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Keoghs Insight

We keep you up-to-date on emerging market issues and their impact on the insurance sector, through a variety of publications, events and our leading market initiatives.

Author

Samantha Ramen

Samantha Ramen

Director of Market & Public Affairs

T: 07713 393534

Who is David Lidington?

Blogs||12/06/2017

Red, blue, yellow - whatever colour you might associate yourself with, it is fair to say that the outcome of last week’s election has meant that we are now faced with less certainty than ever about the country’s future. This applies equally to the whiplash reforms and potential changes to the discount rate. So – what now?

Well, much will hinge upon the views of the new Justice Secretary/Lord Chancellor, David Lidington, whose appointment was announced yesterday afternoon. He has, to date, been very loyal to the Government in terms of his votes on legislation and any speeches in the House of Commons. In particular and perhaps even more encouragingly, his stance on LASPO in 2012/13 has always been to support it. But do we know anything more about what his outlook is on current key personal injury reform issues?

Whiplash

Mr Lidington is on record discussing the whiplash reforms during a statement on the Business of the House in November 2016. In answer to questions from Valerie Vaz MP (Labour) on whiplash, he said:

“I would have hoped that she [Ms Vaz] welcomed the action that the Government are taking on whiplash, because I thought that it commanded widespread support on both sides of the House…I hope that we can build a formidable cross-party coalition in support of such measures.”

Notwithstanding my view that “widespread support” might be a little optimistic, it is encouraging that Mr Lidington believes the issue to be worth taking forward. However, he will no doubt balance the reintroduction of any whiplash reform provisions against the reality of a weakened minority Government, albeit that they have enough votes together with the DUP to push legislation through. Although the DUP’s manifesto does not explicitly reference any view to whiplash reform, given that they lean more to the right than the Conservative party, the expectation is that they would not resist the proposals as currently drafted.

However, some commentators believe that Ministers will only be able to pass legislation which commands cross-party support; whilst this is not an absolute rule, it is clear that the new Government, even with the support of the DUP, will encounter more challenges. Given the whole raft of changes contained within it (particularly on prison reform), it was difficult to see that the Prisons & Courts Bill would fall away entirely. However, the priority given to this Bill will need to be balanced against the Government’s focus on Brexit and other policy areas, given the precarious position it now finds itself in.

Discount Rate

David Lidington has never mentioned the discount rate in Parliament. And we shouldn’t expect to hear anything in the next seven weeks or so - the issue is at the stage where it is with MoJ civil servants to produce a response ready for sign off by Mr Lidington by 3 August. Where he will stand on this issue is not clear, however given that he has shown loyalty to his Government in the past, we can expect the financial impact upon the Treasury to be at the forefront of his mind. Of course, this is no bad thing for insurers.

But what about Truss? Even though she’s moved on from the MoJ, she retains a Government role – as Chief Secretary to the Treasury – but is not a member of the Cabinet (although she can attend). As a result, her ability to formulate and drive policy will be fairly limited - the position of Chief Secretary to the Treasury is one which administers rather than sets policy. Although the discount rate policy brief sits squarely with the MoJ, the HMT will no doubt have a large role in shaping its outcome behind the scenes. Philip Hammond, in his retained role as Chancellor of the Exchequer, remains the most important person in the Treasury and will still be ultimately responsible for this aspect.

Driverless cars/ CMC regulation/Jackson’s extension of fixed recoverable costs

Policy issues that are not controversial and will likely attract cross-party support may continue as planned. We can expect the dropped Vehicle Technology & Aviation Bill which brought forward the necessary legislation to enable the use of driverless cars to sit in this category.

The transfer of CMC regulation from the MoJ to the FCA is also relatively uncontroversial, but in the context of the Claims Management Regulator previously encountering difficulty with pushing through its necessary legislation in the last Parliament, whether this issue will be enough of a priority for the new Government remains to be seen.
In terms of Lord Justice Jackson’s work on the extension of fixed recoverable costs, we shouldn’t expect this to be affected; his report is independent of Government and any recommendations that he makes will likely only require changes to secondary legislation.

What to look out for in coming weeks

Junior ministerial appointments will likely be announced in the next few days. It would be positive, in terms of reform, for there to be continuity at the MoJ - the hope and expectation is that Sir Oliver Heald and Lord Keen continue in their roles. We should have clarity on this by the end of the week.*

However, it is the Queen’s Speech that will be pivotal. This was scheduled to take place on 19 June but, as of lunchtime today, the media are reporting that there will be a delay of “a few days”. Andrea Leadsom, as the newly appointed Leader of the House, will provide confirmation in a statement to be delivered “shortly”.

So we may have to wait a little longer – but more importantly, what will it look like? Well, although there is a widely held expectation that the Queen’s Speech will be slimmed down given that the Government has been weakened by the loss of its majority, there will have to be some business as usual policy contained within it to demonstrate that the Conservatives are keen to get on with domestic issues as well as Brexit. However, whether or not personal injury reform will feature as part of this remains uncertain.

Keoghs’ Market & Public Affairs Team will keep close to issues as they develop and will update clients as information becomes available.

* Dominic Raab has been confirmed to take over Oliver Heald’s role and it has been confirmed that Lord Keen will remain in his current post.