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NHS hospitals are making money by charging "ambulance chasing" lawyers fees to advertise in accident and emergency departments, former justice secretary Jack Straw told MPs.

He said 70 trusts had been paid a total of £2 million over the past five years as he attacked the "grubby" personal injury claims industry.

Mr Straw revealed proposals to clamp down on the compensation culture which he said had led to soaring motor insurance premiums.

The Government has already accepted one of his key demands by promising to ban the payment of referral fees in personal injury cases.

"In the last year alone there has been a 40% increase in the average premiums paid by Britain's motorists to insure their cars," Mr Straw said. "The principal factor behind these rocketing premiums has been a extraordinary increase in both the number and value of claims for personal injuries."

However the number of accidents had decreased and the increase had been "artificially generated by a new industry, unheard of 20 years ago, a claims industry with, I'm afraid, the complicity of the insurance companies themselves".


He accused claims management companies, personal injury lawyers, credit hire companies and vehicle recovery firms of building a "lucrative and self-serving merry-go-round" with information about people involved in accidents passed between them in the hope of securing a payout.

Mr Straw added: "Some police and NHS employees have been unlawfully engaged in this trade. Some police authorities have officially been charging recovery firms to pass on information about drivers and vehicles involved in accidents - one made over £1.3 million in two years.

"I can tell the House today, some NHS acute trusts have been making money from this so-called industry, charging ambulance chasing lawyers to advertise their services to patients waiting in accident and emergency departments. Since 2006, in aggregate, 70 NHS acute trusts have received £2 million in this way."

Mr Straw's Motor Insurance Regulation Bill was given an unopposed first reading and has cross-party support, including from chairman of the Commons Justice Select Committee Sir Alan Beith. However it stands little chance of making further progress due to a lack of parliamentary time.


The Press Association, photo by Britain Photograher