Official hearing page

17 July 2024 – Kenneth McCall and Kelly Tolhurst

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(10.05 am)

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

Sir Wyn Williams: Yes, I can, thank you.

Mr Stevens: Thank you. You will be hearing from Mr McCall this morning.

Kenneth McCall

KENNETH MCCALL (sworn).

Questioned by Mr Stevens

Mr Stevens: Please could you state your full name?

Kenneth McCall: Kenneth McCall.

Mr Stevens: Mr McCall, in front of you there should be a witness statement; do you have that?

Kenneth McCall: I do, thank you.

Mr Stevens: Firstly, can I thank you for providing that written statement and for attending the Inquiry today to answer questions about it.

Before I ask you to turn to your signature, I understand there’s one small correction to be made. Please could we have on the screen page 30, paragraph 65 of the statement. In that paragraph, you say, at the start, that you received Mr Cooper’s call at around 8.00, and we’ll come to this section in the course of your questions. Just for the purposes of the correction, midway down the paragraph it says, “Shortly after the call with Mr Parker I rang Ms Stent”, and I understand you wish to change that to “Shortly after the call with Mr Cooper”; is that correct?

Kenneth McCall: Yes.

Mr Stevens: Thank you. That can come down from the screen. Thank you. Mr McCall, can I ask you, please, to turn to page 35 of your statement; do you see a signature?

Kenneth McCall: I do.

Mr Stevens: Is that your signature?

Kenneth McCall: It is.

Mr Stevens: Subject to the one correction we’ve just made, are the contents of that statement true to the best of your knowledge and belief?

Kenneth McCall: They are.

Mr Stevens: Thank you. That stands as your evidence in the Inquiry. It will be published on the website shortly and, for the purpose of the record, the Unique Reference Number is WITN10020100. I’m going to ask you some questions about I but not all aspects of it. I’ll start with your background or, actually, your role at Post Office Limited. You were the Senior Independent Director of Post Office Limited from January 2016 to January 2022; is that right?

Kenneth McCall: That’s correct.

Mr Stevens: Looking at your background, you spent the first part of your career at TNT; is that right?

Kenneth McCall: That’s correct.

Mr Stevens: You became the CEO for Asia and then CEO for China at TNT?

Kenneth McCall: I did.

Mr Stevens: You joined DHL in 2007?

Kenneth McCall: Correct.

Mr Stevens: You then joined the Europcar group becoming Deputy CEO in 2016?

Kenneth McCall: That’s correct.

Mr Stevens: Was that an executive position at Europcar?

Kenneth McCall: Europcar was an executive position.

Mr Stevens: What was the time commitment for that role?

Kenneth McCall: I was a full-time executive at Europcar on a normal basis, five days a week, or as required.

Mr Stevens: In practice, was it a five day a week job or did it involve weekend work as well?

Kenneth McCall: It involved weekend work as well.

Mr Stevens: You had been a Non-Executive Director of Superdry; is that right?

Kenneth McCall: That’s correct.

Mr Stevens: When did you begin that role?

Kenneth McCall: From my witness statement, it would be six years prior to then, I recall, so I served two terms at Superdry and joined the Post Office in 2016, so it would be 2010.

Mr Stevens: Was there any overlap between your Superdry appointment and your appointment as Senior Independent Director at Post Office?

Kenneth McCall: No, I don’t recall there being so.

Mr Stevens: Did you have any other non-executive roles whilst you were at the Post Office?

Kenneth McCall: I did not.

Mr Stevens: I understand that your contractual time commitment as Senior Independent Director was two days per month whilst at Post Office?

Kenneth McCall: That’s correct.

Mr Stevens: Did you have sufficient time to meet your commitment to the Post Office, given your executive commitments to Europcar?

Kenneth McCall: Yes, I did.

Mr Stevens: You say in your statement at paragraph 9 – we don’t need to bring it up on the screen – that Tim Parker thought you would be a good fit at Post Office and you refer to your experience in parcels and mails, yes?

Kenneth McCall: Yes.

Mr Stevens: Later in your statement, you also refer to having some experience of dealing with IT issues at an executive level; is that right?

Kenneth McCall: Yes.

Mr Stevens: Could you briefly just summarise what that IT experience was?

Kenneth McCall: My IT experience, I was responsible at Europcar Group for the business priorities of the IT function, which was headquartered in Paris. So I would decide exactly what the business required of the IT Department and liaise with them.

Mr Stevens: Did you find that experience assisted you in your role as a Senior Independent Director at the Post Office?

Kenneth McCall: From a business perspective, yes; from a technical perspective, not necessarily.

Mr Stevens: Why not from a technical perspective?

Kenneth McCall: I’m sorry, I beg your pardon?

Mr Stevens: Why not, from a technical perspective?

Kenneth McCall: Because my role at Europcar wasn’t a technical role. It wasn’t deciding systems or otherwise, it was purely: what does the business require; what do our customers want?

Mr Stevens: When you were a Senior Independent Director at Post Office, do you think its Board had sufficient technical IT experience to handle the issues before it?

Kenneth McCall: Yes, I do. We had an excellent CIO, Mr Houghton. We had – I had two fellow non-executive Board colleagues who came from the IT and technology sectors, and therefore, at least two of the Board, to my knowledge, were very IT savvy and knowledgeable.

Mr Stevens: You say in your statement that, to the best of your knowledge, the companies you had worked for prior to the Post Office did not pursue private prosecutions?

Kenneth McCall: That’s correct.

Mr Stevens: Was there anyone on the Board with legal experience or qualifications?

Kenneth McCall: Latterly, I believe, if I recall correctly, a year before the end of my second term, we had a Non-Executive Director join, who’s still there, I believe, at the present time, who is from the legal profession.

Mr Stevens: Can you name that person, if you can remember the name?

Kenneth McCall: I don’t immediately recall – yes, I do now: Mr Tidswell.

Mr Stevens: Do you think the Post Office Board would have been assisted by having a member of the Board who had legal experience or qualifications, considering the matters you were dealing with during your time there?

Kenneth McCall: I believe that, latterly, the assistance of Mr Tidswell was extremely helpful in guiding the Board through some of the processes. So, yes, I –

Mr Stevens: Let me pause you there. When you say some of the processes, what processes are you referring –

Kenneth McCall: I think understanding what decisions we’re required to make and why, and how to maybe understand a bit better the details.

Mr Stevens: The details of what?

Kenneth McCall: The details of the options we had.

Mr Stevens: I’ll ask it in another way. Are you referring to legal issues to which this Inquiry relates, such as compensation and criminal appeals?

Kenneth McCall: Yes.

Mr Stevens: Do you think it would have assisted the Post Office Board, then, to have experience such as that on the Board when you were dealing with the Group Litigation?

Kenneth McCall: At the time when I joined the Post Office Board, I did not know anything about the Group Litigation, so therefore, in joining, I wouldn’t have had an opinion that said we would benefit from having legal expertise. Having then gone through the Group Litigation, I would say, yes, it would have benefited the Board.

Mr Stevens: I want to look at your role as Senior Non-Executive Director. The Inquiry has heard evidence, and is well aware, that both the Shareholder Executive and then UKGI appointed a Shareholder Non-Executive Director to represent its shareholding interest at the Board. Correct?

Kenneth McCall: Yes.

Mr Stevens: As a Non-Executive Director, in whose interests did you act?

Kenneth McCall: In the interests of the shareholder.

Mr Stevens: How did you determine what those interests were?

Kenneth McCall: In a company that’s either a listed company or certainly multi-shareholding, you’re acting on behalf of that as a shareholder. In this case, in the Government company, I was acting on behalf of the Government Shareholder to bring my expertise and experience to bear on a Post Office Board.

Mr Stevens: The Government shareholding interest in Post Office Limited wasn’t simply to see Post Office making a profit; would you agree with that?

Kenneth McCall: That statement was never something that was in my terms of reference or was never made to me specifically. My view was that my role was to try and ensure a sustainable business model for Post Office looking forward.

Mr Stevens: Can you summarise, in your view, what distinguished your role as Senior Independent Director from that of the other Non-Executive Directors?

Kenneth McCall: I was responsible for reviewing the performance of the chairman. I was the conduit for the other Non-Executive Directors, if they needed any help or advice. In some ways, I was the go-between also to the Chairman, where I would advise the Chairman if there were any concerns of the Non-Executive Directors. So, in simple terms, I would say at a high level I was eyes and ears.

Mr Stevens: The responsibility you referred to of evaluating the Chair’s performance, in one way, that was carried out through yearly evaluations; is that right?

Kenneth McCall: That’s correct.

Mr Stevens: Would you see your responsibility for evaluating the Chair’s performance as an ongoing matter, though: you that to keep on top of the Chair’s conduct and effectiveness?

Kenneth McCall: Yes, in principle. I think through the Covid period, where we were meeting remotely, I don’t recall exactly the process we went through but through the Covid period it was extremely difficult. It was about survival and it was about trying to keep a business together, so I don’t recall specifically the Chairman’s performance review. When it was done face-to-face, I recall it quite specifically.

Mr Stevens: In your role as Non-Executive Director and protecting or acting in the interests of the shareholder, to what extent did you have meetings with the Minister with responsibility for Post Office in your role as Senior Independent Director?

Kenneth McCall: I don’t recall how many meetings I had with the Postal Minister. Possibly one or two, nothing more. And, again, please bear in mind that, through the period we had three years of Covid as a part of that exercise, so therefore, no one was meeting anyone face to face.

I met the Chairman of BEIS at that time, I think – I believe now BIS, and I met the possibly one other minister as a part of that exercise. So I didn’t regularly meet a Postal Minister.

Mr Stevens: Before the hand-down of the Common Issues judgment in March 2019, had you had any conversation with the Postal Minister or indeed the Secretary of State about the allegations concerning the robustness of the Horizon IT System or the Group Litigation?

Kenneth McCall: No, I don’t recall I did.

Mr Stevens: To what extent would you meet representatives of the Shareholder Executive – sorry, UKGI – outside of meeting Tom Cooper in Board meetings?

Kenneth McCall: I would meet possibly Richard Callard, who first – was the prior to Tom Cooper. Tom Cooper, afterwards, either for a coffee beforehand or after a Board meeting. I don’t recall any formal meetings at their offices, as a part of that. I had a conference call once with the Permanent Secretary but, other than those, I don’t recall any.

Mr Stevens: The conference call with the Permanent Secretary, do you recall when that was?

Kenneth McCall: I don’t recall the specific date.

Mr Stevens: Did you discuss issues relating to the allegations of a lack of robustness in Horizon or the Group Litigation?

Kenneth McCall: No, I did not.

Mr Stevens: Do you recall what you discussed?

Kenneth McCall: Frankly, I can’t remember the date, I can’t recall the date, so I think I would just be hypothesising so no, I don’t remember.

Mr Stevens: Please can we bring up your statement at page 5, paragraph 14. You’re referring to your roles and responsibilities as Non-Executive Director and, at the end of paragraph 14, you say:

“At a high level, my role as a [Non-Executive Director] was to be part of a board developing [Post Office’s] strategy to achieve financial self-sustainability and to work with the management team to deliver that.”

Then over the page at paragraph 16, just go down, please. Towards the bottom half of that paragraph you say:

“Our role as non-executives on the Board is to help determine the company’s future direction and strategy. In other words, we are focused on what the company might look like in several years’ time and how we can create a sustainable and future-proof business.”

So strategy is forward looking. Would you accept that, to be able to advise on strategy, a non-executive has to consider risk to the business arising from past liabilities or current operations?

Kenneth McCall: From a strategic point of view, the focus of the non-exec will be looking at the marketplace that the business operates in, the business model that it’s using in that marketplace and how we might improve that business model to ensure that, in this case, the Post Office remained a leading player in the mails, parcels and logistics market, and that was the focus of sustainability as a business.

Mr Stevens: Do you think that, following the hand-down of Common Issues, the Post Office’s future strategy and its sustainability changed as a result of that judgment?

Kenneth McCall: After the Common Issues judgment there was, I believe, about eight or nine workstreams that were started as a result of the Common Issues judgment, looking at the remarks and comments made by Justice Fraser and requirement for the Post Office to substantially change its way of operating and its relationship with the subpostmasters.

Mr Stevens: I think you’re agreeing with me that things changed significantly during the Common Issues trial.

Kenneth McCall: There had to be significant change.

Mr Stevens: The Common Issues judgment considered and made findings on matters that happened in the past; would you agree?

Kenneth McCall: Predominantly, yes.

Mr Stevens: So was it not the role of the Board, including the non-executives, to look at the past as well, to determine what risks in future, or assess what risk in future, may be on the Horizon?

Kenneth McCall: As a non-executive I’m always looking forward, not looking back, and looking at our business model, and in this case, after the Common Issues judgment, we were looking at what changes required to be made that was the result of the judgment. And so that was really the focus, as opposed to looking historically.

Mr Stevens: Do you think the Executive Team had a role in identifying, analysing and mitigating risks for things that happened in the past?

Kenneth McCall: The Executive Team from the outcome of the Common Issues judgment was –

Mr Stevens: No, I’ll stop you there, sorry. I’m not talking about from the Common Issues judgment here. As a matter of generality, when you joined the Post Office in 2016, did the Executive Team have a responsible to identify, analyse and mitigate risks that the Post Office Limited faced?

Kenneth McCall: Yes, as a general principle, yes.

Mr Stevens: Did the Non-Executive Directors have a role in overseeing that aspect of risk management?

Kenneth McCall: Yes, mainly through the Audit and Risk Committee.

Mr Stevens: What did you see as the Non-Executive Director’s role in challenging the Executive Team’s delivery of its operations?

Kenneth McCall: The robustness of the strategy, the business operating model, the product evaluation, the Customer Service requirements. The detailed operating requirements of running a business and what we had to change and what the Executive Team were focused on day to day.

Mr Stevens: So did the Non-Executive Directors, including yourself, from 2016 onwards, have a role in overseeing the Executive Team’s analysis of the risk posed by the Horizon allegations?

Kenneth McCall: When I joined the Board in January 2016, I was completely unaware of the Horizon issues, bugs and historical problems and, therefore, in my mind, when I joined in 2016, my focus was on building a sustainable business model and future. It wasn’t focused on looking back. I was completely unawares of the history and what had recently happened. I then became aware, in April ‘16.

Mr Stevens: Thank you. Well, I’m going to cover that shortly so we’ll come back to that topic but, before I do, I want to ask you a couple of questions on materiality which appears in your statement at a few places. Please could we have up page 6, paragraph 17 of the statement. Thank you.

You say at the bottom there that:

“The Board will not consider the specifics of individual bugs or defects, which is generally the responsibility of the specialists in the IT Team, save to the extent that those bugs or defects have a material impact on the day-to-day running of the company.”

Then at paragraph 18, you say:

“Typically a non-executive board would have high-level oversight of the conduct of any civil litigation brought by or against the company but only if and when it became material. Each company will have its own materiality threshold and unless a civil claim met that threshold, I would not necessarily expect the Board to be made aware of it or updated on its progress.”

How was the threshold of materiality determined at the Post Office Board in 2016 to 2019?

Kenneth McCall: In my witness statement comments, I refer to materiality as if it would be determined by the auditors. So the statement would be based on normally, if I recall correctly, a percentage of turnover. So in this case, my use of the term “materiality” would be a percentage of turnover of the Post Office, and that’s the reference that I make by “materiality”. So in the case, if I recall correctly, then it would be many millions. But that’s the use of the word “materiality”.

Mr Stevens: We’ve heard this before in the Inquiry, exactly the definition you describe, and would you accept that the materiality, from the perspective of the Post Office Limited Board, would be different from materiality to an individual subpostmaster?

Kenneth McCall: Yes, I would.

Mr Stevens: In terms of the allegations that –

Sorry, before I ask that question: did the Board, when you were there, ever consider the subpostmasters’ perspective of materiality?

Kenneth McCall: The comment on materiality was driven by the auditor definition or from an annual accounts perspective. We didn’t look at it, as I recall, from a subpostmaster perspective.

Mr Stevens: In terms of the allegations that were made that Post Office had secured unsafe convictions using data generated by the Horizon IT System, so the allegation of an unsafe conviction, is that a matter that should be considered at Board level or is there a test of materiality for unsafe convictions?

Kenneth McCall: When I joined the Board in January 2016, to the best of my knowledge, there was no convictions and none of the existing Board members at that time had sat on the Board previously and so, therefore, I find it hard to comment on your question.

Mr Stevens: Can I just clarify with you what you mean by “no convictions” there. Do you mean that when you were a Senior Independent Director, you believe Post Office didn’t pursue prosecutions that led to convictions in that time?

Kenneth McCall: That is my understanding.

Mr Stevens: Let’s look at your appointment letter, please. It’s POL00362996. So we see it’s dated 2 December 2015. If we could turn to page 8, please. It refers to an induction, saying:

“After the commencement of your appointment, the Company will provide a comprehensive, formal and tailored induction. We will arrange for site visits and meetings with senior and middle management.”

What induction did you actually receive by Post Office?

Kenneth McCall: I met most of the Senior Executive Team face to face at Post Office offices.

Mr Stevens: Just so we can be clear, when you say the Senior Executive Team, most of, who are you referring to?

Kenneth McCall: I’m referring to the person that was in charge of the banking business or the person that was in charge of the mails business, so the people that were leading the various business units of Post Office. I met the Chief Financial Officer. I – in addition to that, I met the Chief Executive. So, I mean, the sort of top-line Executive Team. I don’t recall how many of the people I met, but I met number of the top-line team.

After that, I then did some external site visits and I visited some sub post offices in the network: if I recall correctly, probably four or five subpostmaster network offices.

Mr Stevens: Did you meet anyone from the Legal Department as part of your induction?

Kenneth McCall: No, I did not.

Mr Stevens: So, for example, Jane MacLeod, you didn’t meet her as part of your injunction?

Kenneth McCall: No.

Mr Stevens: Please can we bring up your statement, page 33, paragraph 73. You’re giving your reflections here and you say:

“When I joined [Post Office], the Board was still relatively new and, to my knowledge, none of the [Non-Executive Directors] had been in post at the time when the ‘Legacy’ Horizon system was in operation and the private criminal prosecutions were still ongoing. I can recall feeling as though we had been left holding the baby and we had to decide what to do with it based on our limited background knowledge.”

What, in particular, left you feeling as though you were holding the baby?

Kenneth McCall: Not having a non-executive on the Board who understand (sic) what had happened in the previous one, two, three, four years, and not having that knowledge.

Mr Stevens: When did you get this feeling?

Kenneth McCall: My comments were quite general when I started to find out about the Horizon issues, which was between April and September 2016, that there was no one, when I looked at my colleagues, who was in position prior to that.

Mr Stevens: So reading this, you say in the first sentence “When I joined Post Office Limited”, the second statement – I say a sentence, sorry – “I can recall feeling as though we had been left holding the baby”, your evidence is that that happened later in April 2016 onwards, rather than when you joined Post Office Limited?

Kenneth McCall: That’s correct.

Mr Stevens: That document can come down, thank you. You refer, we don’t need to turn it up but in your witness statement you refer to having an interview with Baroness Neville-Rolfe, prior to your appointment as Senior Independent Director.

Kenneth McCall: Yes, that’s correct.

Mr Stevens: Your evidence is that she didn’t discuss with you matters such as the allegations regarding Horizon or Tim Parker’s review?

Kenneth McCall: That’s correct.

Mr Stevens: How confident are you now, looking back, that she made no reference to the Parker Review in that interview?

Kenneth McCall: Very confident.

Mr Stevens: Why?

Kenneth McCall: Because I would have remembered something as significant, if there was a major issue that had been identified to me at the time before I was likely to join a new Board. So I’m as confident as I can be, bear in mind I’m talking eight years ago, that I recall that nothing was mentioned about the historical issues.

Mr Stevens: Do you remember what briefing material, written material, was provided to you as part of your induction?

Kenneth McCall: No, I don’t.

Mr Stevens: As part of your Rule 9 Request, the Inquiry sent you number of documents and asked you when you first had knowledge of them. Can we turn, please, to page 18 of your statement, paragraph 41. You say, towards the bottom of that paragraph:

“I now realise that, by this time [and you’re referring to 30 October 2018, we see, at the top], several reports had been commissioned by [Post Office] into possible issues with Horizon and I have been provided with copies of certain reports dating back to 2013. Except as set out in this statement, I had no knowledge of any of those reports until they were provided by the Inquiry.”

In that sentence, are you referring to documents such as the Second Sight Interim Report in 2013, which commented on the Horizon system itself?

Kenneth McCall: Yes, the first that I’ve seen of any reports on the Horizon system were in documentation provided by the Inquiry.

Mr Stevens: Please can we turn to POL00006357. This document very well known to the Inquiry, it’s Simon Clarke’s Advice of 15 July 2013, it was sent with the Rule 9 Request to you and was one of the documents that the Inquiry asked you about. Did you read it when preparing for this statement?

Kenneth McCall: No, I did not, because I wasn’t in position in 2013.

Mr Stevens: So are you aware of what this document says?

Kenneth McCall: No, I’m not.

Mr Stevens: Firstly, before I ask what it says, when did you first see this document?

Kenneth McCall: Only when it was presented to me as part of the papers from the Inquiry.

Mr Stevens: Why did you not refer to it in your witness statement?

Kenneth McCall: I didn’t believe that it was relevant to me on the basis that I wasn’t in position and didn’t know anything about it and so, therefore, I’d struggle to comment on it.

Mr Stevens: If we turn, please, to page 13, we see, under “Conclusions”, it says:

“What does this all mean? In short, it means that …”

It says “Dr Jennings”, which refers to Gareth Jenkins. Presumably now you know who Gareth Jenkins is?

Kenneth McCall: Yes, I do.

Mr Stevens: “… [Gareth Jenkins] has not complied with his duties to the court, the prosecution or the defence.”

If we go down, at 38, we don’t need to go through it all, but it says:

“Dr Jenkins failed to disclose material known to him but which undermines his expert opinion. This failure is in plain breach of his duty as an expert witness”, and continues.

Were you provided any information regarding Gareth Jenkins when you joined the Post Office?

Kenneth McCall: I was not.

Mr Stevens: When was the first time you heard of Gareth Jenkins?

Kenneth McCall: The first time I’d heard about Horizon issues was between April and September 2016, after I joined in January 2016. I don’t recall exactly when I found out about Gareth Jenkins. I don’t have a date of recollection in my mind.

Mr Stevens: Do you recall when you found out about the allegation that Mr Jenkins had failed to comply with his duties as an expert?

Kenneth McCall: I don’t know about duties as an expert but, in terms of ability to access the system, I believe that was in November/December 2019.

Mr Stevens: When you say “ability to access the system”, do you mean what we now refer to as remote access?

Kenneth McCall: Yes, I believe so, yes.

Mr Stevens: Can you assist us with whether you were aware of concerns about Mr Jenkins before, say, the Common Issues judgment?

Kenneth McCall: No, I was absolutely not.

Mr Stevens: Again, I’ll phrase it slightly wider: do you recall when the first time you became aware of concerns with Mr Jenkins within Post Office?

Kenneth McCall: I don’t recall an exact date.

Mr Stevens: Can you give us a brief time, a time period?

Kenneth McCall: Only when – I go back to my November/December 2019, when I heard the system could be remotely accessed. That’s probably the first time. I don’t remember anything prior to that.

Mr Stevens: Did you discuss concerns about Mr Jenkins with anyone else on the Board?

Kenneth McCall: No, I did not.

Mr Stevens: Could we look at the monitoring, please, of the Group Litigation. We don’t need to – actually, no, let’s bring it up, please, your statement, page 16, paragraph 37. You say:

“Initially, Ms MacLeod delivered updates to the full Board on the status of the G proceedings, which soon became a standing agenda item. These updates were necessarily limited to high-level news and ‘headlines’: how many claimants had joined the claim; whether there was going to be a class action; and similar key issues and milestones. From a very early stage there was a huge amount of detail in the GLO proceedings that the Board would not have time to review, and it was not the Board’s role to do so. Looking at the Board minutes I have been provided with by the Inquiry, the notes of Ms MacLeod’s updates appear quite light. It’s not clear to me now why the Chairman did not request more detail in the minutes.”

You refer to Ms MacLeod’s preoccupation with preserving privilege.

So just clarifying this, is your evidence that, actually, as a matter of fact, Ms MacLeod provided more substantial briefings to the Board orally than is reflected in the minutes?

Kenneth McCall: Mrs MacLeod provided updates to the Board that were almost, almost verbal, that I recall.

Mr Stevens: Yes, and when she provided those verbal updates is your evidence that what she actually said to you when you were in the Board room was more substantive or provided more information than is reflected in the Board minutes?

Kenneth McCall: No, I don’t recall specifically because everything was verbal. I find it harder to recall whether it was more detailed or less detailed, I just recall it was a verbal update and the minutes reflected that update being quite light. I don’t know why but Mrs MacLeod wouldn’t present for one hour or otherwise, it was a short session that I recall verbally updated on the high-level points of the litigation.

Mr Stevens: What did you mean then by “It is not clear to me now why the Chairman did not request more detail in the minutes”? Are you saying that the Chairman should have requested there to be more detail written down as to what Ms MacLeod actually said or that the Chairman should have requested that Ms MacLeod provide more detail to the Board?

Kenneth McCall: I’m saying that the Chairman should have requested more detail in the minutes.

Mr Stevens: From saying that, what do you think is missing: what sort of information is missing from the minutes that has led you to make that statement?

Kenneth McCall: The basis of my comments relate to receiving information from the Inquiry. If I was able to read it now, it would give me a better understanding of what was said and what happened during those meetings, if the minutes were more detailed. So my comments are really driven by recollection of memory, as opposed to anything else.

Mr Stevens: Why didn’t you raise any concerns about the minutes at the time?

Kenneth McCall: In hindsight, I should have done.

Mr Stevens: Please can we bring up POL00024270. So we know and have heard evidence that there was initially a steering group for the GLO and then the Board created a subcommittee in early 2018. In fact, we see at paragraph 2.1, it says it’s following the meeting of 29 January 2018. In your witness statement, you refer to one of the purposes of the committee to be to receive legal advice. Was it also to provide oversight for how the litigation was being conducted?

Kenneth McCall: If I recall correctly, there is terms of reference – there were a terms of reference of the subcommittee in documents. I haven’t seen it as part of my papers but, if I recall, there was terms of reference, and the day-to-day management of the subcommittee and working with the legal officers representing Post Office was the duty of the Company Secretary or Legal Team, Jane MacLeod, and the Executive.

Then, after that, if there was anything required to be escalated, then that would be escalated to the subcommittee.

Mr Stevens: That can come down for the time being. Thank you.

Leaving aside what the formal terms of reference said, as a matter of practice, what did you see your role to be on the subcommittee?

Kenneth McCall: The Group Litigation, as I first found out about in between April and September 2016, started to snowball very quickly. There was approximately 90 claims, and that snowballed very quickly into 550 or 560 claimants, so things were moving very fast.

And the role of the subcommittee was to be able to try and quickly react, if there was any decisions or any advice that was required, because it was happening so fast. Decisions had to be made and so, therefore, the purpose, as much as anything, of the subcommittee, was to try and assist the Board in understanding what was happening and to be available if the Executive or Mrs MacLeod had to escalate anything that required further discussion.

Mr Stevens: Can you give us a summary of what types of things were escalated to the subcommittee?

Kenneth McCall: I don’t recall specific documents or items at the moment and, in my papers provided by the Inquiry, there wasn’t any documents that I can give as an example but it was more about the frequency and the feed of information that was coming very quickly.

Mr Stevens: I want to look at a different topic, please, and that’s what we now call the Swift Review or Tim Parker’s review. When did you first become aware of Tim Parker’s review as commissioned by Baroness Neville-Rolfe?

Kenneth McCall: I never was aware of the Swift Review until the papers and I saw the documents provided by the Inquiry.

Mr Stevens: So I want to try to delineate two things here. Firstly, when were you aware that Tim Parker was carrying out a review at the request of Baroness Neville-Rolfe?

Kenneth McCall: I wasn’t aware at all and I was never informed of that at all.

Mr Stevens: The second question I was going to ask was: when did you become aware of Sir Jonathan Swift’s involvement? Your evidence is you didn’t see the report, the advice, until it was sent to you by the Inquiry?

Kenneth McCall: That’s correct.

Mr Stevens: Apologies if I misheard you but just so I can be clear, that’s when you saw the advice produced by Sir Jonathan Swift; when did you become aware of his actual involvement?

Kenneth McCall: “His” being? Can you just clarify?

Mr Stevens: I’m very sorry, yes. Sir Jonathan Swift’s involvement?

Kenneth McCall: The name Swift, I was not aware of. It’s not a name that I was aware of. I believe when I looked through the papers provided by the Inquiry, there’s a comment from Tom Cooper which says “I attach” – and I don’t believe he names anything but he attaches a document. I don’t recall ever receiving that or seeing that document but I’ve read the papers provided by the Inquiry but, to the best of my recollection, it doesn’t mention a name, and I don’t remember seeing it. So physically seeing what was the Swift Report and the letter to Baroness Neville-Rolfe, I didn’t see it until it was provided by the Inquiry.

Mr Stevens: I want to bring up, please, Jane MacLeod’s witness statement. It’s WITN10010100. This is a witness statement provided to the Inquiry by Jane MacLeod dated 30 April 2024, which has been read into the record.

Can we please turn to page 101, and if we could go down, please. Sorry, it should be starting at page 100, paragraph 184. So we see at the top there, it’s referring to – 183 – Sir Jonathan, that’s Sir Jonathan Swift, providing a draft version of his findings to Mr Parker.

At 184, Jane MacLeod says that:

“I have not been provided with the minutes of any Board meetings or Group Executive meetings in which the Chairman’s Review or the findings from it were discussed, although it is clear that the Board were aware that it had been commissioned as the CEO informed the Board its meeting on 22 September 2015 …”

Pausing there, that’s before you joined the Post Office:

“… that ‘the Minister had asked the Chairman for his independent review of Sparrow’.”

It then goes on, if you see further down, it refers to Mr Parker’s comments in open source material. She says:

“My recollection is different to Mr Parker’s, although I agree that I discussed privilege and confidentiality with him when I met him. My recollection is that the Senior Independent Director, Mr McCall, asked a question at a Board meeting as to whether the Board would be briefed on the findings of the Chairman’s review, although I do not now recall the exact timing, but it was after the further work recommended by the Chairman’s Review had commenced.

Pausing there, do you recall asking such a question, as indicated by Ms MacLeod here?

Kenneth McCall: No, I don’t.

Mr Stevens: So, in your evidence, where we saw you refer to feeling being left holding the baby, you weren’t referring to learning of the Chairman’s review?

Kenneth McCall: I have not seen that document nor have I questioned it, nor have I said I have a totally different recollection, otherwise I would have – not have made the comments in my witness Statement.

Mr Stevens: I’m just going to continue with what she says, in fairness to you, so it’s put to you:

“I believe that, as a result of that question [this is Jane MacLeod speaking], I provided an oral briefing to the Board (although I do not recall if this was at the same meeting or subsequently), as to the scope and findings of the Chairman’s review as well as a summary of the further work being undertaken following the Chairman’s review.”

Again, I’ll put it to you: do you disagree, then, with Ms MacLeod’s recollection?

Kenneth McCall: I have absolutely an alternative view on that, I have never – and I stress again – I have never seen that report nor do I recall in any way that I made those statements or that word.

Mr Stevens: Finally, she says:

“Although I have not seen any documents which indicate the full report was circulated to the Board, my recollection is that I advised the Board that the full report was available on request.”

Do you agree with that?

Kenneth McCall: No, I do not.

Mr Stevens: That can come down. Thank you. Can we please bring up POL00024913. It’s a letter from Tim Parker to Baroness Neville-Rolfe regarding his review. It’s dated 4 March 2016. I think you’ve already referred to it but for clarity I will ask: did you see this at the time?

Kenneth McCall: No, I did not.

Mr Stevens: When was the first time you became aware of this letter?

Kenneth McCall: In the papers provide to me by the Inquiry.

Mr Stevens: Could we turn, please, to page 2, and if we go down to the “Criminal Prosecutions” section – we don’t need to read it all – it sets out some information on the review, and the criminal prosecutions element of it, and above (1) minute it says:

“As a result of the review I have decided to take the following steps.”

It says:

“I will take advice from specialist criminal counsel as to whether the decision to charge theft and false accounting could undermine the safety of any conviction for false accounting if (a) the conviction was on the basis of a guilty plea following which, and/or in return for which, the theft charge was dropped, and (b) there had not been sufficient evidential basis to bring the theft charge.”

Were you aware of that work described there having been commissioned?

Kenneth McCall: No, I was not.

Mr Stevens: Do you think you should have been made aware of that?

Kenneth McCall: My first Board meeting was in February ‘16 and I notice, from seeing the letter again, it’s March. But yes, naturally in the course of events, I believe I should have been aware of it but I was not aware of the letter, at all.

Mr Stevens: If we turn the page, please, page 3, there’s information on Horizon and it refers to, firstly, various bugs, errors and defects. We don’t need to go to that. It’s the second two paragraphs I want to refer to:

“Nevertheless, the … report suggested that consideration should be given to whether it would be possible, by analysis of the transaction logs of subpostmasters who made complaints, to determine more comprehensively whether or not the matters complained of by each subpostmaster could show the existence of some other generic bug within the system. Work is now underway to assess if such testing is possible and, if so, to scope the work that would need to be done.”

Then it goes on to say:

“Further work is also under way to address suggestions that branch accounts might have been remotely altered without complainants’ knowledge.”

Were you aware of one or either of those recommendations or work being carried out further to them?

Kenneth McCall: No, I was not.

Mr Stevens: That can come down, thank you. Can we bring up UKGI00012703. It’s an email from Tom Cooper on 16 November 2020. We see in the distribution list and the cc list there are various senior figures at UKGI and then what was BEIS, the Permanent Secretary included. It says:

“Ahead of our call this afternoon, this is just to update you that Ken McCall, the [Senior Independent Director], has confirmed that, having spoken to other members of the Board as he deemed appropriate, he does not think it appropriate to take any action in relation to Tim Parker’s decision making around the QC’s review in 2015 [referring to the Swift Review] of [Post Office’s] handling of the Horizon complaints.

“His rationale is the same as reported previously. Ken believes Tim made a significant error of judgement in accepting legal advice that the QC’s report and, as a consequence the follow-up work, should not be shared with the Board.”

Does that fairly summarise any work you carried out following your discovery of the Chairman’s review?

Kenneth McCall: The Chairman’s review, and you’re talking of the Chairman’s – just for clarity, you’re talking of the Chairman’s review of performance?

Mr Stevens: Initially, I’m saying: once you were asked to conduct a – no, let’s pause here.

This says that “he does not think it appropriate to take any action in relation to Tim Parker’s decision-making around the QC’s review in 2015 of [Post Office Limited’s] handling of the Horizon complaints”, and then it goes on to say that you believe that he made a significant error of judgement in accepting legal advice that the QC’s report, namely Jonathan Swift’s report – and, as a consequence, the follow-up work – should not be shared with the Board.

Well, this suggests that by September 2020 you were aware of the Swift Review?

Kenneth McCall: No, because by name, I wasn’t aware of what anything was called. Just for clarity, I don’t recall the term “Swift” and I don’t see it in this document, and I’ve not seen it in anything that’s been provided to me that would indicate, better than my recollection, that I have seen. And this refers to the Swift Report, so I was – my understanding is that the Chairman conducted a review. I did not know what it was called or what it was and it wasn’t shared with the Board but the name of Swift was not known to me.

Mr Stevens: Were you aware that he had instructed a barrister to assist with the review?

Kenneth McCall: No, I was not.

Mr Stevens: So is your evidence that Tom Cooper here, when saying, “Ken believes Tim made a significant error of judgement in accepting legal advice that the QC’s report and, as a consequence, the follow-up work, should not be shared with the Board”, your evidence is that’s inaccurate?

Kenneth McCall: My evidence is that if there was something as serious as that, having taken place, then I believe the Chairman should have shared it with the Board.

Mr Stevens: That’s a separate question. I’m asking, on this email from Tom Cooper, the suggestion is that you had evaluated Mr Parker’s performance and determined he’d made a significant error of judgement in failing to share legal advice in the form of what’s described as the QC’s report, and failing to share that with the Board; is that wrong?

Kenneth McCall: My conversation with Tom Cooper, to the best of my recollection, there wasn’t a reference in our conversation to “QC”, so, therefore, I just recall Tom saying “Tim Parker has carried out a review, it’s not been shared by the Board”. I don’t recall there being a name given to that document, or QC’s document, and the email here is much more direct than the conversation that we had. So my conversation with Tom Cooper was, “Apparently there’s been a document that Tim has commissioned and it’s not been shared by the Board”. It was as general a recollection as that I have.

So here it’s very specific. It says, “In this email”, which obviously I’m not a party to and didn’t see. Then, you know, it’s a much more strongly worded than the phone conversation with Tom Cooper with me was.

Mr Stevens: Did you say to Tom Cooper that you thought, on the information you had, that Tim Parker had made a significant error of judgement?

Kenneth McCall: If there’s a major report, that the Chairman should have shared with the Board, then that’s why I would refer to it as a significant error of judgement.

Mr Stevens: So in saying you would have referred to it as a significant error of judgement, you said “if there was a major report”. What were you told for you to believe there was a major report that he’d failed to share with the Board?

Kenneth McCall: Verbally from Tom Cooper.

Mr Stevens: What did he say specifically about the report?

Kenneth McCall: I mean we’re talking four years ago or thereabouts. I don’t specifically recall the exact conversation, but the Chairman had commissioned a report, and it’s not been shared with the Board. That is the essence of the conversation. There was no reference to “Swift”, there was no reference to “QC”. So I don’t understand how Tom knows those factors or QC’s report. I certainly didn’t know those factors.

Sir Wyn Williams: Have I got this right, Mr McCall: that you accept that there was a conversation with Mr Cooper either shortly before or on the date of this email. In that conversation, he told you that Mr Parker had received a report which had not been shared with the Board. You were told enough to consider that that was a significant error of judgement on the part of Mr Parker but, given his overall record, you did not think that any action should be taken against him in respect of that error of judgement.

You, however, dispute the fact that you were aware either of the name “Swift” or that the report was carried out by a barrister. Now, is that a fair summary of what you’ve been debating with Mr Stevens?

Kenneth McCall: Yes, sir. That’s correct, sir.

Sir Wyn Williams: Fine. Thank you.

Mr Stevens: Please can we bring up UKGI00012155. I think this is a document you were referring to earlier. We see it says, “From: Tom Cooper” at the top, “To” includes Tim Parker, and then you’re there as well, Ken McCall. “Subject: Chairman’s review report”. Attachment, “QC Post Office review”, 7 February 2016, and then also the letter to Baroness Neville-Rolfe, dated 4 March 2016:

“As promised yesterday, please finding attached a copy of the QC’s report prepared for Tim in 2016. The recommendations are at the back.

“Also attaching a copy of Tim’s letter to the Minister.”

Do you accept you did receive this Swift Review?

Kenneth McCall: No, I do not. I accept I saw in the documents provided to me that this is exactly what it says but I have no recollection of actually having seen that report.

Mr Stevens: Is it not the case that you, on 30 July 2020, received the Swift Review and then later, in the email we just went to, gave Tom Cooper your views on it, namely having read the report, you thought that it should have been disclosed to the Board?

Kenneth McCall: I don’t believe so. To the best of my recollection, I would – I believe I would remember or have remembered if I saw a document such as this.

Mr Stevens: Sir, that’s probably a good time to take our break and I wonder if we could come back at 11.25.

Sir Wyn Williams: Yes, that’s fine, Mr Stevens. I was just checking the time.

Mr Stevens: Thank you, sir.

(11.15 am)

(A short break)

(11.26 am)

Mr Stevens: Sir, can you still see and hear us?

Sir Wyn Williams: Yes, thank you.

Mr Stevens: Please could we bring up POL00104107.

We see this is an email from you to Veronica Branton and others on the Board on 22 April 2020. We’ll come to it in a moment. You say:

“I would appreciate seeing a redraft of the minutes to include the points raised by Tom.”

That’s an email from Tom Cooper to which we’ll turn in a moment. Before we do, you say:

“I must say at this stage I do not feel comfortable that the minutes truly reflect the complete unawareness of the Board to the existence of a Deloitte report, whom it was commissioned by and the contents therein, and that the minutes reflect the complete shock at finding out that Fujitsu had remote access.”

Pausing there, the Inquiry has set you several reports from Deloitte but in two sets, broadly one Project Zebra from 2014 and one Project Bramble from 2016 onwards. When you say “the existence of a Deloitte report”, to what are you referring?

Kenneth McCall: I wasn’t aware, if I recall correctly, that there was more than one, so I don’t have a name or a badge that I can give to that report. I didn’t know that there was multiple Deloitte reports, only in the papers that were sent to me by the Inquiry was I aware that there was multiple Deloitte documents.

Mr Stevens: So is your evidence, at this point, you were aware of no Deloitte reports regarding remote access?

Kenneth McCall: That’s correct.

Mr Stevens: When you say things like “complete shock” and “complete unawareness”, do we take from that that you think the Deloitte report should have been before the Board?

Kenneth McCall: That was my perception, that someone had commissioned a report and the Board hasn’t seen it.

Mr Stevens: Did you think it was an important report?

Kenneth McCall: That was my perception at the time, that there was a report, and that the Board should have seen it, and so my words used then are complete unawareness by the Board and I believe myself and my fellow colleagues on the Board – specifically I refer to the non-executives – would have felt the same way.

Mr Stevens: So if you’d known earlier that there was a report by Deloitte that dealt with remote access, would you have wanted to know more about it?

Kenneth McCall: Yes, I would.

Mr Stevens: Could we go, before we move on to look at that in more detail, I want to look at Tom Cooper’s email, which you refer to there. As I say, you say:

“I would appreciate seeing a redraft of the minutes to include the points raised by Tom.”

If we go to the bottom of the page, you see that is the email from Tom Cooper, you are sent it, we see, on the right side. Then if we go to see the meeting, it says:

“Veronica

“I’ve got a few points on the minutes from the last meeting.”

Something at paragraph 7 about the Deloitte report. He says:

“I’d like to clarify that the ‘who knew about’ question should apply to the various pieces of work commissioned …”

You see the third one is “following the Jonathan Swift QC report”.

So you were aware that it was Jonathan Swift QC who prepared a report by at least 22 April 2020; would you accept that?

Kenneth McCall: I accept it when I see it here in email, but day to day, I don’t have any recollection of that specific email and I don’t have a recollection of the name, but there is an email here which I read the title and I see it and I accept. But it’s not something that I had any retention for.

Mr Stevens: Well, looking back now then, would you accept that, firstly, you knew Jonathan Swift had commissioned a report, it was later sent to you, and you told Tom Cooper that Tim Parker should have disclosed it to the Board?

Kenneth McCall: I see the paper trail and the email trail. I have no recollection of receiving the Jonathan Swift Report. I have none at all.

Mr Stevens: So there are two options, really: one is your recollection is inaccurate and you did receive it and read it; or, secondly, an obvious important report that you were sent, you didn’t open?

Kenneth McCall: The former, in that I have no recollection of receiving the Swift Report.

Mr Stevens: Actually, the former thing I said is that your recollection is incorrect.

Kenneth McCall: Yes.

Mr Stevens: Are you accepting your recollection is incorrect?

Kenneth McCall: When I see the paper trail, you would have to say yes, that’s potentially the case.

Mr Stevens: That document can come down, please. Could we please look at your statement, page 29, paragraph 63. You say:

“At some point during the Board’s review of CCRC cases … I received a telephone call from Mr Cooper regarding a Deloitte report that Mr Parker appeared to have commissioned but had not shared with the Board.”

You go on in that paragraph to say you believe now that he was referring to Project Bramble, which, as I said earlier, was the post-2016 work.

If you can turn the page, please, to paragraph 66, you say:

“During the CCRC review meeting, which Mr Parker attended, the Board raised the subject of the Deloitte [review] and why it had not been shared. The tone of the meeting was not one of anger but definitely puzzlement. Mr Parker’s explanation was that he had been advised that the report was legally privileged and should not be shared with the Board …”

So your evidence appears to be you were told of the Deloitte review, the report, and you attended a Board meeting at which you asked Mr Parker why he didn’t provide that information earlier?

Kenneth McCall: Yes, that’s correct.

Mr Stevens: Please could we look at POL00006753. These are minutes of the Group Litigation subcommittee of Post Office, on 21 February 2019. We see Tim Parker attends by phone and then, third down, you attend by phone as well. Yes?

Kenneth McCall: Yes.

Mr Stevens: We also see that Anthony de Garr Robinson QC, as he then was, gave – if we go down please – at the upcoming Horizon trial, gave a briefing or advice in conference on his views. If we turn the page, please, number 4 says:

“Remote access risk. The claimants have posited the theory that Fujitsu had interfered with branch data in secret. [Post Office] Limited and Fujitsu’s case on remote access had changed over time. Initially Fujitsu had said that remote access was not possible. The Deloitte audit had found that it was. The claimants’ expert was arguing that the scope for remote access was even greater than now stated”, and goes on to say what the court would do.

So let’s take it in stages. Firstly, you were aware at this stage, weren’t you, that remote access by Fujitsu was possible?

Kenneth McCall: My recollection was some time between November and December 2019 –

Mr Stevens: That’s your recollection but this is a minute from February 2019, at which remote access is discussed. So do you accept that you were aware of remote access by at least this date in February 2019?

Kenneth McCall: From the minute that’s in here, I have to accept that that’s the case and my recollection is wrong.

Mr Stevens: Secondly, it refers to the Deloitte audit. So you were aware of Deloitte’s involvement in an issue relating to remote access; would you accept that?

Kenneth McCall: Yes, I do.

Mr Stevens: If we look further down, please, we see “Questions”, and the first one is about optimism on the claim; the second a note about “limit of planning that we could do before we had the judgment in the Common Issues trial”; a discussion there about risk mitigation.

If we turn the page, please, it says there, in this paragraph:

“Whether an accusation was being made that [Post Office Limited] had been involved in instructing Fujitsu to change transactions? It was noted that only Fujitsu could change data and there was no suggestion that [Post Office] had operated a policy to get Fujitsu to manipulate the branch data. The claim was that we had lied about Fujitsu’s ability to change branch data. It was noted that it was hard to capture the number of instances in which the data had been changed, especially in the Horizon system because of the way that data was captured. We could not distinguish easily between maintenance access and making changes to branch data. However, Fujitsu had been clear that branch data had only been changed on very rare occasions.”

Then we see it goes on to say about a line between bugs and systemic system errors and appeals.

So from these minutes, it firstly doesn’t appear that any surprise was raised at this information that Fujitsu could remotely access data; do you accept that?

Kenneth McCall: I do.

Mr Stevens: Secondly, there’s no question raised, such as what is the Deloitte audit? Would you agree with that?

Kenneth McCall: I don’t see anything of that in the minutes.

Mr Stevens: From that, can we infer that members of this committee were aware of the Deloitte audit before this meeting?

Kenneth McCall: According to the minutes, I would have to agree with you but, as I say, the dates were not my recollection. But I’m obviously incorrect.

Mr Stevens: So you can’t assist us, then – you’ve said in your evidence it’s November 2019 or maybe December 2019. Looking at this document, you can’t assist with when, before February 2019, you may have found out about this information?

Kenneth McCall: It’s – in my witness statement, I’ve honestly, to the best of my recollection, said this is the date I believed I found out about remote access, and that’s what’s in my statement. That’s what I believe. But you’ve obviously shown me something that – where my recollection is incorrect.

Mr Stevens: Do you recall reading any of the reports into the Bramble Deloitte reports?

Kenneth McCall: No.

Mr Stevens: Given what we said earlier about the significance of this and you would have asked about the Deloitte reports, if you were aware of the Deloitte reports at this time, would you have asked to read them?

Kenneth McCall: Yes. I believe it was an error, certainly on my behalf.

Mr Stevens: Sorry, you say you believe it was an error. What are you referring to there?

Kenneth McCall: I believe, if I had been aware of the Deloitte reports, I should have asked to see them.

Mr Stevens: Can we look, please, at a different topic. It’s your approach to litigation. POL00006380, please. Now, this is a paper for the steering group on the 11 September 2017, the Group Litigation steering group. You weren’t a member of that steering group, were you?

Kenneth McCall: I was not.

Mr Stevens: You only became involved when it was the Board subcommittee?

Kenneth McCall: That’s correct.

Mr Stevens: We see the title is “Does Post Office support the general strategy set out below?” Do you recall whether you saw this document as part of your role as a Senior Independent Director at the time?

Kenneth McCall: No, I have not seen the document.

Mr Stevens: If we turn, please, to page 2, paragraph 4.3, we see the heading is “Overall Post Office Strategy”, and there’s some discussion on that, and then we get to 4.3, which says:

“We believe the better solution is to try to force the claimants into a collective position where they will either abandon the claims or seek a reasonable settlement.”

It goes on to refer to the litigation funder, and at the end says:

“Our target audience is therefore Freeths, the funder and the insurers who will adopt a cold, logical assessment of whether they will get a payout, rather than the claimants who may wish to fight on principle regardless of merit.”

It says:

“To try to force the claimants into a position where they give up or settle, we recommend a three-pronged, approach”, which we don’t need to turn to.

Were you aware of that broad strategy of trying to force the claimants into a position where they give up or settle, and focusing on the solicitors, funders and insurers?

Kenneth McCall: No, I was not.

Mr Stevens: In your witness statement at paragraph 36 – we don’t need to bring it up – you say that you recall the Board being advised that the claim was funded by a litigation funder and that their model would be to move quickly to get other claimants involved?

Kenneth McCall: Yes, that’s correct.

Mr Stevens: Can you recall the context in which you were told that there was a litigation funder involved and the purpose for why you were told that?

Kenneth McCall: It was just a matter of fact when the discussion came forward about who was representing the claimants. So it was only used as a matter of fact, a matter of information.

Mr Stevens: Can we look, please, at POL00258369. Please can we go to page 2, and further down, please, to Jane MacLeod’s email. Thank you. It refers to the “Case Management Conference last week”, and the decision of then Mr Justice Fraser on the strikeout application, striking out parts of the witness evidence that the claimants had filed. At the bottom we see it says:

“However in deciding the application, the Managing Judge was very critical of our conduct of the case intimating that we were not acting cooperatively and constructively in trying to resolve this litigation (which criticism was levelled equally between the parties); and that we had impugned the court and its processes by making the application for improper purposes. This response is extremely disappointing as this has not been our intention, and his challenge as to the purpose for which we had applied for strikeout is at odds with comments he had made during various procedural hearings over the past year.”

If we go up, please, to page 2 to see Mr McCall’s response. You say:

“Jane

“Many thanks for your note.

“Disappointing indeed.

“I would like to suggest we have a full update the next time we are all together.”

You say you’ll leave it to Tim for thoughts on the discussion.

What, if any, action did you take in response to learning about Mr Justice Fraser’s criticisms of the way the Post Office had handled the litigation?

Kenneth McCall: I believe, if my recollection is correct, that that’s when we changed QCs – now KC –

Mr Stevens: No, this is before the Common Issues trial.

Kenneth McCall: Oh, I see. Then my view would be the tone and the approach that we took.

Mr Stevens: What did you do to address the tone and the approach?

Kenneth McCall: I personally don’t recall, you know, I don’t recall specific conversations, other than I’ve said, “Look, I think we need to discuss this, and I think we need the Chairman to lead a discussion on what actions we should take”. That was the purpose of my note.

Mr Stevens: That can come down. Thank you.

I want to go to a different topic, please, on contingency planning in the run-up to the Common Issues trial. Please can we bring up page 20 of your statement, paragraph 43. You say:

“I can recall being shocked at losing so badly when the advice from [Post Office’s] barristers had consistently been that we had the better of the arguments on most of the 23 separate issues under consideration. Against that very clear and confident advice, it was almost inconceivable that we had lost on all material points. I also did not appreciate and I do not believe the Board as a whole appreciated, how great an impact the [Common Issues Trial] could have on [Post Office’s] day-to-day operations.”

The words you use there, “better of the arguments”, is taken from, or at least it’s in, minutes recording legal advice was given. When you hear the words “better of the arguments”, how much confidence do you think the legal professionals had in the case, if using the term “better of the arguments”?

Kenneth McCall: It’s very difficult for me to comment on the legal professionals. My perception on the receiving end of those comments would be that we were in a strong position.

Mr Stevens: When you say a strong position, if you were to put a percentage on it, what were you thinking of your chance of success?

Kenneth McCall: Better than 50 per cent.

Mr Stevens: As in anywhere from 51 per cent upwards, or?

Kenneth McCall: I think it’s quite subjective to put a figure on it but I would say consistently our legal advice had been our arguments were strong and that, based on those arguments, my perception, and hence the use of my words that I was shocked, I was shocked. I completely didn’t expect what had happened and so, on that basis, I said “Well, how can we have got it so wrong? How can that be so wrong? How could this have happened, based on our legal advice?”, and that’s what I depended upon.

Mr Stevens: But from what you’re saying, is it fair to say that you hadn’t considered this to be a certain victory or had you considered it to be a certain victory?

Kenneth McCall: No, I don’t think you can ever say anything is a certain victory but I certainly believed that there would be a better outcome than there ended up being.

Mr Stevens: Can we look, please, at POL00006754. So this is a minute of the meeting of the Subpostmaster Litigation Subcommittee, we see it’s on 15 May 2018. At the bottom, we see you’ve given your apologies. Would you have read the minutes of the meeting that were prepared when you were – in readiness for the next meeting?

Kenneth McCall: I think you would have to assume normally, yes. But it’s difficult to recall, back in 2018.

Mr Stevens: We see Anthony de Garr Robinson QC and David Cavender QC are listed as in attendance and, page 1, if we go down, please, it gives an overview of the litigation. It says, “Work out in Common Issues [‘trial’, it should be trial] what the contract means. Phase 2 work out how the computer [it should be ‘system’] worked.”

The next paragraph down:

“CI trial [Common Issues trial] – what king of relationship those documents in the round constitute. We say business to business but could be interpreted differently. Not straightforward because of the drafting [it should be ‘of’] the contracts [especially] the older ones.”

I say “what king”, it should be “what kind”, I think:

“Idea of good fait into contracts, [especially] relational contracts …”

I assume that’s “especially long-term arrangements”:

“New law. Unclear what a general duty of good faith would mean.”

It’s there on the screen, sorry:

“Overall view is that the [Post Office] has the better of [the arguments] in most 23 [arguments]. Don’t think it likely that the good faith claim will be upheld but is material there for him to do so (bit of a one-sided contract, etc) but in that case would advise [Post Office] to appeal.”

Then, if we go to page 4, please. It says:

“Any view on how many of the 23 claims they’re likely to win? 5 or 6 significant issues where it’s not straightforward (go away and provide a summary?). Need to manage the comms angle and work out the implications.

“Do a piece of work on impact of losing any of the 23 terms. Aiming to bring this back in July. Looking at mitigations and what we could do now in addition to wait [‘what’, I think] we do if we did lose. Interesting to hear QCs’ views on most contentious of the 23 issues.”

Do you recall discussing the advice with anyone at who attended this meeting afterwards?

Kenneth McCall: No, I do not.

Mr Stevens: Would you accept that it appears that the barristers were advising that some of the issues were not straightforward?

Kenneth McCall: When I read this document, even though the quality of the English is extremely poor, I’d have to say yes, there are obviously issues that are not straightforward.

Mr Stevens: And that the Post Office may lose some of them?

Kenneth McCall: Yes.

Mr Stevens: It appears that the committee asked for more work to be done to analyse the impact of a negative outcome?

Kenneth McCall: Yes.

Mr Stevens: Can we look, please, at POL00006763. This is the meeting of the Litigation Subcommittee on 10 July 2018. We see that you’re in attendance on the third line. If you go to page 2, please, towards the bottom, we’ve got “Contingency Planning”:

“It was noted that the QCs had presented their opinion on the merits of the case at the last meeting, and had concluded that, based on the information available to them at the time, on balance Post Office had the better arguments.

“In order to understand the potential impact of an adverse outcome, the various terms sought by the claimants to be implied into the postmaster contract had been assessed from both a legal (likelihood) and an operational (impact) perspective, and had been prioritised using a simple ‘RAG’ approach. These were discussed with the Committee and it was noted that, in general, those terms which had been assessed as the most likely, in fact had a low operational impact; and conversely, those with the greatest potential impact were less likely to be successful.”

It goes on to say, over the page, that:

“The Committee noted that the assessment was very helpful.”

If we look at that assessment now, it’s POL00025908, please. We can see it says “DRAFT Contingency Planning: Risk Assessment Table”, and do you see the date is 9 July 2018, at the bottom left? Do you remember reviewing this document?

Kenneth McCall: No, I don’t recall seeing the document.

Mr Stevens: Do you accept would likely have been the document that was before the Committee?

Kenneth McCall: It’s very hard to say, I don’t recall seeing the document and my solicitors, actually, asked from my feedback of reading the document, could we please have some more information on the document: when, who sent it, what was it produced for, who was it from, who was it to, who was it circulated to? And, without that, it’s very hard for me to understand, but reading it now, I don’t recall seeing the document.

Mr Stevens: Well, I’m going to ask you some questions on it and just assist us as best as you can. We see at the top, it says:

“This document summarises in Counsel’s Opinion on the Common Issues. By its very nature, it is simplistic and should not be relied upon in lieu of a careful reading of Counsel’s Opinion.

“Where we have offered a view on the impact on Post Office, this is an initial view based on our current knowledge and we have not sought to set out an exhaustive list of impacts.”

Then we see below that there’s a RAG analysis or a grading table. We see on the left it’s likelihood, Red 5 being “very likely to lose”, right through to 1, “Post Office is very likely to win the issue”. On Impact, 5, “A significant adverse impact on the business”, right through to “There will be negligible impact on the business”.

If we just go through that, for example, page 3 – if we go further down, please, thank you – we see there an implied term with a high likelihood 5 because it’s been admitted, but low operational impact of 2 for cooperation.

Over the page, please. Similar on exercise of powers. But, if we go, please, to page 7, we see there at 11 there’s an implied term about the relationship and, for example, Post Office would not take steps which would undermine the relationship of trust and confidence between it and the subpostmasters, and the operational impact has been listed as 4.

Over the page, shortfalls, implied term:

“Post Office would:

“A) produce, keep and maintain accurate records of all transactions carried out using Horizon;

“B) be able to explain all relevant transactions;

“and

“C) use the records to explain any shortfalls.”

It’s an example of 5 on the operational impact.

Looking at that table again, do you agree you were made aware, as a member of the Postmaster Litigation Board subcommittee, that there were a number of substantial adverse impacts on Post Office’s day-to-day business operations, in the event that the court disagreed with Post Office’s interpretation of the contractual clauses?

Kenneth McCall: In reading the document, yes, I understand that but my response to you would be that I hadn’t seen and I don’t recall having seen the document, because I’ve seen no information that I’ve seen it or circulated to me, and I have no recollection of it.

Mr Stevens: I want to then move to your reaction to the judgment in Common Issues, please. It’s POL00392634. This is an email from you to Tim Parker on 13 March 2019, so shortly after the judgment in Common Issues. It says:

“Tim

“Apologies I was not able to stay on the call longer …

“Anyway I understand we have a further call week of 18th to be scheduled.

“Outside of the call I [I assume that’s ‘would’] appreciate a private conversation on you on this topic …”

Pausing there, we see the subject is “GLO Call”:

“… and it would be great if you could let me know what might suit.”

Firstly, can you recall if you had a private conversation with Tim Parker following this email?

Kenneth McCall: I don’t recall specifically, no.

Mr Stevens: Well, do you recall what type of things you discussed with Tim Parker in private conversations following the GLO judgment in Common Issues?

Kenneth McCall: I have no recollection. I mean, we’re talking March ‘19. I think to remember a conversation is extremely hard. So I don’t have a recollection of it.

Mr Stevens: This was a pretty significant moment, wasn’t it, for the Post Office?

Kenneth McCall: Yes, indeed.

Mr Stevens: Is it fair to say you can remember your reaction to learning of the decision in Common Issues?

Kenneth McCall: Yes.

Mr Stevens: So is your evidence you can’t remember discussions you had in private with Tim Parker about that very issue?

Kenneth McCall: I don’t remember having a discussion in private with Tim Parker.

Mr Stevens: I want to briefly touch on the recusal application, please. Can we bring up your statement, page 24, paragraph 50. You refer to a debate and the Board unanimously supported the recusal application, including Tim Franklin. You say no one on the Board, to your knowledge, had been in that situation before. The final sentence is:

“Given the rock-solid advice given Lord Neuberger and Lord Grabiner that [Post Office] had ‘no alternative’ other than applying to recuse Judge Fraser, recusal appeared to be the only logical way forward.”

Can you explain what you mean when you say “no alternative”? Why did you think there was no alternative?

Kenneth McCall: Those were – because this was such a dramatic situation, I personally, and I believe my colleagues, had never been in a situation like this before, and the reason I remember those words is because those were the specific words that Lord Grabiner used and that’s why I remember it. I remember those words specifically. If there’s anything I remember, it’s those words: we had no alternative but to ask to recuse Justice Fraser.

Mr Stevens: When saying there was no alternative, can you recall what Lord Grabiner said as to the reasons why there was no alternative?

Kenneth McCall: There was a number of reasons in the discussion. There wasn’t any alternative put forward but there were a number of reasons: reliability/credibility of Post Office witnesses; the accusation of inadmissible evidence; small issues being spread across the whole of Post Office, et cetera. There was number of reasons and rationale why, apparently, according to our legal advice, amounted to apparent bias and, on that basis, that was the legal advice we were given.

Mr Stevens: So those are reasons why the application may or may not be strong or may or may not have merit. Slightly different question is the reasons given for why there was no alternative to make the application?

Kenneth McCall: I don’t specifically remember a discussion taking place that pointed out “Here are three alternatives” or “Here is an approach”. I don’t believe there was that discussion. I believe there was a discussion about the rationale, as I’ve just explained but, other than that, there wasn’t presented a case that said “There’s option A, option B, option C”; we weren’t given that.

Mr Stevens: Presumably, you knew there was option A, make the application; option B, don’t make the application?

Kenneth McCall: That’s correct.

Mr Stevens: So in those circumstances, can you recall what was said or the reasons Lord Grabiner gave for saying there was no alternative but to go for option A, to make the application?

Kenneth McCall: I can’t remember his specific words but, as a layman, it’s very difficult when we’ve got some of the strongest possible legal advice, when we have some of the most senior people in the legal profession giving us that advice and none of the Board had the experience of having been through this before, then it was our opinion that we had to follow our legal advice. In hindsight, maybe we should have been far more questioning and said, “What are our alternatives?” but I don’t remember being presented with any at the time.

Mr Stevens: In your statement, you refer to Tom Cooper recusing himself from the vote on the recusal application. Now, in the Board meetings can you remember Tom Cooper expressing a view on the application?

Kenneth McCall: I remember that, in speaking – I remember first of all the Chairman recused himself because of an existing accountability and then, I don’t remember the exact time, either just before or the day before, Tom Cooper recused himself. But it was my clear understanding that there was a unanimous opinion that we should proceed with recusal. I don’t recall in any way any – I have no recollection of any dissenting word that said no.

Mr Stevens: Did you have a view on Mr Cooper’s decision not to participate in the vote?

Kenneth McCall: I had to respect his opinion.

Mr Stevens: You can respect someone’s opinion and agree or disagree with it; did you have a view on whether you agreed or disagreed with his decision to recuse himself?

Kenneth McCall: I understood his position but I was a little bit surprised.

Mr Stevens: Why?

Kenneth McCall: I understood our Chairman had a conflict, which was very evident, but I wasn’t sure what the conflict was in the case of Mr Cooper.

Mr Stevens: Can we look at your statement, please, page 25, paragraph 52. Turning now to the preparation for the Horizon Issues trial.

Sorry, I’m not sure what I said, but it’s page 25, please. Speaking, actually, post-Horizon Issues trial, you say:

“I do not recall that losing the [Horizon Issues trial] came as a surprise to myself or the Board. In contrast to the [Common Issues trial] judgment the, legal advice we received before the [Horizon Issues trial] judgment was much more pessimistic given that we had lost the recusal application. It was clear Judge Fraser had a strong view and, for the same reasons we applied to recuse him, such as his criticism of POL’s witnesses, we did not expect his findings in the [Horizon Issues trial] to be favourable to us.”

So I think what you’re saying is the legal advice changed after the recusal application failed on Horizon issues; is that right?

Kenneth McCall: I would say the legal advice we were given became far more balanced, as opposed to convincing, that Post Office had a strong case.

Mr Stevens: So you refer to losing the recusal application and you say about Judge Fraser’s strong view. Are you saying that before Horizon issues but after the recusal judgment you thought that Mr Justice Fraser would find against Post Office because you believed he’d developed strongly critical views of the Post Office?

Kenneth McCall: One of the key points put forward in our advice on recusal was his strong criticism of Post Office’s witnesses and, on that basis, if those same witnesses were the witnesses in the Horizon trial, there was a strong belief that the arguments of Post Office would not be favourable to securing a judgment.

Mr Stevens: At this point, did you think that you were predicting losing the Horizon Issues trial because of the judge’s approach to the Post Office witnesses, rather than the substance of the matters themselves?

Kenneth McCall: I think it’s very difficult to talk about the substance of the matters itself because, obviously, myself and none of my non-executive colleagues were employed by Post Office at the time, the historical or the Legacy Horizon systems were in place. So my knowledge of those Legacy systems is very limited indeed. My position here is that I said our inability to have Judge Fraser recuse himself was, in simple terms, due to three or four factors which would not stand us in good stead in the Horizon judgment.

Mr Stevens: Well, let’s take one of those factors. You said the views he took of the Post Office witnesses, that was one of the grounds I understand, you took into account when deciding to issue an application to recuse Mr Justice Fraser, yes?

Kenneth McCall: Yes.

Mr Stevens: So you presumably believed that the strong view Mr Justice Fraser had taken on some of the witnesses was a ground for arguing that he was apparently biased against the Post Office?

Kenneth McCall: That was our legal advice.

Mr Stevens: Well, did you believe it?

Kenneth McCall: I believed the legal advice.

Mr Stevens: Did you believe or did you agree with the underlying proposition?

Kenneth McCall: I believed – I believed that that was a factor but it was based on the legal advice that we had been given.

Mr Stevens: So when you’re now thinking about the Horizon Issues trial and saying, “Well, we think our prospects of success are low because of the strong views Mr Justice Fraser had taken”, what did you think of the fairness of that?

Kenneth McCall: I find it very hard to comment on the fairness. What I feel more comfortable commenting on was our legal advice gave a number of reasons which amounted to – according to our barristers was apparent bias. So –

Mr Stevens: Yes, but – sorry, I interrupted you –

Kenneth McCall: Sorry. And, on that basis, given a collection of issues, as opposed to just one issue on its own, we voted unanimously to proceed with the recusal application.

Mr Stevens: Mr McCall, the point I’m trying to get at is whether you, as the Senior Independent Director and your view of the outcome of the Horizon Issues trial, whether you thought or believed that it was there was a lack of robustness with Legacy Horizon, as a matter of fact, or whether it was because you thought that the judge had taken strongly against your witnesses and it was just the outcome of the trial?

Kenneth McCall: I think my knowledge, as I said earlier – my knowledge of the robustness of a Legacy Horizon system was very limited. I wasn’t at Post Office. I had no knowledge of that system whatsoever. But the judgment that you’re asking me on, I would – I believed that the judgment was given on the basis of that the Legacy Horizon system was not robust.

Mr Stevens: I want to look at, now, some of the issues after the judgment and the steps that Post Office took in response. Could we look at, please, POL00021586. It’s a Post Office Board meeting on 30 June 2020, and we see you’re there on the third line down.

Can we please turn to page 5. We have “Postmaster Engagement/Representation”. It says:

“Nick Read explained that we were trying to rebalance the relationship between [Post Office] and postmasters recognising the historical position and the GLO. The partnership during the Covid-19 situation had been very positive and built up trust. We wanted to forge a proper partnership and make running a Post Office an attractive proposition.”

It goes on to describe some roadshows. The second paragraph says:

“Amanda Jones noted that the position had been moving quickly and the conversations with the Non-Executive Directors and UKGI had been very helpful. We had taken on the suggestion to extend the consultation period”, et cetera.

Do you remember the conversations you had with Amanda Jones at this stage, regarding postmaster engagement?

Kenneth McCall: Not the specific conversations. I remember that – Nick Read carrying out roadshows to try and rebuild trust, to listen to subpostmasters, to try and connect exactly with those people that were part of our network and that were running the most important part of our Nationwide. And so I remember the roadshows, I remember that the attendance was very good. I don’t remember specific details. I think there was four or five, or maybe half a dozen roadshows, and the information that came back was that they were welcome, they were very positive and they provided good feedback.

Mr Stevens: If we look at the bottom of the page, please. There’s a bullet point that says:

“Tom Cooper noted that it was important to establish that the … Board was comfortable with the proposals to include one or more postmasters on the Board. All of the Directors confirmed that they were comfortable with the proposal and would prefer that two postmasters were appointed to the Board.”

It goes on to say they should be Non-Executive Directors and remunerated as such.

Then at the bottom, it says:

“As noted, we would need to think carefully about the selection process and also the credibility of the appointees with their constituency.”

Can you recall the discussion on the selection process and credibility of appointees at this Board meeting?

Kenneth McCall: Not that – I can’t recall the specific discussion. What I do recall is that we were very keen to ensure that the subpostmasters joining the Board were recruited and independent. So, therefore, it wasn’t the Post Office choosing two people; it was actually the postmasters themselves choosing who the representatives would be. I remember that that was the principle of independence and the subpostmasters should have the ability to do that. That’s my recollection.

Mr Stevens: Were you involved in establishing or advising on establishing how the appointees would be selected?

Kenneth McCall: I don’t recall that I was.

Mr Stevens: That can come down. Thank you.

I want to ask you some broader questions, which touch on the next phase that the Inquiry is going into, Phase 7. Aside from what we’ve just referred to there, the subpostmasters on the Board, what other steps had the Post Office Board taken, following Horizon Issues, to try to address the culture of the organisation and the criticisms made by Mr Justice Fraser?

Kenneth McCall: There were a number of workstreams instituted to try and improve the relationship; there was technology, such as the branch hub system, which was to try and address the speed, the feedback, the ability of subpostmasters to go online and address any challenges or queries they had themselves; the ability of Post Office, through that branch hub network, to be able to communicate far faster and far more quickly to subpostmasters; there was a strong push to try and improve the communication, in addition to having two subpostmasters on the Board to help advise, guide and give the Board confidence that the subpostmasters were being represented in terms of strategy, communication and support.

So there was a much stronger push to get a lot closer to the network and the people through some of these initiatives.

Mr Stevens: As at the time you left, which was January 2022, what did you think of the adequacy of those measures in practice?

Kenneth McCall: My recollection is that we had high 80s, maybe 90 per cent of the branch network connected and working with branch hub. The two subpostmasters were an excellent addition to the Board and gave really good, strong at times and honest communication and feedback, and I thought they were doing an exceptionally good job in representing the subpostmasters.

And I felt Nick Read was really strongly trying to get as close as possible to the subpostmasters and improve the relationship between Post Office Executive and the network. So I felt that the moves that were made were very positive.

Mr Stevens: What was the culture of the Board like at the time you left?

Kenneth McCall: I left in January ‘22. The – myself and my colleagues who were there tried our hardest to address the historical issues and to, in some small ways, try to put right what had gone wrong, as we were – none of us had been in position at the time. And so the culture was one of trying to help, trying to assist, trying to address the historical issues and trying to work hard to build the credibility. And there were some very talented non-executives that were still on the Board of the Post Office, and so I would say the Board culture was very positive indeed, and Mr Parker was a good Chairman that was very inclusive in trying to make sure the Board was very focused indeed.

Mr Stevens: You’ve mentioned already Nick Read. What was your view of him as Chief Executive in dealing with the issues that arose from the GLO judgments?

Kenneth McCall: He was a strong communicator. He tried to get round the network as much as possible. He would welcome feedback. His style was open and engaging and he was also detailed, and so, therefore, I was very positive about his approach to rebuilding trust between the Post Office and the subpostmasters.

Mr Stevens: What about the relationship between Nick Read and Alisdair Cameron; did you have any views on that?

Kenneth McCall: In what terms?

Mr Stevens: Well, I’m just asking if you had any comments to make on if it was an effective working relationship?

Kenneth McCall: I never saw that it wasn’t an effective working relationship.

Mr Stevens: Do you have any other views on that matter?

Kenneth McCall: No, sir.

Mr Stevens: What are your views on the composition of the Board when it left, in terms of did it have sufficient expertise to deal with the matters before it?

Kenneth McCall: As I said earlier, I believe it was the year before I finished my second term and stepped down, and Ben Tidswell, who joined the Board from a legal professional background, was a great addition to the Board and I felt that was very positive indeed.

The Chair of the Audit Committee was extremely competent and an experienced Executive, and as was one or two of the others. A replacement had started for me, but that was his first Board meeting, so it’s impossible for me to comment.

But I was certainly very positive, although it was going through a period of change with me leaving and with the Chairman going to leave later in ‘22.

Mr Stevens: The Inquiry will be considering issues of corporate governance and the role of Non-Executive Directors when it considers matters. Do you have any thoughts or recommendations, having reflected on matters, for any changes or proposals you would make to corporate governance or the role of the Non-Execs to avoid something like this happening again?

Kenneth McCall: I think I’d have to reflect on that and take a bit more time to answer the question in any sort of level of detail. It’s very hard, when you are attending as a non-executive one or two days per month, to get – other than the agenda and what is on a Board or a subcommittee agenda, it’s very hard to get a much stronger feeling throughout the organisation on the culture or the effectiveness. I certainly feel that the induction could be strengthened, both in Post Office and on the Government’s expectation of a non-executive in that company.

But I viewed Post Office as a trusted institution that had been around for hundreds of years and I felt no requirement to do strong investigations or due diligence before joining. It’s something I regret now and I should have paid more attention to. But I think the training and induction and the expectation of the major shareholder – and I think also the complication of the business because, at the time, you know, this was a Financial Services banking joint venture. It was a broking business, it was a payments business, it was a mails business, it’s a parcels business. It is – it was a complex business and I think making sure that any induction in process takes account of all those businesses would be more preferential.

Mr Stevens: Finally, just picking up on one thing you said earlier, do you think that two days per month for a non-executive at Post Office is insufficient time to carry out the role effectively?

Kenneth McCall: I think two days per month under normal circumstances, and I caveat that because most of the non-executive appointments, leaving aside Post Office itself, most of the non-executive appointments are two to three days per month. That’s a common figure and should be sufficient. In the case of what has happened here, patently it would have been, and we ended up spending a lot more and allocating a lot more time to Post Office, but normally it should be sufficient.

Mr Stevens: Thank you, those are all the questions I ask.

Sir, I’m just going to check if there are any Core Participant questions and if there are or if there aren’t, then we can take a view on whether it’s an early lunch or a break.

Sir Wyn Williams: Yes.

Mr Stevens: It’s just Ms Patrick who would seek five or ten minutes. I am just looking at the transcriber –

The transcriber is happy to continue and then we can take an early lunch.

Sir Wyn Williams: Yes, by all means. Over to you, Ms Patrick.

Questioned by Ms Patrick

Ms Patrick: Thank you, sir.

Mr McCall, my name is Angela Patrick and I ask questions on behalf of number of subpostmasters, who were prosecuted and convicted and have since had their convictions overturned, and you see two of my clients are sitting next to me: Ms Hamilton, on the left, and Ms Hall, on my right.

You’ll be glad to hear I’ve got one issue and one document I want to go to and ask you about.

But before we go back to that, I just want to set the scene. You can recall, I think, Mr Stevens took you this morning to a minute from February 2019, where the issue of the Deloitte reports were discussed. He asked you.

“So your evidence appears to be that you were told of the Deloitte review, the report, you attended a Board meeting at which you asked Mr Parker why he didn’t provide the information earlier.”

Then you replied:

“Yes, that’s correct”, having seen the minute.

He also took you to a minute of 21 February and I think, if you can recall, that’s the one where you and Mr Parker attended by phone and, again, Deloitte and remote access were discussed. Can you recall that exchange with Mr Stevens this morning?

Kenneth McCall: Yes, I do.

Ms Patrick: Of course. That just sets the scene for the document.

Can we look at POL00111699, please. If we can scroll to the last page, which is page 3, I’d be very grateful. If we can scroll a little way further down, please. Do you see there at the bottom, you can see there’s a dial-in detail for that meeting, GLO subcommittee, 21 February 2019, you see the meeting was to be 11.00 to 12.00, and the various dial-in details, including your name there; do you see that, Mr McCall?

Kenneth McCall: Yes, I do, thank you.

Ms Patrick: Can we scroll up a little and we can see where this email goes. If you scroll a bit further, I can see that first message. You see there’s a message there from Tom Cooper, and it isn’t copied to you but, just to set the scene, he says:

“Jane

“One follow-up from the call.”

Presumably that was the meeting earlier that morning because the timing on this is 12.47. If we read it together, he is asking:

“To what extent can the court protect POL against journalists overstating the evidence re Horizon? If a journalist writes that there’s evidence of systematic problems with Horizon when in fact no evidence exists, will the court help us [at all]?

“Seems to me it’s extremely important to have a press strategy that seeks to stop misrepresentation by journalists and seeks to protect POL’s business today against the implication that the current system doesn’t work properly.”

That’s to Jane MacLeod, I think. There’s no other Jane on the message.

Now, this is after the meeting, where there’s a discussion with Mr de Garr Robinson and there’s a conversation about the Deloitte report and remote access. Now, here Mr Cooper is asking about how to protect the position of the Post Office and in press reporting during the GLO, isn’t he?

Kenneth McCall: Yes, that’s what’s written there.

Ms Patrick: Was that a concern that was shared more widely on the Board or on the Subcommittee?

Kenneth McCall: Not particularly.

Ms Patrick: But the subcommittee we see here, could be involved in strategy for the Post Office during the GLO, including, on communications and interaction with the press; is that right?

Kenneth McCall: No, I think the subcommittee was involved in the – in items that were escalated by the day-to-day executive who was managing the litigation.

Ms Patrick: It would be open to you, as a member of the subcommittee, in the way that Mr Cooper is here, to ask questions about anything around the strategy on the litigation; is that fair?

Kenneth McCall: That’s fair but, as you can see from this email, I’m not copied on the email, so –

Ms Patrick: I’ll stop you there, Mr McCall. If we can scroll up so we can see the next message in the thread. Stop there. We see Ms Vennells replies, very shortly thereafter at 1.21, and she does copy you in; can you see that there, Mr McCall?

Kenneth McCall: Yes, I can.

Ms Patrick: So you’re copied in, and you see Mr Cooper’s question to the other members – to the members of staff but also copied to his fellow subcommittee members. So you did receive that message, didn’t you?

Kenneth McCall: It says there’s an email, and I’m sure I then received it.

Ms Patrick: Okay. I just want to have a quick look at what Ms Vennells is telling you about the strategy in response to Mr Cooper’s enquiry. She says:

“Yes we defend robustly but we avoid adding extra coverage.”

If you recall, this is after the meeting where we know that you’ve had a conversation about remote access and Deloitte:

“As before we hold the ground: the system is robust. And not comment any further during the trial. So ‘aggressive’ no, robust – absolutely no question.”

If we scroll down a little bit further we see she’s talking a little bit about the strategy and how it’s gone so far:

“The strategy has worked well so far, which is to minimise coverage in mainstream media. Therefore, we don’t engage in any public debates, we have strong lines but we add no oxygen by commenting or engaging. This is not new news despite how the claimants will present it as that; our approach is to curtail interest as much as possible.”

Then she goes down to sort of talk about the question about legal options that Mr Cooper has raised:

“Your questions re how far we can go ‘legally’ are important. We have used injunctions and demanded apologies in the past. They are both to be used but with caution. They gain more coverage, which is not always balanced. But there are tools in the box (Portland are very experienced about this too …)”

Portland, was that an external PR agency that the Board was consulting?

Kenneth McCall: That would be the responsibility of the Executive. I don’t know the name Portland specifically, and I never met anyone from Portland. So I’m presuming, in the circumstances of what I see written, it would be managed by the Executive and that’s who they are.

Ms Patrick: So here, Ms Vennells is writing to the whole subcommittee, updating you on the approach they’re planning to take to the strategy around the GLO. She’s saying, “Maintain the position that the system is robust”, strategy is to be “aggressive, no, robust – absolutely no question”.

Was this the strategy towards press engagement on which the subcommittee was essentially agreed?

Kenneth McCall: Well, the subcommittee weren’t responsible for the press engagement. There was a communications director working with the CEO, and the General Counsel, and they were responsible for all the day-to-day strategy around communication and what was said by the company in addition to shareholder inputs or the subcommittee wasn’t on a day-to-day basis involved in this.

Ms Patrick: Okay. Can we just scroll up a little to see the last in the line of communications. On the first page, I think we should see Mr Davies’ response to Ms Vennells’ outlining of the strategy and, again, copies you in. We’ll take this very briefly because it’s, essentially, repeating the message but with some greater detail:

“Our external communications strategy is to minimise negative coverage by holding the robust line we have deployed throughout. In doing so we have succeeded in minimising coverage in the mainstream media.”

I want to cover this in great detail because he goes over how different approaches have been taken in the press. But he says:

“There is a group of journalists who have staked their professional representations on campaigning on behalf of those who have now taken us to court. They – and one in particular – drive most of the periodic increases in external coverage. We have sought to engage with this group but there is an unwillingness to engage with our side of the story.”

If we skip down a little further:

“Private Eye has also featured the issue regularly, claiming Post Office has knowingly covered up evidence of what it calls the ‘deeply dodgy’ Horizon system. We believe the content in Private Eye is almost certainly provided to it by one of the ‘campaigning’ journalists who have staked their reputation on proving that Post Office has conspired to see otherwise innocent people jailed or penalised.”

Now, first, Mr McCall, can I ask you: how closely did Mr Davies work with the subcommittee at this time during the development of strategy on the GLO?

Kenneth McCall: As I said – and let me repeat again – Mr Davies, the General Counsel and the Chief Executive were responsible for the communications strategy and anything that was responded to by Post Office. The subcommittee wasn’t day-to-day responsible at all.

Ms Patrick: I’ll just stop you there, I’ve got one last question for you, Mr McCall. This is February 2019. This message which goes to the whole subcommittee talks about the campaign. There’s been a campaign by this stage for a very long time, in which my clients, including Mrs Hamilton and others, were deeply engaged. They’ve managed to get their case into court, there was a subcommittee of the Board set up to lead the strategy on that litigation.

You are the Senior Independent Non-Executive Director, you’ve agreed today that part of your role was to represent the interests of the shareholder, who is the taxpayer, the Government. Are you really suggesting at this point – and if I can remind you, you’ve accepted the Board would have been aware that the picture on remote access was very different from that which may have been presented at an earlier stage – are you really suggesting that, if you thought that the strategy that was being presented by the Executive Team was out of step or might be causing some risk to the business, that you could not step in and say something?

Kenneth McCall: I’m suggesting to you and I’m answering to you quite firmly: the subcommittee is not responsible for the communications strategy. There was a document produced earlier today talking about the strategy of the litigation. I didn’t sit on the subcommittee of that. I had never seen that document before and I’m copied in here on an email, but I’m not responsible for the communications strategy. I was the Senior Independent Director, and I accept that, and I received the email, I’m absolutely certain. But I wasn’t responsible for the strategy.

Ms Patrick: Thank you very much, Mr McCall. I don’t have any other questions for you.

Sir Wyn Williams: Is that it, Mr Stevens?

Mr Stevens: That’s it, sir. Yes, that’s all the questions.

Sir Wyn Williams: Fine.

Well, thank you, Mr McCall, for making a witness statement, as the Inquiry requested of you, and thank you too for giving evidence this morning before me. I’m very grateful to you.

The Witness: Thank you, sir.

Sir Wyn Williams: So what time shall we resume, Mr Stevens?

Mr Stevens: I wonder if we could resume at 1.35 and then, because it will be a longer session, take two breaks but that should give us sufficient time, I think, to cover the evidence.

Sir Wyn Williams: All right. 1.35.

Mr Stevens: Thank you, sir.

(12.44 pm)

(The Short Adjournment)

(1.35 pm)

Ms Price: Good afternoon, sir, can you see and hear us?

Sir Wyn Williams: I can indeed, thank you.

Ms Price: May we please call Kelly Tolhurst.

Kelly Tolhurst

THE RIGHT HONOURABLE KELLY JANE TOLHURST (sworn).

Questioned by Ms Price

Ms Price: Can you confirm your full name, please, Ms Tolhurst?

Kelly Tolhurst: Yes, Kelly Jane Tolhurst.

Ms Price: As you know, my name is Emma Price and I will be asking you questions on behalf of the Inquiry. Thank you for coming to the Inquiry to assist it in its work and for providing the statement which you have. You should have a hard copy of that statement on the desk in front of you; do you have that?

Kelly Tolhurst: I do.

Ms Price: It is dated 19 June 2024. If you could turn to page 73 of that, please. Do you have a copy with a visible signature?

Kelly Tolhurst: I do, yes.

Ms Price: Is that your signature?

Kelly Tolhurst: It is.

Ms Price: For the purposes of the transcript the reference for Ms Tolhurst’s statement is WITN10930100. Ms Tolhurst, your witness statement is now in evidence and will be published on the Inquiry’s website in due course. As such, I will not be asking you about every part of your statement, just certain specific issues which are addressed in it?

Kelly Tolhurst: Okay.

Ms Price: I’d like to start, please, with an overview of your professional background and career in Government to date you explain in your statement that you, before taking up an elected role, ran a marine business for 17 years –

Kelly Tolhurst: That’s right.

Ms Price: – training as a marine surveyor during this time?

Kelly Tolhurst: Correct.

Ms Price: You were elected to Medway Council in 2011, representing the Rochester West ward?

Kelly Tolhurst: Correct.

Ms Price: You were elected as an MP in May 2015.

Kelly Tolhurst: Yes, correct.

Ms Price: You served as Assistant Whip to the Treasury from 9 January 2018 to 19 July 2018?

Kelly Tolhurst: Correct.

Ms Price: Following that, you served as Parliamentary Under-Secretary of State for the Department for Business, Energy and Industrial Strategy from 19 July 2018 to 13 February 2020, where you were responsible for small businesses, consumers and corporate responsibility?

Kelly Tolhurst: Correct.

Ms Price: This was your first ministerial appointment?

Kelly Tolhurst: Yes.

Ms Price: Was it in this role that you became involved in some of the matters which the Inquiry is concerned with?

Kelly Tolhurst: That’s correct.

Ms Price: You went on to serve for a little over six months as Parliamentary Under-Secretary in the Department of Transport?

Kelly Tolhurst: That’s right.

Ms Price: Followed by serving as Parliamentary Under-Secretary at the Ministry of Housing, Communities and Local Government between September 2020 and January 2021?

Kelly Tolhurst: Correct.

Ms Price: You were Deputy Chief Whip in the Commons from July 2020 to September 2022?

Kelly Tolhurst: (No audible answer)

Ms Price: You then served as Minister of State at the Department for Education for a short time, before serving at the backbenches until the recent election?

Kelly Tolhurst: Correct.

Ms Price: Is it right that the only time you have had involvement in matters relevant to this Inquiry was when you were Parliamentary Under-Secretary of State for the Department for Business, Energy and Industrial Strategy?

Kelly Tolhurst: Yes, that’s right.

Ms Price: Moving then, please, to the civil servants who assisted you when you were Parliamentary Under-Secretary at BEIS, if I have understood your evidence in your statement correctly, there were, broadly speaking, three pools of civil servants who provided you with assistance on Post Office matters. First, Private Secretaries from the Department’s private office?

Kelly Tolhurst: Yes.

Ms Price: Second, officials who were subject matter experts in particular policy areas –

Kelly Tolhurst: (The witness nodded)

Ms Price: – who, for the part of your role which related to the Post Office, worked for UK Government Investments?

Kelly Tolhurst: Yes, that’s correct.

Ms Price: The third category, from August 2018, when it was established, were officials from the Post Office Policy Team within BEIS; is that right?

Kelly Tolhurst: That’s right.

Ms Price: So far as your Private Secretaries were concerned, is it right that they dealt mainly with managing your diary, preparing paperwork for your ministerial box and managing correspondence?

Kelly Tolhurst: Correct.

Ms Price: In terms of advice you received from officials, you addressed this at paragraph 12 of your statement. Could we have that on screen, please it’s page 4. Towards the bottom of page 4, please. You say here at paragraph 12:

“The breadth of a Minister’s portfolio is such that they have to, to a greater or lesser extent, rely on the advice of officials and make decisions on the basis of it. Ministers expect the advice given to be competent, accurate and reliable, honestly given and on the basis that objectivity has been applied in the analysis of the facts.”

Why was the application of objectivity in the analysis of the facts important?

Kelly Tolhurst: In my – so, in my view, when you’re coming in as a Minister, as potentially an amateur in the space in which you’re operating – for example, in this particular instance I didn’t have any particular experience within the Post Office or that kind of structure – so for example, the objectivity would be important because, obviously, you would want to be given advice where you feel that they weighed up both sides of things, so you would be confident in the fact that you were taking a decision or had information that was sound and also had been looked at from a number of different points of view.

So I think, when they’re giving you that advice, it’s important that you have that range of the objectivity, so that you can make decent judgements based on what’s put in front of you.

Ms Price: Turning, then, to the information you were given about the Post Office, in the early period when you took up your role as Parliamentary Under-Secretary at BEIS, you explain at paragraph 9 of your statement that you had a broad policy portfolio covering a range of sectors and it was just a busy portfolio that it was, in fact, split into two after you left BEIS; is that right?

Kelly Tolhurst: That’s correct, yes.

Ms Price: So there was a lot to get on top of?

Kelly Tolhurst: Yeah.

Ms Price: You were given an entire portfolio briefing to start when you arrived in post; is that right?

Kelly Tolhurst: Yes, sorry. Yeah.

Ms Price: You also received a briefing on postal affairs, specifically?

Kelly Tolhurst: Yes. For the whole of the brief, it’s quite common for new ministers to be given sort of a day 1 briefing on all of the different elements that are included within the brief because, within the brief of a minister, there may be things that you would have more sight of than others.

Ms Price: If we could have paragraph 13 of Ms Tolhurst’s statement on screen, please. That’s page 5. In referring to that briefing on postal affairs specifically, you say in the last line:

“I was provided with some outline information regarding the Horizon IT system issues.”

At paragraph 14, is that your assessment of what you understood those issues to be at the time, at paragraph 14, there.

Kelly Tolhurst: Yes. It was my assessment of what – you know, the information that I had at the time, yes.

Ms Price: You say:

“I understood at that time that a civil claim was being brought by a number of SPMs in relation to accounting losses suffered in branch as a result of the Horizon IT System. I understood that SPMs were alleging that there were widespread problems with the system and that [Post Office Limited] denied this. I knew that several SPMs had been convicted for accounting losses.”

You refer at paragraph 15 of your statement to briefing documents which you received on 16 August 2018.

Kelly Tolhurst: Yeah.

Ms Price: Looking first, please, at how these briefing documents came to you, could we have on screen, please, UKGI00008342. Starting, please, with the original email dated 10 August 2018, which starts about two-thirds of the way down the page. This is from Stephen Clarke, from the Post Office Shareholder Team at UK Government Investments. Going over the page, please, Mr Clarke says:

“Please find attached” –

Actually, apologies, if we can just go back, please, to who this was sent to. This was initially from Mr Clarke to the Permanent Secretary’s private office; is that right?

Kelly Tolhurst: Yes.

Ms Price: Going back over the page:

“Please find attached an update submission (with 5 annexes) on the Post Office Horizon litigation case. This is an info sub to (i) bring Alex up to speed on the case …”

Was that Alex Chisholm who was the Permanent Secretary?

Kelly Tolhurst: Correct.

Ms Price: “ …(ii) brief Alex on safeguards for handling [Post Office Limited’s] legally privileged information under the Disclosure Protocol and (iii) focus on plans for the oral briefing on 10 September by [Post Office Limited’s] Legal Counsel. Please note that [Post Office Limited] have password-protected their background briefing (Annex 3) as an extra safeguard; the password will follow …

“For the benefit of copy addressees who saw this sub in draft a few weeks back, I should explain that the sub was put on hold while we collected the required signatures for recipients on the disclosed description list.”

Then there is a request not to share the submission beyond the closed distribution list.

This email was then forwarded to your private office, going back to the first page, please, on the 16 August 2018. So if we scroll from the top, we can see from Stephen Clarke to – we can’t see the full email address but that is to your private office, isn’t it?

Kelly Tolhurst: Yes.

Ms Price: Just scrolling down a bit, please. It says:

“Hi Sam …”

Was Sam your Private Secretary?

Kelly Tolhurst: Yes, she was. One of them.

Ms Price: One of them?

Kelly Tolhurst: Yeah, one of them.

Ms Price: “As discussed, here is the info submission that went to the Perm Sec on the Post Office Horizon Litigation. I’m sending this now for information as we won’t be getting any comments back from Alex before the Minister goes away again.

“The recipients list in Annex 2 has been updated …”

There’s a reference to getting the new SpAd on board.

We can see from the list of attachments with the updates submission, just looking there under “Subject”, the first attachment is the submission itself, and then we have five annexes listed. So it appears from this, doesn’t it, that both the submission itself and all five annexes were sent to your private office on 16 August?

Kelly Tolhurst: (The witness nodded) Yes, sorry, yes.

Ms Price: The transcriber has to get your words.

Kelly Tolhurst: Apologies.

Ms Price: Thank you. It appears from your statement that you read the submission dated 10 August 2018, which was the first attachment to this email, because you refer, at paragraph 23, to background information which you derived from the documents provided to you on 16 August, making specific reference to a paragraph of that submission. Is that right, that you read the submission itself at the time?

Kelly Tolhurst: In regards – I believe I did read the submission at the time. Being a new minister, I had quite a lot to get through and I would have read it because I did try and read everything that was put in front of me, which sometimes was a frustration to some.

Ms Price: Was this the first briefing that you had received specific to the Group Litigation since becoming Parliamentary Under-Secretary?

Kelly Tolhurst: I believe so.

Ms Price: I’d like to explore, please, whether you read any of the annexes which were sent to you, which were discussed in the submission.

If I can stop you there, in your statement it’s not entirely clear which of the annexes you think you would have read at the time. So if we can just take that in stages. But, forgive me, you wanted to say something?

Kelly Tolhurst: No, apologies, I was sort of pre-empting what you were going to say. In relation to the annexes, I remember obviously reading the briefing. The protocol was something that I obviously remembered – remember, obviously, being put in front of me because obviously it was subject to me being given further information. And, yeah, I don’t remember what I was feeling at the time in August when I would have read those, and I may have read them sort of later than – it might not have been on the 10 August, it might have been sort of later on when I – when the documents may have been shared with me.

Ms Price: They were sent to your private office on 16 August?

Kelly Tolhurst: 16th, sorry, yeah.

Ms Price: I think it would have been after that date, if you did.

Kelly Tolhurst: Yeah.

Ms Price: But let’s just take it in stages. If we can have on screen, please, paragraph 20 of Ms Tolhurst’s statement, that’s page 7. So you say here:

“As to the other annexes, Annex 1 was the Information Sharing Protocol [which you’d referred to just now] and Annex 2 was the On-Boarding Protocol. I do recall receiving those documents at the time, but I do not remember reflecting on them.”

Did you read those two annexes?

Kelly Tolhurst: I believe I did.

Ms Price: You would have been aware, from those documents and in fact from the submission, that Post Office Limited, BEIS and UKGI had by this time established a disclosure protocol which governed the flow of legally privileged and confidential information in respect of the Horizon litigation from Post Office Limited to UKGI and BEIS; do you recall that?

Kelly Tolhurst: Yes, I do recall that.

Ms Price: Can we have on screen, please, paragraph 17 of Ms Tolhurst’s statement. That’s page 6. You say this of Annex 3:

“At paragraph 8 of that submission, it is recorded that ‘following the agreement of the protocol, [Post Office Limited’s] Legal Counsel provided an initial background briefing on the litigation (Annex 3), including their QC’s view on the merits of the case’.”

You say here:

“I did not receive this Annex 3 at the time and have not seen it since.”

Just to clarify, Annex 3 was sent to your office under cover of the email of 16 August. We’ve seen that from the email. Albeit that it appears in the original email sent, it was password protected. Can you help with why you say here that you did not receive it?

Kelly Tolhurst: Well, I don’t remember receiving it and I hadn’t seen it – well, as I’ve said in the statement. But I don’t remember being given the QC’s views on the merits of the case. So that’s all I can sort of, you know, genuinely sort of – with what I can remember from the time and sort of looking back now.

Ms Price: Looking, please, to the 10 August submission itself, could we have that on screen, please. The reference is UKGI00018266. We can see there at the top the date, and the submission title, “Post Office Limited – Horizon Litigation Update”. Towards the bottom of page 2, please, there is a heading “Litigation background briefing and updates”, and paragraph 8, underneath that, contains this:

“Following the agreement of the Protocol, [Post Office Limited’s] Legal Counsel provided an initial background briefing on the litigation (Annex 3) including their QC’s view on the merits of the case, and has since provided a further update (Annex 4) following discussion of the case at [Post Office Limited’s] last Board meeting on 31 July. For ease of reference, in Annex 4, UKGI has highlighted in yellow any information that is new and worthy of note.”

So this was in the submission itself flagging the existence of both Annex 3, which contained the QC’s view on the merits, and a further update from Post Office Limited’s Legal Counsel at Annex 4, with anything that was new and worthy of note highlighted. Did you ask to see either of those documents when you read this submission?

Kelly Tolhurst: I genuinely don’t remember. All I would say is that at the time it would have been over the recess period, so I don’t remember specifically asking for that. So I would be wrong to say anything else other than that, really. But it would have been a period where we weren’t – I wasn’t necessarily in the Department, so I may have been in the constituency, so it might have been something that I maybe didn’t request.

Ms Price: Looking, please, to paragraph 11 of the submission, a little further down the page. This explains the purpose of the oral briefing from Post Office Limited’s legal counsel, which was scheduled and which you were going to be attending, for 10 September. Is it right that you think this, in fact, occurred on 17 October?

Kelly Tolhurst: Yes. I believe it did. I’ve sort of checked my diary, and I actually had – I think I had another what they call a statutory instrument debate at the time it was originally proposed. So I think that may have been the reason why it didn’t take place.

Ms Price: This is the explanation given of the meeting:

“The briefing is confirmed in your diary and the Minister’s diary for 10 September. A proposed agenda and list of attendees drawn up between UKGI and [Post Office Limited] is attached [at Annex 5]. [Post Office Limited’s] Legal Counsel, Jane MacLeod, Chair Tim Parker, and CEO Paula Vennells (via telephone/video link) will brief you on the key issues at stake, as well as on the financial, reputational and operational implications (which could be considerable) of an adverse ruling at November’s ‘Common Issues trial’ and/or at the ‘Horizon trial’ in March 2019 and [Post Office Limited’s] contingency plans for dealing with these risks. This will be an excellent opportunity for you and the Minister to exercise Shareholder scrutiny and seek reassurance on any issues of concern.”

So this was flagging up, was it not, that there were financial, reputational and operational implications, potentially considerable ones, if there were adverse findings for Post Office Limited at either Common Issues or the Horizon Issues trials –

Kelly Tolhurst: Yes.

Ms Price: – and that contingency plans for dealing with these risks were in train?

Kelly Tolhurst: Yes.

Ms Price: It was also flagging what was expected of the Permanent Secretary and you at the meeting, which was an exercise of shareholder scrutiny –

Kelly Tolhurst: Mm-hm.

Ms Price: – as well as it being an opportunity to seek reassurance on issues of concern. When you read this, did it make you think to ask for Annex 3 or Annex 4: the QC’s views and the new and noteworthy information?

Kelly Tolhurst: Genuinely, I can’t say if it did or not at that particular time. So I can’t honestly tell you whether or not – what I thought about in relation to those annexes you’ve outlined.

Ms Price: Could we have on screen, please, paragraph 24 of Ms Tolhurst’s statement, that’s page 8. Your comments in this paragraph are made in the context of the documents sent to your office on 16 August, including the submission itself, and in the first half of the paragraph you say this:

“I do not recall any advice being given at the time regarding the risks of the litigation. I was not given the impression that [Post Office Limited] were anxious about the litigation, or that there was any particular risk involved with the litigation over and above the inherent risk associated with any legal dispute.”

Can you help, please, with why you took from the submission – and paragraph 11 in particular – that there was no particular risk involved in the litigation, over and above the inherent risk of any legal dispute?

Kelly Tolhurst: Well, in relation to – I’m just looking at – I mean, ultimately, I think, at that particular time, all the informal – the briefing that I’d been given, sort of didn’t suggest at that particular time that there was anything particularly that I should be aware of or that would mean that there would be sort of more – well, as big as it obviously – what we now know the risks and the troubles relating to the litigation.

So I hadn’t been given the impression new into the post that there was anything particularly to worry about and, obviously, that sort of – that was my understanding sort of going into that meeting. At the time, I suppose I was more concerned with actually any kind of litigation, what that would mean for the Post Office, what it would mean for the Government. But that was sort of the limits of my sort of thinking at that time.

Ms Price: You say in the paragraph above, paragraph 23, that:

“The only background information [you] derived from the documents … was that ‘the independent investigations by Second Sight … found no evidence of flaws in the Horizon IT System’.”

That is taken from paragraph 12 of the submission itself.

Given that this was background information which you derived from documents at the time, did you ask to see Second Sight’s Report?

Kelly Tolhurst: No, I didn’t ask to see Second Sight’s Report.

Ms Price: At paragraph 25 of your statement, you say that it was obvious, notwithstanding your comments at paragraph 24 about what you appreciated in terms of risk, that the litigation was going to be an important part of the postal affairs brief, and you say that you did not think that the information provided in August 2018 had given you the information necessary to provide effective leadership from within BEIS in respect of the litigation.

You go on at paragraph 26 to say that you are someone who is interested in the detail and concerned to have all of the relevant information before taking a decision.

Over again, please, at 27, you say this:

“For that reason, I requested further information, and I was provided with the short further document entitled ‘Briefing for Kelly Tolhurst MP, Postmaster Litigation’. The document itself is undated. I do not recall exactly when I received it but I am sure it was provided after 16 August 2018 and before the meeting with [Post Office Limited] took place on 17 October 2018. It is a top-level summary document drafted by UKGI. I return to it below.”

That document was a one-page high-level briefing, as you say, but you were provided with two further briefings between August 2018 and the meeting which was discussed in the August submission, that of 17 October 2018. The first of these was a briefing ahead of a meeting you had with Paula Vennells on 3 September 2018 and you address that briefing at paragraph 28 of your statement, and you quote the section which raises concerns – well, there were concerns which were raised by UKGI that Post Office Limited had not done enough to prepare for potential business, reputational and financial implications of losing the litigation.

Do you recall discussing this with Paula Vennells at your meeting with her?

Kelly Tolhurst: I remember – obviously I remember meeting with Paula Vennells. I remember touching on it but I would say that it was a touching on the litigation. It was very much an intro meeting and, obviously, one of the things that – there were other sort of postal or Post Office issues that were relevant as well, and my interest was obviously, as a minister, how could I affect and be helpful to the Post Office in relation to some of those other duties and responsibilities? So I do remember speaking with her. I remember the meeting, but I remembered it only being sort of touched on, as opposed gone into in any great depth at that particular time.

Ms Price: Indeed in your statement you indicate that only five minutes of the meeting was allocated to the litigation, as opposed to those other issues; is that right?

Kelly Tolhurst: Yes, approximately.

Ms Price: But this was, again, flagging up that there were business, reputational and financial implications of looking the litigation, this briefing, ahead of your Paula Vennells meeting, wasn’t it?

Kelly Tolhurst: Yes.

Ms Price: At paragraph 29 of your statement, starting five lines down, you say this:

“I note Mr Aldred recorded that Ms Vennells had passed on the advice of [Post Office Limited’s] leading counsel that, in summary, ‘[Post Office Limited] will likely lose on some contract clauses but not on the highest impact ones’. Whilst I do not now recall the detail of the point made, that fits with my understanding at the time. I remember having the general impression that the [Post Office Limited] had confidence in its overall defence to the claim.”

There are two parts of the note of the meeting with Paula Vennells, on which you comment in your statement, at paragraphs 30 and 31. At paragraph 30, you say this:

“I do agree with Mr Aldred’s note that I ‘emphasised the need to provide plenty of detail and [Paula Vennells] said [Post Office Limited] would be in a much better position to do so after further briefings from their QCs and hopefully more information on the claims’. This fits with my memory of dealings with [Post Office Limited] during my time at BEIS. [Post Office Limited] always seemed willing to answer questions when asked, but I did find that they were sometimes difficult about what information they would volunteer. There was never a refusal to provide information if it was requested, but I did feel that details were not always forthcoming in a proactive way.”

Even at this early stage, your first meeting with Paula Vennells, was this the impression you formed or did that impression come later?

Kelly Tolhurst: I think it – the impression would have come later, as I say, as I said in my statement, I was new to the brief I wanted to understand as much as I possibly could. It would be usual for me to ask for further information or as much detail as I could, so it would have been normal for me to have said to Paula, you know, “Provide me with as much information as possible”. But, as I sort of said in the statement, there was never any – I never ever detected any sort of resistance to giving me that information directly from Post Office but, obviously, I felt, and when I reflect back, looking at obviously the documents and reflect back on that time, you know, I was – I did feel that I was asking for information all the time, or wanting further information. So obviously that’s what’s sort of formulated my view on this.

Ms Price: Was this is an impression you formed when you were Parliamentary Under-Secretary at BEIS or is this what you formed on reflection?

Kelly Tolhurst: No, it was what was happening when I was actually in the Department but, obviously, at this particular time – so that meeting with Paula was on 3 September, I’d only just recently been appointed and, at that particular time, there were a number of – just to sort of set the context, there were a number of big areas within my portfolio at BEIS that required me to sort of get up to speed on pretty quickly, and so it was – and, actually, this was the sort of first intro meeting.

So that’s why I was pleased, actually, when she suggested that, you know, sharing information, you know, wasn’t going to be a problem but, obviously, as time went on, it was me asking for that information.

Ms Price: At paragraph 31 you say this:

“I also note what Nick Parker writes international first paragraph, ‘Paula frequently confirmed that challenge from [Her Majesty’s Government] is good but also asks that HMG ensures the positive developments in Post Office are made clear and that HMG continues to stress the important role that Post Office plays in communities up and down the country’. Reading this comment now, I do feel that [Post Office Limited] was more interested in the Department challenging [Post Office] for the ‘appearance’ of challenge rather than sincerely listening and changing course in response. I got the impression that [Post Office Limited] expected the Department to be positive about [Post Office Limited] regardless of the scrutiny that the Minister or Department wished to apply.”

Again, is this an impression you formed at this point in September 2018 or one which came later?

Kelly Tolhurst: It would have – it came later. Yeah.

Ms Price: As far as you are aware, was this approach and attitude from Post Office Limited ever challenged by BEIS or raised with the Post Office Limited Board members at the time?

Kelly Tolhurst: Sorry, at the time? At the time of the further September –

Ms Price: At the time that you had that impression and you had that concern?

Kelly Tolhurst: Sorry, yes, yeah.

Ms Price: Was that approach and attitude that you describe there ever challenged by the Department with Post Office Board members?

Kelly Tolhurst: So, I’m not sure – I don’t know if it was challenged by anyone within the Department. I know that I had expressed frustrations over that period, particularly on this point of not feeling that maybe I was getting the information that I needed or that should be coming my way. I can’t say that I – you know, it would be wrong for me to say that I directly challenged Post Office Limited on that particular point. But I think that my feelings and frustration of that was understood by the team at BEIS and the UKGI members that I spoke to and interacted with.

Ms Price: In general, did you feel restricted in your ability to change this attitude or approach or to ensure that Post Office Limited acted upon suggestions made by BEIS?

Kelly Tolhurst: I would say that – you know, I’m generally somebody who would – if I have an opinion and I’m not happy with something, I would generally make that clear, and I would, you know, I would have thought that – I mean, I’m just sort of making, you know, I’m just trying to think what would have – what I may have done sort of looking at it now, rather than sort of giving you any solid – you know, solid sort of factual – or answer to what actually would have happened at the time.

But I think that, you know, it was understood that I was – you know, I felt frustrated at that particular – you know, after that period of time. I sort of – the reactions and information that was coming through or that sort of appearance. So, yeah.

Ms Price: The second written briefing you received further to the August submission and ahead of the 17 October 2018 meeting, was the detailed paper you address at paragraph 35 of your statement. Going over the page to that, please – and again, please – here you say:

“On 11 October 2018 I received a briefing authored by [Post Office Limited] for the 17 October meeting. The briefing was extensive, although section 2 setting out the background to the litigation was relatively short. I did not understand this to be a meeting about litigation strategy or the merits of the claim. It was really just a meeting about what was happening in the litigation.”

Just picking up there on your understanding of the purpose of the 17 October 2018 meeting, this was, you think, the adjourned meeting, which was addressed in the 10 August submission and, in that submission, the meeting was described in paragraph 11, which we looked at, as an excellent opportunity for you and the Minister to exercise shareholder scrutiny and seek reassurance on any issues of concern.

It was also envisaged that there would be some scrutiny of Post Office Limited’s contingency planning at the meeting, wasn’t it, because that was why you were briefed ahead of the Paula Vennells meeting, to request sight of the contingency plan in advance of the meeting; do you recall that, from the documents?

Kelly Tolhurst: Yes, I do recall it from the documents.

Ms Price: Can you help, therefore, with why you viewed the meeting as really just a meeting about what was happening in the litigation?

Kelly Tolhurst: Yes. So, again, this would have been the first sort of major meeting that I would have had around the litigation in relation to the Post Office and it was an – and whilst the contingency plan was an element, this was an opportunity for them to brief me about what was happening with the litigation, and an opportunity for me to discuss and ask questions. So for me, I felt that it was very much about the whole litigation, not just about the contingency planning.

And, obviously, I had limited knowledge. I’d only had what I’d read prior to that or, you know, informal conversations. So it was an opportunity for me to meet with all of the people involved and ask questions, and listen to what they had to say.

Ms Price: But you’re saying by “it was just about what was happening in the litigation”, that you didn’t have the opportunity to apply that shareholder scrutiny at that meeting, because that was the stated intention, wasn’t it, in the submission from August?

Kelly Tolhurst: Yeah, I mean I – at that particular meeting, I was concerned about the – you know, to have more information about the litigation. I remember being able to ask questions. I asked questions about the, you know, I did ask questions of the merit. I asked questions about the liability, what it would mean, what the Post Office felt about the outcome or potential outcomes of the litigation. So I think, from my perspective, I wanted to use the meeting as a better understanding of what was – what the current state of play was.

I was very much aware that this had been going on for a long period of time and, you know, I wanted to be able to perform correctly as a minister, in the best way I could, and the only way I would, you know, I believe, is to understand what’s going on and the detail.

So whilst contingency planning was a part of it, I think, from my perspective, you know, it was very important that, you know, it was an opportunity for me to ask questions.

Ms Price: Can we have on screen, please, POL00022976. This is the briefing paper for the 17 October 2018 meeting. Starting, please, with page 2, we can see a table of contents and there were sections listed as 1 to 7, the “Executive Summary”; “Background to the Litigation”; “Key Issues at Trial in November”; “Operational Improvements already Underway”; “Contingency Planning”; “Communications Strategy”; and “Settlement Options”.

You’ve said in your statement that you were interested in the detail as a general rule.

Kelly Tolhurst: Mm.

Ms Price: Did you read all of the sections of this briefing when it was provided to you?

Kelly Tolhurst: Yes, I would have done, ahead of that meeting.

Ms Price: Going to the executive summary over the page please, at paragraph 1.2, under the heading “What is the case about?”, it says:

“The case represents the culmination of a series of campaigns by disaffected postmasters and others (including a number of MPs on both sides) who believe that Post Office wrongly attributed branch losses to those postmasters and that as a result, they suffered financial and reputational harm. A theme of these campaigns is that flaws in Horizon (the in-branch point of sale system) were the cause of these losses.”

Going over the page again, please, at 1.8, the number of claimants is identified there, as the group of 561 claimants. Then going to page 6, please, this is the second section, the background to the litigation. At 2.2 there is this:

“In 2012 a small number of (mostly former) postmasters, under the banner of ‘Justice for Subpostmasters Alliance’ and with support from some MPs led by then MP (now Lord) James Arbuthnot, claimed Post Office’s Horizon IT System had caused losses (shortfalls in physical cash against cash holdings recorded on Horizon) which they had had to make good. In some cases they had been prosecuted for these losses) usually for false accounting, theft or both) while, in other cases, they claim that it led to their contracts with Post Office being terminated causing them financial loss and other personal harm including bankruptcy, divorce and emotional distress including suicide.”

So this briefing was informing you that subpostmasters had alleged that the IT system had caused losses which they’d had to make good, yes?

Kelly Tolhurst: Yes.

Ms Price: This had led to some people being prosecuted for false accounting, theft or both?

Kelly Tolhurst: Yes.

Ms Price: Others having their contracts terminated with the consequences we see there?

Kelly Tolhurst: Yes.

Ms Price: And they had had support from some MPs, led by Lord Arbuthnot?

Kelly Tolhurst: Yes.

Ms Price: Did the nature of the allegations being described here cause you any alarm by their very nature?

Kelly Tolhurst: Yes, of course. Anyone sort of being accused of breaking the law or doing something regarded as illegal and the consequences of that, of course, you know – and for me, absolutely, that’s why, you know, I was keen to understand more about what had gone on and what the current situation was with the Post Office.

Ms Price: Did this paragraph cause you to ask yourself whether you needed to test what you were being told by the Post Office about its position on the allegations?

Kelly Tolhurst: At this particular time, at this particular meeting, no. And the answer to that is, again, this was the first big meeting that I had had with the Post Office to talk about the litigation in any kind of detail, and I was just formulating my views. I didn’t have any developed views, really, prior to taking on the role as a minister.

So, you know, of course, reading it, it’s really concerning but it didn’t sort of – that particular paragraph in that briefing didn’t – you know, I didn’t – as you say, I didn’t make any further decisions based on that.

Ms Price: Did you understand, when you read this briefing, that it was the Post Office which had been doing the prosecuting?

Kelly Tolhurst: Yes.

Ms Price: Did that aspect of it cause you any concern, taken with the information here in paragraph 2.2?

Kelly Tolhurst: Yes. Of course, any kind of private prosecution is of a concern, and especially when it’s being done by an organisation. This, I think – I think I mention further in my statement, but this is where I sort of asked the question about, you know, what the Post Office really, you know, what the situation was with regards to the litigation because I did feel that this was a situation where you had a very large organisation taking private prosecutions against, you know – excuse the phrase – small businesses or individuals, in some cases and so, for a large organisation to take that kind of action against, you know, relatively small players – excuse the expression– you know, they must have been pretty sure or confident in their position to move that forward.

So obviously, you know, that was how I was feeling at the time and obviously I was getting to know what was going on and developing my views and thoughts and trying to suck up as much information as was being given to me.

Ms Price: At paragraph 2.3 there was this:

“In response to these assertions, Post Office appointed independent forensic accountants Second Sight to perform a ‘top-down’ examination of Horizon. Second Sight issued a report in July 2013 which concluded there was no evidence of system-wide (systemic) problems with the Horizon software but identified some areas where Post Office could have done more to support individual postmasters.”

This was the second reference to Second Sight that you’d had. When you read this, did you ask to see Second Sight’s Report?

Kelly Tolhurst: No, I didn’t ask to see Second Sight’s Report.

Ms Price: Why not?

Kelly Tolhurst: It wasn’t – at the time, I can’t really give you an answer as to why I didn’t ask to see their report. I was taking the – making a judgement on the advice that was in front of me. I would have expected the briefing to have given me sort of factual and relatively, you know, truthful information, but I didn’t ask to see that, and I would have taken what I was given here on face value.

Ms Price: Could we have on screen, please, paragraph 36 of Ms Tolhurst’s statement. That’s page 12. You refer, here, to paragraph 2.3 of the briefing document. So that’s the paragraph we’ve just looked at, referencing Second Sight, and you say in the last two sentences:

“I remember being reassured by this. I understood ‘no evidence of system-wide (systemic) problems’ to mean that there were no fundamental flaws in the system that could SPMs more widely, although there may have been one-off issues arising from user error or occasional bugs.”

Going back a page to paragraph 33, please. You say:

“In my general impression at this point in time was that [Post Office Limited] did not consider there was a serious problem with the Horizon system, albeit there may have been occasional bugs or errors in the system affecting individual SPMs. I understood [Post Office Limited] thought there was a possibility that the court may find against them on various contractual points or in respect of those occasional bugs or errors, but did not think they would lose on anything significant.”

So the reference here to occasional bugs or errors in the system affecting individual SPMs, did you at the time question whether this system, which you understood to have bugs or errors affecting individual SPMs, even occasional ones, could be described as robust? The language which was being used by Post Office.

Kelly Tolhurst: So at that particular meeting, you know, the sort of terms “occasional bugs or errors”, I’m not a – you know, I’m not a technical expert, particularly with computers and computer systems. So I wouldn’t have – you know, I wouldn’t have sort of – wouldn’t sort of maybe have asked that question. But I think, for me, it was very much about I was sort of at that particular meeting given assurances that, you know, the representatives themselves and people in the room were telling me that there was no systematic issue, it was played down in the sense that it was only very minor.

So, again, I took what I was told on face value at that early meeting, without sort of probing further what bugs or errors could potentially be.

However, I’m not an expert in tech or computers, so even if I had of, I’m not sure what information they would have given me to maybe lead me to take different views or ask for something further, if that sort of makes sense.

Ms Price: Taking it fairly simply, did you understand these occasional bugs or errors to be material, that is they were affecting SPMs in the way they claimed, causing accounting difficulties?

Kelly Tolhurst: Yes, yes, I would say so.

Ms Price: Did you question whether these occasional bugs or errors were visible to subpostmasters when they occurred or whether illusory losses caused by bugs could be told apart from genuine losses by the Post Office?

Kelly Tolhurst: So in relation to the bugs or errors in the system, you know, I didn’t ask and I didn’t have information about those specific bugs or errors and, potentially, how they were affecting postmasters. I definitely was looking at it from more of a global level, more of a top level issue, rather than the individual specific points, which is a – you know, that’s an honest sort of position of what I was thinking at the time.

Ms Price: Do you recognise now that, absent bugs or errors being visible to SPMs or distinguishable from genuine losses, wrongful action might be taken against someone, whether a subpostmaster, their staff or a Post Office employee, on the basis of unreliable data, without anyone knowing?

Kelly Tolhurst: Yes, and it’s terrible.

Ms Price: Did you recognise that at the time?

Kelly Tolhurst: No, I – you know, I can – my – as I say, at that particular time, I wasn’t particularly – I wasn’t thinking about the particular bugs and the errors and the specific impacts that that might have had. But absolutely, I mean, having been led to believe that – or been told by Post Office that there were no systematical errors with Horizon, I suppose in some respects gave me some confidence and some comfort that the only errors were incredibly minor and maybe didn’t have the impact that I now know had on the postmasters. That’s the best I can, you know – yeah, that’s my view on that. Yeah.

Ms Price: Do you think you should have recognised this risk at the time?

Kelly Tolhurst: Um, you know, do you think I should have recognised? Absolutely. I mean, I’m sure there’s things that, you know, in hindsight, that I may have been able to recognise at the time – at the time I was – yeah, it, you know, I honestly didn’t recognise that those – that issue or those issues were, you know, problematic in that sense.

Yes, I mean, there’s lots of things I would wish I had done or said, or done differently. I can’t make any sort of excuses for that.

Ms Price: Sir, is that a convenient moment for our first short afternoon break?

Sir Wyn Williams: Yes.

Ms Price: So ten minutes, please, sir, which I think brings us back at just after 2.45.

Sir Wyn Williams: I make it 2.38, so shall we give ourselves 2.50? Yes, fine.

Ms Price: Yes, sir, thank you.

(2.38 pm)

(A short break)

(2.50 pm)

Ms Price: Hello, sir.

Sir Wyn Williams: Yes.

Ms Price: Could we have back on screen, please, the briefing document for the 17 October meeting, the reference is POL00022976. There is just one last section of this briefing I’d like to go to, please, and that is the contingency planning appendices towards the end of the document, starting at page 32. If we can zoom in a little more, please, so we can see the table on page 32. That’s the page above. We can see here what is colour-coding – albeit that this is black and white – of five different numbers in the left-hand column for likelihood of Post Office losing a common issue or an implied term being found against the Post Office.

Just scrolling down a little, please, so we can see. In the right-hand column, there is a 1 to 5 assessment mechanism for impact, so impact on the Post Office if a common issue is decided in favour of the claimants, and that is defined as a significant adverse impact on the business that could threaten existence, as a 5, so the top level in the right-hand column.

On the left-hand column, on likelihood of 5 is “Post Office is very likely to lose the case, the proposed term is very likely to be implied”.

Scrolling up, please, just to the top introduction section there, this is the bit of the document relating to high likelihood areas so that’s the likelihood column on the left and, beneath that, is a table detailing the four Common Issues assessed as having a high likelihood of Post Office losing the issue or having the implied term found against them.

Going to page 37. This is the start of the table relating to high impact areas, so those things in the right-hand column, and the introductory section explains that the table details the three Common Issues assessed as having a significant adverse impact on the business, if the issue or implied term were to go against the Post Office. So it’s saying there were three of the issues that would have that impact.

Did you read these appendices at the time? They’re not part of the main sections, in fairness to you.

Kelly Tolhurst: I expect I would have read them at the time. I don’t recall – to be absolutely straightforward, I don’t recall but I expect I would have.

Ms Price: Seeing the issues which were assessed as being 5s or likely to lose on points, and the three in having a high impact, were they to be lost, albeit that the likelihood on those was lower, did that cause you any concern in terms of the risks of the litigation?

Kelly Tolhurst: I think that the – you know, I was concerned about all of the risks in relation to litigation. Going back to the point that I made around the fact – you know, I was concerned of the large corporation against the small individual. I was concerned that – you know, I was concerned that actually looking at the information that I’d had, I was being given all these assurances. So I think that, for me, that’s definitely, in that 17 October meeting, I felt that the people briefing me were relatively confident of their position, and – but that worries me just because of my sort of concern over the length of time this had been going on and some of the issues, obviously in greater detail.

So I think, in general, I was concerned, without being able to draw out sort of specific, you know, particular parts on different particular clauses. I think I had a genuine, overall concern, which I think would have been – it would have been right for any kind of minister to have an overall concern about any litigation that any sort of Government subsidiary would have been – would be. So I think I had concern but obviously none on those particular points, if that makes sense.

Ms Price: That document can come down now. At paragraph 34 of your statement, you refer to this concern, the general concern you had, and you say that you remember at this early stage being concerned that Post Office Limited were perhaps over-confident.

Kelly Tolhurst: Mm.

Ms Price: Can you explain what in particular let you to form the view that they were over-confident?

Kelly Tolhurst: Well, I think at that particular meeting, you know, I don’t remember at any time there was any sort of suggestion or acceptance that there was a potential for losing any kind of litigation, and I suppose, in some respects, that’s what also concerned me, because the objective approach would be obviously to look at the worst-case scenario, if you were looking at it. But I – at all these stages, I suppose, these individuals in the room who had obviously spent a lot of time on it and had been working on this for a long period of time gave me reassurance, and I didn’t have any evidence or any particular information in order to challenge what was being put in front of me at that particular time. So that’s the sort of best way I can articulate it.

Ms Price: Could we go, please, to paragraph 38 of Ms Tolhurst’s statement, that’s page 13. At paragraph 38, you say this:

“My overwhelming concern at that time [this is at the point of the October 2018 meeting] was that a judgment against [Post Office Limited] or settlement of the claim would not cause [Post Office Limited] a financial crisis. I was very focused on keeping Post Office going as a valued service. This is why it was so important to me that I was provided with information on [Post Office Limited’s] financial position so that proper planning could take place.”

At 39, you go on to say this:

“Frustratingly, [Post Office Limited] were not willing or perhaps not able to provide any concrete advice on their liability at the meeting. I was informed by way of a post-meeting note that for ‘for any settlement up to around £50 million the cost could be borne by the company. Above that they would need to consider whether it could be funded by [Post Office Limited] or request additional support from HMG’. I wanted more information about the arrangements that would be put in place for [Post Office Limited’s] financial liability, and this is something that I followed up the following month. My understanding was that [Post Office Limited] were not giving me an estimate of its potential liability because then it would become a known liability disclosable to [Post Office Limited’s] auditors which may expose it to a risk of trading when potentially insolvent. Whilst I understood that, I would expect [Post Office Limited] to be able to give me some clear information, even if it was not an official figure.”

Kelly Tolhurst: Yeah.

Ms Price: You also refer at paragraph 126 of your statement to being told, in a June 2019 submission, that Post Office Limited’s auditors had previously had concerns that no figures were included in the accounts on Post Office Limited’s potential liability. From whom did you gain the understanding that the reason Post Office Limited was unwilling to be open about the likely quantum in the claims related to the need to declare the risk to the auditor which could, in turn, endanger Post Office Limited’s position as a going concern?

Kelly Tolhurst: Well, I believe, actually, this was discussed in the meeting of 17 October because I do believe, asking the question directly, you know, give – I mean, my question to the Post Office was, you know, what do you think the liable, potentially, could be to the Post Office? I needed – I wanted to understand what that looked like, and they couldn’t give me a figure and that was a major frustration to me, because – and, I have to say, one of the things that frustrated me about it was that, you know, I was questioning senior executives of the Post Office about what the potential liability was and, you know, okay, I hadn’t been a senior director of a large organisation like the Post Office but I couldn’t understand why nobody could articulate that to me as the Minister.

And I thought, at this point in the process, they would have had a better understanding of what that figure was but, actually, they couldn’t give me a – they couldn’t even give me an informal figure.

So until after that meeting, I had no idea what their potential – what the potential liability could be.

Ms Price: We do actually have a draft note of that meeting, if we can have that up on the screen, it’s UKGI00008554. It’s page 2 of that document, towards the bottom. There’s a comment halfway down the page, which is the first one from you. You say, “Kelly Tolhurst (KT)”, and then a little further down we have “KT”:

“Additional funding requirements?

“Would [Post Office] have enough to cover? Important that [department] is aware as could be significant?

“Potential liability.”

Is that what you’re referring to in terms of what you asked?

Kelly Tolhurst: Yes, I mean, this note obviously was a note that I hadn’t seen but that’s what I – you know, I do remember that particular conversation at that meeting. So it characterises, in some form, my question.

Ms Price: That document can come down now. Did the lack of figures being provided at that stage mean that no account was being taken by the Government of the overall value of the claims for the purposes of assessing litigation risk?

Kelly Tolhurst: Well, at that particular time, my understanding was that Post Office had an ability to make financial transactions up to £50 million. Anything over that would need Government Minister sign-off.

My – again, I’m not a legal expert. I have no idea what sort of quantums of claims there could potentially be but when I was told and when I understood that potentially 561 postmasters could potentially have had a claim on the Post Office, I was concerned that that could equate to more than, obviously, the £50 million. So I understood that any negative judgment against the Post Office would have had a massive impact on the finances and the taxpayer, and I was trying to be diligent into trying to push the Post Office into giving me some idea of what potentially that figure could be and if it would have an impact on the Post Office – the functioning of the Post Office.

Because one of the things that, you know, it seems sort of reflecting now, looking back, you know, I was actually really pleased to have the Post Office as part of my portfolio because I thought it was a great business and I thought it was an interesting part of Government. So it was something that obviously, as an individual, I very much wanted to make sure that the Post Office could continue with its function of public service. You know, obviously separate to the litigation and obviously what I now know.

Ms Price: Could we have on screen, please, UKGI00021096. This is a Shareholder Executive Risk Register, dated 29 June 2018. It’s a little difficult to see because we need to click into the cells in order to see the text, so when I ask the lady to click in a box, the text will appear in full, in the bar across the top.

Kelly Tolhurst: Oh, okay. Yeah.

Ms Price: If we are looking at this first tab “Guidance” and cell C6, please, we can see the text here explains that:

“This will be used as a graphical representation of TOP RISKS [in capitals] each team faces and also allows for different assets’/projects’ risks, to be compared easily.”

In big capital letters towards the end:

“PLEASE ONLY INCLUDE YOUR TOP RISKS.”

Then if we go to tab 2 of this please, which relates to the Post Office, so this was a Shareholder Executive Risk Register, which had that guidance and had this specific risk register relating to Post Office. Have you ever seen a Shareholder Executive Risk Register like this before?

Kelly Tolhurst: So I don’t believe I had until obviously the documents were shared with me, I think, a few days previous.

Ms Price: So these weren’t shared with you at the time you were Parliamentary Under-Secretary?

Kelly Tolhurst: I don’t believe they were.

Ms Price: If we go to row 38, which is item 11. We can see here possible civil litigation against Post Office Limited, and then in column D, which is “Risk overview”, we have:

“Civil litigation and/or Court of Appeal processes judge that [Post Office] has acted inappropriately, or illegally. Even in the absence of such a finding, ongoing risk that they are perceived to have acted in that way.”

Then if we look at column E, “Impact of risk”, on that same line:

“Potential for significant compensation claims if civil or criminal courts rule against Post Office Limited. More likely, however, and certainly in the short-term, is that this continues to be a significant distraction (and cost) to the business as they defend their actions.”

Then column H. We can see that the civil litigation has been given an impact rating of 4 out of 5 – a probability rating of 4 out of 5, and then we can see an impact rating there.

Forgive me, if we can just scroll up so we can see the column heading. It seems to be current and previous, so referring to two different times of that being assessed.

Scrolling down, please. So probability at 4 out of 5 and impact at 5 out of 5.

Pausing there, was the scale of the risk ever articulated to you in those terms?

Kelly Tolhurst: I don’t believe that was.

Ms Price: If we look at column K, mitigation overview, it states:

“[Post Office Limited] have external legal advisers employed on the civil litigation including a QC. They continue to update UKGI through the Board where UKGI’s NED sits and directly to UKGI’s Legal Counsel under a Disclosure Protocol that protects legally privileged information.”

Then at column P “Further mitigating actions”:

“UKGI have briefed Minister (Andrew Griffiths) and will keep ministers, SpAds and [Permanent Secretary] update at key points through the new Disclosure Protocol, with POL’s Legal Counsel to provide an oral briefing on 10 September.”

So that’s the meeting which was adjourned to 17 October:

“BEIS Legal are also up to speed and contributing to any advice to ministers. Maintaining a position that Government will not comment on an ongoing legal issue.”

Were you aware that UKGI considered the civil litigation against Post Office Limited to be one of POL’s top rated risk on its asset register?

Kelly Tolhurst: No, I can’t say that I knew that.

Ms Price: That document can come down now. In terms of your experience of information flow from Post Office Limited, could we have on screen, please, UKGI00021771. Going to page 4 of that document, please, the email towards the bottom of the page. You explain at paragraph 48 of your statement that you met with Tosin Adegun and Tom Cooper of UKGI on 19 November 2018. This email is sent next day on 20 November and it’s from Oluwatosin Adegun to Sam White, who was one of your Private Secretaries, and it says this:

“Hi Sam,

“Thanks to the Minister for her time yesterday, detailed below are the follow-on actions (both Sams, please let me know if I have missed anything).”

That first bullet point:

“Weekly briefings as the litigation case progresses (verbal and written updates) (UKGI to action).”

Did you request those briefings?

Kelly Tolhurst: Yes, I believe I did ask to be briefed. That was sort of normal for me to – I would rather have more information than I needed. So, you know, you’re better off having more information. So weekly briefings, I would have requested that at the meeting or as a consequence of the meeting. However, I can’t guarantee that they – I did receive weekly briefings or verbal updates.

Ms Price: Did you request those because, as a matter of your general practice, you liked to have regular updates or was there a particular concern –

Kelly Tolhurst: No, I think it was more to do with my general practice. I knew obviously it was a big issue. It was something that was – that it was important that I did have access to any new information or information as quickly as possible. So it would have been normal for me to have asked for regular updates.

Ms Price: Some emails follow above about how frequently the updates should be sent to your Private Secretary and then, towards the bottom of the page, I think the bottom of the first page, there is an email dated 23 November 2018, from Stephen Clarke to Richard Watson and Tom Aldred, which says this:

“Richard,

“To see further clarification below from the Minister’s office on the Minister’s request for trial updates.”

“… we’ll submit once a week …”

Then that included a round-up of the week’s news coverage and also at the second bullet point an update from Post Office Limited’s Legal Team on trial developments over the past week.

So the second bullet point here was referring to the fact that you wished to have updates from Post Office Limited’s Legal Team in particular; is that right?

Kelly Tolhurst: So that would have been something that would have been formulated via the team or with my private office. I don’t remember being specific about what I was requesting. I would have just asked for weekly updates and, you know, relevant information, not sort of giving me information that had no consequence or was irrelevant. So these would have been ideas that would have been put forward by – yeah, as I say, I’m unsure of who would have sort of made those three particular requests.

Ms Price: Okay. Then the reply from Richard Watson is above. It says:

“Stephen

“Thanks. I have had no reply from [Post Office Limited] Legal. I will chase them about it. I have not said to them that the Minister wants the update, partly because I rather feared that would cause the update to be less useful or perhaps even be met with a refusal to provide one.”

Then Stephen Clarke’s email above:

“Thanks Richard, I hadn’t thought of that risk but probably very wise based on past dealings!”

Were you aware that this was what was expected by

Ukgi: that a request for an update having come from a Minister might result in a less useful update or a refusal to provide one?

Kelly Tolhurst: No, I wasn’t and, actually, you know, I would have – if I had have been, I would have been rather annoyed by it because, quite frankly, you know, they would have – you know, I would have – yeah. A refusal to give an update to the Minister, I would have thought would have been absolutely outrageous. So if I’d known about that at the time or that there was concern that that might not be the case, I probably would have raised that directly with them, if they were actually refusing to give me updates.

Ukgi: It may follow from your answer but was this something you ever experienced directly at any point?

Kelly Tolhurst: A refusal to give me information? No, I can’t say that they refused to give me information. As far as I am aware, should I say, because actually, that was just from my direct contact with the Post Office. For what may or may not have been said to UKGI or officials within the team that I am not aware of, that may have occurred, but with my direct communication, no.

Ukgi: Could we have on screen, please, UKGI00009455. This is an email from Tom Aldred of UKGI to others from UKGI dated 5 April 2019. The first paragraph of the email says this:

“On Wednesday, Kelly met with Tim Parker. We also had a good chat with Kelly after Tim had to leave, where I was able to make a few points to her. I also walked over to the meeting with Carl, the new BEIS director, who seemed very nice.”

Then under “Litigation and recusal”, the second bullet point reads:

“Kelly complained that she wasn’t seeing enough information flow about the trial. We discussed as officials afterwards and it seems the block is somewhere between her private office and her. Regardless, we should make sure that we are providing updates to her as soon as they are relevant.”

At this point in April 2019, what information about the trial were you expecting but not receiving; can you recall?

Kelly Tolhurst: I can’t say – I don’t know what I was expecting. I just wanted to have good information, you know, regular information and, obviously, rather than getting confused on the months again, I was – I know we haven’t spoken yet about the recusal but, obviously, I was frustrated and angry about that. So I was expecting to get more timely and better information because, ultimately, you know, I – as the – as the Minister who that the responsibility to answer the House of Commons or anyone that asked the questions, it was right that the information flow should be there and – but I don’t quite know what I was expecting to see because obviously I didn’t know what I didn’t know. But I just wanted that – you know, if I was getting a regular flow, hopefully there’d be information in there that would be useful to me in my role as the Minister.

Sir Wyn Williams: Can I just ask you in general, so that perhaps we can shortcut some of this, in November 2018, that was when the Common Issues trial started. Are you telling me that, during the course of that trial, so that in the weeks, effectively, of November and December, you felt that you didn’t get enough information of how that trial was progressing? That’s point 1.

Then coming to this point in time, which is April 2019, we’ve now got the judgment in the Common Issues trial. Everybody knows that the Post Office lost, and so we’re talking about the information you want to get in the Horizon Issues trial.

So with those two staging posts in mind, so to speak, first of all, going back to question number 1, did you feel you were properly kept up to date with what was happening in the Common Issues trial?

Kelly Tolhurst: Thank you, Sir Wyn. I felt that I was getting some information and, at the time, I would say that – I couldn’t – at the time, I couldn’t make a judgement on the reliability or the level of information I thought that I was getting. I suppose my big issue was, obviously after the judgment was made, it absolutely was clear that I wasn’t getting the updates or the information that I felt I needed to know, if that makes sense. If it answers your question.

Sir Wyn Williams: Well, it answers my question about the Common Issues trial and then, once you knew that the Post Office had lost that trial, to what extent, if at all, were you demanding greater discipline, if I can put it in that way, in keeping you up-to-date with what was happening in the Horizon Issues trial? We’ll leave recusal as a separate topic for Ms Price to deal with but, so far as the Horizon Issues trial is concerned, were you kept up to date in a more disciplined fashion – I can’t think of putting it in any other way – during the course of that trial?

Kelly Tolhurst: I’m not – I was given more information from – obviously, we had the policy team within BEIS and my private office and we were all sort of trying to keep abreast of what was happening, but I don’t think that I was kept updated in a more disciplined way, hence why I was – you know, I felt like I was continuously sort of asking for more info, more info, more detail, more detail. Because, clearly, the judgment, there were issues. You know, I – there were clearly issues with what the Post Office was saying and what was happening, based on that judgment.

So I didn’t want to be blindsided, as well, if that makes sense. So my determination to keep asking for information, asking for more detail, meant that, you know, in my view, I thought that I wouldn’t – you know, I would know what’s coming, if that makes sense.

Sir Wyn Williams: All right. Then one last question before I hand back to Ms Price. When you were saying more info, more info, were you directing your requests to officials in UKGI or officials in the Department or to both?

Kelly Tolhurst: To both, to both.

Sir Wyn Williams: All right. Fine.

Ms Price.

Mr Beer: Not at all, sir.

Ms Tolhurst – that document can come down now – a number of times in your statement you touch on the relationship and engagement you had with UKGI specifically, to follow up on the point made by the Chair as to who you were encountering difficulties with.

If we could have on screen, please, paragraph 88 of Ms Tolhurst’s statement. That’s page 31. You deal here with April 2019, your private office saying that Tom Cooper wanted to meet you to update you on the litigation, and you saying you’d rather the updates were formalised. Then just going over the page, please, at 89, you say:

“I suspected by this time that Tom Cooper had gone native. My feeling was that he had lost his independence from [Post Office Limited] and was not providing effective challenge or scrutiny.”

What did you mean when you said Mr Cooper had “gone native”?

Kelly Tolhurst: Well, I meant that his objectivity had been lost, I suppose, in regards to – you know, whether that’s a fair characterisation or not of his approach, but that was my feeling at the time. That’s all I can sort of say, and I think that had been borne out – well, as I think I’ve said in my statement, actually, that, you know – and I know we want to come on to it, so – but what happened around that recusal obviously gave me cause for concern, and the reason I made a fuss about not wanting to meet the people informally is that, you know, this was very – you know, I wasn’t ignorant enough to know – not to know how serious the whole litigation was, and because I had become frustrated with the information flow, I didn’t want informal information. I wanted information that was recorded and on the record, hence why I didn’t want to have a random communication, as I characterised it.

Mr Beer: In relation to Mr Cooper’s request for a meeting, Mr Cooper’s evidence to the Inquiry was that he would have benefited from a lot more in-person contact with the Department but, in particular, you, and his evidence was that the Department had received briefings but no questions came back. How would you respond to that?

Kelly Tolhurst: Well, so, even as a junior Minister, I had a wide portfolio and I had lots of responsibilities. At this particular time, we had a number of other challenges within my portfolio, not just the Horizon litigation. Absolutely, I want to meet with all stakeholders but, as one individual, there is a limit on some of the personal contact that you can have with those stakeholders.

However, he had open and unfettered access to the BEIS team. He also had the ability to speak with the Permanent Secretary and any kind of severe concerns, in my view, shouldn’t have been just purely reliant on having a face-to-face meeting with me.

If he had had those serious concerns or he had something that was important to the Department, you know, I would have imagined and I would have hoped that anyone working in that environment would have raised it with a number of other people, rather than only speaking to me, unless it, you know, it was something like a – I don’t know, a whistleblowing or something like that.

So I would say that, yeah, absolutely, as a minister, I was always willing to meet with whoever I could, within reason, particularly where it affected by portfolio. But, you know, I recognise as well, it wasn’t possible with just the other pressures at that particular time, to meet with – you know, I wouldn’t have been able to meet with him on a weekly basis. But that’s a rather long answer, but I just wanted to give you the context of that.

So I would say that’s slightly unfair to suggest that, because he didn’t have as many face-to-face meetings with me, that there was no sort of feedback from my office, so to speak.

Mr Beer: Coming, then, to your reaction to the Common Issues judgment and the recusal application. Can we have on screen, please, paragraph 58 of the statement, that’s page 21, this you being made aware of the judgment and at 59, your immediate reaction was one of embarrassment.

Kelly Tolhurst: Mm.

Mr Beer: You were appalled that the judge had found Post Office Limited to have behaved so reprehensibly and you felt usher shame on behalf of Post Office Limited in respect of what the SPMs had been through.

You say you had a call with UKGI the next day about the judgment and then, going over the page, please, a call with Tim Parker, Alisdair Cameron and Jane MacLeod, and you set out some of the speaking points for that call which reflects your immediate concerns.

Then over the page, please. At the next paragraph, you describe the handing down of the Common Issues judgment as a lightbulb moment for you. And you also say that your concern was what was going to change, in terms of how the litigation was approached.

A “Dear colleagues” letter was sent to all members of the House of Commons after this judgment, wasn’t it?

Kelly Tolhurst: Yes.

Mr Beer: You explain at paragraph 65 to 68 that you had originally recommended that some wording be included which was subject to some amendments after comment from UKGI but this wording was removed after input from Post Office Limited; is that right?

Kelly Tolhurst: Yes.

Mr Beer: The wording you originally proposed is set out at paragraph 66. That wording was that:

“… the judgment ‘represents a significant step forward, delivering justice for those postmasters who have been wronged’.”

You provide your reflections on this at paragraph 69, over the page, please, and you say:

“Looking back now this is probably one of the areas where I should have pushed back and insisted on the original wording.”

Why do you consider that the original wording should have been kept?

Kelly Tolhurst: Because I believe that, actually, it was the true characterisation of how, you know, I felt as the Minister at the time. But, you know, looking – you know, looking back, I wish I had pushed harder on that wording.

Mr Beer: Coming, then, to the recusal decision, you say you were, at this stage – the drafting on the “Dear Colleagues letter” stage – unaware of any suggestion that Post Office Limited might seek for the judge to recuse himself, and that you became so aware on the 19 March 2019, when UKGI informed your office of this; is that right?

Kelly Tolhurst: Yes.

Mr Beer: You say at paragraph 71 that your view and your officials’ view was that the application should not be made and that you had very grave concerns about it. Three lines down you say this:

“I believe that the Permanent Secretary, Alex Chisholm, took this forward and tried to discourage [Post Office Limited] from making the application. At no time was anyone at POL given reassurance that Government would be happy with POL making this application; quite the contrary.”

By “quite the contrary”, is it your evidence that you told Post Office Limited not to make the recusal application, or not?

Kelly Tolhurst: So I did not have any discussions with Post Office Limited directly about the recusal. But, as far as I can remember, I don’t remember having that direct conversation with them. However, what I do remember is that, you know, my reaction and that of the others – you know, other people within the Department, that this was something that, you know, was not something that I – you know, I wouldn’t support it and I thought it was rather – you know, madness, really, but that I don’t believe was directly articulated directly to Post Office Limited.

Mr Beer: You deal at paragraph 73 with what you were told about whether Government could or should be involved in the decision, and you say:

“It was apparently not, however, within the Department’s gift to stop [Post Office Limited] from making the application.”

If it had been within your gift, would you have stopped the application, despite the legal advice to the contrary?

Kelly Tolhurst: Well, I believe I would have, because I – and again, it’s easy to say – it’s easy for me to say that in hindsight, with what we know now. But my view, as a complete layperson in this area, my feeling at the time was you’ve had a judge that’s made this incredibly damning position about the Post Office, so I was very surprised how the Post Office’s first thought was to try and then recuse that judge. I, as a layperson, I thought it was, you know, something that was madness. Even what, you know, depending on what that legal advice had been and, actually, you know, I think that we wanted to, you know, we wanted to make sure that this came to a resolution, and that it was moved forward, and, you know, we were – I was definitely concerned that anything like this could delay any further, you know, the progression of the case to draw a line under it for the individuals involved.

Mr Beer: Could we have on screen, please, WBON0001756. This is an email from Jane MacLeod to Tom Beezer and Andrew Parsons, copied to others, dated 16 March 2019, and it says:

“Many thanks – I have a call at 12.15 with our Chairman, Al Cameron and Minister Kelly Tolhurst (and others), although I don’t believe recusal will be part of the discussion. I have been advised by the UKGI GC that ‘government’ will not express an opinion on recusal as they will not want the ‘executive’ to be seen to be criticising the’ judiciary’.”

Was recusal discussed on the call on 16 March? That was three days prior to the date you give in your statement, you saying you were aware of it?

Kelly Tolhurst: I genuinely – I can’t remember the exact details of the call.

Mr Beer: The suggestion that the reason Government would not opine on the recusal application was said that it did not want the Executive to be seen as criticising the judiciary. Did you personally receive advice to that effect?

Kelly Tolhurst: I don’t remember receiving – you know, I don’t remember receiving advice to that effect and, actually, that’s not how I was thinking. So my objection to the recusal was not worrying about whether or not the Government would be seen to be criticising the judiciary. You know, from my layperson’s point of view, was that I thought it was absolutely the wrong thing for the Post Office to be doing, just because they had had a judge who had made a scathing judgment against them.

So therefore, I couldn’t understand how that would help in any way the Post Office – Post Office’s case going forward, with any future judgments.

So whilst that may have been the Department’s view, which I don’t disagree with, I’m just saying that my thoughts at the time were very much in that place, as opposed to particularly concerned with what the judiciary may or may not have thought.

Mr Beer: Having seen the documents which have been sent to you more recently, are you aware that BEIS Legal and the Permanent Secretary had taken the view that the Department should not involve itself directly in the recusal decision?

Kelly Tolhurst: Yes.

Mr Beer: We needn’t turn it up unless you’d like to see it but there was an advice from BEIS Legal to Mr Cooper that he should not take part in the decision on recusal, on 15 March 2019. Were you aware of that at the time?

Kelly Tolhurst: So I don’t think I was – no, I wasn’t aware that he – that the advice he had been given was to not take part in that discussion, as far as I think I am correct in saying. However, I think this represents one of the concerns and one of the issues for me because, having the shareholder representative on the Board not taking part in a significant decision that had the impact on the organisation of which we were the shareholder, and on a position that, you know, I didn’t agree with, I suppose was a concern – you know, is a concern, and is a concern, you know, how were we able to – you know, we – I mean, I – whether the – the advice was correct or not, you know, I’m disappointed, and I disagree with it.

You know, because I believe that, if you are a shareholder, if you are a Board member, unless you have a very clear conflict, you should be taking part of those decisions and, you know, it’s a frustration to me.

Mr Beer: Could we have on screen, please, UKGI00009321. Going to page 2 of that document, please, about halfway down there’s an email from your Private Secretary, or one of them, it seems, to Tom Cooper, which refers to brief discussion of this with Kelly over the phone and “as expected she has concerns” and this relates to the recusal application being considered:

“Immediately she said she would raise with [Secretary of State] …”

This is 19 March at 17.15:

“… I have flagged this to his office and I believe she has already contacted him.

“She has agreed that they shouldn’t do anything until after the decision has been made at the board meeting/call tomorrow …”

That’s the Post Office Limited Board meeting to decide whether the application should be made; is that right?

Kelly Tolhurst: I think so.

Mr Beer: “… and it is likely she will want another call with Tim Parker and Al Cameron after this to ask them to explain their reasoning behind their change of mind.”

So it would appear from this that there was a plan for you to have a discussion with the Secretary of State but you had decided not to contact Post Office Limited to intervene in the decision before it was made; is that right?

Kelly Tolhurst: I don’t believe I made a decision not to intervene and speak with the Post Office to – I don’t believe that that correctly articulates – articulated what that note meant at the time because I was very clear on my – I was very clear on my position, hence whilst I had spoken to Secretary of State – it may have been – I can’t – I don’t – I wouldn’t have seen this message, I don’t remember refusing or not agreeing to speak with the Post Office Limited on this issue.

Mr Beer: Well, did you make any attempt to speak to Post Office Limited on this issue before the Board meeting decision?

Kelly Tolhurst: So my belief was that my – my understanding – if I correct correctly, that Alex Chisholm, who was the then Permanent Secretary, was going to speak with the Board – or not necessarily speak with the Board, but it was left with him. But I – but I think, you know, very clear, that I definitely didn’t try and avoid or refuse to speak to Post Office Limited on this because, if I had felt that I had had an opportunity to influence it, I would have taken it.

Mr Beer: That document can come down now. You received a submission on 11 June 2019 about the Post Office litigation. Can we have that on screen, please, it’s BEIS0000075. If it helps, you address this submission at paragraphs 124 to 128 of your statement if you want to refer to them. So this submission, you are one of the recipients?

Kelly Tolhurst: Mm-hm.

Mr Beer: Under “Summary”:

“At the industry meeting on 4 June you ([Secretary of State]) [so being the top recipient] asked for advice on how the ongoing Post Office Limited litigation could be brought to a swift and satisfactory conclusion, ensuring postmasters who had been treated unfairly were appropriately compensated.”

Does that reflect your wishes at the time as well?

Kelly Tolhurst: Yeah, absolutely.

Mr Beer: The potential options which were available to you are set out on page 4 of this document. Can we go to that, please, and it refers you to a table at Annex A with a range of options and they were said to range from challenging the existing Post Office Limited Board to change their litigation strategy, to more fundamental changes, such as replacing the Post Office Limited Board or BEIS assuming control of the litigation strategy.

Then the risks are explained at 18, of more rigorous action and those included:

“Forcing further changes to the leadership team risk disrupting the progress POL have been making in other areas of operation of the business … Making public statements or directing POL to take certain action could weaken their negotiating position in relation to settlement and make it harder to stick to the existing BEIS line that this was an operational matter for POL.”

Then the recommendation was that you choose from options 1 to 7, and options 1 to 7 were the less fundamental changes of the options; is that right?

Kelly Tolhurst: Correct, yeah.

Mr Beer: I won’t go to them for the sake of time but they’re the ones that you set out at paragraph 125 of your statement?

Kelly Tolhurst: Mm.

Mr Beer: Looking at the points made in paragraph 18, was there pressure to maintain POL’s financial success as a priority over the concerns and interests of subpostmasters?

Kelly Tolhurst: I don’t believe so. That was definitely not something that was my approach. I would say it was never about protecting the Post Office over subpostmasters; it was about making sure that, you know, as the people – as a taxpayer responsible body, we had confidence in the leadership and the processes and that the right decisions were being taken.

Mr Beer: In respect of the line referred to here, that the litigation is an operational matter for Post Office Limited, did you agree with that?

Kelly Tolhurst: I did agree with it because – at that particular time because obviously we – there was an Executive Team running the Post Office and they were responsible for the operations and delivery of the Post Office as an organisation and, you know, as far as I was aware, none of the officials within BEIS, notwithstanding whatever the officials in UKGI had been informed of, that it was something that they were leading on and that it was their responsibility to resolve, as well.

Mr Beer: Wasn’t this a classic example of an operation – or operational or contractual matter, which was concerning ministers at a policy level, such that simply leaving matters to Post Office Limited, on the basis that they were operational, was not a defensible position?

Kelly Tolhurst: I think, in – you know, looking at it from hindsight, yeah, we could say that, absolutely, you know, actually – I mean, I think – you know, we can go on – I’m sure you’ll pick up with me about the – you know, the future and, you know, potentially what is wrong but I think that, at the time, all I can talk about is at the time and when I was involved, and, you know, I did think it was an operational matter. Yes, I was concerned in relation to policy and how that would affect policy, how that would affect future decision making. But I didn’t believe that we could take operational responsibility for it because, obviously, we weren’t appraised or, you know, we weren’t – well, I definitely wasn’t directing the legal advice or, you know, have – you know, I don’t even know what the questions were asked of the legal representatives, when this legal advice was given to the Post Office.

So I think that, absolutely, it’s – what we know now and it absolutely – you know, it was a mistake that it – it shouldn’t have been, you know – Government should have had better oversight of what was going on at that time.

Mr Beer: Why, ultimately, did you choose not to make radical changes to the left and right of the Board, so the harder options that were in the submission?

Kelly Tolhurst: So I’ve thought about this obviously since writing the statement and I don’t remember exactly, other than – I don’t remember exactly why I went from being very determined in my views to move on the Chairman and change the board, that we didn’t end up doing that other than that, I would imagine, that, you know, there was no appetite for that within the Department or the advice that I was being given by the Permanent Secretary and, you know, the team at the time.

You know, it would have been seen as a very sort of – you know, I think I described it in my statement as a nuclear option and, you know, as this was my first ministerial role, I was really keen to make sure that I acted appropriately, and obviously I was – I did take note of advice and – that I was given.

However, I will caveat that in the sense that, whilst I take note of the advice, if I thought that I had an opportunity to do it, I would have taken it. So I – but I can’t explain exactly why I didn’t go for the – for that particular option.

Mr Beer: I’d like to come finally to your reflections, and starting with paragraph 194 on page 70 of the statement, please.

Sir Wyn Williams: Before you do that, Ms Price, could I just check with you, are we having a sort of second break or are we going to the end now?

Ms Price: Sir, I think we are going to have another short break, after which there will be some questions from Core Participants. I will only be a couple of minutes further with my questions at which point I was going to suggest at 3.55 we take a break until 4.05.

Sir Wyn Williams: Fine; okay.

Ms Price: So page 70 of the statement, please. In the interests of time, I won’t read out all of paragraph 194 but that is the paragraph that essentially deals with what you think was inadequate information being provided to you.

Then on 71, we have 198 and 199, where you make some observations in respect of the governance structure in this instance.

In sum, is it correct that your position is that, first, the Government was not given sufficient information to act appropriately; and, second, the structures in place tied the Government’s hands as it had no directing power?

Kelly Tolhurst: Mm.

Ms Price: Is that a fair summary?

Kelly Tolhurst: Yes, it is.

Ms Price: Is it right though, that, in terms of access to information, the Government had a representative on the Post Office Limited Board and you were in a different position, in terms of knowledge of matters after the Common Issues judgment, as compared with before?

Kelly Tolhurst: Yeah.

Ms Price: The Government also had that nuclear option of removing the Chair –

Kelly Tolhurst: Yeah.

Ms Price: – in extremis. Was there any conversation about the responsibility of Government and collective Cabinet responsibility in the context of litigation being defended in a way which it appears you believed was increasingly indefensible?

Kelly Tolhurst: I can’t speak for – I don’t know whether that was discussed, and I definitely, you know, I genuinely can’t answer the question about the Cabinet’s involvement or whether that was discussed at that particular point. I think for – you know, I remain concerned about – at the time, I would have loved to have had – I would have loved to have had powers of direction over the Post Office, actually, because, you know, if I am furnished – you know, I was, you know, more than happy to take decisions, so I think that, fundamentally, the structure of the Post Office and the way it’s been set up, and also even that connection between UKGI and the Department, so for example, you know, the UKGI shareholder representative wasn’t a member of the Department so it wasn’t someone that was directly blank to me, for example, or the Secretary of State.

I think I was operating within the system that was there and, whilst I accept that, you know, the structure of the organisation, I had to work on those boundaries, yes, it was a frustration and, you know, that’s something that I believe that maybe, if it hadn’t have been set up in that way, we would have – well, I hope – I would like to think that this may have been resolved early on, because ministers would have had that ability to direct and take further decision.

I mean, I think even – sorry to sort of labour the point, but just going back even to the point where the Minister had to sign a protocol for information sharing. I mean, even me coming in as a layperson, I thought: well, hang on a second, if I am the Minister responsible, why do I have to sign a document to say that I’m not going to share – you know, so that I can be given that information, when, actually, we are the shareholder, we own the organisation?

So I think that – and, you know, I – yeah, I would like – yeah. I am also very keen to see the outcomes of the Inquiry in relation to the recommendations that are made because, obviously, it’s something that, you know, has caused me, you know, concern and a lot of reflection since the process, since I was a Minister in the Department.

Ms Price: Sir, those are all my questions for Ms Tolhurst. It is between 3.55 and 4.00. But I wonder if we could come back between 4.05 and 4.10, if we’re going to get through the questions.

Sir Wyn Williams: Yes, by all means. I’m prepared to stretch 4.30 a little but, just so everybody knows, my absolute limit today is 4.45. So either questions have to be asked within that time frame or some other arrangement has to be made, all right?

Ms Price: Thank you, sir. Understood.

(3.57 pm)

(A short break)

(4.07 pm)

Ms Price: Good afternoon, sir.

Sir Wyn Williams: Good afternoon.

Ms Price: We have questions from Mr Stein and Ms Patrick I’m told they will be 12 minutes each.

Sir Wyn Williams: The precision grows. All right.

Questioned by Mr Stein

Mr Stein: Sir, I’m grateful, I’ll start my 12 minutes now.

Ms Tolhurst, my name is Sam Stein, I appear on behalf of a very large group of subpostmasters, subpostmasters’ partners, mistresses and employees in branch offices.

You said towards the end of your evidence when you were being asked questions by Ms Price that you are looking forward and you’re very keen to see the outcome of the Inquiry in relation to the recommendations that are made. Okay?

Kelly Tolhurst: Mm-hm.

Mr Stein: Now, if you like, the lens through which I’m going to ask you a number of questions is that one –

Kelly Tolhurst: Okay.

Mr Stein: – the recommendations: how can we improve, what is going to be better in terms of Government, the way Government operates? All right.

Kelly Tolhurst: Okay, thank you.

Mr Stein: Now, to help with that and as a starting point, can I take you, please, to paragraph 35 of your statement. You’ll see there at paragraph 35, that’s page 12 of Ms Tolhurst’s statement, that you’re referring there to a briefing organised by POL for 17 October meeting:

“The briefing was extensive although section 2 setting out the background to litigation was relatively short.”

You go on to say:

“I did not understand this to be a meeting about litigation strategy or the merits of the claim.”

So I’m going to take you now to that briefing.

Kelly Tolhurst: Okay.

Mr Stein: If we can go to that, that briefing is to be found at POL00022976. If we look at page 1, and have that on the screen, that would help. So this briefing paper, as you’ll see, and you had this in your pack, it’s a meeting on 17 October 2018, and it has a reference to yourself, Ms Tolhurst, Parliamentary Under-Secretary for the Department of BEIS, et cetera, okay?

Kelly Tolhurst: Okay, so you’d joined and taken on this ministerial post, I think, in July 2018, so you’d had some time to get familiar with the role but not very much time. All right?

So the particular paragraphs that I’d like to ask you questions about at page 10, paragraph 3.3, please. Thank you. Right. So 3.3:

“The most important common issues concern the liability of agents for ‘losses’.”

Then it goes on to say this:

“The claimants argue that Post Office needs to show that a postmaster’s actions have caused Post Office to suffer a net economic detriment, not just that the branch’s accounts ostensibly show a shortfall. Post Office’s position is that if a shortfall is shown in the branch’s accounts then, absent any cogent evidence to the contrary, the postmaster is liable for that shortfall, given that they are responsible for conducting the transactions recorded in those accounts, and for the Post Office cash and other assets used.”

Paragraph 3.6, please, so over the page to page 11.

“Post Office’s external Counsel believe that Post Office has the stronger arguments on most of the Common Issues.”

Okay, so you’re being given a pointer here within the briefing document to what are strengths and weaknesses, all right?

“However they also caution that areas likely to be most problematic for Post Office are the clauses dealing with suspending and terminating postmaster contracts (including length of notice …), withholding remuneration during the periods of suspension, and imposing liable for branch losses.”

Okay?

So you’re being given a steer as to areas of real concern for the litigation and one of the steers that you’re getting, and an area of real weakness that’s being identified, is regarding this question of how shortfalls are accounted for within branches.

So if we add up the pieces we’ve got so far: you’ve been in post for a few months. One of the jobs that you had to do is, essentially, look after areas that are relating to the Post Office. Yes?

Kelly Tolhurst: Mm-hm.

Mr Stein: You need to say, yes, or no.

Kelly Tolhurst: Sorry, sorry, yeah.

Mr Stein: Thank you very much. You understood that the Horizon system was essentially the working operating system for branches, and that it was an accounting system, run by the Post Office. Yes?

Kelly Tolhurst: Yes, yes.

Mr Stein: You’ve lived – I think you’ve lived and worked in Kent for – you were an MP in Kent. You’re as familiar, as we all are, with small branches of post offices up and down the country.

Kelly Tolhurst: Yes.

Mr Stein: You’ve said already in your evidence that you were aware that these branches were small businesses, as against a much larger corporation.

Kelly Tolhurst: (The witness nodded)

Mr Stein: Okay. So what we’ve got here, it seems, in the briefing, do you accept this, is you’re being warned: look, there’s a real issue about this question of how we impose liability on those small businesses. Do you agree that’s what it says?

Kelly Tolhurst: Well, I agree with – that that’s what it says, because obviously that was the nature of the litigation, and the dispute, and it was obviously an update of the litigation, hence the first sort of big brief I’d been given since taking on the role.

Mr Stein: One of the things about this brief – we’ve flicked through it and we can see that it’s something like 50 pages, it’s quite dense stuff. So we can see that, by being given this amount of material, without it necessarily identifying “Look, Ms Tolhurst, this is the hot topic, if we lose this then this could be curtains for the Post Office”, because the very identification of who is responsible for paying these shortfalls is pretty much an essential foundation of the litigation.

Kelly Tolhurst: Mm.

Mr Stein: Now, that doesn’t seem to have happened. It doesn’t seem to have got on to your operational radar as being “Look at this, watch out for this problem”; do you agree?

Kelly Tolhurst: So yeah, I would agree. So for example – I mean, one of the ways I work anyway, and I had it number of times in that portfolio, I had to get to grips with very large documents, or points within Government that I had no experience of before. So I’m absolutely fine with reading documents, taking it in, obviously there may or may not be some questions that I may or may not arrive out of reading what’s put in front of me, but you’re quite right.

So I don’t remember or recall anyone, when I first looked at this brief, saying, “This is going to be a problem, this is something that the Post Office, you know, will have such a bad judgment on”, and the reason I say that is because, obviously, I had this, going into that meeting, and then having those assurances that there was confidence from the Post Office that they were right. And, obviously, whilst, you know – and, you know, I’m not a lawyer, I don’t have any legal experience, and I wouldn’t – and I’m sure the civil servants wouldn’t have liked it for a minister to have, you know, to – they would always caution against going against sort of legal advice.

Mr Stein: But here, Ms Tolhurst, the legal advice actually is “Look, we may well lose on these issues”. So here’s an area whereby the owner of the Post Office could have said, “Hang on, what does it mean if we lose on these issues? How bad is that?”

Kelly Tolhurst: Yeah.

Mr Stein: Now you say in your statement – I don’t want to go to it because of time limitations – paragraph 57, it was probably – this is March 2019:

“Probably at this time I was first told of the core issues in the Horizon Issues trial.”

Well, actually, when we go back to this briefing, you are being told about these core issues quite a lot earlier than that. Now, where has this gone wrong? Should somebody and, if so, who, have said to you “Look, if we lose this, this really is significant for the entirety of the litigation. The company that we own.” Who should have pointed out to you, do you think?

Kelly Tolhurst: Well, actually – sorry, so I think that it was – so actually, there’s not one person that is, you know, sort of – it’s a failure of the whole system because, actually, I think, as I said earlier in the evidence on the answer to –

Mr Stein: I said who. You may want to say role or position.

Kelly Tolhurst: Yeah, sorry.

Mr Stein: No. My fault.

Kelly Tolhurst: So in answer to Emma Price’s questioning and I said, actually, that, you know, severe – I shouldn’t have been the first or the last person to – or could have been – I shouldn’t have been the only person to have had that message. So that – you know, if there was a severe issue, I would have expected it to come through the shareholder – the Government Shareholder representative on the Board because, ultimately, that’s their role but I would have – but that should have been something that had been discussed widely, it would have been something that you would that have expected UKGI to be over, a Permanent Secretary to be over.

It should be – you know, you shouldn’t have had a junior Minister chasing around or sort of, you know, working out what to – what information or what not to believe, and I think that’s the fundamental issue.

Mr Stein: Okay. Can I tackle that?

Kelly Tolhurst: Sorry.

Mr Stein: No, that’s fine. Can I tackle that, paragraph 78 of your statement, page 28. You’re talking there, at the beginning of that paragraph, about the arm’s-length model. You’re talking there I think, if I recall correctly, about recusal application and legal advice, which I will, if I have time, just quickly go to in a moment.

Kelly Tolhurst: Mm-hm.

Mr Stein: But this point about a junior minister point that you’ve just gone to, you say this at paragraph 78, the situation at that time, arm’s length, senior counsel legal advice, and so on:

“This did not feel enough for me as a first time junior minister to go against the advice. In my mind also was that, in taking that sort of action …”

Then you go on to talk about other issues that you’re saying are on your mind.

Kelly Tolhurst: Mm.

Mr Stein: But it’s not just in recent history that there’s been a churn of ministers. It is – there is a frequency of churn of ministers across our system.

Kelly Tolhurst: Yeah.

Mr Stein: Indeed, you have occupied various –

Kelly Tolhurst: A number –

Mr Stein: Various posts, quite short periods of time, so you’re quite a good person to ask about this. It’s frankly quite difficult to get a sense of Government from ministers that are constantly changing, who are constantly having to be briefed, worked up in terms of knowledge and then start making decisions.

Kelly Tolhurst: Mm.

Mr Stein: Because you end up in challenges like this, by being told by senior legal people, X or Y. What do we do to change that? How do we make sure that somebody actually gets a grip on these things?

Kelly Tolhurst: Well, I think specifically around the Post Office, because I do agree with your point, you know, in regards to churn of ministers, getting up to speed, being given that information in order to make proper decisions, but I think where the Post Office concern is slightly different, because – and this is where – and it goes – I think I’ve said it in my statement but, excuse me, I can’t remember the paragraph without looking it up.

And my only sadness is that Post Office Limited wasn’t what I would call a true arm’s-length body of Government, where, actually, as the junior minister, I would have had powers of direction and absolutely the position to be able to ask and demand information or make a judgement. And, for me, as – even though it was my first time ministerial appointment, you know, I’ve spent my whole life taking, you know, living with the consequences of the decisions that I make in my work life, so if I had been in a position where I could make decisions, I would have – and it’s a phrase I’ve used – I live or die by my sword. And if I made the wrong decision, I’ll take responsible for that. If I made the right decision, all very good.

And that’s one of the things that this is – and, for me, this is the problem. The fact that it was a limited company, not a true arm’s-length body of the Government and, therefore, I personally, if I can say, you know, whatever – you know, I – I hope that the – one of the outcomes of this Inquiry is actually the Post Office structure is completely changed.

Mr Stein: Let me briefly, and we’ll finish on this, legal advice, paragraph 73 of your statement. Now, paragraph 73, it’s an example of legal advice that’s been given but you refer generally in your statement, as you have in your evidence, to strong legal advice that you’ve been given.

Effectively strong legal advice to stay out of it, to not interfere with this particular body.

Now, for the people that I represent, that feels mad because there you are, you own essentially, as the Government –

Kelly Tolhurst: Yeah.

Mr Stein: – you own the Post Office. Now, the legal advice that you’re being given if you look at what you have there at paragraph 73, which is reasonably good as a reference to the type of legal advice, it not legal advice that is saying that there’s legislation that says you’ve got to keep out of this. It’s not cases that say you’ve got to keep out of it. This is more kind of we think it might not be a bad idea if Government sort of keeps away from it because we don’t want to get burnt type legal advice.

This is barely legal advice if it’s a legal advice at all. Why did you feel that you had to follow stuff that isn’t actually rooted in law?

Kelly Tolhurst: Well, because as someone who is not an expert and particularly in regards to legal matters, and I – you know, I can’t profess to be so – when you are given – if you are given advice from trusted, experienced, qualified – or people that you perceive to be qualified, you know, I had nothing to – you know, what – you know, at that particular time, or especially in short time, you’ve then got to rely on being able to have other advice in order to challenge that, and actually – and one of the challenges, going back to your earlier question, around, you know, the responsible – I’m not making excuses, please don’t think that that’s the case.

But, you know, there is so much going on, there are so many demands on your time. You only have a certain amount of bandwidth. So you do have to rely or put some trust in some of the information that you are given by your advisers and that’s not a get-out – you know, I’m not trying to negate any responsibility for not challenging because, absolutely, that’s the role of a Minister: to challenge.

And, you know, others will judge, you know, whether I was right or wrong. I just try to act in the best – the best that I could at that time.

Mr Stein: Do you agree that ministers in the future need to look at the question, which is: is this actual legal advice? Is this about the law saying something that can or can’t be done because that’s a legal principle, or is this other types of advice, which isn’t necessarily from anything other than coming from lawyers?

Kelly Tolhurst: I agree, you know, I –

Mr Stein: No further questions. Thank you, Ms Tolhurst.

Sir Wyn Williams: All right. Thank you.

Just one follow-up on that before Ms Patrick.

It seems to me that your core complaint when you talk about what frustrated you was your inability, in effect, to direct the Post Office what to do in certain circumstances. So I take it you want me to look at powers of direction, if any, which currently exist and whether they should be greater?

Kelly Tolhurst: Thank you, Sir Wyn, yes –

Sir Wyn Williams: I’ve got the point. That’s fine.

Yes, Ms Patrick?

Questioned by Ms Patrick

Ms Patrick: Thank you, sir.

Ms Tolhurst, my name is Angela Patrick, I represent a number of subpostmasters who have been convicted but since have had their convictions overturned. You see Mrs Hamilton to my right and Ms Hall and Mrs Henderson to my right.

I have two matters and I think I’ll only take you to one document, if I need to. The first I think I can take quite quickly. Ms Price has asked you questions about your concern that you had around the time of the recusal, so spring 2019, that Mr Cooper had “gone native”, and that you’re having problems getting information through UKGI. She has also asked you a general question about cabinet collective responsibility.

Did you raise your concerns about Mr Cooper having gone native or your concerns about blockages of information coming through UKGI with any more senior ministerial colleagues: your Secretary of State or anybody at the Treasury?

Kelly Tolhurst: So, yes, and absolutely, that’s why we ended up with the paper which gave us a number of options to – on how potentially we could move forward. One of the things that I think I referred to in my statement is that, you know, I was concerned about – I was concerned about what was happening at the Board for the shareholder representative, and I was very annoyed about the recusal. And, you know, my initial reaction was, you know – I know we didn’t end up in that place but my initial reaction was I wanted to change the Board and I wanted – and I did – I wanted advice on how I could remove the Chair.

So – and do you know, if I look back, if I had taken that decision or enforced – or got that decision made, what would have, you know, would that have affected things? I don’t know because I don’t – we don’t know, in hindsight. But that’s – I do believe I raised concerns, and hence whilst I also mentioned in my statement that I didn’t want informal meetings, I wanted it on record, you know, the information that I was being given, because it wasn’t until – sorry.

Ms Patrick: Can I stop you there. We’ve got your witness statement. I just want to say you did escalate it.

Kelly Tolhurst: Yeah.

Ms Patrick: Now, we’re going to hear from other ministers.

Kelly Tolhurst: Mm-hm.

Ms Patrick: That kind of communication, where you have concerns about what briefings are happening, how they are, whether the role is being performed properly, that’s something that any minister can do, they can share concerns with other ministerial colleagues, they can raise it, they can escalate it if they’ve got particular concerns at any time. That’s fair?

Kelly Tolhurst: Mm-hm, yeah.

Ms Patrick: Secondly, I just want to return, again in that general sense, to what you say about the powers and responsibilities of Government in respect of POL and I won’t take you to a document I was going to take you to, just to save time. I will give the reference, POL00259978.

It will have been very familiar to you. It’s a long also in list of PQs with your name on, where you state – most of them have answers which start with “POL is wholly owned … but POL is an independent commercial business”. That’s a line that would have been very familiar to you –

Kelly Tolhurst: Mm-hm.

Ms Patrick: – from the start of your role and it’s reflected in the evidence you’ve given to the Inquiry today about your concerns about the arm’s length role of the Post Office and the limitations and responsibilities and the ability of Government to direct.

Again, you’ve said about operational issues with Ms Price and you’ve raised that with Mr Stein.

I just want to go back to taking hindsight out of the picture, what you and other ministers would have known at the time you were in post. You’d have known that the Post Office was wholly publicly owned.

Kelly Tolhurst: Correct.

Ms Patrick: You, of course, have addressed the fact that the Government would have had that nuclear option that all shareholders have. They could have got rid of the Chair, they could have got rid of the Board at any time.

Kelly Tolhurst: Mm.

Ms Patrick: You’re nodding, I think you have to say yes.

Kelly Tolhurst: Sorry, apologies yes, yes, yes.

Ms Patrick: You’ve said repeatedly, like others have, that you would have been deeply conscious about the important role the Post Office played in the community?

Kelly Tolhurst: Mm-hm.

Ms Patrick: You would have known that the Post Office was a business with public commitments that had to be discharged –

Kelly Tolhurst: Yes.

Ms Patrick: – commitments that the Government was very conscious of. Now, you knew the Government had passed the 2011 Act and was working with a goal towards mutualisation for the Post Office. You would have known that in your role, wouldn’t you?

Kelly Tolhurst: Yes.

Ms Patrick: Now, the Inquiry has seen repeated correspondence, appointing repeated Post Office chairs, where ministers write to those chairs and set the goals they see for the business?

Kelly Tolhurst: Mm-hm, yes.

Ms Patrick: You would have known as Minister that Government was essentially setting strategic goals for the business that they were essentially working through the Chair to achieve?

Kelly Tolhurst: Yes.

Ms Patrick: You knew that the Post Office continued to lie on a really important public subsidy –

Kelly Tolhurst: Yes.

Ms Patrick: – and one of the goals was to reduce that public subsidy?

Kelly Tolhurst: Yes.

Ms Patrick: This was no ordinary, independent commercial business, was it?

Kelly Tolhurst: No.

Ms Patrick: No. So, was repeating that line, as Government often did, including in PQs, really just a convenient way to avoid the true picture, that the Government didn’t want to face up to the fact that the Post Office was a state-owned body which had, or at least potentially may have, unlawfully prosecuted hundreds of innocent men and women for years?

Kelly Tolhurst: So I – so my response would be that I don’t believe that, you know, I definitely wasn’t using it as a convenient excuse not to get involved. I fundamentally believed that I was unable to and hence why I made the comment about what I believe that really – you know, if we’re in a – if the Government are ever in a position where they own a – you know, it doesn’t work, you know. Government can’t be a shareholder of an organisation without having fully operational responsibility, as far as I’m concerned.

Ms Patrick: Can I stop you there, I’m very conscious about time and I just want to go back to that notion of the nuclear option: that the only option the Government had was that nuclear option to get rid of the Chair. That nuclear option, whether its owned by the Government or any other majority shareholder, that nuclear option gives you leverage, doesn’t it?

Kelly Tolhurst: Yeah.

Ms Patrick: You had serious concerns about the direction of litigation, you had serious concerns about Tom Cooper and about UKGI, and you say you did something about it. Now, we’ll look at that. But if you or any other minister really wanted to do something about what the Post Office was doing, whether in the litigation or in its other conduct, you really did have options short of the nuclear, didn’t you?

Kelly Tolhurst: Yes, I mean, it’s highlighted. I’ve – I have absolutely been clear about that and, you know, I – if I had, you know, I don’t – I said in – earlier on in evidence that, you know, I don’t know why – I, you know, I know there wasn’t an appetite for it. However, actually, I was someone who, you know, I – you know, I would have – I would have fronted – even if it had been the wrong decision, I would have fronted that out. And, you know, that’s one of the – I don’t know what would have happened if I had taken that decision and if it had – hadn’t have sort of been discouraged not to. I don’t know if it would have had any – an impact for the postmasters and subsequent – you know, subsequent operations.

And that’s something, you know, I can’t answer. I can only explain what I was thinking and where I was at the time. But you’re right. But, I mean, I can only speak for myself. I can’t speak for other ministers, you know. I – for me, it was definitely not an – it wasn’t an excuse not to get involved because if I had – if I felt that I had justification and evidence to back up a decision, I would have taken it.

Ms Patrick: Just to bring it back to the very simple question, you focused, in what you’ve said to Mr Stein and to the Chair and in your witness statement, about the Government being limited to that nuclear option. It wasn’t the only option Government had was it; there was leverage?

Kelly Tolhurst: Well, I think I’ve sort to explained that, you know, it was leverage, you know, I asked questions.

Ms Patrick: You did.

Kelly Tolhurst: But it wasn’t enough.

Ms Patrick: Thank you. That’s all the questions I have, Ms Tolhurst.

Sir Wyn Williams: Ms Tolhurst, just so that I’m clear about this, the so-called nuclear option, was that something which you personally could have done, if you’d thought that to be the appropriate course of action, or was that for the Secretary of State?

Kelly Tolhurst: Well, I think the – it would have been for – it would have been under a direction of the Secretary of State, Sir Wyn.

Sir Wyn Williams: Ultimately, he or she would have had to agree with that option?

Kelly Tolhurst: Yeah, absolutely, and they were the options that were presented to us. I mean, it’s my characterisation of nuclear option.

Sir Wyn Williams: No, no, I follow that –

Kelly Tolhurst: That’s my words –

Sir Wyn Williams: – I just used the phrase to identify the process.

Kelly Tolhurst: Yes, sorry, it was –

Sir Wyn Williams: All right. Thank you very much.

Is that it, Ms Price?

Ms Price: It is, sir.

Sir Wyn Williams: Well, thank you, Ms Tolhurst, for making a very detailed witness statement and for answering a good many questions this afternoon. I’m very grateful to you on behalf of the Inquiry.

The Witness: Thank you.

Sir Wyn Williams: So we’ll resume again at 9.45, I take it, tomorrow, with Mr McFadden; is that right?

Ms Price: That’s right, sir.

Sir Wyn Williams: All right. Fine.

Ms Price: Thank you.

(4.35 pm)

(The hearing adjourned until 9.45 am the following day)