The Treasury is keeping a watching brief on UK reforms to the process of awarding personal injury compensation payments.

Controversial changes to the system in operation in the UK - specifically how a ’discount’ is deducted to take into account interest accrued on a lump sum payment - have led to fears that the financial implications could cripple the National Health Service with a multi-million pound additional costs.

The new discount rate is actually a negative discount - moving from 2.5 per cent to minus 0.75 per cent - effectively increasing the amounts awarded. As a result, the UK Lord Chancellor Liz Truss has instigated a review.

The Isle of Man is keeping the previous rate of 2.5 per cent and Treasury Minister Alfred Cannan said there was no plan to adopt the negative rate.

He said: ’It is clear from recent UK parliamentary debate that both government and opposition believe the current position created by setting a revised rate is untenable, citing potentially huge rises in insurance premiums and significant funding issues for the NHS and, in turn, all taxpayers.

’The Lord Chancellor has agreed that the system is in need of urgent reform and has given her assurance that the results of the review will be acted upon swiftly with any necessary legislative changes brought forward at an early stage.

’Treasury has carefully considered the implications of the UK discount rate change and the further review currently under way. While there may be an expectation for a corresponding Isle of Man order to now be brought forward, which matches the new rate in place within England and Wales, I do not propose to amend the existing Isle of Man rate at this time.’

He said a ’further period of reflection’ was required to assess the UK’s decision and any future changes.

When the rate was last set the Isle of Man in 2014, a report was commissioned to look at options, including periodic payments as an alternative to a lump sum.

’Currently, periodic payment orders can be made by the High Court in the Isle of Man but only with the consent of both parties involved in a case,’ Treasury Minister Alfred Cannan explained. ’This differs from the United Kingdom legislation which allows their courts to impose such settlement.’

If it is decided to go ahead with periodic payments, the changes to law may already be in place, he added.

Mr Cannan plans to move an amendment to the Statue Law Revision Bill that would allow the High Court to make an order for periodic payments, without requiring the consent of both parties.