In a landmark court judgment, the Court of Appeal has ensured that seriously injured people relying on compensation payments for their long term care no longer face critical funding shortfalls when paying for care staff.
The current system of calculating compensation had left many people who had been catastrophically injured, through no fault of their own, unable to meet the steep rises in the cost of hiring carers, support workers and personal assistants.
Compensation for future care needs is either awarded as a lump sum or in annual periodical payments. The Government, when setting up the periodical payments legislation, decided that they would usually be linked to the retail price index (RPI).
Many Claimant Solicitors have long argued that indexing these payments to RPI (which is designed to measure the cost of living) would mean that claimants would lose out as historically the RPI has been much lower than the annual rise in earnings in the care sector. Therefore the increases in periodical payments would fall behind the increasing cost of their care.
As a consequence they are not able to afford to maintain their essential care arrangements leading either to the risk that they will be forced to cut their care or seek to maintain it with the prospect of running out of money later in life.
Claimant Solicitors proposed that compensation payments be calculated against the Annual Survey of Hours and Earnings (ASHE) instead, which offers a far more accurate guide of the cost of care. The defendants had argued that the court did not have the power to use any alternative index, other than RPI.
On the basis of this decision it will be possible for claimants needing future care to opt for periodic payments and for the court to link those payments to an index relevant to the cost of care.