Civil Liability Bill [Lords]

Kevin Hollinrake Excerpts

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

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Gentleman talks about injustice. Is it not an injustice that many motorists are paying inflated insurance premiums because some people are getting an unreasonable level of compensation for their injuries? Is that not what the Bill is intended to prevent?

[Andy Slaughter]

It is not, because I do not know what the hon. Gentleman means by an unreasonable level of compensation—

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[Huw Merriman]

My hon. Friend is right. When I was running the legal team, it always distressed me when we settled because, as a lawyer, I found the whole court process incredibly interesting, but those on the financial side insisted that we settle because that was the better business decision to make. However, my hon. Friend is right about the distress of individuals going through the process. Of course, insurers have to focus not just on the money, but on the valuable human resource implication—the manpower it takes to fight the claims.

That comes back to my point that it is not an issue for insurers if ultimately their costs are covered because the price of premium for everybody else goes up. It is no skin off the bone for them to settle, and that is what occurs. For change, Government action is required. Although I readily accept that a tariff situation is genuinely not to be found in common law, the position that we have got ourselves into means that we need to look at the system akin to the way that we consider the Criminal Injuries Compensation Authority, which fixes the tariff in the same way. That is not unusual if we look at our European friends such as Italy, France and Spain, where similar systems are in place.

I represent a largely rural constituency of 200 square miles. I have many younger constituents who find the price of insurance too great. Studies show that, for those aged between 18 and 21, 10% of their wage will be taken just to cover their insurance. In a rural constituency, there is no choice. If people do not have a car, they find it very difficult to travel. The bus services are not as they were and, without a car, people cannot get from A to B or go to work. That has a knock-on effect because 28% of my constituents are over 65—the national average is 17%—so I have a lot of older constituents who need looking after. We have high social care bills. If we lose our younger people to the cities because they cannot afford to travel around a rural constituency, the balance goes completely.

[Kevin Hollinrake]

Thirsk and Malton also has high social care bills, so I understand exactly what my hon. Friend says. His point about reducing the cost of premiums is very important but, fundamentally, the Bill’s provisions were set out in our 2017 manifesto. The measure is a manifesto promise, and amendment 2 simply wrecks a key premise of the Bill. That is contrary to what most people would expect when we have made a promise in our manifesto.

[Huw Merriman]

My hon. Friend is absolutely right. The amendment drives a coach and horses through the Bill. Yes, of course it is right to clamp down on those who claim fraudulently, and the Bill will act as an incentive for people not to do so, but the ultimate gain is that the money saved will go back into the pockets of those consumers who are currently being overcharged because of fraudulent claims. Like him, I intend that we legislate on all our manifesto commitments, this being one of them, which is why I support the Bill.

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[Kevin Hollinrake]

My hon. Friend makes a very good point about the personal injury lawyers. One of the provisions in the Bill—I think it is clause 8—states that claims management companies will be regulated by the FCA. We already regulate the insurance industry, so how do we make sure there is no conflict of interest in the regulation of both those parties, which often have competing interests?

[Rory Stewart]

This is a very interesting point, and I am very happy to follow up on it in more detail. The nature of the regulation in each case is quite distinct. In relation to the insurance industry, the regulation proposed is to ensure that we have the financial information to prove that the savings the insurance industry has derived from these reforms are passed on to customers. In the case of the claims management companies, the regulation is to ensure that they comply with the law, particularly the legal changes introduced by previous legislation. In accordance with the suggestions from the Justice Committee, we are also looking at the advice forthcoming from the judiciary to ensure that we can deal with other issues involving claims management companies.

If I may, I will come back to the core of the Bill. We are dealing with a perfect storm of three things. First, at the minor end of whiplash injuries—the three-to-six-month end—this is a condition that, in effect, is unverifiable and difficult to disprove. The polite way of expressing this is to say that there is an asymmetry of information. Somebody suffering a whiplash injury will experience genuine and sincere pain, but that pain cannot be detected at the minor end through any medical instruments. That is the first challenge involved in this type of injury.

The second challenge is of course the level of payments offered to individuals suffering these injuries. The third is the level of recoverable costs which meant, in effect, that a no win, no fee process was operating in which people could apply to a lawyer to represent them and be confident that the legal costs would be recoverable from the defendant. When that is connected to the fact that for all the reasons I have given—particularly the first, asymmetry of information—the insurance companies are not contesting claims, we end up with a discrepancy rapidly emerging between the number of motor vehicle accidents and the number of claims, and between the number of claims made in the United Kingdom and the number made in other jurisdictions.

Lord Brown of Eaton-under-Heywood, a former justice of the Supreme Court, stated that he was

“reluctantly persuaded that this provision is justified: it is surely intolerable that we are known as the whiplash capital of the world, so I have concluded that it is open to government, as a matter of policy, to seek to deter dishonest claims in this way.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1603.]

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[Richard Burgon (Leeds East) (Lab)]

It is regrettable that we are here for the Third Reading of yet another Conservative Bill that unleashes a Tory attack on the rights of victims and undermines access to justice. When the record of this Conservative Government is written—probably sooner rather than later, if the media reports are to be believed—the way in which they have entrenched a two-tier justice system will be writ large on the political epitaph of the Prime Minister and this Government. The cruelty of the Conservatives’ cuts to legal aid will be one example of that. Their wilful policy of making it harder for people to take on dodgy landlords or to challenge a flawed benefits decision or cruel immigration decision will be another, at a time when people need that kind of support more than ever. The Conservatives’ record on employment tribunal fees will also be something that we in this country will look back on shame. It is not only unlawful, as the Supreme Court decided, but immoral.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Richard Burgon]

I will not.

The Government’s intent was clear for all to see. They are making it harder for workers to take on unscrupulous bosses—[Interruption.] If the hon. Member for Thirsk and Malton (Kevin Hollinrake) wishes to speak for the insurance industry, he can do so. Step up!

[Kevin Hollinrake]

I thank the hon. Gentleman for giving way. I was not going to speak for the insurance companies. I was going to ask whether he welcomed the fact that the Bill will lower the price of insurance for consumers. Does he not welcome that?

[Richard Burgon]

There is absolutely no guarantee of that happening as a result of the Bill. That is not its real purpose. It actually undermines access to justice. As I said on Second Reading, this is yet another attack by the Government on our justice system and on the vulnerable. It is an attack that will, in practice, enrich the Conservatives’ friends in the insurance industry—[Interruption.] As we can hear, Conservative Members do not like that allegation, and they did not like it when I made it on Second Reading. Maybe it touches a nerve. The Government had a chance to disprove it by their actions, by backing amendments that would have ensured that the Bill would not simply line the pockets of the insurers, but they did not do that.

In their media briefing, the Government claim that the Bill is about cutting the number of fraudulent whiplash claims. Of course, no one would disagree with doing that, and had the Government taken measures that did that in reality and simply stopped there, they would undoubtedly have built a broad consensus and the Bill would have been uncontentious. They did not do that, however. Instead, they pressed on with measures that will penalise the many. That, alongside their dire record on access to justice, is why we still believe that these reforms are a smokescreen. I know that there are many Conservative Members who pride themselves on defending our justice system, on upholding the rule of law and on promoting access to justice. Today is the day for those Members to show that they put their commitment to those important principles above narrow party interest by rejecting the unjust proposals.

The Bill started in the Lords, where it faced substantial opposition, not only from Labour Members or Members representing other political parties, but pre-eminent legal experts, including former Lord Chief Justices, who expressed their concerns about the Bill’s impact on access to justice and the independence of the judiciary. The Government only narrowly defeated amendments—similar to those we have discussed today—that would have fundamentally altered the Bill for the better. Since then, they have not taken the opportunity to listen, not even to those pre-eminent legal experts. They have not tried to negotiate or to remove the barriers to justice that define the Bill. For those reasons and others that I will set out, Labour Members will vote against it.

Before addressing the Bill’s provisions, I wish to place on record other elements of the package of reforms that are intended to be passed through statutory instruments. Through that route, the Government want to increase the small claims limit from £1,000 to £2,000 in all cases and from £1,000 to £5,000 in road traffic accident cases. That will make it much harder for workers to get compensation for workplace injuries, and for genuinely injured people to get a fair settlement. A significantly greater number of claims will be dealt with through the small claims procedure, whereby no legal costs are usually awarded, even in successful claims.

When legal fees are not covered, tens of thousands of working people will simply be priced out of obtaining legal assistance, resulting in many pulling, dropping or not pursuing their cases. Of course, others, determined to secure justice, will fight on, but by representing themselves, at a massive disadvantage. An insurance company will be served by a legal expert fighting their case. The victim will be left to try to navigate a complicated legal procedure, placing greater pressure on our already overstrained courts. Some will choose to pay their legal fees out of their compensation, but then, in practice, they will be compensated less than a court found appropriate. As always, the wealthy will be able to afford the best legal advice and the rest will have to suffer.

Justice for the many, not the few is mere rhetoric for the Government. In reality, it is justice for the few, not the many. Is that why the Government are trying to sneak measures through the back door rather than putting them in the Bill so that they could be debated and amended? That is a cowardly attack on workers’ rights, pushed through without real debate or scrutiny. That just about sums the Government up.

I want to give some real-life examples of people affected by the reforms because far too often their voices are not heard in this place.

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[Kevin Hollinrake]

May I concur with the comments of the hon. Member for Belfast South (Emma Little Pengelly) about that terrible tragedy, and also the terrible injustice that followed in the process of the prosecution of that crime? Our thoughts are with all the families at this moment in time.

The Bill is surely about fairness—making sure that we look after the interests of consumers. I echo the comments of my hon. Friend the Member for Walsall North (Eddie Hughes) when he said that this Government are championing the cause of the consumer and making sure that we drive down the costs of living. There have been many examples of where we have been able to do that over recent months, such as the cap on energy costs, of course, and the Tenant Fees Bill, which is, as you know, Mr Speaker, something that is very close to my heart as it is related to my previous profession. I say that despite the significant hit to our business—Members can check my entry in the Register of Members’ Financial Interests—because it is absolutely the right thing to do. We should look after the interests of consumers and make sure that their interests are fairly represented.

There are other areas in which we seek to legislate, such as leasehold reform to make sure that people do not find that they are paying unfair charges for leasehold properties. That is another instance of how we are trying to drive down the costs of living for our consumers.

The hon. Member for Ealing North (Stephen Pound) indicated from a sedentary position that he questioned the relevance of my hon. Friend’s points about the fact that we are trying to drive up the standard of living and reduce the costs of living, but it was absolutely relevant, as this is a key strategy of the Government. We want to make sure that we reduce the cost of living and increase the standard of living.

The Bill also, of course, fulfils a manifesto commitment. We were clear in our 2017 manifesto that we would deliver on the promise to reduce insurance costs, and that is what this is all about. We are still making sure that people get fair compensation, but we are reducing car insurance costs for the majority. That, along with simplifying the system, is the principle of this Bill.

It is very disturbing to hear my hon. Friend’s comment that this country is the whiplash capital of the world. It is therefore only right that we take action in this area and try to reduce the excessive costs of whiplash compensation, which do, of course, affect us all. This is not about saying that we will not give people fair and appropriate compensation when accidents happen, but it is about clamping down on the worst excesses. With a 40% increase in the number of claims since 2005-06, it is only right, when our roads are actually safer, that we make sure that any compensation paid for accidents on the road is commensurate with the injury itself.

It is absolutely right that we stand up for genuine claimants, but we must provide fair compensation for those claimants. The Opposition’s amendment 2 was simply a wrecking amendment. It is clear what this Bill is about, and that amendment would have hit right at its heart. Without being able to control the tariffs for compensation, the Bill would have been pointless. I guess that it will not be the last wrecking amendment that we will see in this place over the next few months, but it is absolutely right that this Bill, which implements a manifesto commitment, passes through the House.

It is also right that we try to make sure that insurers pass on the savings from which they will benefit as a result of the Bill. It is right, too, that there is clear supervision of the rules to make sure that those savings are passed on to the consumer.

Let me briefly touch on claims management companies. As my hon. Friend pointed out, despite the fact that many have a bad reputation, they do a very good job in making sure that, when compensation is due, that compensation is paid. I have slight concerns that these claims management companies will now come under the auspices of the Financial Conduct Authority. Hon. Members will recognise that much of the work that I have done in this place has had the aim of trying to hold the banks to account for some of their worst excesses, particularly against small businesses, following the financial crash in 2008, but the regulator has seemed incapable of doing that in many cases. Many people think that the regulator is too close to the banking sector, and I am slightly concerned that it is regulating both ends of the process.