Meeting of the Parliament 19 March 2019
I, too, thank my colleagues on the Economy, Energy and Fair Work Committee for their work on the bill, and I thank the minister for her work on the bill, including her timely response to the committee’s stage 1 report. Not least, I also thank the clerks and legislation team who have assisted me and all the members who have been involved at all stages of the bill’s passage.
Throughout our consideration, there has been genuine recognition, by everyone, of a number of principles. The first is the importance of the proposed legislation, which will add clarity and transparency by providing a statutory framework for calculating the personal injury discount rate. Clarity and transparency are hugely important to a person who has undergone life-changing events. A number of colleagues laid that out unambiguously during the stage 1 debate, when they described how a person’s life might never be the same again following a life-changing incident, if they become unable to earn and will be reliant on care for the rest of their life. Although they might be few in number, cases that involve the discount rate for future losses will benefit from the bill.
The second principle is 100 per cent compensation and the overarching goal of working out a system that would limit undercompensation or overcompensation as much as possible, while recognising that, of course, there can be no exact science for that—as the minister said—and acknowledging the effects of not getting it right for pursuer or defender. Defenders include not just insurers to whom we might have to pay higher premiums. They also include public bodies that we, as taxpayers, fund—for example, the national health service, which could, as we heard during stage 1, be at risk in both overcompensation and undercompensation scenarios. Broadly speaking, the bill has tried to strike the right balance, and I hope that it has been largely successful in that.
Some of the committee’s concerns at stage 1 have been ironed out during subsequent stages. During stage 1, and in my role as convener of the committee, I raised in our report members’ concerns about gaming, a term that relates to cases in which a settlement might be delayed if one or other party anticipates a more favourable rate coming into force. It was welcome that the minister changed the review period of the discount rate to five years. Keeping up to date with market changes is essential in ensuring that the legislation stays relevant, unlike the current process for setting the discount rate, under which a review that was held in 2017 was the first in 15 years.
A number of members from across the chamber have raised the importance of the pursuer’s views in determining periodical payment orders or lump-sum awards. PPOs can be preferable for some people because they give the certainty of a regular income over time. Others prefer a lump sum in order, for example, to pay for accommodation at the outset.
Amendment 1 at stage 3 set a slightly different tone from amendments at stage 2, by asking that the court
“have special regard to the pursuer’s needs and preferences”,
rather than making a presumption in favour of the pursuer’s preferences.
As the minister said in responding to the committee at stage 1, it is important not to undermine or limit the courts’ ability to make the best decision based on all the facts and circumstances of a particular case. Amendment 1 should not prevent courts from making the best decisions, but I would welcome further comment from the minister on how she envisages a court approaching the matter.
Concerns remain about amendment 9, as outlined earlier by my colleague, Dean Lockhart. The goal of the bill is to stick to the 100 per cent compensation principle as far as possible. Witnesses at stage 1 told the committee that:
“The award of damages is not an investment pot—it is not a reward. It is a sum of damages that is awarded to look after somebody’s needs for the rest of their life.”—[Official Report, Economy, Energy and Fair Work Committee, 23 October 2018; c 26.]
There is a risk that amendment 9 will take us beyond the 100 per cent principle and could have significant knock-on effects on insurance premiums and public bodies.
The committee was content with the 0.5 per cent standard adjustments, as, it appeared, the minister was—at least at that stage. Although the change to that is, on the face of it, only a small change, in practical terms it could make a huge difference. That late change by the Government will need to be carefully reviewed, as appropriate, with measures being taken by the Scottish ministers by way of regulation, where appropriate.
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