THE minister responsible for coal health claims, Nigel Griffiths, has been advised to dump the company that handles compensation claims on behalf of former miners.

Senior civil servants in the Department of Trade and Industry (DTI) have recommended that the work of Capita Irisc should be put out to public tender as soon as possible, to allow other companies to bid for the contract.

In a separate development, it is understood the DTI is to hold an inquiry into fees paid to a number of law firms representing miners or their families. According to sources there is concern that some firms have been charging claimants a percentage of any payout, on top of the agreed fees already paid by the DTI.

In the past, MPs from coalfields communities have expressed concerns about delays in processing hundreds of thousands of compensation claims from miners and their families. There have also been rumours of inefficiency.

But now, according to DTI sources, the minister in charge of the multi-billion pound respiratory disease compensation scheme is being urged to take action ahead of plans to speed up payments.

In an internal memo, officials said the performance of Capita Irisc "has been causing concern" over the years and successive officials "have not grasped the nettle".

Describing the claim-handling company's performance as poor, the civil servant accuses Capita Iris of allowing "a paper mountain to develop within the system" with "layer upon layer of low grade staffing".

The minister has also been advised that Capita Irisc's involvement in claim handling for the DTI for 15 years "has been a clearcut breach of the department's procurement rules".

Earlier this week it was announced that MPs were to launch an inquiry into the Government's compensation scheme for former miners whose health suffered after working in pits.

The Trade and Industry Select Committee has said it will review the scope and administration of the two schemes covering respiratory illness and vibration white finger.

Next week legal representatives from the DTI and the claimant solicitors group are due to return to the High Court, in London, to thrash out the final details of fast-track payment arrangements.

Requests to Capital Irisc for a comment were referred to the DTI Press office.

A spokeswoman for the DTI said: "A coal health claims handling contract expires in July 2006, and under EU law the department is obliged to go out to tender through the European Journal."