Post Office Historical Shortfall Scheme

George Freeman Excerpts

Tuesday 14th December 2021 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)]

I am grateful, Dame Angela, for the chance to serve under your chairmanship. I congratulate hon. Members for their contributions today and the right hon. Member for Orkney and Shetland (Mr Carmichael) for raising the matter. I am here with apologies from the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully), who has been called into the House on primary legislation elsewhere. However, I relish the chance to respond on behalf of the Department for Business, Energy and Industrial Strategy, having experienced in my constituency the appalling injustice that the sub-postmasters suffered.

In one village in my constituency, Gressenhall, I saw the misery, the family disruption and the hell, as referred to by hon. Members, that the sub-postmasters were put through in a frankly disgraceful episode of institutional contempt for the little guy—if I can put it like that—at the bottom of the system. I am pleased today that, as hon. Members have remarked, we are announcing through a written ministerial statement—there will be an oral statement, subject to the Speaker’s permission, tomorrow—the Government’s commitment to fully fund the historical shortfall scheme and the losses for those who have not yet been compensated.

[Kevin Hollinrake]

The Minister makes a fair point, but so does the right hon. Member for North Durham (Mr Jones). The scheme excludes those who took part in the group litigation. That is entirely unfair and unjust. Lee Castleton, who is not one of my constituents but somebody I have tried to help through a third party, got £28,000 in compensation but he lost more than £400,000. That is simply unfair and that route for compensation cannot persist.

[George Freeman]

I thank my hon. Friend for that intervention. My hon. Friend the Member for Sutton and Cheam is the lead Minister on this matter and I will raise that with him. For the record, I want to make clear what has happened. Those who settled have a settlement. Today, we are tackling the issue of those who were not subject to a settlement. Nevertheless, my hon. Friend makes an important point. This must be fair and it must be seen to be fair.

I want to begin by echoing the Government’s support for the point about culture. It is vital that the painful and difficult lessons from this disgraceful saga are properly learned. Let the message go forth from this Dispatch Box that we expect the Post Office to tackle that culture change properly. I am delighted that there is a culture change programme and two new non-executive directors. However, this is not a tick-box exercise; it is a serious commitment that an organisation wholly owned by the taxpayer delivers properly and learns the lessons from this disgraceful saga. I dealt with the issue when I was a Minister in the Department in the coalition Government in 2015. I saw what seemed to me to be institutional obfuscation and institutional defence of injustice. All those who conspired in that should hang their heads in shame.

The right hon. Member for Orkney and Shetland mentions a law firm. I signal that some lawyers have stepped up to the mark on this and in particular Patrick Green QC at Henderson Chambers, who worked pro bono to help many of the sub-postmasters; Neil Hudgell at Hudgell Solicitors; and Freeths, who did tremendous work speaking up for those who did not have a voice. It is only because of the bravery of those sub-postmasters and their lawyers that we are where we are today.

It is good news that we have announced that funding, but I do not want to focus on that today. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam, has campaigned hard on it and he will speak to the House tomorrow. However, I want to set the record straight on where we are today for those watching or reading this debate. As everyone in the Chamber will be aware, the Post Office introduced the Horizon scheme in early 2000 and subsequently recorded shortfalls in cash at post office branches, which the Post Office then blamed on sub-postmasters—completely unfairly, it subsequently turned out. That resulted in horrific suffering, not just in losses for the small businesses being run by the sub-postmasters, but family losses, divorces, depression, mental health problems and anxiety, not to mention the loss of a facility in many rural areas that is crucial to the community. Many people were sent to prison. That is an absolute disgrace. It is important that the lessons are learned properly and that the culture that conspired to allow that to happen is seriously changed.

In 2017, a group litigation order was brought against the Post Office by the 555 postmasters. The postmasters won two landmark trials in 2019 and reached a settlement with the Post Office for £57.75 million. Those court cases and subsequent cases in the Court of Appeal have demonstrated just how wrong the Post Office was to behave in the way it did. It has apologised, and is now working to overhaul its culture to address the findings of Mr Justice Fraser.

[Mr Kevan Jones]

The postmasters had to settle because they ran out of money. My constituent Tom Brown got £20,000 in compensation; he paid £86,000 back to the Post Office. Can the Minister tell me where that £86,000 is, and why Tom is not entitled to get it back?

[George Freeman]

The right hon. Member makes a really important point. I will raise that specifically with the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam, and perhaps he can address it in his statement tomorrow. On behalf of the Government, I express our deep sympathies to those sub-postmasters mentioned today—to Tom and to those in Scotland, York and around the country. This is an injustice that must urgently be tackled.

[Mr Carmichael]

The best way to demonstrate a change of culture and good faith would be for the Post Office to start the whole process again from the beginning, instead of insisting that people who have made applications under a flawed process will have to see them through to the end and get less than they are entitled to as a consequence.

[George Freeman]

I understand the point that the right hon. Member is making. Let me include, for the record, the history of how we got to this situation. As part of the 2019 settlement, the Post Office committed to putting in place a scheme for those postmasters who were not part of that settlement and did not have criminal convictions related to the Horizon scheme. The historical shortfall scheme was set up to meet that commitment, and it is an important step. It opened in May 2020 and closed to applications later that year.

To be fair, the Post Office made significant efforts—quite rightly—to reach out to all postmasters, sending 7,000 individual letters to current postmasters and a further 20,000 to former postmasters. It is fair to say that the Post Office was quite surprised—I do not think that any of us in this room will have been—by the response. The scheme received over 2,300 eligible applications. I hear the points that the right hon. Member for Orkney and Shetland made about the nature of that form. Because I am not the lead Minister on this, I have not looked at it, but he makes an important point, which I will raise with the Minister. The form needs to make clear to people what they are entitled to and needs not to discourage them from understanding their rights, the enforcement of which is long overdue.

The response to the HSS meant that the cost of the scheme went beyond what the Post Office could afford, and it turned to the Government as its 100% shareholder. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam, has set out that the Government will provide sufficient financial support to the Post Office to ensure that the historical shortfall scheme can proceed properly and that those people are fully compensated. I understand that that raises a question about the fairness for those who settled out of court, which is a point that the Minister will no doubt want to address. The Post Office is contributing from its own funds.

[Kevin Hollinrake]

If the estimate is £300 million and there are 2,300 applications, that is £130,000 each. Lee Castleton got £28,000. The constituent of the right hon. Member for North Durham (Mr Jones) got £20,000. That just cannot be right.

[George Freeman]

My hon. Friend makes a powerful point, which I am sure that the Minister will want to address. I want to mention the question of speed. When the Government step up and say, “We will fully fund this,” it is incumbent on the Post Office to pull its finger out and get on with processing claims more quickly. I understand that the intention is that the vast majority of applications will be claimed within months, by the spring, and all of them will be claimed within the year —and that is long overdue.

I will close by picking up on a couple of the points that hon. Members have made. I will ask the Minister to write to the right hon. Member for Orkney and Shetland about the board. The hon. Member for Strangford (Jim Shannon) made the same points about his constituents. With the right hon. Member for North Durham (Mr Jones), I share the Government’s apologies to Tom Brown and others in his constituency, and I take the point about lessons for Ministers and for the Department for Business, Energy and Industrial Strategy. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) made a very good point; we cannot have unaccountable quangos marking their own homework, and there are really important lessons about accountability.

It is good news that the Government are making a commitment to fully fund the HSS, but there are other issues that still need to be sorted so that this never happens again and that the injustices are properly resolved.

Question put and agreed to.