MPs demand fair compensation for Bates 555 in Post Office IT scandal – but what now?

By Tony Collins

A cross-party committee of MPs has called on the government to commit urgently to “ensuring that the 555 are fully compensated for all of their losses on the same basis as other victims of this scandal receiving compensation”.

The committee’s statement refers to the 555 members of the Justice For Sub-postmasters Alliance who defeated the Post Office in the High Court in 2019 by proving that its Horizon system was faulty and caused shortfalls for which sub-postmasters were wrongly blamed.

Today’s report of the Business, Energy and Industrial Strategy Committee asks the government to consider paying the 555’s legal fees, which were about £46m. It says the payment ought to be an interim amount pending determination of full compensation.

If the government agrees to pay the £46m it would mean average individual payments to the 555 of about £83,000.

To date, the Post Office has paid the 555 an average of only 20,000 each after costs. Typically, the 555 lost hundreds of thousands of pounds each.

The Post Office wrongly prosecuted more than 700 sub-postmasters and sub-postmistresses for fraud, false accounting or fraud on the basis of untrustworthy Horizon data. To date, only 72 convictions have been overturned. Most victims of the scandal are not seeking to have their convictions overturned. Some are known to want nothing more to do with the Post Office.

Today’s committee report is the first independent Parliamentary appraisal of the Post Office and ministerial actions since the end of the High Court action in December 2019. Much of the report will make uncomfortable reading for business ministers and senior civil servants.

It says,

“We are deeply disappointed that the 555 group action litigants, who took the Post Office Ltd. (POL) to court and who exposed the Horizon scandal, should be worse off than other victims of Horizon who would otherwise not be in a position to make claims.
“It is a perverse situation that the prolonged legal proceedings and the resulting delay to POL’s decision to settle have reduced the compensation the 555 were entitled to. Both the Post Office Ltd. and the Minister accept that this is unjust. We agree with the POL CEO, Nick Read, that it will be impossible for the POL to move forward until this issue is fully addressed. Our view is that the responsibility for addressing this injustice lies with the Government. Consideration should be given to recompense the legal fees of the 555 as an initial payment whilst full determination is considered.
“We demand that the Government as a matter of urgency commit to ensuring that the 555 are fully compensated for all of their losses on the same basis as other victims of this scandal receiving compensation.”

Some bullet points from the report:

  • There’s an “unacceptable irony” that the Bates 555 group has made possible a “Historical Shortfall Scheme” for thousands of victims of the scandal but the group is itself denied access to fair compensation through the scheme.
  • There’s a need for an independent intermediary body as a trusted first point of contact for those wrongly convicted because of Horizon, in particular for the 576 convicted sub-postmasters who have not yet come forward.
  • The Committee wants monthly updates on the number of interim payments made for those whose convictions have been overturned, including the number of final payments made, and the range of amounts paid out to reach full, fair and final settlements. The report says this is needed “because of the nature of the Horizon scandal, transparency on these issues is crucial to restoring trust.”
  • There’s a need for far more information on why some sub-postmasters whose convictions have been overturned are being denied interim compensation payments. The Committee will need convincing that the scheme has genuinely independent oversight.
  • The Committee is “concerned that a firm involved with the discredited HBOS Reading scandal is involved with the Historical Shortfall Scheme, and that the Post Office Ltd. (POL) CEO was unaware of the issues surrounding the HBOS compensation scheme. Though Herbert Smith Freehills may have experience in establishing such schemes we are not reassured by the Minister or the POL CEO’s arguments that the issues associated with the HBOS scheme do not necessarily question their role in the Historical Shortfall Scheme. In responding to this report, we expect the Government to explain how the Historic Shortfall Scheme differs from the HBOS Reading scheme and what safeguards have been built in to avoid the problems that the latter scheme experienced.”
  • There is much criticism in the Committee’s report of the Historical Shortfall compensation Scheme, which has received claims for compensation from more than 2,500 sub-postmasters and sub-postmistresses. The Committee questions the scheme’s independence and is concerned that the Post Office is involved in making initial recommendations regarding claims. It says that, given that the Post Office bears a major part of the responsibility for the Horizon scandal, “it seems perverse that POL is making initial recommendations regarding claims”. The Committee adds, “It is worth remembering that a key criticism made of POL at the height of the scandal was that effectively it acted as judge, jury and executioner when deciding on convictions of sub-postmasters.”
  • The slowness in paying compensation claims means more claimants will die awaiting their cash, given their age profiles. “We are disappointed that so few claims have been processed by the Historic Shortfall Scheme considering it was closed over a year ago. The conclusion of only 30% of claims does not represent significant progress.”
  • The Committee is concerned about the low amounts of compensation, the difficulties in making claims, the lack of support and expert advice available and onus being on the claimant to prove losses when the Post Office may not have the relevant paperwork.
  • The Committee wants details of claims refused where there was paperwork missing.
  • Given that the Post Office has profited from taking money from sub-postmasters on the basis of Horizon data, there needs to be a “significant level of benefit of doubt when compensation is calculated”.
  • The Committee calls for more transparency over the costs of compensation schemes. The Committee noted that it hadn’t been told about a £685.6m direct grant to the Post Office over Post Office historical matters.

Comment – What happens now?

Ministers are free to accept or reject any of the Committee’s recommendations. They must, however, publish a formal response, usually within two months.

There is no doubt that the Committee’s report will add to pressure on government and the Treasury to pay at least the Bates 555 group’s £46m legal costs.

The traditional government reply to awkward reports of Parliamentary committees is to fudge, which can mean seeming to accept recommendations without actually acting on them. But the Parliamentary momentum for the Bates 555 to be properly and fairly compensated may now be too great for ministers to continue with the present undeclared strategy of promising much, talking regularly to the 555 and delaying actual government-funded compensation payments indefinitely.

Postal Affairs minister Paul Scully

That said, there is little appetite in Whitehall to pay the 555 any government money, especially as the group’s expose of the scandal has made the Post Office technically insolvent and created a huge amount of extra work for the civil service. There is also the technical problem of proving to the Treasury that compensating the 555 is value for money. This is where ministers come in. With the help of Downing Street and the Treasury, the Postal Affairs minister Paul Scully could make things happen. But to date he has been has been weak and vacillating.

The hope now is that’s BEIS’s commendable report will help create an unstoppable Parliamentary force for the right thing to be done. There is nothing in the report that any right-thinking person could denigrate or dismiss. The report is a landmark in the post-litigation era of the Post Office IT scandal.


MPs demand urgent compensation for Post Office scandal victim group – Computer Weekly

Post Office received £1bn taxpayer subsidy last year as part of IT scandal compensation – Karl Flinders, Computer Weekly

The Great Post Office Scandal

43 years of state IT-based project disasters and they’re still happening – Part 3 – Campaign4Change

2 responses to “MPs demand fair compensation for Bates 555 in Post Office IT scandal – but what now?

  1. Thank you, Tony.
    Your clear analysis and reporting of this scandal is invaluable.
    I don’t wish to diminish your contribution by posting my far from civilized initial thoughts and suggestions.
    The facts speak for themselves.


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