18 July 2024 – Patrick McFadden and Edward Davey
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Mr Stevens: Good morning, sir. Can you see and hear us?
Sir Wyn Williams: Yes, I can. Thank you very much.
Mr Stevens: We’ll be hearing from Mr McFadden this morning.
Patrick McFadden
THE RIGHT HONOURABLE PATRICK MCFADDEN MP (sworn).
Questioned by Mr Stevens
Mr Stevens: Please could you state your full name?
Patrick McFadden: My name is Pat McFadden.
Mr Stevens: Mr McFadden, thank you first for providing a written witness statement to the Inquiry and, secondly, thank you for attending today to give oral evidence. I want to turn first to the written statement of which you should have a copy in front of you?
Patrick McFadden: I do.
Mr Stevens: For the purpose of the record the Unique Reference Number for the statement is WITN10250100.
Before we go to your signature, could we please have on screen page 6, paragraph 23. If I could ask, Mr McFadden, that you turn to that page too. In paragraph 2 you say:
“The arm’s length relationship between Government and Post Office was legislated for in the Postal Affairs Act of 2000.”
I understand you wish to change that to “Postal Services Act”.
Patrick McFadden: Yes, it should read “Postal Services Act”.
Mr Stevens: Thank you. That can come down from the screen but, Mr McFadden, if I can ask you to turn to page 26 of your statement.
Patrick McFadden: Yes.
Mr Stevens: Do you see your signature?
Patrick McFadden: I do.
Mr Stevens: It’s dated 20 June 2024?
Patrick McFadden: Correct.
Mr Stevens: Are the facts stated in that statement true to the best of your knowledge and belief?
Patrick McFadden: Yes, they are.
Mr Stevens: Thank you, Mr McFadden. That will stand as your evidence in the Inquiry. Your witness statement will be published online shortly. I am going to ask you some questions about your statement, not about all matters in it but some of most relevance.
In your statement, I should say, there are parts where you refer to written answers to questions in Parliament and discuss the accuracy of those. I am not going to explore in your evidence any matters about the accuracy of matters to said to Parliament due to Parliamentary privilege.
I want to start with your background, please. You were elected as the Member of Parliament for Wolverhampton South East in 2005?
Patrick McFadden: That’s correct.
Mr Stevens: Between 5 May 2006 and 28 June 2007, you served as a Parliamentary Secretary in the Cabinet Office?
Patrick McFadden: That’s right.
Mr Stevens: Please could you briefly summarise your role as Parliamentary Secretary in the Cabinet Office?
Patrick McFadden: The Cabinet Office is a wide-ranging department and its job description in Government changes as the years go past. So I find myself back in the Cabinet Office today, after many years away from it and it’s a very different department today to what it was then.
Back then, I was Parliamentary Under-Secretary I was sometimes referred to as a junior minister, and the Department had several special projects, as it were, at that time. One was working on what we called social exclusion, which was whether the Government of the day could have a set of policies geared towards a very small group of families who were – often had multiple problems, involved with lots of different public agencies and whether there was a more rounded package we could do, particularly to help the children in those families, but also to increase or decrease, rather, the calls on various public services to be involved with them, over the years.
It did other routine business, as it were, Cabinet committees; it’s the Department for the Civil Service; it’s really the engine room of Government that helps to coordinate the work of other departments.
Mr Stevens: In that role, did you have any role or responsibility or involvement with matters relating to Royal Mail or the Post Office?
Patrick McFadden: Not at the Cabinet Office, no.
Mr Stevens: You were appointed as the Minister of State in the Department for Business, Enterprise and Regulatory Reform on 2 July 2007?
Patrick McFadden: Yes.
Mr Stevens: That’s a role you held until the change of government in 2010, albeit the department changed.
Patrick McFadden: Yes, under slightly different names. The Department changed its name. It got slightly different responsibilities. The role evolved a bit, particularly after 2008, when Lord Mandelson was appointed the Secretary of State, because that gave us the unusual situation where the Secretary of State for the Department was not an MP but was a Member of the House of Lords. So, from that moment on, my role expanded to cover more of the different things that the Business Department was doing.
Mr Stevens: I’m going to look at those, both the change of department and your role, in a bit more detail shortly.
Before we go there, at the end of my questions I’ll be asking for your thoughts on current matters. For that reason, could you please just confirm what your current role is in Government.
Patrick McFadden: My current role is Minister for the Cabinet Office in the Cabinet.
Mr Stevens: Let’s look then at the Department. As I said, you were appointed as a Minister of State in July 2007. The Department for Business, Enterprise and Regulatory Reform was created a few days before your appointment; do you remember that?
Patrick McFadden: Yes.
Mr Stevens: Before that, the Post Office had been the responsibility within government of the Department of Trade and Industry?
Patrick McFadden: Yes, I mean, it’s to all intents and purposes the same Department but with certain added emphasis on some things. So there was an emphasis on regulatory reform but, throughout this, I think it’s fairly logical to just regard it as the same department under these different names.
Mr Stevens: Well, that was going to be my question. Are you aware of the reason for the change of name from DTI to the Department for Business, Enterprise and Regulatory Reform?
Patrick McFadden: Well, there was an emphasis on regulation. We wanted, at the time, to – there was quite a lot of debate about regulatory burdens on business, could we get, not necessarily always less regulation but more sensible regulation; a lot of emphasis on red tape, is there a way to reduce red tape for business and other organisations. So the name change was really about emphasising that in 2007.
Mr Stevens: Was there a change in the Department’s portfolio overall?
Patrick McFadden: I’m not sure. They may have taken on additional responsibilities for regulatory reform. Not as far as postal affairs matters went. That carried on from the previous DTI to the new Department, or the newly named Department.
Mr Stevens: Moving forward in the timeline, I’m just focusing on the Department at the moment, rather than your role as such. You say that the Department for Business, Enterprise and Regulatory Reform was dissolved on 5 June 2009?
Patrick McFadden: Correct.
Mr Stevens: That was replaced by the Department of Business, Innovation and Skills?
Patrick McFadden: Yes.
Mr Stevens: You were appointed as a Minister of State within that Department. Again, did the Department’s portfolio change with the name change?
Patrick McFadden: They may have taken on here some additional responsibilities for skills. This has always been something that’s a little bit unsure in government: should some things like further and higher education be the responsibility of a Department for Education or should they sit more in a Department for Business, and it has moved around a bit over the years. So what you’re saying here is really an emphasis more on skills, but I think, in my experience of being in the Department during these changes of name, perhaps the changes of name implied more change in substance than is really the case.
Mr Stevens: Final question on this: was there any change to either allocation of civil servants working on Post Office matters or their line management as a result of the name change of the Department.
Patrick McFadden: No, no. Not as far as Post Office matters went.
Mr Stevens: I want to then look at your role as Minister of State, that’s a government position below the Secretary of State; is that right?
Patrick McFadden: Yes, there are basically three grades of minister: Parliamentary Under-Secretary is the most junior minister; Minister of State is the middle ranking, if you will; and the Secretary of State is the most senior minister, who’s a Cabinet Minister.
Mr Stevens: So you were sat in that middle rank, as you say?
Patrick McFadden: Yes, correct.
Mr Stevens: What was your relationship like with the Secretary of State, in terms of the division of responsibility when you joined as Minister of State at the start, leaving the change to Lord Mandelson aside at this point?
Patrick McFadden: Sure, so the first Secretary of State that I worked for in the Department was John Hutton. The Secretary of State is responsible overall for everything a department does. The DTI that then became the Business and Regulatory Reform Department, it does a whole range of things. So the Secretary of State would have oversight, for example, over relations with key industrial sectors and the automotive sector, the airspace sector, and so on.
There was a lot of European work in the Department at that time. We were members of the European Union at the time and there were what they called, in the EU, these dossiers which would – had to have a home department in the UK system. So I and the Secretary of State spent a fair bit of our time in Brussels or in Luxembourg negotiating the UK position on these dossiers around things like Working Time Directive, Agency Workers Directive, other things that were relevant to the UK economy.
Really, anything across the business economic environment, other than Treasury matters and things like setting the budget, and so on. We didn’t have anything to do with that.
So the Secretary of State, when you’re a Minister of State, is your boss and what will happen is, beneath the Secretary of State, there will be two or three other ministers who will have a particular focus on different aspects of the Department.
Mr Stevens: During your time as Minister of State, to what extent, if at all, did you discuss Post Office matters with the Secretary of State?
Patrick McFadden: Well, in the early part of my tenure as the Minister, the big Post Office issue, the most dominant Post Office issue, was around a closure programme called the Network Change Programme, and it had been decided before I became a Minister in the Department but it was being implemented while I was a Minister. So that would have been the issue that I would have discussed with the Secretary of State, most of all regarding postal affairs matter. It was very politically contentious. We were closing 2,500 post offices out of a total network of roughly 14,000.
It had been agreed with the Post Office but agreement in principle and in policy is quite different from implementation in practice. So I certainly discussed that programme with the Secretary of State in the first 15 months or so of my tenure as a minister, and it was that programme which consumed, if you like, a lot of the political attention and energy of the Department in regards to postal affairs.
To give you an example, if a post office in a particular area had been selected for closure, very often there would be – there might be a petition against that; there might be a Parliamentary debate about the impact of that closure on the local community; there might be questions about it in Parliament. It was quite hot, politically, that programme and, in terms of the postal affairs part of my brief, it was very much the dominant issue for about the first 15 months or so that I was there.
Mr Stevens: In the case you’ve just mentioned there, of where an individual post office was raised for closure as part of the closure programme, to what extent would the Department become involved with the underlying decision as to whether that post office should or should not be closed?
Patrick McFadden: They wouldn’t, and I do cover this in the written statement. Where the Department was involved was in agreeing with the Post Office what the size of the network should be in the future, and the idea behind the closure programme was that the network needed to reduce in size from 14,000 down to about 11,500. So it was losing somewhere between one in six and one in seven branches across the country.
That’s agreed as a policy, as a strategic objective, the reason being that the ministers previous to me, and the Post Office Management themselves, thought the network had to be smaller to ensure its future financial viability as a whole but, when it came to selecting which of the 14,000 branches should close, I played no part in that. That was decided through this programme of local area reviews that were carried out by the Post Office themselves.
That doesn’t mean MPs aren’t going to raise it in Parliament because, of course, it affects their local community but, in terms of the decision making, I didn’t sit with a map saying “We’re going to close this branch and keep that one open”. That was all a decision for the Post Office.
Mr Stevens: So going back to – because you said earlier about questions being raised in Parliament, if it was raised, would your response be “It’s a matter for Post Office” –
Patrick McFadden: Yes, it would. Certainly in terms of an individual branch. I did lots of debates on this and the position would be that the MP might be raising a particular branch in the area and I would always have to make clear in the debate, “I play no role in deciding which branch stays open or which branch stays closed, this is an operational matter for the Post Office”, and there were some reasons for that, not just the legislative basis of the Postal Services Act but also the way that they decided do this closure programme wasn’t just to ask for volunteers.
Mr Stevens: If I can just stop you there, I’m exploring the decision on operation versus policy?
Patrick McFadden: Okay.
Mr Stevens: The underlying decision doesn’t form part of the terms of reference, so I’m just going to pause you there and move on.
Patrick McFadden: Okay.
Mr Stevens: The last question on discussions with the Secretary of State, you mentioned focusing on the closure programme. To the best of your recollection, did you have a conversation with the Secretary of State at any point regarding the allegations made by subpostmasters as to the integrity of the Horizon IT system?
Patrick McFadden: I don’t believe so.
Mr Stevens: Please –
Sir Wyn Williams: Can I just ask you, Mr McFadden, really out of general interest. I think you said Mr Hutton was the first Secretary of State that you serve under. Did Lord Mandelson follow him?
Patrick McFadden: Yes, he did.
Sir Wyn Williams: Was there anyone after Lord Mandelson while you were Minister of State?
Patrick McFadden: No.
Sir Wyn Williams: So it was just those two?
Patrick McFadden: They were the two Secretary of State’s over the roughly three-year period that I was in the Department.
Sir Wyn Williams: Thank you very much.
Sorry, Mr Stevens.
Mr Stevens: Not at all, sir.
Please could we bring up page 3, paragraph 9 of the witness statement. You’re referring in paragraph 9 to your appointment as Minister of State and, as you said in your evidence earlier, Minister of States having a particular portfolio, which was their area of emphasis. You say:
“As Minister, my responsibilities included leading on any legislation connected with employment relations or postal affairs, meeting with external stakeholders, and being made ministerial point of contact for the civil servants covering these areas in the Department.”
So in terms of subject areas, we have employment rights and postal affairs; those were your two areas, were they?
Patrick McFadden: Yes, that’s right.
Mr Stevens: If we turn to page 4, paragraph 16 of your statement. You say:
“Issues in the employment relations area of my portfolio included legislation going through Parliament to improve employment rights.”
In terms of the balance between postal affairs and employment rights in your portfolio, how much time did each take up?
Patrick McFadden: That’s a good question. They were – if we were looking at particularly this first period, I almost see this as two halves, the first period being dominated by the Post Office closure programme. That took up a lot of time. On the employment relations side, also quite a lot because we did have legislation and we had a lot of European work concerning that portfolio. There were other things I would be doing, as well, that aren’t covered in the title, just because the Department covered quite a lot of areas, so it’s difficult to put a percentage on it.
I’m going to do this very roughly just to give you an idea but it won’t be exact. I would say, maybe on Post Office matters in this first 15-month period, maybe a third to 40 per cent of the time; roughly similar for employment relations; and maybe the remaining 20 per cent of the time on other things not covered by that title.
That changes in the second half of the period when I’m acting as the lead spokesperson for the Department across everything in the House of Commons and, probably in the second half, postal affairs issues are a smaller part of the overall work. But in the first part of it, particularly because of that closure programme, it’s a very significant part of what I’m doing.
Mr Stevens: At the time, looking at the first part, did you feel you had sufficient time as a minister to deal with all those areas of your portfolio?
Patrick McFadden: I don’t think any minister ever feels they have sufficient time. I think the reality is ministers deal with a large volume of paperwork, a large volume of advice. They have a lot of meetings about things, either internal meetings or external meetings. It always feels quite time pressured but that’s what ministers have to do. That’s their job.
Mr Stevens: The second time period, you have already referred to when Lord Mandelson became Secretary of State, and you say in your statement – and you’ve said in your evidence today – that, because Lord Mandelson was a peer, he could not appear in the House of Commons?
Patrick McFadden: That’s correct.
Mr Stevens: So you, as Minister of State, had to deal with a wider range of issues in the House of Commons?
Patrick McFadden: That’s correct.
Mr Stevens: Was it limited to simply having to answer more questions in the House of Commons when Lord Mandelson took over or did your decision-making or policy-making role also expand?
Patrick McFadden: I was involved in a lot more things. On the postal and Royal Mail side, in this second half of my period in the Department, the focus was a lot more on Royal Mail. There was – we had commissioned the Hooper Review to look into the future of Royal Mail, which we may come on to, and that too proved controversial in a different way from the Post Office closure programme but we were also entering the period now where the country was being hit by the great financial crash and there were a lot of businesses seeking help from the Department.
There were big negotiations going on about the future of the car industry in the UK and the breadth of what we were dealing and the intensity increased in that second half of the period in which I was in office, which I would date from roughly October 2008 until leaving the Department at the 2010 election.
So it got busier, it got more intense and things got broader, partly because of the great financial crash, which closed a lot of industrial problems which came to the Department’s door.
Mr Stevens: As your portfolio or your area of work got busier, how did you satisfy yourself that the Post Office was being effectively managed?
Patrick McFadden: Well, on Post Office matters, things seemed to calm down towards the end of the closure programme because, although it had been very difficult to implement that programme, it had been quite understandably controversial in the country. We had an Opposition Day Debate at some point during the closure programme where, even though the Government of the day had a majority of 60-odd seats, I believe we came within something like ten votes of losing the vote, and this was in the days when Opposition Day Debates were taken seriously and the votes mattered. In recent years, Parliament has taken a bit of a different view on that.
I remember for the Secretary of State – that was John Hutton who was the Secretary of State at that time – and I that was quite a serious moment. This programme was in real trouble. But, by the time we get to towards the end of 2008, on the postal side things seemed to have calmed down because the programme, however controversial, has now been implemented. The branches have been closed, the network has been reduced in size. But things don’t stay quiet for long because we then enter the period where we are proposing legislation based on the Hooper Review to try to get a private sector investor into Royal Mail.
And, as I said a few moments ago, this is controversial in a very different way because the idea of a Labour Government, in particular, trying to invite a private sector investor, even on a minority stake, into a big nationalised industry like Royal Mail proved very controversial, there was a lot of opposition to it on our own side and, in the end, the legislation didn’t complete its passage through Parliament.
Mr Stevens: You referred throughout your evidence to some what I call big ticket items: the Network Closure Programme, the potential sale of Royal Mail. In terms of overseeing how the Post Office was running as an arm’s-length body, to what extent were you reliant on civil servants?
Patrick McFadden: Oh, enormously. The big strategic five-year programme for the Post Office was really centred on this Network Change Programme. The idea was to reduce it in size, to make it more financially viable and, alongside that, there was this constant discussion of, and search for, streams of business for the Post Office because life was changing, we were getting more into the Internet age, there was, for example – and I refer to this in my statement – a lot of controversy over something called the Post Office Card Account, which was the mechanism whereby people would pick up pensions or benefits from the Post Office.
Now, if we fast forward to today, they’re nearly all paid directly into a bank account; back then, this was controversial. The Post Office wanted to keep the business for people to pick up their pension. So we’d be involved in a question like that but, overall, we were trying to get the network on an even keel financially and get it fit for the future and constantly searching for new streams of business that we could help the Post Office with.
Mr Stevens: I want to look at some of the structures in the Civil Service that were available to you, starting with the Permanent Secretary in the Department. So the Permanent Secretary is the most senior civil servant within a government department?
Patrick McFadden: That’s correct.
Mr Stevens: They are responsible and accountable for the day-to-day management of the Department?
Patrick McFadden: They are.
Mr Stevens: I think, whilst you were Minister of State, the Permanent Secretaries to the Departments were Sir Brian Bender and Sir Simon Fraser.
Patrick McFadden: That’s right.
Mr Stevens: To what extent, if at all, were the Permanent Secretaries involved in discussing matters relating to the Post Office with you?
Patrick McFadden: Not very much. Barely at all, I would say.
Mr Stevens: When I say the Permanent Secretary, does that involve the second Permanent Secretary as well?
Patrick McFadden: Yes, the people – the officials that I would discuss Post Office matters with, in my time, were those based in the Shareholder Executive.
Mr Stevens: That’s where I want to come now, the Shareholder Executive. The Inquiry has heard evidence from various officials from the Shareholder Executive. At the time, what was your view or understanding of the Shareholder Executive’s role in respect of the Post Office?
Patrick McFadden: Well, they were the people who were, if you like, the departmental experts. If I had a meeting with Post Office Management, which I did from time to time, they would be the people who would prepare the briefing and say this is roughly what’s going to be discussed, or what we should expect, or this is what’s going on.
Mr Stevens: Can I just pause there. So they prepared the briefing?
Patrick McFadden: Yes.
Mr Stevens: Would that come directly to you?
Patrick McFadden: It would go through my private office. To explain, every minister has a private office of – it could be something like five or six civil servants, or thereabouts, and their job is to process and funnel all the paperwork coming in to a minister to sort it. You’ll have heard about ministers’ red boxes, and so on. They would sort the material you would read in your box, which you get most evenings. So briefings, correspondence, things like that, would all be funnelled through the private office.
So for something like a meeting that you’re talking about, a briefing would be written by the Shareholder Executive. It would go through the private office and eventually make its way to me.
Mr Stevens: So I’m going to look at the private office in more detail shortly but, to the best of your understanding, someone in the Shareholder Executive writes the briefing, and when you say it goes through the private office, is that simply a case of – if it had been printed off – receiving it, putting it in the right box to get it to you or was there someone in the private office who would analyse, amend or change anything in the briefing?
Patrick McFadden: They could. They could add additional advice. It’s not simply, you know, taking it with this hand and giving it to you with the other hand. They might put a cover note on, for example, and say, “This is what this is about”, and give you additional advice. That is what your private office is there to do.
Mr Stevens: Who in the private office would do that?
Patrick McFadden: Well, I had a couple of private secretaries in my time as a minister, Robert Porteous and Kate Hall were the two main private secretaries I had.
Mr Stevens: Would Special Advisers ever be involved in that work?
Patrick McFadden: Yes, they might be, Special Advisers are temporary civil servants who are allowed to operate in a more political way than the career Civil Service and, unlike the career Civil Service, they’re very attached to a single minister, so that if you lose your job as a result of a general election or a reshuffle, where the Prime Minister no longer requires your services, the Special Adviser is effectively tied to you and would lose their job as well.
The career civil servants are, of course, not like that. They are permanent and their career, their position, their advancement, all of that, is not dependent on the individual minister and that’s a core part of how our Civil Service works.
Mr Stevens: So the briefing comes in from the Shareholder Executive into the private office, it may or may not have input from a private secretary?
Patrick McFadden: Yes.
Mr Stevens: It may or may not have input from a Special Adviser?
Patrick McFadden: Yes.
Mr Stevens: Are there any other policy officials or civil servants who may have input into the briefing before it reaches you as Minister of State?
Patrick McFadden: No, not normally.
Mr Stevens: I interrupted you because my question before we took all that on was what your view was at the time of the role of Shareholder Executive?
Patrick McFadden: Right. So, the Shareholder Executive at the time was the body that held or, in effect, stewarded Government shares in a whole range of organisations. Now, from memory, in my time in the Department, the Shareholder Executive was looking after things like Channel 4, the Nuclear Decommissioning Authority, The Met Office, a whole range of organisations. But one of those was Royal Mail and Post Office beneath Royal Mail.
So they were the people who were charged with day-to-day liaison with the company. They were the people who would – as I said, if I was having a meeting with the Royal Mail Chief Executive or the Managing Director of the Post Office, there would be somebody from the Shareholder Executive who was there as the Departmental person for that policy area.
Mr Stevens: So you mentioned the role in overseeing the business. What was your view of the Shareholder Executive’s role in terms of policy, Government policy?
Patrick McFadden: I mean, I thought they – I had no complaints about how they were doing their job, how they were dealing with me. I had a good working relationship with them. I just viewed them as part of the fabric of how we worked.
Mr Stevens: Was your relationship – or working relationship, I should say, sorry – with the officials in the Shareholder Executive different to other policy officials who were based just within the Department?
Patrick McFadden: The Shareholder Executive was a little bit different in that it probably had a more business focus because they were dealing with these organisations that I’ve mentioned, that were usually in some ways standalone organisations. And if you compare that to the other side of my portfolio, the employment relations side, it would have been more direct there because we had legislation, for example, to improve employment rights during the time I was a minister, we changed the way the minimum wage worked a bit. That was a more traditional government department policy function: you write a White Paper, you consult on the White Paper, you then write a bill, the Minister takes the Bill through all its governmental – all its Parliamentary stages and you have an Act at the end of it.
With the Shareholder Executive, it’s a bit different because they are sort of managing the public shares in these different organisations that are state-owned but they’re not state run on a day-to-day basis and, in the case of both Royal Mail and the Post Office, we have the Postal Services Act, which we referred to at the beginning of our discussion, and that sets up in legislation that these organisations are to be run by their own management. They are state owned but they’re not state run on a day-to-day basis. They’re run on a day-to-day basis by the management appointed to do that job.
Mr Stevens: Were you more deferential towards advice given by Shareholder Executive than you would have been to a civil servant based solely within the Department?
Patrick McFadden: No.
Mr Stevens: Why not?
Patrick McFadden: Well, I don’t know why I would be more deferential.
Mr Stevens: Well, for the reasons you said about being more business oriented and involved in day-to-day management of a company, slightly different from –
Patrick McFadden: No, I don’t think I was any more deferential as a result of that. I’m just sort of pointing out there was a – they had a slightly different focus in that unit, if you like. It later became UK Government Investments, I think, and changed its name and changed its home. But in my day in the Department, it was based in the Department of Business.
Mr Stevens: I want to look, then, at the private office. You’ve covered this already, slightly. There were private secretaries, obviously, in your office. You’ve referred to one who appears in the paper, Robert Porteous. Did individual private secretaries have, I suppose, portfolios themselves for the types of issues they would deal with for you as Minister?
Patrick McFadden: Perhaps in a Secretary of State’s office, but in a Minister of State’s office or a Parliamentary Under-Secretary’s office, the private office will be smaller and they’ll have to cover lots more things across the board. So I don’t think, for example, I had a special private secretary just dealing with postal matters. They dealt with everything which came in.
Mr Stevens: What was the level of seniority of civil servants who took on the role of private secretary?
Patrick McFadden: Oh, now, they have these grades and I’m not 100 per cent sure if this is accurate but, from memory, I think they were either Grade 7 civil servants or Grade 5, which is Senior Civil Service but not absolute top level.
Mr Stevens: As Minister, would you have been aware of the training they were to receive on how to carry out the role of Private Secretary?
Patrick McFadden: No, no.
Mr Stevens: At any point, in respect of Post Office matters, were you unsatisfied with the Private Secretaries within your office?
Patrick McFadden: No. I had a good relationship with my private office. A Minister is very, very reliant on their private office because they are managing a very busy diary, they’re managing a very busy paper flow. They are the first people you look to, to say what is this meeting about? What’s the agenda here? They are the people who – they are an absolutely indispensable part of how a minister functions.
Mr Stevens: To what extent did your Private Secretaries have any involvement with policy or decision making?
Patrick McFadden: They didn’t, really. They will give you a bit of advice but they’re not really policy advisers, you know. The policy advice was coming from ShEx, not really the private office.
Mr Stevens: Please could we bring up your witness statement, page 10, paragraph 36. I’m going to go through some of these paragraphs in your statement. It may be, in the course of my questions, then, you’ve covered some of this, but we well take it stage by stage.
Patrick McFadden: Okay.
Mr Stevens: You say:
“My common practice at the time I served at the Department, and which I expect was broadly typical for ministers generally …”
When you say you expect that was broadly typical of ministers generally, where did that expectation come from?
Patrick McFadden: Just in my experience this is roughly how ministers work. By that phrase, I mean, I think this was the Whitehall practice of how Ministers worked. There might be the odd one, that I don’t know about, that has a very different way of working but I think this is generally true.
Mr Stevens: That remains true to this day, as in you would expect that still to be the case?
Patrick McFadden: Well, I’ve only been back in office for less than two weeks, so I’m not 100 per cent sure and a lot can change in 14 years, so I don’t quite know yet. But my early experience of being back in office is still that the private office is absolutely critical to how you function as a minister.
Mr Stevens: So your common practice:
“… was that correspondence and documentation sent to the Department for my attention would be received by my private office. My private secretaries would review the documentation and apply their judgement as to how that documentation should be directed. The document may be referred elsewhere; for example, the correspondence sent in November 2009 to Lord Mandelson’s office …”
I’m going to turn to that but, at this stage, you’re talking about where does it go: does this correspondence sit with you or does it sit with another member of Government, basically?
Patrick McFadden: Yes, so if you take correspondence, a minister doesn’t see correspondence when it arrives at the Department. The first port of call is not to say, “Here are these letters from whoever it is for your attention”. That’s not how it works. What will happen is someone else could be the private office, could be some other official whose advice is needed, will look at that correspondence and will make a decision as to what needs to be done in order to get a response to this from the Minister, and the only time the Minister gets to see it is when all of that work has been completed and they will get the correspondence usually in their red box with the original letter from the MP, or whoever has written, underneath it, there might be an advice note, very often there isn’t. But there is a reply that has been drafted for the Minister’s signature attached to it, and you might have quite a large number of those on lots of different subjects in your box of a given evening.
And it’s important, this, because you have to be in a position to trust the work that has been done in framing that reply. It is not – I don’t want people to have the impression that, when letters come in to a Department, the first port of call is the Minister who is sitting deciding how will this be handled. The Minister is the end of the chain, not the beginning of the chain, when the reply will eventually be sent.
Mr Stevens: You give us a bit more information on the chain, as you’ve described. You say, paragraph 37:
“If a document or piece of correspondence was to be dealt with by my office then, depending on the nature and complexity of the issue, it may be addressed directly by my private secretaries, referred to officials for analysis and advice …”
Now, pausing there: on Post Office matters, would that be Shareholder Executive?
Patrick McFadden: Yes.
Mr Stevens: “… or referred directly to me.”
Patrick McFadden: Yeah.
Mr Stevens: So what type of correspondence would be addressed directly by your private secretaries?
Patrick McFadden: That would be very rare, it might be something personal, where they think this is really – you know, this doesn’t look very departmental. This is somebody who I think you might know or, you know, it’s not really a Departmental thing. In anything to do with Departmental responsibility, there’s some process involving the private office and the relevant officials and, in the case of, very importantly, of matters relating to the Post Office, the Post Office itself, to frame the reply.
And again, this is important, if I may: that with regard to Post Office matters, particularly because of the way the Postal Services Act has been constructed, because of this arms-length relationship where the Post Office Management is responsible for running the business on a day-to-day level, the Department had no role in running the business on a day-to-day level. So if anything came in that was to do with an individual subpostmaster or something concerning the day-to-day running of the Post Office, the only way to get the information was to go to the Post Office.
The Department would have held no information about individual subpostmasters or anything of that nature and so whether the reply is coming from the Post Office to the relevant MP, as some of the ones that we will discuss did, or whether it’s signed by me, the source of information is almost always going to be the Post Office itself.
Mr Stevens: So is it fair to summarise it like this, because we’ll look at the correspondence as we go, but of the letters you’ve seen where Horizon issues are raised, your expectation would be, if a letter like that came in, it wouldn’t be dealt with by a private secretary?
Patrick McFadden: No. Not in any substantive – well, the Private Secretary might ask the Shareholder Executive. They might say, “We’ve had this letter, can you help us with the reply?”
The Shareholder Executive may be able to do that, and may then go to the Post Office, if they didn’t have the information. So the Private Secretary is involved, but they are probably not alone in the process. There’s somebody else, either officials in the Department or the Post Office, who are helping them frame either a reply or advice to me.
Mr Stevens: So the expectation is go to Shareholder Executive if information is needed, the Shareholder Executive needs to go to Post Office for information and then it comes to you with, I think you said, a draft response, possibly a written advice note, as well?
Patrick McFadden: That’s correct or, in the case of some of the correspondence that we are going to discuss, quite often a reply directly from the Post Office itself to the relevant MP because the Department has judged that this is an operational matter for the Post Office. They’ve got the information here, so they should write to the MP. That happened quite often.
Mr Stevens: If you had a draft letter without an advice note, it was just “Here’s the letter that’s come into the Department, here’s a draft”, when you’re there going through your red box, did you know who drafted the letter, where the input had come from or would you be reliant on what’s recorded on the face of the letter?
Patrick McFadden: You’re very reliant on what’s recorded on the face of the letter. You’re trusting that the work has been done to make sure that the information in that letter is accurate.
Mr Stevens: I’ll ask you this question now because I was going to come to it later but you’ve referred a few times to the importance of trusting what the civil servants say, et cetera. What position would Government be in if you didn’t have that level of trust in the Civil Service?
Patrick McFadden: Well, I think it’s very difficult and, of course, it’s relevant to this issue because at the heart of this issue is that, in the process that I’ve been describing involving a private office, Shareholder Executive, the Post Office itself, the information turns out to have been wrong with terrible human consequences for some of the people who are here and, obviously, what you’re going to try to get to the heart of is how did it go wrong, who was responsible for that and why was it allowed to be perpetuated in that way for such a long period of time?
And in the discussion that we’ve had for the last ten minutes or so, what I’m trying to illustrate is there are different layers involved in this. To put together a reply to a letter, there will be people, not just the senior management of the Post Office but layers down from them, who really have the information; you’ve got the Post Office Management themselves; you’ve then got of the Shareholder Executive; you’ve got the Government Department; and then you’ve got a Minister sometimes at the end of that chain. And the Minister is very reliant on those other layers having told the truth about the information that’s put in front of them to sign in a red box, whenever they’re doing the red box.
And the feature of the Horizon correspondence – and not just the Horizon correspondence but probably other things to do with an individual sub post office, say it was nothing to do with Horizon but some other contractual issue or dispute, the Department, and me as the Minister, we’ve got no independent information about that, other than in the Post Office and, most of the time, queries about those kind of things are answered directly by the Post Office themselves.
That’s why you get this pattern: I’ve asked the Managing Director of the Post Office to reply directly to whoever the MP is who’s raising it because they’ve got the information and they run the business, and that is set down in legislation, that separation.
Mr Stevens: So my question was: the reliance you place on the Civil Service and the process you described, if you weren’t to rely on the civil servants like that, what effect would that have on the business of Government?
Patrick McFadden: Well, it would be very difficult. How can government operate, how can ministers operate, if they couldn’t trust what they were being told? You could perhaps envisage a world where everything is not trusted and pretty soon you can see it’s very difficult to operate government on that basis.
So trust in what you’re being told is at the heart of how this works, how this system works – how it should work.
Mr Stevens: I want to look at the Government’s interest in the Post Office. Can we look at page 25, paragraph 101 of your statement, please. You’re discussing recommendations and you say:
“The question is how an arm’s-length body like [Post Office Limited] can be held accountable for its actions. The Government is the 100% shareholder. Ministers do not run the Post Office but Ministers answer questions about it in Parliament and are responsible for reporting to Parliament on matters concerned with the Post Office.”
Where does ultimate accountability for the actions of an arm’s-length body, such as the Post Office, that’s owned by the Government, lie?
Patrick McFadden: I have thought about this a lot because of this issue and this whole question of the arm’s-length relationship and what happens when that goes wrong and what you can do about it and, at the end of the statement here, we’re dealing with almost thinking about the future: what could you do to stop something like this happening again? If it’s state owned, ultimately the accountability will lie with the Government because it’s state owned. But I do want to stress that the legislation that had been passed in the Postal Services Act had deliberately created this separation.
If you look at what the Secretary of State who brought forward the legislation said at the time – and this was five or six years before I became the Minister – they were very clear that the purpose of the legislation was, if you like, to get the Minister out of the hair of running these organisations – this organisation on a day-to-day basis. It would have commercial freedom, it would be able to make its own decisions, it would have its own management and they would be charged with the responsible of running the business.
That was the case for many years. I imagine – I don’t know what current ministers have said to you about their relationship today but I imagine, even today, even after this, it is similar today. But when something is publicly owned, of course, in the end, people well look to the state, even if the state is not – the ministers who speak for the Government are not running the business on a day-to-day basis.
Mr Stevens: I want to explore the operational decisions and the strategic or policy one sand that separation. You have already referred to, I think, the example you gave of the closure programme and I think you made the distinction of, on the one hand, the Government saying “Close X number of post offices”, and you say that’s a policy or a strategic decision, but the actual getting the map out, as you say, and pointing to which ones are closing, that’s the operational decision.
Patrick McFadden: That’s right. And any dispute around that, for example, if you’re closing post offices, there will be campaigns, and there were a lot of campaigns, you know, “Save Post Office X”. If Post Office X – one of the frustrating things about the programme and the way it worked, because they had this target of reducing by 2,500, if Post Office X was saved, they decided to close Post Office Y. But I played no part in that decision.
Mr Stevens: Yes, I’m just using that to illustrate the example. I suppose this comes to – would you agree that Government policy was that the Post Office had a social role maintaining branches nationally, including in remote and rural locations?
Patrick McFadden: Yes. Yes, I would, and I refer to that in my statement, and that social role made the Post Office different in character from Royal Mail.
Mr Stevens: So, with that, maintaining that social role and maintaining branches in rural and remote locations, in terms of delivering that policy objective, subpostmasters, counter assistants and Post Office employees played an important role?
Patrick McFadden: Yes, absolutely.
Mr Stevens: So would you agree that the treatment of those persons, namely subpostmasters, counter assistants and Post Office employees, the treatment of them was directly relevant to a key Government policy objective?
Patrick McFadden: Yes. They played a very important role and that is why, in this closure programme, there were these access criteria where – I haven’t got it all in front of me but it’s all about 90-odd per cent of the population must live within a certain distance from a post office, you know, there was particular care taken, if it’s – you know, the post office is the only one in a village or a town, you don’t want to leave a desert where there’s no access to postal services.
There was a thing called outreach services, where subpostmasters were encouraged to – if they were in charge of a post office in one area, they were encouraged and there was a contract where they would maybe go to the neighbouring village or town for an afternoon or a day a week and provide a service in a church hall or something like that.
So this social element was part of the character – it is part of the character of the Post Office.
Mr Stevens: The Government, through Shareholder Executive, had a role in monitoring the performance of the Post Office in delivering on those policy objectives?
Patrick McFadden: Yes, they had a role in the five-year plan being implemented, and that was this £1.7 billion investment over five years with the reduction in the size of the network and the kinds of innovations that I’ve been talking about.
Mr Stevens: So would you agree that the manner in which an arm’s-length body like Post Office, the manner in which it operates, can cause concern for the Government at a policy level?
Patrick McFadden: Yes, it can. I think that’s fair.
Mr Stevens: Would you accept that the bright line distinction between operations, on the one hand, and strategy, on the other, can become quite blurred?
Patrick McFadden: Well, I’m not sure and I can sort of – I think I can maybe see where you’re sort of driving at with the line of questioning. So what did the Department see its role as? As I said, before I got there, there was this agreement between the Department and the Post Office, and the National Federation of SubPostmasters, who were, I think, broadly in agreement with this, to reduce the size of the network. There’s a financial sum to help with that. There was a subsidy level at policy level of about £150 million a year to directly support that social element that we are talking about because the Post Office at this time was not a profit-making organisation, it was losing money.
But, in fact, I believe, as I was told, if it was run purely as a commercial organisation, instead of 14,000 branches, there would have been about 4,000 in the country. So the Government didn’t want to see 10,000 post office closures.
Those are the policy levels but when it comes to the individual contract between a subpostmaster and the Post Office, that isn’t something the Government would have got involved in.
Mr Stevens: When we had witnesses from Shareholder Executive come and discuss the arm’s-length body, they made the point that the length of the Government’s arms can shorten at some points in comparison to much influence it has over operational decisions; would you broadly agree with that?
Patrick McFadden: I’ve not watched all the previous witnesses. You know, I do think the Government had a role in making sure that social element of the Post Office Network was there, and the way that they implemented that objective was by subsidising the network to make sure it would be a lot bigger than would have been the case, if it had just been run like a bank.
Mr Stevens: Let me put the question in another way. Do you think it was a policy objective of the Government to see that subpostmasters involved in the delivery of, as you say, this social purpose, was it a policy objective of Government for subpostmasters and Post Office staff to be treated fairly by the Post Office?
Patrick McFadden: Well, we wouldn’t have been drawn into contractual disputes between individual subpostmasters and the Post Office. I think that would have been viewed as an operational matter for the Post Office and certainly, in my time as minister, whether it was on the Horizon disputes or – sometimes there were other disputes about what a post office could sell and things like that. These were dealt with by the Post Office themselves.
Mr Stevens: What about a company owned by the Government who prosecuted its employees or agents? Would you say it’s a policy objective of the Government to see that its asset prosecuted fairly and lawfully?
Patrick McFadden: We took no part in the decision to prosecute.
Mr Stevens: It’s a slightly different question. The question I have is: as a minister or as the Government, was there a policy objective in seeing that a company it owned prosecuted fairly and lawfully?
Patrick McFadden: I don’t remember that ever being discussed in that way. If – ministers are very reluctant, for understandable constitutional reasons, to intervene in prosecutions and, once court judgments are cited, all the ministerial learning you have is not to interfere with the courts. This separation of powers is well understood in the British constitution. If ministers do start questioning court verdicts, they are very quickly criticised for intervening or trying to interfere in the court process. So I think there would have been great reluctance to consider prosecutions or the outcome as a policy question.
Mr Stevens: Imagine we put to one side past prosecutions where they are past convictions and it’s a Government asset that has a plan to prosecute in future: did the Government have any policy objective in terms of how its own assets prosecuted its staff?
Patrick McFadden: I was never involved in a discussion like that about the basis for which anyone should be prosecuted.
Sir Wyn Williams: I understand that that might be the case, Mr McFadden, but I think what Mr Stevens is driving at is this: the owner of the company might be thought – let’s choose my words as neutrally as possible – to have an interest in a very unusual situation. It’s not usual for a company to prosecute either agents or its employees. That’s normally done through the Crown Prosecution Service.
So I think what Mr Stevens is trying to get to is whether the owner of such a company, which is engaged in private prosecutions, feels any responsibility, or should feel any responsibility, to ensure that the prosecution is conducted lawfully and in accordance with proper practice?
Patrick McFadden: Well, I mean, my view of that is that, if Ministers see reference to prosecutions or convictions in correspondence, they will assume that the court has reached its verdict correctly because, as I said to Mr Stevens a moment ago, Sir Wyn, you know, we are all told not to intervene or interfere in court judgments.
In my period as a minister, I never remember a discussion. It may be you, you know, you’d think this isn’t right but I never remember a discussion about the prosecutions taking place at a Departmental level.
Sir Wyn Williams: All right.
Back to you, Mr Stevens.
Mr Stevens: I might just explore that further, sir.
The Chair asked or referred to imagine a private company and the owner of a private company, if the private company bought a prosecution, do you think the owner of the company has any interest in how that prosecution is conducted?
Patrick McFadden: The standard of evidence in a private prosecution is supposed to be – supposed to be – the same, and the standard of proof is supposed the same, as in, if you like, a prosecution pursued by the CPS. That’s my understanding of it. So I’m not sure if they would.
Mr Stevens: So when you say the standard, are you saying, effectively, that it’s for the criminal court; I think that’s what you’re saying?
Patrick McFadden: Yeah, it’s for the court to judge and ministers will always be very reluctant to intervene in decisions about prosecutions because they’ll see that as being a matter for the judicial system and not a policy matter.
Mr Stevens: Sir, unless you have any questions, I think that’s an appropriate time to take our morning break.
Sir Wyn Williams: That’s fine. What time shall we resume?
Mr Stevens: If we could say 11.25 past, I think, sir. That would be helpful.
Sir Wyn Williams: That’s fine.
(11.13 am)
(A short break)
(11.25 am)
Mr Stevens: Sir, can you continue to see and hear us?
Sir Wyn Williams: Yes, I can, thank you.
Mr Stevens: Thank you, I’ll continue.
Mr McFadden, I said I was going to turn to the letters now, there was one more question I was going to ask and that is, at the time you were Minister, and we’ve talked about operational decisions and how that was to be left to Post Office in your view, if you wanted to become involved in an operational decision, for whatever reason, what, if any, power, did you think you had as a Minister to influence or change such decisions made by Post Office?
Patrick McFadden: I believe at the time I would have considered it improper to become involved in an operational decision to that degree, about, say, an individual contract or Post Office branch, or something like that. We might have had correspondence about them and, you know, passed that to a Post Office in the normal way but it was quite well established, this division between operational and, if you like, overall strategic policy responsibility.
I don’t want to detain you because I know you want to go into the correspondence but, if I can use the example of Royal Mail, which was more prominent in the second half of my tenure, we had a lot of policy responsibility on Royal Mail because it was being very challenged by technology and people weren’t sending letters, and it was changing its nature. There was a lot of industrial disputes, and so on, but, even then, we didn’t get involved in the day-to-day running of Royal Mail.
Mr Stevens: Let’s look at the letters then, please.
Patrick McFadden: Okay.
Mr Stevens: It’s WITN10250102, please. This a letter from Jacqui Smith MP, who I believe then was Home Secretary; is that right?
Patrick McFadden: She might have been Home Secretary or Chief Whip, I’m not sure but she might have been.
Mr Stevens: It’s addressed to you, 9 January 2009. It refers to Mr Julian Wilson, sets out the issues that he was reporting in respect of discrepancies, and the third paragraph says:
“He has heard of three other postmasters in exactly the same position as him within a six-mile radius of Redditch. He states that there are others that he knows of in the West Midlands area. I feel that there could be a system problem here.
“I would be grateful if you could investigate this issue and provide a response for my constituent on this issue.”
Now, I’m going to ask you some questions about that letter but, given the process that you’ve described, a letter comes in and then there’s a process, it goes out, I’m going to have on screen as well your response of 9 February, which is WITN10250103.
Thank you. So we see that’s the letter from you, your signature has been redacted, but it’s to Jacqui Smith. Now, do you have any recollection of what you thought when you read this letter and the fact that Jacqui Smith was raising what she said could be a system problem here?
Patrick McFadden: No specific recollection of the letter. When I look at the letter and the reply, the way I believe this will have been dealt with is information has been obtained about it from Post Office Limited. For example, if you look at the reply from me in the third paragraph, it says:
“I understand that Glenn Chester of [Post Office Limited] has written to you regarding the investigations at the Astwood Bank branch.”
And then goes on, in the fourth paragraph, to say:
“I am informed that Mr Wilson resigned from his position in September 2008 and was, therefore, not invited to be interviewed by [Post Office Limited].”
There is no way for me, independently, to know either of those two things, other than that information coming from Post Office Limited. So I don’t know the full wiring behind the reply but it looks to me, from this, as though either the private office or the Shareholder Executive have asked the Post Office what is happening here and have been given this information, especially the information in paragraphs 3 and 4, to put this reply together.
Mr Stevens: With a letter like this, roughly how much time would you have spent on it, in reviewing the response?
Patrick McFadden: It’s difficult to say. I mean, you’ll be dealing – I don’t know how many you would be dealing with in a particular evening, on a range of subjects, but normally I would read the reply, read the original letter, sign the reply, and go through them like that.
Mr Stevens: Let’s look at what’s said. In the second paragraph, it says:
“Operational decisions, which include decisions relating to the running of individual post office branches are a matter for Post Office Limited.”
Why was that relevant when what Ms Smith was raising was feeling that there could be a system problem here?
Patrick McFadden: That paragraph, and the things said in it, is quite standard when I look back at this correspondence. You’ll see a paragraph like that quoted quite a lot, maybe not exactly word for word, but something along those lines, that these issues around individual subpostmasters were regarded as, as it says here, operational decisions and that’s why they’ve gone to the Post Office to get the information.
Mr Stevens: If there was an issue in the Horizon system, which we later found out there was, and the Horizon system is used to prepare the Post Office’s accounts and it’s used to create data to prosecute subpostmasters, in your view, is a system problem in the system something with which the Government should have been concerned?
Patrick McFadden: Look, we would certainly, at that stage, have had no way of knowing about the detailed running of the Horizon system. What this whole story is, is that over time, there are more and more cases, and more and more questions about it. But, certainly, in the early stages of this, this would have been regarded as a matter for the Post Office and that’s reflected in this reply, and in the others that we’re going to discuss.
Mr Stevens: Let’s go through the timeline, then, slightly. Can we go to the next letter, please. It’s POL00027890.
If we could go to page 2, please. So we see this is from Brian Binley MP on 24 February 2009 to you. He says:
“I write to you having received an email, which I have enclosed [we’ll go to it in a moment]. The content of her email is worrying and I would be very grateful if you could address the point she is making and let me know the exact situation regarding this matter.”
If we then turn to the email, please, it’s page 3. So it’s an email from Rebecca Thomson, the reporter at Computer Weekly who subsequently wrote the May 2009 article on the Horizon system. It says there:
“I have spoken to several current and former subpostmasters, who say that random flaws in the IT are causing deficits in their weekly accounts, sometimes of thousands of pounds at a time. Their complaint is that, instead of listening to their problems and investigating the software or equipment, the Post Office is making them pay back this money without any investigation into what is going wrong. Neither they, nor I, have any way of proving that it is the IT that is causing the deficits. Their problem is that the Post Office refuses even to entertain the possibility that their system could be going wrong.”
Pausing there, do you have a positive recollection of reading this email?
Patrick McFadden: I don’t.
Mr Stevens: I think you say in your statement it’s likely you would have –
Patrick McFadden: Yeah, if I’d dealt with this in the way that correspondence was dealt with, I would have seen the – at some point in the story, I would have seen the letter from Brian Binley and the attachment to it, which this is.
Mr Stevens: So this opening paragraph is saying a few things, isn’t it: firstly, the subpostmasters referring to flaws in the IT causing deficits; secondly, that the Post Office isn’t listening to the problems or investigating it; and, thirdly, that the Post Office refuses to entertain the possibility that the system could be going wrong?
Patrick McFadden: That’s right. That’s what she says.
Mr Stevens: What do you think you would have thought of that when you read that?
Patrick McFadden: Well, I would have wanted to know what the position was, and this letter and its attachment end up with – they were referred to Alan Cook, who was the Managing Director of the Post Office at the time. He’s asked by the Department to look into this, to the allegations made in this letter and email, and to respond directly to Mr Binley.
Mr Stevens: We’ll come to that shortly. So let’s read on. It says:
“The consequences for some of the postmasters have been extremely serious. Of the group I am in contact with, two have been forced to file for bankruptcy. Others have lost their life savings. If postmasters cannot pay the deficits back because their savings have been depleted, the Post Office takes it out of their wages. In desperation, a couple of the postmasters I’ve spoken to turned to false accounting. They were not getting help when they asked for it from the company, and they did not have the money to pay the deficits back. So they signed the weekly accounts, affirming the money was there when it was not. The Post Office has then prosecuted these people, although no one that I have heard of has ever been prosecuted for theft.”
Of course, we know people were prosecuted for theft.
You say, I think in your statement, that this was the first time you were aware of the Post Office’s prosecutorial role; is that right?
Patrick McFadden: That’s correct.
Mr Stevens: Do you remember what your thoughts were when you learnt that?
Patrick McFadden: Well, this – remember how this works in the process that I described in the first half of our evidence. I don’t see this when it first comes in. I will only see this in conjunction with a reply from the Post Office. So I would have looked at the two of them together and the thing that strikes me about the reply from the Post Office to what is said in Rebecca Thomson’s email is how emphatic they were in defending the robustness of the system.
This was the beginning –
Mr Stevens: Sorry, let’s pause there. Because if we go – I’m asking you about your recollection when you read this letter and what you thought.
Patrick McFadden: Well, I’ll have read it together with the reply. That’s the point I’m making.
Mr Stevens: If we look at page 1, please. We see this was sent to Alan Cook on 30 April 2009 for his response, as you’ve said. At the bottom it says:
“Pat McFadden has asked that you look into this matter and reply directly to Brian Binley MP.”
So you would have read this letter before you had the response from Alan Cook, would you?
Patrick McFadden: Not necessarily. That is a private office way of saying, “Can you look into this?” They would use that terminology without me necessarily having read the correspondence.
Mr Stevens: So who made the decision to send this to Alan Cook, as the Managing Director?
Patrick McFadden: It looks, from here, as though it was the private office because they thought that was the right way to deal with it.
Mr Stevens: Can we bring up, please, your statement, page 14. If we can go down to paragraph 56, please. Just to be clear, you say:
“Brian Binley’s letter would have been shown to me by the private office with Rebecca Thomson’s email clipped to it. I would have read both the letter and the email. I do not remember having any oral discussions with Ms Thomson, Brian Binley, Alan Cook or other representatives of [the Post Office] of officials in the Department or ShEx, regarding the issues raised by Ms Thomson.”
So is your evidence that the reading of it would have occurred later, after Alan Cook’s response?
Patrick McFadden: Yes, they would have showed me this with the reply.
Mr Stevens: Why was that? Why would that be the way –
Patrick McFadden: Because that’s the – it’s the discussion we had earlier. When correspondence comes in, certainly my memory is there isn’t a process where people go through the original correspondence with a Minister before a reply is put together. The way that the Minister sees it is, yes, they will see a letter from an MP with, in this case, an email attached to it. They will see that when the work has been done to put together a reply to it, and a response. And, if you look at paragraph 57, just beneath the one that we are discussing, it says:
“My private office sent Brian Binley MP’s … letter to Alan Cook … The decision to handle the correspondence … would have been a decision taken by the officials in my private office. The source of the information in the response would have been [Post Office Limited], whether or not it came directly from Mr Cook or [if the reply had been put together in a way that I am replying directly to him as the Minister].”
Mr Stevens: If we bring back up POL00027890. We see at the bottom that the direction is:
“Pat McFadden has asked that you look into this matter and reply directly to Brian Binley MP.”
So is this – just to be clear, the private office here directs that Brian Binley MP’s letter should be addressed by Alan Cook directly without your involvement?
Patrick McFadden: I think that’s right, and this form of words is used quite a lot, including in my constituency office, if somebody writes in and a reply comes from one of the case workers, they will often say, “Mr McFadden has asked me to reply”. It doesn’t mean on each individual piece of correspondence that I’ve read it and asked them to reply.
Mr Stevens: That document can come down, thank you.
So why would it come back to you with Alan Cook’s reply?
Patrick McFadden: Well, I would see what he’d said. It’s important to know what they’re saying and what I was really struck by, looking at this correspondence, is just how emphatic the Post Office reply is. It’s detailed in this statement –
Mr Stevens: We can bring it up for you, if it assists.
Patrick McFadden: They are saying two things which coloured the replies and I think affected this situation for a long, long time, in this reply to Mr Binley.
Mr Stevens: Let’s bring it up, it’s POL00130687.
This is the letter that you were referring to –
Patrick McFadden: Yes.
Mr Stevens: – and I think your evidence earlier was that this informed decision making, or at least your decision making, for some time, was it, or I think you said coloured the decision making for some time?
Patrick McFadden: Yes, and I think for some years after, given how all this played out. And there’s two really important points in this, which get to the heart of this story in many ways. One is their – the Post Office’s emphatic defence of the Horizon IT system. They use phrases like “we have scrutinised many Horizon transaction records”; they talk about any subpostmaster who is unhappy to accept the loss has the opportunity to provide evidence; “we take the concerns of subpostmasters extremely seriously”; “no evidence has been found that shows the Horizon system has caused the errors to occur”.
Phrases like that, “No evidence has been found”, were used for a long time in Post Office replies.
The other thing which comes up in this reply is the reference to court proceedings as a proof point. Paragraph 62 of my statement –
Mr Stevens: Well, just for ease, if we turn the page on the actual letter to that shown, it can be –
Patrick McFadden: Sorry. Mr Cook says:
“In … the cases referred to … Post Office defended the claim vigorously and assistance was obtained from Fujitsu […] All of these reports proved that there was no problem with the Horizon system that would explain the discrepancies …”
And he says he is:
“… satisfied there is no evidence to doubt the integrity of the Horizon system and that it is robust and fit for purpose.”
Now, look, I understand that reading this 14 years on, after all the miscarriage of justice, is a very difficult thing for the people who were victims of this to read. But the reason I point it out here and in the statement is to illustrate what we were being told by the Post Office in response to concerns raised by MPs like Mr Binley.
Mr Stevens: That can come down. Thank you.
Just so we’re clear, do you have a positive recollection of reading this letter and your mindset at the time?
Patrick McFadden: Look, it’s difficult, after these – so many years, to remember individual bits of correspondence. My recollection is that this was around a bit, it was being raised over this period of time but the Post Office kept insisting that the system was robust and fit for purpose. They kept expressing their faith in it and they’re using court judgments as a proof point.
Now, of course, the terrible thing here is that these court judgments were found to be unsafe and unsound but I didn’t know that at the time and, you know, it took a long time for those court judgments to be overturned: many years after they took place, in some cases.
Mr Stevens: I’m asking, with the benefit of hindsight here, and hindsight – you know, it’s not what you had at the time but, with the benefit of hindsight, reading that letter now, do you think there’s anything more you could have or should have done to challenge what the Post Office was saying?
Patrick McFadden: With this particular letter, it was so emphatic, you know, I’m not sure but, if you ask me over the whole story here, of course I wish I had done more to question these responses. But I believe, if I had – and I’ve thought about this quite a lot – I believe if I had, I’ve have got the same response from the Post Office in terms of these two points about their faith in the system – it’s robust, there’s no evidence it’s wrong, and so on, and the reference to court judgments – that they were saying in the letter. And the reason I believe that is because they were saying these things for quite a long time after I left office, as well.
Mr Stevens: Let’s move on again in the timeline, please, to 3 November 2009. It’s UKGI00011504. This is a letter from James Arbuthnot, now Lord Arbuthnot, to Lord Mandelson, to his then Secretary of State, on 3 November 2009, (unclear) evidence that this was passed to you.
Now, is this a case where, again, you would have received it with a proposed response?
Patrick McFadden: Yes, and this one is more unusual because the response is signed by me. It’s not referred to the Post Office, to reply directly to Mr Arbuthnot. That might be because – well, Mr Arbuthnot, as he then was, Lord Arbuthnot now, has written to the Secretary of State, rather than to me, it might be something like that but, in both this case and the others, even if the reply is signed by me – and I’ve signed one to Jacqui Smith as well – the information in it is still all coming from Post Office because the Department has no independent source of information about matters concerning individual subpostmasters. The only people who have the information are the Post Office themselves.
Mr Stevens: What we see here is that he refers to his constituents. He says, second paragraph:
“Nonetheless there does appear to be a significant number of postmasters and postmistresses accused of fraud who claim that the Horizon system is responsible, including at least two in my constituency.
“Given the level of impact this has on the personal lives of these postmasters and postmistresses and their families, often involving bankruptcy and certainly significant financial hardship, I should be most grateful if you would let me have your comments on what can be done to investigate the matter.”
Then, if we could please turn to page 3, which was an email enclosed, which you see is from David Bristow to Mr James Arbuthnot, then MP, it refers to his situation, and says:
“My predicament is very similar to many postmasters/mistresses around the country. You may be aware of the similar case of Mrs Hamilton at the South Warnborough post office.”
Now, pausing there, were you aware of Mrs Hamilton’s case at that time?
Patrick McFadden: I wasn’t, no.
Mr Stevens: “This morning your colleague Mr David Jones MP phoned me about this matter. One of his constituents has been subjected to the same problem. He intends to request a public inquiry in the House of Commons, concerning the Post Office and the Horizon system.”
So taking that and Lord Arbuthnot’s letter together, is the request here, effectively, for the Government to shorten the arms and investigate Post Office itself, or at least investigate the Horizon system itself?
Patrick McFadden: Yes, he’s saying David Jones MP intends to request an inquiry in the House of Commons.
Mr Stevens: Yes, sorry. So that’s the inquiry in the House of Commons.
Patrick McFadden: Yes.
Mr Stevens: If we go to page 1, my apologies, at the bottom:
“… I should be most grateful if you would let me have your comments on what can be done to investigate the matter.”
In other words, they’re requesting that some external investigation be carried out?
Patrick McFadden: Yes.
Mr Stevens: Was that a “yes”, sorry?
Patrick McFadden: Yes.
Mr Stevens: If we look at your response, please, it’s UKGI00011506. The second paragraph is similar to the one you said before.
Patrick McFadden: Yes.
Mr Stevens: You mentioned it arose before. It says:
“The issues raised by your constituent are operational and contractual matters for [Post Office Limited] and not for Government. I understand from [Post Office Limited] that errors at the branch have been fully investigated and there is nothing to indicate that there are any problems with the Horizon system. The company’s position as regards the integrity of the Horizon system remains as set out in the reply dated 13 October from Alan Cook, Managing Director, to Brooks Newmark MP, to which your letter refers.”
So, at that point, rejecting any further external investigation?
Patrick McFadden: Well, this letter would have been treated in the same way as the others, where it was referred to the Post Office, who had the information to respond to the allegations within it and, in every case, they are insisting, in response to our requests, that the system is robust, that it’s been proven in court and there’s no evidence to suggest there’s anything wrong with it. That’s what they say in response to Jacqui Smith, to Brian Binley and, in effect, to Lord Arbuthnot.
Mr Stevens: With an increased number of allegations being raised, more MPs becoming involved and calls for independent investigation, why did you continue to rely on what the Post Office was telling you?
Patrick McFadden: I think the emphatic nature of their response and their faith in the system, their use of court judgments to back that up. They were a trusted brand in the country and they were the ones running the system. And over and over again, they said the system is robust, it’s fit for purpose and it’s been proven in court, and that’s throughout my time what they said in response to each of these queries and letters that we’ going through.
Mr Stevens: In paragraph 39 of your statement – we don’t need to bring it up – you say that you believe you met senior management at Royal Mail and Post Office every few months.
Patrick McFadden: Yes.
Mr Stevens: You say that you periodically met the Managing Director of Post Office, Alan Cook?
Patrick McFadden: That’s correct.
Mr Stevens: Did you discuss any of these allegations or Post Office’s response to them at the time?
Patrick McFadden: If I did, there’d have to be a record of that in the Department. I’ve not seen a record of that but we did meet from time to time, so I cannot say for certain that I raised these things with – it would have been Alan Cook, probably not Adam Crozier, that would have been different issues. But, if I did, there should be a record of that in the Department at the time.
Mr Stevens: I’ll ask one more series of questions on that issue. Could we please bring up POL00158368, and page 21. If you could go to the bottom of that page, please. Thank you.
This is an email from Alan Cook on 15 October 2009, the Inquiry has seen it before. It’s to internal people within Post Office. No suggestion that you would have seen this at the time. It says, second paragraph down:
“For some strange reason there is a steadily building nervousness about the accuracy of the Horizon system and the press are on it as well now.
“It is the more strange in that the system has been stable and reliable for many years now and there is absolutely no logical reason why these fears should now develop.
“My instincts tell that, in a recession, subbies with their hand in the till choose to blame the technology when they are found to be short of cash.”
Do you have any recollection of Mr Cook expressing those views to you?
Patrick McFadden: No, I never – I saw this – I think it was published by this Inquiry some weeks ago. I saw it in detail for the first time on Monday. I think it’s shocking and, you know, revealing about the instincts inside the Post Office at the time. But I never heard senior Post Office people say that at the time and, when I looked at the replies to Brian Binley or to the other MPs, you know, I’ve taken at face value their faith in the robustness of the system. But I think – perhaps I shouldn’t opine on things I haven’t seen or had no involvement with, but I think it’s a revealing email.
Mr Stevens: That can come down. Thank you.
We’ve looked already at your response to James Arbuthnot – Lord Arbuthnot, sorry. Lord Arbuthnot gave evidence to this Inquiry on 10 April of this year and, in respect of that response, he said that he was frustrated and annoyed and, in setting out his reasons for being annoyed, he said:
“Because I’d wanted what had seemed to me to be something that was potentially an injustice to be sorted out and, since the Government owned the Post Office, I assumed that the Government would be in a position to sort it out, but they were saying ‘No, not me guv’.”
He went on to say that the Government was refusing to take the responsibilities that go with ownership. Do you accept or reject that criticism?
Patrick McFadden: Look, I understand why he’s angry, given what happened and, you know, he’s right to be, but the legislation of the Postal Services Act made a clear difference between operational running and overall ownership. This is a separation that was legislated for by design. It wasn’t a policy decision of mine or of any other later Minister. It was legislated for by design and what that set up was the structure that, when enquiries came in or queries raised or questions asked from individual MPs about subpostmasters or the operation of the Horizon system, that it would be referred to the Post Office for response, either directly or to get the information for a Departmental response, because they were the ones who had the information.
We didn’t have a separate source or a store of information in the Department about that. My reflection on this, after all these years, is, clearly, those responses were wrong. The evidence being used in the court to prosecute the subpostmasters has turned out to be wrong and was proven to be wrong in the cases that overturned these judgments many years later.
What I’m not clear of about is at what point in this story does blind faith from the Post Office in their IT system turn to something more sinister where people are just not telling the truth? Now, I don’t know at what point that happens but I’m sure it’s something the Inquiry will want to get to the bottom of.
Mr Stevens: Do you think, during your time as Minister, the Government should have done more to satisfy itself that Post Office was conducting its prosecutions properly and fairly? I’m not talking about convictions; I’m talking about prosecutions.
Patrick McFadden: Look, when I look back on this and I, you know, think of the terrible human consequences for the subpostmasters who were prosecuted – even the ones who weren’t prosecuted but lost large sums of money or suffered damage in other ways – of course I wish I had asked more about this. But do believe, given the emphatic nature of the replies and Post Office’s use of court judgments as a proof point for the robustness of the system, at this stage in the process, I’m not sure it would have got any further. I believe they would have said exactly the same things in person as they were saying in these letters.
Mr Stevens: Just in fairness, I’m going to just clarify my question. I think the answer there really is about the information you were receiving regarding the Horizon IT system?
Patrick McFadden: Yes.
Mr Stevens: Now, my question is slightly different in that Post Office were prosecuting people, it was a government-owned company, and my question is: do you think the Government should have done more, effectively, to oversee Post Office prosecutions and see that they were done fairly and lawfully?
Patrick McFadden: Well, I’m not sure about that because we discussed this in the session before the break. Ministers are always very reluctant to interfere in a judicial process. So – and that reluctance is there for good reasons. You know, we are always taught not to do that in the UK constitutional system. In fact, it is 14 years after the period we’re talking about now where Parliament has taken the constitutionally – I don’t know if it’s unprecedented because, you know, I can’t say that for sure, but, certainly in my time in politics, the unprecedented step of legislating to overturn court judgments.
Now, I support that legislation, I think it was the right thing to do because of the enormous level of harm done to the subpostmasters but it’s a very unusual thing to do, as well and it has taken many years after the period that we’re talking about for Parliament to reach the conclusion that so much of this was tied up in the courts that the only course left to it was to legislate to overturn court judgments, and the ministers introducing the legislation acknowledged how unusual it was to do that.
Mr Stevens: I want to ask you some questions about the model going forward, I’ll be very brief.
The Inquiry is going to hear evidence on things like corporate governance, Government oversight and whether it will consider whether any recommendation should be made for changes. The Inquiry shall hear evidence that recommends that ministers should have an express power to involve themselves in decision making of arm’s-length bodies; what would you say to that?
Patrick McFadden: I think it’s right that the Inquiry looks at this. I have thought about that is. I think there’s going to be a temptation on your part, because of what went wrong here, to have Ministers as sort of Shadow Chief Executives of these bodies and I think, in the short term, there will be a cheer for that, because people will say this arm’s-length body, this publicly-owned company engaged in unsound prosecutions of its own staff, effectively, it’s own contracted staff, and of course the consequences for them were awful.
But I’m not sure, in practice, given the number of arm’s-length bodies there are, that ministers really can act as Shadow Chief Executives of them, which begs the question: well, what do you do when one goes rogue? If it’s not the ministers sitting on the Chief Executive’s shoulder, what is it? And I wonder if it’s worth considering some sort of body that is established to do precisely this, that can be called in to launch an inquiry or take action when the level of allegations reaches such a point that it looks like that is the right thing to do.
I think this is a live and real policy question which has been exposed by this scandal, and I’m glad you’re considering it going forward, but I’m not sure if making Ministers the Shadow Chief Executives is going to be the practical way to do this.
Mr Stevens: So you propose there’s some form of independent body that would conduct a –
Patrick McFadden: Well, “propose” is a bit of a – is maybe a bit –
Mr Stevens: Sorry.
Patrick McFadden: I’ve been trying to think about this and I think we’re going to have to have something that can be called upon to do this kind of thing in the future. The exact design and job description, that will need work, but, you know, I have been trying to think: what could you really do here?
This system of separation, which I appreciate is frustrating to many people, was legislated for by design, and there was no independent source of information that could have allowed the Department to start second-guessing on the operation of Horizon. But, still, injustices took place, so what is it that we need in the future, and I wonder if some sort of inspectorate or body to be called in is the right way to go. I think it might be.
Mr Stevens: Given you said you did not like my use of the word “propose”, I’m not going to ask you further questions on the details of that but it is something that the Inquiry will obviously consider going forward.
Sir Wyn Williams: I think I’d say, Mr Stevens, that Mr McFadden is floating an idea before me for my consideration.
Mr Stevens: Yes, sir.
Patrick McFadden: That’s a very fair way to put it, Sir Wyn, and it is for the Inquiry to make its recommendations. But I, for one, would be grateful if the Inquiry could consider that idea floated.
Mr Stevens: Thank you, Mr McFadden.
Sir, that is all the questions I have. There are questions from the NFSP, I believe.
Yes, anyone – Mr Stein?
I’m just getting it a time estimate, sir.
Mr Stein has asked for five minutes and the NFSP have asked for five minutes as well.
Sir Wyn Williams: Well, then, I’m very happy for them to agree the order in which they take advantage of their five minutes.
Questioned by Mr Stein
Mr Stein: Sir, the agreed order is that I go first.
Mr McFadden, I represent a large group of subpostmasters. I want to go back to your statement, if I can, please, when you refer to the information that was given, as you’re talking about, to your private office from the journalist, Ms Thomson.
Patrick McFadden: Yes.
Mr Stein: So if we go, please, to paragraphs 52 to 54, I’d be grateful.
Patrick McFadden: Yes, I’ve got that here.
Mr Stein: If we look at 52 – if we can get that up on the screen, I’d be grateful – we see there what’s happening, just to orient ourselves to the point. Your office is getting information from a publication called Computer Weekly. This is being passed on by an MP called Mr Binley and this is about articles written by Ms Thomson, and I’ll just summarise what is being written here.
She’s talking about the fact that she has spoken to several current and former subpostmasters, talking about random flaws in the system. She’s talking about deficits in weekly accounts, sometimes to thousands of pounds at a time, that the Post Office – this is my summary – is making people – subpostmasters – pay back this money without any investigation to what’s going wrong.
Then, as you go through, you’re quoting within your own statement the fact that the articles are continuing and referring to what I would call devastating consequences that people are turning to false accounting or being forced to file for bankruptcy.
Now, that’s my summary of particular parts of what’s being sent through to Government, okay?
Now, these are unusual allegations, these are particularly strong allegations, with subpostmasters in branches being made to pay back or being prosecuted or to turning to criminal acts. These are wholly unusual, do you agree?
Patrick McFadden: It is unusual, yes.
Mr Stein: The large number of people that I represent, I suppose, want to find out then what happened next and, again, in my summary, what happened next was your office went back to the Post Office – who the subpostmasters regarded as the abuser of them – went back to the Post Office and said, “What’s going on?”, and you get a reply from the Chief Executive of the Post Office, saying “Well, no problem here, this is not happening”.
How do we in the future, when you’re thinking about changes to the way that these matters should be looked at, how do we actually get the Government to actually think about what people are saying, not just organisations? Because what could have happened here was that someone could have spoken to the subpostmasters rather than just going back to the Post Office; why did nobody do that?
Patrick McFadden: Well, look, for us in taking this allegation at the time, the right thing to do was to ask the people running the business – and we’ve talked a lot about this, this morning – and that structure had been set up some years before I was the Minister. They were the people who ran the Horizon system. They were the people who had the information about it, and when I look at the correspondence in the round, what I’m really struck by is how emphatic their defence of the system was and continued to be for a long time after this exchange of correspondence.
Not only an emphatic defence, but also the use of court judgments as a proof point. When you have the use of court judgments as a proof point, ministers at that point, as we said – I said in my exchanges with Mr Stevens – ministers at that point will usually think, “I can’t intervene in court judgments”, and they think that for a very good reason.
Mr Stein: Well, you’ve already been asked questions by the Chair of this Inquiry about that part of it and I will leave that alone. But my point, and the question I am asking you, is this: you’re saying that the right thing to do is to ask Mr Cook – this what your private office did – at the Post Office, you’re saying that’s the right thing to do. Why isn’t the right thing to do to ask the people that are saying they are being abused by the Post Office; why miss out on them?
Patrick McFadden: Well, the National Federation of SubPostmasters, as is seen in evidence given by the then General Secretary to a Select Committee some years later, he says that, at the time, he didn’t think there was a fundamental problem with the system either.
So, at the time, the representatives – or what I thought was the representative of the subpostmasters – they weren’t raising it as an issue either. Now, what I have subsequently discovered, which I did not realise at the time, was that the relationship between the National Federation of SubPostmasters and many individual subpostmasters, I think particularly perhaps those involved in this scandal, was a bad relationship but that wasn’t something that was clear to me at the time.
So you have both the management of the business and, in effect, the trade union, saying very similar things.
Mr Stein: Mr McFadden, I know you’ve been a politician for a very long time. That wasn’t my question. My question was, in relation to this correspondence, the trenchant and deeply disturbing allegations being made by Computer Weekly were not investigated by your Department. They were simply circulated back to Mr Cook. As an example, if your answer was right, nobody within your Department said, “Well, let’s have a word with the NFSP”. What happened at the time is just to go back to Mr Cook rather than the people making these awful complaints.
Have you got a better answer than, “Well, I’m not sure why it didn’t happen but we could have, if later on, thought about it, we might have had a natter with the NFSP”, which didn’t happen?
Patrick McFadden: I think it was the right thing to do try to get the – to raise these concerns with the Post Office, who were running the system.
The fact that the Post Office’s assurances proved to be wrong about the robustness of the system and the fact that the court judgments that they were using as proof points proved to be unsafe and unsound and were later overturned, was not known at the time.
Mr Stein: Sir, I’ve asked that question, I think, three times. I’ll stop now.
Sir Wyn Williams: Thank you, Mr Stein.
Is Ms Watt there?
Ms Watt: Yes, sir. Thank you.
Sir Wyn Williams: Thank you.
Questioned by Ms Watt
Ms Watt: Good afternoon, Mr McFadden. I ask questions on behalf of the National Federation of SubPostmasters and I’ve got couple of questions to ask you about your evidence this morning.
Looking at the employment relations side of things, at paragraph 9 of your witness statement – and you also talked about this in your evidence – you say that as Minister of State at BERR:
“My responsibilities including on any legislation connected with employment relations or postal affairs.”
At paragraph 16 of your statement you say:
“This included legislation going through Parliament to improve employment rights.”
Now, subpostmasters were self-employed and not employees of the Post Office, so they didn’t have the protections that came with being an employee. So the question I wanted to ask you about that was: was this difference in legal protections between those who were Post Office employees and the very large number of self-employed subpostmasters, whose businesses supported a significant part of the Post Office network, were those differences between those two ever considered by you or your office?
Patrick McFadden: No, and I think this is an important aspect of this, which we haven’t discussed before this morning, which was the nature of the contract here between the subpostmasters and the Post Office, which meant that the subpostmasters were considered liable for losses and, again, I’m not sure how far the Inquiry has looked into this but I would be interested in knowing about how flaws in the system were dealt with in the Crown post offices where there’s a more direct employment relationship.
So I think you’ve raised an important point and I think this is about the nature of that contract, part of this overall story.
Ms Watt: Thank you.
You referred just there, in your answer to Mr Stein, to the evidence of Mr Thomson, the General Secretary of the NFSP at the time, and the NFSP of today has said how shocked it was by that. But at paragraph 27 of your witness statement, looking at a different organisation, you say that:
“The CWU was totally opposed to any level of private investment and ownership of RMG.”
I just wanted to ask you a little bit that, how regularly you in your role met with the CWU to talk about issues affecting their members?
Patrick McFadden: Quite a lot but not to do with post offices because their principal interest was Royal Mail and, in the second half of my tenure at the Department, we’d had the Hooper report, which had recommended private investment in Royal Mail. As I said in my earlier evidence, that was a very controversial thing for a Labour Government to propose. The Bill to do that – we had a Bill to do that, which guaranteed that Royal Mail would remain in the public sector and that any stake would be a minority stake. But still, there was huge opposition to that, not just from the CWU but from a lot of Labour MPs at the time as well.
And a combination of that opposition and the inability to find a private-sector investor that the Government thought would give value for money meant that the proposal was eventually shelved before the 2010 election.
Ms Watt: So is it fair to say that, in your meetings, the CWU didn’t raise concerns about Horizon with you?
Patrick McFadden: Yes, I don’t remember the CWU raising concerns about Horizon with me.
Ms Watt: Just one final aspect, there’s also been quite a lot of discussion this morning in your evidence about the arm’s-length relationship and the day-to-day operations, as opposed to strategic, in terms of the Post Office. Would you accept that the reliance of Government on this arm’s-length relationship and day-to-day operations, and the Post Office assurances, despite all of that incoming correspondence from MPs, meant that the Government ultimately failed to investigate or insist on an investigation into Horizon issues and the truth of what the Post Office was saying?
Patrick McFadden: Well, I think the way that this had been set up by the Postal Services Act meant that the way to raise queries like this was by asking the Post Office, and what we did not know at the time was that what the Post Office was saying about the system was wrong, and the question that I’m not clear about is to what extent was this blind faith in the IT from the top of the Post Office or something more sinister, and at what point in this story?
I think probably, perhaps, you know, I’m seeing too benign motives in people. I think perhaps at the start to their story it was blind faith in the IT. But I think at some point in this story, as has been proven by the subsequent court judgments, we moved from blind faith to dishonesty, in terms of some of the things that are being said. I don’t know quite when that happens but, from a Government point of view at the time, we took what the Post Office said about the robustness of the system and the court cases as proof points, at face value.
And, in particular, this point about using the court cases as proof points is important because the Ministers are told “Do not interfere when there is a court judgment, you cannot interfere with judges, a court judgment is final”.
Ms Watt: Just finally looking back, you’ve talked about the Postal Services Act there, which sets up the Post Office as this arm’s-length body, but you’ve also mentioned many more arm’s-length bodies. Would you accept that reliance on that type of relationship, arm’s length, apparently allows Government to absolve itself from ultimate responsibility when things go wrong, as it did here?
Patrick McFadden: Well, I think it’s an important question and it’s a difficult one because, as Mr Stevens asked me at the end of my evidence to him, you know, what is the proposal to do something differently? It is quite difficult to bring all these things entirely in-house, and have ministers, in effect, run them on a day-to-day basis. I think that’s going to be a tempting conclusion from this, because of the degree to which things went wrong and the awful human consequences of it, but, you know, what would be looking for in a policy way here is something that would work, rather than something that might in practice not work, and that’s why I’m wondering if there’s some body that can be established that can inquire into these organisations, rather than the conclusion to your question being: Ministers should act as Shadow Chief Executives of all the departmental bodies within any Department in which they’re a Minister.
Ms Watt: Thank you, Mr McFadden.
Sir Wyn Williams: Is that it, Mr Stevens?
Mr Stevens: Yes, that’s it, sir. We are finished with the questioning for Mr McFadden.
Sir Wyn Williams: Well, thank you very much, Mr McFadden for producing your written statement and for coming to the Inquiry to give oral evidence. I am very grateful to you.
The Witness: Thank you very much.
Mr Stevens: Thank you, sir. I understand from Mr Beer that the proposal will be to take a ten-minute break now, until 12.40, and then start Sir Ed Davey’s evidence.
Sir Wyn Williams: All right. That’s fine.
Mr Stevens: Thank you, sir.
(12.30 pm)
(A short break)
(12.44 pm)
Mr Beer: Good afternoon, sir. Can you see and hear us?
Sir Wyn Williams: Yes, I can. Thank you.
Mr Beer: Thank you, sir. May I call Sir Ed Davey.
Sir Edward Davey
THE RIGHT HONOURABLE SIR EDWARD JONATHAN DAVEY MP (sworn).
Questioned by Mr Beer
Mr Beer: Sir, thank you very much for coming to give evidence today. As you know my name, is Jason Beer and I ask questions on behalf of the Inquiry. Can you give us your full name, please?
Sir Edward Davey: My full name is Edward Jonathan Davey.
Mr Beer: You kindly provided us with a witness statement, the URN for which is WITN10610100. You will have a hard copy in front of you. There are two corrections, I think, that you wish to make to it. The first is on page 2, at paragraph 6, if you can turn that up.
In the second line, does it end with “explain the way in which I worked as Secretary of State”, should that read “explain the way in which I worked as Minister”?
Sir Edward Davey: Yes.
Mr Beer: So cross out the word “Secretary of State”, insert word “Minister”.
The second correction, page 14, please, at paragraph 61. The first sentence reads, “I commissioned a comprehensive report”, and then a reference appears in parentheses afterwards. Do you wish to delete all of the text in the parentheses after the word “report”?
Sir Edward Davey: Yes, I do.
Mr Beer: Because that’s not the correct reference. Thank you very much.
Can you turn, please, to page 62.
Sir Edward Davey: Mr Beer, do you mean page 47?
Mr Beer: 47 of 62, thank you. Is that your signature?
Sir Edward Davey: Yes, it is.
Mr Beer: Are the contents of the witness statement true to the best of your knowledge and belief, with those two corrections brought into account?
Sir Edward Davey: Yes, they are.
Mr Beer: Thank you very much. You can put that to one side and the witness statement can come down.
Can I start, please, with your background, and I’m going to deal with this in summary terms, if I may. Can you confirm the following: you are presently the Member of Parliament for Kingston and Surbiton and you previously held that position between May 1997 and March 2015 and then again from June 2017 to date?
Sir Edward Davey: Correct.
Mr Beer: You’re the Leader of the Liberal Democrats and, more relevantly to the Inquiry, you were the Parliamentary Under-Secretary of State for Employment Relations, Consumer and Postal Affairs in the Coalition Government between the 20 May 2010 and 3 February 2012?
Sir Edward Davey: That’s correct.
Mr Beer: Is it right that that was your first ever ministerial post?
Sir Edward Davey: Yes, it is.
Mr Beer: I think it therefore lasted about 20 months, if my maths is correct. Was that until your promotion to the role of Secretary of State for Energy and Climate Change?
Sir Edward Davey: Yes, that’s correct.
Mr Beer: Was your predecessor as Parliamentary Under-Secretary of State, PUS, Lord Anthony Young, a Labour Minister?
Sir Edward Davey: I believe that to be the case, yes.
Mr Beer: Was your successor as Parliamentary Under-Secretary of State, Norman Lamb –
Sir Edward Davey: Yes.
Mr Beer: – a member of the Lib Dems?
Sir Edward Davey: Yes.
Mr Beer: Is it right that your Secretary of State through that 20-month period when you were Parliamentary Under-Secretary, the Secretary of State for Business, Innovation and Skills, was Sir Vince Cable?
Sir Edward Davey: Yes, it is.
Mr Beer: There was no change in leadership of the Department, the BIS Department, in terms of Secretary of State?
Sir Edward Davey: No.
Mr Beer: Thank you very much.
Can I start the questions of substance, please, with exploring the Government’s arm’s-length relationship with the Post Office?
Sir Edward Davey: Yes.
Mr Beer: Do you agree that, as the Minister with responsibility for postal affairs and in the light of its status as a publicly-owned company, that you, as Minister, were ultimately accountable for the Post Office?
Sir Edward Davey: Yes, I do.
Mr Beer: How do you satisfy yourself that the Post Office was being properly and effectively managed by its management and its Board during your tenure?
Sir Edward Davey: I was primarily reliant on the advice of my officials from the Department. They would brief me ahead of meetings with management from Post Office Limited and, indeed, Royal Mail Group because, at the time, Royal Mail Group was ultimately in charge of Post Office Limited. So the main reassurance about what was happening came from the Department, from the officials, but I would have meetings with both Royal Mail and Post Office Limited, and indeed stakeholders, and discuss the situation in those meetings.
Mr Beer: Was there any formal or established method of oversight in place when you took up the position as Minister?
Sir Edward Davey: Was I – as I understood it, the oversight came from the Department, talking to Royal Mail Group, talking to Post Office Limited, with ShEx, who were the Shareholder Executive, the group within the Department, most of all, overseeing that. Of course –
Mr Beer: Was ShEx then the principal body or organisation or group of people that, from Government’s perspective, was responsible for oversight of the Post Office?
Sir Edward Davey: Yes, I think that’s the case. Obviously, my private office would often relay briefings on behalf of ShEx. At the time, when I was starting as a Minister, I really didn’t see much difference between officials who weren’t in Shareholder Executive from Shareholder Executive. I gradually learned there was a bit of a difference, mainly the people in Shareholder Executive seemed to have more a commercial background.
Mr Beer: Did you receive any handover from your predecessor, Lord Young?
Sir Edward Davey: No.
Mr Beer: Is that commonplace in changes of Government, not to receive handovers from your predecessor in office?
Sir Edward Davey: I’m afraid I don’t really know. This is the only time it happened to me. I’m not sure if I gave a handover in 2015 when I left office, so I – and I was not asked to, so I presume it’s not that common. I think ministers rely on the civil servants to be the continuity part and to brief and, of course, you’re not supposed to see papers from the previous Government.
Mr Beer: You tell us in your witness statement – let’s turn it up, it will come up on the screen, please, page 22 of the witness statement, at paragraph 94, which is at the foot of the page. You say:
“I cannot recall having an initial briefing on Royal Mail and the Post Office, though I expect I did, during my first weeks in office. However, I am very confident that I did not receive any specific briefing on the Horizon system, nor was it something that it would have occurred to me to ask for specific briefing on. My concern with [Post Office] was primarily at the level of strategic policy, which was [the] consequence of the fact that [Post Office] was an arm’s-length body. I did not expect to be involved with operational matters such as staff, buildings or IT systems. I was not aware of the Horizon system in particular, though of course I would have realised that [Post Office] would have a computer system used in Post Office branches.”
Then, at paragraph 95, you note that you were not aware that:
“… the Post Office and Royal Mail Group themselves investigated, prosecuted and obtained convictions against subpostmasters.”
Then, lastly, over the page to page 24, at paragraph 99, this is something we’re going to coming back to in more detail after lunch but I just want to read this paragraph for now:
“The draft response [and this is a draft response to a request for a meeting from Sir Alan Bates] declined the suggested meeting. The reason given for this refusal in the letter was that the Horizon system was an operational matter for [Post Office], which was an arm’s-length body. That accorded with my understanding of the relationship between the Government and [Post Office] at the time: it was not my role as a minister to intervene in [Post Office’s] day-to-day operations. I understood this to be the case for practical reasons: ministers did not get involved in the day-to-day running of the business. That made sense to me. I was not qualified to, and would not have had time to, get involved in the day-to-day running of [the Post Office].”
So looking at all of that evidence together, in order to fulfil your role as Minister and ensure that the Government’s strategy for Post Office was implemented, did you not need to have an understanding of the operational issues that were affecting the Post Office?
Sir Edward Davey: Not in terms of staff, buildings and IT systems, no. The key issue in our manifesto, and then in the Coalition Agreement, was to avoid further closures of post offices and to maintain the network, and our focus on doing that, as I think I describe in my statement, was both asking Post Office Limited and Royal Mail Group to come up with a strategy to put to Government so we could ask Treasury for subsidy for the rest of the Parliament to implement that commercial strategy. Plus, we were looking at, at a strategic level, how the Post Office’s role might need to change, given the changes in the way Government put business through the Post Office, the declining footfall in post offices and the changing nature of the high street.
So I came to this position wanting to implement our policy which was, at a very strategic level, and it frankly didn’t occur to me that I needed to go down into IT systems.
Mr Beer: How did you distinguish between what was an operational matter, which was for the Post Office, and matters of strategic policy that were for you?
Sir Edward Davey: I guess it was a combination of advice from officials, which – they were experienced in this, they had understood and worked with the Post Office and Royal Mail Group for – I presume for some time, and therefore understood that, that line. But there was also the common sense line, both as I understood – understand now in law and in terms of practical considerations, a minister who has got huge responsibilities over many areas, really can’t get involved in day-to-day operational matters, and I felt our focus was on the strategic level, where Government could make a difference, both in terms of deciding subsidy levels and deciding the ultimate strategic role that the Post Office would play in our society.
Mr Beer: What would it take for a matter to reach the level of “strategic policy”?
Sir Edward Davey: Well, if it was going to fundamentally change the nature of the Post Office and how it supported the public, it clearly has a very big social purpose in many of our villages, towns and cities and, having in opposition and as an MP over a number of years, had to fight closures of post offices in my constituency, as have colleagues, and having seen how the public value their post offices and value their subpostmasters, it seemed to me that we wanted to make sure those closures didn’t happen again, and we were, therefore, focused on the strategy to make sure that didn’t happen again, which as I’ve referred to, meant things like subsidy levels, the role of the Post Office in the future, not day-to-day operations.
Mr Beer: Who made it clear to you that it was not for you to become involved in operational matters?
Sir Edward Davey: Well, I guess it was the briefing of officials, and you will see in a number of letters that have been put to the Inquiry that that is what I was advised and that is what I understood. It seemed –
Mr Beer: Is that principally from ShEx?
Sir Edward Davey: Yes, I suppose so. I mean, whoever wrote the letters, I assume it’s from ShEx, yeah.
Mr Beer: Was that made clear to you early in your tenure as Minister, that you were not to become involved in operational matters?
Sir Edward Davey: Whether it was explicitly in a verbal briefing, I don’t think so, but it was in the paperwork that there was this difference. Indeed, I think there’s a reference to an Act of Parliament in 2001, which said that ministers weren’t to get involved in day-to-day operations of either Royal Mail Group or its subsidiaries, Post Office Limited, and that these were arm’s-length bodies not to be interfered with on a day-to-day basis.
That seemed to make sense to me, in common sense terms, that we just wouldn’t have had the time or the knowledge to do that. There were so many other things that we were responsible for and, indeed, within Post Office, so many other things that we were trying to achieve at the strategic level.
Mr Beer: Did the same division or prohibition apply to individuals within ShEx, ie they were not to get involved in the operational matters concerning the Post Office?
Sir Edward Davey: I assume it did. But we didn’t have a conversation to that but I always assume that was the case.
Mr Beer: Did the same prohibition, to your understanding, apply to civil servants outside of ShEx, that they were not to become involved in the day-to-day operational running of the Post Office?
Sir Edward Davey: Yes, it follows that they did. I mean, given that that law, I think, was a 2001 Act, it seems to suggest that Government, be they ministers or officials, were to leave Post Office Limited and Royal Mail Group to get on with that day-to-day operational responsibility that they’d been given.
Mr Beer: That’s something you suggest in your witness statement – no need to turn it up – at paragraph 26 on page 7. You say:
“Under the law, Royal Mail Group and Post Office operated at arm’s length to ministers.”
Which law was it?
Sir Edward Davey: I think, and I’m sorry I’m not – I don’t know the exact reference – I think it was the Postal Services Act 2001.
Mr Beer: You understood the Postal Services Act 2001 to require the Government to operate at arm’s length to the Post Office and Royal Mail Group?
Sir Edward Davey: Yeah, I think that was a reference that we put in a number of letters that were drafted for me to sign, and that was the basis as I understood it.
Mr Beer: Did you ever receive a briefing on what the Postal Services Act in fact said on this issue?
Sir Edward Davey: No.
Mr Beer: Did you ever look at the Postal Services Act to see what the legal relationship between Government and Royal Mail Group and Post Office was?
Sir Edward Davey: No, and there was a – probably a good reason for that, Mr Beer. We were charged through the Coalition Agreement – I was charged, with putting a new Postal Services Act into place, rapidly. The Government business managers wanted that Bill to be ready for a second reading in the autumn following the May election and my task, which took a considerable amount of my time in those first few weeks and months, was to prepare the Postal Services Bill, which was going to fundamentally change the relationship. So all my time was focused on that, not looking back to an Act of 2001.
Mr Beer: You said in your witness statement that you were not aware that the Post Office or Royal Mail Group themselves investigated, prosecuted and obtained convictions against subpostmasters. When did you first become aware of that operation or conduct by RMG or POL?
Sir Edward Davey: I’m trying to think if it was during this Inquiry procedure. I think it probably was; I certainly didn’t realise it when I was a Minister.
Mr Beer: Does it follow that you were unaware of any steps that Government took to superintend or oversee the conduct of prosecutions by the Post Office?
Sir Edward Davey: I was unaware of those, if there were any at all.
Mr Beer: You’re aware, I think, that the Attorney General oversees the conduct and operation of the Crown Prosecution Service and answers for the Crown Prosecution Service’s performance and conduct in Parliament?
Sir Edward Davey: Yes, I am.
Mr Beer: Does it follow that you were unaware at the time, the duration of your period as minister for 20 months, whether or not there was any equivalent position occupied by a member of Government in relation to Post Office’s prosecutions and Royal Mail Group’s prosecutions, because you didn’t know that they were being undertaken by those companies?
Sir Edward Davey: That’s the case, yes.
Mr Beer: You tell us in your witness statement and you’ve told us today that you relied significantly on briefings and the provision of drafts of letters and of submissions from civil servants. Were they principally from within the Shareholder Executive?
Sir Edward Davey: I think they were, certainly in relation to this issue, the only submission that I’ve seen was from Mike Whitehead from ShEx.
Mr Beer: The 5 October one?
Sir Edward Davey: Yes, but I would have received many, many more submissions on Royal Mail and Post Office Limited over my time because there were many, many other issues occurring. And I can’t be sure because I haven’t gone back to those papers but they almost certainly came from ShEx.
Mr Beer: To what extent did you monitor ShEx’s oversight of the Post Office?
Sir Edward Davey: I’m not sure if monitoring – I mean, we were trying to implement our policy, that was the main focus, the strategic changes we were trying to make, and my interactions with ShEx about that were, again, at that quite high level. I guess for the Postal Services Bill, there would have been people outside ShEx within the Department because there would have been the policy committee, the Bill committee. Because it was quite a big piece of legislation which we were putting together quite rapidly, there would have been a lot of people working on that.
So it wouldn’t have been exclusively ShEx and, I guess, monitoring of ShEx was through the work we were doing with them, not from their oversight of Royal Mail Group or POL.
Mr Beer: Does it follow that you would treat ShEx as a self-sustaining and self-governing body that would be left to its own devices to monitor and oversee the Post Office in its capacity as shareholder, and that you wouldn’t yourself exercise any oversight or control of ShEx itself?
Sir Edward Davey: Well, certainly, I relied on the advice and experience of ShEx officials, who were having a regular dialogue, it seemed to me, with the senior management in Royal Mail Group and in Post Office Limited. As is clear from my statement, I would meet, myself, those senior managers and obviously discuss our strategy with them. So I relied mostly on ShEx to do that but, as a minister, I wanted to meet the managers too and put my questions to them. But, again, for those meetings, I was heavily reliant on ShEx.
Mr Beer: If we turn up page 22 of your witness statement, please, at paragraph 91. You say:
“It is worth emphasising at the outset that, whilst now clear that there were disastrous problems with Horizon – and with the Post Office’s conduct towards subpostmasters – which are now rightly the focus of this public inquiry, that was not at all clear at the time. I was responsible for a large number of important issues across a very broad portfolio, and with respect to all the issues I dealt with in postal affairs, the Horizon issue was one amongst many – and indeed, I was continually advised it was a matter for the Post Office, because it was a day-to-day operational issue.”
Who continually advised you that Horizon integrity issues were operational matters for the Post Office?
Sir Edward Davey: Well, that was both in the submission of Mr Whitehead but in the drafting of the letters in response to letters from MPs and, indeed, Parliamentary Questions. So for example, there were three Parliamentary Questions, written questions – there were no oral questions, there were three Parliamentary Questions or three MPs who asked Parliamentary Questions, as probably some of them asked more than one, and the answers to those questions drafted by officials for me to agree to was that those issues were matters for the Post Office, and so we referred, answering those questions, to the Post Office, with their answers being put in the House of Commons library.
So that was an example of how that happened.
Mr Beer: So you’ve pointed to two things constituting the advice, namely the drafts of letters that you were supplied with and the drafts of answers to Parliamentary Questions?
Sir Edward Davey: And, indeed, the submission of Mr Whitehead, but this wasn’t – the Horizon issue wasn’t an issue that we discussed very much but the advice came through in those matters, yes.
Mr Beer: Did you question that advice at all, at the time that you received it?
Sir Edward Davey: No, because it seemed to be reasonable and it was a reference to an Act of Parliament, and I thought they were telling me the truth, which, to my knowledge, they were referring to an Act of Parliament, so I assumed that was the truth.
Mr Beer: Are you saying that in the submission, the letters or the answers to the PQs, they referred to an Act of Parliament?
Sir Edward Davey: In what – some of the letters, I don’t know how many they did, not in the – I don’t think in the Parliamentary answers. They may have done. I’ll have to check that, Mr Beer.
Mr Beer: We’re going to come to in fact there were four PQs, not three, and we’ll come to those after the –
Sir Edward Davey: There were three MPs and four PQs?
Mr Beer: Yes, exactly. I think Priti Patel asked either two or three questions?
Sir Edward Davey: Yes.
Mr Beer: Do you accept that the Post Office’s role as an active private prosecutor should not have been treated as an operational matter?
Sir Edward Davey: If I’d known about it and we’d had a discussion about it, I’d have been surprised.
Mr Beer: Why would you have been surprised that the Post Office was prosecuting?
Sir Edward Davey: It seems like quite an old-fashioned thing. I mean, certainly now, with the benefit of the knowledge of what we know, it was wrong and, as I say in my statement, it seems as though that power should be taken away from them but, nevertheless, I wasn’t aware of it, and it seems odd that they were.
Mr Beer: Why would it seem odd that they prosecuted?
Sir Edward Davey: Because I think you should have a more thorough process, where there’s a more independent aspect that goes to the court. That happens in other prosecutions.
Mr Beer: Are you referring there to criminal offences that are alleged being investigated by independent police forces and then prosecutions, in some circumstances, being commenced and pursued by the Crown Prosecution Service?
Sir Edward Davey: Yes, yes.
Mr Beer: So if you had been aware of the conduct of prosecutions by the Post Office, you would have raised a question as to why they were doing it and whether it should continue?
Sir Edward Davey: Yeah, I think it’s the sort of thing that I would have questioned. Maybe I would have accepted the answers, but it came as a surprise to me when I learnt about it through this Inquiry.
Mr Beer: You say you may have accepted the answers, ie that it was appropriate for the Post Office to continue to prosecute its subpostmasters. If that had been your position, would you have said anything about Government or ministerial oversight of such prosecutions?
Sir Edward Davey: Well, I mean you’re asking me, Mr Beer, to speculate on what I might have done if something had been put to me 14 years ago –
Mr Beer: Yes.
Sir Edward Davey: – and it’s quite difficult to do that. I really don’t know, to be honest. It was not put to me and speculating what I might have done 14 years ago, it’s quite tricky.
Mr Beer: Can we look at paragraph 92, please, of this witness statement. In the third line, you say:
“As I have stated publicly, I believe I was seriously misled by the Post Office. I do not know if one or more civil servants misled me during my time as a minister, or if they were themselves misled by [Post Office].”
Can you see that?
Sir Edward Davey: Yes, I do.
Mr Beer: More broadly in your witness statement – the references are paragraphs 4, 5, 116, 131, 138 and 153, you refer to being lied to by the Post Office.
Sir Edward Davey: Yes, I now know I was being lied to. I follow this Inquiry and it’s pretty clear what they told my officials was not true.
Mr Beer: You refer in paragraph 138 of your witness statement to the individuals within Post Office who lied to you as being “senior executives”. Are you able to help us as to the identity of the senior executives who lied to you?
Sir Edward Davey: Well, the senior executives I dealt with – and this is not the – directly answering your question, Mr Beer, but the senior executives I dealt with David Smith and then Paula Vennells. There may have been one or two others, they’re the names that I recall, and they were the ones giving the information to my officials, came in their names, and to me. So they were the people passing information which was untrue.
Mr Beer: To accuse somebody of lying is to accuse them of saying something that they knew or believed not to be true, with the intention to deceive; do you agree?
Sir Edward Davey: What I’m trying – I am trying to answer the question because I cannot know what was in their minds and how the information came to them but someone, I assume senior in Post Office Limited, must have known the truth, must have at some stage understood that, and this is what I hope the Inquiry will uncover.
It is difficult for me to uncover. I didn’t know it at the time, of course. What emerged from your questioning and from this Inquiry and the reports of this Inquiry is that there was knowledge of the Horizon system having serious flaws in it, within Post Office Limited, and that was not put forward to ministers, either myself or others.
Mr Beer: It’s just the cumulative effect of what you suggest in the paragraphs that I’ve listed tends to suggest that you believe that senior executives lied to you, and I just wanted to distinguish whether you firstly understood, in common with me, what an accusation of lying constitutes, namely accusing a person of saying something that they believe or knew not to be true with the intention to deceive and then, secondly, whether you were in fact alleging that against any particular executive.
Sir Edward Davey: I guess what I feel is that Post Office Limited, as a body, were misleading ShEx and ministers. Who was responsible within Post Office Limited is quite difficult for me to know.
Mr Beer: Yes.
Sir Edward Davey: One assumes that it was the senior executives because they had a responsible role and I assume were asking the questions but I think, ultimately, it’s for this Inquiry, and I hope it – I wish it well in this task – of identifying who was really culpable for misleading ministers, the courts and, above all, the subpostmasters.
Mr Beer: Thank you. So the allegation of lying applies or is intended to apply to Post Office as a corporate body, and you don’t distinguish between senior executives and those who are not senior executives as the responsibility for the lie, because you don’t personally know?
Sir Edward Davey: I don’t know. My only information comes from the papers that have been given to me by the Inquiry and the reports of this Inquiry, but I don’t personally know.
Mr Beer: Thank you very much.
Sir, it’s just coming up to 1.20 now. Although it’s been a short session, can we break now until 2.10 for lunch?
Sir Wyn Williams: Certainly.
Mr Beer: Thank you very much, sir.
(1.18 pm)
(The Short Adjournment)
(2.10 pm)
Mr Beer: Good afternoon, sir. Can you see and hear us?
Sir Wyn Williams: Yes, thank you.
Mr Beer: Thank you.
Good afternoon, Sir Ed. We saw before lunch, in paragraphs 94 and 95 of your witness statement, that you said that you did not receive any specific briefing on the Horizon system, nor was it something that it would have occurred to you to ask for a specific briefing about and that, as far as you were aware, as you recall, you were unaware of any complaints made by subpostmasters as to the integrity of the Horizon system before you took office, and nor were you briefed on that issue upon taking up your ministerial role.
Sir Edward Davey: That’s correct.
Mr Beer: When did you first become aware of complaints made by subpostmasters about the integrity of the Horizon system?
Sir Edward Davey: I think it must have been through Sir Alan’s letters. As you know, he wrote to me on the day I took office.
Mr Beer: 20 May 2010?
Sir Edward Davey: That’s right.
Mr Beer: So your very first day in office?
Sir Edward Davey: Yeah, and I wrote back to him, following a draft produced by civil servants, that –
Mr Beer: We’re going to come to that, if it helps, in a moment.
Sir Edward Davey: I think that must have been it, yeah.
Mr Beer: When did you first become aware that a large cohort of subpostmasters alleged that their convictions were not safe?
Sir Edward Davey: I think that might have been the High Court in 2019. I mean, obviously, when Sir Alan Bates came to see me I was aware that he was representing a number of subpostmasters who felt that they had been wrongly prosecuted, and that was the case but, in terms of the large number, the group action, I’m afraid I wasn’t aware of that until much later.
Mr Beer: He said in his correspondence – we’ll look at it in a moment – that he was representing 100 or so?
Sir Edward Davey: Yeah.
Mr Beer: Are you distinguishing between the 555 that brought the group action as being a large number but the 100 not?
Sir Edward Davey: Yes, and also that my officials, as you see in Mr Whitehead’s note, were disputing whether it was 100, but I accept it was mainly the point you were making about the large number, the 550.
Mr Beer: You tell us in your witness statement – no need to turn it up – between paragraphs 96 and 119, the correspondence received from Sir Alan, the draft responses prepared by Government officials and the sources of information used upon which to base those responses, and you tell us in those paragraphs about a note, a written briefing, that you received on 5 October 2010 from Mike Whitehead, a civil servant in ShEx, and we will look at that later.
You tell us in paragraph 108 on page 30, which we should turn up – page 30, paragraph 108 – you say:
“This [that’s the Mike Whitehead written briefing of 5 October 2010] is the only substantive written briefing I received on Horizon. It indicated that Horizon had ‘proved robust’, that there were no ‘[systemic] integrity issues’, that the unions had ‘expressed confidence in Horizon’, that there was training, that there were proper audit processes and no ‘backdoors’, there had been regular reviews, there was an appeals process and legal representation, and no court had ever found problems with Horizon.”
You tell us in 109 that you would have taken from that that officials were confident in Horizon and that the Post Office had had it independently assured.
In addition to that single written briefing on Horizon, would you have also received oral briefings?
Sir Edward Davey: Almost certainly, though it’s a long time ago. I suspect I would have had one when I replied to Sir Alan Bates after the meeting.
Mr Beer: How often would you have received oral briefings from ShEx?
Sir Edward Davey: More broadly as opposed to – well, relatively often because people like Stephen Lovegrove and others – Susannah Storey comes to mind – would have been briefing me on the litigation and particularly the relationship with Royal Mail, more than POL, because the work we were doing there was substantial. Everything – we were dealing with the pension deficit of the Royal Mail and trying to get State Aid clearance for writing that off.
Mr Beer: So weekly?
Sir Edward Davey: Probably not because postal affairs, both for Royal Mail Group and POL, were only a part of my responsibilities. I am likely to have had more briefings from them in 2010, I suspect, and in the first half of 2011 than later on because that was the legislation and early implementation.
Mr Beer: So you’re piloting a bill at that time?
Sir Edward Davey: Yeah.
Mr Beer: When you receive a briefing like the one from Mike Whitehead of 5 October 2010, would you ask questions about the sources of information in it or would you take the document as read and not query the accuracy or the sources of things said in it?
Sir Edward Davey: Normally we’d take it as read unless something jumped, completely jumped out at you. But I’d had submissions in all my ministerial posts and very rarely do I remember questioning them in the way you’ve described.
Mr Beer: So the information presented to you by civil servants, you take to be reliable and truthful?
Sir Edward Davey: Yes.
Mr Beer: Would you expect ShEx civil servants and civil servants outside of ShEx who were briefing you to base their briefings, and the letters that they drafted for you, on any evidence independent from Post Office?
Sir Edward Davey: Well, I would assume they would go to Post Office first. Whether they would add to that, I hadn’t really considered. I sort of assumed they would have a collective view but I hadn’t really considered that point.
Mr Beer: Put another way, would you have thought that they were just relying on what Post Office had told them, ie they were a mere conduit of information from Post Office?
Sir Edward Davey: I’d have thought they’d have added some value but –
Mr Beer: In what way?
Sir Edward Davey: Well, because they’d been – the Civil Service has been managing that relationship for some time, so they would have learnt a little more about it. But, to be honest, Mr Beer, I haven’t really thought that through. I just assumed that what was put in front of me was their best advice.
Mr Beer: Would you expect ShEx and other civil servants to probe information provided to them by Post Office on contentious matters, before relaying it to you in a written briefing?
Sir Edward Davey: I expect they would do, yes –
Mr Beer: Really what I’m asking, Sir Ed, is you said that you’d take the document as read as being truthful and accurate when it gets to you, whether you had ever thought about what had gone on to create the document that you were treating as truthful and accurate?
Sir Edward Davey: Yeah, well, my understanding, not just on this issue but other issues, was that by the time a submission got to a minister there had been number of checkpoints within the Department. The nature of what checking they were doing wasn’t visible to me but, whether you’re a junior minister or a Secretary of State, my understanding is that the Civil Service has processes to make sure what goes in front of the Minister is the best advice that they can provide.
Mr Beer: So there had been some sort of quality assurance, and that may have included probing or testing the information provided in this instance by Post Office?
Sir Edward Davey: Well, Mr Beer, I assume that was the case but I didn’t ask about what that process was. One sort of assumed it because you knew that there was a machinery trying to serve ministers as well as they could.
Mr Beer: Can we turn, then, to your initial refusal to meet Sir Alan Bates in May 2010. That can come down from the screen. Thank you.
Can we look, please, at his letter, Sir Alan’s letter, to you of 20 May 2010. UKGI00016119. Thank you.
If we just look at the top part, please. I take it the handwriting at the top is not yours?
Sir Edward Davey: No.
Mr Beer: You’ll see that it’s on Justice for Subpostmasters Alliance paper, addressed to you directly. It’s dated 20 May, which is the very day you took up office, as we said already; is that right?
Sir Edward Davey: Yes.
Mr Beer: If we just read it, he says:
“I am writing to you with regard to your position as Minister for Postal Affairs on behalf of the [JFSA].
“We are an independent group of ex and serving subpostmasters who suffered at the hands of the Post Office and their Horizon system ever since it was first installed. Our website … outlines how we came about and our aims, as well as offering sample cases that were provided by some of the group. Currently the group number is close to 100, though we continue to be joined by others who have learned of JFSA and have found that there is nowhere else to turn to for help.
“In every instance the Post Office acts as judge, jury and executioner and the individual is deserted by their reputedly representative organisation, the National Federation of SubPostmasters. Invariably these cases all stem from the flaws of the Horizon system the Post Office introduced and which they refuse to admit has ever suffered from a single problem.
“The evidence is there to be found by anyone in a position of being able to unlock doors instead of placing barriers in the way of those pursuing information. Our organisation has access to a number of specialists who could provide the questions and analyse the resulting data if required. Though an independent external investigation instigated at Ministerial level would be the most appropriate, and would without any doubt easily find evidence of the error ridden system.
“I am sure that you appreciate that there is not a single computer system that does not from time to time suffer from errors, especially when at the size and level of complexity of the programs associated with the Horizon system. The Post Office blindly state that there are not, nor have there ever been any system errors, so subsequently anything wrong is entirely the responsibility of the subpostmaster as that is what they have agreed to when signing their contract. This is a contract that was produced in 1994 and does not address nor identify new technology, but they are still using it to intimidate and prosecute subpostmasters.”
Over the page:
“The weight of evidence we have been collating over the years continues to grow and gain in standing, it is only the flat refusal of the Post Office to allow experts to examine the system which is holding back this major scandal from breaking. But with the growing numbers in JFSA and the support we are now finding from the IT community and the media it is just a matter of time until the real truth about the Post Office and Horizon is exposed.
“Over the years I have personally submitted written details of all of this to the Select Committee of the DTI, and then on two other occasions to that of BERR, and put simply, the information has either been buried or disappeared. Others of JFSA have followed the route of contacting their MPs who would take the matter up with the Post Office on their behalf. Subsequently they are stonewalled or ‘handled’ by the Post Office often with off the shelf answers where they only change the name and address.
“I am writing to you on behalf of the group, I am asking for a meeting where we can present our case to you. Much has appeared in the press over the last few days that Government is going to change, I only hope that is true. If it is, the abuse of subpostmasters that has been going on under the protection of the previous Government may well come to an end.”
Would you agree that, to summarise the letter, Sir Alan outlines the issue, he signposts you to further information and asks for a meeting?
Sir Edward Davey: That’s what the letter says.
Mr Beer: He was asking for an opportunity to present his case to you?
Sir Edward Davey: He was indeed.
Mr Beer: He just wanted an audience?
Sir Edward Davey: Yes.
Mr Beer: Would you agree that these are not unreasonable requests, put politely but with force?
Sir Edward Davey: They’re not unreasonable.
Mr Beer: Can we look at your reply, please. ABAT00000001. 31 May, “Dear Alan Bates”, if we just scroll down – thank you – we’ll see it’s signed by you. Underneath there is your signature:
“Thank you for your letter of 20 May, requesting a meeting to discuss the Post Office Horizon system.
“Since 2001, when the Royal Mail (which includes Post Office) was set up as a public limited company with the Government as its only shareholder, Government has adopted an arm’s-length relationship with the company so that it has the commercial freedom to run its business operations without interference from the shareholder.
“The integrity of the Post Office Horizon system is an operational and contractual matter for [Post Office] and not Government, whilst I do appreciate your concerns and those of the Alliance members, I do not believe a meeting would serve any useful purpose.”
Would you agree that this is a rather terse reply, in particular the line “I do not believe that a meeting would serve any useful purpose”?
Sir Edward Davey: Yes, it is a terse reply. If I may then, Mr Beer, refer you to my written statement because I can’t remember actually reading his original letter. I remember, as we’ll come to, no doubt, reading his second letter and taking view that I should meet him but I think, if I had read that first letter, I would have remembered it because it was forceful and made a case.
But I’m afraid that is my memory and all I can do is go from my memory. I have apologised and repeat that apology for not meeting Mr Bates on the basis of his first letter.
Mr Beer: You tell us in your witness statement that the letter, the one we’re looking at, was drafted by officials for you; is that right?
Sir Edward Davey: Yes.
Mr Beer: It was nonetheless approved by you and signed by you?
Sir Edward Davey: Yes.
Mr Beer: Can you help us: you spent a lot of time in your witness statement explaining the administration of ministerial correspondence. If this was one of those occasions where you got the letter in, ie Sir Alan’s letter in, and the draft reply out, ie the document we’re looking at, at the moment, how would you judge whether the right approach was being taken, if you’d just got those two bits of paper?
Sir Edward Davey: Well, the way it worked is you would have your red box, which you would look at with all the other different policy papers, as I explain in my written statement. You would be dealing with a lot of different issues in any red box –
Mr Beer: Can I just try and cut through things a bit because we’ve got your witness statement about – and I completely accept the breadth and the volume of work. I am just asking, if this was one of those occasions where you got the letter in and the letter out, they’re the only two bits of paper that you’ve got, how would you judge whether the letter that you’re being asked to sign is the appropriate one?
Sir Edward Davey: If I’d had both letters in my letter file in my red box, I would have read both of them and I’d have had to make a judgement when I was signing all the different letters in that letter file about whether this was an appropriate response to that letter. What I don’t recall – and I apologise for this – is whether or not in my letter file there were both the original letter and the response – there may have been but I don’t recall it – and I think I would have done, given the nature of what Sir Alan was writing.
Mr Beer: So it may be that you didn’t even see the letter in; it may be that the only thing you saw was this letter and you signed it?
Sir Edward Davey: That may have been the case. I’m sorry, I can’t be more definite but we’re talking about a long time ago. I had just started my post and I was signing a huge number of letters, and I was reliant on the advice of officials. I just apologise that, if that was not the case and I had read it and I wrote this as reply, because it is terse.
Mr Beer: If you only had the letter out, ie the thing that we’re looking at at the moment, how could you judge whether it was an appropriate reply or not?
Sir Edward Davey: I was being – based on the advice of officials.
Mr Beer: But it didn’t come with any advice. All it came with was a letter in draft, as we see here, without the handwriting at the beginning and the end?
Sir Edward Davey: Yes, but when you are going through your file of letters, you assume they’d been written, and I was told they were written, on the basis of advice from both policy officials and those responsible for that area of policy.
Mr Beer: In some cases, there’s a ministerial sub, isn’t there, ie there’s a cover paper, which says, “This is the issue, this is the recommendation, these are the facts, these are the options, sometimes, and here is a proposed draft reply”, ie so you’re given a briefing and some context before being asked to sign the letter off?
Sir Edward Davey: That’s very rare. The vast majority of cases in the letter file within the red box – and I say in my statement on average there’d be 20/25 letters in any one red box – the vast majority were, by themselves, without any submission. A submission would be very rare.
Mr Beer: So you – the likelihood is, on your evidence, that you neither received a briefing in order to judge the accuracy and appropriateness of this reply, nor even the letter in, to see what you were responding to?
Sir Edward Davey: I definitely didn’t receive a submission. I’m saying I may have received the original letter but I really can’t remember it, and I think, if I had, I would have remembered it.
Mr Beer: The second line from the end says, “Whilst I do appreciate your concerns and those of the Alliance members”, doesn’t that indicate, because it is personalising it, that you are likely to have seen the letter?
Sir Edward Davey: Well, I do indeed say that in my – in paragraph 97 –
Mr Beer: Yes –
Sir Edward Davey: – in my written statement –
Mr Beer: – and I’m asking you now, is that right: it’s likely that you did see the letter in?
Sir Edward Davey: It’s possible because, what I have been doing in preparing my statement is trying to think back 14 years, to a letter that I wrote, amongst many others, at a very early stage in my ministerial post, and I just genuinely can’t remember. But you’re right, that phrase suggests I might have done and I just can’t recall and I apologise for that.
Mr Beer: The very matter that Sir Alan was complaining about was that the Post Office had, to use his words, acted as judge, jury and executioner –
Sir Edward Davey: Yes, if – of course –
Mr Beer: – ie that there wasn’t any independent oversight of what was going on?
Sir Edward Davey: Indeed, and I – when I had the submission for the meeting with Alan Bates later on the year, both original letter and the second letter were attached to that submission and I read those in detail before that meeting.
Mr Beer: This letter takes the line that Horizon is an operational and contractual matter, which is for Post Office and not Government and that follows Post Office being an arm’s-length body, given freedom to run its commercial operations without interference by Government?
Sir Edward Davey: Yes, and that’s – that follows the logic that I’m trying to get over, that I was following the advice of officials and this was the advice of officials on many occasions in relation to this matter.
Mr Beer: Can we look at your witness statement, please, page 24, at paragraph 101 and 102 at the foot of the page. You say:
“On reflection, and with the benefit of hindsight, I am really sorry that I followed the advice and did not question it, and I can also see why Sir Alan took offence at the phrase ‘I do not believe a meeting would serve any useful purpose’. It was poorly judged, and I apologise to Sir Alan for signing it off.
“I should have accepted Sir Alan’s request for a meeting when he first made it. However, I remain unconvinced that an earlier meeting would have changed the course of events. I expect that I would have put the same questions to my officials and [Post Office], and received the same categorical assurances about the integrity of Horizon that I did later that year.”
Is the hindsight that you’re bringing into account there, is that essentially – and I’m summarising greatly here – that the substance of the matters that Sir Alan was complaining about was correct?
Sir Edward Davey: That clearly turned out to be the case.
Mr Beer: Yes, so that’s what the hindsight is referring to here?
Sir Edward Davey: Yes, the hindsight that we now have because we now know many, many things that we – I did not know back then.
Mr Beer: Your reflection, with the benefit of hindsight, shows, would you agree, that there wasn’t an inflexible rule, less still an inflexible rule of law, that prevented you from beginning involved was there?
Sir Edward Davey: No, there wasn’t because, as we are no doubt about to go, when I had the second letter from Mr Bates, I didn’t have any advice on that but I decided I was going to see him. So I exercised that flexibility then.
Mr Beer: More than that, there wasn’t an inflexible rule of law that prevented you, as the Minister, from becoming involved in operational matters, was there?
Sir Edward Davey: That is true, it wasn’t completely inflexible, as clearly was the case because I met Mr – I asked to see Sir Alan in July. But the advice I was given was that it was not a matter for a minister because it was an operational matter. In asking to see Sir Alan, I was effectively going over the advice.
Mr Beer: Can we look, please, at POL00417098, and look, please, at page 9. Can you see here, if we just scroll down, a letter dated 19 May –
Sir Edward Davey: Yes, I can.
Mr Beer: – from Priti Patel, then MP for Witham, to, it seems, Vince Cable:
“Dear Vincent …”
Sir Edward Davey: Yes.
Mr Beer: “I have been contacted by a constituent who runs a local sub post office who has enquired as to which Minister will have responsibility for the Post Office.
“They have quite a serious issue with the Horizon system, which as you are aware is the IT platform which Post Office has used to conduct their transactions. Prior to the election the previous Shadow Minister was willing to arrange a meeting to discuss the issue, and I wondered whether something could be set up with the new Minister once they are in situ?”
That’s you, essentially?
Sir Edward Davey: Yes.
Mr Beer: Was this correspondence drawn to your attention? This is the day before you took up office, the day before Sir Alan’s letter to you?
Sir Edward Davey: No, I can’t remember that at all being brought to my attention.
Mr Beer: Ought it to have been brought to your attention?
Sir Edward Davey: Probably, yes. I know Priti Patel asked some written Parliamentary Questions which I answered, as you’ll be aware, but I wasn’t aware she was seeking a meeting.
Mr Beer: Okay. Thank you. I’m going to look now, before we come to the meeting of 7 October with Sir Alan, to a series of letters from MPs, either directly to you or forwarding correspondence that they’d received from their constituents describing problems with the Horizon system, and prosecutions arising from Horizon, and a number of written Parliamentary Questions.
Can we look at those, I hope, in chronological order. Can we look at POL00417098, which I think in the pack we’re on at the moment, page 3, please. 7 June 2010 to you – if we scroll down – from Keith Simpson MP, MP for Broadland, enclosing a letter which he’s received from a constituent, Margaret Callow, asking you to look into the points and report back. If we go over the page to page 4, please.
Mrs Callow congratulates Mr Simpson on his success and says that she wrote to him on 3 March:
“… on behalf of my daughter [about] her treatment along with others at the hands of the Post Office.”
She says that it is a problem that will not go away and they have a copy of a recent letter sent to Alan Bates by you. That is obviously the letter we just looked at. She says:
“Clearly Mr Davey is neither interested nor helpful.
“Whilst he prefers to distance himself behind such a reply, I respectfully suggest that all the ministers in Government are there to represent us and best help us. Therefore it is to be hoped that matters will be taken up on our behalf.
“As the Government holds 100% shares in the Post Office, this means we the public own them so the validity of Mr Davey’s reply is questionable. Therefore, I would hope you could speak to Mr Davey or his Department to ask him to look at this issue again.”
Ought this letter – ie the cover letter from Keith Simpson, if we go back to page 3 – and its enclosure, to have been brought to your attention?
Sir Edward Davey: Yes, it’s a letter to me, from an MP.
Mr Beer: Yes, and ought there to be a reply to this?
Sir Edward Davey: There should have been.
Mr Beer: So that was 7 June. Can we go forwards, please, to WITN10610110. This a Parliamentary Question of 22 June 2010 from Priti Patel to ask the Secretary of State, so that’s addressed to Mr Cable, what representations he has received from JFSA in the last 12 months, if he will meet representatives of the Alliance to discuss Post Office’s Horizon system and if he will make a statement, and then you reply.
Is that sometimes how it works? That although the written PQ was addressed to the Secretary of State, one of his or her ministers would be given the responsibility of replying to it?
Sir Edward Davey: That’s right and the draft Parliamentary Answer, written Parliamentary Answer would be in another file in the red box and you would go through them one by way.
Mr Beer: Was there just the Parliamentary Answer, the draft answer in the box, or did that come with the submission?
Sir Edward Davey: No submission.
Mr Beer: Sorry? No submission?
Sir Edward Davey: No submission, no.
Mr Beer: Again, how would you judge the accuracy or appropriateness of the answer, if it came just as a single sheet of paper?
Sir Edward Davey: Well, you were reliant on what your officials were telling you and one would expect, and certainly it was my experience, that they would draft a reply that was factually accurate and reasonable.
Mr Beer: You say in your reply:
“Given Post Office’s responsibility for negotiating contractual terms and conditions with subpostmasters, I have asked David Smith, the Managing Director of Post Office, to respond directly to my Honourable Friend and a copy of his reply will be placed in the libraries of the House.”
Sir Edward Davey: Yes.
Mr Beer: That seems to be repeated twice for some reason.
So here, the reply suggests that you had – or somebody on your behalf – had asked the Managing Director of Post Office to respond to the question raised?
Sir Edward Davey: Indeed.
Mr Beer: But the question was to ask the Government what representations it had received from JFSA in the last 12 months?
Sir Edward Davey: Indeed. But I was assuming –
Mr Beer: Why would Mr Smith know the answer to that more than Government?
Sir Edward Davey: Well, I was assuming that was the way it had been done on the basis of what advice officials were giving me.
Mr Beer: What do you mean you were assuming that was the way it had been done? What was the “it”?
Sir Edward Davey: The response to those types of questions.
Mr Beer: The questions asking you what representations the Secretary of State has received; why does passing that on to Mr Smith help with the answer?
Sir Edward Davey: Well, I had assumed that those representations would always go to the Post Office themselves, and that was the way that it operated because of the arm’s-length relationship.
Mr Beer: I see. So that because you assumed that any previous communications would themselves have been forwarded to the Post Office, the Post Office was in best place to answer how many –
Sir Edward Davey: Indeed.
Mr Beer: – requests it had received for – or representations it had received from the JFSA?
Sir Edward Davey: I assume they’d all been passed to the Post Office. At this stage, trying to understand my job, I was very, very reliant on the advice I was being given.
Mr Beer: Can we turn to POL00417098, and page 17, please. I think this is a draft reply to a PQ; is that right? Maybe if we just pan out. Thank you, if you look under the tramlines it says, “Draft Answer”, and then at the foot of the page, there are some approval boxes; can you see that?
Sir Edward Davey: Yeah, I can.
Mr Beer: Is this the kind of thing that would come in the red box?
Sir Edward Davey: Yes.
Mr Beer: The thing we saw before was an actual Parliamentary Question/Answer, this is the stage before that, the draft; is that right?
Sir Edward Davey: To be frank, Mr Beer, I don’t know whether they all said “Draft” before I signed them off, or whether they didn’t say “Draft”. I’m not sure if it was quite that methodical.
Mr Beer: Okay it’s from Priti Patel again, “Question”:
“To ask the Secretary of State … how many times Ministers have had discussions with Post Office on the Horizon system …”
Answer:
“[Horizon] is an operational responsible of the company and I have had no such discussions.”
That’s you answering:
“It is an established convention that the Ministers of one Administration cannot see the documents of a previous Administration. I am therefore unable to provide the information requested.”
That’s accurate obviously for you, you hadn’t had any meetings at this time?
Sir Edward Davey: Yes, that’s accurate.
Mr Beer: Thank you. Then can we go forwards, please, to page 15. Third question from Priti Patel, with, again, a draft answer:
“To ask the Secretary of State [for BIS], if he will review the effectiveness of the Post Office’s Horizon system; and if he will report his findings to the House.”
Your draft answer:
“I have asked David Smith, the [MD] of Post Office, to respond directly to the Honourable Member and a copy of his reply will be placed in the House Libraries.”
So, again, that’s essentially maintaining the operational responsibility point; is that right?
Sir Edward Davey: Yes, indeed.
Mr Beer: Can we turn on please to WITN10610111, 8 July, from Priti Patel:
“To ask the Secretary of State for [Business], what his most recent estimate is of the cost to postmasters and subpostmasters of errors in the Horizon operating system; and if he will make a statement.”
Your reply:
“I have asked David Smith, [MD] of Post Office, to respond directly to the Honourable Member and a copy of his reply will be placed in the House Libraries.”
So it’s essentially the same answer as the previous one, maintaining the operational responsibility for Horizon being a matter for the Post Office line; is that right?
Sir Edward Davey: (The witness nodded)
Mr Beer: Can we move forwards to 12 July, please, POL00417098, page 19, please. A letter to you from Jenny Randerson Assembly Member, 12 July now, under the heading “Post Office Horizon Accounting Problems”. If we scroll down:
“As a former consultant in the postal services sector, I am sure you are only too well aware of the accounting problems that have arisen from the Post Office Horizon computer system which have resulted in postmasters and mistresses suffering financial losses and sometimes even incurring criminal prosecutions because of unexplained discrepancies that have let to shortfalls.”
She explains in paragraphs 2, 3 and 4 a problem with her constituent, and then if we go down to paragraph 5, at the foot of the page:
“I am aware that the previous government built up an extremely poor IT record and that it had already entered into a contract with [BOI] to enable [Post Office] to provide a range of financial services …”
Then over the page please:
“… I am sure you will agree that the apparent inadequacies of the Horizon computer system, and the injustices it has caused, need immediate investigation and resolution and I would welcome your advice as to the government’s intentions in this matter.”
Again, ought this to have been passed to you for a reply or a draft reply provided to you for signature?
Sir Edward Davey: Yes.
Mr Beer: Can we move on please, POL00417099. A letter to you of 20 July 2010:
“I have been approached by my constituent …
“I would be grateful if you could look at the matters raised by my constituent …”
Then, if we go over the page, please – I should have said this is from Alun Michael MP – this is the letter from his constituent, saying:
“I am writing to you with regard to the way I have been treated by Post Office.
Second paragraph:
“At the end of the day, the root cause behind the problems I had with Post Office was entirely due to their fault hidden Horizon system. I am not alone in suffering from a system which is prone to errors, has negligible support, is inaccessible to the level required to manage the business, but it is me that is held accountable for its failures and losses.
“The Post Office is 100% owned by Government and regardless of how Government try and sidestep its responsibilities, it is the Government of today with its silence, that ultimately approves and sanctions the atrocity/ies that Post Office has inflicted on me/subpostmasters. There has to be an independent investigation into how [Post Office] has abused its power …”
Then next paragraph, mention of the JFSA, and then it is signed off. Again, ought this to have been supplied to you by officials for reply and/or a draft reply provided to you?
Sir Edward Davey: Yes.
Mr Beer: Can we move on, please, POL00417098, and this is an email exchange in which you’re not included – if we look at the foot of page 1, please – between Oliver Griffiths of ShEx and David Smith MD of Post Office, with Mike Whitehead of ShEx copied in with the subject of “Justice for [Subpostmasters]”:
“Dave [that’s Mr Smith]
“As we discussed briefly on Monday … there has been recent interest from MPs in purported cases where the Horizon system has left subpostmasters out of pocket. We have to date said that this is an operational matter for POL and resisted calls to impose a review of Horizon …”
Just stopping there, do you think that the replies to all of the letters that I have shown you would have maintained that line, ie Horizon is an operational matter for Post Office and a resistance to any call for a review of Horizon?
Sir Edward Davey: I can only presume they did.
Mr Beer: He, Mr Griffiths, continues:
“We are in theory happy to continue holding this line – but if we do so and it turns out that there have been problems with Horizon, then there will be significant political heat. Grateful therefore if you could let me know how confident [the Post Office] is that there is nothing behind these claims.”
Then if we scroll up, the MD’s PA, Tracy Abberstein, replies:
“Mike Granville will liaise with you both to prepare a brief for Oliver to give the reassurance required!”
This is the kind of thing that went on beneath the surface and you didn’t get to see, I presume?
Sir Edward Davey: No, not at all.
Mr Beer: Would you agree that this is, looking at it now, an important exchange?
Sir Edward Davey: Yes, it is, and I’m – we’ll no doubt go on to other important exchanges behind the scenes, which certainly weren’t brought to my attention.
Mr Beer: If we just look at the bottom of the page, ShEx is saying, “We’re happy in theory to continue to hold the line, if it turns out there are problems, then there will be significant political heat. Grateful to know how confident [Post Office] is, there is nothing behind the claims.”
Do you agree this shows there was no requirement in law for Government to adopt the position it did that Post Office was an arm’s-length body and that all matters relating to Horizon were operational ones for the Post Office to answer? That was just the line.
Sir Edward Davey: That is what he is saying in that and there is no doubt, as I showed myself, that ministers could ultimately ask about these sorts of questions. And I – when I did ask to see Mr Bates – Sir Alan Bates to ask about these questions, no one said I couldn’t.
Mr Beer: So it was a matter of choice as to whether and to what extent Government got involved, rather than the law prohibiting it, correct?
Sir Edward Davey: That is true. In these early days, I was reliant on the advice and I thought that was the case but, as we’ll no doubt come on to with Mr Bates second letter, Sir Alan Bates second letter, I decided I would see him, despite what I’d been told.
Mr Beer: Would you agree here, reading this exchange, that what appears to matter to ShEx, in deciding whether to hold the Government line, was the Government’s confidence in whether there was anything in the claims or not?
Sir Edward Davey: That’s how it reads.
Mr Beer: Is this the extent of the testing that you would envisage had gone on in testing the accuracy, strength, truthfulness and reliability of what Post Office was saying to Government, ie an email exchange between three people saying, “Tell me how confident Post Office is that there is nothing behind the claims”, and then an email from a PA back saying, “You’ll get a brief”?
Sir Edward Davey: Well, I’d have thought that, by the time they gave me advice they needed to be certain that advice was true, and one – no doubt this Inquiry will make a judgment about whether or not they did enough to find out whether what they were telling me was true, but it – ministers have to rely on being told the truth and, therefore, people briefing them need to be sure that the Minister is being given the truth.
Mr Beer: Would you expect something more from ShEx, putting it bluntly, to say, “Please Post Office, who people allege something is wrong with your system, tell us whether you’re confident that there is something wrong with your system”?
Sir Edward Davey: It certainly looks like there could have been more probing, yes.
Mr Beer: Can we move forwards, please, to POL00294957. We’re now on 26 July. There is a letter to you from the then Chancellor of the Exchequer George Osborne, writing in his capacity as a constituency MP. He says that his constituent, Mr Walters:
“… has written to me about errors on the Post Office computer system which he believes led to the termination of his contract … he and others in a similar position have joined [JFSA].
“I enclose a copy of his letter …”
If we go over the page, he says that he is writing to Mr Osborne in relation to the way he has been treated. Second main paragraph:
“Unfortunately a few months after my contract was terminated the Post Office closed as part of the government cutbacks.”
He says it was a set up. Next paragraph:
“Do you not think it strange that not only I but many other subpostmasters have experienced the same thing, that nearly 300 subpostmasters have been suspended for similar offences as we speak. It’s all right expecting the poor subpostmaster to make good any shortfall but what happens when they are thousands of pounds under which obviously is a computer error and cannot be right and yet they are expected to make good this loss. Those that cannot are treated as criminals and sentenced as such because the Post Office say they have taken the money. Although the Post Office cannot produce such evidence to support these claims. The saying that innocent until proven guilty does not come into it.”
Penultimate paragraph on that page:
“At the end of the day the root cause … was due to their fault ridden Horizon system. We are not alone …”
Last paragraph on that page:
“The Post Office is 100% owned by the Government and regardless of how the Government try and sidestep its responsibilities, it is the Government of today with its silence, that ultimately approves and sanctions the atrocities …”
You can see some similar language here from an earlier letter, yes?
Sir Edward Davey: Yes, indeed.
Mr Beer: Again, should this, should George Osborne’s letter have been provided to you by officials for a reply?
Sir Edward Davey: I’m surprised it wasn’t. I can’t – in the pack that I’ve been filed, I can’t see any reply from me to this.
Mr Beer: When you say you’re surprised, is that in particular because of the personality of the author?
Sir Edward Davey: Actually not. I think when an MP writes to a minister, my understanding was that the minister would reply to the MP. That was the sort of understanding that one acted on and one thought was the case. So one might not reply to members of the public and officials might reply to that, because there’s so many letters coming in, but I had assumed that any letter to me as a minister from an MP would get a reply from me.
Mr Beer: Can we go forwards, please, UKGI00014108. If we see at the top it’s from Valerie Vaz MP, dated 29 July. It’s about her constituent, Jasvinder Kaur. She says in the second paragraph:
“There have been a number of subpostmasters and mistresses who appear to have been the subject of a fraud investigation. There have been some instances of transactions which appear to be inaccurate causing suspicion on the subpostmasters and mistresses. This is the Horizon system which appears to be ridden with faults. This has a detrimental affect on the subpostmasters and mistresses who have formed [JFSA].
“I would be grateful if you could let me know if you are aware of other cases of postmasters and mistresses who have used the Horizon system who have then been prosecuted for fraud.”
“She [that’s Ms Kaur] has asked if it is possible for an inquiry to be set up to look into the Horizon system.”
Again, this is the kind of correspondence, it being an MP letter, that should have been passed to you for a reply?
Sir Edward Davey: Yes.
Mr Beer: Thank you. That can come down.
In your witness statement, you tell us that, as a Minister, when MPs raise matters with you, you quote:
“… inevitably take them more seriously, there was a small trickle of correspondence and Parliamentary Questions from MPs on this issue. None of these seemed to raise any issues that fundamentally questioned the advice I had received from officials and the Post Office.”
Sir Edward Davey: Yes.
Mr Beer: Is the “small trickle” the four Parliamentary Questions and the five letters that I’ve just shown you?
Sir Edward Davey: That’s what I’m referring to. Well, no, if I didn’t see those letters, which I assume (unclear), if you look at the pack that has been provided me from the time I was a minister, the number of letters that I signed that came into my file was, I think, smaller than the number of people who had written in via their MPs.
Mr Beer: Can we look at an example of a response to the letters that you received from MPs. UKGI00013913. This is later, this is February 2001. If we scroll down, sorry, 2011. You say:
“Thank you for your letter setting out concerns raised by constituents about [Horizon].
“The issues raised in your letter are, however, operational and contractual matters between [Post Office] and individual subpostmasters and I should make clear that neither I nor the Department can intervene in cases which are sub judice or where court action has been determined.
“Whilst blame has been laid in a number of cases on the Horizon system for the financial discrepancies and shortages which have led to subpostmasters having their contracts terminated and subsequent cost action, [the Post Office] continues to express full confidence in the integrity and robustness of the Horizon system.
“The [system] operates in all … branches and has done so for over 10 years, processing up to 750 transactions a second at peak times. The system and the processes around it offer a very high level of security and resilience and are designed to ensure that, should part of the system or equipment fail, the integrity of the accounting records is always maintained. [It’s] has proven to be very robust since its introduction.
“[It] was fully tested at the time of the nationwide implementation and all new software releases are also subject to rigorous testing … For example, testing for the latest upgrade to the system … was independently assured by Wipro as being ‘best practice’ …
“As regards ongoing performance, the … information security management systems are accredited to industry standards … A transaction log is available for every branch and full audit logs of all system and user activity and transactions are securely sealed, backed up and retained to provide an evidential and investigative repository.
“The system is based on principles of ‘double entry bookkeeping’.”
If we go over the page, please. I think that’s the end. So you sign or would have signed it off.
You see here, this is still taking, in the first paragraph, the line that Horizon is an operational issue, the Government maintains an arm’s-length relationship with the Post Office and it’s, therefore, for the Post Office to answer?
Sir Edward Davey: Yes, though I should add that, by this time in February 2011, I had had the meeting with Sir Alan Bates in October, and I had asked my officials to ask POL a whole series of extra questions. So, by this time, when I was writing, while that was still my view, because it was the law from the 2001 Act, I felt – certainly the officials drafting my letters must have felt – that I made those enquiries following the Sir Alan Bates meeting, and so the letters seemed received to be a bit more detailed by this time.
Mr Beer: You mention again the 2001 Act, I think you mean the Postal Services Act 2000?
Sir Edward Davey: Oh, I beg your pardon.
Mr Beer: That’s all right. You have said a number of times that it was what the law required. What did you understand the extent of the prohibition or the limits of the prohibition on Government becoming involved in the affairs of the Post Office as imposed by the 2000 Act?
Sir Edward Davey: I guess it was more on the day-to-day operation, and when there were strategic issues, policy issues, then we ought to get involved and, as we’ll no doubt come to, when I had the second letter from Sir Alan Bates, although I wasn’t advised to meet him, the number of people who have engaged in that second letter, it did seem to me that this was becoming more than an operational matter. There was something that I needed to find more information about.
Mr Beer: Because you see here, this doesn’t simply stop at the first paragraph –
Sir Edward Davey: Indeed.
Mr Beer: – saying this is a Post Office matter. It essentially adopts the Post Office account?
Sir Edward Davey: Yes, it does. From my perspective, as a Minister signing that, by this time, I had done – made my officials look further at the issue. But you’re right, we were still referring back to the 2000 Act.
Mr Beer: So by this time, E because officials had looked more deeply into the issues raised, it was permissible and not contrary to the law to adopt the Post Office’s account in a reply to MPs?
Sir Edward Davey: No, I’m not saying that, Mr Beer. I guess I’m saying that the officials felt able to put more into the reply.
Mr Beer: But the – what they put into the reply was essentially the Post Office account?
Sir Edward Davey: Indeed.
Mr Beer: So the prohibition isn’t operative at this point, you don’t stop at paragraph 1?
Sir Edward Davey: No, they – officials, given that I had asked them to look into it, could have been looking into it more.
Mr Beer: Can we move back to the meeting with Sir Alan Bates on 7 October 2010, and start with what was the precursor to it, which was Sir Alan’s second letter. That’s UKGI00016099. We should find a letter of 8 July 2010, so it’s in the midst of that slew of correspondence and PQs that I showed you.
“Dear Mr Davey
“I have to say your response to me dated 31 May 2010 [that’s the one we’ve looked at] regarding the very serious issues I had raised was not only disappointing but I actually found your comments offensive. It seems that though there are new politicians in post, the Government has not changed. The letter you sent is little different to the one I received seven years ago from the minister responsible for post offices at that time, and so many more lives have been ruined in the interim because of that same attitude.
“It’s not that you can’t get involved or cannot investigate the matter, after all you do own 100% of the shares and normally shareholders are concerned about the morality of the business they own. It is because you have adopted an arm’s-length relationship that you have allowed a once great institution to be asset stripped by little more than thugs in suits, and you have enabled them to carry on with impunity regardless of the human misery and suffering they inflict.
“You can listen to your civil servants telling you these issues are really an operational matter for POL to deal with. You can even listen to [the Post Office] telling you that Horizon is wonderful, that there has never ever been a problem, it is inherently robust, and there is our just a few malcontents trying to cause trouble. Or you can meet with us and hear the real truth behind Horizon and what the Post Office is actually up to.
“Your civil servants and [Post Office] will not tell you about [Post Office] staff harassing sick ex-subpostmasters demanding written promises of money or they’ll send the police round. They won’t tell you that [Post Office] watches post offices heading into trouble, fails to provide any help, and then waits until the problem shows a loss of £20,000 [or more] so that the subpostmaster then falls foul of the Proceeds of Crime Act. They won’t tell you that when someone wants to sell their post office and has a suitable buyer, [Post Office] will turn down the applicant to drive that business into the ground. You won’t hear about subpostmasters endlessly requesting audits of their offices and having to wait for up to five years for someone to turn up, in offices turning over £5 million a year. Neither will they tell you of the cases where [Post Office] have run an audit, closed a post office bankrupting the owner who loses his business, house and family, holds a pending court case over him for 18 months, then drops the charges and walks away. Nor will they tell you about how they are stopping subpostmasters selling on the post office side of their business in order to recover their original investment. They won’t even tell you that the Horizon system is designed to entrap subpostmasters so that they can easily finish up in prison, just by tying to open the day after a trading period balance.
“This is just a taste of some of the practices your company is carrying out in your name, day after day. They brandish a big legal stick, fail to provide evidence in court and rely on the clause in the 1994 contract, about a subpostmaster being liable for any loss from their office however it occurs, yet it is their shoddy Horizon system that is the root cause of all this. Post Office themselves lose thousands of pounds from each of the Crown Offices that they run using Horizon, though their staff are not treated as guilty until proven innocent, but a subpostmaster is!
“The whole of this scan is teetering on the edge of a precipice at this point in time, but it is still not too late for you to reconsider convening a meeting to discuss the issues involved, if you are prepared to keep an open mind.”
Can we turn up page 25 of your witness statement at paragraph 104, please. You say:
“I recall being shown that letter by officials (probably in my private office) and being asked what I wanted to do. Realising that Sir Alan was quite cross with my initial reply, and reflecting on the seriousness of the concerns he was raising, I told my officials I wanted to meet him. I do not what, if any, advice my officials gave me at the time, but I did meet Sir Alan on 7 October. I note that Mike Whitehead’s briefing [of] 5 October 2010 … stated that officials recommended offering a meeting ‘for presentational reasons’. As far as I can remember, that briefing – long after the meeting had been arranged – was the first time that ‘presentational reasons’ for the meeting were mentioned to me. They were certainly not the reason I decided to meet Sir Alan Bates following his second letter. As set out above, I told officials I wanted to meet him because I could see he was cross at my initial response and wanted to hear his concerns directly.”
So, in summary, you’re saying that the meeting was arranged because you decide that it should be arranged, you could see from the content of his letter that he was angered by your reply and you denied that presentational reasons, as per the briefing of 5 October played a part?
Sir Edward Davey: Yes, that is my recollection. I should add, Mr Beer, that in, I think, one of the bundles that came quite late to me I noted an email from Mike Whitehead to Post Office Limited telling them that I had asked to meet JFSA, where he said that I had done that on the basis of the second letter of Sir Alan and being told that Channel 4 news were thinking about some report –
Mr Beer: We’re going to come to that in a moment.
Sir Edward Davey: But the point was – and he had added I had given no advice for that meeting.
The reason why I bring that to your attention and the Inquiry’s attention, Sir Wyn, is it sort of confirms my recollection because I’m having to recollect issues from 14 years ago. I do remember my official from my private office coming in to me, talking about this letter, showing me the letter and me making the decision there and then that I ought to meet him.
Mr Beer: Can we look at the two pieces of evidence in turn, then, starting with the briefing of 5 October 2010. UKGI00000062. This is the briefing of 5 October 2010, two days before the meeting was going to take place. We’re going to come back to the substance of the briefing after the afternoon break. I just want to look at one part of it at the moment in relation to this narrow issue of the reason for agreeing to meet.
Can we look under “Background to the meeting”, and can you see in the third line Mr Whitehead says to you:
“His [that’s Alan Bates] second (more confrontational) letter of 8 July was followed by reports that Channel 4 were planning to run a news item on the JFSA campaign. We then recommended offering a meeting in response to this 2nd request for presentational reasons against the background of potential publicity (Channel 4 News item) playing heavily on Government Minister ‘refusing to meet victims of Government owned Post Office Horizon IT system which has systemic faults resulting in wrongful accusations of theft/false accounting’.”
Just dealing with that piece of evidence to start with, in terms of accuracy, it’s right that Sir Alan wrote a second letter on 8 July, isn’t it?
Sir Edward Davey: That’s correct.
Mr Beer: It’s right that that second letter was more confrontational than the first?
Sir Edward Davey: Very much so.
Mr Beer: It’s right that it was followed by reports that Channel 4 was going to run a news item on the JFSA campaign?
Sir Edward Davey: I now understand that to be the case, yes.
Mr Beer: But you say it’s wrong that the recommendation to you was that the meeting was to be agreed to for presentational reasons?
Sir Edward Davey: That is wrong. I have this memory of this meeting with my junior official from my private office and there was no submission or recommendation for a meeting. It was my decision.
Mr Beer: Do you know why Mr Whitehead would say that the recommendation to you was to agree to a meeting for presentational reasons, if that was false?
Sir Edward Davey: I don’t know.
Mr Beer: The problem, would you agree, with agreeing to a meeting for presentational reasons is that it may suggest that there is, in fact, little or no interest in the subject matter but, instead, the guiding light is how it all looks to the outside world?
Sir Edward Davey: That’s what it would appear but that was certainly not in my mind and I repeat, from my statement, that this – the first time I saw this would have been in my red box of October. I took the decision to meet him in July, two months into my term of office.
Mr Beer: Meeting for presentational reasons would all be a bit plastic, a bit synthetic, wouldn’t it?
Sir Edward Davey: Totally –
Mr Beer: If –
Sir Edward Davey: – and it’s worth adding at this point, Mr Beer, one of the things that was in my mind in accepting and asking for the meeting, was because there had been an organisation set up. The Justice for Subpostmasters Alliance seemed to me that number of people had come together, and while a Minister could not respond to a court case involving an individual subpostmaster, it seemed reasonable to meet a group of people who’d come together and, with his second letter, understanding a little more, two months into office, who he was and there’d been these other – these written questions and, you know, because it had begun to be an issue coming across my desk, I felt it was right to meet him.
Mr Beer: Was the meeting agreed to because Channel 4 had picked up on the Parliamentary Questions?
Sir Edward Davey: No.
Mr Beer: Can we look, please, at POL00417097.
This is the email that I think you were referring to I think a moment ago, Sir Ed. It is dated 28 July 2010, so remember that Sir Alan’s letter was 20 July 2010, his second, more confrontational letter.
Mike Whitehead of ShEx writes to Sue Huggins and Mike Granville, who are both at Post Office, and Oliver Griffiths and Rosemary Buck who are both at ShEx, and says:
“Further to our discussion on Monday, Ed Davey has said that the JFSA should be invited to meet him. He took this view on the basis of the 20 July letter from JFSA and the briefing on the expected Channel 4 News item and without further advice from me.”
Then there is some other information that’s not relevant to our question.
This is a record, would you agree, which suggests that you took a view, ie decided, to meet Mr Bates in part because of a Channel 4 News item that was expected, doesn’t it?
Sir Edward Davey: Well, it’s his reporting of an oral meeting between my private office and myself. I have no doubt that the private office mentioned there could be Channel 4 News item but the letter was the substantive reason because it was a very strong letter, and I had no – as three goes on to say, there was no advice from him, there was no written submission, and advised me whether or not to take the meeting; the meeting was decided by me in my office, having read the 20 July letter.
Mr Beer: The email records that you took the view “on the basis of … the expected Channel 4 News item”. If that’s correct, that would be agreeing to a meeting in part for a presentational reason, wouldn’t it?
Sir Edward Davey: It would be. What I’m telling you is that I do have a recollection of this because the second letter was so strong, because two months into my posting I was beginning to understand there might be an issue here, I was beginning to understand that JFSA was an organisation representing a number of subpostmasters and it felt reasonable to meet them. Having spent a number of years campaigning on behalf of subpostmasters, to have a letter in the way that Sir Alan Bates wrote it, struck me very strongly, and so I wanted the meeting.
I have to say, a possible Channel 4 News item was not something that was particularly troubling to me.
Mr Beer: So there are two pieces of evidence, would you agree, that record that the reasons for meeting Sir Alan included a reason of how it would look?
Sir Edward Davey: There are. There’s the submission, and I remember being rather irked by that bit of the submission when I read it, but we were about to go to the meeting and it was the substantive points that I focused on, but Mr Whitehead wasn’t at the briefing with my private office, and he is taking that no doubt from – report from the officials who were there.
Mr Beer: Thank you, Sir Ed.
Sir, could we take the afternoon break, please, until 3.40?
Sir Wyn Williams: Certainly, yes.
Mr Beer: Thank you, sir.
(3.25 pm)
(A short break)
(3.40 pm)
Mr Beer: Can you still see and hear us, sir?
Sir Wyn Williams: Yes, thank you.
Mr Beer: Sir Ed, can we look at two documents at the same time, please, on the screen. The first document, please, POL00088974, and then UKGI00000062.
Thank you. You’ll see on the left-hand side is the briefing that was provided to you for your meeting on 7 October. It’s dated 5 October, written by Mr Whitehead.
Can we turn in that document, please, to page 3. Do you see under the heading “Integrity of the Horizon system”, at the foot of the page, can you see it starts with:
“The Horizon system has been in place for over 10 years.”
Then, if we go over the page, that paragraph ends in “the system”.
Next paragraph, “The system is currently being updated to ‘Horizon Online’”, and ends with “Horizon system”.
Next paragraph, “The integrity of both Horizon and Horizon Online is built on tamper proof”, ends in “branch accounts remotely”.
Next paragraph, “Critically, Horizon creates a separate audit file”, ends in “at the time concerned”.
Scrolling down, “Subpostmasters are trained on the system”, ends in “update the accounts”.
Next paragraph, “As with any large organisation”, ends in “ensure ongoing accuracy”.
Then a new heading “Action taken”, begins with “Post Office Limited has a regular system”, ends with “undertaken by the NFSP”.
Then all of the paragraphs to, in fact, the end of the document:
“No court has ever ruled that there have been problems with the Horizon system.”
Just going back to the start of that, on page 3 where it begins – scrolling down, thank you – when you read this, or when you would have read this, would you have expected that some system or process for verifying the accuracy of what you were being told had been undertaken.
Sir Edward Davey: Yes, I would have assumed I was being told the truth and that it was, from my officials, the best provide they could provide with me.
Mr Beer: You see the way it’s presented to you is as a matter of fact, that this is the single truth?
Sir Edward Davey: Yes.
Mr Beer: It doesn’t say “Post Office alleged to us the following”; it doesn’t say, “Post Office say to us the following”; or “We’ve asked for a briefing from Post Office and they have provided the following”.
Sir Edward Davey: It doesn’t say that.
Mr Beer: No. So would you read this as this is essentially being ShEx’s own account to you?
Sir Edward Davey: Yes.
Mr Beer: On the document on the right-hand side can we see a “Brief to BIS”, we know this is from the Post Office, we know it’s dated August 2010. It’s a brief to BIS for your prospective meeting with JFSA.
In that document, can we go, please, to page 2, and can we see a heading “Integrity of the Horizon system”, and a paragraph that says, “The Horizon system has been in place for 10 years”, yes?
Sir Edward Davey: (The witness nodded)
Mr Beer: Then, on the left hand page, if we can scroll down, we can see the next paragraph, “The system is currently being updated”, and on the right-hand side, “The system is currently being updated”; and then on the left-hand side “The integrity of both Horizon and Horizon Online”, and on the right-hand side – and so it goes on.
The entirety of the information in the sections that I’ve read you appears to be a cut and paste from the Post Office briefing: they’ve right clicked, swiped, cut and paste, or copied and paste?
Sir Edward Davey: (The witness nodded)
Mr Beer: Is that what you would have expected to have happen by your officials when they were briefing you, and not attributed it to Post Office?
Sir Edward Davey: It is not what I expected. When I saw these documents in the bundle sent to me it became obvious that there had been that cut and paste, as you say, and it surprised me.
Mr Beer: Why is it surprising that officials would simply swallow whole what the Post Office were telling them, by cutting and pasting an account into a Ministerial briefing?
Sir Edward Davey: I’d have thought they’d have had a meeting and argued – not argued but probed a bit because this meeting had been planned for. I’d asked for it in the July, two months after coming into office. It didn’t happen until the October, so there was plenty of time for them to prepare and, given there’d been a number of written Parliamentary Questions and letters, this was a very important meeting to me and people knew that and I would have expected a quality brief.
Mr Beer: Can I turn – we can get rid of the document on the right-hand side, please – to the meeting itself and, on the document on the left-hand side, go back to page 1 – thank you – and scroll down. Just stop there.
You’ll see that in the attendees are listed Sir Alan and then two lawyers, one from Shoosmiths and one from Coomber Rich called Issy Hogg, a Basingstoke-based firm of solicitors who have defended number of subpostmasters who have been prosecuted by Post Office in recent years. This was a meeting on 7 October and we know that Issy Hogg was Seema Misra’s solicitor and that Seema Misra’s trial started a few days later on 11 October 2010.
We also know, through other evidence, that David Smith of the Post Office and the Executive Team at the Post Office, were watching the trial very closely. Was, to your recollection, Seema Misra’s case and her impending trial discussed at the meeting?
Sir Edward Davey: I can’t remember but I think in the reply that I gave to Sir Alan, there was a reference to it. So I think –
Mr Beer: You sent that reply?
Sir Edward Davey: In the 7 December reply but that may have been because he wrote two letters subsequent to the meeting and it may have been in there and, I’m sorry, I don’t know but I can’t remember it being raised at the meeting.
Mr Beer: We haven’t got a note of the meeting, I think you understand, or haven’t been given the note –
Sir Edward Davey: No, and I asked the Department for the minutes and all the submissions from my diary and they weren’t able to give it to me.
Mr Beer: And same here.
Would you have followed the lines in your briefing?
Sir Edward Davey: By and large, yes. The lines were – the key lines that I took from them was that, as they say, being listening mode, and their reason for that was there was a possibility of a court case and they were – said it was prudent to – as you see in there, prudent to adopt a sub judice approach in the comments you make. I don’t know how many questions I asked; I certainly was keen to listen and hear their points of view.
Mr Beer: If you look at “Our objectives”, at the foot of the page, you’re advised by Mr Whitehead that:
“Tactically we would advise you to seek to establish at a very early stage whether legal action against Post Office is imminent/planned. If so, it would be prudent to adopt a ‘sub judice’ approach in the comments you make.”
Did you read that as being a device, ie to establish the concurrency of court action, therefore giving you an additional reason not to commit to anything?
Sir Edward Davey: I’m not sure if a device – I assumed they were giving me their best advice and they –
Mr Beer: The sentence begins with the word “Tactically”.
Sir Edward Davey: Well, there may have been wanting to protect me as a minister, I don’t know. But it’s difficult, Mr Beer, because I can’t remember exactly all the details of that meeting. I can remember how I considered Sir Alan. I’m happy to go into details about that but I don’t always follow the advice of my officials, and that’s why the meeting was taking place.
Mr Beer: The advice continued that you should:
“Emphasise that the issues raised by the JFSA are operational and contractual matters for [Post Office].
“Make clear that, as the shareholder, Government has an arm’s-length relationship … and doesn’t have any role in [the company’s] day-to-day operations.
“Establish whether … legal action [is contemplated or committed to taking place].
“If so, note it will be for the relevant legal process to decide on the JFSA case and that the issues are effectively sub judice.”
Then, over the page, please:
“Demonstrate that you are prepared to hear JFSA’s side of the story (JFSA claim both [Post Office] and officials are covering up the problems with Horizon) but make clear that you are not in a position to offer substantive comment.”
Then:
“Avoid committing to [setting] up an independent/external review of Horizon.”
Do you think you’re likely to have followed those lines?
Sir Edward Davey: I’m pretty sure I would have followed those lines, yes. I might well have asked one or two more questions than they wanted but it was a meeting which Sir Alan had wanted to put his case.
Mr Beer: Under the heading “Issues or elephant traps” in bold, Mr Whitehead says:
“… we recommend that you should be primarily in listening mode on the basis that any statements or comments made at the meeting may be subsequently quoted in any legal process involving JFSA or its members.”
Did you remain primarily in listening mode?
Sir Edward Davey: I would have certainly been in listening mode for most of the meeting. My normal practice would probably be to have asked one or two questions for clarification but I’m afraid I can’t remember the details of the meeting.
Mr Beer: Did you make any commitments in the meeting?
Sir Edward Davey: I can’t remember making – certainly not commitments to things like a review but I committed to come back to him, I would imagine, on the substantive points he was making, and no doubt we’ll get on to that. I certainly –
Mr Beer: Did you agree to do or require others to do anything?
Sir Edward Davey: Well, after the meeting, I asked my officials to follow up on all his points. I found Sir Alan a very reasonable and credible representative. He had a strong story and I felt it needed to be looked at again. The submission that I received – and we can no doubt go through other parts of it – it made a powerful case because it wasn’t just based on what my officials were telling me about Horizon but it was – also referred to the National Federation of SubPostmasters view and the courts had not found problems with Horizon. And those were three reinforcing points that he made in that submission but, because Sir Alan was very articulate and able champion for his case, I still felt, despite this submission, that more work needed to be done to reassure me that what was in the submission was true.
Mr Beer: Can we turn, lastly, then, to POL00186759. This is your letter to Mr Bates of 7 December 2010. I’m going to skip over the contents of the letters that you refer to earlier, in the interests of time. You say:
“Following our meeting, the points you raised as Chairman … are being followed up on my behalf by officials as part of our dialogue with the company. However, as I made clear … neither I nor the Department can intervene in cases which are sub judice or where court action has been determined, as in Mrs Misra’s and Mrs Buffrey’s cases.”
Given that one of the principal complaints was the conduct of the Post Office, which had led to court proceedings and convictions, how could officials follow up matters on your behalf if they could not intervene in cases where court action had taken place?
Sir Edward Davey: Well, the basic understanding that I have of court practices is that the executive arm of Government, be they officials or ministers, can’t interfere/shouldn’t interfere, and I wouldn’t seek to interfere, with the judicial process.
Mr Beer: Was anyone asking you, or your Department, to interfere with the judicial process, rather than examine the conduct of prosecutors?
Sir Edward Davey: I think they were wanting to – well, to be fair, I remember Jonathan Lord, in particular, the Member of Parliament for Woking, making it clear to me that they weren’t asking me to intervene, and knew that I couldn’t. But in terms of the prosecution process, that wasn’t, to my understanding of the meeting with Sir Alan, the core part of his questioning. The core part of his questioning seemed to be around issues to do with Horizon.
Mr Beer: You say in the third paragraph here that you realise that:
“… the core of the JFSA’s concerns relates to the Horizon system … However POL continues to express full confidence in the integrity and robustness of the Horizon system and also categorically states that there is no remote access to the system or to individual branch terminals which would allow accounting records to be manipulated in any way.”
I think you now know that that itself is a cut and paste from information provided from Post Office –
Sir Edward Davey: Indeed, I do now.
Mr Beer: – a bit like before? I’m not going to spend time in showing you the documents because I think you will have reached that conclusion yourself.
Sir Edward Davey: (The witness nodded)
Mr Beer: Again, are you disappointed that your civil servants have simply swallowed what they’ve been told by Post Office, by cutting and pasting, in this case, an email into a draft letter for you?
Sir Edward Davey: Particularly at this point because, having asked for the meeting with Sir Alan, having had the submission that I did but then saying I still think these points need to be looked into, I think that was an invitation for them to look rather harder.
Mr Beer: Thank you. At least on this occasion, it says, “The Post Office continues to express” so it’s attributing that which follows to the Post Office?
Can we turn, lastly, so far as questions from me are concerned, to your witness statement, please. It’s the end of your witness statement concerning your reflections, and it begins on page 41.
If we scroll down, you deal with your reflections in six subheadings. If I could look at those briefly with you because we’ve got your statement on the record. Start at page 42 over the page, please, foot of the page, “Duty of candour”. Do you there argue for the consideration of the introduction of a duty of candour, given that this was addressed yesterday in the King’s Speech.
Sir Edward Davey: I do and I strongly support –
Mr Beer: I’m not going to ask you further questions about it but you add your heft to that call; is that right?
Sir Edward Davey: (The witness nodded)
Mr Beer: Can we look at the foot of the –
Sir Edward Davey: Sorry, I was told not to nod, so yes.
Mr Beer: That’s a “Yes”, is it?
Sir Edward Davey: Yes.
Mr Beer: Thank you. Look at the foot of page 43, please. The second point that you make concerns the oversight of arm’s-length bodies, and you speak to that issue between paragraphs 142 and 143. Can you explain what you are suggesting, please?
Sir Edward Davey: Well, clearly, one of the big problems that arises from this tragedy and this appalling miscarriage of justice, is how the executive arm, the Government, the Department, oversees arm’s-length bodies. That’s come up in your questions today, Mr Beer.
Now, when we reformed Royal Mail Group and split off POL, I insisted there should be a ShEx official on the Board although that wasn’t welcome, I’m told, but I insisted on it and it follows from that, I’m a big believer in proving corporate governance and greater transparency. I think the lesson from this appalling situation is we need possibly to go even further and Government’s should look across the piece to all arm’s-length bodies to check that the governance is appropriate so the oversight is genuine, real and thorough.
Mr Beer: The third reflection that you make is over the page at page 44, concerning the relationship, essentially, between the executive and the judiciary, and if we skip forward to paragraph 149 on page 45, you posit the creation of a new process. Can you explain what you have in mind?
Sir Edward Davey: It seems to me that, if there is a real concern about too many prosecutions going through the court system that shouldn’t be, that there needs to be a process within Government for officials, for ministers, to raise questions. There is a real balance, though, and I’m sure Sir Wyn will appreciate this, you don’t want to give ministers a power to abuse the court’s independence. So I don’t quite know what that might be but I’m positing that should be at least looked at. But I go on to say it would be far preferable if there were reforms within the legal profession, the judiciary, to learn the lessons from what happened, rather than allowing the executive to intrude into the judicial arm.
Mr Beer: Thank you. Suggestion number 4 at the foot of the page is in relation to prosecutorial powers and what you say there is contained in those two paragraphs, 151 and 152, and you make the general point that it seems to you that prosecutions are best left to the CPS, who are independently investigated?
Sir Edward Davey: Indeed it is.
Mr Beer: Over the page, please, suggestion number 5. The suggestion, I think, to strengthen the protection afforded to whistleblowers?
Sir Edward Davey: It is, because it seems to me in this case the critical piece of evidence for the High Court – and you saw it in the ITV drama, you saw it – although I didn’t see it at the time – in the BBC Panorama in August 2015, the key thing was the evidence from Richard Roll. And we’ve seen in other scandals it’s been the whistleblower that’s been fundamental to that, and other countries have a much stronger protections for whistleblowers than we do and, indeed, I mentioned this in the House of Commons yesterday: we do need a much more robust system to enable and persuade and encourage and support people coming forward when they see that lies are being told.
Mr Beer: Then lastly, number 6, if we scroll down, please, to summarise, you say in paragraph 156 that you think that the idea of mutualisation of the Post Office, which you describe as radical, might offer a productive way forwards.
Yes, the Post Office Network is really important for our society, our country and our economy, and subpostmasters, in my experience, are cornerstones of our community, and I actually argued at the time – the idea came from the National Federation of SubPostmasters but it reflected parties that my party had put in the Coalition Agreement, that we should look at mutual models and so, although it wasn’t in any briefing, it wasn’t from officials, I put into the Postal Services Bill, I think it was clause 7, the enabling power for, in the future, the Post Office to be mutualised, and that would mean that subpostmasters were in control and there would be no such thing as POL.
And, as we look forward, the Post Office is so important, the subpostmasters and their community, we need to find a way to strengthen them, support them and rebuild the trust in that institution and it seems to me mutualisation offers a way forward, I legislated for it, so I hope that could be taken forward.
Mr Beer: Sir Ed, thank you very much. Those are my questions.
Sir, there are some questions from Core Participants. Mr Moloney first, I think, up to 15 minutes; Ms Page second, up to ten minutes; Mr Stein third, up to ten minutes; and then Ms Watt, on behalf of the NFSP, up to three minutes. So it’s about a 4.35/4.40 finish.
Sir Wyn Williams: We’ll see, Mr Beer.
Mr Beer: Thank you very much.
Mr Moloney first.
Questioned by Mr Moloney
Mr Moloney: Sir Ed, I’m over here. Thank you. My name is Tim Moloney and I represent a large number of subpostmasters, all of whom were prosecuted to conviction and all of whom have subsequently had their convictions quashed.
Sir Ed, you received number of letters from MPs on behalf of postmaster constituents – and you’re now not following your own lessons, which is to say yes, rather than simply nodding. Would you say, yes, rather than simply nod?
Sir Edward Davey: Yes. Yes, I did receive some letters.
Mr Moloney: Thank you. You sent number of letters in response?
Sir Edward Davey: Yes, I did.
Mr Moloney: You told the Inquiry that these letters in response were drafted by officials and you examined them and signed them, was the usual process?
Sir Edward Davey: Yes, that’s right. There would be a file of letters in my red box, between 20 and 25, and I would sign them – yes, essentially, I would sign them most nights.
Mr Moloney: Those letters would cover a wide range of subjects, not simply postmasters?
Sir Edward Davey: Oh, a huge number of subjects, as I say in paragraph 14 of my evidence, I was responsible for a range of things from employment affairs to trade, to competition policy, consumer affairs and, yes, I had a large variety of issues and, within Royal Mail and Post Office in the postal affairs umbrella, there were a number of other issues raised, not just Horizon.
Mr Moloney: Of course. Would you always just sign the letters, or might you sometimes raise matters with officials that you’d like checked?
Sir Edward Davey: Very occasionally I wouldn’t sign them. That was very unusual but, occasionally, I wouldn’t sign them.
Mr Moloney: So far as the letters to MPs about postmasters were concerned, were many of those pro forma?
Sir Edward Davey: Broadly speaking, that’s true. But they – there was always a little bit of difference but they followed the same lines, the sort of things that Mr Beer has been talking about.
Mr Moloney: Precisely, and Mr Beer showed you the letter to Karen Lumley MP?
Sir Edward Davey: Yes.
Mr Moloney: Might we just look at that again, just very briefly. That’s UKGI00013913. That’s a good example, just to see the format that it takes.
If we could just focus it, thank you, and scroll up, if we can. So, essentially, thanking you for the letter, is the first paragraph, and then the issues are operational and contractual, and the Minister and the Department cannot intervene in cases which are sub judice or where court action had been determined, essentially confirming what you said earlier: that the Minister could not respond to individual cases of subpostmasters, individual court cases.
Sir Edward Davey: That’s true.
Mr Moloney: Then there’s mention there of the blame on Horizon, then the next paragraph is how widespread Horizon operates. Next one is the testing of Horizon, and so on.
Sir Edward Davey: I think I should say, to be as helpful as possible, that I think – and I haven’t analysed them in huge detail because there weren’t that many, but there were some before I met Sir Alan, some just after, and some after I’d replied to him.
Mr Moloney: Yes.
Sir Edward Davey: And I think you’ll see a little bit of difference in the replies that my officials drafted.
Mr Moloney: Sure. I don’t suppose you recollect sending a letter concerning a Mrs Allison Henderson to Norman Lamb MP, do you?
Sir Edward Davey: No.
Mr Moloney: Right. Mrs Henderson sent a letter to Mr Lamb and asked that it go to the relevant minister and that letter was then forwarded to Vince Cable initially, but then it came to you. Can we have look at Mrs Henderson’s letter, which is POL00294731. That’s the covering letter from Norman Lamb who was your successor in fact, wasn’t he?
Sir Edward Davey: Yes, he was.
Mr Moloney: This forwards the letter of Mrs Henderson to Vince Cable, as we can see there, but it eventually came to you. If we go to the next page, we see the substance of Mrs Henderson’s letter, and then if we could scroll up, it’s addressed to Mr Lamb, it’s November 2010. The first paragraph is the reason for Mrs Henderson writing. The second is her history of being postmaster at Worstead, leaving Hertfordshire and becoming a postmaster, the finding of £18,000 missing from her office, reduced to £11,000 and she’s now facing a trial at Norwich Crown Court accused of theft and false accounting. She says, in the next paragraph:
“I have never taken a penny from that post office but the prosecutors from the Post Office do not believe me [essentially there saying that there were Post Office prosecutors there], hence the trial. I was aware some time ago that the figures were wrong during a weekly balance – some £4,000 appeared to be missing. I tried to find the missing amount without success, and due to the fact that the [Post Office] helpline were less than helpful decided to roll over the figures hoping that an error notice would be issued from Chesterfield and the matter resolved. This did not happen and for some reason the figures just seemed to get larger.
“Post Office Counters are adamant that there are no issues with any part of their IT systems and are demanding that I pay back the apparent missing money as well as face a trial.”
If we could go over to the next page, which I believe is blank, and then to that final page, and this is the fourth paragraph on that page:
“My office surprisingly escaped the last round of closures, but now instead of having to pay me a redundancy sum, my reputation has been wrecked and I face the prospect of a possible prison sentence, heavy fine, or some other criminal punishment plus having to pay of the Post Office a large sum of money. Money that was never taken from the office, but just seemed to vanish into cyberspace.”
Your reply to that is UKGI00013863. Could we put that up, please. Might we try also to put up the letter to Karen Lumley MP next to it, which is UKGI00013913.
Thank you. Now, we can see the similarities between the letters but there are also some important differences. We see the first paragraph is thanking as, before, and the issues raised paragraph, the first four lines are the same in each letter. But then there’s further detail added in relation to Mrs Henderson’s case that I’ll come back to.
We then see at the third paragraph “The Horizon computerised accounting system operates”, and we see that at the bottom of the page on Mrs Henderson’s letter. If we scroll up on both letters, on the final paragraph – yes, thank you – we see the Horizon system was tested and we see the Horizon system was tested as the first paragraph on the second page of Mrs Henderson’s letter.
As regards ongoing performance, we see the second paragraph on both, and then the system is based on the principles of double entry bookkeeping. So very similar.
But if we could please just go back to just Mrs Henderson’s letter on the screen now, and to the second main paragraph on the first page. If we just focus in on that second main paragraph in Mrs Henderson’s letter, on the right-hand side of the screen:
“The issues raised in your letter are, however, operational …”
That’s great, thank you very much:
“The issues raised in your letter are, however, operational and contractual matters between Post Office Limited and Mrs Henderson and I should make clear that neither I nor the Department can intervene in cases which are sub judice or where court action had been determined.”
Essentially consistent with your evidence this afternoon. However, it goes on:
“I understand that Mrs Henderson was charged to appear at Norwich Crown Court on 15 December 2010. I further understand that she pleaded guilty to false accounting (POL having dropped a charge of theft) and the court imposed a sentence of a Community Penalty Order with unpaid work of 200 hours and £1,500 costs. Mrs Henderson also repaid the shortage and, I understand, at no time during the case were any problems with POL’s Horizon IT system raised by Mrs Henderson, or separately identified.”
So, in this case, in Mrs Henderson’s letter, it does comment on an individual case. It gives the circumstances of her pleading guilty and, moreover, goes on to say that she didn’t say anything about Horizon; do you accept that, Sir Ed?
Sir Edward Davey: That’s what it says in the letter.
Mr Moloney: Indeed. Would you accept that the comment has the effect of saying that, well, while Mrs Henderson may be alluding to the unreliability as the cause of her problems in the letter to you, Mr Norman Lamb MP, she didn’t do so in the proceedings against her when it really mattered?
Sir Edward Davey: Well, I assume, when my officials drafted that, that was what they had in their mind, yes.
Mr Moloney: Yes, and you’d accept, would you, that such a comment would be likely to undermine the trust that Norman Lamb, her MP, might have in her sincerity?
Sir Edward Davey: Yes, I feel very sorry for Mrs Henderson and, frankly, all of the postmasters and mistresses who have been so badly affected by this miscarriage of justice, and this clearly would not have helped.
Mr Moloney: No. I asked you at the start whether, whilst officials wrote letters for you, would you sometimes raise things if you thought you might have to be careful about things, and so on? Did you raise anything in this instance?
Sir Edward Davey: No, I didn’t.
Mr Moloney: Why would such a point-scoring comment be included in a letter from your Department, essentially saying, “Look, this woman is complaining about Horizon but when she went to court she didn’t”? Why would a point-scoring comment of that nature be included in a letter from your Department?
Sir Edward Davey: I don’t know.
Mr Moloney: It might be viewed, mightn’t it, as siding with Post Office?
Sir Edward Davey: It can certainly be interpreted that way. Absolutely.
Mr Moloney: Did you think at the time it was right to send a letter like that?
Sir Edward Davey: I genuinely can’t remember. I can’t recall signing this letter and, if it gave offence to Mrs Henderson, I apologise to her.
Mr Moloney: Do you know where that information came from about her not saying anything about Horizon?
Sir Edward Davey: No.
Mr Moloney: Well, can we please just look at the judgment of the Court of Appeal Criminal Division in the case of Hamilton & Others, which is POL00113278, and the first part of this judgment I’d like to look at is paragraph 116, which is at page 29 of the judgment.
Here we are. Could we scroll up just a bit so we can see what’s beneath that paragraph as well. That will really help. Thank you. That’s perfect.
“The appellant Allison Henderson pleaded guilty to false accounting and POL offered no evidence on the charge of theft. Before agreement was reached tot hat effect, POL’s prosecuting lawyer gave instructions to counsel that a plea to false accounting on the basis that Horizon was at fault would not be acceptable. In her case it is conceded that:
“It was improper to make the acceptability of her basis of plea conditional on her making no issue of Horizon;
“Since the theft charge that been dropped, [Post Office] could no longer advance a case that she had stolen any money, and it should have been open to her to suggest that there was no actual loss and she had only covered up a shortfall created by Horizon.”
If we could then move forward six pages, please, to paragraph 156. If we could see the whole of that page, thank you. That’s enough. Here we see more details in relation to Mrs Henderson’s case. There are the circumstances of her plea, as reflected in your letter. At 157, we see that, in fact, Mrs Henderson denied theft, and this is five lines in:
“… but accepted that she was contractually obliged to make good any discrepancies and was making efforts to do so. In an amended, signed defence statement, served on 16 November 2010, Mrs Henderson said that it was her belief that any discrepancy:
“‘was a result of a malfunction of the Horizon computerised accounting system … any discrepancy could have been discovered by the Post Office auditor’”, and so on.
If we go further down, please, so that records what was in her defence statement and gives the lie to what was said in your letter just from the outset, as it were, Sir Edward, and we then see, though, in paragraph 159 that, at the end of September 2010, Mr Wilson wrote to an investigator, essentially saying that a plea on the basis of Horizon unreliability would not be acceptable.
If we go down to the next paragraphs, please, and at 160, he says it in terms:
“Clearly if there were to be a plea to false accounting but on the basis that the Horizon system was at fault then that would not be an acceptable basis of plea for the prosecution.”
Then there is discussion.
It was absolutely plain that Mrs Henderson was raising Horizon all the way through this case and what was in your letter was a complete travesty, you can see now, can’t you?
Sir Edward Davey: What you’ve shown me is quite shocking –
Mr Moloney: Yes.
Sir Edward Davey: – and, clearly, I was asked to sign a letter which was clearly wrong. I didn’t know that at the time, I believed the letter to be true.
Mr Moloney: Plainly, the only checks that were done were with Post Office, weren’t they?
Sir Edward Davey: It looks that way.
Mr Moloney: Post Office did not tell the officials the truth, did they; they can’t have done, can then?
Sir Edward Davey: From what you’ve shown me they can’t have done.
Mr Moloney: But it looks like officials were more than happy, without question, to include a completely untruthful slur on Mrs Henderson in the letter in order to undermine her position?
Sir Edward Davey: It looks that way.
Mr Moloney: Yes, and, Sir Edward, you signed it without question as well, didn’t you?
Sir Edward Davey: Indeed, and I apologise for that. I have to say, when you are signing letters, you are working on the basis that people are telling you the truth and that’s the only way that Government can work. It’s one of the reasons why we need a duty of candour. It is shocking that people have misled ministers, misled subpostmasters, above all.
Mr Moloney: I’m sure you can, but can you understand the hurt that must have caused Mrs Henderson?
Sir Edward Davey: Of course I can, and I apologise to her.
Mr Moloney: Can I ask you this question about the more general statement you have made: was it appropriate/is it appropriate for a Department to only go to, for example, Post Office for information, when it’s Post Office that is being challenged?
Sir Edward Davey: I think what comes through what you’ve just shown me is that I think if departments are quoting court cases, they should go back to the court case.
Mr Moloney: Thank you, Sir Ed.
Sir Wyn Williams: Thank you, Mr Moloney.
Who is next?
Questioned by Ms Page
Ms Page: It’s me sir, thank you.
Mr Davies, on the subject of lies, this lie originated in what the Inquiry knows as the Ismay Report. It goes like this:
“The integrity of Horizon is founded on its tamper-proof logs, its realtime backups and the absence of ‘backdoors’, so that all data entry or acceptance is at branch level, and is tagged against the log-on ID of the user. This means that ownership of the accounting is truly at branch level.”
Mr Beer has taken you to the way that that lie found its way into the Whitehead briefing to you, and it was a copy and paste from a Post Office briefing, which was a copy and paste from the Ismay Report. The rest of the Whitehead briefing was really aimed at persuading you to fob Sir Alan off; do you agree?
Sir Edward Davey: I think they wanted me to just listen and not ask questions, yes.
Ms Page: In effect, the officials closed ranks with the Post Office against the JFSA, and the subpostmasters, would you agree with that?
Sir Edward Davey: It’s really clear that the officials were following the line from Post Office Limited, that is really clear in the way you’ve described the Ismay Report finding its way into what was sent to me.
Ms Page: That report was commissioned, the Ismay Report, by David Smith, who you met with regularly, and Mr Smith was also, as Mr Beer said, keeping a close eye on the Misra trial, which started a few days after the meeting that you had with Sir Alan.
Sir Edward Davey: (The witness nodded)
Ms Page: Mr Smith was delighted with his team for securing the conviction against Mrs Misra. He apparently, or at least the team apparently, believed that it vindicated Horizon that Mrs Misra had been convicted; did you ever raise the JFSA complaints directly with David Smith when you met him?
Sir Edward Davey: This is an interesting point. When I got the letter to Sir Alan Bates of 7 December, which was essentially my response to the questions he’d asked at the meeting, which I’d asked to be followed up and checked, I’m assuming, because it would have been my normal practice, that I would have discussed that with either an official or with a member of Post Office, in this case David Smith.
I have racked my memory to see whether that was raised, and I assume I did it, but I cannot remember the precise meeting or the precise discussion.
Ms Page: How regularly were you meeting with him at that sort of time, in the latter end of 2010?
Sir Edward Davey: I genuinely don’t remember, I don’t think it was that week. Most of my meetings at the time at postal affairs were to do with the Bill and the Royal Mail Group, but I remember meeting him on one or two occasions. He was not a frequency attendee.
Ms Page: Can I – sorry.
Sir Wyn Williams: I don’t want either Sir Ed or you to be on a false premise here. My recollection is that Mr Smith’s tenure as Managing Director ended in 2010 but I stand to be corrected.
Ms Page: You’re quite right, sir.
The Witness: Correct.
Sir Wyn Williams: I wouldn’t want Sir Edward to think there were many, many months when he was in post, that is all.
Ms Page: No, you’re absolutely right, sir. He was only there for a short time during the period but, obviously, covering this period of autumn 2010.
Sir Wyn Williams: Yes, certainly, yes.
Ms Page: Can I then just turn to the letter that you wrote to Jonathan Lord and the background to that, Jonathan Lord being Ms Misra’s MP. Mr Lord wrote to you about the Misra case and, if I can bring that back up, please, it’s POL00004279. I haven’t been able to find a very good copy of this letter but one of the points that is raised within it is remote access, albeit in a slightly roundabout way.
If we go, please, to page 7 and if we zoom in at the bottom of the letter, we can see how he raises it. Penultimate paragraph in the final sentences:
“I know that the Horizon system has had a great amount of problems since its introduction, and the majority of subpostmasters have blamed it as a defence in court cases.”
Then this:
“I also gather that access to the system is possible remotely through the Post Office’s network.”
It seems that that has been picked up by Mr Whitehead because, if we could then, please, go to POL00417094, he sends an email to Post Office following up on that. If we look at the bottom of page 1 going into page 2, there’s the email where he picks up on it. Thank you. It’s 26 November, and he says:
“Mike
“Thanks.
“Re the Lord/Misra case, can we quote POL as categorically stating that there is no remote access to the system or to individual branch Horizon terminals which would allow accounting records to be manipulated as JFSA claims?”
So it’s very specifically about the Misra case; do you see that?
Sir Edward Davey: I do.
Ms Page: Your reply to Mr Lord dealt with remote access in a very similar way to the letter that was written to Sir Alan, touching on the same subject which has just been shown to you by Mr Beer. Both of those letters were based on the wording from the POL briefing that you received. So to save time, I’ll simply give the reference for the letter to Mr Lord. It’s SMIS0000268, at page 3 and at least the passage on remote access has that same categorical refusal to accept it:
“POL also categorically states that there is no remote access to the system or to individual branch terminals, which would allow accounting records to be manipulated in any way.”
So that same wording is used as in the letter to Sir Alan?
Now, that letter will have been received by Mr Misra when Mrs Misra was in jail, because it was forwarded on from Mr Lord and you can imagine how that would have broken his heart.
Sir Edward Davey: It must have been dreadful for him.
Ms Page: An interesting point is, on the same day as the Post Office briefing was sent, which that letter was based on, so this is 2 December 2010, there seems to have been another communication going on about these cases and, if I can bring the reference up, it’s POL00295322. This seems to indicate that Mr Whitehead was asking further questions from Post Office and it says this:
“Mike,
“Further to your query.”
So this is from Post Office to Mike Whitehead, so evidently Mr Whitehead has raised a query – confused, of course, by the fact they are both called Mike – but evidently this is referring to Mr Whitehead raising a query:
“Further to your query.
“The position is that [Post Office] acts as a private prosecutor in relation to the specific criminal case – adhering to the Code for Crown Prosecutors and all statutory or other rules in relation to prosecuting offenders. It should be noted that legislation gives the Director of Public Prosecutions the right to take over and close down a case if they regard that as appropriate.
“I hope that this assists.”
If you look a little further down, you can see that this is on an email chain related to “SAVE MY WIFE”, that’s because that was the way Mr Misra had headed up various emails that were then being sent around.
So, clearly, it seems that, whilst seeking some information about the Misra case, there was also a question raised about whether or not these were private prosecutions; do you think you asked that question?
Sir Edward Davey: No.
Ms Page: Where do you think that might have come from?
Sir Edward Davey: I don’t know, presumably within ShEx.
Ms Page: It’s a telling question, isn’t it, given that most people at this time – most of the evidence we’ve had is that people outside of Post Office, and sometimes even people inside Post Office – it may surprise you to hear that even Ms Vennells claims that she didn’t know that Post Office was forming private prosecutions at this time, and yet clearly somebody has asked the question and been given the answer. Why do you think that didn’t filter out?
Sir Edward Davey: I don’t know. I find quite a lot of things I’ve been reading both shocking and surprising.
Ms Page: The key thing is that people were being sent to prison by a state-owned entity and that should have demanded real scrutiny, shouldn’t it?
Sir Edward Davey: It should, indeed.
Ms Page: It just doesn’t seem to have happened, does it?
Sir Edward Davey: Well, I am disappointed that the questions I asked were not put more forcefully and we didn’t get the answers. I had assumed that I was being told the truth.
Ms Page: Did you ever hear about the Misra case in any way other than the letters that we’ve seen – obviously not recently, I’m talking about back in the day?
Sir Edward Davey: Back then?
Ms Page: Mm.
Sir Edward Davey: I can’t remember beyond the letters. I’m sorry, I can’t be precise about what I knew about an individual case.
Ms Page: Do you remember hearing at all about Mrs Misra being sent to prison when pregnant?
Sir Edward Davey: I genuinely don’t, I’m sorry.
Ms Page: Thank you. Those are my questions.
Sir Wyn Williams: Thank you, Ms Page.
Questioned by Mr Stein
Mr Stein: My name is Sam Stein. I’m going to ask you some questions. I don’t think I’ll be that long.
Can we go to document RLIT0000251 and page 67 of that document. If we can centre on 5(b), if we go further down – so page 67 of the document on Relativity, please, internal pagination would be page 287. Thank you.
Now, to explain, Sir Edward, this is a part of the Infected Blood Inquiry report. The report itself was delivered on 20 May this year. You’ll see there at 5(b) the part that I’m going to quote, starting with the heading for that paragraph, “Ending a defensive culture in the Civil Service and government”.
Now, this is before the King’s Speech, which you replied to yesterday, and it’s the report in relation to infected blood, whereby Government lines were kept for many, many years, undisturbed by investigation. Okay?
So 5(b) says this:
“If, on review, the Government considers that it is sufficient to rely on the current non-statutory duties in the Civil Service Code, it should nonetheless introduce a statutory duty of accountability on senior civil servants for the candour and completeness of advice given to Permanent Secretaries and Ministers, and the candour and completeness of their response to concerns raised by members of the public and staff.”
Yesterday in the Commons you explained that, on behalf of the Liberal Democrats, you welcome the promised Hillsborough Law, with its statutory Duty of Candour on public officials. But you go on to say this:
“But we urge the Government to go further in this area.”
For the moment, then, let’s just pull two pieces together. You can see that, from the Infected Blood Inquiry Report, that the reference to the Duty of candour is not only in relation to candour itself, ie tell the truth, which might be thought as a basic minimum, but also for completeness of advice.
I’ve got a feeling you’re going to agree with my next question.
From the evidence and the questions that you’ve been asked today, you can see that there is a need for completeness of advice to include making sure that advice is right, not that you are being told what people believe is the truth because another entity tells it so. In other words, there’s got to be something that actually looks into this; do you agree?
Sir Edward Davey: I do agree. Strongly.
Mr Stein: Now, how to do that is not easy. Government needs to be able to sort out that the difference between someone that refers to the passing UFO – forgive me, any extra terrestrials watching – but it might be a different question to looking into the issues that relate to an organisation which is prosecuting its own people, and there there needs to be some type of body that is capable of carrying out investigation.
That would have to be backed up with some power, in other words, some powers to conduct an investigation and for other people to answer those questions. Do you again agree?
Sir Edward Davey: Yes, although I’m – for clarification, can you say a little bit more about what you’re proposing?
Mr Stein: Well, Government is going to have to consider a way of not only looking into things but also getting answers.
Sir Edward Davey: (The witness nodded)
Mr Stein: That may need a power of compulsion that the courts have, in order to call for evidence and documents, perhaps instruct experts. So do you understand that, from all of the evidence that you’ve given today, the sorts of questions that you’ve been asked, you need to go further than just making sure that officials are telling what they think is the truth; you need to look into it?
Sir Edward Davey: I agree with that.
Mr Stein: And to look into it, you’re going to have to have some power to get some answers.
Sir Edward Davey: Yes. I mean in the way, for example, a select committee has powers to call evidence and force people and call for papers, and to cross-check between what witnesses are saying. On a matter that’s as serious as this, when people are being prosecuted, losing their livelihoods, their homes and being so appallingly affected, there absolutely has to be those powers and that ability.
I mean, if I was in Government looking at this, I would want to make sure we’d learn from these various scandals and we restore the public trust in the system. The system has clearly failed on a most shocking way and has to be reformed, root and branch.
Mr Stein: That must be done in timely fashion.
Peter Holmes was a branch manager, Jesmond branch of the Post Office. He was convicted in 2010, not long before you took up your post. He had been a police officer in Jesmond. His area was his beat. He had had a hotel there. His great love in life was, with his family, taking drives out to the country. He was a modest man, who wanted to work to support his family and provide a service in the area, and hence he was a branch manager at a post office.
I mention timeliness of investigation: he died in 2015; his name was cleared in 2021. Do you see what I mean?
Sir Edward Davey: I absolutely do. I mean –
Mr Stein: Not only must there be an investigation, consideration of these matters that are serious, but it must be done so that where there is wrong, that wrong is identified.
Sir Edward Davey: Absolutely.
I mean, I hope you don’t mind, Sir Wyn: I have three constituents I’m representing now whose lives have been very severely affected by this scandal. I’m obviously not going to name names but, listening to their stories, like the one you’ve just spoken about, like so many, justice demands that we change the systems to make sure this can’t happen again.
Mr Stein: Agreed.
Sir Edward, you’re not in Government. You are now the leader of the third largest party in Government. You have increased weight and increased influence in Government. Will you use that weight in influencing Government to try and push through, so that there is something done in this area, a duty of candour plus, in other words take it that step further?
Sir Edward Davey: Yes, I hope when Sir Wyn finalises his report, alongside the Hillsborough recommendations, the Contaminated Blood Scandal recommendations and others, the Government implements those recommendations and, if it does, it will have the full support, indeed we will champion them. And I mentioned earlier another reform that we are championing, namely an office for the whistleblower because I do think that’s another important element of reforms. There are many we need to make. We can’t just rest at legislating for duty of candour, important though that is.
Mr Stein: Yesterday you mentioned the question of whistleblowers and stronger protections. What we have seen here within the Post Office Inquiry is that, for many, many years, subpostmasters were not brought within whistleblower protection by the Post Office.
Sir Edward Davey: (The witness nodded)
Mr Stein: Now, we think that that is because that they were agents of the Post Office and didn’t have employee status within the legislation. There are many people that work as agents, there are many people that work as consultants that are not protected by the whistleblower legislation. That is another area that I believe, you may well agree, needs concern, needs attention and needs change; do you agree?
Sir Edward Davey: Yes, I agree.
Mr Stein: Thank you, Sir Edward.
Sir Wyn Williams: The last series of questions, I believe.
Questioned by Ms Watt
Ms Watt: Thank you, sir.
Sir Ed, I ask questions on behalf of the NFSP.
I think, obviously, you mention the NFSP in your statement and the former General Secretary, George Thomson, and the Inquiry has heard what he had to say about his position on Horizon.
I want to ask you, though, about some of the other representative bodies or unions that you met with to find out what you gleaned about Horizon there. At paragraph 28 of your statement you say you met with the CWU 12 times and the NFSP nine times in your two-year tenure. The Inquiry heard evidence in June from the CWU’s Tony Kearns that, during the relevant period of Horizon, there were approximately 9,000 employees in Crown post offices using the Horizon system, and those employees would likely – perhaps not all – but likely have been CWU members.
It is accepted there were prosecutions and dismissals arising from Horizon data of Crown Office employees, and that there was an increase in prosecutions for them, albeit not at the level of the subpostmasters.
So what I wanted to ask you was: when the CWU came to meetings with you, did they raise anything about Horizon in those meetings?
Sir Edward Davey: I can’t remember them doing that at all.
Ms Watt: Do you remember if you ever asked them about Horizon?
Sir Edward Davey: No. The only thing I can remember, and it was an informal meeting with George Thomson from the NFSP, amongst many other issues because we were dealing with the Bill and Network Transformation, and so on, I did ask him about Horizon, although my brief had already told me that they didn’t agree with the JFSA, but I wanted to hear it directly from him. So I asked him. But I – it didn’t come up at any CWU meeting.
Ms Watt: It didn’t occur to you to ask, given that these people working in Crown post offices were actually Post Office employees and, effectively, civil servants?
Sir Edward Davey: Well, all I’d been told – and it’s there in the Mike Whitehead submission – that the Crown Post Office weren’t reporting any problems with the system.
Ms Watt: Thank you, those are my questions.
Sir Wyn Williams: Thank you, Ms Watt.
Is that it, Mr Beer?
Mr Beer: Sir, it is.
Sir Wyn Williams: Well, thank you, Sir Ed, for making a full witness statement and for answering a great many questions, both before lunch and after lunch today.
I’m very grateful to you for so doing.
The Witness: Thank you, sir.
Sir Wyn Williams: We’ll resume again at 9.45 with Ms Swinson; is that correct?
Mr Beer: That’s right, sir. Thank you very much.
(4.49 pm)
(The hearing adjourned until 9.45 am the following day)