Meeting of the Parliament 18 December 2018
Oh, my goodness! I cannot guarantee that my arguments will be any more elegant. Let me cut to the chase and focus on two areas: the discount rate and periodical payment orders.
I appreciate that, as other members have pointed out, the Scottish Government’s intention is that there should be neither overcompensation nor undercompensation for people to whom awards for personal injury are made. The principle of 100 per cent compensation is right—albeit that, in practice, that might be difficult to achieve absolutely.
Those who are responsible for paying out compensation—the defenders—believe that the Government is being overgenerous in its calculations of what people with an award would do with their lump sum. Their view is that the Government is too cautious in its assumptions and that investors should invest in equities, rather than fixed assets, thereby potentially maximising their return. However, that clearly carries a level of risk that might be considered to be too high, given the volatility of markets. On the other hand, those who represent pursuers say that any portfolio should be based on no-risk investment. Although I am minded to agree, I think that the Government’s approach is sufficiently low risk and cautious that it strikes the right balance between the two competing interests.
To be honest, most normal people with a personal injury award have probably never considered an investment portfolio before. They will naturally err on the side of caution, wanting to be sure that they have a secure return for their money and that the money will meet their needs well over their lifetime. However, I know that people will invest on the basis of expert financial advice. The Association of Personal Injury Lawyers welcomed the inclusion of standard adjustments in the bill, but noted that the amount for financial advice and tax was underestimated. It would be helpful for the minister to review that before stage 2.
The second area that I will cover is periodical payment orders. I welcome them, because many people with personal injury awards may have to live with the consequences of their injury for many years and will require varying degrees of long-term care. Periodical payment orders are a useful way of dealing with someone’s needs over their whole lifetime, and they are flexible enough to be reviewed and adjusted if a person’s condition deteriorates significantly, for example.
However, for some people with personal injury awards, the preference is to take a lump sum. That might be because they want to buy a house or adapt their existing home. It might be because they have no faith in the organisation making the payment, because it might have caused the injury in the first place. Whatever the reason, it is important for the court to be flexible and a combination of lump sum and periodical payment might be the best option for some.
I ask the minister to give thought to the committee’s recommendation about giving more weight to a pursuer’s views when the court decides whether to award a PPO. I am entirely with Angela Constance on that. It would be disempowering for somebody who has faced that degree of personal injury to have that choice removed. I listened carefully to what the minister said to John Mason, but I am not convinced that the Government cannot go further towards meeting the committee’s recommendation.
It would also be helpful if she would ensure that, if there is a requirement to vary a PPO because of a change in circumstances, the pursuer would not need to bear the costs of doing so. That is an important principle that we will want to clarify.
As other members have said, it is a technical bill. The Scottish Government has, by and large, taken a balanced approach and, in the main, made the right policy choices, but I will not let the Government off the hook easily. There are always areas that can be improved and I look forward to the minister co-operating with the committee to ensure that we have a fair and transparent system of compensating those who have suffered personal injury.
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