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The Lord Chancellor announced that the discount rate applied to personal injury compensation payments will fall from 2.5% to 0.75%.
The rate determines how much payments are adjusted by to reflect the interest claimants can expect to earn by investing them. The percentage is linked in law to returns on the lowest risk investments, typically index-linked gilts.
Liz Truss said the change reflected the significant fall in interest rates since the rate was last set in 2001.
The Ministry of Justice said the law makes clear claimants must be treated as risk averse investors, reflecting the fact that they are financially dependent on this lump sum, often for long periods or their life.
Compensation awards using the rate should put the claimant in the same financial position had they not been injured, including loss of future earnings and care costs.
Truss said: ‘The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants. I am clear that this is the only legally acceptable rate I can set.’
Claimant lawyers welcomed the move that will give victims greater sums. But Truss warned it will have a significant impact on the insurance industry and a knock-on effect on public services with large personal injury liabilities – particularly the NHS.
Insurers reacted by seeking an urgent meeting with the Chancellor of the Exchequer, Philip Hammond, to ask him to intervene and reverse the change.
The Lord Chancellor announced that the discount rate applied to personal injury compensation payments will fall from 2.5% to 0.75%.
The rate determines how much payments are adjusted by to reflect the interest claimants can expect to earn by investing them. The percentage is linked in law to returns on the lowest risk investments, typically index-linked gilts.
Liz Truss said the change reflected the significant fall in interest rates since the rate was last set in 2001.
The Ministry of Justice said the law makes clear claimants must be treated as risk averse investors, reflecting the fact that they are financially dependent on this lump sum, often for long periods or their life.
Compensation awards using the rate should put the claimant in the same financial position had they not been injured, including loss of future earnings and care costs.
Truss said: ‘The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants. I am clear that this is the only legally acceptable rate I can set.’
Claimant lawyers welcomed the move that will give victims greater sums. But Truss warned it will have a significant impact on the insurance industry and a knock-on effect on public services with large personal injury liabilities – particularly the NHS.
Insurers reacted by seeking an urgent meeting with the Chancellor of the Exchequer, Philip Hammond, to ask him to intervene and reverse the change.
Far-ranging month for the Chair of the Bar
Endometriosis Awareness North, a charity raising awareness of endometriosis and supporting those affected across the North of England, has received a £500 boost from AlphaBiolabs via the company’s Giving Back initiative
Marie Law, Director of Toxicology at AlphaBiolabs, examines the most recent data on alcohol misuse in the UK, and the implications for alcohol testing in family proceedings
Clement Cowley, Partner at The Penny Group, explains how tailored financial planning can help barristers take control of their finances and plan with confidence
Marie Law, Director of Toxicology at AlphaBiolabs
A £500 donation from AlphaBiolabs has been made to the leading UK charity tackling international parental child abduction and the movement of children across international borders
Seeing the full picture – Baljit Ubhey OBE outlines the CPS action plan to tackle violence against women and girls, offering insights directly relevant to courtroom practice
Heritage as an anchor and a compass, finding our common humanity and embracing the power of the outsider – Melina Antoniadis’s lessons learnt
Is the Judicial Conduct Investigations Office process fit for purpose? Women barristers’ experiences of bullying are not being reported or, if they are, they are not making it through the system, says Tana Adkin KC
Review by Daniel Barnett
Chair of the Bar reports back
