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History of the UK
Thalidomide
Settlements
(Compensation)
Distillers (Biochemicals)
Ltd marketed thalidomide under its UK brand name Distaval
between 1958 and 1961. The drug was known as a mild sedative and
was to be marketed as a wonder drug. The drug was mainly given
to pregnant women for morning sickness; instead, it caused
damage to the foetus. Thousands of babies were born with missing
limbs and internal deformities.
1968
The first settlement aim was to benefit 62 children for whom
writs against Distillers had been issued. The claimants would
have to withdraw negligence claims against the company
Distillers. This meant that each child would be awarded a
private settlement of 40% of the legal valuation of his/ her
disabilities. Distillers also announced that they would
eventually provide for all the other children whom were affected
by their thalidomide products.
The Thalidomide Trust
Negotiations for an increasing number of children raised
questions about the proof of thalidomide injury. This led to the
creation of two separate lists. The 'X' list consisted of young
people with proof of thalidomide injury; people on the 'Y' list
were those who had not been able to provide adequate proof.
1973
After a
number of unreasonable offers had been made by Distillers, an
agreement was eventually reached in 1973 by approximately 440
children, who withdrew negligence claims against Distillers. In
exchange, provided X list status could be attained, these
children would receive a private settlement similar to the 1968
settlement of 40%, increased by a third to offset inflation.
1973 (10th August)
The
Thalidomide Children’s Trust was founded on the 10th
of August 1973, with the object of providing support to those
people who had disabilities caused because their mothers had
taken the drug thalidomide during pregnancy.
Additionally, all of the children who had received settlements
became beneficiaries of a new charitable trust to which
Distillers paid seven annual instalments of £2 million,
increasing by up to 10% annually for inflation.
1974
The
Government, not wishing to profit from the thalidomide tragedy
and also wishing to preclude doubt as to future settlements
arising from other comparable tragic events, hit upon the device
of a tax offset. It was characterised as arising from some
genuine misunderstanding as to whether all distributions from
the Trust to beneficiaries would be tax-free. The then Financial
Secretary to the Treasury stated that its effect (and therefore
broad objective) “…will be to increase the income available to
the Trust in a way that should at least offset the effects of
taxation.” The express intent was to create a neutral tax
environment; this to all intent and purposes amounted to tax
exemption of distributions by other means.
1979
Following
the ‘Y’ list inquiry by the parliamentary Ombudsman, Sir Alan
Marre, Distillers settled additional monies on the Thalidomide
Trust for an additional 20 children, and the Government again
made use of the tax offset device. This is evidence that the
earlier tax offset did not preclude subsequent ones. Had it
thought otherwise, the Government would not have felt obliged to
follow Sir Alan Marre’s recommendation in his report on the
thalidomide children who had been placed on the “Y” list.
1993
A new
campaign group was launched Thalidomide UK (Thalidomide Action
Group UK) its aims were to fight for adequate compensation for
the thalidomide survivors.
1996
By 1995, it
had become clear that the money held by the Thalidomide Trust
would run out by 2006. Guinness plc (having in the interim
acquired Distillers) covenanted until 2009 further monies
annually to the Thalidomide Trust. The Trust applied for a tax
offset but the Government rather than continuing the previously
established arrangement lighted on giving monies under another
guise; a grant in aid. The then Secretary of Health articulated
it as arising from “… the responsibilities and difficulties of
adulthood, family life, and employment. These are factors which
could not have been foreseen at the time of the original
settlement.” This amounts to the Government confirming, though
in a somewhat circuitous manner, that it had no desire to profit
from the thalidomide tragedy.
2000
Diageo plc
(formed by a merger between Grand Metropolitan and Guinness plc)
extended the covenant to 2022, a year later the Chancellor
refused the Thalidomide Trust’s application for a tax offset on
the basis of both the overall size of the Trust’s fund and
though mutually exclusive, the sums being injected into the NHS.
In reneging on the principle that it should not profit from the
tragedy the Government in justification relied on outdated
information as well as general assertions regarding the NHS
which previous experience indicates as being of doubtful
validity. The time that it took to come to the decision suggests
not only that the Trust’s application was approached with a
closed mind but also that when it was made the Treasury was at a
loss as to how to present its intended refusal.
2004
(15th
July)
Paymaster
General Dawn Primarolo today laid new legislation to make
payments from the Thalidomide Trust to victims of Thalidomide
tax-free, a move which will be worth £1 million per year in
lower tax and increased tax credits for recipients of the
payments.
Since 1974, the Thalidomide Trust has been subject to the same
rules that govern payments from all ‘discretionary trusts’. Up
until now some payments from the Trust have counted towards the
victims’ ‘taxable income’, increasing their tax bills and also
reducing their level of entitlement to tax credits.
2005 (8th December)
Diageo plc has agreed a new financial settlement for those
affected by the drug. Historic agreement had been reached
between Diageo plc, Thalidomide UK, and the Thalidomide Trust’s
National Advisory Council (NAC), all of whom recognised that
existing resources supporting survivors of thalidomide were
unlikely to be sufficient to meet their continuing needs in the
coming years. All parties believe that this agreement will be
full and final.
Authors
Freddie Astbury & Nick Dobrik
2009
Thalidomide survivors apology
The
Government has apologised over the thalidomide scandal - almost
50 years after the drug was withdrawn in the UK - but some
victims said it was too little, too late.
The formal
apology by health minister Mike O'Brien was greeted with a mixed
reaction by campaigners who welcomed the move but pointed out
the statement fell short of saying "sorry".
Government
Payout to thalidomide survivors via trust fund
£20 million
support package, announced last month, which will be
administered through the Thalidomide Trust to help meet the
needs of survivors.
He said: "I
know that a lot of thalidomiders have waited a long time for
this.
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