With your permission, Madam Deputy Speaker, I wish to make a statement on the Post Office, Horizon redress and Post Office finances. We inherited a Post Office in crisis. It had a grim past, a poor commercial track record, unstable leadership and its record on compensation was widely perceived as legalistic, slow and adversarial. Since this Government came into office, the total amount of redress paid to victims of the Horizon scandal has increased by more than three and a half times. Between July last year and 31 March this year, more than 3,300 victims have received compensation for the first time. Approximately £892 million has now been paid to more than 6,200 claimants. We have also established a new compensation scheme, so that those postmasters who finally had their convictions overturned by Parliament last year get redress. We are working on our approach to redress for postmasters who fell victim to the flaws in the Capture system.
Unlike the previous Government, we set out a clear forecast for compensation within the autumn Budget of £1.8 billion from 2024-25. As the House will know, the Government previously committed to provide the majority of group litigation order claimants with substantial redress by the end of March. I can confirm that, as promised, 76% of those who submitted claims for compensation have received substantial redress. All those who submitted a claim before Christmas have received an offer or, in one case, a substantial interim payment instead. We will also take further steps to increase the pace at which claimants’ challenges can be resolved fairly. Facilitated discussions will be reintroduced to the GLO scheme for this purpose.
Most recently, we announced that from 3 June my Department will take over responsibility for the overturned convictions scheme from the Post Office. We have also welcomed Fujitsu’s commitment to contribute to the Government’s compensation for the victims of the scandal. During a meeting between the Secretary of State and Fujitsu’s chief executive officer in March, an agreement was reached on beginning talks ahead of the conclusion of Sir Wyn Williams’ inquiry.
The House will be aware that the Secretary of State announced the Government’s intention to establish an appeals mechanism for claimants who were unhappy with offers that they had received under the Post Office’s Horizon shortfall scheme. Today we are publishing the guidance and principles for the HSS appeals, and by the end of this month we will begin to accept applications from eligible postmasters who are currently involved in the Post Office’s dispute resolution process. The document sets out the underlying rules that will govern the assessment of appeals, and also provides information on, for instance, the eligibility criteria to help postmasters and their legal representatives make their claims. We developed this in consultation with the Horizon compensation advisory board, claimants’ lawyers, and representatives of postmasters’ organisations.
Later this month we will begin writing to the legal representatives of potentially eligible postmasters who are currently involved in the dispute resolution process, inviting them to transfer their claims to the new HSS appeals scheme. If postmasters do not have legal representatives, we will write to them directly. Shortly after that, we will open the scheme to all other eligible postmasters. As with the GLO scheme, my Department will aim to respond within 40 working days of the submission of a substantially complete appeal in at least 90% of cases. We will encourage postmasters entering the process to engage legal advisers, and we will meet their reasonable legal costs through a tariff that we have agreed with claimants’ lawyers. Postmasters will not have to pay a penny of income tax, capital gains tax, national insurance contributions, corporation tax or inheritance tax on any compensation that they receive through the new process.
As we look to the future, we will also continue to address any concerns about the Post Office’s past behaviour. I am therefore pleased to be able to provide an update on the Government-funded Post Office process review scheme, which will provide redress for postmasters who lost out financially owing to issues connected with Post Office products, policies or processes. Those issues are unrelated to Horizon but are part of the company’s efforts to rebuild trust with its postmasters and ensure that past failings are fully addressed. The scheme is due to be launched in the next month, and the Post Office will write to all of those potentially affected with further details, including information on how postmasters can apply.
We will consider carefully the conditions and recommendations of Sir Wyn Williams’ inquiry when it is published. While tackling the awful legacy of the Horizon scandal, the Government are also determined to make the Post Office more sustainable for the future, and we remain committed to publishing a Green Paper to consider its long-term future. In particular, I look forward to hearing the visions and ideas of stakeholders, including key trade unions, sub-postmasters and others.
It has been apparent for some time that the Post Office is heavily reliant on Government funding. Its chair’s transformation plan was announced in November, with the aim of putting the company on a path towards financial stability and delivering a “new deal for postmasters”. The plan requires the company to make difficult decisions about, for example, the need to look seriously at efficiencies in its headquarters and the branch network to ensure that it is fit for purpose.
Today the Post Office has announced that it would be moving to a fully franchised network as part of those plans. That will realise significant savings, potentially amounting to £100 million over the duration of the current Parliament. Before this announcement, many Members wrote to me expressing concerns about their local directly managed branches, and we have heard those concerns. The Post Office will therefore ensure that each directly managed branch will be franchised, either on site or in a location nearby, so that service provision will remain in place in communities. Making those changes will ensure that the company is more sustainable.
To support Post Office provision in every community across the UK, the Government plan to provide up to £83 million of subsidy next year. That is up from the £50 million provided under the last Government, and is in addition to the uplift that we provided in the last financial year. The Post Office needs to transform the outdated technology on which it depends, and we therefore plan to provide up to £136 million of funding for its new future technology portfolio in the 2025-26 financial year. Over the next five years this work will address technology needs across the business, which will include replacing Horizon, reducing central costs and ensuring that postmasters have the tools they need to serve their customers. To enable the Post Office to continue to administer redress payments to postmasters and respond to the Post Office Horizon IT inquiry, the Government will provide up to £57.9 million of funding. These funding streams are subject to the Subsidy Control Act 2022 and referral to the Competition and Markets Authority.
An announcement on banking framework 4 has not yet been made, but I am hopeful that there will be a positive announcement soon, as post offices continue to provide vital banking services in every community up and down the country. Together, these steps will help to pave the way towards a more sustainable future for the Post Office.
During my engagement with the National Federation of SubPostmasters, concerns have been raised that the Post Office may have acted improperly in the course of the network transformation programme during the 2010s. There are claims that the Post Office and its representatives put undue pressure on postmasters, and may have given unregulated financial advice to encourage them to move on to contracts that were ultimately not in their best interests. Those allegations must be taken seriously. I am therefore commissioning an independent review of the conduct of the programme to establish whether there was any improper or coercive behaviour, and I will update the House on the scope and timing of the review in due course.
It remains our priority to speed up the delivery of fair compensation to all the victims of the Horizon scandal, and to secure and strengthen the Post Office for the future. There is more to do, but I commend this statement to the House.