Post Office (Horizon System) Compensation Bill

(Limited Text - Ministerial Extracts only)

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

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.

--- Later in debate ---

[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.