Lord McNicol of West Kilbride (Lab)
My Lords, I will follow up on the questions asked in the other place yesterday. When responding to a Post Office Question last week, the Minister said that this whole debacle and scandal had shown the Post Office in a good light—not Post Office Ltd but the postmasters and postmistresses. We agree with that. What changes was the Secretary of State looking to achieve in the removal of the chair, and what is the timeline for rebuilding trust in Post Office Ltd?
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. To clarify, the question was whether the Post Office brand was damaged. Many people would say that it was a toxic brand. My argument was simply that if one believes that the real Post Office is actually the postmasters, they are the heroes of the day. If anything, their brand has been enhanced but there is no doubt that the management and oversight of the Post Office has been seriously compromised over many years.
Perhaps we should remind ourselves how this company operates, which is on an arm’s-length basis. It is owned by the Government—the taxpayer—and there is one shareholder: HMG. Yet, like many of our public bodies, it is now managed on an almost separate, arm’s-length basis. In doing so, a board is created that looks like a public company, but when is a public company not a public company? It is when there is a board that does not do the job it is meant to be doing.
There was an executive management team, and the role of non-executive directors is to challenge that team. The role of the chairman is, principally, to represent the shareholders and to call the executive management to account. Clearly, that has not happened here. Since 2015, a whole new set of executive managers has been put in place, as well as a new board. In 2023, there were three new independent directors. We have the chair, and through the increased scrutiny resulting from the Government perhaps being more interventionist, some disagreements within the board have come to light. The Secretary of State believes that the current arrangements are not working, so it was agreed by mutual consent to part company. We have taken decisive action to change course and improve, rather than to wait and hope that the situation improves.
Lord Fox (LD)
The Minister’s answer is really helpful, because the question is, when is arm’s-length not arm’s-length? It is clear that it has ceased to be an arm’s-length operation, rightly or wrongly. His Majesty’s Opposition asked for a timetable, and it would be helpful if the Minister gave it to us. How much leeway will the new chair have to do what he or she needs to do, in their mind, to achieve the objectives, and how much will that arm’s-length relationship be pulling the chair back?
Lord Offord of Garvel (Con)
To clarify, the Post Office is constitutionally set up to be arm’s-length and will remain so. We are now talking to the Secretary of State about tightening the governance of that. The key position is the chair, who runs the board and is accountable to the shareholders. We will appoint an interim chair as soon as possible, with a view to getting a new person in post this year. That will coincide, I hope, with the inquiry coming through at the end of the year.
Lord Sikka (Lab)
On 22 January, I tabled a Written Question about possible conflicts of interest associated with the position of Henry Staunton, the former chairman of WH Smith, which operates Post Office franchises. I have yet to receive and Answer. Mr Staunton has now gone—nothing to do with me, I am sure. First, can the Minister publish the conflict-of-interest assessment made when Mr Staunton was first appointed as chair of the Post Office? Secondly, can the Minister explain how it is that Simon Jeffreys is a director of the Post Office and the Crown Prosecution Service? How did that happen?
Lord Offord of Garvel (Con)
I thank the noble Lord for those questions. The removal—the resignation by mutual consent—of the chairman, Mr Staunton, is clearly an ongoing HR issue and we have been clear that we are not going to comment on that in public. That will now take place and no compensation will be paid, but that is still in process in terms of taking action. As far as the rest of the board is concerned, we are happy with the three new non-executive directors who came in in 2023. We have two sub-postmaster representatives, and we are looking for a senior independent director, which will further strengthen the board.
Baroness Brinton (LD)
In the Commons on 10 January, the Prime Minister promised that postmasters would be cleared and compensated swiftly. That same day, Minister Kevin Hollinrake said at the Dispatch Box that all compensation should be paid by August, which is encouraging after many years of delay. However, last Sunday, the Secretary of State Kemi Badenoch said on the BBC that setting a deadline is “not a priority” and that getting the money out and sorting out the governance of the Post Office is the critical thing. Which is it—that the compensation should be paid by August, or that a deadline is not a priority?
Lord Offord of Garvel (Con)
I thank the noble Baroness for her question. We have to clarify that what we are doing here is separating their compensation, so that it is done as immediately and expeditiously as possible. Then we will do fact-finding through the inquiry and accountability will follow. The Prime Minister and Secretary of State have said that there will be no deadline put in place, partly because this is a complex process that requires the postmasters to co-operate and come forward. Of the 2,417 postmasters in the HSS scheme, 100% have received offers, of which 80% have been accepted. We are making great progress.
Lord Browne of Ladyton (Lab)
My Lords, on the issue of how long the arm between the Government and the Post Office was, in 2020, following a High Court decision against the Post Office, experts on electronic evidence were invited by the Government to suggest changes to the legal presumption that computers are reliable. That lies at the heart of this case. To whom did those experts report, was the Post Office consulted about whether the recommendations should come into force and why have the recommendations never even surfaced, let alone been put into force?
Lord Offord of Garvel (Con)
I thank the noble Lord for his question. I know that he is well versed in these matters. As we have discussed in the House before, there will be many ramifications from this case when the facts come out, one of which, as the noble Lord highlighted, is this presumption that the computer is always right, which clearly was not the case. I would have to refer to MoJ colleagues to find out exactly what happened in that case. The judgment was given in the Appeal Court in 2019 and the inquiry was set up in 2020. In 2021, when the convictions were overturned, the inquiry became a statutory inquiry. Under a statutory inquiry, we will get to the bottom of those questions.
Lord Watts (Lab)
My Lords, the chairman oversaw this scandal. Can the Minister assure us that he will not be given a compensation package that demonstrates that, if you fail, you get paid?
Lord Offord of Garvel (Con)
The chairman who is just leaving was not the chairman pre-2015 and he is not receiving any compensation.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, I am perplexed: the Statement said that the chairman left by mutual agreement, the Minister spoke earlier about his resignation, but the Secretary of State made it clear that she sacked him. Which was it? Henry Staunton was appointed by a Conservative Secretary of State, so presumably that was a mistake, for which the Minister is apologising. How can the Government make sure that, when they appoint a new chairman, they will not make the same mistake again?
Lord Offord of Garvel (Con)
I thank the noble Lord for that. A key part of making these appointments is to make sure that we have the right people, in the right place, and the right leadership. In this case, we agreed to part company by mutual consent. The point is that there are issues with the governance of the Post Office beyond Horizon. There needs to be further reform of the Post Office and we have to start with the chairman to move that forward.
Lord Fox (LD)
My Lords, the Minister said that it was hoped that the appointment would be made as soon as possible, hopefully this year. In the meantime, this organisation is a burning platform; it needs leadership. Where does the Minister expect that leadership to come from until the appointment is made?
Lord Offord of Garvel (Con)
The assessment at the moment is that, with the strengthening of the non-executive directors and the current executive team in place, we have a team that can continue to manage the Post Office. We believe that we have a situation that is stable, but it now needs to be improved. That is the challenge before us.