Post Office value written down to zero following Horizon scandal

THE Government has written down the value of the Post Office to zero after the state-owned chain was hit by the postmasters scandal.

In its annual report, the Department for Business said the value of its holding in Post Office Ltd had plummeted from £145m to “nil” in the year to March 31.

It follows a court ruling that found hundreds of postmasters had been wrongly prosecuted for theft and false accounting when a faulty computer system was to blame.

As a result the Post Office had to put aside £233m to compensate victims, forcing the 361-year-old institution to seek a cash injection from the Government to stay afloat.

Without this bailout, the chain’s future would have been called into question, separate accounts show.

The Department for Business annual report states that it agreed in July to make £94m available to the Post Office for compensation to postmasters.

But it said of its shares in the firm: “The fair value of the investments as at 31 March 2021 was nil.”

The Post Office, which has about 11,500 branches across the UK, is owned by the Government but run by the Post Office Ltd board.

Since it was spun off from Royal Mail in 2012, the firm has operated as a commercial entity providing banking, postal, travel and other services.

A sharp decline in the number of letters being sent has eroded its business, while the firm has been obliged to keep loss-making branches open to comply with its statutory duties.

Although the chain had revenues of £951m, it sunk to a £305m loss in 2019/20 due to costs related to the Horizon scandal. Between 1999 and 2015, hundreds of innocent postmasters were sacked, bankrupted and even jailed in what is now regarded as one of Britain’s biggest miscarriages of justice.

They were blamed when money went missing from branch accounts, even though it later emerged that it was caused by faults in the Horizon computer system developed by Fujitsu.

Despite knowing the software was potentially faulty, the Post Office covered up evidence of bugs and aggressively prosecuted postmasters for theft and fraud, demanding repayments for the “missing” cash. However, a High Court ruling overturned the wrongful convictions, with Mr Justice Fraser accusing Post Office bosses of “bare assertions and denials” despite a mountain of contrary evidence.

The ruling left the Post Office open to a deluge of compensation claims, with the firm initially estimating it would face £153m in liabilities.it later emerged the Government was setting aside £233m. Victims who had their convictions overturned were offered up to £100,000 each, even before final settlements are reached.

An independent inquiry into the scandal is ongoing.