Meeting of the Parliament 18 December 2018
Daniel Johnson makes a good point. The general point is that the rate must meet the needs of the hypothetical investor and ensure that they get the right amount of money, so that, at the end of the term, the money is exhausted and the person will not have been overcompensated, and, equally, will not have been undercompensated.
The member is right to say that economic conditions can change rapidly, which is why the bill provides for the facility to have an out-of-cycle review, so that if circumstances should change, the Scottish Government will be able to review the methodology and the distance between and frequency of rate reviews and so on, to ensure that the rate still meets the needs of the hypothetical investor.
The 2017 consultation provided options for those who might set the rate, some of which involved ministers and some of which did not. However, overall there was more support for the options that did not involve ministers. The bill therefore provides that the rate will be reviewed by the Government actuary, and the courts will continue to have the ability to apply a different rate should they decide to do so.
The policy decision to place the duty to review the discount rate on the Government actuary is consistent with and integral to the overall policy aim of reforming the law to make provision for a method and process for setting the discount rate that is clear, certain, fair, regular, transparent and credible. The policy approach has been to regard the determining of the rate as an actuarial exercise in which there should be no need to exercise political judgment. The bill will provide, in an accountable way, the framework in which the rate should be set, and thereafter the mechanics of determining the rate will sit with an appropriate professional. The Scottish Government thinks that that strikes an appropriate balance.
Currently, courts can make a periodical payment order for future pecuniary loss resulting from a personal injury only if the parties consent. In certain situations, periodical payments can be an attractive option to provide a guaranteed payment year on year for the duration of an award. The bill will, for the first time, require courts to consider imposing a periodical payment provided that the source of the funding is reasonably secure.