Post Office Horizon Compensation Scheme

Earl of Erroll Excerpts

Thursday 27th February 2025 Lords Chamber

[The Earl of Erroll (CB)]

My Lords, I thank the noble Lord, Lord Beamish, for bringing forward this debate. This issue has worried me for a very long time. I remember the great campaign in particular by the noble Lord, Lord Arbuthnot, as well as by others in the Commons. Some of us here mentioned it, but we knew we were getting nowhere and were labelled as nutters. After a while, because we wanted to get on with other important things, we just had to give up. I am delighted the noble Lord never did and that we are finally getting there.

As the noble Lord, Lord Beamish, said, the problems started years ago with the ICL Capture system and the PFI contract Pathway project to computerise the Post Office. It started going wrong very early on. I remember a parliamentary visit to ICL. Among other things, they showed us Horizon, though it was not called that then; it was either Capture or it may have been called Pathway. They said, “Sadly, it doesn’t work and we’re going to knock it on the head”. Very soon after that, Fujitsu took over and, suddenly, a bit later, this new Horizon system appeared in the Post Office. I was very surprised because, only a couple of years earlier, they had known perfectly well that it was not working.

A lot of people were taken off or left the Pathway project to work on the millennium bug to make sure that it did not take the country down—which it did not. It infuriates me when people say that so much money was wasted on the millennium bug. It was not. People pre-emptively sorted out the software so that things did not go wrong at midnight. In a way, the lesson is that lots of failures are needed and people must be paid to sort them out, but this is not the sort of lesson we want to learn.

I was told that part of the problem was that the Capture system was based on spreadsheets. The other trouble was the system for transferring the data centrally, which took place in a short, one-hour window in the evening, over telephone lines which, back in those days, were very dodgy—in some places, they are a little better today. That system often did not work, particularly with the software they were using, which was designed for very small datasets. The datasets they were transmitting were much bigger. There were lots of errors and lots of time was spent trying to sort them out. Very often, they did not work.

There is another problem in the system which you get in large organisations and everywhere else—confirmation bias. For a long time, those on the security side of the Post Office were sure that with the amount of cash sloshing around in the system, some postmasters out there must have been pocketing some of it. Therefore, when the Horizon system said, “Yes they are”, they said, “There, we’re proven right”. They were willing to believe that Horizon was right and not the others. That is the trouble with large organisations: you get these attitudes and they do not shift forward very easily.

Fujitsu knew the software problems and told the Post Office. It is on a PFI contract and therefore has a duty of client confidentiality and is not allowed to talk outside, so none of this was meant to leak. We were told by the Post Office and others that maybe they were crooks, but they obviously did not think about this very hard or investigate it properly. Auditors are all very well, but if they are investigating stuff that they do not know and understand, it is quite tricky, as they do not know what they are looking at.

Also, having dealt with accounting software in the past, I have noticed that large auditing companies do not understand cash-based accounting. They work on P&L accounting. You have lots of little accounts and you can push things away. You have control accounts between your sales or ledger accounts and your main nominal account, for pushing things into. You can tamper with them, which you cannot with cash-based accounts. In a cash system, the other side of your central bank thing, which tells you where the money is, is the individual postmasters’ accounts. If you tamper with one, it tampers with the other. The people doing the tampering probably realised that but were not listened to, so you have this big problem of not understanding things. Certainly, I have discovered that big auditors do not understand cash accounts. I have had this trouble in other small businesses.

It is just a ring of failures—of understanding, listening and looking at the problem properly. It is sad. However, the problem really is that there must have been people telling lies somewhere down the line. Those lies must have surfaced in some of the evidence given to the courts. There must have been people giving evidence to the courts or briefing the lawyers who were not telling the truth, in which case they are guilty of perjury. The only way of stopping this from happening in the future is to prosecute some people for perjury. There must be somebody in the Post Office, though not necessarily at the top; I do not know where it happened. I do not see why we cannot investigate who briefed whom with what to conceal the truth.

We should look also at how good the expert witnesses are. I do not know who the courts were relying on, particularly in the early days when they were being told that the systems worked. You must be very careful. We have had problems with expert witnesses in other areas as well. The courts need to start thinking about it.

Also, I seem to remember that barristers and expert witnesses owe their first duty to the courts, not to their clients. Sometimes our legal profession should think about that quite seriously, because that is how you can get these huge miscarriages of justice. We also need to remember that large bureaucratic organisations often like to conceal things that do not go right. I remember years ago trying to get a large part of an organisation—I had better not say which one—to adopt some software which would have been very good at tracking all the stuff around contracts so that you could tell exactly who had done what, what had gone wrong and everything like that. They said, “Oh. no, we can’t have that. The first rule is that if at first you don’t succeed, bury all trace that you tried”, because it would not be career-enhancing. Anyway, that is enough of the cynicism.

The sad thing about it is what happened to the postmasters and postmistresses. It was dreadful. It was known about for a long time and a lot of people colluded to hide it. I would like to see some heads roll. Who pays for it? Fujitsu made a lot of money out of those contracts, so I do not see why it should not ante up towards it. The Post Office must too, as it is hugely responsible for the whole thing. It owed a duty of care to its postmasters and postmistresses. We need to dig deep, but I would like to see some heads roll for lying to the courts. It really worries me when our court system is not working properly.