Silk urges Justice Committee “not to be swayed by powerful insurance lobby”

December 5, 2017

Bill Braithwaite QC has called on the Commons Justice Committee looking at draft legislation for setting the personal injury discount rate to “stick to its guns and not be swayed by the powerful insurance lobby”.

A Justice Committee report on draft legislation for setting the personal injury discount rate has now been published.

The report says the Government must clarify its aims, gather proper evidence about how claimants invest lump-sum damages and whether investment covers their future losses, and ensure adequate safeguards to prevent under-compensation of the most vulnerable claimants.

The Justice Committee has also called on the government to ensure there is ‘clear and unambiguous’ evidence before bringing forward any legislation.

Said Bill Braithwaite QC:

“By focusing on better safeguards for vulnerable claimants the Committee is starting at the right point.

“It is absolutely correct for the Committee to ask for clear and unambiguous evidence – as we haven’t seen any yet.”

Continued Bill:

“It is also important to go beyond asking how claimants invest their compensation.  If they are investing in low, medium or high risk we need to know whether this is because they want to or because the Judge has told them that they have to in order to make the compensation work.  There is a big difference.”

The Ministry of Justice is currently proposing to base the rate, which calculates how much should be deducted from personal injury awards, on a low risk of return, rather than a very low risk of return as at present. Reforms are likely to come into force in 2018 although the date of implementation remains unclear.

The rate changed from 2.5% to -0.75% in February based on the current formula, prompting the insurance industry to lobby furiously for a rethink as the change hit profits. Ministers believe that a figure set according to government proposals would be between 0% and 1%.

The committee of MPs recommends the government ensures ‘adequate safeguards’ to prevent significant under-compensation of the most vulnerable claimants. Committee chair Bob Neill said setting the discount rate is much more than a technical decision and is about how society treats people who have been seriously injured, whether through medical negligence, road traffic accidents or by other means.

Continued Bill Braithwaite QC:

“It is hugely encouraging to see the Chair of the Committee take this stance.

“All claimants who receive major compensation are vulnerable, because if the money runs out or is lost through high risk investment, they suffer hugely.

“I agree wholeheartedly about society deciding how it wants to treat people with severe injury, when the person who caused the injury has suitable insurance.  Wouldn’t all right-thinking people agree than an extra few pounds on their car insurance premium would be well spent if it made sure that catastrophic claimants did not suffer and if kept them off the NHS and the State?

“The social cost of clinical negligence payouts has to be balanced against the savings made by Health Authorities and Local Authorities in not having to fund the accommodation, medical attention, care, therapies, transport and equipment.  In other words, all the care which the negligent hospital or doctor is order to pay for would otherwise have to be funded by the State.”

The committee proposes that the lord chancellor explain his reasons for every decision to change the discount rate or to leave it unchanged. Current plans are for the rate to be reviewed every three years and set after consultations with an expert panel and the Treasury.

The report recommends that legislation should require the expert panel and the lord chancellor to consider whether to set different discount rates for different periods of loss or different heads of damage.