Automated and Electric Vehicles Bill

Lord Tunnicliffe Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 9th May 2018 Lords Chamber

[Lord Borwick (Con)]

My Lords, as we go through this Bill, it is remarkable how many amendments overlap each other. It was not necessarily apparent at Second Reading, but we have all from our different directions come out with the same answers. One of them is in the update of safety-critical software.

This Bill seems to have taken some time to go through another place and then to arrive here. Since we first heard about it, it has changed its name on various occasions. It has had aviation included and then taken out. During this period—which I have variously heard has been two or five years—things have changed. The Bill is written as if it is the job of the insured person to update the software. That might have been true five years ago, but nowadays the software is updated automatically. We are, after all, talking about an automated vehicle—the software should be updated automatically.

I believe that the drafting, as we have it, of Clause 4(1)(b) should be changed to the wording in Amendment 23. It is perfectly easy to programme the software so that the vehicle will demand itself to be updated and will not move unless it is done. Given that this is safety-critical software, we ought to make certain that this vehicle itself has enough ability to know whether it is up to date. It can easily do that with modern software systems. So making certain that the vehicle updates itself before it moves from wherever it is in a parked and deactivated position will be perfectly easy. Nowadays, with the design of the Tesla vehicle, all the updating is done automatically—sometimes without the knowledge of the owner or driver. It is easy for the manufacturers to do and a much more modern way of looking at it than the drafted wording in this Bill. I beg to move.

[Lord Tunnicliffe (Lab)]

My Lords, I rise to move Amendment 25 in my name and—

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

The noble Lord should speak to the amendments.

[Lord Tunnicliffe]

You are quite right. I am a pedant as well, and proud of it. I shall start again.

I rise to speak to Amendments 25 and 28 in my name. The first concerns insurance, which is what the Bill is supposed to be about. As the noble Lord, Lord Borwick, has said, because of the time this Bill has been in gestation, the language is not perhaps as we should like. It has effectively defeated me. If you look at Clause 4, for instance, we have:

“an insured person … an insured person who is not the holder of the policy …someone who is not insured under the policy in question”,

and then we have, simply, “that person”. I got lost working my way through it.

What this amendment tries to do is to protect the innocent party. What we need from this Bill is that, when an innocent party is injured or their property is damaged by an automated vehicle, they get the money without quibble and all the legal battles take place between the insurance company and whomever may be responsible for the event. It may be that the Bill, as drafted, achieves this. I shall be happy if the Minister tells me that, provided she accompanies it with a plain language explanation as to how the clauses and subsections get us to that point. I do not think this Bill is going to win a crystal mark for clear English.

The purpose of this amendment is to protect the victim or damaged party. We must be clear that the insurance system put in place for automated vehicles is designed in such a way that it does not cause any delay or question over the payment of compensation to the victim, if there is any dispute between the insured person and the insurance company over responsibility for the accident. As the technology becomes more complex, so too could the decision about who is to be held responsible. I understand that this Bill aims to set out the liability of insurers for automated vehicles. So I am seeking clarity from the Minister on this point to ensure that the victim of any potential accident is at the front of our minds when we are discussing these issues.

I shall now speak to Amendment 28. Under the current drafting of the Bill, people would be able to drive their automated vehicle on the roads without having the latest updated software, which could lead to safety risks. The clause would require the Government to introduce regulations requiring automated vehicles to be up to date in order for their automated functions to be used. If a vehicle had a serious mechanical fault that could endanger the driver and others, we would not allow it on our roads. It makes sense that an automated vehicle would similarly present an increased safety risk if its operating system were not updated.

Without the new clause, people would be able to take an un-updated vehicle on to our roads, either by accident or on purpose. Insurance companies could surely factor the increased risk into premiums, which would be higher as a consequence. Most people with smartphones or computers are likely to have software that prevents them from being used until it is updated. There does not seem to be any reason why a similar mechanism could not be included in automated vehicles. By preventing un-updated vehicles from being used, we would achieve safer roads and cheaper insurance.

The primary benefit of AVs is that they reduce the likelihood of human error, yet one of the few areas where scope for human error remains—the responsibility for ensuring that software is updated—would not be addressed even though it would not be difficult to do so. The new clause would address that.

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[Lord Tunnicliffe]

Perhaps the Minister could help me a little here. If a vehicle is not insured today, and a pedestrian is harmed, say, who had no responsibility at all, my understanding is that they will get an instant payout from some sort of collective fund. Is that correct? If it is, is it the intention of the Bill to have a similar situation, including possibly defective software?

[Baroness Sugg]

I am pleased that the noble Lord has allowed me to address this point, because it goes to defective software. As the noble Lord said, it would be a legal requirement that all automated vehicles must be insured, but there will be instances when vehicles are driven illegally, as we see today. I will take this opportunity to clarify that the Motor Insurers’ Bureau will continue to play the same role as it does now with uninsured and untraced drivers, so that victims involved in collisions with uninsured automated vehicles will have quick and fair access to compensation, in line with conventional insurance practice. This arrangement is not currently covered in legislation nor included in this legislation; it is covered through an agreement between the Secretary of State and the Motor Insurers’ Bureau. We are discussing what changes are needed to that agreement to sufficiently and appropriately incorporate automated vehicles within the existing process.

On software updates, Clause 4 anticipates that vehicle manufacturers will want to ensure that their vehicle systems are as safe as possible for consumers. As my noble friend Lord Borwick said, we expect that most updates will be done automatically and will be the responsibility of manufacturers. This is something that manufacturers acknowledge. Vehicle safety standards, which include software, as I have mentioned before, are still being discussed at the UNECE level. The requirements for system updates form part of the international discussions on the standards that will ultimately form the basis of the type-approval process that the vehicles must pass before they are sold in the UK.

There will be robust standards in place before these vehicles arrive to market, which will include the updating of safety-critical software. I can reassure noble Lords that vehicles will have to meet these standards before they are made available on the market. I fully appreciate the noble Lords’ intention to ensure that automated vehicles’ software is up to date, so that they are functioning safely—but, as with our previous debate on standards, we do not think it is right to act unilaterally at this time.

All noble Lords, including myself, are in the same place on this. We expect that vehicles will not be deemed safe to use, and therefore will not be placed on the list and covered by insurance, unless the safety-critical software is in place. It is a complex issue; we still do not know exactly how the software is going to work. We see some good examples from Tesla and Apple, but this is part of extensive conversations at an international level, with manufacturers and other countries, to understand how best to deal with this.

Amendment 25, tabled by the noble Lord, Lord Tunnicliffe, requires the insurer to pay out first and then recover from the liable party. I hope that I can say this in plain English. Subsections (3) and (4) of Clause 4 already work with Clause 2, where the insurer has a first-instance liability to pay the injured party. I believe that Clause 2 is clear on that, and where the liabilities of insurers are when the accident is caused by an automated vehicle. I think that the current wording fulfils the intention behind the noble Lord’s amendment.

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Moved by

[Lord Tunnicliffe]

36: After Clause 7, insert the following new Clause—
“Review of Part 1
(1) By September 2019, the Secretary of State must lay a report before Parliament assessing the effectiveness of the system for defining and insuring automated vehicles introduced by Part 1 of this Act.(2) The report must consider—(a) the impact on the insurance industry,(b) the impact on the cost of insurance premiums for automated vehicles,(c) the impact on the uptake of automated vehicles, and(d) the levels of disagreement between manufacturers and insurers on liability.”

[Lord Tunnicliffe]

My Lords, we all agree that in the future automated vehicles have the potential to improve personal transport arrangements as well as air quality, which is crucial given the dire state of the environment and its impact on health. Solving questions of how automated vehicles can be insured is essential and we welcome the fact that the Government are setting out how to do that. However, it is important to assess how measures work in practice, not only in legislation. It is particularly important that the Government should ensure that regulations are working as intended and should monitor unexpected impacts, which are always there, before attitudes and practices become entrenched and before automated vehicles become common on our roads.

Although the list in the amendment is not exhaustive, given the focus of Part 1 of the Bill it makes sense for a report to consider the impact that measures have on the insurance industry, on the cost of premiums for policyholders, on the uptake of automated vehicles and on disagreements between insurers and manufacturers on liability. This will be a fast-moving area and—who knows?—we may have to revisit areas of this Bill in the future as advances in technology take place and the advances impact on how these vehicles are insured.

It is important that Parliament is kept informed of the effectiveness and impact of the legislation to make sure that we keep it up to date as new technologies in this area are developed. I beg to move.

[Baroness Sugg]

My Lords, the Government are taking a step-by-step approach to our regulatory programme in relation to automated vehicles. Where the evidence base exists for regulatory change, we will act so that the UK public and businesses can benefit from innovative new vehicle technologies as soon as they arrive to market. As we noted when we initially consulted with the public and industry in 2016, each of these steps, taken through either primary legislation, secondary legislation or guidance, will be subject to a process of scrutiny and ongoing review.

On the automated vehicle insurance measures, as part of this regulatory programme we will continue to engage with the DVLA and other motoring agencies, the insurance industry and other relevant stakeholders to make sure that the system works effectively as the new insurance framework is implemented, and that we are still meeting our intended policy objectives to provide a compulsory insurance framework for automated vehicles.

As noble Lords will be aware, we have produced a detailed impact assessment looking at the potential direct economic effect on the insurance industry from introducing these measures. As my noble friend has just explained, the Centre for Connected and Autonomous Vehicles has asked the Law Commission to undertake a far-reaching review of the UK’s legal framework for automated vehicles. This may consider a wide variety of areas of law, including the liability and the insurance provisions set out in the Bill.

Unlike with many other amendments we have discussed today, I will not be arguing that the Bill is the wrong place for this amendment. However, it asks for a report by September 2019, which would be too early to consider whether the scheme is effective. It is not anticipated that there will be many—or even any—vehicles to which the insurance provisions apply. However, I understand and share the noble Lord’s intention to ensure that the system that is in place is working effectively, and ahead of Report I will consider whether there is anything further we can do in this area. With that in mind, I hope that the noble Lord will feel able to withdraw his amendment at this stage.

[Lord Tunnicliffe]

My Lords, I thank the Minister for her response. There is a wider point, which perhaps I should have made before—though I think she is erring towards agreeing with me—which is that it seems possible that the first fully automated vehicles could be ferrying children to school in, say, five, 10 or 15 years’ time, without this issue coming back to this House at all, by virtue of the wide powers that many of the road traffic and other Acts have to do things by order, for example. Therefore I hope that we will be able to find some sort of reporting compromise that ensures that this House and, ideally, Parliament in general are kept informed of developments in this exciting and innovative area. I beg leave to withdraw my amendment.

Amendment 36 withdrawn.