There were 67 responses in favour of the Lord Chancellor exercising his power with several commenting on the need for certainty and a consistent approach by the courts. Three respondents thought the power should be exercised by others (Government Actuary and Court of Appeal were suggested).

A clear majority agreed that the Lord Chancellor could prescribe a rate that was not based on the assumption that claimants will invest in ILGS. Some thought that the rate should still be based on ILGS to protect the claimant. However, the majority thought that the Lord Chancellor should base his decision on investment reality, including the true return received by claimants, how a claimant would be properly advised to invest and what the average investor with a mixed portfolio would receive. Several respondents commented that the position in relation to ILGS had changed since Wells v Wells (1999) and referred to their lack of availability, making their rate of return artificially low, and to their limited duration. Those that disagreed argued that the Lord Chancellor could not depart from the reasoning in Wells v Wells, otherwise claimants could be deprived of full compensation. They should not be exposed to risk. Some commented that the Lord Chancellor must not take into account the impact on defendants, including the NHS.

A joint summary of the answers to the questions is being provided because a large number of those who did answer the questions gave joint answers that cannot usefully be separated.

A wide variety of suggestions were made, including the FTSE 100 Index, or similar; the Barclays Capital figures; the practice in the Court of Protection; that it should be based on what claimants do in reality; or based on expert opinion (e.g. accountants, actuaries).

Most favoured a fixed rate being prescribed, with a few responses in favour of the Lord Chancellor prescribing a formula.

The general arguments in favour of a fixed rate were that it aided simplicity, increased certainty and was less confusing for claimants. It was also seen to reduce costs because of the lack of need for professional advice on applying the formula and because it would promote early settlement and, therefore, be consistent with the CPR. It was suggested that a formula would give a false impression of accuracy, cause delay due to tactical positioning, be time-consuming and expensive to apply and could cause problems with appeals.

Those that favoured a formula thought it would be more accurate. Some thought it should change on a daily basis, others thought it should be case specific.

Most responses were in favour of averaging the indicator that is used to set the discount rate over a particular period. The suggestions ranged from monthly to 20 years or more. The majority were in the range of one to five years.

Those in favour of averaging over a previous period generally believed that it was necessary to prevent an award from being distorted by short-term fluctuations in the indicator. Some referred to the economic cycle, others to Wells v Wells.

Some responses were opposed to averaging past rates of a return over a particular period because historical rates had no relevance for the claimant; or because there was no merit in it being done in this way. Some referred to the need for expert financial advice.

The majority of those who responded to this question agreed that it should be accurate to the nearest ½%; a few suggested to the nearest ¼%.

Among the arguments of those in favour of rounding to ½% was that rounding to lower fractions would only create an illusion of greater accuracy.

Those in favour of rounding the rate to the nearest ¼% suggested that anything larger could make a substantial difference, leading to significant over or under-compensation. Some were in favour of more accurate rounding than ¼% and argued that rounding and averaging at higher rates can produce exaggeration and anomalies that can be easily avoidable and that the bond markets quote to 1/8%.

The majority of respondents were in favour of regular review periods, ranging from one year to five. The general view was that the period they specified was appropriate taking into account the need for certainty and the appropriate level of accuracy while ensuring that the rate was not unduly influenced by short-term variations in the market. There were also concerns that the wrong review period could lead to tactical delays while parties sought an advantage from changing rates.

Among those that opposed regular review of the discount rate, the general view was that regular review periods would lead to speculative delays. It was also argued that the rate should be constantly monitored and should be changed when it had moved by ½%, but no more often than once a year, or that the rate should be changed when appropriate.

Most respondents were opposed to different rates for different classes of awards. They argued that one rate would mean greater simplicity and clarity and would avoid unnecessary complication and expense.

The few in favour of different rates for different classes of case suggested that it was necessary to take account of different tax rates, the head of damages and the period of award.

There were slightly more responses saying that there was a problem with retrospection than not.

Those who expressed no concern over retrospection commented that it was a fact of life in personal injury litigation. They saw little justification for changing established principles and thought there could be obvious practical difficulties. Some suggested that the term was wrongly used because the discount rate applied to awards for future losses and was not concerned with the past.

Of those that considered retrospection to be a problem several were in favour of transitional protection and believed that changes in the rate should only apply where the cause of action occurred after the rate came into effect. Some commented on the effect on insurers and defendants.

Most respondents were in favour of applying a flat rate deduction. This included those in favour of maintaining the current approach, following the guidelines in Wells v Wells or applying a 15% deduction. A large number argued that courts should continue to have the power to apply a higher rate where appropriate. The general view was that flat rate deductions were necessary for simplicity. Several responses made the point that a system based on Duxbury would involve increased costs, disputes and delays.

Of those responses that advocated other methods of taking tax into account, a number favoured making a deduction for tax but did not specify the rate at which the deduction should be made, whilst others argued that it depended on the circumstances of the case or was a matter for the courts.

The suggestions for the discount rate ranged from 1.5% - 5%. Of those that suggested a rate, the respondents were almost evenly divided between 2% and below, or 3% and above. A few suggested different rates for short term and long term awards while others thought it a question for the Lord Chancellor and expert advice (HM Treasury, financial experts and actuaries were mentioned).

The responses to this question showed a small majority against a power to impose. 38 responses answered 'no', (although some felt that it might be acceptable in certain circumstances). 32 responses answered 'yes', again including some qualified responses, where respondents felt that the power should only be available in certain circumstances.

The major concern of those who answered 'no' was that the claimant should have the freedom to choose how they receive their damages, as an able-bodied person has choice over control of their finances. Some felt that this could be overcome by giving the courts the power to order a structure without the consent of the defendant but not against the wishes of the claimant. Other concerns were the need for a clean break between the parties and that the structured settlement market is not mature enough at present.

It should be noted that amongst those who answered 'no' to this question there was a lot of support for the courts having the power to question why a structure has not been agreed in cases requiring court approval (i.e. cases involving minors and the mentally incapable).

Those in favour of the power argued that a 'bottom up' structured settlement would overcome the problems associated with lump sums whilst a 'top down' approach would not. Other arguments in favour included that such a power avoids risk of dissipation and overcomes the problem of defendants refusing to agree a structured settlement unless the claimant agrees to a discount.

This produced a similar response to question 13 with a small majority against and with the same arguments generally being advanced. A number of responses suggested that it was not clear what the Consultation Paper had in mind when it referred to periodical payments other than structured settlements, while others suggested that it was not a helpful distinction. A number of responses that were in favour of the imposition of structured settlements opposed it for other periodical payments. Among the reasons for this difference were concerns that the preferential tax treatment would not apply and that defendants would continue to have responsibility for payments and would not be able to discharge their liability. It was also suggested that the benefits of periodical payments other than structured settlements were not clear.

A substantial majority of responses were opposed to this. Prominent arguments included the desire of both sides for a clean break, problems for insurers and reinsurers if they could never close their books, increased legal costs and use of court time, and disincentives for claimants to improve their position. There were also concerns that in practice the power would only be used one way, in claimants' favour.

The main argument advanced in favour of reviewable periodical payments was that they represented the only true way of meeting changes in claimants' needs, and thereby avoiding under or over-compensation. A number of those in favour accepted that there would be a need for restrictions on when a review would be appropriate and a need for incentives not to abuse the process.

There was no objection to lump sums continuing to be available for past losses and pain, suffering and loss of amenity. Among those in favour of some form of periodical payments there was general agreement that they were suitable for costs of care and related expenses, but there was no clear view on whether future loss of earnings and pension rights were more suited to a lump sum or periodical payments. Other comments on this question included the suggestion that even where periodical payments were to be made on certain heads of damage, part of the award should be paid as a lump sum to create a 'contingency fund'.

The widely supported view on tax was that all periodical payments should be free of tax in the same way as income from structured settlements is at present. There was disagreement over whether the law provides for this at the moment.

There was agreement that inflation proofing was necessary but disagreement over the appropriate index. A number of responses took the view that the traditional link to the RPI was not appropriate for loss of earnings or costs of care as both could be shown to increase at a higher level. But there was no consensus on the appropriate index for each. Among those in favour of maintaining the link with the RPI, it was suggested that the use of different indices would be too complicated. It was pointed out that the Court of Appeal made its decision on general damages in Heil v Rankin (2001) PIQR by reference to the RPI. It was also pointed out that payments from annuities were linked to the RPI because matching requirements mean that Life Companies have to secure the payments with investment in index-linked gilts.

While there was a range of answers to this question security was a concern in all cases except those where a defendant was backed by a Government department. In such cases security is provided by section 5 of the Damages Act 1996 and the NHS (Residual Liabilities) Act 1996. Several responses pointed to the fact that 100% security for structured settlements was provided by the Policyholders Protection Act 1975. Some gave this as a reason for limiting any new powers to structured settlements; others said that the protection should be extended to other periodical payments.

Among those who expressed an opinion on this question, there is no clear consensus one way or the other. Questions were raised on whether it would be appropriate for the heads of damage that arise in other types of claims to be dealt with by way of periodical payments.

This question drew a wide range of responses, including comments on the use of Part 36 offers, the need for financial advice and insurance issues concerning the market place, types of annuities and self-funding. The responses did, however, make clear the high level of support for the wider use of structured settlements, even amongst those who believed that consent should continue to be required.