THE Prime Minister called for new laws yesterday to demolish the myth of the compensation culture and rein in ambulance-chasing companies.

Britain was in danger of developing a disproportionate concern about risks, Tony Blair said, and fuelling a risk-averse culture that would stifle innovation and creativity.

“People are entitled to sue. “Often the most outlandish cases that are brought are dismissed,” he told an audience at the Institute for Public Policy Research in London. “But their headlines live on, create a myth and that myth is acted upon.”

The perception of the “so-called compensation culture” had the adverse effect, causing public bodies and others to act in “highly risk-averse ways”, he said. Too often the knee-jerk response from public bodies was to do everything to avoid blame in a “something must be done” culture. “In the end, risk is inescapable,” Mr Blair said. “Government cannot eliminate all risk. But too often our reflex as a society is to regulate and to introduce new rules.”

Between seven and ten million pupils took part in school trips in England two years ago, Mr Blair said. “Sadly, there was one fatality, but only one. Our reaction to it should not be to deny children opportunities.

“If we start to believe that every possible problem must be avoided at all costs we end up with a mindset that says nothing good should happen in case it leads to something bad. Irrational decisions should not be made through fear of litigation. Rather, there should be a commonsense culture, not a compensation culture.”

He announced measures to ease regulation and end risk-averse cultures in the science and business communities and the public sector.

John Hutton, the Cabinet Office Secretary, will review regulations, an issue that will be a priority of the British EU presidency, Mr Blair said.

The Better Regulation Bill will force those making rules to apply a rigorous risk-based approach.

The Compensation Bill will introduce statutory regulation of claims-management companies and clarify the common law on negligence to make clear that there is no liability for incidents that could not have been avoided by taking reasonable care.

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