Personal Injury Discount Rate: Publication of a Call for Evidence

Ministry of Justice written statement – made at on 17 January 2023.

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Photo of Lord Bellamy Lord Bellamy The Parliamentary Under-Secretary of State for Justice

I announce today the publication of a Call for Evidence on exploring the option of introducing a dual or multiple Personal Injury Discount Rate (PIDR).

The PIDR is important in ensuring that claimants who suffer serious, life-changing personal injuries receive full damages, including for their future financial needs. It is the percentage figure used to help calculate how much a compensator (usually an insurer or body such as the NHS) pays to a claimant, in the form of a lump sum.

It is assumed that claimants will invest this lump sum and accrue a return on that investment and the PIDR represents what the real rate of return on this investment is expected to be.

Historically, the PIDR has always been set as a single rate however, it can be set as more than one rate if supported by the evidence. It has been argued that applying a single rate can result in unfairness to claimants and that moving to a dual or multiple PIDR could potentially be more accurate than using the current single averaged rate.

Moving to a dual rate means having more than one rate which can be targeted more specifically at claimants with shorter- or longer-term injury awards. For example, it would allow for short and long-term rates to be set with claimants switching from one to the other after an appropriate length of time. Other approaches include separate rates for different losses, such as care costs or future lost earnings.

The Government Actuary explored this issue during the last PIDR review in 2019, noting that the implementation of dual rates might be considered as a means of providing fairer compensation for both short and long-term claimants.

However, the Government decided that there was a lack in the quantity and depth of evidence available at that time to conclude that a dual rate was more appropriate than a single rate. A commitment was, therefore, made to seek additional data and evidence on this issue to inform future PIDR reviews.

This Call for Evidence is being issued in response to that commitment. Its purpose is not to decide whether there should be a change from a single to a dual or multiple PIDR. Instead, the aim is to evidence and expert opinion on the pros, cons, effects and impacts of a change to a dual or multiple PIDR approach.

The Call for Evidence will be open for a period of 12 weeks and will close on 11 April 2023. A copy has been placed in the Libraries of the House and a response document summarising the key submissions and evidence provided by stakeholders will be published in due course.

Copies of the Call for Evidence can be found here:

https://www.gov.uk/government/consultations/personal-injury-discount-rate-exploring-the-option-of-a-dualmultiple-rate.