Civil Liability Bill [Lords]

Debate between Gloria De Piero and Andy Slaughter

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

[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.