HC 172 Annual report and accounts 2016/17 Advise / Resolve / Learn NHS Resolution Annual report and accounts 2016/17 Presented to Parliament pursuant to Paragraph 6 of Schedule 15 of the National Health Service Act 2006. Ordered by the House of Commons to be printed 13 July 2017. This is a reproduction of the annual report and accounts laid before Parliament under the name of the NHS Litigation Authority - pages 5 to 165 remain unchanged HC 172 Contents © NHS Resolution 2017 (the operating name of the NHS Litigation Authority) The text in this document (this excludes, where present, the Royal Arms and all departmental or agency logos) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not in a misleading context. The material must be acknowledged as NHS Resolution copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder much be sought. Any enquiries related to this publication should be sent to us at 151 Buckingham Palace Road, London, SW1W 9SZ This publication is available at www.gov.uk/government/publications Print ISBN 9781474143813 Web ISBN 9781474143820 ID 18041725 07/17 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the Williams Lea Group on behalf of the Controller of Her Majesty’s Stationery Office Advise / Resolve / Learn Contents Contents Performance report 6 Chair’s welcome 8 Chief Executive’s report 10 Performance summary 12 What we do 12 Understanding our indemnity schemes 13 The year in numbers 14 The environment we work in 27 Key issues and risks 28 A going concern 30 Performance analysis 31 Our strategic aims 31 Performance measures 32 Delivering a fair distribution of cost 36 Our strategies for resolution 37 Mediation 37 Contesting claims appropriately 37 Tackling exaggeration and fraud 37 Challenging excessive legal costs 39 Resolution without legal proceedings 43 Defending cases to trial 44 Developing legal precedent 46 Managing historic liabilities 50 A focus on maternity 50 Sharing learning for improvement 53 Service updates 58 Feedback on our performance 67 Finance report 70 Accountability report 78 Corporate governance report 80 Directors’ report 80 Statement of Accounting Officer’s responsibilities 81 Governance statement 82 Remuneration and staff report 103 Parliamentary accountability and audit report 119 The certificate and report of the Comptroller and Auditor General to the Houses of Parliament 120 Financial statements 122 Statement of comprehensive net expenditure for the year ended 31 March 2017 124 Statement of financial position as at 31 March 2017 125 Statement of cash flows for the year ended 31 March 2017 126 Statement of changes in taxpayers’ equity for the year ended 31 March 2017 127 Notes to the accounts 128 Glossary 164 5 Performance report Performance report Performance report 7 NHS Resolution Annual report and accounts 2016/17 Performance report Overview Chair’s welcome Ian Dilks / Chair We are becoming we considered that there was financial and performance NHS Resolution. more we could contribute. report. The good news is A number of steps have already that for the third year in a I referred last year to the been taken in recent years, row clinical negligence claim ongoing discussions with the for example establishing our numbers reported to us have Department of Health (DH) Safety and Learning team and fallen, by over 10% in three about the future role of the the promotion of mediation years. Despite this however, NHS Litigation Authority and as an alternative to litigation, the cost of claim payments how we could play a bigger so NHS Resolution represents continues to rise. In part, this role to assist in the reduction evolution not revolution. is a function of the nature of of harm and cost of claims Our new strategy and name our risk pools which mean to the NHS. both support the changes that that payments today reflect The strategy for the were already under way and claims notified in previous development of what is now give us a clear mandate to years, but it also reflects the NHS Resolution is the outcome. do more. It also gives us the increasing cost of claims and I would like to congratulate opportunity to make more use the associated legal costs, with the management team on of new skills acquired when the claimant legal costs rising by the development of the new National Clinical Assessment 19% last year to almost £500 strategy and we are grateful Service (NCAS) joined us a million, once again a greater to both our sponsor team in few years ago. Further details increase than in damages DH and our scheme members are contained in our strategy paid to patients (up 14%). in their responses to the document available from our It is salutary to reflect that our new website, www.resolution. consultation we carried out total provisions have increased nhs.uk/our-strategy, and in the last year which have been by over 250% from £26 billion pages that follow. invaluable in shaping the in 2014 to £65 billion in 2017. Much of this is attributable to future for NHS Resolution. One key aspect of our plans financial factors beyond the We are also grateful to our for the future is much closer control of the NHS and driven Health Ministers for their working, both formally by the current low interest active support. and informally, with other rate environment - the change organisations within the overall So why change? We have in discount rate used to value health system. Many of the commented before that our liabilities which occurred measures that can be taken to the clinical negligence cost last year and the change in influence the cost of claims are burden placed on the NHS the Personal Injury Discount not ones that NHS Resolution is becoming unsustainable. Rate (PIDR)1 which occurred in can take but we can advise The NHS Litigation Authority March 2017. Neither of these and support others. was, as external reviews adjustments are a measure of have confirmed, well led and The need for change is harm but as I said last year, the operationally efficient but illustrated again in our final provision (£65 billion this 8 NHS Resolution Annual report and accounts 2016/17 Performance report year) reflects the true cost to costs so will be dependent Director Mike Pinkerton the NHS in today’s prices of the on additional funding to who recently stood down payments that we will have to be provided by DH which in as the Chief Executive of make in the future. turn will be met out of the Doncaster and Bassetlaw additional £1.2 billion per NHS Foundation Trust and The National Audit Office annum the Chancellor of brings valuable insights into (NAO) is currently conducting a the Exchequer has said the senior leadership of our review of how the Government will be made available to scheme members. We were manages the cost of clinical public bodies, including also delighted last November negligence in trusts and we NHS Resolution, to meet to appoint as an Associate now expect the final report, these claims. Non-executive Director, Dr the publication of which Mike Durkin, the then National was delayed by the general In addition to developing our Director for Patient Safety election, later this year. NHS new strategy the management at NHS Improvement, which Resolution is obviously a team has continued to develop brought valuable knowledge of significant part of the overall and improve our internal and links to other organisations system and we look forward to capabilities, important to active in improving patient receiving the NAO findings and our priority of being fit safety. At the same time we to seeing whether they point for purpose. I would like lost the services of Ms Ros to other steps that can be to mention two external Levenson whose term of office taken in which we can assist. achievements that reflect came to an end in October last this. Firstly we were awarded The change in the PIDR added year and I would like to express ISO 27001 certification of £4.7 billion, approximately my appreciation for her role in our information security 7.5%, to our claims provisions supporting the development management systems at March 2017 but will have a of NHS Resolution during her and secondly, successfully proportionally bigger impact term of office. obtained Investors in People on the claim payments we will accreditation. Both are notable We are all enthused by the make in 2017/18. Our previous achievements at a time of challenges that lie ahead in estimate of payments was continuing change for implementing and further c£2 billion which is the cost the organisation. developing our new strategy. already notified to our scheme The Board is committed members but the PIDR change Our senior management team, to supporting the senior will materially increase the which was relatively new this management team in enabling amount of payments we will time last year, has continued to NHS Resolution to play a make, particularly if there is develop and there have been greater role, working with change in the behaviour no significant changes. There others in the system, of claimants. We will not this have however been changes in improving outcomes year be making any additional on the Board. In January we for patients and reducing the charges to our scheme were delighted to welcome burden of harm on the NHS. members to meet these as a new Non-executive 1 More detail about the PIDR can be found on pages 27 and 28.