Oral Answers to Questions

Jo Stevens Excerpts

Tuesday 5th February 2019 Commons Chamber

[Mr Gauke]

My hon. Friend rightly highlights an horrific incident, and I know the prisons Minister has already replied to a letter from him on this matter. We are fully committed to addressing the significant increase we have seen in the number of assaults on our hard-working prison staff. The new Assaults on Emergency Workers (Offences) Act 2018 increases the penalty for those who assault emergency workers, including prison officers, and I understand that the police are continuing to investigate this particular incident.

[Jo Stevens (Cardiff Central) (Lab)]

We have already heard that assaults against prison officers are at record levels, and those levels are rising at a record rate. Why is the Secretary of State more interested in taking prison officers to court for raising health and safety concerns than in sitting around the table and working with them to develop an urgent violence reduction strategy?

[Mr Gauke]

We are very focused on reducing violence, which is why we are taking the measures that we are: introducing the extra staff; giving prison officers access to PAVA; increasing the use of body-worn cameras; and increasing measures to stop drugs getting into prisons—as we have heard, they can often be a driver of this violence. So that is precisely what we are doing and will continue to do.

Joint HMI Prison and Probation Report

Jo Stevens Excerpts

Thursday 24th January 2019 Commons Chamber

[Rory Stewart]

First, I pay tribute to my hon. Friend, who was a prisons and probation Minister. The connection with the NHS is central. Additional funding has gone into the NHS, and we need to ensure that that focuses on the most vulnerable offenders in terms of mental health, addiction and the need for courses provided by the national health service. Getting that right will be essential in dealing with violent crime, sex offences and short-sentence offences. The NHS connection is vital. The most important thing, from my point of view, is ensuring that we have the treatment provision in the community for addiction.

[Jo Stevens (Cardiff Central) (Lab)]

I was really disappointed to hear the Minister’s assertion that the transforming rehabilitation programme has had no impact on the results in this report, because most of these offenders are within the national probation service sector. Trade unions whose members work in this sector have long argued that transforming rehabilitation would damage public safety, and public concern about what it has done is strong. Surely he must now agree that those concerns were legitimate.

[Rory Stewart]

I agree that there are significant concerns about transforming rehabilitation, which is why we are looking at that seriously. We have issued a consultation on that and will be issuing reforms. My point is narrower: the issue of sex offenders is for the national probation service and is not affected by the CRCs.

Oral Answers to Questions

Jo Stevens Excerpts

Tuesday 18th December 2018 Commons Chamber

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

1. What steps the Government are taking to ensure that workers can access legal advice on workplace injuries.

[Jo Stevens (Cardiff Central) (Lab)]

4. What steps the Government are taking to ensure that workers can access legal advice on workplace injuries. [R]

[The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)]

I believe that the hon. Gentleman is referring to our proposal to raise the small claims limit for employees’ personal injury claims to £2,000. That change is not only in line with inflation, but will give those affected the opportunity to be heard in an uncomplicated, accessible court, without the need for a lawyer if they so choose.

[Lucy Frazer]

The Ministry of Justice always ensures that it brings measures to the House in a way that is appropriate for them. Of course this measure will have scrutiny; statutory instrument procedure involves the scrutiny of the House. This measure will ensure that people can access the courts in an accessible way, without the need to spend excessive amounts of money.

[Jo Stevens]

I refer the House to my entry in the Register of Members’ Financial Interests. I listened carefully to what the Minister just said, but what guarantee can she give us that the civil procedure rule committee will be able to consider the proposed small claims increase, which covers workplace injuries, independent of Government? Why can we not debate the measure on the Floor of the House?

Civil Liability Bill [Lords]

Jo Stevens Excerpts

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

[Chris Philp]

I am always delighted to take advice and guidance from such a distinguished, learned and experienced Member as my hon. Friend the Member for Bromley and Chislehurst (Robert Neill). He adds further weight to the case by drawing attention to the benefits of the online portal, which I hope could be used to further simplify such matters and enable claimants to manage them, rather than having to rely on lawyers.

[Jo Stevens (Cardiff Central) (Lab)]

I refer the House to my entry in the Register of Members’ Financial Interests. Is the hon. Gentleman aware that in most personal injury claims, there are fixed costs for lawyers’ fees?

[Chris Philp]

In many cases there are, but in many cases those costs inflate. I referred to the fact that 47% of the value of pay-outs get consumed by legal fees. I hope that the fixed tariffs provision, which is not the subject of any amendment but is in the Bill, will further simplify matters.

One reason why we have a problem that needs solving in this area—new clause 1 would inhibit that solution—is qualified one-way costs shifting, which was introduced a few years ago. I understand why it was introduced—the shadow Minister referred to David and Goliath—but under a system of qualified one-way costs shifting, unless the respondent can prove quite a high level of intention, deceit or malfeasance, the claimant’s legal costs are borne by the respondent in any event, even if the claim is dismissed. That creates significant moral hazard, as it means that claimants can bring claims, even if those claims have relatively little merit, safe in the knowledge that they, or indeed their advisers, will never have to bear the cost of the claim. It is a one-way bet, which means that claimants may as well just have a go and see what happens. The number of cases in which a claimant is shown to be so egregiously fraudulent that they have to pay the cost is extremely small. This one-way bet—this free option—that the legal system now provides is one of the reasons why there has been such an explosion in claim numbers.

--- Later in debate ---

[Chris Philp]

As always, my hon. Friend makes a very good point. As Members of Parliament, we should send out a clear message to our constituents and the wider public that making fraudulent claims is not a victimless crime. They affect the insurance premiums that all of us and all our constituents pay. Fraudulent claims are extremely bad for society as a whole. They encourage a sense that people can somehow get money without really deserving it, which is morally corrosive as well as financially damaging.

[Jo Stevens]

I am sure that no one in the Chamber thinks that we should encourage fraudulent claims—absolutely not—but may I bring the hon. Gentleman back to some facts? Between 2015 and 2017, the number of registered claims for whiplash fell by 15%, while the number of claims being reported through the police also fell, which might have something to do with the 37% reduction in the number of road traffic police officers in the last 10 years.

[Chris Philp]

Clearly the number of injury claims made via an insurance company is not related to the number of police officers on the street. The hon. Lady mentions the slight but welcome reduction in the number of whiplash injuries. Over the same period, the number of claims to insurance companies for back injuries has increased, so the total number of claims is down only very slightly over the last couple of years, and is still dramatically up over 10 years, which is clearly a more meaningful period. When the two are taken together, therefore, there has not been a significant reduction.

--- Later in debate ---

[Chris Philp]

The hon. Lady evidently agrees that claims management companies have been inciting fraud on an industrial scale—a point of view that her Front-Bench colleague perhaps disagrees with. That said, claims management companies are only part of the problem. As I said, the incentives inherent in the system have encouraged the kind of behaviour I have been describing.

I want to come to the implied sedentary disagreement from the shadow Minister earlier. I inferred from his gesticulation that he disagreed with my suggestion that claims management companies were inciting fraud on an industrial scale. I will start with a personal anecdote, which I realise does not make the general point, but I will then come on to that more general point. My interest in this area stems from personal experience. About three or four years ago, just before being first elected, I had a minor road traffic accident while driving along the M5 to Cornwall with my wife and our two small children. [Interruption.] I think I am being heckled by the Chair of the Justice Committee.

Nobody was injured in the accident—the bumper was a bit dented, but that was it. It happened at low speed, the traffic having slowed down. For about a year, however, I was bombarded with calls to my personal mobile by people from claims management companies, I think, that had somehow found out about the bump, trying to persuade me that I or my family had suffered a neck injury. No matter how often or how insistently I told them that everyone was fine, they would say things such as, “If you just say your neck hurts, you’ll get £3,000.” The incitement to commit fraud was clear and direct. Subsequently, as recently as in the last two or three months, I have received repeated automated calls—robocalls—again to my mobile, although wholly unrelated, I think, to the first set of calls. I received a recorded message saying, “We are calling about your accident. Do you want to talk about it?” There was then a pause during which I was expected to reply. That is clearly happening on an industrial scale.

[Jo Stevens]

Who does the hon. Gentleman think sold his details to that claims management company?

[Chris Philp]

In the first instance, it was very likely to have been an insurance company that had been circumventing the referral fee ban through an alternative business structure, which is a practice that I wholly deplore, and I encourage the Government to ban it. However, as I have said three or four times before, simply trying to legislate away claims management companies will not in itself be enough when the incentives inherent in the system are so powerful. Raising the small claims track limit to, say, £5,000—which is still half the level of the general small claims track limit—will serve to diminish the financial incentives in the system whereby lawyers are taking nearly half the value of pay-outs.

--- Later in debate ---

[Chris Philp]

My hon. Friend is absolutely right. Because the claims are settled upfront by the payment of, typically, £3,000 or £4,000, there is often no medical examination. There is therefore no evidence on which to assess whether the claim was fraudulent or not, which is why the 1% figure cited by the hon. Member for Hammersmith (Andy Slaughter) is essentially meaningless.

One of the other provisions in the Bill, which we debated on Second Reading, is the requirement for a medical examination to take place before an offer is made. That is an essential reform. In response to an intervention from me, the Secretary of State for Justice confirmed that such medical examinations would have to be face to face. That would begin to address the issue that my hon. Friend the Member for Bexhill and Battle (Huw Merriman) has rightly raised.

[Jo Stevens]

I thank the hon. Gentleman for giving way to me again; he is being very generous. He mentioned the purpose of raising the small claims limit to £5,000, and what that would do. What it will do is deny victims of injury access to justice, as the Government’s own impact assessment expressly states.

[Chris Philp]

I do not accept the premise of the hon. Lady’s intervention. I think that in the case of the smaller claims, whose value is less than £5,000, it is perfectly possible and perfectly reasonable for individuals to submit their own claims—these are relatively simple matters—using the online portal to whose importance my hon. Friend hon. Member for Bromley and Chislehurst drew our attention earlier. Members have also referred to the role that unpaid McKenzie friends can play in assisting members of the public who submit claims. I do not accept the suggestion that bona fide claims will be prevented or inhibited by the proposed reforms.

--- Later in debate ---

[Bim Afolami]

I agree with my hon. Friend. I reiterate that the point of this legislation is to bring down insurance premiums for ordinary people by, I think, between 35% and 40%. I look to the Minister to check whether that is right.

[Jo Stevens]

The UK’s leading insurance companies earned more than £2.6 billion in profits in 2016, up on 2015. The proposed changes do not guarantee any reductions in premiums; they simply say that the premiums may fall. There is no guarantee that they will, and we know from previous Bills that this does not happen. Why does the hon. Gentleman suppose that things will be different this time?

[Bim Afolami]

I take the hon. Lady’s point. The industry has pledged to pass this on. My understanding is that premiums fell by an average of roughly £50 a year in 2012. When we talk about averages, we must bear in mind that if premiums were to fall by an average of, say, £35 under this legislation, the figure in some instances would be much greater—especially for young drivers, for example. Those are my remarks, based on what I have seen and heard today, and I commend this speech to the House.

--- Later in debate ---

[Mr Clarke]

I am saying that there is a need for a proportionate system for compensation. The number of road traffic accident-related personal injury claims has increased by 200,000 since 2006—a rise of approximately 40%. That suggests to me that the incentives in the system are skewed. Insurers predict that, without reform, motor premiums could continue to rise at a rate of about 10% annually. That constitutes a significant burden on the cost of living for millions of us who are dependent on our cars for daily travel, especially in rural communities.

[Jo Stevens]

Does the hon. Gentleman not think that the UK’s leading insurers paying out £2 billion to their shareholders in 2016 might have something to do with the rising cost of insurance premiums?

[Mr Clarke]

The Bill is designed to make sure there is a closer connection between whiplash claims and medical evidence by introducing a ban on seeking or offering to settle whiplash claims without the appropriate medical evidence. That will discourage fraudulent claims, encourage insurers to investigate claims properly and protect genuine claimants from accepting a settlement without knowing the full extent of their injury.

--- Later in debate ---

[Ruth George]

I beg your pardon, Madam Deputy Speaker.

New clause 1 would amend some of the worst failings of the Bill, which has been drafted at the behest of the insurance industry over several years. The industry has failed to tackle fraudulent claims. We have heard from hon. Members on both sides of the House this afternoon that the industry, which is responsible for so many of the claims management companies and for passing information on to them, is producing the problems that the Government are now seeking to address by further victimising the victims of accidents.

The insurance industry is making billions of pounds of profit and will make a further £1.3 billion from this Bill through the reduction in claims. Victims of accidents are not the people who tend to go to court. Those who lose will be denied access to justice, as both the impact assessment and the excellent report from the Justice Committee make clear.

It is a huge undertaking for a layperson to take a case to court. Most would not even dream of it, especially a case against their employer, who will be armed with their own lawyers and often with an insurance company, which will also be armed with its own lawyers. Unison, the public sector union, surveyed its members 60% and said they would not have taken a case against their employer to get the compensation they deserved for their injury at work if they had to take the case on their own without the support of a lawyer.

It is extremely difficult to determine liability in the case of many accidents at work, especially in instances like those I saw when I worked for the Union of Shop, Distributive and Allied Workers. Deliveries are made to stores by a third party and there are incidents in warehouses that may be the fault of one party, the fault of another company or the fault of the employee. Those arguments are exceedingly difficult to pin down, especially for an individual claimant, and they require the assistance of a lawyer.

The Government assure us there will be an easy online portal for claimants to register a claim. I am sorry, but I am a member of the Select Committee on Work and Pensions and we were told that there would be an online portal for universal credit, yet 47% of claimants are unable to access the portal. An online portal is, of itself, not an easy thing to access, particularly for people for whom IT is not their natural sphere. I ask the Minister to commit the Government not to roll out these changes to the small claims limit until the portal has been demonstrated to be easily usable by at least 95% of those who seek to use it. I hope that that commitment will be made during the passage of this Bill because, as we have heard, the portal is nowhere near ready and even the pilots have been found by firms of lawyers to be difficult to access.

The arguments made in favour of the Bill have been about the cost of insurance but, as we have heard, that cost has been rising at the same time as insurance companies’ profits have been rising. It is not the cost of personal injury claims that has increased insurance; those bodily injury claims have actually reduced by £850 million since 2013. A large degree of the cost rises has been due to the costs of vehicle damage, which have become far higher in the last five years—nearly £700 a year more—because cars are more complicated.

The Bill has been introduced, it is claimed, to crack down on whiplash claims, but it covers far more than simply whiplash. The definition of whiplash itself has been extended far beyond a medical definition, to include all injuries to necks and backs that relate to rupture or strain of muscles, tendons or ligaments lasting up to two years. I hope that no one on either side of the House would feel that such injuries are minor. The Bill also deals with accidents at work, public liability claims and medical negligence. USDAW has estimated that five times as many cases would be caught by this small claims limit as are caught currently. According to the TUC, only one in seven workers make a claim against their employer for an accident at work. So we can see that this move will have a severe impact on the number of claims being made.

[Jo Stevens]

Does my hon. Friend agree that the Bill will make workplaces more dangerous? I know from experience that, if employers are litigated against as a result of accidents in the workplace, they review their safety policies and make workplaces safer. This Bill will have the opposite effect.

[Ruth George]

I absolutely concur with my hon. Friend’s point, which I raised with the Health and Safety Executive, whose laboratory is in my constituency. It concurred that one of its major concerns is that without claims being made against employers they will cease to militate against risk in the workplace. That is just one of the many problems the Bill will cause, both for victims of accidents and for all other employees in the workplace.

The Minister has heard many examples this afternoon of how the Government could crack down on fraud and on the costs of insurance without cracking down on innocent victims of accidents. The requirement in the Bill for medical reports prior to offers being made is an important one, which all sides are supporting. We hope that the Government would seek to assess the impact of that change before impacting on victims. We have also heard many calls from Members on both sides of the House for claims management companies to be acted against because they are obviously playing the system and we need to make sure that that cannot continue.

This Bill is seeking to make the innocent victims of accidents pay for the fact that insurance companies are not prepared to crack down on fraud and so have come to this Government seeking their help. We have no guarantee that insurance costs will fall, but we do know that insurance companies will make £1.3 billion more a year out of this legislation and that innocent victims of accidents will suffer. I very much hope that the Minister has listened to the arguments being made on both sides of the House today and will accept the new clause.

Civil Liability Bill [ Lords ] (Second sitting)

Jo Stevens Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 11th September 2018 Public Bill Committees

[Rory Stewart]

That is a very good question. The hon. Gentleman and the right hon. Member for Delyn are essentially asking the same question. Indeed, that is what this whole debate is about. The question is about the extent to which the Government wish to interfere in the market to fix prices. As the hon. Member for Enfield, Southgate suggested, a very, very unusual and unprecedented decision was made about the energy companies following a suggestion originally made by the Labour party that we should get involved in fixing prices. That is something about which, from a policy point of view, we generally disagree with Labour because—this deep ideological division between our two parties goes back nearly 100 years—we are a party that fundamentally trusts the market.

The Financial Conduct Authority and the Competition and Markets Authority argue that the insurance companies are operating in a highly competitive market. The reason why we did not initially suggest that we need to introduce anything equivalent to new clause 2 is precisely that we believe that the market is operating well, and that the savings passed on to the insurance companies will be passed on to the consumers, as happens in every other aspect of the market. I have not yet heard a strong argument from the Opposition about why they believe that not to be the case. Logically, Opposition Members can be making only one argument: they must somehow be implying that the insurance companies are operating in an illegal cartel.

[Jo Stevens (Cardiff Central) (Lab)]

rose—

[Rory Stewart]

I give way to hear why the Opposition believe that is not the case.

[Jo Stevens]

The Minister has said that the Opposition want to fix the market and prices. He also mentioned trust, which is exactly what this is about, because we have been in this situation before. Previously, insurers promised to return savings to consumers and did not. Why is it different this time? Why does the Minister think we can take insurers at their word this time when they have not returned savings previously?

[Rory Stewart]

Recent evidence on the cost of motor premiums shows that, after the implementation of the last set of reforms, there was a flattening off in the increase in the insurance premiums that was lower than inflation. The reason we believe this mechanism works—this was all part of the evidence put forward by the Competition and Markets Authority—is that it is a very mobile market. Currently, 72% of policyholders have switched their motor insurance provider—it is not a static market where people do not move between providers, which gives a very strong incentive to compete on the premiums. Fifty per cent. of insurance customers are going to comparison websites to compare the premium prices.

--- Later in debate ---

[Rory Stewart]

Again, the Competition and Markets Authority is our best guide. Its job is to look very closely at the operations of its industry. It believes that this is a very competitive industry, which is why it is confident that the reforms introduced led to savings that were passed on to customers and why it believes that the current reforms will lead to the same. If that does not happen, it would be interesting to hear Labour Members’ theories about why competition is not operating in this market and why they believe there is a cartel. If that is the argument they wish to make, they will be assisted and not impeded by the Government new clause, which will enable them to gather the information with the Treasury and the Financial Conduct Authority in order to make precisely that case.

[Jo Stevens]

Perhaps I can help the Minister on the figure that my hon. Friend the Member for Ashfield mentioned—the £11 billion of savings after the 2012 changes. That is an Association of British Insurers figure. That figure was saved in claims costs over six years, according to its evidence, but premiums are now higher than ever.

[Rory Stewart]

I will return to the fundamental disagreement between right hon. and hon. Members. We can all agree that there were significant savings to the insurance industry. We can all agree that some of those savings were passed on to customers and that premiums ceased to rise at the rate at which they had been. There is some disagreement between the two sides of the House about whether enough of those savings were passed on—we argue that the industry passed on sufficient savings—and whether premiums went up more than they should. However, without Government new clause 2, the evidence or information will not be available to people in order to make such arguments.

It is not enough to produce a general figure, saying, “Here is £11 billion, and this is how much was passed on in premiums.” That is why the new clause has no less than 11 subsections that detail the kind of data that would need to be extracted from the insurance industry by the date recommended in order to prove that case. I was asked why reporting would not be done annually. The answer, of course, is that a claim can be brought any time within three years of an accident. The date takes into account that the law is due to come into effect in 2020. We add three years to that for the claim, and then time for the data and evidence gathering in order to report in 2024.

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[Robert Courts (Witney) (Con)]

I want to make a few brief comments. I entirely understand the force of the comments made. As someone who started his practice in the small claims court before progressing to other courts, I have seen how they work. I have a couple of pertinent points—the Minister alluded to the first. For some very complicated cases, particularly commercial ones, there are already limits of £10,000. As other Members who have practised will realise, the fact that someone is in a small claims court and not represented does not mean that they are completely unassisted. The district judges who hear those claims are solicitors or barristers and are extremely competent and experienced in their own right. Therefore, there is every reason to believe that they will be able to hear those claims, which will have justice as their case is heard.

[Jo Stevens]

I take the hon. Gentleman’s point but judges are not there to represent in that case, whereas a solicitor would be there to represent. Does he agree that he is comparing apples with pears?

[Robert Courts]

The hon. Lady is absolutely right. I know she has a long history of practising, as do I. That is, of course, absolutely correct, but it does not mean that they are simply left to sink or swim on their own. I have seen countless cases in my practice where a district judge, although not representing someone, clearly points out arguments that may wish to be made. District judges frequently bend over backwards to ensure that the correct points are made by claimants. Although that is true and I accept the force of the hon. Lady’s point, I suggest that the overall thrust of enabling justice, but at a reasonable and proportionate cost, is being addressed.

Civil Liability Bill [ Lords ] (First sitting)

Jo Stevens Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 11th September 2018 Public Bill Committees

[The Chair]

If they wish, hon. Members may remove their jackets. It is warm in here and we are trying to open a window. Please ensure that electronic devices are turned off or switched to silent. Tea and coffee are not allowed during sittings. We will first consider the programme motion on the amendment paper, which was agreed by the Programming Sub-Committee yesterday. If there are any matters of interest to declare, we will do that afterwards. We will then consider a motion to enable the reporting of written evidence for publication. In view of the limited time available, I hope we can take those motions without too much debate.

Ordered,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 11 September) meet—

(a) at 2.00 pm on Tuesday 11 September;

(b) at 11.30 am and 2.00 pm on Thursday 13 September;

(c) at 4.30 pm and 7.00 pm on Tuesday 9 October;

(2) the proceedings shall be taken in the following order: Clauses 1 to 10; new Clauses; new Schedules; Clauses 11 to 14; remaining proceedings on the Bill;

(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 10.00 pm on Tuesday 9 October.—(Rory Stewart.)

[Jo Stevens (Cardiff Central) (Lab)]

On a point of order, Mr Stringer. It is a pleasure to serve under your chairmanship. I refer the Committee to my entry in the Register of Members’ Financial Interests. My partner is a solicitor and a chief executive of a personal injury law firm, which is relevant to the matters under consideration.

[Robert Courts (Witney) (Con)]

Further to that point of order, Mr Stringer. I would like to make a similar declaration, because I used to practise as a personal injury barrister.

--- Later in debate ---

[Rory Stewart]

It is a great privilege to serve under your chairmanship, Mr Stringer. Thank you again for the serious involvement that has gone into the debate. It has been a real privilege, as somebody who is not a legal specialist, to see how many well informed and distinguished colleagues we have on both sides of the House contributing to these interesting questions of definition.

Many of the amendments we are dealing with today reflect the work of the House of Lords and, in fact, of Opposition Members of the House of Lords—Labour Members, Liberal Democrat Members and Cross Benchers—who introduced many of the clauses into this Bill, which were not originally there and which we are now discussing. With your permission, Mr Chair, I will move quickly through amendments 8 and 9 and new clause 9 and then discuss why we feel clause 1 should stand part of the Bill.

The definition of whiplash, which is dealt with in amendment 8, was placed in the Bill after extensive debate pushed by the Delegated Powers and Regulatory Reform Committee of the House of Lords. In the initial version of this Bill, we had not sought to define whiplash. The DPRRC argued carefully and at great length that it felt strongly that it was inappropriate to have legislation of this sort if a definition was not in the Bill. The Committee felt it was not appropriate for any individual, whether a Minister or a chief medical officer, to make this definition on their own. It should be made by Parliament as a whole and it should be made fully explicit.

After a great deal of debate in the House of Lords, we conceded this point. The clause was inserted and everybody—Cross Benchers, Opposition Members of the House of Lords—nodded the amendment through. It was then inserted. The reasons for this are both those brought forward by the DPRRC and, I would add, to assuage some of the concerns put forward by the Opposition. Clause 2 also allows for a review of the definition by the chief medical officer, along with others, every three years to make sure it remains in touch with medical science and medical expertise. The definition is in the Bill and not purely provided by medical experts because, as the House of Lords argued, this is a medico-legal definition. In other words, it is not simply a question for medical specialists; it relates to the operation of law and the way in which the law of tort would operate.

The final reason for which I ask that amendment 8 be withdrawn is that I am afraid it refers only to the chief medical officer for England, whereas, of course, the legislation applies to England and Wales. That is why we feel strongly that clause 2, which refers to the chief medical officer for England and the chief medical officer for Wales and, indeed, the Lord Chief Justice and the Law Society in consulting on the definition of whiplash every three years, is the appropriate way to proceed. On that basis, I respectfully ask that amendment 8 be withdrawn.

It is easy to understand why amendment 9 was tabled and that the Opposition would be concerned. Again, we would respectfully argue that the key point is that the injury has occurred and not why the individual is in the car. The question of why they are in the car would be a distinction without a difference. There are many pressing reasons why somebody might be in a car. I, like many Members here, represent a rural area. Somebody might be in a motor car, for example, because they were having to drive their child urgently to a hospital. They might be in a motor car for any number of reasons that left them with little choice but to be in the car. It would seem invidious to distinguish between them and somebody else who is in the car for the purpose of employment, purely on the basis of the injury. The key is the injury and the fact that the third party who is liable for that injury is held liable.

[Jo Stevens]

The Minister mentioned choice. The fact is that if somebody is driving in the course of their employment, they do not have a choice because they are doing so on the instruction of their employer. Does the Minister accept that his argument on choice is not relevant when talking about an employer liability claim?

[Rory Stewart]

The argument I am trying to make is that, in many ways, travelling in a motor car in a rural area is, in effect, not a choice. If you were heavily pregnant and had to get to a hospital, you would have to get into that motor car. You would have no more choice than an individual who was in a car for employment purposes. In my constituency, very sadly, there are simply not the public transport links. People are obliged to be in a motor car, whether or not they are travelling in the course of their employment. Were they to suffer a whiplash injury, travelling in a rural area through no choice of their own, because they were suffering some kind of emergency or they were having to respond, it would seem invidious that they would receive different treatment from an individual who is, for example, driving a postal van.

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[Bambos Charalambous]

The issue of tariffs has been set out in an arbitrary way in the Bill. The criminal injuries compensation scheme was set up in 1991. Since 1995, the scheme has set the damages received for a criminal injury at £1,000 for whiplash that lasts from six to 13 weeks. That was the same figure in 2001, when the scheme was updated, and again in 2008 when the scheme was updated, and even in the current scheme which has not been updated since 2012: the damage for whiplash is £1,000 for more than 13 weeks. That compares unfavourably with the tariff that has been set—£470 for whiplash—so there are two inconsistent schemes operating under Government auspices. Someone is better off if they are injured by another person in criminal activity—for example, during dangerous or careless driving—and then receiving money from the Government. If they are injured negligently in a car accident they would receive far less. It should not be the case that someone receives far less if someone else commits a criminal offence against them than they would as the result of an incident that has occurred through negligence.

[Jo Stevens]

Does my hon. Friend agree that the Bill is creating tiers of victims of personal injury, so there will be different rates for people injured in Scotland, the workplace and road traffic accidents, and as a result of a criminal act?

[Bambos Charalambous]

My hon. Friend makes an excellent point. This leads to my next point: the way damages are calculated by judges has evolved over time through the judicial colleges. They have years of experience, yet what we have here is the Lord Chancellor plucking figures out of the air just to make things fit and to satisfy the insurance companies. That is not right. There has to be consistency, and a consistent approach. The measure makes no sense at all, and we should not be a situation in which tariffs are set arbitrarily by the Lord Chancellor that are inconsistent with other parts of the law and even other schemes within the Ministry of Justice.

--- Later in debate ---

[Ellie Reeves]

The point about fraudulent claimants is that it is a very low percentage, and the insurance industry has reporting duties. No insurance company has stated that fraud is a material risk. It is not correct to suggest that there is an epidemic of fraudulent claims. Such claims should be tackled, but the way to do that is to go after those who commit fraud rather than innocent victims of road traffic accidents. The implementation of the Government’s package of measures in this Bill and the forthcoming changes to the small claims limit would eviscerate access to justice for many people with genuine injuries. In its current form, the Bill would replace the long-standing and established Judicial Studies Board guidelines with a rigid tariff that would undermine judicial discretion and leave injured claimants worse off.

I agree with the conclusions of the Access to Justice group in its written submissions to the Committee, which state that the increase in the small claims limit and the introduction of a tariff system is punitive and arbitrary. The draft tariff system presented by the Ministry has shown an overwhelming reduction in payments for pain, suffering and loss of amenity for whiplash injuries. In comparison with the 2015 average pay-outs under the existing guidelines, injuries lasting 19 to 24 months would be compensated 13% less, and those lasting 16 to 18 months would be compensated 29% less, while injuries lasting 13 to 15 months would be compensated 45% less. I note that Government amendment 4 would ensure the Lord Chancellor consulted the Lord Chief Justice before proceeding with regulation changes, but it is not satisfactory and would not see access to justice delivered for injured claimants. It misses the point of what is damaging about the move from judicial guidelines.

The Bill classifies injuries dealt with by the proposed tariff scheme as minor. I am not sure by whose definition a minor injury is one that can last up to two years. By most standards, it is surely a significant injury, and I welcome the shadow Front-Bench amendments that would see injuries of more than a year removed from the scope of the tariff system. To grade an injury of up to 15 months as minor and restrict damages to nearly 50% of what they are currently is a clear, ideologically-driven assault on access to justice.

Moreover, the evidence submitted to the Committee by the Carpenters Group showed that 15% of road traffic accident injuries lasted for more than 12 months. We cannot insist that the punitive measures invoked by a move to a tariff system affect the ability of a substantial number of people to access justice. Further, on the secondary legislation changes to the small claims track from £1,000 to £5,000 for road traffic-related personal injury claims and to £2,000 for all other types of personal injury claim, the package of measures, of which this Bill forms part, will see thousands of injured people fall out of scope for free legal advice and potentially denied justice. Current predictions are that around 350,000 injured people will be put off pursuing a claim for an injury that was not their fault. Access to justice is on the line for thousands of genuinely injured people.

[Jo Stevens]

Does my hon. Friend agree that the impact of the Bill will mean that we are likely to see what happened in the employment tribunals when fees were introduced and there was a drop-off of 90%?

[Ellie Reeves]

That is absolutely right. If the changes go through, hundreds of thousands of people will simply not be able to pursue claims with legal representation and will be deterred from doing so. The Government’s introduction of employment tribunal fees was found by the Supreme Court to be illegal because they denied people access to justice, and we seem to be going down the same route with the Bill’s further attacks on access to justice and with the related small claims measures. Amendments 10 and11 should be adopted as they provide much needed strength to the legislation and will help protect access to justice for victims of accidents.

--- Later in debate ---

[Rory Stewart]

Many whiplash injuries are not detectable on an MRI scan. Many people are currently receiving compensation for whiplash and have experienced whiplash injury, which cannot be caught on an MRI scan. The GPs who will be asked to decide whether someone has had a whiplash injury will not be holding them to the standards of an MRI scan. Were they to do so, we believe that the number of whiplash injuries would decrease very dramatically. Nothing like 550,000 injuries a year would be recorded on an MRI scan, particularly in the three-month to six-month period.

[Jo Stevens]

I practiced in this area for nearly 30 years. Every day, I saw the impact of motor accidents and soft-tissue injuries on young and old people from all sorts of backgrounds. What the Minister is saying is absolute nonsense. GPs are able to determine whether someone has suffered an injury—they have been doing so for many years and will continue to do so for many years. This is simply an excuse to increase insurance companies’ profits.

--- Later in debate ---

[Jo Stevens]

Why not take the pragmatic approach and just leave it to the judges to decide? They are the experts. Why should a politician influence what is happening?

[Rory Stewart]

The answer goes to the core of the entire legislation. The proposed tariff recognises that what we are dealing with—or at least, what we believe we are dealing with—in relation to whiplash, with the peculiar anomalies since 2005 and the increase in whiplash claims, is not exclusively medical or legal, but has strong social and political dimensions in terms of insurance premiums and the cost to the public purse, which is why quite a lot of part 2 of the Bill deals with the NHS. The introduction of the tariffs is designed precisely to reduce the amount paid out in the specific case of general damages for minor whiplash injuries. Simply to stick with the judicial college guidelines would obviate the entire purpose of the Bill and undermine the medical, legal, social and political arguments that underlie the legislation.

--- Later in debate ---

[Rory Stewart]

This will be entirely different. The disagreement is only about whether one can employ a lawyer and recover the cost of the lawyer. The individual will be able to recover from the insurer the medical costs on the report they got—for example if they spent £140 going through the MedCo portal. The small claims court cost of registering the claim would also be recoverable. However, in the vast majority of cases at the moment—we consider that this will be true in the future—cases do not go to court at all. In the vast majority of cases, a claimant will get a medical certificate, follow the path of the online portal and the settlement will come without them having to proceed to court.

[Jo Stevens]

The Minister’s impact assessment, which I referred to on Second Reading, explicitly states that the measure will affect the number of people who will bring cases, and that the number of cases will go down. Will he comment on that please?

[Rory Stewart]

Absolutely. The Government’s contention is that some of the cases currently being brought forward are fraudulent or exaggerated claims motivated by a desire to get a payout when either an injury has not been experienced or the injury experienced was considerably less than claimed in court. We believe that, by reducing the level of tariffs that paid out and by removing the industry of lawyers whose costs can currently be reclaimed through the process, it will be less likely that an individual who has not suffered an injury will go through the inconvenience of seeking a medical report, and less likely that they will proceed to the small claims court or go through the online portal to receive payment for an injury that did not occur. They would not be supported and encouraged by the legal profession or, more likely, claims management companies in proceeding down that path.

[Jo Stevens]

Will the Minister clarify? Is he saying that, although his impact assessment states that the number of cases will go down, the measure will apply only to fraudulent cases? Is he saying that no genuine victim of injury will not pursue a claim because they are not able to recover their costs?

[Rory Stewart]

The impact assessment, which is based on an enormous amount of expert evidence and discussion, boils down to a pretty straightforward assumption about human behaviour. Under the proposed new system, if someone has a car crash and injures themselves, they will proceed to their insurance company, register the fact that they have genuinely injured themselves, be directed towards MedCo, which would provide a report, go to the online portal and, in an effective, efficient and transparent fashion, proceed towards a predictable tariff based on their medical reports. If the medical reports say that the prognosis is six months, a fixed tariff would be paid out.

The experts’ contention is that, if someone has a car crash and genuinely nothing happens to them, it would be unlikely, in the absence of a claims management company encouraging them to do so, that they will tell the insurance company that they have a whiplash injury, or be coached to mislead a doctor in the MedCo process to get some kind of report suggesting they have a whiplash injury. Therefore, somebody who either did not experience an injury or experienced an injury so minor that they were not interested in pursuing compensation would not proceed. We believe that, under the current system, the practice of some claims management companies is to encourage people who either have not experienced an injury or have experienced a considerably more minor injury to make a fraudulent or exaggerated claim. We believe that those claims will be not entirely excluded but reduced.

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.

Parole Board: Transparency and Victim Support

Jo Stevens Excerpts

Friday 19th January 2018 Commons Chamber

[Mr Gauke]

Yes, I can give my hon. Friend that assurance. Without dwelling on the details of the reasons that I have already set out, I have given very long, close and serious consideration to my options.

[Jo Stevens (Cardiff Central) (Lab)]

The Secretary of State has quite rightly concentrated on the victims and the issue of transparency in his remarks, but he also referred to the fact that there are some victims who are crowdfunding to bring potential legal proceedings. That is because civil legal aid has been severely restricted for judicial review cases by the previous coalition Government. Will he please look again at the availability of civil legal aid for judicial review?

[Mr Gauke]

In the context of legal aid generally, the hon. Lady will be aware that there is currently a review of that. I do not intend to say any more on that until that review has been completed.

Royal Institution of Chartered Surveyors: Property Act Receiverships

Jo Stevens Excerpts

Tuesday 18th April 2017 Westminster Hall

[Jo Stevens (Cardiff Central) (Lab)]

I beg to move,

That this House has considered the regulatory role of the Royal Institution of Chartered Surveyors in Law of Property Act receiverships.

It is a pleasure to serve under your chairmanship today, Mr Hollobone. The Royal Institution of Chartered Surveyors is the professional body that accredits some 125,000 professionals in the land, property and construction sectors worldwide. The RICS banner slogan is “Confidence through professional standards”, and a mission statement proudly announces:

“We regulate and promote the profession, maintain the highest educational and professional standards, protect clients and consumers via a strict code of ethics, and provide impartial advice and guidance.”

That statement embodies the key principle that although a professional body has responsibilities to its members, such as setting standards, training and interpretation of legislation, its overriding responsibility is to the public at large—its members’ clients and customers—to provide assurance and confidence that RICS members are behaving entirely professionally to those third parties.

Self-regulation, which is what that represents, leads RICS to its immediate conflict of interest. On the one hand, it represents the interests of members, who fund the organisation; on the other hand, it has an overriding responsibility to the public at large. The issue becomes how RICS manages that conflict and whether RICS is achieving the appropriate balance in judging the actions of its members. That is the crux of what today’s debate is about.

RICS, naturally, claims that everything is in order. On its website it states:

“We assure competence and enhance our professionals’ status by providing confidence to consumers and markets”,

and:

“We are proud of our reputation and we guard it fiercely, so clients who work with an RICS registered professional can have confidence in the quality and ethics of the services they receive.”

No self-regulator will ever say otherwise, but the question is whether RICS is delivering on that commitment in practice. Unfortunately, in the experience of my constituent Mr Shabir and many others, the answer is emphatically no.

RICS has entirely misdirected itself in Mr Shabir’s case and should issue a revised decision that accords with RICS’s mission statement and the facts of his case. A further concern to me is that public pronouncements by RICS, specifically those made to the Select Committee on Business, Innovation and Skills under the chairmanship of my hon. Friend the Member for West Bromwich West (Mr Bailey), seem wholly virtuous and bear no relationship to RICS’s interpretation of its own standards when it responds to complaints such as those of Mr Shabir.

Turning to the Law of Property Act 1925, it is unfortunate that although the LPA or the relevant mortgage deed provides for a lender to appoint a receiver, section 109(2) of the Act defines the receiver as the “agent” of the borrower. That creates an immediate conflict, since a bank or other lender, when faced with claims of unreasonable behaviour on behalf of the receiver whom it has appointed and whose remuneration it has agreed, will shelter behind the fact that the receiver acts as the agent of the borrower. Most commentators acknowledge, however, that that is not the reality. The receiver’s first and often only loyalty is to his appointer, and the impecuniosity of the borrower, often as a consequence of the very actions of the bank or other lender, will deny the borrower the ability to defend himself. In such circumstances—for example, when a RICS member is acting in, or in association with, a receivership capacity—it is essential for RICS to set the bar for acceptable behaviour at the very highest possible standard.

On 16 September 2015, I led a debate in Westminster Hall about the case of Mr Shabir and that of Alun Richards, a constituent of my hon. Friend the Member for Ogmore (Chris Elmore). I will not repeat the details of the case, but in summary, as a consequence of the financial crash in 2007-08, Lloyds bank took the opportunity to reassess its relationship with customers who were borrowing large sums of money at low rates of interest above base. Those customers were known as fine margin customers. Faced with the significantly increased costs of funds in the money markets, Lloyds sought to improve its position by eliminating fine margin customers from its portfolio. The mechanism to achieve that was systematic down-valuation of a customer’s property in order to engineer a shortfall in the key loan-to-value ratio. Once that term was breached, Lloyds could pass the customer in question to the Bristol recoveries department—from which it was confirmed there was no escape—and resist all proposals for restructuring.

The Bristol recoveries department was in effect the graveyard of Lloyds, because no business came out of it alive. It has become infamous as the centre of the malpractice and it has dealt with cases from all over the country. Once a business was with the recoveries department, receivers were appointed. They then eliminated the customer and met Lloyds’s objective. Any shortfall for Lloyds was met by the Government under the taxpayer bailout arrangement. To add credibility to that manoeuvre, Lloyds needed the support of a professional firm with apparent independence and full RICS endorsement. In Mr Shabir’s case the firm was Alder King, which had at one time been owned by Lloyds. The advantages to Alder King were all too obvious: a significant source of extremely profitable consultancy and receivership work, much of which was unnecessary and would not normally have arisen were it not for the position that had been artificially created.

[Kevin Brennan (Cardiff West) (Lab)]

I congratulate my hon. Friend on securing the debate. I give her my full support. What she is presenting is the tip of the iceberg. I cannot name a constituent of mine in a similar case because he wishes to remain anonymous, owing to confidentiality agreements negotiated around the malpractice. Suffice to say, he is a victim of exactly the same kind of malpractice by Lloyds as she is describing.

[Jo Stevens]

My hon. Friend is right. We have the names of people who have been affected, but many cannot identify themselves because of gagging agreements in the settlement of disputes.

As far as Mr Shabir and others similarly affected are concerned, the Lloyds manoeuvre was not simply an esoteric exercise. The practices employed have destroyed perfectly viable businesses and sources of livelihood for their owners—Mr Shabir had a business worth about £10 million. Recognition of such practices is widespread, including in the Tomlinson report and the financial press, and there is much sympathy for those who have suffered financial loss. Redress, however, remains elusive, not least as a consequence of the prohibitive cost of litigation. This really is a David against Goliath situation.

At a time when RICS’s support might be decisive, it remains in denial about the malpractice that lies at the heart of this matter. What, therefore, was the malpractice? Mr Jonathan Miles, a partner in Alder King, was embedded in the Lloyds recovery department in Bristol. He was given a Lloyds email address, telephone and business card, and his true identity as a partner in Alder King was concealed. Mr Julian Smith, another Alder King partner, was not only instructed to do the valuation of Mr Shabir’s business—in reality, the down-valuation by Lloyds—but appointed receiver over his property. Mr Smith had significant involvement with Lloyds and he, too, was provided with a Lloyds email address and had access to confidential customer data. Disturbingly, RICS has confirmed that during that whole period Mr Smith was on a part-time secondment to Lloyds. That is about as obvious a conflict of interest as we will ever see. Mr Smith was acting as judge, jury and executioner.

The terms of those involvements—in particular Mr Miles’s full-time secondment, which lasted several years—were to act in an executive capacity within Lloyds. The relevant financial arrangements have never been disclosed, which raises doubts about whether they even existed. In that executive capacity, Mr Miles was threatening customers, making receivership appointments to his own firm and signing property sale completion documents as a senior authorised Lloyds official. The valuations produced by Alder King were up to 50% less than comparable valuations produced by valuers with a national profile. Furthermore, once appointed, Mr Smith acted in blatant disregard of Mr Shabir’s interests. Mr Shabir has been left with arrears of rates, service charges and utilities’ services, some of which have become the subject of county court judgments against him. An attempt was even made by Alder King to sell one property from Mr Shabir’s portfolio to Mr Julian Smith’s personal assistant at Alder King.

It goes without saying that each of those matters appears to raise serious concerns when placed in the context of RICS’s literature and professional standards. Naturally, therefore, Mr Shabir made a complaint to RICS. That was on 29 June 2011. It drew an extraordinarily disappointing response, which contained a list of reasons for doing nothing and, in particular, a denial that the issue had anything to do with ethics and conduct. A second approach in July 2011 did not even attract the courtesy of a response, and a further approach in April 2014 led to completely inconclusive dialogue for five months. RICS finally agreed to receive a formal presentation on 13 November 2014, but although all the complaints that had been given in were evidenced, three months passed, and in February 2015 RICS concluded in a letter to Mr Shabir that

“there is no evidence of misconduct by Alder King or the members in question”.

The letter also added that the matter could be referred to an independent reviewer—appointed by RICS—to review RICS’s procedures, but not the actual decision.

As might be expected, the issue of conflict of interest features widely in professional standards literature published by RICS. Doing something that secures an unreasonable pecuniary advantage to the detriment of others is so obviously irregular that there is not even any reference to it in that literature. On 4 March 2015, RICS’s public position was defined by Ms Eve Salomon, then chair of RICS Regulation, in evidence to the Business, Innovation and Skills Committee, chaired by my hon. Friend the Member for West Bromwich West, during an inquiry into the regulation and policies of the insolvency sector. Ms Salomon said in her evidence, in response to questions 20 and 21, that

“secondment…is subject to an arm’s-length contractual agreement between the secondee and his or her firm and the employing organisation.”

She went on to say that

“where somebody might be a secondee in a bank…and then subsequently…is appointed as a fixed-charge receiver, that could potentially raise issues of conflicts of interest, but those matters are dealt with by professional codes”.

She also said:

“If we found evidence that, say, a secondee had given advice on the expectation that the matter would be leading into receivership and that that particular chartered surveyor would be appointed as a receiver, then we would see problems.”

Ms Salomon’s colleague at RICS, Mr Graham Stockey, added:

“At that stage, provided it is at arm’s length and the contract that is set up clearly limits the involvement of the secondee, the conflict could be managed. We look very closely at what the terms of the contract would be and what the terms of the appointment are, and it is up to the firm to be able to show RICS Regulation that there is no conflict. This is something that we look at really closely.”

His comments were endorsed in the evidence session by Mr Julian Healey, who is the chief executive of NARA—the Association of Property and Fixed Charge Receivers. In response to question 19, he said:

“Yes, there is conflict between a fixed-charge receiver going into a bank and advising on matters and then saying, ‘I have identified this as a distressed property. What a good idea. I’”—

or my firm—

“‘shall now go and act as fixed-charge receiver’.”

Those comments were also endorsed by Mr Phillip Sykes of R3, who said in response to question 85 that it would represent an unacceptable conflict of interest if that secondee individual or his firm

“was then to go on and take the insolvency appointment…In my experience, certainly, the banks take enormous care to ensure that if a secondee is working on a particular case then their firm will have no part in any enforcement proceedings.”

From reading that evidence, which was given publicly, it is particularly disappointing that when I wrote to the director of regulation at RICS, Mr Luay al-Khatib, on 15 December last year, he sought to explain away Ms Salomon’s comments to the Select Committee as being

“of a general nature to assist the Committee and not comments made in relation to Mr Shabir’s case”.

It is of fundamental concern to me that Mr al-Khatib declares himself to be satisfied with the decision that RICS made when he knows that there are no agreements governing the terms of secondments that have lasted for five years, that the secondments were without charge to the bank, that there was no escape from the recoveries department—the excuse offered by RICS that there was no certainty of a receivership appointment following Alder King’s advice or valuations is therefore simply nonsense—that the issue of under-valuation has not been addressed and that there was no tendering for receivership work, as cases on which Mr Miles worked were invariably passed to Alder King.

Having attempted since late 2015 to get Lloyds, Alder King and RICS each to meet with me and my constituent to address the issues I raised in my debate in September 2015, I have come to the conclusion that RICS is failing to deliver an acceptable level of regulation. Worse than that, it is doggedly maintaining in its public pronouncements that it is subscribing to the highest possible principles and standards, whereas in reality it is condoning practices that are untenable and universally condemned by other professional bodies. Whatever the reasons for its actions, be they the extent of the practices, the importance of the members concerned, compensation considerations or others, RICS is completely undermining a principal basis for its existence, namely the maintenance of public confidence in a professional body. I recognise that LPA relationships bring their own difficulties, but on the evidence of Mr Shabir and others who have been affected by practices similar to those I have outlined, regulation has failed in the one area where it was most needed.

In March 2017, RICS published on its website a professional statement entitled “Conflicts of Interests”, together with some commentary notes. Obviously there is merit in refreshing professional standards from time to time, but the problem is that RICS is not using its statements or standards when dealing with members who are in breach of those standards. At a meeting held here in Parliament on 15 March 2017, the Thames Valley police and crime commissioner, Mr Anthony Stansfeld, who was responsible for the prosecution of the now convicted bankers behind the HBOS fraud, stated that in his opinion the board of Lloyds bank, which owns HBOS, had been well aware of the fraud since 2009, despite persistently denying it for many years. And here we are again, in my constituent’s case and that of many other small and medium-sized enterprises, dealing with the same Lloyds board, the same owners of HBOS and the same set of individuals: the chairman, Lord Blackwell, and the chief executive, António Horta-Osório.

Mr Shabir’s case has clear parallels with the Reading fraud case. It involves fraudulent activity and then a cover-up. The former chairman of Lloyds, Sir Win Bischoff, wrote to Mr Shabir’s former Welsh Assembly Member on 14 October 2010, completely refuting the allegation that the receivership had been mishandled and specifically saying that there had been no conflict of interest. But he then went on to say that Alder King was Lloyds’s preferred firm of professionals in the south-west. That statement is in itself conflicting. How can the guarantee of receivership work sit alongside Alder King secondments to Lloyds? We know that it sat alongside them very comfortably, because I have a letter from Alder King’s Julian Smith, dated 21 December 2009, to his Alder King boss Jonathan Miles, at his Lloyds bank address, thanking Mr Miles for appointing him as receiver. Sir Win was also sent the letter, but declined to respond. I also have a letter dated 22 May 2014, written by the then Secretary of State for Business, Innovation and Skills, Vince Cable, confirming that he had met Lloyd’s chief executive, Mr Horta-Osório, and discussed Mr Shabir’s case. The chief executive told him that he had “looked into the matter personally”. So the chair and the chief executive of Lloyds knew what was going on and did nothing. That sounds very familiar.

Lloyds has effectively opened up its bank vaults and allowed Alder King to walk right in and help itself. Meanwhile, RICS, supposedly keeping watch, ensures that Alder King has a clean getaway. The financial incentive for Lloyds and Alder King to cover up the fraud is clear, but this dereliction of regulatory duty by RICS, in the face of the most blatant conflict of interest, makes RICS complicit in the fraud itself.

I ask the Minister to address three matters in his response. If RICS is to retain its role in the sector, it should establish which, if any, of its member firms are on bank or lending institution panels and have secondment agreements operating with those lenders. If there are member firms that have such a relationship, does the Minister agree that that should be confirmed in writing to all associated parties before any involvement by those firms in potential receivership cases? Does he agree that RICS must immediately establish with its members, such as Alder King, a system of financial redress for victims of this fraudulent malpractice, including Mr Shabir and other SME owners? The victims should not have to put themselves through the stress and expense of litigation where there is no equality of arms. Since Lloyds has had the principal financial interest in cases such as Mr Shabir’s—Lloyds is still part taxpayer-owned—and has been pulling the strings of RICS members, it should be required to be the major party to that system of financial redress.

The past few weeks have not been good PR for the banking industry, and particularly not for Lloyds. The Reading fraud convictions, the subsequent announcement of yet another £100 million compensation scheme and the launch of a new independent lawyer’s investigation have all made headline news. The scope of that investigation covers the role of three successive chairmen at Lloyds—Bischoff, Blackwell and the chief executive, Mr Horta-Osório—all of whom denied knowledge of the Reading fraud case until it got to court. We know from the release of a leaked internal Lloyds document that those executives knew of the fraud—they even referred to it as fraud—as far back as 2009. Mr Shabir has received the same stonewalling from the same set of individuals.

I conclude by reiterating that banks, regulators and specifically RICS need to clean up their act to restore public confidence and trust. They need to offer full and immediate redress to the victims of their malpractice. The issue is not going to go away, even despite today’s announcement of a general election.

[Several hon. Members rose—]

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)]

It is of course a great pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Cardiff Central (Jo Stevens) on bringing the important topic of the regulation of Law of Property Act receivers back to the Chamber, and I congratulate other hon. Members on their contributions. This debate was postponed from March the 22nd because of the dreadful events on that day, and I am sure that I speak for everyone in the Chamber when I say that our thoughts are with the victims’ families even now.

This debate follows on from a debate that the hon. Member for Cardiff Central secured in September 2015 relating to concerns raised by one of her constituents, Mr Kash Shabir, about the appointment of fixed charge receivers by Lloyds bank and the conduct of the individual appointed. I understand that since then there have been separate investigations by the Serious Fraud Office and the Royal Institution of Chartered Surveyors into the treatment of her constituent by Lloyds Banking Group and Alder King, the firm of chartered surveyors used by the bank, but no further action has been taken against those investigated. She is dissatisfied with that outcome and, as a result, with the current regulation of LPA receivers. Law of Property Act receivers are also referred to as “receivers of rent” and “fixed charge receivers”. I will refer to them simply as “receivers”.

The Act in question is the Law of Property Act 1925, the key provisions of which in relation to receivers are sections 101, 109 and 110, which define the relationship of the receiver with the mortgagor and the mortgagee and set out the powers of the receiver. However, the Act provides that those provisions may be varied or extended by the mortgage agreement, and most modern mortgage deeds contain express provisions that replace or supplement the statutory provisions. The relationship of the mortgagor, mortgagee and receiver is therefore, as a general rule, governed by the contract creating the security for the agreed finance, not by the default provisions in statute. The terms of agreements vary from case to case but are likely to require the borrower to allow a person appointed by the lender to take over the management of the mortgaged property when the loan is in default, usually to collect rental income for the lender to service the arrears but with the right to sell the property if necessary.

On that basis, the appointment of a receiver provides a relatively straightforward way for the lender to protect its position. The ability to do that would seem, indirectly, to help keep the cost of borrowing low and the availability of credit greater than it would otherwise be. Those are clearly desirable objectives, but giving contracting businesses the right to decide the terms of their own contracts does not mean that the receiver has carte blanche as to how he or she exercises his or her powers. Receivers are under legal obligations. They must act in good faith and use their powers for proper purposes, and although their primary duty is to the lender in securing repayment of the secured debt, they must manage the mortgaged property with due diligence and have regard to the borrower’s interests.

There will be cases where lenders and receivers do not act properly, and the hon. Member for Cardiff West—I mean the hon. Member for Cardiff Central, not Cardiff West—described circumstances in Mr Shabir’s case where questions must at least be asked. In such cases, borrowers may have the right to seek compensation by an action for damages against the lender or the receiver in respect of the wrongs alleged to have been committed. Determining the rights and wrongs of such cases is a matter for the courts, and I can only recommend that borrowers caught up in such situations should take legal advice about their rights and remedies and how best and most economically to proceed.

[Jo Stevens]

The Minister has referred to the prospect of litigation, but does he not accept that in this situation—where a small business owner has lost their entire business, has no money and is up against the might of a financial institution—it is simply not possible for them to enter litigation? That is why some alternative form of redress and a scheme is necessary.

[Dr Lee]

Of course, in a difficult situation where all of someone’s funds have been exhausted, I recognise that litigation would be a problem. It would not be appropriate for me as a Minister to comment on an individual case, but I hear what the hon. Lady says and will take away her suggestions.

--- Later in debate ---

[Jo Stevens]

May I thank the Minister for his response? I felt heartened in some respects and a bit downbeat in others. I am grateful to him for saying that he will take the concerns away. I thank the right hon. and hon. Members who have contributed to the debate.

Rather than focus on a particular individual in my summing up, I want to say that, as my hon. Friend the Member for Cardiff West (Kevin Brennan) has pointed out, this is about systemic failure. It affects huge numbers of people. It is not just about businesses, it is about humans—about families, individuals and the crises that it has caused them. It is clear that the difference between the public rhetoric, which was mentioned by my hon. Friend the Member for West Bromwich West (Mr Bailey), and the private reality is very severe for all our constituents. We are looking for a wider remedy and redress system to prevent this happening again.

I am grateful to the Minister for saying that he will take things away and look at them, but there is clearly evidence of wrongdoing here. It falls in the gap between SFO criteria and local police force criteria for investigation. Large numbers of people who have been badly affected have fallen into that gap. We need to look at some way of ensuring that their financial situation is redressed.

Question put and agreed to.

Resolved,

That this House has considered the regulatory role of the Royal Institution of Chartered Surveyors in Law of Property Act receiverships.

Prison Officers Association: Withdrawal from Voluntary Tasks

Jo Stevens Excerpts

Tuesday 28th February 2017 Commons Chamber

[Mr Gyimah]

Modern, fit-for-purpose prisons will have a huge impact on prison officer safety, not least because they will not have all those corners where people can hide. They will also be good for rehabilitation. Today we have opened Her Majesty’s Prison Berwyn, which is the largest prison in Europe and is taking its first prisoners today. That is a huge step in our efforts not only to reorganise the estate, reduce overcrowding and improve safety in our prisons, but to ensure that they can be places of rehabilitation.

[Jo Stevens (Cardiff Central) (Lab)]

I have listened carefully to the Minister. He said that he thought that this action was designed to disrupt the safe and decent running of prisons. Does he not understand that the whole reason why prison officers are withdrawing from these tasks is that we do not have safe and decent prisons? We have intolerable and dangerous prisons; I would not want to work in them, and I am sure that the Minister would not either.

[Mr Gyimah]

As I have said, our prison officers do an incredibly difficult job. I visit prisons almost every week and I know how hard the officers work. The POA has decided to make a stand on pay, as we have seen in today’s bulletin. I urge it to withdraw its bulletin because it will not do anything to improve safety in our prisons.