Government has not done enough to ensure compensation for Post Office Horizon victims, says Public Accounts Committee
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Government has taken insufficient action to ensure that all
entitled to compensation from the Post Office scandal have applied
for it. In one of two new reports from the Public Accounts
Committee (PAC) focused on the Department for Business and Trade
(DBT), the PAC finds that many current and former postmasters
affected by Horizon IT failings and associated miscarriages of
justice are not yet receiving fair and timely compensation. The
PAC's report finds that, based on...Request free trial
Government has taken insufficient action to ensure that all entitled to compensation from the Post Office scandal have applied for it. In one of two new reports from the Public Accounts Committee (PAC) focused on the Department for Business and Trade (DBT), the PAC finds that many current and former postmasters affected by Horizon IT failings and associated miscarriages of justice are not yet receiving fair and timely compensation. The PAC's report finds that, based on figures provided by the Department in May 2025, only approx. one in five of letters sent to postmasters making them aware of one of the compensation schemes (full details below)* had been responded to. The 18,500 people written to by March '25 as part of this scheme does not represent all those affected, and government has no plans for following up with people who are, or may be, eligible to claim under the schemes but who have not yet applied. DBT has not received any full claims under another of its schemes for those who had had convictions quashed by 2024 legislation; and for another scheme relating to convictions, 25 of 111 eligible people have not yet submitted a claim, some of which represent the most complex cases. The report further finds that DBT's efforts to recover fraud losses incurred through the Bounce Back Loan Scheme (BBLS) have been largely unsuccessful, with only a small fraction of losses recovered to date. DBT has estimated at least £1.9bn has been lost to fraud in the BBLS. The PAC's inquiry found that DBT has recovered only £130m in payouts from lenders, though was unable to confirm how much of this amount relates to fraud. DBT has been too passive by placing primary responsibility on lenders to recover losses. As lenders' losses are 100% underwritten by government, there is no commercial incentive to assist with recovery of taxpayers' money. The highest risk fraud cases were being passed to the National Investigation Service (NATIS) to investigate, but recoveries by NATIS have been a minimal £8.6m. With DBT further in the spotlight following recent developments in global trade and the UK steel industry, the PAC is also publishing a second, separate report on DBT's support for priority industries. This report finds that, despite DBT being created to provide a front door to all businesses, it is not always clear which part of government businesses should go to with their needs, leading to confusion and at times conflicting or duplicated communications from departments. The report further warns of a lack of clarity on how DBT balances multiple government objectives, such as economic growth, employment and net zero, when making decisions about supporting industry. This can make it difficult to understand government priorities, the rationale behind support, and for DBT to evaluate how effective that support is. Steel, for example, provides critical inputs into other sectors such as construction, manufacturing, and defence. Despite this, government policies, such as those designed to support decarbonisation, can put UK steel companies at a competitive disadvantage. The PAC is calling for greater transparency on the factors DBT considers when supporting industry. Sir Geoffrey Clifton-Brown MP, Chair of the Committee, said: “The Post Office Horizon scandal was one of the UK's worst ever miscarriages of justice. Thousands of people were failed deeply by the system. This Committee would have hoped to have found government laser-focused on ensuring all those eligible were fully and fairly compensated for what happened. It is deeply dissatisfactory to find these schemes still moving far too slowly, with no government plans to track down the majority of potential claimants who may not yet be aware of their proper entitlements. It is entirely unacceptable that those affected by this scandal, some of whom have had to go through the courts to clear their names, are being forced to relitigate their cases a second time. “We found a similar passivity in government's approach to recovering the almost £2bn of pounds in taxpayers' money lost to Bounce Back loan fraud during the pandemic. DBT were unable to tell us if even the tiny fraction of that sum recovered was in fact even related to fraud. Indeed, relying on government-backed lenders to recover losses, who thus lack any incentive to pursue lost funds, has been a dangerously flatfooted approach. Now that the Insolvency Service has taken over responsibility for viable cases, we look forward to hearing how it fares where others have failed. “Our report on supporting priority industries further finds that businesses can be faced with something of a confusing rabbit warren when seeking support from government. In an increasingly uncertain world for UK industry, we hope the recommendations in the two reports we publish today help DBT cement its place as the true front door for all business which it was designed to be.” *Notes to editors The PAC's inquiry into the DBT's annual report and accounts 2023-24 was based on the data available as at its April 2025 evidence session, with further correspondence received in May 2025. The Horizon Shortfall Scheme, administered by the Post Office, is for current and former postmasters who were affected by financial discrepancies related to previous versions of Post Office's Horizon IT system, but who were either not convicted or did not take the Post Office to the High Court. Claimants can either settle their claim on a full and final basis for a total fixed sum of £75,000, or they can choose to have their claim fully assessed. The Post Office also administers the Overturned Convictions (OC) Scheme, which provides financial redress to sub-postmasters who had been wrongly convicted of fraud, theft and false accounting, later overturned by the courts. Eligible claimants are entitled to a £600,000 full and final settlement, or the option to pursue a full claim assessment. The Horizon Convictions Redress Scheme is administered by DBT, following 2024 legislation quashing the convictions of any sub-postmaster who had not already had their conviction overturned by the courts. Consistent with the OC scheme, eligible claimants are entitled to a £600,000 full and final settlement, or the option to pursue a full claim assessment. PAC report conclusions and recommendations Department for Business and Trade Annual Report and Accounts 2023-24 The Department does not yet have clarity on the volume of claims that will be received under the Horizon Shortfall Scheme or the value of claims that will be received under the Horizon Convictions Redress Scheme. The Post Office is writing to postmasters to make them aware of the Horizon Shortfall Scheme and how to apply. By 31 March 2025, approximately 18,500 letters had been sent by the Post Office with a response rate of 21%. Approximately 5,000 further letters are expected to be sent in 2025. For the Horizon Convictions Redress Scheme, the Department told us that justice authorities have issued letters to the approximately 800 individuals who have had their convictions quashed following the passing into legislation of the Post Office (Horizon System) Offences Act in May 2024. By 31 March 2025, 339 individuals had accepted the fixed and final sum of £600,000. Other participants in the scheme were deciding whether to accept the fixed sum or go through the detailed assessment process. The Department does not have any plans for following up with individuals who are, or may be, eligible to claim under these schemes but who have not yet applied. The Comptroller & Auditor General has qualified his audit opinion on the Department's 2023-24 accounts due to the significant uncertainty associated with the value and volume of future redress payments on the schemes, and specifically, the limited data available to support the Department's assumptions. Recommendation 1: In order to improve the timeliness of settlements the Department should outline what more it will do to ensure every affected postmaster is fully aware of their options for making a claim under the Horizon Shortfall and Horizon Convictions Redress Schemes. Within the Overturned Convictions Scheme, there are a number of complex cases where claims have not yet been submitted, meaning ongoing delays in compensation for these individuals. The Overturned Convictions Scheme was set up to compensate those who had their convictions overturned by the courts. The scheme is separate from the Horizon Convictions Redress Scheme, which was created to compensate those who had their convictions quashed via Government legislation. There are 111 individuals eligible for financial redress through the Overturned Convictions Scheme. By 31 March 2025, 86 had submitted full and final claims, of which 69 had been paid, one had accepted an offer and was awaiting payment and a further 8 had received offers. The remaining 8 were awaiting offers from the Post Office. It is possible that claims may not be received for the remaining 25 eligible individuals until into 2026 due to the complexity of their cases. These individuals have received an interim payment of £200,000, with a further £250,000 payment to be made on receipt of a claim. With effect from 3 June 2025, the Department will take on direct responsibility for management of the scheme from the Post Office. There is a 3-month transition period underway to transfer the relevant data and handling of claims from the Post Office to the Department. Recommendation 2: The Department should outline how it plans to handle remaining cases under the Overturned Convictions Scheme, including how claims will be handled differently following the transition of the scheme from the Post Office to the Department. The Department has issued a far-reaching letter of support, which commits it to supporting the Post Office to pay its liabilities as they fall due, but there is no clear plan for how long this will continue, or how to eventually make Post Office Limited financially independent. The Post Office is reliant on the Department for its financial survival. The Department issued a 'Letter of Support' to the Post Office in December 2024 which, in addition to the Department's pre-existing commitment to fund the Post Office's redress schemes, and an extension of established loan facilities, provides assurance that the Department will continue to provide financial support to help the Post Office to meets its liabilities as they fall due more widely. This includes support for: the running of Horizon remediation matters, Horizon support and technology replacement, taxation related liabilities, and for other potential liabilities. Without this financial support, the Post Office would not be able to meet its liabilities as they fall due. In 2023-24 the Department provided £260 million in grants and subsidies to the Post Office. By 31 March 2024, the Post Office also had total borrowings of £786 million with the Department. The Department has assured the Committee that it is working closely with the Post Office to identify ways to make the Post Office more financially independent. The Department did not consider the Letter of Support to require separate disclosure to Parliament under Managing Public Money requirements. However, the Department has agreed to notify the Committee of the next Letter of Support when it is issued. Recommendation 3:
The Department's efforts to recover fraud losses incurred through the Bounce Back Loan Scheme have been largely unsuccessful, with only a small fraction of losses recovered to date, for which the Department is unable to confirm the value.The Department has estimated it will incur a total loss of at least £1.9 billion due to fraud within the Bounce Back Loan Scheme. The Department remains reliant primarily on lenders to recover losses due to fraud, despite the limited commercial incentives placed on those lenders due to the 100% guarantee provided. Of the amount paid by the Department to lenders under the guarantee, £130 million has been returned, but the Department is unable to confirm how much of this relates to fraud. The highest risk fraud cases were being passed to the National Investigation Service (NATIS) to investigate. But recoveries by NATIS have been minimal, with £8.6 million disclosed in the Department's Annual Report and Accounts for 2023-24. The significant level of fraud within the Bounce Back Loan Scheme has been well known for years and has been subject to previous scrutiny by this Committee. The low value of recoveries, and the lack of clarity on the value of recoveries that relate to cases of suspected fraud, indicate that the actions taken to date by the Department have not been adequate. Following our evidence session in April, on 15 May 2025 the Department announced that its review of NATIS' performance had shown public money was not being spent effectively, that NATIS would be audited to determine accurate figures for fraud recovery, and that the Insolvency Service will take over NATIS's viable investigation cases. Recommendation 4:
The restructuring process which created the Department left it insufficiently resourced to deliver its 2023-24 Annual Report and Accounts on a timely basis and unable to establish appropriate controls and processes across the 2023-24 financial year. The Department inherited limited finance staff from the former Department for Business, Energy and Industrial Strategy and initially relied on the finance team of the former Department for International Trade. The accounts of the new Department are significantly more complex than the accounts of the former Department for International Trade, including hard to value assets and liabilities, and requiring the consolidation of 19 Partner Organisations. The Government Internal Audit Agency was only able to issue a limited assurance opinion for 2023-24, noting that further work was required to strengthen controls, capability and capacity following the restructure. The Department has undertaken a lessons learned exercise and has a clear plan for the laying of its 2024-25 accounts in September 2025 and for its 2025-26 accounts to be laid before Parliament's 2026 summer recess. Recommendation 5: The Department should provide a written update to the Committee if it expects that its planned dates for laying its accounts before Parliament will not be met. If so, it should set out the reasons why, and what actions it is taking to address the problems. Supporting the UK's priority industry sectors The Department can do more to make it easier for industry to engage with government. While most departments engage with industry, the Department for Business and Trade was created to provide a 'front door' to all businesses. Despite this aspiration, businesses do not always know which part of government to go to with their needs. This can lead to confusion and, at times, businesses receiving conflicting or duplicated communications from departments. The Department recognises the limitations of its current approach - officials do not consistently record their interactions with industry and its digital platform is not accessible to all departments. The Department has worked with HM Treasury and Number 10 to put in place a new account management system for the top fifty companies that it considers will have the greatest impact on the growth mission. While the forthcoming Industrial Strategy will be co-owned by the Department and HM Treasury, other departments will have responsibilities for particular sectors and policy interventions. This new approach, and the government's missions, will require even greater communication and join up between the Department and its partners across government. Recommendation 1. The Department should take steps to improve its approach to stakeholder engagement by:
The Department is not working effectively enough with other departments to support industry and achieve the greatest impact.The Department views the economy through the lens of 10 economic sectors and 41 sub-sectors. While the Department is responsible for supporting businesses in general, it is not itself responsible for all the relationships and policy interventions involving these sectors and must work with at least 10 other government departments. The Department's relationships with these bodies vary in maturity and there is no shared understanding of sector ownership, roles, or responsibilities. Prior to the announcement of the Industrial Strategy, the Department proposed formalising sector roles and responsibilities between departments by agreeing 'handshakes' which were akin to memorandums of understanding (MoU), but this approach was not widely adopted. Some cross-government structures have developed which aim to look at issues in an integrated way, such as the Office for Life Sciences, a skills forum, and the recent Growth Mission Board, and there is potential for this approach to be used more widely. The Department analyses and shares business intelligence across government, giving insight into senior engagement with businesses and sectoral issues, but its reporting could be improved. Recommendation 2. The Department should develop the way it works with other departments to support industry, looking to:
The Department lacks a comprehensive understanding of its support for industry, including how much it spends per sector and the types of support it offers. The Department supports industry through a range of interventions, which vary in form and scale. Some interventions support individual sectors while others are designed to improve the general business environment. The Department currently tracks its programme spending, grant expenditure, and spending by its Business Group (the part of the Department leading on support for industry). In 2023-24, it spent £790.9 million on business support grants and £530.3 million on business support programmes. While the Department can provide information on its individual items of support and their desired policy outcomes, it does not have a comprehensive understanding of its support. The Department found it difficult to readily provide the National Audit Office (NAO) with a breakdown of its industry support; does not routinely categorise the composition of it (for example, by industry sector or type); and has a limited understanding of what can be provided to sectors by other government departments. Maintaining good oversight of spending enables good decision-making, prioritisation, and accountability, and reduces the risk of inefficiencies in how public funds are used to stimulate economic growth. Without a good understanding of the profile of current spending, the Department cannot effectively adapt its approach to a new Industrial Strategy. Recommendation 3. The Department should consolidate its understanding of the support for industry it offers; take steps to improve its reporting, for example, by type, value and sector; and use this information to inform decision-making on future support. It is not clear how the Department balances multiple government objectives, such as growth and net zero, when making decisions about how to support industry. Government needs to consider a wide range of metrics when making investment decisions including employment, net zero, and economic growth. Pursuit of these metrics requires trade-offs, but how the Department assesses and balances these factors is not transparent. This can make it difficult for stakeholders to understand government priorities, the rationale behind support, and for the Department to evaluate the effectiveness of its portfolio of support. Steel, for example, provides critical inputs into other sectors such as construction, manufacturing, and defence. Despite this, government policies, such as those designed to support decarbonisation, can put UK steel companies at a competitive disadvantage. There are new forums which can consider these policy choices and trade-offs and inform ministerial decisions, including the Growth Mission Board and the Permanent Secretaries' Growth and Delivery Group. The Department acknowledges that decisions are made using a mix of data, facts and evidence, and judgement and that there is no easy formula for balancing competing objectives. Recommendation 4. The Department should provide greater transparency on the factors it considers when supporting industry, including how these factors are balanced when making decisions on what to support and how, and the processes underpinning these. There is a risk that the Department is not set up internally to support the aims of the forthcoming Industrial Strategy and to respond to ongoing issues facing UK businesses. The composition of sector teams in the Department's Business Group varies by size and grade distribution, and is not always related to the priority, size or needs of the sectors they are intended to support. The Department has said that a review of its structure is ongoing, to clarify responsibilities and to allocate resources to the top priority sectors. However, there does not seem to be an overarching approach which considers the needs of individual sectors while accounting for pan-sector issues such as skills, regulation, or geography. Using the forthcoming Industrial Strategy as a clear framework to direct and prioritise its activity is an important next step to address this. The Department must also be able to respond to urgent and emerging issues that businesses face. It needs to allocate and flex resources to meet the needs of important sectors such as steel, which is subject to fluctuating external challenges. Recommendation 5. The Department should critically review its internal structures and resourcing model to ensure they reflect the objectives and demands of the forthcoming Industrial Strategy. This could include, for example: its approach to individual sectors, including foundational sectors such as steel; pan-sector issues; geography; and how it will ensure it can respond effectively to emerging issues that affect UK businesses. It is essential that the government's forthcoming Industrial Strategy has clear measures of success and effective processes for monitoring and evaluation. The government's forthcoming Industrial Strategy is central to its economic growth mission. The Department is placing great emphasis on the Strategy and sees it as an opportunity to set a clear strategic direction for the UK economy over the next decade. The Department is less clear however on the practical implications of the Strategy and how it will change the nature of its support for industry, noting at the time we took evidence that it was in the middle of a spending review process. The Department acknowledges that its monitoring and evaluation has been inconsistent and, moving forward, wishes to embed evaluation from the start of its interventions. The Strategy provides the Department, HM Treasury and wider government an opportunity to address these shortcomings and set clear measures of success. While the government has yet to specify objectives for its Industrial Strategy, the Department's Permanent Secretary is clear that it would be a failure if, in two to three years, the UK's growth rate had not improved to at least the G7 average from 1.6% to 1.8%. Recommendation 6. The Department should update the Committee in six months on how it is adapting to the Industrial Strategy and the metrics it will use to measure success. |