8 October 2024 – Karen McEwan and Nigel Railton
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(10.00 am)
Sir Wyn Williams: Morning, everyone.
Mr Blake.
Mr Blake: Thank you, sir. This morning we’re going to hear from Ms McEwan.
Karen McEwan
KAREN ANITA McEWAN (sworn).
Questioned by Mr Blake
Mr Blake: Thank you. Can you give your full name, please?
Karen McEwan: Karen Anita McEwan.
Mr Blake: Thank you very much. You should in front of you have a witness statement behind tab A or tab A1. I’m going to ask you to turn to that, please. Is that statement dated 17 September this year?
Karen McEwan: Yes.
Mr Blake: Can I ask you, please, to turn to page 74.
Karen McEwan: Yes.
Mr Blake: Can you confirm that is your signature?
Karen McEwan: It is.
Mr Blake: Can you confirm that that statement is true to the best of your knowledge and belief?
Karen McEwan: I can confirm.
Mr Blake: Thank you very much. That witness statement has the unique reference number WITN11360100, and that will be published on the Inquiry’s website. By way of background, you hold a first class honours degree in psychology; is that right?
Karen McEwan: That is correct.
Mr Blake: You have 30 years’ experience in specialist HR and operational management roles for large organisations?
Karen McEwan: That’s true, yes.
Mr Blake: Can you assist us with what specialist HR is?
Karen McEwan: Just years of experience, formal coaching and formal training through businesses like Tesco, and my degree, obviously, which is hugely relevant to my vocation.
Mr Blake: Thank you. You worked at Tesco from 1981 to 2016; is that correct?
Karen McEwan: That’s correct.
Mr Blake: Including, as UK People Director. Is that head of a particular team, part of the management structure?
Karen McEwan: It was part of the operational management structure and I led the People function for the UK, which was all of the stores, distribution and support centres.
Mr Blake: In 2016 you moved to become Chief People Officer at McColl’s Retail Group; is that right?
Karen McEwan: That’s correct.
Mr Blake: You moved up the ranks to become Interim Chief Executive before it was purchased by Morrisons; is that right?
Karen McEwan: That’s right.
Mr Blake: Most relevant for today’s purpose, you became Chief People Officer at the Post Office in September 2023?
Karen McEwan: I did.
Mr Blake: I want to start by looking at your induction. Paragraphs 15 and 16 of your statement, you have said that you didn’t receive any formal induction or training, and you took a number of actions yourself, speaking to people. Can you assist us with why that was?
Karen McEwan: I think at that time, obviously I reported directly to Nick Read, who was the Chief Executive, and Nick was extremely busy during that period. The People function itself was not staffed very well, and people were under a lot of pressure in that function and I just think there was no time to do a formal induction process.
Mr Blake: If I could bring up on to screen your witness statement, WITN11360100. If we could look at page 7, please. I’ll just read couple of sections from this page when it comes onto screen. Thank you. It’s page 7, paragraph 21. You say there:
“I did not have sufficient understanding of the context of the business and felt I should have been told more about it before I started. I had not fully appreciated the stress that the business and the Executive were under, or that I was expected to, and needed to, start work on an urgent basis to begin to help to fix the issues the business was experiencing and support the Executive Team. This meant that, whilst my background and relative experience allowed me to move into the role without difficulty, I did not have a pleasant or comfortable introduction into the business.”
At paragraph 22 you also say, about halfway down that paragraph:
“However, upon joining [the Post Office] it became clear that the scale of my role was more significant than I had anticipated. The level of expectation of my working hours and visibility across the business, made it necessary to take on a rental property in London to be able to manage the demands of the business. This has impacted my personal life.”
Where did the original expectation come from, in respect of the work that you would be required to do?
Karen McEwan: I wouldn’t attribute that to any individual telling me that; it was just apparent, given the experience that I had had in other businesses, I could see that things were less stable than I might have understood. It didn’t come from any individual; it was just my understanding and my observations of the business at that time.
Mr Blake: What was your first impression of how the business was run?
Karen McEwan: Do you mean generally?
Mr Blake: Yes.
Karen McEwan: I didn’t form an observation on how it was run initially because I would have expected to have had time to consider that and to have understood properly exactly how things were working. I think specifically, in the People function, it was chaotic.
Mr Blake: You had worked with Mr Read before at Tesco. How well did you know each other; what was your relationship?
Karen McEwan: We had never worked together. We both were on a management development programme in around 2002, I think. From memory, we didn’t work together, we had a 12-week or so programme where we had got to know each other as part of a group of about 16 people. After that time, I didn’t have any further contact with Nick at all until I joined the Post Office, or just before.
Mr Blake: What was your initial impression of how he was running the Post Office when you joined?
Karen McEwan: I felt initially the business looked like it was well run and Nick’s reputation was, as I knew it, from someone of integrity, and he had experience and was highly regarded in his role at Tesco. So that was the impression that I brought to the business with me.
Mr Blake: In respect of the Chair, Mr Staunton, at that time, what was your initial impression of Mr Staunton?
Karen McEwan: I’m afraid I didn’t have a very good impression, initially.
Mr Blake: Why was that?
Karen McEwan: I think until any personal encounter that I had had with Mr Staunton, it was a general demeanour that I felt made me and other people feel quite uncomfortable, in terms of his behaviour, certainly in and around the office in London.
Mr Blake: You say in your witness statement that “onboarding wasn’t typical of a large organisation”; what do you mean by that?
Karen McEwan: That there was just no formal process. So it was obvious that I would have to self-initiate that process and get to meet with the people that I felt I really needed to meet with, it just was unstructured and less structured than I would have expected. There just wasn’t a formality to the process.
Mr Blake: Who was responsible for onboarding at that time?
Karen McEwan: I think primarily it would have been the Chief People Officer but, as I joined, there was nobody in that role and one of the existing team was being asked to step up to cover that role, so the focus on that probably wouldn’t have been as one would have expected.
Mr Blake: Are you now responsible for that role?
Karen McEwan: I am.
Mr Blake: We’ve heard that your post was one that changed hands a lot and you’ve addressed that in your witness statement, you’ve given reasons for the pressures that people were under in that team. One of the reasons you say is that members felt undervalued. Can you expand on that for us?
Karen McEwan: On initially joining, I was very keen to get as much information about the culture of the business as I could, and I asked the team very open questions, this is the People Team, the people that I would have been responsible for managing, effectively, in my role. I just feel that they felt that the efforts they were making and that they were putting into the business were just not appreciated and they were finding it very difficult to make progress, unsurprisingly, in the circumstances.
Mr Blake: When you say the circumstances, do you mean the fallout from the Horizon scandal, the Inquiry, or something else?
Karen McEwan: Yes, definitely, but also just the lack of leadership in that function at that time and the lack of attention that the function had.
Mr Blake: The other reason you’ve given is that people were unable to effect change in the business and you say “including how performance was managed”; what do you mean by that?
Karen McEwan: I would say the biggest and most common thread of the feedback that I had at the time from the people was that they felt that there was performance in the business. There were people who were not performing to the standard that would have been expected or that was necessary for the business at that period of time, and they felt that there was not enough rigour, not necessarily in the policy or the process, but that there wasn’t enough rigour in the application of those processes so that people were held accountable for poor performance or poor behaviours in the organisation.
Mr Blake: Was that something that was specific to that point in time; do you think it was something that went back further?
Karen McEwan: I would suggest that it was exacerbated by the issues that the business had at that time but I suspect that it had gone back further, probably due to the constant change of people in my role, I would imagine. That wouldn’t have been helpful.
Mr Blake: Having worked in that role in a number of different companies, is that something that’s typical; do Chief People Officers tend to move around a lot or is that something that was a particular problem for the Post Office?
Karen McEwan: Certainly not. I’ve only worked in two employers previously, certainly not in either of those organisations, and it wouldn’t be typical, I would suggest, in an organisation at the size and scale of the Post Office, no.
Mr Blake: In terms of corporate memory, how did that present itself when you first joined?
Karen McEwan: The Executive Team had also changed quite frequently and it was difficult to get consistency in the information that I was trying to get to understand about the business to go about my job. So I would say it was fragmented. There were certain parts of the business that had had stability, and people were more confident in those departments and those areas, and there were other parts of the business where people were less confident and there had been more change.
Mr Blake: I want to ask you about the scope of your role and the limits to your role. Are you in charge of recruitment –
Karen McEwan: Yes.
Mr Blake: – managing those who are currently in the business from a Human Resources perspective as well?
Karen McEwan: That’s correct, yes.
Mr Blake: Onboarding is something we’ve discussed. How about other areas of the business: where do you see your role as fitting in?
Karen McEwan: In terms of directly managing or in terms of having –
Mr Blake: Yes, your responsibilities?
Karen McEwan: I would say the role of the Chief People Officer is to lead the agenda on People across the organisation. So that doesn’t spend to postmasters but it extends to anybody that works for and is contracted to work for the Post Office.
Sir Wyn Williams: I was going to ask you the direct question. Presumably you focus on employees of the Post Office; is that fair?
Karen McEwan: So my role focuses on employees but my view of the role – and I think this is very significant and really very important – is that the performance of people employed by the Post Office in the organisation have a direct impact on the relationship with, and the confidence, and the trust with postmasters. So I see the role as intrinsically connected to the postmaster population, and I think that’s extremely important but, in terms of my direct responsibility, my direct responsibility is for the colleagues of the Post Office.
Mr Blake: Can we please bring on to screen POL00448785. There’s no real significance to this particular document. It’s just an example of something I’d like to look at. This is a Board report of which you are named as the author and sponsor and it relates to a contract for PR services. Under the “Executive Summary” it says:
“As a result of events that have occurred since the start of 2024 [the Post Office] has required a substantial increase in services from Cardew …”
Cardew is a PR firm; is that correct?
Karen McEwan: It is.
Mr Blake: First bullet point:
“… the increased public scrutiny that has arisen and the knock-on impact this has had on [the Post Office’s] brand; and
“Cardew backfilling the vacancy left by [Post Office’s] departing Director of Communications.”
To what extent does your role also involve the obtaining of contract for services?
Karen McEwan: So at that period in time, there was no incumbent Communication or Corporate Affairs Director and I was taking some line management accountability for that function to help and support the Executive and Nick, who – there was a lot of pressure in the business at that time.
Mr Blake: We’ll see, with you and with other witnesses, quite a lot of expenditure on external firms. There will be those who query why the Post Office considers it necessary to contract out those kinds of services; what’s your view on that?
Karen McEwan: I understand that and I definitely understand that in the context of this particular contract, and I think it might be important to explain some of that context for the Inquiry.
Mr Blake: Please do.
Karen McEwan: At that time, and this was a pre-existing contract that was already in place and was actually due for retender this autumn, actually this month coming, at that time – I think I’d referred to it elsewhere in my statement – the business was in significant distress, and not only for the wider business but for the Communications Team as well. It wasn’t a normal time and, you know, the events – I think the media attention that the business was under at that time, the challenges that we had, we’d had a lot of – again, a lot of leavers in the team.
It was important, I felt to get support for the team but I was very conscious at that time that there had been criticism in the media about the expenditure on corporate affairs and on PR support for the business. So I was acutely aware of that at the time of making this decision.
I think when I extended the contract I was very keen to point out to Cardew that the caveats for this extension would mean that there would be as much focus on internal communication for our colleagues and postmaster communication because, at that time, the business was being challenged on its employer brand, so we were struggling to recruit senior positions, certainly in my function specifically, because of the brand of the Post Office at that time, frankly. And I’d asked Cardew to ensure that there was as much focus, not just on the Executive, that almost seemed to be less important than the focus that we needed on internal and postmaster communications, so they brought in some specialist support to help with that as well.
Mr Blake: How is that going to work going forward?
Karen McEwan: Well, I think we’re over that peak period of the volume now, and we have recruited – at the same time we started a search in the market to replace the Corporate Affairs and Communications Director. We have now replaced that position. So I think there’ll be more stability and more consistency.
Mr Blake: Going back to the issue of induction, you’ve given evidence about your own induction, you’ve personally made changes to the induction process. You’ve set those out at paragraphs 25 to 33 in your statement. You address Horizon scandal training. Can you briefly summarise what that involves?
Karen McEwan: It was just raising – further raising awareness for colleagues onboarding, pre-joining the Post Office, so they had context and we set out a recommended reading list and reference material for people to do on a self-taught basis, prior to joining, but then reinforce that training as people join. So there was an online training module, which is available to everybody, that raises awareness of exactly what happened, right the way through from the judgments and to subsequent actions that the business has taken.
Mr Blake: Was there anything addressing those topics before you joined, in terms of training?
Karen McEwan: Yes, there was pre-existing training prior to my joining I believe, yes.
Mr Blake: Have you seen that training?
Karen McEwan: I have seen it, yes.
Mr Blake: What was your view of the quality of it?
Karen McEwan: At the time that I reviewed it and in the context of the business, I felt that more rigour was needed in terms of the amount of material that people needed to read and comprehend to properly understand their roles before they joined.
Mr Blake: There’s been quite a lot of focus in the Inquiry on issues in the Legal Team and issues in the Investigations Team. Is there any additional training that’s provided to the Legal Team or the Investigations Team in light of their role in matters being investigated by the Inquiry?
Karen McEwan: Not to the best of my understanding, no.
Mr Blake: Do you think it would be worthwhile having additional training for those teams or do you think that the process that you’ve already put in place is sufficient?
Karen McEwan: No, I think it may be worthwhile in doing further training with those teams and any other teams that require it.
Mr Blake: Moving on to the People Plan, can we bring up on to screen POL00458453. What is the purpose of the Strategic People Plan?
Karen McEwan: In this business, probably more than any others, it was very important to get some formality and some structure about the way that work was being conducted by the People Team and I think I referred, and you asked me earlier, about some of the reason for the chaotic state of affairs, really, when I joined, and I think this came down to the fact that there wasn’t a clear plan for the business or for that function, and it was important to establish the function within the business to get credibility and get belief in the work that the function was trying to do, and I think it’s extremely important to have a plan, some focus and some measurable targets and actions that I and my team can be held to account for.
Mr Blake: Was this a plan that you personally implemented?
Karen McEwan: Yes.
Mr Blake: Can we please scroll through the plan. Over the page, please. If we can continue going over and over, we can stop on the final page, page 7. One matter that has already been highlighted by Sir Wyn this morning is this plan doesn’t address subpostmasters, does it?
Karen McEwan: It doesn’t.
Mr Blake: I think you’ve said in your witness statement that, and you’ve said also this morning, that, in your view, improving the culture within the Post Office will also improve the experiences of postmasters. Can you just expand on that and quite what you mean by that?
Karen McEwan: I think that’s absolutely critical. I think – it’s fairly all encompassing but I would say from onboarding people properly, making sure that they’re sufficiently trained, making sure that they have awareness of the issues and the wrongs of the past, making sure that we have people that work for us that have the right behaviours and the behaviours that are expected in an organisation, and all of that gives people the confidence and capability to do their jobs, and that’s fundamentally important in building trust with postmasters.
So, whilst I don’t have contractual responsibility for that population, I believe that my role is to do everything I can to make sure that the people in the organisation are sufficiently capable.
Mr Blake: A counterargument to that might be that it cements a them-and-us attitude between employees and subpostmasters. Whose responsibility would it be to develop a plan like this to improve the relationship with subpostmasters?
Karen McEwan: Specifically, at a detailed level, the Retail Team and the postmaster facing team would be very much involved, but I believe it’s the job of the Executive Team and of the Chief Executive, as the ultimate owner, to ensure that the postmaster relationships continue to be a focus and priority for the business.
Mr Blake: Are you aware of a strategic plan, similar to the Strategic People Plan, to address subpostmasters?
Karen McEwan: I haven’t seen a plan but I know that there are efforts in the business to do that, yes.
Mr Blake: Could we please bring up on to screen our YouGov expert report, that’s EXPG0000007. Did you see this evidence being given in person or have you read the report?
Karen McEwan: I have read the report in my additional documents as the preparation for the Inquiry.
Mr Blake: Can you turn to page 40 where it addresses certain statements about the leadership Board at the Post Office. If we look at the first two of those figures in figure 28, we can see there that, in terms of the statement that “Generally, Post Office Limited is trying to improve its relationship with subpostmasters”, there’s a net disagree figure of 51 per cent; and, secondly, a statement “Generally, Post Office Limited understands the concerns of subpostmasters”, a very strong net disagree of 74 per cent.
It seems as though there’s quite a lot of work to do there in respect of that relationship; would you agree with that?
Karen McEwan: I would agree with that, yes.
Mr Blake: Is that something that you’re aware of having been discussed at Executive level?
Karen McEwan: Yes, definitely. It’s a constant conversation. I haven’t seen those stats before but seeing them highlights how much work there is to do. But yes, it is discussed.
Mr Blake: What do you think can be done to fix that relationship?
Karen McEwan: There is a need for transparent communication and I think in building any relationship of trust, that’s critically important, so there’s more work to do there, definitely in terms of talking about, you know, the plans that the business has. Whether they’re strategic plans on proposition or whether they’re plans to generally support the postmasters, I think we can do a better job of communicating those plans.
Mr Blake: Do those figures surprise you at all?
Karen McEwan: No.
Mr Blake: Having had conversations at Executive level, are they figures that surprised members of the Executive Team?
Karen McEwan: I can only speak for my own perception, obviously, but I would be surprised if the Executive Team didn’t expect there to be dissatisfaction from postmasters about the relationship, yes.
Mr Blake: Thank you. That can come down.
I’m going to move on to the CEO position. The CEO’s appointment and CEO remuneration issues, do they fall within your remit?
Karen McEwan: Not directly, no. So the CEO appointment is a matter for the shareholder and the CEO remuneration is also a matter for the shareholder, but I am a member of the Remuneration Committee.
Mr Blake: In terms of the CEO appointment being a matter for the shareholder, what role does the Chief People Officer have in that?
Karen McEwan: Obviously I haven’t experienced that particular role being searched for at the Post Office because, obviously, when I joined, Nick was the Chief Executive and he was incumbent and has been in the role since I’ve been here. I would expect to be consulted, from best practice perspective, on how we would search for that role in market. I would expect, given that I’ve now got some experience at the Post Office, to be consulted about what I saw to be the significant issues that needed to be addressed in that role. So I guess I’m saying I would expect to be consulted but not necessarily involved in the decision making about the appointment.
Mr Blake: Who would take those kinds of matters forward? Let’s say we’ve heard that Mr Read will, in due course, be stepping back: who will take the new appointment of a CEO?
Karen McEwan: I think that will be a matter for Nigel Railton, the new Chair; Lorna Gratton, as a shareholder representative; and Amanda Burton.
Mr Blake: We’ve heard quite a lot about the CEO’s remuneration. What is your view of the sufficiency of the CEO remuneration to attract top talent?
Karen McEwan: It’s quite difficult in terms of comparison, because I think compared to the wider market in more commercial businesses, which frankly are the businesses that I’ve only had experience in, then currently the remuneration is probably definitely not upper quartile, I would expect. So it isn’t significantly high, is what I’m saying. I think, compared to obviously other remuneration packages in the public sector, there might be a different view of that.
Mr Blake: That’s quite similar evidence to the evidence given by Amanda Burton, two extremes, but if the Chair looking at recommendations for the future, ensuring that the Post Office has the best people leading it, what is your view of the remuneration package?
Karen McEwan: I would agree with the statement, firstly, that it’s important. It’s critical that the Post Office has the right leadership team to take it forward. I would consider it possible to recruit somebody capable and proficient at the current level of remuneration but I would also expect that there will be other candidates probably that we would want to approach and that would be suitable candidates that may not want to come to the Post Office, due to their view of the remuneration. I think it’s a job that one has to want to do because there’s a public service to be done and I think that’s very important as well.
Mr Blake: Can we please turn to POL00448641. This the investigation report that was carried out by Marianne Tutin, a barrister, in relation to complaints made or raised by Ms Davies. We’ve addressed it previously, we’re addressing it and Ms Davies has been named because she’s been previously named, for example, in a Select Committee. We’re not going into great death in relation to each and every allegation but I want to go to two matters that arise, and the first is relevant on this issue. You were the commissioning Executive in relation to this report; is that correct?
Karen McEwan: I wasn’t initially the commissioning Executive. Somebody else was the commissioning Executive and due – as the investigation started, due to a conflict issue, I was asked to take on the role of the commissioning Executive once the investigation was under way.
Mr Blake: What did that involve?
Karen McEwan: I was part of a panel of – oversight panel of the investigation, along with Amanda Burton and Lorna Gratton.
Mr Blake: Thank you. If we could turn to page 5, please. We’re going to stick to the CEO pay position and that is allegation 2.10. The allegation was that Mr Read bullied Ms Davies in relation to the messages he sent in relation to his dissatisfaction with his pay. The analysis is on page 15. If we could turn to page 15, I’ll just read a few paragraphs from that analysis. Ms Tutin finds that:
“Mr Read did not bully Ms Davies in respect of the message he sent her concerning his dissatisfaction with his pay in January 2023.”
She says:
“Mr Read had been dissatisfied demonstrably with his remuneration package for some time, with numerous attempts being made by former Chairs of [the Post Office] to seek an improved package from the government. Ms Davies, Mr Read and Mr Staunton discussed the topic intensively during the first two months of Ms Davies’ employment in particular. Mr Read suggested that he would resign or take action unless matters improved, with increasing frequency and feeling, during January 2023.
“From Ms Davies’ perspective, I appreciate that she must have felt under pressure to improve his pay, given the intense focus this issue received and Mr Read’s increasingly strong suggestions that he would leave [the Post Office] or take action. That said, some of that pressure may well have been self-imposed by Ms Davies in her desire to succeed where her predecessor, Ms Williams, had seemingly failed.
“Mr Read’s messages were, at timetables, demanding, impatient and irritable, which he may wish to reflect upon. However, they were, on balance, not of an offensive, aggressive or humiliating nature. They were not of that severity. Furthermore, Mr Read explained to Ms Davies that his dissatisfaction with pay pre-dated her time at [the Post Office] and he did not blame her for the situation. Mr Read spoke to others, including Mr Staunton, about his dissatisfaction with his pay in similar terms. There was no ‘finger-pointing’ at Ms Davies.”
If we scroll over the page we can see the recommendation. She says:
“Nevertheless, [the Post Office] will no doubt wish to ensure that the future Chair is aware of the history of requests made to the government in respect of Mr Read’s pay to ensure that his expectations are managed appropriately moving forward.”
Has that recommendation taken place; have you had discussions with the Chair?
Karen McEwan: I haven’t had any personal discussions with the Chair. I would imagine that Amanda Burton would have taken that up. I haven’t discussed it with the Chair.
Mr Blake: What’s your view of the relationship with government and having to ask the Department for Business or the Secretary of State to improve the pay of the CEO?
Karen McEwan: I think, having come from other corporate businesses, where we still would have to answer to shareholders, that is in keeping with my experience. I think it’s important that there is strong governance and rigour around how executive pay, as well as the Chief Executive but including the Chief Executive, is managed. So it’s important. I – there are occasions where I feel that we don’t maybe have as much autonomy as we ought to have to make decisions regarding pay at a more junior level, but I think at the level of the Executive and the Chief Executive it’s important that that is in place and that that rigour is applied, yes.
Mr Blake: When you say at a more junior level, who do you have to obtain authorisation from in respect of the pay of more junior employees?
Karen McEwan: So that’s determined by threshold of the value of the pay, as opposed to the individual. So it’s individuals over a certain level we have to seek approval for, which is mainly confined to the Executive and the Senior Leadership Team.
Mr Blake: What change would you make to that?
Karen McEwan: I don’t think there are any further changes to make to that at the moment but, if we did want to go outside of those parameters, for example, if we were looking for somebody new to come into the business, we might have to get approval for that but there aren’t any current changes in plans for that team of people.
Mr Blake: While we’re on this report, if we could perhaps turn back to page 5. I’ll address this now just because we’re on the report, and I don’t want to have to return to the report but, if we scroll up to the top, we have the allegation relating to Mr Staunton. It’s allegation 2.7:
“During a meeting on 25 January 2023, Henry Staunton, former Chair, referred to women as ‘pains in the arses’ and at the same meeting, said of one candidate for the RemCo Chair position, words to the effect of ‘she doesn’t look coloured, where does she come from?’ and in view of her age referred to the same candidate as a ‘girl’ (when other women were referred to as ‘ladies’) …”
If we please could turn to page 12 and 13 there’s the analysis of that allegation. As I said, this isn’t the forum to investigate the particular allegations but I’m looking at the business’s response to the findings of this report. Ms Tutin sets out the allegations there at 27. At 28 she says:
“Mr Staunton’s remarks were discriminatory on grounds of race and sex, and therefore not in accordance with the Dignity at Work policy. The remarks go well beyond his characterisation of them as potentially ‘politically incorrect’ statements.”
She sets out her reasoning below. If we could please turn to paragraphs 29 and 30, those are passages I’d like to look at. Paragraph 29 says:
“Consideration should be given as to whether quality, diversity and inclusion training should be offered to Non-Executive Directors, including the future interim or permanent Chair. Alternatively, such training could be a mandatory requirement for any [Non-Executive Directors] involved in external or internal recruitment processes, where they are acting as a representative of [the Post Office].”
Just pausing there, is that something that falls within your area of responsibility?
Karen McEwan: Yes, it does fall within my area of responsibility.
Mr Blake: Is it something that you have taken steps to address?
Karen McEwan: Yes, I have.
Mr Blake: Can you briefly summarise the steps that you have taken in that regard?
Karen McEwan: So we have, after several months’ search, actually we have just appointed a specialist in EDI for the business, which I felt was critical, who reports into the Talent and Capability Director, who is ultimately responsible for this area and will be producing training for every member of the Post Office team, including the Non-Executive Directors and the Board.
Mr Blake: Thank you. Paragraph 30 says:
“I was also concerned by remarks made by Mr Staunton in respect of his outdated view of the Speak Up process and investigations (the latter of which he said, notably, were a ‘cancer’ in the organisation), and the impact such views can have on workplace culture. It was very troubling that those remarks were made by the (then) Chair of an organisation that is grappling with the most serious of institutional failings. In looking for a new Chair, it should be a key consideration for [the Post Office] and [the Department for Business] to assess whether prospective candidates have good experience of helping to foster a workplace culture in which any concerns relating to [for example] EDI, discrimination or whistleblowing can be raised openly without fear of intimidation or retribution.”
The current Chair is only an Interim Chair; is there a process ongoing for the recruitment of a new Chair?
Karen McEwan: I believe there is a permanent – or there will be a permanent process being run, yes.
Mr Blake: In respect of paragraph 30, are those areas within your area of responsibility?
Karen McEwan: Not strictly for the recruitment of the Chair but this is one of the areas that I would expect, obviously, to have some involvement in, given my previous experience, yes.
Mr Blake: Are you aware of that process or anything similar having been undertaken in respect of Mr Railton before he was appointed?
Karen McEwan: I’m not aware of that taking place, no.
Mr Blake: Thank you. That can come down.
At paragraph 164 in your witness statement, you have said that Mr Staunton had asked you to close down the investigation. Can you assist us with your account in respect of that, please?
Karen McEwan: Yes, he had asked me previously, or talked to me previously about investigations more generally in the business. So I was aware that he had a dim view of the processes, and he did, in a comment to me, also use the terminology that it was a “cancer in the organisation”. Specifically related to the investigation into Jane Davies, he asked me to close down the investigation and do everything that I possibly could to make sure that that was – that that happened.
Mr Blake: Close down the investigation into Mr Read, into himself, or more broadly?
Karen McEwan: So, at the original time, there were several conversations about this. At the initial conversation, the investigation as we knew it only related to Mr Read because the – some of the comments had not been particularised until the Employment Tribunal claim was laid. Then the claims were particularised and I became aware that they pertained to Mr Staunton, yes. So, at that time, he was asking me to close down the investigation into Nick Read.
Mr Blake: From your understanding and from what you heard and saw, were you of the belief that he understood that the investigation was also into his own conduct?
Karen McEwan: So, certainly after November, when the Employment Tribunal claim was particularised, then yes, I was of that belief.
Mr Blake: Did you have any specific conversation about the investigation into him with Mr Staunton?
Karen McEwan: So he didn’t refer – Mr Staunton didn’t refer to his own investigation or the elements that extended to him, specifically, but he did persist in asking me to close down the investigation and it was my belief at the time that the motivation to do that was not as I had been told by Mr Staunton.
Mr Blake: What do you mean by that?
Karen McEwan: So he – sorry, Mr Staunton said that it was in respect of his concern about Nick Read’s wellbeing, and I didn’t believe that to be true.
Mr Blake: What opinion did you have?
Karen McEwan: Sorry, could you repeat the question?
Mr Blake: What was your view?
Karen McEwan: My view was that that request was self-serving on Mr Staunton’s behalf.
Mr Blake: Did you hear Mr Staunton’s evidence to the Inquiry?
Karen McEwan: Yes, I did.
Mr Blake: What is your view now?
Karen McEwan: My view remains the same.
Mr Blake: Thank you. I’m going to move on to the Group Executive and the Senior Executive Group structure.
Sir Wyn Williams: Just before you do – I don’t want details – but it follows from what you said, I think, that Ms Davies brought an Employment Tribunal claim against the Post Office, presumably?
Karen McEwan: Yes.
Sir Wyn Williams: Has that been concluded?
Karen McEwan: No, it hasn’t, I think –
Sir Wyn Williams: Fine then, I won’t –
Karen McEwan: My understanding is that it is filed but not yet heard, sir.
Sir Wyn Williams: Right, that’s fine. Let the Employment Tribunal do its work.
Mr Blake: In respect of the Group Executive, you have identified issues with the Group Executive before it became the Senior Executive group. In paragraph 77 of your witness statement, you have said that it was untypical of senior leadership groups that you’ve been part of; can you expand on that for us, please?
Karen McEwan: I would say specifically the lack of experience and particularly in the context that the Post Office had at that time. So training, experience and, whilst – I think I say this in my statement – whilst there was not a shortage of commitment, it was a matter of capability.
Mr Blake: Where in particular were the problems?
Karen McEwan: I would say particularly in the retail-facing functions. But it wasn’t confined to that. It wasn’t confined to just one individual; it was a general view that I held.
Mr Blake: Is that the function that interact with subpostmasters?
Karen McEwan: Yes, it is.
Mr Blake: What would you say is the cause of that problem?
Karen McEwan: I think it’s largely down to selection of the individual for the role against the requirements of the role. So there probably was a shortfall in terms of experience or capability of the individuals in the job, and then, as a business, we probably didn’t react quickly enough to some of the areas of underperformance that had started to appear and manifest, particularly given the circumstances that happened earlier this year.
Mr Blake: Who in particular was failing in that regard?
Karen McEwan: So it would be the direct leaders of the people in question, the Executive Team. Ultimately, of course, the Chief Executive has accountability for performance in the organisation. I would say, though, that for the year before I joined – I know I have repeated this several times – but the lack of having strong People representation in that group is undoubtedly going to have consequences on the performance in the organisation.
Mr Blake: I know you’ve said that it isn’t just individuals but I think we’re getting the impression that there is certainly at least an individual who, in your view, was underperforming; who was that individual?
Karen McEwan: It was the Chief Retail Officer.
Mr Blake: Who was that?
Karen McEwan: It was Martin Roberts.
Mr Blake: Thank you. You’ve also given the example of being asked to give an opinion on a matter which was not within your area of expertise; are there other examples of failings in that regard?
Karen McEwan: For me individually, no. I recall one example, I think, of abstaining from a decision because I felt that I wasn’t qualified to do so but it’s my belief that, at that time, there was a reluctance for people to not say when they didn’t understand, and feel obliged to make a contribution to things that they maybe weren’t necessarily qualified or had the experience to contribute to.
Mr Blake: At paragraph 79 of your statement, you said that members of the wider management population felt they couldn’t trust the Group Executive; can you expand on that for us, please?
Karen McEwan: Yes, I think intuitively – and this is not factually based, but intuitively when I started, I detected that that was the case, and I ran a couple of sort of voluntary forum groups, not all of the representatives from the senior leadership population came, but they were quite well represented, and I did several of them over my first few months, and members of that team told me that at the time, and members of my own team had also said the same thing. So there was consistency in what I was being told.
Mr Blake: Were there particular individuals who they felt they couldn’t trust?
Karen McEwan: So there weren’t – they didn’t cite particular individuals. It was the – it was kind of commonly referred to as the GE, as it was at that time, the General Executive Team.
Mr Blake: I think you’ve said that was quite a big team at that time –
Karen McEwan: Yes.
Mr Blake: – is that right? You changed the structure. Was it instigated by you, the change of structure, to the Senior Executive Group?
Karen McEwan: So I think, before I joined, Nick and Owen Woodley, who was the Deputy Chief Executive, had been considering whether or not the structure was right anyway, but I would say, on joining, and having conversations with Owen, and probably having a fresher perspective, would have instigated the action that we then took, yes.
Mr Blake: What were the principal structural changes to the group?
Karen McEwan: We narrowed down the group, which may seem odd, given that the business was under pressure at the time, and it was quite complicated, but to speed up the decision-making processes, it felt important to confine that group, the most senior in the organisation, to the people that had the relevant skills and experience to do those jobs.
So we thinned the group quite substantially and we were also at that time – it wasn’t the only reason but we were also, at that time, concerned about the bandwidth of the Chief Executive, of Nick, in terms of the number of direct reports that he had but also the size of the job that he had to hand as well and, as I said, it wasn’t the only consideration, but it was one of the considerations.
Mr Blake: Looking at the problems that you identified with the original group, if we take the lack of deference to Subject Matter Experts as one of the complaints, has that been overcome by these structural changes?
Karen McEwan: Yes, it has, yes … I think, as always, the dynamics and the behaviour of a group running a business has to be constantly under review, and we have to have the right checks and balances in place to make sure that that is the case, but I feel confident that it’s far better than it was when I joined, yes.
Mr Blake: Taking the other issue, the lack of trust, has that issue been resolved?
Karen McEwan: Trust is a very difficult thing to measure, of course. Yes, I think to a great extent it has, and from the conversations that I’ve since had with the senior leadership population, I think they feel more confident that the behaviours of that group, the Executive Group, are in keeping with what they would expect and I think that has given people confidence that that change has definitely been made, yes.
Mr Blake: Can we please turn to POL00446673. This is a “Strategic Executive Group Report” of 1 May this year. It has you down there as the sponsor of the report. Can you assist us with the background of this report, please?
Karen McEwan: Yes, this the full report pre-the Board report of the colleague engagement survey that was taken earlier this year.
Mr Blake: Are you aware of issues as to whether sufficient information was passed to the Board based on this report?
Karen McEwan: So I feel very confident that this report, and the report that went to the Board, is what would consider to be best practice, and that’s what I’ve been told since. So I’m confident in the quality and in the comprehensiveness of the information that was given to the Executive and to the Board.
Mr Blake: Did the report accurately reflect the results of the surveys, for example?
Karen McEwan: Yes, yes it does.
Mr Blake: If we could turn over the page, please, we have the headline results there. I am just going to read couple of them. Paragraph 3 says:
“The overall outcome report was shared with the Strategic Executive Group on 23 April 2024. It has also been shared with the ‘Create New Confidence’ Leadership Team group.”
Can you just assist us with who the Create New Confidence Leadership Team group are or what their purpose is?
Karen McEwan: This is – at the start of the year, after changing the Strategic Executive Group, we wanted to give the Senior Leadership Team some key focus areas to work on and this was one of the focus groups, so they were the group that were responsible for giving us ideas and communicating the survey but giving ideas in terms of further improvements, yes. So they were a cohort group within the existing management population.
Mr Blake: If we scroll down, please, I’d like to look at 4(d). It says:
“The level of strain felt by senior colleagues at Post Office is substantially different to the level of strain felt by more junior colleagues and this is impacting their wellbeing. The predominant descriptions of the culture for junior colleagues are ‘friendly’ and ‘supportive’, whilst for senior colleagues they are ‘bureaucratic’ and ‘political’. The barriers which have the highest impact on strain have decreased for junior colleagues, whilst increasing for senior colleagues. Proximity of senior colleagues to governance processes is likely a cause of strain and job and [organisational] design should be reviewed for senior colleagues.”
Can you summarise for us what the issue here is?
Karen McEwan: There’s quite a lot to summarise here, I am just trying to think of how can I best say this as succinctly as possible. So I think the comments on bureaucracy apply to the levels of process that those people have to apply to get change executed in the business or to make things happen and the political behaviour, my belief is that would refer back to the references to the general Executive Group in terms of the political behaviour there, maybe.
But I think it’s really centred around how difficult it is, the processes that the team have to go through to get things done.
Mr Blake: It seems as though the solution might be changes to the job and organisational design; is that something that has taken place?
Karen McEwan: It’s something that’s in the process of taking place, yes.
Mr Blake: How do you foresee that happening?
Karen McEwan: So I think there needs to be more clear lines of accountability and demarcation between responsibilities, so people are very clear on the elements of their role, which are within the confines of what they’re responsible for, and that there’s clarity, but also that we have roles that are duplicative in the business as well, and that causes confusion and also gets in the way of getting things done.
So I think there’s a need to organise work better, simply put, and to have the right people in the right jobs.
Mr Blake: Who’s taking that forward?
Karen McEwan: That’s my responsibility to take forward.
Mr Blake: Do you have a timeline for implementation?
Karen McEwan: We – we’re doing the work at the moment to – I mean, constantly evaluating the structure of the business, like, I guess, in any other business, but we’re sort of specifically looking at that over the next – we’ve started and we’re looking at that over the next few months, yes.
Mr Blake: Can we please turn over the page and look at (f). (f) says:
“Poor internal communications are driving a lack of colleague confidence in both Post Office and senior leadership. 43% of colleagues suggest that the one thing they would do to make Post Office a better place to work is to either ‘improve internal communication’ or ‘be more honest and transparent’. In most businesses, suggestions to make the business a better place to work tend to centre on improving pay and benefits or improving progression opportunities, so the overwhelming feedback on communications at Post Office suggests this is a real area of opportunity.”
Can you assist us with that?
Karen McEwan: It’s surprising that it’s so important. So I think that paints the picture of what people’s expectations of us are as a leadership team, and is giving us very clear signposting, and emphasising the need to communicate, I think with colleagues and with postmasters. So I think it’s very important that we take heed of that.
Mr Blake: Are you aware of work that’s ongoing in that respect?
Karen McEwan: Yes, work has definitely started in that respect.
Mr Blake: Can you point to any concrete steps that you think will change that concern?
Karen McEwan: We have regular, every Wednesday, we have a regular communication that Nick, in the past, has led, and now Neil Brocklehurst has taken over from, where we do a weekly communication on business performance, changes that we’re making, there might be issues on some elements of the People Plan that we want to communicate, or colleague wellbeing, for example, and they’re attended physically with the people that are in the office and then there’s a broadcast.
Then every four weeks we do a fuller, more comprehensive meeting, again led by the Executive Team, and, at that point, people are able to ask questions of the Executive Team or each other, frankly, and most recently – and this has been a really positive step forward – we’ve had postmasters as well attending those meetings and speaking to the Post Office team and the Post Office colleagues about their life as a postmaster.
Mr Blake: Is that something that’s formal, that’s going to happen every so often?
Karen McEwan: There’s a plan to make it happen regularly and often, and to do more in that respect as well.
Mr Blake: Does that have a particular name, the group that met with the subpostmasters?
Karen McEwan: We haven’t – I don’t think from memory – sorry – there may be, I’m not familiar with it having a name but I think there’s a strong intent – and our Director of Corporate Affairs and Communications is taking responsibility for making that happen.
Mr Blake: Thank you. That can come down.
At paragraph 99 of your witness statement, you have said that there’s a perception that the organisation is not as open as it could be; is that a perception or is that reality?
Karen McEwan: There is definitely work to do, so I think there is a sense of reality but I also think that – yeah, sorry, I think it is a reality, yes. I think we could be more open.
Mr Blake: To take an example, Calum Greenhow of the NFSP has given evidence to the Inquiry about a meeting on 29 May this year. I think you were present at that meeting; is that right?
Karen McEwan: I’ve been present at a couple of meetings. If they’re the meetings that I think you’re referring to, yes, I have been present definitely with him at a meeting, yes.
Mr Blake: He has suggested that information was given to him about the new NBIT system but that didn’t mention a number of concerns that we’ve heard about at this Inquiry, about the quality of the NBIT build and about cost. Do you think those meetings with the NFSP have been as candid as they should have been?
Karen McEwan: Apologies, I don’t recall that specific conversation happening, I’m afraid, at that meeting at all. I think I can talk confidently about the intent going into those meetings, and I know Nick had asked the whole of the Executive to try where we possibly could to sort of show representation, and generally to meet and listen to the views of the Voice of the Postmaster, and the NFSP, and the CWU. So we all attended for that reason.
So I think the intent going in there definitely would have been to have open dialogue and to take constructive challenge from those groups of people about how we could better run the business. But I can’t recall the specifics of that meeting, I’m sorry.
Mr Blake: I appreciate that NBIT is not your area of responsibility but, looking at NBIT; do you think that there is sufficient transparency about the future in regards to that system, from what you’ve seen and heard within the business?
Karen McEwan: I think, because of what I’ve seen and heard, and listening to the view from postmasters and other people, I think there is definitely opportunity to improve the openness and transparency of the progress, yes.
Mr Blake: I’d like to turn to an anonymous letter. Can we please bring up on screen POL00448411. This is a letter that you will have seen, it’s from a group of people who have called themselves Post Office whistleblowers. It was sent to a number of people, including the Chair, Members of Parliament and the Inquiry.
In the third paragraph it says:
“Since March [the Post Office] has conducted 2 opinion surveys, one directed at postmasters, the other at [Post Office] employees. Both results are shocking and serve to demonstrate that the culture within [the Post Office] is significantly worsening (despite [Mr] Read confirming in a Parliamentary committee meeting in January that ‘improvements in culture were being made’). This is not true. We are deeply frustrated that despite several requests to see the full results, we are being denied access.”
Is this something that fell within your area of responsible?
Karen McEwan: So the postmaster survey, not, but the colleague survey, yes, that’s within my area of responsibility.
Mr Blake: Are you aware of this specific allegation?
Karen McEwan: I wasn’t aware until I saw this in preparation for the Inquiry very recently. I didn’t know that that was the allegation.
Mr Blake: Can you speak to it at all in terms of whether you’re aware of any requests to see the full results and not being granted?
Karen McEwan: Yes, I attended the Board meeting to present the results on the colleague survey and, at the same time, the team that were responsible for the postmaster survey also attended at the same meeting. So I happened to stay for the whole session, which was very comprehensive. We covered the detail of the postmaster survey – this is not the YouGov survey, sorry, this is the internal survey – and the colleague survey, in detail with the Board.
We’d also covered both of those same things at our Executive Group meeting beforehand and we have fully communicated the results, certainly of the colleague survey – I can speak with conviction to that element – through the business at every level, and we’ve been very comprehensive, so we haven’t sanitised any of those results. We’ve provided full and comprehensive detail to every business leader, to then share with their – onward share with their teams.
We have protected anonymity in the smaller groups from the verbatim comments but, frankly, the verbatim comments roll up into the themes of the survey anyway, so there’s no chance of any ambiguity about the results of the survey.
Mr Blake: Thank you.
The letter then goes on to raise a concern about people being managed by Mr Read. If we scroll down, we can see a complaint about those who are said to have conflicts of interest and we’ll get on to Project Phoenix and the Past Roles Project shortly. If we go over the page, please, there’s just something that’s said about you that I’d like to give you an opportunity to respond on. It’s the second paragraph. I think we’re going to actually have a version of this that doesn’t have the redactions on but it doesn’t matter for today’s purpose. It says:
“Who are the new executives coming on board too? Karen McEwan is well known to Read; they worked together and have kept in touch over the years. How she got appointed within weeks of her predecessor departing, tells us this is another cover up and Read is simply surrounding himself with his ‘own’ type.”
How would you respond to that allegation?
Karen McEwan: I mean, it’s totally untrue. As I said, I was on a management development programme with Nick 20 years ago. We genuinely have had no contact since, and that is particularly of relevance because, at the time that I was at McColl’s, Nick was at the Nisa group and there could have been an opportunity then, given that I was an executive member of the team at McColl’s, for us to have contact and, even at that point, we didn’t make contact at all. I had no contact with him.
Coincidentally, I had written an email to Nick the week before I got approached by MBS Executive. I had no idea there were any vacancies in the Post Office leadership team but, by mutual contact from Tesco suggested to me that I wasn’t working at the time and that I would be very helpful to Post Office in some way, shape or form, and that I should contact Nick, and suggested that I contacted him. I wrote him an email, and I actually said in the email, “I’m not sure whether you’ll remember me”. I didn’t even know that Nick would remember who I was, 20 years later.
So to read that my appointment was less than cloaked in integrity is disturbing. So I was approached formally – I was interviewed formally as a candidate for that job genuinely, and I had had no contact with Nick over that time.
I also don’t know that it would have been problematic if I had been in contact with Nick. I wouldn’t – I wouldn’t have been ashamed about that and it certainly wasn’t a cover-up but, genuinely, we hadn’t been in touch for a 20-year period.
Mr Blake: Thank you very much, that clarifies that matter. Can that letter please come down.
Moving on to Non-Executive Directors. What is your view, if you have one, on the balance between the number of executives and the number of Non-Executive Directors on the Board?
Karen McEwan: So, in terms of the number, it feels appropriate and it’s in keeping with my previous experience.
Mr Blake: Thank you. In respect of the Postmaster Non-Executive Directors, do you consider that that works, in principle?
Karen McEwan: That the role works?
Mr Blake: Yes.
Karen McEwan: I think it’s fundamentally important and it definitely works, insofar as both of those individuals give a good, honest, representation of issues mattering most to postmasters. So I do, I think the role is invaluable, and I think, in other organisations, other Boards should work hard to take the same principles.
Mr Blake: Do you have any concerns about any conflicts of interest in that respect?
Karen McEwan: No.
Mr Blake: Are there other ways in which you consider that subpostmasters or subpostmaster experiences can be built in to the business in some way?
Karen McEwan: Yes, so we have a Postmaster Experience Director, who is a recent appointment, and he’s a serving postmaster, and he’s doing really well in bringing to life the issues that are live and happening for postmasters and, in fact, he’s been instrumental in bringing the postmaster to the meetings that I was referring to earlier. So that’s a role that I think we should continue to heavily focus on and heavily champion, and I think, as an Executive Team, it’s very, very important that we have a close and trusting relationship with him and that he feels he’s able to talk to us and tell us about issues that he might be experiencing in getting things done in the business. I think that’s really important.
Mr Blake: Do you know who instigated that role?
Karen McEwan: Sorry?
Mr Blake: Do you know who instigated that particular role, the Postmaster Experience Director?
Karen McEwan: I’m not entirely sure who did, no.
Mr Blake: And that’s Mr Eldridge?
Karen McEwan: It is, yes.
Mr Blake: Are you aware how he manages to balance working as a subpostmaster with also taking on this role at the Post Office?
Karen McEwan: So every conversation encounter that I’ve had with him he’s very positive and he’s never said that he’s not able to cope with that, and I think he seems really capable and he’s got a really good, both commercial background and a postmaster background. So I’m confident that he would tell me if he wasn’t able to balance it and he does seem able to do that, yes.
Mr Blake: Is he in some way supported by a team at the Post Office or does he attend on his own?
Karen McEwan: I think he wants to retain a degree of independence, I think but, also, he would be supported by the Retail Team, and I think he has a good relationship with them, yes.
Mr Blake: Perhaps we could bring up on to screen POL00458458. I think this was the advertisement or job description for that role. If we could scroll over, please, and if we could look at page 5, if you could scroll down, there’s a section there that says:
“Where does this role fit with the rest of the team?”
Can you assist us with that, please?
Karen McEwan: In terms of whether this is – happens in practice or –
Mr Blake: Yes.
Karen McEwan: Yes, so that is as I see it in practice, yes.
Mr Blake: So who holds the other roles?
Karen McEwan: So the Engagement Director role is held with Tracy Marshall and the Group Chief Retail Officer was Martin Roberts but, obviously, we’ve made the changes to that function so, temporarily, Pete Marsh is stepping up as interim cover for the Chief Retail Officer role.
Mr Blake: You’ve previously in your evidence expressed some concerns about the previous holder of that role. Do you have confidence in the new individual who holds the role, or is stepping up to the role?
Karen McEwan: Yes.
Mr Blake: Thank you. I’m going to move on to another topic but that might be a moment to take our morning break?
Sir Wyn Williams: All right. What time shall we resume?
Mr Blake: If we come back in 15 minutes, so 11.35. Thank you.
(11.17 am)
(A short break)
(11.36 am)
Mr Blake: Thank you.
I’m going to move on to cultural issues. Paragraph 70 of your witness statement, you have referred to the Behaviours Framework that was launched and I’d just like to bring up onto screen, if I may, your statement WITN11360100, page 24. Is the Behaviours Framework something that you are responsible for?
Karen McEwan: When I consider the formulation of it and the communication, yes. In terms of overall accountability I think the behaviours are the responsibility of everybody in the business.
Mr Blake: Thank you. If we could bring up page 24 of your witness statement, please. It’s paragraph 71. You say at 71:
“One of the four key behaviours is ‘own the outcome’, which I am confident will help drive the changes in ownership and accountability we need to see. The other behaviours are ‘be curious’, ‘move it forward’ and ‘back each other’, all of which are critical to cultural change.”
To a group of lawyers that sounds like a lot of words and not much else. Can you assist us with really what that means in practice?
Karen McEwan: Yes, I appreciate that that doesn’t read literally. I think “owning the outcome” means for people to take responsible and accountability, which is obviously critically important, given the history of the Post Office, to take their job seriously, to fulfil it to the best of their capability, and to make the decisions and own the consequences of decisions that they take.
In terms of “be curious”, this is particularly relevant because the Post Office has been accused of, and understandably so, a lack of curiosity, a lack of seeking to find the truth. In any circumstances, even when seeking the truth is difficult, it’s very important that everyone in the organisation asks questions, feels comfortable to question people, particularly when they’re more senior, actually.
“Moving it forward” is the acknowledgement that sometimes good is better than perfect and what I mean by that is there is sometimes – I think that sometimes stifles performance, so people feel that everything has to be perfect and everything is going to be scrutinised, and rightly so in some cases, but it does sometimes hinder progress, and we wanted to encourage people to feel that they were giving their best and their best was good enough.
And “backing each other” is fairly straightforward but that means to support each other through times of difficulty and challenge.
Mr Blake: Issues of culture are quite difficult to monitor. Is there a way in which achieving those behaviours can be monitored?
Karen McEwan: Yes, we’re taking that extremely seriously. So rather than a series of words – and I appreciate when you see this in a statement and on a piece of paper, it can look like a halfhearted time promise, but we are – we’re very serious about it. So right the way through from ensuring that all of these four behaviours are embedded in our recruitment practices, for example.
So we’ve got some – a framework to help people who are interviewing, to seek out these behaviours and to make sure that the people that we recruit to the Post Office have the right values and the right behaviours, and actually, that’s arguably as important, if not more important, sometimes, than the technical expertise, if we have the right people, particularly on curiosity, for example. So we’re building it into the recruitment practices and processes that we have.
We are building it into progression through the business. So I think in the past I refer to people maybe ending up in jobs that they weren’t totally capable of doing. That’s critically important and, even if that means letting people down when they think they’re going to be capable but they’re not, whether we have to have more scrutiny as an organisation on that. So as well as subject matter expertise, we’ll be looking for these behaviours, and identifying those behaviours and individuals before we promise anyone a bigger job, a bigger pay package and more responsibility, as these are the individuals leading an organisation in a hugely and very critical time of change. So very important.
Mr Blake: That can come down. Thank you.
In terms of culture towards subpostmasters, we’ve seen in evidence the letter from Mr Read to the Lord Chancellor in January 2024, regarding the potential exoneration of subpostmasters. Is that a letter that has been discussed with you at all?
Karen McEwan: Is it possible to remind me, so I can see –
Mr Blake: I don’t have the number to hand but it’s a letter in which Mr Read set out the number of appeals that the Post Office was likely not to contest as against the higher number of those that would be contested. If it’s not something that you’re aware of –
Karen McEwan: It’s not something that I remember at all, sorry.
Mr Blake: – that’s absolutely fine. Can we in that case, please, turn to POL00448653.
Karen McEwan: Apologies, I’ve got a completely blank screen. Is that normal? There’s nothing happening on my screen, it’s completely black.
Mr Blake: Has it changed now or is it still black?
Karen McEwan: There’s nothing here.
Mr Blake: Sir, we may need to pause for a moment while somebody has a look at it. It might just be a matter of turning it on. I’m not sure where the switch is there, I’m afraid. (Pause)
Sir Wyn Williams: It was working before the break?
The Witness: It was working perfectly before. It was working up until a few seconds ago.
Mr Blake: Perhaps we can take a five-minute break.
Sir Wyn Williams: We can. Do you actually want to us go in and out? Everybody else can go out if they want to but all this coming and froing, I think I’ll just sit here, if it’s only five minutes. I’ll conduct an experiment as to whether you can resist talking to each other.
(Pause)
Karen McEwan: I’ll let you know if can’t see anything properly but at the moment I’ve got the screen back, thank you.
Sir Wyn Williams: Could we please then turn to POL00448653, and that’s what we know as the Project Pineapple email, over the page, please. Was this something you saw around about mid-January of this year?
Karen McEwan: Yes, it is.
Sir Wyn Williams: If we could scroll down, please, I’d just like to take you through a few of the complaints that were set out in this email just to see whether any of those fall in your responsibility and what has been taken forward and what hasn’t.
So if we start with the first paragraph, there are the concerns expressed regarding Mr Taylor and a feeling by management, and even members of the Board, that still persisted that those postmasters who have not come forward to be exonerated were guilty as charged.
That’s a similar complaint to the complaint about the letter that I was asking you about that you hadn’t seen.
Karen McEwan: Yes.
Sir Wyn Williams: In respect of that particular allegation, not just against Mr Taylor, but a broader allegation that subpostmasters are seen as guilty as charged who haven’t come forward to be exonerated, are there any steps that you personally have taken in that regard?
Karen McEwan: I mean, obviously, as a member of the Executive Team, I take that very seriously and it definitely isn’t a feeling or – it’s just definitely not something that I’m familiar with at my time in the Post Office. I’ve never heard – never heard that and I don’t believe – to the best of my knowledge, I don’t believe that anybody that I work with in the organisation feels that that’s true, that that’s the case at all.
Sir Wyn Williams: If we look at the second paragraph, there’s a complaint there about Mr Roberts and certain members of his team. I think you’ve mentioned Mr Roberts already. Is that a matter that you have personally taken forward?
Karen McEwan: So the subsequent investigation into this complaint was handled by a member of my team, yes.
Sir Wyn Williams: Is Mr Roberts still in the organisation?
Karen McEwan: No, he isn’t.
Sir Wyn Williams: Thank you. Is that a result of action that has been taken?
Karen McEwan: No, it isn’t, it’s …
Sir Wyn Williams: The next paragraph is a complaint about the power wielded by Mr Foat, General Counsel. Is that something that you have personally been involved in?
Karen McEwan: This particular part of the statement wasn’t totally new to me because Henry Staunton had mentioned this previously when I was having a conversation with him about the investigatory processes that were in place at the time. So I think that sentiment was not as much as a surprise as some of the other elements of the letter.
Sir Wyn Williams: Is it something that you have looked into and is it something you feel action needs to be taken or has been taken?
Karen McEwan: So I – yes, we are and have looked into it. Every element of this was subject to a very thorough investigation, so we’ve broken this down and have investigated on all of the matters. As I said, this view that was held at the time about Ben Foat was something that I was definitely familiar with, though –
Sir Wyn Williams: Is it something that you have taken any actions in respect of?
Karen McEwan: I think the action that I am and have taken is more all-encompassing action to improve the culture in the business more generally and to ensure that the Executive and management and everybody lives to the values and the behaviours. We haven’t – I haven’t specifically taken any action in respect of Ben Foat, no.
Sir Wyn Williams: If we scroll over the page, please, there’s another complaint there regarding Postmaster Non-Executive Director membership on all committees, including RemCo; what’s your view of that?
Karen McEwan: I think Amanda Burton referenced it in her evidence. I think it is helpful to have representation of all Non-Executive Directors at some of the committee meetings, yes.
Sir Wyn Williams: In terms of RemCo, I think you’ve said – are you a member or do you just attend –
Karen McEwan: I don’t have any voting accountability but I attend the meetings. I am responsible and accountable for preparing the papers for that meeting.
Sir Wyn Williams: In your view, would Postmaster Non-Executive Director membership of that committee be helpful or unhelpful?
Karen McEwan: It would be helpful.
Sir Wyn Williams: Thank you. Could we please turn to POL00448599 and we’re now looking at the fallout from the sharing of that Project Pineapple email. If we scroll down to the bottom of the page, Mr Foat has emailed Nick Read and he says:
“The Project Pineapple email contained very serious allegations of which I have not been aware. Given the circumstances, I would be conflicted.”
Do you know what the context of this email is?
Karen McEwan: How I read it at the time, and looking at it now, my belief – but I don’t know this to be the case but I think you’d have to ask Ben Foat, but my belief here is that there are inferences made about his conduct and his treatment of postmasters which, when he read the email, were the first time that he had been made aware that there were – there was a perception that there were any allegations against him. So I think the point he’s making here is that he didn’t know but now that he does know, clearly he wouldn’t be – we wouldn’t be able to carry on with the investigation because he would be in a position of conflict. So I think that’s the point that he’s making.
Sir Wyn Williams: Thank you. He says:
“Karen and Ben T – it would be helpful to have a conversation with you.”
Did you have a conversation with Mr Foat about the Project Pineapple issue?
Karen McEwan: Yes, I did have the conversation on the day that the email came out, yes.
Sir Wyn Williams: Can you assist us with what was discussed?
Karen McEwan: So he was – Ben, sorry – was very distressed.
I think on that day and at that time there was a lot of anxiety in the business, and particularly with the individuals that had been – had been in receipt of the email and who were named in the email. Because of the sensitivity, at that time, Owen Woodley and I decided that we would take responsibility and take control of the situation, effectively, and therefore we were the only two members of the Executive that were in contact with people and we sort of divided responsibility, effectively, to call those people to try and – (1) to try to settle them down, bearing in mind that we’d got to worry about business continuity, and there was already – I mean, that period in time was our most critical period of time, and we were all very concerned about people’s wellbeing but also about running the business.
So I had the conversation with Ben and he was very distressed.
Sir Wyn Williams: Did you speak to the Subpostmaster Non-Executive Directors around this time?
Karen McEwan: I did but not immediately. So I think it was at the beginning of the following week. I think this happened, from memory, on a Friday, and I was in contact with Ben, I remember, on that day and then, subsequently, Martin Roberts over that weekend. And I spoke to Saf – I don’t think I – I don’t recall speaking to Elliot but I spoke to Saf on – very early in the beginning of the following week, yes.
Sir Wyn Williams: Thank you. Could we please turn to POL00460000. This is the investigation report that was carried out by Nicola Marriott into this particular issue. Was this something that you commissioned or asked to be carried out?
Karen McEwan: Yes, so at the time of the Project Pineapple email, the middle of January, it was clear that, once the dust had settled and we had made sure that the people that were named were as composed as they could be, it was obvious that we needed to take some action, and we decided at the time that Nicola Marriott would be the most suitable person. She’s extremely experienced and very thorough and has a very good perspective of the criticality of postmasters in the business as well, which I thought was important.
So she would understand, probably better than anybody, the need for a kind of very rigorous approach to the investigation. So she set about doing that work in the beginning of February, yes.
Sir Wyn Williams: Can we please turn to the bottom of page 15 and we can see the summary of her findings. She says:
“There is a consistent theme of lack of effective communication and updates into the Board sufficient for Saf and Elliot to fully understand some of the issues raised, how they are being handled and in some instances why things have taken so long.”
If we scroll down:
“Based on this investigation, I do not believe there is a toxic culture towards [postmasters] still prevalent within Post Office or that there is an intentional attempt from current employees to prevent the [Postmaster Non-Executive Directors] from having access to relevant information. However, I can understand why some of the situations outlined by Elliot and Saf could be perceived in this way and the recommendations will address the need to improve flow of information to the Board as well as clarify the scope of the [Postmaster Non-Executive Director] role including what is appropriate in terms of engagement outside of the Board with subsequent engagement on this to all relevant stakeholders.”
The reference in that conclusion in not believing that there is a toxic culture towards postmasters still prevalent within the Post Office, do you think this investigation was sufficient to have reached that conclusion?
Karen McEwan: I would say, in reading and analysing that particular line again, that is quite an all-encompassing statement, yes. I think – trusting that Nicola will have had the best intention in doing this investigation, I think from the interviews she conducted and the people that she spoke to, I think she’s there, from the best of your knowledge, stating what she believes to be right. But I think it would be impossible, with hindsight, from the extent of that investigation, to be able to make that comment with conviction, like I say.
Sir Wyn Williams: We’ve seen recently, for example, the investigation into Mr Jacobs and correspondence from an investigator to him as part of that investigation; did you hear that evidence?
Karen McEwan: No, not specifically but I am aware of it.
Sir Wyn Williams: Do you think that there are still potentially wider cultural issues that might mean that, in fact, to some extent, there is a toxic culture towards postmasters still prevalent in some aspects of the business?
Karen McEwan: Not to the best of my knowledge but I do believe that there is still a lack of capability in the organisation that needs to be addressed, and I believe that there is – there are also still issues with the infrastructure and the operating model of the Post Office, which I think I talked earlier about accountability being in the right places. I don’t think that’s helpful and I do also think that maybe the communication isn’t as transparent as it could be, not for any malicious intent but either because of those capability issues or because people are still worried about the consequences of saying things that may be controversial or admitting that things are not right.
So I do think that there is a – still that – that feeling within some members of the Post Office colleague population, yes.
Sir Wyn Williams: Thank you. At paragraphs 153 to 157 of your witness statement you have raised an issue and you say it wasn’t minuted as part of that investigation. Can you assist us, insofar as you’re able to, with what that issue is?
Karen McEwan: If I could just wait for that to come up. I can’t see it at the moment, sorry.
Sir Wyn Williams: Ah, would you like to see your witness statement?
Karen McEwan: Yes, please.
Sir Wyn Williams: WITN11360100, paragraph 153, that’s page 52. We can’t look into the truth or otherwise of what was said to Parliament but if you’re able to assist us with what the broad allegation was that you say was not minuted as part of that allegation.
Karen McEwan: Sorry, yes. I’ll just remind myself.
Sir Wyn Williams: 153 to 157.
Karen McEwan: This relates to one of the two – I was asked about whistleblowing complaints in the business and this relates to one of the two whistleblowing complaints that I was aware of at the time of writing my statement, yes.
Sir Wyn Williams: So it wasn’t minuted so as to protect the identity of the whistleblower or for some other reason?
Karen McEwan: Sorry, could you repeat that?
Sir Wyn Williams: I think your witness statement suggested that there was intentionally something not minuted within that investigation.
Karen McEwan: No, that wasn’t –
Sir Wyn Williams: Perhaps that’s –
Karen McEwan: That wasn’t what I was intending, no.
Sir Wyn Williams: That’s fine. Perhaps we can then mover on to Project Phoenix and Past Roles. That can come down, thank you. Did you understand the difference between Project Phoenix and Past Roles at the beginning?
Karen McEwan: Do you mean in the beginning of my time at the Post Office?
Sir Wyn Williams: If they were both ongoing at that time, yes?
Karen McEwan: They were both ongoing and, no, I didn’t immediately understand the issues – the differences, sorry. I understood what was broadly being looked into but I didn’t immediately understand the differences, no.
Sir Wyn Williams: When did you become aware of the differences between the two?
Karen McEwan: So I had started asking questions about it because it obviously related to extremely important matters, and I felt that I should be aware of them, and I’d asked questions, probably from not long after I joined, probably at the end of October, and I established a broad understanding. At that time, I wasn’t accountable for the work, but I got a broad understanding, and I did quickly understand the differences between those two groups of people, yes.
Sir Wyn Williams: I think you’ve said in your witness statement that Past Roles was moved to sit within your domain by December 2023; is that correct?
Karen McEwan: I think it was around – I couldn’t remember exactly but I’m sure it was – as we came from the Christmas break into the New Year, kind of the end of December, yes.
Sir Wyn Williams: Why was it moved within your domain and where did it come from originally?
Karen McEwan: So originally, Owen Woodley had executive accountability for it and then there was a couple of people that were set up to do the operational work, yeah.
Sir Wyn Williams: Why did it move to you?
Karen McEwan: Naturally, there were investigatory matters which related to colleagues that worked in the business so, therefore, from an accountability perspective it would make sense for it to sit with me but also, I think I was probably, with respect to Owen, I was probably better qualified to take the executive responsibility. I probably had more experience in that particular area than Owen did at the time. So we discussed it, and agreed that it would be better to sit in my area.
Sir Wyn Williams: How about Project Phoenix?
Karen McEwan: No, so Project Phoenix was with John Bartlett’s team, the Assurance & Complex Investigations team.
Sir Wyn Williams: Do you think that the division between the two is appropriate?
Karen McEwan: Do you mean the division in Project Phoenix between myself and that unit or do you mean the division of Past Roles and Phoenix, sorry?
Sir Wyn Williams: Both.
Karen McEwan: Both. So yes, in terms of the division of the two subject matters because they are distinctly different. Ultimately, I think it’s important for me to be connected and brought in on some of the matters relating to Project Phoenix because, after all, they relate to Post Office colleagues who have a contract with the business.
Sir Wyn Williams: Are you sufficiently brought in?
Karen McEwan: Yes.
Sir Wyn Williams: Can we turn to POL00448308. We’re going to start by looking at the Past Roles Project, we’ll then move on to Phoenix. These are the terms of reference that the Inquiry has seen before. I’m not going to spend a great deal of time on it but the first sentence there refers to the Past Roles Project being established after the Inquiry’s compensation hearing in December 2022. Are you aware of why that was the particular trigger for this work?
Karen McEwan: My understanding is because of the judgments, that that initiate the work, as …
Sir Wyn Williams: Sorry, what do you mean?
Karen McEwan: So the – I think from the – this is a recollection, so I think it’s from – as a result of the judgments that the team set up to look into this matter.
Sir Wyn Williams: Do you know why the Inquiry’s own compensation hearing might have been a trigger?
Karen McEwan: I don’t know, I’m sorry, no.
Sir Wyn Williams: If we turn over the page, please, we see the risks that are said to emerge, and this is a matter I’ve dealt with with other witnesses. They’re set out there:
“… (i) Criticism of employees (say on social media); (ii) Undermining the integrity of the work being performed (for example, giving rise to conflict or the perception of conflict); (iii) Undermining postmaster of the public confidence in the work being performed by [the Post Office], or the specific team.”
Do you consider those risks to be an accurate reflection of the risks, and in that order?
Karen McEwan: In that order, no, I obviously can’t speak to this confidently because I wasn’t here at the time. I think all of them are considerations. The biggest risk of changes in this particular unit, where most of these people were employed, would be the slowing of compensation for postmasters. So I think that probably should have been the number 1 issue here.
Sir Wyn Williams: Thank you. Thank you. Can we please turn to POL00448615. This is a Group Executive report, the title is “Past Roles Review” dated 17 January 2024. Could I please ask you to turn to page 7. I wonder whether you could assist us with this. We’ve heard evidence that it was originally, or certainly Mr Jacobs thought, that he was originally going to be sitting on this panel. We see there Mark Eldridge’s name as Postmaster NED. Can you see us with that at all?
Karen McEwan: Obviously I wasn’t there at the time of setting up this panel, so I don’t – I wasn’t aware, actually, that that was the case. Sorry.
Sir Wyn Williams: If we could please turn to page 11. Mr Eldridge, does he sit on that panel?
Karen McEwan: Yes, he does.
Sir Wyn Williams: Paragraph 3, this is another passage that I’ve read to other witnesses, it says there, in terms of key themes for communications:
“In carrying out this work we are acutely aware of the duties we owe to our colleagues, and the views of our trade unions. We also recognise that, in the vast majority of cases, employees who have performed such roles in the past will have carried out their duties according to the instructions given to them by the business at the time, and in the belief that Horizon was robust.”
Do you consider that to be appropriate?
Karen McEwan: So I think, in seeing some of the thematic evidence that I’ve seen over my time in the Post Office, relating to kind of the mistakes that have been made on culture, it isn’t surprising to see the reference to the fact that colleagues were acting under instructions from more senior people. That isn’t surprising.
It’s very difficult to comment. I wasn’t obviously here when these terms of reference were –
Sir Wyn Williams: This is a report from January 2024.
Karen McEwan: Oh, sorry, right, okay.
Sir Wyn Williams: If we take a step back and look at the Past Roles Review and the work that’s being carried out, do you think that there has been sufficient focus on the risk it actually poses to subpostmasters and, for example, those claiming compensation and redress, rather than, for example, the risks to current employees?
Karen McEwan: I think in my time here and in all of the conversations that I have had, both of those things have been a consideration, so it is true to say that that the concern that people, looking at our progress with this, might have, subpostmasters and members of the public and other people, is relevant and it has been relevant to us as well as the impact on the colleagues in the business, yes.
Sir Wyn Williams: Could we please turn to POL00448864. These are the minutes of a Group Executive meeting from 13 March this year. I’d just like to read to you a passage or a few paragraphs that relate to the Past Roles Project. They can be found on page 3, please. If we scroll down, we can see the heading “People” and “Past Roles”. Is this something you spoke to or you –
Karen McEwan: So I sponsored the work. Nic Marriott and Simon Recaldin came in to do the presentation.
Sir Wyn Williams: Thank you. I’m just going to read to you a few passages and just ask you a few questions going along. So “SR” is Mr Recaldin and “NM” is Ms Marriott:
“[Simon Recaldin and Nicola Marriott] spoke to the paper which set out a recommendation on the approach to be taken in relation to the Past Roles Review and staffing in the Remediation Unit in the light of the change in operational context and political environment.”
Do you know what’s meant there by the operational context and political environment?
Karen McEwan: Yes, my understanding, and the conversations that I’d had with Nic before she came into present this paper were that the – it was quite difficult at the time, amongst other things, to determine the workload requirement and, therefore, the workforce planning for the Remediation Unit, because things were changing quite frequently. At this particular time, I think this was in the time of the mass exoneration and the change to the schemes, as well. So, what she’s speaking to here is the changing environment but also the difficulties faced by that team at the time and the workload.
So operational, in the sense that there was more pressure, more work, and some of the political decisions that had been taken at that time, which changed the work of the – of that unit.
Sir Wyn Williams: The third bullet point says:
“It had been agreed that an independent panel would be established to validate the approach to the activity and while it had decision making authority it was able to recommend potential outcomes, as follows:
“No further action
“Reallocation of workload or activities
“Redeployment
“Additional assistance for employee wellbeing
“A formal employment process in limited circumstances, [for example] where an individual in a high risk role unreasonably refuses to accept redeployment or cooperate with the business.”
So the Past Roles Project here is looking at those who had previously been involved in issues that the Inquiry is looking at and who are still working for the Post Office –
Karen McEwan: That’s right.
Sir Wyn Williams: – and these are the options that are being presented or were presented for, for example, not taking action, redeploying, et cetera; is that a fair summary of that?
Karen McEwan: That’s exactly right, yes.
Sir Wyn Williams: Thank you.
“[Ms Marriott] noted that public perception aside, no direct conflicts had been found and none of the risks outlined within the [terms of reference] of the Past Roles Review had materialised and that ongoing uncertainty was causing upset (with mental health absence as a result in some cases).”
Do you know what’s meant there by “none of the risks outlined in the terms of reference had materialised”?
Karen McEwan: I can’t remember and I don’t know specifically but – no, I’m sorry, I can’t remember.
Sir Wyn Williams: It says:
“Colleagues were rated ‘RED’, however, if they were identified as giving rise to a perceived risk in terms of undermining the integrity and independence of remediation and redress work being done and in those cases, redeployment had been recommended.
“Since the review had been undertaken, there had been a significant increase in late applications and the [Remediation Unit] work driven by current external scrutiny and the heightened awareness that was generating, organisational design delays had meant an increase in colleagues who were deemed as ‘RED’ and there [was] no clarity yet on the Government’s role in relation to redress going forward and associated processes and procedures.”
Are we to understand that, by March 2024, following, for example, the ITV drama, there was an increase in the number of people who were claiming redress and the Remediation Unit was under great pressure, work pressure?
Karen McEwan: Yes, that’s correct.
Sir Wyn Williams: The concern in the business, it appears – and correct me if I’m wrong on my reading of this – is that the work that was being undertaken in relation to the Past Roles Project, potentially redeploying people from the Remediation Unit, would cause problems in that regard?
Karen McEwan: That was one of the balancing decisions that we had actually, yes, and it was very difficult to pinpoint exactly what the workload and, therefore, the workforce requirements of the team were. It was quite difficult to pin that down and that’s, I believe, one of the other reasons it’s led to it taking longer than it should have taken.
Sir Wyn Williams: “[Simon Recaldin and Nicola Marriott] noted the implications arising from a reduction in headcount and the risks posed to redress claim processing times.
“The recommendation to the SEG, therefore, was to take a ‘many to few’ approach to redesigning the organisational structure within the [Remediation Unit]. The approach would see the number of ‘RED’ employees reduce and the appointment of new recruits to undertake work at a different (lower) grade, albeit the transition would need to be done over time to help mitigate the risks to redress claim processing times.”
Can you assist us with what the suggestion is there, please?
Karen McEwan: So I think we were acutely aware that the last thing we could do was slow down compensation and, therefore, changes to the structure in that Unit, taking away people that, notwithstanding the perception of their involvement in work that is of interest to the Inquiry and had led to postmaster prosecution, that they had experience and knowledge and we already had a gap in corporate knowledge that was essential not to slow down redress, and that was the forefront of our mind.
Sir Wyn Williams: So were you balancing out a risk: on the one hand you had a risk that those who were previously involved in issues being examined by the Inquiry would still be employed within the Remediation Team; but, on the other side, you had potential delay if they were to be redeployed elsewhere?
Karen McEwan: Yes, absolutely.
Sir Wyn Williams: “It was recommended that the creation of a separate independent function should continue to be explored and initially in discussion with Government, as the make-up of any such function would depend on final decisions on the Government’s role in relation to redress going forward.”
We saw the Government’s role being mentioned at the very top of the page, as well. Is there, at this point in time, a movement at the Post Office towards trying to put redress in the Government’s hands, rather than in the Post Office’s hands?
Karen McEwan: So I’m aware of – I mean, I’m not involved in those conversations, so I can’t confidently speak to them but I do know that those conversations have been ongoing, and are another factor in us not clearly – or haven’t clearly been able to determine the resource requirements of the unit. So I think we’re working blind to the decisions that might happen outside of our control, really, and assuming a business as usual approach to ensure continuity of compensation, the best that we can do.
Sir Wyn Williams: It says:
“… as the make-up of any such function would depend on final decisions on the Government’s role in relation to redress going forward.
“[Ms Marriott] noted that while she stood behind the recommend, she would wish to emphasise that no conflicts had been found, nor had any risks materialised; the issue was one of perception. On this basis, [Ms Marriott] would personally advocate for ‘no further action’.”
So we have a “many to few” approach and we have a “no further action” approach; can you talk us through those two different possibilities?
Karen McEwan: So the “no further action” would be exactly as it says there. I mean, we would just – we would do nothing, effectively, with any of the people that worked in the Remediation Unit. They would continue in their role and they would stay as it is. Nothing would be any different. The “many to few approach” would be a restructuring, reorganisation approach that – it’s a redundancy, effectively. This is a Post Office terminology that I wasn’t – I only became familiar with very recently but the “many to few” approach is the decreasing or diminishing of a business unit and, therefore, the compulsory redundancy that would be associated with that.
That’s the terminology for it. So it goes from, I think, the extreme of doing nothing at all to making people in that business unit redundant on a compulsory basis.
Sir Wyn Williams: “[Mr Recaldin and Ms Marriott] left the meeting so that the SEG could discuss the recommendations.
“The SEG discussed the difficult trade-offs at play, with the majority voting for the ‘many to few’ recommendation.”
Then it has a footnote. If we scroll down, we can see the footnote. It says:
“NR, CB and KS voted for Option 3, ‘many to few’; OW voted for Option 2, ‘no further action’; [you] abstained on the basis Option 3 [‘many to few’] had the majority vote.”
Can you assist us with what your view actually was at that time?
Karen McEwan: So my view at the time, and the reason for not abstaining, was to delay the process any further. My view at the time was we just needed to do something and it was clear that it had already taken too long. So I had a strong view that something did need to be done, therefore I wasn’t firmly of the view that nothing should happen. I could see that clearly something had to happen, yes.
Sir Wyn Williams: The decision was taken for option 3, “many to few”. Does that mean the team was made smaller in size, or what happened?
Karen McEwan: So this was the recommendation that was then taken to the Board, which was why it was so important at this meeting that we got a decision because I think, by now, it was – correct me if I’m wrong, but I think this was the middle of March –
Sir Wyn Williams: Yes.
Karen McEwan: – and because the conversation had been circling around for a long time, and because we were all acutely aware of the internal impact and the internal perception, let alone the external perspective of not doing anything, it was becoming critical. And I think this was the meeting pre-the Board meeting and, at the Board meeting, we were going to get the final decision and permission to move ahead and execute the plan that we are now, actually, as I speak, we are now in the process of executing.
We’re not taking a compulsory redundancy approach, but we have resolved with a mixture of voluntary redundancy approach and then a ring-fence where we’ll be removing people from the Remediation Unit so they will be reporting in a separate unit. But we’ve got a period of time that’s really critical so we can hand over – and I mentioned earlier that they have subject matter experience which is critical to compensation, and we don’t want to lose that experience and knowledge.
So there will be a transition period where – over three months or so, where that knowledge could be transferred properly so the work can still progress.
Sir Wyn Williams: So is the current position arising from this discussion and the subsequent Board meeting that people are being replaced within the Remediation Unit and, if so, do you see any risks to the prompt payment of compensation and redress to subpostmasters arising from that?
Karen McEwan: I’m confident that we cross-functionally have all of the right plans in place. It is critical that there is this handover period and whilst people might expect it to happen very quickly it’s critical that it doesn’t happen any quicker – it takes as long as it needs to take to ensure that knowledge transfer happens and only at that point will those people move away from the unit. So I think if that isn’t enacted, then there is a clear risk that there’s a knowledge gap.
And it has been really difficult to establish the specific resource requirements for that unit because of the change in – for example, the change to the schemes, and what that might mean and I think that drives the need to be constantly monitoring the resource requirements in that unit. So I think we’re working closely as a People Team with Simon Recaldin and his team to ensure that he has – as a Subject Matter Expert, that he has exactly what he needs to continue to run the function. But the redress and the speed of compensation is at the forefront of my mind and everybody’s mind that’s dealing with this object.
Sir Wyn Williams: Could we please have a look at POL00458447. This is a separate issue that appears to have been happening at a very similar time as these discussions. So if we look at these discussions at the Group Executive level of 13 March this year, this is emailed correspondence from 8 March. Could we turn over the page, please.
It relates to a grievance that had been raised in respect of Mr Recaldin around this time. We don’t need to go into the detail but we have there, in the paragraph beginning with the word “whilst”, it says:
“Whilst I do not believe escalation is required to the misconduct policy in relation to Simon, the investigation does raise concerns about the effectiveness of his performance and a number of further actions are now needed to get to the bottom of and correct issues that are likely present within the function including ineffective OD …”
Can you assist us with what that means?
Karen McEwan: Sorry, yes, that’s “organisation design”. So the way that the unit is structured.
Sir Wyn Williams: “… and lack of resourcing plan as well as cultural issues arising from an ‘us and them’ mindset within the leadership team.”
Can you assist us with the concerns that are being raised there?
Karen McEwan: Sorry, can I just take a minute to remind myself of this paragraph?
Sir Wyn Williams: Absolutely. (Pause)
Karen McEwan: So there were a couple of issues. So the original complaint that had been initiated was regarding the disproportionate number of people that were incumbent Post Office colleagues, vis à vis the number of contingent workers, so contractor workers, and that’s why I’m referring here to the set-up of the business unit and the function. And it was clear that there was a need to have a better resourcing plan and I’ve spoken to the kind of volatility and the challenges relating to that.
But it was really important that we were clear – so that we could help Simon and team – we were clear about exactly what was needed in that function to run of the contribution scheme process effectively. And, at that time, I offered some support with one of the People Team, who had expertise in both organisation design and resourcing to help Simon and the team to have more effective plans.
Sir Wyn Williams: That was in March of this year. Do you think that the team now, the Remediation Unit, has sufficient resources, sufficient expertise, sufficient quality individuals, to address the issues of compensation and redress?
Karen McEwan: Did you say the Remediation Unit? Apologies, I didn’t hear –
Sir Wyn Williams: Yes.
Karen McEwan: – the first part of your statement. Would you mind repeating your question?
Sir Wyn Williams: Do you think, looking at the issues being raised as at March this year, by the present time, do you think sufficient has been done to ensure that that unit has sufficient people, sufficient quality, sufficient expertise in respect of compensation and redress?
Karen McEwan: So I think in terms of the people required, as far as all of us can tell now, we are in a much stronger place in terms of resourcing requirements. I think, as you previously asked me about the moving of people in the Past Roles population, and that potential knowledge loss, I mean, as long as we mitigate for that, I think that the people operationally that are doing the job are capable and I think we have enough people. I think it is a moving feast because of the changes to schemes and, as long as we can keep on top of those changes, I think that that will be helpful.
We are supporting Simon and the team, so there are other members of the leadership team that are also helping in this function in this unit as well to ensure that we’ve got the right level of capability there.
Sir Wyn Williams: Looking at the concerns that are raised here regarding ineffective OD, lack of resourcing plan, and cultural issues, to what extent do you consider those may have impacted negatively on the speed of compensation and redress?
Karen McEwan: I don’t think we’ve found any evidence that that has happened at this point in time but I think, in answering the question as best as I’m able to answer it, if the design of the function and the way that the function and the people within in it are working together is not as good as it should be and not best practice, then that has the potential to be ineffective and, in this case, obviously what we’re asking this unit to do is make compensation payments. So I think it has the potential for it to have had an effect but we’re not aware that it has.
Sir Wyn Williams: Are you aware of anybody looking into those matters further?
Karen McEwan: Yes. So this is a constant point of discussion and the operation of this is a constant point of discussion and focus, and our recently appointed Group General Counsel, that’s accountable for this area, is very focused on it so him and the team are giving this a lot of attention.
Sir Wyn Williams: Thank you.
Sir Wyn Williams: Can I just try to understand the scale of what we are talking about. First of all, in terms of the approximate numbers of people who have been working in the Remediation Unit but, in inverted commas, “it’s now thought appropriate that they should not be”.
Karen McEwan: Yes.
Sir Wyn Williams: How many actual numbers are we talking about?
Karen McEwan: The actual number – and it’s taken quite a long time to get to this point – sorry for my deliberation, but the actual number is 27 people.
Sir Wyn Williams: Right, okay, and that’s out of approximately how many?
Karen McEwan: Approximately 110, but that’s approximate.
Sir Wyn Williams: Right, okay, so I’ve got that. So far as the schemes with which the Remediation Unit is concerned, following this Inquiry, we’ll know that on occasions I’ve been struggling to keep abreast of the various schemes that have come into existence. The Post Office Remediation Unit, does it deal with – I believe there are now four schemes?
Karen McEwan: Yes, I believe there are four.
Sir Wyn Williams: So it deals with all of them?
Karen McEwan: Yes.
Sir Wyn Williams: Right, fine.
Karen McEwan: Four, but there are more than four schemes. So, to the best of my understanding – I’m definitely not the expert here but I’m pretty certain it’s four, yes.
Sir Wyn Williams: All right. Let me name them, so that I’m sure I’m on the ball. There’s what I’ll call the first one, the shortfall scheme. That was the first one in time?
Karen McEwan: (The witness nodded)
Sir Wyn Williams: Then there was a scheme when people’s convictions started to be quashed by the Court of Appeal?
Karen McEwan: (The witness nodded)
Sir Wyn Williams: We’ve called it the Overturned Convictions Scheme.
Then there was a scheme to provide further compensation to members of the GLO –
Karen McEwan: Yes.
Sir Wyn Williams: Now, there is a scheme to compensate those people who have been, I use the word “exonerated” by act of Parliament?
Karen McEwan: Yes.
Sir Wyn Williams: Is that it or are there more that I’m missing?
Karen McEwan: There’s also a process, a Post Office Process Review Scheme. I’m sorry, I’m definitely not the Subject Matter Expert but there is a scheme about – regarding – yeah, the – I think it’s the process –
Sir Wyn Williams: We’ve got lots of people –
Karen McEwan: Apologies, somebody more qualified than me should answer that question. Sorry.
Sir Wyn Williams: That’s fine. We’ll get to the bottom of it. But I’m right, at least, that there are four at least –
Karen McEwan: Yes.
Sir Wyn Williams: – and there may be at least one more.
Karen McEwan: Yes.
Sir Wyn Williams: Fine. All right.
Mr Blake: Moving on now from Past Roles to Project Phoenix, we’ve heard a suggestion in evidence, I think, from Mr Staunton, suggesting that Project Phoenix was allowed to go into the long grass by Mr Foat. What’s your view on that?
Karen McEwan: Can I answer that question in two parts, if I might, because it might be easier for me to answer. So at the time of Mr Staunton making that accusation, Ben Foat was not responsible for that unit so, therefore, by nature, wasn’t responsible for the investigations. So I think that was an error made by Mr Staunton. I don’t think he understood the structure of the business at that time but Ben Foat wasn’t actually responsible.
In terms of the perception that it had been kicked into the long grass, I think there was just process failings and communication failings, and I don’t think, to the best of my belief, that anybody had intended to kick that into the long grass. It’s hugely complicated, and it’s just not straightforward.
Mr Blake: What is your view on whether people should be suspended while they’re being investigated, rather than continuing to work within the business?
Karen McEwan: Specifically in relation to Project Phoenix or –
Mr Blake: Yes –
Karen McEwan: – or are you saying generally? So my view on suspension is that it’s a necessary form of action when an investigation is taking place. I think the bar on suspension is now far higher than it was, and obviously we’re bound by sort of ACAS guidelines, which is that the – generally, we would use suspension where an investigation was going to be a brief period of time. I think in the case of Project Phoenix, the decision was taken not to suspend for that reason because I don’t think – I wasn’t there at the time but – so – the best of my understanding, and I know to be the case, the decision was taken not to suspend because we didn’t deem that it would be a brief period of time and a brief investigation.
That being said, with hindsight, I do think it may have been better to have made suspensions in this case, yes.
Mr Blake: Are you able to assist us with whether you think sufficient progress has now been made in relation to Project Phoenix?
Karen McEwan: So, yes, I do believe that sufficient progress has been made and, internally, we are confident – again, this isn’t necessarily right – within my remit but I do know and I’m associated with the programme and quite close to it, so I’m sure that we’re going to be concluding our processes by the end of this year, the end of the calendar year.
Mr Blake: Why are you sure about that?
Karen McEwan: I just know that that’s how far the investigations have progressed so I’m clear, I’m kept update about that regularly.
Mr Blake: Are you able to assist us with the current position, as things stand as at today?
Karen McEwan: So the current position is that there are three colleagues that are in scope as part of this process. I’m not sure whether the Inquiry is aware of that, but that is factually accurate. And we have conducted full investigations into the allegations, bearing in mind that the colleagues involved here were subject to specific allegations of wrongdoing, so there’s been a thorough internal investigation, which has been conducted by the Assurance & Complex Investigations team.
They are at the almost concluding part of that investigatory process into the individuals that are in the scope currently.
Mr Blake: Thank you. There’s one final document I’d like to ask you about before moving to questions from Core Participants, and that’s POL00448788. This is a letter that was drawn to the Inquiry’s attention by Mr Ismail, although he wasn’t aware of the author of this letter. This is a letter, if we scroll down, from Graham Brander, who it has there listed as the Network Provision Lead.
Are you aware that Mr Brander investigated Jo Hamilton, Julian Wilson, Lynette Hutchings and others?
Karen McEwan: No, I wasn’t aware. That’s the first time that I’ve come across this. I wasn’t aware, no.
Mr Blake: Thank you. That particular document can come down?
Are you aware of individuals who formerly worked for the Post Office being rehired. Mr Brander, for example, was rehired in 2019; is that something you were aware of?
Karen McEwan: Not at all, no.
Mr Blake: Do you have any concerns that there are those who are actively working at the Post Office, in roles relating to subpostmasters or relating to investigations, who do bear some responsibility for what has happened in the past?
Karen McEwan: So I’m not aware of any individuals but I am of the strong belief that, if there had been any allegations of any form of wrongdoing by any individuals then, of course, it would have been completely inappropriate for them to be working at the Post Office.
Mr Blake: Are you aware of anybody who is working at the Post Office?
Karen McEwan: So, save for the people that are in the population that are a matter of our investigations for allegations of wrongdoing specifically, no, I’m not aware of any –
Sir Wyn Williams: So you’re aware of three people, effectively?
Karen McEwan: Yes, I am.
Sir Wyn Williams: Yes.
Mr Blake: Thank you, sir. Those are all of my questions. I know that Mr Stein has some questions. I think that may be it.
Questioned by Mr Stein
Mr Stein: Ms McEwan, my name is Sam Stein. I represent a large number of subpostmasters and I’ve got a few questions for you.
Could I start, please, with your own statement. Can I take you to your statement which you should have, it’s WITN11360100. Within your statement, Ms McEwan, I’m going to be asking you a question directly about paragraph 212, if you go to that.
Karen McEwan: Is it possible to have this on screen –
Mr Stein: Hopefully it will go on to the screen.
Karen McEwan: – so I can refer to it?
Mr Stein: Paragraph 212, please. Thank you. So, we orientate ourselves on the paragraph, you say at the beginning there:
“At my interview, when discussing Al’s absence …”
The “Al” being referred to there is Mr Cameron; is that correct?
Karen McEwan: Yes, sorry, yes.
Mr Stein: “Nick”, that’s Mr Read?
Karen McEwan: It is.
Mr Stein: “… Nick also informed me that there had been complaints regarding Al’s behaviour but did not specify what had been alleged. He also told me that a conversation had taken place between him and Al in early 2023 regarding Al making an ‘exit’ from the business, as the relationship between them had broken down due to a longstanding employment dispute …”
Then it then finishes:
“Al had then been off work due to ill health and was not engaging with the business.”
Help us understand this, many years before this interview, you had worked with Mr Read; is that correct?
Karen McEwan: Yes.
Mr Stein: I think 20 years ago you’ve said?
Karen McEwan: Yes, but to clarify, we hadn’t worked together. So we came from very different parts of the business and, as you’ll appreciate, Tesco is a huge employer, 300,000 people, I think, in the UK. So we had never worked together. We just happened to be on a leadership development programme together.
Mr Stein: Right. That’s helpful. Thank you.
My question, though, relates to the appropriateness of this discussion at an interview. This is before you’re employed at the Post Office. You’re being given information regarding Al, Mr Cameron, which is that there had been complaints about his behaviour, unspecified complaints, and that there had been then a difficulty, the relationship breaking down between him, Mr Read and Mr Cameron.
Karen McEwan: (The witness nodded)
Mr Stein: Should those sorts of matters be discussed in interviews prior to employment?
Karen McEwan: So for context, I think this came from the – I was asking questions about the set-up of the Executive Team and the strength of the team. I was aware that there was not a CFO in place, and obviously that’s a critical leadership position, and I was concerned that – I wanted to understand and I obviously wanted to do my own due diligence before joining the business, so it was important that I understood the context and the operating context of the leadership team. So I think I’d asked questions about the whole team, and that’s where the conversation came about.
I think, in terms of the appropriateness, there would be – I would hope that Mr Read would have known, from knowing me 20 years before but also knowing by reputation, that my integrity is extremely important and that I would never have divulged that out side of the conversation that we’d had and the confines of that. And the only reason I have done now is because I’ve been asked specific questions by the Inquiry, so I’ve had to make that in my statement, but I – that conversation was in the – in a trusted conversation between me and Mr Read before starting work.
Mr Stein: I’ll ask my question again. Should such matters be discussed prior to employment?
Karen McEwan: I think possibly not.
Mr Stein: Can I move, then, on to a different document, please. This is a document for a Board meeting, which is this year, 27 February. If I’ve got the document reference right, it’s POL00447854, page 1.
It’s a Board report that’s being discussed, a three-year People Plan and people structure. So POL00447854, page 1. Ms McEwan, again it should go on the screen. Grateful. If you can scroll down the page, please, under “firstly”, if we look at those two paragraphs, you see where it says, “Executive Summary”, “firstly”, and then “secondly”. Probably the easiest sentence to look at is under “Secondly”:
“… a Strategic People Plan has been developed, focusing on three strategic priorities – colleague experience, capability and inclusion – to ‘create a great place to work for all’. The high-level plan is shared with the Board in this paper for noting and discussion.”
If we wish to, we can go up the page, I don’t ask for that, but this is a document presented to the Board for February 2024, this year, which is for noting only, essentially saying that this what is happening, we are developing this paper, three-year plan.
Now, you’ve discussed this briefly with Mr Blake. But where this says “to create a great place to work for all”, in fact the plan doesn’t mention subpostmasters. I can’t even find the word “subpostmaster” used at all within that plan. Help us to understand how such a plan that is meant to create a great place to work for all doesn’t even refer to subpostmasters?
Karen McEwan: So this is a question that I have been asked before, understandably so. So the extent of my remit is to the colleagues that work at the Post Office but I’m acutely aware, and very focused, on my role in providing a strong, capable, collective of people that work at the Post Office so that they can do their best for postmasters, and I discussed this very point with the Postmaster Non-Exec Directors.
So before I took this plan to the Board, I consulted with Saf and Elliot because I was keen to make sure that the work that I was going to do through the plan would make a difference for postmasters and, at that point, Elliot actually pointed out to me that it didn’t explicitly say “postmasters”.
I think we’re intending, in the statement, a great place to work and, originally, we just had it as “a great place to work”, with a full stop. We’ve said “for all” because, by reference, that means anybody that is associated with the Post Office, we want it to be a great experience and a great culture for everybody, and that means for everybody, irrespective of the jobs that they do. So I think it’s implicit.
I understand it’s implicit, and we are making real efforts to extend some of the work we’re doing through this plan to subpostmasters. For example, we’ve had several meetings recently where we’ve talked about the leadership – sorry, the Behaviour Framework that I spoke to earlier. We’ve started to talk to the postmasters about how that hopefully will make a difference to them for the future and we’ve had quite positive feedback from that, and something like our service training, we’re running a programme of inclusive customer service training. We feel that that could easily be extended to the postmaster population, and we want to be able to do that. So it’s not explicit but I’m conscious that it isn’t explicit and, as I said, there is a reason for that.
Mr Stein: The Postmaster NEDs, I think they were the ones that came to you and said that there’s a problem with this plan that it doesn’t mention subpostmasters; isn’t that right?
Karen McEwan: Sorry, could you repeat?
Mr Stein: Did they come to you and make that point, did they say to you, “Ms McEwan, this doesn’t mention subpostmasters”? You didn’t elicit, you didn’t go to them and say “I’m terribly sorry about not mentioning subpostmasters”, did you?
Karen McEwan: No, I did go to them. It was my full intent to consult them thoroughly before I took this paper and the plan anywhere, and they are my biggest, most significant stakeholder. So I did consult them and I did ask the question.
Mr Stein: Is there a three-year People Plan and People structure for subpostmasters and branch employees?
Karen McEwan: Not to the best of my knowledge, no.
Mr Stein: Was the possible inclusion of mention of subpostmasters and staff at branches discussed with Angela Wolfenden, who is the external people and organisation design consultant who conducted the review? Was the possibility of mentioning them even by exclusion, by saying that this is not meant to directly refer to those individuals, was that discussed with Ms Wolfenden?
Karen McEwan: So I’m not aware whether it was discussed or not. I think, with hindsight, as confident as I am about the intention of the People Plan and the spirit that we want to go about this work, I think with hindsight it would be entirely appropriate and helpful maybe to reference specifically in future documents that, whilst I don’t talk about subpostmasters and postmasters directly, the work that we’re doing is absolutely focused on improving the relationship and definitely improving trust and communication with them.
Mr Stein: Because you say – and other people have said this – that the pressures of the scrutiny of this Inquiry, and cases and investigations, have impacted upon people within the Post Office so that people – are you okay – so people are concerned about the way their behaviours may be viewed. We understand that but this still seems to be excluding subpostmasters rather directly, doesn’t it?
Karen McEwan: So arguably, in the work that I’m doing, I don’t think that there is exclusion. I think far from it. I think I’ve – I’m very acutely aware of the need for the connectivity between the culture of this organisation and what it best does to serve postmasters. So every part of our plan is intending to do that.
Mr Stein: In that case I’ll take you to a different document POL00458463. So that’s POL00458463. Ms McEwan, that’s the “Our Behaviours” plan, okay? So “Our Behaviours” plan. This one is July ‘24. Was this one drafted inhouse or was that one also outsourced?
Karen McEwan: So we drafted it in consultation with a management consultancy business that we were working with as part of the ethos programme that had been set up before I started. So it was a collaboration between the Executive of the Post Office, including the whole team, and this company.
Mr Stein: Page 5, please, of that document. Now, we’ve just seen under the banner heading “Creating a great place to work for all”, if we can expand it on my screen – it’s very small, I don’t know whether it can be widened slightly – onto “How and when to use these behaviours”, thank you. If we can scroll down, please, to the “Employee engagement survey”, there we go.
So this is under that heading and descriptions:
“Including questions related to behaviours and employ surveys to gauge impact on overall engagement, cultural alignment and colleague satisfaction.”
Then if we just go up one, please, from there “Recruitment and selection”:
“To support what it takes to be successful at Post Office, we will align our behaviours to our recruitment and selection processes. The definitions will provide a solid benchmark when hiring.”
Now, this plan does mention colleagues including subpostmasters but it appears to be directly impactful for employees; is that correct?
Karen McEwan: The – so, yes, the intention is to provide a framework for the employees. I described in the past, for example, there’s been a lack of curiosity in the organisation. It’s really important that we correct for that and we address it. So I think, yes, but by nature, it would – would relate to postmasters.
Mr Stein: Thank you. Now, you’ve come to the Post Office with a huge range of experience, background, longevity of employment at Tesco and other companies. Is there a similar People person with your type of experience for the – I think it’s 7,000 individual branch subpostmasters, and presumably a larger number also of employees; is there somebody that’s got your background experience and ability to provide the focus within the organisation for those people?
Karen McEwan: Sorry, do you mean currently employed in the Post Office?
Mr Stein: Yes.
Karen McEwan: Not to my knowledge, no.
Mr Stein: You’ve mentioned that there is a subpostmaster who has been brought in to try to provide an insight into subpostmasters. But that subpostmaster, unless I’m very wrong, doesn’t have your sort of background and experience; is that correct?
Karen McEwan: Has a different background and experience, but yeah, but not from a – probably from a cultural expertise perspective, no.
Mr Stein: Just moving then slightly sideways to whistleblowing and the policies that are in place currently. Now, the whistleblowing policies I won’t look at in detail with you, but they’re not incorporated into subpostmaster contracts. So there is a policy and that policy, essentially, if we wanted to look at it, says that subpostmasters’ whistleblowing comments will be received by the Post Office –
Karen McEwan: (The witness nodded)
Mr Stein: – although, essentially, the Post Office doesn’t have to look at those because of legislation essentially doesn’t take into account contractors or non-employees.
Karen McEwan: (The witness nodded)
Mr Stein: To assist subpostmasters, would it be of benefit to them if the whistleblowing policy was incorporated directly into their contracts, so that there will be a contractual obligation to ensure that that is adhered to?
Karen McEwan: Yes, I would hope that – and probably hope isn’t enough but I would hope that the work that we’re doing to ensure that people – everybody, postmasters and colleagues in the organisation – understand the benefits of having that policy and how to utilise it, I think is really important but I think it’s possible that we shouldn’t over-rely on that, I think. So yes, it may be helpful.
Mr Stein: Lastly, you, amongst other individuals within the Post Office, have taken part in meetings with subpostmasters that have been affected by the scandal?
Karen McEwan: Yes.
Mr Stein: I think you’ve taken part in number of those meetings, including travelling to Belfast; is that correct?
Karen McEwan: I haven’t been to Belfast but I have been to several meetings.
Mr Stein: Right, okay. Where did you go in your meetings?
Karen McEwan: So my meetings have been virtual, actually, so I’ve done three meetings and they’ve all been virtual but I have done three of the meetings, yes.
Mr Stein: I’m grateful.
Just to finish my questions for you, Ms McEwan, can you comment on the personal impact, emotional impact, that those meetings have had on you?
Karen McEwan: Yeah, I’ve found the meetings to be personally distressing and hugely insightful. I think probably less important the impact they had on me but more the impact that what’s happened in the past has had on those people and their families. I found them incredibly difficult but hugely insightful, and very helpful to me in my role at the Post Office.
Mr Stein: Excuse me one moment.
Thank you, Ms McEwan.
The Witness: Thank you.
Mr Blake: Sir, I think those are all the questions.
Questioned by Sir Wyn Williams
Sir Wyn Williams: Right. I’m not sure that I should be asking this question, because I’m not sure I’ve got the expertise to evaluate where I’m going, but I will ask it.
In this rather unusually structured organisation, where you have direct employees but you have postmasters who are now, if they weren’t in the past, certainly now, said to be absolutely central to the business, shouldn’t they be under the function of someone called a Chief People Officer?
Karen McEwan: Do I think – sorry, can you just say the last bit of the question, again? Sorry.
Sir Wyn Williams: Yes, you’ve got direct employees, obviously.
Karen McEwan: Yeah.
Sir Wyn Williams: But you’ve got other people who are contractually, in legal terms bound to the Post Office but acknowledged to be central to the business –
Karen McEwan: Yes.
Sir Wyn Williams: – the postmaster –
Karen McEwan: Yes.
Sir Wyn Williams: – and you’ve got someone called a Chief People Officer and, to my rather naive way of thinking, that means that someone is performing functions in respect of all the people in the business.
Karen McEwan: Yes.
Sir Wyn Williams: So my question is: shouldn’t the Chief People Officer have specific functions in relation to postmasters?
Karen McEwan: Yes.
Sir Wyn Williams: So if I were to recommend that, you wouldn’t think I’d gone mad?
Karen McEwan: I wouldn’t. I’d wholeheartedly agree.
Sir Wyn Williams: Right. Thank you.
Karen McEwan: We are starting to do work though, we are –
Sir Wyn Williams: No, I follow –
Karen McEwan: We’re making progress but there’s much more to do.
Sir Wyn Williams: It just struck me, you know, from Mr Blake’s questions and Mr Stein’s questions, and there seemed to me to be an elephant in the room, so I thought I’d bring out the elephant.
The Witness: Thank you.
Sir Wyn Williams: Right, thank you.
Mr Blake: Thank you, sir.
Sir Wyn Williams: That’s it, Mr Blake?
Mr Blake: It is.
Sir Wyn Williams: Yes. Well, thank you very much for your assistance to me this morning. I’m very grateful.
Mr Blake: Shall we come back at 2.00, sir?
Sir Wyn Williams: Certainly.
(1.01 pm)
(The Short Adjournment)
(2.00 pm)
Mr Blake: Good afternoon, sir. This afternoon we’re going to hear from Mr Railton.
Sir Wyn Williams: Yes.
Nigel Railton
NIGEL RAILTON (sworn).
Questioned by Mr Blake
Mr Blake: Thank you. Can you give your full name, please.
Nigel Railton: My name is Nigel Railton.
Mr Blake: Thank you very much. Mr Railton, you should have in front of you a witness statement –
Nigel Railton: I do.
Mr Blake: – dated 30 August this year; is that correct?
Nigel Railton: Yes, it is.
Mr Blake: Can I ask you, please, to turn to the final substantive page, that’s page 33. Can you confirm that that is your signature?
Nigel Railton: It is my signature.
Mr Blake: Is that statement true to the best of your knowledge and belief?
Nigel Railton: Yes, it is.
Mr Blake: That witness statement has a URN of WITN11390100, and that will be published on the Inquiry’s website shortly.
By way of background, you are a qualified accountant; is that correct?
Nigel Railton: Yes.
Mr Blake: You started life, working life, in the railway industry; is that right?
Nigel Railton: Yes.
Mr Blake: You worked at Black & Decker, and then Daewoo Cars?
Nigel Railton: That’s correct.
Mr Blake: You joined Camelot in 1998 as Head of Finance?
Nigel Railton: Correct.
Mr Blake: You held various positions at Camelot before becoming their CEO from 2017 to 2023; is that correct?
Nigel Railton: That is correct, yes.
Mr Blake: You currently hold a number of Non-Executive Director positions –
Nigel Railton: Mm.
Mr Blake: – as well as being Chair of something called Argentex Group, which is a Financial Services Company; is that correct?
Nigel Railton: That’s correct.
Mr Blake: Relevant for today’s purpose, you are current Chair of Post Office, or Interim Chair of the Post Office, and you were appointed on 24 March this year; is that correct – sorry, 24 May this year.
Nigel Railton: 24 May is correct, yes.
Mr Blake: In terms of your appointment, you’ve set out in your witness statement that you were approached by the then Minister Hollinrake in February this year; is that correct?
Nigel Railton: That’s right, yes.
Mr Blake: Then you were formally appointed by the then Secretary of State Badenoch?
Nigel Railton: Yes.
Mr Blake: Did you know either the Minister or the Secretary of State?
Nigel Railton: No, I did not.
Mr Blake: Do you know why you were approached?
Nigel Railton: I don’t know why I was approached, I imagine because of my experience with Camelot.
Mr Blake: Did you work with their department when you were at Camelot?
Nigel Railton: No, it was a different department. Camelot – the National Lottery, is governed by DCMS, so a different department.
Mr Blake: Do you know if it was a competitive process –
Nigel Railton: I do not –
Mr Blake: – where interviews or anything along those lines –
Nigel Railton: I do not.
Mr Blake: Did you have to submit a CV or –
Nigel Railton: Yes, I had to submit a CV. I must say, the – whether it was the interview or the amount of meetings I had, I had many, many meetings with the Department of Business and Trade, UK Government Investments, the Postmaster NEDs, so lots and lots and lots of meetings.
Mr Blake: Prior to your appointment?
Nigel Railton: Yes.
Mr Blake: Thank you. Do you know if it was or is expected to become a permanent position?
Nigel Railton: I don’t know. I mean, clearly, the Post Office needs a chairman and – well, I’ve not had any conversations yet about whether this, you know – when a permanent chairman will be put in place.
Mr Blake: Have you been told how long it is expected to be an interim position?
Nigel Railton: Yes, it was 12 months from 24 May to 24 May next year.
Mr Blake: Thank you. To what extent, so far as you’re aware, was your IT experience at Camelot relevant to your appointment?
Nigel Railton: I don’t think it was, actually. I’m not sure.
Mr Blake: Was there something in particular that you achieved at Camelot that you consider most important for this particular role?
Nigel Railton: Well, I think, you know, the National Lottery operates at enormous scale, 44,000 retailers, systems that have to balance to the penny every day, operate with absolute integrity, and we changed the systems in the UK a couple of times, and in other markets. So I think the size of the challenge, in terms of the Horizon replacement for the Post Office in particular, I think my experience was relevant, and is relevant.
Mr Blake: In terms of the composition of the Camelot Board, and comparing that to the Post Office Board, do you consider that, on joining the Post Office, that there is sufficient relevant expertise amongst Board members?
Nigel Railton: I think there’s some very good Board members. I think the Board members we have are excellent, actually but there are some gaps, and we’ve just finished doing a Board Skills Matrix assessment, and there are clear gaps in technology. There is no expertise on the Board in terms of technology. There is no expertise in the Board in terms of business transformation, and also I think we’re lacking in kind of Civil Service/ Government expertise.
Mr Blake: Can you assist us with what steps are being taken to fill those gaps?
Nigel Railton: Yes, we’re actively recruiting now. We’ve had a number of applications for the technology role, and the business transformation role. In fact, we had about 150 applications for the technology role. So it’s proving popular.
Mr Blake: Was that something that you implemented, that you identified and came up with a solution, or is that something that was already in train?
Nigel Railton: No, it’s – I think conversations were happening at the Board in terms of the skills that were missing, but it’s something that I implemented.
Mr Blake: One thing that you have said in your witness statement is that, when people join the Board, they discover it involves a lot more work than anticipated. Is that just because of the Inquiry and the historic matters or do you see that as a broader issue?
Nigel Railton: I think it – it’s a broader issue. I think the governance within the company is not working as effectively as it could, so I think too many matters, quite frankly, go to the Board. I think too many matters go to Non-Executive Directors to deal with on a virtual daily basis, particularly around people. But I do think it’s temporary.
Mr Blake: I think you have said that you were told that it was going to be a two days a week position to be chair. Realistically, how long do you spend in that role?
Nigel Railton: Much more than that. I’d say five days a week, not constantly five days a week but pretty much the equivalent of five days a week.
Mr Blake: Is that sustainable?
Nigel Railton: It is for the short term, yes.
Mr Blake: When do you envisage the workload will reduce?
Nigel Railton: I think the key event is the implementation of the strategic review that we’re doing now, number 1, and, number 2, when we fully implement the recommendations from the Grant Thornton report and have the governance within the Board and the company operating effectively and efficiently.
Mr Blake: How long do you imagine that’s going to take?
Nigel Railton: Hopefully about three months.
Mr Blake: Three months. Thank you.
I’d like to start by looking at the briefings you received on becoming Chair. Can we please bring up onto screen your witness statement, that’s WITN11390100.
If we could start, please, on page 5. The bottom of page 5. Thank you. If we scroll down, thank you. If we could continue scrolling over the page, please, we see there, in paragraph 12, at the bottom, in terms of the Horizon System – sorry, if we scroll down slightly more – you say:
“My understanding is that the same technical issues and concerns [the ones that happened in the past] do not apply to the current build.”
Paragraph 13, you say:
“I had a session with the Post Office technical teams as part of my induction. This covered the Post Office’s IT system at enterprise architecture level. I asked [several] questions about Horizon and associated business processes and controls and came away assured that what has happened in the past in the IT system cannot happen now.”
Can you just assist us with who provided you these briefings?
Nigel Railton: It was Simon – sorry, I’m struggling with the names. It was a former CTO and senior members of the technical team. Forgive me, I can’t think of the names. Chris Brocklesby and his team, effectively.
Mr Blake: Thank you. Could we please bring onto screen our YouGov expert report, that’s EXPG0000007. Can we turn to page 19, please. You’re aware of the circumstances of the YouGov report and how we obtained the results?
Nigel Railton: Yes, I am.
Mr Blake: Yes. Current subpostmasters were questioned, and these are their responses, with regards to issues that they’ve experienced with Horizon in the last 12 months: 70 per cent experienced screen freezes; 68 per cent loss of connection; 61 per cent issue with PIN pad; 57 per cent experienced unexplained discrepancies.
If we please turn to page 28, we see there “Frequency of experiencing an unexplained discrepancy since January 2020”, and we see 17 per cent experienced unexplained discrepancies a few times a month; 18 per cent at least once a month; 21 per cent once every two to three months.
If we turn over the page, please, we can see how discrepancies have been resolved, and 74 per cent of those who had experienced discrepancies said that they resolved those discrepancies themselves or using their branch’s own money.
In light of those findings, do you think that you have been properly briefed about the current state of the Horizon system?
Nigel Railton: The briefing I had, by its very nature, was very high level, very high level, and we continue to look, and the team continue to look at discrepancies in particular and the operation of Horizon. You know, the Horizon system is available 100 per cent of the time. This gets reported to the Board. The number of defects is quite low now, I’m told, through the data we get at the Board, and I was under the impression that the dispute resolution button now was dealing with most issues, but clearly this data doesn’t support that.
What we want to do and what we will do is now work through the dispute resolution process and the end-to-end process of how these discrepancies are arising because I think it’s a function of three things – it’s a function of the system, of cash and of stock – and I think we need to look at it end to end, rather than just looking at the system. And Neil Brocklehurst, who is now the acting CEO, we’ve talked about that. We want to do that with postmasters.
Mr Blake: Do you feel that the current experience of subpostmasters in using the Horizon system is properly understood at those levels within the business?
Nigel Railton: I don’t know.
Mr Blake: Has there been a discussion about this report and the results?
Nigel Railton: Yes. We’ve talked – well, the Executive Team have talked about these results and, clearly, I think two things spring out from the results: it’s really disappointing that this is still happening and somewhat surprising. But what it does do, it allows us to now take these findings and look at them in the context of the strategic review that we’re finishing and make sure that the plan we’re coming up with addresses them, and also, of course, resetting the NBIT programme.
Mr Blake: We’ll get to the NBIT programme but, looking back at your witness statement again and it says, “My understanding is that the same technical issues and concerns do not apply to the current build”, and we saw on screen there all of those similar issues to the ones that we heard about during the Human Impact Hearings and during other stages of this Inquiry. Do you think that the business has a sufficient grip on those issues?
Nigel Railton: Well, I think the issues that – on one of the previous slides about screen freezes and, you know, systems do freeze from time to time and systems do have issues. The important thing is making sure the control environment is adequate to deal with issues as they arise and that the technical teams have got the proper controls and support around them.
Mr Blake: If we turn back, please, to page 19, it wasn’t just screen freezes, “Unexplained discrepancies”, 57 per cent, it seems like quite a high proportion of subpostmasters experiencing not just discrepancies but unexplained discrepancies. Do you think for the business has a sufficient understanding of those kinds of issues?
Nigel Railton: Based on that 57 per cent, no.
Mr Blake: Your predecessor, Mr Staunton’s, evidence was to the effect that problems with Horizon were obvious to him when he started. Is that a conversation that you’ve had with Mr Staunton at all?
Nigel Railton: No, I’ve not spoken to him at all.
Mr Blake: Moving on to the issue of strategy. Strategy is something that is mentioned in your witness statement 23 times. It sounds great, but can you assist us with what it actually means?
Nigel Railton: Of course. When I was doing my due diligence before accepting to become Interim Chairman, it became very obvious to me that there was no strategy for the Post Office at all and there hadn’t been for a number of years, and I think that’s what – one of many problems but one of the big problems is causing a lack of direction in the organisation. So one of my preconditions with the former Secretary of State is that, if I did agree to join, if she wanted me to join, is that I was able to conduct a thorough strategic review to look at the future of the business.
And, in doing a strategic review, you look at all elements of the business and, over the last four months, we’ve done that and last week the Board signed off a plan for the future for the Post Office but, more fundamentally, for postmasters, and we’ve passed that plan to the Government now for review and approval.
Mr Blake: If we could please turn to POL00448624. This is a meeting of the Board of Directors, 4 June 2024 but it’s actually a document within this pack that I’d like to take you to. It’s page 109.
Is this where things began in terms of developing a strategy?
Nigel Railton: Yes.
Mr Blake: It is a firm called Teneo that was instructed by the Post Office. Were you involved in instructing Teneo?
Nigel Railton: Yes.
Mr Blake: Why Teneo?
Nigel Railton: I’d worked with Teneo in the past as part of the turnaround of the – of Camelot and the National Lottery in 2017. I was very impressed with them, in terms of their ability to get to grips with things pretty quickly, and I thought that these would be an ideal company to help us pull a plan together for the future.
Mr Blake: We’ve seen in the Inquiry, especially in recent years, a large number of external reviews and reports. We’ve seen Grant Thornton, Ernst & Young, Accenture, now Teneo. Why do you think Teneo is the one that’s going to work?
Nigel Railton: Well, I say that I’d worked with them before on a number of occasions, actually, and the quality of the individuals that they offered to work on this was really high. And, again, you know, we’ve now finished the review, we’ve now got the plan and I can assure this Inquiry that the quality of the plan is very, very high, in my opinion.
Mr Blake: I think you’ve said you’ve handed it over to Government, the final review or final plan; is that a Teneo document or Post Office document?
Nigel Railton: It’s a Post Office plan, so the Post Office team worked with Teneo to come up with a plan.
Mr Blake: Will there be a version of that plan that you can share with the Inquiry in due course?
Nigel Railton: Yes, of course, if the Inquiry wants to see it, then it’ll be provided through the normal channels.
Sir Wyn Williams: Just to check I’ve got it right, the Post Office Board has now approved a strategic review – plan, sorry, plan?
Nigel Railton: That’s correct, Sir Wyn, yes.
Sir Wyn Williams: The next step is for the shareholder to approve it?
Nigel Railton: Yes.
Sir Wyn Williams: What is your expectation about the timescale over that process?
Nigel Railton: I have been pleasantly surprised at how quickly the Government are reacting to this.
Sir Wyn Williams: Right.
Nigel Railton: I anticipate, but can’t commit to, getting a decision in a week or two.
Sir Wyn Williams: Right, okay.
Mr Blake: As at today, is there any aspect, even as high level as you like, that you’re able to share with the Inquiry in respect of overall strategy and direction of the Post Office?
Nigel Railton: Yes. My going in hypothesis to this whole review was that we needed to do two things: we needed a new deal for postmasters, not just economically but in terms of operationally; and, secondly, we needed to reverse the polarity of the Post Office. And what I mean by that is to put the postmasters at the centre, not the current centre being at the centre, with the current centre actually becoming, if you like, a service function properly to the postmasters and, as I say, I can’t go into the detail because it’s subject to Government approval and is commercially sensitive because it affects colleagues but what I can tell you is that we have achieved those two objectives through the plan: a new deal for postmasters and a change in the polarity.
Mr Blake: I’d like to take you through a number of other reports that have been obtained in recent years or reviews or exercises, and to get your view as to whether they’ve been addressed or not.
The first I’d like to bring on to screen is POL00448681. These are exit interviews that occurred before you took up your role. These are exit interviews and the information, I think, was gathered by Ernst & Young. It says, “Confidential – for the Attention of the Chairman and the GCPO”. Is this a document that you have received before being provided with it by the Inquiry?
Nigel Railton: No.
Mr Blake: We’ll go through some of the detail but is some of the detail information that was provided to you before this document was provided to you by the Inquiry?
Nigel Railton: I can’t recall. I did read this document yesterday when I received it, so I’m able to offer views on it, if you would like.
Mr Blake: “[Non-Executive Director] Exit Interviews …
“The following summary is the result of 3 interviews carried out virtually on … 1 March 2023.”
So some time before you joined the company.
“The three interviewees were Carla Stent, Zarin Patel and Lisa Harrington who have been in as a [Post Office Non-Executive Director] role for between 3 and 7 years.”
Could we turn over the page, please. I’d just like to test this alongside your own personal impression on joining the Company.
Nigel Railton: Mm.
Mr Blake: “Leadership and Teamwork/Culture.”
The results from their exit interviews are summarised as follows:
“There are questions on how well set up the [Group Executive] leadership team are for a business turnaround – specifically questions were raised about the capability, the teamwork and the interactions with the Board/[Non-Executive Directors]. Notwithstanding the external pressures and constraints, governmental changes/politics/shareholders, and competitor landscape etc, there was a strong suggestion that the levels of respect, trust, and ‘enterprise first’ thinking within the [Group Executive] and also between the Board and the [Group Executive] are a barrier to business success that warrants further explanation.”
Is that something that you have experienced since joining the company?
Nigel Railton: Not exactly. I think – the Group Executive, I mean, was quite thin on the ground when I joined. We had no CFO because the former CFO was on long-term sick, no General Counsel. So quite large gaps in the team but that’s not something I particularly recognise.
Mr Blake: The second paragraph is explained, I think that’s a reference to Mr Cameron. The third paragraph:
“With the context of the current enquiry especially, there was a clear concern over whether lessons had/were being learned and applied to prevent something similar happening in the future. Concerns were clear about the lack of time/energy that leaders had, but also the apparent underlying lack of trust/respect between leaders and the lack of accountability (healthy support and challenge).”
Again, is that something that you have come across?
Nigel Railton: I’ve certainly come across the lack of accountability.
Mr Blake: Can you give us an example of that, please?
Nigel Railton: I don’t think I can give specific examples, it’s just a theme that I’m seeing, and the way I’m seeing it manifest itself is with the amount of materials that are going to the Board. So I’ve listened to other witnesses give evidence and I think talk about the Board being overwhelmed with information, and that’s something certainly that I saw immediately. And I think the reason that ties into accountability is people are not making decisions, and are deflecting everything upwards through the governance structures in the organisation, so that lands at the Board.
Mr Blake: Thank you. Can we go over the page, please, and over the page again. Can we go to number 3, please. The feedback there is:
“The Board is not really listened to. The Exec is under real pressure and it is not sure they know how to get the most out of the [Non-Executive Directors].
“There is not enough clarity on the role and expectations of the [Non-Executive Directors]/Board.”
Slightly further down, it says:
“I am not sure we have the right calibre of team at [executive] level, and therefore there is more chance the [Non-Executive Director] gets involved in detail when they shouldn’t. Turnarounds need strong leaders and leadership; with courage, energy and will to drive change, and who can help the organisation believe.”
What are your views on that; have you experienced any of those concerns?
Nigel Railton: I think it’s part of the same – the same issue. When we talk about turnarounds, I think what we’re talking about now is implementation of the new plan that comes from the strategic review and, clearly, you need leaders with, you know, great leadership abilities. The thing that we need to do is, once we’ve that the leadership review hopefully approved, we’ll look at the skills that are required to implement that, we have an interim team at the moment that are strong, and we will consider what permanent roles we need in order to implement the plan.
But I do think the relationship between the Non-Executive Directors and the Executives, certainly in the few months that I’ve been here, is quite healthy.
Mr Blake: Number 4 relates to the Board being risk averse. If we scroll down, it also says:
“It feels as though we are a bit of a rubber stamp on things.”
Can you assist us with your views on that?
Nigel Railton: Well, I don’t think the Board is risk averse; I think the Board does its role properly in terms of considering risks appropriately. If the rubber stamp relates to how we work with Government departments, then I can assure you I will not work in that way. I’m an independent Chairman and we will operate as an independent Board.
Mr Blake: Have you taken any steps, so far, that can demonstrate that?
Nigel Railton: Yes, with the strategic review, where suggestions were made that we might want to, you know, not be quite so aggressive with the strategic review, in terms of the things we wanted to implement and I refused to concede and said “No, we’re going to, as an independent Board, come up with a plan which we think is the right plan for the Post Office”.
Mr Blake: What do you mean by “suggestions were made”?
Nigel Railton: Just in terms of the level of funding that’s required.
Mr Blake: Who by?
Nigel Railton: It was just by officials that I spoke to in different departments in Government, and it wasn’t official direction, let me be clear, this was just suggestions, because I think a lot of decisions are driven by what the Treasury will fund, so what one tends to get is advice in terms of what the Treasury might accept. But I’m not prepared to do that. I mean, the thing is my remit and our remit is to come up with the right plan for postmasters, you know, for a new deal and to reset the – you know, and to change the polarisation.
So I couldn’t do that if I’m hampered, so we’ve come up with what I believe is the right plan.
Mr Blake: We’ve heard some evidence of a begging bowl mentality, whereby the Post Office have to beg the Treasury for money to achieve any change or to achieve anything that they want to achieve; is that your experience?
Nigel Railton: Not exactly. I think all of these examples of Treasury short-term funding all come from the same problem: lack of strategy. So because things have, you know, been short-term, each decision has been a short-term decision, it’s therefore necessitated short-term funding from the Treasury, and I don’t know which one started first, whether it was the Treasury saying “You can only have money for three months”, in which case short-term decisions are made or, in fact, short-term decisions were made that led to the Treasury funding it short-term. But what I do know is the antidote to this a proper strategy that is properly considered, funded and implemented.
Mr Blake: You don’t have to give us the figures involved but does the strategy that you’re going to be presenting or you have presented, does that have a figure in mind that will resolve the various issues?
Nigel Railton: Yes, it’s fully costed, it’s fully planned out. We know exactly what we need to do.
Mr Blake: Thank you. Number 5:
“Overall, for a variety of reasons (capability, energy …) the leadership probably isn’t strong enough for the demands the organisation is facing. Nick (and the Exec) are the fixers, not the cause of the Horizon situation, but his and their ability to remain rational and focused is really being tested by his/their attachment to the serious nature of the historical issues and this is depleting energy and bandwagon for the transformations.
“The Board and the Exec need to be better at supporting each other. The level of teamwork is poor. The Public Inquiry process is consuming and draining the [Group Executive’s] energy needed for the turnaround. Be really clear and aligned on the messages for the shareholder [regarding] the challenges ahead.”
Do you consider that there is sufficient energy currently to achieve those objectives?
Nigel Railton: Yes, I think so. I think the interim people that were brought in recently have injected new energy into the business.
Mr Blake: Where have they been brought into?
Nigel Railton: Well, three individuals came from my team at Camelot, and Preetha, who is with us today, came from John Lewis and Heathrow Airport.
Mr Blake: Thank you:
“There is a genuine concern that the Board are held accountable for stuff that we don’t actually have the authority to decide on.
“Having learned from the [Postmaster Non-Executive Directors] it shows how ‘out of touch’ our execs are. They are not connected enough to the commercials and definitely not in touch with the customer.”
In your view, is the role of Non-Executive Subpostmaster something that you would wish to continue; do you think it’s useful; or do you think some other model might be appropriate?
Nigel Railton: I think it’s, in answer to your question, absolutely vital. One of the reasons that I agreed to join was the conversations I’d had with Saf and Elliot and, in particular, I had an amazing conversation with them for an hour and they asked for my help based on my Camelot experience, which is one of the real reasons I joined.
Mr Blake: Can we scroll down, please. It says:
“There is no obvious successor to Nick other than D(CIO) …”
I’m not sure who that is but it says:
“… but he is far too stretched and needs to focus on the platform. For the next 12 months there is a need for someone who will perform a CEO [business as usual] role (COO/CEO designate) given much of Nick’s focus and time will be spent on the [Inquiry].
“There are some ‘warning lights’ around the way work is proceeding on the new platform …”
We’ll get on to the new platform.
Nigel Railton: Yes.
Mr Blake: In terms of the CEO role, we know that Mr Read is going to be stepping down; are you involved in succession planning?
Nigel Railton: I will be. I will be.
Mr Blake: Do you know if anything has taken place so far in that regard?
Nigel Railton: No, not yet. I need to – once this evidence session is over, I need to turn my attention to speaking to UKGI and DBT to start that process.
Mr Blake: Irrespective of names, what kind of skills are you going to be looking for?
Nigel Railton: I think the skills that we need are the ones that are going to be determined by the strategic review. I think we need people with strong leadership teams; understand how to work with an organisation that supports an amazing social purpose; digital skills; retail skills; and technology skills. So quite a broad remit.
Mr Blake: Do you think such a person (a) exists and (b) would be happy to join the Post Office at the level of pay?
Nigel Railton: Yes and yes.
Mr Blake: Can we scroll down to number 9, please:
“What advice would you want to share with the Chairman?
“Complete a great handover involving new and outgoing [Non-Executive Directors] and extending to the other Board members.
“Give clear and frank messages to the shareholder (to help everyone internally and externally) appreciate the situation [Post Office] is in … and the ambition moving forwards.
“Be decisive over the team. Have we got the right CEO for a turnaround?
“Are there too many [Non-Executive Directors] … There doesn’t feel like enough camaraderie in the Board …”
What is your view about the balance between Executives and Non-Executives at Board level?
Nigel Railton: Well, we have no – apart from Nick, who has resigned, we have no Executive Directors on the Board at the moment. So that’s something we need to address. So we need the CFO to be a Board member and the acting CEO, and that’s something we’re working on at the moment.
Mr Blake: Can we scroll down, please, to number 11:
“Given that the [Post Office] is in need of sustained transformation – commercially and culturally, (so it is set up to compete and be successful in the market) there are questions about the fit of the Board level [Group Executive] leadership.
“How well suited are they to drive of the turnaround?”
Much the same as we’ve already been looking at.
Nigel Railton: Yes.
Mr Blake: There’s a concern there raised between the relationship between Mr Read and Mr Cameron. Do you think there is sufficient trust at Executive level and Board level in the organisation?
Nigel Railton: It’s difficult for me to answer that question, given I’ve only been here a number of months but, certainly at Board level, I found a really high level of trust between Board members.
Mr Blake: Thank you. The second document I’d like to look at is something called “Group Assurance Chairman Update”. That can be found at POL00460606. This document is dated 16 May this year, so it pre-dates your appointment, or your formal appointment, but you are listed as an attendee of this meeting.
It’s POL00460606. Thank you.
Are you able to assist us with the background to this document?
Nigel Railton: Yes, I was – even though my official appointment was 24 May, I did start on 1 May with my induction and, I have to say, I had a very comprehensive induction programme that I worked through with the teams, and this one was on 16 May which was my introduction to Sarah to take me through how assurance worked.
Mr Blake: Can we scroll down and look at paragraph 4. It says there:
“Adopted a tactical and heavily manual approach to Assurance due to the following gaps:
“a. No common universe definition and/or coverage for [Post Office] activities …
“Even IA do not have a comprehensive universe and they were not assessing the sustainability and/or impacts of the actions implemented for Issue judgments – a major cause of divergence between their outcomes and ours!!!
“SNOW our GRC tool cannot be relied upon for completeness and/or accuracy, with a lens of both risks and controls. This view has been communicated to both RCC and ARC.”
Then it says:
“So what? We had no choice to build our own Excel based universes.
“Common Issue Judgment – 365 lines;
“SPMP Integrated Assurance & Risk Universe – 509 lines.”
Am I right to understand from this that, as part of their group assurance function, they were reviewing, for example, the implementation of the Common Issues judgment and had to do that on an Excel document?
Nigel Railton: I believe that’s what the document says, yes. This was, as you can imagine, quite a lot of detail for an incoming Chairman to absorb, and in couple of weeks.
Mr Blake: Stepping back, and just trying to remember that meeting, what were the key concerns that were raised at this meeting?
Nigel Railton: I think more generally, that the kind of control universe or the control framework within the Post Office was perhaps not as efficient as it could be, and what I mean by that is that Assurance, Risk and Compliance were all separate, as was Audit, and it seemed to me that things were operating in silos and it would be much better to put some things together to get a common view of how the control framework should work.
Mr Blake: If we scroll over the page, they set out their key issues and significant concerns. They say, “All of these are easily fixable”. One is “Lack of accountability and consequence management”:
“This is the single root cause of all issues in [the Post Office].”
Is that something you agree with? Is that something that’s been taken forward?
Nigel Railton: I think I agree with it, actually. I think we said – I said earlier there was a lack of accountability. I think there was a lack of consequence management and the reason say that is, when I look at some of the risks that come to the Audit and Risk Committee, that are moving quarter by quarter and not being resolved or moved forward, I think that’s an example.
Mr Blake: So the risks are being identified at Board level but aren’t being resolved; why is that?
Nigel Railton: I think no, the risks are being identified within the business and escalated through the Audit Committee to the Board and, previously, they were not moving at sufficient pace in terms of mitigation and resolution. The reason for that is the sheer volume of priorities in the business at the moment.
Mr Blake: Can you see that being resolved and, if so, how?
Nigel Railton: Well, focus on the key priorities, number 1. I think we’ve now very clear on what the key priorities of the business are. Would it be helpful to describe those?
Mr Blake: Yes, briefly.
Nigel Railton: Well, you know, quite clearly there’s two number 1 priorities: one is assisting this Inquiry with its important work; and the second one is speeding up mediation payments.
Our third priority is the strategic review, having that approved by Government, implementing it as soon as possible; fourthly, implementing the findings from the Grant Thornton review in terms of governance, that’s something I’m hoping to have in place very quickly; and then, finally, deciding what to do next with the NBIT programme.
They’re our kind of five priorities.
Mr Blake: Thank you. We’ll just go through a few more of these key issues and then we’ll move actually onto the Grant Thornton report and your reflections on that.
Nigel Railton: Okay.
Mr Blake: The second is “Closed mindset – Capability and Competence”:
“Lesson of the past at an inherent level are not imbibed in the DNA of [the Post Office].
“Many seniors have a myopic lens on their role.
“Many are afraid to make decisions, therefore so many committees.
“Newly created Leadership Team has excluded line of defence – Most illogical considering lessons of the last and themes arising from the Inquiry.”
Can you assist us with your understanding of that and whether that is being resolved.
Nigel Railton: It is being resolved. I mean, I have to be honest, I don’t quite understand some of that. The one I certainly recognise is that many in the business are afraid to make decisions. There is a fear culture and, basically, what that means in practice is that many decisions are escalated and eventually arrive at the Board.
Mr Blake: I think we see that under “Governance”, number 3. I think the third point there says:
“Despite [the Post Office] significant issues, Board/ARC seem afraid to intervene or challenge overtly for management to course correct.”
Does that feed into that concern or is that a separate concern?
Nigel Railton: No, it’s part of the same concern where too much is coming to the Board and I can assure you that I am course correcting that.
Mr Blake: Then “Operational level”, it says:
“… Disparate, illogical, and non-existent [versus] good or even basic practice
“Responsible person is not a [Subject Matter Expert] in this field.”
We have already heard evidence this morning about a problem within the business those who were being asked for their opinions were not the Subject Matter Experts and perhaps a lack of a lack of Subject Matter Experts being asked their views; is that something you recognise?
Nigel Railton: Not particularly. I think context is important. So I’d imagine, at an executive level, asking non-Subject Matter Experts their opinions on things is sometimes healthy because you get good debates. So it’s not something I particularly see.
Mr Blake: Thank you. Let’s move on to the Grant Thornton review, please. You’ve said in your statement and you’ve said just now that there is a structured programme to implement their recommendations; can you assist us with what that involves and who is responsible for that?
Nigel Railton: So the Company Secretary is working through that at the moment. So, as a Board, we agreed a plan. So of all the actions in the Grant Thornton review – and of course there are many – we have a plan to implement all of those things and we’re working through that, some of which we can implement before the strategic review is agreed and some afterwards.
So the ones that we can kind of get on with – and, by the way, what I should say is that I thought the Grant Thornton report was excellent. I mean, it’s all pretty much basic good governance but it was excellent in terms of its detail.
So we’re implementing everything we can, and then those things that we need to wait for the strategic review to be approved, we’ll implement immediately afterwards.
Mr Blake: Thank you. Can we please turn to POL00446477 and that’s the Grant Thornton report.
The key findings are on page 7 and perhaps we can turn to those, please.
The first one, “The lack of a unifying purpose and group-wide strategy between [the Post Office] and its shareholder”, is the strategic review the solution to that?
Nigel Railton: Yes.
Mr Blake: Second, is there anything else, other than the strategic review that you’d point to address that issue?
Nigel Railton: No, but I think what the strategic review allows us to do is have a proper conversation with Government departments as to how the relationship should work but at least we have a strategy as a start point of the conversation.
Mr Blake: Number 2, “Conflict around the role of the Shareholder versus the Board”, that’s one area we’ve heard quite a lot of evidence on, the relationship between the Board and UKGI and the Department for Business. What do you see as the Board doing in respect of conflicts in that relationship?
Nigel Railton: I haven’t particularly seen this but that may be because of the approach that I’ve taken, that we are an independent Board and we will make our decisions with, you know, input from Board members that represent the shareholder, but we’ll make our independent decisions nonetheless. So I haven’t really seen that, I think I can understand from history where this might have arisen but, again, I think the answer to this is to have a clear strategy agreed with Government.
Mr Blake: How do you see cultural issues being addressed between the UKGI and the Post Office?
Nigel Railton: I don’t currently see cultural issues, actually. I think what we have to get to is a common goal, which is a new deal for postmasters that I talked about, and we have been working through achieving that common goal and I have to say that I feel supported.
Mr Blake: In your view, the role of a UKGI Non-Executive Director, does that work on the Board? So somebody who, for example, spends all of their time on the Post Office, has greater knowledge of Post Office affairs than perhaps other Non-Executive Directors?
Nigel Railton: I think it depends on the individual. I think it can work. I think with the wrong individual it might be difficult but it – certainly, from my experience, I think it works. And it’s not unusual. I mean, when I was at Camelot we had shareholder representatives on the Board, that 100 per cent owned the company and we made it work. And, if you embrace it properly, you can really make it – you know, turn it to your advantage, in terms of having somebody that can go back to the shareholder that really understand the business requirements.
Mr Blake: Number 3, “Leadership capacity”. Are there any specific plans in place that you can point to to address that?
Nigel Railton: Yes. So structure follows strategy. So once the strategy is approved, we have a clear structure that we’re going to populate with clear skills that are required.
Mr Blake: Can you assist us with what that means in plain English, please?
Nigel Railton: Well, in plain English, we understand what the structure is trying to – sorry, the strategy is trying to achieve. We will need organisation structure to support that and an operating model. So, you know, what roles do we need? Clearly, we need a CEO, clearly we need a CFO, but what other types of roles and what types of individuals and what types of experience will we need? And we’ll populate that from the start point of implementing the plan, with the revised operating model of how the business has to operate.
Mr Blake: Are there likely to be more people recruited to senior roles?
Nigel Railton: Possibly. And – sorry, if I can just clarify that. It depends on the definition of senior role. Do we need perhaps more people at an Executive level? Probably. But there are lots of layers of senior roles in the Post Office and I think that’s unusual.
Mr Blake: Sorry, it’s unusual for there to be so many people in senior positions?
Nigel Railton: Yes.
Mr Blake: Thank you. Number 4, “Decision making forums at Enterprise level lack pace and do not enable accountability”. Have there been any changes insofar as that is concerned, as far as you’re aware?
Nigel Railton: Well, this is something that I and the Executive are currently looking at as part of the whole governance redesign. We have to re-engineer the governance to make sure the business, first of all, is taking accountability and has the right decision making ability, and making sure the various levels of governance work, which currently, at the moment, to be frank, they don’t because too much comes to the Board.
Mr Blake: Fifth, “Culture – a lack of trust, accountability and performance management”. How do you envisage that can be overcome?
Nigel Railton: I think culture is a really interesting topic and I know one that this Inquiry has considered from various different dimensions but I think it starts with purpose. And I think, you know, can the culture be improved in the Post Office by doing certain things better – and I think Karen this morning talked about some of the things that she’s doing – yes. But I think that to get a true step change in culture requires a resetting of the purpose, which again a strategic review does and I think a resetting of the purpose allows them to get the right behaviours in place, and culture will follow.
Mr Blake: What is that purpose, so far as you see it?
Nigel Railton: The social value, the purpose of the centre of the Post Office is to support postmasters to support the communities that they serve.
Mr Blake: In your view, knowing what you know from the past, do you think that there has been or is about to be some sort of step change in that?
Nigel Railton: There will be a step change. There will be a step change but it’ll be through the strategic review when we reposition the – change the polarity of the business and go back to first principles around purpose. And I did this at Camelot. When I took over as CEO in Camelot, belief in the Executive Team was 35 per cent, which is not dissimilar, actually, to the scores we’ve seen for the Post Office, at 36 per cent, I think.
When I left, assisted by some of the people that are currently assisting me at the Post Office, it was at 96.
Mr Blake: How do you see yourself as achieving that?
Nigel Railton: Pardon me?
Mr Blake: How do you see yourself as achieving that?
Nigel Railton: I think it’s the same steps. It’s about having a plan that goes back to the purpose of the Post Office and a new deal for postmasters, a change in polarity, having the right people operating in the right way, behaving in the right way to the right values. Culture follows.
Mr Blake: Are there any concrete steps outside of your own strategic review that you can draw to the attention of the Chair that you consider would change the culture in the Post Office?
Nigel Railton: I know that the Executive Team at the moment are working hard to try to change the culture and I think we – incremental changes can be made, you know, where people start to – I mean, people do – many conversations I hear about postmasters. So that’s good thing. But I think rather than just incremental change, I think we need wholesale change, and that will come through the strategic review.
Mr Blake: I’m getting quite a few answers that are just looking forward to the strategic review. It would be helpful for the Inquiry to know at least some steps that you have in mind to change something so fundamental as culture.
Nigel Railton: I can’t really tell you the things that I’ll do in the next month or two because I’m the Chairman and it’s really a role for the Executive but I know that Neil Brocklehurst and the Exec Team, and Karen, are focused on this. So I think, yes, we can change the culture, and perhaps we can change behaviours in the short-term. What I’m talking about is truly embedded culture, that’s what I’m really talking about. It will only come through the step change that’s right allowed through the strategic review.
Mr Blake: Are we to expect something fundamental to change as a result of the strategic review?
Nigel Railton: Yes.
Mr Blake: Thank you. The fourth document I’d like to ask you about is an anonymous letter that we’ve seen already today. It’s POL00448519. Was this a letter that came to you very early on in your time at the Post Office? Is it a letter you saw very early –
Nigel Railton: Yes.
Mr Blake: I won’t go through it again. If we turn over the page, we can go just see there is something addressed to you, penultimate paragraph, that says:
“Mr Railton, please look at the above and investigate. If you can, you should engage with some of the past employees (particularly [Mr] Staunton and [Mr] Cameron). Our view is that those who have left under a cloud are the ones telling the truth.”
Is that something that you’ve personally investigated; are there conversations that you have had?
Nigel Railton: I haven’t spoken to Mr Staunton or Mr Cameron, no. When I received this letter, and I think it was dated four days after I officially started, I took advice from the SID, and I went through this and stepped through it because I thought it was also a useful learning experience for me to understand what happened in the past. I was assured – and we put it into the proper investigation process.
What came back was that the vast majority of all of these claims had already been investigated and there was one or two that required a bit more investigation, which happened very quickly and through the proper process, and this basically included no further action.
Mr Blake: Thank you. That can come down.
I’d like to now move on to the topic of NBIT. You’ve said in your statement, and it’s a paragraph we’ve already been over, that you have been told that what has happened in the past in the IT system can’t happen again now. Are you familiar with the Inquiry’s hearings in Phase 2 of the Inquiry that looked at the original procurement of the Horizon system?
Nigel Railton: I’m not, I’m afraid. I’m sorry.
Mr Blake: Could we please turn to POL00460593. This is an email from Mr Bartlett to you dated 27 June this year. It’ll come up on the screen in a moment. I’d just like to take you through it. He’s identified a number of different investigations that, at that point in time, were ongoing, relating to the NBIT system.
Nigel Railton: Mm.
Mr Blake: I’d like to take you through each one of those. Before I do, what were you told initially about the progress of the NBIT scheme?
Nigel Railton: As part of my induction, I was told that the programme was on track and progressing well. I struggled to reconcile that to another briefing I’d had that the project was now going to cost 1.2 billion against a budget of 180 million, and deliver in 2028 against an expectation of 2024. So the two things were in conflict for me.
Mr Blake: Why do you think that is?
Nigel Railton: I don’t know. I don’t know. I think perhaps it was people were confident about the revised plan, whereas my reference point was the original plan. So perhaps that was the reason for the improved confidence in the revised plan.
Mr Blake: Do you think you were being given correct information initially?
Nigel Railton: It’s very difficult to assess because I was really new, and I was presented with a lot of data and a lot of information. So it’s difficult for me to answer that question. I imagine people were presenting me with the data they thought was relevant.
Mr Blake: I’ll just have a read through this and I’ll take you through each of the allegations. Mr Bartlett says:
“Nigel, when Sarah and I met with you to brief you on A&CI’s work, we discussed Project Willow2 and the Speak Up reporting we have periodically received over the last year that gave us a qualified insight into the NBIT programme. You asked for a brief on the topics being reported to us. Claire Hamilton, the Speak Up Team Manager has helpfully prepared the below which I hope is a useful summary.
“Willow2
“This is a two-strand substantive investigation relating to concerns raised by multiple Speak Up reporters concerning NBIT. Pinsent Mason and Grant Thornton have been commissioned by [Post Office] to investigate these two allegations:
“Allegation One:
“That certain [Post Office] staff were aware of problems with the NBIT system and that progress reports to senior stakeholders including Nick and the [Group Executive] may not have been reliable.
“In April 2024, further information received in relation to the upward passing of information and decision making at senior level in respect to known errors in the NBIT system.
“It is to be determined if high severity defect information that was channelled upwards in an email to SteerCo prior to rollout may have been deliberately misleading.”
Are you able to assist us with the status of that investigation at all?
Nigel Railton: I’m not, I’m afraid. I’m not.
Mr Blake: “Allegation Two:
“That two senior engineers ‘pressured’ two IT security/assurance personnel to disable or waive infosec checks in NBIT’s specifications to save time in the project’s rollout (Comment: [Grant Thornton] are focusing on evidence/testing this and understanding the specific impact if it did occur).”
So it seems the second allegation is that something was disabled in order to save time.
Nigel Railton: Mm.
Mr Blake: Something in –
Nigel Railton: I think both of these investigations are ongoing but, certainly, what I’ll also say is that these allegations raised my interest in whether or not the programme and the project was going in the right direction.
Mr Blake: I mean, this is June this year.
Nigel Railton: Mm.
Mr Blake: Have you been provided with a substantive update in relation to any often these projects, any of these investigations?
Nigel Railton: No.
Mr Blake: Is that of concern to you?
Nigel Railton: Perhaps it should be but I’ve been more concerned with making sure we understand what’s happening with the project and I think some of these things perhaps explain why the project is over-spent and late but I haven’t chased up on the progress against the allegations, but I will after this session.
Mr Blake: “General concerns relating to NBIT team/activity raised via Speak Up.
“The following are grouped themes of various information passed by a variety of reporters to Speak Up over the last year that discuss NBIT:
“Behaviours
“Behaviours and activities were driven by timescales linked to bonuses rather than delivery of quality and reliability, ie perverse incentives (comment: this is now several months old so unsure if this is still occurring but it is corroborated in the Willow2 investigation).
“Mirroring very senior staff behaviour (Zdravko and Gareth Clarke), there was poor or lack of effective communication between key staff around governance of the programme.
“[Third] Active discouragement by senior NBIT staff relating to the use of Speak Up channels (comment: one allegation was made relating to detriment resulting from Speaking Up (an offence under the PIDA if proved) – this was investigated and no grounds found to support the concern).”
So there seems to be a result in relation to the final bullet point.
Nigel Railton: Mm.
Mr Blake: But, in relation to those first two, are you aware of any results from those investigations?
Nigel Railton: I am not at this stage, no.
Mr Blake: If we scroll down, “Accenture”:
“Collective confidential reports received raising concerns/issues about Accenture and conflicts of direct awarding by CB …”
That’s Mr Brocklehurst?
Nigel Railton: Brocklesby.
Mr Blake: Brocklesby, sorry:
“… with CB being ex-Accenture, without anyone looking at the bigger mapping picture of key positions/ activity held/performed by Accenture.”
Are you aware of any developments in that regard?
Nigel Railton: It’s all part of our review. I think we are too reliant on Accenture.
Mr Blake: I think this possibly feeds into the final section, if we scroll down. There’s a section there on “Reliance on third parties generally”:
“Need to be setting the conditions for [the Post Office] to be ready to run the system once rolled out which includes [Post Office] staff gaining relevant skills, understanding and knowledge during the design and build programme. Concerns are being raised that [the Post Office] has become reliant on third parties and so [Post Office] staff are not going to be able to effectively take over during the end transition.
“The matter of cost of third parties is also being raised as a significant concern – this is being compared to the NHS being reliant on Locum Staff, therefore not having the monies to continue as [business as usual].”
Is this something you received an update on or investigation into?
Nigel Railton: I recognise it and it is something that we are actively thinking about how do we do differently. So, to this point, to this point, 80 per cent of all people all staff working on the NBIT replacement are contractors. Only 20 per cent are permanent. And, of course, when you only get contractors working on things like this, they’re, by their nature transient and you don’t, you know, we keep information and skills, and they are generally expensive which is why we need to reset the whole programme.
Mr Blake: Is this part of the strategy review or is that a separate issue?
Nigel Railton: No, it is part of the strategic review. So we need to – would it be useful if I give a little of my thought in terms of the background to this?
Mr Blake: Absolutely.
Nigel Railton: So the first thing I ask myself is: how did we ever get to a position where we’re building a system internally? And from doing some research, going back to 2021, I think there were two decisions that were made that were fundamentally the wrong decision with the benefit of hindsight: one was the objective to get off Horizon, which is different than building a system for the future; and the second one was the decision to build inhouse. And I think we’ll – you know, people in the room will all be – you know, have heard the horror stories of tying to build things inhouse, IT systems, particularly if you haven’t got all the components in place to do so and the right conditions. So I think, based on my assessment, that this was always set up to fail in the first place.
And, you know, building an old Horizon system can never be the right thing to do. So what we need to do as part of reset is to think about what do we need to build? And clearly we need to build a system for the future. Now, I’m hopeful that much of the technology that’s been built to date we can reuse but we have to build to the outcomes of the strategic review. And to give an example of that, we need to, for example, build to the bank’s requirements and what the banks need, rather than just building old technology.
So that’s what we’re going to do.
Mr Blake: When is that achievable by?
Nigel Railton: I don’t know today but I will know soon. So we have a team of people now looking at this and, within the next two to three months, we’ll have a firm view on what we need to build, how we need to build it, how much it’s going to cost, and when it’ll be delivered by.
Mr Blake: Are we talking five years, ten years?
Nigel Railton: No, no, it’ll be – our objective is to do it – if you think about the prior objective which was 1.2 billion in 2028, it’ll be before 2028 and it won’t cost 1.2 billion add we’ll have far more certainty that it will be delivered.
Mr Blake: What do you currently see as the main issues with the NBIT system?
Nigel Railton: The NBIT design?
Mr Blake: Yes.
Nigel Railton: I think the main issue is we’re building the old Horizon system, which – now, the moment that decision was made in 2021, it was out of date because Horizon was, you know, Horizon is out of date. We need to build for the future. That’s number 1. I think the main other issue is building it inhouse. There must be a better way.
Mr Blake: In respect of Horizon, as it currently is operated by Fujitsu, can we please turn to POL00448864. This is a meeting of the Group Executive. It’s before your time, 13 March 2024 but we’ll see how it leads into a subsequent meeting that you were involved in.
If we could please turn to page 6, we have there a section on “Fujitsu Extension”, and it says:
“[Simon Oldnall] spoke to the paper which set out the current position on the discussions to date (including with Government) on the continuation of Support Services for the Horizon platform by Fujitsu beyond March 2025, when the current contract was due to end.
“The extension was proposed to cover the intervening period before the rollout of NBIT.
“While discussions were ongoing, Fujitsu had not yet made any commitment to continuing the support and against the context of the current external scrutiny, was unlikely to do so without the express support of the Government.”
Just pausing there, I know this wasn’t a discussion that you were party to. What do you understand by that?
Nigel Railton: By support of the Government?
Mr Blake: Yes.
Nigel Railton: My understanding is that Fujitsu wanted the Department of business to ask them directly to extend the contract, rather than it coming from the Post Office to ask them to extent the contract. That’s my understanding.
Mr Blake: Do you know the reasoning behind that at all?
Nigel Railton: I don’t. I can only imagine it might help their discussions in going back to Japan to get approval for this, but I’m speculating.
Mr Blake: “Subject to the position being settled, funding for the contract extension formed part of the SPMP business case.”
So it looks as though, in March 2024, the Post Office was looking to extend the Fujitsu contract beyond March 2025, and I’m going to take you to a Board meeting in which you were present, that’s POL00448648. Was this your first Board meeting, 4 June?
Nigel Railton: Yes, and I was an observer at this meeting.
Mr Blake: If we scroll down, we can see there, it says:
“… [Nigel Railton] opened the meeting. Given the very recent appointment of [Nigel Railton], the Board agreed that [Ben Tidswell] preside as Chair of the meeting.”
Can we please turn to page 11. It’s the bottom of page 11, bottom half, “Horizon continuity of service update”, and there’s a discussion there about the future of Fujitsu and Horizon:
“[Simon Oldnall] spoke to the paper outlining the proposal for a 5-year exit plan for Fujitsu. [Mr Oldnall] advised that the Board were being asked to include in the strategy a stage where if NBIT was not completed within the term of the extension that the Company would put in place an alternative approach to supporting the Horizon platform to make sure that Fujitsu was still able to exit at the 5-year point. SJ queried what the alternative approach would constitute. SO advised that the Horizon platform could be brought inhouse or procurement taken for external support for the platform. [Mr Oldnall] estimated that it would be 18 months to 2 years when a decision would need to be taken on this point …”
So as at your first Board meeting, it appears that there was discussion about maintaining Horizon beyond the contracted date but either bringing it inhouse or having another firm support Horizon; is that a correct summary of that?
Nigel Railton: Yeah, well, I think the extension of Fujitsu for up to five years had been the conversation that had been ongoing for a while and, to be clear, an extension of Fujitsu is absolutely necessary to keep going. I’m not sure whether the conversation was about an extension beyond the five years or not but, certainly, at the same meeting, a conversation about potentially bringing elements of the Horizon platform inhouse I recall was discussed.
Mr Blake: “[Mr Jacobs] queried whether we should we not be working towards this scenario. CB advised that a high level plan and cost to execute had been presented however the team did not want to go down that path at present given the commitment Fujitsu was requesting.
“[Here we have you querying] whether there were any termination points proposed in the extension. [Mr Oldnall] replied that there were not, and CB contributed that there were core services that would be provided for the entire term however there were certain services that could be terminated.”
Can you assist us with that discussion?
Nigel Railton: Yes, I was just – I found it surprising that we were committing to a five-year contract when our objective on the old plan was to be on our own system by 2028. So I was just questioning whether or not break clauses needed to be in the contract to allow us flexibility.
Mr Blake: We then have an action point:
“[You] queried the maximum cost for the contract extension. SO replied and advised that he would check the cost if all services aside from the core services were removed.”
I think that’s Mr Ismail:
“… queried why the extension was not proposed for 3 years given the programme build was tracking to complete in 2026. CB advised this was proposed in order to provide some contingency. [Mr Ismail] tested this further and pointed out the risk of the Company being on a new platform yet still paying service fees to Fujitsu. CB reiterated the point in respect of seeking a contingency.”
We then have, over the page, you again querying whether you can negotiate a break clause, so that’s the point, I think, you’ve just raised.
Nigel Railton: Yes.
Mr Blake: Mr Woodley advising that the team could take this away and look at a five-year extension with a three-year break:
“[Mr Ismail] noted the communications on the extension needed to be executed with precision in relation to postmasters and the public. CB advised that he understood this …”
Then we have “ACTION”:
“[Mr Railton – so you] asked for a session with SO to discuss what owning the source code encompassed …”
Can you assist us with what’s meant by owning the course code in the discussion that took place there?
Nigel Railton: Yeah, I think that perhaps owning the source code is perhaps not the best description of the conversation that we were going to have. It was really trying to understand what the team actually meant by insourcing Fujitsu. Because that can be many things. And I was a little confused, so I was trying to understand there what that actually meant in practice. Was it all of the source code, with all of the systems, all of the processes? That’s really what that was relating to.
Mr Blake: Is there a possibility that, at some point after the conclusion of the contract with Fujitsu and before the NBIT system, in some – somehow, the Post Office will be taking responsibility for the Horizon system itself?
Nigel Railton: I think – well, it’s a possibility, yes. But we have to extend the contract. We have no choice. We need optionality to be able to get out of the Fujitsu agreement at the appropriate time for both parties. We are looking at all options in terms of how to bring, effectively, the functionality that we currently have by using the Fujitsu system within our control.
So I think the wrong description is bring it inhouse. I think perhaps a better description is developing something that we can use ourselves.
Mr Blake: What’s the difference between those two descriptions? Sorry.
Nigel Railton: Well, just bringing Fujitsu inhouse just suggests that we’re going to take everything Fujitsu do, in terms of processes, data centre and everything, and just bring it inhouse and basically manage what they do now. What we’re looking at a blend to say “Look, are there some things that Fujitsu do today that make sense to continue and we don’t have to change?” I think an example I give is, you know, the interfaces we have with the banks, for example, and they have. They work currently, there would be no point in rebuilding those, so that’s something we might keep.
Equally, we might want to change some of the infrastructure or, you know, some of the Transaction Processing elements of it.
Mr Blake: If we scroll down:
“The Board RESOLVED that:
“Subject to seeking a 3-year break provision, the proposed strategy for an extension of up to 5 years of the Horizon Support contract with Fujitsu from 1 April 2025 until 31 March 2030 be and is hereby APPROVED; and
“The inclusion of a binding commitment to Fujitsu that an alternative approach to supporting the Horizon platform through commencement of a programme to insource/reprocure elements be activated if there is not sufficient time within the term extension to fully migrate from Horizon to NBIT be and is hereby APPROVED.”
Can you assist us with what the present position is, in relation to that?
Nigel Railton: The conversations with Fujitsu are ongoing.
Mr Blake: We’ve seen, in the YouGov report, for example, and in evidence that the Inquiry has heard, of issues still being experienced by subpostmasters in relation to their use of Horizon. Is it possible, is it likely, that subpostmasters are going to be using that same system into 2030?
Nigel Railton: It is possible. I don’t think it’s likely and certainly our intention and the intention of the new team is to move away from Horizon to a new system that can deliver – I’m sorry to go back to the strategic review, but a system that’s fit for the future, as soon as possible. But to do that in a way that doesn’t disrupt postmasters’ activities.
Mr Blake: Thank you.
Sir, that might be an appropriate time to take our mid-afternoon break.
Sir Wyn Williams: Yes.
Mr Blake: Can we come back at 3.35, please.
(3.16 pm)
(A short break)
(3.35 pm)
Mr Blake: Mr Railton, we spoke before the break about Horizon potentially continuing for another five or potentially even more years, and also the possibility that certain aspects may come inhouse. What do you envisage so far as Prosecution Support, in those circumstances?
Nigel Railton: From Fujitsu?
Mr Blake: Well, from Fujitsu, yes.
Nigel Railton: I don’t know.
Mr Blake: Have you seen the recent correspondence, between Mr Read and Fujitsu, regarding their involvement in Prosecution Support?
Nigel Railton: I was provided with some documentation, I think, on Thursday.
Mr Blake: Yes.
Nigel Railton: Which was an exchange between Nick Read and Fujitsu this year. That’s the correspondence you’re referring to, yes –
Mr Blake: It is, yes, is that something that had been brought to your attention before this Thursday?
Nigel Railton: Not particularly. Clearly, I enquired when I received the documentation and my understanding is it’s information that’s required by the Met Police and the City of London Police into an investigation that involves organised crime and that’s why they approached us and Post Office – we went to Fujitsu and asked them as well to help provide this data. But that’s as far as I am aware of the situation.
Mr Blake: Perhaps we can bring onto screen some of the correspondence. I won’t take you to all of it because we have dealt with it with other witnesses, but can we please turn to FUJ00243204. This is the letter from Fujitsu, from Mr Patterson to Nick Read. If we scroll down, there’s a reference there to Mr Bartlett’s letter or email, and that’s a document that we’ve seen and a document that was also in your pack.
Nigel Railton: Mm.
Mr Blake: It says:
“Mr Bartlett suggests that a failure to provide a witness statement would ‘rightly be interpreted by the police and prosecutors as [the Post Office] and Fujitsu not having faith in the reliability of the data with the obvious outcome resulting.”
Mr Patterson says:
“A witness statement from [Fujitsu] attesting to the reliability of the Horizon system and of data from it in criminal proceedings would amount to expert opinion evidence. [Fujitsu] is incapable of providing expert opinion evidence as it is neither independent nor has it sufficient information to provide such an opinion.
“As the Post Office is well aware, there have been and there continue to be bugs, errors and defects in the Horizon system. Further, [Fujitsu] currently has, and previously had, access to branch transaction records. Your letter of 30 May 2024 also acknowledges the existence of other matters (beyond the Horizon system) which could have operated to create innocent discrepancies in branch accounts including ‘… mis-keys, or omissions when remitting cash or stamp stock based on Horizon data …’ by end users.”
He then goes on to say:
“… the Horizon system is reliant on the delivery of serviced by Post Office and third parties …”
Over the page, please:
“Based on the evidence which has been seen and heard in [the Inquiry], [Fujitsu] considers that all of the matters mentioned above would need to be investigated carefully by the Post Office and the police, with the assistance of an independent technical IT expert, and possibly also forensic accounting expert, to ascertain proper explanations for branch account discrepancies. [Fujitsu] considers that only after such an investigation has been undertaken could a meaningful expert witness statement be made in subsequent criminal proceedings which addresses the reliability of the Horizon system and the relevant data produced. For the reasons I have mentioned above, [Fujitsu] cannot provide such a statement.
“As to your comments regarding the pursuit of shortfalls, [Fujitsu] will continue to deliver its contractual obligations including reporting promptly and transparently branch impacting incidents. It is for the Post Office to work with postmasters to understand and resolve branch account discrepancies fairly and promptly. The improvements you mentioned to your discrepancy investigation processes I hope will allow for this to happen. You say in your later that Horizon data is not currently being used for civil recoveries from postmasters. This is reassuring. For the avoidance of doubt, [Fujitsu] will not support the Post Office in the event it pursues civil recoveries from postmasters.”
Do you understand from this and from the discussions you have had, that the current position is that Fujitsu will not provide a witness statement for criminal prosecutions, even if requested to do so by the police?
Nigel Railton: I’m not sure that’s entirely correct. I understand that they will provide it if the police ask them. That’s my understanding of the situation. I do find some of the comments made by Fujitsu here quite strange, actually, given that we and postmasters rely on the system. We have a system of controls to give us all comfort that things are working with integrity. But I am speaking to Paul on Thursday, so I will test this with him.
Mr Blake: In respect of not supporting the Post Office in the event it pursues civil recoveries, is that your understanding that that is the current position?
Nigel Railton: I think so.
Mr Blake: We can see a response from Mr Woodley. That’s FUJ00243209. Mr Woodley responds to that correspondence. If we scroll over the page, he explains in that paragraph there, the final section of the first paragraph:
“The feedback they received in April 2024 was that the Police that only been able to have one conversation with [Fujitsu] at that time and the investigation officer’s impression from that conversation was that they were indirectly being told by [Fujitsu] that the Horizon system was unreliable. As a result, the Police told the AC&I Team that the investigation could not progress.”
Over the page, I’m just going to read to you a few relevant passages. It says at the top of that page, “To get the right checks and balances” – this is under the heading “Criminal investigations and prosecutions”.
Nigel Railton: Right.
Mr Blake: “To get the right checks and balances in any of these investigation processes, data will be required from the Horizon system along with analysis of any bone bugs, defects or errors in the system at the relevant time period. Thank you for confirming that such data will be provided in line with contractual obligations and in cooperation with law enforcement agencies.”
It then addresses the postmaster shortfalls and Mr Woodley, in the final sentence of that first paragraph, says:
“… I was concerned about your statement that [Fujitsu] would not support the Post Office in the event it pursues civil recoveries from Postmasters.
“While Post Office does not currently take civil recoveries action to recover established losses from Postmasters, this may be necessary in future to establish a fair, transparent and consistent approach to recoveries. Critically, this would only be undertaken in the future with the wide endorsement of the Postmaster community and robust independent assurance.”
Before I ask you about this, I’d just like to turn to the response from Mr Patterson. That’s at FUJ00243211.
We’ve seen this letter, so I won’t go over the first paragraph but, in the second paragraph, he says:
“I do not intend to engage further with the Post Office on the matters I raised. We completely trust in Sir Wyn and the Inquiry process which will examine the extent of the Post Office change in Phase 7.
“You will recall that I have state publicly Fujitsu does not wish to extend the contract with the Post Office and your letter has reinforced the challenges we have as an organisation with continuing to do business with the Post Office. As agreed some months ago with Nick, we wish to continue to prioritise the necessary work on exit and the Post Office has tired an external person who starts in August to take responsibility for this. While there have been several workshops to scope out the 5-year request, your statement when we met regarding a 2-year request needs rapid attention from the Post Office. Dan Walton has arranged an initial meeting with Neil on 25 July, to address his technical questions and there is a workshop with the other Post Office personnel to update Dan on the 2-year requirements.”
Is there, in your view, an impasse between the Post Office and Fujitsu currently?
Nigel Railton: I think when I step back and read this correspondence, there’s certainly a breakdown in the relationship. I think that’s evident. I think there has been an impasse. But I’m hopeful now that we can breakthrough that impasse with Neil Brocklehurst as now the acting CEO, working with Paul Patterson at Fujitsu to now break this and come up with something that’s sensible for Fujitsu and sensible for the Post Office and postmasters because we have to continue with the system, post-March. We have no choice.
Mr Blake: What is your view, having seen this correspondence?
Nigel Railton: My view on –
Mr Blake: Of the nature of the relationship between Fujitsu and the Post Office?
Nigel Railton: I think it’s strained.
Mr Blake: What’s your view on the approach by Fujitsu as set out in this letter?
Nigel Railton: I think it’s quite defensive. I think they are clearly making statements for the benefit, I think, of this Inquiry perhaps. I don’t know, I’m not close to it. But I also understand from others that Paul is a very reasonable guy and Fujitsu are very reasonable as a company and I’m hopeful that, with the right conversations, we can find something that works for both organisations.
Mr Blake: If you move away from Fujitsu, in the way we’ve already discussed today, prior to the start of NBIT, to some extent, what is the plan for assisting the police or assisting in civil recoveries?
Nigel Railton: I don’t know the answer to that question, I’m afraid, but clearly we would – any design that we have for the use of, you know, the Fujitsu system or components of it or NBIT, we’ll have to make sure we can comply with our legal obligations to provide data and information as required.
Mr Blake: Because there’s going to be a number of years, possibly five, possibly more, in which the Horizon system is still going to be used. How do you see the Post Office as overcoming issues and being able to provide evidence to criminal prosecutions and undertake civil recoveries?
Nigel Railton: On the first element of that – of the question, our intention is not to stay on Fujitsu for another five years and certainly not beyond. I think our objective is to move away from the Fujitsu system, as soon as reasonably possible, and put in place the right system for the future.
I need to go away and consider this more. It’s quite a lot to consider here but, you know, we will as an organisation make sure we comply with, you know, the requests from the police, particularly on things such as we discussed this afternoon about, you know, issues that have been raised from the City of London and the Met Police. I think what we need to do is come up with a sensible compromise and sensible solution, working with Fujitsu, and I’m confident we can.
Sir Wyn Williams: I am seeing this at the moment very much with a criminal lawyer’s hat on, all right –
Nigel Railton: Yes.
Sir Wyn Williams: – as opposed to the relationships between you and Fujitsu. But there are two possible scenarios that I just want to ask you to consider with me. The first is that, completely independently of the Post Office, the police obtain information which suggests that a crime has been committed against the Post Office, and we’ll say it’s a financial crime of some sort –
Nigel Railton: Yes.
Sir Wyn Williams: – which will require financial investigation, right?
Nigel Railton: Yes.
Sir Wyn Williams: So they come to the Post Office and say, “We have this information, we want to investigate. This is what we want from you”. In my mind, the answer is obvious, “Here it is”.
Nigel Railton: Agreed.
Sir Wyn Williams: Right, because you are currently not in the business of prosecuting anyone.
Nigel Railton: That’s right.
Sir Wyn Williams: That’s correct, isn’t it?
Nigel Railton: That’s correct, and the Post Office will no longer prosecute ever again anybody.
Sir Wyn Williams: So it’s simply a question – not a question – it’s simply the Post Office being asked to cooperate with the police investigation, and I would have thought the answer would always be, “Yes”?
Nigel Railton: Absolutely.
Sir Wyn Williams: Right. The second scenario is that you, the Post Office, come into possession of information which suggests that a crime has been committed against the Post Office –
Nigel Railton: Mm-hm.
Sir Wyn Williams: – forget whether it’s a postmaster or any other person, but you have the initial information. My understanding so far is that, in those circumstances, your own Investigation Department would investigate whether or not such an offence may have been committed.
Nigel Railton: I think that’s the start point, from my understanding.
Sir Wyn Williams: Sure, fine. Then they would get to the point where they would, for these purposes, conclude that there is evidence to support an allegation of a crime?
Nigel Railton: Yes.
Sir Wyn Williams: Now, my understanding – and this is where I want your confirmation about it – is this: that at that point it would actually be a Board decision as to whether or not a report was made to the police of that suspicion, in effect?
Nigel Railton: That is correct and I know this –
Sir Wyn Williams: That’s your understanding as well.
Nigel Railton: Yeah, it is my understanding and I think it’s correct.
Sir Wyn Williams: That’s correct.
Nigel Railton: I think there was some debate about whether or not this moved away from the Board, from correspondence that I’ve read.
Sir Wyn Williams: Exactly so. So I’ve got it right. So let us assume that the Board says “Yes, on the basis of what you tell us, we think this should be reported to the police”.
Nigel Railton: Yes.
Sir Wyn Williams: Thereafter, as I see it, as a criminal lawyer, the process becomes identical to scenario number 1: the police become the investigators and you simply cooperate with whatever they ask you for?
Nigel Railton: Exactly, exactly.
Sir Wyn Williams: Right. Now, you’re not Fujitsu but can you think of any reason why any company which is asked for information by the police, short of something being incredibly commercially sensitive or something like that for the moment, but in the normal run of cases, why they wouldn’t just say, “Yes, Detective Inspector Williams, since you’ve asked me for that information, I’ll go and get it and provide it for you”?
Nigel Railton: I find it odd.
Sir Wyn Williams: Right. Okay, thank you.
Mr Blake: Moving on to our final topic, and that’s compensation and redress.
Nigel Railton: Yes.
Mr Blake: You have advocated for that work to move to within the Department for Business. How do you envisage that working?
Nigel Railton: To be clear, I’ve advocated that the Post Office don’t do redress. Where it goes to is not my decision but basically my position since I joined was that the Post Office should not be dealing with redress and payment of compensation. For reasons that I think some people don’t trust the Post Office still.
I’ve had conversations with various officials and those conversations continue. So I don’t yet have confirmation that it will move it, but I’m hopeful it will at some point.
Mr Blake: One of the complaints about compensation and redress is that it’s taking too long. Won’t that just slow things down yet further and kick it down the road?
Nigel Railton: One of my objectives and one of the team’s objectives is to speed things up, at I think having two organisations dealing with basically the same thing but having two organisations, cannot be the most effective way of doing something. I also was interested in the conversation this morning about redress and how the team works and I’ve spent quite a lot of time with Simon Recaldin, talking about how we can speed this up, and I think we can automate far more, is one of my – that’s one of my objectives now, given, post-my giving evidence today, to go back and work with the Executive Team and see how we can speed things up by automation.
I don’t know but I can’t understand why everything is so manual. I think there’s better ways of doing things.
Mr Blake: Can you give us an idea of what you mean by automation in terms of compensation or redress?
Nigel Railton: Sure, of course. Well, at the moment, as I – and this is my understanding because I haven’t been into the real kind of detail on this, but we have a whole bunch of people – I think Karen talked this morning about 110 but, I think there’s more when you look at the wider team, who are manually accessing databases or old database information to look for shortfalls and that takes time and people, and it’s very difficult to scale a process that requires people. And we know that, you know, hopefully we’ll have more and more postmasters coming forward with claims.
So I think the way to think about scaling it is to automate that process. There must be a way of taking an historic database and writing database queries and programs that can get this information for us very, very quickly, so we can turn these things around much more quickly. So that’s my objective.
I need to now talk to the team and people who actually know how to do this but, at a logical level, that would seem sensible to me.
Mr Blake: The final document I’d like to look at this afternoon is BEIS0000793. This a briefing for the then Minister Hollinrake in April this year. It’s a briefing for his meeting with Nick Read.
Nigel Railton: Mm.
Mr Blake: If we could turn over the page, please, there’s a section at the bottom of that page on background that addresses your appointment. It says:
“Background: Nigel Railton accepted the role of Interim Chair following a conversation with [the Secretary of State] last week. [The Secretary of State] has previously provided Mr Railton with her priorities for Post Office which include (i) intensifying existing workstreams to address [the Post Office’s] historic failures, (ii) support cultural transformation and improving [Post Office’s] capacity, capability and resilience at all levels, and (iii) enabling the future success of [the Post Office], including through effective financial management and deliver of NBIT.”
First of all, are those still the Secretary of State’s priorities, even though we have a new Secretary of State?
Nigel Railton: Broadly, yes.
Mr Blake: Can you assist us with how it has changed?
Nigel Railton: I think on the “intensifying existing workstream to address POL’s historic failures”, there’s particular reference to speeding up remediation and compensation payments.
Mr Blake: Thank you, because that was going to, in fact, my question, which is where does compensation and remediation fit within those priorities.
Nigel Railton: Yes, I mean, I think this is a summary, actually, of the – there’s a couple of sub-bullets for each one.
Mr Blake: Thank you. Have you spoken to the current Minister regarding compensation and redress?
Nigel Railton: I’ve spoken to the current Minister, yes. We talked about whole a lot of topics, and yes, I did. I did.
Mr Blake: What is your view as to whether Government is providing the issue of redress and compensation with sufficient attention and support?
Nigel Railton: I think they are. I’ve spoken to the Minister, I’ve spoken to the Secretary of State. I’ve made my position very clear in terms of how I think this needs to evolve and they’ve been very supportive.
Mr Blake: Thank you.
Sir, those are all of my questions. There are some questions from Mr Jacobs. Do you, sir, have any questions before?
Questioned by Sir Wyn Williams
Sir Wyn Williams: Just before you ask your questions, Mr Jacobs.
Obviously, Mr Railton, you’ve raised the prospect that, over the course of the coming weeks, I think, given the way you put your evidence, there would be likely information about your strategic plan which would be of considerable interest to the Inquiry.
Nigel Railton: Yes.
Sir Wyn Williams: So we need to work out a mechanism for the Inquiry to be kept up to date, effectively, yes?
Nigel Railton: Yes.
Sir Wyn Williams: Obviously, I know you’re the Chair and therefore a very important figure but, if you can’t commit to things while you’re sitting in the witness box, that’s fair enough. But what I’d like to be in a position to get agreement about is that – well, as I see it, the next step is approval or otherwise by the Government.
Nigel Railton: Yes.
Sir Wyn Williams: So, obviously, I would like to be informed, maybe there will be a great public announcement, so I won’t need your assistance but, if there isn’t, I would like the Post Office to tell the Inquiry what the position is once the Government say whatever they’re going to say –
Nigel Railton: Certainly.
Sir Wyn Williams: – and I’ll be asking the Government to tell me as well, so it won’t be just the Post Office.
It may be that that will provoke the need for a Rule 9 Request, which I’m sure you know what that is and a pretty quick answer to it, if the statement isn’t, obviously, self-explanatory. So, again, I’d like your cooperation in seeking to ensure that this could happen, because what I don’t want to happen is for the Phase 7 hearing to finish more or less on time, as I’m pretty sure it’s going to, and then for events to be occurring while I’m trying to make sense of what I’m going to say.
Nigel Railton: Yes.
Sir Wyn Williams: So I’m really asking for your cooperation in feeding the Inquiry information as soon as you can –
Nigel Railton: Yes.
Sir Wyn Williams: – in respect of the strategic plan and all that flows from it, all right?
Nigel Railton: I can assure you of my cooperation and commitment to do that.
Sir Wyn Williams: Fine. Thank you.
Mr Jacobs?
Questioned by Mr Jacobs
Mr Jacobs: Thank you, sir. I ought to say we’ve had 20 of our clients asking for me to ask the question you’ve just asked, so I don’t need to ask it.
Sir Wyn Williams: Well, I’ve stolen your thunder, Mr Jacobs, and I apologise.
Mr Jacobs: I’m afraid my voice isn’t so great, so if you can’t understand me or understand me then let me know.
Nigel Railton: I can certainly hear you.
Mr Jacobs: Good. Thank you. In relation to the plan, the strategic review plan, we understand that once the plan was drafted, Post Office didn’t go back to the National Federation of SubPostmasters or to subpostmasters to ask them if they were content with the proposed plan, whether they objected to proposals or had proposals that they wanted to be included. Why didn’t Post Office ask for feedback or properly consult subpostmasters on this?
Nigel Railton: I think we did consult with subpostmasters and the various Federations in groups to get their input to the plan.
Mr Jacobs: Yes.
Nigel Railton: So we got their input. We talked to lots and lots of people to get their input, and I think I can understand people’s concerns, but I doubt there’s anything in the plan that, when we announce it, people will not want us to do or not be happy with.
Mr Jacobs: Don’t you think you should have sent the plan at least to the Federation and asked for feedback on the proposals or any counterproposals, as a consultation, part of the consultation exercise?
Nigel Railton: Perhaps, but perhaps that stage – we can do that once the Government agree to the fact that this is a plan that’s sensible and we can then consult with them at that point before we implement it.
Mr Jacobs: Thank you. I want to ask you now about restorative justice.
In your statement at paragraph 56, you say you believe that you met postmasters recently on 18 June.
Nigel Railton: And subsequently.
Mr Jacobs: We’ve heard evidence from Ms McEwan today that such meetings had been profound and impactful. Is that how you found your meetings?
Nigel Railton: I found them, yes, really, really helpful.
Mr Jacobs: You say that a new deal and full engagement with the postmasters is fundamental and that’s how you would like to see things going forward?
Nigel Railton: Yes.
Mr Jacobs: Can you confirm whether the new deal, which I understand is part of the strategic review, whether that incorporates any wider restorative justice proposals for subpostmasters?
Nigel Railton: Not – it doesn’t really deal with compensation, it deals with the new and economic model and new ways of working going forward.
Mr Jacobs: Okay, I’ll expand on that. Of course, you’ve only been around in office since May this year.
Nigel Railton: Yes.
Mr Jacobs: In December 2022, Howe+Co, who instruct me, set out some proposals for wider restorative justice in written submissions and Mr Stein, King’s Counsel, raised them at a hearing on 8 December 2022.
I just want to ask you whether, as Chair, you’re aware of whether there are any proposals for any ongoing psychiatric and counselling support for subpostmasters and their families?
Nigel Railton: I’m afraid I’m not aware. I’m not aware of that.
Mr Jacobs: What about bursaries to assist with retraining of subpostmasters and for the education of their children whose education was disrupted by the scandal?
Nigel Railton: Again, I’m afraid I’m not able to answer that question. I will say that I believe that the remediation process and compensation has been widened.
Mr Jacobs: What about a tangible memorial scheme to mark the miscarriage of justice and sympathetically record the experiences of subpostmasters; has that been –
Nigel Railton: I’m sorry, I’m really not familiar with this at all.
Mr Jacobs: Okay. Finally, are there any proposals for local initiatives to restore the reputation of subpostmasters within their local communities?
Nigel Railton: I think there’s certainly an objective to restore the Post Office brand. How far that stretches to local, I don’t know, at this point.
Mr Jacobs: The proposals that I’ve just listed out were put to this Inquiry in submissions in December 2022. Do you accept that the plan that you speak about in your statement, the new deal for postmasters, should include such measures as a matter of principle, Mr Railton?
Nigel Railton: I think, as a matter of principle, yes, yes. But I think I just need to think about it. In principle, yes; in practice, how that would work?
Mr Jacobs: Is that something that you are prepared to consider, going forward, or that Post Office are prepared to consider?
Nigel Railton: Well, the Post Office, I’m sure, will consider that, yes.
Mr Jacobs: Moving on. I want to ask you about the Standard Subpostmasters Contract.
Nigel Railton: Yes.
Mr Jacobs: Perhaps we could just have part of that on the screen. So it’s POL00000254, and then going to page 32 of that document. That’s section 12 of the Standard Subpostmasters Contract. Page 32. So if we could then scroll down to paragraph 20, do you see at paragraph 20, “Post Office Duties”?
Nigel Railton: Yes.
Mr Jacobs: “Post Office Limited shall …”
Then if we scroll down to 20.3:
“… properly and accurately effect, record, maintain and keep records of all transactions effected using Horizon …”
Now, these are the new terms that have been put into the contracts after the Common Issues judgment of Lord Justice Fraser.
Nigel Railton: Mm.
Mr Jacobs: My question for you is: does this mean that the mechanism exists within Post Office now for monitoring and identifying shortfalls on Horizon terminals?
Nigel Railton: Yes, as far as I’m aware. Yes.
Mr Jacobs: So Post Office are able to identify, track down and monitor shortfalls?
Nigel Railton: Yes, and we have a process that does that.
Mr Jacobs: If we could then move further down to paragraphs 20.4 to 20.7. Again, Post Office will:
“… properly and accurately produce all relevant records and/or explain all transactions and/or any alleged apparent shortfalls attributed to the subpostmaster;
“cooperate in seeking to identify the possible or likely causes of any apparent or alleged shortfalls and/or whether or not there was indeed any shortfall at all;
“seek to identify the causes of any apparent or alleged shortfalls, in any event;
“disclose possible causes of apparent or alleged shortfalls (and the cause thereof) to the subpostmaster candidly, fully and frankly …”
I hope I haven’t read those too quickly.
Nigel Railton: No, I’ve read them.
Mr Jacobs: So these subclauses say that the Post Office will seek to identify possible or likely causes of shortfalls. Do you accept, then, that Post Office has a facility to do this: it can identify and it can do this?
Nigel Railton: Yes, so we have a process – and, forgive me, this is my understanding based on information I’ve been given, but we have a process now where people can put any shortfall into dispute. It then goes into a process that’s administered by a team in Chesterfield that looks at what’s caused the shortfall. But the open – the proposition of it is that the postmaster is not at fault. That’s really important.
That’s the start point and it’s for the process to identify where any shortfall may have been caused, and it may not be Horizon. I think, as mentioned in these clauses, it could be a stock shortfall, you know, that the wrong stock has been sent, a cash shortfall. It could be many reasons. One thing we do want to do is we want to get more postmasters involved in reviewing these processes to make sure that they’re comfortable with them.
Mr Jacobs: So the process really is that the postmaster has to identify the shortfall first; it’s not a case of Post Office actively looking for problems in the Horizon system?
Nigel Railton: No, I think – the shortfall will appear on the system, I think, but predominantly through a postmaster logging a dispute.
Mr Jacobs: You were asked by Mr Blake about the position between Post Office and Fujitsu, and there’s a letter – we may not need to turn it up because you’ve answered on the subject – that Mr Patterson wrote to the Chief Executive on 17 May 2024, to Mr Read, and he says in it:
“To be clear, FSL will not support the Post Office to act against subpostmasters. We will not provide support for any enforcement actions taken by Post Office against postmasters, whether civil, criminal, for alleged shortfalls, fraud or false accounting.”
So the position is that Post Office are contractually bound to identify and resolve the shortfalls.
Nigel Railton: Mm.
Mr Jacobs: How can Post Office fulfil these obligations without support from Fujitsu?
Nigel Railton: I don’t know. I mean, that’s quite a technical question. I think one of the issues that the Post Office has right now is they don’t recover any shortfalls, and haven’t for quite a period of time. But I think we need to think about how we can get the business back on a proper footing. So I’m afraid I don’t know the answer to that question but I’ll certainly take it away and think about it.
Mr Jacobs: Thank you. Finally, from me, at about 2.10 this afternoon Mr Blake took you to the YouGov survey –
Nigel Railton: Yes.
Mr Jacobs: – that has been prepared at the request of this Inquiry. We know from Ms Burton’s evidence last week that there was a Board meeting about this on 24 September; is that right?
Nigel Railton: Yes.
Mr Jacobs: You were at that meeting, were you?
Nigel Railton: Yes.
Mr Jacobs: You will no doubt know, then, that the Executive summary says that 92 per cent of the 1,000 postmasters who responded – approximately 1,000 – experienced some form of issue with the Horizon system in the last 12 months, and 98 per cent of those who experienced discrepancies reported shortfalls and, worryingly, the most common resolution was for them to use branch money or resolve it themselves.
So isn’t it right that the subpostmasters are still paying for Horizon-generated shortfalls from their own funds; do you accept that?
Nigel Railton: Well, that’s what the report says, so therefore I have to. I think we need to go away and investigate this again and look at it. As I say, the report was disappointing, surprising and, as I say, we need to go away and work out exactly what is happening again. But that’s certainly not the intention of the Post Office for that to happen.
Mr Jacobs: It follows, doesn’t it, that the need to identify and resolve Horizon shortfalls, not least because of your contractual obligations but also because of what subpostmasters are experiencing on the ground, is a matter of huge concern today, isn’t it, Mr Railton?
Nigel Railton: Yes.
Mr Jacobs: Are you able to say what steps you’re able to take, as Interim Chair, to try and drive this issue forward and resolve it?
Nigel Railton: Well, we’re going to take the survey, and we’ve already got a lot of activities under way. I think the best way to resolve this – and I’ll talk to the Acting Chief Executive about this – is to get a number of postmasters to work with us to review the processes end to end because we can say repeatedly that we have confidence in the processes but, until they do, then I don’t think we’re going to resolve this.
Mr Jacobs: Well, thank you. Your answers have been helpful. I’m just going to ask if I need to ask you anything more.
No, I haven’t any further questions.
The Witness: Thank you for the questions. I appreciate it.
Mr Jacobs: Thank you.
Mr Blake: Thank you, sir. I think those are all the questions.
Sir Wyn Williams: Thank you, Mr Railton, for your witness statement and for your evidence this afternoon. I’m very grateful to you and grateful too that I may hear from you further, so to speak.
The Witness: Thank you.
Sir Wyn Williams: Mr Chapman isn’t here, is he, from the Department?
Mr Blake: No.
Sir Wyn Williams: I take it, so that I’m not going off on a false trail, it’s the Department for Business and Trade that –
Nigel Railton: Yes.
Sir Wyn Williams: Yes, fine. So is anyone here from the Department? Anyway, if they are following remotely, they will know that I would expect the same cooperation from them as I’ve been assured I will get from Mr Railton. So thank you all very much.
The Witness: Thank you.
Sir Wyn Williams: 10.00 tomorrow morning.
(4.13 pm)
(The hearing adjourned until 10.00 am the following day)