The £1bn Disaster

I recently got a call from a parliamentary friend – not an MP, but someone who works with MPs. He pointed me in the direction of a website I had never come across before. It lists grants made by the government’s Department for Business, Energy and Industrial Strategy (BEIS – which “owns” the Post Office) .

The thinking behind the Subsidy Transparency Database is written up here. The entry I was being alerted to was here. It states the following:

Subsidy scheme namePost Office Historical Matters Compensation
PurposeRescue aid
Legal basisS103 Postal Services Act 2000
Subsidy typeDirect Grant

A direct grant in rescue aid to the Post Office, you say? How interesting.

What the web page doesn’t state is the amount handed over. To find that, you have to go here, and search for it. You need to search the specific company name – “Post Office Limited” (don’t shorten “Limited” to “Ltd” or you won’t get anywhere), and tick “Select all” on the next three pages. When it asks if you are looking for subsidies within a specific date, select “No” and then, finally, you get this:

Yes, that is correct. On 20 December last year, BEIS quietly awarded the Post Office £685,600,000 in “Rescue Aid” to help compensate Subpostmasters.

Mystifyingly, this gigantic sum was not mentioned on 15 Dec 2021 on the floor of the House of Commons when BEIS minister Paul Scully announced the grant, saying:

“The Government have been working with the Post Office to agree funding to facilitate the Post Office making final compensation payments to postmasters. As I announced in a written ministerial statement to the House yesterday, the Government have now agreed to provide funding for that purpose. We are working with the Post Office to enable the final settlement negotiations to begin as soon as possible.”

Something you want to tell us, lads?

It is also mystifying that neither Scully, nor the two senior civil servants who sat either side of him (Carl Cresswell and Tom Cooper) at the BEIS Select Committe hearing on Tuesday 11 Jan 2022 elected to mention this £685m compensation grant to MPs, when compensation was exactly what the committee was there to discuss.

Fool me thrice

If you follow the search criteria as outlined above, you will see this is a trick BEIS has pulled before. The next entry on the results page is another Direct Grant in “Rescue Aid” to the Post Office, this time for a mere £94,400,000. This is the sum quietly allocated to the Post Office back in July 2021 when the government announced the Interim Compensation Scheme, offering £100,000 to each Subpostmaster whose conviction had been quashed. Again, at the time, no mention of the size of the grant was made in parliament or any press release, and the figure passed all of us by.

The third entry – a cool £233m – is the sum agreed to cover the Historical Shortfall Scheme. The total value of claims to the scheme had exceeded £300m by July last year, but on 11 January this year, Tom Cooper told MPs he thought the total cost of the scheme would not be much more than £153m, though whether he was talking just about the total compensation or overall cost of the scheme was not clear.

Whatever the final cost of the Historical Shortfall scheme, the Post Office Horizon IT disaster is now a fully-fledged £1bn scandal.

During the select committee hearing on 11 Jan, Post Office CEO Nick Read told MPs the Post Office had already spent “in excess” of £300m fighting, litigating and belatedly compensating Subpostmasters – this sum includes the £100m+ spent on the disastrous High Court litigation, which ended with 555 claimants being given a relatively paltry £57.75m in compensation (£46m of which went on legal and litigation funder success fees).

If you disregard the sum allocated to the Historical Shortfall Scheme, but add Mr Read’s £300m+ to the £94.4m and £685.6m handed over in July and December you have a cool £1.08bn+ chalked towards the Horizon scandal, and that’s before you go down the route of providing proper compensation to the 555 civil litigation claimants – something Mr Scully has said is “by far and away the most pressing issue in my list of responsibilities as a minister.”

Rose to our attention

My thanks are due to my parliamentary mole, who was surprised by the size of the grant and astounded that neither the minister nor his civil servants saw fit to mention it to the BEIS select committee on 11 Jan.

My source said that he in turn is grateful to a public sector advisory lawyer by the name of Alexander Rose (see below), who brought the Subsidy Transparency Database to the attention of those us interested in this scandal in a tweet to Darren Jones MP.

Thank you, Mr Rose.

Addendum: since publishing this blog post, BEIS have been in touch to say the sums described above have been “set aside for potential use”, not spent, and that much of the final total “will be dependent on the number of convictions quashed by the courts,” adding “final compensation amounts will be based on individual circumstances.”

BEIS also tell me that the estimated £153m cost of the Historical Shortfall Scheme just covers the actual compensation, not its overall cost.

Notes: the initial version of this blog post only contained information about the two “Rescue Aid” direct grants made by the government to the Post Office last year. An eagle-eyed secret emailer spotted the “Employment” [?!] grant of £233m, allocated towards the Historical Shortfall Scheme. I am grateful. If you’d like to receive the secret email newsletters, please see below.

Addendum 2: Karl Flinders has been in touch to point out he broke this story in the pages of Compuer Weekly well before this blog post was published, something he does with stunning regularity. Happy to give credit where due. Go read his brilliant piece.

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