Horizon Settlement: Future Governance of Post Office Ltd

David Jones Excerpts

Thursday 19th March 2020 Commons Chamber

[Mr Jones]

I thank my hon. Friend for that. She uses a great description.

We then come on to the issue of compensation.

[Mr David Jones (Clwyd West) (Con)]

The right hon. Gentleman mentioned the issue of Ministers. Of course the Post Office has a non-executive director appointed by the Government. One must assume that that non-executive director is reporting to Ministers. Would that not be an interesting topic for the inquiry?

[Mr Jones]

Yes, and I was going come on to that, because I would love to know who those non-executive directors have been over the years and what they said to Ministers. If I had been the Minister, I would have had that person in and scrutinised what was going on, as I am sure the right hon. Gentleman would. That would certainly have applied in the past few months, given the hundreds of millions of pounds that have been spent defending the indefensible.

In December, the Post Office agreed a settlement worth £57 million. Unfortunately, most of that has been swallowed up in the fees and the after-the-event insurance that the litigants had to afford. I do not criticise the lawyers—the people who funded this—because without them we would not have got justice, but that leaves about £15,000 for each of the successful people in the class action. We must recall that my constituent has lost more than half a million pounds, and the Post Office is settling cases outside this settlement for £300,000. What has to happen now is that a scheme has to be set up to compensate individuals properly. We must remember that £15 million of those costs were legal costs for pursuing the case, and £4 million of that is VAT, which will go straight back to the Government. Over the time that Paula Vennells was at the Post Office, she earned nearly £5 million, which just shows how the individuals who have been affected are not having happy retirements and peace of mind, but have been put through this system. The issue is clear to me: the figures that are being paid out now privately need a scheme.

I wish to make a couple of further points before I finish. The first is that the National Federation of SubPostmasters needs winding up now. It is not independent, nobody joins it—sub-postmasters are auto-enrolled. It is basically an arm of the Post Office and is paid for by the Post Office. Surely if it is going to be an independent voice for sub-postmasters, it should be that.

If anyone saw the Business, Energy and Industrial Strategy Committee hearing last week, they will have seen the chief executive, who could not answer on how many of his members had been affected by Horizon or what his organisation had done about it. I will tell the House exactly what it did: nothing. In Tom Brown’s case it just said that the Post Office must be right. The organisation is a sham and it needs to be wound up now. We need an independent organisation to represent sub-postmasters—including through the recognition of the Communication Workers Union, which some people are members of—that can actually be an independent voice for sub-postmasters.

The other thing that I, the hon. Member for North West Leicestershire and James Arbuthnot did was to take some cases to the Criminal Cases Review Commission, because there are people who have been found guilty and in some cases jailed unfairly. I pay tribute to that body, which took the issue seriously and took on a number of cases. It has stayed those cases—quite rightly, in my opinion—until the outcome of the civil litigation. It is important that those cases are now moved on and considered, because there are miscarriages of justice in some of those cases that need to be put right very quickly.

The right of the Post Office to take forward its own prosecutions needs to be removed. This issue goes back many centuries in the Post Office’s history. When Tom Brown asked whether he could get the police or the Crown Prosecution Service involved in looking at the evidence against him, he was told no. Likewise, it was the same for everyone else. Removing that right is something that the Government could do straight away, because there is no adequate oversight of how cases are being prosecuted. In Judge Fraser’s summing up, he described the contract and the way in which the Post Office acted as

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

and said that the Post Office appears to

“conduct itself as though it is answerable only to itself.”

That is the case: it was answerable only to itself, with little or no insight in terms of oversight from Government.

Let me say what needs to be put right now. I have already mentioned that compensation needs to be put in place. We now need a full independent inquiry, and in a response in Prime Minister’s questions on 26 February, the Prime Minister indicated that that might be the case, calling the issue a “scandal”. In response to Lord Arbuthnot in the other place on 5 March, Lord Callanan said that the issue would be under consideration. We need as a matter of urgency an inquiry to cover not just what has gone on but how we can improve the situation for the future, and it has to be independent of Government. The Business, Energy and Industrial Strategy Committee is looking into the matter, and I give credit to it for doing that, but we need some recommendations about what went on in the past. I am sorry, but as my right hon. Friend the Member for Warley said, we need to expose who did what. I have to say, if in some cases what I would argue was criminal activity took place, people have to be prosecuted. Given their involvement, they certainly need to be removed from any public bodies on which they currently serve.

The Minister’s predecessors have not been good at looking into this issue. They have not asked the right questions—they have not asked questions of their officials or the Post Office. The Minister now has a chance to put this right. I know that he spoke to Alan Bates yesterday, and I know that he is hiding behind the court case in terms of compensation—his officials are saying that they cannot get any more. I have to say: please do not do that. It is now time for bold action. If we do not take action, this injustice will continue.

Let me finish with this: my constituent Tom Brown should be enjoying a happy, well-funded retirement, but he is not. He is still a proud man, as I said—he is a man who has not lost his dignity—but he is living in social housing with his son, and that is not his fault; it is down to people such as Paula Vennells and the board at the Post Office, and the failure and cover-ups that have been perpetrated by individuals. The Government, who should have stood up for him, have turned a blind eye.

--- Later in debate ---

[Mr David Jones (Clwyd West) (Con)]

I, too, congratulate the right hon. Member for North Durham (Mr Jones) and my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) on securing the debate. I have the privilege of representing Mr Alan Bates, who was the lead claimant in the proceedings that were settled in December. If it had not been for his tenacity and that of others, the consequences would have been that the wrongdoings of the Post Office and Fujitsu would have gone undetected and the reputations of many hundreds of completely decent, innocent people would have been completely destroyed without any hope of being repaired.

It is clear from the judgment delivered last year by Mr Justice Fraser that the Horizon system was, at all relevant times, defective. It is also clear that the Post Office and, by extension, its directors and, by further extension, its Government-appointed directors must have been aware that the system was defective. Notwithstanding that, for over 20 years, the Post Office stubbornly and aggressively continued to assert that the system was fit for purpose. Many innocent sub-postmasters and sub-postmistresses lost their livelihoods, some of them went bankrupt, some of them were prosecuted and, indeed, some of them were sent to prison. It is an absolutely scandalous tale.

It is, indeed, a credit to Mr Nick Read, the new chief executive of the Post Office, that his intervention helped achieve a settlement to the legal dispute last December, but that settlement cannot be the end of the matter. The Government cannot simply regard the settlement as putting the Horizon issue to bed. As other hon. Members have said, after costs are taken into account, the settlement sums for those 500-plus litigants will be paltry. The Government have a duty to further compensate the sub-postmasters who have been so appallingly treated by a Government-owned company.

I will be brief, because I know others wish to speak, but there is a vehicle that could be used to pay that compensation. The Post Office operates a suspense account for unallocated money and, given the history we have heard today, I suggest there is rather a lot of unallocated money in the Post Office.

According to a 2015 report by Second Sight, unreconciled balances for the 2014 financial year were approximately £96 million in respect of Bank of Ireland ATMs and approximately £66 million in respect of Santander. Bank of Ireland and Santander are just two of approximately 170 so-called client accounts operated by the Post Office. The question of how much has been going into the Post Office’s profit and loss account from unreconciled balances would clearly have to be a matter for further inquiry. However, it is surely a source available to repay the costs of the claimants in these court proceedings.

To summarise, the Government owe a significant debt, both financial and moral, to the wronged sub-postmasters as a consequence of the deplorable conduct of those responsible for the direction of the Post Office, including non-executive directors appointed by the Government. Ministers should ensure that the debt is discharged as quickly and as fully as possible. Although it is pleasing to hear assurances from Ministers that they recognise the Post Office needs to do more to strengthen its relationship with sub-postmasters and to regain public trust, it would be even more pleasant to hear they are making arrangements to compensate the claimants as quickly and as fully as possible.

Finally, I fully support the calls for an independent inquiry, which the Government have a moral obligation to deliver.