Civil Liability Bill [Lords]

Rory Stewart Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 4th September 2018 Commons Chamber

[Ruth George (High Peak) (Lab)]

I will address my speech to you, Madam Deputy Speaker.

I agree with Government Members that the insurance industry plays a valuable role. It has two main purposes: to ensure that innocent victims are compensated for their suffering and its impact on their lives and that perpetrators are appropriately penalised with higher premiums. Unfortunately, the measures in the Bill will do nothing to effect either of those main aims of the insurance industry, but they will impact heavily on innocent victims and ensure that perpetrators do not pay the costs of their actions.

I agree that we need to combat the problem of claims management companies, as we have heard from Members on both sides of the House. However, as the hon. Member for Croydon South (Chris Philp) set out lucidly, claims management companies are fed information by insurance companies, to enable them to target the victims of accidents. Since that was banned directly, they have been doing it indirectly. Insurance companies are not only feeding claims management companies information to enable them to do that but are profiting from it, and they are now briefing Members that it is a problem with claims management companies.

[The Minister of State, Ministry of Justice (Rory Stewart)]

This may be a naive question, but it seems as though two different arguments are being made by Opposition Members. There was a suggestion from the hon. Member for Jarrow (Mr Hepburn) that the direction of the insurance companies is to try to stop anybody claiming. The hon. Lady seems to be arguing that the insurance companies are also fuelling these claims. Can she explain that paradox? How can they can be involved in both at the same time, and how does that work for them financially?

[Ruth George]

I cannot answer for other Opposition Back Benchers. I am speaking as an individual Back-Bench MP with experience of the insurance industry, and the hon. Member for Croydon South set out clearly similar experiences.

Along with Government Members, I have met the Association of British Insurers, but I suspect that it was a slightly less happy conversation, and I will certainly read less of its briefings in my speech. I challenged the ABI on the information coming to claims management companies from insurance companies. It agreed that that was happening and said that the Government could look to stop it. When insurance companies are putting information out to solicitors’ firms, they could ban those firms contacting claims management companies to farm out the information.

[Rory Stewart]

This is a sincere question. The suggestion made by the hon. Member for Jarrow and a number of others is that the entire profit model of the insurance companies is based on charging big premiums and trying to minimise the number of claims, and that that is how they make money. The suggestion is that the entire Bill is driven by the insurance industry trying to stop anybody making claims. At the same time, perfectly reasonably, you are making the argument that the insurance companies are trying to support claims. How do they—

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Having brought to the attention of the hon. Member for High Peak (Ruth George) that she must not use the word “you”, I hope the Minister will follow suit.

--- Later in debate ---

[The Minister of State, Ministry of Justice (Rory Stewart)]

It has been a great privilege to be able to sit through this debate with an extraordinary number of Members, many of whom have very direct experience as lawyers in the claimant industry or connections to the insurance industry. It has therefore been a very well-informed debate.

Our proposals in this Bill are serious, but to some extent matters of housekeeping. They follow a lengthy and extensive consultation over a number of years, and they attempt essentially to do three things: first, to try to improve the administration of justice in certain key, but relatively limited, ways; secondly, to address some issues around public morality and honesty; and, thirdly, to make sure we guard resources whether in the interests of people paying motor premiums or those who are supporting the NHS.

A number of objections have been made by Members across the Chamber and seven of them have stood out. Four of those I would respectfully and politely disagree with, but three have some real heft and we will take them into account in proceeding with this Bill.

The first of those objections, from the hon. Members for Ashfield (Gloria De Piero) and for Jarrow (Mr Hepburn), largely focused on the questions of damage in the workplace and to people with non-whiplash-related injuries. This is not strictly relevant to this Bill, which deals with whiplash-related injuries. The change in terms of non-whiplash-related injuries is proposed to be from £1,000 to £2,000, roughly in line with RPI since it was set in 1991, and dealing with roughly the same category of cases that were intended when the legislation was first introduced in 1991.

The second issue that has been raised by some hon. Members is that there is no evidence. This will be somewhat depressing for the people who have conducted an extremely extensive consultation, which has taken evidence not only from the insurance industry, as has been suggested, but from the Department for Work and Pensions, from claimant lawyers, from the Medical Reporting Organisation and from a large public consultation.

Thirdly, the hon. Member for Jarrow and, to a certain extent, the hon. Members for Enfield, Southgate (Bambos Charalambous) and for Cardiff Central (Jo Stevens) suggested that very few fraudulent whiplash claims were being made. This is a difficult issue to pursue, as my hon. Friend the Member for Croydon South (Chris Philp) eloquently pointed out, because of the asymmetry of the information. In other words, it is extremely difficult to prove that someone has a whiplash claim because it is, by its very nature, a concealed injury. Nevertheless, the statistics—in particular, those raised by my hon. Friend the Member for Spelthorne (Kwasi Kwarteng)—show that the number of traffic accidents has decreased by a third while the number of claims has gone up by 40%. At the same time, as my hon. Friend the Member for Walsall North (Eddie Hughes) pointed out, cars have become considerably safer. All this suggests that something is going on in relation to these claims.

The fourth objection, raised by the hon. Member for Lewisham West and Penge (Ellie Reeves), related to access to justice. The suggestion was that it was inappropriate to say that people should proceed to a small claims court for claims of under £5,000. The vast majority of existing claims do not proceed to court at all. The district judges who are ruling on these claims are used to dealing with claims of up to £10,000.

The three more serious objections are those that we are addressing. One of them is the idea that the insurance industry will not pass on the savings to motorists in the form of premium savings. As the Secretary of State has indicated, we will therefore be introducing an amendment, which will be with the House shortly and will be available in Committee and on Report, to address this exact concern, which was expressed by the hon. Members for Harrow West (Gareth Thomas), for Leeds East (Richard Burgon) and for Jarrow, and by my hon. Friend the Member for South Leicestershire (Alberto Costa), as well as by the hon. Members for High Peak (Ruth George) and for Hammersmith (Andy Slaughter) .

The second serious concern was about vulnerable road users, and it was raised by my hon. Friend the Member for Chelmsford (Vicky Ford) and by the hon. Members for Cambridge (Daniel Zeichner) and for Brentford and Isleworth (Ruth Cadbury). There, too, we will be introducing changes to ensure that vulnerable road users are excluded from the scope of the Bill and from the raise in the limit. Thirdly, my hon. Friend the Member for Croydon South and others raised concerns around periodic payment orders. The Secretary of State has written to the Master of the Rolls to ensure that PPOs are introduced more frequently, in order to ensure that vulnerable people suffering problems around lifetime care costs are genuinely able to get regular, sustainable and reliable payments out of the insurance industry to sustain them.

[Chris Philp]

Will the Minister give way?

[Rory Stewart]

Very briefly, because I have been told to stop in three minutes.

[Chris Philp]

What does the Minister think of the idea that we might tweak the system so that periodic payment orders became the default setting unless a judge agreed that there was a good reason to do otherwise and make a lump sum payment?

[Rory Stewart]

I am very happy to take that issue offline with my hon. Friend. There is a lot to be said for PPOs.

In essence, there are three fundamental arguments that we would make in favour of the Bill. The first is that we need to ensure that the administration of justice is proportionate and sustainable. As my hon. Friend the Member for Chelmsford has pointed out, the fact that nearly 40% of the costs are currently being absorbed by legal fees is a serious issue. Secondly, we need to ensure that the system is straightforward. As my hon. Friend the Member for North Warwickshire (Craig Tracey) pointed out, the introduction of the portal will ensure that the administration becomes more straightforward. Thirdly, my hon. Friend the Member for Croydon South has pointed out that the introduction of fixed tariffs, on the French model, will make the administration of justice more predictable.

The question of fraud and morality is also at the centre of these changes. As my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) said, fraud does happen, and my hon. Friend the Member for South Norfolk (Mr Bacon) has pointed out that it can often be extremely flagrant. My hon. Friends the Members for Spelthorne and for Walsall North (Eddie Hughes) said that even if we cannot prove every case of fraud, it is at least true that claims are becoming more exaggerated. Indeed, as my hon. Friend the Member for Walsall North also pointed out, that can have medical consequences. To quote the polite words of the New England Journal of Medicine:

“The elimination of compensation for pain and suffering is associated with a decreased incidence and improved prognosis of whiplash injury.”

That was the point made by my hon. Friend about the situation in Greece.

The fundamental point is that the Government have a responsibility to balance the administration of justice and honesty with the broader social costs. As my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) pointed out, insurance premiums have been rising, and we need to take them into account. As my hon. Friends the Members for South Norfolk and for Bexhill and Battle (Huw Merriman), premiums are rising in rural areas in particular. Again, as my hon. Friend the Member for North Warwickshire pointed out, the cost of over £1 billion to the NHS that will be addressed through this legislation is one that is borne by every taxpayer and is causing increasing concern among medical professionals.

This is a serious piece of legislation that addresses various focused points. It comes at the end of an extensive consultation, during which we have made several concessions to address the concerns expressed across the House. During the House of Lords’ consideration of the Bill, we introduced new definitions for whiplash, we involved the Lord Chief Justices in the process, and we adjusted some of the timings for the discount rate. Through this legislation we believe that we can contribute towards a more honest and proportional system that takes into account the significant social costs of exaggerated claims. Through a more simple, predictable, effective and rapid administration of justice, we can protect a range of social and economic interests while balancing the rights of road users, claimants, defendants and, ultimately, citizens as taxpayers.

Question put and agreed to.

Bill accordingly read a Second time.

CIVIL LIABILITY BILL [LORDS] (PROGRAMME)

Motion made, and Question put forthwith (Standing Order No. 83A (7)),

That the following provisions shall apply to the Civil Liability Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 9 October.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(Jeremy Quin.)

Question agreed to.

CIVIL LIABILITY BILL [LORDS] (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Civil Liability Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred under or by virtue of the Act by the Lord Chancellor.—(Jeremy Quin.)

Question agreed to.

[Mr Speaker]

In the thitherto unimaginable scenario that Members do not wish to listen to the hon. Member for Oxford West and Abingdon (Layla Moran), they can leave the Chamber quickly and quietly, so that the rest of us can enjoy her mellifluous tones.