1 October 2024 – Henry Staunton and Alisdair Cameron
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(10.00 am)
Mr Blake: Good morning, sir.
Sir Wyn Williams: Good morning.
Mr Blake: This morning we’re going to hear from Mr Staunton.
Henry Staunton
HENRY ERIC STAUNTON (sworn).
Questioned by Mr Blake
Mr Blake: Can you give your full name, please?
Henry Staunton: My name is Henry Eric Staunton.
Mr Blake: Mr Staunton, you should have in front of you a witness statement dated 6 September this year; do you have that in front of you? It should be behind tab A of your bundle.
Henry Staunton: Yes.
Mr Blake: Could I ask you, please, to turn to page 83?
Henry Staunton: Yes.
Mr Blake: Can you confirm that that is your signature?
Henry Staunton: It is.
Mr Blake: Can you confirm that that statement is true to the best of your knowledge and belief?
Henry Staunton: It is true to the best of your knowledge and belief.
Mr Blake: Thank you very much. That witness statement has the unique reference number of WITN11410100, and that will be uploaded onto the Inquiry’s website in due course.
By anyway of background, you qualified as a chartered accountant; is that right?
Henry Staunton: Correct.
Mr Blake: You worked at Pricewaterhouse, PwC, for 23 years, including as partner?
Henry Staunton: It was Pricewaterhouse all the time that I was there, but yes.
Mr Blake: You became Executive Director of Granada Group and ITV and, in that position, you worked for a further 12 years; is that right?
Henry Staunton: Correct. They were both FTSE 100 companies.
Mr Blake: You became a non-executive director and chairman of a number of other companies thereafter. Just by way of example, you were Chairman of Ashtead, a plant hire company; is that right?
Henry Staunton: Correct.
Mr Blake: WHSmith, the well known retailer?
Henry Staunton: Correct.
Mr Blake: Capital & Counties, which was a property company?
Henry Staunton: Correct.
Mr Blake: And Phoenix, which was a life insurance company?
Henry Staunton: And I was also Deputy Chairman of Legal & General, which is the biggest investor in British business. Can I just say I am also Chairman of my old school and Chairman of the Advisory Board of Exeter University Business School where I was at.
Mr Blake: Thank you. Can you assist us with how you were approached with the role as Chairman of Post Office, please?
Henry Staunton: Well, I was looking forward to a happy and fruitful retirement on the golf course and I was approached to consider this, and I initially said no, but they said, “Look, it’s time for you to put something back, Henry, please thank about this seriously”, so I did, and I took the role on.
Mr Blake: Who is “they”?
Henry Staunton: The headhunters liaising with DBT.
Mr Blake: Mr Parker had left on 30 September 2022, and I think you’ve said in your statement that you began informally shadowing Mr Tidswell from 1 October 2022; is that right?
Henry Staunton: That’s correct. I was leaving WHSmith at the end of October and I didn’t feel it was right to be – it’s a strategic partner, WHSmith and the Post Office, and I thought it was very unlikely there would be any conflicts but, for the avoidance of doubt, I started two months later.
Mr Blake: Thank you. It was nominally a role for two days a week. Was that the amount of time you spent in that role?
Henry Staunton: It was considerably more.
Mr Blake: Did you anticipate that it would be considerably more?
Henry Staunton: No, I didn’t.
Mr Blake: Was it simply because of matters relating to the Inquiry, matters relating to the historic fallout from the scandal that’s well known to this Inquiry, or do you think it’s something more than that that would require the time and commitment that you –
Henry Staunton: It was more than that because I thought the place was a mess and it required much more of my time.
Mr Blake: In terms of the briefings that you received when you took on the role, did you receive briefings into the historic actions against subpostmasters concerning alleged discrepancies when you first joined?
Henry Staunton: Yes, I was.
Mr Blake: What was your initial impression of the attitude of the business towards those matters?
Henry Staunton: My initial impression was – and I’m no lawyer – but I thought it seemed obvious to me that the Horizon system was completely and utterly unreliable and I was staggered that the postmasters had had these issues to deal with in respect of their relations with the Post Office. That was my single biggest reaction from the whole of my briefing of those two months.
Mr Blake: What was your initial reaction as to how seriously or otherwise the business took that issue?
Henry Staunton: I felt that people thought Justice Fraser’s analysis – they didn’t fully accept it, was my impression. That somehow the case hadn’t been put well or whatever. There wasn’t a feeling this was absolutely wrong as to what had happened.
Mr Blake: Where in the business was that impression coming from, in your view?
Henry Staunton: Well, it was outside, it was not just within Legal or Remediation, I think it was a feeling across the piste with the team.
Mr Blake: We will get, in due course, to your meeting with the Permanent Secretary but what was your initial impression of the attitude of UKGI and the Department for Business, in respect of those matters?
Henry Staunton: I couldn’t say because I hadn’t met anyone until I met Ms Munby, and we didn’t really talk about the sort of issues that we’re talking about here, in any length, so I really – it would be speculation on my part.
Mr Blake: You’ve addressed the Horizon system, what about compensation and redress? What was your initial impression of the business’s attitude towards compensation and redress?
Henry Staunton: My initial impression was that I thought the Post Office and the Government were dragging their feet in terms of making payments for remediation in the first place; and, in the second place, I thought that, in respect of – there was no appetite at all for exoneration. Those were the two things that came through strongly to me.
Mr Blake: What did you understand to be the role of the Investigations Department when you first joined?
Henry Staunton: Well, my understanding was that they were very powerful, that if you heard about some of the issues in respect of how they dealt with postmasters, it came over to me as quite brutal, really.
Mr Blake: We’re talking about your initial impressions –
Henry Staunton: Yes.
Mr Blake: – at the very beginning?
Henry Staunton: Yes.
Mr Blake: You didn’t have any background in, for example, liaising with the law enforcement?
Henry Staunton: No, I’ve never been involved in – I’ve got to be honest, I’ve never had any involvement with a situation like this before in my business life.
Mr Blake: Do you recall any discussions or briefings early on in your time as Chair, with regard to the role of the Investigations Department and, for example, criminal prosecutions?
Henry Staunton: No, not in any great detail. I mean, there was an overview to start with in those two months, if we’re talking about this two-month period, no, I would say not.
Mr Blake: I want to move on to your initial tasks and initial information that you became aware of and I’m going to start with a letter to your predecessor from the Permanent Secretary of the Department for Business and Trade. Can we please turn to UKGI00044315. This is a letter from Sarah Munby, Permanent Undersecretary of State to your predecessor, Mr Parker, and that sets out the strategic priority for 2022/2023. I’ll just spend a few moments going through some of the key points in this letter?
If we scroll down, please, it sets out that at each year there is a letter to the Post Office which sets out the key priorities. First, it has a heading “Shareholder priorities” and, if we keep on scrolling, please, it says at the bottom:
“Specifically, I would like you to focus on the following priorities:
“1. Maintaining and improving [Post Office’s] capacity, capability and resilience at all levels of the organisation.”
If we scroll down, we can see 2:
“Engaging with the Post Office Horizon IT Inquiry and implementing change …
“3. Resolving historical litigation issues.”
I’ll just read out some of those priorities that are set out there in bullet points. It says, for the financial year ‘22/’23, the Post Office should:
“Build on the successes of the [Historic Shortfall Scheme] and the lessons learned to ensure effective process of the other compensation areas;
“Deliver the [Historic Shortfall Scheme] timetable with our ambition for 100 per cent of offers made by the end of 2022 and progressing [claims] through to the post-offer process;
“Continue to work closely with officials to progress the timely delivery of compensation to postmasters with Overturned Historical Convictions;
“Work with officials on issues relating to [Group Litigation Order] compensation;
“Identify and deliver compensation to postmasters that have suffered detriment not captured within the other areas; and [finally]
“Challenge [Post Office] management so their activities are reflective of our shared objectives for compensation, to see postmasters are treated with consistency and they receive swift compensation that is fair for claimants and taxpayers.”
If we scroll down, she continues:
“We acknowledge that the delivery of compensation to claimants is raising a number of difficult issues, given the challenging objective of balancing fair and swift compensation consistently across the claimant groups with making appropriate use of taxpayers’ money. We remain committed to working with you to resolve these issues.”
It then moves on to the fourth priority:
“Effective management of legal costs and settlements with claimants.”
If we scroll down, please, we see there the final of those bullet points, it says:
“Work with officials to explore ways in which these activities could be delivered differently, in particular to deliver redress in a timely manner and at a lower cost, alongside continuing to review legal costs and controls.”
Number 5, if we scroll down, “Effective financial management and performance”; and number 6, over the page, please, “Successfully delivering the Strategic Platform Modernisation Programme”.
She then says at the bottom:
“I look forward to discussing progress against these priorities at our next meeting and in your exit interview.”
So this was a letter that was sent to your predecessor. It seems as though it was soon before he was leaving the business; is that right?
Henry Staunton: Correct.
Sir Wyn Williams: Can you tell me the date, Mr Blake? Sorry, I missed the actual –
Mr Blake: The letter itself is undated. I don’t know if Mr Staunton is able to assist. No.
On taking up the role, was this a letter that you had sight of?
Henry Staunton: And I was also forwarded by Ms Munby.
Mr Blake: Thank you. Moving on, please, to POL00448680.
Henry Staunton: Sorry, if I could just interrupt for a second, I would just like to highlight the fact that, on page 3, there are three references to – when it talks about remediation, to “fair value for the taxpayer”, to “appropriate use of taxpayers’ money”, to “be fair not only to the postmasters but also to the taxpayer”, and I thought – that left me with the view – this was not a letter saying we want to make generous remediation payments to postmasters, it was saying trim it to give fair value for the taxpayers. I found that deeply disturbing, those three references.
Mr Blake: Being deeply disturbed, was that one of the main things on your mind at the time?
Henry Staunton: It was on my mind and certainly was on my mind when I went to see her.
Mr Blake: It was a key priority for you to address when you received that letter?
Henry Staunton: Correct.
Mr Blake: Can we please turn to POL00448680, 11 November 2022. Here you are writing to the Secretary of State, this is actually before you’ve taken up the role.
Henry Staunton: Correct.
Mr Blake: It says:
“I am writing to ask for your support in addressing a significant risk to the reputation and success of Post Office Limited, namely the retention of the Chief Executive Officer, Nick Read.
“As you know I will become the Chair of Post Office Limited on 1 December 2022. In preparing for that role, I have identified what I believe to be a critical situation regarding Nick’s remuneration package which I welcome your support to address. This will allow us to mitigate against the risk of Nick leaving the Post Office in the coming months and the significant consequences this would have for the reputation and future of the Post Office.
“My predecessor, Tim Parker, has raised the specific issue of Nick Read’s remuneration with both Paul Scully and with Kwasi Kwarteng over the past year. On both occasions the ministers declined to approve any improvement in Nick’s package, citing concerns over the Inquiry and the context of the public sector pay freeze. They indicated that the situation be reviewed again in September 2022 once the Inquiry was concluded. However, particularly in light of the extended Inquiry process and the subsequent delay in any report being published, which means that it may not conclude for at least one more year, I believe that the risk to Post Office are now even more present and that we need to take active control of the situation. As incoming Board Chairman, I have a responsibility to seek action without delay and seek the invaluable support you can offer me.”
If we scroll down, it sets out there Mr Read’s “Current Package and Remuneration History”. We see there the total maximum compensation as at that point in time was £788,500.
Can we scroll down. It continues to assess the market position and then, on page 3, sets out “Proposed Action”. We see there, just below paragraph 3, it says:
“These changes would result in total compensation of £1,125,180 at target performance. This places Nick at around lower quartile of target total cash once the cost of benefits are factored in.”
So the letter is essentially asking for Mr Read to be paid from £788,000 presently, now to over £1 million a year?
Henry Staunton: Correct.
Mr Blake: Was this the first communication between yourself and the Secretary of State?
Henry Staunton: Correct.
Mr Blake: If we scroll over the page, we see it concludes:
“We also hope you will not reject the proposals in this letter as your predecessors have done. In the, hopefully, unlikely event that you do not feel able to approve the proposal in full, we would urge you to deliver as much of the proposal as possible.”
Why was it so pressing at this time to address Mr Read’s pay?
Henry Staunton: Just by way of context, as you say, I hadn’t been appointed even as Chairman. Normally, in any corporate, a letter like this would actually have gone from the RemCo Chairman, unless it surely should come from the RemCo chairman. But, as it was – Ms Williams was the CPO at that time, as she said and as Nick said, the previous letter came from the Chairman, so it would look weak if it didn’t come from me, so this letter was drafted and I signed it, there was nothing there that was factually that was wrong. It was obviously just a massive salary increase for – in a company where it wasn’t a normal corporate. It’s – it was a public – owned by the public, paid for by the public purse.
Mr Blake: It might strike people as odd, of all the matters affecting the Post Office and postmasters, that the very first correspondence with the Minister is about Mr Read’s pay?
Henry Staunton: Astonishing.
Mr Blake: Mr Staunton, you sent that letter.
Henry Staunton: I did. As I said, I was asked to sign it. A similar letter had gone by my predecessor. I signed it and I – as I say, there was nothing factually wrong with it. I wasn’t expecting to get approval because I could see what had happened to the previous two letters and, of course, I saw the Secretary of State in January and he turned it down. And I would say, in my statement, you’ll see various – a number of issues that arose in respect of remuneration, even between the sending of this letter and my meeting with the Secretary of State, all involving remuneration. It was a very time consuming part of the work: ridiculously time consuming.
Mr Blake: We’ve heard evidence from Amanda Burton last week, and I think she identified that it was unusual, perhaps problematic, to have to seek approval from governments to increase the CEO’s pay; what’s your view on that?
Henry Staunton: I don’t think it is. I think these are huge numbers, as Grant Shapps said – the then Secretary of State – in the context of what Secretaries of State earned, senior people in Government; it was a huge amount of money so I don’t agree with Ms Burton. I think, actually, it’s quite right that she gets sign-off because I think, if we hadn’t had that, maybe this letter might have gone through. So it was a useful buffer, I thought, for me to hear the concerns, pass them on and, if they were turned down, I thought, “Well, actually, if I’d been the Secretary of State, I would have turned it down”.
Mr Blake: Can we please turn to BEIS0000607, please.
That’s perfect. Thank you.
This is your appointment letter from Ms Munby. I’ll just read a few parts of that, please. It sets out three priorities. It says:
“Dear Henry,
“Congratulations on your appointment as Chair … It is a unique opportunity to make a nationally significant contribution …”
She sets out there three matters that she would like you to focus your attention on:
“1. Effective financial management and performance, including effective management of legal costs, to ensure medium term viability;
“2. Maintaining and improving [the Post Office’s] capacity, capability and resilience at all levels of the organisation;
“3. Engaging positively with the Post Office Horizon IT Inquiry and implementing change, including resolving historical litigation issues, successfully delivering the Strategic Platform Modernisation Programme, and reaching settlements with claimants.”
If we scroll down, she says:
“Finally, Tim Parker wrote to me on [the Post Office’s] work to transform the cultural and process aspects in response to the Inquiry shortly before his departure. I will write to you on this matter separately.”
Did you get a response in relation to that matter?
Henry Staunton: I don’t think I did.
Mr Blake: Can we please turn to the first Board meeting.
Henry Staunton: Sorry, could I just say –
Mr Blake: Yes.
Henry Staunton: – in respect of say, 1, “Effective management and performance, including” – regarding medium-term viability, it was clear to any businessman that to achieve medium-term liability (sic) you needed to take – you need to do radical restructuring of this organisation in terms of reducing the cost levels, et cetera. So it needed a huge injection of funds from the Government if we were to achieve medium-term viability. So you can’t just write “medium-term viability”, unless you have the intention of backing the Post Office in terms of investments.
I’m sorry to interrupt but that’s a really key point which you may come on to later.
Mr Blake: We’ll come to the context of your meeting with Ms Munby, in due course. Can we first though, please, turn to POL00448621, please, and that is a first Board meeting or the first Board meeting at which you have been appointed, 6 December 2022. We see there you’re listed there as Chairman, “via Teams”. If we scroll down, we see there:
“It was RESOLVED that Henry Eric Staunton, having consented to act, be appointed as a Director of the Company …”
Then:
“It was NOTED that the shareholder of the Company had appointed Henry Eric Staunton as Chairman of the Board.”
If we could scroll down, please, I don’t think you made a significant contribution to the actual meeting? I don’t think your name is mentioned in all that many places because, presumably, you had only just taken up the role. But there is a CEO report, please, at page 3, and it appears that Minister Hollinrake, the then Postal Minister, attended the meeting; is that correct?
Henry Staunton: I guess so, I can’t recall, but yeah.
Mr Blake: “The Chairman welcomed the Minister and passed over to [Nick Read] to present the CEO Report. [Mr Read] spoke to the report advising that the Company had had a very good half year in terms of trade, and that the Company’s travel and bill payments businesses had continued to perform well.”
It then goes on to say that:
“… we were seeing a tightening in consumer confidence, with a slowdown in banking and travel.”
About halfway down that paragraph, it says:
“With the slowdown in the mails trade a shortfall in our funding over the next few years was forecast. The Inquiry, extending now potentially into 2024, was going to cost the Company more, however we wished to support the Inquiry to the best of our ability. One of the implications of the Inquiry was in relation to the rollout of NBIT [New Branch IT System]; the technology needed to work first time, the rollout exercise was vast, and the exercise was massively time bound. This compression of activity within a very short time frame would have many impacts.”
“BT [I think that’s Mr Tidswell] noted that parts of the business were positive, however the Company had significant issues to face including the Inquiry and wider external factors. An issue of some urgency for the Board was determining the optimal size and shape of the network, which needed to be coordinated with BEIS and the Minister.”
If we scroll down there, we see “SI”, that’s Saf Ismail, who we have already heard from last week:
“… detailed some of the headwinds for Postmasters including an anticipated increase in minimum wage, rising energy prices”, et cetera.
“LH [that’s Lisa Harrington] referenced the strategic direction of the Company and that the Board was interested to understand early ideas on the BEIS policy review.”
If we scroll down we then see that Minister Hollinrake and assistant left the meeting at 2.07. You don’t recall?
Henry Staunton: No, I was getting confused with the date that the Minister came but I recall now, he came on that date, yeah.
Mr Blake: Thank you. There are no issues addressing compensation being raising with the Minister on that occasion, are there?
Henry Staunton: No.
Mr Blake: If we could turn to page 9, once the Minister has left, we see the issue of historical matters being addressed, if we scroll down, please. If we scroll over the page, there’s a section there that you have addressed in your witness statement. I’d just like a little bit more detail if I may. The minutes say:
“In respect of outstanding balance payments, BT [Mr Tidswell] advised that this issue had been considered many times at the HRC.”
What was the HRC?
Henry Staunton: The Remediation Committee.
Mr Blake: Thank you:
“The quandary was that if we notified Postmasters and requested they pause payments, were we inadvertently stimulating claims against an unfunded position. [Nick Read] queried whether there had been any communications with the current 77 postmasters who were repaying. SR replied [I think that’s Mr Recaldin] that there had not been. [Mr Recaldin] noted that 13 of the 20 cases in this category that had been investigated had shown that the repayments were in order. AC noted that we had not investigated the balance of the other cases …”
It then says:
“AC advised that he was not persuaded by the argument against pausing repayments and his view was that we needed to notify and speak to the postmasters in question and investigate fully.”
I think “AC” is Mr Cameron; is that right?
Henry Staunton: Correct.
Mr Blake: Thank you. Can I just clarify the issue here. Was the concern that, by pausing repayments that were being made by subpostmasters, it might actually mean that more subpostmasters are claiming compensation or redress from the Post Office?
Henry Staunton: Correct. I mean, I raised this, I put it in my statement because I used the words that I thought the process was bureaucratic, adversarial, unsympathetic, and one or two other adjectives, and I thought I can’t just say that without giving some examples that came to mind. And there were four examples I gave of which that was one.
Moving to that one, what surprised me was that, you know, we shouldn’t be not doing something because it would generate claims. You know, that’s not the basis on which the Remediation Committee should be working.
Mr Blake: Having received that letter, the strategic priorities for 2022/2023, which you said caused you significant concern, in respect of redress and compensation, having then moved to addressing Mr Read’s pay, is it not surprising that nobody thought at the meeting with the Minister on this occasion to raise issues of compensation and redress?
Henry Staunton: Well, I’d only been in the job a few days, so I think that’s asking quite a lot when you’re trying to find your feet in what’s going on. But, as I say, I formed a view, over a period of months, regarding bureaucracy and unsympathetic and adversarial approach, and that is one example where we shouldn’t be making that decision, that it shouldn’t be based on reducing – not having further claims. That’s not a good reason for not pursuing something.
Mr Blake: So the letter from Ms Munby to your predecessor that you said, I think, shocked or concerned you, did that take months to settle in, or was your shock and concern quite instant?
Henry Staunton: It was quite instant, in terms of she didn’t say, “Make payments to postmasters that are either generous or, you know, seen to be very fair”. It was “fair but also make it fair for the taxpayers”, or, “appropriate use of taxpayers’ money”, et cetera. So there was a balance here, and I think that – I think Mr Cameron said that – in a note of about 23 March, that the Remediation Committee was perhaps too keen to follow shareholders’ interests and just that, and these four examples I gave to show that’s not, I think, the priority for a Remediation Committee.
Mr Blake: So why, at your first Board meeting, when the Minister was in attendance, were issues of redress and compensation not raised? They were clearly raised after –
Henry Staunton: No, the fact is that, as I say, I’d been there a few days. Mr Read addressed what he thought were key issues for the Minister to hear and I think that all the things he raised were perfectly fair. I think the feeling among the Post Office is that, you know, “We’re doing quite well in terms of HSS, et cetera”, in terms of getting offers out. Clearly that’s not the view of the postmasters but, as I say, that was the view internally, that “We’re doing quite a good job and exonerations, and that’s – it’s not for us, and we don’t believe in it anyway”.
So I think there’s a balance here between what the postmasters think – that the Post Office thinks it’s doing a good job. That’s not, clearly, the view of postmasters but that was what I think drove them, “We don’t need to raise it with the Minister because things are on track”.
Mr Blake: Okay, so you had been shadowing since October, this is now your first Board meeting –
Henry Staunton: (The witness nodded)
Mr Blake: – the company’s view is things were going okay on compensation. Presumably, that was something that you shared at that occasion, then?
Henry Staunton: No, I didn’t share it but I think the answer is, it’s very early. In your first Board meeting when you are listening to everything, I mean as Chairman, you know, if you’re – assuming you’re in there for nine years, you have to acclimatise yourself, work out what’s happening at a Board meeting, how things work. You can’t, at the first Board meeting, just make statements when you’re not really sure of all of the facts. Don’t forget, a lot of my other examples that I gave in terms of really a priority that was not being given to postmaster claims, were all after this Board meeting. So this was the first one. So my thoughts were forming but they weren’t absolutely firm.
Mr Blake: Can we turn to POL00448676, please. We’re now towards Christmas 2022 and there’s an email exchange between Mr Read and yourself. If we could start, please, on page 3., at the bottom of page 3., thank you. We don’t have the email below this in the chain, or we may have it but it’s not shown here, but this is a response from Mr Read to yourself, and he says:
“Thank you Henry.
“This is part of the problem. [Non-Executive Directors] attempt to play exec roles, dipping in and out, which causes confusion amongst colleagues. Unfortunately because Tom …”
I think that’s a reference to Tom Cooper, the UKGI Non-Executive Director; is that correct?
Henry Staunton: Correct.
Mr Blake: “… works 4 days a week on [Post Office], he sets a precedent. This needs to change.”
Your response above is:
“In the past I have had a couple of [Non-Executive Directors] who have struggled with understanding the difference between [Executive Directors] and [Non-Executive Directors].”
In the next paragraph, you say:
“Unfortunately Tom is not inexperienced; he feels he has a special status; and I do not think he wants to be ‘helpful’. He seems to want to undermine management and to be antagonistic.”
Can you expand on that, please?
Henry Staunton: Yes, I mean, it is a very different role, the UKGI representative on this Board, compared to a normal non-executive. One has to say that, on the one hand. On the other hand, it is odd to spend four days – that much time, four days a week, you’re neo-executive, and that is why Mr Read felt that the UKGI representative was dipping in and out. And, throughout my first year, in all the surveys that we did of – when people left – I don’t know if we’re going to come on to that – but when three directors left, I had an independent survey done to find out their views, and the role of the UKGI the director, was raised as an issue and it was raised also in the Board Evaluation Report that came out soon afterwards.
So there was some dissatisfaction on the Board, I think there probably still is, in terms of the role of the GI director and how much power they have. Equally, it’s a very difficult role for that UKGI director, and I accept that.
Mr Blake: What do you mean by, “I do not think he wants to be helpful”?
Henry Staunton: Well, I think he was making a number of points to the management, which I think that they found weren’t helpful, that were perhaps off the mark, and I don’t think that Tom Cooper saw that as his job, that he wanted to be helpful.
Mr Blake: If we scroll up, another response from Mr Read. He says:
“That’s a fair summary, Henry.
“My primary issue with Tom is that he fails to fulfil his role, which is to act as an interface between the company and Government and to act as a ‘cheerleader’ for what we do, and the value we play in society.”
Just pausing there, is that an accurate description of the role of the UKGI shareholder or what it should be?
Henry Staunton: I don’t think it is the role of the – of the UKGI –
Mr Blake: What do you see as the role of the UKGI shareholder?
Henry Staunton: It’s very difficult because, as I say, I’ve never come across anything like it as a role, so I think almost, it is what that UKGI director seeks to make it. But I don’t think it’s just to act as a cheerleader or really as a priority, it should be that. It should be, I think, I think, to make sure that public monies – and they’re very significant sums involved – are well spent.
Mr Blake: He then continues:
“Nothing about the way he conducts himself suggests this happens. He has little or no influence in Government and doesn’t understand the politics. I am consequently fearful for the next 4 weeks and how we are being positioned in Whitehall.”
What was the significance of the next four weeks, do you recall?
Henry Staunton: I can’t.
Mr Blake: No. If we scroll down those final two paragraphs on that email, it says:
“At the Board he has asymmetric information and therefore an undue influence over everyone, the Chair included. He is simply much closer to the day-to-day mechanisms of the business, has an army of analysts to delve into his personal areas of interest and, consequently, undue influence.
“Tim [that’s your predecessor, Tim Parker] did duck it. He felt he could influence him … sadly no evidence of that.
“The opportunity and challenge for any incoming [Non-Executive Director] will be corporate knowledge, history and how Government works. Getting the selection right of course will be important, but I am afraid you will struggle to have an effective and most importantly, independent Board, until you address the elephant in the room.”
What did you understand by that?
Henry Staunton: Well, there were a lot of issues within there. Starting from the back, I realised that, fairly early on, this was going to be an issue and, actually, setting up an independent Board that wasn’t overly influenced by either UKGI or DBT or, indeed, the UKGI-nominated director was very important to establish the independence of the Board, and I’m not sure fully succeeded but that was always my aim.
My predecessor did actually also – Nick Read is right – did say “This is a huge elephant in the room, Henry, and I just wasn’t prepared to take it on and you’ve got this problem to deal with”. He did have undue influence, that’s fair to say. Equally, as I said before, you could see, you know, he felt he had a special role in terms of looking after public monies. So I could see both sides of where people were. They were both right.
Mr Blake: Was there considerable frustration at the role of UKGI and it’s Non-Executive Director as at Christmastime 2022?
Henry Staunton: Yes, there was and, as I say, I did do an independent survey of the three directors who were leaving, two of them who were leaving before their nine years were up, and one of them said, “It seems like each director around the table has one vote and it seems like the UKGI director has ten votes. So, actually, you know, we’re nothing more than an advisory board, we have no power”. Words like “a puppet board” were used.
So, obviously, I was worried to hear that and that’s why I thought it’s a priority to set this Board up as an independent Board but, clearly, there was dissatisfaction with – from Nick Read and, indeed, with quite number of the independent directors.
So I did actually go to UKGI and said, “Look it’s not working, I’m not blaming Tom but, actually, I think we need to have a fresh start”, and they accepted that and said they would implement it. “It may take a month or two”, said Charles Donald, but they did.
Mr Blake: If we scroll up, we can see your response. You say:
“I think there is no getting away from the issue. It was the pathway to getting the right result that I was reflecting on and your email made good sense. I am in on 3 January seeing Sarah Munby and will pop into the office after that. If you are in we can discuss in specific detail.”
If we scroll up, please, you have then forwarded that exchange to Mr Tidswell, and you say as follows:
“Ben,
“As the future [Senior Independent Director] I want to copy you in on an email received from Nick today. Removing Tom is very, very tricky territory, trickier than Nick imagines. However, it needs to be done I fear. We will then have a unified Board with the execs and [non-execs] working together to sort out [Post Office’s] issues.
“We must get away from the carping, the undermining of management and the disproportionate influence Tom has over the Board.”
What do you mean by carping and undermining of management?
Henry Staunton: Well, I think – I’ve talked about it, that he would make his point, sometimes they were quite detailed points, as a non-exec would see it and, I think, as the execs would see it and, therefore, they felt he’s not running this company, we are, we don’t agree with him and we’ve got to spend all this time dealing with it. So it was certainly a word used by me that that was his approach, and I agreed with it, as I say, whilst at the same time understanding the difficulties of the UKGI director.
So I wanted a unified Board. I recognised how tricky it was. Actually, it was a lot less tricky than I thought. UKGI were very understanding when I said to them we needed to change, not because I was being critical of Tom, I just think we needed a change and that would help steady the ship in terms of having a unified Board.
Mr Blake: It says:
“Nick, you and I will have to work hard with our three new [Non-Executive Director] colleagues and Brian to have a proper functioning Board that knows the difference between the [Executive Director] and [Non-Executive Director] roles. I know I can rely on you and think Brian can be won round. You will see that Nick has other issues [with regard to] the role of the UKGI [Non-Executive Director] which Tom does not fulfil.
“I am seeing Sarah Munby in early Jan – will keep you posted.”
If we scroll up we have the response from Mr Tidswell:
“I agree it will be very tricky but I also agree it seems inevitable.
“My sense is that it will require firm engagement at the highest levels, both within UKGI and BEIS. It probably also fits quite naturally into the suite of difficult subjects we have to broach in the next few weeks, including the funding issues, the network and Nick’s pay. I suspect everyone feels that things aren’t working as they should.”
So it seems there are four issues at the top of the Post Office’s priority list at that point in time. The first is the replacement of the UKGI Non-Executive Director, which we’ve seen in that email exchange, and then we come to those three other issues: funding issues; the network; and Nick’s pay. Is that a fair summary of the position, as at 23 December 2022?
Henry Staunton: No, I don’t think it is a fair summary of the key issues that we were facing but they were some of the issues we were facing.
Mr Blake: Why don’t you think it’s a fair summary?
Henry Staunton: Well, I think a fair summary – I referred earlier to the fact that, when I took the business over, I thought it was a mess, and the reason it was a mess was that it was hugely unprofitable, with respect to remediation. As I say, the Government and the Post Office were dragging their heels. There was no appetite for exoneration. We had costs that were completely bloated. We had an issue with regard to cultures and how poorly postmasters were viewed by the organisation. We had a structure that was far too many layers of management and yet everything came up to the top, no one was taking a decision. We had an issue with regard to governance and particularly remuneration governance, which we might come on to.
So there were a string of priorities, all of them very important, and when I say remuneration, one of them obviously was the Nick pay issue. So funding was important, the network was important, but there were a string of others, and I wouldn’t put the – I would put them – all of the things I’ve mentioned were massive issues.
Mr Blake: We still, by this stage, though, don’t see correspondence or communications with Government by yourself in relation to remediation, do we?
Henry Staunton: No, I’d been in post less than a month.
Mr Blake: We then have the meeting with Sarah Munby, on 5 January 2023. That document can come down. Thank you.
You said in your statement, it’s paragraph 14, that you were aware in your words that “Horizon was a completely unreliable system by that stage”; is that right?
Henry Staunton: Correct.
Mr Blake: You’ve said that 700-plus convictions of subpostmasters were “suspect”, I think was the word you used; is that right?
Henry Staunton: Yes.
Mr Blake: You’ve also said that the redress schemes at that stage were administered in a bureaucratic and unsympathetic way; is that right?
Henry Staunton: Correct.
Mr Blake: At that stage, what was your concern regarding the bureaucratic and unsympathetic administration?
Henry Staunton: Well, as I say, you picked up one of the examples. I also referred in my statement to a state duty where, this is where there’d been a death in the family, and we were talking about the principles, and the view was, if we widened the principles, that we opened ourselves up to more claims. So I thought that seemed pretty unsympathetic to me. I thought, at that same meeting, the legal counsel talked about the duty of care that we owed postmasters and he said we owe a duty of care to our employees but we don’t owe the same duty of care to postmasters, and I thought that completely mist the point.
The postmasters are an integral part of this organisation and, particularly, after all that had happened to them over the last few years, to feel that we didn’t owe them the same duty of care as we did to our employees, I thought was pretty unsympathetic. I thought we owed them probably a greater duty of care than to our employees.
Mr Blake: Will we find that reflected in the minutes?
Henry Staunton: No, I talked to – my style as Chairman is not to pull up people at Board meetings. I go and see them after and say, “I just don’t think that hits the mark, really, does it?” That’s what I’ve done in – I’ve been the chairman of a number of companies for many, many years. That’s my style, I think it works, and that’s what I did in respect of these issues, was chat to Simon, who ran Remediation or Ben Tidswell, in terms of his comment about opening things up to further claims, and to Ben Foat, in respect of his comments about not having a duty of care to the same extent for postmasters.
Mr Blake: We’ll be hearing from Mr Recaldin in due course. Do you think that he will give evidence that there was a conversation between the two of you –
Henry Staunton: Yes, yes.
Mr Blake: – in which you said “We’re not getting it right in terms the attitude towards subpostmasters”?
Henry Staunton: In that particular issue, yeah.
Mr Blake: If we could take your statement onto screen, it’s WITN11410100, and can we please turn to page 6, paragraph 13. Thank you. I’m just going to read paragraph 13 out. You say:
“[There were], firstly, the legacy of the Horizon scandal, which would require the full and speedy exoneration of all the convicted postmasters and appropriate and rapid redress to the thousands of postmasters and their families who had lost so much. Secondly, there was the need to replace the discredited Horizon IT System. It was clear that both would require substantial sums to be earmarked, but I assumed the case for doing so was so overwhelming that the necessary funds would be readily set aside. It was therefore a considerable surprise that when I met the civil servant overseeing the Post Office early in my term as chairman, I was told that there would be little appetite in government for the kind of decisive and morally imperative action that I believed was necessary. Instead, the message I received was that I was expected to fulfil a more limited caretaker role, overseeing a more modest plan to ‘hobble’ up to the next election. I address this meeting in more detail below.”
I’d like to take you to various notes that have been taken of that meeting. Can we start, please, by looking at RLIT0000254, please. Is this your note of the meeting?
Henry Staunton: Correct.
Mr Blake: I think it’s a note that you sent to Mr Read on 6 January in the morning, and it’s a note of your meeting the day before; is that right?
Henry Staunton: Correct.
Mr Blake: I’d just like to take you through the notes, if we start with where it says, “Sarah”:
“Sarah asked for first impressions, I said I had been on over a dozen public company Boards and not seen one with so many challenges.
“I focused on the financing and network challenges:
“On financing we had identified in [September] a deficit of £210 million. After much effort we had identified savings of £170 million (mainly out of the change budget, cap exp and [exponentials]). However since then extra costs of £120 million have arisen: from Horizon £60 million (training needs [especially] with Inquiry) …”
Can you just assist us with what that issue was?
Henry Staunton: The training needs?
Mr Blake: Yes.
Henry Staunton: I can’t remember the details of it, I’m sorry.
Mr Blake: Might it be that the earlier phases of the Inquiry had identified issues with the training of subpostmasters, and a decision was taken to invest an additional £60 million in training?
Henry Staunton: That is my guess, but I didn’t want to say for sure, but that’s my guess.
Mr Blake: “… Inquiry £30 million (taking longer); and telephony/Internet £30 million. In total we have a shortfall therefore of £160 million … and this before the deficit arising from the material downturn in the parcels business, and to a lesser extent from the implications for our cash business of the FCA Money Laundering regs on deposits.”
So the issues being raised there in terms of spending appear to be related to Horizon training, costs relating to the Inquiry and also additional costs relating thing to telephony and Internet; is that right?
Henry Staunton: Yes, I mean, if I could just say, from my experience, if this had happened in any other company I’d been chairman of, I’d have blown a – these are huge numbers swinging around. I’ve never come across a company where you would come across this.
Mr Blake: Where do you think responsibility for that lies?
Henry Staunton: I mean, you could say it was the chairman, but I’d just been appointed –
Mr Blake: What do you say –
Henry Staunton: It’s mentioned really, isn’t it? Always is.
Mr Blake: Fundamentally, what do you see as the issue there?
Henry Staunton: It’s a very good question. It’s – to be fair, this is a very unusual situation but, nonetheless, I just didn’t feel that we really had enough of a grip on costs.
Mr Blake: But is that a problem with specific individuals? Is it a problem with anything that you can actually put your finger on or is it just a – it’s all a bit too difficult?
Henry Staunton: I couldn’t put my finger on it then, as I say, these are huge numbers swinging round, massive numbers I’d never seen before, and it has to come down to management. I wouldn’t – I couldn’t pinpoint a particular manager but it has to be management.
Mr Blake: It then says:
“There was a likelihood of a significant reduction in post offices if more funding was not required. Last year half of all post offices were either loss-making or earning less than £5,000 profit. The position would have deteriorated substantially because of increase in Minimum Wage and fuel/electricity prices. A recent survey indicated that one third of [postmasters] would hand back their keys over the next 5 years and that figure would now be higher because of extra costs.
“The reputational consequences for [Post Office] and for Government were fraught.
“Sarah was sympathetic to all of the above. She understood the ‘huge commercial challenge’ and the ‘seriousness’ of the financial position. She described ‘all the options as unattractive’. However, ‘politicians do not necessarily like to confront reality’. This particularly applied when there was no obvious ‘route to profitability’.”
What do you understand by the comments being made there?
Henry Staunton: I think it’s a big point that she’s making about no route to profitability. I mean, I think, if I were a minister, I’d be concerned about pouring good money after bad, so I think it’s a fair request to ask for a route to profitability. But, as I said, the route to profitability is a fundamental rationalisation of this business, reducing the cost base and, in fact, also attacking the income numbers, but it was not something that would be achieved without big investment, and a big reaction from management to get it right.
Mr Blake: It continues:
“She said we needed to know that in the run-up to the election there was no appetite to ‘rip off the band aid’. ‘Now was not the time for dealing with long-term issues’. We needed a plan to ‘hobble’ up to the election.”
Now, those comments appear to be broad comments about funding, not directed towards the matter of redress; what do you say about that?
Henry Staunton: I think the comments about the funding that would be required for the Post Office, the big spends were the Inquiry, but I think the cost there would have to be what they would be. The costs would relate to Horizon, and, as I said to Nick Read afterwards, that is the one where I think we’re most exposed, we really do need to be – have a much better grip on what these costs are. The third area was funding – was remediation. And the fourth area was just outflows out of the business.
And I said to Nick, of the last – the last one we’ve clearly got to get a handle on the costs situation and, on the remediation, I said we should spend what it takes and I’ll take the consequences.
Mr Blake: Where in this conversation with Ms Munby, and your note of the conversation, do we see the issue of remediation, redress, compensation being raised with –
Henry Staunton: This – my filenote was not meant to be a full record of what took place. I just wanted to, because we haven’t talked about – my note didn’t cover Horizon, for instance, which we ought to talk about. I wanted to talk about two things: one that I’d told the Permanent Secretary that this business, in terms of commerciality, was a problem child; and, secondly, to deal with the other points that I raised. But it wasn’t meant to be a full record of everything she said.
Mr Blake: So aghast were you by that letter outlining the strategic priorities for 2022/2023 and the references in there to fair value for the taxpayer and compensation, why do you think it is that you didn’t note down any references to compensation and redress in this note?
Henry Staunton: Well, it’s because I just – I thought there was – I was more interested in making the general points that she made, which was there’s no appetite to rip off the band aid, the Treasury is finding money very, very tight and, as I say, the tightness would be in those four areas: which is Horizon, remediation, the Inquiry, and trading.
Mr Blake: Where is remediation in the note?
Henry Staunton: The remediation is not in there, neither is Horizon.
Mr Blake: Horizon –
Henry Staunton: As I said, it wasn’t meant to be a full note, it was meant to be just recording (a) the trading position to let her know how precarious the position was in respect of the network; and, secondly, I wanted to record her overall comments that she made with regard to band aid, hobbling into the election, restricting spend.
Mr Blake: It then says:
“Having said that, we and BEIS needed to do the long-term thinking for a new Government of whichever colour. This would include what is politically acceptable [with regard to] the size of the network. She also referred to ‘operational’ issues colouring [the Treasury’s] thinking. (‘Trust’ in the [Post Office] Board and management has not been high). They could see this as another ‘begging bowl’ request from [the Post Office] I said the funding issues revolved around poor decisions made many years ago [with regard to] Horizon and related legal issues.”
Henry Staunton: “Related legal issues”, of course, I was referring to – that was my reference to Horizon and remediation, the related legal issues.
Mr Blake: “With regard to the forthcoming meeting with the [Secretary of State] she gave some advice. He’s nice and easy but not interested in meetings. He prefers the written form. We should expect him to be ‘pushy and demanding’ as he was with the train operators whilst [Secretary of State] for Transport.”
I think this is Grant Shapps by this stage; is that right?
Henry Staunton: Correct.
Mr Blake: “He would ‘hold us to account’. He will take a hard time on pay. So far Sarah’s efforts on pay have fallen on deaf ears.”
So it looks as though, again, there is discussion here in respect of Mr Read’s pay; is that right?
Henry Staunton: Correct.
Mr Blake: We then have a note that was taken by the Department for Business. Can we please turn to BEIS0000752. Thank you very much. We can ignore the top email because that, I think, formed part of an investigation into what had been said. So that’s dated 2024 at the top but, looking now at the emails we have at the bottom of the screen, and if we scroll down, we can see that this was, in fact, a note that was taken and circulated on 6 January relating to that meeting and it says:
“Sarah met with Henry yesterday – thanks very much for the support on briefing. It was a fairly frank/open conversation in general, I should flag that Sarah opted not to write to Henry prior to the meeting. Readout below, left longer as I think useful.”
Let’s go through the note that was taken by the Department:
“Henry noted he has never seen a corporation challenged on so many fronts … don’t have the luxury of prioritisation as every issue is a big one.”
That corresponds broadly with what was written in your note:
“SM [Ms Munby] agreed that challenge is significant and that politics around [the Post Office] make this is an even trickier problem to solve, the timing of agreeing a longer term solution this year is also very difficult politically. Noted that we do need to be ready for what that answer is though.
“[Ms Munby] flagged that the relationship on funding [with His Majesty’s Treasury] is difficult, their view will always lean towards the ‘begging bowl’ type scenario, a dynamic worsened by Horizon/Inquiry costs.”
Again, that’s consistent with your note:
[Mr Staunton/Ms Munby] agreed to having a frank/open relationship on [the Post Office].
“[Ms Munby] gave background to [the Secretary of State’s] ways of working – noting fairly hard/pushy with ALBs/Partner Organisations.”
Again, that’s a matter addressed in your note.
There’s then a lengthy section on Mr Read’s pay:
“[Sarah Munby]
“Sympathetic to case for [Mr Read] and have been working hard to push this forward.
“[Secretary of State] is very hard line on executive pay and haven’t so far been successful in getting progress but have postponed formal decision until post-[your chat with the Secretary of State].
“[The Secretary of State] understands risk of [Mr Read] leaving.”
By this stage, had Mr Read said he was going to leave if he wasn’t paid more?
Henry Staunton: I believe so. There was quite a delay between sending this letter and the meeting of the Secretary of State and I think it wasn’t – it wasn’t eating away at Nick but I think clearly it was important to him and, at that stage, he was clearly wanting movement on his pay, and I’ve set it all out in my evidence – my witness statement. I think by then he was already saying, “I’m threatening to leave”.
Mr Blake: “Balancing act in terms of [you] raising it at [meeting] – given its first discussion [with the Secretary of State] so potential for getting off on wrong foot combined [with] relative low chance of success.”
It records your response:
“[You]
“Can understand from [The secretary of State’s] perspective why it’s difficult to approve and have already flagged this to [Mr Read].
“Reflected that if [Permanent Secretary] can’t get progress it’s unlikely he will get much further and questioned his worth in raising it.
“[Sarah Munby] if there is good point in conversation to land the issue/argument, could still consider raising it but he isn’t going to agree to full request, still worth trying to get what he can.”
It records you as:
“… keen to be straightforward [with regards to] Mr Read.”
There is then a section on succession/management. Ms Munby says:
“[The Secretary of State] knows problems with internal succession and the [management] team isn’t as strong as could be so will likely raise this as challenge to fix.”
What was the issue there?
Henry Staunton: Well, as I said, when I ran through why the company was a mess, I said that management was an issue, so I don’t disagree with Sarah’s assessment. So it was a fair point. But this company was in a state of some crisis, so I think it’s very easy to be critical of management but, from the early days, I thought “My goodness me, I’ve never seen a team having quite so much on their plate, or anywhere near as much on their plate”. So I think it’s easy to be critical about – for Ms Munby to say we need to strengthen the management and it’ll all go away. It needed something far more fundamental than that.
Mr Blake: “[Ms Munby] ran through what [we’ve been] doing our side to think about policy options and [presumably cost, there’s a pound sign]. Noted 3 difficulties on [pounds]:
“1. We don’t have it (will need to come from elsewhere).
“2. In order to give any money it will need to be approved by [His Majesty’s Treasury] – who won’t allow us to give until we had long-term plan, but the timing doesn’t work – so trying to do something to bridge.
“3. Subsidy control – without an excuse we can’t just lift cash over the wall – have to be subsidy compliant (but should be fixable and is our problem to fix).
“[Ms Munby] We might end up doing something small to buy space collectively to get to the longer term.
“[You both] discussed dynamics of policy options – [for example] difficulties in reducing networks.”
It then says that you mentioned targets referred to in Inquiry hearing:
“… wasn’t looking for an apology but wider point around being synced up and acknowledging where each other’s roles lie. Was keen him and Sarah strategically aligned where [possible].”
Now, this does seem to be the first mention of compensation or redress; do you agree with that?
Henry Staunton: To be honest, I can’t recall quite what she meant about targets in respect of the Inquiry hearing but I assume it was remediation.
Mr Blake: I think the issue was we saw, in that very first document that we have seen, that there is reference in the original strategic priorities for the Department’s priority to be an ambition of 100 per cent of offers made at the end of 2022 in respect of the Horizon Shortfall Scheme?
Henry Staunton: That was the difficult – that’s where the apology was sought from the Post Office Management, which was actually they never said that they would get 100 per cent; they said they would get 95 per cent. To me, it was quite a small issue but, clearly, this had been blown up on both sides as to whether it was 100 per cent or 95 per cent. I wasn’t interest in getting into the middle of that skirmish.
Mr Blake: I think the skirmish related to whether it was a target or an ambition?
Henry Staunton: Indeed. Indeed.
Mr Blake: As you say, a skirmish about what was said at the Inquiry, rather than something more substantive?
Henry Staunton: Absolutely. Absolutely.
Mr Blake: We then get on to:
“[Ms Munby] also keen to be aligned as far as [possible], though reflected that the level of trust in [the Post Office] Board/[management] isn’t that high and that funding will come with conditions/scrutiny (that’s how HMT work) but agree with everyone playing in correct lane.”
Then, once again, it records:
“[Mr Staunton] queried [Mr Read’s] bonus.
“[Ms Munby] noted in the same place as pay.
“[Ms Munby/Mr Staunton] agreed bad if they have to repay and not worth it for the amount.
“[Mr Staunton] thought shouldn’t have [gone] to [Ms Munby] in the first instance.”
Can you assist us with that discussion?
Henry Staunton: I can’t remember what the issue was on the bonus. I don’t know if it – and we may come to it – but the whole issue of the bonus that the Department were wondering whether the senior management should repay, because it had been paid before it had been approved by the Department. I’m wondering if that’s what it was; is that what she meant?
Mr Blake: Well, we’ll ask –
Henry Staunton: We might come to it, I presume. Yeah.
Mr Blake: Why is it, throughout this discussion, we don’t see any significant discussion about redress and compensation, certainly not in the note that was taken by the Department.
Henry Staunton: I don’t think it was discussed at length. I mean, this was my – she called me in for an introductory meeting and, as I say, I’d been in post a month by then. I think you’re forming your views – I hadn’t made up any – you know, made any final views. This was very early days. To walk in and start talking about that remediation is going too slowly, at that stage, was too big a call.
So I think I was there to listen to what she had to say and, as I say, I mean, that filenote doesn’t record the key things, which was “Hold onto the purse strings; don’t spend any money; hobble into the election; don’t take any long-term conditions; don’t rip off the band aid”. I mean, that was the message that I received from this meeting; none of that, of course, has been minuted.
Mr Blake: If we scroll up, we see considerable time seems to have been dedicated to the discussion of Mr Read’s pay at this meeting. It might be thought that matters of redress, compensation and the detail of that is more important than discussion of Mr Read’s pay?
Henry Staunton: I think, if I were a postmaster, I’d be horrified that – when their remediation is going up 1 or 2 per cent, and their costs are going up by more than that, ie they’re making less money and it’s very marginal at best, to see this sort of discussion of moving a pay package to over £1.1 million, just for target, let alone for good performance.
Mr Blake: Why were you personally dedicating so much time to that?
Henry Staunton: It was astonishing. I think – firstly, I think Lisa Harrington and Tom Cooper were very unhappy with what was going on. As I say, we go back to the bonus that had been unauthorised and paid up, and they were very angry about it. They were very angry about the whole way remuneration worked. So I talked to them and Tom had a very good reading as to the Department, he said, “Send it in, Henry, but you just get a refusal”. So Grant Shapps did turn me down and I can talk through the events after that in due course.
Mr Blake: We started today with the strategic priorities for 2022/2023 and the evidence that you gave was to the effect that you were horrified by the approach that was taken in that letter to the need for value for money, et cetera, in respect of compensation issues.
You’re now meeting with the very person who has responsible for those issues, the very person who wrote that letter to your predecessor. Why don’t we see, in either your note or their note, any significant discussion of that issue?
Henry Staunton: Well, as I say, I was called in. It was a listening meeting to hear what she had to say. She didn’t specifically raise those issues of the taxpayers’ money and it – but it was her meeting. I just felt that it’s a big issue to talk about the role of getting value for money for taxpayers when it comes to the remediation for postmasters. But I thought that was a matter we would need to sort out in due course. It was way too early in my tenure, after a month, to have formed firm views on what was happening.
Mr Blake: To give an idea of the relevant timeline, so far as the Inquiry is concerned, on 6 and 13 July 2022, there had been an Inquiry hearing on compensation. On 15 August 2022, the Chair had published a progress report on compensation. You had been attending the Board since October that year. We’re now in the New Year, your first meeting with the Permanent Secretary: why is it that Nick Read’s pay seems to take a great deal amount of space on the page, whereas compensation, redress for subpostmasters, doesn’t?
Henry Staunton: Well, it was taking up a disproportionate amount of time. I mean, in my witness statement it took up 10 per cent of my witness statement, talking about what was happening on the Chief Executive’s pay. That just shows how the priorities in terms of pay were to the management.
Mr Blake: What went wrong there?
Henry Staunton: Well, I think what went wrong was that the management feel that this was meant to be more like a public company than a company owned by the State and, therefore, the remuneration levels should be closer to that, than that of a public company. That, I think, is what went wrong. And, to start with, I thought maybe there’s something in that but, you know, once I – almost once I’d seen Grant Shapps, I could tell that’s not the way Government looked at it. They didn’t see it as a company that was more like a public company; they saw it as a company that was owned by the Government and that’s why the Secretary of State, Grant Shapps, pointed me towards how much he might earn and how much Permanent Secretaries might earn versus how much the executives of the Post Office might earn.
Mr Blake: I’d like to move on, before we take our morning break, to some early observations after that meeting. Could we, please, first actually turn to POL00423699 and this is Mr Cameron’s email on “The robustness of our governance”, that was sent to Mr Read. We’ll bring that up on to screen. If we scroll over, please, to the bottom of page 2, it’s an email that the Inquiry has previously seen in an earlier phase and no doubt it’s an email that we will see again this afternoon with Mr Cameron. If we scroll down, thank you.
Did you see this email at the time or thereabouts?
Henry Staunton: I don’t think I did, but I think Alisdair chatted me through it, you know, as part of our conversations.
Mr Blake: I’ll take you quickly through it, we’ve already seen it with another witness, so I won’t read it all out:
“We agreed to do a rapid, subjective assessment of the issues around our governance, which we might want to fix before we get an expert in.”
Were you aware of an expert being brought in to look at governance issues at this stage?
Henry Staunton: Yes, and I was aware that Alisdair wanted to have a chance to fix them before we got an expert in who just repeated the fact that we had a problem.
Mr Blake: “Board
“Membership. We need to get another accountant to support Simon J. Sorry.”
If we scroll down, “Group Executive”, and there is a series of issues regarding the Group Executive. If we scroll down, (3) was “Decision-making”.
Henry Staunton: If we could – if I could just it’s quite a big – important there.
Mr Blake: Absolutely.
Henry Staunton: He refers to CIJ and I think that’s quite important to touch on.
Mr Blake: Yes.
Henry Staunton: Will you come back to that?
Mr Blake: We can address that but there’s a reference there to the CIJ scorecard. What did you understand by that?
Henry Staunton: What we had was – if I could just step back a moment, Justice Fraser issued two judgments. One was the CIJ, which was mainly around contractual issues but included some other items, and the HIJ judgment was really 15 big recommendations on how we should move forward. So these were really important, and the scorecards were there to try and tick off what was – what Justice Fraser wanted to make sure that we got there.
And Alisdair’s comment here was actually that’s not what we’re doing. We’re not measuring the things that Justice Fraser is really interested in, in terms of losses, the rapid buttons for – press if you’ve got a problem, investigations, et cetera. So he was really concerned that we were not moving in the right direction.
Mr Blake: Were you aware at that time of what the CIJ scorecard was?
Henry Staunton: No, I wasn’t. I wasn’t aware of it at all. I was interested because I felt that it was – we’ll come and perhaps talk about it later, as to the Board, as to whether CIJ/HIJ was receiving the right priority, but at that point I wasn’t aware of the detail of what was in the scorecard and what happened and that we weren’t measuring the correct things. It all came out from talking to Alisdair.
Mr Blake: At this point in time, did you have a view as to whether the business was appropriately addressing those issues in the Historic Issues judgment and the Common Issues judgment?
Henry Staunton: I didn’t have a view. It was – before I joined the Board, there was a board meeting where they discussed actually implementing the HIJ and CIJ judgments in November ‘22, and Nick Read reported that we didn’t have sufficient funds to proceed both with the Horizon replacement, and the CIJ/HIJ recommendations.
And Tom Cooper said “Well, they’re both equally important”, but Nick said “If there’s only room for one, we should move forward with replacing the system”. And I said to him, “My view is, for what it’s worth – I haven’t even been here a matter of a few days – surely we should fix what Justice Fraser wants. You know, an accountant starts – with let’s fix the basics and spending £800 million on a new system, well, we should get to that but let’s do the basics that we can because that will inspire confidence from our postmasters that we have a system that they can rely on”.
But as a Chairman, you don’t take the decisions. The Chief Executive runs the company. That’s very important to understand. You’re there to guide thinking, nudge and, only in the last resort, overrule. So I thought, “Well, I’ve raised it. I think it’s for Nick to think about” and, in the end, he thought about it and, actually, the priority was the NBIT system. It was not what I’d have done if I had been Chief Executive but that was the view that was taken.
Mr Blake: So the decision was to prioritise the new Horizon system –
Henry Staunton: Correct.
Mr Blake: – over implementing –
Henry Staunton: Justice Fraser’s recommendations.
Mr Blake: – matters raised by Mr Justice Fraser?
Henry Staunton: Yes.
Mr Blake: Can you assist us with approximately what time period was when that decision was taken?
Henry Staunton: That was at the Board before I joined.
Mr Blake: Thank you. We get to the NBIT system at point 4 of Mr Cameron’s email. He says as follows in respect of NBIT:
“We have not had any formal governance of NBIT for months and there is no date when we can expect it.
“The [Group Executive] has no idea, for example, why R2 has been delayed …”
Is that a second rollout of some sort?
Henry Staunton: Yes.
Mr Blake: “… or the extent to which it matters.
“No one is working on how we run [the Post Office] after NBIT.”
What was your understanding of the concerns regarding the NBIT system at that stage?
Henry Staunton: They were very, very real. They were very, very real as far as Alisdair Cameron was concerned. Normally, with these big projects, you have an Executive Committee that really gets into the detail and you have a Board committee that looks at it more strategically in governance terms, makes sure that the Exec Committee know what they’re doing. And the Executive Committee was abolished in about November, as I recall, and that’s precisely why Alisdair raises the problem and it wasn’t set up for months.
And he says in a different memo that it’s reckless. And I said to Nick, “You know, we really ought to have Executive Committee that runs this”, but there was no Executive Committee right the way through to the half year and I was getting feedback from other people, of Alisdair saying, “Look, there’s a problem building up here, the costs are out of control”, and, sure enough, in June we were informed as a Board that the project, instead of costing 330 million-odd, it was going to cost 840 million.
I mean, that is an indication of how staggeringly out of control this project was. So I think Alisdair is probably not – is being a bit kind to say what he said.
Mr Blake: You’ve mentioned a decision in June or information that was provided to you in June.
Henry Staunton: Correct.
Mr Blake: In your statement, you also refer to an incident in May 2023 where you say Jane Davies had spoken to Mr Cameron and there is an allegation there that the full exposure had been hidden from the Board; can you assist us with that allegation?
Henry Staunton: Well, only to the extent that I think Alisdair’s view was that the truth wasn’t coming out and, at the same time, shortly after we had that John Doe letter which said exactly the same thing, and I guess none of that would have transpired if we’d had an Executive Committee that was meeting fortnightly astride this project. It’s normal basic project control of a big project like that.
Mr Blake: We’ll get to the John Doe letter but, in your opinion, is it your evidence that there was something intentional about the lack of information being provided to the Board?
Henry Staunton: Ah. That would be what was happening within the IT Department. I think that there probably was an intention for the picture not to emerge but I have no evidence for that. That would be my gut feel. You cannot have a project going from just over 300 million to just over 800 million without some intention to hold back that information.
Mr Blake: Thank you. We’ll look at one more document before we take our mid-morning break. That’s POL00447866. This is the Board evaluation report that you referred to earlier. We’re now at 28 March 2023. Was this a report that you asked to be created?
Henry Staunton: No, it’s a normal annual evaluation where we contact the non-execs – well, contact all the Board Directors, and one or two others, to get their views on governance.
Mr Blake: Thank you. There are points raised or areas for development set out there, the first is regarding Board agendas. The second is:
“The relationship between the Group Executive and the Board needs to be strengthened, and priorities aligned. There was concern about insufficient information flows between the two groups …”
Briefly, what was the concern there and was it a concern that you shared?
Henry Staunton: Yes, I think, to be honest, it’s – the real issue was for the Directors, that we get these very lengthy reports, which are difficult – there’s just too much to read, and the main issue was that they were being asked as Board Directors to take a decision, and that’s very unusual. Normally, in a Board, the Executives take the decision and they bring it to the Board for approval, which is very, very different. And I think that was the issue about the information. It was information on – but not in the way they would have expected to receive it.
Mr Blake: Thank you:
“3. The Board needs time to review and reflect on its past decisions and customers’ views need to be considered further when the Board is making decisions.
“4. The Board would like clarity on the shareholder representative’s role on the Board.”
Does that go back to the December 2022 discussion that you were having regarding the UKGI Non-Executive Director and the limits or extent of their role?
Henry Staunton: Partly. But it – also, for me, it confirmed what had happened from these three Directors, one of whom left after nine years and the other two left before their time was up, and I got an independent review done by Ernst & Young as to their reasons for leaving, and they said, “Look, we’re about to leave, that makes it very invidious for us”. And I said, “Look, I’ll tell you what, talk to Ernst & Young and I will – on a purely private basis, because I need to know, as a matter of record, why two of you are leaving early, really”.
And one of the issues that emerged – that – the key issue for me – that mainly emerged actually after talking to them about the report – was the issue of the UKGI Director. So it wasn’t a surprise to see this thing arising in this report.
Mr Blake: If we turn to page 3, it sets out there the lowest scoring questions. There’s also a section on the highest scoring questions.
Let’s, if we scroll down, look at the lowest scoring questions:
“To what extent does the Board review past decisions? 2.3.”
So a score of 2 means that the area requires development; 3 is good or at the required standard.
If we scroll down, please:
“How would you assess the Board’s approach to considering the following stakeholder needs/views when taking decisions:
“Customers.”
Again, 2.3.
“How seriously does the Board take the development of individual directors and the Board as a whole, and where it needs to improve? 2.5.”
It’s these last three that I’d like briefly to focus on:
“How effective are the relationships between:
“Non-executive Board Members and Management (in providing support and challenge)? 2.8.”
What do you see as the concern there?
Henry Staunton: Well, as I said, I hadn’t been there long but it clearly came out that there – relationships between the non-exec and the management weren’t quite as good as they would be in any other company I’d been there.
Mr Blake: “The level of insight provided by the UKGI representative into the strategic direction that the shareholder aspires to. 2.8.”
Is that much of the same that we’ve been discussing –
Henry Staunton: Yes.
Mr Blake: – in relation to UKGI?
Henry Staunton: Yes.
Mr Blake: Yes? Finally:
“How would you rate the quality of papers and presentations received by the Board?”
Again, 2.8. Again, was that a concern that you shared?
Henry Staunton: It was the point I made. It was not so much the – well, it would depend, really, what you mean by “quality”. The issue was too much decision-making was required by the Board and all of this should be done at the top management level, if not below.
Mr Blake: Can we please turn to page 11. There are some open comments there in response to the question:
“How effective do you consider past Board Evaluations to have been and do you feel that recommendations arising from past Board Evaluations have been implemented with sufficient rigour?”
I would like to look at those last two bullet points. First:
“With a new chair I expect there will be some shift towards greater challenge and accountability of senior management.”
Was that a concern that you were aware of when you joined, that there was a concern about the accountability of senior management?
Henry Staunton: I don’t want to be critical of my predecessor but I felt that that was the case. I’m a fairly proactive chairman in terms of getting things done and that’s probably fair. I saw that as an issue.
Mr Blake: “There is a concern that the [Post Office] Board lacks independence from its shareholder. The shareholder’s views are ostensibly given more weight than other [Non-Executive Directors] or directors. [The Post Office] Board should act in the best interests of [the Post Office] (and it may have regard to its shareholder interest) but not at the expense of [the Post Office]. It is not always clear this is being done.”
Again, is this much of the same in terms of the –
Henry Staunton: This is the ten votes versus one vote situation.
Mr Blake: Thank you.
Sir, that might be an appropriate moment for us to take our mid-morning break, please?
Sir Wyn Williams: Certainly, yes. What time shall we resume?
Mr Blake: If we could take 15 minutes, so that’s about 11.47.
Sir Wyn Williams: All right, fine.
Mr Blake: Thank you.
(11.33 am)
(A short break)
(11.49 am)
Mr Blake: Still moving chronologically, can we please turn to POL00448712. This is the Chief Executive’s report to the Board of 6 June. That will come up on screen in a second. Thank you. The narrative states as follows:
“There can be little debate that the period since my last Board Report has been one of the most challenging for Post Office in its recent history. The combination of the TIS submetric issue [that’s the bonus issue that we discussed with Ms Burton] combined with the racial codification scandal as well as legal challenges to the [Historic Shortfall Scheme], has put the organisation on the back foot reputationally, as well as politically. It is also unlikely that this will cease in the near term. The Select Committee hearing at the end of the month along with the publication of Amanda Burton’s Report will ensure we remain in the media spotlight. It is as yet unclear what approach the Government propose to take with their Remuneration Governance review, but it is unlikely to be positive. The implications of all of this should not be underestimated. A fragile and brittle business is creaking. Morale is being severely tested. A culture of fear is developing. It is this final point that we should be especially concerned about. Colleagues are fearful of putting their heads above the parapet, of taking risks and soon, of admitting mistakes. Risk aversion and paralysis is setting in, which will not help our commitment to transparency.”
Was that a view which you shared?
Henry Staunton: Yes, it was.
Mr Blake: As at 6 June 2023 what, in particular, were you doing about it?
Henry Staunton: I think just – I think I ought to make plain the role of the Chairman because you asked a lot of questions about remediation: why weren’t you doing something about it? I just want to make sure it’s fully understood that the Chief Executive of any company runs the company, is responsible for everything on a day-to-day basis, everything comes up to him. The Chairman’s role is, if he’s not satisfied that sufficient progress is being taken, you challenge, you nudge, you try and clarify thinking but, in the end, you’re under no – you fully understand, as the Chairman, that the Chief Executive is running the show and, if, in fact, you’re unhappy with the way he’s running the show, there is only one option, which is you find a new Chief Executive.
But you’re not running it, and I just want – you indicated that somehow I was running the company. That’s not the whole of a chairman, just to be clear.
So on something like this, I was aware of it and we talk about it, I understood what was happening and the answer is what do we do about it, and that’s what we talked to the Chief Executive about.
Mr Blake: So you say the role of the Chairman is to talk about a significant problem where there is a culture of risk aversion and paralysis setting in, and your solution about that is to talk about it?
Henry Staunton: No, that’s not fair. The answer is that, if you’re not running the company, you make suggestions as to what you might – what you – what Nick ought to think about doing. But it’s not a question of talking. You make suggestions as to how you tackle the problem but it’s for the Chief Executive to tackle the problem and sort it.
Mr Blake: What were the concrete suggestions that you made to Nick Read to resolve the very serious issues that he highlighted in his annual report to the Board?
Henry Staunton: Well, his monthly report to the Board. Yeah. Well, my main concern – and I touched on it right at the beginning – which is we have layers of management and no one is taking a decision. Even before this culture of fear, decisions were not being taken right at the level. Everything was being passed up, and there was this fear, possibly – and this is what Nick said – possibly because of the Inquiry, you know, that they were fearful of making decisions because they might be up to give evidence.
I found that unlikely because we weren’t talking about a level of management where they would come before the Inquiry, but that was his view and that was part of the explanation: we’ve just got to get through the Inquiry and things might normalise. I think that it was – it was more than that.
This business is not fleet of foot the way I would – other retailers, Granada, WHSmith, you know, the way they would tackle it. It wasn’t fleet of foot in that sense and I wanted to talk to him about my experience at Smiths and how we might make the business more fleet of foot and, of course, a lot of this thing comes back to, if you have commercial success, a lot of bits fall into place. So I was actually very anxious to – if we are successful, people will confident about what they do, they will feel they have a secure job, because the business is expanding, and that actually is also part of dealing with this culture of fear.
Mr Blake: Am I to understand from the answer you’ve given, then, that your answer is that the way to address the problem here is greater commercial success?
Henry Staunton: That’s part of it. Without any question, that always lifts morale in any company. If you’re doing well, it’s amazing what difference that makes to people: taking decisions, not being fearful, et cetera. It’s not the only reason but it’s, without question, in my limited experience, it’s a factor.
Mr Blake: Are there any other concrete suggestions that you made at that time in order to resolve the problem?
Henry Staunton: I can’t remember the detail but there was no doubt it was a big issue and I think that Nick, not unreasonably, felt that this was not going to be solved immediately. It needed a longer-term issue. It came out even in the evaluations that we did – staff surveys. I’ve never seen even with top management, we did the survey, that culture of fear and worry. So this was something that was not going to be sorted without a lot of thought and a lot of movement on all fronts.
Mr Blake: Is there anything over and above thought and movement that you would suggest could resolve those problems as at that time?
Henry Staunton: Well, I can’t remember the detail of it but, you know, the fact is it needed to be dealt with on a number of fronts, and I didn’t feel that the management were being slow in that regard. I could quite see that, with the lack of commercial success, with the Inquiry, et cetera, why people were fearful. I understood that.
Mr Blake: Let’s move to the John Doe letter that you’ve referred to already in your evidence. It’s POL00448689. It’s an anonymous email, subject “Whistleblowing”, and it’s directed to you:
“I’m writing to you directly because I don’t trust the Post Office whistleblowing process and escalations into Nick Read have not been dealt with. This email will also be sent to Sir Wyn Williams and Darren Jones.
“The disaster of NBIT is well known across different levels within the business. Recently a number of people have raised concerns to Nick Read that have been ignored. More than one individual is aware and has told Nick the Board have been told untruths by the NBIT team and CIO about the extent of defects and timescales for R2 rollout that now won’t be delivered until August, if then.”
Were you aware of those issues when you received this email?
Henry Staunton: Yes, I think I explained before that we’d had – I’d had feedback from Alisdair in May that things were being – well, it goes right back to the fact that we didn’t have an Executive Committee for some months, so, you know, that wasn’t good project control. So when Alisdair said there was a problem brewing in May, I fully expected that – I wasn’t surprised, and then, of course, Nick reported to the Board in June. This is when the project moved from 340 million to over 840 million.
So it was all about this time. By the time of this note, I was aware the project was looking at, with contingency, over £1 billion. I mean, I was obviously shocked by it and – as you would expect.
Mr Blake: The next paragraph:
“There has been no governance in place for NBIT for a long time and what has been in place hasn’t done what it’s supposed to. Even the new steering group operates on misinformation because no one really has a clue what’s going on, how long it will take to fix and can’t be open about how broken the programme is because it’s already gone too far.”
Was there a feeling within the business that it was now effectively too big to fail?
Henry Staunton: No, I don’t think that was the case. I think my view and the view of my fellow directors was that this was an appalling situation to have, to suddenly, within three months, have a project to be costing over £1 billion when we thought it was going to be 300 million before. But I didn’t think – there was not a feeling that it was too big to fail. As I put in my witness statement, the answer is we needed to have a – at £1 billion, we needed to have a rethink about what on earth was going wrong, and Nick Read and I agreed that we would – the monthly spend needed to be slashed while we took stock of where we were.
Just to explain, if I could, with NBIT, there was – we had to – well, the decision was taken before my time, which was should we have a system built off the shelf, or have it done specifically for us and then, if it’s done specifically, should we do that in-house or by some experts?
And Post Office had taken the decision that we would do a specific system built in-house. That was the most risky route to take but that route had been taken by the time I got there. Once we had this £1 billion number thrown at us, we agreed that we would get Accenture in, get them to do a review of what should take place, and that’s what happened. And Accenture felt that what the Post Office were proposing, which was to have it built in-house on our own, was actually the right decision, although they recommended a partner, ie Accenture, should hold our hands going forward.
As you’ll see from my witness statement, I was a bit sceptical because I said I was concerned that the consultants were talking the project up and, to a certain extent, the management, the IT management, were influencing the consultants. So, even though I got the Accenture report, I just had in the back of my mind that they were just saying “Press ahead” and I just wanted – I wanted to know if there was a cheaper solution, which I did talk to the CIO about at some length. So it wasn’t as if – trying to explain to you – as if nothing was done when we saw this £1 billion. The answer is quite a lot was done.
Mr Blake: Let’s continue scrolling down. It says:
“The NBIT project team and RTP teams work in silo. NBIT is secretive and told not to share updates or information with anyone from the wider business. The RTP team are being stood up to understand gaps in the NBIT plan that should have been managed under the CIO and NBIT Director …”
Was anyone being held accountable at this stage within that team?
Henry Staunton: Yes. The – Mr Read felt that the NBIT Director probably just wasn’t coping and we needed to make a change.
Mr Blake: Can we scroll over the page, please:
“Setting up two separate projects under different leaders has been a colossal mistake from Nick which he did despite being warned against it by the CFO and others. It has led to infighting and openly combative and negative behaviours from some of his [Group Executive] and other senior leaders …”
Were these kind of views isolated? Were they views you were aware of more broadly? Did this take you by surprise?
Henry Staunton: I’m not sure – I didn’t agree with the fact that it was wrong to have two separate leaders, and I know we’ve now gone to having one team but, actually, the RTP team really was to take – their responsibility was to take a system developed by the IT Team and implement it within post offices. It was a totally different set of skills that were required. And we had a manager called Kate Secretan, who was just fantastic but she couldn’t have written an IT program but she could really deliver at what goes on at the Post Office.
So I didn’t disagree with having two teams because of the skill sets required. Equally, once you have two teams, there’s always a degree of bickering and you have to make a management decision as to the pluses and minuses of those two.
Mr Blake: Scrolling down:
“There is inefficiency in business but especially in the Transformation, Retail, CIO and NBIT teams.”
If we scroll down:
“The CIO is the worst leader I have experienced in a long and successful career. He is open about misleading the Board with inaccurate dates and cost for NBIT and is incapable of making a decision or having a difficult conversation.”
Was that a view that you were aware of or that you shared?
Henry Staunton: Well, clearly, when you see a project go up to £1 billion from £300 million in the course of three months, clearly something is being hidden from you.
Mr Blake: If we scroll down over the page, please:
“Retail path clearing is an expensive and time consuming activity that needs to be delivered before the new system can roll out but this is the day job of the Retail Team and nobody with the ability to fix it seems to be questioning why they’ve not been doing what they should be or why the retail director isn’t owning fixing it now.”
Then there’s a section there that addresses Mr Read, and it says:
“Nick Read has openly acknowledged and accepted the failings of some of his [Group Executive] team to more than one employee that’s been to him to express concerns, but has taken no action to deal with it. He is also aware of toxic behaviour from senior leaders and again does nothing to address it even when he’s witnessed it directly. He refuses to make the difficult decisions and nods along when people raise concerns, saying everything they want to hear, but then does nothing to resolve it. He is aware he has senior people in the role not doing what they should like Jeff Smyth and again does nothing to manage or deal with it, even though it’s a waste of public money.”
Was this a view that you were aware of or shared?
Henry Staunton: Yes, probably. Yes.
Mr Blake: Yes, to both: you were aware of it and you shared it?
Henry Staunton: Yes, yes.
Mr Blake: “The culture in the business is disgusting” –
Henry Staunton: Although I say that, that is my perspective. It is fair to say that this was an incredibly complex decision, the Horizon decision. So it’s – I would put that in mitigation in terms of my criticism.
Mr Blake: “The culture in the business is disgusting and starts from the top with Nick and the [Group Executive]. More than one person has heard comments from [Mr Read] about public school education and there is a class, race and gender divide at the top. We have [a Chief People Officer] suddenly disappeared from the business who happened to be the only female on his team.”
Now, without identifying any individuals involved or anybody who has been a whistleblower, broadly, looking at that is paragraph, what is your view?
Henry Staunton: We had a huge cultural problem there. Certainly, even when I joined, there was any one female in the Executive Team, which I said to Nick, that’s just – doesn’t fly. Ethnicity was very poorly represented across the team. You heard odd comments about “jobs for the boys”. I’d heard them and understood why those comments were made.
Mr Blake: What do you mean by that: you understood why those comments – oh, why these comments –
Henry Staunton: Yeah, because we did have a problem with ethnicity, we did have a problem with gender.
Mr Blake: “Nick made comments last week to the senior team about the horrific behaviours of the people who were part of the Horizon debacle especially if they are still in the business. He doesn’t seem to see how much of this is still going on and it feels like he’s doing exactly what those people did before saying if you were here in the past you need to go regardless of the situation.”
Now, we’ve heard about Project Phoenix and the Past Roles Project. In your view, as at this time, was the business doing enough in respect of those people who were involved in the underlying issues remaining in the business?
Henry Staunton: The underlying issue, with regard to Horizon, was we didn’t have an Executive Committee managing in a normal project control sort of way what was happening. That was what was – so there was no – if we’d have had that, these issues, no doubt in my mind, would have come to light. So, you know, a lot of this would have been dealt with – most of it would have been dealt with.
Mr Blake: I know you don’t like the question “What did you do about it”, but can I but that again: what did you do about it?
Henry Staunton: No, well, I thought I’d said really, which is I said to Nick, “Never in my experience have we not had an Executive Committee running a project like this”. I did institute a Board committee, an Investment Committee, so there was this overview of what should take place, and Andrew Darfoor agreed to chair it, and he’s a very, very competent person. But the fact is that a board committee doesn’t work unless you’ve got an Executive Committee reviewing these things on a day-to-day basis.
Mr Blake: What about the fundamental cultural issues that are addressed here?
Henry Staunton: Well, that’s – okay, so that’s a different issue at all, that’s got nothing to do with Horizon.
Mr Blake: Yes. What were you personally doing in respect of those fundamental issues?
Henry Staunton: Well, I think that you will have seen the evidence given by Saf Ismail and Elliot Jacobs as to how hands-on I was with regard to dealing with the issues of postmasters and how we should treat them, and of course there’s a big ethnic issue within that. So I was doing a lot in that area.
I think, with regard to Horizon, it is a project, and really a project has to be managed by the Executive. So, if there are issues that are being hidden, if there’s a feeling that it’s – there are too many public school jobs for the boys, that’s for the management to sort out and, like I said to Nick, that’s what we need to do. And if we had a proper Executive Committee it would get sorted out.
Mr Blake: Can we please turn to POL00448509. There’s then a discussion at Board level on 5 July about the letter. If we scroll down, we can see there’s a heading “Speak-Up”, and if we see below it says:
“The Chairman shared his view that some of the allegations raised did not appear to be strictly whistleblowing issues and that it may be in order for the Board to consider a different approach to address [those allegations].”
Henry Staunton: And that is because some of those issues were to do with competence and management, rather than whistleblowing, which is to do with more cultural type issues.
Mr Blake: We see below that, if we scroll down the page, Mr Read addressing the Board. Now, given that some of those cultural issues were directed towards Mr Read’s own abilities, do you think that the Board at that point scrutinised those cultural issues sufficiently?
Henry Staunton: Well, with regard to competence, the Board felt it was up to them to form a view, after a review, as to whether we felt the competence was right, and that is why we agreed to appoint Accenture to give us a view on all these things. So we didn’t do nothing, we actually felt that would deal with competence. If it was to do with cultural, well, that should be part of the investigation into Mr Read, which it was.
Mr Blake: We have KPMG involved by this point, Accenture involved by this point. We’re going to move on to Grant Thornton also being involved by this point. What is your view as to whether the Post Office farmed out these issues to too many external agencies and didn’t deal with it themselves?
Henry Staunton: I think that’s a really good question. In my experience, I’ve never seen an organisation that uses consultants so much, by a factor of five. It’s just very, very – it’s a really good question. It’s very unusual and it would not happen in a normal corporate. That’s absolutely right.
Mr Blake: You personally did instruct a number of those organisations, or were involved in the appointments, should I say?
Henry Staunton: Well, I didn’t – I was keen for Accenture to give the Board an independent view and I was keen for Grant Thornton to be involved on governance type issues, yes, that’s right. But I’m talking just more generally.
Mr Blake: If we could turn to the Grant Thornton report. That’s at POL00446477. We see over the page it was commissioned in October 2023. So were you personally involved in the commissioning?
Henry Staunton: Correct.
Mr Blake: Yes. If we turn to page 7, we see there the “Key findings”. The Inquiry has been through this report already and the key findings: are there any in particular there that stand out for you that you were concerned about?
Henry Staunton: Yes.
Mr Blake: I appreciate that this wasn’t published until a year later?
Henry Staunton: Yes. Well, I think a key one is the first one, which is actually everything stems from having a proper group-wide strategy, and I think – and my view for the strategy, which I touched on with the Secretary of State on the day she fired me, which was we needed to have a far more postmaster-centric organisation, with more postmasters on the Board, and it would change our culture in terms of how much we spend, we would be farming out a lot less to people and spending public money in that area, and I think what I saw was a slim – this was only a viable business if we slimmed it down significantly, but that would require funding. So it was the key issue for me, without doubt.
Just looking down there, I think –
Mr Blake: Could I ask you about number 5. 5 is:
“Culture – a lack of trust, accountability and performance management. [Post Office] is plagued by a pervasive culture of reluctance to make decisions, driven by fear of public scrutiny …”
Now, this very much echoes the observations made by Nick Read that we looked at earlier, that were made in June 2023.
Henry Staunton: Yeah.
Mr Blake: It looks as though, by the time of this report of 25 June 2024, so a year later, that was still a problem within the business. Do you think that under your chairmanship, sufficient was done to address that issue?
Henry Staunton: Yes, I think we were trying to deal with it. I think, as I said before, the management structure was all wrong, and it just encouraged this reluctance to make a decision and performance manage, and everything was moved up in a business – I’d never seen that in a business before.
There are a number of cultural issues. The biggest cultural issue, of course, relates to how postmasters are viewed in this organisation. We could probably come back to that, what is missing –
Mr Blake: We will come back –
Henry Staunton: What I thought was missing –
Mr Blake: – to that chronologically in due course. Let’s stick with the timetable. We’re in October now when this report has been commissioned. Let’s move on now to November. Can we please turn to POL00448694. We’re now in November. If we scroll down, actually, if we could go to the bottom of page 2 into page 3, this relates to something called Project Venus.
Briefly, do you recall Project Venus, as a name?
Henry Staunton: Is this – I think is this to do with the postmasters? Yeah?
Mr Blake: Yes –
Henry Staunton: Postmasters –
Mr Blake: – so let’s have a read of that, the bottom email. It’s an email from yourself to Simon Jeffreys, who was a Board member. I think was he the Chair of the Audit and Risk Committee?
Henry Staunton: Yeah.
Mr Blake: Actually, if we scroll down, we can see his email to you, and he says:
“I was made aware of this project this evening.
“It would be helpful, please, if you could numbs date me before [the Audit and Risk Committee] on Monday. Happy to give you a call tomorrow if convenient.”
Then we see your response and you address the investigations into Mr Ismail and Elliot Jacobs. You say:
“The balances with Elliot, as with so many postmasters, is problematic partly reflecting the complications with Horizon. A summary of the saga is as follows. A detailed investigation was undertaken by the Investigations Team and a balance of under £15,000 was agreed as owing by Elliot. This built up over a period of 6 to 10 years. Bearing in mind that about £1 million a year goes through the intercompany account, the difference built up over a period of years is de minimis.”
So, essentially, you’re pointing out there that the money owed by Elliot Jacobs was, in your view, de minimis, given the period and given the amount of money passing thorough his accounts?
Henry Staunton: No, these were not – that’s precisely the point – these were not loans to David Jacobs (sic). What we had here, as with any retail organisation, we had a difference on an intercompany account. Just as you have with any supplier relationship. This did not – and it’s £200,000, but even £200,000 is de minimis in terms of the amount of business going through Jacobs’ account.
So it was, in any normal organisation, you’ve just done a reconciliation of intercompany accounts, which eventually we did, and we found that only £15,000 or so was owed by Jacobs, which was infinitesimal in terms of the business going through.
But what had happened was that the Legal Department did a complete investigation into these two Postmaster Directors. I think it was vindictive, I think it was all to do with there were raising issues with regard to postmasters generally, and it was completely out of order, and what we had was a situation – was, even though when we found, I think Sir Wyn said it took a year to get to do this investigation? And the answer is: it took a year but actually it could have been done in months but it was held over these two poor people for a year. That’s why I say it was vindictive.
Mr Blake: If I could stop you there. Were you surprised that the Chair of the Audit and Risk Committee by this stage, after a considerable period of investigation, wasn’t aware of this issue?
Henry Staunton: Well, it’s because these investigations, as part of our procedures, are not made public because, you know, these people – as it turned out, these people were completely innocent. So we just wanted to find out what had – what the position was.
Now, what happened was, the Legal Department, as part of this – the word is not “vendetta”, but as part of this attack on the Postmaster Directors, were saying these were loans to directors, when they clear weren’t. It was just intercompany trading. That’s why I pulled you up on the word “loan”. This wasn’t a loan; this was intercompany trading and nothing more. And they said somehow that the reduction from the £200,000 to the £15,000 was a benefit in kind.
It wasn’t. It was the fact is the Horizon system was lousy and it was giving these wrong figures and we could only prove £15,000 that was owed. So there wasn’t an issue.
Mr Blake: You then say:
“Foat spent a considerable amount on legal fees. I asked a subcommittee of Lorna (as the Shareholder Director) and Amanda (a lawyer) to look at legal advice … Saf and Elliot have a feeling that Foat will just not let it go – that he keeps raising the matter that somehow Elliot and Saf had an undisclosed conflict of interest (I gather he said that to you …).”
Henry Staunton: Yes.
Mr Blake: “They deeply resent that. They say it shows the [Post Office] has not changed in that they think that all postmasters are crooks. It is getting heated now when I thought he had cooled the situation weeks ago.
“I thought the whole matter had been finalised following Amanda and Lorna’s review but it seems that Foat opened a second front with you!
“I have not seen the note that is being considered so am unsighted on what is proposed. Saf and Elliot are obviously concerned that a note will lead …”
Is that a Freedom of Information Request?
Henry Staunton: Yes.
Mr Blake: “… which they think is Foat’s aim. They think the matter has been investigated fully and the balance found to be owing is de minimis and [Freedom of Information Act Request] will just allow Foat to pursue his vendetta.”
Very strong words at this point in time being used in relation to Mr Foat. By this stage, November 2023, were you aware of an investigation into your own conduct?
Henry Staunton: No.
Mr Blake: If we scroll up –
Henry Staunton: Can I just pick up on one thing, though, which was – and this was not just being 100 per cent supportive towards the Postmaster Directors. When the £15,000 was found to be owing, the Post Office agreed with Mr Jacobs that he could just add that to the intercompany account and deal with it that way, and I said no, I want you to write out a cheque. So I don’t want any doubt that there’s no loans to a director here, and they said, “Well, we’ve agreed what we’re going to do with the Post Office”. I said, “Nonetheless, I would like you to write out a cheque”. So it’s not a question of just siding with the postmasters; I took a firm line on that.
Mr Blake: If we scroll up, we can see that exchange of correspondence with Mr Jeffreys, and he asks for some more information on the top of page 2 because of the difference in the figures.
Then, if we go to the first page, we can see you give a more detailed explanation in respect of those figures.
Henry Staunton: And you can see that the Chairman of the Audit Committee agreed.
Mr Blake: Yes. Now, we do know that, by this stage, there was an investigation into a whistleblowing complaint that had been raised by Ms Davies, but can I confirm that it is your evidence that, by this stage, you are not aware that it concerned you?
Henry Staunton: Correct.
Mr Blake: You’ve suggested in your witness statement that the investigation into the Subpostmaster Non-Executives may have had some sort of ulterior motive. Can you just assist us briefly with that, please?
Henry Staunton: Well, I believe, and so do the Postmaster Directors, it was because of their comments about the unsatisfactory cultural issues within the company, that the postmasters have got their hands in the till, guilty until proven innocent, you will have seen all of those issues raised by them, and I think they felt that this was, in their view, some sort of payback vendetta.
Mr Blake: As I’ve said, also at this time the company is dealing with the allegations made by Ms Davies, the Chief People Officer or the former Chief People Officer. The Inquiry isn’t investigating every aspect of that complaint, and the reason the Inquiry has named Ms Davies is because she has been previously publicly named in respect of this issue.
In terms of timing, if it assists your answers, the speak-up complaint from Ms Davies was made on 4 September 2023. Ms Davies is said to have named you part of, albeit not the main complaint, but as part of that –
Henry Staunton: No, she didn’t name me at all. I wasn’t named in that.
Mr Blake: I’m coming to it. On 10 November, it is suggested that she is subsequently said to have named you as an individual who had made a discriminatory comment at a meeting with external recruiters. As I say, we’re not addressing every single issue in today’s hearing but, in terms of timing, it does seem as though, by the time this happened and the concerns that you’ve raised there in vociferous terms regarding Mr Foat, she had, by that stage, named you personally?
Henry Staunton: But I wasn’t aware of that. Can I just say that Ms Davies, as she said to the Select Committee, this was a complaint by her into Mr Read and Mr Read alone, and she has said in writing that she thought this investigation was weaponised against me, following my support of the postmasters.
Mr Blake: In terms of notification to you, then, when is it you believe that you were notified that you were the subject of that investigation?
Henry Staunton: I think sometime in December.
Mr Blake: Thank you. Looking at the timeline again, the ITV drama was 1 to 4 January 2024. So we’re now moving to early 2024, and there was a letter that was sent to the Lord Chancellor. By way of background, can we please look at POL00448701, please. This is a letter from Nick Vamos, a partner at Peters & Peters solicitors. I think the actual letter is undated, but it must be prior to the letter to the Lord Chancellor, which is 9 January. He says as follows:
“I wasn’t sure who within [the Post Office] currently is engaged on this issue but I assume you all are.”
Was this a letter that came to you at all?
Henry Staunton: No.
Mr Blake: Do you know who it went to?
Henry Staunton: I assume Mr Read and Mr Read alone.
Mr Blake: “I have been listening with growing concern over the weekend to the report that Alex Chalk [who was then the Lord Chancellor] is actively considering ‘stripping [the Post Office] of its role’ in appeals and/or using legislation to overturn every conviction. I assume he is considering the HCAB [that’s the House of Commons] recommendations in their 14 December letter and attachment. My concern is not that the Government will implement any of the recommendations, but that it will do so on a false basis because it does not have all the relevant information and advice it needs to determine whether it will increase the number of successful appeals.”
Sir Wyn Williams: Sorry, Mr Blake, to interrupt, but isn’t HCAB the Horizon Advisory Board, not the House of Commons?
Mr Blake: Absolutely, my apologies, sir.
Sir Wyn Williams: That’s fine.
Mr Blake: “The most significant issue is that all the HCAB recommendations and the recent media and political response is based on a false assumption that there are 700 wrongful convictions, therefore there are hundreds of miscarriages of justice still out there whose route to justice is somehow being thwarted by [the Post Office] and ‘the system’. In reality, it is highly likely that the vast majority of people who have not yet appealed were, in fact, guilty as charged and were safely convicted. Unless this is made clear to the Government, it risks making incredibly important and expensive decisions on a completely false premise. I am sure that this point has been or is being made to whoever is briefing Alex Chalk, but I also know that points can be misunderstood or watered down by the time they reach a Minister, and this is one point that cannot be made strongly enough.”
He then identifies other issues. The second issue relates to the Crown Prosecution Service unlikely to be taking a more generous approach than the Post Office.
The third issue is that there are still many cases that need to go via the CCRC and it has rejected 31 applications based on clear confessions and/or other corroborating evidence of guilt.
“The fourth issue is the unspoken assumption that the [Court of Appeal Criminal Division] would overturn more convictions if only [the Post Office] would let it …”
Then if we scroll down over the page, please, the letter ends as follows:
“Please let us know if you need assistance from Peters & Peters in ensuring that the Government has a clear and comprehensive picture of all the relevant issues in its current decision-making process. If it does not, or they are not presented clearly, I am very concerned that the outcome of that decision-making process will not be in the interests of justice, PFAs or POL.”
Were you aware of a request for this letter having been made or do you know if it was volunteered; do you know the background at all to production.
Henry Staunton: No, nothing of it.
Mr Blake: Was it something that you have discussed with Mr Read?
Henry Staunton: I hadn’t discussed it at all. I was absolutely horrified when I saw this because we were getting absolutely nowhere on exoneration for postmasters based on a very faulty system, and I was in some despair and then the dam broke with the Mr Bates programme, and we were getting somewhere, and you’ll see I wrote to Nick Read very early in January and said, “You know, there’s some progress happening here”.
Nick was slightly more in the ‘guilty as charged’ camp, whereas I was of a different view and I said, “Well, let’s just keep out of this, this is a hugely difficult decision for the Government to make in terms of exoneration, and let’s let them make it”. And I thought we’d agreed that, so when I saw this letter going to Alex Chalk, I just thought that’s not – that should have gone to the Board because it was actually expressing a view that I’m not sure that – I didn’t share and I don’t think most of the Board did.
I did write to the Minister and I said, “Thank you for all the comments you made in Parliament the previous day, in respect of exoneration and I’m hugely grateful for your support”.
Mr Blake: Let’s have a look at of the ultimate letter that was sent, the Inquiry has seen it before, it’s POL00448381. This the letter to the Lord Chancellor from Mr Read. If we look at the second paragraph, it welcomes the publicity generated by the ITV drama but it says:
“We also have a duty to the Court in respect of our role as prosecutor in some 700 of those cases which resulted in convictions.”
The paragraph below says that they have carried out an exercise to identify which would be highly likely to concede in court:
“This has enabled us to write, proactively, to a further 30 potential applicants in addition to the 142 resolved cases and the five awaiting consideration …”
But then the paragraph below sets out the natural corollary to the exercise, which has been to identify those cases in which:
“… on the information available to us, and following the judgment in Hamilton, we would be bound to oppose an appeal. Typically, these cases involve convictions obtained by reliance on evidence unrelated to the Horizon computer system. The number of such cases is very much more significant, at 369, with a further 11 still under review.”
So the suggestion being put there, between those two paragraphs is that there are 30 potential applicants, in addition to the 142, but the number that they would oppose, significantly higher. Is that your understanding of what was –
Henry Staunton: Yes, about half is what they said. If I could just step back a bit, at the January 2023 meeting, the KC acting for the Post Office, Ms Gallafent, came to the Board and I asked her specifically why are so few people coming forward, and she said “Well, there are a number of reasons, one of the reasons is that they may be guilty”, but she gave a whole lot of other reasons, which I thought were perfectly reasonable, but it’s interesting that Mr Tidswell, who is the Chairman of the Remediation Committee, said the reason they haven’t come forward – “If they haven’t come forward by now, they’re probably guilty, and the Post Office – we as the Post Office have a duty” – that was the words – “we have a duty that those who are found guilty remain guilty”. And that sent a chill down my spine because that was the beginning of the year.
That’s why I was in despair. I thought, “How on earth are we going to get exoneration back on the map”, and it only came with Mr Bates.
So it gives you some understanding of the feeling within the Board, particularly the Chairman of the Remediation Committee.
Mr Blake: Will we see in the minutes of meetings you voice that concern?
Henry Staunton: No, but, again, as I said, my style was to say to Ben, “Ben, that doesn’t make any sense”. They quoted 550 cases at that January Board, which they were looking at in terms of exoneration, and they said there were only 12 per cent that might be considered. And I said, “That doesn’t make any sense that only 12 per cent were based on Horizon”. As you saw, they’re now admitting that it was up to half were based on – so these quiet words do make some progress in terms of moving the numbers.
Mr Blake: But you’re Chairman of the company, you’re chairing the Board meeting. Isn’t the Board meeting the time to say, “Hang on a minute, we’ve got this approach entirely wrong”?
Henry Staunton: The issue is manage. We have a separate Remediation Committee, chaired by the Senior Independent Director. He reports to the Board and we take a view on what he said. He’s got the feel for it. But I would say that the majority of the Board probably shared my view that this probably didn’t make any sense but the detail was being handled by the Remediation Committee, so I think it’s very difficult as a chairman, when you’ve got your Senior Independent Director saying there’s a duty for them to be – remain guilty, and –
Mr Blake: Mr Staunton, this isn’t a matter of detail; this is a matter of fundamental –
Henry Staunton: Absolutely.
Mr Blake: – culture.
Henry Staunton: Absolutely.
Mr Blake: Why, as Chair of Post Office, were you not at this time making the feelings that you have expressed today in your evidence, why were you not making that known at Board level?
Henry Staunton: This was in January ‘23, a month after I’d been on the Board. As I said, that would have been ludicrous at that point to have that firm a view.
Sir Wyn Williams: Sorry, Mr Staunton. I’m getting confused about dates. I assume that this discussion that Mr Blake is suggesting to you that should have been occurring at a Board meeting, was in 2024, just after Bates v The Post Office had broken.
Henry Staunton: Yes, Sir Wyn, I was just trying to give some background as to what was the position a month after I joined in terms of –
Sir Wyn Williams: Yes, but we’re a year on from that, aren’t we?
Henry Staunton: Okay, but I hadn’t related to explain that situation –
Sir Wyn Williams: Sorry.
Henry Staunton: – which was the feeling – I was trying to give a background to where people were coming from at that point, which was the case in December. That’s why.
Mr Blake: Okay, but we’re now in January 2024. We have a letter from the CEO to the Lord Chancellor, almost as high up as you can possibly go in terms of correspondence.
Henry Staunton: Yes.
Mr Blake: What were you doing at Board to make known that you had fundamental concerns with this approach?
Henry Staunton: I don’t think there’d been a board meeting since the letter from Nick Read, had there, to –
Mr Blake: Did you send an email saying, “I totally disagree with this letter, why did you send it?”
Henry Staunton: I did. I think it’s on the email trail, isn’t it, “Nick, we agreed that this was not – you’re expressing a view from the Post Office which you know is not my view and this should have had Board approval”. So I did do that, precisely.
And there hadn’t been a Board – there was going to be a Board the week after I was fired, where that was firmly on the agenda.
Mr Blake: Looking broadly at the culture at the Post Office at this particular time, can we please turn to POL00448699. This is the same day as that correspondence. Can we turn to page 6, please. There’s an update on the discussions in Parliament.
“As you may know, the Post Office Compensation Bill is a short, fairly technical piece of legislation that essentially looks” – sorry, this is from December, we’re going to see in due course. It start with an update on the Post Office Compensation Bill.
If we scroll, please, to page 4 –
Henry Staunton: I don’t think I was copied on this note, was I?
Mr Blake: No. I’d just like to ask you, really, about your – you’re copied on the first – sorry, this chain is ultimately sent to you and we’ll see on page 1 in due course but, if we start on page 4, on 8 January, so the day before that letter was sent, at the bottom of the page, we see:
“As you will know, the Minister provided a statement in the House of Commons this evening on the ‘Horizon Compensation and Conviction Update’ following media covering of [the Bates drama] and mounting pressure …”
If we scroll down, we can see concerns being raised there in the second paragraph:
“Although the Minister did not have a substantive update on compensation, he did note that he had met with the Lord Chancellor Alex Chalk today and together they have ‘devised options’ to work through outstanding convictions ‘with much more pace’, but noted the Lord Chancellor would need to speak to senior members of the judiciary for advice first …”
So it looks as though there’s movement towards –
Henry Staunton: Absolutely.
Mr Blake: – the exoneration?
Henry Staunton: And that’s why I replied to the Minister thanking him for his efforts.
Mr Blake: Thank you. If we scroll now to page 1, we see an email from Mr Foat, which is copied into you, so that encloses the entire chain. It says as follows:
“In addition to my note on Saturday setting out a range of points on legal, governance and comms, I do think it may be worthwhile that a one pager ‘fact checker’ is drafted …
“There are a number of facts that are actually erroneous in the media, ie that all convictions are unsafe etc. If it [sic] such matters are overtaken by a political decision and legislation I believe it will be important to have an accurate position of why it was that the Government and [the Post Office] were in this position, ie [Court of Appeal Criminal Division] not all 700 are unsafe convictions based on Hamilton; current legal rules mean that the convict claimant must bring the Appeal – it is not up to [the Post Office] to just overturn all of them etc …”
In your view, what was the view of the Executive, the Legal Team and the wider business at this point in time in relation to the possible movement by Government to provide a blanket exoneration?
Henry Staunton: Well, my view is there was no propensity – no interest at all for overturning convictions, I’m sad to say, whereas that was not my view. I thought these convictions of these poor postmasters and their families were based on a completely unreliable system and it was obvious to anybody – I’m not a lawyer but it would be obvious to anybody who is not a lawyer that that was just an incredible decision. So we got to the right decision eventually but it was not one that had much support within the Executive of the Post Office, as you see from Nick’s letter and you see from Mr Foat’s letter.
Mr Blake: We then get to 13 January, and I think this is the email that you’re referring to, in which you express concerns about the letter. Could we please look at POL00448703, 13 January. You say:
“Dear Nick,
“Thank you for forwarding your letter to Alex chalk as requested. I was surprised to read it following our conversations that we would not become involved in any way in what is a very difficult decision for Government and our justice system.
“You say that we are not making a value judgement but then attach a letter from our lawyers which makes the statement ‘It is highly likely that the vast majority (of postmasters) who have not yet appealed were in fact guilty as charged’. If that is not a value judgement I do not know what is. He also makes another value judgement that no one would have a more generous approach than [Post Office] – a view I would not share based on my assessment of our past behaviour.
“A third party would see this letter as Post Office’s lawyers ‘continuing to defend the indefensible’, ‘Post Office has not changed’ etc. That assessment of others would do a huge disservice to the efforts of the current Board and management team as we seek to accelerate justice and generosity for wronged postmasters.
“Please ring me over the weekend to discuss.”
So you do very clearly, as at Saturday 13 January –
Henry Staunton: Crystal clear.
Mr Blake: Crystal clear. It might be said against you that, by that date, you had an invitation to be interviewed in relation to other whistleblowing complaints, the Ms Davies complaint that we have referred to, and that, in some way perhaps that played a role in you suddenly reacting in this way with such a strong tone. What’s your view of that?
Henry Staunton: Well, you saw the evidence presented by the postmaster NEDs who said that I was absolutely consistent. These are absolutely consistent with my views explained throughout this process.
Mr Blake: Could we please turn to POL00448302. We are now on 14 January and, as you say, we are now getting it to the Project Pineapple incident and your involvement with the Non-Executive Directors. Could we please turn to page 4. This is an email exchange that we have seen in the Inquiry. Am I right in saying, in fact, where it says 10 January, it should read 14 January?
So it’s the – just after you’ve sent that email, I think, to Mr Read, the day after, the Sunday after. This notes your views –
Henry Staunton: It’s not mine –
Mr Blake: Sorry, it records the views of Saf Ismail and Elliot Jacobs:
“Saf said the views expressed by Richard Taylor, and previously by management and even members of the Board, still persisted – that those [postmasters] who had not come forward to be exonerated were ‘guilty as charged’. It is a view deep in the culture of the organisation … including that postmasters are not to be trusted. SOMETHING NEEDS TO BE DONE.”
What was your view on that issue?
Henry Staunton: I totally agreed.
Mr Blake: “Martin Roberts and certain members of his team were singled out. There has been no feedback on the investigation into Roberts (including for inappropriate behaviour and lack of integrity). He was responsible for the postage stamps debacle where changes were made to accounts by his team just like Fujitsu. If Elliot had not been on [the Audit and Risk Committee] the controls would not have been strengthened. Roberts and his team do not want any extension to their terms of office as they believe new [postmasters] would not have the experience to challenge them.”
Again, what’s your view on that?
Henry Staunton: That’s slightly more detailed and I was much less aware of these issues of postage stamps debacle, et cetera. It was all news to me but Elliot said that, if he had not raised them at Audit Committee, things would not have been done. I did not understand the detail. I put it in there because I wanted these two to know that everything they’d said to me reflected their views.
Mr Blake: Thank you. Then we get onto a section on Mr Foat:
“Equally, Saf and Elliot are FED UP WITH THE AMOUNT OF POWER WIELDED BY FOAT. He and other members of the senior team act as if [postmasters] ARE GUILTY UNTIL PROVED INNOCENT … We must also part company with all those investigators who behaved so terribly with [postmasters].”
Again, at this stage, what were your concerns with regard to Project Phoenix and the Past Roles Project?
Henry Staunton: There are these people called the untouchables who are in the investigations team, or reds or whatever, and they were involved in dealing with all these issues in the past, sending – finding postmasters guilty. I think it’s very important for the Inquiry to understand this is not something that relates to the past. This is something that relates to the future.
Before we implement Horizon, we will be doing a path-clearing exercise. There are millions of pounds in dispute between postmasters, what’s on their records versus what is in the Post Office’s account, and I am very afraid that, if they are investigated by the so-called untouchables, we will have another debacle, not quite to the same extent, but we could never have, you know, hundreds of postmasters again having to pay out monies.
And I think I was referred to in some of the correspondence that you may have seen with Elliot, but this is not something that relates to – this is a big issue going forward, the involvement of the untouchables.
Mr Blake: You refer to them as “untouchables”. Is that a word that you had heard used?
Henry Staunton: No, it was the – I think it was – it was used by Nick to me privately and he did refer to it in a meeting we had with all of the non-execs there, and that’s why I was slightly surprised when he said he didn’t recognise the term.
Mr Blake: What did you understand him to mean by that term?
Henry Staunton: I think I understood him to mean that these people that were involved in prosecuting postmasters previously, they were still in their roles and, therefore, would be involved in any future investigations, and were under the – they were – we classified all of these people under various colours, and they were the same as the so-called reds, ie would be involved in future investigations, which just seemed utterly wrong.
Mr Blake: If we scroll down, we have the reference to a small amount of £16 in compensation being paid to one postmaster. It then refers again to the 48 people involved in investigations, and I think you record being told by Mr Ismail and Mr Jacobs that there were 40 just like Mr Bradshaw.
It then says:
“As a Board, we need to send a signal to the Executive providing guidance and improving the culture significantly. The current culture was described as toxic …”
Again, this is your record of the note of that conversation.
Henry Staunton: The most important one is the paragraph you’ve missed out, which is they say “The postmaster is not the enemy”. That’s vital to understand.
Mr Blake: So that’s just above the highlight:
“The [postmaster] ‘is not the enemy’. ‘Only [postmasters] can solve this’ and tell us how to change. JB [I think that’s Mr Bartlett] is an ex-policeman. His behaviour has been unacceptable and he needs to move on to prove we have changed.”
Now, I have to put it to you, because others have made this suggestion, that your interest at this point in time in these Pineapple issues, in the letter that was sent by Mr Read, is prompted, in some way, because at this stage, at this point in time, you yourself were under investigation in relation to those allegations.
Henry Staunton: Well, let me – this investigation was an investigation primarily into Mr Read. There was one sentence that referred to me. So I was absolutely very confident that I had nothing to fear. It was a 12-page report by Ms Davies and she had an 80-page dossier to back it up, and the only sentence – there was one sentence in it with regard to me. So I wasn’t concerned at all.
Moving on to the Project Pineapple report, it was Sunday night, I was at home, I didn’t prompt them to do it. They rang me with their concerns, it was nothing more. And I said to them, “Firstly”, I said, “this is very tricky for you chaps, you know the Post Office as much as I do. This will be of – have serious consequences for you. They could end up – you could end up losing your businesses”. And they said, “Henry, we feel this is the right thing to do is to bring this out into the open”.
So it was their initiative and I think they were very courageous to do it. So I said “I will send a note the Board just highlighting your points, it won’t be a formal report but I’ll just – for discussion, and I will want, if there’s a single word in this note/email that you don’t like, I won’t send the email haven’t I want both of you to agree to every single word”. And they both came back to me and said, “That’s exactly what we said”.
Mr Blake: Thank you. If we go over the page, we can see the final point there as well, regarding postmaster membership on the RemCo.
One final document before we break for lunch –
Henry Staunton: That’s really important, sir, if I may say so –
Mr Blake: Yes.
Henry Staunton: – that the Postmaster Directors feel that they’re treated as second class citizens, so they’re not on important committees like Rem, and that’s important. You know, they refer to a two-tier board and when I’ve said to them “Are you referring to the fact the two tiers with regard to just the two of you not being given – treated with respect by the management, or is it because you have this inner cabal of Ms Gratton, Ms Burton and Ben Tidswell versus the rest of the Board?”, and they said, “Well, sometimes it’s one and sometimes it’s the other”.
So here is me desperately trying to keep this Board together and yet there are these issues about some people feeling not involved. But the fact is we need postmasters on Boards like the Rem because it’ll bring a different perspective to what is a reasonable salary to take, because postmasters think £800,000 is a lot of money per year, let alone £1.2 million.
Mr Blake: We are going to look at one more document before we break for lunch and I’m afraid we will go over lunch today. Could we turn to POL00448381.
Sir Wyn Williams: While that is coming up, Mr Staunton, can you just tell me who decides which directors sit on which subcommittee?
Henry Staunton: The NomCo decide, the Nominations Committee. The Nominations Committee decides, but the Chairman also has a view on it. I did actually talk to Mr Read about why don’t we have a member of the – one of the Postmaster Directors on it and he said, “Well, you know, they just wouldn’t take a commercial view of what is the right salary because, of course, they come from the postmaster environment”. But I think –
Sir Wyn Williams: I wasn’t delving into the merits of the particular –
Henry Staunton: It’s the Nominations Committee, sir.
Sir Wyn Williams: I guess I wondered who made the decision, that’s all.
Henry Staunton: The Nominations Committee.
Sir Wyn Williams: Fine.
Henry Staunton: They would take some notice of the Chairman in terms of that but it would be the Nominations Committee.
Sir Wyn Williams: So the Nominations Committee but the Chair can seek to exert influence, is that a fair –
Henry Staunton: Yes, that would be a fair way of putting it. They would listen very carefully to any views I had.
Sir Wyn Williams: Yeah, okay.
Mr Blake: If we can start on page 2, please. There’s an email from Mr Jacobs to Melanie Park, who was the Central Operations Director. We’ve seen this email before; he was waiting for his finalised report in respect of the investigation that was going on into his branches, and that’s 16 January.
If we scroll up, we can then see that he sends that concern to you. You say:
“Below you’ll see correspondence from between myself and Mel Park regarding the fact that [his] trading account has [not yet been] updated with the removal of the invalid claims of losses nor a letter of withdrawal of the investigation to be issued.
“Who is responsible … legal. Again. How are legal in the way of all things progress and good in this business? Proof, if proof was needed, that their fingers are in every part of the pie affecting our ability to get work done to such a level that it is frankly beyond belief.”
You then respond and it’s your response that I’d like to focus on. You say:
“This is completely unsatisfactory – I was under the impression after talking to one of the [Non-Executive Directors] handling this … that the report was wrapped up many weeks ago. I understand the tremendous upset you (and Saf in the case of his investigation) have been subjected to. This requires an investigation. I had sent a filenote of the views of our [Postmaster Non-Executive Directors] with regard to Ben Foat. We should see tomorrow whether our [Non-Executive Director] colleagues should take action. I told Andrew yesterday that all the [Group Executive] and FOUR Main Board Directors had been investigated. He was incredulous.”
Can you assist us with that: at that point in time, what were those investigations that were going on? We’ve heard about the two non-executive subpostmasters being investigated, the suggestion here is that all of the main Board Directors had also been investigated.
Henry Staunton: No, there was the – obviously, Nick was being investigated, I was being investigated, you had the two postmaster directors – so that was the four – and the Senior Management Team, most of them had been subject to investigation. This was – it’s difficult to comprehend. This was completely and utterly unusual, the power of the Legal Department to investigate people.
Mr Blake: So we have, by this stage, all of the Group Executive, four board members. We also have, as a background, a falling out in respect of that letter that we saw to the Lord Chancellor. Everything that’s going on at this point in time, it looks like a bit of a circus, doesn’t it?
Henry Staunton: Well, the issues around the GE, that was all much earlier in the year so this was not something that was a circus at the time. This just shows the power that the Legal Department had over months and months and months. So it’s not all happening in December. But the fact is, there’s no getting away from it, from January following the Lord Chancellor letter, following the Richard Taylor letter saying, you know, all the postmasters have got their hands in the till, just outrageous stuff.
The fact is that January was the most turbulent month that I’ve had in my whole 50-year career in business and particularly in all the man years I’ve been a chairman. I don’t deny that.
Mr Blake: What do you see as fundamentally having gone wrong by that stage?
Henry Staunton: To have a position like that, there are all sorts of strands, one, of course, is the role of GI and the UKGI Director; there’s the role of the Legal Department; clearly there’s an issue around Nick and I trying to keep this show on the road, but I think we both were working incredibly hard in that respect. Even three or four days before I was fired, I wrote to Lorna Gratton saying, “Look, Nick here just feels totally unsupported. We do need – this is a terribly turbulent time for the business, we do need to give him some more support”, because a lot of these issues, you’re saying it’s almost self-inflicted, but these were coming from out – the Richard Taylor thing was coming from left field, as it were, as was, of course, the Lord Chancellor situation.
Mr Blake: Thank you.
Sir, that is an appropriate time to take our lunch break. Can I ask that we come back at 1.50?
Sir Wyn Williams: How is the shorthand-writer with that?
Mr Blake: Yes?
Yes.
Sir Wyn Williams: Right, 1.50.
(1.01 pm)
(The Short Adjournment)
(1.50 pm)
Mr Blake: Good afternoon, sir. Can you see and hear me?
Sir Wyn Williams: Yes, thank you.
Mr Blake: Can we turn to POL00448381, we are still in January of this year, we are still on the subject of Project Pineapple.
Now, before this email was sent, there was also a meeting on Teams on that day, regarding the new Senior Independent Director; do you remember that?
Henry Staunton: Indeed.
Mr Blake: The Inquiry has heard evidence that, by that point, you were expressing a view that the appointment should take place internally, rather than through an external recruitment firm; is that right?
Henry Staunton: No.
Mr Blake: Can you assist us with that, please?
Henry Staunton: Yes, what happened was that – let me put this thing in context, which was that the existing SID was leaving to go to the competition and markets authority. We needed to find somebody else. UKGI, in the form of the Chief Executive, rang me, absolutely properly, to say, “Look, we’re not telling you what to do, but actually, just to let you know, the shareholder will have a strong preference for a Whitehaller to be SID, Henry, but we realise this is the Board’s final prerogative”, and I said “Fine”.
So we then did – we went round each of the non-executives, I did that with a phone call but with the company secretary with me. We did a vote as to what we should do, and four directors voted to go internally and four voted to go with a Whitehaller. And I said, in view of the shareholder’s preference and a split vote, we should go with the Whitehaller. Then, of course, when we had all these issues arising during the early part of January, other non-executives at the meeting – it wasn’t me drawing – I was just being a servant of the Board – other non-executives said, “You know what, I voted to go to a Whitehaller, I think there’s so much happening that we should actually go internally”.
So I said “That’s a massive decision to take, I want you all to go away and think about it, not just rush it at this meeting”, and I rang them all afterwards and I said “Which do you want to do?” And a vote of six to two came out to remain internally. So it was not my view at all. I was being a servant of the Board trying to work out what they wanted and of those two –
Mr Blake: Were these votes taking place transparently?
Henry Staunton: Yes.
Mr Blake: Were they known to the other members of the Board?
Henry Staunton: Yes, the only two that voted against was Ms Gratton and Ms Burton. The Chief Executive and everybody else voted to go internally because one of them said “When the facts change, you change your views”. So it was not me pushing this at all; it was the Board pushing for we need a change of mind and I said to them “This is a massive decision, we need to go through a proper process of a NomCo and then a Board and Andrew will be there for part of it”, because then it emerged that their choice was Andrew Darfoor, an internal director, to be the NED, and I said we would then do a proper process where Andrew would be there part of the time and he would leave the room and we would discuss it and view it. So it was not pushed my me at all. Absolutely not.
Mr Blake: We’ve heard evidence from Ms Burton. The suggestion that you confirmed to the Board that Mr Darfoor would be the Senior Independent Director and that you would bypass the usual process?
Henry Staunton: Absolutely not. You’ll see the email trail which says that is the view, six to two, in favour of Andrew, but we need to have a proper NomCo and then Board to discuss that. So not at all. I was just reporting the vote. Ms Burton happened to be one of the two that voted against and the other one was Ms Gratton but, including the Chief Executive, everyone else voted to stay internally because of the view. And I should say that I knew (unclear), it goes right back to his 2003 report, the choice of a SID is a matter for the Board, not the shareholder, and the shareholder has to approve it and that’s why we need to go through a process, but it’s a matter for the Board to decide and the vast majority of the Board wanted to go internally and most of those voted for Andrew.
Mr Blake: In your view, is there some sort of miscommunication that’s taken place here or something else?
Henry Staunton: Well, I think the fact that Ms Gratton and Ms Burton voted against, and I don’t know what they took exception to it, and I think – I mean, it was unfortunate that we had to stop the process but that was – you stop the process if the Board has changed its mind and there was nothing odd about this. But I think it was – I can’t, I wouldn’t like to put the motives as to what – why those two adopted the story but the vast – and the Board has since appointed Andrew Darfoor. The will of the Board has eventually come through loud and clear but we went through the hiccup of UKGI saying that this somehow wasn’t proper.
Mr Blake: Now, at the same meeting on 18 January, you also discussed the Project Pineapple issue; is that right?
Henry Staunton: Yes.
Mr Blake: Can you assist us with the conversation as far as that matter went on 18 January?
Henry Staunton: Well, I think I ask the two non-execs to outline their views and, obviously, they did and I think most of the directors were shocked they weren’t that clear – they weren’t so clear as to how bad the culture was. But some of them had some sense of it. Those that went around to talk to postmasters, et cetera, were more aware of it. I mean, I was aware of it because I go to postmaster conferences and they say to me, “Oh, I’ve just been on the helpline and they’ve said ‘There’s another Mohammed on the line’”, and the answer was I said, I’m – “Does that happen often?”, and they said, “More often than you’d believe”, and I just had to say to postmasters, “I’m terribly sorry, that is not the culture that we want to have”.
So –
Mr Blake: Mr Staunton, let’s stick to this issue now, as at 18 January. Let’s turn back to the email. This is an email that you sent confirming that the confidential note had been forwarded to those who had been named in the Project Pineapple email.
Henry Staunton: Yeah.
Mr Blake: Can you assist us with your understanding as to why it was forwarded on?
Henry Staunton: Well, this – just for Sir Wyn’s benefit, there was this email that was the complaints about the culture within the Post Office towards postmasters and, because we had this meeting coming up, I said to Elliot, and he seems to have forgotten about it, I said, “Look, I think it would be a mistake to bounce this off Nick, I need to send it to him. Are you okay?” And he said “Yes, he’s going to see it anyway”. Initially, we said he wouldn’t see it, and I said “Fine”.
So I sent it to Nick and then, during the course of our meeting, Amanda Burton said, “You won’t believe it but Nick has copied that note to the Legal Director and the Retail Director who are the subject of their complaint.”
Mr Blake: It appears that you’ve had a discussion with Mr Read about it. What was your understanding from that discussion as to why it had been forwarded?
Henry Staunton: Well, I think he was very busy and he said he was very sorry, and I then wrote to the Board saying he was very apologetic and he was going to apologise to Saf and to Elliot subsequently.
Mr Blake: That’s the email that we see on screen at the moment?
Henry Staunton: (The witness nodded)
Mr Blake: Looking at the timeline that we’ve been looking at recently, we have the investigation into Mr Jacobs not yet withdrawn. We have the investigation into Mr Read and into you, relating from the Jane Davies complaints, we have the here now Project Pineapple email being disclosed and the fallout internally from that. We also have a fight between at least you and two of the non-executive directors in respect of the appointment of the Senior Independent Director, and –
Henry Staunton: It wasn’t a fight.
Mr Blake: A dispute.
Henry Staunton: No, the Board –
Mr Blake: Your accounts are fundamentally opposed to one another, aren’t they?
Henry Staunton: Yes, but that’s not the – I’m just telling you how it was from the perspective of me and the six directors who voted in favour of Andrew Darfoor.
Mr Blake: There was a dispute, therefore, between you and those who had not voted in favour of the appointment of Mr Darfoor, was there?
Henry Staunton: No, I don’t think there was. I think it wasn’t a dispute either between the six and the two. The fact is that you – quite often the Board get a majority vote and you should actually normally go with the majority vote.
Mr Blake: So –
Henry Staunton: It just so happened that one of them was the UKGI Director.
Mr Blake: As far as you are aware, as at mid-January, there wasn’t in any way a falling out over the –
Henry Staunton: No.
Mr Blake: – appointment of a Senior Independent Director?
Henry Staunton: No.
Mr Blake: Putting that issue to one side, looking at those other issues that I’ve just highlighted, we’re a couple of weeks now after the ITV drama. Who is focusing their mind on compensation and the redress schemes at the Post Office?
Henry Staunton: Well, the compensation redress scheme was handled by the Remediation Committee and I don’t sense that there was any slowing up on that at all. We would be – it was going to be reported to us in the meeting the next week, as to where they were, and I would have – if I had not been fired on the Monday, I’d have been in the office getting a catch-up with the Remediation Committee before the Board.
Mr Blake: There are lots of matters going on at Board level and Executive level in terms of people being investigated, people being upset by the circulation of the Project Pineapple email. Do you think that there was sufficient attention, at that point in time, to the issues facing subpostmasters?
Henry Staunton: Well, I think you’ve heard from the two Postmaster NEDs how much attention I gave that issue. They were very complimentary about my efforts in terms of they said it was my biggest priority, which it was.
Mr Blake: What about the business more broadly?
Henry Staunton: Well, that was also requiring quite a lot of my time but it was – I was –
Mr Blake: Sorry, I meant what was the reaction or the efforts of the business more broadly, the Executive and the Board, in relation to the subpostmasters and focusing attention on subpostmasters, rather than spats between themselves?
Henry Staunton: I don’t think that the non-execs saw it as a spat. I think the non-execs saw the fact that some people had changed their mind, I think they were quite pleased that the majority was six to two. If it had been five to three or four all, it could have been more spiteful. But I think – I don’t think it was a spat at the Board level –
Mr Blake: Putting aside the Senior Independent Director issue –
Henry Staunton: Oh, sorry.
Mr Blake: – I’m talking about the investigation into Mr Jacobs, I’m talking about the investigation into Nick Read and into yourself, Project Pineapple and the fallout there. There seems to be a lot going on at this period of time in relation to matters that don’t directly involve subpostmasters. Do you think the business was focusing sufficiently on subpostmasters at this point in time?
Henry Staunton: The fact is that there was a huge attention towards the subpostmasters and remediation. It may have been for a few days we were focusing on some governance issues, but the fact was that, certainly for me, giving attention to not only our subpostmasters existing but also remediation for subpostmasters who have suffered, particularly for those who had had convictions, was my top priority.
Mr Blake: We know at this period of time you were also being investigated into the allegation relating to Ms Davies. There are several allegations that follow that you tried to change the scope of the investigation or stop the investigation that was being carried out by an independent barrister and that, separately, that was in some way perhaps motivated by a desire to limit the investigation into yourself. What’s your account in relation to that?
Henry Staunton: Well, I initially raised these points about limiting the investigation well before I knew there was going to be an investigation into me because the investigation into Nick Read started months earlier and, actually, it was a litany of complaints that were being made, and it was very distressing for him. So I said we need to not stop the investigation but to limit it to focus on the main points, so that we could actually get to the truth of the big issues, and that was agreed.
It wasn’t agreed until January, I admit, but that was what I was trying to – I wasn’t trying to stop it; I was trying to limit it in respect of Nick Read and I was doing that before I was even investigated, based on one sentence in Jane’s report, and she said it was nothing – she had no complaints about me.
But moving beyond that, the fact is I didn’t try to stop it, I tried to limit it, but only in respect of Mr Read.
Then there had been some issues made that I didn’t cooperate. The fact of the matter is I was in Nick Read’s room we were talking about all the issues relating to Mr Bates, and I said I’d done absolutely no work yet to prepare for there is Tutin investigation, he said, “Nor have I”, he said, “I have asked for a two-week extension”, and I said, “Well, I shall ask for that too because I haven’t spent any time”.
Nick Read was granted the extension; I was not.
So I think, and I still went ahead, completely unprepared, into this investigation with Tutin. So the fact that you say that people say I tried to not cooperate, I cooperated fully, even though I wasn’t prepared, and I wasn’t given due consideration of extra time, when you think of all the things that have happened. So it’s a complete – it’s completely wrong to say I didn’t cooperate.
Mr Blake: It’s suggested that you put Ms Burton and Ms Gratton under pressure to change the scope or limit the scope of that investigation; what’s your view on that?
Henry Staunton: My main correspondence, all the time, was with the SID because I think that was the right thing to do, and you see that he wrote back to me saying, “Yes, we’ve agreed to split these complaints and Nick into three categories”, so my main – I may have told them what I was talking to Nick about but I didn’t put any pressure on them. The discussions were between me and the SID, as it properly should be.
Mr Blake: It is also suggested that you asked Ms McEwan and Ms Sheratt to stop the investigation. What do you have to say about that?
Henry Staunton: These are relatively less senior people, so, of course, I wouldn’t have done that.
Mr Blake: It’s also suggested that you did the same to Mr Tidswell?
Henry Staunton: Oh, I did talk – not in my own case. No, I didn’t in respect of my own case. I was talking to Mr Tidswell before it became into me, but my main conversations, if not my only real conversations on this matter, were with Ben Tidswell.
Mr Blake: Why do you think it is that allegations are being made about you that you tried to stop or change the scope of that investigation for your own benefit?
Henry Staunton: Well, I think I quoted the fact that this seemed bizarre and weaponised – the word “bizarre” about this investigation was used by the current SID, Andrew Darfoor, and the fact that this was weaponised against me because my support for postmasters is my view.
And that was confirmed in the letter that you may have seen that has been written by Saf Ismail. I was approached by the institute, who said, “We’re going to strike you off after 50 years as an institute member”. So I rang the three of them up – at this point, I didn’t know I was going to come before the Inquiry and they very kindly issued references to say, “Actually, there’s not an ounce of racism in Henry, we don’t recognise any of this. If we’d been asked to sign the report, we would not have done”.
You asked me why. Saf Ismail said “I think that Henry’s paying the price for having supported postmasters”. You may have seen that, and the other two also made comments, Elliot said it left a nasty taste with him, he wouldn’t have approved the report, had he been asked to sign it and Andrew Darfoor said it was bizarre and he said that one person involved with it has been subject to some disciplinary, and he said others have been discredited and he doubted the Secretary of State would have said what she’d said if she’d have known the true facts.
So the truth of the matter is there is another side of the story you’ve been hearing.
Mr Blake: It sounds rather elaborate though, doesn’t it?
Henry Staunton: No, it doesn’t. That’s exactly the case. This was a report into Nick Read. I’m not saying – forming a view one way or the other but there was one sentence on me and yet, because I’d taken the side of the postmasters, this was weaponised, to use Jane Davies’ comment, and is not recognised. The charge of racism is not recognised by the three – and these three directors that wrote those references for me, one is Jewish, one is black and one is a Muslim, and all three of them said how not only was I not a racist but, actually, I was the biggest supporter of ethnicity on the Board. So, as I say, there’s a different story from the one which you’ve heard from Amanda Burton.
Mr Blake: You’re focusing on one particular aspect of the allegations but the allegations against you included, for example, that you attempted to change the scope or stop the investigation into you?
Henry Staunton: I’ve dealt with that, which – I’ve dealt with both the fact that I didn’t cooperate and tried to change it.
Mr Blake: The other allegation is that you improperly interfered in the appointment of the Senior Independent Director?
Henry Staunton: And I’ve dealt with that too. Six to two of the Board wanted to appoint an independent – wanted to appoint Andrew Darfoor.
Mr Blake: The suggestion, then, that I have to put to you, that is said against you is that it would be a rather elaborate plot to try to get rid of you because of your actions on behalf of subpostmasters to invent those three matters?
Henry Staunton: Well, if, in fact, it’s – the SID issue is, as I’ve said, which is I was acting as a servant to the Board and the vast majority wanted to go internally. Those are the facts.
Mr Blake: Moving to your dismissal. On 27 January this year, you found out from a journalist that you were going to be removed; is that right?
Henry Staunton: Correct.
Mr Blake: What were you told at that stage?
Henry Staunton: He said that I was going to be replaced and it was the first thing I said to the Secretary of State: it’s astonishing that one finds out from the press. That wouldn’t happen in any normal business that that would take place.
Mr Blake: Do you know where that information had come from?
Henry Staunton: No.
Mr Blake: Do you have a belief as to where that information came from?
Henry Staunton: I wouldn’t want to publicly speculate.
Mr Blake: So you have no information in that case?
Henry Staunton: I have no information, no, but the Secretary did say we have a very big department so who knows where it came from. That was in the bit of the conversation that wasn’t taped, unfortunately.
Mr Blake: So you don’t wish to speculate but it seems as though you had a conversation with the Secretary of State in which it may have been suggested that it came from the Department?
Henry Staunton: That would be tying two things together, and she didn’t admit that it came from her Department, no.
Mr Blake: Speculated?
Henry Staunton: I wouldn’t want to speculate.
Mr Blake: Could we please turn to BEIS0000931. Now, this not your note of the conversation but this is a note of the conversation between yourself and the Secretary of State. Some of it we have –
Henry Staunton: Sorry, I’m –
Mr Blake: It’s going to come up on screen in a second. It’s BEIS0000931. Thank you. We have a recording, which is obviously the best evidence, but the recording doesn’t start until slightly further down, so let’s just go through the first section of this recording to see your view as to whether it’s an accurate note of what was said:
“KB [that must be Ms Badenoch, the Secretary of State] started reading from the script:
“I’m sorry to be speaking to you under these circumstances. I understand that given the increased media scrutiny at the moment, these are difficult times for the Post Office. I’m speaking to you today to tell you that the Government, as sole shareholder, is exercising our power, under the company’s Articles to remove you as Chair of Post Office Board.
“[Ms Badenoch] noted that she was sorry it was coming at short notice – the media have gotten hold of the story and we’ve heard they will be breaking the story. [The Secretary of State] noted she wanted to speak to [you] first but officials will send a more formal record of the decision shortly.
“[You] noted it was too late and was called by a reporter this morning to comment on the story. [You] noted how upset [You] were at this.
“[Ms Badenoch] started to note how important culture is at the Post Office and concerns about [your] behaviour had been raised.
“[You] then started to describe some of the events over the last four weeks reflecting that the Post Office as an organisation is operating in an extremely challenging context.”
Now, we’re going to get on to the actual recording but, so far, do you consider that to be an accurate account of the discussion between yourself and the Secretary of State?
Henry Staunton: Absolutely.
Mr Blake: Yes?
Henry Staunton: Yes, sorry.
Mr Blake: We’ll now play the recording because, as I say, that is better evidence than somebody’s typed note, and we’ll just listen to that until the end.
(The recording was played)
Mr Blake: That’s why we hear the beep, contact details have been taken out of the recording. But if we can carry on.
(The recording continued)
Mr Blake: That’s just the provision of an email address.
(The recording continued)
Mr Blake: Thank you. That’s the end on the recording. Now, tracking back to where we started this morning, we had, even before you became Chairman, that letter to the then Secretary of State regarding Mr Read’s pay, followed by the meeting with Sarah Munby in the January, a year before this conversation that we’ve addressed at length today. We then have a Board meeting where the Minister attends and, as we saw, very little discussion about matters such as compensation, et cetera.
Why is it only when you are being dismissed that you are raising the issues we’ve heard being raised directly with the Secretary of State regarding UKGI, regarding culture, regarding the CEO?
Henry Staunton: Well, as I’ve said to you before, you’ve heard the postmasters’ evidence, and they told you how much it was the front of my priority right throughout the year. So that’s the first thing. Secondly, in respect of my contact with the Secretary of State, I had some contact with Mr Hollinrake, who was the Minister. In fact, in corporate land, just to be clear, the contact always in a business is between the Chief Executive and the shareholder.
Because I was involved – with all four of my companies we were quite active in acquisitions, et cetera, and I was known to have some expertise in that area, I would quite often go to shareholders on very special deals, particularly if they were putting up new money. But the day-to-day contact with the shareholders, in the corporate world, it’s always done by the Chief Executive. Now – so that’s what I was completely used to.
The Secretary of State now says, “Oh, you should have seen me”. If she’d wanted to see me, of course I would have gone but, for me, coming from the corporate world, that was the normal way things were done and Mr Read saw the shareholder on a regular basis, reported back to me what was said, which is exactly what would have happened at any of the companies where I was a chairman of.
Mr Blake: The Post Office isn’t like WHSmith –
Henry Staunton: No.
Mr Blake: – or another company –
Henry Staunton: No.
Mr Blake: – it’s a very different type of company that is owned by the shareholder, the Government. You’re expressing very strong feelings in this meeting about UKGI and about culture, matters that go to the very core of issues that you’re saying –
Henry Staunton: Absolutely.
Mr Blake: – have occurred at the Post Office.
Henry Staunton: Absolutely.
Mr Blake: Why leave it until your dismissal to raise those directly with the Secretary of State?
Henry Staunton: No, because you’ve seen that Nick Read was also aware of them and he was talking to the shareholder about them. So it wasn’t being held back from the shareholder but the relationship between – at the Post Office, the relationship between the shareholder and the Chief Executive was always with the Chief Executive – that’s what the previous Chairman said to me was the way it was done and it didn’t surprise me because that’s what I was used to in the corporate world. So it was nothing to do with me; it was the way the relationship that the shareholder had with the Chairman of Post Office, both me and before me.
Mr Blake: Could we please turn to RLIT0000256, please. Now, after your dismissal on 18 February 2024, you had had an interview with The Sunday Times; is that correct?
Henry Staunton: Correct.
Mr Blake: We see here the reporting of that interview. Could we scroll down, please, and focus on page 3. Thank you. The first bullet point says:
“He was instructed by a senior civil servant to stall on compensation payments to Horizon victims so the government could ‘limp into the election’ with the lowest possible financial liability.”
Is that an accurate recording of the information that you provided to the newspaper?
Henry Staunton: I did use the word “limp” and, of course, when I found my filenote, I found that the word was “hobble” so that was factually – because The Sunday Times said, “Look, the Government are saying this is all wrong, so can you find your filenote”, which I did, because, by that stage, the Secretary of State has said, “He lied in Parliament”. That was never repeated once I found my file note.
So I did say that the civil – secret civil servant had asked me to “hobble” into the election and I think I – it’s not reported there, but to stall on cash payments generally, including compensation and Horizon, and the business.
Mr Blake: The reporting there is “compensation payments to Horizon victims”. That’s obviously significant for the Inquiry’s purpose and for the public’s purpose?
Henry Staunton: No question.
Mr Blake: Did you say that you had been told, instructed by a senior civil servant, to stall on compensation payments to Horizon victims because of, in some way the next election –
Henry Staunton: Stall on payments inter alia, including compensation.
Mr Blake: We saw the discussion earlier today –
Sir Wyn Williams: Sorry, can I be clear about that. I appreciate that newspapers – this is a newspaper report of what you had to say but I would like you to be as precise as possible, Mr Staunton. Did you say words to the effect that you were instructed by a senior civil servant to stall on compensation payments to Horizon victims?
Henry Staunton: To stall inter alia on payments.
Sir Wyn Williams: Well, I doubt whether you’d have said inter alia to the newspaper.
Henry Staunton: No, on all payments including compensation, yeah.
Mr Blake: Perhaps we could turn to page 5 which –
Henry Staunton: If I could just say, sir –
Mr Blake: No, I’m going to ask the question and then you can address the Chair but let’s look at page 5, please, and the bottom of page 5 because it has words in quotation marks. It says as follows:
“‘Early on I was told by a fairly senior person to stall on spending on compensation and on the replacement of Horizon, and to limp, in quotation marks – I did a file note on it – limp in the election’, he said. ‘It was not an anti-postmaster thing, it was just straight financials. I didn’t ask, because I said, “I’m having no part of it – I’m not here to limp into the election, it’s not the right thing to do by postmasters”. The word “limp” gives you a snapshot of where they were’.”
Is that a direct quotation from you to the journalist?
Henry Staunton: It would be words to that effect.
Mr Blake: It appears that you had told the journalist that the words “limp into the election” related to compensation and the replacement of Horizon, not broader matters relating to the Post Office; is that correct?
Henry Staunton: No, I would have said on all payments, including compensation and Horizon. There was only the other one which was operational costs because the Inquiry was – obviously would be what it would be. It –
Mr Blake: We saw earlier today the note of the conversation that you had and in neither your own note or the Department’s note was there any reference to compensation.
Henry Staunton: The – there were – there – you saw from my note that there were huge pressures on the Government, you saw from my note that she wanted to – that I was instructed to hobble into the election, that all costs had to be strenuously considered, and the only costs that we had were Horizon, remediation and operational, and the Inquiry and so all of those were included. So I put compensation in Horizon, maybe I should have said “and operational costs”.
Mr Blake: The suggestion may be made in due course that you’re only belatedly raising compensation because you knew that that, in particular, would embarrass the Secretary of State and the officials who work underneath her?
Henry Staunton: No, it wasn’t. If it – you must – my strength of feeling for the postmasters, if I haven’t got that across to you now, I have clearly failed. But you heard it from the Postmaster NEDs how strongly I felt about it. You’re hearing a story from other people in the Post Office and you’re clearly providing more credence to that. I think you should give some credence to what the Postmaster NEDs are saying.
Mr Blake: I rudely interrupted you before. There was something that you wanted to say to the Chair?
Henry Staunton: I’ve totally forgotten, Sir Wyn. I was distracted.
Sir Wyn Williams: Well, what was happening, Mr Staunton, was, in effect, I was pressing you to say whether or not what you are reported as saying by the journalist was accurate, and I think, essentially, you’ve answered that question in your answers to Mr Blake. But if there is anything you wish to add, then please do so.
Henry Staunton: Well, I think you made a really good point, which of course I kind of assumed that I would see his draft before it was published, to make finer corrections. But, as you say, you lose control over it, and I was never given any opportunity to look at this in detail. I think I would have – I might have used the words inter alia or I would have – in the first comment, I’d have put compensation, Horizon and operational costs because all of those were to be dealt with, and held back on.
Sir Wyn Williams: All right. Thank you.
Mr Blake: While we’re still on this article, if we could turn back to page 3, please, there is a second bullet point that I just wanted to ask you about. It says there:
“The government body that manages taxpayers’ ownership of the Post Office told its Chief Executive to write to the Lord Chancellor stating the reasons so few subpostmasters had come forward to have their convictions overturned was because they were ‘guilty as charged’.”
I don’t think we’ve heard in your evidence today that the origins for that letter from Mr Read lay with UKGI or the Department for Business. Can you assist us with that bullet point?
Henry Staunton: Yes, because, of course, this letter was so unusual to come from the Post – particularly after the discussion Nick and I would have, which is we’re getting progress for the exoneration but I think the Post Office – I was keen for the Post Office to pursue the point on exoneration and maybe have some publicity on it. But Nick was more in the ‘guilty as charged’ mode. So I thought we’d agreed to keep it quiet, to not take a side either way. As I’d said in a note, that actually this was a terribly difficult decision for the Government to take and I was not saying anything I thought was helpful.
So I said, “Having had all of that conversation, why on earth did you issue this note when you know that was not my view when we agreed to keep it quiet and surely you should have involved the Board?”
And he said – I know it’s been denied by him and by UKGI – he said, “I was asked by UKGI to do it”, and that made sense to me because we’d agreed we wouldn’t say anything, so why did he suddenly, a day later, write that letter? So …
Mr Blake: Can we please turn to page 9, one final –
Sir Wyn Williams: Sorry, again, I want to be precise about these things. The suggestion at the time –
Sorry. No, forget it. I was confusing two documents. Never mind. Carry on Mr Blake.
Mr Blake: Page 9, please, underneath the photograph, you’ve referred in this interview to the term “untouchables”, it says there:
“A source close to the Post Office said it was not true that they continued to employ 40 investigators involved in the Horizon scandal and that it did not recognise the ‘untouchables’ tag.”
Now, without going into matters of Parliamentary privilege, matters that were discussed in front of Parliamentary Committees, what is your view of what is said by the source close to the Post Office?
Henry Staunton: Well, I think you’ve heard that Nick said he didn’t recognise the word “untouchable”. I think you’ve heard from the Postmaster Directors, one of them said to Nick “It’s your words”; Amanda Burton said “It’s your words”; Andrew Darfoor has confirmed to me that they were Nick’s words. So the fact that he did not recognise the untouchables tag seems strange.
Mr Blake: I’ve already used the word “circus” in a question earlier. January/February of this year, it seems the circus is continuing. Would you agree with that?
Henry Staunton: Yes, to a certain extent. I think the untouchable thing is a really odd one because, actually, I think, as I say, it is a really serious point with regard to when we do path clearing. This is – I think we need to recognise what we have here in terms of the untouchables, it’s not some sort of academic exercise; this is really fundamental to what happens next time round to avoid another crisis for postmasters. That’s why I feel the untouchables thing is important, not so much the word or who said what to whom.
Mr Blake: Is there anything that you would like to say to subpostmasters in relation to these events, as we’ve seen them play out in January and February of this year?
Henry Staunton: Absolutely. I think it is – for a start, I think it’s absolutely appalling what’s happened to them but, in fact, the Post Office makes all these fine words up but, actually, deeds count far more than words, and we have a tragic situation here, and I’ve given those examples where, you know, words are used that show clearly no sympathy at all for subpostmasters who are subject to litigation, and I would say to them, “Hang in there” because we’ve got to accelerate this process. I wrote to the Select Committee and I said, “This process must be taken out of the hands of the postmasters, we should give a six-month deadline” –
Mr Blake: Post Office, I think you mean?
Henry Staunton: Sorry?
Mr Blake: Taken out of the hands of the Post Office?
Henry Staunton: I’m sorry, taken out of the hands of the Post Office – “and we must get this thing sorted in the next six months”. And I know that every six months elapses and somebody says, “Let’s do it in the next six months”, which is exactly what Alan Bates has done, but the fact is, I would say, don’t be discouraged, it must be coming to the end, there is a lot of pressure being put on, have faith.
Mr Blake: One final document that I would like to take you to is BEIS0000753. It’s a note after your time at the Post Office. It’s, I think, from Minister Hollinrake’s private office and there’s a discussion there with Mr Read and others, and I’m just going to read to you a section of it, “Kevin”, that’s Minister Hollinrake, says:
“… fair to say, at a certain point in time have to take the gloves off and try to manage the info. I think the Select Committee were weak with him, apart from Antony Higginbotham. Sorry it was so messy. Keen to support in any way we can, to make sure we get past this. Hope he’s discredited. Anything else you think we need to do to make it easier?”
From what you understand, is that a conversation about you?
Henry Staunton: I assume so, to discredit me, certainly. It’s circling of the wagons and anyone that’s supporting the postmasters, as the Postmaster Directors themselves have found, as I warned them would happen, that’s what happens.
Mr Blake: Then:
“[Mr Read]: Look to Lorna on this.
“[Lorna Gratton from UKGI says]: Need as much support as you can get from Ben Tidswell to try and get the Board functioning properly. We need to try and find a way through the Project Pineapple memo.
“[Mr Read says]: We’ll have a Board meeting tomorrow and we’ll see where we can get to. [Postmaster Non-Executive Directors] may use tomorrow as [an opportunity] to criticise on funding and anti-postmaster sentiment. Need to avoid tomorrow morning being a proper road crash.
“[Kathryn Sheratt, the interim CFO says]: Had a bit of a flavour of it on Monday, they think it did not do enough for postmasters. Elliot mentions where the investment for the future of the business and postmaster rem is front and centre, costs are rising, and this has been a theme of theirs for quite a while.
“[Nick says]: This goes back to whether the postmaster directors are playing a role of a director, or of a trade union rep. I don’t know where that is going to go. They’re extremely exposed as a result of Project Pineapple. Not sure how to patch this up. In a slight stand off.
“[Lorna Gratton says]: They are not in a good place and aren’t operating in a way appropriate for the business.
“[Mr Read says]: How can they ensure their own self-interest doesn’t cut across their role in support [the Post Office] as a business.”
What are your views as to the discussion that’s taking place here?
Henry Staunton: I think it’s absolutely appalling.
Mr Blake: Why do you say that?
Henry Staunton: It’s absolutely appalling because the Postmaster Directors were making some – this is a terrible issue in terms of our culture, in terms of how postmasters, the regard in which they’re held, you know, guilty as charged, I won’t repeat it all. And they have cried foul, and then for the word to be used twice that they are now exposed, as if they’re some sort of shooting gallery, that’s just not the way they should be treated.
They’ve taken a huge risk. I told them it was a huge risk, I said, “You will lose your businesses if you’re not careful”, and they were still extremely brave to proceed with this route, and they should be congratulated and to be spoken of in these terms, as I say, is appalling.
Mr Blake: Thank you.
Sir, those are all the questions that I have. We do have a small number of questions from Core Participants, mindful, of course, that we have Mr Cameron on this afternoon as well.
Sir Wyn Williams: Fine. Well, let those questions be put.
Mr Blake: Mr Jacobs.
Questioned by Mr Jacobs
Mr Jacobs: Thank you, Mr Staunton. I have some questions for you. I represent a large number of subpostmasters.
At 11.45 this morning you referred to the importance of greater commercial success at the Post Office and, in your witness statement, you say that your initial assessment was that Post Office needed to refocus its activities in order to put its operations on a commercially viable footing. Then, on the other hand, you say at paragraph 7 of your statement that the Post Office is a vital public institution and you took the position because you were doing a public service in giving something back to the community. Then at 2.30 this afternoon, just now, you agreed with Mr Blake that the Post Office isn’t like WHSmith, it’s a very different type of company owned by the shareholder, the Government.
So with those statements in mind, my question is: should the Post Office really be a business in the strict commercial sense?
Henry Staunton: That’s a very good question. I think we should be commercial. I think we should reduce the costs because I think that gives us more profitability to pass down to postmasters, so I think it’s in postmasters’ interests for us to be a commercial success and, if I may, I’ll just draw attention to that memo that we’ve just seen, where the Minister said, even after Horizon – certainly after Horizon, this business is bust.
He’s wrong. This business if we take – I do this all the time in my business career: I looked at the cost base and I thought we could take 100 million out of the cost base and we could do much more in terms of income, in terms of banking framework too, and we could have an extra 150 million of income. We would have a thriving business here which would be much more money for postmasters, which is absolutely fair because they don’t get nowhere near the right rate for the job.
So, actually, I think, on the one hand, it needs to be as profitable as possible. Equally, there are a host of post offices which are not profitable, whichever way – and perform a public service and, for that, I think you need to get a grant from the Government, a bigger one than it’s got now because this grant doesn’t really do it for the postmasters but, if you’ve got a decent grant for those postmasters who are in areas where they’re just performing a public service, get the Post Office with a much better cost structure, we would have a business which would be better for all postmasters, including the small ones who are benefiting from a grant.
Mr Jacobs: The Post Office has been propped up by the Government in the past. We know that in 2010 that there was a £1.3 billion investment as part of the Network Transformation Scheme. We know that part of this propping up is to keep post offices going in rural communities where perhaps businesses might not be viable.
Henry Staunton: Absolutely.
Mr Jacobs: Should the Post Office need to make a profit if it is largely a public institution entrusted to give public services to communities?
Henry Staunton: Well, the reason I would like to have a lower cost base, so that it was profitable is that I think I have a slight worry that the Government, if they thought that they were just throwing good money after bad, they might not support the Government. So I think it’s incumbent on the Post Office to be as efficient as possible, and to have as much income as possible, still have a subsidy for the other postmasters, but I think if you did that there would be actually more income for postmasters, which is – which they’re crying out for because it’s not a profitable business.
Mr Jacobs: Exactly, and on the subject of income for subpostmasters, we’ve been told by many of our clients, that large numbers –
Henry Staunton: Oh, I’m so sorry.
Mr Jacobs: I do the same sometimes!
Henry Staunton: Sorry.
Mr Jacobs: That large numbers of subpostmasters received remuneration that’s below the minimum wage –
Henry Staunton: No question.
Mr Jacobs: – and that very many of them – and these are people that are at the heart of the business – are struggling today to make ends meet and you accept that’s the position?
Henry Staunton: I go to postmaster conferences. These people are working 70/80 hours a week and when you see the profitability of their businesses, it’s outrageous. So we – that’s why I’m anxious to have a successful, thriving postmaster providing more income for postmasters because it’s absolutely necessary.
Mr Jacobs: There’s a disconnect, isn’t there, between the drive to profit and the pay of senior executives and the reality of how some subpostmasters are remunerated –
Henry Staunton: No question. No question. I think I said that when I was talking about remuneration levels for executives.
Mr Jacobs: Was that something that was at the forefront of the thinking during your time as chairman?
Henry Staunton: Absolutely. I mean, I spent a lot of time with the postmasters and I could see how hard they worked. I mean, they were reconciling these balances into the night. I mean it’s every night, I mean, you – I was going to say you wouldn’t believe it. Clearly, you do because you represent so many and you talk to them. I don’t need to tell you.
Mr Jacobs: What do you think the Post Office can do now to improve the dire financial positions of subpostmasters?
Henry Staunton: Right, well, there’s no getting away from it. We need to get an investment to get a proper system like Horizon because, at the moment, it is – if I were a postmaster, I’d be terrified that they’ve got this system that is unreliable and what does that do for me, particularly when it comes to path clearing? I won’t repeat my points there. So the Government has to make an investment to get Horizon – the replacement of Horizon up and running.
The second thing we need to do is reduce the costs base of this business, increase the income, particularly in terms of Banking Framework 4, and then you would have a business – I mean, I spent two days – I was – I went – I looked at the structure, what we would have done at Smiths; what did we do here? Every time I take over a company that’s the exercise I do.
So I’m convinced we could have a profit in this business and more money for postmasters as well, and that’s the short term solution. But I did mention that I – my personal view is that we need to have this business owned by the postmasters but it’s only worth demutualising it – mutualising it, if it’s profitable, and can stand on its own two feet. And I think, if we did that, actually, the cost structure would come down even more because postmasters wouldn’t allow – there would be no bonuses, there would be no long-term schemes, no short-term schemes. They just turn up for work and get a salary and they would expect the management of the Post Office to do exactly the same, and that would make huge inroads into it, on top of the £100 million-plus cost reduction I’m talking about.
But that isn’t for tomorrow, that is for two and three years away, but I think that would benefit them too.
Mr Jacobs: Thank you. I have one other very, very short topic and I’m conscious of the time.
We have three of our clients here and many of them are watching from home and we’ve had a number of messages from them today while you’ve been giving your evidence, and the general view is that they all note that you were supportive of the Subpostmaster Non-Executive Directors, and they feel that you were badly used by the Post Office.
Henry Staunton: Thank you. I feel that too.
Mr Jacobs: Who do you think is responsible for this weaponising against you, throwing you under the bus, so to speak? Are you able to give any names? I know you’ve said earlier that you don’t want to speculate.
Henry Staunton: Well, you can see how some of the cases have been influenced by the postmasters – it is outrageous and anyone can look through all of that and see what has happened.
Mr Jacobs: Well, very briefly, was it within the Post Office that this was going on against you?
Henry Staunton: I think it was driven, actually, a bit by the UKGI Director influencing the UKGI, and huge pressures put on one or two of the non-executives, particularly those that voted against the internal SID. So it was the minority but it was, it was – it just was not good governance.
Mr Jacobs: I’m going to ask if I have any more questions for you.
I don’t, thank you very much.
Henry Staunton: Thank you, and thank you for your supportive comments. I really value that. Would you thank –
Mr Blake: Thank you, sir. Mr Henry has some questions. I may have a follow-on question at the end.
Questioned by Mr Henry
Mr Henry: Mr Staunton, you were appointed, of course, in December 2022. There was a Board meeting, which took place on 24 January 2023, which you refer to at paragraph 49 of your witness statement, and I don’t want these put up on the screen but, for the benefit of referencing, the Board minutes, partial, and supposedly full, are POL00448620 and POL00448713.
At that Board meeting, apparently the Senior Independent Director, Mr Tidswell, said the following:
“If postmasters thought their conviction could be overturned, then they may have already come forward.”
And:
“The company had duty to ensure that people who were guilty remained guilty.”
Now, Mr Staunton, having looked at both of the documents that I’ve cited, the full minutes and the partial minutes, I haven’t been able to locate, if postmasters thought their conviction could be overturned, then they may have already come forward. Do you distinctly recall Mr Tidswell saying that?
Henry Staunton: I think – Mr Henry, I think I did mention that in this presentation earlier, which is that it sent a chill down my spine. I remember even now as I sit here him saying that: that it’s the duty of the Post Office to ensure that these people who were found guilty remain guilty, and that’s the Chairman of the Remediation Committee. So you can see what I was battling against. And that was in January. Similar sort of comments were expressed by the remediation right the way through my time, through to December, when the letter went to the Lord Chancellor. So I couldn’t agree with you more. I was chilled by it.
Mr Henry: Now, there’s nothing in those minutes, Mr Staunton – and I think you’ve already dealt with this, but I just want to develop it with you – nothing in those minutes that suggests that you confronted it. Did you address him, as it were, collegially afterwards?
Henry Staunton: I did. I just said, “I cannot feel you feel that”. The truth of the matter is that Ben Tidswell felt that right the way through. It’s a view and I think – I hate to say it in this room – but it seemed to be more a view held by the lawyers on the Board than others.
Mr Henry: In fact, you addressed that in your statement: that the view was, as it were, egged on by the lawyers?
Henry Staunton: Yes.
Mr Henry: But I want to come now to 28 November, so it’s 11 months into your tenure, and could this please be put up on to the screen. It’s in our Rule 10, so it’s should be. POL00448614. Could we go, please, to page 12 of 21. I want to concentrate on paragraph 8.4, “Disclosure of Potential Future Appellant(s)”. “SR”, that’s Mr Recaldin, is it?
Henry Staunton: Yes.
Mr Henry: “SR spoke to the PFA exercise and what had been achieved. SR outlined the identification of 333 cases [that’s November 2023] where the conviction did not appear unsafe although further information could change that position, however, on the evidence held, the Company could not properly concede these appeals. This information had been shared with the DBT Advisory Committee and the RU team were working with the Communications Team as to how this information might be communicated.”
So, therefore, they would have been working with Mr Richard Taylor, correct?
Henry Staunton: Yes.
Mr Henry: Yes. Now, there is no evidence in these notes, Mr Staunton, of any trenchant challenge by you, no confrontation by you, “This is wrong, we shouldn’t be doing this, we’re defending the indefensible”. Do you accept that this was a missed opportunity for you to leave your mark and, you know, impress your views very, very clearly in that meeting?
Henry Staunton: Well, I would say – I would say that the position was – I quoted the position in January, where it was 550 cases, and Simon Recaldin said only 12 per cent might be appealable. So I just didn’t accept that and I said that, and I did say to Simon afterwards, this, if it goes back to this culture –
Mr Henry: No, Mr Staunton, I’m trying to explore with you. There is no doubt at all that you were supportive but what I’m tying to suggest to you is that you did not clearly message your concerns, they were not clearly documented and so, therefore, you did not confront the culture that confronted you, a culture of denial and they must be guilty. You didn’t do it effectively. That’s what I’m asking you.
Henry Staunton: There is a – there was a culture of denial. As I’ve said to you, my style is to say to people outside the Board meeting that – if you keep challenging people in the Board meetings you end up with – you can end up in a bit of a mess. I did actually did consult – did contest this, the comments about Ben Tidswell, you referred to earlier, with him, and I also contested the 333, as well as the 550 with Simon because, clearly, this is based on the Horizon system, which is completely inappropriate.
So the answer is I did confront Simon outside the Board and said, “This doesn’t make any sense, Simon, to me”. You must remember we have a Remediation Committee that goes through it in detail, which is chaired by Ben Tidswell, so there’s an element of process about it, and as the Chairman, all you can do is say, “Guys, that surely doesn’t make any sense, can’t we look at it another way?”, or whatever.
So the answer is I did challenge – I did challenge them both, and you can hear from the Postmaster NEDs how much I challenged on behalf of particularly those people that were convicted, which are the numbers we talk about here, but also the whole – the thousands of postmasters that lost so much, even if they weren’t convicted.
No one did more to try and change things within the Post Office than I did, and that would be confirmed by the two Postmaster NEDs.
Mr Henry: But, Mr Staunton, you accept, don’t you, that you had a specific role in determining whether the communications as Chairman were effective and supported the achievement of the organisation’s objectives, and one of the most important objectives was the proper, full and fair compensation and exoneration of the postmasters; you must accept that?
Henry Staunton: Yeah, and no one was more acutely aware, particularly of exoneration. As I say, you saw – you heard my horror at the exoneration comments made previously by Mr Tidswell throughout 2003 (sic), and no one could have been more questioning of him than I was.
Mr Henry: But it’s unfortunate, isn’t it, that – we don’t need to go to it but, obviously, there was the CEO, Mr Read, on 9 January, sending that unfortunate letter, together with the Peters & Peters advice, and there was Mr Taylor suspended on 12 January, who was basically saying, “Well, some of them downright stole it”, and even disputed the findings of Mr Justice Fraser’s judgment in the Horizon Issues trial, quote/unquote, because when he was caught out on tape, he said, “It’s never been proven that there was a link between the computer glitch and anybody actually losing any money”.
I mean, obviously, reflecting on your efforts – and I don’t doubt you attempted to do something – but you were not able to change the culture, were you, if that’s the way your CEO was approaching things and your Director of Communications?
Henry Staunton: Everything that Taylor said, that was widely held, not just by Taylor, widely held within the Company. That’s absolutely right, and I don’t disagree. That’s why it was such a big battle, to change the culture. It was my top priority, as Ish and Elliot said – Saf and Elliot.
Mr Henry: My closing issue for you is this and, obviously you don’t subscribe to it, but the idea is that “Well, if they haven’t come forward by now, they must be guilty” –
Henry Staunton: I don’t agree with that all. I totally –
Mr Henry: Yes, you disagree with it vehemently. The firm that instructs me represented Mrs Kathleen Crane. Her appeal came before the Court of Appeal on 25 January 2024, so a little more than two weeks after Mr Read sent that letter to the Justice Secretary. In its judgment, the Court of Appeal noted the profound fear which had prevented her from pursuing any challenge to her conviction which had dated back 14 years, and they had no hesitation in granting her appeal.
They granted a lengthy extension of time and, even on the morning of her appeal before it was heard, when it was even known that the Post Office would not contest it and her case fell squarely within the Horizon cases, she was terrified that her appeal would nevertheless be rejected. So that fear, that profound fear, was how she felt after 14 years of suffering in silence.
Now, we know that you were addressed –
Sir Wyn Williams: So what’s the question, Mr Henry?
Mr Henry: Yes, sir.
We know that you have addressed why people don’t come forward and you received a very measured and balanced briefing on the subject from no less than Ms Gallafent King’s Counsel, who said that some might have been traumatised and afraid but, given what the Court of Appeal held in Mrs Crane’s case, how many of your former colleagues at senior Board level or senior Executive level, how many of your former colleagues actually shared that view, or are they still unable to understand that people might not come forward because they are terrified and scarred by their experience?
Sir Wyn Williams: I’m sorry, Mr Henry, but he can’t answer for his senior colleagues who have not been his colleagues for at least, by my reckoning, eight/nine months.
Mr Henry: Well, could I just deal with it in this way, then, sir:
When you were recorded speaking to the Secretary of State, and we’ve heard the recording, and you actually mentioned Mr Taylor saying that he thought that most people were guilty as charged, et cetera, et cetera, you said this to the Secretary of State: you didn’t think that most of the Board held that view. But how many of the Board, at that time, when you were speaking to the Secretary of State, held the view that the postmasters were guilty as charged?
Henry Staunton: I think it was widely held amongst the management team and I’ve said that before, so I hear what Sir Wyn has to say, but I was around the block enough to know that; and it was held by some on the Board but a minority. I would say that I’ve read the testimonies of these postmasters who have been – had lost everything, had convictions, et cetera, and the evidence is absolutely heartrending, and it’s – if you have any sort of heart you feel awful for them, and I felt that.
They talk about the brutality of the Post Office’s lawyers, both internal and external. This has been dire and it’s all over the papers, whatever you read in terms of the interviews. So I understand where you’re coming from, trust me. I think you’re absolutely – I absolutely agree with you.
Mr Blake: Thank you, sir. Those are all of the questions.
Do you, sir, have any questions?
Sir Wyn Williams: Just one or two, Mr Staunton.
Questioned by Sir Wyn Williams
Sir Wyn Williams: Can be I take you back, hopefully without putting it on the screen, to the letter which Ms Munby sent to your predecessor, Mr Parker, some time in 2022 before your appointment. You’ll remember the letter?
Henry Staunton: Yes.
Sir Wyn Williams: Because you said that a particular sentence, in effect, had a profound effect on you, which was to the effect that compensation was to be fair to the postmasters but also fair to the taxpayer.
Henry Staunton: And there were three comments in that regard, it had to be fair value for taxpayers and a third one, it had to be appropriate use of taxpayers’ money. So if it had happened once –
Sir Wyn Williams: Hang on, let me ask the question. I was just putting the context.
Henry Staunton: Oh, I’m sorry.
Sir Wyn Williams: So with that in mind, I want to ask you about your knowledge of various things. Firstly, did you know that in, I think, three documents which I issued, I quoted Government ministers as saying that compensation for postmasters should be full and fair?
Henry Staunton: I didn’t know that, sir, I’m sorry.
Sir Wyn Williams: Well, that’s question number 1.
Question number 2 is: in the time that you were Chair of the Board of the Post Office, were any of the documents which I issued about compensation discussed by the Board?
Henry Staunton: I don’t think – when it was reported back by the Remediation Committee, I’m sorry to say I don’t recall much feedback, sir.
Sir Wyn Williams: All right. Fine. Thirdly –
Henry Staunton: Sir, I could say the minutes of the – I’ll focus on the remediation –
Sir Wyn Williams: All right –
Henry Staunton: There may be something in the Remediation Committee, sir. If I’ve got that wrong –
Sir Wyn Williams: All right. We’ll find out. I’m asking about your knowledge. I’m not saying this is unkindly. Whatever I may have said in those documents, clearly didn’t make much impression on you, since you can’t remember it.
Henry Staunton: I don’t think it was – I don’t think it was presented to the Board, sir.
Sir Wyn Williams: Fine, all right. That’s fine.
Then the third question I want to ask you is this: you obviously saw a distinction between compensation which was full and fair to the postmasters, and compensation which was fair to them but which took account of other factors, such as the public purse. Yes?
Henry Staunton: Absolutely.
Sir Wyn Williams: Presumably you did so because you realised that compensation which took account of factors, such as the public purse, might be less generous than compensation which was full and fair?
Henry Staunton: Absolutely, sir. Absolutely.
Sir Wyn Williams: Right.
Henry Staunton: That’s –
Sir Wyn Williams: Can you tell me whether you know which of those approaches was adopted by the Post Office in making offers of compensation?
Henry Staunton: I think it was the taxpayers’ – in fact, I think Alisdair Cameron is coming on later and you’ll see that when he talks about – he issued a note in March ‘23, where he says the same thing: that he said that the Remediation Committee wanted to please the shareholder. So you might be asked about –
Sir Wyn Williams: So in your time as Chair, so far as you were aware, the actual approach of those who were making offers of compensation was to make them taking account of what was in the interests of the public purse? I’m putting that in a general sense.
Henry Staunton: That would be my view, sir.
Sir Wyn Williams: Is that because you were party to discussions to that effect, or is that something which you have inferred from your general knowledge, so to speak?
Henry Staunton: Yes, it’s because, before the Board meeting, I would have a meeting with the remediation management as would with the Horizon management and everybody else, and it was based on those discussions that I thought it was –
Sir Wyn Williams: Right. So far as you are aware, if you are aware, was the approach, which you said was the one which was taken in terms of making offers, a continuation of what had happened before you became Chairman or was there some change when you became Chairman?
Henry Staunton: I’m afraid I couldn’t say, sir, because I wasn’t around and –
Sir Wyn Williams: That’s fair enough –
Henry Staunton: – no one said to me “We’re taking a different approach”, sir. I can’t answer it, I’m afraid.
Sir Wyn Williams: All right, well thank you very much. Those are my questions.
Thank you very much, Mr Staunton, for your very detailed witness statement and for all the time and trouble you’ve taken in answering questions today. I’m grateful to you.
The Witness: It’s a pleasure, sir.
Mr Blake: Thank you, sir. Could we now take our mid-afternoon break until 3.30. With a fair amount of cooperation with all Core Participants, we will be fine to finish Mr Cameron’s evidence this afternoon as well.
Sir Wyn Williams: Jolly good. Thank you very much.
Mr Blake: Thank you.
(3.15 pm)
(A short break)
(3.29 pm)
Mr Blake: Good afternoon, sir. Our second witness of today is Mr Cameron.
Alisdair Cameron
ALISDAIR CHARLES JOHN CAMERON (affirmed).
Questioned by Mr Blake
Mr Blake: Thank you. Can you give your full name, please?
Alisdair Cameron: Alisdair Charles John Cameron.
Mr Blake: Mr Cameron, you should have in front of you a witness statement dated 8 August this year.
Alisdair Cameron: Yes.
Mr Blake: Could I ask you to turn to the final substantive page. That’s at page 24.
Alisdair Cameron: Yes.
Mr Blake: Can you confirm that is your signature?
Alisdair Cameron: Yes.
Mr Blake: Can you confirm that that statement is true to the best of your knowledge and belief?
Alisdair Cameron: Yes.
Mr Blake: Thank you very much. That has a unique reference number of WITN09840200, which will be published on the Inquiry’s website shortly.
As we know, you have previously given evidence to the Inquiry on 17 May 2024 –
Alisdair Cameron: Yes.
Mr Blake: – and you’ve given quite a great deal of evidence, so we can take things pretty quickly this afternoon.
Relevant for today’s purpose is that you were the CFO at the Post Office up until 23 June 2024; is that correct?
Alisdair Cameron: Yes.
Mr Blake: Although, as we’ll see, there was a period prior to that in which you were not attending meetings and not –
Alisdair Cameron: Yes.
Mr Blake: First, I’d like to just clear up a loose end in relation to Phase 5 and 6. Can we please look at UKGI00048147. Thank you. We’ll start with the bottom email. It’s an email from Mr Foat of 30 April 2021, in respect of the Simon Clarke Advice. It’s an email to, Ken McCall and others, and he says:
“The Simon Clarke was sought following the Second Sight Report which contained information that Horizon may not be ‘bug free’ and Post Office may have been aware of this. The Second Sight Report identified two bugs with Horizon (receipts and payments mismatch and local suspense account) which had been highlighted to Second Sight by Gareth Jenkins. In the advice dated 8 July 2013 he advised on the need to conduct a review of all Post Office prosecutions (and a small number of current cases) to identify those in which the material ought to be disclosed. This post conviction exercise was referred to as the Cartwright King Sift Review. On 15 July 2013, Simon Clarke provided advice to Post Office as to ‘the use of expert evidence in support of prosecutions of allegedly criminal conduct. This advice is referred to in the [Court of Appeal Criminal Division] judgment as illustrating [the Post Office’s] poor investigation procedures.”
In your view as at this time, were the Board sufficiently informed of the significance of the Clarke Advice?
Alisdair Cameron: I didn’t think so and I think my response was to say we could really do with, as a Board, a clear setting down of exactly what happened, in what order, through this period because it wasn’t at all clear to me, and obviously this would have been happening well before I joined, and so I certainly felt I didn’t understand it and I suspected the rest of the Board didn’t either.
Mr Blake: In your view, is that description, in the final couple of sentences there sufficient or a sufficiently accurate characterisation of the Simon Clarke Advice on the use of expert evidence?
Alisdair Cameron: I’m not sure I know.
Mr Blake: If we scroll up we can see a response to Mr Foat from you, and you say as follows:
“Ben, it would … be helpful to do a high level and simple timeline of the Second Sight activity, the different reviews like SC …”
So that’s Simon Clarke is it?
Alisdair Cameron: Yeah.
Mr Blake: “… Brian Altman’s review, disclosure exercises, Deloitte H reviews so we can see how it pins together. 2013 does seem to be the pivotal year when [the Post Office] doubled down.”
Alisdair Cameron: Yeah.
Mr Blake: Can you assist us with what you meant there by “doubled down”?
Alisdair Cameron: So my sense of it – and again, well before I joined – was that – and this may not be right, but my sense at the time was that the Post Office Board, as it became independent, seemed to be engaging sort of more openly it what became the claimant population, and there seemed to be some dialogue between Lord Arbuthnot and, you know, Post Office, and then that seemed to stop relatively suddenly.
And what I meant by doubling down is Post Office retreated into “Well, we’ll do the Mediation Scheme, but …” you know, and to become much more defensive again, and that is what I meant, and that seemed to be around 2013.
Mr Blake: Thank you.
Moving now to a different topic, and that is your email that we’ve seen already today and previously entitled “The robustness of our governance”?
Alisdair Cameron: Yeah.
Mr Blake: The email you sent on 23 March 2023. Can we bring that up on to screen. That’s POL00423699. Can I also ask if you could give your answer perhaps slightly louder or come slightly closer to the microphone, please –
Alisdair Cameron: Okay.
Mr Blake: – or maybe both. Thank you.
If we could look at the bottom of page 2 into page 3, you’ve addressed this email in your latest witness statement at paragraph 22, and there are just a couple of matters that have been identified today as potential significant issues that I’d just like to ask you about. If we scroll down, the first is the CIJ scorecard and your views on that. Are you able to expand on your views as set out there, regarding the Common Issues judgment scorecard?
Alisdair Cameron: So one of the roles that GE should have been playing and my contention is that it wasn’t playing, was to provide oversight of what was happening through the business as the senior executive group, and there was some reporting developing, so there was a scorecard, and I can’t remember how much of that was Operations or how much of that was Legal who put that together at this stage, but it was about whether we had done the things that we were required to do in the Common Issues judgment and whether they were being maintained and monitored.
And the fact is, we never discussed it, and I don’t think – the trouble with scorecards is you really do need to understand what the underlying data is doing, and I didn’t think we did, and I didn’t think that we understood what the performance of operations was. I don’t think it was coming up to the Group Executive and, within the scorecard, they may well have been measuring some very sensible things but they weren’t measuring the things that I thought were critically important, one of which is the shortfalls, the losses. One of which was investigations, where they had really lost all the data on what was happening and weren’t completing very many investigations, and there were – a couple of my obsessions through these years was that in getting to clarity on branch situations, there were two things that weren’t operating effectively, and we just weren’t getting done: one is stamp accounting.
So unlike the cash, where everything was remmed in and remmed out of the branches on barcodes and, you know, was checked at either end, the stamps hadn’t been invested in like that, and there hadn’t been the procedures in place to make sure that end-to-end stamp numbers were right and people were putting them in manually. That’s what postmasters had to do.
And, absolutely, we have to get that process automated and it was supposed to be part of the Horizon replacement and then that wasn’t happening, and so that was one.
And the other was: you couldn’t put – shouldn’t put retail sales through a post office till. They weren’t retail products and people, rather than moving between tills, postmasters were using something called the retail button, or the stamps button, I can’t remember, but they were putting it through, and then reconciling it later, sort of changing it later, which created confusion and noise. And I’m just saying, look, these are important parts of whether the operations are working and they’re not even on the scorecard.
Mr Blake: We heard evidence this morning about a point in time at which a decision was apparently taken to prioritise the new Horizon system or the NBIT system over and above addressing issues to do with the Common Issues judgment or Horizon Issues judgment; is that something you’re aware of at all?
Alisdair Cameron: I think – I mean, yes. So, at some point, if you’ve got expensive time-consuming, difficult IT changes to do, and Horizon is incredibly expensive and difficult to change because it’s so old and we don’t manage it, then you have to decide, are we fixing Horizon, and then flowing that into NBIT, or are we just creating this capability in NBIT?
So those were choices that were happening progressively but, of course, the NBIT timetable kept, and has kept, going backwards and, therefore, you might have made a different decision.
Mr Blake: We see below there, there’s a section number 4 on NBIT.
Alisdair Cameron: Yeah.
Mr Blake: You raise concerns there about the governance of NBIT. Briefly, what were your concerns here?
Alisdair Cameron: So the sort of steering group governing NBIT wasn’t working particularly well and the project wasn’t getting the input from operations, thinking about how you roll NBIT out, that it needed. And the team had asked if I would chair the steering group, and Nick thought that was a bad idea, and then a year later – so I think we’re probably autumn ‘22 now – had asked me to do that. And my view by the January was that it really needed fairly fundamental reworking, and said that, and Nick asked me to stand it down because he had other ideas.
And so what he then set about creating was a completely different operating model with Katie Secretan leading it from Martin Roberts’ team, and that took some time to set up. So, between me being asked to sort of stop and the new arrangements coming in, was a space of several months, which this was in the middle of, and I thought, “Well, there is just no formal governance now over the NBIT programme for this period”.
Mr Blake: The Post Office doesn’t yet have a new system in place that’s been rolled out to subpostmasters. At paragraph 58 of your witness statement, you say that Fujitsu’s relationship with the Board has never been satisfactory and you suspect that both parties would like to end that relationship.
Alisdair Cameron: Yeah.
Mr Blake: Was there discussion at Board level about ending the relationship with Fujitsu?
Alisdair Cameron: No, because it was very hard – although it was discussed over the years, it was very hard to really conceive that anyone other than Fujitsu could manage Horizon, and so you would only end the relationship with Fujitsu when you were really confident that NBIT was going to go in on a certain date, and you were expecting it to work. And that date has never – or certainly wasn’t visible when I stopped working.
Mr Blake: Can we turn to POL00448793. This is back in time now to 8 April 2020, and there was a Board meeting on that date where there’s a potential alternative or addition that’s being discussed. So this is a Board meeting at which you were, at that time, Group Chief Finance Officer. If we could turn to page 9 and have a look at the middle of that page. If we stop there, we can see there’s discussion of the Group Litigation Order, and then the post-GLO implementation plan. If we scroll down, please, over the page, I’m just going to read to you a paragraph there. It says:
“We needed to reach a better position on the Branch Trading Statement where we had been heavily criticised by the Judge. If the Branch Trading Statement could not be replaced it needed to be supplemented by other information that made it fit for purpose. Communications to postmasters on the status of the Branch Trading Statement contractually would be needed. It was noted that there had been a significant amount of communications about this. We were considering whether we could move the Branch Trading Statement off Horizon but migrating to another IT system could take a number of years. However, we were also looking at all the different parts of the accounting system and what our options were. If we had a running account with a Postmaster we would settle that account for remuneration and that would be transparent. We did not know yet if we could separate accounting from the Horizon system and place it elsewhere.”
Were there meaningful attempts to try to improve the Branch Trading Statement while you were in post?
Alisdair Cameron: There was a lot of work going on in 2020 and, specific to the Branch Trading Statement, I cannot remember how far we got or what changes were made by the team. So I’m afraid I’m unable to answer your question. But I think we obviously had done work on back office systems and so I think the question we’re trying to get at was, within the SAP CFS accounting system, was there enough information coming through from Horizon and elsewhere that we could have tried to create a Branch Trading Statement, put it on Branch Hub, so it was available electronically, and I don’t think that ever happened. So my recollection, it was probably too difficult.
Mr Blake: Can we please turn to POL00021583, on a similar subject, looking at the Board minutes on 26 May 2020. Thank you.
So these are the Board minutes of 26 May. If we could please turn to page 4, about halfway down, under the topic of Telecoms, the second bullet point, it says there, if we scroll down, please:
“Carla Stent noted that the Fujitsu relationship had been raised at the [Audit and Risk Committee] on 19 May 2020 and that Jeff Smyth, CIO, would be preparing a paper for the Board on this issue. The Fujitsu CEO had recently indicated that they would like to explore a structured early exit agreement. A principles document was being drawn up …”
Are you aware of any progress insofar as that was concerned?
Alisdair Cameron: So I don’t particularly remember this conversation but I assume they are talking about the Fujitsu relationship around the telecoms business, rather than Horizon, which obviously we went on to sell the business relatively soon after, and so I think it was that they were talking about.
Mr Blake: Thank you. Moving on to a different topic and that is UKGI. You had raised, in a number of places, I think, in that email, the governance email that we’ve already turned to, concerns relating to UKGI’s role as a Non-Executive Director, I think you’ve said performing a quasi-executive role. Can you assist us with your view on that, please?
Alisdair Cameron: So I think the UKGI relationship and their role across the Government to Post Office has never worked properly, as far as I can tell, and certainly didn’t in my time. And I think it just – so the first problem is it just complicates the flow of information because you’ve got to discuss everything with UKGI, and then it goes to brief DBT and sometimes they brief and sometimes we brief and we don’t necessarily know what the flow of information is. So I think that doesn’t work.
But I felt, you know, strongly that it’s an odd and equivocal role being shareholder representative, because the authority for that role comes from being the representative of the shareholder of the Secretary of State. But, often, it seemed to me that the issues that were of concern to UKGI were their personal opinions on things. So they wielded the authority of being a representative of the shareholder to pursue things that were of interest to them, but which the shareholding wasn’t particularly engaged with, and I thought that was consistently unhelpful.
Mr Blake: Did that remain the case throughout your time?
Alisdair Cameron: Yes.
Mr Blake: You’ve said at paragraph 62 of your statement that many decisions were made by or were significantly affected by the Treasury?
Alisdair Cameron: Yeah.
Mr Blake: Can you assist us with that, please?
Alisdair Cameron: So I think anything which requires money being spent requires Treasury approval, unless it’s so small that DBT can do it themselves, and so all the major funding decisions, all the major compensation decisions, are done, I think, through a negotiation between DBT and the Treasury. And the Treasury often sets conditions.
So there were really detailed operational agreements that DBT had to make sure Post Office operated around HSS, around the overturned convictions compensation, in order for Treasury to confirm that they were willing to fund the compensation.
And so all of these decisions were, you know, negotiated between DBT and the Treasury and, often, Post Office wasn’t in the room for that at all. And so you got – I mean, there was a very odd funding round I think it was towards the end of 2021 when Post Office was asking for £400 million over three years, and then we were told we would get 200 million, and our view was, well, we couldn’t, therefore, maintain 11,500 branches and we couldn’t afford to replace Horizon, and DBT were just completely astonished. And they just hadn’t, you know, through UKGI, or whatever, they had not understood the financial position, and found another 100 million, you know, but we hadn’t asked for enough and it wasn’t enough.
But they clearly didn’t understand all the papers that were being written, and, you know – so there was a final discussion between DBT and Treasury without any of them really understanding Post Office.
Mr Blake: Moving on to the NFSP. I think you’ve said that you don’t agree with the idea of an oversight committee.
Alisdair Cameron: No.
Mr Blake: Can you briefly expand on that?
Alisdair Cameron: Post Office needs to be owned by postmasters. I mean, there is a fundamental conflict of interest between Post Office Limited and postmasters, and it plays out really simply and financially, which is: if Post Office wants to meet a financial target, the easiest way it can do that is not pay as much money to postmasters. And what you have seen was – I mean, a deliberate and, you know, I can explain it – attempt to reduce the overall postmaster remuneration between 2012 and 2018, which is all disclosed, and that was done through largely Network Transformation.
And then following that, we agreed postmaster remuneration had to increase and we had been very aggressive with the banks around Banking Framework 2, we probably added 90 million to the Post Office bottom line overnight, and that in able to two increases in postmaster remuneration, so that by 2021, postmaster remuneration had gone up, and the total amount paid, which no one ever talks about, had actually gone up for two years in a row. And then, since then, it’s gone down, bubbled around, and it’s still less than it was and it’s still far less than it was in 2012, and yet postmasters have had to bear huge inflation through energy costs, minimum wage, and all the rest of it.
And so, you know, we had this conversation often but, I mean, Nick was very clear about we should be putting postmasters first, at the beginning of 2021, and that was a rallying cry. And by the autumn, you know, I said to him that I was uncomfortable using that phrase because, if you looked at the way we were divvying the money up, we put hitting our financial targets first and postmaster remuneration second, and he said that he hadn’t been using that phrase for some months at that time.
Mr Blake: Were you aware during your time of whether compensation or redress was being sufficiently addressed at Board level; do you have any views on that?
Alisdair Cameron: I think the Board spend an awful lot of time on the sort of legal mechanics of it all and the processes around that, and they certainly did review it. I think once you accepted that the Court of Appeal had set a process and our job was to legally follow it on overturned convictions, and that we were complying with the operational agreements that the Treasury and DBT had set for both OHC and HSS, then there was relatively little influence we could have, other than, you know, pushing Simon Recaldin to do the delivery of it as fast as possible, and he accelerated it.
But I didn’t think we were really making the decisions.
Mr Blake: It has been suggested earlier today that one of the considerations was the taxpayer, rather than simply whether it was full and fair compensation; do you have a view on that?
Alisdair Cameron: So the Treasury set aside funding for HSS, for OHC and other schemes later. Now, that process was slow and painful. But if you take overturned historical convictions, they set aside a very significant amount of funding with a time limit to use that funding and, from memory, it’s over 700 million. And the Court of Appeal set the process, and the reason why our estimates at that spending actually reduced over time was because we just thought more people would come forward and they didn’t. But I’ve never understood, you know, and I do say this in my statement, why Henry thought why anyone would have asked him to slow down the compensation.
I can absolutely understand the Government saying, “Look, you’ve got to cut investment spend in the business, you’ve got to manage the cashflow”, but the money for the compensation was there. It was set aside. If we followed the process and the compensation was paid, we would recover it from the Treasury and the Treasury had already set it aside, and so there was no advantage to anyone in slowing down compensation. And to be honest, if, you know, Henry really thought he was being asked to slow down compensation, you know, he should have threatened to leave. I mean, it would have been outrageous.
Mr Blake: In light of that, do you have a view as to whether it was or was not likely that pressure was put on him?
Alisdair Cameron: I’ve always – so I’m sure there was lots of pressure on him to all sorts of things. I’ve never understood why they would be pushing him on compensation payments. Nick told me at one point that what the Treasury had said, I think, but I am repeating conversations, is that, if Post Office was going to get more money, which we were clearly going to need, that they wanted a strategic review of Government’s requirements of the network. And so Nick and others were pushing very hard for that review to be done because it should unlock the door for more funding.
And what Nick told me, so I guess it would have been late 2022, was that the then Secretary of State had said, no, they weren’t going to kick this off and could Post Office sort of the limp through to the next general election as best it could?
Now, obviously when Nick gives testimony he can say whether that’s what his recollection is but that’s my recollection, and so I assume there’s been a muddling between not doing the strategic review, not getting more funding, although in, fact some, I think has been provided, and the actual compensation itself.
Mr Blake: Thank you.
My final topic is departures. Departures in general first. I think you’ve highlighted issues with Chief People Officer and that there were a number of departures. Can you think of any reason why that particular role is one that’s subject to such a churn in who fulfils the role?
Alisdair Cameron: I’m not sure I can. I think all the individual circumstances were different. But, I mean, if you look at the churn of Post Office executives since independence, I mean, Paula replaced her entire team at least once and, you know, I replaced one member of that team very quickly and was working on another, and, you know, Nick obviously replaced, you know, a relatively new CIO and Retail Director, within a few months. And, you know, it does seem to have been a theme overall, not just Chief People Officer.
Mr Blake: In terms of your own departure, 7 May 2023 was your last working day, I believe; is that correct?
Alisdair Cameron: Yes.
Mr Blake: You formally ended your time at the Post Office on 23 June 2024 and you’ve addressed that, I think, at paragraph 72 of your witness statement. In summary, can you assist us with what happened between you and Mr Read at that point in time?
Alisdair Cameron: So, in summary, Nick told me in 2021 that I was leaving the business, he didn’t give a reason, and I thought it was the Chief Executive’s right to choose their team but I thought I ought to be compensated because he wasn’t – he was absolutely clear he wasn’t firing me, he wasn’t making me redundant, and so I thought it was reasonable and he thought it was reasonable that he settled the contract. And I suspect he can tell you that he had some encouragement from DBT that they would support that position, which is why he had talked to me, and then they changed their mind, or made up their mind, and refused to do so.
So in May of that year he asked me to stay on and I agreed, and we agreed a modus operandi. Now, I don’t know what happened after that. I think I read somewhere that Jane Davies was saying that getting rid of me was an objective for her and her predecessor but I don’t know if that is true or not.
I was finding it increasingly stressful for two reasons: one was to work in an atmosphere where I didn’t feel welcomed or, you know, able to fulfil my full role; and the other was, through 2022, we seemed to have given up trying to run the business and it was just deteriorating on a whole range of fronts, a lot of which I talk about in there, and I was very stressed by what I call the pause payments issue, and if I could just touch on that for a moment.
So Post Office used to recover money from postmasters through deductions from their remuneration over an agreed term, which might go on for years, and what Lord Justice Fraser said in the Common Issues judgment, I think, was that Post Office couldn’t take money off postmasters unless a proper investigation had been done.
And the legal advice, therefore, was we should – there were existing sort of deduction arrangements still going on from before 2019, and the Legal Department said it should stop, and the HRC refused to stop it, and it was still going on in 2022. So I made a, you know, had a sort of a bit of a tantrum about this at the Board in December 2022, and it was agreed to stop –
Mr Blake: What was your concern about it?
Alisdair Cameron: Well, I thought it was both wrong and illegal. So we were recovering money from postmasters where we hadn’t done an investigation. So it seemed to me that was a clear breach of the Common Issues judgment and it was indefensible. And so they stopped the existing ones, which were almost at an end anyway, but I had just assumed we would then do a process to return the money that we had taken since 2019, and they weren’t prepared to do that.
Mr Blake: Who is “they”?
Alisdair Cameron: The Historical Remediation Committee, Ben Tidswell and Tom Cooper, at the time. And I thought that was just wrong. So things like that, I was finding incredibly stressful, as I did, you know – we did, genuinely, I think, the business – I’m not talking about what had happened with postmasters, but the commercial business, I think, did get a lot stronger between 2015 and 2020, and it was just deteriorating visibly in front of us.
And I got very upset by the shortfall investigations because what we were seeing was the – after two months, if we thought a postmaster owed us money and the postmaster didn’t pay it then we wrote that off to the P&L, and so you could see the scale of that very quickly through the P&L, and it had been, I think 2 million a year when I joined, it went up to 5 million a year, and suddenly it was 12 million a year. It was £1 million a month.
And through 2022, I was saying, “Look, we’ve got to understand this”. So by 2020 we had a lot of data on this stuff, we were helping people avoid problems, what has happened? And I was being told, “Oh, all of these after being investigated”, and eventually had to put – I couldn’t get sensible data out of it so I had to put an EY team in there to get sensible data out of it. And it was perfectly clear that they were hardly investigating any of them, and it just wasn’t a basis to be asking people for money at all. And that – there was a lot of resentment that I was asking those questions out of the Operations Directorate. So all of that was very stressful.
Mr Blake: Can I just pause you there: who was responsible for that and where was the resentment, in your view?
Alisdair Cameron: I felt a lot of resentment from Martin Roberts, who was telling me I ought to, you know, mind my own business. And, you know, I did speak to Nick about it but I had to carry on, it was too big an issue not to. So I went on holiday in April 2023 for two weeks, and I said to my wife while we were away that I really wasn’t sure I could go back, it was just too difficult, and Jane Davies had asked me if it was making me ill and it made me reflect on that.
My wife was very clear it was making me ill, so I didn’t come back immediately. I went to see my GP because I didn’t really know, I’m not a doctor, and it’s me, and –
Mr Blake: You’ve addressed those matters in the statement, we didn’t need to go into any further detail, as far as that’s concerned.
Alisdair Cameron: Fine.
Mr Blake: Thank you very much. Sir, those are all of my questions. There are a small number of questions from Core Participants.
Before we turn to Core Participants, do you, sir, have any questions?
Sir Wyn Williams: Well, I think I will wait to see what they ask.
Mr Blake: Thank you very much. Perhaps we could start with Ms Watt for the NFSP.
Questioned by Ms Watt
Ms Watt: Good afternoon, Mr Cameron, I’m over here, thank you.
I ask questions on behalf of the National Federation of SubPostmasters and I’ve got couple of questions for you regarding some financial changes that I understand took place while you were the Chief Financial Officer.
I’d like to discuss the concept of Hard to Place postmasters, and I’m going to summarise. If you bear with me, I’m going to speak for a little bit and then I’ll ask you some questions.
So in summary, under Hard to Place since 2018, if a postmaster wanted to leave the network but a potential new postmaster could not be located, then the Post Office places them on a Hard to Place register and, if a potential new postmaster is found, the exiting postmaster will get a leaver’s payment.
Post Office originally offered 26 months’ compensation to the Hard to Place postmasters, but this has been reduced unilaterally by the Post Office to 12 months, which is an average loss of around £43,000 for a postmaster. It’s a significant decrease in the return the subpostmaster will get from their investment in the business, and they will have all the costs associated with closing down their business and adds to the significant difficulties with remuneration that postmasters have been facing.
Now, turning to Nick Read telling you that you would be leaving the Post Office, you say at paragraph 70 of your witness statement:
“In my experience it’s not unusual in the commercial world for CEOs to want to recruit their own teams. Indeed, even within POL, many executive colleagues had previously received settlements to leave the business.”
You go on at paragraph 80 to set out your financial settlement, which you say is two years’ salary at £245,000, so just under £500,000.
Would you agree that it is not fair that postmasters who have invested their money, time and lives in their business are having their compensation – modest compensation – for leaving the network cut, especially considering that the network relies on their investment and work, when at least some senior departing Post Office officials can negotiate large settlement packages?
Alisdair Cameron: So a number of thoughts. I mean, fundamentally, yes, and often there are relatively few people getting senior remuneration. There are an awful lot of postmasters and, therefore, the overall cost to the business gets very disproportionate which is why it’s easy to end up in these places. I didn’t get financial settlement; I got retired on ill health, which was not my judgement, so I think that is different and it followed the Post Office’s policies, I think, to the letter under those circumstances. There were no special favours.
Nonetheless, your point is well made. On Hard to Place – and I’m not the world’s greatest expert on it – I think this came out of the Transformation Programme, and the rule was we couldn’t pay compensation at that point unless there was a replacement Post Office. We couldn’t pay understanding the rules of the Network Transformation Programme to shut a Post Office, and I think that was the rule that it originated with.
It’s then being debated, at least once a year, and the decision to reduce it was taken quite reluctantly but we just weren’t being funded in the way we had been under Network Transformation. So it was, you know, one of those difficult financial trades but is it unfair? Yes, it is.
Ms Watt: So, and just to tie off that point, notwithstanding what you’ve said about your own particular circumstances. So you would agree that there’s a disparity between how the Post Office treats its senior employees, as compared to how it treats postmasters and, would you agree, this is just one of many issues that reflect badly on the Post Office of today, in the way it continues to treat those investors in the business, the postmasters?
Alisdair Cameron: So I agree it’s unfair, absolutely. The Post Office does have to meet the budgets agreed with Government or the Government has to pay us more money. So Nick campaigned quite hard, I would guess, sort of 2022, to increase postmaster remuneration but it required more money from Government. We didn’t have that money and anything we could do ourselves would have been a drop in the ocean of making a really material difference to postmasters, and the Government said no.
So it’s not that Post Office Limited is sitting on a huge pot of gold and arbitrarily chooses, Post Office Limited is bust. It’s been bust for years. It has 700 million of net liabilities and we’ve disclosed this in excruciating detail for ARA after ARA. So I take your point about the fundamental unfairness.
If you wanted another example, you know, all through my time, Post Office employees got pay rises – I mean, I didn’t, but Post Office employees got pay rises to 2.5 per cent most years; postmasters didn’t, their remuneration fell. So yes, it is absolutely an unfair structure.
Ms Watt: Thank you.
Mr Blake: Mr Henry?
Questioned by Mr Henry
Mr Henry: Mr Cameron, you wrote a document that nobody will forget, the “What Went Wrong” document, and you wrote that in 2020. But I want to just explore with you another document that you wrote back in 2018, and it was entitled “Sparrow Narrative”; do you remember it?
Alisdair Cameron: I’ve read it in my papers for this.
Mr Henry: Now, the former document was premised on the basis, “We did not sufficiently challenge and test our legal advice until it was too late”. Do you accept that in the “Sparrow Narrative” document, there is nothing in the mindset of senior management in 2018 about testing the legal advice?
Alisdair Cameron: Absolutely, and I think that was precisely the sort of basis of my apology when I was last here, which was to say, up until 2019/2020, I simply hadn’t challenged enough the very clear sort of statements of the Post Office leadership, and I’m sorry for that.
Mr Henry: Now, just concentrating, however, on the “Sparrow Narrative”. I want to ask you about this passage, and if it needs to be put up on the screen it is POL00253410. While it is being put up on the screen, you’re familiar with it, so I’m just going to read out something you wrote verbatim:
“After its independence in 2012, the new leadership team of [the Post Office] who were not accountable for how the business had been run in the period under debate, sought to ensure a full, open and fair resolution of these issues, including a mediation scheme, investigations and an independent review by a third party.”
Do you remember writing that?
Alisdair Cameron: I don’t remember writing that but it was absolutely the position of the Post Office as I set out in my first witness statement from 2015, and I accepted at the time it clearly was wrong.
Sir Wyn Williams: Sorry, could we have the relevant passage on the screen, so I can follow it?
Mr Henry: Of course, sir. Forgive me, I don’t have the page number.
Alisdair Cameron: It would be towards the bottom because I think it started with me.
Sir Wyn Williams: So we’re looking for something from Mr Cameron, is that it?
Mr Henry: Yes, sir, I’m so sorry, it’s – if we could go up to the next page.
Alisdair Cameron: No, down.
Mr Henry: Further down, please.
Alisdair Cameron: Yes, it’s the section in italics.
Mr Henry: Yes, exactly. I’m very grateful. I’m sorry for not giving you the precise reference, Mr Cameron, and you, sir.
So:
“After its independence in 2012, the new leadership team of [the Post Office], who were not accountable for how the business had been run in the period under debate, sought to ensure a full, open and fair resolution of these issues, including a mediation scheme, investigations and an independent review by a third party.”
Does that reflect the mindset that the Senior Management Team, maybe even the Board, felt that the Post Office was not accountable for how the subpostmasters had been treated or prosecuted under the previous Royal Mail Group regime?
Alisdair Cameron: No, I think the point I was absolutely making there – which was also probably wrong, but my understanding at the time – is that a new Board had been created, largely, and there were a lot of new people who came in and so they weren’t at fault for what had happened in the past. Were they accountable for resolving the situation? Absolutely, but they couldn’t be accountable for what had happened before they formed.
Mr Henry: I see. So it’s not a sense of resentment, “Oh, well, we’ve been landed with this, and this all happened when we were under the aegis of the Royal Mail Group”?
Alisdair Cameron: No, I don’t think so.
Mr Henry: Then, if we scroll further down, we can see the view of the team at the time, which was what’s been called the mantra. You have put in square brackets:
“[99%] have managed to conduct their business without an issue or loss. Out of a total trading of some £60 billion a year, with 10.5 million customer sessions a week, we only have to correct [approximately] 100,000 transactions a year, a process that is transparent to Postmasters and [is supported by their National Federation].”
This, effectively, was a defence of the entire litigation strategy, wasn’t it?
Alisdair Cameron: It was my understanding at the time, it was wrong but my reason for writing this, and it is consistent with a number of things that came out in my first witness statement, is I consistently felt that, if we believed this – and everyone seemed to – we should be saying so out loud and in public, and explaining and defending what we were doing because my feeling was that would help everybody. And, in fact, it would have helped everybody if we had done that more because people could point out where we were wrong.
And, actually, what happened – sorry, but what happened was that, you know, Paula would look interested and then Mark Davies and Jane MacLeod would shut it down. And it happened, if you read my first witness statement, several times like that. I thought we should be more open; they didn’t.
Mr Henry: There’s no doubt, sir – and this is my last point to you – that that is precisely the advice that Jane MacLeod gave Ms Vennells –
Alisdair Cameron: Yet again.
Mr Henry: – at the beginning of the document. Thank you very much.
Mr Blake: Thank you, sir.
Mr Stein has a short matter.
Questioned by Mr Stein
Mr Stein: Mr Cameron, just picking up on some of the questions asked by Mr Blake earlier regarding the way that the Post Office is looked at by Government and Government preparedness to invest in the Post Office.
You say in your statement, paragraph 84, that the Post Office business is capable of supporting a national network of post office branches.
Alisdair Cameron: Yes.
Mr Stein: You say that Horizon must be replaced –
Alisdair Cameron: Yes.
Mr Stein: – and, if the Government wants a sustainable national set of post offices, it will have to finance the complex multi-year set of challenges and then arrange for postmasters to own the network long-term.
Now, let’s just go back to that. That’s paragraph 89:
“If HMG wants a sustainable national set of post offices, it will have to finance the complex multi-year set of challenges.”
Alisdair Cameron: Yes.
Mr Stein: Right. Now, that position – the Government need to set out its agreement to finance the Post Office into the future – has remained the same for now a number of years; do you agree?
Alisdair Cameron: We get, as does the rest of Whitehall, you know, funding settlements which might be for one year or might be for three years, but that isn’t a brilliant way to fund a trading business where circumstances can change radically. It’s really designed to say, “Well, you’d like to spend 10 billion on green technology, we’re only giving you £1 billion, do what you can”, and it doesn’t really work.
And I think we have – I’m not suggesting for a moment that Post Office hasn’t muddled some of this. So we simply didn’t ask for enough money for the Horizon replacement, I mean, nowhere near enough. And the more we got into it – it was very early stage, and it was a sort of budget for software – the more difficult, complex and expensive the actual rollout looks like it’s going to be.
This is a software and a hardware change; it’s the first one for 20 years; the last one went catastrophically badly. So there is no trust in the system, and so – you know, I remember being part of a software rollout in a commercial company as an employee and, at one point, they just said, “Look, we cannot cope with being on two systems at the same time. So we know it’s not working brilliantly, we’re just going to push everything onto the new system and we’ll fix it later”.
Now, as an employee, that was fine. It is utterly inconceivable that you could talk like that to postmasters because they’re running their own businesses, and Horizon was a catastrophe. So the actual rollout, how you resolve shortfalls, all of that, is going to be very, very difficult; and we simply hadn’t done of the work to appreciate that properly when we first asked for money, and we just didn’t ask for enough.
Mr Stein: So Government needs to provide long-term settled commitment to funding the Post Office for the future, not just one year –
Alisdair Cameron: Yeah.
Mr Stein: – but for the future –
Alisdair Cameron: I agree.
Mr Stein: – including the replacement of the Horizon system. That is obvious to you and anyone else that has paid attention to this scandal; is that right?
Alisdair Cameron: No one else is going to do it. So if Government doesn’t do it, it doesn’t get done.
Mr Stein: Understanding the effect: you said in your evidence that it isn’t a brilliant way to fund a trading business, but the real effect on the postmasters running a small branch office in a rural part of this country, whereby there is no way that it would make business sense to open up a branch, means that those branches are left in limbo, not knowing what the future is, not knowing whether they have an asset within the business, not knowing whether they can continue to operate for the interests of the people around them or for their families; do you agree?
Alisdair Cameron: I do. What the Government has done to address that was the network subsidy payment. So this was different from investment funding, and it was specifically designed to enable Post Office to keep open post offices that weren’t financially viable and which you would shut if your only issue was commercial questions.
And that dropped to – I mean, it was 200 million a year at one point – it dropped to 50 million, which was, in part, because we had improved commercial performance but that is less than it costs, or certainly when I was there it was less than it cost. And of course, again, it only goes for a maximum of three years into the future, and often it’s two or one, or it’s uncertain, and so I agree with you.
And this is why I think the strategic work around the network, which has been so postponed, actually does need to be done because the Government either needs to say, “Yes, we do want you to keep all those uncommercial post offices open”, in which case it has to pay for them because there is no one else, or it doesn’t, in which case they’ll go.
Mr Stein: Thank you, Mr Cameron.
Just one further point. Can I take you, please, in your statement, the second statement, you talk about when you joined the Post Office in January ‘15:
“The Post Office’s position was that there was no evidence of any faults with Horizon or unsafe convictions.”
I’m going to take you to one document, POL00142856. It should come up on the screen now. Can we go to the last page, that’s page 3, please, and down to the last couple of lines, please. Now, this is signed by Mike Young, Chief Operating Officer, March 2012. So this pre-dates you joining the Post Office.
Alisdair Cameron: Yes.
Mr Stein: Just as a reminder, Mike Young was an individual who was discussed by Paula Vennells as being one of the people who she relied on to tell her, “Look, there’s no problem in the system”, okay?
Alisdair Cameron: Okay.
Mr Stein: So my question about this document is whether this document was a document that was drawn to your attention. So, briefly, we can go back to page 1, please. Then, under the heading “Background”, 2.1, if you could highlight that, please:
“Last week’s major incident on Horizon was the fourth significant service failure of the system in nine months.”
Then there’s a recitation of those failures: in July 2011; December 2011; February 2012; March 2012.
Now, interestingly, in relation to this document, there’s no mention of the mismatch bug or any other bugs. If we drop down, then, to the paragraph at 2.3, I’ll summarise this: it says there that, as part of the move to Horizon Online, the contract was renegotiated. One of the design changes which contributed significantly to a reduction in Post Office operating costs, circa 5.5 million per annum to the savings, was moving to an active/passive data centre arrangement.
Then I’ll read the next bit:
“Consequently the resilience is now housed in one data centre with the second data centre primarily being used as a test environment, but available for disaster recovery if required.”
So setting out those issues. The proposal is set out by Mr Young at page 3, paragraph 6.2. So under “Proposal”, 6.2. Highlight that, please:
“In recognition of the recent performance history, the media attention this has drawn and our business transformation plans, we have proposed a fundamental review of the service. Within this review we will draw out whether the current technical design is correct for our future business needs and plans. The review will run in conjunction with the operational investigations.”
6.4:
“The review will as a minimum cover:
“The technical design of Horizon
“All forms of testing
“Monitoring and alerting
“Best practice in retail and financial service markets
“Future requirements of our business strategy that may influence the technical environment of which Horizon is a critical part.”
Okay? Now, I’ve shortened my examination in relation to that but just to give you the flavour of what that document was saying. So in March 2012, some time before you joined the Post Office, this document was sent to the Board and it was discussing, essentially, a full-out review of the Horizon system. Was that brought to your attention when you joined the POL Board?
Alisdair Cameron: I believe, to the best of my knowledge, that this is the first time I have seen that document and, indeed, I don’t think I particularly knew who Mike Young was. I don’t remember ever seeing this document at any stage, and it was nearly three years before I joined. It’s hard to be definitive; I don’t have access to POL emails and things any more, but I don’t remember ever seeing that before.
Mr Stein: Should it have been brought to your attention?
Alisdair Cameron: Yes, I think it would have been helpful. I mean, there were things I certainly learnt reading it. So I understood how we used the data centres in 2015 but I didn’t know that the history was that they had been used differently previously. And this is one of the reasons why, whether people like it or not, Horizon has to go: because we were doing – I mean, going back four or five years, we were doing kind of business continuity disaster recovery tests, where we would shut down, you know, the primary data centre having moved all the stuff over to the secondary to proved it worked, and then move it back a week later. And that – there hasn’t been a full sort of disaster recovery business continuity test of Horizon for years because no one is that comfortable that it will work.
And so this is a really serious challenge, and it’s one of the reasons why, you know, you either get Horizon onto the Cloud, which the business has absolutely failed to do, or you’re going to have to rebuild data centres at a prohibitive cost using very old technology.
Mr Stein: Thank you, Mr Cameron.
Questioned by Sir Wyn Williams
Sir Wyn Williams: Mr Cameron, in the aftermath of the Bates litigation, HSS came into existence, yes?
Alisdair Cameron: Yes.
Sir Wyn Williams: Presumably at or about the same time, the Remediation Committee came into existence?
Alisdair Cameron: I think it was a little bit later, sir, but yes.
Sir Wyn Williams: Yes. Were you on the Remediation Committee from the outset?
Alisdair Cameron: I don’t think I was. So one of my – apologies if this is wrong – one of my agreements with Nick was that I was – there was – as soon as – straight after the litigation, so I’m thinking sort of late-ish 2019, one of the points I made was that the committee then managing these matters was essentially exactly the same people who had managed the litigation, other than Nick swapping in for Paula. And I felt that was wrong and hard to defend, and I thought – and then it moved to the whole Board. And in 2020, I think, sort of 40 Board meetings or something. I mean, it was a huge increase in work. And then the HRC was formed.
Largely, my recollection of it – and it may have been different right at the beginning – was that I had the right to attend meetings and I was sent papers, but certainly in the later phases I was not a member; it was the Shareholder Representative, Ben Tidswell, and one other non-exec. There were no executives on the Committee. It might have been different right at the beginning and, apologies, I can’t remember.
Sir Wyn Williams: No, that’s all right.
Just so that I can be clear, then, about the extent of your knowledge, how much did you know of what was being discussed at that Committee?
Alisdair Cameron: So I would only – there were usually calls – I would only usually attend the meeting if there was a particular subject of interest or concern to me, but I always looked at the papers. So I had a reasonable idea of what was going on, which was why I was so exercised about the paused payments issues.
Sir Wyn Williams: Right. Mr Staunton has recently told me that his understanding was that, in overseeing what went on in HSS and then the Overturned Conviction Scheme, the Remediation Committee proceeded on the basis that compensation offers would take account not just of what might be full and fair for the postmaster but also what was – and these are my words, not his – acceptable given the need to have value for money and taxpayers’ money was being used; is that your understanding as well?
Alisdair Cameron: I never heard it expressed like that but I think there are a couple of things. The fact that there were detailed Treasury/DBT signed-off operational agreements of how the HSS and OHC schemes had to be operated in order for Treasury to fund the compensation meant that that must have been built in to the process, I think. And there was, I felt – and apologies to all the lawyers in the room – an excess of lawyers in the process. I mean, I think at one point there was so much opinion checking that three different QCs or four different QCs were used for one question.
So it was a very bureaucratic process, which Post Office – and obviously Simon Recaldin would understand this much better than me – but Post Office had to follow.
And I think – I mean, I did find the paused payments issue pretty incomprehensible as to why Post Office or the HRC was taking the stand it did. So it does feel like maybe it was a value for money thing.
Sir Wyn Williams: I asked the question, amongst other reasons, because in documents which I have issued, I have drawn attention to the fact that lawyers are used to an adversarial system –
Alisdair Cameron: Yeah.
Sir Wyn Williams: – in which defendants “get away with as little as they can”, in inverted commas.
Alisdair Cameron: Yeah.
Sir Wyn Williams: Claimants try to “get as much as they can”, in inverted commas.
Alisdair Cameron: Yeah.
Sir Wyn Williams: At least some of the public utterances from both Government Ministers and Post Office representatives suggested that this was to be somewhat different, in that the aim was to provide full and fair compensation promptly, and I drew attention to all of this in progress updates that I wrote. What’s your impression about what actually went on, on the ground?
Alisdair Cameron: So I think, if you go back to the setting up of the HSS, the decision was made for Herbert Smith Freehills to run the scheme, and they got that because of their role in the settlement, which was effectively them negotiating with the claimants from the GLO.
So it was set up on the basis of a negotiation between lawyers and, essentially, there was an element of that in the way that HSS was constructed. And I think that was a mistake – and Simon Recaldin, again, will talk about this, I’m sure – but my recollection of him coming in was challenging everyone to say: should this be a negotiation between lawyers or should this be, you know, a genuine attempt at remediation, that people feel, at the end of it, that they’re satisfied, justice is satisfied, we can move on, and that they’ve been properly compensated for everything that’s happened to them?
And I think that did conflict with the sort of legal advice, committees, you know, bureaucracy of the schemes, you know, quite badly.
Sir Wyn Williams: All right. Thank you very much, Mr Cameron.
Thank you for coming for a second time. I trust you won’t have to come again.
The Witness: Thank you very much, sir.
Sir Wyn Williams: So 10.00 tomorrow morning, Mr Blake?
Mr Blake: Thank you very much, sir.
(4.38 pm)
(The hearing adjourned until 10.00 am the following day)