Post Office: Horizon Accounting System

Lord Arbuthnot of Edrom Excerpts

Thursday 18th June 2020 Lords Chamber

Asked by

[Lord Arbuthnot of Edrom]

To ask Her Majesty’s Government, further to the answer by the Prime Minister on 26 February (HC Deb, col 315), what steps they have taken in relation to the establishment of an independent inquiry into the Post Office’s Horizon accounting system.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, last week the Government announced an independent review to consider whether the Post Office has learned the necessary lessons from the Horizon trial judgments and to provide an independent and external assessment of its work to rebuild its relationship with its postmasters. The Government are keen to see this review launched as soon as possible, and we are in the process of identifying a chairman to lead its work.

[Lord Arbuthnot of Edrom (Con)]

My Lords, perhaps I may explain why this review is so inadequate. The terms of reference have been designed to exclude all possibility of blame falling on the Government. However, last week my noble friend told me that the Government became aware only in early 2019 that transactions entered remotely might be invisible to sub-postmasters. That was unconvincing, since the Post Office had said in open court in January 2017 that that could happen. That verified what Second Sight had said in its interim report of July 2013—but then of course it was quickly sacked. Nor do the terms of reference say anything about the likelihood of the Post Office improperly making a profit from the sub-postmasters, or about the suspense accounts or the critical role that Fujitsu played in all this. Without asking those questions, you cannot get to the bottom of this, as the Prime Minister wants. Does my noble friend appreciate that the Government appointing one of their own rather than a judge as the chairman of this review does not fill us with confidence that it will be independent of the Government?

[Lord Callanan]

I pay tribute yet again to the work that my noble friend has done in both Houses on this important issue, along with other noble Lords and MPs. The findings outlined throughout the Horizon judgment already provided an extensive insight into what went wrong at the Post Office, including an independent judicial view of all the facts that all sides were looking for. However, the Government now accept that more needs to be done. We want to be fully assured that, through the independent review, there is a public summary of the failings that occurred at the Post Office, drawing on the judgments from the Horizon case and listening to those who have been most affected without repeating the extensive findings already entered into by Mr Justice Fraser. The Post Office has committed to co-operating fully with the review and we, as Ministers, will hold it to that. The review will have sufficient strength and breadth to deliver in a timely manner, and I assure my noble friend that the chair of the review will be fully independent of both the Post Office and the Government.

Horizon: Sub-postmaster Convictions

Lord Arbuthnot of Edrom Excerpts

Thursday 11th June 2020 Lords Chamber

[Lord Callanan]

The Post Office operates as an independent business. As noble Lords would expect, it has all the necessary insurance in place for a company of this kind. It is not, however, obligatory for businesses, including the Post Office, to take out insurance against computer malfunctions or liabilities to third parties that could result from such malfunctions. It is therefore unlikely that any of the Post Office’s insurances would provide cover for any compensation payments the business may be required to partake in.

[Lord Arbuthnot of Edrom (Con) [V]]

My Lords, when did the Government’s representative on the Post Office board first know that the Post Office had privileged access to sub-postmasters’ accounts, so that the Post Office or Fujitsu could alter those accounts at will without the sub-postmasters being aware of it? Was it from the Ernst & Young management letter to the board of 27 March 2011, or was it earlier than that? If my noble friend does not know, will he please write to me?

[Lord Callanan]

First, I pay tribute to the work my noble friend has done, both in the other place and in this House, to draw attention to this unfolding scandal. The issue of privileged access was discussed throughout the Horizon case and highlighted in the Horizon issues judgment. The Ernst & Young management letter he refers to was issued before Post Office Ltd was separated from Royal Mail Group. At the time, there was no government representative on the board. The first government representative was appointed to the board of the Post Office in 2012. The Government were aware from the information they received, such as that by the forensic accountants, Second Sight, in 2013, that branch records could be accessed remotely; however, we were then advised that any transactions entered remotely would be visible to sub-postmasters in branch. As far as I am aware, the Government were only made aware that this was incorrect early in 2019, via witness statements that were used by Fujitsu in the court case.

Sub-postmasters: Compensation

Lord Arbuthnot of Edrom Excerpts

Thursday 5th March 2020 Lords Chamber

Asked by

[Lord Arbuthnot of Edrom]

To ask Her Majesty’s Government what assessment they have made of the level of compensation received by sub-postmasters as a result of the Horizon accounting system litigation, as compared to the losses those sub-postmasters incurred due to Post Office Ltd’s policies.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, while the Government are pleased that a resolution has been reached on this difficult matter, the Post Office led the mediation and the Government were not party to it. While the financial settlement is a major step toward resolving some of these grievances, there is much more for the Post Office to do, including resetting its relationship with postmasters and addressing historic shortfalls for postmasters who were not part of this group litigation.

[Lord Arbuthnot of Edrom (Con)]

My Lords, I am grateful to my noble friend. Many of your Lordships will have been delighted to hear the Prime Minister say last week in Prime Minister’s Questions that there would be an independent inquiry into what he described as the Post Office Horizon IT system “scandal”. Can my noble friend give us details of that inquiry, in particular of how it will be independent of not only the Post Office but the Government?

[Lord Callanan]

First, I pay tribute to my noble friend for rightly pursuing these matters with dogged determination. We probably would not be where we are today without his work and that of many others on this issue. The Government recognise the strength of feeling about the negative impact that the court case has had on postmasters. As my honourable friend, Paul Scully MP, announced at BEIS Oral Questions on Tuesday, we are looking into what needs to be done. We will outline the next steps following the Prime Minister’s announcement as soon as possible.

Post Office: Horizon Accounting System

Lord Arbuthnot of Edrom Excerpts

Tuesday 25th February 2020 Grand Committee

[Lord Arbuthnot of Edrom (Con)]

I am grateful to noble Lords for allowing me to speak in the gap. I am particularly grateful to the noble Lord, Lord Berkeley, for initiating this debate and for his speech, which was a masterpiece of understatement.

The noble Lord, Lord Berkeley, rightly thanked Nick Wallis and Private Eye. I add to those thanked Computer Weekly, which has been campaigning on this issue for years. I warn the Committee, too, that I have a Question on this topic on Thursday next week. It would be very good if I could persuade noble Lords who have spoken to speak on that, because they will have been able to consider my noble friend’s reply this afternoon.

The Post Office inflicted losses on the sub-postmasters through its defective accounting system. It then blamed the sub-postmasters for those losses and often told them that they were the only ones suffering those problems. It then made them repay money it had already taken from them. Finally, it dragged those poor people through the humiliation of court hearings, criminal convictions, bankruptcies and worse. At my request it set up a mediation scheme, which it then sabotaged. It forced the sub-postmasters to incur an awful risk and the costs of litigation—litigation that the Post Office lost comprehensively, paying the sub-postmasters a derisory proportion of what they had lost.

It is hard to find words strong enough to condemn the people in charge of this catastrophic fiasco. What have the people in charge suffered as a result? One of them, Paula Vennells, has been given a CBE and now sits on government-sponsored boards. None of the rest, as far as I can see, have suffered at all. However, it is not their suffering that we want, but justice and proper compensation for those who have been dragged through this. The litigation settlement simply does not cut it.

In the common issues trial, the court found that sub-postmasters should be compensated for the loss of their office, which was not covered by the settlement agreement. How will the Government facilitate that? The court held that the National Federation of SubPostmasters was not an organisation independent of the Post Office and that its very existence depended on it not giving the Post Office grounds to challenge its activities. Evidence was also put before the court that the NFSP has, in the past, put its own interests and the funding of its future above the interests of its members. Why are the Government continuing to talk to the NFSP as though it were representative of the sub-postmasters when the judge has found that it is not?

As the noble Lord, Lord Bichard, said, it is clear from the judgments that Fujitsu altered the accounts of the sub-postmasters while telling people that it could not and while knowing that the sub-postmasters were being dragged through the courts, prison and bankruptcy, as we have heard. Some of the witnesses from Fujitsu have been referred to the Director of Public Prosecutions, but what more is being done to bring Fujitsu to account?

Finally, the accounting officer for the Post Office is the Permanent Secretary of the BEIS department. My noble friend the Minister is answerable for that Permanent Secretary. What responsibility do the Government take for this dreadful story?

National Minimum Wage Naming Scheme

Lord Arbuthnot of Edrom Excerpts

Wednesday 5th June 2019 Lords Chamber

[Lord Henley]

My Lords, as I said to the noble Lord, Lord Stevenson, the noble Lord will have to be patient and wait for the full announcement. Sir David made his comments and my right honourable friend took them on board. We want to review the effectiveness of naming and shaming. My honourable friend made it clear yesterday that:

“It is absolutely right for me, as the Minister responsible, to evaluate the scheme and make sure that any naming and shaming scheme is meaningful, adds value, acts as a tool to aid employers to make sure that they are able to comply with the national minimum wage legislation”.—[Official Report, Commons, 4/6/19; col. 49.]


We want to make sure that that legislation is effective. This is just one tool among many. As I made clear, there is also self-correction by employers and the possibility of civil fines and, as has happened on occasion, prosecuting in the criminal courts. We want to see how effective this is and whether it should be looked at again. That is what my honourable friend and right honourable friend are proposing to do.

[Lord Arbuthnot of Edrom (Con)]

My Lords, I am quite sure that it is my fault, but I remain confused. Has the naming and shaming scheme been suspended?

[Lord Henley]

I would not want to use the word “suspended”. My honourable friend made it clear in her Statement yesterday that naming and shaming was still there and available, but that while we were reviewing the scheme we were not using it. We want to look at the effectiveness of that scheme, as my honourable friend said, and decide how it can be made use of most effectively as one of the tools in ensuring that the minimum wage legislation, which goes back a long way—it was introduced by the party opposite, extended by the coalition Government and had further increases under the Conservative Government—all works well. It belongs to all of us.