A council will pay up to £40million compensation to thousands of former residents of a care home where abuse took place on an ‘industrial scale’.

The biggest payout of its kind was authorised yesterday after an explosive report claimed to have uncovered widespread sexual and physical abuse of at least 700 children over 30 years. Lambeth council took the unprecedented step of agreeing to pay compensation to every former resident, even if they did not suffer abuse.

Blanket payouts were offered because the council felt that all children were judged to be at risk. Those who suffered abuse will receive larger compensation payments.

Campaigner Lucia Hinton (left), Lib Peck of Lambeth Council (second left), Shirley Oaks Survivors Association founder Raymond Stevenson (third left), former Shirley Oaks resident Shayne Donnelly (third right), MP for West Norwood Helen Hayes (second right) and MP for Streatham Chuka Umunna (right) pose for a photograph before the report's unveiling today

Doctors, teachers, priests, police officers, sports coaches and council workers were part of a 60-strong paedophile ring at the council’s flagship children’s home, Shirley Oaks, the report found.

The compensation figure is far higher than the reported £3million paid to the 160 alleged victims of the North Wales historic care home scandal. And 166 victims of Jimmy Savile are understood to have been paid a total of £2.3million from his estate.

Yesterday’s report claims senior figures at the council covered up multiple assaults – allowing staff at the home to carry on ‘abusing in packs’. Football coaches who had links to Chelsea scout Eddie Heath – named as a paedophile by former players – were also named as paedophiles at the home.

And corruption at the heart of Scotland Yard meant that almost all of the abusers have escaped justice, it said.

It found that 48 children died in Lambeth’s care system from 1970 to 1989, of which 20 were abuse victims linked to Shirley Oaks.

The report was written by Raymond Stevenson, the head of the Shirley Oaks Survivors Association (SOSA), who was abused during his 11 years at the home.

Paul (left) and David Annon (right) speak to guests today about their late brother Mark, at the unveiling of an interim report on findings by the 'Shirley Oaks Survivors Association'

Residents of the Lambeth Council care system and survivors of the systematic abuse that took place there, watch a film of archive footage as they attend the unveiling the report today

'Sandra' (left) and 'Bill' (right) speak about their experiences of abuse in London today

He began investigating two years ago when a survivor approached him and described his ordeal. His 130-page report, which came after interviews with 400 former residents of the home, concluded: ‘We can now confirm that sexual abuse, on an industrial scale, started in the 1950s.’

Mr Stevenson discovered that changes in the care system were not being implemented even though 15 reports detailing allegations of abuse, neglect and corruption were commissioned by Lambeth council.

Last night experts said the extraordinary move by Lambeth – which no longer runs any children’s homes – to offer compensation could lead to other local authorities being forced to pay out for claims of historic child abuse. Mark Stephens, of the Howard Kennedy law firm, said: ‘This will be the first of many similar cases.’

The council has accepted liability for abuse carried out at Shirley Oaks (pictured) in Croydon and said ex-residents would be paid - whether or not they were abuse victims

Sosa founder Raymond Stevenson holds up a printed copy of the report in London today

WERE THEY ALSO SAVILE VICTIMS? Prolific paedophile Jimmy Savile may have abused children from Shirley Oaks, the report claims. It tells of how the late BBC DJ visited numerous children’s homes in the Lambeth area, including one where many children from Shirley were sent. He was also friends with a superintendent at Shirley Oaks during the 50s and 60s, survivors have alleged. The report adds: ‘Having learnt… that Jimmy Savile had a fixation with children who had mental disabilities, we are concerned that he may have visited three cottages at Shirley Oaks which were designated for children with various disabilities.’ Savile, pictured right, also DJ’d at the Shirley Oaks Community Centre, ex-residents claimed. Although the report cannot make ‘direct allegations’ against Savile, it questions how he was granted ‘unhindered access’ to Lambeth’s children’s homes. It adds that paedophiles considered Lambeth a ‘welcoming place’. Advertisement

Claude Knights, who runs anti-child abuse charity Kidscape, said: ‘This abuse was widespread and many different agencies are responsible for the dark times that the victims endured. If [the compensation payouts] fall to Lambeth alone, where is it going to be coming from, given other services need to be funded?

‘I believe the other agencies responsible should pay a share.’

Mr Stevenson found that the council destroyed 140 care records during the mid-2000s, despite legislation stipulating all records should be left untouched for a further 70 years. In his report, he accuses the council of being ‘institutionally evil’ and acting to ‘protect perpetrators of corruption and abuse’.

Labour MP for Streatham Chuka Ummuna speaks to survivors of abuse at the event in London

Kenneth Hewitt, a former resident of the Shirley Oaks care home and survivor of the systematic abuse that took place there, speaks today

Russell Specterman (left) looks on as his sister Samantha holds up a rattle that belonged to their 11-month-old sister Sarah, who died while in the care system in South London

Shane Donnelly (left) and Pauline Blackwood (right), who are former residents of the Lambeth council care system and survivors of the systematic abuse that took place there

Yesterday Mr Stevenson said SOSA had uncovered a number of other Lambeth-run homes where a paedophile network of up to 30 members operated. He said many of these abusers are still alive.

Lambeth council leader Lib Peck made an unreserved apology to everyone who spent time at Shirley Oaks, which was one of the biggest children’s homes in the UK from the 1950s until its closure in 1983.

‘This is an incredibly powerful report,’ she said. ‘It is very, very distressing to hear about their suffering, which continues today. The report shines a light on a very, very dark period in Lambeth’s history which I feel ashamed to be in any way associated with.’

Six fresh police investigations into abuse at Shirley Oaks are ongoing after SOSA passed on information.

THE CHELSEA CONNECTION A football coach at Shirley Oaks was friends with a former scout at Chelsea Football Club alleged to have abused young players, the report reveals. John Butcher, who has been convicted of possessing child abuse images, was associated with Eddie Heath – accused by ex-Chelsea players in recent weeks of abuse in the 1970s. Butcher, now 67, is said to have been involved in child pornography movies, the report says, although he has never been investigated in relation to the claims. He said this week: ‘I’ve never physically abused any children.’ The dossier said Butcher had connections to Chelsea, Crystal Palace, Fulham and Millwall as a scout. It adds: ‘John Butcher knew Eddie Heath, a football scout at Millwall who has been accused in the latest allegations.’ Advertisement

'Adrian' speaks about his experiences of the historical systematic abuse in the care system