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A Manchester council has saved over £1.5m by cracking down on bogus compensation claims. This year, Tameside council paid £40,054 to settle personal injury claims compare to £1.6m in 2001. Last year the insurance industry paid out over £7bn in compensation.

Tameside's new hardline stance has led to it winning ninety percent of cases it challenges in court.

The number of personal injury claims increased drastically between 2000 and 2002. Tameside council admitted that it was caught out owing to the fact that it had no system in place to inspect and challenge claims made for injuries caused by slips, trips and falls on its roads and pavements.

The council launched a system of inspection in 1999 to reduce the chances of accidents and now contests every claim. It can now demonstrate it has done all it can to minimise risks once a case reaches court. An increasing number of judges accept that evidence. The tightening up of the council's risk management policy and practices has additionally contributed to their current strong position.

In the first two years following the introduction of the inspection programme Tameside had a sixty percent success rate against claims. In 2002-3 the figure rose to 84 per cent.

An recent audit panel report stated that local authorities have been seen as "fair game" by "no win, no fee" law firms. The audit report also points out the reduction in the amount it has paid out coincides with the collapse of the Accident Group. Previously the UK's largest personal injury claims firm, Accident Group collapsed in May 2003. Accident Group's parent company Amulet said it had to cease trading because it could not sustain its "continual battles with the insurance industry."

Tameside Council's finance chief, Councillor Joe Kitchen, its system for challenging claims was one of the best in the country.

Martin Cockx of personal injury specialist Amelans said: "We have come against Tameside council and it has a hardline approach. It is not in our interest to take on cases we have got no prospect of winning because it will put us out of business. We do take on cases that are risky and we do our best with them. What people think about personal injury firms bothers me because it's all rubbish. "