A milestone in the long campaign for justice over the Post Office IT scandal or the start of a new chapter?

By Tony Collins

The Post Office’s chief executive Nick Read has signalled a profound change of approach over what he now concedes is a scandal.

For the first time, he is calling for compensation for the 555 sub-postmasters who, led by Alan Bates, sued and defeated the Post Office in a group litigation in 2019. The Bates 555 proved in the High Court in 2019 that the Post Office’s Horizon system had defects that caused shortfalls in branch accounts for which sub-postmasters were wrongly blamed.

Read also says for the first time that the Post Office must confront its “recent past”. Before his speech, the Post Office and its ministers consigned events in the scandal to the “historical past” which seemed an attempt to distance the government and the Post Office from relatively recent events such as misleading statements given in evidence to the High Court, an attempt to remove the judge and the running up of high legal costs – £89m on both sides – which forced the 555 into settling a case they were clearly winning.  

Now Read says the Post Office needs to,

 “confront, and face up, to its recent past”. 

Journalist Nick Wallis has reported Read’s speech in full. The timing of Read’s comments appears to anticipate a rash of negative headlines next week when the Court of Appeal is expected to overturn around 40 convictions linked to the Post Office’s Horizon system.

Such a mass quashing of convictions in one go has never happened before and reflects fundamental weaknesses in the criminal justice system and Whitehall’s oversight of the Post Office. Many more convictions are expected to be overturned in future.

More than 3,500 post office branch franchise holders – sub-postmasters and sub-postmistresses – forcibly took the blame for money shown on Horizon as missing. Horizon was designed and supplied by Japanese-owned Fujitsu.

Hundreds were wrongly convicted, some imprisoned and many others given community service and afterwards were unable to find work because of their criminal records. Some went bankrupt. Some died prematurely. Many have waited 16 years or more for justice.

All the signs now are that government officials will continue to try and confine fall-out from the scandal to the Post Office, thus limiting the consequences for Whitehall. Indeed Read said the government is “keen that the Post Office should be seen to be fixing its own mess”.

But he said the Post Office cannot afford to pay compensation arising from wrongful convictions. He took the highly unusual step of making an appeal directly to government. He said,

“I completely understand that Government is keen that Post Office should be seen to be fixing its own mess. And through the work being undertaken across the business every day to place the needs and interests of postmasters first, we are doing just that. But financial compensation commensurate with wrongful conviction is a different matter.

“I am urging Government to work with us to find a way of ensuring that the funding needed for such compensation, along with the means to get it to those to whom it may become owed, is arranged as quickly and efficiently as possible.”

Such an appeal directly to government is unusual because the Post Office is understood to have an executive team which briefs government business ministers. This helps to ensure a close relationship between the Post Office and its “sponsor”, the Department for Business, Energy and Industrial Strategy.

But compensation pay-outs are categorised as out-of-the-ordinary spending and may need the approval of Treasury officials. It is possible that the Treasury is refusing to approve any compensation beyond the government’s agreed contribution to the historical shortfall scheme. The scheme excludes the Bates 555.

Read says he has realised that the litigation settlement left the 555 claimants with an average only £20,000 each after costs – a fraction of their losses which he accepted in many cases run into six figures. Some of those who went to prison received less than £20,000. This compares with £60,000 which has been set aside as the average pay-out on the historical shortfall scheme.

The big disparity in likely average pay-outs to the group of 2,400 in the historical scheme and the group of 555 who sued the Post Office, will look as though Whitehall is punishing the Bates 555 for its litigation that made the Horizon scandal undeniable.

A change of approach

Read’s speech marked a major change in the Post Office’s approach to the Bates 555. Before Read’s speech, he had given no hint he wanted the government to supplement the litigation settlement of nearly £58m, about £46m of which went in costs.

The government’s junior business minister Paul Scully has many times refused to pay anything to the Bates 555. He said the litigation settlement was “full and final”.

Now Read acknowledges the injustice of the litigation settlement. He said,

“… although the parties entered into a full and final settlement of the Group Litigation in good faith, it has only become apparent through various news reports since quite how much of the total appears to have been apportioned to the claimants’ lawyers and funders.

“Should those reports be accurate, it is at least understandable that the claimants in those proceedings should continue to feel a sense of injustice, even in circumstances where they also agreed the settlement in good faith. What if, anything, can be done on these two issues is not for the Post Office to determine or even within its gift.”

He also said,

“We must ensure that all Postmasters affected by this scandal are compensated and compensated quickly.”  He added, “The Post Office simply does not have the financial resources to provide meaningful compensation.”

Comment

It is to Read’s credit that he, at last, acknowledges the injustices of the litigation settlement. At this stage it’s only words but he is clearly putting the onus on ministers and Whitehall to step in and pay fair compensation to everyone affected by the scandal. It is right that the onus falls to Whitehall because government officials are deeply involved in the scandal.     

The Department for Business, Energy and Industrial Strategy and its predecessor departments were supposed to oversee the Post Office. The Treasury has a rule book on the duties of government officials towards “arm’s length bodies” such as the Post Office to ensure public money is being spent properly. But to judge from Paul Scully’s statements, government officials seem to have left everything of importance to the Post Office. All Scully has said on the scandal seems to distance government and his department from the Post Office. Where then was Whitehall’s proper oversight?

The Home Office could not with credibility say it had nothing to do with wrong deportations in the Windrush scandal because that was a mess created by the immigration department.

Whitehall let the Post Office IT scandal happen. The Post Office was allowed to run up huge costs on a litigation that ought not to have been fought. Whitehall was supposed to oversee major decisions of the Post Office to ensure value for money. Indeed, government officials could have intervened years ago to stop the Horizon IT scandal reaching the costly present stage.

They didn’t intervene because they put too much trust in what the Post Office was telling them. It seems the last thing government officials wanted to do was concede the possibility that a much-trusted state institution, rather than own up to computer problems, was content to let innocent people to go to prison.

Read says the government is “keen that the Post Office should be seen to be fixing its own mess”. But this scandal is very much Whitehall’s mess as well.

Indeed the Bates litigation exposed not only Horizon’s defects and the poor treatment of sub-postmasters but also fundamental weaknesses in government administration that allowed material problems with a public institution’s strategic computer system to be covered up for 20 years and for Parliament to have been misled almost routinely. Ministers in successive governments gave MPs and peers assurances on Horizon’s integrity.  

The least Whitehall, the Department for BEIS and government ministers including Scully can do now is try and make amends properly for the “mess”. Continuing to punish the Bates 555 by promising fair compensation to those who didn’t sue the Post Office serves only to make Whitehall’s resentments of the Bates 555 plain.

Read’s comments ought to mark a milestone in the campaign for justice for all those affected by the scandal. But if Whitehall continues to distance itself, Read’s comments will merely mark a new chapter in what Lord Arbuthnot has called a “national outrage”.

Read calls on government to compensate Subpostmasters – Nick Wallis’ Post Office Trial website

Post Office staff instructed to shred documents – Karl Flinders, Computer Weekly

A sea change in the reporting of the Post Office’s accounts – Tim McCormack

The Great Post Office Trial – BBC Radio’s re-run this week of a moving summary of the Horizon scandal