Government set to back down on claims reform...

The government appears to have bowed to union pressure and watered down proposals for a radical overhaul of the creaking personal injury system.

A well-placed Whitehall source said the proposals, which were supposed to fast track the claims process and introduce fixed fees for solicitors, should have been released in the autumn but have been delayed and are set to be watered down or even abandoned.

Unions, like brokers and insurers, are known to benefit from the referral fees solicitors pay for details of prospective personal injury clients – in this case, the union members. The government’s proposals were expected to bring an end to the referral fee system.

The Ministry of Justice (MoJ), formerly the Department for Constitutional Affairs, refused to set a new date for the release of the proposals. A spokesman said the ministry is still analysing more than 300 responses to its consultation on the reforms, which closed in July 2007.

Insurers and claims solicitors believe the proposals will either be dropped or watered down.

Andrew Welch, head of insurance litigation at Stephensons Solicitors, believes the MoJ is leaning towards a more watered-down version of the initial proposals laid out in its consultation paper.

He said: “My understanding is that the unions leaned quite heavily on the government. The government may have thought this to be a very a political issue. I don’t think we’ll ever hear about it again.”

AXA claims director David Williams said: “I’m really worried. I think it’s so important these changes happen. If you think about the amount of work and details argued on this, everyone will look very stupid if it is just dropped.”

A spokesman for the Trade Union Congress said: “We are hoping that some of the points we made would be taken on board, particularly when it comes to speeding up the claims process and individuals access to justice.”