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Witness Name: Thomas Cooper
Statement No: WITN00200300
Dated: 2 October 2024
POST OFFICE HORIZON IT INQUIRY
Third Witness Statement of Thomas Cooper
I, Thomas Cooper, will say as follows:
1. I am employed by UK Government Investments (“UKGI”) and hold the position
of Director, a position I have held since November 2017. This is the third
statement that I have made to the Inquiry, my first statement being dated 13
June 2024 [WITN00200100] and my second statement being dated 3
September 2024 [WITN00200200]. This third statement is made in response to
“Annex B” of a Rule 9 Request made by the Inquiry dated 25 July 2024 (“Rule
9(2)B”). In this statement, I have sought to address each of the questions posed
by the Inquiry in Rule 9(2)B, save where they relate to matters which post-date
my role as the Department for Business and Trade’s (previously the Department
for Business, Energy and Industrial Strategy and collectively referred to herein
as the “Department’) representative on POL’s Board (the “Shareholder NED”).
I have cross-referred to my previous witness statements as necessary and also
referred to relevant contemporaneous documentation in support of my
responses, to the extent that I have considered this may be of assistance to the
Inquiry. I have also exhibited key documents.
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The attitude of POL senior executives and/or the POL Board towards having a
UKGI representative as a member of the Board.
2. I have been asked to describe the attitude of POL’s senior executives and or
the Board towards having a UKGI representative as a member of the Board. I
am not well placed to answer a question about someone else’s attitude about
arole in which I served. The question is most appropriately addressed to other
members of POL’s Board (the “Board”). I believe the best way that I can attempt
to answer this question is to refer to the Board Effectiveness Reviews (“BERs’”)
that were carried out during my tenure, in which feedback relating to my position
on the Board was invited from Board members. I note, for example:
a. The external BER carried out by Independent Audit dated March 2021
[UKGI00017887] states “The Board has a shareholder representative
NED from UKGI who is felt by colleagues to be engaged and
constructive, and to provide good input into debates.”
b. The comments section of the internal BER of 2021/2022 [POL00438073]
states “The Shareholder Representative is extraordinarily competent
and provides extraordinarily detailed oversight.” However it also states
“It is sometimes difficult to know whether the shareholder rep is reflecting
his own or UKGI's view of the business or, whether he represents the
policy and direction proposed by BEIS... this can come across as
conflicting.”
c. By contrast, the 2022/2023 internal BER [UKG1I00044328] (which I did
not receive at the time as production of the report post-dated my tenure)
referred to there being a “widespread view that UKGI delved too much
into the detail’. I addressed this in paragraph 52 of my second statement,
where I said that in my view, engaging in the detail was needed in order
to carry out my role given the many challenges that POL (the “Company”)
was faced with.
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Redress and Compensation
3. I have been asked to address a number of questions in relation to my
involvement as the Shareholder NED and that of UKGI’s shareholder team (the
“Shareholder Team‘), which I led, in the compensation workstreams arising out
of the GLO. Following the handing down of the Group Litigation Order (“GLO”)
judgments, delivery of compensation to victims of the Horizon scandal was a
key priority for POL and HMG. As I referred to in my first witness statement at
paragraph 170, this was made clear by the then Secretary of State on 16 March
2019, the day after the Common Issues Judgment (“ClJ”) was handed down by
Mr Justice Fraser. Providing compensation and implementing the commitments
made in the GLO settlement was also highlighted as a key priority for POL in
the annual letter sent by the Department to the Chair in February 2020
[POL00104222] and in annual Chair letters thereafter.
4. The first stage of the compensation process was triggered by the settlement
agreement relating to the GLO which was agreed in December 2019. As part of
the settlement, POL agreed to set up a compensation scheme for all current
and former postmasters, subpostmasters and any other eligible claimants
(collectively referred to as “SPMs”) who had suffered losses as a result of
having to repay shortfalls that they did not, in fact, owe. This scheme became
the Historical Shortfall Scheme (“HSS”).
5. Following referral by the Criminal Cases Review Commission (“CCRC”) to the
Court of Appeal of the first cases involving SPMs found guilty of criminal
offences, POL also worked on the process by which compensation would be
delivered to convicted SPMs whose convictions were found to be unsafe. This
compensation process is now known as the Overturned Historical
Compensation Scheme (“OCS”).
6. The Department had a significant role in HSS and OCS, both of which required
approvals and funding from the Department. The Shareholder Team played a
significant role in supporting the Department in relation to both schemes. The
role of the Shareholder Team and my role as the Shareholder NED in these
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schemes, as well as the Group Litigation Order Compensation Scheme (“GLO
Scheme”), is described below. Throughout this process, the Shareholder Team
did not make decisions for or provide assurance to the Department, for example
on legal matters, a matter which was agreed between UKGI’s CEO and the
Department's Permanent Secretary (Letter from Charles Donald to Sarah
Munby - 9 August 2022 and Letter from Sarah Munby to Charles Donald — 11
August 2022) [UKGI00049062 and UKGI00049064].
For completeness, there were two other compensation workstreams that were
in train during my tenure on the Board. A scheme to compensate SPMs for
errors in reconciling SPMs’ holdings of stamps was introduced and closed
during my tenure on the Board. This was known as the Stamps Scheme. The
second workstream was called Postmaster Detriment. Postmaster Detriment
brought together a number of issues which had gone wrong at POL and which
meant that compensation was owed to the SPMs affected. A separate
compensation process was required because these claims fell outside of the
scope of HSS. The largest component of Postmaster Detriment compensation
related to a contractual term in SPM contracts which meant that SPMs were not
paid when they were suspended. This term was found to be unlawful in the ClJ.
In cases where no shortfall was involved, the SPM concerned was not able to
make a claim for suspension pay under HSS. As the Inquiry’s questions have
focused on HSS and OCS, I have not addressed the Stamps Scheme or
Postmaster Detriment in this witness statement.
As I describe in more detail below, UKGI provided a substantial degree of
support to the Department on both HSS and OCS. In the early stages of the
compensation process, the Department had few resources for the level of
governance and oversight required. In the interests of progressing the
compensation schemes and supporting the Department, UKGI therefore
stepped outside its target operating model, which would not typically involve
supporting the delivery of compensation schemes on behalf of HMG. As I
described in my first witness statement at paragraph 11, the number of UKGI
employees working on compensation matters increased substantially over this
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period to support the compensation workstreams and, at its peak, there were
approximately 12 people working full or part time on POL matters.
The Department also needed support from a lawyer with significant litigation
experience, to assist with the compensation workstreams. Although UKGI had
an in-house legal team, it did not have significant litigation expertise and it
therefore retained the services of an external lawyer with significant litigation
experience on a consultancy basis (a former partner at an international law
firm), followed by a senior litigator on secondment from another international
law firm. Although not UKGI employees, the Shareholder Team treated these
lawyers as full members of the Shareholder Team. In performing their role, they
had direct involvement with both POL and the Department and provided
significant assistance to the Shareholder Team. As I describe below, once these
schemes were up and running, the Department increased its involvement and
UKGI was able to reduce its dedicated resource on compensation matters over
time.
The Shareholder Team's role on the Department's behalf in relation to HSS and
OCS mainly consisted of the following activities:
»
assisting with obtaining funding from HMG;
b. assisting with the design of governance arrangements for the
Department's oversight of the schemes;
c. monitoring the progress of the schemes and assisting the Department
where it had a decision-making role;
d. attending the Department's decision-making committees (the HSS
Steering Committee (“HSS SteerCo”) and the POL Overturned
Convictions Committee (“POCC” or “POHC’”)), both of which I attended
as an observer; and
e. attendance at the Board and Historical Remediation Committee (“HRC”,
and now called the Remediation Committee (“RC”)) which I attended in
my capacity as the Shareholder NED.
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11. It should be noted that although I left the Board in May 2023, as part of the
handover arrangements with my successor, Lorna Gratton, I continued to
attend HRC as an observer for a period afterwards. The last HRC meeting I
attended was in July 2023.
12. Given the distinct nature of HSS and OCS, I have answered the questions put
to me by the Inquiry by reference to each of these schemes separately, in order
to help to explain the role of the Shareholder Team in relation to each of them.
x
in
in
13. Essentially, the Shareholder Team's involvement in HSS can be divided into
three phases:
a. Initial design and implementation of HSS;
b. Governance and operational resourcing of HSS; and
c. Monitoring of HSS.
Phase 1: Initial design and implementation of HSS
Initial design of HSS
14. I As mentioned above, HSS was set up in order to fulfil one of the requirements
of the GLO settlement agreement and the scheme was designed by POL in
collaboration with the GLO claimants and their lawyers. Herbert Smith Freeths
(“HSF”) advised POL on the scheme design and remained involved throughout
the time that I was on the Board.
15. When HSS was being designed, the potential scale of the scheme was
unknown. Initially, POL thought that HSS might receive a few hundred
applications and I recall that POL thought the cost could be of the order of £10m.
Because the scheme was part of the GLO settlement that the Department had
sanctioned and because of the anticipated cost of the scheme, it was expected
that the scheme would be managed and funded by POL and no further
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approvals would be required from the Department. As the Shareholder NED, I
was involved in approving the scheme design which was considered by the
GLO sub-committee of the Board and approved by the full Board in March 2020.
16. The design of the scheme appeared to be well developed and a series of flow
charts were attached to the Board paper that showed how claims would be
assessed for eligibility, evidence collection, claims assessment, determination
by an independent advisory panel (the “IAP”), settlement and dispute resolution
[from p. 11 UKGI00046031]. However, as time went on, both the number and
nature of the claims emerged, and it became clear that there would be a number
of complex issues to deal with as outlined below.
Implementation of HSS
17. The application window for HSS opened in May 2020. As the summer of 2020
progressed and the closing date for applications was extended (to allow for the
impact of the Covid-19 pandemic), it became increasingly clear to POL that the
number of applications would exceed POL’s initial expectations substantially. In
September 2020, the Board was told that there were over 2,200 claims with an
estimated cost of around £100m. It was immediately clear to the Board that POL
would not be able to fund this amount from its own resources.
18. In October 2020, POL’s Chair wrote to the Minister and Permanent Secretary
to request financial support for compensation payments [POL00168611]. The
Shareholder Team became involved with the funding of the scheme and, on
behalf of the Department, led the submission of the business case to HMT along
with associated documents. There were a number of challenges for POL in
preparing the business case. The ultimate cost of the scheme needed to be
quantified to a standard acceptable to HMT, but this was difficult because a
large proportion of the claims were either unquantified or only partially
quantified. In addition, the Board was concemed to ensure that it would have
sufficient funding to cover the worst-case outcome for the scheme and took
advice on the wrongful trading risks that existed if the funding proved to be
insufficient. POL requested funding of up to £320m but there was a reluctance
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19.
20.
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on the part of the Department to underwrite such a large figure given the
uncertainty as to the overall quantum of the claims. Agreement was reached
that the Department would provide funding of up to £285m but, before any HMG
funding could be used, POL was required to use the proceeds from the recent
disposal of its telecoms business. POL was also required to absorb the costs,
both legal and operating costs, of running the scheme. In addition, the
Department wanted to have a degree of oversight over the management of the
scheme and the ability to stop funding the scheme if the scheme developed in
a way that did not meet Managing Public Money requirements. The business
case was submitted in January 2021 and funding was approved in March 2021.
While funding was being discussed there were extensive discussions between
the IAP and HSF (on POL's behalf), and between POL, HSF and the
Department about how HSS would operate in practice given the unexpected
scale and complexity of the claims that had been submitted. In addition, a suite
of agreements was prepared including a funding agreement, a comfort letter
and an operations agreement (the “HSS Operations Agreement’)
[UKGI00049057] which is described below. The Shareholder Team supported
the Department in these discussions.
A number of important principles were also established, for example, a de
minimis level would be set below which claims would be paid without
investigation. This would allow several hundred claims to be settled quickly,
allowing POL and the IAP to focus on larger and more complex cases.
Given the large number of claims, consistency of treatment of claims was a
concern for the parties and for the Shareholder Team. The IAP decided that it
should develop a series of principles by which it would assess claims and
determine compensation awards and that these principles would be developed
from a bank of test cases put forward by POL. The principles would be included
in Case Assessment Guidance (“CAG”) that would inform the IAP’s decision-
making. In addition to addressing the key heads of loss, such as shortfalls and
loss of earnings, the CAG also dealt with other important matters such as the
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IAP’s approach to claim investigations and unquantified claims as well as the
treatment of evidence submitted by claimants.
22. All parties understood from the beginning that many claimants might find it
difficult or impossible to provide evidence in support of their claims that would
meet the standards required by a court. It was agreed that the IAP would adopt
a general approach of accepting a claimant's evidence unless there was
evidence to the contrary. With certain exceptions, such as the treatment of
evidence, the IAP would determine claims by reference to accepted legal
principles such that awards would be made on the basis of what a court would
award in the same circumstances. This approach by the IAP meant that, in
principle, HSS would meet Managing Public Money requirements.
Phase 2: Governance and operational resourcing of HSS
Governance
23. The Department's oversight of HSS was set out in the HSS Operations
Agreement [UKGI00049057] which the Department agreed with POL. In
essence, the HSS Operations Agreement provided that decisions which might
have a material financial impact on HSS would require Department approval.
For example, it was POL’s responsibility to engage with the IAP to support it in
developing the principles and CAG and, as that was a matter which would have
a material impact on the cost of the scheme and therefore affect taxpayers’
money, the Department would approve those documents. Other key decisions
the Department needed to approve included the approach to significant cases
(either because of their nature and precedent setting effect or value) and the
dispute resolution process to be applied in the event that the award made by
the IAP was not accepted by the claimant. In addition, the Board had decided
in early 2020 that it would require a degree of oversight and control over HSS.
It was therefore agreed that the Board would also approve the principles, CAG
and the approach to significant cases.
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24.
25.
26.
27.
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The time it took to discuss these issues and reach an agreement on funding
caused a delay to payment of de minimis claims which POL began to settle
shortly after funding approval was obtained. It would take several months longer
before POL was able to make offers to claimants with more complex cases as
it took time to identify test cases, develop the principles and agree the CAG.
To enable such decisions to be made, in January 2021, the Department set up
the HSS SteerCo which consisted of the Department's CFO, Senior
Responsible Officer (the Director General), Director responsible for POL and
Legal Director. HSS SteerCo’s terms of reference set out its responsibilities
when making certain decisions on behalf of Ministers [UKGI00049065]. I was
invited to attend HSS SteerCo meetings as an observer and would be joined by
members of the Shareholder Team. My role on HSS SteerCo was primarily to
help provide senior Departmental officials with context and an understanding of
POL’s proposals, in order to inform their own decision-making.
The Department also set up a working group (the “HSS Working Group”),
comprising members of the Department's policy team and the Shareholder
Team. The Shareholder Team initially acted as the secretariat function to both
the HSS Working Group and HSS SteerCo, and as part of this would work with
the Department's policy team to agree issues for discussion and approval at
HSS SteerCo. This function was later handed over to the Department. Members
of the HSS Working Group were also involved in the day-to-day interaction with
POL and would provide challenge to POL on matters being put for approval by
HSS SteerCo. This included working closely with POL and HSF as the
principles and CAG were developed. Members of the HSS Working Group also
took a detailed interest in the test case process.
Notwithstanding the level of oversight and control retained by POL and the
Department, I would emphasise that both parties were at pains not to
compromise the independence of the IAP. There were occasions when, on
specific topics, there were different views held by POL, the Department and the
IAP. Although neither I nor members of the Shareholder Team were involved in
any discussions with the IAP as they were held by HSF on POL’s behalf, I
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believe any issues of this kind were discussed openly and in the spirit of
achieving fair and consistent outcomes for the claims. I do not recall the IAP
expressing any complaints or unhappiness about interference from POL or the
Department. If there had been any, I believe they would have been taken very
seriously by the Department.
Operational resourcing
28. During this phase, there were discussions at the Board about how POL would
operationally resource the compensation workstreams.
29. In Spring 2020, the Shareholder Team contributed to those discussions by
providing advice to the Department concerning the separation of historical
liabilities and compensation matters arising from the GLO from the ‘business as
usual’ commercial operations of the Company [UKGI00046340]. One option
that was suggested was to transfer the management of POL’s compensation-
related liabilities into a newly created separate company owned wholly by HMG.
This would have enabled POL to focus on the strategic and operational issues
it faced, whilst in parallel having a dedicated resource set up to deliver
compensation to victims of the Horizon scandal. The alternative to this proposal
was the establishment of a unit within POL to handle all compensation related
matters.
30. I UKGI’s advice was discussed with POL and HMT as well as the Department.
HSF assisted POL in preparing its own paper on the topic which was discussed
at the Board [BEIS0000022]. The idea of separating the compensation
workstreams from POL received little or no support. The Board determined that
POL would take responsibility for the compensation workstreams itself rather
than pass it to HMG. It was decided that an internal unit would be set up within
POL, the Historical Matter Business Unit (“HMBU”), now known as the
Remediation Unit. HMBU was set up in July 2020 and had a remit to deliver the
legal and compensation workstreams flowing from the GLO proceedings.
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31.
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Having reflected on this decision and reviewed the advice that UKGI provided,
as well as the Board paper, one thing that is conspicuously missing from both
documents is the claimants’ perspective. Claimants were not approached to
give their view at the time and, in hindsight, the lack of trust that claimants had
in POL should have been included as a factor in support of separation. We know
now that trust remains a major issue for claimants, one example of which is the
GLO claimants’ refusal to have the GLO Scheme administered by POL. Given
that, as of today, significant elements of the compensation being delivered to
SPMs are being administered by the Department, as well as the very significant
strain that compensation has placed on POL’s management which has lacked
the bandwidth to handle the multiple, complex issues in front of it, I believe that,
with the benefit of hindsight, the option of separating the compensation from
POL should have been considered more seriously. However, at the time,
following the successful settlement of the GLO and the participation of the GLO
claimants in the design of HSS, there was a perception at POL that a degree of
trust in POL had been restored. It is possible, therefore, that even if UKGI's
advice and the Board paper had identified the issue of trust and captured it fully,
the decision made may well have been the same in any event.
Having said all of this, the creation of HMBU was fundamentally positive as it
created a focused resource within POL dedicated to delivering compensation.
In the summer of 2020, Declan Salter was appointed to run HMBU. This was a
challenging and complex role and although I recall Declan Salter was highly
motivated to deliver good and swift outcomes for claimants, there were various
challenges with HMBU’s performance during the early stages. Despite the best
efforts of all the parties to get on with making offers as soon as possible, the
pace of delivery was slow. Although following funding approval de minimis
claims were paid relatively quickly, other HSS workstreams appeared to be
taking too long, slowed down by requests for information, investigating and
assessing claims, preparing and submitting test cases to the IAP and therefore
finalising and implementing the applicable principles. On 20 March 2021, I wrote
to Tim Parker to express my concerns about these issues and to propose the
appointment of a new non-executive Director with significant legal experience
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33.
34.
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to chair a new sub-committee of the Board to oversee the compensation and
other legal workstreams arising from the GLO [UKGI00018239].
HRC was subsequently established and Ben Tidswell was recruited to chair it.
Under its terms of reference, HRC was given responsibility for overseeing
POL’s compensation workstreams as well as the other legal issues arising from
the GLO including, following the handing down of the Hamilton judgment, POL’s
stance in relation to convicted SPMs seeking to have their convictions
overturned [POL00363158]. Ben Tidswell was a highly experienced litigator
who had been the Chair of Ashurst. HRC worked intensively and met weekly to
begin with, and later fortnightly. In my first witness statement at paragraph 278,
I commented on Ben Tidswell’s contribution to the Board. I believe Ben Tidswell
made a very positive contribution to POL and was a real asset to the Company.
In June 2021, Nick Read informed the Board that Declan Salter would be
leaving POL and in August 2021 a paper was presented to HRC that made a
number of observations about the way HMBU had operated [UKGI00049056].
It took several months for POL to appoint a successor and it was not until
January 2022 that Simon Recaldin joined POL. I believe that the lack of full-
time, dedicated leadership of HMBU during the intervening period may have
contributed to delays in the delivery of the compensation workstreams.
However, Simon Recaldin’s arrival was a very positive development. He
brought significant experience in delivering compensation schemes and had a
strong personal commitment to achieving fair outcomes for claimants. In
addition, I believe that Nick Read was instrumental in focusing Simon Recaldin
and HMBU on its targets for making offers to HSS claimants. Although targets
had existed prior to Simon Recaldin’s arrival, they did not appear to be
particularly credible or deliverable. However, after his appointment there
appeared to be a real and credible commitment to achieving the key target of
making offers to 95% of the 2,374 HSS claimants by January 2023.
By December 2022, 2,244 offers had been made to applicants representing
94.5% of the claims made. I understand that various actions were taken by
Simon Recaldin to try to achieve this target by removing blockages and
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bottlenecks in the system. Simon Recaldin will be in the best position to
describe them, but one example that I can recall is that around Spring of 2022,
it became clear that the capacity of the IAP to process claims was going to be
a significant obstacle to meeting the target. Accordingly, POL acted to put in
place additional capacity and, at one stage, three panels had been created to
make awards.
Phase 3: Monitoring HSS
36. By Autumn 2021, the IAP had begun making decisions on claims above the de
minimis threshold and issuing offers to claimants. The Shareholder Team’s role
was to support the Department in reviewing test cases being submitted to the
IAP, reviewing the draft principles before being approved by HSS SteerCo and
reviewing individual offers that met the exception criteria set by HSS SteerCo
in advance of approval by HSS SteerCo. In addition, the Shareholder Team was
responsible for reviewing POL’s financial forecasts for HSS so that the
Department could understand the financial impact of decisions made within
HSS and also monitor POL's operating and legal costs associated with
delivering HSS. This activity involved frequent interactions with POL and HSF
in the form of regular and ad-hoc meetings and conversations.
37. — This monitoring activity was intensive and involved frequent meetings and calls
between the Shareholder Team, the Department, POL and HSF. Part of this was
a necessary consequence of the Shareholder Team's role, but in the early
stages of the scheme, POL had outsourced much of the design and
implementation work to HSF and the Shareholder Team’s view was that POL’s
supervision of HSF was inadequate. The Shareholder Team therefore played a
useful role in providing constructive challenge to HSF’s work, particularly in
relation to test cases and the principles. For example, I recall that the
Shareholder Team's legal consultant was an early advocate for including
distress and inconvenience (“D&I”) as a head of loss under which the IAP could
make awards. D&l had not been clearly identified as a standalone head of loss
in the original HSS terms. In addition, with the assistance of the Shareholder
Team's legal consultant, the Shareholder Team challenged POL about the
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38.
39.
40.
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arrangements POL had made with HSF to process claims between Belfast and
London which the Shareholder Team’s legal consultant believed was slower
and more expensive than necessary. Following Simon Recaldin’s appointment,
POL’s internal governance arrangements improved and the Shareholder
Team's concerns about the oversight of HSF by POL reduced.
The Shareholder Team's concerns about the apparent lack of speed with which
claims were being processed during 2021 resulted in a request for better
information as to the progress of claims processing and a regular series of
meetings to discuss the information provided with members of HMBU. Monthly
meetings were set up at working level as well as quarterly meetings attended
by the Department’s Senior Responsible Officer who chaired HSS SteerCo.
I mentioned above that as cases were examined, many complex issues
emerged. Examples included: how to deal with unquantified claims; over what
period should shortfalls be investigated in circumstances when the claimant
was unable to specify the period in which the shortfall occurred; termination
awards; bankruptcy cases; taxation of awards; claimants whose assistants had
been wrongly convicted; claimants who were prosecuted but not convicted;
claimants who had been given cautions; claimants who had been subject to civil
proceedings; claimants who were in partnership; and claimants who were
shareholders, directors or employees of dissolved companies. Solutions had to
be found to deal with all these scenarios, usually involving the development of
new principles and this took considerable time.
One area of concern that also emerged concerned the Dispute Resolution
Process (“DRP”). During 2021, it became clear that cases in dispute were not
progressing. HRC requested information from HMBU about the status of cases
in dispute and the information provided showed that POL was slow to respond
to correspondence and lacked the necessary resources, for example to field
senior employees at escalation meetings.
Reflecting on these issues, I believe the DRP was too cumbersome. For
example, the process included two good faith meetings before mediation, which
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slowed down the resolution of claims in dispute. In addition, there was criticism
from some claimants about the way in which good faith meetings were being
handled, in particular that POL was represented by HSF at these meetings
without a representative from POL being present. There was also feedback from
some of the lawyers representing claimants in the DRP that the process was
unnecessarily elaborate so that, for example, good faith meetings could be
avoided by going straight to the escalation meeting stage.
Following his appointment, Simon Recaldin responded to these issues and
improvements were made. The number of cases being resolved in DRP
increased significantly and the time taken to reach resolution improved.
However, at the time I left the Board, there was still a backlog of cases, some
of which seemed to have reached an impasse. In such cases, I came to the
view that it was important for POL to pay all or at least most of the offer that had
been made and I made this point at HRC. I understand that this has now been
implemented by POL.
HSS SteerCo met frequently. Initially it met weekly so as to be able to coordinate
decisions with HRC and it continued to meet weekly for a period even after HRC
had moved to a fortnightly rhythm. One of HSS SteerCo’s objectives in meeting
so frequently was to try to avoid being the cause of delay in the delivery of
compensation to HSS claimants. In relation to the approvals that HSS SteerCo
was required to give in relation to test cases (both the principles and the cases
that met the exception criteria), I do not believe that HSS SteerCo was
responsible for any significant delays to the delivery of compensation under
HSS. It is possible that the extent of the monitoring activity that the Shareholder
Team undertook on the Department's behalf at the early stages of HSS was
excessive and led to delays but, overall, my view is that the Shareholder Team
played an essential role in trying to ensure that HSS was being implemented in
a coherent way and, in part at least, filled a gap in POL’s oversight (by providing
effective constructive challenge) that would otherwise have been present. I
believe that without the Shareholder Team’s substantial involvement at the early
stages, HSS would have experienced even greater problems than it did, which
would then have led to further delays later on.
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44. Over the course of 2022, UKGI worked with the Department and POL to
implement changes to the governance of HSS to reflect the greater
understanding of cases and the further capacity within POL to oversee and
deliver the scheme. During this period, most of the key principles had been
approved and the IAP had made a significant number of awards. The
Department decided it could relax the exception criteria. As a result, the number
of cases that needed to be reviewed by the Shareholder Team prior to approval
by HSS SteerCo reduced significantly. New principles and changes to existing
principles still required approval by HSS Steerco.
45. In addition, during 2022, the Department committed more resources to the
compensation workstreams including HSS and by the autumn of 2022 there
was a significant degree of duplication between the Department and the
Shareholder Team. As a result, it was agreed that the Shareholder Team would
step back from most of the monitoring activity. The Shareholder Team continued
to be represented at HSS SteerCo with observer status, but by that stage HSS
SteerCo was meeting much less frequently in any event.
Reflections on other issues relating to HSS
46. Having described the three phases I identified above in relation to the HSS, I
will now turn to consider a number of discrete issues that the Inquiry has asked
me to address.
Engagement with SPMs eligible to apply to HSS
47. I recall that in early 2020, before HSS was launched, the Board decided that
HSS should be advertised widely to the population of current and former SPMs
as all of them might have claims. The Board instructed POL’s management to
take all reasonable steps to contact potential claimants and I understand that
POL invited all current and former postmasters to apply by writing out to them,
advertising HSS across its network including placing adverts in SPM
magazines, and by directing potential applicants to the HSS website, which
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48.
49.
50.
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contained eligibility criteria, application forms and some of the relevant
guidance (although not all, as I discuss below). On this basis, I consider that
the steps taken by POL are those which a company would reasonably take to
encourage applications to such a scheme.
However, as the Inquiry will be aware, applications continued to be made after
the closing date in November 2020 and by the time I left the Board,
approximately 2,600 claims had been made to the scheme, including
applications submitted after the original deadline. I am told by UKGI colleagues
that this number today stands at nearly 4,000. It is obvious therefore, that POL’s
efforts to reach potential claimants can be described as only partially
successful. In fairness to POL, the scheme was launched over the pandemic
period which may have affected the initial take up of the scheme. More
significant in my view however was the increasing level of media coverage of
the Horizon scandal as time went on and other events, such as the Hamilton
judgment. After I left the Board, ITV broadcast the Mr Bates v the Post Office
drama. I expect that all these events will have increased awareness amongst
current and former SPMs about compensation and will have contributed to late
applications being made. POL itself could not have generated such nationwide
coverage for the availability of compensation through HSS and so it is not clear
to me that POL itself could reasonably have done much more to encourage
claims.
But that is not to say that engagement could not, in my opinion, have been
improved. For example, the consequential loss guidance was not put in place
until five months after the scheme had been launched, which may have
hindered claimants in being able to articulate their claims. It would have been
helpful for postmasters to have access to that guidance from the start, even if it
meant a short delay in launching HSS whilst those principles were agreed.
Following submissions at the Inquiry compensation hearings in 2022, I became
concerned about this issue and I deal with it further below.
Ithas also been reported in the media and by commentators (e.g. in Parliament)
that some claimants felt they were not being updated regularly in respect of the
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51.
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progress of their cases and that the pace of the scheme was too slow. In my
opinion, POL was not ready to deal with such a large volume of applications
and, had it anticipated this, it could have expanded its own capacity earlier to
enable it to have more regular engagement with claimants.
During my tenure, the closing date for HSS was discussed several times at
HRC. On reflection the way late applicants to the scheme were handled was
unsatisfactory and I expect would have painted a confusing picture to SPMs.
Having at various points been in favour of setting a firm date for closure when I
attended HRC, before I left the Board I changed my opinion. Significantly, this
was as a result of the evidence presented to the Inquiry at the compensation
hearings in July and December 2022, from which it became clear to me that
there were significant flaws in the way that HSS had been structured and
communicated to potential claimants in 2020.
Various criticisms were made in evidence to the Inquiry including: the late
communication of the consequential loss guidance; that claimants with legal
representation achieved better outcomes than those without legal
representation; the absence of reimbursement of legal costs until after an offer
had been made; and that reimbursement of legal costs was capped at an
inadequate level for complex cases. HRC asked POL’s management to
investigate these criticisms and assess their impact. POL’s management
reported back to HRC in July 2023 and it was clear from their work that there
was substance to the criticisms and that claimants and potential claimants had
been disadvantaged [UKGI00049053]. For example, the paper presented to
HRC states:
a. In relation to the consequential loss guidelines:
“On launch day, 7,100 current and 13,800 former PMs were contacted
with a further 6,200 former PMs, who had inadvertently been missed
from the original mailing, being contacted in July 2020. The letter guides
PMs to a link on the POL website, does not mention Consequential Loss
and there is no Post Office telephone Helpline available for PM's to call.
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The Application Form for HSS was not included in the letter that was sent
nor were the Terms of Reference, rather PMs were directed to access
the link on the website, download and complete the Application Form
and review the Terms of Reference, and either email, or print and post
the forms to POL. Against a background of Covid 19 and lockdown, it is
difficult to say how many PM's received letters, accessed the website
and were able to submit a claim.
The Consequential Loss Guidelines were approved on 16th September
2020, and it was agreed that these guidelines would be sent to all
applicants to HSS and would be published on the POL website in
October 2020. At this point there were 2,211 applications from claimants,
meaning that approximately 25,000 Postmasters did not receive
Consequential Loss Guidelines at all. In addition, c60 Shortfall only
claimants (plus 146 who did apply for further losses to be considered)
who applied to HSS after the Consequential Loss Guidelines where
published did not retrospectively receive the Guidelines. A paper was
considered at HMC on 18th January 2023 which considered the
issuance of CLG being sent in October 2020 and concluded that no uplift
in applications was experienced after the mailing of the CL Guidelines.
It should be noted that the CL Guidelines were only sent to actual
claimants. The paper was subsequently presented to HRC who
concluded that further investigation was required.”,
. In relation to legal representation:
“Additional information and review by the HSS team, states that a review
of Relativity shows the undernoted information. A fuller review of Legal
Representation is in course and will be presented in a separate paper.
i. Overall, for the 2417 original claims, the average initial Offer is
£92.6k for those claims represented and £35k for those
unrepresented. Lower DM claims were proportionately less
represented than non-de-minimis claims.
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ii. Shortfall only claims with representation have an average offer of
£17.7k;
iii. I Shortfall only claims without representation have an average
Offer of £9.6k;
iv. CL claims with representation have an average Offer of £101k;
v. CL claims without representation have an average Offer of
£55.4k”; and
c. In relation to the ratio of shortfall only to consequential loss claims:
“i. Applications submitted before 1st October 2020 had a shortfall
only/Consequential Loss claim split Of 42%/58% (929 claims/1282
claims);
ji. Applications submitted after 1st October 2020 had a shortfall
only/Consequential Loss split of 29%/71% (60 claims / 146 claims) -
however no CL Guidelines have been sent to the 60 shortfall only
claimants.”
53. I expressed the view at HRC that HSS should be reopened to allow new claims
to be submitted and existing claims to be re-submitted and reviewed. I also
suggested that claims that had been settled could be reopened and reviewed
at the request of the claimant. If, as I understand, there is to be an appeals
process as the Horizon Compensation Advisory Board (the “HCAB”) has
proposed, I hope that this will provide a route by which these issues and any
other defects in the scheme can be remedied.
Keeping individuals informed about HSS
54. Responsibility for communicating with individuals about HSS and the progress
of their claims through the scheme sat with POL, supported by HSF. I am aware
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55.
56.
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that there has been significant criticism of the delays experienced by claimants
and of the general lack of communication with them by POL, which is highly
regrettable. As a POL-run scheme, it would not have been appropriate for the
Department to engage with individual claimants or their legal representatives
and had it attempted to take on that role, my view is that this would have simply
inserted a ‘middle-man’ into the process, as the Department and the
Shareholder Team would have been reliant on sourcing any information that
was relevant to each claim from POL. Correspondence from another party not
responsible for delivering the scheme could also have been confusing for
claimants.
Although UKGI was not involved in communicating with individual claimants,
there were instances where claimants wrote to the Department requesting an
update or flagging particular issues, which the Shareholder Team would then
be made aware of. The general approach to such correspondence was that
either the Department or the Shareholder Team would follow up with POL to
understand the issue in question, ask them to investigate and request that they
respond directly. Any Ministerial correspondence would be responded to by
Departmental officials in the usual way.
As mentioned above, the Department and the Shareholder Team were updated
on the progress of claims and some claimant engagement statistics were
generated at a scheme level (e.g. responses to offers, the number of requests
for information issued). Updates were also provided through the regular
submission of KPIs to HRC and through the regular monitoring sessions. I
consider that HMG was updated properly through the existing channels on
claimant engagement however, as noted above, there was understandable
criticism of the delays experienced by claimants, which could perhaps have
been avoided had there been greater capacity within POL at the time to deal
with the claims and had some of the organisational issues in HMBU referred to
above been addressed at an earlier stage.
Public data on the progress of HSS was made available on POL’s website from
November 2021 and I am aware that this was later published monthly, including
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on gov.uk. Given the significant public interest in the scheme, I think it is right
that such information is made readily available, although in retrospect I would
acknowledge that it was well over a year from the launch of the scheme before
data was published. In my view, the information could have been made
available earlier.
58. With hindsight, I also believe it would have been beneficial if more claimants
had benefitted from legal representation, not only because the outcomes for
those clients may well have been better, but also because I expect the presence
of stronger advocates for claimants would have put pressure on POL to
communicate better and might also have brought to light some of the defects in
the scheme, that caused me to believe it was necessary to reopen the scheme.
Providing full and fair compensation to applicants
59. The idea of being able to fully and fairly compensate postmasters for the
consequences of the Horizon Scandal, which in many cases has been life
changing, is in itself difficult to conceive of. Monetary awards can only go part
of the way to achieving redress.
60. It has been argued that the Horizon scandal was such an egregious event that
legal precedent and what a court would award is the wrong starting point for
considering the fairness of compensation. I have sympathy for this argument,
but particularly in the context of thousands of claims, many of them complex,
where compensation is being funded from public funds, fairness of awards and
consistency between claims are critical principles that need to be observed and
demonstrated. A solid framework for assessing claims and awarding
compensation is therefore essential.
61. Moreover, in the context of the use of public funds, Managing Public Money
guidance applies and the fairness of an award is generally assessed by
reference to what a court would award in similar circumstances. Under HSS,
the principles were intended to be based on clear and well-established law
wherever that was available. In this way, the Department could be reassured
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that the compensation awards made by the IAP were appropriate through the
combined advice and input of the IAP, POL and POL’s solicitors, as well as its
own monitoring in which the Shareholder Team was involved.
62. I believe the remit of the IAP and the resources available to it meant that it was
set up to achieve the objectives of fairness and consistency in the
compensation awards it made. I am not an expert in compensation schemes,
so it is difficult for me to give a view as to whether the IAP has achieved these
objectives, either in relation to specific cases or in aggregate across the scheme
as a whole. However, based on my observation of the scheme and the way the
IAP operated, I believe the IAP worked thoroughly and diligently in doing its job.
My understanding is that in some respects, such as the approach to evidence
and the discretion the IAP was given to make awards that were higher than the
amount claimed and for heads of loss that were not claimed, HSS was more
flexible than a court process and so the outcomes for claimants in many cases
may have been better than going to court.
63. Given the recent wave of applications, it is clear that HSS is far from complete.
As of July 2024, I have been informed that £126m has been paid to over 2,500
applicants and that there are over 1,600 eligible applicants who are yet to have
their claim settled and paid. This is obviously of concern given it is now more
than four years after the scheme opened for applications.
Making offers and payments within a reasonable timeframe
64. The delivery of HSS has been much slower than anyone would have liked,
despite the genuine intentions of both POL and HMG. I have outlined above the
issues around pace of compensation at the early stage, although the rate at
which offers were made did increase over time, especially following Simon
Recaldin’s appointment.
65. As to the payments themselves, my experience was that this process
proceeded relatively smoothly and the Shareholder Team received regular
updates from POL Finance to monitor and track spend. Once a compensation
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payment had been agreed, including any interim payment, the speed at which
that payment was made was relatively quick. This was a metric that was tracked
as part of HSS KPIs and my recollection is that there were limited concerns in
this regard.
Interim payments
66. Initially, interim payments were largely focused on hardship grounds. However,
as time went on and, in an effort to mitigate some of the delays that were being
experienced more generally in HSS, POL’s approach developed to enable more
interim payments to be made. My understanding is that POL now provides
payments of up to £50,000 upon submission of a claim, and an interim payment
of 100% of its offer if the offer is disputed.
67. My recollection is that the need for interim payments, beyond the limited
hardship payments that had been allowed for at the early stages of the scheme,
became clearer as it was recognised that the delivery of the scheme was slower
than hoped and, in particular, that claims in DRP were taking a long time to
resolve. In addition, interim payments had been introduced at an early stage of
OCS and this had been well received by claimants. I also remember at one
stage there was some concern from POL that making large numbers of interim
payments would divert resources from the task of processing the underlying
claims which would only cause further delays. However, while recognising that
these concerns might have had substance, I was, in principle, in favour of
making interim payments where possible and made this point at HRC towards
the end of my tenure.
68. Given the difficult circumstances that many postmasters face, I consider the
provision of interim payments to have been a positive development and one
which I hope will continue to provide some relief and redress to claimants, whilst
the remainder of their claims are being settled.
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Fixed sum payments
69. I have been asked to summarise my role and that of the Shareholder Team in
implementing the £75,000 Fixed Sum Payment offer to HSS claimants.
Although I am aware of this policy development, it was introduced after I
stepped down from the Board. I do not, therefore, consider myself to be well-
placed to express any view about it. From speaking to colleagues within UKGI,
it is my understanding that it was a policy decision taken by the Department and
that the Shareholder Team did not play any role in it.
The IAP
70. I have described the way HSS operated and the role of the IAP in general terms
above. In terms of its processes, the IAP operated as follows: the Panel made
its recommendations to POL and POL then had to approve the ultimate award,
make the offer of compensation to the claimant and make the compensation
payments. During my tenure, I cannot recall any occasion on which POL
outright rejected the IAP’s recommendations and, in my opinion, the
establishment and utilisation of the IAP itself worked well. Indeed, I believe that
POL could not have run HSS without an independent panel and, in that sense,
the IAP was key to achieving the delivery of HSS.
71. The capacity of the IAP expanded significantly over time to be able to handle
the volume of claims. Each panel consisted of an experienced litigator, a retail
expert and a forensic accountant. Initially the members of the IAP were Alex
Charlton KC, Sunder Sandher and Susan Blower. The fact the Panel had
quantum and retail experts meant that they had the expertise and experience
to make an assessment of the claimant’s losses (such as business losses)
based on various assumptions, even where the underlying information may not
have been available. I believe the range of skills and experience represented
on the IAP enabled the IAP to assess the vast majority of claims effectively
without recourse to outside help. Indeed, there were only a few occasions on
which I can recall the IAP seeking outside expertise such as in relation to claims
that included a medical component.
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72. POL also had little, if any, direct engagement with the IAP. All engagement
proceeded through HSF, which took the lead in the initial assessment of claims.
I am aware that HSS has been criticised as lacking independence. This is
unfortunate, as my experience is that the IAP operated as intended, providing
independent views unfettered by POL.
Tax treatment of claims in HSS
73. As mentioned above, HSS was designed by POL with assistance from HSF.
When it was presented to the Board in early 2020 for approval, the tax status
of the scheme was not identified as an issue and the tax status was not
explained. Nor were any alternatives put forward. With hindsight, POL should
have sought approval for a scheme that was tax-free, but that possibility was
not raised until OCS was being designed in 2022.
74, The tax treatment within HSS is an unfortunate feature that caused unfairness
for certain categories of claimant. Awards for certain heads of loss in HSS, such
as loss of earnings, were taxable in the year of receipt. For large awards, this
would be taxable as income at higher rates, even though the earnings that the
claimant was being compensated for might only have been taxed at a lower rate
(e.g. the basic rate of income tax) over the period in which they would have
been received. This was evidently unfair to the claimant.
75. A further issue arising from the tax treatment of HSS was the administrative
burden for claimants of having to include their awards for certain heads of loss
in their tax returns.
76. These issues of unfairness were highlighted by the Shareholder Team to HSS
SteerCo in August 2022 [UKGI00049055]. An attempt was made to assess the
number of claimants affected and various solutions were considered.
Unfortunately, action was not then taken immediately to rectify the problem.
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77. Following adverse comments in the press, however, HSS SteerCo then decided
that the issue needed to be addressed. The Shareholder Team supported the
Department in quantifying the impact of the different options available and these
options were discussed between the Department, HMT and HMRC.O The
decision was taken to top-up awards made to all claimants in respect of awards
subject to income tax. This had the effect of remedying the unfairness referred
to above (i.e. making whole claimants that would be subject to higher rates of
tax on their awards but who would have paid lower rates of tax on their earnings
when they were SPMs). It was recognised that this solution would result in other
claimants (for example those who currently pay no tax or the basic rate on their
earnings) being better off as a result of the top-up payments, but it was
considered that remedying the unfairness to the other group was more
important than a risk that some claimants would be overcompensated. This
proposal was approved by Ministers and announced in June 2023
[UKGI00049058).
Addressing the effect of bankruptcy in HSS
78. The treatment of bankruptcy and related consequential losses was a scheme-
level issue that required principles to be developed by the IAP in accordance
with the process I have set out above. Clearly, the effect of bankruptcy on any
individual is substantial and can have life changing consequences.
Unfortunately, bankruptcy law is complex and the resolution of these cases
which involved multiple parties were some of the last cases to be dealt with
during my tenure on the Board.
79. As I understood the position, the two most contentious issues in dealing with
bankruptcy cases were causation and the allocation of the compensation award
between the claimant and any remaining creditors.
80. It fell to the IAP to determine whether the bankruptcy had been caused by a
shortfall and/or Horizon related issues. If so, the bankruptcy principles and
related consequential loss principles applied and the IAP would make an award
on that basis. Where causation could not be established, compensation would
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be provided in respect of all Horizon related losses, but the bankruptcy and
consequential losses principles would not be applied in determining the award.
81. In relation to the allocation of pecuniary losses, as a matter of insolvency law,
some or all of the compensation would vest in the bankrupt's estate. This meant
that, in many cases, the claimant's creditors would have the first call on a large
proportion of the compensation awarded in cases where the bankruptcy
remained open.
82. In the end, it is my understanding that all but one of the Trustees in Bankruptcy
involved in HSS bankruptcy cases (including the Official Receiver) agreed that
they would not take any of the compensation payments on behalf of the
claimant's creditors. I recall there was one exception to this, and that case was
ultimately resolved by way of a top-up payment being made.
Funding for legal assistance under HSS
83. AsIhave explained above, on reflection, I consider many HSS applicants would
have benefited from access to legal assistance in preparing their claims. This
was also an inconsistency in the approach taken between the compensation
schemes: under HSS, claimants were provided with a maximum of £1,200 to
pay for legal advice to support them in considering an offer (with further sums
being made available if an offer progressed to DRP), whereas under OCS and
the GLO Scheme, more comprehensive legal assistance was available from the
outset of their claims (reasonable legal fees on OCS and a tariff on the GLO
Scheme).
The HCAB
84. I have been asked to provide any reflections I may have on the HCAB’s report
dated the 14 June 2023 [RLIT0000250]. I have set out my comments below by
reference to the paragraphs in the HCAB report:
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. Fairness and legal costs (paragraphs 1, 7 and 11): As stated above, I
agree with the fairness principles reflected in paragraph 1 of the report
and that reimbursement of legal costs should be made, provided they
are reasonable in the circumstances of the claimant and their claim.
. Taxation (paragraph 2): This issue was dealt with as I described above.
. Dispute resolution and trust (paragraphs 3 and 9): I would like to
acknowledge the comments that have been made about the outcomes
and handling of claims having been “unfair” in some cases. As
mentioned above, at the time I left the Board, I believed that HSS should
have been reopened to allow for new claims to be submitted and existing
claims and settlements to be resubmitted and reviewed. As part of any
reopening, claimants should be reimbursed for reasonable legal costs
from the outset.
. The role of the IAP (paragraphs 4, 5 and 10): The HCAB appears to
confirm my view that the IAP acted independently and diligently in
assessing claims and making awards and sought to achieve consistency
between claimants whose claims were similar.
. Differences between HSS and the GLO Scheme (paragraph 6): As I
mention below, I was also concerned about this issue and recommended
the Department should obtain assurance on the point.
Role of an independent panel to increase trust in the final settlement
(paragraph 8): I agree with HCAB’s comment that an independent panel
to make a final decision in relation to awards is helpful in building trust.
In relation to HSS, unfortunately despite the existence of the IAP, a
significant number of awards were disputed and taken through DRP. I
believe it is likely that a number of these disputes could be attributed to
defects in the way HSS was communicated at the outset, for example
the communication of the consequential loss principles. These cases
should be capable of being resolved through the DRP, particularly if the
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claimant obtains legal representation. Other awards may not have been
acceptable to the claimant because the IAP did not have sufficient
evidence, even taking account of the discretion available to it, that
enabled it to make an award that the claimant would regard as fair.
Alternatively, it is possible that some claimants may have had unrealistic
expectations about the award the IAP would make even if all relevant
evidence was available. HSS did provide that claimants could ultimately
have access to mediation and if, having exhausted all available
processes, any claimant remained dissatisfied with their award, they
could take the matter to court. It was always hoped that there would be
sufficient trust in the process that no claimant would feel it necessary to
do so. I reached the view that, even if a claimant remained dissatisfied
with their award, all or nearly all of the award should be paid to them and
that payment should be made once the offer was made by POL.
. Damage to reputation and loss of earnings (paragraph 12): I believe the
IAP did make awards in relation to claims for loss of reputation.
Compensation for loss of earnings was one of the more difficult areas for
the IAP which had to balance a number of factors in reaching a decision
on a case-by-case basis. I recall that the IAP did take account of the
claimants’ particular circumstances and a number of awards were made
that were higher than the 26 months remuneration figure. Lower awards
were also made in some cases, but my recollection is that there were
few such cases. I am not a lawyer, but my understanding is that a strict
legal analysis might give rise to a lower figure than 26 months because
many SPMs had contractual notice periods of 12 months or less. Mr
Justice Fraser had also suggested in the ClJ that a notice period of 12
months might be appropriate in many cases. The IAP had to weigh up
these factors and reached the conclusion, which I believe was arrived at
in good faith, that 26 months remuneration would strike an appropriate
balance in many cases.
. Overall fairness of awards (paragraph13): I believe that others are better
placed than me to provide informed comment on the overall fairness of
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the awards made in HSS. A reopening of the scheme, as I proposed,
would provide an opportunity to remedy any unfairness as far as
possible.
i. Overturned convictions (paragraphs 14 to 19): my understanding is that
many of the concerns expressed by the HCAB and _ the
recommendations they made will have been dealt with by the legislation
introduced by HMG. This took place after I left the Board.
Overturned Convictions Scheme (OCS)
Summary of UKGI’s role and involvement in key decisions
85. As with HSS, the Shareholder Team took a proactive role at the outset to
support the Department with obtaining funding for the scheme and with the
governance arrangements relating to the Department's oversight and
monitoring of the scheme, providing a challenge function where appropriate. As
I have mentioned above, as the Shareholder NED, I participated in decision-
making by the Board and HRC in this regard.
86. I have set out below the key stages in the development of OCS to provide
further detail concerning the Shareholder Team’s role. I would also highlight that
the process for compensating postmasters who had their convictions
overturned was not structured as a “scheme”, but I have used this terminology
nevertheless.
Decisions on stance and general approach to compensation
87. Following the settlement of the GLO proceedings in 2019, POL began the
process of dealing with convicted SPMs who were seeking to have their
convictions overturned. A disclosure process was set up to assist convicted
SPMs to put their appeals together and POL’s lawyers advised that POL would
need to review the evidence on a case-by-case basis and take a stance as to
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88.
89.
90.
91.
92.
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whether the conviction should be overturned by the Court of Appeal or the
Crown Court, as applicable, in each case.
I recall that a number of Board members, including myself, did not think it
appropriate for POL to be involved in the process of determining whether any
convictions should be overturned given its history of culpability in the Horizon
scandal, and felt that this role would be more suitably performed by another
party. However, it was explained by POL’s lawyers that, in cases where it had
been the prosecutor, POL was required to perform this function according to the
established legal process for determining whether or not a conviction was safe.
In light of this advice, the Board decided that, given the serious implications for
the SPMs concerned, it would take the decision on the stance POL would take
in each case. The first cases that the Board considered were 47 cases that had
been referred to the Court of Appeal by the CCRC. Based on the available
evidence and legal advice, which was considered in depth, the Board decided
it should oppose three of the appeals but that it would support the remaining
44. In the Hamilton judgment, which was delivered in April 2021, the Court of
Appeal confirmed that 39 of the 42 convictions being considered at the hearing
should be overturned. The convictions in the three appeals that POL had
decided it should oppose were upheld by the Court of Appeal.
During my tenure on the Board, decisions concerning POL’s stance in relation
to criminal appeals were not delegated by the Board. Either the Board or HRC
reviewed the legal advice in each case and took the decisions.
In parallel with those decisions being made, POL also began receiving advice
on the compensation to which convicted SPMs whose convictions were
overturned would be entitled. HSF provided POL with advice about malicious
prosecution, the total potential quantum of compensation and approaches that
might be taken to the settlement of claims and delivery of compensation.
In early 2021, HSF began to engage with Hudgell Solicitors (“Hudgell”) who, at
that stage, POL understood was representing around 65 convicted SPMs
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seeking to have their convictions overturned, to discuss the process for
compensation. At the Board meeting on 18 March 2021, HSF advised that
Hudgell’s clients did not want the compensation process to involve a “scheme”
like HSS. This information guided the approach that POL would go on to take.
I understand that HSF also sought to reach out to the lawyers representing
other claimants such as Howe & Co and Paul Marshall, however the feedback
the Board received was that they were not in a position to engage at that stage.
93. Another factor in the initial approach taken to compensation was that there was
no time limit by which convicted SPMs had to appeal their convictions. While it
was hoped that a significant cohort of SPMs might have their convictions
overturned quickly and provide the information to be able to assess
compensation in a holistic way, it was understood that there might be a tail of
claimants coming forward over a potentially long period, possibly years. In
practice, despite 39 convictions being overturned as part of the Hamilton
judgment and a further six at the Crown Court in December 2020, the flow of
claims was slow. This meant that a more negotiated outcome had to be followed
with each case being dealt with as it came in.
Interim payments and governance for final payments
94. Shortly after the Hamilton judgment, POL put forward a proposal to make
interim payments to postmasters. It was already clear POL had no financial
capacity to make compensation payments beyond the amount it had committed
to HSS. POL therefore asked HMG to fund interim payments of up to £100,000
per claimant. This figure was based on an analysis by HSF. It was understood
that many claimants would be entitled to substantially more than £100,000 but
HSF considered that it would be the minimum amount of compensation that
most claimants would be entitled to. The proposal was approved by the Board
in May 2021. The Shareholder Team then supported the Department in
preparing the required business case for the funding, which included reviewing
POL's proposal and financial analysis. The business case was approved by
HMT on 21 July 2021, which enabled POL to announce the policy and
applicants to begin applying for payments.
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95. In HSF’s view there might have been a small number of cases in which the
ultimate amount of compensation that would be payable to a claimant would be
lower than £100,000. This situation might arise, for example, if the claimant had
earned more after their conviction than they had earned as an SPM. This would
result in a small amount of compensation being paid for loss of earnings which
was thought to be the largest head of loss for most claimants. Neither POL nor
the Department wanted to be in a position where they might have overpaid
compensation such that some of an interim payment might then have to be
recouped from the claimant. Before making each interim payment, HSF
therefore carried out a light touch assessment of the facts of each case, based
on details provided in the appeal proceedings, and this informed the
appropriateness of the payment being made. During my tenure, there were a
handful of cases where HSF recommended an interim payment of less than
£100,000.
96. In my view, the interim payment policy worked well. Applications for interim
payments were generally received by POL fairly quickly after convicted SPMs
had their convictions overturned. Interim payment offers were made relatively
swiftly after applications were received and reviewed by HSF. Payment was
also made promptly after acceptance. Progress was swift, for example, it was
reported to the Board that, by October 2021, 59 SPMs had their convictions
overturned, of which 57 had applied for interim payments, 43 offers had been
made and 36 payments made. In addition, as the information as to the likely
quantum of claims improved, for example following the Early Neutral Evaluation
("ENE") decision by Lord Dyson, interim payments were increased significantly.
97. The Shareholder Team assisted the Department with preparing the business
case for funding final compensation payments which was approved by HMT in
November 2021. As part of this work, the Shareholder Team was involved in
scrutinising POL’s financial analysis of the number of potentially affected
postmasters and the legal analysis on quantum provided to POL by HSF (with
assistance from BEIS legal).
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98. Concurrently, POL, UKGI and the Department engaged on the governance
arrangements for OCS, which were similar to HSS. By this point, HRC had been
established and it incorporated OCS within its Terms of Reference. The
Department set up POCC which, as outlined in its Terms of Reference, was
designed to make key decisions from HMG'’s perspective [UKGI00049063].
The decision makers at POCC were the Department's Senior Responsible
Officer and Director responsible for POL, the Department’s CFO, the
Department's Legal Director and a representative from HMT’s spending team.
As with HSS Steerco, I was invited to attend POCC as an observer along with
the Chair of the Department's Audit and Risk Committee. The Department also
set up a working group consisting of DBT policy officials and members of the
Shareholder Team, which would consider the matters which needed to be put
to POCC and which had working level engagement with POL on OCS (the “DBT
POCC Working Group") (Working Group Terms of Reference — July 2022)
[UKGI00049061]. The Shareholder Team also undertook the secretariat
function for POCC until this was handed over to the Department at the end of
2022.
99. In December 2021, POL, UKGI and the Department agreed an operations
agreement (the “OCS Operations Agreement”) [UKGI00049054] that outlined
the different responsibilities for the respective parties. In particular, it outlined
the different approval points for the Department, for example the Department
would approve the legal principles (designed by POL’s lawyers) that would be
applied when assessing claims and making compensation awards. In addition,
the Department would approve the compensation offers made for the first 20
claims for which offers were made. The intention was that after the initial cases
had been settled, the operation of the legal principles would be sufficiently well
established and enough precedents set that the Department could either step
back entirely from approving offers or reduce its involvement to looking at a
small number of claims on an exception or sampling basis.
100. Part of the Shareholder Team’s role was also to work with POL to develop
management information (“MI”) so that the Department could monitor progress.
This started with weekly information about the processing of applications for
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interim payments. Over time the MI was developed to cover the processing of
full compensation claims received. The Shareholder Team also monitored the
development of the estimated total cost of OCS which POL calculated by
updating the financial model that had been used to support the business case
for funding the scheme. Monthly monitoring meetings attended by a number of
representatives from each of POL and the Department were also coordinated
by the Shareholder Team in a similar manner to that described for HSS.
101. As with HSS, there was a regular drumbeat of meetings on OCS. The DBT
POCC Working Group meetings (typically weekly) and POCC meetings
(typically every fortnight) were distinct from HSS SteerCo and HSS Working
Group. There would also be ad-hoc calls and meetings from time to time
involving some or all of the following: Department officials; members of the
Shareholder Team; POL; and HSF. Overall, the meetings relating to OCS were
more event-driven, for example there was a particular uptick in meetings in the
run up to the ENE.
Initial cases and ENE for non-pecuniary damages
102. In addition to claims for interim payments, POL initially received two full
compensation claims from Hudgell which were discussed at the Board in
August 2021. As anticipated in the OCS Operations Agreement
[UKGI00049054], it was important to develop principles to enable fair
compensation to be awarded but also to provide consistency between cases.
The first two claims were considered as lead and precedent setting cases, both
in terms of some of the key principles, such as loss of earnings, and also the
process for awarding compensation. They therefore required substantial
involvement by POL, HSF and the Shareholder Team. POL and the Department
also took advice from counsel.
103. The Board and POCC approved initial offers in December 2021 and January
2022, however, agreement could not be reached as there were disagreements
about a number of heads of loss. The most substantial point was in relation to
non-pecuniary damages. The offers had been based on precedent cases but
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the claimants’ solicitors disagreed with this approach as they believed the
precedent cases were not comparable to their clients' cases. They believed that
the harm suffered by their clients was unprecedented and so higher awards
should be made. While sympathetic to the arguments being made, the
Department struggled with how it could justify making awards that were higher
than those proposed by its own counsel and it took some time to find a way
forward. As a result, it took some months before POL was in a position to
increase the offers.
104. The Shareholder Team and POL encouraged the Department to consider
different ways to resolve the position on non-pecuniary damages with Hudgell
and other claimant cohorts. It was clear that the Department needed an
independent and authoritative opinion on the range of damages if progress was
to be made. After considering various alternatives, HSF produced a paper
proposing ENE in April 2022 and the Board agreed with this proposal. The
Shareholder Team supported the Department in reviewing the proposal to
ensure the Department had a clear understanding of the ENE and its scope.
POCC was supportive of ENE and provided comments to help develop
proposals as they were put forward including on the terms of reference for the
ENE.
105. The proposal to move to ENE was developed in conjunction with Hudgell. Other
law firms representing convicted SPMs were offered the opportunity to take part
but they chose not to participate at that stage. It was agreed that the ENE would
be most beneficial if it could determine a range of awards for a variety of
claimants whose circumstances were different. In this way the ENE could
provide a basis for agreeing awards in as many cases as possible and minimise
areas for disagreement. As a result, the ENE process took some time to set up
whilst Hudgell assembled non-pecuniary claims from a further 8 claimants so
that, in all, 10 cases could be considered. In early July 2022, the parties made
submissions to the evaluator, Lord Dyson, and he reached his opinion at the
end of the month. Shortly afterwards, non-pecuniary offers were made to the
10 claimants whose cases had been considered and I recall that most of the
offers were accepted quickly. In a few cases, there were some residual
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disagreements, but my recollection is that they were resolved within a short
period.
106. There is no doubt that the need to have the ENE caused a delay in settling the
non-pecuniary claims for the first two claimants, however overall, the ENE
proved to be successful as it unblocked the settlement of non-pecuniary
awards. It gave HMG reassurance as to the appropriate level for non-pecuniary
awards and, in the main, claimants and their solicitors seemed to accept the
ranges put forward by Lord Dyson to be appropriate. To illustrate how ENE
enabled non-pecuniary claims to be progressed, by early November 2022,
POL’s management information recorded that there had been 83 convictions
overturned and POL had received 40 non-pecuniary claims and in 15 of those
cases, POL’s offer had been accepted. However fewer than 10 pecuniary
claims had been received.
107. The ENE also enabled the threshold for interim payments to be increased to
£163,000 because the ranges put forward by Lord Dyson were higher than the
level assumed when the £100,000 figure for interim payments had been
decided. The increase was approved in October 2022.
Pecuniary damages
108. In relation to non-pecuniary claims, the ENE enabled POL and the claimants’
solicitors to take a tariff-based approach to these heads of loss. Pecuniary
claims could not be approached in this way, as the quantification of
compensation relied on more specific information that was unique to each
claimant. For example, to quantify compensation for loss of earnings, the
claimant's earnings both in the period shortly prior to conviction and the entire
period after conviction had to be obtained (usually from HMRC or the claimant’s
accounts) or estimated if source material was not available. The approach taken
by POL was to seek to negotiate agreement with claimants on different heads
of loss based on the information and evidence presented and, if that failed,
consider other forms of ADR including mediation. The Shareholder Team
supported the Department on the initial lead cases in reviewing POL’s lawyers’
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recommendations so that POCC could be satisfied with the approach being
taken. Where relevant, the Shareholder Team would also consider POL’s
proposals for resolving issues that could not be agreed between POL and
claimants, for example where expert advice may have been needed.
109. Whilst POL, the Department and Ministers shared a desire to settle claims
quickly (Letter from Tim Parker to Minister — 22 April 2022) [UKGI00049059]
and (Letter from Minister to Tim Parker — May 2022) [UKGI00049060], there
were challenges in achieving this objective, for example: only one of the law
firms representing some of the claimants, Hudgell, was forthcoming in
presenting claims; and POL’s lawyers faced challenges in obtaining the
required information to support an offer, including from HMRC. However,
progress was made and, as mentioned above, fewer than 10 claims had been
received by November 2022.
110. Unfortunately, the rate at which pecuniary claims were submitted by claimants
was very slow. By the time I left the Board in May 2023, more than two years
after the Hamilton judgment, POL’s management information recorded that, of
the 86 convicted SPMs whose convictions had been overturned by then, only
nine pecuniary claims had been submitted and, of these, only two had been
settled.
111. The Shareholder Team worked to help OCS progress and overcome obstacles
where possible. For example, in March 2022 the Shareholder Team supported
the Department in taking forward POL’s engagement with HMRC on the tax
treatment of OCS. Although UKGI is not an expert in tax matters, the
Shareholder Team assisted in the process of quantifying the financial effect on
claimants and the cost to the taxpayer of various options in relation to a number
of tax issues that arose in OCS. The objective was to evaluate a tax exemption
for OCS with HMRC and HMT, which was ultimately agreed and announced in
September 2022. I address the specific issue of tax treatment under OCS
further below.
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112. Over the summer 2022, the Shareholder Team also worked with the
Department and HMRC to try to expedite HMRC’s response to requests from
claimants for historic tax records which would support their claims for loss of
earnings.
Remediation approach
113. The issues with pace in the negotiated approach, outlined above, led HMBU to
propose a new ‘Remediation Approach’ which was considered by HRC at a
meeting in July 2022. The intention was to develop a detailed and consistent
set of principles for assessing heads of loss and for internal POL case
assessors to take the lead in considering claims and proposing settlement
amounts to claimants.
114. POL and HSF discussed the proposed remediation approach with several of
the firms representing claimants including Hudgell. My recollection is that the
concept was reasonably well received.
115. The process took some time to develop and evolved over time. For example, it
was agreed in November 2022 that the Remediation Approach would only be
used for pecuniary damages and that POL and its lawyers would continue to
lead on trying to agree non-pecuniary damages with claimants utilising the
guidance from ENE.
116. Developing sufficiently detailed principles, which were required in the
Remediation Approach, took time. POL’s plan was to agree the principles with
the law firms representing all the known claimants and potential claimants in
OCS. My concern, which I expressed at HRC, was that this process could be
long and complicated and that it might in fact lead to delays in compensating
claimants.
117. By the time I left the Board, whilst there had been substantial progress on the
development of the principles which were being shared with the claimants’
solicitors, a number of matters remained to be resolved. For example, POL was
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still designing the process for resolving disputes where a claimant did not agree
with POL’s offer. It was proposed that there would be an independent assessor
(“IA”) (ideally a KC with the assistance of a forensic account and experts where
necessary) to review disputed heads of loss and give a recommendation. If
there was still a challenge on a point of law, there would then be an appeals
process. However, this had not been finalised by the time I left the Board and I
cannot therefore comment on how the subsequent Independent Panel, which
has now been appointed, operated nor on the appointment of Sir Gary
Hickinbottom as the Chair.
118. During the development of the Remediation Approach, it was intended that
negotiations for claims that had already been submitted would continue.
Progress with these claims was slow. The Shareholder Team raised its
concerns over this slow pace with POL through the Monthly Monitoring
Meetings and requested clearer reporting to show where claim assessment was
delayed and where issues needed to be escalated.
119. In March 2023, the Shareholder Team also supported the Department in putting
up advice to the new Minister, Kevin Hollinrake, on POL’s Remediation
Approach and the issues that were being faced in achieving pace in OCS. I
understand that this increased engagement resulted in the Minister asking the
Department to explore an approach of offering claimants a fixed sum settlement
in lieu of providing a detailed and evidenced breakdown of their losses. Whilst
the Shareholder Team supported the Department on estimating the cost of a
fixed sum approach, I was not involved in the policy which was finalised in July
2023 after I had left the Board. I therefore cannot comment on whether the
decision to offer £600,000 in full and final settlement under OCS has been
effective or provide any further background to this policy.
Engagement with SPMs eligible to apply for OCS
120. Reaching out to convicted SPMs whose convictions were potentially unsafe
was a topic that was regularly reported on to the Board and discussed in more
depth at HRC. POL undertook an extensive exercise to identify potential future
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appellants (“PFAs”). This resulted in 666 PFAs being identified and by June
2022, POL had been able to write to 540 of them. Unfortunately, and for
completely understandable reasons, some PFAs could not be found, did not
respond, or asked not to be contacted.
121. Over time, extensive efforts were made by POL to identify and contact PFAs
including sending further letters when no response was received. In late 2021,
an external firm was appointed to help POL obtain contact details for those
PFAs, or their next of kin if applicable, which POL did not already have.
122. POL recognised that a number of PFAs might not wish to hear from POL and,
in some cases, further correspondence could cause offence or trigger traumatic
memories. POL therefore approached the CCRC to ask it to write to PFAs who
had not responded to correspondence from POL. In April 2022, the CCRC
agreed to write to them and by June 2022, the number of PFAs for which POL
had no contact details had been reduced to 31.
123. Shortly before I left the Board, HRC approved a letter that would be sent to
PFAs whose convictions POL believed were unsafe. This was based on an
extensive review of court papers and other information that POL had been able
to obtain without the benefit of information from the claimants themselves or
their solicitors. In summary, the letter said that POL would not oppose the PFA’s
appeal if the PFA decided to seek to have their conviction overturned. This was
a further effort to encourage PFAs to come forward.
124. However, at the time I left the Board only 86 convicted SPMs had appealed and
successfully had their convictions overturned.
125. Developments since I left the Board appear to have had much greater success
in convincing convicted SPMs to come forward. Media coverage such as the
ITV drama may have contributed, but perhaps most importantly, the recent
legislation that automatically overturns convictions along with the offer of a fixed
sum of £600,000 may have had the biggest effect.
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126. It is unfortunate that more postmasters did not come forward at an earlier stage.
As I say above, this was a topic that was discussed regularly and I do consider
POL took all the reasonable steps it could to engage with affected postmasters.
Providing full and fair compensation to applications
127. As I have commented in relation to HSS, it is challenging to fully and fairly
compensate those affected by the Horizon scandal. This is particularly relevant
with regards to postmasters who were wrongly convicted, who have had the
consequences of their convictions hanging over them and their families for
much of their lives.
128. Under OCS, legal representation for claimants was fully funded and I recall that
very few claimants chose not to be legally represented. This has provided some
reassurance that claimants have had the support necessary to claim all the
compensation to which they are entitled.
129. With respect to pecuniary damages, POL often made assumptions aimed at
enabling claimants to obtain full compensation under relevant heads of loss.
For example, POL assumed for loss of earnings claims that postmasters would
continue to operate their branches until retirement and assisted claimants to
obtain accurate earnings data via HMRC records to support the calculations
underpinning their claims.
130. This approach was elaborated upon in its proposed remediation approach, in
which POL set out a wide range of heads of loss to help support claimants and
their representatives to fully develop their claims.
131. Throughout the process, POL also attempted to avoid placing an evidential
burden on claimants that was too high. HMRC records were of great assistance
in that regard.
132. However, in relation to compensation for pecuniary claims, beyond commenting
that I believe POL sought to ensure that compensation awards would be fair, I
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do not feel able to comment on the general fairness of compensation available
under the scheme as so few claims had been dealt with by time I left the Board
and the Remediation Approach was in the process of being set up.
133. As to non-pecuniary damages, the ENE conducted by Lord Dyson gave me
confidence that the approach being developed by POL and the claimant
representatives covered the range of heads of loss available. It also reflected
the unprecedented nature of the claims being brought which required
compensation beyond that awarded in pre-existing case law.
The tax treatment of claims in OCS
134. Compensation awarded under OCS is exempt from Income Tax, National
Insurance, Inheritance Tax and Capital Gains Tax. I understand that this is
consistent with the tax treatment of compensation awards under the GLO
Scheme, but not HSS which I have commented on above.
135. Seeking these tax exemptions was a policy decision taken by the Department,
with the support of HMT. The tax exemptions were aimed at ensuring the
maximum amount goes to the claimant and avoided the administrative burden
for claimants of having to include compensation in their tax returns. I was
supportive of OCS being tax exempt despite the inconsistency with HSS. Had
OCS compensation payments been taxable, it would have caused the same
unfairness that existed in HSS but on a bigger scale because OCS
compensation payments were typically substantial and so a high proportion of
OCS claimants would have become subject to higher rate income tax.
Addressing the effect of bankruptcy in OCS
136. My recollection is that bankruptcy was not an issue in either of the settlements
that had been agreed by the time I left the Board. As part of the Remediation
Approach, bankruptcy and insolvency-related losses were in the process of
being agreed with claimants’ solicitors and these would have included principles
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relating to bankruptcy. I am therefore not able to comment on how the issue of
bankruptcy was addressed in OCS.
Keeping claimants updated
137. The Shareholder Team was updated on OCS claimant engagement in the same
manner as I have described above for HSS. As OCS was more lawyer-led, it
was for HSF to keep claimants updated about the scheme's processes via
engagement with the lawyers representing them. HSF was also responsible for
keeping claimants updated about the progress of their claim, again through their
solicitors, and I am aware that HSF had multiple interactions with Hudgell
regarding the claimants they were representing, some of which are mentioned
above.
138. HSF was also in touch with the lawyers representing other claimants including
Howe and Co and Paul Marshall. I have also highlighted that POL reached out
to claimants that were not represented as part of the PFA process outlined
above.
139. I am also aware that POL updated its website to include details of OCS
processes which provided information on the progress of the scheme.
Effectiveness of dispute resolution in OCS
140. During my tenure as the Shareholder NED, the ENE acted as an effective
dispute resolution process in relation to non-pecuniary compensation. ENE
enabled the non-pecuniary claims for the vast majority of claimants to be
settled. I recall there were three cases where the circumstances of the claimant
were such that they did not accept that the outcome of the ENE was applicable
to them. I recall that, when I left the Board, a second ENE involving Lord Dyson
was planned to resolve these cases.
141. I recall that in one of the claims that had been settled, the parties could not
agree on compensation for one pecuniary head of loss and this was resolved
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through mediation. However, this was an ad-hoc arrangement and a dispute
resolution process for pecuniary claims had not been established by the time I
left the Board. At that stage, a dispute resolution process was envisaged for the
Remediation Approach that was being discussed, but it had not yet been
agreed.
GLO Scheme
142. I have been asked a number of questions in relation to my involvement in and
the effectiveness of the GLO Scheme. The GLO Scheme was administered by
the Department and UKGI did not have an active role in relation to it.
143. There was a limited period where a member of the Shareholder Team attended
GLO Scheme steering group meetings as an observer to have an
understanding as to how it was being approached and responded to queries
from the Department about achieving consistency with HSS and OCS. A junior
member of the Shareholder Team also joined the Department on secondment
in January 2023 to support the GLO Scheme.
144. However, I was not involved in the GLO Scheme and beyond the background I
have described above, I am unable to comment on how it has operated, the
policy decisions that were made or its effectiveness.
Ensuring Parity of Compensation across the different redress schemes
145. I am unable to comment on parity of compensation across all the different
redress schemes, as the Shareholder Team’s role was, in substance, limited to
HSS and OCS. As mentioned above, I proposed to the Department that it
should obtain assurance that the GLO Scheme would deliver outcomes that
were comparable to HSS. I have since understood that the Department did
commission this work, but I am not aware of the outcome. I therefore focus on
the two schemes with which the Shareholder Team was involved.
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146. With respect to the HSS, as noted above, both POL and the Department wanted
the IAP to deliver fair compensation to claimants in a consistent manner. In
addition, it was important that where similar losses such as shortfalls and
consequential losses came to be considered under different schemes, that
applicants under each of the schemes would be treated with parity.
147. The legal principles for OCS were developed after those in HSS so naturally
POL was guided by them and attempted to ensure consistency. It was
supported by the same law firm (HSF) and counsel (Helen Davies KC and
Andrew Kinnear KC). Broadly speaking, similar teams at POL, UKGI and DBT
were involved which meant that there was a common understanding as to how
different heads of loss operated under HSS and OCS.
148. Despite the above objectives and circumstances, there were significant
differences between the way certain heads of loss were treated because of the
nature of the claim and the extent of the losses suffered by the claimant. A good
example is termination payments. In HSS, termination awards were generally
determined by reference to a suitable notice period (which was usually longer
than the contractual notice period). The IAP often awarded 26 months
remuneration for termination. In contrast, the principle followed in OCS was to
compensate the claimant as if they had continued to run their branch from the
date of prosecution until the normal retirement date and deduct the claimant's
actual earnings over the same period. As a result, different levels of
compensation were awarded depending on whether a claim for termination was
being assessed under HSS or OCS. This different approach was considered
appropriate because the consequences of a conviction for a criminal offence
are generally more severe than contractual termination. Another example
related to taxation, which I have addressed above and believe has now been
resolved.
149. Agood example of a head of loss that was treated in the same way under both
schemes was shortfalls. In respect of a claim for shortfall losses, I had a
reasonably high level of confidence that claims would be assessed consistently
and similar awards given. This is because POL’s HMBU and HSF were
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intimately involved with both HSS and OCS and were very familiar with how
such heads of loss were to be assessed using the applicable principles. POL
and HSF had access to the full bank of test cases and awards made by the IAP.
In its reviews of OCS cases, of which there were very few by the time I left the
Board, the Shareholder Team was not aware of any discrepancies between
HSS and OCS where heads of loss such as this were meant to be assessed in
the same way.
150. The nature of claims under OCS were also in some ways different given they
related to malicious prosecutions. This meant that certain heads of loss, such
as loss of liberty, could only be pursued under OCS. However, where non-
pecuniary damages did apply under HSS, POL was able to share the findings
of the ENE with the IAP.
STATEMENT OF TRUTH
I believe the contents of this statement to be true.
Date: 2 October 2024
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Index to Third Witness Statement of Thomas Cooper
No. URN Document Description Control
Number
1. ITN00200100 First statement of Thomas WITNO0200100
Cooper - 13 June 2024
2. ITN00200200 Second statement of Thomas WITNO00200200
Cooper - 3 September 2024
3. IUKGI00017887 Independent Audit Review of UKG1I027894-
Board Effectiveness — March 001
2021
4. IPOL00438073 Internal Board Effectiveness POL-BSFF-
Review 2021/2022 095-0000009
5. IUKGI00044328 Internal Board Effectiveness UKGI054535-
Review 2022/2023 001
6. POLO0104222 Chair Letter - 26 February 2020 POL-0103805
7. IUKGI00049062 Letter from Charles Donald to UKGI057823-
Sarah Munby - 9 August 2022 001
8. I[UKGI00049064 Letter from Sarah Munby to UKGI057825-
Charles Donald — 11 August 2022 I 001
9. IUKGI00046031 Flowcharts contained within UKGI054628-
Board Papers (from p. 11) - 001
March 2020
10. [POL00168611 Letter from POL Chair to HMG - I POL-0163908
30 October 2020
11. IUKGI00049057 Historical Shortfall Scheme UKGI057818-
Operations Agreement - 25 001
February 2021
12. IUKGI00049065 Historical Shortfall Scheme UKGI057827-
Steering Committee Terms of 001
Reference — 27 January 2021
13. IUKGI00046340 Post Office Liabilities Funding UKGI055006-
Concept Paper - 29 May 2020 001
14. [BEISO000022 POL Board Paper - GLO V1IS00001332
separation solution: Managing
Issues Arising from GLO Related
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WITNO00200300
WITNO0200300
Matters & Project Starling - 28
July 2020
15. IUKGI00018239 Email chain between Tom Cooper I VISO0011638
and Tim Parker - 20 March 2021
16. IPOL00363158 Historical Remediation POL-BSFF-
Committee Terms of Reference — I 0191161
6 June 2023
17. IUKGI00049056 HMBU organisation paper UKGI057830-
presented to Board - 26 August 001
2021
18. IUKGI00049053 Historical Matters Committee UKGI057826-
Paper — CL Guidelines and 001
HSS/Stamp Scheme Review — 5
July 2023
19. lUKGI00049055 Historical Shortfall Scheme UKGI057829-
Steering Committee Risk Update I 001
- August 2022
20. I[UKGI00049058 Public announcement by UKGI057819-
Ministers - 19 June 2023 001
21. IRLIT0000250 Horizon Compensation Advisory I RLIT0000250
Board's report - 14 June 2023
22, IUKGI00049054 Overturned Convictions UKGI057828-
Operations Agreement 001
23. IUKGI00049063 POL Overturned Criminal UKGI057824-
Convictions Board Terms of 001
Reference — 10 May 2022
24. IUKGI00049061 Working Group Terms of UKGI057822-
Reference — July 2022 001
25. IUKGI00049059 Letter from Tim Parker to Minister I UKGI057820-
— 22 April 2022 001
26. IUKGI00049060 Letter from Minister to Tim Parker I UKGI057821-
— May 2022 001
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