The NHS’s total liabilities for medical negligence have reached a record £60 billion, according to a new report by the National Audit Office (NAO).
The figure reflects a surge in claims, higher payouts, and escalating legal fees, making clinical negligence the second-largest liability on the government’s balance sheet after nuclear decommissioning.
The report estimates that £60 billion would be required to settle all existing and potential NHS negligence claims as of March this year. This amount is now four times higher than it was in 2006–07, signaling a growing financial burden on the health service.
The NAO revealed that legal costs for claimants have increased significantly faster than those for the NHS. Between 2006–07 and 2024–25, claimant legal costs rose from £148 million to £538 million, representing 15 per cent of the total cost of settled claims. Over the same period, the NHS’s own defence costs increased from £76 million to £159 million but dropped proportionally from 7 per cent to 4 per cent of total claim costs.
The report highlighted that legal fees for low-value claims now far exceed the damages paid out. Around three-quarters of all clinical negligence cases are settled for £25,000 or less, but their total legal costs are nearly four times higher than the compensation awarded. In 2024–25, £143 million of the £183 million spent on low-value claims went towards legal costs, while only £39 million was used for damages.
Obstetrics cases involving cerebral palsy or brain damage continue to account for the largest share of total costs, with payouts reaching £599 million, followed by paediatrics at £137 million. The NAO noted that damages for high-value cases exceeding £1 million represent 68 per cent of overall costs despite making up just 2 per cent of total claims.
The report warned that the total cost of clinical negligence is likely to continue rising, with annual settlement costs now more than triple what they were two decades ago — from £1.1 billion in 2006–07 to £3.6 billion in 2024–25.
The NAO said that improving the NHS’s handling of patient harm complaints could help reduce the volume and cost of claims. It also criticised inconsistent application of the “duty of candour” — the legal obligation requiring openness when care goes wrong — across NHS providers.
Although previous governments planned to cap legal costs in low-value cases, these measures have yet to be implemented. The NAO further noted that taxpayers may, in some instances, be paying twice — once through claim settlements and again through continued NHS or social care for affected patients.
Gareth Davies, head of the NAO, said reducing harm to patients is the most effective way to contain rising costs. “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,” he added.
A Department of Health and Social Care spokesperson said: “There has been an unacceptable rise in the cost of clinical negligence claims – billions that should have been spent on frontline services. From overhauling our broken safety landscape to addressing serious problems in maternity care, this government is taking decisive action. Our 10-year health plan makes clear that patient safety is the bedrock of a healthy NHS.”
The government has appointed legal expert David Lock KC to advise on how to curb rising legal costs and improve the compensation process for patients.
