Motor Vehicles (Compulsory Insurance) (Amendment etc.) (EU Exit) Regulations 2019

Lord Adonis Excerpts

Wednesday 20th February 2019 Lords Chamber

The Government justify this change by saying that if we maintain the visiting victims scheme and the MIB compensation system, we will end up paying out money to EU victims visiting the UK without any reciprocity. That is a very good reason for taking no deal off the table and continuing the current system. Many years ago, the cumbersome system that the Government now envisage was the norm, but more than 2.5 million of us drive abroad each year. That is equivalent to the whole population of Northern Ireland—men, women and children—getting up and taking their cars off on holiday at the same moment.

[Lord Adonis (Lab)]

The noble Baroness is making a very powerful point in respect of compensation for accidents, but there is also a massive bureaucratic issue in respect of insurance here. It is understated in the Explanatory Memorandum. Paragraph 3.7 says:

“If there is no deal with the EU, UK motorists will also be required to carry a ‘Green Card’ which guarantees third-party insurance provision when driving in the EU. This may result in increased bureaucracy and costs for those drivers”.


That must be the understatement of the year: how can that not result in a massive increase in bureaucracy and inconvenience to drivers? Should the Government not be telling all the motorists proposing to leave the country in five weeks’ time that they are going to be required to have this green-card, third-party insurance provision which they do not have at the moment, and how they can secure it? I am a former Secretary of State for Transport, but I myself do not know what it is, so the population of Northern Ireland which, as the noble Baroness says, will be decamping over the next 12 months to the European Union, is going to have to be well informed about the green-card insurance system, about which it knows absolutely nothing at the moment.

[Baroness Randerson]

The noble Lord makes a powerful point and I will come on to the green card later. It did strike me, as I read the Explanatory Memorandum, that it was a masterpiece of understatement. It said some fairly amazing things without the slightest hint of a raised eyebrow.

The point I am making is that the Government’s proposal is totally inappropriate to modern life. The Joint Committee on Statutory Instruments points out that paragraph 3.6 of the Explanatory Memorandum says that the method of claiming will vary from country to country and that victims might have to pursue an uninsured person directly.

It also points out that no deal will lead to the issuing of green cards again. I am sure that noble Lords will remember green cards—but not with affection. The DfT has acknowledged that this will also apply to travel between Northern Ireland and the Republic of Ireland. Although it says that the SI has nothing to do with green cards, perhaps the Minister can update us on the situation with green cards, because the British Insurance Brokers’ Association is alerting us now to the urgency for a decision, because physical green cards will have to be produced in their millions in the next few weeks.

I sometimes think that Brexit is a giant conspiracy against the great British tradition of a holiday in the sun.

[Lord Adonis]

I did not pick up on this in my reading of the statutory instrument. Did I hear the noble Baroness correctly: that you will require a green card to cross the Irish border? Is that the point she was making? Is that not a breach of the Good Friday agreement?

[Baroness Randerson]

I am quoting the Joint Committee on Statutory Instruments. The noble Lord makes an interesting point. It quite possibly would be but I am not sufficiently expert on the Good Friday agreement to be definitive on that.

There is a conspiracy against our summer holidays. We will now be going off with an international driving permit, sometimes two, and a green card to wait in the queue at the Channel Tunnel or the port—unless we choose to go by air, with all the doubts about whether or not the plane will fly. It will cost more because of the changes in the exchange rate in the past two and a half years; the ATOL system will not have the guarantees that it once had; and now we hear that if you have an accident you will be left to fight for compensation on your own. What will we get in return? A shiny blue passport. The problem is that this takes us back to a cumbersome, bureaucratic system that goes back decades and does not fit the modern way of travel.

On the consultation outcome, paragraph 10.1 of the Explanatory Memorandum states:

“Given the EU Exit negotiation sensitivity of changes to the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003, formal public consultation was not considered appropriate”.


I have read that several times. Are the Government really saying that because this will upset motorists they are not going to tell them about it or consult them? That is how I read that sentence. If that is not accurate, will the Minister explain exactly what the Government were trying to say?

The paragraph goes on, almost incredibly, to say that the Motor Insurers’ Bureau, the insurance trade associations and the motoring trade associations have been consulted and are satisfied. Are they seriously satisfied with this? They cannot possibly be satisfied and I would like to know what they really think. They might take the opportunity after they have read Hansard to tell us. It cannot be possible in an industry as diverse as this that all those organisations are happy with these seriously problematic regulations.

Paragraph 12 refers to the impact. Astonishingly, it deals with the impact on the courts of an expected spike in the number of cases being pursued prior to Brexit to take advantage of the current system. It totally ignores the impact on private individuals who are victims and find that they have to go to another country to pursue their case. Justice is a right, not a privilege, and these regulations cut at the basis of that right. UK citizens injured abroad may effectively lose the right to compensation as a result of this. Indeed, it is likely that compensation will be available only to privileged, wealthy people who can afford expensive legal representation.

[Lord Adonis]

My Lords, it is important that the House does not lose its capacity to be shocked by the scale of the dislocation that may be imposed by the Government on the country in one month’s time if no deal Brexit proceeds.

In a succession of speeches, the noble Baroness, Lady Randerson, has laid out the impact of no deal on motor industry regulation and she did a good job of weaving together the changes in relation to insurance, accidents and international driving licences. The extraordinary thing about it is that, because we are going back to pre-1973 law, not only are many bureaucratic requirements being imposed but they are being imposed in a way that is entirely pre-digital.

Noble Lords will recall the green card but I am still of an age where I do not recall it—I do not think the Minister recalls the green card—which is a telling remark. You have to be—how can I put this delicately?—of a certain age to remember the green card. I certainly do not remember the international driving licence. However, as we go into this Alice in Wonderland world of disaster that the Government propose to inflict on the country, we now know that not only will you require an international driving licence and a green card but you will have to have them as physical constructs because the regulations under which they are imposed go back to the pre-digital era. You will have to get a physical international driver’s licence or licences—the Minister can intervene on me at any stage if she wishes—and a physical green card. Is that correct?

[Lord Hope of Craighead (CB)]

I am old enough to remember the green card, which you had to produce when crossing a border. When you went through what were independent countries, at each border you had to produce a green card, which was a document in your hand. Has the noble Lord any solution to the problem of what we must do if we are to satisfy the authorities abroad that we are covered by third-party insurance? That is what the green card is all about. It is a document to show that you have third-party insurance. It should go on your policy anyway. It is a document that shows that what is in your policy is transferrable and understood by the countries you want to visit.

[Lord Adonis]

My Lords, my submission is that we should not be engaging in a no-deal Brexit in the first place.

Let us be clear about the obligations that the Government are now imposing on the country: it is entirely within the Government’s power to rescind the notice under Article 50 so that we do not crash out in four weeks’ time. If the Government cannot persuade Parliament to agree to arrangements in the Prime Minister’s withdrawal agreement that do not involve the country descending into Dante’s circles of hell in four weeks’ time by leaving with no deal, the Government’s duty would be to ensure that we do not leave with no deal. There are two ways of doing this: they could rescind the notice under Article 50 or they could have agreed at any point in the last six months to apply for an extension to the Article 50 negotiating period, which Parliament may impose on them next week.

[Lord Grade of Yarmouth (Con)]

I am grateful to the noble Lord for giving way. We have all sat here very patiently. In the politest way that I can say it, the noble Lord is testing the House’s good will if he is not testing the Companion itself. I read pages 50, 51 and 52 before I came into the Chamber, anticipating this kind of filibustering. It is counterproductive to alienate the mood of the House in such a way. Straying from the Companion to the extent that the noble Lord has is testing the House’s good will. Will the noble Lord reconsider?

[Lord Adonis]

I completely refute the noble Lord’s remarks. My remarks have been relevant to the statutory instruments before the House. I have said nothing that is not. That was clearly a pre-prepared set of remarks that the noble Lord was intent on making. I think this is well below the standard that one would expect of a Member of this House in addressing another. If the noble Lord wishes to defend the Government’s policy, he should make a speech doing so, rather than attacking those who are doing their duty in this House by scrutinising it.

The noble Baroness set out the concerns about green cards and has done previously about international driving licences. Her point revealed that separate international licences are required for different countries in the EU because of the different rules. Regarding the green cards, my noble friend Lord Rosser has pointed out to me paragraph 3.10 of the Explanatory Memorandum, which says that the DfT estimates that,

“between two to four million individuals may need a Green Card”.

In response to the noble Lord who intervened, we have a duty to speak up for those 2 to 4 million people who will be put through a big, new bureaucratic process as a result of this one statutory instrument. It goes on to say:

“Green Cards are obtained free of charge from insurance providers; however, the DfT has explained that ‘insurance providers can decide to reflect production and handling costs in a small increase to their administration fees’”.


This is another point that the noble Baroness, Lady Randerson, made about the impact assessment: the Government say in paragraph 3.10 that they expect that insurance providers may pass costs associated with the requirement to hold these green cards on to motorists. This surely justifies an impact assessment to judge what those costs will be. The Government also ought to set out what they think is an acceptable level of costs.

I know exactly what will happen and the House can immediately envisage the circumstances. Those costs will pass through and may be quite substantial in many cases, because the insurance providers will claim that there has been a sudden change that they cannot quantify and they want to make proper provision for it. As always in these cases, there will then be a significant public controversy. When that happens, questions will be asked in this House and in the House of Commons about the acceptable level of costs that can be passed through. What does the Minister think would be an acceptable level of administration fees for insurance providers to pass on to motorists if they require green cards?

The point about Northern Ireland is not small but substantial. I see a noble Lord from Northern Ireland in the Chamber. If all motorists in the Republic of Ireland and Northern Ireland who cross the border will be expected to carry a green card, because all those drivers will frequently cross borders, unlike drivers in Great Britain, this cost and requirement will effectively be imposed on a very substantial proportion of citizens and on all citizens in the border areas.

That is a straight cost that will be imposed on them and a big bureaucratic burden. Do the Government not think that, if they are imposing a cost that is pretty much a badge of citizenship on individuals—

[Lord Hope of Craighead]

I am sorry to intervene again on the noble Lord’s interesting speech. That cost is not the product of this instrument at all but of travelling into a country with which we no longer have the relationship that we have at the moment. Their laws will impose on us the requirement to carry the green card and prove that we have the necessary insurance if we enter their territory. I do not think it follows from the instrument. I may be wrong, but I would be interested if the noble Lord could point me to a paragraph in the instrument itself, rather than the memorandum, which has that effect. I would be very surprised if it did.

[Lord Adonis]

My Lords, I am guided by the Explanatory Memorandum, which has highlighted this as an impact of these new arrangements.

[Lord Hope of Craighead]

The noble Lord is obviously pointing out for our information that this is the effect of the problem we are facing, which I think he is suggesting we ought to know about. My point is that it is not the effect of the instrument. If he is asking for a statement on the effect of the instrument in the documents that follow, that is not the right question to ask.

[Lord Adonis]

I now understand the noble and learned Lord’s point, which is to distinguish between the precise provisions of the instrument and the regime that will apply around the matters covered by the instrument when we leave the EU without a deal. That distinction will not pass muster with the 2 to 4 million citizens a year who will be required to have green cards, or with pretty much the entire population of the border territories of Northern Ireland and the Republic of Ireland, who will have these obligations imposed.

My final question for the Minister is a serious one. If there is a requirement to have a green card, and therefore new insurance documentation, for all citizens in Ireland’s border territory, what legal advice does she have on how that can be reconciled with the Good Friday agreement to have no further border controls or impediments between the Republic of Ireland and Northern Ireland?

The issues raised by the statutory instrument are profound and need to be properly debated in this House. I for one do not intend to be silenced by Conservative Peers who would much rather these issues were swept under the carpet.

[Lord Rosser (Lab)]

My Lords, I would like to raise one or two questions. I will try to direct my questions to what is in the statutory instrument—although I share the view of my noble friend Lord Adonis that, if the Explanatory Memorandum to this statutory instrument makes a reference to something, it is perfectly appropriate to discuss it in this debate.

My first question to the Minister concerns something that is mentioned in the report of the Secondary Legislation Scrutiny Committee, which ends by saying that the committee recommended that this instrument be upgraded to the affirmative resolution procedure when it was previously presented as a proposed negative. Bearing in mind the fairly dramatic impact that this instrument will have, why did the Department for Transport think that the instrument was appropriate for a negative resolution procedure rather than an affirmative one?

I will try to make fairly specific questions and points. The first relates to the paragraph on consultation outcome that has already been mentioned. I will pursue a little bit further the point made by the noble Baroness, Lady Randerson, about this extraordinary statement. I will repeat it:

“Given the EU Exit negotiation sensitivity of changes to the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003, formal public consultation was not considered appropriate”.


Can we have a proper explanation of why, and sensitivity to whom? What about the changes is so sensitive that the decision was made not to hold a formal public consultation? It goes on to say:

“Nevertheless, informal engagement has taken place with the MIB, the Financial Conduct Authority, insurance trade associations and motoring trade associations to inform our drafting and ensure key stakeholders are aware and satisfied with the changes being proposed”.


Does the reference to motoring trade associations cover, for example, the RAC and the AA? If it does, then clearly I know where I stand on that. If it does not, were the RAC and the AA consulted? Bearing in mind the impact on insurance, was the Consumers’ Association consulted? It might have had a view on the impact of this statutory instrument on the consumers of insurance policies, which will be fairly dramatic. It would be helpful if the Minister, on behalf of the Government, were able to give a response.

I want to follow up another point, already raised by the noble Baroness, Lady Randerson, about the cost of having to pursue claims in EU countries, which is another fairly dramatic change associated with this instrument. What is the Government’s estimate of the cost for individuals of having to do this? The instrument remains pretty silent on what that impact will be. Indeed, as has already been said, the instrument is very much geared towards the impact on the insurance industry and the MIB, and the potential costs involved; it says precious little about the impact on affected motorists. Surely the Government would want to protect the interests of the motorists and not leave them in a worse situation, if at all possible. If the Government felt this was not possible, they might at least produce a document setting out fairly what the additional costs are likely to be for motorists in having to pursue claims in EU countries, as opposed to the current procedures.

Paragraph 12.2 of the Explanatory Memorandum also makes a reference which, presumably, reflects when the statutory instrument was first drafted. It says:

“We should anticipate more UK residents issuing legal proceedings from November 2018 to exit day in order to ensure their claim can continue to be made in the UK”.


Bearing in mind that we are now more than half way through February 2019, is the Minister able to update us on whether more UK residents have issued legal proceedings since November 2018, as was anticipated at the time that this instrument was first drafted?

Later in the text, paragraph 14.1 says:

“The approach to monitoring of this legislation is that a Post-Implementation Review is not required”.


In view of everything that has already been said this evening about the impact on individual motorists vis-à-vis their insurance, it would seem that if one piece of legislation required a post-implementation review after going through, it is this one. There is no real information in the Government’s document about what they think the impact will be on individual motorists; there is speculation, but not much solid information, so surely this ought to be subject to post-implementation review. Once again, I would be grateful if the Minister could give a response on behalf of the Government.

As others have said, considerable surprise will be expressed about what this particular impact of a no-deal Brexit could mean. My final comment is that at some stage, presumably, the Government will want to advise people of the impact that a no-deal Brexit would have on motor insurance. Perhaps they intend to do it by putting an advert on the side of a bus and running it around the country to tell people about some of the downsides of Brexit.

--- Later in debate ---

[Baroness Sugg]

I agree with the noble Baroness that the Government have a responsibility to ensure that people are aware of this. A communications campaign was launched in February, which has notified citizens about how the changes to claims can be pursued. It advises that in the event of a no-deal exit, UK residents involved in a road accident while abroad would need to bring their claim in the country concerned. That campaign is live, with radio, digital and social media. The noble Lord, Lord Adonis, heard an advert on Spotify, as he mentioned in a previous debate. We are also directing stakeholders to an external site where they can download and share information with their clients; we will continue to do that.

This is an area where we continue to pursue agreements with other EU countries: we are pursuing bilateral agreements and the MIB is having those conversations with its EU equivalents. The nature of the conversations is sensitive, involving the reciprocal payments of insurance claims; that is why the specific detail has not been published. As I say, we acknowledge that this is not an ideal outcome for citizens. It is a sensible alternative, after weighing up the options, but achieving a deal remains our greatest priority.

The impact assessment lays out the five options that we considered, including a “do nothing” policy, but in each there would be a direct cost to victims of traffic accidents. People are still able to make claims, but they will have to do that in another country. I am not able to give a specific cost. The noble Baroness is correct to point out that this equates to 5,000 motorists a year. The additional costs incurred by a victim would depend on a number of factors and the complexity of the case.

On green cards, the noble Lord, Lord Adonis, quite rightly quoted the comments from the SLSC report, which were put in the new Explanatory Memorandum. The noble and learned Lord, Lord Hope, was quite right to point out that this SI does not equate to green cards, but I am happy to address it briefly. The Government want to remain part of the green card free-circulation area. We meet all the requirements needed to remain part of it when we leave the EU. That has not yet been agreed by the Commission; we very much hope that it agrees that soon. They can be obtained from insurers, free of charge. The noble Lord is quite right to point out that that could mean 2 million to 4 million green cards. We are working very closely with insurance companies to ensure that people are informed of this. My noble friend Lady Barran, our new Whip, received such a contact from the insurance industry very recently. However, this is something that we want to avoid and that is why we are very hopeful that the Commission will agree that the UK can remain part of the green card free-circulation area. Again, as the noble and learned Lord, Lord Hope, pointed out, this is not in our gift. We match the requirements that are needed, but need the EU to recognise that.

I think I have answered all the questions raised.

[Lord Adonis]

Northern Ireland.

[Baroness Sugg]

On Northern Ireland and specifically the Good Friday agreement, which I think the noble Lord pointed to, the Commission and the UK have said that they will respect the Good Friday agreement, and currently—the noble Lord is right to point out—there would be a requirement to carry a green card. However, the implementing decision from the Commission to recognise the UK as part of a green card circulation area would remove the need for that green card. As I said previously, we meet all the requirements of that, and are working with the Commission to make that agreement.

I think I have answered all the questions; if I have not I will follow up in writing. I will end as I started: I recognise that this is not an ideal situation; it is not one that we want to be in. We think this is the right decision, given the implications of leaving the motor insurance directive—something that will happen if we leave the European Union without a deal—and that is why the Government are working to ensure that we achieve a deal with the European Union. I beg to move.