Post Office Horizon IT scandal: Progress of compensation

Approximate read time: 25 minutes

On 27 February 2025 the House of Lords is due to consider the following motion:

Lord Beamish (Labour) to move that this House takes note of the progress of the Post Office Horizon compensation scheme and of the contribution of Fujitsu to the compensation of victims.

1. Background

The Post Office is a limited company owned entirely by the government and overseen by the Department for Business and Trade.^[1] As of March 2024, there were 11,805 post office branches open across the UK.^[2] Of this number, 11,690 were run by independent postmasters and companies as franchises, with only 115 branches run by Post Office Ltd.

1.1 Horizon computer system

From 1999 the Post Office introduced the Horizon computer system into branches, with pilots conducted from 1996.^[3] The system was used for stock-taking, accounting and recording financial transactions. The provider of this original system was International Computers Limited (ICL). ICL was partly owned by Fujitsu and was fully incorporated within Fujitsu in 2001.

Following the introduction of Horizon, a number of sub-postmasters experienced difficulty with the system and errors were first reported as early as 2000.^[4] In particular, the system made it appear as though money was missing from branches. Under the standard postmaster contract, individual sub-postmasters were responsible for any accounting shortfalls.^[5]

Computer Weekly highlighted that by 2009, a number of sub-postmasters who had reported issues with Horizon were facing prosecution, bankruptcy and jail.^[6] Sub-postmasters argued that the losses were caused by glitches in the IT system. The Post Office was resistant to this argument. As outlined in the explanatory notes to the Post Office (Horizon System) Offences Act 2024,^[7] a range of penalties were imposed on sub-postmasters deemed to be at fault:

From 1996, the Post Office piloted new Horizon software in some of its branches. This software was introduced across the network of branches in 2000. The software had faults which meant that some postmasters’ accounts showed false shortfalls. The Post Office obliged postmasters to “repay” these false shortfalls. Some postmasters and others were suspended (generally without pay) and/or dismissed. Others were prosecuted for dishonesty offences (by the Post Office itself or by the Crown Prosecution Service (CPS)); some were convicted and imprisoned. Some were made bankrupt (in some cases on the petition of the Post Office: there are allegations that this was done maliciously). Some lost their homes. Some suffered mental or physical health problems as a result of their treatment or of the financial consequences. Some were harried as thieves by their local communities. Some suffered breakdowns in relationships with their partners, children or other families and friends. Several died by suicide.^[8]

The majority of prosecutions were brought by the Post Office. The Post Office has no special authority to bring special private prosecutions. Instead, it used the powers in section 6(1) of the Prosecution of Offences Act 1985 to bring private criminal prosecutions. The right to bring private prosecutions in this way is available to companies and individuals in England and Wales.^[9]

The Post Office did not engage private investigators or specialist lawyers to conduct prosecutions.^[10] Instead, it relied on its own internal investigators and lawyers to carry out the prosecutions of its sub-postmasters. This has led to concern about a lack of safeguards in situations where an organisation acts as both investigator and prosecutor in cases where it is also the alleged victim. The House of Commons Business and Trade Committee has described the Post Office acting as “judge, jury and executioner”.^[11] The Horizon Compensation Advisory Board has been highly critical of the behaviour of Post Office employees carrying out investigations and prosecutions.^[12]

As of December 2024, the Post Office had identified a total of 700 convictions in cases it prosecuted between 1999 and 2015 “in which Horizon evidence may have featured”.^[13] This figure does not include prosecutions by other agencies, namely the Crown Prosecution Service (CPS), the Department for Work and Pensions, the Crown Office and Procurator Fiscal Service in Scotland, the Public Prosecution Service for Northern Ireland and Royal Mail Group. The Post Office has said that it has continued to help other prosecuting authorities, including by “sharing all the information we have in relation to prosecutions which have been brought by other prosecutors”.

The government has estimated that in addition to the 700 convictions in cases prosecuted by the Post Office, a further 283 sub-postmasters were prosecuted by others based on Post Office evidence, totalling 983 convictions.^[14]

1.2 Exposing issues with Horizon

Various attempts, predominantly driven by sub-postmasters, were made to expose issues with the Horizon system. These are outlined in brief below.

• 2009: The campaign group Justice for Sub-postmasters Alliance (JFSA) was established.^[15] Members of the group argued that the Horizon accounting system was incorrectly showing sub-postmasters in some branches to be in arrears in their payments to the Post Office as a result of technical faults.
• 2012: The Post Office set up an independent inquiry conducted by the accountancy company Second Sight.
• 2013: An interim report highlighting faults in the Horizon system was published. The Post Office established a complaint review and mediation scheme to examine cases raised in the report. This scheme was closed to new applicants later that year. The JFSA argued there had not been enough opportunity for sub-postmasters to enter the scheme.
• 2015: The mediation scheme was closed by the Post Office. The JFSA began legal action against the Post Office. The case involved a group of 555 people, most of whom were postmasters (individuals or companies).
• 2017: The JFSA took the Post Office to the High Court in a case managed using a group litigation order (GLO) made in March 2017.
• 2019: On 11 December 2019, the Post Office and the sub-postmasters concerned announced they had reached an out-of-court settlement (the GLO settlement agreement) for £42.5mn plus costs. However, postmasters had to pay £31mn of the settlement to the company which had funded their action. The GLO settlement agreement also required the Post Office to create a compensation scheme for those postmasters who had not been party to the GLO legal action. This was implemented as the ‘Historic shortfall scheme’, now renamed the ‘Horizon shortfall scheme’ (HSS). The HSS is discussed further in section 2.1 of this briefing.

In the subsequent judgment on the Horizon issues, published on 16 December 2019, the High Court ruled that the original Horizon system had not been sufficiently robust and had suffered from a number of bugs and errors.^[16] Among other findings, Mr Justice Fraser expressed concern about the Post Office’s conduct towards the claimants, its approach to evidence and its disclosure, and its resistance to objective scrutiny.^[17]

A number of postmasters had their convictions overturned by the courts. For example, in October 2020, the Post Office confirmed it would not contest the appeals of 44 out of 47 individuals against their convictions. In April 2021, the Court of Appeal overturned the convictions of 39 postmasters whose cases had been referred by the Criminal Cases Review Commission (CCRC), the independent body which looks into criminal cases where people have argued they have been wrongly convicted or sentenced. The CCRC described the events as “the most widespread miscarriage of justice the CCRC has ever seen”.^[18]

Most recently, the Post Office (Horizon System) Offences Act 2024 made provision to quash the convictions of eligible sub-postmasters. The act quashed “on a blanket basis, convictions for various theft, fraud and related offences during the period of the Horizon scandal in England and Wales”.^[19] The act also applies to relevant convictions in Northern Ireland. The Scottish Parliament has passed legislation to similarly exonerate eligible sub-postmasters in Scotland.^[20]

Commenting on the Horizon IT scandal, the Post Office itself stated:

We are sincerely sorry for the devastating impact on so many lives and the priority of today’s Post Office is to ensure that victims receive justice and financial redress as swiftly as possible.^[21]

1.3 Statutory inquiry

In February 2020 the then prime minister, Boris Johnson, committed to “getting to the bottom of the matter” of the problems caused by the Horizon system through the use of an independent inquiry.^[22] The Post Office Horizon IT Inquiry was established in non-statutory form on 29 September 2020. It is led by retired high court judge Sir Wyn Williams. The inquiry was converted to a statutory inquiry on 1 June 2021.^[23] The website for the inquiry summarises its purpose as follows:

Sir Wyn is tasked with ensuring there is a public summary of the failings which occurred with the Horizon IT system at the Post Office leading to the suspension, termination of sub-postmasters’ contracts, prosecution and conviction of sub-postmasters. The inquiry will look to establish a clear account of the implementation and failings of the system over its lifetime (a period of over 20 years). The inquiry will gather relevant evidence from affected persons, previous and current subpostmasters and subpostmistresses, Post Office Ltd, UK Government Investment (UKGI), Fujitsu, the Department for Business and Trade (DBT), amongst others. It will also consider whether Post Office Limited has learned the lessons and embedded the cultural change necessary from the findings in Mr Justice Fraser’s judgments and the impact on affected postmasters.^[24]

The inquiry concluded its public hearing stage at the end of 2024 and will now start analysing evidence and drafting its final report.^[25] Sir Wyn Williams has said he wants to be able to share the final report “as soon as practicable”.

2. Compensation schemes

2.1 Summary of schemes

Four compensation schemes have been established which seek to provide financial redress to those affected by the Post Office Horizon IT scandal. These were established at different times and have different eligibility criteria. These are summarised below:

• Horizon shortfall scheme (HSS). The HSS was launched in May 2020. In December 2019, the Post Office Ltd and the group litigation order group agreed a settlement that ended the group litigation in the High Court.^[26] As part of the settlement the Post Office agreed to establish the HSS. This scheme is open to postmasters who had not been part of the GLO action and who did not have a criminal conviction.^[27] Postmasters in the GLO were excluded from applying to the HSS.^[28] The scheme opened in May 2020 and was originally open until November 2020, but in October 2022 the government said it would provide funding to the Post Office so that late applicants could be accepted into the scheme.^[29] Further information on the scheme is available on the Post Office’s website.^[30] The government is currently establishing an independent appeals process for the HSS.^[31]
• Group litigation order scheme (GLOS). This was announced in March 2022. The GLOS is an ex gratia claims-based scheme for postmasters who were part of the action Alan Bates and Others v Post Office Ltd pursued under the group litigation order, and who do not have a Horizon-related conviction.^[32] The scheme is run by the Department for Business and Trade. The department has said the GLOS was established because “much of the agreed GLO settlement monies went to the firm which funded the litigation, leaving those postmasters worse off than their peers who qualified for the HSS”. The government considered that this was unfair on members of the GLO group. The government announced that it would be making funding available through the GLOS to ensure these postmasters “received similar compensation to that given to their non-GLO peers in similar circumstances”.
• Overturned convictions scheme (OCS). This scheme is open to anyone who had their Horizon-related convictions overturned by the courts.^[33] This includes administrators acting on behalf of the estates for someone who has died. The OCS is administered by the Post Office.
• Horizon convictions redress scheme (HCRS). The Post Office (Horizon System) Offences Act 2024 made provision to quash the convictions of eligible sub-postmasters and others who worked in post office branches and who suffered as a result of the Post Office Horizon IT scandal. Similar legislation was passed in Scotland. Those who have had convictions quashed by either the Scottish or UK legislation are eligible for the HCRS.^[34] The scheme is administered by the Department for Business and Trade and further details are available on its website.^[35]

Compensation related to the Post Office Horizon scandal is overseen by the Horizon Compensation Advisory Board.^[36] Originally set up to advise ministers on the GLOS, its terms of reference have been expanded to include advising on the Department for Business and Trade’s oversight of Horizon-related compensation by the Post Office. The aim of the board is to “ensure fair and prompt compensation to sub-postmasters affected by the Horizon scandal and related issues”.^[37] The board consists of:

• Two academic experts in the field of alternative dispute resolution and legal ethics. These are Professor Christopher Hodges (the chair) and Professor Richard Moorhead.
• Two parliamentarians recognised for their past involvement in pursuing the resolution of the Horizon scandal. These are Lord Arbuthnot of Edrom (Conservative) and Lord Beamish (Labour), both former MPs. Lord Beamish (formerly Kevan Jones) joined the House of Lords in August 2024 and Lord Arbuthnot in October 2015.

The government has said that it is currently reviewing whether to bring the administration of the two Post Office schemes within the Department for Business and Trade. However, the government said it did not want to “inadvertently create some environmental factors that may accidentally slow down the process of those claims”.^[38]

In an oral statement to the House of Commons on 18 December 2024, Gareth Thomas, parliamentary under secretary of state for business and trade, said that the government was “looking again at the arguments for providing additional redress to postmaster family members who were affected by the scandal, and to the employees of postmasters”.^[39] Mr Thomas said he would report back to the House of Commons “in due course”. Mr Thomas also said he was conscious that for victims of the scandal “justice delayed is justice denied” and it was the government’s responsibility to make the process of compensation as effective as possible. He said this was why the government had asked the Post Office to write to over 16,000 former postmasters “encouraging them to come forward if they believe they have a genuine claim”. He said that the government wanted “to ensure that every postmaster who is eligible for redress under the Horizon shortfall scheme has the opportunity to apply for it”.

2.2 Compensation scheme statistics

As of 31 January 2025, approximately £663mn had been paid to over 4,300 claimants across four schemes:

• Horizon shortfall scheme (HSS): £315mn total value of all payments including interim payments
• Group litigation order scheme (GLOS): £128mn total value of all payments including interim payments
• Overturned convictions (OC) scheme: £65mn total value of all payments including further interim payments
• Horizon convictions redress scheme (HCRS): £156mn total value of all payments including interim payments^[40]

The previous edition of the data (as at 3 January 2025), said that approximately £594mn had been paid to over 3,800 claimants across the four schemes.^[41] Therefore, by 31 January 2025 an additional £69mn had been paid out and an additional 500 claimants had been paid.

In the 2024 autumn budget, the government said it had set aside a budget of £1.8bn for compensation costs from 2024–25.^[42] Speaking in the House of Lords on 11 February 2025, Baroness Gustafsson, minister of state at the Department for Business and Trade, said that the £1.8bn was “not a limit or target; it is just the best estimate” and that “ultimately, the government will do what they can to fully compensate the victims of this scandal”.^[43]

Table 1 below provides an overview of claim data across the four compensation schemes.

Table 1. Claims data by scheme, as at 31 January 2025

(Department for Business and Trade and Post Office, ‘Post Office Horizon financial redress data as of 31 January 2025’, 7 February 2025)

Notes: Changes from last month’s publication (3 January 2025 data) in square brackets; [-] indicates no change since last month.

Across the four compensation schemes, the HSS has received the most applications. However, it is important to note that the HCRS is the newest scheme to have launched, and the schemes have different histories and eligibility requirements. Of the 4,665 eligible late claims received on the HSS, 1,802 offers had been made, 1,306 had been accepted and 1,260 claims have been paid. As reported above, the government has asked the Post Office to write to over 16,000 former postmasters “encouraging them to come forward if they believe they have a genuine claim”, because it wanted “to ensure that every postmaster who is eligible for redress under the Horizon shortfall scheme has the opportunity to apply for it”.^[44]

2.3 Position of Fujitsu on compensation

The provider of the original Horizon system was International Computers Limited (ICL). ICL was partly owned by Fujitsu and was fully incorporated within Fujitsu in 2001. Paul Patterson, chief executive of Fujitsu Europe, has said that the company has a “moral obligation” to contribute to compensation.^[45] This position was reflected in Fujitsu’s closing submission to the Post Office Horizon IT Inquiry. It said that following the publication of the inquiry’s findings, Fujitsu would work with the government on a contribution to the government’s compensation costs:

One important topic which Fujitsu does not address in this part 6 [of its closing submission] is financial redress and compensation. Fujitsu recognises the importance of that topic to affected SPMs [sub-postmasters and their employees] and their families. Fujitsu will engage with government on contribution to the government’s compensation costs. The timing of this engagement will commence once this inquiry has published its findings.^[46]

The National Federation of Sub-Postmasters (NFSP)^[47] has expressed concern that progress on addressing the issues of the Horizon IT scandal “was motivated by or expedited due to the scrutiny of the inquiry and this matter being in the public consciousness”.^[48] In its closing submission to the inquiry, it asked what would happen when the issue was no longer subject to the scrutiny of the inquiry. The NFSP argued that this was “especially the case in relation to Fujitsu’s contribution to compensation”.^[49] The federation asked if Fujitsu intended to make a contribution, why had progress not been made:

It is submitted this begs the question, why have Fujitsu not progressed this? It is submitted that there are two possible reasons, firstly because they are looking to see if the findings of the inquiry will allow them to minimise their culpability in relation to this scandal, and therefore their “moral obligation”, and secondly, they hope to avoid the scrutiny of the inquiry and the associated public attention regarding the amount they actually contribute.^[50]

In answer to an oral question in the House of Lords on 11 February 2025, Baroness Gustafsson said that the outcome of the inquiry would help work out the scale of any financial contribution:

Fujitsu has acknowledged a moral obligation to support the government in respect of the financial redress that should rightly be made to the victims of this scandal. We are awaiting the outcome of the Sir Wyn Williams review, which will go a long way to understanding the scale to which this financial contribution should be made. Ultimately, this will be made in the light of that evidence.^[51]

The minister also said that Fujitsu had agreed not to bid for further government business:

Regarding the ongoing relationship with Fujitsu, Fujitsu has agreed not to make new bids for business within government. That being said, there are existing relationships within departments with Fujitsu, where perhaps they feel that the necessary skills or capability is something that is uniquely held by Fujitsu. In those cases, the contracts may continue to exist, but ultimately that is a decision within the department.^[52]

Lord Beamish said the inquiry had “clearly highlighted” what he called Fujitsu’s responsibility.^[53] He asked Baroness Gustafsson what discussions the government had had with the company. Lord Beamish also said that whilst the minister had said Fujitsu would not bid for new government contracts, “it is making multi-billion-pound profits from extensions of contracts, so may I urge the minister to get it to the table as quickly as possible?”. Baroness Gustafsson said there were ongoing conversations with Fujitsu but reiterated the need to wait for the conclusion of the inquiry:

Ultimately, the government will do what they can to fully compensate the victims of this scandal. Fujitsu has an important role of being financially responsible for some of this, and there are ongoing conversations within the department and with Fujitsu. Ultimately, the outcome and report of the inquiry by Sir Wyn Williams will be an important determinant of this.^[54]

In answer to a written question on 4 February 2025, the government said that officials from the Department for Business and Trade had met Fujitsu three times since the general election to discuss its contribution to the cost of the Horizon scandal.^[55]

3. Speed of compensation payments

The speed with which compensation has been paid to people affected by the Post Office Horizon IT scandal has been criticised by some organisations as being too slow. In a report on the compensation schemes published on 1 January 2025, the House of Commons Business and Trade Committee said that whilst “some improvements have been made to the redress schemes and they are now moving faster”, this was “not fast enough”.^[56] The committee also argued that in addition to compensation being too slow, “the schemes are so poorly designed that the application process is akin to a second trial for victims”. The committee held two evidence sessions in November 2024 and its report made the following five key recommendations to the government:

• Remove the Post Office from administering any of the redress schemes.
• Up-front legal advice should be offered to claimants and paid for by the schemes’ administrators for all schemes.
• Introduce binding timeframes for scheme administrators at each individual stage of each scheme, with financial penalties passed on to the claimant if these deadlines are not met.
• Appoint an independent adjudicator for each scheme and empower them to provide directions and case management to ensure claimants move through the process swiftly.
• Provide clear, strong instructions to taxpayer-funded lawyers to maximise the speed of redress, eliminate legal delays, enhance the benefit of doubt given to claimants, and publish the costs spent on lawyers for the public and Parliament to see.^[57]

The report also made a series of recommendations under each of the compensation schemes specifically. For example:

• On the HSS, the committee said it had learned that it would take approximately 18 months for the independent panel to assess outstanding claims on the HSS.^[58] In the HSS an independent panel comprising legal, forensic accounting and retail experts assesses legal claims.^[59] It does so against established legal principles, but it can exercise discretion where a postmaster is unable to provide documentary evidence. The committee indicated that the current frequency of meetings was not adequate: “A panel central to the process that assesses all claims meeting twice a week will not deliver swift justice for sub-postmasters”.^[60] It recommended that the panel should be resourced to meet full time until the majority of first offers had been issued.
• On the GLOS, the committee said the government should aim “wherever possible” to complete claims by March 2025.^[61] This was suggested to the committee by Sir Alan Bates, the founder of JFSA. The committee said that it knew this would not be possible for complex claims or for vulnerable claimants. It said that the government should therefore “introduce binding timeframes at each stage of [GLOS] with financial penalties awarded to the claimant if these timeframes are not met”.
• On the HCRS, the committee expressed concern that some people might never know of their rights to compensation under the scheme.^[62] It said the government must set out a plan for how it would notify eligible postmasters. The committee was also concerned about a lack of published data which made it hard for the committee to assess progress of the HCRS across the UK. It asked the government to update it monthly on a range of statistics, including how many people may qualify for redress under the Post Office (Horizon System) Offences Act 2024 and the Post Office (Horizon System) Offences (Scotland) Act 2024.

The government has not yet responded to the report.^[63] Baroness Gustafsson has said that delivering “swift redress” remained a priority for the government.^[64] On the complexity of the schemes, she said she understood that:

[…] the process is a complex one, that people have suffered a great deal already and that the process can be quite cumbersome. Whilst this cannot always be avoided in all cases, the government have worked hard to try to alleviate some of this by making some fixed-sum offers available, which go some way to making the process a lot simpler for claimants.^[65]

Baroness Gustafsson said that the fixed claim sums were also aimed at speeding up the process.^[66]

In its closing submission to the Post Office Horizon IT Inquiry, the Post Office discussed the issue of promptness. It said that the objective to be achieved in compensating people was dependent on ministerial direction and policy objectives. It stated that prior to late 2023, the ministerial objective was “to achieve full and fair compensation with less emphasis on promptness”.^[67] However, the Post Office said that from the end of 2023, “promptness has been pushed to the fore”. The Post Office said that it was sorry that the redress processes for which it was responsible had taken a long time:

POL [Post Office Limited] accepts and apologises that the redress processes for which it is responsible have taken a considerable amount of time causing delay to postmasters achieving final redress. POL welcomes the government’s emphasis on securing redress promptly and POL has taken a number of steps to speed up the redress process. For example, in respect of the HSS, POL is hiring more individuals to process claims, increasing the frequency of escalating meetings, offering face to face negotiations rather than re-submitting disputed applications to the panel, and exploring whether the shortfall analysis process can be automated.^[68]

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Cover image from Wikimedia Commons.