TUC debunks compensation culture myth

Allegations about the UK’s growing compensation culture float around like confetti in a windy churchyard.

Each day seems to bring fresh news of the culture that is “crippling Britain”. Stories about chefs suing hotels for cut fingers are snapped up by journalists keen for quirky news stories.

Back in 2002, the actuaries’ profession put the total cost of compensation claims at 1% of GDP – £10bn a year.

According to a survey conducted by risk insurance company Aon, 60% of respondents feared that the compensation culture was hampering their business by distracting management time.

However, the TUC refutes the notion that the UK is in the grips of a US-style compensation culture.

TUC general secretary, Brendan Barber, said: “The harsh reality is that thousands of ill and injured workers get very little, if anything, when things go wrong at work as a result of their employers’ negligence.”

The report sets out to demolish commonly held myths that suggest the cost of compensation paid out as a result of workplace accidents and injuries is spiralling out of control.

Falling claims

It states the number of civil compensation claims against employers has fallen every year for the past five years.

The UK pays out much less money in compensation, as a proportion of its GDP, than any other European country except Denmark.

Furthermore, the cost of compensation pay-outs has remained the same, in real terms, since 1999.

Some employers admit that the concept of a compensation culture is exaggerated, but argue that what might be described as a risk avoidance culture is discernible.

Gary Booton, health and safety manager at the EEF manufacturers’ group, said: “In a sense we are coming from different angles.

“We would not suggest to the TUC that there is a US-style thirst for litigation in the UK, but there is a problem with safety people being blessed with 20:20 hindsight when things go wrong and blaming the employer for failures that no-one really expected.”

Doubtless the debate will stutter on, but measured perspectives are needed and the TUC’s contribution provides a helpful reality-check.

Pragmatic solutions are also on the EEF’s agenda.

Booton said that a pilot scheme to reduce the costs of settling small personal injury claims had been aborted earlier this year when the TUC withdrew support, believing it would not help claimants.

On the other hand, perhaps employers’ organisations need to be more considered.

Lessons learned

John Sunderland, president of the CBI, argued last year that the UK needs to learn from China, whose businesses “enjoy the same fearlessness about risk as the UK’s did during the Industrial Revolution”.

Having walked around Chinese factories, I am confident that few UK industrialists would want to replicate Chinese conditions over here. They are full of unguarded machinery and swarf piles that would cut you to ribbons. The UK doesn’t know what it is missing.

It is true that no-one looks for damages in China and there is no compensation culture either.

I suspect the CBI would not want a revolution to achieve that, but if it did happen the TUC really would have something to write about.


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