Will Djanogly debunk the myth of a compensation culture?

J Mulligan presents the evidence against there being a compensation culture, and argues that attempts to fix this nonexistent problem will harm those worst off.

By Jonny Mulligan of the Sound off for Justice campaign

Today we can watch the justice minister Jonathan Djanogly face questions from the Transport Select Committee on the cost of motor insurance in the UK. This is a great opportunity for him to clear up the ‘myth of the compensation culture’ in which politicians tell us the UK suffers – a myth that Lord Young of Grantham has already stated categorically does not exist.

The question today is simple. Will minister Djanogly continue to support the idea of a compensation culture? If he does it means he rejects in full all the findings of Common Sense, Common Safety, a report endorsed in full by David Cameron, and one which is the governments blue print for cutting ‘red tape’ in business.

Or will Djanolgy agree with Lord Young and the fact that there is no ‘compensation culture’, that it is merely the invention of the media, and that it is promoted by those companies set to benefit from the changes in the Jackson Reforms?

AXA, the ABI and Jack Straw MP will also be giving evidence on the reduction of motor insurance. The industry has long argued that being part of the ‘compensation culture’ that drives premiums up. This claim is made by front bench MPs and by the industry even though it clearly contradicts the findings of the Better Regulation Task Force.

The evidence of the last six years indicates this is simply not true.

In October 2010, in his report “Common Sense, Common Safety”, Lord Young of Graffham concluded:

The problem of the compensation culture prevalent in society today is… one of perception rather than reality.”

In appendix A to the report Lord Young confirmed that amongst the many stakeholders who had responded to his call for evidence:

“There was a general agreement that the rise of a compensation culture is largely a mythperpetrated by the national press.”

Lord Young has already pointed out the absurdity of many myths that abound – from toothpicks being unavailable in restaurants to pancake racers having to walk in wet weather.

Papers today show the level of pressure that they have been putting on the Ministry of Justice and the minister to adopt their amendments. This push by the industry must be seen in a wider context at a time when their revenues are suffering.

Ken Oliphant, head up the Institute for European Tort Law of the Austrian Academy of Sciences, told the Guardian:

“Insurers around the world are trying to put pressure on governments to save on liability costs. You have to understand that legal aid was cut and no win no fee arrangements were meant to replace them, to allow people access to justice.

“If you remove that right then you will not allow ordinary people to have access to justice. If they have to pay for legal costs out of damages it may not be worth going to court.”

If their lobbying campaign on Djanogly is successful and if he adopts the Jackson reforms and effectively get rid of ‘no win no fee’ legislation, the industry promises that this will allow them to bring down the charges to the consumer in lower premiums. Of course this would be welcomed but hard to judge in advance.

This part of the legislation is very complicated but the impact on normal individuals in society is significant. In the short term the changes the Jackson reforms bring will result in significant profits for the insurance firms. Normal citizens will be unable to afford to take their cases so the industry will not pay out on as many claims.

This is the legislation that enabled the Dowler family to take their case. This is the legislation that enables victims of clinical negligence, fraud and asbestos who cannot afford high legal fees to take their cases. This is the legislation that allows accident victims to rehabilitate their lives and become paralympians. So the Jackson reforms if adopted will have a serious impact on many people from all different walks of life.

Papers obtained under a freedom of information request reveal recorded discussions between insurers, the NHS and government officials working under Jonathan Djanogly, the Guardian has today reported, showing that the justice minister met leading insurance companies on 19th January.

During meetings with the likes of Aviva and Axa, the justice minister asked their advice on how best to draft rebuttals to critisims of government proposals that might come up due to the legal aid reforms, which is seen asoffering them a chance to help shape policy and an “opportunity to try to influence those who will be controlling this consultation process”.

Andy Slaughter, the shadow justice minister, gave the papers to The Guardian and said that the public “will be concerned that the information shows the consultation process was skewed to the interests of the insurance lobby.”

Based on this and the recent knowledge that Djanogly failed to reveal his controversial stakes in the insurance industry, the cabinet secretary, Gus O’Donnell, is now considering whether or not to launch an investigation into allegations of a conflict of interest between the minister and the insurance industry.

Today presents a great opportunity for Djanogly to explain his understanding of the Jackson reforms and who they will benefit. Are these reforms for the benefit of industry or access to justice for the normal citizen?

See also:

Tory MP: People opposed to legal aid cuts are “irresponsible and unhelpful”Jonny Mulligan, October 5th 2011

The government must explain the alternatives to Conditional Fee ArrangementsJonny Mulligan, September 23rd 2011

Compensation changes will leave Paralympic heroes without vital supportJonny Mulligan, September 9th 2011

NHS report urges government to stop legal aid cutsJonny Mulligan, July 12th 2011

Outrage at government plans to fast track legal aid legislationJonny Mulligan, June 24th 2011

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by becoming a Left Foot Forward Supporter today.