The Post Office has almost halved the amount set aside for payments to branch managers wrongly convicted in the Horizon IT scandal as fewer than expected have won or brought appeals.
The scandal, frequently described as “the most widespread miscarriage of justice in UK history”, resulted in more than 700 post office operators being prosecuted between 1999 and 2015 for theft, fraud and false accounting because of faulty accounting software installed in the late 1990s.
The Post Office said in its annual results covering the year to the end of March that it was now holding £244m for compensation payments related to overturned convictions, down from £487m a year ago, after 38% of appeals against convictions were either turned down, withdrawn or unsuccessful.
Fewer people than expected have also appealed against their convictions. By last month, 142 appeal case reviews had been completed out of 900 people convicted during the scandal, with 88 convictions overturned, while 54 cases had the conviction upheld, withdrawn or were refused permission to appeal.
Chris Hodges, the chair of the board that oversees compensation to Post Office workers, wrote to the government last year saying that people had been unwilling to appeal because their experiences had left them with an understandable deep distrust of authority. He added that, after two decades, much of the evidence had been lost or destroyed by the Post Office.
According to the Post Office’s accounts, the sum set aside for compensation was also reduced after the government-backed company paid out £13m of interim and final payments in the year relating to wrongful convictions.
The overturned convictions process is one of three different compensation schemes that have been set up as the scandal has developed. More than £130m has so far been paid to about 2,500 postmasters across the three schemes, but there have been concerns about delays to the payments and further blunders – including tax being charged on the compensation.
The Post Office also warned that the government had not yet signed off £252m of requested funding to support the loss-making business, describing the situation as “a material uncertainty which may cast significant doubt about [the company’s] ability to continue as a going concern”.
The government funding includes a grant to help cover the costs of participating in the public inquiry into the scandal, led by the retired high court judge Sir Wyn Williams, which was made statutory in 2021 and is expected to be completed some time next year.
The Post Office said the inquiry had cost it £38m in legal and running costs this year, up from £12m in 2022. It also requires the state funding to cover the cost of updating its IT system from Horizon, which it continues to use with support from its original developers, Fujitsu.
The government quietly told parliament on Tuesday that it had “agreed to provide” the funding. However, the Post Office said on Thursday that the money had “not been contractually committed yet” and discussions were ongoing.
The Post Office accounts, published this week, show it remained £76m in the red – although that was down on the £130m loss recorded in 2022. Net liabilities rose to £799m from £724m.
Sales rose 6% to £885m, helped by a rise in demand for banking services via the Post Office, but costs also increased including £36m spent on building a replacement to Horizon which is expected to be begin to be phased out next year – if the funding can be secured.
The Post Office said that without further funding, it risked breaching the conditions of its loans and would be unable to meet its liabilities as they fell due.
Nick Read, the chief executive of the Post Office, wrote in the accounts: “We fully understand that there can be no new beginning for the Post Office until such time as it has fully reckoned with, and made amends for, its past. Any suggestion that today’s Post Office is deliberately placing obstacles in the way of that outcome is wholly misplaced.
“We will not rest until justice is achieved, and full and fair compensation paid, for all those so badly affected by the events of the past. Set against the processes and procedures we have to follow to both secure the necessary funding from government for compensation payments and to make them, we have made good progress.”
Read’s pay last year sank to £573,000 from £816,000 the year before, as 10% of his annual bonus – related to the progress of the inquiry – was removed.