Last Wednesday, Deirdre Connolly was expecting a letter from the Post Office.
For five years the former sub-postmaster has been fighting for compensation after being wrongly accused of stealing almost £17,000 from the branch she ran in Northern Ireland. It ruined her life, leaving her bankrupt, unemployed for a decade, shunned by her community and with mental health problems.
She was hoping to hear whether a claim for hundreds of thousands of pounds was being approved, but the deadline passed and the letter never arrived. Once more she has been abandoned by the Post Office.
And she is not alone. Thousands of sub-postmasters cleared of wrongdoing are stuck in a bureaucratic nightmare trying to win compensation after being victims of the flawed Horizon computer system.
In an interview last week, Henry Staunton, who was fired as Post Office chairman, claimed a senior Whitehall official told him to stall on compensation to sub-postmasters not long after he took up the role in December 2022. The government disputes this.
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However, evidence seen by The Sunday Times shows how the Post Office is still failing to believe claims for hardship, personal injury, harassment and mental health issues made by sub-postmasters.
Lawyers say many are unwittingly accepting low-ball compensation offers without legal aid. Some are being asked up to 100 additional questions when they make a claim and being told to provide documents dating back two decades.
Neil Hudgell of Hudgell Solicitors, who is representing about 500 Post Office victims, said that only about 50 cases had been resolved. Each claim involves several attempts because the offers made are below what they ought to be, and each step of the process can take weeks.
According to guidance, the Post Office is supposed to accept some claims even when they have not been proven. It states: “Where the postmaster is unable to satisfy the burden of proof in relation to their claim, their claim may nonetheless be accepted in whole or in part if the scheme considers it to be fair in all the circumstances.”
But, Hudgell claims, sub-postmasters are not being told what is “fair”, allowing the Post Office to wriggle out of payments. He says: “Where documentary evidence is not available, because everything happened so long ago, or where the Post Office retained the papers, the Post Office is meant to give people the benefit of the doubt, but we have regularly seen evidence where this is not the case.”
Hundreds of questions and lengthy forms
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There are three different compensation schemes for sub-postmasters.
The most high-profile is the one triggered by Alan Bates, the protagonist in the ITV drama about the scandal, Mr Bates vs the Post Office. He was among 555 sub-postmasters who won a landmark High Court case in 2019. They won nearly £58 million but after costs only received about £20,000 each. They have since been allowed to make additional claims under a Group Litigation Order (GLO) scheme, which so far has made 475 interim payments but only 26 final offers.
Then there is the Overturned Convictions Scheme intended for people who have had a criminal conviction quashed. Of 900 convictions, only about 100 have been overturned so far and only about 80 compensation offers have been paid. The remaining wrongfully convicted can make a claim only once their convictions are overturned, which is expected to happen by the end of July.
The largest compensation scheme is the Horizon Shortfall Scheme (HSS) for sub-postmasters who were not convicted or part of the group litigation. The Post Office has 170 people working on claims and 2,417 offers worth £110.5 million have so far been made.
The Post Office website says the HSS “has been designed to be simple and user-friendly to avoid the need to incur costs of legal representation”.
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That is not the experience of those using it. Initial paperwork for the scheme is 14 pages long with 32 separate questions, with sub-questions and six pages of footnotes with detail on how each section should be answered.
For any claim, sub-postmasters must supply bank statements, receipts, newspaper cuttings, business plans, expenses and other costs.
If they are claiming for hardship they must show evidence of how customers stopped supporting their post office, details of any harassment or reputational damage suffered or doctor’s notes to show the impact on their physical and mental health.
There is no legal help when the form is first filled out, but £1,200 is available after an initial offer is made.
Postmasters can then challenge the claim within 28 days, at which point they are asked to attend a confidential meeting with a Post Office official. A further offer is made, and they can again complain twice more before their claim is assessed by an independent barrister.
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Dan Neidle, the founder of Tax Policy Associates, has claimed the HSS is “rigged” against some claimants, with some receiving just £15.75, declaring it “a scandal on top of a scandal”. He said: “I was a senior partner in one of the largest law firms in the world, and I personally wouldn’t complete the form myself — specialist advice is essential.”
He estimates it would cost about £10,000 in legal fees to complete the form.
Neidle also points out that claims can be made for “damage to reputation”, but only where it causes financial loss — which is very difficult to prove, and which is not an established legal principle. He claims the Post Office created this to “minimise compensation claims”.
‘If you can’t prove it, they don’t pay you’
The problem for many sub-postmasters is trying to put a specific value on, and find documents for, events that happened as long as two decades ago. In Connolly’s case, which dates back to 2006, this meant proving financial losses after being forced to go onto benefits.
She had to show loss incurred for her husband Darius, who ran the shop attached to the Post Office, after he lost his job and had to become a delivery driver to keep paying their mortgage.
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They had to quantify the harm done by being shunned by their community and they had to show how they borrowed money from Connolly’s uncle and her father-in-law to pay the money claimed by the Post Office. She also built up huge credit card debts and remortgaged her home to pay the bills.
She said: “We didn’t know if we could afford to live in our house any more and it had a serious effect on my physical and mental health. Our whole world was turned upside down.”
Connolly, now 54, was made bankrupt in 2013 and was unemployed for a decade. She now works as an accountant for a dog food company.
She received the initial payout of about £13,500 under the GLO and then, when she complained again, an interim payment of about £22,000. She estimates that she is still owed many hundreds of thousands of pounds. It took four years of wrangling before she was able to make a final claim with all the details needed in December last year.
She supplied the Post Office with bank statements, old payslips, proof of loans and repayments, and credit card statements.
The claim includes a sum for loss of earnings for a decade, and also takes into account the impact of her bankruptcy, reputational damage and personal injury related to her mental health.
Even Bates has not yet received a satisfactory compensation deal, turning down last month what he called a “derisory” offer of “around a sixth” of what he had claimed.
The sub-postmistress Jo Hamilton, a central character in the ITV drama, was given a 12-month community order for false accounting and had to repay £36,000 supposedly missing from her Post Office. She remortgaged her home and borrowed money from her parents to pay the debt.
To prove she was owed compensation, Hamilton had to calculate lost interest and financial harm. She says she had to calculate small details such as the mileage driving from her house to the probation office and train fares. She had to calculate how her insurance increased because she had to use a specialist firm that catered for fraudsters.
She had initially received a low-ball first offer of more than £100,000, but received a final compensation payment a month ago after a 2½-year battle. Overall she has received “a little bit more than” £600,000. Even this was about 20 per cent less than what she claimed, but she and her husband David, 76, recovering from prostate cancer, decided to cut their losses.
Hamilton said: “You get to a point in your life where you run out of road and it’s so unfair. I would hate to think anything happens to either one of us and I’d fought for 20 years and we didn’t actually enjoy it. The Post Office say they want this, they want that, they want proof of this, proof of that. Fortunately I’d kept some of my stuff from the shop, some of my stuff I didn’t. And then they carve it up if you can’t prove it.”
Christopher Hodges, the chairman of the Horizon Compensation Advisory Board, said he was unaware that sub-postmasters were not being given the benefit of the doubt on claims and would raise it with the board.
The Post Office said: “Our sole aim is to get full and fair compensation to people as fast as we are able. The Horizon Shortfall Scheme is open to late applications and claims are assessed by an independent advisory panel before an offer is made. Almost £125 million in settlement offers have been made to claimants and late applicants to the Horizon Shortfall Scheme so far, with the majority agreed and paid.”
