BAD teaching could cost local authorities millions of pounds following a landmark legal judgment which opens the way for pupils to claim compensation.

The ruling could also lead to more red tape, with lawyers warning that full educational records will have to be kept for longer.

Last week’s decision by the law lords establishes that local authorities owe all pupils a duty of care and can be sued if the failings of teachers or other educational professionals lead to youngsters getting a poor deal.

Appeals were being considered in four special needs cases, three involving dyslexia. The judgment opens the way for other pupils or former pupils - such as those in failing schools - to make a case for negligence.

A spokesman for Municipal Mutual Insurance Ltd, the council insurer in one of the four cases, said it knew of several hundred waiting in the wings - most of them involving dyslexia. The company, which effectively ceased trading in 1992, is dealing with a backlog of pre-1992 cases which could cost it tens of millions of pounds.

But education authorities must pick up the tab for more recent cases, as most only insure against losses of pound;50,000 or more. Pamela Phelps, now 26, who claimed that her dyslexia had not been diagnosed or catered for, had a previous pound;48,000 award reinstated by the law lords.

Teacher unions and council leaders say the ruling will open the floodgates, and have called on the Government to take actin.

Graham Lane, chairman of the Local Government Association’s education committee, said ministers should ensure compensation is paid in kind, rather in cash. Former pupils who have been disadvantaged should be “fast-tracked” into further education and training, and given support for fees and materials.

“People are entitled to have their detriment put right. But giving them money doesn’t do that. If people go into it to make money, only the lawyers will benefit, and it will be today’s children that lose out,” he said.

Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, said court was not the right place for dealing with such issues. “I’m not saying we shouldn’t diagnose dyslexia when it’s there, but we have to improve public services by giving people the right training rather than going to the courts and getting money.”

But parents’ help groups have welcomed the ruling. Susan Rees, helpline co ordinator at the Advisory Centre for Education, said there was no reason why teachers shouldn’t be treated like other professionals who can be sued for negligence.

But David Hart, general secretary of the National Association of Head Teachers, said that while, in theory, the decision had major implications, in reality the number of cases was limited because financial loss or other damage must be proved.

A Department for Education and Employment spokesman said it was still considering the judgment and its options, and would respond later this month.