Ministers to time UK blood scandal payouts to avoid jeopardising pre-election tax cuts

Ministers are drawing up plans to establish a £10bn to £20bn compensation scheme for the victims of the UK’s long-running infected blood scandal but will schedule the payouts so they do not jeopardise pre-election tax cuts.

The Treasury said a House of Commons defeat for the Conservative government on Monday over compensation would not affect its original plans to respond only after it receives a final report from the public inquiry into the NHS transfusion scandal. The inquiry’s findings are due in March next year.

Crucially, the timing means Jeremy Hunt, chancellor, would not be expected to sign off on the massive compensation package until after his pre-election Budget — expected in late February or early March.

“It is right that these findings are published and considered in the round and the government will respond as quickly as possible once the final report is published,” the Treasury said.

Government officials told the Financial Times the compensation scheme would therefore not be “scored” in the Budget and eat into the headroom that Hunt hopes to have available for tax cuts.

“The Budget is expected in late February or early March, before we get the report,” one official said. “So the fiscal impact won’t be a problem for Jeremy — it would be for whoever presents the next fiscal event.”

Contaminated blood left tens of thousands of people, many suffering from haemophilia, a rare blood disorder, infected with HIV and hepatitis C in the 1970s and 1980s.

Sir Brian Langstaff, chair of the public inquiry into the scandal, urged the government in April to establish an arms-length body to pay compensation to victims. He said the government should move swiftly because thousands had died. Officials said they expected total payouts from the scheme to “exceed £10bn” but would probably be less than £20bn.

On Monday, 22 Tory rebels joined Labour in defeating the government and forcing an amendment to the victims and prisoners bill that would require an independent, judge-led compensation body to be set up within three months of the legislation being enacted, which is expected by next spring.

Dame Diana Johnson, the Labour MP who forced a vote on the matter, said victims had grown frustrated over repeated delays. “We’re at the point where a high court judge has made recommendations that compensation should be paid. People are dying,” she said.

About 1,250 people are thought to have contracted HIV, of whom three-quarters had died by 2020, according to the inquiry. A further 26,800 became seriously ill, while 2,400-5,000 people were infected with hepatitis C.

Langstaff’s team had hoped to publish a final report in November but it had been delayed because of high workload, said two people familiar with the matter.

One government figure said the estimates for the final cost were “quite a big range” given the final policy had not yet been determined and the fiscal impact was still uncertain.