The government is set to remove the right to general damages for minor soft tissue injuries and increase the small claims limit for personal injury claims from £1,000 to £5,000, it was announced in the Autumn Statement today.
The Chancellor, George Osborne, also announced that £700m would be invested to fully digitise the courts.
In moves likely to hit claimant personal injury lawyers very hard, the Treasury said: “The government is determined to crack down on the fraud and claims culture in motor insurance. Whiplash claims cost the country £2bn a year, an average of £90 per motor insurance policy [figures it attributes to the Association of British Insurers], which is out of all proportion to any genuine injury suffered.
“The government intends to introduce measures to end the right to cash compensation for minor whiplash injuries, and will consult on the details in the New Year.
“This will end the cycle in which responsible motorists pay higher premiums to cover false claims by others. It will remove over £1bn from the cost of providing motor insurance and the government expects the insurance industry to pass an average saving of £40 to £50 per motor insurance policy on to consumers.”
It said that claimants would still be entitled to claim for ‘special damages’, including treatment for any injury if required and any loss of earnings.
“More injuries will also be able to go to the small claims court as the upper limit for these claims will be increased from £1,000 to £5,000,” the Autumn Statement said.
In relation to investment in courts and tribunals, the statement noted that last year the government committed £380m of new money over five years from 2015-16.
“In this Spending Review, the government is increasing total investment to more than £700m to modernise and fully digitise the courts, moving from a paper-based to an online system. This will eliminate the need for over half a million pre-trial hearings in the criminal courts, and will significantly reduce court hearing times and the time spent on basic administrative functions.
“The government will also deliver a more efficient configuration of the estate by selling some underused courts to release land for new homes, and refurbishing existing ones. Together these reforms are expected to deliver savings of approximately £200m a year from 2019-20 onwards.”
It said the government “will also look at changes to court fees as it continues to put the courts on a more sustainable financial footing”, but there was no indication on the direction in which this could go.
There was also no mention of legal aid at all.
The Ministry of Justice’s budget continues to fall, and is planned to fall from £6.2bn in 2015/16 to £5.6bn in 2019/20, a 15% cut.
The statement said that “by focusing on its reform priorities and delivering significant efficiencies within its back office running costs, MoJ will be able to reduce its administrative budget by 50% by 2019-20”.