UK Business Department Wants More Money from Budget for Post Office Victims

(Bloomberg) -- Officials in the UK’s business department are lobbying the Treasury to set aside more money to cover compensation for people caught up in the Post Office scandal, underscoring the demands on Chancellor of the Exchequer Rachel Reeves even as she seeks savings to shore up public finances.

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The request will be part of the department’s negotiations with the Treasury ahead of Reeve’s first budget on Oct. 30, according to a person familiar with the matter who spoke on condition of anonymity, amid fears that total payouts will exceed the £1 billion ($1.3 billion) currently committed.

The timing is awkward for Reeves, who has warned officials to brace for a painful budget after she said the Treasury had discovered a “£22 billion black hole” and blamed her Conservative predecessor Jeremy Hunt of allocating artificially low spending limits to departments. She has already cut a winter energy benefit for pensioners, while Prime Minister Keir Starmer said Thursday that the struggling National Health Service — which he has promised to rebuild — would get no extra money without accepting an overhaul of how it operates.

Still, any sense that victims of the Post Office scandal are not being fairly compensated would carry real political risk. More than 700 sub-postmasters were wrongly convicted of theft and fraud after the Post Office’s faulty Horizon IT system made it appear as though money was missing from their branches, in what is now considered to be the biggest miscarriage of justice in the UK.

Former Conservative Prime Minister Rishi Sunak’s administration was bounced into action when a TV drama watched by millions thrust a scandal that played out mostly in the background since the 1990s firmly into the public eye.

Sunak promised swift compensation, but his government acknowledged in March that redress payments might surpass the allocation of “around £1 billion” in Hunt’s March budget. Kevin Hollinrake, the minister who was then responsible for the Post Office, said payouts “may well exceed that, but that shouldn’t be something that stops people getting fair compensation.”

Since Labour’s victory in July’s general election, Gareth Thomas has taken over responsibility for the Post Office as Minister for Services, Small Business and Exports. A person familiar with the matter said Thomas was spending around 50% of his working time on matters related to the Post Office scandal.

A spokesperson for the Department for Business and Trade declined to comment on matters relating to the budget, but said the government had paid out “almost £290 million to over 2,800 people across four redress schemes.”

“We are committed to ensuring every postmaster receives full and fair redress as quickly as possible,” the spokesperson said in an emailed statement.

Business Secretary Jonathan Reynolds this week announced a new independent appeals process to allow sub-postmasters who already settled under one of the redress programs — the widely criticized Horizon Shortfall Scheme — to have their cases reassessed.

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