Thank you for launching an inquiry on issues emerging from the Horizon IT Court cases. Government believes that postmasters are at the heart of communities and recognises the strength of feelings about the negative impact the Horizon cases has had on postmasters, causing distress to them and their families. I therefore believe this is an important inquiry and my officials and I will take the necessary actions to support the Committee.
As a first step, I welcome the opportunity to provide oral evidence with my Business, Energy and Industrial Strategy (BEIS) and UK Government Investments (UKGI) officials on 24 March. Ahead of this, Iam writing to you to provide some further information. Ihave also included annexes that summarise the respective roles of BEIS as the Policy Sponsor, UKGI as the Shareholder Representative and Post Office Ltd (Annex A) as well as a timeline of historical events in relation to the issues brought forward by the Horizon litigation (Annex B).
On 11 December 2019, Post Office Ltd reached a settlement of £57.75m to conclude the Horizon litigation claim. This was fully funded by Post Office Ltd under the new Chief Executive Officer Nick Read. Post Office Ltd led the mediation and the Government was not party to it, although we closely monitored the situation during the legal proceedings. The settlement was approved by Government in accordance with the governance arrangements between Government and Post Office. A factual summary of historical events is set out in Annex B.
Since the issues with Horizon surfaced, BEIS were reliant on Post Office Ltd's management to investigate issues with the Horizon system. We were assured that the system was robust and that the issues raised by the postmasters were being handled appropriately. BEIS pressed management on these issues, including instigating a review of the Post Office's handling of Horizon and its dealings with postmasters in 2015, and was given consistent advice from the company's management and its experts that appeared to verify these claims at the time. It is now clear that this was not the whole picture and, in hindsight, facts have come to light through the litigation that has revealed that advice received over that period was flawed.
As you are aware, Post Office Ltd, under Nick Read, has accepted that in the past it got things wrong, apologised and has said it aims to re-establish a positive relationship with postmasters.
This includes undertaking appropriate actions such as addressing historic shortfalls for postmasters who were not part of this group litigation and resetting its relationship with its postmasters. We will monitor its progress closely.
The Government wants to make sure lessons are learned from this case, so that such issues do not happen again, and it is of the upmost importance that the Post Office proceeds to undertake its dealings with postmasters openly and transparently.
We are therefore committed to establishing an independent review to consider whether the Post Office has learned the necessary lessons and to provide an independent and external assessment of its.work to rebuild its relationship with its postmasters. We will announce further details on this in due course.
As you are aware, the Criminal Cases Review Commission (CCRC) are currently considering 57 applications from postmasters seeking to have their convictions overturned. Government cannot comment on individual cases and it is important that we do not interfere with this process. Post Office Ltd has also assured Government that they are cooperating fully with the
Furthermore, Justice Fraser when handing down the Horizon Issues Judgment raised concerns in relation to the evidence provided by Fujitsu employees. He has referred his concerns to the Director of Public Prosecutions (OPP). It is a matter for the OPP to consider what action, if any, he would like to take. Again, it would not be appropriate for Government to comment on this.
More broadly, Iwanted to thank you for the report that the BEIS Select Committee issued prior to the election, following my predecessor's appearance at the Committee in June last year. I am grateful for your recommendations and know you will have seen our response, which I sent to you on 11 March. The Post Office delivers essential services that are hugely valuable - to both individuals and SME businesses - in urban and rural areas across the UK.
Looking forward, my priorities include helping the Post Office to continue to grow a _thriving commercial business together with delivering of its social purpose, which includes:
meets customers' needs, working closely with postmasters who play an important role in their local communities;
• supporting the Government's access to cash and financial
inclusion agenda by ensuring that basic cash and banking services are available throughout the network to meet fhe needs of individual customers and SMEs.
Delivering these services enables the Post Office to contribute to the Government's broader social and economic priorities, locally and nationally. The Post Office also has a key role to play in high streets across the UK, helping keep town centres vibrant and playing a role in levelling up communities throughout the country
I hope the information provided in my letter is useful in supporting the Committee's inquiry and I look forward to speaking further on 24 March.
Paul Scully MP
Minister for Small Business, Consumers & Corporate Responsibility
Annex A: Department for Business, Energy and Industrial Strategy written evidence to the BEIS Select Committee’s Inquiry into the Post Office and Horizon IT System, March 2020
Summary of current governance
Accounting Officer responsibilities
Shareholder policy and corporate governance roles
Post Office Ltd’s Board
Annex B – Factual Timeline of Events from the Last Decade in Relation to the Post Office Horizon Case
Post Office Ltd (POL) is separated from Royal Mail Ltd. The BEIS Secretary of State (SoS) as shareholder appoints a Non-Executive Director (NED) to represent Government interests.
POL hold a meeting with James Arbuthnot and Oliver Letwin (Minister of State for Government Policy), during which they agree to appoint a firm of forensic accountants, Second Sight.
The Post Office Minister gives an oral statement to parliament, following publication of Second Sight’s interim report, that “so far found no evidence of system wide (systemic) problems with the Horizon software” but did note 2 incident of defects giving rise to branch issues that were investigated.
POL announces a Complaint Review and Mediation Scheme in consultation with the Justice for Subpostmasters Alliance (JFSA), MPs and Second Sight as an avenue for postmasters to resolve complaints.
Jul / Sept
Second Sight produce their second report which describes branch operating procedures and related Horizon functions. Second Sight raise specific concerns and POL publishes a response.
Westminster Hall Debate on the Complaint Review and Mediation Scheme.
Complaint Review and Mediation Scheme closed. 41 of 136 cases resolved. POL write to the Post Office Minister outlining the outcomes of the scheme.
Apr / May 2015
Second Sight’s final report is published, and POL publishes its response. CCRC announces it will consider cases from postmasters.
The Post Office Minister meets with POL to discuss the Complaint Review and Mediation Scheme, Second Sight reports and POL’s approach to addressing issues raised about the Horizon system.
The Post Office Minister commissions POL’s new Chair to undertake a review of POL’s Horizon system and handling of postmaster issues. Support is provided by a QC
Preliminary conclusion of the review by the POL Chair finds no systematic problem with the Horizon system. Review halted following legal proceedings lodged against POL by the JFSA. CCRC also initiate review the POL cases.
Group Litigation Order made.
Nov / Dec 2018
‘Common Issues’ Trial between 5 November and 6 December.
‘Horizon Issues’ Trial commenced on 11 March. Trail is suspended following recusal application by POL on 21 March.
‘Common Issue’ Judgment (CIJ) handed down on 15 March.
Recusal application refused on 9 April. POL apply directly to the Court of Appeal on 11 April. Horizon Issues Trial is be stayed in the meantime.
Court of Appeal reject POL’s recusal application on 9 May. POL’s application to Mr Justice Fraser for permission to appeal the CIJ denied on 23 May.
POL apply to Court of Appeal for permission to appeal the CIJ on 13 June. ‘Horizon Issues’ Trial resumes on 4 June.
‘Horizon Issues’ Trial concludes on 2 July.
Nov / Dec
Permission to appeal the CIJ rejected by the Court of Appeal on 22 November. Mediation between POL and claimants begins, concluding with a £57.75m settlement being reached on 11 December.
‘Horizon Issues’ Judgment handed down on 16 December
 UK Government Investments was formed in April 2016 when the Shareholder Executive, a Directorate of the Department for Business, Innovation and Skills was brought together with UK Financial Investments, a part of HM Treasury, under a single holding company owned by HM Treasury. The Shareholder Executive was set up in 2003, in part to act as shareholder for government’s arm’s length bodies.