Post Office Horizon Compensation Scheme

Lord Beamish Excerpts

Thursday 27th February 2025 Lords Chamber

Moved by

[Lord Beamish]

That this House takes note of the progress of the Post Office Horizon compensation scheme and of the contribution of Fujitsu to the compensation of victims.

[Lord Beamish (Lab)]

I begin by declaring an interest as a member of the Horizon Compensation Advisory Board. I am looking forward to the maiden speeches of the noble Baroness, Lady Elliott, and the noble Lord, Lord Barber, both good trade unionists who I have worked with and known for many years.

Along with my good friend—and I call him a good friend—the noble Lord, Lord Arbuthnot, I have been involved in the campaign for sub-postmasters for over 15 years. I hope that our efforts have made a little contribution to exposing this scandal. The main efforts that need to be recognised in this scandal are those of Alan Bates and the sub-postmasters. They have ensured that we have got to where we are today, when the truth is finally coming out about what went on around the Horizon scandal.

I first became involved with this cause in 2009, when I was Member of Parliament for North Durham. A constituent of mine, Tom Brown, came to see me. He was an upstanding, hard-working postmaster who had received awards from the Post Office for fighting off an armed robber at his post office. He was accused of stealing £84,000.

Tom had raised with the Post Office the issues around the Horizon system, but he was completely ignored until auditors arrived to close his post office down and was subsequently taken to court for stealing £84,000. In that two-year process, Tom was made bankrupt. ironically, on the morning of the case at Newcastle Crown Court, the Post Office said it had no evidence to put forward. It was too late for Tom by then: his life had been ruined. Tom gave evidence to the public inquiry but, sadly, passed away last year before its conclusion. He was one of too many who passed away, never to see the justice that they deserved.

The Post Office Horizon issue has been described as a scandal, but I argue that it is worse than that. It is the worst example of when the state, with all its powers, not only goes unchecked but leads to collusion. Moreover, the state was in a position where it can bury the truth, even at the expense of individuals who are hard-working, upright citizens going to prison.

Over the years, the noble Lord, Lord Arbuthnot, and I, along with other parliamentarians from both Houses who have been involved in this campaign, have been lied to. Has it been a lonely furrow to plough over those years? Yes, it has. Certainly, when you talk to the campaigners and the sub-postmasters, you find that they have felt frustrated over the years that they have been not only ignored but lied to as well.

Without Alan Bates and the campaigners—the 555—who took the case to court, I am not sure that the truth would have emerged. Even when the case took place in 2017, the Post Office and the state were still prepared to spend £100 million of taxpayers’ money to try to bury the truth to ensure that it did not come out. To the credit of the campaign, its financial backers and Lord Justice Fraser, they did get to the bottom of the case, but again, they had to settle because the Post Office and the state used a tsunami of cash to try to stop the process. The dam did burst in that case to make sure that evidence that had been hidden for many years but known to many of us who had been involved in the campaign saw the light of day. Remarkably, the ITV drama on the Post Office brought it to a wider audience. The subsequent public inquiry has shone an even deeper spotlight to reveal the truth, and I look forward to its findings. I pay tribute to Sir Wyn Williams and the staff of the inquiry for the work that they have done.

The Government have paid out £633 million to victims through the Horizon compensation scheme. We have four schemes: the Horizon shortfall scheme, the group litigation order scheme, the overturned convictions scheme, and the Horizon convictions redress scheme. If you were starting afresh, would you start with four schemes? No, you clearly would not, because the claimants have quite clearly found the way all four schemes have operated to be frustrating and bureaucratic.

The advisory board has sought to try to ensure that there is fairness across the four schemes, and that we have a system whereby individuals can get some independent legal advice and, at the end of the process, can have the process and their claims looked at independently from the Post Office. The victims quite rightly do not trust the Post Office. The scheme with which I have the most difficulty is the Horizon shortfall scheme, because it was run by the Post Office. There is quite clear evidence that there was an attempt to try to settle many claims as quickly as possible to ensure that the Post Office did not have to come to the Government for more money. The advisory board has recommended that there should be independent processes at the end for claimants to be able to have their cases reviewed, because there is clear evidence that there are individuals who have accepted settlements without legal advice that, I would argue, were under settled.

If noble Lords want to know why victims distrust the Post Office, I can tell them that there is potentially a fifth scheme that surrounds the Capture system, which pre-dated Horizon. It only came about because I found out about it by accident. I went to see a postmaster in Northumberland a couple of years ago, who said she had been a victim of the Horizon scheme, but when I looked at the dates I discovered that they pre-dated Horizon, which surprised me. When I went to the Post Office and the Government to say that this was surely a Horizon case, they said that it could not be because the dates were too early.

We then found out that there was a pre-runner of Horizon called Capture, which again has thrown up other issues, including more than 200 individuals who were either prosecuted or had their lives ruined. Because of that, the Government instituted an independent report—the Kroll report—and have agreed to compensate those individuals. That shows the culture there has been at the Post Office of not coming forward. You would have thought that, with all the publicity around Horizon, someone might have come forward and said, “Well, we might need to look at the earlier system”. Again, however, we had to drag out of the Post Office, kicking and screaming, any information that was needed.

This comes to broader point. As I said, would you start with four schemes in the complex system that we have? No, we would not. There is a need in government—and it might possibly come out of the inquiry—to set up a body to look at how we pay compensation to victims of misjustice: certainly, for example, those affected by the infected blood scandal. But this scandal was not the result of mistake or failure: this was conspiracy—a cover-up—involving government, Ministers, the Post Office and Fujitsu.

Fujitsu was the main contractor. In terms of that company, sub-postmasters were always told that this system was infallible, that it could not be accessed remotely, and that whatever was put in by the sub-postmaster was somehow their mistake and their fault. It was quite clear, however, that there could be remote access to it, and this was known. It is clear that that could happen from Lord Justice Fraser’s judgment in the sub-postmasters’ case. Again, we were given the impression that it was the perfect system but that judgment found that there were 29 bugs, some of which went unchecked for many years.

Was this known at the corporate level? Yes it was. For example, in 2001 Fujitsu paid the Post Office £150,000 for a data breach. However, it is worse than that, because Fujitsu not only covered up the fact that the system was full of bugs and could be remotely accessed but took an active part in the prosecution of sub-postmasters. It had, as part of its contract, a litigation and fraud support unit, which provided the Post Office with data to support prosecutions. This was known as ARQ data. Lo and behold, this ARQ data was never checked, so in the case that went forward not only did Fujitsu employees gave testimony against the sub-postmasters but the data they were given was not accurate or even checked. We know this because Anne Chambers, who was a Fujitsu employee, raised this at corporate level in 2006 and asked why this data was being given without any checks whatever. That, again, was raised and completely ignored by Fujitsu.

That begs the question: what was Fujitsu actually doing? We know now that all this was known. In his testimony to the public inquiry, Paul Patterson, the director of Fujitsu in the UK, admitted to all of this. Likewise, Rob Putland, who was the senior vice-president, admitted to it when he wrote to the BIS Select Committee of the House of Commons in 2020. All the information was there, so it raises the question: why were these red flags not raised within Fujitsu itself?

At the public inquiry and the Commons Select Committee, Mr Patterson said that he apologised to the sub-postmasters and that Fujitsu would make a contribution to compensate victims. As of today, no money has been paid by Fujitsu to victims—and this is a company that is still making multimillion-pound profits from government contracts. That information is available in Computer Weekly, where, last week, Karl Flinders had a very good article showing that Fujitsu will potentially make, over the next few years, over half a billion pounds in new contracts. It said that it was not going to bid for new contracts, but what it is doing is extending existing contracts. That is happening at the same time as the taxpayer is paying out nearly £600 million in compensation to victims, and many victims are still waiting for compensation.

Fujitsu is hiding behind the public inquiry. It knows the evidence that it has given to the public inquiry is there. Nothing will be revealed from a public inquiry’s findings that we do not already know. So I suggest that it should make an interim payment of at least £300 million now to cover the cost for victims. Some major changes are also needed within Fujitsu. When the process for bidding for new contracts starts, the Government should bar Fujitsu from taking part in any future contracts if major change has not taken place. That would be a tragedy for the 7,000 people in the UK who work for Fujitsu, nor would it be good for UK-Japanese relations, a point that the noble Lord, Lord Arbuthnot, and I raised a few weeks ago with Mr Suzuki, the Japanese ambassador to London. I understand that, in a few weeks’ time, the Secretary of State for Business and Trade will go to Japan, and I suggest that he should meet senior Fujitsu representatives to press the case for them to make proper compensation, even if only on an interim basis.

In conclusion, yes, this a scandal, but it is also something that we cannot allow to happen again. We need to put in place things that not only prevent it happening again but change the culture, both within the organisations and in how we address these issues. We need a new system independent of government—an ombudsman system—which does not then mean that we need to have a public inquiry every time. Clearly, we need to strengthen whistleblowing, and the Government need to look at the way in which non-executives and others are appointed to outside bodies which, clearly, do not raise any questions. Finally, Fujitsu needs to pay up. It needs to make sure that it will not keep taking money from the UK taxpayer while it makes no financial contribution to this scandal.

I finish with this point. Tom Brown, who gave evidence to the public inquiry, was asked what he wanted from the inquiry. He said that he wanted the truth. That is what we owe Tom and all the other victims of this scandal. I beg to move.

--- Later in debate ---

[Lord Beamish (Lab)]

I am grateful to noble Lords for their contributions. We have had an informed debate. The important thing about this scandal that I have recognised over the years is that you have to keep bringing it to the surface so that people do not forget the gravity of what we face.

I will pick up one point that the noble Lord, Lord Hastings, made about the judiciary. In reply, the Minister talked about solicitors, but the noble Lord—and I agree with him—was talking about the judiciary as an institution. When the last Government overturned the convictions, there was a huge hue and cry from the judicial establishment, saying how terrible it was that this was taking place. I suggest that people read some of the transcripts of the court cases and look at the role of judges.

The one that sticks in my mind is the Capture case of June Tooby. Her protestations that Capture was the problem were completely ignored and thrown out by the judge, who was not prepared even to hear the consideration. Although cases are being taken against solicitors, the judiciary needs to look at its role in this. There is no way this could have happened if a few inquiring minds had asked questions. I ask the justice department to look at that.

On the role of auditors, that is unfinished business. I am sorry, but I do not accept that it is good enough for the Government just to say that it is down to the regulators to look at that. Over the years, sub-postmasters kept asking what had happened to their money. The accountants did not know where the money was in the system, even though it was signed off—and no doubt Ernst & Young and others were paid millions of pounds for their advice.

I understand the position of the Government and others in wanting to wait for Sir Wyn Williams’s report to be published, but I think that is being used as an excuse. Most of the information is out there now, and certainly in Fujitsu’s case it is—it has admitted to its role in this.

I welcome the Minister’s support for my suggestion that Fujitsu should support and pay an interim payment. I just hope that, when Minister Thomas meets Fujitsu, he makes that point strongly. I also urge that, when the Secretary of State visits Japan next month, he raises that directly with the main board in Tokyo.

At the end of the day, the contribution that got to the heart of it was that of the noble Lord, Lord Polak—it was a human story. We all have those, and if you have met any of the victims, you can replicate those human stories. At the end of the day, this is about individuals who were hard-working, solid citizens. They were pillars of their local communities and were absolutely devastated and ruined by these acts against them.

In closing, all I would say is that compensation and changing the systems are important, but we should all remember that, at the end of the day, when the state gets things wrong, it is the individual citizens—people such as Rita, referred to by the noble Lord, Lord Polak, who has gone through hell for the last few decades—we should think about.

Motion agreed.