Horizon compensation scheme audit compromised by inaccurate data, watchdog says

Inadequate data from the UK Government has held back an audit of the Post Office Horizon compensation schemes, a spending watchdog has warned.

A lack of data and a breach in spending limits relating to the Post Office Horizon compensation schemes has forced the National Audit Office (NAO) to issue a qualifying statement on the Department for Business and Trade (DBT)’s 2023-24 financial statements.

The NAO said the limited information provided means the DBT’s estimates on the take-up of two Horizon compensation schemes are likely to be “significantly” inaccurate.

One such scheme is the Horizon Shortfall Scheme (HSS), which supports those affected but not convicted of a crime due to failings of the Horizon IT system. It offered either a fixed sum of £75,000 or a full assessment by an independent advisory panel.

The Post Office - which the government is the sole shareholder of - is calling postmasters to apply for the scheme if they wish to but haven’t yet done so, as there will be a closing date. The Post Office told DBT it estimates a response rate of between 25 to 30 per cent and that the majority of new claimants will accept the fixed sum offer.

However, the NAO said that due to the “limited amount of available data on which to base this estimate" the final figure could "vary significantly.”

DBT is also responsible for delivering the Horizon Conviction Redress Scheme (HCRS), which compensates those who had their convictions overturned.

It offers successful claimants £600,000 and another route for those sub-postmasters who believed they are owed more.

Officials assumed take-up would be similar to those who had their convictions overturned by the court and are being compensated through the Overturned Conviction (OC) scheme - a prior programme that gave financial redress to those whose convictions were reversed due to the faulty Horizon IT system.

It also estimated that the average settlement value for those choosing not to accept the HCRS fixed sum award would be “significantly lower” than its equivalent estimate for OC claimants.

However, given the HCRS scheme was launched six months ago, the NAO says there is not enough data on which to base such estimates.

As a result of the scarce evidence supporting DBT’s assumptions regarding both schemes, NAO head Gareth Davies has had to limit the scope of his audit opinion into the department’s financial statements.

The watchdog also found the DBT had breached its spending limit by more than £200m in anticipation of settling its HSS obligations, which NAO called "irregular", saying a breach of this nature “normally undermines parliamentary control over public spending”.

This comes after two calls from the business and trade committee for the Post Office to be stripped of its role to oversee the Horizon compensation schemes to prevent further delays in justice.

Holyrood  has contacted the DBT and the Post office for comment