- 9 July 2025
On Tuesday 8 July, the Post Office Horizon IT Inquiry (the “Inquiry”), an independent public statutory inquiry, published the first part of its final report (the “Report”), following 225 days of hearings which saw interviews with 298 witnesses. The Report, which runs to 162 pages, focusses on the human cost of the scandal and the issues surrounding the compensation process.
The Background
The Post Office Horizon scandal was one of the UK’s worst miscarriages of justice. Between 1999 and 2015, more than 900 Post Office sub-postmasters were convicted of fraud, theft or false accounting based on erroneous evidence from the Post Office’s accounting system which was called “Horizon”, and which was developed by Fujitsu. A further 50 to 60 people, possibly more, were prosecuted but acquitted. Many other sub-postmasters were dismissed or forced to make up financial shortfalls out of their own pockets.
Four compensation schemes were subsequently established to provide financial redress to all sub-postmasters who were affected by the scandal. Two of these are run by the Post Office and two by the Department for Business and Trade (DBT).
The Inquiry was established in non-statutory form on 29th September 2020 with Sir Wyn Williams, a retired high court judge, as Chair. On 1 June 2021 the Inquiry was strengthened with full statutory powers and extended Terms of Reference with the brief of exposing the truth of what happened, ensuring all wrongs are righted, and preventing the mistakes from happening again. The Inquiry originally planned to submit a report to the Government in Autumn 2022, a deadline which has been pushed back repeatedly.
What did we learn on Tuesday?
While the scandal has been formally linked to four suicides, Sir Wyn said the total could be more than 13, with some deaths going unreported.
Sir Wyn was highly critical of the way that the Government designed the compensation system. The Horizon Shortfall Scheme (HSS) came in for particular criticism. This was established in 2020 by the Post Office to provide redress to current and former postmasters who suffered past losses. Claimants can either opt for a £75k Fixed Sum Award or, they can reject this fixed offer and apply for a full assessment, which is undertaken by an Independent Advisory Panel.
The report stated that a ‘substantial body of evidence’ suggested that once a first offer of compensation was rejected by a claimant, the second offer was significantly higher, on occasion up to £100,000 more. Sir Wyn believed that the process was unnecessarily adversarial and complex with the result that claimants have come up against ‘formidable difficulties’.
Sir Wyn agreed with claimants that HSS creates a 'fear factor by forcing claimants to choose between accepting a fixed £75,000 offer or rejecting it and going to assessment by an advisory panel'.
He also said it was ‘indefensible’ that the government refuses to pay for claimants in the Horizon Shortfall Scheme to speak to a lawyer before deciding whether to accept a fixed offer of compensation.
An estimated 10,000 claims are currently working their way through the four schemes, with that number likely to rise. Incredibly, 314 claims dating from 2020 remain unresolved five years later.
If the first principle of governance is clarity of responsibilities, then the compensation process represents a governance failure. The Report reveals the chaotic state of the compensation process, which is a byzantine web of overlapping responsibilities. Several of the 19 recommendations of the Report should have been settled at the outset of the Inquiry. It is hard to read the recommendations and not conclude that the Inquiry has faced obstructive tactics from both the Post Office and the Government. Sir Wyn has exhibited considerable patience in his role as Inquiry Chair, perhaps too much.
As an example, the term “full and fair compensation” has become a matter of contention and Sir Wyn has asked the Government to formally define the term, as he believes that the compensation schemes are not currently operating by this principle. It is extraordinary that fundamental matters such as this can remain unresolved even at this late stage.
Who is paying?
The CEO of Fujitsu Europe, Paul Patterson, has acknowledged that Fujitsu has a "moral obligation" to contribute to compensation for the victims.
“We were involved from the very start. We did have bugs and errors in the system. And we did help the Post Office in their prosecutions of the sub-postmasters. For that we are truly sorry. To the sub-postmasters and their families, Fujitsu would like to apologise for our part in this appalling miscarriage of justice” Evidence to Business and Trade Committee on 16 January 2024
However, despite this candid admission before MPs, Fujitsu has not yet provided a penny in compensation.
As a consequence, the taxpayer has funded all compensation. The chancellor, Rachel Reeves, confirmed in her first budget last October that the Government had set aside £1.8bn to cover all compensation claims.
What happens next?
No date has yet been set for the publication of the second part of the final report, which will cover the technical issues with the Horizon IT system, the Post Office’s handling of the reported discrepancies, legal proceedings against post office operators, institutional culture and government oversight. It could be published as late as 2026.
The Inquiry is running in tandem with a criminal investigation by the Metropolitan Police (“Operation Olympos”) which began in May 2024. 100 detectives have been examining six million documents for potential offences of perjury, perverting the course of justice and fraud by employees of Fujitsu and the Post Office. Seven suspects have been identified to date, with more than 45 people classed as "persons of interest". Police will send evidence to the CPS for charging decisions once the Inquiry has concluded.
In any investigation there is a balance to be struck between thoroughness and speed. The Inquiry was certainly not designed for speed. We can only hope that it is thorough and that the waiting proves worthwhile.
To read the full report, click here.