LORD CHANCELLOR DEFENDS SHARP REDUCTION IN DISCOUNT RATE

The Lord Chancellor had earlier defended the sharp reduction in the discount rate used for calculating damages for personal injury claims. In a statement to the Houses of Parliament, Truss said she had based the discount rate on the investment portfolio “that offers the least risk to investors in protecting an award of damages against inflation and market risk”. Truss argued that a portfolio that contains 100% index-linked gilts (ILGs) “best meets this criterion at the current time”. The Lord Chancellor said a portfolio of ILGs, comprising stocks spread across a range of redemption dates “guarantees the investor an inflation-adjusted income, known with certainty at the time of the award”. She said that in adjusting the rate, she followed the previous Lord chancellor, Lord Irvine’s approach that respected the principle that there should be a single, fixed rate to cover all cases.