Auditor Issues Qualified Opinion as Financial Impact of Historic Miscarriage of Justice Remains Unclear
The UK’s spending watchdog has issued a “qualified opinion” on the Department for Business and Trade’s (DBT) accounts, citing uncertainties surrounding a compensation scheme aimed at addressing the historic injustice caused by the Post Office Horizon IT scandal.
In a statement, the National Audit Office (NAO) highlighted both a lack of data and a breach of the department’s spending limits related to the Post Office Horizon compensation schemes as key reasons for its decision regarding DBT’s 2023-24 financial statements.
Background on the Horizon IT Scandal
Horizon, an EPOS and back-end finance system, was implemented across thousands of UK Post Office branches. Initially developed by UK technology company ICL, which was majority-owned by Fujitsu in the 1990s, the system was fully taken over by the Japanese firm in 1998.
Between 1999 and 2015, approximately 736 sub-postmasters and sub-postmistresses were wrongfully convicted of fraud due to errors in the system. The scandal led to devastating consequences, including financial ruin and mental health struggles, with some victims taking their own lives.
While some convictions have since been overturned, at least 60 individuals died before seeing any form of justice. A statutory inquiry into the widespread miscarriage of justice began in 2021 and is still ongoing.
Compensation Schemes and Financial Oversight
The UK government has launched two compensation schemes: the Horizon Shortfall Scheme (HSS) and the Horizon Conviction Redress Scheme (HCRS).
HSS is designed to assist those who suffered financial losses due to discrepancies in earlier versions of the Horizon IT system. Eligible applicants can either accept a fixed sum of £75,000 ($93,000) or opt for a full review by an independent advisory panel.
“The Post Office is encouraging current and former postmasters to apply for HSS if they haven’t done so yet, as the scheme will close at a future date. The DBT expects a response rate of approximately 25-30 percent, with most new claimants likely to accept the fixed sum offer. However, due to limited data, final figures could vary significantly,” said the spending watchdog.
Meanwhile, HCRS is designed to compensate individuals who had their wrongful convictions overturned. However, NAO stated that since the scheme is in its early stages, there is insufficient data to estimate future settlement values accurately.
DBT had assumed that the proportion of applicants opting for the fixed sum would mirror the take-up rate among those compensated through the Overturned Conviction (OC) scheme. Additionally, the department estimated that the average settlement for those rejecting the fixed sum under HCRS would be significantly lower than similar OC scheme payouts.
“Given the limited evidence supporting DBT’s assumptions for both HSS and HCRS, the NAO has restricted the scope of its audit opinion,” the watchdog reported.
Furthermore, the NAO noted that DBT exceeded its authorized departmental spending limit by £208 million in anticipation of fulfilling HSS compensation obligations.
Government Response and Additional Funding
Since the reporting period ended, the UK government has announced a provision of £1.8 billion ($2.2 billion) under Annually Managed Expenditure (AME) to provide greater budget certainty.
A DBT spokesperson commented: “This issue arose as a direct result of the rightful decision to provide further redress to Horizon scandal victims, during a time when the high volume and complexity of claims made cost estimates highly uncertain.”
“We have acknowledged this to the NAO and remain committed to ensuring that all affected postmasters receive the financial compensation they deserve to rectify these historic injustices.”
