Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 23rd April 2019 Commons Chamber

[Rory Stewart]

We now have 4,300 additional prison officers, which is the highest level since 2012.

[David Hanson (Delyn) (Lab)]

What about 2010?

[Rory Stewart]

We have fewer officers than in 2010. There was a reduction from 2010 to 2012, but we have now turned that around, with the 4,300 extra officers, meaning we can now roll out the key worker programme, which is central, as it means we have the ratios we need to have one prison officer allied with four prisoners to make sure we deliver the work on rehabilitation.

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[Rory Stewart]

The big change that has been introduced by my right hon. Friend the Secretary of State is to ensure that education in prison is linked to employment. This involves talking to the local job market, ensuring that we provide the skills that match that market and, above all, ensuring that we have safe, decent prisons so that we can remove the prisoners from their cells and into work and education so that we can get them into jobs. That reduces reoffending by an average of 7%.

[David Hanson (Delyn) (Lab)]

T8. How are we getting on with securing the 26 prisoner transfer agreements that are currently in place with the European Union to ensure that they are in place at the end of this year?

[Rory Stewart]

I am delighted that Labour Members are working with us to try to get a good Brexit deal in place, and if we can get such a deal, we will be able to continue through the transition period. In a no-deal situation, however, it will become significantly more difficult because we will have to fall back on older and more cumbersome ways of moving prisoners. That would not be good for us or for Europe.

Disclosure of Youth Criminal Records

Lord Hanson of Flint Excerpts

Thursday 28th March 2019 Westminster Hall

[David Hanson (Delyn) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Walker. I begin by thanking the Chair of the Justice Committee, the hon. Member for Bromley and Chislehurst (Robert Neill)—he is my hon. Friend in this circumstance—not only for his chairing, but for his contribution today. We work as a very strong team on the Justice Committee, and it is good to focus on key issues. I am sure the Minister will respond to them in a positive way in due course. I also thank those who contributed with oral or written evidence or who were involved in the informal seminar, as has been mentioned, where we met people who had committed offences that had impacted on their lives for a considerable period in terms of employment, housing and other services.

I want to focus on one simple issue: employment, which is central because work is one of the key planks for preventing reoffending. There are key issues to do with housing, drug and alcohol rehabilitation and maturity, as my right hon. Friend the Member for Tottenham (Mr Lammy) said, but ultimately the ability to get and keep work, to have self-worth in doing that work, and to progress through work, is critical.

We focus in the report on training, employment and through-the-gate services, including prison and youth offender institution training and community rehabilitation companies in adult prisons and elsewhere. Those are critical in helping people to get into work, but whatever the system does with that training, someone ultimately has to get a job with a public sector body or an employer. When an individual goes before a public sector body or employer, it might see that they have a criminal conviction that may be 10, 15 or 20 years old, and an initial value judgment may be made on that basis. That will stop someone accessing employment. Whether it is earlier or later in their life, that may lead to reoffending or stop them contributing in a way that is important to society as a whole.

The key question that I will focus on is one that a number of Members have touched on: banning the box. The Disclosure and Barring Service, which we have discussed, is important in relation to a series of jobs, but it does not relate to all jobs. Ban the Box is a simple idea that could, if adopted through Government and the private sector, help to ensure that we gave people an opportunity to show what they were worth prior to judging them for what they may have done 10, 15 or 20 years ago.

The simple idea, which my hon. Friend the Member for Lewisham West and Penge (Ellie Reeves) mentioned, is that disclosure happens after the job interview and job offer. The right to refuse is still there, but the judgments are made on the merits of the application and the individual in front of the employer—not on a conviction that may have happened some years ago. In his review, my right hon. Friend the Member for Tottenham emphasised the difficulties that BME individuals face, because those who have convictions will also encounter other prejudices. It is important that we tackle those head on and up front.

Ban the Box is an initiative of Business in the Community, which is a branch of the Prince’s Trust. It had the support of the then Prime Minister, David Cameron, in February 2016, and was taken forward by the current Prime Minister. It has had significant success with, according to my latest figures, 120 employers signing up and some 828,000 roles being taken forward. Many private sector companies, such as Adnams Brewery, Barclays Bank, Boots, Cambridge University Press and Fujitsu, as well as Bristol City Council and Nacro, have taken people on, and operate the Ban the Box scheme to ensure that they do not discriminate at the point of application and interview of individuals.

We made key recommendations in conclusions 1 and 2 of the report. As my hon. Friends mentioned earlier, we agreed

“with the recommendation of the 2015 Parliament Work and Pensions Committee that Ban the Box, which applies to all criminal records, should be extended to all public sector vacancies, and that the Government consider making it a mandatory requirement for all employers.”

That is important, because we identified in conclusion 1 that

“the laudable principles of the youth justice system, to prevent offending by children and young people and to have regard to their welfare, are undermined by the system for disclosure of youth criminal records”

and by discriminatory practices that stop people getting employment, and which banning the box will address.

Those are the key recommendations. I have four or five fairly straightforward questions, which will give us an indication of the Minister’s thinking, and of whether the Government’s response and rhetoric match the aspirations that they have set themselves—it is important that they do. The first is simply this: how many employers do the Government believe to be operating a Ban the Box principle for their employment practices? Does the Minister keep a record of, or have access to, the number of employers who have that scheme in place? What is he doing to ensure that we expand and progress the scheme? What initiatives has he taken, or does he have planned, with major trade organisations, the CBI, perhaps the Trades Union Congress, businesses, the British Retail Consortium and a range of agencies to promote the idea of banning the box?

The Government’s response to the Committee helpfully said:

“The Ministry of Justice…will continue to explore options for promoting Ban the Box across both the public and private sectors, primarily by ensuring we lead by example.”

When I held a ministerial job, I may well have signed off such words, but I am interested in what they mean in practice. What initiatives are planned? What effort has gone in? Is it something that the Government have said in response to the Committee, and perhaps even—dare I say it?—to get through a debate such as today’s, but will file away tomorrow and not worry about? What is the plan for the future on those issues?

Great play was made in the response that in

“early 2018, we will publish an employment and education plan”

to promote Ban the Box. Early 2018 is a year ago. What has happened in the past 12 months? What progress has been made in Government? Does the Minister know? Could he tell me—not today, but perhaps in writing afterwards—how many of the Departments before us in this great House of Commons operate Ban the Box principles? Do any not operate those principles?

Government is not just the Home Office, the Ministry of Justice, the Department for Environment, Food and Rural Affairs and other Departments; it is also health trusts, health boards, arts councils and a plethora of quangos. Has that been pushed by the Minister? Has he brought together the chairs of quangos to ask what they are doing about Ban the Box, and whether they have extended it to their organisations?

What about local government? That is a big issue and part of the public sector. The Government have said that they will look to encourage the public sector to ensure that Ban the Box is adopted. What has the Minister done to encourage local councils to undertake that policy? The issue of procurement was also mentioned. The Government remain the biggest spender in the private sector across the country, commissioning builders, construction firms and purchasers. Have they checked with their suppliers about banning the box?

The simplest thing of all may be just be to make this mandatory. Then the Minister would not have to worry about extending it, and trying to push it forward and promote it—he would simply have to find a mechanism to check those who do not do it. If discriminatory practice emerges, the possibility of its being an offence could be explored, or at least the possibility of naming and shaming. As we recommended in our report, that might be the simplest way to make it a mandatory requirement for employers. I am interested, in a helpful way, in the progress the Minister has made, and what other progress there will be. Does he accept that it should be a mandatory requirement for employers as a whole?

I was asked by the Welsh Government last summer to undertake a review of prison, education and employment issues centrally. I undertook that review during the latter part of last year. The review was submitted to the Welsh Government in October of last year, and they helpfully published it last Thursday. One of the recommendations in my review of the Welsh Government’s responsibilities was that they should support the Ban the Box campaign in their own operation, procurement proposals and suppliers. I hope they will do that in Wales as a whole in response to my recommendations.

That review was commissioned by Baroness Morgan of Ely, an Assembly Member and Minister in the Welsh Government. It is now being taken forward by Kirsty Williams, who is also a member of the Welsh Government. I am very hopeful that my recommendations on Ban the Box will be adopted by the devolved Administration. However, the Minister has responsibility within the prison system and the youth justice system in England and Wales. Has he discussed that with his colleagues in Scotland, or with officials in Northern Ireland pending the resumption of the Assembly? Can we get a co-ordinated response across the United Kingdom on this issue?

As my hon. Friend the Member for Lewisham West and Penge, the hon. Member for Banbury (Victoria Prentis), my right hon. Friend the Member for Tottenham, the Chair of the Justice Committee and the hon. Member for Henley (John Howell) have all pointed out, this is about people’s lives. We have an opportunity to make people’s lives better by judging them not on the offences that they have committed, but on the people they are and the skills they bring when they apply for the job.

[Sir David Amess in the Chair]

Welcome to the Chair, Sir David. You may have a shorter stint than you imagined, but I am sure it will be a productive and helpful one.

The key thing is the important Ban the Box recommendation, which is based on evidence and has cross-party support. I hope the Minister will respond to my questions by giving an indication of how the Government will take matters forward in a positive way.

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[The Parliamentary Under-Secretary of State for Justice (Edward Argar)]

It is a pleasure to serve under your chairmanship, as ever, Sir David. I thank my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), the Chairman of the Justice Committee, for securing a debate on an important report. I pay tribute to all the Members who have spoken today and, indeed, all members of his Committee for their work. It is a pleasure as always to serve opposite the shadow Minister, the hon. Member for Bolton South East (Yasmin Qureshi). I know and welcome her commitment to this area of work, and to working collaboratively and in a bipartisan way when we have a common goal to achieve.

The Chairman of the Select Committee and many others present today have worked hard to champion the potential of children who offend, and their capability to move on from their previous behaviour to live rich and fulfilled lives—and, indeed, to make our shared commitment to rehabilitation a reality. My hon. Friend is right to say that although the issue is technical and legal, it is about more than that. It affects real lives and, as hon. Members have said, continues to affect them for years after the offence is committed. We are grateful for the Committee’s recommendations.

My hon. Friend set out with his typical eloquence and polite forcefulness how the system operates and what he feels does not work well. As hon. Members have said, at the heart of the debate there is a question of balance—striking the appropriate balance, as the shadow Minister said, between protecting the public and giving young people the opportunity for rehabilitation and to have a second chance and a future.

My right hon. Friend the Secretary of State for Justice recently set out his vision for a criminal justice system and the principles that should be at its heart. I am clear that the criminal justice system must have multiple aims—to deter, to ensure that there is both punishment and rehabilitation, and to protect society from crime. That means the system must be proportionate and, in the case of disclosures, relevant to those objectives. My right hon. Friend set out the need to move away from debates about soft or hard justice, and to think instead about smart justice that achieves what we would all want for society. That means knowing that, alongside appropriate safeguarding measures for children and vulnerable people, employment for those who have previously offended can support public protection. There are, as the right hon. Member for Delyn (David Hanson) said, few better tools for reducing reoffending than a regular pay cheque. We have made it clear that we want more employers to look past someone’s offending history and see their future potential, and I believe that rehabilitating people and getting them into employment is the best outcome for us all.

On taking office in 2016, my right hon. Friend the Prime Minister made a pledge that the Government would fight against social injustice and give people back control of their lives. She set out a vision whereby all British citizens could go as far as their talents took them. Nothing should hinder that, and it should also apply to children who commit crimes or make an error. This must be reflected in the disclosure of criminal records.

I agree with the core position laid out by the Committee: employers should not regard the disclosure of a criminal record as an automatic barrier to employment. A balanced judgment should be exercised, having regard to factors such as a person’s age at the time of the offence, how long ago it was, and the relevance to the application or post in question. The Committee’s report goes beyond this and rightly highlights the need for proportionality, clarity and fairness, as well as seeking to ensure that the systems designed to protect the public and facilitate rehabilitation keep up to date with the reality of the modern world.

The Secretary of State for Justice has already identified that one of the best ways to help those who have offended to get meaningful employment is by working more closely with employers and expounding the benefits of hiring those with criminal convictions. That is why—to address one of the key themes in hon. Members’ speeches—I am happy to see the Government leading by example by rolling out Ban the Box across the civil service in 2016 and continuing to encourage its implementation across both the public and private sectors.

Whenever I see the right hon. Member for Delyn in a debate that I am speaking in, my heart both rises and sinks. It rises because he brings great expertise and knowledge of this subject; it sinks possibly for exactly the same reason, as I know he will ask me various challenging questions. He asked a number of questions, and I will try to answer some of them—if I do not answer them all, I will happily commit to write to him next week with detailed answers.

[David Hanson]

I am glad to see I serve some purpose, if there is anything wrong with the Minister’s heart—rise and/or sink, depending on his mood. He just mentioned the roll-out across Government, and it is important that he puts on record, either now or by letter, whether any Department is not operating Ban the Box.

[Edward Argar]

I take the right hon. Gentleman’s point. I am not aware of any Department not doing it. There may be some roles, perhaps in the policing or security aspects of Government, where there might be more complex considerations. I undertake to write to him with a clarification on that in due course, when I will answer a number of his other questions.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 12th March 2019 Commons Chamber

[Rory Stewart]

First, I make it absolutely clear that no decision on sentencing policy will be driven by anything other than public protection. That is the key in any sentencing decision. Secondly, I make it absolutely clear that we are fully behind the Home Secretary and the work that is being done on knife crime and we want to make sure that judges have the full powers at their disposal to deal with people who are wielding knives.

[David Hanson (Delyn) (Lab)]

Will the Minister confirm to the House that he will not go cold on the Justice Secretary’s pledge to reduce short sentences? Short sentences and removing people from prison who will reoffend if they go to prison are the surest way to save money and to stop reoffending in the long term.

[Rory Stewart]

As the right hon. Gentleman is aware, this is something that we are continuing to look at very carefully and we are continuing to learn both from what has happened in Scotland and the evidence that suggests, on the basis of a study of 130 different characteristics in 300,000 separate offenders, that people are more likely to reoffend with a short custodial sentence and therefore that tens of thousands more crimes are committed every year by the wrong use of a custodial sentence.

--- Later in debate ---

[Rory Stewart]

That is a very good challenge. My hon. Friend specifically raised Albania, with which we have a prison transfer agreement in place. I met the Albanian Minister of Justice two weeks ago. We need to ensure that more returns take place, but we are well ahead of Italy and Greece on returns to Albania.

[David Hanson (Delyn) (Lab)]

T7. Youth justice funding has fallen from £145 million to £71 million in the past 10 years. Yesterday, the Local Government Association said, “No more.” Is it right?

[Mr Gauke]

My Department will continue to argue the case for spending our money sensibly and getting the best deal for justice.

Privatised Probation System

Lord Hanson of Flint Excerpts

Monday 4th March 2019 Commons Chamber

[Rory Stewart]

That is a good reminder. The former Home Secretary Charles Clarke and my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) are articulating the same point, which is that there is an enormous amount that non-Government actors—not just the private sector, but the voluntary sector—can bring in terms of innovation, efficiency and delivering very good services.

[David Hanson (Delyn) (Lab)]

Volumes for offences were 48% lower than expected; community rehabilitation companies had losses of £294 million when they were expected to have profits of £269 million; and the figures relating to the reoffending of individuals were 22% up: who signed off these projections and who is accountable for this delivery failure?

[Rory Stewart]

These questions of accountability are quite difficult for me to answer. Normally, I answer by offering to resign; I am not about to do that again, but I would say that these things are related. On the question the right hon. Gentleman raised about the caseload shift, as the NAO pointed out, a 2% case load shift was predicted, but a 48% case load shift happened, directly impacting the second issue of the income coming to the companies. That prediction is a question we are really trying to look into and understand. This is to do with the fact that more violent and sexual offences were committed than previously, and the Crown courts managed to make different decisions in terms of sentence length and not giving accredited programmes. The question is, how do we predict that type of social change? Could we have predicted it; was it predicted; and how do we act on it?

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 5th February 2019 Commons Chamber

[Mr Speaker]

I call David Hanson—in a sentence.

[David Hanson (Delyn) (Lab)]

The number of outstanding repairs in prisons is 22,000 higher than this time last year and the number of outstanding planned repairs is 9,000 higher. Why is this?

[Rory Stewart]

It is largely to do with degradation across the estate, but we have had significant improvements in the performance of Amey recently, and we have of course taken Carillion back in-house so a Government company is now operating there. We therefore expect improvements to go with millions of pounds of extra investment into the estate.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 18th December 2018 Commons Chamber

[Rory Stewart]

I know that my hon. Friend does wonderful work with the prison in her constituency. As she says, we need to take action, and we are taking action. There have been 40 convictions of people using drones, and we have imposed 140 years’-worth of prison sentences. No one should be in any doubt that importing drugs into prisons with a drone is a very serious crime, and I am pleased to say that, thanks to the Department’s work since 2015, we are getting on top of the problem.

[David Hanson (Delyn) (Lab)]

The Minister mentioned in July and re-emphasised today the importance of jamming equipment in prisons; how many prisons have that equipment?

[Rory Stewart]

First, that is classified information, but, secondly, the answer is not that many prisons. It is very expensive equipment to use, but we are looking at an electronic fencing technique which has been deployed in Guernsey. We can learn a lot from Guernsey prison: if that electronic fence in Guernsey works, it is a good cheap solution. We would need to check its technical specifications and then we could look at rolling it out.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 13th November 2018 Commons Chamber

[Rory Stewart]

I will resist the temptation to offer to resign on every single issue within my Department, but I repeat that I will resign if I do not turn around those 10 prisons by August. Why were those 10 prisons chosen? They largely focus on Yorkshire and London. There are many other challenged prisons in the system. Which is challenged day by day alternates a great deal—it depends on the particular population—but I do not think that anybody would suggest that prisons such as Wormwood Scrubs, Nottingham and Leeds, which are among the 10 prisons, are not very seriously challenged prisons.

[David Hanson (Delyn) (Lab)]

21. Given the £300 million cut next year to the Ministry of Justice’s overall budget, including for prisons such as Liverpool, does the Minister expect to be able to maintain prison budgets at their current level at least?

[Rory Stewart]

I am pleased to say that, at the most recent Budget—I do not wish to get involved in the next Budget and the spending review, on which I am confident—we got a great deal of investment into the prison estate, which makes a huge difference. The right hon. Gentleman is absolutely right to raise the issue of the future budget, but watch this space and see how our negotiation goes.

Oral Answers to Questions

Lord Hanson of Flint Excerpts

Tuesday 9th October 2018 Commons Chamber

[Mr Gauke]

We work across government on this matter and are considering a number of proposals across government, including with BEIS, on how we can encourage employers in this area, including on apprenticeships. Let me make a point I have made before: employers are increasingly looking at employing ex-offenders. We should all welcome that, and I would be supportive of any constructive steps to progress this.

[David Hanson (Delyn) (Lab)]

The biggest employer in Britain today is the Secretary of State and other Ministers, through themselves in their Departments and through the suppliers that they use. What steps has he taken to improve employment opportunities for offenders within his remit?

[Mr Gauke]

That is a good point. One thing we announced when I launched the education and employment strategy was the fact that the public sector—the civil service—was taking people on. We had a pilot in the north-west of England, which we are now extending to other parts of the United Kingdom. The Prison Service also takes on ex-offenders. The right hon. Gentleman is right to highlight this, and the public sector has a role to play in the area, too.

Civil Liability Bill [ Lords ] (First sitting)

Lord Hanson of Flint Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 11th September 2018 Public Bill Committees

[David Hanson (Delyn) (Lab)]

Just to be on the safe side, I am sponsored by the union USDAW, which has made representations to the Committee, and which I may speak on in due course.

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Rory Stewart.)

[The Chair]

Copies of the written evidence that the Committee receives will be made available in the Committee Room. The selection list for today’s sitting is also available in the room.

Clause 1

“Whiplash injury” etc

--- Later in debate ---

[Rory Stewart]

I thank the hon. Members for Ashfield and for High Peak for their powerful speeches. Before I move on to amendments 12 to 15 and Government new clause 4, I will clarify some points raised by the hon. Member for High Peak.

Many things are covered by insurance besides the ability to get compensation for whiplash. It would be absurd if the entire purpose of an insurance scheme was simply to give someone an annual pay-out for whiplash, and they paid £450 for that insurance when such claims were capped at £450. The hon. Member for High Peak is right that that would be an absurd system, but insurance covers many things besides whiplash claims. In fact, we are trying to move to a world in which the majority of someone’s insurance would cover things other than their whiplash claim.

This goes to the heart of the discussion so far, and to a point made by the hon. Member for Lewisham West and Penge. Fundamentally, the number of road traffic accidents has decreased by 30% since 2005. At the same time, cars have become considerably safer: headrests and other forms of restraints have made it much safer to be in a motor car than it was in 2005. During that same period, whiplash claims have increased by 40%. Whether we define these as fraudulent or simply exaggerated, there is no doubt of the trend. There are fewer road traffic accidents and cars are safer, yet whiplash claims are going up.

[David Hanson]

We heard a number times in the Justice Committee, when taking evidence from the Minister’s colleague, Lord Keen, the question of the word “fraudulent”. Can the Minister quantify for this Committee how many fraudulent claims he expects there to be on an annual basis?

[Rory Stewart]

The answer is that judging fraud in whiplash is almost impossible except statistically through the measures that I have used, because for minor whiplash claims of the sort that are covered in the tariff—not the type of whiplash injury that the hon. Member for High Peak experienced—there is no way of proving whether an injury has occurred. That is why The New England Journal of Medicine has done research on this.

There has been interesting research on what happens if someone sits in a motor vehicle with a simulated accident and a curtain behind them, so that they are unable to tell whether the accident has occurred or not. It shows that 20% of people experienced whiplash without the collision actually occurring. This is clearly a complex medico-social phenomenon. The polite way of putting it is that there is an asymmetry of information. It is close to impossible for an insurance company to prove that an individual did not experience whiplash, particularly at the three-month rate.

[David Hanson]

Could the record show, Mr Stringer, that the Minister, like his colleague in the House of Lords, could not indicate how many claims per annum are fraudulent?

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[Rory Stewart]

With permission, I will proceed. There is still no answer to why the number of claims has risen, particularly when the number of road traffic accidents has dropped. The hon. Lady suggested that she would answer the question but did not. I look forward to someone answering that question, but I would like to make progress.

[David Hanson]

In Committee, it is normal to take interventions. As a Minister I never refused an intervention in Committee. I hope the Minister will accept this intervention. He mentioned the increase in claims being made. How many of those claims does he expect are fraudulent? That is the key. If they are not fraudulent, they are genuine claims, whether they are through a claims management company or from an individual.

[Rory Stewart]

The statistics suggest very strongly that what happened to an individual in a motor car in 2005 would, on average, have been much more severe than what happens to an individual in a motor car in 2018. A 30% reduction in the number of road traffic accidents, combined with the improvement in safety procedures, would suggest that an individual having a motor vehicle accident today would be considerably less likely to suffer whiplash than would have been the case in 2005. Therefore, the fact that the number of claims has increased by 40% is a very peculiar anomaly that requires explanation, which nobody has produced so far. Will somebody please explain why the number of claims has increased by 40% when there has been no physiological change in the human body since 2005 and motor cars have, if anything, got safer?

[David Hanson]

The Minister still has not answered the question. How many of those additional claims does he suggest are fraudulent? If a claims management company takes forward a claim, there might be issues about the claims management company but, ultimately, if the claim is not correct it will not be approved. Therefore, how many of those extra claims are fraudulent? He needs to tell the Committee.

[Rory Stewart]

In 2016, there were 7,572 confirmed fraudulent motor claims and 58,576 suspected claims, resulting in 66,147 detected motor fraud claims. However, my point goes much wider. Because of the asymmetry of information and because it is impossible to prove whether the injury has occurred—particularly at the three to six-month period—it is impossible to put a precise number on it. We can be confident, through the soaring inflation in the number of these claims, that many are exaggerated, to put it mildly, even though we cannot prove the exact number beyond the 66,147 that are actually fraudulent.

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[Rory Stewart]

We certainly will move to introduce an amendment exactly in relation the hon. Gentleman’s question—he has campaigned well on this, as have other hon. Members—setting out that we should consult the Lord Chief Justice on the level of tariffs as well as on the percentage uplift for judicial discretion. Those are two important concessions that I hope will reassure the Opposition.

[David Hanson]

Before the Minister sits down, can he give some further detail about how he intends to consult the Lord Chief Justice on making the regulations? How much notice will he give the Lord Chief Justice? Will the Lord Chief Justice’s comments be public? Will they be published so that other hon. Members can see them prior to any decision being taken? What happens if the Lord Chief Justice disagrees with the Government’s suggestions? Could the Minister give some outline of those circumstances?

[Rory Stewart]

As the right hon. Gentleman is aware, clause 5(5) merely states:

“The Lord Chancellor must consult the Lord Chief Justice before making regulations under this section.”

We intend that to be done in an accountable, responsible, transparent and predictable fashion that would give the Lord Chief Justice a serious amount of time to consider and respond, but, ultimately, it is a consultation and the power of decision rests with the Lord Chancellor, as is implied in the legislation.

[David Hanson]

Will the Lord Chief Justice’s comments on the consultation be public? Will other people apart from those two parties be able to see both their comments?

[Rory Stewart]

That remains to be determined by regulations introduced by the Lord Chancellor and is not included in the Bill.

Civil Liability Bill [ Lords ] (Second sitting)

Lord Hanson of Flint Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 11th September 2018 Public Bill Committees

[Gloria De Piero]

Amendment 17 would require insurers to report on whether savings have been passed on to consumers. New clause 6 would require insurers to pass on all savings as a result of the changes to consumers. Unlike the Government’s over-wordy, over-complicated new clause 2, which I will discuss shortly, amendment 17 and new clause 6 are straightforward. They would require the Financial Conduct Authority to insist that insurers report on the savings they have made as a result of the Bill, and the extent to which such savings have been passed on to policy holders. There are no caveats, no get-outs—it is a straight-line requirement to do the right thing.

The Bill is the latest in a long line of Government handouts to the insurance industry. Back in 2012 in a closed-door meeting at No. 10, the insurers—in return for being able to set the fixed costs in the new fast track that the new Legal Aid, Sentencing and Punishment of Offenders Act 2012 introduced—promised to reduce insurance premiums. Since then, insurers have saved more than £11 billion; those are Association of British Insurers figures, not my own. As the Minister must concede, motor insurance premiums are higher now than they were then. So much for those promises.

In the Bill, the Government have, again, swallowed hook, line and sinker the insurers’ promises that they will reduce premiums. History is repeating itself. Insurers are making record profits: Direct Line’s profits in 2017 jumped by 52% to £570 million and Aviva recorded a profit of £1.6 billion. No, that is not all motor related, but in the case of Direct Line it will largely be so.

Meanwhile, insurer CEOs are on multimillion pound packages—Paul Geddes from Direct Line and Mark Wilson from Aviva made more than £4.3 million each in 2017. We are now discussing measures that will save the insurers £1.3 billion a year. Of that, the insurers might—if the wind is blowing in the right direction and none of the ludicrously large get-out clauses in new clause 2 apply—hand across up to 80%. Notably, the cuts to insurance premiums of £35 a year, which insurers are promising now, are much lower than the previous estimates of £50 per year promised in the Prisons and Courts Bill. The Government represent a party that claims to oppose red tape: here is a chance for them to avoid it. Let us have a simple clause that does what it says on the tin.

That leads me to Government new clause 2, which is as full of red tape as it is holes. Perhaps my most fundamental question to the Minister is this: what is wrong with the word “will”? The new clause is peppered with the word “may”. If the Government are genuinely committed to ensuring that savings are passed to consumers, why do they not insist that that happens? Paragraph 3 includes provision for all kinds of ways in which, by regulation, insurers should provide information. Is there any reason why that information should not be made publicly available?

Paragraph 4 is a catalogue of reasons why insurers could wheedle out of being transparent and evade passing on the very substantial savings that the Government’s impact assessment makes clear they will be making. The truth is that all the Government have managed to extract from the insurers, who stand to gain massively from this Bill, is a vague promise that they will pass on savings.

Embarrassed by the lack of hard evidence for a commitment, the Government have tabled this new clause, which is riddled with get-outs and opportunities for insurers to worm their way out of the flimsy commitments they have made. We know—and if the Government are honest, so do they—that insurers will seek to avoid paying the savings that they make back to policy holders. That is what happened when they last made promises in 2012. Given the weakness of the new clause, that is what will happen again.

In truth, the Government have rolled over and the new clause is simply a fig leaf to cover their embarrassment. The answer, I suggest, is to include a simple clause that—and I use a phrase from Conservative Back Benchers on Second Reading—will

“hold the insurance industry’s feet to the fire.”—[Official Report, 4 September 2018; Vol. 646, c. 111.]

Our new clause would mean that any savings made by any insurer as a result of anything in this Act, or associated regulation, will be passed to policy holders by way of reduced premiums. What could be simpler? The Minister may notice that our proposed new clause quite deliberately refers to

“savings made…as a result”

of changes by this regulation.

The Government have refused to include in the Bill the small claims changes that they propose; we will come back to that issue later in our other amendments. What is crucially different between the Government’s new clause 2 and our new clause 6 is that our new clause is not only simpler but mentions the savings that insurers will make from the small claims changes.

In calculating the £1.3 billion in savings that the insurers will make every year, the Government’s impact assessment includes the savings created by the increase in the small claims limit as a result of the so-called wider package of measures. For the Government not to include the savings made from the small claims limit changes in their new clause 2 renders it virtually worthless, and undermines their much-vaunted and fundamental promise that motor insurance premiums will drop by £35 a year.

[David Hanson (Delyn) (Lab)]

It is a pleasure to serve under your chairmanship today, Sir Henry.

I know it is a long time ago, but I will take the Committee back, if I may, to 25 November 2015, when George Osborne, as he is now known, was the Member for Tatton and serving as Chancellor of the Exchequer. At that time, he said—it was recorded in Hansard:

“We will bring forward reforms to the compensation culture around minor motor accident injuries, which will remove… £l billion from the cost of providing motor insurance.”

And here is the crucial bit:

“We expect the industry to pass on this saving, so that motorists see an average saving of £40 to £50 per year off their insurance bills.”—[Official Report, 25 November 2015; Vol. 602, c. 1367.]

When this Bill was introduced to the House of Lords and subsequently to this place, the Ministry of Justice’s impact assessment indicated at first that the figure would now be £40, not £50—not between £40 and £50, but £40. However, when the general election was fought last year, the figure had miraculously gone from £40 to £35.

In October last year, one of the insurance companies that the Minister in another place, Lord Keen of Elie, has been fond of quoting—Liverpool Victoria or LV=—spoke. Caroline Johnson, director of third party and technical claims at LV=, spoke at the Motor Accident Solicitors Society’s annual conference in Sheffield, which must have been an important place to say this; it was not just said off the cuff, but at the conference. She said, “The £35 may or may not be achievable”.

I ask my first question today in support of the new clause tabled by my hon. Friend the Member for Ashfield and to start the testing of the Minister’s new clause. In his response, can the Minister give the latest Government assessment of what the £50/£40/£35/possibly-not-achievable £35 is as of today? We are expected to take on trust the figures that he has given.

There is no doubt that the insurance companies will save £1.3 billion a year. That figure has been accepted by the Government and the insurance companies, and I suspect that it will be cited again—not only by my hon. Friend the Member for Ashfield, but by others who will say that it is the saving, the prize, that the Government seek. My concern is not the insurance companies and the £1.3 billion; my concern is how much, if there are savings to be made in the areas we are concerned about, of that £1.3 billion will land in the pockets of those individuals who would then have lower premiums as a result.

I am very pleased to sit on the Justice Committee, just as I was very pleased to sit coterminously this morning with this Committee; I have to say that was very interesting. The Justice Committee carried out an investigation into this area and came to a conclusion as a whole—it was not just the Labour members of that Committee. It is chaired by the hon. Member for Bromley and Chislehurst (Robert Neill), who is a Conservative; it has a Conservative majority; and it has unanimous support for the recommendations it made in this very area. The Committee said:

“As obtaining insurance involves a commercial transaction with a private sector body...there is little that the Government can do to enforce lower premium rates without significant change to present policies.”

My question to the Minister is about his proposed new clause 2. There is something I cannot find in it—it may be hidden in there within the legalese—but, if it is, could he please put it in simple language for the Committee? What happens if this investigation proves that the insurance companies have made a saving of anything between nothing and £1.3 billion? What steps will the Government take at that stage to enforce their policy objective of ensuring that £50/£40/£35/possibly £35 goes into the pockets of individuals who pay the insurance companies?

--- Later in debate ---

[David Hanson]

My hon. Friend makes a valid point; it is one I had not thought of and I am grateful to him for bringing that to the Committee’s attention. If this saving is going to be made, it would be sensible to say whether it is made early on, because downstream, as my hon. Friend indicated, there will no doubt be a tapering.

To be honest with the Committee, the Minister is only proposing new clause 2 because he got done over in the other place by Members of the House of Lords and could not get the Bill through the House of Lords without this new clause. He got done over in the other place because the Justice Committee unanimously called for

“the Financial Conduct Authority to monitor the extent to which any premium reductions can be attributed to these measures and report back to us after 12 months.”

I go back to the all-party Justice Committee, chaired by a Conservative MP, with a Conservative majority, which said in its report on this Bill that there should be a report within 12 months. We have been helpfully reminded by my hon. Friend the Member for Brighton, Kemptown why we suggested that at the time: because we wanted to see the impact within 12 months.

On the amendment tabled by Lord Sharkey in the House of Lords, Lord Keen, the Minister dealing with this in the other place, said on Report:

“the Government are not unsympathetic to the underlying intention of Amendment 46, as tabled by the noble Lord, Lord Sharkey. The point is that having made a firm commitment, insurers should be accountable for meeting it.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1632.]

That is what this Minister’s colleague said in the House of Lords, and I do not disagree with it. I only say to the Minister that April 2024 seems a tad far in the future to secure the proposals that he is putting to the Committee today.

The Minister needs to say firmly to the Committee what he anticipates the savings to be now, how he will monitor what the insurance companies are making—not just now, but in the next five years—and how he will hold the insurance companies to account. How will he ensure that, whatever date we end up with—be it 1 April 2024 or, if the amendment of my hon. Friend the Member for Ashfield is accepted, as I hope it will be, an earlier date—they meet their obligations and give the money back to the people who are funding it in the first place?

[The Minister of State, Ministry of Justice (Rory Stewart)]

It is a great honour to serve under your chairmanship, Sir Henry. I am grateful to right hon. and hon. Members for bringing proposing the amendments and new clauses.

Effectively, as the right hon. Member for Delyn has pointed out, new clause 2 was introduced with a lot of influence from the House of Lords—it was driven by Opposition Members of the House of Lords to meet exactly the concerns raised by right hon. and hon. Members. Therefore, I am tempted to argue in my brief argument that amendment 17 and new clause 6 are, in fact, unnecessary. The noble Lords did a good job in new clause 2 of addressing many of the concerns raised in the debate, which is why the Government are keen to ask for the Committee’s support.

At the heart of this, the Committee will discover, is a fundamental disagreement about the nature of markets, which will be difficult to resolve simply through legislation. There are profoundly different views on both sides of the House about what exactly is going on in a market. Again and again, all the arguments—from the hon. Member for Jarrow (Mr Hepburn) right the way through to the eloquent speech by the right hon. Member for Delyn—rest on the fundamental assumption that every company, insurance or otherwise, in the country is simply involved in trying to charge their consumers as much as possible and provide as few services as possible, and that there is nothing to prevent their doing that.

Of course, what prevents companies from doing that ought to be competition. It does not matter whether that is the insurance industry or, to take a more straightforward question, why Tesco’s does not charge £50 for a loaf of bread and try to produce one slice. In the end, the decision on what premiums are charged will be driven by competition between different insurance companies. All the arguments, whether in relation to these or other amendments, are based on that fundamental misunderstanding. The Labour party is again effectively pushing for a prices and incomes policy. They are trying to get the Government to fix the prices of premiums and control the prices that insurance companies charge because they simply do not trust the Competition and Markets Authority, the FCA, the insurance industry or any other business to pass on savings to consumers.

[David Hanson]

With respect to the Minister, in this case the Labour party is just asking for confirmation of what the Government want to do. They said that they want to save £1.3 billion, and in November 2015 said that they would give back £50 as premiums. That figure has changed. All I am asking is this: what is their estimate of the figure today? The Minister should be able to give an estimate because he has done so on two previous occasions—in an assessment of the Bill’s financial implications in the Conservative party manifesto, and in the Chancellor’s statement to the House of Commons.

[Rory Stewart]

Unfortunately, something is being missed in the way the right hon. Gentleman is framing his arguments. He is suggesting that there is a fixed, stable situation—the Chancellor of the Exchequer offered £50, nothing changed, and now it is £35. If that were true, it would indeed be a disgrace, but the reality is that, following the negotiations that took place in the consultation and in the House of Lords, the savings that the insurance companies will realise and will be in a position to pass on to the man or woman paying the premium have been considerably reduced.

When the Chancellor of the Exchequer—[Interruption.] The right hon. Gentleman might be interested in listening to the answer rather than talking to somebody else. When the Chancellor of the Exchequer spoke, he of course suggested that all general damages would be entirely removed. His proposal was that there would be no general damages at all. It is therefore perfectly reasonable. If no general damages at all were paid, the insurance company’s savings would be considerably larger, and the savings passed on to the consumer might indeed have been £50.

Due to the very good work that the Opposition and the noble Lords put in, there have been a number of compromises to the Bill, which mean that the savings passed on to the insurers, and from the insurers in the form of premiums, will be considerably reduced. One of those compromises is that, whereas in the past there were going to be no general damages paid to anybody getting a whiplash injury of under two years, there is now a tariff for money to be paid out. As it gets closer to two years, the tariffs paid out will be much closer to the existing Judicial College guidelines, so the savings will be considerably less.

--- Later in debate ---

[Rory Stewart]

I will return to the fundamental disagreement between right hon. and hon. Members. We can all agree that there were significant savings to the insurance industry. We can all agree that some of those savings were passed on to customers and that premiums ceased to rise at the rate at which they had been. There is some disagreement between the two sides of the House about whether enough of those savings were passed on—we argue that the industry passed on sufficient savings—and whether premiums went up more than they should. However, without Government new clause 2, the evidence or information will not be available to people in order to make such arguments.

It is not enough to produce a general figure, saying, “Here is £11 billion, and this is how much was passed on in premiums.” That is why the new clause has no less than 11 subsections that detail the kind of data that would need to be extracted from the insurance industry by the date recommended in order to prove that case. I was asked why reporting would not be done annually. The answer, of course, is that a claim can be brought any time within three years of an accident. The date takes into account that the law is due to come into effect in 2020. We add three years to that for the claim, and then time for the data and evidence gathering in order to report in 2024.

[David Hanson]

If the Bill comes into effect in 2020 and we add three years, that is 2023. However, new clause 2(7) says:

“Before the end of a period of one year beginning with 1 April 2024”.

That means that the report may not be done until the end of March or April 2025. It may be published by the Government after that, and then there will be discussion. Therefore, even on the Minister’s timetable, we are talking about three years past the 2023 deadline that he indicated to the Committee a moment ago. He should reflect on that and table an amendment to his new clause on Report that brings forward the proposed date considerably.

[Rory Stewart]

The reason why I respectfully request that the Government amendments are supported and the Opposition amendments are withdrawn is that pushing for one-year rather than three-year reviews and attempting to price fix the result would leave the opposition amendments open to judicial review and create an enormous, unnecessary burden on the market. Our contention is that the market already operates—we have the Competition and Markets Authority to argue that that is the case—and, by introducing our new clause, we will be able to demonstrate that over time. It is a very serious thing.

I remain confident that, if insurance companies are compelled to produce such a degree of detail and information to the Financial Conduct Authority and the Treasury, they will pass on those savings to consumers because, were they not to, they would be taking a considerable legal risk. The industry initially resisted this move, and understands that it is a serious obligation.