Image copyright Science Photo Library

A BBC investigation has found evidence that some local authorities in England and Wales may have allowed fear of losing insurance cover to alter their approach to child abuse inquiries.

File on 4 has also been told of cases where insurers attempted to suppress information about abuse allegations.

An ex social services chief called the behaviour of one company "disgusting".

The Association of British Insurers said the investigation "raised a number of serious matters".

When Colin Lambert, then leader of Rochdale Council, proposed an investigation last year into a possible cover-up of child abuse in the town, he was shocked by a response from council officers.

Former pupils at the Knowl View special school for boys have alleged they were victims of sexual assaults by Rochdale's former MP, the late Cyril Smith and others, in the 1970s, '80s, and early '90s.

Mr Lambert says he was told an inquiry could lead to problems with the council's insurers.

"I can recall a conversation with officers that this could lead to the insurers withdrawing cover," he says. "Holding an actual open inquiry would expose exactly who did know what - and therefore the council probably would have been liable. And that then opens up the insurers to claims."

Image copyright Rochdale Council

He continued to press for an inquiry - which has now been instituted.

The council has not denied Mr Lambert's account of the conversation about insurance - though it says it "would not be influenced by any pressure, perceived or actual, to either withhold or evidence or not to carry out a full and thorough investigation."

The File on 4 investigation has found other cases across Britain, over many years, in which councils have expressed concern over the danger of losing insurance cover - and some in which insurers have attempted to suppress information about abuse allegations.

Tim Hulbert, former director of social services in Bedfordshire, says insurers "instructed" him on what to do when he was helping set up an inquiry into alleged child abuse at a children's home in the early 1990s.

He said: "I had a phone call from the insurers who were anxious to influence the terms of reference of the inquiry, so they didn't actually produce circumstances which would increase the likelihood of claims.

"I thought it was disgusting."

Image caption Tim Hulbert says insurers "instructed" him on how an inquiry should be conducted

Hulbert is one of those who called for the national abuse inquiry led by New Zealand High Court judge Lowell Goddard to look at insurance concerns.

"There is actually a conflict between the responsibilities of a local authority to safeguard its finances, which represents the interests of the insurers amongst other people - and the responsibility to protect children in whatever circumstances.

"For that reason, it needs to be dealt with as part of the whole examination of what influences have allowed the cover-ups of child abuse for so long."

At another council, Hereford and Worcester, in the same period, former child protection manager Peter McKelvie says council lawyers warned him not to admit the authority's liability at an inquiry into abuse at Rhydd Court school for boys, near Malvern.

"I could talk about the abuse that children suffered, but I was not to talk about how it could have been prevented," he said. Mr McKelvie believes insurance concerns lay behind the instruction.

The insurers, Municipal Mutual, told the BBC it denies "any suggestion that it acted to the detriment of pupils" at the school. The company repudiated cover in the case on the grounds that the council had breached its policy conditions by taking too long to inform them of the allegations.

In North Wales in 1996, Clwyd County Council refused to publish the report of an inquiry it had set up into abuse in its children's homes following legal advice that it would risk losing its insurance cover.

The issues raised impinge on the democratic and constitutional arrangements of England and Wales Jillings Report

The government-appointed Waterhouse Tribunal on North Wales abuse later said the insurers had "acted throughout with the honourable intention" of preventing the council acting in such a way that they would be forced to repudiate liability for claims.

But when the Clwyd report by John Jillings was eventually published on a BBC Freedom of Information request in 2013, it revealed that the insurers had objected to the panel's proposal for notices in the press appealing for information about abuse.

'Bandwagon'

The insurers said: "Such notices only encourage a 'bandwagon' of claims together with adverse publicity."

The Jillings report said: "The issues raised by those advising the insurers impinge on the established democratic and constitutional arrangements of England and Wales."

The Association of British Insurers said: "Any survivor of abuse should be able to have confidence that their case will be dealt with fairly and openly by all parties and we will work with our members to ensure that the role of insurers in these sensitive processes is well framed and understood."

For more on this story listen to File on 4 on BBC Radio 4 at 20:00 on Tuesday 24 February.