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Post Office Update

Volume 812: debated on Monday 24 May 2021


The following Statement was made in the House of Commons on Wednesday 19 May.

“With permission, Madam Deputy Speaker, I would like to update the House on changes to the Post Office Horizon IT inquiry. Over a 20-year period the Post Office Horizon computerised accounting system recorded shortfalls in cash that were allegedly caused by sub-postmasters, leading to dismissals, recovery of losses and, in some instances, criminal prosecutions. I know that Members across the House are aware of the terrible impact that this has had on affected postmasters and their families. The life-altering implications of these accounting errors cannot be overstated.

The Post Office Horizon IT inquiry, led by Sir Wyn Williams, was launched in September 2020 as a major step towards righting the wrongs of the past. The inquiry was established on a non-statutory basis to enable the chair to work quickly to establish a clear account of the implementation and failings of the Horizon computer system over its lifetime.

On 27 April I made an Oral Statement to the House following the decision by the Court of Appeal on 23 April to quash the convictions of 39 postmasters who had been convicted for Horizon-related shortfalls. As I said then, the Government recognise the gravity of the court’s judgment and the scale of the miscarriage of justice that it makes clear.

Sir Wyn and I are both of the view that the context for the inquiry has changed in the light of the judgment by the Court of Appeal and that now is the right moment to convert the inquiry to a statutory footing. Therefore I can now inform the House that, with the agreement of the Prime Minister, I will convert the inquiry to a statutory footing on 1 June 2021. I have also agreed that Sir Wyn will now have more time to undertake his work. The inquiry is now expected to report in autumn 2022 rather than summer 2021.

Together, these changes will give Sir Wyn the powers and the time that he needs to conduct an in-depth analysis of the decision-making processes that led to the Horizon scandal. He will be able to compel organisations to provide documents and witnesses to give evidence, under oath if necessary. It is now for Sir Wyn to consider his next steps, and I expect that he will provide more information on his proposed approach soon. In the short term the inquiry will complete its planned engagements through May, but public hearings that had been expected to take place in June will be delayed.

I have always said that the inquiry should proceed quickly to get the answers that postmasters and their families are seeking. Sir Wyn has gathered a lot of evidence from key parties and engaged with many affected postmasters; I have therefore asked that he provide a progress update to his original timeline of summer 2021, to make public the progress to date and any initial findings. I hope that still more affected postmasters will choose to engage with Sir Wyn as he continues his work on a statutory footing.

The inquiry’s overarching aims—to ensure that the right lessons have been learned and to establish what must change—will remain. However, there will be some changes to the terms of reference in the light of the Court of Appeal judgment. I have today notified the House of the updated terms of reference in a Written Ministerial Statement.

I thank Sir Wyn for his quick progress on the inquiry to date and for taking the time with me in recent weeks to consider the next steps for it. I am pleased to confirm that he has agreed to remain as chair of the inquiry for the next phase.

Finally, I note that converting the inquiry to a statutory footing and proceeding over a longer period will of course have cost implications, but I assure colleagues across the House that they are being fully considered with my colleagues in HM Treasury.

The Horizon saga has wrecked lives and livelihoods. We cannot undo the damage that has been done, but we can establish what went wrong at the Post Office and ensure that nothing like it is ever allowed to happen again. The events surrounding the dispute have long been shrouded in darkness, and this Government are determined to bring them into the light. The landmark Court of Appeal judgment changed the context for the inquiry. Following it, the Government did not hesitate to act to give the inquiry more teeth and equip Sir Wyn with more powers. To affected postmasters and their families, my message is that we are listening and we will get to the bottom of this appalling affair. I commend this Statement to the House.”

My Lords, no one who knows this story can feel other than shame that a government-owned institution, the Post Office, oversaw—nay, facilitated—the biggest miscarriage of justice that we have seen, with nearly 1,000 false prosecutions as well as bankruptcies, prison and unemployment all flowing from the actions of Fujitsu and the Post Office, and indeed from the lack of action from the Post Office’s shareholder, the Government.

The Minister knows we are delighted that the inquiry will now be statutory—though somewhat bemused that it has taken a month for the Government to reach that conclusion—and that a progress report will be made public, but there remain other concerns. First, while we agree with the Statement that

“We cannot undo the damage”,

we can move faster and with generosity on the question of compensation. Perhaps the Minister can explain why the inquiry will not cover compensation, and assure us that speed will be of the essence in beginning to help those so badly affected by this sorry saga. Can he update the House on the appointment of a new Post Office director to handle compensation and ensure that this will not replicate the disgraceful Windrush scheme?

Secondly, there is the major issue of the lack of accountability of those who were deeply implicated in the lies and lack of openness that led to the prosecutions and the delay in dealing with the results. Michael Keegan was Fujitsu’s chief executive when the company was telling the Post Office that Horizon was fine and when its staff were even appearing in court as prosecution witnesses against the sub-postmasters. He does not appear to have suffered any penalty and indeed is now a Crown representative at the Cabinet Office, where he oversees the Government’s relationships with suppliers. Given that Fujitsu continues to work with the Post Office, a £42 million extension to the Horizon contract having been agreed with the Post Office last month, can the Minister assure the House that Mr Keegan would have had no role in any such decision?

We continue to worry about the role that Fujitsu played in covering up concerns about Horizon and in facilitating the blame-shifting to sub-postmasters and their subsequent prosecutions, actions for which the company appears not to have paid a penny in compensation. What discussions are taking place in that regard?

The Post Office, which now wants taxpayers to take on its liabilities over this issue, has still not explained why no one questioned how it was that a vast cohort of upright citizens—people selected and trusted to run sub-post offices and handle public money—all at the same moment became petty thieves, as if a dishonesty virus had suddenly taken hold. Did nobody notice? The management incompetence at the highest level, as senior directors watched unlikely criminals paraded in court, still beggars belief.

I turn to the Government, the Post Office’s only shareholder, which somehow failed to spot what journalists, the noble Lord, Lord Arbuthnot, and finally the court did: that the Post Office was abusing its power over postmasters, failing to question Fujitsu and prosecuting a swathe of unlikely thieves. Will the Minister acknowledge the Government’s failure of oversight and due diligence, with drastic consequences both for individuals and for taxpayers?

We welcome the fact that the inquiry will now be statutory, but my plea to the Minister is: will he ensure that in parallel to the inquiry the Government themselves take a close look at how they oversee not just the Post Office but all expenditure, personnel and IT decisions to ensure that there is sufficient curiosity, challenge, openness and honesty, so that taxpayers’ money and people’s lives are never again put at the risk of a saga like this one?

My Lords, let us remind ourselves of the human scale of this outrage. Starting more than 20 years ago, the Post Office prosecuted nearly 1,000 sub- postmasters and sub-postmistresses based on incorrect information from a recently installed computer system. Some went to prison following convictions for false accounting and theft, many were financially ruined, and some have since died with the shame of this still hanging over them and their families.

As we know, a subset of those people were acquitted and, as we discussed around a month ago, the Government have asked Sir Wyn Williams to inquire into this episode. We are of course pleased that the lid is beginning to be lifted on some of these issues. Speaking on 28 April about suggestions that the inquiry was underpowered, the Minister was very clear:

“Given that all parties so far are committed to co-operating, we remain of the view that a non-statutory inquiry is the right approach.”

He added:

“However, if Sir Wyn does not get the co-operation he requires, then all options are on the table and we will not hesitate to act.”—[Official Report, 28/4/21; col. 2324.]

Today we are discussing a new Statement that says the context of the inquiry has changed, hence the move to a statutory basis, but it cites the successful appeal as that context. That is strange as the results of that appeal were available on 28 April. So what has actually changed? What has caused the department to change its mind? For example, has the co-operation of which the Minister spoke evaporated? If so, who is now no longer co-operating?

I do not think the noble Baroness, Lady Hayter, or I are surprised that this change has had to happen. Like her, we welcome it as a small step in the right direction, but I point out that on an already tight schedule this has not helped. On 28 April the Minister said he expected the report in the summer, and in your Lordships’ House the Minister was adamant that this deadline could be met. Now the inquiry report is delayed. What will take the extra time? What has caused that delay? Will the new deadline of the autumn be met?

As the Statement suggested, the terms of reference for Sir Wyn have been amended. As we do not have the benefit of tracked changes, can the Minister please outline for the record and for your Lordships the principal changes in those terms of reference? If we look overall at the terms of reference, the overriding problem is there for all of us to see: six clauses, each set out with very passive language. “Assess”, “understand” and “acknowledge” are all good words, I will admit, but they are not an indicator that this inquiry has any way to identify culprits. They are not the words of a robust bringing to book. Even if he wanted to, Sir Wyn will not be able to go beyond those terms of reference as there is no wriggle room. If this is the only inquiry, I fear it is not going to be a satisfactory one.

For example, section B of the terms of reference uses the words

“to establish a clear account of…the implementation and failings of Horizon”

and the Post Office’s use of that information—the latter are my words, not those of the ToR. Given that this inquiry is essentially a fact-finding mission, what will the Government do with the facts when they get them? Further, it seems to be focused largely on the failure of the Horizon system and not that of Post Office management—and, as we know, this case was compounded by what appears to have been an intentional decision by the Post Office not to disclose material that undermined its case. So where in the terms of reference will this issue be tested and judged?

As in other cases, there are two levels of failure here. The first was an excess of trust in the system and technology; the second was the failure to deal with the consequences of this when the facts became apparent to some people within that organisation. This inquiry is set up to learn lessons from history but not to deal with the legacy of this past. With these terms of reference, I do not see how this inquiry will establish culpability from these facts, and how it will be the means to deliver resolution to the sub-postmasters and sub-postmistresses and their families over whom this case hangs. I do not see it as a route to compensating these people. So, while it is a step forward, I can understand why former sub-postmasters are demanding a judge-led inquiry into this scandal. I have a great deal of sympathy for their demand.

I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Fox, for their comments. Let me say from the start that I completely share their outrage about this scandal, as I think they both know. It has been going on for many years, under many different Ministers and Governments, and we should all accept our share of the responsibility for the dreadful way these poor people were treated. Nobody who saw them emerging on to the steps of the High Court a few weeks ago could have failed to have been moved by what they had to say.

Turning to the many questions that the noble Lords asked, as I said, this Government deeply regret that this situation has occurred. Since it was launched in September 2020, the Post Office Horizon inquiry has made swift progress. The inquiry’s chairman, Sir Wyn Williams, and his team have heard from many affected postmasters and gathered evidence from key parties, including the Post Office, my department, UKGI and Fujitsu.

The noble Lord, Lord Fox, asked about the changes to the terms of reference. It is clearly critical that the inquiry is able to look at exactly what decisions were made and why, in relation to the Horizon prosecutions, so that lessons can be learned. The terms of reference have changed to clarify that the inquiry can investigate the Post Office’s decision-making in taking action against postmasters, including pursuing prosecutions and a fairly aggressive legal strategy, and in particular of course it can investigate the cases of those whose prosecutions have now been quashed.

The noble Baroness, Lady Hayter, asked about accountability. Let me be clear, for the avoidance of doubt, that the inquiry can make findings of fact and make recommendations. With regards to accountability, as noble Lords will understand, matters of criminal and civil law remain for the courts, as only the courts can make such judgments. However, they and other bodies can draw on the findings of the inquiry when considering these issues. It is therefore now for Sir Wyn to establish what happened, what went wrong and why it went wrong. We can then consider whether more needs to be done in the light of those findings.

The noble Lord, Lord Fox, asked about the timeframe for the inquiry. The deadline for the final report has now been extended to autumn 2022, to take account of the new statutory nature of the inquiry, but we are expecting a progress update later this summer. The changes to the inquiry’s timeline mean that Sir Wyn will have more time to determine exactly what went wrong at the Post Office during this period and to make sure that a situation such as this cannot happen again.

The noble Lord, Lord Fox, and the noble Baroness, Lady Hayter, both raised the issue of compensation. I know that many postmasters, and Peers across this House, have called for further compensation for those who have been caught up in this situation. Those whose convictions have been quashed, with a settlement amounted in the group litigation, are of course outside the scope of the inquiry. But, as I said previously, the Government are keen to see that all sub-postmasters whose convictions are overturned are fairly compensated as quickly as possible. We will ensure that we work with the Post Office to make this happen as quickly as it is possible to organise.

The noble Baroness, Lady Hayter, referred to Fujitsu. She will be aware that two Fujitsu employees are still the subject of a police investigation. However, so far Fujitsu has co-operated fully with the terms of the inquiry. I confirm to the noble Lord, Lord Fox, that all actions of the Post Office, including its fairly aggressive legal strategy, can and will be examined under the terms of the inquiry.

We now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

My Lords, last week the Minister, Paul Scully, said:

“We want to ensure justice and fair compensation for all who have been affected”.—[Official Report, Commons, 19/5/21; col. 721.]

He did not limit that to those whose convictions had been overturned. Does my noble friend accept that this must mean reopening the settlement of the group litigation order? Please will he stop using the words “full and final settlement” to describe a settlement which was not just and not fair?

Let me again pay tribute to the work that the noble Lord has done, both in the other place and here, in seeking to draw attention to this scandal. He was well ahead of many people in seeing the true extent of this horrendous scandal but, as I have previously said to the House, the December 2019 settlement was between the Post Office and a group of sub-postmasters. Both those parties were legally represented; the Government were not a party to this litigation, nor to the settlement that was agreed, and we still believe that it would not be appropriate for the inquiry to reopen or review such a settlement, which was agreed in the courts.

Perhaps I may take the question put by the noble Lord, Lord Arbuthnot, a little further and probe the Minister. I would like to ask about the scale, scope and timeframe of compensation; the Minister touched on it a little, but perhaps I could dig a little further. As we all know, Her Majesty’s Government are the sole shareholder in the Post Office, which has ultimate responsibility for where the compensation lies. Can the Minister set out in a bit more detail the scale and scope of the compensation discussed between Her Majesty’s Government and the Post Office? Importantly, can he put a bit more meat on the bones of the timeframe? We all know that this compensation for sub-postmasters and sub-postmistresses is so well deserved.

I agree with the noble Lord and understand his impatience. The Government are keen to ensure that postmasters whose convictions are overturned are fairly compensated. But I am sure he will understand that it is for the Post Office to consider the next steps in this case, in the first instance. I therefore regrettably cannot provide him with a timescale for this process or make commitments on funding at this point, but I can assure the House and the noble Lord that we are eager to see that this happens as speedily as possible.

My Lords, this shocking injustice, perpetrated by the Post Office, has left a sour taste in the mouth of many people and badly damaged public trust in a national institution. Sadly, this comes at the same time as the Post Office is playing an ever more important role in helping people to access cash and other banking and financial services, particularly in poorer and less well-served communities. So what plans do the Government have to rebuild trust in the Post Office, particularly in its management culture, and provide greater direction in the way that it runs its affairs while the inquiry takes place? Can the Minister confirm that the Post Office will continue to play a key role in the new access to cash banking hub pilots, to protect people from the impact of bank branch closures?

The noble Baroness makes some very astute observations and I agree with her; the Post Office is a vital access point for customers to deposit cash, enabling the Government’s financial inclusion agenda and ensuring that many small businesses can benefit from accessible, convenient and local ways of depositing cash. The Post Office has seen significant growth in the use of this facility in recent years and it is particularly important for more vulnerable or remote customers in the context of bank closures, so it is very important for it to carry on with this work. She is also right to point out the need to rebuild the trust of the public.

My Lords, I congratulate the Government on extending the remit of the inquiry, but I am afraid my sympathies are with my noble friend Lord Arbuthnot. I do not understand why all those affected cannot be compensated, nor why we are not asking Fujitsu to stump up. Has my noble friend seen the report in Computer Weekly of 19 February, in which a developer said that

“senior managers at Fujitsu were aware that an important element of the Horizon system did not function correctly and could not be fixed”

and that, when this product was launched,

“no design documents, no test documents, no peer reviews, no code reviews, no coding standards”

were issued?

Surely these people are victims of gross incompetence, both on the part of the Post Office and by a corporate organisation which is still working for the Government. Why it it not being properly held to account and stumping up, instead of relying on the taxpayer?

We are actively discussing the next steps with the Post Office, including the best process for ensuring that fair and swift compensation is provided. As I said, it will be for the Post Office to determine the next steps but, as I have said repeatedly, we want this to be done as quickly as possible. Regarding Fujitsu, I have considerable sympathy for the points the noble Lord made, but compensation from Fujitsu is a contractual matter between the Post Office and Fujitsu. I hope all options are being examined. It is for the Post Office to lead on the compensation process, but I assure my noble friend that Ministers are closely following this process.

My Lords, I welcome the Government’s U-turn and I agree with what the noble Lord, Lord Arbuthnot, said about compensation. Will the inquiry also look at issues such as the way the Post Office’s actions left some remote, rural villages without a post office for months? This includes one example I know of where the post office was closed without notice on pensions day, leaving a number of pensioners and vulnerable people stranded without any proper explanation, help or apology.

The next stage of the inquiry will continue to hear from affected sub-postmasters to understand what impact the Post Office’s actions had on individuals and local communities. I do not know the specific example the noble Baroness refers to, but if she wants to write to me about it, I will certainly get her a more detailed answer.

My Lords, the sheer size and scale of this miscarriage of justice is quite difficult to believe—that in this day and age an organisation such as the Post Office was allowed to continue doing this year in, year out. I pay tribute to my noble friend Lord Arbuthnot for the way he conducted the campaign, both in this place and the other place. In welcoming the fact that this has now been turned into a statutory inquiry, I think the Government have a responsibility to speed up the compensation to those who were treated appallingly by both the Post Office and, in turn, as the Post Office was owned by the Government, by Governments of all colours.

It is for the Post Office to determine the next steps, but Ministers are closely following the situation. We are keen for it to act as speedily as possible and get on with the process, as we all want to see these people fairly compensated.

My Lords, the Minister is making a valiant attempt at defending the split between the Government as a shareholder and allowing the Post Office to conduct its own operations in relation to compensation. The path we are currently going down is only adding insult to injury. To say that the outcome of the inquiry can be used for future compensation claims and further civil action simply delays wrong being put right. I urge the Minister to reconsider this and not hide behind the operational and shareholder split on this issue.

I assure the noble Baroness that I am not trying to hide behind anything. I totally accept that the Government need to accept their share of responsibility, as do the Post Office management and Fujitsu, but all these matters will be brought out. That is what the inquiry is for: to determine what went wrong, what lessons can be learned and who was responsible. So we need to wait for that inquiry. But as I have said, we want to ensure that the compensation process proceeds as swiftly as possible.

My Lords, I am sorry but the Minister’s answers on compensation are simply not good enough. Surely the Government must fully admit to their own culpability? Throughout the shabby and shameful persecution of innocent sub-postmasters, the Permanent Secretary in the department was the Post Office’s accounting officer and a government representative sat on its board. It is no good just passing the buck. The Treasury must fully fund an extremely generous compensation scheme to atone for a criminally negligent failure of ministerial and Permanent Secretary responsibility.

I am not trying to pass the buck to anybody; I have accepted all the responsibility that falls on my department and on Ministers present and previous. The inquiry will draw all these facts out in due course. I say to noble Lords that it is for the Post Office to continue with this process. The Government will accept their share of responsibility when it comes to that, but we need the Post Office to get on with it and we want it to do so as soon as possible.

My Lords, over the weekend I checked in with my friend Rita Threlfall, one of the 555 claimants who brought the successful action against the Post Office in 2019 but received scant compensation. She is rightly concerned that some victims are being treated differently from others. Does my noble friend the Minister agree that we should be insisting on fairness and equity for all those wronged in this appalling injustice? Can he assure me that everything will be done to create a level playing field for all those who suffered? There is a danger that the Post Office will be responsible for a system where there is a first class and a second class. How can my noble friend the Minister ensure that this applies only to its stamps and not to its people?

As I have said to other noble Lords, we are discussing the next steps with the Post Office. I agree with my noble friend that that needs to include the best process for ensuring that fair and swift compensation is provided to those sub-postmasters whose convictions were quashed, but it is for the Post Office to decide on the next steps.

My Lords, I thank the Minister for updating the House on this industrial miscarriage of justice. On 28 April, I, along with other noble Lords, asked for the powers of the inquiry to be increased. I am delighted that the Government have acted decisively in converting this into a statutory inquiry. Can the Minister confirm that the Government will press the Post Office to include Fujitsu in any liability for compensation? In the light of the Statement mentioning that a criminal investigation is going ahead, can the Minister confirm this will give certain witnesses the right to remain silent? Does this not somewhat inhibit the scope of the inquiry?

The noble Lord refers to the ongoing Metropolitan Police investigation into two Fujitsu employees following a referral from the Director of Public Prosecutions in response to the findings of the Horizon issues judgment. I see no reason this should cause problems with Fujitsu co-operating with the inquiry, as the company—notwithstanding the announcement of the police investigation—has already fully indicated its willingness to co-operate with Sir Wyn and the inquiry. As I have said in previous answers, the matter of compensation from Fujitsu is a contractual one between the Post Office and Fujitsu.

My Lords, some of these wrongful convictions go back to 2003—a wait for some of nearly 20 years for justice. The delay can be explained in part by the Post Office cover-up and its contesting of cases for as long as possible. However, this is also an egregious, systemic failure of the criminal justice system. What is being done to stop it happening again, especially with regard to the digital evidence rule that made it easier for the Post Office to bamboozle courts, with regard to judicial capacity to test the reliability of computer evidence and with regard to the power of self-interested entities to bring private prosecutions? Where were the lawyers?

There were lots of lawyers involved in this case; some might think that there were too many. However, the noble Lord makes some very good points about the operation of the justice system. As I have indicated in previous answers to this House, I have received personal assurances from the Post Office that it is no longer pursuing any private prosecutions and will not do so in future. This is indeed an egregious scandal; there are many lessons to be learned from the inquiry, and we will learn them.

My Lords, I echo the welcoming of the extension of the inquiry. I also echo the tributes to my noble friend Lord Arbuthnot for his work on this issue. This was an affront to justice and compensation is urgent. There is a clear feeling across the House that the sense of urgency perhaps needs to be increased by a level or two. More than £100 million of taxpayers’ money was spent on criminal prosecutions of innocent people that were investigated, managed and conducted by the Post Office itself—marking its own homework. Can my noble friend assure the House—I believe that he may have just done so in answer to the previous question—that private prosecutions will not be used as a fast-pass ticket to jump the queue to the criminal courts by companies with deep pockets? This would mean that we could learn lessons in this case so that, generally speaking, wealthy private companies would not be able to bring private prosecutions or we could review their ability to do so.

I have given the noble Baroness an answer about the Post Office pursuing private prosecutions. I reiterate that it has no special powers in this regard: the power to bring private prosecutions exists across the piece and is used by a number of other organisations. The Post Office has assured us that it has no plans to pursue any further private prosecutions. The issue of private prosecutions generally has been studied extensively; indeed, a committee of this House looked at the issue and recommended—I will correct this for the noble Baroness if it is not right—that the power should remain. However, I repeat that the Post Office will not be pursuing any more private prosecutions.

My Lords, the Minister referred to the fact that the Government were actively discussing this issue with the Post Office. Can he confirm whether that means that the Government will take full responsibility for the compensation for all those post personnel, including those from Northern Ireland, who were so wrongly maligned and convicted?

The noble Baroness is of course right, and I assure her that the Government are keen to see that all sub-postmasters with quashed convictions are fairly compensated. The noble Baroness will understand that this question is being followed closely by the Treasury; the Post Office as a company is 100% owned by the Government, so we are following it and the financial implications very carefully.