Prisons and Courts Bill — House of Commons, 2017-03-20
Topic: Law and Crime
Jonathan Simon Djanogly (Conservative, Centre-right): I congratulate Justice Ministers on bringing forward this very competent Bill. I very much appreciated the helpful and informative briefings on, and technology demonstrations for, the proposed court reforms that were organised by my right hon. and learned Friend the Minister for Courts and Justice. In many aspects of prisons, court and litigation policy, the Bill moves the debate forward in a generally pragmatic and rational way. If I have any overall concerns, they relate not so much to the Bill’s general content, but to the need to give fuller context to some of its clauses. This I intend to do in relation to a few of its measures On whiplash, we need to keep in mind that the proposals in part 5 are a continuation of the policy held since 2010 to reduce a compensation culture that has had a detrimental impact on our society. In Justice questions on 7 March and again in this debate, the shadow Minister, the hon. Member for Leeds East (Richard Burgon), seemed to question the existence of a compensation culture. Frankly, I thought that we had positively proven that that was an issue at the time of our consideration of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, but it seems that the situation now needs to be re-explained. Before LASPO we noticed, as my hon. Friend the Member for North West Cambridgeshire (Mr Vara) pointed out, that although accidents had fallen by a quarter, claims had increased by a third. That unacceptable position led us to instigate a series of incremental measures with the aim of reversing that trend The key problem originated from the dynamic created by the no win, no fee provisions of Labour’s Access to Justice Act 1999, which had put in place an unreal marketplace. To cut a very long story short, due to the workings of Labour’s Act, the interest of the client in their advocate’s fees had become detached. That was because the client would never directly have to pay any of the fees, so it followed that they would not care what those fees were. The situation was stoked by claims farmers and aggressive cold callers. This was a further example of Labour supporting a something-for-nothing system, and that system put constant upward pressure on fees and thereby insurance premiums In LASPO, to counter that, we ended the recoverability of success fees and after-the-event insurance premiums from the losing defendant. We then moved on to ban referral fees, and to address spam texting and cold calling by claims handlers and their agents. We also toughened up the regulation of claims handlers. The overall impact of the changes was considered to have reduced insurance premiums by some 25%. However, it is vital to keep an overall picture of what is a complicated situation. For instance, the Association of British Insurers considers that some 1% of whiplash claims are fraudulent, meaning that criminal sanctions also play a part in dealing with this issue. The fraud figure used at the time of LASPO was over 5%, so I will be interested to hear from the Minister whether he believes that insurers and prosecutors have now got the message and upped their game by taking more fraudsters to court. However, I am not convinced that the problem of illegal cold calling has yet been resolved, and I would be interested to hear whether the Minister has any further proposals in this regard Another important aspect is the small claims limit for personal injury cases, which is frankly well out of date. To those who are complaining about the proposals, I would say that the fact that this measure is being taken up now, rather than when it was first considered in around 2012, shows how cautious the Government have been to take one step at a time. I fully support the Government’s proposal to increase the road traffic accident-related personal injury small claims limit to £5,000, which will encourage more thought before cases are taken. Will the Minister please confirm whether mediation will be a requirement for consideration, as it is for general small claims, or will the use of a tariff not require this I am surprised that the Government propose to increase the limit for all other personal injury claims from £1,000 to only £2,000, rather than £5,000. My understanding was that if only inflation were taken into account, the limit would increase to above £3,000. I appreciate that the change to the small claims limit is a matter for secondary legislation rather than the Bill, so I hope that the Government might reconsider this level. 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 The compensation culture tag is not one that I would attach to seriously injured accident survivors who need complicated legal help, but rather more to the mass of whiplash claims that involve an injury duration of less than two years and are currently waved through to settlement by insurers who do not want the cost or bother of dealing with each small claim. The average compensation for a six-month injury duration is £1,850. This is why I fully support the Bill’s proposal that the tariff should be based on injury duration, but if that proposal is not to be taken advantage of, a better system for organising medical reports is needed. At the moment, offers to settle can be made without medical reports, even though changes were made in 2014 to discourage that practice. From now on, there will be a ban on settling without medical evidence, which I certainly think is to be welcomed A related area that I understand is contributing to the increase in insurance premiums relates to the cost of so-called free hire cars for accident victims. Is the Department looking at that The overall insurance premium saving attributed by the Government to these proposals is £40 per year. However, I agree that that message has been somewhat diluted by insurers, who are saying that the proposed reduction of the discount rate applicable to personal injury lump sum compensation payments to minus 0.75% will result in a significant increase in premiums of up to £75. I appreciate that the law, not the Lord Chancellor, sets the discount rate, and I am pleased that the Government are consulting on an alternative framework, but one wonders why the consultation could not have been handled with the Bill. Having said that, it is certainly the case that, through this Bill, the Government are continuing the incremental fightback against the compensation culture, which I think is a very good thing.