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NHS Resolution Annual report and accounts 2021/22

In-year financial performance
The settlement and administration of indemnity schemes The public sector funding regime does not require NHS
is funded by a combination of contributions from Resolution to have sufficient assets to cover the long
members (NHS and independent sector providers of term liabilities as these will be financed by Government
healthcare, clinical commissioning groups and other at the time they become due for settlement. Therefore,
DHSC ALBs), and financing from DHSC. General practice NHS Resolution only collects the cash needed to
indemnity (GPI) costs are funded out of the budget held settle claims in the financial year in question.
by NHS England for the NHS, via DHSC financing.
Indemnity schemes in-year financial position
DHSC sets a budget in respect of this financing on a
Expenditure on clinical schemes against income and
Departmental Expenditure Limits (DEL) basis. The DEL is
budget set by DHSC is shown in Table 7. These costs
a HM Treasury budgetary control1, which covers income
include NHS Resolution's own administration costs.
and spending on general administration costs, e.g.
salaries and goods and services, but also the settlement
(utilisation) of the provisions in the financial year.

Table 7: Clinical schemes financial performance

Clinical scheme 2021/22 2020/21
Income / Expenditure Under/ Percentage Expenditure
budget (over)spend under/
(£ million) (£ million) (£ million) (over)spend (£ million)
Member funded - CNST 2,459 2,237 222 9% 2,079

DHSC funded schemes 114 104 10 9% 86
GPI 86 94 (8) -9% 67

CNSC 1 0 0 52% 0
Total clinical schemes 2,659 2,435 224 8% 2,233

CNST is our largest scheme and has the majority of The year-on-year increase in CNST spending has been
the underspend against budget. In recognition of driven by a £177 million (19%) increase in spending
the slowing of claims inflation rates, total funding on claims valued at over £3.5 million, primarily in
for CNST for 2021/22 was held at the same level as damages payments, and with the majority of the total
the previous financial year. The 2021/22 budget was increase of £17 million in claimant legal costs being
set in the summer of 2020 when the full extent of against this tranche of claims. This is influenced by the
the pandemic, and the consequent impact on claims mix of claims coming due for settlement in the year.
payments on 2020/21 DEL expenditure, was unknown.
NHS legal costs of CNST have reduced by £2.8 million
Payments on CNST claims and scheme administration year on year. Expenditure on nil damages value claims
increased year on year by £158 million (8%), compared has reduced by £8 million, partially offset by increases
to a year-on-year reduction of £94 million (4%) in spending on claims valued at over £100,000.
between 2019/20 and 2020/21. Nevertheless, this
increase still resulted in a £222 million (9%) underspend
against the CNST collect as the assumptions for the
volume and value of high-value claims settlements
in particular did not occur to the extent expected.

HM Treasury Consolidated Budgeting Guidance can be found at
https://www.aov.uk/aovernment/publications/consolidated-budaetina-auidance-2017-to-2018