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Civil Liability Bill passes the Lords and is off to the Commons with only limited changes

27 June 2018
The Civil Liability Bill received its Third Reading yesterday and is now off to the Commons.

At the Bill’s Report Stage earlier this month Lord Beecham, the opposition justice spokesman predicted that this would take place within a week, and that prediction on timing may be borne out as the government will want to take advantage of the Bill's current momentum.

It seems that the formality of its First Reading in the Commons is indeed likely to take place before the House rises for its summer recess on 20 July after which it does not return until 5 September. After that, Second Reading will follow at least 2 weeks later though perhaps not until September, and it will be then that we will begin to see the initial views of the Bill taken by members of the House of Commons, at least beyond those MPs who have expressed comment as a result of being members of the House's Justice Committee.

Whiplash issues at Third Reading

No amendments were submitted at Third Reading in relation to Part 1 of the Bill which of course is the part concerning whiplash. There were though signs that this part of the Bill will not necessarily have a straightforward passage through the Commons.

At Report Stage, Lord Beecham had spoken of the potential need to bring back Labour amendments at Third Reading if Lord Woolf's amendment substituting the Judicial College Guidelines for the Bill's tariff was not accepted, and of course it went on to be defeated. But there was no sign of those yesterday following the narrow defeat for Lord Woolf at Report Stage and instead the Opposition seems to be gearing up for the debates in the Commons.

Yesterday, Lord Beecham limited himself to observations about the Bill as well as highlighting the issues which Labour planned to attack on in the Commons. He labelled the Bill as "fundamentally flawed", and he hoped it would be improved when the views of MPs were heard. He identified in particular these aspects which Labour regards as open to challenge:

  • They wanted medical experts to have input into the definition of whiplash in the Bill
  • They would seek an outcome where damages were assessed by judges based on the JCG, essentially the present system
  • If this is to be a tariff, their position would be that the Judicial College should be involved in setting it
  •  He quoted with apparent approval the Law Society position that there should be clarity as to what would constitute a failure to take reasonable steps to mitigate the effects of an injury
  • Another Law Society point was mentioned, that “exceptional circumstances” to increase beyond the tariff should be left to the judges to decide upon
  • He also indicated an intention to oppose the proposed increases to the Small Claims Track limit when regulations which would make the necessary changes to the Civil Procedure Rules are submitted to parliament, calling the increases obstacles to justice.

On the other hand, Lord Beecham made it clear that Part 2 of Bill dealing with discount rate reform had his party's support.

The other Labour voice heard was that of Lord Monks, former General Secretary of the Trades Union Congress, who took the opportunity of the debate to make views clear on matters linked to Part 1 of the Bill. He was also concerned about the SCT increase and what he thought would be its effect, which he said would be the loss of free legal cover for about 350,000 people a year.

While he accepted that this aspect had been debated on one of the amendments which had been put to a vote at Report Stage and that vote had been lost, he claimed that there had been little time to brief Lords or to campaign more widely. He wanted it known that he and his colleagues would return to the SCT aspect “in any way that we can”.

In response, Lord Keen for the government continued to express a willingness to meet with him to engage on such points of concern but saw the SCT increases as “part and parcel of the overall package that we consider has to be delivered to address the issues referred to in the Bill”.

The passage of the Bill through the Lords being complete is of course as much in relation to Part 1 as it is to Part 2 even though yesterday’s debate was essentially in relation to Part 2. We can see that the key challenges from the Lords to Part 1 had effectively been seen off at Report Stage.

Number of litigated injury claims

The data is shown on the graph below with the last bar showing the latest figure:

We have looked at the number of litigated personal injury claims on a regular basis previously and do so again following these comments by Baroness Hayter set alongside the release by the MoJ of the litigation data for Q1 of 2018.

In the debate, Baroness Hayter had referred to the recent release of the data (which had taken place 5 days previously though she referred to them being released the day before the debate) as showing "a reduction of 7%" which she said was confirmation of the trend that there were "serious fall-offs of people with genuine claims who are simply unable to pursue them themselves…".

It is worth re-checking Baroness Hayter's maths and putting in context what indeed was a reduction, albeit a smaller one that she had calculated. Her reference to when the data was released shortly before the session, or at least when that data was seen by her, may explain any mathematical error.

In Q1 2018 there were 33,527 newly issued PI claims in the county courts, with that figure being provisional as is usual at this stage when first presented. This was a reduction of 4.4% from the 35,068 seen in Q4 of 2017, as well as a reduction of 5.6% from the average quarterly level of 35,549 seen in 2017. But 7% would be an exaggeration and it is difficult to see how the figure was arrived at.

What is obvious is that despite the level of court fees being substantially increased from Q2 of 2015 onwards through using enhanced fees, affecting all claims valued at over £10,000, and with the extent of that increase being as much as 660% at a certain level, there has been no reduction in the number of PI claims moving into court proceedings.

The variations as between the various quarters show changing numbers without any apparent explanation and therefore we should be slow to see significance in one quarter's data in any event and should look longer term.

Looking at longer periods of calendar years the data has shown these numbers:

  • 2014: 131,441
  • 2015: 142,724
  • 2016: 133,882
  • 2017: 142,197

From that data we can see an increase of 5.5% between 2016 and 2017, with 2017 returning to the same level as 2015.

The range of quarterly figures over the last 3 years has been between 32,082 and 38,071, so that the latest set of data is within that range though closer to the lower rather than the higher end of it.

The average quarterly figure in 2017 though was 33,471, and the latest quarter's figure is slightly above that.

In summary, there is much quarter to quarter variability in the data which prevents any meaningful comparison of one quarter's data, so it would be unwise to reach specific conclusions as the baroness has done, even if the baroness’s maths were correct.

The most that can be said, though it will need to be kept under review as the year develops, is that we start off 2018 with a figure on par with that seen in 2016 rather than 2017

Discount rate issues at Third Reading

We reviewed the progress made at Report Stage in our update found here We noted that certain aspects on the timing of the first review of the rate had been left to yesterday’s Third Reading.

Yesterday, the government accepted a further amendment again tweaking the provisions so as to make early progress with the first review. The result of this is that the commencement date for Part 2 of the Act will no longer be at the discretion of the Lord Chancellor but is brought forward to the very day that the Act is passed, in other words when it gets Royal Assent.

Lord Keen repeated the government’s full commitment to start the first review as soon as possible after Royal Assent and to completing it as soon as practicable. They were satisfied that the 90-day period available between commencement of the Act and the triggering of the first review could be met.

This change supports the view that if the Bill passes into law, the outcome of the first review might be available by the summer of 2019.

The government also made a second concession yesterday, agreeing that subsequent reviews of the rate should be carried out within a maximum of 5 rather than 3 years, a point which Lord Faulks had continued to press. Lord Keen explained that it had been a pragmatic choice between the periods, with the argument quite evenly balanced, but discussions with other peers had led to the conclusion that a 5-year maximum “could help to reduce the effect of the litigation practice of trying to game the system”.

Outstanding issues

These matters therefore remain outstanding:

Lord Keen had indicated that the government will develop a proposal ready to be put before the Commons as to how insurers could issue reports as to how savings created had been passed on. This is awaited. Yesterday he said that an amendment would be brought forward as soon as possible in the Commons, but that it was a complex issue with commercial sensitivity and competition issues.

The government has indicated that it is sympathetic to arguments regarding the effects of the SCT rise on Vulnerable Road Users and will continue to consider whether they should be exempted from the increase.

As to use of PPOs, the government position remains that their use where appropriate should be encouraged. It was reported yesterday that there is agreement in principle for the Civil Justice Council to review the law and practice in this area. The timetable had not yet been agreed but the hope was that the task could start late this year or early 2019, so that it could be completed that summer.

Future prospects

Part 2 of the Bill on the discount rate seems following a number of limited amendments to have broad cross-party support, and indeed there is a view that the reform is needed as quickly as possible. This position is unlikely to change significantly in the Commons. Subject to the link with whiplash reform by both measures being within the same Bill, discount rate reform can be expected to have led to a changed rate, perhaps by summer 2019.

As to whiplash, the government’s response to the Justice Committee’s report on the SCT rise of 17 May is still awaited and may be delivered before the summer recess. It will link into the Commons debates on Part 1 of the Bill.

The fact that Part 1 of the Bill derives from the Conservative Party manifesto for the 2017 General Election featured in various debates in the Lords and will no doubt be returned to in the Commons. Under the heading “Cutting the cost of living” it was said that if elected the government “will reduce insurance costs for ordinary motorists by cracking down on exaggerated and fraudulent whiplash claims”, the detail of which plans were already known from what had been Part 5 of the Prisons and Courts Bill. It might be expected that Tory MPs would generally support the measure as a result.

Labour opposition to Part 1 is likely in the Commons. The challenge for government will be to be able to secure a parliamentary majority despite the lack of a formal majority, and what are understood to be the doubts of some of its MPs. Some concessions have been made already, albeit the main thrust of whiplash reform remains intact. Will further concessions be needed to make the parliamentary mathematics work?

The passage of the Bill through the Lords does however mark a milestone and is at least one step along the path towards securing the reforms which the Bill strives to achieve.


For more information please contact Simon Denyer, Strategic Legal Development Consultant.

Further Reading