The prospect of a reform in the discount rate applied to personal injury compensation awards has loomed larger after governments in Scotland and Northern Ireland approved their own changes.

Justice ministers in both jurisdictions announced they would set their new rate at 0.5% (it had been -1.5% in Northern Ireland and -0.75% in Scotland). The reformed rate effectively means that lump sum damages will be reduced slightly on the basis that claimants will recoup the money through investment yields.

Although England and Wales operate differently, lawyers can reasonably expect that the government is considering a similar revision from the current -0.25% when it reviews the PIDR rate before 11 January.

As would be expected, defence lawyers and insurers were delighted with the changes in Scotland and Northern Ireland. David Pranklin, the head of claims with the Medical Defence Union, said reductions in the discount rate in recent years had led to a hug increase in the cost of clinical negligence claims which in turn had serious implications for the NHS.

He added: ‘The determination by the government actuary to increase the rate in Scotland and Northern Ireland to +0.5% is welcome news. This will mean that more money can be retained in the NHS to be spent on patient care. The process of reviewing the PIDR in England and Wales is underway and is due to be completed by January 2025. We hope the England and Wales PIDR will be increased from the current rate.’

On the other side of the debate, Gordon Dalyell, treasurer and Scotland representative for the Association of Personal Injury Lawyers, suggested that the new rates have potentially significant consequences for people suffering life-changing injuries.

‘It is now even more likely that a catastrophically injured person will not receive full compensation and therefore be unable to meet the costs of their necessary care and support,’ he said.

Announcing the change, Northern Ireland justice minister Naomi Long said the 0.5% rate was designed to maintain the principle of 100% compensation.

She added: ‘It is important that those members of our society who have sustained serious injuries through no fault of their own are fully compensated for their future financial loss, whilst also ensuring that the way this is calculated is fair to defendants.’

 

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