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The compensation culture costs Britain £10 billion a year. David Davis blames the human rights industry

21 August 2004

12:00 AM

21 August 2004

12:00 AM

The compensation culture costs Britain £10 billion a year. David Davis blames the human rights industry

One hardly knows where to start. The teacher who won £55,000 from the taxpayer because she slipped on a chip. The parents of the Girl Guide who won £3,500 after singeing her fingers cooking sausages. The prisoner who successfully sued the government when he fell off the roof while trying to escape. The 200 travellers who were granted retrospective planning permission to set up a permanent camp on the edge of a small village because they had a ‘right to family life’. The serial murderer who successfully demanded the delivery of hard-core pornography to his prison cell because of his ‘right to information’. My favourite is the case of Peter Foster, the Australian conman who exposed intimate details of the Prime Minister’s family affairs and then claimed that deportation from Britain would infringe his ‘right to respect for private and family life’.

I defer to no one in my defence of genuine human rights. Formerly a member of Amnesty International, my first action as shadow home secretary was to lead the successful attack on the government’s plans to end the right to a trial by jury. Now that really is a ‘human right’. The ‘rights’ to compensation, or to squat in someone else’s field, or to hard-core porn are special categories of something else: the ‘rights’ culture which is now so deeply rooted in our society that we have lost all common sense about the relations of individuals to each other and to the state.

It is at the local level that the compensation culture is most damaging. Volunteering is in sharp decline, with ‘risk, fear of blame and litigation’ the factor most often cited by people giving it up. In the public sector there has been a doubling in the number of compensation claims against schools and hospitals since 1997. Schools paid out £200 million last year in compensation (equivalent to 8,000 new teachers). Hospitals paid £480 million a year (23,000 new nurses).

According to the Commission for Architecture and the Built Environment, the rise of compensation has coincided with the loss of many of the most attractive aspects of parks and public spaces. Ancient trees, boating lakes, adventure playgrounds, festivals, markets, water features and public art all are deemed too risky. Green spaces are turning into just that: green spaces, shorn of all ornament, with the trees pruned back to the trunk, the conkers swept up before dawn each morning, and the lakes filled in.


Not content with sanitising public parks, the government recently proposed that when schoolchildren are taught rock-climbing, every difficult stretch and patch of ice should be labelled ‘dangerous’. I am glad to say this absurd suggestion was withdrawn following howls of derision in Parliament. But is it any wonder that the teachers’ union NAS/UWT now advises its members against taking schoolchildren on trips? That doctors’ practise ‘defensive medicine’, with the avoidance of litigation, not the cure of the patient, uppermost in their minds? Or that Manchester City Council’s budget for pavement repairs is smaller than the money it spends fighting compensation claims from people who have fallen in the street?

Private-sector employers also suffer from the compensation culture. The number of applications for employment tribunals — claims of discrimination or unfair dismissal — rose by nearly two-thirds during the last Parliament. Payouts on employers’ liability insurance tripled over the same period. Unsurprisingly, the cost of insurance premiums increased by 50 per cent in 2002 alone, with many sectors — such as construction — hit even harder. In total, according to the Institute of Actuaries, compensation cost British businesses £10 billion per annum, a cost currently rising by 15 per cent every year. No wonder that Lord Levene, chairman of Lloyd’s of London, says that ‘the compensation culture is starting to plunder the UK economy’.

Of course, the effect of the compensation culture is not just the payouts. There are avoidance and opportunity costs, too. The Ministry of Defence estimates that the hidden extra costs of a claim are about six times the actual compensation paid — and it paid £100 million in compensation last year. According to the Institute of Directors, two thirds of businesses accused of unfair dismissal decide to settle rather than proceed to tribunal (they are often wrong to chicken out; a third of businesses that refuse to settle find the claim is withdrawn at the last minute).

So what accounts for the growth of compensation claims? Partly the explanation lies in higher expectations on the part of the citizen. It is a good thing that people are demanding a fair deal from the institutions that supply their needs and wants. The public services, in particular, remain unreformed and ‘producer-captured’ — often the only way a family can make the system pay it some attention is to sue it. With reformed schools and hospitals, incentivised through their funding system to be responsive to their users, fewer people will have recourse to the law to press their claim to decent treatment.

We also need changes to the law affecting liability. The conditional fee arrangement (‘no-win-no-fee’) introduced in 1999 has been effective in widening access to justice to those who cannot risk heavy legal bills. But it has also led to a rush of spurious claims by people who have nothing to lose by launching an action against an employer or public agency.

We need to think about cutting the cancer of litigation out of the public services altogether, except when a public servant may be said to have recklessly endangered those in his charge. We need to think about how to limit liabilities on company directors and charity trustees, how to ‘sunset’ health and safety legislation and how to end the distorting effect of discrimination law, which positively encourages claims on the basis of race and sex.

Overall, we need to nurture a culture of responsibility and common sense. To my mind the worst emanation — cause and effect — of the compensation culture is the Human Rights Act, which incorporated the European Convention on Human Rights into UK law. Once, we had inherited English liberties; now, we have incorporated European rights. The English idea — evolved through Magna Carta (1215), the Petition of Right (1628) and the Bill of Rights (1689) — was of freedoms held back from the state. The new idea — invented with the Code Napoléon — is of bounties handed out by the state. Once, the law limited the state and enlarged the sphere in which the citizen could be free; now, it imposes obligations on the state and limits the freedom of the citizen. British judges once ‘discovered’ the law with reference to statute and precedent; now they must ‘divine’ the law by appeal to the declarations of politicians.

Needless to say, I do not believe in leaving the individual defenceless against the state or against the recklessness or criminality of others. Today, government is a more intrusive presence in our lives than ever before in our history, and crime and disorder wreck the lives of families and communities. The problem is that the ‘human rights’ system rewards compensation-chasers and criminal troublemakers. The ordinary citizen has never needed more protection against the agents of the state and against the depredations of crime — but the current approach is not providing it.


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