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Sir Graham Hart explained his views as being that "the position which ministers had taken was justified and defensible but that the pressure to change it, notably from victims, members of Parliament and some parts of the media, was growing in strength. If the pressure on ministers continued to build up, it could reach the point at which they found their position no longer tenable: I did not think it was inevitable, or imminent."

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Officials expressed concern that John Horam may wish to alter departmental policy rather than continuing to firmly hold the line.

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Kevin Guinness asked his colleague preparing a first draft of the options paper requested by John Horam to include reference to it being a "Slippery Slope" and to stress that any payments "would have to come from less money being available for patient care."

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The submission requested by John Horam recorded that people infected through blood transfusion "would have as good cause as haemophiliacs for access to a compensation scheme" and that "if anything" the case for people infected through transfusion "is stronger because some were infected after tests were known to exist."

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Lord Horam observed it was fair to say that officials were giving him "strong warnings".

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The Haemophilia Society issued the final version of the report which it had commissioned on Hepatitis C and haemophilia.

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John Horam asked for more information about the likely costs of a scheme limited to those who developed cirrhosis.

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A letter from Kevin Guinness to John Adey provided more information about the likely costs of a scheme limited to those who developed cirrhosis.

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A memo from Ben Dyson to Mrs Weatherseed stated that the Permanent Secretary counselled "extreme caution", telling the Minister that "The unfortunate truth is that this is a very slippery slope."

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A memo from Marguerite Weatherseed to Mr Dyson stated that the Permanent Secretary's points on the question of introducing compensation for people with haemophilia with Hepatitis C had been noted and would be borne in mind by the Parliamentary Under-Secretary of State for Health.

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In a briefing for a meeting between the Haemophilia Society and John Horam, the Society sought to emphasise "the social, psychological, economic and medical impact on individuals and their families".

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A briefing for the Minister noted that the Haemophilia Society had been "encouraged by what they perceive to be a softening in Ministers' position".

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Following the meeting the Haemophilia Society provided further information about their proposals to the Department of Health.

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The Secretary of State told John Marshall MP that he did not consider that no-fault compensation of £40 million would be an appropriate use of health resources.

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A briefing note prepared in advance of that meeting included a reference to Stephen Dorrell's evidence to the Health Committee in July 1995 which "acknowledged that payment to the HIV group was illogical."

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Charles Dobson wrote to colleagues noting that the precedent set by the HIV scheme was "indeed a problem, but I didn't think we had ever gone so far in public!"

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Paul Pudlo (Department of Health) acknowledged that the Secretary of State had consistently opposed any form of no-fault compensation but interpreted his position as being that it was preferable to live with the anomaly of the HIV scheme than to remove it by making it the norm.

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John Marshall MP wrote to the Prime Minister John Major to ask whether help could come from the contingency fund rather than the Department of Health's existing budget.

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The Prime Minister John Major suggested that the Government had given the question of compensation very careful consideration. He expressed great sympathy but John Major said it was better to spend money provided for healthcare on current patients. Rather than people who "received the best possible treatment available at the time".

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John Horam met John Marshall MP and stressed it would be very difficult to justify "payments of this magnitude".

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