Part 2: Personal Injury Discount Rate Section 10: Assumed rate of return on investment of damages. Section A1
Subsection (1) inserts the new section A1. The new section sets out the power of the Lord Chancellor to set the rate. It is for the Lord Chancellor to decide whether to set a rate and what that rate should be. He or she may set different rates for different classes of case. If the Lord Chancellor sets a rate the court must have regard to it in deciding the return a claimant is expected to receive from investing damages for future financial loss (the court must consider this when calculating the size of an award of such damages to be paid by way of a lump sum). In fulfilling its obligations, the court must comply with the rules of court made for the purposes of section A1. No such rules of court have been made pursuant to section 1 of the 1996 Act to date and none are presently proposed to be made for the new section A1. Subsection (4) makes clear that the power in subsection (3) to prescribe different rates of return for different classes of case includes the power to set separate rates for different sorts of future loss (for example, one rate for loss of future earnings and another for the cost of future care) or for different durations of award (for example, one rate for damages in respect of costs to be incurred during the first ten years from the making of the award and another rate to damages in respect of costs to be incurred during subsequent years). Subsection (5) of the new section A1 is also new, and provides for the new Schedule A1 (see "Schedule A1" below) to have effect. Subsection (6) of the new section specifies how the statutory instrument setting the discount rate is to be made, and is drafted in the same terms as the equivalent provision in section 1(4) of the Damages Act 1996. In summary, the only substantive differences between section 1(1)-(4) of the Damages Act 1996 and the new section A1(1)-(6) are clarification as to the provision for prescribing different rates of return for different classes of case; the introduction of the new Schedule; and the omission of the requirement to consult the Government Actuary and the Treasury before setting the rate. The new consultation requirements are set out in the new Schedule A1. Regulations made under this section will be subject to the negative procedure.