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Addressing the Institute of Public Policy on Thursday, Prime Minister Blair cited a "wholly disproportionate attitude" towards risk as creating immense pressure for public bodies and services. Normal risks are part of life, Blair emphasized, citing two examples of public bodies that altered their normal routines so as to reduce their exposure to legal action from private citizens.

The first was the case of a local council removing their hanging baskets because of the fear that they might fall and injure someone. The second was a Cotswold village that pulled its seesaws because they were judged to be a danger under EU regulations. In both cases, there had been no accidents.

Mr Blair said the government would reflect on how it reacted to scandals or accidents in future. He also commented that there is a need to replace "the compensation culture with a common sense culture."

"This [compensation culture] is putting pressure on policy making not just in government but in regulatory bodies, in local government, public services, in Europe and across parts of the private sector; pressure to act to eliminate risk in a way that is out of all proportion to the potential damage," he added, "We cannot respond to every accident by trying to guarantee ever more tiny margins of safety. We cannot, in other words, eliminate risk. We have to live with it and manage it and sometimes we have to accept no-one is to blame".

Conservative response was cautious. "The government's stated aim to curb the compensation culture" was a good first step, said constitutional affairs secretary Oliver head. But, he added that much of the blame lies with the government itself, blaming the government's constant "promotion of such things as the Human Rights act."

He also cited procrastination as a key obstacle to any reforms. "After eight years we need effective action rather than more talk."

Changes, Oliver stated, had to be balanced and take into account "claims-farmers" and those who file frivolous or fraudulent claims. Individuals with genuine claims also have to have protection by the law as well.

Mr. Blair also took on the EU, citing that body's tendency to engage in "unnecessary interference" in businesses and with individuals and he promised to make cutting red tape a "central theme" of Britain's European presidency, which commences in July.

"Europe has done itself more damage through what is perceived as unnecessary interference than all the pamphlets by Eurosceptics could ever do," he said, "About 50% of regulations with a significant impact on business now emanate from the EU. And often it seems to want to regulate too heavily without sufficient cause."

A good example of this was an EU directive that would outlaw thousands of vitamin products, Blair said. He went on to add that too much regulation would have a negative economic impact as businesses moved their operations and products to countries that allowed for higher levels of risk.