Civil Liability Bill [HL]

Baroness Primarolo Excerpts

Committee: 1st sitting (Hansard continued): House of Lords
Thursday 10th May 2018 Lords Chamber

[Baroness Primarolo (Lab)]

On that point, the Minister will be aware that the business model for insurance companies is to assist those who they insure, and to make claims against others when it is appropriate. They are part of that industry, and some of them own claims management companies. Will the Minister explain to the House what he undertook in terms of research to make sure that the figures he is basing his assertions on are correct?

[Lord Keen of Elie]

I acknowledge the noble Baroness’s expertise in these areas as a non-executive director of Thompsons Solicitors, and her knowledge of the claims culture that has built up. With respect, in carrying out our work, we looked at the behaviour of the insurance industry in this context. Of course, the insurance industry can operate as an intermediary because, where the claims arise, it passes on the costs to the consumer by way of increased premiums. There have been instances in the past where insurance companies have passed on details of their own insurees’ claims to third parties and that has been exploited. I was quite open earlier in saying that we acknowledge the contribution of a number of different parties to what has developed into an unacceptable claims culture. That is what we are seeking to address in this Bill.

Can I continue just a little further in that context? The first group of amendments from the noble Lords, Lord Sharkey and Lord Marks, proposed that compensation for pain and suffering should be determined by reference to the Judicial College guidelines. Indeed, the second set of amendments proposed to place the tariff amounts into the Bill rather than in regulations made by the Lord Chancellor. All those figures would be significantly higher than those proposed by the Government—indeed, more in line with the amount currently paid out by claim.

I understand that noble Lords feel that the proposed tariff amounts are too low, but we continue to be concerned about the high number and the high cost of these claims in general, and the impact of that on the consumer. Therefore, we have to take a policy view as to how we can disincentivise not just fraudulent claims but what I would call unmeritorious claims—very minor and exaggerated claims. Our view is that it is right to set the tariff through regulations, which will help to control those costs and ensure greater certainty to both claimants and defendants when they come to deal with these claims, remembering that the vast majority of these claims never reach court anyway. They are dealt with before they ever arrive at the door of a court. In addition, we consider that a tariff will provide the flexibility required to change the tariff amounts, in reaction not just to inflation but to changes in the market, if I can gently call them that. We know that we are dealing with a marketplace; it is extremely inventive and can rise again phoenix-like from any statutory provision that we bring forward.

Therefore, we are going to have a tariff of predictable damages, albeit for those who suffer injury with a duration of up to 24 months. That is a relatively minor personal injury, but not one to be dismissed—and we do not seek to dismiss them. The relevant tariff will then be applied. It will be far simpler for someone to take their claim forward and, of course, we then have in place the requirement for an independent medical expert report, albeit in circumstances of dealing with subjective complaints of injury, as the noble Lord, Lord Sharkey, acknowledged. They can be very difficult to determine. If someone comes forward with symptoms, on the basis of a subjective assessment, a report can be made, but it can be very difficult to determine whether those subjective complaints are well based. Indeed, as the noble Earl, Lord Kinnoull, observed, there are claims management companies that would encourage someone to come forward even if he had not suffered any symptoms so far, in the belief that something might emerge in due course. That is why we have taken that approach, albeit we have allowed for the judiciary to have input so that it can, in appropriate or exceptional circumstances, increase the tariff award by up to 20%.

--- Later in debate ---

[Lord Bassam of Brighton]

My Lords, I am much heartened by what the noble Baroness, Lady Berridge, said because my Amendment 30 tries to take us to the same range of issues. It states:

“When making regulations under section 2(2), the Lord Chancellor must take account of the PI small claims limit”.


The rest of the amendment addresses the whiplash issue.

Why is the amendment here? It is here because there is no other way in which we can address the personal injury limit. It seems to us to bring in an element of manifest unfairness. This piece of legislation will impact on small claims made by employees. By raising the threshold to £2,000 for those personal injury cases the Government are creating a particular difficulty. Claimants in the small claims court, because they cannot reclaim the cost of legal support, will have to represent themselves as litigants in person—and that brings a number of difficulties.

These cases can be very complicated, and they impact adversely on those who have suffered an accident at work, or the early onset of an industrial disease. USDAW has produced a very good briefing on this, citing a vast array of cases in which it represented members and which would be caught by this uplift. Vulnerable employees can be quite seriously injured. They are often unable to work for weeks or months and suffer considerable financial detriment and loss. With no legal assistance available to them, they will be opposing an employer—who will invariably be represented at court—without the expert advice that their injury and its implications merit.

I do not understand, therefore, why the Government are so keen on this £2,000 limit. It seems both unfair and lacking in rationale. The Government have not set out any reasons for including employee injuries in what was billed as a reform of whiplash claims—which, as we have said, we have no argument with. There is no suggestion anywhere that there have been fraudulent claims by injured employees. Claimants in this process will be vulnerable. There should be, as the noble Baroness, Lady Berridge, said, an equality of arms. That principle, which is fairly fundamental to the way our system of justice works, is undermined by this change, and the uplift to £2,000, when employers will be able to rely on full legal advice and support.

Cases are complex, injuries can be significant and victims can suffer considerable financial loss. Furthermore—an important point—the increase is far in excess of inflation. In 2009 Lord Justice Jackson suggested that there should be no increase to £1,500 until inflation justified it. Well, the figure of £2,000, to which the Government are wedded, cannot be justified on an inflationary basis: in terms of Lord Justice Jackson’s proposals, no increase is currently justified.

Small claims courts are not suitable for personal injury claims. We invite the Government to seriously reconsider the way they have set about this. We have already heard that cyclists will be swept up in the whiplash issue. Whether or not the Government seriously thought that they would be involving quite badly injured claimants by raising the limit to £2,000, that would be the effect of the proposed change. I have tried to find a way to bring an amendment to the Bill that would capture this issue, but have not so far succeeded. That worries me, because the Government seem to have found a way around a problem to the benefit of employers. I hope that that is not the case.

The Minister has a gap between Committee and Report, and I hope that he will meet me and others—particularly those who represent trade union members and are involved day in and day out with small claims personal injury issues—to benefit from our experience and knowledge of this field. I hope that he will then reconsider what is a very unfortunate policy, and one that will not be welcome in the workplace.

There are two other points here that are of value to consider. There will be an increase in the undersettlement of claims as a product of this; and I suspect that there will also be an increase in the number of claimants with highly unrealistic expectations of the value of their claim, thus removing the possibility of early settlement and placing increased pressure on the courts system. I hope that the Minister has some reassurance for us on this, because it is a very serious issue. It undermines some of the other, perhaps gentler, words that the Government have used in trying to understand the problems and complexities that people confront in the workplace, which was one of the Government’s earlier ambitions. That is the purpose behind our Amendment 30 and I hope that the Committee will see the strength of the case that has been put.

[Baroness Primarolo]

When the Minister considers in the round the comments made by other noble Lords, will he undertake to go away and look specifically at the way in which Scotland has approached this important question of asymmetry in the process? Will he look at whether there is a way of incorporating or dealing with claims in a similar way, without clearly undermining what he has identified as the Government’s policy principles in simply reducing tariffs?

[Lord Keen of Elie]

My Lords, perhaps I may begin with Amendment 26, as put forward by the noble Lord, Lord Beecham, and Amendment 47, put forward by the noble Lords, Lord Marks and Lord Sharkey, and my noble friend Lady Berridge. These amendments seek to secure assurances as to the recoverable cost of a medical report in respect of whiplash injury claims, notwithstanding the increase in the small claims track limit.

The cost of medical reports is currently recoverable in personal injury claims where the defendant insurer has admitted any part of liability. It is intended that these costs will continue to be recoverable following these reforms, including the proposed reform in the small claims track, which is not part of the Bill. I seek to reassure the noble Lord, Lord Marks, in particular that it is intended that that cost will be a recoverable element in each and every case where liability is accepted. My understanding is that the civil procedure rules currently permit the recovery of such a cost; if there is any issue with that, I would be perfectly happy to look at it again to ensure that the rules reflect that position, because that is certainly our intention.

The effect of Amendment 27 would be to require the Civil Procedure Rule Committee to undertake both a review and a consultation in respect of the proposed increase to the small claims track limit for whiplash claims before publishing its decision. I appreciate that the noble Lord, Lord Bassam, is taking us beyond the realms of whiplash claims and I will comment upon his observations in a moment. The Government have already undertaken a consultation on this issue and our policy changed as a result of that consultation. Originally, we proposed raising the small claims track limit to £5,000 for all personal injury claims but, after consultation, we proposed that the track limit should be raised to £5,000 for road traffic accident-related personal injury claims but only to £2,000 for all other personal injury claims, including employer/employee claims. We do not believe that a further consultation on this issue is required, nor that such a requirement should be placed into the Bill.

I observe in passing that the small claims limit for non-personal injury claims is now, I believe, £10,000 and it operates adequately. In respect of the personal injury limit of £1,000, that was set about 10 years ago so even if we were to apply various inflation-linked multipliers, it would be in the region of £1,700 to £2,000, depending upon what index was taken in respect of inflation. As regards personal injury claims in general, it is not going much beyond that.

The proposal in the amendment tabled by the noble Lord, Lord Bassam, is that the increase should be to a maximum of £1,500, as opposed to the increase to £5,000 for road traffic accidents and £2,000 for personal injury claims. In that context, the noble Lord observed that these cases—I believe he was referring to non-road traffic accident cases in particular—can be very complicated. I acknowledge that, but if such a claim is complex, that is a ground for removing it from the small claims process to the fast track. There is already provision for that very situation, so we do not consider that further steps need to be taken.