Car Insurance: Young People

Debate between Anne Main and Huw Merriman

Monday 20th March 2017 Westminster Hall

[Huw Merriman (Bexhill and Battle) (Con)]

It is a pleasure to speak in this debate. I echo the words of the hon. Member for Liverpool, Riverside (Mrs Ellman), who chairs the Transport Committee, of which I am a member, and congratulate the lead petitioner and all the people who signed the petition.

I represent a rural constituency of 200 square miles, where the car is an essential way of life, particularly for the young, for whom getting out and engaging has never been more important, given the advent of social media and their ability to communicate while on their own in their bedrooms. It is vital that we do everything we can to let them get out and about and interact with the world around them. That is more important now than it was when I was young. We talk in this place, rightly, about social mobility. In rural environments where people’s ability to access public transport, let alone pay for it, is somewhat restricted by the loss of bus services and other difficulties, it is hugely important for our young people to be able to go out to work, earn money and get a foot on the ladder, because without that ability, they may be held back and not climb the ladder.

I congratulate my hon. Friend the Member for St Austell and Newquay (Steve Double) on leading off this debate. We ended up in a discussion about whether tests have become easier. As we get older, we tend to slip into the mode of saying, “It was much harder in my day.” When I learned to drive and took my test, I did not have to reverse into a space—I found that to be a drawback when I moved to London—and I was not required to sit a written exam, as our young people are, so I might argue that tests have actually got harder. I remember being asked by my examiner what green meant at a traffic light. If the test has got harder than that, things are getting better.

I shall focus on the need for the insurance market and perhaps the Government, through incentives, to ensure that premiums are based on specific risk rather than a specific class, which is how young people are currently grouped.

[Mrs Anne Main (St Albans) (Con)]

My hon. Friend is making an excellent speech—I hope that I can contribute to this debate—but premiums actually are not based solely on risk. It used to be the case, a while ago, that young men paid higher premiums than young women. Of course, we were told that that was discriminatory, but it actually reflected risk—that is what the statistics said. Sadly, a lot of young women’s premiums had to rise to ensure that everything was fair and equal. I do not think that premiums are always based on risk—other things sometimes come into play.

[Huw Merriman]

My hon. Friend is absolutely right—I wholeheartedly agree. The Transport Committee and the Petitions Committee met jointly to hear evidence. We heard from the head of research at the RAC, who said that

“insurance costs are based on four main things: the cost of the vehicle; the likelihood of theft; the cost of available claims generally, if you were to make a claim; and the risk of the individual.”

It is absolutely clear that, on average, 17-year-old boys present twice the risk of 17-year-old girls, yet no price differential at all is offered. As my hon. Friend mentioned, there was such a differential, but prices had to be equalised as a result of the gender directive. Of course, in life, prices tend to go up rather than down. To a certain extent, she makes a point that I wanted to make—we should look at individuals’ performance risk and price insurance comparatively. In the United States of America, where the insurance market is much more tightly regulated, there is a requirement to look at specific risk rather than a class. Will the Minister consider whether the time is right to look at this issue from a regulatory perspective?

A 17-year-old new driver is 40% more likely to have an accident than an 18-year-old, yet I dare say that premiums do not fall by 40% in that year, because there is a tendency to look just at age. I received information from one of the telematics companies that seems to suggest that, by the time people reach 29, men and women present the same risk, and the curve drops dramatically.

At the moment, pricing is measured crudely for young people. Insurers tend to look at young people as students who live at home, drive small cars and have no driving experience, and therefore make no allowance for their performance. That is why telematics is such an exciting concept. The advent of telematics means that, rather than putting in place a cap that does not bear any relation to risk, insurers can reward good drivers and penalise people who do not drive so safely. With more telematics in place, 1,000 accidents involving death or serious injuries would be averted, so I dare to suggest that the cost to the Government would reduce. Telematics have developed to such an extent that the software can talk to emergency services to warn them of an event. We all know that early response to an emergency can save lives and, if we are crude about it, money, including for the state.

I would be interested to hear from the Minister about what we can all do and what the Government can do to incentivise the development of telematics. Given the cost savings that I mentioned, is there a case for insurance premium tax to be reduced for drivers who use telematics? VAT is charged on the box that is required to use telematics, which reduces the cost benefits, so, again, could some exemption be made as far as that is concerned?

The insurers’ discount rate was changed from 2.5% to minus 0.7%. Although that happened after the petition was started, the petitioners would maintain that their insurance premiums were high enough as they were. Unfortunately for the Transport Committee, that change was a live issue for insurers when we heard evidence. I am pleased that the Government have decided to look again at that rate, but we made the point to representatives of the insurers and the Association of British Insurers that their attempt to state that the change would cause young people’s insurance premiums to double was rather crude given that they did not seem to have research to bear that out. Actually, I do not believe they have provided the research that they promised to the Committee. We should perhaps always go hard on insurers and work hard to ensure that the evidence for the claims that they put out—they always say they are based on evidence, yet we do not see that evidence—is in the public domain, so that pricing for young people is demonstrably linked to the risk that they pose as individuals.

Immigration

Debate between Anne Main and Huw Merriman

Monday 19th October 2015 Westminster Hall

[Huw Merriman (Bexhill and Battle) (Con)]

I am grateful for the opportunity to contribute to the debate, Mr Walker, and welcome the public engagement that has caused it to be held. It is right that we discuss matters on which significant numbers of constituents have expressed concerns to the House, and that we have the opportunity to allay the concerns and fears that have clearly manifested themselves in the language used in the petition.

The debate on immigration is not new to me. Of course, by the time of the 2015 general election, it was well known to us all, but in 2008 I was selected to stand in North East Derbyshire, which was regarded as a rock-solid Labour former mining seat. In 2015, I stood in Bexhill and Battle and was fortunate enough to be elected. Both constituencies displayed a lot of concern about immigration, which is interesting because both have a lower exposure to immigration in terms of numbers of constituents. Perhaps that lack of exposure in certain parts manifests itself in concern, whereas in other constituencies, where immigration numbers are higher, the constituents are more comfortable. I would say that it is because they can see the many benefits to immigration.

Although I maintain that the language of the petition is perhaps on the harsh side, I acknowledge that many of our constituents have entirely legitimate concerns about immigration, including control, security and access to infrastructure. Those need to be answered and our constituents need to be reassured. Therefore, as we debate our need for more housing and more essential public services, such as health and education, and how we transport our constituents to work and across the country, we must consider the population size of the UK, which, as matters stand, is predicted to grow 25% by 2060.

In touching on those issues, I want to talk about the concerns raised directly by the petition and some underlying issues. First, I want to address the concept that foreign citizens are taking all our benefits. Over the years, there has been much debate about whether immigrants put more into the Exchequer than they take out in welfare and benefits. Like anything, that depends on how the data are interpreted. Two academics from University College London compiled a report on immigration between 1995 and 2011. On the one hand, the report concluded that EU immigrants put £20 billion more into the country than they took out in benefits, and non-EU immigrants put in £5 billion more than they took out. However, it also concluded that immigration would cost £120 billion. The difference between those conclusions is down to the fact that we clearly do not know how much immigration will cost and how much it will benefit us.

When looking at the cost of immigration, one tends to look at a group of individuals who have come to this country without having been educated here, and therefore have not put the burden of education on the state. There may also be an expectation that they will not burden the Exchequer with other large costs, including the cost of health, as they get older, and of pensions. There is an assumption, however, that immigrants will return to the countries from whence they came, but of course we do not know that they will do that. It is right to look again at this issue and keep asking ourselves whether the costs to the economy can be maintained.

However, I do not subscribe to the suggestion that benefits are the driver for immigration. I do not buy the idea that people are willing to risk life and limb and leave a lot of their family behind in another country purely to survive in this country on what is a relatively small amount of money when housing and other provisions are taken into account. I do not believe that at all. I am more inclined to believe that the type of person who has that get up and go and determination is the type of person who will set up their own business, contribute, work incredibly hard, enrich our country and be a success. However, I agree that anyone coming to this country must do so to work, study or shelter from persecution.

Foreign citizens are sometimes portrayed as taking our jobs. First, no one is entitled to a job; jobs have to be earned. When I speak to my constituent business owners—I have a considerable number of fruit farmers, for example, in my constituency—they say that they tend to hire migrant labour because they feel that they do not get the same productivity and work ethic in our native labour market. That is not universally the case, but it seems to be the perception. We have to help local people—young people, in particular—to break that perception and get jobs. An issue is the fact that businesses tend to hire from abroad, rather than from within, which is regrettable.

However, we know that UK productivity needs to increase. Since I was elected, there have been a number of debates in Parliament on the fact that our productivity numbers are not high enough. I would contend that without immigration our productivity would be poorer.

[Mrs Main]

My hon. Friend fought an election in 2008, so he will be only too aware that a campaign slogan was “British jobs for British workers”. It was very unhelpful, given the difficulty of getting productivity from some of our workers, which he has just described.

[Huw Merriman]

I agree. It should not be British jobs for British workers, but jobs for all workers. I was brought up on the idea that people have to compete and work hard. Somebody who is looking to employ would expect that from a worker, and they would look at it before looking at their nationality. None the less, I want to support our native employment market. I encourage those people to take a leaf out of the book of some of those who come from abroad with nothing and work incredibly hard. That is very important.

I want to touch on the benefits of migration to some of our essential public services, and our reliance on immigrant numbers as a result. It would be difficult to staff our hospitals, in which 11% of all staff and 26% of doctors are non-British. We hugely rely on those individuals to keep us healthy and well. From a local perspective, 28% of my constituents are aged over 65—that is a figure to celebrate, because the national average is nearer 17%—but it makes care home provision in my constituency an enormous challenge, and without immigration those care homes would be either incredibly expensive or understaffed.

The key is to get the balance right. There has been some talk about what occurred before 2010, but if we are to have an honest conversation about immigration we must look at the things we have done well and the things that have not worked out well. I believe that, before 2010, the Government badly underestimated the net migration from the newly acceded countries. The Labour Government thought that between 5,000 and 13,000 people would move from Poland and the newly acceded eastern European countries to the UK from 2004. The number of migrants who arrived was not their maximum figure of 13,000, but 1 million. Almost every EU nation, with the exception of Ireland and Sweden, prevented migrants from coming over for seven years. The British public have such a dismissive view of immigration policies and lack trust because we got our predictions of the numbers spectacularly wrong. It is important that we win back the trust of the British people so we can reassure them that we have the correct boundaries for immigration. I am pleased that the Government I support have required individuals from newly acceded countries to wait the full seven years before they can benefit from the same rights as EU workers.

The final issue I want to touch on is culture. It is often said that we need to preserve our culture, or that our culture is under threat. In my view, cultures evolve. Our culture has certainly been enriched over the centuries by global trade and our desire to look beyond our own window, and I would support that. Perhaps it is fair to add that the most culturally homogenous nation on earth is North Korea, which is hardly a great example of cultural enrichment. However, we must also preserve our values of freedom of speech, equality and respect for the rights of others. We must jealously guard those rights from all those who seek to erode them. That must be understood by anyone seeking to join our country—and, indeed, anybody already within our country.

Finally, on the ethics of immigration, I struggle with the fact that our health system is hugely reliant on immigrants, many of whom come from incredibly poor countries where people do not have the same access to hospital provision, drugs and care that we do. In taking people from such countries, I ask myself whether we are denying much more vulnerable people the ability to be cared for. We should continue to ask such questions. On Syria, which it is important to consider in this debate, is it right that people who have risked drowning are instantly allowed into this country? By allowing them to settle in this country, are we encouraging others to take even greater risks? That is of huge concern to me, which is why I support the Government’s stance that, rather than encouraging and incentivising people to risk their lives in perilous journeys, we seek to look after people in the camps or to take vulnerable people from those camps. In so doing—this is part of the ethical challenge—we keep as many people close to Syria as possible, so that the fittest and most able, who might otherwise never return to look after their own country and become future leaders, are nearby when they are able to return.

I welcome the benefits of immigration, but it is right that we discuss the public’s concerns openly. I certainly do not agree with the concerns as stated in this particular petition, but such concerns exist and it is right that the public keep us on our toes. We should not shy away from our responsibilities. The positives of immigration ultimately outweigh any negatives.