b. The Horizon Shortfall Scheme - HSS

4.16. In the Progress Update, I provided a detailed description of HSS as it was at its launch in May 2020 and as it evolved over the following 30 months.[38] I also referred to aspects of the scheme in the Chair’s Statement and the Interim Report. However, given the criticisms to which HSS, its administration and delivery have been subject, I consider it appropriate to describe again (thereby stressing) some aspects of the scheme, its administration and delivery at its launch and in its early years.

May 2020 to 15 August 2022

4.17. The scheme was developed, quite deliberately, with the ambition that claimants could make their claims without the assistance of lawyers. The Post Office wanted the scheme to be “user friendly”; that was an aim which was shared by the claimants in the Group Litigation and their advisors who were consulted about the nature and form of the scheme. The consequence was that at its launch the scheme was essentially constituted by two published documents: a claim form and the Independent Advisory Panel Terms of Reference which, as its name suggests, was a document relating to advisory panels.[39] The panels were intended to be an integral part of the process for determining what offers of financial redress should be made to postmasters. See paragraph 4.25 - 4.26 below.

4.18. The Post Office anticipated that the claims made under the scheme would probably be of the order of a few hundred. There has never been a full explanation as to how that number was derived. It is clear however, that this was the information which the Post Office provided to the Department before and at the launch of the scheme.

4.19. The scheme was open only to those who satisfied defined eligibility criteria.[40] Crucially, claimants were eligible under the scheme only if (i) they had been, or were, in direct contractual relations with the Post Office;[41] and (ii) they had suffered a shortfall or shortfalls in their branch accounts which had arisen under either Legacy Horizon or Horizon Online.

4.20. There was a time limit for making a claim. Originally, claims had to be lodged with the Post Office by midnight on 14 August 2020. In due course, the Post Office decided to extend the closing time and date to midnight on 27 November 2020. However, the time limit for making a claim was never set in stone. The Post Office retained for itself the discretion to admit a claim into the scheme even though it was made outside the permitted time limit (referred to hereafter as “a late claim”).

4.21. There was no provision under the scheme for claimants to recover legal fees incurred in obtaining assistance to make a claim. That lack of provision was quite deliberate – see paragraph 4.17 above. Not surprisingly, therefore, very few of the claimants who made a claim prior to 27 November 2020 instructed lawyers to assist them in making their claims.

4.22. At the launch of the scheme, there was no discrete comprehensive guidance about the losses which could be claimed. In particular, while it was always accepted by the Post Office that claimants were entitled to recover consequential losses as well as the sums which had wrongly been claimed from them by the Post Office, there was no proper guidance to that effect. Written guidance about claiming consequential losses was not published until late September 2020. This guidance, therefore, was published approximately four months after the scheme had been launched and about two months before it was due to close. The result was that many claims for redress were made without the benefit of that guidance and by persons who had not obtained legal advice about the meaning of the phrase “consequential loss”.

4.23. Whether or not the eligibility criteria were met in any given case was determined by employees of the Post Office (although no doubt they had recourse to legal advice from Herbert Smith Freehills, if necessary). The scheme did not specify a procedure for challenging a determination that a claimant did not meet the eligibility criteria. No person independent of the Post Office was designated to consider challenges to eligibility determinations.

4.24. Assuming the eligibility criteria were met, an employee of the Post Office would consider available data to ascertain whether the claimant had suffered a relevant shortfall. If a shortfall was established an assessment of the particular claim would be undertaken by a member of staff of Herbert Smith Freehills (an “assessor”). The assessment process involved analysing the claim and any supporting documents provided by the claimant together with any relevant documents held by the Post Office. The assessor would then reach a conclusion about the likely value of each head of claim which had been presented (and, according to the Post Office, any other heads of loss which could have been included in the claim, but which had not been made). If an assessor thought it appropriate, further information and/or evidence might be sought from a claimant or advisor if one had been appointed. Once the assessment was complete it would be provided to an independent advisory panel.

4.25. From the outset, each independent advisory panel was constituted by a senior lawyer, as chair, and two other persons who had accountancy and retail expertise. Panels would consider each claim presented to them and reach a conclusion about the financial redress which, in their view, the Post Office should offer. All panels were governed by their Terms of Reference.[42] The overriding objectives were for panels to act in a timely manner, to assess eligible claims by applying the principles and standards set out in the Terms of Reference and assess and recommend to the Post Office a fair outcome for shortfall losses and consequential losses.[43]

4.26. Decisions reached by panels upon the amount of financial redress in individual cases were recommendations which were communicated to the Post Office. A panel’s view on the amount to be offered in any given case did not bind the Post Office. The recommendation of a panel needed approval from the Post Office before an offer could be made to a Claimant.[44] In some instances the approval of the Department was also necessary before offers were made.[45] Offers to claimants would be communicated to them by HSF.

4.27. If a claimant accepted the offer made, a settlement agreement was concluded. If an offer was rejected the “Dispute Resolution Procedure” was available to that claimant.[46] In summary, the process in its original form involved the following potential stages: (a) a good faith meeting; if that failed to produce an agreement, (b) an escalation meeting; if that also failed to produce an agreement, (c) a mediation could follow. In the event that all three of those stages failed to produce an agreement, claims with a potential value of less than £10,000 could be litigated in the County Court pursuant to the Small Claims track and claims with a potential value in excess of £10,000 could be the subject of arbitration proceedings. I will return to the Dispute Resolution Procedure as a discrete topic in due course.

4.28. By midnight on 27 November 2020, the Post Office had received 2,523 claims of which 155 did not meet the eligibility criteria.[47] The number of eligible claims received was approximately 12 times the number it had predicted before and at the time of the launch of the scheme, and the Post Office simply did not have the means to fund the financial redress which would be due to that number of people.

4.29. As of 6 July 2022, the Post Office had received 186 late claims, i.e. claims which had been submitted after midnight on 27 November 2020. At the hearing on 6 July 2022, Leading Counsel for the Post Office was unable to provide me with any information as to how the Post Office intended to deal with these late claims. That was still the case on 13 July 2022 when Counsel for the Department made oral submissions to the Inquiry. In the Progress Update, I drew attention to this state of affairs. I expressed my disquiet about it and also about the fact that it was the Post Office who would make the decision about whether to admit late claims into the scheme.[48]

4.30. When HSS was launched in May 2020 there was no formal resolution as between the Post Office and the Department as to which body would fund redress payments to claimants. Once it became clear that the number of claimants was very substantially more than had been estimated by the Post Office, it also became clear that the funding of the scheme would have to be the responsibility of the Department. However, this issue was not formally resolved until March 2021. Consequently, it was only after that date that the Post Office was in a position to make offers to claimants. I did not realise when I published the Progress Update that the decision as to whether to admit late claims was inextricably bound up with a decision by the Department, and/or HM Treasury, about whether additional funds would be made available to enable such claims to be paid.

4.31. In its early stages HSS was managed by a group of Post Office employees known as the Historical Matters Business Unit. The unit has always been led by a person having the title “Director”.[49] On 10 January 2022, Mr Simon Recaldin was appointed to the post of Director, a position which he held until very recently. In the spring/early summer of 2023 the unit changed its title and became known as the Remediation Unit, a title it has retained to this day.

4.32. Initially, Mr Recaldin reported to Mr Ben Foat, then the Post Office Group General Counsel. Subsequently, he was line managed by Mr Nick Read who had been appointed the Chief Executive of the Post Office in 2019.

4.33. Ultimately, of course, the board of directors of the Post Office (the “Post Office Board”) was and is responsible for the work done on behalf of the Post Office to administer and deliver HSS. From the scheme’s launch however, the Post Office Board delegated important functions to committees and sub-committees which were formed with a view to exercising appropriate oversight and supervision of the financial redress schemes as they came into existence.

4.34. Most importantly for present purposes, a sub-committee of the Post Office Board (now known as the “Remediation Committee”) was constituted.[50] It has always consisted of at least three members of the Post Office Board, and it was and always has been chaired by a member of the Board. In the hierarchy of committees formed in the aftermath of the Group Litigation and the development of HSS, this sub-committee sat above a committee now known as the Horizon Matters Committee which was, and is a committee formed of senior Post Office employees. From the date of his appointment to the date of his departure from the Post Office, the Horizon Matters Committee was chaired by Mr Recaldin.

4.35. In the early years of HSS, the Remediation Committee sat every fortnight. The Horizon Matters Committee has always met on a weekly basis. It is this Committee, primarily, which is responsible for overseeing the administration and operational performance of HSS day to day.

4.36. As I will explain in a later volume of my Report in greater detail, the Post Office Board is made up of a number of non-executive directors and a lesser number of executive directors. The Department is the only shareholder of the Post Office; one of the non- executive directors appointed to the Board is “the shareholder representative”. Between March 2018 and May 2023, the shareholder non-executive director was Mr Thomas Cooper. At the material time, he was an employee of United Kingdom Government Investments (“UKGI”) and he led a team (known as the Shareholder Team) of fellow employees of UKGI who provided assistance to the Department in (a) obtaining funding for HSS from HM Treasury, (b) designing governance arrangements for the Department’s oversight of HSS, (c) monitoring progress in HSS, and (d) attending a steering committee established by the Department to make important decisions relating to HSS.[51] Mr Cooper personally attended the steering committee as an observer. In his capacity as a non-executive director of the Post Office, he attended the Post Office Board and the Remediation Committee.

4.37. Mr Cooper’s third witness statement reveals an insight into the period between May 2020 and March 2021 which is of some interest.[52] As I have said, it was during this period that the Post Office and the Department came to realise that the scheme would have to be funded by the Department, with the consequence that the process of making offers to claimants could not begin until that had been resolved. However, according to Mr Cooper (and I have no reason to doubt it), it was during this period that extensive discussions took place about how HSS would operate in practice.[53] Paragraph 22 of Mr Cooper’s statement is of particular interest:

“All parties understood from the beginning that many claimants might find it difficult or impossible to provide evidence in support of their claims that would meet the standards required by a court. It was agreed that [the Independent Assessment Panel] would adopt a general approach of accepting a claimant’s evidence unless there was evidence to the contrary. With certain exceptions, such as the treatment of evidence, the [Independent Assessment Panel] would determine claims by reference to accepted legal principles, such that awards would be made on the basis of what a court would award in the same circumstances. This approach by the IAP meant that, in principle, HSS would meet Managing Public Money requirements.”

4.38. I have highlighted paragraph 22 of Mr Cooper’s third witness statement for two inter- related reasons. First, the approach which it was agreed that the Panel should adopt to assess evidential requirements was consistent with the Terms of Reference of the Panel and the Guidance which had been issued in September 2020. However, as I stressed in the Progress Update, my understanding then (and has always been since until receipt of Mr Cooper’s evidence) was that it was open to the Panel to depart from established legal principles if that was necessary in order to achieve a fair outcome in a particular case.[54] That understanding was based squarely upon the submissions made to me by Ms Kate Gallafent KC as long ago as 6 July 2022.[55] Mr Cooper’s written evidence appears to create a possible conflict between Ms Gallafent KC’s submissions on behalf of the Post Office, and how the independent advisory panels may have operated in practice.

August 2022 to 31 March 2025

4.39. Since 15 August 2022, there have been a number of changes aimed at improving, streamlining and speeding up the process of delivering financial redress to claimants. I do not propose to list them all. However, in the paragraphs that follow I identify the most important changes and developments which have occurred in the period following the publication of the Progress Update on 15 August 2022.

Late Claims

4.40. On 4 October 2022 the Post Office provided written submissions to the Inquiry which acknowledged that the issues of whether, and/or, in what circumstances, late claims would be admitted under the scheme had not been resolved despite the passage of time since 27 November 2020.[56] The Post Office apologised unreservedly for that state of affairs. Two days later, on 6 October 2022, the Minister made an announcement to the effect that funding would be made available to enable late claims to be determined.[57] That was the first obvious indication I had been given that the issue of funding had been a major contributory factor in delaying a decision about late claims. In the days immediately before the hearing on 8 December 2022, written submissions were made to the Inquiry on behalf of the Post Office and the Department which, in part, related to late claims. Although ambiguous to a degree about the need for a claimant to explain why a claim had been made after 27 November 2020, these submissions created the very strong impression that all late claims which satisfied the eligibility criteria for the scheme would be admitted, and that the claimants would receive appropriate financial redress. I responded to these submissions in the Chair’s Statement of 9 January 2023 by concluding that:

“…fairness now demands an unequivocal statement to the effect that all applications made after 27 November 2020 will be accepted into the HSS provided all eligibility criteria set out in the HSS are met: i.e. no application already received by [the Post Office] will be refused on the basis that it was made after 27 November 2020. To require applicants to explain the delay in making an application when, as a matter of course, it will be accepted if all other eligibility criteria are met is, in my view, wholly unnecessary.”[58]

4.41. On 2 March 2023, the Post Office and the Department reached agreement that all late claims that met the eligibility criteria would be accepted into the scheme regardless of the reason the claim had been made late.

4.42. In the Interim Report, I recommended that HSS should be closed to further applications.[59] That recommendation was accepted by the Minister/Department in October 2023. However, no date for the closure of the scheme has yet been announced.[60] In his oral evidence to the Inquiry, Minister Thomas expressed his reluctance to set a closure date. He explained that claimants were still coming forward and that he expected that claimants would continue to come forward at least until I had published my Report.[61] Claimants are still submitting claims and, provided the eligibility criteria are met, offers of redress are being made or will be made. As I will explain in my conclusions, I find it difficult to discern the justification for HSS remaining open to claimants even now with no end date in sight when the plan in 2020 was for it to close in that year.

Interim Payments

4.43. From the commencement of the scheme, claimants could seek an interim payment if they could demonstrate that they were suffering from poor health or financial hardship. The amount which could be awarded to an individual claimant was a maximum of £10,000. Over time and, in particular, following the hearings which I held on 6 and 13 July 2022, the Post Office came to realise that the requirement that a claimant should prove ill health or financial hardship before an interim payment could be made, was unsustainable. It also accepted that a maximum sum of £10,000 as an interim payment was too low. The requirement that a claimant should prove ill health or financial hardship to qualify for an interim payment was removed in October 2022.

4.44. The current position in relation to interim payments is as follows. Prior to any offer being made, an interim payment can be made to a claimant. The amount payable is one which is equal to the shortfall(s) claimed by a claimant as verified by the Post Office. If a settlement offer has been made but not accepted, as of July 2023, an interim payment of 100% of the offer may be paid to the claimant.[62]

Taxation

4.45. When HSS was first launched, and for approximately three years thereafter, claimants were liable to pay income tax on payments received by them under the scheme.

4.46. On 16 March 2023, the Post Office Horizon Compensation and Infected Blood Interim Compensation Payment Schemes (Tax Exemptions and Relief) Regulations 2023 came into force.[63] The effect of those Regulations was said to be that payments made to claimants under OCS and GLOS were exempt from income tax, capital gains tax and – in the case of payments under OCS – inheritance tax. By letter dated 28 February 2023, I made enquiries of the Department as to why tax exemptions for compensation payments paid to claimants under HSS and GLOS were, apparently, different from tax exemptions available for payments under OCS. Although I received a reply to my letter, I was far from satisfied with its contents. (See paragraph 22 of the Interim Report).[64] Accordingly, in advance of the compensation hearing which took place on 27 April 2023, I invited written submissions from Core Participants upon the issue of exemption from taxation of payments under the various schemes.

4.47. On 19 June 2023, the Minister announced that HSS claimants who had received settlement payments would receive top-up payments (exempt from tax and national insurance contributions) equivalent to the tax which hitherto they had been liable to pay in respect of the settlement payments.[65]

4.48. Notwithstanding this announcement, I considered it appropriate to make a recommendation in the Interim Report about the taxation of payments under the three financial redress schemes then in existence.

4.49. Recommendation 6 was in the following terms:

“DBT shall publish in as much detail as it reasonably can, and as soon as it reasonably can, its proposals for ensuring that applicants to all schemes are treated equally and fairly. This is as far as their liability to or exemption from Income Tax (IT), Capital Gains Tax (CGT) and Inheritance Tax (IHT) is concerned as the same relates to compensation payments under each scheme.”[66]

4.50. On 26 October 2023, the Department published a response to my recommendations.[67] In relation to Recommendation 6, it wrote:

“Recommendation accepted

Payments under the GLO scheme and the Compensation for Overturned Convictions (OC) are exempt from IT, National Insurance Contributions (NICs) and CGT. On 19 June, the Government announced arrangements for ensuring fair treatment in respect of IT, NICs and CGT for Horizon Shortfall Scheme (HSS) Claimants.

Initial offers under HSS did not account for the tax on compensation when paid as a lump sum, which means that postmasters were not necessarily restored to the position they would otherwise have been in. Top-up payments are the quickest and most efficient way to address this issue and will be exempt from tax.

Details are set out in Appendix A. Payments from all 3 schemes are exempt from IHT.”

4.51. As foreshadowed in this text, Appendix A was the justification for its response to my recommendation. There was also an Appendix B, which was a table setting out how the various heads of loss would be treated in terms of taxation under the then existing schemes.

4.52. In his written evidence to the Inquiry, Mr Carl Creswell asserted that the top-up payments made under HSS, and referred to above, are the means by which claimants within HSS are, in effect, treated equally (in relation to taxation) to the claimants in other schemes.[68] I have not received any evidence from Core Participants (either written or oral) which contradicts Mr Creswell’s opinion.

Categories of Claims

4.53. The Post Office and the Department have always separated claims into different categories. Claims which were very low in value were categorised as “Below Assessment Threshold” (“BAT”). Claims were categorised as BAT if they were £8,000 or below.[69]

4.54. BAT claims were intended to be processed quickly. In these claims there was no investigation as to whether a shortfall existed. Further, no case assessment was undertaken by Herbert Smith Freehills. In reality, as I understand it, such claims were accepted and paid upon the assumption that a relevant shortfall existed provided the remaining eligibility criteria for HSS were established. In 2021 and 2022 in particular, all such claims were paid reasonably promptly. With the advent of Fixed Sum offers such claims are bound to become extinct.

4.55. There are two other categories of claims: standard claims and complex claims. Standard claims are those in which there are five or less heads of claim. Complex claims are those in which there are greater than five heads of claim, or in which one or more of the heads of claim are assessed to be complicated.[70]

4.56. The categorisation of claims as standard or complex is of no particular significance so far as a claimant is concerned (save in respect of the length of time which might elapse before the claim is resolved). The real significance of a claim being categorised as complex lies in the fact that the Department may play a role in the decision about how much a claimant should be offered in a case which is regarded as exceptional.[71]

Fixed Sum Offers

4.60. On 13 March 2024, the Minister announced that claimants in HSS whose claims had not been settled could, if they chose, opt to accept the sum of £75,000 (“the Fixed Sum Offer”) in full and final settlement of their claims as opposed to having their claim assessed in accordance with the process I have described above.[73] As will become apparent, Fixed Sum Offers had already been introduced by this time in OCS and GLOS.

4.61. This initiative was very much driven by the Department and the Minister. At the date of the announcement, it was anticipated that this option would become available to claimants as from September 2024.

4.62. The general election intervened. Nonetheless, following the election the incoming Government decided to honour the commitment made by its predecessor to introduce Fixed Sum Offers in HSS. On 25 July 2024, Minister Thomas gave his approval to the introduction of a Fixed Sum Offer of £75,000 which decision was ratified by the Secretary of State on 30 July 2024.[74]

4.63. By the time this announcement was made a very significant number of claims under HSS had already been considered and the majority of those considered had been settled. Further, many of the claimants who had settled their claims had done so for sums less than (and, in some cases, very significantly less than) £75,000. Nonetheless, the Department and the Minister considered it would be unfair to exclude those who had settled their claims from taking advantage of the Fixed Sum Offer. Accordingly, the decision was made that it should be available not just to claimants who had not settled their claims (either because no offer had been made or because the offer made had not been accepted) but also to those who had settled their claims for a sum less than £75,000 prior to 30 July 2024. The result was that those who had settled their claims for less than £75,000 prior to 30 July 2024 became entitled to receive top-up payments of the difference between £75,000 and the sum previously paid to them.[75]

4.64. In all, 1,800 claimants became eligible to receive top-up payments. The process of making these top-up payments began on 9 August 2024. By 11 March 2025, 1,677 had received the payments to which they were entitled, and the Post Office had written to the remaining 123 eligible claimants to remind them of their entitlement.[76]

4.65. As of 30 July 2024, there were many hundreds of claimants who had yet to receive any offer in settlement of their claim, and/or had not accepted the offer which had been made to them. Those claimants became entitled to opt for the Fixed Sum Offer.

4.66. It was also in the summer of 2024 that a decision was taken that a letter should be sent to all current and known former postmasters alerting them to the possibility of claiming the Fixed Sum Offer in HSS. Between October and December 2024, a total of 18,528 letters were sent out by the Post Office.[77]

4.67. Thousands of claims have been made since those letters have been sent and it is anticipated that many more claims will be made before the scheme closes. All these claimants will be entitled to opt for the Fixed Sum Offer, provided of course, they satisfy the general eligibility criteria for inclusion in HSS.

4.68. The Fixed Sum Offer of £75,000 carries with it three features which may be detrimental to claimants.

4.69. First, those who opt to accept the Fixed Sum Offer must give up the right of appeal which was contemplated at the time that the Fixed Sum Offer was introduced and has now been created. Second, those claimants who do not accept the Fixed Sum Offer but instead opt for an assessment of their claim cannot change their mind. Once the option of accepting the Fixed Sum Offer is rejected in favour of an assessment of the claim, the claimant is not permitted to withdraw from the assessment process and instead accept the fixed sum. If, at the end of the assessment and the Dispute Resolution Procedure or appeal, the award to the claimant is less than £75,000 the claimant will be bound to accept that award. At one point the Department and its Ministers contemplated the possibility that an assessed award (for those who opted for it after the Fixed Sum Offer was introduced) would never be less than £50,000. However, that possibility has now been rejected.[78] Third, there is no provision in the scheme which allows a claimant to recover any legal fees incurred in seeking advice about whether to accept a Fixed Sum Offer.

Dispute Resolution, Appeals and a Reviewer

4.70. At paragraph 4.27 above, I described the Dispute Resolution Procedure as it existed at the launch of the scheme. In the current Terms of Reference of the scheme, there is no material change in how the Dispute Resolution Procedure is described. In summary, the procedure envisages two meetings between the claimant and the Post Office. If those meetings fail, a mediation may take place, and if the mediation fails, the claimant may seek an award in the County Court (in the small claims track) or, if the likely award exceeds £10,000, the claimant and the Post Office can engage in arbitration proceedings.

4.71. It is worth stressing at this point that the Dispute Resolution Procedure is intended to lead, ultimately, to a decision which binds the claimant and the Post Office either by agreement or by litigation/arbitration as I have just described. Although, as I understand it, a claimant who makes a claim under HSS is not thereby precluded from litigating the claim in the courts (at least prior to any settlement of the claim in HSS). The whole idea is that the scheme will be the vehicle whereby financial redress is delivered to those who are entitled under its eligibility criteria.

4.72. It may be that the advent of the Fixed Sum Offer will have rendered redundant, for all practical purposes, the need for the Dispute Resolution Procedure for those who accept the Fixed Sum Offer. However, those who opt for an assessed offer can avail themselves of the Dispute Resolution Procedure should they be unhappy with the initial and any subsequent offer, which is made to them.

4.73. I note, however, that the Dispute Resolution Procedure is silent (and always has been) as to the processes relating to the incurring and recovery of legal costs should a claimant and the Post Office engage in meetings, and/or mediation, and/or arbitration. It may be that the claimant’s costs would be recoverable provided they are reasonable.[79] It may be that the costs incurred by a claimant would be dealt with as part of any mediated settlement should that occur. However, what happens if a mediation takes place, but no settlement is achieved? In the event of an arbitration, it may be that the issue of costs is determined by the arbitrator in accordance with principles normally applicable in a commercial arbitration. In my view, there is a lack of clarity to say the least, as to a number of issues surrounding the payment and recovery of legal costs. Further, Mr Recaldin’s written evidence suggested that in arbitration proceedings claimants would be responsible for one-half of the fees of the arbitrator and that they would be responsible for payment of any legal fees which they incurred, with the implication being that those sums would not be recoverable from the Post Office or the Department.[80] If Mr Recaldin’s evidence is correct on these points it would constitute a significant reason why arbitration would be very unattractive to many claimants.

4.74. On 8 April 2025 the Department announced the launch of the Horizon Shortfall Scheme Appeals process (“HSSA”).[81] Before describing what has occurred and what is envisaged, it is necessary to explore the relevant background.

4.75. The prospect of an appeal process within HSS has been under consideration since it was recommended by the Advisory Board on 14 June 2023.[82] I quote from the minutes of the Board:

“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 con- sider how such an appeal process could be introduced. It should focus on assessing whether settlements were fair based on the evidence provid- ed, whilst allowing consideration of elements of a claim which had been missed or not included on the original form. 11. … 12. … 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. While such damages were intended to punish the Post Office, they also had the effect of acknowledging the sustained impact which the actions had had on individuals. They recommended that the ap- peal process recommended above should put particular weight on securing a fair outcome in respect of the issues described in the preceding paragraphs.”

4.76. At its meeting on 25 October 2023, the Advisory Board addressed the issue of whether “a reviewer” should be appointed in HSS to mirror the activities of the reviewer in GLOS.[83] The Board’s discussion was in the following context:

“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 Scheme 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.”

Following a detailed discussion, the Board reached a number of conclusions. The relevant minute reads as follows:[84]

“13. In conclusion, the Board:

  • Appreciated and supported the recommendations made by Sir Ross [Cranston];

  • 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 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.

  • 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;

  • Agreed to keep this mechanism under review as it was developed and operated.”

4.77. On 12 August 2024, the Minister approved the creation of an “Appeals Mechanism”, and, on 9 September 2024, he made an announcement in Parliament to that effect.[85]

4.78. When he gave oral evidence to the Inquiry, Minister Thomas was unable to provide any detail as to the criteria which would be used to determine whether a claimant might have a right of appeal. Both Minister Thomas and Secretary of State Jonathan Reynolds, in their oral evidence, informed the Inquiry that such matters would be settled early in 2025.

4.79. On 30 January 2025, a further statement in Parliament suggested that the details of appeal rights would soon be forthcoming.[86] Specifically, the Minister announced that the Department was in the final stages of procuring a legal firm to act as its advisor on appeal cases, and a separate firm to act as the secretariat “for the scheme’s Independent Panel and Reviewer”. The Minister’s announcement continued:

“My officials will shortly send to both appellants’ representatives and the Advisory Board a draft of detailed principles and guidance. They will ensure that the HSS Appeals Scheme is fit for purpose and provides a satisfactory outcome for affected Postmasters, in line with the Advisory Board’s recommendation. They will also establish the eligibility criteria. We will continue to engage both groups on all aspects of the scheme.”

4.80. The Minister’s announcement concluded with his confirmation that the appellants’ costs of appealing would be provided for. He expected that the first cases would be “ready for submission” in the spring, and that postmasters who were currently engaged with claims in the Dispute Resolution Procedure would be permitted to transfer their claims to “HSS Appeals”. A further update was promised “nearer the time”.

4.81. As I have said the Minister announced the launch of HSSA on 8 April 2025. He intended that it would come into effect from May 2025 and I understand that has happened.

4.82. Before describing the main features of HSSA, it is worth making a preliminary point. As things stand currently, HSSA will not replace the Dispute Resolution Procedure. Those claimants who have already invoked the Dispute Resolution Procedure will be invited to proceed under HSSA, but they will have a choice as to whether to do so. As I understand it, the Department intends that HSSA and the Dispute Resolution Procedure will both continue to exist and, in effect, any claimant in HSS who has rejected the offer of redress made by the Post Office may choose whether to pursue the claim in HSSA or in the Dispute Resolution Procedure.

4.83. The Department has to date published two documents in which HSSA is explained: they are Horizon Shortfall Scheme Appeals process guidance and principles (“HSSA process guidance and principles”) and How to apply to the Horizon Shortfall Scheme Appeals (HSSA) process. What follows is taken from those documents.[87]

4.84. A claimant is eligible to appeal in HSSA if one of the following criteria are met:

  • A claimant has settled a claim in HSS “without entering the Dispute Resolution [Procedure]”.

  • A claimant has rejected an initial HSS offer without entering the Dispute Resolution Procedure.

  • A claimant has settled a claim in the Dispute Resolution Procedure “before mediation stage without legal advice funded by the Post Office, other than for reasonable allowances to consider the offer”.

  • A claimant is within the Dispute Resolution Procedure “with or without legal advice but not having requested or awaiting a mediation meeting as at the date the appeals process opens”.

  • A claimant is a shareholder or director of a company or a partner in a partnership which has ceased to exist. In the published documentation such a claimant is described as a linked individual and, if appropriate, such an individual may be offered an ex-gratia payment.[88]

4.85. No claimant who has accepted the Fixed Sum Offer of £75,000 may appeal. For the avoidance of any doubt, I infer that this embargo applies to persons who had settled their claims prior to the introduction of the Fixed Sum Offer, but who accepted appropriate top-up payments which brought the sums paid to them to a total of £75,000.

4.86. All those who are eligible to appeal (save for one group which I identify immediately below) have nine months in which to appeal from 31 May 2025. For those claimants who are currently within the Dispute Resolution Procedure, but who have not requested, or are not awaiting a mediation meeting, the time period in which to appeal is nine months from the date of the letter which they will receive inviting them to join HSSA.

4.87. A time period of nine months in which to decide whether or not to appeal is, by the standards of litigation, at least, a remarkably generous period in which to make the decision. I say that even allowing for the fact that all relevant information and evidence related to the appeal must be submitted within the same nine-month period.

4.88. The HSSA process guidance and principles is, in my view, unclear about whether decision makers can extend the time for appealing. At one point in the documentation, claimants are told “If for any reason there are issues with these timelines being met, email …. to discuss further.” A few lines later, under the heading “Making a late claim”, claimants are informed “Unfortunately, DBT will not be able to accept any HSSA appeals made after these timescales”. I interpret that as meaning that the Department may extend the time for appealing provided that any extension is sought before the expiry of the nine-month period. However, a claimant seeks no extension before the expiry of the period and the nine- month period expires, no appeal will be permitted.

4.89. HSSA is said to operate on a “best offer” principle. HSSA process guidance and principles provides:

“The process operates on a ‘best offer’ principle, and by entering the Scheme there is no risk of receiving less redress than offered in the HSS Panel Stage. If you are in the [Dispute Resolution Procedure] there is no risk of receiving less redress than the best offer received during [that process].”

4.90. At a later point in the same document under the heading Referral to an Independent Panel the following appears:

“The Independent Panel may make an award which is less than any earlier offer made by DBT for your appeal. DBT will be bound by the Independent Panel’s decision and once the Independent Panel has made it final decision on the offer, you will not be able to return to this earlier offer. However, you will never receive any less than your HSS or DRP offer.”

4.91. I should spell out what I believe these passages mean in practice. There may be claimants who have received an offer from the Post Office (after a recommendation from the independent advisory panel), referred to above as the HSS Panel Stage, who have yet to enter the current Dispute Resolution Procedure. There may also be claimants who have received an offer at the HSS Panel Stage who have entered the Dispute Resolution Procedure but not yet received an offer in that process. Both those categories of claimants will be able to opt to join the appeal process safe in the knowledge that they will be able to take the offer they have received at the HSS Panel Stage, even if they are offered or awarded less in the appeal process. There may also be claimants who have entered the Dispute Resolution Procedure who will have received an offer or offers in that Procedure. They will be able to join the appeal process safe in the knowledge that they will be able to take the best offer received in the Dispute Resolution Procedure, even if they are offered or awarded less in the appeal process. However, there are other possible scenarios which need to be considered, and which are difficult to reconcile with the language set out in the HSSA process guidance and principles. I discuss those scenarios at paragraphs 6.93 to 6.96 below.

4.92. Once a claimant is accepted as being eligible to appeal, the process which unfolds is similar to that which occurs in GLOS. I have previously described the main features of the appeal process in GLOS in the Interim Report. (See paragraphs 27 to 68 thereof).[89] I summarise the proposals for HSS:

  • Appeals will be considered by case workers in the Department who will be advised by the Department’s lawyers, Addleshaw Goddard LLP.

  • The Department may or may not request further information or evidence, but once it is satisfied that there is a sufficiency of evidence, it “will make a fresh assessment” of the case under consideration. If the Department considers that the offer under appeal is too low, it will increase the offer. If the Department agrees with the offer under appeal, it will say so.

  • If a claimant is dissatisfied with the Department’s conclusion, settlement discussions will occur between the lawyers for the Department and the claimant.

  • If those fail, the steps to be followed are as follows. If the Department has declined to increase the original offer, the claim will be referred to an independent panel. If, however, the Department has increased the original offer, the claim may be referred to a panel, but that does not occur automatically. Indeed, the claim is unlikely to be referred if (i) there is no substantial difference between the parties’ respective valuations, or (ii) further evidence is required, or (iii) there is no issue on which it would be helpful to obtain the views of the independent panel. I presume that in cases other than the three types described immediately above, there will, in fact, be a reference to the panel.

  • An independent panel will be formed of three persons with suitable expertise to consider the issues in a particular case. I assume that the panel will be chaired by a person who is legally qualified. At a hearing before a panel the claimant (no doubt by his/her lawyer if legally represented) “will have the option to make an oral statement limited to one hour” during which statement the panel may ask pertinent questions of the lawyer/claimant.

  • The panel’s decision is binding upon the Department. However, there are two sets of circumstances in which the panel’s decision does not bind the claimant. First, if the panel’s decision is that the offer made to the claimant by the Department was sufficient (or even that it was too much) but the offer made to the claimant originally by the Post Office was for a greater sum, the claimant is entitled to receive the sum offered by the Post Office. Second, a claimant may seek a review of a panel’s decision from “the Reviewer”. The Reviewer (an independent senior lawyer) may increase the sum awarded to a claimant by the panel if:

  1. There has been a manifest error, procedural irregularity or substantive error of principle in the independent panel’s final assessment of the appeal; or

  2. The independent panel’s final assessment is substantially inconsistent with the document known as HSSA process guidance and principles.

4.93. The document to which I have just referred makes it clear that the main principles and types of loss within the HSS Consequential Loss Principles and Guidance will be applied to HSSA, both when the Department is assessing afresh, what offer should be made and when a panel is engaged. Additionally, however, both the Department and the panel must consider “what is fair in all the circumstances”.

4.94. At paragraph 4.73 above, I drew attention to the lack of clarity that I consider exists in relation to the issue of costs incurred by the claimant when pursuing redress in the Dispute Resolution Procedure. Although the Minister announced that the costs incurred by a claimant who appeals would be provided for, there was no details about costs incurred by an appellant in the documents published on 8 April 2025. However, this omission was quickly cured. On 28 April 2025 the Department published the document entitled Horizon Shortfall Scheme Appeals (HSSA): tariff of reasonable legal costs in which it was made clear that the Department would meet the reasonable legal costs of an appellant in accordance with the tariffs set out in the document.

Oversight and Governance

4.95. I have already provided a brief description of how the Post Office managed HSS in its early years at paragraphs 4.31 to 4.38 above. The Remediation Committee and the Horizon Matters Committee are still the two bodies which routinely provide oversight of the work done by the Remediation Unit in administering and delivering HSS.

4.96. Currently, there are two sub-committees of the Horizon Matters Committee which have important roles in relation to HSS. These are the HSS Panel Recommendations Review Committee (the “Review Committee”) and the DRP Decision Committee.[90] The Review Committee has the important task of reviewing recommendations made to independent panels by assessors and recommendations made to the Post Office by independent advisory panels where the claims are categorised as exceptional. (See paragraph 4.56 above). Members of this Committee are employees of the Post Office and meetings of the Committee are attended by a lawyer from Herbert Smith Freehills. The DRP Decision Committee considers and agrees the approach to be taken by the Post Office when mediation of a particular case is contemplated and agreed. It also lays down the limit of authority for those who engage in a mediation on behalf of the Post Office.

4.97. As I have said already, the Department also exercises oversight of the administration and delivery of HSS. A description of how the process of exercising oversight has evolved can be found in the first witness statement of Mr Creswell at paragraphs 51 to 60. The following is a short summary of the evidence in those paragraphs.[91]

4.98. The first step was to form the HSS Steering Committee whose members, originally, were employees of the Department, members of the Shareholder Team (who were employees of UKGI) and employees of HM Treasury. Mr Cooper attended the Committee as an observer. This committee has always operated under formal Terms of Reference.[92] Further, its role is clearly defined in an agreement with the Post Office known as the HSS Operations Agreement with Post Office (“the Operations agreement”).[93] In this volume of my Report, it is unnecessary to describe the terms of the Operation Agreement in any detail. Its effect however, was summarised succinctly by Mr Cooper as being that “decisions which might have a material financial impact on HSS would require Department approval”.[94]

4.99. The HSS Steering Committee is chaired by Mr Creswell, and it meets regularly. According to Mr Creswell’s evidence (which is not disputed on behalf of the Post Office) the Committee sets the strategic direction for HSS, considers and provides advice and assurance on relevant policy risks and issues, and has the right to consider and approve the approach taken by the Post Office to what are designated as “exceptional cases” within HSS – as to which see paragraph 4.56 above. The Committee is supported by a Working Group. This group leads on engagement with members of the Post Office Remediation Unit at an operational level.

4.100. The HSS Operations Agreement provides for regular departmental monitoring at meetings between departmental officials and Post Office employees. Scrutiny of management information provided by the Post Office takes place in monthly meetings and, on a quarterly basis, meetings take place in order to monitor performance.

4.101. In the early years of HSS, Mr Cooper and the Shareholder Team were involved to a significant degree, in providing assistance to the Department in relation to governance issues, operational resourcing and performance monitoring. However, as time has gone by the direct involvement of the shareholder non-executive director and the Shareholder Team has diminished as compared with the involvement of Departmental employees.

4.102. In May 2023 Mr Cooper was replaced by Ms Lorna Gratton as the non-executive director representing the shareholder on the Post Office Board. She still fulfils that role. She has described her involvement in HSS in her witness statement and her oral evidence.[95] In relation to HSS, four aspects of her evidence stand out. First, in her witness statement she described how analysis presented to the Remediation Committee in July 2023 demonstrated that the offers made to claimants on average were higher if claimants had been represented by lawyers at the time they made their claims.[96] According to Ms Gratton this prompted the Remediation Committee to recommend that legal representation should be offered to claimants “up front”.[97] Second, both in her witness statement and oral evidence, Ms Gratton expressed the view that the approach of Herbert Smith Freehills to claims was “legalistic”, i.e. in some cases their approach appeared to have been that an offer to a claimant should be with a view to achieving an outcome which was the least financially detrimental to the Post Office “within a range of fair settlement”.[98] In her view, a different approach was needed along the lines of “giving the benefit of the doubt to claimants, even if that means a greater payout than one that might result from a hard-fought negotiation in line with a conventional legalistic approach.”[99] In Ms Gratton’s view too, Herbert Smith Freehills was prone to argue, unnecessarily, about comparatively small sums of money. Third, Ms Gratton considered the advisory panels to be having a “positive effect on the resolution of HSS claims”[100] - an assessment shared with Professor Christopher Hodges OBE.[101] Fourth, Ms Gratton was a keen supporter of the introduction of the Fixed Sum Offer in HSS.

4.103. I say now that I found much of Ms Gratton’s evidence persuasive. I should record that her enthusiasm for the Fixed Sum Offer in HSS appears to have been based, at least substantially, upon her view that there should be parity between the Fixed Sum Offer available in GLOS and the Fixed Sum Offer to be made available in HSS. That view was held not just by Ms Gratton. As I understand it, this was essentially the basis for pitching the Fixed Sum Offer in HSS at £75,000.

Possible Further Changes to HSS

4.104. During the course of Phase 7 of the Inquiry, in particular, questions were asked of Ministers, former Ministers, Departmental employees, the current and past Chairs of the Post Office, Mr Read and Mr Recaldin about whether the eligibility requirements of HSS were too narrowly drawn. In particular, the questioning focussed upon the requirement that only those who had or continued to have a direct contractual relationship with the Post Office were eligible for financial redress under the scheme. The suggestion was made to these witnesses that this eligibility requirement was unfair to two groups who may have suffered significant detriment on account of illusory losses generated by Horizon. These groups were (a) family members of postmasters and (b) employees of postmasters.

4.105. This issue was not canvassed in any significant detail during the evidence given about human impact. However, it became more prominent as the Inquiry progressed and, as I have said, the issue received considerable attention during the oral evidence given in Phase 7 of the Inquiry.

4.106. By the close of the oral evidence on 18 November 2024 the standard response to the direct question (“Are these groups going to be given financial redress in HSS or some other scheme?”) was the assertion that such matters were under consideration by Ministers. So far as I am aware that remains the position. I discuss these proposed changes further at paragraphs 6.216 to 6.228 below.

The Number and Progress of Claims and the Sums Paid

4.107. In the Progress Update, the Chair’s Statement and the Interim Report, I provided information about the number of claims made up to midnight on 27 November 2020 and between that date and 27 April 2023. In the Interim Report, I wrote that by midnight on 27 November 2020, the Post Office had received 2,417 claims which satisfied the eligibility criteria of the scheme.[102] Between 28 November 2020 and 27 April 2023, there had been 263 late claims, 242 of those claims had been assessed for eligibility and 214 had been accepted as satisfying the eligibility criteria.[103]

4.108. In his sixth and eighth witness statements, Mr Recaldin provided further evidence about the number of claims made, whether or not they satisfied the eligibility criteria, the number of offers made, the numbers of offers accepted, the stage at which settlements had been achieved and the number of claims which had been assessed (and which had not been topped-up to £75,000) and which were standard and below threshold.[104] His evidence about all those matters dealt with the position existing on 31 May 2024 and he provided updates in relation to some of the statistics as of 22 August 2024 and 30 September 2024.

4.109. By 31 May 2024, a total of 4,323 claims had been made, which had grown to 4,628 by 22 August 2024, and to 4,817 by 30 September 2024.[105] Of those 4,817 claims, all but 373 had been assessed as satisfying the scheme’s eligibility criteria, although, if my arithmetic is correct, there were also 265 claims in which eligibility had not been determined.

4.110. The Post Office had made offers to 2,720 claimants by 31 May 2024,[106] and 2,248 claimants had accepted their offers.[107] The figures for 22 August 2024 were 2,751 and 2,282 respectively.[108] By 30 September 2024, the number of claimants who had accepted offers had risen to 2,315. The number of outstanding claims was 1,864.[109]

4.111. By 31 May 2024 there had been a total of 176 good faith meetings,[110] and 53 of the claimants who had engaged in such meetings had accepted an offer made at, or subsequent to the meeting.[111] By the same date there had been 25 escalation meetings and five successful mediations.[112] There had been no claims referred to arbitration. No comparable information was made available in Mr Recaldin’s evidence for 22 August 2024 and 30 September 2024.

4.112. As of 4 September 2024, the total number of claims included approximately 50 claims from postmasters who had been prosecuted by the Post Office but not convicted of any crime.[113]

4.113. Mr Recaldin also provided evidence about the number of claims, settled and outstanding, in relation to the different categories of claims. By 30 September 2024, 505 complex claims, 1,213 standard claims and 597 BAT claims had been settled.[114] By the same date, 1,070 complex claims, 791 standard claims and three BAT claims remained outstanding.[115] It is worthy of some note that 224 of the complex claims which were then outstanding had been submitted to the Post Office in the period 1 May 2020 to 27 November 2020.[116]

4.114. In his oral evidence on 4 November 2024, Mr Recaldin told me that the number of claims which had been made had risen to 4,971; 397 of those claims had been ruled ineligible and there were 307 claims which had not then been assessed for eligibility.[117] By 4 November 2024, the number of offers made to claimants had risen to 2,792, of which 2,341 had been accepted.[118]

4.115. In the written closing submissions made on behalf of the Department dated 9 December 2024, counsel provided information about claim numbers, offers and acceptances in a slightly different form. By 29 November 2024, 4,802 eligible claims had been submitted; 3,182 offers had been made and 2,545 of those offers had been accepted.[119] That means that offers had been made in about 66% of eligible claims and approximately 80% of those offers had been accepted.

4.116. In his written and oral evidence, Mr Recaldin alerted the Inquiry to a development of considerable significance and to which I made reference at paragraph 4.66 above. He explained that the Post Office intended to notify all former and existing postmasters who had not applied to HSS (or any other scheme) that (a) there was a Fixed Sum Offer of £75,000 available in HSS and a simplified process for those who wished to make a claim for payment of that sum; (b) if they considered they were entitled to a sum greater than £75,000, they could submit a claim which would be assessed; and (c) an appeals process was to be introduced. In his witness statement dated 26 March 2025, Mr Recaldin disclosed that in October, November and December 2024, a total of 18,528 such letters were sent out.[120] By 30 January 2025, the number of claims submitted to the Post Office had risen to 8,583, of which 6,859 had been confirmed as meeting the eligibility criteria for the scheme.[121] I do not know whether as many as 1,724 claims had been declared ineligible or, more likely, a number of claims had not been considered for eligibility by that date.

4.117. I pause, at this stage, to make some observations about the written evidence provided by Mr Recaldin by 4 November 2024 and his oral evidence on that date. First, as many as 4,574 eligible claims may have been received by the Post Office although it was more likely that the accurate figure would be less (by a few hundred) once eligibility checks had been undertaken. Second, offers in settlement had been made in 2,792 of these claims. Third, there may have been no offer from the Post Office in as many as 1,782 claims, although that figure is probably on the high side. Fourth, approximately 83% of those to whom offers had been made had accepted them. However, fifth, if I assume that a total of 4,350 of the claims made by 4 November 2024 satisfied the eligibility criteria[122], it means that no more than about 64% of claimants had received offers. Sixth, there were 2,321 settlements, i.e. claims which had been agreed, and in which the claimants had been paid the agreed sum. Seventh, it follows that there were 471 claims in which payment had not been made, and/or the offer made to the claimant had not been accepted, and/ or the offer had been rejected.

4.118. In his oral evidence, Mr Recaldin confirmed that he knew of 319 claims in which offers had been made but there was a dispute between the Post Office and the claimants.[123] He did not tell me which staging post within the Dispute Resolution Procedure each disputed claim had reached. He did, however, confirm that no disputed claim had ever been referred to arbitration proceedings.[124]

4.119. During the course of his oral evidence, Mr Recaldin readily and unequivocally agreed with the suggestion put to him that the Dispute Resolution Procedure was operating far too slowly. Indeed, in his 7th witness statement he had foreshadowed this concession by issuing an apology “for this being a lengthy process”.[125]

4.120. The evidence adduced before me made it clear that at least one of the reasons for the length of the process is the practice, which has apparently become prevalent, of referring disputed issues back to the independent panel after good faith meetings, and/or escalation meetings have taken place (or, for all I know, whenever that seems to be appropriate). Such a practice does not feature in the Dispute Resolution Procedure, and I have not been provided with any convincing justification for this departure from the written Procedure or why this change has come about.

4.121. As a consequence of the evidence given as to the progress of claims, and also in the face of continuing complaints made by some claimants as to lengthy delays, earlier this year I caused further requests for evidence to be made to the Post Office pursuant to Rule 9 of the Inquiry Rules 2006.

4.122. In a request dated 23 January 2025, I asked for information as to (a) how many disputed claims had been referred to arbitration and (b) how many such claims had been determined by an arbitrator. In his 9th witness statement dated 29 January 2025 Mr Recaldin confirmed that no disputed claim had ever been referred to arbitration.[126]

4.123. In a further and much more detailed request dated 13 February 2025, the Post Office was asked to provide evidence about the numbers of resolved and unresolved claims by reference to the time periods in which they were first submitted to the Post Office. The request was made because I was very anxious to understand not just how many contentious or potentially contentious claims remained unresolved, but also, when they were first submitted. I was anxious too, to identify the stage which unresolved claims had reached in the current Dispute Resolution Procedure.

4.124. The relevant evidence as of 30 January 2025 was as follows:[127]

Claims submitted on or before 27 November 2020

4.125. 2,479 claims had been submitted, and 2,349 claims had been determined as eligible.[128] I assume that there are now no outstanding eligibility issues given the length of time since the claims were submitted. Offers in settlement had been made in 2,340 claims and accepted in 2,032. Accordingly, the Post Office had made no offers in nine claims and its offers had been rejected or remained unaccepted in a further 308 claims. 210 of these outstanding claims were “complex” and 104 claims were categorised as “standard”. A total of 203 of these claims had reached the Dispute Resolution Procedure. All of them, bar five, were at a meeting stage, i.e. either at the stage of a “good faith meeting” or at the stage of an “escalation meeting”. Only three claims were at the stage of a mediation, although in total, seven claims had been resolved by mediation at some point.

Claims submitted between 28 November 2020 and 31 December 2023

4.126. 508 claims were submitted, and 450 claims were considered eligible. Again, I assume that all eligibility issues have been determined given the time that has gone by since the claims were submitted. Offers in settlement following assessment had been made in 397 claims and there had been 288 acceptances. 105 complex claims were unresolved and there were 41 standard claims which were also unresolved. 88 claims were being dealt with in the Dispute Resolution Procedure, and all those claims were at a meeting stage. There were no claims which were the subject of mediation and no claims from this period had ever been mediated.

Claims submitted between 1 January 2024 and 31 July 2024

4.127. 1,553 claims were submitted, and 1,288 claims satisfied the eligibility criteria. I acknowledge that there may be a small number of claims in which eligibility issues remain, but I doubt whether it is a significant number. 158 claimants had received an offer following assessment, and 104 of those claimants had accepted their offers. 465 complex claims and 276 standard claims remained unresolved. There were 12 claims within the Dispute Resolution Procedure, and all those claims were at the meeting stage. There were no mediations.

Claims submitted between 1 August 2024 and 30 January 2025

4.128. 4,043 claims were submitted, and 2,772 claims had satisfied the eligibility criteria by 30 January 2025. Offers in settlement following assessment had been made in eight claims, of which two had been accepted. 125 complex claims and 166 standard claims were awaiting resolution.

4.129. It was in this period of course, that Fixed Sum Offers became a reality. In a footnote to paragraph 8 of his 10th Witness Statement, Mr Recaldin explained that by 27 February 2025, the Post Office had received 5,359 claims seeking to accept the Fixed Sum Offer.[129] Of those, offers of the Fixed Sum had been confirmed in 2,283 claims and acceptances had been confirmed in 1,712 of those claims.

4.130. There were no claims from this period in the Dispute Resolution Procedure.

4.131. Finally, I should report that Mr Recaldin provided evidence as to the period of time which has typically elapsed between entry into and exit from the Dispute Resolution Procedure. The average time for all claimants has been 69 weeks. However, on average, 62 weeks would elapse between entry into the Procedure and the completion of the good faith meeting process.

4.132. The picture which emerges from Mr Recaldin’s 10th Witness Statement is that there are large numbers, still, of standard and complex cases which remain unresolved. There are 780 complex cases and 421 standard claims which were submitted between the launch of HSS and 31 July 2024. As Mr Recaldin frankly acknowledged during the course of his oral evidence, the ability of those administering HSS to cope with the flood of claims which has been received in recent months is wholly dependent upon a very significant percentage of those claims being resolved by the Fixed Sum Offer.

4.133. As of 30 April 2025, there have been a total of 9,437 eligible claims submitted in HSS.[130] According to the information published on GOV.UK, 6,644 offers have been made, and 5,812 offers have been accepted (of which 5,725 have been paid). A total of £507m (made up of full and final awards and interim payments) had been paid out to claimants. Of that sum, £240m had been paid in Fixed Sum Offers and top-up awards. By 2 December 2024 the Post Office had paid £67m to Herbert Smith Freehills.[131]

Survey Evidence

4.134. HSS has attracted a much larger number of claimants than the other schemes with which the Inquiry is concerned. Yet comparatively, few of these claimants are Core Participants.

4.135. In these circumstances, it seemed to me to be essential that I should commission a survey so as to gather evidence from claimants in HSS about how they viewed the scheme. YouGov were appointed and it carried out its research between 18 July and 15 August 2024.

4.136. In September 2024, YouGov presented two written reports to the Inquiry – its main report and an addendum which was written in response to specific questions raised on behalf of Core Participants.[132] On 23 September 2024, Mr Gavin Ellison gave oral evidence about the contents of the reports. Mr Ellison is the Head of Public Sector and Not for Profit Research at YouGov, and he has approximately 25 years of relevant experience. A team headed by Mr Ellison worked with members of my team to produce a questionnaire which was sent to persons who had made claims in HSS. As of July/August 2024, the YouGov team had identified 3,476 eligible claimants. The questionnaire was sent to them all with a request that they complete it.

4.137. A total of 1,430 claimants completed the questionnaire in its entirety and submitted the same to YouGov.[133] It follows that the percentage of claimants completing the questionnaire exceeded 40% of those who had been canvassed. Mr Ellison’s oral evidence was that such a response rate was statistically significant. To use his words:

“The response rate to the HSS Applicant Survey is very strong, I would say to get anywhere near 50% of those invited is very strong.”[134]

4.138. The important themes to emerge from the survey were as follows.

4.139. 24% of claimants submitted claims on or before 27 November 2020 and 39% of claimants submitted their claims after October 2022.[135] 74% of the claimants received no support from anyone prior to submitting their claims. A small percentage of the claimants (9%) received legal advice before submitting claims, although a slightly higher percentage received legal advice at some stage in the application process.

4.140. 47% of claimants expressed the view that it had been hard to understand the scheme. 20% of claimants that responded found it easy to understand the scheme, and 30% found it neither easy nor hard. 57% of claimants found it hard to complete the questionnaire compared with 16% who found it easy and 25% who “were in the middle”.[136]

4.141. 39% of claimants valued their claims at less than £20,000. 73% of these claimants received an offer from the Post Office which was identical to their own valuation of their claims. Among those claimants valuing their claims at between £20,000 and £60,000, 37% received an offer from the Post Office which was identical to their claims. 8% of claimants with claims of between £20,000 and £60,000 received an offer which was higher than their own valuation. 16% of the claimants valued their claim at more than £100,000. For claimants in this category, about 26% received an offer from the Post Office which was equivalent to the claim which they had presented. Overall, the survey results established that the higher the claimant’s valuation of a claim, the less likely it would be that the Post Office would make an offer which was the same as the claim submitted.[137]

4.142. The vast majority of the claimants reported that they had not made an application for an interim payment. A significant percentage (34%) were not aware that they were entitled to make such a claim.

4.143. As I have indicated, the Fixed Sum offer of £75,000 was first announced in March 2024, i.e. about four months before the launch of the survey. 39% of claimants indicated that they would accept the Fixed Sum Offer if it were available to them. Claimants were asked how satisfied or dissatisfied they were with the Fixed Sum payment option: they were given a number of options from “very satisfied” to “very dissatisfied”. Of those who had indicated that they would make an application for a Fixed Sum payment, 36% expressed themselves as satisfied with the process as opposed to 29% who were not.

4.144. 51% of the claimants had received an offer from the Post Office, 49% had not. The vast majority of the persons who had received an offer had accepted it in full (87%) and a further 5% had accepted individual components of the offer which had been made. However, a total of 59% of the claimants who had accepted their offers expressed themselves to be very dissatisfied or fairly dissatisfied with the amount they had been offered. A mere 15% of those who had accepted the offer did so because they were satisfied with the offer.

4.145. 49% of the claimants who had received an offer were either very dissatisfied or fairly dissatisfied about the amount of information which had been provided about the offer and how it had been determined. 52% of those claimants were either very dissatisfied or fairly dissatisfied with the length of time between the making of a claim and the receipt of an offer.

4.146. A section of the questionnaire explored overall perceptions of the scheme. A total of 49% of the claimants were very or fairly dissatisfied with the scheme overall, whereas 12% of claimants were very or fairly satisfied. 48% of claimants were either very or fairly dissatisfied with the time it took from submitting a claim to the receipt of an offer. That was almost five times the percentage of claimants (10%) who were either very or fairly satisfied with the time lapse between making the claim and receipt of offer.

4.147. Finally, I note that the Executive Summary to the Main Report included a paragraph relating to suggested improvements to HSS. It read as follows:

“When asked what could be improved about the Scheme, there were three main themes: speed / efficiency; communication and transparency; and fairness and compensation. There was a sense of the process was too long, with a lack of transparency – for example the cause of certain delays or information about how cases were progressing. Some applicants surveyed believed that the amount of compensation received or offered was not sufficient, in particular to compensate for additional stress caused. However, other applicants appreciated that the Scheme meant that POL acknowledged their fault, brought the issues to light, and was an avenue to receive some compensation.”[138]