On 1 August 2012 the Ministry of Justice, the Scottish Government and the Department of Justice, Northern Ireland jointly published a consultation paper “Damages Act 1996: The discount rate—how should it be set?” (CP12/2012).
The paper seeks views on how the Lord Chancellor in relation to England and Wales, Scottish Ministers in relation to Scotland and the Department of Justice in Northern Ireland in relation to Northern Ireland should set the rate of return to be prescribed under section 1 of the Damages Act 1996.
The prescribed rate is taken into account by the court in determining the return to be expected from the investment of a sum awarded as damages for future pecuniary loss in actions for personal injury. This rate of return is referred to as “the discount rate” and is currently 2.5%.
The consultation period is 12 weeks from and including 1 August. Copies of the consultation paper have been placed in the Libraries of both Houses. The document is also available online at: www.justice.gov.uk/consultations.
Independently of this consultation and the review of the amount of the prescribed discount rate of which it forms part, the Ministry of Justice intends to issue a consultation paper in the autumn of 2012 to review the present legal basis for the setting of the rate in England and Wales. The consultation will seek views on whether the restrictions on the factors that can be taken into account in prescribing a rate under section 1 of the Damages Act 1996 are still appropriate.