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The Government paid £24 million to the Macfarlane Trust to be distributed.

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Kate Lee, a solicitor acting for the central defendants, reported that counsel had considered the possibility of sending a letter informing the plaintiffs that if they discontinued against the defendants the Government would forgo its own costs. It was suggested that, viewed with the additional money being made available to the Macfarlane Trust, this "may be seen as a sympathetic gesture."

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A memo from Richard Gutowski to Kate Lee, regarding HIV litigation, expressed unease about writing to plaintiffs informing them that the Government would forgo its own costs if they discontinued against the defendants. It was felt this could be construed as overly aggressive.

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A memo from Charles Dobson to Clive Wilson expressed his view that an open letter warning the plaintiffs about costs of proceedings could be too easily misinterpreted.

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A memo from Donald Acheson to Virginia Bottomley and Kenneth Clarke urged the Government to make an ex-gratia settlement to people with haemophilia infected in relation to the HIV litigation.

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A memo from Strachan Heppell to the CMO, the Minister of State for Health and the Secretary of State set out the options for responding to the litigation.

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A note to ministers on the haemophilia AIDS Litigation invited Ministers to review the government's position in light of: (i) Mr Justice Ognall's statement to consider an out-of-court settlement; (ii) advice from Counsel; and (iii) the Regional Directors of Public Health submission.

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A submission from regional directors of public health on HIV litigation was submitted.

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Kenneth Clarke was in favour of sticking to the Government's legal defence and continuing to fight the litigation. He did not deem it necessary at that stage to send a memo to the Prime Minister.

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Kenneth Clarke sought to discuss the issues of settlement with the Chief Secretary to the Treasury.

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A memo from Stephen Bowden to Andrew Edwards outlined a phone call between the Chief Secretary and the Secretary of State for Health. They had agreed that there were no grounds for offering an out-of-court settlement in relation to people with haemophilia with HIV.

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In his oral evidence, Lord Clarke said that he did not approve the idea that the central defendants should settle the litigation but thought that once the case had run its course and the expected judgment in favour of the Government had resulted, a substantial payment would then have been made to the Macfarlane Trust.

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The plaintiffs' lawyers wrote to the central defendants in response to Mr Justice Ognall's observations and proposed that consideration be given to a settlement.

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A Department of Health summary of the campaign for the settlement was provided in a briefing to the next Secretary of State.

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The Department of Health produced a summary of the campaign for the settlement.

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The health authorities encouraged Pannone Napier to explore with the other solicitors for the plaintiffs whether they could agree a realistic settlement figure which could be offered to the Department of Health.

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At a meeting between counsel for the central defendants and lead counsel for the plaintiffs, the Government lawyers indicated that they could not initiate a compromise but were prepared to listen.

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The steering committee of the plaintiffs met and a further meeting between counsel for the parties was arranged.

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The figures in the proposed scheme of compromise were to cover all the people with haemophilia registered with the Macfarlane Trusts as well as all the plaintiffs.

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In his oral evidence, Justin Fenwick KC gave greater detail in relation to the proposed settlement.

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