The Government is to compensate hundreds subpostmasters who helped expose the Horizon IT scandal but lost out after seeing their compensation payments swallowed up in legal fees.

Chancellor Rishi Sunak said ministers will be setting out details of the scheme in the coming months to ensure the subpostmasters receive the same level of recompense as others wrongly accused of financial crimes due to the faulty software.

The group of 555 subpostmasters brought the case which resulted in a landmark High Court ruling in 2019, paving the way for millions of pounds in future payouts and which led to the Court of Appeal quashing a series of wrongful criminal convictions.

But, because of a “no win, no fee” agreement with their legal funders, Therium, they received only a fraction of the £43 million they were awarded – about £20,000 each.

Rishi Sunak
Chancellor Rishi Sunak said the group will be compensated ‘fully and fairly’ (Peter Byrne/PA)

At the same time, they found they were ineligible to apply to the Historical Shortfall Scheme (HSS) which was set up to by the Post Office to compensate those who had to personally cover shortfalls in their branch’s accounts due to the problems with Horizon.

The Treasury said the new scheme would ensure the 555 would see the the same level of compensation as those who claimed through the HSS.

In a statement, Mr Sunak said: “The Horizon IT dispute has had a devastating impact on postmasters and their families, with many losing their livelihoods or being wrongly convicted for crimes they didn’t commit.

“Without the efforts of these postmasters, this terrible injustice may have never been uncovered so it is only right that they are compensated fully and fairly.

“That is why we have set up this new compensation scheme for those who played a crucial role bringing this scandal to light, which I hope provides a measure of comfort.”

Business minister Paul Scully, responding to an urgent question in the Commons, said: “As well as apologies and accountability, people want proper compensation to be paid.”

He added: “Following extensive negotiations with the company, I’m really pleased that Therium have agreed to waive their rights to any claim on this compensation, meaning that we can now proceed.”

Labour former minister Kevan Jones, on costs, said: “We’ve got to get this right now, it is a step forward, I accept that, but it will not go away minister, he knows that.

“Can he just tell the Treasury that, no matter how much it’s going to cost – because this is going to cost quite a lot of money – I don’t know whether yet he’s actually established how much? Has he got an open cheque book now from the Treasury, because he might need it.”

Mr Scully replied: “I’d love say I’ve got a blank cheque from the Treasury but that’s clearly not going to happen from this place.”

MPs pressed the Government to protect taxpayers’ cash and ensure that Fujitsu, which installed and maintained the Horizon IT system, contributes.

Mr Scully said: “We will push as much as we can and every avenue to tackle compensation from wherever it comes from.

“It shouldn’t be the UK taxpayer that’s picking up the tab for other people’s problems.”