Clinical negligence is the second largest liability on the Government's balance sheet having increased in real terms to £60bn from £14.4bn since 2006-07.

Gareth Davies, head of the NAO, said: ‘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.'

Davies said that, aside from reducing harm to patients, the DHSC should consider whether the existing approach to legal costs ‘remains proportionate for all claims' and explore  ‘whether alternative methods to compensate for negligent treatment could provide better outcomes for patients, with less cost overall'.

Damages on very-high value cases (with awards of £1m or more) accounted for 68% of all costs in 2024-25, despite only constituting 2% of claims by volume. 

Claimant legal costs on successful claims rose from £148m in 2006-07 to £538m in 2024-25. In contrast, NHS legal costs rose from £76m in 2006-07 to £159m in 2024-25. 

Low-value claims currently (for awards of £25,000 or less) made up three quarters of  claims. The legal costs for low-value claims were 3.7 times higher than the damages awarded to claimants in 2024-25.

The NAO highlighted the risk of the Government paying twice in some cases by settling a claim and then by paying for further treatment as patients could go on to use publicly funded health or social care services, despite the settlement being paid with the assumption they will use the private sector.

The report that clinical negligence costs in England were much higher than in many other countries due to the offer of universal healthcare, no cap on compensation and a more comprehensive understanding of the true cost. 

Annual costs are expected to rise to £4.1bn by 2029-30. 

Reaction

NHS Resolution welcomed the report's conclusion that it ‘worked hard to reduce the financial and emotional cost of clinical negligence by resolving claims faster and without litigation wherever possible', along with its innovation in dispute resolution and learning from claims such as the Early Notification Scheme for maternity.

It noted the proportion of claims resolved without litigation increased from 67% in 2006-07 to 83% in 2024-25 with most clinical negligence cases (99.8%) not proceeding to trial in 2024-25.

A spokesperson said: ‘Patient safety remains a top priority. We are therefore accelerating our work with partners across the healthcare safety system to use insights from claims to improve outcomes for patients, with a particular focus on maternity care.

‘We also look forward to providing our unique data and expertise to support Government in addressing the wider challenges set out in the NAO's report.'

Thomas Reynolds, director of policy & communications at the Medical Defence Union (MDU) said the report should be a ‘wake-up call' and ‘lightning-rod for change' for the Government.

The MDU called on the Government to introduce the fixed recoverable costs scheme for claims valued at less than £25,000 and go further with a scheme for the upper limit of £250,000.  

Reynolds said the Government should end the ‘the decades long absurdity … which requires courts to disregard the existence of the NHS when paying clinical negligence compensation, and instead do so on the basis of the cost of private healthcare'.

Helen Morgan, Liberal Democrat health spokesperson, said: ‘Billions are being wasted on legal battles instead of improving care. ‘After years of denial and decay, the NHS cannot survive more dithering. To turn this situation around, the Government must stop talking and start delivering real change within the NHS. It needs to invest in staff and fix broken services to increase patient safety and restore trust.'

A Department of Health and Social Care spokesperson said: ‘There has been an unacceptable rise in the cost of clinical negligence claims – billions that should have been spent on front line 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.

‘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.'