Civil Liability Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

3rd reading (Hansard): House of Lords
Wednesday 27th June 2018 Lords Chamber

[Lord Keen of Elie]

My Lords, in moving this Motion I thank noble Lords across the House for their careful scrutiny of the Bill throughout its passage. Noble Lords have made not only detailed but informed contributions to the debate, and that has resulted in improvements to the Bill before it passes to the other place tomorrow for further consideration.

There have been extensive amendments to the whiplash provisions and appropriate amendments to Part 2 with regard to the discount rate. We consider that the Bill is in a better place as a consequence of your Lordships’ contributions.

I have been asked by my noble and learned friend Lord Mackay of Clashfern to put on record a clarification that I provided in my letter to Peers following Report. This relates to a request by the noble Baroness, Lady Bowles, for confirmation that the words “different financial aims” in what was then paragraph 3(3) of the new Schedule A1 to the Damages Act 1996,

“do not provide an override of the conditions laid down in the earlier new paragraph 3(2)”.—[Official Report, 12/6/18; col. 1649.]

As I indicated in my letter, I can confirm that the words in question form part of the definition of the approach to investment that the recipient of relevant damages is to be assumed to take for the purpose of securing the objectives set out in paragraph 3(2) and that the words “different financial aims” cannot therefore override those objectives. It is perhaps appropriate that I put that on record.

Finally, the Government share with the House the view that insurers should be accountable for meeting their commitments to pass on savings from the reforms. Therefore, we have also committed to developing an effective means for reporting on the savings made by the insurance sector being passed on to consumers, making sure that insurers are held to account. We will bring forward an amendment to this effect as soon as possible in the House of Commons. It is quite a complex issue, having regard to, among other things, commercial sensitivity and competition issues.

The noble Lord, Lord Monks, referred to the proposed changes to the small claims limits. We consider that these are appropriate in the circumstances. Of course we are open to debate on these matters, and if the noble Lord wishes to engage with me further on them, I am content to meet with him for that purpose. He is fully aware of the Government’s position on these issues. They form part and parcel of the overall package that we consider has to be delivered to address the issues referred to in the Bill.

Again, I thank all noble Lords for their contributions to the Bill.

[Lord Hodgson of Astley Abbotts]

Before my noble and learned friend sits down, could he possibly say a word about periodical payment orders, an issue which has occupied a number of us quite a lot? He said at the previous stage that he would confirm that the Government placed emphasis on the importance of PPOs as part of the array that is available to the courts when damages are decided.

[Lord Keen of Elie]

My Lords, I am obliged to my noble friend for that reminder. Clearly, it is our intention that this matter should be taken forward. As I indicated before, we are engaging with the judiciary on this matter, and we have engaged already with the Master of the Rolls to see what further developments can be put in place on the provision of PPOs. We share the view that the noble Lord has expressed that the appropriate use of PPOs should be encouraged, and we are grateful to the Master of the Rolls for his agreement in principle to the Civil Justice Council reviewing the law and practice regarding PPOs to see whether they can be improved. The timetable for that has not yet been agreed, but we hope it can begin towards the end of this year or early next year, with a view to completion in the summer of 2019. I hope that that reassures my noble friend.

I thank noble Lords again for their contributions to the Bill. I am content to carry on further discussions relating to the Bill during its time in the House of Commons if noble Lords so wish. Thank you.

Civil Liability Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Report stage (Hansard): House of Lords
Tuesday 12th June 2018 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I said that my amendment was designed to tilt the balance in favour of PPOs, and I am grateful to the Minister for his comments. It is good to know that guidance will be rewritten to draw attention to the PPO advantages, and to hear the news that the Lord Chancellor has written to the Master of the Rolls on using the Civil Justice Council to make improvements in that regard. Before I withdraw my amendment, can my noble and learned friend say how long he thinks it will be before the Civil Justice Council produces some results from that discussion and consultation?

[Lord Keen of Elie]

I cannot at this stage answer that question. However, I will consider the point and write to my noble friend, and place a copy of the letter in the Library.

[Lord Hodgson of Astley Abbotts]

I am grateful to my noble and learned friend and, on that note, I beg leave to withdraw the amendment.

Civil Liability Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Committee: 2nd sitting (Hansard): House of Lords
Tuesday 15th May 2018 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I thank my noble and learned friend for that extensive reply and other noble Lords for their contributions to this debate.

I take issue with my noble and learned friend on two matters. First, it is perfectly possible for us to deal with the question of PPOs for mutuals by setting up a proper reinsurance programme. That could be done quite easily. Therefore, to say that we would like to do this but we cannot because mutuals cannot provide it is inaccurate. We can sort that out with a certain amount of technical help.

Secondly, the noble Lord, Lord Sharkey, said that we were engaged in a nudge. Personally, I am engaged in a bit of a shove, and I hope that the noble Lord, Lord Monks, will join us in in that shove. I am not sure that my noble and learned friend has given a shove; I think it is a very delicate pressure on the arm of the industry, which I am not sure will be effective.

We heard from the noble Earl, Lord Kinnoull, about how PPOs are declining in use and from the noble and learned Lord, Lord Woolf, about the culture and question of fairness, which must be at the heart of all our discussions. I was encouraged to think that such an eminent jurist as him should think that the rules of court could provide the flexibility to enable the issues covered by my amendment to be incorporated. We are in an era where things are moving fast, and we do not want to find ourselves stuck in inflexibility.

My noble and learned friend Lord Mackay of Clashfern referred to the question of interference by the Executive with the judiciary. I made clear that I was concerned about that in my opening remarks. The amendment is designed so that Parliament, the legislature, makes its view clear. It is nothing to do with the Executive. It is giving judges a steer, but after that, it is over to them how they proceed. My worry about my noble and learned friend’s comments is that the best remains the enemy of the good. We have a system that is not working very well, but we are saying, “This is frightfully difficult, so we should not change it; we are likely to cause more trouble by changing it than we solve, let sleeping dogs lie”.

The system is not working very well. The transfer of investment and longevity risk away from the individual has to be a key part of making matters fair. It deals with important and difficult cases of the sort raised by the noble and learned Lord, Lord Judge. I hope that the Minister will agree to meet some of us between now and the Bill’s next stage, because I do not think we have got to the bottom of this. We are missing an opportunity to do something seriously helpful for people who suffer long-term, life-changing injuries. In the meantime, I beg leave to withdraw the amendment.

[Lord Keen of Elie]

In response to my noble friend Lord Hodgson, and a point raised by the noble Lord, Lord Sharkey, I would be perfectly content to meet them before the Bill’s next stage to discuss this. If they contact my private office, that can be arranged.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts]

My Lords, I will briefly support the noble Baroness, Lady Bowles of Berkhamsted, in what she just said. It is easy for us to overlook what quantitative easing has done to the returns on savings and fixed interest. It has been a much longer-running saga than was anticipated, and it is still carrying on. If we are to set up a system that precludes people investing in equities, which gives some protection against that, we will be doing no service to the people who need this money as part of the way to recover from terrible injuries they received. The last line on page 9,

“who has different financial aims”,

does not add anything at all to the situation and will merely provide fuel and funds for lawyers to discuss exactly what that means in cases in future years.

[Lord Keen of Elie]

I am obliged to all noble Lords for their contributions. The noble Lord, Lord McKenzie of Luton, began by referring to the briefing from APIL—the Association of Personal Injury Lawyers. I am familiar with it, and indeed, the association invited me to speak at its annual conference, where I confirmed that we would take the Bill through Parliament. I have not cleared my diary for next year. Much of what they had to say, which was repeated by the noble Lord, was, as the noble Earl, Lord Kinnoull, pointed out, met by the need to encourage the uptake of periodical payment orders. We are committed to that and we will take it forward in various ways. They need to be embraced more thoroughly, not only by claimants but by defendants —insurers—as well. Nevertheless, I make that point.

The noble Lord referred to the case of Wells v Wells, which has been mentioned before. There we saw the reference to what was essentially construed as “very low risk investment in UK gilts”, and we are moving away from that. However, there is an additional element in that, which is volatility: you have an investment portfolio which may be subject to volatility, and you may find that it is at a low point at a stage when you need to withdraw capital funds. That has to be factored in as well, and we appreciate all that.

On the suggestion that we are somehow inviting people to invest their savings, or a majority of them, in hedge funds, that will not do at all. The portfolio A that was examined included 13% UK equities, 15% overseas equities, and 18% of alternative investments which could be modelled as hedge funds. We have to see all this in context. We took clear evidence on the nature of a low-risk portfolio, and there was reference, for example, to widows and orphans, but we are in a different climate in this context. We are not seeking to move away from the idea of 100% compensation. I will come on to the probing amendment of the noble Baroness, Lady Bowles, on setting the rate by reference to not only a floor but, I suggest, a ceiling—there are reasons for that—and the question of investment objectives, as distinct from different financial aims.

Amendment 78 seeks to amend paragraph 3(2) of new Schedule A1 by removing the words,

“in the opinion of the Lord Chancellor”,

from the requirement that the Lord Chancellor must decide the rate on the basis that,

“the rate of return should be the rate that, in the opinion of the Lord Chancellor, a recipient of relevant damages could reasonably be expected to achieve”,

if he invested the relevant damages for the purpose of the assumed objectives. The effect of the amendment would be to prevent the Lord Chancellor seeking to justify a rate on the basis that it seems perfectly reasonable in his subjective opinion when, by any objective assessment, the rate proposed is not supportable.

The noble Lord referred to an “unfettered discretion” and conflict with a political interest, but we are talking about the Lord Chancellor making the decision in his capacity as Lord Chancellor. He does not have an unfettered discretion. He is subject to public law duties in the exercise of his functions. Any decision of the Lord Chancellor as to what the rate should be must be rational, and any failure in rationality can be challenged by way of judicial review. I have already touched upon that and the question of disclosure, and I shall not repeat it.

It is necessary to have reference to the opinion of the Lord Chancellor in relation to setting the rate because the setting of the discount rate is not now, and will not under the proposed legislation, be a precise science—it cannot be. The decision to be made on the rate will require the weighing of different potential outcomes for individuals in relation to a range of possible rates. An inevitable degree of subjective assessment is involved in this process. That is why it is appropriate that, although there is an expert panel, that subjective assessment is made by the Lord Chancellor, albeit with the reasons being given and explained, with a rational analysis of the information submitted to him.

Amendment 78A would require the Lord Chancellor to assume, when considering the damages to which the discount rate would apply, that the relevant damages would be payable as a lump sum or partly as a lump sum. The current wording of the Bill requires the Lord Chancellor to assume that the relevant damages will be payable wholly as a lump sum. We do not consider that this amendment is necessary. The discount rate will only ever be applicable to damages payable as a lump sum, and in setting the rate the Lord Chancellor will have regard to that.

Amendment 79 would include the requirement to assume, among the assumptions which the Lord Chancellor must make under paragraph 3(3) of new Schedule A1 in determining the discount rate, that the cost to the claimant of investment advice shall not be recoverable by way of damages. I appreciate the point made by my noble friend Lord Faulks about the need to be clear about how investment management costs are to be treated in setting the rate, but we do not consider that this amendment is necessary.

Paragraph 3(5) of the schedule provides for the Lord Chancellor to make such allowance for “investment management costs” as he thinks appropriate. This provision has been included on the basis that under the current law the cost of investment advice is not, for the reasons explained by my noble friend Lord Faulks, recoverable as a head of damages and therefore needs to be taken into account as a factor in setting the discount rate. Should the law change, an allowance in the setting of the discount rate would then become unnecessary, as the claimant would already have the benefit of the compensation for the costs. However, we understand that paragraph 3(5) reflects the current law and can adapt to changes in the law. Therefore, we do not consider that it casts doubt on the present law regarding the unrecoverability of investment costs as a head of damage. That is a feature of fixing the discount rate.

Amendment 80, tabled by the noble Earl, Lord Kinnoull, seeks to change one of the assumptions that the Lord Chancellor is required to make under paragraph 3(3) of the new schedule. Under the amendment, the recipient of the relevant damages would be assumed to invest in a diversified portfolio of investment grade listed debt securities rather than a diversified portfolio of investments. The range of investments to be assumed to be made and included in the diversified portfolio under the amendment is clearly narrower than that under the proposed assumption in paragraph 3(3)(c) at present.

The Bill does not restrict the investments that are to be assumed, save that the overall investment approach must be assumed to fall within the range of risk described in paragraph 3(3)(d). We consider that this approach avoids the rigidity of tying the assumptions to a single type of investment. The Lord Chancellor and the panel can therefore assess what the appropriate investments should be in the circumstance of the review. In making their assessment, the Lord Chancellor and the panel will have to have regard to evidence of how claimants actually invest and the returns actually available to investors. We consider that to be a more sustainable system for the future.

Civil Liability Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Committee: 1st sitting (Hansard continued): House of Lords
Thursday 10th May 2018 Lords Chamber

[Lord Beecham]

My Lords, I am a little concerned at the degree to which political considerations are supposed override our system of justice. This is not the first time it has been mentioned. However, the latest case is perhaps the least acceptable of the recommendations of this kind. Why on earth should Parliament decide on the so-called exceptional circumstances—undefined, of course, for the purposes this debate—on what are already constrained sums to be awarded in damages? It is trespassing too much on the rights of the citizen and the role of the judiciary. I hope that the Minister will concur with that, given his enormous experience of these matters, and, I apprehend, a real interest in justice being effective and available. With all due respect, the amendment moved by the noble Lord undermines both.

[Lord Keen of Elie]

My Lords, I am obliged to my noble friend Lord Hodgson for his amendment. I understand the intent when we are seeking to address a very particular problem. However, I cannot concur with the proposal that we should set in the Bill some limit to the judicial discretion that will be exercised in exceptional circumstances. We have yet to see how exceptional circumstances will develop once the Bill comes into effect. We therefore consider it more appropriate that the percentage increase in tariff should be determined by regulation by the Lord Chancellor in order that he may, from time to time, have regard to developments once the Act is in force. We do not consider it appropriate to constrain that exercise by setting a ceiling in the Bill. For these reasons, I invite my noble friend to withdraw his amendment.

[Lord Hodgson of Astley Abbotts]

I thank my noble and learned friend for that reply. It was not entirely unexpected. I say to the noble Lord, Lord Beecham, that it is nothing to do with access to justice, it is merely limiting judicial discretion. Indeed, the noble Lord accepts that judicial discretion is going to be limited because he is quite happy to have this percentage in regulations which can subsequently be altered one way or another without much parliamentary scrutiny for all the reasons we know. I note the points my noble and learned friend has made, and I beg leave to withdraw the amendment.

Belhaj and Boudchar: Litigation Update

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Thursday 10th May 2018 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I should like to draw the House’s attention to the fact that I am an officer of the All-Party Parliamentary Group on Extraordinary Rendition. I am extremely grateful to my noble and learned friend for repeating the Statement and to the Government for having taken the opportunity to draw a line under this very unhappy and unsatisfactory episode. They are to be congratulated on having grasped this particular nettle.

Perhaps I could ask my noble and learned friend to follow up on a couple of loose ends that are still lying around. The first relates to the press release put out by the Crown Prosecution Service on 9 June 2016 when it decided not to proceed with the case against Sir Mark Allen. The press release said that,

“there is sufficient evidence to support the contention that the suspect”—

that is, Sir Mark Allen—

“had … sought political authority for some of his actions albeit not within a formal written process nor in detail which covered all his communications and conduct”.

Will any further probing take place on what that political authority was and who gave it?

Secondly, there has been discussion in the Statement and elsewhere about the question of consolidated guidance and the review of consolidated guidance dealing with interviewing prisoners abroad when they are at risk of torture and ill treatment. There has been discussion about this being reviewed for some months, and tomorrow never seems to come for this. Will the Minister explain where we are with the review of consolidated guidance and when we might expect to see it published?

[Lord Keen of Elie]

I am obliged to the noble Lord. It is not for me to comment upon a press release from the Crown Prosecution Service, which is, of course, an independent body concerned with the consideration of criminal complaints and cases. Therefore, I cannot add to the comments that were made in that press release.

On the matter of guidance, the current consolidated guidance is from 2010. That sets out the principles consistent with both domestic and international law governing the interviewing of detainees overseas and the passing and receiving of intelligence-related matters and information. At the moment, I am not able to give any indication as to when a review of that guidance will be completed, but it might be informed—apart from anything else—by the work of Parliament’s Intelligence and Security Committee, which is due to publish its detainee report in the near future. In light of that, we will give attention to the 2010 guidance.

Civil Liability Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Committee: 1st sitting (Hansard): House of Lords
Thursday 10th May 2018 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I intervene briefly, having put my name to the noble Earl’s amendments. I am not sure that the noble Lord, Lord Trevethin and Oaksey, quite followed the idea behind this, which is that psychological injuries are specifically identified at various places in this clause but minor injuries are not. The purpose of the amendments is therefore to remove psychological injuries as a specific category and reinsert them further down, through Amendment 22, with minor injuries, so that we sweep up everything concerned with a whiplash unless it is a serious injury, such as a fracture of a leg, which is clearly a different issue. However, the issue is picked up by the reinsertion by Amendment 22 of the words “minor injuries”, such as a bruised knee.

[Lord Keen of Elie]

I am obliged to noble Lords for their contributions to the Bill in Committee. I begin with Amendment 4, moved by the noble Lord, Lord Beecham, which would limit the definition of whiplash to soft tissue injuries of the neck. There is then a further amendment that would require the definition of whiplash to be set by the Chief Medical Officer of the Department of Health. The amendment to remove the back and shoulder from this definition would significantly reduce the number of claims subject to measures in the Bill, namely the tariff and the ban on settling claims without medical evidence. It would also encourage claims displacement into other areas to avoid them being subject to the tariff. That would be a serious issue.

The definition in the Bill has been adapted from that in the Prisons and Courts Bill following feedback from stakeholders that the definition in the latter Bill was not broad enough to capture the intended claims. The current definition, with the draft regulations that have now been produced, is intended to achieve that objective.

The amendment requiring the definition of whiplash to be set by the Chief Medical Officer of the Department of Health would provide an independent person who has responsibility for advising the Government on medical issues, but the definition of whiplash injury needs to reconcile the current legal understanding with an accurate medical definition that covers both injuries and their symptoms. This is why the Government have developed the definition of a whiplash injury with input not only from medical experts, but from other expert stakeholders, including claimant and defendant solicitors.

Amendments 8, 9 and 10 restrict the scope of the tariff provisions by reducing the injury duration of affected claims to 12 months from two years. As the noble Lord, Lord Faulks, observed, this would reduce the number of claims captured by these reforms, but have the negative effect of encouraging claims displacement or claims inflation. Having an injury duration of up to two years will ensure that genuinely injured claimants seek timely treatment for their injuries, as well as enabling the Government to reduce and control the level of compensation in whiplash claims and consequently—as is one of the objectives—reduce insurance premiums for consumers.

The noble Earl, Lord Kinnoull, spoke to Amendments 15 to 20 and 22, which would widen the types of injuries affected by both the tariff of damages and the ban on settling claims without medical evidence. It would remove the term “psychological” from the clause, so that the measures in the Bill would apply to all minor injuries related to road traffic accidents, regardless of whether they are psychological or physical in nature. Consequently, this would apply the single-figure tariff to all those injuries, irrespective of number and type, by reference to the duration of the whiplash injury alone. This would result in the reduction of damages for a substantial number of personal injury claims outside the scope of our proposed reforms. The proposed reforms are intended to reduce the number and cost of particular claims—“an industry”, some people have referred to; “a racket”, others have mentioned. We are committed to addressing the issues that arise with whiplash injury.

I understand the point made about the bruised knee. I respond to the noble Lord, Lord Trevethin and Oaksey, on the potential for discrepancies between awards made under the tariff for the whiplash injury itself and awards made for other minor injuries.

Clause 2(8) makes provision for the fact that the court will take into account other minor injuries and will make an award that is not related to the tariff itself. That is my understanding of the words in parentheses: that, in the context of the whiplash injury, regard will be had to the limits imposed by the tariff and the regulations but that, with respect to the other injuries, there will be no such limitation. That is why we do not consider it appropriate to delete the term “psychological” and extend these provisions to all minor injuries. Including minor psychological claims within the original tariff, as the noble Lord, Lord Trevethin and Oaksey, indicated, was done in order to meet the way in which claims develop in this area. Indeed, it is in line with the Judicial College guidelines for personal injury compensation, which indicate that minor psychological injuries such as travel anxiety are not in themselves separate injuries attracting compensation; they have to be linked to physical injury itself.

Turning to Amendment 21, moved by the noble Baroness, Lady Primarolo, if one considers Clause 2(6), persons who are unable to locate treatment for either their physical or psychological injuries are in fact only required to take appropriate steps to seek such treatment. There is no requirement for them to undertake it if it is not available for any number of practical reasons. I would therefore suggest that this amendment is unnecessary in the circumstances.

Legal Aid

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Thursday 19th April 2018 Lords Chamber

[Lord Keen of Elie]

My Lords, the coalition Government introduced LAPSO in order to ensure that legal aid was directed at those who most require it. The figure of £950 million arises only in the context of a comparison between 2010 and 2016. In that period, legal aid expenditure fell by about £950 million, or 38% in real terms.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, is it intended that the review will cover third-party litigation funding? Third-party litigation funding is a useful access to justice, but too often the division of any awards of damages between those who provide the funding and those in whose name the cases are being brought are obscure. Would it not be a good idea if the courts had the power to require the disclosure of such terms to ensure fairness between all the parties?

[Lord Keen of Elie]

My Lords, the matter of third-party litigation funding is of course a matter of contract between two parties, and the Government would be slow to interfere in that contractual process.

Damages (Personal Injury) Order 2017

Debate between Lord Hodgson of Astley Abbotts and Lord Keen of Elie

Tuesday 18th July 2017 Lords Chamber

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I thank my noble friend Lord Hodgson for tabling the Motion on this important topic. I welcome the valuable contributions that he and other noble Lords have made.

As has been observed, the discount rate to be taken into account by the court in determining the rate of return to be expected from the investment of a lump sum award of damages for future pecuniary loss caused by a personal injury is set for England and Wales by the Lord Chancellor under Section 1 of the Damages Act 1996. This is colloquially referred to sometimes as the Ogden rate as in practice it is applied through the actuarial tables published by the working group originally set up by the late Sir Michael Ogden.

As noble Lords have observed, the rate plays a key role in underpinning one of the core principles governing the law of damages. Claimants who have suffered injury as a result of another person’s negligence must be compensated fully for their loss, and should be placed—as far as is possible in financial terms—in the position that they would have been in but for the injury. This is known as the principle of full compensation or the 100% rule. Under this principle, the aim of an award of damages is therefore to compensate claimants fully, but not to overcompensate them or undercompensate them.

To fulfil that aim, where damages are awarded for future pecuniary loss—such as future loss of earnings or the care costs that are going to be incurred—in the form of a lump sum, the award is, and must be, adjusted to take account of the benefit to the claimant of being able to invest the money before the loss or expense in respect of which it is awarded has actually occurred. The discount rate is the factor applied to the award to make this adjustment so that it represents the expected rate of return. The court, of course, has a power to apply a different rate but, as my noble friend Lord Hodgson noted, it has almost always applied the prescribed rate in these circumstances.

The Damages Act 1996 does not specify when the rate should be reviewed. However, the Lord Chancellor is under a continuing duty to ensure that it is not set at an inappropriate level. The rate was set in 2001 on a certain basis. Thereafter, there was consultation on the legal framework for setting the rate. Indeed, in 2013, a consultation was carried through but reached no consensus as to any changes or proposed changes to the legal framework for setting the discount rate. So, as at 2013, the coalition Government, of whom the noble Baroness, Lady Kramer, was a member, took no steps to deal with what she referred to as a preposterous state of affairs. Indeed, it was not at that time a preposterous state of affairs.

In 2015, an expert panel advised with regard to the matter of the rate. But in all these circumstances, when it came to 2016 and the beginning of 2017, the then Lord Chancellor had an existing duty to address the adequacy or otherwise of the discount rate. That was her legal obligation. In the light of that duty, she announced on 27 February this year that the rate should be changed from 2.5% to minus 0.75% with effect from 20 March 2017. I note that the Scottish Government made the same change to the discount rate about a week later on 28 March 2017. The then Lord Chancellor also undertook to review the framework under which the rate is set to ensure that it should remain fit for purpose in the future. The consultation paper she promised was published on 30 March. It sought views on a range of issues, including what principles should guide how the rate is set; whether the existing methodology is appropriate for the future; whether the power to set the rate should remain with the Lord Chancellor or move elsewhere, possibly to an expert panel; whether more frequent reviews would improve predictability and certainty for all parties—a point raised by a number of noble Lords—and whether further steps should be taken to encourage the use of periodical payments orders instead of lump sums, a point touched on by the noble Lord, Lord Beecham.

Underlying the consultation was the wish of the Government to make sure that the way the rate is set is put on the firmest possible footing in future, so that we have a better and fairer system for claimants and defendants, and, in so doing, keeping true to the 100% principle—namely, that claimants are paid no more but no less than they should be. The consultation closed on 11 May and the Ministry of Justice is currently analysing the 135 responses received, which, as might be anticipated, reflect a broad range of opinion as much as they reflect a broad range of interests. This requires considerable care and thoroughness, as many of the responses are highly complex and contain detailed technical information on investment returns and investor behaviour, something the noble Baroness, Lady Kramer, pointed out could be quite diverse and divergent in particular circumstances.

It is not for me to anticipate the outcome of the consideration of the consultation, but I seek to assure my noble friend and other noble Lords who have spoken in the debate that an announcement of the Government’s conclusions will be made at the earliest possible opportunity. Of course, the interests of all parties concerned will be considered, and there will be an impact assessment.

My noble friend’s Motion is, however, directed at the change of rate rather than the outcome of the consultation. His argument is that the then Lord Chancellor should not have set the rate at a time when she had decided that a further consultation exercise was to take place on how the rate should be set in the future. I venture that this argument is not well founded. As I have explained, the Lord Chancellor is under a continuing duty to ensure that the rate is set at an appropriate level. This means that once the then Lord Chancellor reached her decision on what the appropriate rate should be, she was legally obliged to put that decision into effect. The option of delaying setting the rate until the outcome of the planned consultation was known was simply not available to her.

My noble friend’s regret that the then Lord Chancellor carried out her duty is therefore, I respectfully suggest, misplaced. The then Lord Chancellor acted correctly both in changing the rate and in initiating a consultation on whether there is a better or fairer way for it to be set in future. Had the Lord Chancellor adopted the approach proposed by my noble friend and delayed a change in the rate until a consultation—and no doubt any consequent change in the law—had been complete, she would have knowingly maintained an inappropriate rate for what might have been a considerable period of time. That would have been in breach of her legal obligation with respect to the setting of the rate.

Consequently, the approach taken by the Lord Chancellor was correct in law. In these circumstances therefore, the Government cannot support my noble friend’s Motion, and I hope that he will feel able to withdraw it in light of the explanation I have sought to give on behalf of the Government.

[Lord Hodgson of Astley Abbotts]

My Lords, the hour is late so I will be brief. I thank all noble Lords who have spoken in support of this regret Motion: the noble Baroness, Lady Kramer, for her forthright support; I think I got half or maybe two-thirds of a loaf—I am not quite sure but I will settle for half—out of the noble Lord, Lord Beecham; and I thank my noble friends Lord Faulks and Lord Hunt for their support. They speak from a position of a great deal more expertise than I will ever have.

Of course awards need to be fair, and I do not argue at all with the first arm of the Wells v Wells judgment, that it must not undercompensate or overcompensate; it must be fair. As my noble friend Lord Faulks mentioned, there was this sensation around that this is an attempt by insurance companies to boost their profits. If we leave that aside, over the next five years there will be £6 billion less in the National Health Service, which would have been used for looking after patients and carrying out the essential work that the NHS does, as a result of this decision and as provided for in the recent budget development.

I appreciated my noble and learned friend’s teaching on recent developments as regards the setting of the discount rate. His defence of the then Lord Chancellor was stout in the extreme. It is extraordinary that in 2017 the then Lord Chancellor suddenly felt that she had a duty when her predecessors in all the years since 2001 apparently thought that they did not. However, he made a good fist of quite a tricky brief—although I know that, as an expert barrister, he will be long used to and practised in that.

I am pleased to hear that there have been 135 responses to the consultation and that the Government are analysing them. I thought I got a slight Nelsonian wink that we might expect some developments in this area. I hope very much that that assumption is correct, as we have to deal with this running sore. However, we can take it no further this evening, and I beg leave to withdraw my Motion.