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2 November 2022 Lead official: Rob Brightwell! GRO_
POST OFFICE HORIZON: GLO COMPENSATION
Issue
1. The delivery mechanism for the additional compensation which we have promised forthe
“GLO” postmasters, who exposed the Post Office Horizon scandal in the High Court.
Recommendation
2. Note the strong cross-party Parliamentary interest in this issue and the pressure from the
Williams Inquiry for an announcement before its 8 December hearing.
3. Agree that (subject to approval by the BEIS Projects and Investments Committee) we
should adopt a scheme based on facilitated dispute resolution proceses/Alternative
Dispute Resolution (ADR) to be delivered by BEIS
4. Agree to delegate approval of to the details to PIC, so that if PIC approves it can go
straight to Treasury, to maximise chances of an announcement before 8 December.
Background
5. Sub-postmasters were franchisees contractually required to cover any losses at their
branches. In 2000, the Post Office introduced its Horizon accounting system which had
bugs which led to false losses in branches.For 19 years, the Post Office made thousands
of postmasters “repay” these losses. Many were dismissed; hundreds were prosecuted
and jailed for theft or false accounting.Many decent people los their reputation, suffered
mental and physical health problems, bankruptcyor even committed suicide.
6. In 2016 a group of 555 postmasters sued the Post Office under a Group Litigation Order
(GLO). The High Courts 2019 findings exposed the scandal. The postmasters negotiated
a settlement of £42.75m plus costs, butmost of this went to the firm which had funded
their litigation. They were left with only £10.5m. Under the settlement, the Historical
Shortfall Scheme (HSS) was set up for other affected postmasters That provided much
more generous compensation. (Compensation for postmasters with overturned
convictions (whether GLO members or not)is being negotiated separately)
7. Following a cross-party campaign,the then-Chancellorannounced in March this year that
we would provide finance to ensure that GLO postmasters’ compensation was similar to
that provided to others Compensation will also meet claimants reasonable legal costs.
The Treasury have agreed reserve accessof up to £80m for the costs of compensation
subject to conditions, including that any scheme is delivered via POL.BEIS will need to
find cover for the costs of delivery we are discussing this with Finance colleagues.
8. Minister Hunt consulted in September on options for a scheme developed in close
partnership with the Justice for Subpostmasters Alliance (JFSA). The options differ only
in respect of process: all will deliver compensation similar to that offered by the HSS.
9. The Inquiry into the Horizon scandalhas a further hearing on compensation issues on 8
December. Its Chair, Sir Wyn Williams, has said that he wants rapid progress on the GLO
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scheme. We are putting a proposed scheme to BEIS’s Projects and Investment
Committee on 22 November. It will then need Treasury clearance. We hope to make an
announcement before the 8 December hearing.
Considerations
10.Postmasters’ responses to the consultationoverwhelmingly supportedthe scheme being
a) delivered by BEIS rather than the Post Office; and b) based onADR (notably including
mediation) rather than one similar to the HSS.
11.We believe these are the best options for Government, too.To minimise the legal costs
of the process to both sides we need early resolution of claims. That is much more
achievable in a scheme which postmasters trust. They will trust ADR much more than a
lawyer led litigation orientated approach if adopted for the scheme — and the GLO group
of postmasters understandably do not trust anything run by the Post Officeor its lawyers
HSF. Furthermore, the JFSA’s highly effective lobbying operation will strongly resistither
the HSS-style scheme or a Post Office led one.We believe Treasury will waive their
insistence on POL delivery in light of these points. Do you share our preference for a
BEIS-led, ADR-based scheme?
12.To strengthen trust in the scheme we are developing proposals for an independent
governance board — see separate submission. Compensation for reasonable legal costs
will be based on a tariff being developed by independent costs draftsmen.
13.Like any major project, the scheme requires approval from BEIS’s Projects and
Investment Committee (PIC) and Treasury. PIC meets on 22 November So that we can
announce it before the 8 December hearing— and avoid strong criticism from Williams,
the media and postmasters — we need to give the Treasuryas much time as possible.
Are you content for the scheme should go straight to Treasury if approved by PIC?
14.Once the scheme is approved we will need to procure ADR specialiststo facilitate claims
resolution and external legal advice to BEIS before submission of claims in early Spring
Awards will follow as soon as possible: we should resolve smaller cases quickly, but
complex ones will take many months. The legal base which we are using for the scheme
means we can make no payments after August 2024. We aim to finish all payments well
before that date.
Presentation and handling
15.We will provide separate advice ona Statement announcing the scheme. In parallel with
the Statement we will send details to the Inquiry. The overall message will be that
Government is determined that postmasters affected by the Horizon scandal should get
swift and fair compensation. Our proposed scheme reflects what they have asked for in
consultation and has been developed in partnership with the JFSA. We are now
determined to deliver it as quickly as possible- an important issue for the postmasters.
16.Minister Hollinrake has orally agreed that he and officials should brief the group of
leading Parliamentary campaigners previouslyconvened by Minister Hunt. This should
further ease the Parliamentary reception.
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Recipient To Note / Comment Approve / Decide
Secretary of State x
Minister Hollinrake Xx
Permanent Secretary
x
Special Advisers (SpAds)
x
Does the advice have spending
implications, either for existing
budgets or a pressure for future
budgets? If the answer is'yes’ it
must be cleared with Finance
before being submitted to SpAds
/ Ministers.
Budget cover from HMT for compensationand HMT
consent for the GLO group to be compensated
currently contingent on any scheme being delivered by
POL rather than BEIS. The proposed approach will
require HMT to remove this condition
HMT have agreed access to the reserve of up to £80m.
The cost of compensation remains uncertain The
proposed approach is notanticipated to have an impact
on the level of compensation paid.
No budget has been allocated to date to fundhe
administration costs for the schemeof circa £5-7m which
are likely to scoreto RDEL Admin.
Communications
Has the Communications team
been consulted about the public
presentation of the proposed
course of action?
Details of the GLO delivery mechanism, in line with
feedback from the consultation, is likely to be broadh
welcomed by postmasters and we will frame this as
further evidence of government delivering compensation
fairly and quickly. We will provide full comms handling in
due course, for an announcement prior to the Williams
Inquiry, which will include a press notice and reactive,
Q8A.
Better Impact assessments must be NA
Regulation cleared by the better regulation
team.
Legal Are there legal implications that I Not at this stage. Further detailed workremains to be
Ministers need to be aware of, undertaken.
and what did BEIS legal advisers
advise?
Delivery Does the proposal have delivery I NA
challenges associated with them
and what did the Implementation
and Delivery Directorate advise?
Devolution & the
Union
Does the proposal have
devolution or Scotland/Wales/
Northern Ireland implications? If
so, have you considered these,
and/or consulted the BEIS
Devolution & the Union team?
NA ~ this is a reserved matter.
Other
Does the proposal have
implications for other teams eg
HR, Analysis, Chief Scientific
Adviser, Parliamentary,
commercial, digital functions? If
so, use this table to record the
outcome of consultation with the
expert function(s).
Analysts and commercial expertsare involved in the
development of our detailed proposals.
Comments for private secretary This submission has been writtenas a first introduction to GLO
issues, and so is suitable for early consideration by MinistersWe are required to finalise our
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business case to PIC by 11 November. A response by8 November would allow us to factor
Ministers’ comments into scheme design.
We are currently preparing a submission orHorizon issues more generally including the Inquiry and
other compensation schemes. This willbe with you by 4 November.We have already briefed Minister
Hollinrake in person on thesewider issues, so he could look at this sub before themore generalone.
It may make sense for SoS and other readers to look at the two subs together.
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