Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted in Part
The money that government estimates it owes under various compensation schemes has risen in recent...
Recommendation
The money that government estimates it owes under various compensation schemes has risen in recent years, reaching £73.4 billion by the end of 2024–25, an £11.8 billion increase on the previous year. Annual payments from the government’s current largest ongoing compensation schemes nearly doubled from £2.5 billion at the end of 2023–24 to £4.9 billion at the end of 2024–25, and the total lifetime impact of these schemes is estimated at over £102 billion. A considerable portion of this impact relates to clinical negligence, which the Department of Health & Social Care intends to address through the upcoming NHS Ten Year Plan. We do not question the validity of payments received by individuals through the government’s various compensation schemes, however it is not clear whether value for money has been properly considered in the schemes’ design and administration. recommendation HM Treasury should undertake an international comparison of compensation schemes, to identify learning or best practice that could be applied from other countries’ approaches to how schemes are designed, funded and administered, and report back to the Committee by the end of the year. This should include benchmarking how much other countries’ compensations schemes cost as a percentage of GDP. 5 1 The annual reports and accounts of government Introduction
Government response summary AI-generated
The government agreed to undertake an international review of compensation schemes focusing on design, funding, and delivery features. However, it explicitly stated that strict benchmarking of costs as a percentage of GDP would risk misleading conclusions, opting instead for appropriate comparisons of schemes' scope and costs.
Summary of the government's response below — read the verbatim text to verify.
Government Response
Accepted in Part
HM Government · verbatim extract
Accepted in Part
The government agrees with the Committee’s recommendation. fair outcomes and achieve value for money, particularly in light of the significant increase in liabilities and annual spend identified by the Committee. The government also recognises the value of drawing on relevant international experience where this can inform scheme design and delivery. It is also important to recognise that compensation schemes are established to address specific and often unique circumstances, including distinct legal frameworks, policy objectives and affected cohorts. Aggregate international comparisons, including benchmarking costs as a percentage of gross domestic product, risk obscuring these differences and could lead to misleading conclusions about costs and value for money. The government will therefore undertake a review of relevant international examples, focusing on design, funding and delivery features, and the lessons these may offer for the UK context. The review will include information on schemes’ scope and costs and compare these against the UK as appropriate. Departments and Accounting Officers remain responsible for individual schemes, and the review will support them in drawing on relevant international learning when designing and administering those schemes. 27