How do the Post Office scandal compensation schemes work?

The Labour government has announced a new independent appeals process system aimed at helping some sub-postmasters affected by the Horizon IT scandal.

It means those who were not convicted but handed over their own money to make up shortfalls caused by the Post Office's Horizon accounting system can appeal if they feel their financial settlement did not reflect the true extent of their losses and trauma.

It is another step in the long-running Post Office scandal. Under the previous Conservative government, a new law was passed to overturn the convictions of more than 900 people.

More than 4,000 people in total have been told they are eligible for compensation. But the schemes they need to access in order to receive remuneration for their suffering can be long-winded and complicated.

We've broken down how they work.

What are the main compensation schemes?

There isn't a single compensation scheme for sub-postmasters to apply to, and individual eligibility will depend on the particular circumstances of an individual's case.

The four main schemes are aimed at groups of victims who had different experiences of the scandal. They are explained in more detail in the following sections.

Which scheme is available to Alan Bates and others depicted in the ITV drama?

Alan Bates led a group of 555 sub-postmasters in a landmark court case against the Post Office, which came to wider public attention after it was depicted in an ITV drama.

While the cohort secured a £42.5m settlement in 2019, the huge costs of going to the High Court meant each claimant received a relatively low compensation pay-out at the end of it.

The Group Litigation Order (GLO) scheme was set up to ensure they received extra money to reflect the gravity of their situations. The scheme is funded and managed by the government.

As of January, people eligible for this scheme "will receive at least £75,000 in compensation upfront".

The government estimates around two thirds will turn that offer down and push for more. In those cases, the government will award postmasters 80% of the initial offer made to them.

As of 30 August, £87m has been paid under the scheme, including interim payments. On 9 September, Labour said it will set a target of making an offer to 90% of sub-postmasters who have submitted a full claim within 40 days.

Of the 555 members of the GLO group, 63 had criminal convictions and therefore are not eligible for this scheme but they are eligible for other compensation - depending on how their convictions are overturned.

If they are quashed by the court, they can apply to the Overturned Convictions Scheme. If they are overturned under legislation - the Post Office (Horizon System) Offences Act 2024 which became law in May - they can go to the newer Horizon Convictions Redress Scheme.

ITV's drama Alan Bates vs The Post Office has introduced millions to the long-running scandal

What compensation is there for people with overturned convictions?

There have been 983 convictions - 700 of which were privately initiated by the Post Office - linked to the faulty Horizon IT programme.

People whose convictions are quashed can apply to the Overturned Convictions Scheme, whether or not they are in the GLO group.

A total of 111 people have had their convictions overturned as of 31 August 2024. But when the government's promised law to overturn all convictions linked to the scandal becomes a reality, hundreds more people will be eligible.

As of 30 August, £56m has been paid out to 57 claims.

Those whose convictions are overturned can choose to take a fast-tracked £600,000 settlement. Or they can enter into negotiations if they feel they are entitled to more.

All eligible people are entitled to an "interim" payment while their final settlements are processed. The government has provided funding to the Post Office for these payments.

For those people whose conviction is overturned through the new law, they can register for the Horizon Convictions Redress Scheme.

This will entitle them to an initial £200,000 interim payment. They can then decide to accept £600,000 or have their case fully reviewed.

More on the Post Office scandal

• Why were hundreds of Post Office workers prosecuted?

• PM backs calls to knight Post Office campaigner

• Post Office paid Fujitsu £95m to extend Horizon

• Can scheme to quash Post Office convictions work?

What about sub-postmasters who weren't convicted?

The Post Office scandal goes far beyond the original GLO court case and the people who wound up with criminal convictions.

Fearing prosecution, some sub-postmasters poured their own savings into their businesses to make up losses that were incorrectly calculated by the computer programme. This is where the new independent appeals process system comes into play.

The Horizon Shortfall Scheme is intended for those sub-postmasters who weren't convicted or part of the GLO court action. It is administered by the Post Office but the independent appeals process will be overseen by the Department for Business.

It has received more than 2,400 eligible claims so far, according to data from the Department for Business and Trade. Around £144m has been paid to 2,069 of these claims as of the end of August.

How many people are eligible for compensation overall?

The number of people eligible for one of the three main schemes stands at over 4,000 - and the government has said new potential victims are still coming forward.

It is unclear how many of them will end up receiving payments, and the processes - which have been criticised by campaigners for being too slow - can sometimes take several years.

What about people who died before receiving compensation?

On 10 January, the then Post Office Minister Kevin Hollinrake told the Commons the families of the 60 people who died before receiving any compensation would be able to apply for it in their place.

How much compensation has been paid out so far?

As of 30 August 2024, approximately £289m has been paid to over 2,800 claimants across the four schemes, according to government data - which includes interim payments for people whose full case has not been settled. That total breaks down as:

• Horizon Shortfall Scheme - £144m

• Group Litigation Order Scheme - £87m

• Overturned Convictions Scheme - £56m

• Horizon Convictions Redress Scheme - £1m

The amount an individual sub-postmaster receives can vary greatly depending on the circumstances of their case.

Prof Chris Hodges, chair of the the independent Horizon Compensation Advisory Board, told the BBC compensation payments that have been made so far range from £10,000 to "well over £1m".

The government has not provided an estimate for how much compensation will be paid out in total, but it will inevitably run into the hundreds of millions on top of what has already been paid.