Kenneth Clarke proposes ceiling £25,000 higher than outlined in Young's report

Justice secretary Kenneth Clarke’s move to widen the scope of the fast-track system for dealing with low-value litigation underlines the government’s determination to reform the ‘dysfunctional’ claims system.

The Ministry of Justice’s proposal for a £50,000 ceiling on the value of claims to be handled by the portal exceeds the £25,000 cap outlined by Lord Young in his Downing Street-commissioned report on health and safety last year.

An MoJ paper issued this week, which outlines how the government plans to take forward the Jackson Review-inspired shake-up of civil litigation costs, also proposes that the £50,000 limit applies to all classes of liability, not just road accident cases.

Junior justice minister Jonathan Djanogoly has estimated that the new upper limit will capture up to 90% of all claims – a dramatic extension of the existing fixed-costs system introduced less than a year ago.

The paper shows that the MoJ is taking forward almost all of the measures outlined in its November consultation document on implementing the Jackson Review’s recommendations.

These include an end to unsuccessful defendants being forced to pay claimant lawyers’ success fees and after-the-event (ATE) insurance premiums. It also gives the green light to damages-based agreements, under which lawyers are recompensed by taking a slice of their clients’ damages instead of fees.

The only concession to the claims lobby, which has mounted a robust campaign against the government’s reform package, is a proposal that the overall ban on the recovery of ATE premiums should not apply to sums paid for costly expert reports in clinical negligence cases.

The government’s continued unwillingness to press forward with a ban on referral fees will be the insurance industry’s chief cause for concern.

Djanogoly explained that it would be premature to introduce such a ban prior to the wider shake-up of law firms’ ownership structures, which takes place in October. He added that he hoped fee levels would be driven down by wider changes to the litigation process.

Opponents have greeted the government package with a note of disbelief. But the insurance industry should be relieved that its concerns are being listened to in Whitehall.