Post Office (Horizon System) Compensation Bill

2nd reading & Committee negatived & 3rd reading
Tuesday 16th January 2024 Lords Chamber

Second Reading (and remaining stages)

19:57

Moved by

[Lord Offord of Garvel]

That the Bill be now read a second time.

The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con): My Lords, we had positive debates last week in relation to the Post Office Horizon scandal, in what proved to be a watershed moment in this appalling scandal’s story. I was pleased to be able to update the House in reply to the Oral Question from the noble Baroness, Lady Chakrabarti, and through my Urgent Question repeat.

As noble Lords are aware, last Wednesday, the Prime Minister announced that the Government will bring forward legislation to overturn the convictions of all those convicted on the basis of Post Office evidence during the Horizon scandal. We discussed this in your Lordships’ House last week and I have since written to noble Lords setting this out in more detail. The Government will continue to keep noble Lords informed as progress is made on the new legislation over the coming weeks.

The Post Office (Horizon System) Compensation Bill is a small Bill of just two clauses, which will provide a continuing legal basis for the payments of compensation to victims of this appalling scandal, specifically in this case the trail-blazing members of the group litigation order, or GLO, who took on the Post Office all the way to the High Court and exposed the Horizon scandal.

Compensation payments made under the GLO scheme are currently paid under the sole authority of successive Appropriation Acts. Parliament requires all such payments to be made within a two-year period. The first payment of interim compensation was made on 8 August 2022, meaning that with the law as it stands, no GLO payments can be made beyond 7 August 2024. This Bill removes that deadline.

Let me be clear on this point. This does not mean we are taking our foot off the gas. We still want to pay compensation as quickly as possible. My department is now committed to making an initial offer of compensation in 90% of cases within 40 working days of receiving a fully completed GLO claim, and many claims can be dealt with much more quickly.

However, as Sir Wyn Williams, chair of the independent statutory inquiry, noted, the resolution of compensation claims requires action by postmasters, their advisers and third parties, as well as the Government. In his interim report provided to Parliament in July, Sir Wyn expressed concern that the August 2024 deadline could leave some postmasters timed out of compensation or rushed into making decisions. The Government have agreed that that must not happen, and the Bill ensures that it will not happen. All GLO postmasters will get full and fair compensation; they will get it promptly, but without being unduly rushed.

Good progress has been made in paying compensation to GLO members and those in the other two compensation schemes. As of 11 January 2024, approximately £153 million had been paid to over 2,700 claimants across the three schemes. Noble Lords and the public can rightly continue to hold the Government to account on this important issue of compensation. Figures relating to the number of claims received and processed, and the compensation issued, are updated each month on the dedicated GOV.UK page.

The Government are hopeful that the announcement of an upfront offer of £75,000 that we made last week will save those affected having to go through a full assessment. This will not only allow the department to focus its resources on the larger cases but will allow the claimants’ lawyers to do the same. The pace at which we can get claims into the scheme is the key constraint on how quickly we can settle them. The upfront offer is smaller for the GLO scheme than for the overturned convictions because the claims tend to be smaller. We estimate that perhaps a third of GLO claimants may want to consider this route.

I turn now to the other pressing matter of truth and accountability. The cases of Alan Bates, Jo Hamilton, Lee Castleton, Lisa Castleton, Saman Kaur, Noel Thomas, Michael Rudkin and Pam Stubbs—to name just a few of the more than 3,000 people who have suffered in some way as a result of his appalling scandal—have been powerfully played out in the gripping ITV drama “Mr Bates vs The Post Office”. Naturally, it has drawn much greater public attention to the issue than before. I am pleased to see a much wider awareness of the scandal among the public. The Government previously set up the Post Office Horizon IT inquiry in 2020 and have provided compensation funding since 2021, but there is no question that the TV drama has brought the issue to the forefront of the nation’s attention.

For those portrayed in the drama and many others, it meant paying the Post Office money that they did not owe. For others, it meant the loss of their livelihood, home, mental or physical health, or family relationships. Too many have died before getting justice. Saddest of all, some of those deaths were suicides prompted by the scandal. Each Horizon victim is a personal tragedy. It is imperative that each and every person gets the justice and compensation that they have waited far too long for.

This Government are committed to delivering justice for all Horizon victims. Part of that justice will come from making sure that everyone knows the truth about what happened. That is why the Government set up the statutory inquiry into the scandal, chaired by Sir Wyn Williams. The work of the inquiry to date is commendable; it is doing great work in exposing that truth.

From that truth will follow corporate and individual accountability; I know that there is a strong appetite for that in this House and beyond. I sympathise with noble Lords’ desire to see accountability right now, but finding people guilty without looking at all the evidence is how we got into this mess. It is how postmasters were prosecuted without proper disclosure. We must not commit the same mistake when it comes to holding people accountable for the scandal, however tempting that might be.

In conclusion, until everyone has fair compensation, the truth is known and the guilty are held accountable, noble Lords in this House and others will rightly continue to raise issues about this scandal. I assure your Lordships’ House that this Government are on the side of the postmasters, and we will continue to give these issues our full attention and do our best to resolve them. The Bill is a further example of that, and I commend it to the House.

20:04

[Baroness Chakrabarti (Lab)]

I am grateful to the Minister; it is a pleasure to follow him. I am particularly grateful for the way that he dealt with matters last week, and the way that he has continued to deal with them today. I will attempt to emulate not just his tone but his succinctness; just because there is no advisory time does not mean that one has to go one way as opposed to the other way.

The noble Lord, Lord Arbuthnot, is a modest man, but I am afraid that I ask him and other noble Lords to forgive me for not sparing his blushes—not just because of his work over so many years, when these people must have felt so forgotten and ignored, but because of his very succinct but powerful contribution last week. He reminded noble Lords of the very important words of the legendary jurist and Conservative politician William Blackstone, who famously said:

“It is better that ten guilty persons escape than that one innocent suffer”.


We all know that that is from his Commentaries on the Laws of England. In those commentaries, he also said that criminal law should always be

“conformable to the dictates of truth and justice, the feelings of humanity, and the indelible rights of mankind”.

For anyone who believes that human rights were some confection from 1945, or even later in the 1960s, I remind them that William Blackstone said that not in the 1960s but the 1760s. So human rights are not some foreign body floating in our soup; they ought to be in our DNA.

In his remarks last week, the Minister very helpfully articulated the reasonable demands of the wronged postmasters. I made a note of them. The three aspects were compensation, exoneration and accountability, and the Minister repeated that formulation, to some extent, today. This Arbuthnot Bill is narrow to aid compensation, because money must be authorised. As the Minister said, it is a short and to-the-point Bill, but I say to the Government, to all noble Lords and to anyone listening to this debate or reading it subsequently, that exoneration—in my view, for what it is worth—may be achieved by a Bill that is a little longer, but not much. However, while I appreciate and agree with the Minister’s remarks that on accountability it may take a little longer to avoid the situation that he described, there must be accountability in due course. There is an element of due process, but there must be accountability none the less. That includes corporate and, potentially, individual accountability in the form of investigations—criminal investigations, potentially—as well as restitution.

We heard just this week that the management and leadership of Fujitsu are very humble, but this will not be a voluntary matter; there will have to be some legislation, I believe, to ensure corporate restitution in due course. Humility is all very well but, however big this Bill, one needs to remember the even bigger bill that the Government have met in enriching Fujitsu in relation not only to the Post Office contract but to other government contracts.

Finally, I come back to exoneration, which can be done swiftly—almost as swiftly as compensation. It is incredibly important that we do not repeat the mistakes of the Windrush scheme. There needs to be a blanket element and an automatic element to this exoneration.

I will not bore noble Lords in the short time I want to speak for with my own formulation, but it is almost as simple as declaring in primary legislation that a class of people’s convictions are hereby quashed from the moment the Bill passes, and then any application could be for a certificate of that quashing, but not for the quashing itself. That is how automatic I believe this ought to be after this length of time.

I know that some eminent lawyers, many of whom are friends of mine and many of whom I usually agree with, are nervous about this proposition. There has been much discussion, especially in the media, to suggest that somehow a proposition of that kind would interfere with judicial independence. I feel it incumbent on me to explain why I disagree with those who have made that argument, especially because some people have compared the blanket, automatic nature of the legislation I propose to the Rwanda Bill. I mention that not because I want to bang on about Rwanda as a broken record and a one-trick pony, but because it is important to make the distinction if I am to have credibility in what I propose. It is obviously not the Government’s position, but it is my position, which is important for these purposes, that the Rwanda Bill is to change facts as have been found by the highest court in the land. That is essentially what the Rwanda proposition is, whereas here, I am proposing legislation that will reflect the facts that have now been found, including by our higher courts, and implement those facts on a swift and blanket basis, to the benefit of individuals and not their detriment. That distinction is incredibly important.

As I think noble Lords and perhaps the Minister agree, this was at the very least a very gross error, involving maladministration and blind trust in technology—we must take note of that in relation to artificial intelligence, which my noble friend Lord Browne of Ladyton has been raising concerns about in your Lordships’ House, and must learn, remember and reflect on even after this particular circus has left town—and, quite possibly, systematic corruption and cover-up motivated by greed. Some noble Lords who have stopped me in the Corridor in the days since our last discussion have asked me whether I am troubled by even the remote possibility that a few postmasters who perhaps could have been correctly convicted should get off as a result of what I am proposing. I am very clear with them, and the answer lies in what the noble Lord, Lord Arbuthnot, said, and what William Blackstone said before him.

20:13

[Lord Palmer of Childs Hill (LD)]

My Lords, I too thank the Minister and the noble Baroness, Lady Chakrabarti, for their comments. I agree entirely with all that they said. We on these Benches support the Bill in its limited objectives. It simply provides financial power to the Secretary of State for expenditure on the compensation scheme and, as the Minister said, removes the deadline of 7 August to give people more time to claim, as recommended by the statutory inquiry. It also allows expenditure on other compensation schemes. The design of those schemes is not, unfortunately, within the remit of the Bill. We urgently need the Minister to confirm, as he suggested when he spoke earlier, that these matters will happen speedily. There is no reason to delay.

There needs to be a new rule and, following on from what the noble Baroness, Lady Chakrabarti, said, postmasters and postmistresses should be presumed innocent and all convictions, past or present, should be overturned. She used the word “exoneration” and mentioned other elements. If someone committed an offence and gets through because these convictions are quashed, that is a price that we hope will not be needed, but should be paid.

There have been lots of accusations in the Tory-controlled press seeking to make political capital out of personal disasters to postmasters and postmistresses. Let it be clear that no Minister of any party could have been expected to disbelieve the appalling—the word used by the Minister—lies and misinformation they received from senior civil servants and senior Post Office executives. There have been multiple Ministers—a long list—over this period. None of them deserves to be accused of anything other than believing the lies told to them by people they should have had the right to rely on.

The noble Baroness talked about Fujitsu. I understand that Fujitsu had always said that the only people who had access to these accounts were the postmasters and postmistresses, and therefore, if there was any error, it was the postmasters and postmistresses; it could not be Fujitsu. But we now find that at its headquarters, Fujitsu had the ability to access those accounts and to make alterations—maybe for the best of reasons and to iron out bugs—and was doing so. That is what happens with computer systems, but its interference may well have created a lot of these problems.

I practise as an FCA and had a long career as a partner in firms of chartered accountants. It would not be unusual for a client to say to me, “Monroe, we have a wonderful new system we are going to introduce for our accounting” or financials. I would look at the system and say, “Well, it looks all right”. But I would always say—and I imagine that all qualified accountants would say—that you should run the old system in tandem, in parallel with the new system for a period of six months or so, to see if there are any glitches in the new system. You have not burned all your bridges: they are still there.

The latest technology may be all singing and dancing, but you should still be looking at, in this case, keeping the paper-based system. Only when no sizeable discrepancies emerge could the old system be jettisoned, and that did not happen. This is elementary accountancy. This is not high-blown computer stuff. Can the Minister say whether senior civil servants and Post Office employees had any grounding in such mundane knowledge and experience? I believe that they may have been highly qualified, but I am of the opinion that their accountancy knowledge was pretty limited. Can the Minister confirm that in future—because we have got to look at the future now—the Government will not put all its eggs in one computer basket?

Also, since we are talking not just about the compensation Bill but the background to it, can he tell the House what auditing took place? Surely there would have been internal audits at the Post Office and at departmental level. There are audits all over the place, but do we hear anything about them? What was the role, or lack of role, of the National Audit Office? Surely we have a right to look to them as well. It is no defence from these auditors that certain bodies were outside their jurisdiction. I have had the honour to be the chairman of the audit committee of a Tory borough, the London Borough of Barnet, for eight years. The audit committee dealt with all the activities of the various departments. What we have is like a traffic-light signal—was it red, was it orange, was it green? If it was red or orange, I required the manager of each department to come to the committee and explain why there was this error, why there was this poor report, and to say what they are going to do in the future. That worked pretty well, but then there was a glitch—a glitch that is very relevant to the system which we are talking about now. The officers said, “Oh, that wasn’t our officers; we outsourced it”. In this case, in the London Borough of Barnet, it was to Capita, the computer company. Therefore, “We can’t tell you about that because Capita did it”. I said that the directors of Capita had to come to the London Borough of Barnet audit committee and explain why it was wrong and how they were going to justify it. They objected, saying, “Well, we’re not part of your organisation; we are outside”, as we are talking about in this instance. However, I insisted that they came, justified, put right and acknowledged the problems that were there.

Can we have less, please, of the party-political posturing and more of a look at how IT, without a knowledge of accountancy, can be a dangerous animal? The Minister and the noble Baroness, Lady Chakrabarti, used the words, “an appalling scandal”. It is an appalling scandal. We cannot stop it being an appalling scandal, but we must make sure that the postmasters and postmistresses are absolved, whether they might be guilty or not guilty. I am assuming that they are not guilty but, assuming even that somebody gets through who might have been guilty, I still feel that they all should be absolved because they were part of the system which was deficient at the maximum because it did not do what any basic qualified accountant would have done.

From these Benches we support this Bill, but we hope that the Minister will take aboard our comments about the future.

20:21

[Lord Arbuthnot of Edrom (Con)]

My Lords, I am grateful to my noble friend the Minister for his opening remarks, not least for their tone, which this House has always got right. I am also grateful to the noble Baroness, Lady Chakrabarti—except for her suggestion that this should be called the Arbuthnot Act. She made the very important point about blanket exoneration. We must not force these traumatised people back before the courts that did them such injury. I am grateful also to the noble Lord, Lord Palmer, for his important remarks about auditors, who have escaped much scrutiny. Maybe that will change in the coming weeks and months.

I declare my interest as a member of the Horizon Compensation Advisory Board. I put my name down for this debate intending to use this speech to call on the Government to announce the wholesale exoneration of all those convicted as a result of Post Office evidence since the introduction of Horizon. I thank the Prime Minister for making that unnecessary, which will shorten this speech dramatically. He has been well supported and motivated in this by the excellent Post Office Minister, Kevin Hollinrake, and his formidable team. I shall not in this Second Reading debate succumb to the temptation to travel widely beyond the contents of this Bill, which is very short. I have spent the last week trespassing far too much on people’s patience, on TV and radio and in the newspapers. I apologise for that and feel—

[Noble Lords]

No!

[Lord Arbuthnot of Edrom (Con)]

I feel a little talked out. That too, your Lordships will be pleased to hear, will shorten this speech dramatically.

This Bill is with us at the request of the chairman of the public inquiry to ensure that the Government do not run out of time to pay compensation or, as Alan Bates has often said, to give redress. He says that it is redress rather than compensation because this is money that the Government owe the sub-postmasters; some of it is money which has always, in law, belonged to the sub-postmasters. Let us acknowledge that point and move on.

The name of the Bill is the Post Office (Horizon System) Compensation Bill, which suggests that it is about a faulty computer system. But this dreadful story only started as a story about a faulty computer system. It became something else, as we have seen from the evidence at the public inquiry: it became a matter of human behaviour; of oppressive contracts; of Post Office investigators prioritising asset recovery over justice; of useless helplines with Post Office and Fujitsu staff telling sub-postmasters that they were the only people suffering these problems and then telling them to do things which made matters worse; of senior managers at the Post Office and possibly, although I do not know, Fujitsu, lying about what their technical staff could do by way of remote access; of Ministers of all parties failing to exercise the responsibilities of ownership; and of the courts ignoring the requirements of justice in order to accommodate the most trusted brand in the country. The background of this saga was a computer system, but compensation, as we have heard from the public inquiry, is payable in respect of so much more. So, frankly, I do not much like the name of this Bill, but having questioned its name, I shall move on to its substance.

Money is to be payable to compensate people affected by the Horizon system, or to compensate persons in respect of other matters identified in High Court judgments. The expectation at the beginning of the group litigation was that it would be split into five different cases. Because the Post Office—I assume with the backing of the Government, although we shall find that out soon—decided to spend the sub-postmasters into submission with taxpayer-funded litigation, the sub-postmasters were forced, as we saw in the drama, to settle after only two of those cases had been decided. The consequence was that many issues were left undecided. Does the Bill cover these issues?

What about issues arising out of the public inquiry, rather than out of High Court judgments? We have been listening over the past few days to some pretty dreadful stories of behaviour by the Post Office investigators, who have been confronted with their bullying behaviour. We have heard the evidence from Duncan Atkinson KC about the shortcomings of the Post Office prosecutors and their prosecutions. I hope that these issues will be covered by the Bill as well as what has come out of the High Court judgments.

I feel a bit churlish, frankly, attacking both the name and the contents of a Bill that I welcome, but I do welcome the idea that the Government should not run out of time to pay the redress that we as taxpayers—with the help of Fujitsu, now that it has recognised its moral obligation; I hope that soon it will recognise its legal obligation to contribute to the cost—owe to the sub-postmasters. The very fact that it should be necessary to have the Bill in the first place suggests that the three compensation schemes have been slow and bureaucratic —and they have been. We must get a move on and do our utmost to make sure that the Bill is not, in the event, needed, because full compensation, or redress, is paid before August.

20:28

[Lord Browne of Ladyton (Lab)]

My Lords, it is a privilege and an honour to follow the noble Lord, Lord Arbuthnot, particularly on the Second Reading of a Bill which, whether he likes it or not, is already referred to as the Arbuthnot Bill, and if I have anything to do with it, will continue to be.

On 7 September last year, the noble and gallant Lord, Lord Houghton of Richmond, began his contribution to an Armed Forces debate with the following sentence:

“I suppose that one of the many benefits of being a Member of this House is that you get a free copy of the New Statesman every week”.—[Official Report, 7/9/23; col. 570.]


I never thought that I would use this phrase, but I opened my New Statesman this week to discover that the editorial, headed “A very British scandal”, is about the very subject that has led to the necessity of this legislation. With your Lordships’ permission, I will read the peroration—for a very good purpose:

“The malaise that the Post Office scandal has exposed in British life is that of unaccountable power. Its executives obfuscated and denied errors despite being confronted by innumerable injustices. Institutions such as the Post Office and the Royal Mail—diminished by its botched privatisation—should exemplify the common good. All too often they become self-serving bureaucracies, with customers and workers bamboozled should they complain. Yet this affair is also a reminder of the best of public life: crusading journalists and MPs (such as staff at Computer Weekly and the Conservative peer James Arbuthnot); gifted screenwriters and actors; and, most of all, tenacious campaigners such as Mr Bates who will not cease until justice is done”.


My noble friend Lord Arbuthnot is an example of the best of public life.

The Post Office Horizon scandal exemplified many of the trends that have led to anger and political apathy among the public. Political indifference and delay, exacerbated by a defensive posture among the legal profession and others, have resulted in ruinous, life-altering outcomes for thousands of innocent people. To add insult to considerable injury, Fujitsu—the company responsible for this debacle—has won 150 government contracts since the details of the Post Office scandal began to emerge. Since December 2019, when the Appeal Court ruled that the Horizon system contained bugs and errors that resulted in miscarriages of justice, the Government have awarded contracts worth more than £4 billion either solely to Fujitsu or as part of joint public sector contracts. For those affected, there could be no greater evidence of a thumb on the scales of justice than this asymmetry of consequences. Postmasters have faced financial hardship and ongoing legal limbo, while those responsible have received implicit government endorsement in the shape of new lucrative contracts.

This is bad enough, but recent evidence has suggested that the Post Office has also treated the limited compensation it grudgingly offered to sub-postmasters as tax deductible. Dan Neidle, the head of Tax Policy Associates, has outlined why these claims are illegitimate, stating that you cannot

“claim a tax deduction for things which are unlawful, illegal or outside the trade”,

such as wrongly prosecuting 4,000 postmasters. We must also ask why, given that the £934 million they claim as deductible relates to historic periods, it is only this year that the Post Office has made a designedly oblique reference to this practice in the small print of page 101 of its accounts. I am pleased that HMRC last week confirmed that this matter—one of five where Tax Policy Associates believes that the Post Office has materially underpaid its tax—is under active investigation.

Mr Neidle is also campaigning openly for better compensation in the present scheme, for the element of damage that reflects destruction of reputation and stress. As I heard him explain only the other day, in the context of employment tribunal awards that component of the calculus of the total sum of compensation attracts awards of between £1,000 and £11,000 for the lowest levels of damage to reputation and emotional damage. For the more severe, awards are between £11,000 and £34,000. For the worst examples—I venture to suggest that the vast majority, if not all, the wronged postmasters must have suffered reputational damage and stress of the worst kind—employment tribunals are awarding between £34,000 and £56,000, whereas most postmasters are getting no more than £5,000 from the current compensation scheme.

Alongside today’s Bill, I am also pleased that a brief Act of Parliament providing for exoneration of all those affected is now being considered, which is something I first suggested in your Lordships’ House in June 2020. Given that three and a half years have elapsed between that date and this, such a glacial pace in providing redress may be another useful exemplification of a problem that saps confidence in the political process among the public.

At the heart of this miscarriage of justice is the fundamental unreliability of the Horizon software, upon which the original prosecutions depended. It is equally clear that, without the group litigation brought by the 555 sub-postmasters, the flaws and glitches in the software would not have been uncovered. Here, I return to a question which I raised in your Lordships’ House last Wednesday: where does, and where should, the burden of proof lie in respect of computer-derived evidence? The Police and Criminal Evidence Act 1984 placed that burden upon those who rely on such evidence. But, in response to lobbying from the Post Office, among others, we saw that change, because of a Law Commission recommendation. There is now a presumption in favour of the reliability of such evidence unless a defendant can prove why it may be compromised. How can we possibly expect an individual unversed in the complexities of computer programming or algorithmic, sequential decision-making to provide such proof? This is a further asymmetry that needs urgent action. I would be grateful if the Minister could give an undertaking, maybe not today, that this will form part of the follow-up to the Williams review.

Finally, I turn to the broader issue that my noble friend Lady Chakrabarti alluded to, and which is an obsession of mine: artificial intelligence and its integration into our public services. If the Horizon system—far more rudimentary than any AI-infused technology—can precipitate such confusion, misery and frustration, there is a risk that a far more complex system could produce more apparently coherent, though equally unjust, outcomes. In such a case, the pursuit of justice in the case of error would be more tortuous than that endured by the sub-postmasters we are discussing today. Noble Lords may recall a scandal that hit the Netherlands in 2019, whereby a self-learning algorithm falsely labelled thousands of people in receipt of child benefit as perpetrators of fraud. What was the result of that? Poverty, a wave of suicides among those affected, and children taken into foster care. Perhaps most worryingly, the algorithm disproportionately—and, to reiterate, falsely—targeted those from ethnic minorities.

I realise this is well outside the Minister’s purview, but, as we learn lessons from the Horizon scandal, what plans do the Government have to review the integration of AI into the work of the DWP in this country? Perhaps more importantly—I have asked this question and it has not yet been answered—what is the statutory basis for the use of AI in public services at all? Surely the use of AI in this way risks violating the Blackstone principle, of which the noble Lord, Lord Arbuthnot, reminded your Lordships last week. I will not repeat it, because my noble friend has already dealt with this. In this respect, I return to the Dutch case to which I referred. The victims had no way of knowing why their cases had been identified as potentially fraudulent, and officials claimed they had no way of accessing the algorithmic inputs and could therefore not describe why they were under suspicion. This echoes the Kafkaesque nightmare of the sub-postmasters—accused by faulty technology, denied access to the very information that could exonerate them and forced, in the meantime, to endure penury and stigmatisation.

I will support this Bill, as my party will, as it passes your Lordships’ House with, I trust, the utmost rapidity. I keenly anticipate further measures, not merely to provide full restitution to those affected by the Horizon scandal but to strengthen scrutiny and ministerial oversight over arm’s-length agencies. Nothing adequately can compensate the sub-postmasters and sub-postmistresses who have lost years of their lives to this injustice, but I believe that ensuring such a tragedy cannot happen again may at least console them with the thought that their suffering has not been entirely in vain.

20:39

[Baroness Jones of Moulsecoomb (GP)]

My Lords, this Bill is welcome because we needed to see some action from the Government. It is very good, but of course there are a lot of questions that remain to be answered. I am curious about how many of these will get an answer over the next few years.

Where did the sub-postmasters’ money go? Did it pay for the bonuses of those who prosecuted them? Did Fujitsu ever get fined or even suffer any consequences for the failures of the Horizon system? Is it going to suffer in the future? At the moment, the taxpayer is covering the cost of the government redress scheme, but when do we get some of that money back from the people who made a profit or claimed a bonus as a result of destroying the lives of thousands of sub-postmasters?

What are the lessons we should learn, not just from this horrendous injustice but from the common themes of numerous modern scandals? We have had Hillsborough, which turned victims into pariahs as the establishment closed ranks. There was the “spy cops” scandal, with its denial of systematic abuse and cover-up, and the institutional racism of the Windrush scandal, which has its echoes in the racial profiling of sub-postmasters. All these are examples of how the establishment closes ranks and blocks progress. There is no recognition of how our democracy is failing to deliver for ordinary people.

There are so many awful things about the scandal of how the Post Office treated its sub-postmasters: the lies and threats used to isolate people and make them feel alone; the vicious use of courts to silence complaints about a flawed computer system; a system of corporate bonuses designed to encourage malicious acts against innocent people; and, of course, legal teams and professionals who lost their moral compass. This is David versus Goliath: a Goliath that was a private corporation, backed by the state and able to destroy people’s lives one by one. At least 236 sub-postmasters were sent to prison for offences they did not commit. Many have died poor and some committed suicide. Over 3,000 had their names dragged through the mud.

It is absolutely incredible that the sub-postmasters have had the resilience to get together and win. I am in awe of their tenacity and their patience—except, of course, they have not won yet. In the last decade, they have been deceived and messed around with previous compensation schemes. Fujitsu remains a favoured government contractor. In fact, it has won nearly 200 public sector contracts worth nearly £7 billion. When the sub-postmasters are cleared and their names are removed from the criminal records database, guess who has the contract to do that? Fujitsu. Is it, perhaps, too big to fail? Is it considered irreplaceable, or are there other reasons for continuing to use it?

It was the Post Office that relentlessly persecuted the sub-postmasters, but Fujitsu provided the expert witnesses in court to declare that it was the “Fort Knox” of software. It effectively pointed the blame at the sub-postmasters and away from the company, yet it now acknowledges that there were bugs and errors right from the start. Why, then, has Fujitsu been involved in £4.9 billion of solo and joint public sector contracts after the December 2019 ruling, including £3.6 billion during Sunak’s time as Chancellor and now Prime Minister?

Is it the close ties with Conservative Party donors, such as Simon Blagden, who stepped down as non-executive director at Fujitsu UK in 2019? He was a man who, along with companies he is associated with, has donated £376,000 to the Tories since 2005. Or the 2019 donation by Fujitsu Services Ltd of £14,000—peanuts, really—or the £21,000 to the Conservatives to run the Blue Room at their conference in 2015?

I am now going to offer some solutions, because I do not like to criticise without coming up with something positive to say afterwards. I suggest that the Government now take three immediate steps. They should hand back donations from those linked with Fujitsu. That is a role for the Conservative Party. They should have a moratorium on Fujitsu public sector contracts until the public inquiry reports. There should be a pause in using Fujitsu until we understand exactly what it did. They should pay the redress money as soon as possible, but get back as much from Fujitsu as possible. I see no reason why the taxpayer should carry the burden of most of the redress money. I would really like to point out that there are more questions raised now than answered. It would look very good from the Government’s point of view if they could, perhaps, answer some of those questions before the public inquiry does.

20:45

[Lord Forsyth of Drumlean (Con)]

My Lords, I thought for a dreadful moment that I was going to say, “I agree with everything the noble Baroness said”, but she spoiled it with her party-political points at the end. She will forgive me if I do not pick up on them, but what she had to say about what has happened is something all of us feel very deeply.

I have been around Parliament for close on 40 years, and I do not think I have ever felt so ashamed of so many things that have gone wrong, with devastating consequences. The Bill is about compensation. I do not know how you compensate people for losing some of the best years of their lives. I do not know how you compensate people for the horror that they have faced of having to live from hand to mouth. All I know is that something has gone dreadfully wrong with our system when it took my noble friend, who is a hero although he denies it, and Kevan Jones in the other place for the Labour Party, more than 20 years. This has gone on for more than 20 years, and even now we have a Bill to extend the time still further. I am not against the Bill. I can see that in practical terms it is necessary, and I am grateful to my noble friend the Minister for saying that the Government are not going to take their foot off the gas. I have to say that the foot has not really been on the gas for quite some time.

My noble friend the Minister said that this is a small Bill; I think we are going to have a very big bill at the end of this process—I am referring not to legislation here, but to cash. I was delighted to see Fujitsu today, speaking from Davos—the irony—admitting moral responsibility. There is a legal responsibility as well.

I want to say a few things to my noble friend about some of the reasons that I say that this is much wider. What was the board of the Post Office doing? Did nobody on the board of the Post Office think, “Isn’t it a bit odd that we are suddenly getting all these cases?” Where were they? What has the department done to hold the board to account? Are there malice and clawback provisions—which are common throughout business nowadays—that apply to the Post Office? Are they being applied? I am sorry, but it is not good enough for Ministers to say, “We are waiting on the results of the public inquiry”. It is not the public inquiry’s responsibility to hold the members of the board of the Post Office responsible for discharging their fiduciary duties. That is for Ministers to do. I am at a loss to understand this. Look at what has happened to some of the people on the board of the Post Office: one of them is now a Permanent Secretary in a government department. I am not saying that she did anything wrong, but I just find it completely remarkable, so can my noble friend tell me what action has been taken by Ministers to look at the conduct of the members of the board? Did they not read the newspapers? Did no one think, “Isn’t it odd that we’re having all these sudden cases of alleged fraud and dishonesty coming from nowhere?”

Then we have Fujitsu. I read in the newspapers—to follow the point made by the noble Baroness, Lady Jones —that when Ministers wanted to take action to stop Fujitsu getting contracts, they were told that poor performance in respect of one contract did not enable you to not have some of the others. What is this world that operates in Whitehall? Every household in the country, if it gets a duff builder, does not feel that it has to give that builder another opportunity, so there is something desperately wrong with the procurement process and the way in which Ministers are advised.

Now I would like to say something at risk to myself: I would like to criticise the Lobby correspondents in this place. My noble friend has raised this on numerous occasions, and we have all tried to support him in one way or another. It gets nowhere. It does not get reported. Then we have a television programme and now my noble friend is full-time doing interviews and explaining what has happened, but for years and years it was not of interest, like so many reports produced by Select Committees of this House which warn—I will not go through the whole litany of them—and they do not get picked up because the Lobby correspondents are too busy as a pack operating on how many bottles of champagne have been sold in the House of Lords, for example, which hit the headlines the other day, completely wrongly attributing it to Members and not to people who come here.

I am not a lawyer, but I always understood that lawyers had a duty to the courts and to ensure that information was disclosed, whether in court cases or tribunal cases. So what was going on with the lawyers? What was happening there? Is the regulatory body waiting for the inquiry as well? The inquiry will report and then there will be another couple of years—by which time we will all be dead—before we know what actually happened. Why are the regulatory bodies not doing this?

On the subject of the Lobby, why is it that Computer Weekly has been the hero here? Our paths crossed, my noble friend and I, after Liam Fox, when he was Secretary of State for Defence, set up an inquiry to look into the Chinook helicopter crash on the Mull of Kintyre. I did this with a judge, and with the noble Baroness, Lady Liddell. We exonerated the pilots. Quite frankly, when we looked at the evidence, there was a whole load of information that had not been made available to Ministers. I see a pattern.

I concluded that a whole bunch of important people concerned with security in Northern Ireland had all gone on one helicopter, which they should not have done. The helicopter had not been approved to fly safely; indeed, there was evidence that it had been thought that it would be positively dangerous. The easy thing to do was just to blame the pilots. The case took 11 years. My noble friend, again, was one of the heroes pursuing that issue. While the families battled to get clarity, some of them died, as has happened with the postmasters. There is something fundamentally wrong with the way we operate when these scandals occur.

I congratulate my noble friend on his persistence. In the film, someone says, “I never thought a Tory MP could be so nice”, or something to that effect. Just for the record, whether they are Tory or Labour MPs, or even Liberals, or Liberal Democrats—are there any Green MPs?—whatever they are, the vast majority of Members of Parliament, in my experience, do their duty by their constituents and work very hard; there are some bad apples, of course. But if we get answers from Ministers that do not answer questions, if Parliament is not able to do its job because the Executive has become overmighty and too powerful, they cannot deliver. The result, of course, is a scandal of this type.

Having got that off my chest, I want to ask my noble friend the Minister one question. This concerns one individual, Lee Castleton; I know about this only because of the media coverage. We know, because the Post Office has admitted it, that Lee Castleton was used “pour encourager les autres”. He defended himself in court, he got a bill for over £300,000 and he was bankrupted. Will those legal costs be remitted to him? Will he be compensated for all the legal costs?

When, greatly to their credit, the Prime Minister and other Ministers say that people will be restored to the position they would have been in had this not happened—wow—what does that mean, and who will decide that? It does not mean just compensation in terms of some approved scale or whatever. What about what happened to their homes and house prices and everything else? When we talk about compensation, what are we actually saying here? How will this be delivered, and in a realistic timescale? We are all getting older, and they have had to wait far too long.

Finally, I want to ask my noble friend, although I know that he does not have responsibility for it, what is going on in Scotland in this respect? I read in the newspapers that, in Scotland, they are talking about providing a pardon. I am sorry but, if I am a postmaster who has been falsely accused, I do not want a pardon. I want absolutely it on the record that I have been exonerated. A pardon is not enough. I appreciate the legal difficulties but it is not enough, and you cannot have a different system north and south of the border when you are talking about restoring people’s integrity and reputation.

I apologise to the House for going on for so long at this hour. I had hoped to do it on Thursday when we talked about accountability, but we were given three minutes, and now I can talk for as long as I like. But I might lose the House if I did so.

There are some serious issues here about accountability and about the relationship between the Executive and Parliament. This needs to change. There is going to be a general election. It will be interesting to see what the parties say in their manifestos about dealing with this. We all know on all sides of this House that Parliament is broken and not working properly. We know that because we get all the legislation that comes here from the other place that is not being properly discussed. We know that because we get Answers from Ministers to Written Questions and Oral Questions which have been written by civil servants who do not show sufficient respect to Parliament, and Ministers—perhaps some—who do not respect Parliament to the degree they should. When that happens, it means that people have to battle for 20 years. I pay tribute to my noble friend, who—he really needs to shed his modesty—is a symbol of what is good about this place. This whole episode has revealed a very rotten undercurrent, which needs to be addressed.

20:56

[Baroness Hoey (Non-Afl)]

My Lords, it is a huge pleasure to follow the noble Lord, who has probably spoken for those people watching and listening tonight. What he is saying is that there needs to be a real, deep-rooted look at how we work generally within Government and in Parliament, and particularly with the civil servants. I agree so much about the Post Office board.

I thank the Minister for his very sincere and clear outline of the Bill. It is rare on a Second Reading to get so much agreement between everyone. One or two things I would not necessarily agree with, but most of what has been said tonight I absolutely agree with. This is the first time for a little while that I have seen a Bill that actually includes Northern Ireland. I thank the Government for this because of course dozens of people went to prison in Northern Ireland too. I am very pleased about that.

The Bill is about compensation, but the reality, as has been said by other noble Lords, is that no amount of money will bring those people who took their own lives back to their families, no amount of money will replace the time that people spent in prison, and no amount of money will help take away that terrible trauma we know those men and women felt when they knew that their local community—which they had loved, trusted and worked with—was looking at them in a different way, because there was always this idea that there was no smoke without fire. The point raised by the noble Baroness, Lady Chakrabarti, and her explanation of exoneration is so important. It is not just about compensation. Money cannot replace all of those things. However, of course it is important that we deal with that quickly, and that is why it is good also that the time limit is being extended if necessary.

I want to say a few words about Fujitsu. I find it shocking that today we saw Fujitsu’s European boss, Paul Patterson, tell MPs, as has already been mentioned:

“We were involved from the very start. We did have bugs and errors in the system and we did help the Post Office in their prosecutions of the sub-postmasters and for that we are truly sorry”.


Fujitsu’s website says:

“For over 40 years, Fujitsu has been a trusted provider to the public sector through the delivery of nationally critical services”.


I say to the Government that it is inexplicable to me that they could continue to give contracts at this stage to that company. Paul Patterson also said today, “We all make mistakes”, but the reality is that Fujitsu lied. That is not making a mistake.

On the moral obligation to contribute to the compensation scheme that has been mentioned, we have to be clear that Fujitsu is going to be made to pay huge amounts of money. As the noble Baroness said, it should not be the taxpayer picking up the tab; it should come from those who were at fault.

I am sorry if it seems as though I always come back to Northern Ireland, but Fujitsu has the contract for the Trader Support Service. I got an answer to my Question about how much it has been paid. It is a Fujitsu-led consortium and it is very expensive: so far, from August 2020 to August 2023, it has spent £411.6 million on the scheme. Apparently, Fujitsu suggested when it got the contract that it had the capacity to make the Irish Sea border work smoothly, and that is why it got all this public money.

However, hauliers are already saying that despite getting this huge amount of government money, Fujitsu is not providing a smooth service. The wonderful technology that it went on about is still struggling to deal with things such as mixed loads going across and the whole way that groupage works. We need to ask why Fujitsu was given that contract, why it cannot now have that contract removed, whether it can deliver and whether it has been overpaid. If the Government were simply to restore Article 6, that money could be given to many of the people who have suffered under the Horizon scheme and under the overall control of Fujitsu.

Tonight is important because we are moving on. I welcome that things have moved so quickly in the last short while. I add my tribute to all noble Lords who have been talking about this and trying to do something about it for many years, particularly the noble Lord, Lord Arbuthnot. I hope that we can now work out the compensation, but accountability is the crucial bit. We cannot let these people get away with this. We cannot let them continue to think that they can simply go back to people who complain about anything to do with the public sector and tell them that they know best and technology knows best.

I welcome this measure. I am glad that we have been able, finally, to move it forward as quickly as we can.

21:03

[Lord Cormack (Con)]

I am glad to follow the noble Baroness, not least because I agree so passionately with what she and others have said about my noble friend Lord Arbuthnot. He has been exemplary in the way that he has behaved. He has been persistent, tenacious and, in the end, successful, but it has taken far too long.

Something that puzzles me is that those of us who have represented constituencies in the other place, particularly if they were rural ones—I had a significant number of post offices in my constituency—know that in almost every village the postmaster or postmistress was looked up to as one of the leaders of the community. For the life of me, I do not know how the Post Office or anyone else could have thought that these people who had done so much for their communities—provided local leadership, run the flower shows and all the rest of it—suddenly, all over the country, had turned bad and become criminals. It is just implausible. If it were in a novel by the noble Lord, Lord Archer, no one would believe it. It is incredible that this has happened.

I want to make one or two points. First, this Bill, which has my wholehearted and complete support, is a misnomer: there is no such thing as compensation—others have touched on this—for the destruction of lives and livelihoods, for deaths; there is no way that you could adequately compensate for those things. Of course, they must have decent and proper payments, and they must have them as quickly as possible. I believe the Government should absolutely commit themselves to making these payments by August. August is referred to in the Bill, and I ask that my noble friend the Minister do everything he possibly can—I know he cannot give a total commitment to your Lordships’ House tonight—to ensure that the Secretary of State and the Government sign up to an August deadline because this must not go on and on and on.

I also agree wholeheartedly with the need for doing more, and what was proposed in the other place last week has my broad and enthusiastic support. But we do have to recognise the constitutional implications of Parliament passing an Act that, at a stroke, overturns judgments in dozens, if not hundreds, of court cases. It is very important that we recognise—I am very glad to see the noble Lord, Lord Hunt, nodding at that point—the constitutional implications of what we are doing, and in recognising them, we need to commit ourselves to say that this will never be necessary again. As to how we do it, it must be in consultation with the judiciary, and various things spring to mind: a decent budget for the Criminal Cases Review Commission might be one of a number of ways we could contemplate doing it. We must not put ourselves in the position again where Parliament can undo, at a stroke, what the independent courts of this land have determined. I beg noble Lords not to think that I am, in any way, seeking to oppose what is proposed, but I think we need to understand the implications of it very carefully; it is incumbent on all of us to do that.

I thought that the noble Lord, Lord Browne of Ladyton, made a very important point about artificial intelligence. I cannot pretend to be an expert on these subjects—I think everybody in the House knows that—but I am very worried about the manipulation of artificial intelligence. I am very worried, with the general election approaching, about the consequences for the future of our democracy. It is possible to recreate the voice of the noble Lord, Lord Hunt of Kings Heath, and my own voice, and to put words into our mouths that advocate things we would never in a million years advocate and, what is even worse, to have people taking those things seriously—we do have to recognise this. And that is why the noble Baroness, Lady Hoey, was right to talk about the responsibility of Fujitsu. I cannot anticipate the results of various inquiries, but it does seem that it has a lot to answer for. I was horrified by the figure of £411 million that the noble Baroness quoted in a more recent context; it has a lot to answer for, and I believe it should have a lot to pay for as well. I think that is absolutely fundamental.

I agree wholeheartedly with the Blackstone dictum, which I have quoted in your Lordships’ House in other contexts: far better that 10 or a dozen rogues go free than that an innocent man or woman is punished. But we have to recognise that this is not the only scandal. I suppose we really ought to urge ITV to do a series on the contaminated blood scandal and on Windrush. This is one of a number, although I believe it to be the worst, in both numbers and content—but it is not the only one. We in this House, and our colleagues in the other place, have an absolute duty to do all we can to ensure that these scandals are not replicated.

We will have a far better chance of doing that if we remember the words of the late Lord Judge: if we have legislation that is properly thought out, if we abandon the Henry VIII clauses and the Christmas tree bills, and if we recognise above all else that the Executive is answerable to Parliament, not the other way round.

21:11

[Lord Sikka (Lab)]

My Lords, it is a rare occasion on which I agree with everything that has been said. No amount of compensation can compensate these people for the pain they have suffered—not only them but also their families and friends. I have a number of questions for the Minister, and I will take this opportunity to put on the record some other matters that will hopefully be helpful for later debates.

First, can the Minister confirm that there will be no upper limit on the amount of compensation?

Secondly, paragraph 14 in the Explanatory Notes states that the scheme will be

“administered by the Post Office”.

Why? Who on earth could have any confidence in it being fair? Surely the entire board needs to be sacked and a new board needs to handle this, or an independent body needs to be created. I do not think many people will have any confidence in the current board’s ability to handle this matter in a fair way.

Thirdly, there are press reports—the Minister may have seen them—that one postmaster got compensation of £15.75. Could he look into this please? I have looked at the 14-page form that this sub-postmaster filled in, and I would not like to complete it. It effectively asks them to give up their rights for any future claim. That is utterly inappropriate, and it is another reason why the Post Office is not a suitable body to handle the compensation claims. I hope the Minister will attend to that as a matter of urgency.

A number of comments have been made about accountability, and directors and auditors have been mentioned. I will put some matters on the record in relation to that. I checked the Companies House filings today and, between 2002 and 2023, there were 83 directors of the Post Office. Despite full inside knowledge, not one of them went on the public record to say that something was wrong. They were complicit, they lied and they committed fraud—83 of them.

The Post Office also had several non-executive directors, who are supposed to challenge what the executive board does. None ever spoke up, despite some also being heads of the audit committee and the risk management committee. There has been a conspiracy of silence, injustice and fraud, and they all need to be held to account.

Noble Lords asked what on earth happened to the money extracted from sub-postmasters under fraudulent pretences. It may interest them to note the Second Sight report from 2015, paragraphs 22.11 and 22.12 of which say that

“for most of the past five years, substantial credits have been made to Post Office’s Profit and Loss Account as a result of unreconciled balances held by Post Office in its Suspense Account … It is, in our view, probable that some of those entries should have been re-credited to branches to offset losses previously charged”.

That was in 2015. The Post Office did not do so. Directors on performance-related pay were very keen to boost the bottom line; they directly benefited from this fraud. They all knew for years that something was wrong but continued in exactly the same way.

There were also violations of the Companies Act 2006 requirements by directors of the Post Office. For example, Section 386 requires directors to keep “adequate accounting records”. In view of the flaws of the Horizon system, it must be doubted that the company did so. Failure to keep adequate accounting records is a criminal offence, so what exactly have the Government been waiting for? Why have they not charged anyone? Is it because we do not have a central enforcer of company law in this country? We are almost unique in the western world in that respect.

Section 172 requires directors to

“act … in good faith … promote the success of the company for the benefit of its members as a whole, and in doing so have regard … to … the interests of … employees … suppliers, customers … the community”

and have

“high standards of business conduct”.

Anyone looking at the 300 pages of the High Court judgment would conclude that the directors totally failed to do that. Unfortunately, we do not have an enforcer of company law, so the onus is on the Government to act. What action has been and will be taken? I have no confidence in the Insolvency Service being able to do anything—we would be waiting another 10 years.

I turn to auditors. Ernst & Young was the external auditor of the Post Office from 1986 to 2018—the entire period of the scandal. As part of their statutory duties, an auditor is required to state whether in their opinion

“adequate accounting records have not been kept, or … returns adequate for their audit have not been received from branches not visited”.

The company did not keep proper accounting records, as I said earlier. Despite the overwhelming evidence to the contrary, Ernst & Young said that it was satisfied—how could it not be, having picked up £1.8 million in fees in the previous two years? Was it all to do with money? This is not the first time we have talked about the role of auditors; there are numerous scandals, and I have published a lot of academic and other research on them.

Ernst & Young knew that the accounting system was deficient. That much is clear from a publicly available, 36-page Post Office report titled Horizon—Response to Challenges Regarding Systems Integrity, dated 2 August 2010. It was written by a gentleman called Rod Ismay, the head of product and branch accounting at the Post Office. He joined the Post Office in 2006, after 11 years working for—guess who?—Ernst & Young, and was now liaising with the auditor. The report is very concerned about the court cases and adverse press reports. I first became aware of this scandal in 2009 from an item in an accountancy magazine, and I have followed it and noted with considerable dismay that nobody actually honed in on auditors or corporate governance. It was all about the systems and everything else.

On page 19 of the report, there is a paragraph that we need to take note of:

“Ernst & Young and Deloitte”


—it has been involved in some capacity—

“are both aware of the issue from the media and we have discussed the pros and cons of reports with them. Both would propose significant caveats and would have limits on their ability to stand in court, therefore we have not pursued this further. The external audit that E&Y perform does include tests of”

Post Office Limited’s

“IT and finance control environment but the audit scope and materiality mean that E&Y would not give a specific opinion on the systems from this”.

Another paragraph is most damning:

“It is also important to be crystal clear about any review if one were commissioned—any investigation would need to be disclosed in court. Although we would be doing the review to comfort others, any perception that POL doubts its own system would mean that all criminal prosecutions would have to be stayed. It would also beg a question for the Court of Appeal over past prosecutions and imprisonments”.


That is an internal document—a report of the Post Office—which is publicly available, and auditors have discussed all of this.

The point is that Ernst & Young had considerable awareness of the issues, systems and internal failures. On 27 March 2011, it wrote to the management of the Post Office. I will read two paragraphs from that letter:

“The outsourcing of Post Office Limited’s … IT function to a third party … provider (Fujitsu) creates a degree of complexity and difficulty for POL in gaining assurance that”


these

“are adequate … We noted that POL are not usually involved in testing fixes or maintenance changes to the in-scope applications; we were unable to identify an internal control with the third party service provider to authorise fixes and maintenance changes prior to development for the in-scope applications”.

It knows that Fujitsu is pulling the strings, having unauthorised access to anything and everything. None of this ever gets mentioned in the accounts and the audit report—none. That is the state of audit that we have in this country.

Ernst & Young knew the failures of the system and the cover-up. It knew that the company did not keep adequate accounting records, and adequate returns were not received from branches not visited by it. Post Office profits were inflated by the amounts fraudulently taken from postmasters.

I have questions. I taught auditing for many years as an accounting academic. The first thing you teach students is that if management asserts something, you try to independently corroborate it; the more that you are able to corroborate something, the more confidence you can have in it. How on earth did Ernst & Young corroborate what the management told it, or did they simply rely upon it? How did it verify income and profits, with millions, possibly—I do not know how much—in loss of money given by innocent sub-postmasters and simply taken by the Post Office?

E&Y knew the Post Office had suspense accounts. The existence of prolonged suspense accounts is an indication of accounting misstatements and possibly fraud—I am sure the noble Lord, Lord Palmer, would agree with that. It should have been put upon inquiry that something was wrong. That went on for years and years. How did Ernst & Young test any corporate reconciliation of those suspense accounts? How was it persuaded to believe that no provisions needed to be made for any contingent liabilities, given that it had access to all the press clippings and everything?

There is an issue. Every year, Ernst & Young gave the company its customary clean bill of health and, as I indicated, in the final two years it collected £1.8 million in fees. As a sole shareholder of the Post Office, the Government need to sue Ernst & Young, because it owed a duty of care to the company at the very least —if not to anybody else. It has been utterly negligent and a party to a cover-up. The Government need to have the Ernst & Young audit investigated from 1999 onwards—not just one year, the whole period. What exactly was it doing? I hope that the Minister will say, “Yes, that will begin tomorrow, next week or next month”, because we need to be very firm on this.

Finally, I fully support the Bill and I await further Bills to reform corporate governance and auditing.

21:25

[Lord Weir of Ballyholme (DUP)]

My Lords, I enthusiastically support this legislation, which has received support from every corner of this House—even from the sober representation of the Democratic Unionists. I suspect that we are not responsible for very many of the bottles of champagne that the noble Lord, Lord Forsyth, made reference to earlier.

This issue has deep personal resonance for me. I come from a Post Office family. My mother worked for many years for the Post Office. My father worked his entire adult life for the Post Office until his retirement in 1987. I shudder to think what either of them would have made of this appalling scandal. In the 1970s, my father spent a good deal of his time working alongside virtually every sub-postmaster and sub-postmistress in Northern Ireland, helping them to fit what were referred to as “bandit screens”—a euphemism for a form of protection used to try to protect post offices from robbery. That should give us pause for thought.

The noble Lord, Lord Cormack, highlighted that the sub-postmasters and sub-postmistresses are the backbone of our communities and the glue that holds them together, but we should also remember that the service and self-sacrifice they give to the community have often come at deep personal risk. Post offices were quite often targeted as the easiest and most vulnerable target of organised crime, terrorism and local villainy whenever robberies were being pursued. Those are the people at the heart of the scandal before us.

It is right that this legislation is just one piece of the jigsaw. It is important that the inquiry deals with accountability at both an organisational and an individual level. It is clear that there has been negligence, deceit and maybe even criminal behaviour on the part of some of those individuals and organisations, and it is right that we hold those people to account through the due process of law. It is also the case that the focus needs to go beyond accountability and that the inquiry should deal with many of the systematic issues that have been highlighted in this debate and beyond: the future role of AI, the shift in the burden of proof when it comes to the reliability of computer evidence, and the question of which organisations should have the power to take criminal prosecutions. All those issues need to be taken into account, and many more.

It is right that we focus today on what may be euphemistically called compensation for sub-postmasters and sub-postmistresses who have been affected. The contents of the Bill are of great merit: it is right that the Minister is given the power to compensate and, indeed, that the scope is wide enough to cover all those who have been directly affected.

I welcome the removal of what I think is an artificial date: the restriction of compensation ending, in effect, in August 2024. I also welcome the Minister’s commitment that the foot will not be taken off the pedal in relation to this.

It is also vital, as has been highlighted by the noble Baroness, Lady Hoey, and others, that this covers sub-postmasters and sub-postmistresses in England, Scotland, Wales and Northern Ireland. The Post Office is a unitary body, effectively, throughout the United Kingdom. Whether it is in the inner-city branch or the most rural of settings, tasks, performance and terrible things have happened throughout this kingdom, so it is right that everybody is put on a level playing field.

To that extent, the Government need to look at the scope of exoneration. It is clear that the Government are rightly determined to ensure exoneration throughout the system, but, when questioned on this last week, they highlighted initially that the legislation was focused on England and Wales. But we know that in Scotland and Northern Ireland, there have been 100 prosecutions, I think: 76 in Scotland and 24 in Northern Ireland. I appreciate that the Government have committed to consulting with the relevant bodies in both those jurisdictions to take matters forward. But I say to the Government that, if we are left with a process that, at best, becomes unnecessary duplication of legislation in other jurisdictions to achieve the same effect or at worst, as highlighted by the noble Lord, Lord Forsyth, an inadequate pardon, which becomes a form of second-class solution, that is inadequate. It is worse still if we leave some of those sub-postmasters and postmistresses in a situation in which justice and exoneration for them comes with a level of unnecessary delay because of that duplication. That would be unacceptable.

I appreciate that there are legal barriers as to why this is difficult to do, but I urge the Government to take every action they can to think outside the box to ensure that we have legislation which covers every sub-postmaster and sub-postmistress who has been affected throughout the United Kingdom. That is the fair solution, as we have with this legislation.

Many years ago, there was a slogan used in Northern Ireland in an election campaign. I cannot remember which particular election it referred to, or even what it directly sought to overturn, but the slogan was “To put right a great wrong”. We all know within this House that whatever we do cannot completely put right what has happened in terms of the wrong that has been done to the victims of the scandal. For some, it is sadly too late. Some have taken their own lives; others, through the passage of time, have passed away; and for any sub-postmaster or sub-postmistress who has been impacted by this, irrespective of the level of compensation, if you gave them the choice of all the compensation in the world or turning the clock back and making sure that this never happened to them, they would choose the latter. We cannot completely put things right. But today at least, and I think with a unanimous voice, we can take a large step in the right direction by passing this Bill.

21:33

[Baroness Brinton (LD)]

My Lords, we have had an extraordinary debate on compensation, exoneration and accountability, but this very short, two-clause paving legislation to grant the power to incur expenditure in relation to compensation for the victims—the postmasters and postmistresses—is absolutely vital. However, the detail that we have been discussing is not in this Bill. For the short term, the actual scheme for this particular compensation package is something that I hope the Government will take notice of. But there is time for politicians of all parties to review the entire nature of compensation schemes and the way they work. This is just one of many schemes that have gone wrong in the administration, and we must look at that.

We were reminded by the noble Baroness, Lady Chakrabarti, of the repeated abuse of the human rights of the postmasters in this whole process over the years. They were let down by organisation after organisation. We must have the postmasters at the heart of any debate that we have about this. It is an appalling miscarriage of justice. We were reminded of the personal sacrifice of many postmasters by the noble Lord, Lord Weir, and the risks that they face before they have to start looking at their accounting packages—but worse is that they are still waiting for justice and many, as we have heard, are waiting to receive compensation or redress.

My noble friend Lord Palmer talked about the presumption of innocence, and that must be essential for getting to exoneration. The postmasters, led by the absolutely admirable Alan Bates—who is as modest as the noble Lord, Lord Arbuthnot—have fought for decades to get to the truth of what happened and to clear their names. The noble Lord, Lord Forsyth, referred to lobby correspondents and other media, but there have been some extraordinary journalists over the years. He referred to Rebecca Thomson and Karl Flinders of Computer Weekly, but Private Eye has covered this story for decades, as has Nick Wallis at the BBC, and John Sweeney’s “Panorama” in 2015 was done at an absolutely key time.

All of that happened before Paula Vennells was even the chief executive of the Post Office. I am very grateful for the comments that the noble Lord, Lord Forsyth, made about politicians. One of the problems with how our press works at the moment is that there tends to be one person that they talk about. There have been other chief executives and other senior directors of Post Office Ltd during the really difficult time when it was becoming apparent behind the scenes that there were problems. Today is not just about those who need to be held accountable in the future, but that must happen in due course. The contribution of the noble Lord, Lord Sikka, about the role of auditors, was very timely and very important. This would not be the first audit scandal of the last few years.

The noble Baroness, Lady Hoey, quoted from today’s comments by Fujitsu. The noble Lord, Lord Forsyth, said it had been 20 years, but it is clear that the problems started just after Peter Lilley MP signed off the pilot in 1994. Even then, the pilot postmasters were reporting problems—in 1995, 1996 and 1997. It goes right back. This is not party-political. I am just making the point that Fujitsu and the Post Office both knew that there were problems before the rollout started in 1999.

The Father of the House, Sir Peter Bottomley, said last week:

“The titanic error was the belief in technology”.—[Official Report, Commons, 8/1/24; col. 86.]


However, every day, including today—the noble Baroness, Lady Hoey, mentioned Fujitsu’s testimony to the Science, Innovation and Technology Committee—more is revealed about what the company knew, even from prior to the rollout, as I have just mentioned. The noble Baroness, Lady Jones, talked about the chief executive admitting today that funds that postmasters were forced to pay may have gone into executive pay. If that is true, it is an absolute disgrace.

The noble Lord, Lord Browne, and others, talked about computer problems. I am married to an engineer. He is not a software engineer, but he deals with software in the things that he designs. One of my foster children is a software engineer. They look at each other with raised eyebrows and talk about “garbage in, garbage out”. “Garbage in” is done by people, not by computers. The problem that the noble Lord, Lord Browne, raises, is, “Will that happen in the future?” We have to hold Fujitsu to account for those errors, which it then clearly did nothing about. The noble Lord, Lord Forsyth, said that he felt ashamed. I feel ashamed too. I want to quote from Professor Graham Zellick KC, the former chairman of the Criminal Cases Review Commission. He was angrier than we are. He said:

““I am enraged. I think this is deplorable. It is inexcusable. It is a failure of public administration and government without precedent. It makes one’s blood boil”.


I hope that we continue with that strength of feeling as we move into the next stage and the drama moves out of the limelight, because we must learn lessons from this. The Secret Barrister—some noble Lords may follow him on Twitter/X—said:

“As the issue of compensation for miscarriages of justice is rightly in the news, it’s timely to note that in 2014, the government changed the law to make it all but impossible for people wrongly convicted and imprisoned to claim compensation”.


Much has already been said in this debate, but I want to go on to talk briefly about the future. Various Members have talked about the problems that people in the HSS—the Horizon shortfall scheme, now known as the historic shortfall scheme—have had with the application form. The noble Lord, Lord Sikka, referred to a case where someone claimed only £15.75 because he did not understand the form; there was a reference in it to looking at Appendix 1, but it was so impenetrable that he thought it did not apply to him.

Another case cited by Dan Neidle, who runs Tax Policy Associates, concerned someone who was made bankrupt, lost his post office in a fire sale and has been offered £8,000. The numbers of people receiving offers from Post Office Ltd for compensation are good, but if compensation is at that level, it is not good and it is inappropriate. We need a more transparent mechanism to streamline the current complex arrangements, which Government after Government have created with crisis after crisis, to have what amounts to two and a half schemes running—the GLO and the HSS scheme and then the new review scheme that was announced 10 days ago.

Dan Neidle says we should probably follow the example of employment tribunals. For example, why are sub-postmasters not allowed a grant for legal advice before they put in their applications? They should be. There should be a larger fixed amount for damages; cases are different, but everyone who has been involved, whether they have been convicted or not, has lost income, often their job and their home, and been unable to work at the level they were working at before because of the threats they were under. Redress needs to reflect their loss of earnings. They should also receive the very specific amounts of money that they were forced to pay back—not compensation. They should be paid back the money they had to pay in error. The idea of those who were convicted and imprisoned having to pay charges for bed and breakfast from their compensation is an absolute outrage that should not be allowed. On occasion, there will be specific damage above and beyond that outlined which might, for example, cover a suicide in a family or those who have had strokes.

Finally, we should consider a complete change to the way in which these compensation schemes operate. Next week in Committee on the Victims and Prisoners Bill, we have an amendment on the infected blood scheme. We are still waiting for the details of the interim payments. The first young people were infected in the mid-1970s—it cannot go on like this. Others have spoken about the Windrush scheme; I would raise Hillsborough and Grenfell, where there are similarly complex arrangements. Surely, now is the time to consult on future arrangements for compensation schemes, including whether they should remain with government or be independent, so we can be sure that we have a reliable, independent, swift and fair scheme that cannot be constantly adjusted, ignored or delayed, particularly by politicians.

21:43

[Lord McNicol of West Kilbride (Lab)]

My Lords, I welcome this Bill and am glad that the Government have accepted Sir Wyn Williams’s recommendations in his interim report that the current deadline for compensation must be extended. It is my hope, as has been said by many this evening, that the extra time the Bill provides for is not needed, and that compensation is delivered as quickly as possible.

Labour is committed to working with the Government to ensure the best possible outcome for victims. As the shadow Leader of the House of Commons said last week, justice delayed is justice denied. It is deeply shameful that, 25 years after the rollout of Horizon began and 15 years after this scandal was first revealed by journalists and campaigners, victims are still seeking justice. It is particularly saddening that justice did not come quickly enough for the more than 60 sub-postmasters and sub-postmistresses who died before being compensated and before having their convictions overturned. It is incumbent upon us to ensure that justice is delivered, and delivered urgently.

I am glad that the Government have committed to mass exoneration to save victims having to relive their trauma and that the Metropolitan Police has opened an investigation into those who caused it. My noble friend Lady Chakrabarti is right: it will be difficult to unpick and there will be legal issues, but it is incumbent on all of us to overturn these convictions and allow people to move on as quickly as possible.

The question still remains around why it took an ITV drama for justice to finally be tabled for the victims. The noble Lord, Lord Forsyth, touched on the board, and I remember standing here four years ago after the Court of Appeal decision, when one of the issues that we touched on was how much the lawyers had taken out of the £58 million. I think £12 million was left. That point was raised by a number of noble Lords, and I asked a question then about the chief executive and the board. I had no idea that there had been 80 members of the board—it would be interesting to look through them now—but questions were asked four or five years ago about their culpability. The Minister—not the noble Lord, Lord Offord, but the previous Minister dealing with it—was again very positive about what we needed to do, but we still have not seen any action taken against the individuals who had oversight at that time. That is something that we need to look at and make sure we resolve for the future.

The public are rightly sick and tired of scandal after scandal, which has again been a theme of this debate. From Hillsborough to Grenfell, from Windrush to infected blood, we have had enough of the destruction of innocent people’s lives, the cover-ups, the vindictive way in which victims are treated once they come forward and the lethargic speed at which the Government act.

The Post Office has used the opportunity of the last decade not to hold up its hands and make amends to those it has wronged but to do everything it can to protect the bottom line and its once good name. Only last week, it was revealed that the Post Office had claimed tax relief on the compensation payments it made. As compensation is not a legitimate tax-deductible business expense, HMRC will likely be investigating the matter, and it is reported that the taxpayer may have to foot another bill, just short of £100 million, to settle what the Post Office owes the Exchequer. This was not before its creative accounting meant that bonuses could be paid to senior executives in line with its false levels of profitability. My question to the Minister is whether those moneys will be reclaimed by either the Post Office or the Government.

I will pick up the point made by the noble Baroness, Lady Brinton, about only ever focusing on one of the CEOs and move to another. In 2022, the then Post Office CEO Nick Read received a bonus of £137,000. According to Tax Policy Associates, the average payout under the Post Office Horizon shortfall scheme was £32,000 before tax. As we have heard tonight, from my noble friend Lord Sikka and the noble Baroness, Lady Brinton, one applicant was paid out £15.75, while also signing to say that he relinquished any future claims. I hope that that will be overturned and dealt with.

My noble friend Lord Browne and the noble Baroness, Lady Brinton, touched on ways of moving forward with this. As has been said, Dan Neidle has made the argument for looking at an employment tribunal-style way of dealing with this that will set levels we can move up from. I am interested to hear the Minister’s response to that.

Alongside compensation, we must seek reforms, not just of systems and structures at the corporate, judicial and governmental levels but of culture. The culture of covering up instead of owning up has cost so many sub-postmasters and sub-postmistresses their livelihoods, their relationships—which we have not really touched on—their dignity and in some cases their lives. The culture was one of being rewarded for failure, and of the people responsible for administering scandal not only not being held responsible for their actions but in some cases receiving handsome bonuses, honours and new jobs. It was a culture that, in this case, meant that the scandal was compounded; that prosecutions continued long after the Post Office became aware of the flaws of the Horizon software; and that lawyers helped mislead Parliament and the courts, and threatened journalists working to uncover the truth. It was a culture in which, as we have heard, the Post Office made compensation forms deliberately difficult for sub-postmasters to complete in order to minimise payments; in which a former Post Office Minister was paid a six-figure sum for advising the firm legally representing the Post Office; and in which the Business Department nominated Paula Vennells for a CBE two years after group action lawsuits had been launched in the High Court.

Responsibility and accountability are vital. I am glad that the leader of the Opposition made standards in public life a key part of his campaign when we entered this new year. The public are crying out for trust in their leaders. They need faith in a system and government that works; faith that each week will not bring about a new scandal; and faith that the worst instincts of humans will not be indulged or rewarded but punished. Those parliamentarians campaigning for the sub-postmasters and sub-postmistresses have helped show that Parliament and parliamentarians can stand in a good light. As my noble friend Lord Browne and the noble Lord, Lord Forsyth of Drumlean, said in referring to the noble Lord, Lord Arbuthnot, and Kevan Jones MP, they represent the best of public life. It is my hope that this scandal could be our last, and that the collective jolting of the public consciousness that has occurred over the last month will lead to a serious shift in the way that those in power are permitted to act. With that, we on these Benches support the Bill.

21:53

[Lord Offord of Garvel (Con)]

My Lords, it is with great responsibility that I stand to conclude what has been a respectful debate. We have heard many insightful and personal contributions from noble Lords across this House. I particularly echo the numerous and heartfelt tributes paid to my noble friend Lord Arbuthnot, who has been a long-time champion of those affected by the Horizon scandal. A key part of this is that the noble Lord, plus Kevan Jones MP in the other place, are members of the Liaison Committee, where my colleague Minister Hollinrake is dealing directly with them on a daily basis. That is an important part of the architecture of this, and something that the sub-postmasters and sub-postmistresses have expressed confidence in. Again, that is a great tribute to my noble friend.

I will start by picking up on the remarks of my noble friend Lord Arbuthnot. Yes, this will be a simple piece of legislation, but it will encompass the question raised by the noble Baroness, Lady Chakrabarti, who asked whether this will be a blanket exoneration. The answer is yes: this is a blanket exoneration to be given to the sub-postmasters—those who have had convictions —and speedy compensation will be given to all on the basis that, as was mentioned by the noble Lord, Lord Palmer, these folks are presumed innocent rather than guilty. So I can start by saying that this Bill exactly achieves what my noble friend Lord Arbuthnot was going to be pitching for; that has been delivered with the support of the Prime Minister and Minister Hollinrake.

In terms of speed of compensation, I reassure the House that our plan is to keep going, not to go more slowly. The delay here is not a delay of time: it is just allowing the due process to move through. Alongside the Bill, we have made a commitment to make offers on 90% of cases within 40 working days of receiving the GLO application, and we will publish monthly updates about the number of cases submitted and settled. In fact, to answer the question raised by my noble friend Lord Arbuthnot, it is actually the Government’s aim not to require a technical extension. The aim of the Government is to actually have this compensation made by 7 August, within the original timetable. Technically, that is not entirely within the Government’s gift because, clearly, claimants are underrepresented and need to give some evidence on their claims. They want each of their claims to be assessed on an individual basis, which is the right thing to do, and that is often not a simple process. They are telling us that it takes time, and they are saying that they want sufficient time to bring in their claim.

There are a number of folks who are affected but do not want to do that, which is why we are giving them the opportunity to go straight to up-front compensation within the GLO scheme. If you are just done with lawyers and completely scunnered by the process, and you feel that you want to take the £75,000, those who choose that route can take that straight up front and therefore get away from the lengthy claims process. We want to ensure that no one is timed out of compensation or rushed into making decisions. That is what the statutory inquiry, chaired by Sir Wyn Williams, has recommended, and we have taken action to address that.

I will turn now to a number of the points raised in the House this evening by noble Lords. The key objective of this Bill is that we have redress—that is a very good word that we should be using; compensation is compensation, but is it not the idea that we have to provide restitution for people have been wronged, to put them back in the position that they were in before?

The noble Lords, Lord Browne and Lord Sikka, and a number of other noble Lords, mentioned some of the paltry sums that have been quoted in terms of individual claims. In fact, when one looks at the overall Horizon shortfall scheme—the main HSS scheme, which is for those 2,500 claims for people who were not convicted—the average on that is £42,000 per sub-postmaster. That gives you an indication that there is quite a wide range of claims. It is quite right that there is not one single number for everybody, because each claim needs to be assessed on its merits. That gives some context to the £75,000 being offered to the GLO claimants who consider that they have a further claim to process.

Then, in the hierarchy of compensation, for those 983 people who have been wrongly convicted, of whom 95 have had their wrongful convictions overturned, there is an immediate ability to claim £600,000—again, without access to lawyers and without having to go through any process. That is your right as a claimant to take that. Again, however, if you feel that you deserve and should be compensated for more than that figure, there is no limit. There is no upper limit—to answer the noble Lord, Lord Sikka—to what can be claimed.

We are dealing with a cohort of individuals who, as my noble friend Lord Arbuthnot mentioned, are quite traumatised by this process. They watched the first GLO court action being successful and three-quarters of the money going to the lawyers, the claim administrators or the investors in the litigation, so there is deep scepticism within this cohort and community about the process being run.

Again, to answer the question from the noble Lord, Lord Sikka, the GLO scheme is being run by DBT, not the Post Office. The Post Office is running the Horizon scheme. Therefore, that is crucially where the advisory committee comes into play to make sure that there is a clear, independent voice for those who are feeling uncomfortable with that. In terms of the overturned convictions, the retired High Court judge Sir Gary Hickinbottom has been placed in to make sure that claimants feel they have an independent person to refer to.

I think in terms of process and redress the Government are making steps now to go fast, but it is up to each claimant to work out the process they want to go through. It is not right for me to comment on individual cases, but obviously the most egregious example given in the drama was that of Lee Castleton. I think his claim was about £26,000 but he ended up with a £320,000 bill. Again, I am not commenting on that case, but it does inform the £600,000 that can be claimed immediately against a case such as that. Indeed, if he felt he wanted to take that further, he could do that. That is a private matter for him.

[Lord Forsyth of Drumlean (Con)]

I know my noble friend the Minister does not want to comment on the particular case of Lee Castleton, but the point I was making about him was there were £325,000 of court costs. First, normally when you win you do not pay costs. The effect of saying that he is not guilty surely means that those costs should be returned. That has nothing to do with the compensation that is paid to him. So will costs be remitted? That is the key point. Secondly, in respect of that case, what do the Government mean when they say that things should be restored to where they would have been had this not happened? What does that mean because £600,000 is an arbitrary number? Some people lost their business, their house and their position. How will that principle, which I think is greatly to the Government’s credit, be delivered?

[Lord Offord of Garvel (Con)]

I commend my colleague the Postal Minister Mr Hollinrake for pushing through hard on the £600,000 because it is not for us to judge what any individual has lost; it is up to that individual claimant to make the decision about whether they want to go through the due legal process. The word “compensation” has perhaps been misapplied here. What we are actually talking about is a monetary sum to be given back which gives redress to individuals. In any particular case—for example, the case of Lee Castleton—it may well be that one can actually identify separate buckets, one of which might in fact be court costs be repaid, but within the overall settlement there will be an amount which should take account of all losses. If you have paid for someone else’s legal fees, that is a loss which needs to be repaid, so this will be tied up within each individual claim, the point being that if you do not as a postmaster want to go through the heartache and process of doing that, there is a route for you to receive a substantial sum and you can close the matter and get on with the rest of your life.

[Lord Arbuthnot of Edrom (Con)]

I would not want anyone to be confused in an already confusing situation. The £600,000 is not actually relevant to Lee Castleton because it is a sum that applies only to those who have overturned convictions. Lee Castleton was sued rather than prosecuted. I am sure he will get a lot more than that, which will include the legal costs that he had to pay and also all the issues about the bankruptcy that he went through and the horrors his family went through, and he will deserve a lot more than that.

[Lord Offord of Garvel (Con)]

I thank my noble friend for that clarification.

Moving onto another theme, there has obviously been a lot of comment on Fujitsu and we have all been horrified by the extent of what would appear to be its collusion in the matter. Again, we have to be very careful here to allow this inquiry to run its course. Sir Wyn Williams is very focused on this, and he will get it done through the course of this year. We will get answers to these questions.

Sir Wyn has been very clear, as indeed has Minister Hollinrake in the other place, that the cost of this must not fall solely on the taxpayer. We have now had the statement today from the European chief executive, effectively putting his hand up to say that he knows there is going to be a large bill to pay, and that it goes beyond moral to legal and financial. Again, that will be determined when we get through the inquiry.

The reality is that Fujitsu is embedded in all aspects of government, in many departments. We all feel nervous about that at this moment and I am sure that all departments will be reviewing that; but, again, we have to discover the extent of culpability. The company knows that it will have a large bill to pay. We have to allow that process to run its course. I am sure that there will be full accountability and from that—there is no question my mind—will cascade many levels of scrutiny of that company in every government department. I think we will be hearing more about that as we go.

The other theme brought through was governance of the Post Office. The noble Lord, Lord Forsyth, was very clear in asking how this works in respect of being a limited company with a board. The noble Lords, Lord Palmer and Lord Sikka, mentioned the whole accounting scenario. With respect to the current governance of the Post Office, it remains an arm’s-length statutory body; we are all now asking different questions about how that works.

[A noble Lord]

With shorter arms.

[Lord Offord of Garvel (Con)]

Shorter arms, yes. There has been quite a big overhaul in terms of organisation, some of which is pretty obvious when you look at it. There is now a huge amount more central support and training given to postmasters. There are 100 new area managers, creating a buffer zone between the manager and the board. Two postmasters have now been appointed to the board as non-executive directors. There is an appointment of a current postmaster in a director role concerned with the day-to-day relationship with the postmasters. All of it should have been done a long time ago.

As we look at public bodies, those of us who have been in the private sector understand how boards work. We understand the role of non-executive directors, which is to challenge management. It is not to nod and pass, or to wave through. It is to be intellectually curious and, if you find something that does not stack up, to probe it and question it. That has not happened here. We have had an organisation that looks and feels like a plc. It has renumeration committees, audit committees, auditors, a board of directors, non-executive directors and a non-exec chair. All of these, when they are put into businesses, are put in for checks and balances, as the noble Lord, Lord Sikka, said. What we have had here is a mirror image of this architecture without any checks and balances. I think this requires us to look quite hard across quite a wide range of arm’s-length bodies.

[Lord Sikka (Lab)]

I am glad that the Minister has clarified that relationship, but my concern is that, for as long as I can remember, the Government have been preaching shareholder activism. What happened to that when it came to the shareholder—the Government —in the Post Office being active? Did nobody notice the pile of newspaper clippings about the cases? I do not remember any Minister standing up and saying “Right, we’re going to look at this” until after the High Court judgment. Why did the Government fail on their own so-called shareholder activism?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that searching question. Of course, this covers about three or four different Governments and more than half a dozen Ministers; that is just a fact. The reality is that the shareholder of the Post Office is the taxpayer. The share is owned by the Secretary of State for the Department for Business and Trade. Under the current structure, that is effectively subcontracted to an independent board. If that independent board had acted on an independent basis, this would not have happened. In fact, if Ministers had slightly more inquiring minds, this would not have happened.

I look at myself in my role as a Minister. I look at the advice that I am given and at the decisions I have to make. There is a lot coming through on a daily basis. I ask myself this question: if I had been in this role and prior to Horizon there had been an average of, say, 10 convictions per year in a bad year—maybe five on average—and that went up to 80, even though I was very busy, doing a lot of things, and even though I said I had an independent board looking at this for me, would not that raise some inquiry? This fundamentally is the shocking scale—we are all embarrassed about this—of the abuse here. The accountability piece of this will absolutely come through the Wyn Williams inquiry. That will then move us to the next stage of the lessons that we learn from it.

Next is the theme of legal process, brought up by the noble Lord, Lord Cormack, as well as the noble Lords, Lord Forsyth and Lord Weir, and also in relation to the Scottish angle. The noble Lord, Lord Cormack, says that the lawyers have some disquiet about the idea of Parliament overruling courts, but we have had the counterbalancing argument from William Blackstone. I think the House agrees that that overrides that particular issue.

In Scotland and Northern Ireland we have different jurisdictions. There were 77 prosecutions in Scotland and 24 in Northern Ireland. To speak from a Scottish point of view, those prosecutions were brought not by the Post Office but by the Crown Office. That is a separate legal jurisdiction in Scotland. Yes, we are one United Kingdom, but in the UK we respect the legal jurisdictions of the devolved nations. The Lord Advocate has reported today to Holyrood, the devolved Parliament in Edinburgh, saying that she is not currently in favour of a blanket rescinding of convictions because, she says, not every case involving Horizon will be a miscarriage of justice. She wishes to go through the appeal court—the Scottish Criminal Cases Review Commission. From a legal point of view, she is saying that these convictions were made by a court and therefore should be undone by a court.

We are at an early stage of that dialogue. There are letters and communication going between the MoJ in London and the Lord Advocate and the Crown Office in Scotland, and there is communication between the First Minister and the Prime Minister on this. That just highlights that there are some legal complexities here. The reserved matter remains reserved. Compensation will be the same for all jurisdictions, but there are some issues to be resolved regarding the actual legal process—certainly north of the border.

[Lord Browne of Ladyton (Lab)]

How on earth does a court challenge the evidence that the information coming from this computer is to be treated correctly because of the presumption? How on earth does the court overcome that? Only we can overcome that. We need to change the law. Unless we do so, we will always have this problem. The fact of the matter is that everywhere on this island the courts are not fit to deal with these cases. There were miscarriages of justice everywhere. The courts were not fit to test the evidence.

[Lord Offord of Garvel (Con)]

That is exactly the position that has been taken here by the Lord Chancellor for England and Wales, and that is now the conversation that has to be had in Scotland and Northern Ireland. We are dealing with a legal complexity that was confronted earlier this week by the Lord Chancellor, who now needs to run through the process with the Lord Advocate.

We come to the accountability issue. There have been comments from the noble Lords, Lord Sikka and Lord Palmer, about the role of the auditors. Again, you will get technical answers back that this is a separate statutory body that does not account to the National Audit Office because it has its own auditors, but then we find that that the auditor, EY, has signed off on the accounts. This is what we need to get to the bottom of. There needs to be a full inquiry to bring this to light. We will get the answers to these questions. Out of this, as I said, there will be a cascade of inquiry taking us into the fundamental territory of how the Government operate alongside quangos, arm’s-length bodies and so on. We have not heard the last of this. Its repercussions will come down through Whitehall.

Lessons will be learned, but right now our responsibility is to get the blanket exoneration that the noble Baroness, Lady Chakrabati, was asking for, and which my noble friend Lord Arbuthnot is now satisfied will be given, and getting the compensation—whatever that means; let us say financial restitution—to the claimants as quickly as possible.

This is a sorry saga and, as my noble friend Lord Forsyth said, we are all deeply embarrassed by it. It has taken so long; it has been going on for 20 years. How people did not ask more basic questions is something that we all need to reflect on. All of us Ministers are looking at that. From my own personal point of view, I am certainly looking at things quite differently through the lens of, “Where’s my sniff test on what I’m hearing, as opposed to just what I’m told by officials?”

I commend the noble Lord, Lord Weir, on his personal reflections on this and his story about his father being a postmaster. Is that not the essence of what we got from the series, and from our personal experience in the towns and villages where we live, that these folks are the salt of the earth? How could they as a group suddenly become criminal? How could we go from half a dozen convictions a year to 80? It just does not make any sense. So I thank the noble Lord for that contribution. That is what is turbocharging our response to this matter.

I say in conclusion to noble Lords that, as far as my department is concerned—and my colleague Mr Hollinrake is working very hard to ensure this—those who are affected by this awful scandal will receive the full and fair compensation that they are owed, and we will do that as quickly as possible. Postmasters have suffered for too long. That said, with their having waited so long for justice, the Bill ensures that the Government will not need to force victims into unduly rushed decisions on the complex and emotive issues of compensation.

I repeat my thanks to all noble Lords for their contributions today. I know the House takes a strong interest in this scandal and wider Post Office matters. I hear what the noble Baroness, Lady Brinton, said about where this takes us on previous scandals, and I am sure there is more to be said about that. This Bill is just one part of the extensive action that the Government are taking to defend the interests of postmasters, and I commend it to the House.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

House adjourned at 10.18 pm.