Subpostmasters want £300m from a government that allowed Post Office ‘reign of terror’

Wrongful blame

For about 15 years, from the introduction of its Horizon accounting system in 2000, the government-owned Post Office said subpostmasters were responsible for unexplained accounting shortfalls, with subpostmasters wrongly blamed when they were caused by computer errors.

Subpostmasters were prosecuted for theft and false accounting, with prison sentences, community service, criminal records and heavy fines among the injustices they suffered as a result. Many more paid back shortfalls believing them to have been caused by their own mistakes. When challenged by subpostmasters and Computer Weekly over potential Post Office denied computer errors could cause unexplained losses.

In 2018, over 500 subpostmasters, led by Bates, took the Post Office to court in a group litigation action to prove the computer system was to blame for unexplained losses. They won the multimillion-pound High Court battle, which concluded in December 2019, proving that the Horizon computer system they used was to blame for the unexplained accounting shortfalls.

When the High Court case ended, the Post Office agreed to pay £57.75m in damages, but after costs were taken out this left a little over £11m, which did not even get close to covering financial losses of the group of over 500 claimants. For example one claimant who was wrongly sent to prison, which left her life in tatters, received just £9,000 compensation.

The Horizon scandal is widely regarded as one of the biggest miscarriages of justice in UK history, with the Criminal Cases Review Commission referring 47 subpostmaster convictions to the Court of Appeal to review, the biggest group referral in English legal history.

In its complaint to the ombudsman, the JFSA claims that not only did the government fail to oversee the Post Office conduct the JFSA also accused the government of being directly involved with “absolute oversight and regulatory control over POL during the relevant period.

Government knowledge

The complaint said the government’s 100% ownership of the Post Office, its power as sole finance provider, de facto executive control of the organisation and power to approve the appointments, as well as appointing a representative on the Post Office’s audit and risk committee, proves the government must have known what was going on.

“From this it can be said with confidence that the government could quite easily have taken steps to stop the Post Offices heinous conduct at any time during the relevant period,” reads the complaint. “Or to put it another way, if the government as 100% owner could not put a stop to the Post Office’s heinous conduct, there is no-one that could.”

The government has not admitted fault, describing the Post Office as an “arm’s-length” organisation and stating that it does not get involved with operational matters. It is also refusing to pay the costs that the subpostmaster claimants had to pay to take the Post Office to court and win.

In July JFSA raised £100,000 for its legal costs in relation to the Ombudsman complaint in just six weeks using Crowdjustice, a crowdfunding platform focused on raising money for legal cases. Sending a complaint to the Ombudsman is free but the legal work to put together an argument is not.

In its complaint, the JFSA said: “The precise nature of the acts committed by the Post Office are not the subject matter of this complaint, but nor are they in dispute – they are a matter of historical record…

“We say that the government is guilty of maladministration in not overseeing and regulating POL properly in such manner as to prevent the Post Office from running amok as described in the judgments and, in doing so, destroying the lives of the complainants.”

JFSA complaint

The JFSA complaint has already been sent to BEIS, as protocol requires, and while waiting for the BEIS reply it has made public a 74-page document, outlining its complaint.

BEIS has until the end of this month to respond to the complaint, which will then go to the Parliamentary Ombudsman.

The House of Commons Library briefing, The Parliamentary Ombudsman: role and proposals for reform, says: “The Parliamentary Ombudsman can investigate complaints from members of the public who believe they have suffered injustice because of maladministration by government departments or certain public bodies.

“Maladministration can be defined as the public body not having acted properly or fairly, or having given a poor service and not put things right.”

The ombudsman has the right to summon people and papers with powers analogous to those of a High Court judge. “So the names will be named and those who took decisions will have to defend what they did, or in many cases probably didn’t do, that finished up with us having to take the Post Office to the High Court,” said Bates.

Bates said the complaint “utterly demolishes the nonsensical claim” often made by government that although it owns Post Office, the company operates at arm’s length as an independent commercial business.

“The complaint also seeks financial redress, not just to recover the costs of the legal action, but also for all other losses the group suffered which would have formed part of further trials if the Post Office had not been allowed to use the government’s open wallet to run us out of money at any cost,” he added.

Full involvement

The JFSA complaint alleges that the government was “fully involved” in this decision because it has a seat on the Post Office committee that had been set up to manage the court action. “The figure we are now seeking is very significantly more than we had been looking for just to recover costs,” said Bates.
 
Documentation to support the complaint has been submitted references to incidents, meetings, reports and emails that the subpostmasters want the Ombudsman should investigate further. “We don’t have to fully prove our case to the Ombudsman. We only need to show that there is a case that needs investigating, and the JFSA submission goes far beyond that.”

It was a Computer Weekly investigation in 2009 that first made public the stories of subpostmasters, who run Post Office branches, being blamed and punished for unexplained financial losses, which they claimed were caused by errors made by the Horizon system (see timeline below). 

The JFSA was established soon after when subpostmasters, who had been told by the Post Office they were to only ones suffering unexplained shortfalls, realised they were not alone.

The Post Office denied the computer system could be to blame, and subpostmasters were subsequently prosecuted for theft and false accounting, with prison sentences, community service, criminal records and heavy fines among the injustices they suffered as a result. The Post Office did in fact know of many errors and bugs in the system that could cause shortfalls, but did not reveal them until forced to during the legal battle.

There are calls for a much closer look at who did what and when, and a review promised by the government has been criticised for not going far enough. The JFSA, along with many MPs, have described the proposed review by the government as a “whitewash” because it lacks the power to call witnesses to give evidence under oath and does not address the financial losses suffered by subpostmasters.

Campaigning for justice

Conservative peer James Arbuthnot, who has campaigned for justice for subpostmasters for many years, said it is hard to believe that the government, “which owns, directs and funds the Post Office”, has at any stage been ignorant of what the Post Office has been doing. 

“In particular the role of the Accounting Officer, set out on the Gov.uk website, establishes that the Permanent Secretary of the BEIS Department must keep a very close eye on the activities of the bodies under his oversight, including the Post Office,” he added. “The Government has been closely involved in this scandal, one of the worst ever to be perpetrated by a public body in this country, right from the beginning.” 

“The government is under a moral and probably legal obligation to compensate the people whose lives have been devastated and there are many of us who will not rest until it has done so."

During a house of Lords debate Labour peer Peter Hain recently said that the government had ultimate responsibility for the scandal. “The permanent secretary of the department is the accounting officer for the Post Office, the government has a representative on the board and the government is ultimately responsible for this scandal,” he said.

“It is not good enough to keep delaying this with lots of processes and reviews – they have got to be compensated fully.”

Read the JFSA complaint to the ombudsman here.