Post Office: Horizon Accounting System

Lord Bichard Excerpts

Tuesday 25th February 2020 Grand Committee

[Lord Bichard (CB)]

My Lords, I have come to this case rather late in the day and defer to those who have been involved for so much longer. I was aware that sub-postmasters in my local area had been involved. I therefore gradually took an interest, researched and read the background briefing. The more I read, the more concerned and appalled I became. That is why I will make a short contribution to this debate; I am so grateful to the noble Lord, Lord Berkeley, for enabling it. This is not something that we should allow to go away.

Obviously, I share the views already expressed. I feel an acute sense of injustice on behalf of the sub-postmasters and sub-postmistresses, many of whom have seen their reputations and lives destroyed by what has happened here. Some have been made bankrupt or imprisoned and many have suffered mental health problems as a result of the anxieties they have faced. Surely none of us can feel comfortable about that. I suspect very few of us feel that the settlement finally reached is sufficient compensation for all they have suffered, particularly when so much of that money will go to lawyers.

There are at least four wider issues—some have already been mentioned—that we need to look at. The first is the way the Government and the Civil Service department managed the relationship with the Post Office during this time. The judge suggested that the Post Office appeared at times to conduct itself as though it was answerable only to itself. It is not, it should not be, and we should better understand why the situation was allowed to happen.

I have run large government agencies and non-departmental bodies in the past. I was always very aware that my parent departments were watching me closely, and sometimes they would robustly challenge what I—what we—were doing. Was there robust challenge during this 20-year period? If not, why not? If there was, what was the consequence? That is the first of the four issues that we need to look at.

The second issue is the culture that exists in the Post Office so far as it concerns sub-postmasters. In the Appeal Court, it was said that it seemed that the Post Office felt entitled to treat sub-postmasters in

“capricious or arbitrary ways which would not be unfamiliar to a mid-Victorian factory owner.”

These are people who provide essential services in communities across the country—essential because many citizens depend on them for their existence. They are people who play an important part beyond that in their community. Whether they are fairly treated and supported is a matter of public interest; it is not an entirely internal matter for the Post Office, and it should not be.

We should be clearer about what the culture of the Post Office is. I note that in the last week or two the new chief executive has said how important it is to deal with this. Well, it starts from a pretty low base, from my observation—and, again, we need to take a close look at how it has got to where it is.

The next issue, which was raised by the noble Lord, Lord Berkeley, will I suspect be the subject of further litigation. Like the noble Lord, I have serious misgivings about the way Fujitsu managed the introduction of the Horizon accounting system. I also have serious reservations about how the Post Office and the department managed the contract and held Fujitsu to account. The judge himself commented that he had serious reservations about the conduct of Fujitsu staff during the course of the contract, and even during the court hearing. This is not the first IT problem close to government that has caused a few problems. It really is about time we learned the lessons and asked ourselves why this keeps happening. It is something else we should look at more closely.

The fourth point, which has not yet been mentioned, is that during the proceedings the Post Office said that if the sub-postmasters were right—and they have been proved right—it would represent, according to the Post Office’s own material,

“an existential threat to the Post Office’s ability to continue to carry on its business throughout the UK in the way it … does.”

If that is the case, and it is not just hyperbole, we again need to know how it intends to address that existential threat and ensure that this essential service continues to be delivered effectively.

As I said, these are wide-ranging concerns that go to the heart of how the Post Office behaves and is held accountable. For that reason, unless the Minister can provide sufficient reassurance today, I agree that there is a strong case for seeking a fully independent public inquiry covering the issues of culture, accountability, the role of government and the IT failures. After all, the only inquiry to date, I think, was the one carried out in 2013 on behalf of the Post Office by the accountancy firm Second Sight. That was restricted, I believe, to the Horizon system itself.

As I said in the House the other day when this Question was asked by the noble Lord, Lord Arbuthnot, it is sadly all too easy for large corporate organisations such as the Post Office to say that they have made a mistake but will ensure that it is never repeated. Frankly, that will bring little comfort to the sub-postmasters who have been so grievously mistreated. Nor should it be enough to reassure us that the culture will change, that the Government will properly manage the relationship with the Post Office, and that this important public service can deal effectively with the issues it faces. Words and promises are not enough. That is why, if I were a Minister—heaven forbid—I would want someone to have an objective, independent look at what happened, and to be sure that things would change.

--- Later in debate ---

[Lord Callanan]

I will come on to that shortly.

I was answering the noble Lord, Lord Berkeley, about Fujitsu. When handing down the Horizon judgment, the judge raised concerns in relation to the evidence provided by Fujitsu employees. Those cases have been referred to the Director of Public Prosecutions. It is, of course, a matter for the DPP to consider what action, if any, he would like to take following that referral.

My noble friend Lady Redfern asked about the kind of settlement and referred to it being inadequate, following the comments by my noble friend Lord Duncan. We recognise that it has been, to put it mildly, a difficult period for postmasters who have experienced the issues covered by this litigation. Mediation took place between the parties in confidence and, while I can confirm that the total amount of the settlement was £57.75 million, I am sure the Committee can appreciate the legal sensitivities of the matter. While the financial settlement is a major step towards resolving some of these grievances, there is more for the Post Office to do. It has committed to a major programme of work to overhaul its relationship with postmasters, which we in government are determined to see delivered.

My department has taken steps to strengthen the mechanisms for doing so. This has included expanding the BEIS Post Office policy team that works closely with UKGI in holding the Post Office to account at an official level. It also means strengthening the relationships and responsibilities of the Post Office, BEIS and UKGI through a new framework document that formalises that relationship and the responsibilities of those parties involved. I can announce that this will be published shortly. In addition, BEIS has established, and chairs, a quarterly working group involving the NFSP and the Post Office. The working group is a forum for discussing Post Office and postmaster relations and provides the opportunity for highlighting concerns the postmasters may have. As I said earlier, the Government are also engaging with other stakeholders in the postmaster community, including the Communication Workers Union, to understand the views of postmasters. Progress will also be monitored at the highest levels of the Post Office in quarterly ministerial meetings with its CEO, Nick Read.

I can confirm, too, to the noble Baroness, Lady Burt, that we are in the process of establishing the framework document to govern that relationship, and that will be published soon. I will now address her point about holding directors to—

[Lord Bichard]

Before the Minister sits down, will he agree, since he is clearly not inclined to accept the need for an independent inquiry, that the independent non-executive director, who I think sits on the BEIS board, might have a role in ensuring that these promises are kept?

[Lord Callanan]

Indeed, I would of course be happy to accept that. We believe, however, that additional accountability should be in place, which is why I outlined the further accountability mechanisms that we are putting in place: it will not be just the director on the board—there will also be a series of quarterly meetings between the CEO and Ministers, to make sure that we put in place all the appropriate accountability that is required.

On the issue of the directors responsible, we are pleased that the Post Office’s chairman and its new CEO, as well as the previous CEO, have fully apologised for getting things wrong in the past. The appointment of the new CEO in September last year is an important step for the Post Office in improving how the organisation is run, along with its relationship with its postmasters. However, the Government do not propose to take any further action against current or former directors.

Following the conclusion of the mediation, the Government’s focus is now on ensuring that the Post Office lives up to its commitment and moves forward under the leadership of its new CEO. The judgments in this litigation have provided the independent view of the facts that both parties sought for many years, resulting in firm pledges from the Post Office to reform postmaster relations and ensure the stability and sustainability of the network.

Your Lordships can be sure that the Government will hold the Post Office to account in delivering reform and ensuring that these crucial changes have a tangible and positive impact on postmasters. We will make sure that those hard-working individuals are respected and valued for the fundamental role they play in upholding the post office network and with it, delivering essential services to communities up and down the country.

Finally, I apologise for not having time to respond in detail to a number of points that were raised. I will do so in writing.