BRTF chairman David Arculus

Britain does not have a compensation culture but some unfounded cases are holding up redress for genuine claimants, according to a new report.

The Better Regulation Task Force said on Thursday that fears the UK could develop an American-style litigation culture were unfounded.

But it warned that some "spurious claims" were clogging up the system.

The BRTF found that the courts were "very good at sorting the wheat from the chaff" when it comes to unfounded claims.

"Newspapers complain that the UK is becoming like the United States with stories of people apparently suing others for large sums of money, and often for what appear to be trivial reasons," said task force chairman David Arculus.

"In 2000, the cost of litigation in the UK as a percentage of GDP was less that a third of that in the US. 

"Media reports and claims management companies encourage people to 'have a go' by creating a perception, quite inaccurately, that large sums of money are easily accessible."

He said that over 55 per cent of county court awards in 2002 were for less than £3,000, while the number of accident claims fell by nearly 60,000 in 2003/04.

"Whilst the compensation culture may be an urban myth, the costs associated with it are very real," said Arculus.

The report backed greater use of mediation and no-fault rehabilitation, as well as allowing people to apologise.

There was also a call for the government to raise the £1,000 limit under which personal injury claims can be pursued through the small claims track.

"We want this report to act as catalyst for an informed debate about how the perception of the compensation culture can be tackled.  The issue is too important to ignore – what’s needed is a good dose of reality to dispel this damaging myth," said Arculus.

"Government and its agencies have a large part to play in starting the debate, but they cannot provide all the solutions to the problem. 

"Others, in particular insurance companies, all branches of the legal profession, the media and commentators must play their part."

Report welcomed

Responding to the recommendations, the Association of British Insurers backed more cost effective legal processes and greater use of mediation.

"This report bears out what insurers have been saying about the importance of reforming the legal process," said the ABI's Mary Francis.

"Reform will help people with a legitimate personal injury claim to have their cases settled more quickly. And reform will ensure that the costs of compensation are kept under control.

"As government ministers have said, we need to prevent the damaging effects of a 'have-a-go culture'.

"Insurance enables claimants to receive the compensation they are entitled to.  But high frictional legal costs – averaging 40 per cent of damages paid - mean that the system needs to be reformed. This proportion is far greater in low value cases, so we fully support the recommendation to review the small claims limit.

"We are pleased that the task force has brought new vigour to this issue and hope that the government will now respond quickly to its practical recommendations."

The Health and Safety Commission also welcomed the report.

"I am delighted that the Better Regulation Task Force's report dispels the myth of the compensation culture," said chairman Bill Callaghan.

"I also welcome the report's support for our policy that sensible risk management is the best way to prevent litigation or the threat of litigation."