The National Audit Office (NAO) has pointed out that the financial statements from the Department of Business and Trade (DBT) lack enough data to accurately calculate the compensation costs related to the Post Office Horizon scandal.
In the past year, the department overspent its budget by £208 million while gearing up to compensate victims of the scandal. Many of these victims were unfairly accused of financial discrepancies, which were actually due to faults in a computerized system developed by Fujitsu. Around 900 people faced prosecution, but thousands more were pressured into repaying non-existent shortfalls.
The NAO has raised concerns about the reliability of estimates tied to the Horizon Shortfalls Scheme (HSS). They warn that minor inaccuracies in the department’s assumptions could lead to significant adjustments in the computed liabilities. Gareth Davies, the head of the NAO, noted that he hasn’t found enough evidence to confirm that the government’s provisions for the HSS (£672 million) and the Horizon Conviction Redress Scheme (£699 million) are free from serious errors. He indicated that these issues could materially affect both the liability valuations and the accuracy of related expenses.
The HSS came to be after a High Court trial in 2018/19 demonstrated that the unexplained financial shortfalls that subpostmasters faced were due to errors in the Horizon system, not wrongdoing on their part. This scheme aims to assist those subpostmasters who were never convicted but still suffered losses due to these mistakes. Meanwhile, last year the government introduced a scheme to overturn convictions for about 900 subpostmasters and staff who were wrongfully prosecuted for crimes like theft and fraud.
Davies explained that because the Post Office recently initiated a mass mail campaign to reach potential victims, he hasn’t gathered sufficient audit evidence regarding the expected additional claims under the HSS. Even small adjustments to the assumptions could result in major changes to the estimated financial provisions.
Additionally, the department raised its spending limit by £208 million to cover HSS obligations, acknowledging that the true costs only became clearer after supplementary estimates were submitted. A government spokesperson stated that this overspend was a direct result of the decision to fairly compensate Horizon scandal victims amidst the complexities and uncertainties surrounding claim costs. They reaffirmed their commitment to ensuring that all affected subpostmasters receive the financial remedy they deserve.
The flaws of the Horizon system came to light during a legal battle initiated in 2018 by former subpostmaster Alan Bates and a group from the Justice for Subpostmasters Alliance. They sought to prove that the system caused the discrepancies that led to wrongful accusations, marking this case as one of the most significant miscarriages of justice in UK history.
Further complicating matters, the government is also bracing for rising costs tied to past claims made by subpostmasters impacted by an older system, known as Capture, used in the 1990s. Reports show that this system also resulted in unexplained shortfalls and wrongful prosecutions. The Criminal Cases Review Commission is currently looking into these previous convictions, while the DBT works with affected individuals to establish a compensation scheme.
The Horizon scandal first came to public attention in 2009, when Computer Weekly detailed the experiences of seven subpostmasters caught in the fallout from the faulty accounting software.