1Background to this inquiry
The inquiry of the previous Justice Committee
1.On 17 March 2017, our predecessor Committee launched what was intended to be a short inquiry into Part 5 of the Prisons and Courts Bill on road traffic accident (RTA) related “whiplash” claims and on related plans to raise the small claims limit for personal injury (PI) by secondary legislation. The decision to launch this inquiry was informed by that Committee’s oral evidence session on 7 February 2017, which heard from the Association of Personal Injury Lawyers and the Association of British Insurers and also received written evidence from those two organisations. Submissions to the inquiry were invited on the following questions:
- 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.
The inquiry received 68 submissions that were published on the Committee’s website, but owing to the dissolution of Parliament on 3 May 2017, no oral evidence could be taken and no report could be produced. Likewise, the Prisons and Courts Bill fell on Parliament’s dissolution.
2.On 21 June 2017, the Queen’s Speech announced the incoming Government’s intention to introduce a Civil Liability Bill containing provisions similar to those in Part 5 of the Prisons and Courts Bill. When giving evidence to us on the work of his Department on 25 October 2017, the then Secretary of State for Justice, the Rt Hon David Lidington MP, confirmed that the Civil Liability Bill would appear during the current session of Parliament1 and informed us that the Government still intended to raise the small claims limit to £5,000 for RTA PI claims and to £2,000 for other types of PI claim.2
Our inquiry
3.Mindful of Mr Lidington’s statement of the Government’s intentions, we decided to launch an inquiry into the decision to raise the small claims limit for personal injury; we considered that an inquiry focusing on this issue would assist Parliament’s scrutiny of a proposal that might otherwise receive less attention than it merited, owing to its introduction via secondary legislation effecting a change to the Civil Procedure Rules.
4.When launching the inquiry on 23 October 2017, we explained that we would take account of published written evidence that had been submitted to our predecessor Committee’s unfinished inquiry into personal injury: whiplash and the small claims limit, and of the oral evidence on this topic that had been taken on 7 February 2017 before that inquiry had been launched. We invited further written submissions that raised new points on the following topics:
- The impact of raising the small claims limit to £5,000 for RTA-related whiplash claims [and other RTA personal injury 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 potential impact of this policy on the role of claims management companies and on the operation of the market for ‘before the event’ legal expenses insurance.
5.In the course of our inquiry we received 34 submissions that we agreed to publish, and held one oral evidence session which took place on 16 January 2018. Witnesses at this session were Jason Tripp, Operations Director, Coplus; Steve Mitchell, Deputy Head of Legal Services, Union of Shop, Distributive and Allied Workers (Usdaw); Nigel Teasdale, former President, and Shirley Denyer, Technical Director, Forum of Insurance Lawyers; Mrs Justice Simler, and His Honour Judge Nigel Bird; the Rt Hon Lord Keen of Elie QC, Ministry of Justice Spokesperson in the House of Lords, Ministry of Justice; and David Parkin, Deputy Director for Civil Justice and Law, Ministry of Justice. We are grateful to all those who provided oral and written evidence to our inquiry, as well as to those who made submissions to the inquiry of our predecessor Committee.
6.We would particularly like to record our appreciation to the two senior members of the judiciary who agreed to give evidence representing the views of the Civil Executive Team; this team supports the work of the Master of the Rolls as head of the civil judiciary and provides him with judicial oversight over the current reform programme.
7.Since we launched our inquiry, the Civil Liability Bill was introduced in the House of Lords, where it had its second reading on 24 April 2018, and completed its Committee stage on 15 April 2018. The Government has not indicated when it intends to introduce the secondary legislation required to raise the small claims limit, although it has confirmed that it aims to introduce the package of reforms by April 2019.3
8.In the following Chapter of our report, we consider the legal basis for personal injury claims; reforms already implemented to the claims process; the most recent proposals for reform; the Government and industry response to insurance fraud; and the impact of personal injury claims on insurance premiums. In Chapter 3 we then examine the small claims limit for personal injury, and consider whether and how this limit should be inflation-proofed. In Chapter 4, our report turns to the potential impact of raising the small claims limit—on RTA personal injury claims, including claims by vulnerable road users; and on non-RTA PI claims, including employer liability and public liability claims. The possible impact on the judiciary and the courts is also considered. This is followed, in Chapter 5, by an examination of the Ministry of Justice’s proposals for implementing the small claims reforms. Chapter 6 considers the impact on organisations assisting claimants: before the event insurance providers, claims management companies, and solicitors’ firms. We also look at the potential impact on cold calling and paid McKenzie friends. We set out some concluding remarks in Chapter 7.
Published: 17 May 2018