The government has set aside as much as £233m to cover payouts from the Post Office to wronged postmasters who were forced to cover shortfalls caused by a broken computer system.
State aid disclosures analysed by the Guardian show that taxpayers’ share of funding for the payments could be significantly larger than the £153m which the Post Office has reserved to make restitution to the postmasters.
The Post Office will pay an undisclosed portion of the cost of the payouts, while the government will cover the rest, with an upper estimate of £233m. The Post Office has previously also warned that costs linked to the repayment scheme could theoretically double to more than £300m.
The failure of the Post Office’s Horizon computer system resulted in one of the biggest single miscarriages of justice in British history. Hundreds of people running post offices were accused of being responsible for shortfalls in the cash they collected from customers.
Many of the operators were jailed at least partly on the basis of evidence collected from a computer system designed by a subsidiary of Japanese conglomerate Fujitsu.
Since errors in the system were discovered, 57 people have had convictions overturned. Some died before their names could be cleared.
The £233m put aside by the government – its upper estimate of what the scheme will cost taxpayers – will cover payments under the historical shortfall scheme, which is meant to reimburse operators who were not convicted, but who were instead forced to replace missing funds from their own pocket. The Post Office has already made 400 compensation payments, with more than 2,000 other claims still “progressing”, the BBC reported earlier this month.
The government is also funding a separate scheme, announced on Thursday, which will pay up to £100,000 in compensation to each person who was wrongfully convicted.
The state was forced to step in after the Post Office admitted that it would not be able to continue as a going concern without taxpayers’ help. The Post Office purports to be operationally independent, but the government is its sole shareholder. The financial pressures on the Post Office have been exacerbated by the coronavirus pandemic, which has hit takings over the past 18 months.
“They can’t afford to pay any of this, which is why government has been forced to bail them out,” said Alan Bates, the chair of the Justice for Subpostmasters Alliance, a campaign group. “It is constantly being subsidised by the taxpayer.”
Bates was among 555 claimants who won a £57.5m settlement against the Post Office in December 2019. However, most of the sum went on legal costs, and all the members of that claim have also been barred from the historical shortfall scheme.
The 555 claimants are now awaiting the terms of a statutory inquiry, and they are also bringing a complaint of maladministration against the business department with the parliamentary and health service ombudsman.
A government spokesperson said: “The Horizon dispute and court case has been a terrible ordeal for many postmasters and their families who were unfairly penalised. The government will provide sufficient financial support to Post Office to ensure that the historical shortfall scheme can proceed, based on current expectations of the likely cost.
“We want to see that all postmasters whose convictions have been overturned are fairly compensated as quickly as possible, and will work with Post Office towards this goal.”
A Post Office spokesperson said: “We are committed to fairly resolving claims in the historical shortfall scheme, with assessment by an independent panel. Post Office has made a provision of £153m in its annual accounts in respect of expected payments from the scheme. We will continue to transparently provide information in our published accounts.”