A barrister acting on behalf of postmasters claiming compensation from the Post Office last week described the process as a “scandal within a scandal.”

Speaking at the first compensation hearing at The Oval cricket ground in South London on 6 July 2022, Howe & Co’s lead counsel Sam Stein QC, on behalf of 153 of the postmasters affected, said:

“The approach of the Post Office and BEIS [the department for business, energy and industrial strategy] replicates past behaviour.

“There is the danger of a scandal within a scandal about compensation.”

The July hearings (the second is on 13 July) are designed to get to the bottom of problems with the compensation process. Nick and I recorded a podcast at the hearing which you can listen to here.

There are several separate compensation processes:

• · The first, the Horizon Shortfall Scheme (HSS), is for postmasters who repaid shortfalls and perhaps lost their businesses, but who weren’t prosecuted and weren’t part of the 555-strong group who took the Post Office to the High Court.

• · The 555 received money in their £58m settlement but it only equated to £20,000 or less each – most was swallowed by legal bills. The terms of their settlement said they were not entitled to any further claim. This changed on 30 June 2022 when £19.5m was announced for this group.

• · People with quashed convictions are immersed in their own mediation process

The whole picture is further complicated by the fact that some of the 555 are in this group too.

The core problems with the compensation process, as described during the first hearing and in the published submissions from legal teams, are:

• · The Post Office is the final arbiter of how much compensation a postmaster is offered, despite being the organisation that caused their trauma in the first place.

• · Postmasters are left in ignorance of the status of their claim and there have been delays of up to two years without news.

• · The original form was confusing.

• · There is a lack of full legal advice, with little funding available. Postmasters have to fund their own legal advice and can only claim a maximum of £1,200. Only 3% of postmasters applying to the main compensation scheme (named HSS) have had representation. Hudgells solicitors represent a group whose convictions have been overturned and say their team has not yet been paid anything so far, for what must be thousands of hours of work.

• · The burden of proof is on postmasters – they have to prove their losses, and they have to prove other ‘consequential’ effects such as stress-induced illness or lost income. Sam Stein described many as suffering victim fatigue, with some likely to be experiencing undiagnosed PTSD, meaning many haven’t been able to face going through this process. He also said that in many, if not most, cases, the Post Office seized paperwork from postmasters during the audit process. There is some indication that some records were automatically destroyed after six years.

• · Sometimes the Post Office is using evidence it holds on people to determine how much to offer the postmasters, but not telling them what evidence it used until an offer is made. Postmasters’ legal teams argue this is the wrong way around when the burden of proof is on postmasters.

• · There is a lack of transparency over the principles applied when the Post Office and its legal team are assessing cases and making offers.

• · For those who were prosecuted and have had their convictions overturned, the process is much more complicated and there are issues there too. The Post Office wants to pay a smaller amount of money than the postmasters feel is their due, and there were hints in the submissions that these cases could end up in court.

• · The Post Office has refused to pay interim payments to people for amounts that have been agreed, while they consider another part of someone’s claim. This is contributing to postmasters’ continued financial problems.

As a result of all these challenges, Stein said it is likely that a number of postmasters have accepted a lower amount of compensation than they might have been entitled to.

Overall, delays and a lack of urgency to compensate people have been the biggest issue. Sam Stein said:

“The harm that the Post Office has caused is ongoing and made manifest in desperate financial consequences.”

He added:

“When the Post Office wanted its money [when requiring postmasters repay shortfalls] they wanted it there and then, under threat of criminal prosecution.”

Mr Stein described postmasters who are on the verge of bankruptcy, who have not been able to repay elderly relatives, who have had to sell jewellery, who visit the supermarket at 4pm to shop for reduced price food, and who can barely afford the parking and transport costs to attend the inquiry hearings.

“There has been delay, obfuscation, they make statements and excuses. They do everything but pay up promptly. The money is needed right now, to solve immediate problems, to get people out of holes created by the Post Office.”

£19m for the High Court litigants

On June 30th BEIS put out a press release announcing a £19.5m pot of interim compensation for the 555 High Court claimants, who had previously been excluded from all schemes due to the terms of their High Court settlement.

This announcement was released on the same day that the submissions to the inquiry were published. These contained scathing criticism from the legal teams acting on behalf of postmasters. Sam Stein said about that announcement:

“This is a terrible scandal, it should not be an opportunity to secure public relations points through the media. BEIS has to be dragged kicking and screaming in the right direction.

“It’s possible to believe that the Post Office is so incapable of understanding even now that they have victimised their own staff.”

He added there was a lack of clarity over the way forward for that particular pot of money, no application process and no immediate hardship payments available.

Rebecca Thomson, July 2022

Nick adds: My thanks to Rebecca for her report. Rebecca has started her own reporting substack, covering Post Office issues and other stories which interest her. Here is the link if you want to subscribe: https://rebeccathomson.substack.com/

Sue Edgar is Chair of the National Federation of Subpostmasters and a serving Subpostmaster. Her story is fascinating. The evidence she gave to the Post Office Horizon IT inquiry on the afternoon of Fri 4 March will undoubtedly be seen as significant for a number of reasons, but I would like to focus on what she said about remote access to Subpostmaster branch accounts.

By 2016, the Subpostmasters’ campaign for justice was well known to the Post Office and the National Federation of Subpostmasters. Remote access to the Horizon IT system was a live issue.

In order to maintain confidence in the integrity of its prosecutions (and sackings/asset recovery processes), the Post Office had to convince everyone that Subpostmasters were in sole control of their accounts.

After all, if someone else had access to them through the Horizon system back-end, particularly if that access could not be detected, then they were not in sole control of their accounts. If that was the case, it was a little unfair to criminally prosecute them. More than a little unfair, in fact.

In 2015 three Post Office executives stated, on the record, to a Panorama producer:

“It is 100% true to say we can’t change, alter or modify existing transaction data, so the integrity is 100% preserved.”

The Panorama producer checked: “And that’s true now, and has been for the duration of the system?”

To which the Post Office execs answered an unequivocal “Yes.“

This was not true. Proving it was not true would require a multimillion pound High Court case which eventually went to trial in 2018.

But in 2016, according to her evidence on 4 March 2022, Sue Edgar and a fellow Subpostmaster called Ann were invited to Fujitsu HQ. And this is what Mrs Edgar said happened:

“They were showing us what the Horizon would do and what it couldn’t do after a conference one year… and we went and we were looking round and we were saying, ‘Oh, so this is where you do whatever, and this is where you write the programmes’, and what have you.

And then they took us into another room that we weren’t allowed to discuss because we shouldn’t have been in there apparently and this guy was showing us … so we said, ‘What do you do?’ He said, ‘Oh, I go through the systems and blah, blah’.

I can’t really exactly say what he said but he said, ‘Look, I can get into every Post Office in the land, I can get into their system’, and Ann and I just looked at each other and he said, ‘I’ll show you’. What he did, he said, ‘There, look what I’m doing’, and he went into a postmaster’s stock unit and he took I can’t remember the amount but he took some Euros out of that guy’s stock unit, and our jaws just dropped to the floor, and we were looking at each other and said:

‘But won’t he be short now? Are you putting them back in?’

‘Oh no, I’ll put them back in tomorrow.’

‘Right. Well, what happens if it’s his trading period or he wants to balance?’

‘Well, he’ll be short but they’ll be back tomorrow and he’ll find them tomorrow.’

And we said – ‘But you can’t do that’ – it was wrong.

‘Oh no, no, it’s okay, it’s okay. I’ll put them back tomorrow.’

Now, we left that night and got on the train to come home but we didn’t know if he’d put them back in and whether that postmaster was right or whether he balanced right or he balanced short.

People used to say they could do that and I said ‘no’, but I used to say ‘there will be a back door’, I mean even though I’m not techie I knew there must be a back door into a system because every computer has that and I did mention this to… I can’t remember exactly the date but we think it was about 2016 and I mentioned this to my contracts manager.

I mentioned it to a couple of people that were in the Federation at the time who were higher than me, because I was just at the branch secretary then, and they more or less – especially Post Office, they just fobbed me off with: ‘No, he was just carrying on. He was just like showing off. He can’t do that. He’s just like telling you that. Because you don’t understand he’s just saying that’. But we actually saw it. Two of us saw it at the time and, to be honest, it was a topic of conversation all the way home.”

You can watch Mrs Edgar’s saying the above here, (thanks to Tim Brentnall):

Screen grab of sue Edgar confirming remote access was known before the glo trials when the post office still denied it was possible @ElCShaikh @RonRwarming @nickwallis @chrish9070 @ArchNichola @GandMBB @PostOffice @ArchNichola @CWUPostmaster @mkiceburnmarko pic.twitter.com/BRCiO98Jbj

— tim brentnall (@tim_brentnall) March 8, 2022

Rudkin re-run

Not only is Mrs Edgar’s evidence extraordinary in itself, it almost exactly echoes the experience of Michael Rudkin, a former NFSP exec, who visited Fujitsu HQ for a look-see at the Horizon system in 2008. Here are the relevant passages about this episode from my book:

“Rudkin was met at Fujitsu reception by a friendly chap called Martin Rolfe, who signed him in, gave him a guest pass and took him on a little tour of the building. This concluded at Rolfe’s own office space.

Martin introduced Michael to one of his colleagues, who didn’t take well to a Fed exec being in his place of work. ‘He was rude and rather negative,’ said Michael. Martin engineered a swift exit. ‘He said, “Let’s get out of here. Come with me, Michael.” As though I was his long lost friend.’

The two men went through several secure doors which needed a pin-pad entry code. As they did so, they discussed some of the issues Rudkin wanted to raise around problems with bureau de change and accounting for foreign cash.

They went downstairs and ended up in the doorway of what Rudkin describes as ‘a boiler room. A subterranean office. All their gubbins – the air conditioning, the central heating was in that room.’

In what sounds like some kind of bizarre dream, Rudkin told me that alongside the machinery in this boiler room, there were two desks, with two Horizon terminals sitting on them.

The terminals were recognisably the same as the terminals Rudkin had in his own Post Office – that is, exactly the same hardware you’d find on a Post Office counter top – and they were running the same software. Four men in office-wear were present. Rolfe introduced them as ‘The Covert Operations Team.’

As soon as the men clocked the arrival of visitors, three of them left. They were not friendly as they did so. One remained sitting at a terminal. Rolfe gestured towards the unattended Horizon terminal and said,‘This is one of the offices we have a problem with.’The man who had left the terminal in a hurry was still logged on.

Rudkin said Rolfe was showing him the branch’s figures and told him, ‘This is the live system.’ Rudkin asked what he meant – could the figures be adjusted in real time on the system?

According to Rudkin, Rolfe ‘made an alteration on screen to demonstrate to me that he could do that. He then reversed the transaction and he made a joke about reversing the transaction, otherwise the office would not balance.’

Rudkin challenged him. ‘I said, “Have you just altered the bureau de change figures in that branch?” and he said “Yeah.”’

Rudkin was aghast. ‘I said to him, “For years, we’ve been told that you do not have remote access into Post Office branch accounts.”’

Rolfe seemed to think it was a bit of a joke. Rudkin didn’t, asking in that rather intimidating baritone, ‘What the fuck is going on here?’

Rudkin told me he could not be escorted out of the building quickly enough.”

The day after Mr Rudkin’s visit to Fujitsu he was suspended by the Post Office over an alleged discrepancy. Michael resigned his position on the NFSP and was systematically discredited by the organisation’s leadership (for the full story, please do buy my book).

The point is – here was something almost identical happening to another Subpostmaster, eight years later.

As Mrs Edgar states – she mentioned this experience to the Post Office via her contracts manager, and to her NFSP superiors. Everyone denied it.

What was going on in there?

You can watch Ms Edgar’s evidence in full here, or read the full transcript of it here.

For obvious reasons I have spent many hours dealing with sacked and convicted Subpostmasters, rather than those still working.

The evidence given to the Post Office Inquiry has come from both serving and former Postmasters. I am currently watching the focus group session on the afternoon of Fri 4 March – particularly because of some social media interest in what the Chair of the National Federation of Subpostmasters, Sue Edgar, told the inquiry about remote access to Horizon, the Post Office’s disastrous IT system.

I haven’t got to the relevant bit yet, but before I do, I thought it was worth putting up a post about the evidence from David Hartley.

David is a serving Subpostmaster at Bispham Road Post Office in Southport, Merseyside. He is an active member of the National Federation of Subpostmasters. David took on his Post Office in 2005, but before that he ran Hope Place Post Office in Nelson for sixteen years. David decided to take on a Post Office “because it’s seen as a national institution” and a “trusted brand.” He told the inquiry “I thought it was a good move and that it would settle our future together.”

David’s disillusionment was writ large in his demeanour throughout the focus group session. He described himself as “well past retirement age… but to actually sell a post office now is nigh impossible because the word’s got out there to the general public, and naturally they don’t want to touch it with a barge pole. Would you?”

Automated Teller Madness

Like so many other Subpostmasters who had given evidence, David spoke clearly about the sense of abandonment he felt and how it continues to this day. The Post Office has apparently recently switched many of its cash machines (ATMs) away from Bank of Ireland to an in-house set up.

Although the Post Office publicly denied it, ATMs have long caused huge issues for the Post Office and postmasters over the years, with Postmasters being badly trained and held liable for thousands of pounds worth of discrepancies.

When independent forensic investigators Second Sight raised problems with accounting for cash dispensed by ATMs back in 2014 they were publicly rubbished by the Post Office who said “there is little evidence to support this view”. A year earlier, a secret report presented to the Post Office noted “losses from ATMs have been one of the major concerns.”

So how is the Post Office managing the sensitive switch from Bank of Ireland ATMs to the new system? According to David:

“We were sent a booklet, just a few leaves of paper actually, not even a booklet. That was the extent of the training for it. I’ve since – and I’m not on my own – experienced losses in the ATM. I’ve got a paper here that’s asking me to pay £1,426.61. That’s just come yesterday because of shortages in the ATM.”

David welled up with tears as he described the losses he’d experienced since Horizon was introduced and the Post Office process for dealing with them:

“The process was you put it right”, he said. “That was the end of it. There was no… it was either a black and white. There was no grey areas… If there was a shortage you put it in. You made that right… We’ve had to borrow from family members, from friends, we couldn’t even… sorry … we couldn’t even afford a pint of milk one week because we’d had to put that much money in.”

Federal Failure

Although David himself had been an executive officer of the National Federation of Subpostmasters (around 2012), he described the NFSP’s failure to act on Horizon:

“We were told by the then General Secretary that we have to believe that the system is robust, even though I’ve been paying God knows how much back to the Post Office over the years from when Horizon first started. So I believed it. I thought it’s bound to be mistakes on somebody’s part. I’ve sacked staff in the past thinking they were stealing.”

The full horror of this treatment of Subpostmasters – suspecting their employees whilst experiencing the creeping dread of their livelihoods slipping through their fingers – has to be seen in the context of Paula Vennells’ relentless drive to reduce Subpostmasters pay, which ran pretty much throughout her seven year tenure. David told the inquiry:

“We’ve taken pay cuts as postmasters to keep the business afloat and I challenged the then chief executive officer, Paula Vennells. I stood up at conference and said, ‘Can you tell me why we are taking pay cuts and you are awarding yourself an 18 per cent pay rise of over £500,000?’

“I said, ‘You should hang your head in shame’. She didn’t even have the guts to respond to it. She just looked at her side-kick and nodded and she stood up and said, ‘I think that’s rather personal’. Well, yes, it was rather personal. It was personal to all of us that we’re taking pay cuts.”

Watch David’s evidence here. Read the transcript of the focus group session here. The inquiry will continue to take evidence from former and serving Subpostmasters until the end of this month.