Post Office: Executive Remuneration

Lord Sikka Excerpts

Tuesday 27th February 2024 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government on which dates since 1999 they exercised their right as the sole share- holder of the Post Office to (1) approve, or (2) disapprove, the executive remuneration policies and amounts.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

Under current arrangements, the Government, as shareholder, approve the targets underpinning executive performance pay. Targets are typically approved on an annual basis as these schemes are usually revised each year to ensure that targets are up to date. The Government also approve CEO and CFO remuneration, in principle before their formal appointment. For the CEO, this was provided in June 2019 and, for the CFO, in January 2015. Such approvals have historically been made in line with the Government’s guidance on senior pay in the public sector at the appropriate juncture.

[Lord Sikka (Lab)]

My Lords, it is shameful that year after year, the Government approved remuneration of Post Office directors boosted by a higher bottom line number and inflated by theft from sub-postmasters. Why has none of that so far been clawed back, and why have the Government approved bonuses for Post Office directors for appearing at the Horizon inquiry?

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Lord for raising this point. I think we all agree that this is an extremely distressing situation for the postmasters involved. A committee hearing is going on in the other place, which I believe we will discuss later this afternoon. I reassure all Members of this House that the Government never approved the bonuses for the section relating to co-operation with the Horizon inquiry. Frankly, the idea that you should reward executives for performing their duty is surprising, and we certainly did not confirm those bonuses. That is a very important point. The second important point to make is that the executives, as I understand it, have paid back the portion of the bonus relating to that, but that does not change the fact that we need to review how Post Office executive remuneration functions. There has been a number of different reviews of the governance of that, and the Government are taking significant note of them.

Post Office Governance and Horizon Compensation Schemes

Lord Sikka Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank my noble friend Lord Arbuthnot. I will take the second one first: there are live conversations going on right now, at great speed, to finalise the legal process with the Ministry of Justice, which will result in the overturning of all the convictions in England and Wales by an Act of Parliament, excepting that there may be some small number of people who, in fact, have had legal or safe convictions, but they will be overturned—as we discussed before—because the greater good is to wipe the slate clean as quickly as possible. That will be coming to this House in short order, and I imagine there will be unanimous support for that.

As for the timing and the finance, the finance for this will come ultimately from the Treasury. The Treasury has been funding DBT, in order for it to fund the Post Office, and, in the course of last year, under the chairmanship of Henry Staunton, £253 million was paid by the Treasury, via DBT, to Post Office Ltd, of which £150 million was for the compensation schemes—and £160 million has now been paid—and the £103 million was for the replacement of the Horizon system. There are regular funding lines going to the Post Office via DBT.

This money has been ring-fenced and identified by the Government—it sits within the Treasury—but we have also had conversations in this House about the fact that there may be some other sources of compensation to be had from other places, and why it should not necessarily be just the taxpayer who picks up the bill for this when there are perhaps other stakeholders involved in this sorry saga who should pay their part. It may well be that that the taxpayer can be relieved of some of the £1 billion ring-fencing because it may be that we can get other sources, not least Fujitsu, to pay for that.

The commitment given by my department—we are working flat out on this—is to get 90% of the claims processed and settled within 40 working days. There is no going back from that; as we have said before, 78% of postmasters and postmistresses—a figure of 2,270—have been fully paid and settled. We are now at the sharp end of this process for those who were treated the most egregiously. Therefore, those cases are more complex, and perhaps need more time—not demanded by the Government—for the process of how they put their claim together. We have a situation where it is openly known that Mr Bates has submitted his claim and is not happy with the response: that is part of the process that we are in, and it will go on. We will move as quickly as we can to make sure that everyone is restored to the position that they should be in.

[Lord Sikka (Lab)]

My Lords, I have a question about the undated letter from Sarah Munby to Mr Staunton that has been released. It asks him to focus on

“effective management of legal costs”.

Can the Minister explain what those legal costs are? What does that mean? Such a letter could not have been written without consultation with lots of colleagues as to what kind of terminology to use. Will the Minister ensure that all the back-up notes to this letter are put in the public domain?

[Lord Offord of Garvel (Con)]

This is very straight- forward. If I am appointed as the new chairman of a company in this situation and, of my three priorities, the No. 1 is to manage a legal process to get compensation quickly to postmasters, I would expect to be told that formally by the Permanent Secretary and to be held accountable to manage those costs effectively. That does not mean to minimise or delay; it means to manage the process effectively to get compensation to the postmasters. What has been put into the public domain makes it very clear that there has been no dragging of feet and no instruction to the contrary on this matter.

As we have discussed many times in this Chamber, we now have a full statutory inquiry. The judge, Wyn Williams, will pick through this in fine detail. We are all very impatient and frustrated because we want the answer now, but we got into this mess because we jumped the gun before, and we are not going to do so again.

Registered Office Address (Rectification of Register) Regulations 2024

Lord Sikka Excerpts

Monday 19th February 2024 Grand Committee

[Lord Sikka (Lab)]

My Lords, it is pleasure to follow the insights of the noble Lord, Lord Vaux. I will speak to the second SI, the Limited Liability Partnerships (Application of Company Law) Regulations 2024. I broadly welcome the thrust of the proposals but I have a number of questions; I hope that the Minister will be able to answer them.

First, the words “company law” appear in the statutory instrument, obviously, but can the Minister tell the Committee whether there is in the UK any central enforcer of company law—or for LLPs, for that matter? I have not been able to find one in all these years, so it would be helpful to know where the buck stops. Who, in the final analysis, is responsible for regulating these entities? This matters, especially when companies and LLPs engage in unlawful practices such as paying dividends without sufficient distributable reserves—something that damages the interests of creditors, including pension schemes with a deficit.

Let me go back a little while, because I have always been interested in this topic. In a Written Question on 14 September 2017, Kelvin Hopkins, the then Member of Parliament for Luton North, asked the Business Secretary

“what checks his Department carries out to ensure that dividends paid by companies do not exceed their distributable reserves”.

This was the reply, on 12 October 2017:

“The Department is not responsible for carrying out checks on dividends paid by companies to ensure that they do not exceed their distributable reserves”.


That is still the position. Nothing has changed. We still do not know who is responsible for looking at these things.

In recent years, companies such as Domino’s, Dunelm, Games Workshop and Hargreaves Lansdown have admitted to paying dividends that were, strictly speaking, unlawful; after a while, they noticed that they were unlawful. They therefore paid illegal dividends but, in the absence of an independent enforcer of company law, no one really examines such instances. The Business Department has long washed its hands of such matters. I hope that the Minister can tell us where the buck stops and which external agency is responsible for enforcing both company law and LLP law. That is my first question.

Secondly, LLP and company financial statements are prepared in accordance with what are sometimes called generally accepted accounting principles—or GAAP, although there are many variations on that—and are promulgated by the Financial Reporting Council in the form of accounting standards. They have an important bearing on whatever counts as an asset, a liability, income, an expense, wages, a tax, liquidity, accountability and much more. Ultimately, the rules or standards have a bearing on the distribution of income, wealth and risks.

In a democratic society, only Parliament has the social mandate to adjudicate on competing claims concerning the distribution of income and wealth. However, that authority has been subverted by the Government, and none of the accounting standards issued by the Financial Reporting Council is ever debated in Parliament. Why is that? Why has Parliament’s authority been subverted? I hope that the Minister can explain why the Government do not bring accounting standards to Parliament for approval because they affect the distribution of income and wealth and form the basis of taxation.

Thirdly, through the FRC, committees dominated by partners of LLPs make their own accounting and disclosure rules. They operate through a private company, which is named CCAB Ltd and is dominated by the accountancy bodies. No one in the Government has ever suggested that the hungry should set food standards, the homeless should set housing standards or the poor should set the minimum wage, but the partners of LLPs are allowed to make their own accounting rules without any kind of parliamentary oversight.

If noble Lords look at LLPs’ accounts, they will see that these LLP partners do not like transparency. For example, LLPs are not required to disclose their partners’ share of profits, which is the nearest equivalent to director remuneration in limited liability companies. We do not know their exact share of the profit, even though they may be enjoying government or other public contracts. Why is the partners’ share of profits not disclosed in LLPs’ financial statements, and why is setting the rules for LLP accounting and disclosure considered private? Surely it is not.

[Lord Fox (LD)]

My Lords, as someone who has spent a lot of his professional life working on annual reports, I have often had questions about GAAP, but the Minister will be pleased to know that I will not ask them today.

The four SIs before us are to be welcomed. They are steps on the way from our discussions on both the last economic crime Bill and the one before that. We are moving forward, in a sense. I am glad that the noble Lord, Lord Vaux, introduced what I call the Knighton collection of companies that were registered to a terraced house in the Welsh borders, not far from where I live—as I believe does the noble Lord, Lord Bourne. I would like some reassurance that the statutory instrument on registered office addresses would deal with that.

As the noble Lord, Lord Vaux, eloquently set out, there are a lot of steps to go through to eliminate falsely registered companies. It comes back to the question of whether Companies House is capable of really handling this, ceasing to be a filing cabinet and starting to be an investigative organisation. To echo the point made by the noble Lord, Lord Vaux, it would be very helpful to have an update on how the huge cultural change that Companies House needs is going. Many of us were impressed by the team that we saw, but also a little frightened by the huge task that it has in front of it to make these SIs and the next 51—or however many there are—come to life.

I have some trepidation on the second of these SIs, on limited liability partnerships, because the noble Baroness, Lady McIntosh, seated opposite, is our Scottish legal expert. I wondered where Scottish partnerships come in, because the territorial extent of that statutory instrument is the whole UK. Where do Scottish partnerships sit within that?

The service address and principal office address regulations are useful and important too, but expose the central weakness that is still within our system. After all the work we did on the Bill, those with control still have the ability to hide that control. We welcome the Service Address (Rectification of Register) Regulations and the Principal Office Address (Rectification of Register) Regulations, but can the Minister set out, either now or in writing, how we are going to eliminate the cancer within this system of people obscuring the real ownership of assets to the authorities and wider society? With that, we welcome these four statutory instruments.

Post Office Horizon Scandal: Racism

Lord Sikka Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I share the noble Lord’s frustration with this process. There was indeed offensive language used in the official documentation, which had not been updated since the 1980s and for which the Post Office has clearly apologised. As far as the culture in the Post Office is concerned, there is a rebuilding job required. The chairman has been removed and live conversations are going on right now to appoint a new chairman. My department is fully focused on rectifying this sorry situation.

[Lord Sikka (Lab)]

My Lords, none of the racist terms in the report, codenamed Project May, could have been used without the approval of directors, all of whom were appointed by the Government. Rather than hiding behind the claim that the Horizon inquiry might look at it, the Minister needs to be accountable to Parliament. An inquiry is not a substitute for parliamentary accountability. So, can he tell us when he first became aware of these racist terms and why he has not already referred the Post Office to the Equality and Human Rights Commission for investigation?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. He is referring to the historical document that was released under the Freedom of Information Act in 2023. It has clearly been identified to have offensive language in it, which had not been updated since the 1980s. There is an ongoing inquiry into this. We all want to know the answer. The reason we got into this position in the first place is that people were deemed guilty rather than innocent without due process. Let us not do the same thing again.

Post Office Ltd

Lord Sikka Excerpts

Tuesday 30th January 2024 Lords Chamber

[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.

Alan Bates and Others v Post Office Limited

Lord Sikka Excerpts

Wednesday 24th January 2024 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government, following the December 2019 High Court judgment in the case of Alan Bates and Others v Post Office Limited, how many Post Office directors have been charged for breach of statutory duties under the Companies Act 2006, or for conspiracy to pervert justice.

[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 his Question. I can confirm that no prosecutions have been brought against Post Office directors to date. The Horizon inquiry will establish the facts of what went wrong. It would be wrong to take action before we have all the evidence. Punishing people without looking at all the evidence first is how this scandal started. We should not repeat that error.

[Lord Sikka (Lab)]

My Lords, I remind the Minister that the Government have the sole responsibility for law enforcement. It is no good saying that they are relying on some committee to turn up evidence; they have had 49 months, and in that time little has happened. The Government need to take steps to charge people for violation of the Companies Act, false accounting, lying under oath and conspiracy. After six years, they have not even yet managed to deal with the directors of Carillion. That does not inspire much confidence that they will be able to deal with the Post Office directors. The whole thing is being kicked into the next decade. Rather than hiding behind this inquiry, will the Minister now publish a schedule showing a timetable for the Government’s actions?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. I know that there is a lot of frustration in this House and the other place on the timelines. This has been going on for a very long time—almost one generation. However, we have been very clear that we have to separate the two elements of this sad story. The immediate action we are taking is to overturn convictions and give compensation. We then come to accountability. A statutory inquiry is in place, and it will look at all the facts of the matter. At that point, a cascade of actions will be taken by the various bodies concerned. We need to understand the role of directors, the ministerial oversight and the role of Fujitsu and the auditor, EY. All that will be done once the facts are established and the Williams commission has reported.

Regulatory Approval for New Products and Services

Lord Sikka Excerpts

Monday 22nd January 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I am grateful for those important words and I absolutely agree. There are issues in ensuring that regulators’ mandates are properly focused. It is important to get a balance between, for example, investment, growth and the other regulator duties. I look forward very much to working with the regulators when we assess the responses from the consultation that is currently being undertaken—some were completed last week—to bring together a suite of solutions to ensure that we can continue to grow our economy and regulate it properly.

Let me just add that our regulators are some of the best in the world. From travelling around the world, I know that a number of jurisdictions literally cut and paste our regulatory texts so that they can copy what we do because they admire it so much. That does not mean we should be complacent, but it does ensure that we should focus very much on the opportunities that the growth agenda will give us.

[Lord Sikka (Lab)]

My Lords, perhaps I might urge the Minister to think about regulatory approval in a different way, by reminding him that Warren Buffett said:

“Derivatives are financial weapons of mass destruction”.


We have seen so many financial products mis-sold in this country. Can I urge the Minister to ensure that regulators road-test all financial products before they are unleashed on the unsuspecting public?

[Lord Johnson of Lainston (Con)]

I am grateful for that comment; of course, I would contact the Treasury about it, since that is its specific focus. I totally agree that we need to have trust in financial markets for them to function properly. That also entails significant responsibilities towards the consumer.

Post Office (Horizon System) Compensation Bill

Lord Sikka Excerpts

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

[Lord Sikka (Lab)]

My Lords, it is a rare occasion on which I agree with everything that has been said. No amount of compensation can compensate these people for the pain they have suffered—not only them but also their families and friends. I have a number of questions for the Minister, and I will take this opportunity to put on the record some other matters that will hopefully be helpful for later debates.

First, can the Minister confirm that there will be no upper limit on the amount of compensation?

Secondly, paragraph 14 in the Explanatory Notes states that the scheme will be

“administered by the Post Office”.

Why? Who on earth could have any confidence in it being fair? Surely the entire board needs to be sacked and a new board needs to handle this, or an independent body needs to be created. I do not think many people will have any confidence in the current board’s ability to handle this matter in a fair way.

Thirdly, there are press reports—the Minister may have seen them—that one postmaster got compensation of £15.75. Could he look into this please? I have looked at the 14-page form that this sub-postmaster filled in, and I would not like to complete it. It effectively asks them to give up their rights for any future claim. That is utterly inappropriate, and it is another reason why the Post Office is not a suitable body to handle the compensation claims. I hope the Minister will attend to that as a matter of urgency.

A number of comments have been made about accountability, and directors and auditors have been mentioned. I will put some matters on the record in relation to that. I checked the Companies House filings today and, between 2002 and 2023, there were 83 directors of the Post Office. Despite full inside knowledge, not one of them went on the public record to say that something was wrong. They were complicit, they lied and they committed fraud—83 of them.

The Post Office also had several non-executive directors, who are supposed to challenge what the executive board does. None ever spoke up, despite some also being heads of the audit committee and the risk management committee. There has been a conspiracy of silence, injustice and fraud, and they all need to be held to account.

Noble Lords asked what on earth happened to the money extracted from sub-postmasters under fraudulent pretences. It may interest them to note the Second Sight report from 2015, paragraphs 22.11 and 22.12 of which say that

“for most of the past five years, substantial credits have been made to Post Office’s Profit and Loss Account as a result of unreconciled balances held by Post Office in its Suspense Account … It is, in our view, probable that some of those entries should have been re-credited to branches to offset losses previously charged”.

That was in 2015. The Post Office did not do so. Directors on performance-related pay were very keen to boost the bottom line; they directly benefited from this fraud. They all knew for years that something was wrong but continued in exactly the same way.

There were also violations of the Companies Act 2006 requirements by directors of the Post Office. For example, Section 386 requires directors to keep “adequate accounting records”. In view of the flaws of the Horizon system, it must be doubted that the company did so. Failure to keep adequate accounting records is a criminal offence, so what exactly have the Government been waiting for? Why have they not charged anyone? Is it because we do not have a central enforcer of company law in this country? We are almost unique in the western world in that respect.

Section 172 requires directors to

“act … in good faith … promote the success of the company for the benefit of its members as a whole, and in doing so have regard … to … the interests of … employees … suppliers, customers … the community”

and have

“high standards of business conduct”.

Anyone looking at the 300 pages of the High Court judgment would conclude that the directors totally failed to do that. Unfortunately, we do not have an enforcer of company law, so the onus is on the Government to act. What action has been and will be taken? I have no confidence in the Insolvency Service being able to do anything—we would be waiting another 10 years.

I turn to auditors. Ernst & Young was the external auditor of the Post Office from 1986 to 2018—the entire period of the scandal. As part of their statutory duties, an auditor is required to state whether in their opinion

“adequate accounting records have not been kept, or … returns adequate for their audit have not been received from branches not visited”.

The company did not keep proper accounting records, as I said earlier. Despite the overwhelming evidence to the contrary, Ernst & Young said that it was satisfied—how could it not be, having picked up £1.8 million in fees in the previous two years? Was it all to do with money? This is not the first time we have talked about the role of auditors; there are numerous scandals, and I have published a lot of academic and other research on them.

Ernst & Young knew that the accounting system was deficient. That much is clear from a publicly available, 36-page Post Office report titled Horizon—Response to Challenges Regarding Systems Integrity, dated 2 August 2010. It was written by a gentleman called Rod Ismay, the head of product and branch accounting at the Post Office. He joined the Post Office in 2006, after 11 years working for—guess who?—Ernst & Young, and was now liaising with the auditor. The report is very concerned about the court cases and adverse press reports. I first became aware of this scandal in 2009 from an item in an accountancy magazine, and I have followed it and noted with considerable dismay that nobody actually honed in on auditors or corporate governance. It was all about the systems and everything else.

On page 19 of the report, there is a paragraph that we need to take note of:

“Ernst & Young and Deloitte”


—it has been involved in some capacity—

“are both aware of the issue from the media and we have discussed the pros and cons of reports with them. Both would propose significant caveats and would have limits on their ability to stand in court, therefore we have not pursued this further. The external audit that E&Y perform does include tests of”

Post Office Limited’s

“IT and finance control environment but the audit scope and materiality mean that E&Y would not give a specific opinion on the systems from this”.

Another paragraph is most damning:

“It is also important to be crystal clear about any review if one were commissioned—any investigation would need to be disclosed in court. Although we would be doing the review to comfort others, any perception that POL doubts its own system would mean that all criminal prosecutions would have to be stayed. It would also beg a question for the Court of Appeal over past prosecutions and imprisonments”.


That is an internal document—a report of the Post Office—which is publicly available, and auditors have discussed all of this.

The point is that Ernst & Young had considerable awareness of the issues, systems and internal failures. On 27 March 2011, it wrote to the management of the Post Office. I will read two paragraphs from that letter:

“The outsourcing of Post Office Limited’s … IT function to a third party … provider (Fujitsu) creates a degree of complexity and difficulty for POL in gaining assurance that”


these

“are adequate … We noted that POL are not usually involved in testing fixes or maintenance changes to the in-scope applications; we were unable to identify an internal control with the third party service provider to authorise fixes and maintenance changes prior to development for the in-scope applications”.

It knows that Fujitsu is pulling the strings, having unauthorised access to anything and everything. None of this ever gets mentioned in the accounts and the audit report—none. That is the state of audit that we have in this country.

Ernst & Young knew the failures of the system and the cover-up. It knew that the company did not keep adequate accounting records, and adequate returns were not received from branches not visited by it. Post Office profits were inflated by the amounts fraudulently taken from postmasters.

I have questions. I taught auditing for many years as an accounting academic. The first thing you teach students is that if management asserts something, you try to independently corroborate it; the more that you are able to corroborate something, the more confidence you can have in it. How on earth did Ernst & Young corroborate what the management told it, or did they simply rely upon it? How did it verify income and profits, with millions, possibly—I do not know how much—in loss of money given by innocent sub-postmasters and simply taken by the Post Office?

E&Y knew the Post Office had suspense accounts. The existence of prolonged suspense accounts is an indication of accounting misstatements and possibly fraud—I am sure the noble Lord, Lord Palmer, would agree with that. It should have been put upon inquiry that something was wrong. That went on for years and years. How did Ernst & Young test any corporate reconciliation of those suspense accounts? How was it persuaded to believe that no provisions needed to be made for any contingent liabilities, given that it had access to all the press clippings and everything?

There is an issue. Every year, Ernst & Young gave the company its customary clean bill of health and, as I indicated, in the final two years it collected £1.8 million in fees. As a sole shareholder of the Post Office, the Government need to sue Ernst & Young, because it owed a duty of care to the company at the very least —if not to anybody else. It has been utterly negligent and a party to a cover-up. The Government need to have the Ernst & Young audit investigated from 1999 onwards—not just one year, the whole period. What exactly was it doing? I hope that the Minister will say, “Yes, that will begin tomorrow, next week or next month”, because we need to be very firm on this.

Finally, I fully support the Bill and I await further Bills to reform corporate governance and auditing.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

Shorter arms, yes. There has been quite a big overhaul in terms of organisation, some of which is pretty obvious when you look at it. There is now a huge amount more central support and training given to postmasters. There are 100 new area managers, creating a buffer zone between the manager and the board. Two postmasters have now been appointed to the board as non-executive directors. There is an appointment of a current postmaster in a director role concerned with the day-to-day relationship with the postmasters. All of it should have been done a long time ago.

As we look at public bodies, those of us who have been in the private sector understand how boards work. We understand the role of non-executive directors, which is to challenge management. It is not to nod and pass, or to wave through. It is to be intellectually curious and, if you find something that does not stack up, to probe it and question it. That has not happened here. We have had an organisation that looks and feels like a plc. It has renumeration committees, audit committees, auditors, a board of directors, non-executive directors and a non-exec chair. All of these, when they are put into businesses, are put in for checks and balances, as the noble Lord, Lord Sikka, said. What we have had here is a mirror image of this architecture without any checks and balances. I think this requires us to look quite hard across quite a wide range of arm’s-length bodies.

[Lord Sikka (Lab)]

I am glad that the Minister has clarified that relationship, but my concern is that, for as long as I can remember, the Government have been preaching shareholder activism. What happened to that when it came to the shareholder—the Government —in the Post Office being active? Did nobody notice the pile of newspaper clippings about the cases? I do not remember any Minister standing up and saying “Right, we’re going to look at this” until after the High Court judgment. Why did the Government fail on their own so-called shareholder activism?

[Lord Offord of Garvel (Con)]

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

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

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

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

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

Horizon: Compensation and Convictions

Lord Sikka Excerpts

Wednesday 10th January 2024 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords—

[Lord Sikka (Lab)]

My Lords—

[Baroness Williams of Trafford (Con)]

Can we let in the noble Baroness, Lady Fox, from the non-affiliated Benches, please?

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022

Lord Sikka Excerpts

Tuesday 19th December 2023 Lords Chamber

[Lord Offord of Garvel (Con)]

As I said before, a decision has not been made on this—a consultation is going on. Regulation 7 is in some ways interference with the operation of private companies and other employers, and sometimes prevents work-seekers being offered employment in legitimate circumstances. We are trying to get the balance right here between maintaining the right to strike and providing companies with the ability to service their clients and fulfil their revenue.

[Lord Sikka (Lab)]

My Lords, could the Minister inform the House, either now or in a Written Statement, of the cost of developing, processing, enacting and defending this unlawful legislation? Can he also promise to refer this legislation and the court case to the newly appointed Minister of State without portfolio as an example of how the Government waste public money?

[Lord Offord of Garvel (Con)]

I think the decision was made on the basis that the court decided that full consultation had not taken place on what we would all agree is an important matter in employment law. It was quite legitimate to say that the consultation should be rerun. It was decided not to appeal the decision—so public money was saved in that regard—but that the consultation should be now run in the ordinary course.