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| The Rising Cost to the UK? - C4F Archived News |
Many politicians, newspapers, radio stations and the majority of the general public have commented on the rising cost of our current compensation culture. It could now even be considered "politically correct" to be against such. But what ARE the costs and are the politicians, as ever, creating scapegoats for the public to wag their judgemental finger at?
In 2004 John Baron, a Tory Health spokesman, stated: "The annual cost to the NHS of clinical negligence has reached an unprecedented £446 million a year." This is a rise from a total of £57million in the 1990's. Wales Office Minister Don Touhig said in a speech to the Welsh Coal Health Claims Monitoring Group that there have been around 117,000 claims for compensation for mining related illnesses up to March 2004. Of these, only 25,000 had been paid out so far costing £436million for respiratory claims and vibration white finger. These huge amounts of money are taken directly from the tax-payers pocket and, in the case of the NHS, should have been going on services, staff, equipment and operations.
When calculating the total estimated cost of just these two compensation groups with the current claims in progress, approximately £2billion will be spent on miner's compensation and £5billion will be spent on medical negligence claims against the NHS. This gives a grand total of £7billion to be spent in compensation to just these two government appointed compensation groups alone.
So how bad is it is getting in the insurance claims area? Norwich Union, who insure 1 in every 5 cars in the UK, say they paid out £2billion in personal injury claims last year and estimate that the new wave of claiming is currently costing the United Kingdom £10billion a year - that's £400 per household. Mr Beaumont, the group chief executive for Co-Op said that Co-operative Insurance Services has seen a rise of £10million more being paid out in damages for personal injury claims than in the corresponding period last year. Again, these amounts are staggering and surely cannot continue at their current pace.
Surely the solution is to try and slow down the number of claims being made?
This is where the misleading information has led the public - to consider that the problem lies with themselves, that they are too greedy and that the only way to stop the rising cost is to stop claiming. Certainly, the number of claims being made has more than doubled in the past four or five years, but it is the rising cost of each individual claim that is causing the majority of the problem. The amounts awarded in compensation have not changed much over the past years but the amounts solicitors can charge for their services has:
Take the example of Birmingham Council where Councillor John Lines estimated that £7.5million had been paid out in housing compensation with £4.5million of that going to meet legal fees. Of the remainder, £2million has gone on repairs and only £1million (a mere 13% of the compensation total) being given as actual compensation to tenants. He commented that solicitors have been queuing up to sue the council on behalf of tenants saying: "Millions of pounds of rent money which should have been used to provide central heating or double glazing has been siphoned off into the pockets of solicitors without any questions being asked or the claims being checked out. "
Previously we mentioned the compensation due to miner's in a speech by Wales Office Minister Don Touhig. Unfortunately Mr Touhig did not reveal just how much of the £436million has been spent on legal fees simply commenting: "Finally, I would like to re-emphasise that the Government is paying all the solicitor's legal costs and claimants should on no account be asked to pay any more money on top of that. " - as a warning to some claims handlers who had been caught skimming money off the top of compensation payouts. We also gave you a statement by Tory health spokesman John Baron who said: "The annual cost to the NHS of clinical negligence has reached an unprecedented £446million a year ..." the rest of the statement being "... whilst the legal and administrative costs often exceed the money paid to the victim. "
Norwich Union's Patrick Snowball said at recent conference in Monaco that he believed that 40% of all compensation paid out goes on legal fees, costing the nation £16million per day the solicitors are working. These estimates were based on research from the The Actuarial Profession who also claim that the amount of compensation being paid out is rising by 15% per year.
So why don't the government do something about it?
Extensive lists of suggestions offered by top legal advisors have been put forward again and again but it is far easier to point the finger at the public and tell them it is their own fault for claiming - not the government's fault for poor legislation. There are many solutions to dramatically reduce the cost of compensation:
Tory health spokesman John Baron's proposal is to remove legal aid as an option in clinical negligence claims. This would result in claimants having to rely on "no win, no fee" options offered by solicitors which means the tax-payer is not footing the bill for frivolous and fraudulent claims but the solicitors themselves.
In an EADT article by business editor Duncan Brodie the following observations were made: "The real problem is not that so many people are engaging in litigation but that, from time to time, courts have found in favour of claimants whose weak, and sometimes downright frivolous, cases ought to have been struck out ... The real responsibility for the compensation culture lies, therefore, not so much with the public for seeking compensation as with the state for encouraging and even commissioning action where the degree of culpability is such that the case should never reach the court room. The answer lies ... in the application of common sense, by the Legal Aid authorities, by the CPS and, ultimately, by judges."
Our own suggestion at Claims4Free is to follow the Scottish method of limiting the amounts solicitors can claim as their fees. To quote the Scottish Law Society: "If you raise a successful court action and the opponent is ordered to pay your expenses ... the expenses that the Court can order the other side to pay (Judicial Expenses) are calculated on a different basis than is used to calculate the fees charged by solicitors to their clients." This means that the solicitor does not receive what he charges, but what the court awards them.
If the figures are correct and solicitor's legal fees make up 40% of compensation payouts in the UK then surely the blame for the rise in compensation costs is also 40% theirs? - Written 24/09/04*
Other Archived Articles:
> The Meaning of the Word Accident?
> Compensation Claims Pros & Cons
> The Claims Management Company
> Fraudulent Claims in the UK
> Is there a Huge Rise in the Number of Claims?
> NHS Compensation Claims
*Disclaimer: This article has been marked as "archived" because, although most of the information may still be relevant, the article was written more than two years ago which may mean that some information may be outdated. Although this site is updated as often as possible the information provided may not accurately reflect the current laws, procedures and/or facilities available to you. To ensure that you get the most up to date information make sure you consult an actual solicitor before pursuing any action. The articles on this site are for informational purposes only and are not intended to advise any particular action or inaction. Please read our terms of use for more information.
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