Official hearing page

23 July 2024 – Lucy Neville-Rolfe

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(9.45 am)

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

Sir Wyn Williams: Yes, thank you very much.

Mr Beer: Thank you. May I call Baroness Neville-Rolfe please.

Sir Wyn Williams: Of course.

Baroness Lucy Neville-Rolfe

BARONESS LUCY NEVILLE-ROLFE (sworn).

Questioned by Mr Beer

Mr Beer: Good morning, my name is Jason Beer and I ask questions on behalf of the Inquiry. Can you tell us your full name, please?

Baroness Lucy Neville-Rolfe: Baroness Lucy Neville-Rolfe.

Mr Beer: Thank you. You’ve kindly made a witness statement. It’s 72 pages long and is dated 26 June 2024. Can we look at that, please. It’s WITN10200100. Can you turn to page 72, please; is that your signature?

Baroness Lucy Neville-Rolfe: It is indeed, yes.

Mr Beer: Are the contents of your witness statement true to the best of your knowledge and belief?

Baroness Lucy Neville-Rolfe: The contents are true. It was signed on 26 June when I was a Government Minister in the Cabinet Office. I’m now an opposition Member of the House of Lords.

Mr Beer: Yes, thank you. By way of background, I think you were a civil servant for 24 years between 1973 and 1997; is that right?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: Holding positions, amongst others, as a private secretary, a member of the Prime Minister’s Policy Unit in Number 10, and then as a director in the Deregulation Unit in the then DTI.

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: You then worked in the second stage of your career in the private sector, holding positions as a company secretary, a board member and as a NED, a Non-Executive Director, including in FTSE-listed companies; is that right?

Baroness Lucy Neville-Rolfe: That’s correct. I was an Executive Director at Tesco for 15 and a half years and then I also had non-executive roles, at various times.

Mr Beer: Then, thirdly, you were made a Member of the House of Lords in 2013, and from 2014 until 2017, you were a Government minister in variously the Business, Culture and Treasury Departments?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: You held ministerial responsibility for postal affairs, is this right, between 12 May 2015 and 13 July 2016?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: So a period of 14 months?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: I’m going to address matters chronologically, if I may, as you’ve done in the first part of your witness statement, rather than thematically, because hopefully, in this way, we will explore all of the themes as they arise across the 14-month period.

Can I start, however, with a high-level summary of the entirety of your time in office. It’s my summary and I want to know from you whether I’ve got it right. I’m going to split it into four stages or four periods. That may be somewhat artificial, as there was, I think, no neat dividing line in the four stages, no “lightbulb moments”, as you say in your witness statement, and the issues appear to have been evolving or developing for you.

But is this right: the first period of time, stage one, lasted from appointment in mid-May 2015, until a meeting with MPs and the Post Office in mid-July 2015, and this period, would this be right, would be marked by you being provided with information, principally by ShEx, which information suggested that it was established Government policy that Government maintained an arm’s-length approach to the Post Office, that Horizon had been independently and extensively investigated and that no systemic faults had been found with it?

Baroness Lucy Neville-Rolfe: I think that’s a fair summary. I mean there was also Criminal Cases Review Commission work into cases that people were worried about.

Mr Beer: This first stage was marked by you finding that information, reassuring and acting in reliance on it?

Baroness Lucy Neville-Rolfe: I think that’s largely true, yes.

Mr Beer: Accordingly, at this early stage, you followed the orthodox line that you had essentially inherited as part of Government policy?

Baroness Lucy Neville-Rolfe: Yes, to the extent I was writing letters to MPs, for example. But, obviously, I was aware that there were murmurings, especially amongst a few MPs who had particularly troublesome cases, like Mrs Hamilton – I think the Ms Hamilton case and that was one of the reasons I was very pleased that I was going to have a meeting with MPs to discuss some of that.

Mr Beer: Thank you. Then stage two, as I am going to call it, from mid-July 2015, your faith in ShEx’s advice was beginning to wane and this led to a desire in you to hear from different voices and for more independent scrutiny of the Horizon issues to be undertaken than had been offered by ShEx to date; is that fair?

Baroness Lucy Neville-Rolfe: That is fair, and I was also in receipt of advice – there was this Second Sight Report that was sent to me by one of the MPs and I was in receipt of advice from ShEx on that, which I was troubled by because it seemed to be a very cursory summary of what looked like a very long, complicated report, which I obviously had difficulty in understanding the ins and outs of.

Mr Beer: Then stage three, from about September onwards, you took the view that ShEx were failing to carry into effect your wishes and, to an extent, seemed to be working against you?

Baroness Lucy Neville-Rolfe: I think that came a bit earlier, to be honest. I was worried in August that I wasn’t getting broad enough advice, I tried to get in officials, without success, from the Department more broadly, and I also then asked the new chair, Tim Parker, of the – of POL, to take a fresh look and undertake an independent review of all of this. So that was actually in the August period. But, obviously, it was carried through later. I mean, in Government things take more time than in the private sector.

Mr Beer: Lastly, you determined that the only way forwards was to secure some form of independent investigation into the Horizon issues?

Baroness Lucy Neville-Rolfe: That’s correct, yes, and the question was how could one get this extra work done, recognising that there were arguments on both sides, of course, because I was being told in all directions that, actually, there wasn’t really an issue, there was no systemic problem with Horizon, and so on. So I was trying to find a way through to get some further work done because I just couldn’t believe that these people, who would be seemingly sort of honest, respectable people, were, you know – so many of them had been prosecuted and that’s what the MPs had been telling me.

Mr Beer: You were engaged, in relation to the Post Office, for a relatively short period of time, 14 months, whilst you held this ministerial brief but, would this be right, you were concerned by the apparent approach of ShEx officials to align their position very closely with that of the Post Office, rather than exercising an independent function?

Baroness Lucy Neville-Rolfe: Yeah, I think I came to that view gradually because they were obviously departmental officials, albeit slightly separate because they were in this thing called the Shareholder Executive, and I – in fact, Laura Thompson, who was my main official advice, she seemed, you know, quite like the other officials who worked for me, sounded very satisfactory in other areas, and, you know, she advised me in the classic way.

I didn’t really realise until later how coordinated that was with the Post Office. Obviously, they needed to go to the Post Office to find out the facts, particularly on individual cases, but I was looking to them for, obviously, the kind of independent, objective advice that, as a former civil servant, I knew was the job of civil servants.

Mr Beer: Thank you. With that overview in mind, can we start with your appointment and initial briefing. I think it’s right that you were aware, even before you took up the postal affairs brief, that concerns had been raised by some MPs about the Horizon issue and that that issue had been raised in Parliament; is that right?

Baroness Lucy Neville-Rolfe: That is right and there’d been a debate, and I’d – there’d been a piece of correspondence I had, which I had got in my bundle originally, about making a statement about mediation, which I’m not sure was whether it was eventually made, but the convention is that, if a statement is made by a Minister in the House of Commons, it’s then repeated routinely in the House of Lords. Although one doesn’t have any influence over the content, obviously one’s name is put to it. So, out of courtesy, it’s sent to you to have a look at. So I was aware of that.

Mr Beer: So that prior knowledge led you, I think, upon receipt of information from the Secretary of State as to the range of your portfolio and the fact that it would include postal affairs, to seek an early meeting about the problems with the Horizon IT System; is that right?

Baroness Lucy Neville-Rolfe: That’s correct, yes.

Mr Beer: Can we look at that, please. It will come up on the screen for you. You can probably put that witness statement to one side now because I won’t be referring to it very often. It will come up on the screen, WITN10200101.

If we can go to page 2, please, and scroll down, an email to – and can you help us – the email address is “Neville-Rolfe MPST-OLD”. An email sent to that email address, where would that go to in relation to you?

Baroness Lucy Neville-Rolfe: I mean, that’s the private office address so all your private secretaries have access to that.

Mr Beer: So we shouldn’t take any email that’s to “Neville-Rolfe MPST” as being an email that went directly and personally to you?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: Is it right that you would see some of these emails if private office chose to forward them to you or to print them and put them in front of you?

Baroness Lucy Neville-Rolfe: Exactly.

Mr Beer: Hannah Wiskin, the PPS to the Secretary of State says:

“The Secretary of State has considered carefully the [portfolios] across BIS and has decided on the policy areas [that are] contained in the attached.”

If we go to page 1, please, a reply from your private office, if we just scroll down, we can see it’s from Harriet Smith. Did you have more than one private secretary?

Baroness Lucy Neville-Rolfe: She was the main one but there’s a guy called Andrew who also features, who was the sort of number 2.

Mr Beer: Okay, so from your private secretary:

Hannah.

“The Minister is broadly content – she has commented as follows”, and then about the fifth paragraph down:

“The Post Office brief is troubling and I would like an early meeting on the problems with the Horizon System …”

Just stopping there, does this look, therefore, like text that has been cut into the email by your private secretary Harriet, through the use of the word “I”?

Baroness Lucy Neville-Rolfe: Yes, it does. Most likely, I’ve written that in manuscript on a document that she’d sent me. One of the problems about this particular Inquiry is that there isn’t any proper paperwork on the private office. This has been preserved, no doubt, because it came from the Secretary of State’s office but I don’t think most of the notes of my meetings and the submissions that came and what I wrote on them, none of that seems to be available.

It must have all got thrown away at some point but this looks very much like what I said and then I made this point that obviously I know that Post Office closures were a worry because we dealt with those when I – when some of the post offices – as part of transition, some of the post offices were coming into our neighbourhood stores, which, I mean, was a positive, to be honest.

Mr Beer: So you say:

“The Post Office brief is troubling and I would like an early meeting on the problems with the Horizon IT system and the losses people are complaining about. This will be a Parliamentary issue and it would be good to know who will answer on postal matters in the Commons. I dealt with Post Office closures a few years ago at Tesco and it was very problematic with local MPs including David Cameron – whom luckily we were able to help!”

So this is 18 May, within six days of you taking up office; is that right?

Baroness Lucy Neville-Rolfe: That’s right, yes.

Mr Beer: The purpose of this part of the email here, was it simply to work out where the Parliamentary business would sit as between the Commons and the Lords, ie who will actually be speaking in the Commons, or was it a deeper issue you were raising than that?

Baroness Lucy Neville-Rolfe: I think there were couple of things happening here. First of all, I’m being allocated my portfolios, some of which I was already doing, which were quite busy, and obviously the Bills that I had to do, I don’t think, are mentioned here, perhaps maybe they’re in an annexe. Secondly, I knew that taking the Post Office portfolio wasn’t without difficulty. I’ve recorded that. And then for good order, I needed to know who would be answering if there were a commons debate, for example.

It turned out to be Minister Freeman, in due course. I was always on to this point because I had to answer in the Lords for all my other colleagues, that’s one of the sort of challenges of being a Lords minister, just the sheer scale of work you have to do, which is not in areas that you’re responsible for.

Mr Beer: I think at the end of the month, at the end of May, you had an introductory meeting with members of ShEx –

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: – and that was ahead of a meeting specifically about the Post Office on the 2 June 2015. I think you’ve got a background briefing. Can we turn that up, please. Firstly, the covering email – UKGI0004415 – 29 May from Laura Thompson and, as you’ve said already, she was your principal contact, is this right, within ShEx?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: To your private office, with the subject of “Briefing for Baroness Neville-Rolfe” again, “ahead of introductory meeting on Post Office”:

“… please find attached some background briefing for [you] ahead of [your] introductory meeting on Tuesday of next week.”

Can we turn to the briefing itself, UKGI00004416. This is page 1 of the attachment. It’s a 28-page document and we can’t do it justice by going through all 28 pages here. I think you say in your witness statement that, overall, you found this to be a well prepared, clear and helpful briefing?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: Can we look, please, at page 2. This is the first substantive page and is essentially an executive summary. If we look at the last paragraph on that page, it says:

“A small but vocal number of mostly former subpostmasters have raised concerns about [Post Office’s] Horizon IT System, which they claim has caused their businesses losses. Over two years’ worth of independent investigation has found no systemic faults in Horizon and there is a mediation scheme to consider individual cases, but campaigning and media interest persists and BBC’s Panorama is due to broadcast a programme on this on 22 June. See slide 13.”

If we, just before we go to slide 13, look at page 3, please. Do you see in the bottom left-hand side of that slide, in bold italics the last entry:

“Government does not seek to influence [Post Office’s] day-to-day operations.”

Have you got that?

That’s it.

Baroness Lucy Neville-Rolfe: Yeah, thanks.

Mr Beer: Maybe, if we can just look at that in context we can see it’s essentially a running summary.

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: Was that the orthodoxy that ShEx told you was the essential operating position?

Baroness Lucy Neville-Rolfe: I think they explained, as I probably already knew, that it was at arm’s length, and we tried not to interfere because we were trying to make them behave commercially and that was how the model worked, and it followed from that that we weren’t influencing day-to-day operations. I mean, that didn’t rule out them asking many – if you look further on in the document, there’s a sort of programme of things that I should do as a new minister for the Post Office and I think that included – certainly I made, you know, visits to post offices on visibility. So but the day-to-day operations, how things run, what the IT system did, you know, which post offices you closed, how rapidly we transformed from the old model to the new model, they regard that as a matter for the Post Office. And I mean I supported that, as I think I’ve said in my statement, that there can be a lot of merit in allowing, you know, people to get on with it.

Mr Beer: I think you say in your witness statement that the model of an arm’s-length body operation with Government is not inherently defective but it depends on the honesty and reliability and competency of the people operating it?

Baroness Lucy Neville-Rolfe: It does, people on both sides, yeah.

Mr Beer: Can we go to slide 13, which is on page 14, please. This is the slide concerning the Horizon system and the Mediation Scheme. On the left-hand side, it records that:

“There has been over two years of independent scrutiny of [the] system and no evidence of systemic flaws has been found.”

Then in the body of the text, if we look at the first paragraph:

“Following complaints from a small number of (mostly former) subpostmasters about the … system, in 2012 the Post Office commissioned an independent firm, Second Sight, to examine the system for systemic laws that could cause accounting discrepancies.

“Second Sight’s Interim Report, published in July 2013, and the final report published in April 2015, both make clear that there is [and this is underlined] no evidence of system-wide problems with Horizon.”

At this time, did you have a copy of either the Interim Report or the final report that are mentioned here?

Baroness Lucy Neville-Rolfe: I don’t think so.

Mr Beer: Therefore, did you rely on what was said; in particular, did you rely on what we know to be a false statement that the final report makes it clear that there was no evidence of system-wide problems in Horizon?

Baroness Lucy Neville-Rolfe: Yeah, obviously, I believed that and that was – that line was – continued to be taken for some months by ShEx and, no doubt, the Post Office.

Mr Beer: At this point you had no information or material to know that that was a false statement, insofar as it applied to the final report?

Baroness Lucy Neville-Rolfe: No, and if you look at the pack, you know, it looks considered, they’ve gone through the various things that are going on. I mean, it looks orderly and well organised.

Mr Beer: The rest of the slide concerns the Mediation Scheme?

Baroness Lucy Neville-Rolfe: Mm.

Mr Beer: I am going to take that as read.

I think you asked for a further briefing specifically concerning Horizon; is that right?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: Why was that?

Baroness Lucy Neville-Rolfe: I think it probably dated back to that original exchange that we looked at, you remember, that I had known on appointment that Horizon was a problem area and so I – and I think it was – I felt that it was a slightly different subject to the sort of commercial and transformational issues that are looked at, at the rest of the pack. So it made sense to have a separate session and I wanted a bit more information. I think they sent me a longer submission.

Mr Beer: We’re going to look at that now, UKGI00004453. This is the longer submission, dated 2 June 2015. It is a six-odd page document. So the fuller briefing about the Post Office generally was dated 29 May. We’re now on 2 June. The “Purpose” of this document is recorded to be a “Further briefing on the Post Office Horizon IT System and associated Mediation Scheme, and seeking your views on handling this matter in future”, with a recommendation that you firstly note the briefing; secondly, that you agree that Government should maintain distance from this matter and resist calls for further independent investigation; and, thirdly, that you agree that officials, rather than ministers, should respond to future correspondence from the JFSA.

Do you, as well as obviously noting the briefing, agree those two recommendations, essentially?

Baroness Lucy Neville-Rolfe: I mean, I think certainly the third one, a letter went off to Sir Alan Bates from an official. So, implicitly, it’s clear that I did agree that, and I think it would fit in with my general approach. You have to look at it in the context of how many portfolios I’ve got and therefore how much correspondence and requests – it was a request for a meeting, I think, and I – my general approach was to see – if MPs asked to see me, then I would try and have an MP or a fellow peer, and if the Department recommended a meeting, particularly if it was from somebody like a trade union, then I would try and fit those in.

I was advised, I think – you’d have to go elsewhere in this document – that Justice for Subpostmasters weren’t sort of the equivalent of an accredited trade association/state trade union, that they were individuals and, therefore, I agreed that it made sense, within the spirit of how we organised correspondence, for that to go from officials.

Mr Beer: Can we look at the substance of the briefing, then, paragraph 2:

“[Post Office] commissioned an independent firm of forensic accountants, Second Sight, to examine the system for evidence of systemic laws which could cause accounting discrepancies. Their initial report (in June 2013) found no evidence of systemic flaws that could cause the issues raised. The report did find that in some cases [Post Office] could have provided more training and support to subpostmasters, and [Post Office] have since made changes to address these. [Post Office] also established a mediation scheme and invited current and former subpostmasters to come forward …”

Then, in paragraph 3, there’s some numbers given – 136 applicants versus an estimated 68,000 users in 11,700 branches – and:

“The vast majority of subpostmasters are using Horizon effectively every day.”

Was that a series of statements that ShEx officials made regularly to you: a comparison of the number of people who had come forwards, either to JFSA or through the Mediation Scheme, against the balance of users who were operating the system, it was said, effectively every day.

Baroness Lucy Neville-Rolfe: Yes, certainly, they’d put the numbers in context, but of course the Mediation Scheme was set up because there were sort of acute problems in a few cases. So it’s important context but not definitive.

Mr Beer: Paragraph 4:

“… Second Sight began their investigations in 2012, producing their initial report in June 2013 and their final report in April 2015. They’ve also undertaken separate investigations into each of the 136 cases in the scheme. There has therefore been over two years of independent scrutiny and in that time no evidence of systemic flaws in Horizon has been found.”

Then, if we go forwards to paragraph 7:

“Despite JFSA’s complaints and calls for a new investigation, it is our strong recommendation that Government should maintain the position that this is not a matter for Government, and increase our distance from the matter … attempts to prolong this matter do damage to [Post Office’s] brand and cost [Post Office] significant amounts of money in funding Second Sight and operating the Mediation Scheme. We also recommend that Government should resist any calls for further investigation – the matter has been comprehensively investigated over several years and the complaints of JFSA have borne no fruit. Reinvestigation would be neither value for money nor in the public interest …”

Then it’s repeated, I think, for the third time: “There is no evidence of systemic flaws in Horizon …”

Second bullet point:

“There is no evidence that any of [Post Office’s] prosecutions against subpostmasters for either false accounting or theft are unsafe. [Post Office] has got a duty to disclose any new material that comes to light that could support a subpostmaster’s defence, and none has emerged.”

At this time, had you got any material that suggested to you that that was a false statement?

Baroness Lucy Neville-Rolfe: No, I mean, I knew there were sort of enduring concerns, but I found this reassuring, in that the Criminal Cases Review Commission are looking at applications for review from subpostmasters and that POL has a duty, which obviously I was aware of from my corporate background, to disclose material that comes to light. I mean, that’s a very important principle of British justice.

Mr Beer: But, in particular, my question was slightly imprecise, the statement that no material – none – no material has emerged that could support a subpostmaster’s defence. I mean, you now know that, by this time, June 2015, much material had emerged within Post Office that might support a subpostmaster’s defence, in particular, you now know, I think, the advice that had been written about the principal expert witness, Gareth Jenkins, that the Post Office had relied on and the Post Office’s own conclusion that he had given evidence that was materially misleading and in breach of his duties to the court. At this time, did you know any of that?

Baroness Lucy Neville-Rolfe: Obviously, I didn’t know any of this at this time, although I would have pursued, you know, more detail. This is very strong advice, you know, it’s not “on the one hand … on the other”. ShEx haven’t sought to go, you know, into the detail of the individual cases and explain, you know, what the concerns are. I did ask for material on that, but that was later on in August. We’ll come to that in due course. As far as I can see here, there’s a very strong advice that there isn’t a problem, they looked into it all, there is no evidence, and even if there is and some material comes up, then that’s going to be shipped straight off to the Criminal Cases Review Commission.

I mean, that would have been the way I would have read that. Obviously, we’re looking back at hindsight at the moment and I was getting this unending and, you know – you know, always the same advice on all of these points from ShEx.

Mr Beer: Is the point you’re making that this, even as a piece of advice, contains no shades of grey: it’s very black and white?

Baroness Lucy Neville-Rolfe: Very black and white yes.

Mr Beer: No evidence, no evidence, no evidence?

Baroness Lucy Neville-Rolfe: Correct, and, you know, these were civil servants. I’d been a civil servant. You know, you have a duty to be objective and truthful as a civil servant, so obviously, you know, Government can’t cope if, you know, the civil servants aren’t looking at things, you know, honestly, which of course they may have been. You know, this is maybe what – this is presumably what they believed.

Mr Beer: Over the page, please. The top bullet point, which picks up a point you made earlier, Baroness Neville-Rolfe:

“It is important to note that the [Federation], which is the recognised representative organisation for subpostmasters, does not support JFSA’s arguments. The … General Secretary, George Thomson, has publicly said that he considers JFSA members to be ‘trying it on’ and there are their complaints are doing damage to subpostmasters’ businesses.”

Then if we go on to paragraph 8, please:

“To date, [Post Office] have generally sought to address JFSA’s concerns where possible, and throughout the process have maintained the confidentiality of all members of the scheme, even where individuals have waived their own anonymity and spoken to the press or where documents have been leaked by [Justice for Subpostmasters Alliance]. There has been some attention on this matter, mostly BBC’s The One Show and local news programmes. Subject to taking legal advice [Post Office] are now in favour of taking a more robust approach to handling JFSA, given that it is clear JFSA wish to derail the Mediation Scheme and prevent the final cases from being mediated.”

Then lastly paragraph 13, please – sorry, I should have read paragraph 9:

“We consider that a more robust and proactive approach from [Post Office], together with a more detached stance from Government, would be the right approach to minimise negative press and ensure the scheme can complete its work and close as swiftly as possible … Are you content with this approach?”

I think you indicated that, in the light of what you were told, you would have been content with that approach?

Baroness Lucy Neville-Rolfe: I think there was a – I mean, obviously I may have read this afterwards but the Mediation Scheme had been subject to a sift, originally and then I think, as part of the closing it all down, anybody who wanted to have mediation could have mediation. So, you know, that looks like an improvement to me.

And on the trying on, which we passed over rapidly, when I was preparing for today, I discovered that Thomson had actually told the Committee and the Commons that he thought that I think, was it Mr Ridkin (sic) had been trying it on. So there was quite recent evidence, if you like, that no doubt officials were looking at, to say that perhaps, you know, there was some issue. So that’s the background to that is.

But, for me, sitting and looking at all of this, coming, I suppose, as you saw when I first got the role, with a little bit of concern, this seemed to be very, as you said, you know, very strong advice.

However, you know, I was a new Minister. I didn’t really decide anything definitively. We’d got BBC Panorama coming up and also a debate, perhaps more important, in the House of Commons.

Mr Beer: If we go over the page, please, to paragraph 13:

“ShEx recommended that correspondence from JFSA is handled at an official level, on the basis that they are not a recognised organisation and that continued direct engagement with ministers will serve to prolong their campaign. We propose to send the response [and there’s a draft letter at annexe C] from our team. If you would prefer to reply personally we can adapt the response to come from you, or (preferably) we can prepare a short response from you politely declining the offer … Are you content for officials to respond from Mr Bates?”

I think you indicated that, in the light of the draft letter and in the letter out that you’ve seen, the answer is that you were, at this stage, content for officials to respond?

Baroness Lucy Neville-Rolfe: I felt officials should deal with it. Obviously, I hadn’t been given all the background to Mr Bates because, actually – Sir Alan, as he now is – had had various sort of interactions with ministers over the years. It would perhaps have been helpful to have known a bit more about that but that isn’t in any of the paperwork.

Mr Beer: No. In your –

Baroness Lucy Neville-Rolfe: So I obviously wasn’t aware of it at that time.

Mr Beer: Thank you. In you witness statement, you rely on, I think, five points to stand up the reasonableness of you relying on the advice given in this submission to you. Can I summarise them and see whether I’ve got it right.

First, ministers are, as a matter of principle, entitled to rely on the advice of officials and do so on the basis that the advice they are receiving is itself objective and thorough; is that right?

Baroness Lucy Neville-Rolfe: That’s certainly my understanding, my approach, my assumption in dealings with the Civil Service and the Government, yes.

Mr Beer: Secondly, in this case, the author of this document, Laura Thompson, appeared to you to be both competent and across the detail?

Baroness Lucy Neville-Rolfe: True.

Mr Beer: Thirdly, you were new in post and what you were being asked to do was essentially continue what you were advised was an established Government line?

Baroness Lucy Neville-Rolfe: True, and that, you know, tends to happen, that you have these established lines which, you know, have gone – a lot of work goes into and, as a new junior minister, you know, you inherit those.

Mr Beer: Fourthly, the very structure that was embedded was one of an arm’s-length body which could operate free from political interference and, therefore, the approach suggested was consistent with had embedded position?

Baroness Lucy Neville-Rolfe: Correct. I mean, I’m not so sure whether that’s – that’s not particularly to do with whether you write to Mr Bates or not but it’s my whole approach to the subject, which is to try and allow the Post Office, as well led as we can make it, to get on and improve things, you know, for the post offices, both commercially and for the postmasters –

Mr Beer: And –

Baroness Lucy Neville-Rolfe: – and for society because the Post Office – this is the thing you’ve got to remember: the Post Office is so important in almost every village in the land.

Mr Beer: Lastly, on the substance, you were informed that there were no systemic problems with the system, despite years of investigation and that the recognised union supported the Post Office and didn’t support the subpostmasters?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: In the course of the briefing, it’s mentioned that the Post Office prosecuted its own subpostmasters and that the CCRC was reviewing some cases. You tell us in your witness statement that you took comfort from the fact that the CCRC was considering some convictions and that Post Office had agreed to preserve documents accordingly. When were you first aware that the Post Office conducted its own prosecutions?

Baroness Lucy Neville-Rolfe: I think I would have been aware of that probably even before I took over because there are various bits of Government – I mean, private prosecutions can be done by organisations and the Post Office did their own in the same way as something like the DVLA or the RSPCA, which isn’t even a Government body.

Mr Beer: So you were aware, even before you took up this post, as to the Post Office’s private prosecutorial function?

Baroness Lucy Neville-Rolfe: It isn’t something I queried. I mean, I did, in my statement at the end, question it should have continued in quite the way it did once you’ve moved from a public sector organisation to a more private sector one, but that’s a completely different point and perhaps for later. Obviously I knew that they were doing that.

But, obviously, they had a large Legal Department, no doubt inherited from the conglomerate that was originally Royal Mail plus the Post Office, and indeed, I think we’d discovered elsewhere, that they’d recently put in charge a new general counsel, which sounded like a good idea at the time.

Mr Beer: Did you have any concerns, therefore, that the Post Office that a private prosecution function?

Baroness Lucy Neville-Rolfe: No, I don’t think I’d have concerns in particular at the private prosecution function. Although, with the benefit of hindsight and knowing what I now know, I think it’s important that institutions like that – you know, the thing about the – I’m perhaps anticipating – but the thing about the CPS when they took over from the police is that the CPS can look in the round at all these cases and say “Is this sensible?” Now, there’s no reason why the Post Office couldn’t have done that themselves and you have – obviously, if you’re a prosecutor you have to abide by various codes and behave properly and look at evidence and worry about disclosure. So all of that can be done by the Post Office. But, as I’ve said elsewhere, once you’re a private operation, the incentives are slightly different and so that would be the – that would be the worry.

But you’re asking me, at that time, the fact that they did private prosecutions I noted, I think I knew about it and, in any event, they have got audit committees and all the rest of it to look at, you know, at the progress of legal cases and prosecutions, which I obviously knew about from having been a Non-Executive Director and indeed an Executive Director in lots of companies. The Prosecution Policy is something, you know, that you would routinely take a look at, make sure it was being done properly.

Mr Beer: You’re referring to your time in –

Baroness Lucy Neville-Rolfe: At Tesco but also in other companies, where I’ve sat on the audit committee.

Mr Beer: Did Tesco have a Prosecution Policy?

Baroness Lucy Neville-Rolfe: We certainly prosecuted quite a low of shoplifters, and so on, and we would have – the Compliance Committee would have – obviously, from time to time, would look at the number of cases and the Security Officer would come and talk to us about that sort of thing.

Mr Beer: Was that a function of Audit and Compliance or Audit and Risk Committee?

Baroness Lucy Neville-Rolfe: We didn’t have a Risk Committee, we had an Audit Committee, which was made up of Non-Executive Directors, but I attended in my capacity as Company Secretary. And then we also an Executive Compliance Committee, which during the period I was Company Secretary, I used to chair. So, you know, I was knowledgeable about that sort of thing.

Mr Beer: Just help us, the document can come down from the screen, it may be an interesting point of comparison, what level of scrutiny in a fully private company, Tesco, was given in that committee to prosecution?

Baroness Lucy Neville-Rolfe: I think it would tend to look at numbers but, if you had a sort of difficult case and arguably what we’re talking about here were quite a lot of difficult cases with publicity, then they would have been looked at by the, you know, by Non-Executive committees, as well as Executive committees, and we’d have a sort of legal annexe and, I mean, I’ve had that in other companies which I’ve chaired or sat on as a Board. You would know what was going on in the legal area and that would be a combination of tribunals, prosecutions, et cetera.

Mr Beer: You mentioned that the – I think did you say the Security Director would come and report to you?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: What would he or she report?

Baroness Lucy Neville-Rolfe: Well, they’d write a paper on these are the things that had happened over the last year or six months, or whatever the period was, and, you know, we’ve had X prosecutions and successful or unsuccessful, and we’ve nagged away at the Home Office to help a bit more and all that sort of stuff.

Mr Beer: Thank you. You tell us – and you mentioned it a moment ago – at paragraph 290 of your witness statement, that the arrangements allowing the Post Office to pursue their own prosecutions should have been ended at privatisation when they ceased to be part of Government:

“Prosecution decisions should be made independently and impartially whereas here there were financial incentives for prosecuting.”

Firstly, I take it that’s a view that’s emerged after your time in office –

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: – in the light of the events which have happened –

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: – and been revealed. But, secondly, why do you draw the link between the ending of the prosecution function and the event of privatisation?

Baroness Lucy Neville-Rolfe: Well, I think, obviously, if you’re a governmental body it’s fair enough that, if there is fraud or harassment or whatever, that, you know, you would have a Legal Department and that could bring prosecutions or you could take them to the CPS if you wanted them to do it. I think once, you know, you’ve privatised a whole thing, you know, you’ve got to set up – you’ve got to have a proper Legal Department and, as I said, I think it must have been split between the two bodies and, in a commercial operation, especially where there seemed to be some sort of benefit to the Post Office from the prosecutions in that, you know, the money – they were recovering money which then goes into their bottom line, or it was sitting in an account, then that – the, you know, the – there’s a slight – a sort of slight inherent conflict of interest would be my concern.

So either you could stop prosecuting and I think they did stop prosecuting all the Horizon related one I even took over. I may have to check that. So it’s important that either you don’t prosecute and you get the CPS to do it or you set up a proper system of kind of reviewing the cases to make sure that you’re learning from mistakes. And, in a commercial company like the ones I was used to, you know, learning from mistakes was one of the big features that a Compliance Committee would always look at, you know, have we done it this right way? You lost a case, you know, why was that? Or there seems to be an awful lot of these different things.

I remember, for example, on slips and trips in stores, we actually changed the whole system because we discovered we were having a great many cases on that, and people perhaps slipping over, hurting their foot, and then coming back and taking a legal case against us, which took ages.

So we changed the whole system so that remedies could actually be addressed straight away in the store, that you would apologise to the person, take them home, send them flowers, if necessary give them some sort of minor element of compensation. And that stopped – that stopped – it’s an example of learning from mistakes – it stopped us having so many cases and, you know, customers getting a remedy much more quickly.

Mr Beer: You mentioned that, by the time that you were in office, the Post Office had stopped prosecuting cases based on Horizon.

Baroness Lucy Neville-Rolfe: Mm.

Mr Beer: Did you know that at the time?

Baroness Lucy Neville-Rolfe: I mean, I’m not sure when I learnt it but I did find that out. So, given there was an uncertainty, which became more and more apparent as we went through the year, that was obviously good news that they weren’t continuing when you’ve got these outstanding cases which were before the Criminal Cases Review Board. So that was extreme – obviously a sensible thing to do.

Mr Beer: Was it revealed to you that the reason that the Post Office stopped prosecuting, or the reasons included, that the Post Office could not find any expert witness who would testify as to the integrity of Horizon or the data that it produced?

Baroness Lucy Neville-Rolfe: No, I wasn’t aware of that until this Inquiry.

Mr Beer: We saw that the –

Sir Wyn Williams: Before we leave prosecutions, Mr Beer, can I just – it’s a very minor point but I wanted to be clear about it. When you were talking about your time at Tesco, Baroness, you said, “We prosecuted shoplifters”. Just so that I’m clear, do you mean by that that Tesco took out private prosecutions or do you mean you reported them to the police, who then instigated a prosecution via the CPS?

Baroness Lucy Neville-Rolfe: It’s a very good question, Sir Wyn, which I’d like to come back to you on because I wouldn’t want to mislead you. I mean, obviously prosecutions were taking place.

Sir Wyn Williams: Sure.

Baroness Lucy Neville-Rolfe: The individual detail of who exactly did it. There weren’t as many prosecutions as I know many store managers wanted, which perhaps suggests to me we were using CPS rather than doing it ourselves but perhaps I could come back to you on that point, if that’s permitted?

Sir Wyn Williams: Yes, of course it is. Thank you.

Mr Beer: Thank you.

We saw very briefly that the second annexe to the briefing note of the 2 June 2015 was the draft letter to Alan Bates declining a meeting with you and you accepted the advice that you should decline the meeting and therefore didn’t meet him. You had, however, been asked to meet Paula Vennells, by this time the CEO of the Post Office; is that right?

Baroness Lucy Neville-Rolfe: Yes, the original briefing had a sort of table of things that I should do as Minister, and that included meeting the CEO, which seemed very sensible.

Mr Beer: That meeting occurred relatively early in your period in office; it was 11 June, I think, 2015, and you received a briefing for it two days beforehand on 9 June. Can we look at that, please. It is UKGI00001074. 9 June. Again, it’s from Laura Thompson to you, for a meeting on 11 June. You’ll see the proposed attendees additionally included Al Cameron, Kevin Gilliland and Mark Davies. Tim McInnes from ShEx would also attend.

Under “Background”:

“This is your first meeting with Paula Vennells since you became the Minister for the Post Office. Paula has tended to meet with ministers 2-3 times per year.”

It says:

“[She] will want to give you an overview …

“… will also want to discuss the [away day].”

Then over the page, please. “Main issues to discuss”, I’m going to speed through these: long-term strategy; financial performance; Network Transformation; banking; then over the page, Horizon:

“Paula may want to reassure you that [Post Office] are handling the issues relating to the Mediation Scheme set up in connection with their IT system, particularly the forthcoming BBC Panorama programme …

“It remains the case that there is no evidence of systemic fault within the IT system. We … have communicated to [Post Office] that the Government maintains that the Mediation Scheme and cases within it are independent of Government. [Post Office] are supportive of that approach.”

So essentially a repetition of the briefing we saw in the 2 June 2015 pack?

Now, there is no surviving minute of this meeting, we are told. Have you any reason to believe that the meeting didn’t track the briefing and, therefore, firstly, Horizon formed only a small part of your discussion; and, secondly, that you weren’t told anything other than is set out here?

Baroness Lucy Neville-Rolfe: Yeah, I mean, on Horizon, this would be my recollection of what I was told by Paula and others from POL at that time and the meeting will have – I think was more wide-ranging and I was interested in the transformation, the commerce, how they were going to retail and more general issues and the Premium Bonds were at some stage – I remember agreeing to go and see the Treasury Minister, very unsuccessfully, to get the Treasury to continue to use post offices for their – for selling some of their products.

Mr Beer: Thank you. Can we move forwards in the chronology then to the BBC Panorama programme, the Adjournment Debate, which eventually led to a meeting between MPs and the Post Office. Can I use your witness statement to track this part of the chronology please, page 12, paragraph 46.

Paragraph 46 is at the foot of the page and you say:

“On 24 June 2015, Laura Thompson sent a submission to both me and George Freeman … regarding a BBC Panorama programme … which was due to be broadcast on 29 June (though it did not in fact air until 17 August) … This was in timed to coincide with an Adjournment Debate called by Andrew Bridgen MP, and the submission indicated that both Mr Bridgen and James Arbuthnot were understood to be involved in its making. It stated that the programme was expected to be ‘highly critical’ of [Post Office]. Ms Thompson again advised that Horizon ‘is a matter for Post Office and subpostmasters and it would be inappropriate for Government to intervene’.”

Then over the page, please, paragraph 47:

“The Post Office had fallen within my portfolio for around seven weeks by this time and I could see a pattern emerging: it was the consistent advice of ShEx that these matters were independent of Government, that [Post Office] was dealing with the various matters appropriately, and on Horizon that there was no evidence of any systemic problem despite rigorous independent testing, and that I should not be interfering.”

Then if we go further down the page to paragraph 50 you say, although you didn’t see it at the time:

“… I have since been provided with a letter dated 26 June from Paula Vennells to George Freeman in advance of the Adjournment Debate, in which she stated that [Post Office] had gone to ‘great lengths’ to investigate the problems with Horizon and that ‘the past three years have underlined the confidence we have always had in Horizon – it has been found to work as it should’. Ms Vennells set out in her letter that [Post Office] had found nothing to suggest that any conviction was unsafe, and that [Post Office] took ‘great care’ regarding its continuing duty of disclosure on all matters including full cooperation with the CCRC … This was of a piece with the information I was being provided by ShEx. We now know, of course, that it was seriously misleading.”

Moving on, you tell us in paragraph 51 that on the 29th Andrew Bridgen called an Adjournment Debate:

“… a number of MPs called constituents’ complaints. Mr Bridgen stated that he and a number of colleagues had ‘lost all faith and trust in the Post Office’s willingness to investigate the issue …’ criticised the Mediation Scheme, and called for a public inquiry. George Freeman … referred to the striking degree of concerning expressed by Parliamentarians at and in the lead-up to the debate, and offered to convene a meeting between MPs and [Post Office] executives in which the issues could be discussed.”

Then moving on, please, to paragraph 52. You say:

“I understood that at least some subpostmasters were losing, or had lost, trust and confidence in the Mediation Scheme, whilst at this time ShEx officials were telling me that ‘Post Office have put a great deal of effort to be helpful and transparent here, yet are constantly denounced for their approach and their apparent ‘contempt’ for MPs without any real evidence to demonstrate why. They accepted the seriousness of the situation and are committed to resolving it but are becoming increasingly frustrated by the attacks …’”

You say:

“I was keen to preserve the Mediation Scheme, see the CCRC reach conclusions and encourage engagement between the subpostmasters and Post Office. I agree with George Freeman that the way forward was to bring the interested parties together and at least provide a forum for open, frank and sensible discussion [that] would not have happened had [you followed] ShEx’s advice.”

Can I look at the exchange in which you agreed with Mr Freeman’s approach. WITN10200103, please.

Can we start with page 3, please. There’s an email from 1 July from Laura Thompson to your private office and Mr Freeman’s private office, amongst others; can we see that? Ms Thompson says:

“Andrew …”

He was one of those that worked in your private office, the person you referred to earlier; is that right?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: “Please see attached submission [sent to the pair of you]. It follows up on Monday’s Adjournment Debate in the Commons on the Post Office Horizon system, which is Baroness Neville-Rolfe’s policy lead but the debate was taken by George Freeman.

“The submission recommends how we meet the commitment made by Government (and repeated at [Prime Minister’s Questions] today) to convene a meeting on this matter. There are draft letters for [you] to send to Andrew Bridgen (who called the debate) and Paula Vennells, Post Office CEO.”

Then if we go to the bottom of page 2, please – thank you – can you explain who the email is from and to here?

Baroness Lucy Neville-Rolfe: So that’s to me, myself, from my private secretary –

Mr Beer: So –

Baroness Lucy Neville-Rolfe: – attaching a submission, yes.

Mr Beer: – Andrew Smith, your private secretary, using your private office email address, sending it to you, in a personal email; is that right?

Baroness Lucy Neville-Rolfe: In a personal email, probably my Parliamentary account but obviously it’s not clear from there, yes.

Mr Beer: Yes.

“Minister,

“Please find attached a submission on the Horizon Adjournment Debate outlining next steps. Officials are keen for the draft letters to issue [ASAP].”

Skipping a paragraph:

“George Freeman’s comments as relayed by his private office are ‘The Minister considered your advice and he is somewhat content. However, he feels strongly that Second Sight and George Thomson (NFSP) should be invited. He commented that the MPs focused on Second Sight and it would not be a satisfactory meeting without them. He agrees that JFSA should not attend’.”

So here you’re being told that there’s a submission, including draft letters, to go out to Paula Vennells and Andrew Bridgen, who called the debate, that this has been run past your colleague in the Commons, George Freeman, and he said that he felt strongly that Second Sight should be invited to attend the proposed meeting, correct?

Baroness Lucy Neville-Rolfe: Correct.

Mr Beer: Then, if we scroll up, please.

Mr Smith writing to you, about half an hour later on the same day, saying that he had just had a call from officials who recommend strongly that Second are not invited to the meeting. So officials, in this context, would that be from ShEx?

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: So, so far we’ve got Mr Freeman and his antennae maybe twitching a little by him saying, “I think it’s important, I strongly believe that Second Sight should attend this meeting”; ShEx recommending strongly that they’re not, to your private office; and then you reply about an hour later, we can see it at the top there:

“I am uneasy about overruling George Freeman and am not sure about excluding others.”

So, at this point, officials were trying to persuade you to exclude Second Sight from the proposed meeting; your ministerial colleague and you disagreed?

Baroness Lucy Neville-Rolfe: I disagreed, although in the end I think I agreed to a meeting without Second Sight, but we’ll –

Mr Beer: But we will develop.

Baroness Lucy Neville-Rolfe: – come on to that, because they went on nagging away at it and I was keen to get the meeting to happen. Anyway, perhaps we can – but that’s right, I was uneasy, you know but then they had reasons, which presumably we’ll come on to.

Mr Beer: If we scroll up, please. Your private secretary sends your reply back to ShEx, in particular Laura Thompson. Then scroll up, please, and then a little further, about an hour later, a long email from Laura Thompson. So she’s called in, or somebody from ShEx has called in, saying, “We think it’s a bad idea that Second Sight are invited to this meeting”, and then this is followed up by a long email we’ll see, taking the same point.

Laura Thompson says:

“I understand the Minister’s concerns about excluding people, and that George Freeman is in favour of inviting Second Sight because MPs focused on them. However, I would still recommend strongly that they are not invited to the meeting. The legal risk to Post Office (and, potentially, Government) is significant if this meeting prejudices the work of the [CCRC].”

So, at this point, ShEx had had an attempt to exclude Second Sight by calling your private office, and they’re trying again in this email, and raise a point that there’s said to be a significant risk to the Post Office, legal risk to the Post Office, and indeed to Government, by prejudicing the work of the CCRC by meeting Second Sight; did you or do you understand the logic of that position?

Baroness Lucy Neville-Rolfe: I mean, I don’t know what I thought at the time but what I would say is, if I’m told that something prejudices the work of the Criminal Cases Review Commission, I take that seriously and, clearly, officials, who at that time I had no reason to believe were not doing anything that was not in my own interest, were saying that we shouldn’t have Second Sight and it seemed to me that the key thing was to see the MPs and hear what they’d got to say and to get them to actually talk to the Post Office, because there seemed to be something of a stand-off between these MPs and the Post Office, which was why I was keen to have a meeting and hoped that it would be constructive. Perhaps over-optimistic at the time, but that was my approach.

Mr Beer: Ms Thompson continues:

“… we have very grave concerns that, based on Second Sight’s conduct to date, they will not respect confidentiality or the terms of their engagement either during the meeting or afterwards. We understand (although cannot confirm) that they have links in to JFSA and strongly believe their presence in the meeting will do more harm than good.”

Then she adds a second point that:

“… the Post Office are extremely worried about the risk to their business from this meeting, particularly around legal issues like the CCRC. I’d be concerned that inviting Second Sight could be a red line for them – we would have to consider what would happen if this were the case, but I think it is important to remember that Post Office have put in a great deal of effort to be helpful and transparent here, yet are constantly denounced for their approach and their apparent ‘contempt’ for MPs without any real evidence to demonstrate why. They accept the seriousness of the situation and are committed to resolving it, but are becoming increasingly frustrate by the attacks against them and it is not clear what more they can do – remembering, as we mentioned to the Minister, that [Post Office] are effectively fighting with one hand behind their back because they are respecting confidentiality when others are not.”

So this is taking a separate point: never mind the merits of the situation, the Post Office might consider this a red line and this is another reason to exclude Second Sight?

Baroness Lucy Neville-Rolfe: Yeah, I think the main point is about prejudicing criminal work somewhere else or civil work somewhere else. Obviously, this is perhaps the first example of Post Office – of ShEx very much taking strongly a Post Office line and bringing that through, which is interesting.

But I took the view that we’d promised a meeting, a meeting promise had then been repeated by the then Prime Minister, David Cameron, and that I was keen to meet the MPs and talk to them about their concerns and, you know, not actually having Second Sight present. I mean, that didn’t seem to me to be a killer point. The key point was to get on and have the meeting. We could always have another meeting with Second Sight on another occasion, if that’s what turned out to be necessary.

Mr Beer: Thank you.

Baroness Lucy Neville-Rolfe: But, I mean, I have to say, in a busy day, this is going backwards and forwards, it was probably, you know, a snap judgement, “Let’s get on, let’s have the meeting and let’s invited the Post Office to come”, although they didn’t in fact send the CEO, which was a disappointment to me, as you’ll see from later documents.

Mr Beer: We’re going to come to that after the break.

Before we do, can we see what happened by looking at your witness statement, page 16, paragraph 58, please. Much as you told us, you say:

“The key thing, from my perspective, was to get the MPs together in a room with Paula Vennells and [Post Office] executives and hear what they had to say. I was aware that the relationship between [Post Office] and Second Sight was not healthy, and thought it would be easier to get Ms Vennells to attend if they were not there. I also took at face value the concern that Second Sight presented a risk of leaking what was said at the meeting, and also thought it was important to avoid the meeting descending into a discussion of individual cases. The point was to have a productive discussion between MPs and [Post Office] senior management as part of a process to ‘get to the bottom of the matter’, and it seemed most likely that that would happen without Second Sight at this stage.”

Then you tell us you did later subsequently meet with Messrs Warmington and Henderson. So some letters went out, can we look at those, please, UKGI00004820, a letter of 2 July to Andrew Bridgen. Scrolling down, thank you – just a little bit further – sorry, no, further up:

“I am writing as the Minister responsible … further to your Adjournment Debate … I would like to follow up on the offer [of George Freeman] by inviting you to attend a meeting at the Department to discuss this matter.”

You mention in the next paragraph the Mediation Scheme, and confidentiality and the importance of maintaining it.

In the third paragraph, the fact that the CCRC has received applications from individuals in the scheme.

Paragraph 4, you say:

“The Government acknowledges the concerns that [MPs] raised during the Adjournment Debate.”

Paragraph 5:

“The Government wants to ensure that MPs take the opportunity to raise their concerns directly with Post Office. At the same time, the Government would like to allow the Post Office a further opportunity to address the very serious accusations that have been made against it. The meeting will provide an opportunity for both MPs and Post Office to understand each other’s views better, while maintaining the confidentiality of individual cases and respecting the work of the CCRC.”

Then over the page:

“This will be a private meeting and I will be writing in similar terms to the Post Office to invite them to attend.”

Then can we look at POL00027164, a letter on the same day to Paula Vennells, the CEO of the Post Office. If we just scroll down, you’ll see it’s in very similar terms, so an equivalent letter. Both letters were, in fact, silent, I think, on the issue of Second Sight attendance.

Baroness Lucy Neville-Rolfe: I think they did say we might have another meeting or something, on a future – I mean, there’s a possibility – silent, if you go over – keep going.

Mr Beer: So if we scroll down a little further.

Baroness Lucy Neville-Rolfe: Yes:

“Following this meeting we will consider whether any additional further action or meetings required.”

I think I kind of might have put that in to – I can’t remember but that –

Mr Beer: But it doesn’t explicitly say –

Baroness Lucy Neville-Rolfe: It doesn’t explicitly –

Mr Beer: – Second Sight will or will not –

Baroness Lucy Neville-Rolfe: It doesn’t say Second Sight are being invited, it doesn’t say Second Sight aren’t being invited, but it’s trying to set up a constructive conversation, try and get two sides a little bit closer together.

Mr Beer: Can we look at the reply from Paula Vennells. UKGI00000026, her reply of 10 July to you.

“Thank you for your letter of [the 2nd].

“Post Office is, of course, willing to attend a meeting to discuss these matters and I note that it has been set up for Wednesday. Unfortunately, this coincides with a Post Office Board meeting; therefore I hope you will accept my apologies. My colleagues, Mark Davies, our Communications and Corporate Affairs Director, and Patrick Bourke, who leads the Post Office team dealing with the Scheme, will be pleased to attend”, and that you found some time to speak on Tuesday morning in advance of the meeting.

Ms Vennells continues:

“As you know, we have been open and transparent with MPs throughout this important process and have met Mr Bridgen previously with some of his fellow MPs.

“Regrettably, it is clear our engagement has done little to address his concerns. Since our last meeting, Mr Bridgen has on he occasions refused our offer of a further meeting, most recently last week. We have also offered every MP with a constituent in the Scheme the opportunity to discuss with us, subject to [consent]. Just three MPs have taken up this [offer].

“… over the last three years, the Post Office has been trying to address a small number of individual, private, complaints brought to it by (mostly) former subpostmasters about problems they experienced whilst working in their post offices. Despite the finding of an initial investigation that our computer system did not suffer from systemic flaws, we established a scheme …

“… all cases have been comprehensively reinvestigated and independently reviewed and all of this work has been shared with individual applicants … It is worth reiterating that in none of the cases has our computer system been shown to have caused the losses complained of and in none of the cases has any evidence medicine to suggest that convictions are unsafe.”

Then over the page.

“Instead, in a majority of cases, it is clear from the evidence that errors made in branch are responsible for the problems that arose. In some other cases, the Post Office acknowledges it might have done more to support individual subpostmasters … In a last group of cases (thankfully a minority), regrettably, subpostmasters have committed criminal offences, either by dishonestly covering up losses, or by stealing money, or both.”

Skipping a paragraph:

“In cases involving a criminal conviction, our investigations reveal that the facts on which the convictions were based cannot be distinguished from the says raised by applicants to the scheme. Therefore, mediation is not appropriate as it is not capable of producing the principal outcome sought … because only the courts can overturn a conviction.”

Skipping a paragraph:

“As you note, a number of these applicants have asked the [CCRC] to look into their cases and it would be highly inappropriate to do anything which might interfere in its work …

“In short … applicants to the Scheme have a choice to sit down and mediate their case with the Post Office, litigate the civil courts or pursue any claim of miscarriage of justice through the established processes. Given these clear choices … it is not immediately clear what the Post Office could offer beyond restating the choices … However, we will try to address as many of the concerns expressed by MPs as we can.

“Finally, and while you do not mention them in your letter, there have been suggestions that Second Sight should attend a meeting. As Second Sight has no standing in the disputes between the Post Office and applicants … we do not consider their involvement to be necessary or appropriate.”

So Ms Vennells seems emphatic that you and the MPs should not meet Second Sight, yes?

Baroness Lucy Neville-Rolfe: Certainly she doesn’t want Second Sight at that meeting.

Mr Beer: We know that, by this time, Post Office knew there were bugs, errors and defects within the Horizon system and that Second Sight had discovered some of those bugs. We know that the Post Office, by this time, knew that forms of remote access by Fujitsu to the system were possible, including a form of remote access by which financial data at branch level could be amended by the insertion of transactions into an account, without the subpostmaster’s knowledge, and that Second Sight, on the basis of some whistleblower evidence, had discovered some of this.

We know that, by this time, the Post Office knew that its principal expert witness in criminal prosecutions was said to have breached his duties to the court and to have given misleading evidence to the court, but the Post Office had decided not to reveal that information either to Second Sight or to convicted defendants.

Did you know any of those things?

Baroness Lucy Neville-Rolfe: I didn’t know any of those things, no, but I’d also note that Paula Vennells didn’t come to the meeting. I suppose if she knew – and she’s written this letter, which, certainly, if that was known to her, is odd that there’s absolutely no suggestion of any hesitation or concern on any of those points at that point in time. She didn’t come, she sent the – Mr Davies who was communications person.

Mr Beer: And Mr Bourke, the Corporate Affairs Director?

Baroness Lucy Neville-Rolfe: And Mr Bourke. At that time, I remember that, I asked who was this person, and I was told, well, he was the person in charge of the Mediation Scheme but, actually, you’re describing him – I think later he’s described as the Government Affairs Director –

Mr Beer: Yes.

Baroness Lucy Neville-Rolfe: – whereas obviously my hope would have been that Paula Vennells herself would have turned up, so that one could have made some progress, rather than people who were, as it were, managing the MPs and managing – you know, even tying to manage the ministers. So that – so that was, I think, regrettable.

Mr Beer: We have seen the reason that Paula Vennells gave for not being able to attend was a diary clash?

Baroness Lucy Neville-Rolfe: That’s what that says and that’s what I took at face value –

Mr Beer: Yes.

Baroness Lucy Neville-Rolfe: – although –

Mr Beer: Have you seen information since then?

Baroness Lucy Neville-Rolfe: Well, I think somebody mentioned to me, but I can’t give you chapter and verse, that, actually, there was advice that she shouldn’t attend the meeting, which is a slightly different point, clearly. I understand the importance of Board meetings. I don’t know what the exact timing clash was.

Mr Beer: Let’s just look at that, please, POL00388295.

And look at page 2 first, please. If we scroll down, please:

“Please see attached that has just arrived.”

That’s your letter.

“I assume we should seek to respond quickly.

“It is still my view that Paula should not attend but should perhaps speak to [Baroness Neville-Rolfe] beforehand? I am very open to contrary views.”

That’s Tom Wechsler, Ms Vennells’ then Chief of Staff.

Then scroll up, please, to see what the Communications Director said.

“I agree re Paula point and this was also her view when we spoke this morning. And I also agree that she should speak to her in advance.”

I think that means “I agree that Paula Vennells should speak to Baroness Neville-Rolfe in advance”:

“I suggest we reply as warmly as possible, especially as the letter is from [you].”

Then scroll up, please.

“I share that view re Paula”, says Patrick Bourke.

Then scrolling up, please, Tom Wechsler then agrees re attendees and I think that’s the end of it.

So, at the time, you wouldn’t be aware, presumably, that various Post Office PR and communications people were providing advice behind the scenes to Paula Vennells that she should not attend the meeting with you? You took at face value what was said in her letter, that she had a diary clash.

Baroness Lucy Neville-Rolfe: I took it entirely at face value and, of course, it’s a Board meeting and you do try to respect – if you’re a Director, you do tie to make sure you do go to Board meetings. So it was a perfectly valid excuse but I was somewhat perturbed when I subsequently saw this, that actually it was strategic rather than a diary clash. Because I think, having her there would have been good, because she would have had to listen to the MPs’ concerns and answer them herself.

Mr Beer: Thank you.

Sir, that is an appropriate moment for the morning back. Could we break until 11.25, please?

Sir Wyn Williams: Yes, certainly.

Mr Beer: Thank you, sir.

(11.11 am)

(A short break)

(11.25 am)

Mr Beer: Good morning, sir. Can you continue to see and hear us?

Sir Wyn Williams: Yes, thank you.

Mr Beer: Thank you.

Baroness Neville-Rolfe, can we turn briefly to what happened at the meeting between Post Office and the MPs. Is it right that you essentially chaired or facilitated the meeting?

Baroness Lucy Neville-Rolfe: Yes, I chaired it, as would be normal with a ministerial meeting.

Mr Beer: Can we turn to page 17 of your witness statement, please, and look at the foot of page 17. At paragraph 62 you say:

“The meeting between MPs and [Post Office] was attended by Andrew Bridgen, Kevan Jones [they’re the MPs] Mark Davies … Patrick Bourke … Laura Thompson … and [you]. A note was drafted by Ms Thompson …”

You give the reference to it, I was going to give your witness statement instead to address what happens. You say:

“The note records that Messrs Bridgen and Jones outlined their concerns relating to some individuals. The concerns focused on the length of time the issue had been ongoing and the view of the MPs that [Post Office] had acted with a lack of transparency in dealing with the claims that there had been problems with Horizon; the way in which [Post Office] had used its powers of prosecution; the length of time it took for cases to progress through the Mediation Scheme; concerns about miscarriages of justice where individuals had been advised to plead guilty to false accounting by their legal representatives. I believe they also raised concerns about document destruction.

“63. I recall thinking that the concerns expressed by Andrew Bridgen and Kevan Jones needed to be taken extremely seriously.”

You say, skipping a paragraph:

“This meeting, which took place within 2 months of my taking up the postal affairs role, was an important step. Amongst other things, it brought home that the processes in place – including mediation and the CCRC process – were not working satisfactorily. More generally I was from the start surprised that so many people from normally reliable sections of the community were being convicted of dishonesty. This was troubling.”

On that last sentence there, can you explain more generally what you meant, please?

Baroness Lucy Neville-Rolfe: As I got into the individual cases, which earlier on I’d been discouraged from thinking about, it became apparent that these were honest citizens who perhaps had, on retirement, bought a – I think if you buy a Post Office – I’m not quite sure what the arrangements are – people like Lord Arbuthnot’s constituency, I think is in Hampshire, you know, leafy, middle-class people, who suddenly, out of the blue, with no even suggestion that they had either themselves or any of their friends and relations been involved in anything dishonest, was suddenly ending up in court and being convicted, mainly, I think, on grounds of false accounting but in some cases of theft, and that just – I’d got all this evidence that everything was fine, that there was nothing wrong, that there’d been an independent inquiry which actually told us that the Post Office was right, and yet the people who were, as it were, going down were terribly honest citizens.

I have to say this is the thing that worried me. You know, I have come from business and I’d also come from the Civil Service and, you know, it’s not – it’s not only keeping the business going, it’s having an element of common sense and thinking about your staff. So that – so that was what worried me, but I didn’t actually have any information to support my case until I had this meeting and Andrew Bridgen and Kevan started to, you know, list some of these points.

That was my sort of road to Damascus, if you like, beginning to realise that there were quite small numbers – we were talking about I think about three or four MPs at that time – who’d had these very unsatisfactory experiences with what I call Middle Britain.

Mr Beer: Thank you. Can I check with you whether a couple of issues were addressed at the meeting, by firstly looking at POL00027729, which is an email – you wouldn’t have seen this at the time, it’s internal to the Post Office – from Mark Davies on 15 July, at 8.17 in the evening, to, amongst others, Jane MacLeod, Paula Vennells, Angela van den Bogerd and he says, if we scroll down:

“All

“Patrick and I met with Andrew Bridgen and Kevan Jones today, at a meeting chaired by [you].

“The meeting was held up as Mr Jones was late. Mr Bridgen then ran through his central points.

“This included no new allegations and was broadly a repeat of his Adjournment Debate script. He raised some new unnamed cases …

“He accused the Post Office of:

“Abusing its prosecution powers and using plea bargaining to ‘cajole’ people into accepting guilty pleas.

“Curtailing Second Sight’s work and the Mediation Scheme.

“Reducing scope of [Second Sight’s] work and forcing [Second Sight] to moderate its reports.

“Not cooperating with [Second Sight].”

Then this:

“Having ‘Dickensian’ contract arrangements with postmasters, ‘suspicious’ suspense account procedure and an inadequate helpline.”

Have you any recollection that the contract itself, said to be Dickensian, which was rather prophetic because that’s how the Court of Appeal was subsequently to describe it in similar terms many years later, whether that was raised?

Baroness Lucy Neville-Rolfe: Well, I have no reason to believe that it wasn’t. After all, it’s on a memo from POL saying what came up, which disturbed them and, clearly – I probably knew at the time that the way it works is that a subpostmaster is almost like – is a kind of agent responsible for all their – you know, for everything that they do and that was no doubt incorporated into the contract. It’s a very one-sided arrangement but then, I think, to be fair, post offices entered into that knowing that it was a one-sided arrangement and thinking that they would be able to cope with that because, you know, often they had a lot of experience of running small businesses and things when they took over post offices.

You weren’t – didn’t become a subpostmaster overnight. You know, there was some sort of, I assume there was some sort of vetting procedure before you actually got given the keys to Horizon.

Mr Beer: So did you know about the one-sided nature of the contract at the time?

Baroness Lucy Neville-Rolfe: I think I knew after this meeting. It wasn’t referred to in any of the briefing that I’d had prior to that from ShEx, that I’ve noticed. But I mean, obviously it’s difficult for me to remember 10 years hence when I learnt what I learnt. But it was a sort of – I was gradually learning, from listening to these outsiders, what their problems were, and one of the problems, it seemed, was the contract arrangements. And, of course, I know now because I have been given information about what eventually happened that was that the contract was a key issue in the Fraser judgment.

Mr Beer: Lastly, Mr Bridgen accused the Post Office of:

“Using Bracknell and remote access to target and implicate postmasters of wrongdoing.”

Then:

“[Kevan] Jones endorsed the above and accused the Post Office of:

“Using the Mediation Scheme as a smokescreen to pass the Statute of Limitations.

“A deliberate and planned cover-up.

“‘Leaning’ on [Second Sight].

“‘Gagging’ Panorama.

“He accused Patrick and I of lying to him and Mr Bridgen in the meeting. We did not.

“The MPs asked the Minister:

“To call an independent inquiry.

“To meet with Second Sight.

“They asked us:

“To provide details of how much we paid out to settle claims.

“We agreed:

“To write to both MPs reiterating our offer to meet …

“It was a very unpleasant meeting at which Patrick and I were robust but respectful in making our case in [the] face of an approach which was volatile and at times aggressive.”

Do you remember these two MPs being volatile and aggressive?

Baroness Lucy Neville-Rolfe: To be honest, this isn’t my note of the meeting and I didn’t see it at the time and, if I had, I think that was probably a little bit unfair on them. They were actually explaining clearly what their concerns were in detail, which frankly was exactly what I wanted in having the meeting.

Mr Beer: Scrolling down under “COMMENT”, Mr Davies says:

“This was a very difficult meeting. We now need to ensure that the Minister [that’s you] understands the position. While she was supportive, there is a risk that the complexity of the issue, plus MP interpretation of that complexity, causes the search for simple ‘solutions’ which we know do not exist.”

Then, at the foot of the page, second paragraph up:

“The Minister did appear to agree that it would be rather difficult to make progress if the MPs refused to engage with the rest of the story.”

Can you recall which commitments you made, if any, at the conclusion of the meeting?

Baroness Lucy Neville-Rolfe: I’m sure I will have said that I would reflect further because that would have been standard practice and I think I encouraged the MPs to talk to the Post Office, because there’d been the stand-off between them and it looks from this as though there was some acceptance by Mr Bridgen. There was also a point about documents. There seemed to be concern that documents were being shredded, which would be helpful to the unfortunate people who’d been prosecuted, and I do recall – I don’t know – probably as a result of this meeting – that took some steps to do something about that, because obviously, given my commercial background, I was very aware of the importance of not shredding documents, even very old documents, and of your legal duty, particularly if you were an actual trained lawyer, you know, a barrister or solicitor, not to shred documents.

So I think I recall that coming out of it and, obviously, I went away and, you know, wanted further meetings to discuss what might be done.

Mr Beer: Thank you. That can come down.

You tell us in your witness statement that at about this time – it’s paragraph 65, no need to turn it up:

“All of the advice I was receiving regarding Horizon was from ShEx. This was supposed to be impartial and balanced. However, my faith in that advice was beginning to wane. I now wanted to hear different views and wanted to apply some more independent scrutiny to the issue than had been offered to date by ShEx and, at that meeting, I agreed with Andrew Bridgen that I should meet with James Arbuthnot MP.”

Because this meeting therefore one of the turning points in the unfolding picture?

Baroness Lucy Neville-Rolfe: Definitely. I think the MPs played an important role, you know, in articulating the issues and articulating the problems in a way that perhaps the experts, Second Sight and things, were not able to do, and I think James Arbuthnot was probably – may have been invited to the original meeting and hadn’t been able to come, I don’t know. But it became apparent from that meeting how important and pivotal he was. So I was obviously keen to talk to him, and I did later meet him, and, you know, he’s played a crusading role in all of this.

Mr Beer: Can we see what ShEx’s follow-up was to the meeting by looking at UKGI00015226. This is 17 July, so two days later. The “Purpose”, says Ms Thompson, is the:

“Next steps following your meeting on Wednesday, with MPs [with a recommendation] That you:

“Note that the Post Office will write to [Messrs Bridgen and Jones] to reiterate the offer of a meeting and provide information relating to some of their concerns.

“Agree that you would like to meet James Arbuthnot, as discussed in the meeting and confirm whether [or not] you would like officials and/or Post Office to attend.

“Decide whether you would like to write to Sir Anthony Hooper …

“Agree that you should write to the Prime Minister following your meeting with James Arbuthnot …”

I just want to explore the last of those, please, by looking at paragraph 9 of the note, which is over the page. Ms Thompson says:

“Following your meeting with Mr Arbuthnot and, if appropriate, Sir Anthony, we recommend that you should write to the Prime Minister, to set out your assessment of the situation and the Government’s position, having ‘got to the bottom of the matter’, to use his words.”

I think they’re the words that he used in PMQs.

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: “We strongly recommend that the Government comes to an agreed position, and ideally should communicate whether it will take any action. We advise that the priority should be to put this issue to bed – continued uncertainty and allegation does damage to Post Office’s business and prevents those individuals with cases from reaching a resolution. We will provide further advice on this [and] propose your office sends a short note of the meeting … to the Private Secretary at Number 10.”

What did you think to this suggestion that you should write to the Prime Minister to set out your assessment of the situation, having got to the bottom of the matter?

Baroness Lucy Neville-Rolfe: Well, I think I had two concerns about this. One was I wasn’t sure I’d yet got to the bottom of the matter, and the second is, it’s not really appropriate for a Parliamentary Under-Secretary of State to write to the Prime Minister. I’m not sure that’s – perhaps Ms Thompson didn’t really know that. That is something that would go through the Secretary of State or the Secretary of State’s office.

Mr Beer: So, for those two reasons, did you ignore the suggestion?

Baroness Lucy Neville-Rolfe: So I said – I’m sure I didn’t agree to it although it comes back because they then produce draft and it goes, takes days on end to go round through lots of different people and then comes back to me to sign off, to look at anyway, but it’s not my note. So clearly the Prime Minister had been involved at PMQs, so it’s not unreasonable that there should be feedback to Number 10 but certainly I wasn’t in a position to write saying I’d got to the bottom of it and, more important, it would have been a first time that somebody, you know, a Parliamentary Under-Secretary, had kind of written to a Prime Minister on a business issue from their Department because that seemed to me to be not what normally happens.

Mr Beer: So there a protocol or convention issue but then there was an issue of substance as well?

Baroness Lucy Neville-Rolfe: There was substance and protocol which came together, which means I, in your words, probably for that time ignored paragraph 9.

Mr Beer: Thank you.

I think it’s right that the next step in the chronology – that can come down, thank you – is essentially the provision of the Second Sight Part Two Report to you, towards the end of July. Can we look at some material that relates to that.

UKGI00005133. Can we start by looking at page 3, please. If we scroll down, please. Thank you. We’ll see Mr Warmington’s email in his familiar font, of 22 July 2015, to George Freeman. You’re not copied in at this time. The subject is “Second Sight’s Briefing Report – Part Two”, and he says, Mr Warmington:

“I am puzzled, and not a little distressed, by your summarisation in your recent email to Ian Warren [no need to look at that], and more importantly to Parliament [we’re not going to look at that either], of my firm’s Interim and Part Two Reports (there were, in fact, three reports). You have summarised our Reports with the following words: ‘Second Sight have produced two independent reports, in 2013 and 2015, both of which demonstrate that there is no evidence of systemic flaws within the Horizon system which could cause the issues reported’. That is NOT a correct statement. I respectfully draw your attention to paragraphs [then he lists some] of our Report, and to the following additional paragraphs [then he lists some].

“You may have noted from reading our Reports, and also from Post Office’s Rebuttal Documents, that Post Office has continually focused attention on the system itself (ie ‘Horizon’ and … ‘Horizon Online’), and even more narrowly on the software, rather than the entirety of the platform used by its subpostmasters. It follows that even if there had never been any systemic flaws in either version of the system (that being a contention with which we do not agree), that would not mean that the operational platform as a whole was always fit for purpose for all of the tens of thousands of users. As we have stated in our Report, it was not.

“I have attached here a copy of our Briefing Report – Part Two.”

Then scroll down:

“I am available at any time.”

So he is attaching the Part Two Briefing Report, he is drawing specific attention to some paragraphs within it. If we go back to page 3, please, thank you. In the middle of the page, we can see an email from Andrew Bridgen MP to Andrew Smith, your private secretary; is that right?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: “… please see that the email below reaches the Minister as it contradicts statements [made] by the Post Office.”

Then if we scroll up, please. He, Mr Smith, forwards the chain to Laura Thompson. You’ll see that it CCs the same email address as he is sending it from. Is there something that we are missing there, as to why that would be done?

Baroness Lucy Neville-Rolfe: No. I think it might be to do with, if you’ve got an attachment, if you copy it, does it – is it retained, or something. That’s still the private office address. It’s not an address I’ve got access to.

Mr Beer: No. Then scroll up, please. We can see that Ms Thompson replies to Mr Smith:

“1. Ron Warmington … has emailed George Freeman regarding Second Sight’s Reports … Mr Warmington states that he disagrees with the summary that Second Sight’s reports demonstrates no evidence of systemic flaws within the Horizon system which could cause the issues reported by applicants to [the] Mediation Scheme. [He] directs the Minister to several paragraphs in the final report which he feels demonstrates that Horizon, in the totality of the user experience, is flawed.”

Then if we scroll down:

“3. … I would emphasise that our position is not arbitrate in this matter – it is a commercial matter for the Post Office. As shareholder, we expect the Post Office to operate commercially and to handle operational and legal matters such as this one without Government intervention …

“4. Following [the] email, we have looked again at the paragraphs he has highlighted … The statement that ‘there is no evidence of systemic flaws within the Horizon system’ remains correct.”

That does appear to be arbitrating:

“This is a position we have stated repeatedly, including in Parliament, so it is unclear why Second Sight are choosing to raise this now. We are happy to provide further detail on the … points raised if Ministers require.”

So how would you have read this kind of commentary from Laura Thompson on the Second Sight Report that was being sent through to you?

Baroness Lucy Neville-Rolfe: Well, I’m not sure whether I saw it at that time although I certainly saw if it later in the month and had a look at those paragraph numbers. I’d got concerned by that time, which is why I wanted to have a policy meeting to discuss what we should do about all of this and that’s what happened on 4 August. I’m not sure I’ve got a lot to add. I mean, we can talk about the Second Sight Report if you want, here or later.

I mean, they refer to all these paragraphs. If you go through those particular paragraphs, it doesn’t bring out nearly as clearly as the session I had with MPs what the issues were, particularly if you’re not technical, you read through and you look at all those different paragraphs and then you look at the POL response, which is even longer –

Mr Beer: The 83-page rebuttal?

Baroness Lucy Neville-Rolfe: – and comes back on it and, to be honest, for somebody who is not expert and not meant to be expert, it’s actually quite confusing. And it was that – you know, so I’ve got this milling about. Obviously, you’ve got somebody writing in saying that what Freeman had been advised to say looked – I think they’re actually saying was misleading, which is obviously a serious matter. So, for me, I wanted to try and find a way through but obviously the advice that I’m getting here is “Stay at arm’s length, you know, we haven’t got any reason to think that our advice is wrong, that the Second Sight Report demonstrated no evidence of systemic flaws within the Horizon system”.

Mr Beer: When did you receive the second Second Sight Report?

Baroness Lucy Neville-Rolfe: I’m not convinced I saw it before that meeting of the 4th – I mean, I may have been aware of it. What normally happens with a box is you read the top papers and, if you’ve got time or reason, you might read some of the annexes. It’s one of the things that you that to explain to civil servants, actually, I’ve found, because I’ve had these different jobs, both inside and outside, is the key points need to be in the covering memo. So Warmington’s covering memo was helpful because a couple of the key points came out but I don’t think I actually read the full report until later in the month, and you will recall that I then – Mr McInnes sent me a memo saying “Well, there’s nothing new here”, and I asked for further advice, hoping that I would get further advice on the detailed allegations in the Second Sight Report, which at the time I didn’t get. I got another note from the Post Office.

Mr Beer: So just dealing with the extent of your reading of the second Second Sight Report, can we look, please, at UKGI00005504. We are skipping ahead in the chronology a little here but it is because of what is said in the body of the email. If we scroll down to the second email down, there’s an email from your office to Mr Warmington of 14 August. You say in the second line, last two words:

“I have read with interest your ‘Part Two Briefing Report’ as well as the response from Post Office Limited.”

Was that correct: that, by this time, 14 August, you had read the Second Sight Report and Post Office’s 83-page rebuttal?

Baroness Lucy Neville-Rolfe: I had certainly looked through it and, later on, I think I say I’ve kind of looked through it. It’s convention that if somebody writes to you as a Minister and they send you a report – it happens all the time, they send you a report on accidents, statistics or procurement – then you write back saying, “I’ve read with interest” – this is a standard reply “I’ve read with interest your report” and, in this case, I have mentioned the two reports. That will have been drafted for me by officials of some kind and I have no reason not to quote it in a conventional way.

So it’s not that I wasn’t aware of the Second Sight Report and was aware that it had got important things in it but the idea – it’s perhaps slightly misleading, the idea that I would have been on top of all of it, but what I have said is they’ve committed to addressing them and making improvements, on training, which of course I think they had done but, obviously, I’ve stuck to the line of the parties involved.

But behind the scenes, you will know that I’d asked Tim Parker to, you know, do some sort of independent investigation of all of this, of which Second Sight would be at the heart.

Mr Beer: So just focusing at the moment then on the extent to which you read Second Sight’s Part Two Briefing Report. In your witness statement, you tell us that you would have read the report or at least the passages which Mr Warmington had listed?

Baroness Lucy Neville-Rolfe: Yeah, yeah.

Mr Beer: I don’t suppose you can remember which is the case?

Baroness Lucy Neville-Rolfe: Well, I certainly read the passages which were listed and those were the ones I was commenting on: that, if you go through them, you don’t get quite the same tonality as if you read the whole report from beginning to end. And then, of course, you turn to the POL response, and you’re actually confused as to what you know, what you need. So, I mean, to some extent, I think you have to understand, I was concerned about this. There wasn’t that much I could personally do, in terms of getting on top of this. I therefore wanted to make sure that a proper piece of work was done on this, which is what eventually became the Swift Report.

Mr Beer: The Second Sight Part Two Briefing Report in summary finds that some form of unauthorised remote access may have occurred; that amounts in excess of £100,000 had been taken into Post Office’s profit and loss accounts; that the Post Office operated contracts to the detriment of subpostmasters; and provided them with no automatic entitlement to data upon which properly to judge whether or not they were liable for the losses alleged against them; and that some prosecutions appear to have been focused more on debt recovery than in the interests of justice.

Baroness Lucy Neville-Rolfe: That comes out very well from the Swift Report, which summarises – which I only saw when I was preparing for this hearing, summarises it very well. But, at that time, I had asked ShEx for advice on this, you may recall. So I’d said, “I’d like some advice, please”, and I had then been sent a memo by Mr McInnes which repeated the usual mantra and didn’t go into the details. I never actually got proper briefing on that report, and I don’t think it’s unreasonable for a Minister to ask officials to look at and summarise something of that importance, particularly as it turns out they’d had it for about a year, so presumably they could and should have read it in great detail, and when I asked for an analysis of it, I actually should have had an analysis of it. But I didn’t get that, and so I then moved on, and accelerated the work being done by the new Chair of Post Office.

Mr Beer: Do I take it from that, Baroness Neville-Rolfe, that your reading of either the report or the identified paragraphs in the report didn’t highlight to you that what you had been consistently told by Laura Thompson and others, that that second report had revealed no systemic problems with Horizon, was untrue?

Baroness Lucy Neville-Rolfe: I think – unfortunately I haven’t got it with me but I think there is a reference somewhere, because what was done by POL, and perhaps by ShEx, was to pick up from the work that Second Sight had done this sort of magic sentence that there wasn’t a systemic flaw. But, actually, there were lots of other things in the report, like the fact that obviously they’d had a really crummy foreign currency scheme, which ended up losing money, either for the unfortunate postmaster or indeed for the Post Office itself, it’s not too clear.

So there were these various different points in those reports, which I didn’t have the time or expertise to really look at properly. And what they seemed to be just doing was repeating this mantra that Second Sight was fine and they’d gone native, and we should just ignore that report. And I was – I didn’t really like that approach to things. But I have to say, I think perhaps Second Sight – you know, they weren’t experienced, they weren’t lobbyists, they hadn’t brought out into the front of the report, in a way that might have helped them a bit more, you know, the key things that you have now summarised so beautifully and – you know, as Counsel to the Inquiry. They didn’t do that.

But the MPs had talked to them and they did bring out strongly exactly these points that you’re – that were actually quite well summarised in the note from POL of the meeting that I had, which obviously wasn’t an official note.

Mr Beer: You tell us in your witness statement – it’s paragraph 88 – that you received a briefing note from Laura Thompson. Can we look at that, please. UKGI00001067. Going back a little bit to 31 July, but it’s a passage that I want to pick up, and if we scroll down, please – and again – yes, (6).

“Individuals who have a criminal conviction already have a suitable independent route of appeal through the courts or the [CCRC]. That is the appropriate course of action for those individuals to take if they feel their convictions are unsafe.”

Then over the page. Yes, nothing else on that. The briefing note appears to be advising you not to interfere in cases where there had been criminal convictions because that was a matter for the CCRC and the courts. What was your view on that aspect of the advice that you were receiving?

Baroness Lucy Neville-Rolfe: Well, obviously the line that I should respect the CCRC, who, at that – you know, were well – I think were well viewed at that time, seemed to me to be a reasonable one, especially as I’d been told by – with – including a letter from their General Counsel, that they weren’t holding any papers, which actually turned out to be untrue. When you eventually read the Swift Report, you find there were sort of Deloitte papers and things, which I was completely unaware of, which other people hadn’t had, and so the CCRC should be allowed to get on with it seemed to be not an unreasonable point.

Having said that, I was – and obviously, they were the particular population I was worried about, but, equally, there were these points by Second Sight that had been raised about how – I mean, what seems to have been happening was the Post Office had an awful lot of lines for a poor subpostmaster in a small rural post office and so it was really, really important that Horizon worked properly when they, you know, had to deal with all of these things. And the Second Sight Report is quite good, and it takes you through all these different lines and explains the difficulties.

Now, if you’ve got a really good IT system and really good IT support, you can bring online new products and people who are selling them, you know, can be ushered in to making it work. But the Second Sight Report suggested that there were some wider problems, and we kept being told there weren’t systemic problems but there were obviously, you know, bugs and the odd problems, as you can see from what the MPs were telling me and, indeed, from the Second Sight Report. If you could find the right bits.

Mr Beer: Can we turn back to your witness statement –

Baroness Lucy Neville-Rolfe: I’m sorry, does that answer your question?

Mr Beer: Yes, it does. Can we turn back to your witness statement, please, and page 34. In fact, if we start at page 30, and paragraph 110, you say:

“I did feel at this stage [that’s mid-August 2015] that I was fighting ShEx.”

Then if we go forwards, please, to page 34, you say:

“By this time I had lost confidence in the quality of ShEx’s advice. We were going round in circles, and they were unwilling to engage with the issues in the way I felt they needed to. In my view ShEx had lost objectivity, and its officials were unable or unwilling to scrutinise [Post Office] properly – even though that was an essential part of their role. The advice they gave seemed close minded, deaf to the issues and constantly repeating the same mantra. As time went by I felt as though they were trying to obstruct, or shut down, my efforts to get to grips with the issues. This may have been connected in some way to a dogmatic belief that [arm’s-length bodies] should be entirely free of Government interference; and certainly I was repeatedly advised that [Post Office] should be left alone. I do recall feeling the pressure of the consistent advice from ShEx that these were not matters for Government and to hold that official line, but based on what I now knew, that was no longer a tenable position.”

Had this happened in either your Civil Service or political career to date, ie by mid-August 2015, the officials that were advising you were fighting you, they had lost objectivity, they seemed closed minded?

Baroness Lucy Neville-Rolfe: I mean, the answer is no. I mean, I did deal with the Green Investment Bank – and, funnily enough, that was ShEx as well, although a different cast list – where we had a problem of trying to reassure people that green credentials would not be sort of completely lost, and the advice there was it was privatisation, so that was tough, eventually, we found a solution, which was to been trustees who were slightly outside the structure, and, you know, could be turned to, in the event of, I think, an onward sale or whatever.

But to start with, I’d found ShEx quite difficult on that subject, although we did get a resolution to that in the end. But, on the whole, you know, if you’re clear you want something –

I mean, the other thing the officials do is go to the Permanent Secretary or go to the Secretary of State and, to some extent, obviously, there was this understanding that there was operational separation, and that certainly had the endorsement of the Secretary of State, but I probably would have mentioned by frustrations, but the way I dealt with the frustration rightly or wrongly, I wanted to do something, was I moved forward and I got the new Chairman to take a look at this, I explained that it was, you know, reputationally and organisationally important for the Post Office, and I encouraged him.

My recollection is I encouraged him actually to use lawyer, a QC, because that’s what – the sort of thing that I had experience of in the private sector. Where you’ve got a really big problem, if you bring an independent leading member of your profession, they provide clarity, they make sure you know what the facts are, and then that enables you to move forward and do the right thing.

But if what you’re asking me about was had I lost confidence in ShEx advice, the honest truth I had, I tried at an earlier junction to get some Business Department officials to come along to a meeting and they sent along a lawyer. So I had a lawyer and I had two Special Advisers at the meeting but I didn’t have, you know, a senior Business Department Official who I felt might be a little bit more understanding of the fact that you’ve got MPs – I mean, MPs are really important in our democracy because they sometimes bring, you know – they bring unwelcome bits of information to you. I wasn’t an MP, but I was at a major retailer. We had the same system. You’ve got these letters coming in to the CEO, which were an excellent source of stones in the shoe, and that’s what we were getting from these MPs, and I didn’t feel that ShEx really wanted to listen to that.

They wanted to make sure that the line that they took prevailed, and they worked with POL to try and make sure that that’s, you know, what I was being told. And then I bought in Oliver Letwin – see paragraph 125 – which was obviously helpful.

Mr Beer: Yes. If we skip forwards to paragraph 239 on page 61, please, you say:

“My relationship was mainly with Laura Thompson who was, for the most part hardworking, helpful and effective. However, she followed party lines decided above her by Richard Callard, the [Post Office] Board member, and others. In retrospect, ShEx was too close to [Post Office] for effective scrutiny and I was at times frustrated by their unwillingness to question the status quo.”

Who within ShEx did you have concerns about, by reference to the words “and others”?

Baroness Lucy Neville-Rolfe: Well, I had – I didn’t see much of Richard Callard but, to the extent, I did have a little bit concern about him, and clearly we’ve got – we’ve had evidence separately that he was working very closely to POL, which I mean is understandable, he was on their Board. And then I had this exchange with Mr McInnes, who I think was – I don’t know where he slotted in but maybe above Callard, and I’d asked him specifically for a proper submission on Second Sight, and I ended up not getting a reply from him at all, but getting a reply from Laura Thompson, saying the same thing and forwarding a piece of paper from POL, annexe B, which was missing when I saw all these papers initially.

Mr Beer: What was the nature of your interactions with Mr Callard?

Baroness Lucy Neville-Rolfe: I think he came to the meeting at the beginning of August. I met him when I went on the away day in June, because he was the Board member.

Mr Beer: Did you communicate your concerns directly to Mr Callard?

Baroness Lucy Neville-Rolfe: Well, certainly on 4 August I communicated my concerns, and he saw – the thing about the Civil Service is there’s a lot of reading of paper, and civil servants are very good at reading paper, and he was receiving copies of all the exchanges I was having with Laura Thompson, who knew of my concerns. I mean, one difficulty we’ve got – and I now know why – is that we haven’t got any notes of my meetings by my private secretaries, except where they ended up somewhere else and one of the documents you’ve just flashed up says it’s not the responsibility of a private office to keep any copies; it’s the responsible of the divisions.

So that’s the problem we’ve got. Sorry, I’m not really answering the question, but those were the concerns I had. I think I had one meeting with Mr Russell, who was the top honcho, and that was later on – I think he came to I see me to ask about how I’d found ShEx.

Mr Beer: Given the concerns that you have mentioned in the passages of your witness statement that I’ve shown to you, in particular that ShEx was being obstructive, that you had lost confidence in it, that it lacked objectivity, what steps did you take to address those issues?

Baroness Lucy Neville-Rolfe: Well, the main step I took was to ask the new Chairman of Post Office to bring an independent person to have a good look at the whole thing and provide us with advice and then I pushed back on ShEx in the normal way, where they gave me advice that I didn’t like. But, you know, they were the officials. I had a go, at the beginning of August, at bringing in officials from elsewhere, but I was told that – and remember, I was a relatively junior minister, I was told that that wasn’t appropriate.

I mean, I did have updates with – quite short updates, always – with the Secretary of State and I’m sure I will have – I know I explained to him that I was planning this review by Parker, obviously, who he was partly responsible for bringing in, which my recollection was he supported.

Mr Beer: Was that Sajid Javid?

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: Did you ever consider – escalating might not be the right word – but raising the problems that you were encountering with the Permanent Secretary?

Baroness Lucy Neville-Rolfe: The honest truth is I can’t remember but if I had had a meeting with the Permanent Secretary, which I did occasionally have at that time, I’m sure I would have said “Well, it’s all very frustrating but what we’re going to do is get – we’ve got these two or three avenues, we’re going to add the extra avenue of having an independent look at it by Parker, and he would have probably agreed that was a good idea”.

You have to remember that I tried to be constructive. I tried to actually do something, which was why I got this extra piece of work done, which I think, if it had become public, would have been extremely transformational.

Mr Beer: Given your concern that the party line was being decided by individuals, including Mr Callard, did you consider it was appropriate for Mr Callard to have been the Government’s representative on the Board?

Baroness Lucy Neville-Rolfe: I mean, that was not a decision for me. My understanding of the structure was that I was responsible for postal affairs, but who – you know, how the Shareholder Executive worked – and, you know, the Permanent Secretary sat – the permanent secretaries, I think, sit on the TopCo in the Shareholder Executive and it is for them to decide who the individuals are. It is important who the individuals are but it is not part of the constitution that we, as ministers, you know, decide which civil servants have which jobs. And when that works well, that’s fine.

Mr Beer: Which Permanent Secretary had functional responsible for ShEx?

Baroness Lucy Neville-Rolfe: Well, that will have been the Business Permanent Secretary, who I think – it was first Martin Donnelly, and then it became Alex Chisholm, but I think that was – Alex came in with the climate change and energy work, which was the time I was moved, so I think Martin Donnelly would have been the Perm Sec at that time.

Mr Beer: Thank you.

Baroness Lucy Neville-Rolfe: I did have meetings with him on European issues quite a lot because one of the points I haven’t made is obviously, although the Post Office was very important to me, I was quite heavily occupied on other matters, notably going to Brussels, probably once or twice a month. I think I was in Asia in this summer period on intellectual property and, you know, that was the most important – those were the – those, plus the Bills, were the most important part of my portfolio, important though this obviously is.

Mr Beer: You’ve referred to having a meeting at the beginning of August with Paula Vennells. Can we look, please, at UKGI00005261. If we scroll to the foot of the page, please. This is an email exchange not including you, and is in the run-up to the meeting. The subject heading is “Sparrow catch-up”, it’s dated 4 August 2015, from Mr Callard to Avene O’Farrell, who is or was Paula Vennells’, essentially, personal assistant:

“… we had a catch up with Lady Neville-Rolfe today about Sparrow. Paula is seeing her on Thursday morning [that will be the 6th] first thing(ish) and I thought it might be worthwhile me having a chat with Paula for five minutes over the phone tomorrow if there is time – I appreciate it’s her first day back but … if we could find a slot, it’s worth her being aware of [Lady Neville-Rolfe’s] mood and position (not that there is too much to worry about).”

Can we look, please, at your witness statement at paragraph 102, which is on page 27. At the foot of the page, you say, “I have also been shown a copy of a chain of emails”, that’s the one I’ve just shown you. Then fourth line:

“Of course I did not see these emails at the time.”

Then you start quoting from the email and, if we go over the page, please. You say:

“I find this troubling. This seems to me to be clear evidence that ShEx – whose role it was to provide me and other ministers with objective and impartial advice, to scrutinise POL’s actions and to hold it to account – was taking steps to provide advance warning to [Post Office] about my concerns and intended direction of travel. I cannot see any good reason for them to have done so. I am sadly driven to the conclusion that ShEx and [Post Office], perhaps inadvertently, were in effect working together to try to deflect me, and that ShEx were not giving me the independent and impartial advice that I needed.”

What was it about the communication between Richard Callard and Paula Vennells’ office that led you to that conclusion?

Baroness Lucy Neville-Rolfe: I think he and Laura knew that, by that time, I was getting frustrated and wanted more done than the classic Post Office line and so he seems to be ringing them up, to say “Well, there’s a meeting coming up”, and, as it were, telling them in advance where I was going to come from so that they could prepare for that. That took the element of kind of surprise away from my meeting with Vennells, so instead of being able to take on Vennells, they would obviously pre-brief Vennells, the Communications Director, who was an ex-special Adviser, who will have obviously explained everything that she should do and I didn’t really think, given there was a difference between us at the Post Office at that time, that that was a very sensible or wise thing to do. I mean, it is true, sort of Prime Minister’s have Sherpas that talk to each other before meetings but, you know, that’s where things are, you know, more – there’s more agreement coming along, whereas, actually, you know, this was a slightly rocky patch, and I think that showed a lack of judgement and a wish to be perhaps more aligned with the Post Office than was appropriate. But obviously, Mr Callard had these two conflicting – he was trying to be a good NED to the Post Office, and he was also trying to advise me. So I, you know, well, I can perhaps understand it from that point of view. But I think it was misjudged and it made me feel slightly that those who were advising me have had a foot in the Post Office camp, and it was one of the reasons why, as I alluded to earlier, I wondered if we shouldn’t have some more classic Civil Service officials because you remember that ShEx is very much made up of commercial people – Richard came from Deloitte. You know, they’re all a series of people who have come in from the private sector, which of course I do understand, but it does mean that they’re not so au fait with these political difficulties which were obviously facing at this time.

Mr Beer: Why did you consider that ShEx and the Post Office working together to try to deflect you was perhaps inadvertent?

Baroness Lucy Neville-Rolfe: Well, I was trying to – obviously, I don’t have – I don’t have evidence except the evidence that you have given me in those pieces of paper and, you know, they’re civil servants, they try to act with objectivity. That’s why I put “perhaps inadvertently”. As it is, I think, during the course to your inquiry, this thing that I wrote some weeks ago has become a little more believable.

Mr Beer: Sir, thank you we’re about to move to a separate topic. Can we break until 12.35, please.

Sir Wyn Williams: Yes.

Mr Beer: Thank you.

(12.23 pm)

(A short break)

(12.35 pm)

Mr Beer: Good afternoon, Baroness Neville-Rolfe. Can we just go back –

Assuming, sir, you can see and hear us?

Sir Wyn Williams: That is a correct assumption.

Mr Beer: Thank you very much.

Can we go back, please, to the tipping off or priming of Paula Vennells and her staff about your concerns, your mood and your position in advance of the meeting. We looked at that email before the break and you expressed your concerns about it. Can we look, please, at UKGI00001067. We have looked at this note before but I want to ask you a couple of questions about a different issue. It’s from Laura Thompson to you of 31 July, and you’ll see that it refers, under “Purpose” to “ahead of our discussion with you and Nick King on Tuesday (4 August)”, and “Timing: To see ahead of our meeting on Tuesday, 4 August”.

Then under 1:

“Since we spoke to you earlier this week, we have been exploring options to address the concerns you raised.”

Then this:

“We have also been engaging with Post Office at a senior level to ensure [that] they are aware of your views.”

Reading that sentence, “engaging at a senior level to ensure they are aware of your views”, would you understand that that’s a reference to the forewarning of Paula Vennells of your mood and position in the way that we saw in the email that we looked at before the break?

Baroness Lucy Neville-Rolfe: Well, I think it’s a completely fair point, that they did say that. I don’t recall that at the time and it says “aware of your views”, so I suppose that’s fair enough. It doesn’t resolve – obviously it depends what the exchanges were. It doesn’t quite resolve the problem that I was looking for independent advice, and they knew that because my private office had been on to them, saying that I wanted somebody outside ShEx to come to the meeting.

Mr Beer: But the point that we take from this, would this be right, is at least ShEx were being open with you –

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: – about the fact of communication over “your views” with Post Office at senior level; it wasn’t surreptitious?

Baroness Lucy Neville-Rolfe: That’s true. From that note, yeah.

Mr Beer: But do I detect that you retain a residual concern, having read the email exchange between Richard Callard and Paula Vennells’ –

Baroness Lucy Neville-Rolfe: I retain –

Mr Beer: – staff?

Baroness Lucy Neville-Rolfe: I retain a residual concern, yes.

Mr Beer: Can we turn to the separate issue – that can come down, thank you – you’ve mentioned it a number of times already: the wish to have separate or independent advice, ie separate from ShEx. Can we turn to your witness statement, please. It’s paragraph 99, which is on page 26. Page 26, 99 is at the foot of the page. You say:

“… I had agreed to a meeting with Paula Vennells and Jane MacLeod on 6 August. As explained … by this stage I was dissatisfied with the advice I was receiving from ShEx, and I wanted a senior official outside ShEx to provide support. On 3 August, my private secretary communicated to Laura Thompson my request for support from a senior official from outside [of] ShEx at this meeting.”

So here you appear to be saying that the request was for a senior official outside of ShEx to provide you with support at the meeting with Paula Vennells and Jane MacLeod on 6 August, correct?

Baroness Lucy Neville-Rolfe: My recollection was the main occasion on which I wanted someone from outside was on the 4 August meeting because we were looking – we were trying to look forward at options, but I think the private office, perhaps rightly – it was a long time ago – took that as meaning that it would be good to have somebody there on the 6 August meeting. I mean, I think that might be the conflation of the two meetings. I’m not sure that that detail matters. It was more that I was hoping to have a different pair of eyes on the issues.

Mr Beer: Can I just persist with the detail modestly for a moment, by looking at the email, because I think you may be right in what you’re saying, that the independent assistance was for the purposes of the meeting on the 4th, not the 6th. UKGI00005195. This is the correspondence that you cited in paragraph 99 of your witness statement and if we look at page 2 first, please and scroll down, an email from Laura Thompson to your private office:

“Please see attached a short note to the Minister ahead of our meeting with her on Tuesday.”

So Tuesday would have been 4 August.

Then if we scroll up, please, revised note sent through.

First page, please, at the foot of the page. And scroll a bit more, please. Thank you. Your private secretary replies to Laura Thompson:

“Thank you for the note, which [you had] seen. [You were] looking forward to the discussion at Tuesday’s meeting. To ensure this meeting was as valuable as possible, she commented that:

“It was very helpful [to have] Nick King …

“A lawyer would need to be involved …

“… keen to have a list of the senior officials that would attend.

“Grateful if you could advise on who should be invited from legal. On point (c) … I understand that Richard Callard and Anthony Odgers will attend. The Minister is still keen that a senior official outside of ShEx be involved given that part of this discussion is a policy one that may go beyond BIS’s shareholder role. I would be grateful for your steer on how we can address this. I would like to go back to the Minister on this point this afternoon …”

Then at the top of the page, an email from Laura to Richard:

“Just spoke to Harriet. She thinks [Baroness Neville-Rolfe] still wants a senior official outside of ShEx and not including whoever we get from Legal but is going to go back with the proposal of just three plus Legal and see what the Minister says. I asked Harriet to emphasis that we are taking the policy view not just the shareholder view.”

So it would appear from your private secretary’s email that the request from you was to have somebody from outside of ShEx present at the meeting on the 4th, ie the internal meeting on the 4th; is that right?

Baroness Lucy Neville-Rolfe: That’s right but –

Mr Beer: Rather than the meeting with Post Office on the 6th?

Baroness Lucy Neville-Rolfe: But I only got half a loaf. I got a Legal Department person and I got a more senior person from ShEx, and I got Special Adviser.

Mr Beer: So leaving aside the detail point and getting back to the point of substance, why did you request the support of a senior official outside of ShEx for your meeting on 4 August?

Baroness Lucy Neville-Rolfe: Because, as I explained in my statement, by then, I was beginning to worry about the advice that I was getting from ShEx, which is very much a single track “everything is fine”, and I was seriously concerned about the sort of points that the MPs who I met had been making, and I felt that something extra needed to be done so that the line that the things we got, which were the CCRC, the mediation, the SS report, were not enough and that we needed to do something extra. And I thought that somebody from outside ShEx would be more open to that.

Mr Beer: Do you know why your request was denied?

Baroness Lucy Neville-Rolfe: I suspect it might be partly to do with the fact that it was August and probably nobody was around, you know, the cock-up theory of history, but also they obviously felt strongly they were going to do the policy view as well as the shareholder view and, you know, when you’re a Government Minister, you know, you have to fight the battles you have to fight and we were nearly at the time of the meeting, and it was important that the meeting should go ahead, rather than wait to – you know, sort of going round the office politics was not what I wanted to do. What I wanted to do was to actually get something done.

Mr Beer: So you attended the meeting in the end without the –

Baroness Lucy Neville-Rolfe: Yeah, I had –

Mr Beer: – independent advice –

Baroness Lucy Neville-Rolfe: I had called the meeting. I wanted that meeting to happen before the August break. I wanted to get on with it and make sure that something was done.

Mr Beer: Can we turn to the meeting on 6 August with Paula Vennells, by looking at your witness statement, please, page 27, paragraph 100. You tell us that, in advance of the meeting, ShEx provided you with a briefing note and lines to take, which they drafted and which didn’t reflect your concerns at the time nor your intended direction of travel. You say:

“I did not want to be told yet again about [Post Office’s] side of the story; what I wanted to ensure was that there would be a fresh and independent review to see if issues with Horizon had been missed.”

101, you say:

“Regrettably, I understand that DBT has been unable to locate any minutes or other record of the meeting of 6 August.”

Skipping a few lines, you say:

“Whilst I cannot recall whether I said [in the meeting] that I thought a QC-led (or similar) independent review should be commissioned, [you] might not have done as [you] had not yet spoken to Tim Parker …”

Referring to a letter four lines from the bottom, you say:

“… this does seem to suggest that I highlighted at the meeting the concerns by MPs previously, including that postmasters felt insulted by [Post Office’s] approach to mediation. I do recall finding one of the [Post Office] attendees to be particularly overbearing and dismissive of my concerns.”

Who was that?

Baroness Lucy Neville-Rolfe: I think it was either Mr Davies or Mr Bourke. I don’t – I haven’t got photos of them but what I found was that when I made points and made them to Paula Vennells, there was quite a lot of interrupting by them, giving their view of things and, obviously, I was trying to have a meeting with Paula Vennells to hear her views, and not have the sort of insistent line of these people who were kind of supporting her in this matter. You know, I don’t know whether it was – whether it was the General Counsel, she was obviously there as well. I mean, she might have intervened.

Just my memory of that meeting was that it was, you know, sort of almost – there was a sort of threatening feel that I was trying to do the wrong thing and, you know, I should watch out. It was just, as I said, overbearing and dismissive of my concerns. I was passing on concerns that had been registered by people, you know, the democratic representatives, and I didn’t feel – I felt that they wanted to tell me what they thought the thing was, rather than, you know, explain why the detail of some of these points wasn’t right. I mean, they sent me a big – there was a big PowerPoint pack of stuff, some of which was extremely helpful, you know, like the detail on mediation, and things. So it wasn’t all negative. But there was just this memory and I was encouraged to put this in, that I’d kind of felt slightly threatened at the meeting.

Mr Beer: From the Post Office side, what is your recollection as to who led for them: was it Ms Vennells or somebody else?

Baroness Lucy Neville-Rolfe: Well, Ms Vennells led but she kept – she got interrupted by other people when questions were asked. You know often, if you’re the leader at a meeting, you make the points, you have a speaking note, and then you bring your people in as and when you feel that that would be helpful. It didn’t feel like that. It felt the other way round.

Mr Beer: Thank you. Can we turn to paragraph 103 of your witness statement, please, which is just over the page. You say you recall speaking to Tim Parker, probably later on that same day, 6 August, and you impressed on him that he needed to ensure that the Horizon issues were looked at again and taken seriously:

“I just wanted this sorted out properly and believed that he would realise that he and the other Board members had a duty to just that. I recall asking him to bring in an independent QC or equivalent to head a review when he took up office, and he moved to do so soon after he took office.”

You understand that the Department doesn’t hold a record of that call.

So, by this time, you knew, ie early August, that Mr Parker was to take up the chairmanship of the Post Office.

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: You spoke to him and impressed on him the things that you set out there. Why did you think that Mr Parker was the solution or a solution to the outstanding issue or issues?

Baroness Lucy Neville-Rolfe: Because he was the new Chairman of the Post Office, he had a background which combined business experience, I think Clarks, Samsonite, various things. I mean, he was a strong candidate for this job – and National Trust, which is more public sector kind of thing, and I think he was a Treasury official when he started in this life because I had briefly interviewed him early on in my time as a minister because when new appointments were being made to Boards it’s classic that the people who come through the system, through the panel, then sort of have a cup of tea with the Minister, before the final appointment is made. And I was quite – I have to say I was quite impressed by him. I thought he had a sort of strength and dynamism and he seemed, when I spoke to him, to very much want to get to the heart of all of this.

And I knew from my experience of running Boards that if you have a running sore like this, bring in somebody from outside, like a QC, or it can be a senior civil servant or I think somebody had suggested a captain of industry, which I think probably would work less well, then that was the thing to do. It was also a route to actually getting something done.

Mr Beer: Can we look, please, at POL00102551. This is your letter to Mr Parker of 10 September 2015, so about month later. You say:

“I am writing to you ahead of your taking up the role of Post Office Chairman to confirm our conversation last month regarding [Horizon]. The issues surrounding the Horizon IT system have not been resolved. Indeed, some of the MPs concerned have written to me again following the Panorama programme pressing the case for an independent investigation.

“The Government takes seriously the concerns raised by individuals and MPs regarding the … Horizon system and the suggestions there may have been miscarriages of justice [and] also recognises the commitment that Post Office have demonstrated to resolving those issues, including through creating a mediation scheme and appointing independent investigators to scrutinise the system.

“As you will be aware, there have been some three years of scrutiny of Horizon and the [CCRC] is considering a number of cases which have been brought to it by individuals, and the Government cannot intervene in that independent process.

“As the sole shareholder … the Government wants to make sure that the Post Office Network is successful and sustainable across the country. We recognise [it] is a commercial business and we allow it to operate as such but, of course, we expect it to behave fairly and responsibly in doing so. I am therefore requesting that, on assuming your role as Chair, you give this matter your earliest attention and if you determine that any further action is necessary, will take steps to ensure that happens.”

Over the page:

“I look forward to hearing your conclusions and to working with you to secure the future of the Post Office Network.”

Would you agree this letter did not specify how Tim Parker should carry out any review or investigation into the issues, whether it was to be conducted by him or somebody else and, if by somebody else, the nature or qualifications of that person?

Baroness Lucy Neville-Rolfe: I agree that it leaves it open. The letter was, of course, drafted by ShEx for me.

Mr Beer: Yes.

Baroness Lucy Neville-Rolfe: And I do recall the circumstances. A whole package came up. I think they’d all been cleared through the Secretary of State by the time they got to me, or anyway certainly by the time I was signing this. I think the letter could have added in something about deadlines, something about publicity, one or two other things, but – and it’s very much written from a ShEx perspective, respecting the ALB character. And I think that, actually, that balance is probably quite sensible, because, you know, if they were concerned, which they always were, about the commercial, you know, operation being separate.

But I had a lot of faith in a new chair coming in, who I thought, you know, would take a really good and strong look at this, talk to those concerned, do the sort of forensic work that wasn’t appropriate for a minister to do and I wouldn’t even have had time for it and the letter, you know, confirmed that that is what I’d asked him to through.

Mr Beer: Can we look, please, at POL00233179. This is an email exchange that you weren’t party to, if we scroll down, that’s the email from Rodric Williams, a lawyer in Post Office, to Patrick Bourke and Mark Underwood in Post Office, and he says:

“… see … my starter for ten on Jane’s speaking notes for her meeting with [Tim Parker].”

So this is ahead of a proposed meeting between Jane MacLeod, then General Counsel for Post Office, and Tim Parker, who would by then be Post Office Chairman. If you just look at number 3:

“The review will however be creditable if it is:

“Undertaken independently from the existing Post Office team;

“logical in its approach; AND

“delivered against stated objective/s.”

What would you say to the suggestion that the idea of independence, namely a review undertaken by Queen’s Counsel or similar, came from Post Office and not you?

Baroness Lucy Neville-Rolfe: I mean, I think, when I suggested the thing, I was most keen on having some independence. I don’t think I laid down specifically that it should be a QC because there were other options, such as a senior civil servant or, as I say, a captain of industry. But the key thing was to bring somebody in so that there was, you know, an independence from existing PO teams. So I agree, to be honest, that seems to me a very fair point, and without, you know, sparing your brushes, if you bring a QC you know they will do a thorough job and that it will be objective and that the facts will be correct, and that they’re quite good at marshalling lots of different pieces of paper and summarising things in a way that’s understandable and, actually, I would say that the Swift Review, when I eventually saw it, did a lot of those things.

So I was entirely in agreement with Tim Parker, and delighted when he wrote to me very soon after his start date, saying that was what he was going to do. And Sir Jonathan Swift, who is now, I think, a High Court judge, seemed up and coming and a very talented person to do exactly what I felt needed to be done, and could be done, you know, at reasonable speed and then we could get on and do something which wouldn’t take many years.

Mr Beer: If we just look over the page, please, at paragraph 6.

“Given the volume of material, [Tim Parker] is likely to need ‘independent professional assistance’ …

“Subject to any procedural requirements, this could be:

“a solicitor:

“with good document management and summarising skills

“from a firm which has not been instructed by the Post Office …

“which is on the Government Services Panel if we want preferential rates …

“or completely off panel if we want total independence …

“a barrister:

“likely to have a high level of independence

“BUT tend to be focused on forensics and outcomes rather than process …

“a management consultant:

“likely to be good at understanding the process …

“BUT may not be able to opine on the suitability of the process, or may focus on whether there is a ‘better’ one

“a former civil servant …”

Again, did the idea of independent professional assistance come from you to Tim Parker way back on that conversation in early August?

Baroness Lucy Neville-Rolfe: That was very much my recollection, that was exactly what I wanted, as I say, and I reference that because of my commercial experience at knowing how helpful that can be to a Board.

Mr Beer: Can we look, then, at Tim Parker’s reply to your letter of 10 September. UKGI00006138:

“Dear Lucy

“Thank you for your letter of 10 September.

“Having had my first … days of induction … just last week, I am considering how to fulfil the commitment I gave you to take a fresh look at the Post Office’s handling of the complaints raised … in connection with Horizon …

“To this end, and to promote the independence of the exercise, I propose to instruct a QC to advise me as to the appropriate scope of my investigation, how I might best conduct the necessary enquiries, and to assist me in considering how to present and, as necessary, act on my findings.”

That refers to a slightly different role of the QC, doesn’t it? The QC is going to advise on scope, the conduct and presentation of his, Mr Parker’s, findings, rather than conducting the investigation him or herself?

Baroness Lucy Neville-Rolfe: Well, that might be so but, equally, when we eventually had the summary letter later on, explaining what he’d covered, it seemed to me to cover the right area. You have to put a certain amount of trust in a highly paid chairman to a Government ALB and, you know, bringing in a QC to advise seemed a good idea, and there’s no suggestion that he’s sort of just – just leaving it to the QC, actually he’s to assist me in considering both how to present and as necessary react on my findings. I mean, actually, I require – I think that’s a positive, rather than a negative, if I’m honest. I didn’t have a concern at the time. I felt a certain weight off my shoulders that we were going to actually bring in somebody different.

And, of course, you have to remember that we’re now – we have an inquiry with hindsight. We did not know at the time that there had been these unsafe prosecutions. Everybody was telling me that Horizon was fine, that it was all fine. I was having to tell officials, who didn’t like the idea that we were opening up, you know, possible criticisms of them – they didn’t like the idea that the things might have gone wrong. I had to remind them that we, as Government, you know, had to try to make sure the right thing was done.

Mr Beer: So looking at the episode as a whole, you thought that this was positive, in that he wasn’t simply outsourcing this, farming it out to a silk. The references to his involvement in it were a good thing?

Baroness Lucy Neville-Rolfe: They were. It’s a balance. You’ve got the independent QC coming along and doing a proper forensic job and then you’ve got the Chairman following through and actually, you know, doing what was necessary. That seemed to me what that letter said.

Mr Beer: Thank you.

Sir, that will be an appropriate moment for the lunch break.

Sir Wyn Williams: Yes.

Mr Beer: We will turn next to Baroness Neville-Rolfe’s meeting with Second Sight on 19 October 2015. Could we do that at 1.55, please?

Sir Wyn Williams: Sure.

Mr Beer: Thank you very much.

(1.06 pm)

(The Short Adjournment)

(1.55 pm)

Mr Beer: Good afternoon, sir, can you see and hear us.

Sir Wyn Williams: Yes, thank you very much.

Mr Beer: Good afternoon, Baroness Neville-Rolfe.

Can we turn then to the meeting of 19 October 2015 with Second Sight and start with a bit of a run into it by looking at some correspondence beforehand, beginning with UKGI00005300. If we turn to the bottom of page 2 and on to page 3 – thank you – we can see there the Ron Warmington email of 22 July to George Freeman that we looked at earlier, the one that says, “Please look at the following paragraphs of our second report, and the statement that Second Sight in 2015 found no evidence of systemic flaws with Horizon is incorrect”.

If we scroll up, please, we can see that he, Mr Warmington, sends that on to David Cameron, on 28 July. Then scroll up, please. Then on 4 August, he sends it to you.

“Dear Baroness,

“Further to the article written by Tim Ross in this weekend’s Sunday Telegraph [and he provides the hyperlink], I have as yet received no acknowledgement from Westminster in regard to my 22 and 28 July emails …

“The possibility seems to exist that Mr Freeman was inaccurately briefed on the results of our firm’s investigation. As stated below, we have concluded that there were, and probably still are, systemic flaws in Horizon.”

Then if we go to page 1 and stop there, thank you. Andrew Bridgen says, in an email to your private office, of 5 August:

“Dear Lucy,

“I have been forwarding this email … perhaps you could advise given the seriousness of this allegation that Parliament may have been misled by the Post Office.”

Your private office send that to ShEx:

“… another one for response … we should aim to send a short response on Friday on the back of the response to Ron Warmington.”

Do you think you got personally to see this exchange?

Baroness Lucy Neville-Rolfe: I can’t be sure. I mean, clearly I must have known during that August period that Warmington was disputing what Freeman had said.

Mr Beer: Can you recall what your reach was to Mr Warmington saying that Second Sight’s Report had been misrepresented in Parliament?

Baroness Lucy Neville-Rolfe: I think I probably sought advice, that’s what I normally did if I got something from outside like that. But I think it also came in from the MP, it did, from Andrew Bridgen, who obviously I had a lot of respect for. And so, you know, that meant there was more work to do. It confirmed my view that we should have somebody else look at this.

Mr Beer: Had you by this time read the Second Sight second report to see for yourself whether what had been represented on the basis of briefings to Parliament was correct or incorrect?

Baroness Lucy Neville-Rolfe: I mean, at or around this time I will have got that. I don’t recall exactly when the full report was put in my box, if I’m honest. And, remember, this was a holiday period, we were travelling about, et cetera, et cetera, but I had taken on board the seriousness of it and we had spoken earlier about how, actually, quite difficult it is. You look at the individual paragraphs and it is quite confusing as to exactly what, but there’s certainly a problem there and that I was well aware of.

Mr Beer: Did that problem being raised by Second Sight constitute a separate and independent reason for an independent investigation being a priority?

Baroness Lucy Neville-Rolfe: I think it certainly helped to stiffen my resolve. But, as I’ve said, I thought the key things were well articulated by the MPs that I’d seen and, indeed, by the debate, which we haven’t looked at in the House, there was an Adjournment Debate a few weeks earlier, bringing all of these things together. And then you’ve got the Second Sight Report as well.

Mr Beer: Thank you. That can come down.

Baroness Lucy Neville-Rolfe: Although the Second Sight Report had been around for a very long time and, as yet, I’ve still not had a summary of it from the system.

Mr Beer: Can you recall what the system’s attitude was to your proposal to meet with Second Sight?

Baroness Lucy Neville-Rolfe: Well, basically, they always advised me not to meet with Second Sight on the basis they were unreliable, they didn’t abide by confidentiality and their report that – they seemed to cling on to this key thing that they had found that there was no systematic fault with the system, but they then said that other things that they were doing, you know, that they were not straight with, which was a bit confusing, to me. And, as I said, a little bit earlier, I actually really – I found it difficult to know what the key points in the Second Sight Report were, particularly when I’d seen the counter stuff from POL.

But what I would say is I think Second Sight were amazing in the way that they kept going. You know, year after year, they produced these reports, they thought that they were on to something. They got, you know, not much sympathy from the powers that be and yet they kept on trying and, obviously, they did engage MPs, which was the right thing to do.

Mr Beer: Can we move to closer to the October meeting by looking at UKGI00006142. At the foot of the page or the bottom half of the page, an email from Laura Thompson to Andrew Smith of your private office of 9 October 2015, and she says:

“Andrew

“I noted down for the team here the non-Horizon points from the meeting with the Minister, which I have attached …

“On the Horizon discussion, the main points I took away were [as follows].”

So it seemed like you had a meeting at which Horizon and non-Horizon issues were discussed and this is Ms Thompson noting down, in the body of the email, the main Horizon points that she took away. Bullet point 1:

“[Post Office] wanted to flag their concerns around the Minister meeting Second Sight. They felt that doing so would risk undermining her independence and distance from the situation, and were also concerned that if news of the meeting were to leak to the media, it could risk individuals withdrawing from the mediation process (after considerable efforts by [Post Office] to get these in the diary). Paula was also concerned that the Minister’s meeting might conflict with any meeting Tim Parker decided to have with [Second Sight].

“[You] noted Paula Vennells’ views but felt it important to make the offer of a meeting to Second Sight and inform [James Arbuthnot] that [you] were doing so. [You also] suggested that the offer should be of a private meeting, and should happen quite soon, so that it would take place before Tim Parker invites them to meet.”

Can you recall what you thought of Post Office’s objections to your meeting with Second Sight, on the basis that meeting with Second Sight would risk undermining your independence and distance from the situation?

Baroness Lucy Neville-Rolfe: I didn’t really think that that was the case. I thought it was quite possible to have a meeting to hear what they’d got to say and encourage them to help Tim Parker with his review. So, you know, I’d said I’d see Second Sight as early as July. I’d reiterated that, I think, to James Arbuthnot when I saw him. They all felt Second Sight was very important and I didn’t think that they should stop me – that Post Office should stop me seeing them and, in fact, I think even ShEx agreed, perhaps warn down by my assistance, that I should see Second Sight, so I had a meeting with them.

Mr Beer: We are going to look at ShEx’s note in a moment where they, to an extent, in fact, echo the position taken by Post Office, at least initially.

Did it occur to you that Post Office’s resistance might be motivated by a desire to avoid scrutiny from Government?

Baroness Lucy Neville-Rolfe: Well, certainly they were always trying to defend their line. That seemed to be their approach externally, and they seemed very paranoid about external matters. Indeed, I remember them being very paranoid about Panorama. Obviously, I’d worked in the private sector, I worked for Tesco, which was a company that, at that time, was very high profile and successful and we’d had Panoramas about ourselves, and all the rest of it, about you had to engage and, you know, the fact – I mean actually, I agree that it should be a private meeting, probably, you know, to try and assuage Paula Vennells’ concerns, but I did think the right thing was for me to see Second Sight, since they’d been, you know, making a lot of these points over a prolonged period and I couldn’t really see why I shouldn’t do that.

Mr Beer: You said there that that step might assuage Paula Vennells’ concerns. Do I take it that you understood that Post Office’s approach in this regard was being led by or taken with the approval of Paula Vennells?

Baroness Lucy Neville-Rolfe: Yeah, I think – didn’t I have a conversation with her about it?

Mr Beer: Yes –

Baroness Lucy Neville-Rolfe: Yeah, sorry. So she felt strongly about it herself – enough about it herself, not just her PR people, to actually want to talk to me about it. So she obviously felt strongly, presumably on the advice of lawyers, you know, that this could somehow get in the way of some legal arrangements, mediation, et cetera, to talk to me about it and explain her concerns. I listened to those concerns, I was careful, obviously, when I saw them, not to say anything about – trying to think – you know, sort of something that was going to lead to a lot of public rows, because they were obviously worried about that, but I was absolutely determined to see Second Sight, and that I did –

Mr Beer: Can we look –

Baroness Lucy Neville-Rolfe: – and it was helpful.

Mr Beer: Can we look, please, at ShEx’s position, BEIS0000013. A note of 1 October 2015 from Laura Thompson to you:

“Advice following your meeting with James Arbuthnot … covering [his] ask that you meet Second Sight and Sir Anthony Hooper.”

“Recommendation” is:

“That you:

“Decide whether you would like to meet Second Sight …”

If we go down to paragraph 3:

“Mr Arbuthnot argued that, since you had received a briefing from Post Office on this matter, it was only fair that you should meet Second Sight and hear their side of the story. He invited you to judge for yourself as to whether Second Sight were as ‘biased and unprofessional’ as he felt they had been depicted by the Post Office.

“4. The advantages of agreeing to meet Second Sight would be”, and then they’re set out: demonstrate the Government is listening; agreeing to maintain a positive relationship with James Arbuthnot; assuaging a concern that Second Sight believed that their findings are being misrepresented; and the position that no Government action is necessary since the CCRC is considering cases, mediation is ongoing and Tim Parker is considering the matter with a fresh pair of eyes would be stronger if you can say you have met Mr Bridgen, Mr Arbuthnot and Second Sight.

But then there are significant risks, it was said: the operational matter point in (a); more stakeholders in (b) “might have a reasonable expectation that Government will opine on the merits”; (c) a risk of briefing it out.

Over the page, 6, clearly a difficult judgement:

“Our view is that on balance you should offer a meeting to Second Sight. The risks of doing so are significant, but we believe they can be handled if we are careful and robust in our messaging …

“8. If you do decide to meet Second Sight we suggest a low-key approach with an email from your office to Mr Warmington …”

Did you decide, therefore, that you should meet with Second Sight?

Baroness Lucy Neville-Rolfe: I did. I suspect I had already decided before this memo came up. It’s one of the things in Government that quite often submissions sort of come along to formalise a view, you know, on the one hand, on the other, and they’ve given me a reasonable, you know, run down and accepting that I should see Second Sight. So I’m seeing them – I’m not saying I saw them – the sort of implication is we’re just seeing them to show it was a good thing. I was actually interested in seeing them to hear from them what their view of Horizon was.

Mr Beer: You tell us in your witness statement that when Post Office’s objections came in, you “did not allow Post Office’s objections to deflect me”?

Baroness Lucy Neville-Rolfe: Exactly.

Mr Beer: Is that how you saw the Post Office’s intervention, namely an occasion on which they were seeking to deflect you?

Baroness Lucy Neville-Rolfe: I think that’s fair, yes.

Mr Beer: Can we turn to what happened at the meeting itself and the sources for that are unfortunately quite sparse. Look at your witness statement, please, page 39, paragraph 143. Page 39, paragraph 143. It’s at the foot of the page. You say:

“I met [Messrs Warmington and Henderson] on 19 October 2015. I understand that, regrettably, [the Department] has been unable to locate any minutes or other record of the meeting. I recall listening sympathetically to the issues raised, but I do not remember much of the substance of the meeting: the meeting was certainly not a ‘lightbulb moment’. I am confident I would have informed them of the Parker Review and that I had asked Tim Parker to meet them and that I encouraged them to raise these issues with Mr Tim Parker as part of that review.”

Is that the limit of your recollection of the meeting of 19 October?

Baroness Lucy Neville-Rolfe: Yes, the specific memory of that meeting, I can kind of remember the room I was in, and so on, but unfortunately there is no note of the meeting which makes it difficult. But what I do remember was, you know, they went through some of their points. Obviously, those were becoming to become familiar to me because there was a point about contracts, wasn’t there, there was a point of Bracknell remote being able to fiddle about without a footprint, the thing that Mr McInnes had told me wasn’t possible. You know, there were various things which they repeatedly said but their communication was not of a kind – very decent people, quite right to keep going, but the communication was not of a kind that created a lightbulb moment and that’s my recollection.

However, by then, I felt that we were moving towards a solution and I encouraged them to talk to Tim Parker and to Sir Jonathan Swift about, you know, what their views were. I felt that this was the right way to get those concerns looked at and in play and understand whether the Post Office’s long defence was correct or whether the Second Sight Report was correct.

Mr Beer: We gleaned something from what happened at that meeting from paragraph 145 of the statement.

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: Because you cross-refer to a letter that you later wrote to Oliver Letwin MP?

Baroness Lucy Neville-Rolfe: Yes.

Mr Beer: You say of the meeting of 19 October:

“It was a helpful meeting and they raised a number of important points. I suggested they contact Tim Parker … to follow [them] up. [He’s] currently conducting a review … and has appointed a QC to advise him. He is currently setting up meetings with the key parties and [you are] expecting him to update [you] with findings in the New Year.”

I think that’s all we know about the meeting of 19 October. Did you receive any periodic updates from Mr Parker about the conduct of his review?

Baroness Lucy Neville-Rolfe: I think during the next three or four months I had meetings with him. I don’t recall any letters or anything from him but, from time to time, when I was having a meeting on the Post Office, then Laura Thompson would send me a background brief as to what was happening and I think I asked for a meeting in January because I think somewhere – at some stage or other I was told that he was hoping to have some findings in the New Year, so I had sort of pencilled that into my mind as the time to take up the story again.

Mr Beer: We can see that from paragraph 150, if we go over the page.

Baroness Lucy Neville-Rolfe: Yeah, there we are, 26th January. Yeah.

Mr Beer: You had a meeting with Mr Parker, you cross-refer to your own offices or ShEx’s note. There were some unrelated Horizon issues discussed, or issues unrelated to Horizon, and he told you on Horizon that Jonathan Swift “was about to report. He had found no systemic problem”.

Was the first communication in writing that you received from Mr Parker about the Swift Report, or his, Mr Parker’s, review, a letter of 4 March 2016?

Baroness Lucy Neville-Rolfe: As far as I know, that was the first that I had anything of substance, other than this it’s all slightly – “about to report”, and he found no systemic problem. Obviously, I’d had that from him, which I noted. I mean, the meeting in January, we had quite a lot of issues to discuss, is my recollection. They probably crowded out any discussion of Horizon.

Mr Beer: If we turn then to Mr Parker’s letter to you of 4 March, POL00024913. We can see this is Mr Parker’s letter to you of 4 March 2016. He cross-refers to your meeting on 26 January and says he had provided you with an update on the work he had undertaken with the assistance of Messrs Swift and Knight, to review the Post Office’s handling of complaints made by subpostmasters about the operation of the Horizon software system, and sets out in the letter further information about the approach to the review, scope of work undertaken so far, and his initial findings, and outlines his plans to bring the work to a conclusion?

This is a long letter and we haven’t got the space to go through it in detail, but on pages 1 and 2, under the heading of “Scope of the Review”, you’ll see that he sets out his objections to review the Post Office’s handling of complaints made by subpostmasters regarding the alleged flaws in Horizon, and to determine whether the processes designed and implemented by Post Office to understand, investigate and resolve those complaints, were reasonable and appropriate. Do those terms of reference, or does that stated objective, accord with your intention?

Baroness Lucy Neville-Rolfe: I think broadly. I mean, understand, investigate and resolve – the “resolve” is important too, and then if you go down the letter, there are four areas which seem quite reasonable ones to me. I mean, if you’re a minister you’re not General Counsel for the Department, you’re not kind of fiddling about at the margins – what you want is to make sure that somebody sensible is taking things forward. I thought the scope looked all right to me, rightly or wrongly.

Mr Beer: Over the page, he says that he decided that the particular focus should be on four matters: criminal prosecutions; the Horizon system, ie the software; support provided through training and helplines; and investigations in the circumstances of specific cases.

Can you assist as to whether or not that looked broadly satisfactory to you?

Baroness Lucy Neville-Rolfe: That looked like the right headings to me.

Mr Beer: He says, skipping a paragraph:

“… that [his] advisers requested and were given unrestricted access to documentation.”

I’ll skip over whether that’s accurate or not:

“Numerous meetings were held between them and a range of Post Office staff and employees of Fujitsu”, and he sets out the meetings that he had.

Then he sets out, for the rest of this page and on to page 3, the principal findings and recommendations. Did you understand that there existed separately from this document a written report.

Baroness Lucy Neville-Rolfe: Certainly not a final report. I mean, I think they might even talk about a draft at some point. The way I read this was that they were – they’d made quite a lot of progress and that they’d found these areas where they needed further investigation, which actually, to my mind, matched some of the things I was concerned about and so were the MPs. So I thought it was work in progress, and I was – I think I asked for advice from officials and they sort of said “You don’t have to do anything at this moment in time”, so I was glad that those various areas of further work were being carried out.

Obviously, what I didn’t know but you’re probably going to come on to ask me about, was this was a slightly rosy summary of the Swift Report –

Mr Beer: Yeah, I –

Baroness Lucy Neville-Rolfe: – in my view.

Mr Beer: Yes, I may choose words differently than “slightly rosy”. Can we go to page 4, please. “Next steps”:

“I have commissioned independent persons to undertake the necessary work …

“I … share your aim that matters should be drawn to a conclusion as soon as possible … I anticipate I will be in a position to report back on the outcome of the further work during May.

“I firmly believe that the focus and scope of my review to date, together with further work which I have now commissioned, will allow me to confirm that the processes designing and implemented by Post Office to understand, investigate and resolve those complaints were reasonable and appropriate, and that there are no further enquiries … to be undertaken …”

Two other matters:

“… as I have noted … a number of subpostmasters have made applications to the [CCRC]. That work is ongoing … Second the Justice for Subpostmasters Alliance is reported to have received funding [and] no claim has [yet] been issued.”

Lastly, the last sentence:

“If you would like to discuss the review report with me, I would be happy to do so.”

Given the context of the letter as a whole and that last sentence, did you understand there to exist some freestanding review report?

Baroness Lucy Neville-Rolfe: No, to be honest, I didn’t. I assumed that this was kind of work in progress, that they’d got these extra pieces of work to do, and that I would get a report from the Chairman once that work was complete. He’d mentioned May – there was a Board meeting in May, I think somebody told me, and clearly it’s the sort of thing that I would have expected the Post Office Board to have a look at. But I was also aware that there were some threads to follow up.

Mr Beer: We know that, by this time, Jonathan Swift had provided Mr Parker with a copy of his final report. Do you know why Mr Parker did not state so in his letter?

Baroness Lucy Neville-Rolfe: I’ve no idea.

Mr Beer: Did you discuss – did he mention that there was a final review report when you spoke with him?

Baroness Lucy Neville-Rolfe: I spoke to him in April, I think. I asked for advice from officials, the officials said do nothing. I was having a meeting with him anyway in April, one of my quarterly meetings with him, and I don’t recall him saying that “I’ve got a final report”, or anything of the sort that I might have asked for. I recall him saying that the work was ongoing in these two or three important areas, some of which turned out to be actually quite relevant to the court cases that eventually came through.

Mr Beer: Do you know why he did not, without request, provide you with a copy of the report?

Baroness Lucy Neville-Rolfe: I’ve no idea but I think he’s separately said it was something to do with legal privilege.

Mr Beer: Was that the discussion – was that a discussion that you had at the time, ie whether he could or could not provide you with a report –

Baroness Lucy Neville-Rolfe: No, not that –

Mr Beer: – and, if not, why not?

Baroness Lucy Neville-Rolfe: Not that I recall. The letter is after all – at the beginning it says “This is legal privilege”, and he sent to me under its legal privilege. So what’s the difference between a letter which is legally privileged and a document that is legally privileged? I’m not sure. But, obviously, the fact that the two didn’t match was an issue that I don’t know if Tim Parker himself was aware of. He may not have been but, you know, you have to read the longer report to see whether the summary is – it’s not that the summary is wrong it’s more sins of omission.

Mr Beer: Did you actively seek a copy of the report?

Baroness Lucy Neville-Rolfe: No, because I didn’t have anything to do with the matter after I’d had the advice from Laura Thompson not to do anything until April, and then we had a meeting in April. Is there a note of the meeting in April?

Mr Beer: Um –

Baroness Lucy Neville-Rolfe: I don’t think there is.

Mr Beer: I don’t think there is, no.

Baroness Lucy Neville-Rolfe: No, sadly. But what I will have wanted, you know, I’d asked him to do a review. I would have wanted the conclusions of that review. I don’t think it’s appropriate for ministers to suddenly see drafts of – I mean, I’m thinking about other things that I’ve done as a minister since, you know, you ask for a report and you get the report in due course. You don’t sort of have iterations. That sort of undermines the independence of the report almost, if it’s being sent to the minister in between.

Mr Beer: If can we see a little of what was going on internally POL00110382, and start with page 2, please. There’s an email of 19 February from Jane MacLeod to Tim Parker, under the heading “Chairman’s Enquiry”:

“As discussed last week, we have considered the best way for you to brief the Minister on the outcome of your enquiry … I expressed concerns that were we to provide the Minister with a copy of the legal advice you received from Jonathan Swift, there was a risk that privilege could be lost and that the report could become disclosable by BIS through FOI requests or similar. We have also received a call from the Minister’s office in which they sought to understand how the reporting would be undertaken. During that call it became apparent that BIS officials are also concerned as to the legal status and positioning of any report received from you.”

Those last two sentences suggest that people in your private office were seeking to understand how the report or reporting of the outcome of the review would be undertaken and they said that BIS officials were concerned about the status and positioning of the report. Was that something in which you had any involvement?

Baroness Lucy Neville-Rolfe: Well, (a) I had no involvement and (b) having – obviously I was very concerned to read this at the time, when the Inquiry sent me all these papers because it was suggested that my private office were working behind my back and not giving me full information. But I don’t think that the Minister’s office reference is correct. I think in the Minister’s office, they mean –

Mr Beer: ShEx –

Baroness Lucy Neville-Rolfe: – Ms Thompson. They were thinking she – they’re getting muddled up between my private secretaries and Ms Thompson, who didn’t work for me; she worked for ShEx, and they may – you’d have to ask them, you know, what they felt about all of that. This is just the time when we got the referendum starting, isn’t it so a busy time for ministers.

Mr Beer: The rest of the chain deals with the drafting of the letter, which eventually became the 4 March 2016 letter. Were you ever made aware, prior to Mr Parker sending the letter on 4 March 2016 that Post Office had discussed either with ShEx or your office their intended approach of sending a letter that was claimed to be a summary of the review’s findings?

Baroness Lucy Neville-Rolfe: No.

Mr Beer: Were you ever made aware that the full review report was not to be provided, it was said, in order to preserve privilege over it?

Baroness Lucy Neville-Rolfe: Well, certainly not at that stage. I think probably never. I mean when I stopped doing it – we’ll come on to this no doubt – I thought the sort of follow-up work was continuing because there was one or two quite important bits of work by Deloitte and others, but then it all got muddled up with the general court case by the subpostmasters group but, you know, at this stage I would have assumed that I would have – would get the full report in due course with recommendations as to what to do, and recommendations on how we communicated that to Arbuthnot and others and how we communicated it to the world at large.

After all, you know, my concern came from the points that they’d raised with me a few months earlier, which I’d – was – I was – you know, I’d obviously continued to be worried about.

Mr Beer: In his witness statement – I’m not going to display it now and that document can come down from the screen – the cross-reference is WITN00690100, and it’s paragraph 93 – Tim Parker says:

“Baroness Neville-Rolfe and her office was made aware of the approach being taken to the distribution of the Swift Review to seek to maintain legal privilege.”

Baroness Lucy Neville-Rolfe: Do you know what date that was?

Mr Beer: He doesn’t cross-reference it. He simply says you and your office were made aware of the approach being taken to the distribution of the Swift Review to seek to maintain legal privilege; is that correct?

Baroness Lucy Neville-Rolfe: Well, as I said when I looked at this earlier, I wasn’t convinced it was my office and I don’t recall my office coming in to say to me “You can’t have this document”.

Mr Beer: So either that’s a mistake in the email, which refers to your office and it’s meant to mean ShEx –

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: – or your office had kept something from you?

Baroness Lucy Neville-Rolfe: Correct. Why I said when was it, it was – obviously by the time you get to sort of July, it’s then unclear who’s going to be Minister because we’d had a big change, change of Secretary of State, and I lost the Post Office brief in that carve-up, and they seemed to think, even before I lost it, that I might lose it, if you read the paperwork.

Mr Beer: Okay. You tell us in your witness statement that the first time you saw the Swift Report was earlier this year as a result of the –

Baroness Lucy Neville-Rolfe: Yes, it was during the Inquiry when the documents came through and, obviously, I was very interested to see it. Obviously the letter I’d seen but not the Swift Report.

Mr Beer: Did you compare the report with the letter?

Baroness Lucy Neville-Rolfe: In preparing for this Inquiry I did.

Mr Beer: What view did you take in comparing –

Baroness Lucy Neville-Rolfe: Well, I took the view that it was a bit, you know, it put a positive gloss –

Mr Beer: I think it’s paragraph 166?

Baroness Lucy Neville-Rolfe: I think I’ve dealt with it in my inquiry – so there was two – there was a generality that it seemed to be saying there wasn’t too much of a problem in spite of the fact that there was all these extra areas to be explored, and then there was stuff that particularly concerned me about how prosecutors had tried to do deals with people who were being prosecuted by getting them to accept false accounting, you know, as a quid pro quo for dropping theft charges, and that came out – I think that’s 100 to 109 of the Swift Review.

Mr Beer: If you look at – if we display it on the screen, because there’s a quite neat summary – your witness statement at page 45, paragraph 166.

Baroness Lucy Neville-Rolfe: Yeah.

Mr Beer: Page 45, paragraph 166. You say:

“Even more importantly I now see having had access to the Swift Report, that Mr Parker’s reassuring summary of the report was materially misleading. Specifically, it failed to make any reference to the important points made [by Mr Swift (sic)] in paragraphs 145-147 … which concern remote access and directly undermine the information provided to ministers and, in turn, Parliament, and indicate serious historic and ongoing concerns as to [Post Office’s] compliance with its disclosure obligations in relation to criminal prosecutions and convictions. This contradicts the assurances given in the second paragraph of the Criminal Prosecutions section of Mr Parker’s letter, ‘I am satisfied that Post Office has adopted a proper approach to disclosure such that it satisfies its duty of disclosure as [a] prosecutor’. All this touches on my key concern which was that postmasters should be able to secure justice through the CCRC process.

“Similarly, whilst it refers to further work commissioned in relation to [Post Office’s] tactic of charging theft and false accounting, it did not refer to the important and strongly critical findings in paragraphs 100-109 …

“These specific findings should have been brought to my attention.

“I was surprised and disappointed to discover, years later, that Mr Swift’s findings were not disclosed as part of any criminal or civil proceedings. I do think this is nothing short of scandalous.”

What action would you have taken if you had been provided with the raw material, ie the Swift Report itself?

Baroness Lucy Neville-Rolfe: Well, I would have read the report, I would have seen those paragraphs and other paragraphs, and I would have wanted to take steps to make sure that this duty of disclosure was implemented. I mean, when I came in, I asked about documents. I was told by the MPs that people were destroying files. I tried to make sure that that didn’t happen, and yet here we’ve got an instance where things are not being disclosed. And I think you’ve found, Mr Beer, as part of your other hearings with Fujitsu and others, that there was material. In fact, the – some of the Deloitte stuff was referred to in Mr Swift’s report, but not in the covering letter, as far as I can recall.

So what you’ve got is some really quite explosive material in that detailed report which should have been referred to in the letter to me, in my opinion.

Mr Beer: Well, in particular, would you agree, since the relevant Deloitte report was then two years old in the tooth, and that report had itself been provided to a number of senior executives and a summary of it had been provided to the Board?

Baroness Lucy Neville-Rolfe: Absolutely, and there was almost a suggestion that that was new material, I think, that Swift had got hold of. Sorry, we hadn’t got up the Swift Report but, for those involved in the Inquiry, I think it makes extremely good reading because it summarises a lot of the background very well and, frankly, it would have been good, you know, for everybody to have had that summary made available much more broadly, including, I would suggest, to the Board of the Post Office.

Mr Beer: To what extent did you have any dealings with Jane MacLeod?

Baroness Lucy Neville-Rolfe: Well, I think she came to the meeting on 6 August with Paula Vennells. I think that’s my only dealing with her that I’m aware of.

Mr Beer: Therefore, would that be an insufficient basis to form a view or impression of her?

Baroness Lucy Neville-Rolfe: It would and I know she hasn’t given you evidence, which is a pity because obviously a lot of the work she did touched on these issues that are so important to the subpostmasters –

Mr Beer: Exactly –

Baroness Lucy Neville-Rolfe: – who are in the firing line on all of this.

Mr Beer: – and Mr Parker said it was Jane MacLeod who told him that he couldn’t disclose the Swift Report to you.

Baroness Lucy Neville-Rolfe: Well, there you are.

Mr Beer: Can we move forwards, please, to a draft letter, as I think it rightly is called, of 21 June 2016, and turn up paragraphs 180 to 181 of your witness statement, which are on page 48. You tell us that you have had sight of an unsigned draft letter of 21 June from Tim Parker to you. In it, Mr Parker says that Post Office:

“… ‘has received very strong advice from Leading Counsel that the work being undertaken under the aegis of my review should come to an immediate end, and instead address the issues through equivalent work taken forward in the litigation … I have therefore instructed that the work being undertaken pursuant to my review should now be stopped’.”

You say the first time you saw this draft letter was in preparation for the Inquiry. A FOIA request said that they couldn’t locate any information that the letter was in fact sent to the Department. You are told by the Department that it has no record of receiving it and you’re confident you didn’t see it at the time; is that right?

Baroness Lucy Neville-Rolfe: That’s right. I was amazed when I saw it, to be honest.

Mr Beer: How, therefore, in the absence of that letter, was the work that was outstanding from the Swift Review, that was summarised in the 4 March letter, rounded off for you?

Baroness Lucy Neville-Rolfe: Well, it wasn’t really rounded off. There was, in the briefing that I got in July, they said well, they were looking at how the Swift Review stuff fitted in with the civil litigation, which I think was perfectly reasonable to look at the two alongside each other. But obviously, I never had any advice on what then happened as a result of that. What I discovered, you know, a couple of years ago or whenever – partly when looking, I think, for the Inquiry, and partly I discovered that, you know, the Swift Review had basically been buried, which I was quite surprised by, because when you have legal cases, there’s huge processes of discovery – I mean, I know this from my background at Tesco – there are huge processes of discovery for documents, and you have to, as a – your lawyers have to make sure that things are made available that may help, you know, the people bringing the case.

So I was – I mean, I thought – I described it as scandalous but I also think it’s very surprising and I don’t know – obviously you’d have to ask the counsel that was involved in that litigation, you know, why it wasn’t made available to anybody.

Mr Beer: Thank you. That can come down.

You make a number of observations in your statement by way of reflections. You say that Government cannot function if ministers are unable to trust the information that they are provided with by officials. You say that you were, by mid-August, fighting ShEx, that you had lost confidence in the quality of ShEx advice, that they were trying to obstruct or shut down your efforts to get to grips with the issues, that you had lost the confidence in your civil servants on matters relating to Post Office and Horizon.

Did you ever escalate any of those matters to the Secretary of State?

Baroness Lucy Neville-Rolfe: I think I told the Secretary of State in August that I was unhappy and that, therefore, I was calling for a review by Tim Parker, and that my recollection is that he supported that, that it could get to the bottom of things, you know, in a reasonable way. You know, so – sorry, so – and then – I mean, I think, at updates, which are unrecorded because of the problem of lack of records, I might well have mentioned my concerns and, you know, getting stuff done on this issue. And I think I had an update with Mr Russell at some point, who was the CEO, and I think you showed me a piece of paper just before I came in this afternoon which actually is quite helpful because, for the first time, I can see I did raise it with the Permanent Secretary, as an issue. Perhaps you’re going to show me that.

Mr Beer: In fact, somebody else is going to show you that and they ask that you be shown the piece of paper, so –

Baroness Lucy Neville-Rolfe: Oh, thank you. Let them ask me.

Mr Beer: – I’ll let them do it.

Were they the alternative possibilities, of raising your concerns with the Permanent Secretary, Martin Donnelly; the Chief Executive of ShEx, Mark Russell; or the Chair of the ShEx Advisory Board, Robert Swannell?

Baroness Lucy Neville-Rolfe: Well, if you look at a lot of the papers, they’re copied to the Permanent Secretary, they’re copied to the Minister’s office, they’re copied to Mr Russell. And in the Civil Service, that’s, you know, I was – used to be a civil servant – that’s the way senior civil servants like Permanent Secretaries get an eye on things. They get a lot of paper that they sift through and, as it happens, I did recall having a bit of a moan to Martin Donnelly and, actually, he did something about it, as this document we’re going to come on to discuss shows.

Obviously I felt happier once Tim Parker had taken on the mantle of bringing in an independent adviser to look at the complications, and, you know, although we’ve focused on the negative from ShEx, you have to bear in mind that, in my Post Office brief, I was looking at lots of different things, transformation, the accounts, visiting post offices, you know, how – what was their strategy going to be go forwards? So they didn’t have to have so much of the taxpayers’ money but kept the network which was so vital to local communities going.

So, you know, it wasn’t all negative but, clearly, on this Horizon thing, they seemed to be particularly narrow and, as I’ve said several times when I asked for detailed advice on the Second Sight Report towards the end of August, I didn’t get a submission as I should have done outlining the various accusations and what we as the Department thought about those. I got a defence document from the Post Office.

Mr Beer: Baroness Neville-Rolfe, thank you very much for answering my questions. That’s all of the questions that I propose to ask.

There are, I think, a number of Core Participants that wish to ask questions. I know that Mr Henry has 15 minutes or so, maybe if we start with those, that will take us to the break at 3.00.

Questioned by Mr Henry

Mr Henry: Good afternoon, Baroness Neville-Rolfe.

It is often said that openness is the first casualty of a project that is in serious trouble, and you wouldn’t disagree with that observation, would you, given your experience with the Post Office?

Baroness Lucy Neville-Rolfe: No, and generally – obviously, I come from a background in business where your working assumption has to be that, you know, that things do become public and it’s better to –

Mr Henry: Exactly. One paragraph among many, but early on in your statement, was striking, and it was your paragraph 5, which reads:

“I would like to emphasise that a large number of documents which would have been helpful in preparing this statement, such as the minutes of several meetings in my Ministerial Diary, have not been made available to me. This is perhaps because, in 2016, the Shareholder Executive and its staff and records were transferred out of BIS to become part of the newly formed UKGI and, in the same year, BIS was merged into a new department.”

This is a refrain at paragraphs 31, 42, 101, 143 and 177 of your witness statement. Given your experience in Government, how disturbing is this loss of data which appears to be endemic within the UKGI on this subject? Do you regard this as something which has hampered you?

Baroness Lucy Neville-Rolfe: I certainly do. I think it’s very unfortunate and, if you look at one or two of the documents, it says at the bottom: “It isn’t the private office’s responsibility to keep documents; it’s your responsibility as the advising division”, which I found quite surprising.

I mean, latterly, I’ve been a Cabinet Office Minister and I asked my staff what they did about records and they explained that, every three months, they send off a pile of papers to the archives.

Mr Henry: Right. So this appears to be unusual?

Baroness Lucy Neville-Rolfe: So it may be that it’s unusual. I mean, it’s not something that I can really comment on. It’s more for the civil servants in charge of records. But it has certainly been very unhelpful for me and, I think, for other Ministers, that they haven’t been able to see the contemporaneous notes. You know, has one forgotten important things? We’ve all tried our hardest, I’m sure, but it’s quite difficult.

Mr Henry: Right. I now want to go to a document which is UKGI00019859. While it’s being put up on the screens, one of the themes that has dominated the Inquiry has been the constant refrain, “We had every reason to believe Horizon was robust. We were told this by the Post Office. We were told this by ShEx”.

You, however, did not believe that, did you, Baroness Neville-Rolfe, because in this document you expressed the view that it was probably one of HM Government’s IT debacles, and we can scroll down. We have Richard Callard at the top, but then it’s from Tim McInnes. Do you see the second bullet point:

“As she’s [that’s you, Baroness Neville-Rolfe] mentioned before, she thought Horizon was another example of a Government IT debacle and that innocent subpostmasters were the victims.”

Then Mr McInnes says, and this is 12 June 2015:

“Clearly this is wholly untrue in two respects, probably untrue in a third.”

The general tone of this – I don’t want to distract you – is slightly derisory or slightly mocking but I don’t want to distract you with that. But what I want to explore with you is why you thought that; why you harboured the suspicion that Horizon was another Government IT debacle. Would I be right in suspecting that part of your scepticism no doubt came from your personal experience in business?

Baroness Lucy Neville-Rolfe: I think so but also my experience of Government IT systems. You know, there’d been police computers, various different IT things, and Government do seem to find – or did – perhaps did seem to find – you know, getting IT systems right very difficult.

Mr Henry: Very difficult.

Baroness Lucy Neville-Rolfe: And, you know, a key to having good systems – it’s been my experience, partly as a non-exec in other companies, but also a little bit when I was at Tesco – is you’ve got to have really good induction, training, helplines and learn from mistakes as you go along, because it is inherently difficult, bringing in IT systems and I have to say that the Horizon system, if you look at the Second Sight Report, had to do an awful lot of stuff.

Mr Henry: Yes.

Baroness Lucy Neville-Rolfe: And I’m sure that the IT providers will have known that. They were obviously experienced IT providers in lots of areas. But, you know, I came – I suppose it’s fair to say this was very early on and it probably irritated officials – but I came in with a certain questioning – questioning of IT and I would have wanted to hear why there weren’t the sort of problems that we’d seen in some of these other areas, from my recollection of when I worked in Government and –

Mr Henry: Yes, and, of course, you’d served in Government in the 1990s and you’d served in Government –

Baroness Lucy Neville-Rolfe: Exactly.

Mr Henry: – from, I think it’s right, 2015 onwards?

Baroness Lucy Neville-Rolfe: Well, until I went to Tesco in ‘97, I worked in Government latterly in the Cabinet Office, and in the Business Department, and in Number 10. Then I had 15 and a half years in business. Then I joined the Lords and I became a Minister in 2014. And then I was a Minister for about three years and then, after the referendum, I went on the backbenches, and then I’ve been back being a minister.

So I’m quite unique in having had such a lot of different experience: business, Civil Service and several ministerial departments. So I suppose I thought it was a fair comment to talk about IT debacles, even if the Shareholder Executive obviously found that exceptional.

Mr Henry: So, therefore, it’s within your direct knowledge that Government had suffered notorious problems with IT systems for decades?

Baroness Lucy Neville-Rolfe: Yeah.

Mr Henry: You mentioned the police. There was also, I think it’s right, the Inland Revenue had difficulties with IT problems?

Baroness Lucy Neville-Rolfe: They did, and especially moving to self-assessment, although, actually, in time, they sorted them out. So it was very bad to start with and then gradually it got better. I think that’s the problem. You get a lot of bugs and things to start with, and so you’ve got to have really good support and training and helplines, and help people.

Mr Henry: And an openness and a commitment –

Baroness Lucy Neville-Rolfe: Exactly.

Mr Henry: – to get it right, as opposed to covering it up?

Baroness Lucy Neville-Rolfe: Absolutely.

Mr Henry: I mean this, of course – notoriously, Horizon grew out of the problems that the DSS had had with it, had it not?

Baroness Lucy Neville-Rolfe: I don’t think I know the background to the – the early background to Horizon but that sounds quite likely because, after all, they were – you know, there was this question of making payments to individual benefit claimants, yes.

Mr Henry: So to this refrain, where we were being told that it was robust, you certainly weren’t gulled by that, and the wool wasn’t pulled over your eyes by that, hence your scepticism and the fact you were probing?

Baroness Lucy Neville-Rolfe: I tried to probe but I also tried to take advice because the Civil Service has to work on the basis that officials set things out in a cool and sensible way for the attention of Ministers, offering them options, you know, considering what needs to be done in the public interest. I know that because obviously, to some extent, I had residual Civil Service values in my DNA.

Mr Henry: Could I now move to the role of the Civil Service, because you once said in the House of Lords:

“My Lords, having had previous responsibility for the Post Office, I am very well aware that ministers are advised to stand firm on seemingly solid grounds, only for it to become clear in the long term that that is not defensible.”

Now, you may have heard the Right Honourable Pat McFadden’s suggestion regarding a new body to investigate potentially rogue arm’s-length businesses. What would you suggest, however, be done about potentially reckless advisers and officials who seemed to have lost their objectivity and upon whom you relied?

Baroness Lucy Neville-Rolfe: Right, well, that’s quite a big question. I mean, off the cuff, a couple of points. One, I think it’s incredibly important to have the right people in jobs. So you need good performance culture. You need to hire the right people. You need to give them feedback when they’re not there. I think, as an ex-civil servant, I mean, the role of the Permanent Secretary is also important. So, if you think about financial matters, if ministers ask civil servants to spend money that they think is poor value for money, then the Perm Sec can object and they send a memo that – you know there has to be an instruction from the Permanent Secretary to the – from the Minister to the Permanent Secretary saying, “I, the Minister, think it’s right to do this, even though you’ve expressed some reservations”.

I mean, rather than setting up a whole new department to do this sort of thing on the off-chance that there might be – I hope never – repeats of this sort of thing, my only thought is: is there some way that you could, you know, bring that kind of thing into play and people would then know that, if their work was a problem – I mean, obviously, you can always go to the Secretary of State. That is the sum role of the Permanent Secretary. I don’t know exactly what Pat McFadden said. I’m sure he was trying to be helpful.

Mr Henry: So is there anyone you could have depended upon independently, at the time, to validate the truth and honesty of important ministerial statements before you made them, to prevent the mischief that you were speaking of in the House of Lords, that ultimately those statements had become untenable?

Baroness Lucy Neville-Rolfe: I mean, the truth is that, as a politician, you are extraordinarily aware that anything you say on the public record in the House, whether it’s the Lords or the Commons, has to be accurate. And there are well-established processes for correcting the record, if you have to do that. I mean, that arose during Covid, of course, didn’t it?

So, I mean, the answer is you have to try and find a way of getting at the truth and, if you find out that the truth hasn’t been communicated, then you have to correct the record. I think, if Sir Wyn is thinking about what might be done for the future – and I think you’ve got a further sort of whole module on this – you need to just have a think about how this would work in practice and whether there would be perverse effects to bringing in a whole new sort of tier.

I mean, the key thing, in organisations where you’ve got people who aren’t very good, what happens is you move them. You move them on. In the Civil Service, the Civil Service – the appointments are rightly for the Civil Service, rather than for the Ministers, to avoid, you know, inappropriate – or, you know, people having their friends in the wrong places, and I think that is valuable, that independence of the Civil Service.

So I think you need to look at this particularly in the light of ShEx, where you were bringing in a lot of people from outside the Civil Service, and it might be that you could do more to help them, to induct them, to make sure that their sort of – their reports are looking properly at what might go wrong.

Mr Henry: Can I come to that because, of course, one such recruit was Mr Callard, and the final document for you, Baroness, is UKGI00017443. This is an email that Mr Callard sent on 18 November 2015. Could we go to Mr Callard’s email, which is, I think, on page 2. It’s 18 November 2015 at 18.25. Yes, thank you very much.

This is in response to you expressing some dismay with the way you had been informed of matters, and this is Mr Callard stating that he believed that you’d been a bit harsh:

“The problem is we cannot deliver what she [that’s you, Baroness] wants (a green-locked GIB, and a Post Office without a perceived but non-existent IT problem). Bit harsh from my perspective, we’ve kept a lid on the latter”, he says.

So in other words, “We’ve kept a lid on the Post Office”.

Baroness, given everything that you instituted, did you want Richard Callard to keep a lid on the subpostmasters’ dispute with the Post Office?

Baroness Lucy Neville-Rolfe: No, I wanted to get to the bottom of the matter and the truth of the matter.

Mr Henry: Exactly. So what he’s done there is precisely the opposite of what you wanted, isn’t it?

Baroness Lucy Neville-Rolfe: It does seem to be. Obviously I hadn’t seen this at the time, and I had taken steps to say that I would like more political handling, as you can see from the subsequent memo in this area and in the Green Investment Bank – which also, as I said earlier, involves, you know, people from outside who come in, and that’s great that they come in and bring their expertise, but it’s also important that you follow the values of –

Mr Henry: Government?

Baroness Lucy Neville-Rolfe: – of transparency, truth, and Government.

Mr Henry: Yes.

Thank you very much, Baroness.

Sir Wyn Williams: Thank you, Mr Henry.

So we’ll have our break now, Mr Beer?

Mr Beer: Sir, can I just check with the Core Participants how long they will be?

Sir Wyn Williams: Yes, of course.

Mr Beer: If it’s a short period of time, then it might be that we can survive without a break.

Sir Wyn Williams: Yes, sure.

Mr Beer: One Core Participant, five minutes.

Sir Wyn Williams: Then we will have our five minutes.

Mr Beer: Thank you.

Questioned by Mr Jacobs

Mr Jacobs: Good afternoon.

Baroness Lucy Neville-Rolfe: Good afternoon.

Mr Jacobs: I don’t know if you can hear me. I represent a large number of Core Participants, subpostmasters and subpostmistresses, who were affected by this scandal. Mr Beer asked you about your reflections. Mr Henry took you to some correspondence involving Mr Callard. I have a couple of very brief further questions.

You’ve said in your evidence that you believed that you were being misled. You’ve also said that you believe that ShEx and Post Office were working together to try to deflect you. We have that email where Mr Callard was trying to arrange a meeting with Post Office officials to talk about a forthcoming meeting with you and the Chief Executive, and to gauge your mood and what it is that you wanted to do. So they were colluding and talking about you behind your back, effectively.

It’s right, isn’t it, that your experience is that ShEx were far too close to the Post Office?

Baroness Lucy Neville-Rolfe: I think they weren’t taking in alternative sources of information. I mean, clearly, they were going to have to be close to the Post Office because the Post Office had all the facts on individual cases.

Mr Jacobs: But they lost their objectivity?

Baroness Lucy Neville-Rolfe: My worry was that they’d lost their objectivity in all of that. That was at the heart of the problem, I think.

Mr Jacobs: I just want to clarify a point, it may have already been made, but it just seems to be quite an important point. You made a distinction, at 12.20 this afternoon, that ShEx was made up of commercial people and not classic civil servants/Civil Service Officials. Do you think things would have been different, from what you experienced, had the body charged with oversight of the Post Office been composed of classic Civil Service Officials?

Baroness Lucy Neville-Rolfe: I’m not sure that they would have had the expertise to hold shareholdings in things like the banks and the Post Office, and things, without commercial expertise. I’m not against commercial expertise. I think what I was saying is that that’s not necessarily sufficient.

I mean, having said that, there were some – I mean, Susannah Storey, who I think you’re seeing later, whom I know from DCMS, I mean she was a civil servant of the classic kind. So there was a mixture. But they – I think that – I think – I’m not sure the Civil Service is as good – I remember when I went to work in the private sector, the whole of my first month was induction, and I had three-hour meetings with all of the key directors – three-hour meetings, which I couldn’t understand. The difference, when you go to work in Civil Service, is you’re lucky to get a 15-minute meeting just to say hello to people.

Because it’s very different, and what you have to do in the public sector is a bit different, I think it’s very, very important that they should understand that, and that, obviously, was an understanding by Mr Callard. He felt that it was important to keep the lid on but, obviously, as a civil servant, it’s not only keeping the lid on; it’s also making sure that you’re doing the right thing.

Mr Jacobs: In terms of public duties and serving the public, did you perceive there to be any ethical difference between ShEx officials and the rest of the civil servants who you worked with?

Baroness Lucy Neville-Rolfe: I don’t think we discussed ethics but they obviously took a very narrow, focused view, linked to their duties in terms of the commercial and strategic vision for the POL, and didn’t seem to focus so much on classic governance issues like, you know, the risk from these prosecutions, which would be something that, as a civil servant, you’re always looking at the downside, as well as the commercial opportunity.

I mean, having said that, they were trying to move forward. Paula Vennells, to give her credit, reduced the deficits in the Post Office. So the Post Office must have been doing something right at that time.

Mr Jacobs: Finally, Baroness, this narrow view, this lack of focus on more public interest-type problems, such as prosecution, is that, on your evidence, the fault in the system which prevented you from being able to carry out your ministerial duties in terms of receiving the right information?

Baroness Lucy Neville-Rolfe: I think it was also to do with the particular individuals because I gave them lots of openings, saying, you know, “What’s in the Second Sight Report?” If I had been, my previous self, sitting in that seat, I would have gone away and I would have read the whole of the Second Sight Report and I would have gone through all of the negative findings and I would have then wanted to do my own job, understanding what was right and what was wrong. That wasn’t done.

What they did was take advice from the Post Office because they felt the Post Office could give the answers and that isn’t what you do. As a good civil servant, you bring – you look at different – you know, you look at different sources.

Mr Jacobs: I think that’s answered my question. I haven’t other questions for you. Thank you.

The Witness: Thank you.

Questioned by Sir Wyn Williams

Sir Wyn Williams: Baroness, are you a supporter of arm’s-length bodies?

Baroness Lucy Neville-Rolfe: As I think I said in my statement, I think they do have value. If you think about Government owning things like banks, the Post Office, it’s not really possible for ministers to be responsible on a day-to-day basis. Therefore, the arm’s-length system was set up. However, as I said, I think, in my statement, it’s extremely important – it’s almost even more important that you have really good people engaged, and I think people need to understand that, when you are the board member on an ALB representing the Government, you have a very important duty and, actually, it’s quite similar, private equity, where they own a big stake in a company, which I’ve had experience of, they put a director on the board, and that director, I can tell you, is always asking questions and thinking about, as it were, the owners’ needs, both financial and non-financial. So does that answer my question, Sir Wyn?

Sir Wyn Williams: Well, it does. I’m just wondering how easy it is, actually, to find this super-charged person who is able to always distinguish between his or her duties as a member of the Board, ie his or her duties to the company, and, at the same time, represent a shareholder who is not necessarily aligned with all the objects of the company because the shareholder will have things like, for example, the social value of keeping post offices open in their head.

So I’m just wondering how easy or not, as the case may be, it is to find this person who is able to perform these, as I would see it, extremely difficult tasks?

Baroness Lucy Neville-Rolfe: I think it is difficult but I think if you have clear objectives that all understand and those are kind of trained in at the beginning through induction, and my experience, which is quite limited of private equity, is that the people they put on boards to represent them, you know, have sort of central – if you like, central training, they’re selected to be able both to sit on boards and to take an independent view, and it may be that the cadre of people that we have in ShEx, which is now UKGI, you know, have to have that kind of support.

I have to say, you know, I’m obviously not up to date on what they do do, but it is a very interesting, important area because you’ve got to get the mixture of these operations moving forward commercially, but reflecting the public sector value, sometimes the social value, sometimes obviously value for money, which matters as well, and which the external people can really help with. It’s difficult. I don’t envy them their task, Sir Wyn.

Sir Wyn Williams: All right. Thank you very much. Well, I’m very grateful to you for making a very detailed witness statement and for answering a good many questions during the course of most of today. So, again, thank you very much for your witness statement, and for appearing to give oral evidence.

The Witness: Thank you.

Sir Wyn Williams: Right, Mr Beer. Is that it for the day?

Mr Beer: It is, sir. We return tomorrow with Margot James.

Sir Wyn Williams: Yes.

Mr Beer: Tomorrow being a Wednesday, might I suggest that we start at 10.05, so that we don’t have the interruption of the fire alarm?

Sir Wyn Williams: I don’t think I need much of a temptation to start a little later, Mr Beer.

Mr Beer: 10.05 it is. Thank you very much, sir.

Sir Wyn Williams: Fine.

(3.12 pm)

(The hearing adjourned until 10.05 am the following day)