UK biz dept overspent by £208M prepping to pay workers hurt in Post Office IT scandal
Auditor offers qualified opinion as financial fallout from historic miscarriage of justice remains unclear
Updated The UK's spending watchdog has offered a "qualified opinion" on the Department for Business and Trade's accounts, largely down to uncertainties around a scheme designed to mitigate the historic injustice surrounding the Post Office Horizon IT scandal.
In a statement, the National Audit Office said a lack of data and a breach in the department's spending limits that was tied to Post Office Horizon compensation schemes led it to issue its "qualified opinion" on the DBT's 2023-24 financial statements.
Horizon is an EPOS and back-end finance system for thousands of Post Office branches around the UK, first implemented by ICL, a UK technology company majority owned by Fujitsu in the 1990s and taken over completely by the Japanese giant in 1998.
From 1999 until 2015, around 736 sub-postmasters and sub-postmistresses were wrongfully convicted of fraud when errors in the system were to blame. It destroyed the lives of many involved, leaving some bankrupt and others feeling suicidal, with several ending their lives.
While a number of convictions have been quashed in the courts, 60 people died before just seeing any sort of justice served. A statutory inquiry into the mass miscarriage of justice was opened in 2021 is ongoing.
The government has launched two scheme by way of redress for the injustice: the Horizon Shortfall Scheme (HSS) and the Horizon Conviction Redress Scheme (HCRS).
The HSS intended to support those who experienced financial discrepancies related to previous versions of the Horizon IT system. Individuals who qualify for HSS can choose to either accept a fixed sum of £75,000 ($93,000) or opt for a full assessment by an independent advisory panel.
"The Post Office is inviting current and former postmasters to apply to HSS if they wish to but haven't yet done so, as there will be a closing date for the scheme. It has advised DBT that it anticipates a response rate of approximately 25-30 percent and that the majority of new claimants will accept the fixed sum offer. However, due to the limited amount of available data on which to base this estimate, the eventual outcome could vary significantly," a statement from the spending watchdog said.
Meanwhile, the Department for Business and Trade also manages the HCRS, which is designed to compensate individuals who had their convictions overturned.
"Because this scheme is in its early stages, there is limited data upon which to base an estimate of future settlement values," the NAO said.
- We told Post Office about system problems at the highest level, Fujitsu tells Horizon Inquiry
- Fujitsu does not trust Post Office in use of Horizon data in future third-party prosecutions
- Post Office CTO had 'nagging doubts' about Horizon system despite reliability assurances
- Post Office CEO tells inquiry: Leadership was in 'dream world' over Horizon scandal
The Department for Business and Trade had assumed the proportion of applicants who choose to accept the fixed sum offer — rather than submit a full claim for detailed assessment — would be similar to the take-up rate for those who had their convictions overturned by the court which are being compensated through the Overturned Conviction (OC) scheme. The department was also working on the basis that the average settlement value for those choosing not to accept the HCRS fixed sum award would be significantly lower than its equivalent estimate for OC claimants.
"In light of the limited evidence backing up DBT's assumptions regarding both HSS and HCRS, the head of the NAO has limited the scope of his audit opinion," the NAO said.
The NAO also said the department had breached its authorized departmental spending limit by £208 million in anticipation of settling its HSS obligations. ®
Updated to add
Since the end of the reporting period, the government has announced a provision of £1.8 billion ($2.2 billion), on an Annually Managed Expenditure basis, to provide more budget certainty. A DBT spokesperson told us: "This issue took place as a direct result of the decision to rightfully offer further redress to Horizon scandal victims, at a time when the high volume and complexity of claims meant there was significant uncertainty on the cost estimates.
"We have acknowledged this to the NAO and remain determined to ensure that all affected postmasters receive the financial redress they deserve to right these historic wrongs."