Motor Insurance: Court Judgments

Greg Knight Excerpts

Wednesday 22nd September 2021 Westminster Hall

[Theresa Villiers (Chipping Barnet) (Con)]

I beg to move,

That this House has considered the effect of recent court judgments on the cost of motor insurance.

It is a pleasure to serve under your chairmanship today, Ms Bardell. I would also like to warmly welcome the Under-Secretary of State for Transport, my hon. Friend the Member for Copeland (Trudy Harrison), to her role. I am sure that she is going to be a great success.

Today, I want to make the case for the removal of the EU rules contained in the European Court of Justice judgment in the case of Damijan Vnuk v. Zava rovalnica Triglav d.d. I would like to thank my constituent Robert Rams and the Motor Insurers’ Bureau for alerting me to this problem and providing some very helpful briefing information.

Mr Vnuk was the victim of an accident involving a reversing tractor inside a barn in a farmyard in Slovenia. He took his compensation claim to the European Court of Justice. In the United Kingdom, an incident of this nature would be covered by our compulsory employer’s liability insurance regime, but not all EU member states have such a scheme to protect employees in the workplace. In its 2014 judgment, the ECJ therefore shoehorned Mr Vnuk’s compensation claim into the EU’s motor insurance law. In doing so, it extended the scope of compulsory motor insurance to accidents on private land involving a very broad range of vehicles—essentially, anything with wheels and a motor that does not run on rails, no matter where it is used or for what purpose. This is manifestly different from the compulsory motor insurance requirement in the Road Traffic Act 1988, which applies to vehicles that are permitted to be used on our streets and roads.

The UK’s approach to compulsory motor insurance has been consistent since the 1930s. It is proportionate and it works. However, Vnuk had direct effect in EU law, and that means that it forms part of the retained EU law imported on to our domestic statute book via the European Union (Withdrawal) Act 2018. As a result of cases in the UK courts, such as Lewis v. Tindale, the UK’s compensation fund for people injured by uninsured drivers is now obliged to pay out in the circumstances covered by the Vnuk judgment.

The UK compensation fund is run by the Motor Insurers’ Bureau, and every driver who takes to our roads funds the scheme through their motor insurance premiums. The combined effect of the Vnuk and Lewis cases and the 2018 Act is that the scheme is now having to bear very significant costs for which it was never designed, and motorists are left picking up the bill. Let us be clear about what we are talking about here: accidents on private land, in private gardens, in farmer’s fields, on golf courses, inside supermarkets, in banks or in offices—the list is long. These are places where what has happened, or even the fact that anything occurred at all, will often be difficult to establish with any clarity, and that gives rise to worrying opportunities for fraud. The extension of compulsory insurance to motor sport is a further side effect of the case.

[Sir Greg Knight (East Yorkshire) (Con)]

My right hon. Friend is making an excellent case, and unfortunately this Chamber cannot legislate. However, is she aware that salvation is perhaps on its way from our hon. Friend the Member for Wellingborough (Mr Bone)? He has a Bill before the House, the Motor Vehicle (Compulsory Insurance) Bill, the Second Reading of which is on 22 October, which should deal with the very point that she is making.

[Theresa Villiers]

I am aware of the Bill introduced by my hon. Friend the Member for Wellingborough (Mr Bone). I will come to it in a moment and I hope it has the potential to solve the problem. The trouble is, can we get it through Parliament?

The extension to motorsports is problematic for many reasons. For many people who enjoy participating in motorsports the costs of the new requirement—even assuming they can get the compulsory cover, which must be doubtful in some cases—will be very high. I understand that motorsports organisations and many participants in those sports have raised serious concerns about the judgment and asked for it to be removed from UK law. Although of course we can have a legitimate debate on the potential extension of compulsory insurance and compensation schemes to new scenarios, there can be no justification for leaving drivers to shoulder the whole cost by artificially forcing these new liabilities into our existing motor insurance scheme.

The sums at stake are very large. The Government Actuary’s Department has estimated that total annual costs could rise to more than £2 billion, which would mean roughly an extra £50 on the insurance premium of every motorist in the United Kingdom. That will hit hardworking people who may be struggling to make ends meet.

Of course, £50 is an average, so a disproportionate increase in premiums is likely to fall on groups such as young drivers, who already pay more because they constitute a higher risk during their first years on the road. Businesses with fleets of vehicles will be hit hard at a time when they may be struggling already to recover from the effects of lockdown, and motorists in parts of the north of England, where in some cases premiums are higher, could also end up paying more, which would work against the Government’s laudable levelling-up aspirations.

--- Later in debate ---

[Sir William Cash (Stone) (Con)]

I am extremely glad to follow my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), for whom I have the highest regard as a lawyer, a member of the Conservative party that delivered Brexit and—if she does not mind my using the expression—a spartan, because she was one of the people who brought about the situation that we are happily in at the moment, whereby we have the ability to repeal legislation and to deal with some of the problems that she mentioned. In particular, I would mention the fact that the primary legislation in question would be authorised by the European Union (Withdrawal Agreement) Act 2020, section 38(2)(b) of which enables us to override any EU law through an expressed and direct provision in our own primary legislation and therefore to deal with the problem as a piece of primary legislation.

I listened very carefully to what my right hon. Friend said about the private Member’s Bill introduced by my hon. Friend the Member for Wellingborough (Mr Bone), which will receive its Second Reading on 22 October 2021. I merely venture to suggest that there are some precedents for private Members’ Bills to be given some additional oomph by the Government. If they put their mind to it and have the commitment to do it, which I certainly believe should be the case in this instance, it can be done. In fact, I did just that in relation to the International Development (Gender Equality) Act 2014, because the Government gave me full support for a Bill that was languishing at around No. 17 in the private Members’ ballot. The Act did some very substantial things, including imposing on our development aid projects the commitment and guarantee that we would make it a legal, judicially reviewable duty to enforce the protection of women and children in relation to international development aid. If the Government can do it for that, I would suggest that, given the scale of the problem, which my right hon. Friend the Member for Chipping Barnet so expertly described, there is very good reason for them to give support to my hon. Friend the Member for Wellingborough and to ensure that we get the results that are needed in the national interest, as identified by my right hon. Friend the Member for Chipping Barnet.

[Sir Greg Knight]

I agree with what my hon. Friend has to say. Does he agree that the quickest way to deal with this issue is for the Bill to go through on 22 October? He used the word “oomph”. It can go through quite simply, if the Government do not object to it. My understanding is that the Government are not going to object to it, but perhaps we could have some confirmation of that later.

[Sir William Cash]

I may say to my right hon. Friend, who is a very good friend of mine, that that is a very welcome piece of news, because this is exactly what happened in the case of the International Development (Gender Equality) Act. What happened was that the Clerks in the House were sitting there with bated breath to hear whether anyone was going to object, because all that has to be done on such an occasion is simply for any Member to object. It does not have to be a Whip; it can be any Member of the House. On that occasion, we got down to about No. 17 or 18 on the list—wherever I was. There was complete silence, and the Bill went through. That is what can happen, and I therefore strongly agree with what my right hon. Friends the Members for East Yorkshire (Sir Greg Knight) and for Chipping Barnet have said. I think this is a potential opportunity.

I was very interested in what my right hon. Friend the Member for Chipping Barnet said regarding the question of what the EU was up to at that stage. I am speaking as the Chair of the European Scrutiny Committee, and we shall keep an eye of these matters. We also propose reports, bring forward suggestions and inform the House accordingly in Hansard and so forth. On 30 June 2021, as my right hon. Friend said, the European Commission announced a decision to waive the requirement for UK drivers to show a motor insurance green card when entering the European Union. The decision needs to be fully implemented through publication in the official journal, and there is a waiting period of 20 days, so in the short term green cards are still needed.

The point I want to make is that on 29 June, the Transport Secretary published a ministerial statement, along the lines that my right hon. Friend mentioned, on the motor insurance directive—removal of Vnuk, in other words. It states the Government’s commitment, which the Minister announced on the Floor of the House:

“To remove the effects of the…ruling in the Vnuk case from GB law.”—[Official Report, 29 June 2021; Vol. 698, c. 8WS.]

Putting two and two together, if the Minister has said that the Government intend to remove the effects of it, and we have also the opportunity through the private Member’s Bill, and we know it is precedented for the Government to take the action I have described, I see the potential for a fair wind for this. That will be a tribute, not only to my right hon. Friend the Member for Chipping Barnet, who has spoken today, but also my hon. Friend the Member for Wellingborough.

I would like to touch on the principles that underpin the issue of EU retained law. I will outline it by saying that the issue of EU retained law in this context arises partly in relation to the Road Traffic Act 1988, which has not yet been amended to comply with the European Court of Justice decision. Legislative change is necessary, as my right hon. Friend has said, to bring clarity on the matter, given that pre-exit European Court of Justice case law is now part of UK domestic law, as retained EU case law.

Given that, what is going to happen next? I will give a description of the extent, nature and depth of what my right hon. Friend for Chipping Barnet has rightly put forward, in one instance, with huge financial consequences, with the EU going into reverse, and the absurdity of our being in a position where the EU deals with it in its legislation and we are stuck with it in ours. I am now going to address the question of where I think the Government’s navigation should go.

In June 2016, just before the referendum, I was responsible for bringing forward a Bill that set out the basis on which the legislation after we won the referendum—as I was confident we would do—could be dealt with. There is a huge body of legislation, some of which I will refer to in general in a few minutes. Given the scale of the problem, the best thing to do was to deem all EU law as part of UK law, so that at least we grabbed hold of it as a whole, then we could deal with it on a piecemeal basis.

My Bill was one and a half pages long. The Bill we ended up confronting under the former Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May), went far further and more regressively—if that is not a contradiction in terms—than was necessary, by incorporating the whole concept of EU retained law and the principles of EU law. With it came the assertion in section 6 of the European Union (Withdrawal Agreement) Act 2020 that the courts, if they wish to do so, given the circumstances of a case, would be enabled to quash any Acts of Parliament, if inconsistent with the judgments that they came to in interpreting the issues before them.

That is all very well, but those of us who are acquainted with the manner in which EU law was implemented under section 2 of the European Communities Act 1972, know very well that the Factortame case was the example above all others where the whole of the fishing industry was thrown into chaos, with Spanish fishermen invading our waters. The issue in question turned on the Merchant Shipping Act 1988. I remember saying to the Attorney General at the time that I thought it was a very unwise business for them to do introduce that Act, unless they put at the beginning, “notwithstanding the European Communities Act 1972.” Had they done that, then the judgment in Factortame, which struck down the Merchant Shipping Act 1988, could not have taken place because the courts would have been under an obligation to comply with the provisions of the Act, which would have said notwithstanding the Act of Parliament in question, the UK could legislate on its own account.

I referred to section 38(2) of the European Union (Withdrawal Agreement) Act 2020, which specifically contains the words “notwithstanding” and “direct effect”. It is notwithstanding the direct effect of any provisions that are on the statute book as part of EU retained law, and it enables us to override the European Union (Withdrawal Agreement) Act and, some may care to note, the Northern Ireland protocol. So, the law is in place.

As my right hon. Friend the Member for Chipping Barnet indicated, it can be done by primary legislation. I am just adding a bit of flavour as to how it came about and how it can be done. I listened to my right hon. Friend the Member for East Yorkshire and what he said in the context of the Bill proposed by my hon. Friend the Member for Wellingborough.

I turn to the question of the absurd situation identified by my right hon. Friend the Member for Chipping Barnet and what the Prime Minister said about it some time ago, using very strong language. If it was an absurd position before he was Prime Minister, it is doubly so now, and that is why we need to tackle it. The intention behind the grandfathering, as it is called, in EU retained law under the European Union (Withdrawal) Act 2018—