The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)

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My Lords, I thank my noble friend Lord Robathan for bringing forward this Bill, which, as he noted, has already had a successful passage through the other place, and I thank the noble Lord, Lord Rosser, for his considered and thoughtful contribution. There is not much more that could be said about the Bill, but I am here as the Government and so I will put our view on record.

This is an important issue, and the Government have been clear since 2014 that they do not agree with the European Court of Justice’s ruling in the Vnuk case. That is why the Government support the Bill. The Vnuk decision created an unnecessary extension of motor insurance to private land, as well as to a potentially greater range of vehicles that could include everything from motorsports to agricultural and light vehicles. The excessive liabilities that this would place on the insurance industry and the potential increases to motorist’s insurance premiums are simply unacceptable and unnecessary. These liabilities and potential increases are not trivial. As noble Lords have pointed out, the Government expect that it could cost the industry about £2 billion a year.

Furthermore, if Vnuk had been implemented in full, it would have had a catastrophic impact on the motorsports industry. Drivers would have been likely to be required to purchase motor insurance to compensate injury caused to other drivers, stewards and spectators. Motorsports in the UK are safe and highly regulated. Employers’ liability and public liability already provide a high level of protection. Adding a motor insurance requirement would have brought little benefit at a very high cost—some £458 million per year—had Vnuk been implemented.

Stakeholders have consistently informed us that this would have been prohibitively expensive for the sector, effectively making most of the sector unviable. The sector turns over almost £3 billion annually and generates full-time employment for around 38,000 people and part-time work for a further 100,000 people.

This is why we announced in February 2021 that we will remove the effects of Vnuk from GB law. We said that this would include removing the associated financial liability imposed on the Motor Insurers’ Bureau via the decision in the England and Wales Court of Appeal case of Lewis v Tindale.

I should note that colleagues in Northern Ireland are also progressing legislation in this area, and the Motor Vehicles (Compulsory Insurance) Bill completed its legislative passage in the Assembly earlier in March and is expected to become law by May this year.

There are other positive elements to the Bill. It will ensure that there is consistency across GB and, if the Northern Ireland Bill becomes law, which looks extremely likely, across the UK, which would be very welcome. It also heads off potentially enormous enforcement complications. Had we implemented Vnuk, the police would potentially have been required to monitor newly in scope vehicles never intended to go anywhere other than someone’s garden. The difficulty in gaining access to sites of collisions on private land may have led to the need for additional police powers and could also have had the practical effect of lowering the enforcement rate of uninsured vehicles and encouraging crime.

Implementing Vnuk would have meant that a huge range of newly in scope vehicles would suddenly have been required to be registered on the DVLA database, with license plates required—imagine having to register and stick a license plate on your ride-on lawnmower.

Turning to the questions from the noble Lord, Lord Rosser, I will write to him with further details because I sense that I probably do not have full answers to his questions, and they are very good ones. When we were a member of the EU, the Government continued to work on implementing the binding Vnuk judgment, which would have required very complex changes to our law. While the Government have always been clear about our dislike of Vnuk because of its significant negative impact, we have been equally clear that we had a legal obligation to change the law to reflect Vnuk, and we took a number of steps to respect those obligations. This included a consultation in 2016, which analysed the implications of the ruling and explored policy options. In parallel, we negotiated with the EU over what form the binding Vnuk judgment would take in its translation into the 2009 EU motor insurance directive. As soon as the transition period ended, the Government moved quickly to address this issue, but the pandemic and other challenges have combined to impose unique pressures on the Government, and resources have needed to be deployed accordingly. That is why I am so pleased that this Bill is likely to get the support of your Lordships’ House today.

On the second area that the noble Lord raised, I am afraid I will have to go back to Hansard and read his question about the £50 and whether it applies to the previous EU law or the current proposed EU law. I will write to him with more details.

On the phrase “real reduction”—rather than any reduction—of course, in any of these circumstances there will always be very small considerations. You could say, “Ah, but what about this and what about that?” That is why the Government are very pleased that we can look at those circumstances, now that we are outside the EU. We will keep our regulations relating to insurance under review, because we are always looking to improve the protection of victims and to improve safety, and will consider what else we might do should any gaps become clear. But it is the case that the Vnuk judgment resulted in an overbearing requirement for insurance in areas and on vehicles that it should not have.

The Bill does not have retrospective effect, and it will come into force two months following Royal Assent. All the provisions in the Bill will comprehensively remove the effect of Vnuk and Lewis from GB law. For these reasons, the Government support the Bill and welcome the great progress that it has made to date.