Post Office scandal victims get £19m interim payout but ‘still in dark over compensation deal’

UK taxpayers could have to pay as much as £1bn in compensation to former Post Office workers wrongly convicted of theft due to the defective Horizon IT system.

Postmasters caught up in the Horizon IT scandal say that they are still being “left in the dark” about a compensation package after the government announced that they will receive interim payments.

Paul Scully, the postal affairs minister, said payments totalling £19.5 million will be paid to eligible members of the 555-strong group within weeks while a deal for “full and fair” compensation is negotiated.

Hundreds of postmasters were accused of stealing from their own businesses because of faulty software made by Fujitsu that was introduced in Post Office branches.

In total, more than 700 postmasters were wrongly prosecuted for theft, fraud and false accounting between 2000 and 2015. Some lost their homes and one took his own life in what has been described as the biggest miscarriage of justice in British legal history.

Scully said that legal action was still being considered against the Japanese IT firm to recoup some of the taxpayer-funded compensation, which could total £1 billion.

Earlier this year the government said that a compensation scheme would be set up for the postmasters who helped to expose the extent of the scandal during a group action at the High Court in 2019.

The group was awarded £57.75 million after a settlement was agreed with the Post Office but only received £20,000 each after having to pay sizeable legal costs.

Most of the £46 million legal bill was paid to Therium, the company which funded the litigation on a “no win, no fee” basis. The Post Office spent about £43 million in legal costs pursuing the case, before reaching a settlement with the group.

Having previously ruled out other avenues to compensation because of the legal settlement, Rishi Sunak, the chancellor, announced that funds would be made available for the 555 victims in March.

Amid warnings that some members of the group could die before being fully compensated, Scully announced the interim payment package in parliament today. “These postmasters and their families have shown immense courage in the face of terrible circumstances,” he said.

“I hope this initial step provides some comfort to these pioneering postmasters while reaffirming our commitment to ensuring they receive their fair share in compensation.”

The payments will exclude the 63 postmasters whose convictions over shortfalls were quashed, leaving them entitled to a separate compensation scheme.

Christopher Head, who ran a village post office near Sunderland between 2006 and 2015, credited Scully for “taking a big step” and said that, unlike other ministers, he was driving the issue forward.

However, he added that members of the 555 remained “very disappointed” that the announcement contained a lack of detail on the shape and scope of the final scheme. “There is no mention of time frames and what is being discussed — we are still being left completely in the dark,” he said.

Head echoed previous comments from Alan Bates, the lead litigant in the High Court case, for the initial payout to have been £46 million, matching the legal costs paid out in the action.

On the interim compensation payments, he said: “It is going to alleviate very short-term problems for people that are in desperate situation, who are still having talks about their homes being repossessed. But there’s still no time frame as to when and how the scheme is going to be set up and how long it’s going to take.”

Speaking to media, Scully said he expected the scheme to be structured within the next few weeks, adding that “plenty more compensation will inevitably come”.

He also said that the scheme could align in timing with a separate “historical shortfall scheme”, which it is hoped will have made all its offers by the end of the year.

The minister said that “nothing is off the table” regarding legal action against Fujitsu. He said that a decision would be taken after the company gave evidence to the public inquiry into the scandal.

“Let’s wait for the evidence and see exactly where blame is likely to be apportioned and then we can act accordingly,” he said.

In May, Sir Wyn Williams, chairman of the inquiry, intervened in the row about compensation for sub-postmasters, calling for the government to speed up the payments, and finalise settlements “sooner rather than later”.

It came after law firms representing victims criticised delays in recent months, warning that many could die before seeing any money, and threatened to launch new civil claims.

A Post Office spokesman said: “Ensuring full, fair and final compensation for all Horizon scandal victims is a priority as we put right the wrongs of the past.

“We welcome the government taking action on final, equitable compensation for the postmasters who were part of the group litigation settlement and those whose Horizon-related convictions are overturned.”