UKGI00008597 - Notes of meeting in which the Minister and Permanent Secretary were briefed on the Postmaster Litigation

Evidence on official site

UKGI00008597
UKGI00008597

The purpose of the meeting was to brief the Minister and Permanent Secretary on the Postmaster
Litigation and the following topics were covered:

- The status of the legal case and its resolution
= Operational impacts for POL and contingency planning
- Communications

The POL team explained that the upcoming Common issues trial in November is about the terms in
the contract and POL’s view, supported by the legal advice, is to continue to fight the claim. The
second trial in March 2019 concerns the Horizon accounting system. The parties are under an
obligation to consider mediation after the judgement in the Common issues trial to try and resolve
or narrow the dispute. Unless the case can be settled there will need to be a third trial after May
2019 to consider the facts of individual claims.

The value of the claim has not been quantified. POL has calculated based on the costs being incurred
by the fund backing the claimants that the minimum settlement that the claimants would seek is
around £30m. But the potential claim value is much higher.

The Permanent Secretary pointed out that funding has not been allocated to this claim. POL said
that for any settlement up to around £50m the cost could be borne by the company. Above that
they would need to consider whether it could be funded by POL or request additional support from
HMG.

The POL team was asked whether a loss on one or more of the more significant contractual points at
issue in the November trial could have balance sheet implications for the company. The POL team
said that it is unlikely that additional funding would be needed but said this would not be known
until after the trial. The POL team pointed out that levels of losses due to fraud had increased to
around £5m pa because POL is not prosecuting cases while the trial is ongoing. POL has increased
resources towards spotting and auditing cases of potential fraud. POL is also considering additional
investments (eg in CCTV) to reduce fraud.

The Permanent Secretary asked Pol to share its legal advice with the legal team so that the
department could reach its own views on the merits of any potential settlement opportunity. He
mentioned the Magnox case where there had been different views between the department and
NDA about the merits of settlement and a shared understanding of the legal merits proved to be
essential to reaching a common understanding between the parties. Paula Vennells gave an
unqualified agreement to provide such information.

In relation to communications, it was generally understood that the case would attract attention and
the upcoming case could give rise to PQs and UQs. It was agreed that the Minister’s office and BEIS
comms would have direct access to the team at POL through Mark Davies.

There was a general discussion about the Banking Framework and the re-pricing at the end of
November. The Minister expressed strong support for POL’s role in providing this essential service
and her willingness to support POL in achieving a good outcome for the company.