10 October 2024 – Nicholas Read
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Nicholas Read
NICHOLAS JAMES READ (continued).
Questioned by Mr Beer (continued)
Sir Wyn Williams: Mr Beer.
Mr Beer: Yes. Thank you, sir.
Good morning, Mr Read.
Nicholas Read: Good morning.
Mr Beer: Can I ask, to begin, one set of questions arising from something that you said in the course of your evidence yesterday.
I think you’ll recall that the Inquiry, the Chairman held compensation hearings, ie hearings into the schemes –
Nicholas Read: Yes.
Mr Beer: – that were set up to provide redress to postmasters, and he held four such hearings: one on 6 July, one on 13 July 2022, one on 8 December 2022, and then one on 27 April 2023, which I suspect you’ll remember particularly because you attended it, you sat alongside, I think, Ms Gallafent KC –
Nicholas Read: Yes.
Mr Beer: – with Mr Staunton, the then Chairman of the Post Office sitting behind you.
So in none of those four hearings was it said by the Post Office that it was the Post Office’s belief that it, the Post Office, should not be administering the schemes of redress or any of them; do you agree?
Nicholas Read: I can’t recall the specifics of that. It may be the case.
Mr Beer: Nor was it said that the Inquiry should make recommendations accordingly, whether in its progress updates in its interim reports, saying that the Post Office should not be administering any of these schemes. Instead, the Post Office’s position, and I summarise greatly, was that it was properly administering the schemes for which it had responsibility and that sufficient elements of independence were either already built into the schemes or could be built into them; do you agree?
Nicholas Read: That’s what I said yesterday, yes, indeed.
Mr Beer: You said yesterday that you looked at some contemporaneous notes of a conversation that you had with the Government, Post Office’s shareholder, and you say:
“The way it was portrayed to me was that the Treasury were of the opinion that the chaos – I think was the word that was used – that had been was caused by the Post Office, there was a desire for the Post Office to experience some of the discomfort that had been caused”, ie it should have involvement in and be involved in the administration of the schemes.
You went on to say that, by contrast, it was your firmly held view that, for a range of reasons, the Post Office should have nothing to do with the provision of redress to wronged subpostmasters, certainly in terms of financial compensation.
Was that a personal view that you held?
Nicholas Read: It is a personal view that I hold but I think it’s also a view that is held by others within the Post Office. Certainly, just to confirm your earlier comments, we have done everything that we can to build independence into the schemes, but I think the start point of this, and it’s – it will be Simon Recaldin’s view, I’m sure, when you speak to him next week, as well, that there was always going to be difficulty with the Post Office administering compensation because of the level of trust and confidence that many of the victims will have in the Post Office. So I don’t think it’s a particularly controversial position.
Mr Beer: Was it the corporate view, essentially, of the Post Office?
Nicholas Read: Yes, it was and has been for some time.
Mr Beer: If that was the corporate view of the Post Office, why was it not communicated to the Inquiry in any of those four hearings, ie “We do not want anything to do with redress schemes. We think it is difficult for us to be involved,” for the reasons that you give, “Please make recommendations to take this business away from us”?
Nicholas Read: It’s a good question. I’m not sure specifically why we didn’t say that. It is a conversation that has been ongoing with Government for some time. That’s our failure to do so.
Mr Beer: The Inquiry was considering those very things, there were subpostmaster groups who were saying, “Take the function away from, or do not give the function to, the Post Office”, and the Chairman was considering making recommendations about those very things. Again, I ask, if that was the corporate view of the Post Office, why did it not communicate it?
Nicholas Read: It’s a good question. I’m unsure why we didn’t make that very explicit. Clearly, we should have done.
Mr Beer: Or is it a view that you’ve now come to in the light of the events which have happened?
Nicholas Read: No, it’s a view that I’ve held for some time and it’s a view within the organisation that has been held for some time.
Sir Wyn Williams: I think I’d like a straight answer to the question: was it a view held by the organisation at the dates of each of those compensation hearings?
Nicholas Read: It’s been a view held by the organisation since the very start of the schemes.
Sir Wyn Williams: Right so it was, then?
Nicholas Read: Yes.
Mr Beer: Can I continue, then, Mr Read, with the topic we were addressing yesterday afternoon: the investigation of postmasters and the engagement of the Post Office with law enforcement agencies.
Nicholas Read: Yes.
Mr Beer: Can we look, please, at POL00448310. These are the minutes of the SEG, the Strategic Executive Group, which you mentioned and explained to us yesterday, held relatively recently, 26 June 2024. You’re shown, amongst others, as present, along with Mr Brocklesby, Mr Woodley, Nicola Marriott, Karen McEwan and Sarah Gray. Do you recall that in this meeting, the SEG had to consider, because it was tabled before it, a paper concerning the passage of material to law enforcement agencies?
Nicholas Read: I don’t specifically – do you have it in –
Mr Beer: Yes, let’s look at the paper that was tabled before this SEG and it might help you.
Nicholas Read: Yes.
Mr Beer: POL00448345. You can see that it’s a SEG report, the meeting date is 26 June 2024. The author was Mr Bartlett, director of A&CI, the sponsor was Ms Gray, Interim Group General Counsel. If we look at the Executive – sorry, we should look at the “Input Sought”:
“SEG approval is sought regarding the proposed change in process in governing the passing of information to law enforcement to assist them in criminal investigations and any subsequent prosecutions prior to this matter being discussed at Board in July 2024.”
So it’s seeking, is this right, the SEG, that group’s approval, to pass a policy for approval to the full Post Office Board.
Nicholas Read: That’s what it’s suggesting, yes.
Mr Beer: Yes. “Executive Summary”:
“The current Group Investigations Policy, Cooperation with Law Enforcement Policy (‘the CLEP’), and Legal Play Book (collectively ‘the old Policies’) are considered too unwieldy and unnecessarily complex as well as being drafted before the existence of [A&CI]. The CLEP has resulted in slower than needed provision of information to law enforcement and the unnecessary involvement of the Board in the authorisation process.
“The old Policies have been consolidated into a new draft single Investigation and Cooperation with Law Enforcement Policy (‘new Policy’). The draft new Policy, amongst other investigative operational policy changes, proposes a streamlining of the governance of providing law enforcement with information: the Director of A&CI and the in-house criminal counsel would have to agree to providing the information and, depending on the age of the information, a caveat would also be provided.”
Then “Report”, paragraph 2:
“How the Investigations Policy was implemented in respect of possible criminal matters relied upon its interaction with the CLEP and Legal Play Book. These were focused on limiting in a high-risk perception environment how [Post Office] reported matters to, and shared data with, law enforcement. Uniquely, sharing data in a witness statement or as an exhibit required the extraordinary permission of the Board.”
So that’s talking about the past, isn’t it?
Nicholas Read: Yes.
Mr Beer: Is that right, that in order for Horizon data in a witness statement or Horizon data in an exhibit to be passed to a law enforcement agency, that required the permission of the full Post Office Board?
Nicholas Read: That’s correct.
Mr Beer: That was the position, okay:
“3. The old Policies are not enabling [Post Office] to act in an agile way in monitoring forward with reporting instances to law enforcement where [the Post Office] suspects that they may have been a victim of crime or promptly servicing lawful requests for information to aid a police investigation. A&CI recently took responsibility for being the only conduit for witness statements to be provided to the police, including relieving the Security team of this activity.”
Then over the page.
“This has given us the first [pan-Post Office] picture of the scale of these requests and what is required to service them objectively and in an evidence-based way. There are currently 22 police forces requesting or awaiting Horizon-based evidence across 33 police investigations. To provide this information, A&CI will need to draw upon Horizon data and often provide transaction analysis. The current approach is that the Board will need to be approached in the majority of these cases as and when the data is able to be shared.
“A draft policy is attached with the proposed replacement for the old Policies to reflect the enhanced capabilities of the A&CI and the improved governance approach to investigations generally. In particular, the draft proposes a change in the governance of passing material to law enforcement which we believe is risk balanced.”
Then an extract from the draft is set out, paragraph 1, within paragraph 9:
“Proactively and reactively supplied information will have differing profiles due to historic technology issues. The version of Horizon that was considered at fault in the Horizon IT scandal was replaced in October 2019. In 2020, known errors and bugs identified in the Horizon Issues Judgment formed part of review by KPMG of the system and found not to be prevalent in the system. From 2021, a new collaborative approach was taken to resolving reported Horizon issues in a dispute resolution process. Due to the effect of these developments, the following approach to data sharing with [law enforcement agencies] is:
Then skipping:
“Any information originating from Horizon after 1 January may be passed as either intelligence or evidence only after DA&CI …”
I think that’s the Director of A&CI; is that right?
Nicholas Read: That’s correct.
Mr Beer: “… (or their nominated deputy) and an in-house [counsel] both give approval. A record of [the decision] must be recorded …
“Where information is requested by LEAs that is Horizon data originating from pre-1 January 2022, the same process must be followed. In addition, the wording included in the relevant section of the Investigator’s Manual covering the passing of information to LEAs must be included in any witness statement for evidence or in an accompanying email or letter to the LEA requesting the information in a non-evidential format.”
Mr Beer: If we carry on, if we scroll down, please, and then back to the paper itself, paragraph 6:
“The accompanying lines referenced above which caveat the material passed to law enforcement is also in draft and is …”
So this seems to be some wording that that it was proposed would caveat certain disclosures:
“From 31 December 2019, all post offices have worked on a version of Horizon that the High Court case of Bates & Others has been considered by the High Court to be ‘relatively robust’.”
I think there are some extra words or words missing from that sentence, but anyway:
“In 2020, Horizon was tested for the known errors and bugs identified in the Horizon Issues Judgment and found not to be prevalent. During 2021, a process was developed to work collegiately with Postmasters to understand the causes [of] any shortfalls. Any Horizon data that pre-dates January 2022 cannot be shown to have benefited from all three of these checks and balances.”
Then the SEG paper continues:
“There are significant differences between the environment that existed at the time the old Policies were formed and the current and future environment. The current approach to dispute resolution and the underlying technology could be seen as supporting a more [business as usual] approach to passing information to law enforcement. However, the most significant difference between 2019 when the old Policies were drafted and now is that A&CI exists and brings significant criminal investigation experience to bear, but more importantly, also considerably more objective rigour to assessing evidence. Project Panther within A&CI is solely focused on testing the reliability of data that [Post Office] investigators and law enforcement will rely upon.”
Then paragraph 9:
“SEG is asked to discuss the proposed change of approach in advance of a proposal being presented at the Board in July.”
Just stepping back, so the context is made clear by this paper, isn’t it, that there were a large number of forces, some 22 –
Nicholas Read: Yes.
Mr Beer: – requesting evidence or requesting data in quite a large number of cases, 33 cases?
Nicholas Read: Mm-hm.
Mr Beer: To summarise what we’ve just read there, would you agree, the proposed new approach had two elements to it: firstly, there would be no more need for Board approval for sharing a witness statement about Horizon or sharing Horizon data, instead, approval would come from the Director of A&CI plus an in-house counsel; secondly, when a witness statement or data was shared, if it related to pre-January ‘22 data, it would be caveated in the way that we saw.
Nicholas Read: Yes.
Mr Beer: That form of words would be applied to it?
Nicholas Read: (The witness nodded)
Mr Beer: Can we go back to the SEG minutes, please. POL00448310. So this is the meeting at which this paper was presented. If we go forwards to page 7, please, and scroll down to paragraph 4.6 under the heading “Disclosure to support police investigations”, presented by Ms Gray and Mr Bartlett:
“TABLED and NOTED was the paper on Disclosure to support police investigations/Passing of material to law enforcement.
“SEG DECLINED to APPROVE the submission of the paper on disclosure support for police investigations to the Board, noting further work and assurance was required in relation to Horizon data assurance.”
So questions arising from these two documents: looking at the position as it stood before the SEG paper, why was the Board’s permission required to share Horizon data with law enforcement agencies in a witness statement or as an exhibit?
Nicholas Read: I think we touched on this yesterday, and the view of the Board was that they wanted to have visibility for any kind of data that was being provided to law enforcement agencies, and that they wanted sight of the sort of scale of the requests and, indeed, how that was being operated. And I think we described yesterday that there was that effective trade-off between requests from LEAs and the requirement to conform to those requests, whilst at the same time visibility, quite rightly from the Board, that they wanted to understand where we were engaging with law enforcement agencies, what type of issue was being displayed, and to continue with that.
And I think that is why the SEG declined to approve the submission of the paper. I think there was some surprise – my recollection from the meeting, there was some surprise at the scale of requests in terms of the 22 law enforcement agencies and the 33 requests. I think that came as a surprise to colleagues. I think we were of the opinion that it was in the ones and twos, in terms of requests for information on the sort of scale, and I think that was – the primary discomfort was the size and the number of requests that were coming forward. And, therefore, a better understanding of – and a bigger understanding of the picture, was requested.
Mr Beer: Well, in fact – and we’ll come to this in a moment – what the minutes note is that “further work and assurance was required in relation to Horizon data assurance”, not to know more about the number or nature of requests. It’s about assuring, presumably, the quality, accuracy and integrity of Horizon data that this I referring to?
Nicholas Read: That too, certainly, but I think it was more a case of understanding the bigger picture. I think there wasn’t that level of understanding at the SEG and I think we needed to understand more broadly, you know, what was being requested, in what form, and how we were going to supply that information, and what reassurance that we had that we were doing this in an appropriate way.
So yes, I think there were certainly questions over data assurance but I think it was a broader assurance that the SEG were also looking for.
Mr Beer: You said, and one can understand why, the Board might want to understand the scale of Horizon disclosure for law enforcement purposes, and to have visibility?
Nicholas Read: Mm.
Mr Beer: That is satisfied by the provision of information to the Board.
Nicholas Read: (The witness nodded)
Mr Beer: What this describes is that the Board had to give its permission in order for a disclosure to occur. How did the Board, in fact, go about determining whether to give permission for disclosure or not?
Nicholas Read: Don’t recall having specific cases come to the Board for that particular – to respond to that particular issue. I think this is still fairly uncharted territory for the organisation in its sort of modern guise, in terms of how we supply information to LEAs. So I don’t think we’d had a breakdown, certainly at the Board not in my time, of a specific case and then got under the skin of how and what we are supplying and in what context.
So I think this is the start of that – of that journey, for want of a better word, in the sense that this is the A&CI coming forward with a proposal.
Sir Wyn Williams: I’m sorry, Mr Read, I don’t want to make it sound as if Mr Beer and I are Starsky and Hutch, but I just don’t follow that because all those requests for information from the police, the 33 of them, the vast majority of them presumably couldn’t have occurred without the Board already having sanctioned a report to the police.
Nicholas Read: Well, yes, the way that I understand it is that the police have obviously requested information, there will be a reason why the –
Sir Wyn Williams: Yes, but what I mean is that, once the Board are asked to sanction a report to the police, they obviously know that there is a case which is now being investigated by the police?
Nicholas Read: Yes.
Mr Beer: The way that the paper put it was that:
“There are currently 22 police forces requesting or awaiting Horizon-based evidence across 33 police investigations, the current approach is that the Board will need to be approached in the majority of these matters as and when the data is able to be shared.”
Nicholas Read: Yes.
Mr Beer: Was the organisation simply not processing these requests –
Nicholas Read: Yes, I think that’s –
Mr Beer: – essentially you’re paralysed?
Nicholas Read: I think that’s the point that’s being made.
Mr Beer: Do you know whether the Post Office had disclosed what Mr Cameron had summarised at that meeting that we looked at yesterday – do you remember the January 2023 meeting, the quarterly meeting with UKGI –
Nicholas Read: Mm.
Mr Beer: – and DBT, where he said that the Horizon data is not sufficient to do an investigation in many cases; do you know whether that kind of disclosure had been made to the police service?
Nicholas Read: I’m not sure.
Mr Beer: Do you know whether A&CI had in fact provided, before June 2024, Horizon data and transaction analysis to the police?
Nicholas Read: I don’t recall a specific case of that coming to the SEG or to the Board, no.
Mr Beer: How was, in the 33 cases, the Post Office ensuring that the Horizon data that it proposed to provide to the police service was sufficient and that the transaction analysis that went with it was sound?
Nicholas Read: I don’t have – as I say, this is work that’s in train. I don’t have the specific detail of that.
Mr Beer: The proposal that Mr Bartlett and Ms Gray made, by way of their SEG report, was to essentially devolve responsibility for permission to in-house counsel and to Mr Bartlett, and one of the reasons given was that the A&CI bring “considerably more objective rigour to assessing evidence”. How do A&CI bring considerably more objective rigour to assessing evidence?
Nicholas Read: I think the majority of the individuals who work within the A&CI, which I think, as we discussed yesterday, is a relatively new organisation. Within that team, there are primarily individuals who have worked in law enforcement outside of the Post Office and I think the assumption is therefore being made that these are individuals who have the right training and the right experience of law enforcement, more specifically than perhaps was the case in the past.
And I think what is being demonstrated here is a transition from the old Security Teams that operated within the Post Office historically, which were made up of a variety of different individuals, and the more professional approach that’s now being adopted by A&CI, with better training, better skills and better experience associated with law enforcement.
Mr Beer: More specifically, you mention better training, procedures and personnel. More specifically, do you know how A&CI was testing the reliability of Horizon data that the Post Office and then subsequently law enforcement agencies would rely on in a prosecution?
Nicholas Read: No, I haven’t seen how the testing process works.
Mr Beer: Do you know what data, which data A&CI was testing?
Nicholas Read: No, I don’t have access to that.
Mr Beer: Did you agree with the SEG’s decision to decline to approve the submission of the Bartlett paper to the Board?
Nicholas Read: I believe so, yes. It’s – I think we’ve found the step, the step and the move, pretty significant, as group, and we discussed it obviously as group.
Mr Beer: Why did you find the step significant?
Nicholas Read: I think, as I mentioned a little earlier, I was surprised at the number of law enforcement agencies that were engaging with us, and the scale of the interest, the 22 and the 33.
Mr Beer: So it was the number of cases in which disclosure would or could occur that caused pause for thought?
Nicholas Read: It caused pause for thought, primarily because the team in A&CI is stretched, massively stretched, as we mentioned yesterday, both in terms of its response to the variety of work, both internal investigations of senior colleagues, the assurance work they’re providing on loss recovery and discrepancies, as well as the engagement with law enforcement agencies and, in addition to that, the work they’re doing on Speak Up.
So I think the team was very stretched. This felt like considerably large amounts of work and I think we wanted to make sure that it was being thoroughly administered.
Mr Beer: Did anyone within the SEG disagree with the SEG decision, ie they wanted to approve the submission of the paper to the Board?
Nicholas Read: I don’t recall the specifics but I don’t think so.
Mr Beer: I mean, presumably, Mr Bartlett –
Nicholas Read: Yes, clearly.
Mr Beer: – and Ms Gray –
Nicholas Read: Will have –
Mr Beer: – will have sponsored and written it and proposed it?
Nicholas Read: Correct, but they’re not obviously members of the SEG.
Mr Beer: The minutes of the SEG recorded that “Further work and assurance was required in relation to Horizon data assurance”; can you help, firstly, with what that means?
Nicholas Read: I think the methodology – and I’m slightly speculating but I think it’s the methodology associated with how we are testing Horizon data and how we are assuring ourselves, both from an IT – with the IT function but also with colleagues at Fujitsu that we have a methodology that is robust.
Mr Beer: One reading of the note of the minutes is that “We’ve got to satisfy ourselves in-house as to the quality and reliability of our Horizon data before we think about passing it to law enforcement agencies and before we downgrade from the Board to two other individuals the permission to do so”.
Nicholas Read: Yes.
Mr Beer: Would that be a fair summary?
Nicholas Read: Yes, that would be a fair summary.
Mr Beer: Okay. Has the further work and assurance in relation to Horizon data assurance been undertaken, to your knowledge?
Nicholas Read: Not to my knowledge. I’m unaware as to what progress has been made over July, August and September.
Mr Beer: Do you know who it was proposed should undertake that Horizon data assurance?
Nicholas Read: No, I haven’t got that detail.
Mr Beer: I mean, we’ve seen, for example in Mr Patterson’s letters some things said by Fujitsu that would be disclosable, or at least potentially disclosable, in criminal proceedings. Certainly, as a defence lawyer, I would want to see them.
Nicholas Read: Right.
Mr Beer: Was that brought into account in any of this process, ie what was going on at the higher level between Post Office and Fujitsu and, in the course of such correspondence, what Fujitsu felt unable to say in its correspondence as to Horizon reliability?
Nicholas Read: I think that was part of the debate that was had in June certainly and I think we’re all acutely aware of the interactions that we’ve had with Fujitsu and clearly that’s something we discussed as part of this is process.
Mr Beer: Thank you. Can we turn to what subpostmasters are told about who investigates them, and go to the subpostmaster contract, please. POL00000254. Just so that you know, this is the post-Horizon Issues Judgment contract. We’ll come back to it later today, or perhaps tomorrow, for some other features of the contract?
Nicholas Read: Right.
Mr Beer: Can we look at it in relation to what postmasters are told about investigations of them, now, however, by looking at pages 71 and 72. This is section 19 of the new subpostmaster contract and it concerns, in broad terms offences committed by subpostmasters, their suspension, and “Enquiries by officers of the Investigation Division”. You can see that that’s the heading, underneath section 19.
Nicholas Read: Yes.
Mr Beer: We can just can, if we go down slowly, so you can see the context of what is going to be said on page 72: arrests and convictions; immorality; suspension; if we scroll on, please, “Criminal Conduct: Reporting”; “Inducement to Act Contrary to the Rules”; then over the page, “Theft by Strangers”; “Failures to Report Dishonesty”; then the cross-heading, “Enquiries by Officers of the Post Office Investigation Division”, POID, as it used to be known for many, many years. It says, as subpostmasters are told:
“The main job of the Investigation Division is to investigate, or help the police investigate, criminal offences against the Post Office [and others]. The Investigation Division does NOT enquire into matters where crime is not suspected.
“Most of the crimes dealt with by the Investigation Division are committed by outsiders. It follows a common reason for Investigation Division officers seeking interviews with persons employed is to get help in clearing up such offences.”
Then this, paragraph 14:
“Although they comprise the minority of all Investigation Division crime investigations, there are many cases where the possibility (or even direct suspicion) arises that persons employed by Post Office business may be involved. Officers of the Investigation Division conduct interviews about these suspected offences and they are requiring to observe the same code of conduct when obtaining evidence as that laid down for police officers. This provides for an officer investigating a criminal procedure offence to question any person, whether suspected or not, from whom he thinks that useful information may be obtained. As soon as the Investigation Division officer has evidence which would afford reasonable ground for suspecting that a person has committed an offence, he must caution him before asking any questions about that offence. The caution must be in terms which make it clear that the suspected person is not obliged to say anything unless he misses to do so”, et cetera.
Then 15:
“If a subpostmaster or Post Office branch assistant is questioned as a suspected person by an officer of the Investigation Division, on statements made by a third person, and expresses a desire to be confronted by that person, such confrontation will, if practicable, be arranged. At the confrontation, the suspect will be at liberty to question the third person on his evidence and the questions and replies will be recorded by the Investigation Division officer.”
So this describes those conducting the investigation as the Post Office Investigation Division, and officers of the Investigation Division.
Given the history of the scandal dealt with in the judgments of Mr Justice Fraser and the Court of Appeal Criminal Division, and indeed perhaps the Inquiry, is it appropriate that Post Office maintains within the contract the existence of the Post Office Investigation Division?
Nicholas Read: I must say, I think the wording is heavy-handed in terms of the way it’s described and I don’t think it reflects the way that we conduct investigations. So I think there is a misalignment and expression “Investigation Division” is not consistent with A&CI. So I would agree with you on that.
Mr Beer: Again, given the history, is it appropriate that the subpostmasters are told that the Investigation Division retains investigative powers that include an evidential interview process under caution?
Nicholas Read: No, I don’t think it is.
Mr Beer: So at least this section of the contract requires some quite radical revision, properly to describe the system for reporting and investigation of possible offences by Post Office to the police, doesn’t it?
Nicholas Read: I would agree.
Mr Beer: Do you know why subpostmasters are told this – admittedly on the basis of the Inquiry survey only 15 per cent have got the new contract –
Nicholas Read: Yes.
Mr Beer: – but why subpostmasters are told this sort of five years on after the judgments of the High Court?
Nicholas Read: I would agree with you that it’s not consistent with the way that the A&CI team operate. It’s not consistent with the way that we conduct investigations in practice, and it’s not consistent with the way we support postmasters when they have issues. So I think there is a misalignment, I would agree with you, Mr Beer.
Mr Beer: For a postmaster reading the contract, nothing has changed, has it?
Nicholas Read: This would not – as you say the language and the way that it’s constructed is not helpful and not reflective of the way the Post Office is operating today.
Mr Beer: So that raises the “why” question –
Nicholas Read: Yes, it does.
Mr Beer: – why is it still like this?
Nicholas Read: And I think that is an entirely reasonable question. We’ve obviously done some work on contract restatement. We’ve obviously done some work on addressing the issues that have emerged from the CIJ and the HIJ and made sure that the core tenets of that particular judgment, particularly the duty of good faith and particularly the presumption of innocence and particularly the addressing issues around secrecy and lack of transparency, I think it would be entirely reasonable to conclude that this section of the contract needs rewording, and it needs addressing – not just rewording but needs addressing.
We’re clear that we have work to do on contracts in terms of the specifics and I would say that, back in 2019, once we had the judgments handed down, the most important element for me at that stage was to make sure we changed the behaviours within the organisation and then we changed the contract. So – which is why we did a restatement, rather than a recontracting completely across the organisation. That is still outstanding and that is work that needs to be done.
Mr Beer: Can I turn back, in part, to Project Phoenix and the Past Roles Project, for something that has been said in the course of the undertaking of those two pieces of work and, just by way of some fuller context than was given yesterday, can we look, please, at your third witness statement from paragraph 230 onwards.
I’m just going to read in some of the paragraphs of your witness statement by way of context for Project Phoenix and the Past Roles Project. You say in 230:
“The background to both Project Phoenix and Past Roles is that in 2022 I raised the issue with Simon Recaldin stating that it was a concern to me and potentially very problematic that there may still be colleagues in post who either needed to be investigated themselves or be moved into different roles to ensure confidence is maintained amongst both victims of the scandal and serving postmasters. Some colleagues may have been aware of wrongdoing, or indeed without there being immediate proof of it, have contributed to the wrongdoing. I initiated a piece of work in the organisation to try to get a grip on what the scale of this challenge was and the number of colleagues still working in Post Office and to whom this might apply. We would then need to determine what action to take.
“The process was and slow painstaking and to be fair, this was not an easy task. We needed to be clear who was doing what roles and when in the past. We had incomplete HR records which, given this was a desktop exercise to review [1,700] colleagues with over 10 years history in the organisation was a significant challenge. We needed to be clear whether, not only should they be being investigated themselves but also whether even if no evidence of wrongdoing, there were colleagues now involved in activities, like disclosure or administering the compensation schemes, where it would be more sensitive for them to be moved – anything where it would be better that there was no Postmaster interface. I did not want to cut across rebuilding confidence.”
Then 233:
“In terms of Project Phoenix, my own view, one which I believe I share with others, is that for individuals who were actually close to the investigations unit prior to 2015 it is hard to conceive that they were unaware of wrongdoing at that time. I am aware that there were approximately 40 cases that were looked into further following evidence which emerged at the restorative justice meetings, the Human Impact Hearings, and from evidence before the Inquiry. These are case studies not numbers of individuals (ie the same individual could have been involved in a number of cases). As far as I am aware there are now only a handful of individuals who worked in the Investigations Unit which was disbanded in 2015 who are still employed by Post Office – they do remain in the organisation, but in different roles. Mr Bartlett has provided further information … I am confident therefore that no one from that era remains in the investigations or audit sections of the business.”
Then 234:
“I recognise, understand and on a personal level, share the frustration that Post Office has not been able to move quicker and go further in respect of Project Phoenix and on Past Roles … I would have preferred Post Office to take more decisive action and said as much at Board discussions. That is not where the organised however and the collective decision was made at Board not simply to dismiss anyone who was for instance an investigator at the time, but against whom there was no direct evidence of wrongdoing, rather to transfer them to other departments, offer voluntary redundancy where possible, but, where appropriate to thoroughly investigate. The Board was and is collectively concerned about a myriad of other considerations including, importantly I should say, Post Office not acting in a disrespectful way that might resonate with behaviours [in] the past.”
Lastly, 235:
“Post Office understands that unless wrongdoing can be formally and fairly established, it cannot simply remove existing staff because they were in post when miscarriages of justice were taking place. Those individuals of course have employment and indeed human rights themselves. This however is a deeply difficult area and one which I am aware that the Postmaster NEDs feel very strongly about. This is also relevant to [something you say below].”
Can we look, please, with that background, to the terms of reference for the Past Roles Project. POL00448308. This records, by way of context, that:
“After [this Inquiry] Compensation Hearing in December 2022, it became apparent that [Post Office] had recruited into its Remediation Unit (RU Team) employees who had previously worked for Post Office in the auditing, investigation, suspension or termination of Postmasters connected to historic Horizon shortfall cases. This risked undermining the integrity of, or the public or postmaster confidence in, the work being done by the [Remediation Unit]. It also put employees ‘at risk’.”
Then:
“The aim of the project [and I’m only going to read one] is to:
“Review the past roles conducted by colleagues currently employed within the [Unit] and Inquiry teams, to identify any that could be (for want of a better word) potentially problematic. Examples of such roles might include roles in the auditing, investigation, suspension or termination of postmasters connected to historic Horizon shortfall cases. They might be ‘problematic’ because they pose a risk to the integrity or independence of work being done now, public or postmaster confidence in that work, they create conflict, or they place our employees at risk.”
So is essentially this the result or product of the idea which you were the genesis of?
Nicholas Read: That’s correct.
Mr Beer: And what was your principal concern? What was it at the December 2022 compensation hearing?
Nicholas Read: Well, I think –
Mr Beer: That lit the fire?
Nicholas Read: Well, I think there were a couple of triggers. I think the first trigger was the reemployment of individuals who had been in the business prior to 2015. I can’t specifically recall if that was something that was raised at the compensation hearing, but it was about that time, which was the first trigger for me of concern, is that we were rehiring individuals who had been in the business prior to 2015 in that work, and I think the second element was that, on exploring that with Simon Recaldin and then subsequently with Jane Davies, it became an issue for me, as – and I think it was crystallised during the compensation hearings, that this might be something that is problematic, and Simon advised that there were individuals within the Remediation Unit who may well have been involved historically in auditing, investigation or activities that were of relevance to this Inquiry.
That was a surprise to me, in terms of how we had determined and decided to staff the RU, and that was something that, you know, for a myriad of reasons, most of which are contained in the terms of reference here and in the aims of the project, felt problematic for me.
Mr Beer: So can we wind forwards, then, to see what had occurred and the approach that was being taken once the project was up and running, by looking at a Group Executive report which you, I think, sponsored, of 17 January 2024. POL00448615.
I don’t think you wrote this yourself.
Nicholas Read: No, and the sponsorship, this would have been – Patrick Quinn works for Karen McEwan, so I think there is some confusion as to why this sponsorship would be me, particularly, but as it’s not a – it’s not a function that works for me.
Mr Beer: Right. So you didn’t sponsor this report?
Nicholas Read: No. This report will have come to the Group Executive but it won’t have been something specifically sponsored by me.
Mr Beer: So did you have any role in its creation?
Nicholas Read: No, not in its creation. This report will have come to the Group Executive and I will have been appraised of it, and had an opportunity to pre-read it before the meeting.
Mr Beer: So you would have been a recipient –
Nicholas Read: A recipient.
Mr Beer: – rather than the sender?
Nicholas Read: That’s correct.
Mr Beer: So that’s just wrong?
Nicholas Read: Yes.
Mr Beer: Okay. Might it because you have told us that you led on the idea, you thought of the problem and you created the work –
Nicholas Read: Possibly –
Mr Beer: – that led to the creation of the terms of reference?
Nicholas Read: Possibly. There is a broader question around the concept of sponsor and line manager that I think is still to be addressed as part of the way that we create reports within the Post Office. The notion of sponsorship and line management gets confused and blurred and I think – candidly, I think it’s obviously having my name in the sponsor’s box.
Mr Beer: I just want to ask you about something that’s written as the communications theme for the project and it’s on page 11 of this document, which is an appendix to it. You can see that it says, “Key themes for comms”, and if you just go to the foot of the page you can see what that means by way of footnote, a little bit further.
“These are themes for internal communications.”
Okay? These are themes for internal communications. So if we just go up, please. It speaks in paragraph 1 as a key theme being that the documentary or the docudrama had generated a lot of focus, including that Post Office continues to employ individuals who were, to some extent, involved in historic suspension investigation and prosecution.
Then in paragraph 3, having described in 2 the work that was ongoing, the key theme is said to be:
“In carrying out this work we are acutely aware of the duties we owe to our colleagues, and the views of our trade unions.”
That seems fair enough.
Nicholas Read: Yes.
Mr Beer: “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 instructions given to them by the business at the time, and in the belief that Horizon was robust.”
Do you know the basis for that key theme for communication?
Nicholas Read: What do you mean by the basis for it?
Mr Beer: An assessment that, in the vast majority of cases, employees within this cohort carried out their duties according to instructions given to them by the business and that they did so in the belief that Horizon was robust?
Nicholas Read: As in: is the author of this document in a position to make that statement; is that what you’re inferring?
Mr Beer: Yes, or –
Nicholas Read: Yes, I – it doesn’t look precise, from my perspective. I don’t know where the author would be able to make that – or make that assumption, perhaps.
Mr Beer: Is this a reflection of a belief within the General Executive at the time that, although we’re undertaking this Past Roles Project, in fact, the majority of the people caught by it will have been doing their job according to instructions, and in a belief that Horizon was robust –
Nicholas Read: Yeah.
Mr Beer: – ie we can tell our people, “Although we’ve got to do this, we know, in fact, that they were just doing their jobs”?
Nicholas Read: I don’t think there was any particular determination of that view. I think one of the sort of themes that has emerged amongst colleagues still working within the organisation is that many of the leaders of the organisation historically who have appeared before this Inquiry, appear not to have been held to account if indeed they were aware of and understood other issues associated with Horizon in the past.
I think there is – there was very definitely a view amongst the people community and the authors of this note that people were going about doing their job and we needed to be sensitive to the fact that people were going about doing their job to the best of their ability and with what they knew, as opposed to a specific belief that the statement as has been written here around Horizon being robust, as it’s written.
Mr Beer: At all events, was it your understanding that before the Past Roles Project, there had been no internal reflection within the Post Office as to potential employee misconduct?
Nicholas Read: Reflections by the organisation on this?
Mr Beer: Yes.
Nicholas Read: There hadn’t been, as far as I was aware, certainly when I – before I joined in 2019, any specific piece of work that had looked into what I think you’re suggesting in terms of whether people were aware and what was – of what happened in the past, no.
Mr Beer: I mean responsive to, for example, the findings of the judge in the Horizon Issues Judgment?
Nicholas Read: Not in terms of a specific piece of work about who was left within the organisation. I think this is the genesis of that work, and – of those thoughts, should I say.
Mr Beer: Well, the genesis, you’ve explained, or the paper has explained, that it was the compensation hearing in December 2022. I’m talking about things that might have been done following the Horizon Issues Judgment of December ‘19.
Nicholas Read: Yes, we did – there was no specific piece of work looking into either individuals who left the organisation or indeed specifically people who were in the organisation at that stage.
Mr Beer: Was that part of a culture that you maybe hinted at when you were being appointed, or describing your appointment, that the organisation should not look too deeply into the past?
Nicholas Read: Possibly. I think it’s more likely that the organisation was conscious that this Inquiry would look very, very explicitly into activities of the past and very explicitly into issues that had occurred historically, in a forensic and thorough manner, and that we would be – obviously allegations and evidence would be presented that we, as I say and said yesterday, would commit to investigate as a consequence of what emerged.
So rather than running two pieces of work in parallel I think the view was very much that explicitly, we would see evidence emerging from the Inquiry, and clearly that would be the trigger to take action if necessary, in terms of further investigation; which is indeed what we do.
Mr Beer: Can I turn to a separate thread of correspondence concerning the work on past roles involving the Horizon Advisory Board, by looking at BEIS0000846. This is a separate thread of correspondence concerning the Past Roles Project, disclosed to us by BEIS, involving the Horizon Advisory Board members and Mr Recaldin.
Can we look at the top of page 5 and the bottom of page 4, please. Thank you. You can see there an email from Professor Christopher Hodges to Mr Recaldin and others of 18 June this year. You’re not on the copy list. He, Professor Hodges, says:
“Morning Simon
“Hope you are well.
“We held a [Horizon Compensation Advisory Board] meeting yesterday, at least semi-informally, and no minutes will be published until a new Government is in place. It is interesting that there are so many issues continuing to require attention.
“We noted your letter [I’m not going to go to the letter that triggered this]. Thank you for your kind offer to brief us further …”
This is essentially a letter about the Past Roles Project.
Nicholas Read: Yes.
Mr Beer: “… we didn’t feel it necessary yesterday, not least in the light of the electoral purdah. But we would be grateful for a further update. We note your ongoing review. The view was expressed that one might expect the answer in relation to individuals (about previous involvement and hence ongoing involvement on subpostmasters and mistress matters) to be either yes or no, so we’re intrigued to know more about the substance of the review, and its timing.”
Then if we scroll up to page 3, please, Professor Hodges continues:
“We have two concerns: one is about supporting trust of the victims in the compensation arrangements (and anything else relevant) but the other is about timing, given the extensive ongoing bad publicity emanating from the Inquiry at the same time as the ongoing and imminent new compensation arrangements. Anything you can deliver on the reassurance issue around the involvement of individuals, but also swiftly, would be useful.”
Were these concerns of the Horizon Compensation Advisory Board raised with you?
Nicholas Read: I will have spoken to Simon about these issues, yes.
Mr Beer: Were they discussed with the Board in the context of, at about the same time, concerns being raised by the Subpostmaster NEDs about the involvement of some individuals in the provision of redress and similar activities?
Nicholas Read: As we discussed yesterday, this has been a topic of conversation at the SEG and at the Board for some time. This was – certainly over the summer, this was, and continues to be, a topic of the Board and of the SEG.
Mr Beer: So the Advisory Board’s interest in and comments on the Past Roles Project were fed back to the Board; is that right?
Nicholas Read: I believe they will have been, yes. I mean, this information, I think this is June, so I’m sure at the July board meeting this will have been fed back.
Mr Beer: Similarly, is it right that Government was taking an interest in the Past Roles Project?
Nicholas Read: Yes.
Mr Beer: Can we look, please, at BEIS0000848. Go to page 3, please, and scroll down. You’ll see the Professor Hodges email to Mr Recaldin. Then, if we scroll up, you can see that Mr Cresswell shares that with a group of people within DBT, yes?
Nicholas Read: Yes.
Mr Beer: Then scroll up, please, to page 2. In answer to the question “Do we have a line on this?”, answer in the department, “Not that I can remember!” Suggestion:
“The Department has made it clear to the Post Office in the past that it needs to take steps to remove those with involvement in the scandal in any work dealing with redress or appeals. It would be wrong to pre-judge any individuals before the Inquiry has completed its work but we would expect the Post Office to take action against anyone found to have played any … role in the scandal.”
Then scroll up, please, some tweaks are made. I have read the tweaks in already. The question raised:
“… as this is an HR-type process [would it be] appropriate for Government to comment until [Post Office] has done the work?”
Then keep scrolling please, some more discussion about lines for Government and then, if we keep scrolling to the top of the page, please, Ms Brooks-White says in her second sentence:
“I assume it came up in monthly discussions between NR [which I think is you] and [Mr] Hollinrake? Is that right?”
Did this issue come up in discussions between you and Mr Hollinrake?
Nicholas Read: Yes, my recollection is it did come up in discussions with Mr Hollinrake.
Mr Beer: Were the concerns raised by the Subpostmaster NEDs passed on by you to Kevin Hollinrake?
Nicholas Read: I don’t recall specifically. The conversations that Minister Hollinrake wanted was reassurance that we were doing work to ensure that there was no danger of confidence from victims of the scandal, or indeed postmasters, engaged in compensation. That was the focus of the conversation.
Mr Beer: Does it give you concern or lingering doubts about the effectiveness of the Past Roles Project and Project Phoenix that neither of them are completed?
Nicholas Read: It’s certainly been very frustrating for me that this process has taken as long as it has. I’ve not hidden from that frustration for the teams. I do recognise it is an extremely complex area but, notwithstanding that, finding suitable solutions has taken too long.
Sir Wyn Williams: This is just so that I can be clear I’ve got the timescale right: the genesis for the work was the December 2022 –
Nicholas Read: You’re correct, sir.
Sir Wyn Williams: – compensation hearing, and the evidence over the last few days is that it will be resolved imminently, so we’re talking about nearly two years?
Nicholas Read: Yes, that’s correct.
Mr Beer: Did you get a steer from Government as to how to approach this issue?
Nicholas Read: I think my reflection on this is that Simon Recaldin had conversations with the Government team on the ability to offer voluntary redundancy and redundancy payments to try and move people from the Remediation Unit. Those are still ongoing, as I understand it.
Mr Beer: Can we look, please, at a record of one of the meetings held between you and the Minister Kevin Hollinrake MP. BEIS0000739. If we just go to the foot of the page, I think it’s the second page, actually, we can see this is an email, I think sent to self, essentially, by Mr Hollinrake’s Deputy Head of Office and Private Secretary, Mr Lucas. This is a record, if we go up, please, to the top, of a meeting with you on 23 January 2024 and a record was made on 23 January 2024.
Now, presumably you won’t have seen this?
Nicholas Read: Yes.
Mr Beer: This is a departmental record made in the way that we’ve seen by somebody sending an email to themselves, or a corporate account being used to do so.
If we just look down the left-hand side we can see some initials: “NR”, obviously you; is that right?
Nicholas Read: That’s correct.
Mr Beer: “KH”, Kevin Hollinrake?
Nicholas Read: Yes.
Mr Beer: “CFO”; can you see that?
Nicholas Read: Yes.
Mr Beer: Is that a person or the person’s initials, or it’s the Chief Finance Officer?
Nicholas Read: I think it will be Kathryn Sherratt, the Interim Chief Financial Officer.
Mr Beer: Okay. So they’ve been referred to by their job title –
Nicholas Read: Job title.
Mr Beer: – rather than their initials?
Nicholas Read: It would seem so.
Mr Beer: “LG”, if we just scroll down a bit, you can see some LGs towards the bottom of the page; is that Lorna Gratton?
Nicholas Read: Yes, that would be Lorna.
Mr Beer: So she, I think, was at this time a senior civil servant in UKGI and on the Post Office Board as the Shareholder NED?
Nicholas Read: That’s correct, and she still is, yes.
Mr Beer: “SR”, we see a bit of him coming into the discussion. Can you see there, Simon Recaldin, presumably?
Nicholas Read: That’s correct.
Mr Beer: Some “CCs” there as well, Carl Creswell?
Nicholas Read: That’s correct.
Mr Beer: We know the function that he performed.
If we just go up, please, to the top, there’s some discussion about the Select Committee appearance and what Post Office will respond to the Committee. Mr Hollinrake said:
“Get it is your job to look forward.”
You: “Clear it is simply not my position to opine and pass judgement on predecessors.”
He says: “… there are things you could have pointed out but I take your point.”
You say: “Don’t want to go out there celebrating what we’ve done in the past 4 years, doesn’t feel right. Don’t want to pontificate from the pulpit on what we’ve done.”
Mr Hollinrake: “Key thing we’ve got to do is legislate for the convictions, not straightforward for various different reasons. One commitment I’ve made to various colleagues, is where the money went.”
In context, is that a reference to the issue of where money paid by subpostmasters –
Nicholas Read: That’s correct.
Mr Beer: – in purported satisfaction of a shortfall ended up –
Nicholas Read: I think that’s correct.
Mr Beer: – in Post Office accounts?
Nicholas Read: Indeed.
Mr Beer: Ms Sheratt replies:
“KPMG had a look and that info has been passed to the Inquiry. Some other analysis has been done as well. Need to work through how the differences arose in the first place. Do we wish to refine our review internally, or do we want external support to pick up where the prior review left off? Irrespective, we need to be comfortable with the current process with this type of difference with the current system. I get the urgency.”
Then she continued:
“PwC are our current auditors. KPMG were brought in for that particular review.”
Mr Hollinrake wants to get something in the public domain within a month.
You are recorded, and Ms Sheratt, to say: “We’ve got to.”
You say: “We’ve got 8 days before the end … of the Inquiry.”
I’m just reading this incidentally by way of context for the meeting, rather than just going into a bit of it.
Nicholas Read: Right, sure.
Mr Beer: “… 8 days before end of … the Inquiry. We will have to have a position before Phase 5.”
Is that you saying that, “We, the Post Office, will have to have a position on where the money went before the beginning of Phase 5”?
Nicholas Read: I think it certainly reads that way, yes.
Mr Beer: Was that your view?
Nicholas Read: I think I was frustrated, as many people are and have been, at the inability to answer this question in a way that was – in a way that was accurate. This particular challenge had been out there for some time, the sort of “Where did the money go?”, question, as it was described in many of the media outlets, and I think we had employed, I think, two or three external forensic accountants over the years, certainly prior to my time, to try and get under the skin of this, and it seemed peculiar to me that we were unable to get a fix, even with caveats around its level of accuracy, so that we could at least in part give people some confidence that we understood the size and scale of this issue, or got to the bottom of it.
Mr Beer: Lorna Gratton says: “Probably need to understand the order of magnitude.”
You are recorded as saying:
“Clearly the business employed Wilmington …”
I think that’s Ron Warmington:
“… and Second Sight to do some work on this previous, may be some merit in speaking to them.”
Then Mr Hollinrake recorded as saying:
“Real opportunity to draw a line under this more quickly. We’ve been asking for things from other parts of Government for some time. Anything we can do to accelerate payments we would like to do. Do still here from AB …”
Maybe –
Nicholas Read: Advisory Board?
Mr Beer: Advisory Board, yes:
“… that lawyers are arguing about a few hundred [that’s probably ‘quid’] here and there. I do not want lawyers on either side slowing it down. We are under pressure to bring it back into DBT, we want you to deliver on them. Give the benefit of the doubt to postmasters.”
There’s more discussion on the HSS and the introduction of service level agreements, the use of without prejudice in correspondence. Mr Hollinrake says that he thinks it was a big mistake to keep Herbert Smith Freehills involved in the scheme.
Mr Recaldin says: “We are proactively phasing them out.”
Then, if we go over the page, please, you are recorded in the third line as saying:
“Robert Daily today …”
Indeed, he was a witness on that day.
“… Post Office Investigator. Biggest question for me is we need some autonomy in dealing with people, rather than us coming back to you or [the Treasury], we need a warchest, effectively.”
Can you help us as to what you were describing there?
Nicholas Read: Yes, we needed some financial support and guidance in terms of the ability to move individuals on from the organisation who were involved in the scandal, and we wanted to do that as quickly and efficiently as possible. That might be through redundancy, that might be through a settlement, that might be through some other substantive reason to move people on, rather than going into, potentially, issues where we might sort of fall foul of the unions, or the like, and so I think the point I was trying to make was that we wanted to move more quickly without having to refer back to the Government for funding to do such a thing.
Mr Beer: Lorna Gratton is recorded as saying:
“For those who appear publicly you might have bringing the business into disrepute defence, but not those that don’t appear publicly.”
You’re recorded as saying:
“There’s reputational damage that could be done here and we want to be able to signpost this to stakeholders that we won’t sit on the fence on these issues.”
Mr Hollinrake says: “I’m not a big fan of paying people off. Ideally we go through a process.”
Cfo: “What we are grappling with is create a bit of distance from the people who are implicated somehow and those that are still in the business and that is tainting it.”
Then Mr Hollinrake says:
“I don’t mind if we end up in an Employment Tribunal.”
Was that him signalling the approach to be taken here: that the Post Office should take robust action, even if it meant ending up on the wrong end of an Employment Tribunal claim, brought by a dismissed employee?
Nicholas Read: It does sound like it.
Cfo: Was that the approach taken?
Nicholas Read: No, I don’t think we’ve been as robust as that.
Cfo: Was this not the Government giving you the green light to be robust?
Nicholas Read: Yes, I think it is and, as I mentioned before, I think we’ve dragged our feet in terms of being very, very specific about this.
Cfo: I mean the issue is the potential for individuals who still may be operating at the heart of Post Office who were implicated in events in the past, isn’t it?
Nicholas Read: That is the case and, as I have been very clear, where we get formal allegations, we will act. Pre-emptively, we have struggled to move people on from the organisation.
Mr Beer: Thank you. Sir, I’m about to move to a separate subtopic, could we break for 15 minutes until 11.40, please.
(11.22 am)
(A short break)
(11.40 am)
Mr Beer: Thank you, sir.
Mr Read, I suspect, with your familiarity with the issues in the Inquiry and the time that you’ve spent preparing to give evidence in this phase, you will know that one of the issues explored by the Inquiry is the facility for the Post Office and/or Fujitsu to have remote access to branch accounts –
Nicholas Read: Correct.
Mr Beer: – and a sub-issue, an exploration of what the Post Office has said across time about its and Fujitsu’s facility to have access to branch accounts, yes?
Nicholas Read: Yes.
Mr Beer: A third area of exploration is, or has been, who knew what about remote access and when?
Nicholas Read: Yes.
Mr Beer: No doubt you either heard, read or were briefed about the evidence of Ms van den Bogerd, Angela van den Bogerd, concerning her knowledge of remote access and what she has said across time about the facility for remote access to branch accounts?
Nicholas Read: Yes.
Mr Beer: Can we look, please, at POL00294728. This is an email from a long time ago, before you were in post, pre-dated your appointment by more than eight years, and it’s an email from Tracy Marshall – can you see –
Nicholas Read: I can, yes.
Mr Beer: – to Kevin Gilliland and Angela van den Bogerd about Horizon system issues. It’s 5 January 2011 and, if you just look at the foot of the page, in fact, I think it’s on the second page, you’ll see that it’s signed off by Tracy Marshall, Agents Development Manager within Network & Sales.
If we just go to the top, please, she says that she has made some pages on the outstanding questions. Then the second of those is, “[Post Office] or Fujitsu having remote access to individual Horizon systems”, and she says:
“[Post Office] cannot remotely access systems and make changes to specific stock units etc. Fujitsu can remotely access systems and they do this on numerous occasions on a network wide basis in order to remedy glitches in the system create as a result of new software upgrades.
“Technically, Fujitsu could access an individual branch remotely and move money around however this has never happened yet. The authority process required audit process are robust enough to prevent this activity from being undertaken fraudulently.”
Concluding:
“So although changes can be made remotely, they would be spotted and the person making the change would be identified.”
If we look, please, at POL00088956, we can see an even earlier email, which email has secured some significance in the Inquiry, an email from Mr Breeden to Ms van den Bogerd, dated December 2010, and you can see that Ms Marshall was a copyee, yes?
Nicholas Read: Yes, that’s correct.
Mr Beer: If we just scroll down, and a bit more please, we see cut into this email chain an email sent previously by Lynn Hobbs, in which it was said that:
“I found out this week that Fujitsu can actually put an entry into a branch account remotely. It came up when we were exploring solutions around a problem generated by the system following migration … This issue was quickly identified and a fix put in place but it impacted around 60 branches and meant a loss/gain incurred in a particular week in effect disappeared from the system. One solution, quickly discounted because of the implications around integrity, was for Fujitsu to remotely enter a value into a branch account to reintroduce the missing loss/gain. So [Post Office] can’t do this but Fujitsu can.”
One of the issues that we’ve been exploring is the consistency of the accounts, or accuracy or reliability or truthfulness of the accounts that Ms van den Bogerd has given, in light of the fact that she was provided with this information, as, it seems, was Tracy Marshall.
We’ve seen what she said in the first email that I have shown you, which, on one view, doesn’t really reflect what is set out here.
Nicholas Read: Mm.
Mr Beer: You tell us in your witness statement – this is paragraph 238 of your third witness statement – that a person called Tracy Marshall, as the Postmaster Engagement Director, was the person who briefed you about the investigation of Elliot Jacobs?
Nicholas Read: Yes, I did, yes.
Mr Beer: The email can come down. Thank you.
Is that the same Tracy Marshall that is engaged in these investigations and discussions about remote access?
Nicholas Read: Yes, it is.
Mr Beer: What position does she hold; is it Network Development Director?
Nicholas Read: That’s correct.
Mr Beer: Can we look, please, at WITN11610100.
This is Ms Marshall’s witness statement of 22 August and it’s a corporate witness statement, it’s on behalf of the Post Office. If we scroll down, she says that she is, in fact, the Retail Engagement Director.
Nicholas Read: Yes.
Mr Beer: Her areas of responsibility cover postmaster onboarding, training, contract teams. If we scroll on, please, she says that she is responding to two Rule 9 Requests addressed to the Post Office. If we scroll down, and keep going, we can just scan this. Then “Definitions”, then keep going.
So just going up, you can see the first question that she addresses “current [subpostmaster] contract … set out in detail” changes made.
Then, if we scroll on, please. Keep going. It’s quite a long witness statement. I just want you to see the coverage of it.
Nicholas Read: Right.
Mr Beer: If we keep going, please. We asked to identify relevant changes made in the light of Mr Justice Fraser’s Common Issues Judgment, essentially.
Then if we keep going:
“… the process by which [subpostmasters] were notified of relevant changes”, section 2.
Then if we scroll on, please:
“… process by which new [subpostmasters] are notified of the terms and conditions …”
Scroll on, please, terms of the contract, and their negotiation, whether that’s permissible and what’s the process.
Scroll on, please. If we just scroll to get the full heading of this section of the witness statement, “Induction and Ongoing Support for Postmasters and Assistants”, ie “Please provide details of the training now given to [subpostmasters]”, et cetera.
If we scroll on, please. I think this is quite a long section, so we can scroll on quite fast:
“… details of any key guidance, policies, training or instructions given to those responsible for delivering training.”
Then carry on scrolling, please:
“which department(s) hold responsibility for [such] policies and guidelines …”
Then 8:
“… details of the experience, expertise and qualifications of those currently responsible for delivering training …”
I’m not showing you or asking you to look at the responses to these, just showing you the coverage.
10:
“… any key reports, reviews or investigations … which address quality of training provided …”
Then scroll on, please:
“… details of any feedback sought or engagement undertaken … in relation to their training on the use and operation of Horizon …”
Scroll on, please:
“To what extent are [subpostmasters] expected to train their own managers and assistants …”
13:
“[Any] provision within [Post Office] for [postmasters], managers and/or assistants to raise issues about the provision or efficacy of training …”
Then scroll on, “Contractual liability for Shortfalls”:
“Key policies and [guidance] relating to the liability of [postmasters under the contract] and other end users for shortfalls …”
Scroll on, please:
“Which department(s) hold responsibility for [such] policies …”
Then a new section:
“… all the avenues available to [subpostmasters] to raise queries or questions about Horizon”, and about the Business Support Centre.
Then scroll on, please:
“… current process [a subpostmaster] goes through when they raise a balancing issue and seek assistance to resolve it …
“… policies, guidance, training or introduction for those operating the [centre] since the findings of Mr Justice Fraser.”
If we continue:
“Which department(s) hold responsibility for [those] policies …”
Then 18:
“… details of the experience [et cetera] of those responsible for operating the helpline …
“… how … the advice provided by the helpline is monitored, reviewed or checked …”
Then carry on, please:
“… how … calls raised with the helpline are monitored, reviewed and/or checked to identify any potential issues in branches”, in relation to particularly shortfalls, bugs, errors and defects.
Then carry on:
“To what extent … are branches proactively notified of [bugs, errors and defects]?”
Then carry on, please:
“… sources of advice or assistance made available to [subpostmasters], managers and assistants …
“… any … reports, reviews or investigations … which address the quality of the advice and assistance provided via the helpline …
“… the means by which [a subpostmaster, et cetera], can provide feedback on their experiences [of] using the helpline …
“… measures … in place to ensure that [postmasters, et cetera] who contact [Post Office] for assistance … receive useful, tailored advice.”
A section on “Suspension, Reinstatement and Termination”, and then continue; and continue; and continue; and continue.
That’s it, keep going, thank you.
Thank you. Stopping there.
Ms Marshall is providing the Inquiry with information, the retention of subpostmasters, retention of Post Office employees, including in relation to their potential association of past wrongdoing. She’s essentially the Post Office witness that’s speaking to that issue.
She is a person who, on one view, is involved or implicated in the remote access issue, and yet she’s a corporate witness for the Post Office; do you see a problem?
Nicholas Read: The issue emerged in the summer, which was the first time, I think. The last time we – the last time the Inquiry was sitting and these emails emerged, we invited Tracy to step back from her day-to-day role while we tried to understand the significance of and the extent of any involvement that she had. She was very clear that she was unaware of remote access being actioned. She said she was aware that remote access was possible but not whether or not it was enacted in any way.
There were, I think, a couple of emails that we’ve just been through and a line manager suggested to her that she take a step back from postmaster-facing activity so that confidence could be retained, and indeed provide the opportunity for us to examine any further whether or not there was something substantive with which she had to – to respond to.
Mr Beer: She hasn’t really taking a step back though, she’s taken a step forwards, hasn’t she, because she’s provided a corporate witness statement to us and is giving evidence, I think, next week?
Nicholas Read: Well, my point at this stage was that there is no concrete evidence of any wrongdoing and, as a consequence of that, we want to obviously treat her in exactly the same way as we would anybody else, which is explore any allegations that are being made but, in reality, she is the individual who is best placed to write that corporate witness statement and that is exactly what she’s done. But, at the same time, we’re clear that, for the confidence of postmasters, both past at present, it’s inappropriate for her to be involved in activity that is postmaster facing while the Inquiry is still ongoing, and while we can and will explore whether there is anything that she needs to answer to.
Mr Beer: Is there anything more postmaster facing than giving evidence in the Inquiry on behalf of the Post Office as a corporate witness?
Nicholas Read: I’m not quite sure I understand what you’re getting at.
Mr Beer: You said you invited her to take a step back from postmaster-facing activity?
Nicholas Read: Yes, correct.
Mr Beer: Is it not postmaster-facing activity to come along and sit in the seat that you’re sitting in, give evidence on behalf of the Post Office in relation to a whole range of issues that I’ve just quite slowly taken you through?
Nicholas Read: Yes, I can see the point you’re trying to make. I think the point I’m trying to make is that my desire was that she wasn’t involved in activity that was specifically postmaster facing, so running of forums, listening groups, engagement with postmasters, as opposed to, and by definition therefore, the day-to-day running of her role. However, she had spent the previous four years in that role and had created a lot of the change that has been initiated by the Post Office and, therefore, she is best placed to speak to it, and clearly the Inquiry will speak to her, given that that is her role.
I don’t think it is inconsistent to remove her from coming to the Inquiry to give evidence on the work that she’s done and, you know, if you have questions about other elements of her role going back over time, I’m sure the Inquiry will explore that. As I said earlier, we have been very clear that, where allegations are made, we will investigate those and we will do that. But it is a presumption of innocence in the same way as it would be now for a postmaster as well, and I think it’s important that we continue to maintain that.
I certainly have a responsibility to all my colleagues, as well as to postmasters, and I think it’s appropriate that the balance – and it’s a fine balance – that we have adopted in terms of asking her to step back from day-to-day activity, maintaining the fact that she has done and has spent the last four years involved in activity which will be explored by this Inquiry, and then giving her the chance to come and speak to that well, which I think is a sensible way to progress. And we’ve been very clear that where people have been invited to step back at the conclusion of the Inquiry, and whenever allegations, if they are made, are made, we will continue to act.
Mr Beer: Thank you. Can I turn to, again, a sub-issue we addressed previously yesterday: namely, having subpostmasters as NEDs on the Board?
Nicholas Read: Yes.
Mr Beer: You address this with a sort of qualitative assessment in paragraph 83 of your third witness statement –
Nicholas Read: Right.
Mr Beer: – if we can turn that up and have a look at it. So WITN00760300, thank you, page 46. It’s paragraph 83. You say:
“In respect of the Board, Postmaster Non-Executive Directors have been an important part of trying to invert this dynamic. They bring a detailed and relevant understanding of current day matters to Board meetings in a uniquely creditable way. This ensures a transparency of issues and an agreed and collective understanding across the organisation of the most important priorities.”
Then you go on to consider something slightly separate.
Nicholas Read: Yes.
Mr Beer: You give the impression, would you agree, that having the Postmaster NEDs on the Board has been a positive thing?
Nicholas Read: I think it’s been very positive and I’ve been very consistent with that. I think it’s an important part of the change that we’ve been trying to bring about at the Post Office. I was the champion of bringing Postmaster NEDs onto the Board. It is and was a feature of the role that I had at Nisa where I had a combination of independent Non-Executive Directors and Member Directors – Non-Executive Directors, and that makes – worked well.
Mr Beer: Can we look, please, at BEIS0000753. This is a readout of a meeting between you and other members of the Post Office Executive. So Ms Sheratt, Mr McInnes and, on the other side, Lorna Gratton, Carl Creswell, Jamie Lucas – and I should say Mr Hollinrake too.
Nicholas Read: Yes.
Mr Beer: We can see his private secretary is also recorded as being present. I just want to, again, read a little bit of context. You say:
“Pleased with our session …”
Is that referring to the session before the Select Committee? Just look at the date at the top.
Nicholas Read: Yes, I think there were two Select Committee meetings, one in January and one in February, and I think this one is referring to the –
Mr Beer: To the second?
Nicholas Read: – to the February one, yes.
Mr Beer: You say you were pleased with your session:
“… and felt a bit like the rug got pulled from beneath us.”
Mr Hollinrake is reported as saying:
“It’s fair to say, at a certain point in time, have to take the gloves off and try to manage the [information]. I think the Select Committee were weak with him, apart from Antony Higginbotham. Sorry it was so messy. Keen to support in any way we can to make sure we get passed [sic] this. Hope he’s discredited.”
Is that a reference to Henry Staunton?
Nicholas Read: That’s correct, yes.
Mr Beer: So the Minister was saying that he supposed Henry Staunton was discredited?
Nicholas Read: That’s correct, yes.
Mr Beer: “Anything else you think we need to make it easier?”
You say you’re looking to Lorna Gratton:
“Need as much support as you can get from Ben Tidswell to try to get the Board functioning properly. We need to try and find a way through the Project Pineapple memo.”
That’s the inadvertently disclosed email?
Nicholas Read: Yes, that’s correct, yes.
Mr Beer: You’re recorded as saying:
“We’ll have a Board meeting tomorrow and see where we can get to. Postmaster NEDs may use tomorrow as an [opportunity] to criticise on funding and anti-postmaster sentiment. Need to avoid tomorrow morning being a proper road crash.”
Ms Sheratt: “Had a bit of a flavour of it on Monday, they think it did not do enough for postmasters. Elliot mentions where the investment for the future of the business and postmaster rem is front and centre, costs are rising, and this has been a theme of theirs for a while.”
Then you’re record as saying:
“This goes back to whether the postmaster directors are playing a role of a director, or of a trade union rep. I don’t know where that is going to go. They are extremely exposed as a result of Project Pineapple. Not sure to patch this up. In a slight stand off.”
Then Ms Gratton: “They are not in a good place and aren’t operating in a way appropriate for the business.”
You ask: “How can they ensure their own self-interest doesn’t cut across their role in supporting [Post Office] as a business?”
This doesn’t seem to record such a rosy picture of yours of the Subpostmaster NEDs.
Nicholas Read: I think it’s a moment in time and I think we’ve heard a lot about Project Pineapple in this environment. What I would say is the point of the postmaster directors on the Board is to be challenging, is to bring a tactical view of what is going on the ground, and I went into this with my eyes open, fully knowledgeable that this would be uncomfortable. The big challenge for the Postmaster NEDs, of course, is that they are elected to the Board, unlike anybody else, who is appointed to the Board. So as an elected representative on the Board, voted for by other postmasters, they’ve got a very dual challenge of, on the one hand feeling that they are representing postmasters, whilst, at the same time, recognising they have duties as Directors of Post Office, and that provides conflict.
Not unsurprisingly – and you heard from both Saf Ismail a couple of weeks ago, I think Saf suggested he was working anything up to ten days a month on this – not unsurprisingly, many postmasters were looking to them and constantly looking to them to say, “What have you done? What have you done? What are you doing?” And I think that is the challenge we have had, and Saf and Elliot have faced considerable pressure from their peer group, whilst at the same time having to recognise that they have got to – and they have duties directors of the Post Office. And so it is a tricky play.
There is no question that this time – and you’ll be very familiar with this – that this time was a very difficult pod for the Post Office, the departure of Henry, the exposure of the Project Pineapple email, the challenges that the Postmaster Non-Executive Directors felt, but also they were coming to the end of their term at this stage. This is the three years, and I think they felt very keenly that they wanted to be able to demonstrate they’d made a real difference and I do believe that to be the case but I think it was something that was playing on their minds as well.
Mr Beer: When did you start becoming concerned that they may not be acting as directors but instead as trade union reps?
Nicholas Read: I mean, I don’t think we should make too much of this. I don’t think that is a major issue. I think one of the challenges that this role has, it’s exactly what I experienced, that Nisa was trying to get that balance between representing postmasters, as I’ve mentioned, and actually fulfilling a role as a director. It’s an ongoing issue, an ongoing challenge and very difficult, in fact virtually impossible, to draw a line between the two, and I think it requires very sensitive navigation from them, very sensitive navigation from other Board members and, indeed, obviously, from me, in terms of making sure that we get the best from the Postmaster Non-Executive Directors.
Mr Beer: What did you understand to mean by “trying to find a way through the Project Pineapple memo”?
Nicholas Read: My understanding of that, and what was on my mind at the time, was we’d just lost our Chairman in very difficult circumstances. I think the – I think everybody was acutely conscious of the manner of Henry’s departure, and the publicity that was associated with that. We had two Non-Executive Directors who were concerned about the exposure of the Project Pineapple email.
Mr Beer: I think before that, they were concerned about the conduct of three member of the General Executive?
Nicholas Read: They were.
Mr Beer: That was the substance of their concern?
Nicholas Read: That was the substance.
Mr Beer: The inadvertent disclosure of the email, as you described it, is an additional matter?
Nicholas Read: It is an additional matter, but I think the primary matter that is being discussed in this email is, and was from my perspective, how do we bring some stability and cohesion to the Board, given we’d lost the Chairman and we had two main Board Directors who were disenfranchised? Less about what they were disenfranchised with and more about the personal circumstances they were in.
It was my interpretation of what was going on and what I wanted to try to create was an environment where we had got a sense of collegiality and a sense of stability at a Board level. It was quite apparent that this was causing a disquiet, amongst the organisation, it was being played out in public, and it was, as I think I mentioned before, pretty unedifying and unhelpful for the direction of business.
Mr Beer: At this time the Post Office was putting at a public message that it was putting subpostmasters at the heart of its business, including by having Subpostmaster NEDs on the Board, wasn’t it?
Nicholas Read: I don’t think it was necessarily at this particular moment doing that. I think postmasters had been on the Board for almost three years before to this – prior to this particular situation. So I’m not sure that’s necessarily a fair characterisation.
Mr Beer: To what extent were the Board, including the Non-Executive Directors, updated on the contact that you and other members of the Executive were having with the shareholder?
Nicholas Read: I report back on the detail of the shareholder meeting, and when there are specific issues that emerge, I invariably take my Corporate Affairs Director with me to these meetings on a monthly basis and notes of those meetings are then shared with either the Chairman or indeed with the entire Board, depending on the content that is required.
So that would happen after each of the ministerial meetings and, of course, I would refer to the ministerial meetings in my CEO reports to the Board, of which many have been displayed.
Mr Beer: You’ll remember that one of Grant Thornton’s criticisms was the extent to which the shareholder’s input was diving decision making and performance of Post Office?
Nicholas Read: Yes.
Mr Beer: So to what extent were the Board, including the Non-Executive Directors, sighted on exchanges such as this?
Nicholas Read: On the sort of mechanics of what is going on in here, probably less about the mechanics. If there are things that are matters of substance then, of course, those are issues that we would share with the Board.
Mr Beer: Did you share the view that Ms Gratton expressed that the Subpostmaster NEDs were not operating in a way appropriate for the business?
Nicholas Read: Did I share that with?
Mr Beer: Did you share that view?
Nicholas Read: Oh, sorry, did I share that view?
Mr Beer: Yes, did you hold that view?
Nicholas Read: No, I think my experience of the Postmaster NEDs is that, you know, they are naturally challenging, challenging of me and I’m open to that challenge.
Mr Beer: Mr Ismail has given evidence to us that he believed, after the departure of Mr Staunton, that responsibility to heal the rifts in the Board after Project Pineapple was placed upon the two Subpostmaster Executives; Is that correct?
Nicholas Read: I don’t think explicitly that was necessarily the case. I think clearly, as main Board Directors, they have an opportunity to engage with members of the Group Executive and, by definition, you know, I think they share some responsibility to try to move that agenda forward. I don’t think it’s necessary that the Chairman has to do it, or that the SID has to do it. I think everybody has a responsibility to try to ensure that we get a sense of stability and cohesion back on to the Board. So I don’t think it was any one person’s responsibility.
Mr Beer: Did you leave it to them, the two Subpostmaster NEDs, to build bridges with Mr Foat and Mr Richards?
Nicholas Read: On reflection, I probably did give them too much of the – too much of the onus was placed upon them. I think that’s probably a fair reflection. I think at this time, not unsurprisingly, we were under enormous amounts of pressure as an organisation, and my reflection is that I probably could have done more.
Mr Beer: It was your actions that, in particular, had left them exposed to a response or reprisals from those against whom they made allegations, wasn’t it?
Nicholas Read: Well, as we discussed yesterday, it was an inadvertent mistake, and we’ve been through the mechanics of how that mistake occurred. I also expressed my apology to them within 12 hours of the event occurred. So I don’t think it’s fair to characterise it in that way. I think it was – as I say, an inadvertent mistake. It was disappointing that it had occurred, I was keen to make sure that we moved on and it obviously didn’t – we obviously didn’t move on as quickly as that would have – as would have been helpful. But, notwithstanding that, I think that the scenarios surrounding Henry’s departure clearly didn’t help.
Mr Beer: Thank you. Can we move to a new topic –
Sir Wyn Williams: Before we do, Mr Beer, just to clear my mind.
I think you were present when Ms Scarrabelotti gave evidence, yes?
Nicholas Read: I was, sir.
Sir Wyn Williams: In relation to Postmaster Non-Executive Directors, she was asked some questions about that.
Nicholas Read: Yes.
Sir Wyn Williams: I’m not pretending that these were her words, all right, but she seemed to be suggesting, I think, that the current serving postmasters had a very important role to play but perhaps not as members of the Board? Do you remember her giving that –
Nicholas Read: Yes.
Sir Wyn Williams: I just wondered what your view of that was, if you have one?
Nicholas Read: Yes, I do, Sir Wyn. I do believe that they have a role to play on the Board. I think we were in a situation with no other operators/retailers on the Board, other than effectively myself and the two Non-Executive Directors, and I think it gave reassurance to other Board members that they had a tactical understanding of what is going on, on the ground, in that forum, and that they would challenge me in particular on issues that we were implementing.
So I think it was a really important part of the development that we’ve had over the last three years to have the Postmaster Non-Executive Directors being in a position where they could challenge the change that was being implemented into our business.
Sir Wyn Williams: All right, thank you.
Sorry, Mr Beer.
Mr Beer: In fact, on that topic, we could go back and look at BEIS0000753.
This was the note of the meeting you held with Mr Hollinrake and others on 29 February and, if we just scroll down – and a bit more, please, stop there – I left off examining the memo with Lorna Gratton saying:
“They are not in a good place and aren’t operating in a way appropriate for the business”.
You said: “How can they ensure their own self-interest doesn’t cut across their role in supporting [Post Office] as a business.”
Then if we scroll on, please, six paragraphs from the bottom, eight paragraphs from the bottom, Lorna Gratton says:
“I don’t think postmaster oversight of the Board is worth it, I think there’s good mileage for more postmaster input in the retail [side] of the business.”
Did you understand it to be her view that having postmasters on the Board was not worth it but there was more value in having them have some other input, as it’s called, in retail?
Nicholas Read: Not quite. I think what we were – or what was being described here is the Voice of the Postmaster and the NFSP, as I recall, were progressive a concept of an oversight Board that sat above the main Board of the Post Office, and played a strategic role in shaping the direction of travel. So I think that is what the oversight of the Board, which would be populated by people from the CWU, ministerial colleagues, potentially postmasters as well. So I think that is what is being described here by way of postmaster oversight of the Board.
From a retail perspective, I think what Lorna is referring to here is, is there a more, I wouldn’t say executive role, but I think is there a role of oversight within the retail business of the Post Office that the Postmaster Non-Execs can play, which I think is quite a complicated concept. You heard Mr Ismail say he did ten days a month anyway. I was trying to wrestle in my own mind what a Postmaster Non-Executive Director, with more role in retail, that then starts to blur, I think, the boundaries of what an executive does and what a non-executive does. So it is a difficult concept.
I think what Lorna is quite rightly pointing out is, certainly where the Post Office is now, there is an opportunity for more input from the broader postmaster community and I buy that completely and I do believe that, which is certainly why we have a serving postmaster as part of the Senior Leadership Team.
I think trying to fashion the role, as described here, could be complicated, in terms of accountabilities.
Mr Beer: So we shouldn’t read this to mean that Ms Gratton’s view as expressed here was that having postmasters on the board was not worth it?
Nicholas Read: That’s certainly not how I read it, no.
Mr Beer: Thank you. I only raise that because it is linked to the question that the Chairman asked.
Nicholas Read: Right.
Mr Beer: Can we move to the new topic, then, which is the post-Group Litigation postmaster contract.
Nicholas Read: Yes.
Mr Beer: We have looked at the front page and a bit of it, section 19, already. The crossreference, no need to turn it up, is POL00000254, and I think the Post Office produced a guide, do you remember –
Nicholas Read: Yes.
Mr Beer: – for postmasters, a summary of the effect of the Common Issues Judgment on the postmaster contract. I’m not going to engage in an exercise of comparing what it said versus the judgment, but instead go straight to the contract itself, POL00000254.
Can we look please at page 32. This is, would you agree, one of the key clauses, section 12.
Nicholas Read: Yes.
Mr Beer: “Responsibility for Post Office Limited Stock and Cash”, if we scroll down, please, to 12, “Losses”, so section 12.12:
“The subpostmaster is responsible for all losses caused through his own negligence, carelessness or error, and also for all losses caused by the negligence, carelessness or error of his or her assistants. Deficiencies due to such losses must be made good without delay.”
I think you’ll recognise that there’s a change there –
Nicholas Read: Yes.
Mr Beer: – from the past contract, in that it introduces the qualifier negligence, carelessness or error in relation to assistants –
Nicholas Read: Yes, that’s correct.
Mr Beer: – rather than an absolute liability –
Nicholas Read: Correct.
Mr Beer: – for losses caused by assistants.
Then clause 13:
“Subject to clauses 12 and 13A … the financial responsibility of the subpostmaster does not cease when he relinquishes his appointment and he will be required to make good any losses incurred during his term of office which may subsequently come to light.”
Then some new clauses, 13A:
“Post Office shall not seek recovery from the subpostmaster unless and until:
“[1] it has complied with its duties under clause 20 … (or some of them) …”
We’ll look at them in a moment:
“[2] it is established that the shortfall represents a genuine loss to it; and
“[3] it has carried out a reasonable and fair investigation as to the cause and reason for the alleged shortfall and whether it is properly attributed to the subpostmaster under the terms of this contract.
“Gains
“Surpluses may be withdrawn provided that any subsequent charge up to the amount withdrawn is made good immediately.”
Then if we go to 20, “Post Office Duties”:
“Post Office shall:
“[1] provide the Horizon system [which is defined] which shall be reasonably fit for purpose, including any or adequate error repellency.
“[2] provide adequate training and support, through the provision of training materials, to the subpostmaster, particularly if and when Post Office imposes new working practices or systems or requires the provision of new services.”
Then 3, I’m going to ask some questions about this in a moment:
“Properly and accurately effect, record, maintain and keep records of all transactions effected using Horizon.
“[4] Properly and accurately produce all relevant records and/or explain all relevant transactions and/or any alleged or apparent shortfalls attributed to the Subpostmaster;
“[5] 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;
“[6] … identify the causes of any apparent or alleged shortfalls, in any event;
“[7] disclose possible causes of apparent or alleged shortfalls (and the cause thereof) to the Subpostmaster candidly, fully and frankly;
“[8] make reasonable enquiry, undertake reasonable analysis and even handed investigation, and give fair consideration to the facts and information available as to the possible causes of the appearance of alleged or apparent shortfalls …
9, I’m going to ask some questions about this too:
“communicate, alternatively, not conceal known problems, bugs or errors in or generated by Horizon that might have financial (and other resulting) implications for the Subpostmaster;
“[10] communicate, alternatively, not conceal the extent to which other subpostmasters of branches are experiencing problems relating to Horizon and the generation of discrepancies and alleged shortfalls;
“[11] not conceal from the Subpostmaster Post Office’s ability to alter remotely data or transactions upon which the calculation of the branch accounts … depend; and
“[12] properly, fully and fairly investigate any alleged or apparent shortfalls.”
So with these additional obligations imposed on Post Office, how is the question of the negligence, carelessness or error by a subpostmaster or their staff approached, in practice?
Nicholas Read: In practice? In practice, we do a number of things. Certainly from an investigative point of view or from a – trying to work out whether a discrepancy or a loss has occurred, we have a completely different approach to that that we adopted prior to 2019. We have – as I mentioned yesterday, we have created a number of different teams with different responsibilities. That starts with the network monitoring team, who identify and look for, and monitor the network on a day-to-day basis, to identify where there are different issues and different problems emerging and, indeed, if they are doing so.
Clearly, we have the Branch Support Team in terms of the Assurance Team who do the stock and reconciliation issues, and we have a Support and Reconciliation Team as well, that is also ring-fenced to help support postmasters. But I think the most important principle is that we start from a position of innocence and it is our objective to help postmasters to understand how, if and when discrepancies have occurred, how do we work with them?
And we have a tiered process for doing this. The Branch Support Centre is clearly the first port of call for any postmaster who may or may not have an issue that might emerge. We have a second line team, which is the Branch Support and Reconciliation Team, which are there to aid and support postmasters with more complex issues and, clearly, we have an IT Team who is and who do go out to branches very specifically to help postmasters identify and resolve issues that may or may not be well understood by those particular postmasters.
So it’s a very different approach to the one that we adopted pre-2019.
Mr Beer: In terms of negligence, carelessness or error, for instance, if a subpostmaster says that the loss arose because of a lack of training in undertaking this process, “I admit I pressed these buttons and I admit that it caused a loss of £500 but that was because the process I was undertaking, I wasn’t properly trained upon it, and that’s what’s caused the loss”.
Nicholas Read: Where we –
Mr Beer: Is that negligence, carelessness or error?
Nicholas Read: I haven’t personally been in to do investigations of that nature but I think that the principle that is important at this stage is where there is a disagreement between a branch and the Post Office over a discrepancy or over an issue, we are not – other than going into a dispute resolution process, and a further level of investigation, and a degree of assurance process – we are not enforcing that loss on a postmaster.
And I think that is an important principle at this stage: we don’t think it is appropriate and we are not enforcing it.
So it’s possibly not answering the specifics of your question but I think the principle that I’m trying to describe is that we start with a presumption of innocence and we also start with the fact that, if we cannot resolve an issue, we are not imposing a solution on a particular branch.
Mr Beer: The evidence from one of the Subpostmaster NEDs was to the effect that the button on the Horizon keyboard, on the branch terminal, for paying in was proximate to the button for paying out –
Nicholas Read: Yes.
Mr Beer: – and it was therefore easy to press the wrong button. Is that something that would be classified as postmaster error and, therefore, something for which they were responsible, ie pressing the wrong button?
Nicholas Read: Again, I am not sure I’m able to describe that specifically but on the principal point you make, we’ve obviously spent quite a lot of time looking at the keyboard itself so that where there are specific issues, as that you’ve just described, that are manual issues, we have tried to move buttons and change buttons to make sure that it is more intuitive and easier and less manual, in terms of some of the mistakes that are being made.
Mr Beer: Does the Post Office provide some sort of guidance, either to its investigators or to its subpostmasters, as to what negligence, carelessness or error means, and what it looks like, in practice?
Nicholas Read: I don’t know whether that is specifically the case. We do have, online and e-learning tools around the investigative process, around what we do and why we do it, and examples of where, you know, issues could or may emerge.
Mr Beer: So sort of case studies of –
Nicholas Read: Yes. That’s –
Mr Beer: – what would and would not fit within this type of subpostmaster liability?
Nicholas Read: That’s my understanding, yes.
Mr Beer: The purpose of asking you those questions, those two examples that I gave, wasn’t to get definitive answers for use in the future. Would you agree that it’s necessary to have some sort of guidance so that subpostmasters are clear, beyond the three bare words themselves, as to in what circumstances they will be liable for shortfalls and which they may not?
Nicholas Read: Yes, I think that’s fair.
Mr Beer: At paragraph 20.3 provides that the Post Office will:
“properly and accurately effect, record, maintain, and keep records of all transactions effected using Horizon.”
Does this mean that a mechanism exists for monitoring the identification and payment of any shortfalls by subpostmasters?
Nicholas Read: Yes, it does.
Mr Beer: So is there a mechanism for recording the payment of shortfalls by subpostmasters?
Nicholas Read: There is now, yes.
Mr Beer: When was that introduced?
Nicholas Read: Certainly post-2019. I have had discussions with Melanie Park, who I think you’re speaking to next week and, indeed, around this very topic, which is: is there a record of all payments that are made by postmasters, and a reason code and a payment vehicle that it describes what it is that they are paying for, whilst at the same time, is there a problem impact database that describes all the bugs, errors and defects that have emerged, what we’ve done about them, whether they’ve been fixed, what potential detriment they may or may not have thrown up and that will be – that is obviously a database with which the Branch Support Teams and the Stock and Reconciliation Teams, who do – Support and Reconciliation Teams who do engage with postmasters obviously have access to, so that when postmasters describe issues that they may be experiencing, we now have a database of all the issues that have emerged, and that is certainly – I think it is since 2019, I could be wrong, and all the payments and more importantly the way that reconciliation has occurred in terms of resolving those issues.
Mr Beer: Is that function run and maintained by Fujitsu?
Nicholas Read: No, that’s run and maintained by Melanie Park’s Operation Team in Chesterfield.
Mr Beer: Paragraphs 4, 5 and 6, would you agree, taken together, require the Post Office to identify the reason for shortfalls, in particular, 6?
Nicholas Read: Yes, the onus – as I have stated, the onus is very much on the Post Office to identify where these problems have occurred, and the onus is very much on the Post Office to ensure that if there are any fixes that need to be made that they make them so, yes, I would agree with that.
Mr Beer: That duty, to identify the cause of a shortfall, exists irrespective of whether the shortfall is settled by the subpostmaster?
Nicholas Read: That’s correct.
Mr Beer: Thank you.
Sir, it’s 12.45 now; could I invite you to break until 1.45?
Sir Wyn Williams: Yes. Certainly.
Mr Beer: Thank you very much.
(12.44 pm)
(The Short Adjournment)
(1.45 pm)
Mr Beer: Thank you, sir.
Good afternoon, Mr Read.
Nicholas Read: Good afternoon.
Mr Beer: Can we turn to the topic of shareholder priorities, please. There is no need to turn it up but, in paragraph 246 of your first witness statement, you say:
“The postmaster sentiment survey showed that remuneration is the top priority for postmasters. Despite some increases, it remained a top priority for many postmasters and the area with the lowest perceived improvement.”
Can we look at a letter that you reference in the same witness statement, in your paragraph 169, from Kevin Hollinrake to Mr Staunton, outlining the shareholder priorities that the Department would like you to focus on. UKGI00044317. You will see this is from Mr Hollinrake to Mr Staunton. It’s dated 29 June 2023 and contains the strategic priorities for 2023 to 2024.
I suspect you’re familiar with this letter, are you?
Nicholas Read: Yes, I am.
Mr Beer: I don’t want to spend time scrolling through it, but would you agree that postmaster remuneration, ie ensuring that today’s postmasters are able to make a living, and the viability of the network as a consequence, are not included in the list of properties set out by the Government?
Nicholas Read: Yes.
Mr Beer: Do you know why?
Nicholas Read: I assume it’s because they take that as given, as that being the core element of the job.
Mr Beer: You’ve said that remuneration is, according to the postmaster sentiment survey, the top priority for postmasters. It’s not listed as any priority by the Government.
Nicholas Read: That’s correct.
Mr Beer: Aside from what is formally written down by the Government, in your interactions with the Department, with UKGI and with ministers, would you say it is a priority for the Government to ensure that subpostmasters are remunerated fairly and are able to make a living through their partnership with the Post Office, a state-owned business?
Nicholas Read: I think it’s one of a number of priorities. I think the major priority, as you’ll probably see from the 23/24 letter to Henry is very much around compensation and support to the Inquiry. They are clearly priorities, but your point is correct in that the last four postmaster surveys we have conducted, remuneration has been, on each occasion, been the number 1 concern for current serving postmasters.
Mr Beer: If we go to page 2 of the letter and look at the first priority:
“Effective financial management and performance, including management of legal costs, to ensure medium term viability.”
If you see at the fourth bullet point, this includes maintaining “stringent cost control” and maintaining a “clear focus on value for money and efficient delivery, across the cost base, including”, and then some subpoints.
Would you agree that effective financial management and performance, including stringent cost control, is in conflict with the fair remuneration of postmasters?
Nicholas Read: Potentially.
Mr Beer: So not only is the fair remuneration of subpostmasters not listed as a priority, a priority that is listed is potentially in conflict with it?
Nicholas Read: Yes, I think that’s fair to say.
Mr Beer: You tell us in your witness statement, paragraph 273 – no need to turn it up – that you have:
“… committed that Post Office will work towards sharing 50 per cent of branch generated revenue with postmasters which represents a significant change to their remuneration and, in the last financial year, the Post Office achieved 45.6 per cent, and would continue to drive the fixed upwards.”
Would you agree that if branch generated income is low, then the amount available to be shared with subpostmasters is low?
Nicholas Read: That’s one part of the equation. The other part of the equation is the central costs associated with running the Post Office which, obviously, if we reduced those central costs then the proportion of revenue that’s available to be distributed increases.
Mr Beer: Would you agree that the Government and Post Office is not doing enough to ensure that branches can offer sufficient services to ensure sufficient branch-generated income?
Nicholas Read: I think we’re trying hard to do that but that comes to the core of the purpose of the Post Office, which, you know, ultimately – and we’ve discussed this over the last couple of weeks in this forum – is getting clear on what the purpose, the vision and the strategy of the Post Office is: is it about generating new sources of income and, indeed, what are those new sources of income; is it about market failure and, from a Government perspective, being clear what market failure the Post Office is there to address; or is it about looking for new avenues?
And that’s very much what we have tried to do, which I said in my personal statement quite extensively, about the plans that we’ve had to drive the four key activities that the Post Office is engaged in, mails and parcels, cash and banking, what we’re doing with our travel business and how we’re driving our platform products as well, which is where we’re looking for new commercial opportunities for postmasters to – ultimately to drive their revenue.
Mr Beer: A member survey by the National Federation found that 70 per cent of postmasters who responded to the survey were taking home personal drawings of less than the national minimum wage, at that time £8.91 an hour. Would you agree that it is shocking that the Post Office and their sole shareholder, the Government, would allow the remuneration of postmasters to fall to such a low level and then not make it a priority to rectify it?
Nicholas Read: It hasn’t appeared, as you say, in the shareholder’s letter to the Chairman. However, it’s a clear priority for the organisation. I think we spend a great deal of time focused on how do we generate more revenue for the existing postmaster population. By way of example, I think in the first year, in 1920 (sic), we increased postmaster remuneration by 10 per cent. The following year by 7 per cent, and the subsequent two years, we’ve obviously not been as successful as we were in those first two years, it’s tended to be inflation led.
What we’ve done, particularly with the mails and parcels element of the revenue that is generated by postmasters, is to link that to CPI, so that at least it increases every single year by the same – well, by CPI so some 65 per cent of all the mails and parcels products that we sell.
But your point is well made, which is there is more to do to take cost out of the business and there is more to do to address the underlying operating model that allows postmasters to simplify their relationship with Post Office and obviously simplify what it is they are doing.
Mr Beer: Can we look at the entrustment requirements set by Government. POL00027887. You’ll see that these are contained in a letter addressed to your predecessor, dated 16 April 2018. Have they been updated since then?
Nicholas Read: Not as far as I’m aware.
Mr Beer: Can you tell us what the entrustment requirements are, please – I mean, not a list of what they are but, generically, what do you understand the entrustment requirements to be?
Nicholas Read: This is the services of general economic interest in terms of what it is that we are expected to provide by way of running the Post Office.
Mr Beer: If we scroll down, please, and keep going. The last sentence on the top of the previous page:
“That network must meet the following minimum access requirements …”
Nicholas Read: That’s correct, yes, the SGEIs, yes.
Mr Beer: The first:
“Nationally, 99% of the UK population to be within 3 miles and 90% of the population to be within 1 mile of their nearest post office outlet.
“[Secondly] 99% of the total population in deprived urban area across the UK to be within 1 mile of their nearest post office outlet.
“95% of the total urban population across the UK to be within 1 mile of their nearest post office outlet.
“[Fourthly] 95% of the total rural population across the UK to be within 3 miles of their nearest post office outlet.”
Then:
“In addition, the following criterion will apply at the level of each and every individual postcode district …
“95% of the population of the postcode district to be within 6 miles of their nearest post office outlet.”
Then:
“Post Office is required to provide this network of post office branches to make available the services of general economic interest detailed in annex A …”
Do you agree that these are requirements are those that currently exist in relation to the post office?
Nicholas Read: Yes, they do.
Mr Beer: Do you agree they impose upon the Post Office an obligation to public service?
Nicholas Read: Yes, they do.
Mr Beer: But do you agree they impose an obligation on Post Office to public service that impacts upon the profitability of Post Office as a business?
Nicholas Read: Undoubtedly.
Mr Beer: Would you agree that the public service requirements, as I’m going to call them, tend to fall more heavily on smaller branches with a lower footfall in areas of lower population density –
Nicholas Read: Largely, yes, that’s fair.
Mr Beer: – or lower income areas, which mean that branches in such areas are less profitable than branches typically are in wealthy urban districts?
Nicholas Read: I think that’s fair.
Mr Beer: Can you also confirm the branches that bear the greater weight of these public service obligations tend not to be those run by what I think are called strategic partners, ie Co-op, WHSmiths and similar?
Nicholas Read: That’s correct.
Mr Beer: Does the Post Office have an enduring commitment from Government to maintain public service duties of the Post Office into perpetuity?
Nicholas Read: I don’t think we’ve had a long commitment to do that. The expectation is that we will fulfil the SGEIs and, on a yearly basis, that’s exactly what these are. The policy, or the entrustment, as set out hasn’t changed since 2010 and we are, and have been, in discussion since 2021 with the Government around a policy review for the Post Office, and that is not something that has yet come to fruition but it is something that we have been very keen to encourage the shareholder to take part in or, in fact, to lead.
The point being is that the market has changed dramatically since 2010. I mean, not least we’ve had separation of Royal Mail from the Post Office, we’ve had the right of digitisation, we’ve had the growth in e-commerce and we’ve had a massive change in consumer behaviours and habits and there is a reason why the high street is closing at the speed with which it is closing, there is a reason why 5,000 banks have closed since 2015. The face-to-face delivery of services has changed, which therefore makes the question around – the question that needs to be answered – very, very clear as to the long-term purpose and vision of the Post Office and, by that, I mean long-term.
We describe here in the – or in the letter that you’ve just shown us the strategic priorities for the Post Office. My personal view is strategic priorities aren’t for a year; strategic priorities imply five to ten years, at least in terms of vision. So they’re tactical priorities, as opposed to strategic priorities.
What the Post Office is in need of, and certainly the work that the incoming Chair has initiated with Teneo from its strategic – in its strategic review, is a joined-up vision between the Post Office and the shareholder for the long-term future of the Post Office, and by that I mean five to ten years minimum, such that we can start to plan more strategically, as opposed to tactically, which is very much the nature of the letters that – this particular letter that we’ve just read implies.
Mr Beer: Can you assist us: in practice, how do branches in low population density or deprived areas, as compared to branches in higher population density or wealthier areas, receive, if they do, appropriately weighted compensation for delivery of the public service requirements?
Nicholas Read: Yes, I can. So we receive a subsidy from the Government for the provision of services in areas where, to your point, it may not be economically possible to run a branch. We have some 1,300 SPSO branches, which are traditional legacy branches, which tend to operate, as you quite rightly point out, in rural, or isolated, or inner urban areas, that may not have the level of economic activity that – or footfall indeed, that you would expect.
That subsidy, to the tune of £50 million, has been static since 2018, in terms of its funding. I think it was 210 million a year, back in 2012/2013, at the time of separation. It is, as I say, and has been, static for the last six years at 50 million but, to my earlier observation, the changing shape of the landscape and the changing shape of footfall on the high street has meant that, in essence, costs have increased while the subsidy has remained static but, in real terms, lost value. So there is a mismatch between those two.
Mr Beer: Is the subsidy distributed to post offices by reference to the extent to which the public service requirements are disproportionately borne by then, ie –
Nicholas Read: Yes, I understand. Yes. It tends to be footfall/ transaction driven, in terms of how we support – with fixed payments to specific branches.
Mr Beer: I think it’s right that in the summer of this year, Grant Thornton delivered an important report for the Post Office?
Nicholas Read: One of many, yes.
Mr Beer: Yes. Let’s look at the report to make sure we’re –
Nicholas Read: I was going to say –
Mr Beer: – looking at the same one. POL00446476. This one concerned the effectiveness of the Board.
Nicholas Read: Yes.
Mr Beer: It’s dated 19 June 2024. Can you explain, please, firstly, the circumstances in which Grant Thornton came to be commissioned to undertake this review and write this report?
Nicholas Read: Yes, I can. I think Rachel Scarrabelotti mentioned this last week. In effect, the sort of business code suggests that you should have a Board Effectiveness Review on a yearly basis and I think every three years the effectiveness review should be done and conducted by an external party, and Grant Thornton were commissioned to do the external review.
Mr Beer: Thank you. If we go over the page, you’ll see the partner at Grant Thornton delivering the report. If we scroll forwards, please, an idea of the length of the thing. Then forwards, please. If we can perhaps skip to page 8, I think this is the first part of substance to the report that we will find. It’s an executive summary or key findings section. Under “Overview”, the first key finding was:
“Lack of clarity on the purpose of the Board, with the Shareholder relationship inhibiting the Board’s effectiveness due to perceived interference in [Post Office’s] work and limited visibility around the longer-term funding and objectives of the organisation.”
Was that a finding with which you agreed?
Nicholas Read: Yes, it was, and I would say that the findings did get Board endorsement.
Mr Beer: There’s three parts to it. Firstly, a lack of clarity on the purpose of the Board; what does that mean?
Nicholas Read: I think perhaps the way I would describe it is that, given that there is ambiguity over the strategy, purpose and vision of the Post Office, it is quite difficult to ensure that the level of governance that is supporting that misaligned strategy, if that’s the right word, is quite difficult to articulate. And I think what the Board have struggled with in terms of governance challenges is, without real clarity about the purpose and direction of the Post Office long term it’s quite difficult to establish the right levels of governance, and I think that’s the clarity issue that’s being described here, and the reference being made to what the Board has wrestled with.
Mr Beer: The shareholder relationship inhibiting the Board’s effectiveness due to perceived interference; in what way did the Government inhibit your Board’s effectiveness by interfering in your work?
Nicholas Read: I think it’s more the lack of clarity over matters that are for the Board and matters that are for the shareholder. There are certain areas in which the shareholder has and takes a particular standpoint and view. I think it would be obvious to point out that we have a single source of funding, which is the Government, and we are therefore completely and utterly reliant on our funding from the Government, and this, by definition, causes challenges, certainly from a strategic point of view.
You will have seen in the verbatims associated with this particular report that there are many observations made around the control of the shareholder without consequence or without accountability and the general influence that the shareholder has over the direction of the business.
You’ll also notice, certainly in my first witness statement, I made reference to some of the Non-Executive Directors who’d left after a single term, feeling that independence has and was eroded, if that’s the right word, by the – well, by the obligations and by the constraints that are part of being a publicly-owned organisation.
Mr Beer: The third element is limited visibility around the longer term funding and objectives of the organisation; was this essentially recording that the Post Office needed to know whether it had the backing of its owner long term?
Nicholas Read: Yes.
Mr Beer: Why did it take the expense of an outside organisation to report to be able to state the fairly obvious truth that the Post Office needs to know whether it has the backing of its owner long term?
Nicholas Read: I think, as Alisdair Cameron said a couple of weeks ago, this has been a constant struggle for members of the Board. This isn’t something that has sort of emerged relatively in the near term. When it comes to funding, in particular, that is a challenge for the business. I think we are subject to spending reviews, Government spending reviews, which could be one, two or even three years in duration. There are many issues associated with determining how funding is derived. I will use a similar analogy or similar example to the one that Al used, which was the 21/22 funding round, where the Post Office identified a need for £450 million, which was a combination of subsidy and investment, and we were offered 202 million and, eventually, after five months of toing and froing, the Government gave us 335 million, which was still obviously 80 million less than had been asked for.
That has happened at each of the funding rounds that the business have had and that obviously makes the idea of long-term planning very difficult. Funding is obviously driven by budget, rather than by need, and I think, again, a long-term strategy, with an underlying funding model to support that, is what I think is required and, clearly, that’s one of the outputs, I’m sure, that Teneo will be discussing with the Government over the next two or three weeks when the final Teneo review is put forward.
Mr Beer: I’m going to come to Teneo in a moment.
Nicholas Read: Right.
Mr Beer: Would you agree that the confirmation of the Government’s commitment to Post Office’s public service and the number and spread of branches must be a basic requirement for the continuation of the Post Office as an institution?
Nicholas Read: My sense is that the policy review that is required by the Government, 15 years since its last policy review, should look at all elements of the public sector service that is provided by the Post Office, and be very clear on what it is that it is expecting the Post Office to deliver.
Clearly, at present, we have a fairly uncodified social contract. Yes, you described the service of general economic interest and the entrustment elements of it, but I think it’s broader than that and it’s wider than that. When you look at the role that postmasters play in communities up and down the country, when you look at the trust at a local level between consumers and customers, the communities and their postmasters, it is quite extraordinary.
And when you look at the social value associated with that commitment from postmasters, it is that that I think needs to be more heavily examined in terms of the contribution that is being made by postmasters and how the Government sees, over the next 5, 10, 15 years, that continuing to evolve but, more importantly, that postmasters are recognised for that contribution, which they currently aren’t.
Mr Beer: How is it possible that these questions – the long-term backing of the owner, the continuation of the social purpose commitment – have not been answered for the future?
Nicholas Read: I think that’s a question you’ll need to discuss with the Government. As I say, we’ve been keen to have a policy review for some time. We make this desire very clear to Government: that this is what we are expecting and what we need because there is, as I said, a determination to have a unified purpose, a unified vision and a long-term strategy from the Post Office, from which everything else should flow.
Mr Beer: Do you agree that, in the meantime, the continuation of the Post Office, coupled with the support of Government, goes hand in hand with the projected life of Post Office branches and, consequentially, the individual investment, mortgages and family financial decision making that has to be undertaken by postmasters on a daily basis?
Nicholas Read: Yes, I do.
Mr Beer: You tell us in your third witness statement – it’s paragraphs 31 to 46, but there’s no need to turn them up – that the issues that you identified with the culture within the Post Office included, from the outset, a perception that “the organisation had lost sight of the postmasters”.
Is the failure by the Government to ensure the future of the Post Office and a commitment to its social purpose and consequential funding another example of such a cultural behaviour?
Nicholas Read: Yes, I think that’s fair.
Mr Beer: Would you accept that the very same issues of obtaining decisions and support from Government have also affected and afflicted the compensation, redress and financial restitution?
Nicholas Read: No, I don’t think that’s fair to say that. My sense is, and I think from a DBT perspective, not unsurprisingly, a great deal of focus has been on redress, certainly in the five years that I’ve been in the organisation, and perhaps less time has been spent on developing the Post Office of today for tomorrow. And I think that the Government would – and officials in DBT, would recognise that that is the case. It is complicated to manage both but I think it is important, certainly for today’s Post Office, that there is more clarity.
Mr Beer: You tell us in your first witness statement – no need to turn it up, it’s page 22, paragraph 38 – that:
“The external strategic review that the Post Office is undertaking led by Teneo will be complementary to the work being undertaken by the Department, as it intends to set out a future model for the Post Office to deliver sustainably against the stakeholder requirements.”
You add that that review was expected to conclude in September 2024, the month just gone. What’s the current position?
Nicholas Read: The current position: two years ago, the Department invited, as it happens, Grant Thornton, again, to do an initial strategic review of the Post Office, and I think that that was primarily associated with the sort of commercial long-term future of the Post Office.
The output of that piece of work was a second review, which I understand is what is ongoing at the moment, again, commissioned by DBT. I’ve not had sight or visibility of the scope or of the content of that review, or indeed of its findings, and, clearly, from my perspective, it’s quite important that we are included in that piece of work.
I hope that, and am reassured, certainly by the current Chair, that he has had those conversations with the incoming administration, whereby we can dovetail the Teneo Strategic Review and the independent work conducted by the Department to ensure that the output is something consistent and something that everybody can buy into.
Mr Beer: Can we look at the scope of the review, POL00448624. Can we look at page 109, please. This was a Board paper and an update for the Board on the Strategic Review. It’s dated 4 June 2024. If we can go to the next page, 110, please, we see the scope of the review but, by way of background first:
“Post Office has invited Teneo to carry out a comprehensive Strategic Review of the business and develop a clear plan for the future.”
Then the equivalent passage on the right-hand side:
“Teneo will undertake a through review of the Post Office to understand its current position, clarify its core objectives, identify opportunities and risks, prioritise initiatives and develop a clear [path] to realise the chosen strategy.”
Then a plan. Then if we go over the page:
“We aim to address a range of key questions for the Post Office to develop a clear plan for the business over the next five years.”
One of them on the far right is “Stakeholder Management”:
“How do we ensure stakeholder support for the strategy?
“How do we ensure that subpostmasters’ interests are properly reflected?
“Is the current ownership structure appropriate?
“What is the most appropriate funding model?”
Left-hand side, “Reputation, Trust & Brand”:
“How is the Post Office viewed in the wake of the Horizon scandal?
“What actions must be taken to restore public confidence?
“What do stakeholders want to see from the Post Office (eg make money vs serve the community)?
“Does the Post Office’s purpose and vision need to evolve to balance societal vs economic benefits?”
Some of these questions are, would you agree, rather fundamental but also rather basic, ie “What do stakeholders want to see from the Post Office (ie make money vs serve the community?” How is it that question needs to be asked and answered now?
Nicholas Read: Well, I think the long-term purpose of the Post Office is pretty critical. I think we’ve got to understand and ask ourselves what is the purpose of the Post Office, what is it for, and, alongside that, will go questions of ownership, in terms of where does it sit? So is it designed as a commercial entity that is competing in markets with the banks, with financial services businesses, with large logistics players, with other retailers, or is it there to fulfil a particular social purpose for the isolated, for the elderly, for Government services, in terms of providing some form of Government service around benefits and the like?
I think it’s a pretty fundamental question that the Government needs to ask and, with that and from that, flow many of the issues that are on this single slide.
My recollection was that this is Teneo’s first engagement with the Board and this was their sort of first initial starter for ten. Things have evolved since then from a scope perspective, in terms of how they go about doing that piece of work and …
Mr Beer: Why has it taken five years since the judgments of the High Court for the Post Office to consider these most basic of propositions, given the scrutiny given over to the Post Office in those judgments?
Nicholas Read: I don’t think that’s necessarily how I would characterise it. We conducted, when I first started at the Post Office – which I say from my evidence – a not dissimilar review to this particular one with McKinsey which looked at the purpose and looked at the strategy and looked at the vision of the Post Office.
Clearly, in the following five years an enormous amount has changed, not just consumer behaviour as a consequence of Covid, not just some of the issues associated with the cost of living crisis, but also the revelations of some of the practices that we have been uncovering in the Inquiry, and so I think strategy is always dynamic, there are always things occurring.
I think, probably, the last five years in the Post Office’s history have been more dynamic than any other time in recent memory, and I think that’s something that needs to be build into the particular strategic review that has been triggered by the arrival of the new Chair.
I think it also needs to be brought – there is a natural time frame for this exercise. First and foremost, the Inquiry will come up with its set of recommendations, following the four years that it’s been engaged looking at what is gong on in Post Office; there is a new administration, in terms of the Labour Government, and therefore there will be a shift and change in its perspective on what the future of the Post Office may look like; and, at the same time, we are producing our own internal strategic review.
And I think, bringing together all of these elements, it’s a very natural time for the organisation to take stock and to, I hope, find real clarity about the purpose, the vision and the long-term strategy for the Post Office.
Mr Beer: In the meantime, how can subpostmasters and their small to medium businesses possibly make plans when the Post Office itself and the Government are asking such fundamental questions as these, looking around for ideas and answers?
Nicholas Read: I think it’s a very reasonable question in the sense that this will have been an extremely difficult time for postmasters and – and for post offices more broadly, not just because of the changing shape of the macro conditions in which they operate, which you’ve just described, but also as a consequence of the fact that we need to get much, much clearer on what the long-term future looks like.
When I go into branches, and have done over the last six to eight months, the questions that postmasters put to me most explicitly are around: what are we doing for remuneration; what are we doing by way of innovation, in terms of what other products and services can we sell and can we deliver from our post offices; but then the sort of third and fourth questions are what is happening to the brand as a consequence of this scandal; and, more importantly, what is happening to my long-term investment in a post office?
I’d say they were the four top questions that are asked of me when I go into post offices today.
I hope that we can answer those in the next few weeks, as we go through the Strategic Review. I think that is going to be a really very important part of providing confidence to postmasters about the long-term direction of the business. Will we answer all the questions? I doubt it. But I think we will be able to give people much greater clarity on what the next five to ten years look like and I hope that, from a governmental point of view, we can look at the funding model to make sure that it is reflective of a five to ten-year strategy rather than a one to two-year tactical engagement.
Mr Beer: Put bluntly, who would buy a post office under these conditions?
Nicholas Read: Strangely, now you say it, we don’t see the level of churn that you would expect. Had you asked that question to both Saf and Elliot two weeks ago, you would have found that they are both looking for additional post offices. There is and there are a number of individuals who are keen to buy post offices. So I think – you know, I don’t think it’s quite as stark as you are perhaps suggesting. As I say, there are entrepreneurial postmasters who are still keen to run a post office and, you know, I think people should take confidence in that.
Mr Beer: Only 35 per cent of them reported that they had confidence in their senior leadership in the 2024 Post Office Colleague Engagement Survey, and you tell us that that has fallen 5 per cent since the 2023 survey and 4 per cent since the 2022 survey. That’s in paragraph 252 of your first witness statement.
Are postmasters included in the Colleague Engagement Survey?
Nicholas Read: We do a dedicated survey for postmasters, which is a postmaster survey, and we do an internal survey for those people who are –
Mr Beer: So the survey that I’m talking about, the Colleague Engagement Survey, that’s for Post Office employees?
Nicholas Read: That’s for the employees, correct.
Mr Beer: Given the initiatives that you’ve told us about throughout your four witness statements, why is it that the confidence in senior leadership within the Post Office is falling?
Nicholas Read: I think there are a number of reasons for that. I don’t think it’ll come as a great surprise that the survey itself was conducted, I think, in February and March, at the time of Henry’s departure from the business, and the enormous focus that was provided by that, in terms of the perceived dysfunctional nature, I guess, of the Board and, to a degree, of the Group Executive, and I think that has had a profound impact on colleagues and senior team members.
It obviously occurred after the four-part dramatisation, literally a few weeks after that and, of course, the subsequent and quite rightly media outrage and consumer outrage at what had happened historically within the Post Office. And I think these are important elements to factor into the sentiment of colleagues, whose pride, clearly, has been, not unsurprisingly, hugely damaged and whose confidence, having seen a level of dysfunction as perceived in the media, rather than it being conveyed to colleagues through normal internal channels, was obviously being seen in the media. And I think that put a big dent in the confidence that colleagues had in senior leadership.
Mr Beer: Would you agree that the fall in confidence in the Senior Leadership Team could, in part, be due to the high turnover of senior leadership, perhaps giving the impression of a rudderless ship?
Nicholas Read: In part, I think high turnover has been a feature of the Post Office for many, many years. It’s a difficult place to work, it’s a difficult place to achieve success and I think, at the moment, it’s probably at its most difficult, given the overarching implication of the scandal, as well. So, yes, I think that’s certainly something that is a major factor, is – and, as I mentioned before the lunch break, the importance of stability at a Board and Group Executive level and the importance of stability and confidence in the individuals who are occupying those roles, is paramount to the long-term success of the business, and that’s something that I think is needed and needed urgently.
Mr Beer: Do you think it could, in part, be due to the revelation of a scandal, upon a scandal, being the awarding of bonuses to senior Post Office leadership in relation, in particular, to an Inquiry-based metric?
Nicholas Read: I think the challenges in the business certainly stem back to that particular period. There’s no question that the Transformation Incentive Scheme and the bonus metric associated with it, and the perception that the organisation was blind or deaf to what was occurring within the scandal, certainly will have dented people’s confidence for sure.
Mr Beer: Would you agree that the dent or diminution in senior leadership’s confidence could, in part, be due to the allegations of bullying and sexism made against individuals in senior leadership positions, including, in fact, yourself and Mr Staunton?
Nicholas Read: Yes, I guess that’s probably fair, that that image that will have been conveyed by those allegations will, of course, have had an impact on colleagues. However, in defence of that, I would say that a degree of confidence will have been taken by colleagues that no one is above the law in the Post Office, and those whistleblowing allegations that were made against me, as an example, were followed through with a fairly comprehensive investigation. None of the allegations, I may hasten to at, were upheld but, by definition, colleagues will have taken confidence that it was possible to investigate the Chief Executive and the Chairman, irrespective of what else was going on in the organisation and, more importantly, that those investigations went through to their natural conclusions.
Mr Beer: Would you agree that the diminution in the confidence in the senior leadership of the organisation could, in part, be due to postmasters, including Elliot Jacobs, a Board member, facing a harsh and non-transparent investigation, suggesting to subpostmasters that perhaps nothing has changed since the GLO?
Nicholas Read: I don’t think that particular isolated incident of Elliot, disappointing though it was – and as I said yesterday, I don’t think it was conducted in the way that I certainly would have wanted, I think. But I also do believe that when you look in the round at the way that we have changed to support postmasters over the last four years, that is materially different from where the Post Office has been historically, notwithstanding the perhaps heavy-handed way in which Elliot had been treated.
Mr Beer: In the light of these issues, and each of them, what confidence should the Inquiry have that the Post Office has or will put in place a Senior Leadership Team that deserves the confidence of Post Office employees, postmasters and the public?
Nicholas Read: I think the energy and enthusiasm and drive of the new Chair should give the Inquiry great confidence that Nigel will ensure that: (a) the Strategic Review is conducted in the right way; (b) that the Board and its colleagues will be aligned behind that Strategic Review and that subsequently we will have a Strategic Executive Group and Senior Leadership Team that will support what we’re trying to do.
So I feel confident that that will happen. I think we have a number of capable – and very capable executives who have joined the business reasonably recently, and I think the Board, as well, is – and I mentioned it before sort of six months ago – the need for sort of stabilisation. I think Nigel has brought that to the organisation and to the Board. So, yes, I do have confidence that the wheels are in motion to ensure that the business can come through this very, very difficult period and, you know, emerge stronger.
Mr Beer: In your first witness statement at paragraph 214 – perhaps we’d better have it up on the screen, WITN00760100, page 105, please. Paragraph 214, you tell us that:
“In April 2021, Post Office launched a behavioural framework called ‘Ways of Working’ (‘WOW’) to replace the Post Office’s previous values and strategic pillars of: Care, Challenge and Commit. [Ways of Working] was intended to describe ‘how’ an individual should act in Post Office, to define behaviours that were expected of all Post Office personnel when interacting internally and externally with both Post Office colleagues and with postmasters.”
You tell us in paragraph 220 on page 107:
“The Colleague Engagement Survey … asks colleagues ‘whether they see the Ways of Working demonstrated across the business’. In 2021 this was 41%, in 2022, 50%, in 2023, 58%, in 2024, 53%. Colleagues were also asked to indicate their agreement to the following statement: ‘Where I work people are held accountable for their performance and behaviours’.”
In 2022, 38 per cent agreed; ‘23, 59 per cent; and in ‘24, 63 per cent.
Are postmasters included in this survey?
Nicholas Read: No, not in this survey.
Mr Beer: As they’re not included, how can the Post Office measure whether the Ways of Working are being demonstrated in interactions with subpostmasters?
Nicholas Read: We have a separate postmaster survey, which gives the opportunity for all postmasters to take part. That happens at a very similar time, and we also then do a pulse survey every six months with postmasters, just to check on whether or not we are making progress on the commitments that we made following that survey.
I think it’s quite important just to touch on the postmaster survey. It is conducted usually in February and March with results in April, and that tends to provide me with the opportunity to speak to the postmasters at our annual postmaster conference, where we will share the results of the survey itself. We will post those results on to Branch Hub and by email to all postmasters, and we’ll then have a series of workshops which postmasters are invited to, and they can take part in if they want to, which allows us to work through the results themselves, so that postmasters can bring to life for the team what it is that is being said, and interpret the surveys themselves, so that we can then build an action plan.
And then, towards the middle of the autumn, and it’ll be sometime this month, I think – yes, it’ll be sometime this month or maybe early in November – we will have a pre-Christmas conference where we will present the results of the pulse survey but also the action plans associated with the survey that was conducting in March, and people can hold us to account for whether or not they’ve seen any improvement or any change in, or indeed whether or not the commitments that we’ve made and the action plans that we’ve promised, we’ve actually made any progress at all.
So there is a difference between the two surveys, clearly there are different things to measure, and different things to gain and get feedback on.
Mr Beer: Thank you, Mr Read.
Sir, can we take the afternoon break now.
Sir Wyn Williams: Yes, we can but can I just clarify one thing that I want to be sure I’ve got the right end of the stick. My understanding of Mr Railton’s evidence was that, as a consequence, at least in part of the Teneo work, a strategic plan had now been formulated at Post Office; is that correct?
Nicholas Read: The final version of the strategic plan has been completed by Teneo and the main Board have signed it off, in the sense that they agree with the findings of that.
Sir Wyn Williams: Right, so I’ve got that right.
Nicholas Read: Yeah.
Sir Wyn Williams: That has either gone, or is imminently going to, Government for their, in inverted commas, “approval”.
Nicholas Read: That’s correct.
Sir Wyn Williams: But am I also right in thinking that at the same time, the Government has been working on their own strategic –
Nicholas Read: That is correct.
Sir Wyn Williams: Has there been any crossover between those two keys of work?
Nicholas Read: There has been interaction between the Teneo team and DBT, as I understand it.
Sir Wyn Williams: Right. I did get it right at least.
Mr Beer: Can you tell us what “interaction” means?
Nicholas Read: That’s a good question. The – as I understand it, Teneo have obviously got a number and a range-off stakeholders that they’ve engaged with and clearly DBT is one of those, and my understanding is that Teneo and DBT have discussed the specific piece of work, the specific policy work that DBT Phase 2 have initiated, and we obviously want to make sure that these pieces of work come together.
There’s absolutely no point in doing a Strategic Review of the Post Office internally, if the shareholder is off doing its own piece of work and never the two should meet. That would be a very unfortunate outcome.
Sir Wyn Williams: I love the way we use the word “The Inquiry” but I’m thinking a bit more personally because I’m the one who is supposed to make these recommendations and, if we have a state of affairs where the Post Office has got Plan A, shall we say, and the Government has got Plan B, I think it’s a bit optimistic to think that Wyn Williams can produce the all-embracing Plan C.
But, anyway, there we are. Let’s have a break.
Mr Beer: Sir, the plan is to break until 3.00 and then we’ll switch to Core Participant questions. I haven’t finished by questions yet.
Sir Wyn Williams: No, no, I understand that.
Mr Beer: Because I think you know, and some of the Core Participants know, that Mr Henry can’t be here tomorrow.
Sir Wyn Williams: No, no, that’s fine by me.
Mr Beer: He is going to ask questions between 3.00 and 4.00.
(2.45 pm)
(A short break)
(3.03 pm)
Questioned by Mr Henry
Sir Wyn Williams: Mr Henry.
Mr Henry: Thank you, sir.
Good afternoon, Mr Read.
Nicholas Read: Good afternoon.
Mr Henry: Together with Ms Page, I represent a small cohort of broken people who are yearning for justice, hoping against bitter disappointment that they can move on and find some resolution, and I’m sure you understand that.
Nicholas Read: I do.
Mr Henry: You would accept, would you not, that the wrongful prosecution of the subpostmasters is an atrocious chapter in the Post Office’s history?
Nicholas Read: Unquestionably.
Mr Henry: Convictions were procured, it seems, on a fraudulent basis –
Nicholas Read: Yes.
Mr Henry: – material non-disclosure?
Nicholas Read: That’s correct.
Mr Henry: Of course, even if subpostmasters weren’t prosecuted, there was a culture of prejudice that then existed, a rush to judgement or a default setting that Horizon was never at fault, that the shortfalls were always in some way connected to the stupidity or incompetence of the subpostmaster?
Nicholas Read: Yes, that’s absolutely what we’ve learnt.
Mr Henry: Of course, this protracted episode, now well over two decades in length, represents, as I’m sure you will agree, the most shameful, brutal and sustained breach of trust in the company’s history?
Nicholas Read: Yes, that’s fair.
Mr Henry: You would agree that it’s a nadir that the Post Office will not even begin to recover from until full and fair compensation is paid to its victims?
Nicholas Read: That’s absolutely correct.
Mr Henry: Now, wrongful accusation leading to conviction brings a person’s life to a shuddering halt. I’m sure we can all agree on that.
Nicholas Read: Yes, we can.
Mr Henry: The trajectory of their lives thereafter is either flattened or crushed by that injustice but you would accept that, even when that wrongful accusation is removed, some wounds never heal and some injuries can never properly be compensated for?
Nicholas Read: That’s certainly my experience from the restorative justice meetings that I have attended.
The long-term impact is profound.
Mr Henry: And it spreads across the family?
Nicholas Read: I agree.
Mr Henry: Yes. Compensation, insofar as possible, you would agree, is an attempt to restore a person’s human dignity and to put them in a position which they might have reached, a level they might have attained, had they not had their lives stolen from them?
Nicholas Read: That is the objective of redress, yes.
Mr Henry: So it should not be a box ticking exercise but should fairly assess and properly reflect the many varieties of loss that these appalling injustices have inflicted on the subpostmasters?
Nicholas Read: Yes, I would agree.
Mr Henry: Now, that is a very important factor, would you not agree: the life that they might have led without dishonour or disgrace, that can’t be brushed under the carpet by the Post Office, can it?
Nicholas Read: No, it can’t.
Mr Henry: You would agree that, if the subpostmasters and their dependents are treated unfairly during this compensation process, then the Post Office’s own reputation, perhaps even its future, is doomed?
Nicholas Read: Yes, I think that’s fair.
Mr Henry: Yes, because it would be the most appalling irony or the most dreadful repetition of past history if the Post Office in the past, having exploited the law to its wrongful advantage, did so again, to find some way of evading its proper responsibility to the people it wronged?
Nicholas Read: Yes, I would agree.
Mr Henry: Of course, if the Post Office drags its heels, the same applies?
Nicholas Read: Yes, that’s correct.
Mr Henry: So it follows that the most important thing that the Post Office under your stewardship should be doing, is to facilitate the speeding up of meaningful compensation, to avoid the postmasters living in penury or, as we heard at the very beginning of your evidence, in fact before you gave evidence, Mr Read, dying before receiving proper redress?
Nicholas Read: Yes, that’s correct.
Mr Henry: Now, I think we can still rely on The Times Newspaper. Data obtained by The Times under Freedom of Information laws revealed that 263 subpostmasters and subpostmistresses had died since being wrongly accused of stealing money because of the computer accounting errors and, of that 263, 251 died before receiving compensation. That’s a terrible statistic, isn’t it, Mr Read?
Nicholas Read: It is a terrible statistic. Yes, it is.
Mr Henry: 251 never receiving an apology or recompense, and I am sure you would struggle to find words to convey the injustice of that?
Nicholas Read: No, it’s a terrible situation.
Mr Henry: Each death, during this process, before compensation has been made, is an obviously serious matter, you would accept that?
Nicholas Read: Yes.
Mr Henry: It could show that the process isn’t fit for purpose or it isn’t working properly if the claims take so long that, unfortunately, people die before they receive compensation?
Nicholas Read: I think that’s a fair conclusion.
Mr Henry: Now, I want to now concentrate on something slightly more specific than the vagaries of fate because, obviously, people can die for a variety of reasons at any time. But do you know how many of those dead subpostmasters’ claims were delayed or denied on technical legal grounds?
Nicholas Read: No, I don’t know that.
Mr Henry: Has the Post Office made any study of why the process is so slow and whether its lawyers are to some extent responsible for the delays?
Nicholas Read: I don’t think I would call it a study but we are acutely conscious, as you’ll have seen over the last two days, and particularly the compensation meetings that I’ve had with the Government and with the Minister, we spend a lot of time trying to work out how do we improve and speed up the process. That is a constant point of conversation with myself and the Minister and others.
Mr Henry: But returning to the issue I was raising: it would be a terrible thing if claims were being derailed by clever legal points, which right-thinking people might even regard as chicanery.
Nicholas Read: Yes, it would be.
Mr Henry: Would it ever be right, in your view, to reject a claim on a technicality?
Nicholas Read: To reject an entire claim on a technicality? That would seem the wrong thing to do. My understanding is that we have learnt lessons in that particular respect and we now, where there are disputes or where there are issues associated with technical reasons, we have got ourselves to a position where we pay interim payments and we try and work out how we resolve those particular disputes. That’s my understanding of how we’ve evolved.
Mr Henry: So to reject an entire claim on a technicality would be, in your view, would it be fair to say, unconscionable?
Nicholas Read: It would seem – it would certainly seem a strange approach and I don’t believe that we are doing that now. It may well have been the case and we’ve learnt, and we’ve listened and we’ve moved on but I didn’t believe that was the case now. As I said before, I think we’ve got ourselves to a position where we have – and if we are in a dispute, whether that’s in the HSS scheme or the OC scheme, we do pay interim payments up to that particular level, and then we have a debate about, and a discussion about, how we can come to a conclusion. That is my understanding.
Mr Henry: I see. Now, I wonder, and there are so many cases, but I’m going to take you to the case of Mr Sivasubramaniam Jayakanthan, and you may not have heard of him but he was a subpostmaster in Putney. He was audited, interviewed and suspended on 4 March 2005. His Post Office was peremptorily shut down that very same day before a full investigation had taken place – 4 March 2005 – and later that night, he hanged himself, and his wife Gowri found his lifeless body in the loft. His fate earlier that day was probably the same as described my Mr Justice Fraser in the Common Issues Judgment at paragraph 886, and I quote:
“Suspended subpostmasters are not only entirely excluded from the Post Office part of their premises, they appear to be excluded, in some cases, from the entire premises and also are completely denied access to any information or records.”
Now, no wrongdoing was ever established against that man, and although the shortfall was on the automatic telling machine or cashpoint, it was reported through Horizon. In November 2023, three years after she made her application to the Horizon Shortfall Scheme, Gowri Jayakanthan’s application was rejected, and I’m just going to tell you what the two stated reasons for that rejection was, Mr Read.
The first was that the company that her husband had used so many years before to contract with the Post Office, had been dissolved; and the second reason was that the loss was not a Horizon shortfall, because it had arisen through use of the ATM, even though the data in question was, and had been, processed via Horizon.
That can’t be right, can it, Mr Read, to do that to that woman?
Nicholas Read: That doesn’t sound right, Mr Henry, I would agree with you. I am not familiar with this case, as you rightly point out. I don’t specifically get into individual cases. However, as you quite rightly say, the principle seems peculiar, given that Horizon was clearly involved in the ATM processing.
Mr Henry: The people representing you, and I don’t mean you personally, I’m talking about the institution, but they would have known that, at the time of the tragedy, she was the mother of two young children, infants under the age of five, whom she had to raise thereafter on her own, having suffered years of financial hardship and insecurity because she lost her livelihood, as well as her husband.
So you outright reject, it could never be acceptable for the Post Office’s lawyers to take a technical point like that, blocking her path to closure and compensation?
Nicholas Read: I think, in the context of where we have gone over the last three or four years, it does seem, in the way that you describe, to be a – a desperate situation, I agree.
Mr Henry: Now, leaving aside the issue of the three-year delay, I want to now deal – very, very briefly because we’re going to touch on it a little bit later – with the inception of the schemes. I accept, of course, that you were very, very recently in post and so, therefore, you were very much dependent upon people to advise you.
But there isn’t any question, is there, of extremely tight restrictive eligibility criteria being used to deter claims: narrow, legalistic criteria to reject claims and claimants; you would reject that?
Nicholas Read: Sorry, as an accusation against the organisation?
Mr Henry: The HSS scheme, for example. Take that as the focus. Whether there were narrow legalistic criteria to reject claims and claimants, I mean, you would be shocked if that were the case, would you not?
Nicholas Read: Well, my understanding is that the bar for entry into the HSS scheme was as low as it could be, it was certainly lower than any legal metric, so we were trying to encourage people to come forward. So, yes, I would suggest that wasn’t how it was set up or designed to be.
Now, the implications of the scheme and the errors that we have made subsequently, I would – and I’m sure we’ll discuss them a little later – but certainly the principle of establishing the scheme was to ensure that we gave fair redress.
Mr Henry: Now, there’s another dimension that I want to address, and that’s whether the compensation sums being offered are adequate. That, of course, would depend on many variables, which you would not be necessarily familiar with in each individual case ask but, as a general principle, would you agree that the misconduct of the Post Office causing and prolonging the suffering of the subpostmasters over many years, that would be a relevant factor?
Nicholas Read: Yes, I would.
Mr Henry: So if the Post Office deliberately delayed, denied or obstructed appellate rights, it should pay more, shouldn’t it?
Nicholas Read: Yes, that would make sense.
Mr Henry: Because, of course, it would thereby be wrongly prolonging the suffering of its victims and so therefore the damages should go up, or the compensation award should go up; do you agree?
Nicholas Read: Yes, if suffering is being extended unnecessarily, I think that’s a fair assumption.
Mr Henry: Yes. Now, given your research and the evidence that has been given to this Inquiry, I am sure you’re driven to accept that the Post Office over many years strove to delay the revelation of exculpatory material that would have enabled criminal appeals to have been brought swiftly?
Nicholas Read: I think we’ve certainly heard that, and we can agree that that has been the case.
Mr Henry: Yes. I mean, no need to go over old ground but it is important to note: the non-disclosure of the Clarke Advice from 2013 to 2020, concerning Mr Gareth Jenkins, I mean, Mrs Misra could have brought an appeal in 2013 or 2014, had that not been suppressed; do you agree?
Nicholas Read: Yes.
Mr Henry: Yes. Mr Butoy, Mr Moloney’s client that I have permission to mention, a Legacy Horizon case from 2007, he went to prison in 2008 for 39 months. His appeal was rejected in 2018 and the Court of Appeal Criminal Division had the Horizon mantra put before it, and the Horizon mantra – I mean no disrespect, Mr Read, but it’s: no evidence that the Horizon system was shown to be unreliable or open to errors; whilst as with any computer system errors from time to time may crop up; Horizon is largely reliable; the proportion of alleged and detected defects related to the Post Office branch accounting is minuscule, in comparison with the overall operation of the system; used in 11,600 Post Office and multiple in-branch users daily to provide financial services and counter operations on a national scale.
So his appeal was rejected in 2018 but he was cleared in April 2021 as part of the Hamilton judgment. Now, I think, with a degree of understatement, that it’s fair to say, is it not, Mr Read, that the Court of Appeal in 2018 didn’t get the full picture, did they?
Nicholas Read: It sounds like that was the case.
Mr Henry: I mean, without pulling any punches, they were misled because the truth about Legacy Horizon, as was held by Mr Justice Fraser, was very different from that which was put before the Court of Appeal?
Nicholas Read: Yes.
Mr Henry: Yes. So that mantra was a slogan to finesse what very senior management by then in 2018 ought well to have known: that Horizon, leaving aside its commercial application, was wholly unreliable and unfit for forensic purpose, in other words to bring a case in court to deprive a person of their liberty; you would agree with that?
Nicholas Read: Yes, I would.
Mr Henry: Right. So given this history of obviously meritorious appeals being delayed and the appeal procedure being unnecessarily prolonged, you would accept, and in fact you were very candid about this in your witness statements, that the Board, the Senior Executive Team, historically the institution, prioritised its commercial and reputational interests as opposed to doing justice to the subpostmasters?
Nicholas Read: I said there was very definitely a focus on profitability and commercial sustainability, rather than on the wellbeing and the development of the postmaster contract. Absolutely I did, yes.
Mr Henry: Now, again, just dealing with the mindset and accepting the fact that you were only just in post, the Post Office was even being advised in 2019 that the Criminal Cases Review Commission might never make a referral. To use a colloquialism – and these aren’t the words used by the learned counsel who was advising the Post Office – but the CCRC might blink. Would you accept that, given what this Inquiry has established, the Post Office ought to have been banging on the door of the CCRC, the DPP and the CPS, saying, “You’ve got to refer these cases, they’re unsafe”?
Nicholas Read: When are we describing? Do you mean in 2018 or do you mean subsequently?
Mr Henry: I’m talking about as soon as it came to pass that there were serious problems with Horizon and certainly by 2019, after the receipt of the Horizon Issues Judgment, the Post Office ought to have been banging on the door of the CCRC saying, “You’ve got to refer these cases”.
Nicholas Read: Yes, I can see where you’re coming from.
Mr Henry: You agree?
Nicholas Read: Yes, I can see that.
Mr Henry: But you were being advised by your General Counsel, and it’s paragraph 23, page 12 of your third witness statement, words to the effect “Don’t dig into the past”.
Nicholas Read: Yes, the guidance that I received at that stage was that my focus was very much on today’s Post Office for tomorrow and moving the business forward. So I think that’s fair.
Mr Henry: You know Santayana’s famous dictum: those who do not learn the errors of the past are condemned to repeat them?
Nicholas Read: Yes, I didn’t specifically learn that but I understand where you’re getting at.
Mr Henry: But, anyway, you have very candidly and properly accepted that, if the Post Office prolonged and delayed criminal appeals, they should pay more, and you may have been advised on this already, and I don’t seek to know your advice because that’s privileged, but when a wrongdoer causes harm intentionally, or recklessly, or with gross negligence, then a court can award punitive or exemplary damages and, on any fair consideration, you would agree that this scandal qualifies as an obvious case, in which such punitive or exemplary damages might be eligible?
Nicholas Read: Agreed.
Mr Henry: Can you help me: does the Post Office advise claimants of this potential claim in the schemes you administer?
Nicholas Read: I can’t help you with that. I don’t know the specific details of that.
Mr Henry: I suggest that the Post Office does not.
Nicholas Read: Okay.
Mr Henry: The forms are silent on exemplary damages and, specifically in relation to the HSS form, there is no box for an applicant to claim exemplary damages.
Now, I’m going to come to that form in a little bit more detail later but there is an appendix to the form which gives some guidance to potential claimants and there is no mention of exemplary damages anywhere in the appendix. Now, you’re not aware about that?
Nicholas Read: I’m aware of the appendix and I’m aware of the fact that it’s effectively a review and a guidance about how a decision is made and what has been considered, but I am –
Mr Henry: You weren’t aware of the omission about exemplary damages?
Nicholas Read: Sorry, yes, I wasn’t aware of the omission, yes.
Mr Henry: Yes. Now, given the array of legal advice you receive – and I emphasise I’m not criticising you because you are dependent obviously on legal advice – but shouldn’t exemplary damages have been mentioned in the form?
Nicholas Read: You would have thought so, in the way that you described: that the potential heads of loss, which I know there is no cap on any of those potential heads of loss, or indeed on the specifics, they are considered irrespective, but guidance would have been sensible and I think that was the objective of the appendix.
Mr Henry: Yes. Now, it follows, your not being aware of it, but something is being done in the name of the Senior Executive Team, the General Executive, the Board, something is being done on your behalf which is not candid and which is not forthcoming because exemplary damages ought to have been itemised as a potential head of claim; do you accept that?
Nicholas Read: I –
Sir Wyn Williams: Well, I’m not sure that it’s fair to ask a non-lawyer about when exemplary damages may be payable, Mr Henry.
Mr Henry: But the possibility –
Sir Wyn Williams: No, let me finish.
Mr Henry: Sorry, sir.
Sir Wyn Williams: The exemplary or aggravated damages in strict legal terms – and I don’t mean that in terms of a technicality but when they would be awarded by a court in England and Wales – are clearly defined, are they not, and they’re not the sort of damages that are necessarily payable for all tortious conduct, let alone breach of contract. So I think one has to be careful in what one is putting to Mr Read about this. I’m perfectly prepared to accept substantial submissions about this where there’s a proper legal framework, so to speak.
Mr Henry: So be it, sir.
Sir Wyn Williams: But I think getting Mr Read to agree or disagree about things about which he’s really competent to answer – I’m not sure it’s helping me, put it like that.
Mr Henry: I’ll try to be more helpful.
A lot of the people filling in these forms don’t have legal representation; you would accept that?
Nicholas Read: I would accept that.
Mr Henry: You don’t pay for legal representation for people to fill in the forms, do you?
Nicholas Read: Correct.
Mr Henry: Yes. Now, I want to just ask you to consider this: candour and transparency from now on – or not from now on but it ought to have been the touchstone about what people could claim and certainly in the advice document, particularly given the fact that you’re dealing with people who don’t have legal representation. Right.
Can you see history repeating itself because, admittedly, a lot of this occurred before you came on board, Mr Read, but there were years of delay subverting the appeal process, which you’ve accepted, and fighting the GLO tooth and claw, weren’t there, before you came on board.
Nicholas Read: That’s correct.
Mr Henry: Now, echoing the past, we’ve got five years of delay and, I suggest, attrition in the compensation process, and that history is repeating itself; what do you say to that?
Nicholas Read: I think the visibility that has been shone on the compensation schemes by Parliament, through the Select Committee, by the Inquiry itself, and by the general media would suggest to me that that is not going to happen. I think it would be very fair to say that we set out on the journey of the HSS, and I can remember quite explicitly speaking with Alan Bates about the need to get a very simple application form – so you’re quite right – and the guidance that we discussed at that time was that a lot of individuals had suffered enormous trauma, a lot of individuals were deeply concerned about the relationship with the Post Office and, as I discovered on my restorative journey – justice journey, people didn’t even want to open letters from the Post Office, people didn’t want to engage with the Post Office, they were so traumatised.
So the guidance was very much let’s find a way to make sure that people don’t need to engage in a legal process but they can submit a claim, and I think what I’ve learnt and I think what you’re describing now, is the principle of doing that was probably right, in the sense that I think people were deeply troubled by the notion of engaging with the legal system, they wanted a way to submit a claim and receive redress.
And we didn’t get there, for a multitude of reasons. Perhaps we may discuss this later but we didn’t get there and I think that is of some regret from my perspective. That’s for sure.
Mr Henry: No doubt it would be a matter of regret to you if that supposedly simple and non-legalistic process – and, in fact, the Chairman of the Inquiry, on 8 December 2022, actually was concentrating on that, that it should be a non-legalistic process – you would be deeply concerned, wouldn’t you, if it was mutating into a legalistic or adversarial process?
Nicholas Read: I would.
Mr Henry: You have already touched upon the potential, as it were, conflict or impossibility or unwisdom, to use that word, of the Post Office being involved in these schemes because, as you’ve rightly pointed out, the former subpostmasters want to have no interaction with the Post Office at all, some of them, because of the deep trauma they have suffered. But also, does it not place you in a state of conflict because, if you were candid and transparent and saying, “You’ve got to claim this, you’ve got to claim that, you’ve got to claim the other”, then of course you would be racking up the amount of money you would have to pay in compensation, wouldn’t you?
Nicholas Read: That’s an inevitable conflict, yes, you’re right.
Mr Henry: Yes. You’ve already said, not in so many words, that the Post Office’s role in administering two out of the three schemes is both wrong and untenable?
Nicholas Read: Mm-hm. I probably didn’t use those words but I think it was inappropriate and I’ve said that many, many times.
Mr Henry: Yes. The delay and discreditable disputes concerning compensation would exacerbate that lack of trust, would it not?
Nicholas Read: Yes, it would.
Mr Henry: It would continue to poison the relationship that exists with the victims and further besmirch the character of the Post Office?
Nicholas Read: I’ve been very clear that speedy and fair redress is essential to protect the long-term interests of the Post Office and, obviously, the relationship between the Post Office and the victims of the scandal. We haven’t lived up to that and that, as I say, is of deep regret.
Mr Henry: Yesterday you said this:
“I’ve looked at my contemporaneous notes …”
That would be of conversations with the shareholder and the Government:
“… and I think I may well have disclosed something to this effect, that the way it was portrayed to me was that the Treasury were of the opinion that the chaos – I think was the word they used – had been caused by the Post Office, there was a desire for the Post Office to experience some of the discomfort that had been caused.”
Nicholas Read: That’s what I said, yes.
Mr Henry: Now, I don’t dispute that that was said to you but somewhat odd for a shareholder to want that, isn’t it?
Nicholas Read: Well, I think you’re raising an interesting question about the shareholder. The shareholder has many guises, and I think it would be fair to say that is the ministers, that is the Department, that is UKGI, that is the Treasury. I think this idea that this notion of “the shareholder” is quite confused, in the sense that there are competing and different objectives from different elements of “the shareholder”, as you put it, and I say that in my witness statement: that one of our challenges is to define very clearly who is the shareholder and are their objectives aligned because ministers, departments, UKGI, Treasury, have different objectives, and that is a challenge for us all.
Mr Henry: So was the Treasury calling the shot when you gave that evidence yesterday?
Nicholas Read: That – well, ultimately, we have a single source of funding, whether that’s for the long-term future of the Post Office or whether that indeed is for compensation and that is from the Treasury, and I don’t understand or know about the inner workings of how departments interact with the Treasury. What I do know is that an arm’s-length body isn’t allowed to interact with the Treasury. One goes through either the shareholder representative, in this sense UKGI, or indeed occasionally we can speak to the Department who, in turn, will speak with the Treasury.
So there is an obfuscation, I think, by definition of me as the personification, I guess, for want of a better word, of the Post Office and the funder.
Mr Henry: Yes. Whoever was calling the shots, however, the decision that you should be involved – the Post Office, that is – in two out of the three schemes was thereby exposing a teetering institution, which is virtually insolvent, to further reputational damage and criticism.
Nicholas Read: I do hold that view, yes.
Mr Henry: Yes. The Government is using the Post Office as a shield or fire curtain, isn’t it?
Nicholas Read: That could be a description, yes.
Mr Henry: The fact that you’re administering two out of the three schemes gives the Government a degree of protection, being at one remove gives it room for plausible deniability, where they can detach themselves from criticisms levelled at the Post Office, can’t they?
Nicholas Read: That’s true.
Mr Henry: They might even be instructing you to minimise or suppress compensation claims whilst avoiding public scrutiny?
Nicholas Read: No, I don’t think they’ve asked us to do that, but I think they are one step removed but, at the same time, hold the levers of funding.
Mr Henry: Have they expressed concerns about the bill?
Nicholas Read: No, I think it would be fair to say that there is an inevitability about it. I don’t believe the Department has expressed a concern. I think they recognise that freeing up the funds from Treasury is never easy and, therefore, determining what that business case could look like and how it works, again, is a question for the Department and for UKGI. But, no, I would say that there is recognition that the bill is significant and they must get on and deal with it.
Mr Henry: So that there’s no quibbling about the bill, this could all be wrapped up quickly if the money were put on the table?
Nicholas Read: Well, my sense is that, with the intervention of the previous Secretary of State, back in September ‘23, and, again, with the mass exoneration and the availability of the £600,000 fixed fee for the overturned convictions and the £75,000 for the HSS, they have put their mouth where their money is, would be my suggestion.
Mr Henry: I’m going to suggest that the 600,000 is woefully inadequate for some cases, as is the 75,000. So can I just ask you, then, what is the cause of the delay: if the Government says, or you have been told, that there’s no quibbling about the bill, there’s a realisation that the money has to be paid, what are the reasons for the delay?
Nicholas Read: Well, I think agreement has now been reached, certainly in HSS, for the 75,000 fixed back and the 75,000 fixed forward. We will be writing out to 25,000 additional postmasters to make them available – to make the scheme available. So I think that process, I think, is happening and will happen this month. So I think one should be confident that we will get on and execute as a consequence of that. I think that there is definitely progress now in the overturned convictions. I think principles have been established. I think the process has been firmly agreed. I think the 600,000 is starting to work. So that is happening.
And my sense – and you’ll be able to speak, I know, to Simon Recaldin when he comes next week on the specifics of some of these issues – that having taken an inordinate length of time, particularly in OC, to establish some of the principles, that is now done and I think I would like to think that we will see compensation flowing – I use that word advisedly – in a way that it hasn’t been to date.
Sir Wyn Williams: Do you mind if I ask a question a moment, Mr Henry?
Mr Henry: Of course, sir.
Sir Wyn Williams: Take the HSS –
Nicholas Read: Yes.
Sir Wyn Williams: – and truncating it, so we can give Mr Henry his full time allowance, it gets to a point – and I’m talking about the high-value cases in HSS, all right?
Nicholas Read: Yes, yes.
Sir Wyn Williams: There gets to a point in time where an independent panel has said, “We think the value of this is X”. Right?
Nicholas Read: Correct.
Sir Wyn Williams: Let’s assume there’s a happy state of affairs and the postmaster is likely to agree that sum, all right, because you’re not really far apart.
Nicholas Read: Okay.
Sir Wyn Williams: At any point in this process, does Government authority have to be obtained for individual settlements?
Nicholas Read: Yes, it does.
Sir Wyn Williams: Right. Thank you.
Nicholas Read: Every time – would you like me to explain that a bit more?
Sir Wyn Williams: Yes, please.
Nicholas Read: So every time that the guidelines associated with individual heads of loss are either breached, if that’s the right word, then the Government needs to sign off. So the principles that have been established in terms of the early neutral – the ENE process, they have been established with some guidelines for heads of loss, and ranges. If those ranges are – and the agreement is from the panel that actually it should be outside of those ranges, then that has to be signed off by the Government.
Sir Wyn Williams: Right. So even though there is an independent panel, which has agreed what the sums should be –
Nicholas Read: Correct, sir.
Sir Wyn Williams: – it is at least, in theory, possible that the Government could say no.
Nicholas Read: In theory, that is possible, yes.
Sir Wyn Williams: So the next question is: has that ever happened?
Nicholas Read: I’m not aware but others may have a view. I don’t –
Sir Wyn Williams: You don’t know?
Nicholas Read: I don’t know.
Sir Wyn Williams: All right. Thank you.
Sorry, Mr Henry.
Mr Henry: No, no. Thank you, sir.
So just dealing with the £600,000, that could never be appropriate for a high-value case, could it?
Nicholas Read: No, I think you’re right. We both know that in the 600,000 for the overturned convictions but also the 75 for the HSS, there will be plenty of individuals for whom this will not be appropriate. But it will be a good medium for many and I think that the point – that is the point.
Mr Henry: What do you say to Mrs Blakey’s widower, who stated that he had to accept the £600,000 because he was worn out and that he didn’t have the energy to fight on because it had been so drawn out and so painful that he just decided, “I just have to accept the £600,000”?
Nicholas Read: I think that’s desperately sad and my understanding was that the – is that the interim payment would cover that specific cost and, if there was a need to go above and beyond 600, then that would be possible. So I’m sad that he felt unable to continue with that process. That’s not what the process was designed to do. We were keen to ensure that people got closure, which, by definition, means there will be many who will want to go above and beyond 600,000, and we would want them to be in a position where they can come to a point of closure with the Post Office and with the Government.
Mr Henry: So you reject any suggestion that the Government has been tight with the purse strings?
Nicholas Read: No, I don’t believe it has been tight with the purse strings. I think the process is overly bureaucratic. I would fully acknowledge that. I think the establishment of principles in – as an example, the establishment of principles in HSS, when it was first set up, took an inordinate length of time. There are many examples, I think, where bureaucracy got in the way, things have gone wrong. I don’t think that is necessarily borne out by people, you know, being malicious in any way. I just think that is a poor process, rather than it being anything more than that.
You know, certainly I know there will be people in this room who have had dealings with the Post Office and I’m sure they’ve been deeply frustrated by it but I wouldn’t – it’s not because the purse strings are being closed tight.
Mr Henry: You’ve talked about bureaucracy and you’ve said, “I don’t think it’s about anybody being malicious”, “malicious” is a very strong word but what about old-fashioned attitudes? Has the delay been caused because of the Post Office’s historic, dyed in the wool prejudice against subpostmasters?
Nicholas Read: No, I don’t believe that. I don’t believe that. I think that would be an unfair conclusion to come to. I think it genuinely is a case of old-fashioned bureaucracy, if that’s a different way to put it.
Mr Henry: You say it’s unfair, but you can understand the concern surely –
Nicholas Read: Of course.
Mr Henry: – typified, I regret to say, by your letter to the Lord Chancellor, which might have caused people enormous concern, that letter to the Lord Chancellor, which was reflective of an old-fashioned view, I suggest, Mr Read?
Nicholas Read: No, I don’t believe that. I can see why people will have been frustrated by it. We had an obligation, I believe, to alert the Lord Chancellor to the work that we’d done and I think we worked quite extensively with the Advisory Board trying to work out and trying to understand how do we get more people to come forward, which is exactly what we tried to do. And, you know, you can see, I think, that there are minutes from the Advisory Board meeting that articulate that challenge.
Mr Henry: How do you get people to come forward, Mr Read, when your letter to the Lord Chancellor was in the terms it was, and also Mr Vamos’ unsolicited letter – I’m going to call it the “They must be guilty” letter – which was inexplicably posted on the Post Office’s website earlier this year. How can you get people to come forward if that is happening on your watch?
Nicholas Read: Well, we tried it many, many times, to engage with the 700 convicted postmasters, both writing to them, trying to engage with them, getting the CCRC to help us, and it was a source of great concern, certainly to me, back in the summer of 2023, when we were discussing this with the Advisory Board, that we couldn’t find a way to get people to come forward. And we sought the CCRC’s help, we sought other’s support, we even enquired of the CCRC if we could bring cases forward to the CCRC without postmasters necessarily being aware of it, as in to try and get those convictions overturned, which is something that we did, but was rejected by the CCRC and the Court of Appeal, obviously, because postmasters need to be involved in that process.
So it was, a – and remains a – clear frustration and a clear recognition, I think, that the Post Office role in this particular process of remediation and of redress, you know, first and foremost is the wrong one, and we shouldn’t be involved in that process.
Mr Henry: Yes. Earlier on you’ve denied that there is or was a deliberate policy of delay and deterrence based on the design of the forms. But I want to deal with this perplexing question of trying to get people to come forward. Have you heard of complaints about the complexities of the compensation process and the forms itself from subpostmasters?
Nicholas Read: Yes, we have.
Mr Henry: Have you heard, apart from what I’ve just mentioned about Mrs Blakey’s husband, of subpostmasters settling for less because they didn’t have the energy or the means to pursue their just entitlements?
Nicholas Read: No, I haven’t, until you’ve mentioned that example.
Mr Henry: So you haven’t heard about subpostmasters who sell themselves cheap, deterred by red tape or intimidated by the process?
Nicholas Read: I didn’t get that sense and, certainly, if I look at the HSS scheme in particular, that wasn’t my takeaway from that process.
Mr Henry: If the application forms have misinformed people as to their rights, or deterred them from applying – but let’s concentrate on if they have misinformed people as to their rights, that would be appalling, would it not?
Nicholas Read: I agree.
Mr Henry: Again, I have to be careful in light of the Chair’s earlier observations but let’s just concentrate on the Historic Shortfall Scheme very, very quickly. It’s supposed to compensate subpostmasters who are not actually convicted of theft but were accused of theft.
Nicholas Read: That’s correct.
Mr Henry: They lost their jobs, many were threatened with prosecution and forced to repay cash shortfalls, which were entirely fictitious and all of that, the stress, the suffering, the damage to their reputation, that should be compensated for, should it not?
Nicholas Read: That’s correct.
Mr Henry: You know, from the evidence that we have heard, about subpostmasters being called thieves, spat at or shunned in their community, even in one case being attacked. All because of that false accusation.
Nicholas Read: Yes, I am aware of that.
Mr Henry: You know also, of course, about the fact that some of them had to move house because they had become pariahs in their locality?
Nicholas Read: Yes, I sadly met many.
Mr Henry: Now, as at June 2023, there have been about 2,500 HSS claims settled and the average settlement payment was only £32,000. Does that strike you as being rather low?
Nicholas Read: I think there’s a very long – I was going to say – tale is the wrong word. I think there’s a long – let me put it another way: I think where fatalities or bankruptcies or others, obviously there are a smaller number of those, but there are a lot of very low claims, which I suspect is why the overall average is what you’re suggesting. My point, I guess, is that, where they are more complex and where they are involving bankruptcy or fatality or anything of that nature, or indeed bigger claims, they’re larger.
So I’m not sure the average necessarily paints the picture that –
Mr Henry: Well, anyway, let’s return to the form. Would you agree that the form is lengthy, complex and legalistic?
Nicholas Read: Yes, I would.
Mr Henry: I don’t know if you’re familiar, but you may have been aware of the criticism by Mr Dan Neidle of Tax Policy Associates in respect of it?
Nicholas Read: I’m aware of his criticism, yes.
Mr Henry: Taking it quickly: the form and appendix, 14 pages in length but with other supplementary documents it’s over 20 pages of material, and, as you’ve already said, no legal advice, no payment of legal costs for completing the form. You would realise, as an institution, that you’re dealing with a number of unrepresented applicants, correct?
Nicholas Read: Correct.
Mr Henry: Right. So, therefore, you must be assiduously careful to ensure that they’re not misled?
Nicholas Read: Yes.
Mr Henry: Right. You’ve accepted the importance of a person’s reputation and the stigma of false accusation, haven’t you?
Nicholas Read: I have.
Mr Henry: Right. Mr Neidle, and you’re familiar with what he said, he has stated and suggested that the HSS form is designed to deter claims for damages to reputation; what do you say to that?
Nicholas Read: I mean, he’s clearly entitled to his view. I think what we have done as a consequence is that we have reconstructed the application form, so now that if you want to apply in the HSS scheme for 75,000 forward, I think it’s now reduced to a mere 20 questions, and we’ve also recut the application form for those who don’t want to apply for 75,000 but may have a more complex claim.
So I think we’ve learnt and listened quite extensively to the Select Committee, to this committee, to the commentary that has been run by postmasters and by others, and I would argue that – not argue, I would state that we have made changes to the tax position, we’ve made changes to the complexity, we’ve reduced the scheme application form, and we’ve also spoken at length with DBT about an appeals process because we are very concerned, for exactly the reason you’ve just described, that we may find ourselves in a position where people were disadvantaged, we would say, you know, inadvertently, but if they have been, we clearly need to address that, and that is something that I’m alive to.
Mr Henry: I won’t go into the argument about how the form is misleading because I believe that would be better for submissions. So I will move on and ask you to just help me with a document which is POL00155397. I think you’ve been shown this document, have you not, Mr Read?
Nicholas Read: I’m not sure. If you could scroll down, I could see.
Mr Henry: By all means. It was provided to you earlier this week.
Nicholas Read: Can we scroll down, just so I can see it? Thank you.
Mr Henry: We’ll take it –
Nicholas Read: Sorry, which piece are you taking me to?
Mr Henry: Yes, of course. Well, if we go to page 1, it’s entitled “GLO Post Settlement GE” – that’s General Executive?
Nicholas Read: Group Executive.
Mr Henry: “Group Executive” – forgive me – “Paper”, and presumably, therefore, you would have seen the paper itself?
Nicholas Read: Yes, I was in the organisation at this time, yes.
Mr Henry: Yes. This is what Mr Underwood says at page 1:
“… I am not sure Nick wants me to lead the Historical Claims workstream owing to my prior involvement in the Complaint & Mediation Scheme, Chairman’s Inquiry and the GLO.”
It goes to:
“I am not sure the workstream leads set out in Appendix 1 are set in stone yet”, and then the words that I have just taken you to that have been highlighted.
Can you help me: weren’t entry fees mooted at one point before access to the HSS was allowed?
Nicholas Read: Entry fees, sorry?
Mr Henry: Yes, fees for applicants.
Nicholas Read: Sorry, I’m not sure what that means, actually, to be honest.
Mr Henry: Well, in other words –
Sir Wyn Williams: Mr Henry is suggesting that, before you could enter the scheme, you had to pay a fee.
Nicholas Read: Oh, really? Okay.
Sir Wyn Williams: As you do in court, in some instances, for example. That’s what he’s asking you about.
Yes, Mr Henry?
Nicholas Read: I don’t recall that being the case. It may well be but I don’t recall that.
Mr Henry: Could we go to page 2 of 5, and could we scroll up, please – maybe down, in fact. I’m sorry, when I say up, I mean down.
If we keep going, yes, “Fees”, exactly. Thank you. So we’ve got Mr Underwood there saying:
“My strong view is that you cannot seek payment from applicants – however small and regardless of the rationale behind it. Optically this would be extremely challenging and would be a position that I believe the business would struggle to maintain under political and media pressure. I think you can achieve the same desired outcome [through] having [it says ‘though’] a very tight and clearly communicated set of eligibility criteria and requirements in terms of the documentation applicants have to provide in order to be accepted into the Scheme.”
Now, that’s an atrocious line of thinking, is it not, that, at one point, the Post Office would seem to have been discussing charging fees to be paid by the wronged victims of the Post Office before they would be allowed to enter into the scheme?
Nicholas Read: It does seem a bizarre –
Mr Henry: Yes. I suggest, as is clear from what Mr Underwood was saying, was that the same desired effect, the same outcome, would be strict – very tight, in other words – eligibility criteria, very tight and clearly communicated set of eligibility criteria and, of course, the documentation subpostmasters would have to provide before being accepted into the scheme. He suggested this would have the same desired outcome, didn’t he? It’s clear –
Nicholas Read: It does look as though that’s what is implied.
Mr Henry: I suggest that was to restrict access to the scheme and to deter applicants, isn’t it?
Nicholas Read: Possibly.
Mr Henry: Yes. It’s a more subtle and insidious method of doing it but it makes it difficult for subpostmasters to apply, to reduce the Post Office’s disclosure. I mean, for example, in the forms, they talk about the provision of contemporaneous documents. How are you going to get contemporaneous documents when many years have passed and where the Post Office had seized them and, as in Mr Lee Castleton’s case, never returned them? It’s a hurdle, isn’t it? Not a low hurdle, but it’s actually a high bar. That was the design, wasn’t it?
Nicholas Read: It’s certainly – you could certainly draw that conclusion from this paragraph.
Mr Henry: I remind you, we’ve dealt with it very briefly already, paragraph 886 of the Common Issues Judgment:
“Suspended SPMs are not only entirely excluded from the Post Office, part of their premises, they appear to be excluded in some cases from entire premises and also are completely denied access to any information or records.”
Then Mr Justice Fraser said this:
“Given the severe effect upon a subpostmaster of having their appointment terminated, it is not only important, but I would go so far to say crucial, that they’re given a reasonable opportunity to meet a case being brought against them by the Post Office. It is difficult to see how they can have such an opportunity if they are denied access even to copies of information or records.”
That judgment came out on 15 March 2019. This email is January 2020. By that time, the people in this email, one of whom, of course, was Mr Williams, Rodric Williams, would all have known the difficulties for subpostmasters of obtaining contemporaneous documents, when these were historic events that had occurred many, many years before and where they had been subjected to such unfairness; do you agree?
Nicholas Read: That’s a concerning conclusion, yes.
Mr Henry: You all knew – and I don’t mean that pejoratively to you, Mr Read – but those advising you all knew, when this demand for contemporaneous document was hatched, that subpostmasters would have great difficulty in complying with it; that must be right?
Nicholas Read: That’s a disturbing conclusion, yes.
Mr Henry: Yes. Now, Mr Read, I realise you were, to some extent, put in this job to a degree under false pretences because you had no idea – no idea – what you were letting yourself in for, but you would agree that you were not the solution you promised to be, despite everything you did?
Nicholas Read: Not the solution I promised to be; what do you mean?
Mr Henry: Well, the compensation process is not being dealt with fully, fairly and quickly. That must be right?
Nicholas Read: I think, to a degree, that’s fair.
Mr Henry: Yes. It’s the same, I suggest, dyed in the wool inability of the Post Office to treat those it destroyed, or very nearly destroyed, with dignity, respect and justice?
Nicholas Read: I would like to think we’ve learned the lessons of this. I think it has been slow and painful for the Post Office to do so. I think, culturally, we’ve had to come a long way to do that but I would it argue that those lessons have been learned. I think the changes that we have made, certainly over the last few months, particularly to the schemes, to the approach that we’ve adopted, to the way that we’ve engaged with victims, has changed.
I would hope that people in the room had identified that but we’re obviously open to feedback accordingly. But I think, certainly since the compensation hearings and since the drama at the start of this year and since the Select Committee, I think we’ve learnt those lessons, I think the shareholder has too and I think there is a great deal more understanding.
This process has hugely helped in shining a light on some of the practices of the past. I think we are genuinely open and moving towards a better system.
There are proper appeals processes, proper independent panels now working, there is a commitment, certainly from the Shareholder, from a funding perspective, and there is a commitment from the Post Office to get this right.
I do believe some of the principles are now in place. I do believe that the process is such that things will start to flow but I would also acknowledge, and I think you’ve been very generous in pointing it out today, that mistakes have certainly been made, and I would agree with that.
Sir Wyn Williams: Thank you, Mr Henry.
Mr Henry: Thank you, sir.
Sir Wyn Williams: You will know, Mr Read, that in each of my progress updates and in my interim report, I drew attention to the oft-repeated phrase, both by Post Office and Government, that “compensation would be full, fair and prompt”. Forget “prompt” for the moment. Can you assure me that it is still the aim of Post Office to provide compensation which is full and fair?
Nicholas Read: I can assure you.
Sir Wyn Williams: Fine. Thank you.
Then we’ll adjourn now until tomorrow morning when you’ll resume your questioning, Mr Beer.
Mr Beer: I will, sir.
Sir Wyn Williams: Yes, thank you.
(4.08 pm)
(The hearing adjourned until 10.00 am the following day)