British Government

Thursday 14 January 2010 Government apologises over thalidomide

(To view video the government statement double clicks on the photo below).

  The government granted distillers a UK product License for the drug thalidomide. The government have never paid any compensation for licensing the drug, however they have donated some monies first in 1974 £5million, which was to offset the tax then £7million in June 1996 - no clear reason was ever given for this donation. 

Thalidomide Survivors: 15 January 2010

 Statement: Government money for thalidomide survivors

The Minister of State, Department of Health (Mr. Mike O'Brien): With permission, Mr. Speaker, I wish to make a statement about help for thalidomide survivors. Between 1958 and 1961, the drug thalidomide was used by expectant mothers to control the symptoms of morning sickness. Tragically, this led to many babies being born with often severe physical disabilities. There are currently 466 thalidomiders, as they refer to themselves, who are beneficiaries of the Thalidomide Trust. The Government wish to express their deep sympathy for the injury and suffering endured by all those affected. I will say more about that in a moment.

I am pleased to report that the Government will now fund a £20 million, three-year pilot scheme to help meet the health needs of thalidomide survivors in a more personalised way. Funding has been found from existing departmental central contingency budgets. The scheme will be operated by the Thalidomide Trust, which will use its considerable expertise and knowledge of its members' needs to distribute money to survivors. They, in turn, will invest the money in adaptations and other preventive measures that are likely to reduce long-term demands on the NHS.

In recent months, I have met the national advisory council of the Thalidomide Trust on a number of occasions, and it impressed on me its concerns about the continuing and increasing health needs of thalidomiders as they approach older age. This additional funding will help to meet their complex and highly specialised needs, and to reduce further degeneration in their health.

There will be clear principles for the use of the money. It will be used to explore how the health needs of thalidomide survivors can best be met in the longer term. It will also be used to look at the effectiveness of the scheme and how this approach-of working through an expert national body-might be applied to other small groups of geographically dispersed patients with specialised needs. The evaluation will be focused on thalidomide survivors in England. However, as the Thalidomide Trust has discretion in how it uses its funding, we expect that survivors living outside England will also benefit.

It is important to acknowledge that this announcement builds on work done with thalidomiders in past decades by Lord Morris of Manchester and by Lord Ashley of Stoke. Lord Morris, appointed as the first Minister for Disabled People in 1974, made Distillers, the then owners of the thalidomide drug, establish a trust fund for affected children. Lord Ashley has tirelessly campaigned for greater recognition of the effects of the drug and the needs of thalidomiders, which has also led to improvements in drug safety. The work of Harold Evans and The Sunday Times should also be acknowledged, as should the campaigning by a number of current Members of this House.

While the Government are taking positive steps to help thalidomide survivors, the contribution of the Thalidomide Trust to supporting survivors and their families cannot be overstated. I would also like to take this opportunity to pay tribute to the work of the trust, its officers and, in particular, to the members of the national advisory council, which has worked tirelessly to champion the cause of thalidomiders.

TREASURY PRESS RELEASE THALIDOMIDE PAYMENTS MADE TAX FREE

15th July 2004

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.

Following consultation with the Inland Revenue the Trust will change the way it makes its payments to victims so that they can be classified as “periodical” and fall within the scope of legislation governing “structured settlements”. This allows the Treasury to make use of a hitherto-unused provision of the Income and Corporation Taxes Act 1988 to designate the “periodical payments” to Thalidomide victims as exempt from income tax.

The new legislation will take effect from 5th August 2004, after which payments from the Trust to victims will be discounted as “income” for the purposes of calculating the victims’ income tax liabilities and their entitlement to tax credits.

The total value of the change to Thalidomide victims in terms of lower income tax and additional tax credits will be around £1 million per year. For individual victims, it could be worth up to £60 a week, £240 a month, or £3,120 per year.

Commenting on the changes, Dawn Primarolo said:

"I am delighted that, working closely with Thalidomide Trust, we have been able to find this solution, which will bring real financial benefits to those affected by the Thalidomide disaster. Today's announcement demonstrates our continued commitment to helping the most vulnerable in society, and acting where we can to ensure a fair tax system. The hundreds of individuals who have campaigned for this change and worked hard to achieve it deserve our praise and thanks today."

Details:

The Thalidomide Trust was set up in 1973 to support the victims of Thalidomide. The initial trust funds were provided by way of a donation from Distillers (later Guinness, now Diageo) who made the Thalidomide Drug.

Donations to the trust by Distillers/Guinness/Diageo have been made as follows:

Under a 1974 agreement, Distillers agreed to pay out £14m under deed of covenant at £2m per year for 7 years, later adjusted to £19m in 1978 when more victims came to light;

In May 1995, Guinness agreed to enter into a further ‘entirely voluntary and charitable’ covenant to pay an additional £2.5m per year for a period of 14 years (the Trust was running out of funds at this time); and In June 2000, Diageo agreed to extend the additional contributions until 2022 and index link them from April 2000.

The beneficiaries are taxed on the payments at their marginal rate of tax with credit given for the 40 per cent tax deducted by the trustees. So if the beneficiary is a higher rate taxpayer they have no further tax to pay. However if, as is more usual, they are a non-taxpayer or basic / standard rate taxpayer they can reclaim some or all of the tax deducted.

Since the 1970s, successive governments have given a total of £12.8 million to the Thalidomide Trust. £5.8 million was given in 1974 and 1978 (around the time the Trust was created) to offset the tax due on payments to beneficiaries.

In 1996, £7m was paid as a “one-off” and “final” contribution in recognition of what the government of the day called “the unique and tragic circumstances which surround the Thalidomide disaster”.

Notes to Editors

1. The Treasury has today laid the ‘Thalidomide Children’s Trust (Application of Section 329AA of the Income and Corporation Taxes Act 1988) Order 2004’. It comes into effect on 5th August 2004.