Subpostmaster campaigning forces government to set up compensation scheme and make interim payments

The UK government has announced interim payments and a new compensation scheme to pay 555 former subpostmasters fair compensation for losses and suffering they experienced after being wrongly blamed for accounting shortfalls.

It has also begun working out the full payments these victims of the Post Office Horizon scandal will go on to receive.

After a High Court victory over the Post Office, which proved the shortfalls were caused by computer errors, the 555 subpostmasters were paid compensation, but after legal costs were deducted, they were left with derisory sums. 

Following the court case, the Post Office was forced to set up compensation schemes for 2,500 others who had experienced problems and losses as a result of the Horizon IT system faults. It has since set up a scheme for the subpostmasters who have had wrongful convictions overturned – currently totalling 75.

None of this would have been achieved without the Justice For Subpostmasters Alliance (JFSA) court action, but the government repeatedly refused demands to pay the legal costs of the JFSA, claiming the court settlement was “full and final”.

An interim payment will now be made to the subpostmasters who were part of the court action, with the government putting £19.5m aside to for this. The government said it will deliver interim payments within weeks.

Announcing this payment, Department for Business, Energy and Industrial Strategy (BEIS) minister Paul Scully said the government wants the JFSA members to receive similar levels of compensation as people who were not part of the High Court action. “The government intends to pay interim payments to JFSA members not covered by existing schemes,” he told MPs. “In parallel, we will continue to work at pace to deliver full compensation.”

Eligible former subpostmasters will be contacted about the new scheme.

Scully said law firm Freeths, which managed the High Court action for the subpostmasters, has now been appointed by the government to work alongside the JFSA to create a scheme to award further compensation to victims of the Horizon scandal. Freeths has the data and methodology that it developed to calculate the compensation the subpostmasters should receive, he said.

James Hartley, partner at Freeths, said: “This has been a very long road for the High Court claimants as they were the ones that were forced to pursue the Post Office through the High Court proceedings, at massive cost to them, particularly the external funding expense they had to pay for. Thankfully, the government is doing the right thing by compensating them fairly through the proposed scheme.”

After 13 years of relentless campaigning, the JFSA – set up to get the government-owned Post Office to pay subpostmasters money it had wrongly taken from them – now looks closer to achieving its original goal. Former subpostmaster Alan Bates, who set up the JFSA in 2009, said: “This is excellent news and a great step forward to addressing the very desperate situations many of the group still find themselves in.”

During that period, the JFSA, which is made up of 555 former subpostmasters, won a multimillion-pound High Court litigation which proved that errors in the Post Office’s retail and accounting system, known as Horizon, were to blame for the losses.

The court victory created the foundations for subpostmasters wrongly prosecuted for financial crimes to appeal to have their convictions overturned. This exposed the widest miscarriage of justice in British history and forced the government to set up a statutory public inquiry into the scandal.

In 2019, following the court judgments, the Post Office agreed to pay £57.75m in damages, but when the legal costs for the subpostmasters were paid, they were left with just £11m between them. Each received a derisory sum that didn’t even cover the amount of money they had paid back to the Post Office to cover supposed losses in many cases, never mind the loss of their businesses, liberty, health and reputation. One subpostmistress who was wrongly convicted of theft was sent to prison and lost her livelihood, but received only £8,000.

The subpostmasters had to use litigation funders – companies that pay legal costs – taking huge risks. The money must be paid back with interest, out of the damages awarded.

The JFSA immediately called for the government to the pay the legal costs to leave the victims with fairer settlements, but it refused.

But Bates’ resolve has never faltered, and the JFSA continued to pressurise the government to pay, despite its repeated refusals.

But the overturning of 75 wrongful convictions in the past year, the public airing of the suffering of victims in the public inquiry and the campaign for a judicial review into the government’s handling of the Post Office, are just some of the JFSA’s achievements which left the government unable to continue to deny fair compensation.

Computer Weekly first reported on problems with the Post Office Horizon system in 2009, when it made public the stories of a group of subpostmasters who were being blamed for unexplained losses (see below for timeline of Computer Weekly articles on the scandal since 2009).

Between 2000 and 2015, 736 subpostmasters were prosecuted and many more had their lives and businesses ruined after being forced to pay back unexplained shortfalls, being bankrupted or sacked.

When Bates set up the JFSA, only Computer Weekly reported it, but today his work, and that of the group, is national headline news.  

After years of campaigning, the JFSA took the Post Office to court in a multimillion-pound group litigation. They won the case and in 2019 the High Court judge handling the trial, Peter Fraser, found the subpostmasters were right that the Horizon system was causing unexplained losses and the Post Office was wrong to blame the subpostmasters.

Fraser described the Post Office’s denials that errors in the Horizon system could cause unexplained loses as “the 21st century equivalent of maintaining that the Earth is flat”.

The JFSA immediately called for the government to pay the legal costs to leave the victims with fairer amounts, and has campaigned for this ever since.

The Post Office itself does not have the money to pay the compensation, but the JFSA’s achievements have stirred the public, leaving the government with little choice but to use taxpayers’ money to pay up. In January, Computer Weekly revealed that the Post Office had received a £1bn subsidy for its compensation schemes.