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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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Lord Waldegrave told the Inquiry that there was a moral responsibility for the Government: that it would have been a horrible experience for those making the case to have to go to court, and damaging for the Government because of the bad press they would receive for being heartless.

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Lord Waldegrave told the Inquiry that he was advised by the Department of Health and by the Treasury that the proposed settlement figure was "on the high side".

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Lord Waldegrave told the Inquiry that he was anxious for speed when is came to settlement.

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Lord Waldegrave told the Inquiry he considered there were two arguments which were key to winning the argument with the Treasury regarding the settlement. "The victims' lawyers have come forward with an offer that they say will be seen as fair by their clients. This will not recur, we've got to do this and do it quickly. And look at the numbers; you can afford them, we can afford them."

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In his oral evidence to the Inquiry, Lord Waldegrave explained his reasons for wanting to announce an agreement in principle whether or not there had been any agreement with the plaintiffs' representatives, and in circumstances where the plaintiffs themselves clearly would not all have agreed.

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William Waldegrave and David Mellor wrote to the Prime Minister regarding the proposed settlement. They attached particular importance to a number of points, including "recipients of the new money would have to undertake to drop the existing cases and forswear bringing any future cases on the matter".

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In his oral evidence, Sir John Major noted that in 1990 it would have been "absurdly foolish" to not have taken the opportunity to settle an issue that had caused victims a great deal of anguish.

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Civil servants told the Prime Minister John Major there were significant risks attached to settlement on the basis proposed, but the Health Secretary, Chief Secretary to the Treasury, Social Security Secretary, and counsel all thought that those were outweighed by the advantages.

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The Prime Minister John Major agreed to the settlement proposals.

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William Waldegrave wished to make the announcement regarding settlement, whether or not the steering committee of lawyers representing the plaintiffs had agreed to the proposals. This caused tension with the Treasury.

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The solicitor who was chairman of the Scottish Haemophilia/HIV Litigation Group wrote to the Secretary of State for Scotland, Ian Lang: "Not only were the Scottish lawyers excluded from the discussions with the Government, they were not even advised that these discussions were taking place."

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