Motor Insurance: Court Judgments

Debate between Hannah Bardell and Theresa Villiers

Wednesday 22nd September 2021 Westminster Hall

[Hannah Bardell (in the Chair)]

Before we begin, I encourage Members to wear masks when they are not speaking. This is in line with current Government and House of Commons Commission guidance. Please give each other and members of staff space when seated and when entering and leaving the room. As a result of votes earlier, the debate will go on until 5.45 pm, notwithstanding any votes that we may have during this debate.

[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.

--- Later in debate ---

[Theresa Villiers]

It would indeed be most unfortunate, and I am grateful to all the hon. Members who are here to make such points on the need to resolve this issue because of the potential pressure on household budgets.

In a column in The Daily Telegraph, the Prime Minister —in the years before he became Prime Minister, of course—described Vnuk as the “perfect example” of the over-regulation that had

“sapped the competitiveness of the EU and burdened it with low growth and high unemployment.”

He continued:

“There is no need, no call, no demand, no appetite, no reason, no justification, not even the shred of the beginnings of a case—in the United Kingdom—for this kind of pointless and expensive burden on millions of people.”

Against that background. it would have been reasonable to expect the Government to remove the effects of Vnuk from UK law once the transition period ended. There is nothing to prevent them. Under the terms of the European Union (Withdrawal Agreement) Act 2020, a simple piece of primary legislation is needed to make the change. In a February press release, the Transport Secretary said that his Department intended to do just that, adding that he was delighted to announce that we no longer needed to implement Vnuk.

Sadly, since then, not a great deal appears to have happened. Nothing on this was mentioned in the Queen’s Speech in May. In late June, the Transport Secretary did issue a written ministerial statement, which is welcome. In it, he said that delivering the commitment announced in February was a priority and that the Government would follow the passage of the private Member’s Bill tabled by my hon. Friend the Member for Wellingborough “with interest”.

As we have heard, my hon. Friend’s Motor Vehicles (Compulsory Insurance) Bill would deliver the legislative change we need. I very much welcome the Bill and urge Hon Members to support it when it returns to the House on 22 October. I gather that the Department for Transport has advised on the drafting of the Bill, so hopefully, as the Prime Minister might say, it is oven ready.

I hope this debate will give the Bill some momentum and reassure hon. Members who follow Friday business with care that the issues it seeks to address have received proper scrutiny in this House. However, as everyone here today will understand, a presentation Bill of this nature almost never gets the parliamentary time it needs to reach the statute book. It takes an extraordinary amount of good fortune and a very fair wind for such a Bill to make any progress at all. In the Sessions from 2010 to 2019, 470 presentation Bills were tabled and only six became the law of the land. I am afraid a Government Bill is needed, along with adequate parliamentary time set aside for it to be debated and passed, perhaps as part of a wider regulatory reform Bill going through Parliament. As yet, there is no sign of that happening.

Meanwhile, even as this rather sorry state of affairs in Westminster persists, the irony is that Brussels has been working on a package of changes to EU law that would remove the most extreme effects of the Vnuk case. The rapporteur of the European Parliament described the case as an example of “absurd over-regulation”. The changes have been approved by the Council of Ministers and apparently passed by the European Parliament, so their entry into effect would appear to be fairly imminent. When that happens, we could face the bizarre situation where the UK is forced, by its own law, to continue to apply that absurd over-regulation because its effect was frozen into our legal system as retained EU law at the end of the transition period. In the meantime, the EU has taken action to mitigate the problem, relieving its own motorists of the unfair cost burdens the case imposes.

I do not think that that is what taking back control should look like. Now we have left the European Union and regained the power to make our own laws in this country, we need to use our new freedoms wisely to build a regulatory system that is more proportionate, more agile, more adaptable and better suited to our domestic circumstances here in the UK.

Earlier this year, I was asked by the Prime Minister to be part of his taskforce on innovation, growth and regulatory reform. The report we published contains a series of ideas for how the Government can create a modern regulatory framework that is based on core principles of domestic common law and that facilitates both innovation and competition. There are huge economic benefits to be realised if we do that, particularly in the high-growth, high-tech sectors of the future. Last week, it was encouraging to hear the Paymaster General outline the Government’s plans to do that in response to the TIGRR report, and the Minister responsible for EU relations, Lord Frost, is to be commended for the proposed regulatory reforms in the paper he circulated on the same day. However, one of the key barriers he faces is the fact that the European Union (Withdrawal) Act 2018 means that retained EU law can, in the main, only be amended or repealed using primary legislation. The Vnuk controversy shows that we urgently need a faster track way to remove or update EU laws that no longer work for us, most of which arrived on the statute book via secondary legislation in the first place.

My message today to the Minister and to the Government is that we need to get on with tackling the Vnuk problem. I urge them to take action now to put things right and remove the case from UK law. That will mean bringing forward their own Bill in Government time so that we can make repealing Vnuk a demonstrable benefit of leaving the European Union and regaining the historic right to make our own laws in our own Parliament once again.

[Hannah Bardell (in the Chair)]

I will seek to call Opposition spokespeople by 5.23 pm and the SNP and Labour spokespeople will have five minutes each.