In Part Two of our blog examining the report published last year by the National Audit Office (NAO) on Lessons learned: Government compensation schemes we will focus on the significant operational challenges that arise in operating such schemes, many of which are well known to those who have been involved in one way or another, in the operation of similar national and/or private compensation/redress schemes. We will also look at how this report might influence the establishment of a National Redress Scheme for England and Wales.

Operational challenges

The single most important thing that will impact the overall success of such schemes is the relationship between those who administer the scheme and the potential applicants and their representatives and advisors. As in all relationships, clear transparent communication is the key to this relationship and likely the key to the overall operational success of the scheme. 

It is also equally important that this communication and all other engagement that applicants and their representatives have with the scheme is trauma-informed and does not have a retraumatising effect on those who communicate and engage with the scheme. 

The evidence to date is clear that applicants will have a better experience if they have a single point of contact/caseworker throughout their application - a practice that has been adopted by the newly-established Horizon Conviction Redress Scheme (HCRS), which provides financial redress for those who were wrongly convicted of a crime because of the Horizon IT system used by the Post Office.

Special consideration needs to be given to how the scheme intends to communicate with vulnerable and disadvantaged applicants. In some circumstances it may be necessary to consider directing communication to relatives and/or trusted advisors, though this must be carefully thought through in terms of possible future exploitation of applicants once the compensation has been paid.

In order to be clear and transparent in this communication, although it is often a challenge, it is necessary to be able to estimate in advance all of the people who are entitled to apply for the scheme, and how many of them are already in a position to bring an application under the scheme. This is necessary so that the government can budget both financially and in terms of resource, and also enable applicants and their representatives to estimate timescales from application to payment of compensation and manage expectations in the meantime.

Traditionally, government compensations schemes have been time limited, often for two years to take account of delegated authority from Parliament in relation to funding. However, the time periods for such schemes are increasing to five years and in some places, like Australia, to 10 years. Initially, the Windrush Compensation Scheme was to be open for two years, whereas the current position is that it will remain open as long as it is needed, so that no one is prevented from making a claim because a deadline has passed.

In its day-to-day operation these schemes have to reflect and consider whether additional steps need to be taken and expenditure incurred to encourage those eligible to apply to the scheme. The NAO noted that “…potential claimants for the Windrush Compensation Scheme were fearful of engaging with the scheme in case it was used to question their right to remain in the UK. The Home Office undertook additional outreach activities and numbers of applications increased following changes to the scheme. As at March 2024, 8,164 claims had been received against an expectation of 11,500 in 2019, more than 70% of claims were filed after the original closure date of April 2021.”

Schemes need to be flexible and able to respond to changing circumstances. The Financial Ombudsman Service (FOS) received 1.3 million complaints about the mis-selling of PPI; to cope with this, the FOS had to increase its staff size from 1,000 to 4,000.

The NOA notes that HM Treasury has, in the past, agreed with government departments to the making of a flat-rate compensation payment, even in circumstances where the applicant would have received less compensation through an individual assessed payment, as the flat rate payment reduces the administrative cost of the scheme. 

Consideration has to be given to the systems that need to be put in place for gathering evidence from third parties like the Police and the NHS, such as service level agreements and memorandums of understanding, while also factoring the impact of this on processing timetables.

Lessons Learned

  • It may not be possible to precisely estimate the total number of those eligible for a scheme, and it will be helpful to make the level of uncertainty clear to decision-makers and stakeholders.
  • Officials should avoid over-optimism in their assumptions about the duration of a scheme and the pace of claims processing.
  • Officials should plan for the possibility that they may need to make additional efforts to persuade claimants to come forward.
  • Claims processing capacity will need the flexibility to cope with changing circumstances. 
  • Schemes will wish to put in place robust systems for gathering evidence from third parties where necessary.
  • It is important that scheme designers and administrators work to minimise any re-traumatising effects of the process on claimants.
  • Constant communication using an appropriate tone is important for maintaining claimant engagement and stakeholder support. Specific attention should be paid to communicating with vulnerable or disadvantaged claimants.
  • Claimants should be able to easily access accurate and up-to-date information about the progress and status of their claim.

The NAO referenced the fact that several stakeholders had highlighted to them the importance of advice and advocacy services to help guide claimants through the complex claims process. This is something that has been echoed by applicants to various national redress schemes. The Post Office GLO Scheme provides additional support for claimant’s legal representation or access to advice services. Although the Windrush Compensation Scheme provides support with paperwork and applications, it is one of the only contemporary compensation schemes that made no provision for government funded legal advice. The costs of a solicitor acting on behalf of an individual applying for financial redress if they were wrongly convicted of a crime because of the Horizon IT system used by the Post Office. The NAO noted that Sir Robert Francis was very clear about how important such services will be in his Infected Blood Compensation Framework, and he has recommended an advice and advocacy service supplemented, where necessary, by discretionary access to independent legal advice and representation.

Additional non-financial support is also noted to be a feature of these schemes, whether it be apologies, meetings with representatives of institutions or the provision of medical, psychological and social support to those who have been impacted by the wrong.

In the event that the scheme needs to be changed during its existence, scheme administrators will need to be clear about the process and scope of that change. Even small changes and/or tweaks to the scheme, can have a significant impact on the both the cost and resources necessary to operate the scheme. 

Lessons Learned

  • Additional support offered to claimants during the scheme will help to maintain confidence in the scheme, encourage potential claimants to come forward and improve the quality of applications.
  • Scheme performance indicators should be meaningful, straightforward and transparent.
  • There is a likelihood that schemes will need to change during their existence, whether time-limited or not, and scheme designers should allow for this.

The NAO concluded that: -

“Citizens eligible for redress will have suffered hardship and distress. These citizens have a reasonable expectation that their claim will be treated fairly and speedily. There is no central coordinated approach when government sets up new compensation schemes resulting in a relatively slow, ad-hoc approach.

"Setting-up and administering a compensation scheme is a complex task, and challenging for officials who may have never done it before. This has led to mistakes and inefficiencies in the design of schemes, and delays in getting money to claimants. Claimant and stakeholder confidence can be further undermined where the design and operation of the scheme is not seen as being independent from those who have caused them harm.”

IICSA’s recommendation for a National Redress Scheme in England and Wales made over two years ago remains just that. The Home Office, on behalf of various strands of government, has undertaken some work towards implementation of this recommendation but there is no clarity on whether such scheme will be introduced or not.

Although the new UK Government has not taken any action on this recommendation to date, (nor was there any provision in the recent budget for such a National Redress Scheme, though the budget did make provision for the Post Office related schemes and the Infected Blood Compensation Authority) what does seem clear is, that if introduced, a National Redress Scheme if following the above recommendations is likely to:

  • Be designed in conjunction with victims and survivors of CSA;
  • Will embed a trauma-informed and responsive approach in the scheme’s practice and policy;
  • Will need to be adequately resourced with staff, who have the correct skillset to deal with victims and survivors of CSA;
  • Will require detailed analysis to be carried out in respect of the estimated number of eligible applicants; 
  • Be independent from those who have caused the harm;
  • Be open for at least five years if not longer;
  • Have clear processing timescales and organisational accountability around delivering the same;
  • The burden of proof is likely to be based on the balance of probabilities;
  • Provide for interim payments;
  • Provide that compensation/redress is not liable to income tax and does not adversely impact any benefit that applicants are in receipt of;
  • Provide applicants with some form of paid advice and advocacy services up to and including full legal representation (if we have learned anything from the wide ranging criticism of the Windrush Compensation Scheme, it is, that many of the difficulties could have been avoided if applicants to the scheme had the benefit of legal advice from the outset);
  • Will provide for non-financial redress referred to above.

At least, if a National Redress Scheme for England and Wales is introduced in time, unlike the Windrush Compensation, it will not be able to argue that there was no precedent available to consider in designing the scheme!