Spending watchdog issues qualified opinion on Department for Business and Trade accounts

• Limited data means DBT cannot fully evidence its assumptions on take-up of Post Office Horizon compensation schemes.
• It also breached its departmental spending limit by £208 million as it prepares to settle its obligations for such schemes.
• The head of the NAO has consequently qualified his opinion on DBT's financial statements for 2023-24.

A lack of data and a breach in spending limits relating to Post Office Horizon compensation schemes have led Gareth Davies, the head of the National Audit Office (NAO), to issue a qualified opinion on the Department for Business and Trade (DBT)'s 2023-24 financial statements.¹

DBT is responsible for supporting business to create jobs, opportunities and prosperity across the country. The Business Secretary is the sole shareholder in Post Office Limited, which has launched a number of schemes to compensate current and former postmasters affected by the failings of the Horizon IT system at the Post Office and the associated miscarriages of justice.²

One such scheme is the Horizon Shortfall Scheme (HSS), which is intended to support those who experienced financial discrepancies related to previous versions of the Horizon IT system. Individuals who qualify for HSS can choose to either accept a fixed sum of £75,000 or opt for full assessment by an independent advisory panel.³

The Post Office is inviting current and former postmasters to apply to HSS if they wish to but haven't yet done so, as there will be a closing date for the scheme. It has advised DBT that it anticipates a response rate of approximately 25-30% and that the majority of new claimants will accept the fixed sum offer.

However, due to the limited amount of available data on which to base this estimate, the eventual outcome could vary significantly.

DBT is also responsible for delivering the Horizon Conviction Redress Scheme (HCRS) intended to compensate individuals who had their convictions overturned.⁴ Because this scheme is in its early stages, there is limited data upon which to base an estimate of future settlement values. DBT has assumed:

• that the proportion of applicants who choose to accept the fixed sum offer (rather than submit a full claim for detailed assessment) will be similar to the take-up rate for those who had their convictions overturned by the court and are being compensated through the Overturned Conviction (OC) scheme;⁵ and
• that the average settlement value for those choosing not to accept the HCRS fixed sum award will be significantly lower than its equivalent estimate for OC claimants.

In light of the limited evidence backing up DBT's assumptions regarding both HSS and HCRS, the head of the NAO has limited the scope of his audit opinion.⁶

DBT also breached its authorised departmental spending limit by £208 million in anticipation of settling its HSS obligations. Such a breach normally undermines parliamentary control over public spending. The NAO considers any breach of authorised spending limits to be irregular, resulting in a qualified opinion. In this instance, the amount needed to settle the department's obligations did not become clear until after the supplementary estimates were submitted.

Read the full report

Department for Business and Trade Annual Report and Accounts 2023-24

Notes for editors

1. The DBT annual report and accounts 2023-24 can be accessed here: https://www.gov.uk/government/publications/department-for-business-and-trade-annual-report-and-accounts-for-2023-to-2024
2. The government introduced legislation to automatically overturn Horizon-related convictions on 13 March 2024.
3. Those who had previously settled their claims for less than the fixed sum would have their redress topped up to £75,000.
4. By the Post Office (Horizon System) Offences Bill and equivalent Scottish legislation.
5. Compensation for Overturned Convictions serves those who had been wrongly convicted of fraud, theft and false accounting, later overturned by the court.
6. The head of the NAO anticipates that as time elapses and applicants progress through the multi-stage claim process, submitting detailed claims were relevant, he should not need to limit the scope of his opinion on DBT's HCRS provision estimates.