SUBS0000010
IN THE MATTER OF THE INQUIRIES ACT 2005
AND IN THE MATTER OF THE INQUIRY RULES 2006
THE POST OFFICE HORIZON IT INQUIRY
WRITTEN SUBMISSIONS
ON BEHALF OF
THE DEPARTMENT FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY
FOR COMPENSATION HEARING 8 DECEMBER 2022
Introduction
1. These written submissions are provided on behalf of the Department for Business, Energy
and Industrial Strategy (“BEIS”) in response to the Chair’s Progress Update on Issues
Relating to Compensation, dated 15 August 2022, and in advance of the one-day hearing
on matters relating to compensation due to take place on 8 December 2022. They set out
the developments that have taken place in relation to the three compensation schemes
over the past three months.
The Historical Shortfall Scheme (“HSS”)
2. BEIS is grateful for the observations made by all Core Participants (“CPs”) to date on the
HSS. BEIS has reflected on these and on the views expressed by the Chair in his Progress
Update and has worked closely with the Post Office with the effect that they have
implemented a number of improvements to their administration of the HSS.
Progress on offers
3. Good progress is being made on issuing offers to HSS claimants. As of 30 November
2022, 93% of claimants have now received an offer, meaning that a total of £70.8million
has been offered. The Post Office will meet its own target of offers being made in at least
95% of cases before the end of the year. BEIS continues to encourage POL to make as
many offers as possible during the remainder of this year, and to continue to make good
progress thereafter.
4, The cases that remain are the most complex and therefore the most difficult to resolve,
including malicious prosecution cases and cases where the claimant has been made
insolvent. The Independent Advisory Panel is working with legal counsel to develop
assessment principles for these cohorts to ensure that the treatment of these claims is fair
6.
10.
and consistent. BEIS expects POL to have made offers in most of these cases by the end
of January 2023.
In addition to these cohorts, BEIS understands that there are a number of claims where
the Post Office is awaiting claimants’ responses to requests for further information to
enable them to assess their claim fully. Whilst BEIS encourages the Post Office to resolve
these claims as soon as possible, it recognises that it would not be right to put undue
pressure on these claimants to respond.
Legal costs
BEIS is pleased to note that, in recognition of the complexity of the remaining cases and
the Chair’s views expressed in the Progress Update, the Post Office has added further
flexibility to the legal support that subpostmasters can claim within the HSS, with provision
for reasonable fees to be reimbursed. In addition, insolvent claimants can claim reasonable
fees for professional advice specific to their bankruptcy.
In practice, the number of HSS claimants disputing their offer remains low (10% of those
who have responded to their offer). The Dispute Resolution Process appears to have been
operating effectively, with a team of case handlers with experience as subpostmasters
offering support to claimants at each stage in the process.
Late applications
BEIS has confirmed that funding is available for subpostmastets who applied to the HSS
after the 27 November 2020 deadline, so that they can receive any compensation due to
them. BEIS strongly encourages any other subpostmasters who may have been eligible
for the HSS to contact the Post Office about their claim at the earliest opportunity, and
understands that a significant period of notice will be provided before the HSS is closed
to any further late claims.
BEIS understands that the Post Office has now written to 228 subpostmasters who have
been in touch about potential late claims to confirm that they will be considered. This
includes the 186 subpostmasters mentioned at paragraph 61 of the Progress Update. So
far the Post Office has received 59 further completed application forms from this group,
and these are all being processed without any detrimental impact on the delivery of offers
to other claimants in the scheme.
Interim payments
BEIS recognises the Chair’s views expressed in the Progress Update and the fact that those
claimants who are yet to receive offers or payments may have been waiting for a very
considerable period of time for their cases to be settled. For these reasons, BEIS is pleased
that the Post Office will introduce interim payments for those who have yet to receive an
offer or who have chosen to dispute their offer. This will be in addition to the existing
SUBS0000010
SUBS0000010
hardship payments that the Post Office has already been providing to claimants in
particularly difficult circumstances. These interim payments can be applied for regardless
of a claimant’s personal situation.
The Overturned Historic Convictions Scheme (““OHC”)
11. Good progress is being made on claims received from those with overturned historic
convictions. As of 24 November, Post Office has paid out £11.3m in compensation. BEIS
supports the Post Office’s approach of handling non-pecuniary and pecuniary heads of
loss separately in order to deliver compensation as quickly as possible to subpostmasters.
Non-pecuniary damages
12. As of 24 November, 45 claims for non-pecuniary damages had been received, in respect
of which 82% had received offers totalling £4.7million, in addition to interim payments
already received. Of these, 14% of offers have been accepted, with payments being
processed, and 57% have been accepted and paid.
13. The Post Office has offered to share the Early Neutral Evaluation (“ENE”) report by Lord
Dyson, which sets out an independent assessment of the range of awards available for non-
pecuniary losses, with all claimants’ solicitors and those without legal representation on
condition of a confidentiality undertaking. So far, we understand that 5 of 6 law firms
have received the report, and the Post Office is encouraging the last firm and any
unrepresented claimants to do so as well.
Pecuniary damages
14. As at the date of these submissions, 8 claims for pecuniary damages have been received,
of which 25% (2 claims) have fully settled and only 50% (4 claims) are fully quantified,
with the remainder (2 claims) subject to requests for further information.
15. BEIS is concerned that, whereas the ENE report has unblocked barriers to speedy
settlement on non-pecuniary damages, the pecuniary loss element of the claims is taking
longer to reach resolution. For that reason BEIS has worked with HMRC to set up a
bespoke process for claimants or their legal advisers to request their historic tax return data
in order to support quantification of past pecuniary losses.
Interim payments
16. BEIS is pleased to note that, in light of the Government’s decision to exempt OHC
payments from tax (of which BEIS notified the Inquiry in its submission in October 2022)
and the ENE report, the Post Office decided to increase the interim payment limit for new
claimants to £163,000.
17. For those who had received the original interim payment amount of up to £100,000, the
Post Office is prioritising reaching settlement of their non-pecuniary damages as set out
above. The Post Office had written to all the claimants’ legal representatives to encourage
them to submit their claims for non-pecuniary damages by 1 December for settlement
ahead of the end of the year. However, if a claimant who received the original interim
payment amount has not submitted a non-pecuniary claim by early December, such that it
is unlikely that their non-pecuniary claim will be settled by the end of the year, the Post
Office will offer a top-up payment of £63,000. BEIS supports this approach, recognising
the importance of making compensation payments as quickly as possible.
Insolvency issues
18. All insolvency practitioners, including the Official Receiver, confirmed that they do not
have an interest in OHC compensation at the point of an interim payment being made.
‘There is one insolvency practitioner who has asserted the compensation sums do vest in
the bankruptcy estate. The Post Office and their legal advisers are working to resolve
this problem in order that the claimants in question receive the sums to which they are
entitled in line with insolvency legislation.
Mrs Adedayo, Mr Kalia and Mr Patel
19, As noted by the Chair at paragraphs 91-93 of the Progress Update, there are three CP
subpostmasters whose convictions have been quashed but who have not received interim
payments. This was on the basis that their convictions were quashed because it would not
have been in the public interest to hold a retrial. They remain able to submit a full claim
for compensation, which will be considered on its merits.
20, In relation to these three CPs, and any subpostmasters who find themselves in a similar
position, the Chair expressed concern that the Post Office was acting as the ‘final arbiter’
in determining whether they should receive interim payments. To address that concern,
the Post Office and the three subpostmasters have agreed to hold a mediation process with
an independent mediator. Hudgells Solicitors, which represents all three claimants, will be
required to submit a claim for each subpostmaster ahead of this meeting. The objectives
of the mediation are to ascertain the degree of liability the Post Office holds in these cases,
and the potential quantum of any claim. BEIS hopes that this will provide a mutually
agreed way forward.
Other claimants
21. There are potentially other OHC claimants. So far, 83 historical convictions have been
overturned and we expect more to follow. Post Office is supporting work to review
convictions by the non-Post Office prosecutors, including in Scotland and Northern
Ireland. BEIS is working with the Post Office and other prosecutors to reach as many
convicted subpostmasters as possible and encourage any with potentially unsafe
convictions to lodge an appeal:
SUBS0000010
SUBS0000010
a. The Post Office has carried out several rounds of “mail-outs” to potential future
appellants (“PFAs”), with letters being sent to 674 of 706 (95%) identified PFAs.
‘The Criminal Cases Review Commission (“CCRC”) has now agreed to take over
this process. BEIS understands that the CCRC is continuing efforts to trace the 32
PFAs who remain uncontacted.
b. The Post Office is funding a support programme for PFAs provided by Citizens
‘Advice, which commenced on 1 November 2022. It offers dedicated, trained
contact centre agents, web pages and guides, with PFAs directed to lawyers to
support with the application process.
The Group Litigation Scheme (“GLO”)
22. As the Inquiry knows, the GLO scheme is an ex gratia compensation scheme administered
directly by BEIS. Interim payments continue to be made to the GLO claimants, with
£16.4million being paid to over 85% of claimants (423 individuals) as of the date of writing.
Unsurprisingly, it is the most complex cases which have taken longest to resolve. In
particular, for subpostmasters who have been declared bankrupt, BEIS has urgently been
working to reach agreement from all the relevant Insolvency Practitioners to release full or
partial interim payments. Full payment has now been made to five bankrupt
subpostmasters and partial payment to a further two. Payments are yet to be made to the
remaining 16 bankrupt subpostmasters. Agreement has not yet been reached with all
Insolvency Practitioners, and so BEIS has sought external legal advice on the issue of
whether GLO compensation payments should vest in the bankruptcies.
23. The remaining 10% of outstanding interim payments (46 cases) relate to dissolved
company claimants, claimants who are deceased, claimants who have capacity issues,
claimants who are in an Individual Voluntary Arrangement and claimants who have
returned incomplete paperwork or not submitted an application at all. BEIS remains
committed to providing interim payments to all of these claimants or their estates soon
and is obtaining external legal assistance to resolve these issues as quickly as possible.
24. BEIS has noted the Chair’s views in the Progress Update in relation to GLO members
who were acquitted of Horizon offences, and the suggestion that they should be eligible
for the OHC scheme. Asa result, BEIS has concluded that, in relation to the small number
of acquitted GLO members who have not already received more in compensation that
those who were convicted have received by way of initial interim payments, additional
interim compensation is appropriate. The precise amounts will be confirmed in the light
of decisions on full compensation for HSS claimants who were acquitted, to ensure
consistency and fairness, and offers will be made as soon as possible.
Other issues
SUBS0000010
25. BEIS is pleased to note that, as part of its efforts to address historical operational issues
and make improvements to its corporate culture, the Post Office is setting up a scheme to
provide compensation to subpostmasters who did not receive remuneration during a
period in which they were suspended from their position.
26. The Government will provide funding to the Post Office to cover compensation to
subpostmasters for unpaid suspension remuneration and any associated consequential loss.
BEIS will provide oversight to ensure that this compensation is delivered quickly and
effectively to affected subpostmasters.
27. Fairness dictates that comparable claims should result in a comparable outcome as far as
possible, whilst also taking account of the need to deliver compensation quickly, regardless
of which of the three schemes applies. For that reason, BEIS is ensuring there are
mechanisms to check that claims with similar facts are receiving similar compensation. For
example, the framework of the GLO scheme is based on the HSS framework (in its
current, improved and updated form).
Conclusion
28. As Ministers have repeatedly said in public statements, and as was stated in this Inquiry at
the hearing in July, BEIS is committed to ensuring that all affected subpostmasters receive
full and fair compensation as quickly as possible. It is hoped that these submissions
provide a helpful update on the progress that continues to be made. BEIS looks forward
to hearing the observations of the other CPs and, in turn, those of the Inquiry.
5 December 2022
NICHOLAS CHAPMAN
‘Temple Garden Chambers
ALASDAIR HENDERSON
1 Crown Office Row
6