Motor Vehicles (Compulsory Insurance) Bill 3.30pm The Chair Happy
new year to you all. I have a few quick preliminary announcements.
Members are expected to wear face coverings when they are not
speaking and to maintain social distancing as far as possible. I
remind everybody to take lateral flow tests on every day that they
come to the estate, either before or on arrival. Please switch
electronic devices to silent. Hansard colleagues would be very
grateful if...Request free trial
Motor Vehicles
(Compulsory Insurance) Bill
3.30pm
The Chair
Happy new year to you all. I have a few quick preliminary
announcements. Members are expected to wear face coverings when
they are not speaking and to maintain social distancing as far as
possible. I remind everybody to take lateral flow tests on every
day that they come to the estate, either before or on arrival.
Please switch electronic devices to silent. Hansard colleagues
would be very grateful if Members emailed their speaking notes to
hansardnotes@parliament.uk.
My selection and grouping for today’s meeting is available online
and in the room. No amendments were tabled. We will have a single
debate covering both clauses.
Clause 1
Retained EU law relating to compulsory insurance for motor
vehicles
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss clause 2 stand
part.
It is a pleasure to serve under your chairmanship, Ms Ali, for
the first time, I think. The Minister is here at such short
notice, and I am grateful to her and to the Government for that.
I am also grateful to the Opposition Members present, because
without Opposition support, the Bill could not have moved
forward.
The Motor Vehicles (Compulsory Insurance) Bill is a small but
important piece of legislation. It had its First Reading on 21
June 2021. Second Reading was moved on 22 October, but
unfortunately it was objected to on that date. It was moved again
on 29 October, when it was agreed without objection. Although
there was no debate on Second Reading in the House of Commons
Chamber, the issue was fully considered in Westminster Hall on 22
September in a debate entitled, “Motor Insurance: Court
Judgments”. That debate was expertly led by my right hon. Friend
the Member for Chipping Barnet.
That is very kind.
Mr Bone
That debate may be found in Hansard at column 172WH. I had
intended to attend and speak in that debate, but unfortunately I
was unable to do so because I had covid.
The purpose of the Bill is to remove the requirement for
compulsory motor insurance for vehicles used exclusively on
private land and for a wide range of vehicles that are not
constructed for road use. As the Committee is no doubt aware, the
law of the land is that motor vehicles must be insured for use on
roads and other public land. That common-sense interpretation has
been in place for a long time, and certainly since the Road
Traffic Act 1988 established it in law.
On 4 September 2014, in its ruling on the case of Vnuk, the Court
of Justice of the European Union extended a requirement for
compulsory third-party motor insurance beyond the requirements of
the law of Great Britain per the 1988 Act. That interpretation
was never intended by Parliament, but if the status quo
continues, the Vnuk interpretation of the European directive will
be in force in our country. The Committee may ask why that is.
When we left the European Union, all European directives became
what is known as “retained law”. The Vnuk interpretation will put
ordinary people in breach of the law for not having motor
insurance for vehicles used exclusively on private land. It would
also extend to the ridiculous situation of compulsory insurance
for ride-on lawnmowers.
Is it not the case that without the Bill, everyone will end up
paying higher insurance premiums, which is not something that we
want to see? It could also put the future of motor sport at
risk.
Mr Bone
My right hon. Friend is absolutely right about increased costs,
and I will deal with that point later in my remarks. He is also
correct about the threat to motor sports.
The Bill would end the Vnuk decision’s application in retained EU
law and related retained case law. I believe that I am correct in
saying that, if passed, the Bill will be the first Act of
Parliament to remove EU retained law; it will be a landmark first
step in taking back control of our own laws. It is just one of
the clear advantages of leaving European Union that we may now
alter our laws to ensure that they are interpreted in the way
that this sovereign Parliament intends.
As I understand it, the EU has now changed its law. Because we
are outside the EU, could we not stick with the retained law? I
just want to make that point, because I do not agree with the
hon. Gentleman about the damage of being in the EU.
Mr Bone
I was going to deal with that, but I will answer the specifics.
The right hon. Gentleman is quite right that the EU is changing
the directive so that it applies differently in the EU, but it is
not changing it in the same way as we propose to do. I will deal
with the issue later.
The Bill does not seek to invent new policy, nor would it limit
the Government or Parliament in changing insurance regulations
for motor vehicles in future. The Bill would simply restore the
interpretation of the law that was intended by Parliament and was
believed to be correct by the Government, lawyers, the motor
insurance industry and motorists prior to the Vnuk judgment.
It should be noted that the Vnuk judgment has led the European
Union to seek to revise the European directive, although it is
unlikely to do so in the same way as we propose in the Bill. I
argue that, instead of waiting for the European Union bureaucracy
to change its ruling, we can do so now, here, in this Parliament.
The Bill is therefore an important step in realising the benefits
of our decision to leave the European Union.
The Bill would end any associated liability for insurance claims
against the Motor Insurers’ Bureau for the cost of accidents on
private land where motor insurance is not held. As things stand,
the cost of such claims would have to be accounted for within the
Motor Insurers’ Bureau charging levy, thus passing on the cost to
the motor insurers, who in turn would pass it on to the consumers
through insurance premiums—the very point made by my right hon.
Friend the Member for East Yorkshire.
I note that, under clause 2, the Bill does not apply in Northern
Ireland. Will consumers—drivers—in Northern Ireland therefore
face that hike in insurance bills that we are trying to prevent
in England, Scotland and Wales?
Mr Bone
My right hon. Friend draws attention to something that I will
refer to later in my speech. When she hears what I have to say,
she will see why in the end that will not be the case.
The significance of this measure is seen in the Government
Actuary’s estimate that the increase in premiums to extend
coverage following the Vnuk judgment would be about £50 for the
average motor car policyholder. The Bill will therefore save the
average policyholder unnecessarily increased insurance premiums
in already difficult economic times. The cost of living is rising
and the Bill is an opportunity to keep pounds in people’s
pockets.
You have kindly agreed that clauses 1 and 2 may be debated
together, Ms Ali. Clause 1 would insert into the Road Traffic Act
1988 new section 156A, “Retained EU law relating to compulsory
insurance”. Subsection (1) limits the insurance obligation under
article 3 of the 2009 motor insurance directive to vehicles used
on roads and other public places, and to a motor vehicle defined
as a mechanically propelled vehicle intended, or adapted, for use
on the roads. In effect, it removes the Vnuk interpretation as it
applies to the use of vehicles in Great Britain.
Subsection (2) clarifies that the Bill does not affect the
provisions requiring insurance policies to include the cover
required by the law applicable in the territory where the vehicle
is used, or the law applicable where it is normally based when
that cover is higher. That means that the liability imposed by
the Vnuk interpretation will remain in place for insurance
policies covering vehicles in use in EU member states and
Northern Ireland.
Subsection (3) concerns the removal of section 4 rights created
in the 2008 Lewis v. Tindale case, which found that the
interpretation of the 2009 directive in the Vnuk judgment could
be enforced directly against the Motor Insurers’ Bureau. The
Lewis decision means that the Motor Insurers’ Bureau’s liability
for an insurance claim extends beyond the scope of the
obligations of the Road Traffic Act and applies to accidents on
private land and to vehicles not constructed for road use.
Subsection (3) brings an end to the relevant section 4 right to
compensation from the Motor Insurers’ Bureau except in the case
of motor vehicles on roads or other public places, as defined by
the Road Traffic Act.
What the hon. Gentleman is describing is interesting. Given,
presumably, the obligation arises from an accident and therefore
an injury, who becomes responsible for the injury?
Mr Bone
I thank the right hon. Gentleman for a really important question.
It is one of the issues discussed when drawing up the Bill. In
many cases, such as a public event on private land, there would
be insurance cover. It is not currently the case that if someone
illegally rides a vehicle on private land, has an accident and
causes damage, there is a requirement to be insured for that. The
landowner would be liable for the damage, but they do not have to
be insured for it. Extending insurance to ride-on lawnmowers or
other machines on private land has also been caught by Vnuk.
I accept that there is a fundamental problem with how liability
insurance works: rather than dealing with often catastrophic
injuries through the health service or national insurance, they
are dealt with on an insurance basis. Local councils are impacted
by that and it stops a lot of activities, because insurance
companies prevent them. I accept there is a deeper underlying
problem, but ultimately, if there has been an injury and there is
some degree of fault, who is liable for the compensation? Is it
the landowner? Is it the driver of the vehicle? How can that be
resolved?
Mr Bone
This is a really important argument. There is a liability, and in
each event that will depend on who causes the injury or damage.
That person will be liable for the damages. The Bill deals with a
slightly different situation where we are not extending
compulsory insurance to cover those events. If we did, it would
increase premiums by £50 per motorist. I stressed earlier that
there is nothing to stop Parliament bringing in compulsory
insurance on that basis, but it would have to be done through an
Act of this sovereign Parliament that wanted to make that change.
The Bill brings things back to where we thought we were, but it
does not stop that debate and people can still make that
argument. However, it is not really relevant to the Bill, because
Parliament never thought that the Road Traffic Act and compulsory
third-party insurance applied in the circumstances just
described.
Proposed new section 156A(4) similarly provides for the removal
of all further case law retained under the European Union
(Withdrawal) Act 2018 that could undermine the positions set out
in subsections (1) and (3). Any other EU law that we do not know
about would not apply if the Bill is passed. Subsection (5)
defines the terms used in clause 1, including the 2009 motor
insurance directive, relevant section 4 rights, retained case
law, and section 4 rights.
3.45pm
Clause 2 is relatively straightforward, but important. Subsection
(1) provides for the Act to come into force two months after
Royal Assent. Subsection (2) sets out the jurisdiction of the Act
and that the provisions will apply to England, Wales and Scotland
only. This is consistent with the convention that Westminster
will normally not legislate for matters within the legislative
competency of the devolved Administrations. For a reason that is
not entirely clear to me, the Bill does not legislate for
Northern Ireland as this matter was always reserved to the
Northern Ireland Assembly. From what I understand, the Assembly
is watching the progress of this Bill carefully and if it becomes
law the Assembly will look to produce something similar. That is
of significant importance, as when I first looked at this clause
I was concerned that Northern Ireland was not included because of
the EU withdrawal agreement or the Northern Ireland protocol.
That is not the case.
Clause 2(3) confirms that the measure may be cited as the Motor
Vehicles (Compulsory Insurance) Act 2021.
It is a pleasure to serve under your chairmanship, Ms Ali. I
support this Bill and I congratulate my hon. Friend the Member
for Wellingborough on getting it this far. The prospects for a
presentation Bill making progress are normally minimal, so it has
taken real determination on his part to get it this far. I very
much hope we will see it on the statute book before too long.
As we have heard, it is clear that the Vnuk judgment in the ECJ
has led to a big extension in the type of claim that can be made
against the Motor Insurers’ Bureau fund for uninsured road
traffic accidents. That extension is manifestly different from
the scope and purpose of the scheme in operation under the Road
Traffic Act 1988, which focuses on vehicles that are permitted to
be used on roads.
In my view, the UK scheme for compensation in relation to
collisions caused by uninsured drivers has worked well for
decades. I understand that it has been there in one form or
another since the 1930s, the earliest point of the extension of
private ownership of the car. The combined effect of Vnuk and the
later case of Lewis v. Tindle, which concluded that Vnuk had
direct effect, and the European Union (Withdrawal) Act 2018,
means that potentially significant costs are being loaded on to
the UK scheme—costs for a scheme that was never designed for them
and to which this Parliament did not consent. As we have heard,
motorists will be asked to fund this via their insurance premiums
unless this Bill reaches the statute book.
I agree with previous comments that we can have a legitimate
debate about the potential extension of compulsory insurance and
compensation schemes to new scenarios, but I feel quite strongly
that we cannot justify leaving drivers to shoulder the whole cost
of this potentially big bill by artificially forcing these new
liabilities into our long-standing motor insurance scheme. That
is a separate decision that should be taken separately by this
Parliament.
As we all know, we face significant pressure on the cost of
living at the moment, largely as a result of the global increase
in gas prices. In Parliament, we should all strive to do what we
can to relieve pressure on household bills, which is another
reason to back the clauses in this Bill.
I note the analysis of the costs, which was produced by the
Government Actuary’s Department. It is always hard to quantify
these things, although the £50 claim is certainly credible. It is
particularly worrying that this new liability for the MIB fund is
potentially open to significant amounts of fraud. Therefore, the
actual impact of Vnuk, if left on the statute book, could be very
great. It is hard to quantify in advance. Another reason for my
support for the Bill is the potential abuse of the fund we could
see if the Bill does not get on to the statue book. In a column
in The Telegraph in 2017, the Prime Minister described Vnuk as
a
“pointless and expensive burden on millions of people.”
The Bill provides us with an important opportunity to remove that
burden and prevent this addition to household bills.
Was that article in The Telegraph before or after the one in
which the Prime Minister said that Brexit would enable us to do
away with VAT on fuel bills?
I am not going to comment on the question of VAT on fuel bills,
since that is not the subject of today’s debate. I believe the
debates on VAT on fuel bills date back some years, probably
before that article.
It is disappointing that the Bill does not cover Northern
Ireland, but I hope that it would adopt similar legislation, as
my hon. Friend the Member for Wellingborough has suggested that
it might. It is good to hear that there is nothing in the
protocol that prevents it from doing so. It seems clear that this
is not a single market-type rule, which would be covered by the
protocol. There should be no constitutional or legal barrier to
the Assembly passing a similar piece of legislation, and I
certainly hope that it will choose to do so.
The Bill is the first piece of primary legislation to repeal
retained EU law. I am certainly not aware of any other piece of
primary legislation that does that. There are aspects of EU rules
and programmes that have already been dismantled. Most notably,
many of the fundamentals of the common agricultural policy have
already gone, thankfully. However, it may well be the case that
that was achieved without primary legislation. It is very clear
that this will be the first time we have used primary legislation
to disapply a judgment in the European Court of Justice. It could
undoubtedly be described as a historic moment. The controversy
around Vnuk shows that we need a faster 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. To
have to deal with all of those modernisations, updates and
amendments via primary legislation is a significant flaw in the
European Union (Withdrawal) Act 2018 that needs to be looked at
again.
I very much support the Bill. I hope it is the first of a long
series of repeals and reforms that will take place as we use our
Brexit freedoms to create better regulation that is more targeted
to our domestic circumstances and that enables us to compete in
the big high-tech growth sectors of the future. Only when we have
done that and seized the opportunity provided by Brexit will we
truly be able to say that we have got Brexit done.
The Parliamentary Under-Secretary of State for Transport
It is a pleasure to serve on this Committee and under your
chairmanship, Ms Ali. I congratulate my hon. Friend the Member
for Wellingborough on his success in promoting this private
Member’s Bill. I echo the comments of my right hon. Friend the
Member for Chipping Barnet. She rightly recognises the
determination needed to progress a private Member’s Bill. I know
my right hon. Friend fully understands this, having in the past
attempted to get various private Member’s Bills through this
place—as I have myself. I really do congratulate my hon. Friend
the Member for Wellingborough.
This is an important issue. The Government have been clear since
the 2014 European Court of Justice’s ruling in the Vnuk case that
we do not agree with it. The decision created the unnecessary
extension of motor insurance to private land and a greater range
of vehicles. This is why we announced that we will remove the
effects of Vnuk from GB law in February this year. Delivering on
that includes removing the associated financial liability imposed
on the Motor Insurers’ Bureau via the England and Wales Court of
Appeal’s decision in Lewis.
The proposed legislation in this presentation Bill represents the
best possible opportunity to address the issue at the earliest
possible opportunity. Clause 1 rightly makes provision to clarify
how the compulsory insurance obligation operates in GB and makes
it clear that there is no obligation to extend insurance to
private land and vehicles not constructed for road use. It
removes any retained EU law rights to compensation from the MIB
created by the Lewis case. The clause also provides that retained
EU case law that is inconsistent with the position set out in
this will cease to have effect. That, in effect, removes the Vnuk
decision from GB law. The Bill does not have retrospective effect
and will come into force two months after Royal Assent.
Will the Minister share her thoughts on where this leaves
electric scooters, which are being trialled in some areas? If
they are authorised for road use, will they then be deemed to be
a motor vehicle and need compulsory insurance?
My right hon. Friend raises a very interesting question. My
understanding of this Bill is that it is very much focused on the
issue around private land, but if there is anything that I need
to follow up on, perhaps on the specifics of scooters, I
will.
If my hon. Friend could write to me with her thoughts on that
before Third Reading, I would be quite happy.
I undertake to write to my right hon. Friend with the clarity
that I think he is looking for.
To conclude, the provisions will comprehensively remove the
effect of Vnuk and Lewis from GB law. For those reasons, the
Government support the Bill.
Mr Bone
I thank the Minister for her support and the work that the
Government have done on this. I also thank the Opposition for
supporting the Bill, because without their support we could not
have made progress. This is a sensible measure that Parliament
should support, and it is good when the Opposition and Government
can work together.
I have a few thanks. I thank everyone who turned up today; I
really appreciate that, given the important statement in the
Chamber. I think I dealt with all the issues, except for the
interesting one about electronic scooters that my right hon.
Friend the Member for East Yorkshire raised at the end. I think
it depends on whether they come within the definition of motor
vehicles—I know we did not do so badly in the Ashes today, but
that was certainly a bouncer to give the Minister, who has
stepped in today.
The other issue that came up, which I have not dealt with, was
the important point that the right hon. Member for Warley raised
about VAT on energy. I entirely agree that it should be scrapped,
but of course that has nothing whatsoever to do with this
Bill.
I would like to thank a number of other people. I will start with
my right hon. Friend the Member for Chipping Barnet, because she
not only had the Westminster Hall debate—that is important,
because if a presentation Bill is to get through without
objection, that issue must be debated, so I am grateful to her
for that—but spent time talking to a number of the
stakeholders.
I also thank Izzy Jackson, my senior parliamentary assistant, who
kindly put together my speech today, for all the work she has
done in the office. I will also mention Paul Ryman-Tubb of
Weightmans, who spent time helping me with this. I thank all
those at the Motor Insurer’s Bureau who worked with me,
particularly Nick Robbins, whose help has been invaluable. I
would also acknowledge the hard work of everyone at the
Department for Transport who has worked on this Bill,
particularly James Langston. I again thank the Minister for
stepping in at short notice; I hope that our colleague gets over
covid quickly.
Finally, I support and thank everyone in the Public Bill Office.
I am pleased to say that I did not have to sleep overnight at the
base of Big Ben this year because of covid, but we still made
progress. I thank in particular Adam Mellows-Facer; I am, as
always, grateful for his hard work and professionalism. Thank
you, Chair.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Bill to be reported, without amendment.
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