The two pieces of legislation governing the Personal Injury Discount Rates (PIDRs) in Scotland and Northern Ireland are all but identical, and proposed new changes are likely to align them fully.

Each statute sets out a method for calculating the PIDR which is based on the return from a prescribed investment portfolio, invested for a specified period, being adjusted to take account of inflation, tax and investment charges and using a further adjustment. New proposals from the Scottish and Northern Irish administrations, based on detailed new advice from the Government Actuary’s Department (GAD), will affect these elements of the PIDR as described below.

• The prescribed investment portfolio remains appropriate and will not be changed.
• The investment period in the Scottish Act will be changed from 30 to 43 years, bringing it in line with the Northern Ireland Act (and with the Lord Chancellor’s 2019 decision in England & Wales).
• The measure of inflation within the PIDR calculation will be changed from the Retail Prices Inflation index to the Annual Weekly Earnings index. 
• The allowance for tax and investment charges will be increased from by 0.5%, from 0.75% to 1.25%. This would of itself, and subject to other parts of the calculation, tend to decrease the resultant PIDR by 0.5%.
• The further adjustment of 0.5% remains appropriate and will not be changed.

The changes summarised above will be made by statutory instruments that will take effect before 1 July 2024, the date on which both jurisdictions must begin reviews of their PIDR.

Strictly speaking, these developments do not relate to England & Wales because it has a very different rate-setting process. Nevertheless, as they are based on fresh material from GAD - which reviewed investment and economic indicators when preparing its advice to Scottish and Northern Irish Ministers - it seems reasonable to conclude that they at very least will influence the direction of travel in the English PIDR review. That said, GAD does caveat the latest advice, stating that it “cannot guarantee that all of the assumptions deemed appropriate at this time will still be appropriate in light of any new evidence available when the rate review occurs.”

GAD makes the following comment in relation to the possibility of dual or multiple rates (the bold emphasis is in the original).

“A single rate is still appropriate – Stakeholders are concerned about the introduction of a multiple rate system, due to the added complexity and the need for a transition period. A dual rate system may be appropriate, but we expect that further evidence and analysis would be required, and may not be possible to achieve in the current timeframes.”

This would suggest that the possibility of dual or multiple rates in both jurisdictions looks to be an unlikely outcome.

Echoing the GAD’s caveat above, we simply don’t know whether the level of investment return on the prescribed portfolio observed during the 2024 rate review will be higher or lower than that in 2019 (or in 2022 in the case of Northern Ireland). That will be the key driver, together with the changes outlined above, of the PIDRs that will be put in place in the autumn when the statutory reviews in Scotland and Northern Ireland will have been completed.