NHS organisations which fail to be open and honest with patients and families when they suffer poor care could be forced to pay the costs of any litigation, the government has announced today.

Health secretary Jeremy Hunt said trusts could be stripped of the indemnity cover provided by the NHS Litigation Authority if they had been found not to have complied with a new statutory duty of candour.

The measures were announced today as part of the government’s response to the Francis report into failures at Mid Staffordshire Foundation Trust.

Ministers have accepted 281 of the 290 recommendations made by Robert Francis, including 57 in principle and 20 in part.

Mr Hunt said all organisations and professionals would be required to be open with patients when mistakes happen as part of moves to introduce an culture of openness and transparency.

The measures, which will go out to consultation, will give the litigation authority the power to remove hospitals’ insurance cover and to demand they pay all or part of any compensation paid to families.

While the government has rejected the idea of applying a statutory legal duty of candour to individual doctors and nurses it will become an explicit duty in the two groups’ professional codes.

This will impose a clearer requirement to be open and transparent with patients not just on serious incidents, as Mr Francis suggested, but on all incidents “serious or not”. This will also be extended to near misses as well.

The government has also rejected the idea of making it a criminal offence to obstruct someone from raising concerns but instead will make this behaviour a breach of professional codes.

To try and embed a culture of openness Mr Hunt revealed any raising of concerns at an early stage will be considered as mitigation by professional regulators.

Mr Hunt defended the government’s decision not follow Mr Francis recommendations, telling a press conference today: “Using professional codes is the right way to deal with this issues and will make it much easier for brave people like Helene Donnelly [a Mid Staffordshire whistleblower] to speak out.”

But speaking at the same conference, Robert Francis QC issued a note of caution. He said that while he accepted the government approach, “speaking for myself, we need to keep a close watch on this particular area. If we keep hearing about these behaviours in the future then I will still be saying we need a criminal sanction.”