I want to talk to you today about an issue that is gaining in credence.
The so-called compensation culture - the idea that that for every mishap there is someone at fault. For every injury, someone to blame. And for every accident, someone to pay.
It is a view increasingly reinforced in advertising - on television, in magazines - even in doctor's surgeries and hospital waiting rooms. The papers report stories - often accurately - of claims being made in questionable circumstances: where blame is unclear and common sense is out of the picture. They don't always report the outcome of those claims, often because of the abandonment of the claim. But that doesn't matter. The advertising, the stories, they all create an atmosphere in which claims are encouraged and claimants given the green light to 'have a go'.
The impression is one that courts are awarding compensation today, in a way that is different from yesterday.
The result is that this 'claims-friendly' atmosphere is starting to have a negative impact on the way many organisations work.
Schools, hospitals, local authorities are beginning to feel they are more at risk from litigation than they really are. They have the impression that they are at risk from being sued for activities that, in a healthy society, we would want and expect them to carry out.
We can't afford to leave this impression unchecked.
In the last few months we have heard of local authority councillors standing down because they fear being sued, even conker trees being chopped down, all because of an over-inflated fear that there is no such thing as a genuine accident.
Some call this a compensation culture. Some call it a claims culture. Others call it the 'have a go' culture.
How we describe it matters little. It is the effect we should be concerned with. It creates a fear of litigation; can make organisations risk averse; cause local authorities to cancel events; doctors to practice defensive medicine; it creates burdens for those handling claims. And, critically, it undermines genuine claims.
We should define clearly the principle of law that has stood the test of time. It is a principle that is becoming blurred and muddied. It is a simple proposition. Where there is wrong-doing, which causes loss people are entitled to compensation from the wrongdoer.
It is right that where someone is injured through the negligence or wrong-doing of another, the victim should be compensated. This, at heart, is a rational way to redistribute costs. It ensures that the wrong-doer pays.
My view is clear - I am opposed to the idea, or anything that promotes the idea, that where there is an accident, there is always compensation. The Government is opposed to any development of a so-called 'compensation culture' where people believe that for every mishap, someone else is at fault and should pay up. I am clear that there isn't always someone to blame: no blame, no claim.
Causes and consequences
So, where is the contrary view coming from? What's behind it and what impact is it having?
Let me start by saying what is not happening.
Despite the headlines, the courts are not continually extending liability. The basic principles of the law of negligence remain the same.
Recent judgments such as that in Tomlinson v Congleton Borough Council - where a swimmer, who suffered injury when he dived into a shallow lake where swimming was prohibited, was held not to have a claim against the Council - make this clear that the law is not changing. This judgment is already being reflected in other decisions of the courts.
And for the past four years, the number of accident claims have remained static. Indeed they fell by 9.5% in the year to March 2004.
But the real damage though is where organisations behave differently because they fear the prospect of litigation.
As the stories of a compensation culture abound, so an unrealistic fear of litigation grows.
Yet some of the figures used in the debate are woeful - they fuel the fire that litigation is now something routine, increasing people's view that 'everyone else is doing it, why shouldn't I?'.
One example - a report claimed that "compensation costs British business £10 billion per annum". The report also added that "The costs are by no means precise and in places rely on some heroic assumptions."
And, we now know that some of their assumptions were not just heroic, but heroically wrong.
Reports such as this fuel the perception of a problem. Figures are presented without caveats. Estimates become fact and guesses become gospel.
A more responsible debate is required - recognising that there is a problem, but not blowing it out of proportion. An injection of common sense.
Otherwise, the perception that people will go to court at the drop of a hat curtails normal activity. It is changing our attitude to risk in an unhealthy way.
And, allied to this, is the way the claims management sector promotes itself - both in content and in location.
In some hospitals, there are posters that set out to persuade people to sue their doctors. One reads - "Did the doctor or nurse make you worse? We can get you compensation?"
On the streets, some companies seek to persuade people they have been victims of an injustice and are standing by to back them up.
On television, there are adverts to encourage us to make a claim for every minor fall.
One advert, highlighted in the Better Regulation report which I will return to, featured a young woman looking at a sports car and saying "I've always wanted one of those and now I have had an accident I can have one".
I find this type of advertising very unattractive.
Of course, some advertising has a role to play. It can help people with genuine claims who otherwise might have difficulty obtaining the help and redress they deserve.
But there is absolutely no place for advertising that raises false expectations or promotes the bringing of frivolous claims. This is not providing a service to the consumer. It is misleading and harmful It undermines legitimate claims.
I am pleased that the Chief Executive of the Department of Health and the NHS and the Chief Medical Officer are writing jointly to NHS Organisations. The letter states that Ministers are strongly opposed to advertising by claims management or other legal services within premises which provides NHS services. This can undermine the relationship of NHS staff and their patients.
The guidance on advertising content has been strengthened. It is also suggested that General Practioners may also wish to adopt similar guidelines in respect of notices put up in surgeries and clinics.
This is important.
We do not want to go down a road where our responsibilities to one another are reduced to who can get what from whom, regardless of negligence or wrong-doing. We do not want to promote the law as a lottery where claimants are encouraged to take a punt.
We must break the cycle.
A response
So, to go back to first principles:
The essential purpose of the law is to define people's rights and their responsibilities. To provide a framework to create a fair balance between different interests. This underpins respect for the rule of law - the bedrock, I believe, of a healthy, civil society.
And let us remember that most of the operation of the law is about people in their everyday lives meeting their duties and allowing others to enjoy their rights.
In some areas it's easy to say that if you're injured you should have a claim. Where you've been deliberately assaulted. That's wrongdoing in civil law as well as criminal law.
At the other end of the spectrum there are injuries which are pure accidents. That's life. No-one has done anything wrong.
And in the middle, the law says that if someone is injured as a result of another person's negligence, the victim should be compensated and the negligent person should pay. We need to be careful always to ensure that standards of care reflect sensible norms. That appropriate risks taking, properly understood is allowed
This is right for the individual and for society as a whole.
It makes those who caused the damage pay for it. It ensures, for example, that the efficient producer and honest and transparent corporations are not undermined in the market place by competitors who cut corners and offload costs on others.
People who have a genuine claim should be able to recover the compensation they are due.
Equally, the law is clear that people should take reasonable care of their own safety. Where their own negligence has contributed to the damage they have suffered, it should be taken into account.
That is a fair system. It is a balanced approach. On one side of the scale, we take responsibility for our own actions and, on the other, if damage is caused due to wrong-doing we are due compensation.
But we need to ensure that the system is used, not abused.
The Better Regulation Task Force in their report Better Routes to Redress looked closely at the issue. I would like to give thank to Teresa Graham - who will speak later - and the work she and the Better Regulation Task Force. The work she has done has been invaluable in illuminating this debate, Its key finding is that despite widespread perceptions, it is a myth that society has suddenly become far more litigious and claims for compensation are spiralling out of control. But, the report also recognised it is a damaging myth and it needs to be tackled.
Government can't respond to this alone. But together - government, business, the media - we must tackle the problems I, and the report, have outlined.
Some offer knee-jerk reactions.
The first knee jerk reaction is that our rights have gone too far and we should repeal the Human Rights Act.
Yet the suggestion that the Act has somehow unleashed a tidal wave of litigation is preposterous. The Act did not create any new rights. It is based entirely on the European Convention on Human Rights which the UK ratified in 1951, after playing a leading role in its formulation. Every government since then has sought to abide by it - for the very good reason that it set out the rights that this country has upheld one way or another throughout its history.
So the answer is not to take people's rights away from them. That would be a backward step. Instead we need to explain that rights and responsibilities are two sides of the same coin.
The second argument is that conditional fee arrangements are the cause of bad claims and should be scrapped.
I reject that suggestion.
Rather than promoting bad claims, Conditional Fee Agreements ensure that justice is affordable to all. Making a claim is no longer the preserve of the wealthy. Without CFAs, many people would have been denied access to justice in all manner of cases. Because of them, these people have benefited and received the compensation they are entitled to.
Indeed, CFAs discourage weak claims and encourage early settlement. Lawyers will veer away from groundless claims - commercial interest will mean a case will have to have merit in order for a case to be taken.
But there is room for improvement in relation to CFAs. Regulation of these Agreements can be made simpler and more transparent. They should provide a better deal for consumers, lawyers and defendants. We have consulted on detailed proposals for achieving this and are now working to get the design of the legislation and the rules right.
The third proposal is that we should cap the amount of damages.
But the effect of a cap would be most damaging on those who are most seriously injured and most in need of compensation. It could be someone who is knocked over by a dangerous driver or a child who as a result of the wrongful act needs a lifetime of care.
A cap would certainly be unjust in these circumstances.
So, I've said what we won't do, can I set out what we will do.
We will look closely at the practices of claims management companies. Concern about their activities is a recurring theme picked up by the BRTF.
The past activities and collapse of both Claims Direct and the Accident Group, amongst others, has grabbed the headlines. Poorly served consumers have filled the offices of Citizens Advice Bureau
The Better Regulation Task Force made the better regulation of claims management companies its number one recommendation
Too often it seems consumers have not fully understood the liabilities they were undertaking when signing up for insurance and loans offered to them by the sales agents to support their claims.
It remains an open question as to whether claims intermediaries add value to the claims process or simply an extra costly tier.
The Better Regulation Task Force reported a widespread call for claims management companies to be regulated but noted few were able to suggest a model of the regulation of the sector. The BRTF concluded that self-regulation should be tried before there was any more government regulation and recommended the Claims Standards Council (then the Federation) should work towards approval of its code of practice with the OFT.
We agree with that approach.
We want to see the claims management sector regulated properly and the sector has the last opportunity to do so itself before further formal regulation is considered.
We want to see a major change in quality and behaviour so that the service provided to consumers is improved significantly.
So, if the claims management sector does not put its own house in order we will consider how new formal regulation could be introduced.
The second thing we will do is to continue to push the message that with rights come responsibilities.
We need to send a strong message that provided people act with reasonable care, they cannot be successfully sued even if someone is hurt. And if an injured person has not acted sensibly themselves then that too will be a defence to any claim.
We must resist spurious claims and put risks in context.
I am delighted that OFSTED recently sent out a clear message that if teachers follow recognised safety procedures and guidance, they have nothing to fear from the law.
And we in Government will play our part.
In consultation with the various sectors, we will develop appropriate guidance on issues like health and safety and on rights of redress and their limits. And we will encourage appropriate and proportionate risk management procedures and promote the need for responsible behaviour by all.
We are already working with the insurance sector to promote the availability of affordable insurance and to explore how premiums can be linked more effectively to risk.
We also want to promote greater transparency - all too often increases in premiums or refusal to provide cover, are unjustifiably blamed solely on a rising number of claims or the 'compensation culture', which in turn helps fuel the perception of there is an injury then somebody must pay.
And, while Government cannot determine the commercial pressures faced by local authorities and insurers, it is in our collective interest as a society to resist bad claims.
They are a drain on the resources of those who have to investigate them in order to reject them.
And where meritless claims get compensated, we can be sure that more claims of the same kind will be brought forward.
I can offer the commitment that where state bodies are involved, we will do our bit to resist such claims.
Third, we will do more to resolve genuine claims quickly and effectively.
As strongly as we resist spurious claims, we should also robustly defend the rights of people to make genuine claims.
Wherever possible, we want claims settled informally and quickly, without going to court.
So we will continue to build on the work we are doing to encourage better use of alternative dispute resolution. And we will continue to encourage mediation as a way of resolving disputes between the citizen and the state
We will support initiatives to provide earlier and better rehabilitation. The Government launched its Framework for Vocational Rehabilitation on 27 October.
But there will always remain those cases where a court is necessary and appropriate. Rights and responsibilities would be meaningless if they could not ultimately be enforced. That is the role of the justice system.
Access to effective justice is vital to protect individuals' rights in the last resort and to promote general compliance with the law.
The effective operation of the court in these cases, resolving hard disputes fairly, developing the law and enforcing outcomes, casts the 'shadow of the law' that is vital to the effectiveness of the rest of the system.
We will also continue to look for ways to make the current procedures and costs more proportionate. On small claims, in addition to carrying out research on raising the limit, we will explore other options for dealing with the smaller claims.
The Government is already working with a range of stakeholders to develop a pilot for lower value employers' liability claims.
And, finally, I can give my commitment today that the Government will continue to show leadership to deal with this issue.
Today we are publishing our response to the Better Regulation Task Force Report. I have outlined today the importance I place on resisting spurious claims for compensation, while doing more to help those with a genuine complaint. I have given my clear commitment that we will work with all those who have a part to play in taking this important work forward.
As a sign of that commitment I can announce today that a Ministerial Steering Group is being set up to drive this work forward in a co-ordinated way across Government. We are also setting up an Action Group involving a wide range of stakeholders, from both within and outside Government. I am grateful to all those who have already indicated their willingness to help us in this work.
And we will continue with our important reforms. The more we can make connections between people and public services, the better. The more democratic our institutions - the more people become involved and help to shape them, the less likely they will blame them if things go wrong.
Conclusion
Government cannot provide all the solutions to these problems. They are complex and they are controversial. The issues go to the heart of the relationship between citizen and state. It is a relationship that is vital to a healthy democracy.
It is a relationship that my Department is doing all it can to foster and protect.
This is clear in our constitutional reform bill. These are significant, even radical reforms. Our institutions are becoming more open, more transparent and more representative of the people they serve. These reforms will reshape our constitution for generations to come.
We will continue with these reforms.
And we will respond to new circumstances as they arise and be resilient in the face of new challenges.
It is in all our interests to solve the problems I have outlined today.
And to focus much more clearly on the claims where people have genuinely been the victim of wrong doing and truly deserve all the help and support the system can provide.