The Civil Liability Bill – Second House of Lords Reading

The Government’s Civil Liability Bill went back to the House of Lords on the 24th April for its second reading. You can read the full Hansard text here.

In broad terms, the Lords were supportive of the Government’s position on the whiplash provisions as set out in the proposed Bill and we await further amendments.

On the issue of the Discount Rate, and the proposals to link the setting of the rate to ‘low-risk’ rather than ‘very-low risk’, Lord Keene of Eli set out the Government’s position:

‘I now turn to the second part of the Bill, the personal injury discount rate. Fairness and sustainability are at the heart of our reforms. With any change to the system for compensating the seriously injured, we must keep in mind the person behind every claim. The Government continue to support the aim that seriously injured people should receive 100% compensation to meet expected future financial losses, including medical and care costs. The way compensation is calculated must be fair to both claimants and defendants, including the National Health Service’.

‘This Bill will reform the personal injury discount rate, which adjusts a compensation lump sum to allow for the return a claimant is expected to receive by investing it over the period of the award. Currently at minus 0.75%, we have one of lowest rates in the world. In Germany, it is 4%; in France it is 1.2%, and in Ireland it is 1%. The current rate consistently compensates for injury at more than the 100% required by law. Awards currently average 120% to 125% even after management costs and tax. This is putting huge pressure on the National Health Service in claims for clinical negligence. Last year, the NHS spent £1.7 billion on such cases, a cost that has almost doubled since 2010-11, with an unsustainable average increase of 11.5% every year’

There were a number of dissenting voices during the reading, although most broadly accepted the need for an alteration in the methodology behind the setting of the rate, and also acknowledged the lack of action on the previous 2.5% rate by previous Lords Chancellor. There was also general agreement that on larger future loss damages awards, greater use of Periodical Payments was to be supported and encouraged. We welcome this call to action on the issue of PPO’s.

Lord Keene also gave the Lords an indication as to the timetable of the new Bill:

‘On that last point, I appreciate the concern about the delay in respect of the discount rate. We are proposing to carry out the first review as swiftly as possible. I understand that we are aiming for April 2019, not 2020 as has been suggested. There is a 90-day period and then a 120-day period. There is a need to have an expert panel in place, but considerable steps may be taken in anticipation of the Bill passing to ensure that we have the machinery in place for the swift appointment of an expert panel, so that the review can be carried out as soon as possible. I will take further advice from officials on the question of how far we can go with that sort of preparation prior to Royal Assent of the Bill, in order to move swiftly on that matter’

We shall of course, attempt to keep our readers updated as the Civil Liability Bill continues its course through parliament. In the meantime, it appears that we continue with the – 0.75% rate.