7:  The Myth of Compensation Culture

Big business is seeking the freedom to kill  its workers

George Monbiot. Published in the Guardian 16th November 2004

I t was the most impressive exercise  in democracy the world has ever  seen. Hundreds of millions came out  to vote. The dollars queued for hours  in the rain and sun. The result was  indisputable: the candidates with the  most money won.

No constituency gained more from  the US election than the dollars  belonging to a company called WR  Grace. On November 3rd, its shares  rose by 14%. By November 5th they  were up 26%: the highest they had  ever been.(1) It wasn't Bush's victory  the stockbrokers were celebrating as  much as the defeat of Tom Daschle,  the leader of the Democrats in the US  Senate.

One of the few courageous things  Daschle did was to oppose a law  restricting the amount of compensation companies will have to pay to the  victims of asbestos. Daschle believed  that firms like WR Grace, which used  to manufacture asbestos insulation,  should have to pay the full cost of the  deaths and injuries they caused. Big  business exercised its democratic  rights to the tune of $14m, and the  Republican John Thune was duly  elected. Now the law will almost  certainly be passed, and sufferers from  one of the modern world's nastiest  diseases - mesothelioma - will be paid  roughly half the compensation they  were due.(2)

This is universally recognised as a  Good Thing. Over the past few years,  the press in the United States has  presented us with the heart-wringing  spectacle of bed-ridden multinationals  gasping for money. On this side of the  Atlantic, where companies which used  asbestos are facing a new round of  lawsuits, the result was greeted as a  defeat for something we call  "compensation culture".

Compensation culture has usurped  political correctness, welfare cheats,  single mothers and new age travellers  as the right's new bogeyman-in-chief.  According to the Confederation of  British Industry (CBI), the Conservative Party and just about every news- paper columnist in Britain, it threatens  very soon to bankrupt the country.

That there is no evidence to support  such a claim, is, as always, irrelevant.  Despite the legalisation in 2000 of "no  win, no fee" lawsuits, the total cost of  compensation cases in Britain has  remained, in real terms, static since  1989.(3) The two biggest claims  marketing companies - the great  beneficiaries of compensation culture -  have both gone bust.(4) Last year the  number of accident claims fell by  9.5%.(5) The government's Better  Regulation Task Force, which at other  times has taken the part of big  business, bluntly reports that "the  compensation culture is a myth".(6)

None of this should surprise us. It is  no easier to win a case brought under  the no win, no fee system than it was  to win a case brought with the help of  legal aid. You still have to convince  the judge that the other person had a  duty of care towards you, that they  were at fault, and that they should  have foreseen the risk. Because awards  are made by judges, not juries, there's  very little chance of winning one of  the vast settlements people seem to  secure in the US for bumping into a  lamp post or setting fire to their own  hair. Under the new system, the  claimant's lawyers get stung for all the  bills racked up by both sides if he  loses. They are not going to take his  case to court unless it's pretty certain  to succeed.

Of course, there are malingerers who  try to play the system, and of course  private companies and public services  have to respond to the frivolous suits  they bring. But while the newspapers  delight in telling us about people who  sue the Church for acts of God, they  don't report that in the United  Kingdom such cases almost always  fail.

But compensation culture is a convenient bogeyman, because it allows big  business to associate its victims - such  as the 3500 people who die every year  in Britain as a result of exposure to  asbestos(7) - with scroungers and  conmen. It also opens a new front in  their perpetual war against regulation.

Last week John Sunderland, the  president of the CBI, thundered that  "Britain's greatness was built on  risk-taking." Today, thanks to the  compensation culture, we suffer from  a "reduction in personal responsibility"  and a "collective aversion to risk." We  need to learn from China, whose  businesses enjoy the same  "fearlessness about risk" as Britain's  did during the Industrial Revolution.(8)

What Sunderland has done is deliberately to conflate two kinds of risk: the  risk to which we expose ourselves,  and the risk to which we expose other  people. In the heroic age of industrial  accidents, the "risk-taking entrepreneurs" might have lost their money if  their products did not find a market,  but their profits were dependent upon  the risks of losing limbs, eyes, lungs  and lives they imposed on their  workforce. China's "fearlessness about  risk" means that Chinese bosses are  allowed to kill their workers. Sunder- land is calling for precisely the  "reduction in personal responsibility"  he affects to despise. The entrepreneur shall not be held responsible for  any of the risks he dumps on other  people.

The shadow chancellor, Oliver Letwin,  gave an almost identical speech to the  Centre for Policy Studies in  September.(9) "The call to minimise  risk is a call for a cowardly society",  he said. "If we are to have a courageous society rather than a cowardly  society, we need to abandon the  rhetoric of risk minimisation". Letwin  failed to explain why it is courageous  to expose your workers to asbestos.  Or why it is courageous meekly to lie  down and die when your lungs have  been trashed by your brave employer.

In opposing our mythical compensation culture, Sunderland and Letwin  are creating something much uglier: a  risk culture. They are glorifying the  risks which the powerful impose on  the weak.

The government, to its credit, has  refused to join in. On Wednesday,  Charles Falconer, the Lord Chancellor,  warned that "schools, hospitals, local  authorities are beginning to feel they  are more at risk from litigation than  they really are ... we can't afford to  leave this impression unchecked. ... As  strongly as we resist spurious claims,  we should also robustly defend the  rights of people to make genuine  claims. Rights and responsibilities  would be meaningless if they could  not ultimately be enforced." (10)

This seems odd: the government  seldom misses a chance to butter up  big business and assist the tabloids in  their witch hunts. But there are two  interest groups at play here. Falconer  is a lawyer. So is the Prime Minister.  And his wife. And the foreign secretary, and the defence secretary, and  the transport secretary, and the chief  secretary to the Treasury. Had the  Democrats taken power in the US, the  world would have been run by these  people: both Kerry and Edwards are  known lawyers. It's unfortunate that  our best hope of redress against one  set of greedy bastards is to enlist the  help of another.

Of course there is another way, and  that is to stop big business exposing  people to risk in the first place. But  the state enforcement of health and  safety laws is in the interests of neither  businessmen nor lawyers: the money  won't vote for it. Without regulation,  compensation is often the only  protection we have.


1. Jerry Knight, 8th November 2004. Asbestos,  Defense Firms Win Lottery. The Washington  Post.

2. The asbestos companies, under the bill,  would contribute to a $140bn fund, rather than  face lawsuits of $275bn. See Jerry Knight, ibid.;  and Clare Dyer, 5th November 2004. Firms  Challenge Asbestos Claims. The Guardian.

3. The Better Regulation Task Force, May  2004. Better Routes to Redress. http://

4. These are: The Accident Group and Claims  Direct.

5. Clare Dyer, 11th November 2004. Ambu- lance-Chasing Claims Firms Get Last Warning  to Self-Regulate. The Guardian.

6. The Better Regulation Task Force, ibid.

7. Rupert Jones, 2nd November 2004. Surge in  British Asbestos Claims Will Cost Billions. The  Guardian.######8. John Sunderland, 8 November 2004. Speech  to the CBI Annual Conference.

9. Oliver Letwin, 3rd September 2004. Nothing  Ventured, Nothing Gained. Speech to the  Centre for Policy Studies.

10. Charles Falconer, 10th November 2004.  Compensation Culture. Speech to the Insurance Times Conference. 

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