Yesterday’s second reading debate on the Bill focused, for over three and a half hours, on a few key concerns around the proposed reforms to whiplash claims and the setting of the personal injury discount rate. The detailed scrutiny of the legislation will be taken in the Committee Stages on 10 and 15 May. The proceedings yesterday gave some clues as to further questions and/or amendments which may surface then.
The first part of the Bill deals with whiplash and was probably the more controversial aspect, with a recent report from the Delegated Powers and Regulatory Reform Committee (DPRRC) and new data from the Compensation Recovery Unit (CRU) figuring in the debate. The DPRRC’s role is to examine powers Ministers seek to reserve to themselves in primary legislation and its report last week on this Bill was highly critical of two aspects of the Civil Liability Bill: first that it was inappropriate for the definition whiplash, a core element of the Bill, to be left to delegated legislation and second, that it was also inappropriate that the proposed tariff for whiplash general damages was also to be left to secondary legislation. The DPRRC recommended that the tariff should be set out in the Bill (but capable for modification by secondary legislation). Whether the Government moves to recognise these concerns remains to be seen.
The latest CRU data was released the day before the debate. It records motor claims in 2017/18 at around 650,000, having dropped from around 780,000 in 2016/17. Lord Keen, who opened the debate for the Government, chose not to refer to this drop of 17% in claims numbers and instead referred to a 40% rise since 2005/06.
Lord Keen also referred in terms to a manifesto pledge to bring down the cost of living through a crackdown on exaggerated and fraudulent whiplash claims. This may have been a coded warning to Peers of the Parliamentary convention by which the upper house does not derail legislation set out in a majority Government’s manifesto.
For the opposition, Lord Beecham focused immediately on the new CRU data and the warnings from the DPRRC about the wide powers reserved to Ministers in part 1 of the Bill. He was scathing about the Ministry’s justifications for the whiplash reforms, referring to its explanations as “possible candidates for the Nobel Prize for vacuity”. Several other Peers echoed the DPRRC’s concerns and said they would explore this at Committee stage – very likely by tabling probing or substantive amendments to the Government’s Bill.
There appeared however to be broad consensus on the proposals in part 1 of the Bill to ban pre-medical offers in whiplash claims. Tackling cold-calling and tighter regulation of the claims management sector – which Lord Beecham described as “a parasitic growth in our justice system” – were also broadly supported, although neither is directly addressed in this Bill.
Part 2 of the Bill seeks to change the way the personal injury discount rate is set, by changing the investment assumptions which underpin the rate. Former Justice Minister Lord McNally called the discount rate “one of the most difficult pieces of work that one faced as a Minister”. His successor, Faulks, was concerned at the potentially lengthy timetable for setting a new rate, which prompted Lord Keen to confirm that the Government is aiming for a new rate in April 2019 and intends to take considerable preparatory steps in the rate-setting process before the Bill is passed.
Several Peers spoke of an opportunity to effect wider tort reform, such as addressing the disregard, for damages purposes, of the availability of state-funded care (as set out in a 1948 statute). Although this is certainly worth serious discussion – perhaps under a Department of Health initiative or consultation? – Lord Keen was very clear that the current Bill’s aims did not run to covering it and he warned that it would be “it would be unfortunate if that process [ie setting a new discount rate] was materially slowed” by attempting to repeal the 1948 Act via this Bill.
I expect that the DPRRC’s concerns will probably be more fully explored at Committee stage, along with further probing of the mechanisms by which Government seeks to hold insurers to account on potential premium savings arising from these reforms. Subject to these points and to the issues set out above, the Bill could finish in the Lords before the summer recess and then pass to the Commons. We shall keep you informed.
Written by Alistair Kinley, head of policy and government affairs