Post Office Executives: Bonuses

(Urgent Question): To ask the Secretary of State for Business and Trade if he will make a statement on the awarding of bonuses to Post Office executives.

I thank the right hon. Gentleman for tabling this urgent question; I was very keen to come to the House to make a statement on this matter had he not done so and am keen to answer his question here today.

The situation is extremely concerning and deeply regrettable and the Post Office is right to apologise. This is a very serious issue, particularly as it comes at a time when it is essential that the public have confidence that the culture and processes at the Post Office have been improved.

Since becoming aware of this incident, I have acted swiftly, calling for an immediate explanation from the Post Office as to how this mistake occurred and asking what steps the Post Office board is taking in response. I met officials in my Department and UK Government Investments yesterday to discuss what further action is needed.

The Post Office has rightly apologised to the inquiry and issued a clarification on its website. The Post Office chief executive officer and chief finance officer have returned the remuneration associated with the sub-metric relating to the Post Office’s support for the inquiry. The Post Office CEO has also apologised to Department for Business and Trade Ministers.

But more needs to be done. As a first step it is important that the facts are established. The Post Office has rightly announced that the incoming chair of its remuneration committee, Amanda Burton, will lead an immediate investigation into this incident. She was appointed non-executive director on the Post Office board at the end of last month and brings to the role experience and expertise from her time in the legal profession. The scope of the investigation is to ensure that the remuneration committee’s approach and processes on rewarding its executives in this case was consistent with corporate governance best practice. I expect this investigation to report back to me within two weeks with its findings and recommendations.

First, I declare an interest: I am a member of the advisory board on the compensation scheme.

Two months ago I sat in the front room of a 78-year-old lady in Newcastle whose son had contacted me because she had not applied for compensation. That woman was traumatised: she was never spoken to about this for 20 years and was broken because of the shame involved in her prosecution. When this news broke on Friday night I thought about her and I was angry, but I am not as angry as many of the victims, who have been misled and lied to with a cover-up over the years.

Nick Read was brought in as a new broom, and he apologised to the victims on behalf of the Post Office. Well, that apology means absolutely nothing. This is a man who will get a bonus of over £400,000, which is based not on a mistake, as the Minister said, but on a deliberate lie. Added to that, two of the four people on the advisory board are Tom Cooper, who is his Government’s own representative on the board, and Ben Tidswell, who is chairing the review of historical compensation. How could those two people remain on the board? As the Minister knows, the victims of the Post Office have no confidence in it. I was prepared to give them the benefit of the doubt, but frankly it is rotten to the core still. It needs to change.

May I ask a couple of questions? First, when was the Minister made aware of this? What is the actual role of Tom Cooper, who is the Government’s representative? We have had this for many years, Minister: there were independent Government advisers on that board who oversaw the Post Office spending £100 million of taxpayers’ money to fight an unjustifiable court case against the postmasters. Will he publish who has got a bonus and who has given it back? If he says that the criteria were not clear or were misunderstood, will he publish them? When he does his inquiry, will he come back to the House to give a full explanation about what is going on?

I am grateful for the right hon. Gentleman’s work on the advisory board, as he set out. I was keen to support the advisory board’s recommendation to widen the scope of the scheme to cover other elements of the compensation scheme, so I thank him again for the work that he does.

To respond to the right hon. Gentleman’s specific questions, I was made aware of this on 6 May, Saturday; the officials were made aware on 5 May. It is absolutely right that we should have been notified of this earlier. I met with Tom Cooper yesterday, together with other officials and UK Government Investments representatives. Tom has accepted that mistakes were made, including on his behalf. Tom Cooper was already due to leave his role as the shareholder representative, which is the UKGI role he plays, and is being replaced by Lorna Gratton.

The criteria for the bonus are published in the annual report, but I am happy to commit to come back to the House and report, by whatever means, on the findings of the remuneration committee and the independent expert external report that will look at these issues in the round. As I said in my remarks, I absolutely think that the Post Office needs to change its culture and its approach to these matters, and wider matters arising from the Post Office scandal. We are determined to make sure that people get fair compensation; I know that the right hon. Gentleman, too, is determined to make sure that happens, and he has been a doughty campaigner for that cause for many years.

Ever since being the Post Office Minister years ago, I have been very worried about the whole governance of the Post Office. I think, following this urgent question, that we need absolutely radical reform. Here we have a badly run nationalised industry, with people paying themselves huge salaries and bonuses, but all the work is done by the 11,000 sub-postmasters. They have been treated absolutely appallingly, and not just in the Horizon scandal but in their working conditions, pay and everything else. I have been arguing recently, in consultation with sub-postmasters and their leaders, that we should consider mutualisation. We should pass control of this body to the people on the frontline who do all the work. I hope the Minister will not dismiss that idea.

My right hon. Friend and I have discussed and corresponded on this matter at length. I am a big fan of mutuals, and I spoke in favour of them many times as a Back Bencher. I am happy to keep those conversations going, and mutualisation is certainly not something I would dismiss out of hand.

I call the shadow Minister.

I, too, thank my right hon. Friend the Member for North Durham (Mr Jones) for his ongoing work, and for securing this urgent question.

Here we are again. Just when we thought we had reached a low in the ongoing saga that is the Post Office’s Horizon scandal, a new low is reached. The Minister is right that the situation is concerning, but it is much more than that: it is a disgrace. After years of fighting compensation claims against honest sub-postmasters, using every trick in the book to draw things out for as long as possible, the Post Office somehow found it appropriate to hand out bonuses for co-operating with Sir Wyn Williams’s inquiry, which executives had a statutory obligation to do anyway. The Post Office even implied that the bonuses had effectively been approved by Sir Wyn, which he has denied, saying that the confirmation it received from him was misleading and inaccurate. This is, in no uncertain terms, completely unacceptable.

The Horizon scandal is one of the greatest injustices in modern British history, and these bonuses add further insult to injury. The Post Office has very serious questions to answer on corporate governance, not least in relation to the remuneration committee. I am glad to hear that an inquiry is being undertaken, but there are also questions about Government oversight if the Minister himself had been kept in the dark for weeks. I would be grateful if he could clarify what role Tom Cooper played as an adviser, what he knew and when he knew it. I think the Minister has made this commitment, but can he give a timescale for when he expects to publish Amanda Burton’s report?

The Post Office and the Government must now convince the British public that they understand not only the scale of what happened, but the priority and importance of urgently getting compensation to victims. Sub-postmasters have had their lives ruined, and they need more than repeated apologies and further delayed compensation. They must also be confident that lessons have been learned from these failures. Sadly, it seems the Post Office has failed to do that.

As I said earlier, I became aware of the matter on Saturday, and my officials became aware of it the previous day. I understand that the UKGI representative was made aware in the early part of April. We asked why we were not made aware at that point, and there are questions about information that is restricted to the inquiry. There are provisions around that, and we need to make sure it is disclosed to us appropriately and as quickly as possible. To my mind, the Post Office should have made us aware of this situation straightaway.

Clearly we have to follow due process, including good employment processes, in publishing any report by Amanda Burton. I cannot make a commitment on that, or on the repayment of bonuses, due to employment laws and regulations.

Finally, we are determined to resolve the tax problem that some people in the historical shortfall scheme have suffered. We are working on that at pace right now.

It is an absolute scandal that Post Office executives are being paid a bonus for co-operating with an inquiry into a scandal to which they all turned a blind eye. Another scandal is that Fujitsu, the author of the software, has never been held fully to account for its role. Why not? Can the Minister tell us why Fujitsu is still being given Government contracts, most recently the emergency alert? That is a huge kick in the teeth to those still seeking compensation and justice.

My hon. Friend and I discussed this yesterday, and he takes a great interest in such matters given his background, including as a former sub-postmaster. I understand his concerns about why such a metric was used in the first place. Some time ago, there was an attempt to move away from purely financial considerations in bonuses. I fully recognise that the conditions under which this bonus was authorised are questionable, to say the least. Holding to account Fujitsu and other people who are responsible for this scandal is clearly a role for the inquiry. We should follow due process and wait for the facts to be published before deciding what action to take against those responsible.

I call the SNP spokesperson.

I declare an interest as chair of the all-party parliamentary group on post offices. I have no idea how I will cram everything into a minute, but I will try.

The Post Office was right to apologise, but it should not have had to apologise in the first place. The rotten core of what is still happening in Post Office Ltd needs to be exposed to daylight and be completely cleansed. I know the Minister is keen to do that, and I look forward to his inquiry—not an internal inquiry—into what went wrong. Surely to goodness, Post Office Ltd should not be awarding itself bonuses for co-operating with a Government inquiry into wrongdoing of the extent of the Horizon scandal. Furthermore, lying about the inquiry’s chair is beyond the pale. I have railed against this so many times in this House. Members will be pleased to hear that I do not intend to go on any longer, but this needs to be sorted.

I thank the hon. Lady for all the work she does as chair of the all-party parliamentary group and for engaging with me on many different issues, not least this one. I agree that this should never have happened, which makes it all the more concerning. The external independent review will do just that, and we are keen to ensure that it happens as soon as possible, to get under the skin of this and find out exactly what happened and who is responsible. I have great sympathy for her position that bonuses should be awarded for appropriate measures, and not for something the Post Office should be doing anyway.

The Post Office came to this place a few weeks ago to try to influence many of us to say how great it is. I met the chief executive, Nick Read, who is clearly a liar, because what he told me was untrue. I met Kenneth Pritchard, the head of public affairs, who is equally a liar because what he told me was untrue.

The Post Office is awarding enormous bonuses, or tried to award enormous bonuses, but the postmaster in Dorchester, the county town of Dorset, is so screwed down on transaction fees that he is now personally subsidising the county town’s post office in order to survive. That cannot be right, and I am hopeful that the Minister might be able to give me some reassurance that this sort of area will be properly considered and looked into, to make sure it is stopped.

I am not aware of the circumstances to which my hon. Friend refers, but I am happy to engage with him separately on the matter. Remuneration is clearly important to our postmasters, and we want to ensure that we have a sustainable network. Some improvements have been made this year, including a 20% increase in payments for bank deposit transaction. We need to make sure that the post office network is sustainable for the future, and that includes our postmasters being able to make a decent living.

Putting aside the cheating and lying, let us get back to the basic question of why on earth people were awarded bonuses for going to work and doing their job. Some sub-postmasters have lost their lives and others have lost their livelihoods or spent years in jail, yet some people are trying to clean up on this. Will the Minister commit to tackling the Post Office, which is wholly owned by this Government, and scuppering these bonuses? This has to stop. It is a stain on our history that it happened in the first place, and this is just adding insult to injury.