Rachel Reeves cannot afford to shy away from meeting the costs of state failures

Editorial: The chancellor faces a £47bn bill for historical injustices, making the difficult financial decisions she has to make even harder

Figures derived from National Audit Office findings that suggest that the cost of compensation for which provision has not yet been made amounts to £47bn (PA Wire)

When the chancellor of the Exchequer announced the results of her review of what she called her “public spending inheritance”, she specifically excluded the future costs of compensation run up by the previous government.

“I am not talking about bills for future years they signed up to but did not include, like the compensation for infected blood,” Rachel Reeves said last month. Her exercise was limited to the current fiscal year, from April this year to April next, and the unexpected pressures within that period that had not been fully accounted for.

In a way, it was rather restrained of her to keep her focus so limited, because there is no doubt that the Conservative government behaved irresponsibly in allowing the longer-term bills of state failure to accumulate without adequate provision being made to meet them.

It is now possible to estimate more accurately the scale of the problem. We report figures derived from National Audit Office findings that suggest the cost of compensation for which provision has not yet been made amounts to £47bn – a shocking figure that will be a significant burden on the taxpayer for decades to come.

That means the decisions Ms Reeves has to make in her Budget in October will be even more difficult. The Independent has consistently said that taxes will have to rise, although Ms Reeves must avoid any suggestion of confiscation, in order to avoid damaging cuts to public spending. These really are tough choices that cannot be avoided.

The £47bn figure includes compensation for the infected blood scandal, which happened in the 1970s and 1980s and yet is still unresolved; the wrongful convictions of sub-postmasters in the Post Office Horizon scandal; and the largest item, the bill for clinical negligence in the National Health Service.

All of these are injustices for which the government must take responsibility on behalf of us all, but for which redress has been delayed for too long.

This delay compounds the injustice and therefore results in a worse deal for the taxpayer. As Paul Scully, one of the many ministers who briefly held responsibility for the Post Office, said: “If the cover-up did not happen and the mistakes were dealt with earlier, the cost would be far lower to the public purse.”

The point about compensation is that it needs to be paid as soon as possible after the event, and preferably to have some effect on the budgets and reputations of the people responsible for the failure in the first place. Such accountability has now been lost in the case of infected blood, and is tenuous in the Post Office scandal, in which the injustices were mostly perpetrated in the first decade of this century.

One of the most important bills of failure, though, is the continuing cost of medical negligence, which has been rising for some time. The NHS has to break the cycle of scandal and cover-up that discourages staff from speaking out and delays justice, making it more expensive. Jeremy Hunt, the former health secretary, has called for a no-fault compensation scheme in which the emphasis would be on learning from mistakes rather than apportioning blame. This would mean that victims are compensated more quickly, and that errors are less likely to be repeated. As Mr Hunt has said, “the path to safer care is the same as the path to lower cost”.

The £47bn figure for historical injustices is not precise, because new failures will come to light and the cost of the infected blood scandal, one of the oldest, is still unknown. But the total is large enough to act as an incentive on the government to learn the lessons of past mistakes – made under governments of both parties. It now falls on Ms Reeves and her ministerial colleagues to do so.