Compensation for Postal Managers

I have pursued the issue of compensation for Postal Managers who were wrongly accused when the new computer system failed to account properly for their businesses. The letter beneath gives us the latest update on compensation, where I have urged the government to be generous and get these matters settled:

 

Dear Colleague,

POST OFFICE: COMPENSATION FOR HORIZON SCANDAL

The Post Office Horizon scandal, which began over 20 years ago, has had a devastating impact on the lives of many postmasters. Starting in the late 1990s, the Post Office began installing Horizon accounting software, but faults in the software led to shortfalls in branches’ accounts. The Post Office demanded sub-postmasters cover the shortfalls, and in many cases wrongfully prosecuted them between 1999 and 2015 for false accounting or theft.

I am writing to update you on the latest steps that the Government is taking to ensure that swift and fair compensation is made available to postmasters.

Group Litigation Order scheme

The Government wants the postmasters who exposed this scandal through the High Court Group Litigation Order case to receive similar compensation to that available to their peers. In March 2022, the Chancellor announced that further funding would be made available to deliver this compensation. On 2 September my predecessor wrote to all postmasters in the Group Litigation Order group to ask for their views about whether BEIS or the Post Office should deliver the scheme, and whether it should be organised along the lines of the Historical Shortfall Scheme or based on Alternative Dispute Resolution. In short there was very strong support for an Alternative Dispute Resolution scheme, to be delivered by BEIS. This is the route that we will follow.

The informal consultation also requested views on other issues related to the scheme. Unsurprisingly, there was considerable concern among postmasters that the scheme should be subject to properly independent input. In the light of this, we have decided to create an independent advisory Board chaired by Professor Chris Hodges, an expert in alternative dispute resolution. The membership of that Board will include Lord Arbuthnot and Rt Hon Kevan Jones MP who are recognised by colleagues across Parliament for many years of outstanding campaigning for the wronged postmasters. The advisory Board will be supported by a BEIS secretariat.

Since the consultation closed, a great deal of work has been done to develop the details of scheme, drawing on the detailed comments made in response to the consultation. I am today writing to members of the Group Litigation Order with further information about how the scheme will work.

We are now asking claimants to prepare preliminary information about their claims. In parallel, we are working to engage Alternative Dispute Resolution specialists and lawyers to deliver it. Those experts should be on board in early Spring, and at that point full claims will be submitted. I hope that compensation will start to flow before the summer, and that most cases can be resolved before the end of 2023.

We have already announced that we will meet postmasters’ reasonable legal costs in claiming under the scheme. To enable lawyers to work on preparing claims, we are today announcing details of the costs tariff for the early phases of the scheme, which have been set by independent costs draftsmen. We will shortly be inviting claimants’ lawyers to make proposals for the expert evidence which they will need. I am also pleased to say that the compensation payments will be disregarded for benefits purposes (once secondary legislation is in place).

I have placed on https://www.gov.uk/government/publications/compensation-scheme-for-group-litigation-order-case-postmasters a copy of my letter to Group Litigation Order postmasters and a number of supporting documents.

Overturned Historical Convictions

I am also pleased to provide an update on Post Office’s progress in delivering compensation to those with overturned historical convictions.

Lord Dyson considered the awards available for non-pecuniary damages, which are personal damages such as mental distress and loss of liberty, in an Early Neutral Evaluation process earlier this year. Since then, the Government has supported Post Office’s approach to deliver compensation more swiftly by settling non-pecuniary claims first using the framework established by Lord Dyson. As of 1 December, 51 claims for non-pecuniary damages have been received and 37 offers made, worth £4.7m in addition to interim payments already paid.

Regarding pecuniary damages, which are financial damages such as loss of earnings, only 8 claims have been received to date, 2 of which have been settled in full and final settlement alongside their non-pecuniary damages. Government continues to encourage Post Office to process these claims as fast as possible.

As of 1 December, 82 claims for interim compensation have been received and 77 payments made, worth £7.7m. Post Office has also identified potential cases of hardship and offered and paid further hardship payments of £100,000 to 3 postmasters. Furthermore, following the recent statutory tax exemption and Early Neutral Evaluation, Post Office decided to increase the upper limit of interim payments for all future applicants to £163,000 (from the original level of £100,000). For those claimants who received the original interim payment amount of up to £100,000, the Post Office had focussed on progressing and settling their non-pecuniary claims. However, where claimants who had received the original interim payment amount of up to £100,000 and were not able to submit a non-pecuniary claim by early December and so it is unlikely that their non-pecuniary claim would be settled by the end of the year, Post Office has offered top-up payments of £63,000.

Historical Shortfall Scheme

I am also pleased to see the progress that Post Office has made in delivering compensation to postmasters through the Historical Shortfall Scheme. As of 30 November, 93% of eligible claimants have been issues offers of compensation, totalling £70.8m.

The cases that remain are some of the most complex and the Post Office is working to process these claims as soon as possible. However, the Government recognises the fact that those claimants who are yet to receive offers or payments may have been waiting for a considerable period of time for their cases to be settled. For these reasons, the Government is pleased that the Post Office will introduce interim payments for those who have yet to receive an offer or who have chosen to dispute their offer. This will be in addition to the existing hardship payments that the Post Office has already been providing to claimants in particularly difficult circumstances.

The Government announced in October that it is providing funding to the Post Office to enable eligible late applications to be accepted into the Historical Shortfall Scheme. The Post Office is beginning to process the late claims it has received to date, and I would encourage anyone else who thinks they might be eligible to get in touch with Post Office at the earliest opportunity to discuss their claim.

Benefit Disregard

The Government is aware of the impact of the Horizon scandal on affected postmasters, resulting in significant financial hardship, including bankruptcy for some.

Many postmasters have now received compensation payments which would take them over the £16,000 capital limit, rendering them ineligible to receive means-tested benefits and reducing pension credit entitlement. This risks prolonging the impacts of the Horizon scandal on these postmasters by affecting their eligibility to apply for benefits.

We are therefore introducing a benefits disregard for all Post Office and Horizon-related compensation. Once the secondary legislation for this disregard is in place, payments received by postmasters will no longer count towards the capital limit for means-tested benefits and pension credits and will therefore not affect their eligibility to claim for these.

The Government will legislate to put this disregard in place at the earliest possible opportunity.

 

Yours ever

RT HON GRANT SHAPPS MP
Secretary of State for Business, Energy & Industrial Strategy

39 Comments

  1. Iain Gill
    December 9, 2022

    should be similar scheme for where the Financial Ombudsman Service, Pensions Ombudsman, or FCA have made big mistakes, as their complaints processes are all broken, they are all out of control, and they are all causing the public massive problems by failing in their basic duties.
    and the financial companies know this and abuse it.

    1. No Longer Anonymous
      December 9, 2022

      Yes.

      The FOS awards against banks are paltry compared to what the banks do to customers who default.

      1. No Longer Anonymous
        December 9, 2022

        When it was Barclays mistake I owed them £3000 in penalties… when it was proven to be their mistake (after a summer of research and letter writing) the FOS awarded me £150.

        1. Lifelogic
          December 10, 2022

          They charge 39.9% in personal overdraft fees (thanks to the FCA when under Andrew Bailey) but if you get compensation from them you are likely to get about base or 2% interest on it at best.

  2. Shirley M
    December 9, 2022

    Assuming the system was implemented correctly, shouldn’t the software developers bear some of the cost? I assume they received a great deal of money for a flawed system, or have they conveniently gone into receivership?

    1. Mickey Taking
      December 9, 2022

      Fujitsu produced the system ‘Horizon’ – Post Office, part of Royal Mail introduced it from Feb 1999. From February 2003 to 2010, Royal Mail was under the leadership of Adam Crozier, its CEO.
      By 2013, Horizon was used by at least 11,500 branches and was processing some six million transactions every day. From 1999, sub-postmasters (SPMs) began reporting unexplained discrepancies and losses.

      1. forthurst
        December 10, 2022

        It was produced by ICL a useless company created by politicians as the UK champion to take on IBM.
        However, no responsible company would accept a system without performing adequate or any acceptance testing; this clearly did not happen and there is an inference that ICL did not system test their system adequately before handing it over to the Post Office either. Fujitsu bought ICL while the project was in progress and are consequently lumbered with liabilities created by various parties including senior PO management who clearly were incapable of performing their role of project supervision. Total shambles which has negatively impacted so many honest and hard working peoples’ lives.

        1. Shirley M
          December 10, 2022

          I was involved in forensic accounting at one time. It’s hard slog but also fascinating stuff when you get to the root of the problem. Why didn’t they do a full forensic audit on one of the accounts where money went missing? It would have shown the problem straight away. It smacks of deliberate fraud/evasion to me.

          1. forthurst
            December 10, 2022

            Did any money actually go missing?

    2. Iain gill
      December 9, 2022

      Yes Fujitsu and it’s managers of the time should be in court charged with (offences where there is evidence against them Ed)
      It’s worth noting that the post office is losing a lot of cheque deposits made in its branches right now, and their excuse is the strike. Apparently the cheques are moved from branches to the bank’s by the same postal workers who are on strike. And cheques are not just late but often lost completely. Families will be without their own money over Christmas while nobody in the post office seems to care.

  3. Narrow Shoulders
    December 9, 2022

    Why have they not offered interim pay outs of at least £10K while this bureaucracy proceeds

  4. Ian B
    December 9, 2022

    Sir John

    It seems an outrage that this is still persisting as a situation not fully resolved.

    It also appears morally wrong that those that were 100% responsible for bring about the Court Action without even a token of due diligence, have themselves been able to walk away fully compensated as if nothing happened.

    It is another illustration of Government incompetence(It. The Post Office, is Government owned, created with taxpayer money). No checks, no accountability, no one responsible. This situation appears to be rife through out Government entities that they (the Government) throw taxpayer money at. What were they elected for and why do we (the taxpayer) pay them?

    You can see why we all dis-pare at 12years of Conservative, I was going to say miss-management, but daily there appears to be no management of anything they are responsible for.

    1. Berkshire Alan
      December 9, 2022

      Ian B
      Agreed, I stopped reading this reply when it said further consultation was needed.

      Good grief how much time do these clowns want, some people have committed suicide, others have had their reputation publicly trashed for more than a decade when absolutely blameless, and have then found it difficult to get any sort of responsible job thereafter.
      What price do you put on that £500,000 – £1,000,000
      Anyone from the Post Office been taken to Court or sacked ?
      A quite disgusting lack of appreciation of the situation by the Government at the time, and since.

      1. IanB
        December 9, 2022

        @Berkshire Alan – just as disturbing, the Government in charge gives those in neglect of their responsibility a free pass and dumps all compensation on the taxpayer

    2. formula57
      December 9, 2022

      +1

      These measures are per the hapless Shapps (who only signs the letter) “the latest steps that the Government is taking to ensure that swift and fair compensation” is offered and arrive only now to fix a scandal “which began over 20 years ago”. Meanwhile, where are the prosecutions of those with responsibility, including (named person Ed)and other board members?

      As ever, we await a government on the side of the people.

      Reply I agree there should be action against those responsible for this disaster where there is evidence to mount a case

      1. Ian B
        December 10, 2022

        @Reply The chain of responsibility gets lost by Government.

        First Government is overall in charge as it is the taxpayers management for a taxpayer owned resource.

        Then regardless they whys and wherefores of the systems failure, someone had to instigate legal proceedings. Legal proceeding without due diligence in itself should be a criminal offence. Management, their legal teams the solicitors acting on their behalf all had a first and foremost obligation to ensure the allegations they were making were true. – they didn’t, but they all got paid in full for maliciously ruining people lives, it wasn’t a mistake it was neglect

      2. formula57
        December 10, 2022

        @ Sir John – thank you for making the edit to permit posting.

        The evidence is mounting, having seen recent reports of the questioning by Sam Stein KC (representing the sub-postmaster victims) and others at the Inquiry.

  5. Bob Dixon
    December 9, 2022

    Let’s wait so a few more can pass away?

  6. Lifelogic
    December 9, 2022

    Indeed this was an appalling failure or even corruption of the senior Post Office Staff and many in the know, and indeed of the poor UK the legal system. How on earth can it be “beyond reasonable doubt” that the system had bugs. This especially when so many previously upright people had suddenly all started to take cash they claimed. It made no sense at all to me. But then so much of the expensive and slow UK legal system makes zero sense. It seem mainly to serve lawyers not the public.

    I for example have (on at least three occasions over 30 years) absentmindedly driven on the wrong side of the road when in France. I was lucky and no crashes ever occurred but this was just luck. So am I not guilty of the same offence as this American woman? My wife once left the hand brake off and the car rolled down the road but it did not hit anyone. Surely the offence is the same? Some are lucky others not? Best to hit a bus stop just after the bus comes and picks up passengers & not just before it seems.

    1. Lifelogic
      December 9, 2022

      Why too did the DPP think these cases were worth bringing assuming they did? Did they not notice the large number of very similar related cases of people of previous good character?

      1. mancunius
        December 9, 2022

        Yes, I wondered myself how the DPP managed to escape scrutiny over these cases. Logically they should either have drawn a conclusion that sophisticated conspiracy was at work, or realized that the PO management was covering up a software failure. It was left to the High Court judge to do the DPP’s work for it.
        Who was the DPP at this time – between 2008 and 2013? Clue: He currently leads the Labour Opposition…

  7. Mickey Taking
    December 9, 2022

    A fast scan through this reveals much to be praised, although the long time periods ahead will mean the pain, distress and financial and reputational losses continue.
    I did not notice, sorry if I missed it, but saw no mention of people involved who have since died, naturally or as a consequnce of the appalling blame they found themselves saddled with.
    What will happen, what is happening, to those senior people who refused point blank to consider the software system to be at fault, even after dozens of cases arose and kept on coming for years?

  8. Tim Chappell
    December 9, 2022

    While pleased that wronged postmasters are to be compensated financially, I would like to know the government’s intentions with respect to the lies and obfuscation displayed by senior maagement of the Post Office and Fujitsu.
    To date, nobody has been held to account for the disastrous introduction of a faulty computer system or the pursuit of individuals who had done no wrong.
    This scandal reaches up into government itself.
    As ever, the taxpayer will be paying for the criminal actions of those paid enormous salaries to carry responsibility. The least we should be able to expect is that those individuals be sent to prison and their riches confiscated as the proceeds of crime.

    1. Lifelogic
      December 9, 2022

      Why too did the legal system seem to deny them the ability to put forward a proper defence many advised to plead guilty when they were not. Surely just pointing out all the similar cases against people of previous good character is more than sufficient to show reasonable doubt?

    2. No Longer Anonymous
      December 9, 2022

      +1

  9. margaret
    December 9, 2022

    Good luck to the mail men. I was in a similar situation around this time where I used a system which was complicated and used predictive text. I went on to correct it a few times , but it eventually uploaded in its original predicted form , which was an opposite finding in a medical setting. It cost me my job as it was documented evidence; false evidence of course. I am using the same outdated system again and it is still as irregular as it was in 2007. We have to fall in with Manchester of course even though we are using this tripe.

  10. Aaron
    December 9, 2022

    Fujitsu and post office managers need to have criminal fraud charges against them, to be defended in court. They should be the ones paying compensation, not tax payers.
    All this says is that the government are picking up the pieces again, like they did with the banks in the 2008 financial crisis, leaving the people who caused it to run away and keep the money with no negative impact.
    Shame on Fujitsu.
    Shame on the post office
    Shame on the politicians who don’t seem to be able to improve the situation.

    1. Sir Joe Soap
      December 9, 2022

      Indeed. The cardinal point missing from this saga.

    2. Original Richard
      December 10, 2022

      Aaron :

      Agree completely.

      I would also add the CPS to your list.

    3. Ian B
      December 10, 2022

      @Aaron – But the UK Government is also the one that is responsible for the good management of all taxpayer funded/owned facilities. The Government is responsible for the hiring and firing on behalf us all, that’s why we voted for them – thats their job! thats what we pay them for. You could say the Government is picking up the pieces as a result of its own neglect and couldn’t care less attitude.

      The real problem is the Government has sloping shoulders and doesn’t want to do that we pay them for.

  11. Cuibono
    December 9, 2022

    Well…they’ve been chipping away at our Royal Mail for years now.
    “Harmonised” with the EU.
    Many functions privatised.
    Many lives ruined. Postmen highly stressed…in tears even… on the doorstep. Late 90s I think.
    Chip, chip, chip in the usual cold, cruel way of getting rid of the things we value.
    Did they know that the computer systems were flawed?

    1. mancunius
      December 9, 2022

      It is well known that the Post Office has had nothing to do with Royal Mail since 2011, when it was demerged by Act of Parliament.

  12. James1
    December 9, 2022

    People in the post office management were aware that the problem was defects in their own computer system. They nevertheless hushed it up and pursued the criminalisation of local post masters and post mistresses. An appalling crime. These people should be in jail.

    1. Cuibono
      December 9, 2022

      +many
      Yes!

    2. Original Richard
      December 10, 2022

      James1 :

      Agreed.

  13. mancunius
    December 9, 2022

    Why do MPs always take it for granted that taxpayers should compensate those who have been unjustly prosecuted. The fault lies squarely with the former management of the Post Office, whose principal officer was allowed to leave with a £400,000 lump sum and a sizeable pension (not to mention a CBE).
    Fujitsu (who provided the faulty Horizon software) only escaped a massive claim because the behaviour of the PO management was so appallingly, persistently incompetent.
    Surcharge every one of the PO managers and civil servants responsible.

    1. Norman
      December 11, 2022

      Sue the company and its management, both Fujitsu UK Ltd. and P.O. Ltd., into bankruptcy. They ruined the lives of these sub-postmasters/-mistresses and they both knew that they were culpable from an early stage.

      It seems like a case deserving punitive damages, US-style. I like the way that US civil courts award multiple damages, on a sliding scale, according to how badly and unreasonably the defendant behaved. The process seems to ensure that the claimant more often recovers at least the actual losses. It seems a fairer outcome than ours where, after a bruising process, one gets back maybe 25-75%, i.e. after legal costs.

      In short, I largely agree with the other correspondents.

  14. Bloke
    December 9, 2022

    The matter is a disgrace. It has also created a long tail of complex nuisance to be unentangled.

  15. Old Salt
    December 11, 2022

    From what I hear those responsible along with the legal profession are the only ones to be compensated with the victims left with little after fees etc. Their lives ruined along with the families. What price this.
    The estates of those no longer with us should also be fully compensated.
    An appalling diabolical episode if ever there was one.
    Those responsible should bear responsibility and be charged accordingly.
    Only for the issue to carry on for so long along with the claims for compensation.
    Some justice, not.

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