Post Office (Horizon System) Compensation Bill

Lord Browne of Ladyton Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 16th January 2024 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is a privilege and an honour to follow the noble Lord, Lord Arbuthnot, particularly on the Second Reading of a Bill which, whether he likes it or not, is already referred to as the Arbuthnot Bill, and if I have anything to do with it, will continue to be.

On 7 September last year, the noble and gallant Lord, Lord Houghton of Richmond, began his contribution to an Armed Forces debate with the following sentence:

“I suppose that one of the many benefits of being a Member of this House is that you get a free copy of the New Statesman every week”.—[Official Report, 7/9/23; col. 570.]


I never thought that I would use this phrase, but I opened my New Statesman this week to discover that the editorial, headed “A very British scandal”, is about the very subject that has led to the necessity of this legislation. With your Lordships’ permission, I will read the peroration—for a very good purpose:

“The malaise that the Post Office scandal has exposed in British life is that of unaccountable power. Its executives obfuscated and denied errors despite being confronted by innumerable injustices. Institutions such as the Post Office and the Royal Mail—diminished by its botched privatisation—should exemplify the common good. All too often they become self-serving bureaucracies, with customers and workers bamboozled should they complain. Yet this affair is also a reminder of the best of public life: crusading journalists and MPs (such as staff at Computer Weekly and the Conservative peer James Arbuthnot); gifted screenwriters and actors; and, most of all, tenacious campaigners such as Mr Bates who will not cease until justice is done”.


My noble friend Lord Arbuthnot is an example of the best of public life.

The Post Office Horizon scandal exemplified many of the trends that have led to anger and political apathy among the public. Political indifference and delay, exacerbated by a defensive posture among the legal profession and others, have resulted in ruinous, life-altering outcomes for thousands of innocent people. To add insult to considerable injury, Fujitsu—the company responsible for this debacle—has won 150 government contracts since the details of the Post Office scandal began to emerge. Since December 2019, when the Appeal Court ruled that the Horizon system contained bugs and errors that resulted in miscarriages of justice, the Government have awarded contracts worth more than £4 billion either solely to Fujitsu or as part of joint public sector contracts. For those affected, there could be no greater evidence of a thumb on the scales of justice than this asymmetry of consequences. Postmasters have faced financial hardship and ongoing legal limbo, while those responsible have received implicit government endorsement in the shape of new lucrative contracts.

This is bad enough, but recent evidence has suggested that the Post Office has also treated the limited compensation it grudgingly offered to sub-postmasters as tax deductible. Dan Neidle, the head of Tax Policy Associates, has outlined why these claims are illegitimate, stating that you cannot

“claim a tax deduction for things which are unlawful, illegal or outside the trade”,

such as wrongly prosecuting 4,000 postmasters. We must also ask why, given that the £934 million they claim as deductible relates to historic periods, it is only this year that the Post Office has made a designedly oblique reference to this practice in the small print of page 101 of its accounts. I am pleased that HMRC last week confirmed that this matter—one of five where Tax Policy Associates believes that the Post Office has materially underpaid its tax—is under active investigation.

Mr Neidle is also campaigning openly for better compensation in the present scheme, for the element of damage that reflects destruction of reputation and stress. As I heard him explain only the other day, in the context of employment tribunal awards that component of the calculus of the total sum of compensation attracts awards of between £1,000 and £11,000 for the lowest levels of damage to reputation and emotional damage. For the more severe, awards are between £11,000 and £34,000. For the worst examples—I venture to suggest that the vast majority, if not all, the wronged postmasters must have suffered reputational damage and stress of the worst kind—employment tribunals are awarding between £34,000 and £56,000, whereas most postmasters are getting no more than £5,000 from the current compensation scheme.

Alongside today’s Bill, I am also pleased that a brief Act of Parliament providing for exoneration of all those affected is now being considered, which is something I first suggested in your Lordships’ House in June 2020. Given that three and a half years have elapsed between that date and this, such a glacial pace in providing redress may be another useful exemplification of a problem that saps confidence in the political process among the public.

At the heart of this miscarriage of justice is the fundamental unreliability of the Horizon software, upon which the original prosecutions depended. It is equally clear that, without the group litigation brought by the 555 sub-postmasters, the flaws and glitches in the software would not have been uncovered. Here, I return to a question which I raised in your Lordships’ House last Wednesday: where does, and where should, the burden of proof lie in respect of computer-derived evidence? The Police and Criminal Evidence Act 1984 placed that burden upon those who rely on such evidence. But, in response to lobbying from the Post Office, among others, we saw that change, because of a Law Commission recommendation. There is now a presumption in favour of the reliability of such evidence unless a defendant can prove why it may be compromised. How can we possibly expect an individual unversed in the complexities of computer programming or algorithmic, sequential decision-making to provide such proof? This is a further asymmetry that needs urgent action. I would be grateful if the Minister could give an undertaking, maybe not today, that this will form part of the follow-up to the Williams review.

Finally, I turn to the broader issue that my noble friend Lady Chakrabarti alluded to, and which is an obsession of mine: artificial intelligence and its integration into our public services. If the Horizon system—far more rudimentary than any AI-infused technology—can precipitate such confusion, misery and frustration, there is a risk that a far more complex system could produce more apparently coherent, though equally unjust, outcomes. In such a case, the pursuit of justice in the case of error would be more tortuous than that endured by the sub-postmasters we are discussing today. Noble Lords may recall a scandal that hit the Netherlands in 2019, whereby a self-learning algorithm falsely labelled thousands of people in receipt of child benefit as perpetrators of fraud. What was the result of that? Poverty, a wave of suicides among those affected, and children taken into foster care. Perhaps most worryingly, the algorithm disproportionately—and, to reiterate, falsely—targeted those from ethnic minorities.

I realise this is well outside the Minister’s purview, but, as we learn lessons from the Horizon scandal, what plans do the Government have to review the integration of AI into the work of the DWP in this country? Perhaps more importantly—I have asked this question and it has not yet been answered—what is the statutory basis for the use of AI in public services at all? Surely the use of AI in this way risks violating the Blackstone principle, of which the noble Lord, Lord Arbuthnot, reminded your Lordships last week. I will not repeat it, because my noble friend has already dealt with this. In this respect, I return to the Dutch case to which I referred. The victims had no way of knowing why their cases had been identified as potentially fraudulent, and officials claimed they had no way of accessing the algorithmic inputs and could therefore not describe why they were under suspicion. This echoes the Kafkaesque nightmare of the sub-postmasters—accused by faulty technology, denied access to the very information that could exonerate them and forced, in the meantime, to endure penury and stigmatisation.

I will support this Bill, as my party will, as it passes your Lordships’ House with, I trust, the utmost rapidity. I keenly anticipate further measures, not merely to provide full restitution to those affected by the Horizon scandal but to strengthen scrutiny and ministerial oversight over arm’s-length agencies. Nothing adequately can compensate the sub-postmasters and sub-postmistresses who have lost years of their lives to this injustice, but I believe that ensuring such a tragedy cannot happen again may at least console them with the thought that their suffering has not been entirely in vain.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that searching question. Of course, this covers about three or four different Governments and more than half a dozen Ministers; that is just a fact. The reality is that the shareholder of the Post Office is the taxpayer. The share is owned by the Secretary of State for the Department for Business and Trade. Under the current structure, that is effectively subcontracted to an independent board. If that independent board had acted on an independent basis, this would not have happened. In fact, if Ministers had slightly more inquiring minds, this would not have happened.

I look at myself in my role as a Minister. I look at the advice that I am given and at the decisions I have to make. There is a lot coming through on a daily basis. I ask myself this question: if I had been in this role and prior to Horizon there had been an average of, say, 10 convictions per year in a bad year—maybe five on average—and that went up to 80, even though I was very busy, doing a lot of things, and even though I said I had an independent board looking at this for me, would not that raise some inquiry? This fundamentally is the shocking scale—we are all embarrassed about this—of the abuse here. The accountability piece of this will absolutely come through the Wyn Williams inquiry. That will then move us to the next stage of the lessons that we learn from it.

Next is the theme of legal process, brought up by the noble Lord, Lord Cormack, as well as the noble Lords, Lord Forsyth and Lord Weir, and also in relation to the Scottish angle. The noble Lord, Lord Cormack, says that the lawyers have some disquiet about the idea of Parliament overruling courts, but we have had the counterbalancing argument from William Blackstone. I think the House agrees that that overrides that particular issue.

In Scotland and Northern Ireland we have different jurisdictions. There were 77 prosecutions in Scotland and 24 in Northern Ireland. To speak from a Scottish point of view, those prosecutions were brought not by the Post Office but by the Crown Office. That is a separate legal jurisdiction in Scotland. Yes, we are one United Kingdom, but in the UK we respect the legal jurisdictions of the devolved nations. The Lord Advocate has reported today to Holyrood, the devolved Parliament in Edinburgh, saying that she is not currently in favour of a blanket rescinding of convictions because, she says, not every case involving Horizon will be a miscarriage of justice. She wishes to go through the appeal court—the Scottish Criminal Cases Review Commission. From a legal point of view, she is saying that these convictions were made by a court and therefore should be undone by a court.

We are at an early stage of that dialogue. There are letters and communication going between the MoJ in London and the Lord Advocate and the Crown Office in Scotland, and there is communication between the First Minister and the Prime Minister on this. That just highlights that there are some legal complexities here. The reserved matter remains reserved. Compensation will be the same for all jurisdictions, but there are some issues to be resolved regarding the actual legal process—certainly north of the border.

[Lord Browne of Ladyton (Lab)]

How on earth does a court challenge the evidence that the information coming from this computer is to be treated correctly because of the presumption? How on earth does the court overcome that? Only we can overcome that. We need to change the law. Unless we do so, we will always have this problem. The fact of the matter is that everywhere on this island the courts are not fit to deal with these cases. There were miscarriages of justice everywhere. The courts were not fit to test the evidence.

[Lord Offord of Garvel (Con)]

That is exactly the position that has been taken here by the Lord Chancellor for England and Wales, and that is now the conversation that has to be had in Scotland and Northern Ireland. We are dealing with a legal complexity that was confronted earlier this week by the Lord Chancellor, who now needs to run through the process with the Lord Advocate.

We come to the accountability issue. There have been comments from the noble Lords, Lord Sikka and Lord Palmer, about the role of the auditors. Again, you will get technical answers back that this is a separate statutory body that does not account to the National Audit Office because it has its own auditors, but then we find that that the auditor, EY, has signed off on the accounts. This is what we need to get to the bottom of. There needs to be a full inquiry to bring this to light. We will get the answers to these questions. Out of this, as I said, there will be a cascade of inquiry taking us into the fundamental territory of how the Government operate alongside quangos, arm’s-length bodies and so on. We have not heard the last of this. Its repercussions will come down through Whitehall.

Lessons will be learned, but right now our responsibility is to get the blanket exoneration that the noble Baroness, Lady Chakrabati, was asking for, and which my noble friend Lord Arbuthnot is now satisfied will be given, and getting the compensation—whatever that means; let us say financial restitution—to the claimants as quickly as possible.

This is a sorry saga and, as my noble friend Lord Forsyth said, we are all deeply embarrassed by it. It has taken so long; it has been going on for 20 years. How people did not ask more basic questions is something that we all need to reflect on. All of us Ministers are looking at that. From my own personal point of view, I am certainly looking at things quite differently through the lens of, “Where’s my sniff test on what I’m hearing, as opposed to just what I’m told by officials?”

I commend the noble Lord, Lord Weir, on his personal reflections on this and his story about his father being a postmaster. Is that not the essence of what we got from the series, and from our personal experience in the towns and villages where we live, that these folks are the salt of the earth? How could they as a group suddenly become criminal? How could we go from half a dozen convictions a year to 80? It just does not make any sense. So I thank the noble Lord for that contribution. That is what is turbocharging our response to this matter.

I say in conclusion to noble Lords that, as far as my department is concerned—and my colleague Mr Hollinrake is working very hard to ensure this—those who are affected by this awful scandal will receive the full and fair compensation that they are owed, and we will do that as quickly as possible. Postmasters have suffered for too long. That said, with their having waited so long for justice, the Bill ensures that the Government will not need to force victims into unduly rushed decisions on the complex and emotive issues of compensation.

I repeat my thanks to all noble Lords for their contributions today. I know the House takes a strong interest in this scandal and wider Post Office matters. I hear what the noble Baroness, Lady Brinton, said about where this takes us on previous scandals, and I am sure there is more to be said about that. This Bill is just one part of the extensive action that the Government are taking to defend the interests of postmasters, and I commend it to the House.