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The Rt Hon Kemi Badenoch MP
q Secretary of State for Business & Trade
President of the Board of Trade
ee Minister for Women & Equalities
Department for Business and Trade
Department for Old Admiralty Building
Admiralty Place
Whitehall
Business & Trade toner
Nigel Railton ul
Chair Er
Post Office Limited W ndtrade.gov.uk
100 Wood Street, London, EC2V 7ER www.gov.uk
By email: [POL EMAIL]
[xx] May 2024
Dear Nigel,
Strategic Priorities for 2024/25 - DRAFT OFFICIAL SENSITIVE
I would like to congratulate you on your appointment as interim Chair of Post Office Limited (“POL’”,
or “the Company”) and welcome you, in my role as sole Shareholder. As you know, this is a
challenging time for POL as it seeks to fix the issues of the past and transform its business for the
future. I would like to reiterate my thanks to you for stepping up at this time of need.
Now that you have formally taken up the role of interim Chair, I am writing to outline my priorities
for your tenure. These priorities will require you to go above and beyond the usual remit and time
commitment expected from a Chair of a public body. The priorities listed in this letter should be
considered alongside your responsibilities as Chair set out in your appointment letter, the standard
Governance Expectations of the Chair at Annex A, and the Principles of Public Life at Annex B.
Looking ahead, it is imperative that POL delivers on its commitment to address its historic failures
and provide redress to postmasters. With Phases 5 and 6 of the Horizon IT Inquiry underway and
the Inquiry expected to conclude oral hearings later in 2024, it is also evident that the level of
scrutiny facing POL will remain considerable. The Company will need to perform under significant
pressure.
The Government is committed to delivering justice for postmasters and also fulfilling its duties to
Post Office staff. We will look to you, as interim Chair, to ensure the Board is equipped to meet the
challenges facing POL. You should ensure that you provide the necessary support and challenge
to the Chief Executive and Strategic Executive Group (SEG), as they lead the company.
In this capacity, I would like you to focus on the following priorities for the Financial Year 2024/25:
1. Intensifying existing workstreams to address POL’s historic failures and setting the
business up for future success. You should:
e Enable, wherever possible, swifter redress for claimants, both through the Post
Office-administered schemes and the HMG-administered schemes.
e Participate openly and constructively with the Post Office Horizon IT Inquiry,
engaging on a timely basis and in a demonstrably open, transparent, and efficient
manner.
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e Continue to demonstrate, with external assurance where appropriate, the
Company’s conformance to the Common Issues Judgment and Horizon Issues
Judgment rulings.
e Ensure that lessons from the Company's past failures are incorporated into the
successful delivery of the Strategic Platform Modernisation Programme (SPMP), in
terms of both the development of the technology and the rollout to postmasters.
2. Supporting the cultural transformation of the Company and focusing on improving
on POL’s capacity, capability, and resilience at all levels. You should:
« Engage with postmasters, other key stakeholders, and the public, giving particular
consideration to how you communicate your strategy for the future of POL.
e Assess the strength and skillset of the executive and Board and _ identify
opportunities for efficiency and productivity gains, making changes where
necessary.
e Support and challenge the Chief Executive’s efforts to,improve the expertise and
resilience of the organisation, particularly at the level of the SEG.
« Update the Shareholder on how cultural transformation, is being established.
« While your tenure is interim, make progress towards longer-term goals, including:
o Delivering, a diverse Board (one member from an ethnic minority by end
2024 and 40% female by end 2025).
o Ensuring governance arrangements address emerging cyber-security
risks.
3. Enabling the future success of POL, including effective financial management and
performance to ensure medium-term viability. You should:
« Oversee a strategic review of POL and provide Ministers with your conclusions. To
ensure the work covers all the key areas of interest to HMG we would request that
you agree the approach and objectives with DBT.
e Assist the Shareholder with the ongoing review of POL’s Framework Document.
« Ensure effective financial management and performance against the Business
Plan.
« Maintainsstringent cost control and a focus on value for money and efficient delivery
across the cost base, including on the New Branch IT (NBIT) and IT projects, legal
costs, acceleration of the network strategy, of the approach to directly-managed
branches, and measures aimed at reducing central costs.
e Ensure robust monitoring of financial performance, including investment spending
and liquidity, monitoring, maintaining early and transparent flagging of risks to the
Shareholder and making progress on the establishment of rolling 3-5-year
forecasts.
e Ensure delivery of IT projects crucial to POL’s operations, specifically NBIT system
and delivery of NBIT before the termination of the Horizon system.
I would be grateful if you could keep the Department updated on your progress, for instance
through 1:1s with Minister Hollinrake and myself. You should also provide a written report in
advance of each Quarterly Shareholder Meeting (QSM) with an update on your progress against
the above priorities. This update should include commentary on key personnel risks at the Board
and executive level.
As you know, the Post Office is a national institution with a unique heritage. Postmasters are
central to communities up and down the country. The challenges ahead for POL are considerable
but not insurmountable. As interim Chair, you will need to rise to meet them. I am grateful for your
act of service in taking up this role and I look forward to working together to make your tenure a
success.
Yours sincerely,
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[SoS eSig to be added by SoS PO following clearance]
THE RT HON KEMI BADENOCH MP.
Secretary of State for Business & Trade and President of the Board of Trade
Minister for Women & Equalities
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Annex A: Governance Expectations of the Chair
This letter, issued by UK Government Investments (“UKGI”), sets out the standard governance
expectations of Chairs within its portfolio. This is not an exhaustive list of the duties of a Chair, and
should be accompanied by a letter, tailored to the needs of Post Office Limited (‘POL”), outlining
the specific priorities and expectations of both the Department for Business and Trade (“DBT”) and
UKGI, acting as shareholder representative. This document does not supersede or alter any
responsibilities as set out in POL’s Framework Document, Articles of Association, or Funding
Agreement.
UKGI, acting as shareholder representative on behalf of Departments, expects the Chairs of its
Assets to lead the Board in an effective and collegiate manner, and adhere to best practice
corporate governance standards where possible in undertaking their roles. It is your responsibility,
as Chair of POL to lead the Board, and ensure that it undertakes all of its responsibilities as set out
in POL's Articles of Association, Terms of Reference, Managing Public Money, and the UK
Corporate Governance Code. The Chair should set the tone from the top of POL and promote an
effective and appropriate culture in both the Boardroom and the wider organisation.
Your responsibilities are to act in accordance with the highest standards of corporate governance,
and are complemented by requirements and expectations of you by HM Government. Below is a
list of some of the core governance expectations of UKGI regarding, your duties as Chair
encompassing both of these elements. This list is not intended to be exhaustive, and does not
supplant any responsibilities set out in POL’s governing documentation:
Set the Board’s agenda
You should set POL’s Board’s agenda in good time ahead of a\Board meeting. There should be
sufficient visibility of items for forthcoming meetings to. allow Board members, Executives, and
stakeholders as necessary to prepare and engage with the Board. The agenda should focus upon
POL’s strategy and any policies as set by DBT. In addition, the Board’s agenda should interrogate
POL’s ongoing performance, culture, and value for’money, all while being cognisant of its overall
accountability to the Secretary of State, and ultimately, the taxpayer.
Encourage engagement from Board. members,
You should encourage Board members to engage with POL both within Board meetings, through
active participation’ in discussions, and decisions, and more widely. You should encourage Board
members to join Board committees where they can add value. You should support Board members
to contribute their expertise where relevant to POL on an ongoing basis. You should foster effective
relationships based on trust, mutual respect, and open communication between Board members
and the Executive team, both.inside and outside of the Boardroom. You should monitor and
manage conflicts of interest’ among Board members in order that the Board may function
appropriately, in accordance with the conflicts of interest policies of DBT and POL.
Foster relationships between the Board and stakeholders, including Government
You should be the principal point of contact between stakeholders and the Board. You should
foster constructive relationships with all relevant stakeholders to POL. You should also maintain a
constructive relationship with DBT and UKGI in the course of your work.
Develop a strong working relationship with the Chief Executive
The relationship with the Chief Executive is key to the long-term success of POL. You should
provide support and advice to the Chief Executive, while respecting their executive responsibility.
You should work with the Chief Executive to consider the strength of the broader executive team.
Under your leadership, the Board should consider executive succession planning on a regular
basis.
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Work with HM Government on the composition of the Board, and the appointment of new
Board members
You should consider the composition of the Board in line with the requirements of POL on a
continual basis, providing regular feedback to DBT and UKGI as appropriate. You should work with
DBT and UKGI to consider appointments to the POL Board. You should engage in the appointment
process as appropriate as per the agreed framework, and in compliance with rules or regulations
governing appointments to the POL Board.
Provide mentoring and an induction to new Board members
You should lead the induction to new Board members on behalf of POL. You should make sure
new Board members are introduced to all relevant people both within POL and among
stakeholders. This should be done in cooperation with DBT and UKGI. The induction process
should familiarise new Board members with POL and its overall governance framework.
You should encourage Board members to develop their knowledge and skills
You should continually consider the knowledge and skills that the Board requires to discharge its
duties to POL, this should be considered in conjunction with UKGI. Where the Board would benefit
from additional knowledge and skills, which can be met»without the need to recruit new or
additional Board members, you should encourage Board’ members to undertake relevant training
and education where possible.
Lead the annual evaluation of the Board, which should be.externally facilitated at least every
three years
You should ensure that a review of the Board's effectiveness is undertaken on an annual basis.
This should be facilitated by an external provider at least every three years. Where the evaluation
is not externally facilitated, you should lead the process, gathering feedback from Board members
regarding the Board's functioning..You should also:consider how stakeholders, such as DBT and
UKGI, can input into the review, to provide comment upon the Board's effectiveness in engaging
with Government and stakeholders. Reviews should produce a written report. You should be
responsible for overseeing the implementation»of any recommendations arising from a review as
necessary.
Evaluate the performance of non-executive Board members at least annually
You should undertake a review, at least annually, of the performance of non-executive Board
members. This review should consider their contributions to the Board, and the value they add to
POL. You should write these reviews and be prepared to share them with DBT and UKGI in an
appropriate manner. A written review of performance may be necessary to support any
reappointment decisions for Board members.
Be subject to an annual performance evaluation
You should engage with an evaluation of your performance on an annual basis. You should allow
the Senior Independent Director to gather feedback on your performance from the perspective of
Board members. DBT and UKGI shall gather feedback from Government and other stakeholders.
This will be collated by UKGI and provided to the Principal Accounting Officer in an appropriate
manner. A written review of your performance may be necessary to support any reappointment
decision.
For additional best practice guidance regarding the role of the Chair, see the “Guidance on Board
Effectiveness” published by the Financial Reporting Council. This can be found here.
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Annex B: The Seven Principles of Pul “Nolan Principles”
The Seven Principles of Public Life
The Seven Principles of Public Life (also known as the Nolan Principles) apply to anyone who
works as a public office-holder. This includes all those who are elected or appointed to public
office, nationally and locally, and all people appointed to work in the Civil Service, local
government, the police, courts and probation services, non-departmental public bodies (NDPBs),
and in the health, education, social and care services. All public office-holders are both servants of
the public and stewards of public resources. The principles also apply to all those in other sectors
delivering public services.
Selflessness
Holders of public office should act solely in terms of the public interest.
Integrity
Holders of public office must avoid placing themselves under any obligation to people or
organisations that might try inappropriately to influence them in their work. They should not act or
take decisions in order to gain financial or other material benefits for themselves, their family, or
their friends. They must declare and resolve any interests,and relationships.
Objectivity
Holders of public office must act and take decisions impartially, fairly and on merit, using the best
evidence and without discrimination or bias.
Accountability
Holders of public office are accountable to the public for their decisions and actions and must
submit themselves to the scrutiny necessary to ensure this.
Openness
Holders of public office should act and take decisions in an open and transparent manner.
Information should:not be withheld. from the public unless there are clear and lawful reasons for so
doing.
Honesty
Holders of public office shouldbe truthful.
Leadership
Holders of public office should exhibit these principles in their own behaviour and treat others with
respect. They should actively promote and robustly support the principles and challenge poor
behaviour wherever it occurs.