The home secretary, Sajid Javid, has announced that the government will pay up to £200m in compensation to people whose lives were damaged by the Home Office’s mistaken classification of thousands of long-term British residents as illegal immigrants.

The announcement comes almost a year after the government admitted that its treatment of the Windrush generation had been “appalling” and promised reform of its immigration system and compensation to those affected by hostile environment policies.

“Nothing we say or do will ever wipe away the hurt, the trauma, the loss that should never have been suffered by the men and women of the Windrush generation, but together we can begin to right the wrongs of Windrush,” Javid said.

The home secretary said there would be no cap on the fund, making it impossible to estimate how much money will eventually be paid to victims. Payments will not be restricted to people from the Caribbean but made to anyone who has been in the UK since 1988 who has been wrongly classified as being here illegally and as a result lost the right to work, access to healthcare and the ability to rent property.

The total number of those affected by the scandal remains unknown, but more than 5,000 people have been granted documentation by the Windrush taskforce in the past year, confirming that they have a legal right to live in the UK; 3,674 of them have been granted British citizenship.

Sylvester Marshall, 63 , who was told in November 2017 that he would face a £54,000 radiotherapy bill unless he could prove he was eligible for free treatment, said that the compensation would make a big difference to him. “I’ve still got debts I need to clear because of this,” he said. “The money should set me free so I can start over again.”

He was worried though that the amount of evidence required by the scheme would be as hard to provide as the evidence originally requested by the Home Office as proof of immigration status. “I don’t know how straightforward it will be.”

Q&A What is the Windrush deportation crisis? Show Hide Who are the Windrush generation? They are people who arrived in the UK after the second world war from Caribbean countries at the invitation of the British government. The first group arrived on the ship MV Empire Windrush in June 1948. What happened to them? An estimated 50,000 people faced the risk of deportation if they had never formalised their residency status and did not have the required documentation to prove it. Why now? It stems from a policy, set out by Theresa May when she was home secretary, to make the UK 'a really hostile environment for illegal immigrants'. It requires employers, NHS staff, private landlords and other bodies to demand evidence of people’s citizenship or immigration status. Why do they not have the correct paperwork and status? Some children, often travelling on their parents’ passports, were never formally naturalised and many moved to the UK before the countries in which they were born became independent, so they assumed they were British. In some cases, they did not apply for passports. The Home Office did not keep a record of people entering the country and granted leave to remain, which was conferred on anyone living continuously in the country since before 1 January 1973. What did the government try and do to resolve the problem? A Home Office team was set up to ensure Commonwealth-born long-term UK residents would no longer find themselves classified as being in the UK illegally. But a month after one minister promised the cases would be resolved within two weeks, many remained destitute. In November 2018 home secretary Sajid Javid revealed that at least 11 Britons who had been wrongly deported had died. In April 2019 the government agreed to pay up to £200m in compensation. Photograph: Douglas Miller/Hulton Archive

Javid said recipients would not be required to sign non-disclosure agreements and reassured those calling the new hotline for advice that the information disclosed would not be passed on to the immigration enforcement department. He paid tribute to the barrister Martin Forde QC, who has been working on developing the compensation programme since last May, and said Forde had made it a priority to ensure the scheme would be simple and easy to understand. The first payments could be made within a month, although complex applications were expected to take longer to process.

He said relatives of those people who had died before the Home Office’s mistakes were exposed would also be eligible to apply for compensation. The Home Office has admitted that of the 164 people who were wrongly detained or removed from the country at least 19 died before officials were able to contact them to apologise; another 27 had not been traced.

The Home Office said the scheme would provide payments to people who suffered difficulties because they did not have the right documentation to prove they were in the UK legally – experiencing, for instance, problems ranging from loss of employment, access to housing, education or NHS healthcare, to emotional distress or deterioration in mental and physical health.

Facebook Twitter Pinterest Anthony Bryan, who was misclassified as an illegal immigrant: ‘We can see some light at the end of the tunnel now.’ Photograph: Martin Godwin/The Guardian

There has been frustration from those affected in recent months that the compensation scheme has taken so long to be announced. In the meantime, only nine people have received payments from the government’s hardship fund, which was launched in December to provide emergency interim support to people who were in critical financial difficulties ahead of the compensation scheme.

Last June, Javid accepted that something had gone “massively wrong” within the Home Office and promised there would be reform to introduce a “fairer, more compassionate” immigration system, allowing staff greater freedom to use their common sense. However, many staff working at immigration charities say they have yet to discern a new culture within the Home Office, and have not observed evidence to suggest that employees are operating within a new, more sensitive regime.

Another of those affected by the case, Anthony Bryan, 61, was misclassified as an illegal immigrant, detained for five weeks and booked on a flight back to Jamaica, a country he left at the age of eight, and had not returned to in the intervening 52 years. Responding to the compensation announcement, he said he was relieved at the prospect of extracting himself from financial difficulties caused by the Home Office’s mistake and its effect on his ability to work.

“Things are still difficult,” he said. “I’m still feeling stressed by it all. Life is complicated when you haven’t got money to sort out your problems and I’m still paying back money I borrowed from friends. But we can see some light at the end now.”

Charities supporting those affected welcomed the scheme but voiced concern about how it will work in practice.

Daniel Ashwell, lead caseworker at the Refugee and Migrant Centre in Wolverhampton, which has supported dozens of Windrush victims, said those affected had been very worried by the long delay to the scheme’s launch and would need considerable support finding the evidence required to submit a claim. “It will be challenging for people to fill in the form; there is potential for them to be exploited by lawyers,” he said.

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Sally Daghlian, CEO of the migrant support charity Praxis, was also concerned about the onerous amount of documentary evidence required to demonstrate adverse effects. “Those affected by the Windrush scandal are required to present yet more evidence, paperwork and documentation in order to receive compensation for the losses, suffering and hardship they have endured,” she said.

Satbir Singh, CEO of the Joint Council for the Welfare of Immigrants, questioned whether the estimated £200m fund would be enough, and stressed that the government needed to act fast to reform the hostile environment policy which caused many of the Windrush problems. “These things did not just happen – they were knowingly done to people through Theresa May’s hostile environment policy, which has caught undocumented migrants, legal migrants and Britons of colour alike in its trap.”

The Labour MP David Lammy said: “We are now a step closer to justice for the Windrush generation. It is vital that this scheme is publicised, so all those eligible for compensation know how to access it.”