Key issues raised at second reading of the Civil Liability Bill on 4 September 2018

The Bill’s second reading in the Commons yesterday was book-ended by the speeches of the Secretary of State for Justice and Lord Chancellor David Gauke and by junior justice minister Rory Stewart. In the intervening three and half hours the government flagged some important amendments it will make and the opposition set out the key elements of its argument against much of the whiplash reforms in particular. The body of this blog attempts to summarise the debate.
Mr Gauke mentioned the government’s manifesto commitment to tackle whiplash claims when he opened the debate. Both Ministers said very clearly that the government will move introduce amendments on two important points.

First – and as already signalled in the Lords – provisions will be introduced into the Bill by which the insurance industry will be required to report on savings arising from each part of the Bill ie part 1 on whiplash and part 2 on the personal injury discount rate. Mr Gauke said the text would be made available “very shortly”.

Second was the concession that so-called claims by vulnerable road users or VRUs (ie those not in vehicles, meaning cyclists, motorcyclists pedestrians, horse riders in the main) are to be completely excluded from the part 1 reforms. They are already excluded from the whiplash tariff – because the Bill defines the whiplash injuries it seeks to address as those sustained by a person “in a motor vehicle other than a motorcycle” – so the new point is that such claims will be not be subject to the proposed increase in the small claims limit to £5,000.

It therefore seems that the sustained lobbying from cycling groups on this aspect has succeeded. This change will make for a more patchwork regime for different motor claims, with VRU claims therefore still recovering damages at conventional levels and legal costs at current fixed recoverable scales. They may therefore be regarded as more attractive by those acting for claimants.

The VRU point aside, on small claims both Ministers again committed to the proposed new limits of £5,000 for motor injury cases and of £2,000 others.

There was a little less clarity and detail as to the process by which these claims will be made. One noteworthy point was that the Government intends that the ban on pre-medical offers in low value motor claims should mean that medico-legal examinations are conducted face-to-face. Ministers were however quite brief when talking of the mechanism by which these claims are to be made. Mr Gauke merely talked in generalities, such as working with stakeholder groups to “deliver a simple-to-use on line service” for the vast majority of motor claims and of making sure “that the claimant journey is as smooth as it can be”. [His silence about how EL & PL claims are to be serviced may well be picked up on in later debates.]

Of the proposed change to how the discount rate is set (in part 2 of the Bill), the Lord Chancellor said that “the current process systematically overcompensates”, quoting a level of around 120 per cent – 125 per cent even after allowing for management charges and tax.

The opposition spokesman, Richard Burgon, characterised the Bill as another attack on the justice system and on the vulnerable. He said that Labour could not support the Bill as it stands and would vote against unless it was significantly amended in areas such as the setting of the damages tariff for whiplash injuries and in safeguarding the 100 per cent compensation principle. He was also concerned about inequality of arms in the event of employees making an injury small claim (ie one below the proposed new £2,000 limit) themselves against their employers (a point on which there appears to be a weight of trade union support).

Other MPs – including several members of the Justice Select Committee – raised concerns about cold-calling and the risk of claims management companies sitting behind claimants in person, as paid McKenzie friends, after the reforms have been implemented. Several were troubled by the apparent ease by which claims management companies acquired claimants’ data.

As had been expected, the big controversies and differences of principle relate to the whiplash reforms and there appears to be rather less emotion and politicking associated with how the discount rate is to be set.

Bob Neill, Chair of the Justice Select Committee, said that the whiplash reforms in part 1 of the Bill had “areas where the Government needs to strengthen the evidence base … and they need to get the balance right” and that the approach to the discount rate in part 2 “on balance [was] a sensible proposal”. His remarks are probably as close to a middle ground as anything that was said in yesterday’s debates.

But even without a vote at this stage, MPs’ views on the Bill seem to be splitting along fairly rigidly polarised party lines, suggesting there could be some heated discussions during the Bill’s Committee stages and perhaps some close votes for the government. With just over a month – until 9 October – in which the Committee stage must have concluded it is not going to be too long before these differences come to a head.

Kinley_A-4_webAuthored by Alistair Kinley, director of policy and regulatory affairs

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