Post Office Horizon Compensation Scheme

Baroness Jones of Whitchurch Excerpts

Thursday 27th February 2025 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, first, I welcome my noble friends Lord Barber of Ainsdale and Lady Elliott of Whitburn Bay and congratulate them on their maiden speeches. I am sure this House would agree with me that they both bring a wealth of experience, particularly in speaking up for working people, and I look forward to working closely with them as they navigate their way through our shared UK growth missions. My noble friend Lady Elliott—I am sure the House agrees—will be an important northern voice in this Chamber. I am sure that the House will also agree that we will all benefit from my noble friend Lord Barber’s experience in arbitration and conciliation. We have a lot to learn from him in that regard.

I am pleased to respond for the Government and . I thank the noble Lord for bringing forward this Motion and allowing us to debate this very important issue. I pay tribute to the work of my noble friend Lord Beamish, alongside that of the noble Lord, Lord Arbuthnot, as members of the Horizon Compensation Advisory Board. They have helped guide and shape the Government’s work in this area.

Like my noble friend Lord Beamish, I pay tribute to Alan Bates and the 550 who took the case to court and finally shone a light on the role of the Post Office in deliberately hiding the truth. I also agree with the noble Baroness, Lady Ludford, that certain members of the press—ITV has obviously been mentioned—and in particular Nick Wallis, played an important role in shining a light on this in a very dogged and determined way, and brought it certainly to my attention for the first time.

I welcome this opportunity to provide an update on the progress of the Horizon redress schemes and to discuss the contribution of Fujitsu to the costs of the scandal. This scandal was one of the worst miscarriages of justice in this country’s history. Redress for the postmasters whose lives were scarred by it is of great importance for the new Government. A number of noble Lords, including the noble Lord, Lord Polak, and my noble friends Lord Beamish and Lady Elliott, gave very moving examples of the individuals impacted by the scandal and their lives being torn apart as a result. We recognise the devasting impact that the Post Office’s actions had on many postmasters’ lives, their families and their communities.

The Government remain focussed in our efforts to ensure that all postmasters receive full, fair and swift redress for the terrible ordeals to which they have been unjustly subject. That is why the Government have set aside around £1.8 billion for redress for the 2024-25 financial year onwards for those postmasters affected by this grievous miscarriage of justice. This is in addition to the around £200 million already paid to victims in previous years; this is not a ceiling but an estimate.

I turn now to the progress of the redress schemes. My department and Post Office Ltd publish monthly updates on progress. Since the end of June last year, the total amount of redress paid to victims of the Horizon scandal has more than doubled. Across this period, 1,409 more victims have settled their claims. Approximately £663 million has now been paid to over 4,300 claimants.

As we have identified, there are four separate redress schemes. This is by no means ideal, but, as noble Lords know, the reasons for it are historical. I will describe separately the progress of each scheme. I will start with the Horizon shortfall scheme, which covers postmasters who were not part of the group litigation and do not have a criminal conviction. It is run by Post Office Ltd, with funding, oversight and governance provided by the Department for Business and Trade. Approximately £315 million has been paid under this scheme. However, it has delivered redress too slowly, for two reasons. First, the scheme received many more applications than were originally anticipated: 7,000 and counting rather than a few hundred. Secondly, amounts are decided by a panel independent of the Post Office. This is intended to ensure fairness, but it makes the process slower. Combined with the huge volume of cases, this has caused real problems.

In March 2024, the Minister for Postal Affairs announced an optional fixed sum offer of £75,000 to those applicants who did not wish to complete a full claim. This has greatly accelerated progress. As well as providing speedy redress for those who accepted the offer, it has substantially shortened the queue for everyone else.

The Government have also acted to give postmasters assurance of fair redress. Many postmasters have had understandable concerns about any scheme run by the Post Office, even though redress offers are recommended by an independent panel, which the Post Office has never undercut. The noble Baroness, Lady Ludford, asked whether there was secret guidance to the Post Office lawyers on this issue. In response, I say that the principles of the Horizon shortfall scheme are public; offers are set by an independent panel, with a KC, an accountant and a retail expert. There is also a process to dispute the offer.

[Baroness Ludford (LD)]

I apologise for interrupting the Minister when we are time-pressed. Can she undertake to explore whether the Post Office really is operating to those published principles? The material that I have seen seems to give credible backing to the suggestion that it is not. Indeed, there is an exchange featuring Post Office lawyers saying that they are working on a contractual basis and not a consequences-of-loss basis, which is entirely different.

[Baroness Jones of Whitchurch (Lab)]

I hear what the noble Baroness is saying. Perhaps if she has some of that evidence, she could share it with us. I am not dismissing what the noble Baroness said. If she has that evidence, we will of course look into it. It is important that justice is done in this case, and is seen to be done.

In light of these concerns, in September the Minister announced that the Government are setting up an appeal process for postmasters who are unhappy with the full assessments of their claims, as recommended by the Horizon Compensation Advisory Board. We expect to receive the first appeals in the spring. The Government have committed to covering the reasonable costs of postmasters obtaining legal advice at each stage of the appeals process. The Government are also actively looking at other ways in which the pace of redress can be sped up and have been supported by the recommendations from the advisory board and claimants’ lawyers in this area.

Post Office prosecutions of innocent postmasters were perhaps the most reprehensible part of this scandal. Some 111 of these unfortunate individuals had their convictions overturned by the courts. The Post Office set up the overturned convictions scheme to ensure that such people get fair redress for malicious prosecution and other losses. Approximately £65 million has been paid under this scheme. So far, 82 of the 111 exonerated people have submitted full and final claims for redress. In response, 73 redress offers have been made and 66 accepted and paid. This scheme provides the option of an upfront offer of £600,000 to claimants, ensuring swift redress is provided to those victims who do not wish to submit a full claim. This is larger than the fixed offer in the HSS, reflecting the greater harm done to those who were convicted. As of 3 January, 58 people have chosen to accept that offer.

The House will recall the widespread concern that people convicted as a result of the scandal were not being exonerated by the courts, often because the evidence had gone or because they could not face a further legal fight. These people were therefore exonerated en masse by Parliament in May of last year. As of 7 February, 557 individuals in England and Wales have been sent a letter, informing them that they have at least one conviction quashed by the Act. The devolved Administrations in Scotland and Northern Ireland are running parallel exercises.

In July last year, the Government launched the Horizon convictions redress scheme to address the suffering of these people, wherever they are in the UK. I am pleased to report that it has made excellent progress. Under this scheme, eligible applicants are entitled to an interim payment of £200,000. They can then opt to have their claims individually assessed or take the fixed offer of £600,000. The noble Baroness, Lady Ludford, said that 72% of people in this redress scheme have not yet been paid. Most of the costs of redress relates to convictions which were rightly overturned by Parliament. No full claims have yet been received from those individuals and the Government are not going to slow down the redress. When people claim and we get the full claims, we aim to make to make an offer within 40 working days in 90% of the cases.

As of 31 January, 383 initial interim claims had been received, of which 364 have been paid; 232 full claims have been received, with 208 of those paid and 24 offers accepted and awaiting payment. The department’s target is for the first offers to be provided in response to 90% of full claims within 40 working days of receipt. A total of £156 million, including interim payments, has been paid to eligible claimants under this scheme. BBC News recently ran a story of two more claimants having received their £600,000 claims. It is very good to hear those individual cases of justice being done, even if it has taken far too long.

This brings us to the GLO scheme—the group litigation scheme. The group litigation court order case celebrated in last year’s ITV drama provided redress which proved to be unequal and unfair when compared with that provided by the HSS. The GLO scheme is intended to put that right.

The scheme is delivered by the Department for Business and Trade rather than the Post Office. Last year, Sir Alan Bates expressed concern that the scheme was not delivering fast enough. The Government agreed, but the problem was that we were not receiving the full claims. However, those concerns have now been eased. Out of the 492 postmasters eligible for the scheme, the department has received 408 completed claims. When it receives claims, the department acts quickly. It aims to make offers in 90% of cases within 40 working days of receiving a completed claim. As of 31 January, 89% of offers were made within that target period.

If any postmaster cannot resolve their redress through such bilateral discussions, they can go to the scheme’s independent panel. So far, only five cases have required help from the panel. By contrast, 257 cases have been by agreement between the department and the postmaster, either in response to the first offer or a subsequent challenge. This demonstrates that the department is making fair offers.

A total of £128 million, including interim payments, has been paid to postmasters under the GLO scheme. The Government expect to have paid redress to the great majority of the GLO claimants by 31 March 2025.

My noble friend Lord Sikka raised a question about the DWP convictions. I can assure him that the Minister for Transformation is looking into this, a review is being established, and I hope to provide more information about that. My noble friend also raised questions about the Lost Chances charity. A meeting has been arranged between it and my colleague, Minister Thomas.

We have been talking about the Horizon redress schemes but, as noble Lords have pointed out, a predecessor system known as Capture also involved errors and bugs which affected some postmasters. I pay tribute to the tireless advocacy of my noble friend Lord Beamish on behalf of this group.

In response, the Minister announced on 17 December last year that the Government will be providing full and fair redress to postmasters who were victims of errors and bugs in the Capture programme. The Government will continue to discuss this work with my noble friend Lord Beamish, and we will return to the House in the spring with an update.

Fujitsu supplied the Horizon software at the heart of this scandal. The sorry tale of its introduction has been fully explored by Sir Wyn Williams’ public inquiry. The Government of course welcome Fujitsu’s acknowledgement of a moral obligation to contribute to the cost of the scandal and continue to talk regularly to Fujitsu about this. The Post Office Minister will be meeting Fujitsu’s Europe CEO shortly.

The noble Lord, Lord Arbuthnot, asked: if Fujitsu were in jail, would we be giving it the millions that we are currently giving it? It is of course true that Fujitsu has admitted wrongdoing, but at the moment we do not know whether it is criminal. Deciding on that before reviewing the evidence is part of what has caused the scandal, and we should not repeat it. In its apology, Fujitsu recognised that it has a civil liability, and this will be dealt with through the financial contributions which it has promised.

The noble Lord, Lord Arbuthnot, my noble friend Lord Monks, the noble Earl, Lord Erroll, the noble Baroness, Lady Brinton, and others raised the issue of errors made by the Post Office auditors. The noble Lords have referred the performance of Post Office auditors to the Financial Reporting Council, and my department officials have also spoken to it. It is the right body to consider this, and the Government should not second-guess it. But, going back to the issue of Fujitsu’s contribution, the full amount cannot be determined until we have Sir Wyn Williams’ report, which will set out the full facts of what happened.

The noble Lord, Lord Arbuthnot, and my noble friends Lord Beamish and Lord Sikka raised the potential for an interim contribution from Fujitsu. I would say that it is too soon to decide on Fujitsu’s final contribution to the costs of the scandal, but I agree with noble Lords that an interim contribution would be very welcome and appropriate in these circumstances. Given the nature of the discussions that will need to take place on Fujitsu’s contribution, the Government will not be giving a running commentary on them. But I can promise that we will keep the House informed of progress at appropriate moments.

The Horizon system is still in place, unfortunately. A new version was introduced in the late 2010s, which the High Court accepted was “relatively robust”, but it is none the less very much in need of replacement. There can be no overnight fix for this lack of investment.

We are working with the Post Office to secure a new system which is fit for purpose, and which will not involve Fujitsu. In the meantime, the Post Office is, unfortunately, still dependent on the Horizon system to run its branches. I understand the widespread desire to see Fujitsu out of the Post Office picture immediately, but the only way to achieve this would be to shut down all local post offices and deny citizens the vital services which they provide. We do not think that we can do that, and so Fujitsu must remain for the time being. The Post Office has extended its contract until March 2026 but is looking to reduce its input as soon as possible.

Recognising its responsibility for the scandal, Fujitsu has voluntarily paused bidding for new government contracts. However, the Post Office is not the only area where government needs help which is only practicable to get from Fujitsu. So, while we agree with Fujitsu’s decision not to bid for government contracts in general, there will be situations where existing contracts need to be extended, or new ones begun, although generally in connection with existing services. Of course, we understand why that is undesirable, but it is being done only because currently there are no viable alternatives.

There have been allegations in the media that Fujitsu is seeking and receiving contracts beyond those limits. I assure the House that this is not the case. The Crown Representative and his team in the Cabinet Office, who oversee all the Government’s dealings with Fujitsu, are keeping a close watch on the situation.

I agree with noble Lords that individuals and companies responsible for the Horizon scandal must be held to account. The Metropolitan Police is keeping a close eye on the Williams inquiry and has a number of staff working on this. The noble Lord, Lord Hastings, asked about the involvement of law processes. The Solicitors Regulation Authority has said that it has more than 20 live investigations into solicitors and law firms relating to the scandal. There are other channels of accountability, too, and all of these need to be investigated in due course. My noble friend Lord Monks rightly raised the question of the wholesale culture change needed at the Post Office, and my noble friend Lord Sikka raised specific questions about the culpability of the directors. This will all be covered in Sir Wyn Williams’ report, which will establish what happened, what went wrong and why.

The noble Lord, Lord Beamish, raised the question of an independent body—

[Lord Sikka (Lab)]

I apologise to the Minister for interrupting. I know she has had a lot of questions to answer; I very much hope she will send detailed replies to a lot of the questions I asked. One matter was the case of 92 year-old Mrs Betty Brown, who, despite promises from the Minister six weeks ago, is still waiting for her compensation. Secondly, I asked whether the Minister could meet me and Mrs Gowri Jayakanthan, who had been refused any compensation and whose husband committed suicide, unfortunately, under pressure from Post Office allegations. Would the Minister be good enough to meet us, please?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I was going to go on to say that a number of noble Lords have asked very specific questions, and I will of course write. I will just deal quickly with the idea that there should be an independent body for redress in the future. That is certainly something that we are looking into, and it is a very helpful suggestion coming forward from the Horizon Compensation Advisory Board, among others.

Horizon was a terrible scandal, and it is right that we should continue to keep it in our minds through debates such as this. The Government are determined to learn the lessons from it, which is why Sir Williams’s report will be so important, to deliver full and fair compensation, as quickly as possible, to those postmasters who were so unjustly used. I thank noble Lords for this very helpful debate.