The truth about 'compensation culture'

Deborah Orr - Columnist of the Year

Yesterday it was announced by the union, GMB, that eight former employees of North West Water would receive £1.2m in compensation from the company. The men were dismissed after developing Vibration White Finger. This industrial injury is otherwise known as Raynaud's phenomenon and is brought on by frequent use of vibrating equipment such as pneumatic drills, chain saws, and other hand-held power tools.

Yesterday it was announced by the union, GMB, that eight former employees of North West Water would receive £1.2m in compensation from the company. The men were dismissed after developing Vibration White Finger. This industrial injury is otherwise known as Raynaud's phenomenon and is brought on by frequent use of vibrating equipment such as pneumatic drills, chain saws, and other hand-held power tools.

Small arteries become over sensitised and constrict, cutting off the blood flow. Fingers become white, numb and tingling and become blue, then red and painful, or with a burning sensation as the blood returns. The condition can be crippling, as pain can be constant and the hand's ability to grip can be lost completely. In the case of the eight men, the skin also became split and bled. The men were promised retraining, but alternative jobs within the company never materialised.

GMB utilities spokesman, Brian Strutton, was justifably pleased with himself when delivering this very satisfactory news. "This," he said "is a victory for working people. Last year North west Water made profits in excess of £300m and this award is justice for those workers who helped generate those profits... Those who complain about the so-called compensation culture should recognise that the only protection ordinary workers have against negligence and exploitation is the ability to hit companies where it hurts most, in their profits."

Quite so. It is, therefore, unsurprising to find that Ruth Lea, the head of policy for the Institute of Directors, holds a quite different view to that of Mr Strutton. Last week, in response to the news that Leslie North had been awarded £100,000 in compensation after suffering a nervous breakdown during his work for Lloyds TSB, she declared that this was an example of "the litigation and compensation culture gone barmy".

Oh really? Mr North had spent 27 years working for Lloyds and had found it more and more difficult to keep up with the demands upon him when his staff was cut from 14 to five. Repeated complaints to his line managers went unheeded until eventually he explained that he was regularly working until 2am. He was then told that he was being selfish, because by trying to cope he made the job impossible for his successor.

He eventually went on 12 months sick leave, during which he underwent electric shock treatment to try to combat his depression. His family almost broke up, and he attempted suicide. His pay was terminated and when he asked for early retirement the bank refused to upgrade his pension to a full entitlement.

Those who make regular attacks on the "compensation culture" are fond of saying that it exists on the back of the legal aid system. This is nonsense, since personal injury claims - the only branch of the "compensation culture" which is truly undergoing a cynical expansion - are not eligible for legal aid and are conducted on a no win no fee basis. In Mr North's case the criticism is no more valid. Somehow, this man - who earned a salary of £23,000 a year for his 100-hour weeks - managed to finance his legal challenge himself.

His win is a landmark in legal history, as it is the first successful claim against the banking industry. Employers in the sector are now in something of a panic, and talking of "floodgates" as usual. One can't help suspecting that their nervousness comes from the knowledge that it is now common policy to slash staff punitatively and ignore the complaints of those grateful few left to soldier on as best they can.

Nevertheless, there is a certain amount of justifiable unease about the condition under which Mr North won his case. He is diagnosed as suffering from Post Traumatic Stress Disorder, a condition which is becoming suspiciously ubiquitous, and featuring in many an industrial tribunal.

Earlier this year, at the Royal College of Psychiatrists' annual conference in Edinburgh, Dr Derek Summerfield claimed that the "spectacular"rise in PTSD diagnoses was due to its application to unremarkable events experienced by people seeking victim status and financial gain. He also suggested that "the workplace is being portrayed as traumagenic. Paramedics attending accidents and policemen on duty at disasters are seeking compensation for PTSD".

And indeed, it is with unease that one reads of the two WPCs making claims after their involvement with Dunblane, or the various officers seeking compensation after Hillsborough. (Although I also feel that if taking with such events in their stride is part and parcel of the policeman's lot then that's just yet another argument for increasing police salaries.)

And on the other side of the coin it is unsettling to learn that the Metropolitan Police has asked the London mayor for £8m to meet a massive increase in compensation pay-outs resulting from corruption cases and damages claims. Likewise, the National Health Service paid out £4m in compensation last year. This is a sorry state of affairs, although I cannot go as far as social affairs commentator, Polly Toynbee, who last year declared that no one should ever make claims against the public services. While I agree with her that people make too many irresponsible claims against the public services, I'm not sure if I could sit back and say " c'est la vie" if I'd been treated as a young woman by a Richard Neale or a Rodney Ledward.

But both of these sums pale into insignificance when the Ministry of Defence figures weigh in. In response to £83.4m in compensation pay-outs last year, the ministry has set up a Risk Management Working Group. It may have taken them a while to get around to it, but this surely is the right road to go down. The institute of directors would do better, in the wake of the North decision, to take note of the many recommendations for best practice in employment which are currently ignored, than to cry "compensation culture".

For the fact is that despite appearances the latest Judicial Statistics report from the Lord Chancellors department suggest a decline in litigation in England and Wales. The real compensation culture exists not in the courts but in solicitors offices and insurance firms. Look at Claims Direct, a company specialising in personal injury claims which plans to open 200 high street walk-in centres to make a killing from the burgeoning industry whereby there's a few grand to be made from the smallest accident that you can pin on someone else. Councils, for example, are now laying Tarmac pavements instead of paving stones, because simple everyone makes a claim now when they trip. Manchester city council spends a third of its road maintenance budget on just these claims.

Perhaps the figure is so high in this particular city due to popularisation by Coronation Street's Stan Ogden, who made just such a claim almost 20 years ago. Back then, the process was played for laughs. But it isn't that funny any more. All that this tide of piddling claims - backed up not only by doctor's reports needed only for insurance purposes, and histrionic claims of mental torture - achieves is much higher insurance premiums (up by on average 20 per cent in the past year).

The poorest among us already find it difficult to afford insurance to protect against real hardship or tragedy. It is here, not in the boardrooms of Britain, that the "compensation culture" is really wrecking lives.

d.orr@independent.co.uk