Post Office and Horizon

We are deeply disappointed that the 555 group action litigants, who took the Post Office Ltd. (POL) to court and who exposed the Horizon scandal, should be worse off than other victims of Horizon who would otherwise not be in a position to make claims. It is a perverse situation that the prolonged legal proceedings and the resulting delay to POL’s decision to settle have reduced the compensation the 555 were entitled to. Both the Post Office Ltd. and the Minister accept that this is unjust. We agree with the POL CEO, Nick Read, that it will be impossible for the POL to move forward until this issue is fully addressed. Our view is that the responsibility for addressing this injustice lies with the Government. Consideration should be given to recompense the legal fees of the 555 as an initial payment whilst full determination is considered.

We demand that the Government as a matter of urgency commit to ensuring that the 555 are fully compensated for all of their losses on the same basis as other victims of this scandal receiving compensation. (Paragraph 17) Prosecuted Sub-postmasters and ‘unsafe’ convictions

We are deeply concerned that, despite the efforts that the Post Office Ltd. (POL) has made to contact them, so few sub-postmasters have approached POL to begin the process of overturning ‘unsafe’ Horizon convictions. POL has conceded that this might be to do with the trauma caused by the Horizon scandal and the Minister accepted that it might also be related to mistrust of POL and the Government. Those directly affected by the scandal and those representing them have also pointed to a clear lack of trust between themselves and POL. If this scandal is to be addressed, it is crucial that all its victims receive justice.

We recommend that the Government urgently set up an independent intermediary body as a trusted first point of contact for those wrongly convicted because of Horizon, in particular for the 576 convicted sub-postmasters who have not yet come forward. The independent body should be appropriately resourced to support these victims to begin the process of overturning convictions and seeking the compensation they are entitled to. POL and BEIS should co-operate fully with this body. It is crucial that, if such a body should be established, it has proper engagement with the sub-postmaster community and their representatives.

The Government must confirm how long it expects it to take for final settlements to be made to sub-postmasters after they have received their interim payments. The Government should set out what criteria they are using to determine final payments, alongside indicative examples of what claimants can expect in terms of overall compensation, which should include compensation for consequential losses.

We recommend that the Government provides monthly updates on the number of interim payments made, the number of final payments made, and the range of Post Office and Horizon - Compensationn interim report 23 amounts paid out to reach full, fair and final settlements. Because of the nature of the Horizon scandal, transparency on these issues is crucial to restoring trust.

We are concerned that some sub-postmasters have been denied interim compensation payments despite having had their convictions overturned. The Post Office Ltd. (POL) and the Minister noted that this is because the reliability of Horizon evidence is not central to those individual claimants’ cases. The Horizon story has centred to a large extent on a lack of transparency and trust. It is imperative that POL decisions on compensation are scrutinised by BEIS and are open and transparent.

We recommend that the Government provides regular updates when compensation is refused for sub-postmasters who have had their convictions overturned, the reasons for this and if subsequent compensation is sought and awarded. The Government should ensure that POL provide us with details of the mediation for those seeking compensation after overturning a conviction, including the process, how independence is achieved, the numbers using it, and what the outcomes have been. We also recommend that BEIS explains its role in signing off this mediation process and the nature of the oversight that it and UK Government Investments (UKGI) are providing. (Paragraph 29) The Historical Shortfall Scheme

We are concerned that a firm involved with the discredited HBOS Reading scandal is involved with the Historical Shortfall Scheme, and that the Post Office Ltd. (POL) CEO was unaware of the issues surrounding the HBOS compensation scheme. Though Herbert Smith Freehills may have experience in establishing such schemes we are not reassured by the Minister or the POL CEO’s arguments that the issues associated with the HBOS scheme do not necessarily question their role in the Historical Shortfall Scheme.

In responding to this report, we expect the Government to explain how the Historic Shortfall Scheme differs from the HBOS Reading scheme and what safeguards have been built in to avoid the problems that the latter scheme experienced.

Offers to claimants should only be full and final where claimants have received independent advice and have exhausted their rights to recourse to the Historical Shortfall Scheme’s alternative dispute resolution (ADR) process. We ask the Government to seek clarity from the Post Office Ltd. (POL) on the basis on which offers are made, in particular whether claimants were aware before agreeing to take part in the Scheme of its terms of reference and methodology and what rights, if any, were waived.

We ask POL to explain how it ensures that the ADR process is fully independent from the Scheme, how many claimants have used it, and what the outcomes have been. We also recommend that the Government provide us with details of BEIS and UKGI’s oversight role in the Scheme’s ADR process. We specifically note that 22 offers have been turned down by claimants and we recommend that the 24 Post Office and Horizon - Compensationn interim report Government confirm whether these rejections ended up in the Scheme’s ADR process and, if so, what the outcomes are. We recommend that BEIS explains its role in assessing those offers that have been rejected.

Bearing in mind the nature of the Horizon scandal—including the deep mistrust of its victims of the Post Office Ltd. (POL), BEIS and UKGI, its historical nature and issues surrounding the availability of records and a flawed IT system—we would have expected very careful engagement with those who would be expected to use the Historical Shortfall Scheme. It was imperative that those using the Scheme, often without access to legal or expert support, were put at the heart of the process.

In response to this report, POL and BEIS should provide details of who was consulted in drawing up the Scheme, what issues were raised by those consulted, and how those issues were addressed. We also recommend that POL and BEIS set out what opportunities were given to claimants to raise concerns after the Scheme was opened and how those concerns were addressed.

It is imperative that any victim of the Horizon scandal receives compensation that puts them back in the position they would have been in had the scandal not occurred, whilst also taking accounting of the distress the scandal caused them. We are therefore troubled by the suggestion that the Historic Shortfall Scheme will pay out little in consequential losses to the severe detriment of the claimant. The Government must explain how consequential losses will be assessed under the Scheme with a range of indicative examples that draw on offers that have already been made.

We share concerns about the process by which claims to the Historic Shortfall Scheme are assessed and then reviewed by the Independent Panel. Bearing in mind that the Post Office (POL) bears a major part of the responsibility for the Horizon scandal, it seems perverse that POL is making initial recommendations regarding claims.

The involvement of POL in any part of the Scheme is questionable because of the history of the Horizon scandal. It is worth remembering that a key criticism made of POL at the height of the scandal was that effectively it acted as judge, jury and executioner when deciding on convictions of sub-postmasters.

We recommend that that the Government in consultation with POL set out the reasons for involving POL in assessing claims, how this was discussed with stakeholders and how they dealt with any concerns stakeholders may have raised regarding POL’s involvement. We also recommend that POL set out what steps have been taken to ensure independence, including how robust challenge is achieved and the numbers of initial recommendations rejected or amended by the Independent Panel. We further recommend that Government explains how BEIS and UKGI are providing oversight of the Scheme with practical examples of how, if at all, it has intervened to ensure independence.

We are disappointed that so few claims have been processed by the Historic Shortfall Scheme considering it was closed over a year ago. The conclusion of only 30% of Post Office and Horizon - Compensationn interim report 25 claims does not represent significant progress. There is a danger that every delay will lead to many sub-postmasters continuing to suffer financially while more may sadly die before they receive justice because of the age profile of the victims.

The fact that the Post Office and BEIS officials admitted that they underestimated the number of potential claims is telling and indeed, troubling, and suggests that they may not have appreciated the true extent of the Horizon scandal. We acknowledge that the Post Office and the Minister expect to have processed the vast majority if not all claims by the end of 2022. The Minister and his officials have confirmed that the UKGI representative on the Post Office Board and the BEIS’s Post Office Team will hold Post Office Ltd.’s “feet to the fire”. Both BEIS and UKGI should be held accountable for this oversight role.

We recommend that the Government ask POL to set out and share stretching monthly targets and outturns on how the backlog of claims is being addressed. We also recommend that BEIS and UKGI in their oversight role give monthly updates on what actions they are taking to ensure these targets are agreed and met.

It is worrying to hear that many of the claims awarded so far may be towards the low end of the compensation scale. To dispel any fears that Horizon victims are not being compensated fairly we recommend that the Government ask the Post Office to provide information showing the spread of average claims paid out so far with a commitment to sharing such details going forward to ensure transparency and trust in the Scheme. We also recommend that the Government is explicit about how BEIS and UKGI are providing oversight of the appropriateness of offers made to claimants.

The absence of records held by the Post Office Ltd. (POL) and other relevant organisations, such as HMRC, DWP and the Royal Mail Group, along with an absence of local suspense accounts for individual POL branches, raises serious questions as to how victims of Horizon are supposed to identify and evidence the losses they suffered. POL and BEIS told us that the Historic Shortfall Scheme’s Independent Panel would take this into account when assessing claims.

We recommend that POL shares details, with relevant examples, of how it takes the absence of information into account when it makes its initial recommendations for claims and how the Independent Panel reflects on such cases. We recommend that POL sets out how many claims have been refused by the Scheme or rejected by claimants, where an absence of information has been relevant. We also recommend that BEIS and UKGI confirm what safeguards it agreed when signing off the Scheme for cases were there was a lack of records.

We ask the Government to confirm that the burden of proof should not rest solely with the claimant, not least because POL itself hasn’t kept appropriate records, including itemisation of which postmasters paid what amounts to individual suspense accounts. The fact these funds were merely added to the overall profits of the Post Office during those applicable years should be sufficient to agree that claimants must be given a significant level of benefit of the doubt when compensation is being calculated.

It is deeply troubling, given the historical nature of Horizon, its complexity as a flawed IT system and in many cases a lack of records, that some claimants seem 26 Post Office and Horizon - Compensationn interim report to be preparing claims and accepting offers without appropriate legal and forensic accounting support. If claimants accept offers that have not fully covered their losses, this in itself is a scandal, and justice will not be done.

We recommend that the Government liaise with the Post Office to establish how many of the 2,500 claimants have been offered support through the Scheme, at which point support was offered, if costs were covered, how much was paid on average, and what the nature of that support was and who provided it. We also recommend that BEIS and UKGI set out what oversight they provided of any support that was given through the Scheme, how they ensured that it was independent and how it was evaluated.

We have recommended in this Report that the Government set up a properly resourced independent intermediary to assist sub-postmasters seeking to overturn convictions and seek compensation. We recommend that this same body should also be tasked with assisting sub-postmasters who are accessing the Historic Shortfall Scheme. This should include providing claimants with access to forensic accountants and legal experts who can offer advice to help ensure that claims are as robust as possible, that offers take account of all the losses suffered and that claimants do not suffer significant detriment because records have not been kept by the Post Office or other relevant organisations.

We look forward to receiving estimates from BEIS of the total expected cost of the Horizon scandal and a full breakdown, including any costs paid by the Post Office Ltd. (POL) itself. We also look forward to seeing the Government’s estimate of how much it would cost to reach a fair settlement with the 555, which we have recommended. We were surprised to discover that in December 2021 BEIS had identified a £685.6 million direct grant to POL for the Post Office Historical Matters subsidy scheme and that this was not referenced in evidence to our Committee. The Government must explain whether this direct grant is to cover the whole estimated cost of the Horizon scandal and whether this includes money assigned for achieving a fair settlement with the 555. (Paragraph 72) Post Office and Horizon - Compensationn interim report 27