Civil Liability Bill [Lords]

Andy Slaughter Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 23rd October 2018 Commons Chamber

[Gloria De Piero]

We are again confronted with the reforms in the Bill, which will cost the NHS at least £6 million a year and taxpayers at least £140 million a year, the Government admit. Even they accept that it will result in more than 100,000 injured people not pursuing a legitimate claim that they could pursue now; we say the figure is far higher. Insurers, meanwhile, will get an extra £1.3 billion of profit every year. The Government say that they will hand 80% of that to consumers in the form of reduced premiums, but they have said that before, and insurers have saved over £11 billion since the last Government reforms in this area, in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Despite a brief dip in 2012-13, premiums are now higher than ever.

The Government have moved a little on the Bill, and in Committee the Minister confirmed what he intimated on Second Reading: that vulnerable road users will be exempted from both the Bill and the small claims limit. That is welcome. As Labour has done repeatedly throughout the process, we will attempt today to make the Bill fairer still by setting out some key amendments.

New clause 1 would ensure that the whiplash small claims limit could be increased only in line with inflation based on the consumer prices index, and it follows Lord Justice Jackson’s recommendation that increases should come in £500 increments and only when inflation justifies them.

One of the most disappointing aspects of this package of reforms is the Government’s attempts to sneak through key changes to the small claims track limit through the use of statutory instruments. Today we want to give those changes the scrutiny they sorely deserve and put them in the Bill.

Whereas the threshold for getting legal representation for personal injuries is currently £1,000, the Government are trying to raise it to £2,000 or £5,000, which will make a massive difference to someone injured through no fault of their own. That position is supported by a raft of experts, including some in the Minister’s own ranks—the Tory Chair of the Select Committee on Justice for one. The White Book, which I took the trouble of sharing with the Minister in Committee, shows that there was an effective 20% increase in the small claims limit in 1999 when special damages were removed from the calculation of the limit. I note that the Lord Chancellor conceded in his letter to the Chair of the Justice Committee dated 15 August 2018 that 1999 is the correct date from which to calculate an increase.

It is worth pausing at this point, since the Government now accept that there was a significant change in 1999, to understand what that change meant. An example is given in paragraph 26.6.2 of the White Book:

“a claim for £4,000 for loss of earnings and other losses, plus a claim for £800 for damages for pain and suffering, is a claim which would be allocated to the small claims track”.

In layman’s terms, a claim may be made for under £1,000 for pain and suffering, but when losses and expenses are added in it could be considerably greater. The example in the White Book suggests that, if an £800 pain and suffering award has a losses and expenses claim of £4,000, although the total value of the claim is £4,800, it still falls into the small claims track. We are talking about claims far in excess of the small claims limit.

Lord Justice Jackson, in his review of civil litigation costs, all the recommendations of which the Government accepted and implemented in the 2012 Act, said in paragraph 1.3 of chapter 19 of his 2009 review:

“Personal injuries litigation is the paradigm instance of litigation in which the parties are in an asymmetric relationship.”

In words that we all understand, this is David versus Goliath. Sir Rupert Jackson went on to say that

“the only reason to increase the Personal Injury small claims limit would be to reflect inflation since 1999”

and that

“I propose that the present limit stays at £1,000 until inflation warrants an increase to £1,500”.

He could not have been clearer, yet the Government appear to have plucked the proposed £2,000 limit out of thin air.

The new clause states that the CPI, which is used for the uprating of pensions and benefits paid to injured workers, should be used to calculate the small claims limit. Even the Chief Secretary to the Treasury agrees that CPI is the way to go. She said earlier this year to a House of Lords Committee:

“CPI is a much better measure of inflation…we are seeking to move away from RPI”.

The Governor of the Bank of England agrees, too. He has said:

“We have RPI, which most would acknowledge has known errors. We have CPI, which is what virtually everyone recognises and is in our remit.”

It is perfectly clear what we need to do: enshrine CPI as the key measure in the Bill.

[Andy Slaughter (Hammersmith) (Lab)]

I congratulate my hon. Friend on getting the Government to admit that the increases are arbitrary and not linked to inflation in any way. Is it not the case, therefore, that the only reason for the increases is to prevent injured people from getting representation and thereby preclude people with meritorious cases from getting the damages that they deserve?

[Gloria De Piero]

My hon. Friend is absolutely right. Even if we use RPI, the Government still do not get to their proposed £2,000 new small claims limit. Instead, using the flawed RPI from 1999 would take the £1,000 to roughly £1,700. That is what we on the Labour Benches suspect is going on here.

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[Chris Philp]

Of course the £10,000 small claims track limit applies to a far wider range of issues than simply whether a fridge functions or not. The hon. Lady mentions as an example the question of culpability for a road traffic accident. Given that we are talking about much less serious types of injury if the limit is, say, £5,000, determining responsibility for that road traffic accident does not need to be an enormously complicated procedure. For those of us who have been involved in such road traffic accidents, the minor ones we are talking about here, determining responsibility is not a highly complicated matter. I accept that, in much more difficult cases where very serious injuries have been suffered, one must of course take a lot more legal care and attention. For very minor injuries, however, where by definition the accident is a minor one, I suggest that determining responsibility and culpability does not need to be an extremely complicated matter.

[Andy Slaughter]

With the greatest respect, I do not think that the hon. Gentleman knows what he is talking about. Given of the relatively low levels of compensation for injury, the effects of a £5,000 injury can be quite severe and debilitating over a period of time. The complexity of personal injury cases, which involve expert evidence and issues of causation, means that they are in a different category. Even the Government accept that, so he is batting on a rather poor wicket.

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[Chris Philp]

I give way to the hon. Member for Hammersmith (Andy Slaughter).

[Andy Slaughter]

The proportion of fraudulent claims is about 1%. If I understand the hon. Gentleman’s argument correctly, he is saying that all meritorious claimants should be debarred from proper representation so we can identify that 1%, because it is too difficult for the Government to legislate. Is not the truth of the matter that the Government, as always, are joined at the hip to the Association of British Insurers, and are simply legislating in its interests?

[Chris Philp]

I disagree with all three things that the hon. Gentleman has said. First, as I said earlier to the right hon. Member for Kingston and Surbiton (Sir Edward Davey), the Government have no intention at all of preventing legitimate claims from being made. The Government are keen to facilitate those claims, and the online claims portal will help with that. There is categorically no intention of disbarring, preventing or in any other way inhibiting legitimate claims from being made.

Secondly, the hon. Gentleman referred to the 1% fraudulent claims figure. The reason the reported figure, which in my submission is dramatically under-reported, is so low is that insurance companies are, quite wrongly, choosing to settle those claims—even suspicious claims, even claims without merit—without defending them, because the cost of defending them, which is about £10,000 or £15,000, far exceeds the value of the pay-out. So the 1% figure cited by the hon. Gentleman goes nowhere close to reflecting the true scale of fraudulent claims in this area.

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[Andy Slaughter]

I did not intend to speak, therefore I will be brief. The House is being treated to ad hoc speeches, which are always a delight. They sometimes benefit from a little knowledge of the subject, I gently say to the hon. Member for Hitchin and Harpenden (Bim Afolami). I also urge him not to be quite so credulous of what insurance companies tell us because experience shows that they always say that premiums will go down, and sometimes they go down and then up again, and sometimes they do not go down at all.

I also wonder about the hon. Gentleman’s question of whether we can expect everything to be done in a single Bill. I would argue that the two main things that the Bill will do are to prevent people with meritorious claims and those with often serious injuries from getting into court, and, if they get there, to reduce the legitimate level of damages that they can expect to receive. Would not it be better to have a Bill that deals with a matter that probably everybody in the Chamber thinks is right to tackle: strengthening defences against fraud? There has already been some change in legislation to make it easier to defend fraud cases, yet one may ask why insurers still do not instruct lawyers—whom they are able to employ, unlike claimants, perhaps, after the Bill is passed—to defend those cases. Why do they not insist on medical evidence? Why do they in fact encourage fraud? Why does a proportion of insurance companies’ profits come either from selling information on, which perpetuates claims management companies, or from owning claims management companies themselves?

The problem with the Bill is that it has the wrong targets. I made that point earlier when I intervened on the hon. Member for Croydon South (Chris Philp). All Labour Members can be brief because he substantially made the case for why this is a bad Bill, as the right hon. Member for Kingston and Surbiton (Sir Edward Davey) said.

However, the hon. Member for Croydon South said that the limit should be £10,000, as if personal injury claims were the same as simple money claims, which no one has ever argued. We are arguing about a difference in what the limit should be. In employers’ liability cases, the difference is relatively small, but the difference in road traffic accident cases is substantial: between what inflation would provide—around £1,500 as a small claims limit—and £5,000, which the Bill proposes.

The Association of Personal Injury Lawyers said about the Bill:

“Claims under £5,000 are not minor, and an increase in the small claims limit will cover far more than soft tissue injuries. These claims could include a brain or head injury, injuries to the eyes, a collapsed lung, or fractured cheekbones. This is a disproportionate response to the stated aim of dealing with whiplash claims.”

That must be right. We are talking about people who are in a vulnerable condition, having suffered personal injury. As has been said, the inequality of arms is apparent not just in the courtroom but in the background to the case, particularly in the case of employees who take on their employers. That is often done with the assistance of a trade union, lawyers and other advisers. We should not replace that tried and trusted system with McKenzie Friends—whether unpaid or unpaid— who often do more damage than good to the clients they intend to represent. I urge the Minister, even at this stage, to listen not only to Opposition Members but to some Government Members and particularly to the Justice Committee.

I went through the painful experience of the stages of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and I have therefore heard many of the arguments trotted out before. We went from a situation whereby legal aid was available for personal injury to no win, no fee cases, and now to qualified one way costs shifting—QOWCS. It is increasingly difficult even for those with the most meritorious cases to get representation. There is not the same availability of representation as there was.

The review of the law post-LASPO is due to report shortly. It will cover not only part 1 but part 2 of LASPO, and if we had waited, we could have seen the effect of the reform to civil litigation, but no, the Government wish to take a sledgehammer to crack a nut. The overwhelming majority—estimates are around 90% of road traffic claims—of cases will be taken out of a costs regime. That means that all those people have to sink or swim on their own. No one, not just the lawyers here, truly believes that it is easy for many people who have suffered accident and injury to navigate through the court system, particularly when they are opposed by an insurance company, with all the resources that it has.

The Bill will not benefit the motorist or the interests of justice. Above all, it will not benefit people who, through no fault of their own, have suffered often serious injuries. It is disgraceful that the Government are legislating once again in the sectional interests of the insurance industry and against those who have suffered injury.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

I rise to support the Bill and speak against new clauses 1 and 2 because, whether through ending rip-off energy bills, freezing fuel duty or increasing the personal allowance for income tax, the Government’s constant focus has been to make sure that the consumer is at the heart of their work and to reduce the cost of living for millions of people.

I am therefore pleased that Ministers have identified another area in which the cost of living is artificially and unfairly inflated. At a time when our cars and roads are safer than ever, one would expect the price of motor insurance to come down. Instead, the opposite has happened. Since 2010, there has been an almost 50% increase in the cost of comprehensive insurance premiums, and a near 80% increase in the cost of third-party fire and theft insurance premiums.

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[Mr Clarke]

My hon. Friend speaks with the authority of not just a Select Committee Chair but someone who thinks deeply about these issues. There are safeguards built into the Bill, precisely to ensure that we achieve the robust, balanced and responsive framework that good legislation should aim for. I noted earlier that the Lord Chancellor will have a duty to keep all the relevant legislation under review on a triennial basis, so there will be checks to ensure that compensation thresholds do not become wildly out of kilter. Indeed, part of the reason why the Bill is necessary is that the thresholds have been allowed to drift for a very long time without being amended. That has led to a more dramatic uplift than is customary or than I would ever hope to see in future. We want to ensure that we always have a rolling programme rather than dramatic changes, which unfortunately affect more people than a more staged mechanism would. However, that does not mean that there is not a case for acting, so unfortunately I cannot support amendment 2.

[Andy Slaughter]

I will speak only briefly, because a number of the points to be made in this debate are the same ones that we made in the previous debate. There is no logic or sense to the Government’s rationale; they simply want to minimise the damages paid to litigants who have legitimate and in some cases serious injuries.

The noble Lord Woolf has been quoted several times. The Woolf report led to progressive and now legendary reform of the civil justice system, so he very much knows what he is talking about on this issue as on so many others. He said that the tariff

“results in injustice and it is known to result in injustice. Indeed, no one can deny that it results in injustice. There has never been a case where legislation deliberately introduces injustice into our law. It may be that it is only in regard to small claims, but surely it is important that we pause before we do that.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1620.]

I agree that the Government should pause, and I would say that there is an objection in principle to the tariff in this case. No good reason has been given why this should not be a judicial process rather than an administrative or politically affected process.

There is also an issue of quantum to consider. The proposed sums in the tariff are derisory for what are often quite serious injuries lasting for periods up to 24 months. An injury that lasts for two years is likely to be serious and is certainly a persistent one that will cause a lot of pain and suffering. It has been pointed out that at the lower end of the spectrum—nought to three months, which still includes cases of pain and discomfort lasting a significant time—the proposed sum is £235. The Law Society’s briefing compares that with the amount of compensation that somebody might get for a flight that has been delayed for three hours, which could be considerably in excess of that amount. As well as the matter of principle, there is the point that the actual financial compensation is being minimised for no good reason.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Gentleman talks about injustice. Is it not an injustice that many motorists are paying inflated insurance premiums because some people are getting an unreasonable level of compensation for their injuries? Is that not what the Bill is intended to prevent?

[Andy Slaughter]

It is not, because I do not know what the hon. Gentleman means by an unreasonable level of compensation—

[Rebecca Pow (Taunton Deane) (Con)]

Will the hon. Gentleman give way?

[Andy Slaughter]

Please give me a moment to answer the first point, then I will willingly give way.

I do not know whether the hon. Gentleman is saying that it is unreasonable because these injuries are exaggerated or fraudulent, or that people should not be compensated according to accepted judicial tariffs. Nobody has ever said—that I know of—that the levels of compensation that are awarded under the Judicial Studies Board guidelines are over-generous in this country. What we are doing is simply taking those realistic—some would say, rather parsimonious—levels and reducing them by a substantial degree, so I think the point is nonsense, frankly. However, I give way to the hon. Member for Taunton Deane (Rebecca Pow), who will make a much more sensible point, I am sure.

[Rebecca Pow]

On that point, from the general public’s point of view, there is a consensus that people are taken for a ride over all these claims. Many of them are encouraged to go into this system of claiming when perhaps they do not necessarily have a great case. A great deal of money is made through the legal system, and people want to see fairness. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) is absolutely right: most people’s motor insurance is going up and up to compensate. Does the hon. Member for Hammersmith (Andy Slaughter) agree that that is not fair? What we are trying to do with the Bill is to introduce fairness to a system that frankly—many people would say—has got out of control.

[Andy Slaughter]

I congratulate the hon. Lady on getting a helter skelter of nonsense into one intervention, with every prejudice and false statement that has been made in the tabloid press about these matters for about the last 10 years—well done on that. I could make a long speech dealing with the specific issues of—[Hon. Members: “Go on!] We have got time, haven’t we? No, I will not. I could go into detail about some of the myths about whiplash and soft tissue injuries and what is actually happening in relation to accidents, the insurance industry and premiums, because I have been an observer of that for a long time. However, let me limit myself to a fairly narrow point.

I have listened to the arguments from Government Members, and they are just non-sequiturs, frankly. We have heard that insurance premiums are the issue. Let us imagine that we give the benefit of the doubt there, which I certainly do not, and say that premiums are likely to fall significantly and that that is a factor relating to claims rather than to insurance companies’ profits, the other activities that they indulge in and the way that their businesses are run. I do not accept that, but let us assume that we do for a moment.

The hon. Member for Cheltenham (Alex Chalk) is no longer in his place, but he made a surprisingly illogical—for him—intervention. He said, “Look, people will still get special damages.” Of course they will get special damages, but special damages are what the name suggests—they are to compensate for specific items of loss. Why should the fact that someone still gets compensation for their loss of earnings or their medical bills, or something of that nature, mean that it is right to diminish their compensation for pain and suffering and loss of amenity? These are all non-sequiturs. The worst calumny of all is to say, “We are reducing the level of damages from slightly mean levels to absolutely parsimonious levels because of fraud”, which is exactly what we heard in relation to the small claims limit. So many members of the senior judiciary and indeed, of Select Committees, including not just the Justice Committee, but the Transport Committee, have said that it is plain wrong to say that because there may be instances of fraud, of which very few are identified, all litigants should suffer by having their damages reduced.

[Victoria Prentis (Banbury) (Con)]

I understand what the hon. Gentleman is saying about quantum, but I would be interested to know, theoretically, whether he objects to the idea of tariffs being appropriate for this sort of compensation. I remind him that Lord Brown said

“I am in broad agreement with the whole idea of tariffs for injuries, certainly for lesser injuries, and indeed even of reducing awards in respect of a number of these lesser injuries.”—[Official Report, House of Lords, 10 May 2018; Vol. 791, c. 306.]

Does the hon. Gentleman agree that tariffs can be appropriate with, for example, criminal injuries compensation?

[Andy Slaughter]

There is an element of semantics going on here. We have guidelines at the moment. Judges do not pluck figures out of thin air. They look at the guidelines and hear submissions, or they would have heard submissions when representation was available—it seems it no longer will be—and they make a decision, but they have discretion around the individual circumstances of the case. That is a basic and fundamental principle of law, but one that we are deviating from. I cannot say strongly enough that that is wrong.

To add insult to injury—if I may put it that way—rather than taking the average in the guidelines and having a rough rule of thumb that someone will get a bit more or a bit less than their individual case deserves, or going for an average and calling that a tariff, we are saying that a tariff should be a tiny percentage of the current award. This is nothing but an attempt to say, “We do not wish to pay out money in this way. We wish to diminish both the ability to make a claim and the compensation paid.” Whatever one’s view on fraud, the massive majority of cases will be meritorious and honest cases in which people have genuinely suffered injury.

I will conclude with the words of the former Lord Chief Justice of England and Wales, Lord Judge, on Report in the other place:

“What I cannot accept is a solution which means that a dishonest claim is handled in exactly the same way as an honest one. We cannot have dishonesty informing the way in which those who have suffered genuine injuries are dealt with. That is simply not justice. There should not be any idea that an honest claim for a whiplash injury made by the victim of a car accident should be less well compensated than an identical injury suffered by someone at work.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1600.]

That is what the Government are doing in the Bill and what is so inherently unfair, and they are doing it at the behest of special interests. They may genuinely believe that there is a problem to be resolved with whiplash. I could dispute that—we could go on for a lot longer than we are today—but even if they are right, there are other, better and fairer ways to tackle that issue.

[Bambos Charalambous]

Is my hon. Friend aware that under the criminal injuries compensation scheme someone gets £1,000 for a whiplash injury lasting six to 13 weeks but that under this tariff scheme the proposal is for £470 for three to six months?

[Andy Slaughter]

My hon. Friend, who knows far more about these matters than I do—and more, I suspect, than many on the Government Front Bench—is quite right. He draws attention to the fact that there is no logic in the system.

I feel a bit sorry for the Minister as he has to push these proposals forward; he is normally a very logical and fair man. It is difficult to speak at the Dispatch Box having been given a brief of this quality. When parliamentarians of his stature and of the stature of the hon. Member for Cheltenham, with his spurious points about special damages, are reduced to this level, and when Government Back-Bench Members are hauled in here, as we saw in the previous debate, to make speeches only to be told to stop making them because they are talking such arrant nonsense, one does despair. I hope even at the 11th hour that the Government might take pity on us, listen to the wise voices in the other place and support us on these amendments.

[Kwasi Kwarteng (Spelthorne) (Con)]

A number of the things that the hon. Member for Hammersmith (Andy Slaughter) suggested as being completely outrageous many of his constituents and certainly a lot of mine would completely agree with.

The Transport Committee, of which I was a member for three years, looked at this issue, and it was apparent even then that whiplash was a peculiarly British phenomenon. On the continent, particularly Germany, they do not have nearly as many whiplash injuries. I suggested at a previous stage of the Bill that this had nothing to do with the physiognomy of Germans as against that of British people. I made the point very clearly that I did not believe that their necks were more robust than good old-fashioned British necks. It was a flippant way of making a salient point: this is a national issue. In Britain, we seem to suffer from these injuries a lot more than people in other countries.

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[Alex Chalk]

It is a pleasure to follow my hon. Friend the Member for Dudley South (Mike Wood).

Whether we sit on the Government Benches or the Opposition Benches, the first thing that hon. Members have to recognise is that we do have a problem in this country; of that there can be no doubt. Other hon. Members have mentioned the statistics, but they bear repeating. In 2005-2006, there were 460,000 or so road traffic accident-related personal injury claims. Just a decade later, that number had soared by 40-odd per cent. to 650,000. There must be concern that the circumstances exist in our country to create an unnecessarily fertile ground for spurious and unfounded claims. What are those circumstances? They include the fact that instead of challenging whether a whiplash claim is dishonest or otherwise unfounded, insurers will take a commercial decision to pay out, because that will be in their interest. As other Members have indicated, the effect of that is that ordinary people living on modest incomes are finding themselves having to pay more for their car insurance than would otherwise be the case.

It is a great mistake to say, as some do, that a car is a luxury—to say, “You don’t need your car; alternative transport methods should be satisfactory.” For plenty of my constituents, that simply is not the case. We currently have a big issue in Cheltenham with the closure of Boots Corner, a key arterial route through the town. One argument made by those who favour closing off the road is that people can get around on bikes. That might be okay for some people, but for plenty of my constituents—including nurses, people ferrying around their children, and people with disabilities—it is not. We have a duty in this House, wherever we stand, to drive down the costs of living for hard-working people and their families.

We have to be clear on what the legislation is not about. A lot of the points made by Opposition Members are motivated by the best of intentions. I have served on the Justice Committee with several Opposition Members, and they have shown great distinction—if I may be so bold—and argued vigorously and passionately for the principle of access to justice and on employment tribunal fees, to which the hon. Member for Lewisham West and Penge (Ellie Reeves) referred. But that is not what this legislation is about. It is important not to set up straw men to knock down. Were this debate about LASPO, access to justice and ensuring that people could get early legal advice and assistance, I would have an awful lot more sympathy, but in fact is far more restricted, calibrated and proportionate.

First, this debate and the provisions in the Bill are not about people who sustain whiplash injuries and whose pain, suffering and loss of amenity last beyond two years. If they do last for longer than two years, the case of course falls outwith the tariff system. Secondly, this debate is not about special damages. Let us consider a run-of-the-mill case in which somebody is involved in an accident, makes a whiplash claim because they have a sore neck, spends time off work and incurs taxi fees going to and from the doctor and various other fees. Such special damages would not be subject to any kind of tariff and could be claimed in the normal way. In other words, if someone was off work for, say, nine months, the mere fact that their general damages for pain, suffering and loss of amenity had been capped would not in any way preclude them from seeking the full extent of their special damages. That is why it is important to draw a distinction.

[Andy Slaughter]

I should say that I have secured a three-hour Westminster Hall debate on the LASPO review, access to justice and all such matters on 1 November. I look forward to having the hon. Gentleman join us and to his being fully supportive of my speech.

On this issue, the hon. Gentleman may want to address specifically the issue of the level of the tariff. I hear what he is saying, but what about the level of damages, which cannot in any way compensate for what are in many cases real injuries?

[Alex Chalk]

I am grateful to the hon. Gentleman for making that point about LASPO, because if I may say so he is on stronger ground on that territory and I look forward to attending his debate and making some observations. That debate truly is about a cardinal principle that we in this Chamber should all share: whatever a person’s circumstances, they should be entitled to access to justice. It would be quite wrong, though, to conflate that debate with the one we are having.

On the tariffs, I do not suggest that this is the case for the hon. Gentleman, but there cannot be synthetic outrage. If someone has suffered pain, suffering and loss of amenity to the extent that their symptoms endure beyond two years, they are entitled to get whatever the judge thinks appropriate. We are dealing with claims that, although not insignificant, are towards the lower end of the spectrum. That needs to be borne in mind.