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NHS Resolution Annual report and accounts 2021/22 55
Finance report
Headlines in numbers Year-end provisions
• The provision for the liabilities arising The provision is the value of liabilities arising from incidents
from claims has increased by £43.4 billion that occurred before 31 March 2022 at current prices,
(50.8%) from £85.2 billion to £128.6 billion, both in relation to claims received and our estimate of
primarily due to a technical accounting claims that we are likely to receive in the future from
change affecting the provision. those incidents which have occurred but have yet to be
reported as claims (incurred but not reported, IBNR).
• The total value of clinical negligence claims
under the CNST scheme incurred as a result The provision has increased by £43.4 billion (50.8%) to
of incidents in 2021/22 was £13.3 billion, £128.6 billion. The most significant factor, accounting
up from £7.9 billion the previous year. The for £42.6 billion of this change, is the reduction in the
change in the long term discount rates set long term and very long term discount rates set by HM
by HM Treasury has significantly affected this Treasury. The discount rate is designed to recognise the
value, increasing it from £8.7 billion based value of money over time: £1 now may be worth more
on the previous set of discount rates. or less in the future. Applying a discount rate to the
amounts we expect to pay out in the future enables
• Payments for settling claims in 2021/22 increased
us to put a value on those outgoings at today's prices.
by £199 million (8.8%), to £2.459 billion.
It tells us how much we would need to pay out if we
• Administration costs increased by £8.8 million settled all of those future obligations today. In accordance
(25%) to £44.2 million. with International Financial Reporting Standards, HM
• Budget position: Treasury has applied market rates which reflect the low
cost of borrowing to Government in determining the
- Department Expenditure Limit (DEL)
long term discount rate. Note 7.3 to the accounts shows
£239 million (8.7%) under budget.
how the rates have changed, with the most significant
- Annually Managed Expenditure (AME) changes being the reduction in the nominal long term
£2.63 billion (5.7%) under budget. (10 to 40 years) and very long term (over 40 years)
rates from 1.99% to 0.95% and 0.66% respectively.
The two key aspects to NEIS Resolution's financial
activities are the provision for liabilities arising from A significant proportion of the provisions are expected
incidents which have already happened, and in to be settled over the longer term. Consequently,
year budgetary performance which includes both these reductions in the long term rates have had a
scheme payments and our administration costs. considerable impact on the value of the provision.
However, this is an accounting judgement that does
not change the underlying future payments that
will be incurred in meeting the obligations arising
from claims when they fall due in the short term.
