Transcript: The Post Office scandal — who foots the bill?

This is an audio transcript of the Political Fix podcast episode: ‘The Post Office scandal: who foots the bill?’

[MUSIC PLAYING]

Lucy Fisher
Who will foot the compensation bill for the massive Post Office scandal? I’m Lucy Fisher. This is Political Fix from the Financial Times. And with me in the studio today are Political Fix regulars FT columnist Robert Shrimsley.

Robert Shrimsley
Hi, Lucy.

Lucy Fisher
Hi, Robert. And the FT’s political editor, George Parker.

George Parker
Hello, Lucy.

Lucy Fisher
Hi, George. Also here is the FT’s Rafe Uddin. He’s been leading the reporting team, which has included you and me George, covering the story of the sub-postmasters who’ve suffered for years in the Horizon software scandal. More than 700 people were convicted between 2000 and 2014 of theft or false accounting using flawed data from the Fujitsu software system. Rafe, welcome and thanks for joining us to tell us about the scandal today.

Rafe Uddin
Hi, Lucy.

Lucy Fisher
So give us an overview of specifically what’s happened in the last week on this subject.

Rafe Uddin
Sure. So after a ITV drama aired across the sort of first four days of the new year, public outcry around the prosecution of sub-postmasters has grown. Within a week of that drama ending, the prime minister appeared at the despatch box on Wednesday and said that the government was going to take the sort of unprecedented step to table legislation to overturn the convictions of several hundred people who had been convicted using this flawed data.

Lucy Fisher
And he said in particular that he was going to bring forward an upfront payment for those who’d been pursued by the Post Office for civil litigation and also talked about the compensation that will be given to all those wrongly convicted.

Rafe Uddin
Yeah. So the £75,000 will cover 555 sub-postmasters who were pursued in civil cases and brought a group litigation against the Post Office in 2019. That helped really sort of unravel the Horizon scandal, really expose it and brought it into the public fore. And then the government also sort of made the point that it was going to move expediently on compensation for all other sub-postmasters, particularly those who were convicted.

Lucy Fisher
Well, there’s a lot to get into here, and I want to unpick some of what you said, including why it took an ITV drama for the government finally to treat this matter with a sense of urgency. It is the biggest miscarriage of justice in modern British political history. Rishi Sunak, other ministers have agreed with that verdict. Let’s just talk about the financial aspect of this. You’ve mentioned the sums of compensation. Just how big could this eventual bill be, and ultimately, who’s going to pay it? In particular, are Fujitsu on the hook for this?

Rafe Uddin
So the government has set aside £1bn in compensation to cover all affected sub-postmasters. It’s split across three different compensation schemes for people who were affected in different ways — so people who were pursued for shortfalls, people who were pursued in civil cases and people who were convicted.

In terms of Fujitsu’s role in this, at the moment, the government is footing the entirety of this bill. None of the money comes out of the Post Office as a business itself. The government has had to put that money into the Post Office because otherwise it would be insolvent. And ultimately, it’s unclear whether Fujitsu themselves will have to foot some of the bill for it, given that their software underpinned much of these sorts of decisions to go after postmasters.

Lucy Fisher
We’ve heard from ministers like Kevin Hollinrake, the postal affairs minister, that they will potentially look at putting financial sanctions on Fujitsu if the public inquiry finds that it was their systems at fault and that they bear some culpability in the scandal.

Rafe Uddin
Yeah. So the minister has repeatedly for the past year made this point that the government doesn’t expect to pick up the full tab and it doesn’t want the taxpayer to pick up the full tab. It doesn’t feel that would be right and appropriate. I guess the question now is whether the government would be able to make a compelling case, possibly in court, that Fujitsu was wholly or partially liable for some of this compensation. And that might be quite tricky. And whether the inquiry is sufficient to make that judgment is also unclear.

Lucy Fisher
Why is that?

Rafe Uddin
So the government will have to make a very compelling case that Fujitsu’s systems were really partially to blame for this whole thing. You know, ultimately, Fujitsu weren’t the ones prosecuting sub-postmasters. It was the Post Office that did that.

Lucy Fisher
Well, let’s talk about the inquiry because you were there when it resumed on Thursday. Tell us what happened and what the atmosphere was like.

Rafe Uddin
I mean, for people who have attended the inquiry before, they would have walked into a very sort of empty office space in the middle of London. On Thursday, it was hectic, filled with journalists from national broadcasters, camera crews were set up and interviewing various sub-postmasters as they filtered in and out of the actual evidence session. I mean, much of the focus wasn’t on the evidence being given in the actual room. It was on the sub-postmasters who were there and able to talk to the media about their experiences and what the past 10 or so days has been like.

Lucy Fisher
Emotional? Were people visibly moved? Well, they angry, upset, depressed at how much time has passed since the scandal first came to light?

Rafe Uddin
I mean, the truth is that the sub-postmasters are a remarkable set of people. They’ve campaigned often independently and that much by way of support for more than a decade. And they’ll continue to go on campaigning. So I was told on Thursday by one of the victims, Janet Skinner, who was wrongfully convicted and exonerated, told me that as exhausted as she is, she will continue to be present and to be that voice, because if she doesn’t, other people won’t come forward. Other people who are affected won’t come forward. So it’s a huge strain, but they’re a remarkable set of people.

Lucy Fisher
A very moving story. I want to bring in George and Robert on this to talk a bit about the politics. George, what do you make of the fact that it took for a TV drama to really get the government to act with any alacrity on this?

George Parker
Well, I think it’s shocking and also remarkable that the people, the ITV production team who made that drama, had such an impact and touched a nerve and brought to life in a way that, you know, years of dogged investigative journalism and indeed some political action as well, through the years had not really achieved. And we’re speaking to Paul Scully this week, one of the Post Office ministers who I think the postal workers thought the postmaster thought did actually listen to them. And he said he was watching this and he’d been through. He knew all about the cases.

Lucy Fisher
Remind us when he roughly served.

George Parker
So he was the Post Office minister between 2020 and 2022. And he said that throughout the four hours of this drama, for about two-and-a-half hours of it, he was weeping. And, you know, for someone to be affected like that, and he knew the cases and he’d been living it, I think it’s remarkable. So it is a strange thing, but you can see how it happened. And Stephen Flynn, the SNP leader at Westminster, was saying this week it was a failure of the whole Westminster system.

Robert Shrimsley
But he neglected to mention that it’s not been any better in Scotland. It’s been a little slower.

George Parker
Indeed. That’s absolutely true. And because this came to light gradually, ministers are taking the word of the Post Office. Ed Davey, we might talk about later, the Liberal Democrat leader, former Post Office minister, didn’t seem to be taking it serious enough, but successive ministers didn’t take it serious enough. Then they did. Then they set up a compensation scheme. They thought that that had basically addressed the problem, but then they sort of took their eye off the ball because they hadn’t sort of calculated the agony that people were going through because the compensation scheme was and the appeals process was taking so long to roll out. And that was the thing that was jolted into life by the drama, wasn’t it? It was the fact that eventually they thought, hang on, this is unacceptable. These only relative handful of the cases have been heard, and we need to just get hold of the whole thing and put a bonfire under it.

Lucy Fisher
Robert, who do you think’s to blame?

Robert Shrimsley
I mean, I think the striking thing is, although I agree with everything George just said, in fact, by conventional state standards, things were already moving. The public inquiry was already under way before this ITV drama came out. So things were moving.

But the point I think which it really illuminates was just how incredibly slow the British state can move when it is dealing with individual injustices. And we’ve seen it, you know, the infected blood scandal, the Grenfell Tower and the cladding scandal. There’s numerous things where, a Hillsborough where even when it becomes obvious to a government, any government — this isn’t a party point — even when it becomes obvious to a government that there’s a fundamental problem, the state manages to move in an incredibly slow way. And that old adage about justice delayed being justice denied really comes to mind. And you’ll see ministers getting involved and how can we process the compensation scheme and that’s another year of thinking about it all. You know, when can we pay it out and what do we do and we have to let justice take its course.

And I think one of the things that really struck me this week is there was no particular reason, other than a bit of an outcry after this TV documentary, why the government had to move this week. It chose to. And that’s the really important point. Government decided actually, this has gone on long enough. We’re going to do something. And I think that ought to be the lesson that I would hope other governments take from this, because all the parties failed in one way or another on this scandal and that actually, they have the power to act very fast when they choose to do so.

Lucy Fisher
I think it’s really important point you make there and that this is a general trend of foot dragging in cases where, you know, individual human beings are suffering deeply. Do you think the nature of this scandal, that it spanned many years, that it, you know, the finger can be pointed at Labour ministers, Lib Dem ministers, Tory ministers means that in more recent months, in the past year or two, there’s been a sense that they didn’t need to act quite so quickly because the blame could be spread, or is that too cynical an interpretation?

Robert Shrimsley
I don’t think it’s the party point about how the blame could be spread widely. I think it’s just the way governance seems to work in Britain, that the wheels of justice grind slowly. Look how long public inquiries take. There’s just a general, there is a timescale in which governments operate, and there is a timescale in which normal people operate, you know, and if you’re a government, the thought that something might take five to 10 years doesn’t seem that astonishing. But if you were a wronged postmaster, you know, and very short of money now because you’ve lost your job, you’ve lost your savings, these things matter enormously. It’s one of the things that really is worth addressing, is the failure of government to understand impact on an individual human level, all governments, and to understand when you need to move more swiftly. I don’t think it’s exactly pernicious. I don’t think it’s deliberate. It’s just this is how it is and nobody seems to want to do anything about it.

Lucy Fisher
There are clearly lessons to learn. I just want to stick on this point of culpability a little longer. And George, you mentioned Ed Davey. I mean, he’s come in for an inordinate amount of flak on this, hasn’t he? Two questions for you, I suppose. The first, is it fair that he’s really been pinpointed as an especially egregious minister in charge of postal affairs? And secondly, whether fair or not, how much danger is he in? Is this going to end his career as leader of the Liberal Democrats?

George Parker
Well, it is a very serious situation for him because of the public outcry that we’ve just been discussing, the fact this is an issue which has touched the public nerve, and many people are outraged. And they’ve seen in writing how Ed Davey behaved as postal affairs minister between 2010 and 2012.

Now, as you said, Lucy, this saga had begun whilst Labour was in office, and his predecessor in that job was Pat McFadden, who was known at the time as Postman Pat, now is running Labour’s election campaign. But nevertheless, we saw evidence of Ed Davey turning down a meeting with Alan Bates, the lead campaigner on this issue. He did later meet him, as some of the Lib Dems point out, that Ed Davey was the first Post Office minister to meet Alan Bates, but he initially turned it down. After he did meet Alan Bates, he didn’t see it through. He was fobbed off by the Post Office and basically left it at that.

Does that make him more culpable than all the ministers that came after him? And for the ministers in the Conservative administration who failed to expedite the appeals process, I think listeners will make their own judgments on that. But politics isn’t fair. And this is your point. And the fact is, the Conservative press over a number of days have been targeting Ed Davey on the front page of various newspapers as the public face of this cruel, ineffective officialdom that Robert was describing there. And it has really concerned the Liberal Democrats how much damage he’s taking. You know, they were worried about how long this would last for. And speaking to one old Lib Dem hand, he said, look, it’s not gonna be a one-day wonder. This will go on and on and on. And that proved to be the case.

Robert Shrimsley
I think one of the key points is people don’t actually know who Ed Davey is. He’s got a very low public profile. So the first time that really introduced him, it’s a massively negative story. And the Liberal Democrats traditionally need their leader to be a bigger figure than the party, which he isn’t anyway. So this is very, very awkward for them.

Lucy Fisher
Let’s do a straw poll. Who thinks he will stay? Robert, do you think he’ll have to quit or he’ll cling on?

Robert Shrimsley
I don’t think he’ll have to quit. And in the end, given that the Lib Dem voters next election would likely to be quite tactical voting, I think it probably won’t make that much difference in the end. But it’s not doing him any good.

Lucy Fisher
No. George?

George Parker
I think he’ll ride it out as well, but I think he’s damaged by it.

Lucy Fisher
Rafe?

Rafe Uddin
No, I agree with George and Robert. I think he’ll ride it out.

Lucy Fisher
Vote of confidence for Davey here. I’m not so sure. I’m interested, to be quite frank.

Robert Shrimsley
But one of the reasons why Ed Davey behaved as he did is because we’ve gotten to this place of arm’s-length bodies. The Post Office essentially have this operational independence and autonomy. I mean, those with very long memories remember how Michael Howard tried to dodge responsibility for problems in prisons by saying the Prison Service operates at arm’s length, and we’ve created all these institutions of the state to which the government has given operational autonomy for perfectly good reasons.

It’s not necessarily the wrong thing, but it does mean they hide behind that whenever there’s a problem. So ministers don’t have that direct input into the way something is run. And when a problem breaks out, they’re very, very happy to . . . oh, of course, it’s just a Post Office matter.

Lucy Fisher
I think that’s right. And I think there are moves in some parts of the Cabinet Office behind the scenes of government to try and in future potentially gain back some control of that. But that’s a subject for another day. Rafe, final word to you on this subject. Where does this story go next? What are the big questions that remain to be answered?

Rafe Uddin
The really big question at the moment is how quickly the government can table legislation to exonerate sub-postmasters and how quickly those exonerations come through. But then there are questions about Fujitsu. We reported earlier this week that it had been awarded billions of pounds in joint and solo contracts for IT services in various government departments since a landmark Court of Appeal ruling.

Lucy Fisher
And that was since 2019, wasn’t it? Since Rishi Sunak himself was chancellor and then prime minister?

Rafe Uddin
Yeah. More than £3bn worth of those contracts were awarded when Rishi Sunak was chancellor and prime minister and it will raise questions about how aware the government is of Fujitsu’s role in this scandal. And then finally, the public inquiry will conclude this year, but not before taking evidence from senior Post Office, Fujitsu and other sort of government ministers. And they’ve not given evidence before. And alongside that will be masses of documents, which will also document how they engaged and interacted with postmasters and what their involvement was in this. And that will be quite major when it does land.

Lucy Fisher
Well, as you and I are working on a piece for this weekend about concerns about Fujitsu’s performance in contracts dating back to the early 2010s and a move by people in government during the coalition era to try and exclude them and other companies, but with a heavy focus on Fujitsu and from gaining new public deals that was called Project Sushi, in a nod to Fujitsu’s Japanese heritage. So I look forward to whatever more digging you’ve got on this subject to next week. Well, thank you for your debut appearance on Political Fix, Rafe, and hope you’ll come back soon.

Rafe Uddin
Yeah. Thank you for having me.

[MUSIC PLAYING]

Lucy Fisher
Away from the Post Office scandal this week, there’s been focus on Labour’s intentions, with accusations that Keir Starmer would run a “nanny state” if he’s the next prime minister. George, Starmer hosted a huddle yesterday with journalists — if you could start off by telling our listeners what a huddle is if they’re not familiar — but he used an interesting analogy, comparing the state to a parent, didn’t he? He leant in, in some ways, to this idea that Labour would pursue nanny state policies.

George Parker
Yeah, very much so. Yeah, well, a huddle, first of all, to edify the listeners: it’s just a patient group of journalists asking questions of a politician. And in this case it took place in the leader of the opposition’s old rooms in the House of Commons, which I haven’t been to for many years, actually, behind the speaker’s chair, so a wood-panelled room, as you imagine. And it was the start of, I think it is going to be a series of such briefings because of Keir Starmer’s plans to go out to the country for 48 hours after prime minister’s questions time every couple of weeks and take his message out.

This is part of his drive to land his mission-led government with the country and there’s this series of road shows on that. And in this particular one, he wanted to talk about his child health action plan, which has a number of ideas which I think the public or his opponents would see as evidence of him wanting to pursue a nanny state approach.

So whether it’s, for example, setting up breakfast clubs in schools or most obviously, the one that’s attracted so much attention is this idea of supervised toothbrushing in primary schools or in breakfast clubs. And people said, well, that’s the role of parents isn’t it? And he’s just say, look, this is of course primarily the role of parents but if people want to say this is the nanny state, I’m prepared to take on that argument. And in the case of toothbrushing, he cites the example, which I hadn’t heard before but apparently is true, which is the principal cause of admission to hospitals for 6- to 10-year-olds is tooth decay and to have teeth removed. And he said that’s a scandal not just for the children concerned, but for the state, which has to pick up the tab for that treatment.

Lucy Fisher
So on the one hand, leaning into nanny state policies, as you have outlined George, and on the other, Robert, you picked up on Starmer’s speech to kick off this year in which he said, and I quote, he promised a politics that treads a little lighter on all our lives. Now there was, of course, a reference to the lovely line from WB Yeats: “I have spread my dreams under your feet; tread softly because you tread on my dreams.” So what’s going on, Robert? Why is he one week saying politics needs to tread more lightly, have a softer footprint, and the next week leaning into sort of nanny state-ism?

Robert Shrimsley
Well, to be fair to him, I mean, the reference that he took when he told us a politics that treads a little more lightly, in its narrow meaning, what he was referring to is the anger and rage and confrontationalism of politics and the sense that this government has gone out of its way to find enemies to go after as a way of shoring up its base, and that ever since Brexit, there’s been that sort of political argument intruding more into our lives than perhaps, you know, those who aren’t like us and who live and breathe this stuff would welcome.

On the other hand, he also then went on to say, but actually, I want it to tread more likely because everyone needs to be a bit more grown up and compromise more. And we need a spirit of national unity and people agreeing to things they might not agree to.

So I think it’s one of those things that if you think you’re about to be in power, you certainly want less argument about the policies that you’re going to introduce. But I think there was a second point, which is what I wanted to focus on, which is that it’s all very well to say I want politics intruding less in terms of arguments, but actually, if you’re going to have a series of policies in which you are a more active and interventionist government and you don’t join the Labour party to do less in government, you know, don’t point at the Labour party. People believe in putting their finger on the scales of society and making it a bit more just.

So actually, while he may speak more softly, the Labour party is committed to doing lots and lots of things to intervene in society. Now lots of people think those are good things. You know, people might well think that tackling childhood obesity is a good thing. The toothbrushing, I don’t know, but, you know, I think there is an argument that says there are lots of things that aren’t working in society; if government can help on them, then it should do so and that will be the Labour position.

Lucy Fisher
Yes, you’re right. Labour has this tradition of activism. George, where do you think the public stand on this question? Do people want more autonomy? Do they disdain an overbearing government? Or are people suspicious that, you know, the current Conservative-led government is in hock to kind of corporate influence that stops it tackling sugar and some of the, you know, big business that cause obesity? And do they want more intervention from the state?

George Parker
It’s hard to tell. Well, my sense is probably yes, they do. And actually, Rishi Sunak is already on to that a bit isn’t he? If you look at the centrepiece of his conference speech in the autumn of 2023, it was basically banning smoking or phasing out smoking. I mean, I’ve heard Tory MPs recently saying we don’t ban things. Well, actually yes, you do. And that’s a good, very good example. Look at the online harms bill.

Robert Shrimsley
Another example, vaping, football regulators — it’s everywhere.

George Parker
Vaping. Yeah. So I mean so I think there is an appetite in it. Just going back to Robert’s point about Labour governments intervening. I mean, the National Health Service, I don’t want to trivialise it, but it’s probably the greatest example of the nanny state, if you think about the state looking after the people. You know, it’s revered in this country. So I think there is a certain amount of that.

But, I mean, I don’t think the government should be intruding into every nook and cranny, but I think there is just an economic reality apart from anything else, that if you have a health system which is creaking at the seams, is deeply inefficient and unable to treat the rising number of people coming through the hospital front door, you have to do something about the number of people coming in through the hospital front door. So I think there is a case to be made.

Robert Shrimsley
And this is a major, this is potentially and historically a big philosophical divide that hasn’t been so obvious in the last five or six years. But fundamentally, the extent to which you say, look, people have to make choices and some of them make bad choices, and we should leave them free to do it, be it gambling or eating junk food or whatever it is.

And you know, when Liz Truss, if you remember her, her brief interregnum as prime minister, she was one who pushed back very strongly on this, on sugar taxes on fizzy drinks and things like this. And it is a fundamental philosophical argument. But actually, I agree with George. I think the general tendency of the public is although they don’t want the government telling me personally what to do, they think it’s often quite a good idea that government intervenes to tackle social problems.

Lucy Fisher
And so what might those problems be? We’ve obviously heard from Starmer this week about some of the process for driving this change — these mission delivery boards, the ethos, we talked about nanny state. Where else might it apply? Planning?

Robert Shrimsley
Well it’s definitely going to apply in planning because he has committed himself to a streamlining of the planning process so that people can find it harder to block planning processes. He’s committed to, for example, a review of the school curriculum so that we’ll yet again see intervention to change what people are taught in schools. You’re gonna see it happening all over the place. I don’t think it’s especially unique to Labour. I mean, the Conservatives have been doing this all the way through their time in office as well.

George Parker
Exactly. Look at Michael Gove basically interfering in the curriculum as well. I mean, all governments, I mean, the government’s mission basically is to regulate and interfere with people’s lives to a lesser or greater extent. And you know, you’d probably say that Margaret Thatcher’s mission was to try to get the government off the back of the people. But the trend, I agree with Robert, has been very much towards a more interventionist form of government.

Robert Shrimsley
The other point about some of these measures, be they sugar taxes, anti-obesity drives, they’re all quite cheap. So actually, if you’ve got no money, there are things that you can do to show you are intervening for the health or the wellbeing of society and in the long run may even have some savings, though not in the short term. So these are things an opposition can promise to do with relatively low cost attached to them.

Lucy Fisher
Well, I suspect we’ll be hearing many more such low-cost intervention measures from Labour in the months ahead before the election.

[MUSIC PLAYING]

Well, we’ve just got time left for the Political Fix weekly stock picks. George, as the winner of the 2023 stockpicking, who are you buying or selling?

George Parker
Well, look, I mean, I’m gonna buy a couple of people whose careers are going nowhere. So I’m gonna make sure that I start 2024 off on a bad foot. Kevin Hollinrake, the Post Office minister. I think he’s done a good job in capturing the mood of the country and dealing with the Post Office issue this week. And Paul Scully, someone who hopes to become the Tory candidate for London mayor. Didn’t make it. Is quite bitter about that. But nevertheless, I think he’s done pretty well this week. Sell, I’m afraid, going back to our earlier conversation, Ed Davey, I’m afraid to say that I think I don’t think he’s gonna be forced to quit. I think he’ll carry on. But I think this has been a damaging episode for him.

Lucy Fisher
Robert?

Robert Shrimsley
OK, so I’m going for a slow burn. Well, I’m going to sell Humza Yousaf because actually I think it’s going to be another terrible year for the SNP. They are languishing. He hasn’t really got a strategy for trying to push the independence issue. There’s every sign that Labour is encroaching on them ever further as we head towards the Westminster elections. We’re still waiting on the prosecutions or charges, rather, from the cases that the police are investigating into Peter Murrell and Nicola Sturgeon.

And it just feels like the SNP is drifting and it’s heading towards a general election, presumably towards the end of the year where the fundamental question is not gonna be one of independence particularly but do you want the Tories out? And he doesn’t look to me like a leader who’s getting on top of the situation.

And all you can really see coming out of the SNP strategy at the moment is attempts to position itself to the left of Labour and say Labour is a bit of a pink Tory outfit, and particularly focusing very hard on things like Gaza. I’m not doubting the sincerity of the issue, but the fact is it’s not where the people of Scotland are fundamentally focused. So I think it feels like they’re drifting and he’s gonna have a bad year.

Lucy, what are you going for?

Lucy Fisher
Well, like George, and as I indicated earlier, I am selling Ed Davey. And on the flip side of that, I’d say buy Daisy Cooper, the Lib Dem deputy leader. She’s seen as a very strong performer in the Commons. You know, she has deep roots in the party. She’s steeped in its history. She’s a good campaigner. She’s got a sort of a good media manner.

Robert Shrimsley
More charisma as well.

Lucy Fisher
She’s got a lot of charisma and I think, you know, Layla Moran is another name that often comes up as someone waiting in the wings for the leadership but I think she’s considered potentially a little bit less a reliable choice. So look, if Davey has to go, I think it could be Cooper taking the reins.

Robert Shrimsley
And they could assert even if he doesn’t go, they might choose to elevate her a bit more in the coming weeks just so the focus is on someone else.

[MUSIC PLAYING]

Lucy Fisher
Very good point. Robert, George, thanks for joining.

Robert Shrimsley
Thanks, Lucy.

George Parker
Cheers, Lucy.

Lucy Fisher
That’s it for now. My thanks to Rafe Uddin, Robert Shrimsley and George Parker. Political Fix is presented by me, Lucy Fisher, and produced by Audrey Tinline. The executive producer is Manuela Saragosa. Music and audio mix by Breen Turner. The FT’s head of audio is Cheryl Brumley. We’ll meet again here next week.

[MUSIC PLAYING]