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Government announces new legislation on negligence payouts

The Government has released new legislation, which aims to bring predictability to the way payouts for personal injury claims are calculated.

Under the new Civil Liability Bill, the ‘discount rate’ will be based on ‘low risk’ rather than ‘very low risk’ investments, as is currently the case, which the Ministry of Justice said better reflects the actual investment habits of claimants.

The discount rate is used to calculate the final financial compensation for victims of serious personal injury according to the amount they can expect to earn by investing it.

This comes after the Government came under fire last year when the discount rate, which affects the cost of GP indemnity fees, was cut from 2.5% to minus 0.75% last year, sparking warnings that indemnity costs for GPs would soar.

But the MoJ said the latest changes would bring ‘certainty and transparency’ to the way the ‘discount rate’ is calculated, providing ‘savings for the NHS’.

As was suggested under the original proposals for the legislation, announced in September, the rate will be reviewed regularly – within 90 days of the legislation coming into force and then every three years.

MDDUS chief executive Chris Kenny said the changes to the discount rate ‘give the market greater certainty, frees up money that could be spent on frontline care and reduces the need for extensive Government intervention in individual markets, with the cost, inflexibility and over-regulation that inevitably brings’.

He added that both Governments should now ‘commit unequivocally to having a revised rate in place by March 2019 at the very latest’.

The legislation establishes an independent expert panel chaired by the Government Actuary to advise the Lord Chancellor on the setting of the rate.

Emma Hallinan, director of claims policy and legal at the MPS, said: ‘We hope to see this Bill progress through Parliament swiftly, and for the independent expert panel to be established straight away so the current discount rate can be reviewed as soon as the legislation comes into force.’