The MOJ has this week published a Call for Evidence in respect of the Personal Injury Discount Rate. In particular it has asked to hear from stakeholders on the question of whether the current discount rate of -0.25% should be replaced with a dual or multiple rate approach.
Up to now a single discount rate has been deployed in all cases, regardless of the level of damages awarded and the duration of injury. This “one size fits all” model is now under review, and the Call for Evidence highlights different ways in which a dual or multiple rate model might work. One option would be for the introduction of different rates determined by the duration of award, with one or two short-term rates and then a longer long-term rate. The rationale behind this is that the rates can be set in accordance with anticipated returns on investment. Another option is the application of different rates for different heads of loss to take account of factors such as inflation and appropriate level of investment risk, for example the cost of future care or future loss of earnings.
The Call for Evidence sets out in some detail the purported advantages and disadvantages of the different models, and invites a response from all interested parties. The Call of Evidence will last for 12 weeks and will close on 11th April 2023. The responses to this Call for Evidence will ultimately inform the next review of the PIDR which is due to take place in 2024.