Badenoch blames civil servants for Horizon IT scandal compensation delays
Britain's main opposition Conservative Party leader Kemi Badenoch, arrives to give evidence to the Post Office Horizon IT Inquiry in central London on November 11, 2024. (Photo by ADRIAN DENNIS/AFP via Getty Images)
The government let bureaucracy get in the way of redress for wronged sub postmasters, former business secretary Kemi Badenoch today (11) told the inquiry into the Post Office scandal.
The Tory leader said that during her time as business secretary, she and former postal affairs minister Kevin Hollinrake "wanted to get the money out there" but were constantly given reasons why they could not by officials.
During an appearance before the Horizon IT inquiry, Badenoch said, "We had briefings on the issue with officials, and it was quite clear to me that we were allowing bureaucracy to get in the way of redress too much of the time.
"Kevin (Hollinrake) and I wanted to get the money out there, and we were always given a reason why we couldn’t.
"I feel that there is often too much bureaucracy in the way of getting things done, because people are worried about the process. They are worried about: if things go wrong, they’ll be on the hook for that. So they carry out lots of checks and balances well beyond what I think is required in order to deliver the right outcome."
Questioned by counsel to the inquiry Jason Beer KC on who allowed bureaucracy to get in the way of redress, Badenoch replied: "Well, the government machine.
"I think I remember asking a question like- ‘Why can’t we just give them the money?"’
Badenoch, who was Business Secretary for 17 months, also told the inquiry that she was determined to speed up the whole process of compensation.
“What I was seeing, the way the Department [of Business and Trade] and the Post Office was going on we’d never get to the end of it. I had my own objective of making sure we did right by the sub-postmasters.”
Badenoch added that the Post Office would have “disappeared in its current form long ago” if it was a private organisation, adding that it is a “20th-century organisation that is struggling to evolve in a 21st-century world.”
Badenoch also stated that it was “extremely disappointing” that it took an ITV drama about the Post Office scandal to get the government to accelerate compensation for wrongly convicted postmasters.
“I was not expecting the documentary [Mr Bates vs the Post Office] in January, which helped speed things along. It suddenly turned it from a value-for-money question to a public perception question.”
The inquiry saw an exchange of letters between Badenoch and Chancellor Jeremy Hunt in August 2023 requesting the extension of interim payments for the Group Litigation Order (GLO) compensation. But he initially rejected the idea.
“If you look at it in the context of what’s happening in government," she told the inquiry. "There are a thousand things that are being asked, money requested for. After a while, it just becomes another line in a ledger."
The Metropolitan Police has identified two new suspects in its investigation into possible criminal offences as part of the Post Office Horizon scandal. This takes the total number of individuals to four as the force also revealed it believes more suspects will be identified as the inquiry progresses.
Scotland Yard said members of the investigation team met with Sir Alan Bates, the leading Post Office campaigner, and fellow victims to update them on the development.
A Met spokesman said: “On Sunday Nov 17, members of the investigating team met with Sir Alan Bates and a number of affected sub-postmasters to provide an update on our progress and next steps, following an invitation to do so.
“Our investigation team, comprising of officers from forces across the UK, is now in place and we will be sharing further details in due course. The team is preparing to contact other affected sub-postmasters soon. While four suspects have been formally identified at this stage, this number will grow as the investigation progresses.”
However, Sir Mark Rowley, the Met Commissioner, has warned it could be years before anyone faces charges because of the “tens of millions of documents” that must be worked through.
Speaking previously on the matter, he said, “I think at the core of this you’ve potentially got fraud, in terms of false documents, if it’s for financial purposes.
“Clearly, we have to prove beyond all reasonable doubt, so really it’s 99.9 per cent, that individuals knowingly corrupted something. So that’s going way beyond incompetence, you have to prove deliberate malice, and that has to be done very thoroughly with an exhaustive investigation.
“So it won’t be quick. But the police service across the country are alive to this and we will do everything we can do to bring people to justice if criminal offences can be proven.”
More than 900 sub-postmasters were wrongfully prosecuted between 1999 and 2015 as a result of the Horizon scandal, in which the faulty computer software incorrectly recorded shortfalls on their accounts. Of these, hundreds of people are still awaiting compensation despite the previous government announcing that those who had convictions quashed were eligible for payouts of £600,000.
Oral evidence at the Post Office inquiry concluded this month.
Post Offices handled £3.69 billion in cash deposits and withdrawals in October, reaching the highest monthly amount since July when a record £3.78 billion was handled over the counter, shows new figures released today (11).
Personal cash deposits totaled £1.52 billion which was up 2.2 per cent month-on-month (£1.49 billion, September 2024) and up almost 15 per cent year-on-year (£1.32 billion, October 2023). October 2024 was only the third time personal cash deposits have exceeded £1.5 billion in a single month (previously July and August 2024).
Business cash deposits totaled £1.21 billion which was up almost 4% month-on-month (£1.16 billion, September 2024) and up almost 8% year-on-year (£1.12 billion, October 2023). October 2024 was only the second time business cash deposits have exceeded £1.2 billion in a single month (previously July 2024).
Personal cash withdrawals totalled £928 million which was up 6.6% month-on-month (£871 million, September 2024) and up 13% year-on-year (£821 million, October 2023). The amount withdrawn over the counter was just below the record amount withdrawn in a single month set in December 2023 (£930 million).
Ross Borkett, Post Office Banking Director, said, “Our figures indicate that demand for cash is as strong as ever as people rely on cash to budget, particularly in the run-up to Christmas, and businesses rely on it to survive a volatile trading environment. Postmasters and their teams play a vital role in supporting small businesses to trade by providing a convenient and secure location to deposit their cash takings with many branches open long hours and some at weekends.”
Post Office Cash tracker data – October 2024
Cash deposits value (business & personal)
MOM%
YOY%
Cash withdrawals value (business & personal)
MOM%
YOY%
Total cash deposits & withdrawal value for October 2024
As at 16 October, 88 hubs have been opened in partnership between Cash Access UK and the Post Office. 168 Banking Hubs have now been announced by LINK with further openings planned for later this year.
Family members and employees of post office branch owners who were not considered eligible to make claims over the Horizon IT scandal may be allowed to apply for compensation, postal minister Gareth Thomas told the inquiry into the scandal on Friday (8).
During the hearing, Thomas stated that the government has been looking into the “gaps” in the eligibility criteria for those wanting to make claims under the four redress schemes being administered by the Post Office and the government.
“[Employees and counter assistants] are one of the gaps in the compensation process,” said Thomas. “We are actively looking at what we can do to address those gaps. As indeed we are looking at family members affected very badly by the Horizon scandal and cannot claim compensation either. It was one of those issues identified as being very significant.”
The current schemes exclude applications from family members and assistants at branches because only the person with a direct contract with the Post Office is eligible to apply as managers and counter assistants at branches have a contract with the owner-operator, not the Post Office. And while many branches are run by family teams, not all members have the contract with the Post Office.
Thomas also said that if claimants to the existing schemes can file by Christmas he is confident that payouts can be made by the end of March, the unofficial deadline sought by the leading campaigner Sir Alan Bates.
“Officials have been talking to claimants’ lawyers and looking at potential timings of those claims coming in,” he said. “If claims come in by Christmas we will be able to have made offers of paid financial redress by the end of March.”
Thomas however stressed that no date has been set for a deadline for final applications to be received.
Thomas also said that the government intends to publish a green paper next year to get nationwide views on the future governance options for the Post Office including the ownership of the 11,500 branches. He added that former minister Kevin Hollinrake held “constructive” talks with Post Office workers about ultimately transferring ownership through mutualisation.
“It is difficult to be anything other than concerned about culture in the Post Office,” Thomas said on Friday (8). “There has been some early conversations with stakeholders … about how to change that governance and also look at improvements to culture going forward. We are thinking we will publish a green paper next year to invite wider views about the future of the Post Office.”
Former postal affairs minister Kevin Hollinrake, who was in post between October 2022 and July 2024 under the previous Conservative government, has apologised for allowing the government to “arm themselves with lawyers” while attempting to sort out redress for victims of the Horizon scandal.
During the recent hearing of the Horizon IT inquiry, Hollinrake gave a scathing assessment of the culture and management of the Post Office, describing it as an “inward looking, poorly led, dysfunctional organisation”. He also stated that the outgoing Post Office chief executive, Nick Read, was “paid lots whilst not doing a very good job”, and that working with him was like “drawing teeth”.
“I worked constructively with Nick Read [but] as time went on I formed the view that [he] was unable to lead the organisation as it needed to be led.
“I thought it right to give him a decent chance to see through reform of the Post Office’s culture. But my view was the guy was being paid lots whilst not doing a very good job.”
Hollinrake also criticised the former chair Henry Staunton, who twice asked the government for Read’s pay to be doubled and was fired in January. He said he concluded that Staunton was “incapable of chairing the organisation”.
Hollinrake listed a number of issues with how the Post Office was run, including the “persistent and aggressive lobbying by the chief executive to significantly increase his remuneration”, as well as Read’s refusal to act to reduce central costs such as senior management headcount.
“I was extremely frustrated by the Post Office’s inability to provide this basic information,” said Hollinrake. “A particular example of this is [Read’s] inability or unwillingness to reduce central costs. It was like drawing teeth. I did not think it was right to give [Read] a big increase.
“My view was that we should not be moved by his threats to leave, and that if he wanted to leave he should leave. His departure will present an opportunity to replace him with a truly exceptional leader, and one who recognises that this is a public service role. The solution is good leadership. Nothing can replace that.”
During Hollinrake’s evidence, inquiry chairman Sir Wyn Williams said, “It was both the Post Office’s choice and the department’s choice to arm themselves with lawyers. They didn’t have to have a room full of lawyers to argue this out. That was, if I can use the word, your choice. Yours collectively, you understand – so why?”
Hollinrake, who is now the shadow levelling up, housing and communities secretary, responded, “As I say, I don’t think we should do that in the future. I think we should have some independence in the middle of it.”
This comes a day after it emerged that the previous government’s decision to offer £600,000 to wrongly convicted subpostmasters was a “political” decision where Post Office was not consulted.
Simon Recaldin – in charge of overseeing the compensation schemes run by the Post Office - told the public inquiry that the Post Office expects to have paid £650m in financial redress by March next year and that the final bill will be about £1.4bn.
Recaldin was questioned about a government announcement in September last year when ministers revealed that all wrongly convicted subpostmasters would be offered a payment of £600,000 in financial redress. This could be accepted as a final settlement or those affected could continue with a full claim for more. About 900 former subpostmasters and branch staff could be eligible for the payout.
Recaldin said he supports the proposal, but told the inquiry the Post Office was not consulted on the offer. “I think the £600,000 opportunity was brilliant, it was an inspired idea in terms of how to speed up redress,” he said. But he questioned how the policy was “imposed on the Post Office”.
“The government had not consulted the Post Office. I was told about it in a quarterly shareholder meeting and was advised it was going to happen the next day,” he told the inquiry. He said the announcement was “shrouded in secrecy” in terms of its launch with the Post Office expected to operationalise, manage and push the offer through.
Prime minister Sir Keir Starmer has dismissed need for a March 2025 deadline for compensating Post Office Horizon scandal victim, saying "an arbitrary cut-off date could result in some claimants missing the deadline".
In a response to Sir Alan Bates' call for a March 2025 deadline, Sir Keir Starmer's spokesperson today (5) stated that there would not be a deadline imposed.
"What we don't want to do is set an arbitrary cut-off date which could result in some claimants missing the deadline," the spokesperson said. "We obviously don't want to put pressure on claimants and put them off contesting their claim."
However, victims involved in a landmark case against the Post Office that ended in 2019 "should receive substantial redress by the end of March and we are doing everything we can to achieve that goal", the spokesperson added.
Earlier today (5), Sir Alan was giving evidence to the Business Select Committee when he told MPs that he has twice written to the Prime Minister in the past month to say "it needs to be finished by the end of March 2025".
"I never received a response," Sir Alan said, adding, "Deadlines do need to be set. People have been waiting far too long."
Sir Alan first wrote to the PM on Oct 2 and again a few days ago, urging him to make sure victims get full financial redress by March next year.
“People have been waiting far too long, over 20-odd years, there’s over 70 that have died along the way in the GLO group. There are people well into their 80s now that are still suffering. They’re still having to put up with this as well. They shouldn’t. They really shouldn’t," he said.
Bates himself has twice declined compensation this year, saying the first offer in January was "cruel" and "derisory", and about a sixth of what he had claimed.
When asked today by Liam Byrne, the committee chair, whether he would consider crowdfunding to return to court, Sir Alan said, “I would never say never.”
Legal action was one of several options his campaign group was planning to discuss at a meeting in the coming weeks, he said.
“I know that if we decide to go down that route we are going to halt the current scheme, and it’s going to be at least six, 12 or 24 months before it moves forward in that direction," Sir Alan said, adding: "That might be a choice people are prepared to take."
More than 900 subpostmasters were prosecuted between 1999 and 2015 after faulty Horizon accounting software made it look as though money was missing from their shops.
Appearing alongside Sir Alan were former subpostmaster Dewi Lewis, who was jailed for four months after being wrongfully convicted of theft from his branch, and Jill Donnison, a claimant who worked in her late mother’s branch.
Donnison criticised some of the questions she had been expected to answer as part of her efforts to seek compensation as “long-winded and impossible to answer”.
She said claimants were expected to know how much they had lost even though key data was missing from the records, with documents provided by the Post Office “practically illegible”.