Access to Justice

Rob Marris Excerpts

Wednesday 11th January 2017 Westminster Hall

[Rob Marris (Wolverhampton South West) (Lab)]

I beg to move,

That this House has considered access to justice.

It is a pleasure to appear in front of you, Mr Davies. I thank all those who sent in briefings and background information, which have been most helpful. I especially thank the law firm where I was a partner for several years, Thompsons. In fact, two other Members who are Thompsons alumni are with us today. Thompsons supported my campaign for re-election 18 months ago financially. I also thank the Law Society of England and Wales, of which I have been a member for three decades or more, and the Association of British Insurers.

Access to justice is a pillar of the welfare state. To me, it is no coincidence that in 1948, the legal aid system in England and Wales was introduced—the same year as the introduction of national insurance and the national health service. It is one leg of a three-legged stool called the welfare state. This afternoon, I will not have time to cover as much information and as many matters as I would like. I hope to run around the block on the small claims limit for personal injuries, soft tissue injuries and whiplash claims, and to touch on employment tribunal fees, legal aid deserts and court closures.

I will start with the small claims limit. In recent years, other jurisdictions with similar systems to ours have looked at raising their small claims limit. In Scotland, the small claims limit was raised in 2007, but all personal injury claims were specifically excluded from that, as colleagues from the Scottish National party who are here today will know. They were excluded principally on the grounds of complexity, because of the need for those claiming for a personal injury to instruct solicitors to obtain expert medical evidence and, quite often, other expert evidence—for example, from an engineer.

When the Scottish system was reformed in 2014, personal injury was still treated differently. In 2014, a new procedure was introduced in Scotland called, simply, the simple procedure, to replace small claims and summary causes for cases with a value of less than £5,000. However, most personal injury claims, while proceeding under simple procedure, have special rules. Employers’ liability claims, where someone is injured at work, are entirely excluded from simple procedure.

Whether to raise the small claims limit has been looked at repeatedly in England and Wales. For example, in 2009 Lord Justice Jackson recommended in his report that the limit be retained at £1,000 for small claims relating to personal injury, with a fast-track system. Looking back on that in 2016, he said:

“The fixed costs regime for fast track personal injury cases is working reasonably well.”

I appreciate that people could say he is biased: he suggested one course of action, which was followed, and then seven years later said it was working well.

However, in July 2016, less than a year ago, Lord Justice Briggs in the final report of his civil courts structure review concluded that

“a fixed or budgeted recoverable costs regime, backed by Qualified One-way Costs Shifting…plus uplifted damages has, in the sphere of personal injury (including clinical negligence) litigation been a powerful promoter of access to justice, in an area where the playing field is at first sight sharply tilted against the individual claimant, facing a sophisticated insurance company as the real (even if not nominal) defendant.”

That sets the scene, because there is an asymmetry between many victims who are claiming that they were injured as a result of someone else’s negligence and the effective body against whom they are claiming. For example, following a car accident between two individual drivers, the victim will be claiming against the other driver. That is often an individual, but behind that driver sits the insurance company, which will run the claim and has to do so under the compulsory policy of insurance that all drivers have to take out.

[Graham Stringer (Blackley and Broughton) (Lab)]

My hon. Friend is doing a great service to the House of Commons by bringing this issue before it. He is beginning to make the case that access to justice is fundamental to the welfare state. In one sense, he underestimates its importance. Does he agree that it is fundamental to democracy? A democracy relies on freedom of speech, freedom of the press, the right to vote and access to justice. If there is not the money for access to justice, we do not have the rule of law.

[Rob Marris]

I entirely agree. It is little use having rights if one cannot afford to enforce them. That entrenches inequality.

The consultation came out under the rubric of whiplash. I have to say to the Minister that the consultation somewhat sneakily was announced on 17 November and closed on 6 January. That is a short consultation period over Christmas, which is not helpful.

The Government’s own figures on the whiplash proposals, which may well be a gross underestimate, suggest that if implemented, they will see the NHS lose at least £9 million a year and the Treasury lose £135 million a year. But here is the stinger: insurance companies will get at least £200 million more per year. That is likely to be an underestimate. That figure is due to a methodology that is biased towards insurance companies and has been severely questioned by the Association of Personal Injury Lawyers, of which I think I used to be a member.

The methodology for who gains and who loses under the proposals counts as a gain the extra moneys that insurance companies will get but does not take into account the loss to solicitors. We can all weep crocodile tears about solicitors, but when talking about commercial arrangements, if we are looking at them dispassionately, we have to weigh in the balance where one commercial sector gains and another loses.

[Chris Philp (Croydon South) (Con)]

Will the hon. Gentleman join me in welcoming the UK’s largest insurance company’s commitment to pass on in full any savings realised to consumers? That means, I hope, that the transfer of value, if it occurs, is from the personal injury law community to everyday consumers.

[Rob Marris]

I will get on to that. It is interesting and a great declaration, but of course other changes in the past five years or so have led to an increase in insurance company savings of £8 billion in claims costs. That has not been passed on in terms of reduced premiums, which have continued to go up, so I will believe it when I see it. The Government’s own calculations suggest that at least 90% of the money has to be passed through—the term for returning money to policy holders—for there to be any benefit at all.

[The Minister for Courts and Justice (Sir Oliver Heald)]

As the hon. Gentleman will know, the small claims limit is being put up in all the other jurisdictions, apart from this one, to £10,000. Is it really right that motorists should each pay £40 a year extra, simply so that the sort of solicitors firms he referred to can continue to do work on these very small claims?

[Rob Marris]

The limit has not gone up in Scotland for personal injury claims. I will get on to the figure of £40 a year and whether it is accurate or not.

So much of this information comes from the insurance companies, which are making huge profits. Premiums have gone up 17.2% in the past year, which I regard as unacceptable. I asked the Association of British Insurers about that on 3 January, and it kindly replied a week later. I am not a statistician, but I have knocked around statistics a lot, and its approach is strange, to say the least. It says:

“Given there is no objective medical evidence for whiplash type injuries, with diagnosis often being made on the basis of the claimant’s word, the ability to prove beyond all reasonable doubt that the claimant has not sustained an injury is both incredibly challenging and expensive.”

That is typically misleading of the Association of British Insurers. The Minister will know, as a distinguished lawyer, that if the insurers refuse to pay out on a claim and the policy holder says the insurers are wrong, the policy holder makes a claim in the civil courts against his insurers, where the test is not about proving something beyond reasonable doubt, but based on the balance of probabilities, which is a much easier test to pass. So that is a straw man, but it is true in terms of criminal actions.

The ABI also states that

“actual criminal convictions clearly only represent the tip of the iceberg, and are not in any way a true reflection of the level of fraud that insurers and wider society face on a daily basis… While some of those cases may have an innocent explanation, many more cases of successful fraud go undetected, especially for whiplash.”

The ABI is assuming what it is trying to prove. It is assuming that there is fraud, but it admits that if there are such cases, they are going undetected. We do not know whether there are undetected cases of fraud or there never was a case of fraud. If it assumes what it is trying to prove, I certainly hope my insurance premiums are not set by insurance company actuaries who take such an approach.

[Sir Oliver Heald]

That is all very well and good, but the hon. Gentleman must know that the number of road claims has gone up from 460,000 in 2005-06 to 770,000 in 2015-16, and that 90% of them are for whiplash at a time when our roads are getting safer and our cars have seen huge road safety improvements in their manufacture. How can this be?

[Rob Marris]

It cannot be because the Minister has the figures wrong. The Government’s compensation recovery unit indeed talks of 771,000 claims in round terms, of which 441,000 are for whiplash. That figure has come down by 7% since 2011-12. The overall figure is already coming down, so it is not going in the direction the Minister thinks it is and perhaps he will rethink the proposals.

The ABI says that its statistics

“are therefore intended to provide an indication of the volume and value of fraud detected by the industry. These statistics do not include claims which involve exaggerated personal injury, particularly for whiplash, where the claim has been paid.”

However, it also says that insurers pay out on 99% of claims, so apparently we are talking about the 1% and that is what all these assumptions are based on. That is not a good basis for creating public policy.

[Chris Philp]

Does the hon. Gentleman agree that the qualified, one-way costs-shifting arrangements that were introduced three or four years ago, whereby the defendant bears their own costs, even if they are successful, creates a perverse incentive for insurance companies to settle claims even when they have a very good prospect of defending them?

[Rob Marris]

That regime was introduced as part of other changes which have led to £8 billion more for the insurance companies. One must look at the matter in the round.

The ABI says:

“Previous reforms aimed at tackling the compensation culture have not had the desired effect because claims frequency has not been addressed. As such, the removal of general damages for minor soft tissue injuries is by far the most effective way to address claims frequency.”

What sort of minor injuries are we talking about? The Law Society helpfully provided me with some examples from a public briefing:

“A fractured rib (up to £3,300)”—

that is well below the £5,000—

“Food poisoning symptoms continuing for weeks (up to £3,300)”—

[Chris Philp]

Will the hon. Gentleman give way?

[Rob Marris]

No, I will not. The Law Society continued:

“Neck injuries lasting”

for up to

“12 months (Maximum £3,630)… Back injury lasting up to 3 months (up to £2,050)… Minor wrist fracture (£3,960 maximum)”.

I would venture that such injuries would not seem minor to most of our constituents. Most of them would not say a broken wrist was minor. [Interruption.] Well, they certainly would not in a Labour constituency; perhaps they would in Conservative constituencies. [Interruption.] The Minister is chuntering, “It’s not whiplash”; part of the problem is that the proposals in the consultation paper do not cover just whiplash, with which, I have said, there is not a problem. They cover all personal injuries, including accidents at work. Someone who breaks their wrist at work would not be able to instruct a solicitor, but they would almost certainly have to get a medical report and so on. I just do not think that these are what most of my constituents would call minor soft tissue injuries.

That is one reason why the Law Society has come out against the proposals, saying that:

“the government does not appear to have a robust evidential basis for undertaking the reform”.

So, too, has Cycling UK—it used to be the CTC or the Cyclists’ Tourist Club—which says:

“This change doesn’t target whiplash claims or claimants: it impacts most on those who end up in casualty with broken limbs due to the negligence of others.”

It talks about

“A reform which denies”

the injured

“justice, and sends a message to motorised road users that vulnerable road users’ injuries are a trifling matter”.

The Government have said in their propaganda that most road users have legal expenses insurance as part of their car insurance policy—I do not—so they will be able to get legal representation under that policy. That may be true for many if not most car drivers, but most of us cyclists do not have such insurance, nor do most pedestrians. That is why Cycling UK and its partners—RoadPeace, a national charity for victims, and Living Streets, a national charity for everyday walking—have come out against these changes.

[Chris Philp]

Will the hon. Gentleman give way?

[Rob Marris]

No, I will not. I have already given way to the hon. Gentleman. I was going to talk about employment tribunal fees, but I have taken up quite some time, and some of my colleagues wish to talk about that. Of course, employment tribunal fees have dissuaded huge numbers of people from bringing employment claims. If the Government really think that 67% of previous claims were frivolous—that is how much the figure has dropped by—they are living in a different world from me. Again, the Law Society, which of course has a vested interest, is against those fees. It said:

“In our members’ experience the remission system”—

for remission of fees for those who cannot afford to pay tribunal fees—

“is confusing, uses complicated language, and is hard to navigate”,

and that is for Law Society members, who are solicitors, let alone the lay person who may have just lost their job and perforce be broke. Only 21% of claimants—far fewer than the Ministry of Justice predicted—have benefited from any fee remission at all. Early conciliation was put forward as another approach, but ACAS says that 70% of claimants who entered into early conciliation did not reach a formal settlement.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate my hon. Friend on bringing forward this debate. There is another dimension to tribunals and legal aid in general. Many people come to us, although we are not allowed to give legal advice, because they cannot afford to pay for it. Secondly, citizens advice bureaux and bodies such as the Coventry Law Centre are overloaded with work, because the Government have cut the grants to those organisations, and as a result, they have had to reduce staff. There is an endless vicious circle when people try to get justice in this country.

[Rob Marris]

My hon. Friend is quite right. It is a matter of playing catch-up following the changes to legal aid. There are now legal aid deserts. Recent figures from the Legal Aid Agency show that large areas of England and Wales have little or no provision for legal aid services for housing. That is rather ironic on a day when the Homelessness Reduction Bill, introduced by the hon. Member for Harrow East (Bob Blackman), is being debated. In the south-west, over half of areas have only one provider of legal aid for housing advice. In Wales, half of areas have only one provider. In the west midlands, where my hon. Friend the Member for Coventry South (Mr Cunningham), who just intervened, and I come from, over half of areas have one or no provider. Shropshire, which is not far from my constituency, has no provider. When there is one provider, families on low incomes often cannot afford to travel to see them.

My hon. Friend the Member for Coventry South adverted to the fact that we have a catch-up system, because there are cuts in the number of courts. In Shropshire, people cannot get to Shrewsbury Crown court for a hearing at 9.30 in the morning by public transport from Ludlow, another major population centre. Cases are collapsing as a result; witnesses will not travel, and people are pleading guilty because they do not want to take even more time off work. That is not justice.

[Mr Cunningham]

Solicitors in Coventry and Warwickshire are looking at the possibility of getting local law students at the University of Warwick to assist with some cases.

[Rob Marris]

Indeed—that is, when they can get to a court, because there are plans to close 86 courts and tribunal centres and to cut Ministry of Justice staff by between 5,000 and 6,000. That has led to the courts getting clogged up with litigants in person who cannot afford to pay for legal representation. Judges, quite properly, try to assist litigants in person and to be flexible, so cases take longer. The Government end up with a false saving, because we spend more on the remaining courts to deal with litigants in person, and we have a worse justice system with less access to justice.

[Ian C. Lucas (Wrexham) (Lab)]

Is that not particularly acute in family law cases, and difficult cases relating to children and finance, when litigants in person appear before district judges, who have problems resolving the cases?

[Rob Marris]

My hon. Friend is entirely right and anticipates what I am going to say. There is, as he will know as a distinguished lawyer, an exceptional case fund, which was established to help people such as survivors of domestic violence to get free legal assistance. The Independent, which admittedly is a newspaper and not the Ministry of Justice, reported in 2015 that from April to December 2013 there were 617 applications to the exceptional case fund—that will be for all of England and Wales—and eight were successful. In the three-month period from April to June 2015, five out of 125 applications were successful. The people applying are some of the most disadvantaged in society and face some of the most grievous personal circumstances.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Legal aid has been eroded particularly, perhaps, for victims of domestic abuse, and many now have to present their cases in the family court. Regardless of recently announced Government proposals in relation to abuse of process, surely domestic abuse victims must have their own lawyers in family courts to avoid abuse by proxy.

[Rob Marris]

The hon. Lady is—

[Sir Oliver Heald]

Will the hon. Gentleman give way on that point?

--- Later in debate ---

[Rob Marris]

I will reply to the hon. Lady first. I agree entirely with her. I will give way to the right hon. and learned Gentleman, as the Minister, but I will just say that the Ministry of Justice anticipated between 5,000 and 7,000 applications annually. The actual figures are far lower than that. One reason—perhaps the Minister, when he intervenes, can promise to do something about this—is that, understandably, many solicitors are unwilling to make applications to the ECF because it is so bureaucratic, even though this Government say that they do not like bureaucracy; it takes between six and 10 hours just to make the application. The cuts have had far-reaching negative implications for children and vulnerable young people as well.

[Sir Oliver Heald]

I was just going to ask whether the hon. Gentleman agrees that domestic violence cases are within scope, and that a victim would have legal aid in the way that I outline. As for the exceptional cases fund, which the hon. Gentleman has challenged me to say something about, 1,200 cases a year is the current rate, and 53% are being granted; that is the latest.

[Rob Marris]

That is helpful, but it kind of makes my point for me. The right hon. and learned Gentleman’s own Ministry—before he was there, I have to say—anticipated between 5,000 and 6,000 such applications. A 53% success rate seems to me, on the face of it, to mean very stringent criteria, given how long a solicitor will spend preparing the application—and they will not get paid for that preparation, which suggests that the solicitor making the application on behalf of the vulnerable individual thinks that there is a very good chance of success. But what do they find? It is about half.

In time-honoured tradition, I will ask the Minister some questions, which I hope he will be able to answer. I did give him some notice of them, but only at noon today, so although he is a hard-working Minister, he may not have had the chance to get on top of them all. On small claims, does the Minister accept that there will not be a level playing field if the proposed changes are introduced, because they will remove funding currently available for injured people to instruct lawyers, leaving them having to act as litigants in person on personal injury small claims?

Does the Minister seriously contend that there is a fraud crisis in relation to workplace injury claims, which the proposed changes would cover, and if he does, which he may, what independent evidence, not from the insurance industry, does he have of such a crisis?

The impact assessment for the proposals says that there will be a cost to the NHS of at least £13 million a year and to the Treasury of at least £135 million a year, and an increase in insurance company profits of £200 million a year. Does the Minister accept that that means that the Treasury will lose out while the insurance industry gains? If he does not accept that, perhaps he could explain why.

Can the Minister say by what date the Department will publish its review of the impact of employment tribunal fees, and what data the Department has on how such fees have affected the use of alternative dispute resolution services? What steps will the Government take to try to ensure that all children and vulnerable young people can get legal aid? The Minister has already mentioned some changes in that regard. Following on from that, will he give a commitment to review the exceptional cases funding system to make it much more accessible, and if he will not, can he explain why not?

[Several hon. Members rose—]

--- Later in debate ---

[Chris Philp (Croydon South) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies, particularly given your previous association with Croydon.

I would like to talk specifically about the Government’s consultation on whiplash claims, and the reason for that is an experience that I had two or three years ago. After a very minor road traffic accident in which no one was injured, I was bombarded with phone calls to my personal mobile every week for about a year from a claims management company. It explicitly asked me to pretend to have an injury that did not exist in order to claim compensation.

I have no issue with the more general points that the hon. Member for Wolverhampton South West (Rob Marris) makes about access to justice and the court system. I am talking specifically about whiplash. It is as a result of practices such as the one that I have described that this country has more than two times more whiplash claims than the rest of Europe, and the total number of claims for soft tissue injuries— whiplash and neck and back—has been static, at about 800,000, for the last few years.

One reason for that is the perverse incentives in the system. As I mentioned in an intervention, under qualified one-way costs shifting, when a claim is made, even if the defendant—the insurance company—is successful in defending the claim, it must bear its own costs, which are quite often up to £10,000, so it is easier for the insurance company to stump up £3,000 in insurance and pay some costs to the prosecuting or claiming solicitors firms—some of those costs go to the claims management company—than to dispute the claim. That is why claims here have grown to proportions that are vastly higher than obtain in the rest of Europe and why, as my right hon. and learned Friend the Minister said, at a time when accidents have declined by 30%, claims have gone up by 50%.

In The Sunday Times a year or so ago, there was a shocking report about a company called Complete Claim Solutions—one of the most notorious CMCs, which makes 7 million outbound cold calls a year. Its trainers were covertly recorded by The Sunday Times encouraging or telling—instructing—its staff to get the public basically to lie and make fraudulent claims. I have myself been on the receiving end of those phone calls.

On the point made by the hon. Member for Wolverhampton South West about broken bones, I have looked at the consultation document, and it specifically refers to soft tissue claims. I fully accept that where a cyclist or motorist has broken a rib, wrist or leg, their claim is perfectly valid and verifiable and should be allowed to proceed. We are talking about soft tissue injuries, where there is no objective medical evidence other than the claimant’s own claim. Those claims add, I believe, about £40 to everyone’s motor insurance policy, but more worryingly in my view, they are morally corrosive because large numbers of the public are being incited to commit fraud. That is a bad thing for the fabric of our society.

[Rob Marris]

The Government’s press release announcing the consultation on 17 November said that measures include

“raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000”.

It said nothing about soft tissue injuries.

[Chris Philp]

Well, certainly the consultation document refers on its front page to soft tissue injuries. I am sure that the Minister will consider how that might apply to broken bones, but the title of the consultation refers to soft tissue injuries only.

In my response to the Ministry of Justice consultation, I made a number of proposals, several of which I would like to elaborate on here. I believe that there should be a blanket ban on outbound cold calls in relation to soft tissue injuries. There should be a ban on pre-medical offers. Insurance companies should be required to conduct face-to-face medical examinations, and those examinations should produce independently verifiable evidence. That should be more than just someone saying, “My neck hurts.” The injury should be capable of verification by a third party, so in the case of a broken bone, that would clearly involve an X-ray.

I believe that there should be a ban on general damages for minor soft tissue injuries—not broken bones, but minor soft tissue injuries, where there is no evidence of the kind to which I have just referred. For those injuries, I fully support a threshold of £5,000.

There should also be a duty on claims management companies and solicitors to explain explicitly to prospective claimants that fabricating evidence is an unlawful act. They currently do the reverse; they actually encourage false claims. The Ministry should look again at qualified one-way costs shifting, because it creates a very perverse incentive for insurance companies to settle even when they could win a case in court.

On the point raised by the hon. Member for Wolverhampton South West about where the money ends up, I think that the saving could be more like a billion pounds a year, not £200 million. I would expect that to be passed on to ordinary members of the public and not pocketed by insurance companies. Aviva has committed to do that, but if, after a year, it turns out that the insurance companies have simply pocketed the extra money and not passed it on, I would expect the Competition and Markets Authority to be encouraged by the Government—or even required, if the Government have that power—to conduct an investigation to make sure that those savings are passed on to the hon. Gentleman’s constituents and mine. I do not expect these savings to end up in the back pockets of the insurance industry.

I would also like to see another practice ended. Again, this is a point for the insurance industry. A few years ago, there was a ban on referral fees, which is money that a claims management company would pay an insurance company to hand over the details of somebody who had been involved in a motor traffic accident. They are circumventing that ban through what they call alternative business structures. That is where the insurance company has some form of equity or profit share stake in a claims management company, the details still get passed on, and the insurance company effectively gets paid via the equity stake as a means of circumventing the referral fee ban. That is clearly an abuse and we should take steps to end it.

Finally, there are many examples of insurance companies procuring services such as car hire, legal services or vehicle repair services very cheaply, and they get recharged to the at-fault party’s insurance company at a significantly marked-up price. That is profiteering and, again, steps should be taken to prevent it happening.

In summary, I very strongly support the measures proposed in relation to soft tissue injuries. They will end a whole cottage industry that is morally corrosive because it is encouraging huge numbers of people to commit fraud, and costing our constituents £40 each per year, per car insurance policy. I welcome these proposals. I hope to see them brought on to the statute book at the earliest opportunity, and look forward to supporting them on the Floor of the House when that happens.