Legal Changes Could Affect Those Families Without A Financial Safety Net

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The Law Of... surviving the rise in housing costs

With a report from Shelter highlighting that 1 in 3 families in England would not be able to afford their rent or mortgage repayments for more than a month if they lost their job, a leading Personal Injury Solicitor has claimed that proposed changes to the compensation industry could disproportionality affect those hard-stretched families.

Legal Changes Could Affect Those Families Without A Financial Safety Net

Without the safety net of a savings account, Shelter's report highlighted that 37% of working families would be unable to cover their housing costs if one partner lost their jobs. Emma Costin – Director of Complex Personal Injury at Simpson Millar LLP – explains that it is these families that will lose out with forthcoming changes to compensation claims.

Rising Housing Costs

Shelter's figures came from quizzing 8,381 adults – including 1,581 people in working families with children. Of these families, 37% said they would not be able to meet more than one month's worth of rent or mortgage repayments if one partner lost their job.

Meanwhile 23% of those in working families claimed that they would not be able to pay their rent or mortgage at all if one breadwinner lost their job.

The same report highlighted that 48% of working families see housing costs as the biggest drain on their budget, highlighting the fact that rising housing costs are placing workers into a precarious financial situation where any unforeseen expenses could spell disaster.

Changes To Legal Costs

Shelter's report is one of many recent studies that outline the fiscal insecurity faced by many families in the UK.

With a lack of savings and the non-existence of any cushion for unforeseen circumstances, anyone that is involved in an accident that requires time off work could find themselves in a difficult situation.

This difficulty could stand to be compounded if proposed changes to compensation claims are not stopped, as Emma explains:

"Shelter's report shines a light on the financial difficulty many families in the UK face, and, with unforeseen accidents occurring every day, it's a real concern that a breadwinner could lose their earnings and plunge a household into insecurity."

"We have already seen the availability of Legal Aid being cut, meaning that less people can access justice without the fear of legal costs causing further financial hardship."

"The most devastating change could be still to come, with the Government's proposal of increasing the small claims limit to £5,000 having the potential to seriously restrict the access to justice afforded to the most vulnerable members of our society."

"This change would mean that any individual making a personal injury claim worth less than £5,000 would not be eligible for payment of their legal costs in bringing that claim. Even if they won they would have to fund the costs of the action out of their compensation, leaving them with a much lower sum than they actually lost in the first place."

"Unless they had the time and ability to make a claim themselves, without representation, they would probably fall through the net uncompensated and the negligent defendant would potentially gain competitive advantage."

"There would not be a level playing field because the insurance companies, local authorities, and businesses that they are claiming against will still be able to organise and fund a proper legal defence."

"As Shelter's report rightly finds – a lot of people do not have a cushion of savings to fall back on should they lose their job or be unable to work overtime. Many others are on zero hours contracts. The ability to bring a claim to compensate for lost earnings is often a vital lifeline."

"Ultimately, what policymakers might define as a 'small' claim could be the difference between financial survival and debt for many low income individuals & their dependents."

"We hear time and again that civil justice is 'too expensive' for the paying parties and the clear message to the public and the legal profession is that – for the greater good of society – the costs of litigation must be slashed to protect defendants. This is clearly seen as more important than protecting the rights of the poor and disenfranchised."

"Let's be clear, a rise in the small claims limit to £5000 without provision for payment in addition of reasonable legal costs will be a windfall for defendants, insurers, and their shareholders. It will deprive swathes of people from access to justice. It is often said that there is little point in having rights if practically speaking those rights cannot be enforced for want of a lawyer and this is the exact scenario we will be faced with."

"The figures thrown around when we talk about 'small claims' may seem 'small' and insignificant to the insurers and the costs of pursuing those claims may appear 'disproportionate' to the amount in dispute in some instances, but in a large number of cases the effect of raising small claim limit will be to punish low income working families."

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