• CL Legal, The Corn Exchange Building, 21 Brunswick Street, Liverpool L2 0PJ
  • CALL US NOW: 0151 225 0197

New campaign launched to stop government increasing small claims limit

A new campaign was launched this week that aims to raise awareness and ultimately prevent the UK government from going through with the planned increase of the small claims limit.

Currently, the small claims limit is £1,000 – so any claim with losses predicted to be less than £1,000 is heard in the small claims court, which means the Claimant’s cannot recover legal costs.

The government plans to increase this limit to £5,000, which would mean a lot of personal injury cases would have to be heard in the small claims court and result in more Claimant’s having to represent themselves rather than enlist the help of a professional lawyer on a No Win No Fee basis.

The campaign, called #FeedingFatCats, is highlighting the fact that this change would dramatically reduce the amount of personal injury payouts insurance companies have to make as more injured people would be unable to pursue a claim without being able to recover their legal costs. The campaign estimates that four insurance companies in particular would benefit to the tune of £200 million a year.

#FeedingFatCats, which was set up by Thompson’s Solicitors, has the backing of several Labour MPs.  Shadow minister Christina Rees said: “It’s an outrage that the government openly concedes their proposed changes will starve the NHS and the Treasury of millions while gifting insurers at least £200m in extra profit each year.”

Richard Burgon, the shadow secretary of state for justice said: “The government has offered no justification for including work accidents in what is being billed as a reform of whiplash. The proposed changes are in fact about the insurance industry seizing control of the legal process and undermining the longstanding legal principle that the guilty party pays.

“These changes would be a licence for insurance companies to under-settle or not pay out at all to nearly a million injured people a year.”

Why is the government planning to increase the small claims limit?

The reason for the proposed raise in the small claim limit is the alleged ‘whiplash epidemic’ currently affecting the UK motor industry, which is also being blamed for the increase in car insurance premiums.

However, the #FeedingFatCats campaign disputes this and asserts that car insurance companies have been unwilling to fight fraudulent claims themselves – choosing to pay 99% of road traffic accidents instead. They also use the below chart to demonstrate that whiplash claims have actually decreased over the past five years:

Amount of whiplash claims in UK graph

The increase in the limit to which people are able to claim back their legal fees is expected to affect up to one million people each year who have been injured through no fault of their own.

The deadline the government has given for hearing opinions on the proposed increase is 6 January 2017, with a full announcement expected in April 2017.