Hundreds of Post Office branch managers who were wrongly convicted in the Horizon IT scandal could have their names cleared by the end of the year.
Blanket legislation to exonerate subpostmasters convicted in England and Wales will be introduced within weeks.
Rishi Sunak said they were victims of “one of the greatest miscarriages of justice in our nation’s history”.
Hundreds of subpostmasters were convicted of swindling money on the basis of evidence from the flawed Horizon accounting system, with MPs told the Post Office showed “not only incompetence but malevolence” in the way it acted against them.
The scale of the scandal has prompted the British government to adopt the unconventional approach of new legislation, rather than requiring individuals to challenge their convictions.
Ministers acknowledged the plan could result in some subpostmasters who did commit crimes being wrongly cleared, but insisted the process was the most effective way of dealing with the vast majority who were victims of a miscarriage of justice.
Downing Street said the “ambition” was for the plan to be implemented by the end of the year.
At British prime minister’s Questions on Wednesday, Mr Sunak said: “This is one of the greatest miscarriages of justice in our nation’s history.
“People who worked hard to serve their communities had their lives and their reputations destroyed through absolutely no fault of their own. The victims must get justice and compensation.”
Those whose convictions are quashed are eligible for a £600,000 compensation payment, or potentially more if they go through a process of having their claim individually assessed.
Mr Sunak also announced a £75,000 offer for subpostmasters involved in a group legal action against the Post Office – with ministers setting aside up to £1 billion for compensation.
Post Office minister Kevin Hollinrake told MPs that just 95 out of more than 900 convictions have been overturned.
The usual method for overturning a conviction would see the Criminal Cases Review Commission sending it to the Court of Appeal for a hearing.
But the unprecedented scale of the Horizon scandal means the British government is introducing the legislation route rather than relying on a potentially lengthy court process.
Justice Secretary Alex Chalk has been discussing the situation with senior judges because of the constitutional concern about Parliament being seen to interfere with the legal system.
The Horizon software started to be rolled out in Post Office branches across the UK in 1999 and over the subsequent years a series of subpostmasters were prosecuted over missing funds.
In 2019 the High Court ruled that Horizon contained a number of “bugs, errors and defects” and there was a “material risk” that shortfalls in Post Office branch accounts were caused by the system.
The long-running battle for justice accelerated dramatically after ITV broadcast the drama Mr Bates Vs The Post Office, which highlighted the scandal earlier this month.
Alan Bates, the campaigning former subpostmaster the series centred on, welcomed the “good news” but said the fight is not over for many of those still awaiting compensation.
“It is a leap forward, but it ain’t over yet,” he told BBC Radio 4’s The World At One programme.
“The devil is in the detail and we’re yet to see that. We’re still going to have to keep pushing the whole issue forward until everyone is sorted.”
Mr Hollinrake acknowledged the Government’s plan would result in some people who actually did commit crimes having their convictions quashed and being able to claim compensation.
But he insisted it is the best way to address swiftly the injustice suffered by those caught up in the Horizon scandal who have seen “lives ruined by this brutal and arbitrary exercise of power”.
“Some of those convictions will have relied on the evidence of the discredited Horizon system. Others will have been the result of appalling failures of the Post Office’s investigation and prosecution functions,” he said.
He said evidence from the public inquiry into the Post Office scandal showed “not only incompetence but malevolence in many of their actions”.
To the victims of the Horizon scandal. pic.twitter.com/jK9txzq9IU
— Rishi Sunak (@RishiSunak) January 10, 2024
Mr Hollinrake acknowledged the British government’s novel approach was not “foolproof”.
“I’m sure that a great many people were wrongly convicted in this scandal, but I cannot tell the House that all those prosecuted were indeed innocent, or even that it was 90% or 80% or 70%. Without retrying every case we cannot know.
“The risk is that instead of unjust convictions, we shall end up with unjust acquittals, and we just do not know how many.”
He added: “As far as possible, we want to avoid guilty people walking away with hundreds of thousands of pounds of public money. But we cannot make the provision of compensation subject to a detailed examination of guilt.”
As a safeguard, those involved will sign a statement saying they did not commit the crime of which they were accused, with anyone subsequently found to have signed that untruthfully putting themselves at risk of prosecution for fraud.
