The Post Office computer flaw that meant hundreds of postmasters were wrongly convicted of crimes they did not commit could cost the taxpayer £233 million as the Government sets aside funds for payouts.

The Government has disclosed in its accounts that it is setting aside the money for compensation for those accused of theft and false accounting in 1999 and 2000.

Many have already applied for compensation of up to £100,000 while they are waiting for a bigger sum to be finalised.

Dozens of Post Office workers were imprisoned after the computer system they were using at the time (named Horizon) glitched and employees were blamed for shortfalls.

Hundreds more were convicted and forced to pay back amounts they did not steal, in what is known to be one of the greatest miscarriages of justice in British history. 

It is this group that the £233 million fund is being used to reimbursed.

On Thursday, the government also announced that another scheme will compensate individuals wrongly convicted with up to £100,000 each.

Karen Wilson, widow of postmaster Julian Wilson, who died in 2016, holds up a photograph of her husband outside the court, after his conviction was overturned by the Court of Appeal

Credit: Yui Mok/PA

The Government (which is the Post Office’s sole shareholder) is being forced to inject the money after the Post Office announced that it could not afford to continue to compensate the victims without help.

Alan Bates, chair of the Justice for Subpostmasters Alliance, told the Guardian: “They can’t afford to pay any of this, which is why the Government has been forced to bail them out.

“It is constantly being subsidised by the taxpayer.”

In December 2019, Bates was one of 555 claimants who won £57.5 million in a settlement against the Post Office. However, most of that sum went on legal costs. The case cost the Post Office more than £20 million in fees.

The claimants are now awaiting the terms of a statutory inquiry, and they are also bringing a complaint of maladministration against the business department with the Parliamentary and Health Service Ombudsman.

Suffering and distress recognised

Paul Scully, the business minister, told the House of Commons on Thursday: “The suffering and distress these postmasters and their families have gone through cannot be overstated.

“While nothing will make up for the years of pain they faced after this appalling injustice, I hope this initial step provides a measure of comfort.

“The Post Office has started to turn a corner in terms of dealing with its past mistakes – and the Government will support them in doing so wherever possible.”

A Government spokesperson said: “The Horizon dispute and court case has been a terrible ordeal for many postmasters and their families who were unfairly penalised.

“The government will provide sufficient financial support to Post Office to ensure that the historical shortfall scheme can proceed, based on current expectations of the likely cost.

“We want to see that all postmasters whose convictions have been overturned are fairly compensated as quickly as possible, and will work with Post Office towards this goal.”

Post Office seeks fair resolution

A Post Office spokesperson said: “We are committed to fairly resolving claims in the historical shortfall scheme, with assessment by an independent panel.

“Post Office has made a provision of £153 million in its annual accounts in respect of expected payments from the scheme. We will continue to transparently provide information in our published accounts.”

Thirty-nine subpostmasters who were wrongly prosecuted had their criminal convictions quashed in April this year.