Post Office Management Culture

Dominic Raab Excerpts

Thursday 8th February 2024 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

May I first pay tribute to the hon. Member for Motherwell and Wishaw (Marion Fellows) for securing this debate and her fine work as always on the all-party parliamentary group on post offices, and to the Backbench Business Committee for bringing forward this debate? I also pay tribute to all Members of this House and the other place for their work on this issue. I promise the shadow Minister, the hon. Member for Bethnal Green and Bow (Rushanara Ali), that I do not need anybody to hold my feet to the fire, but it is good that we have this momentum. I very much appreciate the work that has been done by many.

There have been many kind words from contributors about my work, but it is a bit part compared with that of many others who have campaigned long and hard on this issue, as have people outside this place, including members of the legal profession and the media, many of whom we are familiar with for their great work on bringing this scandal to light.

On the governance issues, I am fond of a quote by Emerson, who said:

“An institution is the lengthened shadow of a single man.”

I am keen to ensure that the Post Office’s management culture is in the right place. A positive management culture is paramount to the health of any organisation, so I very much welcome the opportunity the debate brings to consider that point. The Post Office scandal is one of the biggest miscarriages of justice in living history, and the victims must get the justice they deserve. I do believe that today’s Post Office is different from the past, but restoring trust will take time. That does not mean that we are satisfied with the current situation. This will never be about quick fixes; it will be about fundamental changes in every part of the organisation, and that change will not occur overnight.

When the current chief executive of the Post Office, Nick Read, started in September 2019, he made it clear that as well as delivering the essential services that we value across our constituencies, the Post Office needed to apologise for the events of the past and fully address them. On the point made by the shadow Minister about the current board, no one serving on a day-to-day basis on the current board was there at the time of the scandal. As I said, Nick Read joined in 2019, and only one member of the board was there at the time, but they are on extended leave on health grounds and do not work on the board on a day-to-day basis. No members of the senior management team were there at the time.

Post Office is taking steps to right the wrongs of the past. However, it is also important to highlight what it has done with a view to the present and future of the business to improve the culture and ensure that a similar situation can never arise. Crucially, Post Office is taking steps to restore trust between itself and postmasters. That is so important, because, as I have said many times, without postmasters, there is no post office network.

In December 2019, the parties to the group litigation in Bates v. Post Office Ltd took part in a mediation session and issued a joint statement confirming Post Office’s commitment to resetting its relationship with postmasters. Since then, Post Office has improved the board’s structure by ensuring that two non-executive director postmasters nominated and elected by other postmasters have a seat on the board. That is intended to ensure that postmaster voices are being heard at the highest level and that senior management are aware of the impact that decisions will have on those on the frontline delivering services.

Post Office also created a postmaster experience director role, which is filled by a serving postmaster. To pick up the point made by the hon. Member for Motherwell and Wishaw, it is held by Mark Eldridge, who is a serving postmaster at Great Massingham. He is seconded to the role, so he may no longer be in that post office on a daily basis, but he is nevertheless a serving postmaster. He leads the day-to-day relationship with postmasters. Alongside those senior appointments, the Post Office has reformed operational matters to improve culture and trust between senior management, staff and postmasters. Improved training packages and the hiring of more than 100 new area managers to provide dedicated local support are all examples of positive changes. At my meeting yesterday with Voice of the Postmaster and Communication Workers Union national postmasters, they spoke highly of the support and engagement provided by those area managers.

Post Office has also strengthened how it listens to postmasters, with two postmaster conferences and a nationwide postmaster consultation conducted each year to provide the foundation of Post Office annual priorities. I experience at first hand how postmasters in the network today can challenge Post Office leadership on various issues when I chair a regular working group between the Post Office and the National Federation of SubPostmasters. I know that, according to various commentators, past experience of that group has been mixed, but my experience from working with them on an ongoing basis has been that the challenge they provide is constructive but robust.

I know that branch profitability is the top priority for postmasters, and I am pleased that the Post Office is committed to increasing the share of income going to postmasters. That has been stressed on every occasion we have met. We have also very much stressed the need to control central costs—indeed, to reduce them—so that we see more of the remuneration heading towards postmasters. The clear strategy for the Post Office to do that and ensure that the highest share of income goes to postmasters is through parcels and banking services, which are key; we have discussed that regularly when we have met. That point was raised by the hon. Members for Midlothian (Owen Thompson) and for Strangford (Jim Shannon).

I have been clear that the banking framework, which is negotiated between the Post Office and the UK banks, should be as ambitious as possible. Banks have saved about £2.5 billion a year through closure of branches, and in our view a greater percentage of that should go to postmasters directly. I am pleased that the shadow Minister likes our policy on banking hubs, which came principally as a result of our legislation on access to cash. Thirty are open already, and another 70 are in the pipeline, so we will be at 100 and we anticipate that about 500 will be rolled out across the country. Clearly there is more to do to strengthen the relationships with postmasters, but I believe that the Post Office has made and is making some positive steps forward.

Members rightly raised compensation, which speaks to the current management culture at the Post Office. Getting compensation to those impacted by the scandal has not been as swift as we would have hoped. I can assure Members that my Department has been working hard on compensation, alongside colleagues in the Post Office who were recruited specifically for that purpose. As the Secretary of State said recently, we continue to look for ways to speed things up, and we work closely with the Horizon compensation advisory board to ensure that we deliver faster compensation, and that compensation is seen to be fair and is fair.

Recently, we introduced measures such as fixed sum awards of £600,000 for overturned convictions, and £75,000 for the GLO. To be clear, a fixed sum award is an option for people who believe that it will provide sufficient redress. People who believe that their claims are above that level can go down the full assessment route, but the fixed sum award route has the benefit of speedy resolution of claims and reducing the number of people in the queue who want to go down the full assessment route. That should mean faster resolution of claims for all parties involved in the compensation process.

[Dominic Raab (Esher and Walton) (Con)]

The Minister has been given credit for the assiduous way that he is righting the wrongs. Members in all parts of the House have been contacted by those affected, such as sub-postmasters who have been prosecuted or have suffered in other ways. Is there a constituency breakdown of the numbers affected? Some people will be more familiar with how to avail themselves of opportunities than others. If we can make ourselves available to those affected —not just those prosecuted—that may provide some assistance, albeit at a late stage, and some solace to them as they try and right the wrongs that he has rightly outlined.

[Kevin Hollinrake]

I thank my right hon. Friend for his intervention and his work on this matter. It is interesting that more people are coming forward, through colleagues, to the compensation processes, which is very welcome. Some colleagues have written to all their postmasters in their area, asking them to come forward. That is a positive step. I was not aware that I had a postmaster in my area who had been affected—Sam Harrison of Nawton, near Helmsley, who sadly passed away last May. She was one of the 555 members of the GLO scheme. Sadly, she has passed away. New cases come to light all the time. I am very happy to work with my right hon. Friend to see what information we might provide him, so that he can take forward those actions.

As I said, we are aware of concerns about the Horizon shortfall scheme, which was the first scheme set up. We are looking at ways to ensure that that scheme’s compensation is fair and seen to be fair. More than £160 million has been awarded already to 2,700 victims, and 64% of all claimants who made their claims prior to the ITV series—more will come forward as a result, which we welcome—have had full and final compensation. Much work has been done by me, my predecessors and many officials, who do a tremendous job trying to right the wrongs of the past, but there is more that we can and have to do.

As of 6 February, more than £35 million has been paid out to those with overturned convictions. There have been 42 claims submitted already for the 101 convictions that been overturned; 36 offers have been made and 32 have been accepted. A very significant proportion of those have taken the fixed sum award. £27 million has been paid out to 479 claimants among the original 555 postmasters who took the Post Office to court. A total of 58 completed claim forms have been received, and 52 claimants have received offers. Of those, 41 people have accepted those offers without going to the next stage, the independent panel. That indicates that people feel that the offers they are receiving are fair, because there are two further stages in that process if they feel that they are not getting fair settlement of their claims. Some £98 million has been paid out through the Horizon shortfall scheme.

There were 2,417 claimants who claimed prior to the original deadline, which has now been extended for late applications, so there is no final date for applications in that scheme. Some 2,417 offers have been made and 2,051 have been settled, meaning that 84% of claims have been settled. The hon. Member for Motherwell and Wishaw raised the total compensation amount—I think she mentioned the figure of £2 billion. The maximum budget set thus far is £1 billion. That is the number we are working to at the moment. However, we have always been clear that that is not a cap and it will not stop people getting fair compensation for their claims.

On the matter of more people coming forward, we are absolutely united with the Post Office in calling for anyone impacted by the scandal to bring forward their claims as soon as possible. I welcome the fact that the ITV drama has helped to uncover people who had not previously come forward.

The hon. Member for Motherwell and Wishaw asked about ongoing shortfalls. There may be instances of that, although not all shortfalls occur as a result of software problems. I am happy to look at any cases of that that the hon. Lady has, but I have to say that it has not been raised with me thus far in my conversations with the National Federation of SubPostmasters, the Voice of the Postmaster and the CWU. However, I am happy to look at that as we proceed.

Compensation is one part of providing justice; the other is truth and accountability, which the Post Office has told us it is fully committed to. The Post Office Horizon inquiry has been established to uncover what went wrong, and the chair, Sir Wyn Williams, continues to make good progress.

The Post Office is co-operating fully with the inquiry. While the recent disclosure issues have been disappointing, they were the consequence of a failure of process rather than a reflection of the management culture. We do not regard them as a deliberate obfuscation, as the hon. Member for Motherwell and Wishaw said. Nevertheless, it is a serious and unacceptable matter, and we certainly want to ensure that they do not happen again.

It was reassuring to hear Sir Wyn Williams’s comments on Friday that he was “impressed” that the Post Office’s new lawyers have a

“grasp of the scale of the disclosure exercise”,

and that he currently has no reason to doubt that the Post Office will continue to assist the inquiry by disclosing relevant material. The inquiry will also look at the future of the Post Office itself from September this year.

On governance, strong and effective leadership of the Post Office is essential. As is set out in the Post Office articles of association, the Business Secretary appoints the chair and approves the appointment of directors of Post Office Ltd. It is a role that the Government take very seriously. As Members will be aware, following a conversation with the Business Secretary in late January, Henry Staunton agreed to step down as chair of the Post Office. We judged that the current chairmanship was not proving effective and had a difficult decision to make between changing course or waiting and hoping that it improved.

The shadow Minister referred to ministerial scrutiny, and I think all Ministers should learn the lessons of the past in terms of their approach to concerns that are raised. Of course, we as a Department have learned from this ourselves. We will continue to look at governance arrangements and make sure they are fit for purpose. We are not planning any further changes at this time. Members of the House and others have looked at different models of governance of the Post Office, such as mutualisation. As I said, I met with the Voice of the Postmaster and the CWU yesterday, and I am happy to have further conversations with them about that potential route. We are confident that our representative at UK Government Investments, Lorna Gratton, is doing a good job to ensure that the Post Office’s governance is fit for purpose.

The hon. Members for Wansbeck (Ian Lavery) and for Motherwell and Wishaw asked about the surpluses and where they ended up—whether they went into a suspense account, into profit and loss, or into bonuses for directors. We are currently conducting an exercise to find out where that money went and how much it was, and we will report accordingly.

The hon. Member for Inverclyde (Ronnie Cowan) talked about the role of Fujitsu. We welcome the admission from Fujitsu that it holds moral responsibility for the scandal and a responsibility to contribute towards the compensation bill. We will certainly take that up in due course, but it is right for us to ensure that we understand the extent of the bill. The inquiry is looking at other matters surrounding Fujitsu and it is right that we wait for the outcome of that. He mentioned the role of Ofcom. Ofcom does not regulate the Post Office; it regulates Royal Mail. There is a distinction there.

The hon. Member for Wansbeck talked about who knew what. That is something we very much want to know. The inquiry’s purpose is to find exactly that. He made the absolutely correct point that no amount of redress could ever make up for what has happened to some people in this scandal. People have taken their own lives and people have been made bankrupt. The least we can do is try to make that good by providing them with full and fair compensation.

I am very sorry to hear about what happened to Janine. I am very happy to look at that case with the hon. Gentleman, as he asked me about it offline the other day. It is certainly the case that if an employee suffered financial detriment, their employer should be able to claim on their behalf. There may be other cases we need to look at, including that case, so I am very happy to have that conversation with him.

The hon. Member for Chesham and Amersham (Sarah Green) talked about non-disclosure agreements and raised the tragic case of Martin Griffiths in that context. As I said to her in an intervention, it is absolutely right —the Post Office has said this and it is also our position—that no NDA should prevent somebody speaking to relevant individuals, including their Member of Parliament. It is the case, in whatever part of our system and wherever an NDA is signed, that no NDA can ever prevent somebody speaking out—going to the police or other authorities—about a crime. That is the case in any circumstance. The Official Secrets Act only covers the confidentiality of mail and it is no longer signed by postmasters. Again, I am very keen that the gentleman she referred to passes on his evidence to the inquiry, because I think it might find it very useful.

I thank the hon. Member for Strangford again for his very kind words. Understandably, many people are still affected by the scandal and in terms of my performance as a Minister—whether I am the right person or whether I am fit for purpose—I guess the jury is out. I quite understand that. People will judge me at the end of the process, but while I am here, I am very keen to make sure that the full and final settlements are made as quickly and as fairly as possible.

To conclude, I have outlined some of the progress the Post Office has made to improve its culture and its relationship with postmasters, and its determination to right the wrongs of the past. Despite the positive progress made since 2019, there are clearly still improvements to be made. Where the Post Office makes mistakes, I will continue to challenge the leadership. Where action is needed, I will not hesitate to act decisively.