Press notice No.7 of Session 2005-06
3 November 2005
ANNOUNCEMENT OF ENQUIRY
Constitutional Affairs Committee launches inquiry into UK's 'Compensation Culture'
The Constitutional Affairs Committee has launched an inquiry into 'Compensation Culture' and Contingency Fees, which coincides with the introduction of the Government's Compensation Bill, and the NHS Redress Bill.
The Committee are looking at whether there is in fact a growing compensation culture in Britain, and whether new laws are really necessary or whether existing laws on negligence already provide sufficient protection. The Committee will examine the way lawyers' fees are arranged, in particular Conditional Fee Arrangements and 'uplifts': the extra fees awarded to lawyers in 'no-win no-fee' cases, which have been a particular issue in libel cases. They are also interested in whether the new legislation can address the apparent 'risk averse' culture, particularly in public bodies, stemming from fear of litigation.
The new Compensation Bill, which the Government will launch on Thursday 3 November, proposes changes to address what is seen as the growing problems with the compensation culture and the way claims managers handle claims. The NHS Redress Bill would allow people making smaller claims against the NHS to seek compensation without having to go through the long and costly process of litigation.
Rt Hon Alan Beith MP, Chairman of the Committee, said:
The term 'compensation culture' is used very widely and there needs to be more clarity about whether it really exists, and if so, whether its adverse results are really best dealt with by a new law as the Government proposes.
We also want to be sure that the present system is meeting the genuine needs of those who have suffered serious injury or loss.
The inquiry's terms of reference are:
» Does the 'compensation culture' exist?
» What has been the effect of the move to 'no-win no-fee' contingency fee agreements?
» Is the notion of a 'compensation culture' leading to unnecessary risk averseness in public bodies?
» Should firms which refer people, manage or advertise conditional fee agreements be subject to regulations?
» Should any changes be made to the current laws relating to negligence?
Call for evidence:
Submissions relating to the terms of reference above are invited from relevant interested parties. These should be sent to the Clerk of the Committee at the address above by Wednesday 23 November 2005. An electronic version in MS Word or Rich Text format should also be submitted, either by e-mail to
or on a disk and this should be accompanied by a letter stating clearly who the submission is from, together with relevant contact details. Submissions should be as brief as possible, and certainly no more than 3,000 words. Paragraphs should be numbered for ease of reference, and it would be helpful to include a brief executive summary. Attention is drawn to the guidance on the submission of evidence which can be found at
Notes for editors:
1.Concerns have been raised about the use of contingency or conditional fees since the move in 1999 from legal aid to 'no-win-no-fee' arrangements as a way to fund legal advice or representation. It has been suggested that some firms specialising in no-win no-fee arrangements are making excessive profits and 100% success fees are being claimed even when law firms are assuming little or no risk in taking on the case
2. Committee Membership is as follows: Rt Hon Alan Beith MP (Chairman), James Brokenshire MP, David Howarth MP, Barbara Keeley MP, Mr Piara S Khabra MP, Jessica Morden MP, Julie Morgan MP, Mr Andrew Tyrie MP, Keith Vaz MP, Dr Alan Whitehead MP, Jeremy Wright MP
3. Copies of the Bills are available on the
Public Bills page of the TSO website