At least 20 people who were assaulted at Merkland Children's Home in Moffat, Dumfriesshire, will receive the payments from Dumfries and Galloway Council, which ran the residential centre.
Peter Harley, the officer in charge at the home from 1977 to 1982, was jailed for 15 years at the High Court in Glasgow in April 1996 for a catalogue of abuse against boys.
The decision was made at a meeting of Dumfries and Galloway Council meeting, at which it said it was not legally required to make any payment but it felt a "moral imperative to do the right thing".
Council leader Ivor Hyslop said in a statement: "Dumfries and Galloway Council deeply regrets the wrong done to the 20 children and young people who are known to have been abused while in the care of Dumfries and Galloway Regional Council at the former Merkland Children's Home in Moffat between 1977 and 1982 as a consequence of the serious criminal actions of the manager of the home at that time.
"The council therefore apologises unreservedly and publicly to those individuals and their families and gives its commitment to providing them with such assistance and support as is needed to find closure.
"That assistance and support includes individual financial payments of £20,000 as clear recognition of the harm that has been done.
"Nothing that the council can do will ever put right the wrong that has been done to those individuals but we hope that this public apology and clear recognition of the harm done will help them to find closure and move on with their lives."
The report by the director of social work, considered at the meeting today, identified 20 people "who disclosed abuse" which led to charges against Harley.
The council agreed to publicly apologise to the victims for the abuse they suffered, followed up with individual written apologies to each individual and ex-gratia (not legally obliged) payments of £20,000.
A further sum of £400,000 will be set aside by the council for the possibility of other abuse victims coming forward.
Harley, who later moved to Cardiff, admitted 17 indecency charges against boys aged six to 16, between 1977 and 1982. He was 50 when he was jailed for 15 years.
Merkland Children’s Home closed in 1982.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article