Civil Liability Bill [HL]

Explanatory Notes

Financial implications of the Bill

54. The provisions regarding the setting of the discount rate in clause 8 and Schedule A1 will have a financial effect when they are applied but they do not specify what the discount rate should actually be from time-to-time. This must be determined on a review-by-review basis in accordance with the terms of the legislation. Changes in the discount rate will affect the size of lump sum payments of damages for future financial loss. The awards will become smaller as the rate is increased and larger if it is decreased. Relative to a discount rate set under the present law by reference to a very risk averse investor, the change to a low risk investor will produce a relatively higher discount rate than the present law would have produced.

55. The changes in the rate will, when made, affect all defendants, whether private or public sector. The amount of any change will depend upon the rate chosen and the awards to which it is applied.

56. The expense of establishing and supporting an expert panel will impose a small additional ongoing charge on public funds. This will be met by the Ministry of Justice.

57. The new process for prescribing an assumed rate of return will entail consulting an expert panel at intervals of up to three years. The extra expenditure incurred when there is a review and consultation with an expert panel is estimated to be between £50,000 and £100,000.

58. It is not anticipated that the Bill’s measures concerning whiplash will generate new Government expenditure.

 

Prepared 20th March 2018