Government Concedes that NHS Requires £1 Billion Bailout Over Compensation Payments

The NHS will require a bailout in the region of £1 billion in order to meet the growing liabilities of the health service related to higher personal injury compensation payments.

This large figure will be necessitated due to changes in medical negligence legislation.

Downing Street confirmed the figure in a statement.

The requirement is considered particularly onerous in the existing financial climate for the health service.

For example, £1 billion would pay for the 7,000 podiatrists needed in England to ensure every person with diabetes received adequate specialist foot care for four years.

The issue has been created by what can be considered a rather innocuous decision to change the ‘discount rate’ for compensation awards to reflect lower yields from investment bonds.

This will benefit the many thousands of people who suffer as a result of medical negligence, but will be detrimental to the NHS coffers.

And the government has acknowledged that the Department of Health will face higher compensation bills as a result, describing the £1 billion figure as “broadly in the right ballpark”.

Theresa May’s official spokesman outlined the position of the government.

“The Government will make sure that the NHS has the appropriate funding to cover any changes to hospital costs, clinical negligence costs.”

The rate adjusts compensation payouts to take into account how much an individual can expect if they invest a lump sum over their lifetime.

Cutting the rate – from 2.5 per cent to minus 0.75 per cent – will benefit the thousands of people who suffer from medical negligence, car accidents and other personal injury incidents.

However, insurance firms are expected to pass on the cost in the form of higher car insurance – particularly for the youngest and oldest motorists, who are most likely to be involved in a road accident.

However, the £1bn bailout could not come at a worse time, amid growing pressure on the Government to inject more funding to head off the current crisis.

Patients are waiting longer in overcrowded A&E departments, more operations are being delayed or cancelled and local health chiefs have been ordered to find £20bn of “efficiency savings”.

NHS spending will fall on a per-person basis next year, threatening the health service with its toughest year yet, Simon Stephens, the NHS chief executive, has warned.

Meanwhile, the spokesman would not say whether any assessment had been carried out on the impact of the move on motor insurance premiums.

He said: “In terms of premiums, ultimately that is a commercial decision for insurers.”

The Government was “aware that there will be an impact on the insurance industry”, which was why the Chancellor would be meeting representatives to discuss it.

“This is a legal act that the Lord Chancellor was required to carry out,” he added.

“The discount rate had to be reviewed, quite simply because it was out of line with the current yields.”

Ms Truss had said in December that she would announce her review conclusions on 31 January, but then delayed the decision.


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