MDU responds to discount rate change
The Medical Defence Union (MDU) says yesterday’s announcement by the Lord Chancellor that she intends to lower the discount rate from 2.5% to -0.75% will lead to a dramatic increase in the cost of indemnifying its members.
The lowering of the discount rate – a mechanism used by the courts to adjust large compensation payments to take account of future investment returns – will increase the cost of compensation awards immediately for known claims. It will also increase the cost of claims arising from incidents in the future. And it will apply retrospectively to claims for negligent incidents that have already happened but where no claim has yet been made, though it will be at some future date.
Dr Christine Tomkins, MDU chief executive said:
“We are very disappointed by Liz Truss’s decision to lower the discount rate. We are considering the impact of this decision on our subscriptions and working with the Department of Health and NHS England to find a solution to protect our GP members from the otherwise catastrophic impact this will have on them, the sustainability of general practice and on the public.
“Whatever measures are put in place, the fundamental problem of spiralling claims costs remains for the NHS with all the adverse effects this has on the delivery of healthcare. We need a long-term solution to the inflation-busting rises we are seeing in clinical negligence compensation payments. Personal injury law needs root and branch reform.
“The impact on our members and the provision of healthcare is calamitous and a solution is needed urgently. The MDU has proposed reforms to personal injury law needed to address the problem and we hope this change in the discount rate will act as a catalyst to bring these reforms about, in everyone’s interests.”
