Evidence submitted by Volunteering England
These observations are based on a programme
of research conducted in 2005 by the Institute for Volunteering
Research at Volunteering England. The research reviewed literature
on the current situation of risk, risk management and volunteering,
and analysed responses to surveys of volunteer-involving organisations
and of individuals, both volunteers and non-volunteers. These
comments address the Committee's terms of reference.
1. Does the "compensation culture"
exist?
The compensation culture is a reality for many
people and organisations. Our survey of volunteer-involving organisations
shows that more than 90% of respondents believe it exists. It
is recognised that it originated in the United States, but has
been promoted here by the abolition of legal aid for most personal
injury claims and the introduction of "no win no fee"
arrangements; the growth of claims management companies and their
ubiquitous advertising; media coverage of claims; social change
which places greater emphasis on rights; and cultural change towards
an individualistic, atomised society in which people feel a diminished
sense of personal responsibility and are inclined to blame others
for their misfortunes.
The belief that we now live in a more litigious
society has had a major impact on voluntary and community organisations
and on volunteering. It has created a climate of anxiety, if not
fear, in the voluntary (as well as public) sector, and has impacted
on volunteer-involving organisations through increased insurance
costs and exclusions, as the insurance industry itself reacted
to the "compensation culture". A large majority of organisations
have experienced steep premium rises in the past few years, causing
them to increase charges for activities, restrict services and,
in some cases, close down completely.
2. What has been the effect of the move to
"no win no fee" contingency fee arrangements?
This is identified as a key reason for the growth
of the compensation culture in this country, largely because it
stimulated the rise of "claims farmers". However, it
should be noted that while it has encouraged the perception that
anyone can claim and has apparently opened access to claimants
because they do not have to pay legal fees, personal injury lawyers
have a vested interest in screening out claims they are unlikely
to win, and therefore it has not prompted the free-for-all which
some allege.
The Citizens Advice Bureau reports that less
than one third of accident victims actually make a legal claim
for compensation and that the "no win no fee" system
creates complex financial and legal barriers for consumers who
are often vulnerable, disadvantaged and socially excluded. It
maintains that conditional fee arrangements provide perverse incentives
for the legal profession to "cherry-pick" high value
cases with high chances of success. Therefore CAB argues that
we have a "compensation deficit" rather than a "compensation
culture" and that the present system is not meeting the needs
of many who have suffered injury or loss.
There has not been a large number of claims
against volunteer-involving organisations but since these were
virtually non-existent until quite recently, any increase in claims
has attracted attention. In our survey, we found that nearly 5%
of the organisations had been involved in litigation against them.
The much-quoted fact that the actual number
of personal injury claims has declined in this country ignores
the disproportionate impact that a few well-publicised cases can
have, as well as the alleged fact that the bare court statistics
do not accurately reflect the scale of complaints and claims,
many of which are dealt with through quasi-legal and other mechanisms,
and never reach court.
A major umbrella organisation in the voluntary
sector cites the experience of its members that litigation, even
when dismissed, is an enormous drain on resources. Many organisations
which are innocent of wrong-doing choose to make settlements rather
than face the additional costs of pursuing cases through the courts
and the consequent publicity and damage to their reputation. The
need to budget for litigation-related costs is placing a sizeable
burden on both public and voluntary sector bodies and taking resources
away from service development.
3. Is the notion of a "compensation
culture" leading to unnecessary risk averseness in public
bodies?
Yes. While the compensation culture climate
has stimulated awareness and in some situations improved services
and safety, it has also led to excessive risk aversion. This has
affected both the perception of what constitutes "risk"
and the process of assessing and managing risk. In our survey,
20% of volunteer-involving organisations were public bodies and
60% of the voluntary organisations were delivering services under
contract to statutory authorities. Many felt heavily constrained
by the excessive caution and bureaucracy that characterises the
public sector. The risk aversion of the public sector is, in the
words of one health charity, "seeping through into voluntary
organisations". Another organisation commented that in the
area of risk management "the public sector has imposed its
values on the voluntary and community sector".
Certainly our evidence is that the volunteer-involving
sector has become increasingly risk-averse. A significant minority
of organisations have had to cancel or limit activities (which
have operated without incident or accident for a decade or more)
and find the task of completing risk assessment paperwork, often
for several local authority departments, a major burden on their
resources and a limitation on delivering a full range of services.
Risk aversion is threatening the involvement
of volunteers, with evidence that fear of risk and risk management
`red tape' are deterring people from volunteering and causing
existing volunteers to leave. One in five organisations in our
survey reported losing volunteers for these reasons and more than
a quarter said would-be volunteers had been deterred from volunteering
with them. And one in twenty volunteers responding to our survey
had considered stopping volunteering because of their concern
about risk and liability—totalled up this amounts to some
one million volunteers across the country as a whole.
Risk aversion is also threatening the entrepreneurial
nature of organisations. The sector's much-praised ability to
innovate and explore new ways of solving or reducing social problems
is seriously at risk if it dare not push the boundaries of care
and action. Risk aversion in the public sector is therefore not
only of concern for public services but also for the knock-on
effects it is having on the voluntary and community sector and
volunteering.
4. Should firms which refer people, manage
or advertise conditional fee arrangements be subject to regulations?
Yes. There is a firm consensus on this among
major stakeholders including volunteer-involving organisations,
consumer bodies and the legal profession. The very public trawl
for clients by companies which then refer claims to lawyers (many
being dismissed in the process) promotes a widespread perception
that compensation cash is up for grabs and generates fear of being
sued, even when organisations have blemish-free safety records.
5. Should any changes be made to the current
laws relating to negligence?
This needs very careful consideration, with
a wide range of expert opinion being brought to bear on the question.
Responses to the proposed Compensation Bill's change to the law
of negligence are still in the early stages, but views have been
expressed both for and against. Some voluntary bodies welcome
the attempt to contextualise `reasonable care' in determining
whether negligence has take place; in sports, adventure and recreation,
for example, excessive caution in interpreting "duty of care"
can change the essential nature of the activity—or even
stop it completely—and therefore deprive people of these
kinds of opportunities for fitness, challenge and enjoyment.
However, some legal bodies are concerned that
primary legislation is not the most appropriate way of tackling
the compensation culture. In their view, the Compensation Bill's
attempt to replicate 75 years of common law in a single statute
is a questionable strategy, and one which will lead to many years
of satellite litigation to determine whether and how the law has
changed. It will therefore have little immediate effect on halting
the compensation culture and may even raise its profile through
placing key concepts under public scrutiny.
They advocate instead, along with regulation
of claims farmers, better consumer advice and public education
campaigns, education of the judiciary to inform its judgements
on volunteer-related cases, and alternative non-litigious routes
to compensation (as proposed in the NHS Redress Bill) with greater
emphasis on mediation and rehabilitation.
Our research showed that the legislative route
taken in the United States and Australia has not been notably
successful. The passing of Volunteer Protection Acts which attempt
to `immunise' volunteers against liability has had some undesirable
consequences and failed to clarify the situation.
CONCLUSION
"Mythical" it may be but the compensation
culture and associated attitudes are in danger of taking a real
hold in this country, with potentially disastrous effects on the
provision of services, both by public and voluntary bodies.
The deterrent effect on the willingness of people
to volunteer, whether for statutory bodies or voluntary organisations,
is of grave concern. It threatens not only the health of the volunteer-involving
sector but also government's targets for strengthening and expanding
civic engagement. The limitations risk aversion places on innovation
and the sector's entrepreneurial role may have serious consequences
for the future.
Our research commends the advisability of a
programme of action which tackles the situation on several fronts
and involves a variety of stakeholders. Legislation may be a part
of this but needs to be carefully targeted and assessed for potential
unplanned consequences.
Dr Justin Davis Smith
Deputy Chief Executive
Volunteering England
Director
Institute for Volunteering Research
November 2005
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