The government will set out its plans for reducing the cost of clinical negligence claims later this year – and a cap on damages could be on the agenda. Health minister Lord O’Shaughnessy (James O’Shaughnessy) yesterday confirmed to the House of Lords that a cross-government strategy will be published in September.

The National Audit Office had called on health and justice ministers to form a plan by this autumn after reporting last year that the £1.6bn annual cost of claims – if unchecked – would double to £3.2bn a year by 2020/21.

O’Shaughnessy was pressed by fellow peers to outline progress in reducing the budget set aside and cost of claims. Liberal Democrat Lord Sharkey echoed the views of medical defence groups that the Law Reform (Personal Injuries) Act 1948 should be reformed so damages are no longer calculated on the basis of private healthcare costs.

O’Shaughnessy said cost burdens on the NHS were ‘significant’ and admitted that the level of damages was one element being considered as part of this year’s strategy.

He added: ‘The issue of reform to tort law is difficult. We have to be very careful when stepping across the idea of full compensation. It is one of the issues we are looking at. Other countries, such as Australia, have looked at this and we are considering it as part of the cross-government strategy.’

O’Shaughnessy resurrected the idea of fixed costs for clinical negligence claims, saying the government has proposed to fix the amount that legal firms can recover. This is likely to be another matter addressed in the forthcoming strategy.

During the debate, former justice minister Lord Faulks (Edward Faulks QC) highlighted the impact of last year’s changes to the discount rate for deductions from damages payments. These changes effectively increased compensation payments for injured victims but are already under review.

Faulks asked whether the government was serious about a cap or tariff on damages, saying this would ‘not only clarify the amount of damages, but significantly reduce the legal costs involved’.

Meanwhile, the discussion over levels of compensation found itself on the front pages on Friday following a joint letter to justice secretary David Gauke signed by interested parties.

The letter, from the NHS Confederation, the Academy of Medical Royal Colleges, British Medical Association, Family Doctors Association, Medical Protection Society, Medical Defence Union and the Medical and Dental Defence Union of Scotland, asks for immediate action to increase the discount rate.

The groups state: ’We fully accept that there must be reasonable compensation for patients harmed through clinical negligence, but this needs to be balanced against society’s ability to pay. Money that is used for this purpose cannot be spent on frontline care.’

The widespread publicity garnered by the letter has angered clinical negligence lawyers who want the government to focus on reducing errors rather than punishing those who suffer from them. In a tweet, the Association of Personal Injury Lawyers said: ’Denying full compensation to injured patients is inhuman. It is a half-baked solution to the NHS’s problems with data collection, co-ordination, and its ongoing and breathtaking inability to learn from mistakes.’