HC Deb 20 July 2001 vol 372 cc784-6W
Mr. Gamier

To ask the Parliamentary Secretary, Lord Chancellor's Department what the average gross redemption yield on Index Linked Government stock was for the three years to 8 June. [13654)

Mr. Wills

A figure of 2.61 per cent. for the average yield on index linked government stock for the three years up to 8 June 2001 was quoted in the Lord Chancellor's reasons for setting the discount rate for personal injury awards at 2.5 per cent. Those reasons were placed in the Library of this House when that decision was announced on 27 June 2001.

Since then some questions have been raised about that figure, and the Debt Management Office, an executive agency of HM Treasury, which supplied it, have been providing advice to the Lord Chancellor on the calculation performed. The Lord Chancellor is considering that advice. He proposes to make a further announcement as soon as possible and will lay his further reasons in the Library of the House during the recess.

Mr. Garnier

To ask the Parliamentary Secretary, Lord Chancellor's Department, pursuant to his answer of 27 June 2001,Official Report, column 115W, on the Damages Act 1996, what account was taken of the guidance provided by the Judicial Committee of the House of Lords in Wells v. Wells [1999] 1 AC 345. [3656]

Mr. Wills

The Lord Chancellor's reasons for setting the discount rate for personal injury awards at 2.5 per cent. were laid in the Library of this House on 27 June 2001. In those reasons the Lord Chancellor made clear that the legal principle that guided him, which was confirmed in the judgment in Wellsv.Wells (1999) 1AC 345, was that: …the object of the award of damages for future expenditure is to place the injured party as nearly as possible in the same financial position he or she would have been in but for the accident. The aim is to award such a sum of money as will amount to no more, and at the same time no less, than the net loss".

Mr. Garnier

To ask the Parliamentary Secretary, Lord Chancellor's Department, pursuant to his answer of 27 June 2001,Official Report,column 115W, on the Damages Act 1996, what method was used to calculate the discount rate. [3653]

Mr. Wills

The Lord Chancellor's reasons for setting the discount rate at 2.5 per cent. were placed in the Libraries of both Houses on 27 June 2001.

Mr. Garnier

To ask the Parliamentary Secretary, Lord Chancellor's Department, pursuant to his answer of 27 June 2001,Official Report, column 115W, on the Damages Act 1996, what consultation was conducted with (a)HM Treasury and (b)the Government Actuary; on what date; and what the outcome was of the consultation. [3655]

Mr. Wills

The consultation document "Damages: the Discount Rate and Alternatives to Lump Sum Payments" was sent to HM Treasury along with other interested parties when it was published in March 2000. HM Treasury responded to the paper on 31 May 2000. Subsequently particular questions about the market in index-linked government stock were addressed to HM Treasury on 13 February 2001 and a reply received on 23 February 2001. There were a number of subsequent exchanges on technical issues concerning index-linked government stock.

The Government Actuary's Department provided a report to the Lord Chancellor's Department in December 1998. This was used to inform the Lord Chancellor's consultation paper which was published in March 2000, a copy of which was sent to the Government Actuary. The Government Actuary made further comments in a letter of 26 October 2000.

The Debt Management Office, a Treasury executive agency, supplied the figure for the average yield of index-linked government stock for the three years to 8 June 2001 which was quoted in the Lord Chancellor's reasons for setting the discount rate at 2.5 per cent.

The Lord Chancellor also took account of views received in response to the consultation and further evidence obtained from external advisers in arriving at his decision, which was announced to this House in the answer referred to in the question. Copies of the Lord Chancellor's reasons were placed in the Libraries of both Houses on 27 June 2001.

The decision was the Lord Chancellor's and the Lord Chancellor's alone. No regard whatsoever was had to public expenditure implications.