Departments wrongly estimated the level of claims government-backed compensation schemes would receive and the speed at which applications could be processed, fuelling payment backlogs, the National Audit Office has said.
A report from the public-spending watchdog reached the conclusion after looking at seven recent compensation schemes that are expected to pay out almost £15bn to people harmed by the actions of public bodies. The Cabinet Office’s Infected Blood Compensation Scheme alone is expected to pay out £12.8bn. So far just £3.5bn has been paid out across the seven schemes.
In addition to the Infected Blood Compensation Scheme, the NAO looked at the Home Office’s Windrush Compensation Scheme, the Ministry of Defence’s LGBT Financial Recognition Scheme and four different schemes to compensate victims of the Post Office Horizon Scandal that are overseen by the Department for Business and Trade.
In the case of DBT’s Horizon Shortfall Scheme and the MoD’s LGBT Financial Recognition Scheme, more people claimed than had been anticipated.
However the opposite was the case for the Windrush Compensation Scheme. It first opened to claims in April 2019, with the expectation of a two-year window. Far fewer people than anticipated submitted claims and the scheme is now open-ended.
The Horizon Group Litigation Order Scheme underestimated the time it would take to retrieve loss information for claimants, resulting in longer than expected processing times. Its claim window is also open-ended now.
As of January this year, the NAO said fully assessed claims to the Horizon Group Litigation Order Scheme were taking an average of 147 working days to conclude, from the point at which all required information had been received. Fixed-sum claims, meanwhile, were taking 24 working days.
Despite initially attracting fewer applications than expected, the Windrush Compensation Scheme had built up a backlog of 2,257 in-progress claims by March 2023. According to the NAO, as of 2020 the average time taken to conclude eligible claims was 14 months, however by 2025 eligible claims were being concluded within five months, on average.
The NAO acknowledged that a number of government compensation schemes have made progress in handling claims and processing pay-outs to claimants – and that all schemes now offer interim payments or fixed sums, which help to settle some claims more quickly.
Nevertheless, it said there is still more to do to identify all those eligible and minimise delays.
The NAO said “substantial variation” remains in the time it takes to conclude claims, both between different schemes and within the same one. Some claimants can wait over a year after they apply before receiving an offer of compensation.
The NAO said those responsible for administering compensation schemes should accept “some risk of overpaying claimants”, or making payments to ineligible people, when deciding payment frameworks, evidential requirements and the window for claims.
NAO head Gareth Davies said those who have experienced harm should be able to expect a straightforward process for claiming compensation – and no unreasonable delays in processing.
“There is clear evidence that more recent compensation schemes have learned from the experience of earlier schemes, helping reach more affected people and speed up payments to those eligible,” he said.
Sir Geoffrey Clifton-Brown, chair of parliament’s Public Accounts Committee, said the magnitude of anticipated payouts reflected the “terrible harms and injustices” victims have endured, stretching back decades in some cases.
“Government has historically underestimated the complexity of these schemes, meaning that people are waiting too long to receive payments,” he said. “Government is trying to apply the lessons from previous experience, but there remains work to be done to ensure that all those eligible receive the compensation they are owed.”