Civil Liability Bill [Lords]

Debate between Debbie Abrahams and Richard Burgon

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 4th September 2018 Commons Chamber

[Richard Burgon]

Right across the justice sector, the real targets of the Conservatives’ reforms have not been lawyers, but ordinary people. That is the reality.

I will move on to the measures that the Government have included in the Bill. We are very concerned by the tariff system, which would fix the amount of compensation in so-called minor whiplash claims. I will come on to the fraudulent claims later and the measures—or lack of measures—to tackle that in the Bill. However, the reality is that even if the Government’s case about the scale of that problem were correct—I note that the Commons Library says clearly that it is “not universally accepted”—the way the Government are seeking to resolve this would still be wrong. The Government’s main proposal to tackle fraud is to penalise genuine whiplash victims. The proposed new levels of compensation under the tariff system are significantly lower than current average compensation payments. Surely that is unfair.

For example, compensation for an injury lasting up to six months would fall to a fixed £470, down from a current average of £l,750. For an injury lasting 10 to 12 months, compensation would be £1,250, down from a current average of £3,100. For an injury lasting 16 to 18 months, it is £2,790, down from £3,950. Those are considerable drops in compensation for injured people. This will make a real difference to working people and their families in the worst possible way. It is a crude and cruel policy that penalises genuine victims. Who really stands to gain? It will be insurers who will be excused from paying full compensation, even where negligence has occurred.

There was widespread discontent among legal experts in the Lords regarding this tariff approach. Lord Woolf, former Lord Chief Justice of England and Wales, said:

“it results in injustice and it is known to result in injustice. Indeed, no one can deny that it results in injustice.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1620.]

Lord Judge, another former Lord Chief Justice of England and Wales, said:

“We cannot have dishonesty informing the way in which those who have suffered genuine injuries are dealt with. That is simply not justice.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1600.]

In a very powerful intervention, Baroness Berridge said:

“I have met many a claimant for whom the difference in damages now proposed by the introduction of the tariff…is a significant matter for many peoples incomes up and down this country. I cannot have it portrayed that this might not make a great deal of difference to many ordinary people in the country…in this Bill, the intended consequence…will be to affect that group of people.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1611.]

Baroness Berridge is of course a Conservative party peer.

One key point in our opposition is the slashing of compensation for genuine claimants. Another is that it will be the Lord Chancellor setting tariff levels, which risk becoming a political football or, rather, being reduced ever further by the powerful insurance industry lobby. Tariffs are a rather blunt instrument; people should simply get the correct compensation for the specific injuries they have suffered. As former Lord Chief Justice Lord Woolf says, establishing the correct level of damages is

“a highly complex process of a judicial nature”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1593.]—,

and damages might vary from case to case, making the fixed tariff inappropriate. We will therefore propose amendments to delete the power for the Lord Chancellor to set the tariff.

If the Government are set on going ahead with tariffs, the judiciary should be involved in setting them. The Judicial College currently issues guidelines with levels of damages for different injuries. Lord Woolf stated:

“they have been hugely important in the resolution of personal injury claims.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1594-95.]

I hope that those across this House who profess to defend the independence of the judiciary would agree that tariffs should be determined by the Judicial College and not by political actors, of whatever political persuasion. We will be pursuing amendments to that effect.

That is not an end to the powers that the Lord Chancellor is accumulating. This Bill even allows him to define whiplash. Surely, it would be more appropriate for the definition to be set by medical experts rather than politicians, especially when an incorrect definition could mean people with injuries much more serious than whiplash having them classified as such.

The Government’s justification for genuine claimants suffering substantial reductions in damages is reducing the incidence of fraudulent claims. The Government give the impression that it is an uncontested point that fraud is at the levels that the insurers claim, but that is contested. That is not to say that there are not fraudulent cases—of course a small minority of cases are fraudulent—but we need to properly understand the problem if we are going to have genuine solutions.

[Debbie Abrahams]

The Law Society considers that fraudulent claims should be addressed by targeting the fraudsters and that the vast majority of honest claimants should not have to put up with the changes proposed in the Bill.

[Richard Burgon]

That is absolutely right; it is a powerful moral argument. It is immoral to make the honest vast majority pay—literally—for the fraudulent activities of a tiny minority. The Justice Committee explained:

“we are troubled by the absence of reliable data on fraudulent claims and we find surprising the wide definition of suspected fraud”.

Looking at premiums, the insurance industry’s own estimates show that the amount paid out on whiplash claims fell by 17% between 2007 and 2016. What happened to premiums in this time, while the amount paid out on whiplash claims fell by 17%? They actually rose by 71%.

There is therefore little in this Bill, aside from penalising genuine victims, to deter fraud or to prevent the nature of any fraud from changing to circumvent the new measures.

Compulsory medical reports are a good idea, but there is little to limit insurance companies settling too quickly on low claims that they may view with suspicion but pay out on anyway because it is cheaper to settle than to contest them. There is little on controlling unscrupulous claims management companies. Beyond warm words from the insurance companies themselves, there is also no mechanism yet to guarantee that lower insurance premiums will result. The Secretary of State said that something is on its way in relation to that, but we will reserve judgment until we see what concrete measures the Government actually propose.

We will therefore propose amendments that toughen up these measures but do not penalise genuine victims. One amendment would reduce the period for which the tariff applies to one year, not two. It is much less likely that fraudulent cases will be those lasting for the longest time. Two years of suffering is surely too long to be deemed a minor injury. Given that there is no evidence that workers such as ambulance drivers or HGV drivers who suffer whiplash during their employment are behind any fraud whatever, will the Minister find a way to exclude those workers from this legislation?

Finally, where someone has suffered an injury that will leave them with many years, or a lifetime, of disability, they need to be certain that the lump sum compensation award they get has been properly worked out so that it does not run out. The discount rate is key to this calculation. Victims should always get 100% of the compensation they are entitled to. Getting that right means that someone whose mobility is restricted after a serious accident will have enough money over their lifetime to fund the extra costs that reduced mobility will entail. Getting it wrong would leave seriously injured people getting less compensation than they are entitled to, with potentially hugely damaging consequences for their quality of life. That is why we will closely scrutinise the Government’s proposals to change how the discount rate is set, so it is determined not by the powerful insurance lobby but in the interests of society as a whole. That is why we will table amendments to strengthen the safeguards in the Bill and ensure that all victims get 100% of the compensation they are entitled to.

To conclude, the Government have an opportunity—an opportunity to do the right thing and to show that this is not just another attack on access to justice. They can do that by backing amendments to remove the barriers to justice that are all too prevalent in the Bill. If they fail to do so, we are clear that we will vote against the Bill.