Department for Business and Trade acknowledges it and Post Office initially underestimated how many subpostmasters would seek compensation, as MPs warn Horizon victims have faced a complex, costly and distressing redress process.
According to a new report from Parliament’s Public Accounts Committee (PAC) published on Wednesday (Sept 9), the problems facing Horizon victims did not end when the scandal was exposed or compensation schemes were established.
Instead, the victims of Post Office Horizon scandal have faced lengthy delays, complex evidence requirements and a claims process that had become overly legalistic.
The PAC found that 76% of people surveyed across government compensation schemes said the claims process had been distressing or retraumatising, while 63% described the overall process as “extremely difficult” and a further 23% as “somewhat difficult”
The Department for Business and Trade (DBT) has admitted to a fundamental misunderstanding of the scale of the Post Office Horizon IT scandal, with the department and Post Office initially expecting only a few hundred people to seek compensation.
The Horizon Shortfall Scheme was designed to compensate current and former subpostmasters who had been wrongly held liable by Post Office for shortfalls in branch accounts but who were not covered by the other Horizon redress schemes.
However, the PAC found that Post Office's initial expectations of claim numbers were dramatically wrong.
It initially expected only a few hundred applications. By the November 2020 deadline, 2,417 people had applied. Post Office could not afford the total compensation due at that point and processing was paused.
When the scheme subsequently reopened, it received more than 10,000 further applications.
For the PAC, this was evidence of a wider failure to understand the scale and nature of the harm before designing and launching the scheme.
The Committee said DBT had acknowledged that it and Post Office had misunderstood the scale of the Horizon scandal, and that it was only in the months and years after the scheme launched that the true number of people affected became apparent.
The finding is particularly significant because the PAC's inquiry was not simply examining how quickly compensation was paid. It was looking at whether government had learned the lessons of major compensation schemes — including Horizon — and whether the system itself was fit for purpose.
A scheme that became ‘bogged down in lawyers’
The PAC also found that the Horizon compensation schemes had become more complicated and legalistic than intended.
Sir Alan Bates, founder of the Justice for Subpostmasters Alliance, told the Committee that the Horizon schemes had “got bogged down in lawyers”, increasing both the complexity and cost of the process.
The Committee noted that the Horizon schemes placed significant emphasis on formal evidence and structured assessments, meaning claimants often relied on legal representation to navigate the process.
That created a further problem as the people seeking compensation were effectively having to fight their way through a process that was supposed to provide redress for harm already established.
The PAC found that 53% of all survey respondents said the evidence they were asked to provide felt unreasonable or too difficult to provide.
It also highlighted concerns that claimants were sometimes being asked to produce evidence that was already held by the bodies administering the schemes or responsible for the original harm.
Years of waiting
The Committee's criticism also extends to the time taken to settle Horizon claims.
On the Horizon Shortfall Scheme, 2,049 claims were paid more than a year after the claim was received, representing around one-fifth of all claims paid.
The longest claim took 1,395 working days to settle.
DBT told the PAC that it was waiting for people to submit full claims and that it was keen to pay victims. It also said processing times had improved following the introduction of fixed-sum offer payments.
However, the Committee said claims taking more than 1,000 working days were unacceptable.
The delays are compounded by poor communication. Claimants to the Horizon schemes told the National Audit Office that a lack of information about how their claims were progressing was causing significant stress and anxiety.
The PAC's wider survey found that 53% of respondents felt the timescale and next steps were not regularly communicated, while another 13% said they seldom received regular communication.
DBT told the Committee that it had amended guidance for Horizon compensation schemes following feedback from claimants who wanted more information, and had considered an online tracker so applicants could see their progress.
The bigger question: who should run compensation?
For MPs, the problems exposed by Horizon point to a fundamental flaw in the way government compensation schemes are designed.
The PAC found that victims had lost trust in bodies they viewed as responsible for the original harm. In the case of Horizon, DBT itself acknowledged that the low level of trust in Post Office became apparent and that, in retrospect, it was a mistake for Post Office to administer the Horizon Shortfall Scheme.
The Committee is now calling for an independent body to design and administer government compensation schemes, rather than leaving the organisations responsible for the original wrong to design and deliver the redress.
The recommendation is not new. The Post Office Horizon IT Inquiry, led by Sir Wyn Williams, previously recommended a standing public body to devise, administer and deliver financial redress schemes for people harmed by public bodies. The National Audit Office made a similar recommendation.
As the PAC concluded, victims deserve a compensation system they can trust — rather than another battle with the machinery of government.