I am obliged to noble Lords for their contributions. I will speak to Amendment 6 and to Amendments 7, 8, 9, 10, 11A, 12, 17, 17A, 17B, 18, 19, 20, 25, 26, 27, 29A, 30, 32, 39 and 46. I hope noble Lords will forgive me if I take a little time over some of the points.
I begin by picking up on some of the observations made by noble Lords but will begin with a generality. I sometimes have the feeling that, were some noble Lords faced with an enormous edifice, their response would be, “You have to explain how every component part is held together before I am prepared to believe that I face an edifice”. The reality was outlined by my noble friend Lord Faulks, who pointed out that there has been a 70% rise in whiplash-based claims in the past 10 years, during which time the number of road traffic injuries reported has dropped dramatically and during which time Thatcham Research has identified that the safety of seats and headrests in cars has improved in something like 88% of vehicles on the road, up from 18%.
Seven hundred and eighty thousand personal injury claims arising out of road traffic accidents were reported in 2016-17. That is the totality. Of those, 670,000 were whiplash claims. It is an astonishing statistic, and the edifice, let alone its component parts, is enormous. As some have already observed, there is clearly widespread abuse.
We have heard reference to the need to test the validity of claims. I noted the reference of the noble Lord, Lord Beecham, to the impact on the courts of increased litigation. One has only to stop and imagine the impact of trying to litigate 650,000 claims in the courts in order that liability can be established and the claim can be tested in each case. The cost implications of that go wider than just the impact on the courts.
There was a call from the noble Lord, Lord Marks, to do more to test the validity of claims. Again, one of the difficulties is the sheer magnitude of the problem
that we now face. He also alluded to the need for further measures in relation to aspects such as cold calling, which feed this enormous industry.
To address that point, the GDPR and the Data Protection Act 2018 ensure that, where personal data is obtained through an unlawful cold call, further use of that data will not be allowed, and indeed the ICO can impose very large fines. In addition, the Financial Guidance and Claims Act bans any legal person, not just claims management companies, from making unsolicited calls relating to claims services without having first obtained consent. Crucially, changes made by that Act make it explicit that any organisation in the United Kingdom cannot make unlawful cold calls and, in addition, cannot instigate others to do so on their behalf. Notwithstanding that, there is an enormous unregulated industry out there, much of it based abroad where we cannot touch it, and it continues with these practices. It is a major social problem and requires a policy decision.
Touching on the matter of the damages, the noble and learned Lord, Lord Woolf, referred to a highly complex judicial process, but I take issue with that. As my noble and learned friend Lord Mackay of Clashfern pointed out, the assessment of damages for pain, suffering and loss of amenity is essentially a jury question. Whether you give it to a judge or a jury is neither here nor there; it is essentially a jury question and it always has been.
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As the noble and learned Lord, Lord Brown of Eaton-under-Heywood, pointed out, we are dealing here with a policy that requires deterrents and with a political question. The law is replete with policy reasons for excluding damages for negligence in particular cases, and the noble and learned Lord, Lord Brown of Eaton-under-Heywood, referred to the case of Caparo industries, where the court referred to the test of what is fair, just and reasonable in particular circumstances. So there is nothing exceptional about this.
At one point, the noble Lord, Lord Pannick, intervened on the noble Earl, Lord Kinnoull. He began by asking: is there any other area in which the Executive rather than the judiciary fix damages in a civil claim? Even as he asked the question, it obviously crossed his mind that there might be, and so he added the rider, “I expect they are really rather unusual”. The obvious example here is damages for bereavement. It is a very interesting analogy because, again, how do you fix damages for bereavement? It becomes a policy issue, just as when you are dealing with minor physical injuries and minor loss of amenities suffered by reason of a road traffic accident whiplash injury. There may be scope for a policy decision as to what damages should or should not be available. We are not taking damages away from Peter to pay Paul. We are essentially taking a policy decision that there should be a tariff for this form of injury to deal with a very real policy issue.
It is a policy issue which, as the noble Lord, Lord McNally, alluded to, has been under consideration for at least seven years—indeed longer, I believe, because it goes back to before 2010 and to the last Labour
Government, who also felt that this matter had to be addressed. I stress, therefore, that we have not rushed at this matter. I notice that my noble friend Lady Berridge would like us to take it a little more slowly and one step at a time. But age is against me, and I feel we may have reached the point at which we have to move with the pace of a snail.
Let me go over the background for a moment. The Access to Justice Act 1998 was extremely well-intentioned but encouraged a proliferation of no-win no-fee conditional fee agreements. That fed large amounts of money into the personal injury claims market, with little or no risk, frankly. To bring back control, the Government, largely by implementing the Jackson reforms in Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, introduced a ban on referral fees and rebalanced no-win no-fee deals so that claimants had a financial stake in the costs involved in handling their claim. These reforms had an impact and insurance premiums went down, but an adaptable market found new ways to sustain high levels of claims and premiums rose again. Further reforms in subsequent years improved the independence and quality of medical evidence through the introduction of the MedCo system, which I believe is widely supported. Legislation also banned lawyers from offering gifts and cash to encourage whiplash claims and introduced a power for the court to strike a personal injury claim out in its entirety in cases of fundamental dishonesty. However, the case had to be taken to court, with evidence laid and considerable legal expense engaged in, before you could achieve that result in one case, let alone 600,000.
These measures have helped, but the number of whiplash claims remains too high. That is why the Queen’s Speech confirmed legislation to meet our manifesto commitment to reduce the cost of insurance for ordinary motorists by cracking down on exaggerated and fraudulent whiplash claims. It is why this Bill now provides for a tariff of predictable damages for pain, suffering and loss of amenity. In my respectful submission, it is the only reasonable way forward. The tariff applies to all whiplash claims with an injury duration of up to 24 months on an ascending scale. We believe that those levels are fair and proportionate to genuine claimants but should work to disincentivise unmeritorious claims and reduce the cost to the consumer. I emphasise that we are dealing with claims where pain and suffering and loss of amenity has a duration of less than 24 months. We are not dealing with major, catastrophic personal injury.
It is surely right that the levels of compensation should be set by the Lord Chancellor in circumstances where it clearly is a policy decision to deal with a very real problem. Having a tariff in regulations will provide a degree of flexibility to allow them to be reviewed. We have of course indicated that it would be our intention to look at the tariff regularly. The bottom line is this: this Government—and, frankly, previous Governments—have an obligation to ensure that there is real reform in this area. We cannot continue with the present situation. While previous action has attempted to tackle the problem of whiplash claims, the adaptive nature of the personal injury sector has meant that those reforms have not been nearly as effective as one might have hoped. The enduring scale of the problem
justifies giving the role of setting the tariff to the Lord Chancellor. I suggest that that is a carefully targeted approach to deal with a specific and enduring problem. It is not a widespread challenge to the judicial role under the common law with regard to damages; it is focused.
The current system, which utilises the Judicial College guidelines, has in our view led to compensation levels that are out of step with the level of pain and suffering endured as a result of these injuries. That is why we consider that we should step in with a tariff system. The system is not unique. Variations on a tariff system have been deployed in Spain, France and Italy, with levels set by the Government. I have just mentioned the Judicial College guidelines, which are clearly based on reference to decisions by judges. But the Judicial College itself includes representatives of claimants’ lawyers and defendants’ lawyers. These are not the only guidelines used by lawyers involved in the settling of claims of this kind; other guidelines are referred to as well.
In addition to fixing the tariff, we have made provision for an uplift in exceptional cases. We consider an uplift of 20% appropriate and a reasonable increase where there are exceptional circumstances. Again, I notice that it is consistent with European jurisdictions such as Italy, where a similar tariff and uplift is in operation.
In referring to the uplift, I should also like to speak briefly to Amendment 25, which is a technical government amendment. It aims to tighten the drafting of the Bill to clarify our intent with regard to the circumstances that might be considered exceptional by the court when it determines whether to apply an uplift. It captures both where the injury itself is exceptionally severe or where the circumstances of the injured party increase the pain, suffering or loss of amenity caused by the injury, and where those circumstances are exceptional to the particular claimant.
Amendment 20 in the names of the noble Lords, Lord Marks and Lord Sharkey, and Amendment 29A, as proposed by the noble Lord, Lord Beecham, would provide the court with complete discretion in increasing the tariff payments in exceptional circumstances. Together with Amendment 10, in the names of the noble Lords, Lord Sharkey and Lord Marks, they aim to place the tariff amounts in the Bill, rather than in regulations. However, as I have indicated, we do not consider that the appropriate way forward. The Government are clear that the tariff must be fair and proportionate. However, we believe that these amendments and an uncapped uplift would only encourage more claimants routinely to request a hearing for an uplift, and would therefore remove the overall objective of this policy.
Noble Lords will be aware that we have tabled an amendment which proposes that a review of the tariff must be undertaken no later than three years after the date that it first comes into force and every three years thereafter. That will ensure that the Lord Chancellor is required to publish a report in respect of each review, which is to be laid before Parliament.
I want to touch on Amendment 12, spoken to by the noble and learned Lord, Lord Judge. We consider this amendment helpful. It seeks to introduce a
requirement for the Lord Chancellor to consult the Lord Chief Justice before setting the tariff. Within the framework of the Lord Chancellor setting the tariff through regulations, the Government agree that introducing this requirement would be helpful to ensure that we can reflect the views of the judiciary and we therefore propose to bring forward at Third Reading an amendment to require the Lord Chancellor to consult the Lord Chief Justice before setting or amending the tariff.
Amendments 6, 7 and 8 restrict the scope of the tariff provisions by reducing the injury duration of affected claims from two years to 12 months. We are not in favour of such a reduction. We consider that the tariff should cover claims of up to two years’ duration. First, that will ensure that the majority of all whiplash claims are captured by the measures in the Bill. Secondly, if we do not do this, it would have the negative effect of encouraging unfair pressure on medical experts to inflate prognosis periods in claims to move a number of claims out of the tariff and into the more expensive fast-track process. In doing so, it would effectively remove the underlying policy reasons for the entire proposal. In addition, a duration of two years is consistent with the Judicial College guidelines, which indicate that minor orthopaedic neck injuries are those where full recovery is within three months and up to two years on an ascending scale. We consider it appropriate for the period of 24 months to remain.
Amendment 9, tabled by the noble Lords, Lord Sharkey and Lord Marks, is a simple provision aimed at further explaining the meaning the duration of the whiplash injury in Clause 2(1), but we believe that essentially this is covered already in Clause 2(1)(b).
Without delaying matters for too long, I hope noble Lords will understand the Government’s position on these issues. We cannot accept the amendments proposed, particularly those that seek to affect the reasonable and necessary aim of this whole policy. We are concerned that the amendment which would remove Clauses 2 and 3 from the Bill would in effect tear the bottom out of it; it would remove its raison d’être. It would frustrate our manifesto commitment to reduce the cost of insurance for ordinary motorists by cracking down on exaggerated and fraudulent whiplash claims. I hope that in those circumstances, while I intend later to move government Amendments 19 and 25, the noble and learned Lord, Lord Woolf, will withdraw his amendment.