Generally speaking, they are alternative arguments.
Amendment 77 would add an obligation on the Lord Chancellor to take into account the response of the expert panel in determining what the rate should be. Of course, that is exactly what the Lord Chancellor will do. Indeed, why would the legislation require the Lord Chancellor to consult the panel and require the panel to respond if the Lord Chancellor was not required to consider the panel’s response? Of course, there may sometimes be merit in stating every detail of a process in primary legislation but I suggest that it is not necessary in this case.
Amendments 82A, 85A, and 90A, spoken to by the noble Lord, Lord Cromwell, relate to the procedures and responsibilities governing the operation of the panel. Clearly, the expert panel has an important advisory role but it is not appropriate or desirable to load it with the additional responsibilities suggested in the amendments. Paragraph 2(7) of new Schedule A1 already requires the panel to take into account the duties of the Lord Chancellor under paragraph 3. Paragraph 4 requires the Lord Chancellor to give reasons for his or her decision and to publish information about the response of the panel. As the noble Lord, Lord Faulks, observed, ultimately the Lord Chancellor’s decision on the matter, as it is disclosed, will be amenable to judicial review. It is not a case of the Lord Chancellor receiving the expert panel’s views and simply ignoring them. Clearly, such a perverse course of action, which one would not anticipate, would leave his decision-making power amenable to review.
The obligations are expanded by the commitments that we gave to the Justice Select Committee to consult the panel about the allowances to be made for taxation, investment management charges and inflation in the setting of the rate and, over and above that, to publish the panel’s report to the Lord Chancellor at each review. It is not a case just of disclosing what the panel’s advice may have been but of undertaking to publish the panel’s report and then to give reasons for the decision that the Lord Chancellor has made.
As I touch upon that, I recollect that the noble Lord, Lord Sharkey, raised the question of the experts on the panel. I will come on to the question of a medical expert in a moment but I note that with regard to the position of someone concerned with consumer investments, one would be interested there in the context of someone who acted as a financial adviser to those who made investments as consumers at various levels. That, I understand, is what is contemplated at that point.
As I have sought to underline, the overall thrust of the amendments is that the panel should, in effect, carry out a pre-review of the rate. This is not the
intended role of the panel. The panel’s role is advisory. It will be consulted by the Lord Chancellor and it will provide the Lord Chancellor with its views. The report of the panel and the Lord Chancellor’s decision and his reasons for the decision will be published. But the role of the expert panel is not to take away from the role of the Lord Chancellor. It is not the role of the panel to make a decision on what the rate should be. Its role is to provide expert support to the Lord Chancellor.
At the end of the day it is the Lord Chancellor who will make the necessary determination and will be publicly answerable for the determination he makes. Therefore, we consider that the decision must be for the Lord Chancellor, who will take that decision in his role as Lord Chancellor and be legally and politically accountable for it. The process of the setting of the rate is going to be transparent. The panel has been created for a very important purpose—namely, to bring new expertise to the process of setting the rate—but it is not its role to second-guess the outcome of the final review by the Lord Chancellor.
Amendment 84 would require the Lord Chancellor to base the allowances to be made for taxation, inflation and investment management costs on recommendations from the expert panel. The Lord Chancellor is already required by paragraph 3(5) of new Schedule A1 to make appropriate allowances for each of these three items. This will be an evidence-based exercise requiring judgment as to what the standard allowance should be against the range of possible individual circumstances that might be foreseen. The expert panel forms an integral part of the Government’s proposals. It will introduce additional expertise but, at the end of the day, the final decision must be for the Lord Chancellor. The amendments proposed by the noble Lord, Lord Cromwell, would in my submission take the role of the panel way beyond that of an expert consultative role.
I turn to Amendment 87, which was spoken to by the noble Lord, Lord Sharkey, and would extend the membership of the expert panel to include a medical representative. Here I concur with the view already expressed by my noble friend Lord Faulks. On one view, the effect of this amendment would be to broaden the general expertise within the panel, but I should explain that its role is intended to focus purely on matters relating to financial rates of return, in order to provide advice to the Lord Chancellor. The Bill therefore provides for the panel to be chaired by the Government Actuary and that the other members should have experience as an actuary, a manager of investments, an economist and, as I indicated earlier, in consumer matters relating to investment—for example, as a financial adviser.
The Government consider that this range of expertise is the most relevant for providing advice on what the relevant investments and rates of return are likely to be, and will be the most useful source in formulating advice for the Lord Chancellor. While medical expertise is relevant when determining a lump-sum amount of compensation to which the discount rate is to be applied, or in estimating the life expectancy of a claimant, these are separate issues to the setting of the discount rate and would be outside the remit of the panel, as an expert panel advising the Lord Chancellor. We do not see that a medical expert would contribute to the process of the expert panel.
I turn next to Amendment 88, which was also spoken to by the noble Lord, Lord Sharkey, and would require the Lord Chancellor to use the power to appoint the four appointed panel members to secure that each of those members approaches the work of the panel as an expert with the object of recommending a rate of return that is fair to the interests of both claimants and defendants. The appointed panel members are indeed intended to be experts in their fields. The expertise that they will bring to the process of setting the rate is one of the most significant reforms introduced by the Bill. The Government made it clear in their response to the Justice Select Committee that they intend to recruit experts who will act as independent experts in providing their advice, not as representatives of specific interest groups. This is not a representative panel; it is, I emphasise, an expert panel.
The appointed panel members will be required to disclose potential conflicts of interest and, under paragraph 3(2) of new Schedule A1, to take account of the duties imposed on the Lord Chancellor as to how the rate is to be set in deciding what response to give to the Lord Chancellor’s consultation. The mix of expertise stated in the Bill strikes, we suggest, a correct and fair balance between the various areas of knowledge that would be required. The proposed additional requirements on the Lord Chancellor in Amendment 88 are therefore unnecessary.
This amendment, however, also seeks to indicate what the objective of the work of each of the appointed panel members should be. The panel as a whole will play a very important role in providing advice, as I say, to assist the Lord Chancellor in setting the rate. It is very important that this advice is fair, which is why the Bill sets out the range of expertise referred to. However, the role and objective of the panel is to advise the Lord Chancellor on matters relevant to the setting of the rate by the Lord Chancellor. The role of the individual appointed members will be framed accordingly. We consider that the requirements on the Lord Chancellor under the terms of the legal framework for the setting of the rate, coupled with the advice from the panel of experts, who will bring a balanced range of expertise, and the requirements in the Bill which provide that the Lord Chancellor will give reasons for his or her decision, underline the way in which the decision-making process will be accountable and transparent. It will also have the objective of being impartial.
Amendment 91, which I believe was spoken to by my noble friends Lord Hodgson and Lord Hunt, who is still with us, would remove the provisions in paragraph 8 of new Schedule A1, which interpret provisions in relation to the setting of the discount rate to cover the possibility of the Lord Chancellor deciding on the occasion of a review to set no rate or no rate for particular classes of case, on the one hand, and changes from that situation, on the other. In fact, that new paragraph would reproduce the provisions in the Damages Act 1996 which indicate that the court must take into account such rate of return—if any—as may from time to time be prescribed by an order made by the Lord Chancellor. This wording implies that the Lord Chancellor
might decide to set no rate under the present law. The provisions in paragraph 8(2) to (4) are intended to clarify how this power would operate.
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Amendment 91 would remove the possibility of the Lord Chancellor deciding not to set a rate. While it is of course unlikely that the Lord Chancellor would decide on this course of action, we do not consider that it would be appropriate to narrow the Lord Chancellor’s options beyond what is prescribed in the present law, as circumstances could arise in which a category or class of rather unusual cases occur that call out for individual assessment of an appropriate discount rate. That, I believe, is why it was provided for in the 1996 Act. A no-rate provision, such as we think is possible under the present law, would enable the parties to avoid having to convince the court that it should depart from the prescribed rate under new Section A1(2).
I mention again the case of Warriner v Warriner in the Court of Appeal, in 2008, I think, where the court said that it would not be appropriate to depart from the prescribed rate unless very particular reasons were advanced. This removes that presumption in the context of a class of cases where it is believed that the discount rate might have to be addressed on an individual basis. It is only for that purpose; it may be extremely unlikely, but the power is there at present in the 1996 Act. We do not consider that it should be removed and I do not contemplate that as a means by which the Lord Chancellor would seek, in effect, to repeal the provisions of the Bill when it is an Act. I have no doubt that my noble friend Lord Hunt would have something to say if any attempt were made to that extent.
In the light of these explanations and while understanding that these are generally probing amendments—Amendment 74 is just that, as the noble Lord, Lord Sharkey, observed—I invite noble Lords not to press these amendments.