Whiplash Reforms Incentivised by ‘Disingenuous’ Figures?

In this article, we report on claims brought by a representative of the Union of Shop, Distributive and Allied Workers (USDAW), at the Justice Select Committee hearing in January, that the Government and the insurance industry ‘are being “disingenuous” to insist that the small claims limit has not been increased since 1991’[i].

This resistance is in relation to the Government’s Civil Liability Bill, which includes reform on whiplash injuries, such as the increase in small claims limit to £5,000 for soft-tissue whiplash claims.

USDAW has queried, in written evidence to Bob Neill MP, whether the increase to £5,000 is justified on the basis of ‘damages inflation’, as the insurance industry argues. The union submitted that:

‘In fact in 1999 the small claims limit did increase in real terms when special damages were removed from the calculation as to whether the value of a claim was less than £1,000 and therefore fell within the small claims court. This 1999 change represented a 20%+ increase in the small claims limit [even though] the value of the claim had not changed.’

Using Lord Justice Jackson’s cost review, which treated ‘1999 and not 1991 as the starting point for any inflationary rises’, USDAW calculates that consumer price index (CPI) figures show that a 1999 claim today would be inflated to £1,440, while retail price index (RPI) figures show that a 1999 claim today would be inflated to £1,620. 

Moreover, USDAW cite the Jackson LJ recommendations, which supports stability in the small claims limit ‘until such time as inflation warrants an increase to £1,500’.

Since the CPI applies to pensions and benefits paid to injured workers, USDAW perceives CPI to be the ‘logical indexation’ for the small claims limit. If Jackson’s recommendations are followed, they argue that the small claims limit rise to would be premature.

Mark Carney, governor of the Bank of England, has stated that the RPI inflation index has ‘no merit’ and should be scrapped…’

Shirley Denyer, representative of the Forum of Insurance Lawyers (FOIL), said at the January hearing that ‘between 2012 and 2017, damages rose by 20%, while RPI was 5.5%.’

USDAW cited the Judicial College Guidelines, in attempting to disprove the evidence adduced by Ms Denyer, submitting that ‘damages inflation “in fact corresponds very closely with the RPI figure over the same period”’.

Further, the union sought to place a lack of trust on RPI reliance, the preferred index rate of FOIL and the Judicial College, by quoting the governor of the Bank of England, Mark Carney, who recently stated that ‘the RPI inflation index has ‘no merit’ and should be scrapped…’ 

FOIL, in its additional evidence, also argued that in updating the guidelines, ‘the Judicial College seeks to reflect not only inflation but also the decisions of the courts on quantum. This can lead to increases in the recommended awards significantly in excess of inflation’, meaning that neither index is necessarily an accurate indicator for change.

 

[i] Neil Rose, Government “disingenuous” in use of PI small claims limit figures, argues union (27 February 2018 Legal Futures) https://www.legalfutures.co.uk/latest-news/government-disingenuous-use-pi-small-claims-limit-figures-argues-union> accessed 1 March 2018.