Civil Liability Bill [Lords]

Stephen Hepburn Excerpts

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

[Mr Stephen Hepburn (Jarrow) (Lab)]

The Government talk about reform of the justice system, but I am afraid that on the Opposition Benches we just turn around and say, “Here we go again!” Once again, the Tories are putting more barriers between workers—ordinary people—and access to the justice system. At the same time, they are helping their friends in the finance industry.

The employment tribunals farce has already been mentioned; thankfully, following work by the trade union movement, it was overturned by the courts. Then we had cuts to legal aid—another disgrace. Last year, it was found that there had been a 99.5% reduction in the number of people receiving legal aid for benefits cases. The Tories are pricing hundreds of thousands of people out of the legal system.

This Bill is known as the “whiplash Bill”, but it should really be called the “bogeyman Bill”—it is just a smokescreen to create a bogeyman so that public support can be gathered to increase the profits of the insurance industry. We are told that it will save the insurance industry millions and that that money would be passed on to customers. The same was said in 2013, when a fixed fee regime was brought in for more minor accidents. Costs to the insurance industry were slashed and damages to claimants were reduced as solicitors charged a success fee as part of their damages. The claimants got less and the insurers paid less.

Despite that reduction in costs to the insurance industry and the fact that the number of claims has reduced since 2013, premiums have continued to rise. How is that? Will the Minister explain? The number of motor industry claims has gone down by 17% since 2017 and is now at the lowest level since 2010—that is from the Government’s own figures, which show the biggest annual fall on record. Claims are down, damages are down, but premiums are up. Why? The profits of insurance companies such as Direct Line went up by almost 50% to £600 million last year; Allianz’s jumped 26% to £121 million. This is not a poor industry that needs the Government’s help. Profits are up, yet premiums are up. Why? Let the Minister explain.

When the insurance industry promised to reduce premiums by £35 a case earlier this year, it took less than a week for it to backtrack because of the discount rate that has been mentioned. The point is that the industry has promised to reduce premiums in the past, but has never, ever delivered. These reforms will do exactly the same: reduce the number of claims and access to justice. The insurance companies will be the winners again.

We are told that the reforms will reduce the number of fraudulent claims, which everybody would welcome, but it is important for us to understand a few facts. Insurance companies make their money by taking as much as they can in premiums and paying out as little as they can in damages. It is important for them to convince people that they are getting a bad deal because of fraudulent claims. They say it openly—“We are forced to put up premiums. It’s someone else’s fault and we are sorry but you’re going to have to pay for it.” That is the bogeyman syndrome.

The insurance industry would like us to think that we are in the grip of a compensation culture—that people are getting thousands of pounds for trivial accidents. The poor insurers have no choice but to put up premiums, they want you to think. That is not true and the Government have not brought forward a shred of evidence to prove it. It is a fantasy propagated by the insurance industry to promote profits. To succeed in any claim, people have to convince a judge that what they are saying is correct. The suggestion that any insurer would pay out a claim that it knows to be fraudulent or trivial is ridiculous—they are champing at the bit to expose and publicise fraudulent claims, to add fuel to the fire of the insurance industry’s myth of a compensation culture.

The reason behind it all is to make more money, and the Government are helping. Mark my words, further down the road there will be another bogeyman—a new excuse to raise premiums. Watch carefully: whose fault will it be next? This is all part of the Government’s policy of holding back the advancement of ordinary working people while helping the finance industry in the City. Whether it is the constant interference with people’s benefits—implying that they are skivers and need to be sanctioned—stealing the pensions of the WASPI women, or reducing access to the justice system, it is all the same: attack, attack, attack on the rights and livelihoods of ordinary people, while boosting the profits of the wealthy and the privileged.