The Post Office needs to be “taken out” of its role in administering redress schemes for victims of the Horizon scandal, Labour MP Liam Byrne has said, as the “legal bill appears to be racking up all the time” on compensation.
The Commons Business and Trade Committee said compensation for victims is still not being paid quickly enough and the Government should face financial penalties if the process does not speed up.
In a report published on Wednesday, one year to the day since the ITV drama Mr Bates Vs The Post Office brought the scandal to widespread public attention, the Committee said although there had been improvements, redress schemes were still “poorly designed” and payment was still “not fast enough”.
Just £499 million of the budgeted £1.8 billion has been paid out so far, while 14% of those who had applied to the Horizon Shortfall Scheme (HSS) before the original 2020 deadline had still not settled their claims.
Meanwhile, the committee criticised the fees being paid to the lawyers administering the redress schemes.
Committee chairman Mr Byrne said: “The fault lies with the Post Office but ultimately Government is the shareholder in the Post Office and acts on our behalf.
“And so the first thing that needs to happen is we need clear, regular monthly statements from the Post Office about how much they’re actually spending on lawyers, because it’s incredibly difficult for us to extract the information, and Parliament, frankly, has got the right to know, and so does the public.
“And I think creating some of that transparency would also just create an incentive for the Post Office to actually get a grip.
“But then what you need from ministers is really clear instructions to use best endeavours to get the cases settled quickly, because if the lawyers don’t have a budget that they’re having to work with, then it’s obviously in their interest to string the cases out and that would appear to us to be what’s going on.”
So far, legal firm Herbert Smith Freehills has received £82 million in fees for work on the HSS and overturned convictions schemes, the Post Office told the committee in December.
It said that legal fees have made up £136 million of the cost of administering the Post Office-led schemes since 2020 – 27% of the actual compensation paid out.
Mr Byrne added: “The legal bill appears to be racking up all the time, so the whole thing is just, frankly, out of control.
“And when you’ve got so much being paid to lawyers and so little being paid to victims, then there’s only one conclusion you can draw, which is that the system isn’t working and it needs to change.”
In Wednesday’s report, the committee repeated its call for the Post Office to be removed from its role in the redress schemes, something the company has previously said it would have no objection to.
The previous government also rejected that recommendation, saying designing a new scheme would “take months and cost millions which should instead be spent on redress for postmasters”.
But Post Office minister Gareth Thomas indicated earlier in December that the new Government was considering taking over responsibility for the schemes from the company.
Mr Byrne said: “What the Post Office says to us is that they’re trying to ensure that people get what they’re entitled to, but the bottom line is that people are now dying before they get justice, the process is that slow.
“So we just think the Post Office has lost its grip on this, but we just don’t think the Post Office is therefore the right organisation to be running any of these schemes. So that’s why we say the Post Office has got to be taken out of the system altogether.”
He added: “We just think that there remains a problem with culture at the Post Office. We’ve heard evidence on our committee before that there is still a culture of disbelief about subpostmasters that persists in various bits of the Post Office hierarchy.
“We’ve uncovered the fact that investigators who prosecuted innocent victims of the Horizon scandal are still working for the Post Office.
“So that just does not inspire us with trust that the Post Office is the right organisation to be running these schemes.”
Mr Byrne’s committee also called for sub-postmasters to receive free legal advice on submitting their claims, which involves filling in a “complex questionnaire” that “acts against them receiving the full redress they are due”.
The committee has previously called for the Government to introduce legally binding timeframes, with financial penalties paid to victims if those targets are not met.
But the previous government rejected that suggestion in May, saying it would have “no positive effect” on speeding up claims and “might unjustly penalise solicitors for issues out of their control”.
The new Government also set aside £1.8 billion at the Budget in October to fully fund the redress schemes, but has so far declined to set a deadline for settling the claims.
Mr Byrne added: “We can’t go on like this. Justice delayed is justice denied. So today, we’re setting out a practical, common sense plan to reboot the redress system.”
A Government spokesman said: “Since entering government, we have worked tirelessly to speed up the process of providing the victims of the Horizon scandal with full and fair redress, including by launching the Horizon Convictions Redress Scheme earlier this year.
“We are settling claims at a faster rate than ever before, with the amount of redress paid doubling since July, with almost £500 million being paid to over 3,300 claimants as of the end of November. We will respond to the Committee’s report in due course.”
Herbert Smith Freehills said it was confident its legal fees are at the expected level for such work.
The law firm said: “As a firm, we have immense sympathy for the postmasters affected by the Horizon IT system, and what they and their families have endured.
“Herbert Smith Freehills’ work has been complex and wide-ranging, involving hundreds of our staff over several years.
“We are confident that our fee levels are in line with norms for highly complex matters such as this.”
A Post Office spokesperson said: “Working alongside Government, we are focused on paying redress as swiftly as possible.
“The Government’s introduction of fixed-sum options without the need for postmasters to submit formal claims has helped greatly in accelerating settlements.
“Our spend with external law firms is kept under constant review, with a significant portion having been spent on establishing the Horizon Shortfall Scheme and overturned convictions redress process, thus enabling us to pay redress to victims of the scandal.
“Our chair said at the public inquiry in October that redress schemes administered by us should be transferred to the Government and we will support the Department for Business and Trade on any decisions they may take regarding this matter.”
