Scottish NHS compensation bill will increase due to unchanged discount rate, says MDU

The Medical Defence Union says news that the personal injury discount rate is to remain unchanged has dashed hopes of a more balanced personal injury compensation system.

The government actuary has published his determination of the Personal Injury Discount Rate (PIDR) in Scotland, following completion of his review, and has concluded that the PIDR should remain at RPI -0.75%. The determination came into effect yesterday (1 October).

Responding to that announcement, Dr Hugh Stewart, MDU director of legal services and Scottish affairs, said:

'The PIDR is the mechanism used to calculate personal injury awards for future care and loss of earnings: the lower the rate set, the higher the cost of compensation. When the rate was cut by 3.25% in 2017, it had a dramatic effect on compensation claims for Scottish doctors and for the NHS in Scotland, leading to an increase in the provision for claims against Scottish NHS Health Boards of £160m of public money, which could otherwise be used for patient care.

'A review of the way the rate was set was urgently needed, and it was hoped this would produce a result that better balanced the needs of injured patients against the cost of compensation to doctors and the NHS.

'That hope has now been dashed. As we made clear in our response to the Scottish government's consultation on this issue, we cannot understand:

  • why the Scottish government decided not to base its decision on evidence of how those receiving compensation actually invest their damages, preferring instead to create a 'notional' investment portfolio
  • why, having set out a notional portfolio which is already low risk, the Scottish government then required the government actuary to deduct a further half of a percentage point from the PIDR 'as the further margin involved in relation to the rate of return'?

'This makes no sense, and the result is a discount rate that will be 0.5% lower than that recently set in England and Wales, meaning higher costs for the NHS as well as Scottish GPs and other doctors.'

This page was correct at publication on 02/10/2019. Any guidance is intended as general guidance for members only. If you are a member and need specific advice relating to your own circumstances, please contact one of our advisers.