National Audit Office: Cost of settling clinical negligence claims has more than tripled in last two decades

• Now at £60 billion, the government's liability for clinical negligence claims has increased in real terms from £14.4 billion since 2006-07 and is the second largest liability on the government balance sheet.
• Cost increases in the last ten years were largely due to a small number of high-value claims.
• NHS Resolution has taken significant steps to control costs. The National Audit Office advises that even more can be done to manage cost pressures, including building on the use of analytics, and DHSC reviewing the approach to claims in cases where the legal costs exceed the amount of compensation. 

The annual cost of settling clinical negligence claims has more than tripled over the past two decades, from £1.1 billion in 2006-07 to £3.6 billion in 2024-25 due to increased claim numbers and the rising costs of settlements, according to a new report from the National Audit Office (NAO).1 2 

NHS Resolution (NHSR) is responsible for handling clinical negligence claims against the NHS in England. The Department of Health and Social Care (DHSC) oversees NHSR and develops policy to manage the costs of clinical negligence cases. 

Between 2006-07 and 2016-17, the number of settled clinical negligence cases more than doubled, from 5,625 to 11,397. Most claims related to hospital activity, but volumes have been relatively stable since they peaked in 2016-17.3 

Since 2016-17 increases in costs are due to rising amounts of compensation paid out on claims. This is primarily due to a small number of very high-value claims.4 Reasons for increased compensation include advancements in medicine and treatments, and people needing more care as they live for longer. Damages on very-high value cases (with awards of £1 million 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 are paid by the NHS. These have risen far more than the legal costs incurred by the NHS, increasing from £148 million in 2006-07 to £538 million in 2024-25. In contrast, NHS legal costs rose from £76 million in 2006-07 to £159 million in 2024-25. 

The legal costs for low-value claims (for awards of £25,000 or less) were 3.7 times higher than the damages awarded to claimants in 2024-25. Low-value claims currently make up three quarters of all claims. Plans were made by the previous government to cap the legal costs in low-value cases, but these have not been implemented following the change of government in 2024. 

There is also a risk that government may be paying twice in some cases: first by settling a claim, and then again 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 that they will use the private sector.5 

The overall number of settled claims has reduced for the majority of medical specialities reviewed by the NAO, and two specialities showed a notable reduction in costs.6 

The cost of clinical negligence in England appears much higher than in many other countries, as the UK offers universal healthcare, does not cap compensation, and has a more comprehensive understanding of the true cost compared to other nations. 

NHS Resolution and the Government Actuary's Department estimate that the cost of clinical negligence cases will continue to increase each year, with annual payments potentially reaching £4.1 billion by 2029-30. 

Since the NAO last reported in 2016-17, NHS Resolution has worked hard to reduce the financial and emotional cost of clinical negligence by resolving claims faster and without litigation wherever possible.7 

The NAO has recommended the following steps to help DHSC and NHSR manage future risk. 

• Build on NHSR's existing use of analytics and AI to help provide a more comprehensive analysis of damages awarded.
• Consider whether the current approach to legal costs remains proportional given the high relative costs of low-value claims.
• Explore possibilities for greater transparency on the fees agreed between claimants and their lawyers.
• Assess whether the requirement to calculate damages based on privately funded care packages remains aligned with DHSC's vision of a modern NHS.
• Consider incorporating performance against complaints standards into future inspection and oversight regimes as patients report finding the current processes confusing and frustrating.

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. 

“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.” 

ENDS 
Notes to editors

1. The report will be available on the NAO website from 00:01 Friday 17 October.
2. Almost 40% (£23.9 billion) of the liability was estimated costs to the NHS from patient harm that had occurred before 31 March 2025, but a clinical negligence claim had yet to be made. The estimated value of the liability can fluctuate significantly between years due to the various assumptions needed.
3. Two new centralised schemes were introduced for general practice in 2019, and these are the main reason for recent increases in the number of claims NHSR has received and settled. Since their introduction, the number of settlements has increased to 13,329 by 2024-25. Most settlements, including settlements under the GP schemes, are low value (£25,000 or less). In 2024/25 settled claims for General Practice cost £134 million.
4. See Figure 9 for a breakdown of annual costs of settled clinical negligence claims between 2006-07 and 2024-25 by cost area.
5. Section 2(4) of the Law Reform (Personal Injuries) Act 1948 provides that defendants who pay for the future healthcare and treatment of damaged patients must do so on the presumption that such care will be provided by the private sector and not the NHS. Although claimants can be asked to declare in court if they plan to use the NHS for treatment, this rarely happens in practice. There is no estimate of the extent to which clinical negligence claimants go on to use publicly funded health or social care services for their conditions. In 2022, the Health & Social Care Committee concluded that the current approach to compensation was “outdated”.
6. Settlement numbers have reduced for 11 of the 18 major specialties reviewed. The most significant percentage reductions were in orthopaedic surgery (-33%) and general surgery (-31%) which also saw the most notable reductions in annual settled costs (£81 million and £71 million respectively). The number of settled claims increased for six of the specialties reported, with mental health (73%) and radiology (30%) reporting the largest percentage increases. Obstetrics cases involving cerebral palsy or brain damage (£599 million) and paediatrics (£137 million) saw the largest increase in annual settled costs. 
7. The proportions of claims resolved without litigation have increased from 66% in 2006-07 to 83% in 2024-25. Faster resolution of cases also reduces the time commitment and emotional distress for the claimants and clinical staff involved with a claim.