Seriously injured victims should not have to invest in volatile stock markets to ensure they can fund their future care, claimant lawyers said yesterday.

The Association of Personal Injury Lawyers is lobbying the government to reduce the discount rate, the percentage deducted from the damages of injured people. The rate has been set at 2.5% since 2001 to reflect potential profits that can be made from investing the money.

The figure is based on yields generated by index-linked government stock (ILGS). Insurers want the rate calculated on a mixed portfolio of investments.

APIL president Karl Tonks (pictured) said a wrong calculation could leave people who need lifelong care hundreds of thousands of pounds short of the funds they need.

‘It is simply unacceptable and inconceivable that a vulnerable, injured person, who needs every penny of his damages to work hard for his future, should be forced to take the same risks as a speculative investor,’ he said.

‘The government must change the discount rate as a matter of urgency to stop people being under-compensated, and the rate must be based on low-risk government stock.’

But City firm Kennedys, which represents defendants, said claimants already put their damages into a mixed portfolio of investments and the discount rate should be set to reflect that.

Partner Christopher Malla said: ‘To assume a claimant only invests in ILGS is to ignore what actually takes place and this could overcompensate the claimant.

‘Ultimately this could lead to higher costs for defendant bodies, such as the NHS and local authorities, and have a detrimental impact on already reduced public sector budgets.’

The Ministry of Justice consultation on the discount rate closes today, with a decision expected in the new year.