Civil Liability Bill [Lords]

Gloria De Piero Excerpts

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

[Gloria De Piero (Ashfield) (Lab)]

This has been an interesting and wide-ranging debate. I shall try to summarise many of the points that have been made.

The right hon. Member for Chipping Barnet (Theresa Villiers) and the hon. Member for Bexhill and Battle (Huw Merriman) talked about the need to tackle the high premiums applying to young drivers. My hon. Friend the Member for Cardiff Central (Jo Stevens) spoke about her personal experience of representing low-paid workers who would be hurt by the Bill. The hon. Members for South Norfolk (Mr Bacon), for North Warwickshire (Craig Tracey) and for Stoke-on-Trent South (Jack Brereton) focused on insurance fraud and what they perceived to be a compensation culture, and expressed their hope that the Bill would reduce premiums.

My hon. Friends the Members for Jarrow (Mr Hepburn) and for Hammersmith (Andy Slaughter) spoke of a pattern of behaviour on the Government’s part in the last eight years, involving attacks on working people and their access to justice. In an interesting speech, the hon. Member for South Leicestershire (Alberto Costa) expressed his concern about a rise in premiums despite a reduction in the number of claims. My hon. Friend the Member for Lewisham West and Penge (Ellie Reeves) made an excellent speech in which she described a legal system in disrepair and said that the Bill would have a disproportionate effect on innocent victims’ access to justice. My hon. Friend the Member for Cambridge (Daniel Zeichner) spoke of vulnerable road users, and his worries about injured workers’ representation. The hon. Member for Croydon South (Chris Philp) described his experience of weekly phone calls following his accident, and Members on both sides of the House condemned such calls.

My hon. Friend the Member for Harrow West (Gareth Thomas) talked about the attacks on working people’s representation that would result from the Bill, but also asked whether it was time to consider a legal cap on insurance premiums. The hon. Member for Bromley and Chislehurst (Robert Neill), the Chair of the Justice Committee, called on the House to hold the feet of the insurance industry to the fire when it came to reducing premiums.

My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) spoke about cycling, and about how pedestrians, motorcyclists and cyclists would be removed from the scope of the Bill, as indicated by the Secretary of State. The hon. Members for Spelthorne (Kwasi Kwarteng) and for Walsall North (Eddie Hughes) talked about international comparisons on whiplash, and asked why there were fewer instances in other countries. Like so many other Labour Members, my hon. Friends the Members for Enfield, Southgate (Bambos Charalambous) and for High Peak (Ruth George) focused on the attack on injured people, and the bonanza for the insurance companies.

The changes proposed in the Bill will leave police officers, paramedics and firefighters who are injured on the roads without legal support and subject to fixed-tariff compensation, which will potentially reduce the damages that they can receive. The small-claims changes hidden behind the Bill will leave workers like the supermarket assistant, who was left unable to work for weeks after suffering a foot injury while moving stock, ineligible for legal support. Why? Because she was awarded £1,705. As a result of the package of changes associated with the Bill, workers like her, with claims worth less than £2,000, will either have to fight their cases alone or pay for lawyers with money that was meant to cover their injuries and losses.

Unison says that nearly two thirds of the people whom it represents—workers injured through no fault of their own, when there is no whiplash and no suggestion of fraud—would not seek justice without legal representation. The general secretary of USDAW, representing nearly half a million workers, says the changes

“will have a knock-on effect for workplace health and safety, as less scrupulous employers let standards slip because they know they’re unlikely to face the consequences in court.”

There is no suggestion of fraud or of increased numbers of claims by people injured at work. The Government should exclude such claims from this package of measures and from any small claims increase. We all want to stop insurance fraud, but a whopping 400% increase in the small claims limit for all road traffic accident claims means all injured road users—HGV drivers, firefighters, parents driving their kids to school—will be treated like fraudsters claiming falsely for whiplash, and be left with reduced tariff compensation and no legal help. Why?

The justice reforms that the Government passed in 2012 have saved insurers an eye-watering £11 billion, yet they want more. Back then insurers promised to reduce premiums, yet they are higher now than ever. Despite that, the Government have again swallowed the insurers’ promises to reduce premiums hook, line and sinker. This Bill saves insurers another £1.3 billion a year. Again, the rich get richer, the poor poorer. There appears to be a collective amnesia from this Government about the Prime Minister’s promise in 2016, so let me remind the House:

“The Government I lead will be driven not by the interests of the privileged few, but by yours…When we pass new laws, we’ll listen not to the mighty but to you.”

Yet here we are, two years later, with a policy created for the mighty: profitable insurance companies call the shots; working people pay the price.

If the Government will not listen to us and will not listen to the trade unions, will they listen to a Justice Committee headed by a Conservative Member or to experts like Lord Justice Jackson? In his report, approved by the Justice Committee, Jackson proposed that the limit should stay at £1,000 until “inflation warrants” an increase to £1,500. Jackson goes on to say that it should not be increased at all until inflation, from 1999, gets it to £1,500. The Justice Committee sends the same message; it could not have sent a clearer signal to the Government to stop this headlong rush to undermine access to justice.

Labour will be abstaining today in the hope that the Government will think again before the Committee stage. Without some key changes, we will vote against the Bill’s Third Reading. We sincerely hope, for the 99% of injured people even the insurers admit are honest, that they reconsider.

Civil Liability Bill [ Lords ] (First sitting)

Gloria De Piero Excerpts

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

[Robert Courts (Witney) (Con)]

Further to that point of order, Mr Stringer. I would like to make a similar declaration, because I used to practise as a personal injury barrister.

[Gloria De Piero (Ashfield) (Lab)]

Further to that point of order, Mr Stringer. I declare the advice that I have received from Thompsons Solicitors, which will be entered in the register.

[Craig Tracey (North Warwickshire) (Con)]

Further to that point of order, Mr Stringer. I declare an interest as chair of the all-party parliamentary group on insurance and financial services, and as a former insurance broker.

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[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

[Gloria De Piero]

I beg to move amendment 8, in page 1, line 4, leave out clause 1 and insert—

“Definition of whiplash injury

(1) In this Part ‘whiplash injury’ means an injury, or set of injuries, of soft tissue in the neck, back or shoulder that is of a description specified by the Chief Medical Officer of the Department of Health.

(2) For the purposes of this Part a person suffers a whiplash injury because of driver negligence if—

(a) when the person suffers the injury, the person—

(i) is using a motor vehicle other than a motor cycle on a road or other public place in England or Wales, or

(ii) is being carried in or on a motor vehicle other than a motor cycle while another uses the vehicle on a road or other public place in England or Wales,

(b) the injury is caused—

(i) by the negligence of one or more other persons, or

(ii) partly by the negligence of one or more other persons and partly by the negligence of the person who suffers the injury, and

(c) where the negligence of the other person or persons consists in an act or acts done by the person or persons while using a motor vehicle on a road or other public place in England or Wales.

(3) The fact that the act or acts constituting the negligence of the other person or persons is or are also sufficient to establish another cause of action does not prevent subsection (2)(b) being satisfied.

(4) For the purposes of this section references to a person being carried in or on a vehicle include references to a person entering or getting on to, or alighting from, the vehicle.

(5) In this section—

‘act’ includes omission;

‘motor cycle’ has the meaning given by section 185(1) of the Road Traffic Act 1988;

‘motor vehicle’ means a mechanically propelled vehicle intended or adapted for use on roads;

‘road’ means a highway or other road to which the public has access, and includes bridges over which a road passes.”

This amendment would require the Chief Medical Officer to define “whiplash injury”.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 9, in clause 1, page 2, line 3, at end insert—

“(iii) unless in respect of 4(a)(i) or (ii) the person is in a motor vehicle during the course of their employment, in which case Clause 1 shall not apply.”

This amendment would exempt people suffering a whiplash injury during the course of their employment from this definition.

New clause 9—Exemption for vulnerable road users and people injured during the course of their employment—

“(1) Nothing in Part 1 of this Act other than Clauses 6 and 7 shall apply to a claim made by—

(a) a pedestrian, cyclist or horse rider; or

(b) a person injured in the course of their employment.”

This new clause would exempt vulnerable road users and people injured in the course of their employment from the provisions of Part 1 of the Bill, except Clauses 6 and 7.

Clause stand part.

[Gloria De Piero]

It is a pleasure to serve under your chairmanship, Mr Stringer. With amendment 8, we seek to address the Government’s perplexing lack of faith in experts and their overweening belief that their own judgment is right. In the Bill, the Government have chosen to sideline doctors and, as we will see later, judges—two groups rightly held in high esteem in our society. Apparently, the Government know better than them. Quite simply, with this amendment, we say, “This is a medical issue, so ask a doctor.”

Although we have seen the same arrogance that the Government know best and a lack of respect in other areas of policy in recent years, this is the most gratuitous and egregious example I can recall. The only explanation that I can think of as to why they do not want experts involved is that they think that their knowledge is greater and better—or perhaps this is an example of the nanny state that they say they do not believe in.

The Government have chosen not to ban all compensation for whiplash, which indicates that they accept its validity as a medical condition, but they attempt to define it themselves. If they accept that it exists as a medical condition, surely it needs a medical definition. The Minister may tell me that the definition in the Bill comes from doctors. If so, might I ask who? They make no mention of any input from medical experts. Could it be that they have not mentioned their sources because the adviser in this case was all too familiar from almost every other aspect of this Bill? And might the definition of a medical condition in this Bill possibly have come from the insurers, who stand to profit enormously from this huge shift in the law?

On Second Reading in the Commons, the Chair of the Justice Committee, the hon. Member for Bromley and Chislehurst (Robert Neill), alluded to the possibility that in certain parts of the Bill the Lord Chancellor might be acting in a quasi-judicial capacity, although I note that the Minister did not respond to that suggestion. However, even if that were the case, although he might be required to act independently he would not be transformed into a medical expert, which is what is required here.

Before I talk about amendment 9 and new clause 9, can the Minister confirm that vulnerable road users will be exempted from the Bill and from the small claims limit? Also, will he define who a vulnerable road user is?

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

Vulnerable road users will be excluded from the Bill and from secondary measures on the small claims court limit. A vulnerable road user is anybody who is neither driving a motor vehicle nor a passenger in one; in other words, the definition includes pedestrians, horse riders, motorcyclists or anyone else on the road who is not in a motor vehicle.

[Gloria De Piero]

I thank the Minister for putting that on the record.

We absolutely agree that there is a need to act against insurance cheats; no one supports fraudsters. The amendment would not affect the pursuit of those who are claiming fraudulently. By accepting this amendment, the Government can still hit their target. Through this amendment, we simply want to protect those who are injured in the course of their work through no fault of their own. Before it is suggested that this somehow drives a coach and horses through the Government’s intentions, we are not talking about huge numbers of cases.

Thompsons Solicitors deals with workers’ injuries day in and day out. The majority of its work is for the trade unions. Just 16% of its case load consists of injuries from road traffic accidents, and of that number whiplash cases comprise less than 20% of the total. Once we eliminate the large number of these claims that are not work-related, we are left with a tiny percentage of claims related to whiplash that people have suffered in the course of their work.

I have seen no complaint of fraud levelled by the Government against workers nor any suggestion that they are anything to do with the compensation culture of which there has been so much talk, although notably Lord Young said in his report, “Common Sense, Common Safety”, that in any case that view was a perception and not a reality. The Association of British Insurers, which has been very active around this Bill, has produced no examples of fraudulent claims by workers.

This amendment is an opportunity for the Government to exempt employers’ liability claims from the Bill and at the same time exclude them from the small claims limit. If the Government refuse to exempt workers, are they saying that any whiplash claim is evidence of fraud, whoever it is made by? If so, why have they not banned all whiplash claims? If they refuse to exempt workers, are they saying that the police officer, the paramedic, the school bus driver or the firefighter who suffers whiplash while working hard for our communities is scamming it?

Given that the Government have exempted vulnerable road users—horse riders, pedestrians and cyclists—from both the Bill and the associated small claims changes, what is their justification for not exempting workers? Are they saying that vulnerable road users are worthy of more protection than workers? Perhaps the justification is that the cyclist, the pedestrian and the horse rider do not take out motor insurance for their road use, but neither does the professional driver. If the justification for the exemption of vulnerable road users is that they are uniquely exposed, surely the professional driver is, too? For instance, there is the police officer in a high-speed chase or the HGV driver who is on the road for eight hours a day. The reality is that the Government have exempted vulnerable road users because including them would be politically untenable.

[Craig Tracey]

I just do not see any reason why someone who drives as part of their employment should recover a different sum to somebody else—one of our constituents, for example—who is driving in the normal daily course of their life, because they can still claim loss of earnings. The Bill does not change that, so they can still be compensated if they lose money as a result of being unable to work.

[Gloria De Piero]

It would be grotesque nonsense for a cyclist or a pedestrian injured through no fault of their own to find themselves subject to a tariff and a £2,000, let alone a £1,000, small claims limit when the target is whiplash and, in turn, apparently fraud. The same applies to workers. What on earth have they to do with whiplash for the purposes of fraud? If the Government will not move on this point, the only conclusion one can draw is that there is one rule for the small number of those wealthy enough to own a horse and another for the tens of thousands who drive for a living, many of them not in well-paid jobs—say, the paramedic or the refuse collector—who run the risk of whiplash when going about their jobs.

It is deeply disappointing that the Government are sneaking through crucial parts of their changes via a statutory instrument in order to avoid this sort of scrutiny. I wish to make perfectly clear today where the Opposition stands on workers for the entire package of measures. Workers, like vulnerable road users, should be excluded from both the Bill and the small claims increases.

[Rory Stewart]

It is a great privilege to serve under your chairmanship, Mr Stringer. Thank you again for the serious involvement that has gone into the debate. It has been a real privilege, as somebody who is not a legal specialist, to see how many well informed and distinguished colleagues we have on both sides of the House contributing to these interesting questions of definition.

Many of the amendments we are dealing with today reflect the work of the House of Lords and, in fact, of Opposition Members of the House of Lords—Labour Members, Liberal Democrat Members and Cross Benchers—who introduced many of the clauses into this Bill, which were not originally there and which we are now discussing. With your permission, Mr Chair, I will move quickly through amendments 8 and 9 and new clause 9 and then discuss why we feel clause 1 should stand part of the Bill.

The definition of whiplash, which is dealt with in amendment 8, was placed in the Bill after extensive debate pushed by the Delegated Powers and Regulatory Reform Committee of the House of Lords. In the initial version of this Bill, we had not sought to define whiplash. The DPRRC argued carefully and at great length that it felt strongly that it was inappropriate to have legislation of this sort if a definition was not in the Bill. The Committee felt it was not appropriate for any individual, whether a Minister or a chief medical officer, to make this definition on their own. It should be made by Parliament as a whole and it should be made fully explicit.

After a great deal of debate in the House of Lords, we conceded this point. The clause was inserted and everybody—Cross Benchers, Opposition Members of the House of Lords—nodded the amendment through. It was then inserted. The reasons for this are both those brought forward by the DPRRC and, I would add, to assuage some of the concerns put forward by the Opposition. Clause 2 also allows for a review of the definition by the chief medical officer, along with others, every three years to make sure it remains in touch with medical science and medical expertise. The definition is in the Bill and not purely provided by medical experts because, as the House of Lords argued, this is a medico-legal definition. In other words, it is not simply a question for medical specialists; it relates to the operation of law and the way in which the law of tort would operate.

The final reason for which I ask that amendment 8 be withdrawn is that I am afraid it refers only to the chief medical officer for England, whereas, of course, the legislation applies to England and Wales. That is why we feel strongly that clause 2, which refers to the chief medical officer for England and the chief medical officer for Wales and, indeed, the Lord Chief Justice and the Law Society in consulting on the definition of whiplash every three years, is the appropriate way to proceed. On that basis, I respectfully ask that amendment 8 be withdrawn.

It is easy to understand why amendment 9 was tabled and that the Opposition would be concerned. Again, we would respectfully argue that the key point is that the injury has occurred and not why the individual is in the car. The question of why they are in the car would be a distinction without a difference. There are many pressing reasons why somebody might be in a car. I, like many Members here, represent a rural area. Somebody might be in a motor car, for example, because they were having to drive their child urgently to a hospital. They might be in a motor car for any number of reasons that left them with little choice but to be in the car. It would seem invidious to distinguish between them and somebody else who is in the car for the purpose of employment, purely on the basis of the injury. The key is the injury and the fact that the third party who is liable for that injury is held liable.

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[Rory Stewart]

The key point, which goes against both Government and Opposition Members, is not the likelihood of having an accident. That should not affect the level of compensation that someone receives. That should be relative to one thing only: the nature of the injury and the prognosis. It should not be relative to why someone is in the car, how well or how frequently they drive or why they are driving. On that basis, I politely ask that amendment 9 be withdrawn.

New clause 9 reiterates some of the arguments in amendment 9; in other words, it focuses on the question of people injured during the course of their employment. However, it also references vulnerable road users. I have attempted to argue the relevance of someone driving a vehicle in the course of their employment in our discussion on amendment 9. On vulnerable road users, we respectfully request that new clause 9 be withdrawn for the reason I gave in my intervention on the hon. Member for Ashfield—vulnerable road users are already exempted by the Bill, so new clause 9 will be otiose.

On that basis, I respectfully ask that clause 1 stand part. This was a good and serious reform introduced with strong cross-party support by the House of Lords, driven by the DPRRC, which provides a much more accountable, transparent and predictable definition of whiplash to guide the legislation. We owe the Lords a huge debt of gratitude for that. We ask, on the basis that Members of the House of Lords from the Labour party, the Lib Dems, the Cross Benches and the Conservative party all agreed to it, that clause 1 stand part of the Bill.

[Gloria De Piero]

I have listened to the Government’s arguments, but do not accept them. The Bill’s objective is to reduce fraud. I have not heard anybody suggest that workers injured in the course of their employment are scammers. However, I have heard from Labour Back Benchers that workers drive all day and do not have a choice about whether to drive. I will divide the Committee on the amendments.

[The Chair]

Before the hon. Lady concludes, does she wish to divide the Committee on amendments 8 and 9?

[Gloria De Piero]

Yes.

Question put, That the amendment be made.

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Damages for whiplash injuries

[Gloria De Piero]

I beg to move amendment 10, in clause 3, page 3, line 21, leave out “two years” and insert “twelve months”.

This amendment would limit the tariff to injuries lasting less than one year.

[The Chair]

With this it will be convenient to discuss amendment 11, in clause 3, page 3, line 22, leave out “two years” and insert “twelve months”.

This amendment would limit the tariff to injuries lasting less than 1 year.

[Gloria De Piero]

The Bill says that if someone’s whiplash injury goes on for up to two years, or if it is thought that it might go on for up to two years, or if it goes on for up to two years because of their failure to “mitigate” their loss—that is, act to get themselves better by taking up an offer of physio, for example—they are eligible for fixed-tariff damages only.

Since 1999, special damages have been exempted from the calculation of whether a claim falls within the small claims limit. I will take this opportunity to nail down the ongoing argument about when the last increase in the small claims limit was. The Government say 1991, which is disingenuous and borders on the dishonest. I can provide quotes from the White Book if the Minister would like to see them. The limit has remained at £1,000 since 1991 but the method of calculating whether a claim falls within that limit changed in 1999 after the Woolf report. If any doubt remains, the evidence can be found in extracts from the White Book before and after the change.

From 1999, a definition of what was included in the £1,000 limit excluded special damages. It contains a helpful example that leaves no doubt that only general damages should be considered to see if a case is within the limit, and special damages are exempted from that time. I am told that special damages in a case add 20% to a claim on average, which means that the change in 1999 increased the limit by 20%. I shall assume that we have now laid that matter to rest and that any calculation from now on will be from 1999, not 1991. We may argue about the appropriate inflation index, or even the percentage increase from the changes made, but there should be no argument about the date from which it applies.

The impact of the clause is that someone could be off sick and losing wages, or having to work reduced hours, because of their whiplash complaint for up to two years before they are taken out of tariff damages. The Office for National Statistics says that the average wage in the UK was £27,200 in 2016-17, so an injured worker could lose more than £50,000 in earnings and still be subject to tariff damages. Someone on the minimum wage of £7.38 who works 35 hours a week for 48 weeks a year might earn £12,400, so they could have no income at all to support themselves and their family for up to two years.

[Ruth George]

Does my hon. Friend agree that the proposed tariff takes no account of victims’ circumstances? A whiplash injury will have a greater effect on someone in a manual job, who is less likely to be able to perform that job, than someone in a sedentary position, who is more likely to be able to continue to work through minor injury. Someone in a manual job is also likely to have lower wages and be less able to sustain a certain level of loss.

[Gloria De Piero]

My hon. Friend is completely in touch with the reality of life for working people. That is the argument that we seek to make. In tabling amendments 10 and 11, which bring that two years down to 12 months, we concede that people recover and that that can take time. We are not suggesting a short period, but a reasonable one, and we hope that the Government will concede that it is fair and proportionate.

On amendments 12 to 16, it is proposed that the Lord Chancellor should set the tariffs for pain, suffering and loss—

[The Chair]

Order. Those are amendments to the next clause—sorry.

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[Rory Stewart]

The hon. Lady puts her finger exactly on the current situation. Currently, the decision is in the hands of the insurance companies. The argument in the legislation is to take that decision away from the insurance companies; it will prohibit them from making an offer without a medical report. That was supported by the Opposition as well as the Government, and that is exactly the intention of the legislation. That is another reason why we will resist amendments 10 and 11.

[Gloria De Piero]

Does the Minister accept that, although the small claims limit has remained at £1,000, the way that was calculated changed in 1999?

[The Chair]

Order. Can I just say to the hon. Lady that the Minister had sat down? It is appropriate to intervene when the Minister is on his feet. If the Minister wishes to make a statement in response, I will take it.

[Rory Stewart]

This is a good challenge. It is not, respectfully, relevant to amendments 10 and 11, but relates to the question of something that will be done by the Procedure Committee, if it were to proceed through secondary legislation—a proposal to raise the limit from £1,000 to £2,000. The hon. Lady is correct that in 1999, changes were made to how the £1,000 limit was calculated, which adds an extra level of complication.

There is also a debate between us on whether CPI or RPI should be used to move that initial 1991 definition and, if so, to what amount. Should the hon. Lady wish to proceed, that is appropriate—not for this amendment or the Bill, but for subsequent measures.

[Gloria De Piero]

We do not intend to divide on this but we will raise these issues again on Report and Third Reading.

[The Chair]

Does that apply to amendments 10 and 11?

[Gloria De Piero]

It does, and I thank you for your advice. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Gloria De Piero]

I beg to move amendment 12, in clause 3, page 3, line 26, leave out from “amount” to end of line 5 on page 4 and insert

“determined in accordance with the 14th edition of the Judicial College Guidelines for the Assessment of General Damages in Personal Injury Cases or any subsequent revision to these guidelines.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 13, in clause 3, page 3, line 33, leave out subsections (3) to (7).

This amendment, together with Amendments 14 to 16, would replace the tariff with the Judicial College Guidelines for the assessment of damages.

Amendment 14, in clause 3, page 4, line 7, leave out

“to which regulations under this section apply”.

See the explanatory statement for Amendment 13.

Amendment 15, in clause 3, page 4, line 9, leave out

“(subject to the limits imposed by regulations under this section)”.

See the explanatory statement for Amendment 13.

Government amendment 4.

Amendment 16, in clause 3, page 4, line 18, leave out subsection (11).

See the explanatory statement for Amendment 13.

[Gloria De Piero]

The Bill proposes that the Lord Chancellor, rather than judges, should set the tariffs for pain, suffering and loss of amenities. In view of the opposition from those who are judicially qualified and the upholders of the law, can the Minister not see the sense in the point that no politician should be making decisions for which the judiciary is rightly responsible?

To go down that path sets a dangerous precedent. It may be justified by Government when they are the paymasters in the criminal injuries compensation scheme, for example, but in any other sphere of injury compensation it takes away an integral role of the judiciary and introduces another layer of bureaucracy.

The current calculation of damages by both sides—claimant and defendant—is made using the Judicial Studies Board guidelines. Those are based on what judges have awarded in the past—on what is fair. They are used by the parties to guide settlement out of court and by judges in court at trial. That makes the JSB the best guide to what is just and proper in terms of damages awarded. The Government are throwing all that out in favour of the Lord Chancellor—someone with far less expertise and a political agenda.

A lot of people would say that the JSB guidelines are what is just, or that they represent justice for the victim, although I have my doubts about that. After all, although special damages for losses and expenses can put someone back in a position financially, as if the injury had never occurred, general damages can only apologise for what someone has been through and may continue to suffer; they cannot make anyone better. That is at least, for now, something that the courts decide is appropriate; it is not a figure plucked out of the air.

The Government’s attitude is, “What would experts know? It might be a basic tenet of English common law that people are compensated fairly and judges are best placed to assess that but, so what? Let’s rip it up!” That is to ignore Lord Woolf, who said:

“The effect of whiplash injuries, with which we are concerned, can vary substantially according to the physical and mental sturdiness of the victim. This means that the appropriate amount of damages for a whiplash injury can vary substantially…I suggest they are not suited to a fixed cap, as proposed by the Government.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1593.]

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[Rory Stewart]

The answer is exactly for that reason. Because they are so hard to detect, they are almost impossible to fight, and therefore insurance companies have historically made that decision. They often do not even get a medical report because it hardly seems worth while to do so. When somebody comes forward with a whiplash claim, the procedure has often been to settle without going to court in order to reduce the legal fees and the associated costs, exactly because it is incredibly difficult.

Whiplash claims are extremely controversial medically. A lot of articles are written about this—I quoted the New England Journal of Medicine in the House, which is particularly stark. Cassidy’s article argues very strongly that the absence of compensation for pain and loss of amenity is associated with a much improved prognosis and reduced duration in the whiplash injury itself. In other words, the New England Journal of Medicine points to the fact that this is not purely a medical phenomenon. It has social and legal dimensions, of which compensation is a part.

[Gloria De Piero]

Is the Minister familiar with the quote from the head of the City of London police insurance fraud enforcement department? He said in the Insurance Post:

“It would be wrong to say that I believe there is a compensation culture or an insurance fraud culture in general.”

Another expert denied?

[Rory Stewart]

Such arguments would be more powerful if Opposition Members could explain why the number of whiplash claims has gone up by 40% since 2005, when the number of motor vehicle accidents has declined by 30% and cars have got much safer? A lot of things have been introduced in cars since 2005. Nearly 85% now have the safety features specifically designed to reduce whiplash that only 15% had in 2005. There are fewer accidents and much better protection around the individual.

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[Rory Stewart]

Fundamental to decisions that the Ministry of Justice has to make under any Government is the need to think seriously about balancing different types of interest—in this case the interests of the claimant, the third party and the taxpayer, as well as those of road users and people who take out motor insurance. It is therefore appropriate for us to question the overall cost of the system, and—particularly for motorists in rural areas—the fact that the premium could be as much as £35 a year extra, and considerably more for a young driver, because of the hundreds of thousands of people each year who make whiplash claims.

[Gloria De Piero]

Insurers have never mentioned fraud as a material risk in their financial report. If it were such a serious concern, would they not be required to report it to the Financial Reporting Council?

[Rory Stewart]

The question of what constitutes a material risk in a financial report is driven primarily by the financial stability of the company, so the question of whether fraud is defined in that way relates purely to the cost of the fraud. The question is a financial one, not one of honesty.

Amendments 12, 13, 14 and 15 relate to the Judicial College guidelines. This debate has had quite a long consultation period—it has been going on for more than three years. We are grateful to the Association of Personal Injury Lawyers and many others, including the Law Society, who have fed in to this consultation, and we have arrived at a compromise. The Opposition were extremely uncomfortable with the initial proposals, and we have made a lot of concessions—that is why I will be asking hon. Members to withdraw their amendments.

The initial proposals by the Chancellor of Exchequer in his Budget speech were to remove general damages entirely, and for no compensation to be offered for pain, suffering and loss of amenity. There was also a proposal to have no judicial involvement whatsoever in setting levels of compensation, and the third element of controversy was about whether it was appropriate to have tariffs at all.

We have made significant concessions on the first two points—in the House of Lords for the second proposal, and before that stage for the first proposal. Under pressure from many people, including Opposition Members, we have accepted that there should be general damages, and that principle has been reinserted. Secondly—this is why I will ask for support for clause 4—we will push ahead with the proposal that the Lord Chief Justice should be consulted on the level of the tariffs. That brings in the judiciary so that it will not be done purely by the Lord Chancellor, which brings us to the question of whether there should be tariffs at all.

A tariff system is relatively unusual in English common law although, as the hon. Member for Enfield, Southgate pointed out, an equivalent exists for criminal injury compensation cases, which creates some paradoxes and contradictions. At the moment, someone who suffers a criminal injury could receive a different level of compensation than if they suffer exactly the same injury without a criminal act. The same is true if someone in a motor vehicle suffers from a terrorist attack. The Government could give someone considerably more compensation if they are the victim of a terrorist attack than if they suffer the injury in a different way.

However, tariffs are not unusual: they have been introduced very successfully in Italy, France and many other European jurisdictions. Under the proposals in the Bill, there will be judicial discretion on the tariffs. That is judicial discretion that we have consulted on closely and will return to under later amendments. It is in line with what the European Court of Justice believes should be the appropriate degree of judicial flexibility when applied to a tariff system.

--- Later in debate ---

[Rory Stewart]

This goes to the heart of the concerns that the judiciary raised when the first criminal injury compensation schemes were introduced and, indeed, when compensation for a terrorist act was introduced. As the hon. Gentleman suggests, it is perfectly legitimate to question whether, within the tradition of tort in the English common law, it is appropriate to distinguish between an injury suffered at the hands of a criminal or a terrorist and an injury simply suffered at the hands of another third party who is liable, but that is a much deeper philosophical jurisprudential debate than I think we can proceed with here. With that, I respectfully request that the amendments be withdrawn or not pressed and I ask the Committee to support Government amendment 4.

[Gloria De Piero]

I am afraid that I am going to disappoint the Minister. We feel so strongly, because we are led by the independent experts, by the Select Committee on Justice and by some people in the Minister’s own party, whom I quoted earlier, that we believe that the Committee needs to divide on amendments 12 to 16.

Question put, That the amendment be made.

--- Later in debate ---

[The Chair]

As I indicated, we have debated clause 3 sufficiently not to require any separate stand part debate.

Clause 3, as amended, ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.

Clause 5

Uplift in exceptional circumstances

[Gloria De Piero]

I beg to move amendment 18, in page 4, line 30, leave out Clause 5 and insert—

“Power of court to uplift the amount of damages payable

(1) A court may—

(a) determine that the amount of damages payable for pain, suffering and loss of amenity in respect of a whiplash injury or a minor psychological injury is an amount greater than the tariff amount relating to that injury;

(b) determine that the amount of damages payable for pain, suffering and loss of amenity in respect of a whiplash injury and one or more minor psychological injuries, taken together, is an amount greater than the tariff amount relating to those injuries;

(c) in a case where the court considers the combined effect of—

(i) an injury or injuries in respect of which a tariff amount is specified by regulations under section 3(2) or (4), and

(ii) one or more other injuries, determine that an amount greater than the tariff amount is to be taken into account when deciding the amount of damages payable for pain, suffering and loss of amenity in respect of those injuries.

(2) In this section ‘tariff amount’ means—

(a) in relation to a whiplash injury, the amount specified in respect of the injury by regulations under section 3(2);

(b) in relation to a whiplash injury and one or more minor psychological injuries, the amount specified in respect of the injuries by regulations under section 3(4).”

This amendment would allow judges to increase the amount of damages payable where they determine the tariff amount to be insufficient compensation, rather than capping judges ability to increase compensation awards to a percentage specified by the Lord Chancellor as the Bill currently does.

[The Chair]

With this it will be convenient to discuss clause stand part.

[Gloria De Piero]

This amendment would allow judges to increase the amount of damages payable where they determine the tariff amount to be insufficient compensation, rather than capping judges’ ability to increase compensation awards to a percentage specified by the Lord Chancellor, as the Bill currently does. Once again, I want to point out the long-standing tradition of trusting judges, rather than having politicians interfere with the discretion of the courts—a tradition that the Government are inexplicably undermining with this Bill.

Clause 5(3) states that if the court thinks there should be an uplift from the tariff because of the severity of the injury, the amount by which the court can increase the payment is limited according to a cap set by the Lord Chancellor. Not only are the courts being fettered by a tariff, but when they consider the tariff to be inappropriate, they will get their judicial wings clipped again. This reduces judges to little more than errand boys for the Lord Chancellor.

Many Lord Chancellors these days are not lawyers. They will rely on the advice of their officials, who need not have legal training either. If the Tories do not trust the judges, who do they trust? What are they scared of? What evidence do they have that judges will behave badly and award huge sums? What court cases can they point to in which that has happened? I can find none at all, and nor can the experts whom my team and I have consulted.

I suspect the insurers fear that without a cap, every tariff award will be taken to court, where judges will apply an uplift and blow up their tariff. If that is what they fear, it suggests that they secretly accept that the proposed tariffs are too low. Perhaps the reason for all these restrictions—all these fetters on what a judge can decide for themselves—is that the Government and the insurance industry are running scared that judges will, indeed, rebel against them. Not because judges are intrinsically rebellious—far from it, some would say; they are conservative with a big and a small c—but because they have a duty to be impartial and deliver justice, and the Government’s proposed tariff does not even remotely do that. Amendment 18 would restore judges’ lost autonomy.

[Rory Stewart]

I thank the hon. Lady for her speech. This amendment relates to the fundamental question of the tariff system and the relationship between the judiciary and the tariff system. Clause 5 provides a pragmatic compromise between a strict tariff system and judicial discretion by allowing the judges to lift that tariff in exceptional circumstances. However, as the European Court of Justice accepted in the arguments made in the Italian case, there needs to be a limit. If there were no limit to judges’ discretion, the tariff system would become unworkable.

In so far as we disagree about whether there should be a tariff system in the first place, I completely understand where Opposition Committee members are coming from. However, given that the fundamental cornerstone of the Bill is that there should be a tariff, we need to strike a pragmatic compromise between the tariff and giving some discretion to judges. Therefore, we propose that the Lord Chancellor will set a percentage of discretion for judges to uplift the tariff. We also propose that he will consult the Lord Chief Justice on the appropriate level of discretion. We will look carefully at the rulings of the European Court of Justice and the decisions that it has made in other countries where tariffs exist to arrive at that figure.

--- Later in debate ---

[Rory Stewart]

Clearly, a system of the sort we propose, which is modelled on the existing tariff systems in places such as France and Italy, is designed to set in law, through the actions of an accountable Minister, the level of the tariff. The argument is absolutely right. As the hon. Lady suggests, that will remove discretion from judges except in exceptional circumstances. The reasons for that are to do with our policy objective of dealing with the whiplash claim culture. Our intention is to reduce the damages paid for minor whiplash injuries, which are defined in the Judicial College guidelines as those that last less than two years. That will result in general damage payments lower than those currently awarded by judges. However, in exceptional circumstances, judges will be able to increase the award.

[Gloria De Piero]

What is the fear here? Is it that judges will make awards above the tariff set?

[Rory Stewart]

The Judicial College guidelines are simply a historical record of awards by the courts. It is a fact that those awards to date have been higher than the awards we propose in the tariff. The policy intention is to reduce the general damages paid, particularly for people at the three-to-six-month level. As we get closer to the two-year level, awards under the tariff come closer to the Judicial College guidelines, but at the lower end, as was suggested, there is a disagreement between the Government and the current practice of judges about the appropriate award for pain, suffering and loss of amenity.

There has been a lot of discussion about experts, but right hon. and hon. Members must remember that we are discussing general damages, not money for loss of earnings or to pay for physiotherapy. We are discussing a judgment of exactly how many pounds and pence someone should receive for a whiplash injury—for the subjective experience of pain in their neck or shoulder. It is difficult to argue that there is particular expertise on the question of the subjective experience of pain. Indeed, as the hon. Member for Enfield, Southgate suggested, it is impossible for anyone—whether they are a Minister, a judge or a doctor—to suggest that the money that is paid can remove the pain. The pain remains. Money paid in general damages is intended simply as an acknowledgement of the existence of pain, suffering or loss of amenity. It cannot, as would be the case with special damages, remove the pain itself. On that basis, I politely request that the amendments be withdrawn and the clause be accepted.

[Gloria De Piero]

We do not accept the Minister’s arguments, so will divide the Committee.

Question put, That the amendment be made.

--- Later in debate ---

Rules against settlement before medical report

[Gloria De Piero]

I beg to move amendment 19, in clause 6, page 5, line 37, after “injuries” insert—

“provided by an accredited medical expert selected via the MedCo Portal”.

This amendment, together with Amendments 20 and 21, would ensure that any medical evidence of a whiplash injury must in all cases be provided by a person registered on the MedCo portal website.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 20, in clause 6, page 6, line 1, leave out subsection (3)

See explanatory statement for Amendment 19.

Amendment 21, in clause 6, page 6, line 22, at end insert—

‘(7) In this section, the “MedCo Portal” means the website operated by Medco Registration Solutions (company number 09295557) which provides a system for the accreditation of medical experts.’

See explanatory statement for Amendment 19.

New clause 3—“Recoverability of costs in respect of advice on medical report, etc.—

‘(1) For the purposes of civil procedure rules, the costs recoverable by a claimant who recovers damages in a claim for a relevant injury which is (or would be if proceedings were issued) allocated to the small claims track include the costs of the items set out in subsection (2).

(2) The items are—

(a) legal advice and assistance (including in respect of an act referred to in paragraph (a) or (d) of section 6(2)) in relation to the quantum of damages in the light of a medical report or other appropriate evidence of injury; and

(b) in a case where liability for the injury is not admitted within the time allowed by any relevant protocol, legal advice and representation in relation to establishing liability.

(3) For the purpose of ascertaining the amounts recoverable in respect of those items, the claim is to be treated as if it were allocated to the fast track.

(4) In this section “relevant injury” means an injury which is an injury of soft tissue in the neck, back, or shoulder, and which is caused as described in paragraphs (b) and (c) of section 1(4) (negligence while using a motor vehicle on a road, etc.), but does not include an injury in respect of which a tariff amount is for the time being prescribed under section 2.’

This new clause would ensure that a successful claimant is able to recover costs incurred for legal costs in respect of advice sought in relation to determining the quantum of damages following a medical report or the establishment of liability where it is in dispute.

[Gloria De Piero]

The amendments would ensure that any medical evidence of a whiplash injury must in all cases be provided by a person registered on the MedCo portal website. The Government say in clause 6 that cases should never be settled until the claimant has been medically examined. We fully agree, but amendments 19 to 21 would go even further. The Government say that the Lord Chancellor can decide what constitutes appropriate evidence, but it is very simple. The only form of appropriate evidence must come from a proper doctor registered as such on the portal website of MedCo, the umbrella organisation through which doctors in all personal injury cases are currently chosen. Why on earth would the Government not go through the currently accepted route for all other personal injury cases and the same process that insurers accept in every other case? The only people to gain from offers without a medical are defendant insurers who get cases off their books at an undervalue.

Lawyers for the claimant are obliged to put any offer to the client. Reputable lawyers will always advise against acceptance until there is a medical, but some clients are desperate and reject their advice. Unsurprisingly, and heartbreakingly, it tends to happen when a client’s sick pay runs out or perhaps near Christmas when people have been off sick and are desperate. Any downgrading of the requirement for a medical certificate by a medical registered doctor—this is the risk without the amendments —is just another way that vulnerable workers who have to take time off because of their injuries could be harmed by insurers who make record profits.

We suspect that the vagueness about what qualifies as proper medical advice might be an attempt to allow the use of physiotherapists for the evidence. Insurers have long pushed for that. Physiotherapists are great people doing wonderful work in an extremely important part of post-accident rehabilitation, but they are not doctors and are not able to assess and provide a long-term prognosis.

We fear that if we do not specify in the Bill who should provide the medical reports we will have injured people being prescribed a couple of sessions of physiotherapy and then being described by the insurers as malingering when they are not back to full health following the limited treatment, when in reality their condition might require far more intense rehabilitation efforts over a longer period. In some cases, the insurers might see a financial gain to employing a physiotherapist or owning a rehabilitation company. Without the amendments, that would suggest the insurers control not only the payment of damages, but the medical process leading to the award. Let us avoid that conflict. Let us trust doctors and specify where a medical report should come from. Any deviation from the gold standard of a medical doctor would negate the good that is done by effectively banning the settlement of whiplash claims without medical evidence, as this part of the Bill attempts to do.

On new clause 3, the Government say that the cases they intend to sweep into the small claims track are minor, straightforward and simple. We do not think that that is so, or that the injured claimant left on their own to fight insurance companies—let us be in no doubt that insurers will fight—will think that their cases are either small or simple. The new clause would ensure that, at the very least, when the injured person gets a medical report, as the Government in clause 6 rightly say they should, they can get independent legal advice on what the report means in terms of the value of their claim, so that, if they remain fighting on their own, they settle at an appropriate sum. How else would they know what their case is worth?

The Government might say that insurers will not rip people off and that they always pay what is fair. If that is the case, they have nothing to fear in ensuring that the injured get advice paid for that reassures them that that is the case. There is a societal benefit. If people settle at an undervalue or their conditions are not properly recognised, they will fall back on the state—the NHS or the benefits system—and the taxpayer will foot the bill that should properly have been met by the negligent party. The polluter will end up not paying and we will all pay through our taxes.

The same principle applies to cases where the insurers do not admit liability. The Government think that, when a claimant chooses to fight a case, the injured person will have the confidence to fight on. Facing a denial of liability, the claimant will, the Government think, be equipped to fight on, but, without help, we do not think they will be.

--- Later in debate ---

[Rory Stewart]

Perhaps we can return to that very interesting point on Report. It has not been raised in any of the amendments tabled so far, but I would be very interested to see an amendment tabled and to discuss the matter outside this Committee.

On the basis of the arguments I have made about MedCo, I respectfully request that the Opposition withdraw amendments 19, 20 and 21.

[Gloria De Piero]

Will the Minister say a bit more about the advice he has received from counsel and about why he will not accept the amendments?

[Rory Stewart]

It is pretty straightforward. MedCo is a non-profit organisation set up relatively recently as a portal funded by the insurance industry. We intend the Bill, like any law we pass, to have sustainability and resilience. Potentially, it will last 50 or 100 years. It is very difficult, looking forward over that period, to be confident that the exact portal or organisation by which doctors qualify to provide an assessment of whiplash will be called MedCo—it may be called something else. The measure provides the flexibility, through regulations from the Lord Chancellor, to define the form of evidence, the person, the accreditation and the regulation necessary to proceed. We think it would give a hostage to fortune to put the brand name of a specific non-profit on the face of the Bill. On that basis, I request that amendments 19, 20 and 21, and new clause 3, be withdrawn.

Civil Liability Bill [ Lords ] (Second sitting)

Gloria De Piero Excerpts

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

[The Chair]

I remind the Committee that with this we are discussing the following:

Amendment 20, in clause 6, page 6, line 1, leave out subsection (3).

See explanatory statement for Amendment 19.

Amendment 21, in clause 6, page 6, line 22, at end insert—

‘(7) In this section, the “MedCo Portal” means the website operated by Medco Registration Solutions (company number 09295557) which provides a system for the accreditation of medical experts.’

See explanatory statement for Amendment 19.

New clause 3—Recoverability of costs in respect of advice on medical report, etc.—

‘(1) For the purposes of civil procedure rules, the costs recoverable by a claimant who recovers damages in a claim for a relevant injury which is (or would be if proceedings were issued) allocated to the small claims track include the costs of the items set out in subsection (2).

(2) The items are—

(a) legal advice and assistance (including in respect of an act referred to in paragraph (a) or (d) of section 6(2)) in relation to the quantum of damages in the light of a medical report or other appropriate evidence of injury; and

(b) in a case where liability for the injury is not admitted within the time allowed by any relevant protocol, legal advice and representation in relation to establishing liability.

(3) For the purpose of ascertaining the amounts recoverable in respect of those items, the claim is to be treated as if it were allocated to the fast track.

(4) In this section “relevant injury” means an injury which is an injury of soft tissue in the neck, back, or shoulder, and which is caused as described in paragraphs (b) and (c) of section 1(4) (negligence while using a motor vehicle on a road, etc.), but does not include an injury in respect of which a tariff amount is for the time being prescribed under section 2.’

This new clause would ensure that a successful claimant is able to recover costs incurred for legal costs in respect of advice sought in relation to determining the quantum of damages following a medical report or the establishment of liability where it is in dispute.

[Gloria De Piero (Ashfield) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Henry. The Minister had just concluded his remarks, and I had started to say that we would press the amendments in the group to a Division.

Question put, That the amendment be made.

--- Later in debate ---

Regulation by the Financial Conduct Authority

[Gloria De Piero]

I beg to move amendment 17, in clause 8, page 7, line 15, at end insert—

‘(4A) The Treasury must, within one month of the passing of this Act, make regulations specifying that the Financial Conduct Authority is to require all insurers holding a licence to offer UK motor insurance to publish a report—

(a) on the loss cost savings achieved as a result of the provisions of Part 1 of this Act; and

(b) how, and the extent to which, such savings have been applied to reduce motor insurance premiums.

(4B) The first such report from insurers must cover the period of 12 months beginning with the first day of the month immediately after the commencement of Part 1 of this Act and must be sent to the Financial Conduct Authority by the end of the period of 15 months beginning with the commencement of Part 1 of this Act.

(4C) The Financial Conduct Authority will require further annual reports.

(4D) The Financial Conduct Authority, within the period of 18 months after the commencement of Part 1 of this Act, must make and publish a reasoned assessment of whether it is satisfied that every insurer covered by this section is passing on to customers any loss cost savings made by those insurers arising from Part 1 of this Act.

(4E) Regulations made under subsection (4A) must make provision for the Treasury to grant powers to the Financial Conduct Authority to enforce a requirement for insurers to pass on loss cost savings, achieved as a result of the provisions of Part 1, from insurers to consumers through a reduction in the cost of premiums if, after the period of 30 months following the commencement of this section, the Financial Conduct Authority advises the Treasury that such powers are necessary.”

This amendment would require the Financial Conduct Authority to require insurers to report on the savings they have made as a result of this Bill and the extent to which such savings have been passed on to insurance consumers.

[The Chair]

With this it will be convenient to discuss the following:

Government new clause 2—Report on Effects of Parts 1 and 2.

New clause 6—Passing on savings made by insurers.

‘(1) Any savings made by any insurer as a result of anything in this Act or associated changes by regulation shall be passed to policyholders by way of reduced premium.

(2) The Financial Conduct Authority shall require all such insurers to submit an annual report detailing the savings they have made and how all those savings have been used to reduce policyholder premiums.

(3) In this section—

“savings” means any reduction in an insurer’s outlays in damages or costs paid in personal injury claims from the time this Act receives Royal Assent;

“insurer” means any insurer holding a licence to offer UK motor insurance;

“policyholder” means the holder of a policy of motor insurance with the insurer;

“premium reduction” means a reduction in the annual cost of a policy of motor insurance taken out by a policyholder.”

This new clause would require insurers to pass on to insurance consumers all savings made as a result of these changes.

Government amendments 5 and 6.

[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 ---

The right hon. Member for Delyn asked what the point is of the new clause and why we do not propose a compulsory mechanism to pass savings on. The answer is that it all depends on competition and market law. If at the end of the reporting period there is clear evidence that the companies have significantly increased their revenues without passing on savings to customers, that will raise very considerable questions about the operations of markets and competition. That may indeed imply, as Opposition Members seem to imply, that some form of legal cartel is in operation. At the moment, there is no evidence that that is happening.

[Gloria De Piero]

Does the Minister accept that, since the changes made in 2012, insurance companies have saved £11 billion?

[Rory Stewart]

I am not in a position to accept or reject that figure—I am not familiar with that figure and I am not clear how it has been arrived at. I am happy to look at that in more detail before Report stage of the Bill.

--- Later in debate ---

[Rory Stewart]

The premiums dropping will be assessed and published in the normal fashion. The requirement in new clause 2 is much more complex. The new clause requires a prodigious amount of information about all forms of income streams, the number of claims and the number of premium holders so the Treasury and the Financial Conduct Authority can develop a sophisticated and detailed picture in order accurately to address the concerns of Opposition Members that, over the period—particularly the three-year period that will be affected by the introduction of the Bill—insurance companies will not pass on savings to consumers. We believe they will, which is why we are comfortable pushing for this unprecedented step of gathering that information to demonstrate that the market works.

On that basis, I politely request that the Opposition withdraw their amendments and support Government new clause 2, which after all was brought together by Opposition Members of the House of Lords and others, and which achieves exactly the objectives that the Opposition have set out.

[Gloria De Piero]

The Minister talked a lot about where the Committee disagrees, but there are things we can all accept as fact—the facts that insurance profits are up massively and that these changes will save insurance companies £1.3 billion, for instance—and we all want premiums to come down. We believe only amendment 17 and new clause 6 will deliver that, so we seek to divide the Committee.

Question put, That the amendment be made.

--- Later in debate ---

The Government will publish the Government Actuary’s report, the panel’s report and later reviews. I am happy to make that commitment to the hon. Gentleman, who asked about transparency. I respectfully ask that the Opposition amendment be withdrawn, and that the Government amendment be accepted.

[Gloria De Piero]

My learned and experienced colleagues have spoken in great detail about our issues with the amendments, so I do not anticipate making a long speech. I wholeheartedly concur with the comments that my hon. Friend the Member for Lewisham West and Penge made about the importance of periodical payment orders and a proper, timely review of the personal injury discount rate. As everybody who has contributed has said, we are talking about the most seriously injured. They cannot and must not be let down by our playing politics or by insurers seeking to save money.

In amendments 22 and 23, we say that, if an expert panel is appropriate for subsequent reviews, why should not expert opinion from the panel be appropriate for the initial determination of the rate of return? That is why we will press them to a Division.

[Ellie Reeves]

I thank the Minister for his response to the points that I made. For the reasons that I and my hon. Friend the Member for Enfield, Southgate set out, I want to press amendment 24 and new clause 5 to a Division.

Question put, That the amendment be made.

--- Later in debate ---

Brought up, and read the First time.

[Gloria De Piero]

I beg to move, That the clause be read a Second time.

New clause 1 deals with one of the most important effects of this package of measures. It says that the whiplash small claims limit can increase only in line with inflation based on the consumer prices index. It specifies that the limit can increase only when inflation has increased the existing rate by £500 since it was last set.

The Government have been disingenuous in trying to sneak through these changes to the small claims track limit by using delegated legislation, which restricts the proper scrutiny that such significant changes deserve. With the new clause, we ask the Government to do the right thing and to put it on the face of the Bill, enshrining the terms that a plethora of experts agree on: the use of CPI over the retail prices index when it, and using 1999 as a start date for any recalculation of the limit for a small claims track.

The White Book that I showed the Minister shows that there was a 20% increase in the small claims limit in 1999 when special damages were removed from the calculation of the limit. Lord Justice Jackson, in his “Review of Civil Litigation Costs: Final Report” said that the only reason to increase the personal injury small claims limit would be to

“reflect inflation since 1999. As series of small rises in the limit would be confusing for practitioners and judges alike.”

He made it crystal clear that the limit should remain at £1,000 until inflation warrants an increase to £1,500.

The Government admitted to me this morning that there is a difference of opinion in their own ranks about which of these years should be the benchmark. We say again that they must listen to the Lord Justice Jackson and the Justice Committee chaired by one of their own, the hon. Member for Bromley and Chislehurst (Robert Neill), who agrees with him. We should state on the face of the Bill that 1999 must be the start date for any recalculation of the small claims limit, not 1991. The Government accepted all the key recommendations in the Jackson report save the recommendation that there should be an increase in the small claims limit to £1,500 only when inflation justifies it.

To turn to another aspect—the Government have admitted that it has caused a dispute among Ministers—I want to make the case, as I have done before, that CPI and not the RPI is the correct measure to apply for inflation. It seems that the Government use RPI when it suits and use CPI when it suits. CPI is what we use for the pensions and benefits paid to injured workers while they are pursuing justice for that injury through the claim. Even the Chief Secretary to the Treasury agrees with me. When asked at the House of Lords Economic Affairs Committee whether she agreed that RPI was an inadequate measure, she said:

“We certainly agree that it is not the preferred measure of inflation. CPI is a much better measure of inflation… we agree that it is not the preferred method, and we are seeking to move away from RPI”.

Why are we moving towards it here? The Government say they wish to apply RPI to the small claims limit because RPI is applied to updating damages—the same damages that they are taking an axe to with the new tariff.

Perhaps some in the Conservative party are persuaded, like me, that CPI is the best option, because of yet another expert who has lined up to say so. On 30 January 2018, the Governor of the Bank of England, Mark Carney, said:

“At the moment, 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 that we need to enshrine CPI as the key measure on the face of the Bill. The amount of £1,000 from 1999 would now be worth either £1,440 if CPI is applied, or £1,620 if RPI is applied. Lord Jackson said that it should not go up to £2,000, as the Government suggests, until inflation warrants it.

I trust the Minister will not be as dismissive as Lord Keen was when he said in his evidence to the Justice Committee:

“We do not feel that there is a material difference between setting it at £1,700 today and seeing it drop behind inflation next year, and setting it at £2,000 without the need to review it again for a number of years.”

Try telling the nurse, the caretaker or the bus driver that there is no material difference between £1,700 and £2,000. For those on real wages, that has a real impact.

[Rory Stewart]

Relatively rapidly, I would say that we have five types of disagreement with the amendments. Broadly speaking, those are political, philosophical, economic, financial and constitutional. The political disagreement is that the amendment would go to the heart of the Bill. The entire concept of the Bill is to try to effect a change in the current practice and process around whiplash claims by moving the claim limit to £5,000. That is part of the entire package—the tariffs and small claims limits are related to that.

Philosophically and fundamentally, we are not arguing that the shift to £5,000 is fundamentally a question of inflation. There are many other reasons why the small claims limit has been moved in the past. Indeed, in relation to some types of claim, as you will be aware Sir Henry, as one of our learned friends, some of the claims have been moved to £10,000, which goes a long way beyond inflation.

Largely, the driver of whether or not something is on a small claims track is to do with the nature of the claim, not the nature of inflation. However, if we worked on the narrow question of inflation, the Judicial College guidelines are currently on RPI as opposed to CPI. I respect the arguments that the hon. Member for Ashfield made but that is not the fundamental argument the Government are making.

The amendment would have curious financial implications. It would create a strange syncopated rhythm, whereby movements in CPI are not necessarily reflected in the triennial review except in £500 increments which, over time, mathematically will lead to peculiar results.

The fundamental reason we oppose the amendment is the final argument I mentioned, which is constitutional. This is business for the Civil Procedure Rule Committee, as it always has been, and it is not suitable to put in the Bill. On the basis of those political, philosophical, economic, financial and constitutional arguments, I respectfully request that the amendments be withdrawn.

--- Later in debate ---

Brought up, and read the First time.

[Gloria De Piero]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss new clause 8—Restriction on increase in small claims limit for relevant personal injuries suffered by people during the course of employment—

‘(1) In this section, the “PI small claims limit” refers to the maximum value (currently £1,000) of a claim for damages for personal injuries, specifically general damages, for which, in accordance with Civil Procedure Rules, the small claims track is the normal track.

(2) Civil Procedure Rules may not increase the PI small claims limit in respect of relevant injury claims to an amount above £1,000 for the first time unless—

(a) the Lord Chancellor is satisfied, and has certified in writing, that on the day the rules are to come into force, the value of £1,000 on 1 April 1999 adjusted for inflation, computed by reference to CPI, would be at least £1,500, and

(b) the rules increase the PI small claims limit to no more than £1,500.

(3) Civil Procedure Rules may not increase the PI small claims limit in respect of relevant injury claims on any subsequent occasion unless—

(a) the Lord Chancellor is satisfied, and has certified in writing, that on the day the rules are to come into force, the value of £1,000 on 1 April 1999 adjusted for inflation, computed by reference to CPI, would be at least £500 greater than on the day on which the rules affecting the previous increase were made, and

(b) the rules increase the PI small claims limit by no more than £500.

(4) In this section—

“CPI” means the all items consumer prices index published by the Statistics Board;

“relevant injury” means an injury which is an injury of soft tissue in the neck, back, or shoulder suffered during the course of employment which is caused as described in paragraphs (b) and (c) of section 1(4) (negligence while using a motor vehicle on a road, etc.);

“relevant injury claim” means a claim for personal injury that consists only of, or so much of a claim for personal injury as consists of, a claim for damages for pain, suffering and loss of amenity caused by a relevant injury, and which is not a claim for an injury in respect of which a tariff amount is for the time being prescribed under section 2;

“general damages” shall mean damages for pain, suffering and loss of amenity.’

This new clause would limit increases in the small claims track limit in relation to people who have suffered a whiplash injury during the course of their employment to inflationary rises in increments of £500 only.

[Gloria De Piero]

The Government have refused to allow the small claims changes, which will have a fundamental impact on access to justice for hundreds and thousands of injured people every year, into the Bill. New clause 7 is designed to ensure that vulnerable road users are exempted as the Minister has promised. New clause 8 would do little more than reflect the recommendations of Lord Justice Jackson in his civil justice review. The Minister agreed this morning that there had been a change to the small claims limit in 1999. New clause 8 says that 1999 is the date from which any change to the small claims limit should be calculated and that the increase should be by no more than £500 at any one time. As I have said, that reflects the recommendations of Lord Justice Jackson.

There is a difference between us on the appropriate level of inflation. We say CPI—the consumer prices index. There is absolute logic in that because that is the inflation rate applied by the Government to benefits paid to injured people. It is also, of course, the rate that the Governor of the Bank of England recommends.

[Rory Stewart]

Given that we are coming towards the end of the proceedings, I again pay tribute to right hon. and hon. Members on both sides of the Committee for the quality of debate. It has been quite testing personally: a lot of very learned friends have asked a lot of fundamental questions, ranging from inflation rates to the good challenges from my friend the right hon. Member for Delyn (David Hanson), who keeps me on my toes. I thank them very much for their various contributions.

With the final group of amendments, we come to questions that relate to some of the debates that we have had already, in different forms. This in effect is a subset of the arguments made on new clause 1. As right hon. and hon. Members will remember, new clause 1 involved an argument that the reductions should be made in relation to all personal injury claims. These proposals take the same arguments and apply them to two subsets of people who are injured: vulnerable road users and people injured in the course of employment. On both those things, there are some differences between us, again, on the correct level at which to set the rate, but there are also some important concessions that are worth bearing in mind. They were made in the House of Lords and in the subsequent process.

In relation, first, to people injured in the course of employment, personal injury claims that are not as a result of whiplash, we have listened very carefully to right hon. and hon. Members. They will remember that in the initial consultations there were suggestions about raising the limit to £10,000 or £5,000. The agreement has been that for non-whiplash-related injuries, it is kept at £2,000.

There is some discussion about whether it is correct to see that in terms of CPI or RPI—the retail prices index—but broadly speaking, it is not very significantly different from the rates that were set in the 1990s when inflation was applied, although there is some disagreement between the two sides of the House, to the extent of a few hundred pounds, on the extent of headroom put on top of inflation. There could be a broader argument, which was raised earlier, about the fundamental principle that compensation should be paid for the injury rather than on the basis of why somebody was present on the scene, whether in the course of employment or another activity. However, that goes beyond the scope of the amendment.

The real concession has been made in relation to vulnerable road users, which I hope hon. Members on both sides of the House will welcome. We listened carefully to representations made primarily not by people who own horses—although I remind hon. Members that there are more than a million horses in the United Kingdom, so it is not quite as much of a minority pursuit as some might like—but by cyclists, who led a strong campaign arguing that they are particularly vulnerable on the roads. They are: they are not encased in a sheet of metal. We accept that the same argument also applies in spades to pedestrians—as a proud pedestrian, I feel that very strongly—and to people on motorcycles, who are not encased in metal either.

We are delighted to confirm that vulnerable road users will be excluded in respect of the small claims limit and the Bill. On that basis, with many thanks to everybody for their prodigious and learned contributions, I politely ask that the amendment be withdrawn.

[Gloria De Piero]

I will disquiet the Minister one more time and press the new clause to a Division.

Question put, That the clause be read a Second time.

Civil Liability Bill [Lords]

Gloria De Piero Excerpts

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

[Gloria De Piero (Ashfield) (Lab)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss new clause 2—Small Claims Track: Children and Protected Parties—

‘(1) The Small Claims Track Limit in relation to claims made by children and protected parties for whiplash injuries may not be increased unless the increase is to an amount which is not more than the value of £1,000 on 1 April 1999 adjusted for inflation, computed by reference to the consumer prices index.

(2) In subsection (1),

“children” means any person or persons under 18;

“protected parties” means any person who lacks capacity to conduct the proceedings;

“lacks capacity” means lacks capacity within the meaning of the Mental Capacity Act 2005’.

This new clause would limit increases in the small claims track limit for those suffering whiplash injuries to inflationary rises only, for people who are either children or people lacking capacity to make decisions for themselves (as defined in the Mental Capacity Act 2005).

[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.

[Chris Philp (Croydon South) (Con)]

The hon. Lady is making an argument about whether RPI or CPI should be used, but is there not a bigger point here? For almost all claims generally, outside this area, the small claims track limit is £10,000. If we are to be consistent, is there not a case for making it £10,000, the same as everything else?

--- Later in debate ---

[Gloria De Piero]

We are talking about physical injuries.

[Mr Jim Cunningham (Coventry South) (Lab)]

Surely the only gainers here are the insurance companies. Most people, because legal aid has been reduced, cannot afford solicitors.

[Gloria De Piero]

Exactly. I do not think anybody in this House will want to shed a tear for those insurance companies whose profits are going up and up. In 2017, profits for Direct Line went up 52% to £570 million and Aviva recorded a profit of £1.6 billion—and I have not even talked about the packages that some insurance company bosses take home.

The Government appear to have rounded this figure up. We say base the figure on the advice and recommendations of countless experts and follow the evidence. Even if the hon. Member for Croydon South (Chris Philp) does not listen to me, I wish he would follow the evidence of the experts. New clause 1 does just that. It would increase the limit only by CPI since 1999 and limit any increase to £1,500. That way, injured people with significant injuries and potentially even more significant losses will get the representation they need and deserve.

[Ruth George (High Peak) (Lab)]

Does my hon. Friend agree that in the case of an accident at work it is even more important that an injured employee is able to get legal representation to take a case against their employer? The employer will be armed with lawyers and their employers’ liability insurance company. That is stacked up against an individual whose task will be hard enough. They will be feeling victimised enough as it is.

[Gloria De Piero]

My hon. Friend is absolutely right. It is not an easy thing to take a case against your boss. You need a lawyer to hold your hand, an expert to talk you through, and the Government’s proposals are going to make that so much more difficult. She makes an appropriate point.

New clause 2 would ensure that children and protected persons, for example those lacking mental capacity, are treated the same as other vulnerable groups by excluding them from the small claims limit increase for whiplash injuries. Having made a welcome concession on Second Reading, and clarified in Committee that they would exclude vulnerable road users from the impact of the Bill and secondary measures on the small claims court limit, the Government appear to have forgotten others. Horse riders, pedestrians, motorcyclists and cyclists are rightly to be excluded from the changes, but some of the most vulnerable in our society, who are currently recognised by the courts as requiring special status, will be left, with everybody else, facing a new small claims limit of £2,000 or £5,000. As it stands, any settlement awarded to those who lack capacity to conduct their own proceedings, such as children or someone suffering with a mental disability, must be rubber-stamped by a judge because of the claimant’s recognised vulnerabilities. That will continue to be the case after these changes are introduced.

The law requires children and other protected people to have a litigation friend to conduct proceedings on their behalf. In the small claims court, those who provide this required representation are not and will not be paid for their time. Yet by increasing the small claims limit, there will be a significant increase in the number of people coming through the small claims court with higher-value and more complex cases, where they need a lawyer more than ever. We are asking a litigation friend to take on potentially complicated matters for those most in need, on their own, in their own time, for no pay. Injured horse riders, cyclists and pedestrians and motorcyclists will not be subject to a tariff. The small claims limit for them will remain at £1,000, meaning that they will get a lawyer to act for them for free in any case over that value.

Can the Government not see that children and protected persons need this support, too? How on earth can the Government justify protecting one vulnerable group but not another? Why is the horse rider worthy of exemption, but not a child or a person without the capacity to conduct proceedings? Are we really willing to let some of the most vulnerable people in our justice system be left simply to hope for the good will of others to protect their interests because we in this House have failed to do so?

I know that the Minister is aware of this issue from discussion in Committee with my hon. Friend the Member for Enfield, Southgate (Bambos Charalambous). The Minister suggested returning to this point and that he would be very interested to see an amendment tabled. So here is his chance: a ready-made amendment that makes a simple correction and is an opportunity for the Government to rectify what I presume is an oversight. It simply extends the exemption already provided to others. It removes children from the changes being made to the small claims limit or tariff, and ensures that protected groups are excluded from the increase, the same as horse riders, cyclists and pedestrians. It removes the double standard of some vulnerable road users being granted an exemption and others not. Ultimately, it does little more than extend the protections already afforded to some and allow the Government to show that they care for all.

[Chris Philp]

Thank you, Mr Speaker, for calling me so early in this debate. I rise to oppose the Opposition’s new clause 1, which seeks to prevent the Government or any other public body from increasing the small claims track limit in relation to these personal injury cases, particularly road traffic personal injury cases, above £1,500.

I strongly oppose the measure. I touched on one of the reasons for doing so in my intervention on the shadow Minister earlier. For the vast majority of general commercial claims and indeed personal claims, the small claims track limit is £10,000. The reason it is as high as £10,000 is that some level of materiality is applied to the claim in question. The view taken by Parliament in the past, rightly, is that matters below the £10,000 limit should be sufficiently simple for a small claims track procedure to be used without the involvement of often very expensive lawyers.

In response to my intervention, the shadow Minister, before she was distracted by another intervention, drew attention to the fact that these are personal injuries. I accept that point, of course. However, the fact of their being personal injuries is not germane, in my view, to the question, which is: is the matter sufficiently simple to be adjudicated via the small claims track rather than through lawyers? That is the question—not whether the matter is serious or not serious but whether the matter is sufficiently simple to be dealt with properly by the small claims track rather than through lawyers. That is why I think there is a strong a case, on the grounds of consistency, for a £10,000 rather than a £5,000 limit.

--- Later in debate ---

[Gloria De Piero]

I beg to move amendment 2, page 3, line 14, leave out clauses 3 to 5.

This amendment would remove the creation of tariffs for whiplash injuries and retain the existing system where judges decide compensation levels with reference to Judicial College Guidelines.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss Government amendment 1.

[Gloria De Piero]

Amendment 2 gets to the heart of our issues with the Bill and would remove the whiplash compensation tariff system altogether. We are dealing with human beings who experience pain differently, who have different lives and who will all be affected by a similar injury in a slightly different way. We would not accept a pricing of insurance premiums that did not take account of whether we drove a Mini or a Maserati, and we would not accept a standard payment for damage to a car, regardless of its state after an accident. Where is the justification for using such a blunt instrument as a tariff to calculate pain?

We all want to stamp out false whiplash claims, but why should HGV drivers, firefighters or parents driving their kids to school be treated like fraudsters claiming falsely for whiplash, left with tariff compensation and no legal help? As Lord Woolf, the eminent former Law Lord who carried out a review of civil justice after being commissioned by a previous Conservative Government, pointed out in the Lords:

“The effect of whiplash injuries, with which we are concerned, can vary substantially according to the physical and mental sturdiness of the victim. This means that the appropriate amount of damages for a whiplash injury can vary substantially... I suggest that they are not suited to a fixed cap, as proposed by the Government.”

He went on to say that a tariff

“offends an important principle of justice, because it reduces the damages that will be received by an honest litigant because of the activities of dishonest litigants.”

The Government’s proposals will punish the honest based on the behaviour of the dishonest, but how big is that dishonest group? The ABI said in 2017 that insurers paid out in 99% of all cases and that fraud was proven in only 0.22% of cases. Woolf decried the Government’s move to

“interfere with the Judicial College guidelines by substituting tariffs or a cap, which lack the flexibility of the guidelines.”

He went on in speaking against the proposed dismissal of a tried and tested system of justice to say that the Lord Chancellor

“is motivated, at least in part, not by the normal principles of justice as I understand them but by saving insurers money, in the belief that this will result in a reduction in premiums for motorists who are insured when they come to pay for their insurance.”

Later, he put it as strongly as simply saying:

“There is no precedent for this intervention in the assessment of damages in civil proceedings.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1593-1595.]

He went on to quote Sir Rupert Jackson, who said:

“It is the function of judges (not Parliament) to set the tariffs for pain, suffering and loss of amenities in respect of different categories of personal injuries”.

Lawyers who deal with such issues all the time have pointed out how people who are already suffering, and perhaps unable to earn a living due to their injury, will be worse off under the proposed tariff. They include experienced legal practitioners from the Tory Back Benches, such as Baroness Berridge, who said:

“I have met many a claimant for whom the difference in damages now proposed by the introduction of the tariff, taking some damages from four figures—£1,200 or £1,400—down to the likes of £470 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.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1611.]

That is from a Government Back Bencher.

[Alex Chalk]

The hon. Lady is making fair points, but it is important to take into account that the claim may consist partly of a general damages component and also a special damages component. Does she agree that if the individual had, for example, been required to take time off work and had incurred costs—or losses—in the process, he would still be able to litigate and seek to recover those damages?

[Gloria De Piero]

The tariff system would mean that somebody who today was entitled to £1,200 or £1,400 would be compensated with far less. I am quoting Baroness Berridge.

[Alex Chalk]

We have to be really careful in this debate to draw a distinction between general damages, which are for pain, suffering and loss of amenity, as with whiplash, and special damages, such as the cost of taxis or lost employment. Does the hon. Lady agree that special damages will still be recoverable in the normal way and that we should not be confusing the two?

--- Later in debate ---

[Gloria De Piero]

I am choosing to focus on the injuries incurred. For a soft tissue injury lasting six months, an individual would today get between £2,150 and £3,810 but, if the Bill passes, they would get £805. I am choosing to focus my speech on those huge differences. That is the practical reality of what this tariff system will mean.

There is another important principle. It is a significant step to mess with the proud tradition of an independent judiciary in this country, and the Government should not take that lightly. The Justice Committee, too, could not have been clearer in its criticism of how the tariff system will harm access to justice. We hope the Government will listen to the Justice Committee and eminent judges—and, yes, us—and accept this amendment to remove the tariff system.

[Mr Simon Clarke]

It is a pleasure both to speak in support of the Bill and, unfortunately, against the amendment put forward by the hon. Member for Ashfield (Gloria De Piero). It is really important that the Bill is proportionate in achieving the outcomes we want of ensuring that the public get the protection they need from injuries that can be so devastating, while at the same time compensating them in such a way that we do not burden the wider consumer with unsupportable bills. Earlier, I spoke about the fact that premiums need to remain affordable.

Amendment 2 would remove the ability to set a fixed tariff for whiplash compensation in regulations. As I mentioned earlier, the tariff system will ensure that claimants receive a proportionate level of compensation. This will significantly reduce and control the spiralling cost of whiplash claims and disincentivise unmeritorious claims. As with any such tariff system, I can understand the concern that it may not provide the flexibility necessary to ensure that compensation accurately reflects the true nature of someone’s injuries.

However, the Government have taken a number of important steps to ensure that such flexibility still exists. First, the tariff would not be flat for all cases, but staggered, depending on the severity of injury. Secondly, in addition to a tariff payment, all claimants will continue to receive special damages covering compensation for any actual financial losses suffered as a result of their accident. Finally, clause 5 gives the court discretion to deviate from the tariff in exceptional circumstances and when it is clear that a higher level of compensation would be appropriate.

This therefore seems to me to be exactly the type of Bill we should be bringing forward. It is sensible, and it does indeed allow us to provide the protection that people need, without the risk of putting up premiums. I do not believe that amendment 2 would achieve very much, other than wrecking the central point of the Bill, which as I say is to achieve such an upsurge in affordability.