Prison & Courts Bill debate signals reform of the discount rate?

A good deal of this recently-published Government Bill deals with prison reform and prisoner welfare and these issues took up much of the debate on Second Reading in the Commons yesterday, which ran from late afternoon until nearly 10pm. In addition, part 5 of the Bill seeks to implement the Government’s reforms to whiplash claims, which were also discussed at some length.

This short post covers none of those topics but instead suggests that perhaps the two most important interventions yesterday, in terms of financial impact on the claims sector, came relatively early in the debate and then right at its end. Both were quite brief and taken together they clearly signpost reform to the process by which the discount rate for future losses in personal injury claims is set.

First was the unequivocal statement from the Lord Chancellor that “the system is in need of reform, and I will bring forward a consultation before the Easter recess.” Given that Thursday 30 March is the last sitting day before the recess, it must follow that we are going to see proposals about a new approach to setting the discount rate by the end of next week. If so, that will be within ten days of the minus 0.75% rate taking effect.

Second is the prospect of carry over, recorded in these three quite bland words of Parliamentary procedure at the very end of the yesterday’s debate: “Question agreed to.” Why might they be so important for the discount rate? Their relevance is that the Commons has accepted that the Bill will not lapse if it is not concluded in the current Parliamentary session and it can be carried over to the 2017/18 session. Doing just that would allow the Government to introduce later in the year – via amendments to this Bill after it has been carried over – a new statutory framework for setting the discount rate once it has concluded the consultation that is set to begin very shortly indeed. Although any new framework would not necessarily mean a new discount rate straightaway – there might, for instance, be provision for an official body, committee or organisation to take over the setting of the rate or rates, which would need time to reach a decision or to provide advice – it would certainly make it a realistic prospect over the medium term.


Written by Alistair Kinley, director of policy and government affairs

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