Restriction on increase in small claims limit for relevant personal injuries

Civil Liability Bill [Lords] – in a Public Bill Committee at 3:00 pm on 11th September 2018.

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‘(1) In this section, the “PI small claims limit” refers to the maximum value (currently £1,000) of a claim for damages for personal injuries for which, in accordance with Civil Procedure Rules, the small claims track is the normal track.

(2) Civil Procedure Rules may not increase the PI small claims limit in respect of relevant injury claims to an amount above £1,000 for the first time unless—

(a) the Lord Chancellor is satisfied, and has certified in writing, that on the day the rules are to come into force, the value of £1,000 on 1 April 1999 adjusted for inflation, computed by reference to CPI, would be at least £1,500, and

(b) the rules increase the PI small claims limit to no more than £1,500.

(3) Civil Procedure Rules may not increase the PI small claims limit in respect of relevant injury claims on any subsequent occasion unless—

(a) the Lord Chancellor is satisfied, and has certified in writing, that on the day the rules are to come into force, the value of £1,000 on 1 April 1999 adjusted for inflation, computed by reference to CPI, would be at least £500 greater than on the day on which the rules effecting the previous increase were made, and

(b) the rules increase the PI small claims limit by no more than £500.

(4) In this section—

“CPI” means the all items consumer prices index published by the Statistics Board;

“relevant injury” means an injury which is an injury of soft tissue in the neck, back, or shoulder and which is caused as described in paragraphs (b) and (c) of section 1(4) (negligence while using a motor vehicle on a road, etc.);

“relevant injury claim” means a claim for personal injury that consists only of, or so much of a claim for personal injury as consists of, a claim for damages for pain, suffering and loss of amenity caused by a relevant injury, and which is not a claim for an injury in respect of which a tariff amount is for the time being prescribed under section 2.’

This new clause would limit increases in the whiplash small claims limit to inflation (CPI), and allow the limit to increase only when inflation had increased the existing rate by £500 since it was last set.—(Gloria De Piero.)

Brought up, and read the First time.

Photo of Gloria De Piero Gloria De Piero Shadow Minister (Justice)

I beg to move, That the clause be read a Second time.

New clause 1 deals with one of the most important effects of this package of measures. It says that the whiplash small claims limit can increase only in line with inflation based on the consumer prices index. It specifies that the limit can increase only when inflation has increased the existing rate by £500 since it was last set.

The Government have been disingenuous in trying to sneak through these changes to the small claims track limit by using delegated legislation, which restricts the proper scrutiny that such significant changes deserve. With the new clause, we ask the Government to do the right thing and to put it on the face of the Bill, enshrining the terms that a plethora of experts agree on: the use of CPI over the retail prices index when it, and using 1999 as a start date for any recalculation of the limit for a small claims track.

The White Book that I showed the Minister shows that there was a 20% increase in the small claims limit in 1999 when special damages were removed from the calculation of the limit. Lord Justice Jackson, in his “Review of Civil Litigation Costs: Final Report” said that the only reason to increase the personal injury small claims limit would be to

“reflect inflation since 1999. As series of small rises in the limit would be confusing for practitioners and judges alike.”

He made it crystal clear that the limit should remain at £1,000 until inflation warrants an increase to £1,500.

The Government admitted to me this morning that there is a difference of opinion in their own ranks about which of these years should be the benchmark. We say again that they must listen to the Lord Justice Jackson and the Justice Committee chaired by one of their own, the hon. Member for Bromley and Chislehurst (Robert Neill), who agrees with him. We should state on the face of the Bill that 1999 must be the start date for any recalculation of the small claims limit, not 1991. The Government accepted all the key recommendations in the Jackson report save the recommendation that there should be an increase in the small claims limit to £1,500 only when inflation justifies it.

To turn to another aspect—the Government have admitted that it has caused a dispute among Ministers—I want to make the case, as I have done before, that CPI and not the RPI is the correct measure to apply for inflation. It seems that the Government use RPI when it suits and use CPI when it suits. CPI is what we use for the pensions and benefits paid to injured workers while they are pursuing justice for that injury through the claim. Even the Chief Secretary to the Treasury agrees with me. When asked at the House of Lords Economic Affairs Committee whether she agreed that RPI was an inadequate measure, she said:

“We certainly agree that it is not the preferred measure of inflation. CPI is a much better measure of inflation… we agree that it is not the preferred method, and we are seeking to move away from RPI”.

Why are we moving towards it here? The Government say they wish to apply RPI to the small claims limit because RPI is applied to updating damages—the same damages that they are taking an axe to with the new tariff.

Perhaps some in the Conservative party are persuaded, like me, that CPI is the best option, because of yet another expert who has lined up to say so. On 30 January 2018, the Governor of the Bank of England, Mark Carney, said:

“At the moment, we have RPI, which most would acknowledge has known errors. We have CPI, which is what virtually everyone recognises and is in our remit.”

It is perfectly clear that we need to enshrine CPI as the key measure on the face of the Bill. The amount of £1,000 from 1999 would now be worth either £1,440 if CPI is applied, or £1,620 if RPI is applied. Lord Jackson said that it should not go up to £2,000, as the Government suggests, until inflation warrants it.

I trust the Minister will not be as dismissive as Lord Keen was when he said in his evidence to the Justice Committee:

“We do not feel that there is a material difference between setting it at £1,700 today and seeing it drop behind inflation next year, and setting it at £2,000 without the need to review it again for a number of years.”

Try telling the nurse, the caretaker or the bus driver that there is no material difference between £1,700 and £2,000. For those on real wages, that has a real impact.

Photo of Rory Stewart Rory Stewart The Minister of State, Ministry of Justice

Relatively rapidly, I would say that we have five types of disagreement with the amendments. Broadly speaking, those are political, philosophical, economic, financial and constitutional. The political disagreement is that the amendment would go to the heart of the Bill. The entire concept of the Bill is to try to effect a change in the current practice and process around whiplash claims by moving the claim limit to £5,000. That is part of the entire package—the tariffs and small claims limits are related to that.

Philosophically and fundamentally, we are not arguing that the shift to £5,000 is fundamentally a question of inflation. There are many other reasons why the small claims limit has been moved in the past. Indeed, in relation to some types of claim, as you will be aware Sir Henry, as one of our learned friends, some of the claims have been moved to £10,000, which goes a long way beyond inflation.

Largely, the driver of whether or not something is on a small claims track is to do with the nature of the claim, not the nature of inflation. However, if we worked on the narrow question of inflation, the Judicial College guidelines are currently on RPI as opposed to CPI. I respect the arguments that the hon. Member for Ashfield made but that is not the fundamental argument the Government are making.

The amendment would have curious financial implications. It would create a strange syncopated rhythm, whereby movements in CPI are not necessarily reflected in the triennial review except in £500 increments which, over time, mathematically will lead to peculiar results.

The fundamental reason we oppose the amendment is the final argument I mentioned, which is constitutional. This is business for the Civil Procedure Rule Committee, as it always has been, and it is not suitable to put in the Bill. On the basis of those political, philosophical, economic, financial and constitutional arguments, I respectfully request that the amendments be withdrawn.

Photo of Robert Courts Robert Courts Conservative, Witney

I want to make a few brief comments. I entirely understand the force of the comments made. As someone who started his practice in the small claims court before progressing to other courts, I have seen how they work. I have a couple of pertinent points—the Minister alluded to the first. For some very complicated cases, particularly commercial ones, there are already limits of £10,000. As other Members who have practised will realise, the fact that someone is in a small claims court and not represented does not mean that they are completely unassisted. The district judges who hear those claims are solicitors or barristers and are extremely competent and experienced in their own right. Therefore, there is every reason to believe that they will be able to hear those claims, which will have justice as their case is heard.

Photo of Jo Stevens Jo Stevens Labour, Cardiff Central

I take the hon. Gentleman’s point but judges are not there to represent in that case, whereas a solicitor would be there to represent. Does he agree that he is comparing apples with pears?

Photo of Robert Courts Robert Courts Conservative, Witney

The hon. Lady is absolutely right. I know she has a long history of practising, as do I. That is, of course, absolutely correct, but it does not mean that they are simply left to sink or swim on their own. I have seen countless cases in my practice where a district judge, although not representing someone, clearly points out arguments that may wish to be made. District judges frequently bend over backwards to ensure that the correct points are made by claimants. Although that is true and I accept the force of the hon. Lady’s point, I suggest that the overall thrust of enabling justice, but at a reasonable and proportionate cost, is being addressed.

Photo of Ellie Reeves Ellie Reeves Labour, Lewisham West and Penge

Is it not the fact that district judges increasingly have to assist litigants in person when people cannot get legal representation, and that that is putting a huge burden on the courts and district judges? That is not their role but they are increasingly having to do that, which puts an extra burden on them and increases court costs.

Photo of Robert Courts Robert Courts Conservative, Witney

The hon. Lady makes an excellent point. Clearly, cases where judges have to assist claimants are likely to take longer. However, this comes down to ensuring that claimants in cases at the lower end of the scale—I do not for a moment downplay the seriousness of people having been hurt in this way—can be heard at proportionate cost, and that the court’s resources, particularly for the payment of costs, go to cases at the higher end. Ultimately, the costs burden is what denies access to justice.

Photo of Ruth George Ruth George Labour, High Peak 3:15 pm, 11th September 2018

Is it not the case that the district judges set out in their response to the Government consultation back in 2015 that courts would become clogged with litigants in person if this change were made? It simply will not be possible for district judges to support those litigants given the number of claims. Have Government Members read that powerful submission and listened to the arguments of those judges?

Photo of Robert Courts Robert Courts Conservative, Witney

Although I understand the arguments made by district judges, I have faith in their ability to deal with cases efficiently, because I have seen that happen so often. In an ideal world, I would of course prefer everyone to be legally represented. That would be more efficient and would mean that people had someone to argue for them. However, it is not practical within the costs regime under which we live.

Photo of Ruth George Ruth George Labour, High Peak

I spent more than 20 years working for the Union of Shop, Distributive and Allied Workers. In many claims involving road traffic accidents and workplace injuries, claimants were referred by their union to a solicitor who gave them the support they needed to bring a case. As the hon. Gentleman set out, lawyers are experienced and often give claimants the advice they need about whether they can take a claim forward or whether that is not worth doing, and therefore protect district judges and the court system. Projections show that there will be an extra 36,000 cases a year in the small claims court. With the best will in the world, district judges, who are already struggling, will not be able to cope with that additional workload. That is what the district judges themselves said in response to the consultation. [Interruption.] They said it whether the Minister chooses to shake his head or not.

Many younger claimants and those who do not have experience of dealing with the legal system will find it much harder to bring a case themselves. This is not just a question of compensation up to the level we are discussing for minor cases. We have debated the figure for general damages but, as the Minister said, there are exceptional circumstances payments and compensation for loss of wages on the back of that, so an individual’s total claim may be much higher than the limit on small claims. I note that even someone with a claim for a whiplash injury that lasted up to two years will fall under the £5,000 small claims limit. Even someone who suffered an injury that prevented them from working for two years will not be able to take their case to the general court, but will have to represent themselves in the small claims court. The associated loss of wages may have a huge impact on their life and wellbeing.

I hope the Minister looks again at this measure, which will severely disadvantage people who are not able to take claims through themselves. People often need a lawyer to support them. That would make the system more efficient and effective, and that is what we argue for.

Question put, That the clause be read a Second time.

The Committee divided:

Ayes 8, Noes 9.

Question accordingly negatived.

New Clause 3