What have we learned from the Second Reading of the Civil Liability Bill?

Yesterday’s Second Reading of the Civil Liability Bill lasted three and a half hours. There was a fair amount of intense debate, with access to justice concerns flagged by many Labour and Lib Dem peers.

Of course, most of us expected as much. We have been aware for some time that this Bill would get a rough ride in Parliament and particularly in the House of Lords. So what have we learned from yesterday’s debate? We have set out the most notable observations below.

The Government accepts that more certainty may be needed in respect of the Bill

As set out in our client alert yesterday (click here), the Delegated Powers and Regulatory Reform Committee have recommended that the Government introduce more certainty into the legislation in relation to both the whiplash definition and the form of the damages tariff.

Lord Beecham (Lab) was first to speak after Lord Keen’s introduction, and wasted no time in highlighting this report to the House. His comments were echoed by Lord Sharkey (Lib Dem), Lord McNally (Lib Dem), Lord Marks (Lib Dem), Lord Hope (cross bench), and Baroness Chakrabarti (Lab). These concerns were rebuffed by Lord Hodgson (Con), but the overall mood of the House was hard to ignore.

For the Government, Lord Keen, in response, stressed that the concerns of the Committee were noted, but that the Government’s intention was to “have a degree of flexibility” and that it did not “entirely agree with its recommendations”. However, Keen did state that he would “take on board the observations that have been made”.

Our view is that it is almost certain we will see an amendment at Committee stage on this issue – if not from the Government, then from other peers. It is notable that Lord Keen did not immediately dismiss these concerns; therefore a concession or two on this issue is extremely likely.

There is disagreement over whether or not we have a compensation culture

Lord Beecham (Lab) quoted Lord Young’s report published in 2010, where he said that compensation culture is one of “perception rather than reality”.

Conservative peers, as you would expect, pushed back very strongly. Lord Keen did not yield even slightly to this suggestion, stating: “What we have is a very obvious and clear trend in the development of claims for road-traffic-based whiplash injury…the consequences are very clear and obvious”.

What about the Lib Dems? Encouragingly for insurers, their position was clear – they recognise that there is a problem that needs addressing. One example of this is where Lord McNally (Lib Dem) stated: I do not accept that this is so small a problem that it should not be dealt with, and I welcome the Government’s attempt to do so.”

There is widespread scepticism over the insurance industry’s promise to pass savings onto consumers, even amongst the Tories

Much was made of whether or not insurers would pass savings onto consumers. This was not limited to Labour/Lib Dem peers – indeed, even Lord Hodgson (Con) said “To be candid, it will not be good enough for the industry to say something along the lines of, “It’s a very competitive industry so savings are bound to be passed on”. The public are in a cynical mood…”

Lord Beecham (Labour) was, as you’d expect, somewhat less generous with his sarcastic remarks: “We are all familiar with the benevolent intentions of the industry and its heartfelt aspiration to reduce premiums”.

Despite concerns regarding catastrophically injured claimants, the real fight is over the whiplash reforms

The Government has been keen to stress that the 100% compensation principle is paramount when looking at the process for setting the discount rate. There were some concerns raised about how vulnerable claimants might be undercompensated, but by and large the concerns raised centred around the timing of the first review. This was acknowledged by Lord Keen in his closing where he said: “I appreciate the concern about the delay in respect of the discount rate. We are proposing to carry out the first review as swiftly as possible”.

The contrast with the Government’s approach to the whiplash reforms is rather stark - this has not gone unnoticed. The concerns about a “proliferation of litigants in person” (Lord Faulks, Con) and how they would navigate their way through an unassisted claims process were shared by many.

It is clear that the Government will have to reassure members of the House of Lords and, in due course, the House of Commons that the Ministry of Justice has the detail of the execution of these reforms adequately covered.

The next parliamentary stage is the House of Lords Committee Stage. This is scheduled to begin on Thursday 10 May.