The legislation that will pave the way for reform on how the discount rate is set, must be introduced to Parliament promptly to avoid the risk of clinical negligence costs becoming unsustainable, the Medical Protection Society (MPS) said today after its appearance at a Justice Select Committee.
The Justice Select Committee inquiry follows the Government’s proposed new framework for setting the discount rate in the future. In March this year the Government reduced the rate to minus 0.75 – a move that significantly increased the cost of compensation for clinical negligence, at a time when costs are already at risk of becoming unsustainable. In 2016/17 the NHS paid out £1.7bn on claims, and since 2010/11 annual spend has increased by 98%.
MPS said the current law which determines how the discount rate is set does not take into account the impact on the NHS, the public purse and the affordability of indemnity for healthcare professionals - and welcomed the plan to reform it. But MPS is concerned that it will take time to implement and in the meantime, costs continue to rise.
MPS’s Director of Claims Policy and Legal, Emma Hallinan, who represented MPS and its members at the inquiry, commented: "It is vital that the Government gets the framework right if we are to avoid further sudden shocks to the cost of compensation - the discount rate should provide a fair system for both claimants and defendants, ensuring that claimants are paid no more but no less than they should be.
"We believe the Ministry of Justice’s proposal strikes the right balance, and ensuring the rate is reviewed every three years would create greater stability. We also welcome the speed at which the Government has taken forward this draft legislation and the Justice Select Committee’s willingness to conduct this inquiry.
What is absolutely essential now is that the Government introduces this legislation to Parliament soon after the Committee concludes its report. Without prompt action there is a risk that the cost of clinical negligence will become unsustainable for healthcare professionals, the NHS and to society.
Notes to editors
The Justice Select Committee inquiry took place on the morning of 1 November 2017.
The Committee agreed to undertake a pre-legislative scrutiny inquiry into the draft clause ‘Assumed rate of return on investment of damages’.
The Government’s (September 2017) proposal to reform the framework which determines how the discount rate is set can be found here.
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