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Taxpayers will have to pay at least £300m to bail out Post Office after scandal

The cost of a scheme set up to compensate subpostmasters who were victims of the Horizon IT scandal will exceed £300m even before damages are paid to all those who suffered

The compensation scheme set up by the Post Office to compensate victims of the Horizon scandal has received claims worth £311m – and taxpayers will foot the bill after the government agreed to pay when it became clear that the Post Office did not have the resources.

A freedom of information request by campaigner Eleanor Shaikh, published by freelance journalist Nick Wallis, also revealed that the Post Office had only budgeted for £35m for what is known as the Historical Shortfall Scheme. The scheme has received 2,400 applicants, compared with 500 expected by the Post Office.

The government has agreed to cover the costs, which according to Department for Business, Energy and Industrial Strategy (BEIS) minister Paul Scully “is beyond what the Post Office can afford”.

And the total amount could be much higher. The £311m figure does not include compensation for subpostmasters who received criminal convictions. A total of 736 subpostmasters were convicted using evidence from the Horizon system, with 47 convictions already overturned and more expected.

Thousands of subpostmasters were blamed for unexplained accounting shortfalls which were caused by errors in the Horizon computer system they use in branches. They were forced to pay the money back and many suffered criminal prosecution and were sent to prison for financial crimes that never happened.

A Computer Weekly investigation in 2009 first revealed the plight of the subpostmasters in interviews with seven of those affected (see timeline below for more).

After years of campaigning, a High Court case that started in November 2018 and ended in December 2019 saw subpostmasters proved right that the unexplained accounting shortfalls were computer errors. As part of the settlement, the Post Office was forced to set up a compensation scheme for all subpostmasters who had suffered as a result of Horizon errors.

The Post Office said: “Claims are progressing through the scheme and we are committed to fairly resolving these, with assessment by an independent panel.”

The £311m does not include compensation for the 555 subpostmasters who took the Post Office to court over the Horizon errors. These subpostmasters revealed what the Post Office and Fujitsu, which supplied the Horizon system, had been up to for nearly two decades, and what the Post Office’s government owner had failed to stop.

They were excluded from the Historical Shortfall Scheme because the Post Office and government said the damages paid when they won the High Court litigation were full and final. However, most of that £57.75m settlement was swallowed up by costs that had to be paid to a litigation funder, leaving the claimants with only about £11m. The government is refusing to pay to subpostmasters’ legal costs.

In the scandal, subpostmasters lost properties, paid back sometimes hundreds of thousands of pounds and had their lives devastated. They subsequently received derisory amounts, with one former subpostmaster, who lost his business and has lived with a criminal record, receiving less than the costs he has incurred over the years fighting to clear his name.

Had it not been for the High Court victory and the efforts of these subpostmasters, the Post Office would not be paying any compensation and would still be denying that there had ever been any problems with the Horizon system.

The government has been accused of making a “false promise” regarding compensation to the 555 subpostmasters who defeated the Post Office in court.

They were promised a “fair and speedy” resolution to their demand for appropriate compensation in a Zoom meeting with prime minister Boris Johnson and BEIS minister Scully, which took place at the beginning of May.

But none of the subpostmasters involved have even been contacted by the government or Post Office in the two months since then.

One of the subpostmasters, Michael Rudkin, told Computer Weekly: “Having more or less been given assurances from the prime minister and Mr Scully, nobody has contacted me or my legal representatives to make an offer to bring this compensation forward for settlement. These were just false promises.”

In April, Nick Read, the current Post Office CEO, said: “Although the parties entered into a full and final settlement of the group litigation in good faith, it has only become apparent through various news reports since quite how much of the total appears to have been apportioned to the claimants’ lawyers and funders.

“Should those reports be accurate, it is at least understandable that the claimants in those proceedings should continue to feel a sense of injustice, even in circumstances where they also agreed the settlement in good faith.”

Subpostmasters who have had their criminal convictions overturned are currently building their legal cases for compensation. On the subject of compensation for those wrongly prosecuted, the Post Office said: “There must be meaningful compensation that reflects what has happened and we continue to work with government to help ensure this.”

Timeline of the Post Office Horizon case since Computer Weekly first reported on it in 2009

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