Post Office Ltd: Management Culture

Lucy Allan Excerpts

Thursday 13th July 2023 Westminster Hall

[Lucy Allan (Telford) (Con)]

It is a pleasure to serve under your chairmanship, Sir George. I put on record my utmost respect for the Minister, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), and his work in this area. When he was a Back Bencher, he was as passionate as I am about seeking justice for the little people who have been trampled in this scandal.

Last Monday, Nick Read, the chief executive of the Post Office, came to Parliament to apologise to my constituent Tracy Felstead. He said he wanted to hear her story and to understand how her wrongful imprisonment had affected her life and that of her children and family. He sounded genuine. He looked genuine. We wanted him to be genuine. We talked about how the Post Office could improve its efforts to provide redress to those it had wronged, and we made clear how important it was that the actions of the Post Office matched its words. He readily agreed.

What Nick Read did not tell us at that meeting was that the next day, the news of the non-disclosure of documents would land and, as an inevitable consequence, the public inquiry would grind to a halt for an indefinite period. Either Nick Read was dissembling and putting a victim—my constituent—through more trauma and distress, or he had no idea at all about the non-disclosure and its implications. I do not know which is worse. Perhaps he was both dissembling and incompetent, but as a fair-minded person, I believe that he did not know about the serious non-disclosure that would halt the inquiry. It speaks to the culture of an organisation when the man at the top does not know what is happening. Why was he not told, and why were the Government not told? I am sure that they were not told. Nothing surprises me now.

When I first read the Fraser judgment in 2019, and I observed the way that the group litigation was conducted, I saw all the same things that I as the local MP had seen in other public organisations that have experienced profound scandals. I refer to the Shrewsbury and Telford Hospital NHS Trust’s baby deaths scandal and its Ockenden inquiry, and to Telford and Wrekin Council, where there was the Telford child sexual exploitation inquiry, led by Mr Crowther KC. There was the same corporate denial; the same secrecy and lack of transparency; the institutional blindness; the instinctive desire to protect the institution and the people at the top above all else; the complete lack of understanding of corporate governance and the proper role of scrutiny and accountability; the desperate desire to dissemble; the poverty of leadership; the complacency and utter disregard for the usual norms of behaviour; the blaming of everyone else but themselves; the failure to comprehend that their organisation serves the public; and a twisted belief that cover-up is better for the public than openness, and that keeping victims quiet is for the greater good.

I am a chartered accountant and a chartered company secretary. I have a master’s degree in law and experience as a non-executive director. In the case of the Post Office, the questions that screamed at me from the pages of the Fraser judgment were: where were the non-executive directors? What questions, if any, did they ask? What information were they given? Did they read it? And then inevitably there was this question, in block capital letters: where was the shareholder of that rogue organisation—an institution that thought it was untouchable, and so well protected that it could act with impunity in the courts, in the inquiry and elsewhere? It was protected; it had the deep pockets of the Government backing it to the hilt. It can behave as it pleases, and it does.

We cannot talk about the culture of the Post Office without talking about the culture of the civil service and its relationship with Government. Over many different Governments, there has been great poverty of oversight, and a casual tolerance of appalling behaviour. Even after the Fraser judgment, junior Minister after junior Minister was wheeled out to read what had been written for them by their civil servants. I do not include in that my hon. Friend the Member for Sutton and Cheam (Paul Scully), who did a fantastic job and is as committed to the cause as I am, as is my hon. Friend the Member for Thirsk and Malton. Over the last year, we have talked about the House being misled over covid rules, but what about misleading the House about the fate of the sub-postmasters who lost their livelihoods and liberty, their good name, and sometimes their life? We do not talk about that.

Not every junior Minister will share my passion for righting wrongs and correcting injustice. Indeed, the Ministers concerned had a right to trust the information that their civil servants gave them. Did those civil servants mislead the House? What were the consequences, and why are we not concerned about that? Alex Chisholm was the permanent secretary at the Department for Business, Energy and Industrial Strategy between 2016 and 2020, and was the accounting officer for the Post Office. He was recently knighted—perhaps that tells us all we need to know. Those in power appear to think that nothing wrong happened, or that if it did, there were perhaps a few unfortunate mistakes that led to a perfect storm, but that it certainly was not down to those in charge. Why would they be accountable? Why would they be responsible? Take the bauble, Sir Alex et al. Move onwards and upwards. There is not a stain on your character.

I quote campaigner Eleanor Shaikh, to whom the hon. Member for Motherwell and Wishaw (Marion Fellows) referred:

“This is a culture that can never be trusted to handle the compensation claims brought by those who long ago lost hope that the post office is capable of transforming itself. With an acquiescent, arm’s length, sugar daddy shareholder, it will never be in its interests to do so.”

Who decided that the taxpayer should fund the multimillion-pound defence against the group litigation brought by sub-postmasters? Who agreed to fund the war of attrition to wear down those who dared to fight for justice? Who consented to public money being used in this way? Was it the permanent secretary at the Department for Business, Energy and Industrial Strategy at the time, or was it the Secretary of State, or did they simply not know? I think we are back to that: too many people simply did not know, when it was their job to know. This is a culture, both in Government and in the Post Office, where no one thinks they are really responsible. This is a culture that has leaders who do not understand leadership, as we would know it in the private sector, and who do not feel responsible or accountable for anything their organisation does. Public relations are their focus, as well as the greater good of the organisation and the careers of those at the top.

That culture led to terrible wrongs being suffered, destroyed the lives of the powerless, and left those in power to walk away entirely unscathed from the wreckage that they created, and let us not pretend otherwise.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

It is a pleasure to serve under your chairmanship, Sir George. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on securing the debate. I declare an interest that I am a member of the Government’s Horizon compensation advisory board. Many will know that I have been involved in addressing what has become known as the Horizon scandal for many years.

I am usually an advocate of the cock-up theory of history—mistakes happen—but my involvement in addressing the Post Office and Horizon scandal started when a constituent of mine, Tom Brown, who was being prosecuted by the Post Office, came forward. The more I looked into the issue over the years, the more I realised that these were not mistakes but deliberate lies, cover-ups and deceits, which, as has been said, led to innocent, upstanding members of the community being prosecuted, bankrupted and, in some cases, sadly taking their own lives. That takes us back to issue raised by the hon. Lady: it is the culture of the Post Office that led to the Horizon scandal.

I have described the culture of the Post Office as rotten to the core. Based on recent evidence, I do not think a great deal has changed. Let us see what that rotten culture led to. The hon. Member for Telford (Lucy Allan) has referred to the vicious prosecution of individuals. The evidence that came out of the inquiry—Lord Arbuthnot and I were aware of this—showed that the board knew in 2011 that the Horizon computer system was flawed. The argument that kept being peddled out—that somehow the system was infallible—was just not true.

In spite of that, the Post Office continued to prosecute individuals, including one horrendous case where it sent a pregnant mother to prison. Some 927 individuals were prosecuted. The numbers went up substantially, so why was nobody at the Post Office saying, “Wait a minute: have we suddenly got a load of kleptomaniacs employed as sub-postmasters?” Alarm bells should have been ringing, and yet the Post Office doubled down on prosecuting people. My constituent Tom Brown went through agony for two years after being arrested for allegedly stealing £84,000, only to get to the Crown court in Newcastle and be told that the case was dismissed. In that time, he had gone bankrupt and had his reputation completely ruined. There are many other stories. I and other Members have met some of these individuals, so we know of the mental strain and cruelty that they have experienced. It would take a heart of stone not to be moved by their situation.

The hon. Member for Telford also raised the issue of the board’s approach of resistance. I have referred in the past to a tsunami of public cash being used to defend the indefensible, as happened in the court case that Alan Bates and the Justice for Subpostmasters Alliance brought against the Post Office. There was also the ridiculous situation in which it challenged Mr Justice Fraser in the court and tried to have him removed. That was a delaying tactic—it was not about getting to the truth, but about trying to outspend the applicants. That all happened at our expense—the nearly £100 million it spent was our money—yet it knew back in 2011 that what it was arguing in court could not be defended.

The hon. Lady also mentioned the role of the board. There were faceless individuals sitting on the board and agreeing all of this. They were quite happy to get remuneration for sitting on the board, but they did not ask basic questions about what was going on. For many years I have not been able to get to the bottom of the role played by the UK Government Investments share- holder. That person was meant to represent the interests of taxpayers on the board, yet they were quite happy to sign off £100 million of legal fees for the Post Office. I shall make an exception for the present Minister, but I have dealt with many Ministers over the years, all of whom, to be frank, trumpeted the same rubbish every week, obviously guided by their shareholder on the board. It would be interesting to see what the shareholder said over the years. These faceless individuals are taking remuneration, and they need to be held to account for their actions. It is no good saying that time has passed. They have ruined people’s lives—that is the important thing.

The ironic one is Paula Vennells, who ran the Post Office from 2012 to 2019. It has already been mentioned that she got a CBE for services to the Post Office. Even in 2019, when she got it, we knew about the scandal that was going to break, yet somebody thought it was great to sign off on the CBE. They not only did that, but made her a non-executive director at the Cabinet Office and the chair of Imperial College Healthcare NHS Trust. What the hon. Member for Telford said is correct: it is a chummy club where we think good people—either good men or good women—can go on to these other things, and no doubt get, for those two roles, quite substantial payments. How was that allowed to happen? How did somebody in Government say, “Wait a minute; this scandal is about to break—we’ll give her a CBE and appoint her to two public bodies”?

Finally, I come to the present board. It has already been said that Nick Read’s salary is £415,000. He had a bonus of £455,000. The chief financial officer, Alisdair Cameron, gets paid £110,000 and got a £316,000 bonus. I ask them: where is their moral compass? How did they think it was right to accept such ludicrous bonuses when we are still fighting over compensation for victims of the Horizon scandal? That is wrong. I do not understand how someone can get nearly £1 million a year for running an organisation that is supposed to provide a public service and think that somehow it is right to get a bonus for doing their own job, while there are people who are broken, who are destitute and, in some cases, who still have the moral shame that came with prosecution. That is a moral issue. I do not know how these people sleep at night. How do they think it ethically possible to accept such a figure?

I think Nick Read has paid something like £7,000 back. Big deal! Let us be honest: that is pocket money in terms of his overall remuneration package. Part of the bonus was actually for their work on the Horizon scandal. It was complete nonsense: they said that Sir Wyn had to sign the thing off, but Sir Wyn did not even know about it. The Post Office made that up. At the end of the day, this is public money, not their money. This is not a private company; this is taxpayers’ money, which is the important point. I would not mind if it was actually good, but as has already been said, the inquiry has now been held up because the Post Office has not disclosed documents. The Post Office cannot argue that somehow it cannot find documents or that there has to be a delay. Somebody should have done a trawl of this. If certain people have kept money for work on the Horizon scandal, the Government should sue them, because frankly they are holding up the inquiry.

There is a lot of anger, quite rightly, among sub-postmasters, sub-postmistresses and their supporters, not only about what has happened in the past. There are some clear governance issues. I think that there is call to sack the board on various social media, and I agree with that: the present board needs to be sacked. We also need a fundamental change in the way the Post Office is structured and operated.

[Lucy Allan]

Does the right hon. Gentleman agree that the lawyers, Herbert Smith Freehills, should be sacked?

[Mr Kevan Jones]

Lawyers are lawyers. The hon. Lady said she was a lawyer, and I mean no disrespect, but let us be honest, if the lawyers are going to get a good living out of it, they will take the money and give the advice. A lawyer will say anything if they are paid enough. The point is that the board is still not performing its scrutiny role. As the hon. Lady rightly said, the role of non-executive directors is to challenge and question things, but they are not doing that.

There needs to be an emergency situation and the current board, including Nick Read, needs to go. We need to put in some interim arrangements, and then in the long term we need to look at how the Post Office is run. It is frankly a farce that it is considered to be a private, stand-alone company. It is not: it is 100% owned by taxpayers. Unless that is done, I fear that these people will keep taking large bonuses and salaries and, as the hon. Member for Motherwell and Wishaw said, our network will get smaller and smaller and the people who do the real hard work every day of the week at the front end will get less and less.

--- Later in debate ---

[Kevin Hollinrake]

I am keen to respond, as the right hon. Member knows, on a potential appeals process. I am looking at this carefully, and we will continue to engage on that, but we want to ensure that everything is fair and that people are confident in the process for getting the compensation they deserve. We want to ensure that the compensation is delivered on time. We have an August 2024 deadline, as the hon. Member for Motherwell and Wishaw mentioned. We are keen to deliver on that deadline and are looking again at further ways to expedite payments to all those still waiting.

On governance, Post Office Ltd is a public corporation, and as such its board retains responsibility for the strategic direction of the company.

[Lucy Allan]

This debate is about the culture of the Post Office, and we have raised issues around the bonus arrangement, non-disclosure of documents, and racism and the use of categories. Will my hon. Friend move on to discuss the points raised by hon. Members?

[Kevin Hollinrake]

I certainly will. This is all context to the issues that many people have raised around compensation, but I will certainly come on to those points.

Through the shareholder’s representative on the board, the Government oversee the Post Office’s corporate governance, strategy, performance and stewardship of its financial and other resources. The Post Office reports to the Government on key issues at the regular shareholder meeting. The hon. Members for Motherwell and Wishaw and for Paisley and Renfrewshire North (Gavin Newlands) asked about the future of the Post Office and our plan for it. We all recognise that post offices are a valuable social and economic asset for communities. They deliver essential services and play a key role on our high streets.

The hon. Member for Motherwell and Wishaw spoke about post offices being the front office of Government. We very much see them as the front office of Government, but we do not dictate to consumers how they access vital services. Many consumers look to acquire services in different ways. Many people renew their passports and driving licences online these days rather than at the post office, and we want to give them the convenience of doing that. That creates challenges for the sustainability of the Post Office and of individual branches. We have to acknowledge that. The Post Office is putting together its future plan, and we are working with it on things such as banking services and access to cash, which we have now legislated for. We are looking at whether the Post Office network is getting a fair share of the savings that the banks are making by closing branches and making the Post Office the first point of call for access to cash, for example.