The Post Office Horizon IT scandal explained

Rishi Sunak’s government is under increasing pressure to speed up compensation payments to victims of the Post Office scandal and to get their wrongful convictions quashed.

Ministers have been holding urgent meetings with judges and other officials to discuss ways forward since MPs returned to parliament following the Christmas holidays.

Alex Chalk, the justice secretary, hinted on Tuesday that the government was considering an emergency bill to quash all 800 Horizon IT scandal convictions at once.

Meanwhile, Paula Vennells, the former Post Office boss, handed back her CBE after coming under intense pressure over her handling of the scandal, which has been brought back to public attention following the ITV docu-drama series Ms Bates vs The Post Office.

What are the compensation payouts?

There are three ways subpostmasters have been claiming compensation from the Post Office following the scandal.

The first is the money paid out by the Post Office to those wrongly convicted. In December, it said £32.4 million had been paid - that includes 30 “full and final” settlements worth £17.3 million, while a remaining 63 claims are yet to be fully settled.

There is also the Horizon Shortfall Scheme, formerly called the Historical Shortfall Scheme, which was launched in 2020 for postmasters who experienced shortfalls due to the Horizon system given.

A total of 2,645 postmasters have agreed settlements of £117 million through the scheme, according to the Post Office - but have so far received £92 million.

A Stamp Scheme for Postmasters scheme was also run for discrepancies in stamp stock.

Sub-postmasters celebrate the high court ruling in 2019 which led to 39 having their convictions quashed (PA)
Sub-postmasters celebrate the high court ruling in 2019 which led to 39 having their convictions quashed (PA)

The Post Office recently said it had reduced the amount held for compensation payments from £487m to £244m due to a lower number of payments than previously expected.

Meanwhile, the government announced in September that anyone wrongly convicted will receive an up-front compensation sum of £600,000, without the need to bring the claim to the Post Office.

Recap - what exactly is the Post Office scandal all about?

The Horizon IT system is accounting software, designed by Japanese company Fujitsu, which saw accounts automated after subpostmasters entered their sales figures via a touchscreen.

Due to faulty software, subpostmasters started experiencing unexplained shortfalls in their accounts and were liable for losses under their contract with the Post Office, with subpostmasters being ordered to pay back the money that was lost.

But despite concerns being raised, Post Office prosecuted more than 700 operators for offences such as theft and false accounting based on the information from Horizon between 1999 and 2015.

Decades on, the Post Office says on a page dedicated to the scandal on its website: “We are sincerely sorry for past events and recognise both the impact on individual lives and the length of time any victims have waited for justice."

The corporate acceptance came after a High Court judge ruled in 2019 that Horizon contained a number of “bugs, errors and defects” and there was a “material risk” that shortfalls in Post Office branch accounts were caused by the system.

What impact did it have on the accused?

Previously dismissive of the glitches in the Horizon technology, Post Office laid the blame of the financial discrepancies at the hands of those people who ran the branches.

Not only did that result in criminal convictions, it also damaged hundreds of lives; not just those of the accused, but also the partners, children and friends.

Tragically, the pain was too much for four sub-postmasters, who were believed to have taken their own lives due to scandal. They are father-of-two Martin Griffiths, who died aged 59 in 2013, mother-of-two Fiona McGowan, who died aged 47 in 2009, wife Louise Mann, who died in 2012, and Peter Huxham who died aged 63 in 2020.

More than a dozen also died of other causes before they were able to get justice.

The stress of the dispute led to marriage breakdowns and victims suffering health conditions and addiction. A loss of income, in some cases because of efforts to balance the branch books, has resulted in bankruptcies.

Victory for campaigners - what happened?

Many of those wrongly accused refused to stand down and after years of civil cases, a group of sub-postmasters led by the Justice for Subpostmaster Alliance won a High Court ruling in 2019.

That ruling, which found the Horizon system at fault for creating shortfalls in branch accounts, was then upheld on appeal in 2021 and resulted in the overturning of convictions for 39 subpostmasters.

The Post Office also agreed to settle a civil claim brought by 555 claimants for £57.75 million, which after legal fees worked out as £12 million shared amongst the group.

In a written judgment, Lord Justice Holroyde said: “By representing Horizon as reliable, and refusing to countenance any suggestion to the contrary, POL [Post Office Limited] effectively sought to reverse the burden of proof: it treated what was no more than a shortfall shown by an unreliable accounting system as an incontrovertible loss, and proceeded as if it were for the accused to prove that no such loss had occurred.”

Wrongful convictions in numbers

In the wake of the High Court ruling, more cases have come forward and more convictions have been overturned.

A total of 93 convictions have so far been quashed, including the initial 39 subpostmasters.

However, not all appeals have been successful with 54 cases in which convictions were upheld after appeal, people refused permission to appeal or applications withdrawn.

The Post Office said five cases were going through the appeal courts, and it said a total of 25 with convictions had still not been contacted.

Why are we taking about it again now?

As is often the case, a television drama has brought this scandal back to the forefront of people’s minds with ITV’s drama Mr Bates v The Post Office aired last week. The show centred on postmaster Alan Bates’ fight for justice against his and fellow operators’ convictions.

The four-part show has led to renewed public outrage with a petition set up to strip former Post Office boss Paula Vennells of her CBE. Lib Dem leader Sir Ed Davey, who was postal affairs minister between 2010 and 2012, has also been criticised for failing to meet Mr Bates in 2010.

A petition calling for the former Post Office chief executive Paula Vennells to lose her CBE has received more than 1 million signatures (Teri Pengilley for The Independent)
A petition calling for the former Post Office chief executive Paula Vennells to lose her CBE has received more than 1 million signatures (Teri Pengilley for The Independent)

Since the show was broadcast, 50 new potential victims have approached lawyers.

There is also an independent public inquiry taking place led by Sir Wyn Williams which is looking over the scandal with testimonies and documents from managment and victims.

On the first day of the inquiry in 2022, Jason Beer QC said: “Lives were ruined, families were torn apart, families were made homeless and destitute, reputations were destroyed, not least because the crimes of which men and women were convicted – theft, fraud, false accounting – all involve acting dishonestly.”

The inquiry is expected to be completed this year.

Who has been held to account?

No Post Office or Fujitsu executives have been held accountable for the faulty system - although the publishing of the independent review could change that.

The Metropolitan Police has also said they are looking at “potential fraud offences arising out of these prosecutions”; for example, “monies recovered from subpostmasters as a result of prosecutions or civil actions”.

A Post Office spokesperson said: “We’re doing all we can to right the wrongs of the past, as far as that is possible, and to date offers of ­compensation totalling more than £138million have been made to around 2,700 postmasters, the vast majority of which have been agreed and paid. Interim payments continue to be made in other cases which have not yet been resolved.”