1 Wednesday, 6 November 2024 2 (9.30 am) 3 SIR WYN WILLIAMS: Before we start with evidence, Mr Beer, 4 I have another sad announcement to make. 5 I have to inform all those who are following the 6 Inquiry that one of our Core Participants, Mrs Carol 7 Riddell, died on 25 October. Mrs Riddell became the 8 subpostmistress in her home village of East Boldon in 9 the northeast of England in 1991, and continued in post 10 until 2000. She was therefore in post when Horizon was 11 rolled out and she found dealing with Horizon 12 particularly difficult. 13 As a consequence of that and her own ill health, her 14 husband, Alan, took over as the subpostmaster in 2000 15 and continued in that post until 2013. 16 During her time as subpostmistress, Mrs Riddell had 17 to contend with a very serious armed robbery at her Post 18 Office during the course of which she was blinded by 19 having acid thrown in her face. 20 In latter years, and perhaps for many years, both 21 Mrs Riddell, and then her husband, Alan, were assisted 22 by Ms Jean Smith, who was a very close family friend, 23 and assisted considerably in the running of the post 24 office until, in 2013, her involvement ceased. All 25 three of those persons -- well, Mrs Riddell was a Core 1 1 Participant, and Mr Riddell and Ms Smith remain Core 2 Participants at the Inquiry. 3 Mr and Mrs Riddell were claimants in the Group 4 Litigation. I'm sorry to have to report that neither 5 have received full compensation under the relevant 6 scheme as of today. 7 On behalf of all members of the Inquiry Team, and on 8 my own behalf, I extend deepest sympathy to all 9 Mrs Riddell's family and friends. 10 Over to you, Mr Beer. 11 MR BEER: Thank you, sir. Before I start with the evidence 12 of Mr Hollinrake MP, just two short matters. 13 Firstly, some clarification of the evidence of Simon 14 Recaldin that he gave on Monday. On Monday, 4 November, 15 Mr Recaldin gave evidence about the current position of 16 assistants and managers of postmasters who are unable to 17 claim under a redress scheme for shortfall payments 18 made. Mr Recaldin said in evidence -- the transcript 19 reference for Monday is page 50, line 16 -- that the 20 position was under consideration by the Minister. 21 The Inquiry was informed by letter from the Post 22 Office's solicitors yesterday that this evidence was, in 23 the words of the letter, "not quite correct". Instead, 24 and I again quote from the letter: 25 "There have been discussions with DBT officials in 2 1 this regard, although the Post Office is not aware of 2 anything formal under consideration." 3 By its letter, the Post Office apologises for what 4 it describes as the confusion in this regard. 5 The second announcement, sir, is that at 10.00 I'm 6 afraid we have the fire alarm. It will be in the course 7 of Mr Hollinrake's evidence, and so I propose that we 8 sit here -- or, in my case, stand here rather 9 awkwardly -- for five minutes whilst that is got out of 10 the way. 11 SIR WYN WILLIAMS: Well, perhaps I might invite you to sit 12 down, Mr Beer! 13 MR BEER: That would be very kind. Thank you, sir. 14 SIR WYN WILLIAMS: Right. 15 MR BEER: With those two points, may I call Mr Kevin 16 Hollinrake, please. 17 KEVIN HOLLINRAKE MP (sworn) 18 Questioned by MR BEER 19 MR BEER: Good morning, Mr Hollinrake. My name is Jason 20 Beer. Can you give us your full name, please? 21 A. Kevin Hollinrake, Member of Parliament for Thirsk and 22 Malton. 23 Q. Thank you. You have made kindly a witness statement for 24 us which should be in hard copy in front of you. It's 25 dated 7 October 2024. The URN is WITN11460100. It's 3 1 17 pages in length and I think there is one correction 2 to make, if we turn to page 12, please. It's at tab A2, 3 I think, for you. 4 Page 12, paragraph 44. 5 A. Yes, got that. 6 Q. About four or five lines in -- 7 A. Yeah. 8 Q. -- it says in brackets at the end: 9 "... as I think there were 200 people earning over 10 £100,000 a year ..." 11 Do you wish to correct that figure to 143 people? 12 A. Yes, that was from memory. It's 143, having seen the 13 actual documents that I was given at the time. 14 Q. Thank you very much. So cross out "200" and add "143." 15 If you go to the last page, page 17; is that your 16 signature? 17 A. Yes, it is. 18 Q. With that correction brought into account, are the 19 contents of the statement true to the best of your 20 knowledge and belief? 21 A. Absolutely. Yes, they are. 22 Q. Thank you very much. Can we start, please, with your 23 background, Mr Hollinrake. I think, after a career in 24 business, you were elected as the Member of Parliament 25 for Thirsk and Malton on 7 May 2015? 4 1 A. That's correct. 2 Q. You served as a Conservative backbencher for seven and 3 a bit years until, on 27 October 2022, you were 4 appointed by the then Prime Minister, Rishi Sunak as 5 Parliamentary Under-Secretary of State in the Department 6 for Business and Trade? 7 A. That's right. 8 Q. Then you were promoted to the position of Minister of 9 State on 26 March this year, 2024, being Minister of 10 State for Enterprise, Markets and Small Business; is 11 that right? 12 A. That's correct. 13 Q. A position you held until 5 July 2024, when a Labour 14 Government was formed on that day as a result of that 15 general election? 16 A. That's correct. 17 Q. Is it right that in both positions, both as 18 Parliamentary Under-Secretary of State and then as 19 Minister, the Post Office Limited was amongst your wide 20 portfolio of responsibilities? 21 A. It certainly is, yes. 22 Q. So, in short, you held ministerial responsibility for 23 Post Office in Government for one year and eight months 24 between October 2022 and early July 2024? 25 A. Yes, I did. 5 1 Q. Thank you. In opposition, I think you held -- so after 2 July 2024 until today -- in fact until yesterday -- you 3 held the position of Secretary of State for Business and 4 Trade? 5 A. That's right. 6 Q. But I think the new party leader, Ms Badenoch, appointed 7 you yesterday to the role of Shadow Secretary of State 8 for Levelling Up, Housing and Communities? 9 A. That's true. 10 Q. Can we please look at your witness statement, it's 11 page 3, paragraph 6. 12 A. Yes. 13 Q. Paragraphs 6, 7 and 8. It will come up on the screen as 14 well. In the preceding paragraphs you've set out the 15 extent of your ministerial responsibilities, but you say 16 in paragraph 6: 17 "During my entire time ... from 27 October 2022 18 until the General Election in July 2024, the Post Office 19 fell under my ministerial remit, and as part of this 20 I was responsible for leading the Government's action on 21 redress for subpostmasters and Post Office reform. 22 "This was my number one priority as Minister, no 23 question about it. It was of key importance to the 24 Department and it was also an issue which I cared about 25 personally from my time as a backbencher. 6 1 "My appointment was manna from Heaven to me because 2 it meant I could actually help to fix something 3 important. There wasn't a day, night or weekend that 4 went by when I wasn't doing something on the Post Office 5 redress schemes and transformation. I would say at 6 least 25% of my overall time and during many periods 7 a much higher percentage [of time] was focused on this." 8 You speak there about the Post Office being an issue 9 about which you cared personally from your time as 10 a backbencher. Can you help us: can you explain why 11 that was? 12 A. Well, my life has been small business. So one of the 13 nice things about being a Member of Parliament is when 14 you -- from the backbenches you can speak on virtually 15 whatever you'd like to speak on, and so I tend to focus 16 on small business, and one of the first things I tried 17 to help resolve with some of the banking scandals where 18 big banks had mistreated small businesses, particularly 19 Lloyds, HBoS and RBS GRG. So I spent many years on the 20 All-Party on Fair Business Banking on those particular 21 issues. 22 Q. Just slow down a little bit. You mention, I think, the 23 APPG? 24 A. That's right. 25 Q. Tell us very shortly about that APPG? 7 1 A. Yes, so the APPG was an All-Party Parliamentary Group on 2 Fair Business Banking, which was there to try and make 3 sure that small businesses had a voice when they were 4 mistreated by large organisations, and there was some 5 terrible mistreatment of small businesses by those 6 particular banks. 7 So when I came across this particular scandal, which 8 I did as a result of a letter from Paul Marshall, who is 9 one of the barristers who got involved in this case and 10 sought to have injustices brought to light, and did so 11 successfully, I met with him, and realised how serious 12 this was, but also, the parallels that existed between 13 this scandal and previous scandals, where we'd sought to 14 get compensation for those people. 15 And so it then became something I talked about from 16 the backbenches and continued to do so until I was 17 appointed Minister, and that's why I said it was 18 something that I was very pleased to -- that was part of 19 my portfolio because, as a backbencher, you have 20 influence but you don't have any power but, even as 21 a junior minister, you have some power to try and make 22 things happen and that's what I tried to do as the 23 Minister. 24 Q. Thank you. Can we look at an example of what you did 25 from the backbenches. Can we look, please, at 8 1 UKGI00030648. It will come up on the screen. If we 2 look at the foot of the page, we will see an email from 3 you to Darren Jones and others on 5 July 2020. This 4 would have been at the time that you were a backbencher? 5 A. That's correct, yes. 6 Q. If we look at the bottom of page 2, on to page 3, we can 7 see it's signed off by you as MP for Thirsk and Malton 8 and the Co-Chair of the APPG that you have just 9 mentioned? 10 A. Yes, that's right. 11 Q. We see that this was primarily addressed to Darren 12 Jones, if we go back up to the distribution list. Can 13 you help us: at this time, in what capacity or context 14 were you writing to Darren Jones, July 2020? 15 A. Well, it was trying to highlight some deficiencies with 16 the compensation scheme, primarily -- 17 Q. Sorry, it's my fault for a poor question. In what 18 capacity were you writing to him? 19 A. Sorry. Yes, Darren Jones is the Chair of the Select 20 Committee for Business and Trade -- Business, Energy and 21 Industrial Strategy Select Committee, as was then. 22 Q. Thank you. So he was chair of the committee with 23 primary responsibility for essentially the business area 24 of the Post Office and its scandal? 25 A. Exactly right, and he was doing some work -- the 9 1 committee was doing work on the scandal, and it would 2 be -- as I said before, as a backbencher you don't have 3 the power which you need to draw together a coalition of 4 people to try and raise the issue -- raise issues 5 through the various different channels, and this is one 6 of the channels we were trying to use to raise issues we 7 felt existed with the compensation schemes. 8 Q. Thank you. You say: 9 "... thank you for the fine work that you and the 10 Select Committee are doing with regard to the Post 11 Office scandal. 12 "You may be aware of the above issue already ..." 13 By that, I think you mean the subject line "Another 14 Post Office scandal? Convicted claimants paid no 15 compensation by Post Office"; is that right? 16 A. That's right. 17 Q. "... but I have been contacted by Paul Marshall, 18 a barrister who has been informally assisting some of 19 the Post Office victims, about a further injustice 20 relating to this scandal in that convicted claimants 21 have been paid no compensation by the Post Office and 22 are specifically excluded from the Historic Shortfall 23 Scheme. Paul originally contacted me as a result of my 24 work [of the] Chair of the APPG on Fair Business Banking 25 on the Lloyds/HBoS Reading scandal where he highlighted 10 1 clear parallels between this affair and similarly 2 disgraceful abuse of power in the Post Office scandal." 3 Just to note, we've got those documents that have 4 kindly been provided with Mr Marshall contacting you on 5 two occasions, and drawing parallels between the 6 Lloyds/HBoS scandals and this one: 7 "That some one should be prosecuted by a state 8 institution and imprisoned on the basis of false 9 evidence, known to be false, is antithetical to 10 everything that liberal democracy and the 'rule of law' 11 stand for." 12 I should say that the purpose of me asking you 13 questions about this is to gauge the temperature of your 14 feelings whilst a backbench MP and see whether you 15 carried those forwards when you became a Minister. 16 A. Sure. 17 Q. "Such things are rightly associated with authoritarian 18 and despotic regimes. And yet, for 20 years, the Post 19 Office conducted such prosecutions." 20 Over the page you then give some examples: 21 "Tracy Felstead was imprisoned aged 19 in 2002. 22 Mrs Seema Misra was imprisoned when 8 weeks' pregnant in 23 2010. Their cases have been referred to the Court of 24 Appeal by the [CCRC], together with 47 others, following 25 Sir Peter Fraser's judgments in the Bates v Post Office 11 1 litigation. Post Office Fujitsu witnesses have been 2 referred to the [DPP]. The CCRC has described these 3 prosecutions as 'an affront to the public conscience'. 4 "It has now emerged that, while many assumed that 5 the Post Office paid about £58 million (the vast 6 majority of which went to pay costs and expenses) in 7 compensation to its subpostmasters and 8 subpostmistresses, including to those who had been 9 convicted and imprisoned as a result of its seriously 10 flawed prosecutions, this assumption is incorrect. 11 Astonishingly, it is now apparent that under the terms 12 of the settlement, negotiated between Freeths LLP, for 13 the 550 claimants, and Herbert Smith Freehills LLP, for 14 the Post Office, it was agreed that the Post Office was 15 to pay no compensation at all to claimants in the Bates 16 v Post Office litigation who had been convicted of 17 criminal offences. The explanation for this remarkable 18 conclusion is provided by a note written by Paul, a copy 19 of which is attached to this email." 20 You indeed attached a copy of that note to the 21 email. 22 "Putting to one side any legal justification for 23 that extraordinary outcome (none being immediately 24 obvious), it is one that will offend anyone with a sense 25 of justice. Many of those convicted and imprisoned, 12 1 perhaps understandably, have suffered serious ill health 2 including mental illness, as a consequence. 3 "I am also very concerned about the involvement of 4 Herbert Smith Freehills ... " 5 I am not going to read that paragraph but, 6 essentially, you say that you fear that they have 7 adopted an overtly and overly adversarial approach. 8 You say: 9 "I urge the Select Committee to lead the calls for 10 a proper compensation scheme that will enable all the 11 victims of this terrible tragedy and injustice to 12 receive reparation for the injury done to them by the 13 Post Office that is, shorn of niceties, a state 14 institution. The continuing absence of such a scheme 15 will augment injustice with injustice and be 16 inexcusable. It is an outrage that some victims should 17 now be left to their own devices to pursue an uncertain 18 claim against the Post Office for malicious prosecution. 19 Further, the circumstances of settlement, and the denial 20 of recompense to those most grievously injured by the 21 Post Office, now adds to the requirement for a proper 22 public inquiry into this shameful episode. 23 "At the very least, the time period for the [HSS] 24 should be extended by 3 months to 14 October 2020. This 25 will provide a reasonable opportunity for those affected 13 1 to be able to properly evaluate the courses open to 2 them. The issues demand careful and mature 3 consideration." 4 Then you say you copied in the Business Secretary, 5 Alok Sharma, the Small Business Minister, Paul Scully 6 and the Justice Secretary, Robert Buckland: 7 "... who clearly have an interest and I hope will 8 also take up these matters." 9 You expressed, I think it is fair to say, very 10 strong opinions on this scandal in the course of this 11 email, didn't you? 12 A. I did. 13 Q. Did you carry those very strong opinions into Government 14 when you became a Minister two years later? 15 A. Yes, I did. 16 Q. It is apparent from the evidence that we've got that you 17 tried to resolve what might be described as issues with 18 compensation and redress? 19 A. Yes, I certainly tried to do that. 20 Q. What hindered you? 21 A. I think the nature of any compensation scheme, and I saw 22 it in the previous compensation schemes we had dealt 23 with, at Lloyds, HBoS and RBS, is that any compensation 24 of any individual is complicated because everybody's 25 life is different, everybody's lives are complex, and 14 1 the detriment to people's lives is often completely 2 unique. Of course it's completely unique. So, if 3 you're going to set about putting in place 4 a compensation scheme that's going to assess everybody's 5 loss individually, that's going to take time. And it's 6 bureaucratic process. You need to -- 7 Q. Sorry to interrupt you. So, essentially, the first part 8 of your answer there was it's the nature of the 9 exercise, so it's not somebody hindering me, or 10 an institution -- 11 A. Yes. 12 Q. -- hindering progress: you're saying it's a natural 13 consequence -- 14 A. Yes. 15 Q. -- of the problem that needs to be solved? 16 A. Yes. I never experienced anybody -- if the question 17 is -- I never experienced anybody in Government or the 18 Civil Service who tried to hinder compensation to any 19 individual. It's a result of a complex process, that 20 inevitably is the case between an individual whose life 21 has been affected in many, many different ways, both in 22 terms of financially, in terms of their health, their 23 mental health, their physical health, that of their 24 family, that -- in terms of the impact upon their 25 livelihood, all those things have to be taken into 15 1 account. 2 And I think one of the things we need to learn from 3 this, and I've covered this in my statement in later 4 stages, is how we do this better if this -- God forbid 5 this should ever happen again. 6 And so I think, Sir Wyn, you have said in your 7 earlier remarks on this is that, in terms of the 8 compensation schemes, you know, if you're going to go 9 there you wouldn't start from here, in terms of how 10 we've done this, but nevertheless we are where we are -- 11 we find ourselves, and so it is -- as I say, it's the 12 complexity is the biggest problem, and the adversarial 13 nature of putting a claimant's lawyer arguing the case 14 with the Department or the Post Office's lawyers. And 15 that doesn't help either. 16 And so there are ways, I believe, to expedite that, 17 some of which we found through things like fixed-sum 18 awards, which have had a great deal of success, but 19 there are other things we need to do as well to try to 20 expedite this process now and for future compensation 21 schemes. 22 Q. In the course of that answer you said you didn't come 23 across anyone in Government, and you included with that 24 the Civil Service, who hindered you. Did you 25 deliberately exclude the Post Office? 16 1 A. No, I didn't. I mean, I don't believe anybody in the 2 Post Office sought to prevent compensation flowing and, 3 again, that's something I covered in my witness 4 statement. I think there were some failures within Post 5 Office. You know, some of the disclosure failures, 6 which have been well publicised, for the Inquiry, but 7 also in the individual cases, took too long, and were 8 flawed, and mistakes were made. 9 So there are logistical problems, and some that has 10 to be described as incompetence as well as fairly for 11 other reasons. But I don't think -- I haven't met 12 anybody who didn't want to compensate postmasters as 13 quickly as possible. 14 Q. Thank you. Can we look, please, at BEIS0001023. This 15 is an email exchange from, in fact, earlier this year. 16 You'll see that it's dated 5 February 2024 and it's from 17 Minister Hollinrake, that email address, to Rob 18 Brightwell, who is a senior servant within the 19 Department, along with Carl Creswell -- who we are to 20 hear from later today -- and others. 21 If you look at the foot of the page, please, and 22 over to the next page, you'll see it's from Jamie Lucas, 23 who was then your Deputy Head of Office and Private 24 Secretary; is that right? 25 A. That's right. 17 1 Q. If we go back to page 1, please, it refers to 2 a "slightly impromptu meeting with the Minister", ie 3 you, "just now", and it's apparent that a submission has 4 gone up to you, and you've provided comments and he's 5 passing these on to the civil servants, yes? 6 A. That's right. 7 Q. You comment essentially in five bullet points. You say: 8 "I'd like to see how we calculated Alan Bates' 9 compensation please? Even a ready reckoner of £50,000 10 a year for 18 years plus interest seems to be 11 considerably in excess of the offer we made. Not sure 12 we aren't making all this too complicated/getting into 13 the weeds too much at times. 14 "The £450,000 interim on receipt of a full claim is 15 a good idea, we should the same for the GLO, say 16 £50,000? 17 "Why does it take 30 weeks to respond to a late HSS 18 claim? 19 "I think we need an appeal mechanism in addition to 20 the HSS FSA. I think we should consult the HCAB 21 [Advisory Board] before implementing either. 22 "Please can I have a table showing a comparison of 23 tariffs for non-pecuniary [Overturned Convictions] v HSS 24 [schemes]." 25 I think that's essentially what you're describing in 18 1 that last bullet point. 2 A. That's right. 3 Q. So the passages in italics there, that's essentially you 4 speaking directly? 5 A. Yes. 6 Q. So, what: you would have read a submission, not liked 7 some of what you had seen in it, and passed this on to 8 your private secretary? 9 A. That's right. 10 Q. Did you do this frequently, this kind of thing, get 11 actually into the details of individual claims? 12 A. Yeah, where necessary. I mean, obviously ministers are 13 not there to resolve individual claims but I was 14 concerned -- as concerned, I think, as anybody when you 15 felt things were not working as quickly as they should, 16 and so -- and, you know, the bureaucratic nature of 17 things, as I say, I expressed some frustration within 18 those paragraphs about, you know, just really arguing 19 about very small elements of a claim, which, you know, 20 speaking frankly -- and listen, this isn't a criticism 21 of lawyers, so I hope you don't think it is. There's 22 a lot of lawyers in this room right now, I wouldn't want 23 to do that! But it can be the case that things take too 24 long and for the wrong reasons. 25 So arguing about the mileage claim for somebody 19 1 going -- which I heard is one claim because somebody had 2 had to put their mileage going from their place of home 3 to a place of work while they were trying to -- while 4 they were waiting for their compensation, is not the 5 kind of thing we should be doing. 6 I just felt there wasn't a sense check about -- you 7 know, when I dug down in some of the claims, as I would 8 do. You know, I didn't -- I think at times we have to 9 get into the weeds as ministers, myself, we can't just 10 rely on everything we are told. And so it would be the 11 case that people would contact me through various 12 different sources, could be email or social media, and 13 I would be willing to go in and say, "Okay, tell me 14 about that case and tell me why it's taking so long and 15 tell me why that offer is at that level when it doesn't 16 sound like anywhere near the level it should be". 17 And I think I expressed that frustration in Sir Alan 18 Bates' case, in that, you know, it's the level of offer 19 that I established that had been made didn't seem to 20 make sense when you took a common sense view of it. 21 Q. Your Private Secretary continues, skipping over the next 22 lines: 23 "He [that's you] has also expressed to me that he'd 24 like the detail behind a number of high-profile claims. 25 For example, Jo Hamilton claims that her original offer 20 1 went from 20% of her original claim to 80%, why is that? 2 Christopher Head's was on 15% of what he claimed, why? 3 And obviously, as referenced above, Alan Bates' claim 4 ..." 5 There's a note already being drafted on this, your 6 private secretary understood. 7 So one can understand why you would wish to know the 8 detail of what you described here as high profile cases, 9 because you might be asked about them. Was that the 10 reason that you were getting into the weeds here? 11 A. Not -- of course, that's, you know -- we're public 12 servants, we react to public concern quite rightly, but 13 it was more about how the schemes were operating: were 14 they operating effectively; were they operating on 15 a basis of common sense; were they operating on a basis 16 that the benefit of the doubt was given to the claimant? 17 All the things we had committed to do, and I would 18 expect a compensation scheme to operate on that basis. 19 So it was really trying to not resolve that particular 20 claim to get it out to the newspapers, it was a case of, 21 you know, let's improve these schemes across the board, 22 and so these were just examples of things I was aware 23 of. 24 I took the same view on things that didn't -- 25 weren't necessarily as high profile as Sir Alan Bates or 21 1 Jo Hamilton; it was on people that I say contacted me 2 directly, I would try and get the same answers in those 3 cases. 4 Q. So is this kind of thing that we read here typical of 5 you essentially carrying forward the rather strong 6 sentiments that we saw expressed in your backbencher MP 7 from when you went into office as a minister? 8 A. Yes, that's exactly right. 9 Q. Thank you. That can come down. 10 (Pause for fire alarm test) 11 Mr Hollinrake, I think we can continue now. We're 12 about to turn to a new topic, which is Post Office 13 governance, and the provision of information to you from 14 or by the Post Office, and decision making. If we can 15 start by looking at your witness statement, please. It 16 will come up on the screen, page 6, paragraphs 19 and 17 20. 18 A. Before I do that, can I just add to what I was going to 19 say earlier -- 20 Q. Absolutely. 21 A. -- that was probably cut off by the fire alarm. 22 I suppose what I felt through this, having been through 23 what I saw in the Lloyds compensation scheme, that the 24 legal system, for whatever reason -- and, you know, I'm 25 not sufficiently qualified to opine on it, but it treats 22 1 people when they are mistreated, terribly, especially 2 the big companies and the individual. And, yet, when it 3 comes to the compensation, the people who are 4 responsible for the compensation, I felt treat those 5 people, hide behind the law, in terms of properly 6 compensating those individuals. 7 And I think there's something fundamentally wrong 8 with that, and it's not -- this isn't the only time we 9 did it. You know, in fact, in the Lloyds scheme we 10 handed the compensation back to Lloyds to provide the 11 compensation but, in fact, in the HSS scheme we handed 12 the compensation scheme back to the Post Office to 13 deliver the compensation. 14 I think (a) that doesn't give anybody confidence 15 that the compensation will be delivered properly but, 16 also then, it becomes very legalistic, and I think 17 there's something very fundamental we need to learn from 18 that. Some of that was covered under the National Audit 19 Office report on this, but we should never do it like 20 this again. 21 Q. Can I ask you two questions arising from that answer. 22 You said that, when providing compensation for those 23 that have been wronged, we tend to "hide behind the 24 law". That tends to suggest that you have taken the 25 view that those that are providing compensation or 23 1 determining compensation are not applying the law, as 2 they would see it, that -- 3 A. I don't think that. I don't think that -- they're not 4 applying -- I think they're applying the law too 5 strictly, in that this is how we compensate people 6 according to the principles of how a court would deal 7 with this, and this is how we arrive at the calculation 8 that we would do a very complex assessment of loss. But 9 I think, to me, that is too much. We need to -- too 10 much, too legalistic, too adversarial and it doesn't 11 give the benefit of the doubt to the claimant, and it 12 becomes very, very bureaucratic. 13 And there are some basic principles how you 14 compensate people through the courts, I understand that. 15 But I think applying purely legal principles to this, 16 I'm sure there are very good reasons why that happens, 17 but does mean that these compensation schemes to me can 18 be flawed. 19 Q. Can I explore that part of the answer a little further. 20 Is your view or your complaint that the law is used, 21 ie common law and statute law, in determining the amount 22 of compensation, or is it that lawyers are involved in 23 the administration of the scheme? 24 A. Yeah, I think it's a bit of both but, you know, if two 25 lawyers are arguing that can take some time. And, 24 1 again, I'm outnumbered in this room, so I'm not trying 2 to be critical of legal processes but, to me, there 3 should be, as the National Audit Office said and why -- 4 one of the things we tried to do, and probably failed to 5 do -- I've made mistakes here, I'm not saying, you know, 6 I was the only person who did anything positive in this 7 space, not at all. Many good things were done by many 8 people, both by the ministerial and through the civil 9 service, through this process. 10 But I think, you know, you need somebody independent 11 of the legal processes sat in the middle somewhere to be 12 able to sense check some of these things that are 13 happening, rather than applying the strict rules of 14 engagement, rules of compensation, in these situations, 15 because that will just take too long and not properly 16 reflect the situation that people have faced or the 17 losses that they have incurred. 18 Q. The second follow-up was that you said, in your first 19 answer after the fire alarm, that "We handed back" or 20 "handed to Lloyds and then the Post Office, 21 responsibility for administering the scheme or, in our 22 case, some of the scheme". Can you develop, please, 23 your complaint or view there? 24 A. Well, I mean, the culture of the Post Office has been 25 discussed at length, so people are bound to feel there 25 1 is some of that remaining within -- in terms of the 2 claimants, and I think that probably some of that was 3 remaining. You know, I think -- but there's going to be 4 little confidence from the claimant when they feel 5 they're being compensated by the organisation that has 6 been responsible for the huge suffering that they've 7 experienced, that they're going to get properly 8 compensated and that suffering has been is properly 9 recognised, so I just don't think that is the right way 10 to do it. 11 Q. Was it an active question within your 18 months as 12 a Minister under consideration of whether the Post 13 Office should be given or should retain 14 responsibility -- 15 A. Yes. 16 Q. -- for administration of certain of the schemes? 17 A. Yes, certainly. And, again, I know you've stated this 18 in the past, you know, we are where we find ourselves. 19 So revisiting the HSS scheme, which had largely, by that 20 point in time, made offers to the vast majority of 21 people who had put claims in, you know, starting that 22 all again, although we did, as you referred to in my 23 earlier -- some of my earlier comments on this is that 24 we should have put in place an appeal mechanism, so 25 people who feel they have been shortchanged could 26 1 contest the compensation they had been provided with, 2 and that some -- and, latterly, we also pushed for 3 a fixed-sum award for those people, so compensation 4 could be topped up to at least a minimum level. 5 So yes, it's very much the case that we -- that 6 I felt that shouldn't have been given to the Post Office 7 originally but it was. And later schemes, the GLO 8 scheme, was given -- as in agreement with the claimants' 9 lawyers, was done by DBT, operated by DBT, which I think 10 was -- was better, I'm not saying even then you 11 shouldn't do something slightly different from that in 12 the future. 13 But one thing that I was surprised about, early on 14 in my tenure as minister, I think this decision might 15 have already been made, but the Overturned Conviction 16 Scheme was then given back to the Post Office to handle, 17 which again, to me, was a step backwards from 18 understanding the GLO scheme should be handled by the 19 DBT, so independent of the Post Office, then, you know, 20 the first Overturned Conviction Scheme was handled back 21 by the Post Office, and that, to me, is the wrong thing 22 to do. 23 Q. Was it ever passed on to you that Mr Read as CEO and his 24 Board, corporately, did not wish for the Post Office to 25 administer either the HSS or the GLO scheme? 27 1 A. I think the Post Office, including Nick Read, would have 2 been very happy if they weren't dealing with the 3 compensation. That was certainly the conversations 4 I had with Nick in the past. 5 Q. So why was it, if there was a meeting of minds between 6 you and him, that that didn't happen? 7 A. Because the decision had already been taken. The HSS 8 had already been largely -- like you say, most claims 9 had been either resolved or offers had been made. The 10 GLO would decide to do externally, which I think 11 everybody was happy with, and the Overturned Convictions 12 Scheme, the original one, although it came across my 13 desk, I remember making some comments on brief that I'd 14 had of "I don't understand why this is going back to the 15 Post Office" but I think the decision had already been 16 taken by the Secretary of State at that point to do it 17 that way. 18 Q. The Secretary of State at that time being? 19 A. I think the original decision had probably been made by 20 Kwasi Kwarteng. I can't be sure of that but, certainly, 21 it was something -- a comment I made to -- on the brief 22 received that I didn't understand why we -- this was 23 going back to the Post Office. 24 Q. Thank you. Can we then turn to the topic I was going 25 to -- 28 1 SIR WYN WILLIAMS: Before we do, Mr Beer, I understand your 2 concern about each side arming themselves with lawyers 3 and arguing it out. I don't think I am a lawyer any 4 more. I can say that: I used to be one but I'm not 5 more. Anyway, it was both the Post Office's choice and 6 the Department's choice to arm themselves with lawyers. 7 They didn't have to have a room full of lawyers to argue 8 this out. That was, if I can use the word, your choice. 9 A. Yes. 10 SIR WYN WILLIAMS: "You" collectively, you understand? 11 A. Yes, that's right. 12 SIR WYN WILLIAMS: So why? 13 A. Well, as I say, I don't think we should do that in the 14 future. You know, I think we should have some 15 independence in the middle of it, and something that 16 we -- I certainly -- 17 SIR WYN WILLIAMS: Well, I appreciate about the future 18 but -- and I'm absolutely not saying this in a critical 19 sense, it's an enquiring sense -- you obviously had 20 considerable scepticism about how quickly lawyers could 21 sort this out. 22 A. Mm. 23 SIR WYN WILLIAMS: So you become the relevant minister in 24 2022, admittedly the HSS is well down the road, but the 25 Overturned Conviction Scheme wasn't well down the road 29 1 and the GLO scheme had hardly begun. All right? So why 2 not then say, "Right, we'll have a completely different 3 attitude in the Post Office and the Department. We 4 won't arm our defence with lawyers, we'll have 5 reasonable whoever, who will just look at these claims 6 and make fair assessments"? 7 A. Yes, and if I had my time again, that's exactly what 8 I would've done -- one of the mistakes I made. It was 9 very early on in my time as Minister that the GLO scheme 10 came down the track. It was only after two or three 11 months after, I think, and met with various different 12 people, including people like Kevan Jones, Lord 13 Arbuthnot and others, who were -- all seemed to be quite 14 happy with the way the scheme was established. 15 Looking back now, I don't think I should have been 16 happy with that. There were scheme reviewers, Sir Ross 17 Cranston was brought in as a scheme reviewer for the 18 GLO. I think what I should have insisted on at that 19 point in time was for someone like Sir Ross to play 20 a greater role right at the start, rather than be the 21 back stop for a dispute. And I probably hoped, which is 22 probably a vain hope, that that process could happen 23 more quickly. And -- but it's too far down the line. 24 So I hold my hands up, you know, and I say sorry to 25 people whose claims have not been settled quickly enough 30 1 through that process. It's something I got wrong. I'm 2 sorry that's the case. 3 SIR WYN WILLIAMS: Well, I wasn't, actually, as I hope 4 I made clear, necessarily saying you were wrong but 5 I was exploring the reasons why, in the end, this 6 scheme, all schemes, have become -- these are my words 7 and they may not turn out to be my final words -- but 8 apparently a battle between lawyers, in certain cases. 9 A. That is definitely the case and something we should not 10 do -- not let happen again. 11 SIR WYN WILLIAMS: All right. 12 MR BEER: Can we then turn to the topic, topic 2. It was 13 paragraphs 19 and 20 of this witness statement and this 14 is after you become the Minister. You say: 15 "I continued to be briefed on issues throughout my 16 time as a Minister. I had regular meetings with the 17 lead departmental officials -- David Bickerton (Director 18 General), Carl Creswell (Director) and Rob Brightwell 19 (Deputy Director) -- and in those meetings I would often 20 make requests for more information on particular topics 21 and raise and discuss ideas for change." 22 Then in 20, you say: 23 "It was also important to me that I should receive 24 unfiltered information from stakeholders, and right from 25 the start I asked my private office to arrange calls 31 1 with Nick Read, Alan Bates and Lord Arbuthnot." 2 So you're there describing getting information 3 through the usual channels, ie through departmental 4 officials, but also going directly to both the Post 5 Office and to relevant stakeholders, yes? 6 A. Yes, that's right. 7 Q. In your witness statement, it's paragraph 55, which is 8 on page 14. Just by way of background, in 54 you say: 9 "... the Government and the Post Office have 10 approached compensation with the best of intentions, but 11 there have obviously been a number of problems, 12 especially in relation to the pace at which 13 subpostmasters have received compensation (or not)." 14 Then you set out some reasons, and you say: 15 "There were, as I understand it, a number of reasons 16 for this during my time as Minister ..." 17 Then the first of those is: 18 "Slow and flawed disclosure by the Post Office ..." 19 Can you help us: what information were you provided 20 with as to the Post Office providing "slow and flawed 21 disclosure" in connection with the compensation schemes? 22 A. It wasn't information I was given by officials; it was 23 just usually case -- when I'd spoken to victims or the 24 representative of victims, or evidence we'd hear at the 25 Select Committee inquiry, or things I would read in the 32 1 various media reports so that would tend to be where 2 I revealed that it was taking longer than it should. 3 Q. So this is disclosure by the Post Office in and for the 4 purpose of a compensation and redress scheme? 5 A. Yes, absolutely. I'd speak to obviously the claimants' 6 lawyers and they would say to me that's certainly part 7 of the problem. I think that was a problem particularly 8 early on when the Post Office, to be fair, was getting 9 up to speed with a lot of these cases. As we introduced 10 things like the fixed-sum awards, which are one of the 11 things that have made a big difference in terms of 12 making sure the flow of compensation increased, and 13 there has been, I think, around a fourfold increase in 14 the amount of compensation paid over the last 12 months. 15 I think now it stands at £438 million, it was just over 16 100 million this time last year. 17 So many things have worked that we tried to do 18 but -- so that -- one of the -- where the areas that 19 helped in was the Post Office, by using that -- by using 20 that approach, it meant the Post Office had fewer cases 21 to have to disclose evidence to because the fixed-sum 22 awards don't require disclosure of evidence. So there 23 is a twofold benefit in using that approach as one way 24 to get compensation to people. 25 Q. Other than the introduction of fixed-sum awards, did you 33 1 do anything in response to the information that you were 2 given that the Post Office was providing slow and flawed 3 disclosure? 4 A. Well, certainly, it was a topic of conversation we had 5 when I had regular meetings with Nick Read and others, 6 that we urged them to increase the pace of compensation, 7 we were always reassured that was going to be the case. 8 Again, on an individual case level, if things were 9 brought to me, I would attempt to have those cases -- 10 understand why those cases were taking so long and urge 11 the relevant participants to accelerate the -- whatever 12 information gathering was needed and provision was 13 needed. 14 We also set an SLA, a service level agreement, kind 15 of expectation on things like the GLO, that offers were 16 made to individuals within 40 days of offers being -- of 17 claims being submitted. But, of course, that's down the 18 track from when claims could -- because -- could be 19 submitted because they would require the disclosure of 20 evidence to make the claim. 21 So there were some attempts to accelerate things but 22 we also brought in schemes reviewers, again, Sir Ross 23 Cranston, being on the GLO scheme, Antony Higginbotham 24 for the -- on the Overturned Conviction Schemes, which 25 we were very keen to make sure they could play some part 34 1 in trying to make sure those schemes were fit for 2 purpose. And, indeed, the establishment of the Horizon 3 Compensation Advisory Board, with Lord Arbuthnot and 4 Kevan Jones, and I was very keen to make sure there was 5 cross-party representation on that. But also there were 6 people who had been fierce critics of the Government on 7 that Board including Sir Professor Richard Moorhead -- 8 sorry, Professor Richard Moorhead -- to make sure that 9 they could have some oversight of how those schemes were 10 operating and establish where things were going wrong, 11 and be able to advise us on what we needed to do to try 12 and help. 13 Q. You also cite, as a second reason -- this is something 14 you have mentioned earlier this morning -- the fact that 15 large claims were being held up by demands for detailing 16 information on trivial issues, such as mileage and 17 travel. Who was providing you with that information? 18 A. It would tend to be the claimants. I think this was 19 something that Jo Hamilton, for example, has often 20 mentioned to me when I met her. There was information 21 required that seemed pretty trivial and not material to 22 what compensation might be offered that would seem to 23 be -- seemed to be -- have to perform part of the claim 24 before it was submitted. 25 Q. In relation to that, did you communicate any concerns 35 1 about delays in large claims being essentially stalled 2 by demands for trivial details to -- 3 A. Yes. 4 Q. -- anyone at Post Office. 5 A. Yes. Sorry, yes, it was certainly a conversation we had 6 in our regular meetings with the Compensation Advisory 7 Board, how we'd do this a different way. It was very 8 much the case that I felt there should be some sense 9 checking, rather than simply just going -- getting -- 10 sense checking in terms of what might be an appropriate 11 level of compensation for those kind of things, and 12 there would be -- and that there should be a way to give 13 a -- an assessment of the -- of somebody's loss without 14 having to go into a detailed assessment of that loss. 15 There should be -- and this is something that was 16 piloted, that there should be a general -- there should 17 be less of an expectation, less requirement for there to 18 be a submission of individual loss at financial level or 19 in terms of people's health or mental health, that we 20 should be able to work that out on the basis of some 21 kind of tariff. That was certainly a scheme that was 22 piloted within the Department that I understood helped 23 to some degree. 24 Q. You also cite, thirdly: 25 "... the requirement that each claim had to be 36 1 supported by medical evidence of trauma and physical 2 impacts and forensic accountancy evidence for financial 3 loss, when these experts had limited capacity ..." 4 Who was providing you with that information? 5 A. Again, that was a conversation I had with the civil 6 servants, Carl Creswell, Rob Brightwell, who were clear 7 that there were some issues around just -- there was 8 a queue for getting the forensic accountancy or the 9 assessment of somebody's impacts on their health, or 10 their mental health, and those kind of things can take 11 time, even when people are working on those cases but 12 there was a queue of cases to be heard by those, as 13 people who are experts in that field. 14 If we could move -- and I think we did this on 15 a pilot basis, which I understood was successful, this 16 was probably towards the end of my tenure as Minister -- 17 to have, I say, a general kind of -- a lower requirement 18 for assessment of individual need and more of a kind of 19 general figure that could be put on that kind of loss, 20 that could provide a basis of compensation rather than 21 a more detailed assessment. 22 Q. You've mentioned a couple of times in your answers that 23 you asked for the issue that was being raised in front 24 of you to be sense checked, or words to that effect. 25 What did you mean by that? I sometimes find that when 37 1 people use that phrase it can carry a number of 2 meanings, some of which obscure what is, in fact, 3 happening? 4 A. Well, I think I used that in terms of Alan Bates' case. 5 If you just look at the case, somebody who has been 6 campaigning on behalf of thousands of people for 7 20 years, and then you make an offer of compensation at 8 the level it was initially made, you'd think somebody 9 who has been working for 18/20 years on a case, the 10 amount of time it was required for somebody to work on 11 that full time -- and I'm sure he was working more than 12 full time in his campaign -- you can probably add it up 13 pretty quickly that that claim should be significantly 14 higher than the claim that was initially issued. 15 Similarly, with things like Jo Hamilton -- 16 Q. Just stopping there, you mean sense check in -- 17 A. Yeah. 18 Q. -- apply some common sense? 19 A. Yes, that's exactly what I mean. 20 Q. Okay. You were moving on Jo Hamilton? 21 A. Yeah, well, similarly, you know, asking Jo to evidence 22 her mileage between her home and workplace where she had 23 to clean to keep, you know -- to make sure she could, 24 you know, pay for her things she needed to pay for and 25 subsist, was just, to me, ludicrous. 38 1 Q. There were proposals for upfront offers in a fixed sum. 2 Where did that idea originate from? 3 A. It originated from me. I floated the idea at 4 a Departmental meeting with the Secretary of State and 5 the Permanent Secretary, and David Bickerton and others 6 were at that meeting. And it was a frustration for 7 myself and the Secretary of State, indeed, who was 8 always very supportive of all my efforts to accelerate 9 compensation, that things weren't moving quickly enough. 10 To be honest, again, I wish I'd recommended it 11 earlier because it was very well received by all the 12 people at that meeting, that we should look at 13 a different way of doing this, but the original idea 14 came from an idea, you know, a principle, an approach we 15 took at the Lloyds/HBoS Compensation Scheme, where we 16 suffered exactly the same problems even when the scheme 17 was redone with Sir David Foskett as the -- as running 18 the Foskett panel, still the compensation claims took 19 a long time to assess those losses and to agree what the 20 compensation levels should be. 21 So what we alighted upon was using this fixed sum 22 award approach, which was very successful and allows 23 people to walk away from the process much more quickly 24 and get compensation more quickly and move on with their 25 lives because, as we know, and it's terrible to hear 39 1 about Mrs Riddell, and my thoughts are with her and her 2 husband and others, how people do -- have, you know, 3 passed away without ever seeing compensation. It's 4 simply wrong. 5 And it's a way we can accelerate the compensation to 6 make sure those people at least can move on with their 7 lives to some extent after all the terrible things that 8 have happened to them. 9 Q. Can we look, please, at BEIS0000808. This is 10 a letter -- I think we've only got this as an undated or 11 finally dated draft -- but it's dated August 2023. 12 You'll see that it's from the Secretary of State, who 13 was then Kemi Badenoch, if we just go to the top, thank 14 you, to the Chancellor, then Jeremy Hunt. "Accelerating 15 Post Office ... Compensation" is the title and 16 Ms Badenoch's letter reads: 17 "Kevin Hollinrake and I are both determined that 18 postmasters affected by the Post Office Horizon scandal 19 should get proper compensation -- and they should get it 20 as rapidly as possible. 21 "Three different compensation arrangements are at 22 different stages of maturity ..." 23 Then she summarises, including some figures, the 24 HSS, the Overturned Conviction Scheme and the GLO 25 scheme. 40 1 Ms Badenoch continues: 2 "The scandal ruined many postmasters' lives. The 3 longer compensation goes unpaid, the more criticism we 4 shall face -- including from the Williams Inquiry. If 5 we were to fail to compensate all the GLO members in 6 time we would face severe criticism from all sides. 7 "Kevin and I have therefore been looking at ways in 8 which we could rapidly speed up the processes. We 9 already make interim payments of £163k to almost all 10 postmasters whose convictions are overturned, and we 11 undertake only limited scrutiny of GLO claims for 12 certain heads of loss under £10k pants and HSS ones 13 under £8k. We are looking to extend these measures 14 substantially in relation to the GLO, which has started 15 to receive claims. 16 "Some of the options we are considering would 17 actually save more on the cost of lawyers or other 18 advisors than they would cost in extra compensation. 19 Others do have additional costs -- but in my view this 20 would be well worthwhile in the light of the 21 non-financial benefits of accelerating the schemes. In 22 particular, I would like us to be able to offer a £100k 23 fixed payment to every claimant who applies to the GLO 24 scheme. I recognise that announcing this would create 25 significant pressure to offer the same for HSS 41 1 claimants, which we should consider separately, but 2 I believe this the right route far for the GLO scheme. 3 Such radical action would offer great advantages in 4 terms of the speed of the process. The DBT Accounting 5 Officer has expressed some concerns about the value for 6 money given the repercussive risk and raised the 7 potential need for a direction for this idea." 8 That's a reference to a ministerial direction, yes? 9 A. Yes. 10 Q. "I would welcome your views on the best approach, being 11 mindful of value for money considerations, and whether 12 you agree that we should pursue this." 13 The letter was copied to you. 14 So this was a joint suggestion between you and Kemi 15 Badenoch; is that right? 16 A. That's right. 17 Q. Do you agree with everything that she has written? 18 A. Yes. 19 Q. Can we look, please, at BEIS0000705. We can see from 20 this -- if we go down to the bottom, please, it's over 21 the page, the end of the letter -- Mr Hunt, the then 22 Chancellor, replied. Go back to the top, we can see in 23 his paragraph 1 in his reply to the Secretary of State, 24 Ms Badenoch, that her letter must have been dated 25 9 August. Then if we scroll past paragraphs 2, 3 and 4, 42 1 he addresses the request, the ask: 2 "In relation to the specific proposal for fixed-sum 3 awards on the GLO scheme, while successful delivery is 4 paramount, we must also have regard to our 5 responsibility for the public finances and to ensuring 6 that the treatment of claimants on each Horizon 7 compensation scheme is fair to that of their peers. 8 "As you note, making fixed-sum awards on the GLO 9 would incur significant repercussive risk and cost, 10 including to the [HSS]. Given the extent of this risk 11 and its high likelihood of crystallisation, I would 12 encourage you to explore the full breadth of other 13 options to advance the ultimate objective of timely and 14 successful delivery of full and fair compensation." 15 Then the letter continues about some other things. 16 That's essentially a rejection of the proposal; is 17 that right? 18 A. Yes, that's right -- 19 Q. It doesn't say so, in as many terms. It says, "Please 20 explore other options". 21 A. Yes, which, you know, we -- clearly, we were. 22 Q. What was your reaction to the rejection of the proposal 23 made by you and Ms Badenoch? 24 A. Well, disappointment but I wasn't surprised because it 25 is quite -- was quite -- I think we'd -- I think the 43 1 Secretary of State had described the proposal as 2 radical, actually, in a previous letter, and it is quite 3 a radical thing to do, and a Permanent Secretary would 4 never sign this off on value for money grounds because 5 that's what Permanent Secretaries are there to do, to 6 protect public money. 7 Personally, I felt it was still the right thing to 8 do and we continued to press for it because -- I think 9 Jeremy Hunt has always been massively, massively 10 supportive of everything I tried to do in terms of 11 providing compensation to postmasters, as has the 12 Secretary of State and others, and the Prime Minister 13 indeed, Rishi Sunak. But I don't think any of them had 14 had the experiences of previous compensation schemes 15 that we had experienced, the ones I referred to earlier, 16 particularly Lloyds and RBS, so I felt it was something 17 that we would, in the end, have to do. 18 Q. Thank you. Can we move to BEIS0000722. Can we look, 19 please, at the bottom of page 2 and on to the top of 20 page 3. We can see an email from Carl Creswell, to, 21 amongst others, your email address. It's "Minister 22 HOLLINRAKE", the rest of it has been redacted on data 23 protection grounds. Is that essentially your private 24 office? 25 A. Yes, that's right. 44 1 Q. It wouldn't be to you personally? 2 A. No. 3 Q. This is essentially a record of the outfall from the 4 decision we have just looked at. We can see it's in 5 late September, 22 September. If we go forward to 6 point (3), so if we just scroll down, please. On (3), 7 that's a reference to a point earlier in the email 8 chain, which I'm not going to turn up, but CST, which 9 I think means Chief Secretary to the Treasury, I think; 10 is that right? 11 A. That's right. 12 Q. The Chief Secretary to the Treasury, that would have 13 been, I think, John Glen, at that time; is that right? 14 A. That's right. 15 Q. That was before Laura Trott took over in November: 16 "... the [Chief Secretary to the Treasury] has 17 approved in principle a higher scrutiny threshold for 18 Group Litigation Order claimants. He has tasked his 19 officials with agreeing a sensible level with us, rather 20 than picking a figure say as £100k of £50k. Our current 21 scrutiny policy is rather [selective] and just covers up 22 to £10k shortfalls, so moving to a higher and less 23 restrictive threshold as soon as possible would be 24 useful and enable us to process more claims more 25 quickly." 45 1 Can you explain to us what the "higher scrutiny 2 threshold" means? 3 A. It would mean when you did receive a claim, whatever 4 that scrutiny threshold was, if it was below that 5 threshold, then there would be a pretty light touch 6 process in agreeing the claim. So if it's £10,000, or 7 you expect to say it's less than £10,000, just pay it. 8 And what the officials were keen to do and I was keen to 9 do was raise that threshold so, if you'd got a claim of 10 up to, say, £100,000 that light-touch process would be 11 applied to that particular claim. 12 So you wouldn't get into this lawyer-to-lawyer 13 process of arguing about semantics, I would say, in many 14 cases about the level of the claim in certain areas. 15 You'd just pay it. 16 Q. So by raising the level, you would bring more claims 17 within the no or lesser scrutiny approach? 18 A. That's right, yes, I think it's fair to say probably 19 this is one of the alternatives to a fixed-sum award. 20 The difficulty with this in replacing a fixed-sum award, 21 is that clearly you can't reveal this scrutiny threshold 22 to the claimants because everybody would just put 23 a claim in, if it was lower than that, up to £100,000 24 level, if that's where you set the threshold. So it's 25 something you use internally, rather than disclose 46 1 externally. 2 Q. The email continues: 3 "This leaves the question of our proposed £100k, 4 which the Chancellor is resisting on the basis of 5 concerns about precedent for other compensation schemes, 6 as well as potential repercussions. As we explained 7 ahead of the recent [Secretary of State] meeting, we 8 floated the idea of a £75k upfront payment with 9 [Treasury] officials, but were again rebuffed as 10 a matter of [Treasury] principle. Our understanding is 11 that the [Chief Secretary to the Treasury] is 12 sympathetic to our proposals from a political 13 perspective but feels unable to go further because of 14 advice from [Treasury] officials about the impact on 15 other compensation schemes, (eg Infected Blood) and the 16 strong views of the Chancellor. 17 "I would be grateful for Ministers' views on 18 handling, please." 19 So that's a direct request to you; is that right? 20 A. Yes. 21 Q. "In addition to reaching agreement at official level to 22 an amended scrutiny threshold (even at £40k would enable 23 us to process a significant number of GLO cases more 24 rapidly), minister Hollinrake/[Secretary of State], 25 could consider writing to [Treasury] ministers to 47 1 represent the case [to them] and ask them again to 2 reconsider. I would prefer not to hold up progressing 3 the scrutiny threshold because we are processing cases 4 every week and it may take a while for that political 5 conversation to reach a conclusion." 6 I'm reading between the lines here -- can you help 7 with whether I'm correct in my reading between the 8 lines -- that there was a difference of view between the 9 Chief Secretary of the Treasury and the Chancellor and 10 you were being asked as a minister to approach the Chief 11 Secretary to the Treasury, ie at many ministerial level, 12 rather than going back to the Chancellor who had 13 expressed his view more than once. 14 A. I might be wrong but I don't think the Chancellor and 15 the CST did differ actually. I think the CST -- Chief 16 Secretary of the Treasury -- was happy to look at 17 a higher level of scrutiny but still had the same 18 reservations about the fixed-sum award, the upfront 19 offer, as he calls it here, as the Chancellor did on 20 value for money grounds. And I know this has been 21 a topic of conversation, and you've queried it, I think, 22 Sir Wyn in terms of public money: there is a requirement 23 within the work we do and within the Civil Service to 24 protect public money and to look after public money, and 25 there's -- it may seem callous in this regard, and I can 48 1 understand why people might see it like that, but you've 2 got responsibility to the individuals their families, of 3 course, to properly compensate them. You've also got 4 to -- so be fair to them. 5 You've also got to be fair to other postmasters so 6 everybody gets treated equally but you've got to be fair 7 to taxpayers as well, so I do understand the grounds 8 whereby ministers and officials would push back against 9 the fixed-sum award because it does mean extra levels of 10 compensation, it does mean more money paid out. 11 So I don't think anybody pushed back on the higher 12 scrutiny level, although they did ask us to decide upon 13 the -- or argue for what the right level, but the 14 fixed-sum award was more difficult to agree, it is quite 15 radical. 16 My experience was that civil servants, certainly 17 Carl Creswell and Rob Brightwell, were very supportive 18 of that, as was David Bickerton and the Secretary of 19 State, indeed, but when it gets to Permanent Secretary 20 level, both in the Treasury and in the DBT, the 21 Department for Business and Trade, at that point in 22 time, somebody has to sign it off on value for money 23 grounds, they would not do that, it would have to be 24 ministerial direction, which I was very happy to sign, 25 if somebody had asked me to do that. But I can 49 1 understand why it's controversial. 2 Q. Could you have been the appropriate person to have 3 signed a ministerial direction? 4 A. I don't think without the support of the Secretary of 5 State, realistically, or indeed the Chancellor, that 6 would have been possible. 7 Q. Do you think the Treasury regarded the Post Office 8 scandal as the priority that you evidently did? 9 A. Yes, I do, although I probably had greater experience of 10 it than some perhaps other people working in the 11 Treasury. So I think anybody who has had the direct 12 experience -- my predecessor ministers or civil servants 13 dealing in these cases, or many of the backbench Members 14 of Parliament, or many of the campaigners, obviously, 15 here and further afield knew how serious it was; I don't 16 think until the TV series was aired that many -- that 17 there was -- that was a view widely held everywhere in 18 Government, and everywhere in the public consciousness. 19 Q. What was your response to the Treasury's resistance to 20 the proposals that were being made to it? 21 A. Well, keep making the case, as we did. One-to-one 22 conversations with various ministers in Treasury. You 23 know, I perfectly understood the response because of the 24 reasons I set out earlier about public money but I still 25 think it was the right thing to do, so we kept arguing 50 1 for it. But, in the meantime, I think as Carl says in 2 this email, he says that we'll carry on with things 3 like -- things we could do, in the meantime, things like 4 the scrutiny threshold, which would help, while I was 5 still continuing to make the case for fixed-sum awards, 6 as we'd got agreement to do in the overturned 7 convictions. 8 What this is really talking about is expanding 9 fixed-sum awards into the GLO and the HSS, as eventually 10 we did. 11 Q. Could we look, please, just before the break at 12 POL00448411. 13 A. Before we get to that, actually, just the reference 14 there to the Infected Blood, one thing -- and this is 15 obviously not a matter for this Inquiry, Sir Wyn -- but, 16 to me, the Infected Blood Scandal should have fixed-sum 17 awards, and that's not a feature of those -- of that 18 compensation schemes right now -- scheme right now. 19 SIR WYN WILLIAMS: I think I've got my hands full without 20 that! 21 THE WITNESS: I understand that. 22 MR BEER: Thank you. This is a letter with which the 23 Inquiry is familiar. It's from some anonymous Post 24 Office whistleblowers. I think you've seen this as 25 a result of disclosure to you in the Inquiry. Did you 51 1 see this at the time? 2 A. Not at the time. This was about a week after the 3 election was called, so that kind of correspondence 4 would not be shared with me. It may not have been 5 shared with me in the normal course of events because 6 I think this letter is unsigned, actually. So -- 7 Q. It isn't signed. It's signed off by the "POL 8 Whistleblowers". We can look at that at the foot of 9 page 2. 10 A. Yes, signed off unnamed people, which I've got to say, 11 in my experience as a Member of Parliament, I think 12 people who are not prepared to put their name to 13 a letter, I think you're bound to think twice about 14 completely trusting the contents of something that's not 15 signed by an individual. 16 Q. Could you think the opposite: that the strength of views 17 that are expressed are to be accorded particular weight 18 because the people who are writing the whistleblowing 19 letter think that retribution will be taken against them 20 if they are identified? 21 A. I think it's something you should read. I don't think 22 you shouldn't read it, but I think it's -- if somebody 23 makes allegations that they're not prepared to stand up 24 to the individual -- I understand why somebody might not 25 want to, particularly if they hold a position that might 52 1 be affected by the claims they make. 2 So I say I'm not saying you shouldn't read it or ask 3 questions on the basis of it but I think to trust it 4 completely on the basis it's not something you can then 5 go and interrogate both sides -- clearly you can ask 6 questions of the people who were -- allegations were 7 made against but it's -- obviously, you can't then go 8 and ask questions of the people that have made the 9 allegations. 10 Q. Thank you. It's just one passage in paragraph 4 on 11 page 1, the paragraph beginning "Furthermore". It says: 12 "... key people are not being appropriately managed 13 by [that's Nick Read or Mr Read]. You are no doubt 14 aware that Ben Foat has been given significant time off 15 work (he has hardly been seen this year) and for the 16 last few months he has been on permitted fully paid 17 leave, to allow him to prepare for his half day at the 18 Inquiry on Monday, 3 June. Not only this, but he has 19 also had a forensic lawyer assigned to him for over 20 12 months, to assist with the questioning at the 21 Inquiry, costing the public (we are told) [about] 22 £700,000 (we are all wondering why on earth he has to 23 practice so hard to tell the truth)." 24 Then it continues. Were you aware of this 25 suggestion, that one of the witnesses to the Inquiry had 53 1 had a lawyer supplied to them which had cost about 2 £700,000? 3 A. I wasn't aware of that figure. I mean, it doesn't 4 surprise me that they had legal advice. I had legal 5 advice to give evidence today to understand the process 6 and what was expected of me. I was very surprised that 7 anybody needed time off to be able to prepare for this 8 Inquiry. I've not had any time off to prepare for it. 9 Q. But I think you are saying that, because of the timing 10 of this letter, of 20 May, it was within the purdah 11 period and, therefore, it wouldn't have got through to 12 you? 13 A. Yes, I never saw this letter at the time. I only saw it 14 when it was given to me as part of the bundle. 15 Q. So it wasn't something -- because on the one hand, 16 you're campaigning quite hard for fair provision of full 17 and fair compensation to subpostmasters and, on the 18 other, on the face of it, a relatively high sum of money 19 is being expended for preparation to give a half day's 20 evidence at the Inquiry. But this didn't essentially 21 arrive in your inbox? 22 A. I don't know if it's true but it seems an absolutely 23 ludicrous amount of money if that's the case. 24 Q. But it didn't get through to you? 25 A. No, I never saw this letter until I saw it the other 54 1 day, so -- 2 Q. So you couldn't have caused it to be investigated or 3 explored? 4 A. No. 5 MR BEER: Thank you. 6 Sir, might that be an appropriate moment for the 7 morning break? 8 SIR WYN WILLIAMS: Yes. 9 MR BEER: Can we break until 11.05, please? 10 (10.49 am) 11 (A short break) 12 (11.05 am) 13 MR BEER: Thank you, sir. 14 Mr Hollinrake, can we just continue on the issue of 15 compensation a little longer and go back to paragraph 55 16 of your witness statement, which is on page 14. Thank 17 you. 18 You mention in (b) and (c) essentially evidential 19 thresholds for claiming and then payment of 20 contribution, yes? 21 A. That's right. 22 Q. Are you aware that UKGI was involved in setting the 23 minimum evidential thresholds? 24 A. No, I wasn't aware of that. 25 Q. Who did you think set the minimum evidential thresholds? 55 1 A. Well, I guess I assumed they were set by DBT, or whoever 2 established the terms of compensation that were formed 3 on the basis of how their compensation processes would 4 work. So I expected it would be the Department in 5 consultation with legal representatives. 6 Q. Would you agree that medical records are necessary for 7 those claims which allege some personal injury, whether 8 physical or psychiatric, so that the severity of the 9 injury can be accurately assessed? 10 A. I think that was definitely the principles of the 11 scheme. I think what we tried to do later on is reduce 12 the need for evidence around that. So you might say, 13 well, somebody in these circumstances, we would expect 14 the compensation for somebody in that circumstance, 15 whatever happened to them, to be at this level, rather 16 than the need for specific assessment of that -- the 17 impact on that individual. That's what we were trying 18 to get to, to reduce the need for this evidential 19 requirement. 20 But to form a basis of somebody's claim, I think 21 that -- I understand why that was part of the original 22 scheme. Because every situation is different, therefore 23 its difficult to assess everybody's loss or impact on 24 somebody on the basis of a tariff, but what we looked at 25 doing later on, as I said earlier in my evidence, is 56 1 maybe there's a way to do that without the need 2 specifically for that to be evidenced. If a claimant's 3 lawyer could say, "Well, this is the impact, we believe 4 based upon other experience we've had with other 5 claimants, this should be the level of compensation for 6 the impact they've had on their lives", and then 7 hopefully that could be then agreed without needing for 8 a detailed assessment, which should accelerate the 9 process of compensation. 10 Q. Presumably, you'd be aware that, in some cases, 11 obtaining medical evidence can benefit claimants by 12 achieving a higher award or, for example, where the 13 expert recommends that treatment is necessary, then the 14 cost of that treatment can be part of the claim? 15 A. Yes, and nobody would ever want to stand in the way of 16 what -- any assessment that would lead to fair 17 compensation of an individual's claim. It wasn't saying 18 it would be a cap, it was simply saying is there a way 19 to expedite this on the basis that you could have a sum 20 that might reflect on the impact of that individual that 21 could be agreed between -- would be the claimant's 22 side -- the claimant's representatives, and the 23 representatives on the other side of the scheme, be it 24 DBT or Post Office. 25 Q. As to (d), "the involvement of lawyers on all sides", is 57 1 it your view that postmasters should have the assistance 2 of a lawyer for complex claims? 3 A. Oh, yes. 4 Q. Are you aware that the Department has rejected 5 a suggestion that early legal advice, ie pre-offer, for 6 postmasters should be funded by Post Office? 7 A. I think the different schemes operate in different ways. 8 HSS operated in a different way. I think the legal 9 advice came down the line, rather than upfront. So 10 I think the idea behind the HSS scheme, as I understand 11 it, was to try and make it take away some of that 12 lawyer-to-lawyer friction and to try to make these 13 claims -- try and expedite the claims to make them be 14 able to settle more quickly. I understand why it was 15 done like that, but that may well have meant that people 16 didn't get the right advice early on, which is one of 17 the reasons we wanted to push for fixed-sum awards on 18 the HSS scheme because there was a concern that things 19 like consequential loss weren't properly assessed in the 20 original scheme. 21 Q. Are you aware that, in the majority of cases in the HSS, 22 they do not involve lawyers or forensic accountants' 23 evidence? 24 A. I think I understood that to be the case yes. It was 25 supposed to be assessed in a non-adversarial process, so 58 1 the panel of KCs and other experts were there to try and 2 take an inquisitorial approach to assessment of the 3 compensation and pay it that way. It was, as I say, 4 an attempt to take away some of that lawyer-to-lawyer 5 friction but there may be concerns then raised that did 6 people get the right advice right at the start. 7 Q. Then, finally on this, are you aware that, for cases 8 outside the parameters of the funding agreement between 9 DBT and Post Office, the Post Office is required to wait 10 for settlement offers to be ratified by the Department 11 who then have, on occasions, to liaise with the 12 Treasury? 13 A. I wasn't aware specifically of that process, no. 14 Q. Can we turn, please, to the issue of the relationship of 15 Postmaster Non-Executive Directors to the Board, and 16 with Government. In a witness statement provided to the 17 Inquiry -- there's no need to display it, the reference 18 is WITN11170100, at pages 119 to 110 -- Saf Ismail, one 19 of the Postmaster NEDs, said that he "had conversations 20 with individuals at DBT", namely Carl Creswell and the 21 Minister, you, to raise concerns that the business of 22 the Post Office was in a "very precarious position" but 23 that he felt "ignored". 24 Firstly, do you remember Mr Elliot (sic) coming to 25 you? 59 1 A. I remember we had a meeting, an online meeting with Saf 2 Ismail and Elliot Jacobs, I think, to discuss where the 3 Post Office was and their role within it, in terms of 4 being non-executive roles, and the potential change of 5 chair. And, of course, I can't think specifically -- 6 I can't remember specifically them saying that, you 7 know, things -- I don't remember them saying everything 8 was fine, nor can I ever remember them saying that 9 things were disastrous and unfixable, and certainly my 10 feeling was, in that conversation that we had with them 11 online in that meeting, is that they were both keen on 12 the new chair we were recommending to take over at the 13 Post Office, Nigel Railton. 14 Q. Can we look, please, at BEIS0001020. You will see this 15 is an e-mail from and to your private office email 16 address, yes? 17 A. Yes. 18 Q. This is, as we've seen in the past, a means sometimes 19 employed of recording a meeting: an email to yourself, 20 essentially. 21 A. That's right. 22 Q. In this case, it was from Jamie Lucas again to himself, 23 essentially a minute of the meeting; is this the meeting 24 you were referring to? 25 A. That is right. 60 1 Q. It's 28 March this year. You will see it records, in 2 a sort of semi-verbatim fashion, what was said with you 3 being referred to as "Kevin", Mr Jacobs as "Elliot" and 4 Mr Ismail as "Saf". 5 You'll see there's some quite general information 6 passed and, essentially, sort of pleasantries right at 7 the beginning, where I think you're presumably warming 8 each other up at the beginning of the meeting there. 9 Then if we look at the second paragraph, you say: 10 "... we are on the same page on central costs." 11 Mr Elliot says: 12 "The minimum wage ... is becoming a problem." 13 Bottom of the page, you say: 14 "Agree with what you've said, the top and the bottom 15 of it." 16 This is essentially about not Horizon issues at the 17 moment here; speaking about, essentially, the future of 18 the Post Office. 19 Then over the page. They say that: 20 "It's a lack of a roadmap [that's a problem]. We 21 live in [I think that's supposed to be a 'never-never 22 land'] between sustainable business and social purpose." 23 You ask: "Who's your stand out?" 24 Mr Jacobs replies: "Nigel Railton." 25 Mr Ismail agrees. Then it continues. 61 1 What was the purpose of your engagement with the 2 Postmaster NEDs in this way? 3 A. I guess to find out what was going on at the sharp end 4 and what they really felt about the business, and I was 5 keen to have their confidence that we were truly 6 interested in making sure that the Post Office had 7 a viable future, not just as a network but also at 8 an individual postmaster level. So I always liked to 9 talk to the people who were at the sharp end, and 10 I think both Saf and Elliot both operated as well as 11 non-execs, so they are postmasters as well as non-execs. 12 That's the reason they're on the Board. 13 So I was very keen to hear from their perspective 14 but also for them to feel that they were being heard. 15 Q. Was this part of a regular series of meetings with them 16 or was this essentially a one-off? 17 A. I think it was a one-off, although I had spoken to them 18 separate -- in separate situations, when I attended 19 a board meeting, and I think when we were at various 20 conferences, National Federation of SubPostmasters 21 conferences as well. So it was never something I was 22 afraid to do, talking to the people who were the 23 operators of the network themselves. 24 Q. In general, what was your relationship like with the two 25 Postmaster NEDs? 62 1 A. I think good. As I say, it wasn't a day-to-day working 2 relationship but I hope they felt that I was willing to 3 listen to what they had to say, and the thing, the 4 responses I gave them were what I truly felt and, as it 5 says in this exchange, I did agree with a lot of the 6 things they were talking about, particularly the need to 7 reduce central costs, so that more of the revenue that 8 flowed into the Post Office centre then flowed out to 9 the postmasters who were actually doing the day-to-day 10 business at the sharp end. 11 Q. Do you understand how Mr Ismail feels able to say that 12 he felt ignored after his conversation with you? 13 A. I was surprised that's the case, you know, but if that's 14 how he feels, that's how he feels. 15 Q. Did you take any action as a result of the things they 16 said to you in the course of the meeting? 17 A. I think the principal thing we were talking about here, 18 which is what we certainly agreed on, was the need to 19 cut costs so centre, which is something I was very keen 20 to do, that was something I'd talked to Nick Read about 21 and other members of the Post Office Board. I got 22 frustrated, I think I said in my witness statement, that 23 that didn't happen more quickly. But that was certainly 24 a conversation I had with Nigel Railton when we first 25 met about the potential for him to take over as chair. 63 1 And I understand, you know -- and Nigel was always 2 very keen to do the same. He felt the same, and I think 3 he has spoken subsequently or recently about his plans 4 to reduce the cost at the centre, which definitely need 5 doing. 6 So I don't think there's anything in here 7 fundamentally, if we're talking about central costs or 8 the shape and size of the network, which both are 9 matters for consideration and action, or anything that 10 I didn't agree with or wasn't willing to act upon. So 11 I'm surprised he felt ignored. I'd be very happy to 12 have a conversation about why he felt that. 13 Q. Thank you. That can come down. 14 Turning, then, to the issue of cutting central 15 costs. Can you firstly explain in summary terms what 16 you mean by cutting central costs? 17 A. Well, it's -- I had a business background, and when you 18 hit trouble in a business, as the network has -- and 19 lots of those troubles have come as a result of customer 20 behaviour, as well as other matters, in terms of how 21 difficult it is as a postmaster to make a living. So, 22 you know, we use high street shops less than we did 23 before because people have different ways of shopping. 24 I understand that. And so -- and the Post Office and 25 lots of the services we used to get from the Post 64 1 Office, such as our driving licence or passport, many of 2 us do online now, which has hit postmaster income 3 significantly. 4 So what you do when you're in a situation where your 5 branches are less profitable, the first thing you should 6 look to do, in my experience, is cut costs at the centre 7 because they are not the most important -- the most 8 important people in your network are the people serving 9 the customers day to day because they're generating the 10 revenue. So what you'd expect to happen, therefore, is 11 the size at the centre, particularly the executive and 12 the management team, you look at how many people you 13 have in that Executive Management Team and look to cut 14 it. And, typically, what I did in my own business when 15 you hit trouble in the past, you would have cut that by 16 at least 40 per cent, if not more. 17 And that's some of the conversations we had with the 18 Chief Exec and their team and the Finance Director, or 19 the Acting Finance Director, the acting CFO. You know, 20 how many people were at different salary levels within 21 the organisation, and what was going to be the direction 22 of travel in terms of reducing the costs of those people 23 at the centre. There were other costs as well, and the 24 plans to reduce costs of directly managed branches, for 25 example, which are a significant cost, and to the -- to 65 1 Post Office Limited, and that was something we discussed 2 but, certainly, focusing on the people, the management 3 team at the centre and the Executive Team, I think 143 4 people earn £100,000 or more, and you expect there to be 5 a direction of travel in terms of reducing the numbers 6 of people who earn that kind of money. 7 Q. Can we turn, please, to page 8, paragraph 30 of your 8 witness statement. Under the heading "Post Office Board 9 and culture", within paragraph 30, you say this: 10 "... there are also signs that the Post Office 11 remains too inward looking and dysfunctional." 12 Then examples of being too inward looking and 13 dysfunctional you then give. You say: 14 "Good examples are the failures to disclose 15 information to the Inquiry, [2] the slow pace of 16 disclosure for compensation cases, [3] the reluctance to 17 reduce central costs to allow a consequential increase 18 of revenue to postmasters ... [4] the Henry Staunton 19 saga, [5] the failure to deal with longstanding issues 20 with senior executives, such as Alisdair Cameron, [6] 21 the Remuneration Committee's decision and processes 22 around the sign off of bonuses for complying with the 23 Inquiry's disclosure requests, [7] the persistent and 24 aggressive lobbying by the CEO to significantly increase 25 his remuneration." 66 1 It's quite the list. 2 A. Yes. 3 Q. Amongst those matters that you mention is a reluctance 4 to reduce central costs to allow a consequential 5 increase of revenue to postmasters' remuneration. The 6 way that's written, I take two things from it, can you 7 tell me whether I'm correct to do so: firstly, that you 8 drew a link between the reduction of central costs and 9 the increase of revenue to postmasters? 10 A. Well, inevitably there is. 11 Q. Was that the purpose of the reduction, in your mind, of 12 central costs? 13 A. Yes, of course. 14 Q. Then the second thing is that there was a reluctance to 15 do so -- 16 A. Yes. 17 Q. -- by the Post Office? 18 A. Absolutely. 19 Q. Who within the Post Office did you detect a reluctance 20 in to reduce central costs? 21 A. Well, the Chief Executive. I mean, the Chief Executive 22 carries the can for everything and it's not easy to be 23 a Chief Executive and it's not easy to be a Chief 24 Executive of an organisation that had hit so much 25 trouble. So I sympathise about the difficulties of 67 1 running this organisation, but that -- I don't 2 sympathise with doing things that were clearly needed to 3 be done. 4 And had Nick Read come back to me and said, "No, 5 you're wrong, Minister, Kevin" -- whatever you want to 6 call me -- "we need to keep the people for this, that 7 and the other reason", then I would have listened to the 8 argument, of course, but I never heard a compelling 9 reason why that should not be the case. There was, as 10 I understood it, an acceptance that there should be 11 an area where we would look to save costs, that could 12 mean then more money flowed into the postmasters 13 themselves. 14 But then nothing happen about it, despite our urging 15 at several -- at every juncture, at every meeting. And 16 you could easily say, "Well, you should have done more" 17 and I would hold my hands up and say I should have done 18 more to insist upon this, but that was never properly 19 forthcoming and that, to me, is a failure of leadership. 20 Q. Can I look at those two things that I've taken from the 21 sentence, and that you've confirmed, then -- the first 22 of them is the link between a reduction in central costs 23 and increased remuneration for subpostmasters, and that 24 as an aim -- by looking at POL00447841. You'll see this 25 is a letter from you to the then Chairman, Mr Staunton, 68 1 of 29 June 2023. It's a five-and-a-half-page letter 2 including its annex, and its heading sets out its 3 purpose, namely to set out the strategic priorities for 4 2023 to 2024. 5 Could you just explain why you write letters of this 6 kind and what their purpose is? 7 A. Obviously, we are the shareholder for the organisation 8 and, therefore, it's up to us to set out the priorities 9 that then the Chair and the Chief Exec should then focus 10 upon. 11 Q. Page 2, please. You say: 12 "... I would like you to focus on the following 13 priorities, and align the reward package to the 14 shareholder priorities ..." 15 So "align the review package to the shareholder 16 priorities"; what does that mean? 17 A. I would guess that's a case of the -- the -- any bonuses 18 that would be due to senior executives should reflect 19 the priorities that are set by the shareholder. 20 Q. Okay: 21 "1. Effective financial management and performance, 22 including management of legal costs to ensure medium 23 term viability. 24 "For the [financial year 23/24] the Post Office 25 should ..." 69 1 Then as the fourth bullet point: 2 "Maintain stringent cost control, and maintain 3 a clear focus on value for money and efficient delivery 4 across the cost base, including ..." 5 Then there are five sub-bullet points, the last of 6 which is: 7 "Other measures aimed at reducing central costs 8 wherever possible." 9 Is this the record, essentially, of you telling the 10 Post Office to reduce central costs? 11 A. Yeah, I mean that's one of the records. The other 12 records containing within the meetings that are minuted 13 between myself and Nick Read. 14 Q. But this is a particularly formal way of doing it -- 15 A. Yes. 16 Q. -- by setting out the shareholder strategic priorities; 17 is that right? 18 A. Yes. 19 Q. This says that the direction to reduce central costs 20 has, as its aim, the medium-term viability of the Post 21 Office, yes? 22 A. Yes. 23 Q. In the heading at the top. 24 A. That's what it says, yes. 25 Q. Rather than with a view to increasing postmaster 70 1 remuneration. In the letter, it doesn't set out, as 2 a strategic objective, the need to increase postmaster 3 remuneration, or that the Post Office should work 4 towards that. Was that a strategic priority? 5 A. Yes, it definitely was. It wasn't a case I was trying 6 to do this to reduce the contribution by the taxpayer -- 7 and it was a case of, from my focus, it was very much -- 8 all the conversations I had with postmasters, be it 9 through the conferences I attended or by other means, 10 was very much an understanding that life was difficult 11 as a postmaster. Many were working at or below minimum 12 wage, and the Post Office itself would not be viable if 13 its network would not be viable. So that's the most 14 important part in terms of viability of the network, in 15 my view. 16 Q. If we just look through, just if we scan through the 17 four strategic priorities, there's a mention at the foot 18 of that page there, in the last bullet point under 19 number 2 of postmasters. But that's in the context of 20 rolling out to them the Strategic Platform Modernisation 21 Programme. So far as I can see, that's the only mention 22 of postmasters in the strategic priorities, if we go 23 over the page and look at priorities 3 and 4. Are you 24 saying that it was to be taken as read that postmaster 25 viability and, as part of that, remuneration increase 71 1 was a strategic objective? 2 A. Well, I don't think anybody who had an interaction with 3 me in terms of the management team or leadership team 4 would have any doubt that it was my intention, and 5 a requirement of their work, to make sure that we reduce 6 costs to make sure that -- and the beneficiaries of that 7 should have been the postmasters. It may not 8 specifically say this in here and maybe it should have 9 done, but that was certainly the case, that's what we 10 were intending to do. 11 Q. Can I look at the next part of the equation then, in 12 that sentence that we read, which was that there was 13 a reluctance within the Post Office to reduce central 14 cost, by looking at BEIS0000805. I think this is 15 essentially a presentation or a series of slides for 16 a presentation for a meeting that was held on 5 December 17 2023, which I think you attended? 18 A. Mm. 19 Q. This is part of the Post Office presentation to you, or 20 to the meeting at which you were present. It's, 21 I think, annotated up the slide pack if we look, for 22 example, at page 3, presumably by somebody at the 23 Department because this was disclosed to us by the 24 Department. 25 Overall, can you just describe the purpose of the 72 1 meeting; can you remember? 2 A. Well, obviously, central costs is mentioned there, and 3 one of the -- I think the next slide then talks about 4 the number of people on high salaries. So I'm not 5 saying the only purpose of the meeting was to look at 6 central costs but, as far as I was concerned, that was 7 one of the most important areas for discussion at the 8 meeting. 9 Q. Can we turn to page 7, please: 10 "Further scope for self-help is possible but this 11 either involves trade-offs in the near term or it 12 delivers benefits outside the [three-year plan]." 13 Then this the Post Office speaking, essentially: 14 "We have cost saving targets for [the financial year 15 23/24] ..." 16 I think that's a reference back to the letter we 17 just looked at: 18 "... and we will have further targets for [24/25]." 19 Then: 20 "However cash constraints limit what we can deliver 21 in the near term. 22 "If [the Department] was to [do something] (and 23 noting subsidy has been flat for five years) we would 24 [have to do something] we would have more funds to 25 support cost saving activity. 73 1 "We know our costs can and should be reduced and we 2 have a track record of taking costs out across our 3 business over the last ten years. But to have any 4 material lasting impact we need access to funding. 5 "With limited capacity, tight cash and uncertain 6 future funding, working up detailed cost saving plans is 7 speculative and high risk. Plans developed today can 8 only be implemented today." 9 Was this Post Office saying to you that cash 10 constraints limited how far the Post Office could cut 11 its central costs, further than it was already doing 12 without Government support? 13 A. Yes, that's right. That's what they're saying. 14 Q. Do you agree that Government constraints, in fact, 15 significantly limited how far Post Office was able to go 16 in cutting central costs? 17 A. No, I don't. And the conversation I think has been 18 minuted elsewhere that my -- whenever we discussed this, 19 there are things like directly managed branches, for 20 example, redundancies at the centre, all these things 21 cost money. In the short-term there is a short-term 22 impact when you make these decisions, I completely 23 understand that. 24 My clear message to Nick Read and others was, "You 25 make the business case for that investment that we would 74 1 need to get from Treasury to fund those changes, and 2 I'll make the case for you to make those changes". So 3 there should have been nothing that would stop Nick Read 4 or others making the business case to me and, if it made 5 sense, I would have taken that to Treasury to get the 6 money, if that made financial sense to do so. 7 Q. So what you were being told on this occasion evidence of 8 or an example of the reluctance to reduce central costs 9 that you've described? 10 A. Well, it was one of the barriers that might be put in 11 the way. The response I always get to that is "Fine, 12 okay, we'll come back with a business plan to do that", 13 I never got that business plan back. So there was never 14 a clear argument made to me to say, "Okay, you put X 15 amount of money in here, we can deliver that, we can 16 bring that money back to you in savings", or in terms of 17 how that may work over a period of time. And so that 18 was never the case that that was -- that -- it was never 19 the case that that case was made. 20 I've heard this a lot from a business perspective, 21 that you need people at the centre to do all the work at 22 the outside and even though the outside is getting 23 smaller and clearly, in many ways the Branch Network is 24 getting smaller because some of those branches are not 25 physical branches any more, they're drop and collects 75 1 and other things, and yet the centre remains the same 2 size. To me, that's wrong. That's the wrong emphasis. 3 The first thing you should look to do is reduce costs at 4 the centre. 5 It's not uncommon that the management team at the 6 centre don't want to do that because there are lots of 7 people they work with on a daily basis. So it's 8 a difficult thing to make redundancies. I've been 9 through it. It is heartbreaking. You are letting 10 people go you've worked with for a long time but that 11 doesn't mean that's not the right decision to make, 12 and -- but the difficulty here was it just did not move 13 forward at the pace it should have done. 14 Q. You tell us in your witness statement that the solution 15 is good leadership, nothing can replace that. It's 16 paragraph 48. 17 A. Yes, I said that. 18 Q. Would you accept that, as the Government minister for 19 this 18-month period, you had a role in the leadership 20 of the Post Office? 21 A. Yeah, of course. You could easily make the argument 22 I failed, I could have pushed harder. I will hold my 23 hands up to that effect. The thing is, you can't do it 24 for them, the Chief Exec is there for a reason, paid 25 a lot of money to do that job, the Chair the same, and 76 1 the other in the management team. You can see how many 2 people in the organisation -- there are 43 people, 3 I think, in the organisation paid more than £150,000 4 a year, so you'd expect those people to be competent at 5 delivering on priorities set by the shareholder. 6 Q. You say this of Mr Staunton, if we turn it up, please, 7 it's page 9 in your witness statement, at 34, which is 8 at the bottom: 9 "Whilst I did not have regular contact with Henry 10 Staunton, as Nick Read was my principle [sic] point of 11 contact at [Post Office], my own view of Mr Staunton was 12 that he was incapable of chairing this organisation. 13 I first started to doubt his judgement only a few days 14 into my ministerial role when he strongly advocated a 15 very large percentage increase in the CEO's 16 remuneration. I was very aware from my meetings with 17 senior officials at UKGI -- Tom Cooper and then Laura 18 Gratton -- that they did not rate him very highly and 19 felt he was a Chair from a previous generation." 20 Given that you had doubts about Mr Staunton as soon 21 as you took office and heard from others about his 22 inadequacies, why did it take a considerable period of 23 time after then to essentially move against him and 24 ensure his removal? 25 A. I don't believe you should go round sacking people on 77 1 a whim. I always try to work with people in my business 2 life, and also in this life, in trying to give people 3 the opportunity to get the job right. Now, that was 4 an early reflection in terms of the remuneration point, 5 I wasn't -- I was -- it wasn't handled directly by me; 6 it was my Secretary of State, Grant Shapps, who handled 7 the remuneration situation. 8 But, certainly, a chair coming on and arguing for, 9 I think -- I've never seen the letter but I think it was 10 a doubling of Mr Read's -- Nick Read's salary, I think 11 we all were pretty shocked by that within the 12 Department. So, at that point in time, red flags 13 appeared and I think it wasn't the only time he made 14 that case. 15 But, you know, I say, he wasn't my principal point 16 of contact. As I went through this, and certainly, 17 latterly -- it was only latterly that we heard that 18 Mr Staunton's allegations -- I think proven 19 allegations -- of misogyny and racism and bullying, 20 these kind of things that he was -- that he was alleged 21 to have done, you know, over time it became the case 22 that I think it was quite clear his position was 23 untenable and that was a position that was held by UKGI 24 and the civil servants responsible. 25 Q. Why did the senior officials at UKGI not rate 78 1 Mr Staunton very highly, so far as you understood? 2 A. Well, I just don't think they felt he chaired the Board 3 very well. I think, if you look at the report that was 4 done separately, evidenced by Grant Thornton, it talks 5 about some of the processes, meeting discipline, lack of 6 structured management information, all of those things 7 a chair is responsible for. So I guess that was 8 a reflection of some of those failures at board level, 9 and that's very much the responsibility of the chair. 10 Q. In paragraph 36 of your witness statement, you say 11 you're aware of Mr Staunton's allegations, in which he 12 claimed that a senior departmental official had told him 13 to go slow on compensation for subpostmasters and also 14 about the reasons he was given for his departure and you 15 say, "So far as I'm concerned this was nonsense". 16 Can you explain why you think that what Mr Staunton 17 has alleged was nonsense? 18 A. Well, I just don't imagine who he had a conversation 19 with on that basis. And, if you look at Mr Staunton's 20 evidence to the Select Committee, after he was let go, 21 he actually says that there was nothing wrong with the 22 HSS scheme. I think that's, again, evidenced within my 23 witness statement, that he said it was -- that bit of it 24 was going fine. Now, I think anybody who has been 25 through this process as part of the HSS would not say 79 1 "Everything was fine with the HSS schemes". We know 2 there were problems with that. 3 In fact, he refers to that in one of his other 4 emails, this claimant who only received £16,000. That's 5 one of the concerns he raised. 6 So I just do not think that Mr Staunton's evidence 7 holds water on so many different levels. I think that 8 what he -- what I think he says in the Select Committee, 9 the problem was with the overturning of the convictions, 10 which we did. We overturned the convictions of probably 11 700 people but that was something we were in the process 12 of doing at that point in time, something that never 13 happened in the history of Parliament. 14 So I just didn't think that any of his allegations 15 were ever evidenced or ever made sense. 16 Q. Thank you. Can I turn to Mr Read. You tell us in your 17 witness statement that the Post Office was your number 1 18 priority as Minister, that you spent at least 19 25 per cent of your overall time, and at many periods 20 a much higher percentage, focused on the Post Office, 21 and that Mr Read was your principal point of contact at 22 the Post Office. 23 You tell us in paragraph 44 if we move on, please: 24 "As time went on I formed the view that Nick Read 25 was unable to lead the organisation as it needed to be 80 1 led." 2 You say: 3 "I repeatedly asked for basic information about 4 management headcount ... and a plan to reduce ... senior 5 management headcount and cost ... It was like drawing 6 teeth." 7 What information are you referring to: basic 8 information? 9 A. Well, you saw, I think a bit earlier on the -- well, 10 it's in evidence in the pack, if it wasn't shown on the 11 screen -- the numbers of people earning more than 12 £100,000. You'd expect, quite simply, the situation 13 today -- and this is what I set out at various meetings 14 we had, how did you think those numbers -- what the 15 direction of travel with those numbers in a year's time, 16 in three years' time, you'd expect that direction of 17 travel to be significant in terms of reduction of cost. 18 It's quite simple: you'd expect a Chief Exec to 19 deliver that from one Board meeting to the next, so 20 within a month, and that never happened. 21 Q. You tell us in paragraph 46 that you worked 22 constructively with Mr Read, you would meet and talk. 23 You thought it might give him a decent chance to see 24 through the reform of Post Office's culture: 25 "But my view was that the guy was being paid lots 81 1 whilst not doing a very good job. On the other hand 2 subpostmasters ... were struggling to break even at 3 best." 4 What, in your view, were the key issues with 5 Mr Read's leadership at the Post Office? 6 A. Well, I was always being told that -- things within the 7 Post Office nick Read was having problems doing, and 8 motivating the team. I think I was told by Lorna at 9 UKGI that the team needed motivating, we needed to bring 10 somebody else in to motivate the team, the leadership 11 team. Well, that's the job of the CEO, quite clearly: 12 reducing central costs; the disclosure of information to 13 the Inquiry, and to make sure that information was 14 disclosed to cases. I think there was a -- at one point 15 a server was discovered, or two servers were discovered 16 that carried lots of information that hadn't been 17 disclosed to the Inquiry. 18 There were constantly a number of different issues 19 that were being -- that had been raised with me or had 20 been raised in the media, that gave rise to concern that 21 the organisation wasn't being led well. 22 I think, again, this is set out by the Grant 23 Thornton report in terms of the limited effectiveness of 24 the Board, as it was stated in their report on 24 June: 25 a lack of clarity, low levels of trust within the Board, 82 1 no unifying purpose, a lack of succession planning, and 2 we talked before about the processes of the meeting 3 discipline and the people agenda. 4 So it was quite clear that the organisation was not 5 being run as well as it should. As I said before, it 6 was a difficult organisation to run, hugely in the 7 public spotlight because of all the -- because of all 8 what's happened to it. So I'm not saying this job was 9 easy but I think there were some fundamental failings 10 and shortcomings amongst the leadership that meant it 11 hasn't moved forward at the pace it should have done. 12 Q. Paragraph 45, which is above the one highlighted, you 13 say: 14 "Nick Read's pay as CEO was always a running theme." 15 I'm not going to explore that with you but later in 16 the paragraph, at the end, you say: 17 "It was generally thought that Nick Read was always 18 on flight watch, even before this." 19 First of all, can you explain so that I understand 20 what you mean by he was always on "flight watch". 21 A. Yeah, I think Henry Staunton had referred to this, 22 that -- and so that my officials at times -- that he may 23 leave if he wasn't given more pay. So not just that, 24 that's not the only thing that Nick might consider as 25 a reason to leave. You know, he was massively under 83 1 pressure and I think anybody running that organisation 2 would have been. So I understand this was not an easy 3 gig. 4 But I think it principally meant he'd leave if we 5 weren't careful. My response always to that was "Well, 6 you know, if that's the case, that's the case, and we'll 7 find somebody else to lead the organisation if he 8 decides to leave". 9 Q. You tell us later on your witness statement that: 10 "My own view was that we should not be moved by the 11 threats to leave. If he wanted to leave, he should 12 leave." 13 Is that right? 14 A. That's right. 15 Q. Can we look, please, at POL00448706. This is a letter 16 from you of 21 April 2023, about Mr Read's remuneration, 17 to Mr Staunton, the then Chair of the Post Office. You 18 say in the second paragraph: 19 "The Government continues to be grateful for Nick 20 Read's work in leading [Post Office] since his 21 appointment as Chief Executive Officer in September 22 2019, and I recognise the significant commitment and 23 effort he is putting in to tackle the multiple 24 challenges that the company is facing." 25 If you just scan the next two paragraphs, then the 84 1 large paragraph at the foot of the page. So in this you 2 refer to a miscommunication between Post Office and 3 Government, in relation to a backdated pay increase for 4 Mr Read. 5 You say that you were content to approve it and that 6 you recognised the significant commitment and effort 7 he's putting in to tackle multiple challenges. 8 Can you help us, why did you approve the backdated 9 pay increase, if Mr Read wasn't, as you say now, doing 10 a very good job? 11 A. Well, this is fairly early on, don't forget. I think 12 I was moved from the (unclear) Government changes that 13 I think came into effect in February of that year, so my 14 responsibility for this at that point in time was 15 greater. I think the previous Secretary of State held 16 a lot of the responsibility with the Post Office prior 17 to that. The new Secretary of State, Kemi Badenoch, had 18 been very happy to leave me more to it since then. 19 As general principle, I'll work with anybody until 20 I'm ready to not work with that person. So it's not the 21 case of at this point in time we were trying to been 22 about Nick Read's departure. It was the fact that if he 23 was ready to go, he should go. But we weren't saying at 24 this point in time, that it was something we were 25 actively trying to do in trying to get rid of Nick Read. 85 1 So that being the case, we were trying to work with 2 him on the basis of a constructive relationship and Nick 3 Read, at this point, hadn't had an increase in pay, as 4 I think it says in the letter, since 2019. And there 5 was some confusion about when this pay rise is made, and 6 in the context of some much larger pay rises that Nick 7 Read and the Chair was pushing for. It seemed 8 a reasonable thing to pay this relatively modest 9 increase in his pay at this point in time on the basis 10 he hadn't had a pay rise for four years. 11 MR BEER: Mr Hollinrake, thank you very much. Those are the 12 questions that I ask. 13 THE WITNESS: Thank you. 14 MR BEER: Thank you very much for answering them. There 15 will be some questions from the Core Participant 16 representatives taking us up until about 12.30. 17 I think we start with Ms Page. We've got questions 18 from Mr Stein as well, and one from Ms Watt on behalf of 19 the NFSP. 20 Questioned by MS PAGE 21 MS PAGE: Mr Hollinrake, hello. 22 I want to ask some questions about the £600,000 23 offer, which was made to those whose prosecutions were 24 held to be an affront to the public conscience. 25 In January this year, Mr Recaldin from the Post 86 1 Office's compensation schemes, had an exchange with the 2 Department for Business and Trade. He started it off 3 with Carl Creswell and Rob Brightwell. They remained 4 copied in throughout the exchange but the responses came 5 from Beth White. If I can just summarise what he says 6 in his emails, his argument was that the £600,000 was 7 effectively a floor, in the sense that everyone in the 8 Overturned Conviction Schemes would be entitled to it 9 and, therefore, it should be paid to everyone 10 straightaway. 11 His point was that those who were able to show that 12 they were entitled to more could treat it as an interim 13 payment and, for everybody else, it would just be a full 14 and final payment but paid out straightaway? 15 His argument was also that paying it out to everyone 16 straightaway in that fashion would get compensation 17 flowing quickly because everyone is entitled to it, 18 everyone might as well have it, those who still have 19 more to claim thereafter can do so, in the time that 20 that takes; do you see his point? 21 A. I do. 22 Q. Well, the response that he received was as follows -- 23 I think we will have time to bring it up, so I'll ask 24 for it to be brought up. It's BEIS0000738. If we could 25 start on page 2 -- if we could zip down to page 2, thank 87 1 you. This is Beth White and, as I've said, it's copied 2 to Carl Creswell and Rob Brightwell: 3 "Simon, 4 "You asked yesterday whether the aim was to get 5 money as quickly to claimants, or to get F&F [evidently 6 full and final shorthand] to claimants. Our focus is on 7 achieving the latter. This proposal [ie his proposal] 8 doesn't encourage any pace or movement to full and final 9 settlements does it? Ministers and politicians as shown 10 in the Select Committee are keen to take steps to 11 encourage victims getting their full and final 12 settlement as quickly as possible." 13 If we go up, he tries one more time, and then on 14 page 1, Ms White comes back to him again. He says: 15 "So we hold back funds that we could pay to 16 pressurise sorry 'encourage' F&F?" 17 Then her response above that. If I could pick it up 18 from the second sentence: 19 "You asked yesterday whether you should focus on 20 maximising payments or maximising settlements yesterday. 21 We were very clear that we would like you to focus on 22 ensuring that claimants are able to settle their claims 23 as quickly as possible, as this is what ministers and 24 other politicians are keen to achieve ..." 25 Neither Mr Creswell nor Mr Brightwell stepped in to 88 1 contradict that. Was the Department for Business and 2 Trade right to say that ministers wanted to effect full 3 and final settlements ahead of getting payments out of 4 the door? 5 A. Sorry, would you just ask that question again? 6 Q. Well, these responses are saying very plainly, "We don't 7 want you to maximise getting payments out of the door, 8 we want you to maximise getting full and final 9 settlements. That's what we're aiming for". 10 A. No, we wanted both. Will you go back to the original 11 point that Beth made, in that first sentence? 12 Q. Yes, page 2. 13 A. Yes, that's right. You asked whether the aim was to get 14 money out as quickly to claimants or to get full and 15 final settlements to claimants. She says the focus is 16 the latter; I say the focus is on both, because the way 17 the fixed-sum award works, as you will, I'm sure, know 18 is that some people, if they've gone through a full and 19 final settlement would have got less than £600,000. 20 Some would get more. So the point is, it shortens the 21 queue for the others. 22 If you take half the people out of the queue -- 23 because one of the problems we heard is getting people 24 heard that -- their claim heard or getting the 25 assessments made, forensic accountants, experts on 89 1 mental health, physical health, all those things, but if 2 you have fewer people having to go through that process, 3 they can get to the claim point more quickly because 4 people have come out of the process. It was never 5 trying to say to somebody, "Your claim might be worth 6 1 million, we're going to give you 600,000 to get you 7 out of this". It was a choice people could have and 8 they could make the assessment based upon their personal 9 circumstances. It was never trying to shortchange 10 people. 11 Q. Let's have look at how it panned out as far as 12 Mr Recaldin was concerned. In the Inquiry, on Monday, 13 he said this: 14 "I was extremely uncomfortable with that, and 15 I think I'm making my point, articulating what is the 16 right thing to do because I didn't want to delay. It 17 seemed to me I was getting an implication to delay 18 redress in order to hold out for full and final 19 settlement. There's an offer there. I want to pay the 20 offer amount [ie the 600,000] then I don't want to feel 21 restricted about not paying that out because I'm any 22 going to pay out if it's a full and final settlement. 23 But they made it clear, absolutely crystal clear, 'No 24 Simon, the objective is there, black and white, full and 25 final settlement'. 90 1 "So I then had to issue instructions internally to 2 say that those potential interim payments, the 3 Government will not approve them now, and they didn't 4 approve them because they were holding out for full and 5 final settlement." 6 A. He's wrong and, if he'd come to me and expressed those 7 views, I'd have explained to him why he was wrong -- I'd 8 have listened to him. We had a very similar 9 conversation with the Horizon Compensation Advisory 10 Board and Lord Arbuthnot made this argument too: he said 11 "Why can't we pay to everybody and then we let the 12 people who want to claim more". And you can make that 13 argument and James did. But I say, I point to it, if 14 you do that, you will not shorten the queue for people 15 who think they're claims are worth more than 600,000. 16 So I've pointed out before how we've seen this 17 massive uplift in compensation over the last year, which 18 has to be a good thing, a fourfold increase to now over 19 £438 million, I think it is. A lot of that is through 20 the fixed-sum awards. 21 I think of the latest scheme, of the GLO scheme, of 22 the 306 claims submitted so far, 96 per cent have 23 received offers, 295; 228 have agreed offers, I think 24 66 per cent of claims, through the fixed-sum awards. 25 Again, in terms of the new Horizon Convictions Redress 91 1 Scheme: 36 claims have been submitted; 36 offers have 2 been made and paid. 3 So we're seeing much more rapid compensation through 4 this mechanism. That does not stop people going for the 5 full assessment and, if you do if a complete a full 6 claim, which you can do more quickly now because you can 7 access the reports now for the forensic accountants and 8 the other advisers you need, assuming you submitted that 9 claim, then you get £450,000, as an interim payment. 10 So -- 11 Q. Why not 600? 12 A. Why not 600 -- well, it was actually £450,000 as 13 recommended by Sir Gary Hickinbottom, as the payment we 14 should make. I can't remember why we said not £600,000 15 at that time. I guess it's because the claim might not 16 stack up at 600,000. 17 Q. Is it not because it's putting pressure on people to 18 accept the full sum of £600,000? 19 A. That was never the intention. 20 Q. It might not have been the intention; can you not see 21 that's the effect? 22 A. Well, if you -- I'm very happy to hear from you or 23 anybody else in this room, or anybody else outside this 24 room, about ways to accelerate compensation to 25 individuals. We felt this was the best way. I'm very 92 1 happy to have a conversation with you at a later stage 2 why you think -- how we think we might do this in 3 a better way, and the Advisory Board would do that too, 4 but we accepted virtually every recommendation made by 5 the Advisory Board. 6 Our intention was always to try to expedite claims 7 full and final settlement, or full assessment claim, or 8 a fixed-sum award, whichever people would prefer. 9 Q. This was the message that your Department sent to the 10 Post Office: 11 "You asked yesterday whether the aim was to get 12 money as quickly to claimants or to get F&F settlements 13 to claimants. Our focus is on achieving the latter." 14 A. That's not true, and I never had a conversation with 15 Beth about that. If she'd have asked me, I'd have 16 explained it to her. But definitely myself and Carl 17 Creswell and Rob Brightwell, and the Horizon 18 Compensation Advisory Board, were all completely on the 19 same page as this, as this is the right way to do it. 20 Q. One more issue, if I may, Mr Hollinrake. It's about 21 Herbert Smith Freehills. Now, in January this year, 22 Post Office told you that HSF were to be phased out. In 23 March this year, in another meeting, I can give the 24 reference because this is not one that has come up 25 before -- we don't need to look at it -- BEIS0000754, 93 1 you were told, again, that the Post Office were looking 2 at alternative providers. 3 Back in July 2020, in the email that you wrote as 4 chair of the APPG, which we've already looked at, you 5 said on page 2: 6 "I'm also very concerned at the involvement of 7 Herbert Smith Freehills, who I understand are advising 8 on the design and implementation of the Historic 9 Shortfall Scheme. The mere fact that HSF acted on 10 behalf of the Post Office in the legal action with the 11 responsibility to minimise losses should prohibit them 12 from taking any role in a compensation scheme." 13 Of course, you were also aware and you said in that 14 email of their involvement in the compensation scheme 15 for small businesses after the banking scandals and the 16 question marks over their role in that case, as well. 17 It was an obvious problem, wasn't it, having Herbert 18 Smith Freehills involved in the compensation schemes? 19 A. Yes. 20 Q. Yet here they were, four years on, and you were still 21 having warm words about them being phased out, 22 alternative providers. Do you regret not doing more to 23 make sure that they were properly exorcised from all the 24 compensation schemes? 25 A. Yes, absolutely. I mean, you know, I'm sure there are 94 1 some very good people in Herbert Smith Freehills, I'm 2 not criticising everybody who works in that organisation 3 and I'm not saying they weren't trying to do the right 4 thing but perception is reality. I think there's 5 a certain part of -- as has been said earlier within 6 this Inquiry and by the Chair, that we are where we find 7 ourselves, and what's the best way from getting here to 8 there? 9 So, yes, I mean just tearing out a big lump of the 10 existing compensation scheme and the processes and the 11 legal advice of that scheme maybe isn't the quickest way 12 to get compensation out the door, so it does take 13 longer. Should it have happened in the first place? 14 Absolutely no, it shouldn't. 15 MS PAGE: Thank you. Those are my questions. 16 Questioned by MR STEIN 17 MR STEIN: Mr Hollinrake, my name is Sam Stein. I represent 18 a large group of subpostmasters, also people that worked 19 in Post Office branches and we represent people that 20 have been through the Court of Appeal and who have had 21 their convictions overturned, and people that have had 22 their convictions overturned via the legislation. 23 Now you've mentioned and discussed with the Chair, 24 Sir Wyn, the issue of lawyers being involved and how far 25 and to what extent that assists. 95 1 You've had experience yourself, am I right in 2 thinking, with a constituent of yours, who came to you 3 to discuss their issues -- someone that has been 4 affected by the Post Office scandal -- and that they 5 were discussing with you an NDA, non-disclosure 6 agreement, and the potential effect of their signing of 7 the Official Secrets Act; is that right? 8 A. I don't remember that particular case. I did have 9 a constituent in Norton, near Helmsley, who passed away, 10 but I'd never met that individual before, that was the 11 case, who'd been -- was part of the 555. I may be wrong 12 but I don't honestly think I did. 13 I think David Davies brought up the point in 14 Parliament about the Official Secrets Act and the 15 implications that had in terms of the ability for people 16 to speak out. 17 Q. I'm grateful. That's of assistance. 18 Subpostmasters signed the Official Secrets Act on 19 taking up post. As far as I know, they still do so. 20 I'll stand corrected if I'm wrong. One of the issues 21 that we have come across is that they therefore think 22 that that may inhibit them actually engaging with the 23 Post Office, even on such matters as compensation 24 schemes. So that's something that has been raised. We 25 can't go into Parliamentary discussions but that's 96 1 something you're aware of that has been raised. 2 A. Yes, I'm aware of that. 3 Q. We have experience as well that, since the legislation 4 cleared those people who had not had their cases taken 5 before the Court of Appeal before -- because there's 6 a certain issue regarding people that have gone to the 7 Court of Appeal in the past -- but those people in the 8 past whose convictions have been cleared. We've had 9 people contacting my instructing solicitors Howe+Co 10 saying, "We've got this letter about my conviction, is 11 it real? Is this the Post Office trying to do something 12 else?" 13 In other words, the sheer level of mistrust that is 14 engendered by scandals such as the Post Office also 15 means that people need support from lawyers; do you 16 agree? 17 A. Oh, yes. It wasn't a personal criticism of you, 18 Mr Stein, in terms of my earlier remarks on lawyers. 19 Q. Thank you very much. I'll put that one on my website! 20 The other issue, of course, and perhaps slightly 21 more seriously, is that people that have been through 22 these scandals, the Post Office scandal, you mentioned 23 the Blood Inquiry and what happened there, people are 24 damaged, severely damaged. People are damaged in their 25 physical health; people are damaged in their day-to-day 97 1 ability to cope; people's lives are blighted by lack of 2 sleep, mental health problems, and the like, by the fact 3 that they are forced into poverty, by the fact they are 4 forced into trying to cater for the day to day. 5 Now, you're someone with a long track record of 6 supporting small businesses and you know that small 7 businesses depend upon everybody working together to run 8 that business within a family. Yes? 9 A. That's right. 10 Q. So again, the difficulty for those people left in these 11 dreadful situations is that they do need support from 12 lawyers that are prepared to engage at early stages with 13 either Government or what's happened within a scandal in 14 order to provide access way to compensation, yes? 15 A. Quite right, yes. 16 Q. Let's go one step further. The route through which 17 compensation is often argued tends to go this way before 18 inquiries: what happens is, first of all, there is 19 a need to try and see if the Inquiry will seize upon the 20 question of compensation. All of that work is often 21 done pro bono by lawyers, such as Howe+Co, myself and 22 others, to try to, in fact, get the Government -- if the 23 Government is at the root of the scandal or at least 24 part of it, as it is here -- to engage even on the very 25 basis of compensation. 98 1 All of that work has to be done on behalf of a large 2 number of people. One or two people lawyers can cope 3 with on a pro bono basis but you cannot represent people 4 when you're talking about tens and numbers of people 5 that gets up into the larger numbers. There is simply 6 not the capacity for lawyers to do so. So what has to 7 happen is that those lawyers make, as part of their 8 campaign, the attempt to try to get Government to engage 9 on compensation issues. 10 Let me tell you about the next stage. The next 11 stage is when there is a bare acceptance that there 12 might be a need to have lawyers on behalf of claimants, 13 there's then a wrangle about how much they should be 14 paid and about the hours they should spend on such 15 matters. So the next stage is then fighting about how 16 much it is that someone can have. 17 On the other side, what happens is that the 18 Government, represented by lawyers, and indeed the Post 19 Office, represented by many different firms of lawyers, 20 is able to fund the payment for their hourly rates as 21 they go forward. 22 So you can see there is an initial inequality that 23 I'm afraid relates to the claimants' side; do you agree 24 with that? 25 A. Yeah, I do, yeah. 99 1 Q. Now, you say in your statement this: your appointment -- 2 this is paragraph 8, sir -- was: 3 "... manna from Heaven to me because it meant 4 I could actually help to fix something important." 5 You go on to say this: 6 "There wasn't a day, night or weekend that went by 7 when I wasn't doing something on the Post Office redress 8 schemes and transformation." 9 So you understand how much hard work is involved in 10 trying to get things moving in relation to these matters 11 and you understand that that type of work, that day and 12 night work on behalf of people trying to get things done 13 and fixed is very difficult when, essentially, it is not 14 funded at all; do you accept that? 15 A. Totally. 16 Q. Now, you've mentioned the question of working with 17 schemes that don't perhaps, on the Government's side, 18 necessarily have the full engagement of an entire legal 19 team, legions of lawyers working on their behalf. Could 20 you consider this: in scandals such as the Post Office, 21 whereby the Government is part of the problem, the 22 Government owning the Post Office, the single 23 shareholder, unless the Government approaches the 24 question of compensation with a spirit of generosity, 25 there is always going to be a need to have lawyers on 100 1 both sides, probably, fighting it out -- 2 A. Yes. 3 Q. -- because, without a genuine spirit of generosity in 4 relation to the prospect of payment to those claimants, 5 then essentially there will always be a fight and the 6 claimants will have to be represented? 7 A. Yes. 8 Q. Now, Sir Wyn is left with the task -- which I know he 9 welcomes and looks forward to -- which is the drafting 10 of his report. The drafting of this report will take 11 place once all the lawyers stop talking, sometime 12 through this year and into next year. 13 Now, one of the matters that he has to wrestle with 14 are questions of recommendations. We've had by now two 15 other reports that touch upon how do recommendations get 16 implemented. The Grenfell reports and the Blood Inquiry 17 report have both recommended that a committee of 18 Parliament, probably a select committee, continues to 19 oversee recommendations made by inquiries. I'm not 20 asking you your opinion about that, what I am asking is 21 this: do you accept that there is a need for a body, 22 probably such a select committee, to look at the 23 question of how compensation is dealt with, where 24 scandals such as this take place, to learn lessons from 25 what has happened in the past, from past inquiries, to 101 1 consider how better the frameworks for compensation can 2 be set up and managed in the future? 3 A. Yes, I totally agree with that and we tried to kind of 4 replicate that in a -- perhaps a less formal way with 5 the Horizon Compensation Advisory Board. I wasn't 6 criticising the lawyers, the actual lawyers on either 7 side of the process, actually, and we never would have 8 been here if it hadn't been for lawyers, this would 9 never would have come to light. 10 And I fully understand that this is all done, as you 11 say, on a pro bono basis and, as I say in my statement, 12 this came to light because of Paul Marshall, and it was 13 supported by Flora and lots of other people who did 14 a fantastic job on a pro bono basis to bring this to 15 light. So, in many ways, you're the heroes of the hour, 16 in terms of making sure this came to light. I'm not 17 trying to be nice to you because you're asking me 18 difficult questions. 19 But my point is not really that you shouldn't have 20 lawyers on either side; in fact, you should have 21 somebody in the middle. That's really my point. And 22 I think this is what the National Audit Office have 23 said. I don't think a select committee can ever play 24 that role. It might do some oversight or an advisory 25 board can do some oversight but it needs somebody right 102 1 in the middle who is not incentivised for this process 2 to take longer because you and I would probably 3 recognise that, if you work for a large legal company, 4 you've got an amount of hours to bill on a monthly 5 basis, maybe some of those processes take longer than 6 they might. 7 So if somebody in the middle can say, "No, I'm not 8 worried about this small element of this claim or that 9 particular legal point you're raising, I'm taking a view 10 on this", exactly in the way you phrase it, so that it 11 is generous and seen to be generous to the claimants, 12 who are involved in the scheme; I don't think you can do 13 this just by lawyers arguing on either side. That's my 14 point. 15 Q. Yes. What I'm terming the "spirit of generosity" really 16 must come about because it is in situations, such as the 17 Post Office scandal, whereby, at the heart of it, there 18 is a recognition that harm has been caused. That's the 19 starting point for this Inquiry. So when we're talking 20 about the spirit of generosity, it is in fact the 21 balance, it's the repair or an attempt to repair the 22 harm that has been caused by one actor, in this case the 23 Government and its single shareholder status in relation 24 to the Post Office. 25 So it's about acceptance of "This is what we've 103 1 done, we're sorry about it being done. We're not only 2 sorry but we're actually going to pay up and we're going 3 make sure we pay up as open handed as possible, bearing 4 in mind public finances". 5 That essentially is what should be embraced; do you 6 agree? 7 A. That's exactly what should happen. 8 MR STEIN: Thank you, Mr Hollinrake. 9 THE WITNESS: Thank you. 10 SIR WYN WILLIAMS: Ms Watt. 11 Questioned by MS WATT 12 MS WATT: Thank you, sir. Good afternoon Mr Hollinrake, I'm 13 over here. 14 A. Good afternoon, hello. 15 Q. We have this difficulty every time I ask a question. 16 I'm going to ask a question on behalf of the NFSP 17 and I'm going to call up a document and I'll give the 18 number for that but you might recall that on 8 January 19 this year, just after the ITV drama Mr Bates vs The Post 20 Office, the NFSP Chief Executive Calum Greenhow wrote to 21 you and that letter is WITN00370106. I'd just like to 22 call that up. 23 If we scroll to page 2, it's about halfway down the 24 page, the paragraph that begins: 25 "Postmasters are justly and rightly highlighting 104 1 their concerns over the robustness of Horizon today, 2 with the NFSP repeatedly calling for the system to be 3 externally audited to ensure that nearly five years 4 after Justice Fraser's Horizon Issues ruling that the 5 system is robust. Everyone, whether postmaster, 6 assistant, or Crown Office employee of the Post Office, 7 still use Horizon today and collectively we have to have 8 confidence that the system works as it should and does 9 not have bugs, defects or errors that secretly affect 10 branch office accounts. Government as the solicitor 11 shareholder should be ensuring on behalf of the general 12 public that this is the case." 13 We can take that document down. 14 The Inquiry has also heard -- I'm not calling this 15 up but I think you've referred to it, in any event -- 16 about the results of the YouGov survey for the Inquiry. 17 That's EXPG00000007. 18 That indicated that 49 per cent of respondents using 19 Horizon at present were at net dissatisfied with Horizon 20 compared to 25 per cent who were net satisfied. In 21 addition, 57 per cent of respondents had experienced 22 unexplained discrepancies within the last 12 months. 23 In addition to that, the Inquiry has heard evidence 24 about the delays to the New Branch IT System, NBIT. 25 It's years behind now and millions over budget, and it's 105 1 possible, it sounds like, that the Post Office may have 2 to look even beyond NBIT. But, certainly, it's unlikely 3 that Post Office is going to move away from Horizon any 4 time soon. 5 So what I wanted to ask you was: would you agree 6 that an external audit of the Horizon system is 7 necessary, in other words something that's completely 8 independent, to report back to everyone with 9 an interest, involving and including postmasters? 10 A. That sounds very sensible to me. 11 Q. To your knowledge and following on from that letter of 12 8 January this year, and appreciating that your 13 knowledge may extend only to 4 July this year, in light 14 of this letter, has there been any proposal that you 15 know of within Post Office for the current system to be 16 externally audited? 17 A. I don't think that's something that we ever directly 18 discussed, although we did discuss some of the concerns 19 about ongoing discrepancies. Postmasters are dealing 20 with cash every day. There will be discrepancies, or 21 there are bound to be some discrepancies. I think the 22 problems with Horizon were not just IT problems. They 23 were also the approach of the Post Office in terms of 24 their willingness to prosecute and their willingness to 25 think the worst of postmasters. 106 1 And it's my understanding that Post Office take 2 a completely different approach to this, instead of 3 an adversarial approach to some money missing, it's 4 inquisitorial approach which is "Okay, you know, let's 5 certainly give the postmaster the benefit of the doubt", 6 which you would expect to happen in this kind of 7 network. So I understand that to be the case. 8 It wasn't the case that anybody came to me in my 9 tenure as Post Office Minister to say, "This person has 10 been taken to court" -- in fact the Post Office no 11 longer take forward private prosecutions -- "but he's 12 been taken to court on the basis of evidence from 13 Horizon or something that is" -- so I never heard those 14 concerns, either from the NFSP or from others in terms 15 of this was a live problem ongoing about these issues 16 about discrepancies being then taken forward in terms of 17 something along the lines of what happened with Horizon 18 previously. 19 Q. Although that point is being put in that letter, you 20 would accept? 21 A. Yeah, and I have no problem at all in an audit of the 22 system and, clearly, I'm not the decision-making 23 minister now, but that would seem sensible to me because 24 the first time I'd seen the YouGov survey, in terms of 25 the pack that I read over the last few days, but on that 107 1 basis of lack of trust amongst the network for that 2 system, I think that would seem eminently sensible. 3 Q. Okay just to tie that off: can I take it from what 4 you've said, in your time, up to when you concluded your 5 role, that the Government, as the sole shareholder, 6 hadn't asked the Post Office to conduct such an audit? 7 A. I don't remember us doing that, no. But we did ask 8 questions about the approach that Post Office is now 9 taking where there were discrepancies. 10 MS WATT: Thank you. 11 SIR WYN WILLIAMS: Can I detain you for five minutes? 12 I think that's it, Mr Hollinrake. 13 A. Yes, certainly. 14 Questioned by SIR WYN WILLIAMS 15 SIR WYN WILLIAMS: It may be that I will need to form 16 a judgment about the pros and cons of the fixed offers 17 that operate, all right? I'm not sure if I will need to 18 do that but, just in case I do, since you were obviously 19 very influential in their introduction, I'd like to get 20 your view as to what are the pros and cons. 21 A. Yeah, of course. 22 SIR WYN WILLIAMS: All right? I think I can identify as two 23 pros, speeding up the payment of compensation -- yes -- 24 A. Yeah. 25 SIR WYN WILLIAMS: -- and, in all probability, significant 108 1 savings in legal and expert costs. Yes? 2 A. Yes, that's true. 3 SIR WYN WILLIAMS: Can you identify other pros for me, 4 before we get to the cons? 5 A. Well, like I said earlier, some people who would have 6 got less than the fixed-sum award will now get -- 7 SIR WYN WILLIAMS: Well, that might be thought to be a con. 8 So let's come back to that in a moment. 9 A. No, well -- okay. 10 SIR WYN WILLIAMS: Can we try and do it in that way? So 11 we've got speed of payment and, as I say, I can imagine 12 that, if you got an actuary or an accountant on it, they 13 might be able to justify value for money in terms of 14 saving and legal costs, and all the rest of it. So 15 those are what I see, at least, as the two major 16 benefits of the scheme. 17 A. Okay. 18 SIR WYN WILLIAMS: Okay? 19 The cons actually relate to the recipient because 20 it's not a con for Wyn Williams if my true claim is 21 worth £5,000 but I get £75,000. It's a windfall, yes? 22 A. Yes. 23 SIR WYN WILLIAMS: But it's a con also, isn't it, for the 24 public at large if that happens. 25 A. I mean, the public at large pay more, you mean, in terms 109 1 of the taxpayer, yes. 2 SIR WYN WILLIAMS: And there's a point about the fairness as 3 between claimants. 4 A. Oh, you could definitely argue that, that some people 5 would feel, you know, that person is getting more than 6 they should or the same as me, that person is only due 7 £5,000 and I've got £75,000, and I was due that and 8 they've got the same as me. You could argue that. 9 SIR WYN WILLIAMS: Sure. Then the other part of that 10 thinking process is that people who are, shall we say, 11 claiming £85,000 or £90,000, might well feel pressured 12 into taking £75,000 because they know that, if they 13 don't accept the £75,000 at a point in time, it's lost 14 forever, as the current scheme currently operates. 15 A. You could argue that. 16 SIR WYN WILLIAMS: Well, I think I would argue it, if I was 17 a lawyer. 18 A. Well, I'd argue differently. I would say there was, of 19 course, a case for that, so people might decide to take 20 a view. And can I say, nobody is saying those people 21 shouldn't that have legal advice or other advice before 22 they decide to take that. 23 SIR WYN WILLIAMS: I appreciate that but the point I'm going 24 to come to is this: that in normal litigation, okay -- 25 set aside costs consequences -- if you, the Government, 110 1 make an offer in a case of £500,000, then, except in 2 those very rare cases where you withdraw it completely, 3 it's always available to be taken. Right? 4 In this scheme, if you don't accept the 75,000 or 5 the 600,000 at a particular moment in time, that sum is 6 lost forever and you're on risk of getting less. Is 7 that fair to describe as a downside? 8 A. Well, that would depend on the rules of the scheme. I'm 9 not saying -- 10 SIR WYN WILLIAMS: Sure. So that's my last question to you. 11 A. No, I don't say for a minute that, if somebody decides 12 to go down a full assessment route and then is only 13 offered, let's say, £60,000 rather than £75,000, would 14 you give them the 75 anyway? I think you can argue that 15 case. 16 SIR WYN WILLIAMS: Well, I think I was being a bit more 17 generous to the Post Office or the Government. I'm 18 simply going to suggest that why is it you've got to 19 make a once-and-for-all choice at a moment in time, as 20 opposed to being able to say, "Well, look I've now gone 21 down the full route but I realise that I'm on risk and 22 so I want to draw back and take the 75,000"; what's 23 wrong with that? 24 A. No, I don't think potentially there is anything wrong 25 with that and that could be a feature of a future 111 1 scheme, and we had that discussion ourselves internally. 2 I was going to say it was never the case -- I don't care 3 how much this compensation scheme costs, of course we've 4 got to have an eye on public money, but what is fair is 5 fair. So if it costs -- it's now -- the envelope, 6 I think, is 1.8 billion. I don't care if it costs 2 or 7 3 billion, I said this to James Arbuthnot and the 8 officials. It was never a case of trying to save money; 9 it was always a case of trying to expedite and 10 accelerate the amount of compensation that goes to 11 individuals. We would never try to shortchange anybody, 12 and the scheme should never do that. 13 SIR WYN WILLIAMS: Well, armed with your views, I'll ask 14 Mr Creswell and your successor minister in due course 15 what they think of that. 16 All right. Jolly good, thank you. 17 A. Thank you. 18 SIR WYN WILLIAMS: Thanks very much, Mr Hollinrake, for your 19 assistance to this Inquiry. 20 THE WITNESS: My pleasure, thank you. 21 MR BEER: Thank you, sir. Can we break until 12 -- 1.30, 22 please? 23 SIR WYN WILLIAMS: I've heard of truncated lunch times, but 24 even by your standards, Mr Beer, that was pushing it 25 a bit! Yes. 112 1 MR BEER: 1.30, yes. 2 (12.30 pm) 3 (The Short Adjournment) 4 (1.30 pm) 5 SIR WYN WILLIAMS: Mr Blake. 6 MR BLAKE: Thank you, sir. This afternoon we're going to 7 hear from Mr Creswell. 8 CARL PHILIP CRESWELL (affirmed) 9 Questioned by MR BLAKE 10 MR BLAKE: Thank you very much. Can you give your full, 11 name please? 12 A. Carl Philip Creswell. 13 Q. Mr Creswell you should have in front of you a bundle 14 containing two witness statements that you have 15 produced. Can I ask you to turn to the first witness 16 statement. That should be dated 2 October 2024; is that 17 correct? 18 A. It is. 19 Q. Can I please ask you to turn to the final substantive 20 page, that's page 71. Can you confirm that is your 21 signature? 22 A. It is indeed. 23 Q. Can you confirm that that statement is true to the best 24 of your knowledge and belief? 25 A. I can confirm that. 113 1 Q. Thank you very much. That has a unique reference number 2 of WITN11730100 and will be published on the Inquiry's 3 website. 4 You then also produced a second witness statement. 5 You should have that in front of you, dated 22 October 6 2024. 7 A. I do. 8 Q. Can I ask you, please, to turn to the final page of that 9 statement, that's page 20. Can you confirm that that is 10 your signature? 11 A. It is. 12 Q. Can you confirm that that statement is true to the best 13 of your knowledge and belief? 14 A. It is. 15 Q. Thank you very much. That witness statement has 16 a unique reference number of WITN11730200 and will 17 likewise be published on the Inquiry's website. 18 By way of background, you are a civil servant and 19 have been since 1998; is that correct? 20 A. Correct. 21 Q. You have a background in a variety of roles, including 22 Director of Better Regulation, and you were also 23 involved in, for example, the establishment of the 24 Competition and Markets Authority? 25 A. Correct. 114 1 Q. You are currently the Director of Post Office Policy and 2 Business Engagement, and you've been in that role since 3 April 2019? 4 A. That's right. 5 Q. Thank you very much. Mr Creswell, I'm going to start by 6 asking you just some general background about your 7 Department and your role within it? 8 In your statement, you touch upon changes that took 9 place just before you arrived, I think in 2018, to the 10 Department's role vis à vis the UKGI. Can you assist us 11 with that briefly? 12 A. Of course. So you're right, in 2018 there was a step to 13 move some more Parliament-facing functions out of UKGI 14 into the core department. So that started with dealing 15 with correspondence and Parliamentary questions, and 16 that sort of Parliament-facing activity. In about March 17 2019, I was asked by Alex Chisholm, who was then the 18 Permanent Secretary, to move into a newly created 19 director role within the core department, and the 20 intention of that was to create a strong Policy Team to 21 sit alongside the UKGI team that was being run by Tom 22 Cooper. 23 And that was a broader function than just dealing 24 with Parliamentary Questions and so on; it was much more 25 about what are the Government's policy responsibilities 115 1 vis à vis the Post Office, and also issues of funding, 2 and so on. 3 And UKGI's role narrowed at that point to be more 4 focused on the commercials around the business and 5 appointments issues and remuneration, and so on. 6 Q. I think you've said in your witness statement it's 7 effectively setting apart the policy direction from the 8 corporate governance and financial advice roles? 9 A. That's correct, and there were various motivations for 10 why that happened, which I could expand on if you're 11 interested? 12 Q. If you could briefly, yes. 13 A. Okay. So at the point at which I joined -- and I talked 14 to both Alex Chisholm and then Kelly Tolhurst -- it was 15 on the back of Mr Justice Fraser -- and now allow Lord 16 Justice Fraser -- judgments, there were quite serious 17 concerns at ministerial and Perm Sec level about whether 18 we were providing adequate support to ministers on Post 19 Office related issues. I think there was a bit of 20 a loss of faith from Kelly Tolhurst in the support she 21 was getting from UKGI, so my role was to carve out space 22 for a new team, and I was given licence to bring in more 23 capacity, in order for me to create that stronger team 24 that would act as a bit of a counterpoint and balance 25 with UKGI. 116 1 Q. Is it easy to separate out those two distinct roles? 2 A. I have found it to be so but, over that first year, 3 towards December '19 we had to do some work through 4 setting out, ultimately in a framework document, the 5 relative responsibilities of the different parties, so 6 the Department, then BEIS, and the Post Office and UKGI. 7 There is an interaction between some of our 8 responsibilities but I think the delineation is fairly 9 clear. So I know you will be hearing from Lorna 10 Gratton. She and I worked very closely together but we 11 don't overlap in our areas of responsibility: she is 12 clear that I am the one who is responsible for 13 supporting business cases that go to Treasury about the 14 money that the company needs; I am clear that she 15 supports the recruitment of chairs and CEOs and others 16 to the company. 17 Q. In terms of briefing a minister, do you take sole 18 responsibility for that or do you both brief ministers? 19 A. It depends upon the occasion and the topic. So I do see 20 Gareth Thomas, my current Minister, more frequently than 21 Lorna, but Lorna does also come and join meetings on 22 occasion with the minister, dependent on the topic. 23 Later this week, the Secretary of State, Sir Jonathan 24 Reynolds is seeing Nigel Railton for a catch-up 25 conversation, and we will have both someone from the 117 1 Policy Team and someone from the UKGI team there because 2 there are interests on both sides of our fence that need 3 to be represented. 4 Over time, in my tenure over those five years, 5 I have taken on a much bigger role in relation to 6 redress, than I had in the early parts of my tenure, 7 where UKGI did a lot of the work on, for example, the 8 Horizon Shortfall Scheme, and so my conversations with 9 the minister about redress don't tend to now have Lorna 10 or UKGI present in the room. 11 Q. Thank you. 12 We'll go into details in due course today about 13 various schemes and various developments but, just 14 looking at that separation broadly and looking at the 15 evidence that you've heard throughout this Inquiry, do 16 you think that current division is right; do you think 17 it should change in some way? 18 A. I think it works well actually, thank you. I think we 19 have got a good relationship and clear delineation of 20 responsibilities and, obviously, I am not running the 21 Post Office and I am not attending the Post Office Board 22 and I'm, therefore, quite dependent upon UKGI's expert 23 analysis on commercial issues, but also on the flow of 24 information from the Post Office through Lorna and her 25 team to me and to my team because, if that relationship 118 1 didn't work, I would have a much less strong grip about 2 the issues that were bothering the Post Office Board, 3 for example. 4 So I say that by way of an example about what 5 I think works well. I suppose, in theory, if the 6 relationship between the two teams or myself and Lorna 7 didn't operate effectively, then that would be 8 a challenge but I think that would probably be inherent 9 in any structure, since I don't think it would be 10 sensible for me to sit on the Post Office Board. That 11 is Lorna's role as the shareholder representative. 12 Q. Thank you. In terms of the time that you spend on Post 13 Office matters, you've said in your witness statement 14 that you spend, I think, 80 per cent of your time on 15 those matters and you have a few other matters outside 16 of that role? 17 A. That is correct as of now. In the past, though, over 18 that five-year period I had a much wider set of 19 responsibilities, including during the Covid period of, 20 you know, 2020 to 2021, working with the retail, 21 hospitality and wedding sectors, and other 22 responsibilities that I had. But over a period of time, 23 particularly as our role in redress has grown, with DBT 24 running two of the compensation schemes, I've narrowed 25 my brief to focus primarily on the Post Office, and in 119 1 the coming months, actually, I expect to lose my 2 business engagement responsibility and focus inclusively 3 on Post Office issues. 4 Q. You have explained that you have 70 staff within your 5 team. Is that because you're particularly busy dealing 6 with redress matters and will that stay the case or 7 will, in due course, that team wind down to some extent? 8 A. So if you take a sort of very long-term view, I would 9 expect that team to reduce in size quite significantly, 10 yes. But there is a lot of work still to do on redress, 11 as no doubt we will go on to discuss. 12 And when I joined in April 2019, I had two members 13 of staff, so we're actually above 70 staff now, as 14 a result of recent recruitments but since, probably, the 15 end of last year, I've doubled the size of my team to 16 respond to the need to legislate to overturn 900 17 convictions, to work with people affected by the Capture 18 system, to set up and then run the Horizon Convictions 19 Redress scheme as well as then the GLO scheme. 20 Q. Thank you. I'm going to take you through the early 21 months of your time at the Department and focus on the 22 Group Litigation. Can we bring up on screen 23 UKGI00009785, please. This is an email chain from May 24 2019, so your first month, really, in the role. If we 25 scroll over the page, please. If we could scroll down 120 1 slightly. A note here is being drafted for the 2 Minister, that's Kelly Tolhurst at that stage. You are 3 sent an email by Tom Aldred, who is part of the UKGI 4 team? 5 A. That's right. 6 Q. We see here I think it's a combination of his draft and 7 also your changes to the draft in a slightly lighter 8 text. 9 A. Yes. 10 Q. I'll just read to you a few passages from there. He 11 says as follows: 12 "As discussed, Tom has shared a draft note to go to 13 Kelly, which I've pasted below. What do you think? 14 Jess has confirmed that she is happy to pass to Kelly as 15 an email rather than a [submission]." 16 The draft is as follows: 17 "I gather you mentioned a couple of things to the 18 team after the meeting with [the Post Office] yesterday. 19 One being what happened at the Board in relation to the 20 legal advice. The other that you're concerned about the 21 company's approach to forecasting the potential size of 22 liability." 23 Under the heading of "Litigation", it says: 24 "On the legal front, I think we've reached 25 a sensible position with [the Post Office] changing its 121 1 legal advisers and seeking a more conciliatory approach. 2 Like you, I have been concerned about their approach. 3 I wasn't happy with the meeting the company that with 4 you and Alex last October. That was followed up by 5 a very critical ruling from the judge a few months later 6 following which I spoke to Tim and Paula to say that 7 I felt there needed to be a major change of approach. 8 Our interaction to the Legal Team at [the Post Office] 9 wasn't limited to the litigation -- in general we found 10 [their] chief counsel wasn't easy to deal with and I had 11 passed feedback to the management and Tim on various 12 occasions. 13 "Things [had come] to a head after the Common Issues 14 Judgment when it became totally clear -- I think to 15 everyone on the Board -- that there needed to be 16 a change to personnel. This led to Jane MacLeod -- 17 Chief Counsel -- leaving the company." 18 In terms of the atmospherics when you first joined 19 the team, what was the feeling towards the Post Office's 20 approach to the litigation? 21 A. So Kelly Tolhurst was very frustrated on a number of 22 fronts, to be honest, when I first met her. She was 23 very frustrated about what had happened. I think she 24 felt embarrassed, as I think she probably said in her 25 own evidence, about the outcome because I think Al 122 1 Cameron and Tim Parker had been much more optimistic 2 about the likely outcome for the trial and I think she 3 felt -- she was a relatively new minister and I think 4 she felt on her watch something awful had happened and 5 she hadn't known that it was coming. 6 She felt that the company was failing to give her 7 information that she needed to fulfil her 8 responsibilities as the minister. She was also very 9 angry with Tom Cooper, which is part of the backdrop to 10 this email and my advice back to him. And so she had 11 lost confidence, I think, in the whole arrangement and 12 set-up. 13 So, within that, I think you're right, she was 14 unhappy about the approach being taken by the Post 15 Office and the sort of "We are being sued", rather than 16 "justice for postmasters" approach that you could see 17 evidenced, and I could see that myself from talking to 18 the Post Office in my early days talking to people like 19 Mr Cameron. And I think that left her feeling a bit 20 vulnerable but also trying to but also trying to work 21 out what happened next. 22 Q. If we scroll up, please, we can see your response. You 23 say, at the bottom of page 1 into page 2: 24 "Thanks for sharing this with us. I've set out my 25 thoughts below, in the spirit of tying to help you land 123 1 your messages well! 2 "The tone feels a bit defensive to me, so I've 3 suggested some changes below. Kelly seemed to partly be 4 sparking because she thought that she was hearing 5 something different yesterday (decision by consensus) 6 compared with what she heard during the recent phone 7 call (coup)." 8 Can you assist us with what is meant there? 9 A. Of course, yes, I also worked with Kelly on other areas 10 of responsibility, such as on the retail sector, so by 11 this point I'd already established what I thought was 12 quite a good relationship with her. Tom Cooper was 13 holding the role that Lorna Gratton is now holding 14 obviously in UKGI -- 15 Q. Sorry, please if I can pause you there. If it is 16 possible to speak slightly slower, that would be very 17 helpful? 18 A. Of course. 19 So what was happening here was I was trying to help 20 Tom navigate through a tense situation with Kelly 21 Tolhurst, where I'd been discussing with her for 22 a period of time, and so too had the Permanent 23 Secretary, what changes were needed to respond to the 24 Minister's concern about the Post Office. And this 25 whole email chain occurred in a situation where Tom 124 1 Aldred, who worked for Tom Cooper, and I had met Kelly, 2 and Kelly had aired various concerns. 3 Tom Cooper then returned, I think, from leave or 4 absence of some kind and wanted to go to Kelly, and have 5 a conversation with her, because he had heard secondhand 6 that Kelly was a bit frustrated. My judgment was that 7 what the Minister wanted was for us to move beyond some 8 of the previous conversations that we had dealt with 9 without Tom Cooper there, and that it would actual 10 undermine our ability to get more confidence back in to 11 Tom Cooper if Tom wrote this sort of email that picked 12 up things that actually Kelly had reached a conclusion 13 on, and that it was better to sort of leave some of 14 those issues as they were and then move forward. 15 Would you like me to say a little bit more about the 16 "coup" question? 17 Q. Yes. 18 A. So I think this was a question of slightly different 19 language between the two of them. Tom Cooper had said 20 in a previous meeting to Kelly, "Look, it's great the 21 Post Office has decided to change its Legal Team 22 following on from the judgment", and in order to I think 23 make it clear that he had played a significant role in 24 that, at the Post Office Board, remembering that this 25 was at a time when Kelly felt that the Government 125 1 representative had not been sufficiently pressing the 2 Post Office for a number of months, he described it as 3 a coup, by which I think he meant this was a victory for 4 common sense in terms of getting the Post Office to 5 shift its approach. 6 She took that, I think, to be a sign that things 7 were still not right in the Post Office Board and that 8 there was a problem, and I think there was still 9 a slight disagreement of language of talking across each 10 other, which was slightly typical of their relationship 11 at that point. 12 Q. I think you address that here. You say: 13 "I explained that you had meant "coup" in the sense 14 of a victory for common sense, but she still seemed 15 concerned. So my advice would be to emphasise that we 16 have got to a better place, give the details of what 17 happened and explain that you're going to be keeping 18 a close eye on them going forward. 19 I also think it would be best to leave out the 20 reference to the leadership of the company. Strictly 21 speaking she didn't raise it with us in those terms last 22 night -- what she said was that she remains nervous 23 about the Post Office approach. I also think Kelly is 24 unlikely to want to discuss it at this stage. I feel 25 that we have made some good progress this week", 126 1 et cetera. 2 What was the feeling towards the leadership of the 3 company at that stage? 4 A. Well, I think Kelly was quite frustrated with both Tim 5 Parker and Alisdair Cameron. I think she found their 6 approach quite patronising and quite bullish, and 7 I think she felt -- and I must admit I had some sympathy 8 for this -- that they were slightly in denial about the 9 magnitude of the judgment, and they still hoped at this 10 point -- remembering it was May 2019 -- that the Post 11 Office would be successful -- I can't remember whether 12 the recusal attempt had been rejected by that point or 13 not, it had started before I joined but concluded 14 shortly thereafter. But the appeal requests were still 15 in play and I think she felt that the leadership was 16 still somewhat in denial. Yeah. 17 Q. Thank you. If we turn, please, to page 1, and the final 18 email in that chain that I'll read to you. 19 It's the response from Tom Aldred and he says: 20 "For my own part, although she didn't say explicitly 21 that she had concerns with the leadership, I thought it 22 came across pretty strongly in her remarks and in her 23 questions about how we appoint the Board, and her desire 24 to attend. While I'm tempted to hope it blows over, on 25 balance I'm more attracted to addressing it head on. If 127 1 she really doesn't have confidence in the leadership 2 this has the ability to make everything else a lot more 3 difficult and we need to understand what's driving her 4 concern." 5 So did the Minister at that stage have concerns 6 about the leadership of the Post Office? 7 A. She did have some concerns and she did suggest that she 8 would like to join the Post Office Board and actually 9 sit on the Board, which is slightly unusual in corporate 10 governance terms. I felt that Tom Cooper approaching 11 her and saying "Let's have a conversation about the 12 leadership", given that she had quite a level of concern 13 about the support that she got from him, I felt wouldn't 14 be that helpful because I felt that Tom would probably 15 go in and say how great, you know -- that the least were 16 fine and that we didn't need to change the leadership. 17 So my judgement was the best thing to do to support 18 the Minister at this point was to try to dissuade Tom 19 from going in heavily on this issue, given that 20 I actually felt that she had become more comfortable 21 over the period up to May 2019, with where we had got to 22 but still wanted us to do further work on things like 23 information sharing from the Post Office. 24 Q. We'll get onto couple of emails that say exactly that. 25 If we could turn to UKGI00009832. We see on page 2, 128 1 over to page 3, an update from Ben Foat, General Counsel 2 at the Post Office, providing an update regarding the 3 permission to appeal decision of the Common Issues 4 Judgment, and also in relation to costs. 5 If we can see over the page, thank you very much, it 6 says: 7 "We were in court today before the Managing Judge 8 ... to seek permission to appeal the Common Issues 9 Judgment and determine how the costs of the Common 10 Issues trial should be treated." 11 If we scroll downs on "Permission to Appeal", he 12 says: 13 "As expected, the judge didn't agree there was 14 a real possibility of Post Office successfully appealing 15 his Common Issues Judgment and did not give us 16 permission to appeal ..." 17 If we scroll down, he addresses costs. He says: 18 "The judge exercised his discretion and awarded the 19 claimant their costs of the Common Issues trial, rather 20 than reserving the question until later in the 21 litigation when the full impacts of the Judgment would 22 be determined." 23 If we scroll up, please, to the bottom of page 1, we 24 see an email from you to Tom Cooper. You say: 25 "Thanks very much for sharing this all so promptly. 129 1 "I suspect that this latest development will 2 strengthen Ministers' concerns about [the Post Office's] 3 approach to the litigation, so I'm trying to get around 4 the scale of the implications. 5 "My reading of it is that the decision not to let 6 them appeal and require going to the Court of Appeal is 7 completely straightforward and anything different would 8 have been a surprise ... But the costs order is the 9 worrying bit because it will increase the liability for 10 [the Post Office] beyond any damages. Presumably that's 11 only for this first case but it might set a worrying 12 precedent for the future." 13 You say: 14 "Do you think there's an argument that it should 15 change our assessment of whether it's desirable for [the 16 Post Office] to consider settling at this stage?" 17 Just pausing there, what was the position within 18 your Department about settling at that stage, and what 19 was your own personal opinion? 20 A. Yes, so within the Department, Alex Chisholm and I were 21 both clear that a settlement would be needed, and that 22 was the right course of action. My own personal 23 experience of working in another department, the 24 Department for Education, was that a settlement, when 25 there was a legal dispute against a public body, is 130 1 a classic thing you would do when you have been found 2 guilty. So we were all of that view and, to be fair, 3 I think Tom Cooper was in that space, as well, I think 4 the company was probably still hoping that it would, you 5 know, that people would see right and that the judgment 6 would be overturned in some ways. Ha! And my reading 7 of the judgment was -- and I wasn't -- and I'm not, 8 a legal expert but that the costs order was 9 an indication that the Post Office was very unlikely to 10 be successful in that course of action in trying to get 11 the judgment appealed. 12 So for me this was a flashing warning light on the 13 dashboard saying, you know, there's no way that their 14 optimism is going to work out. 15 Q. You say there: 16 "Even though the new lawyers seemed to be saying 17 that [the Post Office] has a case, it feels to me like 18 this is going to run and run (and perhaps not end well, 19 given what the judge has already said)." 20 If we scroll up we can see the response from 21 Mr Cooper. He says: 22 "The judgment itself isn't a surprise. If the Court 23 of Appeal turns it down that would count as a real 24 setback -- probably the biggest so far by some margin." 25 Were there real concerns at this stage about how the 131 1 litigation was being run or continued to be run? 2 A. There were a lot of concerns about how it had been run 3 up until this point. I think prior to my arrival in 4 post, Sir Alex Chisholm had taken some advice or he'd 5 read -- he'd read some of the advice about the strategy 6 that was being taken by the company in seeking to 7 appeal. I think there was a concern about the recusal, 8 you know, attempt but that was, again, prior to my time. 9 I think people were -- were dubious that the appeal 10 would succeed, but felt that it was a judgement for the 11 Post Office Board about whether to request that appeal. 12 My view was, "Look, this looks like you're going to 13 lose and you might as well accept that sooner rather 14 than later and then get on to settling", because part of 15 my responsibility is to support the current company with 16 all the current postmasters, as well as dealing with the 17 historical liabilities and, to my mind, you needed to 18 get quickly through that sort of settlement in order to 19 help the company move forward. 20 I think Tom Cooper also would think that settlement 21 would be a good idea but it was his team in UKGI that 22 had been providing advice about the litigation, prior to 23 my arrival, and even sort of from now onwards a lot of 24 the submissions were written by UKGI but with input from 25 me. 132 1 Q. Moving on shortly in time, can we please turn to 2 BEIS0000830. We're now on 4 June 2019. There's 3 a read-out from the industry meeting from the Post 4 Office, if we turn to page 3 please. Under the heading 5 "Litigation", it says: 6 "[Secretary of State] (backed up by Kelly) [the 7 Minister] has serious concerns about the direction of 8 travel of the litigation and [the Post Office's] 9 handling of it. Referenced the first judgment and 10 particularly the recusal application as evidence of poor 11 judgement of the Board." 12 Were the concerns as broad as the Board itself, 13 rather than those two individuals who you have already 14 mentioned? 15 A. I wasn't present in this meeting, so I didn't actually 16 hear that conversation. But from -- and I didn't 17 actually meet the Secretary of State at that point to 18 discuss it -- Greg Clark -- but I was talking to Kelly 19 and I think she was concerned about the Board more 20 widely, and I think that's why she wanted herself to 21 join the Board. 22 Q. It continues: 23 "The Secretary of State gave a clearly steer that he 24 wanted the Department to be on the side of the 25 postmasters (he said it felt like there were shades of 133 1 Windrush regarding the potential for a number of 2 injustices to come out) and wants a strategy on how we 3 can take this forward. He wants to resolve that is 4 quickly given the damage it's doing to the reputation of 5 the Post Office. 6 "Kelly reiterated her concerns about the 7 effectiveness of the Board, and about the information 8 shared with her. She pointed to the fact that [Post 9 Office] hadn't done any detailed work on the potential 10 liabilities from the case as a concern." 11 If we scroll down we can see "Action the Secretary 12 of State has asked for": 13 "He has asked for a BEIS strategy to ensure the 14 litigation is settled quickly and put [the Department] 15 on the side of the postmasters; resolve the CEO pay 16 issue so we can recruit the best candidate; and consider 17 how we deal with the ongoing management of [the Post 18 Office], given the concerns ministers have on Board 19 performance." 20 Can we please turn to UKGI00010212, please. There 21 is there a meeting with Tim Parker and Alisdair Cameron 22 on 24 June 2019. That's a meeting with you; is that 23 right? 24 A. I was present at the meeting but it was actually for 25 Kelly Tolhurst to meet those individuals. 134 1 Q. Thank you. So where we see the internal attendees, 2 that's in addition to the Minister? 3 A. Correct, so where it says, for example, in the section 4 below "In response to your letter of 29 May", it wasn't 5 my letter; it was Kelly Tolhurst's. 6 Q. Thank you. If we turn over, please, to page 2, it sets 7 out the Post Office's approach to ongoing litigation and 8 it suggested, as follows: 9 "Please express your dissatisfaction with the 10 current status of the litigation and invite the Post 11 Office to present details of their strategy." 12 The second bullet point: 13 "Please provide the below steers to the Post Office, 14 reflecting the options agreed by the [Secretary of 15 State]. [The Department's] preference is for [the Post 16 Office] to pursue early settlement of the case. 17 "[The Post Office] should carry out a project on how 18 to structure and operate a settlement including a fund 19 which would subsequently assess claims and award 20 compensation according to pre-agreed criteria." 21 A. Mm. 22 Q. Is this where we see the beginnings of what became the 23 redress schemes or is this simply focused on the 24 settlement of the litigation vis à vis the litigants? 25 A. So it was a major step towards the settlement in 135 1 December '19 with the GLO group. Within this comment is 2 the hint at the sort of redress schemes that we have now 3 set up and I must admit I had forgotten, until I saw 4 this paper, that that idea had been floated at the time. 5 I think the Post Office's lawyers had been looking at 6 various options. My memory is that the idea of a fund 7 that would award out compensation was rejected, 8 following conversations with the claimants in the GLO 9 group, on the grounds that, actually, what was needed 10 was early settlement and money to go to the GLO 11 claimants quickly, to be distributed by Freeths or 12 whoever through a formula, rather than the start of 13 a claim-based system, which is more like we have now. 14 There's a missing piece of the jigsaw between the 15 document you've just shown me and the previous one, 16 which was the actual BEIS advice, which was requested by 17 the Secretary of State that responded to some of Kelly 18 Tolhurst's and the Secretary of State's concerns, 19 including a long list of options, the most radical of 20 which would have been to have replaced the leadership. 21 But the Secretary of State decided not to do that. 22 Q. Thank you. So one option up in the air at that stage 23 was to replace the leadership. This is a rung or two 24 down from that, is it? 25 A. In timing terms, yes, that's correct. I think I heard 136 1 Kelly Tolhurst talk about this when she gave evidence 2 here before as well. I think the view was taken with 3 the Secretary of State that a new CEO was needed, both 4 a permanent and a new CEO, ie probably not Al Cameron, 5 and that, in that context -- and that obviously led to 6 the appointment of Nick Read later that year -- 7 replacing the Chair at that point probably wouldn't be 8 a good idea because you would create more instability at 9 a critical time when the company needed to move on. 10 Q. Thank you. If we could turn to BEIS0001130. There's 11 another meeting with Tim Parker in October, 31 October 12 2019. You attended that meeting, you're listed there as 13 an attendee; is that correct? 14 A. I'm definitely listed there and I'm sure I did attend, 15 yes. Yes, this was for Alex Chisholm -- 16 Q. Thank you. 17 A. -- with Tim and Tom and me. 18 Q. If we scroll down, there are issues listed there: 19 "Litigation: judgment in the Horizon trial is 20 expected in early November, following the discovery that 21 [the Post Office] had failed to disclose information 22 (Known Error Logs) that may provide a fuller account of 23 bugs in the Horizon system. Whilst this appears to be 24 Fujitsu's responsibility Justice Fraser is likely to be 25 highly critical of [the Post Office]. A decision on 137 1 [the Post Office's] application to appeal the Common 2 Issues trial is expected on 12 November." 3 If we go over the page, please, there are issues to 4 be raised with Tim Parker. The first of those is 5 culture: 6 "POL's culture needs to change and as the 7 shareholder we expect the Chair and Board to be leading 8 this. 9 "The leadership's decision on the litigation (such 10 as the failed, expensive recusal attempt) and the 11 proposal to pay bonuses in full appeared tone deaf and 12 complacent." 13 By this stage, it seems very strong criticisms of 14 the way that the Post Office is being run; is that fair? 15 A. Yes, the bonuses incident over the summer, which, you 16 know, again sits between some of the earlier documents 17 and this one, caused great frustration for Alex Chisholm 18 and others in the Department because it was a classic 19 example of the company failing to acknowledge that they 20 had harmed so many postmasters through, you know, the 21 horrific scandal, and were still trying to pay 22 themselves large bonuses. And it took Alex quite a lot 23 of effort to persuade them not to pay those bonuses in 24 full. 25 Q. Thank you. One final document on the litigation, that's 138 1 UKGI00047866. We're now in April 2020, so we're now 2 a year into your role in the Department. I'd like to 3 start on page 3, please, it's an email from Minister 4 Scully's private email to you and others: 5 "Please find attached a letter from Tim Parker to 6 the Minister regarding the Post Office's financial 7 exposure resulting from the number of cases potentially 8 being referred from the CCRC to the appeal courts." 9 If we scroll up, we can see a response from you to 10 the Permanent Secretary and others. You say: 11 "You should see the attached letter, which provides 12 more detail on the additional past prosecutions the Post 13 Office has identified. The letter includes an eye 14 watering maximum liability that they [may] be exposed 15 to. 16 "Minister Scully is meeting [the Post Office's] 17 leadership for the quarterly shareholder meeting 18 tomorrow afternoon and we are briefing him to express 19 disappointment and put pressure on [the Post Office] to 20 ask for more information ahead of our putting advice to 21 ministers." 22 Is the picture getting somewhat worse by this stage? 23 A. Yes, and I think Sarah Munby touched on some of this in 24 her evidence yesterday. I think we knew after the Lord 25 Justice Fraser judgment that the Post Office had acted 139 1 awfully. We didn't really realise probably as much as 2 probably we should have done, until, you know, the 3 Hamilton judgment, quite how badly the company had 4 behaved. And even prior to that judgment, the advice we 5 were getting was that they might not lose on both limbs, 6 you know, of the case, and so the sort of -- there was 7 still some uncertainty about what the outcome would be. 8 And then we have a letter from Tim Parker saying 9 that the liability that they would be bringing to 10 Government that needed to be funded was of an order of 11 magnitude of around 700 million, in a world in which 12 their revenue is about 800 to 850 million. So it was, 13 you know, it was eye watering because of the sheer scale 14 of it. But, no, you're absolutely right. And the 15 disappointment from ministers probably reflected that 16 sense of, "Oh goodness, it's even worse". And this sort 17 of direction of travel continued over a period of time 18 as more stones were lifted up and more problems of past 19 behaviour were discovered, with the help, to be honest, 20 of Nick Read as the new CEO, helping turn over some of 21 those stones. 22 Q. If we turn, please, to page 1, we have another email 23 from you. If we scroll down, please. You say as 24 follows, you say: 25 "The Minister expressed his disappointment as you 140 1 can imagine and emphasised how important it is for the 2 Post Office to share information with us." 3 Was there a concern about a lack of transparency 4 from the Post Office? 5 A. I think the Minister was concerned that the company 6 could perhaps have shared more information about this in 7 advance, probably because the outcome that was being 8 pointed at was so negative. I think he felt they should 9 have said in advance that this was the likely outcome. 10 I am not sure how completely fair that was because the 11 Post Office was saying it is possible that we might not 12 be successful, although, as I said earlier, they did not 13 say, "We're likely to lose on both limbs and, you know, 14 be found guilty of malicious prosecution", or whatever. 15 So I think I could have just said yes. 16 Q. Just looking at of the picture, then, as it presented 17 itself to you within or by a year into the role, it 18 appears that there were real concerns about the 19 leadership of the company, including as wide as the 20 Board; is that right? 21 A. Actually, by this point, the concerns from ministers 22 weren't quite the same. So, yes, Minister Scully that 23 the Post Office hadn't shared more information about the 24 likely liability in relation to this court judgment but 25 Nick Read had joined at the end, about November, from 141 1 memory, 2019, and there had been some turnover in the 2 Board as well, and Kelly Tolhurst had moved on and Paul 3 Scully was now meeting regularly with Nick Read. 4 So that earlier level of heightened concern from 5 Kelly Tolhurst had been sort of passed by, and I think 6 the Minister was less -- this Minister was less of the 7 view that the whole Board needed to be replaced. And of 8 course, the settlement had been reached in December '19, 9 albeit that it then turned out in 2020 to have been much 10 smaller from the postmasters' perspective than we had 11 frankly realised. 12 Q. Irrespective of that, was the general feeling that this 13 was a company that had handled the litigation badly? 14 A. Yes. 15 Q. It was a company of which your Department had concerns 16 about the culture within the company as well. We saw 17 that reference in that meeting with Tim Parker. Were 18 those cultural concerns present as at April 2020? 19 A. They were, although what I would say was that when Alex 20 Chisholm sat down with Nick Read for introductory 21 conversations, that was the central topic of 22 conversation between them. So Alex was effectively 23 saying to Nick, "One of your biggest challenges is to 24 grip the culture", and they talked about different ways 25 of assessing what the culture was like, getting some 142 1 externals in to come and give a view to enable Nick to 2 put in place changes, including heightened engagement 3 with postmasters, that would help respond to some of the 4 cultural challenges that were there. 5 So I suppose what I'm trying to say is that it 6 wasn't a sense of resignation about, "Oh, the culture is 7 awful, it's never going to change"; it was high on the 8 agenda for issues to be addressed. 9 Q. Would you say that there were serious issues with the 10 company to be overcome by that stage -- 11 A. Oh, yes. 12 Q. -- or to be addressed? 13 A. Oh, yes. No, I mean, throughout most of my time working 14 with the Post Office there have been quite serious 15 issues. 16 Q. In those circumstances, the question might be asked, why 17 was it felt appropriate for the Post Office to be 18 charged with some of the redress and compensation 19 schemes? 20 A. Yes, of course. It's a very good question. The only 21 redress scheme in play at this point was the Horizon 22 Shortfall Scheme, then called the Historical Shortfall 23 Scheme. That was, as you probably well know, set out 24 delineated, drawn in the settlement deed for the GLO 25 order in December '19. And up until -- well, I had not 143 1 had any concerns expressed to me at that point about the 2 Post Office running that scheme. Indeed, the settlement 3 deed said, "This is a scheme that should be run by the 4 Post Office", and it even drew out the stages that 5 should happen for the dispute resolution appeals 6 process. 7 So maybe the question of ownership, as the NAO goes 8 on more recently to describe, should have come up at 9 that point but it didn't at that point and, indeed, 10 I suppose we regarded it as a relatively small scale 11 consequence of the December '19 settlement. We were 12 clearly wrong on that. 13 Q. Who do you consider to be responsible for that 14 underestimation as to how significant a scheme it might 15 have to be? 16 A. I suspect there were stages throughout the different 17 players involved. So I think -- I suspect that the GLO 18 group and Freeths didn't realise quite how many others 19 there were out there because, otherwise, they would have 20 probably joined the 555 in recommending that there 21 should be this consequential shortfall scheme. But the 22 Post Office should have had a better sense or should 23 have analysed more firmly, you know, the indicative 24 numbers of a couple of hundred people who might be 25 involved in the scheme. UKGI, as I say, were working 144 1 closely with the company on HSS for quite a lot of that 2 time, 2020, 2021, and we too in the Department probably 3 should have found a better way to analyse it. 4 Q. I think the initial estimate was 200 applications; is 5 that correct? 6 A. I think that's right. 7 Q. There were, you say in your statement, 12 times that 8 that applied to the Horizon Shortfall Scheme before 9 November 2020 and, obviously, much more since then as 10 well. 11 A. That's right and probably a lot more to come as the Post 12 Office is now writing out to a much wider cohort than 13 the 4,000 plus that are already in the scheme. 14 Q. Who made that original 200-applicant estimate? 15 A. I think it came from the Post Office and Herbert Smith, 16 based upon the conversations with Freeths and the GLO 17 group. I don't know for sure whether Freeths gave that 18 number or whether it was just a Post Office estimate. 19 When I had to give some advice to Alex Chisholm about 20 what was happening in the mediation, he asked me to 21 spell out, as Accounting Officers do, what other sort of 22 consequences would come about as a result of agreeing to 23 the mediated settlement, and one of the issues that 24 I highlighted there was what I was being told about the 25 need to run a Horizon Shortfall Scheme, and we took that 145 1 number from what we were given by the Post Office, at 2 a time of fast-paced mediation, I would say. 3 Q. Were your Department doing any work in trying to 4 estimate those numbers? 5 A. No. No, as I say, at that point I still had 6 a relatively small team and was taking a lot of advice 7 from UKGI. I have reflected a little bit on this 8 because it's obviously quite a big point of criticism 9 about our failure to understand how big the HSS was and 10 I think that's that would probably be fair. 11 In my heart of hearts, I think I probably didn't 12 particularly think it mattered how big the scheme was in 13 relation to settling in December '19 because I did not 14 think it was material to whether the Permanent Secretary 15 should accept what was on the table from the GLO group, 16 and I regarded it as our best estimate at that point to 17 answer the question from the Accounting Officer, and 18 that then the scheme would run and, whereas with the 555 19 group you have a defined cohort, there must always be 20 a risk when you run an open scheme that more people 21 apply than you realised. 22 Is that a failing? Well, if people deserve the 23 redress and they apply, no, as long as you can respond 24 to them quickly enough, which is a separate question. 25 Q. We know that UKGI had a Non-Executive Director on the 146 1 Board for many years prior to that. Did they give you 2 any estimates about the numbers of likely applicants? 3 A. Well, that was the UKGI team to which I was referring. 4 So Tom Cooper was the shareholder representative and had 5 been for about a year, I think. And it was either he or 6 his team that provided the figures. I think it was his 7 team that then wrote the advice to ministers that said 8 "This is what the settlement is, and this is the number 9 that we've been given of the 200 potential claimants to 10 the HSS". 11 Q. So the numbers came to you from UKGI, but you think 12 that's likely to have originated from the Post Office 13 itself? 14 A. Yes, I don't see how UKGI could have made an estimate 15 without information from the company. 16 Q. We know that Herbert Smith Freehills were involved in 17 that original process in building up the scheme. You've 18 probably heard some criticisms of that. What is your 19 personal view about their involvement? 20 A. You mean, rather than my view about the scheme that they 21 designed? 22 Q. Yes. 23 A. So I have heard quite a lot of criticism of HSF, from 24 the perspective of people saying HSF were guilty and 25 culpable for the way in which the Post Office ran its 147 1 litigation. I have found that harder to accept because 2 I know that they were brought in to play a role for the 3 Post Office around April time, after the judgment had 4 actually come out. So I think it is important to be 5 clear when their role started. I think there has been 6 quite a lot of criticism about their sort of high-end 7 City law firm, slightly assertive approach, that 8 sometimes rings true to me, from having seen how some of 9 those schemes are rolled out. And I have had quite 10 a bit of personal sympathy for the view that Kevin 11 Hollinrake expressed earlier about how the Post Office 12 needs to change its law firm, you know, supporting it in 13 a number of those schemes, for the reason that we had 14 feedback in Parliament and elsewhere about how Herbert 15 Smith were handling some of the dispute resolution 16 meetings with claimants. 17 I remember Alistair Carmichael in a Westminster Hall 18 debate talked about a meeting that he had heard about 19 where a victim had met with Herbert Smith and Herbert 20 Smith had not been particularly friendly with them, and 21 I know the Post Office took steps to put Post Office 22 staff into those meetings because they felt that that 23 would respond. 24 So that's not to say -- you know, as Kevin 25 Hollindrake said earlier, there are good people in 148 1 Herbert Smith who have worked very hard on the schemes 2 but I think they are both, from a reputational 3 perspective, not well liked by the postmaster community 4 and, from a costs perspective, they have, I think, 5 extracted quite a lot of money from the Post Office, who 6 haven't managed them as effectively as Sarah Munby and 7 I would have liked from a costs perspective. 8 Q. Lorna Gratton's evidence, written evidence -- we'll be 9 hearing her oral evidence tomorrow -- is to the effect 10 that the Post Office's external lawyers have taken 11 a legalistic approach, and she's also referred to 12 a cultural clash with the approach of commercial 13 litigators; do you have a view on that? 14 A. I mean, some of that is what I suppose I was hinting at. 15 When we were working with the company on the OC scheme, 16 which we were more involved in from the Department than 17 we were in those early days of the HSS, the initial 18 approach that was taken, which was very, I suppose you 19 would say, mediation based, seemed to be being really 20 slow. And I've apologised to Jo Hamilton for how long 21 it took for her claim to work its way through those 22 early stages and it seemed to me that it was quite 23 confrontational and it didn't feel to me that it would 24 deliver the outcomes that the ministers wanted. 25 And the steps that the company then took to bring in 149 1 more of the remediation scheme, which a drive led more 2 by some of the people that Nick Read brought in, rather 3 than by Herbert Smith -- you know, as you probably heard 4 from Mr Recaldin a group of people came in -- that 5 seemed to me to be an improvement on the kind of 6 approach that would be more classically the commercial 7 litigation approach that you've mentioned from Lorna 8 Gratton's evidence. 9 Q. Thank you. I'd like to address your Department's 10 approach to the initial Historic Shortfall Scheme. 11 Could we turn to UKGI00012774, and this is a meeting of 12 22 October 2020 with Minister Scully. 13 I'd like to start on page 4, please. Sorry, if we 14 have a look at page 1 because you can see there it's 15 a read out of Minister Scully's call with Nick Read. If 16 we scroll down, we can see you're listed as a Government 17 attendee. 18 A. Yes. 19 Q. If we could keep on scrolling down, there are various 20 matters that are raised, not all relating to the Horizon 21 system but all relating to the litigation. If we go 22 over, please, to page 4 I'm just going to read to you 23 three bullet points from there. 24 Thank you very much. We'll start on that second 25 bullet point: 150 1 "Minister asked for a quick update on the Criminal 2 Cases Review Commission. Declan said Magistrate cases 3 are going to Crown Court of Appeal. Decision is 4 expected shortly. The Post Office will immediately 5 engage with six cases if they are overturned and will 6 try to head off malicious prosecution. Declan said the 7 Post Office will look at how well they can mediate those 8 six cases as a test case of how to handle the other 9 cases. Tom Cooper said he agreed with the sentiment but 10 there's a lot to discuss in the approach around managing 11 these cases, which will be discussed at the Board 12 meeting later. Tom said that it's not just a Board 13 issue as it involves approvals and funding. [The Post 14 Office] have been given interim payments of up to 15 £10,000 on the schemes. Increasing amount of noise in 16 the system, eg calls and emails. 17 "Tom Cooper said that the Post Office want to 18 unblock de minimis payments on the HSS scheme." 19 Just pausing there, because we'll get to another 20 email that talks about the de minimis payments, can you 21 just briefly explain what the de minimis payments were? 22 A. This is quite similar to the conversation that was being 23 had with Kevin Hollinrake earlier around the scrutiny 24 threshold for the GLO, and so the approach that was 25 being taken was to say that, if the claims were quite 151 1 small, they should be paid with minimal levels of 2 scrutiny. That would enable the company to have more 3 resource to focus on the more complex claims and ensure 4 that money could go out the door quickly to those people 5 that were bringing the claims. 6 The point, I suppose, that Tom is making is that you 7 can't just deal with one part of the elephant, you need 8 to be clear about the overall liability for the scheme 9 and the overall approach, rather than just saying, yes, 10 it's fine we'll deal with that. You have to, in 11 Government approval terms, outline the overall shape, 12 when you're trying to get approval for it. 13 Q. So is it fair to summarise that as the Post Office 14 wanted those small payments to happen quickly and your 15 Department or UKGI, Government as a whole, wanted to 16 look at the overarching scheme first, and establish the 17 entire thing before speeding up those small payments? 18 A. Yes, I think that's fair to say, yes. 19 Q. "The other issue is wrongful trading for the directors, 20 as if the Post Office start making payments under the 21 scheme but don't have the funding to complete it, then 22 that could put directors in a tricky situation." 23 We've heard quite a lot about wrongful trading, we 24 heard about it from Simon Recaldin the other day. Is it 25 a real difficulty with the Post Office because, as 152 1 you've said, the numbers were always going to hugely 2 outweigh, in fact, the amount of money that the Post 3 Office can make? 4 A. So at the beginning, actually, the view was that the 5 Post Office could afford the potential scale of 6 liability in relation to the HSS. So our role as 7 a Department was more as it had been for the December 8 '19 settlement, to approve it from the perspective of, 9 you know, the overall Principal Accounting Officer 10 working with Treasury because it was a novel contentious 11 and repercussive type payment. But, as time went on and 12 as the cost well exceeded what the Post Office could 13 afford, then it became a broader and harder question for 14 Government, as Sarah Munby talked about in some depth 15 yesterday, because we then would need to go through the 16 approval mechanisms which I recognise can sometimes take 17 a long time, within Government. 18 Q. It may be an issue that we return to at the end of your 19 evidence. We have heard quite a lot of evidence 20 throughout this phase of CEOs, chairs coming in to the 21 company, being told that they need to make the company 22 financially viable, and then constantly having to go to 23 the Post Office with a begging bowl -- to the 24 Government -- 25 A. The Government. 153 1 Q. -- with a begging bowl for money. Do you think that the 2 setup of the relationship between Government and Post 3 Office inevitably creates that kind of a situation 4 that's being discussed here? 5 A. It's hard to think of an alternative that would avoid 6 this situation. If you were to create an agency that 7 was a real arm's-length body, an executive agency, and 8 make that the Post Office, you would have quite 9 a different setup and then the liabilities would be ones 10 for the core department. But what you would lose, 11 I think, is that slightly more independent commercial 12 flexibility where, you know, you would have the Post 13 Office being run as a big retailer. 14 The wrongful trading risk is one that has been 15 mentioned to us quite a lot over the five years during 16 which I have worked with the company. The finance 17 people in my department tend to take the view that it is 18 overplayed by the Post Office leadership, as a way to 19 get quite large commitments from the Government to 20 underwrite whatever they want to do. And so I think, on 21 the Government side, it's fair to say, as you heard from 22 Kevin Hollinrake earlier, quite often we have felt that 23 the Post Office has opportunities within how it runs the 24 company to make some savings that would allow them to 25 absorb some of the costs. 154 1 That said, if you take the long view over number of 2 years, and this for the start of it, it became very 3 clear that the company could not afford what it needed 4 to do in order to get redress to the people who had been 5 victims of their activity. So it -- this may on 6 reflection have been slightly more debatable but 7 actually it was pretty clear quite quickly that they 8 couldn't afford all of this and, as I said at the 9 beginning, I'm not sure that an alternative governance 10 innocence arrangement would have removed that wrongful 11 trading risk in any sort of clear way. 12 You would have just taken it up to the departmental 13 level where the Department would then say, "We have now 14 got this liability on the core departments, because it's 15 an executive agency and Treasury you need to fund it 16 because otherwise we will have insufficient funds". 17 Q. Thank you. It continues: 18 "Minister said if can get the information on the 19 de minimis case as soon as possible so he can look at 20 that. 21 "Carl said that BEIS will work with the Post Office 22 and UKGI to facilitate as quickly as possible, but that 23 control considerations and financial considerations with 24 BEIS finance and His Majesty's Treasury need to be 25 worked through. As the Post Office are now looking at 155 1 funds in the region of £100m to £200m, that is very 2 different to the original advice that went to Ministers 3 and the Perm Sec previously. Declan said that virtually 4 all 2,000 have gone thorough the eligibility test. 5 Declan said that funding element is vital to progressing 6 to the next stage." 7 Can you assist us with the control considerations 8 and financial considerations? 9 A. Of course. Well, as I was mentioning earlier, this 10 question of whether something is novel, contentious or 11 repercussive, is quite important when it comes to 12 deciding whether a public corporation like the Post 13 Office can proceed with something that the Board would 14 like to do. So there is the accountable officer, in 15 this case it was Nick Read, and then there is the 16 Principal Accounting Officer, Alex Chisholm, I believe, 17 at that point. I don't think the Permanent Secretary 18 could just decide to approve this and let those payments 19 happen, because Treasury needs to be consulted because 20 it is a novel contentious or repercussive proposal. So 21 that's partly what I mean by the control considerations. 22 The financial considerations is about where is of 23 the money going to come from and I think Sarah Munby 24 talked at some length yesterday about how, if I remember 25 correctly, this took about four months end to end, and 156 1 there are steps that we have to go through both within 2 the Department and then with Treasury to convince them 3 that all of this can be funded, and this was the first 4 of a series of redress schemes where we found ourselves 5 having to go to Treasury to ask for approvals, and 6 I think it's fair to say that the confidence in the Post 7 Office early on was quite low from the Treasury side, 8 and over a period of time it has become easier and 9 better. 10 But I remember one of the business cases, I think it 11 was for this one, we had 29 questions back, even prior 12 to the actual approval meeting, where we went and had 13 proper scrutiny from Treasury. 14 So there were some sort of forests to pick our way 15 through before we could get the approval. 16 Q. So rightly or wrongly, would it be fair to say that, at 17 this stage, the Post Office wanted things to go faster 18 than, in fact, the Government could implement? 19 A. Yes. 20 Q. Thank you. If we please turn to UKGI00013196. 21 SIR WYN WILLIAMS: Before Mr Blake takes you to that 22 document, just so I've got this clear in my head, the 23 settlement is December 2019, and I think I must be right 24 in inferring that the idea of a scheme for people other 25 than the group litigants themselves must have come from 157 1 the group litigants? 2 A. Yes, absolutely. I think -- 3 SIR WYN WILLIAMS: So it follows, does it not, that Post 4 Office agreed to that without, in truth, having any idea 5 how many people might be involved? 6 A. Yes, I think that's right. 7 SIR WYN WILLIAMS: Right. Having done that, the scheme 8 starts and still nobody has any idea how many are going 9 to apply? 10 A. Over a period of time, obviously, it was adjusted, but 11 I think that's right -- 12 SIR WYN WILLIAMS: Sure, but the scheme starts in May 2020 13 from memory. 14 A. Mm-hm. 15 SIR WYN WILLIAMS: Still nobody knows what's going to 16 happen. There's a slow start and then a rush, and 17 nobody has got the money to pay for it. 18 A. That's right. 19 SIR WYN WILLIAMS: That's it in a nutshell, isn't it? 20 A. Yes, the original estimate at that May point was 21 33 million, which could have been afforded by the Post 22 Office, and then when the rush came it became clear it 23 couldn't be afforded. 24 SIR WYN WILLIAMS: Yeah, okay. 25 Carry on, Mr Blake. 158 1 MR BLAKE: Thank you if we bring up on screen UKGI00013196. 2 This is your Department's Historic Shortfall Scheme 3 Steering Committee minutes of 27 January 2021. 4 You are the Chair or were the Chair of that 5 committee; are you still the Chair of that committee? 6 A. Well, I am the Chair now. I was actually standing in 7 for Mike Jørgen(?), who is mentioned later on because he 8 was originally the senior responsible owner for the HSS, 9 but I then actually took on that role. So I became, you 10 know, the Chair. I was covering this role for this 11 meeting but shortly, thereafter, I became the permanent 12 Chair and I've chaired the meeting ever since. 13 Q. Thank you. If we scroll down and over the page, please, 14 there's a section on de minimis payments. It says 15 there, "TC", Mr Cooper, I think? 16 A. Mm-hm. 17 Q. "... presented the de minimis paper. He noted that the 18 Post Office wanted to make these payments in November 19 but the Department for Business did not provide its 20 approval due to issues around funding and precedent 21 setting elements. Both of these aspects have now 22 progressed." 23 I think we dealt with some of those this morning but 24 can you just briefly assist us with what those issues of 25 funding and precedent setting elements were? 159 1 A. I can't remember the specific details about how we 2 resolved them but I think the question was what will it 3 take us as a Department, as raised with Minister Scully, 4 to say, "Yes, the Post Office can go ahead with the 5 de minimis payments because it would be a quick way to 6 get money to the claimants and close down those claims". 7 The precedent setting question is what I meant around 8 the novel, contentious and repercussive, ie if you 9 agree -- as I said about one part of the elephant, if 10 you agree to that is particular intervention, does it 11 mean that you have also taken decisions about the rest 12 of the scheme at the same point? And I think that we 13 and our Finance Team and Treasury just wanted confidence 14 about what we were signing up to, in effect. 15 Q. It says: 16 "For fully quantified claims, the issues were in 17 relation to the interests and legal costs. The Post 18 Office wanted to pay compound interest and contribute to 19 legal costs. Both set precedents. UKGI challenged 20 compound versus simple interest and the advice from 21 Herbert Smith Freehills is very clear. On legal costs 22 the Post Office is providing £400 for de minimis 23 claimants towards legal fees and £1,200 for claimants 24 with bigger claims. UKGI has also seen other advice 25 from Herbert Smith, UKGI is recommending that fully 160 1 quantified de minimis claims be paid as soon as funding 2 is confirmed. The payments will also need to be signed 3 off by the BEIS Permanent Secretary and BEIS ministers." 4 If we scroll down, we can see the approach towards 5 partially quantified claims, if we scroll down please: 6 "Turning to partially quantified claims, Mr Cooper 7 noted that the Post Office were taking a more generous 8 approach and gave an example. He noted that officials 9 are less comfortable with this; however, it is unlikely 10 that we will get more information from the Post Office, 11 given that these claims as per the de minimis principle 12 are not being investigated." 13 Does this show, again, at this stage, the Department 14 is more cautious than the Post Office with respect to 15 payments and quick payments? 16 A. Yes, I can't remember whether officials means UKGI or 17 BEIS. It could be either or both. But I think you're 18 right. I think it is. I think this is probably the 19 Department scrutinising what the company is proposing 20 and raising some questions about that. 21 Q. If we could turn to UKGI00043650. We're now on 9 March 22 2021, another Steering Committee meeting. If we scroll 23 down to the bottom, please, there's a section on "HSS 24 Finance Docs and Issuance of Settlement Offers". "JS", 25 that's, I think Joshua Scott from UKGI? 161 1 A. Correct. 2 Q. "... introduced the item. On the issuance of settlement 3 offers he updated that the Post Office have around 100 4 ready to be issued but were waiting on the issuance of 5 the funding commitment letter before proceeding any 6 further. TC [I think that's Mr Cooper] also noted that 7 the funding commitment letter was among a suite of wider 8 funding documentation that were all interrelated. CC 9 ..." 10 I think that's you? 11 A. Mm-hm. 12 Q. "... and Mr Cooper expressed concern about the risk of 13 other outstanding issues, such as the changes to branch 14 definitions causing delay, but noted that it was 15 a decision for the Post Office Management and Board 16 regarding progress on settlement offers should other 17 funding documentation be delayed." 18 So at this stage the Post Office is ready to go with 19 100 settlement offers but they are waiting for a funding 20 commitment letter? 21 A. Yes, and the funding commitment letter is a standard 22 piece of documentation that normally the Finance 23 Director from my Department would send to the Post 24 Office before it can make a commitment, especially when 25 we've had to go to Treasury for approval. The point 162 1 around branch definitions is a separate one. 2 Q. Yes. 3 A. That is more about how the Post Office Board feels 4 comfortable about its overall financial position, and 5 the question here was whether there was 6 an interrelationship between the two, ie do we need to 7 have both resolved the funding commitment letter and 8 given the company clarity about what it can count as 9 a post office, where ministers had given more 10 flexibility to the company, before it could proceed? 11 Q. Okay. The funding commitment letter issue goes back 12 again to the wrongful trading issue, doesn't it, because 13 without that commitment, there could be a suggestion 14 that the Post Office is acting improperly because it 15 doesn't have the funds? 16 A. That's right. Exactly. 17 Q. If we scroll down the page, please, and over to page 3, 18 under "Any other business" towards the bottom. I'm just 19 going to read some of this for you. It says: 20 "CC [I think that's you] noted that Nick Read had 21 written to Minister Scully over the Department's role in 22 the delivery of a scheme for criminal cases." 23 So we're now moving on from the HSS scheme to the 24 Overturned Convictions Scheme: 25 "[You] set out your view that the Department and 163 1 UKGI do not have the capacity nor capability and would 2 struggle to build this sufficiently. Furthermore, the 3 Post Office holds the relevant information and there 4 would be difficulties in a third party managing the 5 scheme without direct access to the information. There 6 was also a point that it would be more appropriate for 7 the Post Office to continue to have ownership from 8 a moral perspective over resolving their past issues. 9 NB ..." 10 That's Nigel Boardman, I think? 11 A. Yes, he was the Chair of the Audit and Risk Committee in 12 the Department. 13 Q. "... built upon these points and added a concern that 14 accepting Nick Read's proposal could create a precedent 15 to other partner organisations." 16 TT? 17 A. Tom Taylor, the Finance Director. 18 Q. Thank you. 19 "[He] also added that direct involvement in the 20 schemes would remove the 'fire break' for ministers 21 which can be important protection." 22 So, at this stage, there are number of different 23 reasons why the Department considers that it shouldn't 24 be running that scheme. If I could summarise what I see 25 there and you can please assist me if I am wrong, it is 164 1 for reasons of capacity and capability, for reasons that 2 the Post Office should have ownership from a moral 3 perspective and also for reasons of a firebreak to 4 distance ministers from the scheme. 5 A. Well, there is a fourth, and a comment I have on the 6 third. The fourth is that the Post Office holds the 7 relevant information and, as we know, access to that 8 information, disclosure, has proven problematic 9 throughout, and so that was of an important fourth 10 factor. 11 I think on the firebreak, the point that the Finance 12 Director was making was around potential legal action 13 against the Department. So I don't think it was 14 plausible deniability, or something like that. 15 Ministers always felt politically accountable for 16 whatever the Post Office did anyway, whether it was, you 17 know, done by them or done in-house but I think the 18 Finance Director would be more concerned about 19 potentially bringing a legal liability into the core of 20 the Department. 21 I think -- I mean, you say that is the Department's 22 view. This was a conversation with a number of 23 representatives at the point when that letter had come 24 in from Nick Read and the mood in the meeting was this 25 was the Post Office tying to shift the problem on to the 165 1 deposit and get it off their books. I hope you might 2 then move on later to the advice that I gave Sarah Munby 3 and then the submission that we put up to ministers on 4 this point because my view on this shifted after this 5 meeting. 6 Q. Perhaps if you could explain that briefly and then we'll 7 come back to the various reasons. 8 A. Of course. So in Sarah Munby's submissions of her 9 written statement she quotes quite extensively from 10 an email I wrote to her, where I said that I felt that, 11 given how slowly the HSS was moving, the model of the 12 Post Office delivering OC was not right and that we 13 should consider setting up a new Directorate in parallel 14 with my own, with a new director, overseeing the OC 15 redress scheme. 16 Sarah replied to that and I think she touched on 17 that in her evidence yesterday and said that she would 18 like me to do a proper note, which I then did and she 19 rightly yesterday said she approved it without changing 20 it to ministers, outlining the pros and cons and that 21 eventual advice went to Kwasi Kwarteng and was a mixture 22 of pros and cons on a delicate question about whether we 23 should set up a new team or not. 24 From my own perspective, I had previously had some 25 experience of a compensation scheme in the Department, 166 1 and I was also under quite a bit of financial headcount 2 and admin budget pressure within the Department. So 3 some of these points around capacity and capability were 4 things that I felt quite strongly. It's a very 5 different environment now but, at that point, it was 6 difficult for me to see how I would have been able to 7 get hold of the skills and capacity to do this. 8 That said, between this email, this note, and then 9 my advice to Sarah Munby, I felt that the balance had 10 shifted, given how HSS was going to, towards a different 11 approach, which, ultimately, Kwasi Kwarteng decided not 12 to pursue. 13 Q. In terms of the position of the Post Office, we see 14 there it seems to be at that stage the Post Office's 15 view that this should be a scheme that was run by 16 Government. 17 A. Yes, and Nick Read had articulated that in a letter to 18 Paul Scully saying, "Well, the HSS is one thing", to 19 summarise it slightly crudely, "It doesn't look like 20 an HSS-style scheme is what is wanted by the OC victims, 21 and, actually, it will be much better for the Post 22 Office if it could be dealt with by the Government, 23 allowing us to focus on the future of the company". 24 Q. By that stage, had Nick Read expressed any concern to 25 you or any concern that you are aware of about Post 167 1 Office running the HSS scheme, and whether Government 2 should instead be running that scheme? 3 A. No, I don't remember that. Obviously, Nick and I spoke 4 every fortnight at least, and he and I did discuss 5 difficulties with the scheme -- with the HSS scheme, 6 but -- and this has come up quite a bit in the different 7 evidence hearings, you know, should the Post Office have 8 said in the compensation hearings what it really thought 9 about this issue? And I think quite a lot of the tone 10 of my conversations with the company were about this is 11 the situation in which we find ourselves so let's focus 12 on what we need to do to make it work. 13 And I think that, you know, without trying to 14 provide excuses for the company, I think that was 15 probably the view, "We have taken a decision with 16 ministers about how these things should run, we're 17 trying to make them work". So Nick wasn't saying to me, 18 "Oh, please can you just take on the HSS?", because it 19 was in mid-flight and changing things in mid-flight can 20 be disruptive. This was at the point before OC had 21 launched, where he was saying, before we get into this, 22 we need to have a conversation about who should run it. 23 Q. We spoke earlier, looking at the litigation, and issues 24 with the competence of the Post Office, the culture 25 within the Post Office, you've expressed here issues -- 168 1 a number of issues but you're being asked by the Post 2 Office to manage this other scheme. Was this a moment 3 to revisit the question of the Historic Shortfall Scheme 4 and, at that point, to have made a different decision? 5 A. I suppose there would have been moments throughout, 6 before this time and afterwards, when we could have 7 said, "Stop doing that work, please take it on into the 8 Department", but I think the argument I articulated 9 earlier about changing horses in midstream, this was at 10 a point when people had applied to the HSS, they were 11 there being assessed for eligibility, there was Declan 12 Salter and his team working on them, they pointed away 13 from trying to take it on. And, furthermore, we hadn't 14 had complaints that I can recall saying the Post Office 15 shouldn't be running the HSS. 16 As I said earlier on, the settlement deed said the 17 Post Office should run the HSS. That is what was 18 happening. I think if you take the long view, concerns 19 about how the Post Office, whether the Post Office was 20 appropriate from the postmasters' perspective for 21 running those schemes have grown over time, and 22 I wasn't -- I mean, I don't think that was the argument 23 that Nick was particularly making about why the 24 Government should take it on. I don't think he was 25 particularly saying the postmasters don't want us to run 169 1 the OC scheme. I think it was a range of other reasons 2 that he was articulating but, obviously, with the 3 benefit of hindsight, it's probably fair to say that 4 there were points when we could have said the Department 5 should have taken it on. 6 One final point, though, is that I wasn't convinced 7 at this point in this meeting that we would necessarily 8 do a better job, given that we didn't have a team of 9 Case Assessors or the admin budget to actually do it. 10 Q. Thank you, if we could turn to BEIS0000988, I think this 11 is the email from you to Sarah Munby, on 26 May 2021. 12 I can just read those first two substantive paragraphs, 13 if we scroll down. You say: 14 "Compensation for criminally convicted postmasters: 15 the Post Office will now have received the awaited 16 merits opinion from their lawyers. We understand it 17 provides an assessment of the strength of potential 18 'malicious prosecution' claims from those whose 19 convictions were overturned at the Court of Appeal and 20 concludes that all postmasters are likely to have 21 a strong basis for a claim. This means we're looking 22 towards the upper end of the financial cost band. It 23 might also make things easier because the Post Office 24 shouldn't be tempted to resist any legal claim from this 25 group of postmasters. Our plan for the short term is to 170 1 seek approval within BEIS and then HMT for interim 2 payments for these individuals. My team will work with 3 UKGI on the business case for this and we plan to submit 4 an 'in principle' submission to you in the next few dis. 5 I may need to ask you to prompt Charles Roxburgh ..." 6 That is His Majesty's Treasury? 7 A. Yes, second Permanent Secretary at the time. 8 Q. Thank you. 9 "... if it looks like we're going to run in Treasury 10 issues on the proposed interim payments but that should 11 wait until after we've agreed the business case here. 12 "We then need to do further work with UKGI and POL 13 on how we administer the rest of the compensation and 14 Mike and would welcome your thoughts. It looks 15 increasingly likely to me that we should consider taking 16 on responsibility for the design and delivery of the 17 compensation scheme within BEIS though that would have 18 large resource implications." 19 So by this time, had your personal opinion shifted 20 as to who should operate that? 21 A. Yes, this was the email that I was referring to that 22 described my shift in position and that partly came 23 about through conversations with Mike Jørgen, to be 24 fair, who was then my line manager. As Director General 25 he'd had some experience from afar around the cold 171 1 health(?) claims that the Department had dealt with 2 before for other compensation schemes, and he mounted 3 the argument that, actually, the Civil Service have 4 quite a lot of people who can do operational delivery 5 who could have been brought to in help run this sort of 6 scheme. 7 Q. To the best of understanding, why was it ultimately 8 rejected by Kwasi Kwarteng? 9 A. So there were a couple of steps after this. First of 10 all, we talked to Paul Scully and to Lord Callanan, who 11 was then representing the Department in the House of 12 Lords on Post Office matters, and also to special 13 advisers on the back of some advice, a formal submission 14 that went to ministers, and that's the one to which 15 I referred earlier, that argued about the pros and cons. 16 Views were split across those different people. 17 I think Paul Scully favoured taking it on in-house; Lord 18 Callanan expressed a view that it would be better to 19 leave it with the Post Office. We purposefully 20 presented it as a set of options, rather than 21 recommendations to ministers because we felt they needed 22 to weigh it up and reach a political judgement about it. 23 I attended the meeting that happened with Kwasi 24 Kwarteng. I believe Sarah Munby was there as well and 25 Paul Scully and Lord Callanan and special advisers and 172 1 Mike Jørgen and others, and we talked through it with 2 the then Secretary of State, and he weighed it up, and 3 discussed it with people and ultimately concluded that 4 it would be better to rely on oversight of the scheme 5 from the Department, ensure that there was sufficient 6 governance over the scheme, but ask the company to run 7 it themselves. 8 MR BLAKE: Thank you. 9 Sir, that might be an appropriate moment to take our 10 mid-afternoon break, I think 3.00. 11 SIR WYN WILLIAMS: 3.00. 12 (2.47 pm) 13 (A short break) 14 (3.00 pm) 15 MR BLAKE: Mr Creswell, I'm going to move on to a number of 16 specific issues that have been highlighted in relation 17 to the HSS scheme. The first is access to lawyers. One 18 issue that we've heard, especially from Mr Recaldin, is 19 the inability for lawyers to give early advice in 20 relation to the HSS and also to commission early 21 reports, such as forensic accountancy reports, and 22 matters such as that, because funding isn't available at 23 that pre-offer stage. 24 Do you see that as an issue with the Horizon 25 Shortfall Scheme? 173 1 A. I think it's the fact of the design, that's correct. 2 Legal advice is not available upfront. It is available 3 a later stage. The origin of that, and this was 4 something that was discussed at the compensation 5 hearings, and Sir Wyn's interim report, I believe, was 6 that the desire right at its inception was to try to 7 avoid a very lawyer-heavy scheme. So my understanding 8 is that the discussions around the settlement deed set 9 out a requirement that the Post Office should run 10 a scheme that was not full of lawyers, and I think that 11 is indeed how the HSS has run. 12 I think that the Advisory Board, with whom I work 13 closely, have expressed some concerns about how far HSS 14 has gone in delivering fairness. I think a lot of the 15 claimant lawyers, many of whom met the Advisory Board 16 and myself last week, would say more fairness would have 17 been achieved if those claimants had had legal 18 representation. So I do recognise those criticisms. 19 I think it's a very different model to the other 20 schemes that we are running and I know Sir Wyn, 21 I believe, commented that he thought the HSS in theory 22 was capable of delivering fair outcomes. I think some 23 of the criticisms of the scheme have been about the late 24 provision of the consequential loss guidance, the 25 overcomplicated nature of the form, how hard it is for 174 1 vulnerable victims to fill in the form, and so on. 2 Whether lawyers are the answer to that or not I think is 3 a question on which others would probably be better 4 placed to reach a view. 5 I would say that on those schemes where we have 6 a lot of legal representation involved, the number of 7 claims that come forward is much lower. So if you look 8 at the OC scheme, it has taken a very long time to get 9 to the point that we are now, where over half of the 10 claims have been submitted. I'm not saying that is 11 purely the fault of the lawyers by any means, but it is 12 striking that the HSS scheme was designed in a way to 13 try to encourage early submission of claims to the 14 scheme, and then, having met them, the independent panel 15 would say that they've worked hard to draw out the 16 issues for which the claimants should get extra 17 compensation, beyond what they have stated in the form. 18 Q. So when you say come forward, in terms of the Overturned 19 Conviction Scheme, for example, you mean you have 20 applicants who fully intend to apply but the building of 21 the case at that initial stage with the lawyer takes 22 time that doesn't -- isn't in the HSS scheme? 23 A. Yes, yes. 24 Q. We've seen a lot of references to trying to keep the HSS 25 scheme and the GLO scheme consistent with each other. 175 1 That appears to be an inconsistency between the two. 2 Why is there that specific inconsistency in respect of 3 the Horizon Shortfall Scheme? 4 A. Yes, a very good question. We worked with the Advisory 5 Board to try and ensure alignment around the principles 6 for the GLO scheme cohort because both HSS and GLO have 7 non-convicted claimants and we need to ensure 8 consistency of principle across the piece, but what we 9 also did was worked with Freeths whom, you know, we 10 paid, in effect, to help us design the scheme and we 11 worked with the JFSA to help us design the GLO scheme, 12 and one of the points that we heard through those 13 conversations was about a lesson to be learned from the 14 HSS, which had been running for a while at that point 15 and the requests were to ensure that legal advice was 16 available upfront because it was felt that would better 17 help the GLO claimants to formulate their advice. 18 And obviously a lot of the people in the -- it's not 19 quite 555, it's the 492 people within the scope of the 20 GLO scheme -- had an existing relationship with Freeths 21 or another legal firm who could help them formulate 22 those claims. 23 Q. Thank you. The topic of delegated authority, 24 Mr Recaldin also gave evidence in relation to the levels 25 at which that is set. In 60 per cent of cases he said 176 1 he had to seek further authority and, in his view, the 2 level at which authority is required is set at too low 3 a level. Do you have a view on that? 4 A. I think over time we have seen more delegation towards 5 the Post Office across a range of different aspects of 6 the schemes. So for example, on OC, I hardly ever see 7 a non-pecuniary claim and offer now. It's dealt with by 8 the Post Office within a very clear set of principles 9 that have been signed off. We tend to see more 10 pecuniary claims because those principles are a bit 11 fresher and tend to be a bit more novel in their nature. 12 Q. Sticking, though, in respect of the Horizon Shortfall 13 Scheme in particular -- 14 A. Yes, I think it's probably true that the collective view 15 in Government has been to give Simon and his team 16 a certain amount of discretion but not completely 17 unfettered. 18 Q. Do you consider that changing that level of authority 19 might speed up the Horizon Shortfall Scheme? 20 A. I'm not sure that that is really critical. I've spoken 21 to Dr Hudgell quite a bit about how the HSS scheme is 22 working and, over a period of time, I've tried to 23 develop a relationship with some of the claimants' 24 lawyers to try to find out what is going on from their 25 perspective, so I'm not just dependent on information 177 1 from Mr Recaldin. 2 The number of cases in the dispute resolution 3 process is quite small, so when Simon talks about more 4 delegation, he's talking about his ability to mediate 5 a settlement in a handful of cases. So I can't remember 6 the exact number but it's something like five or six 7 claims have been settled through mediation this year. 8 What has made a much more material difference in terms 9 of full redress has been the 75k intervention. 10 Q. Thank you. That's the next topic, the £75,000 offers 11 and top-ups. 12 Do you understand legal advice to be available to 13 those given the £75,000 offer or top-up? 14 A. No, it's not. 15 Q. No. 16 A. Only -- no, it's not at that stage. 17 Q. Do you consider that that is helpful or unhelpful? 18 A. I think this is a matter on which there was consensus in 19 the House of Commons when my ministers announced some of 20 the interventions. So both my current set of ministers 21 and my previous minister, Kevin Hollinrake, were of the 22 view that what was needed was an intervention that would 23 get us to full and final settlement for those people 24 that chose to accept it as quickly as possible. And 25 I think they took the view that having every claimant go 178 1 and get legal advice would mean that aim would not be 2 achieved for a very long period of time. 3 So back to my point around how many claims have come 4 through for the OC, I think we're talking about 61 out 5 of the 111 plus probably PNC cases have come forward. 6 On the HSS scheme, we're talking about over 4,000 7 cases at the moment. The wider population who could 8 access the HSS is about 24,000 people. That doesn't 9 mean they will all reply but I think, if you look at it 10 from the perspective of capacity in the market, I think 11 it would be difficult to see how the legal community 12 could support those, you know, that volume of claim. 13 Q. One of the documents that I took Mr Recaldin to -- I can 14 bring it up on to screen if you want but I don't think 15 it's necessary -- is a meeting at which he raised 16 a concern, or he notified you and others that -- he 17 said, "Claimant lawyers may ask how can I advise my 18 client" -- this is in respect of the £600,000 payment -- 19 A. Okay. 20 Q. -- "is good enough, given no disclosure?" 21 I don't know if you saw that document. I think it's 22 forwarded to you. You were present as well. The 23 concern there being, without disclosure at that stage, 24 how can somebody know if the figure is sufficient. That 25 presumably also applies to the 75,000, so you don't have 179 1 a lawyer, you don't have disclosure at that stage. Do 2 you think that important rights of individuals to know 3 the underlying information are being taken away by that 4 process? 5 A. I think that the 75k, if you look at it through the lens 6 of the HSS, is quite a large sum of money, though it 7 might not sound it. But compared to the average offer 8 that comes from the independent panel, that is quite 9 a big uplift for many people. When I've discussed it 10 with some claimants' lawyers more privately, they have 11 said that they feel that for many people who have 12 suffered a shortfall and the distress and inconvenience 13 that comes with that, 75k is an overpayment, based upon 14 what they, you know, would be sort of expected to 15 receive through a full sort of legal assessment. 16 The more complex claims, where 75k might not be 17 sufficient, based upon HSS and other precedent, is where 18 there are other consequential losses or a termination, 19 or other sort of factors, and those are the claims that 20 I think are more likely to lose out, I suppose, in 21 accepting the 75k. 22 Of course, the lawyers, with respect to the people 23 in the room, are always keen to have more clients, and 24 so this is partly the conversation I have had with 25 claimants' lawyers who have said every person who 180 1 applies for the £75,000 should get access to paid legal 2 advice. But the inherent design of the HSS, as I said 3 earlier, was to try to avoid that. 4 Q. I don't know if you heard the discussion with 5 Mr Hollinrake about the position that people are put in, 6 in respect of the 600,000, or equally for the 75,000, 7 and the risk that is involved in that decision if they 8 can't later down of the line say, "Actually, I've 9 changed my mind". What's your view on that? 10 A. I did hear that and I heard Sir Wyn's comments on it, as 11 well. I think I would say that Kevin Hollinrake touched 12 on the Accounting Officer considerations in relation to 13 the 600,000, or indeed the 75,000. We didn't need 14 a direction in the end, although the Secretary of State, 15 or Minister Hollinrake as was, would have sought to give 16 one, and the reason for that was we got ourselves 17 comfortable with the fact that this was an efficient way 18 to deliver the outcome that ministers wanted to see. So 19 that is what VFM means for me. It's about the most 20 efficient way to deliver the outcome set by ministers. 21 Now, prior to late 2023, there was probably more 22 emphasis on full and fair and a bit less on prompt. And 23 then towards the end of the year the political pressure 24 on us became higher to deliver things more promptly, 25 even if that meant you were foregoing some fairness in 181 1 terms of consistency between different claimants, this 2 point being that some people would gain more than others 3 if they all level up to 75,000 or 600,000. But in 4 Accounting Officer terms, it was justifiable to achieve 5 that, that sort of intervention without a direction, 6 because it was about delivering ministers' aims. 7 Q. Is part of that, then, intentionally carrying a degree 8 of risk to incentivise the acceptance of those offers? 9 A. Yes, I'm afraid that is the conversation we had had with 10 ministers which is why I would sort of agree a bit more 11 with what Beth White had written in that email, which 12 has been discussed, I know, because I think from the 13 politicians perspective, they were publishing regularly 14 data showing how much money had been paid out to lots of 15 claimants, and, you know, every member of the OC 111 has 16 had at least £200,000 in terms of interim payments. But 17 when you, as a politician, give a big number, people 18 quite understand people come back and say, "Yes, but 19 these people haven't had their full and final redress. 20 You've given them loads of interim payments but it's 21 just a big number that doesn't mean anything to the poor 22 people who haven't got to the end of the process", and 23 obviously, you know, that's very unfortunate. 24 So the political desire was actually to try to 25 target more full and final settlements because that was 182 1 bringing closure to those individuals and giving more 2 demonstrable progress. It wasn't, from my point of 3 view, get as much money out of the door as quickly as 4 you can by giving people even higher interim payments, 5 and, actually, I think Mr Recaldin was incorrect in 6 couple of points in his evidence but one of them was 7 around this 600,000 being possible to be offered as 8 an interim payment. It was expressly not -- the 9 Government policy was not 600,000 as an interim payment 10 to every member of the OC, it's a fixed-sum offer. 11 Q. You said that Mr Recaldin was wrong in a number of 12 places. 13 A. Mm. 14 Q. Just while we're on that topic, if there's anything else 15 you think should be drawn to the Chair's attention -- 16 A. Yeah, there are a couple of issues. One of which is he 17 implied that it was only recently that the Department 18 became comfortable with approving interim payments of 19 a large size, which was why he was saying we should have 20 done the £600,000. It is not true that we have only 21 recently got comfortable with approving large interim 22 payments, we have approved six figure interim payment 23 sums from 2022 and 2023 onwards. So I think that was 24 incorrect. 25 He also talked about the HSS appeals announcement 183 1 being made in March, it was not. It was made in 2 September. Because -- I think that's important because 3 it makes it sound as if we've been sitting on our hands 4 since March but we are currently consulting and I can 5 say more about what we're doing there if you would find 6 that useful. 7 Then, finally, his comments about Emily Snow, who is 8 an excellent member of my team, were completely 9 incorrect about when we consulted the Post Office. We 10 consulted Simon Recaldin's team in June 2023. We got 11 the data from the Post Office in order to build the 12 business case for the 600,000 intervention. Emily then 13 wrote on 5 September to the team in the Post Office 14 saying, "Would you please consider the operational 15 delivery implications?" She outlined her plan for HSF, 16 Herbert Smith, to write to law firms on the day when we 17 announced it. Eleanor Brooks, also in my team, spoke on 18 12 September to Simon. 19 Our Comms Team talked to the Post Office Comms Team. 20 I raised it with Simon myself. He wrote to us, thanking 21 us for sharing the analysis for the 600k and then we 22 discussed it at the quarterly shareholder meeting. I'm 23 sorry that was a little bit at length but I felt that 24 the account that was given the other day was 25 disingenuous because we had been involving the Post 184 1 Office, including up to the level of Nick Read for 2 a while. I think the issue, though, which I think is 3 worth being aware of is that Simon and team did not 4 agree with the £600,000 policy. They felt it was 5 cutting across and undermining the principles-based 6 system that they had been working on developing with the 7 claimant lawyers for a very long period of time. 8 And we were caught, from my point of view, between 9 the Minister's desire to have a fixed-sum offer that 10 would enable swifter full and final settlement, even if 11 it meant overpaying at the individual level, and the 12 Post Office's desire to stick with the claim that was 13 principle-based that would take a lot longer. 14 SIR WYN WILLIAMS: Before we go any further, when I read the 15 transcript of today, in respect of the last five minutes 16 I may get the impression that you have told me that 17 there is a shift in ministerial objective from the three 18 words "full, fair and prompt" to at least an emphasis on 19 "prompt". Right? If so, I've not heard any minister or 20 other politician articulate that publicly, and I don't 21 want to be unfair either to you or them but if it is the 22 case that one of the driving forces behind the fixed 23 offer is to elevate "prompt", above what is full and 24 fair, I'd like to know it in plain language, please. 25 A. And sir, responding to that, that is precisely what I am 185 1 saying. I was given the steer by Secretary of State 2 Badenoch and others that we needed -- and some of this 3 evidence is included in my bundle -- to prioritise 4 speed, even if it meant overpayment. 5 SIR WYN WILLIAMS: Well, and underpayment because the way 6 the fixed offer operates, once you don't accept it, it's 7 lost forever, isn't it? So there's an overpayment 8 possibility, certainly, but there's also an underpayment 9 possibility. 10 A. There is, although the 600k, I would say, is supported 11 by legal advice. 12 SIR WYN WILLIAMS: I am not saying that anybody is going to 13 do it deliberately; I'm talking about the effect of it. 14 A. Yes. 15 SIR WYN WILLIAMS: I can put myself in a position of 16 a claimant who may claim £1 million, who is prepared to 17 take the risk on not accepting 600. It's much more 18 difficult if your claim is 700 or 750, isn't it? 19 A. It is. 20 SIR WYN WILLIAMS: Yes. 21 A. May I also add to my comments based upon your earlier 22 question? 23 SIR WYN WILLIAMS: Yes. 24 A. I think for me, in looking at your pros and cons that 25 you mentioned earlier, it's worth thinking about the 186 1 counterfactual of what would have happen if we had not 2 introduced the fixed sums. 3 SIR WYN WILLIAMS: I agree. I understand that there are 4 a multiplicity of pros and cons. I understand that, 5 which is why I was trying to tease them out of the 6 minister. 7 MR BLAKE: In terms of the counterfactual, is that 8 principally of one of length of time awaiting payment. 9 A. Yes, I think I would have been sitting here today with 10 a lot lower number on both the OC and HSS schemes for 11 completion. My experience on the HCRS, which is the 12 Horizon Convictions Redress Scheme, that we set up on 13 the back of the legislation that we designed to overturn 14 so many convictions, has been quite a high rate of 15 people accepting the 600,000. So, obviously, I'm 16 a civil servant who advises ministers, and they 17 ultimately decide, and what we have decided in this 18 space has been to meet what ministers have asked us to 19 do, which is to try to ensure people can get to the end 20 of the process as quickly as possible. 21 I think we probably fall short on some of that. As 22 I've been discussing with Jo Hamilton earlier today, 23 there are still part of what we are doing that aren't 24 going quickly enough. 25 Q. Moving on to the topic of employees and assistants, 187 1 you'll recall that is something that was addressed by 2 Mr Recaldin. They're not eligible under the Horizon 3 Shortfall Scheme because they don't have a contract with 4 the Post Office. Are you aware of discussions to expand 5 the eligibility criteria? 6 A. I am aware of exactly that question and we have been 7 discussing it with Simon's team and we are preparing 8 advice for our Minister, Gareth Thomas, but we have not 9 yet submitted it to him, but it is a live question. My 10 new ministerial team has been quite focused on gaps 11 between existing schemes and so, in our early time 12 working together, they have been asking us questions 13 about people who might fall between the cracks. 14 Q. Where do you see those principal gaps? 15 A. I mean, I think that's quite a good example. We have 16 also been asked questions around caution cases and 17 prosecuted but not convicted claimants. There is also 18 a question about family members which the previous 19 Government was firmly set against including, certainly 20 Kevin Hollinrake was clear on that in the House of 21 Commons. 22 So we -- and I suppose I should also say Capture, 23 I've worked closely with number of the postmasters 24 affected. I know that's outside the terms of reference 25 of this Inquiry but we have also been trying to look at 188 1 the harms that have fallen, it appears, on, you know, 2 a large group of people there. 3 Q. What is the direction of travel, as far as you see it, 4 in respect of those cases: all of those, the various 5 gaps that you've identified? 6 A. Well, I think our starting point as policy officials is 7 to respond to the question of are there gaps? What are 8 the gaps? Then we tend to say, well, what are the 9 options and what do ministers want to do? And that is 10 a cross-Government conversation that needs to happen. 11 So I'm not, at this point, able to say where I think it 12 will end up, but I think it is quite important, 13 particularly to Gareth Thomas, my new minister, to make 14 sure we are clear about who falls into which scheme. 15 This I also a point that the NAO brings out in its 16 report earlier this year, where they say you need to be 17 really clear about the eligibility of your compensation 18 schemes, you know, the boundaries. And sometimes you 19 draw a boundary that leaves some people outside and 20 sometimes you need to expand the boundaries to bring 21 people inside. And those are judgements for politicians 22 to make. 23 SIR WYN WILLIAMS: In terms of process, I'm just taking 24 an example, an extension to family members or 25 an extension to managers and employees, there will 189 1 either have to be yet another scheme or it was HSS, 2 because they couldn't sensibly fit in to Overturned 3 Convictions or Exoneration and Convictions, and they 4 weren't part of the GLO. 5 A. I think you are probably right. We could decide, 6 I suppose, to say a postmaster who is in any of the 7 schemes could include family member losses within their 8 claim. 9 SIR WYN WILLIAMS: So sort of what's the correct word or 10 phrase? They could -- I can't think of it, but they 11 could bring -- the postmaster could bring a claim on 12 behalf of a range of people? 13 A. Yes, and some of the GLO applicants have indeed included 14 family losses within their claim but, because of the 15 ways in which the rules were drawn, based upon 16 an agreement from ministers, those aspects of the claim 17 are not compensatable, if that's a word. 18 SIR WYN WILLIAMS: Yes, the slang I was thinking of is that 19 you could "piggyback" certain people onto existing 20 claims? 21 A. That's right and obviously family members would be quite 22 a big expansion. 23 SIR WYN WILLIAMS: Sure, yes. 24 MR BLAKE: Do you have sums in mind that you envisage such 25 expansion would involve? 190 1 A. No. 2 Q. The appeals mechanism, that's something you have already 3 touched on. You've explained at paragraph 33 and 4 paragraph 60 of your statement -- a route to appeal 5 that's being established. I'd just like to ask you 6 about a number of documents where the matter has been 7 discussed previously. It's BEIS0001092. 8 This a discussion of 5 October 2023, at the monthly 9 monitoring meeting. If we scroll over the page, please, 10 to page 2. At number 4, we can see there you expressing 11 some concerns with the potential for an appeals 12 mechanism. It says: 13 "The group discussed the Advisory Board's 14 recommendation to introduce an independent appeals 15 process on the HSS. Carl noted that there was a risk 16 that, as envisaged, the appeals process would 17 effectively be a rerunning of the HSS and would be very 18 challenging on value for money grounds." 19 Am I right to say that, at that point in time, you 20 were concerned about the potential cost of an appeals 21 mechanism? 22 A. It's not -- well, I suppose cost is a dimension but, in 23 this case, it's the efficiency dimensions of value for 24 money that were on my mind, ie quite a large amount of 25 money has been spent or had been spent at that point on 191 1 running the HSS. The Advisory Board earlier than this 2 date -- I think June '23 -- had first suggested that it 3 might be needed and, at that point, I felt that what was 4 being proposed was basically rerunning the whole thing 5 again for claimants who had gone to the independent 6 appeal, and on average I think at that point had 7 received about £39,000 each. So I was a bit concerned 8 about that. But we worked on this with the Advisory 9 Board over a number of months and the Post Office gave 10 us some ideas as well. 11 At that point, I think I probably hadn't realised 12 quite how many criticisms there were of the way in which 13 the Post Office had run the HSS and it became clear to 14 me eventually that the criticisms were so large that the 15 Advisory Board were right, that we wouldn't get closure 16 on the HSS unless we gave individuals the opportunity to 17 bring an appeal with legal support. 18 Q. If we could please turn to BEIS0001098. There's then 19 another monthly monitoring meeting on the 1 February 20 2024, so quite a bit of time has passed by this meeting. 21 If we could please turn to page 3. We see there again 22 the appeals mechanism is discussed. It says: 23 "CCo [that's Catherine Connolly] explained that 24 there had been 70 requests to open HSS cases. These 25 will be assessed however it was noted that there is 192 1 limited availability of the panel. 2 "The monthly monitoring meeting were told that the 3 Department has started to receive correspondence 4 regarding potential appeals too. The Department's 5 position is to explain that cases are settled. This 6 aligns with what the Post Office are informing potential 7 appellants. 8 "The Post Office stated that the Department need to 9 be aware that not everyone had full guidelines 10 (including legal) when originally claiming. There are 11 currently no timescales with regard to appeals." 12 You advised that: 13 "The Department were minded to see how the £75,000 14 initiative washed through, how many cases this resolved 15 before further consideration of the appeals process. 16 "SR ..." 17 I think that's Mr Recaldin. 18 A. Yes. 19 Q. "... responded by reminding [you] that this went 20 directly against the Post Office's and the AB's 21 recommendation ..." 22 What's the AB? 23 A. That's the Advisory Board. 24 Q. "... the [Advisory Board's] recommendation currently 25 with the Minister who had mentioned his consideration in 193 1 the House of Commons. It also did not consider that 2 an appeals process would address a number of other 3 issues which had been and will be raised at the Inquiry. 4 "[You] recognised [his] points and pointed out the 5 additional concern about the potential costs of 6 establishing such an appeals process." 7 We spoke about value for money before but actually 8 here it's directly on the issue of costs. 9 A. Yes, that's right. We had advised Mr Hollinrake in 10 December that it would be sensible to look at running 11 an appeals mechanism. We ended up in this early period 12 prioritising the 75k and this is obviously January of 13 this year when there were lots of other interventions 14 happening, such as the GLO fixed sum. I don't know that 15 I would agree that it was -- that not introducing it was 16 running counter to the recommendation. Certainly Lord 17 Beamish -- Kevan Jones -- and others continued to press 18 for us to do this. The Minister had not ruled it out; 19 he did say he would do it. 20 My concern about costs was partly influenced by our 21 conversations with the Treasury at official level about 22 this proposal because, from their point of view, we 23 would be effectively double dipping, coming back to 24 Treasury, asking for another version of the scheme that 25 had been quite expensive up until that point. 194 1 Indeed, I think Minister Hollinrake found it quite 2 challenging to get the then CST comfortable with the 3 idea of launching an appeals mechanism. He wrote in 4 March '24 to the CST and continued to chase in the 5 run-up to the election. But we weren't able to persuade 6 Treasury at that point to agree, and it then went on 7 pause and we picked it up again with new ministers after 8 the election and they quite quickly agreed that we 9 should press ahead with this intervention. 10 Q. In respect of the criteria to be applied, do you know 11 what the criteria will be? 12 A. So we have been consulting -- started consulting various 13 people on this. I wrote to Calum -- who I know is in 14 the room -- from the NFSP, and also to Sir Alan Bates 15 last week, and we attended a meeting with the Advisory 16 Board, where we aired with them various proposals. Some 17 of the aspects that we covered included the fact that 18 the bar should be quite low, that we would like to model 19 it -- this is our proposal -- on the HCRS scheme, 20 ie people will have access to legal advice, based upon 21 a legal tariff, and that then we in the Department will 22 get some external legal support but will recruit a team 23 of case assessors to assess those claims for appeal, 24 that those case assessors would not see the panel's 25 decision on the case, but that they would have access to 195 1 all of the documentation that was put together through 2 RFIs, requests for information, and other such 3 interventions. 4 We discovered with the Advisory Board whether those 5 cases that have been through the HSS Dispute Resolution 6 Procedure, that is the appeal mechanism set out through 7 the original December '19 settlement deed, whether they 8 should also be eligible to apply. Our emerging 9 conclusion is the closed DRP cases should not be in 10 scope because those individuals had had access to legal 11 advice and had reached mediated settlements and other 12 such steps, but that anyone whose case is still being 13 considered by DRP could have the option to transfer in 14 to the HSS appeals mechanism, that we would use the 15 existing HSS principles, and that we would again have 16 access to an independent panel but we would not put it 17 upfront. 18 I think one of our views is that having the 19 independent panel upfront in the HSS appeals process, 20 ie pre-offer, has been one of the contributory factors 21 to the slow progress of that scheme, and that's not any 22 criticism of the panel but it's a recognition of the 23 capacity constraint that is caused by having the panel 24 review every offer, and we would then again have a tier 25 of an independent reviewer, à la Sir Ross Cranston, 196 1 though probably not him, on hand if anyone is unhappy 2 with the independent panel's view. 3 Q. Am I right to understand, therefore, that there won't be 4 a strict criteria for eligibility. I mean, to give 5 an example, the GLO test for the independent reviewer is 6 whether there's been a manifest error, procedural 7 irregularity or substantive error of principle. Those 8 kinds of narrow criteria, legalistic criteria, will 9 those kinds of things apply or is it just an appeal, 10 effectively as of right, to this panel? 11 A. So I was interpreting what you said to be about the 12 exhibit for someone to bring an appeal to the Department 13 scheme. 14 Q. Yes. 15 A. Our emerging view is that the bar for that should be 16 very low, so the eligibility should be very wide. You 17 point around the independent review is a slightly 18 separate one because it's not about eligibility for the 19 scheme; it's about the grounds on which you can appeal 20 the independent panel's view on your claim, and this is 21 what is happening in the GLO, where Sir Ross Cranston is 22 that final point of arbitration. 23 Q. So that's the second layer but, in fact, in terms of the 24 first layer, having somebody in the Department review 25 your claim afresh, there won't be any strict criteria 197 1 that's applied? 2 A. Well, we will have to explain who can apply, but our 3 intention is to make that quite broad and open, rather 4 than limited, as we found was a criticism for the HSS 5 early in its tenure. I would say I see it as three 6 stages, probably. So we would have a Case Assessor in 7 the Department with external legal support looking at 8 the claim. If someone is unhappy as per the GLO, they 9 can go to an independent panel. Question yet undecided, 10 undetermined whether to have two bites of the cherry 11 with the independent panel, and then ultimately an 12 independent reviewer. 13 That might sound convoluted and bureaucratic, but 14 actually those are protections in place for the 15 claimants to ensure that they have an opportunity to 16 challenge an offer. 17 Q. We have heard, in terms of the fixed-sum offer, so the 18 £75,000, that in accepting that you are giving away 19 certain rights, and one of those would potentially 20 include the right to appeal; is that correct? 21 A. That is certainly the kind of policy. 22 Q. Can you see a difficulty with that policy in 23 circumstances where the actual arrangements for that 24 appeal mechanism aren't even published? 25 A. I can see your point, and it is something that we 198 1 discussed with the advisory board and are continuing to 2 discuss with people as we go through the consultation. 3 As I say, what we're trying to do is learn the lesson of 4 before you launch the scheme, talk to people about any 5 concerns about the scheme. 6 Q. Is it a possibility that those who have signed away 7 their rights to appeal may in fact, in due course, 8 receive a right to appeal? 9 A. Would it be a problem if we were to allow them into the 10 scheme? 11 Q. Is there a consideration being given to those who have 12 signed up for the 75,000, waived their right to an 13 appeal, being actually, in fact, allowed in that appeal 14 mechanism because they weren't aware of the 15 circumstances on which you could possibly appeal? 16 A. I think we need to reach a view with ministers about 17 what they would like to do. As I say, the proposition 18 that we tested with the advisory board last week was 19 based upon the existing policy, which has been to say: 20 "Here is a £75,000 offer that you can accept, and that 21 would be the final resolution of your claim, or you 22 could continue through the existing Dispute Resolution 23 Procedure, or the new appeal mechanism that the 24 Department is going to introduce in the first part of 25 next year." 199 1 Q. Finally, in terms of the Horizon Shortfall Scheme, end 2 date. Do you have in mind a date on which all that work 3 will be completed? 4 A. Yes. So again, on the back of the compensation hearings 5 and some of Sir Wyn's comments, we consulted the 6 advisory board. I think this was one of the 7 recommendations in the interim report, that an end date 8 was set. The advisory board's board view was that it 9 was too early to determine what that date would be, 10 given that the Inquiry was continuing. And the Post 11 Office tends to find that whenever there is publicity 12 about activities, whether it is the ITV documentary and 13 drama or the Inquiry hearings, that more people come 14 forward with claims from within that wider cohort. 15 Ministers in the new administration have also 16 encouraged the Post Office to write out to a large 17 number of claimants who haven't yet come forward, as 18 I said, beyond the 40,500-odd that are in the scheme. 19 So currently, ministers have not yet set a date, 20 although I have discussed with the Secretary of State 21 and Minister Thomas that it is our ability of drawing to 22 a close, at some point, that window for HSS claimants to 23 apply. 24 Q. When do you anticipate that will be? 25 A. When do I anticipate the end date will be? 200 1 Q. Yes. 2 A. Or when do I anticipate -- 3 Q. On the knowledge you presently have, assuming that the 4 ITV drama was the peak, in terms of publicity, when do 5 you anticipate the scheme will end? 6 A. Well, I am not sure whether it is the peak of publicity. 7 We have waves of publicity, of course. I think it's 8 a judgment for ministers. I think -- 9 Q. As somebody with experience of the scheme for a number 10 of years now, when do you personally think it will end? 11 A. Well, I think the question for ministers to decide is 12 between the summer, or September next year. I think the 13 judgement is partly how much time do we need to allow 14 people to give them fair access to redress? 15 SIR WYN WILLIAMS: Just so there is no public confusion 16 about what we mean by "closing the scheme", when 17 I recommended that the scheme could be closed, I meant 18 that it would no longer be possible to apply for 19 compensation, not that everybody had been paid. 20 A. And that is what I'm talking about, as well. 21 SIR WYN WILLIAMS: Yes. So we're talking about a date after 22 which nobody would be eligible to apply for 23 compensation? 24 A. Exactly. 25 SIR WYN WILLIAMS: Right. Fine. 201 1 MR BLAKE: Thank you. 2 Moving now to the overturned convictions redress. 3 I'd like to ask you a number of topics that, again, have 4 arisen throughout other people's evidence. The first is 5 delegation levels again. Can you assist us briefly with 6 how the delegation levels apply under that process in 7 respect of the Post Office, leading to ask permission to 8 settle claims? 9 A. Of course. So the OC has been on a journey, from those 10 early cases that were mediated settlements, to the very 11 helpful Lord Dyson ENE principles for non-pecuniary. 12 Once those were up and running, we then gave delegation 13 to the Post Office to work within those principles. And 14 as I say, we only need to see a non-pecuniary offer if 15 it brings a new head of loss, for example, that would be 16 precedent setting. 17 The pecuniary principles, again, took a very long 18 time to get agreed; but since they have been agreed, 19 they have been have applied to more cases. And although 20 we do still see pecuniary offers come to the Department, 21 we have given more freedom to the Post Office to make 22 those offers. 23 Q. Can I just touch on one clarification in respect of your 24 statement. At paragraph 29 of your second statement, 25 you've said that there was agreement of the pecuniary 202 1 principles between the Post Office and the claimants' 2 legal representatives. It is the Inquiry's 3 understanding that there was consultation, but there 4 wasn't formal agreement. Is that something that you 5 understand, or do you have a different view? 6 A. I suppose your understanding must be based upon what the 7 claimants' lawyers have said to you. I remember that 8 consultation did happen between the Post Office and 9 various claimant lawyers, and feedback was given, and 10 the principles were amended in light of that. 11 I know Dr Hudgell did say to me that there may be 12 elements of the principles that they would choose to 13 challenge on a case-by-case basis, so perhaps your 14 description is more accurate than what I've said in my 15 statement on that point. 16 However, I do think our experience has been that 17 getting those principles in place is immensely helpful. 18 Even if you go slower -- more slowly at first, you can 19 then go more quickly afterwards because the areas for 20 dispute narrow. 21 Q. Thank you. 22 My other topic under that heading was the £600,000 23 Government offer, but I think you've addressed that in 24 addressing Mr Recaldin's objections when it was first 25 announced, and you've explained your position on that. 203 1 A. Yes, I think that's right. I would say that the 450,000 2 intervention that Minister Hollinrake -- Kevin 3 Hollinrake touched on earlier is also quite helpful, 4 from Sir Gary Hickinbottom's recommendations. And he 5 has played a very active role in case management, as he 6 described at the Select Committee yesterday, which 7 I think has really been welcomed by the claimant 8 lawyers. 9 At the meeting last week when we met the advisory 10 board and the lawyers, there was quite a bit of positive 11 feedback about how the OC scheme was running now, and in 12 particular, the role that Sir Gary Hickinbottom is 13 playing in helping bang heads together, and so on. 14 Q. If we could move on to the Group Litigation, the GLO 15 scheme. Can we start on BEIS0000722, please. 16 I'll take this quite quickly because this was an 17 email exchange that we saw with Mr Hollinrake this 18 morning. It relates to the Chief Secretary of the 19 Treasury's approval of the various thresholds and the 20 Chancellor appearing to resist the upfront offer. What 21 is your view on how receptive the Treasury were to the 22 proposals you were making in this regard? It's page 3. 23 We can have a look at those passages that Mr Beer took 24 Mr Hollinrake to earlier today. Thank you. 25 A. Mm. Well, we got to the right place in the end, which 204 1 was that Ministers were able to announce the 2 intervention that the Secretary of State and Kevin 3 Hollinrake wanted, but it together a lot longer than 4 I think it probably should have done. I know that Kevin 5 Hollinrake challenged what I'd said here about the 6 strong views of the Chancellor. That information was 7 based upon what the Treasury officials had told me: ie 8 the Chief Secretary was sympathetic to the case from 9 a political perspective, but the Chancellor was taking 10 a bit of a broader precedent view -- which, you know, to 11 be fair to Treasury officials, is part of their job, to 12 say: what is the repercussion of this decision on other 13 schemes? 14 And there was quite a bit of resistance, as you saw 15 through that letter that was, you know, sent back, which 16 in summary said something like: "Good idea but go away 17 and come back with a different number." 18 And after January of this year, it then became 19 possible to get political agreement on that 20 intervention, which I think was the right outcome. 21 Q. Thank you. So the original thinking was 100,000, and 22 then it went -- and was agreed at 75,000? 23 A. Correct. 24 Q. Thank you. 25 The latest figures in terms of the GLO is that there 205 1 are 306 claims received, 221 claims paid; is that 2 correct? 3 A. Yes, and there are interim numbers, as well, around how 4 many offers have been made, and so on. 5 Q. Are those figures slightly deceptive in terms of 6 progress, because the most complex ones have yet to be 7 settled and may take some time yet? 8 A. So it is definitely the case that the more complex 9 claims are either ones that we've just started on, or 10 are to come. So I'm not expecting many more 75ks 11 between now and -- you still get the occasional one, but 12 they mainly settled early on. Of the 228 offers that 13 have been accepted, 151 accepted the 75k. So that gives 14 you an indication of the fact that we have dealt with 15 some offers above that level, but it's sort of broadly, 16 I think, two-thirds one-third, if my maths is correct. 17 Two-thirds 75k; one-third, I suppose you might say 18 complex, above 75k. 19 I don't have any reason to believe, based upon 20 discussions with my team and my analysts, that cases 21 we've seen above 75k are any more or less complex than 22 the other claims that are coming. I don't think Freeths 23 or other legal representatives have held back more 24 complex claims, particularly. I think they've been 25 processing them as soon as those forensic accountant 206 1 reports in the medical reports come through. 2 This is -- I mean, this is one of the points of 3 contention around the scheme: that we are awaiting 186 4 claims, and the conversation we had at the advisory 5 board last week was about are we delivering full and 6 fair redress? The answer was, from everyone there: 7 "Generally we are achieving fair and full outcomes." 8 And that wording was included in the minutes that we 9 published earlier this week of the advisory board 10 conversation. The problem is the speed. And the Select 11 Committee discussed some examples yesterday that I 12 thought were requiring of more work on our parts around 13 the way in which Addleshaw Goddard, who act for us on 14 this scheme, ask for more detail from the claimants' 15 side. 16 The claimants' solicitors raised a few issues with 17 us last week. One of them was around Addleshaw 18 Goddard's approach to asking lots of questions. The 19 other was around how long it has taken to get forensic 20 accountancy reports to the quality needed, and it has 21 been quite a long lag there. 22 The other issue that was raised, which I think is 23 quite important, is around the sort to mental health 24 challenges of some of the claimants who are needing to 25 participate in this scheme. Whether that's that it's 207 1 quite intimidating having to fill in the forms, which is 2 something that Jo and I have discussed, or whether 3 people are holding out for the Inquiry to complete, 4 which is something that Mr Moloney has mentioned in the 5 compensation hearings before, and advisory board 6 mentioned as well. 7 Chris Hodges, the Chair of the Advisory Board, said 8 that he felt it was important to say the schemes are 9 there, the money is there, there's 1.8 billion there. 10 So anyone listening should, you know, feel ready to come 11 forward -- was his sort of view. But I can understand 12 that, from what the claimant lawyers said, some of the 13 claimants want more time, and don't want to be pressed 14 by a deadline for the GLO scheme for when they need to 15 complete their claim. 16 Q. One of the issues that has been raised by Sir Alan 17 Bates, for example, is setting a deadline for the GLO to 18 be resolved. 19 A. Yes. 20 Q. What's your view on that? 21 A. I mean, Sir Alan has been really helpful for us over 22 a number of years, and was involved in the design of the 23 scheme for us, but I know he's unhappy with how aspects 24 of it are running at the moment. 25 I think the view from my ministers -- and I think 208 1 the Prime Minister said this in a letter to Sir Alan 2 earlier this week -- that if claims come to us by 3 Christmas, then we should be able to get offers out in 4 the early part of next year. So it is -- you know, 40 5 working days is our target for getting out those initial 6 offers in 90 per cent of the cases. We have met that 7 for a number of months, and I would expect we would be 8 able to honour that commitment for those claims that 9 come to us by the end of the calendar year. Which, you 10 know, means that we should be able to get offers out to 11 those GLO claimants by the end, you know, by the end of 12 March in those situations. 13 Now that doesn't mean that those claimants should 14 feel forced to accept those offers, and I think, however 15 good a job we and Addleshaw Goddard do to give generous 16 and right offers, there will still be some claimants who 17 wish to challenge those offers, which is why I think 18 Government ministers have been reluctant to say no one 19 -- you know, everyone will get their money and no one 20 can claim any later than the end of March. It's a bit 21 like the point we have discussed in the Inquiry before 22 about the August deadline was an arbitrary one that 23 would have forced some people either to apply either 24 earlier than they were ready, or they would end up 25 missing the boat. 209 1 So I think I definitely agree with the sentiment of 2 you should get on with it and get the claims out, you 3 know, get the offers out quickly, but I think the 4 mechanism of saying you must -- claimants must apply and 5 you must give them an offer by the end of March might 6 actually end up with vulnerable claimants either being 7 forced to apply before they were ready, if you see what 8 I mean. 9 Q. Thank you very much. 10 In light of the time, because we have to get to 11 questions from Core Participants, I'm going to address 12 the next topic quite quickly. That's the Horizon 13 Compensation Review Scheme. 14 A. Redress. 15 SIR WYN WILLIAMS: Sorry, Mr Blake. 16 Just so I'm clear, the statistics about the number 17 of people who to made claims in the GLO to the 30 August 18 2024 is paragraph 41 of your second statement. It may 19 need a little bit of updating, but that's by the by, for 20 the moment. What it shows is that as of 30 August 2024 21 there were 492 eligible applicants, but only 264 22 completed claims received. 23 A. At that point, yes. 24 SIR WYN WILLIAMS: At that point. Obviously there will be 25 a bit of updating. 210 1 A. Yes. 2 SIR WYN WILLIAMS: So there are still a very substantial 3 number of people who have not yet made a claim? 4 A. Yes, and to be precise about the number as it sits now, 5 492 is still the claimant cohort. 6 SIR WYN WILLIAMS: Yes. 7 A. 306 full claims have been received. 8 SIR WYN WILLIAMS: So it's 306 now. 9 A. And that leaves 186 that were not received. 10 SIR WYN WILLIAMS: Right. 11 A. Now Freeths, as an example, tell me that they think they 12 will be able to get their claims in by Christmas, and 13 they own quite a big proportion of that remaining 186, 14 and many of those claims are, I think, complete in part, 15 at least. 16 SIR WYN WILLIAMS: Fine, thanks. 17 Sorry, Mr Blake. 18 MR BLAKE: So the Post Office Horizon System Offences Act 19 2024, under section 4, the Secretary of State has a duty 20 to take all reasonable steps to identify those whose 21 convictions have been quashed. 22 Briefly, can you assist us with how you are 23 establishing those individuals? 24 A. Yes. So this is a responsibility that's being 25 discharged by the Ministry of Justice. We have two 211 1 routes in. We have, when the scheme was launched in 2 July, we opened a portal on gov.uk where anyone can 3 self-assess and declare that they think they fall within 4 the scope of the Act, and therefore should be able to 5 achieve redress. And part of the reason for that is 6 because of the passage of time, and some concern that it 7 might be difficult for us to track down every last one 8 of the cohorts. 9 We have also had data from the Post Office and from 10 the CPS which has been shared with the Ministry of 11 Justice. That cohort is 949 people in total for England 12 and Wales, which is the jurisdiction that the Ministry 13 of Justice oversees. The judicial authorities in 14 Scotland and Northern Ireland have number of 130 between 15 them, in addition to this cohort. 16 The MoJ has assessed 732 of that 949, and this 17 data -- these data are available publicly on gov.uk. 18 And I can give you more information if you would find 19 that useful. 20 Q. That's fine, thank you. 21 Section 5 of that Act includes cautions. Now there 22 has been some confusion in the Inquiry as to which 23 compensation scheme is going to compensate people who 24 have received cautions. In your view, which is the 25 appropriate compensation scheme -- or redress scheme, 212 1 sorry? 2 A. So cautions could be in scope of OC if the work that was 3 being undertaken was voluntary. So if, for an example 4 a partner was helping -- you know, I'll say their 5 partner -- with the records for the accounts and then 6 ended up being cautioned because of alleged 7 falsification of accounts, that individual could be in 8 scope of the OC, but most are actually picked up by the 9 HSS scheme and the GLO scheme, where there are cases of 10 people with cautions in scope. 11 Q. Those whose cautions are overturned by this new 12 legislation, where would you say they should be applying 13 to? 14 A. Well, I would expect anyone in that situation to be in 15 scope of the HCRS, this new scheme. But I think 16 I should probably check that with my team. The OC 17 cohort tends to be a bit more bound, because it 18 generally is people whose cases were overturned by the 19 courts as opposed to this legislation. But I can share 20 further information with you, if you would find that 21 useful. 22 Q. Thank you. 23 There's a category that isn't covered by the new 24 legislation: that's those who were convicted and 25 appealed unsuccessfully to the Court of Appeal because 213 1 they didn't satisfy the Horizon system essential 2 prosecution criteria. What is the plan for those 3 individuals? 4 A. There were a couple of different categories, actually, 5 that were excluded when Parliament reviewed the 6 legislation. There were DWP cases, as well, which is 7 something the advisory board has been discussing 8 actively. The Court of Appeal, as you say, and also 9 other offences like capture related offences, all of 10 which are outside the cope of the legislation. 11 The advisory board has been discussing the DWP cases 12 and liaising with DWP about them. There's no active 13 plan relating to Court of Appeal cases that I am aware 14 of, although, as I say, this is more a matter for MoJ to 15 reach a view on. 16 This was quite contentious when the legislation went 17 through Parliament, and there was quite a strong voice 18 from the judiciary that those cases that had been 19 determined by the highest court, effectively, in the 20 Court of Appeal should not be overturned, whereas those 21 judgments reached by a lower court could be. And that 22 was a decision made by the Executive and Parliament. 23 Q. Two very brief topics before I hand over to others. The 24 first is bankruptcy issues. You've addressed those in 25 detail in your first witness statement from 214 1 paragraph 114. Do you see any current issues insofar as 2 that is concerned, and specifically with reference to 3 any differences between how those matters are treated 4 between the Horizon Shortfall Scheme and GLO 5 participants? 6 A. So I think that the Inquiry's intervention was very 7 helpful in getting us to get a direction in relation to 8 Moors(?), which helped us tackle that particular issue 9 for the GLO group of claimants who were affected. So 10 I think that has moved things on significantly. 11 I think there are clear principles in place in 12 relation to bankruptcy, although some cases I know from 13 Dr Hudgell were a bit contentious at the point of 14 discussion with the panel, but I think there are 15 principles now in place for how to deal with bankruptcy 16 claims, but I'm probably not close enough to the detail 17 for that. 18 We did have a concern which has been expressed 19 publicly, I know, by one victim who is within the scope 20 of the HCRS scheme, because early in the running of the 21 HCRS scheme, there was a question about the approach 22 that the Official Receiver would take in relation to 23 bankruptcies and the claim on the estate. But that has 24 actually now been resolved, and we are now able to make 25 payments to those individuals who were falling foul of 215 1 that uncertainty with the Official Receiver. 2 Q. Thank you. 3 Final topic is current priorities and current 4 matters at the Post Office. I don't need to take you to 5 it. There was some document in your pack that relate to 6 concerns at the Post Office about the increasing number 7 of losses at the Post Office and how to address that 8 matter. I don't know if you've seen the various 9 correspondence with Fujitsu in this Inquiry regarding 10 future prosecutions. What do you see as the plan, going 11 forward, to address issues with discrepancies, going 12 forward? 13 A. So in my mind those are slightly distinct issues, 14 although I recognise there is an interrelationship 15 between them. I think, under Nigel Railton's 16 leadership, the company is taking quite an active 17 approach to trying to bring postmasters with them on the 18 discrepancies and losses issue. So I know they have 19 taking steps to bring the NFSP and I think the Voice of 20 the Postmaster into the Chesterfield office to come and 21 see the back office that deals win the discrepancies, 22 and various steps were taken, such as the dispute 23 button, which I think was used a bit less than the Post 24 Office had expected. And there were various training 25 interventions and so on that were pursued. 216 1 And Kevin Hollinrake mentioned earlier the 2 conversations we had had with the company about that. 3 What I believe is going to happen is that the Post 4 Office is going to bring in someone external to have 5 a look at the current Horizon system. When I saw the 6 YouGov survey that the Inquiry published, I spoke to 7 Lorna Gratton, ahead of a Post Office Board meeting, and 8 said, "This is even worse than what I thought, from what 9 I've heard from the company." 10 She raised at the board meeting, I understand, the 11 need to get some independent assurance for us and for 12 the company, and I understand that any Nigel was of that 13 view himself anyway, and so there are plans in place to 14 bring in someone to provide a bit more confidence to 15 everyone involved about how the system is operating at 16 the moment. 17 I think the issue with Fujitsu is probably something 18 you should discuss with Paul Patterson. There was a bit 19 of a dispute between him and Nick Read around this 20 issue, I know, I think earlier in the summer, where 21 I think -- I suspect that the Post Office feels, when 22 the police approaches it requesting data, that it needs 23 to release the data to the police. But they need some 24 checks and balances around that, but I'm not closely 25 enough involved to be able to tell you what the Post 217 1 Office is doing. 2 MR BLAKE: Thank you very much. 3 Sir, there are just some questions from Mr Henry and 4 Mr Jacobs, and from Mr Moloney as well. 5 SIR WYN WILLIAMS: Before they do, can I just be clear about 6 the questions that I asked you about the greater 7 emphasis on speed of delivery, right? Your answer is 8 clear, but what I didn't follow up with you and should 9 have, is whether that steer, that I'll call it a gloss 10 on the earlier steer, is a steer which was given to you 11 by the previous government or by this government, or by 12 both. 13 A. Yes, the answer is by both. 14 SIR WYN WILLIAMS: By both. Right. That's fine. I just 15 wanted to know. Fine. 16 Right. Who is going to first? 17 MR HENRY: I'll go first if I may, sir. 18 SIR WYN WILLIAMS: Can you swap places with Ms Page so I can 19 see you, Mr Henry? 20 MR HENRY: Sorry, sir. I was taking cover. 21 SIR WYN WILLIAMS: Even late in the day, I like to see the 22 questioner. 23 Questioned by MR HENRY 24 MR HENRY: Thank you. 25 Hello, Mr Creswell. You've made two statements at 218 1 reasonably long length. You haven't mentioned Mr Cooper 2 in either of them but you did mention him when you were 3 being asked questions by Mr Blake earlier today. 4 The impression given was that Kelly Tolhurst, the 5 minister, was not particularly happy with Mr Cooper's 6 performance, or would it be right to say judgement 7 calls; is that fair? 8 A. At that early point in the tenure, that is the case. 9 She became more comfortable with him over a period of 10 time, but what I was describing was a particularly 11 sticky patch early in my tenure in the sort of April/May 12 period, which was the fallout from the judgment. 13 Q. Yes, the fallout from the judgment. How well did you 14 know Mr Cooper? 15 A. I worked as closely with him as I now work with 16 Lorna Gratton. The reason I spoke more about -- well, 17 the reason I didn't really mention Tom Cooper was my 18 statements are of a moment in time, principally about 19 now, where I worked with Lorna and have done for about 20 18 months, I think. 21 Q. So you have worked closely with him? 22 A. Mm. 23 Q. I mean, he was, was he not, displaying a very pro Post 24 Office line, wasn't he? 25 A. I don't think that is the conclusion that one would 219 1 reach, having heard evidence from members of the Post 2 Office who have spent quite a lot of time in this chair 3 complaining about an overly-interventionist approach 4 taken by Mr Cooper. 5 Q. Well, that might have been philosophically the fact that 6 he was supposed to be a Non-Executive Director who 7 thought that actually maybe he wanted to have an 8 executive role, but he was aggressively taking the side 9 of POL in the litigation and also on the recusal issue, 10 wasn't he? 11 A. Well, I wasn't around at the point of the recusal. I 12 believe he recused himself from the discussion about the 13 recusal. I found him not someone who wanted to be an 14 executive in the company, but someone who felt that the 15 company wasn't conducting itself as well as it should 16 throughout the organisation. And he did put quite a lot 17 of pressure on the executives in the company, and they 18 didn't like that, but that was what we wanted him to do. 19 Q. Can I just ask you, do you know Josh Scott? 20 A. I do. 21 Q. You do. Because in November 2019, Mr Cooper 22 commissioned Mr Scott to do research on subpostmasters 23 and their background stories, and that which they had 24 mentioned to the press about the tragedies that had 25 befallen them. 220 1 A. Okay, I don't recall that, but I understand what you're 2 saying. 3 Q. Later on -- and no need to take you to the document, but 4 so the reference is clear for the Inquiry in due course, 5 it's POL00337435 -- there is a note of a consultation 6 with Mr Altman Queen's Counsel at which a Mr Vamos, whom 7 you will have known from Peters & Peters, was present, 8 where the following is stated: 9 "Board desperate to decide whether to take potshots 10 at Misra." 11 Then, further down in the document, and it is at 12 page 3 out of 4 of the document, there is a reference 13 to: 14 "Tom Cooper and Tim Parker need to say 'Misra has 15 been saying X in the press'. What our actual review of 16 her case is X." 17 But presumably it meant "Y". 18 Then Mr Altman says that he knew Misra well. 19 If you'd been aware of that, you would have 20 exercised caution, would you not? 21 A. I -- 22 Q. That's dirty pool, isn't it? 23 A. That certainly sounds like a strange approach to be 24 taking. I think, in defence of Mr Scott, I imagine he 25 was doing what he had been asked to do, in terms of 221 1 factual material. 2 Q. No criticism of him at all. 3 A. Okay. 4 Q. No. But that surely would set alarm bells, would it 5 not? 6 A. It certainly should do, and I don't recall seeing that, 7 you know, at the time. The strategy of attacking 8 postmasters is not a winning one. 9 MR HENRY: No. Thank you very much. 10 SIR WYN WILLIAMS: Who is next? 11 Questioned by MR JACOBS 12 MR JACOBS: Hello, Mr Creswell. I represent a large number 13 of subpostmasters who were affected by the scandal. 14 I want to ask you about delays in the GLO scheme. 15 You said at the beginning of your evidence that 16 you've taken much more control in relation to redress, 17 and that's come across as your evidence progressed. 18 Many of our clients were members of the GLO, and they 19 have expressed to us concerns that their claims are 20 taking inordinately long to finalise. I think, from 21 what you've said, there are over 80 claims outstanding; 22 is that right? 23 A. In terms of claims that have not yet had offers? 24 Q. Yes. Or those that have had offers that haven't been 25 accepted? 222 1 A. It must be something like that. I don't immediately 2 have the numbers to hand, but it would be something like 3 that, probably. 4 Q. I'll quote you, and correct me if I'm wrong. You said 5 306 claims received, 221 claims paid? 6 A. Well 295 offers have been made. 7 Q. Okay. 8 A. To the 306. 9 Q. Okay. 10 A. So there is obviously a gap between the 295 offers and 11 the 228 that have accepted, but there is always a lag, 12 because we may have issued an offer at the end of 13 October, and the claimant has not yet replied and would 14 do so soon. I think the most relevant fact, which may 15 support your argument, is there were about 39 or 40 16 claims that were formally challenged. 17 Q. But about 80 outstanding; is that right? 18 A. Do you mean of the 295 offers that have been made? 19 Q. Those that haven't accepted and are still involved in 20 the scheme. 21 A. Yeah, I make it 74, but -- 22 Q. Very well. Well, we're nearly there, aren't we. 23 A. Yeah. 24 Q. So the delays. You will know that the GLO was announced 25 in June 2022. The scheme was published in March to 223 1 April 2023. Then there was a 38-week period where the 2 Post Office provided disclosure, at the end of which. 3 So the scheme wasn't really in operation until 4 January 2024; is that right? 5 A. That sounds slightly later than I have in mind, 6 actually, about when the GLO started running, because in 7 January '24, that was when we launched the 75k fixed 8 sum. And you'll remember from the earlier 9 correspondence that we were discussing -- this was 10 during Kevin Hollinrake's evidence -- we were discussing 11 the scrutiny threshold in it must have been about the 12 September of 2022. So the scheme must have been -- you 13 know, at that point, do you remember I was saying in my 14 correspondence that we were handling cases every week? 15 So it must be earlier than the time you are saying to 16 me. 17 Q. Well, the point I make is that it only got really got 18 going after the disclosure exercise had been concluded, 19 because that was the point at which it was possible to 20 instruct accountants to deal with the disclosure and 21 assess the losses? 22 A. I mean, there were steps along the way such, as the 19.5 23 interim payments, 19.5 million interim payments that we 24 got out early on. But in terms of the part of the 25 process in which you are most interested, that had to be 224 1 later on, and disclosure did take a while. 2 Q. I'm talking about the ability to instruct a forensic 3 accountant. 4 A. I understand. 5 Q. You're aware, no doubt, that the scheme is beset with 6 delays at the moment because the current problem -- 7 I think it's been alluded to -- is that there are only 8 a limited pool of forensic accountants, so there's a bit 9 of a bottleneck because they're all dealing with 10 a number of claims. The Inquiry has heard very sad news 11 on a number of occasions, including today, that Core 12 Participants have died before receiving full 13 compensation. Do you agree it's imperative that the 14 Department does everything possible to address 15 continuing delays in this scheme? 16 A. I do agree with that. I do. And it's very regrettable 17 that people have died without full compensation; 18 I completely agree with you. 19 Q. At paragraph 81 of your statement you say that the 20 Department has made further interim payments to GLO 21 postmasters suffering hardship. 22 A. We have. 23 Q. You cite the risk of bankruptcy or the loss of a home as 24 examples where payments have been made. At 25 paragraph 151, you say that interim payments for medical 225 1 expenses are automatically approved upon receipt of 2 a medical report that supports the need for treatment. 3 Would such payments cover medical expenses where 4 a subpostmaster, for example, needed medical treatment 5 within a short time frame, but wanted to do so privately 6 because they didn't want to wait or be in a queue? 7 A. As far as I'm aware, they could well do. We discussed 8 this with the advisory board last week around cognitive 9 behavioural therapy, where some claimants are still in 10 the system and have not had full redress, and need money 11 to access that sort of support. And my team confirmed 12 in that conversation that that was the sort of thing 13 that we could provide funding for. I have personally 14 signed off hardship payments for people who are 15 struggling with their gas bills. 16 Q. Well, exactly. What if a close family member was 17 struggling or needed medical care? A spouse or a child, 18 for example? 19 A. I think I would need to check the exact approach, but 20 I think obviously, as I mentioned earlier, the 21 principles around whether family members are included or 22 not is something where there is a line. I think the 23 impact of an individual seeing the harm that has fallen 24 on a family member as a result of the Horizon scandal 25 can be funded through compensation schemes. That's 226 1 a sort of indirect funding. I don't know, if a family 2 member comes along and says, "I need funding to pay for 3 this bill", whether that particular bill would be 4 covered through the payment to the postmaster or whether 5 what we would do would be to provide a hardship payment 6 against a head of loss from that main postmaster, and 7 then it was up to the postmaster or former postmaster to 8 decide how to spend that money, if you see what I mean. 9 Q. We have clients who are here today, and I won't name 10 them, but I am told that people here today have received 11 such payments in respect of family members with medical 12 conditions, and others have had pre-existing medical 13 conditions that have deteriorated, and they have 14 received payments in relation to that. But don't you 15 think that the availability of payments for 16 subpostmasters, former subpostmasters or assistants, or 17 family members who are struggling, for whatever reason, 18 is something that should be published? It's not 19 something that people should have to go to their lawyers 20 and write letters to make requests for. That should be 21 information that's freely available? 22 A. That's quite an interesting point, actually. I mean, my 23 team and I try hard to ensure that postmasters who need 24 money whilst they are still in the system can access 25 that money, and obviously we've had waves of interim 227 1 payments, but we have also approved quite a large number 2 of hardship payments, and the definition of hardship is 3 very loose. It's quite a low bar. So maybe that is 4 something that I should take away and discuss with my 5 team. 6 There is a trade-off between how much time is spent 7 by claimants, victims, lawyers and departmental lawyers 8 in handling small requests for funding, and then getting 9 to the end of the challenge cases and getting payments 10 out. Of course, small amounts of incremental requests 11 every week would probably be excessive, but the 12 principle of trying to ensure that people aren't 13 suffering whilst they're waiting for their claim to be 14 completed seems inarguable. So maybe we should amend 15 our guidance to reflect that. 16 Q. That's helpful. It's also noted that you say the 17 definition of hardship is -- the words that you used are 18 "loose" and "low bar". So it's a wide discretion, isn't 19 it? 20 A. Correct. 21 Q. Thank you. 22 My next question, then, is in relation to, at 3.55 23 I think today in answers to questions from Mr Blake, you 24 spoke about the publicly available figures in relation 25 to overturned convictions and people who qualify under 228 1 the Act. Can I just ask you to confirm that that 2 information is the Quashed Convictions Management 3 Information published by the Ministry of Justice? 4 A. That's correct, from 1 November, and it was included 5 latterly in the bundles. 6 Q. Yes, I think what was included was October's numbers, so 7 I'm not going to take you to that, but there was one for 8 4 November that's been published in the last obviously 9 couple of days. You said in your evidence there's 10 a cohort of 949 in England and Wales. 11 A. Yes. 12 Q. 732 have been assessed? 13 A. Yes. 14 Q. There's a cohort of 130 in Scotland and Northern 15 Ireland? 16 A. Yes. 100 in Scotland and 30 in Northern Ireland. 17 Q. Have they been assessed? 18 A. I believe that they are in the process of being assessed 19 and letters have started to issue. There was a press 20 notice from the Scottish Judicial Authorities as well, 21 which you might want to look at to see how far they've 22 got. 23 Q. The figures that are published I think say that 441 24 individuals in England and Wales have been sent 25 a letter? 229 1 A. Correct. 2 Q. Do you know how many have replied? Because this isn't 3 recent; this is over the whole period, isn't it, that 4 letters have been sent? 5 A. How many have applied is linked to how many people have 6 submitted claims, and that's 172 people. That's up from 7 104 the previous month. So every day we are getting 8 large numbers of people who have received those letters 9 applying. 10 Can I just take the opportunity to give a couple of 11 other bits of information around these stats that 12 I think are relevant, which is that the MoJ, the 13 Ministry of Justice, is now getting to the point where 14 they don't have evidence for everyone. So they have 15 written out to lots of people, which are quite 16 straightforward. You might have heard this through the 17 discussions that my team holds with you on a regular 18 basis. 19 There are 116 people in addition to the 441 who have 20 been assessed and either have already been written to, 21 or will be written to, saying: "We think you might be in 22 scope, can you provide more evidence?" 23 So back to that point I made earlier to Mr Blake, 24 there are two ways in. We have a bit of a Venn diagram: 25 people that have come in of their own accord, and people 230 1 from the evidence base. A point that I think hasn't 2 been expressed publicly very clearly is that 949 for 3 England and Wales includes the 111 overturned 4 convictions cohort. So the list that the Post Office 5 provided included those whose convictions have been 6 already overturned. 7 Q. I think it's 104 letters have been sent out to -- 8 A. That's correct. 9 Q. -- people to clarify whether they are -- 10 A. You're looking at the same table as me. 11 Q. Yes. We've heard, the Inquiry has heard -- finally, 12 from me -- the Inquiry has heard evidence from the Post 13 Office that searches are ongoing in relation to 14 subpostmasters who were in post during the relevant 15 period to see whether there may be further people whose 16 convictions have been quashed. What attempts is the 17 Department making to obtain responses from people who 18 don't respond, and to look for people who haven't been 19 identified yet but may be in scope? 20 A. Yes. So this is a question, really, that the Ministry 21 of Justice Is dealing with. I understand they've 22 employed external search -- are you okay? 23 Q. Yes. Please continue. 24 A. I understand that the Department, the Ministry of 25 Justice, has recruited some external search experts who 231 1 are searching for people. I have also passed on to them 2 the offer that I think you may have raised previously 3 about the NFSP saying that they could perhaps help, and 4 I've passed that on to the Ministry of Justice. They 5 are also following up where there are no responses to 6 the letters that have been sent. 7 Q. Okay. I have one further question to ask you. 8 I understand that -- of people that you've written to, 9 how many of them have registered? 10 A. I don't have that statistic here, I'm afraid. 11 Q. Are you able to answer this question: what is being done 12 to find those who have not registered? 13 A. Well, that was what I answered earlier. 14 MR JACOBS: Okay. That's very helpful. I don't have any 15 more questions for you. 16 MR BLAKE: Sir, there are no questions from Mr Moloney. 17 SIR WYN WILLIAMS: So I think that's it, then. 18 Thank you very much, Mr Creswell, for both your 19 witness statements and for your oral evidence this 20 afternoon. 21 We will resume at 10.00 tomorrow morning. 22 (4.20 pm) 23 (The hearing adjourned until 10.00 am the followed day) 24 25 232 I N D E X KEVIN HOLLINRAKE MP (sworn) ...................3 Questioned by MR BEER .........................3 Questioned by MS PAGE ........................86 Questioned by MR STEIN .......................95 Questioned by MS WATT .......................104 Questioned by SIR WYN WILLIAMS ..............108 CARL PHILIP CRESWELL (affirmed) .............113 Questioned by MR BLAKE ......................113 Questioned by MR HENRY ......................218 Questioned by MR JACOBS .....................222 233