The final phase of the long-running inquiry into the Horizon IT scandal has delved into the current operations and culture at the Post Office, as well as the issue of compensation payments to the hundreds of branch operators who were wrongly prosecuted.
If the expectation was to find an organisation transformed – the reformation of a toxic culture, repair of the broken relations with staff and government and a well-oiled compensation process – testimony has shown that in many respects little, fundamentally, appears to have changed.
Here are some of the key issues that have surfaced during the final two months of the judge-led inquiry.
Operators still seen as ‘guilty until proven innocent’
The damning high court judgments handed down in 2019 – which paved the way for the eventual exoneration of 900 wrongful convictions linked to the Horizon IT scandal – was meant to provide the legal template for a reset of relations between the Post Office and branch owner-operators. However, former chair Henry Staunton, who was fired in January, claimed in evidence to the inquiry that many Post Office executives still view branch operators as “crooks” who are “guilty until proven innocent”.
Saf Ismail and Elliott Jacobs, operators appointed to the state-owned company’s board in 2021 as part of a plan to improve relations and oversight of the Post Office, gave scathing testimony. The pair, who were both later subjected to internal investigations, said Post Office executives did not want them on the board and that they were excluded from meetings.
Ismail is still being investigated, for matters not relating to Horizon, and has said it would be inappropriate to comment while the process is under way. Post Office boss Nick Read has said that the investigation into shortfalls at branches owned by Jacobs, which found no wrongdoing, were “heavy-handed”.
The inquiry also heard that cultural issues at the Post Office continue to extend well beyond relations and perceptions relating to branch operators.
Former financial chief Alisdair Cameron, who officially left the company in June after a year of sick leave, said Read preferred to work with “younger, deferential, male” colleagues, while very few senior and independent-minded colleagues, especially female, had “thrived” at the organisation.
Read’s multiple demands for his pay to be doubled overshadowed his pledge on appointment five years ago to “right the wrongs of the past”, with one former postal minister saying he was “paid lots whilst not doing a very good job”.
The inquiry also heard concerns about the ongoing employment of Post Office staff with links to the Horizon IT scandal, in particular those who continue to work in roles dealing with branch operators, such as in the investigations department. Read has said that no employee is “above the law” and denied claims by several inquiry witnesses that he has said there are “untouchables” in the organisation who will never face disciplinary action over the scandal.
The Post Office is again looking at taking branch operators to court
The Post Office stopped private prosecutions in 2015, after more than 900 operators were wrongly prosecuted over shortfalls resulting from the faulty Horizon IT system, a practice it has promised not to restart.
However, the organisation continued to use the court system for the civil recovery of losses from branches until 2018. Following the judgments in 2019, it only pursues losses if there is an agreement with the branch owner, which has led to the organisation having to write off at least £12m annually.
The inquiry heard that the mounting losses have led to discussion within the Post Office of restarting court-led civil recovery, as well as other options, including deductions from operators’ remuneration to recover losses over a period of time, another practice it used to implement.
Another option the inquiry learned has been discussed is setting up a “losses pool” to which all branch operators would contribute, to cover shortfalls across the 11,500-branch network.
Alan Bates may take the Post Office to court again
A key line of inquiry in the final phase has been to ascertain whether the Post Office has lived up to its commitment of “full and fair compensation” for people affected.
Approximately £363m has been paid to over 2,900 claimants across four schemes run by the government and the Post Office, according to the latest government figures to the end of September.
Gareth Thomas, the postal minister, has admitted not all operators affected by the scandal will receive payouts by the March 2025 deadline called for by the campaigner Alan Bates.
Bates, who leads the Justice for Subpostmasters Alliance and has not yet resolved his own compensation claim, has said he is willing to launch legal action again if the process is not resolved more quickly.
Former Post Office chair Staunton told the hearing that during his time in the role he had formed a view that the state-owned body had taken a bureaucratic, unsympathetic and adversarial approach primarily focused on saving taxpayers’ money on payouts.
At a government level, Kemi Badenoch, the Conservativer leader and former business secretary, provided damning evidence showing that it took the national frenzy sparked by the ITV drama on the Post Office scandal to get the Treasury to reverse a decision blocking funding for a plan to speed up compensation.
The question of compensation looks set to rumble on: Thomas has said the government is looking at whether family members and employees of post office branch owners who have not been eligible to make claims may be allowed to apply.
The Horizon IT system will be needed until the end of the decade
The Post Office’s relations with Fujitsu are at an all-time low and the inquiry was shown fiery emails between the two companies in a dispute over the use of data for criminal cases. However, its replacement system remains beset with bugs and faces ballooning costs.
Paul Patterson, the chief executive of Fujitsu Europe, has said that Horizon is now so far beyond its planned end of life that “we have not turned off some of this equipment because it is so old [and might not start up again]”.
The New Branch IT system (NBIT) was meant to be deployed by March next year but is still only being tested in a handful of branches. Costs have soared from £180m to a reported £1bn-plus and there are doubts about it ever being rolled out.
As a result, the Post Office has been forced to extend its contract with Fujitsu, with the inquiry told that the two companies are likely to be forced to still be working together until March 2030.
Patterson has said that any reluctant further extension would only be agreed with the removal of historical contractual clauses relating to “court case support services provisions”, as Fujitsu looks to distance itself from any further role in the legal use of Horizon data in the future.
When will the findings of the inquiry be made public?
After more than 1,000 days, the inquiry, which started on Valentine’s Day in 2022, has now finished gathering witness testimony and written statements.
The chair, Sir Wyn Williams, and his team have a prodigious amount of evidence to distil into a final report: about two million pages amassed from oral and written testimony from well over 500 witnesses during 175 days of hearings.
After hearing closing statements over two days in December, the inquiry will officially draw to an end. It is hoped the findings will be published in 2025, although the inquiry has also heard suggestions that some witnesses may be called back early next year.
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