A 'Regret Motion' in relation to the discount rate reduction was submitted by Lord Hodgson of Astley Abbots in the House of Lords last night (18 July 2017).
The motion was withdrawn following the debate, which was unsurprising given it was mainly intended to draw attention to the current problems. The debate raised many important issues in relation to the present rate and the mechanism for setting the rate, neither of which currently ensures an accurate means of providing claimants with 100% compensation.
In the House of Lords, a motion may be moved 'regretting' some aspect of a statutory instrument, but in no way requiring the government to take action. Such motions are invitations to the House of Lords to put on record a particular point of view. However, even if carried, the motion or amendment has no practical effect.
The motion did not consider the rate reduction, but concerned the fact that the rate should not have been amended when there was (or was about to be) a Consultation on setting the rate. The consultation closed on 11 May 2017 and a response from the Ministry of Justice is currently scheduled for before 3 August 2017.
There was broad support from the majority of Conservative Peers who spoke. Lords Hodgson, Faulks and Hunt all agreed there is a need to change the rate and the mechanism for setting the rate, which is presently over-compensating claimants and leading to increased premiums for insureds.
Baroness Kramer of the Liberal Democrats also noted the government had blindly applied an inappropriate formula in setting the current rate which was 'simply preposterous'. Whilst Labour acknowledged the government needed to address the issue, they did not support the motion.
Lord Keen, appearing on behalf of the government, advised there had been 135 responses to the Consultation (double the responses of the last consultation) and an announcement would be made at the earliest opportunity. Perhaps implicit in this response was that the MoJ is unlikely to provide their response by the current 3 August deadline.
Several references were made to utilising the Civil Liabilities Bill as the legislative vehicle for setting a new rate and to provide a revised mechanism. As the briefing note to the Queen's Speech advised there would be room in the Civil Liabilities Bill for wider personal injury reform, it is hoped this much needed reform will be addressed in this legislation. Indeed, given the likely further delay in responding to the Consultation, this seems a realistic possibility given the Bill won't be tabled until the autumn.
Whilst the motion did not lead to any policy or legislative development; it seems there may be some good news on the horizon for insurers, albeit it may take longer than previously thought. In light of Brexit, the government has an awful lot on its agenda so it’s hard not to see the potential for this issue to slip down the running order. Insurers will need to continue to be vocal if they want to ensure momentum is maintained.