£10bn a year compensation culture

BRITAIN'S compensation culture is 'plundering' the economy of £10bn a year, the chairman of the Lloyd's of London insurance market has warned.

Lord Levene believes we are following the US into an abyss of blame culture that will severely hit the economy and stifle enterprise.

He has already described the culture as 'pernicious, cancerous and ruinous'. And speaking in London yesterday, he said the bill is rising by 15% a year as people take legal action over everything from faulty pavements to disputes with schools, hospitals and their bosses.

Lord Levene warned that 'dark clouds' hang over the insurance industry, with the compensation culture posing its 'greatest external threat'.

He said the crisis is not just an industry problem, but a 'national economic' one. Individuals are cashing in as the economy is losing out, he said. High-profile payouts have added to the problem, creating a 'have-a-go' culture in Britain as people seek easy money.

Citing the example of a Wolverhampton postman who is taking legal action after pulling a muscle against a lecturer for posting too many letters, he said the crisis starts with 'seemingly insignificant things'.

But he warned that there are also more serious concerns. The average cost of claims against employers for accident or injury has doubled in the last five years, he said.

Clinical negligence cost the NHS nearly £500m by 2002 - compared with £6m in 1975, while compensation and legal costs have soared to £100m in the Ministry of Defence.

Lord Levene said: 'Politicians in Whitehall and in Brussels need to wake up to the problem.'