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This inquiry was set up to examine the compensation system in the United Kingdom and encompassed a wide range of topics, including the effect of the move to "no win, no fee" conditional fee agreements, the Compensation Bill [Lords], the NHS Redress Bill [Lords] and risk aversion in public bodies.
The Compensation Bill [Lords] seeks to restate the common law of negligence. This has apparently been included to reassure volunteers that they are protected from liability. Such a provision is unnecessary and may prove harmful. It neither satisfies those people who wish for volunteers to be provided with a special defence against claims of negligence, nor does it clarify the law. Instead, it is likely to lead to additional litigation, as people turn to the courts to define the precise nature of that provision.
The move from legal aid to conditional fee agreements may have broadened access to justice, but it has had some unfortunate side-effects. The regulation of claims "farmers", who refer claimants to solicitors, often selling them financial products in the course of the transaction, is welcome and overdue. We hope that through the Compensation Bill [Lords] the Government will introduce practical measures to tackle abuses such as claims farmers placing misleading advertisements and mis-selling financial products.
We also examined the proposed redress scheme for victims of medical negligence under the NHS Redress Bill [Lords]. Whilst the Government has given the Committee a number of guarantees about independence, it has not satisfied us that it has successfully engaged with practitioners (both medical and legal) to ensure that the scheme will work. It is not apparent how cost effective the scheme will be, and there has been no reliable evidence of the likely cost of claims which would not have been pursued if the scheme had not been set up. The Government should run a pilot of this ambitious scheme to enable it to assess properly its impact before it is introduced nationally.
Finally, we considered the issue of excessive risk aversion - in other words the propensity of organizations to avoid undertaking work which might have some risk attached, however slight. We found no evidence that conditional fee agreements or personal injury litigation were a significant factor in causing risk aversion, and personal injury litigation has not increased in recent years. Risk aversion has a number of complex causes, including advertising by claims management companies, selective media reporting, a lack of information about how the law works and, on occasion, a lack of common sense amongst those who implement health and safety guidelines. Risk aversion of this sort is a concerning modern phenomenon that has an adverse effect on both individuals and the economy as a whole. Instead of a statutory provision restating the law of negligence what is required is a clear leadership by the Government. This should include an education programme making clear that risk management does not equate to the avoidance of all risk and active engagement by the Health and Safety Executive to ensure that it adopts an approach which is proportionate, it does not over-regulate vulnerable sectors and instead offers appropriate advice and support.
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