On 27 February 2017 the Lord Chancellor announced changes to the discount rate applied to awards of damages for personal injury. The decision was made to lower the discount rate from 2.5% to minus 0.75%.
This announcement is made more than four years after a consultation on the issue closed.
What does this change mean?
The previous discount rate of 2.5% remained unchanged since 2001.
The Association of Personal Injury Lawyers has campaigned for years that the rate of 2.5% was too high and penalises those who have suffered injury - the higher the rate, the less injured people receive. This organisation argued that people who were injured continued to be undercompensated due to the delay in reaching a conclusion about what the discount rate should be - they argued that the discount rate of 2.5%, which had been in place since 2001, failed to reflect changes in the economy.
The new discount rate is intended to come into force on 20 March 2017, following amendments to the current legislation. However, the government has announced that it will open a consultation before Easter to review the framework and consider further options for reform.
Why is the discount rate so important for people who are injured?
It is a basic principle of the Scottish legal system that the law will put an injured person back in the position they would have been - insofar as money can do so - but for the harmful act.
It is imperative that people who are seriously injured, require care in the future and/ or have limited or no income as a result of not being able to work, are put back in the financial position they were in should the accident not have occurred.
It is important that there is regular review of discount rates and inertia in a volatile financial landscape should not harm those who are reliant on damages to restore their lives in some type of positive way.
Our Personal Injury team are experienced in representing those injured and will give first class legal representation, support and care to an injured person and their family. We have experience of dealing with high value cases and the application of the discount rate in Scottish Personal Injury cases.