Lord Chancellor Liz Truss has announced that the government will cut the discount rate for compensation awards from 2.5 per cent to minus 0.75 per cent, meaning those who suffer severe injuries will receive more in compensation. This is four years after a consultation on reviewing the rate closed in 2013.
The rate is used by courts to calculate compensation for future loss in personal injury cases. When victims of life-changing injuries accept lump sum compensation payments, the amount they receive is adjusted according to the amount of interest they can expect to earn by investing it.
Accordingly, when determining the compensation for future losses the, courts make a calculation using a figure based on the Discount Rate, also known as the Ogden Rate. This rate is set at a level to reflect the return available, on the lowest risk investments, typically index-linked gilts. That has been falling since the financial crash in 2008 and is currently -0.75%
The compensation award using the rate is meant to put the claimant in the same financial position had they not been injured, including loss of future earnings and care costs. Where a higher rate of return is used, the figure used to calculate future losses will be lower meaning that the money received by the injured person is unlikely to be sufficient and may well run out during their lifetime.
The announcement has been welcomed by the Association of Personal Injury Lawyers (APIL), of which Gotelee is a member.
APIL said it hopes the decision would mark a “long overdue turning point towards treating injured people fairly and with understanding”.
“It is not only the right thing to do, it takes the cost of caring for people away from the taxpayer and puts it squarely where it should be – with the person who caused the needless injury,” a spokesman said.
“People who suffer severe life-changing injuries can now be assured that the compensation needed to look after them is calculated correctly and is sufficient to provide care for the rest of their lives. It is what they need and deserve and APIL welcomes this recognition from the Lord Chancellor.
“But we must also note that this change is long overdue. People already coping with the most severe injuries have been deprived of the help and care they need for years.”
How can Gotelee help?
Our injury lawyers understand how traumatic it can be to suffer an injury through no fault of your own and our compassionate approach will ensure your claim is handled sensitively.
We can assess your claim quickly and advise whether or not we will be able to represent you and pursue your claim on a no-win no-fee basis.