“We’ve gone for moderate options to reform PI,” says justice minister

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21 March 2017


Parliament: first debate on bill

The increase in whiplash claims at a time of falling road traffic accidents and improving car safety means that “cases are obviously exaggerated to some extent, and perhaps fraudulent”, justice minister Sir Oliver Heald said yesterday as he defended the government’s “moderate” personal injury reform proposals during the second reading of the Prisons and Courts Bill.

The reforms – which justice secretary Liz Truss said in the debate were aimed at tackling a “rampant compensation culture” – came under fire from the Labour Party and a Conservative MP who used to be a personal injury solicitor.

The second reading is where the principles underpinning legislation are debated; it is at the next ‘committee’ stage where amendments will be laid.

Wrapping up the debate, Sir Oliver said “no government could ignore these sorts of statistics and not take action. We have not taken extreme options but gone for moderate options such as a tariff of damages for the very minor cases.

“The tariff does not apply in a serious case of whiplash where the damages would be substantial—it is for cases where the pain and suffering lasts less than two years and is of a minor nature. Against that background, such a tariff is surely a reasonable approach.

“If there is any element of exceptionality in these cases, then there is a provision to uplift. We say that this approach is proportionate to the scale of the problem.”

Earlier in the debate, Ms Truss was asked what evidence underpinned the tariff figures, to which she replied: “We have changed the figures in response to the consultation document. Those were judged to be fair and reasonable for the level of injury that we are talking about in this case.”

Labour MP Rob Marris described the tariff as “bizarre… with no evidence of where the government got their figures from, but just an assertion from the Secretary of State that they believe in fair compensation. Well, I believe in Santa Claus as well”.

Shadow justice secretary Richard Burgon welcomed that the government had listened “a little” in limiting the rise of the small claims limit for non-RTA injuries, but said the reform of whiplash claims was based on “a false premise”.

There was, he insisted, “no epidemic of fraudulent claims. The British people are not on the fiddle or on the make in the way that the government so disparagingly suggest”.

He said injured people “should not be made to pay the price for the behaviour of the unscrupulous minority” – specifically cold-calling claims management companies.

Mr Burgon urged the government to obtain guarantees from insurance companies that they would pass on the savings from the reforms, noting that amid all the talk of fraudulent claims, there was a lot less said “about the behaviour of some insurers in failing to defend weak claims and how much the insurance industry is making out of all this”.

He said the £5,000 small claims limit for RTA-related injuries “will inevitably deter people from accessing legal representation and deter genuine claims. The government should consider ensuring that victims of road traffic accidents are able to recover their legal costs”.

Though members cited figures from the compensation recovery unit at the Department for Work and Pensions – which showed that whiplash claims fell 34% between 2010-11 and 2015-16 (to 335,365) – Sir Oliver said the government used a different definition that showed claims were actually going up.

He said: “The expression we use is whiplash-related road traffic injuries. Some of them are described as upper torso strain caused by shunt by a vehicle; that is a whiplash-related claim, and it would not count as a whiplash claim, but we think they are the same thing, and we reckon that the figures show a 50% increase over the last 10 years, at a time when the number of road traffic accidents generally has been falling.”

Conservative MP Chris Philp – the most outspoken backbench supporter of the reforms – called for a wider definition of whiplash injury to include injuries to the lower back as well as the upper back.

Fellow Tory David Nuttall, a non-practising solicitor who handled “many” personal injury matters earlier in his career, said he doubted the proposals would achieve the aim of reducing whiplash claims.

“I am not convinced that the way to reduce premiums is to restrict artificially the level of damages payable by someone found liable for the tort of negligence,” he said, arguing that the government would be better off reducing insurance premium tax to achieve that.

“There are already procedures in place to reduce the potential for fraudulent claims to be successful. I am all in favour of taking the strongest possible action to root out those who try to con the system, but perhaps we should have given the existing measures—it is not many years since they were introduced—more time to work, and there is already evidence that they are working.”

Mr Nuttall said that under a tariff, “the level of damages will hardly ever be correct, as the government recognise in their proposed uplift provisions. This is a rather clumsy way to try to finesse the basic scheme, recognising that the damages will not be at the appropriate level”.

He added: “There will inevitably be an increase in the number of litigants in person, and that raises questions as to how the courts will cope. For example, is the portal proposed as the mechanism by which the system is accessed intended for use by litigants in person?

“Claims management companies will have a field day as they look to expand their operations in the light of these proposals. I fear that there will inevitably be an increase in the number of nuisance telephone calls…

“There will inevitably be a transfer of cases from qualified legal practitioners to unqualified claims companies—McKenzie Friends and so forth—and thousands of high street practices will face closure or, at the very least, job losses.”

Mr Nuttall questioned how the same injury could attract a different level of compensation depending on whether it was suffered as a result of a road traffic accident or in the workplace.

“There will also be unintended consequences. For example, the Access to Justice Action Group has pointed out that an injured party would be entitled to £3,725 for a neck injury lasting 24 months under the small claims track, but £6,750 for a neck injury lasting just one month longer outside the small claims track. That will be an incentive for the small minority who try to play the system to exaggerate their claims.

“In summary, why should the vast majority of innocent, law-abiding citizens be penalised for the actions of the dishonest few?”

Former Conservative justice minister Jonathan Djanogly asked why the small claims limit for non-RTA claims was only going up to £2,000. “I recall putting up the general small claims limit from £5,000 to £10,000, and what was generally seen by lawyers at that time as something that would hurt their businesses has been very successful in practice.”

Bob Neill, Conservative chairman of the justice select committee, noted that the bill provided an ouster of the tariff system for breach of statutory duty.

“But, as practitioners have raised with me, one can of course envisage a number of circumstances in which it is possible to plead both negligence and a breach of statutory duty as alternatives. It might be self-defeating if we get an industry of people always seeking to put in an alternative head of claim to take it immediately out of the pure negligence category. Some careful drafting may be needed to look at the practical effects as far as that is concerned.

“Above all, we must not allow this to cause us to take our eye off the ball of the abuse by claims management companies. Good work is already being done by the Ministry and the Information Commissioner’s Office, but a lot of the problems stem from the work of the claims management companies, and it is important to look at that.”

Labour’s David Hanson, another member of the committee, said the claims about savings being passed on to motorists and about the level of fraud in the system “have not yet been tested to my satisfaction or that of the justice committee, which, it should be remembered, has a Conservative majority”.

Mr Hanson also said the government has not set out a rationale for including employment injuries in what is billed as a reform of whiplash claims, and his Labour colleague Kate Green said the trade union USDAW “offers several examples of where relatively minor accidents that are significant to those in minimum wage jobs would not have secured compensation under the government’s proposed changes due to the lack of access to legal help for workers to pursue their cases”.



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