Discount rate – announcement slips to February?

Somewhat out of the blue after nearly a three year silence on the topic, on 7 December 2016 the Lord Chancellor signalled her intention to make an announcement about the discount rate by 31 January 2017. The process behind this was challenged by the ABI by way of judicial review. That was unsuccessful, with judgment to that effect from Baker J last Friday, 20 January, and the Lord Chancellor undertook to announce her decision on 31 January.

The latest twist is that this morning she revealed that her considerations had “taken longer than expected” – but with no explanation as to why – and as a result, things will now drift into February.‎ As with the news in December, today’s update was issued by the Lord Chancellor on the regulatory news section of the section of the Stock Exchange’s website:

In the last sentence of that the Lord Chancellor says she “remains committed” to making an announcement in February. It is worth reflecting that this phrase could be interpreted as no more than a statement of intent and it is very different from a clear and unequivocal undertaking to make an announcement (and make a new Statutory Instrument in connection with the rate) in February. So perhaps the Lord Chancellor may be affording herself further ‘wriggle room’?

It is beyond doubt that the Lord Chancellor has an extremely difficult decision to make here. But after a fairly good week for her in which she came out of the blocks early to defend the independence of the judiciary following the Supreme Court’s decision on Tuesday in the Brexit / Article 50 case, perhaps taking further time on the rate hints that she may be under some pressure here? And she is also under pressure following the news this week of record prison suicides, another issue on which her Department has the policy lead.

The discount rate is an absolutely critical topic for all stakeholders in the personal injury field – whether claimant, defendant, private sector or public sector – and we’ll continue to keep a very close watch on developments in the next few weeks. A short Parliamentary recess is scheduled from 9 to 20 February. It remains to be seen if the Lord Chancellor will, as it were, kick this can down the road far enough to gain herself some breathing space during the imminent recess.

About the Author

akAlistair 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).

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