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HISTORICAL SHORTFALL SCHEME
BEIS/UKGI WORKING GROUP AND STEERING COMMITTEE TERMS OF REFERENCE
V6.0 —- Approved by the BEIS HSS SteerCo on 27 January 2021
Purpose
1. The purpose of this document is to set out the Terms of Reference for the Department for
Business, Energy & Industrial Strategy (BEIS) and UK Government Investments (UKGI) in
relation to the BEIS Historical Shortfall Scheme (HSS, or the Scheme) Working Group
(WG) and Steering Committee (SteerCo). The HSS is being delivered by Post Office Ltd.
(POL).
2. It is an internal document to be considered alongside the POL / BEIS HSS Operations
Agreement. That document covers the role of POL and its interactions with BEIS (and UKGI
as an agent of BEIS).
Roles of BEIS and UKGI
3. BEIS has an objective to see the successful delivery of the HSS that resolves claims
pursuant to the HSS fairly, in a timely manner and that also provides Value for Money
(VfM) for the taxpayer.
4. Roles of key individuals and teams can be seen below:
e Responsible Minister for POL: The Minister for Small Business, Consumers and
Labour Markets (Responsible Minister) provides ministerial oversight and support
for key policy priorities, on behalf of the BEIS Secretary of State. The Minister
approves of the concept of the HSS and has high-level engagement with POL
management.
e BEIS Permanent Secretary: The BEIS Permanent Secretary is the Principal
Accounting Officer (PAO) for POL. The PAO is accountable to Parliament in respect
of POL and the spending of public finances through the HSS. The PAO will sign off
on the business case.
e Senior Responsible Officer: This is Mike Keoghan (BEIS Acting Director General,
Business Services). He and other BEIS Senior Officials (Carl Creswell as Director
responsible for POL, and Tom Taylor as BEIS CFO) are responsible for a strong
business case and the overall delivery of the project. These officials sit on the
SteerCo.
e¢ BEIS POL Policy Team: Responsible for navigating the HSS business case through
the Department, coordinating engagement across government and providing policy
input. Members of the team are part of the WG. Legal support to the BEIS policy team
is provided by BEIS Legal.
e UKGI POL Shareholder Team: Assume the day-to-day lead in engaging with POL
on the control arrangements, oversight and monitoring of the HSS including ensuring
appropriate scrutiny in the Scheme Set-up phase (see below). The UKGI POL
Shareholder Team will also take the lead in preparing papers for SteerCo, working
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collaboratively with the BEIS HSS Working Group. It will also be responsible for
preparing the HSS business case with input from the BEIS Policy Team. The UKGI
POL Shareholder Team is not responsible for providing legal or financial assurance
on the HSS design, processes or operation to BEIS.
e¢ HM Treasury: To provide the funding and budget cover to BEIS. HM Treasury will be
updated from time to time on the progress of the HSS.
Working Group and Steering Committee
5. The HSS POL / BEIS Operations Agreement sets out approval points and parties’
responsibilities in relation to the set-up and operation of the HSS and the key decision
points where POL will come to BEIS for approval. This interaction will be led by UKGI, with
input from the WG and all key decisions will be put to the SteerCo unless delegated by
SteerCo to the WG.
6. BEIS HSS Working Group: The WG is a BEIS team that will work with the UKGI POL
Shareholder Team on HSS matters requiring discussion at SteerCo or BEIS approval. It
will provide the secretariat function for SteerCo, including scrutiny and challenge of
proposals being put forward for approval by the SteerCo. The WG will consist of:
— BEIS POL Policy Deputy Director
— Grade 6 BEIS Legal representative
— Grade 6 BEIS Finance Business Partner.
7. Should UKGI and / or the WG identify any issues / risks that require escalation, the WG
will work with UKGI to notify the SteerCo in writing as soon as practicable.
8. BEIS HSS Steering Committee: The SteerCo is the decision-making body for HSS
matters and approvals. It will consist of:
— Mike Keoghan (BEIS HSS SRO and Acting Director General)
= Tom Taylor (BEIS CFO)
— Carl Creswell (BEIS Director responsible for the Post Office)
— Patrick Kilgariff (BEIS Legal Director)
— Tom Cooper (UKGI, POL Non-Executive Director) - Observer
9. The SteerCo is responsible for overall strategic direction and for providing certain
approvals that will be submitted by UKGI, consistent with the process set out in the POL /
BEIS Operations Agreement. The SteerCo is entitled to receive all such information it
deems necessary in order to fulfil its function and may reserve the right to withhold a
decision until such information is provided by UKGI.
10. Quorum for SteerCo meetings will be set at three attendees (excluding Tom Cooper as
observer). Should a member of the SteerCo be unable to attend a meeting the individual
may choose to delegate attendance to a member of their team.
11. The SteerCo will meet as often as deemed necessary. The first meeting will be held on 11
January 2021 and up to the end of March 2021. SteerCo meetings will be held fortnightly,
at which point the frequency of meetings will be reviewed as part of the wider HSS review
scheduled for that time.
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12. The SteerCo will provide updates to the BEIS Permanent Secretary and the Responsible
Minister as appropriate. From time to time there will be certain decisions that may have an
impact on overall cost or on the delivery of the Scheme which the SteerCo may also wish
to consult the BEIS Permanent Secretary and / or the Responsible Minister on.
Roles in Scheme Set-Up
13. POL and BEIS have agreed that there will be an initial set-up period where appropriate
controls and rules for intervention are established and implemented. These are set out
below. At the same time, the HSS has been designed to preserve the independence, and
the perception of independence, of the Independent Advisory Panel (the Panel), and all
parties have agreed to respect this.
14. HSS POL / BEIS Operations Agreement: This is the document that sets out the ways of
working and responsibilities between POL and BEIS (and UKGI as an agent of BEIS).
Once POL agree to a final draft, the WG will submit this document to the SteerCo for
approval.
15. Case Assessment Guidance: This is a detailed guidance document prepared by Herbert
Smith Freehills (HSF), on behalf of POL, that will be used by Case Assessors in their
assessment of applicants’ claims to the HSS and in the recommendations they put forward
for consideration by the Panel. BEIS has the right to: i) approve the Case Assessment
Guidance prior to it being issued to the Case Assessors and any variations after any such
approval has been given; and ii) provide input to POL’s response to the Panel should it
raise any comments on the legal analysis in the document. This will be submitted by the
WG to the SteerCo for approval once ready. UKGI will challenge the guidance with POL /
HSF ahead of submission to SteerCo.
16. Panel Guidelines: HSF will engage with the Panel in relation to developing guidelines
which will inform their approach to cases. The guidelines are to be developed by setting
the Panel questions and scenarios (based on actual cases or ‘cohorts’ of cases as outlined
in the Operations Agreement) that are intended to ensure the consistent treatment of
cases by the Panel. It could cover for example how the Panel would approach cases which
are not quantified/partially quantified and/or partially evidenced/not evidenced across
different heads of loss. UKGI and the WG will engage with HSF on the set of questions
and scenarios and the SteerCo will approve BEIS’s input into this process. BEIS also has
the right to review any subsequent Guidelines derived by the Panel in recognition that
these may develop over time. The guidelines are intended to represent the criteria by
which the Panel will seek to quantify offers and make recommendations to POL.
17. Treatment of Precedent Setting Cases: The first cases of any type to be assessed by
the Panel pose the highest level of risk because they set a precedent for how similar claims
will be treated by HSF and the Panel in making their recommendations. The definition of
what makes a case precedent setting is in the POL / BEIS HSS Operations Agreement
and there are 4 designated HMG approval points set out at different stages throughout the
process.
« For each precedent-setting claim, the HSF Case Assessor will provide a report
outlining the amount being claimed under each head of loss, the evidence provided
and its recommendation, which will be shared with the POL Board and BEIS / UKGI.
UKGI will lead on scrutinising any such report, in consultation with the WG, ahead of
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submitting a recommendation to the SteerCo for a decision to approve. If not
approved, UKGI will provide SteerCo’s feedback to POL and HSF and HSF will be
invited to review their recommendation.
«Once the Panel has reached a provisional decision on a given precedent-setting case
and made a recommendation, UKGI will prepare advice for the SteerCo to inform a
decision to approve. If not approved UKGI will provide SteerCo’s feedback to POL
and HSF and HSF will be invited to review their recommendation. If SteerCo approves
the Panel’s recommendation, subject to POL Board approval, an offer will be made to
the relevant applicant.
« Should any offers made by the POL Board be rejected by applicants, UKGI will work
with POL / HSF on a proposed approach to any negotiations and / or mediations (if
the claims passes all the way through the dispute resolution process) and, in
consultation with the WG, submit an approach to the SteerCo for approval.
e For any offers that are not precedent-setting in their fact pattern but result in a
proposed offer outside the guidance set out in the Principles, UKGI will lead on
engaging with POL / HSF on a proposed approach and, in consultation with the WG
will provide advice to the SteerCo.
Roles in Monitoring the Scheme
18. Sample Testing: On a quarterly basis a random sample chosen by POL / HSF of 10 offers
made in the preceding quarter will be subject to a review by UKGI as to their consistency
with the precedent setting cases. Should any of the sample not be consistent with the
precedent setting cases POL / HSF will be required to report to UKGI on why this is the
case. This report will be provided to the SteerCo assuming the variance exceeds
19. Monthly Monitoring Meetings: POL / HSF will provide UKGI with a monthly dashboard
setting out where each claim is in the HSS process (e.g. how many are being reviewed by
Case Assessors, how many are with the Panel, how many have been sent offers, etc.),
alongside a commentary on month-on-month movements and an updated Scheme risk
register. It will also contain an update on Scheme payments to date and a forecast total
cost for the remainder of the claims to be considered (based on the HSF Clive 2 financial
model).
20. There will also be a monthly meeting between UKGI and POL / HSF to discuss the
dashboard and raise any queries or concerns. UKGI will provide a high level update on
these monitoring materials to the SteerCo on an ongoing basis.
21. Quarterly Review Meetings: There will be a quarterly review meeting with POL / HSF
and SteerCo to review progress made in the HSS. The first of these will be at the end of
March 2021.
22. Quarterly Shareholder Meetings (QSMs): QSMs are required by the Framework
Document BEIS has with POL, and this is attended by UKGI / BEIS and senior officials.
Materials used at the preceding Quarterly Review Meeting will be shared at this meeting,
subject to material updates.
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23. UKGI Shareholder Representative on POL Board: The UKGI Director will continue to
sit on the POL Board.
24. BEIS Right to Pause or Withdraw Support for the HSS: The SteerCo will have the right,
at any point, to advise the PAO or the Responsible Minister to pause or withdraw BEIS’s
support for the continued operation of the HSS.
25. Public Sector Equality Duty (PSED) Responsibilities: Throughout the management of
the Scheme both POL and BEIS are required to consider its activities in light of the
responsibilities under the PSED. BEIS cannot pass on its PSED requirements to POL. An
initial assessment was undertaken as part of the business case, and BEIS will be
discussing further with POL what monitoring information it is realistic and feasible to collect
on claims paid to ensure that there is no indirect discrimination.
26. Online Reporting in BEIS (ORB): Further to the approval provided by the BEIS Projects
& Investment Committee (PIC), the WG will agree with the BEIS Project Controls team
i “} which elements of the dashboard provided to SteerCo
should also be included in the monthly performance report through ORB.
Other:
27. Funding Drawdowns: Before the end of each month POL will provide UKGI with an
estimate of the expected amount of settlements to be paid in the upcoming month Subject
to UKGI consideration and approval a submission to the BEIS Finance Director
recommending payment to be made, by the end of that month.