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Second reading of the Prisons and Courts Bill is achieved but future challenges to the government's whiplash and SCT limit reforms continue to lie ahead

On Monday the Prisons and Courts Bill received its second reading in the House of Commons. Part 5 of the Bill is the vehicle through which those aspects of the government's proposed reforms affecting whiplash claims which need primary legislation are intended to be brought into effect. This is alongside the planned increases to the small claims track limit which is to be raised to £5,000 for RTA claims and to £2,000 for EL and PL claims.

As the Bill now moves into committee stage in the Commons, various further opportunities for involvement in the process arise, both with the Public Bill Committee who will be examining the Bill in detail, and with the Justice Select Committee who are planning to resume their scrutiny of the issues raised.


The nature of Monday's debate set alongside these additional developments gives further insight as to the challenges ahead for the Bill and the prospects of successfully overcoming them. Accepting that the appropriate Opposition response was to let the Bill have its second reading unopposed in view of the degree of cross-party support which most of the Bill enjoyed, the Labour position was to postpone the argument on Part 5 until committee stage when it will receive more detailed scrutiny.

It is though clear that there are some common concerns as between Labour and the Justice Select Committee under the Chairmanship of Bob Neill who on 7 February questioned witnesses from both APIL and the ABI. To what extent can we expect those concerns expressed from both the JSC and the Labour-led opposition in parliament to cause problems in the Bill's progress?

The Bill itself

It should be appreciated that as well as dealing with whiplash claims and the establishment of the framework for a proposed Online Court, most of the Bill deals with prison reform and enjoys a high degree of support from all political parties as a result.

It follows that most of the speeches made during the 5 hour debate were in relation to prison reform, and were positive in nature. It remains to be seen whether that general positivity shown towards the Bill will be a factor towards the successful passing of the entire measure into law, though it may already have been influential in ensuring that the Labour position was not to oppose the Bill in gaining its second reading.

The government's position

This was set out both by the Secretary of State for Justice, Liz Truss, as well as by the Minister for Courts and Justice, Sir Oliver Heald. Liz Truss continued to use colourful language which we had seen her speak before in this context, of "the rampant culture that has developed around whiplash claims".

Both she and the minister relied on statistics to the extent that despite there being fewer road accidents coupled with safer cars on the roads, the number of RTA injury claims was over 50% higher than it was 10 years earlier. We will look in more detail at the statistics below.

Sir Oliver referred to the government having gone for moderate rather than extreme options, such as the tariff for general damages rather than a ban, with the uplift available for exceptional cases, adopting the position that these were proportionate measures to adopt.

The Labour position

This was given on behalf of the Opposition by Richard Burgon, the Shadow Secretary of State for Justice. Saying that the Opposition would not oppose the Bill having its second reading, and that Labour welcomed and supported much of its content (presumably a reference for the main part to prison reform), where they disagreed Labour would pursue amendments at the committee stage.

Mr Burgon also accepted it seemed that from his viewpoint the proposed changes could have been worse, saying that many people were pleased that the intended SCT rise outside of RTA claims was to £2,000 rather than to £5,000, "so the government can be congratulated on listening – or listening a little". But key concerns remained, and that the reform of whiplash claims was "based on a false premise".

Labour's issues

Labour's main approach at present links in with one of the concerns raised by the JSC: namely whether motorists will in fact see the reforms as leading to a saving in premiums of around £40.

Indeed, a friendly question from a Labour MP and member of the JSC, David Hanson, set the ball rolling on this during the debate. Mr Hanson asked Mr Burgon whether he was aware of any evidence to back up the government claim of reducing premiums, and that if he had would he share it, as the JSC would be interested in examining it.

If that evidence existed, Mr Burgon had not seen it. He noted that "only a tiny minority of insurance companies have said that they will pass on and savings". He noted from his perspective no mechanism through which "insurers can be made to pass on any savings to consumers", and that government needed "to take action to win those guarantees" from insurers.

Labour also believed that the tariff figures were too low, and that taken with the RTA SCT level increase, most RTA claimants as well as most whiplash claimants would not recover costs.

A Labour backbencher Rob Marris asked Liz Truss where the tariff figures had come from; to be told that they were what the government had judged was fair and reasonable for the level of injury. Mr Marris was not placated: if the government believed the figures were fair, then he believed in Santa Claus, he said.

The views of the JSC members from the debate

The combative approach taken by the JSC at the session on 7 February will be remembered, particularly in the direction of the ABI. The committee seemed to be taking an approach to the government's proposed reforms which was at least questioning if not hostile. Since 7 February the MoJ had of course proceeded with their reform package by publishing the consultation response and the draft Bill. How if at all had the views of the JSC members changed in 6 weeks?

It is worth recalling that the committee has 11 members, with a Tory chair, and an in-built government majority with 6 Conservatives, the others being 4 Labour and 1 from the Scottish National Party.

Bob Neill – Chair

At the February hearing, Mr Neill had thought that the MoJ was "firing in entirely the wrong direction" with its reforms when it should be "knocking claims companies out of business".

Mr Neill's views seem to have developed favourably towards the reform since. He now saw an "important and valuable Bill" which he wished well in its future passage. He was pleased that the MoJ had moved away from banning general damages in affected cases and towards a tariff. The JSC would "as appropriate, endeavour to assist the government in making a good Bill better".

Other Conservative members of the JSC

The only Tory member of the committee who spoke in this week's debate, Victoria Prentis, who had not attended the 7 February session, was supportive of the measure.

It was Conservative MP Alberto Costa who seemed to be taking the most critical line against the reform at the 7 February hearing. Rather surprisingly, he did not contribute to this week's debate at second reading.

David Hanson (Labour)

It fell to Mr Hanson to be the cheer leader for the critical approach shown by the JSC on 7 February. He referred to the committee having set up their follow up enquiry as they had not been convinced by the government's case to date and that they would want to question the minister as part of that process.

He reported that the government's claims both that savings would be passed onto motorists and about the level of fraud currently in the system had not yet been tested to his satisfaction, or that of the JSC, despite, he noted, its Conservative majority. Though unsaid, this, we surmise, may assume that in view of his approach on 7 February, Mr Hanson is including Mr Costa along with the Labour members and the SNP representative in his assessment of the majority.

While Mr Hanson said he had been told by the MoJ that the EL/PL aspects would be dealt with by a statutory instrument following completion of the whiplash measures, our understanding is that this may be sooner, in order that Parliament can consider the full package of reforms as the Bill progresses. In any event, Mr Hanson was still keen to make the point that the JSC would want to consider the two separate aspects of the reforms together.

However he allowed himself a positive comment too, saying that the direction of travel of the Bill can and should be supported, though the beef of the Bill is what really mattered to him.

Other JSC members

Two others spoke in this week's debate. Kate Green for Labour welcomed the Bill, looked forward to seeing it develop, but hoped ministers would take the expressed concerns seriously. With her union background her concerns were mainly around the impact on EL claims of the SCT rise. This of course is outside the Bill in any event and her approach to the reform seemed to have softened over the last 6 weeks, perhaps caused by the reduced rise in the SCT limit in EL claims.

Richard Arkless for the SNP said that against the background of there not being the same compensation culture in Scotland, he did not want the position south of the border to be exacerbated, and wished ministers "all the best" in dealing with the situation.

David Nuttall MP

Mr Nuttall is not a JSC member but an ordinary government backbencher.

Mr Nuttall was elected to parliament as Conservative MP for Bury North in 2010 and was re-elected at the last General Election. He disclosed in the debate that he was a non-practicing solicitor and that earlier in his career he had been involved in many personal injury matters. No doubt these were claimant claims handled by the firm in Sheffield in which he worked and later managed, Taylors Solicitors, before he was bought out by Atteys in 2006. He presumably will have handled or managed claims being dealt with by insurers and perhaps has his own perspective as a result.

His approach to the reform package was surprisingly sceptical to the proposed measures of his own government, though his record shows that he has quite often rebelled in Commons votes since first being elected.

Mr Nuttall has a long list of complaints. They include him not being convinced that Part 5 of the Bill will root out fraudulent claims; he doubts that the reforms will have the desired effect; he thinks that earlier reforms should have been given longer to work; he believes that IPT should be reduced; he thinks that there are signs of the existing reforms working from the selective APIL FoI request results referring only to the number of "whiplash" claims which he quotes in support of that argument; he notes the rough and ready results from the operation of the tariff; he highlights the resulting difference in awards as between whiplash cases affected by the tariff and the same injury caused in an EL situation; he believes that there will be an incentive to exaggerate symptoms from use of the tariff; he notes the likely increase in litigants in person and McKenzie Friends; and thinks that perhaps like the one he used to work in and has reason still to empathise with, "thousands of high street practices will face closure or, at the very least, job losses".

It remains to be seen how strong the challenge to the legislation will be in the Commons where the government has a working majority of 17, as well as in the Lords where of course it has no majority. It is unknown how many Conservative MPs share views with Mr Costa and Mr Nuttall.

Claims statistics

As we have seen, these continued to be referred to in debate. Mr Nuttall's use of the selective APIL FoI data is of course only part of the picture as claims have over recent years been labelled in other ways.

In their written evidence to the JSC prior to the 7 February hearings, APIL seemed to have moved on from their FoI request and instead referred to wider figures, including as well as whiplash claims those involving the neck or back, and on that basis there was what they thought was "a significant fall" of 11% since 2011/12. They do not quote the actual figures however.

In fact, as can be seen on the graph below, if we include all RTA injury claims, the decrease as between 2011/12 and the most recent data is from 829,661 to 771,274, or only 7%. This would seem to us to be a marginal change.

If in fact we look back further as we can to 2008/09, the latest level of RTA claims is 23% higher than it was 7 years earlier.

Su 22 March 1 (5)

Other data available going back to 2000/01 showing global numbers of RTA claims allows the longer term trend to be measured. The blue bars which are each 5 year averages standing 11 years apart on the following show an increase between them of as much as 100%: effectively volumes of RTA claims doubled over that period.

Su 22 March 2 (1)

Ms Truss and Sir Oliver referred to an increase in these volumes of more than 50% over the last 10 years. In fact, the increase as between 2005/06 and 2015/16 is between 466,097 and 770,791, or 65%. In that regard, they have chosen to present their data moderately.

Concerns with the draft Bill

It is worth noting those which have been identified so far.

Bob Neill of the JSC referred during this week's debate to the fact that the proposed new tariff system is built within clause 61 around a definition of the affected claims needing to be ones for negligence, and therefore excluding claims which might have been for negligence but which were in fact instead based on a breach of statutory duty. He feared claimants in particular circumstances seeking to avoid the new system by relying on statutory duties instead of negligence in a whiplash claim.

This point would seem to us to be worth covering off by making it clear that the new processes applied to both types of cause of action.

Chris Philp who is known to have an interest in this reform raised a question during the debate asking the Secretary of State to reconsider the definition of "whiplash injury" also within clause 61 as currently applying to an injury to "the neck or the neck and upper torso" of a description to be defined in regulations. He proposed that it be extended to include injuries to the lower back as well as to the upper back.

Ms Truss did not give ground, saying that it had been covered in the consultation response after listening to comments made, and she clearly thought the definition decided upon was sufficient to achieve their policy goals.  

It seems that further work is needed by insurers in this area to make their point. The government has accepted elsewhere in the process that claims displacement is a risk, and if injuries to the back as well as other injuries outside the current definition remain excluded from it, then displacement away from the injury types included within the reform package is perhaps likely. It is really the case that the premium reductions which is government is looking to achieve can be fulfilled with a watered-down definition?

The use of the definition for soft tissue injury claims which is part of the MedCo processes would continue to present an obvious alternative.

Opportunity to comment No. 1

The JSC have returned to the arena and say they are looking at these 5 areas:

  • The definition of whiplash and the prevalence of RTA-related whiplash claims

  • Whether or not fraudulent whiplash claims represent a significant problem and, if so, whether the proposed reforms would tackle this effectively

  • The provisions in Part 5 of the Bill introducing a tariff to regulate damages for RTA-related whiplash claims, with an uplift in exceptional circumstances; and banning the settlement of claims without medical evidence.

  • The impact of raising the small claims limit to £5,000 for RTA-related whiplash claims, and of raising the small claims limit to £2,000 for personal injury claims more generally, taking account of the planned move towards online court procedures

  • The role of claims management companies in respect of these matters.

They require submissions by 31 March, the short period having to be used as the quick pace of the government's actions with the Bill presumably to try to avoid a Brexit logjam has left the JSC on the back foot. The first of their criteria around the definition to be used and the effects which would follow from no change is very clearly an area where insurers would wish to comment.

The other issues from the JSC seem to come out of the scepticism towards the reforms demonstrated at the 7 February hearings. Despite the mellower approach taken by some JSC members at second reading of the Bill, it cannot be assumed that the overall view of the committee has changed, and representations in support of the principals standing behind the reform including by reference to the data and the undoubted increase in claims volumes over the longer term would be worthwhile.

Opportunity to comment No. 2

In addition the Public Bill Committee have requested submissions on key points and suggested amendments as they start their work on 28 March, with a view to completing it by 27 April. Again, there is good reason to comment on the definition at least as well as continuing the argument in support of the Bill. The Committee will kick off in a similar way to the Justice Select Committee by hearing oral evidence from the ABI and APIL, amongst others.

Discount rate

This issue has overshadowed matters recently and continues to do in view of it significant effect on future premiums. These would of course dwarf savings from the whiplash/SCT package yet government will presumably be keen to be able to demonstrate through the mathematics of the premium calculation that the whiplash/SCT reforms have had a particular effect.

Liz Truss said during the Bill's 2nd reading that the consultation would be brought forward before the Easter recess which starts on 31 March. It is therefore imminent and is expected to be issued next week with a relatively short response period.

The expectation is that a fast pace for that consultation will assist in what may well be legislative change being catered for within the current Bill.

Ultimately, the prospects of success with Part 5 of the Bill reaching the statute book will depend on the government taking the necessary steps to overcome a certain level of opposition which will have to be expected in both Houses of Parliament as has been demonstrated this week, as well as calming the nerves of the remaining members of the influential Justice Committee to the extent that their concerns remain.


For more information please contact Simon Denyer, Partner on +44 (0)161 604 1551 or email simon.denyer@dwf.co.uk

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