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The government today executed a major U-turn on raising the small claims limit for personal injury claims, having announced three months ago that it was not going to do so.

Mesothelioma claims are to remain outside of the Jackson reforms once they are implemented next April, pending a review of their impact on sufferers, the government announced yesterday in a surprise concession.

The government as expected overturned all of the House of Lords amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill last night, with justice minister Jonathan Djanogly saying the Jackson reforms would put an end to the “racket” that has allowed “inflated profits” for law firms.

An 11-man working party will meet for the first time today to advise on how to introduce contingency fees for court work in England and Wales. The working party has been set up by the Civil Justice Council.

Claimant groups have welcomed the House of Lords votes to exclude industrial disease cases from the end of recoverability, but questioned why there is a different rule for other injured people. Also, refusing to put the 10% increase in damages on the face of the bill could cause problems, they warned.