The bill to reform the method of setting of the personal injury discount rate for damages claims, and to permit the court to order periodical payments rather than a lump sum, has passed its final stage in the Scottish Parliament.

MSPs unanimously approved the Damages (Investment Returns and Periodical Payments) (Scotland) Bill after its stage 3 debate.

The discount rate is used to help calculate lump sum compensation to cover disadvantage such as future salary losses or future care costs in personal injury cases.

The legislation puts in place a new methodology for calculating the discount rate applied in calculating lump sum personal injury awards covering an element of future loss, when the money will have to be invested to provide long term support. It further requires the discount rate to be reviewed by the Government Actuary every five years.

It also gives courts in Scotland the powers to impose periodical payment orders for future financial loss, meaning payments can be spread over a period, such as the pursuer’s lifespan – usually via an annual payment. Until now this coiuld only be achieved if both parties agreed to that method of payment.

Community Safety Minister Ash Denham commented: “This legislation is part of our wider programme of civil law reform which aims to ensure the system keeps pace with modern Scotland and the needs of its people.

“While the number of people affected by the discount rate is relatively small, we know that these cases tend to involve catastrophic injury with little prospect of the individual’s full recovery. These changes will ensure that the law determining how the discount rate is set is clear, fair, transparent and credible.”

Lucy Durie, senior solicitor at the Law Society of Scotland, added: “We believe that the reforms introduced by this legislation offer clarity and predictability, in particular in catastrophic personal injury cases. The reforms will be an improvement on the current regime around investment returns and periodic payments.”