Postmasters caught up in IT scandal awarded £19.5mn compensation

The government has announced a £19.5mn interim compensation package for postmasters who brought a landmark legal case against the Post Office that helped expose a scandal around its faulty IT system.

The compensation, announced on Thursday, is aimed at 555 postmasters who brought the High Court lawsuit in 2019, which was settled by the Post Office for £57.75mn. The postmasters received little compensation because most of the money was swallowed up in legal costs.

The government has set aside more than £1bn to compensate people caught up in the scandal.

The Post Office’s faulty Horizon computer system led to hundreds of people being wrongly prosecuted for theft between 2000 and 2013, in what MPs have called the biggest miscarriage of justice in recent history.

The High Court ruled in 2019 that the IT system contained bugs, errors and defects that had caused financial discrepancies in thousands of postmasters’ accounts.

As a result of the ruling, 75 people have had their criminal convictions overturned and the government has set up a public inquiry into what went wrong at the Post Office.

The ruling also forced the Post Office to set up what it called a historical shortfall scheme to compensate other postmasters not involved in bringing the High Court case. Those people had to repay thousands of pounds of “missing money” to the Post Office after financial shortfalls were shown by the Horizon computer system.

However, the 555 postmasters who brought the High Court case have been ineligible to apply for any compensation from the historical shortfall scheme under the terms of their legal settlement. Many argued that was unfair, given that their case played a crucial role in uncovering the scandal.

On Thursday the government said it would provide £19.5mn of interim compensation to the 555 postmasters and create a new scheme to ensure they received proper redress.

Jo Hamilton, a former postmaster who had her criminal conviction quashed last year, welcomed the news.

“It is a long overdue step in the right direction,” she said. “I really hope they deal with it as a matter of urgency as almost three years have passed since the High Court victories.”

The Department for Business, Energy and Industrial Strategy said the interim compensation package would be for postmasters “who played a crucial role [in] exposing the Horizon scandal”.

“These postmasters and their families have shown immense courage in the face of terrible circumstances,” said postal affairs minister Paul Scully.

The Post Office said: “We welcome the government taking action on final, equitable compensation for the postmasters who were part of the group litigation settlement.”

The government has set aside more than £1bn in relation to the scandal in several ways.

It has earmarked up to £780mn for payouts to at least 75 postmasters who have had their criminal convictions overturned, as well as potentially hundreds of others whose convictions may be quashed in the future. The Post Office’s central estimate for payouts to those people is £502mn.

The government has also earmarked £233mn as maximum budget cover for payments under the historical shortfall scheme.