A total of 50 postmasters found to have been wrongly convicted in the Post Office IT scandal have received “down payments” of £100,000 ahead of full compensation negotiations, the Government has said.

Hundreds of people were prosecuted for theft, fraud and false accounting because of the Horizon system, with 72 so far having their convictions quashed.

Business minister Paul Scully told the Commons that “interim payments” to the former Post Office workers are “progressing well”.

He added to MPs: “The Post Office has received 66 applications for interim payments. Of these, 62 offers have been made, and of those 50 have been acted and payments made.”

“Payments made to date have all been to the maximum amount of £100,000.

“I am pleased these interim payments have helped to deliver an early down payment on the compensation due to affected postmasters in advance of full and final compensation packages being agreed.”

Mr Scully described the interim payments as the “first step” ahead of further negotiations between the Post Office and former postmasters to recompense each of them individually, and a statutory inquiry into the scandal.

His announcement to MPs comes a day after the Government agreed to foot the bill for compensation payments because it is the sole shareholder in the Post Office and the company does not have the “necessary funds”.

For Labour, shadow business secretary Jonathan Reynolds welcomed the Government’s action to pay wrongfully convicted postmasters but said ministers are not doing it out of the “goodness of their heart”.

He asked Mr Scully if the 555 postmasters who defeated the Post Office in the High Court would be compensated alongside those who had criminal convictions quashed since their original case.

Mr Scully said the Government had written to 640 postmasters prosecuted who were believed to have the Horizon IT system as a “primary part” of their conviction.

He added: “In terms of the 555 who pioneered this work as well, I have said in my conversations with them and in correspondence that the settlement was full and final, but I recognise what they have done, I recognise that none of this would be possible without their work and I will continue to work with them to see what we can do.”

Following this, Labour backbencher Kevan Jones called out: “Pay them then.”

Mr Jones, MP for North Durham, later highlighted the case of a constituent who will only receive £20,000 despite losing more money as a result of the scandal.

Conservative former minister David Davis added: “We must not allow arbitrary Treasury rules to limit the compensation given to these postmasters, whose lives have often been completely ruined by this process – not a simple financial process, but emotional and social damage as well.”

Mr Scully replied: “Clearly the Treasury has to have these rules to make sure they’re getting the best value for money of taxpayers’ money, but nonetheless some things go beyond that.”

He recognised there is a “human cost” and said it is “really important we get this right”.