Civil Liability Bill [Lords]

Jo Stevens Excerpts

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

[Mr Gauke]

I am glad that the hon. Gentleman asked me that question, because not only have we had public assurances from insurance companies that represent 85% of the policies, but we will table amendments to the Bill to ensure that we can hold those companies robustly to account, particularly given their public commitments. If those are his concerns, I think he will find as the Bill progresses that they are met.

[Jo Stevens (Cardiff Central) (Lab)]

Will the Secretary of State elaborate on his last remark? What incentives or restrictions will there be for insurance companies to make sure that they pass on any savings? Historically, they have not done so.

[Mr Gauke]

I would challenge that. When the Competition and Markets Authority looked at the insurance industry, it found that it is a competitive industry. The factor that is most likely to ensure that benefits are passed on to consumers is competition, and the evidence suggests that there is competition in this area, but we will ensure that insurance companies provide robust information so that they can be properly held to account. As I say, the Government will bring forward amendments in this area, as we have committed to do.

--- Later in debate ---

[Mr Gauke]

We have a system of small claims—by and large, these are very straightforward claims. We want to ensure that support is there so that people are able to bring the claims in person. As I have said, these are simple claims and it is right that we also take action to address some of the concerns that we have. I shall set out more detail in my remarks, but I believe that we have the balance right in terms of the increase to £5,000.



The Bill provides that the tariff will be set in regulations to be debated via the affirmative procedure by Parliament following Royal Assent. We are committed to tabling an amendment in Committee that will require the Lord Chancellor to consult with the Lord Chief Justice before making those regulations. The judiciary will have discretion to increase the compensation payable in exceptional circumstances and, after listening to the views in the other place, we have amended the Bill to ensure that overall compensation levels in the tariff are reviewed at least every three years. We listened carefully to the comments made by the Delegated Powers and Regulatory Reform Committee in the Lords. We accepted its recommendation and tabled an amendment to include a full definition of whiplash injury in the Bill in order to remove any ambiguity about what that constitutes in law.

The Government’s reform programme also includes measures—not included in the scope of this Bill—to increase the small claims track limit for road traffic accident personal injury claims to £5,000, and for all other personal injury claims to £2,000. As these claims are generally not complicated, they are suitable to be managed in the simpler, lower cost small claims track. This route is designed to be accessible to litigants in person without the need for a lawyer, although claimants may still seek legal representation if they wish. To support this, the Government are working with a wide stakeholder group including the insurance industry, claimant solicitor representative groups and consumer groups in order to design and deliver a simple-to-use online service to enable the vast majority of those claiming for low-value road traffic accidents who may well choose not to be represented by legal advisers to receive help and guidance to manage their cases through to conclusion.

The service will be designed for those with no legal advice or training, and will be as simple to use as possible to ensure that the claimant journey is as smooth as it can be. Raising the small claims limit for these RTA cases to £5,000 will work to control their costs, acting as an incentive for insurers to challenge, rather than settle, those cases that they believe to be without merit. This is vital to changing the unhealthy culture that sees whiplash claims as a way to make easy cash. The reality is that, as insurers are forced to offset the cost of the abuse by raising premiums, fraudsters are simply taking money out of the pockets of honest motorists.

[Jo Stevens]

If the Secretary of State is so confident about those increases in the small claims limit, why are they not on the face of the Bill?

[Mr Gauke]

These matters are governed by regulation and we are proceeding on that basis.

--- Later in debate ---

[Jo Stevens (Cardiff Central) (Lab)]

May I refer the House to my entry in the Register of Members’ Financial Interests? I should put on the record that my partner is a solicitor and chief executive of a personal injury law firm.

Before being elected, I spent 27 years advising and representing injury victims in the civil courts. I acted for victims both in cases worth just a few hundred pounds and in cases worth all the way up to more than £1 million. Those victims had been injured—some of them killed—through no fault of their own. They were predominantly low paid. Most, although not all, were trade union members, and probably about two thirds—possibly more—of those I represented would have been very adversely affected by the proposal to increase the small claims limit. The Bill concerns an issue about which I care very deeply—the principle of access to justice—and my almost three decades of relevant professional experience have informed my views.

May I say from the outset that fraudulent claims must be eradicated? I am sure everybody here would support that. However, the Association of British Insurers’ own figures state that proven fraudulent claims amount to just 0.25% of all motor claims. This Bill, therefore, is a huge, defective sledgehammer trying to crack a very, very small nut.

The ABI states in the briefing it sent me and, no doubt, all Members that the Bill represents a step towards fixing the

“broken system of personal injury compensation in England and Wales.”

That is not just a very bold assertion—it is absolute rubbish. There is nothing “broken” about the system of personal injury compensation for victims of negligence. There is plenty that is broken, however, about access to justice, and the ABI and its powerful lobby operation has, I am afraid, been one of the main drivers behind that.

So desperate is the ABI to peddle the myth of compensation culture and the “broken” system in advance of this debate that yesterday it even resorted to providing and paying for content for Guido Fawkes to promote on Twitter. This Bill, I am afraid, reads like one that has been written by the insurance industry for the insurance industry—an industry that cannot be trusted. Why are the Government pandering to it yet again and refusing to front up and put the increase in the small claims limit on the face of the Bill? I say to the Secretary of State that avoiding proper scrutiny is not an attractive look. Members know that our duty as legislators is not just to look at the consequences of the legislation we make, but to properly consider and take into account the unintended consequences.

That is why thorough impact assessments are so important. I have had a look at the Government’s impact assessment on reforming the whiplash/soft tissue injury claim process under the Bill. Paragraph 2.4 refers to the “optimal” level of claims

“for society as a whole.”

That is an interesting assertion. What is the optimal level? There is nothing in the assessment, the Bill or the explanatory notes to enlighten us. Perhaps the Minister can tell us what it is.

In paragraph 2.10, and peppered throughout the assessment, there is reference to “minor claims” and “low value claims”, and in paragraph 4.8 to “trivial claims”, but none of those terms is defined. Can the Minister define what he considers to be low value, minor or trivial?

If we take workplace accidents in the public sector as an example, Unison tells me that nearly half of its members earn about £17,000 a year, so the proposed increased small claims limit of £2,000 for workplace cases represents almost two months’ wages, and the £5,000 limit for road traffic accident cases represents nearly four months’ wages. Does the Minister really believe that a caretaker or a care assistant in his constituency will think that £2,000 is a minor, low or trivial sum? Under the proposals, most injury victims will lose independent legal representation and will either have to represent themselves or lose part of their damages in costs, most likely to resurgent claims management companies. That will impact on especially vulnerable groups.

Paragraph 4.7 of the impact assessment starts with the statement:

“The current Small Claims Track limit for personal injury claims of £1,000 has remained unchanged since 1991.”

That is disingenuous at best. The Government know that the civil procedure rules were changed in 1999 when special damages were removed from the calculation of what fell within a small claims limit. That was effectively an increase of 20%, so it is simply wrong to say that the limit has not changed since 1991. Does it concern the Minister that in the impact assessment the competitiveness of the motor insurance market is based on an Office of Fair Trading report from 2011 which, aside from being seven years old, was published before the changes to LASPO, since when ABI figures show that insurers have saved £11 billion?

The Government go on to state in the impact assessment that they consider

“that 85% of insurer savings could be passed through to consumers”.

Will the Minister share with the House what

“careful consideration of the evidence”

led to this assumption, as well as the “sensitivity analysis” that has been conducted for pass-through rates of 50% and 70%? Paragraph 5.77 states that

“The increase in the Small Claims Track threshold from £1,000 to £2,000 for all personal injury claims that are not RTAs could lead to a reduction in the number of claims proceeding to court.”

I am tempted to use the phrase involving Sherlock defecating at this point, but I suspect that that would be unparliamentary language, Mr Deputy Speaker, so I will go back to quoting the impact assessment:

“It has not been possible to estimate the impact of the reform because the proportion of claimants who currently have legal representation is unknown.”

Given that the words “assumes”, “assumed” and “assumption” are used nearly 50 times in the impact assessment, how can we take it seriously? The Minister knows the dim view the Supreme Court took of the Government’s introduction of employment tribunal fees and the legacy of that unlawful policy, which is still being unravelled by his Department—a bit of a hospital pass left by one of his predecessors. With that in mind, does he consider that allowing injured people to bring personal injury cases with a general damages value of £2,000 or less without any restriction has no broader social benefit? And can he really say that the proposals in the Bill will not impede access to the courts for injured people with a personal injury case with a general damages value of £2,000 or less?

The Bill will be welcomed by claims management companies. We, I think, are united in this House against their pernicious influence and irritating methods, but in the impact assessment it actually states:

“There may be the potential for a rise in CMC’s seeking to enter the market to support claimants without legal representation”.

There is no “there may be” about it: it will happen. Of course they will move in. They will offer poor legal advice on the cheap, maximising their profits on the back of others’ misery, as they have always done. If the Government really cared about the consumer, they would be listening to public opinion and introducing an outright ban on cold calling for personal injury claims by CMCs.

I hope the Minister will reflect on the concerns I have expressed. There will be more, I am sure, in today’s debate and in the other place, because the Bill really needs substantial amendment to protect the principle of access to justice. Those concerns are widely shared by the Justice Committee, the Law Society and solicitors across England and Wales. Access to justice has already suffered enough under this Government and under the previous Liberal Democrat and Conservative coalition Government. The Bill is a gift to an already obscenely greedy insurance industry that needs to be reined in.