Source · Select Committees · Public Accounts Committee
Recommendation 6
6
The Post Office’s mismanagement of its Horizon programme has had devastating consequences for individuals wrongly...
Conclusion
The Post Office’s mismanagement of its Horizon programme has had devastating consequences for individuals wrongly accused of fraud. The financial cost of compensating these individuals will largely fall to the public purse. The Horizon accounting system erroneously recorded shortfalls of cash in local Post Office branches over its more than 20-year lifetime. The Post Office considered some of these shortfalls to be caused by subpostmasters and subpostmistresses, resulting in those staff being dismissed and the Post Office taking action to attempt to recover the ‘losses’ and in some cases leading to prosecutions and people being wrongly convicted. The Department estimates that the ‘Historical Shortfall Scheme’, set up by the Post Office to compensate those who may have experienced and repaid shortfalls (for example from their own funds), is likely to cost £153 million, of which it has set aside £65 million. The Secretary of State for the Department is the sole shareholder of the Post Office, and the Department will provide sufficient financial support to Post Office to cover the scheme. The government has also committed to paying compensation for overturned criminal convictions and estimates that this may cost the taxpayer up to £780 million. The government has also committed to covering the cost of this compensation. Recommendation: The Department should write to the Committee alongside its Treasury Minute response to set out what actions are being taken to ensure Post Office Ltd remains a viable company. Where the Department (or HM Government) provides assurances to Post Office Ltd over the funding of its liabilities, it should inform the Committee at the earliest opportunity. 8 Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21 1 COVID-19 business support schemes
Government Response
Not Addressed
HM Government
Not Addressed
6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 Over the past decade, the government has provided over £2.5 billion in funding to support the Post Office network. The government is providing a further £335 million for the Post Office over the next three years. The government is confident that with this funding, Post Office remains a viable company and can continue to meet the core requirements for the network, including maintaining a network of at least 11,500 branches and ensuring that 99% of the UK population lives within three miles of their nearest branch. 6.3 Post Office Ltd published its annual report and accounts for 2020–21 in May 2022, which, while highlighting a number of risks and uncertainties, was prepared on a going concern basis. Post Office’s independent auditors concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements was appropriate. 6.4 The Horizon scandal has had a devastating impact on postmasters and their families. It is right that affected postmasters are properly compensated and, without government funding, the compensation would have been unaffordable to Post Office. To form part of the going concern assessment for Post Office’s financial statements, BEIS issued letters of comfort to assist the Post Office Board in maintaining its view that the company continues to be able to meet its liabilities. The government will share letters with the Committee from BEIS to Post Office, providing assurances for the Historical Shortfall Scheme, interim and full payments for those with overturned criminal convictions. Further letters will be shared with the Committee at the earliest opportunity.