Risk and the Compensation Culture

Tony Blair spoke about better regulation, risk and the compensation culture this week. He gave a speech on Living with Risk at an event organised by the Institute for Public Policy Research and the Association of British Insurers. There's a lot in this speech, including a theme that worry about liability has got out of hand:

something is seriously awry when teachers feel unable to take children on school trips, for fear of being sued; when the Financial Services Authority that was established to provide clear guidelines and rules for the financial services sector and to protect the consumer against the fraudulent, is seen as hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone; when pensions protection inflates dramatically the cost of selling pensions to middle-income people; where health and safety rules across a range of areas is taken to extremes. Europe has done itself more damage through what is perceived as unnecessary interference than all the pamphlets by Eurosceptics could ever do

Blair recognises that much of the talk about the “compensation culture” may be just that, and that the risks of liability may be much less than people think, but he also acknowledges that public authorities sometimes respond in weird ways to the thought of the risk of liability.

Then there is a theme about risk. Blair doesn't want regulation to eliminate risk (if it were possible):

A natural but wrong response is to retreat in the face of this change. To regulate to eliminate risk. To restrict rather than enable. But we pay a price if we react like this. We lose out in business to India and China, who are prepared to accept the risks. We are unable to exploit our scientific discoveries. We seek protection from risks that are exaggerated or even imagined. We allow the conspiracy theorists to dictate the argument without a basis in fact.

So Blair wants the British people to be subject to the same levels of risk as if they were living in India or China?

There are to be a number of new initiatives including the Arculus suggestion of a “one in-one out” approach to regulation – every time a new rule is introduced an old one is eliminated and a new Compensation Bill to regulate claims farmers and (re)define negligence. And the media will be nobbled:

The media have a responsibility. MMR is one example. The present debate on mobile phones is another. We only narrowly avoided massive expenditure on SARS.

We need to involve the media in a better dialogue about risk. To that end, I have asked John Hutton to invite newspaper and broadcast editors to discuss with the Chief Medical Officer and the Government's Chief Scientist the best and most appropriate forum for ensuring that risk is communicated effectively so that the maximum information can be put into the public domain with the minimum of unnecessary alarm.

What the Government wants is as follows:

We should understand the nature of the decisions we take together, have a mature, reasoned debate between government, experts and people; a conversation between adults taking responsibility for the risks they face.

Sort of like the position with the decision to invade Iraq?