As we get closer to the mid-July 2024 deadline for the start of the formal statutory review of the Personal Injury Discount Rate (PIDR) in England & Wales, the pace of the preparatory activity is picking up.

On 28 November, I attended a hybrid format stakeholder event which Ministry of Justice (MoJ) officials organised on behalf of the statutory Expert Panel (EP, for which they act as secretariat) that was set up earlier in the year under the Civil Liability Act 2018 (CLA). The body of this post sets out the key themes of the meeting.

1. There will be a new call for evidence relating to the PIDR

Much as at the end of 2022, when questions of single or dual/multiple PIDRs were explored by officials with stakeholders before a call for evidence was published, this recent event explored questions related to obtaining evidence relevant to the investment issues that are so critical to setting the PIDR. Unlike in Scotland and Northern Ireland, in England & Wales these issues are not prescribed in the relevant legislation but are matters for the Lord Chancellor to decide, having taken advice from the statutory EP and from the Treasury.

Again, as was the case last year, the engagement by the MoJ, and now the EP, prefaces the launch of a call for evidence (CfE).

2. The call for evidence will be open for 3 months and will focus on obtaining investment evidence 

The new CfE will be open for submitting responses for around three months and the stated aim is to publish it before the Christmas recess, but that could slip to early Q1 2024.

It was very clear that the new CfE will home in on what I have described above as the ‘investment issues’ involved in advising on setting the PIDR. This sharp focus is clear from the table below, which is a transcription of a slide presented on the day.

The legal descriptions and definitions of these ‘investment issues’ are set out in full at schedule A1 of the Damages Act 1996, which was inserted by the CLA. The key provision is paragraph 4, in which the Act deals with ‘investment issues’ in the manner set out below in italics (the bullet points in bold are not in the Act but have been added as shorthand descriptions).

• The award for future pecuniary losses is designed to meet those losses as they arise and to be exhausted at the end of the period

“the rate of return [is one that a claimant] could reasonably be expected to achieve if the recipient invested the relevant damages [to] meet the losses and costs for which they are awarded [and] at the time or times when they fail to be met [and] the relevant damages would be exhausted at the end of the period for which they are awarded”

[these passages get fairly close to a statement of the ‘100% compensation’ principle in this context]

• The lump sum will be invested in a diversified portfolio, not on a very low risk basis, after having taken appropriate advice

“the Lord Chancellor must [assume that] the relevant damages are payable in a lump sum, [and that the claimant] is properly advised on the investment of the relevant damages [and invests in] a diversified portfolio of investments … using an approach that involves … more risk than a very low level of risk”

• Investment evidence from the ‘real world’ needs to be taken into account, as do expenses and charges necessary in realising the investment return

”the Lord Chancellor must … have regard to the actual returns that are available [and to] the actual investments made by investors of relevant damages [and must] make such allowances for taxation, inflation and investment management costs as the Lord Chancellor thinks appropriate.”

[Paragraphs 3 and 5 to 8 of the schedule deal with the procedural aspects of the rate setting process.] 

3. Data will be key

The recent event was a welcome opportunity to hear from MoJ officials about the progress towards the formal rate review, which – of course – has not yet started. It felt like something of a ‘soft launch’ of the next call for evidence and there seemed to be a genuine commitment to try to secure relevant data to assist the EP. 

I was left with the strong impression that the 2024 call for evidence (assuming we don’t see it before Christmas) will run for most of Q1 2024 and will seek to gather as much empirical evidence as possible to help inform the EP in carrying its statutory role - as defined in the schedule linked above and in its published terms of reference* - of advising the Lord Chancellor during the 2024 PIDR review. [* See in particular paragraph 12 of the ToR.]

Ever since Lord Irvine set the first statutory PIDR at a now-heady +2.5% back in 2001, one of the real difficulties in this critical area of damages law and policy has been access to data about the relevant ‘investment issues’ set above. Insurers and compensators have very little, if any, access to that, whereas those representing and advising claimants are much more likely to. There may, however, be a range of barriers that might prevent this data being provided to the EP. If these barriers - real and perceived - can be addressed and overcome, the EP will be in the strongest position after the call for evidence concludes to carry out its impartial task of advising the Lord Chancellor about the rate review.

The imminent call for evidence is not just an opportunity to submit data. It’s also a chance to confront the reasons why it is said to be so difficult to get it. If the statutory EP is to proceed from a truly evidence-based approach, it seems absolutely essential that it has access to as wide a pool of relevant data as it is possible to collate in the time available under the new call for evidence.