A powerful Commons committee has called for more compensation payouts from the NHS to stem a rising tide of litigation.

The 'best hope for avoiding an ever-increasing resort to litigation is the creation of a proper code of practice for the payment of financial redress in the NHS', the committee on public administration concludes in a report published this week.

Its second report on the health service commissioner's annual report notes that while trusts and independent review panels are legally free to recommend payment, there is a wide belief that it 'is not considered appropriate'.

Commissioner Michael Buckley told the committee that he would prefer to make recommendations on financial redress 'by reference to an accepted code of practice'.

But the committee also concedes a 'need for caution', outlined in evidence from NHS chief executive Sir Alan Langlands.

'I do not think there is an overwhelming case for turning the NHS into a small claims court,' he said, adding that more work would need to be done on the issue 'in the context of the evaluation of the complaints procedure'.

The two-year evaluation by the London Health Economics Consortium is not due to report until the end of 2000.

The number of complaints received by the commissioner increased by 20 per cent last year, bringing the total to 2,660.

But the number of cases investigated dropped from 551 in 1996-97 to 270 in 1997-98, partly because many complainants had not exhausted the NHS complaints procedure.

The report notes that there has been a drop in the average time spent investigating a complaint by the commissioner, from 56 weeks in 1996-97 to 45 in 1997-98 - but Mr Buckley warned that increasing number of primary care and clinical complaints was likely to increase this average.

The committee also explores new roles for the commissioner, arising from the government's quality agenda for the NHS.

The commissioner will need to develop 'effective working relationships' with organisations such as the Commission for Health Improvement, it says.

And it calls for a taskforce to be set up to 'consider how the various agencies involved in ensuring and monitoring quality in the NHS work together'.

The report also welcomes an amendment to the Health Bill - due to finish its committee stage this month - to allow the commissioner to pass on concerns about 'dangerously poor clinical performance' regardless of whether a complaint has been made or is in progress.

The committee says that 'in the wake of the Bristol case', it is particularly important for 'the various authorities involved in regulating healthcare... to prevent problems arising in the first place'.

The report also calls for the NHS Executive to arrange training for convenors involved in the new NHS complaints procedure.

It says convenors are currently making 'elementary mistakes'.

Second Report on the Annual Report of the Health Service Ombudsman for 1997-98. Stationery Office.£18.