In a brief written statement (of 259 words, so notably shorter than this article) to Parliament on 21 November 2024, the Lord Chancellor summarised her review of the whiplash injury tariff. The relevant statute required this to be carried out three years after the tariff was introduced, ie by the end of May 2024. Inevitably, the election and the change of government delayed the review’s publication.
The structure of the tariff will be retained and an adjustment will be made for inflation
The Lord Chancellor has essentially made four decisions about the tariff.
- First, the split structure to reflect whiplash injuries with and without accompanying minor psychological harm will be retained.
- Second, and also retained, is the possibility of a 20% judicial uplift to tariff levels where there are exceptional injuries or circumstances.
- The third element concerns medical evidence, both the definition of appropriate medical evidence and the ban on settling without it, with each of these aspects being retained.
- Where there will be change is in relation to the figures within the tariff, the fourth point in the statement. The headline is that these are to be increased by around +15% as a broad allowance for CPI inflation from May 2021 to May 2027 (when a further review will take place). Two sub-points arise: (a) that CPI is expressly preferred to RPI, in contrast to the approach adopted in the Judicial College Guidelines and (b) that the percentage and period proposed require further analysis.
The adjustment for inflation is explained in the detailed report published by the Ministry of Justice that accompanies the statement. This states that a “buffer” for future inflation - to 2024 - had been included as part of the 2021 tariff and that this should be stripped out to avoid double counting of inflation from 2021. Therefore, in the report’s explanation, the approach in this 2024 review is to take the 2021 “‘without buffer’ tariff as the starting point and applying an increase plus a three-year buffer using the available forecasts for CPI [which] would lead to an increase of between 14 to 15%.”
As the only element of change proposed in a revised tariff, this adjustment for inflation is likely to be closely scrutinised by all stakeholders. We will be analysing this approach to inflation against data published by the Office for National Statistics and the Bank of England’s projections.
What does the review mean for the current small track limit of £5,000?
The Ministry is not increasing the small track limit for road traffic claims at this stage.
In principle, this must mean that the proposed inflation increase set out above will cause a proportion of higher-valued tariff claims to exit the small track into the costs-bearing fast track. The same consequences will flow from the 2024 increases to the Judicial College Guideline figures that apply to higher-valued common law non-tariff minor injuries within the current small track limit.
To the extent that this effect happens in practice it will clearly cut across the underlying cost-controlling aims of the whiplash reforms. Although the Ministry recognises this, is has decided not to increase the small track limit alongside the revised tariff but it will keep the topic under review and further data will be collected. It is possible that this is something that the government’s new Motor Insurance Taskforce may wish to consider further as part of its remit to control upwards pressures on premiums.
The MoJ’s report offers the following justification for not increasing the small track limit.
“… compensators argue that the small claims track limit should also be increased to match any increase to the tariff amounts to ensure claims stay in the appropriate court tracks. Again, there is some logic behind this argument, but as well as being out of scope for this exercise caution is also needed in considering acting without regard to all the appropriate data…
… initial analysis suggests that less than 5% of claims using the OIC [Official Injury Claim] would be valued above the small claims limit under the new tariff. However, MoJ officials will continue to monitor settlement data to identify whether a significant proportion of claims have been impacted in the way suggested and will consider further action in this area if the evidence justifies doing so.”
How and when will revised whiplash tariff be implemented?
Under the Civil Liability Act 2018, the tariff is made via secondary legislation. The Act further provides that the regulations are subject to the affirmative procedure – meaning they must be debated in Parliament – and that there must be prior consultation with the Lady Chief Justice.
The MoJ anticipates that this consultation should take around eight weeks, meaning that the necessary secondary legislation will not be brought before Parliament this year. When it is, and if debates are scheduled promptly, it is possible that new Whiplash Injury Regulations could take effect in spring 2025, perhaps around early April or even on 31 May 2025, that being four years after the 2021 regulations took effect. Whichever date is adopted, it should be noted that the new regulations will apply only to road traffic accidents occurring on or after the date of commencement.
The Lord Chancellor’s Statement the accompanying report can be access via these links.
Written Statement dated 21 November 2024; Lord Chancellor’s Report and Recommendations
unknownx500
