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HORIZON COMPENSATION ADVISORY BOARD
INCREASING THE SPEED OF REDRESS
Introduction
1.
Minister Hollinrake has asked us to consider what can be done to increase the pace with
which compensation is delivered. In doing so, we have of course also considered how the
fairness — and perceived fairness — of the schemes can be maintained and improved.
We recognise that the main issues affecting speed of compensation are the preparation of
OC and GLO claims, the resolution of disputes and the time taken to issue HSS offers. Initial
GLO and OC offers are already being delivered promptly.
Recommendations
3.
6.
We welcome measures already in hand to speed up compensation. We recommend a
further package of proposals which could be announced and implemented fairly quickly.
There is more detail on these in Annex A.
e An optional HSS fixed offer whose value should be calibrated to cover about one third of
HSS claims — ie at about £12,000.
e Additional interim payments to take compensation up to £50k when a GLO claimant
submits their claim.
e Create a new lighter touch “small claims” process for HSS claims under say £5k.
e Firmly encourage the Post Office to strengthen and monitor instructions to move
quickly, not to nit-pick, and respond pragmatically to differences of view on claims.
We also recommend that officials should develop for decision further advice on the package
of more structural measures described in Annex B. These take advantage of the need to
build new capacity to deal with the flood of new HSS cases generated by Mr Bates vs the
Post Office plus the additional OC cases which will be created by the Government's planned
legislation. They include:
e Asking the Post Office to remove HSF from any role in Horizon compensation as quickly
as can be managed without unnecessarily disrupting delivery — and instructing their
successors to make full offers without unnecessary quibbling.
e Making DBT (rather than the Post Office) responsible for the delivery of redress for
those whose convictions are overturned by legislation — and extending that capacity also
to cover new HSS cases. The schemes should, so far as possible, take a common
approach based on that of the GLO scheme.
e Using that capacity also to provide an independent appeal route for HSS cases —
effectively putting them through the GLO system.
¢ Bringing into DBT the delivery of the existing stock of OC and HSS claims, along with the
governance and staffing of the Post Office Remediation Unit.
We believe that these recommendations will speed up redress and increase stakeholders’
trust in the process. Because the capacity will need to be built to manage the new caseload,
they will not create substantial new transitional costs.
We have two miscellaneous recommendations (Annex C):
e Provide regular information for claimants in all schemes on claim status.
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© Bring approval process for OC legal costs for future cases in line with the GLO scheme
All of the above recommendations are based on the continuation of what is broadly an
adversarial model. For the longer term, we believe that is not the best way to deliver
compensation schemes. Faster, more efficient and more claimant-friendly redress could be
delivered through a system that was investigative rather than adversarial, and which made
decisions efficiently through an independent process, by reference to a tariff of damages,
and obtaining assistance from a standing panel of external experts. It is too late to adopt
such a system in respect of the Horizon schemes — but we shall produce fuller
recommendations for the benefit of those overseeing future schemes.
Background
8.
9.
10.
11.
DBT officials have provided the following summary of progress in the three schemes.
In the GLO and OC, the overall pattern is that first offers are generally being made quite
promptly once claims are received. Delays are much more likely to arise in:
e The preparation of OC and GLO claims, including the acquisition of expert medical and
accounting evidence and of Post Office disclosures;
e The resolution of disputes (although it is too soon for this to have become a GLO issue);
© The issue of HSS offers; and
© The overturning of convictions (being considered separately).
In considering new measures, account needs to be taken of those which have been decided
but have yet to have their full effects, including:
© Optional fixed offers of £600,000 to those with overturned convictions and £75,000 to
those in the GLO;
® —aninterim payment top-up (to £450,000) upon submission of a fully particularised
pecuniary OC claim to incentivise early submission; and
© Legislation to overturn remaining convictions.
Unless otherwise stated, data in this paper are as at 31st January 2024 for HSS, and 1st
February 2024 for OC and GLO.
Current position
GLO
12.
13.
14.
15.
Across the three compensation schemes, 2,893 postmasters have applied for compensation.
Settlements have been reached with 78% of these. Settlement numbers are likely to include
more of the ‘easier’ cases to deal with. Recent decisions on fixed offers will accelerate that
progress — but the decision to legislate to overturn convictions, plus the impact of Mr Bates
vs the Post Office, will bring hundreds more cases.
We know of no compensation scheme dealing with such complex cases which, now that it
has commenced, is delivering so quickly.
There are 492 claimants in the scheme. Interim compensation totalling over £19 million has
been paid to all but four claimants — three dormant companies and one estate awaiting
probate.
As of 13 February, Post Office had produced disclosures in respect of 304 out of 582
branches (52%), probably equating to over 250 claims. They are now producing around 13
disclosures per week. They have also produced 68 shortfall analyses (which claimants’
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16.
17.
18.
19.
20.
21.
22.
HSS
23.
24.
25.
26.
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lawyers find helpful in some cases) out of 153 extant requests. Note that the £75k fixed offer
is expected to be relevant to about one third of cases. For those clearly below the threshold,
no disclosures or shortfall analyses will be needed. These will include some for which
disclosure has already been made but a significant number are still awaited.
DBT has approved funding for 342 forensic accounting expert reports and 332 medical
reports. Accounting reports can generally only be produced once Post Office disclosures are
received. DBT does not have information about how many reports have been commissioned
or produced (although work is now in hand to track this).
DBT has received 58 complete claims. It has made 52 offers and have 6 still in hand. The
claims and offers include some £1m+ cases as well as smaller ones.
DBT has have a target of issuing 90% of initial offers within 40 working days of receiving a
completed claim. The target only applies to 90% of claims because a small proportion of
cases raise new issues of principle: these take longer to resolve. There are of course more
unprecedented cases at the start of a scheme: as a result, the target is harder to meet. To
date DBT has issued 70% of offers within the deadline. Officials are confident that this will
rise above 90% in coming months. DBT’s performance against the target is published.
Of the 52 offers made, 41 have been accepted, 3 challenged and responses are awaited to 8.
Some challenges will involve the provision of additional evidence which is likely to lead to a
settlement within weeks. Only challenges to the principles of offers are likely to require
resolution by the independent panel. Dentons will refer matters to the panel as rapidly as
they can.
Officials’ view is that the very low number of challenges indicates that DBT’s offers are — as
intended — generally fair.
Conclusion: in the GLO scheme we should focus on measures to accelerate the submission
of claims. We should also consider what can be done to accelerate the scheme’s response
to substantive challenges once they arrive.
2,417 claims were submitted before original deadline. All have been made initial offers.
2,051 have been settled: 366 are in the dispute process.
376 eligible claims have been submitted since the deadline. Mr Bates vs the Post Office is
stimulating further HSS claims - Post Office has received 462 late claims since the start of the
year, taking the total to 876 late claims. Of these, 400 have been assessed as eligible and 62
are ineligible. The remaining 414 are going through eligibility checks. The Post Office expects
to continue to receive a high volume of claims in the coming weeks.
Post Office have indicated that it currently takes 30 weeks on average from when anew
claim is received for it to progress to an offer (although it can be much faster in some cases).
This includes any requests for further information and the referral to the independent panel,
so it is not on the same basis as the GLO target of issuing offers within 40 working days.
The 30-week process is split roughly as follows:
e First 10 weeks — Eligibility confirmation. This includes the verification that the applicant
is eligible and the initial identification and verification (ID&V) of the applicant. The
timeframe for this stage could be affected by issues with obtaining ID&V and any
appropriate attestation/representation documents, including probate documentation
(this could take up to 4-6 months depending on the complexity of the deceased’s
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estate). Also includes delays with IVA supervisors and independent trustees engaging
with the scheme. NB in the GLO scheme this is much easier because the eligible cohort is
known in advance.
e Week 10 - Week 15 — Shortfall Analysis. Average elapsed time is 5 weeks. This is the
time taken to review the claim in detail (shortfalls plus any Post Office contractual claim
elements, e.g. suspension/termination).
e Week 15 - Week 26 — Panel review and recommendation. Average elapsed time is 11
weeks. This will include HSF completing their assessment, incorporating the shortfall
analysis (SFA) with other consequential loss elements of the claim and may include
requests for further information (RFI). Delays in RFI responses and complexity of the
consequential losses being claimed may impact on this, as well as engagement with
expert reports.
© Week 26 — Week 30 - Decision and Offer. Average elapsed time is 4 weeks. This will
include the drafting of the offer letter and resolution of any issues that may come from
this process. This will include offers going through POL and DBT governance checks.
27. There are around 350 cases currently going through the Dispute Resolution Process. DBT has
agreed some recent tweaks to that process to reduce bureaucracy around the approval of
legal fees and to provide Post Office with more flexibility to make an offer on commercial
grounds to settle claims within reasonable parameters.
28. The Board has previously expressed concerns about the fairness of POL and HSF involvement
in administering compensation.
29. Conclusion: the challenge is a mix of considering new claims and resolving those in
dispute.
Current position: OC
30. 101 convictions have been overturned to date. People are invited to apply for compensation
when convictions are overturned. Full and final settlements have been agreed with 32
individuals.
31. Interim payment offers of £163k are made within 28 days of applications. The process
works efficiently and interim payments are paid quickly. Some have chosen not to apply for
an initial interim payment and progress immediately to their full claim. 95 applications for
interim payments have been received and 92 offers have been made.
32. Claimants can opt for a fixed offer of £600k — or can choose to have their claims considered
individually. This offer has helped to significantly increase the number of full and final claims
reached from 5 before the offer was made to 32 full and final settlements today (note —
some previous settlements with ‘public interest cases’ have been re-opened so are not
counted in the latter number).
33. Non-pecuniary claims are settled on the basis of the Dyson ENE. The process is now well
embedded and offers/settlements of non-pecuniary claims progress quickly. Not counting
those who have settled in full and final settlements, 44 non-pecuniary claims have been
submitted, 40 offers have been made and 29 have been paid.
34. Progress in responding to pecuniary claims has to date been slower. These are often the
larger elements of the claim with a great deal of evidential complexity. The OC Pecuniary
Principles which have been put in place and Sir Gary Hickinbottom’s appointment should
speed things along. However the speed/efficiency of the new process is still to be fully
tested, as is the mechanism for then resolving disputes.
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35. Conclusion: the challenge has been getting pecuniary claims submitted. DBT has recently
agreed an interim payment top-up (gross £450k) upon submission of a fully particularised
pecuniary claim to incentivise this.
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ANNEX A: PROPOSALS ADDRESSING CURRENT SOURCES OF DELAY
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We welcome three measures to speed the submission of GLO and OC claims and the processing of HSS ones which are already being implemented:
e To incentivise claimants and their lawyers to submit pecuniary claims more quickly by offering additional interim payments to take compensation
up to £450k when an OC claimant submits their pecuniary claim. (From Sir G Hickinbottom).
e Relaxing requirements on the Post Office to redact third-party information from their GLO disclosures. ICO have offered to help with this, which
might shorten the GLO timeline by several weeks and substantially ease the disclosure challenge for new HSS and OC cases.
© Working with claimants’ lawyers and the Post Office, to provide additional information to track individual GLO cases through the preparation
process and hence identify any blockages and demonstrate scheme progress to stakeholders (JFSA suggestion).
We recommend four further measures with similar goals:
Scheme/proposal
Officials’ assessment of feasibility and impact
Likely results
A1. HSS - Introduce fixed offer of about
£12,000 to cover about the smallest
third of HSS claims.
Would allow about a third of HSS late claims to be settled quickly.
Would help to resolve only about 5 cases currently in the dispute process.
Would add around £9 million deadweight cost by topping up over 1,200 lower awards.
Would provide similar treatment to the OC and GLO schemes. Need clear narrative relating
each scheme’s fixed sum amount to the proportion of claims affected.
Would encourage more claims — whether genuine or fraudulent (whereas GLO claimants
are known).
Would accelerate
resolution of late claims
and address some issues
around lower
settlements.
High deadweight cost.
Some operational
savings.
A2. GLO - Additional interim payments to
take compensation up to £50k when
a GLO claim submitted.
Reduces the financial pressure on claimants whilst claims are considered.
No deadweight cost because of £75k fixed offer.
Limited incentive on claimants and their lawyers to submit pecuniary claims more quickly —
because most claims are delayed by practicality (eg expert evidence) not lawyers’ tactics.
A3. Create new “small claims” process for
HSS allowing claims under [£5k] to be
processed through a simple form
without legal support, and paid
subject only to ID/anti-fraud checks.
Some setup cost but should save significant operational costs and encourage postmasters
to come forward who might not otherwise have claimed.
Saving op costs.
Promoting takeup.
A4. HSS — Firmly encourage the Post
Office to strengthen and monitor
instructions to move quickly, not to
nit-pick, and respond pragmatically
to differences of view on claims.
HSS panel already guided by considerations of fairness.
Already implemented but
could be reinforced.
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ANNEX B: STRUCTURAL PROPOSALS
B1. This Annex sets out a number of proposals for changes in structure.
B2. Two current developments create opportunities for such change. More capacity is needed to deal with the flood
of HSS cases stimulated by Mr Bates vs the Post Office, and to take on the large number of OC cases to be
overturned by legislation. The latter will effectively require a new scheme — “OC2”.
B3. That capacity will need to include additional external legal advisors. We recommend that this should be used as
an opportunity to remove HSF from any role in Horizon compensation as quickly as can be managed without
unnecessarily disrupting delivery. HSF damage the credibility of the schemes and have a reputation for
adversarial negotiation inappropriate to schemes delivering financial redress for often vulnerable claimants. We
understand that their involvement is already being reduced. New advisors should be better able to deliver on an
instruction to make full offers without unnecessary quibbling — and we recommend that such an instruction
should be given.
B4. As well as external lawyers, new in-house capacity needs to be established to run OC2. That could be built in DBT
as easily as in the Post Office and so we recommend that OC2 should be managed by DBT. With the GLO
scheme, the Department has already established the principle that it can run Horizon redress which attracts
more public trust than the Post Office’s schemes. And by removing the governance interaction between DBT and
Post Office, the scheme can operate more quickly and efficiently.
B5. The ITV drama has already stimulated [n] new HSS cases, and many more are expected. Additional capacity will
be required to respond to this. Rather than allowing the Post Office to scale up its own delivery, the most.
efficient way of creating this new capacity will be for it to be integrated with that for OC2. So we recommend
that new HSS cases should also be managed by DBT. The timing of the switch of responsibility should be
determined by when DBT’s capacity will be ready to take on cases.
B6. We note that the average time to make an initial offer in new HSS cases is 30 weeks. That compares to the GLO
scheme’s target of delivering 90% of offers within 40 working days of receiving a completed claim. We recognise
that these targets are measuring different things: the HSS figure includes much of the work required to develop
claims plus a higher level of identity checking (because the GLO cases are a pre-identified group). Furthermore
we accept that the longer time-frame is in part driven by the difference in processes, with the HSS Panel
responsible for deciding offers in all cases whereas in the GLO the panel is not involved except in cases which
cannot be agreed bilaterally. But we see that as a weakness in the HSS process: as well as adding delay, it is more
costly to involve the panel in every case. The construction of new capacity managed by DBT creates an
opportunity to see HSS offers made in-house with the panel’s role confined to resolving disputes.
B7. These recommendations would mean that within a few months, new cases in all three schemes would be
delivered by DBT. We recommend that, so far as possible, all three schemes should take a common approach
modelled on the GLO, including offers made bilaterally; resolution sought through ADR; a Panel to resolve
disputes; a Reviewer for final appeals; a tariff for claimants’ reasonable legal costs; and a claims facilitator,
responsible for helping to resolve disputes and chasing both sides to act promptly. These changes will increase
both efficiency and stakeholder understanding.
B8. We recognise that procurement law means that it will be impossible for DBT simply to scale up its ask of
Addleshaw Goddard and Dentons under their existing GLO contracts: in any case, by the time DBT is ready to
deliver, the great majority of GLO cases should already have been resolved, and that most of the remainder will
be in the ADR process. DBT will need to consider at the time how far it is possible to integrate remaining GLO
work with the other schemes.
B9. We have previously recommended the creation of an independent appeals process for the HSS. If our Annex A
recommendation to introduce a minimum payment for HSS is accepted, the number of postmasters who might
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B10.
B11.
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want to take advantage of this should be reduced by about one third. And if the above recommendation that
new HSS cases should be managed by DBT on the GLO model is also accepted, they too will not need an
independent route of appeal. But that will still leave perhaps 2,000 claims, some of which will have been
submitted before the consequential loss guidance was published and others without legal advice. We continue
to believe that these people deserve the chance to have their cases reconsidered independently, even though
we expect relatively few choose to take that opportunity.
We recognise that one of the difficulties facing DBT in considering whether to create such an appeal route has
been the great uncertainty in the number of cases which would need to be dealt with. That created risks of
building unused capacity — or of having capacity swamped by unexpectedly large numbers of cases. The
recommendations above substantially reduce that risk because DBT will be building capacity anyway for OC2 and
new HSS cases. A final HSS appeal panel and reviewer could be built into that new capacity with very little set-up
cost — it might even be possible to use the GLO system — and the uncertainty in the number of HSS appeals will
be less significant when seen alongside the large number of OC2 and new HSS cases. So if our other
recommendations are agreed, we also recommend that an independent HSS appeal mechanism should be built
alongside them.
The Post Office is already dealing with about 60 OC cases and 349 HSS disputes, and will have made a start on
hundreds of late HSS applications received before the ITV film was broadcast. Once DBT’s capacity comes on
stream, new cases will need to be directed away from the Post Office, leaving them with a rump of previous
claims. We accept that it will probably be difficult — and unfair to claimants — to change in mid-flight the
processes governing these claims or the resources being used to manage them. However we recommend that
the governance and staffing of the Post Office Remediation Unit should be brought within DBT. This will speed
governance and improve the scheme’s credibility, especially given the greater influence of the Advisory Board
over DBT’s delivery. We recognise that existing staff may have a legal right to transfer with the work. Even
though most have been recruited since 2019, in the public mind their continued involvement will to some extent
taint the continued delivery of existing cases. But the taint would be greater if the operation continued to fall
under Post Office governance.
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ANNEX C: PROPOSALS AFFECTING OTHER ISSUES
The Board welcomes recent confirmation that:
e “Public interest” cases are to be compensated in the same way as others with overturned convictions.
*® OC awards will now only be reviewed by DBT in exceptional cases.
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© Difficult issues of principle can be put to the GLO Panel at an early stage, perhaps unlocking resolution of multiple claims and saving operating costs.
Decision-makers in OC and HSS cases can exercise appropriate commercial flexibility to secure just, early settlements. This will become a useful tool
in the GLO as more cases move into dispute, saving legal costs.
We recommend a number of further measures:
Scheme/proposal
Officials’ assessment of feasibility and impact
Likely results
C1. GLO (and other schemes) —
more regular information for
claimants on claim status
Worth considering (via their solicitors), esp for claims which are taking some time.
Feasible, low cost, may
reduce claimants’
concerns.
C2. OC - Bring approval process
for legal costs for future cases
in line with the GLO scheme
On the whole, costs issues are not particularly slowing OC claims as most advisers have agreed to
settle the issue of costs after or at the settlement of the whole compensation claim. POL will make
interim payments on account of costs at the points of: i) non-pecuniary claim settlement; and i)
pecuniary claim submission. It will also pay expert disbursements upfront if agreed ahead of time.
Finally, POL has put in place costs adjudicators at the end of the process if costs cannot be agreed.
However, getting hundreds of postmasters legally represented and ready to submit claims after
primary legislation may be a challenge, so it is worth pursuing for future delivery.
Claimants’ solicitors are keen to see a tariff because they believe it will be of financial advantage to
them, not because they expect it to accelerate the scheme.
Unlikely to be useful in
current process but
required for future
legislative overturns.
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We have considered two further proposals which we do not recommend:
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C3.
NOT RECOMMENDED:
OC/GLO - Increase values of
fixed offers
GLO fixed sum award means that nearly a third of claimants are getting more than they asked for.
We have claimants requesting £15k who are getting £60k more than that. Increasing to say £100k
would mean perhaps 160 people getting an extra £25k each (plus more people who were already
in the £75-100k range also getting something). That's £4m-plus of pure deadweight. It might mean
a few dozen more claims didn't need full analysis, accelerating the end of the scheme by a few
weeks. A few weeks for £4m seems like bad vim when there are so many other demands on the
public purse. There are also the potential repercussive impacts on the HSS to contend with.
Accelerate scheme by a
few weeks.
Cost £4m- plus.
C4,
NOT RECOMMENDED:
GLO/OC — following up the
£75k GLO fixed offer, give
flexibility for quick settlement
of sub-£100k claims at £100k
with especially low evidential
bar. Could take similar
approach to OC claims below
say £750k.
Creates further complexity and edge effects in schemes, which will be unwelcome to claimants.
Would create deadweight (eg paying £100k on an £80k claim) although savings in legal costs would
reduce this.
Reduced evidential requirement could speed submission of claims.
Could speed settlements where offer is challenged. However would mostly affect initial offers. In
the GLO, ~90% of those are accepted.
So each settlement accelerated would cost about 10 lots of deadweight, each worth £0-25k.
Risk of undermining the £600k settlements which have been reached to date, likely that some
would have taken a higher award if it was available. Re-opening settlements may district from
processing outstanding claims.
Feasible, but Treasury likely to be very concerned about deadweight.
Proposal C2 would be more effective.
Feasible way to
accelerate challenged
settlements but very high
cost and creates
unwelcome complexity.
Commercial flexibility
would be better.
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