A London borough that was home to children’s homes at the centre of a sexual abuse scandal has announced plans for a £100m victim compensation scheme.
Lambeth LBC plans to fund the pay outs through borrowing and has been granted special permission from government to use capital funding for this purpose.
The council, which this year had a net revenue budget of £274m, estimates the cost of repaying the borrowing over the next 50 years will range from £235m to £325m, depending on the final amount paid out, equivalent to between £4.7m and £6.5m a year.
However, it has been advised the approach will cost significantly less than the traditional litigation route.
Council leader Lib Peck (Lab) said the borough was acting now to deliver the scheme – the first of its kind by a local authority – “because survivors have already waited too long for redress and there is sadly little prospect of national action on this issue in the near future”.
The scheme is intended to drastically reduce the number of claims that have to go through the courts, thereby avoiding the trauma for victims of having to relive the abuse in court and reducing the amount spent on legal fees by the council and claimants.
Lambeth’s actuary has advised the approach proposed by the council, which will be considered by full council on 18 December, will cost £100m less than a traditional litigation approach. This is despite the fact the approach is expected to generate 1,000 more claims from individuals who were abused while under the care of children’s homes in the borough between the 1930s and the 1990s.
The council estimates there will be 3,000 claims under the scheme with an average payout of between £30,000 and £35,000. Much of the abuse is said to have happened at the Shirley Oaks home which is a major focus of the Independent Inquiry into Child Sexual Abuse set up by Theresa May when she was home secretary in 2014.
Cllr Peck said: “As the current leader of Lambeth Council I make a full and genuine apology for the abuse that people suffered due to historic failings in the care system…
“We are now set to deliver on our pledge to survivors of abuse who have been so very badly let down in the past. This redress scheme offers a formal apology, compensation and access to specialist counselling.”
Individuals who were abused in foster care after having spent time in a children’s home will also be eligible to claim on the scheme. A small proportion of claims – between 5% and 10% – are expected to be so complex they will have to be dealt with through the courts which could result in an additional £40m of costs. If this is the case the council will seek government approval to extend the ‘capitalisation direction’.
A report due to be discussed by council on 18 December said: “The actuarial advice received is that the scheme is expected to be more beneficial to more survivors of abuse, at significantly lower legal costs to both survivors and the council, than the litigation alternative.”