In his first budget, the chancellor, John Healey, faces a familiar problem: how to raise revenue when fiscal headroom is lower than hoped and tax increases have been ruled out. If he wants money to spend, it must come from savings elsewhere in the system.

Few areas illustrate this more starkly than the NHS. Waiting lists continue to rise, placing more pressure on a strained system, yet there remains pressure to find efficiencies. While many cost-saving options involve difficult trade-offs, there are others that could free up funds without impacting frontline care.

One such opportunity is tackling the growing costs of clinical negligence. Last year alone the costs stood at over £3.2 billion in England. The government’s own forecasts predict this rising to over £4 billion a year by the end of the decade. From conversations we’ve had over recent months, there is a clear cross-party consensus that this is something that must change.

With the problem identified, the question now is simple: how do you go about getting the costs down?

Many of you reading this may be surprised to learn that legal costs associated with lower-value clinical negligence claims, £25,000 and under, have increased by 50% over the last six years. Legal costs versus claimant awards have reached a ratio of almost 4:1. At the Medical Defence Union (MDU), we see examples of this on an almost daily basis. In one case, a claimant received £1,400 in compensation, while their legal costs totalled £60,000. In another, damages of £5,000 were accompanied by legal fees of £155,000.

At a time when the NHS is under immense financial pressure, a system where legal costs significantly exceed the compensation awarded raises questions about whether public money is being spent in the most effective way. Every pound spent on disproportionate legal fees is unavailable for reducing waiting lists, improving conditions for healthcare workers, and investing in NHS services.

Given these facts, it is unsurprising that concern is growing in Westminster. Earlier this year, the public accounts committee challenged the government to set out how it intends to address the rising costs. With the deadline for a response approaching, the budget offers an opportunity to deliver practical reform and tackle these costs. So, what action should the chancellor take?

Introducing fixed recoverable costs (FRC) for lower-value clinical negligence claims would be a straightforward and practical first step.  This approach already operates successfully in other areas of civil litigation, including personal injury claims. Under this model, legal costs are capped according to the value and complexity of a case, providing greater certainty for all parties involved.

While the immediate savings, estimated at around £50 million a year, may appear modest in the context of wider NHS spending, they would deliver substantial savings over time.

To date, ministers and civil servants have largely deferred to Sir David Lock KC’s ongoing review rather than setting out a clear plan for reform. However, the scale of current costs means there is a strong case for identifying measures that can be progressed now to start bringing these down.

Fixed recoverable costs for lower-value clinical negligence claims would represent a partial solution; a practical approach towards restoring proportionality to the system and protecting NHS resources.

At a time when ministers are searching for savings that won’t affect frontline patient care, this is an opportunity they can no longer afford to ignore.