Post Office: Executive Remuneration

Lord McNicol of West Kilbride Excerpts

Tuesday 27th February 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

My noble friend raises a very good point. I am aware of people’s frustration over the longevity of the processes, but Sir Wyn Williams’s review will be extremely important in informing us about what has happened. I agree with my noble friend’s point: long-term incentive plans should be as common in public sector bodies as they are in the private sector. I encourage that when looking at how we review governance in these sorts of organisations.

[Lord McNicol of West Kilbride (Lab)]

My Lords, a recent Post Office board meeting refers to a “toxic culture of disbelief” persisting at the top, including a continuing view that some postmasters and postmistresses were guilty as charged. Until the Post Office is taken out of the compensation process altogether, nothing will change. The Minister knows that one of the advisory board’s recommendations is to do exactly that. Have the Government made any recent assessment of the impact of the Post Office’s involvement on the delivery of the compensation scheme? Also, regarding the last question put by the noble Lord, Lord Forsyth, the answer is yes—the Government do have a clawback mechanism.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for that point. On the reference point at the end, I assume that we are awaiting the outcome of the inquiry, which is only right, so that we can ensure that the right things are done at the right time in the right way. I am also grateful for the prompt regarding the Government taking over the entire management of the compensation system. There is a great deal of demand for that—half the compensation processes are managed by the Government, and they have been effectively delivered. It is not for me to make such commitments, but it is clear that these discussions are going on within government to give people confidence that we are trying to do the right thing for those who have suffered so much.

Paternity Leave (Amendment) Regulations 2024

Lord McNicol of West Kilbride Excerpts

Monday 26th February 2024 Grand Committee

[Lord Fox (LD)]

My Lords, I thank the Minister for his presentation, which was very clear, and I welcome the movements that this statutory instrument represents. It is important to add more flexibility, to do things such as reducing notice, and to extend the period by which this leave can be used. The Minister is correct: the ability for fathers to spend time with their babies at this early stage is an extremely vital part of improving the level of parenting going forward.

However, we have to be a bit realistic, in that we have an economy that is gradually moving towards an informal employment model, whether it is gig economy or zero hours, which means that an increasing number of people are missed out by this sort of measure. Then, of course, we have straightforward self-employed people, who are not part of this, and people who have not been working for long enough for their business. That starts to leave out a large number of people. I cannot give the exact number, but at least a quarter of fathers are not eligible because of those issues; it is probably more because the gig economy is increasing. I urge the Minister and the Government to consult with all of us about ways those fathers can be brought into the system, because at the moment there is a danger that they will slip through the net.

We will be going into the election with a manifesto commitment to an increase in the amount of paternity leave that is available and in the level of flexibility. I am sure that His Majesty’s loyal Opposition will say something similar in a minute, perhaps with more specificity. However, I will make a special mention of those businesses that go beyond the law. Many businesses go way past the legal minimum, and one way of moving this forward is for the Government to recognise, praise and celebrate businesses that do far more than the current legal limit. They recognise that the fathers in their business benefit, not just as fathers but as employees. I think the Government and all of us can spend time celebrating that.

[Lord McNicol of West Kilbride (Lab)]

My Lords, like the noble Lord, Lord Fox, I welcome this SI, as far as it goes. As he said, it is welcome, but this is not groundbreaking; we are talking about small moves in timescale, the length of leave, when it can be taken and the number of opportunities to take it. On the previous SI, we were all declaring our interests. My interest in paternity leave finished 21 years ago, when my youngest child passed his first birthday, but I declare my interest in a number of businesses that I advise, all of which treat their employees at a better and higher level than the legal minimum that this sets—and I shall come back to that.

The SI, Explanatory Memorandum, impact assessment and the Minister’s introduction are all very clear. As I said at the start, this is welcome, but I have a few questions to raise. If the Minister cannot answer them, I am more than happy for him to write to me and place a record of that letter in the Library with answers to some of the specifics—but we support this SI going through.

To work through the regulations, one thing that I was not clear about is the territorial application, which is England and Wales and Scotland. Why does it not also cover Northern Ireland? I was interested in that.

Let us look at flexibility. When I did take paternity leave—Jeez, 23 or 24 years ago—my employer at the time, GMB trade union, offered two weeks, which could be taken within the first year, but there was no period that you had to take. These regs will cover two one-week blocks. Twenty-four years ago, I was able to take the first week, then my wife and I decided that I would take every Friday for the next five weeks, because she had help and support earlier in the week, and Fridays were the time that I could take to spend time with our child and allow her some respite. That flexibility of having one day a week for the next five weeks was a different way of taking it, but that is not covered by the regulations. So, just to take the point from the noble Lord, Lord Fox, a bit further, did the department look at widening that flexibility so that it could be taken as individual days?

I fully welcome it being within the first year, and the notice period is also more than welcome. The Minister noted that the first consultation was post the general election following a manifesto commitment in 2019. We are now in 2024, so I am wondering why it took so long to get here, because this is a positive move. The impact assessment, again, is spot on and covers all the right issues.

I am looking at flexibility for a reason. If we look at page 9 of the impact assessment, it looks at the take-up assumptions. Right now, we are on 74% for week one and 66% for week two. A large number of partners and fathers are not taking the second week, so this is about redressing that. However, the assumption is that the second week will move up to a central figure of 70%, which is an increase of only 4%. Even if we get to the high-end assumption of 74%, it is an increase of only 8%. Any increase is welcome, but is there more that the department can do to help general uptake on the first week? With these changes, there is no expectation that week one uptake would increase. Is there more that we could do on advertising and marketing to show and share the benefits of this? Looking at the finances of it, they are relatively small.

The Minister touched on the neonatal issue as well. I have a genuine question for information. Obviously, when there is a notice period, it is for four weeks. If you have a premature birth, or it is an adoption and things move quicker, that four-week period may be too much. The Minister touched on this but I did not quite get the detail of it. If there is a premature birth, what are the rules in terms of the partner or father being able to move quickly in order to take time off? I presume that many premature births end up in hospital but I am sure that support from the partner or father would be very willing. Can the Minister say anything on that?

The noble Lord, Lord Fox, touched on the gig economy so there is no need for me to repeat what he said.

With that, as the noble Lord, Lord Fox, said, we will come back to the manifesto in due course, but now is not the time to set out what our policy would be for the next election. We on these Benches support these regulations.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord, Lord McNicol, for making the point about the declaration of interests. I hope that, for once, I also have no interests to declare in a debate and no need to apologise after the event for not declaring them—but who knows? What is important is that the nation will benefit, and we may too; that is a good thing. I will answer some of the questions asked but am happy to follow up with answers to some of the more specific questions in writing.

The noble Lord, Lord Fox, made some important points about celebrating and congratulating businesses that go beyond the statutory minimum. We should bear this in mind. I do not have the statistics on how businesses function in terms of percentages and performance but, to be honest, all the businesses that I have ever worked around or been involved with have always operated a different process for paternity leave, maternity leave and so on. That is a great thing; we should not forget it. These are minimum standards. It is important that I emphasise that. This should not be “the” standard, as it were; we hope for and expect companies—indeed, all bodies—to try to go beyond it. As the noble Lord, Lord McNicol, rightly said—28 years ago, was it?

[Lord McNicol of West Kilbride (Lab)]

Twenty-four.

[Lord Johnson of Lainston (Con)]

Yes—24 years ago, the noble Lord had a greater degree of flexibility then than these minimum standards imply. I thank the noble Lord, Lord Fox, for raising that.

I also thank the noble Lord for making a point about the self-employed. Mothers are eligible for maternity leave as self-employed persons but self-employed fathers are not eligible for paternity leave. I have not covered this area in my ministerial work but I would be comfortable going back to my colleagues and asking them to scrutinise the opportunities there further. Bearing in mind that self-employed people—again, I have been self-employed to some extent—have very different working patterns and living patterns, we should not necessarily conflate the two, but it is absolutely right to review and assess how we as a society support families and carers of babies and children.

The noble Lord, Lord McNicol, made a number of important points. The first related to Northern Ireland. This area of legislation is devolved to Northern Ireland. We assume that it will follow the legislative work we are doing today—we cannot guarantee that but it is the assumption; there is some shaking of heads and nodding behind me—but, clearly, we believe that these minimum standards should be applied, certainly across Great Britain.

The noble Lord, Lord McNicol, asked whether we looked at widening flexibility. I do not have the answer to that because I was not engaged in the preparation of this legislation, but I will come back to him, if that is acceptable. All these measures are always taken in the light of balancing our desire to create the sort of society that we want with the need for economic growth and bearing in mind how businesses function. The issue with all these pieces of legislation and regulations is that they apply across the board to all businesses, and some businesses, particularly very small ones, can often find compliance difficult. They might not have the flexibility over the professional employee basis that many noble Lords here may be more used to, so I have some sympathy with the need to be quite clear about ensuring that these are minimum rather than general standards and that they can be operated by all companies across the economy.

I noted the noble Lord’s last point: 74% take-up of week 1, and 64%—or low 60s—take-up of week 2. That is precisely why we are making these changes: to encourage fathers to take that second week. We believe that additional flexibility will allow that.

The noble Lord asked about neonatal care regulations. I believe they are to come into play on 6 April, and they are also entitlements from day 1. If that is not the case, I will let him know. As far as I understand it, they operate slightly differently from paternity leave, but I am happy to clarify exactly what those new entitlements will be. Again, they will be a very important, welcome relief for many parents in an extremely difficult situation.

With that, I am grateful to noble Lords for their input in this valuable and important debate. I commend these regulations to the Committee.

Post Office Governance and Horizon Compensation Schemes

Lord McNicol of West Kilbride Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, the Horizon scandal is widely accepted as one of the worst miscarriages of justice in British history. Given the magnitude and duration of the scandal, it is quite astonishing that it seems that every day we get more and more revelations. We get further from the truth and further from true justice for all those who have been victims of it.

Sunday’s allegations could not have been more serious, and the same applies for everything that has emerged since then, not least the memo that was unearthed last night showing Henry Staunton’s recording of a meeting with the then Permanent Secretary at BEIS, Sarah Munby, on 5 January 2023. In that, he was allegedly told to “hobble” into the election; not to

“rip off the band aid”

in terms of the Post Office’s finances; that

“politicians do not necessarily like to confront reality”;

and, finally, that

“now was not the time for dealing with long-term issues”.

This new evidence appears to endorse Mr Staunton’s claim made at the weekend. It is of the utmost importance that both the public and Parliament know the truth. Do the Government continue to deny that any of those conversations took place, as was stated categorically on numerous occasions throughout this week? Given the new evidence, will the Department for Business and Trade now commit to a Cabinet Office investigation into the serious and continued allegations that Mr Staunton has made?

Earlier this week, it was welcome that the Government agreed to publish copies of the letter from Sarah Munby to Henry Staunton on his appointment as chair of the Post Office in December 2022, but that does not go far enough. Given the Secretary of State’s own willingness now to place part of the record in the House Library, I ask once again what I asked on Monday, when we debated this—unfortunately, before the Statement had been made. Given the new evidence that has come to light, will the Government publish all correspondence and minutes of meetings between the relevant departments, UKGI and the Post Office, and put them all in the parliamentary Library?

Earlier this week, it was also suggested by the BBC that the Government knew that there was a cover-up in the Post Office eight years ago—in 2016—with Ministers having been told that an investigation was happening into how often and why cash accounts on the Horizon system had been tampered with remotely. Will the Minister comment any further on those claims about when that was known by the Government? How will the Government investigate those claims? Following that, will this matter also be handed over to Wyn Williams for full investigation? I am sure that we all agree that the secrecy must end, and that the full sunlight of public scrutiny should be brought to bear.

On the compensation itself, has the £1 billion figure referred to in the Statement already been allocated, and is it therefore ready to be paid to those who will receive it? Subsequently, if that is not the case, will the payments be specifically itemised and timelined within the next Budget?

Although Monday’s Statement and today’s repeat are rightly about the Post Office, people’s faith in government has already been damaged by scandals such as Hillsborough, infected blood, Bloody Sunday and Windrush. Victims of other scandals—especially the contaminated blood scandal—feel that they need to ask whether they have been the victims of deliberate inaction as well. Will the Government provide assurances that no such obstacles have been put in the way of any payments of this kind; and if so, how exactly do they explain the delays in so many cases?

The Post Office miscarriages of justice alone have shown the devastation that can occur when institutions are allowed to operate without oversight or are shrouded in secrecy, and I know the Minister shares everyone’s view on this. Throughout all this, we must not lose sight of the sub-postmasters and sub-postmistresses themselves, so I make no apology for returning to the issue of convictions and the overturning of them. Can the Minister update your Lordships’ House on the progress in this area? Have His Majesty’s Government set a timescale for delivering the legislation needed to quash the convictions?

Finally, the Minister often talks about compensation packages and money being paid in thousands, tens of thousands and hundreds of thousands of pounds to wrongly convicted—I would describe them as not just wrongly but malignly convicted—sub-postmasters and postmistresses. However, is he aware that the vast majority of Post Office payments for the specific issue of “damage to reputation and stress” are still generally only around the £5,000 mark?

Finally, again—I feel a bit like Columbo—there is a discrepancy between the Secretary of State’s speech in Hansard and the Statement. Would the Minister like to comment on it, and if not, will he write to me and place a letter in the Library? There is no mention in the Department of Business and Trade Statement of bullying by Mr Staunton, yet the Secretary of State says:

“I should also inform the House that while Mr Staunton was in post, a formal investigation was launched into allegations made regarding his conduct”—


we know that, but she goes further—

“including serious matters such as bullying”.—[Official Report, Commons, 19/2/24; col. 474.]

I am just a bit confused as to why it was in the Statement delivered in Parliament but not in the departmental Written Statement.

[Lord Fox (LD)]

My Lords, as we have heard, with every day that passes, more questions seem to come up.

In Parliament, the Secretary of State’s Statement was strident—I would say unusually strident—but no matter how loudly and aggressively she asserts her side of the issue, it will not go away without answers and evidence. I support fully the questions that the noble Lord, Lord McNicol, just asked—I will try to interrogate some other areas—but we need answers in order to support or otherwise the Secretary of State’s position. These are answers that the Government can give, not ones they can push into the Wyn Williams inquiry.

Minutes from a call on 27 January show that Kemi Badenoch said to Henry Staunton that she had received

“a briefing on the governance issues at the Post Office and that the complaints against”

Staunton

“are so serious that the government need to intervene”.

The Secretary of State said in Parliament that this included issues raised by other directors on the board. From whom did she receive the briefing on the governance in POL, and where are the notes on its contents? When were the directors’ issues first raised with the Secretary of State, and what form did these complaints take? Were they, for example, letters, emails, calls or meetings? Were any directors’ complaints submitted formally, and how many directors were involved in those submissions?

The Secretary of State’s public statements and comments conflate two issues. One is the possible disquiet as to Staunton’s progress on tackling governance within POL, and the other is an entirely separate accusation of bullying. Does the Minister agree that these two need to be properly separated? The conflation is adding to the confusion. As far as I can see, as yet, there is no documentation to support the bullying part of the Secretary of State’s response. The Secretary of State said that a “formal investigation” was under way into the complaint against Staunton. Who is leading this investigation and when was it started? Staunton says that he was not informed of this bullying complaint, so can the Minister confirm if, when and how Staunton was informed of this bullying complaint and whether he has yet to be contacted by an investigator?

Government, departmental and Post Office capacity is only so large. This very public and bitter argument is a major distraction. Given the huge quantity of energy that is being expelled on this dispute, all other activities suffer. Today, the Prime Minister declined to repeat the Secretary of State’s accusations, and if the Secretary of State misled Parliament, she clearly breached the Ministerial Code. Therefore, does the Minister agree that if we do not get a Cabinet Office inquiry, the Government’s ethics adviser should be asked to investigate this issue now?

Without publishing all the personal correspondence with the various intermediaries that link the Post Office with the Government, it cannot be established beyond any doubt who is telling the truth in this very public dispute. The problem for the Secretary of State and for the Government is that Mr Staunton’s central accusation has credibility. What we see is glacial progress in settling the Horizon victims’ cases. That was his central point. In one answer on Monday, the Minister outlined the bureaucratic appeal process open to those offered unacceptable settlements, and of course, these appeals slow things down considerably. Can the Minister at least acknowledge that this time-consuming and energy-sapping appeal process could largely be avoided if the original offers were at an acceptable level in the first place?

I have one final question. All pretence of an arm’s-length organisation has gone; the Government have the power to intervene and control. Will the Government step in and speed things up by making the process simpler, probably by collapsing the three schemes into one? Overall, will they ensure that the offers of compensation are realistic in the first place, so that all the sub-postmasters who have offers can accept them and move on?

--- Later in debate ---

[Lord Offord of Garvel (Con)]

As I said, we are in a situation now where dialogue quite rightly is happening—and minuted, as always—between officials and representatives of Post Office Ltd. The appointment of the senior independent director was one of the issues that the board were at odds over. The chairman wished to promote an internal candidate and the Department for Business and Trade wanted to bring in an external candidate—which was also the advice of the UK Government, the shareholder executive.

In this situation, when an investigation of why this was happening was brought to bear, that too was blocked by the chair. So there was a situation where the board was not working properly and we had to change the chair. It was as simple as that. The chair had to be changed to make sure the board worked properly. There was no concept of him being there to take the rap for the Horizon scandal.

He has made a second claim, and I advise noble Lords to read the notes carefully to understand this. The conflation going on here concerns the discussion with Sarah Munby in January. The chairman was appointed in December 2022. There was a discussion with the Permanent Secretary in January 2023. That was the first discussion after she wrote the letter saying “Here’s your three priorities”. It was the first meeting between the Permanent Secretary and the newly appointed chair, to say, “Right, you’ve been in post for a month, you’ve looked under the bonnet, what have you found?”

[Lord McNicol of West Kilbride (Lab)]

This is a brief point regarding the Minister’s description of the situation between the Secretary of State and the chair of the board, and the appointment of the SID. I seek clarification and want to check that I heard the Minister correctly. The Statement refers only to the chair, Staunton, looking to bring in his own person. It does not deal with the appointment. The Minister said the Secretary of State was looking to appoint the SID, a different person, and Henry Staunton did not want that person coming in as a SID, so that was the tension that was there, not the fact that he had carried out some nefarious process in trying to bring someone in.

[Lord Offord of Garvel (Con)]

That is a reasonable clarification. The clue is in the name “senior independent director”. The Department for Business and Trade was of the view that we should not be appointing an internal candidate to the role but that an external candidate should come in. That was the reason for the dispute.

On the matter of trying to delay, save money and not budget for compensation, this is on the record to be refuted. The conversation was between the Permanent Secretary and the chair one month into his appointment. A businessman comes in to review the company that he is now chairing. “Please can I have a meeting with you for you to tell me what you have seen? What are the pressure points, what’s good and what’s bad?” The conversation was entirely about the business operating model, not the postmaster compensation. That is a completely separate matter and the finance for it is ring-fenced. It is not within his budgetary concerns. They were talking about how this business model was fundamentally compromised and would not exist in the private sector.

But it is a public corporation and it needs to exist in the public sector. This is why we have this hybrid model. We have 11,500 post offices, of which 5,000 are in rural areas and 3,000 are the last shop in the village. That is not financially viable and would not survive any daylight in the private sector, but we all agree that it is legitimate that this is a vital public service for these rural communities, which is why the Treasury funds that to the tune of £50 million, specifically allocated to run a network which, frankly, is not profitable. That is an immediate discussion between the two and when you add in the pressures of last year, with the minimum wage increasing and energy prices increasing, you can see that there are budgetary pressures inside the operating model.

There is also a discussion about the Horizon computer. The Government have allocated £103 million to building a system to replace Horizon—which is now working fine but is clunky and clearly has not been the right system. So now a new system has been put in place. Any noble Lord in this Chamber who has done an IT project will understand how these budgets go—so there is a second pressure.

There are a number of business pressures being talked about. In the very first meeting between the chairman and his reporting senior civil servant, it is quite appropriate that they should talk about those pressures, and it may well be that the Permanent Secretary was explaining to a businessman, who had not worked with government before, about how government works and how communication works. Undoubtedly, a conversation was had between them, but the record now shows—and the letter written by Sarah Munby makes it very clear—that those discussions did not ever stray into the territory of “By the way, please can you solve your budget pressures by stopping or delaying compensation to postmasters”—that is simply not the case, and we can put it to bed now. It has been conflated and confused, but it is now on the record to show that it is simply not the case.

I turn to the compensation, and the question of whether the Government have been dragging their feet and why. There is absolutely no evidence that the Government have been dragging their feet and I will provide some evidence for that. There are three schemes in place: a scheme for the 900 wrongful convictions; a second scheme for the GLO 555, which, if you take out the convictions, is 477; and there is the Horizon shortfall scheme—the 2,500. That comes to just under 3,000 postmasters, and, today, 78% of all claims are paid and settled. Interestingly, of the 3,000 postmasters, 2,700 have received some sort of payment. Either they are settled, or they are interim, which means more than 90% of the cohort have received either a full and final settlement or an interim settlement on their way to final settlement. That was pushed through largely during 2023, and if we take the £160 million that has been paid out now to the 2,700, £138 million of that was paid out by December last year—before the series and the Bates documentary and under the tenure of Henry Staunton as chairman. Therefore, it is interesting that, under his chairmanship, there is no evidence—the opposite, in fact—that there has been any dragging of feet when it comes to compensation being made to the postmasters, of whom now 78% are fully settled and more than 90% have received compensation.

The noble Lord, Lord Fox, mentioned that this compensation process is clunky and bureaucratic. My noble friend Lord Arbuthnot, who is in the Chamber, will substantiate that the process has been put together by the subgroup; that is, the advisory group that Mr Bates has been involved with on how to make the process work and be fair. To be clear, the appeal process is more for the benefit of the postmasters and postmistresses to appeal, not for the Government to push back. The Government will not push back on the claims given; we need to give a process that, where an offer is made to a postmaster or postmistress and that individual does not feel it is high enough, they can appeal that process. That process has been designed by the advisory council, so, again, there is no evidence that we are dragging our feet.

In fact, when you look at the cohort of 477, who are part of the brave 555 group who have arguably been through the most trauma, having had to go to court and having been some of the most egregious examples, we want to process those claims as quickly as possible. We can go only as quickly as we receive the claims. What is interesting to me is that, of the 477 who have received the interim payment so far, only 58 full claims have been submitted, of which we have settled 41—we have settled 41 out of 58, we are settling as quickly as we can. Why is it only 58 full claims? It is because those postmasters and postmistresses are now in a position, with legal help, to access all the information to put their claim in, and they are taking their time to do that, and quite rightly so.

I think I can make the point that on convictions and compensation, the money is fully ring-fenced; it is not in the conversation about the operational matter of the Post Office—that is a completely separate issue—and we have committed to go as quickly as we can to make the payments and that is also why we are putting through legislation on the overturning of convictions.

Post Office Horizon Scandal: Racism

Lord McNicol of West Kilbride Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank my noble friend. We both come at this from the same point of view: the private sector board. The board currently in place is not the board that prosecuted any of these postmasters. In fact, of the non-executive directors, three have been appointed in the last 12 months. There is no question that there has been a failure of governance. As we discussed last time, the governance of this company goes through the chair to the Secretary of State to Ministers. That is where we need accountability and where the inquiry will focus.

[Lord McNicol of West Kilbride (Lab)]

My Lords, as we have heard, the BBC recently reported a number of concerns and comments made by Post Office staff. One sub-postmaster was told:

“All the Indians are doing it. They have relatives so they take the money and send it to them abroad”.


But neither the terms of reference nor the completed list of issues for the inquiry explicitly mentions racism or discrimination. Is the Minister comfortable that the Wyn Williams investigation will deal with these specific issues of racism and discrimination in his report?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. The inquiry was set up by this Government in 2020, initially on a non-statutory basis, immediately following the case with Lord Justice Parker in 2019. That was then upgraded to a statutory inquiry. So Wyn Williams has the full authority of the judicial process to get to the heart of this matter. We are also being advised, as we know, by the noble Lord, Lord Arbuthnot, and the advisory committee. It is very clear that we will get to the bottom of all these issues.

Post Office Horizon Scandal: Compensation Payments

Lord McNicol of West Kilbride Excerpts

Monday 19th February 2024 Lords Chamber

[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.

Post Office Appointments: Ministerial Responsibility

Lord McNicol of West Kilbride Excerpts

Wednesday 7th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

Three new non-executive appointments were made in 2023 and there will be a new senior independent director appointed and a new chair. Two postmaster directors have also been appointed to the board. The current chief executive, who came in in 2019 at the point of the judgment, remains in place. We continue to have faith in him to move this thing forward quickly, with the right amount of oversight. We have confidence in the board as it is reconstituted. But, as has been said, the question is: why did the original failure happen? We need to find that out.

[Lord McNicol of West Kilbride (Lab)]

My Lords, the financial cost of the Horizon scandal is going to be in excess of £1 billion, and that does not take into account the personal cost to the postmasters and postmistresses, some of whom are here with us. Fujitsu has offered to pay a voluntary contribution but, more importantly, should the Post Office wish to sue Fujitsu, is it still in time to do that and when did the Post Office agree a standstill?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. On the specifics, I will write to him on the actual timeline, but the reality is that Fujitsu knows it has a major part to play here. It knows that it is under serious investigation. It has pre-empted that by coming out and saying that it feels a moral responsibility. My colleague, the Minister in the other place, has made it very clear that the cost of this debacle cannot land purely on taxpayers and I am sure there will be a very full investigation and compensation required from Fujitsu.

Post Office Network Subsidy Scheme (Amendment) Order 2024

Lord McNicol of West Kilbride Excerpts

Tuesday 30th January 2024 Grand Committee

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

My Lords, under Section 103 of the Postal Services Act 2000, the Secretary of State for Business and Trade has the power to make payments to support the provision of the Post Office network. This power is subject to conditions, one of which includes a cap on the total amount of funding that can be given to the Post Office in any given financial year. The current cap, set in 2011, is £500 million, and we are proposing to increase this to £750 million per annum.

Raising the legislative cap on funding that can be provided to the Post Office does not reflect a funding commitment but is simply an enabling power to allow the Government to provide appropriate funding to the Post Office when needed. The rationale for the increased cap is simple: we must avoid a situation where the Government cannot legally provide the funding that the Post Office needs for its essential activities.

As all noble Lords will be aware, the Government currently provide funding support to the Post Office in a number of important areas, enabling it to maintain its delivery of key services across the UK.

First, funding is provided for compensating victims of the Horizon scandal. The scandal was one of the biggest miscarriages of justice in living history, and the victims must get the justice that they deserve. As part of this, it is essential that impacted postmasters are compensated fairly and as quickly as possible. The Government are contributing funding for a number of compensation schemes, as well as funding associated with delivering the compensation schemes. It is essential that this process is not held up at any stage of the process.

Secondly, the Government provide significant and vital funding to support the Post Office network. Post offices are the beating heart of communities. Through its network of over 11,500 branches, the Post Office delivers essential services across the United Kingdom. There are currently over 6,000 rural branches, representing 54% of the total network. Over 3,000 of these are described as being the last shop in the village, providing vital retail, mail and banking services together in one space and helping to sustain thousands of rural economies. These services are highly valuable to both individuals and SMEs in urban and rural areas across the UK. It will come as no surprise that, in the Association of Convenience Stores’ recently published annual local shop report, Post Offices were identified as the type of service considered by the public to have the most positive impact on a local area.

The Government have provided significant financial support to sustain the nationwide network: over £2.5 billion in funding in the past decade alone. The Government remain steadfast in their support for the network and have committed to maintaining the annual £50 million subsidy to safeguard services in the uncommercial parts of the network until 2025. Without that funding, most of these Post Office branches would be unsustainable.

The Government provide targeted investment funding to the company. The retail sector is facing challenging conditions. It is still feeling the effects of changing consumer behaviours arising from Covid-19 and the impact of cost of living pressures on consumer confidence arising from a range of factors including inflation and high energy and supply chain costs. As such, the Post Office is experiencing pressures as the business attempts to operate within this challenging commercial environment, while meeting the costs to right the wrongs of the past.

Further pressures have also arisen through the work to replace the outdated Horizon IT system. Although this is a Post Office-led programme, it is essential for the future of the company and the network, and the Government have already committed to providing £103 million to support the development of the replacement system and to ensure that the Horizon system is maintained before the replacement is rolled out. We have provided funding to meet the company’s immediate needs for this programme, and we are working closely with the Post Office to understand what funding may be required beyond that.

These three areas are critical to the future of the Post Office, and the current legislative cap risks the Government not being able to provide the Post Office with the funding it needs for essential activities. Having taken into account the current forecasts and inflationary context since the previous cap was set in 2011, the Government consider a new cap of £750 million to be reasonable, sensible and proportionate. I beg to move.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for outlining this SI. It is one of the shortest statutory instruments that I have had to deal with. I aim to give it a bit of colour. We on these Benches will not oppose it, but it raises a number of questions, which I will run through, giving the civil servants in the Box a bit of time to answer them and to help the Minister if needed.

A cap has been set at £500 million since 2011—so for quite some time now—and has not risen with inflation over the years. Pre the scandal and having to pay and settle some of the problems—let us deal with the scandal completely separately—has the money from the Government to the Post Office come close to that cap over the last four or five years?

The only question to the DBT from the Secondary Legislation Scrutiny Committee, in paragraph 54 of its eighth report, was not really answered. If this £750 million is not enough, will the DBT come back to Parliament with another SI to uplift it? That is purely in the context of the scandal, because in normal times £750 million should be adequate. It is an uplift of 50% from the previous cap limit, so my expectation is that the cap was never hit. However, the department did not answer the SLSC’s question about whether the Government would return to it. I think the department’s answer was that it was confident that £750 million would be enough. It is worth asking whether, if there is a need to come back for more, the Government would seek to do so.

In dealing with the scandal and the payments from it, is there a gross figure that the Government are expecting or looking to pay across all the compensation schemes? We have individual sums—there is the £600,000, and bits and pieces across different schemes—but is there an expected overall compensation figure on the back of the Horizon scandal?

Also, if I remember correctly, one of the senior executives at Fujitsu commented at Davos that, as a business, Fujitsu would be looking to make some recompense. Do we know what level of financial recompense it is looking to make towards the scandal? Would that money be paid to Post Office Ltd or to the Government, since they are basically underwriting any and all of the compensation payments?

A number of questions have arisen on the back of this very short SI. This will come back to the Floor of the House through Oral Questions and Statements or via Written Questions, so I am more than happy for the department to write to me or put a letter in the Library on some of the detail of my questions, if the Minister does not have them to hand.

[Lord Offord of Garvel (Con)]

I thank the noble Lord for those questions, all of which are perfectly reasonable.

The first question was about the £500 million limit from 2011. Of course, up until 2022 we did not have inflation, so it has not been an inflationary environment. Part of the increase is recognising the inflationary hike that we have had and part of it is recognising that significant compensation has to be paid out. I do not know the precise amount of spend against that £500 million; it has not been above it.

To give some idea of this number, we know that, for example, in the last 10 years we have spent £2.5 billion just supporting the network. If you divide that by 10—although it has not been £250 million a year—you get the idea that that is over or under as a scale. Some £50 million has also been given to support the loss-making branches that we want to keep open, of which there are 3,000 in rural areas. There have also been the IT costs: another £100 million to build the new IT system to replace Horizon.

All of that has been within and is manageable within the £500 million, but now we move to the new world of compensation. So far, £153 million has been paid out. That has, therefore, been within the £500 million cap. On the question of how much will ultimately be paid out, guidance has been given that this could, shockingly, end up being £1 billion, but that would be over a number of years. We expect that to be accommodated within the increase to £750 million. That is how it has been budgeted.

Fujitsu has expressed that it has a “moral obligation”. That has not yet been tested as to amount and recipient. That will now be negotiated. I can see a situation where the Williams inquiry establishes the facts and a lot of repercussions come out of that, as we have said in the Chamber. One of those will be a discussion with Fujitsu about the right amount that it needs to contribute. My ministerial colleague in the other place has been very clear that it should not just be the taxpayer who has to foot this bill. Therefore, Fujitsu will need to off-set that. Quite how that will happen and where it will go is not yet decided, but that will be a significant part of that off-set.

I hope that answers in the main the noble Lord’s questions. Clearly, we all knew the Post Office to be a valuable asset in our own communities, but our awareness of this issue has been raised considerably following the TV series. Therefore, this is effectively a mechanism to ensure that the Post Office is in funds to allow the compensation to be made quickly, as we have indicated many times. We need to right the wrongs of the past in this Horizon scandal. This is an important part of that. This order therefore ensures that the Government can provide appropriate levels of funding to the company over the coming years. I urge noble Lords to support it.

Post Office Ltd

Lord McNicol of West Kilbride Excerpts

Tuesday 30th January 2024 Lords Chamber

[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.

Alan Bates and Others v Post Office Limited

Lord McNicol of West Kilbride Excerpts

Wednesday 24th January 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. The Financial Reporting Council is the UK body that deals with accounting failures. It had a considerable review following the failure of Carillion and British Home Stores—the Sir John Kingman review in 2018. A number of Carillion’s previous directors have been disqualified and other cases are still under way. The FRC is now much more effective as an audit regulator—it has had a change of personnel, and the relationship between the FRC and the audit companies has been removed at further arm’s length. There is still a long way to go, but the FRC is now in a position to take more stringent action.

[Lord McNicol of West Kilbride (Lab)]

My Lords, this is not a new question. Noble Lords from across your Lordships’ House have been asking it, and I first raised it in 2019 after the court case. As a sole shareholder, His Majesty’s Government have both a right and a responsibility, so I take the Minister back to those original questions. What are we going to do to hold to account the board members who failed in their Companies House and directors’ duties when the Williams report comes?

[Lord Offord of Garvel (Con)]

The noble Lord is right to say that it is for the members of a company to take action against directors who have breached their statutory duties. In this case, the sole shareholder is the Government. Therefore, once the inquiry has finished, the Government will be in a position to take action specifically against any directors who have failed in their duties.

Post Office (Horizon System) Compensation Bill

Lord McNicol of West Kilbride Excerpts

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

[Lord McNicol of West Kilbride (Lab)]

My Lords, I welcome this Bill and am glad that the Government have accepted Sir Wyn Williams’s recommendations in his interim report that the current deadline for compensation must be extended. It is my hope, as has been said by many this evening, that the extra time the Bill provides for is not needed, and that compensation is delivered as quickly as possible.

Labour is committed to working with the Government to ensure the best possible outcome for victims. As the shadow Leader of the House of Commons said last week, justice delayed is justice denied. It is deeply shameful that, 25 years after the rollout of Horizon began and 15 years after this scandal was first revealed by journalists and campaigners, victims are still seeking justice. It is particularly saddening that justice did not come quickly enough for the more than 60 sub-postmasters and sub-postmistresses who died before being compensated and before having their convictions overturned. It is incumbent upon us to ensure that justice is delivered, and delivered urgently.

I am glad that the Government have committed to mass exoneration to save victims having to relive their trauma and that the Metropolitan Police has opened an investigation into those who caused it. My noble friend Lady Chakrabarti is right: it will be difficult to unpick and there will be legal issues, but it is incumbent on all of us to overturn these convictions and allow people to move on as quickly as possible.

The question still remains around why it took an ITV drama for justice to finally be tabled for the victims. The noble Lord, Lord Forsyth, touched on the board, and I remember standing here four years ago after the Court of Appeal decision, when one of the issues that we touched on was how much the lawyers had taken out of the £58 million. I think £12 million was left. That point was raised by a number of noble Lords, and I asked a question then about the chief executive and the board. I had no idea that there had been 80 members of the board—it would be interesting to look through them now—but questions were asked four or five years ago about their culpability. The Minister—not the noble Lord, Lord Offord, but the previous Minister dealing with it—was again very positive about what we needed to do, but we still have not seen any action taken against the individuals who had oversight at that time. That is something that we need to look at and make sure we resolve for the future.

The public are rightly sick and tired of scandal after scandal, which has again been a theme of this debate. From Hillsborough to Grenfell, from Windrush to infected blood, we have had enough of the destruction of innocent people’s lives, the cover-ups, the vindictive way in which victims are treated once they come forward and the lethargic speed at which the Government act.

The Post Office has used the opportunity of the last decade not to hold up its hands and make amends to those it has wronged but to do everything it can to protect the bottom line and its once good name. Only last week, it was revealed that the Post Office had claimed tax relief on the compensation payments it made. As compensation is not a legitimate tax-deductible business expense, HMRC will likely be investigating the matter, and it is reported that the taxpayer may have to foot another bill, just short of £100 million, to settle what the Post Office owes the Exchequer. This was not before its creative accounting meant that bonuses could be paid to senior executives in line with its false levels of profitability. My question to the Minister is whether those moneys will be reclaimed by either the Post Office or the Government.

I will pick up the point made by the noble Baroness, Lady Brinton, about only ever focusing on one of the CEOs and move to another. In 2022, the then Post Office CEO Nick Read received a bonus of £137,000. According to Tax Policy Associates, the average payout under the Post Office Horizon shortfall scheme was £32,000 before tax. As we have heard tonight, from my noble friend Lord Sikka and the noble Baroness, Lady Brinton, one applicant was paid out £15.75, while also signing to say that he relinquished any future claims. I hope that that will be overturned and dealt with.

My noble friend Lord Browne and the noble Baroness, Lady Brinton, touched on ways of moving forward with this. As has been said, Dan Neidle has made the argument for looking at an employment tribunal-style way of dealing with this that will set levels we can move up from. I am interested to hear the Minister’s response to that.

Alongside compensation, we must seek reforms, not just of systems and structures at the corporate, judicial and governmental levels but of culture. The culture of covering up instead of owning up has cost so many sub-postmasters and sub-postmistresses their livelihoods, their relationships—which we have not really touched on—their dignity and in some cases their lives. The culture was one of being rewarded for failure, and of the people responsible for administering scandal not only not being held responsible for their actions but in some cases receiving handsome bonuses, honours and new jobs. It was a culture that, in this case, meant that the scandal was compounded; that prosecutions continued long after the Post Office became aware of the flaws of the Horizon software; and that lawyers helped mislead Parliament and the courts, and threatened journalists working to uncover the truth. It was a culture in which, as we have heard, the Post Office made compensation forms deliberately difficult for sub-postmasters to complete in order to minimise payments; in which a former Post Office Minister was paid a six-figure sum for advising the firm legally representing the Post Office; and in which the Business Department nominated Paula Vennells for a CBE two years after group action lawsuits had been launched in the High Court.

Responsibility and accountability are vital. I am glad that the leader of the Opposition made standards in public life a key part of his campaign when we entered this new year. The public are crying out for trust in their leaders. They need faith in a system and government that works; faith that each week will not bring about a new scandal; and faith that the worst instincts of humans will not be indulged or rewarded but punished. Those parliamentarians campaigning for the sub-postmasters and sub-postmistresses have helped show that Parliament and parliamentarians can stand in a good light. As my noble friend Lord Browne and the noble Lord, Lord Forsyth of Drumlean, said in referring to the noble Lord, Lord Arbuthnot, and Kevan Jones MP, they represent the best of public life. It is my hope that this scandal could be our last, and that the collective jolting of the public consciousness that has occurred over the last month will lead to a serious shift in the way that those in power are permitted to act. With that, we on these Benches support the Bill.