Official hearing page

8 November 2024 – Gareth Thomas and Charles Donald

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(10.00 am)

Mr Stevens: Good morning, sir. Can you see and hear us?

Sir Wyn Williams: I know I’m having difficulty hearing you, Mr Stevens. Try again?

Mr Stevens: Sir, can you see or hear us?

Sir Wyn Williams: Now I can hear you, faintly.

Mr Stevens: We’ll take a break for a moment. I’ll just turn my back.

Sir, can you see and hear us now?

Sir Wyn Williams: Yes.

Mr Stevens: Excellent. Sir, we will be hearing from the Parliamentary Under-Secretary of State for Services, Small Business and Exports.

Gareth Thomas

GARETH THOMAS MP (sworn).

Questioned by Mr Stevens

Sir Wyn Williams: I’m very sorry, Mr Stevens, but I just about made out what Mr Thomas said, but it is difficult at the moment.

Mr Stevens: Right. Minister, if I could ask you to say your full name, please, and see if that works.

Gareth Thomas: My full name is Gareth Thomas.

Sir Wyn Williams: I can hear Mr Thomas better than you now. Anyway, I can hear you both so let’s carry on.

Mr Stevens: That’s no bad thing, sir.

Minister, thank you for attending the Inquiry today and thank you for providing a written statement to which I wish to turn now. It should be in a bundle of documents in front of you. Do you have that? Tab A2, it should be.

Gareth Thomas: Yes.

Mr Stevens: You’ll see it’s dated 24 September 2024, top right. For the record, the reference number is WITN11490100.

Before I ask you to turn to the signature page, I understand there’s a small correction you wish to make. We don’t need to have it on the screen.

Sir, it’s page 5, paragraph 22.

You say on 30 July 2024, the Secretary of State announced the launch of the Horizon Convictions Redress Scheme, and you then say:

“… Secretary of State oral statement to the House of Commons on 30 July 2024.”

I understand you wish to change “oral statement” to “written statement”?

Gareth Thomas: Correct. That’s correct, sir.

Mr Stevens: If I could ask you just to speak up slightly.

Gareth Thomas: Sorry, you’re right. That’s the correct change I need to make.

Mr Stevens: Could you please turn to page 8 of your statement. Do you see a signature?

Gareth Thomas: I do see a signature and it is my signature.

Mr Stevens: Can you confirm, subject to that one correction, that the contents of that statement are true to the best of your knowledge and belief?

Gareth Thomas: Yes, sir.

Mr Stevens: Thank you. That stands as your evidence in the Inquiry. It will be published on the website shortly and I’m just going to ask you a few questions about it, starting with your background. You’ve been the Member of Parliament for Harrow West since 1 May 1997?

Gareth Thomas: That is correct.

Mr Stevens: You served under the Blair and Brown governments holding various ministerial roles. Not in chronological order: in the Department for International Development, you served as Parliamentary Under-Secretary of State and Minister of State?

Gareth Thomas: Yes.

Mr Stevens: You also served as Parliamentary Under-Secretary of State in the Department for Business, Enterprise and Reform –

Gareth Thomas: Yes –

Mr Stevens: – Regulatory Reform, sorry?

Gareth Thomas: Yes, they overlapped for a period.

Mr Stevens: That is the predecessor department to the Department you’re now in?

Gareth Thomas: Correct.

Mr Stevens: When you were Under-Secretary of State in that Department, did you have any involvement in postal affairs?

Gareth Thomas: Only in a very marginal way. There was at one point consideration being given to legislation on the future – legislation about the future of the Post Office, and I was potentially involved in part of that legislation, but that legislation was relatively quickly dropped. And so I didn’t have any – I didn’t have any day-to-day responsibility for the Post Office. I would have simply been involved in that legislation, but that’s – but on a day-to-day basis I was not involved in any way in the – in responsibilities for the Post Office.

Mr Stevens: When you were in that Department, did you have any discussion with another minister or civil servant about the Horizon issues?

Gareth Thomas: No.

Mr Stevens: Whilst in opposition, you held various Shadow Cabinet appointments?

Gareth Thomas: Not Shadow Cabinet but shadow ministerial jobs, yes.

Mr Stevens: Shadow ministerial, apologies. You were appointed as Parliamentary Under-Secretary of State this year after the general election?

Gareth Thomas: I was.

Mr Stevens: I’m going to go slightly out of order with a few matters but I’m going to start with Government policy. The Inquiry has been told previously that the Government’s policy is to provide full, fair and prompt compensation. Do you agree, as suggested in Carl Creswell’s evidence to this Inquiry this week, that Government policy now elevates promptness of compensation over fullness and fairness?

Gareth Thomas: No, I don’t. We are – I’m acutely aware of the responsibility to try and speed up getting compensation out to the victims of the Horizon scandal but I’m also very clear that we want it to be full and fair compensation that’s paid – that is paid out. So we have tried to introduce a number of reforms and measures that will help to speed up getting redress out to the victims of the scandal, such as the introduction of fixed-sum payments, but we’re also very clear that each victim’s circumstances will be different and that, if they don’t feel that the fixed-sum payment is an accurate reflection of their case, in terms of the redress that they think they’re entitled to, then they have the option of going through the full – through the full process.

Certainly, in the case of, for example, of the Horizon Shortfall Scheme, we’re also bringing in an additional process, an appeals process, to make sure that people also have that option to test whether they’ve been given a full and fair settlement. But just to underline, I met with a number of subpostmasters who were victims of the scandal, and all of them have stressed to me their entirely understandable frustration with the pace of redress. I think we have begun to see an increase in redress, but I wouldn’t want to in any way suggest that there aren’t still problems. Many complex cases are still to be settled.

So we are trying to – we are looking at what else we can do to speed up consideration of those cases but making sure that people get a full and fair settlement in that process too.

Mr Stevens: I’m going to come to how the Government seeks to implement the policy objectives later. Just focusing on the policy itself for now, please could we bring up your statement, page 3, paragraph 15.

Gareth Thomas: My apologies, Mr Stevens, is it going to appear on the screen?

Mr Stevens: Yes, it’s coming.

Page 3, paragraph 15, please.

So you say:

“One of the Labour Government’s key manifesto commitments was to ensure that justice and compensation are delivered as swiftly as possible for every subpostmaster caught up in the Horizon scandal.”

You refer to your ministerial portfolio, saying:

“… work to support the victims of the Horizon scandal, accelerate fair compensation, and improve the position of subpostmasters over the long-term, is at the top of my agenda.”

If we go down to paragraph 20, please, it’s on page 5:

“Since coming into Government we have already made a number of positive steps to accelerate and improve the process of providing redress to postmasters, and we are exploring additional options for the delivery of fair and timely compensation to those affected.”

I think, but I’ll be corrected if I’m wrong, at paragraph 22, middle of the paragraph, you say:

“Because the postmasters whose convictions were overturned in this way were not eligible for compensation under the Overturned Convictions compensation scheme, it was clearly necessary to create a new scheme to provide full and fair compensation to them.”

I think that “full” there is the only time you refer to “full and fair compensation”. So from your evidence earlier, do we take it that the Government policy still maintains full, fair and prompt compensation?

Gareth Thomas: Yes, sir.

Mr Stevens: Again, I ask you to reiterate that promptness isn’t being prioritised over fullness and fairness?

Gareth Thomas: No. No. It isn’t. I absolutely want to make sure that every victim has a proper chance to secure for themselves full and fair compensation. But, as I alluded to earlier, I’m acutely conscious of how long many of the victims of the Horizon scandal have been waiting for that full and fair compensation. And it’s why I think it’s a particular responsibility for me to look at ways to speed up the process, but not at the expense of the delivery of full and fair compensation.

Mr Stevens: Have you discussed with Mr Creswell or others in the Department this issue of full and fair still being on an equal footing with promptness of compensation?

Gareth Thomas: I believe Mr Creswell gave evidence either yesterday or the day before. I’ve not had the chance to speak to him since he gave evidence but I have certainly, in the guidance that I’ve given to officials about the direction of policy, been clear that we wanted to look at ways to speed up the process, but that – absolutely that we expected that not to be at the expense of full and fair payment.

Mr Stevens: So having, I think, listened to or at least been aware of Mr Creswell’s evidence, what steps are you going to take, if any, to set out what the Government’s policy message is to those within the Department on compensation?

Gareth Thomas: Well, I talked to officials about the compensation schemes and the way in which they are working, and the efforts we need to take in relation to getting full and fair compensation out the door every week, and certainly I will be speaking to that team of – those team of officials next week.

Mr Stevens: Were you aware or had you understood that the Minister before you had prioritised promptness over full and fair compensation?

Gareth Thomas: I was not aware of that. When we were in opposition before the election, I did not have responsibility for Post Office in the Shadow Ministerial Team. I had responsibility for trade. So that was the issue, the details of which I was focusing on. I was not focusing on the details of what ministers on the – who had responsibility for the Post Office were doing at that time. Others in the team had that responsibility.

Mr Stevens: I said I would take things out of order, I want to go back in the chronology somewhat and I’ve been asked to ask you some questions on your time as Shadow Minister.

Gareth Thomas: Yes.

Mr Stevens: Please could we bring up POL00232597. It’s an email from Mark Davies who was Communications and Corporate Affairs Director at Post Office to your email address on 11 September 2015. He said:

“Dear Gareth

“You may remember me from my days working as Jack Straw’s [Special Adviser]. I hope you are well.”

Did you remember Mark Davies at that time?

Gareth Thomas: Yes, when he was at the Home Office he was Special Adviser to Jack Straw, the Home Secretary, and I was Parliamentary Private Secretary to Charles Clarke, who was the Minister of State for Police. So there were occasions when our paths crossed, yes.

Mr Stevens: You see it refers to you signing an Early Day Motion about Post Office and the Horizon system and asks to meet with you to discuss these issues if you’re able to.

You were sent a letter subsequently to that, which I don’t need to take you to. The next email I want to take you to, please, is POL00233120. It will be on the screen shortly. You won’t have seen this email. It’s an internal Post Office one. You see Patrick Bourke at the top, to Angela van den Bogerd and Mark Davies, on 22 September 2015. It says:

“Mark and his team have written to every single signatory, offering a meeting. One has taken us up – Gareth Thomas who represents Harrow for Labour.”

Do you remember meeting representatives of the Post Office to discuss the Early Day Motion.

Gareth Thomas: I have to be honest with you, I don’t. When I – when this was sent through in the additional bundle of evidence that I might be asked questions about, I asked my Parliamentary office whether we could go back and see if we could find a recollection of the meeting, and our records don’t go back that far. It’s quite possible that I did meet with Mr Davies as a courtesy.

I think – believe that my name did not come off that Early Day Motion, and I certainly have continued to work with the Communications Workers Union, who I take seriously, since then, and have continued to engage – or continued to engage in the issues around Horizon from a constituency perspective in the time since.

But, as we have alluded to in some of your previous questions, I didn’t have day-to-day responsibility for the Post Office in my brief. So the engagement on what was happening was more occasional.

Mr Stevens: I want to go back to your role now, please. Please could we have up the witness statement page 3, paragraph 13. You set out the responsibilities for your role, we see Post Office is third and then we have a number of other responsibilities as well, including Ukraine reconstruction, export strategy, local growth, small businesses. Quite significant matters within your portfolio, yes?

Gareth Thomas: They are, yes.

Mr Stevens: In your statement, you refer to Post Office issues of being at the top of your agenda. In practical terms, what does that mean with such a wide ranging portfolio?

Gareth Thomas: In practical terms, I think in the – what is it now, almost four months since I’ve been in post, I would think about 50 per cent of my time has been spent on matters to do with the Post Office. I think – I am continually or on – certainly on a weekly basis talking to officials about what else we can do to improve the system of redress. Certainly, I identified, when I got into office, quite early on that there were three significant issues around the Post Office that I needed to grip.

One was around the redress scheme, which we’ve touched on already, and how do you speed up the delivery of redress to the victims of the scandal; secondly was to look at whether there were gaps in the compensation process and, if so, what could we do about that; then thirdly, to look at some of the issues around the future of the Post Office as well.

So the Post Office has been a very significant part of the day-to-day responsibilities to date.

Mr Stevens: During Phases 5 and 6 of the Inquiry, we heard evidence of subpostmasters, Members of Parliament and the press writing to your predecessor ministers raising concerns about Horizon, and we heard how the Department would often refer the correspondence back to the Post Office. We’ve heard evidence from past ministers stating that ministers can’t involve themselves in running the Post Office on a day-to-day basis.

In broad terms, summary terms, how interventionist in Post Office matters will you be as Post Office Minister if concerns are raised with you about how subpostmasters are being treated by the Post Office?

Gareth Thomas: The honest truth is I’m not sure I can give a completely clear answer to that. It will depend on the questions that I get asked. But, you know, I get written to by Members of Parliament and by victims of the scandal direct, and I try to make sure that I give as full a reply as I can do to concerns that are put to me about individual cases, albeit, quite rightly, ministers can’t get involved in individual cases.

But wherever I can make a difference, I’m determined to try and make a difference, in terms of the delivery of redress. So I have been pushing senior officials in the Department to allocate extra resources, in particular to help us speed up delivery of compensation to the victims of the GLO – in the GLO scheme because there are some complex cases there that have been very long running, in terms of compensation not being delivered. And I hope we will see significant progress, as a result of measures we’ve taken very soon.

We are actively looking, actively pushing officials to look at some gaps in the compensation schemes that we’ve been – that we have identified, partly in response to people who have written in via their MP or whose MPs have raised it with us, but also through conversations with officials about what is working and what isn’t working in the redress schemes.

Mr Stevens: The Inquiry has also heard evidence about issues of flow of information from the Post Office into the Government, and then also from Civil Service to ministers. How do you satisfy yourself that the information you receive is full and accurate?

Gareth Thomas: I meet with my officials on the Post Office, as I say, on a weekly basis. On occasions it’s been on a daily basis, where there have been issues and where I’ve had concerns about or questions about submissions or individual cases that have come forward. So I think it’s my responsibility to ask for advice from officials and to ask questions about that advice, and to challenge my officials to make sure I’ve got as full and accurate a picture as I can get.

I believe I’ve been getting that advice, that I have a good team of officials working for me, but it’s my job to challenge them and to push them and, as I say, I am doing that on a – certainly on a weekly basis and often on a daily basis.

Mr Stevens: I want to look at some of the schemes now, starting with HSS please. I want to look at the form itself that postmasters have to fill in. The YouGov survey – we don’t need to have it on screen – carried out by the Inquiry – or sorry, YouGov carried it out on behalf of the Inquiry – found that 47 per cent of postmasters who took the survey found the application hard to understand; 19 per cent found it very hard to understand; 57 per cent found the paperwork hard to complete; 26 per cent found it very hard. Simon Recaldin gave evidence to this Inquiry on Monday that Post Office had simplified the application form.

Do you or the Department have plans to oversee whether these simplifications have a positive effect on the HSS?

Gareth Thomas: I certainly hope so. We’ve seen more –

Mr Stevens: Sorry, you say you hope so. Does that mean you don’t know, or –

Gareth Thomas: Yes, I would want to – I beg your pardon. I would want to check that we are seeing more victims coming forward and that they are more confident in their ability to put in claims for redress. The – one of the reasons for wanting to put in an appeals process into HSS is also to make sure there’s that additional step for subpostmasters applying for compensation under the Horizon Shortfall Scheme to have their claims fully and fairly judged and to be confident in that process.

Mr Stevens: Would the Department consider liaising or consulting with claimant representatives, the NFSP and subpostmaster groups, on how the changes to the form have either benefited or negatively affected the process under the HSS?

Gareth Thomas: Yes, absolutely. I’d be very happy for that process. We already have conversations with claimants’ lawyers about how schemes are working, and where we can make improvements, discussed recently with – very directly as a minister to one of the key claimant’s lawyers, the need to get them in the room with my officials to talk through where else we might be able to find improvements to the running of the Horizon Shortfall Scheme and we’re hoping to set that conversation up very soon.

Mr Stevens: Could we look, please, at – well, actually we don’t need to look at it on screen. I’ll read it. At page 5 of your statement, paragraph 21, you say:

“On 25 July 2024 I gave my approval to the introduction of fixed-sum awards of 75,000 under the Horizon Shortfall Scheme.”

You go on to say how the Secretary of State went on to formally approve that matter. Can we look, please, at the submission to you, it’s BEIS0000888. If we could start at page 5, please.

You see this is an email – it’s not on the screen, but you can take it from me this email was sent on 22 July 2024, and it says:

“Hi Jamie, Jason …”

It refers to the fact this is to the 75,000 fixed sum:

“This is for consideration by Minister Thomas and and Secretary of State.”

We can see it says:

“Timing: We would be grateful for a swift readout. Post Office has received regular correspondence from postmasters awaiting … the £75,000 fixed sum following the March announcement and we expect it to be raised during next week’s redress announcement.”

Then the recommendation is at the bottom, it recommends to:

“[Implement] your predecessors’ announcement to introduce a Fixed Sum …”

Then over the page, thank you.

Now, (b) and (c), (b) says:

“Capping awards at £50k where postmasters reject the Fixed Sum and are offered a lower amount, with no option to return to the Fixed Sum.

“c) Not providing legal advice to claimants to consider the offer of a Fixed Sum.”

I’m going to ask you about those in a moment but just so we can see the chronology, if we go to page 4, please, this is an email of the following day, 23 July. It says:

“… the Minister had reviewed and has asked if an official will be free to discuss options B, C and D in more detail on Thursday at 1.30.”

Then, if we go to page 2, please. A little bit further down, thank you. This is an email on Thursday, 25 July. It says:

“Thank you for attending the meeting today – for the benefit of the chain, the Minister was content with recommendations a), b), c) and e) in the sub”, and goes on to say about the delay which you’d rejected.

I’m going to ask you about the detail of those matters but does that summary there, the email we went through, reflect your recollection of how this was discussed, namely you had the submission, had a meeting to discuss a), b), c), d), e) and then on the Thursday you agreed to those recommendations, including a), b), c).

Gareth Thomas: I believe so.

Mr Stevens: If we go back, please, to page 6. So with the fixed cost award, the idea being that if the subpostmaster comes along and, if their loss, actually, as a matter of fact is £500 they still get an offer of £75,000 and they can accept that; is that a fair summary?

Gareth Thomas: Certainly, if people believe they’ve been victims and have suffered a loss, then they can come forward and accept the fixed sum.

Mr Stevens: Now what were you told about b), capping awards at £50,000, where postmasters reject the fixed sum and are offered a lower amount?

Gareth Thomas: I might need to – I apologise, Mr Stevens, I might need to write to the Inquiry about this because we certainly looked at the question of capping awards at 50k but, ultimately, if I’m remembering rightly, did not – did not bring that in. But I can’t recall the – immediately to hand the detail about that, so I might need to write to the Inquiry with further information on that.

Mr Stevens: I mean, let’s just explore it slightly. What it seems on its face is, whether or not it was brought in, if a postmaster didn’t accept the fixed award of 75,000, they went to an assessment, and the assessment was that the loss was £65,000, on b) it looks like their award would have been capped at 50,000. Is that your recollection of the policy proposal?

Gareth Thomas: As I say, I think I’d just want to check that and write to the Inquiry and write back to you.

Mr Stevens: When can the Inquiry expect a response on that?

Gareth Thomas: I will get a letter to you next week.

Sir Wyn Williams: Mr Stevens, I’m sorry to interrupt but I’m still having some difficulty with the sound and obviously this is an important point that you’re covering. So, if we may, I’d like to take a short break because I’m told by RTS that they can’t fix my sound problem without there being a short break in the hearing.

Mr Stevens: Of course.

Sir Wyn Williams: I hope that doesn’t inconvenience you too much, Mr Thomas, but I’m anxious to hear every word on this particular topic, all right?

Mr Stevens: Thank you, sir.

Sir Wyn Williams: Can we break for at least ten minutes and then I will liaise with RTS as to whether I should disconnect and start again, or what’s to be done, all right?

Mr Stevens: Yes, thank you, sir.

(10.35 am)

(A short break)

(10.48 am)

Sir Wyn Williams: (Muted)

Mr Stevens: We can see you but can’t hear you.

Sir Wyn Williams: I omitted to unmute myself!

Mr Stevens: That’s a relief, sir, I will carry on.

Sir Wyn Williams: You’re as clear as a bell, if I may say so, now.

Mr Stevens: Excellent. Can we please bring back the document we were looking at just before the break, that’s perfect. Thank you.

Minister, I want to continue on b). I hear what you say about writing a letter. The Inquiry will always welcome further clarification or further evidence. This was a document exhibited to your witness statement.

Gareth Thomas: Yes.

Mr Stevens: It concerns a meeting that took place on 25 July 2024, where that was discussed. Subject to any clarification you wish to make, I would like to know what your recollection is of this. I said before what it appears on its face is that, if a subpostmaster rejected the fixed-sum offer of £75,000, went to an assessment, the assessment was the loss was £65,000, the award would be capped at £50,000, so what would be given would be less than the award.

Now, is that position correct; is that how b) was explained to you?

Gareth Thomas: As I said to you, I think I will reflect on the questions and write to you on that. My – the intention around the 75k fixed-sum settlement was – and we looked in reaching that figure, we looked at a range of claims that had come in, and sought to offer what would be a sum that we thought would help –

Mr Stevens: I’m just going to interrupt you, Minister, because that’s a different matter. Is it your evidence that you cannot recollect what was said to you about point b)?

Gareth Thomas: It’s – I would want to just reflect on that question and write to you.

Mr Stevens: Again, Minister, I ask: do you have no recollection of what was – as I say, you can clarify if you wish.

Gareth Thomas: I don’t have a detailed recollection at this particular point, so I will write to you on that, if I may.

Mr Stevens: Simon Recaldin gave evidence to this Inquiry on Monday. For the record it’s 152, line 8 of the transcript, and what he said was this:

“I think it’s consistent and it supports the jeopardy that Government clearly want to put in place to say, ‘You’ve got an opportunity of £75,000, but if you don’t believe that’s sufficient, there’s a risk that once the case has gone through the full assessment, the risk you face is it might be less’.”

Now, just to be clear, he wasn’t talking about this cap at that point, just the general principle of the fixed-cost offer, which may then be reduced on assessment.

Does that fairly summarise the Government’s position that it’s seeking to put jeopardy on subpostmasters to accept the offer of £75,000?

Gareth Thomas: No, I don’t think it does. I think we want to offer a quicker route to get redress, which is why we’ve offered the fixed-sum payment of £75,000 here, and indeed £600,000 in the HCRS scheme. We’re very clear that every victim’s circumstances are different and so, if they want their claim to be judged on its own individual merits, that they can go through a longer, more detailed process, and we’re putting in place the appeals process in the Horizon Shortfall Scheme to give claimants the opportunity, as well, to have the offers that are made to them reviewed independently as well.

Mr Stevens: C) is not providing legal advice to claimants to consider the offer of the fixed sum. I want to explore that a bit. The document can come down while we do so.

On Monday, Simon Recaldin agreed that those postmasters who paid for legal representation to complete the application were more likely to claim consequential losses and an interim payment. Did you hear that evidence?

Gareth Thomas: I didn’t see his evidence, no.

Mr Stevens: Did you know that when you made the decision on the £75,000 offer and not providing legal advice?

Gareth Thomas: We believed that there’s – I believe that there were opportunities for people to get advice as to whether or not they want to accept the offer. And – but we wanted to try and make the process as quick for people if that’s the route they wanted to go down. If they wanted a fuller hearing, then that opportunity exists. But for – but we believe that many people would want a quick settlement and that, on balance, we felt the £75,000 fixed-sum payment would help with that process.

Mr Stevens: It was A slightly different question I asked, which was: when you made the decision about funding of legal advice, were you aware that postmasters who paid for legal representation to complete the form were more likely to claim consequential losses and an interim payment?

Gareth Thomas: I don’t believe I was specifically aware of that – that particular evidence at that point.

Mr Stevens: What does that tell you, that subpostmasters who pay for legal representation are more likely to claim consequential losses and an interim payment?

Gareth Thomas: I think, as I say, what I wanted to do was to make sure that there is a route for people to get quick compensation, if that’s the route they want to take. But also, that if people want a fuller look at their circumstances, absolutely, that has to be there, and then, if people want that offer to them to be reviewed by an independent process, that needs to be there as well.

Mr Stevens: Sorry to interrupt because the point we’re making here is less about that; it’s more about the decision as to whether or not to accept the offer or go down the route of an assessment. The decision has been made not to fund legal representation at that stage.

I ask the question again: if Simon Recaldin says that postmasters who pay for legal representation at the point of completing the form, that they were more likely to claim consequential losses and an interim payment, what does that tell you about legal representation for those subpostmasters?

Gareth Thomas: Well, I suppose what I would say, sir, in answer to that question, sir, is that I think people have a choice, if they want to get legal advice and put a fuller claim in, on that option is available to them. If they don’t want to go down that route, if they want to settle quickly, then we think we have offered a fair sum, £75,000, as a fixed sum, so that they can have even quicker redress. It’s a choice for the individual claimant to make but it does offer a quicker route than has been available – has been available to date.

Mr Stevens: Why has the Government’s decision been not to fund that legal advice on the HSS – at the application stage, I should say.

Gareth Thomas: Our instinct was that the £75,000 was a generous offer, that, for some people, it would be – would help them to reach closure more quickly. But we were also clear that if people, as I say, wanted their case to be heard in more detail, there is the option of having a process to do that, which – and having some of their legal costs covered as part of that process too.

Sir Wyn Williams: Can I approach this from a slightly different angle, Mr Thomas, just so my mind is clear about it.

My understanding is that, prior to the introduction of the fixed-term offer – the fixed offer, not fixed-term offer, fixed offer – once an offer had been made in HSS, there would be funding available to applicants to obtain legal advice on the offer. Do you follow me? So forget fixed offers for the moment. Prior to that, if the HSS scheme offered me £20,000, shall we say, I would be entitled to get some money from – well, ultimately, the Government, no doubt, but let’s say Post Office, for the sake of argument, in order to obtain some legal advice on whether I should accept that offer. Okay? I think I’ve got that right.

Now, what is slightly – well, forget adjectives.

Why is it not the case, if it is the case, that the same doesn’t apply to the fixed offer, ie once an offer is made, ie the fixed offer, why isn’t it the case that someone should be able to say, “I’d like to take legal advice about whether I should accept that offer”; do you follow the point I’m trying to make?

Gareth Thomas: I do follow the point you’re trying to make, Sir Wyn. I mean, I think I will reflect separately after this Inquiry about that particular point. My immediate answer to you now is that we wanted to provide a process that was quick, that people who didn’t want to go through a legal process could have their settlement and redress quickly provided to them but, for anyone who wants to go a longer process, then yes, that offer is there and access to legal support is there for them too for that.

Sir Wyn Williams: I follow that, for many people, it should be pretty easy to decide whether to take £75,000 or not because some people’s claim will be much larger and some people’s claim, in reality, will be much smaller, and so the much smaller ones, I dare say, will find it quite easy to know what to do. But we’ve been debating a little at the Inquiry those applicants who, if you like, fall quite close to either side of the £75,000.

Just by way of an example, that’s all: if your claim is worth anything up to £75,000, then it may be easy to say, “I’ll take the £75,000, I don’t need a lawyer to tell me that”. But if your claim in your mind is worth £85,000 or £95,000, which the difference, although not a vast difference, can be significant for some people, that’s the sort of category of case where you might think, “Well, shouldn’t they be able to at least access a lawyer to decide as between £75,000 or carrying on”?

Gareth Thomas: I suppose our sense was that there is a balance, a judgement to make as to where you set the – where you set the amount for an offer of a fixed-sum payment and our sense was that, on balance, the £75,000 represented a reasonable line and a reasonable offer to people, if they wanted to avoid a full, drawn out, as people may have perceived – perceived process.

But that option to go beyond, if they felt their claim was worth more than £75,000, is very much still there. But to try to help speed up the process of getting redress, we felt offering a fixed-sum payment was appropriate. The question then, as you rightly say is, where do you draw the line? Where do you set that amount? And our sense was the £75,000. On balance, looking at the claims data we’ve had up to now come in, was a reasonable place to put that offer.

Sir Wyn Williams: So – and I’m not trying to put words into your mouth but it’s just my way of expressing it – does it come to this: that by offering £75,000, the judgement was that most people would find it pretty easy to decide whether to accept it or not?

Gareth Thomas: I think we felt that people would – that it was – that for many people they would see it as a reasonably generous offer, given the loss that they had experienced, and that it was would help them to get redress more quickly than going through a longer process. So that was the judgement for us.

What we absolutely didn’t want to do was to shut down the route of people –

Sir Wyn Williams: I follow that, I follow that.

Gareth Thomas: Right, okay.

Sir Wyn Williams: Over to you, Mr Stevens.

Mr Stevens: Thank you, sir. We’ll move on to a different matter. I’ll say now I’m going to look at the appeals procedure within HSS that you referred to already. I appreciate some of these details are still to be worked out. They may need to be announced in Parliament. I’m simply looking for what the Government’s thinking is at the moment.

In your statement, page 6, paragraph 23, we don’t need to bring it up, you refer to on 25 July this year, you agreed to the creation of an independent DBT-administered Horizon Shortfall Scheme appeals mechanism. I’d like to look, please, at the submission. It’s BEIS0000943. I we could go to page 2, please, to begin with, we see the start of the email is there, Wednesday, 24 July 2024, and if we go over the page, please, to the actual submission, thank you. On “Timing”, it says:

“A decision is required urgently to ensure that an announcement can be made ahead of the next Inquiry hearings in September, illustrating [His Majesty’s Government’s] proactiveness and a willingness to action the recommendations of the Horizon Compensation Advisory Board and Business and Trade Select Committee.”

Pausing there. Will the Department be both proactive and willing to action the recommendations of the Horizon Compensation Advisory Board and the Business and Trade Select Committee when there aren’t Inquiry hearings at which the point can be illustrated?

Gareth Thomas: We were – we inherited – when we came into office, we were in a position where both the Business and Trade Select Committee and the Horizon Compensation Advisory Board had recommended an appeals process, and we wanted to confirm that we were willing to go down that route as quickly as possible, once we looked at the issue.

And, obviously, we were conscious that the Inquiry is happening, and that the – there are still many questions about both the speed and fairness of compensation that’s been paid out to victims of the Horizon scandal, and having an appeals process in place, sooner rather than later, would help with that – would help with the concerns around that. So, yes, we wanted to make a quick decision that we were going to go down this route. We are, at the moment, consulting with claimants’ lawyers and subpostmaster groups about the detail of what an appeals mechanism will look like in actuality, but we were keen to give confidence that an appeals system was coming.

Mr Stevens: We see there it says about the developing of Government resourced and administered independent appeals process. You’ve described how you’re consulting with claimant groups. Are you able to provide us with an update on the current proposals for who might be eligible to avail themselves of the appeals scheme?

Gareth Thomas: I am not at this stage, Mr Stevens. We’re still working on that detail. We’re having to talk to colleagues across Government about that but we’re keen to give an update to Parliament soon, but we’re still working on those details.

Mr Stevens: Can we test one aspect with you, please. I’m going to go to Hansard, I’m not asking about whether what was said is accurate, it’s just a point of clarification. It’s RLIT0000348, please.

You see this is from Hansard and it’s the Secretary of State for Business and Trade making a statement on the 9 September 2024. If we could turn the page, please. It says second line:

“Today I am pleased to announce that we have accepted that recommendation”, referring to the appeals process.

It goes on to say:

“That appeal process will enable claimants who have settled their claim under the HSS to have their case reassessed with the benefit of any new information that they were not able to include in the original application.”

Based on current thinking, are you able to assist with whether the scheme will simply allow subpostmasters to rely on new information, or is it the case that it will only be open to those who can provide new evidence or information?

Gareth Thomas: We – we’re listening to the – at this stage, I wouldn’t want to give you a direct answer on that. We’re both keen to follow through on the commitment that we made – that the Secretary of State made, but we’re also listening to – talking to claimants’ lawyers and to subpostmaster groups to try and get right the appeals process and to make sure that it is a fair appeals process. Those conversations are taking place at the moment.

Mr Stevens: So we may have to ask the Secretary of State about what he meant there. Can you assist us with when you expect the consultation process on the appeals system to be finished and that there will be proposals put forward?

Gareth Thomas: As I say, we hope to give an update to Parliament soon.

Mr Stevens: What did you mean by “soon”?

Gareth Thomas: So if not by the end of the year, early in the New Year.

Mr Stevens: Again, when you say “early in the New Year”, that could be doing a bit of heavy lifting. Are you talking January or –

Gareth Thomas: Yes, yeah. If not by the end of – if not by the end of this Parliamentary term, then early in January.

Mr Stevens: I want to ask about the term of the scheme, how long it will last. Have you given any thought to the last date on which applications should be made by?

Gareth Thomas: The Horizon Shortfall Scheme?

Mr Stevens: Yes.

Gareth Thomas: We have looked at a number of – we have looked at a number of options for this. I know this is one of the early suggestions from the Inquiry. I am reluctant to set a deadline at this stage for applications to come forward, partly because we are still receiving applications now, and my experience as a constituency MP was that a constituent who was a victim of the Horizon scandal only narrowly had their case accepted in the first stage of the Horizon Shortfall Scheme.

So I am wary of setting a deadline too soon. I think it is good that people are – who are victims are increasingly coming forward and feel confident to do so, and I think in that sense the continuing publicity about the work of the Inquiry is helpful in that regard. I would expect – or I think it’s possible that there will be further – there will continue to be people coming forward, right up until the point at which the Inquiry publishes its conclusions.

So we are still thinking about what would be the appropriate time to put in the deadline for putting in a claim.

Mr Stevens: I want to look at a different topic, but still on the HSS, and that’s the position of Post Office employees and counter assistants. You’re aware that they aren’t covered by the HSS?

Gareth Thomas: I am aware they’re not covered by the scheme, and it’s one of the issues that I identified early on as being one of the gaps in the compensation process. And I’m – we are actively looking at what we can do to address that, to address that gap, it’s one of the things that I have been asking my officials to do work on, and asking the Post Office to look at as well. I am not in a position to give more detail on that but just that we are actively looking at that issue, as indeed we are at the family members – family members who were affected by – very badly by the Horizon scandal, and who cannot claim for compensation either.

Mr Stevens: Do you know when you expect to be briefed on those matters by your officials?

Gareth Thomas: I ask about those questions on a regular basis.

Mr Stevens: When can we expect a decision from the Government on those areas, both the family members, as you identified yourself, and the position of counter assistants?

Gareth Thomas: I can’t give you a timetable now but we’re working, we’re actively working on those issues. As I say, it was one of the issues that I identified as being a significant issue for my work to be – and that’s exactly why I’m pushing officials to work on exactly those issues.

Mr Stevens: When you say you can’t be give a date, do you expect it to be longer than January 2025?

Gareth Thomas: Mr Stevens, I appreciate that – I understand why a question of timing is a significant point that you want to press me on but I can’t be give you a timescale at this stage.

Mr Stevens: Moving on to, again, another question about deadlines, potential deadlines for applications. Have you considered whether there should be deadlines for other applications, such as the GLO scheme, or Overturned Convictions Redress, or is it the same as your answer for HSS?

Gareth Thomas: On the GLO scheme and the Overturned Convictions Scheme, we’ve been looking at what we can do to speed up decisions in those cases and officials have been talking to claimants’ lawyers and looking at the potential timing of more of those claims coming in. I think we’re reasonably confident that, if claims come in by Christmas, that we’ll be able to have made offers of substantial redress, and paid substantial redress, by the end of March. Certainly in the GLO scheme.

And the Overturned Convictions, Sir Gary Hickinbottom is actively working again with claimants’ lawyers to help get claims brought forward, and I hope that we will be seeing further progress, further progress quickly on getting those sets – that set of complex cases dealt with and redress delivered to those victims too.

Mr Stevens: I want to turn to some issues on the Post Office Horizon Offences Act 2024, for brevity I refer to it as the 2024 Act. Section 4 of the 2024 Act imposes a duty on the Secretary of State to take all reasonable steps to identify the convictions quashed by the Act. Mr Creswell gave evidence that this duty was being discharged by the Ministry of Justice; is that correct?

Gareth Thomas: Yes.

Mr Stevens: What steps, if any, are you taking, or communications are you having with your colleagues in the Ministry of Justice, about the steps that are being taken to identify people whose convictions have been quashed?

Gareth Thomas: So we have – I have actively encouraged officials in my team to talk directly with their counterparts in the Ministry of Justice, both to underline the need for speed in identifying those who have been convicted, so we can begin to get the process of a redress moving forward, and I have also met with my ministerial counterpart in the Ministry of Justice to underline that point as well, and been given assurances that they are working at pace, and have a significant team of officials in place who are trying to do that work as quickly as they can do.

And I should say, Mr Stevens, as well, obviously there’s work being done to talk to the relevant authorities in Northern Ireland and in Scotland as well.

Mr Stevens: Section 1(2)(b) of the 2024 Act states that “Only convictions for offences that were prosecuted by the CPS or Post Office were quashed”, and the previous Government’s policy was not to include prosecutions pursued by the Department for Work and Pensions. Does that position remain the same under your Department now?

Gareth Thomas: Yes, at the moment yes.

Mr Stevens: Section 5 of the 2024 Act deals with the deletion of cautions from the Horizon related offences.

Gareth Thomas: I should say – sorry, I should say Mr Stevens, on the DW cases, I am looking at that issue but, at the moment, our position is, as I stated.

Mr Stevens: When you say you’re looking at it, what do you mean?

Gareth Thomas: I’ve been wanting to – we have asked at my request the DWP for information about those cases and about the robustness of the convictions – of the evidence behind the convictions and, as I say, I’m looking at that. I have not yet seen – I’m not yet in a position to take a view that the position of the Government in that regard is wrong but I am looking at that issue.

Mr Stevens: Section 5 of the 2024 Act deals with the deletion of cautions for Horizon related offences. Are you able to assist with whether persons whose cautions are deleted under section 5 can apply for compensation under the HCRS?

Gareth Thomas: I apologise, Mr Stevens. I would need to write to the Inquiry about that with additional information on that, and I’m not in a position to give that information to you right at the moment.

Mr Stevens: I want to cover another potential gap that was identified by Mr Creswell, and that’s for people who were prosecuted and acquitted. Have you given any thought on whether the schemes should be expanded – when I say the schemes, I’m referring to the HCRS or the Overturned Convictions Scheme – to include persons prosecuted but acquitted, so they can obtain the types of damages associated with malicious prosecution?

Gareth Thomas: I haven’t as yet got to that issue but, if the Inquiry – if the Inquiry gives us a particular steer on that, I’m very happy to look at that and I’ll certainly reflect on that question after this hearing too.

Mr Stevens: I want to move to look at corporate governance and culture, unless you have any further questions, sir, on compensation?

Sir Wyn Williams: No, thank you.

Mr Stevens: Upon arriving in your role as Minister, what is your view – I don’t mean across the whole company but at least at the Board level – of the culture within Post Office?

Gareth Thomas: It’s difficult to be anything other than concerned about the culture in the Post Office. I welcome the fact that there is a new team in place and that there is a chance of starting the process of getting a better culture in place, one that values subpostmasters, in a way that quite clearly hasn’t been the case in the past. We’ve been very clear with the new leadership that their – increased cooperation with them around redress is going to be very important going forward.

But we’re also looking – want to look in the longer term, as well, at what else as Government we can do to improve the culture in the Post Office and that may be in terms of a different model for how they – how the Post Office is governed, and you’ll be aware that we’ve made clear that we want to – we certainly want to hear the Inquiry’s view on that question, but also we will want to talk to stakeholders, and some of the early conferences I’ve had with stakeholders have – we’ve begun to have that discussion about how you change the governance to also lock in improvements to the culture in the Post Office going forward.

But the Post Office is a national asset and I think the public will want to have – be part of that conversation too, and that is why we’re thinking that we will publish a Green Paper next year, to invite wider views about the future of the Post Office.

Mr Stevens: Just understanding the point of consultation, since you were appointed as Minister, have you met the Postmaster Non-Executive Directors?

Gareth Thomas: I haven’t met the Postmaster Non-Executive Directors as yet. I have met the NFSP, the CWU and Voice of the Postmaster and I have met a series of individual subpostmasters who were victims of the Horizon scandal. Obviously, I’ve met the Chair of the – the new Chair of Post Office and the new Chief Executive.

Mr Stevens: We have heard in the Inquiry about the split within the oversight of Post Office, between UKGI and the Policy Team within the core department. Who would be leading on these issues of cultural change within the Post Office: UKGI or the core department?

Gareth Thomas: In a sense everybody has to play a role in changing the culture of Post Office, both UKGI, the Post Office Management Team and Board, and the Department have to play a role in driving that cultural change and there are a number of things that I hope we will be able to see – to see begin to happen under the current Board, but I think there are questions about the future governance of the Post Office which are going to take somewhat longer to think through, and where clearly the Inquiry will have a view, as will many other stakeholders, and that’s why I think – that’s why we flagged that there will be a Green Paper next year, so that other people, a wide variety of people can help us reach a judgement on how we improve that culture.

Mr Stevens: Can we look, please, at page 6 of your statement, paragraph 25. You say:

“DBT has given Nigel Railton, the Post Office’s Interim Chair, a mandate to conduct a strategic review into the organisational culture, structure, resourcing and operational processes within the Post Office, to be carried out in consultation with postmasters.”

You go on to refer to the new Secretary of State over the page, discussing possible options for the future shape of the Post Office. To what extent are you involved in these discussions with Mr Railton and is that something the Secretary of State is taking more of a lead on?

Gareth Thomas: I’ve been involved in those discussions too, with Mr Railton.

Mr Stevens: Can you provide us with an update as to where you see that Strategic Review as being at the moment?

Gareth Thomas: So I think – Mr Railton, I think, hopes to make some initial progress on implementing his strategic review soon, the exact timing I don’t think has been fully settled. It’s not been fully settled as yet but, shortly, I would expect there to be progress on that.

Mr Stevens: You say, in paragraph 26, it doesn’t need to go up:

“We’ve commissioned independent experts to advise us on the best model for the Post Office in future.”

Who are those independent experts?

Gareth Thomas: So Boston Consulting Group have been –

Mr Stevens: BCG, you are referring to?

Gareth Thomas: BCG, yeah.

Sir Wyn Williams: How is this going to work? If I’ve got it right, Mr Railton told me that he had submitted, in effect, a Strategic Review to the Department, the Department itself has commissioned independent experts and there’s going to be a Green Paper next year, and at least inferentially, you were suggesting that, if the Inquiry reports within a timescale which permits this, the Inquiry’s recommendations might be taken into account.

But I’m struggling a bit, Mr Thomas, to understand the Inquiry’s role in this particular issue, in the sense that, if I don’t know what Mr Railton is saying, and if I don’t know what Boston Consulting is saying to you, and if I don’t know what the consultees of the Green Paper are saying to you, it’s going to be quite difficult for me to take into account crucial matters. So I’m asking you, in effect, what it’s got to do with me.

Gareth Thomas: Well, as I understand it, various witnesses to the Inquiry, Sir Wyn, have suggested different ways of the Post Office being run in the future, in terms of how they’re governed, whether it is a mutual, set up as a mutual, whether it becomes an executive agency of Government, or whether there is some other process for the governance.

And you, sir, you may or may not reach a view on those questions, if you do, we would want to take that into consideration as part of our thinking about the future of the Post Office. So I suppose it’s in that context that I make the point about wanting to hear – wanting to consider what the Inquiry says, if anything, on that point.

Sir Wyn Williams: All right, thanks.

Mr Stevens: I read it out already in 25, part of the strategic review which you’re liaising includes operational processes, yes?

Gareth Thomas: Yeah.

Mr Stevens: One operational process is the potential future recovery of shortfalls from subpostmasters, and the Inquiry has heard evidence of concerns within Post Office about the level of discrepancies and future options to recover them, whether it be by attachment of earnings or civil recovery. Does the current Government have a position on how the Post Office should address the issues of discrepancies or shortfalls?

Gareth Thomas: Well, I’ve been concerned to read the reports that have come up of these issues being discussed at this Inquiry, and we have underlined at this early stage to officials, and directly to the Post Office, our concerns that there might still be shortfalls being identified through the Horizon process and then, crucially, people – subpostmasters being put under pressure around – unfairly around how those shortfalls might be being interpreted.

And so we’ve underlined the need to the Post Office in the short term to make sure there is – that they deal with those things in a fair and reasonable way, and we think in the longer – and they have given some reassurance to us that they are seeking to bring a group of subpostmasters in, I think it’s through the NFSP to their offices in Chesterfield, to go through how these issues are dealt with at the moment and how they might be dealt with in the longer term.

I think that is a helpful step. But I would see it only as one – the first step in the trying to rebuild confidence in how the Post Office’s internal processes are used when shortfalls are identified. It’s certainly one of the issues that we will have to continue to look at with the Post Office going forward.

Mr Stevens: We’ve heard, in the Inquiry, of the varying lengths of arms from the Government to an arm’s-length body when it comes to matters of operational strategy, and when it comes to an issue such as discrepancies, there are at least I suppose three ways of approaching it. One is to say, “Well, Post Office, it’s your decision, do what you wish”; another is for the Government to say, “We want you to do this, this is the position we wish you to take”; and the other is to oversee the process by which Post Office makes that decision and ensures it’s fair.

It sounds like it’s the latter position that the Government is taking at the moment; is that correct?

Gareth Thomas: I think – at this stage I think we’re clear that we expect the Post Office – the senior management team to be looking at this and as part of – they are very clear they need to rebuild confidence among the existing subpostmasters, both on issues around subpostmasters’ pay, which is a separate thing but also around they’re dealt with around any Horizon related questions.

And I think the process of getting in subpostmasters into their Chesterfield office and talking through those issues is an important first step.

We will have to work through with them, in the medium term, what, on a longer-term basis, that process looks like. But at this very early stage in our – in my tenure as Postal Affairs Minister, we’ve not got into a lot of the detail around this particular. It’s one of those questions that we will have to get into in more detail about how you – how – about whether we leave it entirely to the Post Office, as you’ve said is one option, whether we are very directive with the Post Office about it, or whether they can give some assurance to us through different internal processes that they set up, that there is a good way of managing this issue going forward.

Mr Stevens: Just on that, is it a potential option in future that the Government, your Department, may say, “Post Office, it’s your decision, we leave it to you”?

Gareth Thomas: That’s, in the sense that no option has been finalised, it’s a potential option in that regard. But, as I say, I’d want to consider that issue in slightly slower and – slower time – I recognise it’s a concern now and, as I say, it’s why we have indicated our concern as ministers to the Post Office in a very direct way, and why my officials have repeated that to the Post Office too.

But in the longer term, as to how that process is managed going forward, we need to think that through.

Mr Stevens: Sir, I don’t have any further questions. Unless you wish to ask any questions now, I’ll see if the Core Participants wish to ask questions.

Sir Wyn Williams: That’s fine. Yes, ask, please.

Mr Stevens: Ms Page has asked for five minutes and Mr Stein has asked for five minutes as well, sir.

Sir Wyn Williams: I think we can safely accommodate both of them before breaking off at around about shall we say 11.50. Let’s put that as our end stop, us so to speak.

Mr Stevens: Thank you, sir. It’s Ms Page first.

Ms Page: Thank you. Is my microphone on?

Gareth Thomas: You’re a bit quiet, apologies.

Ms Page: I’m not sure it is. Is that any better. No. I’m getting a shake of the head from the transcriber. I’ve got the green light on.

Perhaps we could see if Mr Stein wants to go first and then perhaps my microphone can be looked at.

Sir Wyn Williams: Yes, have a go, Mr Stein and we if we can hear you more easily.

Mr Stein: We can confirm no, from the transcriber, sadly not. I wouldn’t like her to miss any of my work.

Mr Stevens: Sir, I do wonder if the – I mean, could you ask questions from here? We know this works, it saves time, unless you need to sit at your desk for your notes.

Mr Stein: I think probably not.

Ah, right, we seem to have solved the problem.

Questioned by Mr Stein

Mr Stein: Mr Thomas, good morning.

Gareth Thomas: Good morning.

Mr Stein: You may or may not be aware but my name is Sam Stein and I represent a large number often subpostmasters and, in particular, for the purposes of some of my questions, which will be short, I represent some currently serving subpostmasters.

In your evidence, you’ve mentioned difficulties with being able to supply answers to Mr Stevens on questions about the appeals, and I think you’ve said that you would like to reflect upon that issue, and give an answer after the Inquiry. I think you meant after giving evidence at this Inquiry.

Gareth Thomas: I did.

Mr Stein: You then set out some sort of timescale for consideration of those particular issues. Some of our clients are having difficulties with the time limits within the scheme. So within at least one scheme there is a 40-day time limit by which an offer must be made, as I understand it. What tends to be happening, and I think this was reviewed at the Select Committee, was that there are then late letters sent to claimants saying, “Can we have more details about your particular application?” That then stops the clock on the 40-day period, meaning there’s then a built-in extra delay.

Now, we represent people that find this process very difficult. They feel lost, they require, frankly, a lot of support. They feel very badly damaged and hurt by the Post Office. They find these late letters in relation to their claims asking for details frankly dismaying and, from their point of view, it appears almost to be a tactic: send a letter in late asking for more details stops the clock.

That’s an issue, I think, that you’re aware of from having attended at the Select Committee; is that correct?

Gareth Thomas: I haven’t attended at the Select Committee. It is an issue I am aware of. And I have met with – I don’t think I’ve met with you, sir, but I’ve met with a number of subpostmasters and I have met with some claimants’ lawyers who have flagged that this is an issue. And I have – and continue to do so – encourage my officials to get offers made as quickly as possible, and if there is a need for further information, that it’s a need for further information that will help not limit or lower the amount of compensation that’s paid but potentially help uplift the compensation that is paid.

But I recognise that many people have been asked multiple times for medical information, and that’s one of the key criticisms that I have heard since coming in to office. And we’re continuing to try to look for solutions as much as we can do to limit that process because I’m very conscious that given the trauma that people have been through already, we need to avoid, in a sense, adding to that, adding to that trauma by drawing out any longer than is absolutely necessary the process of getting a genuine good offer made to people.

Mr Stein: Mr Hollinrake gave evidence the other day and his evidence was regarding his period of time when dealing with such matters, and it seemed from his evidence and, indeed, what we could see that he had tried to take as much of a hands on approach as possible to these particular questions. One of the points of that I put to him was that, given the Post Office is wholly owned by the Government and what went wrong at the Post Office and harmed so many people was therefore by an organ or part of the state’s responsibility, essentially, from my client’s point of view, not keeping the mad dog Post Office under a leash.

What I asked Mr Hollinrake was: surely the compensation scheme should be dealt with under, if you like, a spirit of generosity to those subpostmasters and he agreed.

Do you agree as well, Mr Thomas, that that should be perhaps the guiding first or guiding light behind these schemes? Not nit-picking, not getting to deal with matters unless they are really very important, but making progress with the spirit of generosity, do you agree with that approach?

Gareth Thomas: I do agree with that and have made that clear to my team, and we’ve made that clear to the Post Office too.

Mr Stein: I’m very grateful.

The other matter that Mr Stevens referred to, and also Sir Wyn did, in terms of picking up a particular point regarding strategic review, now we know Mr Railton’s evidence was that the strategic review has been sent upwards to ministerial level, and he discussed what he’s suggesting might be a change of polarity about the business. Now, what I think he meant was that the Post Office business should become subpostmaster or post branch centric, rather than, it appears, being run for the continuation of the Post Office in the middle, actually running for the branches and the subpostmasters providing the public service. He referred to that cultural change as being really very important as a way forward.

So the Strategic Review and the Government’s answer to it is very important to the Post Office generally, the public of course, but also those people I represent. If that review is going to be left so that it can take on board points raised in this Inquiry in terms of its report, that will be some time into next year, Mr Thomas, because we get to closing submissions at the end of this year. Sir Wyn and his team will then go to a process of drafting. I’m sure it’s started. Within that process, they are also need to send out what we call maximisation letters, which are letters to those people which may come under, if you like, criticism from the Inquiry in terms of the final report, and that process always takes some time.

It will mean that neither my clients, their team, myself and my Legal Team, will be able to make careful consideration of what’s going on, if we just get what appears to be the kind of end result of the chat between Government and Post Office. One way forward would be to allow us access to the submission that’s made to the ministry, so we can see what it is that Post Office is suggesting is the way forward and then we will be able to make some submissions.

It’s difficult, sitting there where you are, for you to say “yes” or “no” to that, I appreciate that, but could you consider that?

Gareth Thomas: I am certainly happy to consider that. I think – I mean, there are number of stages and number of elements to the whole question about the future of the Post Office. And I very much agree with the objective of Mr Railton about, in a sense, changing the culture of the Post Office away from focusing perhaps on the centre, as it certainly appears to have done in the past, to putting the needs of the subpostmaster and their operation in communities up and down the country at the heart of what they do going forward.

And there are, in a sense, to make that cultural change happen, there are a number of things that need to happen. And I think we’ve been discussing with Mr Railton what steps can be taken early on and soon, and what issues will need to be considered over a longer-term period. So the whole question about the future governance model for the Post Office, I think, is a longer term issue, which it is reasonable that a Green Paper would look at, changing the beginning of the process of trying to get subpostmasters paid better, and thinking about the sort of commercial operation of the Post Office and getting that functioning better to support subpostmasters. That is something that we think – and I know Sir Nigel does too, that – where work on that can start quite quickly.

You will understand that there is a process of consultation that has to take place, that Post Office has to lead with stakeholder – stakeholder groups. Those conversations are taking place. We also have to think through whether there are financial implications to what Sir Nigel is seeking to do in the short-term, and those conversations are taking place.

So I do expect that there will be movement in the cultural – in the direction of the cultural change you have articulated as both wanting yourself as well as indeed we do, very soon.

But in terms of the specific question you’ve made, I will take that away and –

Mr Stein: I’m grateful.

Now, obviously, your own position, working as you are at the moment and dealing with these issues directly, has only be been in the last, what, eight weeks or something like that?

Gareth Thomas: I think it’s approaching four months now.

Mr Stein: All right, longer. You can’t perhaps answer questions as to why the strategic direction of the Post Office wasn’t wrestled to the ground frankly three/four years ago. I understand that, that’s for other witnesses.

But nevertheless, what appears to us and indeed, I believe, to the Inquiry, is that the movement that we get on issues such as compensation only tends to come just prior to people giving evidence, and the movement in relation to the strategic direction of the Post Office, we essentially only learnt about it from Mr Railton’s evidence a week or so ago.

So there does appear to be a correlation between coming along to the Inquiry to answer questions, and then finding out things that may be happening and, with great respect, Mr Thomas, many answers still then remain. You’ve just used the word “very soon”: Mr Stevens was pressing you to provide an answer as to what does “next year” mean, “early next year”, and you answered January.

Gareth Thomas: I suppose what I’d say, sir – as I say, I’ve literally only been in post not yet four months, so I am trying to get my arms around the detail of the – of what I think are three sets of issues: (1) the issues of how you get compensation to victims of the scandal more quickly; are there gaps in the compensation process, there clearly are, what can we do about them; and then, what do we need to do to improve the culture and address the future of the Post Office, so that it can do a good job in our – in each of our communities, and treat subpostmasters in a far better way than has been done up to now.

So to give an indication, it’s taking – you know 50 per cent of my time is spent at least on Post Office issues, we’re trying to move at pace but these things are not always as straightforward as one might like, and require a degree of thought and a degree of discussion not only with stakeholders groups, but also across Government too.

Mr Stein: Thank you, Mr Thomas. Just one matter then remains. Those –

Sir Wyn Williams: That’s a very generous five minutes, Mr Stein.

Mr Stein: I’ll just ask for one more 30 seconds of my extended five minutes.

Sir Wyn Williams: 30 seconds it is.

Mr Stein: Thank you.

Mr Thomas, you’ve just mentioned the three big points: compensation; the way that those matters are dealt with; and then obviously the strategic direction of the Post Office into the future. These essentially are really the beating heart of this Inquiry. Would you be prepared to return to this Inquiry if Sir Wyn were to schedule a new short period of hearings days and provide answers to the Inquiry as to where we’ve got to, at some point next year? I suspect given the timings and dates you’ve spoken about it would be around late February, early March.

Gareth Thomas: If the Inquiry summons me back, I will of course come. I have already been summoned by the Business and Trade Select Committee to answer questions in Parliament in the coming weeks and I am sure colleagues across the House of Commons will want to hold my feet to the fire on those three big issues going forward.

Mr Stein: I’m grateful Mr Thomas and so obviously those matters will form part of our submissions at a later date.

Sir Wyn Williams: Ms Page, can you be heard now?

Questioned by Ms Page

Ms Page: Mr Thomas, thank you.

I am going to follow up, if I may, on some of Mr Stevens’ questions from earlier about the commitment that you’ve made to make sure that full and fair is not a secondary consideration to prompt. I’m following up on that in the context of the £600,000 offer to those who have been found to have been wrongly convicted, and whose convictions indeed were an affront to the public conscience. So you’re probably familiar with an argument that Mr Recaldin had with the Department in January of this year, when the £600,000 was first brought into effect, and he said that effectively it was a floor, because everyone was potentially entitled to it, and therefore it ought to operate as a floor, so that those who were content to settle for £600,000 would get that as their full and final, but those who thought that they were entitled to more should be able to have it by way of an interim payment.

Therefore, payments would simply go out the door to everyone in that scheme at £600,000 with those who thought they were entitled to more, to continue thereafter.

But, unfortunately, the Department made it very plain that that was not to be the case because they wanted to make sure that they were exerting pressure on postmasters to make full and final settlements, and that if 600,000 went out to everyone, that would not exert sufficient pressure. That was made very plain in the email. I won’t take you to it because the Inquiry has seen it a few times now already, but that was the clear reading of the responses that Mr Recaldin got.

So, in effect, the Government was turning the screws on postmasters saying “You’ve got to accept the 600,000 as full and final, otherwise you don’t get it. Otherwise you’ve got to fight. You’ve got to fight on”.

Now, would you agree that that is the wrong approach and that, moving forward, this new Government and your Department should be looking at the £600,000 as an interim for those who want to say they’re entitled to more?

Gareth Thomas: Well, certainly one of the things I’m going to reflect on after this appearance is the balance between prompt and full and fair. On those who have had their convictions overturned, absolutely, I want them to feel they’ve got a full and fair settlement, and I wouldn’t want anybody to feel pressurised into accepting less than that they felt they were – than they felt they were entitled to.

And, you know, I believe the scheme that we’ve announced, the HCRS scheme, will allow that – will allow that to happen but I’ll certainly take away and reflect on whether there’s more that needs to be done in that regard.

Ms Page: Thank you, and if I may then, please, take away and feed into your considerations the very clear message from those we represent, including Mr Parmod Kalia, who sits next to me, also Mr Vipin Patel, and many other people that we represent who have had their convictions overturned, that they feel under pressure by the £600,000; it makes them feel that if they want to get payment soon they should settle for £600,000.

That is wrong. Some of these people are elderly, some of these people are reaching the end of their lives and they feel under pressure to accept that sum. So please take that away.

Gareth Thomas: I very much will do. I wouldn’t want anybody, given what they’ve been through, to feel under pressure and I will very happily take that away and look at that.

What I would say as well is that part of the reason for the £600,000 offer was to try and give people the chance to avoid going through a long process or a process that created additional trauma, given what people have been through, so the last thing I would want, would be to have the reverse effect. So I’ll certainly take that point away and look at that, ma’am.

Ms Page: I’m grateful.

Sir Wyn Williams: Thank you, Ms Page.

Is that it, Mr Stevens?

Mr Stevens: That is it, sir, yes.

Sir Wyn Williams: Well, thank you very much, Mr Thomas, for coming to give evidence to the Inquiry. I’m sorry that for the first time in virtually three years, you were the victim of having to stop giving evidence because our computer system, in effect, was playing up. I am very sorry about that but I’m very glad also that it was repairing so quickly. So my thanks to those operating it.

Insofar as you’ve been asked to provide further information into the future and, indeed, you volunteered to write to the Inquiry, I will reflect on how best I can communicate with you, if I may, so that there is transparency as between you and your Department and the Inquiry about any further information that you provide.

The Witness: That’s absolutely fine, sir. I will be happy to do that.

Sir Wyn Williams: Fine. Thank you very much. How shall we proceed now, Mr Stevens?

Mr Stevens: Sir, if we can take a break until 12.15 and then we will call the next witness.

Sir Wyn Williams: Fine.

Mr Stevens: Thank you, sir.

(11.57 am)

(A short break)

(12.17 pm)

Mr Blake: Good afternoon, sir. Can you see and hear me? This afternoon we’re going to hear from Mr Donald.

Sir Wyn Williams: Yes.

Charles Donald

CHARLES HUNTER DONALD (sworn).

Questioned by Mr Blake

Mr Blake: Thank you very much. Can you give your full name please?

Charles Donald: Charles Hunter Donald.

Mr Blake: Mr Donald, you should have in a bundle in front of you four witness statements that you have produced:

The first is dated 19 February this year and has a unique reference number of WITN10770100. That outlines the corporate structure in relation to UKGI.

A second dated 26 April 2024 with a URN of WITN10770200. That addresses changes to governance arrangements.

A third is dated 2 May 2024 and has URN WITN10770300. That addresses the management of the Post Office’s performance, amongst other things.

Finally, a fourth statement dated 26 September 2024 with a URN WITN10770400 addressing lessons learnt and changes.

Do you have all four of those statements in front of you?

Charles Donald: I do.

Mr Blake: Can you please confirm that your signature appears on all of those four statements?

Charles Donald: It does.

Mr Blake: Can you confirm that those statements are all true to the best of your knowledge and belief?

Charles Donald: They are.

Mr Blake: Thank you very much. All of those witness statements will be uploaded up onto the Inquiry’s website.

By way of background you are currently Chief Executive of UKGI; is that correct?

Charles Donald: That’s correct.

Mr Blake: You have a background in investment banking. I think you were Vice-Chair of Credit Suisse; is that correct?

Charles Donald: That was my final role at Credit Suisse in 2018, yes. I essentially ran the UK investment banking team.

Mr Blake: Thank you. Prior to that various other roles relating to investment banking?

Charles Donald: Yes. The first half of my career was spent in equity research as an equity research analyst.

Mr Blake: Thank you. You, joined UKGI as Head of the Financial Institutions Group in March 2018; is that correct?

Charles Donald: In May 2018, actually.

Mr Blake: Thank you very much. Can you assist us very briefly with what the Financial Institutions Group dealt with at that time?

Charles Donald: I can. So the Financial Institutions Group within UKGI is essentially what was the old UK financial investments part of the organisation. So when the Shareholder Executive and UK Financial Investments came together in 2016, then the UKFI bit of it became the Financial Institutions Group. So that’s principally the part of the organisation that deals with, basically, the leftover assets from the global financial crisis, which now constitute a remaining shareholding in NatWest Group, and then liabilities in respect of the mortgage portfolios from Bradford & Bingley and Northern Rock.

Mr Blake: Did you have any involvement in banking compensation schemes?

Charles Donald: I didn’t, no.

Mr Blake: You were appointed Chief Executive of UKGI in February 2020 and took up the role in March 2020; is that correct?

Charles Donald: That’s correct.

Mr Blake: Was that your first experience of the Post Office?

Charles Donald: I’d obviously read a lot about the Post Office in the media prior to that and I had, in the period when I was heading up the Financial Institutions Group, I had been a member of the Executive Committee of UKGI, and Post Office, clearly at regular moments, was a topic for that meeting.

Mr Blake: On taking up the role, did you have any specific briefings on the matters that are being addressed by the Inquiry, such as the enforcement actions taken against subpostmasters, the findings of the High Court or the issue of compensation and redress?

Charles Donald: I spent some considerable time with the Shareholder Team and the Shareholder NED at that time, Mr Cooper, to get as comprehensive an understanding as I could of the issues that were important for them at that stage, yes.

Mr Blake: I think you have attended a number of Inquiry hearings?

Charles Donald: I have.

Mr Blake: Knowing what you know now from the Inquiry, do you consider that those briefings in 2020 were sufficient?

Charles Donald: They came from a perspective of, I think the UKGI Shareholder Team but, in order, I think, for me to sort of take on that role at that point, yes, I think they were sufficient. I think my knowledge and understanding of the issues has broadened quite materially since then, of course.

Mr Blake: Thank you. We’ll go into that in due course.

You have said in your third statement that in 2007 ShEx had 17 portfolio assets, by 2019, this was 24 portfolio assets, and UKGI, I think, is a Board member for 13 of those; is that correct?

Charles Donald: A greater proportion of the 23 than – there are some boards – that some assets that we don’t sit on the board of. For example, we don’t sit on the Board of NatWest Group, we don’t sit on the Board of Channel 4.

Mr Blake: Can you assist us with what determines whether there is a UKGI representative on the board?

Charles Donald: So it is substantially determined by is there a request from the Department who owns the arm’s-length body as to whether they would like a Shareholder Non-Executive Director to be on the board. I think, some way before my time, the decision was made in respect of publicly quoted companies, so Lloyds and NatWest, in the UK Financial Investments context, that it wasn’t going to be right for a government individual to sit on the board of a publicly quoted company.

I think that was much as anything to do with inside information and protection from inside information. And then, actually, in the case of Channel 4, because of its status as a broadcaster, it’s absolutely not appropriate for any member of the Civil Service or the government to sit anywhere near the Board of Channel 4.

But, broadly speaking, it always reflects a request from the Department and then it is within our shareholder model what we believe to be a key component of the work that we do.

Mr Blake: Putting aside the matters that the Inquiry has been looking into, is the Post Office inherently more challenging than those other assets that you manage?

Charles Donald: It is up there as one of the more challenging assets. I think, if I separate completely the issues of the Inquiry, I would say there are some other very challenging, complex assets. The Nuclear Decommissioning Authority would be one would point to, the British Business Bank, I think the UK Infrastructure Bank, now the National Wealth Fund, tending to be the sort of larger more complex ones, yes.

Mr Blake: Do you consider that the governance model, the arm’s-length body model, is appropriate for the Post Office, irrespective of the matters that we’re dealing with at this Inquiry?

Charles Donald: So the arm’s-length body model in the way that I understand it – I mean, it’s a model which is used in many different ways across government. I mean, there are, I think, 350 plus arm’s-length bodies but in terms of Post Office being a complex commercial business with a requirement to deliver a wide range of government policies, then, yes, I do think it is an appropriate model.

Mr Blake: I want to ask you a particularly broad question which is, having heard the evidence that you have from the Inquiry, what, if anything, do you consider went wrong at UKGI in respect of the Post Office?

Charles Donald: So I think, with respect to an effective governance model working well, I think there are two principal components. One is, I think, that the executive of the arm’s-length body and the information and the support that flows from, you know, the organisation to that executive needs to be full and transparent, and then the executive needs to be comfortable, prepared and able to bring all issues to the board, be they challenging, problematic or not, and then the reciprocal of that is that the Board needs to be equipped to be as challenging as it can be of that executive and, to the extent that it sometimes issues in areas that it needs to be persistent on, then it is persistent on.

And I would say, with respect to my understanding of some of the issues that went wrong at certain moments in that history, it was that those two components didn’t work necessarily and, at certain moments, I think the challenge and the curiosity from the Board, including at certain points from the Shareholder Non-Executive Director, were not where they needed to be.

Mr Blake: You say “certain points”; are there particular points that you can point to in particular?

Charles Donald: So I think an example would be the Parker Review, so where I think it is the case that that full review did not come to the Board because there was legal advice to suggest that it was privileged and shouldn’t come to the Board. With the benefit of hindsight, that clearly was an issue that – well, a restriction or a restraint that should not have applied.

Mr Blake: Thank you. We’ll come to that example in due course today.

One fundamental issue, the issue of financial self-sufficiency or, as we heard with Lorna Gratton, sustainability, do you consider that self-sufficiency in respect of the Post Office is ever a realistic ambition?

Charles Donald: I probably come at this from a slightly higher level than perhaps Ms Gratton would have done because, obviously, she is – sort of has level of information that I don’t have. I would say that it is an appropriate aim but I struggle to see, with the structure that is there in place at the moment, I think particularly the scale of the network obligation and then the cost structure – I think consideration would need to be given to both those issues in order to produce a sustainable business.

And, as Ms Gratton I think was clear when she gave evidence yesterday, for the Board of the Post Office currently to sign off its accounts as a going concern, it requires the government to stand behind it financially, and it’s not immediately obvious how that stand behind obligation is easily removed at this stage, given the structure of the organisation.

Mr Blake: Looking back at what you have from the Inquiry and your own experience, do you consider that striving for that self-sufficiency, rather than having some other ultimate goal, such as benefiting particular stakeholders, such as subpostmasters, do you think that has had a role to play in the scandal, striving for self-sufficiency?

Charles Donald: I think it is absolutely possible that, at certain points, that striving created, you know, some blinkers on the – in respect of sort of management’s objectives. I can probably partly respond to this question by saying I’ve had a number of conversations with Mr Railton since he took up the role of Interim Chair and I think that these conversations have been quite high level but I think he has some thoughts and some ideas, which, in my view, appropriately could reposition the organisation, importantly to take subpostmaster constituency very seriously and make them more central to the organisation and the way it works, and I think those are very interesting ideas.

Mr Blake: What do you personally see as the solution to that issue?

Charles Donald: I think it is – one of the things is to address the current cost structure and Ms Gratton made reference to that yesterday.

I think there’s also been ideas round, you know, potential mutualisation, which as a concept I think is a really interesting concept. I think, however, it’s really important that, if an entity was to be mutualised that that entity is self-sustaining and financially and economically sound, prior to it being mutualised because, otherwise, a mutualisation of a financially insecure and inefficient organisation is not going to do anyone any benefit whatsoever.

Mr Blake: I would like to move on to the reporting of risks, which again was another issue that was touched on my Ms Gratton, so I can take it relatively quickly.

Can we bring up onto screen, please, your fourth witness statement, and it’s page 46, paragraph 91 that I’d like to ask you about. At the bottom of that page, you say as follows:

“It is important to note, at the outset, that it is not UKGI’s primary function to identify and/or assess risks facing individual Assets across its portfolio and report such risks into the sponsor Department. It is the Accounting Officers within our Assets who are tasked with the primary responsibility for identifying and managing the risks faced by the Asset and for reporting on those risks to the sponsor Department, together with the Asset’s Board and Executive.”

If we scroll up again, please, you say it’s not UKGI’s primary function. Do you nevertheless see it as a function of UKGI to identify and assess risks facing those assets?

Charles Donald: So I do think it is a function, yes. I think, principally, it is that – and that function is for the Shareholder Non-Executive Director and the Shareholder Team to act as, essentially, a secondary line of sight, a line of visibility, onto the Board and then, in particular, the Audit and Risk Committee, which should be responsible for risk, and to assure themselves that the risks that the Board has identified and that the Audit and Risk Committee has identified are being correctly channelled through and communication to the Department.

And, if the Shareholder Non-Executive Director and the Shareholder Team feel that that is not happening in a comprehensive and appropriately detailed fashion, then I think they have the opportunity to act as a separate channel of information and identifying risks to the Department.

Mr Blake: Thank you. I’d like to take you to the portfolio operating principles. We could bring them up on screen at UKGI00049040. Very briefly, you have set it out in your witness statement, but what are the portfolio operating principles?

Charles Donald: So these were a set of principles that first started to be developed in 2019, so prior to my taking on the Chief Executive role, but we put them into place in 2020 and, essentially, the purpose of this document was twofold. It was to try and document and clarify any misunderstandings that existed out there as to what the shareholder role for UK Government Investments was, and it sought to crystallise and identify the core areas that the shareholder NED and the Shareholder Team should be focused on. Within that, the challenge for ALBs is that government often has many roles across them. So they can be the funder, they can be the policy director, they can be, in some cases a customer, they are sometimes the regulator, and they also need to be the shareholder.

And the purposes of documenting the portfolio operating principles for UKGI was to identify what the shareholder role was, as distinct from those other government functions.

Mr Blake: Are we to read into that that some of the background to this development relates to the issues that the Post Office has faced or were they developed unrelated to these issues?

Charles Donald: I think the answer is it was a combination. I mean, as I say, I wasn’t part of the original inception of this process. However, once I became CEO, I very actively encouraged it to come to its point of completion and, as you say – as I said, this document says version 4 by 4. We regularly evaluate and update these principles.

Mr Blake: You have set out in your witness statement how it’s been updated subsequently, as a result of the Horizon Issues?

Charles Donald: And I do think a lot of the learnings that we have had from the Horizon issue, a lot of the evidence that we have heard from the Inquiry, have been significant in developing these principles and ensuring that they are fit for purpose. And I don’t think that sort of evolution and updating – I don’t think you ever get to an end date on that. I think that will be a process that I will certainly continue to drive and my successors will do so as well.

Mr Blake: If we could turn to page 9 please, it sets out there the UKGI Non-Executive Director responsibilities. I would just like to read to you from a section towards the bottom of the page, please. In that final paragraph, about halfway through, it says:

“UKGI [Non-Executive Directors] will act as an interlocutor between Departments and Assets as necessary, to give [His Majesty’s Government] better insight as to the quality of the Board in the performance of its governance function, as well as to promote [the Government’s] perspective and information flow at the Asset Board.”

So, as you were just explaining, do we read into that that, although it may not be UKGI’s principal role in respect of managing the risks, it does, in fact, act as a liaison between the company and the government in respect of the performance of the Asset’s governance function?

Charles Donald: That is correct. It might be worth mentioning that I don’t think – or not “I don’t think”, I’m very clear that the concept or the governance construct of a Shareholder Non-Executive Director is absolute not a unique construct for UKGI. It is a governance construct that is employed widely in the private sector and in private equity. There are FTSE 100 companies at the moment which have Shareholder Non-Executive Directors from shareholders on their Board, and it happens – it is a function that is across government in other areas where UKGI is not involved.

But, yes, you are correct the principal role of that Shareholder Non-Executive Director, whether they be UKGI or other, is to act as that interlocutor between the shareholder and the arm’s-length body.

Mr Blake: Thank you.

Charles Donald: Sorry, I was just going to say and sort of be the ears and the eyes of the shareholder around the Board table.

Mr Blake: Could we please turn to POL00362299. Again, very briefly, are you able to tell us what this document is, what its purpose is?

Charles Donald: So this is a document which sets out the roles and responsibilities of the Department, UKGI and the arm’s-length body. Really, the purpose around putting these in place, and we have them in place across all the arm’s-length bodies that we have a role with, is to ensure that there is a single point where the respective responsibilities are set out and identified, in order to provide essentially clarity as to what everyone’s jobs and obligations are.

Mr Blake: Thank you. If we turn to page 11, it sets out there the key roles and accountabilities of the shareholder representative. I’ll just read to you a small section of that. It starts by saying:

“The Shareholder’s Representative (a role currently performed by UKGI) oversees [the Post Office’s] corporate governance, strategy and the stewardship of [the Post Office’s] financial and other resources on behalf of the shareholder. On these matters, the Shareholder’s Representative is the main source of advice to the Policy Sponsor and the PAO …”

Can you assist us: what is PAO?

Charles Donald: So the PAO is the Principal Accounting Officer, which in most cases is normally the Permanent Secretary at the shareholding department. So, in the case of Post Office, that is currently the Permanent Secretary at the Department for Business and Trade.

Mr Blake: Thank you. So:

“… the Shareholder’s representative is the main source of advice to the [that would be the Department then and the Permanent Secretary], and the primary contact for [the Post Office’s] interaction with the Shareholder.”

It continues towards the end of this paragraph, it says:

“[The Post Office] will facilitate the Shareholder’s Representative in fulfilling this function by providing relevant information on request including on but not limited to: strategic plans, financial forecasts and budgets, financial performance, achievements against targets, capital expenditure and investment decisions, [Post Office] Board appointments and remuneration, branch network information and reports on key corporate risks.”

There’s also a section on the prior page, page 10 on the Post Office’s Accountable Officer who, in this case, if we scroll down to 6.2, please, is the Post Office’s Group Chief Executive; is that correct?

Charles Donald: That is correct.

Mr Blake: Now, there doesn’t appear to be set out there a responsibility on the Chief Executive to pass information to the Department for Business in respect of risks. Do you agree with that?

Charles Donald: It doesn’t set it out there but I think the principles within the Managing Public Money document would make reference to that.

Mr Blake: Thank you. Do you think it’s sufficiently set out there in terms of the responsibilities of the Accountable Officer?

Charles Donald: I think it is in terms of the reference to the Managing Public Money and I think that’s set out in Appendix 1. But it’s an interesting observation as to whether it’s more wording should be inserted in there to make it even more explicit.

But I think the Accountable Officer of any arm’s-length body, seeing this text in the framework document, would want to go and look at the Managing Public Money document.

Mr Blake: Thank you. That can come down.

We heard from Lorna Gratton yesterday in respect of risk reporting and I think her evidence was to the effect that UKGI risk reporting identifies risks that are faced by UKGI, rather than risks that are faced by the assets themselves. Do you consider it would be sensible to have some sort of mechanism to track the risks to the assets themselves?

Charles Donald: So it is correct that, when the UKGI Board looks at risks, it principally is focused on the risks attached to the ability of UKGI to deliver on its role and its function, and that might be a function of resourcing capability and all the things that go with that.

There is then an additional role which the UKGI Board has, and there are levels before we get to the UKGI Board – so there’s then our own risk team, UKGI Executive Committee, and then the Board – to look at whether concerns that the Shareholder Non-Executive Director and the Shareholder Team might have about whether the Accountable Officer at the arm’s-length body is communicating risks correctly and whether the Board and the Audit and Risk Committee of the ALB are communicating risks correctly and assessing risks.

Then coming back to our Board, they do have a role in terms of checking on that and regularly when – well, every time the UKGI Board meets, there is a risk paper which identifies any significant movements in risk across the ALB portfolio and the UKGI Board will interrogate, if appropriate, the Shareholder Non-Executive Director, the Shareholder Team and our Risk Team, on whether that – their concerns, if not going through the channel of the ALB, are being communicated to the Department.

Mr Blake: If we take an example of a present risk, the New Branch IT System, NBIT system, looking that development of that system over the time that you’ve been at UKGI, do you consider that UKGI has been sufficiently made aware of those risks?

Charles Donald: So this is a subject that has come up regularly in my regular interactions with the Shareholder Non-Executive Director on the Post Office Board, so initially obviously Tom Cooper, when I took on the role, and then subsequently Lorna Gratton.

One of the core elements of those conversations that I absolutely recall is me essentially checking with them that their concerns around NBIT, the costs and the development of costs are being communicated by them to the Department, in addition to any communication that is going from the arm’s-length body itself, from the Post Office itself.

Mr Blake: In your view, has that communication been sufficient in respect of NBIT?

Charles Donald: I believe it has and, in addition, I have had conversations myself with both the Director General in the Department – that’s Mr Bickerton – and then, when the responsibility for Post Office moved to the Department for Business and Trade and, essentially, the Permanent Secretary there Gareth Davies took on responsibility as the PAO for Post Office, he and I had a conversation around NBIT and the concerns that UKGI had. So I actually think there’s been sort of multifaceted communication on that, that goes beyond just the communication from the Shareholder NED into the Department.

Mr Blake: Can I return to the “Portfolio Operating Principles”, so that’s UKGI00049040, and it’s page 8 that I would like to ask you about. There’s a section here on “Escalating Shareholder Concerns and Further Intervention”. It says:

“UKGI shareholder teams should conduct the [business as usual] target shareholder role as set out in this document. However, red-flag issues may require further escalation or intervention beyond our [business as usual] practices and the normal parameters of the shareholder role. This should be done via the board initially, but if the response or engagement from the Asset is not adequate then shareholder teams should feel empowered to push matters further. Shareholder teams must not feel unable or unwilling to pursue their concerns because of the perceived operational independence of an Asset or, in the case of Shareholder [Non-Executives], not wanting to overstep their non-executive role.

“In exceptional circumstances, UKGI should not feel constrained by its [business as usual] shareholder or UKGI [Non-Executive Director] activities and should feel comfortable to undertake additional scrutiny and escalate matters where appropriate. In essence, a level and degree of challenge being provided by UKGI must remain under careful review in such situations.”

First of all, can you assist us: what is a red flag issue?

Charles Donald: So one of the learnings from the Horizon scandal and the evidence that we have all listened to at this Inquiry has been for us to, as we talked about I think earlier make some adjustments to the portfolio operating principles and develop them to seek to capture the concept of escalation in more detail, and to make sure that – and create an environment within UKGI where I think Shareholder NEDs and Shareholder Teams are very alert to issues that could become red flag issues.

So I think it’s – I mean, I’m not sure there’s a definition that defines it precisely. I think it’s a function of the constant reminder that we are giving in UKGI to Shareholder NEDs and Shareholder Teams to be alert, curious, absolutely ready to identify a potential red flag issue and make sure that it is being escalated through to the Department.

I think there’s a – we’ve done a lot of training through the organisation and through the Shareholder Teams on what we have set out as our initial lessons learnt from the Horizon scandal and I think we’ve created a culture and environment which is very questioning.

Mr Blake: Can you assist us with what kind of matters would be a red flag issue and, indeed, whether there have been red flag issues that have been dealt with.

Charles Donald: So I think – I mean, perhaps it makes sense to come back in respect to the NBIT example. I don’t think it’s the sole reason that this has happened but the Department is seeking and has put in place an assurance role from public digital, which is a government IT digital function, around NBIT, and that would be a good example. I mean, I think that’s a very good example of where I think a department has taken an action as a function of a red flag issue being identified.

But, as I say, I don’t think that’s purely come from just UKGI, I think that was also a set of – reflected a set of concerns in the Department.

Mr Blake: Thank you. That document can come down. In this Inquiry, we’ve seen the issue as to whether something is an operational matter or a strategic matter. Do you think that there is clarity, certainly in amongst the Non-Executive Directors for UKGI as to the difference between the two?

Charles Donald: I do and I think, again, within our training and our development programme, which we put in place over the last three and a half years, we have a lot of discussion around the role of non-executive and executive and we absolutely know that a board is to be non-executive and should not be getting into running operational issues. That being said, I don’t think – and it’s reflected in the extract that you read out there – I don’t think that the Shareholder Non-Executive Director at UKGI should be fearful about, you know, potentially overstepping themselves at certain moments and being challenging and being curious because I think that’s our role and I think that’s one of the lessons that we have learnt from this scandal.

Mr Blake: We’ve heard some evidence that some people saw Horizon as an operational matter because it related to a computer system. How do you see that being avoided in the future?

Charles Donald: So I think it was sort of the judgement by some individuals that it was an operational issue and should be left as such that was potentially a contributory factor to what went on, which is why I come back to that I think the Shareholder Non-Executive Director’s role today is not to be fearful about just saying “That’s an operational issue and I shouldn’t be asking questions about it”. I think they absolutely should.

Mr Blake: We’ve also heard some evidence in the Inquiry potentially about the Shareholder Non-Executive Director becoming too close to the organisation, to the Post Office. How do you see that as being avoided now or in the future?

Charles Donald: So I think that’s an issue for – I don’t think that’s an issue specifically for the Shareholder Non-Executive Director. I think that’s an issue for all non-executives, and I think – I mean, you didn’t use the phrase but groupthink is a real risk and a real danger and one of the – again, one of the elements that we have drilled into people in our training and in our development programme is to be very alert to the dangers of groupthink.

In fact, I can recall a specific session as part of our Shareholder NED development programme where you have essentially 19/20 people in a room, so collectively the Shareholder NEDs, and we will discuss exactly those issues and how they could develop and what to be aware of and how to resist that happening, and I think that – you know, I mean, individuals will need constant reminding and reinforcement of those principles to ensure that these things don’t happen again.

Mr Blake: There has been some evidence, I think it was from the Subpostmaster Non-Executive Directors that there is a slight imbalance on the Board because the UKGI representative spends every day of the week on Post Office issues, has access to materials from the Department that other non-executives don’t have access to. I know you have already said in your evidence that that structure exists elsewhere, not just for government but also for other shareholders.

But do you see an issue there and, if so, how can that be overcome?

Charles Donald: So I think, to the sort of imbalance point, most of our Shareholder Non-Executive Directors at UKGI will have additional functions that extend beyond just being a Shareholder NED or leading a Shareholder Team of an asset. So I actually don’t think there’s a single individual who is five days a week purely as the Shareholder NED role. So that would be the first observation I would make.

But the second observation I would make is that we’ve never said and we’ve never identified the Shareholder Non-Executive Director as an independent non-executive director. I mean, in our view, and the definition of it, they are non-executive, yes, but they are not independent because they are there to represent the shareholder.

And I don’t think in certain issues, when shareholder issues need to be really focused on, that necessarily an imbalance is inappropriate. I do think there are ways to sort of mitigate that, in terms of the culture and the dynamic around the Board table and I think it is incumbent upon the Shareholder Non-Executive Director, and indeed the Chair, to be focused on that dynamic and to make sure that that dynamic works effectively for the overall working of the Board.

I think there’s also a responsibility on the behalf of other non-executive directors to understand and seek to understand the role that the Shareholder Non-Executive Director has and, you know, make some allowances and adjustments for that very specific role.

Mr Blake: Sir, it’s 1.00. I am unlikely to have more than half-an-hour’s worth of further questions. I think the questions from Core Participants, if any, will be minimal. Can I propose that we continue, unless somebody else says that that’s unrealistic.

Mr Jacobs has about ten minutes. That would take us up to 1.40, if my timings are accurate.

Sir Wyn Williams: I am prepared to do it but, first of all, let me ask Mr Donald how he feels about that. He is the one in the hot seat, so to speak.

Would you prefer to continue and have your lunch afterwards, so to speak, or break for lunch?

The Witness: I’m perfectly happy to continue, Sir Wyn.

Sir Wyn Williams: Fine. I understand we have a transcriber who is remote. Is that person happy to sit through what would normally bet a lunch period, so far as we can ascertain.

Mr Blake: I’m not sure how I would establish if they weren’t I am going to take a guess and say – I am told on the screen – there’s no answer on screen.

Sir Wyn Williams: I’m going to assume that most people would prefer to finish earlier rather than later on Friday in that event.

Mr Blake: The transcriber says “Yes, I am happy”.

Sir Wyn Williams: I’m also going to hold you, Mr Blake, and any other questioner lest there be more than Mr Jacobs, to a fairly strict timetable so carry on.

Mr Blake: Could we then, please, turn to UKGI00013237.

I’m going to address the topic of the Subpostmaster Non-Executive Directors. This is a submission very early of in your time at UKGI, July 2020, and does this submission provide the background to that appointment? In the “Summary”, it says:

“This note provides an update to [the Post Office’s] proposal for 1 to 2 Postmaster Non-Executive Director roles on their Board and the engagement [that Post Office] has had with postmasters regarding their relationship model.”

Paragraph 3, the “Recommendation” is:

“That the Secretary of State approves the direction of travel on [the Post Office’s] proposal for postmaster representation …”

Do you recall receiving this submission or perhaps even drafting it?

Charles Donald: I wasn’t involved in the drafting of it, as I recall, but I do recall it, yes.

Mr Blake: Thank you. If we could please turn to UKGI00032895. So that was July 2020. If we scroll over, please, to page 5, in August 2020 we have an email on behalf of the Secretary of State that says:

“[The Secretary of State] has agreed with the recommendations in respect of Postmaster Representation on [the Post Office] Board without further comment.”

If we scroll up – thank you very much – slightly further up, we can see correspondence then in October, so after the summer break, and it says as follows:

“Further to the ministerial and SpAds support for postmaster representation on the [Post Office] Board the Post Office have designed a proposed approach for the recruitment process. Ash has confirmed delegation of this matter to Minister Scully after SpAds clearance.”

That was delegation from the Secretary of State, I believe, to the Minister.

Charles Donald: Correct.

Mr Blake: If we scroll up, we see an email above that that says:

“With apologies for overriding the previous [Secretary of State] office steer, this should no longer be delegated.”

Are you able to recall what the issue was here and why it was that the Secretary of State personally wanted to deal with that matter?

Charles Donald: I don’t recall. I mean, I think that email is obviously from the private office, from the Secretary of State so I’m assuming it reflects a discussion with private office. I don’t know what the reason was, I’m afraid.

Mr Blake: Did take some time to address this issue from what you recall? We know that the Subpostmaster Non-Executive Directors were ultimately appointed in June 2021. Can you recall any controversy or issues surrounding that issue?

Charles Donald: So I don’t recall any controversy. I am very clear that UKGI, be it – whether it be the Shareholder Team, the Shareholder Non-Exec Director or myself were always extremely supportive of this initiative. So I don’t believe we had any role in the time delay.

Mr Blake: Did you have any concerns about issues, such as conflicts of interest, somebody being a postmaster at the same time as being a contributing member of the Board?

Charles Donald: Well, I mean, as I think everyone is aware, it is not a widely-used construct. There are other examples of it and I think, in the PLC world, Capita has been a company that has had employee non-executive directors.

Clearly, there is potential, as there is with any Non-Executive Director, for conflicts to occur but my perspective is that conflicts are there to be managed and dealt with. They’re not, in themselves, a barrier to something happening.

So I think in putting Postmaster Non-Executive Directors in place, careful thought should be given to the conflicts, and then I think it is incumbent upon the Board and the company secretariat, et cetera, to then manage those conflicts and make sure they’re managed appropriately.

Mr Blake: Putting conflicts to one side, how about experience? Obviously, those who become Subpostmaster Non-Executive Directors won’t necessarily have Board level experience; do you see that as an issue?

Charles Donald: I mean, I think, if I recall correctly and I’m not sure this is absolutely the fact, but I think there was a process to identify candidates for the role, and then, you know, further – I don’t know whether they were interviews or meetings but are then, I think, to identify who the appropriate candidates would be. I don’t think a lack of prior Board experience would be a reason for this innovation to take place.

You could argue, as I have in a number of cases elsewhere, that, if you’re really trying to ensure good board diversity, there should always be at least one member of the Board who has not had prior board experience because, if you are specifying prior board experience as a criteria for appointment, you are actually instantly creating a slightly restrictive and less diverse board. I mean, that’s a personal opinion as opposed to a UKGI one.

So I don’t think that that should be a prohibition to the initiative taking place and I also think that, in this particular instance, and why we were supportive of it, is because we saw it as one of the mechanisms to get Post Office – postmaster concerns and issues more accurately understood and reflected around the Board table.

Mr Blake: What do you see as UKGI’s role in respect of supporting, training, educating those Subpostmaster Non-Executive Directors?

Charles Donald: So I don’t think there is a formal role but I do think that – and it picks up on a point I referenced earlier, that it is important for the UKGI Shareholder Non-Executive Director to build relationships with all the other members of the Board and, if that involves spending time with them, on getting them to understand the UKGI role, that would be a very important thing to do.

I mean, I have served as a Shareholder Non-Executive Director on an ALB board. I spent a lot of time with others members of the board helping them anticipate the UKGI shareholder role. Now, in that case, none of them were new first-time board directors but I think there is an informal option for UKGI to be involved in education and that, and we have – one of the things we have considered internally is whether the training and development programme that we have now put in place within our own organisation is whether we should make it available more widely.

I mean, that’s quite a substantive resourcing question but it’s something we have talked about.

Mr Blake: We heard some evidence from Saf Ismail in relation to the slide deck – you will have seen that in your bundle, I won’t bring it up onto screen but it’s POL00448368 – in respect of his own training. Do you think that UKGI should be doing more in respect of, in particular, those Subpostmaster Non-Executives and bringing them up to a particular level in respect of being a Board member?

Charles Donald: I think it absolutely could do. I think, I mean, I have seen that slide deck and I think that was you know a sensible initiative, in terms of seeking to help the new non-executive directors understand the various roles and responsibilities and become familiar with how the structure worked.

But I think like, you know, all training and all development, I don’t think – I don’t think there’s ever a finishing point to it. So I think that is a really interesting suggestion as to whether we should be doing more of that on an ongoing basis.

Mr Blake: Moving to Board effectiveness reviews you have addressed that at paragraph 50 of your witness statement. Very briefly, how does UKGI evaluate the performance of the Board since the judgments of Mr Justice Fraser?

Charles Donald: So Board effectiveness reviews, I see them as a key element of good governance that need to be promoted by the Shareholder Non-Executive Director. So you will be familiar that they should take place annually and then one in any three-year period should be an externally facilitated review.

UKGI will normally have a role alongside the chair. So Board effectiveness reviews should be commissioned by the Chair. They can take various different forms but, for example, one of the fairly standard elements of it is normally a questionnaire that goes out to all members of the Board, to be answered and then sometimes for the responses to be compiled on an anonymous basis.

Sometimes the UKGI Shareholder NED will be part of the discussion with the Chair as to what topics and issues should be specifically addressed in that and, if for any reason the Chair is showing any reluctance or any hesitation about commissioning a Board effectiveness review, I would expect the Shareholder Non-Executive Director to push it hard with the Chair and, if unsuccessful, come back to me and highlight that as a problem.

Mr Blake: From your own experiences, what is your current view of the leadership, the CEO and the Chair, of the Post Office and their ability to manage the issues that the company faces?

Charles Donald: So I have spent some time with the new Interim Chair. I, together with my own Chair, met him prior to his appointment and we have individually – my own Chair and I, have met him subsequently and I have had a number of other conversations with him.

I think he is grasping many of the issues that need to be addressed well. I mean, these conversations have been quite high level. They haven’t been down in detail but I think he has sort of the energy and the experience and the perspective to get to grips with the issues that need to be addressed.

Mr Blake: That’s the Chair?

Charles Donald: That’s the Chair.

Mr Blake: In respect of the CEO?

Charles Donald: So I had regular interactions – when I say regular probably sort of twice a year with Mr Read.

I think there is now an interim CEO in place. I have not yet met the Interim CEO.

Mr Blake: We’ve heard a lot of evidence about remuneration, requests to government for greater pay. Do you have any views as to the level of remuneration whether it attracts the best talent for example?

Charles Donald: I think it’s a difficult balance because I do believe that it’s just sort of axiomatic that the public sector and all forms of the public sector are never going to be able to provide the levels of remuneration that might be available in the private sector, and I think, if you take a role in the public sector, I think you have to be absolutely cognisant and sensitive to that. I don’t think it’s something that, you know, you can ignore. I think you need to make a conscious decision at the point when you take up a role in the public sector that that is going to be a characteristic.

It is obviously also important that the remuneration does generate a sufficient level of interest from suitably qualified candidates for the role. So I think it’s always going to be a question of balance but I don’t –

Mr Blake: In terms of where it’s currently set, what is your view?

Charles Donald: I think that where it’s currently set, it should absolutely not be impossible to attract a candidate of the appropriate skills.

Mr Blake: Moving on to dealing with litigation, what do you see as the main flaws in the way the UKGI approached the Bates litigation?

Charles Donald: So I think the best way, if I may, to answer that question is to identify what we have – what we have done in terms of putting in place within our operating principles how litigation should be treated by the UKGI Shareholder NED and the Shareholder Team and, as I’ve set out in my witness statement, this reflects learnings both from the Horizon issue but also, prior to that, from the Magnox issue.

Mr Blake: What in particular contained in those do you consider would avoid the problems of the past?

Charles Donald: So I think it is a requirement for the board of the arm’s-length body to be – through the quarterly shareholder meeting, be reporting with appropriate detail litigation that it is facing and then for, if appropriate, the UKGI Shareholder NED, in conjunction with the UKGI Legal Team putting in place a protocol for information flow through to UKGI on that litigation, if it is appropriate.

Mr Blake: You’ve mentioned the Swift Review, I think. Could we please turn to UKGI00045960. Was that an issue that reached prominence when you joined UKGI, in respect of the sharing of that review with members of the Board? If we turn to page 4, we can see it referenced there. Is it a particular issue that stands out for you in respect of UKGI and the Bates litigation –

Charles Donald: Well, it was –

Mr Blake: – or litigation in general?

Charles Donald: So it was this issue around legal privilege acting as a barrier to the Board seeing the review, and I think one of the things that we have all learnt is that legal privilege is not always going to be an appropriate barrier for a board seeing a document. I’m not an expert on legal privilege but there are ways to ensure that visibility can be provided in spite of that legal advice, and that Shareholder Teams and Shareholder NEDs need to be ready to challenge that legal advice.

Mr Blake: Will just read to you a few passages from this email. If we scroll down slightly, it’s an email from Tom Cooper of 26 August 2020. He says:

“An update on our previous discussions about Tim Parker’s role in commissioning, and following up on, the QC’s recommendations that were made shortly after Tim was appointed Chairman of [the Post Office].”

It says there at the first bullet point:

“Since we last spoke: the non-executive directors met to discuss the report on 28 July. Tim was asked about the QC’s report and why it wasn’t discussed with or disclosed to the Board. Tim said that he was guided by Jane MacLeod, the company’s counsel at the time, who gave advice that the document needed to be kept confidential because of the upcoming litigation and also raised privilege issue. He said he relied on that advice.”

If we scroll up, we can see a response from Mark Russell of UKGI, he says:

“This has parallels to Magnox where the Board relied heave lion internal legal counsel and didn’t commission second opinions.

“If we are considering what action, if any, is taken against Tim then don’t we/BEIS need a view in addition to the [Senior Independent Director] probably a legal view? Was it reasonable, at the time, for Tim to rely solely just on Jane’s guidance?”

If we scroll up we see a further response from Richard Watson, also of UKGI. He is the General Counsel of UKGI.

Charles Donald: He was at that time, yes.

Mr Blake: He says:

“In terms of Tim’s explanation of why he did not disclose the advice to the Board clearly the QC’s report was confidential and legally privileged but that, in itself, does not explain why it should not be disclosed to the Board. There is no risk of a company’s legal privilege being lost or confidentiality being breached simply by legal advice, it has received being disclosed to the Board. So I am really struggling to understand why Jane MacLeod gave that advice.

“At the risk of coming at this with a great benefit of hindsight I would like to think that if a company Chair was told by the company’s General Counsel that they should not disclose something to the Board because of confidentiality and/or legal privilege concerns they would strongly challenge that advice if they otherwise felt that the Board should be aware. There might be cases where, for example, individual Board members were conflicted … which might be a reason not to share something with them but the general principle is, as you know, that the Board acts collectively.

“I wonder if what happened in this case is that Tim was comforted by the QC’s report (which he read as effectively giving a green light to everything POL had done) and together with the advice Jane gave him and the fact of the litigation he came to the view that there was no need to share the QC’s report with the Board.”

There’s a response above that from Tom Cooper, who says:

“… I don’t see how, even with rose coloured specs on, anyone would see a green light in the QC’s report, although it’s possible that is how it was presented to Tim given [the] way it was described to the Minister in the letter he wrote updating her of progress.”

Looking at this issue, how do you say UKGI can protect against that kind of an issue in the future?

Charles Donald: So I think I hopefully have illustrated how, you know, we now have in place a guidance note on how a board should deal with litigation. We have training in our development programme to make sure our Shareholder NEDs understand that – how litigation should be dealt with if an ALB is experiencing it.

I suppose the question is whether either the Shareholder NED or other members of the Board are aware that they are not seeing something because the Chair has taken a view on the back of advice that legal privilege stops it getting to the Board. If they are aware, then I think we have a robust mechanism and advice in place where the natural reaction for the UKGI Shareholder NED would be to challenge that vigorously, in the way I’ve just described.

If they don’t have visibility, then I think it then comes back to what we now have in the framework document around litigation visibility being given to the shareholder, and one would expect the Chair to be cognisant of that framework document and realise where the Chair’s obligation sat in that regard.

Mr Blake: In that circumstance that we’ve just seen, might it be that the General Counsel or the Chair are worried, in particular, because of the circumstances of UKGI being on the Board, that it would lose that document to the wider department?

Charles Donald: That might be a concern and, you know, one would expect the Chair and the Shareholder NED to discuss that issue but I don’t think that circumvents the ultimate obligation that I think lies with the arm’s-length body to make sure that there is a good and reliable information flow, and I talked about within the quarterly shareholder meetings on litigation that it is facing coming through to the shareholder.

Mr Blake: To what extent do you think that something like the Freedom of Information Act, which would allow somebody to obtain information, even if it was legally privileged in certain circumstances that has in some way a chilling effect in respect of the passing of information to the UKGI Non-Executive Director?

Charles Donald: That’s quite difficult for me to answer with any sort of –

Mr Blake: If it’s not something you are aware or familiar with, that’s absolutely fine.

Charles Donald: I’m familiar with it, yes, because I’m obviously familiar with the Freedom of Information Act. I’m not sure I have the expertise or experience to provide you with a response that is, you know –

Mr Blake: I can put it a different way. Do you have any concerns that in respect of not just the Post Office but all of the other assets, that there is some fear in respect of sharing information with UKGI from the companies themselves because that information is lost and then available to, for example, applicants under the Freedom of Information Act?

Charles Donald: In general, I don’t think that’s a reluctance that we have experienced, no.

Mr Blake: My final topic really is the current operation of the Post Office. You will have seen documents about difficulties in respect of current enforcement operations. You may have even heard evidence in relation to a potential dispute or difference of opinion between the Post Office and Fujitsu currently.

What do you see as the route through the difficulties the company currently faces in enforcing shortfalls for example, or taking action against what appear to be shortfalls?

Charles Donald: I think I should probably just preface the answer to this by saying I have some visibility on this, so I am aware that this is an issue. I don’t have detailed understanding of what the Board discussion has been on it or what the proposals for dealing with it are, and I think Ms Gratton was asked questions about this yesterday, and I think – probably appropriate for her answers to be taken certainly ranked superior to mine.

I think the comment I would make is I think it’s really important for the Board, collectively, to be examining this issue in detail and, you know, focussing on getting the Executive to take it forward in the right and appropriate way. I think that’s probably about all I can say.

Mr Blake: We looked earlier at risks, for example, and if the company is potentially losing a considerable amount of money because it is unable to take any enforcement action, is that not something that should be of concern to the Chief Executive of UKGI?

Charles Donald: It is a concern but I think it is important also – so as I say, I’m aware of the issue and, in my regular catch-up meetings with Ms Gratton, she has referred to this. So my usual response is to always check that the Department has been made aware of the concern. It comes back to that risk escalation we were talking about.

But, as I say, I think the primary responsibility sits with the Board to address the issue.

Mr Blake: With regard to the strategic review, what is UKGI’s role in that?

Charles Donald: So this is the review that Mr Railton has commissioned?

Mr Blake: Yes.

Charles Donald: So I am aware that the Board has obviously discussed that. Ms Gratton will have participated in that discussion as part of the Board. I don’t know for absolute certain but I presume that Ms Gratton and members of the Shareholder Team have been involved in sort of interviews or meetings with the firm commissioned –

Mr Blake: In terms of you personally, though, do you personally feel that you have sufficient visibility of that fundamental review that seems to be taking place?

Charles Donald: So I’ve had – as I say, high level conversations with Mr Railton on some of the core components of the strategic review. I have not yet seen a document.

Mr Blake: Sir, those are all of my questions.

Sir Wyn Williams: Thank you very much.

Mr Jacobs.

Questioned by Mr Jacobs

Mr Jacobs: Could we turn please to the portfolio operating principles and that is at UKGI00049040, and page 8 of 57, please.

Mr Blake took you to this earlier on. It’s the section concerning escalating shareholder concerns and further interventions.

If we look at page 8, there is a paragraph, if we scroll down further, it says:

“If Shareholder Teams think that they need to intervene above and beyond their shareholder role, they must alert the UKGI CEO [that’s you], Portfolio Director and General Counsel, so they can consider how best to manage [this] particular issue.”

Then:

“If a Shareholder Team has significant concerns the way the Asset is handling an important matter, they should ensure the Department is well sighted at the appropriate levels. This is likely to include informing the Permanent Secretary and potentially ministers.”

Lorna Gratton gave evidence yesterday and she confirmed what she said at paragraph 40 of her statement, where she said:

“Ultimately, should my team or I become aware of an issue that we do not consider the Department has been fully sighted on or has not fully considered, it may be appropriate to provide a submission directly to the Departmental Minister or the Permanent Secretary.”

So is that the process that’s set out in the operating principles?

Charles Donald: Yes, that is correct.

Mr Jacobs: Is it the Shareholder Team who would provide a submission to you, for you to forward on to the relevant minister? How does that’s work; what’s the process?

Charles Donald: So I think in the first instance there would be a discussion with the Department as to the content of the submission. We’d need to be really clear on why the Department wasn’t prepared to be, you know, part of the submission process and I think Ms Gratton mentioned yesterday that, you know, submissions, yes, come from UKGI but they are normally worked on together with the Policy Team in the Department, and then they go up to ministers.

So this is an in extremis option where, if we think for any reason officials are not prepared to correctly sort of reflect our concerns in a submission, then we would want to do an independent submission.

I would expect the Shareholder Team, the Shareholder NED, to bring me at least a draft of that submission to make me aware that it’s going directly to ministers and that, you know, it is to correct the fact that officials have not been providing that information.

Mr Jacobs: Thank you. Mr Thomas gave evidence this morning and he said that he is concerned about the culture in the Post Office. I don’t know, did you follow the evidence of Mr Ismail, one of the Shareholder Non-Executive Directors, on 24 September?

Charles Donald: I followed part of it. I didn’t follow it all.

Mr Jacobs: In his witness statement he expressed a number of concerns about the culture of Post Office and one of the issues that concerns our clients, in particular, is the ongoing nature of investigations. I’ll read what Mr Ismail said:

“When it’s considered appropriate to investigate a postmaster, POL continues to be the body that determines the terms of reference of those investigations. Often postmasters will be suspended prior to those interviews taking place without understanding the reasons for that suspension. Postmasters are still not shown evidence in respect of investigations into their branches, prior to investigation interviews being conducted by POL investigators, and no legal representatives are permitted by POL at those PM interviews.”

That sounds rather like what was going on during the time of the scandal, doesn’t it, and there are other concerns in relation to the retention of a number of Investigators, for example, who were directly involved with the victims of this scandal and have been criticised and this notion of the Post Office continuing to cast itself in the role of victim, investigator and prosecutor, albeit now via CPS.

So these cultural matters are they matters that are capable of being seen as red flag issues in light of what’s happened in the past, Mr Donald?

Charles Donald: I think they are and specifically that concern around Investigators remaining in post, that has been a topic of conversation with the Department.

Mr Jacobs: Also there is this issue, isn’t there, of the YouGov survey, where I think 92 per cent of the 1,000 subpostmasters who responded said that they were having issues with Horizon and, of those who said they were having issues, I think 98 per cent said they had been paying the shortfalls and had been resolving the matters themselves.

Is that another matter that’s raised concerns?

Charles Donald: Yes, and specifically I have read the summary of that survey. That has raised concerns in my own mind. I have begun a discussion with the Shareholder Non-Executive Director about that and I have a meeting in my diary with Minister Thomas coming up.

Mr Jacobs: So that is something that’s being looked at. No need to go back to the document but the “Portfolio Operating Principles” document refers to hard levers and soft levers. We know from Ms Gratton’s evidence yesterday that the hard lever would include the power under the revised Articles of Association for Post Office to issue a direction – sorry, for the Government, for the Minister to give a direction to Post Office to require them to take all steps within their power to do whatever the directions require to be done.

It was understood that this is a last resort option. But in relation to the soft levers, what is it that the Department would be able to do to exercise control and appropriate oversight of the Post Office in relation to the cultural issues that I’ve identified that we’ve been talking about?

Charles Donald: So, I mean, I think the first step is for there to be a discussion between the Department and the Chair and management around the cultural issues. There have been those discussions. I have participated in the meeting with Mr Railton and Mr Bickerton, who’s the Director General, where the cultural issues have been a topic of discussion. So I believe Mr Railton is very aware of the concerns that the Department and UKGI have around culture issues.

Mr Jacobs: Thank you.

The portfolio operating principles document refers to the involvement of General Counsel, UKGI’s General Counsel. Can you just expand a little bit on how General Counsel would get involved in a governance issue in respect of an asset such as Post Office?

Charles Donald: So a good example might be – and this is an example I am taking from elsewhere in our portfolio, where there was a whistleblowing issue in an asset – I should say that I’m not talking about Post Office at this point I’m talking about a different arm’s-length body – and where the Shareholder Non-Executive Director came away from the board meeting with some significant concerns about how the whistleblowing issue was being dealt with, and that individual went straight to the UKGI Legal Counsel and said, “I need some advice and, I mean, I need my hand holding through this process in how I deal with it”.

We have strengthened the resourcing of the UKGI legal team over the course of the last three years in order to provide more resource to Shareholder Non-Executive Directors and Shareholder Teams to deal with such issues. So that would be a good example. Does that answer your question?

Mr Jacobs: That does, although I just wanted some clarification on one other aspect. The document says that – this is the “Portfolio Operating Principles” document – if the Shareholder Teams think they need to intervene over and beyond their shareholder role they must alert, in addition to you, the Portfolio Director, and General Counsel. So General Counsel is informed at the outset of an issue that the Shareholder Team wishes to raise?

Charles Donald: Yes, and I think our General Counsel in UKGI has been very heavily involved in the way we have sought to learn the lessons from this scandal and help us in formulating the changes in the government’s model and the portfolio operating principles we’ve made. So as a function naturally both of their function and that heavy involvement over the last few years, they need to be, in my view, a natural counterparty for that discussion.

Mr Jacobs: Thank you. A point of concern that my clients have: is it absolutely understood within UKGI that seemingly technical or operational issues are absolutely capable of amounting to red flag issues and requiring intervention?

Charles Donald: Yes, and perhaps I could come back to an illustration. So within my witness statements I have set out in quite some detail the development programme that we have put in place and the training that we have done, and these sorts of questions are exactly the issues that we allow to sort of be reflected in discussions, whether they be the formal training sessions or the informal group gatherings or the peer support sessions, because we take – I take a view that no Shareholder Non-Executive Director at UKGI should essentially feel alone.

You know, it shouldn’t be just them who is needing to wrestle and deal with these issues. They need to be able to come to the experience of that collective group to think about how they best address them.

Mr Jacobs: Thank you. That’s helpful. I just have one other question to ask you and I’m aware of the time, so I will be quick. At paragraph 62 of your statement – no need to turn it up – you refer to the framework agreements, and I just wanted to ask you – if we could have a document on the screen, please, it’s POL0036299 (sic). This should be a framework agreement.

If it could come up, it might – POL00362299. I’m sorry. That’s entirely my fault.

This is, I understand, the current Post Office Limited shareholder relationship framework document?

Charles Donald: Correct.

Mr Jacobs: If we could go to section 12.1 of that document, it’s at page 18 of 29, if that helps. “Shareholder’s Right to Information”, so it says:

“Post Office will proactively endeavour to share information on key strategic or policy issues with the shareholder.”

Then under the Articles:

“The shareholder may request such information in relation to the affairs of the group … as it may consider necessary or desirable. The company shall use its reasonable endeavours to comply promptly … but only insofar as the company has such information in its possession or such information immediately obtained by it and may meet with such specified or other relevant directors and senior managers of the company … to discuss the affairs of the group. The shareholder may make such requests itself or via the shareholder’s representative or policy sponsor. The shareholder, the shareholder’s representative and policy sponsor may use the information that’s necessary to properly exercise the shareholder function on the understanding that due care will be taken in handling POL’s information …” and it continues.

Are you aware of this right of the shareholder to request information of the Post Office?

Charles Donald: I am.

Mr Jacobs: And is that something that is exercised?

Charles Donald: It is, yes.

Mr Jacobs: And could this provision be used to hold Post Office to account in circumstances where it’s not clear that the right information is getting out were that to happen in the future?

Charles Donald: It could be used, yes.

Mr Jacobs: And just one final question. This framework document, I believe, is dated March 2020. Is there any reason why it hasn’t been updated?

Charles Donald: It is currently in the process of being updated. That is underway. That is running more slowly than I would like, and I have been pressing for the process to be completed and both the UKGI team, the Post Office and the Department are aware that it is a pressing document to be updated.

Mr Jacobs: Thank you very much. I don’t have any further questions for you.

Mr Blake: Sir, it is entirely my fault but there are two further sets of questions of no more than five minutes each. I apologise. The first is from Mr Henry and the second from Ms Shah.

Sir Wyn Williams: All right.

Questioned by Mr Henry

Mr Henry: Thank you very much, sir.

Mr Donald, you became involved in a conversation with Mr Nick Read about removing Tom Cooper as Non-Executive Director, did you not?

Charles Donald: Yes, I did.

Mr Henry: Can you just help me, please: what was the rationale that Mr Read gave you for why Mr Cooper ought to be removed?

Charles Donald: So I will absolutely come to your question, Mr Henry, but if I could just identify a point I made in my fourth witness statement which was that prior to the conversation with Mr Read – and I think we’re talking about November 2022 – I had had a conversation with Mr Cooper on 1 November 2022 when Mr Cooper had requested to me that he’d come off the Post Office Board. He had been on for – well. He would have been by the end of March ‘23 for nearly five years and he felt he’d done his time.

Mr Henry: Thought he’d done his bit. Thank you, Mr Donald.

Can you just help us, though: what was the rationale that was being put before you by Mr Read?

Charles Donald: So one of the elements of the rationale, and I think it’s come up in other documents that have been disclosed, it’s this concept of being a cheerleader for the company.

Mr Henry: Right. I think, because I am under such time constraint, I am going to just ask you to have a look at this document POL00448676 and could we turn to page 2 of 4, please. Yes, “That’s a fair summary, Henry”. If we could just move the page up so that the whole of Mr Read’s email can be seen. Thank you very much.

I’m going to read I out very, very quickly, Mr Donald:

“That’s a fair summary, Henry. My primary issue with Tom is that he fails to fulfil his role, which is to act as an interface between the company and government and to act as a cheerleader for what we do and the value we play in society. Nothing about the way he conducts himself suggests this happens. He has little or no influence in government and he doesn’t understand the politics. I am consequently fearful for the next four weeks and how we are being positioned in Whitehall. Deeply disappointing … and it needs to change.”

So first question arising from that little snippet: the cheerleader point, what do you have to say to that?

Charles Donald: I don’t think the Shareholder Non-Executive Director should be a cheerleader for the business.

Mr Henry: Exactly.

Charles Donald: That is not their role, and I have been clear with all the chairs and chief executives of the ALBs that we look after that I do not think the Shareholder NED is there to be a cheerleader.

Mr Henry: And can you help: did Mr Read’s conversations with you shed any light upon his being fearful for the next four weeks and how we’re being positioned in Whitehall?

Charles Donald: Mr Henry, I can’t exactly remember what was coming up over the next four weeks and I don’t remember that being a central part of the conversation that Mr Read had with, I’m afraid.

Mr Henry: I then go to these words:

“I would encourage you to lobby Charles Donald and to raise the issue with the Permanent Secretary. I will also be asking Charles Donald what progress he has made on removing him.”

Those are reportedly your words “removing” him.

Did you use those words “on removing him”?

Charles Donald: I didn’t use the word “removing” him. I did say to Mr Read I was considering moving Tom Cooper –

Mr Henry: I see.

Charles Donald: – which was that I reference that conversation I’d had with Tom Cooper. I think it was two weeks before I met with Mr Read.

Mr Henry: And that was a simple and unambiguous meaning of what you said?

Charles Donald: Well, and also, Mr Henry, I would – it is not appropriate, in my view, for a chief executive of an arm’s-length body to think that they can ask me to remove a non-executive director.

Mr Henry: Right. Could I ask you then – so it could perhaps have been a cross-wire, but were you absolutely clear that you never used such words?

Charles Donald: I’m absolutely clear I did not use the word “removing” him. I did use the words “moving him”.

Mr Henry: Right. Now, could I now just go to after the bracket, where it is allegedly attributed to you, sir:

“The additional problem this Inquiry and Tom’s reluctance to distance himself from it.”

Now, this is written on December 23, 2022, so clearly some weeks after you’ve had your conversation with Mr Cooper about Mr Cooper saying effectively, “I’ve done my bit, I want to move on”.

“The additional problem is the Inquiry, and Tom’s reluctance to distance himself from it. He is determined to stay and influence how we position POL and compensation so that he can effectively manage his own reputation and that of UKGI.”

Did Mr Read say that to you?

Charles Donald: Well, I don’t recognise that, and it’s not consistent with Mr Cooper having come to see me at the beginning of November to say he felt he’d done his time on the Board and wanted to move on.

I mean, he actually – he gave me a deadline for that. He said basically by the end of March 2023 and I did request that time because I wanted to give very careful consideration to who should replace him on the board of the Post Office.

Mr Henry: Did you discuss with Mr Cooper the reputation of UKGI arising out of this sequence of unfortunate and, for some people, deeply tragic events?

Charles Donald: No, I don’t recall discussing that.

Mr Henry: Why not?

Charles Donald: Because I don’t think, you know, he is there to manage his own reputation. He made a request –

Mr Henry: I was talking about UKGI, the reputation of UKGI.

Charles Donald: So I believe that it is absolutely necessary – and this has been the case right from the moment when I took on the CEO role in March 2020 – that UKGI learns all the lessons it possibly can from this scandal and what went wrong. I do not believe that reputational considerations should stand in the way of those learnings.

Mr Henry: I continue with Mr Read’s words:

“He [that’s Mr Cooper] was on the board when the judge was recused and fundamental questions were raised over governance. This is a material conflict. He has said to me on occasions he is going nowhere until the Inquiry is over – this is his core driver … not the long-term future of Post Office.”

Can you help, can you shed any light on that sentence:

“He has said to me on occasions he is going nowhere until the Inquiry is over – this is his core driver … not the long-term future of the Post Office.”

In other words, did Mr Read ever raise any such suggestion with you in your conversations with him?

Charles Donald: He didn’t and also, as I say, it doesn’t appear to me that that is entirely consistent with Mr Cooper’s request to me of two weeks previously.

Whether he, Mr Cooper, at some point made comments along those lines to Mr Read, I don’t know.

Mr Henry: Did Mr Cooper express anything to you about the slowness of compensation, because we notice the fact that he is determined to stay and influence how we position POL on compensation, so that he can effectively manage his own reputation, et cetera, et cetera.

Did Mr Cooper mention anything to you in your discussions with him about the slowness of compensation?

Charles Donald: I can’t remember whether in the specific conversation at the beginning of November he referenced compensation. More broadly, in our regular meetings did he in the past reference slow progress on compensation? Yes.

Mr Henry: And that was a complaint that he was making?

Charles Donald: That he thought it was running too slowly?

Mr Henry: Yes.

Charles Donald: Yes.

Mr Henry: And not simply necessarily slowly but also the levels of compensation; was he concerned about that?

Charles Donald: I think he would have been. I mean, I don’t – I remember very specifically we had a number of conversations about the pace. I can’t be precise as to when he talked about levels.

Mr Henry: Well, you think he would have been?

Charles Donald: As I say, I can’t be precise as to whether he talked about levels, but the pace absolutely.

Mr Henry: But you think he would have been, you just said?

Charles Donald: I think he would have been, yes.

Mr Henry: Thank you.

Sir Wyn Williams: Thank you, Mr Henry.

Last questions.

Questioned by Ms Shah

Ms Shah: Sorry, can you hear me?

Charles Donald: Yes, I can.

Ms Shah: Perfect. Good afternoon, Mr Donald. I ask questions on behalf of the NFSP.

So you’ve given evidence today about improvements made to the flow of information and risk escalation between the Post Office, the Department, and UKGI.

However, the key findings of the Grant Thornton report into the Post Office of this year shows significant issues that continue to this day and that much still needs to change in relation to openness and transparency.

Just for the transcript – no need to turn it up – the report is POL00448771. Would you agree with that assessment?

Charles Donald: I would agree that much remains to be done, absolutely.

Ms Shah: Would you accept that something more than improved policies and training is needed to rebuild postmasters’ and the public’s trust in the government and the Post Office after not only the Horizon scandal itself but, for instance, the Grant Thornton report findings, the evidence of the postmaster NEDs, the evidence of Mr Staunton and the evidence of Mr Read to this Inquiry, which show an organisation that is still in cultural crisis and still lacking in openness and transparency?

Charles Donald: So I think the training and the development you make reference to is specifically one of the learnings that we have sought to apply in UKGI. I don’t think that those learnings for UKGI are done and finished yet, and there is more evidence to be heard from the Inquiry and we will continue to listen to it and continue to reflect and learn.

More specifically as to is there much more to be done on the culture of the Post Office and the organisation, I absolutely agree.

Ms Shah: Would you agree that there’s a particular concern that it appears that there is still a willingness – an unwillingness, sorry, to acknowledge failings that seems to exist even now. For example, the evidence of Mr Ismail on 24 October in that he said that after the first draft of the Grant Thornton report was received, certain NEDs said that it was unhelpful and that the first draft of the report was more critical than how it is now.

So would you agree with that concern?

Charles Donald: So the version of the document that was disclosed to me I think was an earlier version of the one that I actually eventually saw just in the normal course of business.

My understanding, because I’ve had a conversation with Ms Gratton about it, was that the board saw, I assume, the version that was disclosed to me as part of my bundle, and the board collectively – and I think Mr Tidswell was chairing at this point because I think this was after the removal of Mr Staunton – was then reflected back to Grant Thornton.

Ms Shah: Okay. Well, Mr Ismail’s evidence was that the comment regarding the Grant Thornton report being unhelpful was said by the Shareholder NED, who I believe would be Lorna Gratton. Would you accept that a comment that that report was unhelpful does not demonstrate that UKGI are embracing cultural change, openness and transparency?

Charles Donald: So I think the question is whether how that comment in the context of the board’s overall discussion of the draft was made. And I actually think that there was a specific point that Ms Gratton had which was that there was – and this reflects a conversation I’ve had with her subsequently on this matter – was that there was a lack of clarity in the Grant Thornton report, for example, about her role and I think one of the actions she took was to then send Grant Thornton her appointment letter so that they got the clarity and the detail on that role.

I don’t know whether her “unhelpful” comment was broader than that or whether it was on that specific point.

Ms Shah: Thank you very much.

Sir Wyn Williams: I think that’s it, is it?

Mr Blake: That is, yes, sir. Thank you.

Sir Wyn Williams: Well, thank you very much, Mr Donald, firstly, for making four witness statements and, secondly, for answering all the questions which have been put to you this morning and this afternoon. I’m very grateful to you.

Charles Donald: Thank you very much, sir.

Sir Wyn Williams: So we’ll resume again at 10.00 on Monday morning, Mr Blake.

Mr Blake: We will, sir, yes, with our final week of Phase 7.

Sir Wyn Williams: There’s one issue which has been brought to my attention and that is that Monday is actually Armistice Day and that in some organisations, which I think include government organisations but not necessarily judicial proceedings, a minute’s silence is observed at 11.00 am. I am perfectly content to have a minute’s silence if that is the collective view of all the participants in the Inquiry. I don’t propose to impose my own view on it.

So can you just canvas what people would like to do and then we will do what the majority wishes to do.

Mr Blake: Thank you, sir. There are lots of nods in the room.

Sir Wyn Williams: So that I can take it then that at 11.00 am there will be a minute’s silence. There will not be a public announcement in the building, as I understand it, because – well, there just won’t be – so that I will be relying upon counsel who is on his or her feet at that moment to alert me to it and then we’ll have the minute’s silence.

Mr Blake: Thank you, sir.

Sir Wyn Williams: Thank you very much.

(2.04 pm)

(Adjourned until 10.00 am on Monday, 11 November 2024)