The only people winning from the system are the lawyers

David Davis MP, public accounts committee chairman

Mr Davis said: "This report demonstrates in the starkest terms that the current system for handling claims for clinical negligence in England fails to provide satisfaction to the patient or value to the taxpayer.

"The report provides firm evidence that the only people winning from the system are the lawyers.

"In almost all cases the taxpayer foots the bill, either in damages or in legal aid."

It also found that five-and-a-half years was the average time taken to settle claims, although children left severely handicapped and brain damaged after birth have to wait even longer for vital compensation.

Arnold Simanovitz, from the organisation Action for the Victims of Medical Accidents, said: "This compensation is not a bonanza for these patients.

"It is money they desperately need in order to restore some quality of life that they have lost because of mistakes made in the NHS."

Further improvements

The National Audit Office (NAO), which issued the report, said the four bodies involved in medical negligence claims - the Department of Health, the NHS Litigation Authority, the Lord Chancellor's Department and the Legal Services Commission - have made improvements but could make further changes.

NAO head Sir John Bourn said: "The present system is a slow and inefficient way of resolving small and many medium size claims.

"The Litigation Authority and the Legal Services Commission are making improvements to the way they handle claims.

"Implementation of our recommendations should provide patients with improved access to remedies, speed up settlements and cut legal costs."

The NAO's said change was needed to bring the system under control.

Committee chairman David Davis: system is out of control

It suggests the NHS Litigation Authority, the centralised body set up to administer the claims, should draw up an action plan with targets and performance measures to address claims which have been underway for more than five years.

It also wants the progress of cases over five years old to be monitored, and steps taken to bring them to a timely conclusion.

The NAO wants the Department of Health and Lord Chancellor's Department to further investigate alternative ways of dealing with small and medium sized claims.

Non-financial remedies such as mediation could be offered.