The Ministry of Justice will today confirm there is to be no increase in the small claims court limit.
The department is finally set to publish its response later this morning to a consultation on reducing the number and cost of whiplash claims.
It will include plans for an independent medical panel to assess whiplash claims from next year.
But the increase in the small claims track threshold from £1,000 to £5,000 – a key element of the original consultation – will not be included in the plans.
The news will come as a huge relief for claimant personal injury firms that feared for their future if the limit was raised above the level of most whiplash claims.
But insurers will be disappointed that they failed to convince the government that a £5,000 limit would help to tackle fraudulent and exaggerated claims.
It is understood the MoJ decided to back away from an increase because of concerns raised during the consultation and following the House of Commons transport select committee report, published in the summer, which opposed it.
The response is expected to say that previous reforms need more time to take effect, although the government will not rule out a change to the threshold in the future.
Justice secretary Chris Grayling today said insurance premiums have already come down by an average of £80 and appeared to suggest this was reason not to address legal costs at this time.
He said: ‘It’s not right that people who cheat the insurance system get away with it while forcing up the price for everyone else – so we are now going after whiplash fraudsters and will keep on driving premiums down.’
Law Society chief executive Desmond Hudson hailed the MoJ decision to heed the warnings of the transport select committee and maintain the small claims limit at its current level for personal injuries as ‘good news for accident victims and a victory for common sense’.
‘It reduces the risk of people with real injuries being fobbed off with less than they are entitled to,’ he said.
‘The government has made the right decision in the face of relentless lobbying by the insurance industry seeking to increase the small claims limit and make it more difficult for genuine claimants to obtain just settlements.
‘We will be studying the MoJ’s consultation in detail, because we are clear that weeding out false claims must not be at the expense of genuine claimants or radical meddling with the working of the civil justice system with consequent risks.’
The Association of British Insurers said the independent panel for whiplash injuries should not be the end of reforms to the sector.
James Dalton, the ABI head of motor and liability, said: ‘Setting up independent panels of accredited experts will help the UK shake off its reputation as the whiplash capital of Europe.
‘Additional measures, such as increasing the small track claims threshold from £1,000 to £5,000 as we have argued for is also crucial. It would provide not only a simple, speedy, more cost-effective way of settling genuine whiplash claims, but ensure that lower motor premiums can be sustained.’