Draft Food and Drink (Miscellaneous Amendments Relating to Food and Wine Composition, Information and Labelling) Regulations 2021
(3 years, 7 months ago)
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The Chair
I remind Members to observe social distancing—you are all sitting in the correct places, so that is fine. Please wear a mask when not speaking, unless you are medically exempt. Hansard colleagues would be most grateful if Members sent their speaking notes to hansardnotes@parliament.uk.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Victoria Prentis)
I beg to move,
That the Committee has considered the draft Food and Drink (Miscellaneous Amendments Relating to Food and Wine Composition, Information and Labelling) Regulations 2021.
It is a great pleasure to serve under your chairmanship again, Ms Nokes. This statutory instrument addresses inconsistencies in our food labelling that arise from our departure from the European Union. It deals with a number of EU exit-related issues, particularly on technical standards, that we were unable to address before the end of the transition period. It amends certain retained direct EU legislation and pieces of domestic food legislation in England, including the labelling of general food, non-beef meats, primary ingredients, and GI—geographical indication—products for wine and agrifoods. It also amends analysis methods and some practices for the production of wine, and rules on their labelling and marketing. Transitional provisions have been included in the SI to allow businesses time to adjust to the required changes.
The aim of the SI is to ensure that our food rules remain broadly the same as they were before, and that the rules and regulation continue to operate well. For example, where a label was required to include an EU address of the business responsible for the information, this will now be a UK or Crown dependency address. This is needed to ensure that consumers and trading standards officers can contact those responsible if necessary.
In addition, where a specific country of original is not provided for certain meats, terms such as “non-EU” will be replaced by UK-appropriate terms on the Great Britain market. UK caseins sold in business-to-business transactions will now have to be labelled with the address of the responsible business operator in the UK. For honey blends comprised of honey from several different countries, the term
“a blend of honeys from more than one country”,
or similar wording, can now be used, although of course a specific country can be named if that is what the producer prefers.
The wine rules reflect the GB context. For example, they will ensure that our rules relate only to products that could be produced here, so not retsina, which can be produced only in Greece. The SI provides for a period of adjustment on geographical indications on labels. That means that for a period of three years, or until wine products are sold, enforcement bodies will not take action if a product is labelled for sale as a wine or agrifood GI but is not in fact protected on our registers. This applies so long as that product name was protected in the UK before the end of the transition period. We are not expecting to use this provision much, as it will apply to only a very small number of GIs, which are included in trade deals that have not yet transitioned to being protected in the UK—so they would have to be GIs from non-EU countries.
The SI provides for adjustment periods to give businesses time to adapt to the new labelling rules. Businesses will have until 1 October 2022 to comply with food labelling changes on the English market, and wine products will also be able to be marketed, with either an EU or a UK importer detail, until that date.
There has been a great deal of business engagement on the changes that we seek to make today, including public consultation on how the retained legislation should be adjusted to fit the UK context. Views were sought in the “Food labelling: amending laws” consultation in 2018. Honey and caseins labelling options were considered in a separate public consultation in 2018. There has been regular consultation with the UK’s wine and spirits industry, and of course with the Food Standards Agency and Food Standards Scotland. Businesses repeatedly asked for a period of adjustment, and that is what this SI will give them, if approved.
I am pleased to say that the devolved Administrations have been informed throughout the making of this SI and they are content. I commend the SI to the Committee.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve with you in the Chair, Ms Nokes. I apologise for my near-lateness and the anxiety that it might have induced in colleagues—we do need the lifts in this place to work.
It seems no time since we were discussing our last SI, some 16 hours ago. I enjoyed the Minister’s introductory comments, which were elegantly presented, as always, on the technical issues that could not be resolved before the end of last year because they ran out of time. Of course, we are seeing the consequences now.
This SI is largely about labelling, or “minor ‘real world’ effects” as the explanatory memorandum imaginatively explains. We are not convinced that the effects are quite as minor as all that. Of course, there have been two attempts at this SI. The sifting Committee felt that the subject was sufficiently sensitive to be upgraded to the affirmative procedure so that it could be discussed, so we are grateful to it. The Lords Secondary Legislation Scrutiny Committee, as eagle-eyed as ever, noted that meat, excluding beef, will be labelled as “non-UK” rather than “non-EU”—that does not preclude a specific country, as the Minister said. When we think about it, that actually reduces the information available to consumers.
The Lords Secondary Legislation Scrutiny Committee stated:
“We note that, as consumers will no longer be able to tell whether meat (excluding beef) is from the EU or not after the adjustment period, this may have the potential of reducing key information that is available at present about the origin of a product and therefore about the associated food standards.”
That might be an unintended consequence of this change, but I think it is worth exploring. I would say—as ever, I will put it more crudely than their lordships—that many people might like to know that the origin is the high-standard EU, rather than, to pick a random example, chlorine-washed America. I know the Minister is particularly keen that we keep repeating that familiar example. Why should consumers not have that additional piece of information? It is not as if the EU has ceased to exist, much as some Members on the Government Benches might wish that to be the case. The EU is still an important partner and we will still be able to purchase its produce in our shops, so it would be good to know.
There is one part of the UK that will still be applying those very same EU rules. As the Lords Secondary Legislation Scrutiny Committee pointed out:
‘We also note that after the adjustment period, different requirements will apply in GB and Northern Ireland (NI) where EU requirements will continue to apply as a result of the NI Protocol. Defra told us that “further steps will be taken to continue unfettered access for NI food products to the GB market”.’
I therefore have two questions for the Minister. First, why not allow consumers to know that the produce is from the EU? Secondly, what are those further steps to continue unfettered access for Northern Ireland food products to the GB market?
Similarly, the changes to wine labelling also seem to wish away the European Union. As the Minister knows—I pointed this out a couple of weeks ago—the Wine and Spirit Trade Association, despite the happy consultations referred to in the explanatory memorandum, is not particularly happy. The explanatory memorandum, in paragraph 10.7, suggests that there has been “regular contact”, so perhaps she could tell us how often and when. Given that the various consultations mentioned in paragraph 10 took place back in 2018-19, perhaps it was a while ago. The key point of difference here might be that there was contact at official level but possibly not at ministerial level.
I would be very happy to convene a meeting with the Wine and Spirit Trade Association and the Minister, perhaps even with that bottle of wine I mentioned the other week, wrapped in red, white and blue tape. I am sure that she will have read the excellent briefing that the association has provided for us today, which argues that under these changes it will no longer be possible to use one label for both EU and UK markets. As the briefing explains at some length, that will increase costs and complexity, which I would have though is undeniable. Sadly, of course, that has been the experience over much of this post-Brexit period.
The Opposition strongly urge the Minister to work with the industry to see whether a solution can be found before the labelling grace period ends in September 2022, which I am sure we all agree would be to everyone’s mutual benefit. I would welcome the Minister’s comments on that, as well as perhaps a commitment to join Labour in promising the early end of the VI-1 form, which I have not mentioned since the SI before last.
Finally, let me say a little about honey and provenance issues, because these make headlines quite frequently, with consumers rightly concerned about what they are actually buying—I looked at a jar of honey in my cupboard this morning, and it was not entirely clear to me. I am grateful to the Food Standards Agency for briefing me on these complex issues. I think that a similar point to that made by the Lords on meat may also apply to honey of EU designation, because the distinction between the EU and rest of the world is important.
I am told that it is really quite difficult to test for added sugars in honey, which is one of the difficulties with the cheaper honeys available. At the moment, the test is done best by German laboratories that use a database made up of references that are predominantly European and have been built up over time. It is an historical accident that it has built up that knowledge, and in the past we had access to that, but now we are having to do it differently. The Food Standards Agency is working with retailers and trading standards officers to get the supply chain assurances that we would like, and I am told that good progress is being made. For consumers, however, being able to distinguish between the EU and the rest of the world seems to me to be of some value. Perhaps the Minister can comment on that. Again, why not allow consumers to know and allow them to make that informed choice?
In conclusion, we do not oppose these changes, but we suggest that the ‘real world’ effects may not be quite as minor as suggested.
Victoria Prentis
I thank the hon. Gentleman for that large number of questions, which I will try to answer. This was certainly not a case of running out of time at the end of last year. Different rules applied when we were subject to the transition period for leaving the EU, and it was deemed sensible to wait until after the end of the period to make these changes, and we have acted with all due alacrity since that date. It is true that we are dealing with a large number of SIs at the moment. Food labelling is important, and it is right that we get it right and ensure that the system works well.
On the general point, as I repeat several times a day, the Government are committed to maintaining high food standards, and this legislation certainly does not change that. Consumers need food information that is relevant for their domestic market. In order for our home consumers to remain informed, now that we are no longer part of the EU, it is required that they are informed that although information on the exact origin of the food may not be available, it is not from the UK. UK consumers would not be appropriately informed if the origin of the food in our market was indicated as being not from another geographical area.
Regarding the potential impact of hormone-treated or chlorine-washed meats in GB, the use of “non-EU” rather than “non-UK” would in no way better inform our customers of the food’s origin.
On EU food information legislation, annex 2 of the Northern Ireland protocol makes it clear that all pre-packaged food placed on the Northern Ireland market should meet EU rules, but any wine produced in Northern Ireland could bear that provenance. I am sorry if I did not make that clear to start with.
On wine specifically, we maintained a constant dialogue and engagement with the key wine production, trade and enforcement organisations in the time leading up to the end of the transition period. I understand that the Wine and Spirit Trade Association has written to me to request a meeting, and officials are currently setting that up. Officials have been in regular contact with the Wine and Spirit Trade Association and with WineGB.
The wine sector prepared well for Brexit, with the result that the trade has continued largely unaffected by the new arrangements. However, in the first few months of this year the wine sector, like some other food sectors, did encounter some ad hoc problems with entering certain EU states, as we have discussed before. We have worked with the companies involved and are doing what we can to ensure that does not happen with future shipments. As I said when we discussed the SI before last, we will meet the WSTA to discuss VI-1 forms, as the matter is under review at the moment.
In order to ensure the continued operability of our food labelling rules, and to reflect that the UK is no longer a member of the EU, it is important that we amend certain retained and domestic food legislation, and provide sensible transitional arrangements to allow businesses time to adjust. For those reasons, I commend the instrument to the Committee.
Question put and agreed to.
Draft Employment Rights Act 1996 (Protection from Detriment in Health and Safety Cases) (Amendment) Order 2021
(3 years, 7 months ago)
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The Chair
Before we begin, I remind Members to observe social distancing and to sit only in places that are clearly marked. I also remind Members that Mr Speaker has stated that masks should be worn in Committee. Hansard colleagues would be most grateful if Members could send their speaking notes to hansardnotes@parliament.uk.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
I beg to move,
That the Committee has considered the draft Employment Rights Act 1996 (Protection from Detriment in Health and Safety Cases) (Amendment) Order 2021.
It is a pleasure to serve under your chairmanship, Mr Davies. I will begin with some important background to the draft order, which was laid before the House on 17 March 2021. The UK is unique in having three employment statuses for employment rights—self-employed, limb (b) worker, and employee—when most other countries, including within the EU, have just the self-employed and employee categories.
Limb (b) workers have a more casual employment relationship than employees and are entitled to a basic set of rights, such as minimum wage and holiday pay. Limb (b) status allows for much needed flexibility in the labour market. Sections 44(1)(d) and 44(1)(e) of the Employment Rights Act 1996, which implements the EU health and safety directive into domestic law, give employees the right not to be subject to detriment by their employer for leaving or refusing to return to their workplace and the right not to be subject to detriment for taking steps to protect themselves or others in circumstances of danger which they reasonably believe to be serious and imminent.
In May 2020, the Independent Workers Union of Great Britain brought a judicial review against the Secretaries of State for Work and Pensions and for Business, Energy and Industrial Strategy. Following comprehensive proceedings, the High Court found in November 2020 that the UK had not fully implemented the EU health and safety framework directive into section 44 of the 1996 Act and that some protections applied only to employees, while the Court held that they should also extend to limb (b) workers.
The claim succeeded only in part, and the Court accepted that the UK was not required to extend unfair dismissal to limb (b) workers and had properly implemented the general obligations of the health and safety framework directive. The Government accepted the judgment and therefore proposes this draft order, which will extend the protection from detriment in health and safety cases to all workers, not just employees, as has previously been the case.
The Court also held that the Personal Protective Equipment at Work Regulations 1992 should also be extended to limb (b) workers, and I am assured by officials at the Health and Safety Executive that work is under way to consult on the regulations and to extend them to all workers through an additional statutory instrument due to be laid later in the year.
These important protections have proved even more essential for employees who have continued to work through the pandemic and for those returning to work as businesses emerge from the lockdown. They ensure that employees have the legal protection they need to act to ensure their own safety and the safety of others without fear of suffering detriment for doing the right thing. That includes protecting them against being denied promotion or training opportunities.
Having considered the Court judgment, we agree that limb (b) workers should also benefit from the protections. That does not represent a major change as limb (b) workers represent a small share of the workforce. However, it does not make it any less important, as such workers undoubtedly have a significant role to play in our economic recovery from the covid-19 pandemic. That is why the Government want to clarify the UK’s understanding of the health and safety framework directive by amending section 44 of the 1996 Act. We are committed to protecting workers’ rights and supporting workers through the challenges created by the pandemic, ensuring that the UK remains the best place in the world to work. Clarifying our interpretation of the directive in the light of the High Court judgment will mean that more people are protected by the provisions.
Turning to the scope of the SI, the changes made to section 44 of the 1996 Act will apply in England, Scotland and Wales, because employment law is devolved in Northern Ireland. We have, however, discussed this SI with the Northern Ireland Administration, who have laid legislation to the same effect, which will come into operation in parallel subject to the Northern Ireland Assembly’s procedure.
Given that the limb (b) workers represent a small share of the workforce, the direct cost to business of the change is expected to be very low. We also do not expect the amendment to have a significant and disproportionate cost or impact in any region across England, Scotland and Wales.
This is a necessary change in order to clarify the Government’s interpretation of the health and safety framework directive. It will ensure that all workers are covered by the protections and that we build back better from the pandemic by maintaining the highest standards when it comes to workers’ rights in the UK labour market.
Imran Hussain (Bradford East) (Lab)
It is, as always, a pleasure to serve under your chairmanship, Mr Davies. I start by paying tribute to the campaigning and work of the Independent Workers Union of Great Britain, as acknowledged by the Minister. It has been instrumental to the introduction of this amendment to the Employment Rights Act through its legal challenge on behalf of thousands of members in insecure work and the gig economy.
It was only through the IWGB’s work that these vital fundamental employment rights that most employees take for granted have been extended to limb (b) workers and those in the gig economy, because without the High Court ruling in the union’s favour, it is extremely doubtful that the Government would implemented this extension. Indeed, the Secretaries of State for BEIS and for Work and Pensions challenged the IWGB’s case in the High Court instead of extending the rights that should be afforded to workers under EU directives, as agreed under the withdrawal agreement, only to be defeated. As a result of the challenge and the delay that it created between concerns first being raised by the IWGB at the start of the pandemic and the High Court’s ruling in November 2020, many months have been lost in which the protections could have been extended, leaving working people without adequate rights or protections regarding health and safety matters during the height of the coronavirus pandemic.
The pandemic has been devastating for all, but particularly for those in insecure work and the gig economy, who do not share the same employment rights as those with employee status, to which the Minister alluded. For months they continued to work because they had no rights to fall back on and because they needed to work in order to make enough to get by, often putting in long hours in public-facing roles or jobs that brought them into contact with large numbers of people. According to the TUC, covid-19 mortality rates were twice as high for these workers than for those in secure employment.
Today is International Workers’ Memorial Day, on which we remember all those who have lost their lives in the workplace or in the course of their job, and it is worth noting that the Government have acted far too slowly to protect many thousands of workers in insecure work and in the gig economy.
This instrument clearly demonstrates once more just how much we need a new employment rights settlement that provides a clear universal definition of employment status, which the latest Labour manifesto called for, so that employment rights are afforded to all workers from day one and that the bogus self-employment that is used by many employers in the gig economy to exploit their workforces can be brought to an end. A universal definition would give certainty, security and stability to working people at a time when insecure, precarious employment runs rampant in our economy unchecked by this Government, who are happy to let the courts step in to deliver justice for working people rather than taking action themselves. Such a definition would strengthen people’s rights at work.
Despite being promised well over a year ago in 2019 Queen’s Speech, the long-awaited, much-delayed employment rights Bill is yet to materialise. It seems trapped in a permanent state of “in due course” according to official responses from this Minister and others. Such a Bill would offer us the chance to deliver a real, positive change and strengthen workers’ rights. It would allow us to correct the inconsistencies and injustices that the IWGB and others have highlighted. The Minister should be able to commit to its inclusion in next month’s Queen’s Speech, and I hope he acknowledges that today.
In conclusion, we support this instrument today, but we lament the Government’s decision to challenge the matter in the High Court and the length of time it has taken them to correct this injustice—a delay which will have cost the lives of many workers during the covid-19 pandemic. I urge the Minister to ensure that the Government introduce their promised instrument relating to the PPE directive—I hope that it is not also left in a state of “in due course”—and, hopefully, a robust employment rights Bill without delay.
Paul Scully
I appreciate the spirit in which this debate has taken place and the agreement on the reason for the court case. It is right that the courts were able to consider all the details of the case before coming to a clear conclusion. As I said, the claim succeeded only in part, with the High Court accepting that the UK was not required to extend unfair dismissal, for example, to limb (b) workers and had properly implemented the general obligations of the health and safety framework directive, and we chose not to appeal that judgment. It is important that the Court can do its work on interpretation to build up the case law. As I mentioned before, officials at the Health and Safety Executive assure me that work is much under way to extend protections under the personal protective equipment directive to limb (b) workers as well. To align with the Court ruling, there is no reason for further delay.
As for the employment Bill, I look forward to debating it with the hon. Gentleman and to working through the Bill when parliamentary time allows. We will see when that discussion happens. I do not have the Queen on speed dial, so we will have to see what happens on 11 May.
In conclusion, I underline once more that the draft order will help workers across the country during the coronavirus pandemic and beyond, providing all limb (b) workers and employees with the right not to be subjected to detriment in health and safety cases. I commend the statutory instrument to the Committee.
Question put and agreed to.
Draft Civil Liability Act 2018 (Financial Conduct Authority) (Whiplash) Regulations 2021
Draft Whiplash Injury Regulations 2021
(3 years, 7 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
I remind Members to observe social distancing and to sit only in the places that are clearly marked. I also remind Members that Mr Speaker has stated that masks should be worn in Committee. Hansard colleagues would be most grateful if Members sent their speaking notes to hansardnotes@parliament.uk.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
I beg to move,
That the Committee has considered the draft Civil Liability Act 2018 (Financial Conduct Authority) (Whiplash) Regulations 2021.
The Chair
With this it will be convenient to consider the draft Whiplash Injury Regulations 2021.
Alex Chalk
It is a pleasure to serve under your chairmanship, Mr Hollobone. The draft statutory instruments before us are key components of the Government’s whiplash reforms. The measures will not only simplify the process of settling whiplash claims, but provide certainty to claimants as to how much their claim is worth. They will also benefit society more generally by enabling an average reduction in insurance premiums for ordinary motorists of an estimated £35 per year.
This House has already undertaken extensive and useful debates on the merits of the Government’s policy during the passage of the Civil Liability Act 2018. Our time today is somewhat limited, so I will focus on the detail of the draft regulations, rather than on the substance of past policy debates.
The measures in part 1 of the 2018 Act alter the process for making whiplash claims. That is done primarily by defining what constitutes a whiplash injury, introducing a fixed tariff of damages for pain, suffering and loss of amenity—referred to by lawyers as PSLA—providing for an uplift to be applied to the tariff in exceptional circumstances, thereby preserving the discretion of the court, and banning the practice of seeking or offering to settle a whiplash claim without first seeking appropriate medical evidence.
In addition to the 2018 Act, we are increasing the small claims track limit in respect of road traffic accident-related personal injury claims from £1,000 to £5,000. The Committee may be aware that the Government have previously committed to increasing the small claims limit for all other types of personal injury, including employers’ and public liability claims, to £2,000.
On Monday, however, my noble Friend Lord Wolfson QC confirmed in a written ministerial statement that the Government have listened to the views of Members of this House and others, and decided to limit this increase to £1,500 and to defer its implementation until April 2022. We believe that to be a sensible and pragmatic decision that will provide additional time for affected stakeholders to prepare.
The draft Whiplash Injury Regulations 2021 set out in a tariff the amount of damages payable for PSLA for whiplash injury or injuries of up to two years, and any minor psychological injuries suffered at the same time. The regulations also allow the court to apply an uplift of up to 20% of the tariff amount in exceptional circumstances. With regard to the ban on pre-medical offers to settle, the regulations specify what constitutes appropriate medical evidence and the experts who may provide it. That may differ, depending on whether the injuries include a non-whiplash element.
The purpose of the draft Civil Liability Act 2018 (Financial Conduct Authority) (Whiplash) Regulations 2021 is to give powers to the Financial Conduct Authority to enable it to monitor effectively and to enforce the ban on pre-medical offers to settle.
I will now provide a little additional detail on each of the sets of draft regulations, having summarised them. The tariff in the draft Whiplash Injury Regulations 2021 presents a rising scale of fixed payments determined by injury duration, with the damages reduced less at the top end to recognise more serious injuries. Claims with a prognosis that exceeds two years will fall outside the tariff.
We have reviewed and updated the previously published figures to account for inflation, using the consumer prices index system. We have also added a three-year future-proofing element to ensure that the figures do not move out of alignment with future inflationary pressures before the required statutory review. That leads to an increase of about 11% over the figures previously provided to the House.
The limit by which the court may apply an uplift in exceptional circumstances will be capped at 20%. That is intended to balance the need for an effective and predictable tariff, and to allow for judicial discretion. It takes account of feedback received during consultation and earlier parliamentary debates, and it reflects other similar jurisdictions. For example, Italy also allows for an uplift of up to one fifth.
During the passage of the 2018 Act, we introduced amendments to ensure that the views of the Lord Chief Justice were sought on the tariff and the uplift before regulations were made. Accordingly, we have undertaken that consultation and we are grateful for his consideration of those matters. Following that consultation, we will undertake an analysis of the available data after a year, with a view to considering whether an early review is appropriate. That is a matter that arose from our discussions with him.
The draft Whiplash Injury Regulations 2021 also specify exactly what constitutes appropriate medical evidence to be provided before an offer to settle a whiplash claim may be made or indeed sought. They provide that when claimants live or are examined in England and Wales, they must obtain a fixed-cost medical report from an accredited medical expert selected via the MedCo portal.
Alternatively, if claimants suffer more serious injuries on the same occasion as the whiplash injury, they may rely on a report covering all their injuries, if that report is obtained from an expert listed on the General Medical Council’s specialist register. The purpose of that is to ensure that only claims that can be properly substantiated by a medical report are settled, because otherwise that litigation risk could be bought off. That in turn increases the cost of insurance premiums, thereby damaging the wider motoring public.
I would like to speak briefly about the Civil Liability Act 2018 (Financial Conduct Authority) (Whiplash) Regulations 2021. These regulations give the FCA the power to take effective action in monitoring and enforcing compliance with the ban on seeking or making pre-medical offers to settle—precisely the mischief we want to address. This ban applies to various types of regulated persons as specified by the Act, which also identifies the FCA as the appropriate regulator to take account in respect of persons authorised under the Financial Services and Markets Act 2000, or FSMA, as practitioners often refer to it.
The FCA is the regulator for insurers and claims management companies who may be involved in settling whiplash claims. These regulations ensure that the FCA has the powers it needs to regulate section 6 of the Act. In plain English, that means that if individuals were tempted to settle insurance claims without seeking a medical report, the FCA could step in and use its powers as a regulator to prevent them from doing so, or indeed to provide an appropriate sanction, should it feel it necessary to impose one.
I will end by emphasising that the measures contained in these regulations are necessary and important. They provide much-needed certainty to whiplash claimants; they will create savings that will be passed on to consumers; and they enable the FCA to effectively regulate the ban on offering and seeking offers to settle such claims without appropriate medical evidence. The regulations serve the public interest and I commend them to the Committee.
The Chair
I now call the Opposition spokesman, who wins today’s prize for the most attractive face mask.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Thank you very much, Mr Hollobone, and thank you for your chairmanship this afternoon. I would also like to thank the Minister for his remarks.
There is a long backstory to these regulations. The Minister mentioned the Civil Liability Act 2018, which in itself was a legislative response from the Government to the growth of claims for whiplash in road traffic accidents. The principle that I believe the Government ought to be aiming for is that there is a legitimate and easy-to-use avenue to claim for those who are genuinely injured, but at the same time it takes into consideration the costs to motorists as a whole.
Figures from the insurance industry suggest that in the decade prior to 2016, which is roughly when all this started—legislation is not always a quick process—there was a doubling of claims for whiplash, with an overall cost of around £2 billion a year. It is suggested that the rising whiplash claims drove up insurance costs for everybody else. That is what has spurred the Government on to introduce legislation.
There are several elements of reform set out in these two statutory instruments. Probably the most notable is a new tariff of payment depending on the length of the effect of the injury. The important thing about it is that these tariffs are set at considerably lower levels than some of the whiplash payments that people have been receiving in recent years. For example, if the injury does not last for three months, the payment is £260, which is a small amount of money. It then goes up on a scale to over £4,000 if the injury lasts up to two years. That is probably the main financial change here.
There is also the requirement for a medical report through a portal known as MedCo registration, and I have a couple of questions for the Minister about that. There is the increase in the financial limit of claims through the small claims process from £1,000 to £5,000. The important part of that is that it is designed to take lawyers out of the process for claims under £5,000. There is also the FCA ban on settlements without medical reports and, in exceptional circumstances, a power for the courts to uplift the payout on the figures I quoted a moment ago by 20%. I have a few questions for the Minister.
The first thing, which most people will look at, is that central justification for everything, which is that the volume of whiplash claims and payouts was resulting in an increase in insurance premiums for everyone. The Government claim that motorists will see a reduction in their premiums as a result of the overall reduced payouts for whiplash. The explanatory memorandum published alongside the draft regulations predicts a reduction in premiums of about £35. First, how will the Government ensure that the insurance industry will pass on any savings as a result of the changes? What is to stop the industry just pocketing the savings and increasing its profits?
Secondly, given that both sets of draft regulations are all about whiplash, how will mixed claims be treated, where not only whiplash might have been sustained, but other injuries too? That is very possible in a road traffic accident.
Thirdly, the draft regulations specify that the medical report must be provided through an online portal or by a doctor listed in the General Medical Council’s specialist register. Will the Minister clarify whether that means that a report from someone’s own GP would not be considered as a medical report under the regulations? That is most people’s point of contact if they have had an injury—they do go to see their GP. If that is the case, why is the GP’s report or letter not sufficient to corroborate the injured party’s claim?
Fourthly, how will data be handled by the new portal? How will the data be transferred securely between the insurance companies, solicitors’ firms and claimants?
Finally, what is the Government’s estimate of the impact of that question of taking lawyers out of claims under £5,000? Does that mean, given that most or all of the tariff is below £5,000, that claimants must in effect represent themselves? What are the implications for access to justice?
Motor insurance is rightly of significant political and public interest, because it is something that people are required to have by law; they have no choice about it if they want to drive a vehicle. The whole idea of the system is that claims should be honest and that there should be fair recompense for honest claims. That protects the interests of the claimants, but we also have to protect the interests of all drivers who have to pay their insurance premiums, many of whom—probably most—may never make a claim. The question is whether the draft regulations get that balance right, between those different interests of drivers as a whole and those making a claim, and whether they preserve access to justice properly for people genuinely injured.
The final thing I want to say to the Minister is about the review provision he mentioned. The 2018 Act states that there has to be a review within three years—I think that is in one of the early sections of the Act—but he also mentioned the period of a year. Review is important—to go back to my first question—because if the result of everything is simply to lower payouts to people, with the savings not being passed on to motorists and the insurance companies pocketing the difference, we will have to return to the issue in future. The founding reason for it would obviously be open to huge question in those circumstances. The real test will be whether the savings made are actually passed on to drivers as a whole in future.
Alex Chalk
Yes, lots of interesting and fair questions. I am grateful to the right hon. Member for Wolverhampton South East for expressing himself as he has and for setting some of that initial context, which he did very fairly. I just want to develop that point before turning to his questions. As he rightly pointed out, the context of this is a worrying concern about what can only fairly be described as an explosion in whiplash claims, associated with grave concerns about the authenticity of a significant number of them. Only a brief look at some of the data could make one’s hair stand on end.
Alex Chalk
The right hon. Gentleman is very diffident on this matter. The latest ABI fraud data report for 2019 found that fraudulent motor claims are the most common insurance fraud, with more than 58,000 in 2019, valued at £605 million, which was up 6% on the previous year. However, City of London Police’s insurance fraud enforcement department achieved 433 convictions in 2019, totalling 239 years in custodial sentences arising out of this matter.
The point that the right hon. Gentleman was making is that this, of course, passes costs on to others, but it is worth taking a moment to dwell on how much we are talking about. The suggestion is that this will lead to savings of around £1.2 billion a year. None the less, his central point is a very fair one, which is to say, “Hang on a second; how can we be sure that these insurance companies will not simply pocket it and then up their profit margins, and the poor old consumer will not be reimbursed?” That is a fair challenge, but there are two limbs to the response to that.
The first part of the response is one that, bluntly, I did not expect to be able to update the House on today, but the impact of the pandemic—so cruel in so many ways—has unexpectedly shone a light on the likely behavioural response in certain regards. The right hon. Gentleman will be aware that during the pandemic people have driven their cars quite a lot less. As a result, there has been a lot of pressure from consumers asking their insurers for a refund on their premiums. It may be that there are people in this room who have done exactly that, so when you actually look at the data to see how the power of the market has had an impact upon premiums—nothing the Government can do, but simply the actions of consumers putting pressure on their insurers—it is quite instructive.
I will give an example of one provider, Confused. In the fourth quarter of 2019, the premium was £630. In the fourth quarter of 2020, it was £575. Similarly, another insurer, ABI, was at £483 in the fourth quarter of 2019, and £468 in 2020. In other words, the power of individuals going back to their insurers and saying, “You are going to have to reduce my premium on account of the fact that I haven’t been driving my car” has had a market impact. As such, I think we can take increasing confidence that there will be a consumer power to drive down these premiums, effectively telling the insurers, “The Government have taken these steps to ensure that there is less fraud taking place by way of whiplash, and we know that there are savings of around £1.2 billion, so pass them on to me or I will go elsewhere”.
Mr McFadden
The Government cannot just leave it to the consumer to have to take the initiative. The Minister is probably right that some consumers have approached the insurance companies because they have been driving a lot less this past year, but trying to phone any big company like that—I am not referring to any insurance company in particular—and get through the systems is not easy. I suggest that we need more from the Government. Surely there has to be some sort of pressure from the Government, some sort of deal here, so that if the Government are going to pass legislation like this, the very purpose of which is to save the £1.2 billion in payouts, then insurance companies have got to pass it on. Otherwise, what is the point of what we are doing here?
Alex Chalk
The hon. Gentleman should have waited for me to make my second point, because he has asked and he shall receive. Let me just finish off the first point. It is not a case of always having to phone the insurer to say, “I paid X, so now you should give me a refund.” The point is simply this: if insurance companies do not offer competitive premiums, people are likely to go elsewhere. The experience of the pandemic is precisely that: unless those insurance companies act in a way that is competitive, they are likely to lose business.
The second point is this. The right hon. Gentleman is absolutely right that we need to be holding insurance companies’ feet to the fire. Having made a firm commitment to pass savings on to consumers, insurers should be held to account. That is precisely why the 2018 Act includes a statutory requirement on insurers to provide information to the Financial Conduct Authority on how they have passed on savings.
Insurers must provide that information to the FCA by April 2024, as stated in the draft regulations, which I hope the right hon. Gentleman has had a chance to study. The Government, with the assistance of the FCA, will assess whether the industry has passed on the benefits of the reforms to consumers. A report will be made to Parliament after April 2024. That will be his moment to say, “Do you remember, Minister Chalk, when we were having that conversation in April 2021, you told me that the savings would be passed on?” We have ensured that the mechanism is built into the regulations to hold those companies’ feet to the fire.
With regard to the portal, the right hon. Gentleman asked whether a person’s GP could be considered. It is important to note that under all sorts of legislation, whether on medical negligence or road traffic accidents, we have to have the right medical expert for the particular issue to come before the court—or, in this case, with a bit of luck, not to come before the court. It has to be the right medical expert. Without any discourtesy to GPs, they are not always the right expert. If the GP has ensured accreditation under the system, there is no bar to the GP being that expert, but it is not always automatically the case that a GP would be able to provide the medical report, because that might not be within their realm of expertise. There is nothing unusual about that and certainly nothing unusual in the draft regulations so far as that is concerned.
How will data be handled? Data will be handled in the normal way. There is overarching legislation that covers that.
On the impact of taking lawyers out of the system, we make no bones about the fact that for a small category of case, it is more proportionate and appropriate to do precisely that. Let me quote what the Lord Chief Justice said about this. Characteristically, he put it very clearly and pithily. He noted that the tariff was a
“narrowly defined statutory derogation from the principle of full compensation through an assessment of damages by the courts”.
He was saying that the Government are deliberately carving out an area to do with road traffic accidents to ensure that, where additional costs are created that pass on additional expense to consumers, that is dealt with in a surgical way. I say “surgical” because vulnerable road users such as children, pedestrians and cyclists are not covered. That is an important exclusion.
Mr McFadden
For two reasons, I am grateful to the Minister for stressing that. First, those groups he mentioned—pedestrians, cyclists and so on—are not covered, and that is important. Secondly, the broader importance—I would be grateful if he can reassure us—is that this is a carve-out just for whiplash in road traffic accidents, and it will not affect injuries at work or other kinds of injuries in which the normal system of claiming through a court and having a judgment on the proportionality of the accident will take place. Some people, responding to the draft regulations, have said, “This is unfair, because you are treating one class of injury unlike another.” There is that argument, and I repeat it, but a lot of our constituents want to be reassured that the draft regulations will not have a broader ripple into their circumstances if, for example, they were injured at work.
Alex Chalk
That is critical. The Government believe in access to justice. That means that if people make their way to work and their employer has created an unsafe environment, so they trip over something and need to make a personal injury claim, they should not be crowded out—not shut out from making a claim. The draft regulations preserve precisely that.
I will address the issue of mixed tariff cases and bring my remarks to a close. Section 3(8) of the 2018 Act provides that, where a claimant suffers injuries in addition to a whiplash injury—the point that the right hon. Gentleman was making—the court is not prevented from awarding damages to reflect the combined effect of the injuries sustained. Ultimately, it is for the courts to determine how mixed injuries are addressed. We are confident, given the excellence of our judiciary, that they are well placed to resolve such cases on a day-by-day basis.
In conclusion, the draft regulations are proportionate, calibrated and targeted measures that serve the public and consumers’ interests, drive down on fraud and act to drive down insurance premiums. They are manifestly good for the public and for road users. I commend them to the Committee.
Question put and agreed to.
Draft Whiplash Injury Regulations 2021
Resolved,
That the Committee has considered the draft Whiplash Injury Regulations 2021.—(Alex Chalk.)