Public sector braced for wave of legal claims

The public sector could face a swathe of legal claims if the Government continues to prioritise short-term savings over longer-term needs, the specialist insurer Zurich Municipal will warn this morning.

The company, one of the biggest providers of insurance to the public sector, says that what it calls a "knee-jerk reaction to budget cuts" could expose organisations to a huge range of potential claims. It fears it will have to deal with more and more claims for unfair dismissal, fraud, personal injury, property maintenance, business interruption and trustees' indemnity claims "if risks are not adequately managed".

In a report entitled Tough Choices: Different Perspectives on the Long-term Risks Facing the Public Sector and Wider Civil Society, produced with Ipsos Mori, the insurer says it found 91 per cent of public sector and voluntary organisation leaders are confident in their risk management processes. However, less than half (47 per cent) of the public share that confidence about their local public services. And although almost all leaders are confident in their processes, 63 per cent agree that they need to change the way they approach strategic risk.

Two-thirds (64 per cent) of public sector leaders also fear that short-term budget challenges will stop them addressing longer-term risks effectively. Half (49 per cent) of public sector leaders fear budget cuts may impair their organisations' ability to provide services. Many also have concerns that spending reductions could lead to financial loss (28 per cent) and reputational damage (22 per cent).