Horizon inquiry questioning raises hopes of fair compensation for victims so far left out

Victims of the Post Office IT scandal have had their hopes of fair compensation raised by the public inquiry chairman’s line of questioning.

Subpostmasters affected by the Horizon scandal had to fight to get consideration of compensation included in the inquiry, and during victim hearings over the past fortnight, the inquiry chairman, former judge Wyn Williams, addressed controversy over the compensation agreements.

Scandal victims were blamed for accounting shortfalls at Post Office branches that were caused by computer errors, with many lives ruined. Many subpostmasters were bankrupted, wrongly sent to prison and saw their families fall apart.

The original terms of reference for the public inquiry did not state a specific focus on financial redress for subpostmasters, which is a highly controversial aspect of the scandal, often described as a “scandal within a scandal”. This was unacceptable to the Justice for Subpostmasters Alliance (JFSA) campaign group of 555, which withdrew the campaign group’s core participant status at the inquiry.

JFSA members have so far been excluded from any compensation scheme, beyond derisory amounts awarded to them after they took the Post Office to court and proved that financial shortfalls for which they were blamed and punished were caused by a Post Office computer system, not them.

After their victory in a multimillion-pound group litigation in 2019, the 555 former subpostmasters were awarded £57.75m compensation. But because of the need for litigation funding to fight a government-owned organisation prepared to spend over £100m in its defence, the subpostmasters were left with just £11m between them. When distributed to the victims, this did not even cover the money many had paid the Post Office to cover unexplained losses.

As part of the settlement, the Post Office was forced to open a compensation scheme for any subpostmasters affected by the Horizon system errors, but the scheme excluded victims who had taken it to court. The Post Office and the government have repeatedly stated that the money awarded on settlement was full and final.

The court case also led to subpostmasters having grounds to appeal criminal convictions related to the unexplained losses. So far, 72 subpostmasters who incurred criminal convictions for false accounting or theft have had their convictions overturned. The government has promised each of them £100,000 interim compensation.

The extent of the scandal would not have been fully exposed without the JFSA and the High Court victory.

Inquiry chairman Wyn Williams confirmed in November that compensation for victims would be revisited. Following the JFSA’s withdrawal from core participation in the inquiry – in protest at the unfair compensation – the inquiry wrote to the campaign group to confirm it would include its members’ financial redress in the hearings.

It said: “On behalf of the chair, I can confirm that paragraph 183 of the inquiry’s list of issues is intended to consider whether all affected subpostmasters, subpostmistresses, managers, assistants, including the 555 claimants in the group litigation of Alan Bates and others vs Post Office case were adequately compensated for the wrongs they had suffered.”

Peer James Arbuthnot, who has campaigned for victims of the scandal for over a decade, said that despite limitations put on him by the inquiry’s terms of reference, Williams was doing as good a job as possible. “He seems to have shrugged off those limitations and is, for example, going to look at compensation,” said Arbuthnot.

During hearings in which victims told their devastating stories, Williams drilled down on the controversial compensation arrangements that have left many victims out because of technicalities.

He asked questions about a group of victims currently being excluded from an established compensation scheme – those who were prosecuted, but not convicted. So far, only those prosecuted and convicted have been entitled to an interim payment of up to £100,000. Williams asked for more information about this and put on record his unhappiness with this.

Williams said: “It appears to me that there may be a loophole or a lacuna, in the sense that those who have been convicted and had their convictions quashed are entitled to an interim payment, but those who were acquitted may fall into a loophole, so to speak. I must say, I am reasonably unhappy about that state of affairs, given that their rights to sue for malicious prosecution have been preserved, apparently.

“I want to understand whether the interim scheme, which is apparently being applied as we are going along, so to speak, is being fair to everyone who might take advantage of it. Now, I’m saying all this, I hope, in entirely neutral tones and there will be people listening, I am sure, who will have views about this, but I would not want a category of potential claimants to be disadvantaged if, as my understanding is, that is a possibility.”

Former subpostmaster Nicola Arch, who suffered unexplained accounting shortfalls, is one example. In 2002, when the Post Office prosecuted her for theft and false accounting, she was found not guilty at Bristol Crown Court, but lost everything in the process. She now finds herself in a position where she does not fall within the Post Office’s Historic Shortfalls Scheme as one of the 555, and because she was not convicted, she does not qualify for the compensation scheme for those wrongly convicted.

“I am getting penalised for defending myself,” she said. “If I’d lost and been sent to prison, I would be better off. That’s our justice system. I seem to be exempt from any group of victims.”

On hearing Williams’ line of inquiry during the hearings, Arch said she felt progress was being made. “I was sat having a coffee with mum and couldn’t believe my ears. It felt like I’d finally made progress,” she said.

“He gets it. Just to be understood was a fantastic feeling, let alone such an accurate account of the position myself and a few others find themselves in. We must get interim payments immediately.”

Sue Palmer, a former subpostmaster in Essex and one of the 555, finds herself in a similar position. She was prosecuted by the Post Office in 2004 for financial crimes following unexplained losses, but was found not guilty. But people who were prosecuted, but found not guilty, lost businesses, homes, thousands of pounds and had their lives turned upside down.

“I am still fighting,” said Palmer. “Why am I still fighting? They say they want to give people their money back and compensation – well, I am here right in front of their face.” 

Mrs Palmer and Ms Arch are both members of the JFSA 555 and are excluded from compensation schemes, beyond what they were awarded after the High Court action.

Williams heard pleas from victims for fair compensation for the 555 subpostmasters who took the Post Office to court.

Horizon scandal victim Mohammed Amir, a former subpostmaster at various branches in Northwest England, said during his hearing: “I’d like to ask the chair on my behalf and on behalf of myself and the 555 group litigation participants: ordinary people like me have had to pay what the police and the Crown Prosecution should have done in bringing the Post Office to the courts. Why? 

“I mean, why have we still not received the costs back of £46m? Why are we still waiting and not received our interim compensation to this day? We’ve had to pay out of our own pockets and I think it’s very unfair that we’re still waiting.” 

Also at the hearing, scandal victim Joan Baily, a subpostmaster at a branch in Wales, told Williams: “The government must act now to pay all the victims. Legal costs and funding costs should be paid to the 555 as well as payments to all the victims suffering now.” She pleaded for this not to have to wait until the end of the inquiry.  

Williams was also told victims that are entitled to interim payments after having convictions overturned, Oyeteju Adedayo and Parmod Kalia, who both ran branches in Kent, have had their claims for interim payments turned down.

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).