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| NHS will need £1bn bailout to pay bills of higher personal injury compensation payments, No 10 admits | NHS will need £1bn bailout to pay bills of higher personal injury compensation payments, No 10 admits |
| (about 5 hours later) | |
| The NHS will need a £1bn bailout to meet the bills of looming higher personal injury compensation payments, Number 10 has admitted. | |
| Changes to medical negligence rules will force the Treasury to hand over the extra cash – at a time when the health service is already crying out for extra funding. | Changes to medical negligence rules will force the Treasury to hand over the extra cash – at a time when the health service is already crying out for extra funding. |
| The shake-up will also push up motor insurance premiums – possibly by “hundreds of pounds” according to the industry – and land the Ministry of Defence with higher payouts. | |
| The Chancellor, Philip Hammond, will meet insurance companies today to discuss the fall-out, as a major political row blew up. | The Chancellor, Philip Hammond, will meet insurance companies today to discuss the fall-out, as a major political row blew up. |
| It has been sparked by a little-noticed decision to dramatically change the ‘discount rate’ for compensation awards to reflect lower yields from investment bonds. | |
| The rate adjusts compensation payouts to take into account how much an individual can expect if they invest a lump sum over their lifetime. | 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. | |
| And, Downing Street acknowledged today, the Department of Health (DH) is braced for higher compensation bills – describing the £1bn figure as “broadly in the right ballpark”. | And, Downing Street acknowledged today, the Department of Health (DH) is braced for higher compensation bills – describing the £1bn figure as “broadly in the right ballpark”. |
| Theresa May’s official spokesman said: “The Government will make sure that the NHS has the appropriate funding to cover any changes to hospital costs, clinical negligence costs.” | Theresa May’s official spokesman said: “The Government will make sure that the NHS has the appropriate funding to cover any changes to hospital costs, clinical negligence costs.” |
| He added: “The Government will make that extra funding available.” | He added: “The Government will make that extra funding available.” |
| 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. | 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”. | 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. | 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. | |
| The spokesman said Ms Truss, as Lord Chancellor, had been “required” to carry out the review, before deciding on the new discount rate. | The spokesman said Ms Truss, as Lord Chancellor, had been “required” to carry out the review, before deciding on the new discount rate. |
| “This is a legal act that the Lord Chancellor was required to carry out,” he added. | “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.” | “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. |