Government set to backtrack on untenable position on subpostmaster compensation

The government is set to announce a new stance on compensation for the 555 victims of the Post Office Horizon IT scandal left out of current compensation schemes.

After months of relentless pressure by this group of former subpostmasters, the government has been backed into a corner, under pressure from the public and MPs, over its current position on compensation untenable.

Questioned by MPs on Thursday 24 February, Department for Business, Energy and Industrial Strategy (BEIS) minister Paul Scully said there could be an announcement on the compensation in days.

He said there was no hold-up in the Treasury and that he hoped to return to the dispatch box with “good news” in the next few days.

In January, Computer Weekly revealed that the Post Office had received government subsidies worth over £1bn last year, including a £685m payment in December, as part of a scheme labelled Post Office Historical Matters Compensation. But it has not shifted its stance that the 555 subpostmasters who defeated the Post Office in court, exposing the extent of the scandal, have had their compensation.

The 555, as they are known, are members of the Justice for Subpostmasters Alliance (JFSA) campaign group, which took on the Post Office in the High Court in 2019, proving that computer errors had caused unexplained accounting shortfalls for which they were blamed. Some were convicted and jailed for financial crimes and many more were made bankrupt and left financially ruined.

After the judge ruled in their favour, the claimants were awarded £57.75m damages, but once legal costs were taken out they were left with just £11m to share. Claimants who had lost businesses and homes received derisory sums.

As a result of the JFSA’s court victory, 72 former subpostmasters have so far had criminal convictions overturned, with many more expected to follow. The government said they are entitled to an interim compensation payment of up to £100,000 while their full compensation is worked out. The court victory also forced the Post Office to create a compensation scheme, known as the Historic Shortfall Scheme (HSS), for subpostmasters who have suffered as a result of Horizon errors, but this excludes members of the 555.

Despite acknowledging the importance of the 555 in fully exposing the scandal, the government has maintained that the compensation they were awarded after the High Court case was full and final.

Following Scully’s announcement that a new stance could be days away, Alan Bates, who set up the JFSA in 2009, said: “I will believe when I see it.”

The JFSA, through Alan Bates, has demanded that if justice is to be done, the first thing the government must do is pay the legal costs, and there has been increasing pressure from MPs for fair compensation to be paid immediately.

There have been signs that the government is changing its position, with Scully recently stating that the only thing holding back fair compensation for the 555 is a mechanism to do so and to “unpick” the legal settlement of 2019.

The past fortnight has seen pressure for financial redress and justice mount as victims have told their horrific stories in public as part of the statutory inquiry into the Post Office Horizon IT scandal.

MPs are now ramping up the pressure. During a House of Commons debate, Conservative MP Andrew Bridgen said he, Labour MP Kevan Jones and former Conservative MP James Arbuthnot, now in the House of Lords, have been “repeatedly dismissed and fobbed off” by ministers over the years when they called out the injustice.

Bridgen asked Scully: “Does the minister agree that all the subpostmasters that lost out due to the faulty Horizon system should be compensated?”

He added. “There is no excuse for further delays in compensation. These people were wronged by the Post Office, let down by ministers and officials who apparently took the word of the Post Office without any question. People deserve adequate justice now. It’s time we accelerated the compensation scheme, got closure for subpostmasters and ensure that this can never happen again.”

On the 555, Scully said: “They have been absolute pioneers in this area and I will absolutely work at speed. I do not want this to go on a moment longer than necessary, which is why we have tried to do anything to try and short circuit any bureaucratic process to be able to get on and compensate everybody fairly. Those 555 subpostmasters exposed this whole scandal by taking the Post Office to the High Court and did a massive public service.”

Adding to the pressure on government is the questioning of victims and their compensation status by public inquiry chair Wyn Williams. It has become clear that he is drilling down on the compensation paid and the fact that the government’s approach is prolonging suffering and is a scandal within a scandal.

During the inquiry, Williams has repeatedly asked about compensation received by victims and has built up a picture of unfairness.

Beyond the disgusting treatment described by victims, the inquiry has heard demands from the victims. All say they have only got to where they are now because of the JFSA 555 and that this group should be fully compensated, without hesitation.

Beyond the 555, there are also those who were wrongly convicted to compensate, as well as 2,400 other subpostmasters who have suffered losses due to Horizon and are part of the HSS.

Then there are thousands more the Post Office forced to pay back unexplained shortfalls, according to Bridgen.

Bridgen told Computer Weekly that there were more who have paid back money over the years due to Horizon errors, but probably just thought the shortfalls were their mistake. He believes there are up to 5,000 more subpostmasters affected. The businesses of these people could have lost money and failed in many cases due to this.

“Subpostmasters that were coerced into paying the Post Office money due to these shortfalls also need to be compensated. I know lots that say they didn’t owe any money but were forced to repay,” he said.

The contract between subpostmasters and the Post Office states that subpostmasters must make up all account shortfalls. This contract was described as “oppressive” by High Court judge Peter Fraser in 2019 during the court case when the JFSA 555 sued the Post Office.

This week sees the public inquiry move to Cardiff, where it will hear more victims tell their stories. See Cardiff timetable here.

• Watch the hearings on the Post Office Horizon IT Inquiry’s YouTube channel •

In 2009, a Computer Weekly investigation revealed that subpostmasters were being blamed for unexplained accounting shortfalls, which began to happen soon after accounts at branches were automated by the introduction of the Horizon system from Fujitsu (see timeline of Computer Weekly articles on the scandal below).