Review of PI reforms announced as MoJ defies Treasury

The government will carry out a full-scale review of personal injury reforms – defying HM Treasury’s positive outlook on how successful the changes have been.

In a surprise intervention announced in parliament, justice minister Sir Nic Dakin told MPs it was ‘right and proper’ to undertake a post-implementation review of the Civil Liability Act. The work will begin later this year.

Such a review had appeared unlikely after the Treasury gave a glowing – if short – assessment of the reforms last month. This evaluation was required in law by 1 April and amounted to a 10-page document with three tables of figures provided by insurers.

In a single sentence summary, the Treasury said the information provided by insurers showed that motorists were paying less for motor insurance than if the act had not been passed.

But in laying the review before parliament, Dakin said: ‘Although it is a factual reporting of the information from insurers provided to HMT through the Financial Conduct Authority, it does not represent the government’s view.’

The Civil Liability Act introduced a tariff of compensation levels for injuries lasting up to two years. These amounts were generally lower than had previously been paid for the same injuries. The reforms also included increasing the small claims track from £1,000 to £5,000 – effectively meaning lawyers could no longer recover costs from defendants – and introducing a new pre-action protocol for RTA claims under £5,000.

The government has already confirmed that the whiplash tariff will be increased by around 15% for RTA claims occurring on or after 31 May.

This increase will last until 2027 and includes a ‘buffer’, Dakin said, to protect access to justice and minimise the risk of claimants being under-compensated.

The minister’s brief speech also hinted at discontent among the senior judiciary at the decision around damages levels being taken by politicians rather than judges.

Dakin said the lord chancellor had consulted with the lady chief justice before making this statutory instrument.

The master of the rolls, acting on behalf of the lady chief justice, endorsed the proposal to uprate the whiplash tariff but also noted that the judiciary ‘would not welcome any further derogation from the principle that damages are assessed and awarded by the courts’.

Meanwhile, the National Audit Office has announced it will conduct a review this autumn of the cost of resolving clinical negligence claims. The investigation will look at the scale of changes to the value of long-term liabilities for claims and associated in-year payments, what is behind those changes and how they could be expected to change in the future.

Total payments for claims continues to increase, with in-year costs amounting to £2.8bn in 2023-24 (up 6.8% on 2022-23).