HC 2371 Annual report and accounts 2018/19
Advise / Resolve / Learn NHS Resolution Annual report and accounts 2018/19
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 11 July 2019.
HC 2371 Contents
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Advise / Resolve / Learn Contents Contents
Performance report 6 Overview 8 Chair’s welcome 8 Chief Executive’s report 11 Performance summary 15 Understanding our indemnity schemes 16 The year in numbers 17 The environment we work in 22 Key risks and issues 24 Going concern 27 Performance analysis 28 Our strategic aims 28 Performance measures 30 Service updates 35 Claims Management 35 Working with our members, beneficiaries and the wider NHS to learn and improve safety 64 Practitioner Performance Advice 66 Primary Care Appeals 72 A fit-for-purpose organisation 78 Finance report 83
Accountability report 94 Corporate governance report 96 Remuneration and staff report 114 Parliamentary accountability and audit report 131 The certificate and report of the Comptroller and Auditor General to the Houses of Parliament 132
Financial statements 136 Statement of comprehensive net expenditure for the year ended 31 March 2019 138 Statement of financial position as at 31 March 2019 139 Statement of cash flows for the year ended 31 March 2019 140 Statement of changes in taxpayers’ equity for the year ended 31 March 2019 141 Notes to the accounts 142 Glossary 178
5 Performance report Performance report
7 NHS Resolution Annual report and accounts 2018/19
Overview
Chair’s welcome
Ian Dilks / Chair
We are now entering the changed is the government’s claims and what can be done third year of the new decision to ask us to operate in a consistent way to reduce strategy we laid out in (on behalf of the Secretary claims and improve patient April 2017. More detail of of State for Health and Social safety. Internally, we will assess progress is contained in Care) what is now known in the months ahead how, by the following pages, but in as the Clinical Negligence bringing the two main clinical Scheme for General Practice negligence schemes together, summary we are very much (CNSGP), similar to the Clinical we can deliver more than the on track and more convinced Negligence Scheme for Trusts sum of the parts. An early than we were before that (CNST) that we have operated example of benefits is that this this is the right strategy to for over 20 years. Preparing for has given us the scale to justify pursue. As Chair, I have the this has been a major task for opening an office in Leeds to pleasure and privilege of the senior management team, service both CNST and CNSGP meeting with a wide range but a scheme for liabilities schemes from a lower-cost of stakeholders and I receive arising from incidents after site, in a location that is more frequent feedback on how 1 April 2019 was successfully attractive to some of our staff. launched on that date and much NHS Resolution has There are a number of early has met with widespread changed in the last few signs that our strategy is support from GPs and other years and how much more having an impact. Customer key stakeholders. The current connected, visible and satisfaction levels continue position on claims arising from relevant we have become to rise, our Early Notification incidents occurring prior to 1 in the wider NHS family. scheme is beginning to deliver April 2019 is explained in the faster support and resolution There is also increasing financial statements (see Note to those impacted by serious international interest in 12 on page 177). some of our initiatives. incidents at childbirth, our Although the decision to maternity incentive scheme We have inevitably progressed introduce CNSGP and to is improving adherence to faster in some elements of appoint NHS Resolution as recognised best practice in strategy implementation than scheme administrator and maternity safety and we are others but progress is being operator was not ours, we are resolving record numbers made in all areas. We are in the delighted to take it on and of claims though alternative process of reviewing progress see real benefits for the NHS means such as mediation – in more detail in the light of in bringing clinical indemnity again more detail is in the other developments in the cover for all NHS activities in following pages. At the same healthcare system but with one England under one roof. For time, we are taking more exception are not expecting the first time, one organisation robust action against those, major changes. The one will have access to the learning thankfully rare, patients who major thing that has of course from all NHS clinical negligence exaggerate claims for personal
8 Performance report
gain at the expense of finite decreasing discount rates. to be presented to the Civil NHS funds and also against The difference between Justice Council in summer 2019 excessive legal fees. For the current payment levels in and what the response of the first time, this year we have respect of clinical claims of Department of Health and seen exaggerated claims result £2.4 billion – of which £0.4 Social Care (DHSC) to it will in custodial sentences and billion relates to the impact of be in the public consultation a solicitor struck off by the the personal injury discount we expect to follow. As the Solicitors Regulation Authority. rate (PIDR) change in March National Audit Office study 2017 – and the cost of harm Our Practitioner Performance published in September 2017 is the main reason that our Advice and Primary Care concluded, in order to tackle Appeals services also continue total claims provisions have the drivers of cost, any strategy to develop successfully. increased by a further will need to include legal £6 billion to £83 billion, a Claim levels have remained sum which represents the reform. However, any changes largely stable for the last two value at current prices of claim are now unlikely to take effect years which, combined with payments to be made years or before 2020. the benefit of other measures, in some cases decades into the has meant that we have been We continue to develop ways future. In November 2017, of learning from claims and able to follow a modest 2% the Public Accounts Committee feeding this information into increase in charges to our (PAC) recommended the the system to help improve members in 2018/19 with a need for a cross-government patient safety and we were 2% reduction for 2019/20, the strategy to tackle the pleased to contribute to first reduction in 10 years. increasing costs of clinical However, as I flagged last year, negligence and as we said last the new patient safety we cannot be complacent and year the initial response was strategy being developed by it is sadly inevitable that the expected last September. We NHS Improvement. pay-as-you-go nature of our continue to contribute our We have also made progress in schemes means that charges knowledge and expertise to looking at other factors that will rise in future years unless the discussion, but ultimately it impact claims, in particular the there is reform of the legal is a political decision as to the research conducted for us last environment in which we basis on which patients who year by the Behavioural Insights operate. I said last year that have suffered harm are to be Team which illustrated the at current prices the annual compensated and their legal ‘cost of harm’ was about representatives remunerated. dissatisfaction with procedures £7-8 billion in recent years. We await with interest the for handling incidents and In 2018/19 the cost of harm initial response to the PAC complaints experienced by was approximately £9 billion, which is now expected later those who have brought of which approximately 60% this year. We also await the claims, as well as the role of relates to maternity claims, report on fixed recoverable NHS staff in recommending the increase being largely costs (for clinical negligence claims on occasion as a way of attributable to the impact of claimant lawyers) which is due getting redress.
9 NHS Resolution Annual report and accounts 2018/19
Working with others in the of the UK government, is in completed external board system to address the issues the very positive independent effectiveness review confirmed raised by this research will assessment of the quality of the many positive aspects of be a priority for us in the the executive team of NHS the way our unitary board year ahead. Resolution and its leadership in operates and also made some repositioning the organisation helpful recommendations for We continue to seek external as one focused on ‘resolution’ further development to reflect validation of the quality of across all our activities. And the changing nature and role what we do where this is I am pleased to say that this of the organisation. appropriate, for example leadership has remained stable The progress and successes retaining our ISO 27001 over the last year although outlined above have of course accreditation as evidence of within the executive team only been possible because of the importance we attach to we have added depth to our the dedication and hard work maintaining confidentiality resources in a number of key of NHS Resolution staff and the of the data we handle. One areas and last summer we support of our panel firms and recognition in the year came made two new appointments I would like to thank them all from an unexpected source to our Board. Nigel Trout for their contribution. when, at Transform Awards joined as a non-executive Europe, alongside our creative director following a successful agency Studio North, we were senior career at HSBC and awarded three silver medals brings experience in the for best naming strategy, best management of projects and brand consolidation and best systems; Sir Sam Everington brand development project. OBE, a distinguished GP
The significance of these wins, whose awards recognise his Ian Dilks against competition from contribution to primary care, Chair small and large companies joined as an associate non- across Europe and other parts executive director. A recently
10 Performance report
Chief Executive’s report
Helen Vernon / Chief Executive
At the heart of our strategy The drivers of claims costs are as Early Notification, to is how we work with others a combination of the number help get to answers sooner to deliver shared objectives. of claims received, the amount and keep claims out of All of those who are of compensation paid for court proceedings. those claims and the legal involved in claims, whether The number of cases going costs which are attached to that’s someone who has into formal litigation has them. In addition, discount tragically found themselves remained stubbornly more rates, something beyond our or a loved one injured as a or less the same for well over control, can have a significant result of something that has a decade. We’ve been on a effect. The numbers of gone wrong in healthcare; a mission to change that. We set clinical negligence claims have lawyer acting for an injured ourselves a challenge to disrupt remained relatively steady, patient or an NHS trust; the traditional approach taken despite rising activity in the a healthcare professional to clinical negligence claims, NHS and so overall, claims working in the NHS; an to encourage mediation and are falling as a proportion academic, or a patient safety other forms of alternative of the number of treatment dispute resolution (ADR) expert, all want the same episodes. This is encouraging and to reduce the number thing. The best outcome is and we have seen increasing of claims going into formal that we avoid the things that engagement of clinical staff court proceedings. Our lead to claims in the first in the learning we derive from aim for mediation is that place. But finding solutions claims although clearly there it should no longer to be is not straightforward. is more to do. Compensation seen as novel in healthcare levels are rising; this year by We know that this isn’t disputes. The benefits are very over 13%. The basis on which something we and others can clear. Mediation can deliver compensation is awarded for tackle in isolation and that we things which go beyond high-value claims (privately need help and commitment compensation, which is so funded care for life, assessed to turn what we know about important when we look at at a point in time), has led the concerns that arise in what our research tells us to some substantial awards, healthcare into positive action. about why people pursue often in excess of a value of We have been fortunate to claims. It provides space £20 million. Finally, legal costs work with a range of partners and time for everyone to overall are down. There has over the course of the year in expIore and understand what been a further drop in claimant both health and justice and happened in all its complexity, legal costs alongside a rise in would like to thank them for to hear what can and can’t defence costs. We believe that their support and hard work be answered and bring the this, in part, is a feature of in delivering together against conversation back to what the increased focus on early shared objectives. matters to the injured person. investigation with investment in ‘upstream’ initiatives such
11 NHS Resolution Annual report and accounts 2018/19
In the first year of our strategy, We have a total balance sheet the organisation, in claims we mediated more claims provision of £83 billion. As management, safety and than in our entire history. In 70% of the £78 billion CNST learning, and advice. It our second year, the number provision relates to maternity, provides a bridge between of mediations has increased we have continued our focus the imperative to reduce the yet again, by 110% to 380 on the thankfully small number burden of clinical negligence mediations. This exceeds the of cases that we receive every costs and to drive improvement number of clinical negligence year concerning brain injury in the safety of maternity care. trials (62) six-fold. We believe at birth. For every baby born The scheme is also supported that this is indicative of in England currently, around by the maternity incentive culture change in the clinical £1,100 is paid as indemnity scheme which includes a negligence market and we costs. The litigation system bundle of actions, informed by have seen a demonstrable does not work well for these our research and our partners, increase in the level of interest families or for providers of that enable the indemnity maternity services. Historically, from lawyers on both sides, scheme to act as a financial it has not responded to as they grow in experience in lever for improving safety in need at the time it arises. In mediation. Having said that, maternity care. our view, the starting point we see mediation as just one must be the incident and the It is too early to say if these of the tools at our disposal, terrible impact that this can steps are preventing harm, as is picking up the phone have on the family and the not least because it is almost or holding a round-table healthcare staff involved. impossible to take sole credit meeting. All are valuable and We’ve approached this with for any specific outcomes all have a place when stacked a three-pronged strategy of against the background of up against the alternative of a research, early notification and the immense efforts that litigated claim. financial incentives for best are taking place across the For the second year running, practice in maternity safety. healthcare system to improve we have also been pleased A flagship of our five-year maternity care. However, to see a reduction in the rate strategy is to get closer to the we have seen positive of claims going into formal point of incident of the most changes in reporting to our litigation, reducing the stress serious maternity incidents Early Notification scheme, of that process for patients so that we can share learning significant improvement in and healthcare staff and more rapidly and get support quality of reporting to NHS contributing to a further to families when they need Digital and in the uptake decrease in claimant legal it. Our Early Notification of the MBRRACE1 national costs, helping to reduce the scheme has continued to Perinatal Mortality Review Tool overall cost to taxpayers. build upon strengths across (100% registration).
1 Mothers and Babies: Reducing Risk through Audits and Confidential Enquiries across the UK (MBRRACE)
12 Performance report
Looking at the broader We heard that the majority We take our responsibility for claims environment, the of former claimants were not holding information securely National Audit Office rightly happy with the response at the seriously, while sharing what identified that there was a time. But we also know that we know to drive change and poor understanding of why this is difficult to do well. For improvement. In the area some people brought a claim the last year, we have targeted of Practitioner Performance following an incident and our efforts at free training and Advice, we adopt a neutral others didn’t. While we have education on the areas which position between the employer acquired some insight on this, are of most relevance such as and the practitioner, using evidence has been lacking and consent and communication our expertise to navigate a finding this evidence has been skills and we will continue to path through concerns which a priority for us to ensure that do so. protects patients but finds we are focusing our efforts an outcome which can be But of course, nothing stays in the right area. sustained. The service has the same and even two years been gradually and carefully Surveying 10,000 former into our strategy the sands are refined, taking account of claimants (over 700 responded) shifting again and we have feedback to ensure that the with the help of the needed to respond. Possibly response is proportionate and Behavioural Insights Team has of most significance, in terms bespoke. This progress has helped to validate our message of our focus, has been the been recognised by improving to trusts that transparency government announcement performance as well as and candour and meaningful of a new state-backed scheme customer feedback which has engagement with the patient for general practice. NHS been positive about the new when something goes wrong Resolution was asked to and changed services provided. in healthcare is critical. operate this scheme (CNSGP) Patients claim to find out what which launched on 1 April Similarly, our Primary Care happened, for an apology 2019. This is the first time all Appeals service does a difficult and sometimes, to obtain information on claims in this job. It is slightly different in compensation for their needs. area has been brought under nature to our other operating We need to deliver all of those one roof and is a tremendous arms as it operates as an things but the first two need to opportunity for learning, adjudicator. Our aim here has happen right at the start. as well as providing system- been to reduce the need for level indemnity for general intervention by making our practice and removing the decisions more transparent and burden of having to take out accessible via our website and individual-level cover. This is a continually educating decision key plank of the new five-year makers on the law governing framework for GP contract their remit. arrangements to support the implementation of the NHS Long Term Plan and has been very positively received.
13 NHS Resolution Annual report and accounts 2018/19
It is a mark of the success of our staff have managed this service that our decisions very high volumes of work, are rarely challenged in the in all areas of the business, courts and the expertise of our to an exceptional standard. Appeals team is unmatched in Their value-driven approach this area. and their continual efforts to improve our services and While we are seeing positive deliver fair outcomes are at trends and results from the core of what we do and it our work, we cannot be is thanks to them that we have complacent. These things don’t been able to drive forward the change without the concerted ambitious programme that we efforts of a whole range of have described in this report people across the health and over the course of the year. justice system and, crucially, the expertise and hard work of our staff and our panel legal firms. The delivery of a second year of our leadership Helen Vernon programme for our staff has Chief Executive driven ground-up change and improvement across the entire business to support our aims. Against the background of a substantial change programme,
14 Performance report
Performance summary
This performance summary provides an overview of the work of NHS Resolution, including our purpose, the key risks to achieving our objectives and a summary of activities we have undertaken over the past year. In particular, it sets out the activity to meet the four strategic aims outlined in our business plan for 2018/19. For more detailed information about how we have delivered against our aims, please refer to the ‘performance analysis’ section.
Figure 1: What we do
Our purpose is to provide expertise to the NHS to resolve concerns fairly, share learning for improvement and preserve resources for patient care.
Our services
Claims Management Practitioner Performance Advice Delivers expertise in handling both Provides advice, support and interventions clinical and non-clinical claims to in relation to concerns about the individual members of our indemnity schemes. performance of doctors, dentists and pharmacists.
Primary Care Appeals Safety and Learning Offers an impartial tribunal service Supports members of our indemnity schemes to for the fair handling of primary care better understand their claims risk profiles, to contracting disputes. target their safety activity while sharing learning across the system.
Supported by
Finance and Membership and IT and Facilities Corporate Planning Stakeholder Engagement
Strategic aims
Resolution Intelligence Intervention Fit-for-purpose Resolve concerns and Provide analysis and Deliver interventions Develop people, disputes fairly. expert knowledge to that improve safety relationships and drive improvement. and save money. infrastructure. Our values
Professional Expert Ethical Respectful
15 NHS Resolution Annual report and accounts 2018/19
Understanding our indemnity schemes
The bulk of our workload is handling We also manage two non-clinical schemes negligence claims on behalf of the members under the heading of the Risk Pooling Schemes of our indemnity schemes: NHS organisations for Trusts (RPST): and independent sector providers of NHS care • Property Expenses Scheme (PES) which in England. covers ‘first party’ losses such as property The five clinical negligence schemes damage and theft, for incidents on or we manage are: after 1 April 1999.
• Clinical Negligence Scheme for Trusts (CNST), • Liabilities to Third Parties Scheme (LTPS) which covers clinical negligence claims for which covers non-clinical claims such as incidents occurring on or after 1 April 1995. public and employers’ liability for incidents on or after 1 April 1999. • Existing Liabilities Scheme (ELS) is centrally funded by DHSC and covers clinical In addition, we manage one other negligence claims against NHS organisations non-clinical scheme: for incidents occurring before 1 April 1995. • DHSC non-clinical – which covers non-clinical • Ex-Regional Health Authority Scheme (Ex- negligence liabilities that have transferred to RHAS) is a relatively small scheme, centrally the Secretary of State for Health and Social funded by DHSC, covering clinical negligence Care following the abolition of any relevant claims against former Regional Health health bodies. Authorities abolished in 1996. In this document where we reference clinical • DHSC clinical covers clinical negligence negligence data, unless stated otherwise, we are liabilities that have transferred to the referring to an amalgamation of data relating Secretary of State for Health and Social to all four of our clinical negligence schemes, Care following the abolition of any relevant excluding claims related to the CNSGP which was health bodies. not in operation prior to 1 April 2019.
• Clinical Negligence Scheme for General Practice (CNSGP), is a new scheme which covers clinical negligence claims for incidents occurring in general practice on, or after, 1 April 2019.
16 Performance report
The year in numbers
Table 1: A financial overview
2017/18 2018/19 Change (£ million) (£ million) (£ million) Funding for clinical schemes Income from members 1,953.6 1,993.5 39.9 2.0% Funding from DHSC (budget) 522.5 496.0 (26.5) 5.1%
Total funding 2,476.1 2,489.5 13.4 0.5% Payments in respect of clinical schemes Damages payments to claimants – excluding PIDR 1,228.0 1,393.6 165.6 13.5% 4.8% Damages payments to claimants – PIDR 404.0 384.4 (19.6) 5.2% Claimant legal costs 466.6 442.3 (24.3) Defence legal costs 128.9 139.6 10.7 8.3%
Total payments 2,227.5 2,359.9 132.4 5.9% Funding for non-clinical schemes Income from members 53.2 59.3 6.1 11.4% Funding from DHSC (budget) 10.5 12.0 1.5 14.3%
Total funding 63.7 71.3 7.6 11.9% Payments in respect of non-clinical schemes Damages payments to claimants – excluding PIDR 28.9 33.9 5.0 17.3% Damages payments to claimants – PIDR 2.3 3.5 1.2 53.2% Claimant legal costs 19.6 17.8 (1.8) 9.2% Defence legal costs 6.9 6.6 (0.3) 4.4%
Total payments 57.6 61.8 4.1 7.1% NHS Resolution administration of schemes Clinical 12.1 13.3 1.2 9.7% Non-clinical 3.9 4.2 0.3 7.1% NHS Resolution other activities Income 1.3 1.1 (0.2) 16.8% Expenditure 6.9 8.3 1.4 20.0% Staff numbers 265 293 28 10.5% Cost of new claims provisions New claims provisions 13,723 8,387 (5,336) 38.9%
Total provisions at year end 76,988 83,376 6,388 8.3%
17 NHS Resolution Annual report and accounts 2018/19
Activity overview When considering settled2 claims in 2018/19 of 11,417 clinical and 4,237 non-clinical claims, Liabilities arising from claims under all of the proportion settled without damages was our indemnity schemes have increased by 44% and 56%, respectively. £6.4 billion to a total of £83.4 billion, at current prices, at the end of this financial year. This is When considering the 16,393 closed claims in the value of liabilities arising from incidents that 2018/19, of the 11,625 clinical and 4,768 non- clinical claims, the proportion settled without occurred before 31 March 2019, both in relation damages was 41% and 52%, respectively. This to claims received, and our estimate of claims compares to 16,701 closed claims in 2017/18, that we are likely to receive in the future from when of the 12,077 clinical and 4,624 non-clinical those incidents which have occurred but have claims, the proportion of claims settled without yet to be reported as claims. damages was 43% and 54%, respectively In 2018/19 we have received 10,678 new clinical The number of new referrals received in relation negligence claims, compared to 10,673 in to the performance of doctors, dentists and 2017/18, a relatively flat profile with an increase pharmacists within the NHS remained broadly of just five claims (0.08%). The number of new consistent, with 925 new requests for advice non-clinical claims, typically employers’ and compared to 919 in the previous year. In public liability claims, rose from 3,570 received addition, we received 171 appeals in accordance in 2017/18 to 3,585 in 2018/19, a modest with the Pharmacy Regulations compared to increase of 0.42%. 170 in the last financial year.
Table 2: The value of payments (damages, claimant and defence costs) across all indemnity schemes for 2018/19 demonstrating the relative size of the schemes
Clinical negligence Value (£ million)
Clinical Negligence Scheme for Trusts 2,232
Existing Liabilities Scheme 38
Ex-Regional Health Authority Scheme 1
DHSC clinical 89
Non-clinical negligence Value (£ million)
Property Expenses Scheme 8
Liabilities to Third Parties Scheme 48
DHSC non-clinical 6
2 Settled claims include claims that have been agreed with ongoing periodical payment orders and claims where damages have been agreed or successfully defended, and costs have yet to be agreed. This is a different cohort to closed claims which do not include ongoing periodical payment orders and may fall in different years.
18 Performance report
Key headlines This year we mediated 397 claims compared to 189 in 2017/18. We have also taken a number We have completed the second year of our of legal cases to the higher courts to develop five-year strategy and continued to deliver at case-law in the broader interests of patients pace. Some of our key priorities and activities and the NHS. undertaken in 2018/19 were: Establish a state indemnity scheme for To increase our understanding, and tackling general practice the drivers of, claims costs including the factors which cause an incident to turn into a claim Announced in last year’s annual report and accounts, we have been working this year to In 2018/19, we conducted research to establish, administer and operate a state-funded understand why people make a claim. The indemnity scheme for general practice on report validated what we know about the behalf of DHSC from April 2019. This strand of intrinsic relationship between claims and the work was an addition to the priorities we had management of complaints and incidents. identified as part of our five-year strategy and Building on the findings, we have worked with there was significant uncertainty in 2018/19 until others, such as the Parliamentary Health Services we were formally asked to operate (as opposed Ombudsman (PHSO), to identify opportunities to just administer) the CNSGP for incidents for the NHS to get better at incident, complaints occurring after 1 April 2019. and claims handling and where we can support the NHS in developing a just culture. With the Use the financial levers at our disposal PHSO, we issued a joint statement to NHS trusts to incentivise the provision of safer care in in England, particularly for those staff who key areas manage complaints and/or compensation claims Maternity claims can have devastating raised against their trust. It outlined our roles consequences for the child and family, together and how our services overlap and interact. with the impact on the treating clinicians and To resolve high numbers of clinical and non- the financial cost to the NHS. They continue clinical claims fairly, reaching the right answer to represent by far the biggest area of spend as quickly as we can and as far as possible, for NHS Resolution on behalf of the NHS. As keeping cases out of formal court proceedings a result, the specialty remains a primary area of focus for us. We had considerable success We continued to resolve increasing numbers with our CNST maternity incentive scheme of claims without litigation, to minimise launched in 2018. The scheme rewarded trusts unnecessary delays and improve the experience meeting ten safety actions designed to improve for claimants, their families and healthcare the delivery of best practice in maternity and staff. Our Claims Management service supports neonatal services. This work had the full support this ambition by targeting cases that are at of the national Maternity Safety Champions and risk of moving into unnecessary litigation and the actions were agreed in collaboration with increasing the uptake of alternative dispute our system partners. Integral to the maternity resolution, including mediation. We reduced priority within the NHS Long Term Plan, in the our litigation rate from 32% in 2017/18 to second year of the scheme we further incentivise 31% in 2018/19. We believe that this will the ten maternity safety actions with some ultimately result in direct savings to the NHS additional refinement. and an improved experience for patients and healthcare staff.
19 NHS Resolution Annual report and accounts 2018/19
Move ‘upstream’ to work with families and NHS Share meaningful and valuable data at both a trusts, right from the start, in relation to those local and national level to drive improvement rare but tragic cases which result in brain injury One way we strive to reduce the cost of clinical at birth with life-long care requirements negligence is to reduce the likelihood of A key aim of our five-year strategy is to get incidents recurring by sharing insights gleaned closer to the point of incident of the most from our unique dataset of claims for clinical serious maternity incidents, so that we can negligence in England. This year we used our share learning more rapidly and get support to data, triangulated with information from families when they need it. We are intervening inquests, to help inform our Learning from in the usual path of an incident to payment of suicide-related claims: a thematic review of NHS a claim to help earlier in the process and have Resolution data report with recommendations now completed the second year of our Early to drive improvements in the care that results Notification scheme for obstetric brain injury. in these tragic claims. We have undertaken the groundwork for a review of claims arising 746 cases were accepted by the scheme between from the emergency care specialty by recruiting 1 April 2017 and 31 March 2018, representing a clinical fellow in emergency medicine – 0.12% of all births in England. Overall our legal because, for the first time, last year the new panel firms were instructed to begin liability claim numbers associated with emergency care investigations in 26% of cases that occurred outstripped those for orthopaedic surgery as the in year one of the scheme. Of these cases, 14 top volume specialty. Work will be undertaken have been concluded to date with admissions of to better understand themes arising from liability, resulting in families being provided with these claims and to feed information back into a dedicated Early Notification case manager, the service to drive improvements in the next explanations, formal admissions of liability and financial year. apologies. Providing families with a decision on liability so close to the point of incident is We have contributed to the wider maternity unprecedented. Normally these multi-million system to improve safety and reduce harm, pound cases could take many years to reach including the Royal College of Obstetricians admissions of liability. However, in those cases and Gynaecologists’ Each Baby Counts where liability is accepted and it is clear the programme; the Maternity and Neonatal baby has additional needs as a result, we have collaborative, and as a member of the Maternity already been able to provide those families Transformation Programme Board (workstream with financial support to access additional 2). We shared vital data to support the Getting It care, respite and where needed, psychological Right First Time programme, facilitating learning support. These cases are, however, one part of across a range of clinical specialties and shared an increasingly complex investigative picture. learning back through 24 national, regional and In many cases, while the standard of care can local events. be determined early on, it is difficult to know what the effect may be until the child is at least two years old. In other cases, our investigations have concluded that care was appropriate. In all cases, our aim is to provide families with full explanations and signpost them to independent support agencies where appropriate. We are planning to report on the first year of implementation of the scheme.
20 Performance report
Use the findings of our customer satisfaction This work explores how best to use the data we survey to implement changes to our services hold to improve the safety of patients, and we and improve the quality of our engagement strive to balance this with best practice in data with our stakeholders protection and to uphold individual rights. In the area of Practitioner Performance Advice, We have also improved our ability to maintain we responded to customer feedback by business continuity, having reviewed our streamlining workplace-based assessments to processes and procedures for business continuity focus on delivering the elements that add the and crisis management. most value and piloting Action Learning Sets In October 2018, we launched our new to embed learning from case investigator and corporate website to improve access to our case manager training programmes at a local resources, such as publications on CNSGP, and level. For Primary Care Appeals we issued new provide greater transparency around our work, guidance to improve the quality of applications such as the ease of access to our Primary Care to amend pharmacy opening hours. Appeals’ decisions. Underpinning these priorities, we also had Supporting and developing our staff a programme of work to ensure that as an organisation we remain fit-for-purpose, During 2018/19, we prepared to expand our exploring how we can improve our management Leeds base and moved into new premises on of data and support and develop our workforce. 12 April 2019. The aim of this move was to help continue to build a skilled workforce by Have a long-term plan for how we collect, store, tapping into a new pool of potential employees process and share information which future- and to deliver better value for money both in proofs our systems and ensures that we are recruitment and our accommodation costs. The able to meet our objectives while complying move was in line with the government strategy with existing and emerging data protection law to increase smarter working and support the We have undertaken an extensive review of hub strategy. all our ‘core systems’ as a starting point to We cannot do anything without the expertise explore new technologies and develop our and commitment of our staff who work existing IT infrastructure to improve our ability incredibly hard to deliver our objectives. In to learn, share what we know and enhance 2018, we adopted a new corporate workforce our operational efficiency. We launched a and organisational development strategy three-year project to review our operational which included delivering an organisation- IT needs. Year one of the project has involved wide leadership development programme engaging with staff and stakeholders to and provided training, including a wealth gather our requirements in relation to our of activities from embedding a corporate case management, customer relationship mentoring scheme to specific training such management and business intelligence systems. as how to respond in a compassionate and We have also explored how we could pilot the empathetic way to those who bring claims use of artificial intelligence in the context of the without legal help. General Data Protection Regulation, and are preparing to procure partners to work with us on this.
21 NHS Resolution Annual report and accounts 2018/19
The environment we work in
Cross-government strategy An important change is that Fixed recoverable costs recipients of damages will be Further to the National Audit deemed to accept “more risk It has long been a concern that Office and Public Accounts than a very low level of risk” on the costs of claimant lawyers Committee recommendations their investments, but “less risk have been disproportionate to to government to address the than would ordinarily be damages, particularly for lower challenge of the rising costs accepted by a prudent and value claims. Sir Rupert Jackson, of clinical negligence, NHS properly advised individual until recently a senior judge in Resolution is supporting work investor”. This replaces the the Court of Appeal, was across government to address previous assumption, laid down commissioned in 2008 to review these recommendations. in 1998 by the House of Lords the whole subject of costs in We anticipate that the in a judicial ruling, that those civil litigation and his final government will set out more investing damages are assumed wide-ranging report was detail in due course. to be “no risk” investors, the published in January 2010. The government accepted most of Personal injury discount consequence of which was that his recommendations and these rate and the Civil Liability returns on index-linked were implemented in 2013, Act 2018 government stock were considered the appropriate many under the umbrella of The reduction in the PIDR from benchmark for setting the Legal Aid, Sentencing and 2.5% to minus 0.75% on 20 the PIDR. Punishment of Offenders Act March 2017 resulted in very 2012 (LASPO). For example, The Act allows a maximum of significant increases to the fixed recoverable costs were 90 days for the first review to value of claims entailing any introduced in most employer’s be started, and that duly element of future loss, liability and public liability commenced on 19 March 2019. especially if there is a long personal injury claims valued at It must be completed within life expectancy. up to £25,000. However, costs 140 days, namely by 6 August in clinical negligence claims and The Civil Liability Act 2018 2019. The Government Actuary other categories such as must be consulted within 20 received Royal Assent on 20 defamation remain uncapped. December 2018. Its main effect days of the start of the 140-day from our perspective was to period, and must respond Sir Rupert gave a lecture in introduce a new basis for within 80 days. The result of January 2016 advocating the setting the PIDR. The Lord these provisions is that any new extension of fixed recoverable Chancellor remains empowered PIDR should be announced on costs regimes and he was asked to vary the rate, but he or she or before 6 August 2019. Any to produce a further report will now be guided by a panel change is likely to have with recommendations, which of experts for all but the first important ramifications for was published in July 2017. In review, when consultation must both claimants and NHS the interim, the Department of be with just the Government Resolution and we may Health (as it was then named) Actuary and HM Treasury, potentially see impacts on launched a consultation on as is the case under settlement behaviour in the fixed recoverable costs in lower existing arrangements. legal market. value clinical negligence cases.
22 Performance report
Responses to this suggested safest healthcare system in the We also need to understand that any such regime should be world. We are supportive of why, as our research found, accompanied by a streamlined the aims and objectives in the NHS staff sometimes process for these claims. draft plan. In our response to recommend patients to bring The government supported the consultation, we a claim rather than pursuing that proposal and in May 2018 encouraged the system to view other means of resolving the Civil Justice Council formed high-value claims as a key area concerns locally. for harm reduction. In relation a working group, consisting of In relation to continuous safety to fostering a ‘just culture’, we claimant and defendant improvement, we support the noted there is variation solicitors, representatives of work NHS Improvement is between NHS providers in expert witnesses, the judiciary doing in maternity. We also terms of openness, candour and Bar, and other interested welcome the support of the parties, to formulate with patients and families and other arm’s length bodies and recommendations to streamline equitable, fair and just support the royal colleges to consider processes and create a grid of for staff when involved in further incentive schemes, as recoverable costs for such cases incidents. With many examples seen with our 2017/18 CNST where damages are £25,000 or of good practice across the maternity incentive scheme (as less. NHS Resolution is pleased NHS, there is an opportunity previously mentioned). We also to be represented on that to learn from excellence and welcome the development of group. It is anticipated that its encourage the sharing of the new patient safety incident report will be produced in the best practice. summer of 2019. management system, which In relation to openness and presents many opportunities On 28 March 2019, the Ministry transparency, our work with to align activity across the of Justice launched a NHS trusts has shown staff safety system. consultation on introducing welcome support and guidance fixed recoverable costs to other in this area. Our research, types of claim including noise- published in 2018, on why induced hearing loss. It is people make claims highlighted scheduled to be open until 6 frustration with both incident June 2019 and once replies and complaints handling. We have been assessed there will need to support complaints be a formal government handlers in the NHS and we response. champion the use of mediation NHS Improvement’s patient to resolve claims by bringing safety consultation together trust representatives and family members. NHS Improvement opened a consultation on 14 December 2018 to help develop a new national patient safety strategy to support the NHS to be the
23 NHS Resolution Annual report and accounts 2018/19
Key issues and risks
Preparations for Planning for As this is a new area the UK’s exit from the indemnity provision of business for Claims European Union for general practice Management, we mitigated some risk by drawing upon We have been actively In October 2017, the the expertise of colleagues engaged in working with government announced the from our panel firms, DHSC on preparations for the intention to develop a state- Practitioner Performance UK’s exit from the European backed indemnity scheme for Advice and Primary Care Union (EU). In line with general practice, announcing: Appeals services working with, government requirements, “The Department understands and in, this sector. Ensuring we nominated a director to that the rising cost of clinical clear communications to our oversee our preparations, negligence is a great source new beneficiaries was very and related risk assessments of concern for GPs and important to ensure that those and planning. In line with impacts negatively on the GP working in general practice government guidance, we workforce, and we are seeking were properly informed. provided reassurance to to put in place a more stable staff members from other and more affordable system The launch of CNSGP brings EU countries on their future of indemnity for general those working in general employment status. Our practice.” In the following practice in line with their self-assessment for EU exit month, November 2017, DHSC hospital colleagues, and preparedness was rated ‘green’, announced that we would be bringing claims from both reflecting the relatively low risk administrators of the scheme. general practice and secondary to our core operations and the After supporting DHSC and care under one roof creates robustness of our emergency others in the design of the tremendous opportunities for planning and response arrangements to establish learning. A claims helpline is framework to cope with any the new scheme, it was available 24 hours a day, 365 short-term disruptions arising subsequently confirmed that days a year from 1 April 2019, from an exit from the EU. we would also operate the and a suite of materials has CNSGP from 1 April 2019, been published on our website Given the work we do, there providing indemnity cover for to support the scheme. is relatively little direct impact incidents after 1 April 2019. from withdrawal from the EU, CNSGP forms part of a wider This strand of work presented but it is not without risk. We package of changes to general a number of potential risks, will consider all potential risks practitioner (GP) contractual as the activity required to and work with DHSC to ensure arrangements, through establish the scheme could that mitigations are in place which NHS England and the potentially divert resources to minimise disruption across British Medical Association away from delivering against the system. (BMA) have agreed a five- our strategy. year GP contract framework from 2019/20.
24 Performance report
Investment and evolution: claims and be able to report on Raising concerns A five-year framework for GP the claims volumes and trends contract reform marks some in the same way we do for As an arm’s length body of the biggest general practice our CNST scheme. Following a which encompasses specialist contract changes in over a further competition through services to the NHS, we have a decade and will be essential to Lot 1 (Clinical Liabilities) of the unique contribution to make deliver the ambitions set out Health-related Legal Services to the patient safety system. in the NHS Long Term Plan. Framework, in February and However, there was a risk that The state-backed indemnity March 2019, we appointed if we failed to appropriately act scheme is a crucial element of seven legal firms from our on concerns which we identify the new contract and is a clear legal panel to assist us in the through our work, patient commitment to addressing development and operation of and/or staff safety and public the concerns recently raised by the new CNSGP scheme. protection are, or have the GPs. Despite the great progress potential to be, compromised made, the work is not finished. Data protection legislation and this could lead to harm. and our ambition to analyse Once the scheme has been To mitigate against this, we safely introduced, we want to and share data have developed a Significant quickly begin to align CNSGP One of the consequences Concerns Framework to with our other indemnity of the new data protection support internal arrangements schemes and look at ways of regime has been to review to raise and consider significant achieving better value for the legal basis of the various concerns about patient safety money for taxpayers through ways in which we are required when information comes to us greater economies of scale and to use our data internally and in our day-to-day work. This enhanced ways of working. externally to discharge our framework has been developed It is vitally important that the obligations in line with our through a cross-organisational new scheme works well for statutory functions. In doing approach, which has involved general practice and we look so, we have recognised that all service areas working in forward to building on our there are tensions between collaboration, reflecting the new relationships to ensure a privacy rights and the ability range of work we undertake to seamless transition. to meaningfully use our data support the healthcare system Upon announcement that NHS lawfully to learn from our to effectively manage and Resolution would be scheme experiences to help support resolve concerns. operator, we commenced the NHS to reduce harm. We recruitment of a dedicated are working with DHSC to team to handle CNSGP claims. consider further work that Recruitment will increase as might be necessary to bolster the claims book develops over our statutory framework to time. We developed our case support the legal basis for management system to provide using data to further our the facility to manage CNSGP strategic aims.
25 NHS Resolution Annual report and accounts 2018/19
Policy environment It also creates a high degree The expectations in relation to of uncertainty around the use of our data and experience To support the policy factors affecting the cost of remain high. Our internal environment and to contribute settling claims in the shorter governance arrangements, the to the national policy agenda, term and the value of the long- embedding of data security we have been required to term liabilities arising from awareness through training substantially draw upon negligence, which is described and implementation of our resources in terms of later in this report. We have business practices to ISO 27001 expert knowledge. This allocated resource to ensure we standards, certification in could potentially have had are aware of policy decisions Cyber Essentials Plus, and our a significant impact on our in the legal/judicial and health engagement with other parties efforts to deliver the ambitions sectors that may impact on our over use of data to ensure set out in our five-year strategy work and sought to inform compliance with legislation, Fair resolution and learning others, such as through formal support us to mitigate against from harm, published in April and informal consultation, inappropriate use of potentially 2017. The risk is in relation to where policy changes might sensitive information. Further our capacity to deliver on such have inadvertently adversely information can be found a broad range of demanding under the Information security fronts at once, as well as impacted on our work. and governance section of the ensuring we do so in line with Cyber security governance statement. legislation. We recognised these challenges in our 2018/19 Cyber security remains a business plan and have been business priority for us and as developing a workforce and part of the programme of work organisation development in this area, we frequently strategy, targeting specific review our defences and areas for skills development endpoint security to ensure and recruitment to support our that an alignment between experienced staff in delivering ever-evolving security threats this agenda while maintaining and our security capabilities is operational effectiveness. being maintained.
26 Performance report
Going concern
The NHS Resolution Board On 27 February 2017, the On this basis NHS Resolution is has reviewed the financial Lord Chancellor announced not required to hold assets to position of the organisation a change to the PIDR from cover liabilities arising from the and discussed future funding 2.5% to minus 0.75%, effective indemnity schemes. Therefore, arrangements with DHSC, from 20 March 2017. The the Board has concluded that given that NHS Resolution government recognised that it is appropriate to apply reports significant net there would be a significant the going concern basis of liabilities. The indemnity impact on public finances, and accounting to the financial schemes that NHS Resolution therefore added around £1.2 statements of 31 March 2019. operates are funded on a ‘pay- billion a year to the budget as-you-go basis’ – members reserve to meet the expected collectively contribute costs to the public sector, in sufficient funds to meet particular to NHS Resolution. the liabilities required to be The change resulted in met on a yearly basis rather additional costs during 2018/19, than holding reserves for which were funded from this future settlements. There is a reserve. DHSC has confirmed reasonable expectation that that it will continue to provide the government, via DHSC support to NHS Resolution to and the NHS, will continue to meet the additional costs in fund future liabilities. settling claims arising from the current PIDR. As a result, no further claim on members of our schemes occasioned by the change in the PIDR in March 2017, and any future change arising from the Civil Liability Act 2018, will be required in 2019/20.
27 NHS Resolution Annual report and accounts 2018/19
Performance analysis
Our in-year activity is now described in greater detail.
Our strategic aims We continue to work to deliver the priorities outlined in Our strategy to 2022: Delivering fair resolution and learning from harm.
The strategic aims outlined in our business plan for 2017/18 were:
Priority 1 – Resolution
• To continue to provide cost-effective dispute resolution services for appeals, claims and cases. • Inform and implement changes to the legal environment, reducing litigation and increasing the use of alternative dispute resolution. • To reduce the unnecessary costs attached to claims and inform policy initiatives designed to achieve this outcome. To extend the reach of the Practitioner Performance Advice service into organisations that are not currently using our services.
Priority 2 – Intelligence
• To understand and respond to the drivers of cost and our customers’ needs.
• To help the system, organisations and individuals identify and address issues.
• To share what we know to inform policy development.
• To ‘diagnose’ the issues driving costs and use this to devise and signpost interventions.
28 Performance report
Priority 3 – Intervention
• To work in partnership with other arm’s length bodies (ALBs), NHS trusts, patients and healthcare staff to improve the way in which the NHS responds to incidents.
• To provide the system with access to a range of intervention services that uses our expertise to support improvement.
• To inform and implement policy initiatives effectively.
• To play a unique role in incentivising safety improvement, using the indemnity schemes as both a platform for learning and a lever for change.
Priority 4 – Fit for purpose
• To ensure we have the right skills and resources in place to deliver our services.
• To be a learning organisation that continuously improves and delivers services with the most effective use of our resources.
Our performance report sets out how we have delivered against our strategic aims in-year and we:
- outline the financial challenges and the - describe how we have worked with providers trends and key features we have observed as of NHS care to learn from claims in order to a result of analysing our data; drive improvement; - explain the steps we have taken to - confirm the steps we have taken to obtain share the costs of claims fairly and to and respond to external feedback; and incentivise improvement; - summarise the activity we have undertaken - describe how we have used our expertise within our various operating divisions to in order to preserve funds for patient care add value for our customers. by targeting our strategies on resolution, including influencing the law;
29 NHS Resolution Annual report and accounts 2018/19
Performance measures
Our performance measures NHS Resolution’s Board and Nevertheless, we have seen a provide an objective workforce strategy group further improvement of 8% in assessment of our operational monitored a variety of relation to this performance performance and how we are workforce indicators, including metric compared with the delivering against our strategic establishment levels, employee previous financial year. aims. NHS Resolution has turnover, recruitment, According to our annual key performance indicators sickness absence, levels of pay, customer survey, overall (KPIs) covering all areas of and equality and diversity satisfaction continues to operations, which are reviewed statistics, to ensure that the annually to ensure that they associated HR issues flowing rise having achieved a 14 support us to continually learn from our business were percentage point increase and develop our services. At properly managed. (from 55% to 69%) over the a high level, our KPIs provide past three years – we will be assurance and performance We have adopted a RAG exploring why this overall information to our Board and rating (red, amber, green) to score has not been reflected DHSC. Internally, they drive show which KPIs we have fully across the scores for our continuous improvement for met, came close to meeting individual services. our operational teams. (within 10% of target) and failed to meet. Claims Management faced Our external KPIs are agreed a number of challenges in by our Board and DHSC Some KPIs were missed, 2018/19, including recruitment and published annually via in particular in the claims of a new Director of Claims our business plan with the area where we have since Management and the exception of some of our undertaken a review of the implementation of the claims KPIs where publication performance framework new CNSGP scheme. Claims could prejudice the effective and the measures that sit Management reviewed the management of claims. The beneath our KPIs. This has performance framework performance of our legal led to changes to ensure and proposed substantial panel firms is also monitored that performance metrics changes for the year 2019/20 to closely under a balanced range are aligned with our strategy ensure the KPI measurements of KPIs that are specified in and seeks to measure those remained fit for purpose and factors we can control or our contracts with them in drive the correct behaviours influence. The Practitioner order to ensure a high-quality in the claims environment. Performance Advice KPI service at a competitive For Claims Management, the relating to Assessments and price. Throughout 2018/19, KPI relating to the letter of we continued to review the other interventions delivered response was missed by 6% distribution of work and within target timeframe for clinical claims and 5% for performance in relative, as represents a stretching target non-clinical claims. well as absolute, terms and for a particularly complex area intervened as required. of service delivery.
30 Performance report
The target was impacted by not used for the year while the challenge to recruit the performance framework sufficient numbers of staff was reviewed. We have now to meet the resourcing agreed a revised measure as levels we need to deliver part of the new framework the expansion in our that is more reflective of the responsibilities and ambitions factors within our control set out in our strategy. This and that we can influence. is being partially addressed The rate of closure KPI was by the announcement of the missed by 5% in clinical claims expansion of the operating but exceeded by 20% in non- base in Leeds to handle claims. clinical claims. The reduction in The time-to-resolution target the open book was met in the has presented a challenge non-clinical teams but missed for most of the year and in clinical resulting in a red the KPI was recognised as rating overall. not being fit-for-purpose because it was impacted by Although there was a a number of factors outside reduction in litigation across of our control, such as the both clinical and non-clinical availability of experts. It was teams, the overall target of paused as a formal KPI and was 10% was missed in both areas.
31 NHS Resolution Annual report and accounts 2018/19
Table 3: Key performance indicators
Resolution Area Target Met
Response time to a letter of claim Claims Internal (clinical and non-clinical). Management
Claims Closure rate (clinical). Internal Management
Claims Closure rate (non-clinical). Internal Management
Claims Internal Clinical claims closed with no damages payment. N/A Management (monitoring)
Claims Internal Non-clinical claims closed with no damages payment. N/A Management (monitoring)
Claims Repudiated claims converting to a damages payment. Internal Management
Claims Reduction in the number of cases proceeding to litigation. Internal Management
Claims Reduction in the open book of claims (clinical). Internal Management
Claims Reduction in the open book of claims (non-clinical). Internal Management
Primary Care Appeals ‘first step’ letters sent out within Primary Care 90% seven days of receiving the appeal or dispute. Appeals
Primary care appeals or disputes where at least 14 days’ Primary Care 100% notice of an oral hearing is given. Appeals
Primary care appeals where the decision maker agreed Primary Care 80% with recommendation of case manager. Appeals
Time to resolve primary care appeals and disputes – Primary Care 15 weeks internal input only. Appeals
Time to resolve primary care appeals where external input Primary Care 25 weeks is required. Appeals
Time to resolve primary care disputes where external input Primary Care 33 weeks is required. Appeals
Positive outcome of quality audits for primary care appeals Primary Care 90% and dispute files. Appeals
32 Performance report
Intelligence Area Target Met
Healthcare Professional Alert Notices issued/released Practitioner 90% (where justified) within target working days. Performance Advice
Healthcare Professional Alert Notices revoked Practitioner 90% (where justified) within seven working days. Performance Advice
Intervention Area Target Met
Positive feedback from trusts visited on recognition Safety and Learning At least 60% of products.
Response to members
1. 95 % response rate to members following a request for contact within five working days. 95%
2. Par ticipation in eighteen regional engagement events Safety and Learning 18 events for members which include two national sharing and learning events. 8 products
3. Eight safety and learning products to be made available for members in 2018/19.
Practitioner Performance Advice education events Practitioner rated by participants at least four out of five for 90% Performance Advice effectiveness/impact.
Requests for advice from Practitioner Performance Advice responded to within two working days (or within Practitioner 90% an alternative timeframe requested by the employing/ Performance Advice contracting organisation).
Assessments and other interventions delivered within Practitioner 92% target timeframe. Performance Advice
Assessment and other intervention reports produced/issued Practitioner 90% within target timeframe. Performance Advice
Percentage of exclusions/suspensions critically reviewed in line with the following timescales: Practitioner Stage 1: after initial four weeks. 90% Performance Advice Stage 2: at three months.
Stage 3: at six months.
Decisions on referrals for assessments and other Practitioner interventions communicated to the referrer within 13 90% Performance Advice working days of receipt of all referral information.
33 NHS Resolution Annual report and accounts 2018/19
Fit-for-purpose Area Target Met
Within 5% Indemnity scheme financial spend. Finance of target
Membership Undertake annual customer satisfaction survey to inform Complete in and Stakeholder service development. 2018/19 Engagement Membership Target for participation in our customer satisfaction survey and Stakeholder 60% to ensure engaged customer base. Engagement Increasing Membership Evidence of increasing scores covered by annual customer scores in and Stakeholder satisfaction surveys year-on-year. 50% of areas Engagement covered
Overall approval rating in the 2017/18 customer All 55% satisfaction survey.
No > 5% Downtime (unavailability between 7am – 7pm) IT of working of any IT system. month No > 2.5% Downtime (unavailability between 7am – 7 pm) IT of working for the extranet and claims reporting services. month
Workstation audits to be carried out monthly to ensure Completion of IT compliance with our security policies and standards. 10 audits
Critical security patches for externally facing systems to Within 30 days IT be applied promptly. of issue
Helpdesk to respond to calls within two hours of receipt. IT 90%
New projects supported by the programme management Business 75% office delivered to time and budget. Development
34 Performance report
Service updates Claims Management
Clinical and non-clinical claims surge in the numbers prior to a change in funding arrangements following the Legal Aid, In 2018/19 we have received 10,678 new Sentencing and Punishment of Offenders Act clinical negligence claims, compared to 10,673 2012 (LASPO). Clinical claims have reduced as a in 2017/18, an increase of just five claims proportion of increasing NHS activity. (0.08%). This suggests a continuation of the plateauing observed last year, following a
Figure 2: The number of new clinical and non-clinical claims reported in each financial year from 2010/11 to 2018/19
14,000
11,945 12,000 11,497 10,965 10,686 10,673 10,678 10,129 10,000 9,143 8,655
8,000
6,000 4,802 4,806 4,346 4,618 4,632 4,172 4,082
Number of new claims 4,000 3,570 3,585
2,000 Clinical Non-clinical
0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Notification year
We have seen an increase in the successful CNST by 1.9% from £1,984 million in 2018/19 defence of claims brought and reductions in to £1,947 million for 2019/20. However, the claimant legal costs. As a result, CNST payments underlying trend for the settlement of CNST have not risen as quickly as we have previously continues to be upwards, so contributions are anticipated, and we have been able to make expected to increase in future years. a small reduction in total contributions to the
35 NHS Resolution Annual report and accounts 2018/19
The number of new non-clinical claims, typically With the caveat in mind that claims received employers’ and public liability claims, increased in-year include claims relating to incidents that from 3,570 received in 2017/18 to 3,585 in have occurred in previous years, data supplied 2018/19, a modest increase of 0.42%. We to NHS Resolution by NHS Digital show that the reduced contributions to the Liabilities to Third activity undertaken (inpatient and outpatient Parties Scheme (LTPS) by 3.7% from £47.8 million finished consultant episodes, emergency in 2018/19 to £46 million in 2019/20. department attendances and ambulance journeys) have steadily increased from close to In 2018/19, the closed claims with no payment 110 million to in excess of 131 million episodes of damages had a cumulative potential cost to between 2013/14 and 2016/17. This is an increase the NHS of £2.68 billion. We incurred £21 million in activity of c20 million episodes or 19% over defending these claims, therefore ensuring a the period. total sum of £2.66 billion remained available for the use in frontline services. The numbers of new clinical claims have remained comparatively stable over recent years To better contextualise the number of claims during a period of growth in NHS activity levels. received in-year, it is useful to broadly consider the activity undertaken by the NHS. Liabilities arising from claims under all of our indemnity schemes have increased by £6.4 billion in 2018/19 – a fuller explanation of the drivers underlying this change can be found in the Finance report on page 83.
36 Performance report
Settled claims
Figure 3: How 15,655 claims were settled3 in 2018/19 compared with 16,338 in 2017/18
12,000
6417 - (39.30%) 6053 - 10,000 (38.70%)
8,000
6,000
4951 - 5014 - 944 - (5.80%) 4,000 (30.30%) (32.00%) 784 - (5.01%) 3902 - 3698 - (23.90%) (23.62%) 44 - (0.30%) 37 - (0.24%) 2,000 80 - (0.50%) 69 - (0.44%)
0 No proceedings No proceedings Proceedings Proceedings Trial Trial 2017/18 2018/19 2017/18 2018/19 2017/18 2018/19
Damages No damages
The majority of claims we settle are resolved favour of the NHS). Claims resolved without without formal court proceedings (70.7%, up the need for formal court proceedings are from 69.6% the previous year) and, in these managed by our in-house teams and panel early stages, more claims are resolved without firms. The overwhelming majority are resolved payment of damages than with payment of by negotiation in correspondence, in meetings damages. Just under one third of claims end between the parties, or using some form up in litigation with less than 1% going to of alternative dispute resolution, including a full trial (where most end in judgment in formal mediation.
3 This figure refers to settled claims, not closed claims, and includes claims that have been agreed with ongoing periodical payment orders. Settled claims will also include claims where damages have been agreed or successfully defended, and costs have not yet been agreed. These data are a different cohort to closed claims reported elsewhere in this document as they may fall in different years.
37 NHS Resolution Annual report and accounts 2018/19
Closed claims, referrals and appeals
In 2018/19, we closed 16,393 clinical and non-clinical claims brought against the NHS in England compared to 16,701 in 2017/18 – these figures include claims both with and without the payment of damages.
Figure 4: The total number of clinical and non-clinical claims closed with and without the payment of damages from 2005/06 to 2018/19
8,000
6,975 6,911 7,000 6,843
6,000 5,776 5,795 5,510 5,579 5,401 5,486 5,252 5,166 4,959 4,983 5,000 4,782 4,524
3,959 4,000 3,566 3,621 3,650 3,680 3,330 3,109 3,158 3,091 3,128 3,541 3,054 2,922 2,957 2,885 3,000 3,199 2,657 3,175 2,618 2,995 2,515 2,491 Number of claims 2,247 2,796 2,041 2,523 2,596 2,382 2,425 2,000 2,357 2,277 2,198 2,109 2,008 1,860 1,884 1,726 1,836 1,000 1,286 1,409 1,332
0
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Closure year
Damages paid - Clinical No damages paid - Clinical Damages paid - Non-clinical No damages paid - Non-clinical
38 Performance report
Figure 5: Clinical negligence payments including interim payments 2017/18 and 2018/19 (including PIDR)
2,500.0 Total = £2,359.9m Total = £2,227.5m 139.6 (6%) 128.9 (6%) 2,000.0 442.3 (19%) 466.6 (21%)
384.4 (16%) 1,500.0 404.0 (18%)
1,000.0
1,393.6 (59%) 1,228.0 (55%)
Clinical negligence payments (£m) 500.0
0 2017/18 2018/19
Damages paid to claimants Damages – effect of PIDR change Claimant legal costs Defence legal costs
Despite the number of claims In part, this is due to the fact When the PIDR rate changed received remaining stable and that payments are generally in March 2017, the settlement a reduction in the number in relation to claims notified values of these claims were of claims settled in the year, in previous years, and also recalculated, and further total payments relating to our reflective of the level of payments of £101 million were clinical schemes increased by inflation in claims settlements. made to those claimants on a £132.4 million (5.9%), from one-off basis. PIDR costs have reduced year £2,227.5 million to £2,359.9 on year. In 2017/18, we paid Legal costs have reduced million (inclusive of the out additional amounts on a overall, with a £24 million (5%) increase due to the change in number of claims which had drop in claimant legal costs as the PIDR). Damages paid to been adjourned for up to the LASPO reforms take effect. patients rose from £1,632.0 seven years at the request of Defence costs have increased million to £1,778.0 million, an claimants, in anticipation of a as we have focused our activity increase of £146 million (9%). reduction in the PIDR. on early investigation and took action to deal with the change to the PIDR.
39 NHS Resolution Annual report and accounts 2018/19
Figure 6: Payments on clinical claims by financial year from 2014/15 to 2018/19 for our CNST, ELS and Ex-RHA, and DHSC clinical schemes (including that attributable to the change in the PIDR)
2,500.0 2,231.9 2,058.7 2,000.0
1,575.9 Clinical Negligence 1,500.0 1,378.2 Scheme for Trusts DHSC clinical scheme 1,044.4 Existing Liabilities & 1,000.0 Ex-Regional Health Payments (£m) Authorities scheme
500.0
97.5 82.5 100.2 110.4 88.7 28.7 28.8 32.2 60.7 39.3 0 2014/15 2015/16 2016/17 2017/18 2018/19 Financial year
Clinical negligence costs continue to rise relatively steeply, with a significant year-on-year increase because of the change in the PIDR in March 2017. Details of the underlying trends affecting these costs are discussed in the Finance report from page 83 onwards.
40 Performance report
Figure 7: The number of CNST and DHSC legacy clinical negligence cases received by estimated damages range in each financial year from 2014/15 to 2018/19
3,000 2,732 2,678 2,659 2,620 2014/15 2,500 2015/16
2,039 2016/17 2,018 1,997
2,000 1,909 1,850 1,842
1,817 2017/18
1,633 2018/19 1,573 1,535 1,475 1,462
1,500 1,424 1,347 1,344 1,283 1,268 1,245 1,205 1,148 1,102 1,081 1,056 938 926 911
1,000 895 Number of claims 837 710 678 634
500 374 361 354 273 255 186 148 139 104 96 0
Nil £1 -
£10,000 £10,001£25,000 - £25,001£50,000 - £50,001 - £100,000 £100,001£250,000 - £250,001 - £1,000,000 £1,000,001£2,000,000 - £2,000,001+ Estimated damages
41 NHS Resolution Annual report and accounts 2018/19
Figure 8: The number of clinical negligence claims received in 2018/19 by specialty
Emergency medicine 13% Orthopaedic surgery Obstetrics General surgery 34% 12% Gynaecology General medicine Total number of Radiology clinical claims 10,678 Urology Psychiatry/mental health 10% Gastroenterology Other 2% 3% 9% 3% 4% 5% 5%
Figure 9: Value of clinical negligence claims received in 2018/19 by specialty across all clinical negligence schemes
Obstetrics 15% Emergency medicine Paediatrics 2% 2% Orthopaedic surgery 2% Neurology 3% General surgery Total value of clinical Neurosurgery 3% claims received £4,931.8m 50% Ambulance 3% Radiology 4% General medicine Other 7%
9%
42 Performance report
Figure 10: The top three categories of clinical claims received in 2018/19 by value and number
60%
50% 50%
40%
30%
20%
13% 12% 10% 10% 9% 4%
0% Emergency medicine Orthopaedic surgery Obstetrics
By number By value
Emergency medicine remains the specialty from where most claims originate, which follows the pattern in 2017/18, yet only accounts for 9% of the overall estimated value of these claims.
Obstetrics claims remain the Our focus therefore continues highest value, 50% of the to be on maternity claims total estimated value, while from the obstetrics speciality. only representing 10% of the Steps taken to help reduce volume of claims received. This the likelihood of harm and represents a similar pattern associated costs include to 2017/18 with the estimated for example our Early value of obstetrics claims being Notification scheme, which 48% while being only 10% of is entering its third year of claims by volume. operation, and our maternity incentive scheme.
43 NHS Resolution Annual report and accounts 2018/19
Figure 11: Non-clinical negligence payments including interim payments 2017/18 and 2018/19 (including PIDR)
70.0 Total = £61.8m 60.0 Total = £57.6m 6.6 (10%) 6.8 (12%) 50.0 17.8 (29%)
40.0 19.6 (34%) 3.5 (6%) 30.0 2.3 (4%)
20.0 28.9 (50%) 33.9 (55%) 10.0 Non-clinical negligence payments (£m)
0.0 2017/18 2018/19
Damages paid to claimants Damages – effect of PIDR change Claimant legal costs Defence legal costs
Figure 12: Payments on non-clinical claims by financial year from 2014/15 to 2018/19 for LTPS, PES and DHSC non-clinical schemes (including PIDR)
60.0
50.0 47.9 44.6 45.6 40.0 43.6 41.2
30.0
20.0 Payments (£m)
11.1 9.4 8.6 10.0 6.5 8.0 3.6 2.8 5.3 5.5 5.9 0.0 2014/15 2015/16 2016/17 2017/18 2018/19
Financial year
Liabilities to Third Parties Scheme DHSC Non-clinical Scheme Property Expenses Scheme
44 Performance report
The increase in non-clinical Managing claims fairly It is important that we defend scheme payments is primarily in and effectively cases at trial where there the LTPS scheme. This is due to has been no negligence and the £6.2 million (20%) increase We manage claims fairly and pursue alternative ways to in damages settlements effectively and continue to achieve fair resolution that including PIDR costs for a develop legal precedents, do not have to involve a costly small number of high-value taking cases to trial or to legal process, in both financial cases that were settled during the higher courts in areas and emotional terms. the year. of law which need to be challenged in the broader We also have a responsibility to Orthopaedic injuries account interests of patients and challenge excessive claims for for the largest percentage of the NHS, or which require damages and costs, in order to claims received (69%) which certainty. The law needs to preserve funds for NHS care. is down from 72% in 2017/18. keep pace with the dynamic Developing legal precedents They also account for the healthcare environment where largest overall estimated groundbreaking advances in Testing claims at trial often value (53%), down from 58% science and technology can has wider implications for last year. Our DHSC non- have a knock-on effect to the other, similar cases and so the clinical scheme responds to cost of clinical negligence. outcome of a case can either historic liabilities and liabilities For example, improvements provide an opportunity for inherited by the Secretary of in prosthetics have an others to claim under similar State for Health and Social impact on the cost of claims circumstances or deter claims Care from abolished health because the increasingly without merit. We take service bodies. The number complex technology is more cases to trial where there is of claims received under expensive. However improved ambiguity in the law or new this scheme and the total functionality may result in points of principle need to expenditure are likely to fall greater flexibility for claimants, be considered. over time. PES covers first-party removing the need for building losses arising from damage adaptations and allowing to NHS property assets. PES them to return to work, or expenditure is typically volatile speeding up their return to and unpredictable, since the work, reducing the cost of trigger for most claims will be claims in other areas. weather-related events.
45 NHS Resolution Annual report and accounts 2018/19
Darnley v. Croydon – Supreme Court In overturning the ruling of the Court of Who can be found to have a duty Appeal, the Supreme Court found that: of care? Liability of emergency • A s soon as the claimant attended seeking department receptionists medical attention there was a patient The Supreme Court gave its judgment hospital relationship (an established in the case of Darnley v. Croydon Health category of duty of care). Services NHS Trust on 10 October 2018. • T here was a duty not to provide Following a head injury, Mr Darnley (the misleading information which might claimant) attended Mayday Hospital, foreseeably cause physical injury. Croydon emergency department with a • T he standard required is that of an friend. The receptionist advised he would averagely competent and well-informed have to wait up to four to five hours to be person performing the function of a seen. Mr Darnley waited 19 minutes before receptionist at a department providing leaving without telling anyone. He was emergency medical care. not informed he would have been triaged within ~30 minutes. Had he been told this, • T he hospital had been in breach of its the trial judge found he would not have left duty of care. the emergency department. Deteriorating This is a very sad case because the claimant shortly after arriving home, Mr Darnley suffered significant lasting injury. The tragically suffered permanent and serious decision is an important reminder that injury, which would have been avoided if hospital staff must take reasonable steps he had not left the emergency department to ensure patients are not provided with and his treatment delayed as a result. “misinformation” including the availability In finding for the hospital, the original and timing of medical assistance. Both trial judge and then the Court of Appeal clinical and non-clinical staff must be made adopted a number of arguments, including: aware that emergency care waiting time information provided to patients must be • T he Trust was not under a duty to reasonably accurate and may have legal provide accurate information about consequences if it is misleading. waiting times. This case raises issues about the legal • T here was no assumption of legal liability of non-clinical emergency responsibility for the claimant. department receptionists when giving • T he information was provided as a advice to patients about waiting times courtesy by non-medical staff. and for which it was important to have a • T he claimant was responsible for his judicial decision. injury because he chose to leave the This is the first case in England where an emergency department, when he had in emergency department receptionist has fact been advised to wait. been found negligent for failing to give accurate information about waiting times to a patient.
46 Performance report
XX v. Whittington Hospital The Court of Appeal approached the case NHS Trust – Court of Appeal in a different way. It noted that what 19 December 2018 Recovering XX was proposing was entirely lawful in costs for arrangement abroad California and, importantly, that she would illegal in the UK – Californian not be committing a criminal offence in surrogacy costs England by being a party to a commercial surrogacy arrangement in a place where This was a case where liability was admitted this was legal. Such an arrangement had and the key issue was the correct measure other major advantages from the claimant’s of damages. There is an anonymity order perspective, because under UK law the in place to protect the identity of the surrogate mother chooses the parent and is claimant, but not that of the trust. XX the legal mother of the child, whereas the developed cancer of the cervix. This was not opposite situation is customary in California. detected, either by way of smear tests in In 2002, the Court of Appeal had held in the 2008 and 2012, or biopsies in 2012 and 2013. case of Briody v. St. Helens and Knowsley The claimant required chemo-radiotherapy Area Health Authority that commercial treatment which in turn led to infertility surrogacy costs were not recoverable from and severe radiation damage to her lower the negligent health body in relatively abdomen. Had the cancer been detected similar circumstances, but that case was as it should have been, XX would have had distinguishable because the chances of a fertility-saving surgery. She had a strong successful outcome were extremely low. ambition for children of her own. Here, the prospect of a live birth was Prior to key treatment, XX underwent significantly better. Further, public and a cycle of ovarian stimulation and egg judicial attitudes to surrogacy had moved harvest which produced 12 eggs that on, and the family courts had recently were cryo-preserved. She and her partner approved payments made in connection decided to opt for a commercial surrogacy with surrogacy in California. arrangement in California, where it is legal The court therefore overturned the first to pay a woman to be a surrogate mother. instance ruling and allowed recovery of the In the UK, however, commercial surrogacy costs of four surrogacy arrangements in arrangements are illegal and it is a criminal California, on the basis that the parent has offence to advertise either for a surrogate always intended to have a large family. It or to offer oneself as a surrogate. However, concluded that to bar XX from recovering non-commercial surrogacy is permitted to the costs would prevent her from obtaining the extent that reasonable expenses may be damages to reflect the loss of her personal paid to the birth mother. In the High Court, autonomy in being able to found a family. the trial judge awarded only reasonable expenses for a surrogacy arrangement, on the basis that that was the position under English law. This ruling was appealed by XX.
47 NHS Resolution Annual report and accounts 2018/19
Various claimants v. W M Morrisons confidentiality because they had put Mr Supermarkets PLC – Court of Appeal Skelton in a position of trust and there was 22 October 2018 a sufficient connection between the role Vicarious liability, employers held in which he had been employed and his accountable for the action of conduct to make that a fair outcome. The their employees company appealed. This first instance ruling was upheld Andrew Skelton was a senior IT internal by the Court of Appeal, which agreed auditor employed by the supermarket unanimously that sending staff data to third chain. He developed a grudge against his parties was “within the field of activities employers after receiving a warning for assigned to” Mr Skelton by Morrisons. It unauthorised use of their postal facilities for was argued on behalf of the company private purposes. As part of his legitimate that since Skelton’s motive was to cause duties he received an encrypted USB stick financial or reputational damage to his containing personal details of thousands employers, they should not be held liable, of his fellow employees. He downloaded but the court rejected that proposition the data onto his work computer and then and held that motivation was irrelevant in copied the information onto a personal such circumstances. The outcome therefore stick. He posted these details on the was that Morrisons were held vicariously internet and sent CDs containing the same liable to the claimants at common law for information to three newspapers, none of Mr Skelton’s actions. which published any of it. He was eventually convicted of a number of criminal offences Comment arising from this unauthorised disclosure While this is not an NHS Resolution case, and sent to prison for eight years. we have included it because it is one of Over 5,000 Morrisons employees sued the the most important rulings of the courts company for misuse of private information, on civil liability issues all year. Because breach of confidence and breach of Mr Skelton had acquired the data as part the Data Protection Act (DPA). The trial of his legitimate duties, and distributing judge held that Morrisons were not data data was likewise part of his job, the Court controllers under the DPA and therefore of Appeal considered it appropriate for not liable for breach of statutory duty. They vicarious liability to attach to the employers were not directly liable in respect of the whatever his motivation might have been. other heads of claim because Mr Skelton Arguably this judgment expands still had acted without authority. However, further the situations in which employers they were vicariously liable for misuse of may incur a civil liability for criminal acts by private information and for breaching their employees.
48 Performance report
Defending cases to trial handed down in 106 of these cases with a success rate of 69%. This represents an increase We continue to defend cases to trial where we of 1% (six cases) in cases taken to trial on the consider there has been no negligence or where previous year and an increase in the success rate the amount claimed is thought to be excessive. by 2 percentage points from 67%. 73 cases were We have taken 116 cases across all schemes to successfully defended. trial in 2018/19. Court judgments have been
Figure 13: Litigation rate4
100%
90%
80%
33% 32% 31% 70% 35% 34% 33% 34% 36% 37% 67% 68% 69% 42% 65% 66% 67% 66% 60% 64% 63% 58% 50%
40%
30%
20%
10%
0% 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Settlement year
Proportion of claims settled after court proceedings start Proportion of claims settled without court proceedings
The proportion of cases settled after court proceedings start has reduced further by 1% on the previous year to 31%. This represents the continuation of our strategy to keep cases out of formal court proceedings wherever possible by utilising all forms of alternative dispute resolution.
4 The data in this figure relate to clinical claims only and it differs from the earlier Figure 3: Settled claims, which represents both clinical and non-clinical claims.
49 NHS Resolution Annual report and accounts 2018/19
D v. Worcestershire Acute Hospitals contemporary guidance on TAH from NHS Trust – Court of Appeal the Royal College of Obstetricians and 7 June 2018 Gynaecologists did not refer to a risk of When medical knowledge has long-term neuropathic (or nerve) pain. changed since the time of failure The respective gynaecological experts for D and the trust had agreed that CPSP to warn was not common knowledge amongst This was an appeal by the claimant against gynaecologists in 2008 and that therefore it a finding of Birmingham County Court in would not normally have been mentioned February 2016. She alleged that she was not when taking consent for hysterectomy warned of the risk of pain prior to a total at that time. abdominal hysterectomy (TAH) and surgery The trial judge had found that even had to remove both ovaries and fallopian she been warned of the risk of CPSP tubes (bilateral salpingo-oophorectomy) the claimant would still have proceeded performed on 25 March 2008. with the operation that day. D’s legal The claimant had a history of painful and team argued that that was not the right heavy periods and during a consultation in test, but the Court of Appeal concurred December 2007 she discussed the possibility with the trust’s view that this argument of a TAH to relieve her symptoms. During amounted to a wholesale disapplication of another clinic visit in February 2008 she conventional causation principles in consent was insistent that she wanted a TAH, even cases. The court held that a claimant must though the doctor explained that it was a still demonstrate a “but for” causative major procedure with associated risks. She effect of breach of duty in such cases and wanted it “all taken away”, in accordance that D needed to prove on the balance with the clinician’s note. of probabilities that the operation would She was reviewed again on 4 March not have taken place when it did, had 2008 and once more confirmed that she appropriate warning been given (i.e. but wanted a TAH and would not consider any for the alleged failure to explain the risk, other treatment option. The consultation she would not have had the operation that note recorded “risks explained” and the day). Consequently, judgment was given in consultant’s usual practice was to provide favour of the trust. a leaflet at that stage, although she could Comment not recall the actual meeting. The trial judge had accepted that prior to the operation on The issue of a lack of warning of the risk of 25 March 2008, there had been a discussion CPSP involved a standard application of the during which the registrar had explained Bolam principle – the claimant failed on this that the procedure might not relieve D’s point because the condition was not known existing pain. about by most competent gynaecologists in 2008. However, the main thrust of this The operation was performed non- case was the attempt to overturn the negligently, but unfortunately D sustained existing law in consent cases. That attempt nerve damage as a result of which she failed. Had it succeeded, the NHS would suffered ongoing pain in her abdominal have been legally liable in many more such wall, which was subsequently categorised as cases. It is unfortunate that the claimant chronic post-surgical pain (CPSP). suffered ongoing pain, but both breach of D alleged that she should have been duty and causation must be demonstrated warned of the possibility of CPSP. However, for liability to attach.
50 Performance report
EH v. Dorset Healthcare University The Court of Appeal agreed with the first NHS Foundation Trust – Court of instance judge. They noted that in Clunis Appeal 3 August 2018 v. Camden and Islington Health Authority Challenging a claim on the basis (1998) they had struck out a relatively similar of illegality claim in its entirety because it was barred by public policy. Likewise, in Gray v. Thames The claimant had a history of psychiatric Trains Ltd. the House of Lords rejected a problems, resulting in various formal and claim from a victim of the Ladbroke Grove informal hospital admissions. On 25 August railway disaster who had suffered post- 2010, while experiencing a serious psychotic traumatic stress disorder as a consequence episode, she stabbed her mother to death. and gone on to kill a man. Critically, in all An independent investigation found that three cases, the criminal trial had resulted there had been failings by the trust in in a conviction based on “diminished caring for and treating EH. While killing her responsibility”. In other words, the killer mother could not have been predicted, a had accepted that he or she retained some serious untoward incident of some kind was measure of responsibility for their actions, foreseeable and it was therefore accepted albeit in the present case that degree was by the trust that they had breached their not significant, in the opinion of the judge. duty in failing to respond appropriately Consequently, the court ruled that this to EH’s mental collapse. The claimant was claim could not succeed. It was barred by charged with murder and, through her legal public policy. The judges expressed the view advisers, pleaded guilty to manslaughter by that the claim for loss of inheritance was reason of diminished responsibility. She has “particularly egregious”. been held in detention under the Mental Health Act ever since. Comment This claim sought damages under a number This was a tragic case where there had been of headings including loss of liberty failings by the trust and the death of an consequent on EH’s conviction, loss of innocent person. Nevertheless, EH accepted amenity, the cost of psychotherapy and partial responsibility for her actions at her losing a share in her mother’s estate owing criminal trial and therefore her claim for to operation of the Forfeiture Act 1982. The damages was ruled unsustainable. The trust argued that all these claims should fail Supreme Court agreed in March 2019 to on grounds of illegality or public policy. Mr hear a further appeal in this case, however, Justice Jay found in favour of the trust on 19 so there is likely to be another important December 2016 and the claimant appealed. ruling for the NHS in the next year or so.
Extending corporate liabilities that these decisions collectively represent a trend which is of concern to NHS Resolution. This year has witnessed a number of rulings Taken together, these decisions appear to from the higher courts in which corporate reflect a growing willingness by the courts to entities, including NHS bodies, have been held impose greater liabilities on solvent bodies, in an liable in novel situations, or for new heads of attempt to compensate innocent victims. loss. These cases5, discussed previously, highlight
5 Various claimants v. W M Morrison Supermarkets PLC – Court of Appeal 22 October 2018 Darnley v. Croydon – Supreme Court XX v. Whittington Hospital NHS Trust – Court of Appeal 19 December 2018
51 NHS Resolution Annual report and accounts 2018/19
Factors that influence the Detailed examination of the • The majority (69-75%) cost and number of claims response to incidents which rated the response to their subsequently turned into complaint as ‘poor or very Understanding why people claims for compensation found: poor’ in terms of accuracy, make a claim underpins any empathy, speed of the • Almost two thirds (63%) work to prevent concerns response and level of detail. and complaints resulting in a of respondents felt that claim. On 23 October 2018, we no explanation for why In approximately three published research exploring an incident occurred was quarters of cases considered, the factors which lead given to them. The majority the incident took place patients to consider a claim for of those that did receive before the introduction compensation when something an explanation waited ten of the statutory duty of goes wrong in their healthcare. days or more to receive it candour which set out specific Undertaken on our behalf by following the incident. requirements for an open and transparent response when the Behavioural Insights Team • Less than one third (31%) things go wrong with care and (BIT), the research considered felt they received an treatment. We would therefore the experience reported by apology. A minority of those hope that levels of candour 728 patients who agreed to that did receive an apology have significantly improved in participate in a survey, with rated the apology highly. a small number of in-depth the interim. telephone interviews to • The majority (71%) of In partnership with the provide additional insights. In respondents did not think Parliamentary and Health the main, the experience of that their healthcare Service Ombudsman, we have these patients will have pre- provider undertook any produced a document for dated the introduction of the actions to investigate the NHS trusts in England to help statutory duty of candour and incident in the first instance. outline our roles and how our unsurprisingly the research • Only 6% of respondents felt services overlap and interact. found that the response that actions were taken that This may help tackle some of following an incident and the would prevent the same the findings of this research handling of any complaint incident happening again. by bringing greater clarity to made at the time featured the complaints process. Staff highly in decisions to make a • Of those who did not make who manage NHS complaints claim for compensation. This a complaint, the majority and/or compensation claims validates NHS Resolution’s (72%) reported not knowing should find this a helpful guide advice, Saying Sorry in that how to complain. when deciding when to involve transparency and candour with the Parliamentary and Health patients who have suffered Service Ombudsman or NHS avoidable harm are critical. Resolution in complaints or compensation claims.
52 Performance report
Alternative dispute Mediation Costs Alternative Dispute resolution and mediation Resolution (CADR) was NHS Resolution launched a appointed to mediate disputes NHS Resolution remains claims mediation service in arising from the recoverability committed to embracing all December 2016 in order to of legal costs. forms of alternative dispute support patients, families and resolution, to include written NHS staff in working together 2018/19 has seen the continued offers, mediation, settlement towards the resolution of successful growth of the claims meetings and telephone incidents, complaints, legal mediation service which has discussions, among many claims and costs disputes and attracted considerable interest options. In 2018/19, we have avoiding the need, expense, from claimants, claimant worked collaboratively with and potential emotional stress lawyers, NHS providers and claimant lawyers and other of going to court. other stakeholders. stakeholder groups on a Contracts were awarded to the number of initiatives to reduce Centre for Effective Dispute the number of cases going Resolution (CEDR) and Trust into formal litigation, limit the Mediation Limited to mediate escalation of legal costs and disputes arising from personal secure earlier resolution. injury and clinical negligence The research to determine the incidents and claims. factors which lead patients to consider a claim for compensation demonstrated The year in numbers: that in some cases it was a lack of candour and transparency • 400 cases formally instructed under NHS Resolution’s that caused patients to take claims mediation service legal action. In such cases • 397 cases proceeded to mediation in particular, where it is not possible to stave off a claim • 3 cases settled before the mediation date by better handling in the first instance, we can improve the • 74% of cases settled on the mediation day or within patient experience by utilising 28 days of the mediation date mediation and other forms of • 110% increase in the use of mediation up from 189 dispute resolution. cases in 2017/18 to 397 cases in 2018/19
• 606 completed mediations undertaken since the inception of the service to 31 March 2019.
53 NHS Resolution Annual report and accounts 2018/19
Mediation case studies
Case study one and in addition the representative from the NHS trust was able to speak to the The claimant underwent treatment for claimant at length and provide an apology, ulcerative colitis. It was alleged that there reassurances of the lessons learned since the was a delay in the treatment provided by incident and explain the changes in process. the NHS trust which caused the claimant to sustain avoidable pain and suffering, the A separate meeting with the clinicians was worsening of her condition and the loss also offered to the claimant, at the trust, of her unborn baby. Partial admissions of to provide more information about the liability had been made on behalf of the preventative processes in place to deal trust, but extent of the claimant’s injuries with similar cases expeditiously and to and value of the claim was in issue. discuss more about the claimant’s specific case should she wish. The claimant and her The case was at the pre-action stage and family confirmed at the conclusion of the the parties agreed to use mediation to mediation that they accepted this offer. resolve the issues in dispute. Settlement was A member of NHS Resolution’s Safety and achieved at the mediation which avoided Learning team was in attendance at the the need to commence legal proceedings mediation and was also able to advise the and the ongoing emotional distress this claimant that the learning from her case would have caused the claimant and her would be shared to drive patient safety family. A financial settlement was agreed and learning.
Case study two During the opening plenary session, the parties set out their respective positions on The claim concerned the management of liability and the perceived weaknesses in the claimant’s labour and delivery of her the opposing party’s case. child. It was alleged that the NHS trust was negligent in allowing the labour to become With the benefit of the mediator, the too prolonged which caused the claimant parties were able to keep up the momentum to suffer a perineal tear. It was also alleged of an ongoing dialogue throughout the day. that inadequate repair of the tear caused The claimant’s suffering was recognised and the claimant to sustain a post-partum detailed explanations provided why liability haemorrhage and subsequent perineal was not accepted and a financial offer could wound breakdown. not be made. This was a fully contested claim with both A resolution was subsequently achieved on parties relying upon independent expert the day with the claimant discontinuing the evidence. A mediation was arranged in claim without costs penalties. advance of the trial date.
54 Performance report
55 NHS Resolution Annual report and accounts 2018/19
Challenging excessive claims – In his remarks, The Honourable Mr Justice fraud and exaggeration Spencer said: “In August 2011, when notified of your prospective claim, the trust immediately We take fraud and exaggeration very seriously made a realistic offer of settlement, £30,000. and in a landmark case, on 1 June 2018, Sandip That was, if anything, a generous offer. You did Singh Atwal was sentenced to three months in not accept it. Instead you pursued a dishonestly jail for deliberately attempting to defraud the aggravated claim, and by November 2014 NHS and deceive the Court. when your schedule of loss and damage was NHS Resolution on behalf of Calderdale & served, the claim was pleaded at over £837,000. Huddersfield NHS Foundation Trust, successfully It included a claim for £255,000 for future established that Mr Atwal was in contempt of loss of earnings, and a claim for £421,000 for court for grossly exaggerating the effect of future care needs and equipment and the minor injuries sustained and deliberately and cost of employing someone for household fraudulently claiming compensation in excess tasks you could no longer do yourself. Those of £800,000 in a clinical negligence claim claims were based upon what you were falsely against the NHS. telling the medical and care experts was your continuing level of disability resulting from the Covert video surveillance of Mr Atwal was negligent hospital treatment. The depths of commissioned in 2015 that exposed him working your deception were revealed by covert video and lifting heavy items, using his phone and surveillance in October 2015, which proved that driving with ease. His social media posts also you were perfectly able to work, to drive, and showed him working as a DJ, which included to lift and to carry activities which you were still him featuring in a music video. claiming not be able to manage… …My firm and clear conclusion is that a sentence of immediate custody is necessary to mark these serious contempts, and to deter others. I am satisfied that appropriate punishment can only be achieved by an immediate custodial sentence…”
56 Performance report
During the year, we pursued another case which concluded on 5 April 2019:
Lesley Elder v. George Eliot Hospital transobturator tape procedure and would NHS Trust have avoided the associated complications. Lesley Elder was sentenced and fined Ms Elder alleged that as a consequence of for contempt of court after fraudulently the admitted negligence she suffered severe exaggerating injuries she sustained in an unremitting pain which was exacerbated by attempt to seek in excess of £2.5 million in movement that she walked with the aid of compensation from the NHS. a walking stick, using crutches on occasions and a wheelchair for longer trips. She also NHS Resolution on behalf of George Eliot claimed that she had not been able to go on Hospital NHS Trust, successfully established holiday since the surgery, save for a trip to that Ms Elder lied about the extent of Egypt in October 2015, that she was unable her injuries and disability following to work from 2013 onwards and that she mesh surgeries. needed care and assistance during the day Ms Elder underwent a transobturator tape and night. insertion operation in December 2010 which However, surveillance was obtained in allegedly left her in constant debilitating 2016 in which she was observed walking pain and with restricted mobility. The trust without any mobility aids, including trips accepted that Ms Elder did not receive to the shops with her daughter and to the adequate pre-operative counselling supermarket. Further evidence obtained regarding the likely success of the procedure showed her in Ibiza on a hen party in 2012 or the risk of certain possible complications. for one of her daughters. Following the surgery, she underwent Ms Elder had sought to recover in excess of several procedures between September 2011 £2.5 million, but was ultimately awarded and January 2014 to remove parts of the £120,012 by the Court in 2016 following tape and mesh but continued to experience the submission of surveillance evidence. pain and mobility problems. However, the judge concluded her claim was It was admitted that with proper advice, dishonest to the criminal standard and she Ms Elder would not have undergone the was sentenced to five months in jail.
Fraud is a serious offence Fraud against the NHS will We work alongside the NHS and these decisions send a be investigated by our staff Counter Fraud Authority very clear message that the and, significantly, dealt with in certain cases to ensure a NHS is not an easy target robustly by the Court. Both joined-up approach to the and that claimants cannot these cases highlight the identification and investigation submit fraudulent claims very serious consequences of potentially fraudulent cases. with impunity. of submitting dishonest and However, we continue to exaggerated claims. ensure genuine claimants are properly compensated.
57 NHS Resolution Annual report and accounts 2018/19
Challenging legal costs budgets by over £62 million (based on cases proceeding the whole way to In addition to protecting the NHS from trial). In addition to some specific legal cases unmeritorious claims, the legal costs associated which were pivotal and of wider significance with handling a claim are scrutinised by NHS to the NHS, Acumension and Keoghs have Resolution and our costs panel (Acumension and advised NHS Resolution in many individual cases, Keoghs). For the claims managed by Acumension where costs budgets have been reduced by this fiscal year, judges reduced claimants’ hundreds of thousands of pounds.
Figure 14: Average of claimant costs paid on claims where damages are between £1 and £100,000 by financial year from 2005/06 to 2018/19 for all clinical negligence schemes
70,000
59,251 60,391 60,000 60,721
53,309 50,000 46,435 49,495 39,889 40,000 37,707 35,824 40,900 32,562 36,701 30,000 29,034 29,436 21,995 21,327 20,785 19,002 20,000 16,656 15,274 19,775 20,973 12,990 Average claimant legal costs (£) Average 10,984 9,246 9,817 14,695 10,000 12,592
0
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Closure year
£0 - £25,000 £25,001 - £100,000
58 Performance report
There has been a decrease in In the case of Barts Health NHS Resolution continues to clamant costs as a percentage NHS Trust v. Salmon (County make very substantial savings of damages in claims paid, with Court 17 January 2019), NHS in ‘change of funding claims’ a value of less than £100,000, Resolution brought a successful following the Court of Appeal’s which continues the trend from appeal in relation to what decision in Surrey v. Barnet and 2016/17 and 2017/18. This is constitutes ‘good reason’ to Chase Farm Hospitals NHS Trust likely to have been contributed depart from a costs budget. and other appeals. These are to by the change in how The court ruled that where instances when we question claimants can fund the pursuit the bill of costs claims less the rationale for moving of claims and recover costs than the budgeted sum, then from one form of funding following reforms in 2013. the paying party does not to another – in particular On 1 April 2013, the LASPO need to establish a ‘further’ where the claimant may see reforms created a new regime good reason in order to less benefit than the solicitors for the civil litigation costs reduce the costs to a greater representing them. XDE v. system, intending to promote extent. As the vast majority of North Middlesex University access to justice at a cost claims settle before trial and Hospitals NHS Trust (High proportionate to the value and before all budgeted tasks/ Court 12 September 2018) is complexity of claims. However, work is undertaken in various an example where the judge there remains uncertainty as to phases of the bill, the decision disallowed additional liabilities how the ‘proportionality test’ provides the opportunity to of around £1 million in a should be applied and also have many phases of the bill single case. regarding the costs budgeting properly assessed by a costs Solicitor struck off for rules (where the court sets judge at the end of the case. budgets for the legal costs overcharging the NHS ATE insurance and change during the case). The rules of funding claims Andrew Good, joint owner of state the court cannot depart Hull law firm Rapid Response, from the budgeted costs unless The case of Peterborough & was struck off on 2 April 2019 there is ‘good reason’ to do so Stamford Hospitals NHS Trust after a High Court judgment – and the judiciary have been v. McMenemy & Ors (Court concluded that he showed a working to come to a clear of Appeal November 2017) “serious lack of integrity” for understanding as to what that examined the recoverability overcharging the NHS. Lord means in practice. This does of post-LASPO after the event Justice Flaux overturned a represent a challenge to NHS (ATE) premiums. The court previous ruling that saw Good Resolution in trying to manage did not consider whether the fined £30,000 for misconduct. hundreds of millions of pounds quantum of premium was We first reported our concerns of public spend in such an reasonable or proportionate. to the Solicitors Regulation uncertain legal environment. The case of West and Authority in 2013, after which A challenge which is met by Demouilpied v. Stockport NHS an investigation was launched. NHS Resolution capturing data Foundation Trust, to be heard and market intelligence to by the Court of Appeal in better inform decision making June 2019 is expected to be a on legal spend management seminal case in relation to the matters at both a strategic and assessment of post-LASPO ATE tactical level, while supporting insurance premiums. proposals for fixed costs to be introduced in lower value clinical negligence claims.
59 NHS Resolution Annual report and accounts 2018/19
Maternity Overall, the NHS remains one of the safest healthcare systems in Western countries. However, it remains the case that avoidable errors still occur. In maternity care, while giving birth in England is generally safe, errors can have devastating consequences for the child and family, together with the impact on the treating clinicians and the financial cost to the NHS. We hold a wealth of knowledge about every compensation claim made against the NHS in England and can use this information to inform the system on where to focus its efforts to gain a better understanding of problems and ultimately stop them from recurring. Overwhelmingly, the cost of clinical negligence is driven by maternity claims, which represent 10% of the number of clinical claims we received in 2018/19, but half of the value of claims received and 70% of the £83 billion provision reported as at 31 March 2019.
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Figure 15: A comparison of the number and total value of claims for maternity cerebral palsy/brain damage claims over time across all clinical negligence schemes
300 2,000 1,858.06
255 1,867.81 1,800 246 250 1,596.80 227 224 1,600 219 223 222 1,398.23 232 199 196 1,400 200 204 179 1,321.70 192 1,406.02 1,239.82 188 1,200 181 1,037.28 150 927.66 1,051.46 1,000 918.22 800 Total claims (£m) Total Number of claims 100 594.99 679.16 600 609.17 400 50 359.36 200 Number of claims Total claim value (£m) 0 0
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Notification year
The number of claims has remained relatively • research – in-house clinical staff conducting steady while the value has significantly a deep dive into the causes of maternity increased, and hospitals now pay around £1,100 incidents and the adequacy of the per birth in indemnity costs. And this is why we investigations that follow; focus considerable effort and energy in seeking to reduce the occurrence of cerebral palsy, • early notification – moving upstream to taking a three-pronged approach using: capture incidents, share learning in real time and apply what we know to support the hospital in their response. An early liability investigation and compensating for needs; and
• incentives – using the pricing lever to reward trusts who deliver against safety which have cross-system agreement.
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Early Notification scheme Maternity incentive scheme
Early notification of obstetric brain injury has Our maternity incentive scheme uses the pricing been a flagship of our strategy giving us the lever of the CNST scheme to reward hospitals opportunity to capture those incidents, within that deliver against safety actions which have 30 days of their occurrence, that meet criteria cross-system support. The ten actions (and the defined by the Royal College of Obstetricians refinements for year two) have been agreed and Gynaecologists. This gives us the with the national maternity safety champions opportunity to disrupt what has become over in partnership with our Collaborative Advisory the years quite a formulaic and lengthy path Group. The group6 was established by NHS from the incident to a settlement. It is relatively Resolution to bring together other arm’s length uncharted territory, but for the first time we bodies, royal colleges and others to support the are making admissions and payments to families delivery of the CNST maternity incentive scheme within months, rather than several years, of the and has also advised us on the refined safety birth and providing support for those involved actions. We have identified ten actions which at the time of the incident. we collectively think are fundamental to the national ambition to reduce the rate of maternal In response to the feedback we received from and neonatal deaths, stillbirths and brain injuries NHS staff reporting into the Early Notification by 20% by 2020. In the first year, for which scheme, we delivered three Finding the words: we have published the results, hospitals self- compassionate conversations with parents certified against the ten actions. There was no national training events for maternity teams to new funding for this. We collected an additional help look at the challenge of delivering difficult 10% on top of the maternity component of news to families and effectively delivering the CNST contribution to create a £73.5 million duty of candour. fund and returned that 10% plus a share of the proceeds to those who were successful in all ten actions. Those who were unsuccessful had an opportunity to bid for a payment capped at 35% of their contribution to the fund to help them make progress against the actions they did not meet. 75 out of 132 members delivering maternity services achieved ten out of the ten required actions. In the second year of the scheme we further incentivise the ten maternity safety actions with some additional refinement.
6 Members of the group include: DHSC, NHS Digital, NHS England, NHS Improvement, Royal College of Obstetricians and Gynaecologists, Royal College of Midwives, Mothers and Babies: Reducing Risk through Audits and Confidential Enquiries (MBRRACE), Royal College of Anaesthetists, and the Care Quality Commission.
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Mental health and preventing Key areas explored included: suicide-related claims • the shared clinical characteristics of those Each year we appoint a clinical fellow to ending their lives by suicide that result in a undertake an in-depth study of either high- claim for compensation; value or high-volume claims in a specific area. • how well families, carers and staff are They identify themes, interpret findings and supported following suicide; and publish a national report. Recommendations are agreed collaboratively with other bodies. • the investigation process. As previously referenced, our report in 2017 was Five years of cerebral palsy claims and in Psychiatry/mental health claims represented September 2018 we published Learning from 320 (3%) of clinical claims by number in 2017/18, suicide-related claims: a thematic review of NHS and accounted for just 2% of the total value of Resolution data following a review of inquests new claims reported. However, these cases are in the area of suicide. devastating for all involved: individuals, their families and carers and often the NHS staff that The report, launched on 10 September 2018, are involved in their care. The report launch to coincide with World Suicide Prevention Day, was supported by ten events ranging from examined some of the factors that contribute to local and regional to national events delivered suicide claims and the quality of investigations with our partners to share the key findings and following these tragic incidents. 101 deaths recommendations from the report. occurring between 2010 and 2017 were examined in detail. The NHS trusts involved Raising significant concerns in these cases were supported through NHS As an arm’s length body which encompasses 7 Resolution’s inquest scheme . In addition, specialist services to the NHS, we have a unique 25 claims relating to non-fatal suicide attempts contribution to make to the patient safety were also analysed for comparison. system. With this in mind, we have looked to To reduce the risk of suicide-related incidents strengthen internal arrangements to raise and and to improve the response of trusts, we made consider significant concerns about patient nine recommendations for NHS trusts and safety when information comes to us in our national bodies. The recommendations highlight day-to-day work, across different areas of potential learning for those delivering mental our business, which suggests prompt action health services in England. We worked with is needed to support the healthcare system external bodies to agree the recommendations to prevent or to reduce the risk of further and are grateful for their support and harm. The delivery of this important initiative commitment to action them, such as the Royal will begin to be rolled out at the start of College of Psychiatrists, NHS England, NHS 2019/20 and we recognise will evolve as our Improvement, and Her Majesty’s Prison and experience increases. Probation Service.
7 Since 1 April 2013, NHS Resolution has offered discretionary funding under its CNST, to provide legal representation for member trusts at inquests. If an application for funding is successful, the trust is then supported by one of ten legal ‘panel’ firms.
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Working with our members, beneficiaries and the wider NHS to learn and improve safety
Safety and learning is integral The events focused on mental Faculty of Learning to all our work and across all health, consent and assaults on and resources to learn our services, raising awareness ambulance staff and involved from claims and driving analysis of member over 460 delegates from our claims and promoting learning member organisations. With Our organisation-wide Faculty from these. Our Safety and regard to our Primary Care of Learning brings together Learning team have a regional Appeals service, we delivered a range of education and focus and are responsive to a one-day workshop for those learning products and access wider issues in patient and working at NHS England to events under a single staff safety in a number of involved in applications to the umbrella. The project has ways. Their work includes: pharmaceutical list. Delegates involved developing the individual engagement learned about the regulatory distinct learning resource to visits to trusts where claims tests and our Appeals service’s support the health service to scorecards are discussed experience of handling learn from harm, adding value and learning from claims is matters. We also exhibited to the services we provide to encouraged, supported by at ten external conferences our CNST membership and local and regional events to promote our work and more widely. which share learning across provided expert speakers for The Faculty works in trusts and organisations. a growing number of events. partnership with other arm’s These events bring clinicians These were both within the length bodies, the royal together to share best practice health environment as well as colleges, other stakeholders and to receive feedback from on medico-legal matters. and charities to promote best organisations on our products We have already touched practice and support joint and initiatives. on the use of publications working and collaboration, As part of our external and national events to raise to avoid duplication of effort engagement activities we awareness of the causes within the system. delivered a range of events in of claims and to drive 2018/19. These included three improvements. Our teams national events which shared are also involved in external learning from claims to help initiatives and collaborate with our members improve patient other NHS and patient-focused safety and reduce claims bodies at regional and national against the NHS. levels to promote the patient and family voice to ensure key messages around saying sorry and the importance of learning are heard.
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Scorecards Videos Did you know? leaflets Claims scorecards were Videos are available to We continue to highlight the released to members and members on request which value and volume of certain independent sector provider feature staff that have been claims or groups of claims for members in July 2017. This involved in cases of litigation clinicians via our Did you know? year we have seen an increase and provide opportunities for leaflets. This year, in addition in the use of scorecards as a sharing learning from claims. to raising the profile of these quality improvement tool, We are currently developing a topics and preparing an triangulating data on claims training tool for staff who may imminent leaflet about assault, with incidents and complaints. be required to attend inquests we have published specific We have continued to hold in video format. At patient material around the Benefits sessions with members to safety events, we have used of supported decision making explain how best to interrogate Christine’s story, our video (consent), Neonatal jaundice the data in the scorecards and highlighting the journey of and a refreshed version of our how to support patients and a woman where there were Maternity pressure ulcers Did staff involved in incidents. issues with communication you know? leaflet. We have been pleased to related to the consent process see an increase this year in for a surgical procedure. She the engagement of clinicians was not aware of the potential and would welcome this outcome and when she information playing a greater complained the apology from role in board-level governance. the trust was so inadequate it resulted in her becoming a claimant.
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Practitioner Performance Advice
Advice Secondary care NHS trusts In addition to the core have continued to be the most services we provide to NHS Practitioner Performance frequent users of our services, organisations in England, Advice has, through the link accounting for 82% of all new the reach of our Practitioner adviser model, continued requests for advice, with 18% Performance Advice service to strengthen the case of requests from primary care has continued to include advice service we provide health organisations. We are, healthcare organisations based to healthcare employers in addition, taking steps to in other regions, including on the effective local strengthen our profile in this Wales, Northern Ireland, management and resolution of sector through proactively Jersey, Guernsey and the Isle of performance concerns about increasing our stakeholder Man, where we have provided individual doctors, dentists engagement and educational the full scope of our specialist and pharmacists. Demand reach in primary care, as advice, intervention and for our advice service has well as closer partnership education services. remained extremely high and working with NHS England. was consistent with previous As in previous years, doctors years: over the course of the accounted for the majority of year, we received 925 new new cases (88%), with 55% of requests for advice on a range those cases being in relation to of issues affecting individuals’ clinicians at consultant grade or performance, including on GP principal level. matters of clinical capability, performance, workplace behaviour and conduct. As a snapshot, we are in contact with four fifths of all secondary care trusts in England.
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Case study – advice on the undergo an independent behavioural management and resolution of assessment carried out by Practitioner performance concerns Performance Advice, as an appropriate and supportive developmental mechanism A long-serving consultant, who in the past to effect sustained improvement in had been viewed by his colleagues and workplace behaviour. employing trust as a capable clinical leader, but whose more recent conduct had been a The doctor agreed to proceed with the cause for concern, was the subject of further assessment, and following the process he concerns about his allegedly deteriorating reported that he found it to be rigorous, but behaviour towards his clinical and nursing fair and thorough, and that it had provided colleagues. These concerns were then him with an important opportunity, in a escalated to his trust’s medical director (MD) professional and friendly environment, for action. The MD in turn contacted NHS to speak in detail about his situation. The Resolution’s Practitioner Performance Advice assessment process subsequently enabled service to discuss the trust’s options in its the trust and the practitioner to make future management of the case, viewing informed decisions about changes to his these as being serious and repetitious. day-to-day working arrangements. He We provided advice in accordance with stood down from his clinical leadership the trust’s local disciplinary policies and role, and with the trust’s support he took procedures, and with reference to further on more programmed activities to increase guidance in the framework Maintaining his direct clinical activity and expand High Professional Standards in the Modern his participation in the trust’s medical NHS. Following our advice, the trust education programmes. instigated a formal case investigation into Several months on from the behavioural the further concerns raised regarding the assessment, the trust MD confirmed that he practitioner’s behaviour, which upheld received what he described as “extremely the validity of those regarding the alleged positive” feedback from the practitioner’s misconduct. During the process, the colleagues about his performance, and practitioner accepted responsibility for his about the way he is now engaging with behaviour, but also expressed frustration his colleagues. The practitioner has also with his work environment and with the offered to act as a mentor/adviser to any demands of his clinical leadership role. medical practitioner colleagues who may In order to support the case to a resolution, find themselves in a similar situation to that we recommended that the practitioner which he found himself in.
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Stakeholder engagement This has led to a number of changes to our model which were being introduced in the We have continued to successfully oversee and final quarter of 2018/19 and will continue to be administer the Healthcare Professional Alert progressed as we move into 2019/20. Notice system, which provides a means by which NHS bodies and others can be informed of The outcome of our review is that we are able to healthcare professionals whose performance or offer the following: conduct gives rise to concern. • Clinical performance assessment – to We have also increased our engagement with provide an independent view on the clinical key groups and stakeholders including medical performance of the practitioner, identifying royal colleges and the General Medical Council both satisfactory practice and any areas of to share learning and best practice, with the poor practice. ultimate aim of moving upstream to support • Behavioural assessment (either as a the early identification, fair and effective standalone component or alongside a clinical management, and satisfactory resolution of component) – to provide an independent concerns in the interests of patient safety and view on the behavioural characteristics of public protection. the practitioner, including any areas which Of particular significance has been our require consideration. renewed focus on engagement through Responsible Officer networks, which has Moving to a more flexible model, the afforded a critical platform to maintain our assessment we offer will be determined by and organisational profile and to understand the tailored according to the circumstances of each particular challenges in the wider healthcare case. We will also cease to duplicate procedures system relating to performance management that are now routinely carried out locally. In all cases, our assessment services are intended to and the differing regional needs of our users. provide key information to assist the employer in In conjunction with our Safety and Learning deciding on the next steps in their management service, we have taken the opportunity afforded of the case, with patient safety and public by Responsible Officer Network meetings to protection being our paramount concerns. raise the profile of the scorecards providing organisations with information on their claims Ongoing improvement is at the heart of what history and our work with other organisations we do, and we will evaluate the impact of to promote a just culture. the changes over 2019/20, which will include drawing on the views of our users in order Assessment to ensure that the services we offer continue We embarked on a major programme of to be fit for purpose and meet the evolving development work to build a more responsive needs of healthcare organisations in managing and streamlined range of assessments to ensure and resolving complex concerns about the these continue to be robust and meet the needs performance of individual practitioners. of our users. The review of our assessment Professional support and remediation framework was informed by a detailed evaluation of our methods and processes, as We have continued to successfully meet demand well as feedback from our users on how we for our professional support and remediation can ensure that we provide the most suitable service, aimed at enabling employers and intervention at the right time to support the practitioners to engage in a structured resolution of a case. framework to support the effective return of
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individual clinicians to safe and valued clinical Our highly tailored and specialist approach practice. With demand for this service consistent has successfully supported parties to better with the previous year, this intervention understand the nature of the conflict in which has been of particular value where we have they are engaged, as well as to work with them undertaken an assessment or where the towards achieving a resolution that restores employer has taken action to clarify the precise effective team-working in the interests of nature of concerns to be addressed, or has clinical care. sought our assistance to help a practitioner to We will continue to monitor closely the impact return to work after a period of absence. of our interventions in circumstances where Assisted mediation behaviours have the potential to impact on the safe and effective delivery of clinical services, Following the successful launch of our and to that end are exploring opportunities workplace-based assisted mediation in April to extend the reach of our interventions to 2018, we have seen a steady increase in the include team reviews for clinical teams in number of referrals for this service. secondary care.
Case study – workplace-based upset between other members of the multi- assisted mediation8 disciplinary team. The trust requested an assisted mediation and both parties agreed Two consultants in general medicine had to this. Allowing a safe space to have a been working together for a number of candid discussion of the issues enabled years, one of whom had been a trainee of both practitioners to clarify previous her colleague and she had found him to be misunderstandings about each other’s supportive and helpful to the progression intentions and to demonstrate that they of her career. Difficulties began when the were both keen to improve current working former trainee progressed to a consultant relations and to work collegiately. and subsequently the clinical lead for the department, a role the other consultant The outcome of the mediation was that had occupied for a good number of years. both parties agreed to draw a line under This led to a deterioration in relationship previous difficulties and to draw from between the two practitioners, particularly the aspects of their relationship which where the new clinical lead had attempted had originally worked well, using this to introduce changes to working practices as a platform to move forward more within the department, leaving her feeling constructively and to ensure they presented undermined, bullied and harassed. a united front to the team. They agreed to achieve this by reflecting on communication The situation created tensions in the wider styles and arranging regular meetings as an team and this was expressed in acrimonious effective means of managing and resolving departmental meetings, complaints and previous tensions.
8 Based on composite cases to preserve confidentiality.
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Education Healthcare professional alert notices
The demand for our education services has NHS Resolution’s Practitioner Performance remained extremely high: across the UK, we Advice service issues Healthcare Professional delivered 55 skills-based workshops to over 1,100 Alert Notices (HPANs). The HPAN system is a frontline clinicians and healthcare managers on process used to inform NHS bodies and others a range of key areas such as case investigation of healthcare professionals whose performance and management, as well as resolving or conduct gives rise to concern. HPANs are performance concerns. At the core of what usually used while the relevant professional we do is sharing our expertise and experience regulator is considering the concerns and with healthcare professionals and managers in provides an additional safeguard during the order to increase their capacity and capability to pre-employment checking process. HPANs are understand, manage and resolve performance issued where it is considered that: concerns locally and as early as possible. • patients or staff may be at risk of harm from We saw a 17% increase in education activity inadequate or unsafe clinical practice or in 2018/19 compared with the previous year from inappropriate behaviour; and all participants providing feedback rated the impact as four out of five or higher. We • there is a risk that an individual may pose also successfully updated our educational a threat to patients or staff because their materials to reflect changes within the NHS and conduct compromises the effective functions professional regulation, as well as current best of a team or local primary care service. practice and key developments in case law. They can also be used to notify NHS bodies In response to the need clearly expressed by and others of a bogus healthcare practitioner. those who access our educational services, we The number of active HPANs at the end of have also commenced a pilot programme on March 2019 was 12, this is around half the action learning sets to further support and number recorded in the previous four years embed learning and the sharing of best practice when the number of HPANs were 26, 25, at a local level – we will continue this work 27 and 25 for 2014/15, 2015/16, 2016/17 and into 2019/20 and evaluate the impact before 2017/18, respectively. considering potential further roll out.
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Primary Care Appeals
In April 2005, the Secretary of State for Health and Social Care delegated appellate and other functions to NHS Resolution and since then our Primary Care Appeals service (formerly the Family Health Services Appeal Unit) has been responsible for discharging these functions. Primary Care Appeals receives and determines appeals where NHS England and primary care contractors, or those wishing to provide primary care services, cannot reach agreement at local level.
Pharmaceutical appeals 98% were issued within a challenges we faced during target of 15 weeks and within the year with regard to the The number of pharmacy an average of 12 weeks. For handling and determination appeals we received in those which required an oral of some appeals. accordance with the NHS hearing, 50% were issued (Pharmaceutical and Local During the year, we were within a target of 25 weeks Pharmaceutical Services) required to establish an but within an average of 24 Regulations 2013 (the Pharmacy approach to dealing with weeks. The reason for the Regulations) and associated reduction in targets hit was appeals where a new Directions was about the same due to a number of factors Pharmaceutical Needs as those we received in the outside our control including Assessment (PNA) came into previous year. We received the difficulties for NHS England in force prior to consideration of usual mix of case types, our finding accommodation, and the application. The approach largest number being those parties being unavailable for we took was to inform parties relating to applications from hearing dates. that Regulation 22 requires pharmacists to either join the decision maker to apply the Pharmaceutical List, or Across all application types the relevant PNA and the to change the terms of those (including “hours” appeals), Regulations envisage there listings. Overall, we received of those pharmacy appeals being a revised PNA from 1 171 appeals in accordance with determined under the April. For Regulation 13, 15 the Pharmacy Regulations Pharmacy Regulations, 67% of and 17 applications, the PNA as opposed to 170 in the last NHS England’s decisions were is central to the application financial year. quashed and re-determined, and applying a revised PNA which resulted in 40% of Of those pharmacy market could significantly affect the applications being granted. entry and change of listing outcome of the appeal. As a 21% of NHS England decisions appeals that resulted in a result, the fairest approach were confirmed which resulted substantive determination (i.e. might be to remit the in no applications being not withdrawn or summarily application(s) back to NHS granted. 12% of applications dismissed) and which did England for re-determination were remitted back. not require an oral hearing which will include a or any additional input (e.g. While it is not appropriate requirement to consider additional comments needed to comment on individual Regulation 22 (if the only way to be sought from parties cases, it is important for wider to determine justly is to use over and above usual process), learning to reflect on the an earlier PNA).
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Parties were invited to make The Committee concluded in the area of the relevant submissions on this point that any finding can only be Health and Wellbeing Board following which the Pharmacy achieved after a consideration (HWB); and Appeals Committee made of all the consequences of (b) the improvements or better its decision. granting the application, both access that would be secured positive and negative, provided In another matter, we were were or was not included in that these consequences were required to consider appeals the relevant pharmaceutical all linked to the broad concept (from two separate applicants) needs assessment in of arrangements in place for regarding NHS England’s the provision of pharmaceutical accordance with paragraph 4 decision to refuse their services. The Committee’s view of Schedule 1. Paragraph 4 of applications to open an NHS was that NHS England needed Schedule 1 requires the PNA community pharmacy because to weigh up any detriment to include: “a statement of it had determined that the against any benefits before the pharmaceutical services granting of any application it could reach a reasonable that the HWB had identified would cause significant decision. The decision was (if it has) as services that are detriment to the arrangements therefore quashed and the not provided in the area of it has in place for the provision applications were remitted the HWB but which the HWB of pharmaceutical services back to NHS England. is satisfied in that area; having found ( a) would if they were detriment NHS England did During the year, in a number provided…secure not consider the matter of of cases, parties (objecting to improvements or better reasonable choice, protected the application) had sought access, to pharmaceutical characteristics and innovation to argue that the benefits the services… under Regulation 18(2)(b) i.e. application would purportedly whether there would be any confer on patients had been ( b) would if in specified benefits that would flow from foreseen by the authors of future circumstances they the granting of the application. the PNA and, as such, the were provided…secure application(s) should fail. future improvements The Pharmacy Appeals or better access to Committee considered that The Regulations state that if: pharmaceutical services…” reference to “arrangements (a) NHS England receives a in place for provision of routine application and is In these cases, the Pharmacy pharmaceutical services” required to determine whether Appeals Committee was not was very broad in scope. It is it is satisfied that granting the satisfied that the PNA had not limited to detriment to application, or granting it in made such statements, and a particular person, class of respect of only some of the as such the applications could person, patient, patient group services specified in it, would proceed to be considered or provider of pharmaceutical secure improvements, or better under later provisions. services whether this is access, to pharmaceutical a dispensing practice or services, or pharmaceutical community pharmacy. services of a specified type,
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An example of considering multiple the application of Rushport Advisory LLP) applications to open an NHS [2016] and the comments made on granting community pharmacy multiple applications to the same site. The Committee determined that approving Two applications were received for a more than one application could lead to pharmacy at the site of the new medical over-provision of NHS pharmaceutical centre near to Braintree College. Both services at the expense of the public purse applicants argued that there was not a and therefore only one pharmacy was reasonable choice for patients to obtain necessary to secure improvements or pharmaceutical services, but they did not better access. suggest that both applications should be granted. Having considered the accessibility of pharmaceutical services, the changing In looking at both applications, the population and the reliance on a limited Pharmacy Appeals Committee’s (the public transport system, the Committee Committee) approach was to consider each confirmed that there wasn’t reasonable application individually, then compare the choice in obtaining pharmaceutical services two if, in principle, it was decided that an in the area and that granting an application application be granted. would confer significant benefits for Regulation 18(2) was used as a basis for patients. While neither applicant was considering the two applications, assessing further forward with purchasing premises the relative merits of each application and both applicants offered similarly against the other. The Committee noted enhanced services, one applicant (reference that neither party suggested that two 18826) proposed marginally longer opening pharmacies were required and commented hours and had an existing relationship with that it may be irrational to grant both the surgery which had relocated to the new applications. Consideration was given to medical centre, therefore their application the judgment of Mr Justice Kerr, R (on was preferred.
New directions Panel Members disputes in other jurisdictions; their biographies can be In August 2018, NHS Resolution During late summer and early found on our website at received new directions to autumn, we ran an exercise to https://resolution.nhs.uk/ determine appeals from recruit lay members (committee services/primary-care-appeals/ pharmacists who had chairs and wing members) to pharmacy-appeal-committee/ been given notice of NHS our list of Panel Members. We England’s intention to recover reappointed six of our previous We would like to take this overpayments made under the members and appointed opportunity to acknowledge Quality Payments Scheme. We ten new members. We held the contributions of our are pleased that DHSC have an induction event for our outgoing Panel Members, delegated this work to us and new members to explain our some of whom have service have continued confidence interpretation and application dating back to the early 1990s. in our experience and ability of the Pharmacy Regulations. In November 2018, we held to ensure that appeals are Our Panel Members have our annual Panel Member fairly and effectively handled experience in a variety of event which was invaluable and determined. areas and in adjudicating in for providing a forum for
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discussion and case review. We Dispute resolution Performers lists notifications take this opportunity to thank and pre-contract checks all our Panel Members for all Disputes relating to GPs and their hard work over the year. their contracts were again the The National Health Service main source of applications (Performers Lists) (England) Pharmacy Appeals for dispute resolution (45 Regulations 2013 currently User Group determined during this apply to the medical, dental financial year compared and ophthalmic professions, The Pharmacy Appeals User with 20 last year). Of the 45 with similar provision for Group met twice during the determinations, 13 related to pharmacists in separate year. The aim of this group reimbursement of premises regulations. NHS England is is to consult service users costs to GPs of which four required to provide notification and their representatives on required rental valuation. to NHS Resolution of any current and proposed changes Other medical, dental and adverse decisions relating to to practice and procedure. ophthalmic disputes raised those on the lists and those Feedback from external group the usual mix of issues such applying to enter them and members remains very positive. as remuneration, clawback of NHS Resolution keeps a record During the year, among monies, payment of quality of such notifications. Similar many things, we continued outcomes framework monies, provisions apply for the Health to facilitate discussions with and termination of contract. Boards in Northern Ireland, Primary Care Support England Wales and Scotland. (which processes market entry Judicial reviews applications for NHS England); During the year, we received Between 1 April 2018 and discussed the outcomes of the two challenges to our 31 March 2019, Primary Care 2018 customer survey and our decisions. The first was made Appeals received notification proposed customer survey to a decision made under the of 79 suspensions compared to recommendations action Pharmacy Regulations because, 58 in 2017/18. The breakdown plan; discussed oral hearing at the time we made our by profession is shown in arrangements and procedure; decision, we were not made Figure 16. There were 73 and provided an update (as aware that a new PNA had suspensions still in force as at previously noted) on our Panel been published; we consented 31 March 2019. There were also Member recruitment. to the decision being set aside 2,709 other decisions under the aforementioned regulations. The Group’s Terms of Reference and re-determined. The second In addition, we concluded and notes of minutes are challenge was with regard a significant piece of work available at https://resolution. to a number of decisions we with NHS England reconciling nhs.uk/services/primary-care- made under special delegation notifiable decisions taken appeals/pharmacy-appeals- from the Secretary of State for Health and Social Care under the aforementioned user-group/ regarding Alternative Primary Regulations. This piece of Medical Services Contracts. The work covered data for 2013/14 judicial review is restricted to onwards and has helped ensure whether or not the contractor that the information we hold is entitled to be awarded is accurate. interest on the monies he is owed. We await the outcome of this application.
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Figure 16: The number of suspensions notified to the Performers lists in 2018/19, by profession
5% Medical 29% Dental Ophthalmic
79 Suspensions Pharmaceutical
66%
Figure 17: 2018/19 Performers list regulations: checks by profession
2% 11% 20% Dental 6% Medical Ophthalmic Pharmaceutical 27,982 Checks Lay Director
62%
76 Performance report
Before determining new During the year, Primary applications to enter the Care Appeals received 27,982 performers lists, NHS England requests for information is required to check with compared to 26,684 in 2017/18 NHS Resolution for any facts using our secure, online relating to investigations or checking system, and which proceedings involving the provided immediate clearance proposed applicants. for 98% of checks. The remaining 2% were referred to us for further analysis before disclosure. The breakdown of checks by profession is shown in Figure 17.
Figure 18: 2018/19 Performers list regulations: notifications (other than suspensions) by profession
1% 5%
Dental Medical 2,709 46% Notifications Ophthalmic 49% Pharmaceutical
77 NHS Resolution Annual report and accounts 2018/19
A fit-for-purpose organisation
Action on the 2017/18 customer survey As a result of feedback about our Primary Care Appeals services we have: We received a response to our 2017/18 customer survey from 385 separate organisations. The • updated our online guidance for parties responses contained rich comment and clear involved in pharmacy appeals; feedback on how our customers viewed doing • provided new guidance on pharmacy business with us, particularly on where we could better meet their needs and wants. opening hours cases; Customers supported NHS Resolution’s strategic • delivered training to NHS England on the direction, particularly our commitment application of the Pharmacy Regulations; to shared learning, making better use of • provided more clarity as to why in some intelligence and early interventions to reduce cases we have not confirmed NHS England’s legal costs. Our customers perceived NHS decision; and Resolution as supportive, helpful, professional and approachable but wanted more proactive • amended the structure of our dispute engagement, particularly around learning from determinations. claims. Overall satisfaction with NHS Resolution was 66%, compared to 55% in the previous Also following the launch of NHS Resolution’s year, representing a significant increase year-on- new website, we made over 500 past decisions year. Most were satisfied with all service areas available and created a new search engine with low levels of expressed dissatisfaction. for decisions. Importantly, 21% said they’d made changes Our systems to practices or procedures as a result of NHS Resolution services or products. In May 2018, we commenced a Core Systems Review project to understand how well our Some of the changes we made as a result of the current legacy systems meet our current and survey responses were: future needs. The scope of the project includes • launch of a new NHS Resolution website with case management, document management and improved functionality and content; transfer, customer relationship management, event management, business intelligence, • streamlined our Practitioner Performance corporate governance workflows and text Advice clinical performance assessments; analytics. As part of the discovery phase, we • better explained to our members how our held 78 multi-disciplinary workshops with 109 contributions are calculated; internal staff and 72 external users including key contractors. These workshops identified • produced an interactive guide to using the opportunities for improvements in processes, scorecard on the website; data collection and stakeholder management. From these workshops and subsequent process • rolled out team reviews to help improve mapping, we have pulled together the user relationships within clinical teams; requirements for any future system as well • delivered Finding the words training for as performing a gap analysis on what we maternity teams. currently have.
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Our Practitioner Performance Advice service ISO 27001 successfully implemented a major upgrade to its case management system, supporting a number We successfully passed our second of important efficiencies in how we process ISO 27001 surveillance audit and work is and track our casework. ongoing to further embed our information security management system into all areas Data security of our business. During 2018/19, we implemented a number Cyber security of changes to further safeguard our information and enhance our controls. We: We achieved Cyber Essential Plus certification and revised a key endpoint security tool. We • reviewed and revised the operational provide ongoing communications and advice standards of our IT function to help us to our staff to ensure that a high level of react more quickly to security alerts from cyber security awareness is maintained. With NHS Digital and other security resources a continued programme of penetration and and subscribed to the Public DNS service. vulnerability testing, the Board and Audit and Additionally, we revised our standards around Risk Committee are fully appraised of emerging the application of software security patches threats and our ability to deal with them. and fixes; and Sustainability • reviewed our endpoint security and removed support for even authorised USB and other We are committed to improving environmental portable media. sustainability across all our activities and actively contribute to the government’s commitment to General Data Protection Regulation reduce greenhouse gas emissions, waste disposal General Data Protection Regulation is now and water usage by 2021. part of our ‘business as usual’ and is considered Our approach during ongoing development of information systems and projects, as well as in our NHS Resolution’s main activities are run from development work going forward. With the two offices; Buckingham Palace Road, London increased obligations on data controllers and and up until 15 April 2019 Trevelyan Square, processors, our Primary Care Appeals service Leeds, when we moved to Arena Point, Leeds. was required to adopt new ways of processing Both are leased as serviced offices with the personal data, in particular where parties landlord taking primary responsibility for provide evidence containing the personal data providing gas, electricity, water and waste of third parties (such as, but not limited to, services. The service charges are built into the petitions and questionnaires). We take this lease terms. This means our direct influence opportunity to remind such parties of their on energy, water and waste management is own obligation, when collecting such evidence, limited and therefore much of our work around to inform third parties that their data might sustainability is through our commitment to the be submitted or is being submitted to us, and wider government initiatives around smarter to direct them to our online privacy notice working and the hub strategy. at: https://resolution.nhs.uk/privacy-cookies/ primary-care-appeals/
79 NHS Resolution Annual report and accounts 2018/19
Despite increases in our business remit in Biodiversity 2018/19, we undertook a number of projects to The premises we currently occupy do not lend further reduce the need for office space and cut themselves to us directly impacting biodiversity. running costs for energy, IT and the use of scarce However, we run a variety of training resources. We actively promote smarter working opportunities for all staff on work and personal and are redesigning our IT systems to better development topics. In 2018/19, we expanded support this. We therefore closed our small the scope of this training to include sessions on Trevelyan Square, Leeds office and relocated educating staff to improve sustainability and our Primary Care Appeals service to a larger but biodiversity at home and seek suggestions for temporary office nearby, (Arena Point, Leeds) how we can do more to help the environment. to accommodate the increase in staff numbers. We will continue to recruit directly to Leeds and Climate change and rural proofing the office is forecasted to run at a desk ratio We have considered the likely impact of climate of almost five desks to ten staff by the end change on our activities, including extreme of 2019/20. weather, flooding and other extreme events. We Our ongoing commitment to the wider have a robust disaster recovery plan in place to government hub strategy means that we ensure we continue to be able to deliver a good will maintain a short-term lease for these service in the event of an emergency. premises to enable us to further reduce costs Greenhouse gas (GHG) emissions by relocating to a hub in Leeds once space is available. The GHG protocol provides an international accounting framework for GHG emissions and We operate hot desking for staff at the divides these into three scopes. The scope Buckingham Palace Road site. We currently types are: operate at approximately ten staff members per seven desks. This ratio will move to ten staff • Scope 1 emissions cover sources controlled per six desks as our London headcount slightly by us and include gas consumption, fuel oil increases in 2019/20. usage and fugitive emissions.
We have an ongoing initiative to work • Scope 2 emissions cover electricity. ‘paperlite’. This reduces printing and the need for physical records, printer toner • Scope 3 covers all other emissions including and their associated storage; we recycle delivery and distribution, purchase of unwanted IT equipment within the wider NHS materials and consumables, use of owned where possible. and leased assets, contracted out services and waste disposal. All categories are an optional In 2018/19, our IT team migrated our IT reporting category except business travel. systems to a data centre provider under a Crown Commercial Service framework thereby substantially reducing localised energy and IT infrastructure costs and our long-term IT plans include further cloud adoption to produce further efficiencies.
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Table 4: GHG emissions
GHG emissions:
tonnes CO2 2018/19 2017/18 2016/17 Gross emissions for As occupiers of serviced offices, scopes 1 and 2 we do not have any energy usage under scopes 1 and 2 Gross emissions for Electricity 52 107 151 scope 3 Gas 18 18 16
Business travel 44 24 46 ww GHG emissions have been calculated using conversion tables published by DEFRA.
Table 5: Energy consumption
Scope 3 – Building energy consumption 2018/19 2017/18 2016/17 Quantity Cost Quantity Cost Quantity Cost (MWh) (£) (MWh) (£) (MWh) (£)
Electricity 184 22,411 304 38,113 366 45,804
Natural gas 99 4,460 98 4,351 85 3,810 ww Energy consumption and cost is calculated as 10% of the whole building consumption at Buckingham Palace Road. This is based on the floor area occupied by NHS Resolution.
81 NHS Resolution Annual report and accounts 2018/19
Table 6: Travel
Business travel 2018/19 2017/18 2016/17 Cost Cost Cost Miles (£) Miles (£) Miles (£)
Scope 3 – mileage 42,966 23,624 46,203 25,874 24,537 13,740
Scope 3 – air 43,683 11,356 42,873 12,510 71,624 23,975
Scope 3 – rail 290,131 115,979 333,172 112,160 247,611 92,321
Table 7: Waste
Waste 2018/19 2017/18 2016/17 Quantity Cost Quantity Cost Quantity Cost (tonnes) (£) (tonnes) (£) (tonnes) (£)
14.6 1,805 12.7 1,563 14.5 1,790
Waste is calculated as 10% of the whole building consumption and cost at Buckingham Palace Road. This is based on the floor area occupied by NHS Resolution.
Table 8: Use of finite resources
Waste 2018/19 2017/18 2016/17 Cost Cost Cost Quantity (£) Quantity (£) Quantity (£)
Water consumption 1,343 m3 3,233 1,400 m3 3,370 1,297 m3 3,123 Administrative paper 2,500 reams 5,570 2,655 reams 6,662 2,338 reams 5,867 A4 equivalent A4 equivalent A4 equivalent
Paper use is paper purchased for use in printers only. Paper usage for outsourced printing of collateral has not been included.
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Finance report
Headlines:
• Provision for the liabilities arising from claims: The key dimension of NHS Resolution’s accounts increase by £6.4 billion to £83.4 billion. is the provision for the liabilities arising from the indemnity schemes that we operate on behalf • The cost of settling claims increased by of the NHS and DHSC. £137 million to £2.4 billion. The provision for liabilities has increased from • Administration costs increased by £2.8 million £77 billion at 31 March 2018 by £6.4 billion, to (12%) to £25.8 million. £83.4 billion at the end of this financial year. • Budget position: Department Expenditure This is the value of liabilities arising from Limit (DEL) £123 million under budget. incidents that occurred before 31 March 2019 at current prices, both in relation to claims • Annually Managed Expenditure (AME) received, and our estimate of claims that we £4.2 billion under budget. are likely to receive in the future from those incidents which have occurred but have yet The overall financial picture this year shows to be reported as claims (incurred but not that trends continue to be better than forecast reported, IBNR). Figure 19 sets out a breakdown in relation to the assumptions affecting the of the changes in the provision. provision. However, we continue to experience increases in liabilities and the cost of settling claims. Two key aspects to the financial position are the year budgetary performance and the provision for costs arising from incidents which have already happened.
83 NHS Resolution Annual report and accounts 2018/19
Figure 19: Change in NHS Resolution provisions for all schemes
90 2.2 3.7 -4.1 2.9 -2.4 0.3 83.4 3.8 80 77
70
60
50
£bn 40
30
20
10
0 Total provisions Total expected Newly Movement Movement Movement in Payments Increase in Total provisions as at impact on IBNR reported in IBNR due in IBNR due existing claims made during provisions due as at 31 March 2018 of additional claims to updated to Increase due to changes the year to change in 31 March 2019 incident year less assumptions in average in data and HM Treasury expected claims PPO damages assumptions prescribed reported in the assumption discount rates year, calculated using 31 March 2018 assumptions
The total value of claims incurred as a result of Liabilities from another year’s worth of activity incidents that occurred in the 2018/19 financial (shown before key assumptions have been year alone is estimated at around £9 billion – updated, the effects of which are shown this represents the cost of harm incurred during separately in Figure 19) are growing by more the reporting year. It includes the estimated cost than the amount we are settling them (£2.4 of claims that we haven’t received as yet, as well billion), even though our open book of claims as those that we have, the effect of inflation remains fairly stable. This is primarily because we in relation to when we expect to settle those generally settle high value cases, where ongoing claims, and the effect of discounting to value care is a feature, with a periodical payment expected future payments at today’s prices. order (PPO), which gives a regular payment to the claimant over the rest of their life. Figure 19 above shows how the provision for liabilities has changed over the last year for all incident years, not just 2018/19, and this is discussed in more detail below.
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Four years ago, (2014/15) the These favourable trends have • A decrease of £800 million number of PPOs in payment been partially offset by an in the liability where claims was 1,634 with £138 million increase in the estimated closed during the year, paid out that year, and a whole average cost of PPO damages either at a lower value than life value of £4.6 billion. At the which allows for a different expected, or where the end of this reporting year, the mix of claims between claim was repudiated. equivalent figures were 2,192, maternity (which are higher £248 million and £18.8 billion in value) and non-maternity The HM Treasury discount respectively. Many of those specialties, compared to the rates have changed by very types of cases involve long average for the claims book small amounts in 2018/19, life-expectancy, so the liability as a whole. and therefore had minimal will continue to grow for some impact (£0.3 billion increase) The liability has increased time, as each year we add on the provision. A more by £2.2 billion in respect another year’s worth of activity detailed explanation of the HM of changes in assumptions to the existing claims book. Treasury discount rate changes affecting known claims. This is is provided in Note 7.1 to the Figure 19 shows a reduction of due to changes to the value of financial statements. £4.1 billion, due to changes in liabilities over the year: assumptions affecting the IBNR The changes discussed above • A net movement of £2.3 provision. The main drivers of highlight the uncertainty billion relating to claims the reduction in the IBNR, are; affecting the valuation of the that were open at 31 March provision. The sensitivity of the • A reduction in the projected 2018 and remain open environment to our actions in IBNR claims numbers at 31 March 2019. This managing the cost of claims, for both PPO and non- is due to reserve values, the degree of activity in the PPO claims. estimated settlement year legal and health policy arena and probability of success in response to the growth in • A fall in average costs of individual claims being costs, and NHS Resolution’s and inflation relative to revised as more information view of the effect of these on expectations for claimant becomes available. key assumptions may change costs and lower than over time. Resulting small expected inflation increases • An increase of £0.7 billion changes in assumptions can for PPO damages. from the updating of have significant impacts on standard reserves for the provision valuation from cerebral palsy/brain one year to the next. This is damage cases. discussed in more detail at Note 7.2 on page 155 in the Notes to the accounts section of this report.
85 NHS Resolution Annual report and accounts 2018/19
In-year financial performance During the year, NHS Resolution estimated that £369 million of additional funding was needed The settlement and administration of for all schemes to cover the costs arising from indemnity schemes is funded by a combination the PIDR change. This funding was provided of contributions from members (NHS and through the Parliamentary Supply process from independent sector providers of health care, the reserves that the government had set aside clinical commissioning groups and other DHSC in the 2017 Budget. Actual expenditure incurred arm’s length bodies), and financing from DHSC. was £388 million. The PIDR forecast was based DHSC sets a budget in respect of this financing on an assumed percentage uplift on damages on a Departmental Expenditure Limit (DEL) expenditure. Actual PIDR expenditure was more basis. This is a HM Treasury budgetary control9, than forecast due to the higher than expected which covers income and spending on general level of damages expenditure, particularly for administration costs, e.g. salaries and goods and high-value claims. services, but also the settlement (utilisation) of DHSC has confirmed that funding for the effect the provisions in the financial year (see Note 7 to of the change in PIDR will continue be provided the accounts). This is different to the increase in centrally in 2019/20 and therefore member the provision that is recorded in the Statement contributions have not increased to cover these of Comprehensive Net Expenditure, which is costs. The Civil Liability Act 2018 introduced classified as Annually Managed Expenditure in changes to the way the PIDR is to be set in the HM Treasury budgetary controls framework. future. A review will take place and the outcome The public sector funding regime does not will be known during 2019/20. require NHS Resolution to have sufficient assets to cover the long-term liabilities as these will Expenditure on clinical schemes against income be financed through government borrowing and budget set by DHSC is shown in Table 9. and taxation at the time they become due for settlement. Therefore, NHS Resolution only collects the cash needed to settle claims in the financial year in question. The Personal Injury Discount Rate (PIDR), which is used by the courts to place a current value on claims settlements where there is an element of future loss, has not changed from the minus 0.75% set in March 2017, and therefore has not been a factor in the change in the liability from last year. However, it has increased the amount of funds needed in order to settle claims in year.
9 HM Treasury Consolidated Budgeting Guidance can be found at https://www.gov.uk/government/publications/consolidated-budgeting-guidance-2017-to-2018.
86 Performance report
Table 9: Clinical schemes financial performance
Percentage Income/ Under/ under/ budget Expenditure (over)spend (over)spend £ million £ million £ million %
Member funded – CNST 1,994 1,876 118 6%
PIDR funding – CNST 345 369 (24) (7%)
DHSC funded schemes 130 112 18 14%
PIDR funding – DHSC schemes 21 16 5 24%
Total clinical schemes 2,490 2,373 117 5%
Contributions from members In recent years, the rate of When contributions were set for our largest scheme, CNST, growth in CNST expenditure for 2015/16, annual growth increased by 1.8% from has been lower than forecast in costs was expected to be 2017/18, while expenditure as a result of more favourable around 17%. However, as Table increased by 10% excluding the trends than expected in key 10 shows, costs have grown at impact of the change in the factors such as claims volumes a slower rate, with claimant PIDR rate in March 2017. and inflation. legal costs actually reducing year on year, since a high point in 2016/17.
Table 10: CNST payments by type
Damages Claimant Defence (excluding legal legal Admin PIDR costs) PPOs costs costs expenses Total Increase Increase £m £m £m £m £m £m £m %
2015/16 757 105 400 116 9 1,387
2016/17 850 124 480 122 10 1,586 199 14%
2017/18 967 152 454 126 12 1,711 125 8%
2018/19 1,108 185 433 137 13 1,876 165 10% Increase between 2015/16 and 2018/19 351 80 33 21 4 489 35% Average increase 88 20 8 5 1 122 9% per annum
87 NHS Resolution Annual report and accounts 2018/19
As these favourable trends additional 100 to 200 claims Defence costs have increased have become more established, per year on this basis. As these by £11 million (9%) due to we have been able to reduce cases generally have a long a combination of factors. the percentage increase in life expectancy, PPO payments Complexity arising from contributions to members, and will continue to rise annually changes in the legal in 2019/20, the total collect for some time to come, as will environment, such as the PIDR from CNST members will be contributions from scheme change, the general increase reduced by 1.9% to £1,947 members to fund them. in interest from indemnity million. Nevertheless, Table 10 scheme members in individual shows that costs have steadily Claimant legal costs have cases, investment in the grown, and we expect that reduced since the high point investigation and negotiation contributions will rise in future in 2016/17. This is as a result of of cases ‘pre-action’ in order if recent trends continue. the tailing off of claims funded to avoid expensive litigation using pre-LASPO conditional Damages costs have grown, and the increase in rates fee agreements (CFAs) which largely due to the effect payable under the last contract are more expensive on average of inflation in damages framework tender in line with than post-LASPO CFAs, which settlements. As mentioned inflation have contributed to above in this report, PPO have increased over the same the increase in cost. payments have increased, period and fewer cases going as we settle around an into formal litigation.
Table 11: Non-clinical schemes financial performance
Percentage Income/ Under/ under/ budget Expenditure (over)spend (over)spend £ million £ million £ million %
Member funded – LTPS 48 49 (1) (2%)
PIDR funding – LTPS 2 3 (1) (50%)
Member funded schemes – PES 12 8 4 33%
DHSC funded scheme 9 5 4 44%
PIDR funding – DHSC scheme 1 1 0 0%
Total non-clinical schemes 72 66 6 8%
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Non-clinical claims expenditure has been stabilising over recent years, which is considered to be a result of the introduction of limits on recoverable claimant legal costs and more efficient claims processing.
Table 12: LTPS payments by type
Damages Claimant Defence (excluding legal legal Admin PIDR costs) PPOs costs costs expenses Total Increase Increase £m £m £m £m £m £m £m %
2015/16 18 0 20 7 3 47
2016/17 19 0 18 6 3 47 0 -1%
2017/18 19 0 18 6 4 48 1 1%
2018/19 23 0 16 6 4 49 2 4% Increase between 6 0 (4) 1 1 2 4% 2015/16 and 2018/19 Average increase 1 0 (1) 0 0 0 1% per annum
Table 12 shows how claimant The PES scheme has The exception to this trend is legal costs, a significant experienced an underspend in PPO costs which have increased proportion of LTPS costs have 2018/19, however expenditure as the larger value cases tend reduced, while damages have has increased by 23% this year. to be settled on this basis. increased gradually, but with The nature of PES claims means Notwithstanding inflationary a 21% increase in 2018/19, that volumes and timings of pressures, we would expect while the number of claims cashflow can be difficult to the costs arising under these settled where damages were predict. In recent years, claims schemes to reduce over time agreed reduced from 1,885 in volumes have been relatively as existing claims are settled, 2017/18 to 1,789 in 2018/19. The stable. However, we have and the likelihood of new increase in damages costs in observed an increase in the claims diminishes. 2018/19 is primarily due to the average value of claims, driving Government also has a settlement of a small number the increase in scheme costs. budget for Annually Managed of high-value claims during DHSC-funded schemes Expenditure (AME). This is the year, which did not occur cover claims arising from to cover expenditure on during the previous year. organisations that are no volatile or difficult-to-manage longer in existence. budget items, and is set on Claims numbers reported, an annual basis. damages and legal costs have all reduced.
89 NHS Resolution Annual report and accounts 2018/19
NHS Resolution’s AME expenditure is in respect Prudent estimates in relation to key potential of the net movement in provisions for all of variables are therefore used to inform the indemnity schemes, i.e. the change in the the budget, in discussion with DHSC and provision less any provisions settled in the HM Treasury. year (see Note 7 in the accounts). Performance against budget is forecast in line with the As noted above, some favourable movements in Parliamentary timetable, but this is before key assumptions have had a positive impact on the work on setting the key assumptions from AME expenditure this year, contributing to observed experience has commenced. a £4.2 billion underspend.
Table 13: Annually Managed Expenditure
£m £m
Budget 10,600 Expenditure: Cost of new claims provisions 8,540 Change in discount rate 269 Settlement of provisions (2,422)
Total expenditure 6,387
Under/(overspend) 4,213
Administration costs This primarily relates to staffing costs, as full- time equivalent staff numbers have increased This year we have invested in developing our by 28 (11%) to 293. However, both expenditure systems to enhance security and efficiency and and staffing levels are below those outlined in have had some growth in the claims our business plan mainly due to the ongoing management team to reduce caseloads and challenges of filling vacancies during the year, drive better outcomes on claims. and putting on hold the Claims Management Administration costs for all of our activities service restructure due to the emergence of (including the costs of administering member- policy developments, particularly in relation to funded schemes which have been allocated to the preparations to implement a state-backed the scheme DEL budgets above) have increased General Practice Indemnity scheme. by £2.8 million (12%) to £25.8 million.
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In addition, this year we have generated £1.1 The average administration cost of resolving million (£1.3 million in 2017/18) of income from claims has increased in recent years as a result of commercial activity, primarily in respect of our investment in staffing in order to meet our education activities and services to other widened remit and objectives in tackling the national governments delivered by our broader drivers of claims costs. Practitioner Performance Advice service. These activities made a loss of £62k (6%) during the year and efficiency and contract reviews are being undertaken to address this.
Figure 20: Administration spend as a percentage of the value of total claims settlement
2.50%
2.03% 2.00%
1.79% 1.50% 1.46%
1.36% 1.31% 1.05% 1.00%
Cost per claim (%) 0.92% 0.89% 0.83% 0.81% 0.78% 0.72% 0.50% 0.70%
0.00%
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Financial year
91 NHS Resolution Annual report and accounts 2018/19
As a proportion of the value of total claims The balance has reduced to £182 million by settlement, administration costs have increased, the end of the year despite incurring a further but very marginally by 0.2%, and this is still well underspend, primarily on CNST. We have below the figure for recent years. been discussing with DHSC the options for utilising cash surpluses in the context of limited As noted elsewhere in this report, we have opportunities for budgetary cover to enable continued to invest in our staff and our systems reductions in contributions for members in to deliver the ambitions as set out in our five- future years. In these circumstances, we have year strategy to proactively manage the costs agreed with DHSC to utilise cash balances of claims and help the health system learn to fund PIDR costs in relation to each of the from when things go wrong. The benefits and schemes up to the limit of cash available. DEL savings from investing in our strategy have been budgetary cover has been provided by DHSC described in the report on performance earlier as described above. in this document. I am satisfied that this Performance report is a Capital true and fair reflection of the work undertaken The budget for capital purchases for the year by NHS Resolution throughout 2018/19. was £989k. This was increased in year by a further £762k to open a new office in Leeds. The total spend for the year was £1,461k, an underspend of £290k due to the delay in gaining access to the Leeds office to complete the set-up of the infrastructure. Helen Vernon Chief Executive and Accounting Officer Cash Date: Wednesday 3 July 2019 The cash balance at the start of the year was £388 million. This had arisen because of underspends in recent years on the schemes we operate, primarily on CNST, as described earlier in this report.
92 Performance report
93 Accountability report Accountability report
95 NHS Resolution Annual report and accounts 2018/19
Corporate governance report
Directors’ report
This report primarily provides information about the composition of the Board of NHS Resolution which had authority or responsibility for directing or controlling the major activities of the entity during the year.
Figure 26: Who we are
Non-executive Director Nigel Trout Chair Ian Dilks Non-executive Director Professor Keith Edmonds
Chief Executive Helen Vernon Non-executive Director Mike Pinkerton
Non-executive Director Charlotte Moar
Associate Non-executive Director Dr Mike Durkin OBE
Board members Associate Non-executive shown with photography Director Sir Sam Everington OBE
Head of Director Director of Head of IT Primary of Claims Membership & Facilities Director of Care Technical Director Management Director of & Appeals Stakeholder Finance & Claims of Safety Practitioner Engagement Corporate Director & Learning Performance Planning Advice
Joanne Lisa John Dr Denise Simon Vicky Ian Sean Evans Hughes Mead Chaffer Hammond Voller Adams Walker
NHS Resolution publishes a register of interests of Board members on its website: https://resolution.nhs.uk/leadership/
96 Accountability report
Statement of Accounting Officer’s responsibilities
Under the National Health Service Act 2006, The Accounting Officer of DHSC has designated the Secretary of State for Health and Social Care the Chief Executive as Accounting Officer of has directed NHS Resolution to prepare for each NHS Resolution. The responsibilities of an financial year a statement of accounts in the Accounting Officer, including responsibility form and on the basis set out in the Accounts for the propriety and regularity of the public Direction. The accounts are prepared on an finances for which the Accounting Officer is accruals basis and must give a true and fair view answerable, for keeping proper records and for of the state of affairs of NHS Resolution and safeguarding NHS Resolution’s assets, are set of its net expenditure, statement of financial out in Managing Public Money published by position and cash flows for the financial year. the HM Treasury. In preparing the accounts, the Accounting To the best of my knowledge and belief, I have Officer is required to comply with the properly discharged the responsibilities set requirements of the Government Financial out in my letter of appointment as Accounting Reporting Manual and in particular to: Officer. As far as I am aware, there is no relevant audit information of which our auditors are • observe the Accounts Direction issued by unaware, and I have taken all the steps that I the Secretary of State for Health and Social ought to have taken to make myself aware of Care, including the relevant accounting and any relevant audit information and to establish disclosure requirements, and apply suitable that our auditors are aware of that information. accounting policies on a consistent basis; I confirm that the annual report and accounts as • make judgments and estimates on a a whole is fair, balanced and understandable. reasonable basis;
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the accounts;
• prepare the accounts on a going concern basis; and
• confirm that the annual report and accounts as a whole is fair, balanced and understandable and take personal responsibility for the annual report and accounts and the judgments required for determining that it is fair, balanced and understandable.
97 NHS Resolution Annual report and accounts 2018/19
Governance statement
Scope of responsibility
As Chief Executive and Accounting Officer I have responsibility for the delivery of NHS Resolution, I am responsible for of our strategic aims and objectives within maintaining a sound system of internal control NHS Resolution’s legislative and regulatory that supports compliance with our policies parameters, as directed by DHSC, and the achievement of our objectives while and in conjunction with the Board safeguarding public funds and the organisation’s through development of strategy and assets in accordance with the HM Treasury effective governance arrangements, document Managing Public Money. I am responsible for:
- compliance with and delivery against our framework agreement and business plan as agreed with DHSC; - delivery against key performance indicators as agreed with DHSC; - provision and effective oversight of internal control systems; - oversight of the complaints process and ensuring that the learning from complaints is embedded into how we operate; - risk management processes; and - our operational and financial systems.
As Accounting Officer, I am supported by NHS I delegate day-to-day operational responsibility Resolution’s Senior Management Team (SMT), for our financial systems and internal risk internal audit and Audit and Risk Committee management arrangements to the Director of (ARC) and make recommendations to the Board Finance and Corporate Planning, who also acts on the matters outlined in this statement as they as the Senior Information Risk Owner (SIRO) for relate to effective governance. I am supported NHS Resolution. by the Board and SMT in ensuring we commit to and embed the organisation’s values in everything we do to help us deliver our aims.
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The governance framework and structures
Figure 22: NHS Resolution governance structure and subgroups reporting to the SMT10
Secretary of State for Health and Social Care
Senior DHSC Principal Departmental Sponsor Accounting Officer
Accounting Officer/ NHS Resolution Chair NHS Resolution Board Chief Executive
Partnership Working Remuneration and Reserving and Audit and Risk Senior Management with Staff Terms of Service Pricing Committee Committee Team (SMT) Committee Workforce Strategy Group
Operations Risk Significant Concerns Review Group Group
Change Digital Technology Management Group Steering Group
Information Governance Group
Editorial Advisory Group
Solid line = reporting and accountability Dotted line = monitoring and/or the provision of advice and support
10 For more information see Table 17: Senior Management Team sub-groups
99 NHS Resolution Annual report and accounts 2018/19
NHS Resolution’s Board
The NHS Resolution Board There are also two associate performance are, where is led by a non-executive non-executive and one appropriate, accompanied by chair and in the year its associate executive Board reports from the ARC and/or complement comprised of directors. The Board provides SMT, to give me, the Board, four non-executives and leadership and strategic and, where appropriate, DHSC, four executive members direction for the organisation assurance on progress and the with a balance of skills and and is collectively accountable, action being taken. experience appropriate to its through the chair, to the The Board regularly reviews Secretary of State for Health responsibilities. The Board these reports to ensure it and Social Care for ensuring has the option of appointing remains satisfied regarding a sound system of internal between three and five the quality of information, non-executive directors and control through its governance and also that it is relevant executive directors. structures, and for putting in place arrangements for and sufficient to inform the Board composition securing assurance about the business of the Board. effectiveness of that system. As of 31 March 2019, the During the period from 1 April Board consisted of the non- I report on the organisation’s 2018 to 31 March 2019, the executive chair, four non- performance to the Board and NHS Resolution Board met on executive members and four to DHSC on a regular basis. six occasions and attendance executive members. Variations from anticipated details are as follows:
Table 14: NHS Resolution Board meeting attendance
Name Post Meetings attended
Ian Dilks Chair 6/6 Keith Edmonds Non-executive Director 6/6 Charlotte Moar Non-executive Director 6/6 Mike Pinkerton Non-executive Director 6/6 Nigel Trout Non-executive Director 4/5 first meeting in July 2018 Helen Vernon Chief Executive 6/6 Joanne Evans Director of Finance and Corporate Planning 4/6 Denise Chaffer Director of Safety and Learning 6/6 Vicky Voller Director of Practitioner Performance Advice 5/5 Mike Durkin Associate Non-executive Director 4/6 Sam Everington Associate Non-executive Director 4/5 first meeting in July 2018 John Mead Associate Board Member 6/6
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Table 15: Frequency of some key matters discussed at Board meetings in 2018/19
Number of Operational matters meetings discussed Chief Executive's report 6 Performance review 6 Complaints report 6 Information governance report 1 Claims performance framework 2 Management proposals requiring board input or approval
Primary Care Appeals service – scheme of delegation 1 Appeals Unit panel appointments 1 Patient safety update 1 Liaison with key stakeholders
Membership and Stakeholder Engagement report 4 Customer survey 1 Key developments
Updates on key claims case reports 5 Legal updates 2 Project oversight
Customer survey update 2 Claims mediation service 2 Early Notification scheme 2 Maternity incentive scheme 5 Change Management reports 4 Practitioner Performance Advice reports 1 System and technology review 2 Guidance on significant concerns 1 Other matters requiring Board approval
Internal policy approvals and updates 5 Responsible Officer's report 1 Scheme of delegation 1 Risk report 2 Risk appetite statement 2
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Compliance with the corporate The Board has committed to developing a governance code plan based on the review which will help support continuous improvement in the Board’s We have reviewed our governance performance; the Board will review its progress arrangements in line with the Code of Good against its plan towards the end of 2019/20. Practice required for central government departments (‘The Code’) and have complied Committees of the Board with the requirements where relevant. The Board is supported by three committees Board effectiveness which were established to enable the Board and me as Accounting Officer, to discharge our We commissioned an independent, external responsibilities and to ensure that effective review of Board effectiveness by a specialist financial stewardship and internal controls are in Board and leadership consultancy – in line with place. A review of the terms of reference for the 11 the Government’s Code of Good Practice and, three committees was carried out in 2018/19 to where relevant, the Corporate Governance assure their fitness for purpose. Code12. The review was based on confidential interviews held with all members of the Board Audit and Risk Committee and a number of others who have a role in the The ARC supports me and the Board in our governance of NHS Resolution. The areas the responsibilities on matters related to internal review covered included: Board leadership, and external audit, corporate governance, the Board’s effectiveness as a team and Board anti-fraud policies, internal control and risk ways of working. The review did not include management, and the NHS Resolution’s annual an appraisal of the Chair or the Non-executive report and accounts. The ARC is chaired by a Directors nor of the Board Committees. Non-executive Director, Charlotte Moar, and is The review highlighted areas of particular Board supported in delivery of its function by internal strength including: clarity of organisational and external auditors. purpose; key stakeholder engagement; The ARC is attended regularly by a strategy development, adaptation and delivery representative of DHSC. The Chair of DHSC ARC oversight; Board composition and dynamics. The attended the ARC meeting of 10 June 2018. review also highlighted areas for further Board development including: leading the evolution To address a previous issue of the Committee of our culture to support our role as a ‘system having access to a sufficiently broad and leader’ in reducing claims costs by taking an deep range of skills, ARC has co-opted two holistic approach to drivers of cost such as independent lay members. patient safety; confirming that the Board’s governance structure fully supports its work as a high-performing team to oversee delivery of the five-year strategy across the whole primary and secondary patient pathway.
11 Corporate Governance in Central Government Departments Code of Good Practice 2017 12 Financial Reporting Council: The UK Corporate Governance Code and Guidance on Board Effectiveness 2018
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Table 16: ARC meeting attendance
Name Post Meetings attended
Charlotte Moar Non-executive Director and Chair of ARC 4/4
Keith Edmonds Non-executive Director 4/4
Charles Bellringer Independent Lay Member 3/3 first meeting in October 2018
Julia Wortley Independent Lay Member 3/3 first meeting in October 2018
Some of the key areas the Committee The Committee is attended by our actuarial continued to support and challenge the NHS advisers from the Government Actuary‘s Resolution Senior Management Team on were: Department. At each RPC meeting members and attendees are asked to declare conflicts • Scrutinising risks which are outside the risk of interest, which are then documented in appetite statement and reviewing plans and the approved minutes. For example, the timescales to redress this. Government Actuary has declared a conflict • Receiving updates on incidents and the as the advisor to the Lord Chancellor on overall position in relation to cyber security. setting the PIDR.
• Deep dives into particular areas of risk such as The Committee meets regularly in order to: HR/workforce and cyber security. • set the methodology and assumptions for • Receiving updates on progress towards calculating the value of the provisions for the achieving and sustaining ISO 27001 and other statutory financial accounts; information governance requirements. • develop cash flow estimates to inform Remuneration and Terms of budgetary requirements and set contribution Service Committee levels for indemnity scheme members; and The Remuneration and Terms of Service • ensure that the framework for assurance Committee is a Non-executive Committee for models used for calculating business whose role includes the determination of the critical information is applied in line with the 13 remuneration, benefits and terms of services Macpherson recommendations . of all posts covered by the Pay Framework The results of the work undertaken by RPC for Executive and Senior Managers (ESM). All on calculating the key estimates for the accounts meetings were quorate. in respect of the provision are recommended Reserving and Pricing Committee to ARC and the Board for approval. The actuarial adviser has provided an opinion on the I chair an internal Reserving and Pricing methodology and assumptions used to calculate Committee (RPC) with membership comprised a key estimate in the accounts, the ‘incurred of the Director of Finance and Corporate but not reported’ provision. Planning, Director of Claims, Head of Reserving and Pricing and a Non-executive Director, currently our Chair.
13 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/206946/review_of_ qa_of_govt_analytical_models_final_report_040313.pdf
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I, Colin Wilson, am Deputy Government IBNR provisions to be £47,978 million for Actuary and a Fellow of the Institute and all schemes combined as at 31 March Faculty of Actuaries. In my opinion, the IBNR 2019 using the method and assumptions provisions for NHS Resolution as at 31 March selected by NHS Resolution. This opinion 2019 to be included in NHS Resolution’s statement should be considered in the report and accounts have been calculated context of my advice to the Reserving and using an appropriate actuarial methodology Pricing Committee. and assumptions which are within a There are a number of uncertainties reasonable range, given the purpose of underlying the IBNR provisions. My advice the calculation and taking into account to the Reserving and Pricing Committee discussions held with NHS Resolution’s and Note 7 to NHS Resolution’s report Reserving and Pricing Committee. The and accounts describe this uncertainty actuarial assumptions were selected on a and quantify the sensitivity of the IBNR best estimate basis, with explicit adjustment provisions to key assumptions. This opinion for risk and uncertainty included within does not negate the fact that the future the claims inflation assumption. There cash flows will not develop exactly as are no such margins included elsewhere projected and may, in fact, vary significantly in the assumptions. I have calculated the from the projections.
Senior management team
The SMT includes directors The SMT reviews particular I report on the work of the and heads of the operating areas of NHS Resolution’s SMT to the Board, and hold areas in the organisation. activity or areas of development members of the SMT to account SMT meets most weeks and and considers any changes in for delivering against agreed discusses issues concerned with the external environment that objectives which are linked to the activity of NHS Resolution may have an impact on NHS delivery of NHS Resolution’s for which SMT oversight or Resolution and its services. strategy and business plan. approval is required, including During the year, SMT held a resource management series of sessions to develop and planning, governance aspects of our five-year strategy arrangements, complaints and in more detail with a view to stakeholder management. producing a business plan for 2019/20 and to taking a longer- term view of our key change and operational deliverables.
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Table 17: SMT sub-groups
SMT Sub-group Function
Change Management Group Oversight of financial investment decisions relating to (CMG) business change
Information Governance Group Provides assurance on the release of data, ensuring (IG) compliance with ISO 27001 standards and information governance requirements
Significant Concerns Group Supports the prompt and effective management (SCG) of significant concerns identified by individual NHS Services functions where these give rise to a need for a coordinated organisational response
Operations Risk Review Group Provides assurance of cross functional review of (ORG) incidents, risk and escalation
Workforce Strategy Group Oversight on recruitment decisions and (WSG) workforce planning which are outside of delegated director controls
Digital Technology Steering Group Provides assurance to CMG that IT-related projects/ (DTSG) tasks are reviewed to ensure alignment of purpose with strategy and to escalate any issues or risks to CMG
Editorial Advisory Group Provides assurance on published content that it is (EAG) consistent, aligned with our strategy and compliant with information governance
The control environment Capacity to handle risk The system of internal control is designed to With the support of our risk management eliminate risk, where possible, and manage framework we regularly considered the risks residual risk to a reasonable level, rather than to and issues that could have an impact on the eliminate all risk of failure to achieve objectives. achievement of our business objectives. This Therefore, it provides a reasonable and not included consideration of the controls we have absolute assurance of effectiveness. in place to mitigate those risks and then, where required, develop plans to bring those risks The key risks to our organisation are set out within appetite. The risk register is reviewed by below with some of the key controls we have in SMT, who review the framework put in place place to manage those risks. and the application of that framework in the consideration and treatment of risk.
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s General Practice
, ARC and the Board to develop plans respond requirements and prioritise within capacity constraints Group Indemnity Working findings and improvements Regular engagement with DHSC sponsor team and policy leads Ministers informed of our priorities and strategy Change Management Group review of programmes and key projects Appointment of the deputy director policy and strategy NHS Resolution representation on the DHSC’ NHS Resolution programme management in place Regular reports to the Board Early Notification scheme launched for maternity Incentivisation of members to identify concerns early Significant Concerns Group and framework in place IT policies and procedures in place System controls including firewalls IG group review metrics for virus incident log IG group review incidents and take forward learning IG reports to SMT External company carry out regular penetration tests and report Internal Audit reviews and deep dives ISO 27001 certification Cyber Essentials Plus audit and certification
• • • • • • • • • • • • • • • • • • • Assess and evaluate – risk assessment evaluation the nature and magnitude of risk. The assessment is completed A risk assessment is a qualitative or quantitative evaluation of by scoring the likelihood of risk occurring and impact should it occur in place to mitigate the risk Assurance of the controls
Identify – Risk identified as potential threat (or opportunity) to meeting NHS Resolution objectives Uncertainty in relation to the administration of liabilities in general practice Support a system of early warning to identify harm to an individual or organisation Cyber security Risk Uncertainty in the policy environment Strategic aim All strategic aims Help the system, organisations and individuals identify and address issues and work in partnership with other arm’s length bodies (ALBs), NHS trusts, patients to improve the way in and healthcare staff which the NHS responds to incidents All strategic aims All strategic aims Table 18: Strategic aims, their associated high-level risks and controls to mitigate them mitigate to controls risks and high-level associated their aims, Strategic 18: Table
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Through the regular review of the risk register Key issues which could have an impact are and the assessment of the controls and required also logged and reviewed through the risk treatments, we were able to reduce risk scores management framework. This includes in the area of delivering the strategy and considering the actions required to address financial sustainability. We also considered issues and the monitoring of progress through changes to description of the risk in relation the escalation process. to financial sustainability, to ensure it reflects the challenges and possible impacts we as an organisation face.
Table 16: The escalation and management of risks through NHS Resolution
Risk score Risk response Action By whom Escalation
High risk Treat/Transfer/Terminate Risks deemed as high • Corporate operational risk SMT require a systems approach register reviewed by SMT to identify the root causes to consider escalation to of the risk and thereby help strategic risk register. choose an appropriate risk • S MT review strategic response. risk register for addition Where it is not possible to or removal of risks and terminate or transfer the recommend to the Board. risk, a treatment plan will be in place.
Moderate risk Treat Risks deemed as moderate • Risk register discussed with Directors to high will require a director/head of service. and CE treatment plan in line with • R isks identifed as amber direct the risk appetite. and red reported to the reports Those risks where it Operations Risk Review/ is deemed no further Information Governance ORG/IG treatment can reduce groups for inclusion on the risk will be reviewed the corporate operational regularly to assess impact risk register. SMT on the organisation. • A mber and red risks and associated treatment plans reviewed by ORG/IG and reported to SMT. • S MT review report from ORG and directors.
Low risk Tolerate Risks graded as low either • Risk is identified. All staff require no action or can • R isk added to team risk be managed through local register. action or by an appropriate • A ction to reduce risk person or department. where necessary is considered. • Teams discuss risk register.
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Risk appetite A key area where this was evident was data sharing across the health sector for learning The Board has developed and continues to purposes, so to mitigate working outside of review the statement of risk appetite. The our risk appetite we have been working closely Board’s approach is to minimise its exposure to with DHSC on the framework that we may need risk in relation to the delivery of its operations in place, and the processes we should consider and compliance with good standards of when requests for our data are made. governance. The Board generally has a low appetite for risk given the nature of the Management assurance organisation’s activities but is prepared to accept NHS Resolution’s assurance framework brings a greater degree of risk in certain cases where it together governance and quality linked to is clear that this relates to a valid pursuit of the our strategic objectives. Its purpose is to ensure organisation’s strategic objectives. that systems and information are available to With the introduction of General Data provide assurance on identified strategic risks Protection Regulation it was acknowledged and that such risks are being controlled and that, on occasion, the framework within which objectives achieved. we operate may be uncertain or open to interpretation, which creates risk of challenge in relation to potential courses of action.
Figure 23: The Board assurance framework process
STRATEGIC STRATEGIC KEY ASSURANCE TREATMENT OBJECTIVES RISKS CONTROLS ON CONTROLS PLANS
Agree the aims Threats to What is already Evidence that Actions to and objectives delivery of in place to controls/systems further reduce of the business the strategic mitigate are effective the risk and plan objectives the risks address gaps in controls
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Internal audit We continue to engage with our counter-fraud team, who work in accordance with the NHS An internal audit plan is developed in Counter Fraud Authority Standards for Providers conjunction with management and the ARC to prevent, deter, detect and investigate fraud to focus on the areas of risk, and provide and bribery. insight, advice and assurance on the internal control framework. We completed the NHS Counter Fraud Authority’s Self Review Tool (SRT) which The Head of Internal Audit gave ‘moderate’ resulted in an overall rating of amber. Full assurance to the Accounting Officer that NHS compliance was demonstrated for a number Resolution has had adequate and effective of standards, with work continuing to ensure systems of control, governance and risk the effectiveness of Counter Fraud activities management in place for the reporting completed as part of the 2019/20 plan, we will year 2018/19. take forward actions to address those areas for Performance and financial controls improvement. We continue our membership to the Claims and Underwriting Exchange (CUE), NHS Resolution’s financial and operational a database of non-clinical claims reported to performance is reported regularly to SMT, to insurers. This enables us to share information the Board and to me. NHS Resolution’s financial with other indemnifiers so as to identify position, together with operational KPIs, is potentially fraudulent claims. We are fully alive reported quarterly to DHSC to demonstrate to the information governance risks entailed that expenditure commitments are in line with in such an initiative and ensure that due legal forecasts and budgetary limits. process is adhered to. There are policies and procedures for the management of finances and resources, Information security and governance including a scheme of delegated authorities NHS Resolution has maintained ISO 27001 for the approval of expenditure. The internal Information Security certification which provides audit programme routinely covers key financial evidence that we have an effective information controls to provide assurance to management security management system. We have also and the Board. Governance arrangements achieved Cyber Essential Plus certification which through the RPC for the setting of reserves for is a UK government scheme of good practice in claims are set out earlier in this statement. information security. It includes an assurance Fraud framework and a set of security controls to protect information from threats coming from As with all NHS organisations, the risk of fraud the internet. This illustrates the importance we is a significant consideration. The nature of place on protecting our information and the NHS Resolution’s work inevitably focuses our quality of the arrangements we have in place to attention on the risk of fraudulent claims being manage and protect our information assets. brought against our members, and we take a zero-tolerance approach to fraud and bribery. NHS Resolution is committed to minimising Through 2018/19, we completed a number of the risks associated with information handling actions to strengthen our internal controls for and to ensuring that all staff are fully aware of this area and have in place an up-to-date Anti- their responsibilities in relation to information fraud, bribery & corruption policy and procedure governance. During the year, NHS Resolution advising staff on how to recognise and deal submitted its annual return on the NHS Digital with potential instances of fraud and bribery. Information Governance toolkit.
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Figure 24: Information governance incidents reported between 2016/17 to 2018/19 by severity14
80
70
60 41 50 14 40 32
19 30 35 Number of incidents 20 37 32 10 22 22 12 9 0 1 NHS Resolution Third party NHS Resolution Third party NHS Resolution Third party supplier supplier supplier 2016/17 2017/18 2018/19
Near miss Non-reportable
During this year, there were to report incidents separately. this period which required 51 information governance NHS Resolution is notified reporting to the Information incidents recorded by NHS when that is the case so that Commissioner. The figures Resolution, of which 37 were we can identify any remedial indicate a significant reduction ‘near misses’. These are defined action to be taken and learning in the number of non- as an incident that did not to be followed up through reportable incidents, but an lead to harm, loss or damage, contractual arrangements. We increase in reported near but could have done, and are are working with our third misses, which is perhaps a reported in order that we party suppliers to ensure root reflection of the continuing can learn from the incident. cause analysis and learning awareness of information This year, the figure has from incidents is taken forward security being embedded not, as previously, included so as to ensure mitigations are within business operations. We incidents which are reported put in place to reduce the risk do not, however, wish to be of such incidents occurring in by contractors working for NHS complacent and do continue the future. Resolution where they are Data to learn from and encourage Controllers in their own right NHS Resolution did not reporting and use examples and therefore have obligations have any incidents during from our incidents to shape
14 There were no serious incidents reported over the period 2016/17 to 2018/19
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Figure 25: Freedom of Information requests and Subject Access Requests received between 2016/17 and 2018/19
450
400 387
350 331 338 303 300 281 264 250
200
150
100 78 54 45 42 50 38 30
0 2016/17 2017/18 2018/19 Freedom of Information request Within 20 working days Subject Access Request Within statutory time future information governance contractors as part of our work Act (FoIA). 338 (87%) were learning, which is a mandatory to assess our key information completed within the statutory requirement for all staff and risks, and informed by learning 20 working day deadline, Board members. from individual incidents. compared to 92% the previous Further awareness-raising Responding to members year. Several requests were sessions are taking place to of the public completed late in 2018/19; the increase the understanding of reasons for lateness were due these types of errors through Effective processes were to complexity of the request root cause analysis and regular in place throughout the or where we needed to seek review by our IG group. Where year which ensured a further advice, and staff we identify trends, or repeated swift response to all public turnover within the team. incidents, we work closely enquiries, correspondence, As the number of requests with the relevant function to parliamentary questions, issues received was higher than the consider a range of options raised under Data Protection preceding year, they represent which might assist with (DPA) legislation, Freedom a significant workload and also reducing levels of incidents. of Information requests and reflect the continuing interest We have also strengthened complaints. NHS Resolution in the organisation. information governance received 387 requests under requirements with key the Freedom of Information
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Data Protection Requests An example where we have identified learning is that we recognise that the tone of our NHS Resolution receives two types of requests communication is key to the handling of under the DPA. Subject Access Requests complaints and we have put in place training (SARs) give individuals the right to request for staff, which includes empathy training to any information held about themselves; and support how we manage complaints. requests under Section 29 of the DPA which allows NHS Resolution to share information Freedom to Speak Up where the disclosure is for the purposes of We implemented our Freedom to Speak Up crime and taxation. 77 SARs were received in Policy and have in place two Freedom to Speak 2018/19, 54 of which were completed within the Up Champions as well as a Non-executive statutory deadline of 40 calendar days. Director who is the Freedom to Speak Up Complaints and feedback Officer. For 2018/19, there were three issues raised through this route. We will continue to From 1 April 2018 to 31 March 2019, we received work with the Freedom to Speak Up Champions 49 complaints, which were reviewed through and staff to review the effectiveness of the our formal complaints policy. This compares policy and local process at least every two to 52 complaints logged in 2017/18 which is a years, the first review will take place in 2020 small decrease. There have been no complaints with the outcome published and changes made escalated from our reviews that were referred as appropriate. to the Parliamentary and Health Service Ombudsman. We are committed to ensuring Health and safety that complaints and feedback about our To ensure the health, safety and wellbeing services are reviewed and that we are engaging of our staff, we have in place policies and with complainants by offering meetings and procedures. Staff are required to participate in considering the best approach to resolving the training provided to ensure awareness. This a complaint. We are also encouraging more year, we engaged a Health and Safety Adviser informal approaches to resolve dissatisfaction to carry out a full assessment of all aspects with our services quickly. The SMT and I review of health and safety legislation. From the complaints and feedback about our services assessment, we have taken forward a number and I report the findings to the Board. We have of critical actions and will continue to address all identified the need for additional resource recommended actions through 2019/20 with the to support our handling of complaints and Operational Risk Review Group continuing to capturing and taking forward learning. support the health and safety agenda.
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Procurement and contracting Accounting Officer’s conclusion
We comply with Public Procurement The governance arrangements detailed in the Regulations in relation to procurement. We statement aim to support NHS Resolution to have developed procurement plans to ensure maximise its understanding and use all of the that acquisitions for goods and services are available information about the quality and supported through a robust procurement effectiveness of our systems to help us improve process and are completed in line with Public services and satisfy assurance requirements Procurement Regulations. All procurement about the effectiveness of our systems of is considered in terms of business need and internal control. Based on my review, I am not is the most economically advantageous for aware of any significant control issues and I am us. We continue to develop and embed best content that appropriate arrangements are in practice in contract management to ensure we place for the discharge of all statutory functions achieve good value for money on the contracts for which NHS Resolution is responsible, and, we enter into. Through the procurement that they are in line with the recommendations process, we ensure key consideration is given as set out in the Harris Review15. to The UK Modern Slavery Act (2015) and as In summary, I am satisfied that the framework such is included in our tender documents for of governance, risk management and system of procurements over £15,000. internal controls are adequate and have been effectively maintained throughout 2018/19.
15 https://www.gov.uk/government/publications/independent-review-into-delegation-of-approval-functions-under-the- mental-health-act-1983
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Remuneration and staff report
Remuneration and Terms of benefits and terms of services of all posts Service Committee covered by the Pay Framework for Executive and Senior Managers (ESM). The Remuneration and Terms of Service Committee is a non-executive committee The Remuneration and Terms of Service whose members have a role that includes the Committee met four times during the 2018/19 determination of the remuneration, year. All meetings were quorate.
Table 20: Remuneration and Terms of Service Committee meeting attendance
Name Post Meetings attended
Ian Dilks Chair 4 of 4
Keith Edmonds Non-executive Director 4 of 4
Charlotte Moar Non-executive Director 4 of 4
Mike Pinkerton Non-executive Director 4 of 4
Nigel Trout Non-executive Director* 1 of 2
*Nigel Trout joined the organisation on 1 July 2018.
The Committee approved the extension of an The annual pay award and performance-related Associate Non-executive Director appointment payments were determined and approved by with effect from 1 July 2018 on a 12-month the Committee, using advice and guidance rolling basis. The annual Directors’ performance provided by DHSC. Where required, approval reviews presented by the Chief Executive, who of the pay awards and performance-related was in attendance, were considered and noted payments was received from DHSC by the Chair by the Committee. of the Committee. Confirmation of the pay awards and performance-related payments approved were notified to DHSC by the Chair of the Committee as required.
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Other matters dealt with by the Committee Remuneration policy during the year included: NHS Resolution is bound by the NHS terms and • Approval to extend an existing temporary conditions of service (known as Agenda for additional responsibilities allowance Change). With the exception of the directors (TARA) for an Executive Director to 30 who are paid in accordance with DHSC pay September 2019. framework for executive and senior managers in ALBs, all staff are paid in accordance with • The performance and objectives of the Agenda for Change. Chief Executive. Full details on the Agenda for Change terms • Consideration/approval of the approach and conditions of service, including a copy taken in relation to the Director of of the current handbook, can be found on Claims recruitment. the NHS Employers website. The provisions • Approval of the Director of Claims salary set out in this handbook are based on the following successful recruitment. need to ensure a fair system of pay for NHS employees which supports modernised working • Review of succession planning and talent practices. Nationally, employer and trades management activities and intentions for the union representatives have agreed to work in executive and senior manager positions. partnership to maintain an NHS pay system which supports NHS service modernisation and The Committee considered its performance meets the reasonable aspirations of staff. in 2018 as satisfactory and concluded that it had discharged its obligations as set out in the The relevant NHS Resolution policies applied terms of reference. during the financial year in relation to salaries were the Recruitment and selection policy and The Committee also considered that the terms procedure (HR16) and the National terms and of reference remain appropriate, subject to conditions of service noted above. Allowances one minor addition in relation to the to staff in payment during the year other than Committee’s responsibility for agreeing the basic salary were high cost area supplement, appointment and renewal of any associate recruitment and retention payments (RRP), and non-executive director posts, including, where on-call allowances for information systems and appropriate, the associated remuneration and governance staff. terms of appointment. The revised terms of reference were submitted to, and received Remuneration for directors approval from, the Board. The following tables provide the contractual salary and pension details of those senior managers and non-executive directors who had control over the major activities of NHS Resolution during 2018/19. Tables 21, 22 and 23 are subject to audit. There were some changes to our Board membership throughout 2018/19.
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Table 21: Executive and non-executive director salaries and allowances for 2018/19
Salary Expense Performance Long term All Total (bands payments pay and performance pension- (bands of (taxable) bonuses pay and related of £5,000) total to (bands of bonuses benefits £5,000) nearest £5,000) (bands of (bands of £100 £5,000) £2,500) Name and title £000 £00 £000 £000 £000 £000
Ian Dilks 60–65 0 0 N/A N/A 60–65 (Chair) Helen Vernon 145–150 0 5–10 0 20–22.5 175–180 (Chief Executive) Joanne Evans (Director of Finance 120–125 0 0–5 0 27.5–30 150–155 and Corporate Planning) Denise Chaffer (Director of Safety 110–115 0 0 0 0 110–115 and Learning) Vicky Voller1 (Director of 65–70 0 0 0 17.5–20 85–90 Practitioner Performance Advice) Keith Edmonds (Non-executive 5–10 0 N/A N/A N/A 5–10 Member) Charlotte Moar2 (Non-executive 10–15 0 N/A N/A N/A 10–15 Member) Mike Pinkerton (Non-executive 5–10 0 N/A N/A N/A 5–10 Member) Nigel Trout3 (Non-executive 5–10 0 N/A N/A N/A 5–10 Member) Mike Durkin4 (Associate Non- 5–10 1 N/A N/A N/A 5–10 executive Member) Sam Everington5 (Associate Non- 5–10 0 N/A N/A N/A 5–10 executive Member)
1 Vicky Voller’s post title changed to Director of Practitioner Performance Advice from July 2018. Vicky Voller’s full year equivalent salary is in the band £100k-105k. 2 Charlotte Moar is also the Chair of the ARC. 3 Nigel Trout was appointed as a Non-executive Director from 1 July 2018. 4 Mike Durkin’s appointment as Associate Non-executive Director was remunerated from 1 July 2018. 5 Sir Sam Everington was appointed as an Associate Non-executive Director from 1 July 2018.
The executive and non-executive directors do not receive any non-cash benefits.
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Table 22: Executive and non-executive director salaries and allowances for 2017/18
Salary Expense Performance Long term All Total (bands payments pay and performance pension- (bands of (taxable) bonuses pay and related of £5,000) total to (bands of bonuses benefits £5,000) nearest £5,000) (bands of (bands of £100 £5,000) £2,500) Name and title £000 £00 £000 £000 £000 £000
Ian Dilks 60–65 0 0 0 N/A 60–65 (Chair)
Helen Vernon 145–150 0 5–10 0 47.5–50 200–205 (Chief Executive)
Joanne Evans (Director of Finance 115–120 0 0–5 0 27.5–30 150–155 and Corporate Planning)
Denise Chaffer (Director of Safety 110–115 0 0 0 15–17.5 125–130 and Learning)
Vicky Voller (Director of 95–100 0 0 0 15–17.5 115–120 Practitioner Performance Advice)
Keith Edmonds (Non-executive 5–10 0 N/A N/A N/A 5–10 Member)
Charlotte Moar1 (Non-executive 0–5 0 N/A N/A N/A 0–5 Member)
Andrew Hauser2 (Non-executive N/A N/A N/A N/A N/A N/A Member)
Mike Pinkerton (Non-executive 5–10 0 N/A N/A N/A 5–10 Member)
Mike Durkin3 (Associate Non- N/A 0 N/A N/A N/A N/A executive Member)
1 Charlotte Moar was appointed as a Non-executive Director from 1 September 2017. Charlotte also became the Chair of the Audit and Risk Committee with effect from 1 December 2017. Full year equivalent salary is in the band £10k–15k. 2 Andrew Hauser left the Board with effect from 30 November 2017. This Non-executive Director appointment was unpaid. 3 Mike Durkin’s appointment as Associate Non-executive Director is unpaid.
The executive and non-executive directors do not receive any non-cash benefits.
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to 23 18 14 16 £000 pension Employer’s Employer’s stakeholder contribution
0 76 20 11 Real £000 value in Cash transfer increase increase equivalent
59 528 266 891 Cash £000 transfer n equivalent value at 31 March 2018 March n. t i o it u
ce 0 98 t o 642 294 e s Cash £000 tn e s rs a rs transfer em equivalent li value at 31 e March 2019 March t a t a t e
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tf r t a e s s a n e e N r a o s a h : P o o e tc i ns 3 . P e o t e o y s t e is ri o n m i e 2 n l v e y i b o l d h e Helen Vernon Helen Vernon (Chief Executive) Name and title (Director of Finance and Corporate Planning) Joanne Evans Vicky Voller (Director of Practitioner Performance Advice) Denise Chaffer Denise Chaffer (Director of Safety and Learning) l r a mpl c a P A p S e p T
118 Accountability report
Cash equivalent They also include any Fair pay disclosure transfer values additional pension benefit accrued to the member as Reporting bodies are required A cash equivalent transfer a result of their purchasing to disclose the relationship value (CETV) is the actuarially additional years of pension between the remuneration assessed capital value of the service in the scheme at their of the highest-paid director pension scheme benefits own cost. CETVs are calculated in their organisation and the accrued by a member at within the guidelines and median remuneration of the a particular point in time. framework prescribed by organisation’s workforce. The benefits valued are the the Institute and Faculty Total remuneration includes member’s accrued benefits of Actuaries. salary, non-consolidated and any contingent spouse’s performance-related pay and pension payable from the Real increase in CETV benefits-in-kind. It does not scheme. A CETV is a payment This reflects the increase in include severance payments, made by a pension scheme or CETV effectively funded by employer pension contributions arrangement to secure pension the employer. It takes account and the cash equivalent benefits in another pension of the increase in accrued transfer value of pensions. scheme or arrangement when pension due to inflation, the member leaves a scheme The banded remuneration contributions paid by the and chooses to transfer the of the highest-paid director employee (including the value benefits accrued in their in NHS Resolution in the of any benefits transferred former scheme. The pension financial year 2018-19 was from another scheme or figures shown relate to the £155,000-£160,000 (2017-18, arrangement) and uses benefits that the individual has £150,000-£155,000). This was common market valuation accrued as a consequence of 3.30 times (2017-18, 3.25) the factors for the start and end their total membership of the median remuneration of the of the period. pension scheme, not just their workforce, which was £47,697 service in a senior capacity Compensation on early (2017-18, £46,897). to which disclosure applies. retirement or for loss In 2018-19, no employees The CETV figures and the of office received remuneration in other pension details include excess of the highest-paid the value of any pension There were no early director (2017-18, was also benefits in another scheme retirements or other exit zero). Remuneration ranged or arrangement that the arrangements for directors from £20,150 to £156,559 (2017- individual has transferred to during the reporting period. 18 £19,604-£153,882). the NHS pension scheme. This is subject to audit. The fair pay disclosures are Payments to past directors subject to audit. There were no payments made to past directors. This is subject to audit.
119 NHS Resolution Annual report and accounts 2018/19
Staff report
Tables 24 and 25 set out staff costs and average staff numbers, which are subject to audit.
Table 24: Staff costs for 2017/18 and 2018/19
Permanently Other 2018/19 2017/18 employed staff Total Total Staff numbers and related costs £000 £000 £000 £000
Salaries and wages 13,559 769 14,328 12,821
Social security costs 1,542 0 1,542 1,344 Employer contributions to 1,680 0 1,680 1,563 NHS Pensions NEST pension contributions 2 0 2 1
Apprenticeship levy 53 0 53 47
Total 16,836 769 17,605 15,776
Table 25: Average full-time equivalent staff numbers
Average number of persons Permanently Other* 2018/19 2017/18 employed / staff numbers employed staff Total Total and related costs
Total 275 18 293 265
*Other is temporary/agency workers engaged with the organisation.
As at 31 March 2019, of the (57%). The gender split ratio for reports to the Board the details seven executive and senior the whole of NHS Resolution of its workforce gender by pay managers, three were male was 39% male and 61% female. band including executive and (43%) and four were female The organisation regularly senior managers.
120 Accountability report
Figure 26: Headcount by gender and grade
The following graphs detail how the organisation’s workforce is made up in respect of the other monitored characteristics which are included under the Equality Act 2010:
50
45
40
35
30
25
Headcount 20
15
10
5
0 Band Band Band Band Band Band Band Band Band Band Band ESM 2 3 4 5 6 7 8A 8B 8C 8D 9 Female 4 2 18 18 25 46 20 24 10 10 4 Male 2 3 6 2 17 33 16 17 10 6 2 3
121 NHS Resolution Annual report and accounts 2018/19
Figure 27: Workforce – disability Figure 28: Workforce – sexual orientation
4% 2%
19% 19%
79% 77%
No Heterosexual Not declared Do not wish to disclose my sexual orientation Yes LGBT
Disability disabled people an interview were offered an interview was if they meet the minimum 14%. This was lower than the NHS Resolution applies the criteria for the job vacancy. percentage of applicants who Two Ticks symbol for internal We remain a member of did not declare themselves as and external applicants the Mindful Employer having a disability, which was during recruitment exercises, 16 recognising our commitment Charter , which is intended 21%. When considering the regarding the employment, to support the organisation percentage of appointments retention, training and career in attracting a more diverse made from the number of development of disabled workforce. The percentage applications received, this was employees. Employers who of applicants during 2018/19 0.6% for those who considered have signed up to the Two who identified themselves as themselves as having a disability Ticks scheme guarantee having a disability and who and 2.4% for those who did not.
16 MINDFUL EMPLOYER® is an NHS initiative run by Workways, a service of Devon Partnership NHS Trust, to help support employers to support mental wellbeing at work.
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Figure 29: Workforce – ethnicity Figure 30: Workforce – religion/belief
3% 2% 1% 3% 5%
6% 33%
13% 44%
64%
26%
White Christianity BAME Do not wish to disclose my religion/belief Do not wish to disclose my ethnic origin Atheism Hinduism Islam Sikhism Other Judaism
The percentage of those who to the Board the details of its • Commit at Board level did not wish to disclose this workforce ethnicity by pay band to zero tolerance of information was 2.5%. including senior managers. harassment and bullying
Ethnicity In September 2018 and in • Make clear that supporting discussion with DHSC, NHS equality in the workplace The proportion of Black, Asian Resolution signed up to the is the responsibility of all and Minority Ethnic (BAME) Business in the Community leaders and managers employees has remained Race at Work Charter which consistent throughout 2018/19 includes the following five calls • Take action that supports at 33%. While the ratios are to action: ethnic minority career closely aligned to the regional progression. figures of 60% white and 40% • Appoint an Executive BAME, we still show a slight Sponsor for race In addition and throughout underrepresentation within 2018, a report was completed • Capture ethnicity data and the BAME categories. The taking an initial look into race publicise progress organisation regularly reports equality at NHS Resolution.
123 NHS Resolution Annual report and accounts 2018/19
The final version of the The organisation recognises The Department for Business, report was discussed with the importance of the report Energy and Industrial Strategy SMT in December 2018. The content and recommendations, published a consultation on the report concludes with three and therefore held a facilitated proposal to introduce ethnicity recommendations as part of session in April 2019, which pay reporting. This report has an implementation plan which considered the report further been discussed at SMT and NHS included the organisation and discussed some action Resolution responded to the voluntarily publishing its areas which will form part of consultation in January 2019. race data in accordance with our wider development of an the Workforce Race Equality equality, diversity and inclusion Standards (WRES). agenda in the coming year.
Figure 31: Headcount by ethnicity
50
45
40
35
30
25
Headcount 20
15
10
5
0 Band Band Band Band Band Band Band Band Band Band Band ESM 2 3 4 5 6 7 8A 8B 8C 8D 9 White 2 1 12 12 26 48 26 28 17 12 7 BAME 4 4 11 7 13 30 10 11 2 4 2 Not disclosed 1 1 3 1 2 1
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Table 26 notes an increase in attributed to an increase in with NHS Resolution. Our the average number of sick the level of long-term sickness monthly absence rate has days per full-time equivalent absence cases reported remained well below the NHS (FTE), up from 3.1 days throughout the year, a number national average and is lower reported in 2017/18 to 4.6 days of which have since returned to than the average rate reported in 2018/19. This can be largely work or left their employment for similar organisations.
Table 26: Sickness absence for the period January 2018 to December 2018
Statistics produced by NHS Digital Figures converted by DHSC to best from the Electronic Staff Record estimates of required data items data warehouse
Adjusted FTE days Average FTE Average sick days FTE-days lost to lost (to Cabinet FTE-days available for period per FTE sickness absence Office definitions)
272 1,443 4.6 99,449 2,016
Notes 1. NHS sickness absence statistics are published by NHS Digital, using data from the NHS Electronic Staff Record Data Warehouse. 2. The number of FTE-days lost to sickness absence has been taken directly from the NHS Digital data. The adjusted FTE days lost has been calculated by multiplying by 225/365 to give the Cabinet Office measure. 3. NHS Days Lost figures are on a full-time equivalent basis.
Off-payroll engagements The appropriate pre-placement checks were completed for this and all of the off-payroll As of 31 March 2019, NHS Resolution has one engagements, with the required assurances off-payroll appointment costing more than obtained to confirm these placements were £245 per day, and which is likely to last longer assessed to ensure that the appropriate tax and than six months. This appointment was a new national insurance arrangements were in place engagement within the reporting period. as they were not covered by IR3517.
17 IR35 is tax legislation that is designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used.
125 NHS Resolution Annual report and accounts 2018/19
Table 27: For all off-payroll engagements as of 31 March 2019, for more than £245 per day and that last for longer than six months
No. of existing engagements as of 31 March 2019. 1
Of which...
No. that have existed for less than one year at time of reporting. 1
No. that have existed for between one and two years at time of reporting. 0
No. that have existed for between two and three years at time of reporting. 0
No. that have existed for between three and four years at time of reporting. 0
No. that have existed for four or more years at time of reporting. 0
Table 28: For all new off-payroll engagements, or those that reached six months in duration, between 1 April 2018 and 31 March 2019, for more than £245 per day and that last for longer than six months
No. of new engagements, or those that reached six months in duration, 2 between 1 April 2018 and 31 March 2019.
Of which...
No. assessed as caught by IR35. 0
No. assessed as not caught by IR35. 2
No. engaged directly (via PSC contracted to department) and are on the departmental payroll. 0
No. of engagements reassessed for consistency / assurance purposes during the year. 0
No. of engagements that saw a change to IR35 status following the consistency review. 0
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Table 29: For any off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2018 and 31 March 2019
No. of off-payroll engagements of board members, and/or, senior officials with significant 0 financial responsibility, during the financial year.
Total no. of individuals on payroll and off-payroll that have been deemed “board members, 10 and/or, senior officials with significant financial responsibility”, during the financial year.
Exit packages
There were no compulsory or voluntary redundancies during the 2018/19 financial year. This is subject to audit.
Trade Union Regulations 2017
The Trade Union (Facilities Time Publication Requirements) Regulations 2017 came into force on 1 April 2017. These regulations require relevant public sector organisations to report on the trade union facility time in their organisation. The following tables detail the number of union officials within NHS Resolution, the percentage of their time spent on facilities time, the percentage of pay bill spent on facilities time and the percentage of paid trade union activities.
Table 30: Relevant Union officials Table 32: Percentage of pay bill spent on facility time Number of employees who were relevant Full-time equivalent union officials during employee number 2018/19 Total cost of £2,716.39 1 1 facility time Total pay bill £16,899,258 Percentage of the Table 31: Percentage of time spent on total pay bill spent facility time on facility time, 0.02% calculated as: (total Percentage of time Number of employees cost of facility time ÷ total pay bill) x 100 0% 0 1-50% 1 51-99% 0 100% 0
127 NHS Resolution Annual report and accounts 2018/19
Table 33: Paid trade union activities
Hours spent by employees who were relevant union officials during 2018/19 on paid trade union activities, as a percentage of total paid facility time hours.
Time spent on paid trade union activities as a percentage of total paid facility time hours calculated as: (total hours spent on paid trade union 0.65% activities by relevant union officials during the relevant period ÷ total paid facility time hours) x 100
People As a result, the organisation Investors in People has seen an increase in the The year 2018/19 has been very number of vacancies and Having successfully obtained productive and successful in subsequent recruitment the Investors in People (IiP) respect of our workforce and campaigns for the accreditation in early 2017, the organisational development technical roles within the organisation has made some activities, which have operational areas. significant progress on the supported the delivery of the recommendations noted in the organisation’s annual business There have been a considerable final assessment report. These plan and strategic priorities. number of staff engagement improvements ensure that we activities throughout the continue to improve against NHS Resolution has seen a year, the most notable being the assessment indicators and continued period of growth the design and delivery of demonstrate our continued throughout the year with an year two of our leadership commitment to people increase of nearly 10.5% on the development programme, management excellence. average full-time equivalent full details of which are noted (FTE) staff in post, up from 268 below. Other staff engagement In order to ensure that we in 2017/18 to 293 in 2018/19. activities have seen the level of are in the best possible While increasing our budgeted completion of our staff annual position to retain or even establishment and headcount appraisals remaining at 90% for improve on our accreditation, we have maintained a 2018 and a positive response we will be considering the consistent level of annual staff rate of 73.2% to our recent implementation of champion turnover of just under 12%. interim staff survey. roles throughout 2019 while providing oversight of our The organisation is continuing We have progressed a performance to the SMT. through a significant period significant number of the The IiP standard is integral of change in order to support key priorities noted in our to everything we do and is a the delivery of its strategy. This workforce and organisational framework that influences all has required the development development strategy. Activities current and planned human of strategic and policy-focused delivered throughout 2018/19 resource and organisational roles across all parts of the include the following. development activities. We had business. Through a series of an interim review of progress open recruitment campaigns, a to date with our IiP lead on number of internal promotions 20 March 2019. were made into these positions.
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Staff survey Leadership development An update on the succession plans for each of our executive Following on from our 2017 A major investment by the and senior manager (ESM) staff survey and a series of organisation in 2017/18 saw positions was presented to our staff engagement sessions the launch of its Leadership Remuneration Committee in held throughout 2018, the development programme. November 2018. Our talent organisation ran an interim The second wave of this pipeline for each directorate staff survey in March 2019. programme has been delivered is underpinned by individual The survey focused on four in 2018/19. This was managed in career conversations, intentions main areas: 3 cohorts and covered a further and aspirations, which continue 45 delegates from across all • Work life balance to be held outside of the parts of the organisation and and working hours annual appraisal process. all levels of staff. In total 90 • Equality, diversity employees have attended We have maintained our and inclusion and completed the leadership membership with the Health programme which accounts and Care Leaders Scheme • Dignity at work for over 30% of our current (HCLS) and continued to offer and access various external • SMT communications. workforce. Each attendee has produced a service leadership development Feedback from this interim improvement plan as part of opportunities which include survey will help to inform our the programme, with benefits the Ready Now, Stepping future programme of support aligned to delivering our Up, Leaders 2025 and Nye for staff and managers, and strategy or improving business Bevan programmes. the specific interventions processes within Although not at the aspired required in response to the NHS Resolution. level, we have managed to areas of concern noted. The Succession planning support the placement of an results will also assist with the apprenticeship role within our development of our equality, Throughout 2018/19, the IT and Facilities function. Work diversity and inclusion agenda. organisation established and is under way to identify other In order to ensure a process successfully recruited to a appropriate positions across the of ongoing staff engagement, number of deputy director organisation in order to ensure the organisation has also positions. The introduction that we are able to utilise our agreed its approach to running of these roles intended to apprenticeship levy as much as a full annual staff survey from ensure that the organisation possible. We are also exploring 2019 onwards. was appropriately resourced to the use of the levy for the deliver its strategic intentions appointment of graduate including the implementation management trainees via the of the CNSGP. The introduction NHS Leadership Academy. of these roles supports the succession plans for our senior business critical roles while offering better career pathways within a majority of our services.
129 NHS Resolution Annual report and accounts 2018/19
Mentoring Over the last 12 months, • delivered a workshop on NHS Resolution has continued managing menopause During 2017/18, 17 employees to implement a number of in the workplace, which accessed mentoring programmes and activities included practical support opportunities made available to promote pay balance in and guidance for engaging to them by the SMT. We have the workplace. Given that we in conversations about recently trained a further have more females than males difficulties which may 15 employees to become at almost every level of the otherwise go unsupported; workplace mentors and the organisation, in addition to the and offer to access this mentoring activity previously mentioned has recently been made some additional actions/ • advertised our ARC external available to staff. activities include: member roles on ‘Women on Boards’; a job website This rolling programme of • return to work mentoring specifically aimed at mentoring opportunities for by an executive director supporting women into staff will support ongoing following a period of board positions. personal and professional maternity leave; development. We have also As a fair and equal employer, provided access to external • continuing to encourage we appoint the best candidates mentorship opportunities flexible working across during our recruitment which are available via the NHS our organisation at every campaign regardless of Leadership Academy. level, to ensure that gender or other protected our employees have the characteristics. We are currently Gender pay gap opportunity to balance in the process of developing an In March 2019, in accordance their home life and equality, diversity and inclusion with the requirements under career aspirations; agenda, a part of which will focus on improvements in the Equality Act 2010, NHS • commissioned an internal the recruitment process to Resolution published its second audit which among other ensure that all individuals have gender pay gap report. The areas looked at recruitment equal access to opportunities report was published on the compliance and starting before their applications are GOV.UK website in advance of salaries by gender. The even submitted. the April 2019 deadline. NHS report shows that there Resolution reported a median were no specific outliers in gender pay gap of 6%, down this area; from 8.1% in the previous year.
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Parliamentary accountability and audit report
The following disclosures are subject to audit.
Losses and special payments Remote contingent liabilities There were no losses and special payments The judgments taken to place a value on the made in 2018/19 above £300,000 nor in 2017/18. provision and contingent liabilities (see Notes 7 and 8 to the accounts) arising from the indemnity Fees and charges schemes that NHS Resolution operates do not Contribution levels for members of the include an assessment for events that, at this point indemnity schemes that NHS Resolution in time, are too uncertain or remote to include. operates, i.e. the CNST, LTPS and PES schemes, Therefore, there is no recognition of potential are determined in order to meet members’ change in the value of the provision arising from liabilities as they fall due, in accordance with our policy developments, in particular around efforts accounting policy at Note 1.3 to the accounts to improve safety in the NHS (other than through on page 142. The contributions collected are set experience reflected in current and past claims), on a full cost recovery basis, and can be seen in and considerations relating to applying a limit to Note 3 to the accounts on page 150. recoverable claimant costs for lower value claims. Expenditure on consultancy At this stage, following the change in the PIDR in March 2017, no adjustments have been No expenditure was incurred on consultancy made to the value or timing of liabilities arising in 2018/19. £80,000 was spent on consultancy from potential increases in claims numbers, services for expert advice on risk management or changes in claimant preferences for lump in the previous year. sums rather than periodical payment orders. Publicity and advertising No changes to the PIDR assumption have been made pending any announcements due to be Publicity and advertising spend for the year made by the Lord Chancellor following the was £100,711. This compares to £60,620 in the passing of the Civil Liability Act 2018. previous year. I am satisfied that this Accountability report is a Regularity of expenditure – gifts true and fair reflection of the work undertaken We have not received or made any gifts where by NHS Resolution throughout 2018/19. the value exceeded £300,000. Indemnity Scheme Cover for NHS Resolution For 2018/19, NHS Resolution was covered under both LTPS and PES. Helen Vernon Chief Executive and Accounting Officer Date: Wednesday 3 July 2019
131 NHS Resolution Annual report and accounts 2018/19
The certificate and report of the Comptroller and Auditor General to the Houses of Parliament
Opinion on financial statements Emphasis of matter – provision for Clinical Negligence Scheme for Trusts I certify that I have audited the financial statements of NHS Litigation Authority (herein Without qualifying my opinion, I draw attention referred to as NHS Resolution) for the year ended to the disclosures made in note 7 to the financial 31 March 2019 under the National Health Service statements concerning the uncertainties Act 2006. The financial statements comprise: the inherent in the claims provision for the Clinical Statement of Comprehensive Net Expenditure, Negligence Scheme for Trusts. As set out in note the Statement of Financial Position, the Statement 7, given the long-term nature of the liabilities of Cash Flows, the Statement of Changes in and the number and nature of the assumptions Taxpayers’ Equity; and the related notes, including on which the estimate of the provision is the significant accounting policies. These financial based, a considerable degree of uncertainty statements have been prepared under the remains over the value of the liability recorded accounting policies set out within them. I have by NHS Resolution. Significant changes to the also audited the information in the Accountability liability could occur as a result of subsequent Report that is described in that report as having information and events which are different been audited. from the current assumptions adopted by NHS Resolution. In my opinion:
• the financial statements give a true and Opinion on regularity fair view of the state of NHS Resolution’s In my opinion, in all material respects the affairs as at 31 March 2019 and of its net income and expenditure recorded in the expenditure for the year then ended; and financial statements have been applied to • the financial statements have been properly the purposes intended by Parliament and the prepared in accordance with the National financial transactions recorded in the financial Health Service Act 2006 and Secretary of State statements conform to the authorities which directions issued thereunder. govern them.
132 Accountability report
Basis of opinions My conclusions are based on the audit evidence obtained up to the date of my I conducted my audit in accordance with auditor’s report. However, future events or International Standards on Auditing (ISAs) conditions may cause the entity to cease to (UK) and Practice Note 10 ‘Audit of Financial continue as a going concern. I have nothing Statements of Public Sector Entities in the to report in these respects. United Kingdom’. My responsibilities under those standards are further described in the Responsibilities of the Accounting Officer Auditor’s responsibilities for the audit of the for the financial statements financial statements section of my certificate. Those standards require me and my staff to As explained more fully in the Statement comply with the Financial Reporting Council’s of Accounting Officer’s responsibilities, the Revised Ethical Standard 2016. I am independent Accounting Officer is responsible for the of NHS Resolution in accordance with the ethical preparation of the financial statements and requirements that are relevant to my audit and for being satisfied that they give a true the financial statements in the UK. My staff and and fair view. I have fulfilled our other ethical responsibilities Auditor’s responsibilities for the audit of in accordance with these requirements. I believe the financial statements that the audit evidence I have obtained is sufficient and appropriate to provide a basis My responsibility is to audit, certify and report for my opinion. on the financial statements in accordance with the National Health Service Act 2006. Conclusions relating to going concern An audit involves obtaining evidence about I am required to conclude on the the amounts and disclosures in the financial appropriateness of management’s use of statements sufficient to give reasonable the going concern basis of accounting and, assurance that the financial statements are free based on the audit evidence obtained, from material misstatement, whether caused by whether a material uncertainty exists related fraud or error. Reasonable assurance is a high to events or conditions that may cast significant level of assurance, but is not a guarantee that doubt on NHS Resolution’s ability to continue an audit conducted in accordance with ISAs (UK) as a going concern for a period of at least will always detect a material misstatement when twelve months from the date of approval of it exists. Misstatements can arise from fraud or the financial statements. If I conclude that a error and are considered material if, individually material uncertainty exists, I am required to or in the aggregate, they could reasonably draw attention in my auditor’s report to the be expected to influence the economic related disclosures in the financial statements decisions of users taken on the basis of these or, if such disclosures are inadequate, financial statements. to modify my opinion.
133 NHS Resolution Annual report and accounts 2018/19
As part of an audit in accordance with ISAs I communicate with those charged with (UK), I exercise professional judgment and governance regarding, among other matters, maintain professional scepticism throughout the planned scope and timing of the audit the audit. I also: and significant audit findings, including any significant deficiencies in internal control that I • identify and assess the risks of material identify during my audit. misstatement of the financial statements, whether due to fraud or error, design and In addition I am required to obtain evidence perform audit procedures responsive to sufficient to give reasonable assurance that those risks and obtain audit evidence that is the income and expenditure reported in the sufficient and appropriate to provide a basis financial statements have been applied to for my opinion. The risk of not detecting a the purposes intended by Parliament and the material misstatement resulting from fraud financial transactions recorded in the financial is higher than for one resulting from error, statements conform to the authorities which as fraud may involve collusion, forgery, govern them. intentional omissions, misrepresentations or the override of internal control. Other information The Accounting Officer is responsible for the • obtain an understanding of internal control other information. The other information relevant to the audit in order to design comprises information included in the annual audit procedures that are appropriate in the report, but does not include the parts of the circumstances, but not for the purpose of Accountability Report described in that report expressing an opinion on the effectiveness of as having been audited, the financial statements NHS Resolution’s internal control. and my auditor’s report thereon. My opinion • evaluate the appropriateness of accounting on the financial statements does not cover the policies used and the reasonableness of other information and I do not express any form accounting estimates and related disclosures of assurance conclusion thereon. In connection made by management. with my audit of the financial statements, my responsibility is to read the other information • evaluate the overall presentation, structure and, in doing so, consider whether the other and content of the financial statements, information is materially inconsistent with including the disclosures, and whether the the financial statements or my knowledge consolidated financial statements represent obtained in the audit or otherwise appears to the underlying transactions and events in a be materially misstated. If, based on the work manner that achieves fair presentation. I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.
134 Accountability report
Opinion on other matters Matters on which I report by exception
In my opinion: I have nothing to report in respect of the following matters which I report to you if, • the parts of the Accountability Report in my opinion: to be audited have been properly prepared in accordance with Secretary of State • adequate accounting records have not been directions made under the National Health kept or returns adequate for my audit have Service Act 2006; not been received from branches not visited by my staff; or • in the light of the knowledge and understanding of NHS Resolution and its • the financial statements and the parts of the environment obtained in the course of the Accountability Report to be audited are not audit, I have not identified any material in agreement with the accounting records misstatements in the Performance Report or and returns; or the Accountability Report; and • I have not received all of the information and • the information given in the Performance explanations I require for my audit; or Report and Accountability Report for the financial year for which the financial • the Governance Statement does not reflect statements are prepared is consistent with compliance with HM Treasury’s guidance. the financial statements.
Report
I have no observations to make on these financial statements.
Gareth Davies Date: Friday 5 July 2019 Comptroller and Auditor General National Audit Office 157–197 Buckingham Palace Road Victoria, London SW1W 9SP
135 Financial statements
Financial statements Financial statements
137 NHS Resolution Annual report and accounts 2018/19
Statement of comprehensive net expenditure for the year ended 31 March 2019
31 March 2019 31 March 2018 Notes £000 £000
Other operating income 3 (2,053,909) (2,008,155)
Total operating income (2,053,909) (2,008,155)
Staff costs 2 17,605 15,776 Purchase of goods and services 2 5,907 5,151 Depreciation and impairment charges 2 820 640 Provision expense 7 8,386,821 13,723,095 Other operating expenditure 2 1,503 1,450
Total operating expenditure 8,412,656 13,746,112
Net operating expenditure 6,358,747 11,737,957
Finance expenditure 7 422,465 552,255
Net expenditure for the year 6,781,212 12,290,212
Other comprehensive net expenditure 0 0
Comprehensive net expenditure for the year 6,781,212 12,290,212
The Notes at pages 142 to 177 form part of these accounts.
138 Financial statements
Statement of financial position as at 31 March 2019
31 March 2019 31 March 2018 Notes £000 £000 Non-current assets: Property, plant and equipment 1,972 1,662 Intangible assets 984 653 Total non-current assets 2,956 2,315 Current assets: Trade and other receivables 4 15,652 15,281 Cash and cash equivalents 5 182,092 388,311 Total current assets 197,744 403,592
Total assets 200,700 405,907 Current liabilities: Trade and other payables 6 (78,850) (38,580) Provisions for liabilities and charges – known claims 7 (2,476,653) (2,665,179) Total current liabilities (2,555,503) (2,703,759)
Total assets less current liabilities (2,354,803) (2,297,852) Non-current liabilities: Provisions for liabilities and charges – known claims 7 (32,920,914) (29,106,772) Provisions for liabilities and charges – IBNR 7 (47,978,000) (45,216,000) Total non-current liabilities (80,898,914) (74,322,772)
Total assets less liabilities (83,253,717) (76,620,624) Taxpayers' equity General fund 3,821 1,930 ELS reserve (1,447,553) (1,446,402) Ex-RHA reserve (73,492) (74,118) DHSC clinical reserve (3,903,402) (3,872,347) DHSC non-clinical reserve (111,409) (98,558) CNST reserve (77,565,305) (70,979,436) PES reserve (4,974) (6,819) LTPS reserve (151,403) (144,874) Total taxpayers' equity (83,253,717) (76,620,624)
The General Fund and individual scheme reserves are used to account for all financial resources. See the Understanding our indemnity schemes section for a brief description of each scheme to which the reserves relate. Helen Vernon Chief Executive and Accounting Officer The financial statements on pages 136 to 141 were approved by the Board on Wednesday 19 June 2019 Date: Wednesday 3 July 2019 and signed by Helen Vernon. The Notes at pages 142 to 177 form part of these accounts.
139 NHS Resolution Annual report and accounts 2018/19
Statement of cash flows for the year ended 31 March 2019
31 March 2019 31 March 2018 Notes £000 £000 Cash flows from operating activities Net expenditure (6,781,212) (12,290,212) Other cash flow adjustments 2 820 640 (Increase)/decrease in receivables 4 (371) 5,138 Increase/(decrease) in payables 6 40,270 (9,594) Increase/(decrease) in provisions 7 6,387,616 11,990,186
Net cash (outflow) from operating activities (352,877) (303,842)
Cash flows from investing activities Purchase of property, plant and equipment (943) (660) Purchase of intangible assets (518) (314) Asset write-off 0 3 Net cash (outflow) from investing activities (1,461) (971)
Cash flows from financing activities Net Parliamentary funding 148,119 540,451
Net financing 148,119 540,451
Net (decrease)/increase in cash and cash equivalents (206,219) 235,638
Cash and cash equivalents at the beginning of the period 388,311 152,673
Cash and cash equivalents at the end of the period 5 182,092 388,311
The Notes at pages 142 to 177 form part of these accounts.
140 Financial statements
£000 Total Total 148,119 540,451 (25,835) Reserves 2,053,909 (8,835,121) (2,762,000) (6,047,286) (6,781,212) (64,870,863) (83,253,717) (12,290,212) (76,620,624) (77,161,075)
0 LTPS LTPS £000 1,500 16,998 47,806 (6,529) (4,015) Reserve (54,335) (10,000) (40,320) (163,372) (151,403) (144,874) (146,374)
0 0 PES (59) £000 1,845 11,500 (2,303) (4,974) (4,516) (9,655) (1,000) (8,596) (6,819) (6,819) Reserve
0 £000 CNST 345,634 Reserve (12,757) 1,993,516 (8,579,385) (2,813,000) (5,753,628) (6,585,869) (59,720,617) (77,565,305) (11,604,453) (70,979,436) (71,325,070)
0 £000 Non- (131) 9,000 9,000 DHSC 15,134 clinical (1,720) Reserve (21,851) (20,000) (98,558) (21,851) (122,692) (111,409) (107,558)
0 £000 (425) DHSC 91,000 Clinical 100,000 132,108 Reserve (487,667) (131,055) (221,630) (131,055) (3,516,788) (3,903,402) (3,872,347) (4,004,455)
0 (8) £000 (374) (374) 4,014 1,634 1,000 2,128 (2,000) Reserve (80,260) (73,492) (74,118) (76,246) Ex-RHAs
0 ELS £000 (125) 29,000 42,607 (7,000) Reserve (30,151) (30,151) (23,026) (224,080) (1,264,929) (1,447,553) (1,446,402) (1,489,009)
0 0 98 £000 Fund 3,821 9,119 1,087 1,930 7,474 (5,642) (8,315) (5,544) (7,228) (8,315) General
3 7 2 7 Notes 1 The Net Parliamentary funding represents the cash drawdown of £148,119 in 2018/19 for DHSC-funded indemnity schemes and administration costs. The Notes at pages 142 to 177 form part of these accounts. Net expenditure for the year Balance at 31 March 2017 Balance at 31 March Changes in taxpayers’ equity for 2017/18 Balance at 31 March 2019 Balance at 31 March Total recognised income and recognised Total expense as at 2017/18 Total recognised income and recognised Total expense for 2018/19 Income Scheme and other income (Increase)/decrease in the provision for IBNR Expenditure Authority and claims administration Balance at 31 March 2018 Balance at 31 March Changes in taxpayers’ equity for 2018/19 Net Parliamentary funding Net Parliamentary funding (Increase)/decrease in provision for known claims
Statement of changes in taxpayers’ equity for the year ended 31 March 2019 March ended 31 year the equity for taxpayers’ in changes of Statement 1
141 NHS Resolution Annual report and accounts 2018/19
Notes to the accounts
1. Accounting policies and errors, requires disclosure in respect of new IFRSs, amendments and interpretations The financial statements have been prepared that are, or will be, applicable after the in accordance with the 2018/19 Government accounting period. There are a number of IFRSs, Financial Reporting Manual (FReM) issued by amendments and interpretations issued by the HM Treasury. The accounting policies contained International Accounting Standards Board that in the FReM apply International Financial are effective for financial statements after this Reporting Standards (IFRSs) as adapted or accounting period. interpreted for the public sector context. Where the FReM permits a choice of accounting policy, The following have not been adopted early in the accounting policy which is judged to be these accounts: most appropriate to the particular circumstances • IFRS 16 Leases: The effective date is for of NHS Resolution for the purpose of giving accounting periods beginning on, or after a true and fair view has been selected. The 1 January 2019, but not yet adopted by particular policies adopted by NHS Resolution the FReM. are described below. They have been applied consistently in dealing with items that are • IFRS 17 Insurance Contracts: The effective considered material to the accounts. date is for accounting periods beginning on, or after 1 January 2021, but not yet adopted The accounts are presented in pounds sterling by the FReM. and all values are rounded to the nearest thousand pounds (£000). The functional • IFRIC 23 Uncertainty over Income Tax currency of NHS Resolution is pounds sterling. Treatments: The effective date is for accounting periods beginning on, or after 1.1. Accounting conventions 1 January 2019.
This account is prepared under the historical None of these new or amended standards and cost convention, modified to account for the interpretations are anticipated to have future revaluation of property, plant and equipment material impact on the financial statements of and intangible assets where material, at their NHS Resolution. value to the business by reference to current cost. This is in accordance with directions issued 1.3. Income by the Secretary of State for Health and Social The IFRS 15 (Revenue from contracts with Care and approved by HM Treasury. customers) standard has superseded the IAS 1.2. Early adoption of standards, 18 (Revenue) standard, effective for reporting amendments and interpretations periods beginning on or after 1 January 2018. The standard has been adapted for the FReM, NHS Resolution has not adopted any IFRSs, which expands the definition of a contract amendments or interpretations early. to include legislation and regulations which enables an entity to receive cash or another Standards, amendments and interpretations in financial asset from another entity Contracts issue but not yet effective or adopted are seen to exist for fees, levies and charges as International Accounting Standard 8, accounting the supporting legislation is deemed to enforce policies, changes in accounting estimates obligations on both parties.
142 Financial statements
NHS Resolution have undertaken an assessment instalments over the term of the yearly of all income to ensure that, where within contract, as NHS Resolution’s performance the scope of IFRS15, the provisions of the new obligations are fulfilled. standard have been met. There has been - Revenue from contracts in relation to no material change in revenue recognition professional services: Invoices are raised either as a consequence of applying IFRS 15. No yearly or quarterly as per the agreed contract. restatements are required in respect of the Regardless of the timing on raising invoices prior period. for payment, we recognise revenue in equal A source of funding for NHS Resolution as a instalments over the accounting year, as Special Health Authority is Parliamentary grant performance obligations within the contractual from DHSC within an approved cash limit, agreements are fulfilled. which funds the ELS, Ex-RHA, DHSC clinical and - Revenue from contracts in relation to training DHSC liabilities schemes, the additional costs courses: We only recognise revenue in this of the personal injury discount rate arising category after the training has taken place; from the change in the rate announced by which is the point at which NHS Resolution’s the Lord Chancellor in March 2017, and some performance obligations are assessed to have administration costs. Parliamentary funding is been fulfilled. recognised in the financial period in which it is received. 1.4. Taxation The operating income disclosed in Note 3 to NHS Resolution is not liable to pay corporation the accounts is that which relates directly to tax. Expenditure is shown net of recoverable the operating activities of NHS Resolution. NHS VAT. Irrecoverable VAT is charged to the most Resolution currently has the following income appropriate expenditure heading or capitalised streams, the accounting treatment of which if it relates to an asset. have been assessed against the requirements 1.5. NHS Pensions Scheme of IFRS15: - Revenue from contracts with customers in NHS Resolution offers two defined contribution relation to indemnity schemes: NHS Resolution pension schemes to staff, the NHS pension receives contributions for the provision of scheme and the National Employment Savings indemnity cover for the CNST, LTPS and PES Trust (NEST). Past and present employees are covered by the provisions of the NHS schemes, which their authorising legislation Pensions Scheme. Details of the benefits gives them the right to collect. This is deemed, payable under these provisions can be per the FREM adaptation of IFRS15, to found on the NHS Pensions website at constitute a contractual arrangement between www.nhsbsa.nhs.uk/pensions. NHS Resolution and its scheme members. The period of cover is annual, commencing on 1 The NHS Pension scheme is an unfunded, April each year (contracts do not span financial defined benefit scheme that covers NHS years). Invoices are raised yearly, quarterly, employers, GP practices and other bodies, over 10 months and monthly according to the allowed under the direction of the Secretary contract agreed with each member. Revenue of State for Health and Social Care, is recognised in our accounts in equal monthly in England and Wales.
143 NHS Resolution Annual report and accounts 2018/19
The scheme is not designed to be run in a way website. Copies can also be obtained from The that would enable NHS bodies to identify their Stationery Office. share of the underlying scheme assets and ii) Full actuarial (funding) valuation liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: The purpose of this valuation is to assess the the cost to the NHS body of participating level of liability in respect of the benefits due in the scheme is taken as equal to the under the scheme (taking into account its recent contributions payable to the scheme for the demographic experience), and to recommend accounting period. the contribution rates. The last published In order that the defined benefit obligations actuarial valuation undertaken for the NHS recognised in the financial statements do not Pension Scheme was completed for the year differ materially from those that would be ending 31 March 2019. determined at the reporting date by a formal The Scheme Regulations were changed to allow actuarial valuation, the FReM requires that contribution rates to be set by the Secretary “the period between formal valuations shall of State for Health and Social Care, with the be four years, with approximate assessments in consent of HM Treasury, and consideration intervening years”. An outline of these follows: of the advice of the Scheme Actuary and i) Accounting valuation appropriate employee and employer representatives as deemed appropriate. A valuation of the scheme liability is carried out annually by the scheme actuary as at the end of iii) Scheme provisions the reporting period. This utilises an actuarial The NHS Pension Scheme provided defined assessment for the previous accounting period benefits, which are summarised below. This list in conjunction with updated membership and is an illustrative guide only, and is not intended financial data for the current reporting period, and is accepted as providing suitably robust to detail all the benefits provided by the Scheme figures for financial reporting purposes. The or the specific conditions that must be met valuation of the scheme liability as at 31 March before these benefits can be obtained. 2019 is based on valuation data as at 31 March The 2015 scheme is calculated using career 2018, updated to 31 March 2019 with summary average re-valued earnings (CARE) based on a global member and accounting data. proportion of pensionable earnings in each year In undertaking this actuarial assessment, the of membership. The 1995/2008 scheme is a ‘final methodology prescribed in IAS 19, relevant salary’ scheme. Annual pensions are normally FReM interpretations and the discount rate based on 1/80th for the 1995 section and of prescribed by HM Treasury have also been the best of the last three years pensionable used. The latest assessment of the liabilities pay for each year of service, and 1/60th for of the scheme is contained in the scheme the 2008 section of reckonable pay per year of actuary report, which forms part of the annual membership. Members who are practitioners as NHS Pension Scheme (England and Wales) defined by the Scheme Regulations have their Pension Accounts, published annually. These annual pensions based upon total pensionable accounts can be viewed on the NHS Pensions earnings over the relevant pensionable service.
144 Financial statements
With effect from 1 April 2008, members Additional Voluntary Contributions run by the can choose to give up some of their annual Scheme’s approved providers or by other Free pension for an additional tax-free lump sum, Standing Additional Voluntary Contributions up to a maximum amount permitted under (FSAVC) providers. HMRC rules. This new provision is known as The expected contribution to the plan ‘pension commutation’. for 2019/20 is £3.1 million (£0.7 million of Annual increases are applied to pension which is due to the 2019/20 increase in payments at rates defined by the Pensions pension contribution). (Increase) Act 1971, and are based on changes 1.6. Pensions costs – NEST in retail prices in the twelve months ending 30 September in the previous calendar year. From The Pensions Act 2008 and 2011 Automatic 2011/12, the Consumer Price Index (CPI) has been Enrolment regulations required all employers used and replaced the Retail Prices Index (RPI). to enrol workers meeting certain criteria into a pension scheme and pay contributions toward Early payment of a pension, with enhancement, their retirement. For those staff not entitled to is available to members of the scheme who are join the NHS Pension Scheme, NHS Resolution permanently incapable of fulfilling their duties used an alternative pension scheme called NEST effectively through illness or infirmity. A death to fulfil its Automatic Enrolment obligations. gratuity of twice final year’s pensionable pay for death in service, and five times their annual NEST stands for National Employment Savings pension for death after retirement is payable to Trust and is a defined contribution pension members in membership for over two years. scheme established by law to support the introduction of Auto Enrolment. Contributions For early retirements other than those due to are taken from qualifying earnings, which are ill health, the additional pension liabilities are currently from £6,032 up to £46,350, but will not funded by the scheme. The full amount of be reviewed every year by the government. the liability for the additional costs is charged The initial employee contribution was 1% to the employer. of qualifying earnings, with an employer Members can purchase additional service in the contribution of 1%. This will increase in stages to NHS Scheme and contribute to Money Purchase meet levels set by government.
Employee and employer contributions to NEST
Employee Employer Total Date contributions (%) contributions (%) contributions (%)
1 April 2014 1 1 2
6 April 2018 3 2 5
6 April 2019 5 3 8
145 NHS Resolution Annual report and accounts 2018/19
There are no restrictions on how much can go In November 2017, following consultation with into a worker’s NEST pot. However, members HM Treasury, the Financial Reporting Advisory may pay additional tax on contributions that Board (FRAB) recommended that nominal go over the annual allowance set by the discount rates should be applied to general government. Most members won’t go over provisions rather than the real discount rates this amount. Pension members can choose to previously applied to an inflation rate. This let NEST manage their retirement fund or change did not require a restatement of prior take control themselves and alter contribution year balances as this was a change in accounting levels and switch between different funds. estimates and not a policy change. In December If pension members leave NHS Resolution they 2018, the following nominal discount rates were can continue to pay into NEST. used: short-term (< 5 years) 0.76%, medium- term (5-10 years) 1.14%, long-term (10-40 years) NEST pension members can take their money out of NEST at any time from age 55. If suffering 1.99%, and very long-term (over 40 years) 1.99%. from serious ill health or incapable of working The nominal rate derived from the real discount due to illness, members can request to take rate applied to the RPI inflation rate used in their money out of NEST early. They can take December 2017 was short- 0.95%, medium- the entire retirement fund as cash, use it to 1.54% and long-term 1.84%. There is now a very buy a retirement income or a combination. long-term rate which was not set out in 2017/18. Additionally, members can transfer their NEST The ELS, Ex-RHA and DHSC clinical and non- retirement fund to another scheme. NEST clinical schemes are funded by DHSC, CNST, is run by NEST Corporation, a trustee body LTPS and PES from member contributions, and which is a non-departmental public body the accounts for the schemes are prepared in operating at arm’s length from government accordance with IAS 37. A provision for these and is accountable to Parliament through the schemes is calculated in accordance with IAS Department for Work and Pensions. 37 by discounting the gross value of all claims 1.7. Short-term employee benefits received: this is disclosed in Note 7.1. The calculation is made using: Salaries, wages and employment-related payments are recognised in the period in which i) probability factors – the probability of each the service is received from employees. Leave claim having to be settled is assessed between that has been earned but not taken at the year- 10% and 94%. This probability is applied to the end is not accrued on the grounds of materiality. gross value to give the probable cost of each claim; and 1.8. Provisions ii) a discount factor calculated using the real NHS Resolution provides for legal or constructive discount rates noted above, and claims inflation obligations that are of uncertain timing or (varying between schemes) of between 4.35% amount at the balance sheet date on the basis and 9.10%, is applied to the probable cost to of the best estimate of the expenditure required take into account the likely time to settlement. to settle the obligation. Where the effect of the time value of money is significant, the estimated The difference between the gross value of risk-adjusted cash flows are discounted using the claims and the probable cost of each claim as HM Treasury’s discount rate. calculated above is also discounted, taking into
146 Financial statements
account the likely time to settlement, and is losses at the reporting date as the difference included in contingent liabilities as set out in between the asset’s gross carrying amount Note 9. and the present value of the estimated future cash flows discounted at the financial asset’s Resolution of claims is difficult to predict as original effective interest rate. Any adjustment many factors can lead to delay during the is recognised in profit or loss as an impairment settlement process while emerging evidence gain or loss. In the current year, following review can alter valuation and thus NHS Resolution of NHS Resolution debts, we have recognised an makes a best estimate regarding the likely year expected credit loss of £170,644. of settlement and expected value of the claim against each notified claim. These estimates are 1.10. Financial liabilities reviewed throughout the life of the claim and amended to reflect variations in expectations, Financial liabilities are recognised in the which inevitably alter the value provided. Statement of Financial Position when NHS Resolution becomes a party to the contractual 1.9. Financial assets provisions of the financial instrument or, in the case of trade payables, when the goods or IFRS 9 supersedes IAS 39. IFRS 9 introduces a services have been received. Financial liabilities new impairment model for financial assets that are de-recognised when the liability has been is based on expected losses rather than incurred discharged; that is, the liability has been paid losses. It applies to amortised-cost financial or has expired. assets and those categorised as fair value through other comprehensive income (FVTOCI) Financial liabilities are initially recognised at and fair value through profit and loss (FVTPL). fair value. The simplified approach to impairment, in 1.11. Critical judgments and key sources accordance with IFRS 9, measures the loss of estimation uncertainty allowance for trade receivables, contract assets and lease receivables at an amount equal In the application of NHS Resolution’s accounting policies, which are described in to lifetime expected credit losses (stage 1). Note 1, the directors are required to make For other financial assets, the loss allowance judgments, estimates and assumptions is measured at an amount equal to lifetime about the carrying amounts of assets and expected credit losses if the credit risk on the liabilities that are not readily apparent from financial instrument has increased significantly other sources. The estimates and associated since initial recognition (stage 2). assumptions are based on historical experience DHSC provides a guarantee of last resort against and other factors that are considered to be the debts of its arm’s length bodies and NHS relevant. The judgments that have the most bodies and as such NHS Resolution does not significant effect on the amounts recognised in recognise stage 1 or stage 2 losses against the financial statements relate to the calculation these bodies. of the provisions for known claims and for IBNR, as explained in Note 7. Actual results may differ For financial assets that have become credit from these estimates. impaired since initial recognition (stage 3), NHS Resolution measures expected credit The estimates and underlying assumptions
147 NHS Resolution Annual report and accounts 2018/19
are reviewed on an ongoing basis by NHS 1.12. IFRS 8 – operating segments Resolution, supported by its actuaries, the Government Actuary’s Department (GAD). NHS Resolution has one reportable segment Revisions to accounting estimates are recognised under IFRS 8 but income and expenditure are in the period in which the estimate is revised if disaggregated by different scheme types in the the revision affects only that period or in the Statement of Changes in Taxpayers’ Equity. period of the revision and future periods if the 1.13. Maternity incentive scheme (MIS) revision affects both current and future periods. The MIS has been introduced to support NHS Resolution’s Reserving and Pricing the delivery of safer maternity care through Committee documents this ongoing review the introduction of an incentive element to process, to facilitate the review of the various contributions to the Clinical Negligence Schemes assumptions used in constructing the actuarial for Trusts (CNST). models which the Accounting Officer relies upon when confirming the estimates used within Where a trust has successfully demonstrated these accounts. The work of the membership achievement against the 10 safety actions, it will of the Reserving Committee includes the recover its element of CNST contribution that Accounting Officer, as Chair, alongside key went in to the maternity incentive fund, plus a executive staff from within NHS Resolution and share of any unallocated funds. Trusts unable to also a representative non-executive director. demonstrate achievement of the 10 actions may be able to recover a lesser sum from the fund to NHS Resolution does not consider that any of help them achieve all actions. our indemnity schemes (see Understanding our indemnity schemes) fall under the definition of As NHS Resolution is not deemed a customer in an insurance contract as per IFRS 4 Insurance this arrangement, the monies received from the Contracts. This is because they are risk-pooling scheme are considered out of scope of IFRS 15. schemes and the significant insurance risk is Instead they are treated as per IAS 1, in that the passed back to the members through annual receipts of funds are offset against the cost of contributions which cover the expected costs of the scheme. the schemes, or directly to DHSC through the provision of financing.
148 Financial statements
2. Expenditure
2018/19 2018/19 2017/18 Notes £000 £000 £000
Non-executive Members' remuneration 123 92 Other salaries and wages1 Salaries and wages 14,328 12,821 Social security costs 1,542 1,344 Pension costs 1,682 1,564 Apprenticeship levy 53 47 Education, training and conferences 154 146 Establishment expenses 1,001 810 Hire and operating lease rental Land and buildings 1,061 1,127 Lease cars 9 4 Photocopiers 25 19 Franking machine 2 13 Vending machine 3 4 Insurance 227 244 Transport (business travel) 156 165 Premises and fixed plant 2,820 2,173 External contractors Actuary's advice 734 700 Primary Care Appeals advisory expenditure 39 25 Consultancy 0 80 External corporate legal fees2 221 138 Practitioner Performance Advice assessment 239 452 expenditure Practitioner Performance Advice professional services 9 38 Other3 349 115 Auditor's remuneration: audit fees4 154 154 Internal audit fees 74 75 Bank charges and interest 10 27 25,015 22,377 Depreciation 633 431 Amortisation 187 209 820 640 25,835 23,017 Other finance costs - unwinding of discount 7 422,465 552,255 Increase in provision for known claims (excl. unwinding 7 5,518,713 2,564,825 of discounts and change in discount rate) Change in the discount rate5 7 269,108 15,599,270 Increase / (decrease) in the provision for IBNR 7 2,599,000 (4,441,000) 8,809,286 8,835,1216 14,298,367
1 Additional explanations can be found in Remuneration and Staff Report in the Accountability Report section. 2 External corporate legal fees do not include legal fees in relation to clinical and non-clinical claims. These costs are included within Note 7 Provisions. 3 Other includes the recognition of expected credit loss under IFRS 9 of £171k. 4 NHS Resolution did not make any payments to its auditors for non-audit work. 5 The discount rates used are mandated by HM Treasury and are set out at Note 7.3 to the accounts (Sensitivity analysis). 6 Of the £8,835 million shown above, £6.9 million is shown as administration expenditure in DHSC consolidated group accounts.
149 NHS Resolution Annual report and accounts 2018/19
3. Operating income
2018/19 2017/18 £000 £000 CNST contributions 1,993,516 1,953,604 LTPS contributions 47,806 49,172 PES contributions 11,500 4,069 Practitioner Performance Advice 1,054 1,269 Other income 33 41
Total 2,053,909 2,008,155
150 Financial statements
0 36 12 2018 £000 Total 2018 £000 2018 £000 Total Total 5,527 2,776 4,241 8,252 13,142 38,580 19,875 15,281 235,638 152,673 388,311 31 March 31 March 31 March
0 174 2019 £000 Total 2019 £000 2019 £000 Total Total (171) 5,473 4,285 3,485 8,053 18,333 78,850 54,870 15,652 388,311 182,092 31 March (206,219) 31 March 31 March
0 0 0 43 132 705 432 £000 £000 £000 (387) 2,439 5,862 3,291 1,400 1,013 1,180 Administration Administration Administration
0 0 0 0
814 174 140 LTPS LTPS £000 £000 2,041 1,053 3,892 4,032 LTPS £000 (188) 39,331 39,143
0 0 0 6 0 0 6 0 11 PES 211 222
PES £000 £000 PES £000 3,354 3,054 6,408
0 0 139 634 £000 (171) CNST 7,195 7,797
£000 CNST 3,133 14,579 67,486 49,774 £000 CNST 0 0 0 0
330,488 114,311 12 12 0 0 (216,177) 71 non- £000 340 269 DHSC non- £000 clinical DHSC
clinical
ELS 0 0 0 9 £000 6,327
13,938 20,265 0 0 £000 1,739 1,748 DHSC 356 640 284 clinical £000 DHSC clinical
0 0 0 852 100 952 ELS
369 253 622 £000 0 £000 68 Ex-RHA ELS 199 £000 2,208 2,475
0 0 0 1 38 39 Ex- RHA £000 1 Other payables At 31 March 2019 Accruals Change during the year Prepaid income At 1 April 2018 NHS payables revenue NHS receivables – revenue Accrued income Expected credit loss Prepayments Other receivables
All Cash balances are held in Government Banking Service accounts. 4. Receivables 5. Cash and cash equivalents 1 liabilities payables and other current 6. Trade
151 NHS Resolution Annual report and accounts 2018/19
£000 Total 422,465 106,108 163,000 7,742,745 3,625,616 2,599,000 2,476,653 2,762,000 76,987,951 45,216,000 83,375,567 83,375,567 31,771,951 69,033,763 47,978,000 11,865,151 35,397,567 (2,224,032) (2,421,670)
0 0 55 LTPS £000 (634) 67,480 66,000 76,000 10,000 94,297 42,837 (7,580) 10,000 167,877 170,297 170,297 101,877 127,460 (26,581) (47,900)
1 0 0 (6) 633 PES £000 3,000 9,348 4,000 1,000 8,004 9,981 5,977 1,000 11,767 12,348 13,981 13,981 (3,166) (7,963)
£000 CNST 89,952 355,288 160,000 7,374,294 3,521,724 2,813,000 2,653,000 2,291,259 71,271,260 43,701,000 77,605,984 77,605,984 27,570,260 64,071,663 46,514,000 11,243,062 31,091,984 (2,065,906) (2,231,904)
25 (11) £000 9,848 1,000 3,986 DHSC 88,000 16,935 20,000 19,000 15,641 12,714 (4,221) (8,142) (5,941) 104,935 120,714 120,714 101,087 108,000 non-clinical
£000 1,000 DHSC 45,512 12,473 95,635 clinical 234,253 132,951 333,430 (91,000) (70,608) (88,679) (92,000) 3,892,434 1,098,000 3,934,385 3,934,385 2,794,434 3,505,320 1,007,000 2,927,385
ELS £000 7,000 6,000 4,053 1,000 20,434 44,958 35,863 251,000 258,000 133,936 (15,094) (46,419) (38,120) 1,464,983 1,456,889 1,456,889 1,213,983 1,287,090 1,198,889
2 0 145 281 £000 1,150 9,000 2,000 2,000 3,618 1,096 74,114 73,317 73,317 65,114 68,603 11,000 62,317 (2,797) (3,210) (1,163) Ex-RHA 1 1 Change in discount rate Unwinding of discount Provision not required written back Movement in known claims Provided in the year Total provisions as at 1 April 2018 provisions Total Analysis of expected timing discounted cash flows Opening provisions for IBNR Movement in IBNR Change in discount rate Total provision as at 31 March 2019 as at 31 March provision Total Opening provision for known claims Later than 5 years Closing provisions for IBNR Provisions utilised in the year Provided in the year Later than one year and not later five years Closing provision for known claims Not later than one year T change in discount rates million for is known £269 million (£106 million for claims IBNR). and £163 D settling on a periodical payment basis rather than lump sum, claims which longer take than anticipated resolve to and changes in the value and timing of payments. he change in discount rate represents the change in provision as a result of a change in the discount rates set by The HM Treasury. total change in provision due the to iscounted cash flowtimings are based upon actuarial estimates for knownclaims and IBNR. Actual cash flows varywill to adue number of factors including claims The provisions relating NHS to Resolution’s indemnity schemes are the only provisions made by NHS Resolution. 1 2 7. Provisions for liabilities and charges 7. Provisions
152 Financial statements
£000 Total 552,255 6,275,828 4,976,270 5,808,186 6,182,000 2,665,179 25,963,765 39,034,000 64,997,765 10,623,000 31,771,951 45,216,000 76,987,951 13,026,817 61,295,955 76,987,951 (4,441,000) (3,711,003) (2,285,164)
0 127 202 LTPS £000 1,000 82,000 70,810 66,000 45,648 (1,188) 103,065 185,065 101,877 167,877 122,229 167,877 (26,714) (45,613) (17,000) (16,000)
0 0 0 0 PES £000 8,302 2,000 9,843 1,046 1,000 1,000 9,348 3,000 1,002 10,302 12,348 11,346 12,348 (2,313) (6,484)
£000 CNST 466,774 5,859,760 4,284,164 5,243,689 6,244,000 2,438,685 22,326,571 37,457,000 59,783,571 10,230,000 27,570,260 43,701,000 71,271,260 12,224,574 56,608,001 71,271,260 (3,986,000) (3,308,275) (2,058,734)
25 74 £000 3,219 9,953 DHSC 13,716 12,528 11,000 16,935 88,000 19,444 75,538 (3,883) (5,525) 112,000 125,716 104,935 104,935 (35,000) (24,000) non-clinical
£000 DHSC 58,185 clinical 214,733 457,557 403,837 323,000 122,422 495,850 (27,000) 2,390,597 1,125,000 3,515,597 2,794,434 1,098,000 3,892,434 3,274,162 3,892,434 (216,193) (110,445) (350,000)
ELS £000 8,000 25,609 55,000 35,831 243,000 108,068 222,534 159,890 251,000 155,552 (47,000) (56,077) 1,054,093 1,297,093 1,213,983 1,464,983 1,273,600 1,464,983 (140,244)
86 £000 1,535 3,000 9,000 1,294 8,166 67,421 13,000 80,421 11,739 65,114 74,114 64,654 74,114 (2,307) (7,000) (4,000) (2,286) Ex-RHA (13,381) Opening provision for known claims Opening provisions for IBNR as at 1 April 2017 provisions Total Movement in known claims Provided in the year Provision not required written back Unwinding of discount Change in discount rate Provisions utilised in the year Movement in Net IBNR Change in discount rate Provided in the year Closing provision for known claims Closing provisions for IBNR 2018 as at 31 March provisions Total Analysis of expected timing discounted cash flows Not later than one year Later than one year and not later five years Later than 5 years Provisions for liabilities and charges (prior year) Provisions
153 NHS Resolution Annual report and accounts 2018/19
£000 Total 422,465 269,108 7,742,745 2,599,000 8,386,821 8,809,286 (2,224,032)
55 LTPS £000 (634) 67,480 10,000 50,265 50,320 (26,581)
1 (6) PES £000 1,000 9,595 9,596 11,767 (3,166)
£000 CNST 355,288 249,952 7,374,294 2,653,000 8,211,340 8,566,628 (2,065,906)
25 989 £000 9,848 DHSC 19,000 21,695 21,720 (8,142) non-clinical
£000 DHSC 45,512 13,473 85,118 clinical 234,253 130,630 (70,608) (92,000)
ELS £000 5,053 6,000 9,592 44,958 30,026 (46,419) 20,434
145 281 366 £000 (784) 1,150 2,000 (3,210) Ex-RHA
Unwinding of discount / Finance charge Increase in known claims provision (Gross of payments) Provision not required written back Change in discount rate (known claims and IBNR) Increase /(decrease) in provision for IBNR expense charged to Statement Provision net expenditure of comprehensive charge to Statement of Total net expenditure comprehensive 7.1. Reconciliation of Note 7 to Statement of comprehensive net expenditure net expenditure 7.1. Reconciliation of Note 7 to Statement comprehensive
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7.2. Explanatory notes Clinical Negligence Scheme for Trusts (CNST)
Nature of the obligation This scheme provides indemnity cover to providers of NHS services, NHS commissioners, NHS Resolution provides indemnity cover for and DHSC arm’s length bodies for claims arising clinical negligence and non-clinical claims under from incidents involving clinical negligence. seven schemes. Provisions are calculated in Contributions are collected from members to accordance with IAS 37, and relate to liabilities make settlements and administer claims on arising from incidents covered by these schemes: their behalf. The scheme has been operating • Claims received by NHS Resolution since 1 April 1995, and claims are included in the (known claims) provision where:
• Settled Periodical Payment Orders (PPOs) • NHS Resolution has assessed the probable where the settlement of a claim involves cost and time to settlement in accordance payments to the claimant into the future, with the scheme guidelines; generally for their lifetime • they are qualifying incidents; and • Incurred but not reported (IBNR) provision • the organisation against which the where claims have not yet been received but claim is being made remains a member where it can be reasonably predicted that: of the scheme. an adverse incident has occurred, and º As at 31 March 2002, all outstanding claims for º a transfer of economic benefits will incidents post 1 April 1995 became the direct occur, and responsibility of NHS Resolution. This ‘call in’ of CNST claims effectively means that member º a reasonable estimate of the likely value trusts are no longer responsible for accounting can be made. for claims made against them, although they do Scope of the schemes remain the legal defendant. Existing Liabilities Scheme (ELS), Ex-Regional Property Expenses Scheme (PES) and Liability Health Authorities (Ex-RHA) and DHSC clinical to Third Parties Scheme (LTPS) and non-clinical Liabilities Schemes The PES and LTPS schemes were introduced in Claims are included in the ELS provision on the April 1999 following the Secretary of State for basis that the incident occurred on or before 31 Health and Social Care’s decision that NHS trusts March 1995. Qualifying claims under the Ex-RHA should not insure with commercial companies scheme are claims brought against the former for non-clinical risks, other than motor vehicles Regional Health Authorities whose clinical and other defined areas (e.g. PFI schemes). negligence liabilities passed to NHS Resolution The schemes are managed and funded via with effect from 1 April 1996. Claims against the same mechanisms as the CNST except that DHSC clinical and non-clinical Liabilities relate to specific excesses exist for some types of claims. claims against dissolved bodies where there is Thus, the provision recorded in these accounts no successor body and a number of other claims relates only to NHS Resolution’s proportion of NHS Resolution is managing on behalf of DHSC. each claim.
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Assumption of liabilities upon cessation The methodologies for the three key elements in NHS Resolution’s provisions are as follows: The NHS (Residual Liabilities) Act 1996 requires the Secretary of State for Health and Social • Known claims – The provision is based on Care to exercise his statutory powers to deal the case estimates of individual reported with the liabilities of a Special Health Authority, claims received by NHS Resolution. The if it ceases to exist. This includes the liabilities case estimates are adjusted for the case assumed by NHS Resolution in respect of handlers’ estimated probability of each claim all schemes. being successful, for expected future claims inflation to settlement, for the likelihood Process and methodology for setting that they will go on to settle as structured the provision settlements – with part of the claim paid NHS Resolution contracts actuarial advisers, the over the life of the claimant as a periodical Government Actuary’s Department, to assist payment order (PPO) rather than purely as a with the preparation of financial statements lump sum – and for the assumed additional through analysis and modelling of claims data. cost if the case were to settle as a PPO. The This is combined with information provided resulting adjusted claim values are then by management on the current economic and discounted for the time value of money claims environment in order to provide estimates (at the Treasury-prescribed rates) to give a for management to consider in relation to present value at the accounting date. determining the valuation of the liabilities for • Settled PPOs – To estimate the provision for the accounts. settled PPO claims, the expected future cash NHS Resolution’s Reserving and Pricing flows from each individual settled PPO are Committee is responsible for making decisions projected and weighted by the claimants’ on the key judgments and estimates, supported probability of survival to each payment. The by the advice of the actuaries. present value of these cash flows is calculated using the Treasury-prescribed discount rates. One of the key assumptions used in the Future cash flows are modelled based on production of the estimates reported is outside individual claim data. This includes the agreed the formal control of NHS Resolution, as HM annual payments and any agreed future steps in Treasury prescribes the discount rates to be used those payments, the index to which payments in calculating the provisions. There are other are linked and the assumed probability of factors that influence the provision that are also survival of the claimant to each future payment. outside NHS Resolution’s control, for example The probabilities of survival for each claimant patients (and their legal representatives) have are based on estimated life expectancy, agreed an element of control over the timing of the by medical experts in each case. reporting of claims. The Reserving and Pricing Committee keeps all of the factors affecting the • IBNR – To estimate the IBNR provision at the calculation of provisions under review to ensure accounting date, the actuaries model the that the final provisions reflect the experience future cash flows expected to arise from IBNR of the organisation and are adjusted in a claims and calculate a present value (at the timely manner. Treasury-prescribed discount rates).
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The steps to arrive at an estimate are: 7.3 Key assumptions and areas of uncertainty º A characteristic pattern of claims reporting from claim incident year is identified to As with any actuarial projection, there are areas determine the ultimate number of claims of uncertainty within the claims provisions that are expected to arise from incidents estimates. This is particularly so for the CNST, ELS that have occurred in each past year up and DHSC clinical schemes given the long-term to the accounting date. This allows a nature of the liabilities. projection to be made for the number of IBNR claims expected to be reported in The following table shows the key assumptions each future year. used to determine the CNST IBNR and settled PPO provisions, as the CNST IBNR provision is the º Assumptions are then made about the largest single element of total provisions, and average claim sizes for different types therefore where uncertainty has the greatest of claim. Adjustments are made to these effect. For each assumption, the degree of assumed claim sizes to allow for expected uncertainty in the assumption and the impact future claims inflation. of the assumption on the level of provisions has been categorised subjectively as ‘high’, ‘medium’ º By combining the average claim sizes with the claim numbers and patterns or ‘low’. for the reporting to payment time lag As an example, the following table shows that appropriately, a projection is made for there is a medium level of uncertainty in the the total value of claim payments for IBNR assumed number of claims incurred in each year claims in each future year. and that this assumption has a high impact on the value of the provision. º For claims that are assumed to settle as PPOs, an estimated payment pattern is The legal environment is a particular area of used to model the future cash flows, based uncertainty, given there have been a number on mortality assumptions derived from the of recent consultations that might impact the settled PPO claims. Lump sum settlements schemes’ provisions in the future (‘Introducing are assumed to be paid out in full around a Rapid Resolution and Redress Scheme for settlement time. Severe Avoidable Birth Injury’ and ‘Introducing Fixed Recoverable Costs in Lower Value Clinical º The final step in the process is to calculate the present value of the projected future Negligence Claims’, both issued by DHSC). cash flows (using the Treasury-prescribed The provisions have been valued using the discount rates), and this gives the estimated current PIDR of minus 0.75%. The Civil Liability IBNR provision at the accounting date. Act 2018 has introduced changes to how the PIDR will be set in future. As there is no º For CNST, ELS and DHSC Clinical Liabilities, these calculations are carried out certainty on the decisions or arrangements that separately for damages, defence costs and will arise out of these consultations, nor the claimant costs, and for PPO and non-PPO value of a revised PIDR, no adjustments have type claims. been made to the IBNR for the potential effects of such changes at this stage.
157 NHS Resolution Annual report and accounts 2018/19 Effect of change Effect -£1.8bn No impact combined effect Total (with claims inflation): +£0.4bn. This includes a +£2.9bn increase as a consequence of allowing for the maternity/non- maternity speciality mix in the calculation of the CNST IBNR provision No impact Relatively small Relatively small +£0.2bn No impact
Change in assumption between 31 March 2018 Change in assumption between 31 March 2019 and 31 March Both the expected number of future PO claims and non-PPO claims has reduced, reflecting emerging experience A value-based threshold has been used to identify potential PPO claims. The selected value of the threshold remains unchanged Generally average damages costs for PPOs have increased by less than expected (excluding the adjustment made to CNST PPO average damages costs to reflect the maternity/non-maternity speciality claimant costs have reduced mix of claims). Average assumptions compared with last year’s The inflation assumption for non-PPO damages has The increased by 0.7% compared with last year. inflation assumption for PPO damages has decreased both include 0.3% by 0.05% compared with last year, pa margin for risk and uncertainty There is no change in the assumption. Non-PPOs: 63%, PPOs: 54% for all future claims reported Lag range from 2.8 to 7.5 years, reducing by 0.1 year at the lower end of range and increased by 0.5 year at the higher end of range since last Expected future lifetime of PPO claimants at settlement has remained the same (37 years) Short and medium term rates have reduced by 0.19% The long term rate has and 0.40% respectively. increased by 0.15% No change to assumption. RPI + 0.75% pa
Sensitivity to changes High Medium High High Medium Medium (for PPOs) Low High High Degree of Degree uncertainty Medium Medium High High Medium Low Medium Prescribed Medium Approach Derived from past claim numbers and development patterns threshold derived Value from recent years’ settled claims data Derived from past settled claims – set separately for damages, defence costs and claimant costs Derived from past settled claims Derived from past settled claims, adjusted for incomplete development Derived from past settled claims Based on analysis of past settled PPO claims prescribed HM Treasury Based on earnings increases relative to RPI over the longer-term
Probability of Probability paying damages Assumption Ultimate number of claims to Propensity settle as PPO cost Average per claim Claims inflation to Creation payment lags Cash flow pattern for PPO payments Nominal discount rates to RPI) (relative ASHE 6115 (80th percentile) Key assumptions in the CNST IBNR provision
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The following are key areas of uncertainty in the estimation of the claims provision.
Clinical negligence claims can take a number Because of the long-term nature of the of years to be reported following the incident liabilities, even small changes to the assumed that gives rise to the claim. The IBNR provision rate of future claim value inflation can have a depends on an assumed time lag pattern for significant impact on the estimated provisions. how claims are reported to NHS Resolution Claim value inflation has historically increased at following the incident. If the true pattern of a significantly higher rate than price inflation. reporting is faster than that assumed, this may For clinical negligence claims, inflation is mean that the number of IBNR claims has been affected by a number of external factors such as overestimated, and vice versa. Changing trends the PIDR, changes in legal precedent (e.g. rules in this pattern over time, for example as a result relating to accommodation costs determined by of changes to the legal environment, increased Roberts v. Johnstone) and changes in legal costs. awareness of the availability of compensation The variety of potential external influences and a lack of past data preceding the formation on future claims inflation means that this of NHS Resolution, increases the uncertainty in assumption is subject to significant uncertainty. this assumption. The HM Treasury PES discount rate note from The number of clinical claims reported to NHS December 2018 (which specifies the financial Resolution continues to level off. Nonetheless, assumptions to be used for valuing provisions at there remains considerable uncertainty when March 2019) states that all cash flows should be projecting claim numbers in the future, due to assumed to increase in line with the Office for the changing claims environment and resulting Budget Responsibility (OBR) CPI forecasts unless instability in past claim trends. certain conditions are met for this assumption to be rebutted. These conditions are set out in PPOs remain a key area of uncertainty, given Paragraph 18 of Annex B to the HM Treasury PES the high value of PPO settlements, the limited note. For NHS Resolution’s IBNR provisions, stable past data to base future claim number these conditions have been met: projections upon and the changing propensity to award PPOs to claimants. PPO claim C ondition 1: there is a logical basis for not settlements are paid over the lifetime of the applying OBR CPI inflation rates, in that the claimant, and consequently there are additional proposed alternative inflation rates would inflation and longevity uncertainties, compared be clearly more applicable to the underlying to equivalent lump sum settlements. nature of the cash flows. For NHS Resolution, past claims inflation and the mandated rates The IBNR provisions are subject to considerable of PPO increases have been demonstrably uncertainty. At a high level, the method used different to CPI increases, so the assumptions to calculate the provisions assumes that future for future inflation rates have been selected experience will be in line with past experience. to reflect the historical data. In particular, the provisions are calculated on the basis of the current legal and claims C ondition 2: the proposed alternative rates environment, including the current PIDR. The must be free from management bias. An recent PIDR change in March 2017 and the indication of this may be an independent prospect of future changes contributes to the or professional assessment of the proposed inherent uncertainty in the calculation of the alternative inflation rates, such as by a provisions. Changes to the PIDR could impact committee, third party or other experts. both the value of indemnity awards and the The claims inflation assumptions have behaviour of claimants. For example, a change been based on the actuarial adviser’s in the PIDR could impact the propensity for assessment of historical claims inflation claims to be settled as PPOs and the volume and which have then been reviewed and timing of reported claims. adopted by NHS Resolution’s Reserving and Pricing Committee.
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Condition 3: the inflation rates instead Furthermore, it is difficult to determine whether applied should be based on logical and the life expectancies estimated by medical relevant calculations and reasonable experts will prove to be too long or too short underlying assumptions. For example, they on average across all claimants. The average life may be comparable to existing financial expectancy of claimants could also be influenced indices or based on historical trends. The by future advances in medical care or other claims inflation assumptions adopted have events (e.g. epidemics). been based on historical claims data as well as The majority of PPOs have payments linked to making references to historical levels of other the retail price index (RPI) and/or ASHE 6115 indices, such as the Annual Survey of Hours (a wage inflation index) and the future rates and Earnings (ASHE), and market-consistent of increase in these indices are uncertain. assumptions for price inflation. In particular, ASHE 6115 relates specifically The change in the PIDR in March 2017 has to care and home workers and external resulted in a significant increase in the value factors impacting this market in recent years of settlements which involve future losses. have increased the uncertainty in setting There is the potential for this to result in lump this assumption. settlements becoming more attractive to There is additionally some uncertainty in claimants, which may affect the propensity for relation to the impact of the Early Notification claims to settle with PPOs, or shift the balance scheme, which impacts some maternity incidents between the amount of the settlement paid that occurred on or after 1 April 2017, on claims up front, thereby affecting the timing of costs and reporting trends. At this stage there is cash flows. In addition, the application of a insufficient information to ascertain what those discount rate with a minus value affects the impacts may be. calculation of accommodation costs under Roberts v. Johnstone. Over the reporting CNST IBNR sensitivities as at 31 March 2019 period, NHS Resolution has not observed any significant changes in claimant behaviour due Reasonable range of results to the change in PIDR in March 2017 or due The CNST IBNR provision is the single largest to any anticipated future change to the PIDR. element within the total provision. Changes to Consequently, no adjustments have been the assumptions underpinning this element have made to the assumptions used to calculate the the greatest potential to affect the estimate of provisions for changes to claimant behaviour the total provision. in this respect. The provision in the accounts is based on a The provisions in respect of settled PPOs are set of chosen assumptions. It is possible to have sensitive to the assumed life expectancy of a range of different results if a different set claimants. Each claimant’s life expectancy is of assumptions had been chosen. Estimation estimated at settlement by medical experts. The of a reasonable range of results is possible, actual future lifetime of the claimant may differ by selecting assumptions based on analysis significantly from this estimate. of historical data that could reasonably have served the purpose of providing an estimate for the accounts.
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A reasonable range of results is set out below, as future experience may differ to the past, although it should be noted that this in itself changes may occur in the claims and legal does not reflect the potential uncertainty in environment, and the modelling approach may the assumptions underpinning the provision not be a perfect representation of real life.
CNST IBNR reasonable range
Value Difference to accounts estimate
Baseline CNST IBNR £46.5bn
Reasonable upper range £54.6bn +17.4%
Reasonable lower range £39.8bn -14.4%
These results were achieved by varying the Sensitivity analysis following assumptions, all of which could have reasonably been applied: The following tables show the impacts of adjusting the key assumptions used for the • The estimate for PPO damages claims for IBNR estimate for CNST. incident years 2014/15 onwards; The ranges of the sensitivity tests shown • The probability of defence for PPO below are based on the variability observed in type claims; past data. They do not represent the maxima or minima of past observed values, nor the • The average cost for PPO damages; range of possible outcomes, but they do • PPO damages claims inflation; capture future values that could reasonably occur. Each change is shown separately, but in • The creation to settlement lag for PPO claims. practice combinations are possible, as different assumptions can be correlated. In summary, the provision in the accounts for CNST IBNR could have been reasonably set at The sensitivity analysis is included in this note a value between £39.8 billion and £54.6 billion, to enable readers to understand the impacts if the same data, method and approach were such adjustments would have on the accounts. used, but different reasonable assumptions It should be noted that the relationship between were selected on the basis of the past data. changes in the value of assumptions and the This is compared to the accounts estimate of IBNR provision is not always linear, particularly £46.5 billion. for assumptions such as inflation and the HM Treasury-prescribed discount rate. Changes in individual assumptions may have a greater or smaller impact on the provisions estimate.
161 NHS Resolution Annual report and accounts 2018/19
Figure 32: CNST IBNR sensitivities as at 31 March 2019
21,000
18,000 36%
15,000 30% Increase in assumption (%) Decrease in assumption (%)
12,000 20% 9,000
6,000 10% 8% 8% 9% 6% 3,000 3% 0 -2% -3,000 -6% -8% -7%
IBNR Increase/(Decrease) £m IBNR Increase/(Decrease) -9% -9% -6,000
-9,000 -20% -22% -12,000 -24%
-15,000 HM Future IBNR claim Average Average cost Differential Probability Life Change Treasury Claims value number creation of per claim between of a expectancy in PIDR discount inflation (+/-10% for claims to (+/-20%) ASHE and successfully assumption (+/- 1%) rates (+/-2% pa) incident payment RPI defended for PPOs (+/- (+/-1% pa) years time lag (+/-0.5% pa) claim 10% change 2014/15 (+/-1 year) (+/-5%) in life onwards) expectancy)
Figure 32 sets out both the value and percentage impact of variations in the key assumptions within the CNST IBNR estimate, which are also explained in the remainder of this note.
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Sensitivity of estimated CNST IBNR provision as at 31 March 2019 to movements in the HM Treasury tiered nominal discount rates
For 2017-18, the discount rates specified by HM From 2018-19 onwards, HM Treasury is Treasury were relative to amounts expressed publishing PES discount rates in nominal terms in current prices, referred to as “real” discount as shown below. rates. These were adjusted to reflect market- consistent expectations of RPI inflation rates The short- and medium-term nominal discount published in the 2017 HM Treasury PES note to rates have decreased this year and the long- provide the implied nominal rates below. These term rates have increased. The impacts of these rates were used for the purposes of discounting changes on the IBNR provisions vary by scheme, NHS Resolution’s inflated projected cash flows depending on the type and duration of the for last year’s accounting provisions. expected future claim payments.
31/03/2019 31/03/2018 nominal rates (%pa) nominal rates (%pa)
Short term (<5 years) 0.76% 0.95%
Medium term (5-10 years) 1.14% 1.54%
Long term (10-40 years) 1.99% 1.84%
Very long term (over 40 years) 1.99% 1.84%
The following table shows that if the HM Treasury nominal discount rates were to be increased by 1% pa, the IBNR recorded in the Statement of Financial Position would reduce by £11,168 million and likewise a reduction of 1% pa would increase the IBNR by £16,919 million.
Sensitivity to changes in the HM Treasury-prescribed discount rates on estimated IBNR provisions
Change to the Percentage Sensitivity to changes Estimated IBNR original IBNR change to the in the discount rate provision £m estimate £m original estimate
All rates +1% 35,346 (11,168) -24%
All rates -1% 63,433 16,919 36%
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Figure 33: Sensitivity of the CNST IBNR provision to changes in the nominal discount rates assumption (£ billion, by change in discount rate from base assumption)
600
500
400
300
Base provision: £46.5 billion IBNR provisions 200
100
0 -6% -5% -4% -3% -2% -1% +0% +1% +2% +3% +4% +5% +6%
Change in real discount rate
This graph shows a range of impacts (for This is because a large proportion (by value) illustrative purposes – it is not intended as a of the IBNR provisions are expected to be paid reasonable range of values) that a change in in more than 10 years’ time. In addition, the all of the tiered discount rates may have on the increase in the long-term discount rates has value of the IBNR element of the CNST provision. been matched by an increase in the assumption For example, an increase of 4 percentage for the RPI inflation from 3.45% to 3.60% (the points would approximately halve the value of rate of 3.60% is taken from HM Treasury’s PES the IBNR provision, but a 4 percentage-point note published in December 2018, reflecting decrease would almost quadruple the value. market expectations at 30 November 2018, consistent with the derivation of the nominal For the clinical schemes, the changes in discount discount rates). This means that the impact of rates this year have had a relatively small impact the increase in the nominal discount rate has on the IBNR provisions. been offset by an increase in the rate at which claims are assumed to increase.
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Sensitivity to future claims value inflation assumption
Estimated Change to the Percentage Claims value inflation IBNR provision original IBNR change to the £m estimate £m original estimate
All rates +2% 60,260 13,745 30%
All rates -2% 36,440 (10,075) -22%
Figure 34: CNST IBNR (£bn) adjusted by claims inflation
120
100
Base provision: £46.5 billion 80
60 IBNR provisions 40
20
0 -6% -5% -4% -3% -2% -1% +0% +1% +2% +3% +4% +5% +6%
Change in claims inflation
165 NHS Resolution Annual report and accounts 2018/19
From the previous Figure 33 for CNST IBNR While a 2% increase in inflation would increase sensitivities and Figure 34, we can see that an the overall provision by 30%, a 2% decrease increase in inflation has a greater impact on would only reduce the provision by 22%. the provision than a decrease in inflation would have at the same rate.
Sensitivity to assumptions of number of IBNR claims
Estimated Change to the Percentage IBNR claims number assumptions IBNR provision original IBNR change to the £m estimate £m original estimate
+10% for incident years 2014/15 onwards 50,290 3,776 8%
-10% for incident years 2014/15 onwards 42,731 (3,784) -8%
The projected number of claims is determined If the number of IBNR claims increases by by development patterns from previous years. 10% for incidents from recent years, the CNST The assumption in relation to the number of provision value will increase by 8% as a result IBNR claims is directly proportionate to the value and vice versa. of provisions.
Sensitivity to creation of claim to payment time lag pattern
Estimated Change to the Percentage Average term based on assumed IBNR provision original IBNR change to the time lag pattern £m estimate £m original estimate
Increase in average time lag of one year 49,314 2,800 6%
Reduction in average time lag of one year 43,821 (2,694) -6%
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A pattern is used to describe the lag between the cost will increase because of inflation. when a claim is created and when it is paid. As This sensitivity approximately adjusts the lag the time lag increases, this increases the value pattern to be one year longer and one year of the provision because of the effect of claims shorter, which results in a 6% increase as a inflation – if we take longer to settle a claim, result and vice versa.
Sensitivity to average costs of claim assumption
Estimated Change to the Percentage Factor applied to all average claim IBNR provision original IBNR change to the value assumptions £m estimate £m original estimate
All rates +20% 55,620 9,106 20%
All rates -20% 37,409 (9,106) -20%
The average claim value assumptions are As we can see from the previous table, an derived from claims settled in previous years, increase of average claim value of 20% with separate calculations for damages, defence will result in a 20% increase in the value of costs and claimant costs. the provision.
Sensitivity to differential between ASHE and RPI
Estimated Change to the Percentage Differential between ASHE and IBNR provision original IBNR change to the RPI assumption £m estimate £m original estimate
All rates +0.5% 50,445 3,930 8%
All rates -0.5% 43,123 (3,391) -7%
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The ASHE index, used in the calculation of The table and graph show the effect on the damages in PPO cases where care costs are a value of the CNST IBNR provision where this component, measures the rate of change in the differential is varied and as the chart below wages of carers. The current assumption is that shows, this is a non-linear relationship. An the rate of inflation in carers’ wages is 0.75% additional +/- 0.5% difference between ASHE higher than RPI price inflation each year. and RPI will either increase the provision by 8% or reduce it by 7% respectively.
Figure 35: CNST IBNR (£bn) adjusted by ASHE index
200
180
160
140
120 Base provision: £46.5 billion 100
80 IBNR provisions 60
40
20
0 -6% -5% -4% -3% -2% -1% +0% +1% +2% +3% +4% +5% +6%
Change in ASHE index
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Sensitivity to the assumed probability of a successfully defended claim
Estimated Change to the Percentage Probability of a successfully defended IBNR provision original IBNR change to the claim in every incident year £m estimate £m original estimate
Increase of 5% 42,368 (4,147) -9%
Decrease of 5% 50,661 4,147 9%
The assumption for the probability of successfully defending a claim is based on historical data. A reduction in that success rate of 5% would increase the provision by 9%, for example.
Sensitivity to changes in the PIDR
Estimated Change to the Percentage Sensitivity to changes in the PIDR IBNR provision original IBNR change to the £m estimate £m original estimate
Rates +1% 45,623 (891) -2%
Rates +0.5% 46,037 (477) -1%
Rates -0.5% 47,091 577 1%
Rates -1% 47,763 1,248 3%
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The assumption for the sensitivity of the CNST The IBNR provision is based on assumptions IBNR provision to changes in the PIDR is based relating to the expectation of the number on evidence of cases settled during the year. As of claims where damages are expected to a significant proportion of the IBNR provision be paid, that certain proportions will settle relates to PPO settlements, which are not as lump sums rather than PPOs, and average affected by the PIDR, the impact of a change time lags for reporting and settlement. The in the PIDR is relatively small. impact of a change in the number of PPO settlements arising as a result of potential There is uncertainty about whether the claimant behaviour changes (keeping all other propensity to settle claims through PPOs will assumptions the same) is set out as follows. be affected by the PIDR change in March 2017 or any future anticipated PIDR change. The impact of the 2017 change could have made lump sum settlements relatively more attractive, however this has not been observed in the settlement of claims during 2018/19.
Proportionate change in number IBNR effect IBNR effect of PPO claims £bn (%) +/-5% +/-£0.5bn +/-1.1%
+/-10% +/-£0.9bn +/-1.9%
+/-20% +/-£1.8bn +/-3.9%
+/-50% +/-£4.5bn +/-9.7%
The effect of changes in the propensity of claims There may be other behavioural impacts of to settle as PPOs would be significant on cash the PIDR change. The sensitivity analysis set flows in the immediate term as the cost of lump out above in relation to the potential effect of sum settlements would change accordingly. changes in claims numbers, average costs, claims inflation and the probability of successfully defending claims, can be used to consider the potential effects.
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Sensitivity of provision for settled periodical payment orders (PPOs) to key assumptions
HM Treasury discount rate assumptions As shown previously in the discussion of the CNST IBNR provision sensitivity, the relationship Due to the long-term nature of PPOs, where between the value of the provision and the PPO claims can be expected to continue for effect of changes in the discount rate is not a 50 years or longer, the PPO element of the proportionate one. A reduction of 1% in the provision is very sensitive to changes in the HM discount rates will increase the PPO element of Treasury-prescribed discount rate, especially the the CNST provision by 41%, but a 1% increase long-term discount rate. In general, the clinical will reduce the provision by 26%. schemes are more sensitive to changes in the discount rate than non-clinical schemes, again, due to the longer-term nature of clinical claims.
Provision for settled PPOs at 31 March 2019
DHSC DHSC non- HM Treasury Total CNST ELS clinical Ex-RHA LTPS clinical Discount rate £m £m £m £m £m £m £m
All rates -1% pa 26,148 21,282 1,434 3,345 83 3 1
Base assumption 18,805 15,141 1,056 2,543 62 2 1
All rates +1% pa 14,085 11,238 804 1,992 48 2 1
Percentage change to provision
DHSC HM Treasury DHSC non- Discount rate Total CNST ELS clinical Ex-RHA LTPS clinical
All rates -1% pa 39% 41% 36% 32% 34% 50% 0%
Base assumption 0% 0% 0% 0% 0% 0% 0%
All rates +1% pa -25% -26% -24% -22% -23% 0% 0%
171 NHS Resolution Annual report and accounts 2018/19
Differential between retail price index (RPI) and annual hourly earnings (ASHE) index over the long-term assumption
The ASHE index, used in the calculation of The table below shows the effect on the value damages in PPO cases where care costs are a of the PPO element of the schemes’ provisions component, measures the rate of change in the where this differential is varied. An additional wages of carers. It is currently assumed that the +/- 0.5% difference between ASHE and RPI will rate of inflation in carers’ wages is 0.75% higher either increase the CNST PPO provision by 17% than RPI annually. or reduce it by 14% respectively.
Provision for settled PPOs at 31 March 2018
DHSC DHSC non- Differential between Total CNST ELS clinical Ex-RHA LTPS clinical RPI and ASHE £m £m £m £m £m £m £m
All rates -0.5% 16,402 13,096 947 2,301 55 2 1
Base assumption: 18,805 15,141 1,056 2,543 62 2 1 0.75% pa
All rates +0.5% 21,769 17,672 1,189 2,834 71 2 1
Percentage change to provision
DHSC Differential between DHSC non- RPI and ASHE Total CNST ELS clinical Ex-RHA LTPS clinical
All rates -0.5% -13% -14% -10% -10% -11% 0% 0%
Base assumption: 0.75% 0% 0% 0% 0% 0% 0% 0% pa
All rates +0.5% 16% 17% 13% 11% 15% 0% 0%
172 Financial statements
Life expectancy assumptions
The provisions in respect of settled PPOs are sensitive to the assumed life expectancy of claimants. Where the life expectancy of individual claimants at settlement is increased by 10%, the provision for CNST PPOs will increase by 19%. A 10% reduction in life expectancy will reduce the CNST provision by 17%.
Provision for settled PPOs at 31 March 2019
DHSC DHSC non- Total CNST ELS clinical Ex-RHA LTPS clinical £m £m £m £m £m £m £m
All rates -10% 15,603 12,556 874 2,118 52 2 1
Base assumption: 18,805 15,141 1,056 2,543 62 2 1 0.75% pa
All rates +10% 22,430 18,061 1,263 3,026 76 3 1
Percentage change to provision
DHSC DHSC non- Total CNST ELS clinical Ex-RHA LTPS clinical
All rates -10% -17% -17% -17% -17% -16% 0% 0%
Base assumption: 0% 0% 0% 0% 0% 0% 0% 0.75% pa
All rates +10% 19% 19% 20% 19% 23% 50% 0%
173 NHS Resolution Annual report and accounts 2018/19
8. Contingent liabilities
DHSC Ex- DHSC non- RHA ELS clinical clinical CNST PES LTPS Total £000 £000 £000 £000 £000 £000 £000 £000 Contingent liability 22,081 675,258 1,077,652 102,773 47,546,614 7,137 138,175 49,569,690 as at 31 March 2019 Contingent liability as at 14,162 662,283 1,144,116 131,689 44,298,593 13,007 154,507 46,418,357 31 March 2018
NHS Resolution makes a provision in its accounts As a result of the dissolution of NHS primary for the likely value of future claims payments, care trusts and strategic health authorities and records contingent liabilities that represent (on 1 April 2013), NHS Resolution has taken possible additional claims payments to those on responsibility for any outstanding criminal already provided for. These amounts are not liabilities, on behalf of the Secretary of State included in the accounts but shown as a Note to for Health and Social Care. Any valid claims the financial statements because a transfer of arising from the activities of those organisations economic benefit is not deemed likely. will be dealt with by NHS Resolution and funded in full by DHSC.
174 Financial statements
9. Commitments under operating leases
The total future minimum lease payments under non-cancellable operating leases payable in each of the following periods are:
2018/19 2017/18 Land and buildings £000 £000 Amounts payable: within 1 year 1,117 1,135 between 1 and 5 years 1,105 2,170 after 5 years 0 0
2,222 3,305
Other leases Amounts payable: within 1 year 32 5 between 1 and 5 years 0 0 after 5 years 0 0
32 5
10. Related parties All clinical commissioning groups
NHS Resolution is a body corporate established All commissioning support units by order of the Secretary of State for Health All English NHS foundation trusts and Social Care. DHSC is regarded as a All English NHS trusts controlling related party. During the year, NHS Care Quality Commission Resolution has had a significant number of material transactions with DHSC and with other NHS Digital entities, to whom NHS Resolution provides Health Education England clinical and non-clinical risk pooling services, Health Research Authority for which DHSC is regarded as the parent Department, for example: NHS Blood and Transplant NHS Business Services Authority NHS England NHS Property Services NHS Trust Development Authority (now part of NHS Improvement) Public Health England NHS Counter Fraud Authority
175 NHS Resolution Annual report and accounts 2018/19
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m o e e R y p h e r d n e n pag h n h Nature Nature of relationship Partner is a Consultant Radiologist Brother is National Clinical Director for Older People and Person Centred Integrated Care Brother is a Consultant Geriatrician Programme Director, and Efficiency Transformation Non-executive Director Director of Community Health Partnerships National Adviser to NHS England Wife is a Board member Wife is a Board member Midwife T a t t in o
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i in a o d. D h s g i i t S R e t is w is t n in c H c a a e s g ow r n r N n l n l a n a o r o e i o r o f t y t c NHS Resolution Denise Chaffer, Director of Safety and Learning Helen Vernon, Chief Executive Helen Vernon, Chief Executive Charlotte Moar, Non-executive Director Charlotte Moar, Non-executive Director Professor Sir Sam Everington, Associate Non-executive Director Professor Sir Sam Everington, Associate Non-executive Director Professor Sir Sam Everington, Associate Non-executive Director Name and position in Denise Chaffer, Denise Chaffer, Director of Safety and Learning The posi the othe are NHS Resolution directors and transactions with other organisations NHS Resolution directors and
176 Financial statements
11. Financial instruments NHS Resolution has negligible foreign currency income and expenditure. NHS Resolution is, IFRS 7 Financial Instruments: Disclosures requires therefore, not exposed to significant interest disclosure of the role that financial instruments rate or foreign currency risk. have had during the period in creating or changing the risks an entity faces in undertaking Credit risk its activities. Because of the way Special Health As the majority of NHS Resolution’s income Authorities are financed, NHS Resolution is not comes from contracts with other NHS bodies, exposed to the degree of financial risk faced NHS Resolution has low exposure to credit risk. by business entities. Also, financial instruments The maximum exposures are in receivables from play a much more limited role in creating or customers, as disclosed in Note 4: Receivables. changing risk than would be typical of the listed companies to which IFRS 7 mainly applies. 12. Events after the reporting period NHS Resolution has limited powers to borrow or invest surplus funds, and financial assets Subsequent to the Balance Sheet date, on the 1 and liabilities are generated by day-to-day April 2019, NHS Resolution is operating a new operational activities rather than being held state-backed indemnity scheme for general to change the risks facing NHS Resolution in practice in England called the Clinical Negligence undertaking its activities. Scheme for General Practice (CNSGP). It covers clinical negligence liabilities arising in general NHS Resolution holds financial assets in the form practice in relation to incidents that occur on of NHS and other receivables, and cash, as set or after 1 April 2019. The value of the liability out in Notes 4 and 5 respectively, and financial in 2019/20 is not expected to be material to liabilities in the form of NHS and other payables, the accounts, however, the business impact in as set out in Note 6. As these receivables 2019/20 will be a staged increase in staffing to and payables are due to mature or become manage the additional scheme. payable within 12 months from the Statement of Financial Position date, NHS Resolution In addition, DHSC has reached agreement with considers that the carrying value is a reasonable the Medical Protection Society Limited (MPS), approximation to fair value for one of the medical defence organisations these financial instruments. (MDOs), in relation to existing in-scope liabilities for general practice in England for Liquidity risk incidents prior to 1 April 2019. NHS Resolution has oversight of the arrangements for the NHS Resolution’s net expenditure is financed new existing liabilities scheme and, for an from resources voted annually by Parliament interim period, claims handing will be retained and scheme contributions from NHS member by the MPS. Disclosure of any estimate of organisations. NHS Resolution finances its the financial impact is considered to be capital expenditure from funds made available commercially sensitive. from government under an agreed capital resource limit. NHS Resolution is, therefore, These financial statements were authorised not exposed to significant liquidity risks. for issue on the date that the Comptroller and Auditor General certified the accounts. Market risk (including foreign currency and interest rate risk)
None of NHS Resolution’s financial assets and liabilities carry rates of interest.
177 NHS Resolution Annual report and accounts 2018/19
Glossary
ALB – Arm’s length body. Ex-RHA – The Ex-Regional Health Authorities Scheme is funded by DHSC and is a clinical negligence claims scheme that indemnifies the CCGs – Clinical commissioning groups have liabilities of former regional health authorities. taken over commissioning from primary care trusts. Extranet – A secure web portal providing our members and our solicitors with real-time access CNSGP – Clinical Negligence Scheme for to their claims data. The data help our members General Practice prevent harm to patients and staff, which might otherwise lead to future claims against the NHS. CNST – The Clinical Negligence Scheme for Trusts indemnifies Members for clinical FHSAU – Family Health Services Appeal Unit, negligence claims. now known as Primary Care Appeals.
DHSC – Department of Health and Social Care. HPAN – Healthcare Professional Alert Notice is an alert system managed nationally by HM Treasury discount rates – These discount Practitioner Performance Advice to alert rates are designed to recognise the value of employers to the existence of serious grounds money over time: £1 now may be worth more for concern about a regulated health or less in the future. Applying a discount rate to practitioner who has departed an organisation the amounts we expect to pay out in the future and for whom concerns were unresolved. This enables us to put a value on those outgoings at differs from performers’ list management today’s prices. It tells us how much we would (restrictions on practice), which are logged need to pay out if we settled all of those future centrally by Primary Care Appeals and shared obligations today. with requesting health bodies.
Duty of candour – The statutory duty of IBNR – Incurred but not reported claims; claims candour places a requirement on providers of that may be brought in the future. health and adult social care to be open with patients when things go wrong. It means LASPO – Legal Aid, Sentencing and Punishment providers must notify the patient about of Offenders Act. Legal reforms that came into incidents where ‘serious harm’ has occurred force on 1 April 2013. The reforms change, and provide an apology and explanation among other matters, the amount that claimant where appropriate. solicitors can recover from the defendant under
conditional fee agreements and limit after-the- ELS – Existing Liabilities Scheme is funded by event insurance. DHSC and is a clinical negligence claims scheme that indemnifies pre-April 1995 incidents.
178 Glossary
Legal costs – Amounts paid out by NHS PES – The Property Expenses Scheme Resolution in legal costs for claims resolved: indemnifies NHS members for property claims. including defence and claimant costs, this can include expert and counsel’s fees as well as PIDR – Personal injury discount rate. court costs.
PNA – Pharmaceutical needs assessment. LTPS – The Liabilities to Third Parties Scheme indemnifies the NHS for employers’ liability, public liability and professional indemnity claims PPO – A periodical payment order is a court made against the NHS. order that grants the claimant a lump sum payment followed by regular payments over the life of claimant. Member – NHS Resolution is a membership organisation comprising NHS trusts, CCGs, independent healthcare providers to the SHAs – Strategic health authorities. Regional NHS and other government agencies related NHS organisations abolished on 1 April 2013 by to healthcare. the Health and Social Care Act 2012.
NCAS – The National Clinical Assessment Service helps resolve concerns about the professional practice of individual doctors, dentists and pharmacists in the UK – now known as Practitioner Performance Advice.
NHS LA – National Health Service Litigation Authority, the former operating name of NHS Resolution.
NRLS – The National Reporting and Learning System was established in 2003, and is a system that enables patient safety incident reports to be submitted to a national database. These data are then analysed to identify hazards, risks and opportunities to improve the safety of patient care.
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