Motor Vehicles (Compulsory Insurance) (Amendment etc.) (EU Exit) Regulations 2019

Motion to Approve

That the draft Regulations laid before the House on 24 January be approved.

My Lords, these draft regulations will be made under the powers in the European Union (Withdrawal) Act 2018, and will be needed if the UK leaves the European Union in March without a deal. The Government are seeking reciprocal arrangements on motor insurance following our exit from the EU, but in the event of no deal, without that agreement we must ensure we have a functioning statute book.

These regulations amend various domestic legislation to correct deficiencies in the legal framework for compulsory motor insurance which arise as a result of the UK leaving the EU without a deal. The draft instrument seeks to maintain the status quo with regards to compulsory motor insurance, making technical changes to ensure insurance requirements for vehicles in the UK are preserved, as well as amending redundant references to the UK being a member state. They also remove specific obligations on the UK’s Motor Insurers’ Bureau—the MIB—under the Protection of Visitors scheme, commonly referred to as the “visiting victims” scheme. If these changes are not made, the obligations would remain unilaterally upon the MIB in the event of no deal. These changes come into effect on exit day.

This SI was initially laid as a proposed negative instrument, but we have happily accepted the committee’s recommendations to re-lay it using the affirmative procedure instead, acknowledging its concerns about the impact of these changes on UK citizens.

It may be helpful to give noble Lords some background to the legislation being changed. In 1930, the UK Government introduced a law that required every person who used a vehicle to have at least third- party insurance. Today, compulsory motor insurance requirements are governed at EU level by the consolidated motor insurance directive, which is implemented in the UK through the Road Traffic Act 1988 and subordinate legislation. The amendments in this SI are necessary to uphold motor insurance requirements as they currently stand in the UK, if we leave the EU without a deal.

The instrument also deals with requirements under the codified EU motor insurance directive for member states to make arrangements to allow victims injured in a road accident in an EEA country, other than in their home state, to claim compensation when they return home. This is facilitated through insurance undertakings, with member states appointing in all other member states a claims representative to handle and settle claims by victims injured in accidents abroad.

Each member state must also appoint a compensation body which is responsible for providing compensation in certain circumstances where insurance undertakings, through the claims representative, fail to do so. These circumstances include, for example, where there is no claims representative or where the claims representative fails to provide a reasoned response to a claim within three months. In the UK, the Motor Insurers’ Bureau currently fulfils the compensation body role, and is reimbursed by its foreign counterparts under the motor insurance directive.

Moved by

At the end insert “but this House regrets that residents of the United Kingdom could be denied access to justice when injured abroad as they will have to make claims for compensation in the country in which the injury occurred rather than being able to appoint a claims representative in the United Kingdom”.

My Lords, I have tabled this amendment because this SI does not simply cross out the term “EU” and replace it with “UK”; it does not preserve the status quo; and it does not recreate the advantages and systems that drivers and passengers can rely on at the moment when things go wrong when they are travelling abroad. I want to thank the Association of Personal Injury Lawyers, which helped to explain how the system works.

Every year, more than 2.6 million UK vehicles make the trip to the EU, whether for business or pleasure. Given the scale of that annual migration, it will come as no surprise that a significant number of them have accidents. Around 5,000 people a year make claims under a very useful EU scheme which provides that if a UK resident is injured in a road traffic accident in the EU and the injury was caused by the negligence of another person, the injured person can claim compensation in the UK. This has obvious benefits, because victims can do this in their own language, using their local solicitor. They do not have to travel anywhere to do this. The claim is made against a UK-based claims representative appointed by the foreign insurer. Occasionally, this excellent system does not work as it should, in which case the injured person has a backstop—if I can use that phrase—and can claim through the Motor Insurers’ Bureau. The MIB then takes responsibility for recouping costs from its counterpart agency in the country where the accident occurred.

Every year, some 4,300 claims are made against insurers and 700 by the MIB. The numbers, therefore, are large: this is an important and well-used scheme. After Brexit, insurance companies in EU states will no longer be obliged to appoint claims representatives in the UK, and this SI removes the ability of UK residents injured in traffic accidents in the EEA to make a claim through the MIB. Instead, a UK resident will have to make a claim in the country where they were injured. Noble Lords can imagine that claiming compensation in a foreign country is a daunting prospect. It will involve travelling there—probably several times—and using a foreign language that they probably do not speak all that well, if at all; and it will involve using a different legal system with which they are not familiar. In most EU states, they will have to pay up front for their own legal advice and representation, which might not be recoverable, even if they win the case. If a person has been badly injured in a traffic accident, they might find it impossible to contemplate all this, and it can take years for a legal claim to be heard. If a victim’s injuries are serious, they will need money as soon as possible to replace lost earnings, adapt their house and that kind of thing.

The Government justify this change by saying that if we maintain the visiting victims scheme and the MIB compensation system, we will end up paying out money to EU victims visiting the UK without any reciprocity. That is a very good reason for taking no deal off the table and continuing the current system. Many years ago, the cumbersome system that the Government now envisage was the norm, but more than 2.5 million of us drive abroad each year. That is equivalent to the whole population of Northern Ireland—men, women and children—getting up and taking their cars off on holiday at the same moment.

The noble Baroness is making a very powerful point in respect of compensation for accidents, but there is also a massive bureaucratic issue in respect of insurance here. It is understated in the Explanatory Memorandum. Paragraph 3.7 says:

“If there is no deal with the EU, UK motorists will also be required to carry a ‘Green Card’ which guarantees third-party insurance provision when driving in the EU. This may result in increased bureaucracy and costs for those drivers”.

That must be the understatement of the year: how can that not result in a massive increase in bureaucracy and inconvenience to drivers? Should the Government not be telling all the motorists proposing to leave the country in five weeks’ time that they are going to be required to have this green-card, third-party insurance provision which they do not have at the moment, and how they can secure it? I am a former Secretary of State for Transport, but I myself do not know what it is, so the population of Northern Ireland which, as the noble Baroness says, will be decamping over the next 12 months to the European Union, is going to have to be well informed about the green-card insurance system, about which it knows absolutely nothing at the moment.

The noble Lord makes a powerful point and I will come on to the green card later. It did strike me, as I read the Explanatory Memorandum, that it was a masterpiece of understatement. It said some fairly amazing things without the slightest hint of a raised eyebrow.

The point I am making is that the Government’s proposal is totally inappropriate to modern life. The Joint Committee on Statutory Instruments points out that paragraph 3.6 of the Explanatory Memorandum says that the method of claiming will vary from country to country and that victims might have to pursue an uninsured person directly.

It also points out that no deal will lead to the issuing of green cards again. I am sure that noble Lords will remember green cards—but not with affection. The DfT has acknowledged that this will also apply to travel between Northern Ireland and the Republic of Ireland. Although it says that the SI has nothing to do with green cards, perhaps the Minister can update us on the situation with green cards, because the British Insurance Brokers’ Association is alerting us now to the urgency for a decision, because physical green cards will have to be produced in their millions in the next few weeks.

I sometimes think that Brexit is a giant conspiracy against the great British tradition of a holiday in the sun.

I did not pick up on this in my reading of the statutory instrument. Did I hear the noble Baroness correctly: that you will require a green card to cross the Irish border? Is that the point she was making? Is that not a breach of the Good Friday agreement?

I am quoting the Joint Committee on Statutory Instruments. The noble Lord makes an interesting point. It quite possibly would be but I am not sufficiently expert on the Good Friday agreement to be definitive on that.

There is a conspiracy against our summer holidays. We will now be going off with an international driving permit, sometimes two, and a green card to wait in the queue at the Channel Tunnel or the port—unless we choose to go by air, with all the doubts about whether or not the plane will fly. It will cost more because of the changes in the exchange rate in the past two and a half years; the ATOL system will not have the guarantees that it once had; and now we hear that if you have an accident you will be left to fight for compensation on your own. What will we get in return? A shiny blue passport. The problem is that this takes us back to a cumbersome, bureaucratic system that goes back decades and does not fit the modern way of travel.

On the consultation outcome, paragraph 10.1 of the Explanatory Memorandum states:

“Given the EU Exit negotiation sensitivity of changes to the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003, formal public consultation was not considered appropriate”.

I have read that several times. Are the Government really saying that because this will upset motorists they are not going to tell them about it or consult them? That is how I read that sentence. If that is not accurate, will the Minister explain exactly what the Government were trying to say?

The paragraph goes on, almost incredibly, to say that the Motor Insurers’ Bureau, the insurance trade associations and the motoring trade associations have been consulted and are satisfied. Are they seriously satisfied with this? They cannot possibly be satisfied and I would like to know what they really think. They might take the opportunity after they have read Hansard to tell us. It cannot be possible in an industry as diverse as this that all those organisations are happy with these seriously problematic regulations.

My Lords, it is important that the House does not lose its capacity to be shocked by the scale of the dislocation that may be imposed by the Government on the country in one month’s time if no deal Brexit proceeds.

In a succession of speeches, the noble Baroness, Lady Randerson, has laid out the impact of no deal on motor industry regulation and she did a good job of weaving together the changes in relation to insurance, accidents and international driving licences. The extraordinary thing about it is that, because we are going back to pre-1973 law, not only are many bureaucratic requirements being imposed but they are being imposed in a way that is entirely pre-digital.

Noble Lords will recall the green card but I am still of an age where I do not recall it—I do not think the Minister recalls the green card—which is a telling remark. You have to be—how can I put this delicately?—of a certain age to remember the green card. I certainly do not remember the international driving licence. However, as we go into this Alice in Wonderland world of disaster that the Government propose to inflict on the country, we now know that not only will you require an international driving licence and a green card but you will have to have them as physical constructs because the regulations under which they are imposed go back to the pre-digital era. You will have to get a physical international driver’s licence or licences—the Minister can intervene on me at any stage if she wishes—and a physical green card. Is that correct?

I am old enough to remember the green card, which you had to produce when crossing a border. When you went through what were independent countries, at each border you had to produce a green card, which was a document in your hand. Has the noble Lord any solution to the problem of what we must do if we are to satisfy the authorities abroad that we are covered by third-party insurance? That is what the green card is all about. It is a document to show that you have third-party insurance. It should go on your policy anyway. It is a document that shows that what is in your policy is transferrable and understood by the countries you want to visit.

My Lords, my submission is that we should not be engaging in a no-deal Brexit in the first place.

Let us be clear about the obligations that the Government are now imposing on the country: it is entirely within the Government’s power to rescind the notice under Article 50 so that we do not crash out in four weeks’ time. If the Government cannot persuade Parliament to agree to arrangements in the Prime Minister’s withdrawal agreement that do not involve the country descending into Dante’s circles of hell in four weeks’ time by leaving with no deal, the Government’s duty would be to ensure that we do not leave with no deal. There are two ways of doing this: they could rescind the notice under Article 50 or they could have agreed at any point in the last six months to apply for an extension to the Article 50 negotiating period, which Parliament may impose on them next week.

I am grateful to the noble Lord for giving way. We have all sat here very patiently. In the politest way that I can say it, the noble Lord is testing the House’s good will if he is not testing the Companion itself. I read pages 50, 51 and 52 before I came into the Chamber, anticipating this kind of filibustering. It is counterproductive to alienate the mood of the House in such a way. Straying from the Companion to the extent that the noble Lord has is testing the House’s good will. Will the noble Lord reconsider?

I completely refute the noble Lord’s remarks. My remarks have been relevant to the statutory instruments before the House. I have said nothing that is not. That was clearly a pre-prepared set of remarks that the noble Lord was intent on making. I think this is well below the standard that one would expect of a Member of this House in addressing another. If the noble Lord wishes to defend the Government’s policy, he should make a speech doing so, rather than attacking those who are doing their duty in this House by scrutinising it.

The noble Baroness set out the concerns about green cards and has done previously about international driving licences. Her point revealed that separate international licences are required for different countries in the EU because of the different rules. Regarding the green cards, my noble friend Lord Rosser has pointed out to me paragraph 3.10 of the Explanatory Memorandum, which says that the DfT estimates that,

“between two to four million individuals may need a Green Card”.

In response to the noble Lord who intervened, we have a duty to speak up for those 2 to 4 million people who will be put through a big, new bureaucratic process as a result of this one statutory instrument. It goes on to say:

“Green Cards are obtained free of charge from insurance providers; however, the DfT has explained that ‘insurance providers can decide to reflect production and handling costs in a small increase to their administration fees’”.

This is another point that the noble Baroness, Lady Randerson, made about the impact assessment: the Government say in paragraph 3.10 that they expect that insurance providers may pass costs associated with the requirement to hold these green cards on to motorists. This surely justifies an impact assessment to judge what those costs will be. The Government also ought to set out what they think is an acceptable level of costs.