Thousands of haemophiliacs who contracted HIV and hepatitis C from infected blood have “only had their anguish compounded” by a new Government statement on compensation, the head of the inquiry into the scandal said today.

Lord Archer of Sandwell, who conducted a two-year review of how haemophiliacs were given NHS transfusions of contaminated blood, said the response from ministers was “deeply disquieting”.

Dawn Primarolo, the public health minister, announced today that haemophiliacs who contracted HIV from infected blood will receive annual payments of £12,800, double the current sums paid through trusts set up to support victims.

Some 4,670 haemophiliacs who received blood transfusions in the 1970s and 1980s were infected with hepatitis C, of whom 1,243 were also infected with HIV.

However Ms Primarolo said that The Skipton Fund - which provides lump sum payments to people infected with hepatitis C - will receive no extra funding. She added that ministers will review the situation again in 2014.

Responding to the announcement, Lord Archer said: “The Government response is a faltering step that only compounds the anguish of the afflicted and bereaved.

“It is difficult to avoid the conclusion that humanitarian impulses have come a bad second to Treasury constraints.”

He branded the new funding for patients with HIV, “paltry” and said the failure to increase help available to victims with Hepatitis C and to offer payment to their dependants was, “sadly lacking both in understanding and in compassion”.

For years the NHS used imported blood from the US to treat haemophiliacs. It was often collected from paid “skid row” donors such as prison inmates who were more likely to have HIV and hepatitis. Nearly 2,000 people have died as a result of exposure to the tainted blood.

The Archer inquiry heard evidence from Lord Winston describing the blood contamination as “the worst treatment disaster in the history of the NHS”.

Lord Archer suggested a Government apology, a statutory advisory panel and compensation at least equal to that paid to patients in Ireland where those infected with HIV from contaminated blood received up to 101,000 euros and those who contracted hepatitis C were paid on average 853,636 euros.

But the Government rejected campaigners’ demands for substantial compensation payments, instead announcing a slight increase of funding for the Macfarlane and Eileen Trusts to allow annual payments of £12,800 to each HIV infected person. Both trusts will also be given more funding so they can make higher payments to the families and dependants of victims.

Spouses of those who die as a result of the infection will still not get any financial help from the Government.

The minister also rejected calls by Lord Archer for a government advisory committee on haemophilia. Instead she said the Department of Health will invite the Haemophilia Alliance - a group of patients, haemophilia doctors, and those involved in their care - to meet with the Government twice yearly.

Ms Primarolo also pledged £100,000 each year for the next five years to the Haemophilia Society.

She said: “I thank Lord Archer for his very thorough report. The Government has the greatest sympathy for those who have been affected and deeply regrets that these events came about following NHS treatment."

Chris James, chief executive of the Haemophilia Society, said the Government had tried to “water down” and “ignore” Lord Archer’s recommendations and presented “a collection of half-measures”.

He said he would write directly to Prime Minister Gordon Brown, Tory leader David Cameron and Lib Dem leader Nick Clegg asking for an urgent meeting because the Department of Health, he said, “have shown themselves to be incapable of the simple human compassion and understanding required to deal with the victims of this disaster”. No health minister attended the two-year inquiry, despite repeated requests.

“The Government claims to accept the moral case for action but then, by not implementing the recommendations in full, it shows its contempt for the victims.”

Norman Lamb, the Liberal Democrat health spokesman, said: “The Government’s response is deeply disappointing and underlines how appallingly it has behaved over this issue. This is one of the most serious tragedies in the history of the NHS.”

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