The Following the Horizon IT scandal, the Government has reduced the value of the Post Office (and its 11,500 branches) to zero.
If the Treasury had not provided financial assistance, the company would have been forced to pay thousands of compensations for innocent postmasters who were falsely accused of taking after the new Horizon software scrambled its accounts.
The bill for legal fees and compensation is already expected to hit £265million – and some legal experts say this will rise.
Postmasters falsely charged with stealing Horizon software-scrambled accounts would have forced the Post Office to close its doors. After their convictions were reversed, former workers celebrate at the Royal Courts of Justice in London.
The Post Office’s annual accounts revealed it finished 2020 with net liabilities of £57million.
This took account of the estimated £153million bill for its compensation programme for at least 2,000 postmasters. It also over-spent on investment by £77million.
The firm was worth £256million two years ago when a High Court judge ruled that dozens of computer glitches could be responsible for money appearing to go missing from branch accounts.
Last year this had fallen to £145million.
Recent years have seen the Post Office return to profit with ordinary trading (including selling stamps) and other banking services.
Post Office’s accounts revealed it finished 2020 with net liabilities of £57million. This took account of the estimated £153million bill for its compensation programme (stock image)
However, bosses have been criticised for reducing the salaries paid to postmasters who manage branches independently as a way to increase profits.
Because of its improved performance, the Post Office had less dependence on a subsidy from government to fund 3,000 rural offices that are financially insolvent.
According to the Department for Business, Energy and Industrial Strategy, “The Department’s value is calculated using net assets of the Post Office.”
“Post Office Limited has reported negative net assets and the department has decreased its valuation in order to reflect that fact.
The Post Office refused to comment.