Post Office Horizon IT Scandal: Compensation

Tuesday 18th July 2023 Commons Chamber

12:36

[Mr Kevan Jones (North Durham) (Lab)]

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the interim report of the Post Office Horizon IT scandal inquiry relating to compensation.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I thank the right hon. Member for his question and his tireless campaigning on this issue. I am also grateful to Sir Wyn Williams for his work and for publishing his interim report. We will, of course, consider that properly in the coming days and provide a formal response to the House.

Sir Wyn’s report recaps the progress made in delivering compensation. He notes our repeated commitment, which I reiterate again, that that compensation should be full and fair. He notes allegations from some lawyers that there are impediments to providing such compensation, but says that he cannot see any legal reason why we cannot deliver our commitment. He is right, and that commitment will be delivered.

Sir Wyn’s first four recommendations deal with the advisory board, of which the right hon. Gentleman is a member. As he knows, the board was established at the instigation of my Department, and its composition and remit were extended as a result of discussions between Ministers, officials, himself and the rest of the board. It has already performed a very valuable service. Notably, its last meeting made recommendations about an appeals process independent of the Post Office. We are considering that recommendation and will reply in due course.

Sir Wyn also refers to the tax treatment of compensation payments. The right hon. Member will acknowledge that when we worked with him and the board on that matter, it resulted in £26 million of additional payments in the historic shortfall scheme, and exemptions from income tax, capital gains tax and national insurance contributions. Sir Wyn also suggests that we should legislate to extend the deadline for the group litigation order compensation scheme.

As we have stated, we will not let an arbitrary date stand in the way of paying full and fair compensation to postmasters. As compensation is being delivered under the sole authority of the Appropriation Act, spending on it is limited to a two-year window that closes in August next year. The Government are determined to deliver compensation by that date. That remains perfectly possible, but challenging. If it seems likely that we will not be able to compensate everyone in time, we shall of course consider legislation, as Sir Wyn recommends. I want to deliver by that date not for some legalistic reason, but in the interests of postmasters who have waited too long for justice.

[Mr Jones]

May I start by declaring an interest, as a member of the Horizon compensation advisory board? I thank the Minister for his remarks and for the positive and constructive approach with which he has addressed this issue. I also thank Sir Wyn and the inquiry for their ongoing work. I agree with many of Sir Wyn’s recommendations. I would be interested to know exactly when they will be responded to, especially because a lot of them were in the note that the advisory board sent to the Minister at the last meeting.

The three compensation schemes have become unwieldy, but the fundamental point is that equal and fair compensation has to be paid to all the people across the three schemes. I would be interested to know from the Minister when the recommendations will be addressed, particularly on extending the remit of the advisory board. I accept what he says: our aim—and certainly his—is to get compensation to people as quickly as possible.

The elephant in the room that needs to be addressed is the continued obstructive role of the Post Office. I found it remarkable that yesterday on BBC radio, the chief executive, Nick Read, said that the “sheer scale” of the problem has

“gone above and beyond anything that anybody could realistically expect”.

That begs the question of what he has been doing for the last four years and why he has been accepting bonuses for his and his management’s role in the inquiry.

The inquiry was stalled last week because again, the Post Office failed to disclose documents to it. When is this issue going to be dealt with? It either gets dealt with, or Nick Read and the entire board have to be sacked. The Minister knows, because he has met many of the people who are waiting for compensation, that they have gone through a lot. They need justice, and they need action. Ill-conceived comments from the present chief executive of the Post Office are rubbing salt in the wounds of the victims. Either he has to go, or something has to radically change at the Post Office.

[Kevin Hollinrake]

I am grateful to the right hon. Gentleman for his work. He is right to say that there are three schemes, which might be described as suboptimal. As Sir Wyn has said on this occasion and previous occasions, we are where we find ourselves, and we must push on. That is the easiest way and the best way to get compensation for those affected.

I referred in my initial remarks to the request that the right hon. Gentleman has made for an appeal mechanism. We are considering that carefully. I think he would acknowledge that whenever he has come to me with something that he thinks we should consider, we have always done that and are keen to deliver the mechanisms that the board requires.

The delays in disclosure were unacceptable, without question, and the Post Office has apologised for that. You are only as good as your last game, and the Post Office has to up its game; there is no doubt about it. We have a governance review into earlier issues around remuneration and the metrics regarding bonuses, which were found to be completely inappropriate. We are waiting for that report, which I should receive by the end of this month. We will take that under advisement, as we do any other evidence we receive about the operation of the board of the Post Office.

[Bob Blackman (Harrow East) (Con)]

I thank my hon. Friend for the update. Some 555 individuals have suffered incredible destitution and injustice for far too long. This has gone on for more than 20 years, and some people have died during this process. Will he ensure that the Post Office owns up to what it has done and that the individuals who were responsible for covering this up 20 years ago are brought to justice, rather than this leaving a stain on the reputations of the postmasters and postmistresses, who are totally innocent of any crime?

[Kevin Hollinrake]

I am grateful to my hon. Friend for his work on this issue. He is right: 62 people have passed away while awaiting compensation. It is simply unacceptable. My Department is looking at creative ways of accelerating the process of providing compensation to the victims.

I agree with my hon. Friend about the need for people to be held to account, and I spoke about that on a number of occasions from the Back Benches. It is right that people are held to account. It is also right that due process is followed. Sir Wyn Williams’s inquiry is there to identify what went wrong and why and who was responsible, and once that is done we should make a judgment about what happens to those people, but I am keen, like my hon. Friend, that people are held to account.

[Mr Speaker]

I call the shadow Minister.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Nine hundred prosecutions—all the postmasters involved have their own stories of dreams crushed, careers ruined, families destroyed, reputations smashed and lives lost. Innocent people have been bankrupted and imprisoned. This may well be the largest miscarriage of justice in our country’s history, and I pay tribute to Members on all sides of this House who have worked for justice, none more so than my right hon. Friend the Member for North Durham (Mr Jones). I also thank the advisory board and Sir Wyn for their work, as well as the Minister for the constructive approach he has taken on this issue to date.

However, as Sir Wyn’s interim report makes clear, the compensation schemes for postmasters are a mess. The commitment to give fair compensation should apply to all postmasters. Sir Wyn specifically recommends that terms of reference should enable the monitoring of individual cases. Can the Minister say that he will act on that recommendation, and when can we expect him to respond in full to the report’s recommendations, including maximising the use of the Horizon compensation advisory board and providing clarity about the tax status of compensation payments? Can he also provide a final figure for claims that have been made to the historical shortfall scheme and how much the Government anticipate the final compensation will cost?

I also ask the Minister what he is going to do about Post Office management. As the only shareholder in the Post Office, does his Department take responsibility for addressing those management issues? The leadership team accepted bonuses for their work on the inquiry, which is just unacceptable. When will the Minister deal with this? Sub-postmasters have had their lives ruined: they must be confident that lessons will be learned from those failures. Sadly, it seems that the Post Office has failed to do so.

[Kevin Hollinrake]

I add my thanks to the advisory board and the right hon. Member for North Durham, but also to Lord Arbuthnot—who is a tremendous campaigner in this area—and other individuals such as Professor Moorhead, who we were keen to include on the advisory board. I also thank campaigners on both sides of this House who made sure that the issue came to light and that action was taken to address these horrendous situations.

On individual cases, as I said to the right hon. Member for North Durham, we are looking at Sir Wyn’s recommendation. There is an appeals mechanism, and condition D of the terms of reference does not prevent us from looking to make sure that claims have been settled fairly and fully. That is something we are looking at and we will respond in due course. On the tax position, as I said earlier, we have provided an extra £26 million to address that. We are keen to make sure that not only all the settlements, but all the tax treatments of those settlements are fair across the board. On the totals for the historical shortfall scheme, we have made offers totalling over £100 million in value and £72.8 million has been accepted, so we have made good progress, but we are keen to make further progress on the remaining claims that are yet to be accepted.

On the Post Office management, there have been a number of unacceptable matters relating to what has happened in the governance of the Post Office. That is why we put in place a governance review, which is being conducted by a very competent legal firm. It is due to report by the end of this month. We will study that review carefully and respond accordingly.

[Karl MᶜCartney (Lincoln) (Con)]

The Minister in place at the moment will realise that former colleagues have stood at the Dispatch Box and given excuses. The procrastination from his Department has been terrible and the effects are ongoing. Fulsome and full compensation is to be welcomed, but the word that was missing from the Minister’s statement was “timely.” Therefore, the first part of my question is this: why two years? Why not two months or two weeks? Pay the compensation to the postmasters affected.

The second part of my question is about the senior management team. So far, they have got away with it. They need to be held to account, as do their IT consultants. When will something positively be done to bring those people to book?

[Kevin Hollinrake]

Again, I know my hon. Friend was one of the key campaigners on this particular issue. I cannot speak for previous Ministers—although I have a great regard for my immediate predecessor certainly—who have dealt with this issue. I have not seen any procrastination and we are driving this as quickly as possible within the Department.

On why not two weeks, rather than two years, settling compensation claims is complicated. It is about specific instances of pecuniary losses and non-pecuniary losses; it is complicated. We are keen to get that money out the door as quickly as possible and, as I have said, we are looking at creative ways to do that. I am just as ambitious as my hon. Friend is to get that money into the hands of the people who need it. There have been interim payments of around £20 million on both outstanding schemes—the GLO and overturned convictions schemes. Nevertheless, full and fair compensation is what we desire.

On people being held to account, I refer my hon. Friend to what I said earlier. We need to see the results of the inquiry—that is what Sir Wyn Williams is there for and we need to see the outcome of his inquiry—and, where he can identify blame, we are very keen to make sure those people are held to account.

[Mr Speaker]

I call the SNP spokesperson.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I do not know where to start—there is so much—but here I go. The SNP welcomes Sir Wyn Williams’s interim report on compensation. His recommendations would go a huge way to ensuring that victims are fully and fairly compensated, and it is about time. The enhanced role for the Horizon compensation advisory board is welcome as well. But the question, as one hon. Member has already said, is: when is this all going to happen? I know the Minister cannot give us an answer to that today, but he updated something I had in my notes: it is now 62 claimants who have died without receiving full and fair compensation. We need to move this on.

Funnily enough, we had a meeting of the all-party parliamentary group on post offices this morning, at which the chief executive officer of Post Office Ltd appeared and answered some questions. The culture at Post Office Ltd has not changed since the new CEO took on his role in 2019. He promised to change the culture; he has not yet done so. We are mired in obfuscation still, and we cannot get to the truth of stuff because of the delay in providing evidence to Sir Wyn’s inquiry. Will the Minister agree to put pressure on the CEO to get this done?

[Kevin Hollinrake]

The hon. Lady is one of the Members of Parliament I engage with more often than not in this place and she does a fantastic job, not least in chairing the all-party parliamentary group on post offices, so I thank her for her work. I agree with everything she said about the pace of delivery, the quality of delivery from the Post Office and making sure it meets its obligations. We have this constantly under review and we are driving this issue. We are determined to look at creative ways to accelerate compensation for all those affected by this, so we can finally draw a line under the matter. I accept we will not draw a line under it until we have held people to account for what has gone wrong, so that is something we are extremely keen to do.

[James Sunderland (Bracknell) (Con)]

Where there has been such a grave miscarriage of justice, it strikes me that we should be pulling out all the stops to ensure that justice is done and in a timely fashion, so perhaps the Government might consider bringing criminal charges against the Post Office and its IT advisers as a way of accelerating the process.

[Kevin Hollinrake]

On pulling out all the stops, I could not agree more, and that is definitely what we are doing in the Department. My days are never without one or other post office issue, which is not the situation we want. On bringing forward criminal charges, of course the Government do not do that, but when our enforcement agencies determine that there have been criminal actions, wherever those criminal actions have emanated from, we would of course expect them to take action.

[Mr Speaker]

I call the Chair of the Business and Trade Committee.

[Darren Jones (Bristol North West) (Lab)]

The victims of the Post Office Horizon scandal should be fully compensated, so that they are put back into the position they would have been in had they not been a victim of this miscarriage of justice in the first place. The Minister has agreed with that statement from the Dispatch Box before, but it is not happening. Can I say that it is not a complicated process to be able to quantify their losses and to be able to compensate them fully? My Committee, I understand the advisory board and the statutory inquiry have suggested that one way to try to improve this is to remove the Post Office entirely from this process and to make it an independent process, properly budgeted, with the requirement to fully compensate the victims in the way I have described. Why will the Government not just do that?

[Kevin Hollinrake]

I thank the hon. Member for his work in challenging us in this area. I would probably push back a bit. It is complicated to assess loss. Both I and the right hon. Member for North Durham sat in on a long call with the HSS panel recently and some eminent lawyers gave us a lot of confidence that this was being done right, on an inquisitorial basis, but it is complicated to assess those losses. I would refer to Sir Wyn Williams’s comments. He basically says that we should carry on what we are doing. He would not necessarily have advised this route in the first place, but what he says now is that the best thing we can do is push on with the frameworks we have in place. There are three different schemes. We need to push them on more quickly of course and I am very keen to do that.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

As a former post office counter clerk myself, I understand at first hand how the Horizon IT debacle had a devastating impact on postmasters, their families and their businesses. Will the Minister assure the House that lessons have been learned from this terrible case?

[Kevin Hollinrake]

Certainly, we have learned the lesson in this place to heed those warnings more quickly. I am sure the new management of the Post Office have seen what has gone wrong, and we are clearly keen to make sure it never happens again. I do not think we will be able to say we have learned the lessons and this will not happen again until we have received the final results of the inquiry and then decided what action can be taken against the individuals responsible, because that will be the ultimate deterrent in stopping these things happening again.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The significance of Sir Wyn bringing forward an interim report of this sort is something that should not be underestimated. I was with the hon. Member for Motherwell and Wishaw (Marion Fellows) in the APPG meeting this morning and it was clear that, as far as the chief executive of the Post Office is concerned, in dealing with historical matters such as this, he sees it as a major barrier to changing the culture within the Post Office. Whether that is a reason or an excuse remains to be seen, but he has to ensure that that barrier is removed so that there can be no further excuses about changing the culture.

[Kevin Hollinrake]

I agree, and we are determined to play our part in that of course. I was very grateful for the report and I have read the recommendations. Clearly, there is a lot of detail in the report that I want to study and consider fully, but I thought it was very helpful. I did not see anything in the recommendations I immediately objected to. As I say, I want to make a good study of those things, but a number of different processes have to take place. We have to give due process the time to do its work in making sure that we establish exactly what has gone on, so that we can put those matters right.

[Paul Howell (Sedgefield) (Con)]

I, like many others, have sub-postmasters who have suffered in this space. I would just like to thank Members across the House, most notably the Minister, his predecessor, my hon. Friend the Member for Sutton and Cheam (Paul Scully), the hon. Member for Bristol North West (Darren Jones)—I was on the Select Committee when we were particularly looking at this issue, and thank him for his time on that—and obviously the right hon. Member for North Durham (Mr Jones) for his energy there. Could I just reiterate what so many have said and ask the Minister to accelerate, with all energy, the payments to the victims, and will he please follow through on the consequences for the Post Office leadership and its IT consultants?

[Kevin Hollinrake]

I thank my hon. Friend for the points in his question, and we absolutely agree that we need to accelerate compensation payments. As I say, we have made significant progress on the HSS scheme. For the two other schemes—the GLO scheme and the overturned convictions scheme—we need to get those payments resolved as quickly as possible. There have been around £40 million of interim payments through those schemes, but the full and fair compensation—the final compensation—is where we need to get to. On holding people to account, he will have heard what I said earlier and I absolutely agree with him on that point.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The report states that there are

“something like 230-250 late applications to be determined and that there may yet be significantly more”

late applications as well. Can the Minister confirm that those applications will be seriously considered and that those victims may be entitled to compensation? Can he provide an assessment as to whether the numbers I have quoted are accurate or are actually higher?

[Kevin Hollinrake]

The hon. Gentleman raises an interesting point, as does Sir Wyn Williams, and we are looking at that recommendation carefully. It is our intention that everybody who has been affected by this is fully and fairly compensated, and we will look at any further issues that might get in the way of that. We are keen to resolve those kinds of issues.

[Andrew Bridgen (North West Leicestershire) (Reclaim)]

I have been involved in the investigation into the Post Office Horizon scandal since my arrival in this House back in 2010, representing my constituents Mr and Mrs Rudkin. By 2014, following the investigation by Ron Warmington of forensic accountants Second Sight and his evidence, I knew that they had been wrongly convicted. The right hon. Member for North Durham (Mr Jones) knew and had evidence that they had been wrongly convicted. The Post Office had evidence that they had been wrongly convicted. Importantly, the Government had evidence that they had been wrongly convicted. Will the Minister explain why, more than nine years after we all knew they were innocent, they are still waiting for full, fair compensation and closure on this issue? They are the real victims in all this—the sub-postmasters.

[Kevin Hollinrake]

We certainly agree with that, and we should leave it to the Williams inquiry to establish who knew what when, and what could have been done earlier, and hold those people to account. Getting wider compensation out to those affected is the No. 1 priority, and the why, who and when is a secondary point to ensuring that people are fairly compensated. That is the No. 1 thing on my agenda, and I thank the hon. Gentleman for all his work on this issue over a number of years.

[Tonia Antoniazzi (Gower) (Lab)]

Will the Minister explain why Fujitsu, whose IT software is at the heart of this scandal, continues to win Government contracts, including a recent extension to a Post Office contract worth £42 million?

[Kevin Hollinrake]

Those decisions are made by others, not by me, so I cannot comment on those specific cases. The hon. Lady raises an interesting point. To be fair, in this country people are still innocent until proven guilty, and it is right that due process is followed and guilt established before we make decisions on how we treat companies or individuals down the line. Like me, she would like to see the full results of the Williams inquiry as soon as possible, so that we can determine blame.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

Decent, honest people—postmasters—have had their lives ruined and been put in prison, and they are now being made to wait years for justice and compensation. The public inquiry also exposed racism and discrimination at the Post Office’s Fujitsu-run IT help desk during the Horizon scandal. Will the Minister outline what the Government are doing with regard to the appropriateness of Fujitsu winning public contracts in future?

[Kevin Hollinrake]

I dealt with that question a second or two ago. It is right that the presumption of innocence is followed until proven otherwise, and the Williams inquiry is looking at Fujitsu’s role in this, as well as the roles of individuals in the Post Office and elsewhere. With regard to the document he refers to, clearly that is inappropriate, and the Post Office has apologised for it. That document, among others, forms part of the Horizon inquiry, which will need to establish the full facts before we decide what action to take.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Member for North Durham (Mr Jones) and others who have assiduously pursued this matter and doggedly ensured a Government response. I know of postmasters who have lost their shirts because of the dreadful scandal. While it might be acceptable to push the date back on paper, in reality that could mean more defaults on payments and loans, and further humiliation for those people who have been tarred as dishonest, when we all know them to be decent and honourable. Can something be done to ensure that those who need it the most now have access to their reparations, as that will help them on the road to recovery from the trauma that they are feeling at this moment in time?

[Kevin Hollinrake]

I am grateful to the hon. Gentleman for speaking out about this matter on a number of occasions. One of my constituents—Sam Harrison of Nawton near Helmsley—passed away prior to receiving full and fair compensation, and that situation should never have been allowed to happen. Interim payments are available, so some compensation is available. In the terrible situation where somebody has passed away, that compensation will still be paid to their estate. That is slim comfort of course, and the hon. Gentleman’s central point that we should get the money out the door as quickly as possible is one I totally agree with.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Some individuals who have already been compensated have been devastated to find that a significant portion of that money has gone straight to paying back creditors. They are then in the position of having to make a second compensation claim, suffering additional stress and anxiety. What talks have there been about ensuring that any payments made are sufficient to cover all expenses, as well as properly compensating individuals for their hardship and loss, without the need for additional claims?

[Kevin Hollinrake]

I am grateful to the hon. Lady for her question, and I am happy to look at any specific cases. If she is talking about those who are bankruptcy claimants, Sir Wyn in his report agrees with our view that insolvency practitioners should not be able to take a share of group litigation order compensation. We have taken advice from specialist counsel on how best to deal with that issue, and we will look to take further action on that in due course.