Whitehall “punishes” 555 sub-postmasters who exposed the Post Office IT scandal

Alan Bates

By Tony Collins

“They’ve thrown pennies at us,” says Alan Bates who founded the Justice for Subpostmasters Alliance.

Bates led a group of 555 sub-postmasters who sued and defeated the Post Office in a High Court group litigation that ran from 2017 to a settlement in December 2019. The settlement left the “Bates 555” with an average of £20,000 each, a fraction of their losses. In contrast, the government is helping to fund what it calls “fair” compensation payments to a separate group of 2,400 other sub-postmasters who played no part in the litigation. These non-litigants are expected to receive an average of £60,000 each – three times as much as those who exposed the scandal.

Bates said of officials at the Department for Business, Energy and Industrial Strategy [BEIS] which funds and is supposed to oversee the government-owned Post Office,

“They have done everything possible to insult the 555 in the claimant group as punishment for daring to raise and parade HMG’s incompetence over the years which destroyed so many lives.”

Paul Scully, the postal affairs minister who represents the Department for BEIS, says the money already paid to the Bates group to end the litigation represents a “full an final settlement”. In the Commons last week, he sounded a little more conciliatory than in the past but gave no firm promise of government help for the Bates 555.

That Scully and his officials at BEIS seem content to leave the Bates group with huge personal losses – in some cases more than £500,000 – raises a question of whether there are resentments in Whitehall that the litigation exposed a scandal that senior officials and ministers had denied.

Bates had repeatedly suggested that ministers and officials settle the case in early 2019 – but they rejected his every suggestion. In the end, Whitehall officials have had to deal with the ignominious defeat in the High Court of a public institution, the Post Office, that was held in high regard by the public.

The Bates case proved that Whitehall, ministers and the Post Office were repeatedly wrong, over a period of nearly 20 years, in their claims that the Post Office and Fujitsu’s Horizon accounting system was robust. The judge in the case, Mr Justice Fraser, found that Horizon was not remotely robust. He also found that the system caused numerous shortfalls in branch post office accounts for which sub-postmasters were wrongly blamed. Some of the sub-postmasters went to jail and some made bankrupt.  More than 730 sub-postmasters were convicted on the basis of “evidence” from the flawed Horizon system. A further 2,400 sub-postmasters have joined the Post Office’s Historical Shortfall Scheme which was set up as part of the Bates litigation settlement. The scheme compensates those who had to use their own money to pay for supposed shortfalls shown on the flawed Horizon system.  But the scheme is not open to the Bates 555.  

Reasons for Whitehall’s apparent resentments?    

The high profile of the Bates’ litigation and the subsequent overturning of 47 convictions has put the media and Parliamentary spotlight on failings in Whitehall that let the scandal happen and on a justice system that wrongly convicted hundreds of upstanding business people who ran branch post offices.

The litigation has also given grounds for potential civil claims that could cost hundreds of millions of pounds, making the Post Office technically insolvent without government financial help.

Whitehall resentments against the Bates 555 might also have been fuelled by having to deal with the fall-out from the scandal, including drafting ministerial replies and speeches, setting up and staffing an inquiry into Horizon and responding in detail to Bates’ crowd-funded complaint to the Parliamentary Ombudsman of BEIS maladministration.

The scandal has damaged the Post Office brand and the reputation of the UK civil service as one of the most efficient and trusted of its kind anywhere in the world.

Sorry?

Paul Scully MP, postal affairs minister

In the House of Commons last Wednesday, postal affairs minister Paul Scully made no apology for the failure of his officials to intervene and stop the Post Office IT scandal.

Scully’s Department for Business, Energy and Industrial Strategy is supposed to intervene in the affairs of government-owned “Arm’s Length Bodies” such as the Post Office if it believes something major is awry.

Seema Malhotra - Wikipedia
Seema Malhotra MP

During a debate on the scandal, shadow minister Seema Malhotra asked Scully to apologise.  She criticised the “Government’s failure of oversight and due diligence with regard to public money” and asked Scully to “apologise to the victims and their families today”.   At the end of her speech Malhotra asked Scully again. She urged him to apologise and “own the Government’s mistakes”.

But Scully made no apology. He suggested that government officials had nothing to do with the scandal.

He said, “The Post Office consistently maintained that Horizon was robust and was misguided in its approach to the issue, leading to the decision to prosecute these postmasters. We pressed management on issues regarding complaints brought by postmasters about Horizon and received repeated assurances that the system was reliable.”

Scully also said that an inquiry set up last September into the scandal is to be put on a statutory footing from June, a move generally welcomed by MPs.

But Scully appears to be doing his best to distance his department’s officials from the scandal. He said in the debate that the Post Office works “operationally independently” of the government. He also said the government had no part in the group litigation.

But are Scully’s briefings accurate?

Heavily-redacted documents released last week under the Freedom of Information [FOI] Act seem to contradict the impression given by Scully that his officials at BEIS were at a distance from Horizon-related events.

Cover-up of the cover-up?

The documents were obtained by special needs teacher Eleanor Shaikh who supports Chirag Sidhpura and other former sub-postmasters in their campaign for justice. She has put many questions to various parts of Whitehall to find out how much officials knew of the flaws in Horizon, the unfolding scandal and the group litigation.

The Department for BEIS has refused to answer most of her questions, as has UK Government Investments which is represented on the Post Office board. Their refusals may heighten concerns that Whitehall is concealing its involvement in the Post Office’s cover up of the scandal.

The latest BEIS documents obtained by Eleanor Shaikh are too heavily redacted to reveal the full extent of Whitehall’s knowledge of, or involvement in, the scandal, but the few sentences not blacked out show that various parts of Whitehall were aware of politically-sensitive Horizon developments.

Although Scully said last week that “Government did not have a part in the litigation”, those within government who were briefed on the litigation included senior Whitehall officials, special advisers, communications staff, HM Treasury, UK Government Investments, the Department for BEIS and various ministers.

Scully has also distanced government from the £57.75m settlement agreement in December 2019 which ended the litigation and left the Bates 555 with an average of only £20,000 each after costs. But the FOI documents show that various parts of government scrutinised the settlement package before it was signed.

One FOI document from December 2019, the month in which the litigation ended with a £57.75m settlement, says,

“The Court of Appeal has refused permission on all grounds to appeal the Common Issues judgment. Judgment on the 2nd trial [Horizon faults] is also expected imminently. Mediation started on the 27th of November [2019] and will end on the 28th of November. Ministers have approved a settlement figure. There is a possibility of reputational damage to BEIS. Mitigation: UKGI and BEIS have been working collaboratively to ensure that Ministers are well briefed on the issues as they arise. Recently UKGI [UK Government Investments], HMT [HM Treasury] and BEIS scrutinised a settlement package which has now been approved by ministers.”

Although Scully said the inquiry, which is being led by former judge Sir Wyn Williams, is being put on a statutory footing because of the outcome of the recent Court of Appeal hearings (which ended with 39 sub-postmasters having their convictions quashed), the FOI documents reveal that BEIS has known for more than three years of a risk that the Court of Appeal could find that the Post Office had behaved unlawfully in its actions against sub-postmasters.  

The FOI documents – BEIS Performance and Risks Committee reports in 2018, 2019 and 2020 – show that senior civil servants at BEIS were aware of the risks posed by the group litigation in February 2018, nearly two years before the case had built up costs for both sides of £89m. Indeed, the Treasury was considering in 2018 a possible settlement of the case during a “window” in January 2019 – 11 months before the actual settlement.

Did Whitehall gamble on winning the litigation?

This long delay in settling the High Court case raises questions of whether government officials and ministers, particularly senior civil servants at BEIS, backed the Post Office to win the litigation. Had they defeated the Bates 555, their win could have avoided the risks as set out in the Performance and Risks Committee reports.

Indeed the FOI documents make clear that an “adverse” outcome to the litigation was one in which the sub-postmasters won and the Post Office lost. There is no hint in the reports of any sympathy for sub-postmasters, only a concern about the financial and reputational implications for Whitehall if the Post Office lost the case.

These are some excerpts from the BEIS Performance and Risk Committee reports in 2018 to 2020:

February 2018
Risks: Civil litigation and/or Court of Appeal processes judge that POL [Post Office Limited]  acted inappropriately or illegally. Even in the absence of such a finding there is an ongoing risk that they are perceived to have acted in that way. Potential for significant compensation claims if civil or criminal courts rule against POL. More likely, however, and certainly in the short term, is that this continues to be a significant distraction (and cost) to the business as they defend their actions.
Mitigation: POL have external legal advisors employed on the civil litigation including a QC. They continue to update UKGI [UK Government Investments] through the board and directly on key stages but this is a legal matter and distinct from government. UKGI have briefed Minister (Andrew Griffiths) and will keep Ministers and SpAds [Special Advisers –  temporary civil servants who advise and assist ministers] updated at key points. BEIS legal are also up to speed and contributing any advice to Ministers. Maintaining a position that Government will not comment on an ongoing legal issue.
August 2018
POL have employed external legal advisors in preparation for the hearing in November (2018). UKGI has alerted Kelly Tolhurst [Postal Affairs minister], Perm Sec [Permanent Secretary – civil service head of BEIS], BEIS Legal and Spads. POL’s legal counsel to provide a briefing to the Minister and Perm Sec on POL’s contingency planning to deal with business implication of adverse rulings.
December 2018
POL faces civil litigation in relation to its Horizon IT system – adverse judgement would pose reputational risks for UKGI. Judgement in first trial due jan [20]19, second trial begins March [2019] UKGI is keeping the Minister, SpAds and Perm Sec updated and POL briefed ministers on 17 Oct. BEIS Legal and comms [communications personnel] are also up to speed and contributing any advice to Ministers. Discussions started with HMT [HM Treasury] to prepare for a possible settlement window in January [2019]
September 2020
POL faces civil litigation in relation to its Horizon IT system… Extension granted on referrals by CCRC [Criminal Cases review Commission] until 2 October 2020 and this continues to pose a material financial and operational risk to POL.

Punishing the Bates 555?

In 2021, the Post Office’s annual accounts said that £153m has been set aside for expected payments to former sub-postmasters who joined the Historical Shortfall Scheme. Separately, Scully has announced that around 2,400 people have applied to the scheme. If all 2,400 are deemed eligible to join the scheme, average payments to each would be about £60,000. If some applicants are rejected, the average amounts to the remaining claimants could be higher.

In contrast, the Bates 555 received £57.75m in the group litigation settlement of December 2019 but about £46m of this went in costs, mostly to the litigation funders Therium. The remaining amount left the 555 claimants in the case with an average of £20,000 each.

Bates had no choice but to accept the £57.75m because his team’s money had run out. Indeed the judge in the case had commented on how the Post Office seemed to have run up costs unnecessarily. “It does appear to me that the Post Office in particular has resisted timely resolution of this Group Litigation whenever it can,” said the judge.

A conflict of interest

It is bold, perhaps defiantly bold, for Downing Street to leave the job of setting up an inquiry to the Whitehall department that has the most to lose from its findings: the FOI documents show that BEIS was concerned, two years before the inquiry, about the risks of reputational damage from an adverse outcome of the litigation and Court of Appeal judgments.

It is, perhaps, no surprise, then, that BEIS set such narrow terms of reference for the Horizon inquiry that its main purpose is to identify failings at the Post Office alone – not Whitehall. Even as a statutory inquiry, its terms of reference keep the focus on the Post Office, not BEIS. And the Treasury is beyond the scope of the inquiry. The Treasury funded a £1bn Horizon system that was known to be flawed. Downing Street’s role in shaping the much-criticised political response to the scandal is also excluded from the inquiry.

Scully confirmed last week that the government “is not part of the inquiry”.

Government officials have also stopped the inquiry from investigating whether the settlement was unfair and punitive.

Scully said last week,

“On the group litigation settlement … That is not within the scope of the inquiry …”

It is indeed unclear how much the inquiry can investigate the biggest miscarriage of justice in British legal history.

Horizon to blame for ruining lives, not humans?

In their briefings to ministers, officials seem to suggest that the focus of any blame for the scandal ought to fall to the computer system rather than any individuals, as if Horizon, rather than any human, prosecuted people who had committed no crime.

Last week in the Commons Scully said,

“The life-altering implications of these accounting errors cannot be overstated… Clearly, with this being a computer software issue over two decades, Sir Wyn [the inquiry’s chairman)] is getting the technical advice that he needs, and he will always have that support from us”.

Where any human was involved in the scandal, one emphasis in the inquiry, it seems, may be on what Scully calls the “decision-making process” (rather than on the actual decisions and those who made them).

Conceal and deny?

In the Watergate scandal, President Nixon resigned over the cover-up of the cover-up rather than because of a break-in at democratic headquarters, of which he might have known nothing. Are we seeing a cover-up of the cover-up at BEIS and UK Government Investments with their refusal to answer FOI requests – or answering them with heavy redactions?

Why have they not published all their board minutes and Horizon-related reports?

Officials would cite commercial confidentiality as the reason and would say IT companies would not want to deal with government if it was careless with commercial secrets. But Whitehall officials have been known to hide behind commercial confidentiality to shield their department from reputational embarrassment and likely accusations of incompetence. The Information Commissioner has overruled Whitehall’s arguments many times on its supposed need for confidentiality over IT-related information.

The Bates 555 and Horizon inquiry

Bates is right to be cautious about whether to engage with the inquiry. He says in a letter to members of the Justice for Sub-postmasters Alliance,

“They say the devil is in the detail and that’s what we need to see now we’ve learnt the hard way that you don’t take the word of POL or BEIS but can usually rely on the judiciary.”

Bates is due to meet Sir Wyn this week. Before engaging with the inquiry it is likely Bates will need to be confident that the terms of reference go wide enough. At present, the inquiry seems to have no useful purpose.

Five phases of the scandal?

To date, the Post Office IT scandal seems to have five distinct phases. First, the groupthink, potentially malicious prosecutions and hounding of businessmen and women on the basis of data from a flawed computer system – what barrister Paul Marshall refers to as “mendacity on an epic scale“. Second, the groundless confidence of judges and magistrates across the UK in the accuracy of incomplete computer evidence before their courts. Third, a group litigation in which the Post Office used its deep pockets to make continuing the legal fight unaffordable for sub-postmasters. Fourth, Whitehall’s cover-up of the Post Office’s cover-up; and now the government’s apparent punishment of the Bates 555 who exposed the scandal.

Failings not historical

Government ministers, Whitehall and the Post Office describe failings as “historical”. After the Court of Appeal quashed 39 criminal convictions based on Horizon, the Post Office’s chairman Tim Parker apologised for “historical failings” and Nick Read, the Post Office CEO, referred to “past failures”.

But journalist Nick Wallis has reported on the ruined life of sub-postmaster Chirag Sidphura whose dispute with the Post Office continued through 2018 and 2019. In 2020, the Post Office raised complaints of contempt of court against two barristers, Paul Marshall and Flora Page, who then stood down from representing three wrongly-convicted appellants, Seema Misra, Janet Skinner and Tracy Feltead. And this year the Post Office tried to persuade the Court of Appeal that its prosecutions of 35 sub-postmasters were not an affront to the public conscience. If the three appeal judges had accepted the Post Office’s arguments, the 35 appellants would still have had their convictions quashed but they would not have been fully exonerated.

None of these controversial events in 2018 to 2021 were historical in the generally-understood sense of the word.

Comment:

Photo by Frank Chou on Unsplash

Scully’s silence when Seema Malhotra twice asked him last week to apologise on behalf of his officials and goverment spoke volumes.

Clearly, Scully’s business department BEIS, as a largely unaccountable administration, has not welcomed being proved wrong, especially by a group of outsiders. Indeed, by their actions, letters and briefings to ministers, Whitehall officials, appear to resent Bates’ exposé of the scandal.

For nearly 20 years after January 2000, when Horizon was formally accepted and the Treasury funded payments to the supplier Fujitsu, the official position was that the £1bn system, whatever its flaws, was to be considered robust. Even in 2020, the Post Office told MPs there was no evidence that Horizon had caused the shortfalls in question during the litigation.

But Whitehall knew in 2017 the reputational and financial risks of trying to prove in a courtroom that Horizon was robust. Still it took its deep pockets into the Bates litigation. It had every reason to take the gamble: no individuals in Whitehall could be held accountable for taking the risks if the litigation went wrong. From a Whitehall viewpoint, it made sense to use every legal means to avoid admitting it was institutionally wrong about Horizon from the start.

And this is what happened.

Under the gaze of mandarins and ministers and by hiring some of the country’s most formidable lawyers, the Post Office did all it could to prove it had not been wrong about Horizon.

First it tried to stop the courts granting approval for a group litigation. Then it tried to stop much of the other side’s evidence being heard. Then it didn’t disclose all it knew about Horizon to the courts. Then not all its witnesses told the whole truth to the judge about the system.

And when it became clear in early 2019 it was still losing the case, the Post Office spent £500,000 trying to remove the judge for apparent bias. But Mr Justice Fraser happened to be one of the most competent judges in the judiciary. The Court of Appeal confirmed his judgments and swept away the Post Office’s case against him.

Still the Post Office, with Whitehall in tow, fought on. Money seemed no object. The Post Office’s legal team included four QCs and two firms of solicitors.

When the lavish spending on lawyers and the denigration of sub-postmasters during cross examination seemed destined to end in more excoriating judgments, the Post Office, HM Treasury, government ministers and BEIS officials scrutinised a settlement deal that would see the sub-postmasters continue to suffer harm.

Indeed, when dozens of MPs and peers called for justice and proper compensation for the Bates 555, Whitehall officials set up an inquiry into Horizon that seemed to focus on everything about the scandal that didn’t matter and excluded in its terms of reference all that did, including the settlement amount and the conduct of Post Office prosecutors.

In debates in the Commons, ministers, based on their civil service briefings, played word games to distance Whitehall from any wrongdoing: the failings are said to have been “historical”, government was “not part of the litigation”, and the Post Office’s £57.75m settlement was “full and final”.

Indeed, ministers’ language about the scandal since the litigation can be characterised by what the US political writer William Schneider called the past exonerative tense. In this vein, the much-praised book “Mistakes were made but not by me” may be said to guide Whitehall’s advice to ministers on how to apologise when there’s no choice.

The book also explains how entrenched institutional beliefs that are incorrect may become more entrenched and just as incorrect the more leaders come under pressure to accept them as wrong. Anyone who cannot understand how the Post Office and Whitehall accepted events in the unfolding Horizon scandal, despite the clear harm to people who were obviously innocent, may find some statements in the book useful …

“People become more certain they are right about something … if they can’t undo it.”
“Justifying the first hurtful act sets the stage for more aggression … Aggression begets self justification which begets more aggression.”
“How do you get an honest man to lose his ethical compass. You get him to take one step at a time and self-justification will do the rest.”
“Most people when confronted by evidence they are wrong do not change their point of view or plan of action but justify it even more tenaciously.

Jeb Magruder, a central figure in the Watergate scandal, was said in the “Mistakes were made” book to have been a decent man until he joined Nixon’s White House team. “One step at a time he went along with dishonest actions, justifying each one as he did,” said the book.

Where now?

For the Bates 555 to receive just amounts of compensation, the payments may need to fit in with Whitehall conventions. This means that, for sub-postmasters to receive at least the money the state took from them and the £46m they sacrificed to expose the biggest scandal of its kind in British legal history, there has to be a fix that exonerates mandarins and ministers and funnels all the blame onto a computer system and on long-extinct Post Office administrations: a sort of mass self-exoneration.

Perhaps the most pragmatic solution is for the Treasury, quietly, to give money to the Post Office to fund proper compensation for the Bates 555. This would distance Whitehall from the entire scandal and justice could be seen to be done. In terms of real justice, it’s a fudge but holding out for anything more than a fudge is pointless: if it has taken 21 years to hold the Post Office to account, how many more decades would it take to hold Whitehall properly to account?

As for fundamental flaws in the criminal justice system that encouraged the Post Office to prosecute hundreds of sub-postmasters on the flimsiest of computer “evidence”, there is a small chance of effective reform in the short term.

Of course, the best solution of all would be for Parliament, which is sovereign, to vote to pay compensation to the Bates 555, hold Whitehall to account and fix a “presumption” in the criminal justice system that let judges, juries and magistrates convict innocent people without knowing the truth. But most MPs seem too preoccupied to be troubled by the biggest miscarriage of justice in British legal history or flaws in the criminal justice system that could allow any number of mini Horizon-style scandals to happen in the hundreds of other arm’s length bodies and public sector bodies where what the institutional computer system says is king.

The authors of Mistakes were made but not by me end their book with an apt quote from poet Stephen Mitchell,

A great nation is like a great man:

When he makes a mistake, he realises it.

Having realised it, he admits it,

Having admitted it, he corrects it.

He considers those who point out his faults

as his most benelvolent teachers.

If Whitehall were to apply this sentiment to the Post Office IT scandal, the Bates 555 would receive full compensation with good grace and without further ado.

**

Thank you to Eleanor Shaikh for emailing links to her FOI responses and to FOI campaigner David Orr for links to various articles on the scandal and other IT-related matters.

**

Barrister Flora Page writes on the courage of Tracy Felstead, Janet Skinner and Seema Misra.

Tim McCormack – an important submission to the Horizon inquiry

Pre-order Nick Wallis’ book The Great Post Office Scandal

Subpostmaster group to meet inquiry chairman – Karl Flinders, Computer Weekly

8 responses to “Whitehall “punishes” 555 sub-postmasters who exposed the Post Office IT scandal

  1. Gay Leaker

    Paula Vennells received a CBE and a position as advisor to the cabinet,
    ‘There’s no success like failure’ Bob Dylan

    Liked by 1 person

  2. While I would like to see all the sub-postmasters fully compensated, you should not be too blasé about the difficulty involved in somehow altering or improving a “full and final” settlement in the courts. Any precedent meaning that such a settlement was neither full nor final would completely wash away the foundations of civil litigation in the UK. The repercussions would be incalculable but huge.
    Be careful what you wish for.

    Like

    • Hello, Dougie,
      I am sure there is much merit in your caution – thank you.
      I am equally sure that there are still sufficient brains and integrity available to work out just solutions to the dire problems bequeathed by this scandal.
      I make no apologies for reminding us that it is not acceptable to punish one innocent, let alone hundreds of innocents, resulting in loss of that most precious of commodities – time – plus: reputation, livelihood, family and friends, premature deaths and suicide whilst the perpetrators spend indecent amounts of ‘not their money,’ on trying to cover their backsides.
      Undoubtedly, a Herculean task to bring justice to the victims in a meaningful way but not beyond the capabilities of the State – should it wish to. And, what an inspirational precedent that would be!

      Like

    • Thank you Zara and Dougie. The words “full and final” refer to the litigation which covered only some of the wrongs. There’s ample scope for the government to compensate the Bates 555 without touching the full and final settlement. Government can also pay the 555’s costs of £46m, again without touching the full and final settlement. The High Court wasn’t able to award costs to the 555 because Therium, which funded the 555’s litigation costs, was not, directly, a party to the case. Courts can’t award costs to third parties. If there is the will, government can pay the 555’s costs but I am not sure it will. Whitehall’s resentments over losing the litigation and having the scandal brought to public attention seems to be standing in the way of justice.

      Like

  3. Thank you Zara. I must admit I am not sure what BEIS does other than act as a publicly-funded PR and marketing department. That said, I know its responsibilities include the smart meter roll-out fiasco for which nobody has been held to account.

    Liked by 1 person

  4. As one of the 555, I never expected to get any form of compensation and after the litigation and POL’s arrogance towards us and the court it was even less likely. Now the Government line is the final kick in the teeth. The media has been very strong in our favour and I thank all those for their support

    Liked by 1 person

  5. Thank you, Tony.
    When faced with such a dishonourable episode that has bestowed upon the innocent so much suffering, and continues so to do, it’s difficult not to get judgmental.
    If the BEIS continues to distance itself from its grown-up responsibilities, what is the purpose of its existence? Of what use is it to man or beast?
    I know in the past I’ve referred to these bureaucrats as third rate. I accept the criticism that someone who makes such a judgment is, by definition, third rate. That’s undoubtedly true of me but, the difference is, I’m not employed in a responsible position, and the taxpayer does not fund me.
    The question arises – which is the most useful – hundreds of decent, hardworking, reliable, skilled, honest beneficial sub-postmasters, or hundreds of taxpayer-funded Whitehall homunculi who seem to have retreated from the basics of civilization to impotently cower behind their fortress thinking they are invisible and protected?
    No wonder this country continues its downward spiral.
    Btw, “Mistakes were made but not by me,” a great find – thank you.
    Thank you, Tony, for all of your research and for continuing to champion integrity and justice on behalf of the innocent and betrayed.

    Liked by 1 person

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