PARLIAMENTARY DEBATE
Post Office Ltd - 29 January 2024 (Commons/Commons Chamber)

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the removal of Henry Staunton as Post Office Ltd chair and wider governance issues within the organisation.

Following a conversation with the Secretary of State for Business and Trade over the weekend, Henry Staunton agreed to step down as chairman of the Post Office. An interim chair will be appointed shortly, and a recruitment process for a new chair will be launched in due course, in accordance with the governance code for public appointments. I will update the House when we have further details.

The current chairmanship was not proving effective, and we had a difficult decision: change course, or wait and hope that it improves. Given the challenging context for the Post Office and the importance of the role of chair, the Business Secretary took decisive action. I understand that Members would like more details around the decision, especially considering that the Post Office is rightly under heightened scrutiny at this time. I can confirm that there were issues beyond the handling of the Horizon scandal, but as hon. Members would expect, I am not able to comment on the specifics of individual human resources cases.

As the Business Secretary has said, Post Office governance is a priority for the Government. The Post Office is a public corporation; as such, the Post Office board has responsibility for the strategic direction of the company. While there was a clear need for new leadership of the board, we continue to have confidence in the other board members, who are experienced executives with a range of business expertise across the legal, financial, insurance, asset management and pensions sectors; there are two elected postmaster non-executive directors, too.

The Post Office faces unprecedented challenges. It needs to work at pace to deliver compensation to the thousands of postmasters who fell victim to a faulty IT system, as well as to continue the essential work to implement the necessary operational and cultural changes needed in the business. As such, strong and effective leadership of Post Office Ltd is a necessity.

I thank the Minister for his response. It is concerning that the Secretary of State’s move towards clarity and better governance at Post Office Ltd begins with the Government being on a different page from Post Office Ltd on whether Staunton was fired or left by mutual consent. Will the Minister clarify that? Is it possible that Mr Staunton is being made a scapegoat to take the heat away from this Government, and those who came before, the Government being the sole shareholder in Post Office Ltd?

Back in July, the Minister for Enterprise, Markets and Small Business said in a debate on POL’s management culture:

“Through the shareholder’s representative on the board, the Government oversee the Post Office’s corporate governance, strategy, performance and stewardship of its financial and other resources.”—[Official Report, 13 July 2023; Vol. 736, c. 180WH.]

That is not the same as the chairperson. Are the Government satisfied that the UK Government Investments board representative has adequately fulfilled his oversight role? Indeed, has Tom Cooper, who stood down in May, been replaced? That is not clear from Post Office Ltd’s website.

It is clear that the governance model simply has not worked. The arm’s length approach used by successive Governments has allowed scandal after scandal to fester. The post office network is in disarray. Financial redress to postmasters is far too slow and, in some cases, wholly inadequate. The remuneration package for sub-postmasters means that many are working for below the minimum wage, and services are continuously being stripped away. Does the Minister have confidence that the removal of Mr Staunton will speed up financial redress for victims and bring about change in the management culture of Post Office Ltd?

Back in July, Mr Staunton appeared in front of the Business and Trade Committee over the bonusgate scandal. In a debate at the same time, I asked the Minister if he had confidence in the current management of Post Office Ltd. I received no meaningful answer, so has it taken a TV drama for the Government to take action? How is that acceptable?

I thank the hon. Lady for her work; the all-party parliamentary group on post offices does a tremendous job. The phrase used in the statement was “mutual consent”, but it is fair to say that the Government exercised their right to remove the chairman; the hon. Lady can deduce from that what she will. This is not a case of allocating responsibility for the past problems of the Post Office; we are simply saying that we need new leadership going forward. There were specific circumstances around the chairman that meant that we felt that he was not the right person to lead the organisation of the board at this time.

The shareholder representative on UKGI, as the hon. Lady was right to say, is not the chair; it was Tom Cooper, but is now Lorna Gratton. Do I have confidence in her? Yes, I do. I meet her regularly and have a high degree of confidence in her.

Compensation is too slow—we accept that. A number of measures were introduced prior to the TV drama, as the hon. Lady puts it, including the fixed-sum award of £600,000 for overturned convictions. We have also introduced a fixed-sum award for the group litigation order to expedite compensation. That is something on which I am absolutely focused on a daily basis.

I accept what the hon. Lady says about the remuneration of sub-postmasters around the country. Part of that, of course, is about consumer habits—where we shop on the high street. We are keen to identify new sources of revenue, including through the banking framework, which is a potential lucrative opportunity, and parcel hubs.

On the issue of confidence in the individuals, let me say that, having been a board director myself for 30 years, you are only as good as your last game, so it is fair to say that, at this point in time, we did not feel that Henry Staunton was the right person to lead the board.

I thank my right hon. Friend for her question and the work that she has done on this. We set up the inquiry in 2021 to undertake that work. Those documents are public and subject to public scrutiny. She may have watched some of the inquiry sessions, which were very revealing about some of the conduct that happened at the Post Office. That inquiry is due to conclude by the end of this year and then report probably sometime next year. We will have a much clearer understanding then of who is responsible, and, as is often said at this Dispatch Box, that is the time to hold those individuals to account.

I call the shadow Minister.

The Post Office Horizon scandal is one of the most insidious injustices in our country. It has robbed innocent people of their livelihoods, their liberty and, all too sadly, their lives. At least 60 postmasters have died without seeing justice or receiving compensation and at least four have taken their lives. Twenty years on, sub-postmasters and their families are still suffering from the consequences and the trauma of all that they have been put through.

The scale of the scandal is so vast that getting the right leadership in place at the Post Office is of paramount importance. However, to decide to eject the chair during the weekend with no real opportunity to get the details of the decision on the public record is unusual, to say the least. People need to know that removing Henry Staunton was a substantive, evidence-based decision if we are to have confidence in that decision. Can the Minister assure us that this decision was, indeed, substantive and not just the result of a personal falling out between Mr Staunton and the Secretary of State?

The Minister has talked about setting a timeline “in due course” for replacing Mr Staunton. In the context of what has happened in the Horizon scandal and the big challenges facing the Post Office, strong leadership is vital at this point in the process. I hope that he will be able to share as quickly as possible further information about the timeline and when the post will be filled.

What confidence can the Minister provide that this change will lead to the wholesale culture change that is desperately needed to make sure that this never happens again? Mr Staunton was not in the Post Office during the Horizon scandal—he has only served in the position since 2022—and this scandal has never been about the actions of one single individual.

Finally, the priority for us all in this House is the fast-tracked exoneration of all remaining convictions and the delivery of rightful redress or compensation to all the affected sub-postmasters as quickly as possible. Will the Minister provide an update on when we will see more progress on those matters to make sure that we take urgent steps to fix the seismic damage of this scandal?

It certainly was not something that we wanted to do on a weekend. There was a chance that it would come into the public domain by other means, which is why a conversation had to take place over the weekend. We did not think that it would be right for the individual to hear about the potential course of action by other means than the Secretary of State speaking to him. I think that was the right thing to do. I do not know why the hon. Lady would feel, or whether she any evidence, that there was some kind of falling out, as she put it; this was about very serious governance issues related to the person who headed the board of the organisation, which are obviously confidential human resources issues.

On the timeline to replace Mr Staunton, as I said, we will do so as quickly as possible. We are looking at recommendations as we speak, and we will report back to the House as soon as possible on an interim and a permanent replacement. This was not about holding somebody responsible for past problems in the Post Office; it was about the governance of the Post Office going forward. That is why a mutual agreement took place for Mr Staunton to step down.

We are working at pace to deliver the blanket overturning of convictions. We are keen to update the House as quickly as possible, and should do so in the coming days.

As a member of the Business and Trade Committee, I was deeply concerned by the inability of Mr Read, the chief executive officer of Post Office Ltd, to answer an array of very simple questions. In fact, he appeared not even to have done his basic homework when it came to looking back at the Horizon scandal. Although he was not the CEO at the time of the scandal, what confidence do the Government have in Mr Read as chief executive officer to turn it around, and has he yet made public the board minutes that show when the matter was brought to the board’s attention for the very first time? If any board member was complicit in hearing that information and not acting upon it, what steps will the Government take with lawyers to ensure that they are held accountable?

I thank my hon. Friend for his work on the Select Committee. I was present for his line of questioning during that session. The chief executive committed to providing responses to the Committee; I am not sure whether they have been provided thus far. A number of questions needed to be addressed, and it is right that those answers be provided. As far as the Government are concerned, our primary means of achieving that is through the inquiry, which is hearing important evidence right now, and will conclude its work by the end of the year and report shortly afterwards.

I call the SNP spokesperson.

Surely if ever there was a time to consider removing Mr Staunton from his post, it was after it emerged last year that bonuses were being paid to Post Office executives simply for doing what I think we would all expect them to: co-operating fully with the Horizon inquiry. I think that people will be forgiven for having the suspicion that, when it comes to Horizon, Ministers have been a bit like the Japanese moon lander, suddenly bursting to life as soon as a bit of light is shone on them, in this case by an ITV programme.

I have two questions. First, Fujitsu’s representatives told the Business and Trade Committee a fortnight ago that Fujitsu had a “moral obligation” to contribute to the financial redress for the victims. Has the Secretary of State had any discussions yet with Fujitsu about how and when that might happen, as well as about the size of the contribution that it might make? Secondly, with regard to the continued unexplained shortfalls in Horizon, will the Government commit to revealing how much in excess the Post Office claimed back from staff, resorting to forensic accountancy if required?

The bonuses were returned voluntarily by anybody who received them for that sub-metric, and the chief executive returned his bonuses from across the entire inquiry.

On the point about the Government picking up the pace because of the ITV drama, I would say a couple of things. We were putting a number of measures in place already. We had put in place the Horizon compensation advisory board, which has Lord Arbuthnot as one of its key members. A fixed-sum award was introduced last autumn. We were looking at advice on overturning convictions. Things were happening at pace in this area prior to the dramatisation, but of course we are public servants and members of the public. Of course we want to expedite things, and the impetus behind them is at a raised level because of the public outcry.

Conversations are ongoing with Fujitsu. In my view, the best point to negotiate is when we have all the evidence at our disposal, which will not be until the inquiry concludes. We welcome the fact that the company has taken and accepted some moral responsibility to contribute towards the compensation and we will take it at its word, but negotiating at the right point is the right way to deal with that.

The question of any excess moneys that came back from postmasters effectively into Post Office accounts is an important one, which we are asking now, and we hope to get answers in the near future.

I spoke recently to a couple of my constituents whose parents were wronged by the Post Office Horizon scandal. Now they are being asked to provide invoices from more than 20 years ago to prove that they bought the Horizon system—records the Post Office itself admits it does not keep. Does my hon. Friend agree that it is right that we focus on those who have been wronged, and that the benefit of the doubt must be with those postmasters who were completely wronged?

That is absolutely right. It should not be the case that a postmaster has to evidence a document that does not exist. The benefit of the doubt should be with the postmaster. Of course it is fair to ask, “Do you have documentation to support any claim you are making?”, but if the evidence is not there, the benefit of the doubt should be with the postmaster.

I call the Chair of the Select Committee.

Leaving the Post Office rudderless now, when people are literally dying before they get redress, is not a situation we can put up with. The key question for the Minister is this: where is the Bill to expedite redress for those who were wrongfully convicted? Will he commit this afternoon finally to making sure that we have pre-legislative scrutiny of that Bill so that it is as strong as it can be, and will he commit to a hard deadline enshrined in law in the Bill to make sure the payments are made as rapidly as possible? Frankly, Mr Bates and the other sub-postmasters who have been wronged for so long should not be made to wait a moment longer.

I thank the right hon. Gentleman for his question, but I do not accept his premise that the Post Office is rudderless. The chief executive is still there and I spoke to him a few moments ago, prior to the urgent question. As I have said, we are looking to appoint an interim chair as soon as possible and a permanent replacement shortly after that, and meanwhile the daily work of the board will continue.

On our commitment to overturn convictions on a blanket basis, I appreciate the right hon. Gentleman’s previous constructive collaboration and engagement with our Department, and I hope that continues. I am keen to engage with him on our approach. These are legal matters that need to be considered carefully and we had a number of meetings last week on this very issue, so I am keen to engage with him, but in a way that does not slow down the process of bringing the legislation forward. He will find us contacting him and knocking at his door in the coming days to talk about how we will go forward with that legislation.

I should point out that Mr Bates’s compensation is not related to the overturning of convictions, because he was never convicted. That is not what is getting in the way of Mr Bates’s compensation, although it is getting in the way for something like 900 other people, and we are keen to resolve that as quickly as possible.

Will my hon. Friend take this opportunity to look at the Post Office’s reported practice, under the former chairman, of making payments of just £5,000 under the Horizon shortfall scheme for distress and inconvenience to people it falsely accused of theft, when a similar claim made at an employment tribunal, in the most exceptional cases, is 10 times that amount?

To be clear, those schemes are run independently of the Post Office. There are independent processes all the way through, and an independent panel assesses the loss. I think my hon. Friend is talking about the Horizon shortfall scheme, but it is clear that any tariffs that might go with payments are not a ceiling—they tend to be a floor. People should of course be fully compensated for both their financial and their non-pecuniary loss; that is a principle we have adhered to all the way through the process. We are looking at the recommendations of the advisory board on how to make sure people who have been through those schemes have received fair payments. In the group litigation order scheme, there will effectively be a minimum £75,000 fixed-sum award. We are keen to ensure not only that we get the money out of the door, but that that compensation is fair and seen to be fair.

The Post Office bullied, threatened and lied to sub-postmasters and, as we have heard, there is huge frustration that throughout the entire compensation process it has tried to minimise payments, or used extra-long and complex forms to avoid making payments to them. Is the Minister confident that the compensation programme is truly independent and that sub-postmasters will get the full and fair payments they deserve?

I do not accept that premise. I do not see any evidence of the compensation schemes trying to minimise payments. The independent panel for the Horizon shortfall scheme included Lord Garnier, for example, and seven or eight KCs—very reputable people seeking to do the right thing—so we must be careful in our rhetoric. Of course we want to ensure that people get their full and fair compensation. That is why we implemented the Horizon compensation advisory board, which includes Lord Arbuthnot, the right hon. Member for North Durham (Mr Jones), Chris Hodges and Professor Moorhead. They are decent people who want to ensure that people get treated fairly, and full and fair compensation is what people will get.

Clearly, in the wake of the Horizon scandal, there is a need for massive change in the culture driving Post Office management, particularly in its relationship with sub-postmasters, who are, after all, running private businesses under contract with—not owned by—the Post Office. Will the Minister ensure that whoever is appointed chairman commits themselves thoroughly to that culture change, and, if necessary, will he change other board members to ensure that we get the change that we all want to see?

That is a good point. In the past, the relationship between Post Office Ltd and sub-postmasters has not been where it should have been. It is important that that changes. There has been much work on this: 100 area managers have been appointed to help build that relationship, and some of the past conduct and culture of the Post Office has changed. However, we know that it needs to change further. That is the job of the board; we need the right leader of the board in order to do that—hence the action that we took over the weekend.

Poor leadership and governance of the Post Office led to the badly designed Horizon shortfall scheme, which other Members have referred to. I have to say to the Minister that there has been massive under-compensation of sub-postmasters, including my constituent Mr Pennington. For 10 years, he was forced to find shortfall amounts totalling a possible £100,000 because of the Horizon system. He and his wife had to use their own savings, sell shares and even jewellery, and remortgage their house twice.

The stress and worry of finding those shortfalls over 10 years was immense, and Mr Pennington had a mini-stroke shortly after selling the business in 2012 because he could not stand paying the shortfalls any more. Yet the Horizon shortfall scheme has paid out a paltry £1,500 for those 10 years of stress and worry, and has compensated only half the shortfalls. Even the tax top-up promised in November has not yet materialised. I have written to the Minister about that case, but what action can he promise now to ensure that my constituent is finally compensated for those years of distress to him and his wife?

I am very happy to work with the hon. Lady on that particular case. We are clear that people should get full and fair compensation for financial loss and other impacts, including reputational loss—[Interruption.] I am setting out the position as it is. Of course, we are all concerned to hear about people who do not feel that they have been properly compensated. That is why we have the Horizon compensation advisory board, on which Lord Arbuthnot sits and to which I have referred a number of times. We are keen to ensure that all those people get, and can see that they have got, fair compensation. We are looking at the recommendations for an appeal mechanism, for example. I am very happy to look at this particular case in that context. It is absolutely the case that people should be fully compensated for financial loss and other impacts on their lives.

I welcome what my hon. Friend has said. By taking this action, the Government have accepted by default that the arm’s length body model for the Post Office does not work, so will he look again at the structure of Post Office Ltd, and will he confirm on the record that the former chairman, having left by mutual consent, did not receive or accept any severance payment?

Yes, I can confirm that there was no severance payment. I do not think it is fair to say that we do not think the arm’s length model works. Clearly, we have the right to terminate the chair’s position, which is what we have done.; that is part of the current governance process. Of course, individuals are important, and having the right individual leading the board is very important. We did not think that was the case prior to this weekend, which is why we took the action that we did. We are very keen to appoint the right person to help make the cultural changes within the Post Office that we all want to see.

Diolch yn fawr, Llefarydd. The effects of the Horizon scandal and Post Office business practices are still hurting our communities. The post office in Nefyn closed partly because staff no longer trust the computer systems, which I bet is happening in countless communities. I have asked the Post Office to provide an outreach van in Nefyn if no business at all is willing to provide that service—as appears very likely, because I have asked businesses; last week, the Post Office said no. Will the Minister guarantee the people of Nefyn that this, the oldest and second largest town in Llyn, will again have post services in the town?

I am very happy to take that point up with the right hon. Lady, and to meet her to discuss it. It is very important that our citizens—our consumers—have confidence in the Post Office. That has certainly been the experience in my patch: people have been outraged when there is a closure, so the general public definitely have some confidence in the service. The Horizon system is being replaced. As far as I know, there has never been a case of a customer losing out because of the Horizon system, but I am very happy to meet the right hon. Lady to discuss her case in Nefyn.

Shepherd’s Bush Crown office closed in 2017, and Hammersmith Crown office closed in 2020 after 100 years. Four sub-offices in my constituency have been temporarily closed for up to 10 years. With queues at the remaining offices stretching around the block at times, and a lack of competition thanks to multiple bank closures, will the Minister investigate why Post Office Ltd lacks commercial sense as well as integrity?

I am happy to look into any cases that the hon. Gentleman refers to. There are clear set criteria: the Post Office has to maintain 11,500 branches nationwide, and 99% of the population has to be within three miles of a post office. The Post Office is maintaining its requirements under those criteria, but I am very happy to talk to the hon. Gentleman about the issue. Of course, we are looking at how to ensure that the network of individual post offices is sustained over the long term with new revenue streams, including through the access to cash legislation that the Government have put in place and things like parcel hubs. We think there is a bright future for the Post Office, but I am very keen to work with the hon. Gentleman to make sure of that in his particular cases.

I recently raised serious concerns with the Minister that the UK Government are not putting enough effort into making sure that post offices have a sustainable future—something that was of concern before the ITV drama shone a light on this issue. It is a challenge, and I do not feel that I really got an answer, so I am coming back to the topic again: we really need to know that we have a clear, proper plan for ensuring that there is no further deterioration of the network and to help build it back up. People in places like Neilston in my constituency, whose post office closed two weeks ago, or Clarkston, whose post office closed on Saturday, need those services. Those closures are billed as temporary, but they are only temporary if someone has the confidence to take up the opportunity to be a postmaster—who would feel that way now? What is the Minister’s plan to address the issue and make sure we have post office services for all our communities?

I agree with the hon. Lady. We need sustainable post offices, and that is about revenue. There have been changes in consumer habits and business levels, which have caused difficulties for postmasters. As I said, the Government have legislated for access for cash, which is a new opportunity for post offices. The banking framework delivers more revenue into those post office branches; we are keen to see that enhanced and for the Post Office to be more ambitious about that relationship, with that money flowing straight into the profit and loss accounts of individual postmasters’ branches. There are many other opportunities, including parcel hubs and foreign exchange. I am happy to discuss the matter offline, if that would be helpful.

The reputational damage to the brand of the Post Office as a direct consequence of the Horizon scandal has been massive—as the Minister knows, my constituent Della Robinson was one of the 555 litigants who had their convictions quashed a couple of years ago. Looking to the future, what is the Minister’s vision for reinvigorating the Post Office as a great British brand?

I thank the hon. Member, and I thank Della Robinson for her work. She was one of the trailblazers who were so important in getting to where we are today and to our getting compensation to the people affected. As I said in response to earlier questions, I believe the Post Office brand is not damaged; it is the centre of the Post Office—those who ran it from the centre—that is damaged. I think we should all get behind our post offices, and of course support them wherever we can. This is not about the brand itself. As I say, when I hear about any closures from colleagues or in my constituency, I know that the local populations are opposed to them, which identifies the high esteem in which people regard their post offices. I am very happy to have a conversation with the hon. Member, if necessary.

It has been very concerning over the last few days to read that a senior UK Government civil servant colluded with the Post Office to shut down the independent investigation by forensic accountants back in 2014, and that he did so with the full knowledge of the coalition Government. Now that the Metropolitan police are finally investigating possible criminality on the part of the Post Office and high-up employees, does the Minister agree that they should also be looking at the possibility of misfeasance in public office?

That is certainly of concern to the Government as well. The inquiry is there to ascertain exactly who did what, or who did not do anything when they could have done something. The Met police will conduct investigations and take forward prosecutions wherever they choose. That is not something we seek to influence, although as I have said from this Dispatch Box before, I would welcome somebody being charged or criminal charges being brought against somebody for what has happened in this horrendous scandal.

The family members of a terminally ill constituent came to my surgery in Corkerhill on Friday; that person was a shopkeeper in the highlands who, like so many, were caught up with unexplained shortfalls in Horizon totals, and although that did not lead to criminal action, they paid up to avoid trouble—often borrowing from other sources to do so. Can the Minister tell us whether work will be done to ensure that we know exactly how much in excess the Post Office claimed through all Horizon errors? Can he also tell me in general terms how he will ensure that those who are terminally ill get the justice and compensation they richly deserve?

I am sorry to hear about the hon. Member’s particular case. The most important thing we can do is to get compensation to those people as quickly as possible. We have the first scheme that was implemented, which sounds as though that is the right one for his constituent—the historical shortfall scheme. I assume they have made an application to that scheme, and they should be compensated accordingly. About 2,400 people applied on time; 100% have received offers and 84% have accepted those offers. That is a route to compensation. On the excess, we are very keen to find out exactly where that money went, and how it was dealt with when it did appear in some kind of suspense account. That is something we are working on, but we are certainly keen to make sure people are compensated. It is the most important thing we can do right now.

When considering the governance of Post Office Ltd, will the Minister bear in mind the demoralising impact of the Horizon scandal on current and potential sub-postmasters, as well as on the people who were victims of the scandal itself? In our communities, we are fighting to return post offices to Shap and to Hawkshead—as he knows, because he kindly met me to discuss them recently—and to maintain a post office in Staveley, but we are being hampered by apparent inertia and administrative hurdles, in Shap especially, which are the last things we need. We need encouragement, not red tape. Is there a plan to proactively support current and potential postmasters, so that we can maintain and expand our vital post office network in Cumbria’s communities and across the country?

Yes, it was a pleasure to meet the hon. Member, and I am happy to meet him again to try to expedite matters if he is experiencing delays. Of course, checks and balances need to be gone through with any new postmaster application, but it is good to hear that people are coming forward, and I am very happy to work with him to make sure that that situation is resolved as quickly as possible.