Infected blood compensation will not threaten tax cuts later this year, treasury sources say

Doctor/ Nurse holding blood bag
About 3,000 people are believed to have died as a result of the scandal - Peter Dazeley

Compensation to be announced this week for the victims of the infected blood scandal will not prevent tax cuts later in the year, The Sunday Telegraph has been told.

While billions will be unveiled on Tuesday for those who were mistakenly infected with HIV and hepatitis C as well as their loved ones, government sources said they were confident they would still have headroom in the autumn to reduce tax.

The infected blood scandal has been described as the biggest treatment disaster in the history of the NHS.

Between 1970 and 1991, thousands of people with haemophilia and other bleeding disorders were infected with HIV and hepatitis viruses after being given a blood clotting agent called factor VIII.

Other people were infected via blood transfusions following surgery or childbirth. About 3,000 people are believed to have died as a result of the scandal.

Sir Brian Langstaff
Sir Brian Langstaff is the chairman of the infected blood inquiry - ©Eddie Mulholland

A final report by Sir Brian Langstaff, the chairman of the infected blood inquiry, is due to be published on Monday.

The total cost of compensation to the Treasury is thought to be anywhere between £10 billion and £20 billion, although no overall figure is expected to be announced this week.

However, the large amounts involved have led to suggestions that it could limit Rishi Sunak’s ability to put more cash into people’s pockets in a pre-election Autumn Statement.

But government sources have said such suggestions are wide of the mark.

A Treasury source said that because the compensation would be a one-off rather than a recurring cost, it was unlikely to threaten the Government’s fiscal rule for debt to be forecast to fall in five years.

Interim compensation payments

A senior Government source agreed with this assessment, saying that much of the cost would be discharged relatively swiftly.

The Telegraph revealed on Saturday that those infected during the scandal will receive new interim compensation payments this summer.

The Government believes that much of the compensation due to the wider group of people “affected” by the scandal - such as parents of children infected, siblings, carers, and dependants of the deceased - is likely to be spread over a two or three-year period. After this period payments are expected to be smaller, though still significant.

The senior Government source also pointed out that the level of headroom in an Autumn Statement would be influenced by other factors, such as assumptions about future spending.

It would be possible to make “adjustments elsewhere” to make room for tax cuts, they said.

‘Double tax’

The fact that the Government is still targeting a tax giveaway in the Autumn Statement was confirmed by Chancellor Jeremy Hunt on Friday.

In a speech, Mr Hunt hinted that he could further cut national insurance contributions at the fiscal event.

“If we can afford to go further, responsibly, to reduce the double tax on work this Autumn that is what I will do,” he said.

The Telegraph understands that there is an “enormous range” to the total amount which could be paid out in compensation for the infected blood scandal, partly due to a “high level of uncertainty” over how many claimants there will be.

Another government source said that ministers understood the need to act quickly due to the deteriorating health of some of the survivors.

“There’s a moral case for doing so,” the source said. “People are dying.”