Post Office (Horizon System) Compensation Bill

We heard just this week that the management and leadership of Fujitsu are very humble, but this will not be a voluntary matter; there will have to be some legislation, I believe, to ensure corporate restitution in due course. Humility is all very well but, however big this Bill, one needs to remember the even bigger bill that the Government have met in enriching Fujitsu in relation not only to the Post Office contract but to other government contracts.

Finally, I come back to exoneration, which can be done swiftly—almost as swiftly as compensation. It is incredibly important that we do not repeat the mistakes of the Windrush scheme. There needs to be a blanket element and an automatic element to this exoneration.

I will not bore noble Lords in the short time I want to speak for with my own formulation, but it is almost as simple as declaring in primary legislation that a class of people’s convictions are hereby quashed from the moment the Bill passes, and then any application could be for a certificate of that quashing, but not for the quashing itself. That is how automatic I believe this ought to be after this length of time.

I know that some eminent lawyers, many of whom are friends of mine and many of whom I usually agree with, are nervous about this proposition. There has been much discussion, especially in the media, to suggest that somehow a proposition of that kind would interfere with judicial independence. I feel it incumbent on me to explain why I disagree with those who have made that argument, especially because some people have compared the blanket, automatic nature of the legislation I propose to the Rwanda Bill. I mention that not because I want to bang on about Rwanda as a broken record and a one-trick pony, but because it is important to make the distinction if I am to have credibility in what I propose. It is obviously not the Government’s position, but it is my position, which is important for these purposes, that the Rwanda Bill is to change facts as have been found by the highest court in the land. That is essentially what the Rwanda proposition is, whereas here, I am proposing legislation that will reflect the facts that have now been found, including by our higher courts, and implement those facts on a swift and blanket basis, to the benefit of individuals and not their detriment. That distinction is incredibly important.

As I think noble Lords and perhaps the Minister agree, this was at the very least a very gross error, involving maladministration and blind trust in technology—we must take note of that in relation to artificial intelligence, which my noble friend Lord Browne of Ladyton has been raising concerns about in your Lordships’ House, and must learn, remember and reflect on even after this particular circus has left town—and, quite possibly, systematic corruption and cover-up motivated by greed. Some noble Lords who have stopped me in the Corridor in the days since our last discussion have asked me whether I am troubled by even the remote possibility that a few postmasters who perhaps could have been correctly convicted should get off as a result of what I am proposing. I am very clear with them, and the answer lies in what the noble Lord, Lord Arbuthnot, said, and what William Blackstone said before him.

I practise as an FCA and had a long career as a partner in firms of chartered accountants. It would not be unusual for a client to say to me, “Monroe, we have a wonderful new system we are going to introduce for our accounting” or financials. I would look at the system and say, “Well, it looks all right”. But I would always say—and I imagine that all qualified accountants would say—that you should run the old system in tandem, in parallel with the new system for a period of six months or so, to see if there are any glitches in the new system. You have not burned all your bridges: they are still there.

The latest technology may be all singing and dancing, but you should still be looking at, in this case, keeping the paper-based system. Only when no sizeable discrepancies emerge could the old system be jettisoned, and that did not happen. This is elementary accountancy. This is not high-blown computer stuff. Can the Minister say whether senior civil servants and Post Office employees had any grounding in such mundane knowledge and experience? I believe that they may have been highly qualified, but I am of the opinion that their accountancy knowledge was pretty limited. Can the Minister confirm that in future—because we have got to look at the future now—the Government will not put all its eggs in one computer basket?

Also, since we are talking not just about the compensation Bill but the background to it, can he tell the House what auditing took place? Surely there would have been internal audits at the Post Office and at departmental level. There are audits all over the place, but do we hear anything about them? What was the role, or lack of role, of the National Audit Office? Surely we have a right to look to them as well. It is no defence from these auditors that certain bodies were outside their jurisdiction. I have had the honour to be the chairman of the audit committee of a Tory borough, the London Borough of Barnet, for eight years. The audit committee dealt with all the activities of the various departments. What we have is like a traffic-light signal—was it red, was it orange, was it green? If it was red or orange, I required the manager of each department to come to the committee and explain why there was this error, why there was this poor report, and to say what they are going to do in the future. That worked pretty well, but then there was a glitch—a glitch that is very relevant to the system which we are talking about now. The officers said, “Oh, that wasn’t our officers; we outsourced it”. In this case, in the London Borough of Barnet, it was to Capita, the computer company. Therefore, “We can’t tell you about that because Capita did it”. I said that the directors of Capita had to come to the London Borough of Barnet audit committee and explain why it was wrong and how they were going to justify it. They objected, saying, “Well, we’re not part of your organisation; we are outside”, as we are talking about in this instance. However, I insisted that they came, justified, put right and acknowledged the problems that were there.

Can we have less, please, of the party-political posturing and more of a look at how IT, without a knowledge of accountancy, can be a dangerous animal? The Minister and the noble Baroness, Lady Chakrabarti, used the words, “an appalling scandal”. It is an appalling scandal. We cannot stop it being an appalling scandal, but we must make sure that the postmasters and postmistresses are absolved, whether they might be guilty or not guilty. I am assuming that they are not guilty but, assuming even that somebody gets through who might have been guilty, I still feel that they all should be absolved because they were part of the system which was deficient at the maximum because it did not do what any basic qualified accountant would have done.

From these Benches we support this Bill, but we hope that the Minister will take aboard our comments about the future.

What about issues arising out of the public inquiry, rather than out of High Court judgments? We have been listening over the past few days to some pretty dreadful stories of behaviour by the Post Office investigators, who have been confronted with their bullying behaviour. We have heard the evidence from Duncan Atkinson KC about the shortcomings of the Post Office prosecutors and their prosecutions. I hope that these issues will be covered by the Bill as well as what has come out of the High Court judgments.

I feel a bit churlish, frankly, attacking both the name and the contents of a Bill that I welcome, but I do welcome the idea that the Government should not run out of time to pay the redress that we as taxpayers—with the help of Fujitsu, now that it has recognised its moral obligation; I hope that soon it will recognise its legal obligation to contribute to the cost—owe to the sub-postmasters. The very fact that it should be necessary to have the Bill in the first place suggests that the three compensation schemes have been slow and bureaucratic —and they have been. We must get a move on and do our utmost to make sure that the Bill is not, in the event, needed, because full compensation, or redress, is paid before August.

This is bad enough, but recent evidence has suggested that the Post Office has also treated the limited compensation it grudgingly offered to sub-postmasters as tax deductible. Dan Neidle, the head of Tax Policy Associates, has outlined why these claims are illegitimate, stating that you cannot

“claim a tax deduction for things which are unlawful, illegal or outside the trade”,

such as wrongly prosecuting 4,000 postmasters. We must also ask why, given that the £934 million they claim as deductible relates to historic periods, it is only this year that the Post Office has made a designedly oblique reference to this practice in the small print of page 101 of its accounts. I am pleased that HMRC last week confirmed that this matter—one of five where Tax Policy Associates believes that the Post Office has materially underpaid its tax—is under active investigation.

Mr Neidle is also campaigning openly for better compensation in the present scheme, for the element of damage that reflects destruction of reputation and stress. As I heard him explain only the other day, in the context of employment tribunal awards that component of the calculus of the total sum of compensation attracts awards of between £1,000 and £11,000 for the lowest levels of damage to reputation and emotional damage. For the more severe, awards are between £11,000 and £34,000. For the worst examples—I venture to suggest that the vast majority, if not all, the wronged postmasters must have suffered reputational damage and stress of the worst kind—employment tribunals are awarding between £34,000 and £56,000, whereas most postmasters are getting no more than £5,000 from the current compensation scheme.

Alongside today’s Bill, I am also pleased that a brief Act of Parliament providing for exoneration of all those affected is now being considered, which is something I first suggested in your Lordships’ House in June 2020. Given that three and a half years have elapsed between that date and this, such a glacial pace in providing redress may be another useful exemplification of a problem that saps confidence in the political process among the public.

At the heart of this miscarriage of justice is the fundamental unreliability of the Horizon software, upon which the original prosecutions depended. It is equally clear that, without the group litigation brought by the 555 sub-postmasters, the flaws and glitches in the software would not have been uncovered. Here, I return to a question which I raised in your Lordships’ House last Wednesday: where does, and where should, the burden of proof lie in respect of computer-derived evidence? The Police and Criminal Evidence Act 1984 placed that burden upon those who rely on such evidence. But, in response to lobbying from the Post Office, among others, we saw that change, because of a Law Commission recommendation. There is now a presumption in favour of the reliability of such evidence unless a defendant can prove why it may be compromised. How can we possibly expect an individual unversed in the complexities of computer programming or algorithmic, sequential decision-making to provide such proof? This is a further asymmetry that needs urgent action. I would be grateful if the Minister could give an undertaking, maybe not today, that this will form part of the follow-up to the Williams review.

Finally, I turn to the broader issue that my noble friend Lady Chakrabarti alluded to, and which is an obsession of mine: artificial intelligence and its integration into our public services. If the Horizon system—far more rudimentary than any AI-infused technology—can precipitate such confusion, misery and frustration, there is a risk that a far more complex system could produce more apparently coherent, though equally unjust, outcomes. In such a case, the pursuit of justice in the case of error would be more tortuous than that endured by the sub-postmasters we are discussing today. Noble Lords may recall a scandal that hit the Netherlands in 2019, whereby a self-learning algorithm falsely labelled thousands of people in receipt of child benefit as perpetrators of fraud. What was the result of that? Poverty, a wave of suicides among those affected, and children taken into foster care. Perhaps most worryingly, the algorithm disproportionately—and, to reiterate, falsely—targeted those from ethnic minorities.

I realise this is well outside the Minister’s purview, but, as we learn lessons from the Horizon scandal, what plans do the Government have to review the integration of AI into the work of the DWP in this country? Perhaps more importantly—I have asked this question and it has not yet been answered—what is the statutory basis for the use of AI in public services at all? Surely the use of AI in this way risks violating the Blackstone principle, of which the noble Lord, Lord Arbuthnot, reminded your Lordships last week. I will not repeat it, because my noble friend has already dealt with this. In this respect, I return to the Dutch case to which I referred. The victims had no way of knowing why their cases had been identified as potentially fraudulent, and officials claimed they had no way of accessing the algorithmic inputs and could therefore not describe why they were under suspicion. This echoes the Kafkaesque nightmare of the sub-postmasters—accused by faulty technology, denied access to the very information that could exonerate them and forced, in the meantime, to endure penury and stigmatisation.

I will support this Bill, as my party will, as it passes your Lordships’ House with, I trust, the utmost rapidity. I keenly anticipate further measures, not merely to provide full restitution to those affected by the Horizon scandal but to strengthen scrutiny and ministerial oversight over arm’s-length agencies. Nothing adequately can compensate the sub-postmasters and sub-postmistresses who have lost years of their lives to this injustice, but I believe that ensuring such a tragedy cannot happen again may at least console them with the thought that their suffering has not been entirely in vain.

It is absolutely incredible that the sub-postmasters have had the resilience to get together and win. I am in awe of their tenacity and their patience—except, of course, they have not won yet. In the last decade, they have been deceived and messed around with previous compensation schemes. Fujitsu remains a favoured government contractor. In fact, it has won nearly 200 public sector contracts worth nearly £7 billion. When the sub-postmasters are cleared and their names are removed from the criminal records database, guess who has the contract to do that? Fujitsu. Is it, perhaps, too big to fail? Is it considered irreplaceable, or are there other reasons for continuing to use it?

It was the Post Office that relentlessly persecuted the sub-postmasters, but Fujitsu provided the expert witnesses in court to declare that it was the “Fort Knox” of software. It effectively pointed the blame at the sub-postmasters and away from the company, yet it now acknowledges that there were bugs and errors right from the start. Why, then, has Fujitsu been involved in £4.9 billion of solo and joint public sector contracts after the December 2019 ruling, including £3.6 billion during Sunak’s time as Chancellor and now Prime Minister?

Is it the close ties with Conservative Party donors, such as Simon Blagden, who stepped down as non-executive director at Fujitsu UK in 2019? He was a man who, along with companies he is associated with, has donated £376,000 to the Tories since 2005. Or the 2019 donation by Fujitsu Services Ltd of £14,000—peanuts, really—or the £21,000 to the Conservatives to run the Blue Room at their conference in 2015?

I am now going to offer some solutions, because I do not like to criticise without coming up with something positive to say afterwards. I suggest that the Government now take three immediate steps. They should hand back donations from those linked with Fujitsu. That is a role for the Conservative Party. They should have a moratorium on Fujitsu public sector contracts until the public inquiry reports. There should be a pause in using Fujitsu until we understand exactly what it did. They should pay the redress money as soon as possible, but get back as much from Fujitsu as possible. I see no reason why the taxpayer should carry the burden of most of the redress money. I would really like to point out that there are more questions raised now than answered. It would look very good from the Government’s point of view if they could, perhaps, answer some of those questions before the public inquiry does.

Then we have Fujitsu. I read in the newspapers—to follow the point made by the noble Baroness, Lady Jones —that when Ministers wanted to take action to stop Fujitsu getting contracts, they were told that poor performance in respect of one contract did not enable you to not have some of the others. What is this world that operates in Whitehall? Every household in the country, if it gets a duff builder, does not feel that it has to give that builder another opportunity, so there is something desperately wrong with the procurement process and the way in which Ministers are advised.

Now I would like to say something at risk to myself: I would like to criticise the Lobby correspondents in this place. My noble friend has raised this on numerous occasions, and we have all tried to support him in one way or another. It gets nowhere. It does not get reported. Then we have a television programme and now my noble friend is full-time doing interviews and explaining what has happened, but for years and years it was not of interest, like so many reports produced by Select Committees of this House which warn—I will not go through the whole litany of them—and they do not get picked up because the Lobby correspondents are too busy as a pack operating on how many bottles of champagne have been sold in the House of Lords, for example, which hit the headlines the other day, completely wrongly attributing it to Members and not to people who come here.

I am not a lawyer, but I always understood that lawyers had a duty to the courts and to ensure that information was disclosed, whether in court cases or tribunal cases. So what was going on with the lawyers? What was happening there? Is the regulatory body waiting for the inquiry as well? The inquiry will report and then there will be another couple of years—by which time we will all be dead—before we know what actually happened. Why are the regulatory bodies not doing this?

On the subject of the Lobby, why is it that Computer Weekly has been the hero here? Our paths crossed, my noble friend and I, after Liam Fox, when he was Secretary of State for Defence, set up an inquiry to look into the Chinook helicopter crash on the Mull of Kintyre. I did this with a judge, and with the noble Baroness, Lady Liddell. We exonerated the pilots. Quite frankly, when we looked at the evidence, there was a whole load of information that had not been made available to Ministers. I see a pattern.

I concluded that a whole bunch of important people concerned with security in Northern Ireland had all gone on one helicopter, which they should not have done. The helicopter had not been approved to fly safely; indeed, there was evidence that it had been thought that it would be positively dangerous. The easy thing to do was just to blame the pilots. The case took 11 years. My noble friend, again, was one of the heroes pursuing that issue. While the families battled to get clarity, some of them died, as has happened with the postmasters. There is something fundamentally wrong with the way we operate when these scandals occur.

I congratulate my noble friend on his persistence. In the film, someone says, “I never thought a Tory MP could be so nice”, or something to that effect. Just for the record, whether they are Tory or Labour MPs, or even Liberals, or Liberal Democrats—are there any Green MPs?—whatever they are, the vast majority of Members of Parliament, in my experience, do their duty by their constituents and work very hard; there are some bad apples, of course. But if we get answers from Ministers that do not answer questions, if Parliament is not able to do its job because the Executive has become overmighty and too powerful, they cannot deliver. The result, of course, is a scandal of this type.

Having got that off my chest, I want to ask my noble friend the Minister one question. This concerns one individual, Lee Castleton; I know about this only because of the media coverage. We know, because the Post Office has admitted it, that Lee Castleton was used “pour encourager les autres”. He defended himself in court, he got a bill for over £300,000 and he was bankrupted. Will those legal costs be remitted to him? Will he be compensated for all the legal costs?

When, greatly to their credit, the Prime Minister and other Ministers say that people will be restored to the position they would have been in had this not happened—wow—what does that mean, and who will decide that? It does not mean just compensation in terms of some approved scale or whatever. What about what happened to their homes and house prices and everything else? When we talk about compensation, what are we actually saying here? How will this be delivered, and in a realistic timescale? We are all getting older, and they have had to wait far too long.

Finally, I want to ask my noble friend, although I know that he does not have responsibility for it, what is going on in Scotland in this respect? I read in the newspapers that, in Scotland, they are talking about providing a pardon. I am sorry but, if I am a postmaster who has been falsely accused, I do not want a pardon. I want absolutely it on the record that I have been exonerated. A pardon is not enough. I appreciate the legal difficulties but it is not enough, and you cannot have a different system north and south of the border when you are talking about restoring people’s integrity and reputation.

I apologise to the House for going on for so long at this hour. I had hoped to do it on Thursday when we talked about accountability, but we were given three minutes, and now I can talk for as long as I like. But I might lose the House if I did so.

There are some serious issues here about accountability and about the relationship between the Executive and Parliament. This needs to change. There is going to be a general election. It will be interesting to see what the parties say in their manifestos about dealing with this. We all know on all sides of this House that Parliament is broken and not working properly. We know that because we get all the legislation that comes here from the other place that is not being properly discussed. We know that because we get Answers from Ministers to Written Questions and Oral Questions which have been written by civil servants who do not show sufficient respect to Parliament, and Ministers—perhaps some—who do not respect Parliament to the degree they should. When that happens, it means that people have to battle for 20 years. I pay tribute to my noble friend, who—he really needs to shed his modesty—is a symbol of what is good about this place. This whole episode has revealed a very rotten undercurrent, which needs to be addressed.

“We were involved from the very start. We did have bugs and errors in the system and we did help the Post Office in their prosecutions of the sub-postmasters and for that we are truly sorry”.

Fujitsu’s website says:

“For over 40 years, Fujitsu has been a trusted provider to the public sector through the delivery of nationally critical services”.

I say to the Government that it is inexplicable to me that they could continue to give contracts at this stage to that company. Paul Patterson also said today, “We all make mistakes”, but the reality is that Fujitsu lied. That is not making a mistake.

On the moral obligation to contribute to the compensation scheme that has been mentioned, we have to be clear that Fujitsu is going to be made to pay huge amounts of money. As the noble Baroness said, it should not be the taxpayer picking up the tab; it should come from those who were at fault.

I am sorry if it seems as though I always come back to Northern Ireland, but Fujitsu has the contract for the Trader Support Service. I got an answer to my Question about how much it has been paid. It is a Fujitsu-led consortium and it is very expensive: so far, from August 2020 to August 2023, it has spent £411.6 million on the scheme. Apparently, Fujitsu suggested when it got the contract that it had the capacity to make the Irish Sea border work smoothly, and that is why it got all this public money.

However, hauliers are already saying that despite getting this huge amount of government money, Fujitsu is not providing a smooth service. The wonderful technology that it went on about is still struggling to deal with things such as mixed loads going across and the whole way that groupage works. We need to ask why Fujitsu was given that contract, why it cannot now have that contract removed, whether it can deliver and whether it has been overpaid. If the Government were simply to restore Article 6, that money could be given to many of the people who have suffered under the Horizon scheme and under the overall control of Fujitsu.

Tonight is important because we are moving on. I welcome that things have moved so quickly in the last short while. I add my tribute to all noble Lords who have been talking about this and trying to do something about it for many years, particularly the noble Lord, Lord Arbuthnot. I hope that we can now work out the compensation, but accountability is the crucial bit. We cannot let these people get away with this. We cannot let them continue to think that they can simply go back to people who complain about anything to do with the public sector and tell them that they know best and technology knows best.

I welcome this measure. I am glad that we have been able, finally, to move it forward as quickly as we can.