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Post Office Compensation

Volume 832: debated on Tuesday 19 September 2023


The following Statement was made in the House of Commons on Monday 18 September.

“With permission, Madam Deputy Speaker, I will make a Statement on the latest steps that the Government are taking to ensure that swift and fair compensation is made available to postmasters whose Horizon-related convictions are overturned.

This House is aware of the distressing impact that problems with the Post Office’s Horizon IT system have had on the lives and livelihoods of many postmasters. Starting in the late 1990s, the Post Office began installing Horizon accounting software, and over the years the Horizon accounting system recorded shortfalls in cash in branches. Between 1999 and 2015, those shortfalls were treated by the Post Office as caused by postmasters, and that led to dismissals, recovery of losses by the Post Office and, in some cases, criminal prosecutions. We now know that Horizon data was unreliable. I pay tribute to colleagues on both sides of this House, and in the other place, who have supported postmasters in their efforts to expose the truth and see justice done.

The Government have supported the Post Office to make significant interim payments up front—set at £163,000—to those with overturned Horizon convictions. We are also funding the Post Office to reach final settlements with these postmasters. To date, 86 convictions have been overturned. The Government and the Post Office have been clear that we want to see the victims receive swift and fair compensation. I have been monitoring the delivery of compensation to those with overturned convictions, and more than £21 million has been paid out to date. Although good progress has been made on personal damages, such as for mental distress and loss of liberty, thanks in large part to a successful early neutral evaluation process overseen by Lord Dyson, progress on full and final settlements has been slower.

That is why I can announce today that the Government have decided that postmasters who have their convictions on the basis of Horizon evidence overturned should have the opportunity, up front, to accept an offer of a fixed sum in full and final settlement of their claim—the sum will be £600,000. It will not be up to £600,000; it will be £600,000. There will be no requirement for evidence to support the claim, other than the ability to demonstrate that the individual has an overturned conviction. We have arrived at that figure by looking at existing claims that have been processed and applying a generous uplift. This will be delivered by the Post Office, with funding from the Government. To be clear, this up-front offer is available to those postmasters whose convictions have been overturned as they were reliant on Horizon evidence at the time. This payment will be made net of any sums already received, such as interim payments and partial settlements, to settle the claim fully.

Any postmaster who does not want to accept this offer can, of course, continue with the existing process. It will therefore be completely optional to accept the offer of £600,000, and the Government will continue to fund the legal costs of these postmasters to ensure that they receive independent advice ahead of making a decision. However, we hope that the change I am announcing today will provide more reassurance and quicker compensation to those postmasters who would prefer this option over going through the full assessment process. Almost certainly, there will be fewer people taking the option of the full assessment process. To be clear, any postmaster who had their conviction overturned as it was reliant on Horizon evidence and who has already reached a settlement with the Post Office for less than £600,000 will be paid the difference.

Postmasters who have been wrongfully convicted have some of the most severe circumstances, having lost clean records and, in some cases, their liberty, and having suffered significant financial losses and an overwhelming impact on their lives. The Government recognise that those postmasters have suffered gravely in relation to the Horizon scandal, and for too long, so should be able to settle their claim swiftly if they wish. The Post Office is contacting the legal representatives of eligible postmasters with further information about this offer. I appreciate that some details will need to be worked through, such as how long the up-front offer remains open. I am committed to consulting the Horizon Compensation Advisory Board, which includes Members of this House, such as the right honourable Member for North Durham (Mr Jones), and Lord Arbuthnot, on this matter to make sure we get this right. However, we did not want to delay informing postmasters that there will be an optional quick and straightforward route to settlement. Postmasters may choose to have their claim fully assessed if they prefer, whereby each claim is assessed on the basis of its individual losses.

The Post Office will continue to process these claims as quickly as possible, and we are encouraging it to continue to work actively with postmasters’ legal representatives to make offers and payments as soon as possible. The Post Office has made offers to all 73 formerly convicted postmasters who have submitted a claim for non-pecuniary damages—non-financial personal losses. Awards for non-pecuniary damages are guided by Lord Dyson’s early neutral evaluation. With regard to pecuniary damages—financial losses—only 21 claims have been submitted to date and the Post Office has made offers on 12 of these, five of which have been accepted.

The Post Office has been engaging with claimant advisers on pecuniary principles for assessing financial losses to support swifter formulation and assessment of claims. The Post Office plans to move to a remediation model of claim assessment, involving an independent assessor to facilitate settlements and resolve disputes. This remediation approach will bring greater transparency to the existing process.

We know that hundreds of postmasters were convicted during the period when Horizon was in use. The Post Office contacted over 600 postmasters to help them to appeal their conviction and that work was later taken over by the Criminal Cases Review Commission as an independent party. However, still only 86 convictions have been overturned to date and we recognise that there are a number of postmasters who have not yet sought to appeal their conviction. It is for the courts to decide whether a conviction is unsafe, but we encourage all postmasters who think their conviction may be unsafe to come forward and start the process. We hope that being transparent about the level of compensation available via a straightforward route will encourage even more people to seek to overturn their conviction.

I am pleased to provide the House with an update on the other areas of Post Office compensation. To date, £79 million has been paid under the Horizon shortfall scheme, with offers made to 99% of the original cohort of applicants. The Post Office has made offers for 58% of eligible late claims.

Under the group litigation order scheme, the department has paid £22 million to date. We also announced interim payments in June last year, and 99% of claimants have received the share of the £19.5 million to which they are entitled. The scheme opened for full applications in March this year. To date, 32 claims have been submitted and first settlements have been reached. I am pleased to inform the House that my department will be publishing data online regularly on the progress of compensation delivery.

In addition to providing compensation, it is important that we learn lessons so that something similar can never happen again. That is why the Government have set up the Post Office Horizon IT inquiry and put it on a statutory footing to ensure it has all the powers it needs to investigate what happened, establish the facts and make recommendations for the future. The inquiry is progressing and we will continue to co-operate fully to ensure that the facts of what happened are established and lessons are learned. I commend this Statement to the House.”

I thank the noble Earl for attending today to discuss yesterday’s important Statement in the other place concerning compensation for victims of the Post Office’s Horizon IT system failings.

What took place after the installation of Horizon accounting software started in the late 1990s has been referred to as one of the greatest scandals of modern times. The installation of the accounting software led to recorded shortfalls in cash at many branches. The truth is that, instead of questioning whether the software was working accurately, the Post Office instead believed that the shortfalls were caused by postmasters themselves, leading to dismissals, recovery of losses from the individuals concerned and, of course, in some cases criminal prosecutions.

The lives of decent, honest postmasters were ripped apart, with some cases resulting in prison sentences but, for all, a long and difficult wait for years to get justice. The consequences for some of those victims are just too awful to contemplate. The wait for resolution of compensation claims has only added to the intolerable burden so many have had to face.

We can all be grateful for the work done by Ministers and civil servants to make progress on this important matter, and I acknowledge the commitment and dedication of Members in both Houses continuing to work with victims through the Justice for Subpostmasters Alliance to sort this mess out.

We agree that there is logic in the proposals for compensation outlined in the Statement and welcome the clarification given in yesterday’s Statement by the Minister, Kevin Hollinrake. He acknowledged that 86 convictions have been overturned and that over £21 million has been paid out in compensation. However, due to the complexity of some claims, especially for personal damages, progress on full and final settlements has been slow. The proposal outlined is to offer a fixed sum of £600,00 for those who received an overturned conviction. Can the noble Earl tell us what specific methodology was used to arrive at this figure? Will he commit to publishing it for the sake of transparency?

I also seek clarification on a few factors. First, how many people does the noble Earl anticipate will take up this offer? What assurances can he give that the compensation being offered to those 86 individuals whose convictions have been overturned will be made up to a sufficient level? What can he say in response to the point that, if people go through the full scheme, the compensation will be much higher? I would be grateful if he addressed what he thinks the balance is between the figure of £600,000 and what others might expect to get. Importantly, what is the estimated timescale for compensation completion for those he considers eligible and not yet fully compensated? Finally, can the noble Earl explain why it has taken so long for evidence from key stakeholders—the Post Office, the Government and Fujitsu—to be presented to the public inquiry?

The Post Office is a national institution, but its reputation has been severely damaged by this scandal. I finally ask: what steps are being taken to ensure that this can never happen again?

My Lords, I too thank the noble Earl for repeating this Statement. I recognise the good faith that the Under-Secretary of State in the Commons and the noble Earl have in trying to move this forward. As the noble Baroness, Lady Blake, said, this scandal is deeply shameful—one of the most deeply shameful incidents in public life, certainly in our lifetimes. It has involved lying, cover-up and deceit on an industrial scale and, to date, only the innocent have been punished.

Nevertheless, as I said, this announcement is a sincere attempt to inject some forward movement. As media reports have indicated, and as the noble Baroness set out, since the announcement, some of the victims will be freed from the need for an extensive claims assessment process through this offer. Others, some of the most egregiously harmed by this scandal, will rightly decline in anticipation of more appropriate compensation via a full assessment and, clearly, the Government have recognised this right, which is the right thing to do.

I sense and understand the Government’s frustration that only 86 out of an estimated 600 people who were damned by Horizon evidence have so far come through the process. Perhaps this new announcement will attract some people out, but I ask the Minister: what is plan B and what else are the Government going to do to try to inject further forward motion in this awful scandal? The process is grindingly slow and presents imposing challenges to people who have already been burned by their contact with the courts and the authorities. These are people who have been psychologically harmed by the system and now have to re-enter it to get recompense. Some element of psychological understanding has to go into coaxing these people to cross that line.

In the Commons, my honourable friend the Member for Tiverton and Honiton asked a very pertinent question regarding subpostmasters who were dismissed but not prosecuted. In his thoughtful answer, Kevin Hollinrake MP highlighted the complexity and difficulty of processing claims. This is the nub of the problem and why things are grindingly slow. It is complex and difficult, and things are taking so long. Already, people have died and more will die before they find justice. I understand that this announcement is driven by a desire to move things forward, but can the Minister please undertake to carry back to his department your Lordships’ frustration and plea for greater urgency and more energy to make this move forward?

I have a question, which perhaps the Minister can explain now or write to us. Do the victims in this process, which is complex, have to prove themselves innocent, or is the assessment the other way around? It seems to me much harder to prove innocence than to refute guilt. Perhaps one way of moving this forward is to change the bar that people have to clear in the assessment process, and make it clear to them that it has been lowered and made easier. Perhaps we are applying too rigorous a standard for people who were so unrigorously prosecuted in the first place.

The elephants in the room in this inquiry are the roles played by the Post Office and Fujitsu, as the noble Baroness, Lady Blake, said. Here, I think the Government have been found wanting. The Government moved on the issue of senior employee bonuses, for which they deserve some praise, but, seemingly unchastened by this overall story, the Post Office is still taking an obfuscatory stance with respect to providing evidence to the inquiry and moving things forward, and it continues to be allowed to do so. Secondly, can the Minister confirm that Fujitsu remains commercially untouched by this and continues to bid and win government contracts—and can he tell us why?

This is a welcome announcement, but it is one step and there is a long way to go, so please can the Minister, who I know is working with us in good faith, work with his colleagues to find new ways to speed it up and find resolution and at least some end to this sorry story?

My Lords, I thank both noble Lords for their speeches, which were both very powerful and raised some extremely salient points on what I think everybody must agree is one of the most atrocious commercial situations that this country has experienced. Both the noble Baroness and the noble Lord are quite right: this is an extremely complicated situation and of course it goes back over a very long time now. Memories are fading and some of the financial data, which is critical to sorting out some of the issues, is not as fresh as it was and, of course, we have the terrible situation of individuals being not only prosecuted but jailed—and unfortunately some have even taken their own life, which is just beyond belief.

This is one of the very worst incidents in commercial history. When it comes to trying to support the victims wherever one possibly can, the Government are increasingly taking steps to not only get an appropriate amount of compensation into their hands but to encourage people to come forward, which seems to be one of the hardest things to do. For one reason or another, people who have been so badly affected by this situation are unwilling to come forward. The noble Lord, Lord Fox, made the extremely interesting point that it could be that proof of innocence is harder than proof of guilt, which of course is completely the wrong way round. I will certainly ask what the Government can do in relation to that, but this is an increasingly difficult situation to get to the bottom of.

Having said that, the offer of £600,000, free of any tax and with legal support if so required, for the individuals involved where their conviction has been overturned is a genuine attempt to make things much simpler and easier for those who find the whole process of going through the established claims procedure too challenging. This is an offer that is not conditional upon anything. My honourable friend Minister Hollinrake said “no ifs, no buts”—it is £600,000 tax free, and of course it is a full and final settlement. The clarity of it is absolutely simple. I hope that will appeal to certain people who may want to bring financial closure where possible. There is no doubt that it will not appeal to everybody. I am sure we have all read in the press this morning a number of stories of people who are talking about numbers which are considerably higher than this. It is right and proper that they should continue to press their case through the compensation channels that they have.

I will address some of the issues raised. I am afraid I cannot give a clear answer to every single one of them; some of them are extremely subjective and probably need a little more thought. I will certainly write where I have not addressed the issue.

The question of personal damages is a tricky one. The Government have already made interim payments of £21 million to 86 postmasters who have had their convictions overturned.

On how the £600,000 figure was reached, I am not absolutely clear. It is a huge step forward from what was available previously, but I will follow that up. From the point of view of the pecuniary amount, it is a significant amount of money. The offer that anybody who has already settled and who got less than £600,000 through the existing channels will be made good up to that figure is an honourable way of going about it. It is extremely important—I quite agree.

As to how many people will take it up, that again is a very difficult question to answer. As I am sure the noble Baroness knows, there are a number of these unfortunate individuals who have already employed lawyers and who are already into the process. I guess they have to be confident that the legal advice they receive will either allow them to pursue what they have started or take this offer. I am not certain that it is the Government’s role to get involved in that; I do not think that is the case. As far as the total amount goes, if everybody were to take it up, obviously that would be £600,000 per claimant, but my suspicion is that it will end up being a bit more than that.

As for the timescale, this offer is to make it simple and fast, for all sorts of reasons. As the noble Baroness said, this has been going on for an unacceptably long time. The attempt to make it transparent and simple is a genuine attempt to bring closure for as many people as possible.

The point about the Post Office, the Government and Fujitsu is very well made, and I will address that later, if I may.

Finally, on the point about it never, ever happening again, I do not think anybody would put their hand on their heart and say that something like this could never happen again, but one of the collateral benefits of a situation such as this is that it raises awareness. One has to go back a long time, but, as noble Lords may know, I was a retailer in my commercial life and the level of faith that one put in electronic point-of-sale equipment and the systems behind those front-facing things was, in the early days, at times ill-founded. One would think now that there are enough checks and balances within any form of automated stock control and management system that anything that does not look right would be flagged up—that is certainly my experience. I do not think that something as specific as what we have had to face through the Horizon scandal is likely nowadays with the advances in technology.

I will refer quickly to the comments of the noble Lord, Lord Fox. I am entirely with the noble Lord; this is a deeply shameful situation. I have stood here before and talked about the way that the Post Office runs itself; I do not think anybody can be in any doubt as to what I think some of its commercial failings have been. We have to look only at the extraordinary situation around the bonus payment, which has now been fully repaid; the chief executive has paid back more than he had to—slightly too little, too late, in my view, but at least it is an acceptance of failure. The Government are acutely aware of those issues.

As for damages through the courts, that is really a question for the courts. As I understand it, the legal advice that you get when you make a claim through the court—I referred to this earlier—is such that it is always an estimate. I imagine that, for some, it is absolutely obvious that they will continue to go through the courts, whereas for others that is not the case. The fact that the Government will make up the difference is certainly an honourable way to address that.

The question of those dismissed but not prosecuted is something that we need to address. I am again surprised, as I imagine are a lot of people, by the amount of people who have not applied and put their names forward. However, on the group litigation order, as of 15 September, 461 registration forms had been received and 32 full claims. Seven offers had been made and accepted. It shows that all these different opportunities are starting to gain some traction. It would be nice if we could get through them as quickly as possible.

I think that is probably it, apart from the elephants in the room—Fujitsu and the Post Office. The Government are keen to get this out the way and settled, before we see where we stand with Fujitsu. It is a core participant in the inquiry. It must now know what went wrong; well, it certainly did before we knew. Once the independent inquiry is complete, I am sure there will be a robust conversation with Fujitsu and, no doubt, its insurers.

I might finish on that. This has been a horrifying experience for a large number of people—well over 2,500—and the Government continue to do what we can.

My Lords, I start by acknowledging that the House owes a tribute to the noble Lord, Lord Arbuthnot, who has pursued this indefatigably over years. I am very sorry to see that he is not in his place today, but I am sure he is well apprised of this settlement. A lot of credit goes to him for continuing to raise this scandalous saga.

The Minister says that he is slightly surprised by how few people have come forward. It is well recognised that, if not the majority, large numbers of these people were from ethnic minorities, many of whom were first generation. They had to navigate the system to find a defence and to defend themselves—to deal first with the legal process and their convictions and then, if they were not convicted, to continue to seek compensation or a settlement for their wrongful convictions; it is not surprising that those people did not have the financial and social capital to do that. They were and are a very special category.

I agree with the Government that this is a generous settlement, but I have two brief questions to ask the Minister. I could not see in the letter he wrote whether the dependants of those who died will be offered any compensation. Perhaps I missed that somewhere but it is profoundly important. There were those who, unfortunately, took their own lives and others who died because of the passage of time.

Secondly, what efforts are the Government making to ensure that these minority communities are aware of this and provided with sufficient information to pursue their claims?

I thank the noble Baroness for her questions. Yes, the estates of deceased postmasters are able to bring a claim on their behalf. Not only that, but they will get the tax-free status on offer.

The noble Baroness’s point about minorities was extremely well made and it certainly came out in some of the interviews that I listened to yesterday. Unless this piece of paper will tell me, I am not aware of the absolute number; no, I do not have that data here. A Citizens Advice helpline has been established and the Government have written to 600 people in an attempt to get them to come forward. The noble Baroness’s point about ethnic minorities, some of whom are first generation, and their reticence in coming forward is well made and I will certainly take it up.

I thank the Minister for his very full replies. Of the 600 convictions, only 86 have been overturned so far, so progress is slow. The Statement refers to a number of postmasters having not even sought to appeal their convictions yet. Among the reasons for this are issues such as increasing age and infirmity, because this has been going on for so long. Indeed, some of those affected may well have died without the Government being aware.

My question therefore is about exactly what work the Government are doing with the families of those affected, as well as those directly involved, to ensure that every possible avenue is taken, not only to trace and contact them but to take every possible step to encourage them to claim what is rightfully theirs.

I am entirely in tune with what the noble Baroness said. It is incumbent on the Government to use every channel that we can to reach out to these people. It has not been easy and we continue to try as hard as we can. I will write to tell the noble Baroness exactly what the Government are doing directly and through the Post Office.

My Lords, this is the most appalling scandal. I agree with the noble Baroness, Lady Falkner, that the noble Lord, Lord Arbuthnot, should be congratulated on the work that he has done, pursuing this point for years. I wish he were in the House today. It is important that, when the inquiry concludes, people are held to account for what they did and did not do or know. The appalling suggestion is that people knew that something was wrong and allowed people to be prosecuted and convicted. Can you imagine being accused of theft, taken to court, convicted and sent to prison, when you were totally innocent? That is what has gone on here. The noble Lord, Lord Fox, also made a point about people who were just fired.

We talked about why people have not come forward. It may be that they are older or from minorities. They also might be very scared. Will they be believed? They have gone through this nightmare, this trauma, and they have moved on and are worried about bringing it all back. We have to understand the difficulty that people may find themselves in here and do something about it. It is absolutely appalling, and I do not know how people can live with themselves if they knew something but then allowed people to have their lives destroyed. People have died.

I am sure the Government are very sincere about what they are doing when they say that they are going to do this, try that and make this happen, but they have the power to sort this out. They can sort this out; nobody else can. They can find these people and assure them that they will make a difference. They have the power —they should use it and use it now.

I entirely agree. It is only the Government who can do this. The Post Office prosecuted nearly 700 people; other agencies prosecuted another 200. We have had 86 convictions overturned, which is not a lot, and we have contacted more than 600 postmasters who were prosecuted. There is an absolute will and intention to get this sorted out. What is very difficult is to define exactly how one reaches the parts that we have so far failed to achieve. All I can really say is rest assured; it is an extremely high priority. More and more funds and resources are being allocated and we will continue to push until we get to the bottom of this.

I want to pursue that point. The noble Earl said that people have been contacted. How have they been contacted? Is it a letter? Is it a phone call? Have you knocked on the door? Have you gone back again? We need to know what that contact is, because if people are not coming forward from that contact, then it has failed. People need to know that we accept that a great injustice has been done to them and we want to sort it out. The noble Earl may not be able to answer the point now, so will he write to me and to other noble Lords in the House to say what the method of contact is and what they are going to do when they have not got a response?

Before the Minister answers that, it is important to bring home and build on the point made by the noble Baroness, Lady Falkner. A strategy to communicate with certain communities is different from a strategy to communicate with the mainstream community. It involves community leaders, different media and different things. Do the Government have a proper media communication strategy of the sort that was just mentioned that involves using community leaders as intermediaries for those people to give them the confidence to step forward?

I talked about the Post Office being obfuscatory. Among the things it was obfuscatory about were appalling racial slurs that were used to characterise those people. At the heart of this is a racial element, and we should not forget that. Many of the people who were punished may well have been singled out because of their classification within that process. I think the Government owe it to them to double down on this communication.

I entirely agree. The Government really do owe it to them to double down on it and I will find out exactly what the situation is. I know that telephone calls, letters, victim meetings and all sorts of things are going on, and it is extremely important that we get to the bottom of it. I will write to noble Lords with the details and let them know exactly how we are proceeding.

I do not wish to detain the House, but can the Minister give the House—perhaps in writing if he does not have the figures now—an assessment of how many other government contracts Fujitsu currently holds?

I think the mood of the House is very much to put pressure on to get some answers about when the three main stakeholders are going to be in front of the inquiry. We cannot wait any longer. Some of those people will be retiring; some of the people involved will not be with us anymore. The clock has been ticking for so long. If the noble Minister cannot answer now, will he come back and give us a very clear picture as to when those people will be held to account and what we can expect from the process to make sure that everything that needs to be is brought to light and exposed for what it is?

I certainly commit to doing that. I hope the House would agree that the step taken by the Government, and announced yesterday, is a genuine attempt to push things forward. It is a very significant amount of money and I hope it may encourage some of the people who have been reticent to come forward and help us get to the bottom of this. The inquiry is of course independent, the chairman sets the timeline, but it is certainly something that I will address.