Hansard

I, too, thank the clerks and members of the Economy, Energy and Fair Work Committee for their excellent work at stage 1 of the Damages (Investment Returns and Periodical Payments) (Scotland) Bill. I acknowledge the many organisations and individuals who participated in the consultation process.

Scottish Labour welcomes the introduction of the bill. The bill seeks to calculate personal awards of damages through the injury discount rate in a way that is

“clear, certain, fair, regular, transparent and credible”.

Ultimately, the bill is about providing security to those who have been injured through the actions of others, often leaving them with life-altering conditions and with substantial life decisions to make.

As members have noted, although this is a technical bill, at its heart is something fundamental and understandable. It is about protecting vulnerable people and making sure that we have in place a system that is fair and equitable, so that they can make the decisions that they need to make in very difficult circumstances. Importantly, it is also about finding the right balance so that our public bodies, in particular the NHS, do not incur unreasonable costs and liabilities. There is also the important point that undercompensating can lead to many such bodies having large bills. If we undercompensate—if we give people too little—often it is the NHS that ultimately picks up the bill.

Although Labour agrees with the broad principles that are outlined in the stage 1 report, we recognise that there are parts of the proposed legislation that need to be tested robustly as the bill proceeds through stages 2 and 3. I will outline two or three such areas in my speech. The first area that requires scrutiny is the make-up of the notional portfolio, which we have already heard about. Concerns have been raised that it is too cautious and too focused on fixed assets at the expense of equities, even though equities would deliver a higher rate of return.

However, we need to strike a cautious note, in particular around the notion of the hypothetical investor. Although it is reasonable to assume that vulnerable people will invest, it is not reasonable to assume that they will become investment experts, or that they should assume risk or that they require to be speculators. It is not reasonable that they have to put their damages award under a metaphorical mattress, but nor should we expect them to bet on the stock market and to base their future on such speculation.

The notional portfolio would need be updated regularly to keep up with market changes, but it is unclear whether the Scottish Government or the UK Government Actuary’s Department would be responsible for doing that. Likewise, it is unclear whether the series of adjustments that are set out in the bill would be adequate to cover the cost of inflation, tax and investment advice or underperformance. We must test all those aspects as the bill proceeds.

Periodical payment orders would allow courts to make awards for future economic loss and for payments to be made in a periodic manner, thereby increasing the security of such payments. We welcome that provision, which can mitigate against some of the uncertainty that is associated with lump sums. For vulnerable individuals in particular, it can provide welcome certainty. However, more weight should be given to a pursuer’s views when a court is asked to decide on a PPO and members have already raised that point. Ultimately, the bill should seek to empower those who seek compensation, instead of taking away any more of their control.

On the 30-year period, despite evidence that suggests that the average life expectancy following a serious personal injury claim with damages of more than £250,000 is 46 years, the bill creates an assumption that the hypothetical investor will hold their assets for a 30-year period. In her evidence, the minister stated:

“There is no authority on which to base that figure; it was chosen merely as a useful duration that was neither too short nor too long.”—[Official Report, Economy, Energy and Fair Work Committee, 6 November 2018; c 8.]

It is important that the period is examined and carefully considered so that the bill provides for a payment period that is realistic.

Labour welcomes the bill and supports its aim of creating a

“fair, ... transparent and credible”

personal injury discount rate. Although it represents progress, the bill is far from perfect and the proposed legislation must be tested robustly and scrutinised closely as it moves forward. Changes in the areas that I have mentioned will help strengthen the bill to provide greater security to those people who have been injured through wrongful action, while also protecting public bodies from unreasonable costs and liabilities. The bill will ensure that we have in place a just system that is fair and equitable. I look forward to following the bill’s progress through stages 2 and 3.