Chair’s interim report calls for action from Government to resolve compensation issues for sub-postmasters
Recommendations made to encourage full and fair compensation
In an interim report laid before Parliament today, Sir Wyn Williams has called for action and legislative change to resolve issues blocking full and fair compensation being delivered to sub-postmasters affected by the Horizon scandal. He also calls for a strengthening of the Horizon Compensation Advisory Board and more clarity around the tax treatment of compensation.
The Chair of the Post Office Horizon IT Inquiry decided to bring forward his investigation of compensation issues from Phase 5 of his Inquiry, after hearing human impact testimony from former sub-postmasters and others around the UK* about the suffering and financial loss that they endured. In a foreword, he writes: “Such evidence left me in no doubt that there was a compelling need to provide compensation to all those who had suffered loss and damage which properly reflected their pecuniary and non-pecuniary losses.”
The recommendations made today under s24(3) of the Inquiries Act 2005, follow four hearings the Chair has convened on the issue of compensation, and two written updates. Sir Wyn acknowledges progress by the Government in response to concerns he has raised previously but makes formal recommendations today due to persisting concerns.
In his report, the Chair points to commitments by numerous representatives of the Post Office and Government over a period of nearly three years to provide compensation which is “full and fair”. He said he does not consider there is any valid legal reason why the Government and the Post Office cannot give effect to these commitments.
Sir Wyn says the commitment must apply with equal force to the compensation payable under all three schemes – the Historical Shortfall Scheme (HSS), the Overturned Historic Convictions Scheme (OHCS), and the Group Litigation Order Scheme (GLOS).
He writes: “The object of each scheme is to put the sub-postmaster into the position in which he/she would have been had he/she not been the victim of unlawful tortious behaviour and/or the position in which they would have been had the various breaches of contract which they may prove had not occurred.”
Sir Wyn says concerns he has previously set out about delays in the administration of the schemes remain valid, adding: “My definitive view upon whether the schemes have delivered compensation which is full and fair must await my investigation under Phase 5 of the Inquiry.”
Horizon Compensation Advisory Board
Sir Wyn makes a number of recommendations to “maximise the role of the Horizon Compensation Advisory Board”, established to help the Department for Business and Trade (DBT) ensure fair and prompt compensation.
These include that the Board should not be prevented from monitoring individual cases. Sir Wyn said it “must be one of the core duties of the Board that it monitors whether compensation payments are full and fair.”
Group Litigation Order Scheme
Sir Wyn has previously stressed that the Government should administer the GLOS in such a way that no applicant feels pressurised into accepting an offer before the 7 August 2024 end date by which it had said all applications had to be resolved.
In today’s report he says: “My current, strongly held view, is that the scheme administrators will be unable to deliver compensation payments to all applicants to GLOS by 7 August 2024.”
He therefore calls on the Government to legislate so as to allow GLOS payments to be made to applicants after 12 midnight on 7 August 2024 if that proves to be necessary.
Sir Wyn has repeatedly raised concerns about how bankrupted sub-postmasters are treated. He heard evidence that one insolvency practitioner, Moore UK, is insisting that compensation payments which have been made to applicants previously made bankrupt are part of such a bankrupt’s estate.
The Chair sought a legal Opinion from Catherine Addy KC on this and other related matters. He is today formally recommending that the Government take necessary steps within 28 days under s306 Insolvency Act 1986 so that a court can resolve the matter.
In his report, Sir Wyn says “my primary concern is that all recipients of compensation from each scheme are treated equally in terms of their exemption from tax.”
Having written to the Government on the issue in March 2023, the Chair welcomes a recent update from the Treasury saying that it intends to take action to ensure equal treatment across all schemes in terms of exemptions from inheritance tax.
The Chair expressed reservations about the Department’s earlier response to his enquiry about why HSS payments were excluded from Income Tax exemptions. However, on 19 June 2023, the Minister announced in Parliament that HSS recipients will receive compensation top-ups, to ensure the amount they receive is not unduly reduced by tax.
Despite these announcements, Sir Wyn says he is “far from satisfied” that those administering or making assessments under the GLOS are fully aware of the difficulties that may still exist in relation to the apparent exemption from income tax, in particular.
He adds “there is still a lack of clarity as to the basis upon which tax is payable (or not payable as the case may be) under the various schemes.”
He therefore recommends that DBT publish in as much detail as it reasonably can and as soon as it reasonably can, proposals for ensuring that applicants to all schemes are treated equally and fairly so far as their liability to or exemption from income tax, capital gains tax and inheritance tax is concerned.
Historical Shortfall Scheme
When considering the HSS, Sir Wyn said “I am left with the distinct impression that the most complex cases have not been addressed as speedily as might have been the case.”
Sir Wyn has previously raised concerns about the short application window for claiming under the HSS and how the Post Office handles ‘late’ applications to the scheme. Following his suggestion that late applicants should not be required to give a reason for their delay, the Post Office adopted this approach in March 2023.
In today’s report, the Chair highlights that there are around 230-250 ‘late applications’ to be determined and that there may yet be significantly more.
Further issues are explored in Sir Wyn’s report which is available to read in full here.
Sir Wyn will be assessing how issues around compensation have been dealt with in practice when he receives written and oral evidence in Phase 5 of the Inquiry.
Notes to editors:
* Between February and May 2022 Sir Wyn held Human Impact Hearings in London, Cardiff, Leeds, Belfast and Glasgow, listening to the experiences of more than 70 sub-postmasters/sub-postmistresses/managers/assistants/affected family members.
Payments under the three schemes – see page 30 of the Interim Report.