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Witness Name: Professor Christopher
Hodges OBE
Statement N°: WITN11710100
Dated: 30° October 2024
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF
PROFESSOR CHRISTOPHER HODGES OBE
Introduction
Personal background
The creation and remit of the Horizon Compensation Advisory Boar
The approach of the Advisory Board ............cccecceeceeeeeeee ceseeeeeeeeceeeeeeeeeseceeeeenee eeeeeeee 11
The various Horizon compensation schemes
Concerns over delay, and analysis of causes
Evaluating major architectural Changes. ...............ccccceeeeeecces ceeeeeeeeeeeeeeeeeeeeeeneteeeee eee 20
Structural reforms implemented
The principle of full and fair compensation. :
Reorienting the Rules, Procedures and Culture of schemes. ..............:.c:ccceeeeeee cee 36
Clarification of the rules on levels of damages
Consistency between Schemes.
Culture
The Lump Sum Mechanism Technique in the OC and HSS schemes
Specific issues addressed
Urging SPMs to come forward and Claim... eeeceec ees eeee coeeeeeeeeeeeeeseeneeeeeeeees
Use of ‘without prejudice’ in offer letters by the Post Office
Remuneration tariffs for lawyers we
Bankruptcy ooo... ecee ee cececceeeeeee ceseeceececeecececeecaceeceeseee sesececsusecseececeeseeeeeciee ceeeeeeeeees
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‘Tainted’ Post Office staff .
Legal charging practices ..
The issue of overturning CONVICTIONS 0.2... eee cece cee eee tees eee ee eee eeeeeeeceeeenee eeeeeeee
The second cohort under the Horizon Shortfall Scheme
The current situation
Issues for The FUture o.oo... cece cceeeee coneeenecsnecseesseesseesseeseee cneeessessieesseeseeeseeesaeee
Providing mental health support.
Prevention and Response Mechanism: .
Statement Of Truth 0... eee ec ceeeceeeee cececsececeeeeesceeeesececesenee ceeacseercecseseceeenseteeeeeeee eeee 83
I, PROFESSOR CHRISTOPHER HODGES OBE, Chair of the Horizon Compensation
Advisory Board, will say as follows:
INTRODUCTION
1. This witness statement is made to assist the Post Office Horizon IT Inquiry (the
“Inquiry”) with the matters set out in the Rule 9 Request dated 20 September
2024 (the “Request’).
PERSONAL BACKGROUND
2. My educational and professional qualifications are:
a. BAjurisprudence, New College, Oxford (1976); MA (1983).
b. PhD, King’s College London (2004).
c. Solicitor of the Supreme Court of England & Wales (1979).
d. Solicitor of the Supreme Court of Hong Kong (1984).
e. OBE (2021).
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From 1979 to 2004 I was a lawyer in international law firms (principally Slaughter
& May, Clifford Chance, CMS Cameron McKenna) based in the City of London
(and 1984-85 in Hong Kong), practising in litigation and regulation. From 1990 to
2004 I was a partner in what became CMS Cameron McKenna. For the last four
years of my time in practise I held a part-time position at New College, Oxford.
From 2004 until I retired in 2021, I was an academic at the Centre for Socio-Legal
Studies, University of Oxford, leading a research programme in dispute
resolution and regulatory systems. In 2014, I was appointed by Oxford University
as the first Professor of Justice Systems, and by Wolfson College, Oxford as a
Supernumerary Fellow. My current status is that of Emeritus Professor of Justice
Systems, and Supernumerary Fellow, Wolfson College, Oxford.
I have published extensively in my specialist areas of dispute resolution systems
and regulatory systems. Among the positions I have held are: Freeman of the
City of London (1982); Chair of the International Bar Association's Committee on
Product Liability, Advertising, Unfair Competition and Consumer Affairs (1999-
2003); Chair of the Legal Issues Committees of both the European and UK trade
associations of medical device manufacturers, EUCOMED/EDMA and
ABHI/BIVDA (c1995 to 2005); Co-Chair of two Working Groups of the Health
Industries Task Force, reporting to a Minster of Health (2003-7); Chair of the
Pharmaceutical Services Negotiating Committee for England (2007-2011);
Board Member of the UK Research Integrity Office (2008-2017); Erasmus
Professor of the Fundamentals of Private Law, Erasmus University, Rotterdam
(2011-2014); Honorary Professor the International Law School of the China
University of Political Science and Law, Beijing, China (2013-2016); Visiting
Fellow, Australian National University, Canberra (2014); a Director, Foundation
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for Law Justice and Society (2014-19); Consultant Editor of Halsbury’s Laws of
England for the sections on Courts and Tribunals (2018-2024); Member of the
Academic Panel of the Administrative Justice Council (2018-2021); Member of
the Government's Committee on the Regulation of Property Agents (Best Report,
2019); Member of the Advisory Board, The Internet Commission (2020-2023);
Independent Chair of the Housing & Property Redress Group (2020-date,
comprising judiciary, Ombudsmen and redress schemes); Member of the
Government's Commonhold Council (2020-date); Co-founder and a Director,
International Network for Delivery of Regulation Limited (2021-); Chair of HM
Government's Regulatory Horizons Council (2022-date); Board Member,
Dialogue Through Conflict Foundation (2023); Board Member, Institute for
Regulatory Innovation, Delivery and Effectiveness (2023); Member of the Civil
Justice Council's Working Party on regulation of litigation funding (2023-date);
Chair of HM Government's Horizon Compensation Advisory Board (2022-date).
THE CREATION AND REMIT OF THE HORIZON COMPENSATION ADVISORY
BOARD
5. I The Horizon Compensation Advisory Board (the Advisory Board) was appointed
by His Majesty's Government (“HMG") in late 2022 to provide independent advice
to Ministers on aspects of compensation relating to the Horizon scandal. The
Advisory Board was created initially solely in relation to the Group Litigation
Order (GLO) Compensation Scheme, however that remit was then expanded to
cover the Horizon Shortfall Scheme, the Overturned Convictions Scheme and
the Horizon Redress Compensation Scheme (together, “the Schemes”). The
Advisory Board has comprised four members:
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a. 2 parliamentarians recognised for their past involvement in pursuing the
resolution of the Horizon scandal, Rt Hon Lord Arbuthnot of Edrom, and Rt
Hon Lord Beamish (formerly Rt Hon Kevan Jones MP);
b. 2 academic experts in the field of alternative dispute resolution and legal
ethics, Professor Richard Moorhead, Professor of Law and Professional
Ethics, Exeter University and leader of research projects into the Horizon
scandal; myself as an expert in Alternative Dispute Resolution.
6. The four key Terms of Reference of the Advisory Board mandate are:
“1. The Board’s aim is to help DBT to ensure fair and prompt
compensation to postmasters affected by the Horizon scandal and
related issues.
2. It will advise DBT ministers on how best to manage the delivery of the
GLO Compensation Scheme announced in December 2022, with
the aim of ensuring that it: 1
+ provides fair compensation to GLO postmasters;
+ does so promptly — and certainly before the deadline of August
2024; and
* does so consistently with the expectations of Parliament that public
money is spent in line with the Accounting Officer’s duties.
3. It will advise DBT ministers in respect of DBT’s oversight of other
‘When quoting documents in this statement the emphasis is as in the origina) except where otherwise
stated.
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strands of Horizon-related compensation by the Post Office,
including the Historical Shortfall Scheme, arrangements for
compensation in respect of overturned historic convictions and
compensation for postmaster detriment.
4. The Board will not consider individual cases for compensation.”
(RLIT0000270 — Terms of Reference for Horizon Compensation
Advisory Board).
7. The Advisory Board has no executive, administrative, managerial, governance,
policy-making or implementation roles nor does it exercise ‘oversight’ in relation
to any of the compensation Schemes or issues. The Advisory Board essentially
gives advice to Ministers, and it is Ministers who have oversight of the various
schemes. The Advisory Board does not consider any individual cases, nor
therefore does it make any decisions on any individual case.
8. None of the Members of the Advisory Board receive remuneration for the
considerable amount of time that they have expended on this work; travel
expenses can be reimbursed.
9. The Advisory Board has met regularly roughly every six weeks since 29 January
2023, holding seventeen meetings as of 18 September 2024. All our minutes
have been posted promptly on our website,2 along with significant
correspondence and papers that we have prepared.
10. The Advisory Board was initially constituted in late 2022 to advise solely on the
2 WITN11710105.
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GLO Compensation Scheme that was then being created by HMG. However, it
soon became apparent that it would be advisable to extend our remit to cover
advice on all Horizon compensation schemes. Ministers readily agreed to this
suggestion, and extended the Board’s Terms of Reference accordingly in Spring
2023 (RLIT0000270). Updated Terms of Reference that included the Horizon
Convictions Redress Scheme were confirmed by the new Government in August
2024 (RLIT0000410 — Advisory Board amended Terms of Reference).
11. The remit and function of the Advisory Board developed over time, I will set out
below the current position and how that position developed.
12. The Inquiry’s First Interim Report included the following Recommendations:
“Recommendation 1: The Horizon Compensation Advisory
Board should not be prevented from monitoring individual cases
in which compensation has been or is to be determined by
paragraph 4 of its Terms of Reference. It must be one of the core
duties of the Board that it monitors whether compensation
payments are full and fair.
. Recommendation 3: The Horizon Compensation Advisory
Board shall, as part of its advisory role, consider whether, in its
view, full and fair compensation is being paid out to applicants
under the three schemes and shall advise the Minister and the
Post Office accordingly at three monthly intervals.”
(INQ00002027 - First Interim Report on Compensation of 17 July
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13.
14.
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2023).
The Advisory Board had no prior notice of these Recommendations, nor any
opportunity to comment on them in advance. The position was considered in
detail in our Sixth meeting held on 31 July 2023. We were concerned that
intervening in individual cases would undermine the Advisory Board’s core role
of advising on the fairness of the system. It would also be impractical for the four
members to be asked to review large numbers of cases, or to put in place the
large administrative mechanisms necessary to carry out such reviews and the
re-opening of many settled cases (RLIT0000265 Advisory Board Report of sixth
meeting, paras 27-38).
In my letter to Sir Wyn of 15 August 2023, I explained the way in which the
Advisory Board viewed their remit and what was relevant and appropriate in
relation to its scope, and said:
“It should go without saying that each of us is committed to the
principle that the victims of this awful scandal receive full and fair
compensation. However, we do not believe that it would be possible
or advisable for us to intervene in the determination or outcomes of
individual cases, nor to give an opinion on individual outcomes, or an
opinion that full and fair compensation is being paid out to individuals.
To do so would raise serious issues over interference in processes
that involve procedural safeguards to ensure fairness (not least an
review/appeal mechanism), and _ in individuals’ rights and
professionals’ obligations and functions. We do hope that matters of
concern, whether [in] individual cases or systemically, will be brought
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to our attention so that we may advise the Minister on appropriate
action.
We intend to continue to meet roughly every six weeks and to ensure
that minutes of our meetings are published.
It is, of course, for the Department rather than ourselves to provide a
formal response to your recommendations. I am copying this letter to
Minister Hollinrake: I am sure that he will take it into account in
formulating that reply.”
(WITN11710102 — Letter from Advisory Board to Inquiry of 15 August
2023).
15. Sir Wyn’s reply to me of 25 August 2023 said:
“In response to the recommendations in paragraph 139 of my Interim
Report, you expressed the difficulties HCAB are likely to experience
should it intervene in individual cases. For the avoidance of doubt, it
was not my intention for HCAB to investigate all individual cases, but
to be provided with the mandate to review any case where it is
necessary to do so, principally to ensure there is fairness in the
operation of the compensate [sic] schemes as a whole. Without
having the ability to review individual cases, it is my view that it may
not be possible for HCAB properly to advise Ministers on the fairness
of the compensation schemes pursuant to HCAB’s Terms of
Reference. As you say, it is for the Minister to respond to my
recommendations, and I await the Minister’s response to my
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16.
17.
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recommendations.”
(WITN11710101 — Letter from Inquiry to Advisory Board of 25 August
2023).
The Advisory Board considered Sir Wyn’s reply carefully but held strongly to our
view that it would not be feasible or appropriate for us to intervene in the
established processes, to operate as a sort of appeal or review mechanism for
individual cases, and that it was entirely unclear how we might be able accurately
to identify those individual cases where “it might be necessary” to investigate, at
least without an extensive and possibly complete review by re-opening many or
all decided and ongoing cases. Further, we did not see how we possessed the
skills to review the ‘fairness and fullness’ of fact-specific decisions by
independent lawyers and judges, or that it would assist for us to attempt to do so
in either some or certainly all cases.
In the Government's Response to the Inquiry’s Recommendations, it agreed with
the Advisory Board’s position. The Government rejected Recommendation 1 and
accepted Recommendation 3 in part, saying:
“The advisory boara’s aim is to help the department to ensure fair and
prompt compensation to postmasters affected by the Horizon scandal
and related issues. The department agrees that, in delivering this aim,
it may be helpful for the advisory board to be given anonymised
information about individual cases.
However, the department endorses the view expressed by the board,
in the report of its 31 July meeting and in its letter of 15 August 2023
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to the inquiry, that it would not be “possible or advisable for us to
intervene in the determination or outcomes of individual cases, nor to
give an opinion on individual outcomes, or an opinion that full and fair
compensation is being paid out to individuals”. [emphasis added]
4. The Terms of Reference allow the advisory board to advise the
minister whenever it sees fit. Reports of its 6-weekly meetings are
communicated to the minister and published.”
(RLIT0000359 - DBT response to the Inquiry’s First Interim Report).
18. The Advisory Board has, therefore, operated on the basis that HMG set out in
the Terms of Reference. The Advisory Board has continued to discuss and
recommend means of addressing issues that have come to its attention, or it has
itself identified, around the design and operation of the various schemes, and
their delivery of full and fair compensation.
THE APPROACH OF THE ADVISORY BOARD
19. The Advisory Board decided that we should adopt an approach based on a
number of principles, including:
a. Transparency: Reports of our meetings have been published on our website.
The Board has received reports on progress at each meeting, and since 7
May 2024 has received formal Case Manager Reports on each Scheme (see
RLITO000275 — Report of fourteenth meeting held on 7 May 2024),
identifying claim statistics and raising significant concerns. These have been
discussed by the Board, and fed into our ongoing recommendations,
recorded at each of our meetings.
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b. Independence: The Advisory Board is independent of Government and of all
parties involved. Advisory Board members are not paid, save for travelling
expenses.
c. Communication: Individual Advisory Board members have established a
number of communication links that have enabled a consistent stream of
information on issues as they have arisen. These have included long-
standing communications with individual sub-postmasters (“SPMs”) and with
leading journalists. The Advisory Board also made clear to claimants’
lawyers, through official and informal channels, that we wished to hear of
generic issues that were causing problems. We have received informal and
written communications from them, which have all been promptly considered
and given rise to discussions on what might be effective responses. Regular
liaison meetings were held separately between the lawyers and DBT officials,
issues from which were reported to us. We were able to communicate
informally with the legal community (in some cases quite regular
communications have taken place with individual Advisory Board members)
and have held three formal meetings to date.
THE VARIOUS HORIZON COMPENSATION SCHEMES
20.
The Board’s work has encompassed all Schemes, and the Board’s approach has
been to provide consistency in relation to all Schemes and issues considered.
As such, I think it helpful to provide a roughly chronological account of the work
of the Board, identifying the major issues that arose under one or more schemes
in their relevant context as the history of the matter developed.
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21. Once the Advisory Board was appointed, the broad position, as of January 2023,
was that:
a. The Overturned Convictions (OC) Scheme had been created, and was
operated, by the Post Office for victims who had had their conviction
overturned on the grounds that it was reliant on Horizon evidence. This was
an alternative to suing the Post Office or applying to the general scheme
operated by the Ministry of Justice for compensating miscarriages of justice.
No victims of the Post Office had applied under the MoJ scheme, and the
OC Scheme appeared to be processing cases slowly. The OC Scheme had
divided cases into pecuniary and non-pecuniary tracks, on the basis that it
appeared to be simpler to resolve pecuniary aspects of claims, as discussed
below (§65). As at 31 August 2023, 85 claims had been received, offers and
payments had been made in 82 claims (RLIT0000411 - Post Office Horizon
financial redress data).
b. The Horizon Shortfall Scheme (“HSS”), also operated by the Post Office as
an alternative to victims suing, was open to those who had not been
convicted. Post Office had received 2,417 eligible claims by March 2021, and
by May 2023, offers were made to over 90% of the cohort, and, 1,965 claims
had been paid. (By September 2023, offers had been made in 2,411 claims,
and 2,016 claims paid (RLIT0000411).) Around 222 ‘late’ claims were also
being processed. The number of claims settled at that point might be taken
as an indication that a significant number of people were content to accept
the sums offered. The Advisory Board accepted, of course, that, as with all
disputes, some recipients might be dissatisfied with the offers received, and
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were reluctant to accept them, but did so for a number of possible reasons,
including from an absence of further review/appeal, or a desire to achieve
closure. There was also an issue over the absence of funding for legal advice
prior to submission of a claim, and whether that might have had an effect on
acceptances (see §74 below). However, SPMs were continuing to come
forward, technically after the ‘closing date’ of the Scheme.
The Group Litigation Order (“GLO”) Scheme was still under development,
and was launched in March 2023. This was an ex gratia Scheme designed
to make good the difference in compensation of those (originally 555)
members of the GLO litigation against the Post Office who had only received
around £20,000 each from the settlement of that litigation. The settlement
was £57 million but around £46 million was paid contractually to the funders
of the litigation and their lawyers. One of the first tasks of the Advisory Board
was to review and comment on the Scheme design, including the Scheme
Registration Form, the draft Application Form, and the draft Principles and
Guidance (RLIT0000261 — Report of second meeting, 6 February 2023, para
2). We noted that the guidance said that “awards should be full and fair”
(RLIT0000264, para 3).
In addition, we were later informed that the Post Office operated a process
called the Postmaster Detriment Scheme, for compensating SPMs who had
been entitled to pay while suspended (whether or not that suspension was
related to Horizon) (RLIT0000268 — Report of ninth meeting held on 29
November 2023, paras 10-16). At this point in time, the Advisory Board has
not received any complaints from SPMs, or any other groups, about the
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operation of this scheme.
22. A number of problems struck us from the start of our work. There were three
individual schemes, each established at different times, as a result of different
initiatives, and with different procedures. The Post Office had created and
operated two schemes, whilst the DBT was establishing a new scheme, with
each scheme applying to a particular cohort of victims. Over time, the position
had become more complicated as the need for the different schemes arose.
23. It was initially unclear to us whether different rules, especially on sums awarded
for the same types of damage, were consistent across the Schemes. We set
about investigating these issues around procedures and rules, particularly
through a series of meetings with the key professionals involved, to understand
how they worked, their viewpoints and attitudes, and to identify major problems.
24. Our first task was to identify how each scheme operated. Accordingly, we
considered the publicly available scheme documentation and received briefings
on this from officials and interviewed key personnel involved. They included staff
at the Post Office (Simon Recaldin and colleagues), its lawyers (Alan Watts of
Herbert Smith Freehills), representatives of the independent lawyers involved in
the HSS Panel (Alex Charlton KC, James Cross and Michael Davy), plus lawyers
advising on criminal aspects (Simon Baker KC, Jacqueline Carey KC, Nick
Vamos of Peters & Peters).
25. Meetings were held with the following:
a. Members of the HSS Independent Panel (See RLIT0000259 — Secretariat
note: discussion of 31 May 2023; RLIT0000265).
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b. Sir Ross Cranston, before and since his appointment as Reviewer of the
GLO Scheme (see RLIT0000266 — Report of seventh meeting held on 5
September 2023, para 13; RLIT0000267 — Report of eighth meeting held on
25 October 2023, paras 1-2). Sir Ross made a number of suggestions on
revision of the draft GLO Guidance and Principles, which were accepted by
the Government and implemented.
c. Sir Gary Hickinbottom, after his appointment as Chair of the OC independent
panel.
d. Claimants’ lawyers (e.g. BEIS0001033 — Report of eleventh meeting held on
22 February 2024, paras 6-10).
e. The new Chair of the Post Office (see BEIS0001028 — Report of sixteenth
meeting held on 29 August 2024, paras 1-3).
CONCERNS OVER DELAY, AND ANALYSIS OF CAUSES
26. Anumber of concerns of SPMs and their lawyers came to our attention over time,
around the speed (pace/delay) of one or more Schemes. We were particularly
focused on identifying the root causes of any delays. I discuss the proposals
made at 64 below.
27. Aconsiderable number of possible reasons exist that may be causes of delay in
processing and resolving claims. First, at the systemic level, one should note:
a. The adversarial model employed in these schemes inherently requires
parties and their lawyers to argue opposing positions. In commercial
litigation, the tactical goal for a claimant is to maximize payment whereas
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that of a defendant is to minimize it, that position is further entrenched by the
professional duties owed by each sides’ lawyers to their clients to achieve
the best outcome, which is normally measured in terms of the value of any
compensation awarded. As discussed at §38.f and 61-63 below, the Advisory
Board tried to highlight the inappropriateness of that mindset and influence
a change to it in relation to these Schemes given the fact that the victims
deserved particular sympathy and support for what they had been made to
suffer.
b. Traditional procedural rules require the need for evidence to prove each
element of loss, the claimant having the burden of proof and being required
to satisfy a standard of proof. That approach was reflected in the rules on
these issues in each of the Schemes. These rules may present significant
barriers for SPMs for various reasons, notably that significant relevant
evidence no longer exists, that proving a counter-factual of how much an
individual might have earned can be highly challenging, and that the mental
state of an individual may mean that they do not wish to engage with any
relevant process.
28. In the case of Horizon claims, there can also be multiple reasons for delay in
individual cases, such as:
a. The lack of retained evidence, given its destruction or loss with the passage
of time.
b. Particular difficulties for claimants in assembling and remembering historical
evidence.
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c. The understandable unwillingness of some victims, given their mental state,
to engage in reliving traumatic memories, and risk re-traumatisation, and
hence reluctance to assemble relevant evidence, even with legal assistance.
d. The perceived complexity of the application form and its details. On the other
hand, the arguments for having a comprehensive checklist of the types of
potential compensation, and of the applicable ranges of monetary payment,
were intended to ensure that potential compensable losses were not
overlooked and that there should be consistency between cases. There is an
inevitable risk that such documents seem confusing to non-lawyers.
e. The time necessary for both the Post Office and an individual to search and
obtain such records as exist. This is an inevitable consequence of the nature
of an inquiry into both verification of what historical damage or losses actually
occurred, but also of accurately identifying the counter-factual position of
what the claimant's financial position would have been if they had not
suffered as a result of the Horizon scandal and the Post Office’s behaviour.
f. The time needed for obtaining medical and/or accountancy expert reports
(especially given potential gaps in the evidence that the expert has to
consider).
g. The difference in procedural design over the position of an independent
Panel in the process as between the HSS and OC Schemes.
h. In the OC Scheme the significant size of sums claimed and the divergence
of views on each side in offers and negotiations can give rise to friction.
29. The Advisory Board has heard all of the above complaints voiced about the
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operation of individual schemes at different times, especially about the HSS
Scheme, albeit usually in the context of ongoing argument over difficulties in
settling individual cases.
30. We also considered whether other managerial approaches could be adopted,
such as targets and monitoring progress through obtaining statistics. The
Advisory Board requested at its first meeting on 9 January 2023, that “BE/S
should, by April, develop targets against which they could monitor case
throughput’ (para 2.6).
“The Board agreed that at future meetings [it] should consider:
5.1 Reports on progress against milestones.
5.2 Data on flow of cases, including cases of special concern. ... “
(RLIT0000260 — Report of first meeting, 9 January 2023, para 5).
31. The Advisory Board has undertaken regular monitoring of the broad statistics,
but this method fails to identify root causes either in individual cases or
systemically. Thus:
“6. The Board discussed the need for monitoring and evaluation
against success criteria for the scheme. They supported the
Department's intentions in respect of objective measures such as
timeliness and efficiency (process costs as a proportion of
compensation paid). They discussed ways of assessing subjective
issues such as trust in the scheme as it is developed and on
completion. Direct feedback from claimants would be important. The
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32.
33.
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Department was already intending to develop a monitoring and
evaluation plan and would take the Board’s comments into account.
7. Members asked for a report on feedback from claimants’ lawyers.”
(RLIT0000262 — Report of third meeting, 8 March 2023, paras 5 & 6).
Once cases are settled, the level of dissatisfaction that is voiced tends to fall
considerably. Delays have been attributed by different voices either to the Post
Office or to claimants, in matters such as taking time to produce relevant
evidence, in issuing authorisations to instruct an expert witness, in obtaining
expert reports, in constituting a panel, in assessment by panels, and in obtaining
approval in signing off offers.
In our view, the most effective way to address most of these procedural delays
is through direct, regular case management scrutiny, such as that has been
exercised by Sir Gary Hickinbottom as Chair of the Independent Panel in the OC
Scheme (see §38.d below). Similarly, in the GLO scheme, Dentons have a
mediation and case-management function that the Advisory Board understands
has been helpful. Case management can bring to bear root cause analysis and
targeted response in relation to both systemic and individual issues. A body such
as the Advisory Board is not privy to the necessary detail in individual cases to
be able to intervene other than through considering such issues as may be
brought to its attention, essentially as being generic issues that might benefit
from some systemic change.
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EVALUATING MAJOR ARCHITECTURAL CHANGES
34. The Advisory Board considered early in 2023 whether major architectural
reforms would assist. Three options of particular interest were:
a. Toremove the Post Office from the governance and operation of all schemes
in which it was involved.
b. To replace all Schemes with a single new Scheme.
c. To move existing Schemes from an adversarial model to an investigative
model. A precedent for this would be the model of many sectoral Consumer
Ombudsmen, and public sector Ombudsmen such as the Parliamentary and
Health Service Ombudsman and Local Government & Social Care
Ombudsman, which use an investigative approach involving no cost to a
complainant and require no legal representation.
35. Highly attractive as one or all of these options may have been, we concluded that
such major changes were not feasible in view of the circumstances of the history
of this scandal and of the established status of the HSS and OC Schemes, plus
the established reliance of many victims on their lawyers. A significant number
of claimants under the HSS Scheme had already reached resolution. Any major
structural changes would upset the expectations of claimants who were currently
in the system, raise concerns for the significant number who had already
concluded settlements, all leading to destabilization and issues of trust. Further,
creating a new structure is not something that can be done at the drop of a hat.
The design and procurement stages of the GLO and the Horizon Convictions
Redress Scheme (HCRS) both took over 6 months. The availability of officials
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and external lawyers to undertake this work was also limited, and officials had
their hands full dealing with the establishment of the GLO scheme, overseeing
the two other schemes, and before long, the passing and implementation of the
legislation overturning convictions, and the creation of the HCRS. The
procurement rules require outside contractors to be subject to fixed processes of
selection and appointment that take time.
36. Nevertheless, the Advisory Board’s desire to change governance and delivery
structures influenced HMG's decision to itself oversee and run the HCRS scheme
in 2024, and later to create a new ‘in house’ appeal process for HSS claimants.
37. It may be that, as time progresses, further opportunities for change can be
identified by HMG, for example as the number of cases in the OC and HSS
schemes that are resolved increases, or fresh decisions are taken in relation to
processing the ‘late applicants’ to the HSS scheme through what might be
described as ‘HSS2’.
STRUCTURAL REFORMS IMPLEMENTED
38. The Advisory Board has recommended a number of structural changes that have
been implemented. Important matters have been:
a. Oversight over all schemes — as noted, HMG swiftly agreed to widen the
remit of the Advisory Board to cover all schemes. When HCRS was created,
we were consulted by DBT on its principles and design.
b. We have received regular updates on the status of each Scheme, from
spring-2024 in the form of formal reports that are published. These give
descriptive and statistical information that enable us to see progress, and
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also identify major issues and challenges, so that we can offer our views on
resolution.
Appointment of a judge as a final appeal stage in the GLO scheme (Sir Ross
Cranston).
Supporting the initiative of discussions between the lawyers and HMG for the
OC scheme that a judge should play a role in the Panel evaluation stage
(initially envisaged as an independent assessor role: see RLITO000266 —
Report of seventh meeting held on 5 September 2023, para 11). Sir Gary
Hickinbottom was appointed as Chair of the independent panel (see
BEIS0001034 — Report of tenth meeting held on 10 January 2024, para 7)
and, as we anticipated, he adopted a strong case management role on
cases, holding regular meetings with lawyers involved, which helped identify
specific reasons for delay in cases, and hence enabled targeted actions and
pressure to resolve blockages. This was also a mechanism for identifying
issues that could be brought to the Advisory Board and DBT for review. (It is
fair to note that Sir Ross's appellate position in the architecture of the GLO
Scheme does not provide the same opportunity for case management
intervention at earlier stages in the process. However, in general, progress
of cases in the GLO Scheme has been relatively good, and the lawyers and
officials involved have given the impression of being proactive in identifying
and resolving barriers.)
In August 2024, HMG implemented our recommendation that a new ‘appeal
stage’ be created at the end of the HSS Scheme. The Advisory Board
understands that this will be based on the principle of ‘new evidence’
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becoming available, but with the benefit of paid legal representation. DBT
are currently finalising the precise details.
f. Supporting a change in culture within the process, involving moving away
from a strictly legalistic approach to a more flexible and compassionate
approach, emphasising the principle and objective of achieving full and fair
compensation. This, we believe, achieved a number of appropriate short cuts
in quantification and speeded up the making of offers in individual cases. We
continue to hear anecdotal reports from claimants’ lawyers and DBT of where
this less adversarial approach, also involving what might be regarded as a
more common sense approach on the part of the Post Office and DBT, has
shortened cases. We also hear of discussions about further innovations to
shorten or simplify approaches, as the professionals engage with the more
complex cases that progress slowly through the systems. Equally, we hear
of some frustrations, but this enables everyone to contemplate how
challenges might be overcome.
A further option considered was recommending that an audit be undertaken of
decided case decisions, especially under the HSS Scheme, to evaluate to what
extent individual outcomes were ‘full and fair’. The Advisory Board decided, with
some reluctance, against recommending an audit for a number of reasons. It was
considered that an audit would be unlikely to be justified as it would be slow,
costly, and disruptive of expectations and parties’ peace of mind. The Advisory
Board was also influenced by the firm opinion of Sir Ross Cranston arising from
his experience of an audit in the HBOS Inquiry (this is quoted at §60 below). We
have, however, remained mindful of that option and other options, and reconsider
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issues in the light of changing developments. The risk of the occurrence of
significant unfairness in HSS outcomes has hopefully been significantly reduced
by two mechanisms: the introduction of the lump sum mechanism, and
associated ‘topping up’ of settlement values below £75,000 (§64 below), and the
announcement in August 2024 of a new appeal mechanism for HSS cases, that
will be operated by DBT.
THE PRINCIPLE OF FULL AND FAIR COMPENSATION
40. One of the first issues that the Advisory Board considered was the basis on which
compensation was being, and should be paid. We immediately stated our core
belief that compensation should be “full and fair”:
“Board members agreed that ... As with the general law, the goal
should be to restore the claimants to the position that they would have
been in if the scandal had not happened.”
(RLIT0000260, para 2).
41. I believe that our public adherence to this principle had a number of positive
practical and psychological effects on those involved in the operation of the
compensation schemes. It assisted people to lift their focus from the detail of
applying cold legal rules in individual cases to applying a values- and principles-
based approach of delivering just outcomes in individual cases.
42. Individuals’ views on what constitutes ‘full and fair’ can differ, since these
concepts are principles and values that involve individual judgment in concrete
situations, especially in complex situations. In giving practical reality to individual
outcomes that are ‘just’ or ‘fair’, a number of considerations apply that may
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43.
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require fine judgment in balancing different considerations and different values
such as delivering speed and closure.
For example, the following considerations might arise:
a. The need to ensure that all elements of loss of damage have been identified
and compensated. This can be assisted by having checklists of types of loss
and damage (heads of damage). However, this can result in lengthy and
legalistic lists that can seem confusing to a non-lawyer.
b. The need to ensure that every type of loss receives full and fair
compensation. This requires consistency in several dimensions — between
different claimants whose individual circumstances have both similarities and
differences, and between the Horizon victims and all those who receive
compensation awards from the courts generally. This leads to two broad
categories of loss:
i. Individual sums that have been ‘lost’ and need to be ‘repaid’, such as
sums paid by SPMs to the Post Office, or other specific sums that can
usually be quantified fairly readily (pecuniary damages).
ii. Elements of loss or damage that present much greater challenges of
quantification (non-pecuniary damages), such as sums paid for mental
distress, for loss of income that would have been earned had the original
wrong not occurred. These situations need:
1. firstly, precedent in order to achieve consistency (and to be aligned
with the extensive list of sums, ranges and considerations set out in
the Judicial College Guidelines (currently 17" edition) as applied by
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44,
45.
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the courts), and
2. secondly, evidence from experts, especially medics and
psychiatrists in relation to the nature, duration and severity of
psychological and physic damage, and from accountancy
professionals in relation to the quantification of what a person or
business would have earned if they had continued to operate without
closure or bankruptcy (quantifying the counter-factual situation).
It is a fundamental legal principle that decisions on compensation must be based
on evidence that supports and quantifies the ‘exact’ nature of the loss and of the
compensation due. This leads to legal tools such as that a claimant has the
burden of proof, and has a particular standard of proof (usually in civil cases ‘the
balance of probabilities’). These rules are also in place to prevent taxpayers’
funds being paid out without valid justification (the public accounts
considerations). But multiple challenges arise in the current circumstances. Much
evidence has been lost because of the passage of so much time, many SPMs
found it very painful to relive the need to go over what had happened in the past
in what would be normal forensic detail. Much of the accountancy evidence might
need to be based on gaps.
Applying all the available factual and expert evidence to the matrix of guidelines
requires skilled, objective, professional expertise. Opinions can differ.
Accordingly, one expects to see the involvement of independent, dispassionate
professional lawyers. Various schemes have adopted familiar mechanisms that
decisions are reached by involving panels of independent senior lawyers, and of
using mediation between parties to try to reach mutual compromise and
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46.
47.
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agreement, but these mechanisms can take time and expense. The ‘softer’
techniques of mediation and negotiation still remain within a system that is
essentially adversarial, and claimants can perceive that processes, rules and
outcomes are unfair. These are, I am afraid, all familiar consequences of almost
any dispute resolution system, especially one that is an adversarial model.
Opportunities for mediation have been introduced into the Schemes (at the end
of the HSS process; in the GLO scheme facilitated by Dentons) and the case
management approach applied later by Sir Gary Higginbotham had a similar
result. We made clear that we strongly supported attempts by the parties to
discuss and agree resolution of areas of disagreement. Resolution of
disagreement inevitably involves compromise by one or both parties. This is a
well-recognised feature of all civil litigation. Individuals may value compromise
for various reasons, such as ‘just to get the thing over with’ or to be paid quickly.
Claimants may feel short changed in situations in which they face significant
challenges such as over the unavailability of evidence or considerations of delay.
Inevitably, some claimants can feel that the outcome is not what they were
entitled to, or is unfair. It is unavoidable that compromise may conflict with the
ideal of a ‘full and fair’ settlement in any individual case. The underlying issue in
the Post Office cases is whether processes or techniques have led to undue or
widespread unfairness. This raises challenges of verifying and reopening the
outcomes of cases that have been settled, as well as deciding how and what to
substitute as a different outcome, and what effect that might have on many other
cases. I return to this at paragraph 60 below.
Added to these complex challenges of achieving justly quantified outcomes in
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multiple individual cases, there are a number of wider considerations, notably:
a. The overriding need to support trust in the various systems, through the
delivery of principled and consistent redress. Risks here would include the
perceptions that ‘they got more than I did’, ‘I would have got more if I had
been in that other scheme’. It could reasonably be foreseen that a wholescale
re-opening of settled cases would trigger the collapse of all confidence in all
schemes.
b. The need to deliver speedy outcomes, for obvious reasons. These victims
had been suffering and deprived for far too long, and their cases needed
speedy resolution. There has been a need to deliver certainty and closure
for victims, especially distressed victims, who may have wished just to get
everything over with, and not for new arrangements to prolong things even
further.
c. The need to ensure that victims are responded to with compassion in view
of the awful nature and scale of what has happened to them, and the amount
of time for which they have suffered. This is, we believed, the mark of a
civilized society — a phrase I have used publicly several times.
d. The need to ensure that public money was not wasted or paid out
fraudulently. One aspect of this is the cost of lawyers and experts in an
adversarial, legalistic system. Another aspect is the problem of balancing the
need for compassionate and speedy delivery of compensation to many,
whilst avoiding making payments at a level that is difficult to justify on the
basis of the presently available evidence, thus being potentially inappropriate
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48.
49.
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expenditure of public funds. Government is rightly conscious of the ‘public
accounts’ viewpoint.
Taking all the issues referred to above into account can present real difficulties.
How should the need for fairness, fullness and justice be balanced, taking into
account a compassionate approach, the need for evidence and procedures, the
need for speed and closure, and the public accounts considerations? It can be
an immense challenge to reach decisions like this in individual cases.
The Advisory Board gave particular scrutiny to issues of fairness under the HSS
Scheme. This issue was in our minds throughout the past two years. A relatively
early example of detailed discussion was:
“Fairness of the HSS
1. The Advisory Board agreed that
e Fair compensation should be delivered that puts victims in
the position that they would have been in if the scandal had
not occurred and properly reflects the significant harms that
had been visited on their lives and reputations.
e Legal or other related costs should be reimbursed in full, so
that compensation payments were fully compensatory.
2. It recognised that Government already subscribed to those
principles. Its concern was that they should be effectively
implemented, and that postmasters and others should have
confidence that they were being applied fairly. Officials informed
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the Board that Ministers would shortly be announcing their
intention to fund top-ups to HSS payments to address the issue
relating to tax.
[Post-meeting note: announcement to Parliament is here].°
3. The Board noted that offers had been made to 99.3% of
postmasters who had originally claimed under the HSS, and that
82% of these offers had been accepted. However there had been
public comment about the outcomes and handling of a number of
cases perceived to have been unfair. Some of these had not yet
completed the dispute resolution process within the HSS.
4. The Board have had a discussion with KCs from the HSS
Independent Panel. The KCs had explained that the Panel had
adopted a practice of ‘acting as advocates for claimants’ where it
could see matters within a claim that were not addressed in the
options presented by HSF, rather than as wholly disinterested
arbiters, and had adopted a presumption in favour of applicants if
there was a shortfall and no other explanation.
5. The Advisory Board believed that the Panel had been guided by
principles of independence and professionalism, and by legal
precedent so as to seek consistency between awards, in reaching
decisions in individual cases.
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6. The Board noted the difference in process between the HSS and
GLO schemes. Under the HSS, the independent Panel
recommended an offer. If the offer was not accepted there was a
dispute resolution process managed by the Post Office, including
referral back to the Independent Panel and then with independent
mediation as a final stage. By contrast in the GLO scheme an initial
offer was made by DBT followed, if necessary, by independently
facilitated discussions. Only if these did not produce agreement
was a case referred to an independent Panel. There was provision
for review by a senior legal figure in the event of manifest error or
irregularity. A broadly similar sequence was being envisaged for
the new arrangements for compensation for overturned
convictions.
7. The Board also noted the different remuneration arrangements for
representation and the very high levels of cases without
representation in the HSS scheme.
8. In the Board’s view, having an independent Panel (and, if
necessary, the Reviewer) in place at the end of the process to
make final decisions on individual claims increased the trust which
could be placed in the final settlement.
9. The Board noted that given the history of mistrust in the Horizon
scandal born of adversarial litigation, many postmasters would
lack confidence in the fairness of any compensation delivered
under the auspices of the Post Office or its legal advisors. They
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also noted concerns about the administration of HSS, including
issues in respect of the application form.
10. They concluded that if the Scheme was to be seen to be fair,
individuals who were unhappy about the settlements which they
had received needed to have recourse to an assessment which
was wholly independent of the Post Office. This should come at
the end of the process, on similar lines to the role of the GLO
Independent Panel. They recommended that the Minister
should consider how such an appeal process could be
introduced. It should focus on assessing whether settlements
were fair based on the evidence provided, whilst allowing
consideration of elements of a claim which had been missed
or not included on the original form.
1
ay
. The Panel discussed the differences in the extent and timing of
legal advice in the schemes, which tended to suggest there may
be merit in the concems that unrepresented claimants have been
disadvantaged under the HSS scheme. The Board noted that the
HSS had been established under schedule 6 of the agreement
between the Post Office and JFSA which had settled the GLO
case. DBT’s understanding was that, in the light of their members’
difficult experiences in the High Court and elsewhere, the JFSA
had argued for a process which did not expect postmasters to take
legal advice in making applications. The Post Office had, however,
provided support with the costs of legal advice to help claimants
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consider compensation offers. The HSS Panellists had also
explained that they took the approach of scrutinising HSS
applications with a view to identifying any heads of loss that had
not been explicitly included. Nonetheless, claimants’ lawyers had
suggested that claimants who were unrepresented may have
received smaller awards than those who had engaged legal
advice.
12. The Board noted that many of the concerns about the fairness of
settlements related to the overall treatment of individual
postmasters by the Post Office over many years. They noted that
the HSS had paid careful attention to legal principles and
precedents in respect of loss of reputation, stigma, distress and
inconvenience and related heads of loss, but that this had led to
potential differences between different claimant groups. However
they believed that the facts of some Horizon cases went beyond
those of precedents, for instance in respect of damage to
reputation irrespective of prosecution given the impact of any
branch intervention or civil action, the prominence within the
community of many postmasters, the length of time during which
the individual suffered damage, and the consequences for family
members and family unity. If such cases were decided by the
Courts, there were good reasons for thinking that judges may well
create new, more generous precedents, especially given the
egregious and bullying behaviour of the Post Office during the
course of the scandal — behaviour whose impact was increased by
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50.
51.
virtue of the Post Office’s credibility as a Government-owned
organisation. They were also concerned that the operation of
some rules of thumb in the scheme (such as the 26 month
guideline on termination and the starting points for assessing
reputational harm) risked unfairness to some claimants.
13. The Board was therefore not convinced that the application of
existing principles and precedents would lead to consistently fair
results. They noted that postmasters who had been prosecuted by
the Post Office would receive exemplary damages. Whilst such
damages were intended to punish the Post Office, they also had
the effect of acknowledging the sustained personal impact which
its actions had had on individuals. They recommended that the
appeal process recommended above should put particular
weight on securing a fair outcome in respect of the issues
described in the preceding paragraphs.”
(RLIT0000250 — Report of fifth meeting held on 14 June 2023, paras
1 to 13).
ninth meeting held on 29 November 2023, paras 1-6.
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A further example, with the benefit of advice from Sir Ross Cranston, was on the
introduction of a Reviewer for the HSS Scheme: see RLIT0000268 — Report of
The Inquiry asks if the HSS Scheme, in its current format will provide
compensation that is full and fair. The board has held this question in respect of
all of the Schemes at the heart of its discussions over the time it has operated.
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This is in many ways both simple and difficult. I have referred elsewhere (§42
and 46 above) to the various factors that influence a person’s decision to settle
their claim, and it is axiomatic that there will always be those who are content
and those who for differing reasons are not. The Board cannot answer the
question by reference to individual cases, however it has been very careful in its
scrutiny of the Schemes over the last two years, and in its recommendations for
improvements, and firmly believes that the victims of this scandal and the public
at large should be able to have confidence in the Schemes and their operation
and the outcomes they deliver.
REORIENTING THE RULES, PROCEDURES AND CULTURE OF SCHEMES
52. The discussion above has highlighted the importance of decisions being reached
as a result of clear and fair procedures and rules, of consistency between
Schemes, of an appropriate culture and attitudes towards compensating victims.
The Advisory Board was able to prompt a number of changes in these elements
of schemes, as discussed at 61-63 below.
Clarification of the rules on levels of damages
53. In particular, we wanted to ensure that there was not only clarity but also
consistency between Schemes. All Schemes adopted written Principles that set
out heads of damage and ranges of relevant damages.
54. We were told that discussions had taken place at the commencement of the
Schemes between claimants’ lawyers and the Post Office over the creation of a
matrix of levels of damages, based on the Judicial College Guidelines, with
certain elements clarified in an Early Neutral Evaluation (ENE) exercise between
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55.
56.
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the parties and Lord Dyson. We asked to review the Dyson award but did not see
a copy (which included redactions) until 2024 because of confidentiality reasons
that may otherwise have involved obtaining authorization from all of the OC
claimants.
We expressed our reservations about the amount quoted for some elements in
the Dyson award, especially the level of compensation for damage to reputation.
We still think that the Dyson figure was too low. But these are fundamentally
matters which judges should decide, rather than an Advisory Board, so it
confirmed our feeling that adding judges into the architecture of the Schemes
was the appropriate response.
Under the GLO Scheme, we considered the bandings set out in the Principles
and Guidance:
“3. DBT noted that those figures were advisory and did not impose
limits on compensation. The guidance required that each case should
be considered on the basis of its individual facts. The Independent
Panel would be under an obligation to secure fair settlements. Board
members pointed out that the guidance did not make these points
sufficiently clear. They were concerned that claimants and their
lawyers might be inhibited from making full claims, and that the Panel
might not be clear about the flexibility available to it. They were also
concerned about the way in which the figures had been derived, and
wanted more information.
4. In the light of the Board’s discussion it was agreed that DBT would
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provide further information about the way in which the figures had
been set. Board members would speak to lawyers representing
claimants in the GLO and HSS schemes. The meeting would
reconvene when this additional information was available.”
(RLIT0000263 — Report of fourth meeting: part I, held on 29 March
2023, paras 3 & 4).
5. The Board reconvened to discuss additional information provided
by DBT and the results of Board members’ discussions with claimants’
lawyers.
6. The Board agreed to recommend to Minister Hollinrake that the
scheme’s Guidance and Principles should be revised to make clear
that:
e the bands were not limits but indicative guidance to claimants, their
lawyers and the Independent Panel
* each case would be decided on its merits
e the figures for each band were derived from decisions made by
the HSS Independent Panel on HSS cases where there was good
reason to expect cases were generally less serious. The more
serious cases were likely to still be going through dispute
resolution. The GLO Compensation Scheme expects to find some
cases where the facts of the case would demand awards
Significantly higher than the upper figure for the top band.
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e if a claimant's compensation cannot be agreed through the
Alternative Dispute Resolution process, they have the right to have
it considered by the Independent Panel including a KC and other
experts
e as for other aspects of compensation, where the Principles and
Guidance set out bands, decisions would be taken by the
Independent Panel based on the facts of each case looked at “in
the round” and guided by considerations of fairness
7. Board members wanted to understand the legal rationale and case
law on which they had been based as they were aware of case law
which might suggest significantly higher indicators, such as serious
defamation cases. The Board therefore agreed to hold discussions
with members of the HSS Independent Panel with a view to confirming
the way in which the figures had been devised and used; and securing
greater transparency about those issues.”
(RLIT0000263 — Report of fourth meeting: part Il, held on 21 April
2023, paras 5 to 7).
57. On 26 April 2023, Minister Hollinrake announced that he accepted the Advisory
Board’s recommendations, set out above.
Consistency between Schemes
58. Onconsistency, an early discussion took place in April 2023. DBT Officials made
the following points:
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“Controls to assure fairness between schemes
The Department is working to achieve fairness — including
consistency — between the OHC arrangements, the HSS and the GLO
scheme through the following measures:
e The principles of each scheme are based on the same
established principles of law;
e The Department's oversight of all three schemes is led by the
same Senior Responsible Officer (“SRO”), with input from the
same lawyers, policy officials, accountants and analysts;
e There is considerable cross-membership of the internal
governance bodies for all three schemes;
« The published GLO principles were developed with the HSS
principles as a starting point, and whilst subsequent changes
aimed to improve the accessibility of the guidance to postmasters
and provide additional transparency about the approach in the
light of HSS experience, those changes did not lead to any
material disparity between the principles of the two schemes;
e So far as the compensation schemes delivered by the Post Office
are concerned, there is extensive discussion across the
Department’s team about cross-cutting issues and solutions,
aimed at maintaining consistency; and
e Weare considering arrangements for reviewing a sample of GLO
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cases against HSS precedents.
e For most claimants and most heads of loss the Department is
confident that these efforts are successful. The Department works
to prevent other such issues arising in the first place, and where
they do arise, it acts as quickly as possible to resolve them, whilst
being careful that the solutions do not cause unintended and unfair
consequences, including delay to settlements.
e To provide greater assurance of this oversight the Department has
recently taken the following two additional steps:
° The remit of this Board has been extended to include the
Department's oversight of the HSS and OHC.
« A new internal Programme Board of senior civil servants has
been established, covering all three schemes, which will meet
every four weeks. The Programme Board will review and resolve
any interactions between the schemes relating to groups of
claimants, heads of claim, processes, resources, risks,
communications and lessons learned.”
(WITN11710103 — HCAB Dashboard 21 April 2023, slide 10).
59. The Advisory Board noted:
“The Board noted the arrangements which DBT had in place to ensure
that claimants were treated in a similar way no matter which scheme
applied to them. These included a new Programme Board of officials
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focussed on ensuring fairness across schemes.”
(RLIT0000263, final para).
60. The Advisory Board returned to the issues in October 2023, focusing especially
on a rejection of adopting an audit, but identifying the concerns of claimants’
lawyers, and recommending the appointment of a Reviewer for the HSS to follow
the GLO model:
“Assuring fairness and consistency between schemes
3. The Board's aim was to ensure fair and prompt compensation
for postmasters, including consistency between the HSS, GLO
and overturned convictions arrangements. It was concerned that
the schemes should not only be fair but be seen to be fair. It had
discussed at its June meeting some recommendations to this
end, which the Department had agreed to consider.
4. Since becoming Reviewer for the GLO scheme, Sir Ross had
conducted a short review of the scheme’s principles, which
largely echoed those of the HSS. In the light of that review he
set out some recommendations which he had made to the
Department. These included enhanced arrangements for
transparency and to ensure consistency within the scheme.
5. The Williams Inquiry’s interim report on compensation had
recommended in July that:
... It must be one of the core duties of the Board that it
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monitors whether compensation payments are full and
fair.
The Horizon Compensation Advisory Board shall, as part
of its advisory role, consider whether, in its view, full and
fair compensation is being paid out to applicants under
the three schemes and shall advise the Minister and the
Post Office accordingly at three monthly intervals.
Sir Ross noted that he had undertaken a full assurance review
of compensation following criminal misconduct at HBOS. His
review had involved sampling of a Statistically valid stratified
sample of cases. It had taken a year with a large team of
consultants and had been very costly. He strongly
recommended that a similar approach was not followed in
respect of the Horizon schemes. Board members commented
that it was essential to give postmasters closure in respect of
Horizon as quickly as possible. A lengthy review would prevent
that.
Board members asked whether a less comprehensive — and
hence quicker and cheaper — approach to sampling would be
viable. Sir Ross advised that a smaller sample would not
produce reliable results, and hence was not worth doing. In
particular it was less likely to identify any problem unless it was
widespread. It could therefore provide false assurance.
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10.
11.
The Board accepted Sir Ross’s advice but noted that it needed
to find alternative routes to assure itself of the fairness of the
three compensation arrangements. They noted that any scheme
run by the Post Office or its appointees would be distrusted by
many because of the organisation’s past behaviour. Particular
concerns arose in respect of the HSS because most claims had
been made without legal help.
The Board noted that the Post Office had told their September
meeting that it was consulting claimants’ lawyers on a new
process for overturned convictions compensation. An
independent assessor - likely to have judicial experience — was
to be appointed in discussion with claimants’ lawyers to provide
an independent appeal route should claimants disagree with an
offer made by Post Office.
The Board noted that in the GLO scheme, where compensation
could not be agreed between the postmaster and the
Department decisions would be made by an independent panel
and, if necessary, subjected to review by Sir Ross. Claimants
had Government-funded legal representation.
An alternative way to test the fairness of the scheme would be
to establish the views of claimants’ lawyers. The Board already
received via the Department regular reports on those views. The
Department invited the Board or Sir Ross to speak to those
lawyers directly if they wished.
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12. The Board wanted to hear regularly from Sir Ross about his
13.
views of the scheme. If his work gave rise to systemic issues the
Board would recommend remedial action. All of these
arrangements were independent of the Post Office.
In conclusion, the Board
Appreciated and supported the recommendations made by
Sir Ross;
Took the view that it was essential that compensation was
settled quickly, delivering closure to individuals who had
suffered from the scandal for many years;
Noted the Inquiry’s recommendation that the Board should
regularly advise the Minister as to whether full and fair
compensation was being paid to applicants under the three
schemes; but accepted Sir Ross’s advice that a full review of
the HSS, including sampling of a representative number of
cases, would take too long and require substantial amounts
of money to be spent on lawyers and consultants which
would be better directed to postmasters themselves;
Recommended the appointment by Government of a
Reviewer for the HSS to follow the GLO model. The HSS
Reviewer would consider cases which met similar criteria to
those which will apply to the GLO Reviewer.
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e Recommended that the GLO and proposed HSS
Reviewers and the OC Assessor should regularly report
to the Department and the Board any systematic
concerns about the fairness of the schemes, and
believed that such reports represented the most effective
way of securing the assurance which the Inquiry had
recommended;
e Agreed to keep this mechanism under review as it was
developed and operated.”
(RLIT0000267 — Report of eighth meeting paras 3-13).
Culture
61. The culture within the operation of the OC and HSS Schemes was initially
reported to us, anecdotally, as being notably adversarial, and it was said that this
was impeding a collaborative and swifter approach towards resolution of cases.
62. The Advisory Board emphasized the need for a shift in culture towards a less
rigid adversarial approach, and involving increased compassion and flexibility.
The adversarial model, perhaps inevitably, was reported to have given rise to a
lack of trust by the claimants (and their lawyers) in the Post Office (and their
lawyers), and a lack of general trust on the part of the SPMs. A more flexible
approach was needed for these claimants towards issues of strict proof through
evidence and on the burden and standard of proof. We urged the lawyers and
administrators of every scheme to adopt a more user-friendly and compassionate
approach, involving greater flexibility on lack of evidence, adoption of a more
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mediative mode, and reaching sensible solutions in negotiation more swiftly. For
example:
“8. DBT noted the pilot for encouraging claimants’ representatives
on the GLO Scheme to take a proportionate approach to
evidence was at an early stage but proving so far successful,
though more cases were to be tested before formally
implementing more widely and developing the arrangement
further. Officials emphasised that unless claimants trusted the
scheme they would be reluctant to sign off lighter-touch claims.
Such trust could only be built gradually.”
(RLIT0000275, —para 8).
63. In contrast, the culture around creation of the various new Schemes (GLO,
HCRS, HSS appeals) seemed to be notably collaborative, with consultation
between DBT, the SPM lawyers, and the Advisory Board. This collaborative
approach appeared to have also been increasingly visible in the operation of the
various Schemes over time. Potential improvements in ways of working are now
being discussed, trialled and implemented on a regular basis between lawyers
and DBT.
Delays
64. The Advisory Board paid repeated attention to issues around delays and ways in
which progress could be speeded up. The following extracts from minutes record
this.
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“Speeding up
Introduction
1. The Board had developed two packages of proposals for
discussion with the Minister, Sir Ross and Sir Gary. Introducing
the proposals, the Chair said that the first package included
measures which could be introduced quickly to speed up
financial redress. The second group were structural proposals
formulated in the light of the large number of additional cases
now coming forward.
2. The Chair noted that the systems for determining Horizon
redress had elements of alternative dispute resolution but were
largely adversarial. It was the Chair's view that redress for future
scandals should be provided on a more investigative basis,
using models which had proved successful in other countries.
However, with some 3,000 cases already determined and a
premium on pace, it was now too late to introduce such an
approach into Horizon redress.
3. Sir Gary noted that his role on overturned convictions (OC)
redress encompassed case management, including driving
individual cases towards settlement. He had recently met
claimants’ lawyers to discuss progress and would do so again in
future. He noted that the Bill to overturn convictions could lead
to perhaps ten times as many cases as were currently going
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through the OC scheme. That created new challenges — for
instance for the capacity of lawyers representing claimants.
Officials said that DBT recognised these challenges and were
keen to work with the Board on them.
Board members agreed that it would be helpful to have regular
reports to the Board on progress and pinch-points in all three
schemes from their respective case managers. The Minister
agreed to commission this.
Speeding up redress
5. The meeting discussed the first package of proposals, intended
to speed up redress.
6. OC claimants already received an interim payment of £163,000.
The Minister said that, on Sir Gary’s recommendation, the Post
Office was planning to top this up to £450,000 on the submission
of a full claim. This would provide early help to claimants and
would incentivise their lawyers to submit claims promptly. The
Board welcomed this change.
7. The Board recommended a similar top-up payment to GLO
claimants of £50,000 on the submission of a substantially
complete claim. The Minister agreed to this.
8 The Minister added that following requests from postmasters, if
a GLO case enters the claim facilitation process DBT would now
pay 80% of the offer (or 80% of £75,000, if higher). The
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10.
11.
remaining 20%, plus any subsequent additions, would be paid
once the award was agreed by the claimant or decided by the
independent panel. The Board welcomed this approach.
The Board noted that people applying for redress for overturned
convictions could choose between having their claim assessed
individually or accepting a fixed £600,000 offer, which could be
agreed quickly and without substantial process. A similar offer
of £75,000 had been introduced for the GLO: the smaller sum
reflected the disparity between typical awards in the two
schemes. As well as providing quicker redress for those who
chose to accept the offers, these measures meant that
resources could be focussed on the larger claims, accelerating
them too.
In both schemes, claims which had already been settled when
the fixed offers were introduced were topped up to the level of
the offer.
The Board recommended that a similar offer should be
introduced for HSS claimants. A range of options for amounts
was discussed. Typical awards for the HSS were smaller than
those for the GLO. On the other hand one of the principles of the
approach to redress was that similar amounts should be
available to postmasters in similar circumstances, whether they
were in the HSS or GLO.
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12.
13.
14.
The Board made two further recommendations in this package:
e Provision of regular information for claimants in all
schemes on claim status;
e¢ Bringing the approval process for legal costs for
overturned conviction cases into line with that for the
GLO.
The Minister thanked the Board for the proposals described
in paragraphs 10 and 11 above and agreed to give them very
serious consideration.
Officials noted that they were discussing with claimants’ lawyers
further positive ideas to speed the submission of GLO claims,
including a fast track system. They agreed to report back to the
Board on these at future meetings. The Board agreed to
maintain consideration of any further ideas for improving the
operation and speed of the various schemes.”
(BEIS0001033 — Report of eleventh meeting held on 22 February
2024, paras 1-13).
“Speeding redress
The Board’s own discussion with the Minister the previous week
had been focussed on identifying practical steps to accelerate
redress. They were glad to see that a number of these were
already being taken forward and had been announced in the
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House of Commons on 26 February, including paying 80% of
offers made under the GLO scheme if a postmaster chooses to
challenge the offer. They would continue to monitor this issue
and bring forward further practical ideas for improvement.
5. At the previous meeting they had agreed that it would be helpful
for the Board to receive regular reports on progress and pinch-
points in all three schemes from their respective case managers.
These would build on the data which the Department already
published monthly. The Board now further recommended that
these reports should be published and sent to the Select
Committee. DBT officials would ensure that formal letters issue
to Dentons, Sir Ross Cranston and Sir Gary Hickinbottom to
confirm these arrangements.
6. The Board agreed to meet lawyers advising postmasters in the
schemes to discuss further options for improving redress.”
(RLIT0000273 — Report of twelfth meeting held on 28 February 2024,
paras 4-6).
“Redress
8. The Board noted the good progress outlined in the latest redress
data [footnote 1].
9. The Board noted that an extension of the time limit for accepting
£600,000 for those who have had convictions overturned by the
Court has been implemented, following views from claimant
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10.
11.
legal representatives and a recommendation from Sir Gary
Hickinbottom. DBT confirmed that, for any claimant who had
submitted a claim on or before 14 June 2024, the £600k fixed
sum offer would remain open unless and until that claimant
makes any further claim. This would allow claimants proper time
to consider the offer.
The Board asked how pace was being increased on each
scheme. DBT confirmed that Sir Gary was considering various
options for the overturned convictions scheme. A case
management function would also be procured for the new
Horizon Convictions Redress Scheme, similar to that already in
place on the GLO scheme. Board members reported positive
feedback from some postmasters’ lawyers on offers being made
under the GLO scheme.
The Board considered whether there would be disparities in
settlement sums arising from a lack of legal representation for
some claimants. DBT confirmed that there is extensive case
comparison across the schemes to ensure fairness as far as
possible between cases with similar fact patterns. Post Office
would also shortly be writing to claimants with regard to the £75k
fixed sum offer for those who have not yet settled or have
already settled below that amount in the Historical Shortfall
Scheme. DBT would continue to consider the Board’s previous
recommendation of an independent HSS appeals process with
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12.
Ministers, following the election.
The Board noted they would continue to look at the treatment of
family members and how these claims are dealt with. In
particular there was a risk that families where splits had occurred
could receive different treatment than those families which
remained amicable. The Board agreed they would consider this
further with claimants’ legal representatives.”
(BEIS0000841 — Report of fifteenth meeting held on 17 June 2024,
paras 8-12).
“12. The Board noted that a large number of HSS cases had been
13.
submitted in recent months, stimulated by the ITV drama Mr
Bates vs the Post Office. They expressed concern that the Post
Office was making few offers in response. DBT noted that many
of these cases may benefit from the £75k fixed sum offer.
Payments on such cases should begin to issue shortly. In the
Board's view, the two difficulties posed by HSS were the need
for panel assessments before offers are made and the continued
involvement of the Post Office and its lawyers in the process
(beyond disclosure where it was unavoidable). DBT agreed to
look further at the pace of the HSS and provide information to
the Advisory Board on take-up of the £75k offer.
The Board also requested further data on the rate of redress
payments over time.
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14.
A number of HCRS claimants had stated that they did not wish
to appoint legal representation for their claims for fixed-offer
redress, because they wanted to reduce the amount of public
money spent on lawyers. The Board discussed whether there
should be a process of ‘sense checking’ the cases of claimants
who choose not to seek legal representation.”
(BEIS0001028 — Report of sixteenth meeting held on 29 August 2024,
paras 12-14).
“Redress
11.
12.
13.
DBT gave an update on their initial thinking on the HSS appeals
process which the Minister had announced on 9 September.
They outlined how they are learning from the schemes already
in place to ensure the process is as speedy and appropriate as
possible. DBT are currently talking to the Post Office to ensure
the right data sharing protocols are in place.
DBT said they were keen to consult the Board, former
postmasters and other experts at scheme design stage.
The Board asked about HCRS claimants who choose not to
seek legal representation. DBT stated that so far this has only
happened with people who wish to accept the £600k fixed sum.
DBT assured the Board that claimants are strongly encouraged
to appoint legal counsel and provided with information on how
to do so. The Board remained concerned that this posed risks to
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some claimants, but understood the reasons why some
claimants did not wish to be represented.
14. The Board asked whether the department was having trouble
getting law firms to sign up to the HCRS tariff. DBT said 11 firms
had already agreed to use the tariff, and to make no other
charges to postmasters.”
(RLIT0000407 -— Report of seventeenth meeting held on 18
September 2024, paras 11-14).
65. Many of the issues discussed above are interrelated. A further example of this
will be apparent from the extensive discussion with representatives of the Post
Office and its lead external lawyer on 5 September 2023, in which a number of
themes were emphasised, especially independent legal advice funded by the
Post Office (see also §74 below), the need for an independent assessor,
consultation with the SPMs’ lawyers, and the need for speed:
1. The meeting was joined for this item by Simon Recaldin, Neil
McDaid and Nick Lowman of the Post Office and Alan Watts of
Herbert Smith Freehills.
2. The Post Office team described the evolution of the system for
compensating former postmasters whose convictions have been
overturned. All these people had been encouraged to seek legal
representation, with such costs being paid by the Post Office.
Postmasters whose convictions had been overturned (other than
those whose appeal had been allowed on the grounds that a retrial
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would not be in the public interest) had also been offered
substantial interim payments (initially £100,000, now increased to
£163,000). These had been paid promptly.
. Full and final settlements in two lead cases had been negotiated
bilaterally with claimants’ lawyers. Pecuniary losses (e.g. loss of
earnings) had been considered separately from non-pecuniary
ones such as personal injury or damage to reputation. The former
Supreme Court judge Lord Dyson had been commissioned jointly
by the Post Office and lawyers representing a number of claimants
to undertake an “Early Neutral Evaluation” (ENE) of a sample of
non-pecuniary claims. On the basis of this evaluation he had
recommended ranges for the non-pecuniary heads of loss to be
applied across all former postmasters with overturned convictions,
with the offers for each individual being within the range and which
were sensitive to the facts of each case. As a result, 59 of the 83
eligible postmasters had agreed settlements of their non-
pecuniary losses. Eight were considering offers, with three further
claims being assessed. Another 13 postmasters had not yet
submitted claims.
The Post Office was now seeking to make similar progress with
pecuniary losses by establishing a process which was
transparently fair, consistent and claimant oriented, drawing on
learning from the ENE. It had consulted claimants’ lawyers on
principles for assessing such losses and a process for delivering
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consistent and fair assessments against those principles. That
process had three key elements to ensure fair outcomes:
e Independent legal advice to the postmaster throughout the
process, with reasonable costs met by the Post Office;
e An independent assessor who was being appointed to provide
an independent appeal route should claimants disagree with
an offer made by Post Office. Claimants’ solicitors had been
invited to reach consensus on the individual(s) who should
perform this role and were currently considering candidates.
The person chosen as Chair was likely to have judicial
experience.
e Retention by postmasters of the right to have their
compensation determined by the Courts — but the purpose and
aim of the new process was to ensure that fair settlements
could be reached without needing to take such a step.
5. After several rounds of discussion with claimants’ lawyers, the
Post Office were now close to finalising the principles and agreeing
the process. Further comments from claimants’ representatives
had been requested by 15 September.
6. The Board welcomed the promulgation of principles and a
timetable for agreeing them and the final process. They wanted
the new arrangements to come into force as quickly as possible.
They encouraged Post Office to document and communicate the
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approach thoroughly so that it was fully understood by
postmasters. They urged claimants’ lawyers to reach early
agreement on the identity of the independent assessor and to
submit remaining claims as quickly as possible.
7. The Board also expressed concern that claiming that the ‘retention
of litigation rights’ was restating a right claimants had in any event
and should not be presented as a benefit of the scheme.
8. The scheme should if operated well on both sides avoid litigation.
To aid this, and especially for reasons of consistency and
oversight across all the schemes the Board took the view that the
reviewer proposed by the Board under the HSS scheme should be
the same person as the Reviewer under the GLO scheme. The
Department could consider asking him to play a similar role for the
compensation for those with overturned convictions, in addition to
the assessor.
9. The Board noted that the Chair has written
a. to the CCRC asking for more information about cases, their
process, and the status of cases, and
b. ageneric letter to the Non-Post Office Prosecuting Authorities,
including the DWP, and authorities in Scotland and Northern
Ireland, asking for more details of their procedures, number of
cases, and status of cases.
10. Copies of these letters are being placed on the Board’s web-page.”
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(RLIT0000266 — Report of seventh meeting held on 5 September
2023).
THE LUMP SUM MECHANISM TECHNIQUE IN THE OC AND HSS SCHEMES
66. On 18 September 2023, the Government announced that all eligible HSS
claimants would be entitled to a fixed sum award of £600,000. I believe this novel
technique was the idea of the Minister, Kevin Hollinrake MP. Claimants are
offered an option of accepting a fixed lump sum in full and final settlement of their
claim, whilst retaining the option of continuing, if they prefer, with full (forensic)
investigation and quantification of their losses. The Advisory Board supported the
introduction of this offer (see RLIT0000267 - Report of eighth meeting paras 14-
16). Subsequently, the Advisory Board queried, and was able to clarify, the
position as regards time limits:
“10. The Board sought clarification on whether there was a time limit
for the upfront ‘fixed sum’ offer of £600k for individuals who have had
their conviction overturned by the courts. DBT confirmed that there is
no time limit for a claimant to accept this offer. However, if an
individual chooses the fixed sum offer, there would not be an option
to pursue a full assessment of their claim. Similarly, an individual
choosing to purse the full assessment route would be eligible for
£450k once they have submitted their full claim, but not then be able
to take the option of the ‘fixed sum’. DBT confirmed they had written
to all claimant representatives outlining this.”
(RLIT0000275, para 10).
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67. In January 2024, the Minister announced that a fixed lump sum offer of £75,000
would be made to all members of the GLO Scheme (see BEIS0001034, paras
5-6).
68. On 13 March 2024, the Government announced that all eligible HSS claimants
would be entitled to a fixed sum award of £75,000.
69. The lump sum mechanism meant that, whether individual claimants felt that they
were, or might have been, owed more or less than the lump sum, they could take
that sum and resolve everything without further ado. It also set a floor for
settlement of all cases in the relevant scheme. All those who had earlier accepted
sums under the lump sum have been paid a further sum to bring them up to the
lump sum level.
70. The lump sum mechanism has proved to be an effective short cut for a significant
number of victims, saving them considerable angst by avoiding having to go
through an uncertain and unfamiliar process, and saving time, effort and costs
for both claimants and the state.
71. The technique has resolved a good number of cases swiftly. This has shortened
queues and freed resources on all sides to concentrate on the more difficult
cases.
SPECIFIC ISSUES ADDRESSED
72. Anumber of issues have been highlighted by the Advisory Board, and solutions
been found in most instances. Particular issues raised are outlined below.
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Urging SPMs to come forward and claim
73. It was noted throughout 2023 that whilst claimants who had not been convicted
were continuing to come forward, many appeared to be reluctant to come
forward. The Advisory Board made repeated statements (in our minutes, on
social media and other contacts with claimants and lawyers, and in media
interviews) urging people to come forward. As time progressed, psychological
reasons for reluctance to come forward became more apparent (for example,
see §28.c above).
74. In the HSS Scheme, there was a lack of provision of funded legal advice to
claimants at the initial stage of them submitting a claim (unlike under the GLO
Scheme). This has remained a source of contention and difficulty. The principle
of legal representation, funded by the Post Office (and hence the state), was
obvious. The difficulty was the practical one that the vast majority of claims had
already been settled. There was a level of confidence that the process and in
particular the approach of the independent Panel was broadly fair. Confidence
was increased by the addition of a judge to the system (Sir Gary), the introduction
of the £75,000 lump sum that acted as a floor, and the introduction in later 2024
of an HSS1 appeal mechanism.
75. As far as the Advisory Board are aware, all of the late applications referred to in
the Interim Report were accepted. The Advisory Board understands that any
further late claims will be addressed by a scheme operated by DBT, the details
of which are still under internal discussion.
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Use of ‘without prejudice’ in offer letters by the Post Office
76. This struck Advisory Board members as inappropriate, a potential abuse of
power in negotiations, and potentially a breach of professional ethical rules
(BEIS0001034, para 8). The Advisory Board raised the practice with the Post
Office and with the Solicitors Regulatory Authority, after which it appeared that
practice was changed.
Remuneration tariffs for lawyers
77. Given that the state was paying for claimants’ legal representation (apart from
the initial stage of the HSS1 Scheme), there are advantages for all, not least the
taxpayer and those required to undertake state budgeting, as well as for
speeding the reimbursement of the lawyers involved, if a tariff can be established
for remuneration of the claimants’ lawyers.
78. Some objections were raised either to a tariff or to the sums payable, but these
were largely ex gratia schemes, and although fair representation was essential,
and should be paid fairly, the court-based approach of assessing legal costs at
the end seemed unwieldy. Some strong criticism was also heard that ‘it was the
lawyers’ who slowed the process down, and were paid large sums of money. As
with many issues, this was an issue of balance. It needed to be recognised that
the system involved lawyers not just for the Post Office and HMG but also for the
claimants. The total bill is considerable, and it is right to consider whether some
constraints are achievable.
79. Almost all the lawyers agreed a costs tariff with HMG in relation to all Schemes,
and recently in relation to the HCRS.
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“7. The Board discussed adopting a legal tariff for the Horizon
Convictions Redress Scheme (HCRS) and strongly agreed that DBT
should implement one, as it has for the GLO Scheme. They noted a
concern about whether legal representatives would sufficiently
expand their capacity in advance of the implementation of HCRS
given the number of claimants likely to come forward.”
(RLIT0000275).
80. The Advisory Board was able to be a mechanism for clarifying some
misunderstandings.
“The BEIS team confirmed that the proposals on legal fees had been
misrepresented. The first payment of £900 was for initial contact with
the client only. BEIS was currently developing a full tariff of fees in
discussion with claimants’ lawyers.”
(RLIT0000260, para 3).
Bankruptcy
81. This issue was a matter of concern two years ago, but the Government resolved
the issue so that those who were made bankrupt or subject to an Individual
Voluntary Arrangement (IVA) did not end up out of pocket. Thus:
“4. DBT updated members on the principles which will be adopted for
bankruptcy claims, and the legal position of the compensation
payments, to ensure insolvency claims are fairly dealt with.
5. The Board welcomed DBT’s commitment to a proactive approach
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to assessing claims and ensuring full losses are recovered and offers
are fair.”
(RLIT0000262, paras 4 & 5).
82. The Advisory Board has not had any complaints drawn to its attention since that
update was given.
Tax
83. The Advisory Board confirmed its view that individuals should not lose out
because of tax rules. HMG responded similarly, confirming that individuals would
not end up being penalised by losing their compensation entitlement.
‘Tainted’ Post Office staff
84. There was concern expressed that individuals employed by the Post Office who
had been involved in earlier unacceptable behaviour, especially in investigations,
prosecutions and suspensions, should not remain involved in any part of work
dealing with the entitlement of victims to compensation or of the various
Schemes. The Advisory Board raised this issue on a number of occasions with
both DBT and the Post Office. For example:
“11. The Board asked for reassurance from DBT that those who were
working on redress in the Post Office had not played a role in the
Horizon scandal. DBT confirmed they had asked the Post Office this
question when setting up the GLO scheme and they had received
reassurance on this point. The Board agreed that the Chair should
write to the Post Office CEO to seek assurances that other people
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who had played a role in the scandal were not still involved in redress
or appeals in any way.”
(RLIT0000275, para 10).
85. I subsequently raised the issue in correspondence (see BEIS0000841, para 13).
We were given assurances of investigation that we indicated were far from
satisfactory. The issue was raised recently with the new Chair of the Post Office:
“3. The Board expressed strong concern that some Post Office staff
who were thought to have been involved in the scandal continued to
be employed on matters relating to Horizon redress. The Chair said
that he fully understood the Board’s concern: this was a matter on
which the Post Office had made some progress and on which the
Board continued to work actively. The Board were grateful for the
Chair’s update and hoped to hear further news in the near future.”
(BEIS0001028, paras 1-3).
86. We look forward to closure of this issue being achieved soon.
Legal charging practices
87. Asmall number of lawyers charged or agreed success fees at the same time as
tariff reimbursement was available. The details are issues of professional
conduct, and the Advisory Board has drawn the attention of the professional
regulatory authorities to the issue for them to consider. See BEIS0001034, para
8; RLIT0000273, paras 8-10.
THE ISSUE OF OVERTURNING CONVICTIONS
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88.
89.
90.
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As soon as the Advisory Board’s remit was extended to cover all the extant
compensation Schemes, it became clear that, at that stage, the largest cohort of
SPMs who remained without compensation comprised those perhaps 900 or so
individuals whose convictions had not been overturned. The Advisory Board
asked why they could not be paid compensation swiftly. We were told that they
could not be compensated before their convictions were overturned.
That led us to investigate the reasons why convictions were not being overturned
more quickly. We interviewed the independent lawyers advising the Post Office
on its response to criminal appeals. We also interviewed the Criminal Cases
Review Commission (see RLIT0000250 — Report of fifth meeting held on 14 June
2023, paras 14-19) and spoke to the Law Commission, who had started a project
on criminal appeals. There seemed to be a considerable obstacle in bringing
cases before the Court of Appeal. The underlying problem seemed to be that
lawyers felt bound to apply the criteria for overturning Post Office Horizon
convictions that had been set by the Court of Appeal.
In our view, those criteria were clearly too restrictive, especially given the
abundant evidence that was then being revealed by the Inquiry about fresh
grounds for overturning convictions in view of what appeared to be the systemic
and appalling behaviour by Post Office investigators, and in procedural failures
to disclose information on the unreliability of the Horizon system. However, it did
not then appear that the CCRC or lawyers would feel able to bring forward
appeals to try to expand the Court of Appeal criteria until at least after the Inquiry
had issued its Final Report in 2025. Even then, we detected concern amongst
the lawyers over what the Court of Appeal’s decision might be.
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91. A further obvious impediment to appeals being brought was that the rules
required an individual to come forward to instigate an appeal in their case. But it
was becoming increasingly clear that many of the SPMs were so traumatised
that they simply did not wish to come forward. They were, reasonably enough,
unwilling to revisit traumatic past history, to have anything to do with the state or
its courts, or even to talk to lawyers who might be able to help, but who might
well advise of the uncertainty of launching any appeal.
92. Ireferred to these issues in my letter to Sir Wyn of 15 August 2023:
“We believe that there is already sufficient evidence to demand a
positive presumption that unless clear evidence to the contrary
remains, all Post Office convictions are unsafe and should be
overturned. Further, we believe that a change in the law may be
needed that a tainted investigation undermines other and previous
investigations by the same tainted team. Such changes need to be
done rapidly: as you know, many of those wrongly convicted are now
elderly, and some have sadly already passed away. Because these
people are still regarded by the law as criminals, they are not eligible
for compensation. That is a matter of grave concern to us.”
(WITN11710102).
93. In his reply of 25 August 2023 (WITN11710101), Sir Wyn confirmed that he
intended to continue with hearings on Phase 4 issues until 23 December 2023
and then set out his findings and recommendations on all matters he has
investigated, including criminal actions against SPMs, in his final report. Our
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discussions with the Law Commission also confirmed that their timetable for
considering the possible reform of criminal appeal procedures stretched forward
over several years.
We continued to investigate the situation (see RLIT0000267, paras 17-22 and
attached note of meeting with the Law Commission on 23 October 2023;
RLIT0000268 — Report of ninth meeting held on 29 November 2023, paras 17-
18) and on 14 December 2023 I wrote on behalf of the Advisory Board to the
Lord Chancellor attaching a detailed paper. My covering letter said:
“Lam writing as Chair of the Horizon Compensation Advisory Board,
on behalf of myself and colleagues: The Rt Hon Lord Arbuthnot of
Edrom, The Rt Hon Kevan Jones MP, and Professor Richard
Moorhead.
- Over 900 postmasters were prosecuted during the Horizon
scandal. There could not have been such a massive outbreak
of criminality amongst people who were, and remain, as a group
of citizens, careful, law-abiding and trustworthy individuals.
- These convictions were the most egregious effect of the Horizon
scandal: until they are overturned we cannot put the scandal
behind us. Many victims remain traumatised and ostracised by
their communities.
- The convictions are unsafe not only because they relied on the
Horizon computer evidence, but also because of egregious
systemic Post Office behaviour in interviews and pursuing
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prosecutions, vividly demonstrated in evidence to the Williams
Inquiry. This led to guilty pleas and false confessions, driven by
legal advice to victims to minimise sentences, and by the
psychological pressure of dealing with an_ institution
systematically disregarding the truth and fairness.
- Individuals can apply to the CCRC and Courts to have convictions
overturned — but only 93 of the 900 have done so successfully. So
the current approach is not working. This is because:
= Over two decades, much of the evidence has been lost or
destroyed by the Post Office.
= Individuals’ unwillingness to appeal given their
understandable deep distrust of authority.
= The Court of Appeal rules impose limitations on the Post
Office’s ability to concede cases.
= The unreliability of evidence about other Post Office-related
systems (and DWP payments), which has still not been
adequately examined, and may never be.
= In cases where Post Office concludes that a retrial would not
be in the public interest, the conviction is overturned but the
postmaster is denied full compensation and left with an
implication of continued guilt.
For these reasons we believe the only viable approach is to overturn
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all 900+ Post Office-driven convictions from the Horizon period.
A small minority of these people were doubtless genuinely guilty of
something. However, we believe it would be worth acquitting a few
guilty people (who have already been punished) in order to deliver
justice to the majority — which would not otherwise happen.”
(BEIS0000893 - Letter from the Advisory Board to the Lord
Chancellor of 14 December 2023).
95. Professor Richard Moorhead and I investigated further the difficulties faced by
victims who continued to suffer stress, or who were having to relive their
distressing history through having to deal with official processes. Together with
his colleagues at Exeter University, Dr Rebecca Helm, Dr Sally Day, Dr Emily
Spearing and Dr Karen Noakes of UCL, we wrote a paper, published on the
Advisory Board’s website, that examined the scientific basis for individuals
predictable experience of stress in these conditions, and the triggering of desires
to avoid any reengagement with the past or the state.
96. Public concern peaked in the first week of January 2024 after the screening by
ITV of the series Mr Bates v The Post Office. Within a few days, the Government
decided that the only option was to overturn all convictions by legislation. This
led to the Post Office (Horizon System) Offences Act 2024 (the “Overturning
Legislation”). Individual members of the Advisory Board continued to engage
members of the judiciary and legal profession on the reasons why traditional
means of overturning convictions were non-responsive in these circumstances,
and why the Act did constitute an essential upholding of the rule of law and
fairness in this country, rather than a constitutional affront. In my view, this was
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97.
98.
99.
100.
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essentially not a conflict between Government and judiciary, but would have
been one between judiciary and the populace if the Government had not reacted
swiftly, as it did.
The next major challenge for DBT and the Advisory Board was to establish a
fresh compensation scheme for those whose convictions would be overturned
by the Act. This was announced in August 2024 as the Horizon Convictions
Redress Scheme (HCRS). Importantly, it was accepted that the HCRS would be
run by DBT rather than the Post Office, which the Board had supported for some
time.
Details of HCRS were discussed between officials and the Board from early 2024
onwards (see WITN11710104 — DBT Note on Horizon Convictions Redress
Scheme). This illustrates that it takes time and considerable careful effort by
Officials to design and establish a fresh scheme (as I touched upon at §35 above).
Suggestions that a new scheme or major reform to an existing scheme is
necessary can fail to appreciate how much effort goes into delivering and
implementing such changes. Throughout our work, the Advisory Board was
aware that recommendations that involved major restructuring might seem
simple to describe or call for, but might take so long, and be so destabilising of
the whole Post Office compensation landscape, as to be undesirable.
However, having some time to consider details meant that we were able to assist
Officials through continuing to debate fine tuning of aspects. One example was
the wording of notification letters to those whose convictions would be
overturned, and the wording of either undertakings by them or of explanations of
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conditions designed as anti-fraud measures.
THE SECOND COHORT UNDER THEHORIZON SHORTFALL SCHEME
101. The January 2024 TV series and publicity of the Overturning Legislation had the
effect that around 1,900 victims came forward for the first time in the first half of
2024. From early 2024, the Advisory Board and HMG were mindful of the need,
opportunity and benefits of making changes so as to avoid operating the HSS
Scheme for the ‘new cohort’ and instead to create a new Scheme (HSS2),
especially if it could be governed and managed by DBT (or some other
independent body) rather than by Post Office. My perception is that the
Government understandably had to devote extensive attention during 2024 to
the Overturning Legislation and the creation of HCRS, but after those challenges
had been surmounted, it was possible to scope the options for addressing HSS2,
including issues of limitations on available legal resources and procurement
hurdles, and also to introduce a new appeal mechanism for HSS1.
102. An early discussion on the issues took place in February 2024:
“HSS2
Structural changes
15. The meeting turned to the Board’s more structural proposals.
16. The Board noted that the significant number of new HSS cases
stimulated by Mr Bates vs the Post Office, and the large number of
OC cases to be overturned by legislation, would require more capacity
and create opportunities for changes which could increase both the
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pace of redress and claimants’ trust in the system. OC cases arising
from the legislation would effectively require a new scheme — “OC2”.
17. That capacity would need to include additional external legal
advisors. The Board recommended that this should be used as an
opportunity to employ new legal advisors in Horizon redress (for those
with overturned convictions) as quickly as could be managed without
unnecessarily disrupting delivery. New advisors should be instructed
to make full and fair offers as quickly as possible without unnecessary
quibbling.
18. As well as external lawyers, new in-house capacity needed to be
established to run OC2. That could be built in DBT as easily as in the
Post Office. In the interests of claimant trust, the Board
recommended that OC2 should be managed by DBT, draw on the
Department’s experience of running the GLO scheme and
involve Sir Gary in a similar way to his existing OC role. They
suggested that if possible, claimants should be allowed to choose to
defer OC claims and include them in OC2. Whilst they thought that it
would in principle be desirable in the interests of postmaster trust to
make a similar recommendation in respect of HSS claims, they
concluded that this would risk unacceptable disruption to the delivery
of the scheme.
19. The Board had previously recommended the creation of an
independent appeals process for the HSS. If their recommendation to
introduce a minimum payment for HSS was accepted, the number of
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postmasters who might want to take advantage of an appeal
mechanism should be reduced substantially, reducing the associated
practical difficulties. They therefore reiterated their
recommendation. The appeals process should be run by DBT,
again adopting much of the GLO model with Sir Ross as
Reviewer.
20. The Minister agreed to consider the proposals in paragraphs 16-
18 above very closely as the Department developed plans for the
implementation of OC2.”
(BEIS0001033 — Report of eleventh meeting held on 22 February
2024, paras 1-5).
THE CURRENT SITUATION
103. At the current time, the major challenges and unresolved issues that the
Government faces include:
a. The number of individuals coming forward since the ITV series. This in effect
requires an ‘'HSS2’ Scheme. It is certainly an opportunity to reform the
Scheme landscape further. In a significant number of cases, we hear that
individuals suffer from mental distress in going over very painful history,
especially if they need to approach state officials or institutions, and some
can have difficulty talking to their own lawyers. As noted above, the Advisory
Board has recommended that governance of the OC and HSS Schemes
should be transferred from the Post Office. I suspect that serious
consideration is being given to achieving this end. A significant challenge has
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been that the DBT has faced a series of major operational challenges in
establishing and running first the GLO Scheme, then the Overturning
Legislation, then the HCRS Scheme, then an appeal mechanism under the
HSS Scheme. Decisions may be significantly affected by the scale of the
remaining number of cases that remain as at around the end of 2024, given
the progress made in operation of the various Schemes and the resultant
ongoing pressure on overall resources, and especially the extent to which
the two lump sum options are taken up by claimants.
b. To ensure that the GLO and new HCRS Schemes continue to operate well.
The performance statistics on the GLO Scheme (e.g. of responding to claims
within 90 days) are encouraging.
c. To respond well and swiftly to the recent information about those who have
been ‘victims of Capture’. HMG has recently received a Report and
Addendum from investigators, which found evidence of shortfalls,
investigations, demands for repayment of sums allegedly owed, and
prosecutions, during the period of operation of the Capture software. I wrote
to the Lord Chancellor on 23% October 2024, on behalf of the Advisory Board,
saying that we could see no reason to distinguish the position of ‘Capture
victims’ from ‘Horizon victims’ and calling for legislation to overturn
convictions and for compensation arrangements to be put in place.
d. To provide clarity over whether those prosecuted by the DWP have
convictions that are unsafe.
e. To ensure that the employees of postmasters and retailer companies have
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been dealt with fairly. See RLIT0000273, para 7.
To respond fairly and with consistency to those whose appeals that were
rejected by the Court of Appeal, mainly on the basis of applying its restrictive
‘Horizon system essential to the prosecution’ criteria, but where we consider
that other grounds would have been valid if the cases were eventually to be
considered by the Court of Appeal. Cross-party support for overturning all
these cases had been indicated to Lord Arbuthnot during discussions on the
Overturning Legislation, but failed to materialise when Parliamentary time
was curtailed by the sudden announcement of the General Election, with the
result that such cases did not make it into the Act that was agreed in the
‘wash up’.
Family members have suffered psychological and material harm as a result
of what happened to their parents, spouses or relatives. Some family
members have been able to benefit from being included in SPMs’ claims but
some have not. The legal rules and boundaries need clarification. This issue
will need illumination of complex factual issues, and careful consideration of
other situations that have arisen involving family victims of other scandals.
The Advisory Board recently noted the adoption of a flexible approach by
DBT:
“9. The Board reiterated their concern that members of postmasters’
families should receive full redress. DBT described their guidance
to GLO claimants’ lawyers, which says that:
“The aim across all Horizon compensation schemes is to
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compensate postmasters directly and attempt to put them back in
the same financial position they would have been in but for POL and
the issues with Horizon. The policy does not extend to direct
compensation for family members, however we do compensate
some pecuniary losses in situations where there is evidence of a
partnership /joint loss where the loss claimed should be considered
as a single economic unit and/or a party to the contract with POL by
virtue of that partnership and/or foreseeability of pecuniary loss
being caused to the partner or joint asset owner.
In keeping with the general policy objective above, we do not
compensate family members for any non-pecuniary damages.
However, it is clear that witnessing family members in distress may
have a distressing impact on the postmasters themselves. In those
instances where it is claimed we consider it fair to consider this
element under the claimants claim for Distress & Inconvenience.”
10. DBT confirmed that it had been able to apply this guidance even
in cases where family members were now estranged.
11. The Board’s view was that the Department's guidance was not
sufficiently broad and raised some contrasting examples of family
members. They would discuss this issue with claimants’ legal
advisors.”
(BEIS0001028, paras 9-11).
104. The Advisory Board continues to engage on these issues and to support the
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development of effective responses.
ISSUES FOR THE FUTURE
105. A number of issues remain largely outside the scope of the existing
compensation arrangements but should be addressed as more effective
responses to future national scandals.
Providing mental health support
106. Traumatised victims need swift mental health support and therapy. This is not
currently capable of being addressed by a legal system that is essentially
focussed on providing a remedy in the form of money. It is an issue that is of
fundamental importance, but will remain unaddressed for as long as people cling
to adversarial mechanisms. The Advisory Board has had a number of
conversations with charities, the Victims Commissioner, the NHS Patients
Commissioner and others about possible future responses. A veterans charity
has established an admirable system that refers military personnel suffering from
PTSD for swift and effective courses of therapy, which could be utilised but faces
a number of challenges in providing support to non-military personnel, including
issues of potentially large numbers, possible triage, and funding. The issue
deserves serious attention in any future redesign of whether something more
responsive than just a ‘compensation/redress scheme’ can be delivered.
Prevention and Response Mechanisms
107. The essential elements that need to be delivered are:
a. Corporate governance requirements, and organisational cultures, that
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prevent inappropriate institutional behaviours and closed minds.
b. Asystem and culture that identifies problems swiftly.
c. A system that responds to problems, both prospectively, so as to identify
relevant changes, and retrospectively by providing care and psychological,
practical and financial support.
d. A system that ensures that required institutional and cultural changes
actually occur.
108. A major challenge is that every time Government decides to create a new
compensation scheme in responding to a new disaster, this has to be done at
speed, and the default mechanism is to adopt a scheme that is adversarial and
legalistic. This situation does not enable learning to be applied from other
possible models, so that schemes are improved from the traditional ‘court-like’
default model. The traditional approach fails to enable the creation of a model
that is more responsive to the needs of a particular cohort of victims.
Considerable learning is available from previous schemes, from the needs of
particular groups of victims (such as the need to avoid compounding their
vulnerability or trauma), and from other successful models. Two leading models,
which I have researched extensively with academic colleagues, are Ombudsmen
for consumer complaints against suppliers in regulated markets (in which the UK
and Belgium are international leaders) and administrative schemes for personal
injury claims (the ‘no blame’ schemes of all Nordic states). The consumer
Ombudsmen and the Nordic personal injury schemes provide strong examples
of successful investigative and victim-friendly models, delivering consistent, fair
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and speedy outcomes without alienating people through an adversarial process.
109. The Advisory Board published in July 2024 a paper that I wrote on these issues.
I believe that new permanent standing mechanisms are required, not just for
delivering compensation but also for what can generically be described as in the
‘regulatory’ sphere (RLIT0000288 — “Future approach to Compensation” report).
In relation to delivery of compensation, a process is needed that is more efficient
and less costly and slow — this need will be better addressed by an investigative
rather than adversarial process. This points to a new authority and system that
is closer in model and style to an Ombudsman system than to an adversarial
system. Another welcome innovation would be to have a “sympathetic
independent friend” available to assist and support victims, this would be a
person who is not a lawyer, but familiar with processes and systems, who can
for example support victims in telling their stories and hunting for documents, in
situations where formal legal advice is unnecessary.
110. In relation to a mechanism for ensuring that change is actually implemented,
there have been many reports of disasters in the public sector (e.g. in the NHS,
and recently the Infected Blood, and Grenfell Inquiries) following which
recommendations have been made but are, or may remain, unimplemented. One
can contrast the role of regulation in the private sector, which has a function of
overseeing implementation of change so as to reduce future risk. The Board
considers that what is needed is a new mechanism, such as a standing
investigative authority and a linked but independent response authority, that
effectively oversees not just the implementation of recommendations but is also
capable of influencing the future behaviour and culture of public bodies
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(RLIT0000288, page 5). Without such a mechanism, it is predictable that public
bodies will give rise to major disasters that could be prevented, or at least be
identified, far more quickly than at present.
111. What is also needed is a centre of expertise on compensation schemes within
government (presumably within Cabinet Office) and a standing facility for the
operation of compensation schemes that could be triggered swiftly in the future
to identify and adopt a mechanism that is responsive to the particular needs of
the situation and victims, especially in its ability to adopt more flexible and
investigative modes. Templates and principles for future schemes should be
developed that provide appropriate flexibility in responsiveness, and move away
from the adversarial mode.
112. I should note to the Inquiry, for completeness, that I have raised these thoughts
with the National Audit Office and also with Professor Sir Jonathan Montgomery
and Cabinet Office officials, who were at the time designing the Infected Blood
Compensation Scheme.
113. The Inquiry invites me to reflect on the experience of the Advisory Board. Has
the mechanism of having an Advisory Board been a success? To my knowledge,
the Advisory Board is almost unique as a feature of a Government compensation
scheme, however, based on the engagement I and the other members of the
Board have had since its inception, with parties on all sides, it seems widely
regarded as having played a helpful part in the process.
114. The Advisory Board has no executive power, but has been able to exert
considerable influence for changes and improvements that supported key
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outcomes. Our role has been as an independent assistant, clearly motivated by
the twin goals of delivering full, fair, and speedy redress and compensation to
the victims of this awful saga, whilst also recognising the need to provide
assistance to the state, and able to communicate with all major groups and act
as a channel for trusted communication in raising issues and supporting
discussions over finding appropriate solutions. There has been a strong problem
solving element to our work, and generation of a number of reforms and
innovative solutions. As explained above, the Advisory Board has no remit or
power to implement any recommendations, and decisions on implementation are
made by those responsible for a relevant Scheme, such as the Post Office and
Ministers. I do not believe that the Board should have had (or should have) any
such implementation role. The influence of the Board has been significant
precisely because it is functionally independent from the administration and
governance of the Schemes.
STATEMENT OF TRUTH
I believe the content of this statement to be true.
CC
Dated: 30" October 2024
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Index to First Witness Statement of Professor Christopher Hodges
N° URN Document Description control
1 RLIT0000270 sams of Reference for the Horizon Compensation Advisory RLIT0000270
2 I WITN11710105 comencation sdvisonboad PS horizon- WITN11710105
3 RLIT0000410 Anvigony fms ona for the Horizon Compensation RLIT0000410
4 INQ00002027 Compensation Horizon IT Inquiry - First Interim Report: INQ00002027
5 I RLITOO00265 reat Felden st july 2008. Board Report of sixth RLIT0000265
6 I WITN11710102 Inauiryott Reet oo Advisory Board tothe =I witn41710102
7 I witn11710101 ater Ores Acme S0e8 Horizon Compensation Advisory WITN11710101
9 I RLIT0000275 nesting holden Mon ey Board. Report of fourteenth I) pi it9999275
40 I RLIT0000411 (Undated Mach2024 redress data: September 2023 RLIT0000411
14 I RLITo000261 mening. helt one Feb an 2008 Report of second RLIT0000261
13 I RLIT0000259 I Secretariat note: Discussion of 31 May 2023. RLIT0000259
14 I RLITOO00266 reat Feldon's Sept Aacisory Board Report of seventh RLIT0000266
15 I RLITO000267 I Report of eighth meeting held on 25 October 2023. RLIT0000267
16 I BEIS0001033 resting hold en 32 Rebruny 2034 Report ofeleventh I Be1g9001033
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WITN11710100
Horizon Compensation Advisory Board Report of sixteenth
17 BEISO001028 meeting held on 29 August 2024. BEISO001028
18 I RLIT0000260 nesting hold e Jonwory 2035 Board Report of first RLIT0000260
19 I RLIToo00262 resting Co eeaeeon Neo Board Report of third RLIT0000262
21 I BEIS0001034 recteg eld en 10 denoany 203 Board Report of tenth BEIS0001034
22 I RLIT0000250 enig Coe eaeton ea Board Report of fifth RLIT0000250
23 I RLIT0000263 enieg pompensation Advisory Board Report of fourth RLIT0000263
24 I WITN11710103 ponzon Compensation Advisory Board Dashboard, 21 April WITN11710103
25 I RLIT0000273 enirg Fold en 38 Fobruny 2034 Report of twelfth RLIT0000273
26 I BEISo000841 eating Fompensation Aomsoy Board Report of fifteenth BEIS0000841
29 I WITN11710104 I DBT Note on Horizon Convictions Redress Scheme. WITN11710104
30 I RLITOO00288 Horizon Compensation Advisory Board Report “Future RLITO000288
Approach to Compensation’.
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