The Ministry of Justice will conclude its long-standing review of the discount rate used to calculate personal injury awards by 31 January 2017. This news appeared at 07:00 this morning with the Ministry releasing a regulatory news story on the London Stock Exchange’s news feed. The full text of the RNS may be found here
As that piece recognises, there could be “profound financial consequences of even a marginal change to the discount rate.” Perhaps this passage may hint at why advance notice of a mainstream policy announcement about personal injury law was made via the Stock Exchange rather than the via MoJ’s press office?
Equally, there could be significant practical implications for claims settlement behaviours and as regards parties’ current and future preferences for resolving claims arising from serious injuries via lump sum or periodical payment.
The MoJ’s decision, when announced, will mark the end of a long period of (re)consideration of the discount rate (currently 2.5%, having been set back in 2001) which began with a judicial review back in 2011 (by APIL, against the Ministry) and which featured two detailed public consultations run by the MoJ in 2012/13. A panel of independent experts was then commissioned by the MoJ and conducted its work in private.
Today’s RNS piece hints that the final and formal statutory consultation required by the Damages Act 1996 will be completed shortly, concluding that “the remaining steps, such as the mandatory consultation with the Treasury and Government Actuary (pursuant to s.1(4) of the 1996 Act), should be completed in short order.” Presumably, the somewhat colloquial “short order” means at any stage in the next seven weeks, based on the MoJ’s carefully-worded indication about timing: “by 31 January 2017”?
Pending this next announcement from the MoJ there could be a reduced propensity for cases to settle but apart from that nothing has changed as of today and the news does not necessarily mean the rate will change. It hardly needs emphasising that this is a crucially important topic and one which, as a result of today’s news, we will keep an even closer eye on.
About the Author
Alistair Kinley is BLM’s Director of Policy & Government Affairs.
Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.
He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).