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.