Motor Vehicles (Compulsory Insurance) Bill

Peter Bone Excerpts

Committee stage
Wednesday 5th January 2022 Public Bill Committees

[The Chair]

With this it will be convenient to discuss clause 2 stand part.

[Mr Peter Bone (Wellingborough) (Con)]

It is a pleasure to serve under your chairmanship, Ms Ali, for the first time, I think. The Minister is here at such short notice, and I am grateful to her and to the Government for that. I am also grateful to the Opposition Members present, because without Opposition support, the Bill could not have moved forward.

The Motor Vehicles (Compulsory Insurance) Bill is a small but important piece of legislation. It had its First Reading on 21 June 2021. Second Reading was moved on 22 October, but unfortunately it was objected to on that date. It was moved again on 29 October, when it was agreed without objection. Although there was no debate on Second Reading in the House of Commons Chamber, the issue was fully considered in Westminster Hall on 22 September in a debate entitled, “Motor Insurance: Court Judgments”. That debate was expertly led by my right hon. Friend the Member for Chipping Barnet.

[Theresa Villiers]

That is very kind.

[Mr Bone]

That debate may be found in Hansard at column 172WH. I had intended to attend and speak in that debate, but unfortunately I was unable to do so because I had covid.

The purpose of the Bill is to remove the requirement for compulsory motor insurance for vehicles used exclusively on private land and for a wide range of vehicles that are not constructed for road use. As the Committee is no doubt aware, the law of the land is that motor vehicles must be insured for use on roads and other public land. That common-sense interpretation has been in place for a long time, and certainly since the Road Traffic Act 1988 established it in law.

On 4 September 2014, in its ruling on the case of Vnuk, the Court of Justice of the European Union extended a requirement for compulsory third-party motor insurance beyond the requirements of the law of Great Britain per the 1988 Act. That interpretation was never intended by Parliament, but if the status quo continues, the Vnuk interpretation of the European directive will be in force in our country. The Committee may ask why that is. When we left the European Union, all European directives became what is known as “retained law”. The Vnuk interpretation will put ordinary people in breach of the law for not having motor insurance for vehicles used exclusively on private land. It would also extend to the ridiculous situation of compulsory insurance for ride-on lawnmowers.

[Sir Greg Knight (East Yorkshire) (Con)]

Is it not the case that without the Bill, everyone will end up paying higher insurance premiums, which is not something that we want to see? It could also put the future of motor sport at risk.

[Mr Bone]

My right hon. Friend is absolutely right about increased costs, and I will deal with that point later in my remarks. He is also correct about the threat to motor sports.

The Bill would end the Vnuk decision’s application in retained EU law and related retained case law. I believe that I am correct in saying that, if passed, the Bill will be the first Act of Parliament to remove EU retained law; it will be a landmark first step in taking back control of our own laws. It is just one of the clear advantages of leaving European Union that we may now alter our laws to ensure that they are interpreted in the way that this sovereign Parliament intends.

[Stephen Timms (East Ham) (Lab)]

As I understand it, the EU has now changed its law. Because we are outside the EU, could we not stick with the retained law? I just want to make that point, because I do not agree with the hon. Gentleman about the damage of being in the EU.

[Mr Bone]

I was going to deal with that, but I will answer the specifics. The right hon. Gentleman is quite right that the EU is changing the directive so that it applies differently in the EU, but it is not changing it in the same way as we propose to do. I will deal with the issue later.

The Bill does not seek to invent new policy, nor would it limit the Government or Parliament in changing insurance regulations for motor vehicles in future. The Bill would simply restore the interpretation of the law that was intended by Parliament and was believed to be correct by the Government, lawyers, the motor insurance industry and motorists prior to the Vnuk judgment.

It should be noted that the Vnuk judgment has led the European Union to seek to revise the European directive, although it is unlikely to do so in the same way as we propose in the Bill. I argue that, instead of waiting for the European Union bureaucracy to change its ruling, we can do so now, here, in this Parliament. The Bill is therefore an important step in realising the benefits of our decision to leave the European Union.

The Bill would end any associated liability for insurance claims against the Motor Insurers’ Bureau for the cost of accidents on private land where motor insurance is not held. As things stand, the cost of such claims would have to be accounted for within the Motor Insurers’ Bureau charging levy, thus passing on the cost to the motor insurers, who in turn would pass it on to the consumers through insurance premiums—the very point made by my right hon. Friend the Member for East Yorkshire.

[Theresa Villiers]

I note that, under clause 2, the Bill does not apply in Northern Ireland. Will consumers—drivers—in Northern Ireland therefore face that hike in insurance bills that we are trying to prevent in England, Scotland and Wales?

[Mr Bone]

My right hon. Friend draws attention to something that I will refer to later in my speech. When she hears what I have to say, she will see why in the end that will not be the case.

The significance of this measure is seen in the Government Actuary’s estimate that the increase in premiums to extend coverage following the Vnuk judgment would be about £50 for the average motor car policyholder. The Bill will therefore save the average policyholder unnecessarily increased insurance premiums in already difficult economic times. The cost of living is rising and the Bill is an opportunity to keep pounds in people’s pockets.

You have kindly agreed that clauses 1 and 2 may be debated together, Ms Ali. Clause 1 would insert into the Road Traffic Act 1988 new section 156A, “Retained EU law relating to compulsory insurance”. Subsection (1) limits the insurance obligation under article 3 of the 2009 motor insurance directive to vehicles used on roads and other public places, and to a motor vehicle defined as a mechanically propelled vehicle intended, or adapted, for use on the roads. In effect, it removes the Vnuk interpretation as it applies to the use of vehicles in Great Britain.

Subsection (2) clarifies that the Bill does not affect the provisions requiring insurance policies to include the cover required by the law applicable in the territory where the vehicle is used, or the law applicable where it is normally based when that cover is higher. That means that the liability imposed by the Vnuk interpretation will remain in place for insurance policies covering vehicles in use in EU member states and Northern Ireland.

Subsection (3) concerns the removal of section 4 rights created in the 2008 Lewis v. Tindale case, which found that the interpretation of the 2009 directive in the Vnuk judgment could be enforced directly against the Motor Insurers’ Bureau. The Lewis decision means that the Motor Insurers’ Bureau’s liability for an insurance claim extends beyond the scope of the obligations of the Road Traffic Act and applies to accidents on private land and to vehicles not constructed for road use. Subsection (3) brings an end to the relevant section 4 right to compensation from the Motor Insurers’ Bureau except in the case of motor vehicles on roads or other public places, as defined by the Road Traffic Act.

[John Spellar (Warley) (Lab)]

What the hon. Gentleman is describing is interesting. Given, presumably, the obligation arises from an accident and therefore an injury, who becomes responsible for the injury?

[Mr Bone]

I thank the right hon. Gentleman for a really important question. It is one of the issues discussed when drawing up the Bill. In many cases, such as a public event on private land, there would be insurance cover. It is not currently the case that if someone illegally rides a vehicle on private land, has an accident and causes damage, there is a requirement to be insured for that. The landowner would be liable for the damage, but they do not have to be insured for it. Extending insurance to ride-on lawnmowers or other machines on private land has also been caught by Vnuk.

[John Spellar]

I accept that there is a fundamental problem with how liability insurance works: rather than dealing with often catastrophic injuries through the health service or national insurance, they are dealt with on an insurance basis. Local councils are impacted by that and it stops a lot of activities, because insurance companies prevent them. I accept there is a deeper underlying problem, but ultimately, if there has been an injury and there is some degree of fault, who is liable for the compensation? Is it the landowner? Is it the driver of the vehicle? How can that be resolved?

[Mr Bone]

This is a really important argument. There is a liability, and in each event that will depend on who causes the injury or damage. That person will be liable for the damages. The Bill deals with a slightly different situation where we are not extending compulsory insurance to cover those events. If we did, it would increase premiums by £50 per motorist. I stressed earlier that there is nothing to stop Parliament bringing in compulsory insurance on that basis, but it would have to be done through an Act of this sovereign Parliament that wanted to make that change. The Bill brings things back to where we thought we were, but it does not stop that debate and people can still make that argument. However, it is not really relevant to the Bill, because Parliament never thought that the Road Traffic Act and compulsory third-party insurance applied in the circumstances just described.

Proposed new section 156A(4) similarly provides for the removal of all further case law retained under the European Union (Withdrawal) Act 2018 that could undermine the positions set out in subsections (1) and (3). Any other EU law that we do not know about would not apply if the Bill is passed. Subsection (5) defines the terms used in clause 1, including the 2009 motor insurance directive, relevant section 4 rights, retained case law, and section 4 rights.

--- Later in debate ---

[Mr Bone]

I thank the Minister for her support and the work that the Government have done on this. I also thank the Opposition for supporting the Bill, because without their support we could not have made progress. This is a sensible measure that Parliament should support, and it is good when the Opposition and Government can work together.

I have a few thanks. I thank everyone who turned up today; I really appreciate that, given the important statement in the Chamber. I think I dealt with all the issues, except for the interesting one about electronic scooters that my right hon. Friend the Member for East Yorkshire raised at the end. I think it depends on whether they come within the definition of motor vehicles—I know we did not do so badly in the Ashes today, but that was certainly a bouncer to give the Minister, who has stepped in today.

The other issue that came up, which I have not dealt with, was the important point that the right hon. Member for Warley raised about VAT on energy. I entirely agree that it should be scrapped, but of course that has nothing whatsoever to do with this Bill.

I would like to thank a number of other people. I will start with my right hon. Friend the Member for Chipping Barnet, because she not only had the Westminster Hall debate—that is important, because if a presentation Bill is to get through without objection, that issue must be debated, so I am grateful to her for that—but spent time talking to a number of the stakeholders.

I also thank Izzy Jackson, my senior parliamentary assistant, who kindly put together my speech today, for all the work she has done in the office. I will also mention Paul Ryman-Tubb of Weightmans, who spent time helping me with this. I thank all those at the Motor Insurer’s Bureau who worked with me, particularly Nick Robbins, whose help has been invaluable. I would also acknowledge the hard work of everyone at the Department for Transport who has worked on this Bill, particularly James Langston. I again thank the Minister for stepping in at short notice; I hope that our colleague gets over covid quickly.

Finally, I support and thank everyone in the Public Bill Office. I am pleased to say that I did not have to sleep overnight at the base of Big Ben this year because of covid, but we still made progress. I thank in particular Adam Mellows-Facer; I am, as always, grateful for his hard work and professionalism. Thank you, Chair.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill to be reported, without amendment.