This important Bill touches upon significant issues of civil liability and the way in which we treat of them. The Justice
Committee considered both parts of the Bill, and I will refer shortly to our reports in those two regards, but I must first refer the House to my declaration in the Register of Members’ Financial Interests.
First, on whiplash, is there a problem with fraudulent claims? My judgment based on looking at the evidence is yes. I say that not least because I have over the past few weeks received cold calls of the kind that other hon. Members have mentioned asking me to make claims relating to accidents that never happened. Some of the debate in the other House indicated the same. Practitioners know that it happens, but the extent of it is harder to measure. We then have to consider whether the measures in the Bill are proportionate to deal with the mischief, because the limitation that could be put upon the honest claimant must be proportionate and acceptable to deal with the vice of the dishonest claims. The Government must be careful in how they draw forward the evidence base on that.
It is pretty clear that there is a significant and persuasive disparity between the number of accidents and the number of claims. On balance, I am rather in agreement with Lord Hope of Craighead, a former justice of the Supreme Court, who said during the Bill’s proceedings in the other place that the Government had
“said enough to persuade me that it is necessary to do something to try to minimise the abuse that has given rise to such a large and disproportionate number of whiplash claims. The abuse has been going on for some considerable time, and it is time that something was done to address it.”—[Official Report, House of Lords, 24 April 2018; Vol. 790, c. 1490.]
I am happy to go with that. He is a highly experienced judge. I would also pray in aid Lord Judge, the former Lord Chief Justice of England and Wales, who said that
“some claims absolutely reek of fraud”.—[Official Report, House of Lords, 12 June 2018; Vol. 791, c. 1599.]
However, that does not mean that we should assume that everything that is asserted in terms of the benefits will necessarily follow. Like my hon. Friend the Member for South Leicestershire (Alberto Costa), I was sceptical of the evidence of the ABI witnesses, and I found the Medical Protection Society more persuasive. It is therefore important that the Government rigorously monitor such claims and that there is a genuine hold on whether they are actually passed on. That is why there should be some independent monitoring, which the Justice Committee suggested could involve the Financial Conduct Authority as well as the Ministry of Justice, to hold the insurance industry’s feet to the fire.
Secondly, when they are brought in, the tariff levels will be a departure from our norm, although it does happen elsewhere. It is most important that the judiciary are fully consulted on the setting of those tariffs, and I am glad to see the Government recognise that that is the right way to proceed.
Thirdly, in raising the small claims limit, it is most important that we take on board the senior judiciary’s significant evidence on the potential impact in the courts, to which our report refers, and the dangers that will happen if litigants in person—genuine litigants in person—have difficulty navigating the system, which may have the unintended consequence of placing additional burdens on the Courts Service. I recommend the evidence of both the hon. Mrs Justice Simler and his hon. Judge
Nigel Bird to our Committee on those matters, on the outworking of the online portals for such claims and on the way in which that matter should be taken forward.
I am glad the Government have agreed to remove vulnerable road users from the Bill, which is an important recommendation of the Select Committee, but they should also consider the position of other claims that are more complex than the normal straightforward whiplash and soft tissue injury claim. In particular, they should consider where we should set the appropriate limit in relation to employment liability and public liability, which almost invariably create more complex issues. It is much harder to expect people, on an equality of arms basis, to deal with issues arising collaterally from the main point in such cases. As the Bill proceeds, we need to look again at how we handle that.
Those are all important issues. It is important that the Civil Procedure Rule Committee is consulted on how those matters should be taken forward. We refer to that in our recommendations, too. None of those is a reason for rejecting the Bill but, frankly, there are areas where the Government need to strengthen the evidence base. Purely relying on the insurance industry is not enough. There is other evidence for strengthening the case on which the Government could rely, and they need to make sure they get the balance right.
The Justice Committee also considered the discount rate, which on balance is a sensible proposal. There was debate among the witnesses who gave evidence to the Committee and among the members of our Committee as to where to pitch it between very risk averse and risk averse. The proposal is realistic, and it is worth observing that the noble Lords who served in the Wells v. Wells case accept that it is appropriate sometimes to revisit the basis of that ruling. We have to reflect real-life practice, so I do not think that is a problem.
I am pleased there will be greater transparency on the way in which the discount rate is set, and all practitioners recognise the value in having a regular reset of the discount rate, rather than having it drift on for a number of years, as it has in the past. If the Lord Chancellor, as I am sure he does, acts independently of Government in a virtually quasi-judicial role and takes proper advice, for which he is accountable to Parliament, it would give us a better system for dealing with the discount rate in future.
I very much agree with the points about periodic payment orders, which should be encouraged more, and there should be much more uptake, as they move risk away from the injured party and towards the insurance company because they are effectively a form of annuity.
We need to do much more to clamp down on cold callers and on the operations of claims management companies, about which my hon. Friend the Member for Croydon South (Chris Philp) made sound points with which I have much agreement. We also need to look at the role of McKenzie friends, particularly paid McKenzie friends, many of whom work for unscrupulous claims management companies and claim to be qualified when they are not. We should probably move to outlaw the use of paid, as opposed to unpaid, McKenzie friends—there is an important difference.
There is much good in the Bill, but there are also things that need to be considered as it goes forward.
8.38 pm