The Department of Justice (DoJ) in Northern Ireland launched its consultation on how to account for inflation in calculating the personal injury discount rate (PIDR) on 18 November 2025. Our alert sets out the background to the consultation and the reasons why we considered change was necessary. The DoJ's response was published on 26 June 2026 and can be accessed here.
The consultation focussed on four issues as follows:
In principle, should the Damages Act provide more flexibility in relation to how the impact of inflation is to be taken into account by the Government Actuary when setting the personal injury discount rate for Northern Ireland?
Of the 18 respondents to the consultation, the response to this question was a unanimous yes. Given the unanimity the DoJ has confirmed that it intends to proceed along these lines.
If more flexibility is to be provided, how should this be achieved? (a) Prescribe an index, such as the consumer prices index, in the primary legislation, with the ability for the rate-setter to make an adjustment to that index. (b) Prescribe an index, such as the consumer prices index, and an adjustment in the primary legislation, with the ability for the Department to amend the adjustment. (c) Another way.
Having decided that in principle the Damages Act should provide for greater flexibility, the DoJ has then considered how to achieve that. The majority of respondents, for a variety of reasons, argued that option (a) should be the preferred option.
The DoJ has said that it is not persuaded by those reasons and is opting for option (b). The DoJ notes that "the ethos of the rate-setting methodology for Northern Ireland is that its key features – including the measure to be used in taking account of inflation – are prescribed in legislation" and it has decided to maintain that ethos. It has specifically noted that timeliness was a key concern, but states that secondary legislation will be used to amend the primary legislation, so should be a swifter process. It is also noted that the DoJ will consult stakeholders "in advance of each review on the need for any amendments to the various elements of the statutory methodology by which the rate is to be set, including the inflation measure."
Which is the best inflation index to prescribe in the legislation? • CPI • CPIH • Another index.
The majority of respondent's argued for CPI. The DoJ has agreed with the position of the majority.
Do you agree that the balance of inflation affecting lump-sum awards of damages in Northern Ireland is likely to be the same as that experienced in England and Wales?
The majority of respondent's agreed with this proposition. The DoJ has noted that it "is content that the evidence available suggests that the balance of inflation affecting lump-sum awards in Northern Ireland is not significantly different to elsewhere in the UK."
Whilst there is no vehicle in the legislative programme for the current mandate within which these changes can be made, the DoJ has confirmed that subject to the views of any incoming Minister of Justice and Executive, it intends to bring forward legislation in the next mandate to amend the Damages Act 1996 so that the rate-setter must make allowance for the impact of inflation by reference to an adjusted CPI, with a power for the Department to amend the adjustment by secondary legislation.
If you have any questions about these changes, please do not hesitate to contact Jo Folan or Alison Cassidy from our Strategic Advisory and Complex Injury teams.
