This morning, I notified the London Stock Exchange Group that I would today lay a statutory instrument to change the discount rate applicable to personal injury lump sum compensation payments in England and Wales to 0.5%. The new rate will come into force on 11 January 2025, in line with the statutory timelines set out in the Damages Act 1996, as amended by the Civil Liability Act 2018.
As Lord Chancellor, it is my statutory duty under the Damages Act to periodically determine the discount rate which courts must consider when awarding compensation for future financial losses in the form of lump sum payments in personal injury cases. This rate is commonly known as the personal injury discount rate.
On 15 July 2024, I met the requirement to review this rate at least every five years when I commenced a review and consulted both HM Treasury and an independent expert panel for their advice. I have now received their advice, for which I am very grateful, and considered it alongside the responses to two recent calls for evidence, as well as further advice, evidence and analysis which has been made available to me. It is on the basis of this evidence, and having followed the review framework set out in the Damages Act, that I have determined that a single rate of 0.5% is the appropriate determination for me to make in this review.
A full statement of reasons, explaining how I have decided upon this rate, will be placed in the Libraries of both Houses. It will also be published on gov.uk, alongside the full advisory report that was provided to me by the expert panel.
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