Legal background
- The principal pieces of existing legislation with relevance to the Act are as follows.
Primary legislation
- The Post Office is a company limited by shares of which the Secretary of State is the sole shareholder and is classified as a public corporation in the national accounts. The primary legislation that covers it is contained in the Postal Services Act 2000 and the Postal Services Act 2011. The company has a prescribed social purpose. This includes the operation of a network of Post Office branches and meeting certain access criteria, the details of which are set out in a framework agreement and a funding agreement with the Secretary of State.
- Section 103 of the 2000 Act 1 provides the Secretary of State with the power to subsidise and support the Post Office’s network of post offices via a scheme.
- The section 103 power cannot be used as the statutory authority for funding the GLO Scheme which is run and administered by the Department for Business and Trade, because it relates only to payments made by the Secretary of State to the Post Office.
- Parliament has not previously granted specific statutory authority to incur expenditure which can be used as the basis for the GLO Scheme. However, it is possible for temporary programmes of expenditure to be undertaken under the sole authority of successive Supply and Appropriation Acts. It is this power that has been used as the legal basis for the GLO Scheme to date. The text in the Supply and Appropriation (Main Estimates) Act 2023 2 reads:
- Such payments under the sole authority of the Appropriation Acts are governed by the Treasury’s 1932 Concordat with the Public Accounts Committee ("PAC"). That quotes a key passage from the relevant Treasury Minute:
- In practice this is taken to mean that payments under the Act in pursuit of a particular project must be completed within two calendar years. Since the first (interim) payment under the GLO Scheme was made on 8 August 2022, this creates a deadline of 7 August 2024 by which the final award under the scheme must be paid.
"Funding to provide compensation to Group Litigation Order (GLO) claimants who have suffered detriment arising from the errors in the Post Office Horizon IT system or the other matters identified in the relevant High Court judgments."
"… while it is competent to Parliament, by means of an annual vote embodied in the Appropriation Acts, in effect to extend powers specifically limited by statute, constitutional propriety requires that such extensions should be regularised at the earliest possible date by amending legislation, unless they are of a purely emergency or non-continuing character".
Secondary legislation
- Secondary legislation has been made to ensure that payments under the GLO Scheme are exempted from income tax and capital gains tax, as well as inheritance tax. Further legislation has been made to ensure GLO Scheme payments are disregarded in the calculation of benefits (in respect of which a further set of regulations have been made to cover Northern Ireland).
- The above measures have been put in place to increase the amount of compensation received by postmasters and are intended to achieve fairness and consistency in compensation outcomes across the whole cohort of postmasters who have been affected by the Horizon IT scandal and the shortcomings of the Post Office.
