The move last week by the DoJ NI to set an interim discount rate might look like progress, but really it’s stepping back in time 25 years. The 1996 Act which the DoJ has triggered to set its interim rate of -1.75% is totally out of date and was replaced in both England and Scotland two years ago.
It was widely recognised that the rate in NI of 2.5% based on the Act needed changing because it would systematically under-compensate a significant proportion of plaintiffs. But setting an interim rate under the same flawed Act simply swings the pendulum much too far in the opposite direction and will lead to over-compensation in more than 90%* of claims. That level of excess will cost tens of millions of pounds for NI businesses and taxpayers and those additional costs will continue be felt until the new Bill – which the Committee for Justice has chosen to scrutinise until Hallowe’en – comes in. That should bring stability to this area with something of a ‘Goldilocks’ discount rate being set under the new law: not too high, not too low, but just right.
[* See figure 1 at page 18 of the Government Actuary’s advice to the Lord Chancellor in June 2019.]
Alistair Kinley, Director of Policy & Government Affairs