Good afternoon - I'm delighted to be here.
Extremely sorry I couldn't be here to speak to you this morning.
Giving a keynote address first thing after lunch always provides a unique opportunity - either to wake everyone up for the afternoon session or to send everyone in the room to sleep.
I hope I manage to do the former and not the latter.
Introduction
Today we, in Government, want to show that we are committed to preventing a compensation culture from developing.
And today is a chance for local authorities, voluntary and consumer groups, the legal profession, trade unions, insurers and business to find common ground and to agree a way forward. That's why this evening and this afternoon are so important.
Of course, there will always be differences of opinion about how we go about the issue, whether we should do more or less, move quicker or move more slowly.
But through sharing information, promoting discussion, debating issues and testing ideas, we can work together to achieve our aims.
I say "our aims" because I think we all have a lot in common.
We all want to stop a compensation culture from developing.
We all want to tackle perceptions that can lead to a disproportionate fear of litigation and risk-averse behaviour;
We all want to discourage and resist bad claims;
And, just as importantly, we all want to improve the system for those with a valid claim for compensation.
I believe we are successful as a nation in improving health and safety standards. It is vital compensation claims continue to play their part in that improving health and safety. But we must be clear that our continued commitment to legitimate compensation claims is entirely consistent with rejecting a culture which says for every injury there must be somebody liable to pay. That culture stultifies reasonable risk taking it hits organisational efficiency and competitiveness and it prevents worthwhile activity. For too many organisations - business, public and voluntary sector - it makes them believe - often wrongly - that hoops they have to go through are too many so they do not try.
How the Government and wider stakeholders are tackling the issues
So, how are we going to ensure the continued meeting of legitimate claims but rejecting the compensation culture. Because that is the balance we have to strike.
We have been making this a priority across Government.
We have established a Ministerial Steering Group to deliver the programme in a co-ordinated way.
The Group has Ministers from across Government - Health, Work and Pensions, the Home Office, Education and Skills, Office of the Deputy Prime Minister, Treasury, DTI and others.
The Ministerial Steering Group is supported by various groups - including the legal profession, insurers, trade unions, voluntary and consumer groups, business, local authorities and the judiciary.
This shows the commitment - inside and outside Government - to deal with this issue systematically and seriously and in a united way. As a group the solutions are in our hands.
Earlier this month I introduced the Compensation Bill in the House of Lords.
The Bill is not the panacea - it's not a cure for all ills. But it's an important piece of the jigsaw.
I'll talk more about the Bill, as I outline the work we are doing, under six key strands.
The 6 key strands
Firstly, public awareness and communication.
This is critical. However often we point out that claims are not in fact going up, people still believe they are.
The idea of a compensation culture gains credence by this misperception.
The question is, what can we do to help change perceptions?
Our starting point should be this:
Bad claims should not be made.
And bad claims should not be paid.
If we are to promote confidence in the system, local authorities, insurers - all those who receive claims - must find ways to identify and reject bad claims.
Sometimes it might appear to be the easy option to pay up on all claims, just to get them out of the way: even ones that don't seem genuine. But that would be in the short, medium and long term, a serious mistake. That does nothing to deter spurious claims. It just means other people have to pay through their insurance premiums or Council tax on their income tax.
We must also look at helping people to better understand when they can claim compensation, and when they can't.
We are working closely with Advicenow, part of the Advice Service Alliance, to promote their 'Claiming Compensation' leaflet - a clear, simple, straightforward guide.
And there are still other ways that we can promote confidence in the compensation system - and promote confidence that the system is fair and proportionate which is absolutely vital.
We can reassure people, and organisations, that they should not cease their activities because of unfounded fears of litigation.
I know that some of you here have expressed concerns about the negligence provision in the Compensation Bill.
However, this provision means that as long as individuals and organisations adopt reasonable standards and procedures for their activities, they will not be found liable.
The Bill I believe, will help to provide reassurance about how the law in this country works.
But people also need to know what reasonable standards and procedures are. Risk-averse behaviour does not just stem from a fear of litigation. It can arise from people simply not understanding what they should do in terms of risk management.
Risk Management and Affordable Insurance
That brings me to the second strand of our work: Risk Management and Affordable Insurance.
Those responsible for delivering services and those using them need to be better informed about their rights and about their responsibilities.
Of course sometimes people do want to continue to provide certain services that have risks associated with them but cannot because insurance is too expensive or not available.
Part of our work is aimed at promoting affordable insurance. And also at encouraging insurers to provide incentives for good health and safety performance when setting premiums the insurance industry has been co-operative in both these respects.
Advertising
We also need to look at advertising.
Some advertising seems aimed at raising false hopes of compensation and encouraging people to bring weak, spurious claims.
This is distasteful. Advertising of this kind has no place in our justice system. And it ultimately hurts the people interested in taking forward claims.
There have been calls to ban all claims advertising. I don't favour such a blanket ban. If carried out in accordance with existing self-regulation, advertising can promote access to justice for people with genuine claims and raise awareness of people's rights.
Accurate and reliable information that is easily available following an accident can be entirely appropriate.
So, the emphasis must be on stopping improper advertising.
The Home Office and Department of Health have been in touch with chief officers and NHS Trusts to encourage them to take steps to discourage inappropriate personal injury advertising on their premises.
My Department, working jointly with the Advertising Standards Authority, has commissioned research on the impact of advertising in respect of compensation claims for personal injury. The final report is due by end of February 2006 and its findings will inform the development of policy.
Regulation of Claims Management Companies
I am in no doubt that the activities of claims management companies need to be regulated.
There is now plenty of evidence of inappropriate activity by these organisations.
I know that there are some practices that, rather than helping, actually give people the wrong impression about what compensation they are entitled to. Often people are led to believe they will receive large sums of money when they will not.
People are simply not given the best advice on how to proceed with their claim and not told the range of options for doing so - including options which will not involve having to pay unnecessary charges.
It is often unregulated claims companies that do this - companies that knock on doors, cold-call, twist arms, persuade people to fill out forms, pay unnecessary fees, even to take out loans to fund their case with excessive rates of interest.
Many of these unregulated companies - claims farmers, claims management firms, ambulance-chasers - whatever you want to call them, are doing more harm than good.
We also hear stories of:
This is not fair. This is not justice.
Introducing statutory regulation quickly will help ensure consumers are better protected when dealing with claims managers.
We will apply regulation to priority areas where consumers are most at risk - such as personal injury, criminal injury compensation, employment, housing disrepair and mis-selling of financial products such as endowment policies.
We will make it an offence for claims management services to be provided by persons who are not authorised under the new regulatory regime or who are not already fully regulated by another regulator such as the Law Society or the Financial Services Authority.
The regulator will have the power to enforce regulation effectively, including the power to enter and search premises in certain circumstances, and apply for an injunction restraining an unauthorised person from providing claims management services.
The Bill will allow the Lord Chancellor to appoint or establish a body to regulate the claims management sector. Regulatory responsibility will only be given to a body that is competent, has appropriate governance and other management arrangements in place and will provide benefits to consumers. If no suitable body can be appointed, I will have the power as Lord Chancellor to regulate directly.
Coal health claims
An excellent scheme was put in place to compensate people who have had health problems caused by working in the mines. It costs claimants nothing. But some claims companies and law firms have got in on the act, looking to make a fast buck.
The claims companies need very much to up their game. The time has come to take clear and firm action and the Compensation Bill will enable the proper regulation of their activities and quickly.
Some solicitors have also been found to have double charge miners. Where a government scheme meets all legal costs levying additional charges surely must be at least be unethical.
Solicitors of course already have a regulator and I know that the Law Society has treated as high priority complaints against any solicitors firms in relation to the coal health claims. I am pleased to see how responsive the Law Society have been and hope they continue work hard to root out any bad practices amongst solicitors.
Rehabilitation
Another important focus for this work, and one of our six key strands is earlier and better rehabilitation.
Another important focus for this work, and one of our six key strands is earlier and better rehabilitation.
Early rehabilitation can reduce the exclusion of people from the labour market. It can mean the injured party makes a fuller and quicker recovery. It can reduce the levels of compensation that need to be paid.
But there are some difficult questions to be grappled with:
I know that many of you attach great significance to this issue:
If we are to make real progress on this vital issue it will need this concerted effort from insurers, trade unions, employers, lawyers, HSE and Government.
We will be asking you to contribute to their thinking later this afternoon.
We will also be seeking your views on the claims process.
The Claims Process
We certainly want to discourage bad claims. But we don't want to discourage genuine victims from making claims.
Where appropriate redress is awarded, it should be done so in a timely, proportionate and cost effective way.
There is evidence to suggest that currently that is not happening in all cases. That is why we are committed to improving the system.
One argument is that we need to increase the small claims limit. Why? Because costs of conducting such cases have become disproportionately high, particularly for claims on the lower value end of the scale. Insurers say that legal costs now make up 40% of the total amount paid out in such cases.
In addition, it is now a fact that costs often exceed compensation, sometimes by a considerable amount.
Cases involving awards of less than £2000 have been known to incur claimant costs of between £4500 and £7000.
In two of these cases, the original claim for costs in each case was yet another £3000 higher than the amount allowed. And this doesn't even include the costs incurred by the defendant!
These cases may be exceptions rather than rules. And true, there may have been unusual factors involved. But the fact that they occur at all has shown that there is a disparity here - between the size of an award that can be given and the costs that may be involved in demonstrating that one is entitled to compensation in the first place.
While I accept that costs cannot always be proportionate to the size of the award, I am certain that the current system is not as efficient as it should be.
Is raising the limit the answer?
If someone has been a victim and is entitled to some form of compensation, lawyers will ask how can we expect them to act alone without recourse to legal advice?
Typically when a person is making a claim, they have to go up against professionals - insurers, lawyers, claims managers, employers. They have to be able to cope with medical and other expert evidence that will be used to value their claim.
Lawyers have pointed to offers made to non-represented defendants that can increase by almost £1000 by final settlement where the services of a lawyer are engaged.
So how and where are we going to find the balance?
Shortly we are going to be consulting on where the case management limits should be. But whatever the result of that consultation let me be clear about one thing - the present system cannot continue.
Making a valid claim must result in appropriate and fair redress being provided in a way that is more efficient, less adversarial and less stressful for the injured party. And not just for the lower value cases, but for all cases.
What we need to do is to find ways to secure earlier admissions of liability. Now that could mean simply ensuring that the insurer is informed about a claim at a much earlier stage so that liability can be acknowledged. Or it could mean not allowing cases to be prolonged unnecessarily once they do go ahead.
Secondly, we need to think about what areas of the process might involve duplication of work and indeed unnecessary work;
Thirdly, we need to ensure that medical and other expert evidence is proportionate and pitched at the right level;
As I said earlier, we need to promote earlier and better rehabilitation;
And we need to make more use of alternative dispute resolution. My department is already taking steps towards this.
I am encouraged that stakeholders are already focussing on change. I know that many of you here, lawyers, insurers, the Civil Justice Council and others with an interest already have ideas and initiatives, which you are sharing with us.
Conclusion
I hope I - and the other speakers today - have shown how seriously we take this work. I know you and the organisations you represent share the same commitment.
Ultimately, this is not about denying access to justice or restricting people's rights to redress, or regulating the legal sector further.
This is about doing more for people who need the full protection of the law.
This is about clamping down on those who would abuse the current system for their own gain.
It is about preserving public rights and public freedoms to do a great number of things that the law allows.
And it is about maintaining public respect for the law and the rights of others to protection through the law.
Thank you.