Post Office: Horizon Compensation

Kevin Hollinrake Excerpts

Thursday 23rd March 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The Post Office Horizon scandal, which began over 20 years ago, has had a devastating impact on the lives of many postmasters. Starting in the late 1990s, the Post Office began installing Horizon accounting software, but faults in the software led to shortfalls in branches’ accounts. The Post Office demanded sub-postmasters cover the shortfalls, and in many cases wrongfully prosecuted them for false accounting or theft.

The High Court group litigation order case against the Post Office brought by 555 postmasters exposed the scandal. The House will know that Sir Wyn Williams is now chairing a statutory inquiry to establish what went wrong and identify those who were responsible for what has happened.

The settlement of the High Court case ensured that postmasters who had not been party to it would receive proper compensation through what is now the historical shortfall scheme. However, group litigation order postmasters had much of their compensation taken up by the associated costs of funding their case and they were ineligible to access further compensation through the historical shortfall scheme. This meant that they received less than those in similar circumstances who were not party to the case. Government have agreed to run an additional compensation scheme to put this right and to allow group litigation order postmasters to access similar compensation as that available to their historical shortfall scheme peers in similar circumstances.

On 7 December the then Secretary of State announced the outline of the scheme. Since then, a great deal of work has been done to finalise the details, drawing on helpful input from the Justice for Subpostmasters Alliance and claimants’ legal representatives as well as utilising lessons learned from the historical shortfall scheme and compensation for those with Overturned Historical Convictions. On 10 February the Government published a tariff (agreed with claimants’ lawyers) for reasonable legal fees and a registration form.

In December we announced an independent advisory board on the scheme chaired by Professor Christopher Hodges and includes Lord Arbuthnot, Professor Richard Moorhead and the right hon. Member for North Durham (Mr Jones), all of whom have long been distinguished campaigners for postmasters. I am pleased to report that the advisory board has met three times, and reports of its meetings are on gov.uk.

We also said that we would follow an alternative dispute resolution model delivered by the Government. I can report today that we have appointed Dentons as our independent claims facilitators. Its role will be to promote fair and prompt resolutions of each case. We have also appointed Addleshaw Goddard to act as my Department’s external legal advisers on the scheme. They will take a collaborative approach, ensuring that there is no place for aggressive litigation in resolving claims.

I am delighted to tell the House that the scheme is open to receive claims from today. Details of how to submit claims can be found on gov.uk. Our legal powers to pay compensation run out in August 2024, but we certainly hope to make payments much faster than that. As the then Secretary of State told the House in December, we hope that most cases can be resolved before the end of 2023. I am placing documentation on the scheme in the Library of the House.

I am further pleased to report that the statutory instrument exempting group litigation order compensation from income tax, national insurance contributions and capital gains tax was laid before the Commons on 23 February and came into force on 16 March.

Historical Shortfall Scheme

I am also pleased to provide an update on Post Office’s progress in delivering compensation to those in the historical shortfall scheme. I am pleased to see the progress that Post Office has made in delivering compensation to post- masters. As of 21 March, 98% of eligible claimants have been issued offers of compensation, totalling £90.2m. Post Office is working to issue offers to remaining claimants as soon as possible.

Post Office has also received 231 late claims to date, with 15 offers issued so far.

I also recognise the concerns that have been raised in recent weeks around the tax position of claimants in the historical shortfall scheme. It has always been the intention of the scheme to return postmasters to the position they should have been in had they not been affected by the Horizon issues. The Government want to see fair compensation for all victims and my Department is working urgently to address this issue with the Post Office, HM Treasury and HMRC.

Overturned Historical Convictions

I am also pleased to provide an update on Post Office’s progress in delivering compensation to those with overturned historical convictions.

As of 20 March, Post Office had paid out over £17.6m in compensation. 79 of the 84 postmasters with overturned historical convictions had received interim payments, totalling over £10.2m. Post Office has reached full and final settlement with 4 postmasters. In order to deliver compensation as quickly as possible, Post Office is handling non-pecuniary and pecuniary claims separately.

A further 63 non-pecuniary claims had been received, of which all but three had received offers. 49 of these had been paid and settled, with one more claim paid, subject to settlement paperwork, which will bring the total to 50, once received.

In addition to the four full and final settlements, Post Office had made pecuniary settlement offers to four of the nine postmasters who had submitted a pecuniary claim.

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