Sums of money Post Office ‘stole’ from subpostmasters may never be known

The amount of money the Post Office took from subpostmasters who were wrongly blamed for accounting shortfalls may never be known due to “system limitations”.

Subpostmasters paid the Post Office “millions upon millions” of pounds to cover phantom accounting shortfalls that they were wrongly blamed for, said MP and former subpostmaster Duncan Baker during a recent Parliamentary debate.

This money, which ultimately found itself in the Post Office profit and loss account, was “stolen”, according to former Post Office branch owner Jo Hamilton, who was wrongly convicted of false accounting in 2006.

“It was stolen from us,” said Hamilton, who had her wrongful conviction overturned in 2021. Between 2003 and 2006, she paid about £60,000 to the Post Office to cover unexplained losses, which were later proved to have been caused by bugs in the organisation’s Horizon accounting system used in branches.

The Post Office Horizon scandal saw subpostmasters blamed for shortfalls, with thousands of lives ruined. Hundreds of subpostmasters were prosecuted for financial crimes.

In a House of Commons debate this month on legislation to overturn wrongful subpostmaster convictions and provide financial redress for victims of the Post Office Horizon scandal, former subpostmaster Baker, now MP for North Norfolk, asked the Post Office minister for a figure on how much the Post Office took from those running its branches.

“The government has put £1bn aside to deal with all this, despite the fact that the Post Office has taken millions upon millions off postmasters – innocent people. We have never had the figure of what was taken, although I have asked for it before,” he said.

Minister Kevin Hollinrake said: “We are looking to try to identify the figure he refers to and we hope to come back to him at some point; it is complicated, as a lot of these records go back a long way. However, that is a body of work we are undertaking with the Post Office.”

“The government has put £1bn aside to deal with all this, despite the fact that the Post Office has taken millions upon millions off postmasters – innocent people”

But the Post Office and the government have had years to ascertain this figure, with a previous select committee hearing told, in January 2022, that it won’t be possible to calculate.

In answer to a similar question in the select committee hearing two years ago, Post Office CEO Nick Read told MPs that the organisation he heads up does not have access to some of the records that go back to before 2005. “There will be areas of evidence that won’t be possible to identify and we have made it clear to our panel that this should be taken into account,” he said at the time, adding that even information after 2005 is incomplete due to underlying system limitations.

Another difficulty in identifying payments made by subpostmasters to cover unexplained shortfalls is that the money went into a general suspense account, rather than a dedicated one, the January 2022 select committee was told.

Understanding what was paid back is essential, as millions of pounds were handed over to the Post Office to cover shortfalls wrongly reported by the Horizon computer system used by subpostmasters to run Post Office branches.

Many subpostmasters are currently waiting for settlements to repay what was taken from them and compensate them for suffering and loss caused by the Post Office in its demands for money.

When negotiating financial redress with the Post Office, Hamilton found it difficult because of the lack of records. “I am certain I was short-changed,” she said.

The Horizon system was rolled out across the Post Office branch network, to automate accounting, from 1999. Subpostmasters immediately began to suffer from accounting shortfalls they could not explain. Many more victims of the Post Office Horizon scandal, like Hamilton, have cases dating back before 2005. These include Alan Bates, the former subpostmaster who led the fight for justice.

Bates said it is not surprising that the Post Office doesn’t have the information, given its track record and “poorly designed system”.

“It seems mad that you can run a business without being able to account for your money,” he added.

Bates said while some who experienced losses before 2005 might have documentation to prove what they paid back, it will not be many. “Many of our group just paid back money without questioning the demands, and many had to go to extremes to do it, borrowing money and cashing in pensions.”

Peer James Arbuthnot, who sits on the Horizon Compensation Advisory Board, welcomed the minister statement that the government is looking into the sum of money taken from subpostmasters, but added: “The sad truth may be that it will be impossible to get an accurate answer.”

“I very much hope the subpostmasters will be treated generously and given the benefit of any doubt there may be – it is, after all, the government-owned Post Office that has created this dreadful saga”

Arbuthnot, who has campaigned for justice for subpostmasters for well over a decade, added: “We know that Post Office record keeping has been poor and that sometimes their records were destroyed or the entire system changed. We also know that sometimes the Post Office, on taking action against subpostmasters, took away from that subpostmaster access to their records. And often the subpostmasters themselves will not have kept records of the money they were paying in.

“We will just have to do the best we can in these very unsatisfactory circumstances, and that may sometimes involve best guesses backed up by any evidence we can find. In that situation, I very much hope the subpostmasters will be treated generously and given the benefit of any doubt there may be – it is, after all, the government-owned Post Office that has created this dreadful saga.”

The money paid by the subpostmasters would have gone into the Post Office’s profit and loss account, and ultimately to pay the bonuses of its executives. During a hearing at the Post Office scandal public inquiry in December, it emerged that Post Office investigator David Posnett and colleagues were given bonuses based on a performance score, which was partly calculated based on how much money was recovered from branches in deficit.

Posnett told phase four of the inquiry that all financial investigators had bonuses that were linked to recovering money, as did those in the Post Office security department responsible for investigating subpostmasters who had unexplained shortfalls, which often led to prosecutions.

The Post Office paid staff well and handed out lucrative bonuses. For example, when former CEO Paula Vennells was forced out in disgrace in 2019, she left with over £400,000 in pay and bonuses. Since ITV’s Mr Bates vs The Post Office drama was broadcast, Vennells has returned a CBE after public pressure, but there is no sign of Post Office executives implicated in the scandal returning bonuses.

Noel Thomas, a former subpostmaster in North Wales who was wrongly sent to prison based on unexplained shortfalls before 2005, had his conviction overturned in 2021. He said Post Office staff responsible for the wrongful persecution of subpostmasters should “be hit in their pocket, because that is all they understand”.

Computer Weekly asked the Post Office how many subpostmasters have made claims for losses before 2005 and how the Post Office is calculating how much it will repay them when it does not have the data? It also asked the Post Office, from records that it does have, how much subpostmasters paid it to cover unexplained shortfalls? The Post Office had not responded when this article was published.

The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters, including Bates, Hamilton and Thomas, and the problems they suffered as a result of the accounting software (see timeline of Computer Weekly articles about the scandal below).

• Also read: What you need to know about the Horizon scandal •

• Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story •