The Bill to reset the legal basis of the personal injury discount rate (PIDR) in Northern Ireland was published this week following its introduction to the Assembly. As was expected, and as we tweeted yesterday, it’s a lift and shift from the approach in Scotland with one main change: a longer assumed investment period of 43 years rather than 30. The investment portfolio, however, is identical. We have said previously that all that can be taken from this, for the time being, is that had the NI PIDR been set using this approach at the same time as the Scottish rate was set at -0.75% – ie back in Q3 2019 – it might have been a little higher than that. How quickly the Bill (its home page is here) might proceed is both politically contentious (as set out in my last blog about it) and unclear. We may get a better idea of timescales from the second stage debate which is likely to take place next week and may at times be ‘robust’.
Alistair Kinley, Director of Policy & Government Affairs email@example.com
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”.
In evidence today to the Justice Committee, the Justice Minister and her officials summarised the content of the recently finalised Damages (Return on Investment) Bill. The text of the Bill is not yet publicly available but – based on today’s oral evidence – it will follow the approach adopted in Scotland. Subject to any future amendments, this means that:
the rate-setting task will be assigned to the Government Actuary rather than a Minister
the notional low risk investment portfolio, the return on which the discount rate will be based, will be set out on the face of the Bill
the return on the portfolio will be adjusted to take account of inflation and prescribed adjustments of 0.75%, for tax and investment advice, and of 0.5%, as a margin against under-compensation, will also be made
one area of divergence from Scotland is that the investment period to be assumed is 43 years rather than 30 years
the GA will have 90 days following commencement of the legislation, when passed, to complete the rate-setting exercise
the rate will then be reviewed in summer 2024 (at the same time as in Scotland) and thereafter every five years.
The Minister is pressing for the new legislation to secure accelerated passage through the Assembly. She indicated that a new rate could be in place by the autumn on that basis. That seems to be an optimistic assessment in itself and it looks even more optimistic in light of the Committee’s strong resistance to accelerated passage. We will look at this aspect in a further post in the next couple of days.