Mandelson breaks payout logjam

Lord Mandelson had to write to his most senior civil servant overruling Treasury warnings that legislation was needed to extend the compensation scheme by closing a loophole that unfairly penalised hundreds of men from Hull and the Humber ports who lost their livelihoods after the Cod Wars of the 1970s.

The letter from Lord Mandelson to Brian Bender, permanent secretary of the Department of Business, Enterprise and Regulatory Reform, last January has just emerged.

It warns it could take "several years" for legislation to get through parliament and orders his officials to get on with extending the scheme so men were not penalised if they had breaks in service.

The intervention was only the second time a Business Secretary has issued written ministerial directions – which order a department's top civil servants to act despite having raised concerns about propriety, regularity or value for money – since 1997.

They have only been used across Government 10 times since Labour came to power.

Responding to concerns from Mr Bender that "specific legislative authority" was needed on which to base any payments, Lord Mandelson said he wanted to act "as quickly as possible" to comply with the findings of the Ombudsman, who had concluded the old rules were unfair.

"To delay the new scheme, possibly for several years, until suitable legislation can be enacted, would be unacceptable," he said.

"It would meet neither the clear recommendation of the Ombudsman, nor the agreed policy of the Government. There have already been substantial delays since the previous scheme and it must be right that we now make the additional payments to trawlermen as quickly as possible.

"In the circumstances I believe that the Treasury's objection is technical and that it is right to overrule it."

He concludes the letter by saying: "I therefore formally direct you to proceed with the new compensation scheme, making such payments to former trawlermen as are appropriate."

The letter sheds new light on the turbulent battle for compensation fought by the deep water trawlermen, who have been particularly backed by cabinet minister Alan Johnson, MP for Hull West and Hessle.

The trawlermen – who lost their jobs after being stopped from fishing in Icelandic waters – finally won their battle for compensation in 2000 but had to continue fighting to correct several flaws.

It took criticism from an ombudsman and MPs before Ministers agreed to close a loophole in an original scheme that only recognised continuous service, costing men who had breaks in service thousands of pounds.

Ministers agreed to extend the scheme to overcome the problem, only for the Treasury to warn the money could not be paid out without legislation.

But Lord Mandelson insisted that extending the scheme was in "the spirit" of a previous agreement, and last year he travelled to Hull to make the first payments to John Carver, 66, and Mike Neve, 70.

In total around 1,000 former trawlermen are expected to share between 5m and 10m from the scheme extension.

While in Hull, Lord Mandelson said: "Distant water trawling is one of the most arduous and hazardous of occupations. These men lost their livelihoods through no fault of their own and deserve just treatment."