NI discount rate: further discussion of the proposed Bill but no clarity yet on timing

The Justice Committee of the NI Assembly last week questioned the DoJ NI Minister and her officials about the proposed legislation under which a new discount rate would be set. Some of the exchanges between the chair and the Minister could fairly be described as “robust”.

The evidence given by DoJ NI re-confirmed that the Damages (Return on Investment) Bill will follow the Scottish model for setting the personal injury discount rate, the only variation being that a period of 43 rather than 30 years is to be assumed for investment purposes. It is important to realise that this point of difference does not, of itself, offer a clear indication as to what the future discount rate could be for NI. All that can be said about it at present is that if the discount rate in NI had been set on that basis at exactly the same time as in Scotland, ie back in September 2019, then it might have been expected to be a little higher than that in Scotland because of the analysis of returns over a longer period.

The timetabling of the Bill remains unclear. The Minister is seeking “accelerated passage” (AP), a process by which she believes the Bill could be enacted by the summer. Formal setting of the new discount rate would be required within 90 days of that, meaning – in the Minister’s view – that a new discount rate could be in place in the autumn. If, however, the Bill failed to secure AP it was said to be unlikely that a new rate could be in place before early 2022.

An essential feature of AP is that the Bill’s Committee stage is bypassed. It is therefore unsurprising that the Justice Committee is fairly hostile to AP in this instance, meaning there is now something of a stand-off between it and the DoJ on the point. The chair objects to the Minister seeking to introduce a Bill in respect of which it is said that the Committee did not have the opportunity to scrutinise the policy choices which informed its drafting. The Minister is pushing for AP because of the need for urgency in getting to a stable personal injury discount rate that properly reflects the 100% compensation principle.

A potential compromise could be that the Bill is not subject to AP but instead is taken as quickly as possible through all its stages, including Committee scrutiny. This was at least hinted at by the Minister. The transcript of the entire hearing is available here on the NI Assembly’s website.

The next few weeks should see the NI Executive agree to the Bill being introduced (and it being made public) and should see a resolution to whether or not it proceeds under AP. If the stand-off on the point continues, it might ultimately have to be resolved by a vote seeking “cross-community support” for the proposal, as is required by the Northern Ireland Act 1998.

It may seem unusual to outside observers that a major piece of constitutional legislation which followed the Good Friday / Belfast Agreement might be invoked in deciding how to work out, some twenty three years later, at what pace a highly technical piece of personal injury legislation should be passed, particularly when similar reforms have been in place for around two years in England & Wales and in Scotland. Nevertheless, that prospect is in play and the way forward should be clearer later this month or in early March.

Alistair Kinley, Director of Policy & Government Affairs

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