Westminster Blog

Government ministers have had to get used to an unusually truculent House of Lords in the last few weeks, as I wrote about last week.

Both the health and welfare bills might have to undergo serious change if they are to pass the upper house in time for the Queen’s speech.

But peers are also debating another important bill at the moment: the legal aid bill. And that could end up being yet another source of tension.

Peers are likely to vote in the next day or two on a couple of amendments put forward by four Lib Dems which they say will curb the powers of insurers and lawyers to encourage car accident victims to pursue spurious legal claims.

The first amendment would make it illegal for companies to buy or sell details of victims in order to market legal services to them. For the government, which has already banned firms marketing legal services in hospital, this would seem like a natural next step. So it has dismayed the peers, led by Lord Thomas, to find ministers resolutely opposed.

The second amendment would make it illegal for insurance companies to make pre-emptive settlements with people who have not even claimed for injury. Campaigners claim this harms those with genuine claims, who are pressured into settling early, while jacking up the costs for the industry by settling with people who would not have made a claim in the first place. The industry says however that settling early allows insurers to keep costs, and therefore premiums, lower.

That explanation may be why the government is opposing the second amendment, but if so the justice ministry has not said so. Nor has it given a credible explanation for opposing the first. Instead the department says:

The bill demonstrates the government’s commitment to remove the financial incentive to pursue excessive litigation from claims management companies, solicitors and insurance companies.

This explanation isn’t good enough for Lord Carlile, one of the Lib Dem lords. He said:

I can’t think of a credible explanation as to why they should be so resistant to this.

What makes this dispute even more tense is that Jonathan Djanogly, the justice minister who is tasked with piloting the bill through parliament, has already been stripped of his powers to regulate parts of the industry after failing to declare his children’s shareholding in his brother-in-law’s claims management companies. He is also partner in his family’s underwriting partnership, which deals in motor insurance as well as other areas.

The Ministry of Justice has denied there was any conflict of interest however. A spokesman said:

The cabinet secretary has concluded that Jonathan Djanogly has taken the appropriate steps to prevent any conflict between his financial interests and his ministerial duties. There is no evidence that he has acted in any way other than in the public interest.