Compensation rising after 16 years

Posted: 12th April 2017

PayriseA recent change to the way in which compensation for seriously injured negligence victims is calculated has led to a dramatic increase in the size of awards – but they are still no more than is needed to ensure that their care needs are met for life.

One case concerned a young cerebral palsy sufferer who will never be able to live independently after he was starved of oxygen during his birth. The NHS trust that managed the hospital where he was delivered admitted full liability for his injuries and issued an apology to him and his family at the High Court.

Following negotiations with the boy’s legal team, the trust agreed to pay a lump sum of £6,874,283, plus index-linked and tax-free annual sums to cover the costs of his lifelong care. Those payments will start at £155,000, rising in steps to £215,000 when he reaches the age of 60. If he attains the age of 70, the total compensation package will be worth around £18 million.

The settlement was negotiated in the light of a change in the discount rate that is applied to compensation awards to take account of the claimant's returns when the lump sum is invested. The discount rate has recently been reduced to minus 0.75 per cent, having previously been unchanged at 2.5 per cent since 2001, to take account of historically low returns on investments.