The Department of Health and Social Care has been urged to get a grip on spiraling NHS clinical negligence costs as new figures show the annual cost of settling claims has more than tripled over the past two decades.
Public spending watchdog the National Audit Office said DHSC needs to review its current approach to legal costs after its latest report found law-firm fees massively outstrip compensation payments for most claimants.
According to the NAO, the annual cost of settling clinical negligence claims has shot from £1.1bn in 2006-7 to £3.6bn in 2024-25 because of increased claim numbers and the rising costs of settlements.
It said projections from the Government Actuary’s Department and claims-settlement agency NHS Resolution suggest that the cost of clinical negligence cases will continue rising and could hit £4.1bn by 2029-30.
Hand-in-hand with annual settlements, the government’s estimate of its liability for clinical negligence claims has increased fourfold over the past 20 years, rising from £14.4bn in 2006-7 to £60bn in 2024-25.
The liability projection represents an assumption of the total cost for settling all NHS clinical negligence cases up to the end of the financial year in question, including claims yet to be recieved. Almost 40% of the 2024-25 liability projection relates to potential claims.
The NAO said clinical liability is now the government’s second-largest liability, eclipsed only by the cost of nuclear decommissioning.
In today’ s report, the watchdog said the number of settled clinical negligence cases more than doubled between 2006-7 and 2016-17, from 5,625 to 11,397. The NAO said claim volumes had been “relatively stable” since then, but that increases in costs were due to rising amounts of compensation paid out in claims – mainly due to a small number of “very high-value" cases.
It said such high-value claims, where awards of more than £1m are made, accounted for 68% of clinical negligence costs in 2024-25 but only represented 2% of claims by volume. At the other end of the scale, “low-value” cases – which are described by the watchdog as as costing £25,000 or less – account for three-quarters of successful claims.
The NAO said that legal costs for low-value cases were 3.7 times higher, on average, than the compensation claimants received.
The NHS pays the legal costs of clinical negligence claimants who are successful – as well as its own legal costs.
According to the NAO, legal costs for clinical negligence claimants rose threefold from £148m in 2006-7 to £538m in 2024-25. Over the same period, the NHS’s legal costs only doubled.
The report acknowledged that over the past decade NHS Resolution had worked hard to reduce the cost of clinical negligence through resolving claims faster and without litigation wherever possible. It said the proportion of claims resolved without litigation had increased from 66% in 2006-7 to 83% in 2024-25.
In its recommendations, the NAO said DHSC and NHSR should review their current approach to legal costs and consider whether it “remains proportional” compared with the high relative cost of low-value claims. The watchdog said one approach could be to consider whether “alternative methods” to compensate clinical negligence could provide better outcomes for less cost.
The NAO also suggested that DHSC and NHSR should build on their existing use of analytics and artificial intelligence to develop a “more comprehensive” picture of damages awarded. In particular, the watchdog said the bodies should be looking for “inconsistencies in claims for similar needs”.
The report acknowledged that while AI has the potential to greatly improve diagnosis and use of data in the NHS it could also dramatically change the landscape of negligence claims. It said there was “increasing financial interest in clinical negligence claims by venture capitalists who are actively using AI to triage casework”.
Other report recommendations included exploring possibilities for greater transparency on the fees agreed between claimants and their lawyers and assessing whether the requirement to calculate damages based on privately-funded care packages is appropriate.
The report said there was a risk that successful claimants were being awarded settlements based on the cost of private care, only to receive that care for free from the NHS – effectively doubling the cost to taxpayers.
NAO head Gareth Davies said DHSC and NHSR had taken demonstrable steps forward to deal with aspects of the NHS’s clinical negligence burden, but still had more to do.
“Despite progress in containing the number of clinical negligence claims in some specialties, the increasing cost of the small number of very high value claims is driving higher costs for taxpayers,” he said.
“Reducing harm to patients is clearly the best way of containing this cost. Alongside this, DHSC should consider whether the existing approach to legal costs remains proportionate for all claims, including whether alternative methods to compensate for negligent treatment could provide better outcomes for patients, with less cost overall.”
Sir Geoffrey Clifton-Brown, chair of parliament’s Public Accounts Committee, said the legal fees connected to NHS clinical negligence claims were “eye watering” and the overall costs from cases could continue to grow “substantially”.
“It must not be forgotten that behind the amounts reported today lie many tragic incidents of patient harm,” he said. “DHSC’s planned review of the clinical negligence system must provide greater transparency, improve patients’ experience of claims and manage these rising costs, whilst work continues to reduce future harm caused to patients.”
A DHSC spokesperson said the increase in the cost of clinical negligence claims was “unacceptable” and diverted billions of pounds away from frontline services.
“From overhauling our broken safety landscape, to grasping the serious problems in maternity care – this government is grabbing hold of this problem and taking the decisive action patients and taxpayers deserve,” they said.
“Our 10-year health plan makes clear that patient safety is the bedrock of a healthy NHS and we are working to ensure we reduce the incidents that lead to claims.
“However, a large portion of these costs occur through the legal system and we have appointed legal expert David Lock KC to advise us on how to address rising legal costs and how we can improve the claims process for patients.”
Lock’s appointment was announced in July as part of the 10-year plan launch. He is due to report in the coming weeks.