Coronavirus: Post Office postpones subpostmaster compensation scheme amid Covid-19 crisis

The current coronavirus pandemic has forced the Post Office to postpone the launch of a scheme to compensate subpostmasters who suffered losses because of errors in its Horizon IT system.

Known as the Historical Shortfall Scheme, it is designed to investigate applications from subpostmasters who believe they had to repay losses that were caused by the computer system. It is now planned to officially launch and promote the scheme in May.

The scheme is for subpostmasters who were not part of the group of 555 who took the Post Office to court, at great expense, and won damages of £57.75m. The judgments at the end of two trials were clear – the Post Office had an unfair contract with subpostmasters and blamed them for errors in its own computer system.

Computer Weekly first reported the problems with Horizon in 2009, when it made public the stories of a group of subpostmasters. Soon after that, as more subpostmasters came forward, the Justice for Subpostmasters Alliance (JFSA) was formed (see timeline below for links to more coverage of the case).

Although the Historical Shortfall Scheme has not yet been launched, the Post Office has already been working on some compensation cases, and two subpostmasters were recently awarded a total of about £300,000. This has angered subpostmasters, MPs and campaigners because those involved in the group action, who fought to prove that the faults in Horizon were to blame for the losses, were left with much lower compensation, with only £11m being left after legal expenses.

The High Court judgment in a trial focused on the technology said the Horizon system was not robust and the Post Office conceded defeat with an out-of-court settlement.

After delaying the launch of the compensation scheme, the Post Office said in a statement: “The Historical Shortfall Scheme was due to open for applications today.  However, our immediate focus is to prioritise support for our postmasters through the current coronavirus (Covid-19) health crisis. Some postmasters are self-isolating as a precaution. Many other postmasters are busy implementing plans to keep their Post Office open with appropriate social distancing measures in place so that vital community services, including access to cash, can continue throughout the UK.”

The Post Office said it now plans to open the scheme on Friday 1 May. “We are planning widespread advertising, as well as direct communications to both current and former postmasters when the scheme goes live,” it added.

Meanwhile, subpostmasters who took part in the legal action, supported by several MPs and peers, are calling for the government to pay the legal costs of 10 subpostmasters who took the Post Office to court. The government has so far refused to do so. 

To understand why subpostmasters believe they deserve more to cover quantified losses, a rough guide to what they were claiming can be estimated from figures calculated during the Initial Complaint Review & Mediation Scheme. This scheme, set up by the Post Office in 2013 and later prematurely ended, saw claimants use forensic accountants to examine their cases, produce a report of what had taken place and calculate the quantum loss (what a court was likely to award).

There were 150 cases in the mediation scheme, of which 39 had their quantum loss calculated by forensic accountants. Adding up the figures available for the cases in that scheme produces a total of just over £27m, or an average loss of nearly £700,000. Most of the 39 are in the group of 555 subpostmasters involved in the court action.

These figures put into context the £11m that claimants will be left with after costs following the settlement.