• Clampdown on whiplash claims to save motorists about £35 per year
• The whiplash changes are part of government’s wider programme to tackle the compensation culture which is driving up costs to consumers and taxpayers
• Bill includes changes to the way the personal injury discount rate is calculated to bring certainty and transparency to the system, and savings for the NHS

The legislation sets in law measures which will reduce the unacceptably high number of whiplash claims and allow insurers to cut premiums, with motorists anticipated to save on average about £35 per year.

The whiplash measures form a major plank of the Government’s wider work to tackle the country’s compensation culture, ensuring a more balanced and fair system for all concerned. They follow earlier reforms including the forthcoming ban on cold calling, tougher regulation of claims management companies, and a clampdown on spiralling holiday sickness claims.

The high number of whiplash claims has contributed to increased insurance premiums but these measures will mean about £1 billion in savings which insurers have pledged to pass on to drivers.

Justice Secretary David Gauke said:

The number of whiplash claims has been too high for too long, and is symptomatic of a wider compensation culture.

We are putting this right through this important legislation, ensuring whiplash claims are no longer an easy payday and that money can be put back in the pockets of millions of law-abiding motorists.

Road traffic accident related personal injury claims are 50% higher than a decade ago, despite the fall in the number of reported accidents and the UK having some of the safest roads in Europe.

This rise has been fuelled by predatory parts of the claims industry that encourage minor, exaggerated and fraudulent claims, driving up the costs of insurance premiums for ordinary motorists.

The whiplash measures are aimed at cracking down on these claims. The measures will ensure fairness to both motorists and claimants by:

Also contained in the Bill are changes to the way the personal injury discount rate for serious injuries is calculated.

The changes, first mooted in September, will provide a more balanced approach to compensation that fully compensates victims of catastrophic accidents, including the most vulnerable, while addressing issues around overpayment which could have a knock-on effect on public services with large personal injury liabilities – particularly the NHS.

The discount rate is the percentage used to adjust compensation awards for victims of serious personal injury, according to the amount they could expect to earn by investing it. Its application is an important part of the calculation of awards. It only relates to compensation for future loss.

The adjusted awards should put claimants in the same financial position they would have been in had they not been injured – they should receive neither more nor less than full compensation.

In February last year the discount rate was reviewed as required by the law and reduced from 2.5% to minus 0.75%. This dramatically increased the size of awards of damages to individuals.

At the time, the government acknowledged that this move was likely to have a significant impact, launching a consultation on the way the discount rate is calculated in March, followed by the publication of draft legislation in September.

We have also carefully considered the report of the Justice Committee on the draft legislation and accepted the majority of its recommendations.

The changes to the discount rate now being introduced through the Civil Liability Bill will create a fairer and better system of setting the discount rate, which will still provide full compensation. To ensure this happens we will:

• set the rate with reference to ‘low risk’ rather than ‘very low risk’ investments as at present, better reflecting evidence of the actual investment habits of claimants;

• establish a regular review of the rate, the first within 90 days of the legislation coming into force and at least every three years thereafter;

• establish an independent expert panel Chaired by the Government Actuary to advise the Lord Chancellor on the setting of the rate.

Notes to editors

The Government’s commitment to tackle the whiplash epidemic has previously been welcomed by the Association of British Insurers (ABI), with leading insurance firms including Aviva and LV= pledging to pass 100% of savings onto motorists.

In February 2017 the discount rate was reduced from 2.5% to minus 0.75%, which has led to larger awards and concerns in some quarters that the current law provides more compensation than needed to claimants. The consultation, launched in March, sought to address those concerns by collecting views on how to make the system better and fairer.

It is a well-established principle of law that individuals should receive full compensation for losses suffered as a result of personal injuries that are not their fault. The personal injury discount rate is a percentage used to adjust the lump sum awards for future losses, costs and expenses received by victims of life-changing injuries to account for the amount victims can expect to earn by investing their awards. The discount rate applied to the compensation for future financial loss (such as loss of future earnings and care costs) should ensure that people receive the full compensation that they were awarded – no more or less – by taking into account what they are likely to earn on that money before they are expected to have spent it.

The current framework for setting the discount rate uses real yields from Index Linked Gilts as a proxy for the returns that can be expected from a very low risk investment strategy. However, drawing on expertise from financial advisers, the Government has found strong evidence that in practice claimants are advised to and invest in low risk diversified portfolios.

At the time the discount rate was lowered, a number of pledges were made, including a consultation to consider whether there is a better and fairer way of setting the rate in future. That framework is contained in the legislation published today.

A different approach is needed to tackle flooding over next 50 years, Environment Agency Chief Executive James Bevan has said today

The government today (Tuesday 20 March) will launch a consultation to improve the UK’s corporate governance framework and ensure the highest standards of behaviour in those who lead and control companies in, or approaching, insolvency.

The vast majority of UK companies are run fairly and responsibly, but a small number of recent corporate governance failures have raised concerns that company directors can unfairly shield themselves from the effects of insolvency and – in the worst cases – profit from business failures while workers and small suppliers lose out.

Following last year’s corporate governance reforms to increase boardroom accountability and transparency of big business, the government will today raise standards even further by setting out proposals to crack down on directors and employers behaving irresponsibly. These include:

• clawing back money for creditors including workers and small suppliers by reversing inappropriate asset stripping of companies on the verge of insolvency
• disqualifying and or holding directors personally liable when found to have sold a struggling company or subsidiary recklessly or knowing it would fail
• giving the Insolvency Service new powers to investigate directors of dissolved companies
• consideration of the legal and technical framework within which decisions are made on payment of dividends, and how it could be improved and made more transparent
• strengthening the role and responsibilities of shareholders in stewarding the companies in which they have investments.

These reforms seek to respond in a balanced and proportionate way to help reinforce public trust and confidence in businesses and further strengthen the UK’s business environment which is a key part of the UK’s Industrial Strategy, the government’s long-term plan to build a Britain fit for the future. They will also help to ensure the UK remains one of the best places to start and grow a business and is an attractive place to invest.

Business Secretary Greg Clark said:

Britain has a good reputation internationally for being a dependable place to do business, based on required high standards. This framework has been regularly upgraded and in the light of some recent corporate failures I believe the lessons should be learned and applied.

These reforms will give the regulatory authorities much stronger powers to come down hard on abuse and to make irresponsible directors bear the consequences of their actions.

The government will publish the Insolvency and Corporate Governance consultation later today setting out some of these proposals in more detail. It will also seek views on new ways to protect payments to smaller firms in a supply chain which can be hit hardest when large companies become insolvent.

The government is already taking action on this issue by:

• considering whether further action is needed to prevent the misuse of contract clauses, typically in the construction sector, allowing large firms to withhold payments as a surety against defects
• committing to launch a call for evidence on how to eliminate unfair payment practices to small businesses.

This package of reforms follows last year’s corporate governance reforms which sought to increase boardroom accountability.

The government has already:

• supported the Investment Association’s world-first public register of FTSE-listed companies where more than one fifth of shareholders have opposed resolutions on executive pay packages and other issues
• appointed James Wates to chair a new group drawing up the UK’s first-ever set of corporate governance principles for large private companies
• ensuring that employee and other stakeholder voices are heard and taken into account in boardroom decision-making

In the coming months the government will introduce new laws requiring:

• listed companies to reveal the pay ratio between bosses and employees
• all companies of a significant size to publicly explain how their directors take employees’ and other stakeholders’ interests into account
• all companies of a significant size to make their corporate governance arrangements public

1. Whenever a corporate insolvency occurs the conduct of the directors of the company is considered. Directors can be disqualified for up to 15 years if their conduct is found to make them unfit to be involved in the management of a company.
2. Insolvency Service is a government agency, helping to deliver economic confidence by supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors.
3. The Insolvency Service disqualifies around 1,200 irresponsible directors a year, protecting creditors from an estimated total £137 million in losses.

FCO statement on the OSCE report into the Russian presidential election

An FCO spokesperson said:

The OSCE/ODIHR election observation mission to the Russian Presidential elections has now issued their initial report.

The report makes clear that restrictions on fundamental freedoms, in particular freedom of expression and assembly, including the detention of activists, resulted in a lack of genuine competition in the election. The Russian Central Election Commission also placed restrictions on candidate registration, and President Putin benefited from dominating coverage in the state media.

We continue to call on the Russian Government to comply with its international commitments in the Council of Europe and OSCE to ensure respect for human rights and fundamental freedoms, including freedom of expression.

Published 20 March 2018

Thank you for your feedback