Recommendation 18

HM Government · verbatim extract Acknowledged

The Government accepts the Committee’s recommendation. In establishing the Historical Shortfall Scheme, the Post Office was determined to ensure that all those impacted received full, fair and final compensation. Independence is built into the foundations of the Historical Shortfall Scheme via the Independent Advisory Panel and the Scheme is overseen by BEIS with the support of UKGI. Involvement of Post Office The involvement of the Post Office in assessing claims arose from the Group Litigation Order settlement, which required the Post Office to establish and administer a scheme to deal with shortfalls which relate to previous versions of Horizon (sometimes referred to as Legacy Horizon, Horizon Online or HNG-X) for postmasters who were not part of the Group Litigation Order settlement. The Government believes that the Post Office cannot fully move on until it has righted the wrongs of the past and that it is therefore appropriate that the Post Office itself takes responsibility for making amends to the postmasters affected by the Horizon IT issues and that the Government holds it to account for doing so in a fair and consistent manner. The Government agrees that it is also right, for the reasons outlined by the Committee, that the Post Office itself is not the judge and jury in assessment of individual claims. Claims in the Historical Shortfall Scheme are assessed using Case Assessment Principles, which set out the underlying legal principles which will be applied to ensure consistency of approach, as explained in the response to Recommendation 10. As highlighted in that response, these Case Assessment Principles were approved by a Director-level Steering Committee in BEIS before the first offers could be made. The first stage of assessing a claim involves an independent Legal Case Assessment by Herbert Smith Freehills. This takes into account the information provided in the application and the shortfall analysis information provided by the Post Office from its branch and historical record sources. Herbert Smith Freehills’ initial assessment is passed to the Independent Advisory Panel which includes experts from the retail, forensic accountancy and legal sectors, who review the initial assessment and the facts of the application. The Independent Advisory Panel can request further information or recommend an offer be sent to the postmaster based on its assessment of the evidence. As noted previously, Herbert Smith Freehills’ role is to assess claims purely against legal principles and present options for the Panel to consider quantum of compensation. The Panel can then also exercise its discretion to recommend what it believes to be a ‘fair offer’ when considering the facts of the case in the round. Government supports the Panel in this approach. As of 5 April 2022, there have been no cases where the Post Office has offered an applicant less than the Panel has recommended. Oversight from BEIS and UKGI BEIS Steering Committee’s oversight of Herbert Smith Freehills’s recommendation to the Independent Advisory Panel and the final offers subsequently recommended by the Panel is supported by an anonymised weekly case review process. The purpose of this is to check that the assessments and recommended offers are consistent with the Case Assessment Principles, and to identify any cases that require discussion and/or approval. BEIS, supported by UKGI, has oversight of the pipeline of cases being submitted to the Independent Advisory Panel, as well as of the subsequent decisions made by the Panel. Through this governance framework, the BEIS Steering Committee has challenged Herbert Smith Freehills and the Post Office on various issues, including how to treat unquantified claims. As an example, in March/April 2021, BEIS challenged the Post Office’s proposed approach to investigating shortfall claims. As a result, the Post Office amended its approach and opted for a ‘tailored investigation’ approach based on the evidence from claims that were fully investigated. The BEIS Steering Committee has a right of approval over all offers made by Post Office to applicants, and reviews Independent Advisory Panel recommendations that fall within a ‘review criteria’ range; this includes, for example, complex claims above a certain value, or cases where the Independent Advisory Panel’s recommendation differs materially from the options presented in Herbert Smith Freehills’s Legal Case Assessments. The BEIS Steering Committee can also sample a proportion of cases on a regular basis. However, BEIS officials are extremely mindful of the need to preserve the Panel’s independence, and therefore any intervention once a Panel recommendation has been made would be focussed on ensuring the Case Assessment Principles are being applied. The case review framework enables BEIS and UKGI officials to have sight of the more complex or potentially contentious cases, in an anonymised form, as they move through the case preparation stages. This prov