Social Action, Responsibility and Heroism Bill

Lord Hunt of Wirral Excerpts

Tuesday 18th November 2014 Lords Chamber

Moved by

[Lord Hunt of Wirral]

A1: Clause 1, page 1, line 3, after “determining” insert “—
(a) ”

[Lord Hunt of Wirral (Con)]

My Lords, I declare the interests set out in the register, including in particular my partnership within the global legal firm, DAC Beachcroft, as well as my other entries. The amendments in my name are designed to promote responsible behaviour by motor insurers in order to focus on getting people better rather than by paying them cash which is not then used for treatment.

In putting these amendments together, and in this speech in particular, I have borrowed substantially from a very good report published last July by the insurers, Aviva, called Road to Reform, which I commend to the House. As your Lordships know, for many years I have urged that we should adopt a rehabilitation system of this kind for minor injury claims. It chimes very well with the Government’s agenda of people taking responsibility for themselves, so we should embrace the concept of providing treatment for those who need it rather than compensation and legal costs for what has now become hundreds of thousands of claimants every year, many of whom do not need treatment at all. That is what lay behind the amendment that I successfully moved during the passage of the Compensation Act 2006, which is now Section 2 of that Act:

“An apology, an offer of treatment or other redress, shall not of itself amount to an admission of negligence or breach of statutory duty”.

In these amendments I seek to go one stage further by substituting treatment for payment in low-value cases. We are not talking about serious injuries here, but about temporary distress or discomfort which leaves no lasting effect. According to Aviva’s research, 98% of drivers want further costs taken out of the system to keep motor insurance premiums affordable. We should therefore encourage people with genuine minor injuries simply to make a claim to repair their body rather than for cash. After all, we get the car repaired—why not the genuine minor injury as well? By doing that, we will effectively look after those who need treatment and at the same time will tackle those who seek to abuse the system.

UK motorists do not have the weakest necks in Europe; we have a whiplash culture because as a society we have not taken the same stance as other European countries to avoid these claims in the first place. In other countries you have to prove a level or percentage of disability before you can even make a claim. Aviva’s data show, for instance, that 94% of all personal injury claims for a UK motor accident are for minor whiplash injuries, while in France it is estimated that whiplash accounts for just 3% of personal injury claims.

I hope that I have taken the House with me so far. How, then, do we turn this into meaningful legislation? These amendments propose a threshold of 15% loss of function or less. Doctors will make better sense of that than I can, but I understand that a similar measure has been used in New South Wales since 2002. In case it is felt that we have little to learn from our Australian friends either on the sporting field or off it, the DWP also uses a threshold of 14% for payment of industrial injuries disablement benefit, which is paid only for lasting conditions. In truth, I am not necessarily wedded to the 15% figure as long as there is a clear dividing line between minor road traffic injuries not deserving of compensation if treatment can be and is made available at insurers’ expense, and more significant injuries where compensation can be properly targeted. Aviva estimates that if the simple measure in this amendment was adopted, with insurers still covering the cost of treatment for those who genuinely need it, that could save £32 on everybody’s premiums.

I have spoken before about the other cause for concern behind this approach. As the Association of British Insurers and the British Insurance Brokers’ Association, which I have the honour to chair, put it, we have become the “whiplash capital of Europe”. Fraudsters know it and they are exploiting the ease of our current compensation system. There has been a growing rise in the frequency of whiplash claims and a significant increase in the number of so-called “crash for cash” scams faced by insurers. Particularly troubling is the increase in the number of induced accidents where fraudsters deliberately target innocent motorists to cause an accident. According to Aviva, these increased by 51% last year, and that has to be a cause of major concern.

I am not sure that I have yet persuaded the noble Lord opposite but I am told by my noble friend Lord Henley that to persuade him I just have to quote from Dickens. I am not sure whether that is right—

[Lord Beecham (Lab)]

I have to say that I have no great expectations in that regard.

[Lord Hunt of Wirral]

I should stop now. However, I want to stress here that we are not talking about Fagin-type organised crime or Bill Sikes’s opportunist crime, but about the inflation of otherwise genuine claims. It has become a huge industry and insurers are now being forced to spend millions of pounds to tackle it. Organised gangs are at the heart of the increase in the number of these induced accidents. “Crash for cash” not only threatens motorists’ safety but also their pockets. It is estimated that it adds about £400 million to the annual cost of car insurance.

It has become an unfortunate fact that as a society we are faced with so many whiplash claims. It would be easy just to blame the claims farmers, and the House has heard my views on them before. However, despite a series of measures, often encouraged in this House, they continue to proliferate. They plague us with nuisance calls and texts about injury claims from accidents in which we have never been involved and that we have never heard of.

On the subject of nuisance calls, although I welcome the recent consultation by the Department for Culture, Media and Sport, I believe that the current threshold of substantial damage or distress is just too high and that the Information Commissioner’s Office needs to lower the test to ensure that it can tackle more effectively those who are abusing the system and bombarding the British public. I beg to move.

[Lord Pannick (CB)]

My Lords, this Bill has a purpose—a futile and anodyne purpose in the view of many of us who spoke at Second Reading, but a purpose none the less. Its purpose is to encourage heroism, volunteering and action taken for the benefit of the community. I respectfully suggest to the noble Lord, Lord Hunt, that his amendments are a long, long way away from the purpose of this Bill.

[Lord Hunt of Wirral]

It may assist the noble Lord if I explain that I was motivated by the speech of the noble and learned Lord, Lord Lloyd of Berwick, in particular, to think of amendments that would add substance to the Bill.

[Lord Pannick]

I am delighted to hear that because when the noble and learned Lord, Lord Lloyd, comes to move his proposal that Clause 2 should not stand part of the Bill, the noble Lord will no doubt express his wholehearted support for that proposition.

These amendments have no place in this Bill. They would fundamentally alter the scope and effect of the Bill, very much to its detriment. They would prohibit the courts from awarding damages in respect of personal injury in defined circumstances. The existing provisions of the Bill simply identify factors for the court to take into account in deciding whether there has been a breach of the duty of care.

I am also troubled by the detail of the amendments, and I am not reassured at all by what the noble Lord has just said. The amendments beg a large number of questions as to what it means for the defendant to “fund treatment”. At what level of care would that happen, and who is to assess the adequacy of such treatment? If the defendant’s insurer pays for my treatment as the victim of a car accident, would these amendments prevent me recovering compensation for pain and suffering as a result of the accident? That presumably amounts to damages,

“in respect of any personal injury”,

but the amendments seem to prohibit that.

I confess that I am puzzled by the amendments. If the defendant or their insurer has already funded adequate treatment, surely the claimant is going to have to give credit for that in seeking damages. I also do not understand why, if the noble Lord thinks that his amendments are such a good idea, they apply only in respect of,

“loss of function of 15% or less”.

For the Committee to give the amendments any encouragement would in my view, to quote Clause 3 of this curious Bill, not be,

“a generally responsible approach towards protecting the safety or other interests of others”.

--- Later in debate ---

We have dealt, as I told the Committee, with fraudulent and grossly exaggerated claims which have in the past increased insurance premiums. They also eat up the valuable resources of local and public authorities and employers, which could otherwise be used for the benefit of business and providing services to the public. My noble friend supported the provisions in the Criminal Justice and Courts Bill and I fully understand why he sees these amendments as an important piece of the jigsaw in lowering insurance premiums. However, I am sure that he will appreciate that the Government need to consider these issues in much more detail than is possible in the context of this Bill for all their implications to be fully assessed. Therefore, while I well understand what lies behind these amendments, we very respectfully do not think that they should form part of the Bill. I hope that on that basis my noble friend will be persuaded to withdraw his amendment.

[Lord Hunt of Wirral]

My Lords, I am very grateful to all those who have spoken in this debate. I am only comforted by the fact that the noble Lord, Lord Pannick, had rather made up his mind before he heard my speech, because I referred to a number of issues which—I hope—cause him considerable concern. I commend the speech of the noble Lord, Lord Walton of Detchant, because there is a serious problem here and we cannot ignore it.

I am grateful to the noble Lord, Lord Beecham, for his kind remarks at the outset of his speech. I readily accept his acknowledgement that there is a problem here. He may or may not recall—but I know that the noble Lord, Lord McKenzie, behind him, will—that the previous Government attempted to introduce a scheme of rehabilitation rather than cash in employers’ liability claims. It was Jane Kennedy, the Minister, who proposed that. Sadly, although I supported it strongly, it did not succeed at the time. The pilot scheme was rejected but I hope that this House will return to the issue of rehabilitation because we have to make sure that people get the treatment they need. I was taught that at the outset, when I had the honour to become solicitor for the Transport and General Workers’ Union. I became one of the legendary Mr Albert Blyghton’s solicitors, and we constantly strived to get employers to introduce a better system of rehabilitation. I am not sure that we have reached that stage yet.

[Lord Beecham]

I was also one Mr Albert Blyghton’s solicitors.

[Lord Beecham]

That is about right. I am sure that the noble Lord, Lord Hunt, and I, when representing members of that trade union in their claims, would have sought rehabilitation but we would also have sought proper compensation for the injuries that they suffered. The two things are not necessarily in conflict but I would not like to see rehabilitation to the exclusion of proper compensation in the appropriate case.

[Lord Hunt of Wirral]

In the appropriate case. I hope that the noble Lord will not mind if I look for agreement in his disagreement. However, there is a general view that we cannot go on like this, and I am pleased in particular with the words of my noble friend the Minister. I will go away and ponder carefully the various ideas he put forward on tackling a menace to society. It is harassing a substantial number of people, which is why I want to return to this subject at a later stage but, in the mean time, I beg leave to withdraw the amendment.

Amendment A1 withdrawn.

--- Later in debate ---

Moved by

[Lord Hunt of Wirral]

4: Clause 2, page 1, line 8, at end insert—
“(2) When assessing whether a voluntary organisation, charitable organisation or volunteer has been negligent or in breach of statutory duty, the court shall have regard to—
(a) the resources available to the volunteer, voluntary organisation or charitable organisation and the competing demands on those resources;(b) the level of training and qualification which volunteers should be expected to undertake; and(c) the provision of similar services by other voluntary organisations and charitable organisations.(3) When assessing whether a state-funded organisation has been negligent or in breach of statutory duty, the court shall have regard to—
(a) the funding available to the organisation and the competing demands on that funding;(b) the reasons for the allocation of resource by the organisation; and(c) the level of provision of services by other similar state-funded organisations taking into account the prevailing conditions and funding constraints.”

[Lord Hunt of Wirral]

My Lords, I say at the outset that I strongly support the Bill, as long as the Minister is prepared to accept that it must do something to change the law. For many years, scientists have said that even the act of observation can be enough to change the object being observed. That is true with this Bill, just as it was with Section 1 of the Compensation Act 2006 when that was introduced. I am sad that no one has paid tribute to the noble and learned Lord, Lord Scott of Foscote, who has been sitting patiently listening to this debate, because, in the words of the Minister, Section 1 of the Compensation Act 2006 was originally based on his brilliant judgment. I would not expect the noble and learned Lord to comment on that, but we all read his judgment, and I concluded that it was one of the best judgments that I have ever read. I hope he will not mind if I use this opportunity to pay tribute to his tremendous skill as a judge.

Surely the effect of this Bill is as follows. A judge hearing a case needs to say to herself or himself, “My decision was going to be this, but before I make that decision I must take account of the Social Action, Responsibility and Heroism Act. Having done that, my decision is now this”. Of course, the decision may ultimately be exactly the same, but the process by which it is reached will be subtly different. Today is an opportunity to debate whether the changes to the law introduced by this Bill ought to be rather more overt. This amendment, and others in my name, is intended to stimulate that debate.

I hope the noble Lord, Lord Pannick, will forgive me if I say that I have given up. Every time I set up a target, he puts the patch over his good eye and does not see it. He then protests that there is not a target. I will continue to supply targets. All I would ask is that, as with rehabilitation, he should focus on the issue and then work with all noble Lords to try to improve the Bill rather than seek to reject it as useless. Surely the whole purpose of this House—above all, this Chamber—is that we should seek to improve legislation, not to dismiss it as lacking substance. Let us give it some substance. I am sorry, I must not get too emotional about this.

Amendment 4 is quite detailed but its overall effect is simple enough. In terms, it requires a court to have regard to the resources of the voluntary or charitable organisation, or a state-funded organisation. I regard this as an important adjunct to the common law position. Too often we hear of front-line resources being diverted to pay for compensation claims instead of paying for services. I shall give one example. Alarm—the Association of Local Authority Risk Managers—reports that councils paid out £32 million for pothole claims in 2012, and in the same period fixed 2.2 million potholes, but that the average English authority was £6.2 million short of the money it needed to complete the repairs properly. That risks generating more claims and taking more money away from councils’ budgets. In these times of significant pressure on state resources, a spiral of compensation claims is surely not the way forward. Likewise, the voluntary and charitable sector has finite resources which should properly be concentrated on its various good causes. If its limited budget has to go to fund claims or pay increased insurance premiums, what on earth is the sense in that?

I believe that this amendment would help both sectors to bring their resources to focus on helping society, not the compensation bandwagon. It is no accident that when I searched for the statistics I used earlier, the search results started with, “Pothole Bike Accident—injured by pothole?”, and, “Entitled to compensation?”. I shall not name the organisations because they do not deserve that publicity, but they were a claimant solicitor firm and a claims farmer respectively. Surely there must be a better way. I beg to move.

--- Later in debate ---

[Lord Faulks]

I understand my noble friend Lord Hodgson’s slight surprise. It was a late, though perfectly legitimate, move. Until recently, a number of us thought that whether the clause should stand part was to be debated with the amendment. As it is, we are debating one amendment, Amendment 4 in the name of my noble friend Lord Hunt of Wirral, which would build on Clause 2 by requiring courts to consider certain factors about the nature of an organisation’s activities when determining whether it had been negligent or in breach of a relevant statutory duty. Where the organisation concerned was a voluntary organisation, the courts would have to consider what resources were available to it; whether there were competing demands on those resources; the level of training that volunteers could be expected to undertake; and how similar organisations would have provided those resources. Where the organisation was state-funded, the court would again have to consider what resources were available to it and whether there were any competing demands on funding. It would also have to consider whether there were specific reasons why funding had been allocated in a certain way and how similar state-funded organisations manage similar activities.

My noble friend was instrumental in tabling amendments to the Compensation Act 2006 during its passage through Parliament and those very much helped to improve the legislation. I am grateful for his constructive suggestions during today’s debate. In this difficult area, it is useful sometimes to think differently from the traditional way in which we have approached claims of this sort. Normally, a judge simply ignores the resources of the defendant as not being relevant. The question is whether there has been a breach of whatever duty of care is impugned by the claim. Many people believe it is relevant, as a matter of justice, to think beyond that. However, the Government do not believe that this amendment is appropriate. As I have explained, the Bill will require the court to consider certain factors to do with the context of a person’s actions before reaching a decision on liability. The Bill does not change the general way in which the courts consider claims of negligence or for breach of statutory duty. They will continue to judge a person’s conduct against that of the ordinary and reasonable man. There are a range of factors that the court already considers in determining whether reasonable care has been taken in a particular case. For example, it looks at the nature of the activity in question and the degree of care required; the gravity of the harm which might be suffered if insufficient care were taken; and the cost of mitigating any risk.

We have not attempted to set out these matters in the Bill; nor do we intend to do so. Such an exercise would add unnecessary length and complexity to what is a clear and—even its critics would accept—concise Bill.

Some noble Lords have already expressed reservations that the current Bill fetters the discretion of the courts by requiring them to consider certain factors about the context of the defendant’s actions. As I have already explained, the Bill does not purport to tell courts how much weight to put on each factor, covered by Clauses 2 to 4, or to prevent them finding negligence where the circumstances of the case warrant it. However, the effect of being too prescriptive—for example, about the type of evidence the courts need to look at when determining whether an organisation was negligent—could introduce new burdens, which we think, on balance, would not be desirable. That being the case, while renewing my tribute to my noble friend’s attempt to add constructive suggestions to the Bill and his insight into this particular area, I respectfully ask him to withdraw his amendment.

[Lord Hunt of Wirral]

My Lords, I am very grateful to my noble friend Lord Hodgson for his support. I say to the noble Lord, Lord Beecham, that I should like to return to this subject again at a later stage. In the mean time, if he could reflect on the case of Wilkinson v City of York Council, he would understand that I am not seeking to achieve what he described. I seek merely to respond to the words of the Court of Appeal in that case. I will not go into too much detail, but he will see what I mean if I quote just one sentence:

“A judge, it seems to me, should be slow to reject the evidence given by a responsible council official that resources did not permit a more frequent inspection than that which was given”.

The conclusion in that case was that, whereas the question of manpower resources was able to be considered in relation to other sections in the Highways Act, the particular section—Section 58—did not make reference to this shortage of resources as a factor to be taken into account. Therefore, the Court of Appeal concluded that Parliament had not wanted it to be a relevant factor. I therefore hope that the noble Lord will see that I am seeking to meet a particular problem in a specific way.

[Lord Beecham]

I understand the point that the noble Lord is making, and I will certainly look at that case. However, his amendment does not seem to be confined to that particular issue; it would apply much more generally, and I invite him perhaps to consider whether it would be better narrowed to the kind of incidents to which he has referred. Having said that, I do not necessarily pledge myself to support him should he come back with something like that. It seems that the way he has put the matter is rather different from how the amendments as presently drafted would be interpreted.

[Lord Hunt of Wirral]

I am very grateful to the noble Lord, and to the Minister for his comments. I will of course reflect on and consider the points that have been raised. In the mean time, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

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[Lord Beecham]

My Lords, Amendment 6 deals with the provisions of Clause 3, which purports to be—and as I understand it, the Government agree to be—the only substantive change in the law that the Bill promotes. That, of course, raises the question of the relevance of the other clauses of this ephemeral legislative concoction, but it is also unacceptable in itself.

Clause 3 requires the court to,

“have regard to whether the person, in carrying out the activity in the course of which the alleged negligence or breach of statutory duty occurred, demonstrated a generally responsible approach towards protecting the safety or other interests of others”.

At Second Reading I asked what was meant by a “generally responsible” approach. The Minister did not vouchsafe a reply. I do not blame him. The Lord Chancellor and the Minister in the Commons were unable to supply a meaningful interpretation: a case of the inscrutable in search of the unintelligible, or perhaps vice versa.

The Government’s obsession with the so-called compensation culture was reflected in the Lord Chancellor’s response to an Oral Question quoted by the Joint Committee on Human Rights at paragraph 2.35 of its report. The Lord Chancellor talked of the need,

“to provide a deterrent to an employee who tries it on in the face of a responsible employer who has done the right thing, when someone in their employment has done something stupid and still tries to sue. As part of our long-term economic plan”—

I note in parenthesis that it is a long-term economic plan which appears to be growing ever more long-term by the day—

“I want to see those responsible employers protected against spurious claims, and that is what the Bill will do”.—[Official Report, Commons, 1/7/14; col. 731.]

There are, to put it mildly, several problems with that argument. The first is the sheer paucity of evidence for the existence of the compensation culture, apart perhaps from the road traffic cases of whiplash and the like about which we have heard so much today. The second is the apparent belief that the courts are unable to detect whether or not a claim is spurious, given that a claimant has to prove it. The third is that, despite its apparent belief that the Bill,

“is not designed to reduce standards of health and safety in the workplace”,

and,

“will not protect negligent employers who do not have a responsible approach to health and safety”,

the Joint Committee concluded that:

“To the extent that Clause 3 of the Bill will lead to some health and safety cases against employers being decided differently, we do not consider that the Government has demonstrated the need to change the law to restrict employees’ right of access to court for personal injury in the workplace”.

Can the Minister give an assurance that the Joint Committee’s fears in that respect are misplaced and that the Bill is not intended to and will not affect such health and safety cases? He gave a general assurance this afternoon, for which I am grateful, about claims for employers’ liability. The JCHR raised a specific point in relation to health and safety, and perhaps he will deal with that aspect.

The fourth problem is that the Bill is not, in any event, confined to personal injury cases, and still less to cases brought by employees against their employer, which seemed to be the burden of the Lord Chancellor’s principal concern. Clause 3 refers not just to injury but to safety and “other interests”. It must be taken to include economic interests, such as claims concerning damage to property or professional negligence by, say, an accountant, a financial adviser or, heaven help me, a solicitor. This much was made clear by Mr Vara in his heroic attempts to make the case for this generally irresponsible measure. At column 693 of Hansard he proudly announced:

“We have deliberately drafted the clause broadly ... This ensures that it will be relevant in a wide range of situations … The clause is not restricted to personal injury claims and could in principle be applicable in relation to other instances of negligence, such as damage to property or economic loss, where issues of safety may not necessarily be relevant”.—[Official Report, Commons, 20/10/14; col. 693.]

Presumably, issues of heroism would be equally irrelevant. Note that he assumes that negligence exists in such claims but excuses it in the manner of the old saw about the housemaid’s baby: “It’s only a little one”—a “Downton Abbey” analogy, I suppose. It is a rather curious way to approach legislation.

Perhaps the Minister will tell us the difference between being responsible and being generally responsible, and why the clause extends to a wide variety of claims which have nothing whatever to do with social action, volunteering or heroism. Perhaps he will also comment on the paucity of any evidence provided to the Joint Committee by the Government in answer to its request for examples of what the Lord Chancellor described as,

“a jobsworth culture or a legalistic culture that seems to stop common sense in its tracks”.

It asked for such information but received none. Where, one might ask, is the evidence of a common-sense approach, let alone one grounded in an understanding of the law and the courts that one has the right to expect a Lord Chancellor to display?

The twofold approach that I adopt in moving the amendment and speaking to the clause stand part debate is, first, to endeavour to effect a modest improvement in Clause 3 by removing the word “generally” so that that fairly vague and opaque term disappears; and, secondly, to address the general position in relation to the clause stand part debate—that this is the only substantive change in the Bill, and it is not acceptable. If the Government continue to press for this it will certainly be a matter to which I will return on Report. I hope the Government will concede that it is ill designed and likely to produce effects that are not consistent with the overall theme, however repetitive it might be, of the Compensation Act 2006, and therefore that it contributes nothing but potential difficulty for the future. I beg to move.

[Lord Hunt of Wirral]

My Lords, in drawing attention to Amendment 7, I am returning to the points I referred to earlier. The first part of the amendment reminds the Committee how society as a whole has become a victim of insurance fraud where organised criminals are now manufacturing situations in which innocent motorists are caused to collide with their vehicles in a manner which indicates negligence on the part of the innocent motorist. That is why I wanted to bring this amendment again to the attention of the House.

The second part of the amendment intends once again to remind your Lordships of the importance of non-monetary offers and, where they have been made by defendants, how they should be considered when the courts come to decide whether to award damages and the extent of the damages payable. I know that rehabilitation treatment is often offered to those injured in accidents but in many cases, because of the action of an intermediary, that treatment is often refused by the injured party and the period of suffering prolonged in an attempt to increase the award of damages in which that intermediary may be interested. If the courts were to be permitted to order that the treatment provided by a defendant and his representatives is a fair reward in compensation for the injury suffered, then the motivation of fraudsters to pursue “crash for cash” accidents should be reduced.

[Lord Pannick]

Before the noble Lord sits down, could I ask him whether the first part of Amendment 7 would not be covered by the existing law of causation and, indeed, by the law on contributory negligence?

[Lord Hunt of Wirral]

It is partly covered, but I think this makes it much clearer.

[Earl Attlee (Con)]

My Lords, it is well known that I generally support this Bill but I have to confess that I do not have the foggiest clue what Clause 3 is for. It would be much better to have a social action and heroism Bill. If the noble Lord wishes to return to it at a later stage, he will have to amend Clause 5 and the Long Title. A clearer, simpler Bill would send a clearer, simpler message.