An inquiry into payments for Post Office workers affected by the Horizon IT scandal is urging the government to take action and change the law because “full and fair” compensation is being blocked.

In a report which has been laid before parliament, the chair of the inquiry into the scandal, Sir Wyn Williams, also criticised the make-up of the scheme set up to pay compensation to those affected.

He said: “What has emerged is a patchwork quilt of compensation schemes. And, unfortunately, it is a patchwork quilt with some holes in it.”

Were the scheme to be devised today, there would be just one, rather than three separate schemes, he said, but added “we are too far down the road” to contemplate abandoning them.

Sir Wyn also pointed to numerous commitments made by the Post Office and ministers over a three-year period to provide what it describes as “full and fair” compensation.

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Black Post Office workers who were falsely accused in the Horizon scandal were classified using a racial slur, according to documents obtained by campaigners.

He did not see any valid reason why the government and Post Office could not deliver on their commitments.

The interim report from the chair of the Post Office Horizon IT inquiry was released on Monday. It sets out recommendations on the three schemes established by the Post Office and the government to compensate sub-postmasters.

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Uncertainty about the tax status of scheme payments and timelines and cut offs points also came under scrutiny by Sir Wyn.

“There is still a lack of clarity as to the basis upon which tax is payable or not payable under the various schemes”, he said.

The time period for making payments to sub postmasters who sued the Post Office is August 7 2024, which Sir Wyn said “will not be achieved”. It would mean that 550 claims would have to be heard within 20 months.

Addressing the historical shortfall scheme Sir Wyn said, “I am left with the distinct impression that the most complex cases have not been addressed as speedily as might have been the case”.

An inquiry was launched after more than 700 former Post Office sub-postmasters were wrongly prosecuted for theft and false accounting over years in one of the most widespread miscarriages of justice in UK history.

More than 700 branch managers were prosecuted between 1999 and 2015 on theft, fraud and false accounting charges because of a computing error. Wrong sums for sales were given by Horizon IT, making it look like sub-postmasters had been stealing funds.

“Many hundreds of people suffered disastrous consequences by reason of the misuse of data from Horizon, and thousands more suffered very significantly,” Sir Wyn said.

Despite it being more than a year since Sir Wyn closed the “human impact evidence” portion of the inquiry, he said “the effect of the evidence upon me hasn’t changed”.

“It hasn’t lessened to a degree.”