Civil Liability Bill [Lords]

Simon Clarke Excerpts

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

[Andy Slaughter]

I did not intend to speak, therefore I will be brief. The House is being treated to ad hoc speeches, which are always a delight. They sometimes benefit from a little knowledge of the subject, I gently say to the hon. Member for Hitchin and Harpenden (Bim Afolami). I also urge him not to be quite so credulous of what insurance companies tell us because experience shows that they always say that premiums will go down, and sometimes they go down and then up again, and sometimes they do not go down at all.

I also wonder about the hon. Gentleman’s question of whether we can expect everything to be done in a single Bill. I would argue that the two main things that the Bill will do are to prevent people with meritorious claims and those with often serious injuries from getting into court, and, if they get there, to reduce the legitimate level of damages that they can expect to receive. Would not it be better to have a Bill that deals with a matter that probably everybody in the Chamber thinks is right to tackle: strengthening defences against fraud? There has already been some change in legislation to make it easier to defend fraud cases, yet one may ask why insurers still do not instruct lawyers—whom they are able to employ, unlike claimants, perhaps, after the Bill is passed—to defend those cases. Why do they not insist on medical evidence? Why do they in fact encourage fraud? Why does a proportion of insurance companies’ profits come either from selling information on, which perpetuates claims management companies, or from owning claims management companies themselves?

The problem with the Bill is that it has the wrong targets. I made that point earlier when I intervened on the hon. Member for Croydon South (Chris Philp). All Labour Members can be brief because he substantially made the case for why this is a bad Bill, as the right hon. Member for Kingston and Surbiton (Sir Edward Davey) said.

However, the hon. Member for Croydon South said that the limit should be £10,000, as if personal injury claims were the same as simple money claims, which no one has ever argued. We are arguing about a difference in what the limit should be. In employers’ liability cases, the difference is relatively small, but the difference in road traffic accident cases is substantial: between what inflation would provide—around £1,500 as a small claims limit—and £5,000, which the Bill proposes.

The Association of Personal Injury Lawyers said about the Bill:

“Claims under £5,000 are not minor, and an increase in the small claims limit will cover far more than soft tissue injuries. These claims could include a brain or head injury, injuries to the eyes, a collapsed lung, or fractured cheekbones. This is a disproportionate response to the stated aim of dealing with whiplash claims.”

That must be right. We are talking about people who are in a vulnerable condition, having suffered personal injury. As has been said, the inequality of arms is apparent not just in the courtroom but in the background to the case, particularly in the case of employees who take on their employers. That is often done with the assistance of a trade union, lawyers and other advisers. We should not replace that tried and trusted system with McKenzie Friends—whether unpaid or unpaid— who often do more damage than good to the clients they intend to represent. I urge the Minister, even at this stage, to listen not only to Opposition Members but to some Government Members and particularly to the Justice Committee.

I went through the painful experience of the stages of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and I have therefore heard many of the arguments trotted out before. We went from a situation whereby legal aid was available for personal injury to no win, no fee cases, and now to qualified one way costs shifting—QOWCS. It is increasingly difficult even for those with the most meritorious cases to get representation. There is not the same availability of representation as there was.

The review of the law post-LASPO is due to report shortly. It will cover not only part 1 but part 2 of LASPO, and if we had waited, we could have seen the effect of the reform to civil litigation, but no, the Government wish to take a sledgehammer to crack a nut. The overwhelming majority—estimates are around 90% of road traffic claims—of cases will be taken out of a costs regime. That means that all those people have to sink or swim on their own. No one, not just the lawyers here, truly believes that it is easy for many people who have suffered accident and injury to navigate through the court system, particularly when they are opposed by an insurance company, with all the resources that it has.

The Bill will not benefit the motorist or the interests of justice. Above all, it will not benefit people who, through no fault of their own, have suffered often serious injuries. It is disgraceful that the Government are legislating once again in the sectional interests of the insurance industry and against those who have suffered injury.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

I rise to support the Bill and speak against new clauses 1 and 2 because, whether through ending rip-off energy bills, freezing fuel duty or increasing the personal allowance for income tax, the Government’s constant focus has been to make sure that the consumer is at the heart of their work and to reduce the cost of living for millions of people.

I am therefore pleased that Ministers have identified another area in which the cost of living is artificially and unfairly inflated. At a time when our cars and roads are safer than ever, one would expect the price of motor insurance to come down. Instead, the opposite has happened. Since 2010, there has been an almost 50% increase in the cost of comprehensive insurance premiums, and a near 80% increase in the cost of third-party fire and theft insurance premiums.

[Ruth George]

Does not the hon. Gentleman agree that the rise in the cost of insurance is, as we have heard in the debate, down to insurance companies not tackling possibly fraudulent claims, thereby creating the problem and making huge additional profits? Does he accept that consumers are also victims of accidents and will be severely affected by the Bill?

[Mr Clarke]

The hon. Lady is right to say that insurance companies have a duty to tackle fraudulent claims—that is certainly the message that the Government would send out and that I endorse—but the proportion of such claims is relatively small. We need to get the incentives in the system right so that the most serious cases receive the compensation and the attention that they deserve in the legal system and that the less serious cases receive a proportionate response. Whiplash is a horrible injury, which can be very severe, but we must ensure that the incentives in the system are not so skewed as to push all cases into the most extreme bracket. That simply does not reflect the nature of the injuries that are being suffered and it is not in the country’s public policy interest to have insurance rendered hugely more expensive, which the current system does.

[Ruth George]

Is the hon. Gentleman saying that the tariff for compensation for injuries, which judges currently use, is unfair and overcompensates people with more minor injuries? It covers a range of injuries, not just whiplash.

[Mr Clarke]

I am saying that there is a need for a proportionate system for compensation. The number of road traffic accident-related personal injury claims has increased by 200,000 since 2006—a rise of approximately 40%. That suggests to me that the incentives in the system are skewed. Insurers predict that, without reform, motor premiums could continue to rise at a rate of about 10% annually. That constitutes a significant burden on the cost of living for millions of us who are dependent on our cars for daily travel, especially in rural communities.

[Jo Stevens]

Does the hon. Gentleman not think that the UK’s leading insurers paying out £2 billion to their shareholders in 2016 might have something to do with the rising cost of insurance premiums?

[Mr Clarke]

The Bill is designed to make sure there is a closer connection between whiplash claims and medical evidence by introducing a ban on seeking or offering to settle whiplash claims without the appropriate medical evidence. That will discourage fraudulent claims, encourage insurers to investigate claims properly and protect genuine claimants from accepting a settlement without knowing the full extent of their injury.

--- Later in debate ---

[Gloria De Piero]

I am choosing to focus on the injuries incurred. For a soft tissue injury lasting six months, an individual would today get between £2,150 and £3,810 but, if the Bill passes, they would get £805. I am choosing to focus my speech on those huge differences. That is the practical reality of what this tariff system will mean.

There is another important principle. It is a significant step to mess with the proud tradition of an independent judiciary in this country, and the Government should not take that lightly. The Justice Committee, too, could not have been clearer in its criticism of how the tariff system will harm access to justice. We hope the Government will listen to the Justice Committee and eminent judges—and, yes, us—and accept this amendment to remove the tariff system.

[Mr Simon Clarke]

It is a pleasure both to speak in support of the Bill and, unfortunately, against the amendment put forward by the hon. Member for Ashfield (Gloria De Piero). It is really important that the Bill is proportionate in achieving the outcomes we want of ensuring that the public get the protection they need from injuries that can be so devastating, while at the same time compensating them in such a way that we do not burden the wider consumer with unsupportable bills. Earlier, I spoke about the fact that premiums need to remain affordable.

Amendment 2 would remove the ability to set a fixed tariff for whiplash compensation in regulations. As I mentioned earlier, the tariff system will ensure that claimants receive a proportionate level of compensation. This will significantly reduce and control the spiralling cost of whiplash claims and disincentivise unmeritorious claims. As with any such tariff system, I can understand the concern that it may not provide the flexibility necessary to ensure that compensation accurately reflects the true nature of someone’s injuries.

However, the Government have taken a number of important steps to ensure that such flexibility still exists. First, the tariff would not be flat for all cases, but staggered, depending on the severity of injury. Secondly, in addition to a tariff payment, all claimants will continue to receive special damages covering compensation for any actual financial losses suffered as a result of their accident. Finally, clause 5 gives the court discretion to deviate from the tariff in exceptional circumstances and when it is clear that a higher level of compensation would be appropriate.

This therefore seems to me to be exactly the type of Bill we should be bringing forward. It is sensible, and it does indeed allow us to provide the protection that people need, without the risk of putting up premiums. I do not believe that amendment 2 would achieve very much, other than wrecking the central point of the Bill, which as I say is to achieve such an upsurge in affordability.

[Robert Neill]

My hon. Friend makes a fair point. Opposition Members have referred to the Justice Committee’s report, but has he noted that although the noble Lord Woolf was indeed critical of the changes in the terms that have been quoted today, the noble Lord Brown of Eaton-under-Heywood, a former justice of the Supreme Court, did not have an in-principle objection to the tariff system? Does he agree that the devil in the detail is what will be in the regulations on the exceptional circumstances uplift and how that will apply? Is he, like me, pleased to see that there is a commitment to consult the Lord Chief Justice on those regulations, and does he agree that it is important that that consultation is real, thorough and detailed?

[Mr Clarke]

My hon. Friend speaks with the authority of not just a Select Committee Chair but someone who thinks deeply about these issues. There are safeguards built into the Bill, precisely to ensure that we achieve the robust, balanced and responsive framework that good legislation should aim for. I noted earlier that the Lord Chancellor will have a duty to keep all the relevant legislation under review on a triennial basis, so there will be checks to ensure that compensation thresholds do not become wildly out of kilter. Indeed, part of the reason why the Bill is necessary is that the thresholds have been allowed to drift for a very long time without being amended. That has led to a more dramatic uplift than is customary or than I would ever hope to see in future. We want to ensure that we always have a rolling programme rather than dramatic changes, which unfortunately affect more people than a more staged mechanism would. However, that does not mean that there is not a case for acting, so unfortunately I cannot support amendment 2.

[Andy Slaughter]

I will speak only briefly, because a number of the points to be made in this debate are the same ones that we made in the previous debate. There is no logic or sense to the Government’s rationale; they simply want to minimise the damages paid to litigants who have legitimate and in some cases serious injuries.

The noble Lord Woolf has been quoted several times. The Woolf report led to progressive and now legendary reform of the civil justice system, so he very much knows what he is talking about on this issue as on so many others. He said that the tariff

“results in injustice and it is known to result in injustice. Indeed, no one can deny that it results in injustice. There has never been a case where legislation deliberately introduces injustice into our law. It may be that it is only in regard to small claims, but surely it is important that we pause before we do that.”—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1620.]

I agree that the Government should pause, and I would say that there is an objection in principle to the tariff in this case. No good reason has been given why this should not be a judicial process rather than an administrative or politically affected process.

There is also an issue of quantum to consider. The proposed sums in the tariff are derisory for what are often quite serious injuries lasting for periods up to 24 months. An injury that lasts for two years is likely to be serious and is certainly a persistent one that will cause a lot of pain and suffering. It has been pointed out that at the lower end of the spectrum—nought to three months, which still includes cases of pain and discomfort lasting a significant time—the proposed sum is £235. The Law Society’s briefing compares that with the amount of compensation that somebody might get for a flight that has been delayed for three hours, which could be considerably in excess of that amount. As well as the matter of principle, there is the point that the actual financial compensation is being minimised for no good reason.