Justice Secretary David Gauke has unveiled plans to introduce the Civil Liability Bill to parliament. The new Bill includes changes to the way the discount rate is set.

Commenting, Emma Hallinan, Director of Claims Policy and Legal at the Medical Protection Society (MPS), said:

“The Government’s plan to create a fairer system for setting the discount rate in England and Wales is welcome news. A balance must be struck between the interests of the claimant, and the affordability of rising clinical negligence costs to society.

“Getting the framework right and ensuring the rate is reviewed at least every three years should mean we avoid further sudden shocks to the cost of compensation at a time when costs are already at risk of becoming unsustainable.

“We hope to see this Bill progress through parliament swiftly, and for the independent expert panel to be established straight away so the current discount rate can be reviewed as soon as the legislation comes into force.”

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Emma Hallinan gave evidence to the Justice Select Committee inquiry into the framework for setting the discount rate on 1 November 2017.

MPS, alongside many other organisations including the BMA, NHS Confederation and Academy of Medical Royal Colleges wrote to the Justice Secretary David Gauke in February urging him to reform the way the discount rate is calculated as soon as possible.

In 2016/17 the NHS spent £1.7bn on clinical negligence claims. This is up from £1.5bn in 2015/16, and since 2010/11 spend has almost doubled – a 98% increase – which equates to an average increase of 12% every year.

If spend continues to increase at the same rate, the NHS could be paying out £3bn a year by 2021/22.

The change in the discount rate in March 2017 (from 2.5% to minus -0.75) increased the cost of compensation for claims where there are future costs such as care costs or loss of earnings. It exacerbated an already challenging situation.

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