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Motor Insurance: Court Judgments

Volume 701: debated on Wednesday 22 September 2021

Before we begin, I encourage Members to wear masks when they are not speaking. This is in line with current Government and House of Commons Commission guidance. Please give each other and members of staff space when seated and when entering and leaving the room. As a result of votes earlier, the debate will go on until 5.45 pm, notwithstanding any votes that we may have during this debate.

I beg to move,

That this House has considered the effect of recent court judgments on the cost of motor insurance.

It is a pleasure to serve under your chairmanship today, Ms Bardell. I would also like to warmly welcome the Under-Secretary of State for Transport, my hon. Friend the Member for Copeland (Trudy Harrison), to her role. I am sure that she is going to be a great success.

Today, I want to make the case for the removal of the EU rules contained in the European Court of Justice judgment in the case of Damijan Vnuk v. Zava rovalnica Triglav d.d. I would like to thank my constituent Robert Rams and the Motor Insurers’ Bureau for alerting me to this problem and providing some very helpful briefing information.

Mr Vnuk was the victim of an accident involving a reversing tractor inside a barn in a farmyard in Slovenia. He took his compensation claim to the European Court of Justice. In the United Kingdom, an incident of this nature would be covered by our compulsory employer’s liability insurance regime, but not all EU member states have such a scheme to protect employees in the workplace. In its 2014 judgment, the ECJ therefore shoehorned Mr Vnuk’s compensation claim into the EU’s motor insurance law. In doing so, it extended the scope of compulsory motor insurance to accidents on private land involving a very broad range of vehicles—essentially, anything with wheels and a motor that does not run on rails, no matter where it is used or for what purpose. This is manifestly different from the compulsory motor insurance requirement in the Road Traffic Act 1988, which applies to vehicles that are permitted to be used on our streets and roads.

The UK’s approach to compulsory motor insurance has been consistent since the 1930s. It is proportionate and it works. However, Vnuk had direct effect in EU law, and that means that it forms part of the retained EU law imported on to our domestic statute book via the European Union (Withdrawal) Act 2018. As a result of cases in the UK courts, such as Lewis v. Tindale, the UK’s compensation fund for people injured by uninsured drivers is now obliged to pay out in the circumstances covered by the Vnuk judgment.

The UK compensation fund is run by the Motor Insurers’ Bureau, and every driver who takes to our roads funds the scheme through their motor insurance premiums. The combined effect of the Vnuk and Lewis cases and the 2018 Act is that the scheme is now having to bear very significant costs for which it was never designed, and motorists are left picking up the bill. Let us be clear about what we are talking about here: accidents on private land, in private gardens, in farmer’s fields, on golf courses, inside supermarkets, in banks or in offices—the list is long. These are places where what has happened, or even the fact that anything occurred at all, will often be difficult to establish with any clarity, and that gives rise to worrying opportunities for fraud. The extension of compulsory insurance to motor sport is a further side effect of the case.

My right hon. Friend is making an excellent case, and unfortunately this Chamber cannot legislate. However, is she aware that salvation is perhaps on its way from our hon. Friend the Member for Wellingborough (Mr Bone)? He has a Bill before the House, the Motor Vehicle (Compulsory Insurance) Bill, the Second Reading of which is on 22 October, which should deal with the very point that she is making.

I am aware of the Bill introduced by my hon. Friend the Member for Wellingborough (Mr Bone). I will come to it in a moment and I hope it has the potential to solve the problem. The trouble is, can we get it through Parliament?

The extension to motorsports is problematic for many reasons. For many people who enjoy participating in motorsports the costs of the new requirement—even assuming they can get the compulsory cover, which must be doubtful in some cases—will be very high. I understand that motorsports organisations and many participants in those sports have raised serious concerns about the judgment and asked for it to be removed from UK law. Although of course we can have a legitimate debate on the potential extension of compulsory insurance and compensation schemes to new scenarios, there can be no justification for leaving drivers to shoulder the whole cost by artificially forcing these new liabilities into our existing motor insurance scheme.

The sums at stake are very large. The Government Actuary’s Department has estimated that total annual costs could rise to more than £2 billion, which would mean roughly an extra £50 on the insurance premium of every motorist in the United Kingdom. That will hit hardworking people who may be struggling to make ends meet.

Of course, £50 is an average, so a disproportionate increase in premiums is likely to fall on groups such as young drivers, who already pay more because they constitute a higher risk during their first years on the road. Businesses with fleets of vehicles will be hit hard at a time when they may be struggling already to recover from the effects of lockdown, and motorists in parts of the north of England, where in some cases premiums are higher, could also end up paying more, which would work against the Government’s laudable levelling-up aspirations.

I thank my right hon. Friend for securing this important debate; I share her aim that legislation be introduced to reverse this situation. She will be aware that legislation was passed in Parliament to reduce insurance premiums by around £50 on average, I believe, from whiplash compensation. Would it not be most unfortunate if that £50 saving, which everyone warmly embraces, was loaded back on as a result of this judgment?

It would indeed be most unfortunate, and I am grateful to all the hon. Members who are here to make such points on the need to resolve this issue because of the potential pressure on household budgets.

In a column in The Daily Telegraph, the Prime Minister —in the years before he became Prime Minister, of course—described Vnuk as the “perfect example” of the over-regulation that had

“sapped the competitiveness of the EU and burdened it with low growth and high unemployment.”

He continued:

“There is no need, no call, no demand, no appetite, no reason, no justification, not even the shred of the beginnings of a case—in the United Kingdom—for this kind of pointless and expensive burden on millions of people.”

Against that background. it would have been reasonable to expect the Government to remove the effects of Vnuk from UK law once the transition period ended. There is nothing to prevent them. Under the terms of the European Union (Withdrawal Agreement) Act 2020, a simple piece of primary legislation is needed to make the change. In a February press release, the Transport Secretary said that his Department intended to do just that, adding that he was delighted to announce that we no longer needed to implement Vnuk.

Sadly, since then, not a great deal appears to have happened. Nothing on this was mentioned in the Queen’s Speech in May. In late June, the Transport Secretary did issue a written ministerial statement, which is welcome. In it, he said that delivering the commitment announced in February was a priority and that the Government would follow the passage of the private Member’s Bill tabled by my hon. Friend the Member for Wellingborough “with interest”.

As we have heard, my hon. Friend’s Motor Vehicles (Compulsory Insurance) Bill would deliver the legislative change we need. I very much welcome the Bill and urge Hon Members to support it when it returns to the House on 22 October. I gather that the Department for Transport has advised on the drafting of the Bill, so hopefully, as the Prime Minister might say, it is oven ready.

I hope this debate will give the Bill some momentum and reassure hon. Members who follow Friday business with care that the issues it seeks to address have received proper scrutiny in this House. However, as everyone here today will understand, a presentation Bill of this nature almost never gets the parliamentary time it needs to reach the statute book. It takes an extraordinary amount of good fortune and a very fair wind for such a Bill to make any progress at all. In the Sessions from 2010 to 2019, 470 presentation Bills were tabled and only six became the law of the land. I am afraid a Government Bill is needed, along with adequate parliamentary time set aside for it to be debated and passed, perhaps as part of a wider regulatory reform Bill going through Parliament. As yet, there is no sign of that happening.

Meanwhile, even as this rather sorry state of affairs in Westminster persists, the irony is that Brussels has been working on a package of changes to EU law that would remove the most extreme effects of the Vnuk case. The rapporteur of the European Parliament described the case as an example of “absurd over-regulation”. The changes have been approved by the Council of Ministers and apparently passed by the European Parliament, so their entry into effect would appear to be fairly imminent. When that happens, we could face the bizarre situation where the UK is forced, by its own law, to continue to apply that absurd over-regulation because its effect was frozen into our legal system as retained EU law at the end of the transition period. In the meantime, the EU has taken action to mitigate the problem, relieving its own motorists of the unfair cost burdens the case imposes.

I do not think that that is what taking back control should look like. Now we have left the European Union and regained the power to make our own laws in this country, we need to use our new freedoms wisely to build a regulatory system that is more proportionate, more agile, more adaptable and better suited to our domestic circumstances here in the UK.

Earlier this year, I was asked by the Prime Minister to be part of his taskforce on innovation, growth and regulatory reform. The report we published contains a series of ideas for how the Government can create a modern regulatory framework that is based on core principles of domestic common law and that facilitates both innovation and competition. There are huge economic benefits to be realised if we do that, particularly in the high-growth, high-tech sectors of the future. Last week, it was encouraging to hear the Paymaster General outline the Government’s plans to do that in response to the TIGRR report, and the Minister responsible for EU relations, Lord Frost, is to be commended for the proposed regulatory reforms in the paper he circulated on the same day. However, one of the key barriers he faces is the fact that the European Union (Withdrawal) Act 2018 means that retained EU law can, in the main, only be amended or repealed using primary legislation. The Vnuk controversy shows that we urgently need a faster track way to remove or update EU laws that no longer work for us, most of which arrived on the statute book via secondary legislation in the first place.

My message today to the Minister and to the Government is that we need to get on with tackling the Vnuk problem. I urge them to take action now to put things right and remove the case from UK law. That will mean bringing forward their own Bill in Government time so that we can make repealing Vnuk a demonstrable benefit of leaving the European Union and regaining the historic right to make our own laws in our own Parliament once again.

I will seek to call Opposition spokespeople by 5.23 pm and the SNP and Labour spokespeople will have five minutes each.

I am extremely glad to follow my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), for whom I have the highest regard as a lawyer, a member of the Conservative party that delivered Brexit and—if she does not mind my using the expression—a spartan, because she was one of the people who brought about the situation that we are happily in at the moment, whereby we have the ability to repeal legislation and to deal with some of the problems that she mentioned. In particular, I would mention the fact that the primary legislation in question would be authorised by the European Union (Withdrawal Agreement) Act 2020, section 38(2)(b) of which enables us to override any EU law through an expressed and direct provision in our own primary legislation and therefore to deal with the problem as a piece of primary legislation.

I listened very carefully to what my right hon. Friend said about the private Member’s Bill introduced by my hon. Friend the Member for Wellingborough (Mr Bone), which will receive its Second Reading on 22 October 2021. I merely venture to suggest that there are some precedents for private Members’ Bills to be given some additional oomph by the Government. If they put their mind to it and have the commitment to do it, which I certainly believe should be the case in this instance, it can be done. In fact, I did just that in relation to the International Development (Gender Equality) Act 2014, because the Government gave me full support for a Bill that was languishing at around No. 17 in the private Members’ ballot. The Act did some very substantial things, including imposing on our development aid projects the commitment and guarantee that we would make it a legal, judicially reviewable duty to enforce the protection of women and children in relation to international development aid. If the Government can do it for that, I would suggest that, given the scale of the problem, which my right hon. Friend the Member for Chipping Barnet so expertly described, there is very good reason for them to give support to my hon. Friend the Member for Wellingborough and to ensure that we get the results that are needed in the national interest, as identified by my right hon. Friend the Member for Chipping Barnet.

I agree with what my hon. Friend has to say. Does he agree that the quickest way to deal with this issue is for the Bill to go through on 22 October? He used the word “oomph”. It can go through quite simply, if the Government do not object to it. My understanding is that the Government are not going to object to it, but perhaps we could have some confirmation of that later.

I may say to my right hon. Friend, who is a very good friend of mine, that that is a very welcome piece of news, because this is exactly what happened in the case of the International Development (Gender Equality) Act. What happened was that the Clerks in the House were sitting there with bated breath to hear whether anyone was going to object, because all that has to be done on such an occasion is simply for any Member to object. It does not have to be a Whip; it can be any Member of the House. On that occasion, we got down to about No. 17 or 18 on the list—wherever I was. There was complete silence, and the Bill went through. That is what can happen, and I therefore strongly agree with what my right hon. Friends the Members for East Yorkshire (Sir Greg Knight) and for Chipping Barnet have said. I think this is a potential opportunity.

I was very interested in what my right hon. Friend the Member for Chipping Barnet said regarding the question of what the EU was up to at that stage. I am speaking as the Chair of the European Scrutiny Committee, and we shall keep an eye of these matters. We also propose reports, bring forward suggestions and inform the House accordingly in Hansard and so forth. On 30 June 2021, as my right hon. Friend said, the European Commission announced a decision to waive the requirement for UK drivers to show a motor insurance green card when entering the European Union. The decision needs to be fully implemented through publication in the official journal, and there is a waiting period of 20 days, so in the short term green cards are still needed.

The point I want to make is that on 29 June, the Transport Secretary published a ministerial statement, along the lines that my right hon. Friend mentioned, on the motor insurance directive—removal of Vnuk, in other words. It states the Government’s commitment, which the Minister announced on the Floor of the House:

“To remove the effects of the…ruling in the Vnuk case from GB law.”—[Official Report, 29 June 2021; Vol. 698, c. 8WS.]

Putting two and two together, if the Minister has said that the Government intend to remove the effects of it, and we have also the opportunity through the private Member’s Bill, and we know it is precedented for the Government to take the action I have described, I see the potential for a fair wind for this. That will be a tribute, not only to my right hon. Friend the Member for Chipping Barnet, who has spoken today, but also my hon. Friend the Member for Wellingborough.

I would like to touch on the principles that underpin the issue of EU retained law. I will outline it by saying that the issue of EU retained law in this context arises partly in relation to the Road Traffic Act 1988, which has not yet been amended to comply with the European Court of Justice decision. Legislative change is necessary, as my right hon. Friend has said, to bring clarity on the matter, given that pre-exit European Court of Justice case law is now part of UK domestic law, as retained EU case law.

Given that, what is going to happen next? I will give a description of the extent, nature and depth of what my right hon. Friend for Chipping Barnet has rightly put forward, in one instance, with huge financial consequences, with the EU going into reverse, and the absurdity of our being in a position where the EU deals with it in its legislation and we are stuck with it in ours. I am now going to address the question of where I think the Government’s navigation should go.

In June 2016, just before the referendum, I was responsible for bringing forward a Bill that set out the basis on which the legislation after we won the referendum—as I was confident we would do—could be dealt with. There is a huge body of legislation, some of which I will refer to in general in a few minutes. Given the scale of the problem, the best thing to do was to deem all EU law as part of UK law, so that at least we grabbed hold of it as a whole, then we could deal with it on a piecemeal basis.

My Bill was one and a half pages long. The Bill we ended up confronting under the former Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May), went far further and more regressively—if that is not a contradiction in terms—than was necessary, by incorporating the whole concept of EU retained law and the principles of EU law. With it came the assertion in section 6 of the European Union (Withdrawal Agreement) Act 2020 that the courts, if they wish to do so, given the circumstances of a case, would be enabled to quash any Acts of Parliament, if inconsistent with the judgments that they came to in interpreting the issues before them.

That is all very well, but those of us who are acquainted with the manner in which EU law was implemented under section 2 of the European Communities Act 1972, know very well that the Factortame case was the example above all others where the whole of the fishing industry was thrown into chaos, with Spanish fishermen invading our waters. The issue in question turned on the Merchant Shipping Act 1988. I remember saying to the Attorney General at the time that I thought it was a very unwise business for them to do introduce that Act, unless they put at the beginning, “notwithstanding the European Communities Act 1972.” Had they done that, then the judgment in Factortame, which struck down the Merchant Shipping Act 1988, could not have taken place because the courts would have been under an obligation to comply with the provisions of the Act, which would have said notwithstanding the Act of Parliament in question, the UK could legislate on its own account.

I referred to section 38(2) of the European Union (Withdrawal Agreement) Act 2020, which specifically contains the words “notwithstanding” and “direct effect”. It is notwithstanding the direct effect of any provisions that are on the statute book as part of EU retained law, and it enables us to override the European Union (Withdrawal Agreement) Act and, some may care to note, the Northern Ireland protocol. So, the law is in place.

As my right hon. Friend the Member for Chipping Barnet indicated, it can be done by primary legislation. I am just adding a bit of flavour as to how it came about and how it can be done. I listened to my right hon. Friend the Member for East Yorkshire and what he said in the context of the Bill proposed by my hon. Friend the Member for Wellingborough.

I turn to the question of the absurd situation identified by my right hon. Friend the Member for Chipping Barnet and what the Prime Minister said about it some time ago, using very strong language. If it was an absurd position before he was Prime Minister, it is doubly so now, and that is why we need to tackle it. The intention behind the grandfathering, as it is called, in EU retained law under the European Union (Withdrawal) Act 2018—

Order. The right hon. Gentleman is making a very flavourful, detailed and interesting speech, but I gently remind him that we are trying to stick as best we can to the specific topic of the effect of the court judgment on the cost of motor insurance. He is giving us a very interesting tour of his knowledge of EU retained law, but I gently remind him of the topic.

I am very glad that you mention that, Ms Bardell. I am not giving a tour of my knowledge; I am giving a tour of the answer to the question that is before the Chamber at the moment. It is the only way it can be dealt with. The remedy is there, as my right hon. Friend the Member for Chipping Barnet has said.

I will pursue this point for a short few minutes, because it is really important to get this on record. The objective of the grandfathering of EU retained law was to maximise continuity and stability following our withdrawal, without an express commitment to keep this anomalous category of law on the statute books indefinitely. There are ambiguities in all this and they have to be resolved as well. As I have indicated, the most dangerous situation would be if the concept of EU supremacy continued to apply, notwithstanding what I have said.

We have one directive here. I can assure you, Ms Bardell, that the House of Commons Library briefing paper No. 08136, published in November 2017, identified up to 20,000 EU laws that fall into this category. Forgive me if I make the point again, but it is important that people understand the scale of the problem and the fact that it can easily be remedied. About 900 directives are in force, almost all of which apply to the UK, which are not generally retained, and there are 12,484 regulations, around 7,000 of which were incorporated in the UK as

“the amended legislation is considered as one with the legislation amending it”.

There are 7,000 EU decisions, which are converted through the European Union (Withdrawal Agreement) Act and apply to the UK. That also includes European court judgments and case law before exit date, converted to UK law as retained EU case law.

I am now Chairman of the European Scrutiny Committee, having been on the Committee for 38 years, with my hon. Friend the Member for South Thanet (Craig Mackinlay). I can assure the Chamber that there is a very easy way to achieve this, but it is a complicated political manoeuvre, which is now under consideration by the Government. These laws were passed under qualified majority vote, as was the ports directive, for example, which I believe is now on the execution block for the same reason. It was done by qualified majority voting behind closed doors, and much of the legislation that emerged out of the Single European Act is stuff that we would never have implemented ourselves.

In a nutshell, this is a serious matter. It raises questions of sovereignty and the role of the courts, and it raises practical questions of the scale that my right hon. Friend the Member for Chipping Barnet has referred to. One incident she mentioned would cost the British taxpayer £1 billion. That is the scale of the necessity to get this right. I conclude by congratulating my hon. Friend the Minister. She and I have got to know one another very well over the past few years and I am delighted that she has got the job.

I thank the hon. Gentleman. We will now move to the Front-Bench speeches. I call the SNP spokesperson, Alan Brown.

It is a pleasure to serve under your chairmanship, Ms Bardell. I must say, I thought that the hon. Member for Stone (Sir William Cash) was taking the guidance that Front-Bench speeches would start at 5.23 pm. It was a challenge for him to last that long, and it was certainly a good effort.

It has been a wide-ranging debate. Clearly, the main subject was the Vnuk ruling, but we have covered the failure of the private Member’s Bill process and how EU retained law is dealt with. I commend the hon. Member for Stone on his private Member’s Bill in terms of the gender equality and protection for women and children via international aid, which sounds very noble. I think that is very worthy, but I do not think we can compare it to having to try and accelerate and give oomph to the private Member’s Bill from the hon. Member for Wellingborough (Mr Bone) that relates to this.

I should congratulate the right hon. Member for Chipping Barnet (Theresa Villiers) on introducing this debate. If ever I was in doubt that it might be Brexit-related, I only had to look at her hon. Friends to the left and right to know that it was going to be Brexit-related and about taking back control. The irony is that it looks like we are taking back control to allow our retained legislation to match what the EU is going to be doing anyway, so it is a funny kind of taking back control. Certainly, we have covered the fact that EU retained law has to be addressed with primary legislation. I do agree that in some circumstances that may need to be looked at in how these things are dealt with.

I am not convinced of the merits of Government time to introduce this in primary legislation. If action is taken, we need to look at how we do that. If we can save drivers an average of £50 per premium, that is clearly welcome, but I can think of a raft of primary legislation that I have been waiting for the Government to introduce in the energy sphere, and they keep saying that they do not have time. It would be interesting if they magically found time to deal with changing the Vnuk ruling.

On insurance costs, the right hon. Member for Chipping Barnet correctly said that the more expensive premiums are, the more difficult it is for younger drivers and those with less money to afford the premiums. It can be regressive. I would like to remind hon. Members that most of the Conservative Members here voted for insurance premiums to go up from a 6% levy in 2015 to a 9.5% levy and then up to a 12% levy in 2017. That had the same effect on young drivers and those who can least afford insurance premiums. It is a regressive way of taking more money off those who are paying insurance, and there is a risk that there will be more uninsured drivers on the road, which has consequences for premiums further down the line for everybody. This is a slight tangent, but on people being able to afford premiums, the £20 a week cut to universal credit that the Conservatives seem to support puts at risk people’s ability to afford to drive. Unfortunately, it might incentivise some not to insure their car, and we do not want to see that.

I have been very brief. I welcome the comments of the right hon. Member for Chipping Barnet about the Motor Insurers’ Bureau, which points out that much of what will happen in terms of private land agricultural vehicles will be covered by compulsory employer’s liability. If we can make savings, good.

I ask the Minister to address what we suggested about motor sports, because we do not want any unintended consequences. If there is not compulsory insurance for motor sports, what does that mean? Is there a risk that people will not have a route to compensation? Are they left exposed? I just want to make sure that if the complete Vnuk ruling is taken away, there are no unintended consequences that leave other people exposed and potentially out of pocket through no fault of their own if they are trying to chase damages due to what they have suffered. I look forward to hearing what the Minister says, and I welcome her to her place.

It is a pleasure to see you in the Chair, Ms Bardell, and to welcome the new Minister to her place. I assume this is her first appearance in a debate as Minister. It is a rather niche topic with which to start, but I look forward to doing battle with her on many future occasions.

I congratulate the right hon. Member for Chipping Barnet (Theresa Villiers) on securing the debate. I thought she did a very good job of explaining the background to the Vnuk case and the consequences it will have. As she said, we have operated under the scheme set out in the Road Traffic Act for many decades. It is proportionate and it works. That is not to say that we should not revisit it from time to time to make sure that it does the job. As she says, at the moment the cost of uninsured drivers is being met by the Motor Insurers’ Bureau. In my former life as a lawyer I was involved in quite a few personal injury cases, so I am very aware that the Motor Insurers’ Bureau has an important role to play in providing compensation when people have been involved in accidents involving uninsured drivers. I take the points that the right hon. Lady makes.

I will not do battle with the hon. Member for Stone (Sir William Cash) over his views on Brexit. I have been there before, and most of us are well aware of where he is coming from. It is important, as we seek to find a way through our independence from the European Union and review some of the legislation, that we stick to basic principles and promises made during the debates on the European Union (Withdrawal) Act 2018 about not watering down workers’ rights and essential protections. Any measures that venture into that territory ought to be subject to proper scrutiny, and we must ensure that the balance is right.

On the hon. Gentleman’s comments about private Members’ Bills, it is great that none of the usual suspects objected to his Bill, which was No. 16 on the list, but on many occasions they have objected to very good Bills that should at least have been allowed to go into Committee. It should not depend on who a Member’s mates are and whether they behave themselves. I hope that at some point we reform Friday sittings, so that individual Members cannot sabotage good pieces of legislation in that way.

On the issue before us, the Transport Secretary has stated that steps to overturn the Vnuk decision will be introduced at the earliest possible opportunity. I am not sure whether that means that the Government will allow time for the Bill tabled by the hon. Member for Wellingborough (Mr Bone), or whether they intend to do it themselves. I share the concern voiced by the hon. Member for Kilmarnock and Loudoun (Alan Brown), who asked whether to take such steps would be the best use of Government time, as there are so many other pressures on that time. I hope that we can hear more from the Minister on that.

More broadly, in the little time I have left, I simply say that I hope we can hear about other ways in which we can try to reduce insurance claims, and therefore the overall cost of motor insurance. I have been told by issuers that the vast majority of claims have nothing to do with accidents, but result from the condition of the roads. We have an £11 billion backlog for pothole repairs, which at current rates will take more than a decade to clear. Total spending on road maintenance is down by 22% this year because of cuts in Government funding. We also need to improve road safety. I know that new statistics are coming out on 30 September, but advance reports suggest that the upward trend in the number of cyclists killed or seriously injured has continued, which is very worrying.

Finally, as the hon. Member for Kilmarnock and Loudoun said, it is one thing to talk about whether people could afford the extra £50 a year on motor insurance premiums that would result from the Vnuk judgment, but we are in a situation where people are being hit by the end of furlough, the £20 cut to universal credit and the national insurance hike. We need to ensure that people who need to drive can afford their motor insurance and can afford to drive safely. We need to look at the whole picture in the round, and I look forward to hearing from the Minister on that.

It is a privilege to serve under your chairmanship for the first time, Ms Bardell, or indeed under any Chair in Westminster Hall as a Minister. I am grateful to my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) for securing this debate on the effects of recent court judgments on motor insurance. I welcome the opportunity to provide an update and set out the Government’s position on this matter.

We have always been clear since the 2014 European Court of Justice’s ruling in the Vnuk case that we do not agree with it. That decision directed the unnecessary extension of the provisions requiring motor insurance to private land, as well as to a much greater range of vehicles. The excessive liabilities that it would place on the insurance industry and the potential increases to motor insurance are simply unacceptable. To be clear, if we had implemented Vnuk, which we are not going to do, these liabilities and potential increases are huge; they are not trivial. Government analysis suggests that Vnuk could have cost industry some £2 billion per year, and that would most likely have been passed on to consumers in increased insurance premiums.

Focusing on motorcar policyholders, that could have resulted in an increase in individual insurance premiums of around £50 for 25 million consumers. As my hon. Friend the Member for Bexhill and Battle (Huw Merriman) referenced, if Vnuk had been implemented, it would have had a catastrophic effect on the motorsport industry, and indeed all motorists. Vehicles would likely have been required to purchase motor insurance to compensate injury caused to other drivers, stewards and spectators. Motorsport in the UK is safe and highly regulated. Employer’s liability and public liability already provide a high level of protection, so adding a motor insurance requirement would have brought little benefit at a very high cost—some £458 million per year—had Vnuk been implemented.

Stakeholders have consistently informed us that it would have been prohibitively expensive for most of the sector, effectively making the motorsports industry unviable. The sector turns over almost £3 billion annually, generating full-time employment for around 38,000 people and part-time work for a further 100,000. That is why we announced that we would remove the effects of Vnuk from GB law in February, and delivering on that includes removing the associated financial liability imposed on the Motor Insurers’ Bureau via the Courts’ decisions in the Lewis case.

This commitment is a priority for the Government. Its removal is part of a new and prosperous future for the UK outside of the EU—a future where we can deregulate and set our own rules and regulations. At this point, I must commend the tenacity of my hon. Friend the Member for Stone (Sir William Cash) in challenging and successfully and competently setting out the direction he recommends that we take. His detailed knowledge provides important context on matters of EU legislation and is paralleled only by his ability to recall details and dates, which the debate has certainly benefited from.

That is why we will continue to explore bringing forward the necessary legislation as soon as parliamentary time allows, as it has not proved possible to provide a slot for a Government vehicle to disapply the effects of the Vnuk and Lewis judgments during this parliamentary Session. I hope that hon. Members will appreciate that responding to the pandemic was and remains of the utmost importance, and that we are still in a challenging time.

It is very kind of the Minister to give way, and I welcome her to her new post. As outlined by my hon. Friend the Member for Stone (Sir William Cash), there are European Court of Justice judgments and instances where that law was applied to this country while we were in the EU that we did not agree with, and we were probably outvoted under qualified majority voting at the time. Does her Department have officials looking at other instances, such as the Vnuk case, that can be expunged from our legal system at the soonest opportunity, because we never wanted them in the first place?

I thank my hon. Friend for his intervention, and it would only be appropriate to write to him with further details. It is also appropriate to put on record my thanks to my right hon. Friend the Member for Chipping Barnet for her work on the taskforce that generally assesses the potential for dealing with some of those unnecessary regulations.

Ultimately, the Government face many competing priorities in deciding what legislation to bring forward in the limited parliamentary time available. My right hon. Friend the Member for East Yorkshire (Sir Greg Knight) asked whether the Government would support the Bill—we are certainly supportive. I hope that is music to his ears. The legislation proposed in the presentation Bill represents the best opportunity to address the issue at the earliest possible opportunity. Rest assured that the Government recognise the importance of the matter. We will be following the Motor Vehicles (Compulsory Insurance) Bill with interest, as it would deliver the desired effects of removing Vnuk from GB law.

The Government would like to see the presentation Bill being brought forward by my hon. Friend the Member for Wellingborough (Mr Bone) succeed. The Government have worked hard to seize the opportunity to legislate quickly, as we recognise its importance. However, I am sure that all Members will appreciate that the usual pressures on parliamentary time have been made even greater by the amount of emergency legislation passed in the previous Session. The presentation Bill offers the best and earliest opportunity to make that change quickly and deliver the positive outcomes of removing Vnuk, which many Members have referenced today.

I was pleased to hear support from the spokespersons from the SNP and Labour, the hon. Members for Kilmarnock and Loudoun (Alan Brown) and for Bristol East (Kerry McCarthy). I very much look forward to their support when the presentation Bill comes forward. Indeed, I would invite the whole House to lend their support.

I said that the Government need to make sure that no loopholes are created—that no categories fall between the cracks, so that insurance is not compulsory; motorsports was mentioned. If the Government are letting the Bill brought by the hon. Member for Wellingborough (Mr Bone) pass through, will they do some sort of risk or impact assessment?

My officials have been examining the detail. If the hon. Gentleman would write to me with the specifics, I will be very happy to write back with a more detailed response.

The presentation Bill will comprehensively remove the effects of Vnuk and Lewis from GB law. The Government regard the Bill as uncontroversial, hence its provisions being appropriate for a presentation Bill. That is possible because the UK has a very strong consumer protection arrangement in place, via existing insurance products such as employer’s liability and public liability. Removing the effect of Vnuk will save the industry and consumers money without having any substantive downsides.

The Bill will have many positive effects beyond the headline objectives of removing the effects of Vnuk and saving motorists money. First, it will ensure that the law concerning third-party motor insurance in Great Britain is consistent. Currently, the Road Traffic Act 1988 does not require motor insurance for use of vehicles on private land, as its focus is on the road and other public places. It extends its scope to a sensible range of vehicles, as defined in the Act. The retained EU case law that would be removed by the presentation Bill contradicts that, by extending mandatory third-party motor insurance requirements to private land and to a potentially much greater range of vehicles. The law currently points in two different directions, and the Bill is a good opportunity to bring clarity to the law.

Secondly, it will head off potentially enormous enforcement complications. Had we implemented Vnuk, the police would potentially have been required to monitor newly in-scope vehicles never intended to go anywhere other than someone’s garden. The difficulty in gaining access to sites of collisions on private land may have led to the need for additional police powers and a practical effect of less enforcement of uninsured vehicles and of encouraging crime.

Thirdly, implementing Vnuk would have meant that a huge range of newly in-scope vehicles would suddenly have been required to be registered on the DVLA database, with licence plates required. It would have been preposterous to have to stick on a licence plate and register a ride-on lawnmower that never left the back garden.

While we are on the subject of uninsured vehicles, when can we expect to see regulations on e-scooters? There are so many of them—300,000 privately owned scooters are used on our streets, as well as the legitimate pilot schemes. When will the Government accept that the pilots have done their job and come forward with some regulations?

I can speak with some experience on this issue, because my constituency has been a trial area. We are assessing the various trials and will be able to respond to the hon. Lady’s question in due course.

We understand the importance of the Bill for many Members, and we will watch its passage with keen interest. I was pleased to hear the hon. Member for Bristol East mention the support for cycling. I am delighted to say that during the pandemic we saw a 46% increase in cyclists. That has had a positive effect on my Department’s active travel aspirations.

If the Bill fails—I encourage all Members to ensure that does not happen—the Government will continue to explore bringing forward the necessary legislation as soon as parliamentary time allows.

I again thank my right hon. Friend the Member for Chipping Barnet for raising this topic of debate. Our commitment to remove Vnuk from GB law and to end the liabilities that impact on the insurance industry remains a priority for us.

I am grateful to the Minister for her thoughtful and comprehensive response. I am also grateful to everyone who has taken part in today’s debate and for the support that has been demonstrated for making this change to our law, reversing the unintended consequences of the Vnuk judgment. To respond to some of the points made by the Minister, this is a problem that is already happening. Because of the principle of direct effect, Vnuk-type claims are already coming in and in some instances are already being paid, so there is an urgency to this. It is not just a theoretical possibility: it is having an impact already, and in due course the costs could be very considerable, as the Minister said.

I also welcome the contribution made by my hon. Friend the Member for Stone (Sir William Cash) regarding the complexities of EU law. I reiterate that we need to look afresh at how we deal with the body of EU law, because if we have to bring forward primary legislation every time we need to change, amend or update it, that will make for a very crowded parliamentary timetable. We need to see whether we can start using secondary legislation in this context, as is being contemplated by Lord Frost. After all, the vast majority of this law arrived on our statute book as a result of secondary legislation, so I hope the Government will take away the fact that Vnuk is an example of a problem that will recur many times in future unless we make some changes to the European Union (Withdrawal) Act.

I had probably better not, because I am only supposed to be summing up. I hope that today’s debate has given some momentum to the Bill tabled by my hon. Friend the Member for Wellingborough (Mr Bone), which I encourage colleagues to support. Sadly, it only takes one Member of the House of Commons to object to that Bill for it to fall, but we have heard some sensible scrutiny of it today, which I hope will reassure some of those who follow these matters on Fridays with great care.

We all recognise that the pressure on the Government’s legislative programme is intense, and that that pressure has been made even more acute by the pandemic. However, I welcome the Minister’s assurance that the Government are supportive of the Bill tabled by my hon. Friend the Member for Wellingborough, and that if it fails, they will look to legislate as soon as they have the opportunity. I urge them to take this issue seriously and to ensure that we remove Vnuk from the statute book as soon as is practicable, so that we save people costs on their motor insurance premiums and give a bit of a helping hand to families across the country who may be finding it difficult to make ends meet and pay the bills. It is unnecessary to impose this cost on them, and it is time that we legislated to remove that cost from them.

Question put and agreed to.


That this House has considered the effect of recent court judgments on the cost of motor insurance.

Sitting adjourned.