On 2 December 2021, the House of Lords is due to debate the following topical question for short debate:

Lord Mackay of Clashfern (Conservative) to ask Her Majesty’s Government whether the liability costs to the National Health Service in England that relate to negligence can be reduced; and, if so, how.

Managing compensation in the NHS in England

NHS Resolution is an arm’s length body of the Department of Health and Social Care (DHSC). One of its functions is dealing with claims for compensation on behalf of the NHS in England. Its purpose is to:

[P]rovide expertise to the NHS to resolve concerns fairly, share learning for improvement and preserve resources for patient care.

NHS Resolution manages seven clinical negligence schemes. These schemes include:

Other schemes exist covering incidents occurring before these dates, for example the Existing Liabilities Scheme which is funded by the DHSC and covers clinical negligence claims against NHS organisations for incidents occurring before 1 April 1995. NHS Resolution also manages two non-clinical schemes under the heading of ‘risk pooling schemes for trusts’ (RPST). These are:

  • Property Expenses Schemes (PES), which covers ‘first party’ losses such as property damage and theft, for incidents on or after 1 April 1999.
  • Liabilities to Third Parties Scheme (LTPS), which covers non-clinical claims such as public and employers’ liability.

NHS Resolution manages a third scheme called ‘DHSC Non-clinical’. This covers non-clinical negligence liabilities that have been transferred to the Secretary of State for Health and Social Care “following the abolition of any relevant health bodies”.

Costs of compensation

Total payments relating to NHS Resolution’s clinical schemes (not including administrative costs) stood at £2,209.3 million in 2020/21. This was a decrease of £114.9 million from £2,324.2 million in 2019/20. Damages paid to claimants in 2020/21 stood at £1,609.8 million, including personal injury discount rate (PIDR) expenditure (PIDR is used by the courts “to place a current value on claims settlements where there is an element of future loss”). This was a decrease of £73.4 million from £1,683.2 million in 2019/20. Claimant legal costs also decreased from £497.5 million to £448.1 million. NHS Resolution has stated there has also been a reduction in the volume of high value claims that have had damages and claimant legal cost payments and that the average value of these payments reduced in 2020/21, but it has said that the pandemic may have had an effect on reduced costs:

This may be in part due to the operational challenges experienced in the legal and health environments during the pandemic to progress claims. Also, costs are increased when a case enters formal court proceedings and therefore the decrease in claims entering formal proceedings may also have contributed to the decrease in spending in these areas.

Non-clinical negligence payments for 2020/21 (including PIDR) totalled £50.7 million. Total payments made to settle claims in 2020/21 was £2.26 billion.

The number of clinical claims closing with and without the payment of damages has generally been increasing since 2006/07, although claims closing with the payment of damages has levelled off in recent years (see: figure 5 of NHS Resolution’s 2020/21 annual report and accounts; see its amendments note for the key to this figure). In 2020/21, 6,574 clinical claims received damages compared to 7,523 in 2019/20. Clinical claims receiving no damages stood at 5,079 in 2020/21 compared with 4,469 in 2019/20. The number of non-clinical claims has generally been lower than clinical claims, particularly in recent years. In 2020/21, 1,837 claims received damages and 1,907 received no damages.

The cost of CNST clinical negligence claims incurred as a result of incidents in 2020/21 was £7.9 billion. NHS Resolution has said that 60% of this cost related to maternity services (£4.8 billion as at 31 March 2021).

NHS Resolution states that the majority of claims it receives are resolved without formal court proceedings and that “in these early stages, more claims are resolved without payment of damages than with payment of damages”. Claims not needing court proceedings are managed by NHS Resolution’s internal teams. It has said that the “overwhelming majority” were resolved “by negotiation in correspondence, in meetings between the parties, or using some form of alternative dispute resolution, including formal mediation”.

Addressing the cost of compensation

Concern has been expressed that the costs of paying claims represents a significant proportion of the NHS budget. Speaking in the House of Lords in answer to an oral question on 10 November 2021 on the subject of clinical negligence claims, Lord Kamall, Parliamentary Under Secretary of State at the Department of Health and Social Care, said that payments in 2020–21 amounted to 1.5% of the NHS budget:

The costs of clinical negligence are rising at an unsustainable rate, eating into resources for patient care. Annual cash payments have quadrupled in the last 15 years to £2.2 billion in 2020–21. That is equivalent to 1.5% of the NHS budget and these costs are forecast to continue rising. This is despite our substantial safety programmes.

Academics and a solicitor writing in the British Medical Journal in March 2020 argued that “clinical negligence costs now represent a major threat to the viability of the NHS”. They stated that payments for clinical negligence claims were one element of costs and that NHS Resolution also had to account for claims it may receive in the future, and these values were significant:

NHS Resolution also has to account for claims likely to be received in the future. Now standing at £83.4bn [2018–19], the amount “set aside” for such claims is among the most substantial public sector financial liabilities faced by the UK government, second only to nuclear decommissioning (£131bn).

The authors argued that four “foundational principles” for safer care could help reduce costs. These were: “dealing with structural problems, a real commitment to learning, learning from high performance, and facilitating system-wide improvements”.

On 6 July 2021, the House of Commons Health and Social Care Committee published a report into the safety of maternity services in England. As part of its inquiry, the committee looked at the issue of clinical negligence and litigation. It argued that the “current approach to patient safety incidents is resulting in rising clinical negligence costs without sufficient learning and perpetuating a culture of blame”. The committee urged the Government “to reform the clinical negligence system in a way that better meets the needs of families and establishes a less adversarial process which instead promotes learning”.

In September 2017, the National Audit Office (NAO) published a report on managing the costs of clinical negligence in trusts. The NAO examined claims between 2006–07 and 2016–17. On the CNST, the NAO said, “the cost of this scheme has increased significantly, with NHS Resolution’s annual cash spending rising from £0.4 billion in 2006–07 to £1.6 billion in 2016–17”. The NAO also looked at what was behind rising costs during this period and whether NHS Resolution and the DHSC were taking effective action to understand and control them. Amongst its key findings, the NAO said:

  • “The rise in clinical negligence costs is due to increases in average claimant damages and legal costs, and to a higher volume of claims”.
  • “NHS Resolution has identified what is driving the rising costs of clinical negligence, but many of the contributing factors are hard for it to influence directly”.
  • “The rise in the number of claims and claimants’ legal costs for clinical negligence is closely associated with recent legal reforms and market developments in legal services”.
  • “There is no evidence yet that the rise in clinical negligence claims is related to poorer patient safety, but declining performance against waiting time standards is one factor which increases the risk of future claims from delayed diagnosis or treatment”.
  • “NHS Resolution aims to reduce the number of future claims by helping trusts to learn from past claims, but current data on claims management and its capacity to analyse these data are still limited”.

For references to the Public Accounts Committee’s corresponding report and the Government’s response see ‘Read more’.

Government position

The DHSC has stated that it is working with the Ministry of Justice, other government departments and NHS Resolution to address the issue of medical litigation costs.

The Government has said that it is committed to safety improvements in the NHS, but it has argued that reducing harm would not necessarily reduce the number of claims. Speaking in the House of Lords in answer to an oral question on 10 November 2021 on the subject of clinical negligence claims, Lord Kamall, Parliamentary Under Secretary of State at the Department of Health and Social Care, said:

The Government remain committed to continuous safety improvement, particularly on developing learning cultures in our health system and tackling the issues of denial and delay. While we strive towards this goal, we have seen that the cost of clinical negligence claims has quadrupled in the last 15 years, and there is no guarantee that reducing harm would necessarily result in fewer claims. In many cases, the overall costs are being driven by increases in the average cost per claim.

Lord Kamall said that “looking at the system overall, there is no evidence to suggest that the rise in overall costs is due to a decrease in NHS safety”. However, he said that “safety and learning from incidents are essential in their own terms”. Lord Kamall also said that it was important to “bake in a culture of openness in the NHS so it can no longer hide behind the fact that we are full of praise for it when it does things well”. He argued that when things did go wrong the NHS “shuts up shop and hides behind various techniques […] it is important that we are as open as possible in trying to make sure we tackle some of the problems and learn in the future”.

In March 2021, the Government referenced the 2017 report by the National Audit Office (NAO) which the Government said “confirmed that developments in the legal market are amongst the biggest factors influencing costs, rather than any detectable decline in patient safety”.

Giving oral evidence to the House of Commons Health and Social Care Committee on its maternity services inquiry on 2 February 2021, Nadine Dorries, then Minister of State for Patient Safety, Suicide Prevention and Mental Health at the Department of Health and Social Care, indicated that the Government was reviewing how clinical negligence was approached:

What I will say, and I cannot be drawn on the detail, is that we are looking across the NHS in the round, not just in maternity, at how issues of no-blame, no-fault compensation and clinical negligence are treated, how they are dealt with, how we look at them and how we administer them. There is a review taking place. It was discussed as part of the spending review that we look into that. Work is under way. I cannot be drawn on the detail at the present moment, but we are evaluating it.

The committee recommended that the Government brought forward proposals on litigation reforms following that review:

We recommend that following that review, the Department brings forward proposals for litigation reforms that award compensation for maternity cases based on whether an incident was avoidable rather than a requirement to prove clinical negligence. That approach would allow families to access compensation without the need for the courts in the vast majority of cases and establish a substantially less adversarial process.

In the Government’s September 2021 response to the committee’s report, the Government referred to an announcement in the spending review 2020 in which it said “to continue to improve patient safety and tackle the rising costs of clinical negligence, the government will publish a consultation next year”. The Government said that it would take decisions on next steps following the consultation.

House of Commons Health and Social Care Committee: NHS litigation inquiry

The House of Commons Health and Social Care Committee launched an inquiry into NHS litigation reform on 22 September 2021. This follows its previous inquiry into the safety of maternity services in England. In commenting on the committee’s inquiry into NHS litigation, the chair, Jeremy Hunt, referred to the findings of the maternity report and said the committee would be looking at how the litigation process could be reformed:

Our inquiry into maternity safety found that too often the mechanism for awarding compensation, which is based on proving gross clinical negligence, perpetuated a culture of apportioning blame.

This adversarial legal process not only costs the NHS increasingly eye-watering amounts of money but prevents lessons being learnt when things go wrong. We will be examining in more detail in this inquiry how the litigation process should be reformed to save vast sums being spent on compensation, and crucially to promote patient safety in the future.

Read more

Cover image by Bru-nO at Pixabay.