The government has announced it will significantly increase the interim payment given to Post Office workers who have their convictions overturned, from £163,000 to £450,000.
More than 900 sub-postmasters and sub-postmistresses were prosecuted between 1999 and 2015, after faulty accounting software called Horizon, made by Fujitsu, made it seem like money was missing from their branch accounts.
Some went to prison, others were bankrupt, and lost their livelihoods and their reputations. The Horizon scandal has been called one of the biggest miscarriages of justice in British history.
So far, 101 people have had their convictions quashed, but earlier this year the government announced it would exonerate all those who were unfairly prosecuted.
Speaking in the House of Commons on Monday, business minister Kevin Hollinrake said that that legislation will be brought forward “as soon as possible, next month.”
He told MPs: “My statement set out that the new legislation will quash all convictions which are identified as being in scope, using clear and objective criteria on the face of the Bill.
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“Convictions will be quashed at the point of commencement without the need for people to apply to have their convictions overturned,” he said.
The interim payment relates to the Overturned Convictions Scheme, one of three schemes running to compensate victims of the Horizon scandal.
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2:09
Post Office ‘bound to oppose’ appeals
When they submit their claim, the former Post Office workers become eligible for an interim payment – now upped to £450,000.
They can then either accept a settlement of £600,000, or if they feel they are owed more, they can enter negotiations to have their compensation considered on an “individual basis”.
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3:18
Did the government delay Post Office compensation?
Mr Hollinrake added that those who are part of another scheme, the Group Litigation Order Scheme, would receive an offer of £75,000.
The Post Office committed to providing offers for fully submitted claims within 40 working days in 90% of cases.
However, if they don’t accept that and enter arbitration, the postmasters will get 80% of the initial offer “to make sure they don’t experience hardship while discussions are completed,” Mr Hollinrake said.
The government and the Post Office have been accused of dragging their feet on compensation, something that MPs questioned the business minister about in the chamber.
“I agree that the compensation has been given too slowly,” said Mr Hollinrake, “and that is something that we are seeking to accelerate every single day and we are doing good work, I think, with the advisory board in terms of trying to make sure that’s the case.
“I don’t think set offers are too low, I’m not saying there aren’t cases where that is not the case, certainly in terms of some of the cases in any compensation scheme will not be 100% perfect.”
The business secretary will next week hold talks with dozens of private sector bosses as the government contends with a significant corporate backlash to Labour’s first fiscal event in nearly 15 years.
Sky News has learnt that executives have been invited to join a conference call on Monday with Jonathan Reynolds, in what will represent his first meaningful engagement with employers since Wednesday’s budget statement.
Rachel Reeves, the chancellor, unsettled financial markets with plans for billions of pounds in extra borrowing, and unnerved business leaders by saying she would raise an additional £25bn annually by hiking their national insurance contributions.
An increase in employer NICs had been trailed by officials in advance of the budget, but the lowering of the threshold to just £5,000 has triggered forecasts of a wave of redundancies and even insolvencies across labour-intensive industries.
Sectors such as retail and hospitality, which employ substantial numbers of part-time workers, have been particularly vocal in their condemnation of the move.
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On Friday, the Financial Times published comments made by the chief executive of Barclays in which he defended Ms Reeves.
“I think they’ve done an admirable job of balancing spending, borrowing and taxation in order to drive the fundamental objective of growth,” CS Venkatakrishnan said.
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His was a rare voice among prominent business figures in backing the chancellor, however, with many questioning whether the government had a meaningful plan to grow the economy.
Mr Reynolds held a similar call with business leaders within days of general election victory, and over 100 bosses are understood to have been invited to Monday’s discussion.
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A spokesman for the Department for Business and Trade declined to comment ahead of Monday’s call.
The cost of government borrowing has jumped, while UK stocks and the pound are up, as markets digest the news of billions in borrowing and tax rises announced in the budget.
While there was no panic, there had been concern about the scale of borrowing and changes to Chancellor Rachel Reeves’s fiscal rules.
At the market open on Friday, the interest rate on government borrowing stood at 4.476% on its 10-year bonds – the benchmark for state borrowing costs.
It’s down from the high of yesterday afternoon – 4.525% – but a solid upward tick.
The pound also rose to buy $1.29 or €1.1873 after yesterday experiencing the biggest two-day fall in trade-weighted sterling in 18 months.
On the stock market front, the benchmark index, the Financial Times Stock Exchange (FTSE) 100 list of most valuable companies was up 0.36%.
The larger and more UK-focused FTSE 250 also went up by 0.1%.
While there was a definite reaction to the budget, uniquely impacting UK borrowing costs, the response is far smaller than after the UK mini-budget.
Many forces are affecting markets with the upcoming US election on a knife edge and interest rate decisions in both the UK and the US coming on Thursday.
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What you need to know is this. The budget has not gone down well in financial markets. Indeed, it’s gone down about as badly as any budget in recent years, save for Liz Truss’s mini-budget.
The pound is weaker. Government bond yields (essentially, the interest rate the exchequer pays on its debt) have gone up.
That’s precisely the opposite market reaction to the one chancellors like to see after they commend their fiscal statements to the house.
In hindsight, perhaps we shouldn’t be surprised.
After all, the new government just committed itself to considerably more borrowing than its predecessors – about £140bn more borrowing in the coming years. And that money has to be borrowed from someone – namely, financial markets.
But those financial markets are now reassessing how keen they are to lend to the UK.
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The upshot is that the pound has fallen quite sharply (the biggest two-day fall in trade-weighted sterling in 18 months) and gilt yields – the interest rate paid by the government – have risen quite sharply.
This was all beginning to crystallise shortly after the budget speech, with yields beginning to rise and the pound beginning to weaken, the moment investors and economists got their hands on the budget documentation.
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0:33
Chancellor challenged over gilt yield spike
But the falls in the pound and the rises in the bond yields accelerated today.
This is not, to be absolutely clear, the kind of response any chancellor wants to see after a budget – let alone their first budget in office.
Indeed, I can’t remember another budget which saw as hostile a market response as this one in many years – save for one.
That exception is, of course, the Liz Truss/Kwasi Kwarteng mini-budget of 2022. And here is where you’ll find the silver lining for Keir Starmer and Rachel Reeves.
The rises in gilt yields and falls in sterling in recent hours and days are still far shy of what took place in the run up and aftermath of the mini-budget. This does not yet feel like a crisis moment for UK markets.
But nor is it anything like good news for the government. In fact, it’s pretty awful. Because higher borrowing rates for UK debt mean it (well, us) will end up paying considerably more to service our debt in the coming years.
And that debt is about to balloon dramatically because of the plans laid down by the chancellor this week.
And this is where things get particularly sticky for Ms Reeves.
In that budget documentation, the Office for Budget Responsibility said the chancellor could afford to see those gilt yields rise by about 1.3 percentage points, but then when they exceeded this level, the so-called “headroom” she had against her fiscal rules would evaporate.
In other words, she’d break those rules – which, recall, are considerably less strict than the ones she inherited from Jeremy Hunt.
Which raises the question: where are those gilt yields right now? How close are they to the danger zone where the chancellor ends up breaking her rules?
Short answer: worryingly close. Because, right now, the yield on five-year government debt (which is the maturity the OBR focuses on most) is more than halfway towards that danger zone – only 56 basis points away from hitting the point where debt interest costs eat up any leeway the chancellor has to avoid breaking her rules.
Now, we are not in crisis territory yet. Nor can every move in currencies and bonds be attributed to this budget.
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Markets are volatile right now. There’s lots going on: a US election next week and a Bank of England decision on interest rates next week.
The chancellor could get lucky. Gilt yields could settle in the coming days. But, right now, the UK, with its high level of public and private debt, with its new government which has just pledged to borrow many billions more in the coming years, is being closely scrutinised by the “bond vigilantes”.