Thursday 9 March 2017

Government Finances To Hit Nearly £6BN To Solve Personal Injury Payouts

Liz Truss

The government’s finances will take a near-£6bn hit as a result of the increased bill faced by the NHS and other parts of the public sector as a result of changes made to the way compensation awards for botched operations and other errors are calculated.

The lord chancellor, Liz Truss, announced a cut to the so-called Ogden discount rate last month which is pushing up the payouts to claimants but increasing the cost to organisations such as the NHS.

The Office for Budget Responsibility said the government was now setting aside an extra £1.2bn a year to meet the expected costs to the public sector – and it would push up car insurance premiums by around 10% .

Robert Chote, chair of the OBR forecasting unit, said: “The overall effect is to increase borrowing by £1.8bn this year and around £1bn each year thereafter.”

The Association of British Insurers, which wants an overhaul of the system, described the costs as extraordinary.

Huw Evans, ABI director general, said: “Today’s budget confirms a massive £6bn hit to the NHS caused by the lord chancellor’s decision to cut the personal injury discount rate to -0.75%”.

The rate was previously 2.5%. “This extraordinary bill for taxpayers – bigger than any other in this budget – shows how absurd this avoidable decision was,” he added.


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