Kevin Rowan column

Feb 20 2006 By Kevin Rowan, The Journal

Last week saw real public interest in the business of government, around the smoking aspects of the Health Bill, and this is because there was a clear link to the direct impact on individuals.

The Compensation Bill is proposed legislation that could also have a dramatic impact. When the Bill was mooted it was on the basis of two headlines. The first was the apparent "compensation culture" exploding in the UK; the second was the reticence of schools to run trips because of the risk of being sued.

The Bill seeks to address these issues by proposing protections against liability actions for groups conducting "desirable" activities; by regulating the no-win, no-fee claims farmers; and by raising the limit for claims in the Small Claims Court.

There is no opposition to regulating claims farmers. These are often pedlars of after-the-event insurance, with no interest in whether individuals have legitimate claims or succeed in them.

An ex-worker for one of these firms told me they were encouraged to process claims they knew to be unwinnable, as his company made its profit on selling associated insurance.

But lumping trade unions with claims farmers is unreasonable.

Unions generally pursue only strong claims against negligent employers. There is no evidence this is leading to a compensation culture. Quite the opposite. Of the 850,000-plus people hurt at work each year, fewer than 10% receive compensation - evidence that workers need more help, not less.

About one third of personal-injury claims pay out less than £2,500 and the average is less than £5,000.

Lifting the ceiling on claims that should be taken in the Small Claims Court, where costs cannot be recovered, from £1,000 to £2,500 would mean individuals either had to take their claim personally, or had to pay for legal support.

Research shows 80% of legitimate claims would not be pursued, either because individuals were put off by costs or because they did not have the legal expertise to evaluate their claim. That is a lot of people who would be denied justice when their employer had acted negligently, causing them serious injury.

Excluding groups for "desirable" activities is also very dangerous. Would all public-service organisations be exempt from prosecution for acting negligently?

Would private-sector employers be able to argue profit is "desirable" and so be able to undermine duties to manage safety on the grounds it harms profits?