Scotland’s cash-strapped local authorities will struggle to meet the cost of potentially thousands of compensation claims from child abuse survivors, it has been warned.
Council umbrella organisation Cosla said the Limitation (Childhood Abuse) (Scotland) Bill would leave decades-old insurance policies “unable to cope” with actions for damages.
Under the legislation, which is currently being considered by MSPs, a three-year time bar on bringing such actions will be set aside for survivors of child abuse in cases dating back to 1964. Last week Holyrood heard payouts could total £200 million if the Scotland introduces a redress scheme such as those used elsewhere.
In an update to MSPs on the Scottish Parliament’s finance committee, Cosla said the main provider of public liability insurance to Scottish councils from 1975, Municipal Mutual, had been defunct since 1992.
It said money set aside in a fund set up to deal with claims relating to the period 1975-92 had “dwindled” and would be unable to cope with claims brought under the legislation.
It said: “While Cosla is supportive of the legislation and understands the difficulty in quantifying the levels of claims and likely exposure for local authorities, this legislation is going to carry a substantial cost.
“Given the financial environment that local authorities are operating in, local government will struggle to meet the financial implications of the legislation, in particular in light of the fact that it is unlikely that few of these costs are capable of being fully met from the identified insurance policies.
“Therefore, Cosla would welcome a discussion with Scottish Government around how these costs can be managed.”
Financial documents published alongside the bill estimate the change in the law would result in about 2,200 claims in the courts initially – at a cost of £1,017,400.
Last week Police Scotland said it had already identified more than 2,000 files and 4,400 potential victims as part of investigations into historical child abuse in the former Strathclyde Police area alone.
Cosla said the financial memorandum took a “very narrow” view of the potential costs to local authorities. It said: “While we appreciate the constraints the Scottish Government are under in being able to estimate the number of potential claims and/or quantify potential claims, the financial memorandum takes a very narrow view of the potential costs to local authorities – focused exclusively on the costs of defending actions and insurance claims.
“However, what is clear is that the cost of this legislation on local authorities is not limited to the cost of any claim.”
Cosla has previously argued that a national redress scheme for survivors of historical abuse would prevent local authorities being inundated with potentially thousands of compensation claims.
The organisation, which represents the majority of Scottish councils, has called on the Scottish Government to explore a redress scheme similar to one which operated in Jersey and allowed those abused while in the care of the state to claim damages up to £60,000.
Last week Alistair Gaw of Social Work Scotland told MSPs on Holyrood’s justice committee that a similar scheme in Scotland could cost up to £200m.
Scottish Government officials said the Limitation Bill was one of a number of commitments made to survivors to address the failures of those in positions of responsibility to ensure they were properly cared for and protected.
A spokeswoman said: “Having listened to the views of survivors of childhood abuse, we are legislating to remove the time bar preventing civil action to be taken after the limitation period has expired, which is usually the survivor’s 19th birthday. We feel that the law should recognise the reasons why people do not come forward until many years after the event, even where there was knowledge of what had happened.”