My Lords, I believe that we are as one in our desire to see these provisions brought into force as rapidly and as sensibly as possible, and all of these amendments stem from the entirely reasonable, and indeed strongly argued, wish for the review to be carried out in order to minimise the impact that the present discount rate is having—disproportionately, one would venture—on defendants and in particular on NHS Resolution.
As I explained in writing to noble Lords following Second Reading, to which the noble Lord, Lord Sharkey, referred, the Government remain fully committed to beginning the first review of the rate promptly after Royal Assent and to completing that first review as soon as is practicable in 2019. To that end, I indicated that although the expert panel cannot be appointed before the power to do so has been created, preparatory work on the setting up of the panel is already under way and the Government will progress the appointment process as far as they properly can before Royal Assent. I hope that that goes some way to meeting the point made by the noble and learned Lord, Lord Judge. As part of that preparatory work, the Government intend to publish the draft terms of reference for the expert panel in time for the Report stage of the Bill in this House. However, the appointment of the expert panel cannot take place until after Royal Assent and thus the completion of the appointment process cannot be predicted with absolute certainty.
The effect of Amendment 58 and its related Amendments 63 and 66 might be to force the Lord Chancellor to delay commencement or risk the time to conduct the review being eaten into, thereby reducing its effectiveness. We have in mind the stages that have to be gone through. Amendment 59 would reduce the period of time within which the first review of the discount rate must be started following commencement from within 90 days of commencement to 10 days of commencement, and other amendments specifying 30 days have been referred to as well.
What I would emphasise is the word “within”. These are outliers, but we are determined to carry out the process as swiftly as we reasonably can. Having regard to that, however, we have to make provision for any uncertainties that may emerge, and therefore to fix too stringent a period might impact adversely upon the whole process that we want to carry out. In other words, while it is important to move quickly, it is also important to ensure that any review is completed fully and properly and is not going to be the subject of untoward challenge.
As I have said, the appointment of the expert panel to advise the Lord Chancellor simply cannot take place until after Royal Assent and even then it may still take a little time, despite the preparations that are ongoing even now. If the review starts without the panel being ready to start work, the whole task is going to be thrown into some difficulty.
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I turn now to Amendment 71 which would amend the provisions in proposed new Schedule A1 that prescribe how a review of the rate is to be conducted. In particular in relation to the second and subsequent reviews, as I read it, the amendment repeats the provisions of paragraph 2 of Schedule A1 without any substantive change. However, the changes proposed to the conduct of the first review are much more significant. The principal change is that the expert panel is removed from the first review. Instead of being required to consult the panel, the Lord Chancellor is required to consult the Government Actuary and the Treasury.
This approach would clearly have the benefit of enabling the review to proceed free of the complication of setting up the expert panel, and indeed it follows a model that has been tried and tested. That is because not only is the Lord Chancellor required to consult the Government Actuary and the Treasury under the present law, but the provisions of the proposed amendment relating to the first review, subject to an important point of detail, very substantially repeat the text of the equivalent paragraph in the draft clause published by the Government for pre-legislative scrutiny in September 2017.
I acknowledge that initially this was the Government’s preferred approach because of the issue of timing, but we considered the comments and recommendations of the Justice Select Committee and as a consequence adopted a different approach. We brought the involvement of the panel forward from the second and subsequent reviews into the first review. This was done on the basis that the advantages of having the expertise of the expert panel involved in the first review would outweigh any possible delay that might arise in creating the expert panel for the purposes of that first review.
However, having heard the arguments on this subject, I acknowledge that there may be benefits to using the established statutory consultees to apply the new principles for the first time, and that this might offer a sensible way to bring the new and fairer basis for setting the rate into operation more quickly. I will certainly reflect on the views of noble Lords, although at present the Government believe that the panel ought, if practicable, to be involved in the first review. Nevertheless, I hear what has been said with regard to Amendment 71 and I acknowledge that it would reflect the Government’s original proposal in the draft legislation.
Amendment 71 would shorten the permitted length of the first review from 180 days to 90 days, and as a result the amendment would permit only 60 days for the Government Actuary to respond to the Lord Chancellor’s request. Again, these changes appear to be based on the reasonable assumption that the Government Actuary and the Treasury ought to be able to provide their advice more quickly than an expert panel which has not previously existed. I infer that that is why the period is reduced in terms of Amendment 71. Again, although we are concerned about these time limits, I will give them further consideration in the context of Amendment 71 to the question of these time limits.
In addition to the commitments which have already been given, the Government are determined to proceed promptly with the first review. I believe that that is reflected in our response to the Justice Select Committee report. There is the question of a further call for evidence to obtain any additional relevant information, as well as the need to commission the Government Actuary’s Department to carry out further research and analysis of the assumptions to be made with regard to inflation, tax and management costs, although I believe that we will consider the question of management costs later in the context of a different amendment, and of course we have looked at the responses to the original draft legislation.
The solution proposed in the amendment to the question of how to get the panel working at the earliest possible date is imaginative, but it assumes that there will be a material difference in the time by which the proposed shadow panel and the real panel will be able to carry out their work in relation to Amendment 71. I am not sure that that is necessarily the case.
Coming back to the panel itself, there are also considerations about the appointment of the panel in the context of it being in accordance with the principles of public appointments and the need for the review process itself to be open and transparent. Therefore, the reference to a shadow panel carries potential difficulties. As I have said, there can be no appointment of the real panel until after Royal Assent. Only then can the panel’s real work begin. I am grateful for the suggestions that have been made, but I am concerned that, in the light of the potential difficulties over the panel’s appointment, it would not be appropriate to go further than we have indicated at the present time.
Finally, I want to turn to Amendments 93 and 94, which supplement Amendment 58, relating to the commencement of the provisions. Clearly, as we have indicated before, we are determined to see the provisions commenced as soon as possible. The view has been expressed that we should perhaps take that a step further and have it reflected in Clause 11. Again, I will give that further consideration going forward. In the light of my response, I invite the noble Earl, Lord Kinnoull, to withdraw his amendment.