4 November 2024 – Simon Recaldin
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(10.00 am)
Mr Blake: Good morning, sir.
Sir Wyn Williams: Morning.
Mr Blake: This morning we’re going to hear from Mr Recaldin.
Sir Wyn Williams: Yes.
Mr Blake: Thank you.
Simon Recaldin
SIMON DOMINIC RECALDIN (affirmed).
Questioned by Mr Blake
Mr Blake: Thank you very much. Can you give your full name please?
Simon Recaldin: Simon Dominic Recaldin.
Mr Blake: Thank you very much. Mr Recaldin, you appeared at the Inquiry on 29 September last year, and you confirmed the truth of three witness statements, that’s your first witness statement, second witness statement and third witness statement. I’d just like to begin today by briefly taking you through your fourth, fifth, sixth, seventh and eighth witness statements. The fourth has a URN of WITN09890400 and is dated 15 May 2024; the fifth is WITN09890500, dated 3 September 2024; the sixth is WITN09890600, dated 4 September 2024; the seventh is WITN09890700, dated 4 September 2024 as well; and the eighth is WITN09890800, dated 16 October 2024.
Do you have copies of all of those witness statements in front of you?
Simon Recaldin: I do.
Mr Blake: Can you confirm that your signature appears on all of those statements?
Simon Recaldin: I can.
Mr Blake: Can you also confirm that those statements are true to the best of your knowledge and belief?
Simon Recaldin: They are. There are a couple of amendments that I would like to go through, if that’s okay.
Mr Blake: Thank you very much. Yes, please do take us through those amendments?
Simon Recaldin: So in the sixth witness statement if I – if it’s of help to the Inquiry, there’s couple of acronyms which are incorrect. The first one in the Rule 9(56), sixth witness statement, is I referred to SEG as the “Senior Executive Group”. With apologies, that should have been the “Strategic Executive Group”. In the same statement I referred to “DBT” and this should have been defined as “the Department for Business and Trade”. Thirdly, I refer to “DRP”, and that should have been defined as the “Dispute Resolution Procedure”. Finally in this witness statement, I refer to “DRT”, and that should have been defined as the “Dispute Resolution Team”.
In my seventh witness statement, again, I refer to SEG as the “Senior Executive Group”. With apologies, it should have been the “Strategic Executive Group”. Finally, under the seventh witness statement, I refer to “DBT” and this should have been defined as the “Department for Business and Trade”. I hope those are acceptable.
Mr Blake: Thank you very much. Subject to those, are those statements true to the best of your knowledge and belief?
Simon Recaldin: They are.
Mr Blake: Thank you very much. Those witness statements, those that haven’t already been published, will be published on the Inquiry’s website shortly.
You are the Director of the Remediation Unit, which was previously known as the Historical Matters Business Unit; is that correct?
Simon Recaldin: That is correct.
Mr Blake: You’ve been in that position since 10 January 2022. Can you assist us with what you were doing prior to taking up that role?
Simon Recaldin: I worked for NatWest, then became Royal Bank of Scotland, and then back to NatWest again for 33 years doing a number of roles through junior management, senior management and leadership within the Royal Bank of Scotland.
Mr Blake: Thank you very much. Towards the end of your time, I think you’ve said that you were involved in compensation schemes of some sort; is that correct?
Simon Recaldin: Yeah, in my last years of financial crisis in 2008 I was involved in two significant remediation programmes. One was called Project Rosetta, which was the investigating the alleged misselling of sophisticated financial products, such as swaps and collars and caps, and we had to investigate 13,500 trades to understand whether they were missold and, if they were, then we’d have had to compensate the clients accordingly.
And the second programme was called Project Sapphire, and that was – actually came from a Government report, the Tomlinson Report, when the Royal Bank of Scotland was accused of deliberately taking businesses to the wall in order to free up their capital and effectively make companies go bust to free up the capital and we were charged with investigating those allegations and compensating accordingly. I was the Operations Director in both of those programmes.
Mr Blake: Thank you very much. I would like to look at the work of your team and your unit. Can we please bring up onto screen POL00460645. You have produced a slide addressing the various schemes that are currently running. That will come on the screen at the moment.
We see there at the top the Remediation Unit and you’ve set out those schemes that are directly run by your unit and those that are run by the Department for Business and Trade; is that correct?
Simon Recaldin: That is correct.
Mr Blake: We see there on the left-hand side the Horizon Shortfall Scheme. That relates to those who were not on the part of the Group Litigation but who have been impacted by matters relating to the Horizon shortfalls?
Simon Recaldin: Correct.
Mr Blake: We then have the “Overturned Convictions”. I don’t think it’s called a scheme: it’s just overturned convictions redress; is that correct?
Simon Recaldin: Yes.
Mr Blake: It provides redress for those whose Horizon related convictions have been overturned by the courts?
Simon Recaldin: Correct.
Mr Blake: You then have the “Suspension Remuneration Review”. That involves repayment to postmasters who were suspended without pay; is that correct?
Simon Recaldin: That is correct.
Mr Blake: Can you assist us with why those postmasters wouldn’t be able to claim under the Horizon Shortfall Scheme or how that is different to the Horizon Shortfall Scheme?
Simon Recaldin: They might be able to claim under the Horizon Shortfall Scheme and, if they do, they get compensated accordingly. There are others who do not have a claim under Horizon Shortfall Scheme but were suspended and therefore they are entitled to reimbursement of that pay that they should have got when they were suspended.
Mr Blake: If you are a subpostmaster who experienced a shortfall but who was also suspended, do you have to complete two separate forms for those two different schemes?
Simon Recaldin: No. No, you’ll get your compensation through – your redress through the Horizon Shortfall Scheme.
Mr Blake: Thank you. The “Suspension Remuneration Review” therefore applies to those who didn’t experience a shortfall but were nevertheless suspended; is that correct?
Simon Recaldin: Yes, that’s correct.
Mr Blake: We then have the “[Post Office] Process Review”. Can you assist us with what that involves?
Simon Recaldin: During our investigations for all schemes, a number of allegations, issues, complaints were received around a number of products and the use of those products created what we call detriment. So we proactively did a review of number of products where postmasters were identifying problems with them, ie detriment, and we investigated about 19 different products to understand whether or not the use of those products created detriment or potential detriment. That review of 19 products came down to ten, including an additional category called “Other”, and we confirmed that those ten products might or do create detriment.
A good example of that would be a very bad training manual that was issued to a postmaster that, had they followed that training manual to the letter, they would have suffered detriment and, therefore, that – it should be redressed, and that is the scheme on the – that is set up to redress those issues around those ten products.
Mr Blake: Do those products relate to Horizon in some way?
Simon Recaldin: No, they don’t.
Mr Blake: Thank you. Can you give us some other examples, perhaps, just to assist us?
Simon Recaldin: It might be a foreign exchange process; it might be an ATM shortfall not related to Horizon.
Mr Blake: Thank you very much. Then there are two further schemes under your section “Schemes run by [the Department for Business and Trade]”. The first is the GLO scheme, that’s those who were part of the Group Litigation; is that correct?
Simon Recaldin: That’s correct.
Mr Blake: Presumably your department or your unit is involved in disclosure, perhaps making representations as well, in relation to –
Simon Recaldin: No, just disclosure. We have completed the disclosure exercise required for the Department of Business and Trade for the GLO cohort.
Mr Blake: Thank you. Are you able to assist us with when that disclosure was completed?
Simon Recaldin: It was completed four weeks earlier than expected. I think it was around June this year it was completed.
Mr Blake: Then the HCRS, the Horizon Compensation Redress Scheme, that is redress for those whose convictions have been automatically overturned by the recent statute; is that correct?
Simon Recaldin: Correct.
Mr Blake: Again, your Department provides information. What kind of information –
Simon Recaldin: Disclosure.
Mr Blake: What kind of disclosure might be required for that scheme?
Simon Recaldin: Well, what we’ve done there, we’ve worked closely with Government and legal advisers about what disclosures they would require for these cases because many of these cases, we understand – because it’s obviously run by the Department of Business and Trade – their compensation may be limited to the £600,000 sum and, therefore, the amount of disclosure to support those claims may be less – will be significantly less than for claims of over £600,000.
Mr Blake: So is it likely that, in relation to that scheme, it will be £600,000 as of right, without requiring more proof than simply that you were convicted?
Simon Recaldin: Well, my understanding is that if the claim is – if the claimant is, and their legal advisers are comfortable with an offer of £600,000, then limited disclosure, if any disclosure is required to support that.
Mr Blake: Thank you. Your teams work also involves other areas. It involves the Criminal Appeals Review Process; is that correct?
Simon Recaldin: Correct.
Mr Blake: What is your involvement in that, briefly?
Simon Recaldin: I have ultimate oversight of it. The work is part of the Remediation Unit.
Mr Blake: Is that providing, for example, disclosure to the courts or the Crown Prosecution Service or others?
Simon Recaldin: Via our legal advisers, yes.
Mr Blake: Thank you. Also, I think your team is also involved in related civil liability; is that correct?
Simon Recaldin: Correct.
Mr Blake: Is that individuals who bring claims against the Post Office outside of those schemes but relating to Horizon, or more broadly?
Simon Recaldin: Nothing outside these schemes, and nothing outside Horizon – it won’t be dealt with by my team.
Mr Blake: Thank you. Paragraph 140 of your sixth statement, you have outlined various meetings that you’re involved in. Perhaps we can bring that on screen. It’s your sixth statement, WITN09890600. It’s page 42. Thank you. At page 42, paragraph 140, you’ve set out various other meetings and boards that you are a member of.
Simon Recaldin: Yeah.
Mr Blake: We have there little in (a):
“Monthly monitoring meetings with [the Department for Business and Trade] to formally oversee the [Historic Shortfall Scheme], discuss performance and any outstanding matters, risks and issues.”
We have the Horizon Redress Programme Board, the HMC, what’s the HMC?
Simon Recaldin: Horizon Management Committee.
Mr Blake: Horizon Management Committee or Horizon Matters Committee?
Simon Recaldin: Sorry, Horizon Matters Committee, thank you.
Mr Blake: If we scroll down to (d), you chair two further subcommittees of the HMC. If we could carry on, please, the HSS DRP Decision Committee, can you assist us with what that is?
Simon Recaldin: That’s the Dispute Resolution Process, that’s a committee that oversees cases where we look at options available to us to resolve cases which might be going – as it says in the statement, that might be going to mediation.
Mr Blake: Thank you:
“Monthly, previously fortnightly, [Remediation Committee] meetings.”
At (g) wider Post Office governance committees including the weekly Strategic Executive Group meetings.
Do you feel that you have sufficient time for all of those and all of the other work that you carry out in your unit?
Simon Recaldin: No.
Mr Blake: Can you assist us with that, please?
Simon Recaldin: There’s a lot on. There’s a lot to do. This is the biggest miscarriage of justice ever in UK history, that creates a lot of work, and I do spend a lot of time, appropriately, in my view, in governance forums because I use those to make decisions and guide my business through extremely troubled times.
Mr Blake: Do you feel you have sufficient support, sufficient staff, sufficient deputies?
Simon Recaldin: Yes.
Mr Blake: How long do you feel you have had sufficient support for: throughout your period?
Simon Recaldin: Oh, in terms of sufficient support and the team around me, yes, I feel I’ve had adequate support for some time.
Mr Blake: In her witness statement, and we’ve heard in oral evidence, Karen McEwan commented that the sheer volume of information and number of compensation schemes, and their complexity, made it difficult for you to explain to her all the relevant information. Is that something you agree with or disagree with?
Simon Recaldin: Can you repeat that, please?
Mr Blake: The sheer volume of information and the number of compensation schemes and their complexity made it difficult for you to explain to her all the relevant information in her original briefing.
Simon Recaldin: I apologise if that has come across that way and I didn’t realise that that – I hadn’t explained it clearly enough to her. I think – by their very nature I think these are complicated. I think they are the right thing for the postmaster, having said that. My experience would say they’re not – from my experience of other remediation schemes, complexity is what they bring and, in order to ensure fair and reasonable outcomes in a timely fashion to postmasters, sometimes they will be complex.
Mr Blake: Before we turn to the specific schemes, I want to ask you some broad questions about the administration of those schemes and some themes that have come up recently, before we took the break, in respect of their administration.
Simon Recaldin: Yeah.
Mr Blake: First of all, has it been the few of the organisation throughout your involvement, that the schemes should not be administered by the Post Office?
Simon Recaldin: No, it has not been. I have a view, and I’m conscious of the evidence that Mr Read gave as well – which I, by the way, conform to – is when I was first interviewed for this role, which would have been in 2021, back end of 2021, I was interviewed for the role to head up what was then called the Compensation Schemes and now Redress Schemes, and I made it very clear to the interview panel that, traditionally – whatever traditionally means – that you wouldn’t run a remediation scheme this way.
I was asked how you would run it and I was clear, being the interview, that it would be completely independent of Post Office. It would probably be part of reporting to Government but there would be a way that you could separate it and there was a danger of conflict of interests, and it has to be separate from the Post Office because you’re judge, jury, prosecution, witness, et cetera.
And the feedback I got directly from the Chief Executive was that they sort of had been down that route and had been – had a clear direction from Government that there was a degree of accountability here in that the Post Office had committed these dreadful things – and, by the way, some dreadful things have been done – and, therefore, it was sort of feet to the fire time, and you did it, you fix it.
I can go on further, and so, you know, I think it’s very clear, also from the operational agreement between the Government and Post Office about how we operate the schemes, I think clauses 5 and 6, is very clear as well about – that Post Office will be doing this, and Post Office signed up to that operational agreement. So from that point, the die was set and there was probably little point in pushing against that because the agreement had been settled.
Mr Blake: What was the view of Mr Read as communicated to you about the appropriateness of the Post Office carrying out those schemes themselves or administering the schemes themselves?
Simon Recaldin: Mr Read made it quite clear that he agreed with my point and that he had said he had pressed Government on this but had the response, “It’s sort of feet to the fire time, and you’re accountable and therefore we are looking to you to deliver the solution. But, obviously, the Government will be extremely supportive, and provide the important funding, and all the governance and all the structure required in order for any redress schemes to be a success”.
Mr Blake: The Inquiry held compensation hearings dating back to July 2022, April 2023. In your view, was that the articulated position of the Post Office?
Simon Recaldin: Apologies, what was the articulated position?
Mr Blake: Was the articulated position of the Post Office that it would have been better for the Department for Business and Trade to be administering and running those compensation schemes?
Simon Recaldin: The articulated position of the Post Office was clearly embedded in the signed documentation under the operational agreement that this is how these schemes would be run.
Mr Blake: Do you think that a picture was or was not given that the Post Office would prefer not to be administering those schemes?
Simon Recaldin: I have seen evidence that it’s clear that Post Office made their position clear to the Minister at the time that they – the Post Office viewed it would be better and more – more independent, although it is independent – it will be clearer and have more transparency if Government were to operate the redress schemes.
Mr Blake: That’s the articulated position to the Minister.
Simon Recaldin: Yeah.
Mr Blake: You’ve been present at compensation hearings in this room. Do you think that that message has been articulated to the Chair?
Simon Recaldin: To Sir Wyn?
Mr Blake: Yes.
Simon Recaldin: In those compensation hearings, I don’t think so.
Mr Blake: Do you know a reason for that?
Simon Recaldin: I think the reason for that, as I’ve said, and as say in my statement, I think it’s because the operational agreement made it clear – which Post Office signed up to – that the Post Office would be at administrating and carrying out the redress schemes. That was a commitment that they made. I have been in – the Select Committee in February asked me this question as well. They asked me – they made the statement that, in their view, the redress schemes operated by Post Office should be controlled by the Government.
I think the notes will show that I agreed with that, and the Minister at the time was in the room, and I know, subsequent to that meeting, we had a ministers meeting literally the next week when myself and officials from the Department were mandated to go away and look at the opportunity and look at the possibility of transferring the Post Office redress schemes into Government.
Mr Blake: What happened to that?
Simon Recaldin: That was called – from a Post Office perspective, that was called Project Green, and that’s all documented, I’m sure, in your evidence, you have seen some of that articulation, and that was submitted to Government, it would probably have been March/April this year and – of how we thought that could happen and, at the time, the Government declined the opportunity to pursue that any further.
Mr Blake: Thank you. Has there been any change to that situation?
Simon Recaldin: I think there has, yes.
Mr Blake: To what extent and how?
Simon Recaldin: In terms of there – over recent weeks, there has been some further engagement on that from the Government.
Mr Blake: Do you anticipate there will be a change to the situation?
Simon Recaldin: Well, you – I think the Interim Chair was very clear about his intentions, his wishes, in this space and I know he has lobbied hard in Government around that, so I do expect a change, yes.
Mr Blake: Could we please bring up onto screen the witness statement of Mr Staunton, it’s WITN11410100. Thank you. If we could turn, please, to page 7, it’s paragraph 14 I’d like to take you to. Mr Staunton’s written evidence, and reflected in his oral evidence, was as follows, he says a few sentences down:
“As an outsider coming into the organisation (with no prior experience of managing a company involved in the prosecution of criminal offences), it seemed obvious that exoneration was something that required proactive consideration. But it became clear early on, that this was not on the agenda. Instead, there were three complex schemes for redress which only helped those whose convictions had already been overturned or who had not been convicted but nonetheless lost money (for example by ploughing their own savings into the losses wrongly calculated by the Horizon System). These were administered, it seemed to me, in a bureaucratic and unsympathetic way (particularly in relation to overturned convictions), as evidenced by some of the examples given elsewhere in this document.”
Was that a view that Mr Staunton communicated to you at all: that the schemes were administered in a bureaucratic and unsympathetic way?
Simon Recaldin: No.
Mr Blake: Did Mr Staunton have a conversation with you at all where he was concerned that the Post Office wasn’t getting it right in terms of the attitude to subpostmasters?
Simon Recaldin: No.
Mr Blake: I’d like to take you to a couple more passages from his witness statement, please. If we could turn to page 22. Do you have any views as to the sentence that I’ve just taken you to and your understanding of why Mr Staunton may have said such a thing?
Simon Recaldin: No. I had one conversation with that – the past Chairman.
Mr Blake: What was said in that conversation?
Simon Recaldin: It was a meeting that I established to brief him up on the redress schemes that the Post Office ran.
Mr Blake: Did he raise any concerns?
Simon Recaldin: He raised a lot of interest but no concerns.
Mr Blake: If we could please have a look at page 22, paragraph 41, he says at the bottom of that page:
“My impression was that there seemed to be little recognition within the Post Office’s Remediation Team that we were looking at an injustice on an industrial scale and that lawyers (both internal and external) made issues overly adversarial. That is why I suggested to Mr Read while I was chairman that the process be taken out of Post Office’s hands …”
I’ll take you to one more passage, 45(a), that’s at page 24. He says there:
“At my first Board meeting on 6 December 2022, there was a discussion regarding postmaster repayments for unreconciled losses. We were told there were some 77 postmasters who were currently repaying unreconciled balances, despite advice that continuing to accept repayment where cases had not been investigated was a breach of an implied term in postmasters’ contracts. There was a concern from the Remediation Team that if we notified postmasters and requested they pause payments, we might be ‘inadvertently stimulating claims against an unfunded position’. The Board rightly felt that we should do what was right and pause repayments, but the fact that this was brought up at all indicated to me that the culture of the Remediation Team was to try to minimise claims.”
Again, were those concerns that were brought to you at all by Mr Staunton or anyone acting on his behalf?
Simon Recaldin: Absolutely not, no. It seems to me that the phrase “inadvertently stimulating claims against an unfunded position”, that is a risk that should be articulated in a number of different governance documents. So to your question, no, that wasn’t – Mr Staunton didn’t talk to me about that.
Mr Blake: Thank you. Can we please turn to POL00155397. What was your relationship like with Mr Staunton?
Simon Recaldin: Excellent.
Mr Blake: If we scroll down, please, this is an email that the Inquiry has already seen and I’m sure you will have looked at it, it pre-dates your time at the Post Office, and it’s an email from Mark Underwood. The subject matter is “GLO Post Settlement [Group Executive] Paper”. We see there at the bottom of that page, so if we scroll down slightly, the section on “Fees”, it’s, as I say, something we’ve already looked at. He says there:
“My strong view is that you cannot seek payment from applicants – however small and regardless of the rationale behind it. Optically this would be extremely challenging and would be in a position that I believe the business would struggle to maintain under political and media pressure. I think you can achieve the same desired outcome through having a very tight and clearly communicated set of eligibility criteria and requirements in terms of the documentation applicants have to provide in order to be accepted into the scheme.”
You weren’t there at the time but did you in any way have the impression when you joined that the schemes were set up to be intentionally bureaucratic?
Simon Recaldin: No.
Mr Blake: Do you have a view as to what is said there and whether, in some way, the eligibility criteria and requirements were too narrow?
Simon Recaldin: I’ve a very strong view.
Mr Blake: What is your view?
Simon Recaldin: It’s outrageous.
Mr Blake: What’s outrageous?
Simon Recaldin: To deliberately design, allegedly – design eligibility criteria that would be restrictive, I think that’s – in terms of remediation, you just don’t go there, you don’t do that.
Mr Blake: Having seen what you’ve seen over the number of years you’ve been involved, do you have a view as to whether that plan was, in fact, the rationale or something that was actually put in place?
Simon Recaldin: In terms of what is in place, I don’t recognise that.
Mr Blake: In terms of what was in place on your arrival or before your arrival, do you recognise that at all?
Simon Recaldin: No.
Mr Blake: The Inquiry has also seen a document from 2020 where Angela van den Bogerd suggests in 2020 that there were too many fingers in the pie from Herbert Smith Freehills and that that in some way delayed the process; do you have a view on that at all?
Simon Recaldin: I don’t know what “fingers in the pie” means. I think, if the interpretation of that is confusing matters and elongating processes, I have to say, Herbert Smith helped design the process, and it’s a very difficult process design to ensure full and fair redress in a timely way. So I think they were helping Post Office. So I think that’s probably a bit unfair and, of course, all legal advisers have to be instructed, and they are instructed by the client, in this case the client is Post Office. So I don’t recognise fingers in the pie.
Mr Blake: I won’t bring it up on to screen but, just for the purpose of the transcript, that document is POL00293169.
How about Herbert Smith’s involvement more broadly, given that they represented the Post Office in the Group Litigation towards the later stages; to what extent do you feel it was appropriate or inappropriate for them to design, for example, the HSS, Historic Shortfall Scheme?
Simon Recaldin: So it was – their appointment was well before my appointment so I didn’t – I wouldn’t have had a say in that, and they are esteemed professionals in what they do, they’ve got a track record of being able to do – build remediation schemes. I have no further comment than that.
Mr Blake: Thank you. That document can come down, thank you. I’d like to move on to the topic of taxpayers’ money, value for money, and the Department for Business and Trade’s funding. That’s a topic that cropped up quite a bit before we took our break. Can we please bring up onto screen POL00458427, and if we could start, please, on page 2. This is an email chain discussing development of the Inquiry’s hearing on compensation, Thursday, 27 April. It’s dated 30 April. If we look at the bottom of that page, we can see there some views from you. You say:
“Indeed in the appropriate spirit of collaboration – on the basis of ‘funds being no object’ within reason of course, I have asked that parties get together online Tuesday to look at … ways 32 weeks could be brought down …”
I think that’s 32 weeks of disclosure in the GLO scheme; is that correct?
Simon Recaldin: That is correct.
Mr Blake: “… and the associated risks for Post Office Board would need to consider within and without appetite. This includes the potential for recruiting even more people.”
At that bullet point you say:
“As briefly discussed with you both on Thursday, it appears that less the contract being finalised between us on GLO disclosure is signed up by Wednesday this week, due to [the Department for Business’] identity change to DBT, this will be kicked down the road for a considerable amount of time meaning Post Office will have to work [I think that must be ‘at risk’] for an unacceptable period of time.”
We see the phrase “work at risk” in a number of places. Does that describe a situation where the Post Office is having to fund these schemes without knowing, in fact, whether the Government will step in and be funding them themselves?
Simon Recaldin: In terms of the formality of the documentation, yes, correct.
Mr Blake: If we scroll, please, to the first page and the bottom of the first page, we see there an email from Mr Read to Lorna Gratton and he says as follows, about halfway through that email chain:
“I always refer to David Bickerton’s observation that no one will be criticised for paying too much compensation to postmasters … however everyone will be slaughtered if we continue to ‘nickel and dime’ on legal fees, admin costs, compensation itself and a convoluted and complex process … see today’s article in The Times.
“I won’t allow this to happen as my job is to protect the brand, ensure timely compensation is paid (and speedy justice delivered) and that trust in the Post Office is not completely eroded through this torrid period.
“I hope we can work together on helping [the Department for Business and Trade] break the mould and understanding that managing public money is not simply about limiting spend and reducing cost, it is also about the effective and efficient use of funds. I fear they are missing this vital ingredient.”
If we scroll up, we see a response from Mr Staunton. He says there in the first paragraph:
“No corporate would allow this to fester as much, which is why you are right to quote David Bickerton’s observation that managing public money is only one ingredient of this exercise.”
Before I turn to a question, I’d just like to show you one other email chain, and that’s between you and Mr Cameron. That can be found at POL00423920. It’s the second page – the bottom of the first page into the second page, sorry. We see there an email from you to Mr Cameron, 14 May last year. You say there:
“I get the urgency that we really do need to get on with this as the clock is ticking, the judgment is pushing 4 years and victims of detriment are not getting younger. If it helps we are paying away in Detriment A with some momentum.”
A little further down, it says:
“The funding request went into [the Department for Business] many months ago, has just been through DBT, is with [Her Majesty’s Treasury, His Majesty’s Treasury], is due an additional governance layer and expected to emerge now July earliest – more likely September earliest due to the usual nonsense of summer breaks etc.
“If you believe we should start communicating and settling prior to funding being formalised, better people than I can advise, but my understanding is that is a call for [the Post Office] Board (clearly with government representation) who are obliged to look after the interests of Post Office to consider associated risks including potentially wrongful trading as the Board would have to be comfortable that any liability would be covered by funding/support – but you know this, apologies.”
In terms of wrongful trading, was there a concern within the Post Office that, because you hadn’t secured Government funding and were having to fund the schemes yourself, there may be an allegation or even an offence that’s being committed by the Post Office?
Simon Recaldin: Continually. For my entire tenure this has been an issue about the potential for wrongful trading and, therefore, as a commercial, separate legal entity, the Board have to act on behalf of Post Office and, therefore, they have to be advised of the risks of potential wrongful trading. Therefore, without formal letters of comfort in place, as the lawyers would say, then that is a risk that the Board will have to accept and, because of the way the construct of the Board is, there is potential personal liability there and that is why they have to be appropriately legally advised about the risks of wrongful trading and the implications on the Board and Post Office and then as individuals.
Mr Blake: Thank you. If we scroll onto the first page, we see the response from Mr Cameron. He says:
“In that context, our position on wrongful trading has changed in the [business as usual] business. We are delivering NBIT without sufficient funding and without thinking we are wrongful trading because of HMG policy, statement of intent, support letters etc. Personally I cannot distinguish the position from our position on remediation schemes.”
So it seems there was also a concern about wrongful trading in respect of the NBIT scheme?
Simon Recaldin: Correct.
Mr Blake: He says:
“I am not saying therefore that we can rush off and do whatever we like, simply that the position is less clear cut than we thought.
“But my main point is that the day after getting funding or deciding we cannot wait, we should be ready to progress all 14 workstreams as appropriate with the postmaster community AND be asking for ‘any others’ at the same time, so it is clear to everyone we are pursuing justice with all the speed at our disposal. If that’s the plan, great. But I don’t get the sense that it is and honestly I think we will come a cropper.”
He says:
“That is the point I would make at the Board if I am there or you would be kind to make on my behalf: no criticism and no need to defend. Just speed for the future. And if [His Majesty’s Government] doesn’t like it, we need to have an argument.”
Thank you. That can come down.
I’m going to take this in a number of parts. First of all, to what extent, if any, has a focus on managing public money or value for money slowed down or impacted negatively on compensation: so the value for money or the managing public money aspect?
Simon Recaldin: Well, I think there’s a danger of two issues being conflated here. If I may answer that in maybe a slightly different way, and if it doesn’t, please come back to me, is I don’t think we should be confused about the amount available for redress and the impact of value for money on that, which, in an operational sense I don’t see any restrictions or value for money debate around the amount of redress available for payment. I want to make that clear. I know this is something that Sir Wyn asked a question of a previous witness about.
So in terms of the £1.4 billion provision available for redress in the Post Office redress schemes, that is sacrosanct and I don’t recognise any value for money debate around that and, certainly, the terms of references for the independent panel in HSS and the independent panel on the OC, there is no restriction in there about amounts, or there’s no debate about value for money, there is nothing about this is taxpayers funds at all; this is what is a fair and fulsome response to this, in terms of the amount of redress. So I don’t recognise a value for money debate in redress.
Where I do recognise a value for money debate and officials reminding me and my team on a regular basis around we need to manage public money appropriately, and there are plenty of Green Papers that say more about it than I can, then that a consistent conversation with Government with me and others, but that’s more around the process designed to release those redress funds: so is there a value for money debate challenging whether that is an appropriate process; are there more efficient ways of doing it; can you find cheaper lawyers – dare I say that in this forum – et cetera; then that is a consistent challenge.
Now, if that’s a value for money debate, then I understand that. But it’s not about the redress; it’s more around the processes established to release that redress. I hope I’m making some sense.
Mr Blake: Yes, I mean, we saw in that email from Nick Read, he said, “We’ll be slaughtered if we continue to ‘nickel and dime’ on legal fees, admin costs,” and then he said “compensation itself”?
Simon Recaldin: Yes.
Mr Blake: Is it your view that, when it comes to compensation itself, there is or is not consideration of managing public money, value for money, value for the taxpayer?
Simon Recaldin: It’s my strong view that there is not a value for money debate around the amount of redress that is paid out.
Mr Blake: In respect of the test that is applied when calculating an amount to be given to an individual, is there any consideration of that?
Simon Recaldin: In terms of the independent panels, there is no reference to that for a consideration at all, in their determinations.
Mr Blake: I said we’ll take it in stages. So that was the managing public money aspect. To what extent, if any, has the Department for Business and Trade’s delay in authorising, or their bureaucracy, slowed down or impacted negatively on compensation?
Simon Recaldin: I don’t know whether I can put a value on that. You know, the Government have a process to follow in order to release funds to make processes available, and the process is the process, in that the DBT, Department for Business and Trade, do not have oodles of cash, and nor should they, waiting for Post Office to apply to fund redress schemes.
They have a process they need to go through. They need to see a business case to justify that spend. They then need to analyse that, they need to understand that and then they need to go to Treasury. They have their own process, it’s absolutely tried and tested.
My challenge around this has always been it’s very difficult to articulate a process that nobody has ever done before. This is the biggest miscarriage of justice ever and my frustration has been around the whole process, and the Government know this, you’ve seen all my emails, is that we’re trying to squeeze a non-BAU process in – business as usual process into a business as usual process and this breaks the mould.
As I keep on saying, this is the biggest miscarriage of justice ever and to be redistribution agreement by a – and there are good reasons for it, that I’m not arguing against those – there are good reasons for it to make sure it’s fit and proper and set up appropriately to understand that. But that can be restrictive, and that process takes months. And, during that process, quite understandably and reasonably, you get lots of questions back around “Don’t understand how you get to that number. How do you justify that? Please explain this”, and that’s absolutely fine, you have to look at your business case for that. But that whole process – the process takes its time, it takes its time in terms of the process it needs to go through.
Mr Blake: In that exchange with Mr Cameron, for example, where you’re discussing concerns about wrongful trading, concerns about the delay in funding and those kinds of matters, and that’s 2023, the summer 2023, to what extent have delays been built into the system because of that process?
Simon Recaldin: We never – you never build any delay into a system. To be clear, what Mr Cameron is talking about is redress schemes outside the terms of reference for the – my understanding is these are schemes non-Horizon related, and they – but they follow the same process in terms of getting funding. So you call it “delay”, that was your word. I don’t necessarily call it delay. I just say that’s the process, that’s the time it takes. But did it stop the launch of those programmes until that was in place? Yes.
Mr Blake: We heard suggestions from Mr Staunton about needing to hobble up until after the next election, in terms of compensation – the election that’s recently happened. Was that something that was ever been mentioned to you?
Simon Recaldin: No.
Mr Blake: From your experience, is that something that is likely or unlikely to have happened?
Simon Recaldin: If I was asked to do it, I wouldn’t be here.
Mr Blake: So you were never asked to do it. Is it something that is likely to have happened or not, in your view?
Simon Recaldin: That would be speculation and I can’t speculate. This is a public inquiry. I can’t speculate. I think it’s highly unlikely.
Mr Blake: You have funding, I think you’ve said in your witness statement, committed to 31 March 2026; is that correct?
Simon Recaldin: Sorry, what is committed to 31 March?
Mr Blake: Funding from the Government for the compensation schemes. Do you ever a definitive period in which funding ends or funding has been agreed to? What is the current –
Simon Recaldin: Apologies. I do, but I can’t recall it.
Mr Blake: Are you able to say anything in respect of the amount of funds that has been recently announced as part of the budget?
Simon Recaldin: The – do you refer to the 1.8 billion?
Mr Blake: Yes.
Simon Recaldin: I can only assume – and it is an assumption, please, it is an assumption, I know nothing about it at all. All I – I know what my provision is. I know my provision for the compensation scheme, the redress schemes that I look are in Post Office, the four, I know the provision for that is 1.4 billion.
Mr Blake: Is that going forward or is that taking into account sums that have already been spent?
Simon Recaldin: So I can help the Inquiry if it helps –
Mr Blake: Yes.
Simon Recaldin: – there as well. So that is – that includes – so far as of last week, across all the schemes that I operate, we have paid out in redress 302 million. We have now a financial projection of what that figure is going to look like going forward, and there is clear acceleration in there. There has been acceleration and I’m happy to share the numbers with the Inquiry – there has been acceleration over the last six months, significant acceleration of those numbers – and by March 2025 – there are a few caveats of traction from postmasters, et cetera – that 302 million will exceed 650 million by March 2025. Then, in the financial year ‘25 to ‘26, we anticipate paying a further 500 million redress.
Mr Blake: So looking at the sums that have recently been promised, do you think there is sufficient funding to cover all of those schemes that we have been looking at already this morning?
Simon Recaldin: I do.
Mr Blake: Thank you. I’d like to turn, then, to the Horizon Shortfall Scheme, and I think we’ll go probably beyond the first break just focusing on the Horizon Shortfall Scheme. It was previously known as the Historical Shortfall Scheme. Can you assist us with why the name changed and whose idea that was?
Simon Recaldin: It was feedback and I apologise to all the postmasters for it. It was feedback from Lord Arbuthnot, actually, when I met him and Lord Beamish, and he reminded me that the term “historical” was offensive to postmasters because, as we know now, you know, this is very much a live issue now and it’s not historical at all. And he – with clear direction, he suggested that I go and consider the word “historical” and we just took it out of everywhere, and I apologise to the postmaster population for it.
Mr Blake: Thank you. You’ve addressed this scheme in your sixth witness statement in particular and I’ll be taking you to references within your sixth statement. It was launched on 1 May 2020, following the Group Litigation and the conclusion of that; is that correct?
Simon Recaldin: Correct.
Mr Blake: I’d like to look at the Inquiry’s YouGov survey, and that can be found at EXPG0000007, and it’s page 48 of that report. If we scroll down, please, we see a chart there, figure 35, “Perceptions of applying to the Scheme”. These were answers given on a base of 1,483 current applicants or applicants to the Historical Shortfall Scheme and you can see there, in terms of understanding the scheme, there is a lot more red than there is purple 47 per cent net hard, they found it hard understanding the scheme. In terms of completing the paperwork, again, a significant number who found it hard completing the paperwork: 26 per cent there very hard. What is your view about those figures?
Simon Recaldin: Apologetic.
Mr Blake: Do you understand them? Do they take you by surprise?
Simon Recaldin: No, they don’t take me by surprise and I do understand them and that’s why we have completely redesigned the application form for the recent – with the mailout that we’ve just started.
Mr Blake: How recently has that taken place?
Simon Recaldin: So that was a week and a half ago, we started – well, this is all about the – sorry, this all about the £75,000 fixed sum offer, and the last cohort of that population that we have now started to mass mail, and we started that a week and a half ago. And we are now ramping up the numbers in terms of that mass mailout, and we have been mailing 30,000 past and current postmasters with the opportunity to apply for the HSS scheme, if they have not already.
Mr Blake: Is it your evidence that that the information in relation to that scheme, and also the application form itself, have been simplified?
Simon Recaldin: Absolutely, and they’re also available online as well.
Mr Blake: I’d like to turn to eligibility for the HSS scheme. That’s addressed in eligibility criteria. Perhaps we could bring those onto the screen, that’s POL00448027. We have there the “Eligibility Criteria”. First:
“You must have, or have previously had, a contract directly with the Post Office …
“[Second] Your application must relate to shortfalls which arose in respect of previous versions of Horizon …
“[Third] If you are making an application on behalf of another person, you must be a legally appointed assignee, personal representative, attorney or deputy of the person you are making an application on behalf of …
“[Fourth] You must agree to be bound by the Terms of Reference for the scheme …
“[Fifth] Your application and time with Post Office must not involve or relate to any criminal conviction(s) …
“[Sixth] You must not have been part of the Group Litigation against Post Office that settled in December 2019.”
Can we please return to your sixth witness statement, that’s WITN09890600, and page 52. Paragraph 159, you say at the top there:
“When compared to previous years, 2023-2024 has seen an increase in the number of applications being deemed ineligible, whilst the … terms have been unchanged.”
We see that there in a chart, if we scroll down slightly. So the increase, I think, that you’re referring to can be seen by that blue nine; is that correct?
Simon Recaldin: Yes.
Mr Blake: The blue line there has increased significantly in relation to non-represented applicants in 2024. Do you know or do you have any view as to why that might be?
Simon Recaldin: I mean, it says in my paragraph 159:
“The data itself does not provide a clear explanation for this trend, [but] it is worth noting that the 2020 mailing was targeted in nature and intentionally excluded postmasters known to fall outside the eligibility criteria.”
So the mailing in 2020 was a lot more focused on people who we thought were eligible. Since then, it’s been a lot wider and, therefore, you would expect more to be ineligible.
Mr Blake: Because, I mean, for example, we had the ITV drama in early 2024: might there be some relationship between the number of ineligible claims there to have risen in early 2024?
Simon Recaldin: I’m very grateful for the TV drama to raise interest, so the more volumes you get then the more likelihood there are cases that are eligible. Yes, that’s the logic.
Mr Blake: Is that the likely explanation for that peak?
Simon Recaldin: I wouldn’t say that. The peak in activity, absolutely, is a result of the ITV drama. But I can’t – I’m not going to speculate about whether that’s the reason for more ineligible applications.
Mr Blake: If we could scroll down, please, we can see the time that is taken. If we keep on scrolling on to the next page, page 53, there’s a table there that sets out the days from application to eligibility confirmed, split by legally represented and complainant complexity. It seems there, from 2020 we can see, for example, those who were represented in complex cases in 2020, eligibility decisions took somewhere between 450 and 500 days to determine. Can you assist us with why it took so long?
Simon Recaldin: The original focus would be on cases we could get through more quickly because they were more complex cases. We were conscious of time and because they were complicated they took more time to assess – and for eligibility. They’re more complex cases.
Mr Blake: Does that simply reflect the fact that in 2020 there were a large number of claims being filed?
Simon Recaldin: All cases.
Mr Blake: Applications being filed?
Simon Recaldin: Yes.
Mr Blake: Yes. We don’t see that in 2024. Is it possible we might see that in a slightly later chart or has that issue now been taken care of?
Simon Recaldin: We try and learn our lessons – I hope this is clear to the Inquiry – and the lesson there was that we needed the right resource in the right place, and that’s what we did: we put the right resource in the right place. And therefore, I am hopeful that we continue with that modelling going forward and, therefore, we will have a better process, a more efficient process going forward.
We have to take into account the expectation in the HSS is that in a significant portion of new claims coming in, following the mass mailing and following the exercises we go through at the moment, a huge proportion of those will be under 75,000 and there is a completely different quasi-automated process around that, which will make the eligibility check and the payout a lot quicker.
Mr Blake: Can you assist us with why it might be that eligibility decisions on represented applicants seem to take longer than for those who are not represented.
Simon Recaldin: I don’t know.
Mr Blake: I mean, in 2020 and 2022, in particular, very significant differences between those who are not represented and represented; can you give us any idea as to why that might be?
Simon Recaldin: I would be speculating and I’m not here to speculate. I think the legal advisers do a very good job in terms of ensuring that their clients apply for the appropriate levels of compensation.
Mr Blake: But eligibility doesn’t have –
Simon Recaldin: Yes, eligibility –
Mr Blake: – anything to do with the level of compensation.
Simon Recaldin: No.
Mr Blake: So can you assist us with why it might take longer to process just simply the question of eligibility?
Simon Recaldin: No, I can’t.
Mr Blake: If we look at the paragraph below, you say:
“Of the 3,427 applications that [have been] completed Eligibility assessment on 31 May 2024, there are 3,194 (93%) confirmed as Eligible and passed to the next stage to the process.”
If we scroll up and see that chart again, so you have a 93 per cent current success rate in terms of eligibility. Is that likely also to have been the case earlier on and, if so, was there something going wrong that it took so many days to process applications that have such a high rate of eligible applications?
Simon Recaldin: They took a long time to get through eligibility because the scheme hadn’t started. Because, although the scheme opened in May 2020, of course, we didn’t have funding in place, and the scheme didn’t actually operate until after funding came in. So the clock will be ticking. So those checks would probably have not started happening until funding was put in place, which I think was March 2021.
Mr Blake: But even in 2022, we see –
Simon Recaldin: Yes.
Mr Blake: – those two cases, those two charts, bars, that are between 250 and 300 days just to confirm eligibility. If you have such a high rate that are confirmed as eligible, why is it taking so long or why was it taking so long to confirm eligibility?
Simon Recaldin: That would have been the result simply of volumes going through.
Mr Blake: Of what, sorry?
Simon Recaldin: Of volumes going through at the time.
Mr Blake: But I think we saw that the PEAKs in volumes, or we will see, were quite early on and then again in 2024. I don’t think 2022, for example, was a particularly busy year in terms of applications, was it?
Simon Recaldin: No, but we were still dealing with the original cohort of 2,500 that came in so they had to go down through the process. So in – given the funding was not in place until March 2021, the scheme wasn’t properly productive until the end of 2021. 2022 was the – effectively the year when most of the work was done and, if you look at the targeting that we delivered in 2022, you can see when the offers went out, and 94.5 per cent of those offers were actually issued by the end of 2022.
Mr Blake: Thank you. If we look at 2024, on this chart we can see that the average days from application to eligible, it’s over 50 days waiting for an eligibility decision. If we see below, it says that 93 per cent confirmed as eligible. Might it not be easier, or possible to design a quicker system, given the high volume or high percentage that are or confirmed as eligible?
If, overwhelmingly, most are eligible, why must it take over 50 days to confirm that eligibility?
Simon Recaldin: I don’t think you can link the two. We are required, for funding purposes, to ensure they are eligible, so we have to go through a check. If the challenge is more around why does it take 50 days and can’t you do it quicker, that is a fair challenge.
Mr Blake: Yes, and what do you say to that challenge and how can that be overcome?
Simon Recaldin: And in – we have – as I said earlier, we have completely redesigned the process for the vast majority or anticipation of the vast majority of claims of under 75,000, and the eligibility is a very – very much slicker and quicker process and it will not take that amount of time.
Mr Blake: If we could bring up on to screen your eighth witness statement?
Sir Wyn Williams: Before we do that, Mr Blake – this is just me being curious, if you like, Mr Recaldin – but in the year 2021, there appears to be no represented claimant looking at the chart that we’re currently looking at, which seems a little odd to me.
Simon Recaldin: I think, if I may, Sir Wyn, I think that might be down to the fact that we weren’t taking any new ones in. Until it was confirmed that we were allowed to take in late applications, we effectively had the original cohort of 2,400 there waiting to be processed. They were submitted in 2020. 2021 was a year of building the scheme and getting funding in place, agreeing the principles and going through the governance. So, effectively, I could understand why no applications would be – no represented would have been submitted during that period.
Mr Blake: It looks as though at least some were –
Simon Recaldin: Yes, some were –
Mr Blake: – but not –
Simon Recaldin: – but not represented ones, yes, which is Sir Wyn’s point.
Sir Wyn Williams: Yes, all right. Fine. I’ll have to keep my curiosity in abeyance for a little while.
Mr Blake: Could we please bring up on to screen your eighth witness statement WITN09890800. If we could go to the chart, please, on page 4. Thank you. That sets out the number of applications that have been determined as eligible and ineligible. At the point at the time of writing this witness statement, you had 373 applications determined as ineligible, I think that has now risen to 397; is that correct?
Simon Recaldin: If that’s the number I’ve submitted, yes.
Mr Blake: I will take you to the new chart shortly?
Simon Recaldin: Yes, if that’s the number I’ve submitted, then that’s fine, yes.
Mr Blake: Yes. You’ve said in this statement or in the other statement that you can’t say how many have challenged that decision; is that correct?
Simon Recaldin: Correct.
Mr Blake: Are you able to give us an indication as to how many, whether it’s a handful, tens, hundreds, or something else?
Simon Recaldin: Handfuls. If any. I’m not aware of any. If there are, I would be made aware, and I’m not aware of many, but maybe a handful. No more than that.
Mr Blake: So there are some that you are aware of –
Simon Recaldin: Yes.
Mr Blake: – who have challenged that decision?
Simon Recaldin: Correct.
Mr Blake: Can you assist us with whether some of all of those were subsequently determined to be eligible?
Simon Recaldin: I think all of them were.
Mr Blake: In terms of legal representation, were all of those cases involving individuals who were legally represented?
Simon Recaldin: I don’t know but I don’t think any of them were legally represented.
Mr Blake: Can you assist us with what might have changed the situation regarding their eligibility: was it about provision of more information or something else?
Simon Recaldin: Yeah, correct. They would have been asked for more information, they clarified a piece of information.
Mr Blake: Thank you. One question is about branch assistants and branch managers. Why aren’t they included? Why are they ineligible for the Historic Shortfall Scheme?
Simon Recaldin: Because they’re not funded, because they’re not included in the funding arrangements for Government.
Mr Blake: I’d like to take you to a number of documents addressing this but, when you say they’re not funded, what is their redress?
Simon Recaldin: So they – they didn’t have a direct, my understanding is they did not have a direct contract with Post Office and, therefore, that excludes them from the HSS scheme. Now, I can only – my understanding of how things may happen, and of what I’ve seen happen, is that, if an assistant of a postmaster suffered a shortfall and, as a result of that, maybe dipped into their own savings or whatever they did in order to satisfy that but kept the postmaster aware, but – and the postmaster was clear that that’s what the assistant had to do, then they are – that individual is still – is not eligible to apply but the postmaster has applied, effectively, on their behalf and we have managed to resolve it that way. But from a formality of the scheme, those assistants are not eligible.
Mr Blake: Can you see a problem with that?
Simon Recaldin: Yes.
Mr Blake: What do you see as the problem with that?
Simon Recaldin: So I can see there are potentially assistants or postmasters who may have suffered, may have been forced, in a way, to make good, and are still out of pocket, effectively.
Mr Blake: Can you also see an issue for subpostmasters in that respect, that, having received redress, they might themselves become the subject of litigation by those who worked for them –
Simon Recaldin: I am –
Mr Blake: – if the only route of claim is via the subpostmaster.
Simon Recaldin: Yes, I am aware of that but I’m only – of that risk, but I’m only aware of two cases where that has actually happened.
Mr Blake: What has happened in those cases?
Simon Recaldin: They’ve – they have both been resolved satisfactorily directly with the postmaster.
Mr Blake: Can you see a potential significant issue, therefore, for those subpostmasters who had assistants and managers who themselves were out of pocket and who can’t claim under the Historic Shortfall Scheme or, it seems, any other scheme?
Simon Recaldin: I have empathy and sympathy with that, and I can only assume that those considerations were made when the scheme was established.
Mr Blake: Have there been efforts on behalf of the Post Office to try to change that situation?
Simon Recaldin: There has been representations to the Government around that and I know that is something the Government are considering and have considered in the past.
Mr Blake: They’ve – well, we’ll go through the emails, or some of the emails. Has it been explicitly rejected in the past by Government?
Simon Recaldin: Yes.
Mr Blake: And how much confidence do you have that that situation will change?
Simon Recaldin: Ooh, um, I know it is under consideration now. Government officials have advised me that it’s under consideration by the Minister.
Mr Blake: I’ll take you then quickly then through these documents because they may simply say what we’ve just been discussing, but we’ll start with UKGI00031750. This is correspondence from September 2020, from Melanie Corfield. If we scroll down, there’s an exchange between the Post Office and the Department for Business, and she says as follows:
“I have not yet heard back from [I think that’s Herbert Smith Freehills] but essentially it is only those with contracts with the Post Office who could potentially be held liable by the Post Office, not those they employed.”
That is the justification for that limit. It says:
“Background: The scheme was open to people/companies who had or have a direct contract with the Post Office, including multiples. It is only people with such contracts who would potentially have been held liable by Post Office for shortfalls. Assistants of postmasters, or employees of other companies who had no contract with Post Office would not therefore be eligible, ie they had no liability to Post Office. Claims in the scheme will be assessed by the Independent Advisory Panel using information available and in accordance with recognised legal principles …
“Line to take: postmasters and companies who had or have a direct contract with Post Office, and therefore could have been held liable for shortfalls, were eligible for the scheme – multiples were included and could apply. Claims can include consequential loss. Employees of other organisations with no direct contract with Post Office would have had no liability to Post Office and would need to resolve any issues they had with their employer.”
It’s that final sentence, really, that seems to suggest that, if a manager or an assistant of a postmaster suffered detriment as a result of shortfalls from Horizon, they would have to take that up with the subpostmaster themselves; is that correct?
Simon Recaldin: That is. Would you mind just paging down because I don’t want – there are two issues potentially that could be conflated here.
Mr Blake: Absolutely.
Simon Recaldin: You’re absolutely right in that, but I think this email may be about what we call strategic partners – and sorry for the additional jargon – where we have strategic partners who have a – run a number of post offices.
Mr Blake: Yes, and that’s something that I’ll come to shortly.
Simon Recaldin: Okay, okay.
Mr Blake: If we stick at the moment with just managers and assistants, perhaps we could turn, please, to BEIS0001093. Can you assist us with what this is, the “Quarterly Monitoring Meeting”?
Simon Recaldin: It is what it is.
Mr Blake: Who does that involve: that’s between the Department for Business and the Post Office?
Simon Recaldin: Yes, of course I can. This is an extremely important meeting, quarterly, as it says, that was between the Post Office and Government. It’s chaired by Government, by POL – Department of Business and Trade, and it’s the sort of formal Government overview, a shareholder overview, of the Post Office activity during that quarter.
Mr Blake: Thank you. This one took place on 7 September last year. If we please turn to page 4, “SR”, I think, is a reference to you, and it says:
“SR also highlighted that [Post Office] had received the first claim where a postmaster had waived their right to claim and assigned this to an assistant. [You] explained that a paper was due to go to HMC …”
Is that HMC; can you assist us with HMC and the acronym there?
Simon Recaldin: Horizon Matters Committee. The one I chair. Horizon Matters Committee.
Mr Blake: Thank you:
“… on this issue as it would mean a change in the terms of reference, and eligibility criteria.”
Can you assist us: was there a change to the terms of reference and eligibility eligible criteria?
Simon Recaldin: My recollection is there was not.
Mr Blake: Can you recall this case at all or any like them where a postmaster was able to assign their claim to an assistant?
Simon Recaldin: I cannot.
Mr Blake: Could we please turn to POL00448861. We’re now in March 2024, and this is a Board meeting and a Board report. Thank you very much. If we could please turn to page 43. Actually, if we turn to page 31 first, you can just see that it’s a Board report.
It should be 31. If we perhaps go over the page, there we go, there’s the Board report, that’s where it begins. I’d like to ask you about paragraph 83, that’s at page 43. It says there:
“Late applications continue to come in, coupled with enquiries about the HSS from current and former postmasters, branch employees and strategic partners. For now, [the Post Office] continues to decline HSS applications from assistants/employees since the HSS eligibility criteria requires applicants to have held a direct contract with [the Post Office].”
So are we right to understand from those documents that we’ve just seen that in September last year, there was consideration given to changing the eligibility criteria in some way but there has been no change –
Simon Recaldin: Correct.
Mr Blake: – and, if so, can you assist us with why there has not been a change?
Simon Recaldin: The – just the eligibility criteria hasn’t been changed since it was originally established. The process of determining eligibility has become more efficient and will become more efficient, but the eligibility criteria have not changed.
Mr Blake: If you were a manager or an assistant, how would you know what your rights were or how to make a claim for the detriment that you have suffered?
Simon Recaldin: Well, you would seek – you could seek legal advice. You could go to the website to understand whether or not you will be eligible and, from there, you will see that you were not eligible –
Mr Blake: Yes.
Simon Recaldin: – because you do not have a direct contract with the Post Office.
Mr Blake: So how would you go about getting redress for a serious matter that has affected your life? Perhaps you lost your job, perhaps you lost your savings, perhaps you had to fill the till with your own money because there were shortfalls: how would you, as an assistant or manager, go about claiming any redress?
Simon Recaldin: So you – I would go and speak to the postmaster, who ultimately ran that, and understand the situation from their perspective. That’s what – and I might go and get legal advice.
Mr Blake: Do you think it’s fair to put that burden on the postmaster who may themselves have suffered shortfalls, whose lives may have been impacted?
Simon Recaldin: The point is, yes, clearly, but they didn’t have a contract with the Post Office, and the scheme is designed – it’s clear – that the eligibility criteria is that they had to have a contract with the Post Office. Their contract was with the postmaster.
Mr Blake: Can I just clarify, when you said “yes, clearly”, do you mean –
Simon Recaldin: I have empathy to the situation that – and I completely understand it and have empathy to that.
Mr Blake: Going forwards, having discussed that today, do you think you would press for a change, or not, to the eligibility criteria, or for some other form of redress?
Simon Recaldin: Ultimately, that’s a decision for the Government to make. The Government provide the funding for the scheme.
Mr Blake: But as somebody who is head of the unit that runs some of the schemes, for somebody who liaises with Government as to funding, what is your position, and what would be your communication to the Government about those employees and those managers?
Simon Recaldin: My position is completely understandable – understanding of the position those postmasters’ assistants find themselves in. I believe it’s my – my personal view is that I need to understand the risks associated with being able to open up that scheme wider, in order to incorporate the significant number of people that might come in as a result of that. And some of them may have already been satisfied and some of them may not have been.
And my – I think I’ve made it pretty clear to Government what my view is and I think that’s one of the reasons – not my view but I think these considerations, it’s exactly what the Minister is currently considering.
Mr Blake: I think you’ve said already in terms of the new funds that have been allocated that they will be sufficient. Do you have a view as to whether they will be sufficient if the schemes involved employees and managers?
Simon Recaldin: So forgive me, I didn’t say they were new funds. They have always been in existence those funds.
Mr Blake: The funds that were committed as part of the recent budget?
Simon Recaldin: Correct, and my understanding, if the scheme was opened up to assistants and people without contracts directly with Post Office, a significantly larger provision would be required.
Mr Blake: Larger than has already been promised?
Simon Recaldin: Correct. Not promised: that provision has been delivered.
Mr Blake: Thank you. So the announcement in the recent budget, that amount has already been delivered?
Simon Recaldin: So I had known that that funding for redress payments has been available for some time, and it changes as our modelling changes. As we get more experienced with the schemes, we can anticipate with greater accuracy what those redress payments are going to look like across all four schemes. And we engage with Government continuously on those projections and, therefore, they adjust provisions, et cetera – along with the Finance Team, adjust accordingly.
So forgive me, I don’t want the Inquiry to be under the impression that the £1.4 billion has any just materialised. This has been number that was growing and established some time ago, well before I came to Post Office. So the recognition of that redress has been in place many, many years.
Mr Blake: Thank you.
Are subpostmasters told in any of your guidance or in any of your forms that they’re able to claim in respect of redress for their managers or assistants?
Simon Recaldin: I don’t believe they are.
Mr Blake: We’ve seen that 397 applications have been deemed to be ineligible. Can you assist us at all with the kind of proportion that might involve either, on the one hand, the employees and managers, or, as you’ve said, the multiples?
Simon Recaldin: No, I can’t. I can’t. I haven’t got that split, apologies.
Mr Blake: Is it rare; is it common; more than half/less than half that are ruled ineligible because they fall within this category of not having a direct contract?
Simon Recaldin: I really don’t know.
Mr Blake: Okay. As you said, another issue, and separate issue, is issues that have been raised concerning multiples –
Simon Recaldin: Yes.
Mr Blake: – or those who have had licences with somewhere like Costcutter or McColl’s. Is that a correct understanding of that issue?
Simon Recaldin: We call them strategic partners.
Mr Blake: Yes.
Simon Recaldin: Examples are McColls, WHSmiths, Co-op, et cetera, and they have separate arrangements with Post Office.
Mr Blake: They also fall outside the scheme; is that correct?
Simon Recaldin: No, they don’t. So –
Mr Blake: If you were an individual store that had a licence from one of those organisations, they would fall outside the scheme; is that right?
Simon Recaldin: So my understanding of the scheme – and McColl’s is a great example – is that we do accept applications from the strategic partner who coordinate the claims from all the branches that they – the Post Office branches they look after and, therefore, we get one application in and that is considered in the scheme.
Mr Blake: Have those applications come in; are you aware of those applications being built up, as we speak; or what is the current position?
Simon Recaldin: So when the scheme was first launched, I know we had two strategic partners who came in, and my understanding is that those two – they have been resolved through the HSS mechanism, through the scheme. I now understand one other significant strategic partner is currently engaging with Post Office around a potential claim they have.
Mr Blake: There are others who operated through corporate vehicles who may not personally have a contractual relationship with the Post Office. Are you aware of an issue arising in relation to those circumstances?
Simon Recaldin: No, if they’re a corporate identity that might look after 10 or 15 branches, they can apply as their corporate identity, and it’s the same way with partnerships as well.
Mr Blake: What if there was, for example, a company that was the corporate vehicle for running the Post Office but has now been dissolved or went bankrupt, for example, doesn’t exist any more; is that possible?
Simon Recaldin: Yes.
Mr Blake: How about family members? Can they either claim in their own right or on behalf of their own family members and, if not, why not?
Simon Recaldin: They’re not eligible because they haven’t got the direct contract in terms of family members but, in the case of an estate, for example, then they can apply on behalf – for the estate.
Mr Blake: If, for example, an applicant or somebody who wanted to apply but couldn’t because of, say, dementia or simply because they didn’t want to apply themselves on their own behalf, is there a possibility that their family members can pursue it on their behalf?
Simon Recaldin: Providing the appropriate Powers of Attorney, et cetera, are in place, absolutely, yeah.
Mr Blake: We’ve heard about current issues with the Horizon system, we’ve seen the results of our own survey in relation to those who still experience discrepancies, unexplained shortfalls, on the current Horizon system, we saw the Terms of Reference there and the eligibility criteria are based on the old systems. Now, is there any plan to put in place some sort of scheme addressing current issues with Horizon?
Simon Recaldin: That is under consideration as we speak, yes.
Mr Blake: Thank you very much.
Sir, that might be an appropriate moment to take our morning break.
Sir Wyn Williams: Yes, by all means, yes.
Mr Blake: Can we come back at, let’s say, 11.47?
Sir Wyn Williams: I think we can extend to then, Mr Blake.
Mr Blake: Thank you very much.
Sir Wyn Williams: All right, fine.
(11.35 am)
(A short break)
(11.50 am)
Mr Blake: Thank you, sir. Can you see and hear me?
Sir Wyn Williams: Yes.
Mr Blake: Mr Recaldin, before we left off we were discussing potentially extending the schemes to managers and assistants or others, and you said you understood that to be a much larger figure. Is there a figure that has been discussed at all?
Simon Recaldin: No.
Mr Blake: You –
Simon Recaldin: Excuse me, no.
Mr Blake: Can you approximate, in your view, what kind of ballpark are we talking about?
Simon Recaldin: All I can – not speculate – all I can say is that you logically look at the post office, you look at the postmaster and then you look at the numbers of people they may employ to support them in that post office, and you look at that across the country, across 11,500 branches and you do the maths, and that would be a considerable population.
Mr Blake: Have there been discussions between the Post Office and the Department for Business and Trade or the Treasury about that potential?
Simon Recaldin: I think there have, yes. But I don’t think we’ve put a number of potential redress on that.
Mr Blake: In terms of likelihood of there being some sort of change, is it likely or unlikely?
Simon Recaldin: You would need to talk to the Government about that, this is very much in the Government’s hands.
Mr Blake: How recently were those discussions with Government?
Simon Recaldin: My understanding that those considerations were being held at ministerial level a few weeks ago.
Mr Blake: Thank you. Moving on from eligibility, providing that you meet the eligibility criteria, you’re given the opportunity to seek repayment for any losses caused by any apparent shortfalls and also not just the shortfalls themselves but also consequential losses; is that correct?
Simon Recaldin: That is correct.
Mr Blake: Thank you. Could we please turn to the “Consequential Loss Principles and Guidance”, that’s UKGI00033420. Is it right to say that this guidance that’s about to come up on the screen was developed in the summer and autumn 2020 and that it followed a request, I think you’ve said in your statement, from Hudgells Solicitors?
Simon Recaldin: Correct.
Mr Blake: If we scroll down please, can you assist us with who developed these principles and guidance?
Simon Recaldin: This would have been HSF with Post Office.
Mr Blake: Thank you. If we scroll down, please, we see there a section on burden of proof. 3.1.2, if we scroll down, it says:
“Where the postmaster is unable to satisfy the burden of proof in relation to their claim, their claim may nonetheless be accepted in whole or part if the scheme considers it to be fair in all the circumstances.”
Simon Recaldin: (The witness nodded)
Mr Blake: If we keep on scrolling down, there’s then a section that sets out established legal principles. If we keep on scrolling down to the bottom of page 3, we can see types of loss are outlined there. It says there’s no exhaustive list but it sets out, for example, loss of earnings. If we scroll down, loss of profits, loss of property, loss of opportunity, penalties, general increased costs of financing, bankruptcy, insolvency. If we scroll down, legal and professional fees, stigma, damage to representation, personal injury/harassment.
Thank you very much that can come down.
In terms of categorisation, you’ve outlined in your statements three types of cases. The first is something called “below assessment threshold” or BAT. Can you assist us with what that is?
Simon Recaldin: It’s effectively a de minimis case where, if a case comes in where it’s below a – where the claim is below a certain amount, the operational cost of actually processing that would probably be restrictive and, therefore, a decision was made that if a claim below a certain amount came in, we would automatically pay that – pay that amount.
Mr Blake: Does that still exist?
Simon Recaldin: That is now going to be superseded by the £75,000 opportunity.
Mr Blake: Thank you. We’ll get on to the 75,000 in due course. The second type of case is a standard claim and the third is a complex claim. Can you assist us with the difference between a standard claim and a complex claim?
Simon Recaldin: It’s basically the number of heads of losses that are applied for, in terms of the categorisation you’ve just gone through. So if it’s 1 to 5, it’ll be standard; if it’s a 5 to 10, it’ll be a complex; over 10, I think is a super complex.
Mr Blake: Super complex?
Simon Recaldin: Yes, extra complex, I think.
Mr Blake: In your charts and graphs, you’ve only provided, I think, standard and complex, do those super complex fall within –
Simon Recaldin: Yes, included in the complex, yes.
Mr Blake: Thank you. I’d like to look at the number of applicants and their current status. At paragraph 51 of your sixth statement you said that, when it launched, the Post Office wrote to 7,100 current and 20,000 former postmasters and you also arranged for publications in newspapers; is that correct?
Simon Recaldin: It is.
Mr Blake: Can we please bring up on to screen your sixth statement, page 49. WITN09898600, page 49. Thank you.
If we scroll down, please, we can see there a chart. That sets out the applications received up until 31 May 2024 by date. It shows there quite graphically two peaks: one in 2020 and one in 2024. We see there they effectively stop in between 2020 and the end of 2022, a very small number in 2021, and that might account for those figures that Sir Wyn pointed to earlier today, in terms of reference of the applications who were not represented.
Simon Recaldin: Yes.
Mr Blake: You’ve outlined the publicity when it launched. We know that the 2024 numbers occurred at a time after the ITV Mr Bates drama. So that perhaps explains the peak, is that your understanding of why –
Simon Recaldin: Correct.
Mr Blake: – it occurred again? Thank you. We know that, for example, Phase 2 of this Inquiry was in October to December 2022. Do you think that that might have triggered some of those figures in late 2022/2023, or is there some other explanation for figures rising during that period?
Simon Recaldin: So that’s when we confirmed that we would accept late applications.
Mr Blake: Thank you. Was there any publicity or anything done in the 2021 and early 2022 periods to bring the schemes to people’s attention or did that stop altogether because of the cut-off dates?
Simon Recaldin: We – well, we had – formally, of course, we had actually closed – the scheme had closed in November 2020. So what we were doing, we were receiving applications that were coming in and we couldn’t process them because they had missed the deadline, effectively. So we wrote back to the people who were making these applications saying, “Look, whether or not your claim will be accepted isn’t – we don’t know yet, so we’re effectively putting it on hold”, and then, towards the end of 2022, we got permission from Government not to reopen the scheme but to allow late applications. So at that point we did and we did publicise that via the website, et cetera, that we would now accept applications that were late.
Originally, we did ask for them to describe why they were late, why they’d missed the deadline, and then that has vanished now. So now we just accept them as late applications.
Mr Blake: Thank you. If we scroll over to page 50, please, you set out there the types of application. We can see they’re in that table. Am I right to say that post-January there was a rise in the number of more complex cases?
Simon Recaldin: Yes.
Mr Blake: Can you assist us with why that may be or what your understanding of that is?
Simon Recaldin: I think people – I don’t know why that may be but I think people might be more educated around the scheme.
Mr Blake: When you say people might be – what do you mean by that?
Simon Recaldin: They might have taken an opportunity to look at the website to understand what they’re entitled to claim for.
Mr Blake: Thank you. I’m going to take you to the overall figures now. We can look at page 5 of your sixth witness statement, please, that’s WITN09890600. Thank you very much. If we could zoom out of that slightly to have all of the figures. Thank you. Is it possible also to bring on screen, please, POL00460646. Ah, okay, that can’t be brought on screen at the same time. Perhaps if you could have to hand your most recent figures; do you have those in front of you?
Simon Recaldin: Yeah, let me just – if I may. These are the ones I submitted on Friday?
Mr Blake: Yes.
Simon Recaldin: Yes, thank you, I have them.
Mr Blake: So we start there with applications received and logged. The figure as at May 2024 was 4,323; can you assist us with what the figure is now?
Simon Recaldin: 4,971.
Mr Blake: Thank you. Eligibility, work in progress. It was 896. Can you assist us with what it is now?
Simon Recaldin: It’s 307.
Mr Blake: Thank you. So a significant decrease in eligibility work in progression?
Simon Recaldin: Correct.
Mr Blake: Applications ineligible, I think we’ve already covered that today. That’s now 397; is that correct?
Simon Recaldin: Correct, which is 9 per cent.
Mr Blake: Thank you very much. Applications eligible?
Simon Recaldin: 4,267.
Mr Blake: Thank you very much. Offers sent?
Simon Recaldin: 2,792.
Mr Blake: No response to offer?
Simon Recaldin: 123.
Mr Blake: Applicant in contact/querying?
Simon Recaldin: 9.
Mr Blake: So a much smaller number of applicant in contact/querying?
Simon Recaldin: Correct.
Mr Blake: Disputes?
Simon Recaldin: 319.
Mr Blake: Thank you very much. Can you assist us with approximately, if you’re able to, how many or what kind of a percentage of those disputes involve individuals who are legally represented. It doesn’t have to be an exact figure but, if we see there the number of disputes currently 319, can you approximate what kind of a percentage of those figures might be legally represented?
Simon Recaldin: What I can help the Inquiry with is the cases that are in our dispute resolution process, I am aware that I think the number is 70 per cent are legally represented.
Mr Blake: Thank you. Is that different to your categorisation of disputes here and, if so, why?
Simon Recaldin: I don’t think it is.
Mr Blake: No. So about 70 per cent are legally represented? Thank you very much.
Offers accepted. You have there 2,248.
Simon Recaldin: 2,341.
Mr Blake: Thank you very much. Again, are you able to assist with the kind of percentage that are legally represented; is it the same or is it a different type of figure for –
Simon Recaldin: So legal representation across the entire HSS population is approximately the same. It is something like 12 per cent. So legal representation across the total cohort is relatively modest, and yet the acceptance rate is at now at 84 per cent.
Mr Blake: 84 per cent who are of –
Simon Recaldin: Offers. 84 per cent of offers that are issued are accepted.
Mr Blake: Of those, what kind of percentage are legally represented, so far as you’re able to?
Simon Recaldin: I understand it’s circa 10 per cent.
Mr Blake: Thank you. Settlements, 2,085?
Simon Recaldin: 2,321.
Mr Blake: Thank you very much. Total settlement figure?
Simon Recaldin: 118.5.
Mr Blake: Thank you very much. Tax top-ups to HSS applicants?
Simon Recaldin: 14.8.
Mr Blake: Thank you. Combined total paid?
Simon Recaldin: 230.1.
Mr Blake: Thank you. We’ll go through all of the charts that you have provided in your witness statement or most of those charts but can you assist us in your view what the differences in those figures, in your mind, shows?
Simon Recaldin: If I may.
Mr Blake: Yes.
Simon Recaldin: Thank you. The one would like – because at the moment, when I got these Rule 9s, it was very much asking me about trends and patterns –
Mr Blake: Yes.
Simon Recaldin: – and hopefully I can help the Inquiry here. So if you look at the statement that’s on the screen, you look at the combined payout of 121, if you then go down to the notes – so that 121 was at the end of May 2024. If you go down to the notes, you can see on the 27 August that that 121 had turned to 139, and that’s a difference of – rounding – that’s a difference of about 18 million. So in those three months, in terms of redress on this HSS scheme, there was £18 million paid out.
The number I’ve just quoted as at end of October is 230 million, so the difference between the 139 and 230 is fairly significant, and I think what that does is – so what’s that? That’s about 90 million. Now, that is over a period from August to end of October. So that’s a two-month period. So if you compare the 18 million over three months and the 90 million over two months I think what it illustrates is a rapid acceleration of redress and that, of course, is purposeful, because we need to speed this up and need to accelerate redress.
So that is a major trend I would like to use this opportunity to point out to the Inquiry in terms of the acceleration of redress, and I go back to a previous statement I made this morning, that we expect across all the schemes it’s now 302 million redress and we expect that to be 650 million by March 2025.
Mr Blake: What do you see as a principal reason behind a speeding up of redress in that period?
Simon Recaldin: That will be more efficiencies and a better process but predominantly because of the £75,000 scheme, which I know you want to talk about later.
Mr Blake: Absolutely. So let’s look at the average time it takes from eligibility to a decision. That’s at paragraph 64 of the same statement. If we could turn to page 22, please. Thank you. You say:
“For all non-BAT claims …”
So those are standard claims and the complex claims:
“… from the eligibility confirmation letter being issued it takes an average of 470 days to an offer letter being issued. In respect of Complex Claims, this process takes an average of 514 days improving to 306 days in 2024 although we note a lower volume of offers were issued in 2024.”
Can you assist us, in reference to days there, in some places in your statement you refer to “working days”, in others just “days”. Are you aware of whether that is working days or all days?
Simon Recaldin: Apologies it should be working days.
Mr Blake: Working days.
“For Standard Claims, this process takes an average of 445 days and the data shows that this has decreased in 2024 with Standard Claims now taking an average of 302 days.”
So an average case took 470 working days, it’s now decreased, but we’re still talking very significant time periods, aren’t we?
Simon Recaldin: Yes.
Mr Blake: What do you see as the principal reason for such delays, I mean, we’re well over a year for an average claim?
Simon Recaldin: The 445 we referred to?
Mr Blake: Well, those are only working days, so if we include weekends, even more.
Simon Recaldin: So they are not necessarily delays – and whatever I say, please, I don’t want to be taken as defensive at all because it’s not: this process takes too long, full stop. It does take too long. However, there is a process that has to – it has to be gone through and that’s all defined and all operationally agreed and all signed off. Could it be quicker and could it be more efficient? Yes, and that’s what we tried to do continuously and we will continue to do that.
So that’s – and those days will include what I call lapsed time, so when it’s queueing – so when a case is queueing for the next shortfall analysis to be done, or the next Case Assessor to be ready, so there will be queues at each particular process point, and those days will include those. So this is not a true end-to-end picture, this is a reality picture because this is what the postmaster is experiencing. So I’m not going to say well, actually, because it any takes two days in legal review and three days in the SFA, that’s a five day. No, it’s when it’s queueing you have to include those days. The process is too long.
Mr Blake: We see they that there has been an improvement, and I think some of the explanation within your statement is that, for the early claims, there were delays – you don’t call them delays but I will continue to call them delays – relating to funding from the Department for Business and Trade. To what extent did those slow down the process from eligibility confirmation to the final offer being issued in those early claims?
Simon Recaldin: Well, of course it did because – so to take – if I may add some colour to the whole thing and take a step back, everybody in this room will understand that the HSS was actually created from the GLO settlement agreement in terms of a scheme to compensate those not represented in the GLO, and that was effectively the activation date. It was May 2020 when the whole thing started but the scheme might have been announced and might have been started but, as with many schemes, including the recent appeal scheme announced by the Government, it’s just words on a piece of paper. There’s no process, no anything behind it, no application behind it.
So, from May 2020, you’ve got to start building something and that’s exactly what was happening and, initially, the view was thought that – the initial view was that the number of claims would be relatively modest, we’re talking about a few hundred, and therefore, an engine was built accordingly, and then, as soon as the volumes started coming in, and mounting up to 2,500 applications, it’s at that point it was like, “Well, actually, that engine is not going to be appropriate any more and, by the way, Post Office haven’t got those sort of funds to be able to support that, and therefore we have to go to Government and ask for it”, and that starts the whole process around applying for funding.
Mr Blake: Can you assist us with who was responsible for underestimating the number of potential applicants?
Simon Recaldin: No, I can’t, before my time and I don’t know who would have been – I know there was a predecessor to myself, who was appointed but I understand that individual wasn’t around for about eight months before I started. So I don’t know who that would have been.
Mr Blake: Was there anybody in your role in that eight-month period?
Simon Recaldin: Not that I’m – no, not that I understand no.
Mr Blake: I’d like to take you through the various stages of the application process and the offer process, unless you have anything else to say at this stage?
Simon Recaldin: What I would say is, please – and to help the Inquiry in the colour – and, please, again, please do not take this as being defensive at all, but the whole engine to be produced has to go through a huge governance process, so you talked about the consequential loss principles and brought them up on the screen and, forgive me, I did say HSF and Post Office built those but of course the panel, the independent panel were heavily involved in their creation as well, which helps from the independence perspective.
That whole engine, in creating all those principles, creating the funding, creating the process to build, to make cases, allow cases to flow, took a considerable amount of time and everything has to be agreed not only through Post Office – appropriate Post Office governance, but also Government governance all the way thorough to Treasury because, at the end of the day, every process costs money.
Mr Blake: Thank you. So moving on to the various stages, we’ll start with the shortfall analysis stage. That process includes assessing or analysing whether a shortfall occurred, and how much it’s valued at. Who carries that out?
Simon Recaldin: So my operational team carry that out, and how the process works is that a postmaster in their application form will identify a time period when they thought they had a shortfall. The operational team – my understanding, I’m not an operator myself – my understanding is that individual will go into the system, into the Horizon system, and they are aware, they have experienced of the Horizon system and therefore know what they’re looking for. Some of these members of staff have been counter clerks previously at Post Office. So they have sophisticated knowledge of the Horizon system and how to look for the shortfalls.
So they go into the date where the postmaster has identified, and they look six months before and six months after that particular date, to look for that shortfall, and identify the shortfall. And they have the skill sets to be able to identify that, but also to be able to identify whether or not that was a Horizon shortfall or another type of shortfall. If there’s any doubt, the default is that it is a Horizon shortfall.
Mr Blake: We’ve heard throughout this Inquiry about different types of data being available to the Post Office, we’ve heard about ARQ data, for example. What kind of data is it that they are accessing?
Simon Recaldin: So they are accessing Horizon data and accessing a number of other – other data sources, and if they want even further to go and get a branch file, they can go and get the branch file, as well, to create – to be assured of a shortfall.
Mr Blake: But when you refer to Horizon data, do you know what that means? Do you know what kind of –
Simon Recaldin: Entries. So they can look at the physical entries.
Mr Blake: From where?
Simon Recaldin: From at the time, so when the postmaster said it was 24 July, in whichever year, they can go in and look at the entries on that day but they recognise that the postmaster that may be a guess at the date and, therefore, they go in six months after. They look at the whole year, six months after – to look for those entries.
Mr Blake: Is that data provided by Fujitsu; is that data from the Post Office’s own archives or records?
Simon Recaldin: So that will be Post Office and some of that will be supported by Fujitsu.
Mr Blake: You’ve said in your statement there’s a low evidential bar; what do you mean by that?
Simon Recaldin: In a language that maybe I understand better than most, is that, if the postmaster says it happened, it happened.
Mr Blake: That seems like no evidential bar?
Simon Recaldin: No, it is, because – and this is a panel thing, this is an independent panel thing – cases go to the panel where we cannot find a shortfall. So it goes to the FSA process and the postmaster said, “Look, there were five occasions and here are the dates”, and we’ve looked six months after and six months before but we’ve looked at it all but we’d always go to panel and say we can’t find it we can’t find anything. The panel then will go to the statements and all evidence that there has been coordinated by the Case Assessor, and then they will look at it in the round and said, “Okay, we can’t find any actual SFA technical evidence but, in the round, do we believe, given all that evidence in the file, do we believe a shortfall may have happened?”
Mr Blake: Thank you, and we’re used to legal terms: balance of probabilities, reasonable doubt, prima facie case, credible evidence; are any of those kind of legal terms used in the shortfall analysis stage?
Simon Recaldin: In the shortfall analysis, those – yes, in terms of the mindset of the individuals, and they’re looking to be positive about it. Is it formally in their terms of reference for operating and what they’re doing? No, it’s not. But they are, a bit like as I said, the default is a Horizon shortfall, if they can’t find another reason. So it’s an empathetic/sympathetic approach, they are looking for the shortfall. They are not looking not to find the shortfall.
Mr Blake: Looking forwards to the ultimate offer, is it the case that the actual offers are, in any way, reduced because of the uncertainty at that particular shortfall analysis stage?
Simon Recaldin: I believe not, no. The shortfall is just the trigger. It’s just the trigger for the consequences of that shortfall.
Mr Blake: So it won’t be that, because of the form of words that’s used at that shortfall analysis stage, about the certain or uncertainty of the shortfall, that is then used at the offer stage to reduce or not –
Simon Recaldin: That’s not my understanding, no.
Mr Blake: Can we please turn to page 58 of your sixth witness statement, so the same witness statement, please, page 58.
This is the average number of days it takes for that shortfall analysis to take place. We see there on the barcharts the average number of calendar days was significantly higher in 2021 and 2022; is that correct?
Simon Recaldin: Yes.
Mr Blake: But we do also see, from the volume, that that reflects, albeit with a time lag, the volume of applications?
Simon Recaldin: Yeah.
Mr Blake: Now, what we saw in the chart earlier is that after the Bates drama, there was, again, a second spike in those applications. We saw it earlier and then again in 2024. Does that not mean – and we see perhaps some affected there on the far right-hand side – that there is going to be another spike in volume because they have to go through the eligibility stage first, so there will be an inevitable time lag. Will we not see a repeat of what we saw in 2021/2022, later this year, or early next year?
Simon Recaldin: And later this year because of the mailing.
Mr Blake: Because of the January 2024 and onwards spike in the volume of applications?
Simon Recaldin: You will see that spike, yes.
Mr Blake: We’ll see that in the number of calendar days it takes to – for the shortfall analysis to take place?
Simon Recaldin: So I hope not. I hope – I think there will be a spike. But we are busy, as we speak, making sure appropriate resourcing is in place to avoid peaks in terms of longevity of time and eligibility. In addition, as the Interim Chair said in his statement, we are looking at some automisation and efficiencies in this space as well, in order to speed that process up significantly.
Mr Blake: Can you assist us with quite what did he say meant by that in terms of automation?
Simon Recaldin: I can. Well, firstly there’s the automation of actual payments that we have already improved on and we will continue to do that. Secondly, and it is related, forgive me for jumping your agenda, it is related to the £75,000 process, where we have talked about the SFA process. With the £75,000, we are not intending to do an SFA. We are effectively doing a shorter version of it – and we’re calling it an SFI for future reference – and that is – and that’s all been approved through governance, et cetera, for the £75,000 cohort, which we believe will be the vast majority of cases.
And the big difference between the SFA and the SFI, in terms of efficiency, is that you’re only looking for one shortfall. Under the SFA, if the postmaster is saying “I had six”, you look at all six. You look at six months before, you look at six months after, you draw up your report, et cetera, et cetera. On the SFI is when you find a shortfall and, at that point, for all cases under 75,000, we will not be doing a review with HSF. So Post Office are going to be entirely doing that process.
Mr Blake: So to clarify, and we will get to the 75,000, but you’re not granted 75,000 just on fulfilling the eligibility criteria; you have to have the eligibility criteria plus a shortfall; is that right?
Simon Recaldin: Correct, correct.
Mr Blake: Thank you. And you’ve spoken about increased resourcing. Can you assist us briefly with how you are preparing for a spike later this year, early next year and into next year?
Simon Recaldin: Hiring people.
Mr Blake: Can you give us an indication of numbers before/after?
Simon Recaldin: So I know we’re currently in the process of hiring a further 20 individuals.
Mr Blake: Okay, and when do you anticipate that will be completed?
Simon Recaldin: My understanding is that will complete the hiring.
Mr Blake: When, sorry?
Simon Recaldin: Oh, apologies: when? They’re being hired now. So within the next few weeks they should be in place.
Mr Blake: Thank you. The next stage is the legal case assessment.
Simon Recaldin: Yes.
Mr Blake: Am I right to understand that Case Assessor from Herbert Smith Freehills will compile a pack which includes their own assessment and analysis of the claim which is then passed to the independent panel to consider?
Simon Recaldin: I’m not quite sure whether it’s an assessment. They coordinate the information they have. They get the SFA analysis and then they do a legal review of the case, building the case on – per heads of loss for consequential loss. The shortfall is the trigger, and they look at the claim, and they assess, right, that claim means it’s that consequential loss and therefore I’ll build the case around that, and what under each heads of loss the assessor then outlines what the options to the panel could be for consideration under each heads of loss.
So there might be three options understand each heads of loss that the panel might want to consider. They’re not guided to take those options but it’s things for their consideration.
Once that pack is completed that goes off into the independent panel.
Mr Blake: Can you assist us with who at Herbert Smith is carrying that out: is it junior solicitors, paralegals partners?
Simon Recaldin: A range – not partners but a range of Herbert Smith appointees.
Mr Blake: Do you have a view as to whether it’s appropriate for Herbert Smith to be involved in this process given their involvement in the Group Litigation, as we discussed earlier?
Simon Recaldin: I think the two are completely separate.
Mr Blake: Do you know of any overlap of individuals involved, for example, in that process?
Simon Recaldin: No.
Mr Blake: Can we please turn over the page to page 59. We see there the average days from starting legal case analysis to the issuance of an offer. Again, we see perhaps an increase in time, increase in number of calendar days it takes, as a result of higher case volumes that have reached that stage from late 2021 into 2022. So, again, are we likely to be seeing a spike late 2024 into 2025 because of higher volumes and, if so, at the legal case assessment stage, how are you going to avoid that?
Simon Recaldin: I hope not because, as previously described, the anticipation is on the existing cohort that are going through the process and, indeed, future cohorts, the vast majority will be under 75,000 and there will not be subject to a legal case analysis.
Mr Blake: Thank you. Moving on to the request for further information. During this process, Herbert Smith Freehills, the Case Assessor, might issue a request for further information or they might request multiple requests for further information; is that correct?
Simon Recaldin: Correct.
Mr Blake: Can you briefly describe what that involves?
Simon Recaldin: That is designed to help the postmaster’s application, it’s not designed to hold it up, please, it’s not designed to hold anything up. It’s to seek further information to support their case when it’s being put forward to panel. They are very empathetic approaches in terms of, if we – if we can get more information in this particular area, we might be able to assist you further, and that’s what those requests for information are.
And there have been occasions and, unfortunately, it does mean the case takes longer, where there maybe have been two or three requests for further information, but they are well meaning and well intended to ensure that those cases have the best information possible for a positive outcome.
Mr Blake: If we could turn the page, please, to page 60, we again have a chart of the average days from starting a legal case assessment to the RFI request. Again, very much the same trend that we see a peak towards the end of 2022, and possibly a peak again starting in 2024. Once again, I think your answer will be that those will be cut down because of the £75,000 offer; is that correct?
Simon Recaldin: It would be. If I may add something, if it’s helpful to the Inquiry?
Mr Blake: Yes.
Simon Recaldin: In terms of the full colour of the picture – and, again, please, this is not being viewed as defensive, please don’t take this as defensive, it’s just the process that happens – with an RFI, you’re going to out to postmaster and you’re going – or indeed their legal representatives – to request further information. The whole process at that point is sort of out of your hands because you need that information to come back to help that case. So we are relying on that turnaround and, for good reasons, really good reasons, sometimes that’s not instantaneous. And therefore, you have to build that lag in to.
And sometimes we do have a process of chasing down, and it’s wrong to call it chasing – following up is a better term – following up those requests for more information, and that’s all part of the process but what it does is, in the words that you use – and I’m happy to use those words – it creates a delay.
Mr Blake: Thank you. If we go over the page, please, we can see analysis of an average number of RFIs per case and also average number of days from starting an RFI to the final RFI response. We see at the top there, if we scroll up, a gradual increase in the number of RFIs that are requested; is that correct?
Simon Recaldin: Yes.
Mr Blake: Can you assist us with why that is?
Simon Recaldin: I think that will be down to complexity, in that, as the easier cases go through quicker, if there is an easy case – I don’t think there is – the less complex cases go through quicker, and therefore the more complex cases, because their very nature and therefore the likelihood of more RFIs, is more prevalent.
Mr Blake: If we look at the bottom table, please, we can see a growing number of days spent on the RFI process and, as recently as the second quarter of 2024 the average time is nearly 120 calendar days. That’s problem, isn’t it?
Simon Recaldin: Yes, any delay is a problem. I think these figures will also include the cases that are in dispute and they naturally do take longer, and many of those, as I’ve said in the dispute resolution process, are actually in the hands of legal advisers as well, and that adds a dynamic, in terms of their caseload as well. I’m conscious that they have many clients as well.
Mr Blake: But what we have there is, of all the years that this scheme has been operating, the current year actually has the highest number of days that are being spent on that RFI process.
Simon Recaldin: I think that may be down to that factor because a number of cases are in the dispute resolution process and, therefore, the time it takes for – the engagement on RFI and the return of RFI is more.
Mr Blake: Can you assist us with what you mean by that, in a little more detail?
Simon Recaldin: So there are circa, I think, 300/350 odd cases in that dispute resolution process. They are more intense because the offer has been rejected and, therefore, they are – those postmasters and their legal advisers are suggesting that a more significant redress needs to be paid. In order to justify that, in order to understand that better, Post Office will be asking for further information.
Mr Blake: Why is it particularly in this year? Why is the average time particularly higher this year?
Simon Recaldin: Because the other normal cases, the non-disputed cases, are less, and we’ve got a more efficient process around those and, again, the RFI process, it will be in HSF, or not at all, if it’s under 75,000, whereas in the dispute process, it’s still under that process and therefore requests for information are required.
Mr Blake: In your view, looking forward, how can you avoid that increasing yet further?
Simon Recaldin: The 75,000, again, I know we’re going to get on to it, will help massively in that space because we know number of dispute cases will be able to be resolved with the £75,000 offer, so that will help enormously, but we absolutely need to get better and more efficient than we are doing in that space.
Mr Blake: So in that dispute resolution stage, can you assist us with what kind of proportion are actually claiming for less than 75,000?
Simon Recaldin: I – I think the numbers might be in my statement but the – I think there are initially, we know – the number that I’ve got in my head is 25 per cent of cases could well be impacted positively by the 75,000 but that is a determination to be had by the postmaster and indeed their legal representative.
Mr Blake: Thank you. If we could turn back to our survey at EXPG0000007. Page 60, please. Thank you. Figure 45. We have there the third bar is “The time it took for the Case Assessor to assess your claim”: net dissatisfaction, 57 per cent; 40 per cent are very dissatisfied with the time it took for the Case Assessor to assess the claim. Does that surprise you?
Simon Recaldin: No.
Mr Blake: Why do you think that is?
Simon Recaldin: Because it’s not good enough.
Mr Blake: Moving, then, to the independent panel assessment stage could we please bring up onto screen POL00448026. These are the terms of reference for the shortfall scheme Independent Advisory Panel. I’ll just take you through briefly, just to explain the background to this. We have at A1:
“The task of the panel is to assess and recommend to Post Office a fair outcome for Eligible Claims made to the Scheme for Shortfall Losses and Consequential Losses.”
If we scroll down, it has there the panel’s membership, and that comprises of legal specialists, forensic accounting specialists and retail specialists, and it sets out below those who are involved.
If we scroll down further to page 3, please, there’s a section on general principles. At 31, it says:
“In formulating its recommended offer, the panel may recommend the making of an offer to the postmaster if, guided by broad considerations of fairness, the panel considers that doing so would produce a fair result in all the circumstances of the particular case. For the avoidance of doubt, in doing so, the panel’s discretion will not be confined solely to the specific heads of consequential loss claimed by the postmaster but will take into account any facts and matters which the panel considers will produce a fair result on the facts of a particular case.”
Have you known the panel to make a recommendation that includes heads of loss that haven’t been claimed by subpostmasters?
Simon Recaldin: I have known many cases where that clause 31 has been proactively used. I can’t say with certainty whether that means a new heads of loss but I have known that they – part of the process is, once they’ve opined, made their recommendation, they step back and they look at two things: consistency with other outcomes and fairness. And they – and I have seen them use that licence to say, “Right, to be fair, we believe we need to adjust here, here and here”.
I also know that, once Post Office have signed those recommendations off and the offer letter is produced, the offer letter goes back to the panel for sanction, and they take another moment then to assess the fairness of that offer.
Mr Blake: Thank you. If we scroll down, there’s a section on “Horizon Shortfalls”, and it says:
“Where:
“there is evidence that the shortfall in question existed and was paid; and
“there is no evidence that the shortfall was caused by something other than a potential issue with Horizon, for the purpose of the Scheme the presumption is the shortfall is a Horizon shortfall.”
I think that’s what you’ve already addressed.
Simon Recaldin: Thank you.
Mr Blake: “Consequential Loss claims
“The Panel should apply the Scheme Consequential Loss Principles and Guidance which are included at Appendix 1.
“In relation to personal injury claims where insufficient evidence has been provided for a claim to succeed without further medical and/or expert evidence, the panel may recommend the making of an offer to the postmaster which the panel considers fair. The postmaster will then have the option of either accepting that offer or obtaining such further evidence and pursuing a personal injury claim in accordance with the ordinary legal standards relevant to such claims, including as to proof of causation and assessment of damages.”
So it may be that the panel itself makes a recommendation in respect of –
Simon Recaldin: Might do.
Mr Blake: – the personal injury aspect of an application.
To understand your statement correctly, am I right to say that the recommendation that’s made by the panel doesn’t need to be accepted by the Post Office?
Simon Recaldin: I have not known a case where it has not been accepted.
Mr Blake: But am I right to say that, technically, it’s only a recommendation, it doesn’t have to be accepted?
Simon Recaldin: Correct, correct.
Mr Blake: Yes. As you say, you’ve never made –
Simon Recaldin: I think we’ve increased a couple.
Mr Blake: You’ve never made an offer, so far as you’re aware, that is less than the offer that is –
Simon Recaldin: Never.
Mr Blake: On how many occasions, as far as you’re aware, has the panel revised their recommendation on that second look that you’ve already explained?
Simon Recaldin: I don’t know. But I know the process does take place but I don’t know how many times they’ve taken the opportunity to revise it.
Mr Blake: Thank you. What is your role in respect of the panel: do you attend their meetings, are you able to contribute/observe?
Simon Recaldin: Absolutely not. They are completely independent. I have no right of attendance to any of their meetings. They are independent. If I had any engagement with them, I could understand the optics of that, so absolutely not. The only time I have met the panel was when they presented to the Advisory Board.
Mr Blake: Thank you. How about in respect of the Department for Business and Trade? Do you know what interaction they have with the panel?
Simon Recaldin: They have no interaction at all.
Mr Blake: Thank you. Could we go back to your sixth witness statement, WITN09890600, it’s page 62. We’re now looking at the situation at the independent panel assessment stage. You set out the average number of days from the last RFI applicant response to it being sent to the panel. Thank you, it’s page 62.
If we scroll down slightly we can see that chart averaging, I think, 150 days from the last RFI response to be sent to the panel in the last section before we get to the right-hand side. Can you assist us with what the shading means on the right-hand side at all?
Simon Recaldin: I’m afraid I can’t.
Mr Blake: No.
Simon Recaldin: I don’t know why it’s shaded.
Mr Blake: So it may be those are accurate figures –
Simon Recaldin: I think they are.
Mr Blake: – for the fourth quarter and, in that case, we are now averaging almost – is it 700 calendar days between RFI application response and it being sent to the panel? Are those three bars on the right-hand side showing quite a problematic picture, as far as the current situation is concerned?
Simon Recaldin: Correct, and that’s why we are redressing that.
Mr Blake: Is that again the £75,000 offer or something else?
Simon Recaldin: It is the £75,000 offer and so some cases have been waiting for that to be activated and, therefore, they will flow through accordingly, and I think the other one is that – let’s take a step back and see where we were with HSF. We moved into 2023. We were – across 20 – we were effectively winding down the scheme because what we were doing was the later applications. So until the Bates drama came out there was no peak, so we were downsize – and, indeed, HSF were downsizing as well.
Then the drama happen and then the volumes started coming in again, so we have effectively had to recreate the business once again in order to deal with the volumes. Now, it will be – the 75,000 will help enormously in terms of that, but that has meant a knock-on effect and one of the things that we have done is we have, in the month of September, we made sure that the panel now sits twice a week, rather than once a week, and that will be moving into three times a week shortly.
Mr Blake: Yes. I was going to address that. So there are about 1,500 applicants yet to receive an offer; is that correct?
Simon Recaldin: Yes. That’s right, yeah.
Mr Blake: I’ll be taking you to some correspondence with Hudgells Solicitors shortly.
Simon Recaldin: Yes.
Mr Blake: But in that letter you say that panel sessions recently increased from one per week to two per week, and that’s five to ten cases per session. Doing the maths, to get through those 1,500 applications, it’s going to take more than a year, considerably more than a year, just to get through the panel stage for those applications; is that right?
Simon Recaldin: No, it’s wrong because – and, again, it’s the overall picture that now we need to look at. There are 1,500 cases but the vast majority of those are going to be impacted by the 75,000. So the number is actually going to be a lot less, so that will bring – that ten per week will be bringing that in significantly, correct.
Mr Blake: As I say, we’ll get to the 75,000 but do you think you’re putting a few too many eggs in one basket in terms of that 75,000 offer?
Simon Recaldin: The postmaster will have the choice about whether they are prepared to accept the 75,000 or they go for full assessment. My statement makes it clear on several occasions that the average payout redress for the HSS is £53,000. I sit here as a layman and I look at the average of £53,000 redress versus an increase in that, an offer of 75,000, and a slick, efficient, automated process. I sit here as a layman and look at that logically, and we have looked at our data in terms of the numbers of claims that, actually, are under 75,000, and they are the vast majority.
Now, there is some mathematics and there is some logic in coming to the conclusion, therefore, that we believe the £75,000 offer will make a significant impact in terms of the operationalisation and the time of this process.
Mr Blake: We’ll get in due course to –
Simon Recaldin: Sorry.
Mr Blake: – to a number of issues, one of them being that there is potential for an appeals mechanism, so it’s not entirely clear that those figures that settled for lower than that sum actually might not, in due course, seek to appeal the figures that they accepted. We’ll also, in due course, see issues with legal representation –
Simon Recaldin: Good.
Mr Blake: – and a high number of those that are accepted at that early stage not having legal representation?
Simon Recaldin: Understood.
Mr Blake: In light of those problems, those potential issues, might it not be that, actually, that 50,000 or so figure is wrong and that, actually, ultimately, people seek more than 75,000?
Simon Recaldin: I think that’s a potential, yes.
Mr Blake: Won’t that throw a slight spanner in the works when it comes to the predictions that you have for alleviating those problems that are imminent?
Simon Recaldin: I think you can separate the two between appeals process and between the applications that you’re going to get in under £75,000.
Mr Blake: What do you mean by that?
Simon Recaldin: I think the appeals – the potential appeals process, it’s been announced but there’s no process behind it yet, that will deal with any case independently in Government with anybody who wants to appeal and they’re not prepared to take the 75,000. That’s absolutely fine. And if they’re not prepared to take 75 in an offer, then that will go through the full process, and I think the numbers we anticipate in that we can cope that.
Still – separately, I still believe that our anticipation is that a significant number of claims will come in for under 75,000, which we’ll be able to be process quickly without a legal review. I hope that answers your question.
Mr Blake: That anticipation is based on previous figures –
Simon Recaldin: Yes.
Mr Blake: – previous figures which themselves may no longer be accurate because people are going to seek to challenge those figures?
Simon Recaldin: They may do that. I repeat my statement, and I recognise that only 10 to 12 per cent are legally represented, I really do, and, please, this not defensive at all, but 83 per cent accept their offer.
Mr Blake: Do you read into that that 83 per cent are content with their offer?
Simon Recaldin: I have to draw some conclusion to that, that they – but I – I know what the legal advisers will say. You know, that they’re not well informed enough, and I absolutely get that as well but they have made a conscious decision to accept that. So I have to read something into that. And the appeals process, when it comes, will give them the opportunity to say, “Well, actually, I wasn’t sure what I was signing at the time, and therefore I do feel this is unfair, and therefore I want to launch” – and great, that is fantastic. But they also might say, actually, I don’t believe that was fair but the 75,000 is now fair.
Mr Blake: Have you planned for a scenario where, in fact, not as many people take up that £75,000 offer as you currently expect?
Simon Recaldin: I have to, yes.
Mr Blake: How are you going to deal with that when we see figures like this, the process, the RFI process, the case assessment process, taking a considerable number of days?
Simon Recaldin: We have to be more efficient and, as the Interim Chair actually made very, very clear, we will have to automate more and be more efficient and, indeed, for example, introduce the SFI process more aggressively into that population.
Mr Blake: Thank you. You’ve said at paragraph 88 of your statement – we don’t need to get it up – on average it takes 37 days from the panel assessment, panel recommendation, to the offer being sent. Can we please turn back to our expert report from YouGov, EXPG0000007, page 62, if we scroll down we can see there satisfaction figures, in respect of the information provided by the Independent Appeals Panel and the length of time to consider the claim. Again, a lot more red than there is purple. Net dissatisfaction with how long it took for the IAP to consider the claim, 46 per cent; amount of information provided about the IAP process, 52 per cent net dissatisfied?
Do you have any views on those figures and why that might be?
Simon Recaldin: I’ll repeat myself, it’s just not good enough, and I apologise on behalf of Post Office and, in terms of the process, that it takes so long. I do believe we get full and fair outcomes out of it and, as Sir Wyn has mentioned more than once on the previous witness statements, it’s the timeliness which is the issue and Post Office apologise for the time it has taken, and it has taken too long. Am I surprised by these? Absolutely not. Am I doing something about it? Yes.
Mr Blake: Thank you. The next stage is the Post Office review – that can come down off the screen, please – and that is when the Post Office reviews the recommendations of the IAP. Can you assist us with who at the Post Office reviews those recommendations?
Simon Recaldin: Of the Independent Panel?
Mr Blake: Yes.
Simon Recaldin: We are told who it’s going to be.
Mr Blake: You receive them, though, there must be some internal discussion?
Simon Recaldin: The names are put forward by HSF and the names are circulated for interest. But we don’t have a – we don’t opine about whether we’re supportive of that appointment or not.
Mr Blake: Sorry, I mean, in terms of the actual recommendation in individual cases?
Simon Recaldin: Oh, sorry. Apologies. Who sees those recommendations?
Mr Blake: Yes, and who is involved in any kind of internal analysis or assessment of those recommendations?
Simon Recaldin: There’s no assessment of the recommendations. They are what they are. There is no challenge to those recommendations, it’s me. I chair a committee, they look at all recommendations that come out of the independent panel and we understand how the panel have come to those recommendations, and sanction them.
Mr Blake: Once the recommendation is made and accepted, does the Post Office ever revisit those figures, even to increase them once the offer has been accepted?
Simon Recaldin: Where there may be – the answer is yes. Where – for example, where we may have introduced a new heads of loss, we may have adjusted a principle or adjusted the heads of loss because of a new case that has got a nuance in it that hasn’t been considered before, then, actually, we don’t put anything on hold but we realise that, actually, that might impact previous cases, so we do – we do a backward review, with the Panel’s assistance. We do a backward review on all cases that might now have this additional nuance in it and we adjust.
Mr Blake: Approximately how many times have you had that backward review process?
Simon Recaldin: I don’t know but we’ve definitely had one, but there is the opportunity there for – I’m sure it was more than one but I can only recall one.
Mr Blake: In that one, was there a revisiting of earlier acceptances –
Simon Recaldin: Yeah.
Mr Blake: – and communication made with those subpostmasters?
Simon Recaldin: Correct, correct.
Mr Blake: If we go back again to the expert report, the EXPG0000007, I think this is the final time I’ll take you to that report, page 63. Thank you. Page 63 has the “Satisfaction with the amount of information provided about how the application outcome was determined”. If we scroll down, we can see, in terms of the time it took, 52 per cent net dissatisfied; the offer amount, 59 per cent dissatisfied; the amount of information provided to you about how the outcome was determined, 49 per cent net dissatisfied.
If we go over the page on to page 65, please. There’s figure 49, “Reasons why applicants accepted the offer in part/full”, and we only have a figure of 15 per cent who say that they accepted because they were satisfied with the offer.
What’s your view of those figures?
Simon Recaldin: Obviously extremely disappointed. I think where I struggle – and I know it’s simply an optic and it’s simply numbers on a piece of paper, I need to talk about numbers on a piece of paper, please, if it helps the Inquiry – is that the 15 per cent satisfied, it doesn’t tally in my mind with the 83 per cent acceptance rate. That’s where I struggle. But what concerns me more around these numbers – and I looked at these numbers in particular – what concerns me more about this page is that wanted the process just to finish is 51 – that really concerns me and that goes to what some legal advisers have been saying to me as well: that people just want this done and, therefore, whatever you put in front of them they’re going to sign because they just want to talk away from it now, it’s taken too long, it’s two legalistic, et cetera, you’re putting too many barriers. So that does concern me.
On the more optimistic side, what I’m hoping is that the appeals process, when it’s ready, hopefully in the New Year, will be able to accommodate those people to say, “Right, I wanted it to finish but now I’ve got the appeals process, I wasn’t satisfied with that, I wanted it finished but I can now apply to that”.
Mr Blake: Thank you that can come now come down. I’m now going to move on to the dispute resolution process. I’ll introduce that briefly before lunch but we’ll have to return to it after lunch, the Dispute Resolution Procedure applies if the offer is not accepted by the postmaster; is that correct?
Simon Recaldin: Correct.
Mr Blake: It’s assigned to a case manager. Can you help us with who a case manager is?
Simon Recaldin: It will be a member of my team who has a broad knowledge of Post Office and how it operates but, specifically, around how to deal with disputes, and team – the team is currently 23 people, and they all have their own portfolio of cases.
Mr Blake: There is then a good faith meeting and the next level is what’s known as an escalation meeting; is that correct?
Simon Recaldin: So there are four layers of dispute resolution process. All determined, actually, by the GLO settlement, in terms of when it was all – when the HSS was established it was agreed that a dispute resolution process would be established and, therefore, it’s pretty within, you know, given terms that we had to create a four-layered dispute process: so good faith, escalation, mediation, arbitration.
Mr Blake: Thank you. In terms of a good faith meeting, can that result in an increased offer from the performance?
Simon Recaldin: Sometimes, yes.
Mr Blake: Has it resulted –
Simon Recaldin: Yes.
Mr Blake: After the good faith meeting or the escalation meeting, it can then go back to the panel, can it; is that correct?
Simon Recaldin: It can, yes.
Mr Blake: Is there a maximum number of times it can go back to the panel?
Simon Recaldin: No.
Mr Blake: Is that set out anywhere in any of the terms of reference or guidance in respect of the process of it going back to the panel and how often that can happen?
Simon Recaldin: Only the – going back to panel, only internally, into say the process is, once we think we’ve gathered enough information, that may change the view, then it goes back to a panel. But, as no doubt you’ve picked up from recent correspondence with Dr Hudgell, is we are now adjusting that to say if the legal representative or the postmaster actually don’t want it to go back to panel and would prefer Post Office to take a commercial view on that, then that’s fine as well. We’re beholden to what the postmaster and what their legal representatives’ preferred – preferred option. There’s no set – it has to go back to panel, if that’s the question you’re asking.
Mr Blake: Then, finally, you have the formal mediation with Wandsworth Mediation Service?
Simon Recaldin: Yes.
Mr Blake: Does that takes place; has that taken place?
Simon Recaldin: Yes, it has taken place quite a few times and, so far, successful in every occasion it’s been used, and some positive feedback on it as well.
Mr Blake: I’m going to return to this topic after lunch but that’s an appropriate moment to take our lunch.
Sir Wyn Williams: Yes.
Mr Blake: Thank you, sir. 2.00, please.
Sir Wyn Williams: Yes, sure.
(1.01 pm)
(The Short Adjournment)
(2.00 pm)
Mr Blake: Good afternoon, sir.
Sir Wyn Williams: Good afternoon.
Mr Blake: Mr Recaldin, we were on the topic of dispute resolution. I’d like to bring up on screen your sixth witness statement at page 67, please, paragraph 185. You address there some figures in relation to dispute resolution. It may be that they’re slightly out of date now because they were based on the position as at the time you wrote the statement. Actually, sorry before I get to that, just to say in your evidence earlier, I asked you about calendar days and working days, and it’s been brought to my attention that, where you use the term “days” in your witness statement it’s calendar days rather than working days.
Simon Recaldin: Okay, thank you.
Mr Blake: If we have look at that Dispute Resolution Procedure section, it says:
“Of the 2,720 offers made, 532 have been disputed …”
It says:
“86% of legally represented applicants dispute their offer compared to only 11% of non-represented applicants.”
So it’s much more likely that there will be a dispute where somebody is legally represented; is that correct?
Simon Recaldin: Yes.
Mr Blake: If we go over the page, please, to 185(d), you say there:
“There remain 383 unresolved disputes with an average time in dispute of 14 months, of which 261 have not yet gone through a Good Faith Meeting. Some feedback from legal representatives is to bypass Good Faith Meetings and go straight to next escalation stage to speed up resolution, which is why the process is approached with a degree of flexibility.”
Average time in dispute of 14 months: I mean, that’s a very significant time period, isn’t it?
Simon Recaldin: Yes.
Mr Blake: What do you say is the principal cause of that delay?
Simon Recaldin: I think – well, there are a number of things, ie could it be done quicker? Yes. I think in this part of the process, however, it’s really important that we have continuous engagement with the legal representation, and also with the postmasters, and that inevitably causes delay – your term. I call it a process but I understand why it can be viewed as a delay.
That is deliberately put in there, the 261 that hadn’t yet gone to a good faith meeting because there are legal advisers who say “We actually – we were not in dispute, we just want to understand more. So we want to understand the offer better and we are waiting for advice from our clients about whether or not it needs to enter into the dispute process”. So it’s almost like a waiting room until the legal adviser gets clarity from their clients around whether or not it is a dispute or not, and that’s why they’ve yet to get to a good faith meeting.
However, there are cases, quite rightly, where the good faith meeting is bypassed and that’s why the process is flexible and the opportunity is there to go straight to a face-to-face escalation meeting.
Mr Blake: Can you assist us, you have there the average time. Do you know how long the longest time period for a particular case has taken?
Simon Recaldin: No, I don’t. But I know I would be very embarrassed to know what it is.
Mr Blake: Because it may be –
Sir Wyn Williams: I take it that there are cases still unresolved which were part of the cohort of cases which began within the original time frame, which would mean that we’re four years down the line, wouldn’t it?
Simon Recaldin: From May 2020 when they may have been submitted, yes, Sir Wyn.
Sir Wyn Williams: Yes, yes.
Mr Blake: Do you think that’s a handful, tens, hundreds?
Simon Recaldin: Not hundreds but certainly tens, yes.
Mr Blake: Thank you. If we could please go over the page to page 69. We have there the proportion of offers disputed by date of first offer. It looks as though, in parts of 2023 into the beginning of 2024, you have somewhere approaching half of the offers being disputed; is that right?
Simon Recaldin: Yes.
Mr Blake: We see there towards 45 per cent, for example?
Simon Recaldin: Yes.
Mr Blake: We’ll get to the letter from Dr Hudgell shortly, but one of the complaints that was made in that letter is that the escalation meetings are difficult to secure and don’t lead to tangible follow-up. I think you’ve reflected on the number of meetings of those escalation meetings, and you’ve said that there will be a further increase in their frequency; is that correct?
Simon Recaldin: Correct.
Mr Blake: Do you recognise that those meetings have been difficult to secure?
Simon Recaldin: I’d say Hudgells and Post Office have worked what I think collaborative together consistently and I don’t believe getting dates into diary, if that’s what this means, has been a struggle. I don’t believe think that is the case. I’d like to think we’re very collaborative in terms of getting those dates in diaries.
Mr Blake: One of the cases that they highlighted was a case where a figure was agreed but there had been months of argument as to which head of claim that amount fell under. Is that something that you’re aware of?
Simon Recaldin: I am aware of that case, yes.
Mr Blake: What are your views as to what I would call delays in that particular case?
Simon Recaldin: I’m disappointed, and we need to be better at it.
Mr Blake: Are there plans to resolve that –
Simon Recaldin: Yes.
Mr Blake: – imminently?
Simon Recaldin: Yes.
Mr Blake: What about the resubmission to the panel? Does that build in further time?
Simon Recaldin: Yes, it does. The resubmission to panel is a bit of a consistency because the panel provide that consistency and that optic of fair – that fairness of the outcome. And, you know, we believe it’s an important part of the process for that consistency and for absolutely that independence but we also recognise that could lead to delay, there’s another legal review requested in terms of a resubmission into panel. It then has to wait for their next panel meeting, then they opine, and then they’re recommended, and that’s a process that does take time. And we recognise that, to avoid that, we are now offering an opportunity that, instead of going back to panel, we can have a face-to-face negotiation with the – directly with the legal advisers and the postmasters.
Mr Blake: Since when has that been in place or communicated?
Simon Recaldin: So that’s been in place consistently or has always been there, by – we’ve always followed the process of going back to panel. Not every time but we have a commercial flexibility in order to settle. But most of the time we do go back to panel for that consistency perspective. So the – in terms of additional flexibility and allowing the legal advisers to make the call, and obviously their clients, that is something which you will have noticed was in my correspondence to Dr Hudgell last week.
Mr Blake: So that’s a relatively new process?
Simon Recaldin: Yes, yes.
Mr Blake: I won’t bring back the survey onto screen but, in the results, more were dissatisfied with the dispute resolution process than satisfied. I think that it’s small in numbers but 16 against 4 who were satisfied. Again, do you have any views on that?
Simon Recaldin: I’m disappointed but not surprised.
Mr Blake: We then have the arbitration level, that’s for claims over £10,000; is that correct?
Simon Recaldin: So we’ve never been to – we’ve never experienced an arbitration, and the £10,000 is now – effectively is ineffective now because of the 75,000 scheme, the offer and, again, we have never actually been to an arbitration, we’ve never formalised that process at all.
Mr Blake: Thank you. In terms of an appeal mechanism, there has been discussion about an appeals mechanism.
Simon Recaldin: Yes.
Mr Blake: Can you assist us with what the current plan is for that?
Simon Recaldin: The appeals mechanism was – actually came out of this Inquiry, and Sir Wyn and the Inquiry very helpfully suggested some areas that might bring – he might bring forward – the Inquiry might bring forward for attention, such as the fact that consequential loss principles were issued after the scheme was launched, the fact that legal representation was not supported at the point of submission of claims, and Sir Wyn very helpfully listed a number of questions and challenges around what could be the implications of these.
So Post Office, doing their best to listen, if I may say that to the inquiry, went away to consider those challenges and those issues, and said how could we address those? And at the same time, actually, the Advisory Board also came forward to advise the Department of Business that, in their view, an appeals process, an independent appeals process for HSS cases would be appropriate because of the inherent mistrust – I use the word – the inherent mistrust of anything coming out of the Post Office.
That might be slightly unfair on the Advisory Board, in terms of their advice.
The – and at the same time, because of the challenges that Sir Wyn and this Inquiry gave us around these issues, we thought, well, actually, a resolution to all these issues could well be an independent appeals process, so even if cases have settled with us, then, actually, if the recipient, the victim, feels they’ve had an unfair outcome, despite the fact it’s from an independent panel, et cetera, et cetera, then they – that they have a right to an independent appeals process.
Mr Blake: Has that been implemented?
Simon Recaldin: So the Government actually announced its intention to bring that forward, I think under Minister Hollinrake at the time, I think in March of this year, it was announced in the House of Commons. We then had purdah and we had an election and, therefore, new ministers had to be appointed and new ministers had to be brought up to speed, and they understand, and there has been an announcement in the house, that the new Minister is also supportive of such an appeal scheme, so that has formally been announced. The actual process behind that has – is being built, I understand, but, again, Post Office is willing to help, are helping, to build that, but that has to be independent. It cannot be tainted with Post Office, I completely understand that, and that will be run by the Government.
Mr Blake: It will be run by the Government: who is building it at the moment?
Simon Recaldin: The Department of Business and Trade are building it as – I understand as we speak.
Mr Blake: Have you made any projections as to anticipated take-up of that mechanism?
Simon Recaldin: No.
Mr Blake: Do you have a view as to how likely it is or not that the numbers are going to be of significance?
Simon Recaldin: I think, through the helpful YouGov survey and our live experience, I think we can help very much in what that may look like and, although it has not been agreed, one step that has been discussed in this appeals process is the potential transfer of the dispute resolution process into that appeals process. It hasn’t been agreed, it’s one thing that is being considered.
Mr Blake: In terms of the overall perceptions, as you’ve said, they’re set out in the YouGov survey. Perhaps we can bring that up. Again, that’s EXPG0000007, page 67, figure 50.
Page 67. If we scroll down, we can see overall satisfaction levels, and I think this is something that may give you, as you say, an indication. We have there figures for those who said that they were fully informed at every stage of the process, net dissatisfied 48 per cent; that the scheme was easy to understand and navigate, net dissatisfied 49 per cent; that you had enough information to make informed decisions, net dissatisfied 52 per cent; with the HSS overall, net dissatisfied 49 per cent; with the time it took from starting your application to reaching the end, net dissatisfied 48 per cent; with the amount of compensation received, net dissatisfied 43 per cent.
As you can see there, that was 1,430 respondents to that part of the survey. Again, do any of those surprise you?
Simon Recaldin: What I can – maybe hopefully to help the Inquiry is they disappoint me, again, but they don’t surprise me. My experience away from the Post Office in remediation schemes, this sort of feedback is not unusual, unfortunately. It’s just not unusual. It’s remediation. Something has gone badly wrong, for anything like this to be – and, boy, has it gone wrong in this space, right, absolutely gone disastrously wrong. And, therefore, any recoup from that position is always going to be a struggle. So, yes, the figures are just not good, in terms of, you know, 49 per cent are overall dissatisfied; 51 per cent might be partially satisfied.
And that’s what – in a remediation scheme, that’s what you have to hang on to, in terms of the positives. So very disappointed, absolutely, but not surprised, simply because of the nature of my experience before Post Office of remediation schemes.
Mr Blake: Thank you. That can come down. If we address issues of delays, you’ve already addressed them this morning. You’ve set them out in detail from paragraph 104 onwards in your statement, I won’t bring that back on to screen, I’ll just go through one by one of the various reasons you give for delays. The first is the issue of funding and it’s a matter you’ve already addressed today, that, for example, panel members are only appointed in June 2020, funding sign-off from the Department for Business and the Treasury was not until March 2021.
So am I right to summarise it, in your view, one of the reasons for what I call delay, what you call process, is issues with funding?
Simon Recaldin: Yes.
Mr Blake: Second, you referred to high volumes of applications and their complexity. You say that the 2,548 claims by September 2020 was unanticipated. I think that’s also the evidence effectively you gave this morning; is that right?
Simon Recaldin: Yes.
Mr Blake: There’s been complexity, such as taxation issues, the Official Receiver and bankruptcy issues, issues with creditors. Can you very briefly summarise those kinds of issues for us?
Simon Recaldin: Well, when you – any activity where you are required to engage with a third party then an education process has to take place and you are dependent on the third party. So bankruptcy is a great example, and insolvency. So that will always take time to feedback and how you were going to deal with those cases.
If I may, the one thing not on that list is the governance around the establishment of the process, the drawing up of the principles and we talked this morning around HSF and the panel assisting us, and indeed, we need to include the Government in that process as well, in terms of drawing up all those principles and those processes and getting them all signed off at a multitude of levels. I think the last time counted there are 12 stakeholders that I need to keep happy and, in particular, in this very sensitive space. That is a challenge for any organisation to be able to do, to keep those 12 stakeholders engaged and comfortable and have a say in a process design.
Mr Blake: Thank you. Sticking, though, with the bankruptcy issue, you’ve addressed that in your eighth witness statement and perhaps that can be brought up on screen it’s WITN09890800. It’s page 3 where the issue of bankruptcy is addressed. You say there:
“In relation to claims concerning bankruptcy, there are:
“56 outstanding claims which were made between 1 May and 27 November 2020, all of which have received an offer;
“15 outstanding claims which were made between 28 November 2020 and 31 December 2023; and
“87 outstanding claims which have been made since 1 January 2024.”
Is this a particularly problematic group of cases?
Simon Recaldin: That’s not the feedback I’m getting. I mean, clearly we need – there’s a separate process for bankruptcy cases. We need to understand what the bankruptcy court are interested in, in terms of their take on this and we do split the heads of loss to – heads of loss that we can pay directly to the postmasters and ones that we need to be committed to the bankruptcy court et cetera. So it hasn’t been raised to me as a particularly troublesome area but, again, and I know we will get onto it, a number of the – and in particular the 87, may be resolved by the £75,000 process.
Mr Blake: Thank you. That can come down.
I’m still going through the various reasons you give for delay. The third is shortfall analysis. I think we’ve already dealt with that, and you’ve said it could possibly be sped up by just looking for one shortfall, rather than multiple shortfalls in the future.
The fourth is later applications, so the scheme reopened in October 2022, and you had 230 claims waiting to be addressed straightaway, so those are ones that had been stacked, effectively; is that correct?
Simon Recaldin: Correct.
Mr Blake: Following the Mr Bates ITV drama there were 1,345 applications between January and May 2024, so a large number of applications.
In paragraph 120 of your sixth statement you accept that you were not resourced for that increase in January 2024. Can you elaborate on that, please, for us?
Simon Recaldin: Absolutely. So until that point, we were effectively planning closure of the HSS and, indeed, had a tentatively agreed date with the Government about when we would close the scheme, simply because we knew how many late applications we were getting in and, therefore, could project how long the scheme needed to last for. Now, we’d have still issued a reminder for people to come in if they wanted to, but it was clear from the traction that we were getting and the new number of claims coming in, that it was – and they were coming down to a handful a week and, therefore, we were planning to effectively close the HSS scheme with Government permission, et cetera, et cetera.
So we downsized the people accordingly, we can’t have people sitting round not doing anything, so both HSF and Post Office started decreasing the number of people on the scheme.
Mr Blake: So in terms of your staffing and support, what was your team size as at, say, December or the very beginning of January 2024?
Simon Recaldin: Beginning of January, it will be circa 200.
Mr Blake: How has that changed since then?
Simon Recaldin: Well, we’re now increasing significantly. As I said earlier, we’re now recruiting in order to anticipate the peak of activity that we have. That said, we are also automating and, therefore, we are going through a careful planning process around the people we potentially release through automation, we’re using – we’re hopefully going to transfer their capabilities, their abilities to other areas of the business.
Mr Blake: If I can pick you up though on the recruitment, I think your evidence was the recruitment process was taking place now?
Simon Recaldin: It is.
Mr Blake: The increase in numbers took place in January/February 2024. Were you doing anything about those numbers in the intervening period?
Simon Recaldin: So the – sorry, the numbers in 2024 are the consistent numbers that we’ve had in the RU, Remediation Unit, across, that’s been fairly consistent. It’s only the recent recruitment where those numbers are going up.
Mr Blake: But in terms of the number of applicants, that shot up, we saw those figures, after the ITV drama?
Simon Recaldin: Yeah.
Mr Blake: Did the number of people within your team shoot up accordingly, or is it just more recently that you have turned your mind to increasing numbers in your team?
Simon Recaldin: More recently, in terms of the impact of those cases coming through.
Mr Blake: Why do you think it is that thought wasn’t given to increasing numbers before now?
Simon Recaldin: It has been and, forgive me, I was talking about Post Office. So don’t forget a lot of these processes are within Herbert Smith and they had downsized and they had started increasing at that time, so in early ‘24, they were increasing their numbers to deal with the peak.
Mr Blake: Thank you. The fifth reason you give is agreements pertaining to tax treatment, interim payments, eligibility, bankruptcy and insolvency. Under that heading, you’ve also discussed issues with having to liaise with the Department for Business and Trade. Is there a figure at which you have delegated authority to settle cases without having to refer them or refer matters to the Department for Business and Trade?
Simon Recaldin: Yes.
Mr Blake: Is that something you are able to give an indication of? Is it most/some that fall under that?
Simon Recaldin: So, that’s a very good question. I would say some.
Mr Blake: But in the majority of cases, you still have to go back to the Department for authorisation?
Simon Recaldin: I would say more than that. So, certainly – and I am absolutely guessing here – but it feels like sort of 60 per cent still need to refer to further authority levels. So I hadn’t been – I haven’t been – my authorities matrix is very complex and I have certainly haven’t been given the mandate to settle at whatever cost; that would be wrong as well. But I haven’t been given a complete flexibility in that, no.
Mr Blake: Do you think the level that it is currently at is too low, too high, just about right?
Simon Recaldin: In order – looking at the cases that we need to resolve, I would say currently it’s too low.
Mr Blake: Are steps being taken, have you had discussions with the Department about this?
Simon Recaldin: Continuously.
Mr Blake: Are they open to changing that?
Simon Recaldin: Yes.
Mr Blake: Do you foresee that changing soon?
Simon Recaldin: I hope so.
Mr Blake: The sixth, and one that we’re going to come back to and possibly spend quite a lot of time on it, is the legal representation and legal representation costs. Those costs have only been available since October 2022; is that correct?
Simon Recaldin: Yes.
Mr Blake: They’re not available at the application stage, they’re only available at the offer stage; is that correct?
Simon Recaldin: That is correct.
Mr Blake: Could I please take you to page 39 of your sixth statement. That’s WITN09890600, page 39, paragraph 127. So you say at paragraph 127:
“Some applicants have instructed legal representation from the beginning of their application process. While the data shows that this makes a minimal difference to the eligibility outcome, we have received proportionately more consequential loss claims as a result. Although available to all upon request, the data appears to show legal representation has also been a driving force in applicants receiving an interim payment.”
So it seems as though those who do instruct their own lawyers are more likely to claim for consequential losses and are more likely to claim for interim payments; is that a fair understanding of that paragraph?
Simon Recaldin: That is a very fair understanding of that paragraph.
Mr Blake: Does that not suggest that the ability to claim for those might not be sufficiently identified to those who don’t have legal representation, or sufficiently known by those who don’t have legal representation?
Simon Recaldin: I think that could also be a fair conclusion. If it helps the Inquiry, if I may step back slightly, and I think the Inquiry will recognise that post the GLO and the activation of this scheme, the term “legally light” has been used quite a lot because the GLO membership was so burnt by the legal process, which they were forced to go through to get the absolute right outcome for them and for the other postmasters as well, and therefore, their insistence was if – for any other scheme, would be legally light.
And that’s why the HSS was originally built that way, to say, “Well, we want to make this a legally light process and, therefore, you don’t necessarily need legal advice for the submission but you can have legal advice when the offer is made”. Now – and we’ll support that. That was the theory behind why there wasn’t legal advice. Now, I recognise the optics coming out of my own statements, and instead the YouGov study, et cetera, et cetera, it’s pretty clear that that statement is accurate, by looking at the data, that applicants who do have legal representation apply for more consequential heads of loss accordingly.
Mr Blake: As a result, do you think a lesson learnt is that, actually, legal representation at an earlier stage could positively benefit the scheme?
Simon Recaldin: I think it can but, again – and again, please, this not defensive at all – I struggle, therefore, with why 83 per cent seemed to be satisfied, and the vast majority of those without legal advice.
Mr Blake: When you say satisfied, we saw from the survey results they weren’t necessarily satisfied. What you mean is 83 per cent accept the offers?
Simon Recaldin: You’re absolutely right, and I apologise: they have settled.
Mr Blake: Yes.
Simon Recaldin: And I just struggle with that sometimes. But I’m sure you will go on to the fact that the ones who are legally advised at the offer stage and beyond, their average redress is greater, as well, and I absolutely get that as well.
Mr Blake: I think you’ve said that the background to that is that the subpostmasters wanted it to be legally light. Is it not also part of the story that the Post Office and Department for Business, or whoever else was involved in designing the scheme, may also have wanted to avoid having lawyers at an early stage in order to save costs?
Simon Recaldin: I think that was probably a consideration. I wasn’t there but I think it probably was a consideration.
Mr Blake: One thing that you’ve said at paragraph 139 is that it’s regrettable that the Post Office didn’t send the consequential loss guidance to all potential applicants. Have you done anything to highlight what consequential loss is to publicise its availability to those who may not be aware?
Simon Recaldin: Yeah, I mean it’s comprehensively covered on the website, and we direct everybody to that. We also have a customer care line, in effect a customer support line, when postmasters ring in, legal advisers ring in, and we can point them in that direction.
Mr Blake: We’ll come to that. So that was your sixth reason, legal representation issues. Seventh, in terms of delay or time that things have taken, is the Dispute Resolution Procedure. That can come down but, at paragraph 130, you say:
“When an applicant rejects their offer, this is often the time when an applicant obtains legal representation [and that] has meant that … further information is then presented … new heads of loss …”
So when somebody instructs a lawyer, which is only available as of right once an offer is made, then they may, for example, provide new information or further heads of loss. That again builds in time to the process. Reflecting on that, doesn’t that justify the instruction of lawyers at an earlier stage because, if you had that information or heads of loss at an earlier stage before the offer is made, that might avoid the delay or time taken after the offer is made.
Simon Recaldin: I cannot see a flaw in that.
Mr Blake: I think you say in your statement that it elongates the time that it takes to settle as a result of –
Simon Recaldin: Correct.
Mr Blake: – that new information.
Moving on now to the fixed sum offer and top-ups –
Sir Wyn Williams: Before you do that, Mr Blake, have you left the topic of appeals because, if you have, I just want to ask one or two more questions about that before you start another topic.
Mr Blake: Yes, please, sir. Please do.
Sir Wyn Williams: Mr Recaldin, perhaps we could have paragraph 139 of Mr Recaldin’s witness statement on the screen, and that’s at page 42. This is simply to give us a reference point, really, Mr Recaldin, for the point I want to pursue with you. You’ll see that the second part of this paragraph actually deals with what an appeal may deal with.
Mr Blake: We’re just waiting for it to come up on screen.
Sir Wyn Williams: Sure. (Pause)
Right, so I’ll come to this paragraph in a second. Let me just ask you one or two basic questions to make sure I’ve got it right. The possibility of an appeal process was first mooted earlier this year and not before that; is that correct, Mr Recaldin?
Simon Recaldin: There was a recommendation from the Advisory Board, forgive me, Sir Wyn, I don’t know when, but it was before March this year, and there was a recommendation from Post Office about the same sort of time as well, for an independent appeals process.
Sir Wyn Williams: Right. Then the Government announcement was March this year?
Simon Recaldin: I think so, yes, that was Minister Hollinrake.
Sir Wyn Williams: That’s fine for these purposes. I’m right in thinking, from what you’ve said, that the appeal process will be both formulated and administered by the Department, not by the Post Office?
Simon Recaldin: You’re absolutely correct, Sir Wyn.
Sir Wyn Williams: Right, but this is now coming to the nub of what I want to ask you about. Since March 2024 to the current date, has the Department, in inverted commas, consulted with the Post Office as far as you are aware about the grounds upon which an appeal might be brought?
Simon Recaldin: No, they – sorry, since March – yes, they have recently, Sir Wyn.
Sir Wyn Williams: When you say “recently”, do you mean within the last few weeks, or what?
Simon Recaldin: I do mean within the last few weeks.
Sir Wyn Williams: Right. So there is still work to be done, if I can put it in that way, in formulating what might be regarded as at the heart of any appeal process, namely upon what grounds can you bring an appeal?
Simon Recaldin: Correct.
Sir Wyn Williams: Right, okay. I use this paragraph, 139, because in it you say that the Post Office hopes that the appeals process might assist with remedying people who were unaware that they could bring, say, consequential loss claims?
Simon Recaldin: Yes, Sir Wyn.
Sir Wyn Williams: Yes. So there’s still a great deal of uncertainty, am I right, about the basis upon which any appeal can be brought?
Simon Recaldin: There is uncertainty on the basis of which appeals can be brought currently, yes.
Sir Wyn Williams: Does that uncertainty extend to having to decide whether the appeal process will be open to everybody who has, thus far, participated in HSS, regardless of whether they’ve settled or not, or is there still a debate going on about which category of HSS claimant might be eligible to appeal?
Simon Recaldin: I think that is being discussed. Whether or not it is open for everybody or whether there – my words, Sir Wyn – whether there’s a filter on that on what types of applicant can apply to it, I think that is yet to be determined.
Sir Wyn Williams: All right, well, when Mr Creswell gives evidence on behalf of the Department, he may be able to place more flesh on this particular bone. But, doing the best you can, does it look to you as if we are some months away from formulating both the criteria for bringing an appeal and the process for bringing an appeal, and, therefore, some months away from this appeal process beginning?
Simon Recaldin: Sir Wyn, on the limited engagement I’ve had with the Department on this, I understand there is a strong appetite to have something up and running in the new calendar year.
Sir Wyn Williams: Well, those are very carefully chosen words, if I may say so, Mr Recaldin, because something up and running in the new calendar year could span from January until December, couldn’t it?
Simon Recaldin: Okay, let me be fairer to the Government’s Department for Business and Trade. Again, the limited engagement they’ve had with me and my team is that they are certainly under pressure in order to produce a process, and the articulation, the verbal articulation they have is that they are under pressure to be able to do something, to announce something in terms of a process in Quarter 1 of the next calendar year.
Sir Wyn Williams: All right, thank you. I wasn’t trying to tease you, Mr Recaldin.
Simon Recaldin: No, that’s fine.
Sir Wyn Williams: Do you know if – if you don’t, please say so – but do you know if there has been any consultation between the Government and any groups representing postmasters about both the likely grounds of appeal and the process generally?
Simon Recaldin: No, I don’t.
Sir Wyn Williams: Fine. All right, thank you very much, sorry, Mr Blake.
Mr Blake: Not at all.
Thank you, we’ll move on to the fixed sum offers and top-ups. As you’ve said already today, the average that was paid was £52,000 and, from 9 August this year a fixed sum offer of £75,000 was introduced and is also provided as a top-up to those who had already settled for a figure below that. So we have top-ups to those who have already settled that increase the amount that they are provided up to £75,000; you have an offer to those who haven’t yet settled for 75,000 – for any figure, an offer of £75,000, and you also have – are communicating this offer to those who haven’t yet applied for any redress; is that correct?
Simon Recaldin: Correct.
Mr Blake: Can you briefly explain the background to the 75,000 and whose idea it was and where it came about?
Simon Recaldin: So the background to the 75,000 was effectively a minimum payment introduced into the new GLO scheme, which, as we know, is operated by DBT, the Department for Business and Trade. The Government recognised straightaway, as the Post Office, that if that was being offered in the GLO space, it would be absolutely appropriate to also offer the same in the HSS space.
But, as ever, there are differences between the GLO scheme and the HSS scheme. So we are grateful, willing to adopt that but, of course, we had to incorporate that new processes because the HSS cohort is a different cohort to the GLO cohort.
Mr Blake: If you accept the 75,000, are you foregoing other rights and including, as Sir Wyn has said, in terms of those potential appeal rights, might you be foregoing those appeal rights?
Simon Recaldin: So – and this is why I articulated the differences between the GLO and the HSS is yes, you’re absolutely right, as you’ve mentioned earlier, by accepting the 75,000 you’re waiving your rights to a future appeal. So you would call it delay and I understand that. One of the reasons for delay on the 75,000 was we had to take a step back and say while, actually, you know, how are we going to operate that in the HSS scheme because what we prefer to do is one communication to all the postmasters and past postmasters who had not applied, to say, “Here is your opportunity to apply, here is what the £75,000 scheme looks like, here is a closing date, and here is the details of the appeals process”.
So if you decide to accept the 75, you are waiving your right to this appeal process and this is what it looks like.
Now, because of the timing issue, and I have to say that the election has probably got something to do with it that appeal process was not built sufficiently enough to be able to be communicated and, therefore, all we can talk about is a future appeals process that is going to be built, and – but in my view, quite appropriately, we still felt we had to get out there with these offers. It’s all about timely redress because we were falling short on the timeliness of this redress.
So, therefore, it’s not the best piece of communication, I accept that, to say, “Here is your top-up, here is your offer of 75,000, however, but by taking it you are waiving your rights to appeal process which isn’t built yet.” And I understand the optics of that. I absolutely understand the optics of that, and we have spoken at length to Government about those optics; I call them risks. And the Government are aware of our concerns around that. Nevertheless, everybody felt it’s still appropriate to launch the £75,000 scheme accordingly.
Mr Blake: So an individual may accept the 75,000 figure now, in the knowledge that they are foregoing an appeals process that is not in fact yet developed?
Simon Recaldin: Correct.
Mr Blake: You’ve also addressed in your eighth witness statement the letters that have been sent out, you say 266 letters have been sent out to those whose applications have been recently received and the Post Office considers may be appropriate; 54 of those have already been paid. Can you tell us very briefly about this assessment. How have you assessed that certain current applications may be appropriate for that £75,000?
Simon Recaldin: Well, because of their claim, sorry. We’ve looked at their claim and their claim appears to be under 75,000. So that feels like an opportunity. So we’ve ring-fenced that population, that cohort, and we’ve proactively gone out to them and said, “Would a 75,000 offer satisfy your claim?” We’ve had a very interesting and a very prompt response to that, which is really encouraging, and we continue to do that with the existing cohort. And we’ve got a positive response back in many cases, and we turned – so as soon as they signed their offer, they are presented with an offer, as soon as they sign, we pay within ten working days.
Mr Blake: Letters have also gone out to applicants who have received but who haven’t accepted offers of less than 75,000; is that correct?
Simon Recaldin: Correct.
Mr Blake: There is also a mass mailout that either was just about to take place or has –
Simon Recaldin: Has taken – we started it, it’s up to 30,000. I can’t send 30,000 out on the same day but we are ramping that up so we’re at hundreds now. This week we’ll send thousands, next week we’ll send – so we’re ramping all that up to cover the 30,000 population –
Mr Blake: To be sent to 30,000 people?
Simon Recaldin: Circa – it depends on that. We were doing all the data analysis on the population, yes, so up to 30,000.
Mr Blake: Thank you. In terms of the top-up payment those letters are also being sent out to those who settled for less than 75,000?
Simon Recaldin: Yes.
Mr Blake: Again, have they gone out, are they about to go out?
Simon Recaldin: They’ve gone out.
Mr Blake: They’ve all –
Simon Recaldin: They’ve gone out and, on that population alone, we’ve paid out 87 million.
Mr Blake: I think you have said in your eighth statement that 1,194 top-ups have been accepted. Presumably that’s also increased since –
Simon Recaldin: Yes.
Mr Blake: – the date that that was written?
Simon Recaldin: Yes.
Mr Blake: You have noted that 85 per cent of settled claims have settled for less than 75,000. There might be a suggestion that those delays that we’ve seen in the process in 2024, you don’t call them delays, but we saw the figures, the charts, the bars, quite high, as at the current period. It might be suggested that there is a delay being built in to the existing claims in the hope that people will accept those £75,000 payments. What do you have to say about that?
Simon Recaldin: I think that’s fair. I think there has been an identified – an exercise – I know there has been an exercise that has gone through on that population to say, “Is there a part of this population who think will be appropriate to offer the 75,000 and, therefore, once we’ve got the funding in place, we can jump on that straight away?” Absolutely, yes.
Mr Blake: But do you think that has actually resulted in a delay to the processing of their applications through all the stages that we’ve talked about?
Simon Recaldin: No, I think it’s actually sped it up, if I may be so bold, because they won’t have to go through the full process, the full legal analysis, the full HSF review, and the full panel session. So hopefully we go slow to go fast on –
Mr Blake: But those that are awaiting a panel session, for example, awaiting those various stages and meetings, is any consideration given to the fact that it might be that those are cases that will accept the 75,000 so we won’t be progressing them to those various stages?
Simon Recaldin: Absolutely.
Mr Blake: There is?
Simon Recaldin: Yes.
Mr Blake: Can you expand on that, please?
Simon Recaldin: So, again, we look at the entire population that have made a claim and, if we believe – if the claim is for under 75,000 or we believe they may settle or under 75,000, we will approach them all to say, “This is the new thing, is this something that you would be comfortable with accepting, given you’ll be waiving your rights to an appeal, et cetera, and if you hear all the details and if you’re comfortable with this, let us know and we will immediately make you an offer of 75,000”.
So they can interject into that process at any time they want.
Mr Blake: Do you think that that is fair to those that are awaiting an imminent panel hearing, for example, or panel decision, that their cases might now go back slightly in the queue because you’re waiting on the response to that £75,000 offer?
Simon Recaldin: I don’t think it’s as timely as that. I don’t think that would be a delay, and they have the right to continue with the process – or not, we’re not stopping that process; we’re just giving them another option which they might wish to consider. So I don’t see that.
And again, if they’re queueing up for panel, and I actually see, if they are – if 75,000 is a good offer for them, I still would see that as being a quicker redress than going to panel and waiting the 30 days from panel to offer letter, et cetera, et cetera.
Mr Blake: But just so we’re absolutely clear, there isn’t, is there, a conscious decision on behalf of the Post Office to not take forward those cases?
Simon Recaldin: No. So only with – so only with their permission. Only with the postmasters’ permission.
Mr Blake: Can we please turn to BEIS0000763. This is the minutes of a meeting with Minister Hollinrake on 30 April 2024. We can see there that you are one of the listed attendees. If we scroll over the page, please, there’s a section on compensation. We have a couple of versions of this document. There is a slight change made to the minute, and I’ll take you to that, but there’s a discussion of compensation here, and it records as follows:
“Simon …”
Is that you?
Simon Recaldin: That will be me.
Mr Blake: Yes:
“Simon explained the message from us on OC2 …”
Is that the new Overturned Convictions process?
Simon Recaldin: HCRS.
Mr Blake: “… happy to help. He noted that they are communicating with Charlotte and Carl’s team. Need to clarify within acceptable time about what that disclosure looks like. Full disclosure big job and very expensive …
“[Minister Hollinrake] noted that he was hopeful that a lot of these people take the fixed sum award route anyway.”
You say:
“… even to a place where no disclosure at all.”
Then this is the bit that is changed in the subsequent notes, it says:
“How can I advise my client that £600,000 is good enough given no disclosure.”
The amendment in the later version, which I can take you to, is making clear that you’re saying that claimants will say “How can I advise my client”?
Simon Recaldin: I’m trying my best to identify a risk that the Government might face in terms of something that a legal adviser might say to them, “How do I know that – how can I advise my client if £600,000 is a fair offer if I have no disclosure? I don’t know”.
Mr Blake: This is not in relation to the current scheme we’re looking at –
Simon Recaldin: No.
Mr Blake: – but I just want to take you to some words from you within that meeting. So we have what you’ve said there, and it says:
“Simon said that they are hoping to help with capture. Open and willing to let accountant in to have a look. Also they are keen to see HSS Appeals that, whenever it is ready.”
Minister Hollinrake says:
“… still waiting for HMT I think?
“Carl [Cresswell] agreed with the Minister and noted that we are working with [the Post Office] to see if we can do the £75,000 top-ups (not new cases) in the meantime.”
That is the issue we’ve just been discussing, I think –
Simon Recaldin: Correct.
Mr Blake: – in relation to the appeals process and the £75,000 offer.
You say there, at the penultimate entry:
“Simon current proposal on the new £75,000 is to do it in-house and not use the services of [Herbert Smith Freehills].”
Is that still the case?
Simon Recaldin: As in my statement and as advised earlier, yes.
Mr Blake: Thank you. If we look at the amended version, that BEIS0000764. It’s not significantly amended but, if we look at the bottom of page 2., we can see there that the issue you post is:
“Kevin noted that he was hopeful that a lot of postmasters whose convictions are overturned by the Bill will take the fixed sum award route [away].”
You respond:
“… even to a place where no disclosure at all. [This is the risk that you’re highlighting] Claimant lawyers may ask, ‘How can I advise my client that £600,000 is good enough given no disclosure?’”
Doesn’t that also apply to the 75,000 figure that we’re talking about in relation to the HSS scheme? If your plan is for that to be a quick process, doesn’t the risk that it’s not going through that disclosure process, that it somehow bypasses that process, isn’t that risk present here?
Simon Recaldin: Yes.
Mr Blake: Is there anything that you plan on doing about that risk, or is that just a risk that –
Simon Recaldin: I’ll articulate that risk in a slightly different anyway, if I may, that is legal representation at the claimant stage, effectively. I think you called it disclosure, I say it’s legal representation at the offer stage. I’m sure the Inquiry have seen the documentation around this. Post Office have pushed hard on this with DBT, and I’m sure Carl will support that as well. The evidence is there. We pushed hard on this in terms of wanting to have – understanding the optics of having legal advice at the claimant stage from the perspective – DBT, currently, their thinking is not aligned with that, in terms of funding – in terms of funding that – everything has to be funded of course and it’s taxpayers money – in terms of funding that, and everything is under continuous review but, at the moment, they’re saying they want to stick to the current process.
Mr Blake: So is your evidence that in respect of the £75,000 fixed sum offer or top-up, the Post Office’s position is that it will be preferable to have legal advice at the early stage, whereas the Department for Business’ position is different to that?
Simon Recaldin: I don’t want to elaborate on it, on a difference of policy between – that’s not – my job is to get redress out to postmasters as quickly as possible. I really, really cannot afford, and don’t want to get involved in sort of internal politics, but I need to answer your question, okay. And the Post Office’s view has always been in this cohort that we should offer legal advice, to pay for legal advice, in the offer stage, ie learning from our lessons from the original cohort.
Mr Blake: You say at the offer stage, do you mean prior to –
Simon Recaldin: Prior to the – at the claim stage. At the claim stage. And the evidence is there and I’m sure the Inquiry have seen it, the number of times I’ve written to the Department to ask them to reconsider that position. And they haven’t.
Mr Blake: Do you know why: is it purely funding; is it something more than that?
Simon Recaldin: I do believe – and I think I articulated before – I do – I understand, I do understand, I try to be balanced. I understand that, if somebody has got an offer and people who talk to me regularly will be bored of me saying this story – if people have got an offer of 40,000 and they’ve settled and they’re satisfied, I appreciate your definition of satisfaction is different from mine – they’ve settled at 40,000, and then they get a letter saying, “We want to top that up to 75,000, sign here”, I can understand why they may not need to necessarily think twice about obtaining legal advice. I get that and, certainly, the process is not designed to encourage legal advice.
And so, you know, to make it simple and slick, fast, and get redress out of the door, which is my job, I can see how that can work. I worry when the legal advisers come to me and say, “Hang on a minute, how can I advise my customer – my client, whether that is a full and fair?” And that’s a risk to me.
Mr Blake: Thank you. That can come down. Thank you.
Moving on to interim payments. You’ve addressed that at paragraph 22 of your sixth statement. I don’t need to go to the actual paragraph. At first it was £10,000 limited to those in poor health or suffering from financial hardship; is that correct?
Simon Recaldin: Correct.
Mr Blake: Those limits on availability were lifted in October 2022?
Simon Recaldin: Yeah.
Mr Blake: Since July 2023, interim payments of up to 100 per cent are available to applicants who have received an offer?
Simon Recaldin: Correct.
Mr Blake: Does that mean 100 per cent of the amount you’re offered you will receive straightaway, irrespective of whether you contest it further or not?
Simon Recaldin: Yes, if you ask for it. Yes.
Mr Blake: Thank you. What is the situation in respect of those who haven’t received an offer in respect of an interim payment? How is that calculated now?
Simon Recaldin: So we do offer interim payments prior to offer, upon request, in particular in hardship cases, but it’s not limited to hardship cases. And we have a process where, as long as we’ve identified the shortfall, it’s the amount of the shortfall we go up to, that we can pay out – we don’t get many requests for pre-offer interim payments. In fact, very, very few, for pre-offer interim payments.
Mr Blake: How is that now going to work with the £75,000 offer? If, essentially, people are getting £75,000 as of right, albeit risking certain rights such as appeal rights, does that justify a greater interim payment to those who contest the 75,000 and say that their claim is worth more?
Simon Recaldin: That’s where the jeopardy comes in and it’s important the Inquiry understand that, is that, if they decide not to take the £75,000 offer and subsequently their claim has gone through the independent panel and et cetera, et cetera, and comes out at less than 75,000, they’ll get the lesser figure.
Mr Blake: Reflecting on it, do you feel that there should be or shouldn’t be some sort of increase in the standard interim payment for those who are contesting, in light of the fact that they are contesting, but they have rejected a £75,000 offer?
Simon Recaldin: Well, it depends if they’ve got an offer or not. So if they’ve got an offer already –
Mr Blake: They get 100 per cent?
Simon Recaldin: I have strong views. As soon as an offer goes out, it’s not Post Office money, it’s not Government money, it’s the postmaster’s money. So as soon as that offer goes out, they’re entitled to the lot. The dilemma I think you’re articulating extremely well is the dilemma of when you haven’t got an offer, the 75,000 has been rejected, so that’s a pre-offer interim payment and, therefore, we would go back to the shortfall.
Mr Blake: Exactly.
Simon Recaldin: Yes. That’s right.
Mr Blake: Looking at the £75,000 figure that’s now going to be offered, do you think limiting those interim payments just to the shortfall figure is sufficient and is right?
Simon Recaldin: I think it’s consistent, and it supports the jeopardy that Government clearly want to put in place to say, “You’ve got an opportunity of 75,000 but if you don’t believe that’s sufficient, there is a risk that once the case has gone through the full assessment, the risk you face is it might be less”.
Mr Blake: Thank you. Can we bring up on to screen your sixth witness statement at page 56. It’s paragraph 167. I just want to understand some figures that are given there about interim payments.
Thank you, so it’s page 56, paragraph 167. You say there:
“In total, 474 interim payments have been paid to 312 applicants (7% of applicants). Of these Post Office have offered 174 single payments equating to 100% of their offer, with the balance being partial payments; and 23% of complex applicants received an interim payment compared to 10% for standard applicants.”
Can you assist us, more interim payments have been made than there are applicants. Can you help us with that, please?
Simon Recaldin: Absolutely. It is confusing and apologies, that is a confusing paragraph. So an applicant can have number of interim payments. So they – even if they may have an offer and they may – and they offer, let’s say, is £100,000, they say, “Can I – I’m going to go into dispute. In the meantime, can I have 50 per cent of my offer?” Of course you can, so we pay out 50 per cent, and they then may come back a few weeks later and say, “Well, actually, can I have another £25,000 please?”
Of course you can: you can have up to 100 per cent of your current offer.
Now, during the dispute process, for example, the offer might go up a few times and, every time that offer goes up, they’re entitled to more – another interim payment, up to that offer amount. So that’s why there are more offers than cases.
Mr Blake: Is there a number that you have for interim payment applications that have been refused? I think that 7 per cent of applicants is referring to total applicants, isn’t it –
Simon Recaldin: Yes.
Mr Blake: – it’s not referring to applicants for interim payments. Are there a large number, a small number, some –
Simon Recaldin: Small. Tiny.
Mr Blake: A tiny number that are refused?
Simon Recaldin: I think, to be fair to them, again, a lot of these are legally advised, and the legal advisers understand exactly the process and, therefore, they are advised absolutely appropriately.
Mr Blake: And if we scroll down we can see there in paragraph 168 you say:
“Overall, 4% of those without legal representation have received an Interim Payment and 64% of those with legal representation have received an interim payment.”
A very significant gulf between those who are legally represented and those who aren’t. Again, that suggests, possibly, that the message isn’t being communicated effectively to those without legal representation. What’s your view on that?
Simon Recaldin: I think that’s always going to – I think that’s a fair observation. I’m – I think the availability of interim payments is well known. It is on the website, et cetera, et cetera. It is out there and I know every case that goes into the dispute resolution process, they are all written to to say, “These interim payments are available to you”. In particular around hardship, it’s very clear about the interim payments, but I do understand we could always do more publicity and prompt it more. I do accept that feedback.
Mr Blake: If we scroll over the page, please, we can see a chart there for the average days from interim payment requests to payment. So that’s the processing time of those interim payments. We can see, even this year, it’s nearly a six-week wait from request to actual payment. We’ve seen again the number of applications increasing. That’s something we looked at earlier, in terms of the 2024 figures. What gives you confidence that it’ll either stay the same or reduce?
Simon Recaldin: As advised in my statement, the – we are going to adopt much of the automation and efficiencies around the £75,000 process, this will come down significantly.
Mr Blake: I won’t take you to our expert report again but it’s page 58 of that report. Lots of red again, in terms of satisfaction levels with the interim payment process. I assume your answer to that is the same as before, that you understand it and something you recognise?
Simon Recaldin: And disappointed.
Mr Blake: Yes. Returning to legal fees more broadly now – that can come down, please – the BAT – below assessment threshold – cases, are they provided with any legal advice?
Simon Recaldin: So they are made an offer, and therefore at the offer stage, they can still have – yeah, they can still have legal advice. They’re all the same.
Mr Blake: Are you aware of what kind of proportion of those cases actually take legal advice?
Simon Recaldin: No. I’m not. But, of course, that has now been taken away by the 75,000.
Mr Blake: Yes. You’ve explained the background to why legal fees are only available at the offer stage, or why that was formulated. Previously, there was £1,200 for legal advice where the offer was less than the sum claimed; is that correct?
Simon Recaldin: Yes, that’s right, yes.
Mr Blake: There was a small amount –
Simon Recaldin: Yeah.
Mr Blake: – only £400 –
Simon Recaldin: 400, yeah –
Mr Blake: – for where the offer was for the entire sum or for more. Those caps were removed from all offers made from 10 October 2022; is that correct?
Simon Recaldin: That is correct.
Mr Blake: Applicants are now entitled to what’s called reasonable legal fees. Is that different to legal fees available in the GLO scheme, where there are fixed sums for legal advisers?
Simon Recaldin: We try and work collaboratively to the ranges in the GLO, and we have used those, yes, but we still base ours on reasonable, so there have been a number of occasions when – and I have been given authority to exceed whatever reasonable is, but I take legal advice on those. So we are still – we use – we do use the GLO guidelines as guidelines but there we are still – you know, we have reasonable fees.
Mr Blake: If we could go back to your sixth statement, please, and turn to page 10. At paragraph 27, you give figures for the average legal fees. It may be quicker if I just read it. It says:
“The average legal fees prior to 10 October 2022 was £3,044 and after that date it was £4,575.”
Can you assist us with that difference, why you think it is that those figures have changed?
Simon Recaldin: Just the submissions from the legal advisers. That’s – and very comfortable with them.
Mr Blake: If we could please turn to page 66, paragraph 184. Thank you. We see there that the take-up of legal representation is low: 12 per cent –
Simon Recaldin: Yeah.
Mr Blake: – in respect of those that have had offers; 16 per cent if you include legal support rather than legal representation. Why do you think that take-up is low?
Simon Recaldin: I really don’t know.
Mr Blake: If we go to page 63, please, paragraph 181. If we scroll down, you say there that:
“In almost all instances a legally represented applicant receives a higher offer even within the same applicant types …”
Simon Recaldin: Correct.
Mr Blake: Can you see an issue there?
Simon Recaldin: Absolutely.
Mr Blake: What’s the issue?
Simon Recaldin: Well, they are – claimants are generally – the vast majority, are not taking up the offer of legal – of free legal advice, funded by Post Office and, yet, the stats are clear that, when they do have legal advice, they get higher payouts. I absolutely understand that.
Mr Blake: If we go to page 64 there’s a table. We see there, in 2024, for example, in complex cases, similar in 2023, it’s almost double the same figure where those individuals are legally represented. Is that something that you were aware of before compiling this chart?
Simon Recaldin: I think this makes it much more transparent but yes, I was aware.
Mr Blake: Yes. Does that, in some ways, suggest that representations further pushing from people representing individuals is necessary and that, actually, the Post Office on its own isn’t coming up with the right figures?
Simon Recaldin: I wouldn’t call it pushing. I’d call it representing.
Mr Blake: Why should that be necessary to drive the figures up by, in some cases, double?
Simon Recaldin: Because there representing their clients and their clients are providing a position for them, which they are asking to be represented. I do see it as an issue. Again, I – in my mind, I struggle with this. I absolutely get it and that’s the reason one of the – the major reason why Post Office recommended, following Sir Wyn’s prompt, around an independent appeals process where people, if they feel dissatisfied, now they see these statistics, the transparency that this has provided, and thank you for doing it, actually do they feel they have an unfair offer, subject to Sir Wyn’s challenge around, well, what’s the parameters of that appeal, who qualifies for the appeal? If, in the way that I’ve articulated to the Government and Government, you know, have accepted this, is that if they believe – and the Advisory Board more importantly have said this – if they believe they’ve had an unfair outcome and seen these stats, they may feel they’ve had an unfair outcome, then they have the option for the appeal process.
Mr Blake: One thing we spoke about earlier was legal advice at an early stage. In the GLO schemes and the Overturned Convictions Scheme, we understand that solicitors can commission a report such as a forensic accountant report –
Simon Recaldin: Yes.
Mr Blake: – from the outset. Might that, first of all, speed up this process and, secondly, as you’ve highlighted, have an impact on the final figures?
Simon Recaldin: It might.
Mr Blake: Why do you think there is that difference of approach?
Simon Recaldin: I think there is an aspect of trying to keep this as legally light as possible. I understand that. Much – a lot of the feedback – in fact, I noticed in the YouGov survey as well, there’s a lot of feedback about this is too legalese, you know, why can’t we just cut a deal on this, and make it a much more simpler? I get that from many of the legal advisers as well: why do we have to go through this process, why can’t we just go and shake hands on things? So I’m not trying to counter it because I’m absolutely agreeing with you, but there is this other aspect still, that I still grapple with, about how can we make this as simple and unlegalistic as possible?
Mr Blake: Thank you. Before we take our afternoon break, I’m going to take you to that letter from Dr Hudgell that we’ve spoken about. It’s HUJ00000007.
Simon Recaldin: This the new bundle yes?
Mr Blake: Yes. It’s the letter of 23 October this year. So very recent correspondence between you.
Thank you. The letter includes various examples of the differences between original offer and revised offers. If we scroll down, please. These are in respect of those who Dr Hudgell represents. We see there alleged at number 2, for example, the original offer 46,000 in December 2021, a revised offer of 140,000 by November 2022. Number 4, we see from £4,000 in the original offer to £133,000, within the space of – it’s taken two years, the original offer July 2022, and the revised offer September 2024.
If we scroll over the page, number 8. We have there an original offer of 363,000, and revised two years later to 649,000. Very significant increases in these figures. Number 11, 298,000 to 421,000. 13, 260,000 again to 420,000. So quite similar increases in those 11 and 13, from 200 to 400 thousand.
Do you accept that they’re big changes in these offers, and the revised offers?
Simon Recaldin: I absolutely accept them and think it’s great.
Mr Blake: Number 9, we see there the original offer 42,000 in August 2022, 45,000 by May 2024, and we understand that that now stands at £171,592. So a dramatic increase, despite the fact that that figure not really changing very much between 2022 and 2024. What’s your view on that?
Simon Recaldin: My view on that is that the legal advisers are doing the excellent job that they do and they’re gathering the information required for – to enable the panel, in many cases, if not Post Office, to increase the offers based on the evidence that is provided with the help of the legal advisers, maybe by forensic accountants or by medical reports, et cetera, et cetera. So I think the legal advisers are doing exactly what they should be doing and doing a brilliant job at it.
Mr Blake: Isn’t something going a bit wrong, though, that there have been such dramatic leaps in those figures taken so long to negotiate?
Simon Recaldin: So the – I think there are two separate issues here. In something going wrong, no, it’s going right, because the evidence has been found in order to increase those offers to get to the fair redress. Timeliness is a separate issue, and I accept that challenge about how long it’s taken. But – and, you know, this is a two-way street here. We like to work collaboratively with the legal advisers, and make it clear to them what would help the case. Many of these cases of course have – all the cases have originated from the independent panel. That’s where the original numbers come from and many of these cases go back to the original panel so again there’s – they have worked within their terms of – the panel work within their terms of reference to come up with these new offers.
So they are basing it on evidence that has been produced by the postmasters and the legal advisers. So this is a process taking too long, but is working.
Mr Blake: It’s working for those who are, in this case, represented by Dr Hudgell and represented by others. But if we can turn back to the YouGov report, that’s EXPG0000007 and, if we look at page 52 of the YouGov report, it addresses legal advice.
Page 52. We have there only 33 per cent of respondents said that they had been informed of their right to obtain legal advice. Only 10 per cent were provided with information about how they could contact a legal representative. If we look at the bottom of page 52, the author says:
“Reflecting the low awareness of the right to obtain legal advice, just over one in eight (12%) actually received legal advice during the application process. Amongst those that did, 11% received financial support that they felt was sufficient, but 63% did not receive financial support.”
Then we can see the chart over the page, please. Actually, yes, figure 39 “Received financial support for legal advice during the application process”, the overwhelming majority didn’t and that’s reflected in your own figures.
If we go, please, to page 55. Even in respect of those who received financial support for legal advice when they received their offer, you have there 29 per cent saying no financial support received for legal advice when they received their offer, there is a net “Yes,” but 23 per cent of those felt that the financial support was not sufficient.
Looking at these and looking at your own figures, and looking back at that letter from Dr Hudgell and the impact that lawyers have had in that particular case, and I think you’ve really already given your evidence on this but do you think something is going a little wrong there in respect of the availability, the take-up of legal advice, and the impact that it may have on those who may have received offers, or those who are awaiting offers?
Simon Recaldin: Well, I think the first sentence, on page 52 of the YouGov survey, it says, “One in three, 33 per cent, recall having been informed to their right”. So that’s their recollection of being informed about their right to obtain legal advice. The evidence which the Inquiry has seen is that everybody was offered legal advice at the offer stage. So this is – and – and, again, I don’t want to project this sort of corporate image because it’s not a corporate image, it genuinely is not, but the offer of legal advice is there at reasonable costs. And I haven’t turned anybody down in terms of the amount of legal fees. I have had the odd discussion with legal advisers about their bills, yes, but we’ve never fallen out about it.
And so the offer is always there. It’s the take-up is the issue, and I think the challenge, quite rightly, from the Inquiry, should be that it is how much have you pushed the fact that – the benefit of legal advice? Maybe that’s the challenge that I should go away and consider, because it’s clear from the stats, as I’ve said earlier, my evidence is my evidence, is in that there is a – there’s clearly a benefit of it happening. But to be clear, the offer is there.
Mr Blake: How do you think you can improve that situation?
Simon Recaldin: By being more upfront, as I possibly can, by making sure the clients are – yes, they are my clients – my clients are aware of that opportunity. Again, I still struggle, I’ve got an 83 per cent acceptance rate. I need to grapple with that, and where people appear – I’m not going to use your word any more – they appear to want to settle at that rate.
Mr Blake: Thank you.
Sir, that might be an appropriate moment to take our mid-afternoon break.
Sir Wyn Williams: Yes.
Mr Blake: If we come back at 3.40, please.
Sir Wyn Williams: Certainly, yes.
Mr Blake: Thank you.
(3.25 pm)
(A short break)
(3.40 pm)
Mr Blake: Thank you, sir.
Mr Recaldin, my last question in relation to the Historic Shortfall Scheme concerns an end date: when do you expect it to close; is there a date fixed; and has a date been publicised?
Simon Recaldin: Expectation, I don’t know. Is there a date fixed? No. No, there has been discussions prior to the election about when that date might be, and we did propose a date which was sort of tentatively – nothing had been agreed, nothing has been accepted but it was understood when that date might be. But then, of course, we had a peak of late applications, et cetera. So the date that was originally discussed was actually March 2025, and we have been advised by Government that that might still be considered, but let’s not take that as a date that will be publicised. So yet to be determined.
Mr Blake: Is that a date for potentially the applicant process to stop or the entire scheme to finish?
Simon Recaldin: Applications to be in by.
Mr Blake: Thank you. One thing you’ve mentioned is the postmaster contact centre. You’ve addressed that in your witness statement. You say it opened in September of this year. Can I clarify is that simply for the HSS Scheme or for all schemes?
Simon Recaldin: It’s for whatever the postmasters want so it’ll be for all the schemes, currently it is predominantly to do with HSS because that’s the incoming, but we also mandate outgoing calls, as well, to be helpful and proactive. In the fullness of time, it will absolutely be anything we can do on the OC side as well.
Mr Blake: What steps have you taken to publicise that contact centre?
Simon Recaldin: It’s available on the website and available via correspondence.
Mr Blake: Would it surprise you that some subpostmaster Core Participants were not aware of this centre until receiving your witness statement?
Simon Recaldin: It wouldn’t surprise me at all.
Mr Blake: In light of that, is there anything that you have in mind that you could do to publicise it?
Simon Recaldin: So in the mass mailing which we’ve currently started, absolutely included in all of that, so there will be huge publicity because of the up to 30,000 letters going out, it’s included in that, and they all point to the website as well in terms of when that – where that number is available, including – and also in the outbound calls they are effectively publicising their availability to take inbound calls as well.
Mr Blake: Thank you. I’m going to move on now to the overturned convictions redress. It’s not known internally at least as the Overturned Convictions Scheme; is that correct?
Simon Recaldin: Correct.
Mr Blake: On 11 December 2020 the first six convictions were overturned by Southwark Crown Court and then the Hamilton judgment was on 23 April 2021. By 22 August this year, you say in your seventh witness statement, I think, 111 appellants had successfully appealed their convictions and therefore fell within this scheme; is that correct?
Simon Recaldin: That is.
Mr Blake: They fall within this scheme and not the Historic Shortfall Scheme because, as we saw in the eligibility criteria, it doesn’t include those with convictions?
Simon Recaldin: Correct.
Mr Blake: There is, however, another category also included in this redress – I won’t call it a scheme. What do you call it if you don’t call it a scheme?
Simon Recaldin: Process.
Mr Blake: Process, redress process. That is those who were prosecuted but not convicted and who aren’t postmasters and, therefore, also fall outside of the Historic Shortfall Scheme; is that right?
Simon Recaldin: Correct.
Mr Blake: What about those who weren’t prosecuted but who received cautions?
Simon Recaldin: They are included in that cohort, prosecuted not convicted. They are within that cohort.
Mr Blake: Not convicted extends not just to those who had a trial but also those who simply received a caution?
Simon Recaldin: Caution, correct.
Mr Blake: In terms of Government funding, you’ve said in your witness statement that that became available in July 2021; was that difficult to obtain?
Simon Recaldin: No.
Mr Blake: That led to interim payments of £100,000 at that point in time –
Simon Recaldin: Yes.
Mr Blake: – from that point in time. Then there was a second funding agreement in December 2021, again, was that difficult to obtain?
Simon Recaldin: I wasn’t around so I don’t know but my understanding was it was again, it followed the process and it was put in place.
Mr Blake: Could we please turn to POL00448914. As you say, this was before your time but this was the funding commitment as at 22 July 2021, communicated by the Department for Business, Energy and Industrial Strategy, as it was known then. If we scroll down, please, it says:
“The funding commitment letter confirms that the [Department for Business] will provide funding for Post Office to make interim compensation payments of up to £100,000 to each postmaster, branch manner and/or assistant who have their criminal convictions overturned by the Court of Appeal or the Crown Court due to unreliability of evidence obtained from the Horizon System operated by the company.”
Over the page, please, it sets out there the funding structure, and says:
“Each interim payment, which shall be no greater than the aggregate of £100,000 per any one affected postmaster, will be eligible for BEIS funding to the Company provided the postmaster meets all of the following criteria:
“i. Their Horizon-related conviction has been overturned by the courts …”
That’s why we see the scheme doesn’t involve those that recently received the change following the legislation:
“ii. They do not belong to the class of postmasters whose convictions were overturned but were not opposed by the company on public interest grounds …”
Now, at this stage, that was an additional criteria, that it couldn’t have been any of those cases that weren’t opposed by the public interest on public interest grounds. Can you briefly explain your understanding of that?
Simon Recaldin: So public interest cases – and there are five of them – so these are cases that go to the Crown Court at Southwark and, when the case is made to it’s – a quirk, almost, of the Southwark court, in that the cases that go forward, you can either support the appeal, or you can – the alternative is a retrial and, clearly, a retrial is not in the public interest and, therefore, by default, you are going to a case where they or you are supporting the appeal of the conviction. Or you’re raising no evidence against it.
Mr Blake: Those cases were originally not included in the scheme, but they are, I think, following the Mr Bates ITV drama, there was a change in that position; is that correct?
Simon Recaldin: There was a journey to get there but, yes, that is correct.
Mr Blake: When you say a journey, what was the Post Office’s position?
Simon Recaldin: Because of this funding agreement, even though those three cases that I mentioned earlier there, their convictions were overturned but, because of the funding arrangement, they couldn’t be paid their £100,000. So despite Dr Hudgell asking for it, the funding arrangement would not allow us to do it. So you’ve got cases which have been overturned by Southwark court and yet, because of the funding arrangement they weren’t entitled to the £100,000 because, technically, they weren’t Horizon related cases.
And that was an awful position to put anybody in and so we had to work our way through that and we went through mediation to do that and we reached settlement with two of them. Subsequently, due to the Bates and the mass exoneration, those cases have now been reopened and now back in OC.
Mr Blake: I think you said there were five individuals. What is the current status of those cases?
Simon Recaldin: All those five are within the OC, I think one of them has been settled.
Mr Blake: Thank you. Can we please turn to POL00448915 this is the second letter of 20 December 2021, and it is the funding commitment letter that confirms the Department will provide funding of up to 685 million to the Post Office when aggregated with the funding committed under the interim payment, funding commitment letter, the total funding amounts to 780 million.
Then it sets out below the criteria. So those who:
“… have their criminal conviction/s overturned following the ‘Common Issues’ and ‘Horizon Issues’ judgments issued in the Post Office Group Litigation, and/or the [Hamilton & Others] judgment issued by the Court of Appeal; or.
“were prosecuted, but not convicted, of offences connected to the Horizon IT System and suffered detriment in respect of the actions of the Company.”
Am I to understand therefore that that has now changed and we should add to that a third category of those who received cautions because they wouldn’t have been prosecuted but not convicted?
Simon Recaldin: My understanding is cautions are included.
Mr Blake: Are you aware of any formal change to any agreements in that respect?
Simon Recaldin: No, I’m not.
Mr Blake: If we go over the page, please, to the bottom of the second page, it says there:
“[The Department] has agreed to fund the claim payments made by the company to fulfil BEIS’ commitment to delivering compensation to postmasters fairly and as quickly as possible, and supporting and maintaining the Post Office Network.”
It continues a couple of sentences on:
“This funding commitment letter specifically covers the provision of funds for claim payments for the OHC Liabilities only, and is provided to support the company in delivering its rescue and restructuring plan …”
Can you assist with how the redress for these cases relates to supporting and maintaining the Post Office Network, or the rescue and restructuring plan?
Simon Recaldin: I’m sorry, I can’t help you there.
Mr Blake: Let’s move on then to interim payments. Interim payments under this scheme were introduced in July 2021, as we’ve seen, for £100,000. They were increased to 163,000 in November 2014, following representations made by Lord Dyson, who was carrying out the early neutral evaluation, which we’re going to come to; is that correct?
Simon Recaldin: Yes, it is.
Mr Blake: More recently, it’s increased for those who don’t seek what is referred to as a Government offer, and that’s the £600,000 payment, which we’re going to come to as well. It’s been increased to 450,000 as an interim payment, at the request of Sir Gary Hickinbottom; is that correct?
Simon Recaldin: That’s my understanding.
Mr Blake: You’ve set out in your seventh statement at 122(b) that the average time between submitting interim payment applications and the payment is 34 working days; is that correct?
Simon Recaldin: That’s my recollection.
Mr Blake: So let’s look at the Government offer. Since 18 September 2023, there has been an offer of £600,000 to all overturned conviction claimants; is that correct?
Simon Recaldin: Correct.
Mr Blake: Correct. That doesn’t apply, though, to those who were prosecuted but not convicted; is that right?
Simon Recaldin: That is right.
Mr Blake: Can you assist us with why there is that difference?
Simon Recaldin: Because the difference is the actual conviction.
Mr Blake: In respect of the rights, and we spoke about this in respect of the HSS scheme, am I right to say that the 600,000 is only available to those who don’t seek a full assessment of their claim?
Simon Recaldin: Correct.
Mr Blake: You’ve said in your seventh statement that by 31 May this year there were 40 accepted cases, and you’ve said that the average length of time from receiving the offer to payment is 20 working days; is that all correct?
Simon Recaldin: Yes, that’s right.
Mr Blake: Pardon?
Simon Recaldin: Yes, sorry.
Mr Blake: Thank you. Can we please turn to BEIS0000719, please. This is an email chain, and I want to ask you about your initial views as to the £600,000 Government offer.
Simon Recaldin: Yes.
Mr Blake: If we turn to page 4 of that document, the background is, I think, that – is it Herbert Smith Freehills have drafted a letter relating to the £600,000 figure, is that correct, or a letter has been drafted by somebody?
If we scroll, please, to page 4, we can see some of the background. Do you recall this chain where you’re commenting on a statement that’s being made in respect of that £600,000.
Simon Recaldin: I recall – I saw this email the other day, I do recall the email. I recall its construction. I cannot recall, as a result of a letter.
Mr Blake: Perhaps we’ll go through it in a bit of detail. If we start where we are, this is an email, if we scroll up slightly, from Emily Snow, who is a member of the Post Office Compensation Team in the Department for Business, and she says as follows:
“You will spot comments in both attachments on pitching as a DBT only intervention: I appreciate that it is a DBT proposal and that the timescales at which we’re working have meant we haven’t been able to do the type of engagement and ironing out of issues that would have been preferred, not least by [the Post Office]. However, I am somewhat cautious about the language which goes quite far to pitch as a DBT proposal without showing some interaction between [the Post Office] and [the Department] (as you’ll see in the core text). This is from a view that we do not want to create a perception that Government is ‘stepping in’ because it has lost faith in [the Post Office] process – this is not the case at all. We should send a positive message, there are two good options for postmasters: £600,000 or remediation (which Government supports), since postmasters who do not wish to accept the upfront of will still need to go through the remediation process. I think the wording should uphold the faith in that [Post Office-led] process.”
There’s then a response and we see there it’s the email below from Neil McDaid, that says:
“By way of an update, [Herbert Smith Freehills] have crafted a high level heads up letter to claimant representatives which [the Department] have commented on. They have also provided comment on the core lines for [the Post Office].”
It’s above that that we see your response, and it’s that response I’d like to talk to you about. You say as follows:
“Care with the statement please.
“You are absolutely right this does read as a DBT proposal without showing interaction between [the Post Office] and DBT as apart from you and an email exchange between myself and Carl [I think that’s Carl Creswell] (initiated by me) there hasn’t been any! Of course this will create a perception that Government is ‘stepping in’ because it has lost faith in the [Post Office] process as this is precisely what it is! I don’t think we should be disingenuous – we have to be honest and transparent here. It is clear from this and the lack of risk assessment to the [Secretary of State] that the Government nor the Advisory [body] have any faith in Post Office. This will come up at the Inquiry with Government nowhere to be seen. The paragraph of most concern I have lifted and pasted below – my comments in red.”
If we scroll down, we can see you’ve lifted a paragraph from this statement and commented on it. So it was going to be say, “Government having consulted with the Post Office”, and your feedback is:
“false, delete, only you have kindly told us the bare essentials and then to a highly restricted audience – this is not consultation.”
It then was going to continue:
“… has decided that postmasters who have their convictions on the basis of Horizon evidence overturned should have the opportunity upfront to accept an offer of £600,000 in full and final settlement of their claim. This will be delivered by the Post Office with funding from the Government.”
Your comment there is:
“This implies this is extra funding and again is disingenuous – this is not extra funding as you know – the funding is already in place. It is just a different (hopefully more efficient) way of paying it out. In fact a quick look at the Post Office accounts will show to anybody who wants to see that we are anticipating in paying out in excess of this average. This is where consultation would have helped.”
Just pausing there before we continue with this, can you assist us with your position as set out there?
Simon Recaldin: Yes.
Mr Blake: Please do.
Simon Recaldin: So I think the 600,000 opportunity was brilliant, I think it was an inspired idea, in terms of how to speed up redress. It was – I think I’m clear in my note – it’s the way that it was imposed on Post Office and yet we were told that there were – it was clear in the correspondence that they had consulted with Post Office. Government had not consulted with Post Office; my statement is clear.
I was told about it literally in a quarterly shareholder meeting that we had, I was advised that it was going to be launched the next day. I knew about it probably 24 hours before then because I did request DBT whether or not we could see the press briefings around it, and I think I was politely declined that as well. So it was all shrouded with secrecy in terms of its actual launch, but Post Office were expected to operationalise it, manage it and push it through.
And that came out in my note. There was no consultation, which can be fine and doesn’t mean to say it’s not a good idea – it was still a good idea, don’t get me wrong – and it came directly from the Secretary of State, which is one of the reasons why we believed it was confidential, et cetera, et cetera, it was kept under wraps, because it had to make an impact: a positive impact.
Mr Blake: Why do you raise a concern about the extra funding being disingenuous or reference to extra funding being –
Simon Recaldin: Because the impression that was given by the statement was that they had – Government had proactively found additional funds in order to be able to do this, and that was not the case. The funds – as I articulate, the funds were already available, it’s just a different way of doing it.
Mr Blake: Thank you. Do you have a similar view in respect of the budget announcement that’s just happened in respect of the extra funds?
Simon Recaldin: Forgive me. My job is to pay out redress as fast as I can, and I know I’m being challenged on that and, as much as I can, I really do not – and my preference is massively not to get involved in politics, with a small “P” and a large “P”. But I have to answer your questions and there are elements in this, and there are obviously elements in the Chancellor’s thing that are political and I find myself in a really, really difficult position around that, because the politicians with a capital “P” are taking the opportunity and that’s their right – they’re politicians, that’s what they do – to take advantage of that to – I don’t know what, to give themselves publicity, to give themselves credit for whatever. This 600,000, to your point, is a Secretary of State decision.
Mr Blake: Thank you. We’ll move on. You say:
“I suggest we change to:
“‘Government has decided that postmasters who have their conviction on the basis of Horizon evidence overturned should have the opportunity upfront to accept an offer of £600,000 in full and final settlement of their claim’.”
You say:
“I think this is damaging enough and is a bit more like the truth please – I think somebody has to try and cling to some morals here please. This is an imposition and it should not be flowered up in any other way. [The Department for Business/the Secretary of State] should take the credit for this initiative.
“Let’s not forget that this will be exposed at the Inquiry where this will be seen for what it is – a clear Political intervention into a Post Office scheme with good/excellent intent but simply not thought through which is how the legal representatives will view it. Interestingly, despite the common interest and direct request, Post Office have yet to be extended the courtesy of seeing the legal advice given on this – on a scheme we have to run! Does any actually exist?”
What do you mean by “simply not thought through”?
Simon Recaldin: So the allegation that we were consulted, the Post Office were consulted when we weren’t, and part of not thought through” was we immediately started asking questions around “What did the 600,000 – is it a minimum payment?” And it became apparent it wasn’t a minimum payment. Oh right, okay, so how are we as the operation people going to administer this? And there were questions that we were posing that had yet to be worked out what the answers would be.
In addition, with the greatest respect to the legal representatives in this room, is that I had a couple of phone calls from them wanting to understand, and to my point about the politicalisation of this, I got two calls from legal representation sitting in this room before I was advised of this scheme to say, “This is about to be launched, what’s your comment on this, this and this, please? How is this going to work and how is this going to work?” And I’m afraid I had to say to them, “I don’t know because I’m not aware of this scheme, I’m not aware of how we’re going to operationalise it, bear with me” – that’s embarrassing – “bear with me, I’ll come back to you as soon as I know the answers”.
So that’s where that comes from and there was some publicity around this because, effectively, that population out there of convictions, it became immediately apparent that the spin on it was that everybody was going to get a minimum payment of £600,000. We had direct approaches from very distressed postmasters, that because the people knew they were in that cohort and that they knew they were making a claim, they were going to get £600,000, and we did have reports of people actual knocking on their door about it and that was quite distressing, and I got that feedback through the legal advisers as well.
Mr Blake: Do you mean they were concerned for their safety or for being chased for money from third parties?
Simon Recaldin: To that a point, that the vast majority were anonymous and yet, if anybody knew they were making a claim or part of the scandal, then they knew that they – that effectively this was saying they were going to get a minimum of £600,000.
Mr Blake: You continue:
“[For your information] – we had a pecuniary claim in from Hudgells at the end of last week for £18,000. Their non-pecuniary was settled for … 195,000. Under this proposal this individual will enjoy £600,000. I am not saying this is wrong and as you know I want to pay out these sorts of sums but to date have been prevent by [value for money] restrictions, evidence, governance, etc.”
Just pausing there, you addressed value for money at the very beginning of your evidence today and you said you didn’t think that value for money restrictions were being imposed in respect of the settlement of compensation claims.
Simon Recaldin: Yeah.
Mr Blake: This reads somewhat like it did have a role to play?
Simon Recaldin: Yeah, I can understand that. It’s not meant that way. It’s a list of processes, restrictions that I had to go through and governance that I had to go through. I do understand your point about – but no, please, value for money was not applicable in this.
Mr Blake: You continue:
“At a stroke, all credibility/professionalism is gone, never mind the months of work put in by Post Office and DBT on principles and working with postmaster lawyers. The Inquiry will seal all this. I have to assume that all are comfortable with this. I’m not.”
It might be suggested that what you’re saying there is that you’re not happy with the £600,000 scheme because, for example, in that Hudgells case, the Post Office could have got away with a lot less. What’s your view on that?
Simon Recaldin: No, I think that’s the wrong interpretation of that. I’ve been clear in the paragraphs above that I think this is a good idea and this is exactly what I want to do. I think I can argue that that sentence is more around the process that you have implemented, that you have agreed that I can follow, the governance that you have put in place for me that I’ll have to follow only allows me to pay out this amount and yet, at a stroke, you’re completely undermining that and saying, actually, you’re going to get £600,000.
Mr Blake: You say:
“Am I the only one worried about all this? Is it me or is this really Emperor’s New Clothes stuff? I think we are sleepwalking into real difficulties.”
What did you mean by that?
Simon Recaldin: Again, it’s around the Post Office are an operational engine that delivers these outcomes, these fair outcomes. At a stroke, the Government were undermining the confidence in that by – and it’s in here – by saying that, actually, you know, effectively we’re uncomfortable with this process and we’ve not – it’s clearly not fit for purpose because it’s not paying out enough and, therefore, what we’re going to do is we’re going to impose this on, and we’re not even going to consult about it.
Mr Blake: Can we please turn to BEIS0000738, and now moving to January 2024, and there’s an email chain regarding whether it’s a minimum payment or not a minimum payment. If we start on page 4, we see at the bottom of that page being forwarded to you an announcement from the Government, “Government announcement re overturned convictions”:
“Once this legislation is passed and convictions have been quashed, individuals will be entitled to at least £600,000 in compensation to rebuild their lives.
“The Government has always been very clear previously that there is no minimum amount, although in reality the £600,000 upfront offer set that floor. If they are saying publicly that individuals are entitled to at least [I think that should be £600,000] it feels uncomfortable to me that we cannot make interim payments up to that amount.”
Now, is this the overturned convictions process or is this the other process?
Simon Recaldin: So this is the new process from the £600,000 that effectively was – so in terms of interims, we couldn’t go up to the 600,000 – it wasn’t a minimum payment; it was very clear, to be fair, very clear, that this was for full and final settlement only. So it’s a bit like the 75,000: here’s £600,000, providing you’re prepared to settle.
Mr Blake: If we scroll up, we can see correspondence between yourself and Carl Creswell, and you say:
“I know we’re going through interesting times …”
Is that a reference to the post-Bates television drama: we’re in January 2024?
Simon Recaldin: Yes.
Mr Blake: “… but further to previous mails does not the government link below translate to the current £600k being a minimum payment?
“If so, we could pay [circa] 60 cases up to £600k with [imminent] effect.”
If we scroll up, the response to you is:
“The £600k is a fixed offer sum that postmasters can choose to take, or they can seek to make a fully assessed claim. It is not a minimum payment sum, and therefore not suitable for an interim payment amount. There is a £163k interim payment to relieve any immediate financial pressures for those making a full claim whilst that claim is developed and considered, additionally, specific further interim/hardship payments are also considered if requested by a claimant.”
If we scroll up, you say:
“Beth
“OK – last go, I promise!
“I do understand the initiative but it is not logical.
“We don’t have an expiry date on the £600k [full and final] offer – we await to hear on this. So currently there is no expiry date on this offer.
“If a victim decides to push their claim through full evaluation and their offer is less than £600k they will be advised to take the £600k in [full and final]. If their offer is above £600k they clearly will settle above £600k.
“So whatever happens they get £600k – as per the ‘mass exoneration’ scenario. Nicely aligned.
“So whatever happens they get £600k.
“So alleviate postmaster stress and media outrage by being proactive and top all 60 up to £600k because they are all going to get this anyway.”
If we scroll up, the response to you is:
“You asked yesterday whether the aim was to get money as quickly to claimants, or to get [full and final] settlements to the claimants. Our focus is on achieving the latter. This proposal doesn’t encourage any pace or movement to full and final settlements does it? Ministers and politicians as shown in the Select Committee are keen to take steps to encourage victims getting their full and final settlement as quickly as possible. I don’t believe this moves the dial on that.”
You respond slightly above:
“Beth
“So we hold the funds back that we could pay to pressurise sorry ‘encourage’ [full and final]?
“No need to respond (but grateful for your two responses!).
“Last word – promise – what is the right thing to do?
“I’ve moved on.”
If we scroll up, we can see the response:
“The policy position regarding the £600k was announced by the Minister last year. Last week’s announcement doesn’t change that policy. You asked yesterday whether you should focus on maximising payments or maximising settlements yesterday. We were very clear that we would like you to focus on ensuring that claimants are able to settle their claims as quickly as possible, as this is what Ministers and other politicians are keen to achieve, we need to ensure that victims can complete the claims process. The proposal that you have made does not speed up the overall claims process, and indeed may actually further lengthen it, that is not fair to those still waiting to achieve full and final compensation – many of whom are coming up to their 3rd anniversary of their conviction being overturned this spring.”
Can you assist us with what appears to be a dispute between the Post Office or yourself and the Department for Business?
Simon Recaldin: I can. So – and it’s pretty clear from the one below, from the Department, around there’s a choice here between are you saying the objective is full and final settlement: is that a priority over paying funds out because there are – because, in particular, in OC there are many opportunities, as I explained earlier, to pay out more – further interim payments, and what the Department was saying to me was “No, we don’t want you to do that. That’s not the objective any more. We’d rather you hold on to those and hold out for settlement”.
I was extremely uncomfortable with that, and I think I’m making my point, articulating, of what is the right thing to do because I didn’t want to delay – it seemed to me I was getting an implication to delay redress in order to hold out for full and final settlement. I was saying, “Hang on a minute I’m not quite sure I’m comfortable with that. If I’ve got the opportunity to still pay out redress” – a bit like my example if there’s an offer there, I want to pay the offer amount – “then I don’t want to feel restricted about not paying that out because I’m only going to pay out when I get a full and final settlement”.
That, for me, was quite a strong moral dilemma, and maybe I articulated it badly in there but that was the moral dilemma that I was facing and they made it clear to me, absolutely crystal clear, “No, Simon, the objective, it’s there. Black and white, full and final settlement”. So I then had to issue instructions internally to say those potential interim payments, the Government will not approve them now, and they didn’t approve them, because they were holding out for full and final settlement.
Mr Blake: What is the latest position on all of that?
Simon Recaldin: It’s changed.
Mr Blake: How has it changed?
Simon Recaldin: So Government now appear comfortable that, whenever we can make payments via a head of loss, for example, so there may be ten heads of loss and we may – the legal advisers and we may be comfortable with eight of them, we can pay those eight heads of loss, and we settle effectively via each heads of loss.
Mr Blake: Does that extend beyond £600,000, potentially?
Simon Recaldin: Can do, yeah.
Mr Blake: When has that change been in place?
Simon Recaldin: Forgive me, I don’t know when, but for some time. But this was the initial – and, since then, the position has eroded.
Mr Blake: Can you give us an idea: was it in the summer; in spring? This is January of this year.
Simon Recaldin: Yes, this will have been during the summer, yeah.
Mr Blake: Thank you. That can come down, thank you.
Moving on from interim payments. There’s then a full assessment for those who don’t opt for the Government offer.
Simon Recaldin: Yeah.
Mr Blake: Claims are made of pecuniary – that’s financial – losses and non-pecuniary losses, such as physical and mental loss/impact.
Let’s start with non-pecuniary. You’ve addressed this in your seventh statement at paragraph 100. You describe the Early Neutral Evaluation scheme that was set up in 2022. Lord Dyson was appointed to the role of Evaluator and he evaluated, at that point, ten claims. This led to Lord Dyson’s evaluation of 29 July 2022, which set out the ranges of redress for various heads of claim.
Simon Recaldin: Yes.
Mr Blake: Is that correct?
Simon Recaldin: Correct.
Mr Blake: Lord Dyson considered matters again in December 2023 relating to whether the money from the Group Litigation Order –
Simon Recaldin: Yes.
Mr Blake: – should be deducted. Can you summarise for us what his finding was in that respect?
Simon Recaldin: Well, that we – that nobody should deduct the GLO payments that had already been made from redress.
Mr Blake: Do you know what the Post Office position was in respect of those GLO payments prior to that decision?
Simon Recaldin: That we were deducting them.
Mr Blake: Were you in favour of deducting them or was there internal discussion that you were party to as to whether that was the right or wrong thing to do?
Simon Recaldin: I wasn’t – I was aware of the policy, the process to do it. I wasn’t involved in any debate about whether to do it or not. It was just accepted that that was – that their overall redress would be discounted by the redress that they’d already received.
Mr Blake: Thank you. The Post Office, you say in your statement, has offered to refer three further cases to Lord Dyson for his own review but that hasn’t occurred. Can you briefly assist us with what that involved and why it hasn’t occurred?
Simon Recaldin: There are three specific cases. Forgive me, I think they all come from one legal adviser and we are very, very keen, where the legal adviser is not agreeing with the non-pecuniary offers that we are making, and in order to resolve those, we have suggested that we go back to Lord Dyson to help us evaluate, and we are extremely supportive and we were trying to encourage that proactively and, as yet, we haven’t managed to get the time in the diary from the legal adviser’s perspective.
Mr Blake: Is that something that Lord Dyson is happy to do –
Simon Recaldin: Yeah, absolutely. We’ve even got time – we’ve even had, previously, time in his diary allocated to it.
Mr Blake: Thank you. Paragraph 75 of your seventh statement, you say that by 28 August of this year, 77 non-pecuniary cases had been fully settled, including some who accepted the Government offer; is that correct?
Simon Recaldin: That’s right, yes.
Mr Blake: I think you say 77 non-pecuniary; 9 non-pecuniary haven’t settled; 25 more expected but not yet submitted. Perhaps we can bring that onto screen. That’s the seventh statement, WITN09890700. That’s paragraph 75. It’s page 27.
That gives the figures there: 77 non-pecuniary claims have been fully settled.
You also say in this statement that over 90 per cent of non-pecuniary claims submitted were settled and paid within 44 working days of application submission; is that right?
Simon Recaldin: That’s right.
Mr Blake: It appears from your statement that the non-pecuniary cases that take a longer time are bankruptcy cases; is that right?
Simon Recaldin: Yes.
Mr Blake: So whereas in the HSS scheme I think you weren’t particularly concerned about the bankruptcy cases and delay, is there a concern there at the moment?
Simon Recaldin: To be clear for the Inquiry, I am always concerned in any delay, firstly and, again, where the bankruptcy has evolved, we just have to engage with a third party and that then elongates the process – builds in delay.
Mr Blake: Is there anything there that you think would speed up that process?
Simon Recaldin: I think we’re on this, and I have – there will always be things that we can do to speed up redress and, if this is one of them, I’m more than comfortable to get involved. But, at the moment, it’s not being raised to me as a significant risk.
Mr Blake: Thank you. Moving on, then, to pecuniary. You’ve explained that, prior to establishing the pecuniary principles, it was a slow process; is that right?
Simon Recaldin: Yeah.
Mr Blake: Those principles were established in October 2023 and finalised in January of this year; is that right?
Simon Recaldin: Correct.
Mr Blake: We saw that non-pecuniary claims took an average of 44 days to complete. In terms of pecuniary claims, you’ve said 305 working days. So over a year in relation to pecuniary claims; is that your experience?
Simon Recaldin: Well, in terms of – but that – my understanding is that will be including the building of the pecuniary principles. So that was the journey. So when – and I think Mr Cameron’s witness statement also supported this – when I first arrived at Post Office, in this space, obtaining settlement with postmasters on overturned convictions was a negotiation, okay? It was locking lawyers away in a room and working things out on a heads of loss by heads of loss basis, and it was not constructive and it was not collaborative.
So one of the first things I did – and Mr Cameron’s evidence supported this – was I proposed a different approach, a remediation approach, very much collaborative with the postmasters and their legal advisers to walk in the journey between us, all of us, being a party to that.
That took some time to establish, and then we built the principles based on that principle, that this will be a collaborative voice. So the principles were with the legal advisers.
Now, the legal advisers would never agree to those principles but their input was very, very valuable, and we did adjust those principles with their feedback. So, by the time we got to the October and by the time we got to the end of 2023, we were in a position where we had a bunch of principles which people appeared to be very comfortable with working within, although they weren’t signed off but that they had input from a number of third parties, including postmasters and, more importantly, their legal advisers.
And that’s where we shared all of that journey all the way along, through governance in Post Office and indeed with Government as well, to ensure everybody was comfortable with the approach we were taking of that process. And there was some really good behaviours were seen by everybody in that respect, in getting to an outcome, a remediation outcome, that we could take the postmasters through.
Mr Blake: I think you say in your seventh statement that full claims not involving novel heads of loss now take around 40 working days; is that right?
Simon Recaldin: Yes. So we were absolutely aware that new nuances, new principles, new heads of loss will appear, and we have a process that wraps those in, as well, which again have to go through governance. Now, as soon as a new principle or new heads of loss has to be reviewed, of course we have to understand the financial impact, and we have a huge modelling exercise that we go through to say, “Right, if you’re going to now embrace that new heads to loss” – to your point earlier – “what’s the impact on anything you’ve already done, and what’s the impact going forward, and how is that going to affect the financial modelling, indeed the provisioning”, et cetera, et cetera? So all that exercise has to be done with Government approval.
Mr Blake: Thank you. Could we bring back up onto screen your seventh witness statement, please. WITN09890700, paragraph 86 on page 30:
“As at 28 August 2024, all Claimants except three have received a payment in some form, whether an interim payment or final settlement payment. These three Claimants had their convictions overturned between late January and August 2024. All three have been sent an interim payment application form with one Claimant accepting the interim payment; this interim payment was made on 2 September 2024.”
Can you assist us with how many pecuniary claims have finally settled and how many are outstanding, or an indication of that?
Simon Recaldin: So what I can hopefully assist with – I haven’t – I probably have somewhere – got the complete breakdown. I’m happy to supply that to you. What I can hopefully help the Inquiry with, out of the 111 cases – because that’s a fixed population now because of mass exoneration – so out of the 111 cases, 61 have settled. The vast majority of those are the 600,000, but there are other cases that are above 600,000 that have settled. So 61 have settled but there remain 50 cases.
Of the remaining 50 cases, every single one – to this point in paragraph 86, every single one has had at least a minimum payment of £200,000. Many of them have settled on non-pecuniaries and some of them have settled on pecuniaries, as well. I haven’t got that precise breakdown here. I think it is in my statement as it was at the end of May. I’m happy to provide the Inquiry with updated figures on that.
Mr Blake: Thank you very much.
Sir, we’re going to shortly break for the day. Mr Recaldin is able to come back tomorrow morning and we are able to accommodate Ms Munby to be completed within the day as well.
Sir Wyn Williams: That’s fine.
There’s two rather pedantic points, Mr Recaldin. When you say that the number 111 is now closed, technically, that may not be right –
Simon Recaldin: Ooh, you’re absolutely right.
Sir Wyn Williams: – in the sense that there could be non-convicted but prosecuted postmasters who would come forward still; and there could be, if you are right about this, postmasters who had been cautioned who have not have yet come forward.
Simon Recaldin: You’re absolutely right, of course, Sir Wyn.
Sir Wyn Williams: Well, no, no, I could be wrong.
Simon Recaldin: No, you’re absolutely right. But in my head is absolutely the funding allows the prosecuted not convicted population into the OC funding space but because they’re not a convicted case, I haven’t included. So in terms of overturned convictions, my understanding is a locked down population. Thank you for the clarity. You’re absolutely right.
Sir Wyn Williams: Yes, but the reason I was thinking about that was – and I certainly may be wrong about this – I hadn’t appreciated previously that cautioned postmasters were within OC and, when I was reading the section of your witness statement, which deals with prosecuted but non-convicted cohort at paragraph 29 onwards – don’t bring it up now, I’ll just ask you to look at it overnight – there’s no mention of cautioned subpostmasters.
I’m very happy that you may be right about it but I would like you to clarify that for me, if you would.
Simon Recaldin: And Sir Wyn, I would appreciate the opportunity for clarity. And I think Mr Blake also pointed out in the funding arrangement it didn’t refer to the word “caution” either. And, as soon as I’ve said that, I’m now doubting myself. So I’m pretty sure it does but I need to – thank you for the opportunity for me to go and seek clarity. I will do that overnight.
Sir Wyn Williams: That’s fine. Thank you.
Well, thank you very much for giving evidence all day.
I’ll see you – I think it’s 10.00, Mr Blake, tomorrow?
Mr Blake: Yes. We can accommodate both Mr Recaldin and Ms Munby tomorrow, even with a 10.00 start.
Sir Wyn Williams: That’s fine then, so I’ll see you at 10.00 tomorrow morning.
Mr Blake: Sir, can I just clarify for Mr Recaldin: obviously, he can’t speak to anybody about his evidence, subject to that one issue relating to the caution?
Sir Wyn Williams: Yes, I think that must be right, Mr Recaldin. You’re not supposed to speak about your evidence, unless I specifically allow you to do so. Certainly, in relation to the clarification which I have provoked, you can speak to whoever you think is appropriate. All right?
The Witness: Thank you, Sir Wyn.
Sir Wyn Williams: Thank you.
Mr Blake: Thank you, sir.
(4.31 pm)
(The hearing adjourned until 10.00 am the following day)