“Astonishing” – ministers approved £57.7m pay-out in Horizon IT scandal that was not intended for some sub-postmasters

Is it possible for an IT scandal to change the culture of an organisation that dates back to highwaymen and Charles the Second?

By Tony Collins

Business minister Paul Scully has said several times he is pleased with the £57.75m settlement between the Post Office and the businessmen and women who ran branch post offices –  sub-postmasters.

“I am pleased that a settlement was reached after many years and that the deadlock was broken.” was one comment to MPs,

For nearly 20 years, the Post Office had reacted forcefully to sub-postmasters who complained that the corporate accounting system Horizon was the cause of unexplained shortfalls. The Post Office treated them as thieves, liars, fraudsters or incompetents.

It was the same during two years of litigation in which 550 sub-postmasters argued in the High Court that the Post Office was wrong to use unfair contracts to hold them liable for erroneous shortfalls shown on a flawed  Horizon system.

Throughout the litigation the Post Office held that was robust. It attacked the credibility of the sub-postmasters’ lead claimants. Its counterclaim of fraud was the most serious accusation that could be made in the civil courts.

But almost overnight the Post Office seemed to change. The settlement it signed in December 2019 included an apology for past wrongs. But was this really a changed Post Office?

The Daily Mail said,

Daily Mail settlement

The Daily Telegraph said,


Now it has emerged that ministers approved a settlement whose specific terms were that the £57.75m pay-out was not intended for convicted claimants – although they are among the worst-hit victims of the Horizon scandal.

The settlement “deed”, which was agreed by both sides in the litigation,  said that the Post Office “has not made, or agreed to make, any payment to, or for, the benefit of any Convicted Claimant”.

Among the convicted claimants was Tracy Felstead. She was aged 19 when the Post Office’s investigations team wanted to interview her at 3am about Horizon IT shortfalls. She was later handcuffed and went to prison, one among many Horizon IT victims imprisoned for a crime she did not commit – on the basis of Horizon evidence that the courts accepted as trustworthy. But judges and juries were not told the system had thousands of undisclosed bugs.

Other convicted claimants whom the Post Office did not agree to include in the settlement pay-outs were pregnant Seema Misra and mother-of-two Janet Skinner who were jailed on the basis of Horizon system shortfalls they could not explain. Judges at their hearings were not told that Horizon shortfalls at branch post office could be created without their knowledge by software maintenance engineers working at a remote location for system supplier Fujitsu.

Julian Wilson

Another convicted sub-postmaster was Julian Wilson, a founder member of the Justice for Sub-Postmasters Alliance, which represents victims of the Horizon scandal. Had he lived – he died prematurely in 2016 still campaigning for justice – he would have been another Horizon victim who would not have been included in the terms of the settlement pay-outs. He and his wife Karen, a former policewoman, sold her engagement ring to help pay money a flawed Horizon system showed was missing. Julian Wilson pleaded guilty to false accounting rather than face jail for theft. False accounting was where a sub-postmaster had, sometimes on advice of the Horizon helpline, reset the system balance to zero after an unexplained shortfall. Had the system not been reset, the sub-postmaster would not have been open the branch post office next day for business. Many who ran branch post offices such as Julian Wilson, Janet Skinner, Jo Hamilton, Wendy Buffrey and Noel Thomas were encouraged to plead guilty to false accounting rather than face prison for theft. Janet Skinner went to jail anyway because the judge said the shortfall amounts were too large to merit a suspended sentence. Noel Thomas,too,  went to prison. Jo Hamilton was spared prison by spending her life savings and remortgaging to make good the discrepancy alleged to have arisen at her branch. Wendy Buffrey ended up losing her home and livelihood and moving in with her son, the Post Office having received on a court order proceeds from the sale of her home.

Cleared after 3-day trial

Sub-postmistress Nicki Arch was charged with fraud, theft and false accounting after being suspended and sacked over a discrepancy of £24,000. Shortly before the trial, the Post Office offered to drop the fraud and theft charges if she pleaded guilty to false accounting. She refused and was cleared after three-day trial but the experience has had a grim toll on her mental health.

Settlement deed

The Post Office acknowledged in the settlement terms that it could not stop non convicted sub-postmasters giving part of their share of the pay-outs to convicted claimants. But after costs, the £11m left over for pay-outs to non-convicted sub-postmasters covered only a fraction of their losses. Lee Castleton was one who lost hundreds of thousands of pounds because of the Horizon IT scandal.

The settlement “deed” said ,

“If, for reasons of expediency and to facilitate the settlement of the Action as a whole, those Claimants who are not Convicted Claimants elect to share any part of the Case Settlement Sum to which they may be entitled with any Convicted Claimant, though not giving  either express or implicit approval to such a course, the Defendant [the Post Office] acknowledges it is unable to prevent it.”

The n0n-convicted sub-postmasters in the litigation did indeed share with the convicted claimants some of what was left of the settlement pay-outs after costs, though the sums left to all were small.

Sub-postmasters won the litigation didn’t they?

Perhaps Scully was overly optimistic- or badly briefed – if he thought the settlement would change fundamentally the Post Office’s attitude to its legal opponents.

Since 1999, the Post Office had prosecuted up to 900 sub-postmasters and taken action against them in the civil courts to force them to make good discrepancies of sometimes of £50,000 or more shown on Horizon.

That the system was subject, intermittently, to producing erroneous figures, particularly when building work at a branch post office changed the local Horizon configurations, was obvious to MPs, peers, the media and to Post Office staff who wrote internal emails about the defects. Ernst and Young had reported on fundamental flaws in Horizon to the Post Office board in 2011. Later, forensic accountants Second Sight investigated in-depth more than 130 sub-postmaster cases and raised many concerns about Horizon but the Post Office’s board, operating as it did in a near-vacuum of Parliamentary accountability, continued to reject all criticisms of Horizon and sacked Second Sight.

Perhaps the reason ministers and civil servants in the business department always gave their full support to the Post Office, particularly when it was in contention with sub-postmasters over Horizon, was because Whitehall didn’t want to do anything to impede the institution’s anticipated commercial success.

But the lack of ministerial scepticism over the Post Office’s overt confidence in Horizon extended even to ministers transferring to the Post Office responsibility for answering Parliamentary questions – which effectively removed, at times, the Post Office from accountability to Parliament via ministers.

On 13 October 2009, Conservative MP Brooks Newmark asked “the Minister of State, Department for Business, Innovation and Skills [now Department for Business, Energy and Industrial Strategy] whether “he has received reports of errors in the Post Office Horizon system which have led to Postmasters and Postmistresses being falsely accused of fraud and if he will make  statement.

No evidence of Horizon accounting errors

The Post Office’s then managing director said in his reply that he had been asked to reply directly to the MP. His reply stated what has been the Post Office’s position for nearly 20 years. The Post Office’s then MD said,

“The Horizon computerised accounting system operates in around 12,000 Post office branches and processes up to 750 transactions a second at peak times … the system has proved to be very robust since its introduction some ten years ago.. our ongoing monitoring and control processes ensure that any performance issues are quickly identified and resolved at no detriment to individual postmasters. Over the years we have scrutinised many horizon transaction records to establish where a discrepancy in the branch accounting may have occurred. This takes place prior to notifying sub-postmasters that an error has been made at their branch and asking them to make good the loss as per the terms and condition of the sub-postmaster contract for service. Any sub-postmaster who is unhappy to accept a loss has the opportunity to provide evidence to support why believe they re not responsible for it… we do thoroughly investigate matters when they are raised with us but there has never been any evidence found that shows that the Horizon system has caused accounting errors.” In the ten years since Post Office Limited started using Horizon the integrity of the system has also been tested in both the criminal and civil courts and has not been found wanting. I am satisfied that there is no evidence to doubt the integrity of the Horizon system and that is robust and fit for purpose.”



As evidence grew of countless miscarriages of justices – including wrongful imprisonments and unwarranted civil debts that led to bankruptcies and suicide – ministers still did not want to get involved. The Post Office seemed answerable to nobody.

Junior business ministers, on advice from officials, rejected every concern raised by James [now Lord] Arbuthnot who had complained repeatedly about Horizon and the Post Office’s  persecution of sub-postmasters.

But in 2017, 550 sub-postmasters fought back. Litigation funder Therium saw the strength of their case and backed sub-postmasters with tens of millions of pounds to sue the Post Office in the High Court.  One main aim was to prove it was Horizon causing the shortfalls and not theft and fraud by sub-postmasters.

Though Post Office managers and its board knew Horizon was not as robust as they claimed, they decided anyway to fight in the High Court to prove Horizon’s robustness and prove that the claimants in the case were liars, thieves, fraudsters or incompetents.

Throughout the two years of the litigation, ministers and civil servants were  briefed on the interim judgments the Post Office was losing. Still, ministers sided with the Post Office against sub-postmasters. Ministers rejected approaches from former sub-postmaster Alan Bates – a victim of Horizon – to intervene in the litigation and bring to an end the unnecessary costs to both sides of a case the Post Office was clearly losing.

But in September 2019, the Post Office had a new CEO Nick Read whose job, in part, was to settle the dispute. By December the litigation was all over. The animosity seemed to have disappeared.

Numerous bugs, errors and defects

Mr Justice Fraser

Mr Justice Fraser, the litigation judge, ruled that Horizon had numerous bugs, errors and defects that had, on numerous occasions caused shortfalls to appear on systems at branch post offices.

But since the settlement – which was specifically approved by ministers – the Post Office has gone on to make it clear it did not regard the litigation as exonerating individually any of the 550 individual sub-postmasters who were part of the case.

Post Office “intent on protecting” its interests

And in March 20202, Conservative MP Lucy Allan told MPs the Post Office has insisted that sub-postmasters who pleaded guilty to false accounting be excluded from having their cases considered by the Criminal Cases Review Commission.

She told the House of Commons on 5 March that, rather than learning the lessons and moving forward, as the Post Office suggests it has, “it is in fact still intent on protecting the interests of the institution at all costs”. She said,

Lucy Allan MP

“I understand from my discussions with representatives of the Post Office that it would prefer each case to be treated separately. They have said that the Post Office will insist that those who pleaded guilty to false accounting should be excluded from the [CCRC] process.”

Wholly wrong

“However, it seems to me that that should not be a matter for the Post Office to involve itself in. Should the cases be referred by the CCRC to the Court of Appeal, the Post Office will be a respondent. It would be wholly wrong for the Post Office to be involved in any decisions around the mechanisms for the quashing of the convictions, given that the convictions are of people whom it sought to prosecute.”

Allan added that a Post Office representative had told her he doubted many cases will be referred to the Court of Appeal and that those that do are unlikely to succeed.

“Astonishing” and “offensive”

On the clauses in the settlement deed that specified the Post Office’s intention not to include convicted claimants in the pay-outs,  Conservative MP Kevin Hollinrake, co-chair of an all-party Parliamentary group on fair Business Banking, has written to Darren Jones MP, chair of the House of Commons’ Business, Energy and Industrial Strategy  Committee.

Kevin Hollinrake MP

His letter says,

“… while many assumed that the Post Office paid about £58 million (the vast majority of which went to pay costs and expenses) in compensation to its sub-postmasters and sub-postmistresses, including to those who had been convicted and imprisoned as a result of its seriously flawed prosecutions, this assumption is incorrect.

“Astonishingly …it was agreed that the Post Office was to pay no compensation at all to claimants in the Bates v Post Office litigation who had been convicted of criminal offences… Putting to one side any legal justification for that extraordinary outcome (none being immediately obvious), it is one that will offend anyone with a sense of justice. Many of those convicted and imprisoned, perhaps understandably, have suffered serious ill-health, including mental illness, as a consequence.”

Herbert Smith Freehills solicitors

The all-party group criticised the involvement of the Post Office’s solicitors Herbert Smith Freehills in the settlement agreement and in the Post Office’s subsequent Historic Shortfall Scheme which is reviewing up to 900 cases in which sub-postmasters were prosecuted on the basis of Horizon evidence.

Herbert Smith Freehills said there was no conflict.

The all-party group compared the Horizon IT scandal to one involving HBOS Reading. Hollinrake said,

“In both cases, the larger corporation knowing that an injustice had occurred chose to pursue the victims and bury the issues rather than deal with the underlying problem.”

Why did ministers approve a settlement that gave little to victims? 

Arguably, the Horizon settlement was more of a victory for the Post Office and government than the litigants.

By December 2019, it was clear that the Post Office had failed to establish that Horizon was robust, as it had claimed for nearly 20 years. The case had also left the Post Office’s corporate reputation and credibility in tatters because of a series of disclosures and comments by a High Court judge and an Appeal Court judge.

Had the litigation gone to its full term and the Post Office had continued to lose every main judgement, it would have faced paying each of the 550 litigants about £700,000 each, which was an assessment carried out by lawyers years before litigation on typical losses from wrongful prosecutions and civil court claims.

Therefore, if the litigation had gone the full term, the Post Office and the government faced possible compensation claims of £385m plus the costs for both sides of an estimated £150m. Instead, the settlement meant that the Post Office paid only £57.75m which included the other side’s costs. It left the sub-postmasters with only £11m between them and the terms of the settlement did not specifically exonerate any of the 550 litigants.

Why victims had to settle

For the sub-postmasters, they had little choice but to accept the settlement. With ministerial agreement, the Post Office had run up huge legal costs for both sides – £89m at the time of the settlement. The Post Office had launched three appeals and tried to remove the judge near the end of a long Horizon trial which would have needed re-hearing had the Post Office’s “recusal” application succeeded. Had sub-postmasters not accepted, incessantly soaring costs could have put their funding at risk.

Post Office response

Campaign4Change asked the Post Office about the settlement terms. We asked why the litigation settlement specified that the Post Office would pay no compensation to all convicted claimants which may indicate to some that the Post Office has no sympathy with those whose lives have been ruined by wrongful prosecutions and/or convictions. The Post Office replied,

“The Post Office paid a global sum of £57.75m as part of the agreed settlement in the litigation.  Individual payments are a matter between the claimants and their legal representatives and not something over which Post Office has power or control.”


The Horizon IT scandal in one sentence – the Perfect Storm.

The term “Perfect Storm” usually means the confluence of particularly unfavourable circumstances which usually have a grim or tragic outcome. The following sentence/paragraph may help to summarise the scandal. It describes events that may be little understood by business ministers and officials …

Horizon IT scandal – the Perfect Storm:

Businessmen and women, who invested typically £100,000 buying branch post offices with attached shops, were held to unfair, non-negotiable contracts, sometimes with unseen and unsigned terms, that made them liable to summary dismissal, prosecution, imprisonment and huge debts in the civil courts on the basis of whatever incorrect figures were shown on a branch accounting system Horizon whose owner,  Post Office Limited, acted at times as if answerable to nobody and hid documents detailing numerous software defects while claiming the system was robust, which went unchallenged by the courts and juries because of a major flaw in the criminal justice system – a presumption – that encouraged remarkably naïve judges to treat complex computer systems subject to intermittent error much like mechanical clocks that either worked or didn’t work. 

Certain Abuses in the Post Office, 1787 (spotted by Horizon IT justice campaigner and researcher Eleanor Shaikh)

It has emerged that scandals are not new to the Post Office. More than 200 years ago, according to a book spotted  by researcher and justice campaigner Eleanor Shaikh, the House of Commons was investigating a cover-up and improper conduct at the Post Office.

That 233 years later a High Court judge, Mr Justice Fraser, would be delivering a ruling that found a cover-up and improper conduct at the Post Office may therefore not be a complete surprise.

It is more surprising that ministers who have had the Post Office in their remit have, for 20 years, always sided, and without any exceptions, with the Post Office against sub-postmasters. They are still siding against the sub-postmasters.

Ministers supported the Post Office throughout a long, wasteful, hugely expensive litigation that ought not to have been necessary had ministers and civil servants properly held the Post Office to account.

Even in the settlement that is now proving controversial, ministers gave it their approval and now are siding against sub-postmasters by rejecting their request -which is backed by about 100 MPs and peers – for a judge-led inquiry into the Horizon scandal.

Nobody can expect the Post Office to change permanently the attitudes and culture that have become embedded since the days of highwaymen. It is almost unimaginable that in 50 years time the the Post Office will be anything but self-protective, secretive, resentful of criticism and ill-at-ease with any Parliamentary scrutiny.

Indeed, if not for Alan Bates (with his extraordinary legal team led by Patrick Green QC),  together with the judgments of Mr Justice Fraser, ministers and the Post Office could still be saying that Horizon is well tested and proven system that over 20 years has never been found wanting by civil and criminal courts

Thanks to the litigation,  sub-postmasters’ unfair contracts are no longer enforceable. But what else has has changed? Perhaps the Post Office’s investigation branch that dates back to Charles the Second has, culturally, not changed a great deal. A rare tape of an investigation interview, obtained by journalist Nick Wallis, shows how the ordeal brought sub-postmistress Sarah Burgess-Boyd to tears.

Today’s scrutiny of the Post Office – still a remarkable lack of scepticism among junior ministers and officials?

The Post Office appears to have less scrutiny today than in 1787. At that time, its conduct and affairs were being investigated by the House of Commons which produced a detailed report. Today, the House of Commons Business, Energy and Industrial Strategy Committee has held an inquiry into the Post Office Horizon scandal but has not even interviewed the Post Office’s CEO, except by sending a letter with some written questions. At a hearing on 9 July 2020, the Committee asked Business Secretary Alok Sharma only four questions on the Horizon scandal and seemed to accept his answers in which he rejected calls for a judge-led inquiry.


Changing the Post Office culture fundamentally is probably not doable but a wholesale reform of Parliamentary accountability of the Post Office is possible –  at least to restore levels of scrutiny to those that existed in 1787.

Unless there is reform, business ministers will continue to show deference to whoever is currently running the Post Office. Indeed, the current business ministers have said more in praise in the current Post Office administration than in criticism of past regimes.

Wasteful and pointless

When in March this year, junior business minister Paul Scully, was asked by an MP if he would give a commitment to holding an inquiry into Horizon, he replied,

“We will certainly look at how we can keep the Post Office on its toes in the future and look back and learn the lessons from that.”

Scully’s proposed review of the Horizon scandal is a pointless, wasteful and self-contemplative distraction  from what it really needed: a judge-led inquiry into Horizon that includes a look at the lack of effective oversight of the Post Office.

Anything less and we may ask Commons’ leader Jacob Rees-Mogg, who has a thorough understanding of the Horizon IT scandal, if he can begin a campaign to restore levels of Parliamentary scrutiny of the Post Office that existed n 1787.


Journalist Nick Wallis’ remarkable BBC Radio 4 documentaries on the Horizon IT scandal – the Great Post Office Trial

Barrister Paul Marshall’s paper on the Lee Castleton case in the context of the Horizon IT scandal – The harm judges do – misunderstanding computer evidence: Mr Castleton’s story

Paul Marshall has also written a paper on the Horizon IT scandal for the Justice Committee that is a particularly useful summary of the matter.

2 responses to ““Astonishing” – ministers approved £57.7m pay-out in Horizon IT scandal that was not intended for some sub-postmasters

  1. So, the dishonourable and bullying PO were allowed to dictate that falsely convicted victims (false convictions that the PO were responsible for – for various reasons – none of which are respectable) should not be party to the paltry compensation agreed through necessity and not full justice.

    Surely, that fact alone warrants a judge-led inquiry.

    This scandal has now gone beyond one shameful and shameless organisation and its cowed parliamentary minions carrying out psy-ops on the innocent. This ‘agreement’ – no doubt ‘agreed’ in extremis – is so outrageous, it undermines and besmirches the foundations of justice in this country.

    Attention must be focused on this abuse. The anomaly must be addressed.

    I am distraught that Dick Turpin may have had more integrity than his modern-day counterparts. At least he didn’t drag out the torment for his victims.

    Thank you, Tony.

    Liked by 1 person

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