Motor Vehicles (Compulsory Insurance) Bill

John Spellar Excerpts

Committee stage
Wednesday 5th January 2022 Public Bill Committees

[Mr Bone]

My right hon. Friend draws attention to something that I will refer to later in my speech. When she hears what I have to say, she will see why in the end that will not be the case.

The significance of this measure is seen in the Government Actuary’s estimate that the increase in premiums to extend coverage following the Vnuk judgment would be about £50 for the average motor car policyholder. The Bill will therefore save the average policyholder unnecessarily increased insurance premiums in already difficult economic times. The cost of living is rising and the Bill is an opportunity to keep pounds in people’s pockets.

You have kindly agreed that clauses 1 and 2 may be debated together, Ms Ali. Clause 1 would insert into the Road Traffic Act 1988 new section 156A, “Retained EU law relating to compulsory insurance”. Subsection (1) limits the insurance obligation under article 3 of the 2009 motor insurance directive to vehicles used on roads and other public places, and to a motor vehicle defined as a mechanically propelled vehicle intended, or adapted, for use on the roads. In effect, it removes the Vnuk interpretation as it applies to the use of vehicles in Great Britain.

Subsection (2) clarifies that the Bill does not affect the provisions requiring insurance policies to include the cover required by the law applicable in the territory where the vehicle is used, or the law applicable where it is normally based when that cover is higher. That means that the liability imposed by the Vnuk interpretation will remain in place for insurance policies covering vehicles in use in EU member states and Northern Ireland.

Subsection (3) concerns the removal of section 4 rights created in the 2008 Lewis v. Tindale case, which found that the interpretation of the 2009 directive in the Vnuk judgment could be enforced directly against the Motor Insurers’ Bureau. The Lewis decision means that the Motor Insurers’ Bureau’s liability for an insurance claim extends beyond the scope of the obligations of the Road Traffic Act and applies to accidents on private land and to vehicles not constructed for road use. Subsection (3) brings an end to the relevant section 4 right to compensation from the Motor Insurers’ Bureau except in the case of motor vehicles on roads or other public places, as defined by the Road Traffic Act.

[John Spellar (Warley) (Lab)]

What the hon. Gentleman is describing is interesting. Given, presumably, the obligation arises from an accident and therefore an injury, who becomes responsible for the injury?

[Mr Bone]

I thank the right hon. Gentleman for a really important question. It is one of the issues discussed when drawing up the Bill. In many cases, such as a public event on private land, there would be insurance cover. It is not currently the case that if someone illegally rides a vehicle on private land, has an accident and causes damage, there is a requirement to be insured for that. The landowner would be liable for the damage, but they do not have to be insured for it. Extending insurance to ride-on lawnmowers or other machines on private land has also been caught by Vnuk.

[John Spellar]

I accept that there is a fundamental problem with how liability insurance works: rather than dealing with often catastrophic injuries through the health service or national insurance, they are dealt with on an insurance basis. Local councils are impacted by that and it stops a lot of activities, because insurance companies prevent them. I accept there is a deeper underlying problem, but ultimately, if there has been an injury and there is some degree of fault, who is liable for the compensation? Is it the landowner? Is it the driver of the vehicle? How can that be resolved?

[Mr Bone]

This is a really important argument. There is a liability, and in each event that will depend on who causes the injury or damage. That person will be liable for the damages. The Bill deals with a slightly different situation where we are not extending compulsory insurance to cover those events. If we did, it would increase premiums by £50 per motorist. I stressed earlier that there is nothing to stop Parliament bringing in compulsory insurance on that basis, but it would have to be done through an Act of this sovereign Parliament that wanted to make that change. The Bill brings things back to where we thought we were, but it does not stop that debate and people can still make that argument. However, it is not really relevant to the Bill, because Parliament never thought that the Road Traffic Act and compulsory third-party insurance applied in the circumstances just described.

Proposed new section 156A(4) similarly provides for the removal of all further case law retained under the European Union (Withdrawal) Act 2018 that could undermine the positions set out in subsections (1) and (3). Any other EU law that we do not know about would not apply if the Bill is passed. Subsection (5) defines the terms used in clause 1, including the 2009 motor insurance directive, relevant section 4 rights, retained case law, and section 4 rights.

--- Later in debate ---

[Theresa Villiers]

It is a pleasure to serve under your chairmanship, Ms Ali. I support this Bill and I congratulate my hon. Friend the Member for Wellingborough on getting it this far. The prospects for a presentation Bill making progress are normally minimal, so it has taken real determination on his part to get it this far. I very much hope we will see it on the statute book before too long.

As we have heard, it is clear that the Vnuk judgment in the ECJ has led to a big extension in the type of claim that can be made against the Motor Insurers’ Bureau fund for uninsured road traffic accidents. That extension is manifestly different from the scope and purpose of the scheme in operation under the Road Traffic Act 1988, which focuses on vehicles that are permitted to be used on roads.

In my view, the UK scheme for compensation in relation to collisions caused by uninsured drivers has worked well for decades. I understand that it has been there in one form or another since the 1930s, the earliest point of the extension of private ownership of the car. The combined effect of Vnuk and the later case of Lewis v. Tindle, which concluded that Vnuk had direct effect, and the European Union (Withdrawal) Act 2018, means that potentially significant costs are being loaded on to the UK scheme—costs for a scheme that was never designed for them and to which this Parliament did not consent. As we have heard, motorists will be asked to fund this via their insurance premiums unless this Bill reaches the statute book.

I agree with previous comments that we can have a legitimate debate about the potential extension of compulsory insurance and compensation schemes to new scenarios, but I feel quite strongly that we cannot justify leaving drivers to shoulder the whole cost of this potentially big bill by artificially forcing these new liabilities into our long-standing motor insurance scheme. That is a separate decision that should be taken separately by this Parliament.

As we all know, we face significant pressure on the cost of living at the moment, largely as a result of the global increase in gas prices. In Parliament, we should all strive to do what we can to relieve pressure on household bills, which is another reason to back the clauses in this Bill.

I note the analysis of the costs, which was produced by the Government Actuary’s Department. It is always hard to quantify these things, although the £50 claim is certainly credible. It is particularly worrying that this new liability for the MIB fund is potentially open to significant amounts of fraud. Therefore, the actual impact of Vnuk, if left on the statute book, could be very great. It is hard to quantify in advance. Another reason for my support for the Bill is the potential abuse of the fund we could see if the Bill does not get on to the statue book. In a column in The Telegraph in 2017, the Prime Minister described Vnuk as a

“pointless and expensive burden on millions of people.”

The Bill provides us with an important opportunity to remove that burden and prevent this addition to household bills.

[John Spellar]

Was that article in The Telegraph before or after the one in which the Prime Minister said that Brexit would enable us to do away with VAT on fuel bills?

[Theresa Villiers]

I am not going to comment on the question of VAT on fuel bills, since that is not the subject of today’s debate. I believe the debates on VAT on fuel bills date back some years, probably before that article.

It is disappointing that the Bill does not cover Northern Ireland, but I hope that it would adopt similar legislation, as my hon. Friend the Member for Wellingborough has suggested that it might. It is good to hear that there is nothing in the protocol that prevents it from doing so. It seems clear that this is not a single market-type rule, which would be covered by the protocol. There should be no constitutional or legal barrier to the Assembly passing a similar piece of legislation, and I certainly hope that it will choose to do so.

The Bill is the first piece of primary legislation to repeal retained EU law. I am certainly not aware of any other piece of primary legislation that does that. There are aspects of EU rules and programmes that have already been dismantled. Most notably, many of the fundamentals of the common agricultural policy have already gone, thankfully. However, it may well be the case that that was achieved without primary legislation. It is very clear that this will be the first time we have used primary legislation to disapply a judgment in the European Court of Justice. It could undoubtedly be described as a historic moment. The controversy around Vnuk shows that we need a faster way to remove or update EU laws that no longer work for us, most of which arrived on the statute book via secondary legislation in the first place. To have to deal with all of those modernisations, updates and amendments via primary legislation is a significant flaw in the European Union (Withdrawal) Act 2018 that needs to be looked at again.

I very much support the Bill. I hope it is the first of a long series of repeals and reforms that will take place as we use our Brexit freedoms to create better regulation that is more targeted to our domestic circumstances and that enables us to compete in the big high-tech growth sectors of the future. Only when we have done that and seized the opportunity provided by Brexit will we truly be able to say that we have got Brexit done.