Victims of IT scandal in UK postal service will get fresh compensation

Move follows award swallowed up by legal fees

The British government has announced a fresh scheme to compensate victims of the Post Office Horizon IT scandal, which saw sub-postmasters wrongfully prosecuted for theft, false accounting and fraud because of errors in a Fujitsu-built finance system.

The new scheme is set to be delivered directly by the Department for Business, Energy and Industrial Strategy (BEIS), with independent claims facilitators following an alternative dispute resolution model, providing a means for parties to settle cases without the cost or time required to go to court. The government said it devised the scheme following an “extensive consultation” with postmasters.

The Post Office Horizon saga is one of the biggest scandals to hit public-sector IT management in the UK in the last 20 years and has been subject to a BBC Panorama investigation, with journalist Nick Wallis revealing evidence of the extent of the cover-up.

The saga began after the Post Office relied on evidence from its Fujitsu-made Horizon branch office management IT system when it privately prosecuted a large number of subpostmasters during the 2000s and early 2010s. While the system was known to throw up accounting errors, managers did not warn subpostmasters. Faced with big shortfalls between reported revenues and takings, some desperate subpostmasters resorted to putting their own money into their franchised branches to balance the books. When Horizon continued throwing up discrepancies, Post Office managers accused the subpostmasters of stealing money from the public sector body. Private prosecutions and criminal convictions followed. At least two subpostmasters later committed suicide, one taking his life after the Post Office said he owed the branch hundreds of thousands of pounds.

A statutory public inquiry is currently investigating the scandal, calling witnesses from both the Post Office and Fujitsu, which built the Horizon system under government deals originating in the 1990s.

In April last year, the Court of Appeal in England quashed 39 convictions that were obtained by the Post Office's in-house lawyers who had ignored their own barristers' advice.

Separately, in 2019, 555 postmasters who had taken the first legal action against the Post Office over Horizon received £43 million ($52 million) plus legal costs in a settlement. But the bulk of the money was consumed by the costs of funding the case.

The government says it is now recognizing "the unique position" of these postmasters in the Group Litigation Order (GLO) group and is launching the new compensation scheme to help them get similar compensation to their peers. Former compensation efforts have been criticized because high legal costs meant some of the victims were claiming they received far less than they lost.

It has asked those eligible to start preparing their compensation claims ahead of submitting their application next year and has promised to pay £900 per claimant as part of reasonable legal fees to prepare their claim.

In a statement, business secretary Grant Shapps said: "I am acutely aware of the pain and suffering that these postmasters and their families have been through as part of the Horizon IT scandal. Today's compensation scheme will ensure these trailblazing postmasters who did so much to uncover this injustice receive the compensation they deserve." ®

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