Earlier today, I notified the market via the London Stock Exchange group that I would today lay a Command Paper The Personal Injury Discount Rate How it should be set in future Draft Legislation (Cm 9500) before Parliament.
The paper invites comments on draft legislation to give effect to the Government’s proposals to change the way in which the personal injury discount rate is set in England and Wales. If enacted, the proposals will lead to the rate being:
- set by reference to expected rates of return on a low risk diversified portfolio of investments rather than very low risk investments as at present.
- reviewed promptly after the legislation comes into force and, thereafter, at least every three years.
- set by the Lord Chancellor following consultation with an expert panel (other than on the initial review which would be by the Lord Chancellor with advice from the Government Actuary) and, as at present, HM Treasury.
The proposals have been developed in the light of the responses to the consultation paper The Personal Injury Discount Rate: How it should be set in future, which was published on 30 March, and related research. It is not possible to predict accurately now what the rate will be when it is set under the proposals, as this will depend on decisions made in the light of the then current circumstances. Nonetheless, without restricting the future exercise of the proposed power, the Government might expect, based on the evidence currently available and using illustrative assumptions, that if a single rate were set today under the proposals the real rate might fall within the range of 0% to 1%.
I am also publishing today:
- the Government’s response to the consultation;
- an impact assessment in relation to the proposals prepared by the Ministry of Justice;
- the Government Actuary’s Department’s report Ministry of Justice Personal Injury Discount Rate Analysis (dated 19 July 2017); and
the British Institute of International and Comparative Law Briefing Note on the Discount Rate applying to Quantum in Personal Injury Cases: Comparative Perspectives (dated 20 March 2017)).
I will place copies of all these documents in the Libraries of both Houses and will be available at https://www.gov.uk/government/consultations/personal-injury-discount-rate-how-it-should-be-set-in-future and
This statement has also been made in the House of Lords: