Civil Liability Bill [Lords]

Ellie Reeves Excerpts

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

[Chris Philp]

Once again my hon. Friend makes a very good point—two very good points, in this case. The operation of claims management companies, which have been actively engaged in encouraging the public to commit fraud, has had an extremely negative effect in this area. I want an outright ban on them making cold calls, but I am slightly concerned that even if the Government take all the action that he and I would like, these people, being extremely adept in such matters, would adapt their behaviour to circumvent the legislation and regulation. For example, they might start making cold calls from outside the UK’s legal jurisdiction, as we saw following the ban on referral fees that came into force two or three years ago. Insurance companies were banned from receiving referral fees from claims management companies, but some insurance companies and claims management companies sought to circumvent the ban by setting up what they euphemistically termed “alternative business structures”, whereby the claims management company effectively remunerated the insurance company via an equity stake rather than a referral fee. I am therefore concerned that even if we take all the action we can, these often rather dubious characters will find new and ingenious ways of circumventing the legislation.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

I welcome the fact that the hon. Gentleman supports an outright ban on cold calling by claims management companies, but does he agree that the Government’s measures in the Financial Guidance and Claims Act 2018 do not go that far? Rather than punishing injured victims, would it not be far better to introduce that outright ban on claims management companies’ cold calling?

[Chris Philp]

As I said a moment ago to my hon. Friend the Member for Bromley and Chislehurst, an outright ban would be welcome—it might be something the Government are looking at in any case—but because these people are so ingenious at circumventing even the best-written rules and regulations, there would still be a problem.

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[Ellie Reeves (Lewisham West and Penge) (Lab)]

It is a pleasure to speak in this debate. I welcome the opportunity to try to counter the worst aspects of this Bill by speaking to Opposition new clauses 1 and 2.

Access to justice may sound like a catchphrase or buzzword, but it underpins so much within our society, and it should not be bandied about and dismissed with the cavalier attitude currently shown by this Government. The Bill will cause a regression in the ability of genuinely injured people to seek compensation and justice for their injuries. The narrative of wanting to clamp down on fraudulent claims has long worn thin and the statistics the Government are using to justify these policies are entirely erroneous. Of course fraudulent claims are wrong and should be investigated and clamped down on, but we are not experiencing the epidemic levels we have been repeatedly warned of. In 2017, 0.22% of all motor claims were proven to be fraudulent; bearing in mind that that is for all motor claims, whiplash injuries will be an even smaller percentage.

Instead of looking at empirical evidence to create legislation, the Government are using disputed statistics to legitimise their agenda. This is wrong, and the impact on access to justice that the Bill will have will be substantial: 350,000 injured people without the free legal cover they are currently able to access. That is the true cost of implementing the Government’s package of measures.

As I outlined on Second Reading and in Committee, the changes to the small claims limit—although not on in the Bill, they are intrinsically related to its content—will be utterly damning on any reasonable definition of access to justice. The proposal to increase the small claims limit from £1,000 to £5,000 in road traffic injury cases and from £1,000 to £2,000 in all other personal injury claims would mean thousands of injured people could fall out of scope for free legal advice and representation and could be denied justice. Costs are not recoverable from the losing party in the small claims court, so injured people will either have to pay their legal costs themselves, which is likely to be cost-prohibitive, or, more likely, forgo legal assistance altogether, or simply not pursue a claim.

In giving evidence during the Justice Committee’s inquiry into the small claims limit, the Minister in the Lords, Lord Keen, suggested that injured people could instead seek advice from their citizens advice bureau. I am sure that many Members will understand the great number of cuts that have befallen citizen advice bureaux in recent years, and this suggestion is not only unfeasible but is completely out of touch. If there is to be any change in the small claims limit, it must be done proportionately by pegging it against consumer price inflation.

[John Howell (Henley) (Con)]

rose—

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[Ellie Reeves]

I want to make some progress.

That this must be done in this proportionate way is a widely held view, and those who advocate the approach include the Justice Committee, which published a recommendation in its small claims limit report in May; trade unions, including USDAW; the Association of Personal Injury Lawyers; the Law Society; and over 50 Members of this House who have signed my early-day motion calling for the increase to be in line with CPI inflation. These disproportionate and misguided hikes are, it seems, favoured only by this Tory Government and the insurance industry.

New clause 1 in my name and those of my hon. Friends would limit increase in the whiplash small claims limit in line with inflation and permit the limit to increase only when inflation had increased the existing rate by £500 since it was last set. By linking any rise to inflation, it would remove the power from the Lord Chancellor to determine the level and would instead tie it to an economic measure used by both Government and the Bank of England. The Lord Chancellor has an important role, but it is not one that should be afforded powers to artificially dictate rates such as the small claims limit for political reasoning or motivation. If we remove the politics from the decision-making process by using a widely recognised measure such as CPI, people, whether insurers or injured people, can have confidence in the system. It would provide certainty and clarity, be easy to track and would allow stakeholders to adjust for subsequent rises accordingly.

Complementing new clause 1, new clause 2 would firm up the proposal made by my hon. Friend the Member for Enfield, Southgate (Bambos Charalambous) in Committee that would limit increases in the small claims limit for children and people lacking capacity to make decisions for themselves. The Minister stated in Committee that vulnerable road users will be excluded from the Bill and from secondary measures on the small claims limit. This is welcome, but it is disappointing that no Government amendments have been tabled on Report to shore up that promise and include it in the Bill immediately. I hope that this is not a repeat of the Government’s promise to pass the predicted £1.3 billion-worth of insurance industry savings on to customers. I am afraid that the amendment in Committee on that issue was little more than a fudge, and its effect on customers’ premiums will be negligible at best, while the aggressive changes in the draft tariff system will involve reductions of up to 87% in payments for pain, suffering and loss of amenity from road traffic accident-related soft tissue injuries. Under the proposed tariffs, people will be compensated more for a flight delayed for three hours than for being injured for three months. The widely held and understood values of access to justice should not be undermined on a whim to satisfy the insurance industry.

What these Opposition new clauses highlight above all else is the true damage this Bill will do to access to justice and the principles that uphold the right to access to justice. In Committee, I warned the Minister that the changes made by the Government’s package of measures will be similar in scope to the disproportionate implications of the Legal Aid, Sentencing and Punishment of Offenders Act 2012—LASPO—and the unlawful introduction of employment tribunal fees, both of which are key pieces of Tory legislation that have done nothing but remove the rights of many people in seeking access to justice. What we have been left with is an 84% fall in civil legal aid and a 68% fall in the number of employment tribunal cases as a result of these Tory policies.

[Matt Rodda (Reading East) (Lab)]

Does my hon. Friend agree that this is part of a wider package of pressure on people who have some of the lowest incomes in our society? I wish to be associated with her new clauses and her points, and does she agree that the Government’s proposed measures are part of a wider package of pressure on the most vulnerable people in society?

[Ellie Reeves]

I agree with my hon. Friend. This is yet another attack on ordinary people’s access to justice. Should the Bill pass its remaining stages today, those shunned by LASPO and tribunal fees will be joined by an additional 350,000 injured people who will be left without the free legal cover they can currently access.

[John Howell]

I thank the hon. Lady and fellow Select Committee member for giving way. She has talked about access to justice, but she has not mentioned at all the impact of the online courts. Does she have a feeling about what sort of effect that would have for increasing access to justice?

[Ellie Reeves]

I thank the hon. Gentleman for making that point.

The Bill will have a significant impact on access to justice, and we know that the portal system is nowhere near ready to accommodate the changes. It has not been properly tested. Under successive Tory Governments, access to justice has fast become a luxury available only to the few. A recent survey showed that 63% of Unison members would not proceed or be confident to proceed with a claim without legal representation. The small claims limit changes in the Bill will push nearly two thirds of genuinely injured people away from pursuing a claim if they do not meet the arbitrarily imposed criteria dictated by the Lord Chancellor. The idiom of adding insult to injury has never been more apt, and it is surely time to think again.

[Bim Afolami (Hitchin and Harpenden) (Con)]

I have done something a bit novel: I have listened to what has been said in the debate, and my remarks will focus on that. I did not come here with a prepared speech; I came here and listened to the contributions from both sides.

I would like to start by responding to the hon. Member for Lewisham West and Penge (Ellie Reeves) and taking up a couple of points that she made. The first relates to the idea that the Government are somehow doing this because of special pleading from the insurance industry and that they are somehow in bed with the industry. The aim of the Bill is to reduce premiums for individuals. That is the focus of the Bill. If I were the insurance industry, I would want premiums to go up, but the aim of this package of measures is for premiums to go down for ordinary people. I therefore do not agree with her assertion.

Another point that the hon. Lady made was that the setting of the limit by the Lord Chancellor, or any future Lord Chancellor, was arbitrary, unfair and unjust, but that is why we have this House and why we have Ministers. They are not here just to do interviews on the “Today” programme. We have Ministers to make judgments that they are then held democratically accountable for. I accept that Labour Members—or, indeed, at some point in the very distant future, Conservative Members, when they are sitting on the Opposition Benches—might dislike a judgment that is made by a future Lord Chancellor, but we settle these things through the democratic accountability of this House. To reject that principle and to suggest that every limit in any area of law, whether this or anything else, should somehow not—

[Ellie Reeves]

I thank the hon. Gentleman for giving way. He talks with great passion about the democratic accountability of this House. Does he therefore agree that any changes to the small claims limit should not be done by negative statutory instrument, as the Government are proposing, and that they should instead be debated on the Floor of the House?

[Bim Afolami]

That is an interesting point. I have served on many Committees, as we all have, and some have huge amounts of engagement from lots of Members while others have less. But this House is not just this Chamber; it is also all the Committee Rooms. Negative statutory instruments provide a way for significant amounts of secondary legislation—I do not know how many pieces of legislation; probably hundreds—to go through Parliament. I cannot agree with the hon. Lady 100% that using that procedure will always result in a lack of democratic accountability, because frankly, in modern government, it plays a significant part in our governance process. I recognise the point she makes, however, and it is fair to say that sometimes people do not pay as much attention in Committees as they might do, but that is fundamentally the case for this Chamber, too.

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[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.

[Ellie Reeves]

The hon. Gentleman is right in saying that special damages are not included in the tariff. However, the point that needs to be made is that under the tariff system someone could, as he rightly points out, be off work for a very, very long time, but because of the way that the tariffs are set, their claim would fall into the small claims track, meaning that they would not be able to have their legal costs covered, so would be unlikely to get representation for their claim. That is likely to mean that they could have a big special damages claim that is never recoverable because they will be unable to afford to pursue their claim. Does he agree?

[Alex Chalk]

No, I do not. First, in any event, as the hon. Lady knows, if the person’s claim extends beyond £5,000, it will go on to the fast track, so they will be entitled to get that cost. Secondly, the concern that a number of solicitors raise about this is to say, “The really difficult thing that you need to claim—the thing that is hard sometimes to prove—is the general damages element.” That is why they have become so indignant about it. In fact, the special damages claim is rather easier to quantify, and I do not think that people would, in effect, be frozen out of justice. Thirdly—if this aspect of the Bill had not been changed, I think I would be opposing it—for the really difficult claims where, for example, somebody has been injured at work and faces, as I accept entirely, the added burden of having to take on their employer, the threshold does not apply in the same way. It is absolutely right that the Government have moved on that to ensure that anything above £2,000 means that people go on to the fast track.

On the hon. Lady’s specific point about the tariff, is it right to say that this is an egregious departure from anything that we have known before in English law? That is putting it far too high. My hon. Friend the Minister has already indicated that the Criminal Injuries Compensation Authority sets that principle in any event. Furthermore, it is a principle adopted in plenty of other countries that are signatories to the European convention on human rights, Italy for one.

It is also worth stepping back to consider the criminal law. Before the Sentencing Guidelines Council, as it was then called, started to set its guidelines in terms of tariffs for criminal penalties, there was a concern that it would be intruding on the discretion of the courts, but in fact it has worked very well. Defendants, lawyers and judges have really welcomed the guidelines, which set clearer tariffs, because that provides a degree of clarity. Of course, it is not a direct equivalent because judges still retain some discretion within the guidelines, but it does make the point that completely open-ended discretion does not exist everywhere throughout the legal system.

There are other mitigating factors that allow me, and people like me, to conclude that these are fair and proportionate proposals. First and most important is the exceptional circumstances uplift. Clause 5(1) says:

“Regulations made by the Lord Chancellor may provide for a court—

(a) to determine that the amount of damages payable for pain, suffering and loss of amenity in respect of one or more whiplash injuries is an amount greater than the tariff amount relating to that injury”.

In other words, there is a safety net in circumstances where the law would otherwise do an injustice. That is really important and ought to give a lot of comfort to Opposition Members who might otherwise be concerned. The second reason I feel comforted is that the tariffs are clearly going to have the engagement and input of the judges. That is why Lord Brown concluded that there was nothing wrong in principle with a tariff system.

There are of course things that have to be got right. It is critically important that any savings that are derived from this are truly passed on to motorists. I want to ensure that constituents in Cheltenham receive the benefits. We need to ensure that young people who are setting out on their careers and need their car for work, for whom every last £10 is critically important, will be receiving these benefits. If they do, then my clear view is that these principles are sensible, proportionate and calibrated, and have a safety net. Even though—I probably ought to have declared this at the beginning, Madam Deputy Speaker—my wife is a personal injury lawyer, I feel confident that I can take on the domestic dispute just as I have taken on Opposition Members in this House.