Post Office Horizon scandal redress: Unfinished business

Summary

It has been one year since the premiere of the ITV Drama Mr Bates v The Post Office. The drama attracted widespread attention to the Post Office Horizon scandal and the unacceptable length of time involved in delivering redress to victims. Some improvements have been made to the redress schemes and they are now moving faster. But not fast enough.

The most recent data published by the Government shows that just £499 million out of the £1.8 billion set aside for redress has been paid out to claimants. Seventy-two per cent of the total budget for redress has still not been paid. Worse still, the schemes are so poorly designed that the application process is akin to a second trial for victims.

To light up this injustice, the Committee held two evidence sessions in November 2024, where we questioned claimants, legal experts, Post Office Ltd officials and Government Ministers on the issues that have been encountered. Our five key recommendations to Government are:

1. Remove the Post Office from administering any of the redress schemes.

2. Up-front legal advice should be offered to claimants and paid for by the schemes’ administrators for all schemes.

3. Introduce binding timeframes for scheme administrators at each individual stage of each scheme, with financial penalties passed on to the claimant if these deadlines are not met.

4. Appoint an independent adjudicator for each scheme and empower them to provide directions and case management to ensure claimants move through the process swiftly.

5. Provide clear, strong instructions to taxpayer-funded lawyers to maximise the speed of redress, eliminate legal delays, enhance the benefit of doubt given to claimants, and publish the costs spent on lawyers for the public and Parliament to see.

1 Introduction

Background

1. Widely regarded as one of the worst miscarriages of justice in British legal history, the Horizon Scandal saw Post Office Ltd pursue sub-postmasters after errors in the Post Office’s IT System, Horizon, caused false shortfalls to show in financial accounts.¹ Post Office Ltd demanded that sub-postmasters covered these shortfalls, and caused thousands of people to be suspended, dismissed, convicted and imprisoned for theft and false accounting. Sub-postmasters suffered significant damage to their reputations, wellbeing and finances. Several took their own lives.²

Business and Trade Committee Scrutiny

2. In the last Parliament, our predecessor Committee scrutinised the Horizon scandal in March 2020 and published an interim Report on 17 February 2022.³ The Committee interrogated the issue of financial redress for affected sub-postmasters in two evidence sessions on 16 January and 27 February 2024, and published a subsequent report on 7 March.⁴ The Government of the day was wise to accept some of the Committee’s recommendations in that report, including removing Post Office Ltd from administering the new Horizon Convictions Redress Scheme and allowing those on the Horizon Shortfall Scheme who have already settled their claim to have it reviewed.⁵ But not all of our recommendations were accepted. And the delays persist.

3. After the general election, the newly formed Business and Trade Committee returned to the injustice of slow redress payments once again. We held two evidence sessions on 5 November and 12 November 2024. We heard from claimants still fighting for redress, including Sir Alan Bates, along with claimants’ lawyers; Government and Post Office lawyers; the Independent Adjudicator on the Overturned Convictions Scheme; Government Ministers; and Post Office Officials.

Overview of different financial redress schemes

4. There is no single route to financial redress for victims of the Horizon Scandal, nor is there a single body that administers the schemes. There are different schemes available to sub-postmasters and their families depending on how the scandal has affected them. These are set out in the Appendix.

2 Horizon Shortfall Scheme

5. The Horizon Shortfall Scheme (HSS) is the worst of the redress schemes. Dr Neil Hudgell told the Committee that he had a number of ‘fundamental’ concerns,⁶ and Gareth Thomas MP, Minister for Services, Small Business and Exports at Department for Business and Trade (‘the Minister’) told us that he was most worried about the HSS.⁷ As such we have put together a ten-point plan, which the Government should implement as soon as possible.

Role of Post Office Ltd

6. The Horizon Shortfall Scheme is administered by Post Office Ltd. The Committee has repeatedly expressed concern at Post Office Ltd’s involvement in providing financial redress. This is because at the height of the Horizon scandal the Post Office acted as ‘judge, jury and executioner’ when pursuing sub-postmasters.⁸ The Committee’s March 2024 report, Post Office and Horizon Redress: Instruction to Deliver, recommended that the Government immediately remove the Post Office Ltd from any involvement from delivering redress.⁹ While the Government agreed that the new Horizon Convictions Redress Scheme would be delivered by the Department for Business and Trade (‘the Department’), it did not move the Horizon Shortfall Scheme.¹⁰

7. In September 2024, the new Labour Government announced a new independent appeals process for sub-postmasters in the HSS, which enabled sub-postmasters to have their claim reviewed by the Department.¹¹ This is a welcome step, but we regret that the Government has not chosen to fully administer the Horizon Shortfall Scheme. While the Minister said that he understood the Committee’s concern, he said that taking Post Office Ltd completely out of the process would ‘undoubtedly’ slow down redress.¹² However Nigel Railton, the Interim Chair of Post Office Ltd, has since told us that Post Office Ltd should not be dealing with redress.¹³ This echoes the evidence provided to Sir Wyn Williams’ Post Office Horizon IT inquiry by the Post Office Chief Executive, Nick Read.¹⁴

8. When we questioned Post Office Ltd officials in November, they told us the speed of redress on the HSS had accelerated ‘considerably’ since February 2024.¹⁵ This is true. However, the latest figures still show that just 18 per cent of claimants who applied after 2020 have been paid. There are also 14 per cent of claimants who applied before the 2020 deadline who still have not settled their claim.¹⁶

9. One solution that Mr Railton suggested to us was for simple cases—that is, those who are claiming the fixed sum £75,000 offer—to be administered by Post Office Ltd, while complex cases going through full assessment should be considered by the Department.¹⁷ Nigel Railton also told us that Post Office Ltd is investigating ways to automate the end-to-end payment process to accelerate simple claims.¹⁸ According to modelling by Post Office Ltd, between 80 and 85 per cent of cases are expected to be simple cases.¹⁹

Providing up-front legal advice

12. The HSS does not fund legal representation for claimants prior to receiving their first offer from Post Office Ltd. Claimants and legal representatives are concerned with this arrangement, describing the lack of legal support as burdensome for claimants, who are required to complete a detailed and complex questionnaire, and then answer requests for further information without any financial support for legal advice prior to the initial offer.²⁰

13. Survey evidence submitted to Sir Wyn Williams’ Post Office Horizon IT Inquiry underscores that claimants continue to encounter difficulties navigating the Horizon Shortfall Scheme. In a YouGov survey, 47 per cent described the Scheme as hard to understand, and a further 57 per cent found it hard to complete the paperwork.²¹ Worse, claimants’ lawyers told us that, where there is legal advice, offers double.²² Jill Donnison—an HSS claimant who spoke to us in November 2024—first applied to the HSS without legal advice and considered her first offer to be fair. When she then sought legal advice, she learned that her first offer was just over a quarter of what her family had lost.²³ It is imperative that legal support is provided at the onset of the applicant’s journey at no cost to them to ensure claimants are given the offers that they are entitled to.

Stronger instruction to lawyers

15. To date, Post Office Ltd has spent £136 million ²⁴ on legal fees relating to the redress schemes, including £82 million to just one firm, Herbert Smith Freehills, for services including their legal advice on the HSS and Overturned Convictions Scheme. ²⁵ This overall legal bill is equivalent to 27 per cent of redress paid to date. ²⁶

16. This cost may help explain claimants’ experience. They have described the design of the HSS to us as not ‘user-friendly’ and ‘very legal’ in design and execution.²⁷ This is contrary to the design intention of the Horizon Shortfall Scheme outlined in evidence provided by Alan Watts of Herbert Smith Freehills, who said the HSS should allow sub-postmasters to bring claims without the need for legal advice.²⁸ Yet claimants are required to calculate and justify the basis of their calculation for various types of losses, including loss of property, opportunity and personal injury or harassment.²⁹ Once received, Post Office Ltd and the Independent Panel may then make further requests for information and supporting evidence.³⁰

17. Whether intentional or not, these requirements create unavoidable legal complexity for claimants, putting undue burden on them to satisfy Post Office Ltd’s requirements. The value for money administering the scheme is being damaged by these additional evidential burdens. More flexible and direct instruction to Post Office Ltd and Herbert Smith Freehills would cut these costs.

Speed of the Independent Panel

19. All claims submitted to the Horizon Shortfall Scheme are assessed by an independent advisory panel, comprising legal specialists, forensic accountants and retail experts. The panel assesses and recommends ‘first offers’ to claimants. The Panel’s terms of reference states that the Panel should meet once a week, with ad hoc and additional meetings to take place as required.³¹

20. Dr Neil Hudgell, a solicitor who represents Horizon Shortfall Scheme clients, told the Committee that the Panel were meeting twice a week and that they determine between five to 10 cases per sitting. Based on current throughput, he said that it would take the panel around 18 months to process the current outstanding claims.³² The Minister said that, while he hoped it will not take 18 months, he said that he was most concerned about the progress of the HSS.³³

21. Simon Recaldin, the Remediations Unit Director at Post Office Ltd who oversees the Horizon Shortfall Scheme, agreed that the process is cumbersome and slow.³⁴ He also told the Committee that Post Office Ltd recently wrote to 16,000 sub-postmasters encouraging them to apply to the HSS.³⁵ While Post Office Ltd could not give us estimates on how many of those 16,000 are likely to apply to the HSS and go through full assessment, it is a major concern that the already backlogged Independent Panel may now face thousands of new cases.

Establishing a case facilitator for the Horizon Shortfall Scheme

23. All existing schemes except the Horizon Shortfall Scheme include provision for independent and authoritative case facilitation and management. The design and movement of cases through the HSS is ‘facilitated’ by Herbert Smith Freehills, a law firm previously instructed to work on behalf of Post Office Ltd as part of the original Bates litigation and settlement. The direct involvement of Herbert Smith Freehills has been criticised, including by former Minister Kevin Hollinrake, who had described the influence of Herbert Smith Freehills as ‘unthinkable’ in view of its previous role.³⁶

24. Independent case facilitation is supposed to support parties to identify and address the barriers to communication and consideration that limit progress towards a fair and mutually agreeable settlement. This role is useful for complex or potentially contentious processes, including financial redress. In the case of the Horizon Shortfall Scheme, however, survey evidence suggests claimants are dissatisfied with the level of communication, understanding and speed within the redress process; a net 52 per cent of claimants are dissatisfied with their access to information required to make informed decisions, and a further net 48 per cent are dissatisfied with the time it took to progress their application from start to end.³⁷

25. There are 2,291 outstanding claims under the Horizon Shortfall Scheme waiting to be paid as of 29 November 2024,³⁸ and there will be an independent appeal process for settled claims.³⁹ Independent case management and facilitation support would add significant value if introduced early in the process, with a clear mandate to help rectify sources of delay and excess legal burden for claims.

26. Alongside case facilitation, the Committee welcomes the decision of the Government to introduce an independent appeals process for the Horizon Shortfall Scheme. The Committee also endorses the views put forward by the Post Office Horizon Independent Advisory Board on the need for a Scheme Reviewer to provide further oversight and direction over the appeal process,⁴⁰ noting the Advisory Board’s suggestions of a potential mandate that may include:

a. Review of the integrity of settlements under the HSS;

b. Targeted review of cases exhibiting issues arising from ‘structural concerns’ and to either remit cases to HSS panels for reconsideration, make alternative compensation awards, or make scheme-wide recommendations to solve problems;

c. A Panel or Reviewer-based appeals function with any appeals being client-led.⁴¹

Giving claimants the benefit of the doubt

28. The Horizon Shortfall Scheme’s guidance and principles sets out that for consequential losses, a claimant should demonstrate that there was at least a 50 per cent likelihood that this loss occurred as a result of a Horizon shortfall.⁴² There are a range of losses that a claimant may have faced as a result of a Horizon shortfall, such as losses to earnings or property, or as a result of physical or psychiatric harm. Claimants under the scheme are required to monetise this loss and provide a calculation showing how this amount has been quantified.⁴³

29. This requirement introduces significant complexity for claimants, owing to the time that has passed since Horizon-related incidents occurred, the personal circumstances of claimants and the expected deterioration of evidence over time. The Scheme’s guidance and principles notes that if a claimant does not have sufficient evidence, Post Office Ltd will still consider their claim.⁴⁴ The Minister also noted that the Department has instructed Post Office Ltd to be as ‘generous as it can’ with the offers that it brings forward, and that it is continuing to take advice on measures which can be taken to increase fairness and speed of redress.⁴⁵ It is therefore reasonable to re-consider whether today’s level of scrutiny of claimants’ evidence is sufficiently balanced against the objectives of the scheme and wider standards for managing public money.

Cutting down on needless requests for information

31. Requests for information under the Horizon Shortfall Scheme can be made following the submission of an application and be conducted in a manner that is ‘proportionate to the circumstances of that application’.⁴⁶ This Committee underscores two clear concerns that have been raised in evidence when referring to requests for information made under the HSS; namely, the burden placed on unrepresented claimants to answer complex requests for information about Horizon losses and the delay related to processing such requests and disclosures between claimants and Post Office Ltd.⁴⁷

32. The Department has insisted that the purpose of such requests is to increase rather than drive down the value of offers.⁴⁸ It is not clear that this principle is being realised, in practice, under a current arrangement which places significant burdens of disclosure on claimants, including those who have not sought legal advice.

Mediation route

34. Dr Hudgell raised concerns about the structure of the Horizon Shortfall Scheme and the use of the Independent Panel for challenged cases. He told the Committee that the majority of challenged first offers are being resubmitted to the Independent Panel for reconsideration. This means that disputed offers must wait once again to be reviewed by the Panel, which can take a further six months.⁴⁹

35. Dr Hudgell recommended that cases challenged by the Government should instead move into mediation, giving greater opportunity for both sides to state their case with the aim of reducing the dispute.⁵⁰ In response, Simon Recaldin said that they are moving to a system where claimants are given a choice as to whether their claim should be reassessed by the panel or go through mediation.⁵¹

Introducing legally binding timeframes

37. In February 2024, the Chair of our predecessor Committee, Rt Hon Liam Byrne MP, proposed on the Floor of the House of Commons introducing legally binding timeframes for reaching first offer and financial settlement, with financial penalties awarded to the claimant if these timeframes are missed. This followed a recommendation made by Sir Alan Bates to the then Minister for Enterprise, Markets and Small Business, Kevin Hollinrake MP.⁵² Our predecessor Committee subsequently recommended that legally binding timeframes be introduced for each stage of a redress claim, with financial penalties awarded to the claimant for failure to meet those deadlines.⁵³ We regret that the Government did not accept this recommendation, claiming that financial penalties would have no positive effect.⁵⁴

38. We raised binding timeframes for each claims process stage with witnesses during our November evidence sessions. The new Government told us that, rather than putting in place hard deadlines with penalties, they are finding alternative ways in which to speed up the process.⁵⁵ But as of November 2024, just £499 million of the £1.8 billion set aside for financial redress has been paid out across the four redress schemes. This means 72 per cent of budget for redress has still not been paid.⁵⁶ In the case of the Horizon Shortfall Scheme, 14 per cent of those who applied before the original 2020 deadline have still not settled their claim.⁵⁷

3 Group Litigation Order Scheme

Introducing binding timeframes

40. Like the Horizon Shortfall Scheme, the Committee is concerned about the slow speed of tabling final offers to claimants on the Group Litigation Order (GLO) Scheme. While the Government makes a first offer to 89 per cent of claimants within 40 days, challenged offers can be a drawn-out process. In reaction to the speed of redress on the GLO, Sir Alan Bates, who himself has not yet settled his claim, has called on the Government to complete all GLO claims by March 2025.⁵⁸ Claimants’ lawyers, however, have raised concerns that some claimants are vulnerable and may need longer to consider their offer.⁵⁹ These concerns were echoed by the Government.⁶⁰

41. The claimants’ lawyers told the Committee that they expect between 90 and 95 per cent of all claims to be submitted by Christmas 2024.⁶¹ Given that the Government are making first offers within 40 working days to 89 per cent of claimants and that claimants receive 80 per cent of their first offer if they choose to challenge it, Minister Gareth Thomas MP believes ‘substantial’ redress will be paid out on all such claims by the end of March 2025.⁶²

42. While the Committee is encouraged to hear this, it does not address the apparent delays once a first offer has been made and then challenged. As of November 2024, only 47 per cent of full and final claims in the GLO Scheme have been paid to claimants.⁶³ The Committee is therefore deeply concerned at the unacceptably slow speed with which final offers are tabled to claimants on the GLO Scheme.

Role of independent adjudicator

44. At the final stage of the GLO Scheme, after an Independent Panel has considered a case, a claimant can make an application to the Independent Reviewer, Sir Ross Cranston, if they are unhappy with the outcome of their claim. The Department also has a right to seek an independent review of the case.⁶⁴

45. The remit of the Independent Reviewer in this scheme is tightly defined. A case can only be referred to the Independent Reviewer if there are concerns of a manifest error, procedural irregularity or substantive error of principle in the Independent Panel’s final assessment of the claim; or if the Panel’s final assessment is substantially inconsistent with the scheme’s Guidance and Principles.⁶⁵

46. Concerns have been raised that the role of the Independent Reviewer in the GLO Scheme is too constrained. When the former Minister for Enterprise, Kevin Hollinrake MP, gave evidence to the Post Office Horizon IT Scandal Statutory Inquiry in November 2024, he said that on reflection, Sir Ross Cranston should have been a greater role in the GLO at the start, rather than providing ‘the back stop for a dispute.’⁶⁶ When the Committee put this to the Department, Carl Creswell—the Director of Post Office and Business Engagement—did not agree with the former Minister, and said that they are looking into whether the facilitators, Dentons—described by some of our witnesses as a ‘highly paid postbox’—should play a bigger role.⁶⁷

47. While the GLO only has an Independent Reviewer as the final stage of the scheme, both conviction-related schemes have an independent adjudicator available throughout the process. Sir Gary Hickinbottom PC is a judge who acts as the Chair of the Post Office Overturned Convictions Independent Pecuniary Assessment Panel. It was announced in our November evidence session that he has also been appointed as the Independent Adjudicator for the Horizon Convictions Redress Scheme.⁶⁸

48. Sir Gary gave evidence to this Committee explaining the powers he has in this dual role, including the power to give case management directions. In this instance, Sir Gary can give case directions if a claimant does not think that their case is moving quickly enough.⁶⁹ Sir Gary’s function in these schemes have been praised by stakeholders, with claimants’ lawyers arguing that his vast experience as a senior judge means that he is a respected figure who is able to case-manage large volumes of litigation.⁷⁰

Requests For Information (RFIs)

50. Redress under the GLO scheme is delivered in accordance with a published set of guidance and principles, the central goal and overarching principle of which is to deliver redress that is full and fair to eligible sub-postmasters.⁷¹ The guidance sets out a burden of proof on the balance of probabilities and provides for indicative bands for certain heads of loss, for example, loss of reputation.⁷²

51. Despite these principles, claimants and legal representatives have described instances where claims have been challenged by Addleshaw Goddard, the Department’s legal advisors. This was noted in oral evidence provided by claimant lawyer James Hartley from Freeths, who noted how 27 per cent of first offers to his clients made by the Department are for ‘less than half’ of what they had initially claimed.⁷³ This problem has contributed to a perception of Addleshaw Goddard as overly-forensic in assessing claims⁷⁴ and its requests for information have been cited as a contributor to delay for GLO claimants and offers which are unfair.⁷⁵

4 Horizon Convictions Redress Scheme

Informing claimants of their right to redress

53. Unlike other schemes, the Horizon Convictions Redress Scheme is still in its infancy. Despite this, the Committee is disappointed to find that there have been issues with identifying and notifying individuals that their conviction has been overturned by the Post Office (Horizon System) Offences Act 2024. This is wrong.

54. When Heidi Alexander MP—then Minister of State at the Ministry of Justice, the Department which oversees the identification of individuals in scope of the Act—appeared before the Committee in November 2024, she informed us of the difficulties her Department had experienced with discrepancies in different data sources used to identify individuals who meet the Act’s five conditions.⁷⁶

55. As well as these discrepancies, as of 5 December 2024, 31 individuals with quashed convictions and 31 individuals with potentially quashed convictions could not be contacted because the Ministry of Justice has been unable to locate them.⁷⁷ More concerning still is the Justice Minister’s admission that her Department may not have identified all individuals who may be in scope in the Act.⁷⁸

56. The Justice Minister assured the Committee that her Department would complete assessment checks on individuals by early January 2025.⁷⁹ However, given that the Act came into force in May 2024, the Committee is dissatisfied that some individuals may be waiting up to eight months to receive confirmation of their right to redress. Some individuals may never know.

57. Furthermore, the data supplied by the Ministry of Justice means it is difficult for the Committee to assess the full scale of who is eligible for redress. The Ministry of Justice publishes monthly transparency data on identified individuals. However this data only includes individuals from England and Wales.⁸⁰ While the Committee understands that Justice is a devolved matter, this fragmented and siloed way of publishing data does not give the Committee a clear and full picture of those who have had their Horizon related conviction overturned.

Remove the fear factor

59. The Horizon Conviction Redress Scheme incorporates an interim payment and fixed-sum settlement offer to claimants as an alternative to full assessment, which is a positive improvement and a lesson learned from iterating upon previous schemes. Claimants are offered an optional fixed-sum settlement of £600,000, comprising a £200,000 preliminary payment and a further final payment of £400,000.⁸¹ It is however disappointing to note that where a claimant chooses to request a detailed assessment, they then forfeit their opportunity to take the fixed-sum settlement and may ultimately receive redress of less than £600,000.⁸²

60. It is reasonable to assume that the opportunity of losing access to redress may place pressure on a claimant to take the fixed-sum settlement offer and preclude further redress which may be appropriate in their circumstances. Where claimants seek a full assessment, the uncertainty in the floor-value of redress may contribute to distress and anxiety for claimants. The Committee notes that a frequently cited reason among claimants to accept offers is because they want the process to finish.⁸³ When we spoke to Dewi Lewis, a claimant on the HCRS, he told us that he doubted that the fixed-sum offer would take into account his total losses, but he did not want to carry on fighting.⁸⁴ Many of those who do pursue full assessment do so out of persistence to realise a fair and full settlement, appropriate to their circumstances. The Department must ensure therefore, that duress and fear are eliminated from the claimant’s journey to a just settlement.

Binding timeframes

62. We have recommended to the Government that binding timeframes must be introduced for administrators of the Horizon Shortfall Scheme and the Group Litigation Order Scheme, to ensure swift redress. Currently the HCRS is in the early stages of operation so it is difficult for the Committee to ascertain the speed of the process for those who challenge their offers. However, past behaviour is the best predictor of future behaviour. Based on the issues the Committee has seen with the HSS and GLO Scheme, the Government must take swift action to ensure timeliness throughout all stages of the scheme.

5 Transparency for legal costs

64. The Department for Business and Trade provides cost transparency of the redress paid to claimants on a monthly basis.⁸⁵ This is welcomed by the Committee and provides vital transparency to Parliament and the wider public on the progress of each individual scheme in delivering fast and fair redress. However, the Committee notes the oral evidence provided by Mr Creswell which states that the Budget 2024 allocation of £1.8 billion to settle redress costs includes claimants’ lawyers’ fees. Mr Creswell further noted that the Department has ‘previously… been publishing, on a quarterly basis, legal costs spent to date’.⁸⁶ The Committee is not aware of where this information has been published outside of irregular and partial responses to parliamentary questions and freedom of information requests.

65. Using public information, the legal cost of redress is understood to be considerable; for example, Herbert Smith Freehills have so far charged £67 million in costs to administer the Horizon Shortfall Scheme, a figure equal to 27 per cent of actual redress paid out to claimants by 29 November 2024 and over £26,600 per claim paid under the scheme.⁸⁷ It is important that legal cost transparency is provided to ensure proper parliamentary scrutiny of the costs of redress and enable further administrative effort to reduce, where practical and appropriate, extraneous legal expenditure detrimental to claimants and value for money.

Conclusions and recommendations

Horizon Shortfall Scheme

1. Despite repeated criticism from this Committee, Post Office Ltd is still in charge of the Horizon Shortfall Scheme. While the Committee welcomes that the appeals process will be administered by the Department for Business and Trade, swift action must be taken to deal with the thousands of claimants who still have not been given the redress that is owed to them. Sub-postmasters do not want Post Office Ltd to deal with redress and neither does Post Office Ltd itself. Post Office Ltd should not be deciding on what financial redress is owed to victims of its own scandal. The Government must finish the job in hand and remove Post Office Ltd from the Horizon Shortfall Scheme. (Recommendation, Paragraph 10)

2. If the Government is not able to do this for all claims in a timely way, Post Office Ltd must in the first instance transfer complex cases—that is, cases that are going through full assessment—for the Department to administer. For claimants who choose to take the fixed sum offer, Post Office Ltd must continue to take swift action and find solutions to automate case processing. Post Office Ltd should provide regular updates to the Committee on the progress of this. (Recommendation, Paragraph 11)

3. Horizon Shortfall Scheme claimants currently receive no legal advice to help complete the complex questionnaire that acts as the gateway to the scheme. This acts against them receiving the full redress they are due. We recommend HSS claimants be given access to no-cost legal advice to support their entry into the scheme. (Recommendation, Paragraph 14)

4. The gold-plated legalistic process of the Horizon Shortfall Scheme is not best value for the public purse. The Government should therefore ensure that Herbert Smith Freehills and Post Office Ltd are instructed to use best endeavours to simplify and accelerate the settlement of claims. (Recommendation, Paragraph 18)

5. The Committee has learned that it will take around 18 months for the Independent Panel to assess outstanding claims on the Horizon Shortfall Scheme. We have also learned that the Post Office are expecting thousands of new cases to come forward. A panel central to the process that assesses all claims meeting twice a week will not deliver swift justice for sub-postmasters. The Independent Panel must be resourced to meet full time until the majority of first offers have been issued. (Recommendation, Paragraph 22)

6. Claimants under the Horizon Shortfall Scheme lack the same access to authoritative facilitation and case management direction available to claimants in other schemes. This can be remedied by introducing an empowered case facilitator similar to the role played by the Sir Gary Hickinbottom for Overturned Convictions. We recommend that the Department and Post Office Ltd establish such roles, agreeing their functions with claimants and their legal representatives. (Recommendation, Paragraph 27)

7. The Department should work with Post Office Ltd and claimants’ representatives to establish an independent case facilitator with a defined role in assessing whether it is reasonable to subject a claim’s basis of calculation to further scrutiny through requests for information. When requests for information are considered reasonable, it should take no longer than 20 working days to be sent to the claimant from the submission of a claim. (Recommendation, Paragraph 30)

8. Requests for information under the Horizon Shortfall Scheme should only be made where it is deemed reasonable to increase the offer value to claimants, or in the rare instance where there may be reasonable concern about a claim’s basis of calculation. Where redress offers are calculated in-line with indicative bands or redress guidelines, we recommend that offers should be made at or above the top-end of such indicative limits. An independent case facilitator should be established with a role—on appeal by claimant representatives—in swiftly considering whether a request for information is reasonable for the above purposes. (Recommendation, Paragraph 33)

9. The Independent Panel on the Horizon Shortfall Scheme is already backlogged. To keep cases moving, disputed first offers to claimants must not be reassessed by the Independent Panel but instead move straight into external mediation. (Recommendation, Paragraph 36)

10. Sub-postmasters should not be left in limbo, waiting years for the redress that they are due with no light at the end of the tunnel. Ongoing delays are unacceptable and action must be taken to rectify this. The Committee reiterates the recommendation of its predecessor—binding timeframes for each stage of the Horizon Shortfall Scheme process must be introduced to draw this saga to a close. To ensure that claimants are not adversely impacted, timeframes should only be imposed on the administrators of the scheme, so that claimants have the time they want to consider their positions. (Recommendation, Paragraph 39)

Group Litigation Order Scheme

11. The Committee welcomes that the majority of first offers for the Group Litigation Order Scheme will be complete by March 2025. This, however, does not address the time it takes between first offer and final payment. Sub-postmasters have waited long enough. The Government should aim wherever possible to complete Group Litigation Order redress claims by March 2025 as suggested to us in evidence from Sir Alan Bates. We know that this will not be possible for some claims due to the complexity of the claim or the vulnerability of claimants, so the Government must introduce binding timeframes at each stage of Group Litigation Order Scheme, with financial penalties awarded to the claimant if these timeframes are not met. As with the Horizon Shortfall Scheme, timeframes should only be imposed on the Government side, giving the sub-postmaster ample time to consider their position. (Recommendation, Paragraph 43)

12. It is disappointing that the Department does not believe the Independent Reviewer should be given a greater role in the Group Litigation Order Scheme, despite the former Post Office Minister confessing that it was a mistake not to do so. Sir Ross Cranston is a former High Court Judge with a wealth of experience that is not being used to the full. The Government should give the Independent Reviewer greater powers to case manage Group Litigation Order claims throughout the whole process. (Recommendation, Paragraph 49)

13. The Department should ensure that offers to claimants are delivered at or above the top-end of the illustrative redress bands and guidance established under the guidance and principles of the Group Litigation Order scheme. Further requests for information should only be made in order to increase the offer value to claimants, or in the rare instance where there may be reasonable concern about a claim’s basis of calculation. A claim’s named case facilitator should have a defined role in swiftly considering whether a request for information is reasonable for the above purposes. (Recommendation, Paragraph 52)

Horizon Convictions Redress Scheme

14. While it is reassuring that the Government have put a timeframe on completing eligibility checks, we are concerned that some individuals may never know of their right to redress. The lack of data published means it is difficult for the Committee to fully scrutinise progress of this scheme across all Home Nations. The Government must set out a plan for how it will notify postmasters in scope of the Act of their right to redress plus timeframes in which these issues will be resolved. The Government must also update the Committee monthly with the following data, broken down by England and Wales, Scotland and Northern Ireland:

a. How many people are under consideration as qualifying for remedies under the Post office (Horizon System) Offences Act 2024 and the Post Office (Horizon System) Offences (Scotland) Act 2024.

b. How many people have been confirmed as qualifying for the reliefs specified by the Acts.

c. The number of people who have been written to about their right to redress.

d. How many people that have been paid under the Horizon Convictions Redress Scheme.

e. The total amount that has been paid to claimants under the Horizon Convictions Redress Scheme, and the total cost of administering the scheme. (Recommendation, Paragraph 58)

15. The Department should act swiftly to remove the fear factor from the Horizon Conviction Redress Scheme, ensuring that the redress offered under a full assessment settlement is never valued at below the optional fixed-sum redress which was initially available to a claimant. It should further communicate this change to current claimants and consider whether undue pressure may have formed a part of the decision of some settled claimants to opt out of a full assessment. The approach established under this recommendation for fixed-sum settlement offers should be applied as a matter of general principle across all schemes. (Recommendation, Paragraph 61)

16. The Government must introduce binding timeframes for administrators at each stage of the process under the Horizon Convictions Redress Scheme, with financial penalties awarded to the claimant if these deadlines are not met. As with the Horizon Shortfall Scheme and Group Litigation Order Scheme, these timeframes should only be applied on the Government’s side so that claimants have the space and time needed to consider their offer. (Recommendation, Paragraph 63)

Transparency for legal costs

17. The Department should publish a regular transparency report detailing external legal costs incurred under all schemes. It is important that the report is produced in a manner that minimises the potential for wider confusion about the basis under which legal costs are billed, distinguishing the cost of disbursements incurred by firms where possible. Where separation of cost categories is not possible, the Department should provide a clear and accessible summary of the meaning and limitations of the data provided. (Recommendation, Paragraph 66)

Appendix: The Redress schemes

Horizon Shortfall Scheme

1. The Horizon Shortfall Scheme (HSS) offers redress for current and former sub-postmasters who had to cover financial shortfalls that arose from errors in the Horizon System, but who were either not convicted or did not take the Post Office to the High Court (See ‘Group Litigation Order Scheme’ below).⁸⁸ Claimants can either settle their claim on a full and final basis for a total fixed sum of £75,000, or they can choose to have their claim fully assessed if they think they are entitled to more.⁸⁹ The Scheme is administered by Post Office Ltd.⁹⁰

Group Litigation Order Scheme

2. The Group Litigation Order Scheme (GLO Scheme) is for those who were part of the group who took the Post Office Ltd to the High Court via a Group Litigation Order.⁹¹ It is only open to sub-postmasters who were part of this GLO action and who do not have a Horizon-related conviction.⁹² Like the HSS, eligible claimants can either settle for £75,000 or go through full assessment. The Scheme is administered by the Department for Business and Trade.⁹³

Horizon Convictions Redress Scheme (HCRS) and Overturned Convictions

3. The Horizon Convictions Redress Scheme (HSCRS) and Overturned Convictions (OC) are two schemes open to sub-postmasters who have had a Horizon-related conviction. The HCRS is open to those who have had their conviction overturned by legislation and OC is open to those who have had their conviction overturned by the courts. For both schemes, claimants can opt for an up-front £600,000 offer or they can choose to have their claim fully assessed. HCRS is administered by the Department⁹⁴ and OC is administered by Post Office Ltd.⁹⁵

Formal Minutes

Tuesday 17 December 2024

Members present:

Liam Byrne, in the Chair

Antonia Bance

John Cooper

Sarah Edwards

Alison Griffiths

Charlie Maynard

Gregor Poynton

Joshua Reynolds

Matt Western

Rosie Wrighting

Post Office and Horizon scandal redress: Unfinished business

Draft Report (Post Office and Horizon scandal redress: Unfinished business), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 66, as amended, read and agreed to.

Summary agreed to.

Appendix agreed to.

Resolved, That the Report be the First Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Adjourment

[Adjourned till Tuesday 7 January at 2.30pm]

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Tuesday 5 November 2024

Sir Alan Bates, Founder, Justice for Subpostmasters Alliance; Jill Donnison, Claimant from the Horizon Shortfall Scheme; Dewi Lewis, Claimant from the Horizon Convictions Redress SchemeQ1–44

Dr Neil Hudgell, Executive Chair, Hudgell Solicitors; James Hartley, Partner, Freeths; David Enright, Partner, Howe & CoQ45–85

The Rt. Hon. Sir Gary Hickinbottom PC, Chair, Post Office Overturned Convictions Independent Pecuniary Assessment PanelQ86–95

Tuesday 19 November 2024

Gareth Thomas MP, Minister for Services, Small Business and Exports, Department for Business and Trade; Carl Creswell, Director, Post Office and Business Engagement, Department for Business and Trade; Heidi Alexander MP, Minister of State, Ministry of Justice; Ed Lidington, Director, Courts, Criminal and Family Justice Directorate, Ministry of JusticeQ96–194

Mark Chesher, Partner, Addleshaw Goddard; Rob Francis, Partner, Dentons; Alan Watts, Partner, Herbert Smith FreehillsQ195–227

Nigel Railton, Interim Chair, Post Office Ltd; Simon Recaldin, Remediations Unit Director, Post Office LtdQ228–263

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Footnotes

1 “Post Office scandal explained: What the Horizon saga is all about” BBC news, 30 July 2024.

2 Explanatory Notes to The Post Office (Horizon System) Compensation Bill, Bill 16 of 2023–24, para 3.

3 Business, Energy and Industrial Strategy Committee, Eighth Report of Session 2021–22, Post Office and Horizon - Compensation: interim report, HC 1129.

4 Business and Trade Committee, Third Report of Session 2023–24, Post Office and Horizon redress: Instruction to deliver, HC 477.

5 Business and Trade Committee, Third Report of Session 2023–24, Post Office and Horizon redress: Instruction to deliver, HC 477.

6 Q62

7 Q113

8 During the scandal, the Post Office used its own investigation branch to bring private prosecutions against its staff. It did this under the general right in English law for individuals and organisations to pursue private prosecutions without using the Crown Prosecution Service. For more information, please see “Post Office scandal puts private prosecutions in dock,” Financial Times, 11 January 2024.
Business, Energy and Industrial Strategy Committee, Eighth Report of Session 2021–22, Post Office and Horizon – Compensation: interim report, HC 1129, para 48.

9 Business and Trade Committee, Third Report of Session 2023–24, Post Office and Horizon redress: Instruction to deliver, HC 477, para 8.

10 Business and Trade Committee, Fourth Special Report of Session 2023–24, Post Office and Horizon redress: Instruction to deliver: Government Response to the Committee’s Third Report, HC 738, para 1.

11 Department for Business and Trade press release, New independent appeals system for postmasters impacted by Horizon scandal, 9 September 2024.

12 Q181

13 Q229

14 Post Office Horizon IT Inquiry, Transcript of Nicholas Read oral evidence, 11 October 2024.

15 Q238

16 Department for Business and Trade, Post Office Horizon financial redress data as of 29 Novemebr 2024, 3 December 2024.

17 Q231

18 Q235

19 Q233

20 Q224

21 YouGov, Horizon Inquiry: Phase 7 Surveys.

22 Q64

23 Q16

24 Includes VAT

25 Letter from Post Office Ltd’s Remediation Unit Director Simon Recaldin regarding Post Office financial redress, 2 December 2024.

26 As of 29 November, £245 million has been paid to claimants on the HSS: Department for Business and Trade, Post Office Horizon financial redress data as of 29 November 2024, 3 December 2024.

27 Q15

28 Q224

29 Post Office, Horizon Shortfall Scheme: Consequential Loss Principles and Guidance.

30 Post Office, Horizon Shortfall Scheme: Condequential Loss Principles and Guidance, para 4.1.1.

31 Post Office, Horizon Shortfall Scheme: Terms of Reference of the Horizon Shortfall Scheme Independent Advisory Panel, para 13.

32 Q62

33 Q147

34 Q255

35 Q251

36 Simon Lock, UK MPs File SRA Complaint Against HSF Over Role in HBOS Fraud Scandal, Law.com, 6 July 2024.

37 YouGov, Horizon Inquiry: Phase 7 Surveys, page 67.

38 Department for Business and Trade, Post Office Horizon financial redress data as of 29 Novemebr 2024, 3 December 2024.

39 Post Office, The Horizon Shortfall Scheme, see independent appeals process

40 Department for Business and Trade Horizon Compensation Advisory Board, Report of eighth meeting held on 25 October 2023.

41 Department for Business and Trade Horizon Compensation Advisory Board, Report of ninth meeting held on 29 November 2023

42 Post Office, Horizon Shortfall Scheme: Consequential Loss Principles and Guidance, para 3.1.1.

43 Post Office, Horizon Shortfall Scheme: Consequential Loss Principles and Guidance.

44 Post Office, Horizon Shortfall Scheme: Consequential Loss Principles and Guidance, para 3.1.2.

45 Q139

46 Post Office, Horizon Shortfall Scheme: Terms of Reference, para 5.

47 Q63

48 Q156

49 Q66

50 Q66

51 Q255

52 HC Deb, 26 February 2024, col 42 [Commons Chamber]

53 Business and Trade Committee, Third Report of Session 2023–24, Post Office and Horizon redress: Instruction to deliver, HC 477, para 14.

54 Business and Trade Committee, Fourth Special Report of Session 2023–24, Post Office and Horizon redress: Instruction to deliver: Government Response to the Committee’s Third Report, HC 738, page 3.

55 Q179

56 Department for Business and Trade, Post Office Horizon financial redress data as of 29 November 2024, 3 December 2024.

57 Department for Business and Trade, Post Office Horizon financial redress data as of 29 November 2024, 3 December 2024.

58 Q7

59 Q55

60 Q171

61 Q55

62 Q171

63 Department for Business and Trade, Post Office Horizon financial redress data as of 29 November 2024, 3 December 2024.

64 Department for Business and Trade, GLO Compensation Scheme Guidance and Principles, section 3.6.

65 Department for Business and Trade, GLO Compensation Scheme Guidance and Principles, section 3.6.

66 Post Office Horizon IT Inquiry, Transcript of Kevin Hollinrake and Carl Creswell oral evidence, 6 November 2024 2024.

67 Qq158–164

68 Q148

69 Q86

70 Q83

71 Department for Business and Trade, GLO Compensation Scheme Guidance and Principles.

72 Department for Business and Trade, GLO Compensation Scheme Guidance and Principles, section 4.

73 Q47

74 Q49

75 Q46

76 Q99

77 Ministry of Justice, Quashed convictions management information: 5 December 2024.

78 Qq102–103

79 Qq108–109

80 Ministry of Justice, Post Office (Horizon System) Offences Act 2024: quashed convictions management information.

81 Department for Business and Trade, Horizon Convictions Redress Scheme (HCRS): applying for financial redress, section 4.

82 Department for Business and Trade, Horizon Convictions Redress Scheme (HCRS): applying for financial redress, option 2.

83 YouGov, Horizon Inquiry: Phase 7 Surveys, page 65.

84 Q42

85 Department for Business and Trade, Post Office Horizon financial redress data for 2024.

86 Q176

87 Letter from Post Office Ltd’s Remediation Unit Director Simon Recaldin regarding Post Office financial redress, 2 December 2024.

88 Department for Business, Energy and Industrial Strategy, Government supports postmasters impacted by Horizon scandal by providing funding for late applications to Historical Shortfall Scheme, 6 October 2022; Post Office, Horizon Shortfall Scheme Eligibility Criteria, updated July 2023.

89 HC Deb 13 March 2024 c312

90 Post Office, The Horizon Shortfall Scheme.

91 Department for Business and Trade, GLO compensation scheme guidance and principles, para 2.1.3; Explanatory Notes to The Post Office (Horizon System) Compensation Bill, Bill 16 of 2023–24, para 4; HC Deb 26 February 2024 c37

92 Department for Business and Trade, GLO compensation scheme guidance and principles, para 2.1.3; Explanatory Notes to The Post Office (Horizon System) Compensation Bill, Bill 16 of 2023–24, para 4; HC Deb 26 February 2024 c37

93 Department for Business and Trade, The GLO Compensation Scheme: questions and answers.

94 Department for Business and Trade, Horizon Convictions Redress Scheme (HCRS): applicant information.

95 Post Office, Overturned Convictions and financial redress: information on progress.