Road Accidents: No-Fault Scheme (Hansard, 27 October 1988)

§ The Lord Chancellor
My Lords, the report of the Review Body on Civil Justice was published on 7th June. Members of the public were invited to comment on the report, and the recommendations put forward by the review body are still being considered in the light of comments received.

§ Lord Allen of Abbeydale
My Lords, I should like to thank the noble and learned Lord for that Answer, which at any rate means that we are not going backwards. As the civil justice review was precluded from considering the substantive law of negligence, may I ask the noble and learned Lord, who seems to be in a reforming mood, whether there will be an opportunity to consider the Pearson recommendation for a no-fault system for road traffic accidents broadly on the lines of the industrial injuries scheme, a recommendation which has never been adequately debated in the House over all these years and on which there is now a wealth of experience in other parts of the world?

§ The Lord Chancellor
My Lords, I am not absolutely certain whether the noble Lord said "mood" or "mode". The proposals of the Review Body on Civil Justice have in general a high priority. I know that the Royal Commission under Lord Pearson, of which the noble Lord, Lord Allen of Abbeydale, was a distinguished member, made proposals in this connection. I hope that all the proposals of the civil justice review will be dealt with perhaps more quickly than that proposal of the 1702 Pearson Commission. This is only one of the matters currently being considered. I know that a wealth of experience has now been gained in some other countries. I am not sure that all of it is favourable to the proposal but I can assure the noble Lord that the matter is still under consideration.

§ Viscount Hanworth
My Lords, would the noble and learned Lord accept that, whatever the difficulties, the present law of negligence is just a lottery and that many people who might claim under it are quite unable to risk the costs of doing so in the High Court? If one can only realise that there is a problem, one is half way to solving it.

§ The Lord Chancellor
My Lords, I do not accept that the present law of negligence creates a lottery. There are well established principles in that law, developed over the years and still being developed. As regards the cost of litigation generally, and the cost of this type of litigation in particular, the proposals of the civil justice review endeavour to tackle the matter. There is the proposal that quite a high proportion of such cases would he heard not in the High Court but in the county court; there is also the proposal that cases involving up to £1,000 in value might be heard by the small claims system.

§ Lord Elwyn-Jones
My Lords, will the noble and learned Lord give his view on the recommendation of the Review Body on Civil Justice that he should consider in consultation with the insurance industry the feasibility of a no-fault scheme restricted to less serious road accidents? Is it not the case that injuries caused by road accidents run into hundreds of thousands each year? Yet only about a quarter of those accidents result successfully in a claim in tort. Is it not high time that this matter was dealt with urgently?

§ The Lord Chancellor
My Lords, the Review Body on Civil Justice proposed that further consideration should be given to the feasibility of a no-fault scheme for less serious road accidents. Notwithstanding the position, in the light of such inquiries as it was able to make, it did not feel able to make this proposal but thought it right that further consideration should be given to it. The civil justice review has been put out to consultation. We have received a small number of responses to the recommendation from representatives of the insurance industry. Respondents have expressed some reservations about the scope of any no-fault scheme but have indicated that they would be prepared to participate in discussions. We may be able to take this matter forward in discussion, but, as the noble Lord, Lord Allen of Abbeydale, mentioned, one or two other matters are at present under consideration. It is a question of trying to order one's priorities.

§ Lord Airedale
My Lords, does the noble and learned Lord not agree that no-claim personal injury ought to be a fair claim upon the taxpayer generally under the welfare state? It would not cost each taxpayer very many pennies per annum. Surely, the taxpayer would be happy to pay as an extension of the welfare state.

§ The Lord Chancellor
My Lords, your Lordships are aware that there are already benefits payable under what the noble Lord referred to as the welfare state, apart altogether from any question of fault or negligence. I am not sure precisely how he arrives at the figure of a few pence per taxpayer; I doubt whether it is as simple as that.
Some road accident compensation figures are very large and the issue is really whether you pay rather small amounts to many people, or large amounts to people who have been injured as a result of established or proven fault. It is not self-evident as to which is the best system. It may well be that discussions will yield some consensus on the matter. However, at the moment it looks as though the indications are that there will be further discussions before any final view is taken.

§ Lord Hailsham of Saint Marylebone
My Lords, am I right in thinking that the Pearson Commission, which reported some time ago, costed a no-fault scheme on roughly the New Zealand model at something like £24 million per year, based on the prices prevailing at that time? Is it not a fact that most of the no-fault schemes—apart from that in Massachusetts—offer compensation at rather a lower level than is commonly offered in the Commonwealth courts of either England or Scotland?

§ The Lord Chancellor
My Lords, my noble and learned friend is perfectly right. As I understand it, the schemes for no-fault compensation yield—as I sought to say earlier—rather smaller amounts than are awarded generally in the courts.
As regards the ultimate cost of such a scheme, it is quite difficult to reach a firm estimate because the estimate must depend on the level of compensation which is decided upon. That is one of the factors of critical importance when deciding whether to go ahead. However, a few pence per taxpayer is possibly something of an underestimate.

§ Lord Allen of Abbeydale
My Lords, is the noble and learned Lord aware that the recommendation of the Pearson Commission was not to follow the New Zealand precedent; it was more related to the industrial injuries scheme here which covers large awards by the courts in serious cases? As I recall, the estimate was that the cost could be met by, say, two pence on a gallon of petrol, prices of petrol varying so much that one would hardly notice the difference.

§ The Lord Chancellor
My Lords, I understood the Pearson Commission to have made a recommendation broadly on the lines described by the noble Lord. As he was a member of the commission, I feel certain that he describes the proposal accurately. Two pence on the price of a gallon of petrol might seem a good deal to those who drive a lot. However, the critical matter is the level at which compensation is fixed. No estimate can deal with that until the level has been determined.

§ Lord Mishcon
My Lords, does the noble and learned Lord agree that acceptance of such a no-fault 1704 scheme might well obviate the necessity for his having to consider a reform by which solicitors would not expect to receive a fee if they lost a case and only receive a fee if they won it—a scheme which is anathema to some members of a very learned profession?

§ The Lord Chancellor
My Lords, I hear a comment suggesting that I might be able to excuse myself from answering that question on the basis that it is a little wide of the original Question. However, notwithstanding that, I am sure that the noble Lord will appreciate that this is a matter which we intend to open up for discussion. The view of the profession to which he refers will have to be taken into account. But it may not be the only view available on the subject.