Government and Post Office should stop discussing Horizon victim compensation and pay it

The first public hearing of the Post Office Horizon scandal inquiry began with a warning to the government and the Post Office to pay victims the compensation they deserve without delay, or prolong their suffering.

Subpostmasters and their staff were financially ruined after being wrongly blamed and punished for unexplained accounting shortfalls, yet despite it being proved the anomalies were caused by computer errors, many remain in serious financial trouble.

Victims of the scandal paid back losses that only existed on the Horizon computer system used in branches, many of them having to sell houses to gain the money to do so. More than 700 subpostmasters were criminally convicted, many of whom were sent to prison.

The public inquiry does not explicitly say it will look at compensation for subpostmasters. Even if it did, the length of the inquiry means many victims would have to wait for an unacceptable length of time for financial redress. The first public hearing in the statutory inquiry into the scandal heard why financial redress should be addressed from the start.

In 2009, Computer Weekly told the stories of seven subpostmasters affected by the problems, which led many more who had suffered losses to come forward (see timeline of articles by Computer Weekly since 2009).

Ten years later, the Post Office, which is 100% government owned, was forced to set up a compensation scheme following defeat in a High Court litigation where subpostmasters proved the computer system was to blame for the unexplained losses. About 2,400 subpostmasters have joined the compensation scheme, and taxpayers are paying for it after the government agreed to foot the bill.

Subpostmasters who have had criminal convictions overturned since the 2019 judgment have been told by the government that they will receive interim payments of up to £100,000, with much higher figures expected when claims are made. 

But the group of more than 500 subpostmasters in the Justice for Subpostmasters Alliance (JFSA) that took the Post Office to court, paving the way for the criminal convictions to be overturned and compensation scheme to be established, have been excluded from compensation beyond what they received after the High Court trial. They were awarded £57.75m in damages at the conclusion of the case, but were left with about £11m between them after legal expenses were paid.

Taking on the government-owned Post Office meant subpostmasters had to borrow money from litigation funders to pay the high cost of the group litigation order, which has to be repaid with interest and is not paid for by the losing side. Despite calls for the government to put this right, it maintains that the money paid after the court case was a full and final settlement.

“Right now, people are in financial ruin. People will lose their homes unless something is done urgently to assist them. Some might not survive the lifetime of the inquiry due to stress-related illnesses”

During the public inquiry hearing, Sam Stein, a QC representing 151 former subpostmasters, many of whom were part of the 2018/19 group litigation, said the Post Office understands this injustice and has been in contact with the government and will continue discussions regarding this. 

But he said: “Right now, people are in financial ruin. People will lose their homes unless something is done urgently to assist them. Some might not survive the lifetime of the inquiry due to stress-related illnesses.”

The scandal has always been about money and reputation, added Stein. “On the one hand, the Post Office presented a dishonest picture of its finances and its system, and sought to preserve its reputation at all costs. On the other, the Post Office attacked the financial integrity of subpostmasters and destroyed their reputations,” he said.

Stein said despite the judgment in the High Court in 2019 that proved subpostmasters were not to blame for the financial losses, as well as subsequent Court of Appeal decisions to overturn wrongful criminal convictions, victims “are still not in receipt of any adequate financial redress and many still suffer under the stigma of years of reputational loss”.

“The Post Office and the Department for Business, Energy and Industrial Strategy (BIES) need to recognise that payment of full and proper compensation and the return of legal costs [to High Court claimants] is required now. That means immediately and not at some point in the future, nor subject to continuing discussion. Don’t discuss it, just do it,” he stressed.

Former subpostmaster and scandal victim Alan Bates, who founded the JFSA in 2009, said the Post Office or government was going to have to pay at some point so it “should pay now and stop the victims suffering any longer”.

Between them, the 555 JFSA members paid over £8m to the Post Office for so-called shortfalls while they were serving subpostmasters, said Bates in a recent letter to BEIS minister Paul Scully. He asked: “When is this to be repaid and how?”

The JFSA said it would not volunteer its full support to the inquiry unless financial compensation for the subpostmasters that took the Post Office to court is addressed.

Bates was one of the group of seven subpostmasters that Computer Weekly interviewed in 2009. Another was Lee Castleton, who was sued by the Post Office in a civil court. He is represented by Stein in the inquiry, through law firm Howe and Co.

Castleton was declared bankrupt after he refused to pay the Post Office £27,000 – money they said he owed because the accounts of his Post Office branch in Bridlington, Yorkshire, showed unexplained deficits over a 12-week period in 2004.

“Everybody knows the Post Office has behaved badly. It is not difficult – stop paying lawyers...and pay the victims. These people have had their lives turned inside out”

He decided to go to court to contest the Post Office’s insistence that he should pay. But the court ruled that the debt was real, not illusory as Castleton argued. Having lost the case, Castleton was left with costs of £321,000. In 2007, he filed for bankruptcy.

“Everybody knows the Post Office has behaved badly. It is not difficult – stop paying lawyers more and more money and pay the victims. These people have had their lives turned inside out,” he told Computer Weekly

During the hearing, Stein also called for active engagement on the question of financial redress at the very start of the inquiry and called for a position statement from the Post Office and BIES within weeks detailing what they have done regarding compensation, who they have paid and what their plans are.

“The Post Office has had plenty of time to sort this out with the government and they should not be permitted to add to the extent of the Post Office by doing nothing, delaying payment, prolonging suffering and avoiding responsibility. Instead, we suggest this inquiry should demand immediate and urgent action.

The inquiry also had representations from QC Tim Maloney, also representing subpostmasters in the inquiry, Exeter University professor Richard Moorhead, barrister Paul Marshall, the Communications Workers Union and the National Federation of Subpostmasters.

One of the concerns raised by campaigners for justice is that the organisations under investigation will use privilege to prevent access to documents. The inquiry chair, former judge Wyn Williams, has requested a waiver of privilege in respect of legally privileged material relevant to the terms of reference of the inquiry. The Post Office, Horizon supplier Fujitsu, BEIS and UK Government Investments (UKGI) have until 15 November to provide their responses.