MPs have told the government that it cannot wait any longer to address the issues of legal costs and damages costing the NHS millions every year.

In a wide-ranging report published today, the Public Accounts Committee states that a failure to tackle the underlying causes of harm to patients was a key factor behind the government’s liability for clinical negligence quadrupling in the last 20 years to £60bn. But it also highlights ways in which savings can be made in claimant costs and the compensation being paid.

The committee said it was ‘long overdue’ to look again at how victims of negligence can claim damages on the basis of private healthcare treatment for their future needs. Anecdotal evidence suggests that many such recipients still access NHS services. Damages are ‘inflated unnecessarily due to a historic legal requirement to assume that treatment and care will be provided privately’, the report states.

The Department of Health and Social Care does not know to what extent claimants go on to use publicly funded services, the report states. 'This situation simply cannot go on because there may be an element of double-counting.' It calls on ministers to develop proper estimates of this ‘double cost’ and set out additional measures – including changes to legislation – to tackle it within six months.

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Of equal importance to the committee was that claimant legal fees have increased in real terms from £148m in 2006–07 to £538m in 2024–25 and now represent 15% of all settled costs. The committee is 'extremely concerned' that lower-value clinical negligence claims, where damages are £25,000 or less, cost far more in legal fees than victims receive in damages: a 3.7:1 cost-to-damages ratio.

The previous government’s plans to limit the amount paid to lawyers in lower-value cases were not implemented as planned in 2024 and remain under review. The committee recommends that the department develop alternative dispute mechanisms to speed up decisions on less complex cases, looking at other jurisdictions such as New Zealand and Sweden for non-adversarial models.

The government should also clarify its position on a fixed recoverable costs scheme for lower-value clinical negligence cases ‘at the earliest opportunity’.

Whether the report will make any difference is open to question, given that the committee has raised concerns about clinical negligence costs in each of the past two years, with little policy change resulting from such interventions.

Committee chair Sir Geoffrey Clifton-Brown said: ‘Government must move at pace towards a less adversarial system, reducing costs and ensuring that claims are paid more quickly for the benefit of families involved. Whatever happens next, government has been in unacceptable stasis on the issue of clinical negligence for the majority of my political life, as numbers have continued to creep up.’