A recommendation that a new body be appointed to handle financial claims by victims of the Post Office scandal, has been rejected by the government.

A report by the Business and Trade Committee of MPs in March had called for an independent intermediary to handle every stage of the sub-postmasters’ claims amid anger over red tape and delays to payments.

It had described the current redress process as an “abject failure” and demanded too that the Post Office was removed from involvement in the three main compensation schemes altogether.

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But in its response to the report, the Department for Business and Trade (DBT) said: “Setting up a new body to replace these arrangements would take months and cost millions which should instead be spent on redress for postmasters.”

DBT, while pointing out that decisions in redress cases were already independent of the Post Office, also argued that removing the company from the process entirely would only add to delays.

Hundreds of sub-postmasters were wrongly convicted of stealing after bugs and errors in the Horizon accounting system, operated by Fujitsu, made it appear as though money was missing at their branches.

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There were more than 700 convictions in total, dating back from 1995 to 2015.

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Victims not only faced prison but financial ruin. Others were ostracised by their communities, while some took their own lives.

Fresh attention was brought to the scandal after ITV broadcast the drama Mr Bates Vs The Post Office, prompting government action that aimed to speed up the clearing of names and payments of compensation.

In the government’s reply to the committee’s report, business minister Kevin Hollinrake said: “As of 24 April 2024, approximately £196m has been paid to over 2,800 claimants across the 3 Post Office Horizon schemes.”

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The document also ruled out the prospect of financial penalties for a failure to meet a legally binding timeframe in the redress process.

The response said: “Claimants already receive compensation for the time taken to deal with claims, in that interest is paid on most aspects of claims in accordance with standard legal principles: the amount payable therefore increases over time.”

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It added: “The threat of penalties might unjustly penalise solicitors for issues out of their control.”

The update on the compensation process was delivered as the statutory public inquiry into the Horizon IT scandal heard from a key barrister for the Post Office.

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Former senior counsel at Cartwright King Solicitors, Simon Clarke, told the hearing that senior Post Office staff had defended the Horizon system “out of an almost religious panic”.

He claimed he was “misled and deceived” by the Post Office in respect of information not being disclosed to him for a review and in the high profile case of Seema Misra.

The former West Byfleet sub-postmistress was suspended in 2008 and later jailed, while pregnant, for 15 months in 2010 – a conviction that was overturned by the Court of Appeal in 2021.

In answer to a question from inquiry chair Sir Wyn Williams on whether he was misled on a wider basis, Mr Clarke responded: “Yes, the Post Office repeated their protestations that since day dot, there was nothing wrong with Horizon, when they clearly knew there were issues with Horizon.”

He said of his role: “I was not a prosecuting barrister for the Post Office. I was never a prosecuting barrister for the Post Office. I was instructed to prosecute one case, the case of Samra. That case got to trial on 1st July and I stopped it, and I then stopped every other case from being prosecuted thereafter.

“So I was not a prosecuting barrister, I was the barrister who stopped the prosecutions.”

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