Justice Secretary Alex Chalk, left, announced the change after the practice was highlighted by wrongfully convicted Andrew Malkinson (Picture: PA)

A man who was wrongly convicted of a crime will not have his compensation reduced by the amount he ‘saved’ on living costs by being in prison, after a controversial rule was scrapped.

A House of Lords ruling from 2007 meant the money given to innocent people who served time in prison, which can reach up to £1 million, was subject to deductions for savings on things like rent or mortgage payments.

There was widespread outrage over the rule after it was highlighted by Andrew Malkinson, one of the UK’s longest-serving victims of a miscarriage of justice.

Mr Malkinson, 57, had his conviction overturned at the end of last month after spending 17 years in prison for a rape he did not commit.

Originally sentenced to a seven-year sentence, he served much longer due to his refusal to admit to the crime, and was released in 2020.

He said it was ‘sickening, abhorrent, repugnant’ that his compensation would be reduced due to the perceived saving.

When asked about the practice last month, a spokesperson for the prime minister said: ‘In principle, for someone who has been wrongfully convicted, it doesn’t seem fair that they would have to repay or reimburse costs.’

Justice Secretary Alex Chalk has now confirmed the rule will be scrapped.

Alex Chalk said the scrapping of the rule was a ‘commonsense change’ (Picture: PA)

He said: ‘It is not right that victims of devastating miscarriages of justice can have deductions made for saved living expenses.

‘This commonsense change will ensure victims do not face paying twice for crimes they did not commit.’

Mr Malkinson welcomed the announcement, but said it was the ‘first of many changes we need in our justice system to protect the innocent’.

He has demanded wider reform, raising concerns about the police’s handling of evidence and the ability of juries to convict on a 10-2 majority.

Andrew Malkinson has called for a number of changes to the justice system (Picture: PA)

Sir Bob Neill, the Tory MP who chairs the Commons Justice Committee, suggested the government could go further and pay back the people who were previously affected by the ruling.

He said: ‘I wonder if the government could consider ex-gratia payments on a case-by-case basis to make up for that if people can demonstrate they fulfil all the criteria.’

The Ministry of Justice said independent assessors had not chosen to make such deductions in the last ten years.

Emily Bolton, the director of the Appeal charity and Mr Malkinson’s solicitor, said: ‘Andy has succeeded in getting this insulting compensation rule scrapped.

‘But too many wrongly convicted people are denied compensation altogether because of a restrictive test which flies in the face of the presumption of innocence.

“The state robbed Andy of the best years of his life. Changing this one rule is not an adequate response.

‘We need a complete overhaul of the appeals system, which took two decades to acknowledge this obvious miscarriage of justice.’

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The rule was highlighted by wrongfully convicted Andrew Malkinson last month.