Post Office Governance and Horizon Compensation Schemes - Statement

Part of the debate – in the House of Lords at 7:35 pm on 21 February 2024.

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Photo of Lord Offord of Garvel Lord Offord of Garvel The Parliamentary Under-Secretary of State for Scotland, Parliamentary Under Secretary of State (Department for Business and Trade) 7:35, 21 February 2024

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.