Howard warned to expect injury scheme reverse

`Strategy is about saving money rather than aiding victim of crime'

The embattled Home Secretary, Michael Howard, has been advised to warn the Cabinet that he has only a 50-50 chance of overturning a ruling that his new Criminal Injuries Compensation Scheme is unlawful and that the scheme faces administrative cha os as aresult.

The full and "very serious" implications of a second reversal at the hands of the courts are frankly spelled out for the first time in a confidential Cabinet document which warns that officials face the daunting task of reprocessing 70,000 compensation

applications submitted over the last year.

The letter, drafted for Mr Howard to send to his colleagues on the Home Affairs committee of the Cabinet, warns that fresh legislation will be needed "very quickly" to stem the "even more serious" financial implications of extra costs of around £7.5m a month.

The document, leaked to John McFall, the Labour MP for Dumbarton, yesterday, reveals that the Home Office had considered rushing through new legislation to rescue the controversial new fixed rate scheme before the House of Lords hears Mr Howard's appeal against the Court of Appeal judgement.

But the draft, which was prepared by Christine Stewart, head of the C4 division of the Home Office, warns that to do so "could give the appearance to parliamentary opponents of the tariff scheme that we were unsure of our ground and encourage them in their efforts to resist the legislation".

The draft also starkly underlines the undesirability of seeking to "claw back" £3m in provisional payments under the new scheme to 7,200 people who have actually benefited from the changes.

While the document makes clear that "government accounting" is pressing the Home Office to do so, the leaked document suggests Mr Howard says: "I do not think we should attempt recovery in practice and I would like to make this known publicly fairly soon."

Mr McFall said last night that the leak showed the government's strategy had "nothing to do with compensation for the victim and everything to do with saving money. And it exposes the thinking that is going into sneaking the new scheme back through Parliament."

Officials fears of losing in the Lords is not surprising. It was Lord Ackner who led the cross-party attack on the scheme and forced a humiliating amendment to the Criminal Justice and Public Order Act.

The Government had barely patched the damage, by amending the act, when the Court of Appeal, ruled last November that Mr Howard had acted unlawfully when he implemented the tariff-based scheme without any reference to Parliament.

Mr Howard had been taken to the court by trade unions, who had been united in opposition with Lords, lawyers, politicians, police, victim's and women's groups. The unions said Mr Howard was under a duty to bring into force provisions of the 1988 CriminalJustice Act, which stated that the criminal injuries compensation scheme - introduced in 1964 and regarded as generous - should be placed on a statutory basis.

But instead Mr Howard abolished the scheme and introduced the fixed rate scheme - which pays from £1,000 for broken teeth to £250,000 for those permanently disabled - without going back to Parliament for approval. The new scheme takes no account of individual circumstance, such as loss of earnings or costs of future care. A nine-year-old will receive the same amount as a 90 year-old.