19 June 2018
On 14th June 2018 the Scottish Government published its draft Bill for setting the Discount Rate, together with the introduction of Periodical Payment Orders (“PPOs”) in personal injury damages actions. The Parliamentary timetable for introduction of the Bill is yet to be published, however, it will face three stages of legislative scrutiny before being passed into law.
The aim of the Bill is to provide a transparent, fair and credible manner by which to set the personal injury Discount Rate. The stated aim of the Bill is to address concerns that the process by which the rate has been set lacks transparency and was not reviewed frequently enough.
In brief, the key points are as follows:-
- To introduce a Discount Rate assessed by the Scottish Government’s official rate assessor.
- The methodology to be applied to the Discount Rate is intended to reflect the rate of return that could reasonably be expected to be achieved by investing in a notional investment portfolio (a combination of cash, nominal gilts, index-linked gilts, UK / overseas equities or property) for 30 years.
- The Courts shall be required to take into account the rate assessed by the Scottish Government’s official rate assessor.
- It seeks to allow the Courts to apply a different rate if a party to the action shows that a different rate is more appropriate.
- The rate must be reviewed every three years.
- The Courts shall be required to consider whether, in cases involving awards for future pecuniary loss, an order should be made that the future loss payments take the form of a PPO.
- It also proposes to allow the Courts to make a PPO order with or without the consent of the parties.
The Bill ostensibly seeks to mirror developments in England and Wales where the corresponding Civil Liability Bill is currently before UK Parliament. That Bill deals with the methodology underpinning the setting of the discount rate in England and Wales alone. The suggestion is that the first review of the discount rate in England and Wales is not expected until closer to the end of 2019 and the precise timing of that will depend upon when the Civil Liability Bill is brought into force.
It remains to be seen whether the Scottish Government will seek to follow Westminster’s suit in adopting its methodology underpinning the setting of the rate or the Discount Rate itself. It also remains to be seen whether the Scottish Bill will seek to follow the UK Government’s legislative timescale, bearing in mind that the corresponding Civil Liability Bill is further down the legislative path than the Scottish Bill.
BTO will be closely monitoring the progress of the Bill as it progresses through the various parliamentary stages of scrutiny and will issue further updates as matters develop.
In the meantime, for further information on the Bill please contact:
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