Compensation launched for first Post Office software victims

In 1999, subpostmasters, who are essentially franchisees of the state-owned company Post Office Limited who provide postal services to their local communities, started being switched to the ‘Horizon’ accounting software.

While the Post Office provides Royal Mail services as an agent of the FTSE 250 firm International Distribution Services, it was not privatised under the Postal Services Act and remained a government corporation when the rest of the postal service was floated in 2013.

However, faults in the software suggested there were shortfalls in the accounts of Post Office branches, with the Post Office demanding that subpostmasters cover the false shortfalls.

A large number of subpostmasters were wrongfully prosecuted and even imprisoned for fraud, before it emerged that the software was to blame for the widespread shortfalls.

In 2019, 555 subpostmasters who took the first legal action against the state-owned company Post Office Limited over the Horizon scandal received £43m plus legal costs in a settlement.

However, much of that money was taken up by the associated costs of funding their case, and they were ineligible for the Historical Shortfall Scheme (HSS) that was subsequently launched to compensate others who were affected by the failure.

The Department for Business, Energy and Industrial Strategy (BEIS) said on Wednesday that, recognising the “unique position” of those subpostmasters in the group litigation order (GLO) group, the compensation scheme would enable them to receive similar remuneration to their peers.

From Wednesday, claimants were being asked to begin preparing their claims ahead of submitting their application next year.

Business secretary Grant Shapps also confirmed that the government would pay £900 per claimant as part of “reasonable legal fees” to prepare their claim.

“I am acutely aware of the pain and suffering that these postmasters and their families have been through as part of the Horizon IT scandal,” Grant Shapps said.

“Today’s compensation scheme will ensure these trailblazing postmasters who did so much to uncover this injustice receive the compensation they deserve.”

The department said that, following “extensive consultation” by government with postmasters, the scheme would be delivered directly by the BEIS, with independent claims facilitators following an alternative dispute resolution model - meaning cases could be settled between parties without the need to go to court.

To ensure the scheme worked effectively, the government was setting up an independent advisory board of “respected parliamentarians and academics”, including Kevan Jones MP and Lord Arbuthnot, who had campaigned for wronged subpostmasters.

While BEIS had been working to finalise the scheme, GLO postmasters had been able to access a £19.5m interim compensation package, which the government announced in June.

Reporting by Josh White for Sharecast.com.