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Rt Hon Liam Byrne MP 2 December 2024
Chair of the Business and Trade Committee
House of Commons Post Office Ltd
London 100 Wood Street
SW1A OAA London
EC2V 7ER
Dear Mr Byrne,
Post Office: Fast and Fair Redress
Thank you for the opportunity to give evidence to the Business and Trade Select Committee on
19 November 2024 on the topic of redress and for your constructive challenge. I hope the
evidence Mr Railton and I gave to the Committee was helpful.
During the session, I made a number of commitments, and I wanted to follow up on each of
these in writing to continue our support for the Committee’s ongoing work.
Cost of External Lawyers
During the session, I was asked about how much had been spent to administer the redress
schemes and the total amount of fees paid to external lawyers. Importantly, as I said during the
session, Government funding support for redress payments is separate and ring-fenced from
the funding provided for the operation of the schemes that Post Office Limited is administering.
On this topic, I stated that we had spent £178m (including VAT, £163m excluding VAT) on
Herbert Smith Freehills (HSF), who have supported Post Office in the set-up and running of the
Horizon Shortfall Scheme (HSS). The £178m number I quoted is actually the spend allocated
to date for HSF fees associated with both supporting the Post Office Redress Schemes and
other legal work outside redress such as Sir Wyn’s Post Office Horizon IT Inquiry. I apologise
for any confusion this may have caused.
To further clarify, I have since checked my information so I can provide you with accurate figures
on both the cost of administering the redress schemes and the fees paid to external lawyers.
These figures represent spend allocated to date and include, for example, some sums which
Post Office has yet to be invoiced for.
The cost of administering the Post Office led schemes from 2020 to date totals £197m (including
VAT, £181m excluding VAT). £136m (£125m excluding VAT) of this total is for legal fees. This
comprises a total of £67m (£61m excluding VAT) in fees paid to HSF for its work on the HSS
and a total of £15m (£14m excluding VAT) for its work on Overturned Convictions. To your point
at the Select Committee, these are still large sums and, as advised, it is worth noting that a
significant proportion of the external legal fees were invested in the upfront design of the scheme
and its principles, which are now in place.
So long as these schemes are managed by Post Office, we continue to take active steps to
manage legal costs by bringing some redress activity, for example in Overturned Convictions
and the HSS under £75,000 process, in-house. In doing so, Post Office will deliver a greater
proportion of the overall case assessment work while retaining the independent mechanisms
built into the schemes.
Moreover, as I outlined in my evidence, redress payments are now accelerating in volume —
with thanks to the introduction of the £75,000 fixed-sum offer and steps we have since taken to
automate parts of the fixed-sum offer process, like the processing and distribution of payments.
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Anticipated Redress Payments by March 2025
To illustrate the extent of this acceleration, I noted that average monthly payout since May of
this year to date on redress had moved from c. £5m to £45m and has capacity to reach an
average of £68m per month. Overall, Post Office now has the capacity to deliver £570m of HSS
redress to be paid by the end of March 2025.
This is a different figure to the one I gave in my evidence to Sir Wyn’s Inquiry, when I stated that
we expect to have paid out over £650m by the end of March 2025. The reason for this difference
is that the figure provided to the Committee relates only to the HSS, while the figure I provided
to the Inquiry includes redress related to total redress across all the schemes (including
Overturned Convictions and other schemes). We continue to publish redress data related to the
schemes administered by Post Office on our corporate website on a monthly basis. '
HSS Forecast Assumptions
During the session, I offered to provide more information about our modelling assumptions. We
currently operate under the assumption that 85% of eligible claimants will choose the £75,000
fixed-sum offer route. These assumptions are based on the applications we have received to
date. Early indications of responses received since the launch of the fixed-sum offer option
suggest that this forecast is holding true. We will continue to monitor this against actuals and
update our forecast assumptions accordingly. Similarly, based on observed trends on total
applications to date, we have assumed that 87% of people applying to the HSS will be deemed
eligible.
There are, however, two variables to consider:
1) the number of respondents to the recent invitation to the HSS, as part of which we have
written out to c.16,000 current and former postmasters to date with a further c.10,000 to go; and
2) the percentage of those applying that choose to take the fixed-sum offer option. These
variables could both be impacted by a closure date announcement, as well as details of the
Government's independent appeals process once it becomes available.
Requests for Information
During the session, the Committee asked whether Requests for Information (Rfls) to claimants
are needlessly detailed or even designed to minimise claims based on evidence given by
claimants. I apologise for this perception, which was absolutely not our intention.
When I explained that Rfls are intended to help improve claims by providing the best evidence
possible, the Committee rightly challenged whether this intention is being communicated clearly
to claimants. With this in mind, we have added the following wording to Rfl letters (additions in
italics):
“It's important to Post Office and the Independent Advisory Panel (“Panel”) that we give
you every opportunity to make the best claim possible. To do this, the Panel has asked
us to request further information from you to enable it to make the fullest and fairest
assessment of your claim. If you are able, please answer as many of the enclosed
questions as possible. If you cannot give a precise answer, an approximation will help
and the Panel will take it into account, even if you cannot answer everything. Thank you.
1 https://corporate.postoffice.co.uk/en/the-horizon-it-scandal/
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If you need any support in providing the information requested or with any of the
questions, or if you think you will need more time to respond, please let us know by
email or by post (details below)”.
We hope these changes will clarify the purpose of the request and demonstrates our openness
to feedback from all stakeholders, including the Committee.
Project Phoenix
As the Committee will know, Project Phoenix is a very important piece of work for Post Office.
The project reviews over 40 historical investigations where allegations have been made by
postmasters of wrongdoing or poor conduct on the part of Post Office and/or Post Office
employees (both current and past) during the Inquiry Human Impact Hearings. Although Project
Phoenix is distinct from both the ongoing independent Inquiry and the work of the Metropolitan
Police, where evidence of potential criminal wrongdoing has been found it has been referred on
to the Police by the Phoenix Review Team. Post Office continues to fully support their work on
these matters.
Towards the end of the session, you challenged Mr Railton on whether the money spent by Post
Office on the work of Project Phoenix was a good use of money, quoting a figure of around
£880,000. By way of clarification, the total budget for Project Phoenix is £884,000 but the lifetime
spend to October 2024 is £532,000.
I understand the Committee may be interested in an update on the progress of Project Phoenix
and such an update is being prepared for the closing submissions to Sir Wyn’s Inquiry, which
are due to take place in mid-December. I trust you understand our ongoing obligations to the
Inquiry and hope you will accept an update on Project Phoenix at the same time as Sir Wyn.
HSS Legal Support
Ms Griffiths asked if I wanted to change the support offered by way of legal advice to HSS
applicants, to which I responded, “Post Office has made it very clear to Government that we
believe the up-front legal advice should be made available for people’s applications.” To
underline this, and to meet my commitment to share with the Committee where this was raised
at the Inquiry, I refer you to page 146 line 18 to page 149 line 21 of the transcript of my own
evidence to the Inquiry on 4th November 2024.?
For now, as I said during the session, Post Office offers to pay reasonable legal costs for
applicants if they receive an offer and decide to challenge it. An applicant considering whether
to accept a fixed sum offer is not entitled to the same support (a point that Post Office has
repeatedly asked Government to consider). More generally, applicants are encouraged to take
legal advice throughout the process in case they think it would be helpful. The scheme website
states the following:>
“The Horizon Shortfall Scheme has been designed to be simple and user-friendly to
avoid the need to incur costs of legal representation. Applicants are of course welcome
to engage a lawyer or other professional advisor to provide independent representation
at their own expense. Post Office will however help you with the reasonable costs of
obtaining legal advice on an Offer if one is made to you. If so, full details will be
2 https://www.postofficehorizoninquiry.org.uk/hearings/phase-7-4-november-2024
3 https://www.onepostoffice.co.uk/scheme
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included in the Offer letter. Reasonable legal fees will also be reimbursed should you
wish to dispute the Offer”.
Offer letters also explain to applicants that Post Office will pay for reasonable legal costs and,
as I committed to in response to Ms Edwards, I attach a copy of a standard offer letter for your
information. Lastly, where offers are disputed, the Dispute Resolution Team will also highlight
the availability of legal advice to unrepresented applicants.
I hope this clarifies how the availability of legal fees is communicated to applicants. I welcome
any feedback the Committee may have.
I hope this update is helpful. We are keen to support the Committee’s ongoing work and remain
open to feedback on improving the schemes so that both postmasters and the public have
confidence in the redress that postmasters impacted by the Horizon Scandal so rightly deserve.
I remain committed to providing fast, full and fair redress to victims of this terrible scandal and
will continue to update the Committee on progress on a regular basis.
Yours sincerely,
GRO
Simon Recaldin
Remediation Unit Director
Post Office Limited
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