Cuts to discount rate will mean fairer compensation for personal injury victims

Sharon Parsons of Coodes Solicitors’ Clinical Negligence & Personal Injury team welcomes the Government’s announcement that it will introduce a sharp reduction to the discount rate.

“In a surprise move today, the Government has announced it will reduce the discount rate from 2.5% to minus 0.75% from 20^th March. What does this mean for people making personal injury claims?

“The discount rate is the formula used to calculate compensation sums – it is the net rate of return for claimants. The change will mean a sharp increase in the value of clinical negligence and personal injury cases – some claims are set to double. The move is designed to bring financial compensation more in line with what a person would have earned had he or she been able to continue working.

“It will have the biggest impact on young people who have suffered the most serious injuries. Compensation for people who have suffered major injuries, affecting their ability to work, is designed to cover their loss of earnings. The figure is based on how much that person would have earned during the rest of his or her working life, had the injury not happened. So, for people with a long working life ahead of them the payout is higher because it has to last for longer.

“Previous estimates have suggested that a man injured in his 30s is currently under compensated by 42%. The discount rate has remained unchanged since 2001, so this announcement is long overdue. Remember that these pay-outs are often the main source of income for the rest of a victim’s life. I welcome today’s news which means a much fairer rate of compensation for people who have suffered life-changing injuries.”

For advice on any of these issues, please contact Sharon Parsons of the Clinical Negligence and Personal Injury team at Coodes Solicitors on 01326 213032 or sharon.parsons@coodes.co.uk