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<p>NHS Resolution’s provision for clinical negligence claims at 31 March 2017 was
£64.7 billion. Recent rises in the provision are due to a number of factors including
increases in the number of claims received, the amount of damages awarded, particularly
in maternity claims and legal costs. This is also influenced by two discount rates:</p><p>
</p><p>- The long term Public Expenditure System, set by HM Treasury, enabling a present
value to be placed on future liabilities for accounting purposes but not affecting
the costs of settling claims, changed from +2.2% to -0.8% from 31 March 2016, and
increased the provision by £25.5 billion in 2015/16.</p><p> </p><p>- The personal
injury discount rate (PIDR), set by the Lord Chancellor, places current value on future
losses for settlement through lump sum payments, affecting the cost of settling claims.
PIDR changed from +2.5% to -0.75% from 20 March 2017 and contributed £4.7 billion
to the increase in the provision in 2016/17.</p><p> </p><p>The Government published
draft legislation in September to reform the legal framework governing how the PIDR
is set. The proposals will help ensure that claimants continue to receive full compensation
but should significantly reduce overpayment by more reliably reflecting how awards
are invested. Subject to its consideration of the Justice Select Committee’s pre-legislative
scrutiny report and comments received from stakeholders on the draft legislation,
the Government plans to introduce legislation to reform the law as soon as possible.</p><p>
</p><p>The provision is calculated annually taking into account latest developments
in the claims environment to inform assumptions about claims volumes, inflation in
settlements and legal costs and time to settle claims. It is, therefore, not possible
to provide an accurate provision for the next three years although it will continue
to increase for some years to come for inflationary and other reasons.</p><p><strong>
</strong></p><p>NHS Resolution manages the costs of claims appropriately, challenging
claims without merit, excessive claims for damages and claimant legal costs. It works
with trusts to help them understand their claims data to better assess where local
interventions would have the greatest impact in reducing high volume or high cost
claims, and shares learning and best practice from its analysis of claims. Its new
strategy, <em>Delivering fair resolution and learning from harm: Our strategy to 2022</em>
gives it an enhanced focus on mediation, learning and prevention, as well as litigation,
and it will deliver increased insight into what drives the costs of harm and work
with others to develop interventions that improve safety and save money for the NHS,
as demonstrated by its recent report <em>Five years of cerebral palsy claims: A thematic
review of NHS Resolution data</em>. A copy of both documents is attached.</p><p> </p><p>Following
recent reports by the National Audit Office and the Public Accounts Committee on clinical
negligence costs, the Department is working with the Ministry of Justice, HM Treasury
and NHS Resolution and others to develop a cross government strategy to reduce them.
This work is supported by our pursuit of improved safety standards and a transparent,
learning culture across the NHS.</p>
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