Post Office Horizon Scandal: Compensation Payments

Lord Offord of Garvel Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Touhig]

To ask His Majesty’s Government what assessment they have made of claims that the Post Office was asked to delay compensation payments to sub-postmasters who were victims of the Horizon IT scandal.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank the noble Lord for that Question. I can utterly refute this allegation. This Government have sped up compensation for victims and have consistently encouraged postmasters to come forward with claims. To suggest that any actions or conversations happened to the contrary is incorrect. In fact, upon appointment, Mr Staunton was set concrete objectives in writing to focus on reaching settlements for claimants—clear evidence of the Government’s intent. My right honourable friend the Secretary of State for Business and Trade will shortly give an update to the House of Commons with a detailed rebuttal of these allegations.

[Lord Touhig (Lab)]

I thank the Minister for the point that he makes about the Statement in the other place. I am sure that this whole House will welcome it being repeated in this House later in the week. Mr Henry Staunton, the former chairman of the Post Office, said that he was told by a “fairly senior person”—his words—to stall on compensation payments to Horizon victims. The Sunday Times yesterday said that the Government utterly refuted these allegations, and the Minister has repeated that today. To make this statement with such confidence, obviously the Government will have had to fully investigate the matter, and I am sure that the Minister would want to confirm this. Can the Minister tell us who carried out this investigation and whether Mr Staunton was approached and asked for the name of the person he said had told him to stall the compensation payments? Can the Minister confirm that the Government will provide a full copy of the investigation report on the Post Office Horizon IT inquiry?

[Lord Offord of Garvel (Con)]

The sadness about this is that the Secretary of State said that she did not want to conduct HR in public, and this is now the situation that we have got ourselves into. We are very clear that no civil servant made that statement; perhaps it is up to Mr Staunton to provide a name, and we can then investigate whether that was the case. In the meantime, it does not make sense, given that the Post Office has been fully funded for compensation already—before the programme “Mr Bates vs The Post Office”, two-thirds of postmasters had had their claims met in full. Indeed, of the £160 million paid out so far to sub-postmasters, £138 million was paid out by December, before the television series. Therefore, it was fully funded, and there is no basis for the allegation.

[Lord Fox (LD)]

My Lords, clearly the public statements of the Secretary of State and the former chair, Staunton, are mutually exclusive, and we look forward to hearing the Secretary of State’s version, which I hope will be repeated in your Lordships’ House. It would be easier to understand in full if it was supported by transcripts of all the relevant meetings. In her social media rebuttal, the Secretary of State said that she

“dismissed Staunton due to very serious allegations about his conduct while Chair of the Post Office”.

Can the Minister confirm that that is true and explain to your Lordships’ House why those allegations were not in fact investigated, rather than simply dealt with through a summary dismissal? If the Minister is unable to do so now, can he come back when the Statement is repeated and tell your Lordships’ House the answer to those questions?

[Lord Offord of Garvel (Con)]

As I have said, a detailed Statement on this will be given in the other place, and there will also be transcripts and meeting notes put in the House of Commons Library for full interrogation. It is clear that there were very serious concerns about governance. The noble Lord himself mentioned a toxic culture in the earlier Question on this issue, and the Government’s requirement to clean it up and change it. The most important figure on any board of any company is the chair, and, if the culture is wrong, perhaps the best place to start would be to remove the chair, which is what has happened. A full Statement will be given as to the circumstances of that, but it was not done on a whim and it was not a summary dismissal.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, ordinary sub-postmasters throughout the UK have had their integrity and reputation impacted upon. I was talking to one of those people this afternoon, from Northern Ireland. They are part of the 33% who have not yet received payment and their simple question is: when will those outstanding payments be made to sub-postmasters?

[Lord Offord of Garvel (Con)]

The Government can go only as fast as the claims come in. Take as an example the GLO 555: 477 of them do not have any convictions. Of those 477, 58 have submitted a claim, of which an offer has been made to 48 and 41 have accepted. We cannot go any faster; we can go only at the speed at which claims are made.

[Lord McNicol of West Kilbride (Lab)]

My Lords, the allegations made by Henry Staunton over the weekend are incredibly serious. Thousands of people, as we have discussed many times in your Lordships’ House, have been robbed of their lives, liberty and livelihood. For them to experience any modicum of justice relies on the truth coming out. I have one specific question, because I know we will come back to this, probably on Wednesday, to discuss the Statement being made in the other place. Will the Government publish all correspondence and minutes of meetings between the relevant departments, UKGI and the Post Office, and put them in the parliamentary Library?

[Lord Offord of Garvel (Con)]

Once again, we are in a situation where we are dealing with private individuals and HR. We should not be doing that in this Chamber, or indeed in television studios; individuals’ livelihoods are at stake here. We did not want to be in this position, but we have to refute the allegations made against us. A judgment will be made by the Secretary of State as to all supporting documentation, and read-outs of minutes will be put in the House of Commons Library. At the end of the day, it comes back to the fact that we need a full inquiry to find out what has actually happened here.

[Lord Forsyth of Drumlean (Con)]

My Lords, I have seen reports that there are still problems with the Horizon system and that some postmasters are still experiencing the problem of underpayments that created this disastrous position. My question is about ensuring that compensation goes to people as quickly as possible. Can my noble friend assure me that that will be the case and that we will look into the suggestion that this is still an ongoing problem, and, if so, ensure that remedial action is taken?

[Lord Offord of Garvel (Con)]

The response from management on this—and this has now been audited—is that issues with the software system are minimal, and £150 million of government money has now gone in to completely replace the system. A lot of investment is going in to ensure that this does not happen again. On compensation for victims, of the 2,700 claims in the HSS, 2,400 have already had their payments cleared—that is 85% of that category. The more sluggish category is the GLO, because those people have more complicated claims. As I said before, we have received only 58 claims from that cohort. As soon as we get them, we will process them.

[Baroness Brinton (LD)]

My Lords, following on from the question of the noble Lord, Lord Forsyth, on 10 January, the Prime Minister said that postmasters will be cleared and compensated swiftly. On the same day, Kevin Hollinrake MP said at the Dispatch Box that all compensation should be paid by August. However, on 28 January, Kemi Badenoch said on the BBC that the deadline was not a priority and that getting governance sorted out at the Post Office was more important. Given that in the last few days a number of postmasters have said that they have received derisory offers—in the case of Alan Bates, one-sixth—is this limping things along?

[Lord Offord of Garvel (Con)]

The reality is that the Government are not dragging their feet—quite the opposite. We will process the cases as quickly as they are put in. When cases are put in, and if the offer made is rejected, there is a full appeals process for postmasters, which goes all the way up to a High Court judge. At the moment, Mr Bates has not appealed that decision. All these individuals have to have time to assess the offer that was given. We need these offers to be fair and reasonable. There is a reason for all the offers to be made. We are not here to comment on individual cases, but the money is there for compensation, and all these postmasters and postmistresses will be compensated for the damage that has been done to them.

[Baroness Chakrabarti (Lab)]

My Lords, in answer to previous questions about racism or misogyny, for example, the Minister clearly and repeatedly said that that is a matter for the Wyn Williams inquiry. My question is about process. How do the Government decide that matters should be dealt with by the public inquiry, and how do they decide that it would be useful, expedient and desirable for them to investigate and respond themselves?

[Lord Offord of Garvel (Con)]

The Government are a shareholder, and there is only one shareholder in this company, if you can call it a company—I have never come across a company that has only one. Therefore, the Secretary of State is exercising her shareholder right to reorganise the board of this company to make it fit for purpose to make sure that this does not happen again. In the meantime, the Government, through the Treasury, provided the thick end of £1 billion to pay compensation. The Government also committed to taking full recourse against Fujitsu in due course. In the meantime, a statutory inquiry, with statements being taken under oath, is ongoing. When the truth has emerged, there will be a price to pay.

[Lord Stirrup (CB)]

My Lords, in answer to an earlier question, the Minister said that £150 million of public money has been expended correcting the system. Why is it not £150 million of Fujitsu’s money? Will whatever expenditure the Government have made in putting things to rights be extracted in due course from Fujitsu?

[Lord Offord of Garvel (Con)]

That is absolutely the case, and my colleague in the other place, Minister Hollinrake, has made it very clear that we will pursue Fujitsu for its share of the compensation. It is not right that the sole payer of the compensation should be the taxpayer.

[Lord Sahota (Lab)]

My Lords, what is the government advice to the postmasters who, due to their experience, have developed mental health problems, and received all kinds of electric shocks and so on, and are unable to work?

[Lord Offord of Garvel (Con)]

The government advice is that each individual claimant must submit his or her claim, and money is available to them to take legal and medical advice. That is part of the reason why we think that, of the 477 cases, we have 58 claims—because they are more complicated—quite rightly being put together by each claimant and their advisers. When these claims are submitted, we have guaranteed that we will action 90% of them within 40 days of receipt.

[Baroness Kramer (LD)]

My Lords, the noble and gallant Lord’s question was about not compensation but the issue of funding the correction of the software to the tune of £150 million. The entirely appropriate question is: why is Fujitsu not paying for the reworking of that software, rather than the Government and the taxpayer?

[Lord Offord of Garvel (Con)]

Perhaps I should have been clearer: the Government are funding this company, Post Office Ltd, to effectively commission a new system to replace Horizon. It might be reasonable to assume that it will not be Fujitsu that does the second system.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I hope whoever takes on this responsibility will bear in mind the point made by the noble Lord, Lord Forsyth, that there may well be continuing problems deep inside the Post Office systems. I speak as an accountant, and I declare my interest. Basic double-entry accounting systems should never have allowed this system to have occurred. What guarantees can the noble Lord give us that a proper accounting-based system will be put in place of the current Horizon?

[Lord Offord of Garvel (Con)]

The issue here is that the sub-postmasters and sub-postmistresses who run these shops know their accounts back to front—that is the whole point. They know to a penny what they are doing from one week to the next, which is why perhaps the greatest sadness in this saga was those honourable people being told that they were alone, when in fact there were thousands of them. We are clear now that, in day-to-day operational matters, we do not have these issues. We are clear that we need to put a new system in place, which is what the Government are committed to doing.

[Lord Berkeley (Lab)]

My Lords, in response to an earlier question, the Minister said that the chairman had to go because he was effectively responsible for the toxic situation within the company, and it was the chairman’s job at the top to be responsible for this. I am sure he would agree that that is the case, but what about all the other people within the Post Office? Is the Minister saying that none of them had any responsibility for the toxicity within the whole company?

[Lord Offord of Garvel (Con)]

A company’s culture is set by the board and the management. There has not been a prosecution since 2015, and no one on the board of the Post Office today was involved in the prosecutions. The current board is completely different, and we are now dealing with getting the culture right for this company going forward. We always start with the chair, because that is the top position in the company.

[Lord Carlile of Berriew (CB)]

My Lords, can the Minister explain why in 2023, of all things, the Horizon contract was extended?

[Lord Offord of Garvel (Con)]

I am rather relieved to say that I have no idea, so I shall write to the noble Lord.

[Baroness Hoey (Non-Afl)]

My Lords, have His Majesty’s Government now put a block on any new government contracts with Fujitsu?

--- Later in debate ---

[Lord Offord of Garvel (Con)]

I am not aware that that has happened formally, but the law of common sense says that it must be the case.