The government has agreed that the taxpayer will foot the substantial compensation bill for former Post Office workers who were wrongly convicted of theft due to the defective Horizon IT system.

The Post Office has said it cannot afford the multimillion-pound cleanup bill for the scandal and on Tuesday the government, which is the service’s only shareholder, confirmed its intention to step in.

So far, 72 post office operators’ convictions have been quashed. Several other cases are in train, and there are potentially hundreds more operators whose convictions relied on Horizon evidence who may seek to clear their names.

In a written ministerial statement, the postal affairs minister, Paul Scully, said he wanted those with quashed convictions to be compensated “fairly and swiftly”.

The vast majority of these people had received interim payments of up to £100,000 while they waited for the next step, Scully said. The government was now making cash available so final compensation awards could be made, he said.

“We are working with the Post Office to finalise the arrangements that will enable the final settlement negotiations to begin as soon as possible,” he said. The money would enable the Post Office to deliver the “fair compensation postmasters deserve”.

Between 2000 and 2014, the Post Office prosecuted 736 post office operators based on information from a recently installed computer system called Horizon. Some of the convicted workers were jailed following convictions for false accounting and theft, and many were financially ruined.

However, it was the software, which contained bugs, errors and defects, that had caused the problems, according to the high court judgment that quashed many of the convictions.

The government made the announcement just before a business, energy and industrial strategy committee hearing on the matter got under way.

Darren Jones, the committee’s chairman, said it was “wholly unacceptable” for the minister’s statement to be published at such short notice. He also said that “more questions need answering” as to whether the 555 people who paid false shortfalls but were not convicted will receive payments.

At the hearing, post office operators told MPs they had suffered big financial losses. Paul Harry, who was accused of false accounting, said he had recouped about a fifth of the funds he lost after shortfalls appeared in the Horizon accounting system.

Alan Bates, another former operator and founder of the Justice for Subpostmasters Alliance, said operators had paid in the region of £8.5m to the Post Office to cover supposed shortfalls.

“That’s before anything else, like the loss of their businesses and all the rest of it, including the financial difficulties they’ve been left in,” said Bates.

The group received a near £57m settlement in 2019 but £46m went towards the cost of legal action. That left £11m which averaged about £20,000 per person, he said.

Bates suggested it would take payments of £700,000 to put them back in the position they started had the Post Office not done what they did.

Harry, who has received an interim compensation payment, is hoping for further payments. “I have received a small amount of just over £20,000, but my losses are in excess of £100,000, so I am nowhere near getting my money.”