Prisons and Courts Bill (Third sitting)

Chris Philp Excerpts

Committee Debate: 3rd Sitting: House of Commons
Wednesday 29th March 2017 Public Bill Committees

[Mr Gyimah]

The amendment is about a duty for the Secretary of State to co-operate with other agencies and bodies whose functions are relevant to the purpose outlined in the Bill. There are already well-established ways of working between governors and different agencies and bodies, some with their own pre-existing legislation. For example, the multi-agency public protection arrangements provide a process through which the police, probation and prison services work together with other agencies to manage the risks posed by violent and sexual offenders living in the community, in order best to protect the public. Probation is one of the represented bodies, along with the police, local authorities, fire and rescue authorities and health, represented on community safety partnerships, which were set up under the Crime and Disorder Act 1998. The responsible authorities work together to protect their local communities from crime and help people feel safer.

[Chris Philp (Croydon South) (Con)]

Will the Minister confirm whether the Prison Service also works closely with the Home Office to ensure that we act quickly to deport foreign national offenders at the end of their sentences?

[Mr Gyimah]

I assure my hon. Friend that we work closely with the Home Office, which is ultimately responsible for deportation. The Prison Service has to facilitate its work in prisons. There is a lead Ministers group, including Ministers from the Home Office, the Foreign Office and the Department for International Development, which meets regularly to discuss all the issues about moving foreign national offenders under various schemes.

New legislation is not needed to ensure that co-operation between governors and other agencies and bodies continues; governors do that on a daily basis to ensure that different services, from education and employment to healthcare, are carried out. That can be seen in the relationships with employers, such as Timpson and Halfords, which run academies within prison to train offenders for employment on release, and in formal arrangements with NHS England to ensure that prisoners have access to the healthcare they need. We are introducing new performance measures to hold governors to account for their performance in a wide range of areas, including education and housing, and we expect governors to work closely with other agencies and bodies to do that.

The hon. Member for Bolton South East mentioned probation and, in particular, the community rehabilitation companies. I assure her that we are going through a probation system review and will publish the results shortly. That will deal with some of the challenges she outlined. Furthermore, the National Probation Service—as opposed to the community rehabilitation companies—is already covered by Her Majesty’s Prison and Probation Service, so the amendment would have the effect of creating a duty for the Secretary of State to co-operate with herself. We already have a formal contract with CRCs, so it would be unnecessary to create an additional duty to co-operate. I therefore urge the hon. Lady to withdraw the amendment.

Prisons and Courts Bill (First sitting)

Chris Philp Excerpts

Committee Debate: 1st Sitting: House of Commons
Tuesday 28th March 2017 Public Bill Committees

[The Chair]

Chris Philp, on this point. I want to exhaust this area before we move on to the next questions.

[Chris Philp (Croydon South) (Con)]

Q Mr Lomas, you said a moment ago that you thought that there were some failures of leadership in this area. Will you expand a bit on what you mean by that?

Martin Lomas: I was making a broad point about there not being a single solution to the problem, and about how there needs to be analysis of what is needed in particular institutions. The Bill requires us, as an inspectorate, for the first time to take account of leadership, and we will be commenting on it. We sort of do already, but this will be a more transparent arrangement. Our intent is to link our commentary on leadership very directly to the outcomes that we see in the prison. We are not management consultants as such, but we will look for there to be evidence of leadership—at every level, because it is not just about the governor. There needs to be leadership among staff and at the Ministry of Justice. A variety of influences will create a situation in a particular institution.

[Chris Philp]

Q In your experience of inspecting prisons, how frequently are there comprehensive searches both of prisoners and their cells, with the purpose of identifying things like mobile phones and drugs?

Martin Lomas: It is not something we specifically look at, although they are going to begin looking at it, but every prison will have a security protocol that will specify the amount of searching that takes place. That is just the routine element. There will be search protocols around specific risk areas like visits, reception and the like, and there will be targeted searching in response to intelligence that comes in through information reports. There will be a variety of responses and different levels of searching, some more intrusive than others. Beyond that, there will be the application of technology, dogs and all sorts of available options.

[Chris Philp]

Q In your experience of inspecting prisons, do you think that search, whether of individual prisoners or of their cell accommodation, is adequately frequent, bearing in mind the amount of contraband that seems to be in circulation?

Martin Lomas: I do not think that I can give a broad-brush answer to that. There are 120-odd institutions that perform differently, and the identification of contraband might be a sign of the success of searching, so it is a difficult one to answer. We look at the security of the institution, the risks that it faces and questions of proportionality. Prisons have to be constructive places, so searching needs to be justified, reasonable, effective and for a purpose. A variety of factors need to be considered.

[Chris Philp]

Mr Simpson, what is your view of the search regime?

Joe Simpson: At the moment, it is hit and miss across the whole system, and that is down to staffing pressures and the regime. The Prison Service ultimately does whatever it has been told to do by the Secretary of State in power at the time. We have gone from “security, security, security” to “regime, regime, regime”. Only at the weekend one of our prisons had to shut down the whole prison in order to put on visits on a Saturday afternoon. Nothing else happened—there was no searching and the prisoners were not out of their cells. They were in their cells because there were not enough staff on duty to get them out.

It depends on what the searching protocol is for the prison as well. Obviously, we have got different categories—A, B, C and D. I would say that the searching strategy in the category A and B systems is more robust because of the types of prisoner being held. In cat C and cat D, I would say it is not as much as we would like to keep people safe—especially in the cat C estate.

[Nick Thomas-Symonds]

Q Rachel, a moment or two ago, you were taking about what the prisoners themselves have to offer in this. I know that the RSA has spoken about things such as rehabilitation culture—I think “rehabilitation capital” is the phrase that is used by the prisons. Can I pick up on that and, in a general sense, ask you whether you think the Bill incorporates that sort of culture and those sorts of measures in the way you would like to see?

Rachel O'Brien: I am slightly nervous of the new HMPPS defining this thing. We know a lot about wellbeing: for example, we can measure people’s ability to make good decisions and their self-confidence—all sorts of things that are prerequisites for the resilience they will need going forward. We are working with a high-security prison at the moment to develop a community-wide strategy. The outcome is going to be great. It is about thinking about, in a very closed system, how you have a better relationship with the outside world, family and so on. Actually, it is about the process of engagement with those prisoners, when they are talking strategies and tactics. They would not necessarily agree to do desktop publishing, but they will do it because they are producing a newsletter to communicate. It is that kind of approach, and you can measure people’s progress—partly because they will tell you and partly because you see it. It is that kind of approach that we need to replicate. Prisons need to be able to do things themselves rather than outsource them, because that is how staff can get those really valuable relationships.

Prisons and Courts Bill (Second sitting)

Chris Philp Excerpts

Committee Debate: 2nd Sitting: House of Commons
Tuesday 28th March 2017 Public Bill Committees

[Suella Fernandes]

Q Does Mr Dixon wish to comment?

Brett Dixon: Yes, I would—thank you.

In some respects, the debate has moved on from fraud and low-velocity impact. That is because of the provisions that were enacted in relation to fundamental dishonesty, which are in the civil procedure rules at rule 44.16 and in section 57 of the Criminal Justice and Courts Act 2015.

If a defendant thinks that there is fundamental dishonesty involved in a claim, they have two opportunities to challenge it. They can challenge it at the conclusion of a case, when the case is unsuccessful, and then seek their costs. They can also challenge a case if it is successful but there is a question mark over what has been claimed, and that can lead to a claimant losing all of their damages and to a cost order as well. There are sufficient drivers in the system and levers that can be pulled to discourage any type of claim like that.

It is important, though, to understand this in context. First, the most important thing is to consider proven fraud. I see in practice, from different members of our organisation, many allegations of fraud or fundamental dishonesty that are not made out when tested by the court. You only need to look at a recent Court of Appeal decision by Lord Justice Briggs in Qader & Ors v. Esure Services Limited to see that there is a developing gaming of the system by insurers to prevent people from being able to challenge those cases properly. That case was about trying to prevent a claimant from having access to the same tools to fight the allegations as a defendant has to bring them.

There was an implicit recognition from the Court of Appeal in that judgment that it is important that a person who is accused of something like that has the ability and resources to answer it. It is a serious issue for somebody accused of it and it is about what is proven fraud, rather than vague statistics of about 70,000 cases, where we are not quite sure whether it is fraud, detected fraud or suspicion of fraud and what standard that is at. It is for the judiciary to decide if that is an issue and, if it is found to be an issue, that person should be dealt with. Equally, if you are going to have access to justice and equal rights on a level playing field, they need the ability to challenge it in appropriate circumstances.

[Chris Philp (Croydon South) (Con)]

Q Welcome to our panellists this afternoon. About three years ago, my wife and I were involved in a relatively minor road traffic accident. For the year that followed that, I was phoned up on my mobile almost every week by people talking about the accident and trying to make me submit a claim for a neck injury. No matter how many times I told them that neither I nor my family had suffered any injury, they persisted in trying to incite me to commit fraud. Mr Townend, why were they doing that?

Rob Townend: I spoke a bit about it earlier: it is encouraging you to make a claim so they can access the cash. The referral fee ban that was put in LASPO obviously is not working. There are marketing fees available for people to attract you to make a claim. I agree with Mr Dixon and his earlier comment about regulation of claims management companies. Insurers and lawyers are heavily regulated; I would still like to see more regulation of the legal fraternity by the Solicitors Regulation Authority. The regulation around CMCs has been pushed back, I understand, to 2019. The referral fee ban has not worked. There is too much money still in the system and they will keep pestering. We know that. We have got a lot of examples where vulnerable customers are being contacted repetitively, like you were, until they make a claim.

[Chris Philp]

Q Am I right in saying that panel members are unanimous in their view that cold calls by CMCs should be banned?

Brett Dixon: Yes.

James Dalton: Yes.

Rob Townend: Yes.

[Chris Philp]

Q The panel is unanimous on that point.

You mentioned referral fees, Mr Townend. As you say, they were banned a few years ago. My understanding is that some organisations, including insurance companies, seek to circumvent the referral fee ban by entering into what they euphemistically term “alternative business structures”, where they essentially have some kind of equity stake in a claims management company and, effectively, get paid via their equity stake or similar arrangement, rather than an explicit referral fee. Is it the opinion of the panel that this practice, designed to circumvent the will of Parliament, is going on?

James Dalton: The referral fee ban is widely regarded as being relatively ineffective. The mechanism you have articulated is one of the ways people have chosen to get around that ban, including insurance companies and law firms, I would emphasise. That problem is addressed substantially by the reforms in this legislation, because what they do is take that money out of the system and, therefore, take out the incentive to try and circumvent a referral fee ban.

[Chris Philp]

Q Mr Dixon, do you want to add at all to that before I move on?

Brett Dixon: I will with an anecdote, more than anything else. I shared a similar experience to you where I had vehicle damage. I was not in the vehicle. It was in a supermarket car park and an older gentleman was kind enough to leave his details. I was pestered by my insurance company. I was even asked, “Are you sure you weren’t in the vehicle?” Take that on board.

If you have damage to your vehicle—your car that is insured—the first organisation that has access to knowledge that you have had an accident is the insurance company. They take referral fees for work—I am aware of that practice—and they also make a profit from referring such cases on. You only need to look at some of the reports that they make as part of the stock market requirements in relation to that.

Generally, if you take claims management companies out of the equation, you will remove one of the drivers. If you look at banning the practice of insurance companies and claims management companies referring work on, you go some way towards doing that as well. If you ban cold calls, for which the Association of Personal Injury Lawyers has been campaigning for some time, you remove the possibility of what I call the one-way bet and you are focusing then on the real problem, rather than on the genuinely injured person.

[Chris Philp]

Q Your mention of the one-way bet brings me to my next area of questioning. Take the example I experienced: had the recipient of that cold call been someone who was more open to temptation than I am and gone along with what the claims management company was suggesting, how would the claims management company have ended up making money out of an essentially bogus claim? They must be able to make money out of it, otherwise it would not be worth them soliciting the public.

Brett Dixon: It is the one-way bet analogy. If you then compound the problem by allowing an insured defendant to make an offer to somebody without seeing medical evidence, where are the checks and balances in the system? Bear in mind that a claims management company may be dealing with that, rather than a lawyer or a solicitor at that point. If you remove those two levers, those two drivers—the cold calling and the effect of a claims management company encouraging somebody to make it, and an insurance company then making pre-med offers without evidence of the actual injury—then you can deal with a lot of the problems that are inherent in the sector.

[Chris Philp]

Q Am I right in saying that under qualified one-way costs shifting, were an insurance company to take the choice to defend a claim, even if it were successful in defending that claim—if the claim was found to be without foundation—the insurance company would none the less bear both sides’ costs? Would it not further be the case that those costs would be substantially—probably by a factor of two or three—in excess of the value of the claim, and that is why for the past five, 10 or 15 years, insurance companies have simply coughed up without challenging the case? Perhaps Mr Townend might comment on that.

Rob Townend: Yes; I am one of the insurers who has been defending despite the costs.

[Chris Philp]

Q When you defend a claim and win, do you lose money?

Rob Townend: It depends on whether we then go for a costs order. We will try to if we think we will be successful in that. What is really interesting is that, in the model I operate, the only person I am paying as a result of an injury claim is the party who has been injured and their lawyer. How the CMC gets remunerated for that introduction, I do not really know. The only person I am paying cash to is the plaintiff and their lawyer.

[Chris Philp]

Q Presumably one of those two makes an onward payment to the claims management company?

Rob Townend: I do not know how it works.

[Chris Philp]

Q Mr Dixon, you practise in the area. How does the money get to the CMC—by magic?

Brett Dixon: I do not take any work from CMCs; I take the work from personal referrals. What I would like to do is to pick up on some of your questions.

[Chris Philp]

Q Before you do, you also represent the trade body representing personal injury lawyers, so you can answer in general terms. How does the money get from the claimant’s lawyers or the claimant to the CMC?

Brett Dixon: We do not recommend that any of our members interact with CMCs.

[Chris Philp]

Q I did not ask what you recommend, which I am sure is very virtuous; I asked what actually happens in practice.

Brett Dixon: I would not know what happens in practice because I don’t do it and our members are told not to do it either.

[Chris Philp]

Q They clearly do, otherwise CMCs would not exist.

Brett Dixon: We have a large membership but it is not all people who practise in the area. There may be areas where they are not APIL members where that practice goes on. To go back to your earlier point about the qualified one-way cost shifting and the effect of it, qualified one-way cost shifting was brought in to replace the after-the-event insurance policy, which was something insurance companies were making money out of.

Now, if a claim is not successful, then there are exceptions to the qualified one-way cost shifting rule. Take the example of the one-way bet, where someone has not actually had an accident. There would be two different provisions in the civil procedure rules whereby a defendant could get their costs paid. There would be fundamental dishonesty, and there would also be the fact that the claim would be struck out for being no cause of action, or an abuse of process. If there was no actual accident, then it is not a viable claim. It would be an abuse of process.

If the claim was successful, there is a provision in section 57 of the Act for them to recover in circumstances where there is a taint of fraud in relation to a fundamental, or large, part of the claim. If a defendant challenges a claim where there is evidence of fundamental dishonesty, or it is based on a one-way bet, there is a mechanism for them to be paid. It is a mechanism that is being used and, like any provision that you introduce into the civil procedure rules, the mechanism takes time for the courts to interpret and to bed in. However, there have been quite a lot of cases—at county court level, High Court level and some in the Court of Appeal—that are starting to shape how that works. The fundamental point is that, in those circumstances, there is a mechanism for a defendant to be paid for the costs they have incurred.

The final point you made was about the cost being two or three times the likely damages. If it is for a whiplash claim that is in the fast track, then that is fixed cost, so you will not get two or three times the damages. The only circumstances in which you would are if you have made a part 36 offer to the defendant and then gone on to do better than it. In other words, you offered to settle at an early stage and that offer was ignored. That is there to promote settlement between the parties and save court time.

[Chris Philp]

Q The phrase I have heard several of you use is this idea of a one-way bet. Given that it is a one-way bet, it is no surprise that the floodgates have opened in the past few years.

I would like to come on to the pre-med offer point, which is important. In clauses 64 and 65, legislation contemplates essentially banning pre-med offers where there has been a whiplash claim—a whiplash claim is defined as in clause 61. Would it not make sense, in relation to the banning of pre-med offers, to suggest that any personal injury claim in relation to a road traffic accident should involve a face-to-face medical examination, rather than just the whiplash claims, as currently drafted? Would that not be a much stronger way of ending the pre-med offer practice?

Rob Townend: From our perspective, absolutely. We would like to see a pre-med offer ban. In Aviva, we do not make any offers without a medical—again a decision we made—

[Chris Philp]

Q Are those face-to-face medicals?

Rob Townend: Yes.

[Chris Philp]

Q You are unusual in doing that, are you not?

Rob Townend: Yes, we are pretty unusual doing that. We looked at the overall system and said, “We do not want to feed it”. We wanted to make sure we have medical evidence around the settlements we make, and that we then follow through and defend those if we think the injury is not in line with either the accident—

[Chris Philp]

Q So the suggestion I just made is in line with your current practice, and it would effectively force the rest of the insurance industry to adopt the very commendable practice you are already adopting voluntarily?

Rob Townend: Yes, I think: do not pay a claim without medical evidence, whether that is a motor accident or a liability claim in the commercial courts.

[Chris Philp]

Q Mr Dixon, are you happy with that?

Brett Dixon: Very short and very simple: yes, ban it in all personal injury claims. Pre-med offers should not happen.

[Chris Philp]

Goodness me, there we are! A further usual outbreak of unanimity.

Rob Townend: There is one point to go back to. Do not end with a system with your current definition of whiplash that excludes back because, unless you do that, you will have no pre-med offers—

[Chris Philp]

Q There are two operative provisions in the Bill. One is in relation to the fixed tariff, and one is in relation to pre-med offers, and one might treat them slightly differently.

In relation to the definition of whiplash in clause 61, my colleagues have asked about this already but, having read your submission to the Committee, Mr Dalton, I think I am right in saying that you are concerned that the definition in clause 61(1) is too narrowly drawn. In particular, it excludes the back, and you are worried that there will be a sudden miraculous upsurge in people with bad lower backs.

James Dalton: Absolutely correct. I repeat the point I made earlier: getting the definition right is absolutely critical to ensuring the success of this legislation, in terms of delivering the outcome that the Government have articulated that they want to achieve. At the moment, I am concerned that by excluding back you will see a surge in back claims that are not covered by this legislation.

[Chris Philp]

Q To be clear, we have heard a figure of £1 billion a year of savings mooted in the past. If we adopt the definition as drafted, in your opinion what proportion of those estimated savings will in fact be realised?

James Dalton: I think you said earlier that Aviva’s figures suggest that 60% of the claims are probably going to be excluded, so take away 60% of £1 billion.

[Chris Philp]

Q The final question I would like to ask is about a matter I understand might be introduced into the Bill at a later date, which is to do with the discount rate used when paying claims for long-term injuries. It has recently been amended by the Lord Chancellor from, I think, 2.5% down to minus 0.75%. I would like to close by giving each of the panellists an opportunity to comment on that move and the impact it may have on the wider public.

James Dalton: The decision to reduce the discount rate by 325 basis points has imposed substantial costs on the insurance industry. By “substantial”, I mean to the tune of about £6 billion. That is about 60% of the annual claims cost of motor claims. That cost simply cannot be absorbed; it must be passed on to consumers. Premiums will inevitably rise as a result.

A number of firms have indicated in the public domain that that is the case. The Government need to put out the consultation they said they would produce so people can address the principles underpinning how a rate is set. At the moment, it is linked to Government bonds. No one goes and buys Government bonds. It makes assumptions that 100% of a claimant’s damages are invested in one asset class. No rational investor would do that. So the fundamental underpinnings of how the discount rate are set are fundamentally wrong, and we need to address that.

[Chris Philp]

Q In the absence of any change, what is your assessment of the percentage impact on the average car insurance premium in this country?

James Dalton: It will go up significantly. I think the impact on young drivers is going to be particularly bad, because those are the customers who are most likely to have catastrophic injuries. It is estimated that their premiums could increase by £1,000.

Rob Townend: I will not say a lot that differs from what Mr Dalton has said. We have got to sort out the methodology for setting out the discount rate, because I think nobody would say that it fits the current world, either from an investment return point of view or from the point of view of looking after those who are seriously injured.

The fact that there are so many variations of the potential solution that the Lord Chancellor could have chosen tells you that the mechanism does not work. At the moment, while the consultation is happening, there is a world of uncertainty around what will happen in the future. I think it is in everybody’s interest to get clarity around a longer-term rate that can be as formulaic as possible and looks after the long-term interests of those who are seriously injured while looking at the longer-term investment returns that lump-sum payments can achieve. We just plead that the consultation is got on with quickly. We would love to see the piece of legislation that it could be put into.

Brett Dixon: It is important to understand that you are dealing with issues at two ends of a different spectrum. You are talking about a whiplash claim, and in the same breath, in terms of the discount rate, you are talking about the catastrophically injured person. The important point in relation to that is that, first, the insurers have known for some time that this change was coming. It was long overdue. For a number of years they have made provisions in their own accounts for this, so to suggest that this has come like a bolt out of the blue is disingenuous.

Secondly, the changes are to ensure that a seriously injured person has sufficient moneys available to make provision for their future needs because of somebody’s negligent act. A lot of it is about care. If you are not making sure the person who did the damage is paying via their insurance policy, it will be the NHS and the taxpayer who ultimately have to foot the bill to look after that seriously injured person. What you will not change by changing the mechanism for the discount rate is the fact that that person is seriously injured and needs that care. It is right for society that the person who did the damage should foot the bill, not the taxpayer.

Insurers knew this was coming. I hear a lot of talk about how you cannot buy Government gilts. Because of the mechanism chosen in the Damages Act 1996, the person who is investing their money does so on the basis that they are taking a no-risk investment. That is why that is there. There are no other no-risk investments available. If you want a judge to calculate damages, he has to have a methodology and a starting point.

James Dalton: No one is arguing about whether these claimants need the support that an insurance company is going to provide. No one is saying that these people should get less money. What we are saying is that the formula for setting the rate, which is now 20 years old, needs to be updated to take into account the fact that it is linked to Government bonds and assumes 100% compensation. These things do not just happen in practice.

[Sir Oliver Heald]

Q I do not know if Mr Dixon and Mr Dalton would agree that the Lord Chancellor has had to exercise her duty in a quasi-judicial way under the existing mechanism as it stands. It is right for this to be a consultation about the future, but that was the law. Do you agree?

Brett Dixon: I agree entirely. The Lord Chancellor made the decision that she was legally required to make. She was exercising a quasi-judicial function when we made the reforms, introduced the Supreme Court and made other changes. That role was retained by the Lord Chancellor, even though setting damages is properly a judicial function.

James Dalton: I do not agree. The Government undertook consultation exercises in 2012 and 2013 specifically asking questions around whether the regulatory framework for setting the discount rate was right. Indeed, there is going to be a consultation now asking similar questions. To me, that suggests that the Government do not think that the framework is right. In that context, it also suggests that the decision that the Lord Chancellor has decided to take, based on legal advice, is questionable. I do not think that the way that she has taken that decision is right.

Prisons and Courts Bill

Chris Philp Excerpts

2nd reading: House of Commons
Monday 20th March 2017 Commons Chamber

[Elizabeth Truss]

The hon. Gentleman will have noticed that we have changed the figures in response to the consultation document. Those were judged to be fair and reasonable for the level of injury that we are talking about in this case.

[Chris Philp (Croydon South) (Con)]

I strongly welcome the provisions in the Bill to clamp down on whiplash fraud. Will the Lord Chancellor consider widening very slightly the definition of “whiplash injury” in clause 61 to include injuries to the lower back as well as the upper back?

[Elizabeth Truss]

That issue was covered in the consultation, and we have brought it back after listening to what people fed through in the consultation. The Bill will end the unfairness of higher premiums for motorists while ensuring that fair compensation remains available for genuinely injured claimants.

The Prisons and Courts Bill will usher in a new, modern era for our prisons, courts and justice system. It will do three key things. It will ensure that our prisons are places of reform so that offenders have the skills they need to return to society, to secure employment and to turn their back on crime. It will create a courts and tribunal system that protects the most vulnerable and is more straightforward and accessible for all. It will also enable the judiciary to meet the demands of a modern justice system and enhance our reputation for legal excellence around the world. I commend the Bill to the House.

Access to Justice

Chris Philp Excerpts

Wednesday 11th January 2017 Westminster Hall

[Rob Marris]

I entirely agree. It is little use having rights if one cannot afford to enforce them. That entrenches inequality.

The consultation came out under the rubric of whiplash. I have to say to the Minister that the consultation somewhat sneakily was announced on 17 November and closed on 6 January. That is a short consultation period over Christmas, which is not helpful.

The Government’s own figures on the whiplash proposals, which may well be a gross underestimate, suggest that if implemented, they will see the NHS lose at least £9 million a year and the Treasury lose £135 million a year. But here is the stinger: insurance companies will get at least £200 million more per year. That is likely to be an underestimate. That figure is due to a methodology that is biased towards insurance companies and has been severely questioned by the Association of Personal Injury Lawyers, of which I think I used to be a member.

The methodology for who gains and who loses under the proposals counts as a gain the extra moneys that insurance companies will get but does not take into account the loss to solicitors. We can all weep crocodile tears about solicitors, but when talking about commercial arrangements, if we are looking at them dispassionately, we have to weigh in the balance where one commercial sector gains and another loses.

[Chris Philp (Croydon South) (Con)]

Will the hon. Gentleman join me in welcoming the UK’s largest insurance company’s commitment to pass on in full any savings realised to consumers? That means, I hope, that the transfer of value, if it occurs, is from the personal injury law community to everyday consumers.

[Rob Marris]

I will get on to that. It is interesting and a great declaration, but of course other changes in the past five years or so have led to an increase in insurance company savings of £8 billion in claims costs. That has not been passed on in terms of reduced premiums, which have continued to go up, so I will believe it when I see it. The Government’s own calculations suggest that at least 90% of the money has to be passed through—the term for returning money to policy holders—for there to be any benefit at all.

--- Later in debate ---

[Rob Marris]

It cannot be because the Minister has the figures wrong. The Government’s compensation recovery unit indeed talks of 771,000 claims in round terms, of which 441,000 are for whiplash. That figure has come down by 7% since 2011-12. The overall figure is already coming down, so it is not going in the direction the Minister thinks it is and perhaps he will rethink the proposals.

The ABI says that its statistics

“are therefore intended to provide an indication of the volume and value of fraud detected by the industry. These statistics do not include claims which involve exaggerated personal injury, particularly for whiplash, where the claim has been paid.”

However, it also says that insurers pay out on 99% of claims, so apparently we are talking about the 1% and that is what all these assumptions are based on. That is not a good basis for creating public policy.

[Chris Philp]

Does the hon. Gentleman agree that the qualified, one-way costs-shifting arrangements that were introduced three or four years ago, whereby the defendant bears their own costs, even if they are successful, creates a perverse incentive for insurance companies to settle claims even when they have a very good prospect of defending them?

[Rob Marris]

That regime was introduced as part of other changes which have led to £8 billion more for the insurance companies. One must look at the matter in the round.

The ABI says:

“Previous reforms aimed at tackling the compensation culture have not had the desired effect because claims frequency has not been addressed. As such, the removal of general damages for minor soft tissue injuries is by far the most effective way to address claims frequency.”

What sort of minor injuries are we talking about? The Law Society helpfully provided me with some examples from a public briefing:

“A fractured rib (up to £3,300)”—

that is well below the £5,000—

“Food poisoning symptoms continuing for weeks (up to £3,300)”—

[Chris Philp]

Will the hon. Gentleman give way?

[Rob Marris]

No, I will not. The Law Society continued:

“Neck injuries lasting”

for up to

“12 months (Maximum £3,630)… Back injury lasting up to 3 months (up to £2,050)… Minor wrist fracture (£3,960 maximum)”.

I would venture that such injuries would not seem minor to most of our constituents. Most of them would not say a broken wrist was minor. [Interruption.] Well, they certainly would not in a Labour constituency; perhaps they would in Conservative constituencies. [Interruption.] The Minister is chuntering, “It’s not whiplash”; part of the problem is that the proposals in the consultation paper do not cover just whiplash, with which, I have said, there is not a problem. They cover all personal injuries, including accidents at work. Someone who breaks their wrist at work would not be able to instruct a solicitor, but they would almost certainly have to get a medical report and so on. I just do not think that these are what most of my constituents would call minor soft tissue injuries.

That is one reason why the Law Society has come out against the proposals, saying that:

“the government does not appear to have a robust evidential basis for undertaking the reform”.

So, too, has Cycling UK—it used to be the CTC or the Cyclists’ Tourist Club—which says:

“This change doesn’t target whiplash claims or claimants: it impacts most on those who end up in casualty with broken limbs due to the negligence of others.”

It talks about

“A reform which denies”

the injured

“justice, and sends a message to motorised road users that vulnerable road users’ injuries are a trifling matter”.

The Government have said in their propaganda that most road users have legal expenses insurance as part of their car insurance policy—I do not—so they will be able to get legal representation under that policy. That may be true for many if not most car drivers, but most of us cyclists do not have such insurance, nor do most pedestrians. That is why Cycling UK and its partners—RoadPeace, a national charity for victims, and Living Streets, a national charity for everyday walking—have come out against these changes.

[Chris Philp]

Will the hon. Gentleman give way?

[Rob Marris]

No, I will not. I have already given way to the hon. Gentleman. I was going to talk about employment tribunal fees, but I have taken up quite some time, and some of my colleagues wish to talk about that. Of course, employment tribunal fees have dissuaded huge numbers of people from bringing employment claims. If the Government really think that 67% of previous claims were frivolous—that is how much the figure has dropped by—they are living in a different world from me. Again, the Law Society, which of course has a vested interest, is against those fees. It said:

“In our members’ experience the remission system”—

for remission of fees for those who cannot afford to pay tribunal fees—

“is confusing, uses complicated language, and is hard to navigate”,

and that is for Law Society members, who are solicitors, let alone the lay person who may have just lost their job and perforce be broke. Only 21% of claimants—far fewer than the Ministry of Justice predicted—have benefited from any fee remission at all. Early conciliation was put forward as another approach, but ACAS says that 70% of claimants who entered into early conciliation did not reach a formal settlement.

--- Later in debate ---

[Chris Philp (Croydon South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies, particularly given your previous association with Croydon.

I would like to talk specifically about the Government’s consultation on whiplash claims, and the reason for that is an experience that I had two or three years ago. After a very minor road traffic accident in which no one was injured, I was bombarded with phone calls to my personal mobile every week for about a year from a claims management company. It explicitly asked me to pretend to have an injury that did not exist in order to claim compensation.

I have no issue with the more general points that the hon. Member for Wolverhampton South West (Rob Marris) makes about access to justice and the court system. I am talking specifically about whiplash. It is as a result of practices such as the one that I have described that this country has more than two times more whiplash claims than the rest of Europe, and the total number of claims for soft tissue injuries— whiplash and neck and back—has been static, at about 800,000, for the last few years.

One reason for that is the perverse incentives in the system. As I mentioned in an intervention, under qualified one-way costs shifting, when a claim is made, even if the defendant—the insurance company—is successful in defending the claim, it must bear its own costs, which are quite often up to £10,000, so it is easier for the insurance company to stump up £3,000 in insurance and pay some costs to the prosecuting or claiming solicitors firms—some of those costs go to the claims management company—than to dispute the claim. That is why claims here have grown to proportions that are vastly higher than obtain in the rest of Europe and why, as my right hon. and learned Friend the Minister said, at a time when accidents have declined by 30%, claims have gone up by 50%.

In The Sunday Times a year or so ago, there was a shocking report about a company called Complete Claim Solutions—one of the most notorious CMCs, which makes 7 million outbound cold calls a year. Its trainers were covertly recorded by The Sunday Times encouraging or telling—instructing—its staff to get the public basically to lie and make fraudulent claims. I have myself been on the receiving end of those phone calls.

On the point made by the hon. Member for Wolverhampton South West about broken bones, I have looked at the consultation document, and it specifically refers to soft tissue claims. I fully accept that where a cyclist or motorist has broken a rib, wrist or leg, their claim is perfectly valid and verifiable and should be allowed to proceed. We are talking about soft tissue injuries, where there is no objective medical evidence other than the claimant’s own claim. Those claims add, I believe, about £40 to everyone’s motor insurance policy, but more worryingly in my view, they are morally corrosive because large numbers of the public are being incited to commit fraud. That is a bad thing for the fabric of our society.

[Rob Marris]

The Government’s press release announcing the consultation on 17 November said that measures include

“raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000”.

It said nothing about soft tissue injuries.

[Chris Philp]

Well, certainly the consultation document refers on its front page to soft tissue injuries. I am sure that the Minister will consider how that might apply to broken bones, but the title of the consultation refers to soft tissue injuries only.

In my response to the Ministry of Justice consultation, I made a number of proposals, several of which I would like to elaborate on here. I believe that there should be a blanket ban on outbound cold calls in relation to soft tissue injuries. There should be a ban on pre-medical offers. Insurance companies should be required to conduct face-to-face medical examinations, and those examinations should produce independently verifiable evidence. That should be more than just someone saying, “My neck hurts.” The injury should be capable of verification by a third party, so in the case of a broken bone, that would clearly involve an X-ray.

I believe that there should be a ban on general damages for minor soft tissue injuries—not broken bones, but minor soft tissue injuries, where there is no evidence of the kind to which I have just referred. For those injuries, I fully support a threshold of £5,000.

There should also be a duty on claims management companies and solicitors to explain explicitly to prospective claimants that fabricating evidence is an unlawful act. They currently do the reverse; they actually encourage false claims. The Ministry should look again at qualified one-way costs shifting, because it creates a very perverse incentive for insurance companies to settle even when they could win a case in court.

On the point raised by the hon. Member for Wolverhampton South West about where the money ends up, I think that the saving could be more like a billion pounds a year, not £200 million. I would expect that to be passed on to ordinary members of the public and not pocketed by insurance companies. Aviva has committed to do that, but if, after a year, it turns out that the insurance companies have simply pocketed the extra money and not passed it on, I would expect the Competition and Markets Authority to be encouraged by the Government—or even required, if the Government have that power—to conduct an investigation to make sure that those savings are passed on to the hon. Gentleman’s constituents and mine. I do not expect these savings to end up in the back pockets of the insurance industry.

I would also like to see another practice ended. Again, this is a point for the insurance industry. A few years ago, there was a ban on referral fees, which is money that a claims management company would pay an insurance company to hand over the details of somebody who had been involved in a motor traffic accident. They are circumventing that ban through what they call alternative business structures. That is where the insurance company has some form of equity or profit share stake in a claims management company, the details still get passed on, and the insurance company effectively gets paid via the equity stake as a means of circumventing the referral fee ban. That is clearly an abuse and we should take steps to end it.

Finally, there are many examples of insurance companies procuring services such as car hire, legal services or vehicle repair services very cheaply, and they get recharged to the at-fault party’s insurance company at a significantly marked-up price. That is profiteering and, again, steps should be taken to prevent it happening.

In summary, I very strongly support the measures proposed in relation to soft tissue injuries. They will end a whole cottage industry that is morally corrosive because it is encouraging huge numbers of people to commit fraud, and costing our constituents £40 each per year, per car insurance policy. I welcome these proposals. I hope to see them brought on to the statute book at the earliest opportunity, and look forward to supporting them on the Floor of the House when that happens.

Oral Answers to Questions

Chris Philp Excerpts

Tuesday 6th December 2016 Commons Chamber

[Elizabeth Truss]

The hon. Lady will not have to wait long before we release the Charlie Taylor report and the Government’s response, which will explain how we will improve outcomes in youth justice.

[Chris Philp (Croydon South) (Con)]

In February this year, 21-year-old Croydon resident George Beresford was knocked over and killed by a drink-driver. Because the police and the Crown Prosecution Service were unable to prove that the drink-driver was also driving carelessly, he received only a relatively short driving ban, rather than a custodial sentence. I thank the Under-Secretary of State for Justice, my hon. Friend the Member for East Surrey (Mr Gyimah), for agreeing to meet the family this afternoon, but does he agree that the case should be considered as part of the consultation on driving offences, and that when a drink-driver kills someone, a custodial sentence is appropriate irrespective of whether careless driving can be proven?

[Mr Gyimah]

Our consultation proposals make it very clear that when a driver has consumed drugs or alcohol and then kills someone, and if there is sufficient evidence to charge that driver with careless or dangerous driving, he or she could face a life sentence. Obviously it is for the Crown Prosecution Service to prosecute on the basis of the evidence, and it is for the courts to hand down the relevant sentence. I look forward to discussing the details of that specific case with the Beresfords later this afternoon.

Oral Answers to Questions

Chris Philp Excerpts

Tuesday 26th April 2016 Commons Chamber

[Chris Philp (Croydon South) (Con)]

20. Does the Minister share my concern that car insurance premiums are £93 a year higher than they need to be thanks to fraudulent claims, and that claims here are orders of magnitude higher than in Europe? Does he agree that the new limit will go a huge way towards combating this costly and invidious practice?

[Mr Raab]

My hon. Friend is absolutely right. As we move forward to the consultation and take into account all the evidence, the key thing is to make sure that there is proper access to justice but also that we cut the cost of insurance premiums for consumers. That is what we intend to do.

--- Later in debate ---

[Chris Philp (Croydon South) (Con)]

T8. What steps are the Government taking to identify and remove preachers who are radicalising prison inmates?

[Michael Gove]

My hon. Friend draws attention to an important issue. Shortly after being appointed, I asked Ian Acheson, a former prison governor with experience of working with the Home Office, to consider radicalisation and extremism in our prisons. He recently submitted a report to me, and we will be acting on it and publishing it shortly.

Oral Answers to Questions

Chris Philp Excerpts

Tuesday 8th March 2016 Commons Chamber

[Mr Raab]

We have more than 100 bilateral prisoner transfer agreements, as well as Council of Europe and Commonwealth schemes. If the hon. Gentleman wishes, I can write to him in due course on the particular numbers under the Albanian agreement.

[Chris Philp (Croydon South) (Con)]

Does the Minister agree that the deportation of foreign national offenders is in some cases inhibited by the operation of the Human Rights Act? If so, will the Minister update the House on plans to repeal it and replace it with a British Bill of Rights?

[Mr Raab]

My hon. Friend is absolutely right. One specific issue we want to look at in some detail is the scope to which our Bill of Rights can facilitate the removal of serious offenders, particularly when they have relied on their rather elastic, opaque and ever-expanding rights under article 8. The removal of serious offenders is made even more difficult because of the Human Rights Act. Our proposals will be coming in due course.

Draft Occupational Pension Schemes (Scheme Administration) (Amendment) Regulations 2016

Chris Philp Excerpts

Thursday 3rd March 2016 General Committees

[Angela Rayner]

We may laugh, but it will hardly be amusing to someone who finds their employer has invested their pension with a dubious scheme and without safeguards. Alarmingly, the programme also cited one industry expert who suggested that only around 10 existing master trust schemes could be considered completely safe and reliable. There is a view, therefore, that strengthening the requirements to enter the market, such as with authorisation or licensing, should filter out the least desirable operators. We would like to know more about the regulatory framework within which the Minister envisages today’s regulations will sit.

This issue was raised by my hon. Friend the Member for Wolverhampton South West (Rob Marris), who, as shadow Financial Secretary to the Treasury, represented the Opposition during the Committee stage of the Bank of England and Financial Services Bill. The Economic Secretary to the Treasury responded that the Government would bring forward regulations as soon as practically possible. Can the Minister tell us today what discussions the Department for Work and Pensions has had with the Treasury about that legislation and give us an update? Perhaps he will tell us how such legislation relates to the comments of his colleague, the Minister of State for Pensions, in the press on 1 March. She complained that the Government would not give the Department parliamentary time for pensions legislation specifically in relation to master trusts. She said:

“We need legislation and have been bidding for a bill, a pensions bill but it has been refused. It was refused at the end of last year and it has still not happened…I am hoping we will get one because we can’t do anything properly without it.”

We seem to be in the extraordinary position of the Minister for Pensions admitting that she cannot do anything properly on this issue because she cannot get parliamentary time from her own Government, whose legislative agenda is hardly full. However, this seems to be flatly contradicted by the remarks of the Economic Secretary, so is the Treasury more up to date on pensions policy than the Minister for Pensions, or is that just where the power lies in this Government? Perhaps none of them knows what is going on.

If the Minister knows anything about his own Department’s legislative agenda, perhaps he would clarify whether we can expect a Bill and, if so, when. There are a number of questions about the regulatory framework on which it would also be helpful to hear his views.

[Chris Philp (Croydon South) (Con)]

With great respect to the hon. Lady, whose comments are interesting, we seem to have strayed a long way from the regulations before us. Does she plan to get back to the matter at hand in the near future?

Personal Injury Fraud

Chris Philp Excerpts

Wednesday 18th November 2015 Westminster Hall

[Chris Philp (Croydon South) (Con)]

I congratulate my hon. Friend the Member for Lincoln (Karl MᶜCartney) on securing today’s debate. I was keen to speak today because of a personal experience. A year or two ago, my wife and I were involved in a relatively minor road traffic accident on the M5. The car had some damage, but there was certainly no question of any personal injury. Despite that, my wife and I were bombarded on a more-than-weekly basis with phone calls and text messages that continue to this day.

I was annoyed and upset, not by the pestering, but by the person on the other end of the phone trying to coerce me into pretending that I, my wife or my children, who were also in the car, had suffered some form of personal injury when we had not. No matter how often I said, “We’re all absolutely fine. None of us has suffered any injury,” they would say things like, “I’m sure that you must have suffered some slight injury,” or, “You must feel a bit unwell,” or, “All you have to do is say you have a slight neck pain and I can get you £3,000.” I was being incited to commit blatant fraud. I am not alone in that experience. In fact, several other Members of Parliament have had similar experiences, as have friends and family outside the House.

I am appalled and outraged that in this country in 2015, companies encourage our citizens to commit fraud, and that so many of our citizens are going along with it because the system makes it easy, and pays them £3,000, £4,000 or £5,000. The first reason why I find the practice so objectionable is that it is morally corrosive. It encourages law-abiding citizens to commit a criminal offence. My hon. Friend touched on many of the other reasons why it is a terrible practice, and I want to reinforce one or two of them.

Most importantly, each and every one of our constituents, many of whom are hard-pressed financially, are paying almost £100 a year in extra insurance premiums because of this fraudulent activity. Families can ill afford that sort of money, in particular people on lower incomes. It is striking that despite the number of road traffic accidents having gone down by 30% in the past 10 years, injury claims have gone up by a staggering 62%—an extraordinary explosion. The total cost is £2.5 billion a year, which is a significant sum. Many honest businesses, such as Enterprise Rent-A-Car, which my hon. Friend mentioned, are struggling; its business model is under genuine threat, because car rental businesses have such a big cost imposed on them as a result of fraudulent claims that are damaging honest, law-abiding businesses.

The case for urgent reform is clear. I have six specific proposals for the Minister and will be grateful for her response. I am delighted to see that my hon. Friend the Member for Newark (Robert Jenrick), the Parliamentary Private Secretary to the Secretary of State for Justice, is present. I hope that he will pass some of our comments on to the Secretary of State.

My first recommendation or request echoes something my hon. Friend the Member for Lincoln said; it is for a complete ban on outbound calling to solicit personal injury claims, and on the use of information obtained from such calls. Work has been done to regulate that more carefully over the past five or 10 years, but I respectfully suggest that it has not so far had the desired effect. The only way to fix the problem is to have an outright ban on outbound calls, and on solicitors’ firms using the output from the calls; conceivably, someone could make a call from Bermuda, but sell the information to a law firm in Manchester.

I also echo my hon. Friend with my second request, which is that we pursue with criminal charges any claims management firm, solicitor or member of the public found to be making a fraudulent claim. In the hierarchy of criminal activity there are more important things for the CPS and the police to focus on, but the abuse is so widespread and £2.5 billion a year is such a large sum that we should actively pursue people through the criminal justice system. Until criminal sanctions are applied to the activity, there is no disincentive, and people will keep on trying to do this.

My third recommendation or request is that, for injuries to be compensated, there should be evidence that the alleged victim went to a doctor or sought medical advice within, say, a week of the injury being sustained. People turning up a year later and saying that their neck hurts is ludicrous if, when the accident happened, they did not seek medical assistance immediately. That would be a good way to cut out almost all such claims. If the claimant did not see a doctor within a week of the accident, I suggest that the claim simply be disregarded.

My fourth suggestion is that we use the system adopted in Germany and Canada, which have firm and objective sets of criteria. At the moment claims are being satisfied without someone having to produce any evidence except to say, “My neck hurts a bit.” Without further evidence, no cash compensation should be paid—no evidence, no compensation.

My fifth suggestion again echoes something my hon. Friend said—we seem to think alike on the topic—and that is that the claim limit be 12 months, rather than the current three years. My sixth and, as I am sure the Minister will be pleased to hear, final suggestion is that the limit for lawyers getting involved on a no win, no fee basis be increased from £1,000 per claim to £5,000. It has been at the £1,000 level for 16 years, and an increase is long overdue.

I am grateful for having had the opportunity to speak. I again thank my hon. Friend for the debate. I thank the Minister for listening attentively, and I will be grateful to hear her response to my six points.

--- Later in debate ---

[Andy Slaughter (Hammersmith) (Lab)]

I, too, congratulate the hon. Member for Lincoln (Karl MᶜCartney) on securing the debate. The subject is not totally unfamiliar; indeed, it was debated quite a lot in the last Parliament. I refreshed my memory earlier about a debate we had almost exactly two years ago—on 7 November 2013—entitled “Motor Insurance (Whiplash)”. I spoke for 30 minutes in that debate, and I refer hon. Members to that speech to spare them from having me repeat the whole of it now. Much of it is still relevant, which is sad in a way, and that might be an indictment of the Government for not having done more. Perhaps we can blame that on the coalition, which was a completely different organisation—there are no Liberal Democrats around to protest any more, so we can always blame them.

I dealt with this issue for five years, and I thought I had finally got rid of it, but my hon. Friend the Member for Kingston upon Hull East (Karl Turner), who is responsible for dealing with it, is away somewhere, so I am reprising the subject. The last time we debated it, the Under-Secretary of State for Justice, the hon. Member for North West Cambridgeshire (Mr Vara), had just taken over the brief, and now the current Minister is acquainting herself with it. It is an interesting subject, and perhaps I may say without any disrespect to the hon. Member for Lincoln that there was good and bad in what he said. I was with him for much of his speech, until at the end he drew conclusions that did not all perfectly derive from the facts at his disposal. One of the problems is that we do not always have the facts that we need on this issue.

I think we all detest cold calls, because we believe they are parasitical, and they are severely irritating. As far as I am aware, cold calls from law firms are already banned. Many of the cold calls that we receive come from call centres run outside the UK, which have become an industry in themselves. I do not think a single Member of the House, or indeed member of the public, would not want a crackdown on them, and want them to be banned and excluded. The problem is that it is difficult to do that, but I hope that the Minister will be able to say what the Government intend to do along those lines.

[Chris Philp]

Even if one cannot ban calls emanating from outside the UK, there could certainly be a ban on any UK organisation, including law firms, using information derived from such extraterritorial calls. Will the hon. Gentleman join me in calling on the Government to institute such a ban?

[Andy Slaughter]

As I have said, I believe that calls made in that way are banned. I will come on to say a bit more about law firms in a moment, but I think that would be the case for any such form of abuse.

The other area where I am entirely at one with the hon. Member for Lincoln is on referral fees. Again, the previous Government came to the issue late in the day. There were late amendments—on Report, I think—to the Bill that became the Legal Aid, Sentencing and Punishment of Offenders Act 2012, banning referral fees. We thought that that did not go far enough and would have liked them to be criminalised. I am afraid that the implementation by the Ministry of Justice was rather cack-handed and amateur for a while. That is getting better, and there has been a crackdown on claims management companies, which I welcome, as well as an extension of the ban on referral fees. Referral fees do not have any place in the British legal system. Those are the key ways of stopping such abuse.

The percentage of personal injury claims being made for whiplash has fallen, but Members are right to ask why the number of personal injury claims is increasing while the number of motor accidents is falling. One reason, undoubtedly, is greater use of advertisement, which encourages more people to claim. That does not necessarily mean that the claims are fraudulent, but it does mean that there is an industry encouraging the making of claims.

Thus far, so good, but the hon. Gentleman suddenly shoehorned into the end of his speech the conclusion that the small claims limit for personal injury should be extended to £5,000, the limitation period should be 12 months, and the quantum in such cases should be rigidly enforceable. I am afraid I cannot agree with him on that. It would be to attack a basic principle of English law—the principle of the courts’ discretion.

We already have clear Judicial Studies Board guidelines on quantum. There are reasons for the relatively short limitation period of three years. The hon. Member for Lanark and Hamilton East (Angela Crawley) mentioned that injuries are not always immediately evident. As for the old chestnut about raising the small claims limit to £5,000, I am entirely in agreement that after 16 years, if that is how long it has been, it is right to raise the limit proportionally by whatever the inflation rate has been during that time. It might mean taking the limit up to £2,000 or something of that order. Raising it to £5,000, however, would exclude 90% of all personal injury claims. For someone on a low income in particular, £5,000 is a substantial amount of money, and it is wrong for people in that situation not to have the benefit of legal advice. I see an ABI agenda there—that is what it always wants. Insurance companies are particularly keen on effectively taking lawyers out of the personal injury process, so that the relationship is between the victim and the insurer.

--- Later in debate ---

[Andy Slaughter]

I do not want to argue about statistics endlessly, given that part of my argument is that the statistics are not robust. I am sure that the hon. Gentleman looked at the briefing for the debate by the Law Society, which is of course the professional body for solicitors. There are concerns that insurers use figures about levels of fraud as it suits them.

The point that concerns me is that the remedies that insurers resort to are, in some cases, more likely to encourage fraud. The principal one is third-party capture. There is an increasing trend for insurers to contact victims directly, offer a settlement and discourage them from contacting solicitors—and, if they have contacted them, to ask for information about that. They are not entitled to that information, but rather in the manner of claims managers who, as we have heard, use bullying behaviour to try to substantiate fraudulent claims or exaggerate claims, I am afraid insurance companies increasingly approach people in the same way, to try to get a quick, early settlement without medical reporting or professional advice. That may well minimise the value of the claim—I have no doubt that that is the intention—so someone who has a genuine and possibly quite serious injury may settle for a relatively trivial sum of money. However, it may also encourage fraud, because if there is no medical report or lawyer to act as an arbiter of whether a claim is genuine, the insurer, for commercial reasons, might settle a claim that could well be fraudulent. We should be worried about the growth of third-party capture, which would undoubtedly be massively encouraged if small claims were lifted disproportionately.

I am not saying that there is not bad practice by law firms, because there certainly is. I am talking not even about dubious practice, but about sharp practice in marketing skills. However, as one would expect, the overwhelming majority of solicitors act in a proper and professional manner. They have the ability, through the askCUE system, to determine whether someone who comes to them with a claim has claimed previously, and they are encouraged to make such checks to see if that is happening.

I sound a note of caution not because I think that anything raised by the hon. Member for Lincoln is inappropriate. It is just that, as in many things, there is a balance to strike. I was glad to hear the hon. Member for Lanark and Hamilton East speak about victims. Let us not forget them in this case. Political parties often speak up for victims of crime, but victims of accidents are also victims. I would not want to throw the baby out with the bathwater and say that genuine victims of accidents should not get access to justice or be properly remunerated.

I baulk at the constant refrain about a compensation culture. Time and time again it has been shown, including by the Government’s own experts, that no such culture exists in this country. On the contrary, recent consumer surveys have shown that only 17% of people say that their default position would be to seek compensation after receiving poor treatment. I do not think it is naturally British to think that, as a consequence of poor treatment or customer service or even an injury, the first thing one would do is immediately go to claim compensation.

[Chris Philp]

The hon. Gentleman may well be correct, but the problem is that ordinary, law-abiding citizens are being harassed and incited by claims management companies to invent claims—I stand here today because I am one such person. That is why the Government need to go beyond the action they have taken already. I hope that he agrees, given that he used to practise personal injury law.

[Andy Slaughter]

I did indeed practise personal injury law, but, for the avoidance of doubt, I should say that 90% of my practice was for insurers, so I do not think I can be accused of parti pris. I can see it from both sides of the fence, and if I am talking about claimants and victims, that is just to give a bit of balance to the debate.

I entirely agree with the hon. Gentleman, and I hope that, when we hear from the Minister, we will hear what is being done specifically to crack down on those calls. I do not want to put the hon. Gentleman on the spot about whether, in his case, he was able to report to either the MOJ or the police that he was being suborned in such a way, but I hope that people do that. If there were a couple of high-profile cases, perhaps instigated by Members of Parliament, in which pestilential claims management companies and cold callers were held to account, that would be a tonic for reducing the practice substantially. If the Minister can shed any light on what the Government can do on enforcement, I will be pleased to hear that.

We must look at both sides of the argument. We have to take action based on evidence, and we have to realise that there are many vested interests. Yes, the claims management companies have interests and we must be on guard against fraud, but we must also be aware of the interests of the insurance industry, which are not always at one with those of the motorist or consumer. It does not always follow that what the industry asks for is beneficial not just to victims or potential victims, but to motorists as a whole. I hope that we can crack down on fraud and relieve the consumer of the burden of calls—I get them myself on many issues—but I also hope that, on this as on other matters, we will bear in mind that the interests of victims and those with meritorious claims for personal injury should be respected.

--- Later in debate ---

[Caroline Dinenage]

If the hon. Gentleman will hold his horses for just a moment, I will move on to some of those issues. MedCo has introduced a robust new accreditation scheme for medical experts, who need to attain accreditation by 2016 or they will be removed from the system. We hope that that will begin to take effect, but a further reform to control fraudulent claims at source was implemented on 1 June 2015, as he will know. Claimant lawyers were given access to insurance industry data and must now check the number of claims their potential client has made before accepting the claim.

The Government are particularly pleased that stakeholders put aside their differences to develop a consensus on sharing data and improving medical evidence. Such a consensus can only be positive for all involved and we look forward to continuing to work closely with stakeholders. The Government have also taken firm action to ban both lawyers and claims management companies from offering claimants inducements to bring frivolous claims. Although it is still early days in terms of monitoring the impact of the reforms, Government figures show that the number of whiplash claims has gone down by around 70,000 since 2011-12. That is a good start, but we remain concerned about the number of claims made and their impact on the cost of motor insurance premiums. Too many claims are still being brought inappropriately, often because people are encouraged and pressured to do so by unscrupulous lawyers or CMCs.

On 2 December 2014, the Chancellor of the Exchequer and the then Justice Secretary jointly announced a new insurance fraud taskforce. The taskforce will make recommendations to reduce all types of insurance fraud, to lower costs and to protect the interests of consumers. The Government are committed to tackling the perception that insurance fraud is a victimless crime. It is vital that people understand that making a fraudulent claim is not a legitimate way to make money. The taskforce is currently considering its recommendations, which the Government will consider carefully with a view to taking firm action.

My hon. Friend the Member for Lincoln mentioned the practice of “cash for crash”. The insurance fraud enforcement department is a City of London Police unit set up to tackle insurance fraud nationally. The £3 million annual cost of the unit is funded by ABI members through an industry-led compulsory levy. The unit is leading the fight against “cash for crash” gangs, and has caught and prosecuted many perpetrators of that distasteful scam over the past three years. It will continue in that work.

The Government have also been serious in our commitment to driving out bad practices by claims management companies, as is clearly demonstrated by the recent package of reforms to protect consumers who use the services of a CMC or who are subjected to its marketing practices. The reforms will also help organisations that are on the receiving end of high volumes of calls or fraudulent or unsubstantiated claims. The measures are transforming how the MOJ’s claims management regulation unit does its job. Members will be interested to hear that in the last year, 93 CMCs were investigated, 105 CMCs had their licences removed, 296 were issued warnings and 454 audits were conducted. Tackling fraud and unauthorised activity in the claims management industry has been, and will remain, a key priority for this Government.

The CMR unit works closely in partnership with both industry fraud bodies and the police to identify and deal with CMCs engaged in insurance fraud. That work has been instrumental in the successful prosecution of criminal organisations. My hon. Friend the Member for Lincoln rightly identified nuisance calls as a well known route for spurious claims farming. The CMR unit makes sure that CMCs offering claims services do so legally. That is why we introduced tough new rules in October last year to put in place a stronger requirement to make sure claims are properly substantiated before being pursued.

We also strengthened the CMR unit’s enforcement tools in December last year with a new power to impose fines on CMCs. So far, three companies have been fined more than £800,000 for unlawful unsolicited marketing and coercing clients into signing contracts before taking unauthorised payments. That sends the powerful message to unscrupulous fraudsters that the Government take this issue seriously and will take firm action against them.

The claims industry is a fast-moving market. Practices continue to evolve, and the Government will monitor the market and respond with further reforms, as necessary, to provide better protection for consumers and the public. The Government are also looking to build on the work of the CMR unit by undertaking a fundamental review to consider what powers and resources are required for a tougher CMC regulatory regime. The review is due to be completed in early 2016.

I will now answer the very useful six points raised by my hon. Friend the Member for Croydon South, as some of them will be included in that review. He talked about banning of outbound calling and the use of personal injury claims data gathered from those calls. We need to strike a balance between ensuring that consumers are adequately protected and ensuring that a direct marketing industry can continue, as—although this was not necessarily the case in his experience—it is a legitimate activity when done properly. We need to focus on the companies that are breaking the rules rather than penalise legitimate businesses, and to make sure that companies comply with the regulations. We have made it easier for the Financial Conduct Authority to take action against some of those companies, but we will continue to look at that, particularly in the light of what he has outlined today.

[Chris Philp]

I understand that the Government have taken action to regulate outbound calls more carefully. My fear is that that regulation unfortunately has not had the intended effect and that cases like mine are continuing to occur. I suggested an outright ban because I feel it is the only way that we will be able to stamp out a terrible practice that I myself directly experienced.

[Caroline Dinenage]

My hon. Friend is very persuasive, and I will definitely ensure his thoughts are passed on when the review is conducted.

My hon. Friend talked about criminal pursuit of anyone making fraudulent claims. That measure was introduced earlier this year in the Criminal Justice and Courts Act 2015, which requires the court to dismiss in its entirety any claim where the claimant has been fundamentally dishonest. That means dishonest claimants can now no longer receive a payout if they have been fundamentally dishonest, even if a small part of their claim is in fact genuine. Insurers then have the option of pursuing a criminal prosecution for fraud.

My hon. Friend said medical advice should be taken within a week of an accident. In 2004, the Government considered including such changes to the civil procedure rules to ensure that medical examinations and reports were completed before a claim was produced. We have introduced the rules I have spoken about to discourage such behaviour, but we will keep the matter under review and continue to work with key stakeholders. We need to look at how we can tackle the issue effectively.

My hon. Friend asked whether there should be an objective evidence base. The Government remain concerned about the number of claims made and have done much in that area, but we accept that more can be done. We are open to any suggestions put forward by interested stakeholders and will consider all the points he has raised.

Finally, my hon. Friend talked about the 12-month claim limit and the no win, no fee limit of £6,000. We understand that both those issues will be considered by the insurance fraud taskforce, which will be reporting shortly. We look forward to seeing its recommendations and will respond accordingly.