Post Office Executives: Bonuses

Thursday 11th May 2023 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 10 May.

“The situation is extremely concerning and deeply regrettable and the Post Office is right to apologise. This is a very serious issue, particularly as it comes at a time when it is essential that the public have confidence that the culture and processes at the Post Office have been improved.

Since becoming aware of this incident, I have acted swiftly, calling for an immediate explanation from the Post Office as to how this mistake occurred and asking what steps the Post Office board is taking in response. I met officials in my department and UK Government Investments yesterday to discuss what further action is needed.

The Post Office has rightly apologised to the inquiry and issued a clarification on its website. The Post Office chief executive officer and chief finance officer have returned the remuneration associated with the sub-metric relating to the Post Office’s support for the inquiry. The Post Office CEO has also apologised to Department for Business and Trade Ministers.

But more needs to be done. As a first step it is important that the facts are established. The Post Office has rightly announced that the incoming chair of its remuneration committee, Amanda Burton, will lead an immediate investigation into this incident. She was appointed non-executive director on the Post Office board at the end of last month and brings to the role experience and expertise from her time in the legal profession. The scope of the investigation is to ensure that the remuneration committee’s approach and processes on rewarding its executives in this case were consistent with corporate governance best practice. I expect this investigation to report back to me within two weeks with its findings and recommendations.

I can also announce that my department is commissioning a wider independent review of the governance around Post Office decisions on remuneration. It should make recommendations about any further changes that are needed. This will run alongside the Post Office remuneration committee chair’s investigation of this specific incident. Further details will follow.

Finally, let me finish by reiterating that the Government remain steadfast in their commitment to ensure swift and fair compensation to postmasters who suffered as a result of the Horizon scandal and are grateful for Sir Wyn’s work leading the Horizon inquiry. We will keep the House updated on this issue.”

11:50

[Lord Leong (Lab)]

My Lords, I welcome the Minister to his new role and look forward to working constructively in the months ahead. I thank him for coming to this House to address these concerns.

The Post Office Horizon IT scandal is the most widespread miscarriage of justice in UK history. For more than a decade, this Government have allowed the scandal to drag on. Thousands of lives have been ruined and, tragically, more than 30 families have lost loved ones. Despite all this, continued delays mean that thousands of victims have yet to receive financial compensation.

It is appalling that, instead of these victims seeing anyone held to account for their lives and livelihoods being ruined, they are instead suffering the indignity of watching those who contributed to their suffering rewarded. CEOs who allow such behaviour disgrace the business community. Does the Minister agree with me that this is pure corporate greed? Does he really believe that paying nearly half a million pounds in bonuses to those involved in the scandal is justifiable in this case? Does he agree that the payment of these bonuses undermines the fight for justice and insults the hundreds of victims for whom Members on both sides of this House have campaigned so hard and for so long?

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, no doubt this is a serious error in corporate judgment, coming on top of the Horizon scandal and the misery and false accusation that it caused. In this regrettable situation, the Post Office was right to apologise. This is an extremely serious issue, at a time when it is essential that the public have confidence that the culture and processes at the Post Office have been improved. Government has acted swiftly, calling for an immediate explanation from the Post Office of how this mistake occurred and what steps its board is taking in response.

[Lord Fox (LD)]

My Lords, I also welcome the noble Earl, Lord Minto, to his seat. Your Lordships did not need reminding, but this demonstrates again that the executive and board of the Post Office regard themselves as, somehow, a law apart from the rest of us and do not understand the situation that they have created for so many innocent victims. Yesterday, the Parliamentary Under-Secretary of State for Business and Trade, Kevin Hollinrake MP, said in the Commons that

“more needs to be done”.—[Official Report, Commons, 10/5/23; col. 341.]

So what is “more”, and when will it be done?

[The Earl of Minto (Con)]

Initially, Amanda Burton, the new chair of the Post Office remuneration committee and a non-executive director, will have two weeks to find out the precise facts about what has gone on here. At the same time, there is another review on the whole question of remuneration within the Post Office, because, clearly, something has gone very wrong. Within a couple of weeks, I hope that we will have a reasonable report with which we can come back to the House.

[Lord Cormack (Con)]

My Lords, will my noble friend reflect on how often predecessors of his—we welcome him warmly today—have stood at the Dispatch Box, talked about the great scandal that has been highlighted so brilliantly by my noble friend Lord Arbuthnot, and said that we are within sight of a solution? We are still not, and that is an utter disgrace, made even more disgraceful by the subject we are discussing today.

[The Earl of Minto (Con)]

My Lords, I cannot disagree with the motive behind my noble friend’s question. The Government set aside £1 billion to deal with the compensation for the scandal. Of that, over £100 million has been paid out. But due process has to follow its route, and it continues to do so.

[Lord Berkeley (Lab)]

My Lords, the Post Office’s previous management seems to have got away scot free on this. It has been going on for a good 10 years, and some of them even get promoted to other jobs. Should they not be implicated and called to account, along with the IT provider that caused all this?

[The Earl of Minto (Con)]

My Lords, management clearly has a very serious responsibility, as the Post Office provides all of us, throughout the entire land, with some extremely valuable services. The specific management team in place has apologised and, while this is not the appropriate time to go into great detail about what might happen to it, it must be fully aware of the errors that it authorised.

[Baroness Wheatcroft (CB)]

My Lords, every member of that board should have been aware of the bonuses paid and the reasons why they were. If they were not aware, they were failing to do their duty, but, if they were, they showed appalling judgment. Is the Minister content that they should stay in office for even two more weeks?

[The Earl of Minto (Con)]

I entirely agree with the noble Baroness’s sentiment. Certainly, in my experience, every member of the board is fully aware of exactly what the remuneration package is for each individual director and everyone within the organisation, whether it is fixed or bonus-related. Having said that, at this moment it is important that the two reviews under way take place. A decision can then be made at the appropriate time.

[Lord Browne of Ladyton (Lab)]

My Lords, this is the worst miscarriage of justice in the history of this country: 555 convictions have been declared unsafe. These people have been campaigning for 20 years, and some of them have died. The best that I can work out is that fewer than 100 of those convictions have been overturned. The scandal will be worsened by the fact that so many people are likely to die before their convictions are overturned. Can we not do something to speed this process up? One Bill with two clauses in this House could pardon them all.

[The Earl of Minto (Con)]

There can be absolutely no doubt about the seriousness of the Horizon disaster. I am sure that the noble Lord is absolutely right that things should be done quicker. I am not clear about what we can actually do about it, but I will certainly find out and get back to him.

[Lord Dobbs (Con)]

My Lords, justice must be done and be seen to be done, of course, but it must be done in a timely fashion if it is to be justice. This has not happened in this terrible case at the Post Office or with Windrush. One of the reasons for the Illegal Migration Bill is that we need to make sure that justice is done at our ports and for those coming in. Is not the one common thread in all this that we have corporate lawyers, pressure group lawyers and special interest lawyers who are there not to deliver justice but to delay it, and therefore to deny it to those who deserve it?

[The Earl of Minto (Con)]

My noble friend makes a very interesting point. Lawyers act for their clients. Their clients instruct them in so doing. The speed through the legal system in every country in the world is not as fast as one would like.

[Baroness McIntosh of Pickering (Con)]

What due diligence are the Government doing with regard to Fujitsu being a preferred bidder for government contracts on an ongoing basis, given its history with the Horizon project?

[The Earl of Minto (Con)]

My noble friend makes a very good point. I am not aware of the exact situation. I will find out and write to her.

[Earl Cathcart (Con)]

My Lords, I live three miles from the market town of Fakenham. The post office has been virtually closed for nearly four years. Surely the executives should provide a service that Fakenham and other communities need. Any bonus should be linked to providing that service.

[The Earl of Minto (Con)]

My noble friend is right. Bonuses should be awarded based on performance against specific measurable and recorded targets. As the noble Baroness, Lady Wheatcroft, said, everybody within the organisation should know this. Part of my noble friend’s question was about the commitment of the Post Office to the network. At the moment, there are about 11,500 post offices. During the last 10 years, the Government have poured about £2.5 billion of funding into the network. It is obviously very important that towns such as Fakenham have a proper post office. I shall take this up.