Director of Market & Public Affairs
Civil Liability Bill - House of Lords Report Stage
The Government’s proposals to reform personal injury claims were put to its first real test in the House of Lords as the Civil Liability Bill reached Report Stage. Ninety amendments were tabled, many of them the Government’s own amendments. The session ran to almost seven and a half hours; debate continued until almost 11pm.
The more significant amendments – and how they ended up following lengthy debate – are set out below:
Opening the debate, Government Whip Baroness Vere of Norbiton spoke to Amendments 1 and 4 which concerned the full definition of a ‘whiplash injury” within the Bill.
She explained that the Government, given it had “carefully considered” the views of the Delegated Powers and Regulatory Committee (see our previous client alert here) and of peers, had reached the conclusion that such a definition should “be defined in full in the Bill rather than in regulations”.
She also argued it was “essential that the full definition can be adapted so it can respond to future medical developments or changes in the behaviour of the claims market”. In view of this, she highlighted how Amendment 4 would allow for this through permitting the Lord Chancellor “to amend, by regulations”, the definition of a ‘whiplash injury’.
WHAT DOES THIS MEAN?
The whiplash definition will be on the face of the Bill. There will also be a provision for the Lord Chancellor to amend it in future if necessary, provided that he/she consults with the Lord Chief Justice before doing so.
Crossbench peer Lord Woolf sought to remove Clause 2 (reference to a damages tariff) from the Bill. Explaining his reasoning for putting it forward, Lord Woolf referenced why he felt that it was “an undesirable change from practice hitherto, both in terms of judicial responsibility and small claims court processes”.
In response, Lords Ministry of Justice Spokesperson Lord Keen said that the removal of the tariff from the reforms “would in effect tear the bottom out of it”. Such a move would also “frustrate” the Conservatives’ “manifesto commitment to reduce the cost of insurance for ordinary motorists by cracking down on exaggerated and fraudulent whiplash claims”.
However, this did not satisfy Lord Woolf and, after pressing Amendment 18 to a vote, it was rejected by 218 to 205 votes.
WHAT DOES THIS MEAN?
The tariff will continue to form part of the Government’s whiplash reforms. The narrow defeat of this amendment is a serious blow to the claimant community, who had pinned high hopes on Lord Woolf succeeding with this amendment given his extensive experience on civil justice reform.
Limiting the SCT to £1,500
Shadow Deputy Leader of the House of Lords, Baroness Hayter of Kentish Town, sought to insert a new clause effecting a limitation on the small claims track limit, arguing it was necessary “because, on the back of wanting to take action on what are claimed to be fraudulent whiplash claims, the Government propose to remove legal help from a swathe of people with genuine personal injury claims”. This was “not simply unnecessary but wrong”, she declared, before highlighting what wider implications she felt would follow from the Bill’s provisions.
In reply, Lord Keen argued that attempts to limit the SCT in this way would “maintain the burden on ordinary motorists by restricting the flexibility of the Government to reduce the costs of civil litigation through changes to the Civil Procedure Rules”.
Baroness Hayter attempts failed, as her amendment was rejected by 183 to 169 votes.
WHAT DOES THIS MEAN?
Despite the recommendations of the Justice Select Committee in its report published on 17 May, the Government successfully defeated a move to limit the small claims track to £1,500.
Whiplash savings and a subsequent premium reduction
A number of Labour peers sought to amend the Bill to push for a future independent review by the Financial Conduct Authority comparing whiplash savings to premium reduction. This has been a concern of Labour peers (and indeed MPs) for some time; the argument that a competitive market will effectively regulate its own prices has not been accepted by many parliamentarians.
The Government successfully defeated this amendment, but did give ground on a clause being inserted in the Commons which would effectively do something similar. It was, however, stressed that the time period for doing so would not be 12 months as suggested in the amendment. The review will also be subject to competition law.
WHAT DOES THIS MEAN?
The Government are keen to hold insurers to account to pass on any savings, but it seems unclear how they might be able to do so.
The Government managed to ward off the most significant attacks to the Bill. In part this can be attributed to the tabling of its own amendments conceding on various matters, but nevertheless there were a number of notable successes following some very narrow votes.
Notably, the bulk of the debate focused on the whiplash reforms. In terms of the discount rate, the most significant change is that the expert panel will now no longer be required to be involved in the first review of the rate which should hopefully speed up the next rate change. There was also an indication by Lord Keen that the Civil Justice Council could look at the wider utilisation of PPOs. Indeed, we already know that the Government are keen to promote the use of PPOs, so to an extent, these comments are simply an extension of their current position.
In terms of the whiplash reforms, it is helpful to the Government that the Bill has managed to get to this stage with relatively few significant changes. This will send out a strong signal to those MPs voting on this in the Commons. This is particularly significant against the backdrop of the very critical report recently published by the Justice Select Committee.
The votes were close but a win is a win – and despite some concessions, the Government will no doubt be pleased (and relieved) with where it managed to get to at the end of yesterday’s lengthy debate. The Bill now moves on to Third Reading in the Lords and we expect the Bill to then enter the Commons either just before or just after the summer recess.