28 February, 2017
In a surprise step, the Government has today announced changes to personal injury compensation payments. The Discount Rate will be lowered from 2.5% downwards to -0.75%. Previously, the Discount Rate had remain unchanged since 2001.
Lord Chancellor and Justice Secretary Elizabeth 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."
The practical effect of the change is that claimants who receive large compensation payments will now receive an uplift for accelerated receipt, previously awards of damage had been discounted for accelerated receipt.
According to the Ministry of Justice a consultation will also be launched before Easter to consider further options for reform "including whether the rate should in future be set by an independent body; whether more frequent reviews would improve predictability and certainty for all parties; and whether the methodology is appropriate for the future".
Today's decision will see compensation payments rise which will have a significant impact on public sector organisations and large bodies who have large personal injury liabilities.
On a practical note, parties should urgently review relevant Part 36 offers before the new discount rate comes into effect on 20 March 2017.
For further advice please contact Sarah Wilkinson by email or on 01254 662831.