The government has been warned it could still owe hundreds of millions of pounds in compensation to postmasters who were compelled to sign settlement agreements over the Horizon computer scandal. 

Business secretary Paul Scully announced yesterday that the ‘vast majority’ of the 72 postmasters whose criminal convictions were quashed earlier this year have now received an interim compensation payment of up to £100,000.

Scully said the government will make funding available to help the Post Office to make final compensation payments to postmasters whose convictions were overturned.

But on the same day, it emerged that fresh legal action may be launched by up to 555 Post Office workers who had previously settled their civil claims.

Alan Bates, former subpostmaster and founder of the group Justice for Subpostmasters, told the Business, Energy & Industrial Strategy committee of the House of Commons that this group had not received the compensation that was properly due.

The group received a settlement of £56.75m but Bates said that £46m of that went towards the costs associated with bringing the legal action. That left around £20,000 for each victim, which fell 'well short' of the money needed. The committee heard that victims’ claims would be nearer to £700,000 if they were made again.

Alan Bates (centre) speaking outside the High Court in London, after the first judgment was handed down in claims against the Post Office

Bates told the committee that 555 Post Office workers had not received the compensation that was properly due

Source: Alamy

Bates said: ‘We had no other option but to accept it because of the high financial commitment we had incurred and the funders supporting the action were unwilling to provide further support which meant that ATE wouldn’t have been available for us if we had continued.

‘The plus side was that the claimants would at least receive something, albeit not a lot. There were so many of them in dire straits, they were losing houses left, right and centre. Had the funding not run out there would have been at least another three trials.’

Bates said the Post Office had spent ‘well over £100m’ in legal fees and had ‘battalions’ of up to 70 lawyers working full-time on prosecutions.

Announcing that the 555 were seeking a law firm to apply for the settlement agreement to be set aside, he accused the Post Office of ignoring a key clause that required both parties to act in good faith. ‘It is abundantly clear to see that Post Office was not,’ he added. ‘We were forced into an agreement because Post Office’s legal team were trying anything and everything to run us out of cash.'

Bates alleged that key documents relevant to the dispute were deliberately withheld, with the Post Office failing 'on numerous occasions' to comply with disclosure rules. 'It does now seem that the settlement agreement may well be unsafe as it was obtained under duress and unfair conduct.’

The BEIS committee is looking at the issue of compensation and will call witnesses from the Post Office and government in the new year. The compensation element is not being looked at as it falls under the remit of Sir Wyn Williams' statutory inquiry.

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