You take the high road …. or a tale of two Bills.Jun 25th, 2018
The Scottish Parliament published The Damages (Investment Returns and Periodical Payments) Bill on 15th June 2018. It introduces proposals to give Scottish courts a power to order periodical payments, on slightly different terms to the rest of the UK.
The Bill also prescribes a new methodology for setting the discount rate in Scotland. The Civil Liability Bill currently in the House of Lords sets out the Government’s proposals for setting the discount rate in the rest of the UK.
Critically, both Bills depart from setting the discount rate by reference to the risk-free rate of return on index-linked gilts. But they do so in a different manner. In Scotland, the Bill defines the portfolio to be used as the benchmark for acceptable risk and requires the Government Actuary to set the rate on that basis. The Civil Liability Bill leaves the definition of the portfolio to an expert panel, with input from the Government Actuary and HM Treasury. But the setting of the rate is left to the Lord Chancellor.
The Government accepted an amendment to the Civil Liability Bill in the Committee Stage in the House of Lords, to accelerate the review and alteration of the current discount rate. The amendment is for the first review is to be determined without an expert panel. But in doing away with the panel at that stage, the Bill leaves the Government Actuary without any framework on which to express a view as to what range of discount rates the Lord Chancellor could be expected to choose from. Catch 22?
So, an amendment to speed up the process might just have put a spanner in the works.
Watch this space.