The NHS faces a compensation time bomb as provisions for hospital clinical negligence claims have almost doubled since last year to £56 billion - almost half of the NHS’s annual budget. The provisions, a pot of money set aside for paying compensation claims for medical blunders, has increased by an eye-watering £28 billion since it was calculated last year.
The NHS Litigation Authority, which pays compensation on behalf of English hospitals, announced the historic rise in its 2015/16 annual report. NHSLA Chairman, Ian Dilks, explained the £27.8 billion increase as "an accounting adjustment rather than a measure of harm in the year" but stressed that the £56.4 billion figure "reflects the true cost to the NHS in today’s prices." The increase leaves every English taxpayer on the hook for £2,217.
The report shows that £25.5 billion of the increase was caused by the Treasury cutting the long term discount rate, designed to account for the change in value of money which the Government will have to pay out in the future. The rate cut reflects the low cost of government borrowing, resulting in a negative discount rate for very long term obligations.
The NHSLA also reported a £319m increase in compensation payments and legal costs, up 27% on last year to £1.488m. In total, a staggering £2.5 billion was spent settling claims in the year to March.
The Medical Defence Union, the UK's leading medical defence organisation, said the report reveals the urgent need for legal reform to make compensation levels affordable for English taxpayers.
Jonathan Isaby, Chief Executive of the TaxPayers' Alliance, said:
"It is ludicrous that nearly half of the NHS's budget has been set aside for negligence claims. Accidents will happen resulting in some compensation claims, but the sheer scale of the fund hardly sends out the right signal and raises questions about the standard of care delivered. Taxpayers expect NHS funds to pay for nurses and cancer drugs, not for paying out big compensation bills."