Whiplash Injury (Amendment) Regulations 2025

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Whiplash Injury (Amendment) Regulations 2025. Relevant document: 22nd Report from the Secondary Legislation Scrutiny Committee

My Lords, this draft instrument amends the fixed tariff for whiplash compensation, set by the Whiplash Injury Regulations 2021, by applying an inflationary uplift to the tariff values. In doing so, this amendment gives effect to recommendations made by the Lord Chancellor on 21 November 2024, following the completion of her statutory review of the 2021 regulations. By adjusting the whiplash tariff values to account for inflation, the Government will ensure that claimants can continue to receive proportionate compensation until the next review in 2027. These amendments were debated and approved in the other place on 2 April. I also remind the Grand Committee that the Secondary Legislation Scrutiny Committee has drawn this SI to the attention of the House. The whiplash reform programme changed the way claimants are awarded damages for low-value whiplash injuries following from road traffic accidents. The aim of the reforms was to ensure an efficient, proportionate and reliable system for both claimants and defendants involved in road traffic accident-related whiplash claims. At their core, the measures aimed to reduce the number and costs of whiplash injuries and deliver savings to consumers via reduced motor insurance premiums. Elements of the reform programme were delivered through the Civil Liability Act 2018, which introduced several important changes to the civil claims process. Alongside measures that introduced a legal definition of what constitutes a whiplash injury and banned the settling of such claims without medical evidence, the 2018 Act empowers the Lord Chancellor to set a fixed tariff for damages for road traffic accident-related whiplash injuries lasting up to two years. The 2018 Act measures were supported by additional secondary legislative changes to increase the small claims track for road traffic-related personal injury claims from £1,000 to £5,000, and the introduction of a new pre-action protocol for personal injury claims below the small claims limit in road traffic accidents. At the same time, the insurance industry-owned and developed Official Injury Claim portal was launched to assist claimants affected by the reforms. The first whiplash tariff was set by the Whiplash Injury Regulations 2021—which I will refer to as the 2021 regulations—which came into force on 31 May 2021. The 2018 Act requires the Lord Chancellor to review the 2021 regulations, and thereby the whiplash tariff, within three years of its implementation, and within every three years thereafter. In fulfilment of this statutory obligation, the first review of the whiplash tariff was completed on 22 May 2024, and the Lord Chancellor published her report of the statutory review on 21 November 2024. On reviewing the 2021 regulations, the Lord Chancellor concluded that the structure and component parts of the whiplash tariff were effective. However, she recommended that the tariff amounts be uprated to account for CPI inflation between 2021 and 2024, and to incorporate a three-year buffer to account for expected inflation until 2027. She did not consider that any other changes to the 2021 regulations were necessary. In reaching her conclusions and recommendations, the Lord Chancellor took into consideration relevant industry and courts data, as well as information from a Ministry of Justice call for evidence, which ran from 6 February to 2 April 2024. In accordance with the review, this statutory instrument increases the whiplash tariff damages values and, subject to approval by both Houses, the new tariff will apply to all road traffic accident-related personal injury claims in England and Wales from 31 May 2025. I hope noble Lords will find it helpful if I provide some additional explanation of the increase that will be applied to the whiplash tariff. By way of background, I should say that the whiplash tariff operates via a rising scale of fixed compensation payments determined by injury duration, up to a maximum of two years. The payments in the original whiplash tariff set in 2021 range from £240, for whiplash injuries lasting three months or less, to £4,215 for whiplash injuries lasting between 18 and 24 months. There is a separate, slightly higher tariff for cases where any minor psychological injury, such as low-level travel anxiety, is incurred at the same time as the whiplash injury. Claims for whiplash injuries that last longer than two years fall outside of the fixed tariff. When the tariff was first implemented in 2021, the amounts were set to include a three-year “buffer”, which was designed to account for expected inflation according to available forecasts at the time and to ensure that claimants were not undercompensated in the years between the tariff’s implementation and the first statutory review. In reviewing the 2021 regulations, the Lord Chancellor recognised the impact of inflation on the whiplash tariff amounts. Inflation over the first three-year period ran at a higher-than-expected rate and, as most respondents to the 2024 call for evidence noted, the real value of the tariff had fallen. In the light of this, she concluded that the tariff should be uprated by actual inflation between 2021 and 2024 and should again include a buffer to account for expected inflation until the next review in 2027. Therefore, the whiplash tariff will be increased by around 15% for claims arising from road traffic accidents occurring on or after 31 May 2025. As I have already mentioned, this increase has been calculated using the consumer prices index inflationary measure. After careful consideration of the available data and evidence, the Lord Chancellor determined that CPI remains the most appropriate measure for uprating the tariff amounts by inflation. It is also worth noting that the use of CPI is in line with common practice across government, as recommended by the Office for National Statistics. In contrast, she considered that the alternative retail price index measure, if applied, would likely overstate inflation. In accounting for inflation, the Lord Chancellor also decided that the whiplash tariff should continue to be future-proofed by applying a CPI rounding over three years from 2024 to 2027. This approach is consistent with the method used to protect claimants from additional inflationary impacts when the first whiplash tariff was set in 2021. Although this three-year buffer could lead to some overcompensation in the short term, not implementing it would allow the real value of claimants’ damages to decrease and would risk significant under- compensation in the long term. Therefore, this buffer protects access to justice and minimises the risk of claimants being undercompensated in the years leading up to 2027. As noted by the Secondary Legislation Scrutiny Committee, the call for evidence showed opposition to the buffer in its present form. Of the 32 respondents, 29 opposed the use of the three-year buffer, but, crucially, their reasons for doing so were different and, in the opinion of the Lord Chancellor, unconvincing. Some respondents suggested that the buffer would artificially increase the amount of compensation available and potentially undermine cost savings. However, the difference in tariff levels using the buffer is not substantial enough to impact significantly on savings. The tariff amounts are being adjusted only to account for inflation; as such, it is our view that this does not represent a real-terms increase in claim values. Conversely, I am aware that other stakeholders preferred that the whiplash tariff should be either subject to an annual review or index-linked to inflation to ensure annual increases. As the Lord Chancellor made clear in her report, these arguments are not compelling. A three-year review period, as anticipated in the 2018 Act, strikes the right balance between adequately compensating claimants and maintaining a stable system that is as simple to understand and administer as possible. It is worth noting that the recent high inflationary cycle was driven by a unique set of circumstances and is not a regularly occurring event. Therefore, while it is appropriate that the whiplash tariff is regularly reviewed against inflation, three years is the appropriate length of time at which to hold such reviews. Other than uprating the whiplash tariff to account for actual and expected inflation, as I have explained, no other amendments to the 2021 regulations are made by this instrument. In accordance with her statutory obligation, the Lord Chancellor consulted the Lady Chief Justice before making this instrument. The Master of the Rolls, on behalf of the Lady Chief Justice, expressed his endorsement of the proposal to uprate the whiplash tariff. He also noted that the judiciary would not welcome any further derogation from the principle that damages are assessed and awarded by the courts. As noble Lords have seen, in accordance with the powers conferred on the Lord Chancellor by the 2018 Act, this instrument adjusts only the level of damages for whiplash injuries lasting up to two years. I believe that the amendments that this instrument will make to the 2021 regulations represent a balanced, proportionate and practical approach to uprating the whiplash tariff ahead of the next review in 2027. I beg to move.

My Lords, I am grateful to the Minister for his careful and comprehensive introduction to this statutory instrument. Its central point is to update the 2021 level of damages, having regard to inflation. We welcome that update, and I say at the outset that we have no objection to the use of the consumer prices index for the uprating, nor do we suggest that three years is an unacceptable review period. We welcome the buffer for future-proofing, as the Minister described it. That will take us to 2027, which will follow a further review. I am bound to say in passing that I hope the Minister is right that the higher rate of inflation that we experienced recently is a one-off event and not likely to be repeated. His economic forecasting may be better than mine, but I note that it is shared by the Lord Chancellor, who is venturing into unexpected fields —so be it. However, I continue to have the doubts that I expressed in 2018, when what is now the Civil Liability Act was being considered. For my part, I am not convinced of the merits of a tariff for damages for whiplash injuries, particularly at the higher end of the scale for such injuries. Whiplash injuries—even minor ones, and, in particular, those with psychological consequences—cover quite a range. The sums, which approach £5,000 at the higher end of the scale, for the 18 to 24-month duration injuries, represent a considerable sum of money for many claimants, who may feel short-changed by the fact that there is no discretion applied to the award of damages for pain, suffering and loss of amenity in their case. I still suspect that we would be better served by enhanced scope for greater judicial discretion by district judges and, in some cases, circuit judges, assisted by Judicial College guidelines, so that claimants would feel that they had had individual attention, rather than by the rigid application of a tariff. Those were the points that I and my colleagues made in 2018.

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However, we are stuck with the tariff now as a result of the Act. Its introduction was intended to save money, with lower costs for insurers, which were said to be likely to produce lower motor insurance premiums and a saving to the consumer accordingly. We were promised details from the Treasury on both the extent of the savings and the degree to which they had been passed on to consumers in the form of lower premiums, originally at the beginning of last month and then by the end of it. To the best of my knowledge, we have not yet had that information, certainly not in any detail. It would be interesting to hear from the Minister anything about how large the savings have been and how much of that has been represented by savings to consumers in the form of lower insurance premiums. Speaking from an entirely unresearched position, I certainly have not noticed that motor premiums have declined—rather the opposite. When may we expect to see the detail, if the Minister cannot give it now?

My Lords, it is good to follow the noble Lord, Lord Marks, and his committed statement. I thank the Minister for his helpful and thoughtful introduction. I rise on the principle that the Executive should be held to account—in this instance briefly and positively—and to acknowledge that it is traditional to get orders and regulations through in the way we do, week in, week out in your Lordships’ House. The usual channels usually get it right, but so often our regulations and orders affect thousands or millions of people. Perhaps more of them should have been debated more closely, sometimes even in the Chamber. However, having read the declaration in the informative Explanatory Memorandum, who would wish to challenge these regulations? The Minister in another place is a KC, and we have the deputy director for civil justice and law policy at the Ministry of Justice, and the most persuasive and courteous of Ministers in your Lordships’ House—and the instrument is laid by command of His Majesty. I support and welcome the regulations, which offer increased amounts. This and only this differentiates them from the 2021 regulations. The legal framework has not changed. If lower premiums follow, so much the better, but one notes that premiums are imposed by the insurance industry, which does not always deliver on what it infers should be the case. Can the Minister indicate how many whiplash cases entered our courts in, say, 2022 and 2023? That response may come later, rather than here and now, but can he reference in it the numbers for Wales, as well as those for England? Does the department have any rough estimate—for that is all it can be—of the percentage of likely fraudulent and contrived cases that enter our courts?

My Lords, as the Minister outlined, these regulations follow the Government’s statutory review of the Whiplash Injury Regulations 2021. The proposed amendments would increase compensation for whiplash injuries occurring on or after 31 May 2025 from 14% to 15% across all tariff bands. This increase is intended, as we have heard, to reflect inflation since the original tariffs were introduced. It includes a forecasted buffer to cover inflation over the next three years. The whiplash tariff system introduced by the previous Conservative Administration was aimed at reducing the number and cost of minor injury claims and lowering motor insurance premiums. It introduced fixed compensation levels for whiplash injuries sustained in road traffic accidents and moved away from case-by-case judicial assessment. The structure of the tariff is not altered by this instrument; what changes is the monetary value assigned to each tariff band. The uplift of 15% is designed to reflect inflation since 2021; it includes a buffer to account for expected inflation until the next statutory review, scheduled for 2027. In principle, we support this change. It is reasonable that compensation should keep pace with the cost of living. We also welcome the Ministry of Justice’s stated intention to work with MedCo to improve the quality and consistency of medical reporting. Reliable, clear medical evidence is essential to the fair operation of this system, but we have some questions and concerns. This instrument introduces a significant and untested change in how compensation levels are set. Rather than updating tariff figures in legislation, as had been the practice, this uplift includes a forward-looking inflation buffer based on economic forecasts. As the Secondary Legislation Scrutiny Committee pointed out, this is without precedent: no other statutory compensation scheme relies on forecasted inflation in this way. Forecasts, as we know, are often subject to revision and uncertainty. There is a real risk that this buffer may underestimate actual inflation, leaving claimants undercompensated over time. I would therefore be grateful if the Minister could provide clarity on this point. What assurances can be given that the inflation buffer will be accurate and what mechanism will be in place to ensure that claimants are not short-changed if those forecasts prove incorrect? In addition, we are concerned about how the Government have represented feedback from their public consultation. The Secondary Legislation Scrutiny Committee made it clear that over 90% of respondents opposed the buffer model. That is not a mixed view, even if the reasons given differed; it is, in fact, an overwhelmingly critical view. We also note continuing concerns raised by third parties. The Motor Accident Solicitors Society, for example, said that the tariff system and the official injury claims portal have damaged access to justice, particularly for those unfamiliar with legal processes or without representation. It also argues that the original tariff amounts were too low—significantly lower than those typically awarded under Judicial College guidelines for comparable injuries outside a motor vehicle context. While this instrument focuses narrowly on adjusting tariff levels, it is part of a much wider macro-reform framework that remains highly contentious. In conclusion, we support the uplift proposal in this instrument; ensuring that compensation keeps pace with inflation is necessary and fair. However, this policy cannot be left to run on autopilot. It must be subject to scrutiny, accountability and, where necessary, reform. We will support this instrument today, but we will continue to monitor closely whether the whiplash reforms are delivering on their promises of fairness, accessibility and justice.

My Lords, I thank all noble Lords for their support for the measures in this statutory instrument. On the points which noble Lords have made, the noble Lord, Lord Marks, said he supported it, but he repeated his reservations, which he originally articulated in 2018. Just for the record, there is some judicial discretion. All tariff awards can be increased by up to 20% by the court in exceptional circumstances, so I take the noble Lord’s point but there is some judicial discretion in the level of the awards. He asked how much money has been saved. I cannot give him an answer in a figure. However, HM Treasury laid a report on this in Parliament on 27 March 2025. The report details a summary of the information provided by insurers, which have concluded that policyholders benefited from a reduction in insurance costs through paying lower premiums over the period 2020 to 2023. As it is factual reporting of the information from insurers to the Treasury via the Financial Conduct Authority, the report does not represent the Government’s findings or conclusions. Separate to this report, the Ministry of Justice will undertake a post-implementation review of the whiplash reforms later this year. I hope that last point goes some way to reassuring the noble Lord, Lord Sandhurst. We have no intention of running on autopilot, and all government policies are kept under review. It is certainly the intention in this case as well. My noble friend Lord Jones was characteristically very generous in his assessment of the Government’s approach overall, so I thank him for that. Regarding the volume of claims in England and Wales, in 2022, there were 1,827, and in 2023 there were 9,335. I am afraid I do not have a breakdown of how much of that is in Wales alone. If I am able to get those figures, I will let him know. I also do not have a percentage for the likely fraudulent claims. Those numbers are not monitored as such because there are different types of fraud. Nevertheless, if there is any data that I can include in my letter to my noble friend, I will do so. On the Explanatory Memorandum, the calls for evidence and the different views that the noble Lord, Lord Sandhurst, pointed to, more than 108,000 unrepresented claims have been created in the OIC portal since it since it was implemented. The proportion has increased from 9% in the first year to 12.7% as of 31 March 2025, so there is an increase in unrepresented claims, which we think is a good thing. In comparison, only 74 applications were made to the previous system by unrepresented claimants in 2021, so we think that the system is as a whole working well. Nevertheless, I do not want to give any hint of complacency. I undertake that we will continue to review the system and see that it continues to develop, as we hope it will. Motion agreed.