The government has made a last-minute decision to increase payments made through a new compensation scheme to ‘last resort’ mesothelioma victims.

The Department for Work and Pensions today announced victims of the asbestos-related disease will now receive 80% rather than 75% of the average settlement.

In return for reduced compensation, the scheme speeds up the process for making claims when people cannot trace a liable employer. Around 3,500 cancer victims or their families can apply for compensation from next month and the first payments will start in July.

MPs had called for an increased cap during debates in the House of Commons in January but were told the limit would remain at 75%.

In a letter to Chatham MP Tracey Crouch, who campaigned for an increase, DWP minister Mike Penning said the payment tariff can now increase after the final cost of the scheme’s administration was known. Claims management administrator Gallagher Bassett has been awarded the contract to run the scheme.

Penning said successful applicants can now expect to receive an average payment of £123,000 with an additional £7,000 as a contribution towards legal fees.

In a statement today, Penning added: ‘This will end years of injustice for mesothelioma victims and their families – who have had to endure this terrible disease with little hope of any compensation from the insurance industry.’

Specialist lawyers have welcomed plans to increase the ‘last resort’ payment, which is funded by contributions from the insurance industry.

Adrian Budgen, head of the asbestos-related disease team at national firm Irwin Mitchell, said: ‘This is good news for mesothelioma victims and should have been included in the original scheme. But whilst we welcome the increase there is still a significant shortfall from what victims would be entitled to receive in a civil compensation settlement.

‘The cap is particularly hard to understand when the financial services compensation scheme provides 90% compensation, where the insurer is in liquidation.’