Change law to prevent future discount rate impact on indemnity, says MDU

The law must be changed to ensure the discount rate applied to personal injury pay-outs is not lowered again without full consideration of the 'profound' impact it has on the NHS and GPs, the MDU has warned.

Parliament: MPs urged to change law to slow rising indemnity costs (Photo: Ian Bottle)
Parliament: MPs urged to change law to slow rising indemnity costs (Photo: Ian Bottle)

The law governing how the discount rate is set ‘is not fit for purpose’ and must be changed, a medical defence organisation (MDO) has warned.

It follows a decision from the justice secretary in February to lower the discount rate applied to personal injury costs from 2.5% to -0.75%, which set in this April.

The move added billions to the cost of clinical negligence claims ‘overnight’, the MDU warned – adding that safeguards must be put in place to ensure the full implications of the decision are taken into account in future.

An independent panel of experts should be instated to make the decision and assess what effect it will have on the NHS and other public bodies – and the public at large – it added.

The rising cost of GP indemnity was already a serious concern, and a further large increase is ‘simply not affordable’ for the profession, it said.

GP indemnity

MDOs have previously warned that pay-outs will more than double as a result of the change – an increase in costs that will ‘need to be reflected in GP membership subscription rates’.

Upon announcing the change, the justice secretary committed to working ‘closely with GPs and MDOs to ensure that appropriate funding is available to meet additional costs to GPs’.

But no solution has been announced for GPs so far, the MDU said.

Dr Christine Tomkins, MDU chief executive, said: ‘The Lord Chancellor’s decision to lower the discount rate has added billions of pounds to the cost of clinical negligence and other personal injury claims overnight.

‘The law must change to require whoever makes the decision to take into account the effect on public services like the NHS and on every citizen. There should also be an independent panel of experts to advise the decision maker, who should not set the rate in isolation.

Personal injury claims

‘The financial and economic repercussions are profound and need to be fully understood as they should inform any decision about the discount rate.

‘The benefit to the number of people who receive compensation awards must be balanced against the wider public interest, such as the impact on the NHS. The Treasury will need to find an additional £5.9bn for the first three years of additional NHS costs alone.

‘We have responded to the consultation on behalf of our members, pointing out what we think are the flaws in the current decision. In the meantime, GPs need immediate assistance to help them with the increased cost of indemnity as a result of the rate drop.

‘It was already a serious concern and the government committed to support GPs with the massively increased costs this decision has caused.’

The DH said it was reviewing the results of its recent consultation on the personal injury discount rate and remained committed to ensuring funding is in place to meet the additional cost to GPs.

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