Closing summary
So, to sum up today’s business and trade committee hearing on the Post Office Horizon IT scandal and compensation to victims:
Fujitsu, the Japanese technology firm that built the flawed Horizon IT system at the heart of the Post Office scandal, has admitted for the first time that it should contribute to financial redress for victims, which is estimated to reach £1bn. Its Europe chief executive Paul Patterson also apologised for the firm’s role in the scandal, saying: “We are truly sorry”.
There is a moral obligation for the company to contribute. The right place to determine that is when our responsibility is very clear. There are many parties involved in this travesty.”
The retired judge Sir Wyn Williams is leading an inquiry into the scandal.
Patterson admitted that the firm had been aware of “bugs and errors” in the system since the 1990s, but insisted that they had been flagged to the Post Office.
The Post Office is still using that IT system, but will get off it as soon as a new, modern system is in place, said Nick Read, the Post Office chief executive.
MPs also heard from Alan Bates, who featured in the ITV drama Mr Bates vs the Post Office that has captured the public imagination and brought the scandal back into the headlines, prompting the government to announce it would overturn all convictions under blanket legislation to be introduced within weeks. Bates said:
There is no reason at all why full financial redress shouldn’t have been delivered by now. It’s gone on for far too long. People are suffering, they’re dying … And it just seems to be tied up in bureaucracy. And that seems to be the big problem.
In moving testimony, another former post office operator, Jo Hamilton, who was forced to plead guilty to false accounting and whose conviction was later overturned, talked about how the process of claiming compensation is “almost like being retried”.
The business minister, Kevin Hollinrake, said he hopes that compensation to victims will be paid out by August. “It’s more complex than we probably initially anticipated but is there ambition to get that money out the door as quickly as possible? That’s our number one priority.”
Lord Arbuthnot, the peer who has long campaigned on behalf of Horizon victims, said the scandal went unquestioned for so long because it involved “people who have been convicted or pleaded guilty to crime up against the most trusted brand in the country”.
The business and trade committee hearing is over.
Kevin Hollinrake, the business minister, wrapped up by saying:
There’s no shortage of appetite or willingness to do it, these things take longer than we expect. I’ve seen every compensation scheme I’ve ever worked with, as a backbencher. And there’s no difference with this one.
It’s more complex than we probably initially anticipated but is there ambition to get that money out the door as quickly as possible? That’s our number one priority. Is it our ambition to make sure it is fair and seen to be fair? That’s our number two priority. Is it our ambition, our priority to make sure people are held to account for what’s gone wrong? Absolutely. That’s what the inquiry is there for.”
Updated
Here is our full story on Fujitsu’s commitment to contribute to the compensation bill for wronged post office operators:
Fujitsu, the technology firm that built the flawed Horizon IT system at the heart of the Post Office scandal, has admitted for the first time that it should contribute to financial redress for victims.
During evidence sessions, at which MPs on the business and trade committee heard that Horizon victims were “falling apart” while waiting for compensation, Fujitsu’s European boss, Paul Patterson, admitted the firm had known the IT system was faulty since the 1990s.
Asked if the Japanese-owned company should contribute to redress for victims, estimated to reach £1bn, he agree it should but said the exact amount would have to wait until the end of the inquiry, led by a judge, Sir Wyn Williams.
Hollinrake said the government still expects total compensation to post office operators to hit £1bn, while Post Office boss Nick Read cast some doubt on that figure earlier.
The minister said:
The mass overturning of convictions will have a significant impact on the number of people that receive compensation and quite rightly so.
Q How do you ensure compensation is adequate and includes the impact on family members?
Hollinrake says the situations are “heart breaking” but added, as with other scandals, there is “nervousness around directly compensating family members”.
It would hugely increase the scope and complexity of the compensation schemes… So it wouldn’t be an easy thing to do to open it up to family members, but I understand the point you’re making.
Hollinrake also admitted that the government could have done better.
I don’t think we’ve been sufficiently challenging… It would have been resolved earlier if we’d been more challenging earlier, but we all make mistakes.
I’m not gonna blame any one of my predecessors specifically but clearly we could have done better.
He added:
There are lawyers on either side of the equation so it does take, it can take time to negotiate those deals.
We’ve made a commitment that we will respond to 90% of claims within 40 working days.
Updated
Business minister Kevin Hollinrake and Carl Creswell from the business department are now testifying.
Hollinrake says he is expecting legislation on overturning the wrongful convictions of hundreds of post office operators “within weeks”.
Q When will all the compensation be paid? No 10 is briefing by the end of the year.
I very much hope that it will be by August.
Updated
Business committee chair Liam Byrne sums up the session thus:
You’ve not been able to supply the committee with key events in the timeline such as when the Post Office first knew that remote access [to the IT system at branches] was possible.
You’ve told us that you haven’t kept evidence safe about what money was paid to you inappropriately and therefore is owed back and you can’t estimate the scale of compensation. We are grateful for the moral commitment from Fujitsu that they will share in the compensation payment, but that leaves us many questions which we need to put to the minister.
Updated
Q Did you offset a provision for compensation against the tax that you paid to the exchequer?
The Post Office boss said:
There was a characterisation that bonuses have been somehow inflated as a consequence of the treatment of tax and the treatment of compensation. Let me assure you right now that that is absolutely not the case. We have not done that at all.
He promised to provide more information to the business committee.
Read told MPs:
We have not brought private prosecutions within the Post Office on my watch, that has not occurred and it will not occur. We’re very, very clear about that. My job is not to go back and investigate what happened in the organisation pre 2015, 2010. I can see that’s immensely frustrating for you. But my job today is to run the post office to make sure that we have a post office that is fit for purpose.
Q The fact that you’re not willing to look under the bonnet and answer questions because the inquiry should look at it indicates a lack of corporate curiosity
I would disagree with that characterisation.
My job is to create a culture where people are supporting and serving postmasters and that is my role.
Updated
Read said that since the ITV drama on the scandal, 31 affected post office operators had contacted the Post Office directly.
Earlier, MPs heard from Neil Hudgell, executive chairman at Hudgell Solicitors, which represents post office operators in the scandal, including 77 who have been wrongly convicted, that a further 200 had come forward.
Q Do you have an estimate for what compensation Fujitsu will pay?
Patterson said he did not have an estimate at present.
It is right and proper that we allow the inquiry [run by the retired judge Sir Wyn Williams] to discover where the responsibility lies and responsibility lies in many places. And also inside Fujitsu.
Post Office boss: 'Committed to get off Horizon' once there is a new IT system
Q Why is the Post Office still using the Horizon IT system?
Post Office boss Nick Read said:
I’m committed to get off Horizon and I’ve had that conversation regularly with Mr Patterson and we are both committed to make sure that there is a new and upgraded system. It’s outdated, it’s clunky, it’s old, it’s 25 years old, but it does what it’s meant to do… but we’re very clear that we need a modern system for a modern post office, and we will be getting off Horizon.
Updated
Patterson said Fujitsu had not made a provision yet for its share of the compensation, but will do so.
We expect to sit down with government to determine our contribution.
Nick Read, the Post Office chief executive, said:
What astonishes me when I look back to 2019 through 2016 is that there are between 55 and 75 prosecutions approximately every single year. It is an extraordinary number.
He said he could not understand the “lack of curiosity” for individuals to say “Why is this the case? What is going on? is something that remains a mystery.”
Patterson said he had not met any of the victims, but had watched the ITV drama Mr Bates vs the Post Office. He reiterated:
We need to get to the bottom of the entire truth.
Patterson: 'Bugs and errors' in IT system 'at a very early stage' and were flagged to Post Office
Patterson admitted that there problems with the Horizon IT system from the start, but said Fujitsu flagged them to the Post Office:
There were known bugs and errors in the system at a very early stage.
In any large IT projects. there will always be some bugs and errors in any system, particularly of this scale. The important thing is what do we do with that information? do we take that information and share it with the post office? Yes we did. How the post office then chose to use that information in their prosecutions is entirely on the post office’s side.
Fujitsu Europe boss: 'Moral obligation for the company to contribute' to compensation
When pressed about whether Fujitsu should contribute to compensation for victims, Patterson said:
I think there is a moral obligation for the company to contribute and the right place to determine that is when our responsibility is very clear. There are many parties involved in this travesty.
Updated
Fujitsu Europe boss: 'We are truly sorry' for role in Horizon scandal
Post Office boss Nick Read and Paul Patterson, Fujitsu’s boss for Europe, are answering questions now. Patterson has apologised for his company’s role in the scandal.
Q Is Fujitsu an ethical company?
Patterson said:
Firstly, if I may just comment on what I’ve just been listening to this morning from the subpostmasters and families.
Fujitsu would like to apologise for our part in this appalling miscarriage of justice. 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. For that we are truly sorry.
Asked whether Fujitsu is an ethical company, he said:
I believe we are an ethical company.
Updated
Hamilton repeated that the process of redress is like being retried all over again.
You feel like you’re the guilty one.
She made a plea to the government and Post Office:
There has to be a way of applying a bit of common sense to this and cutting out all the red tape.
Q: Do you think that there are many victims still out there who haven’t yet come forward?
Bates said:
There are people contacting me now who have had losses over the years… and I am sending them on to lawyers these days. But yes, they are starting to come through again.
Updated
Both said that the Fujitsu IT system is still being used at the Post Office.
Hamilton said:
I have no proof of it, but I’ve heard it’s not brilliant. It’s still not brilliant.
Asked about the role played by the National Federation of SubPostmasters, Bates said “they were in bed with the Post Office from day one”.
They’ve refused to support any subpostmaster in any legal action against the Post Office.
Hamilton said that when she rang up the federation for advice, she was told:
‘You just go find yourself a good criminal lawyer.’ And that was the only help I got from them. There was no question of, where’s the money gone?
Updated
Horizon inquiry: Fujitsu knew that faulty IT system could lead to a legal challenge as early as 2008
My colleague Mark Sweney is watching the inquiry led by Sir Wyn Williams where four Fujitsu employees are testifying.
Fujitsu knew that faults with the system it used to extract data on Post Office transactions that were subsequently used in the prosecution of hundreds of postmasters could lead to a legal challenge as early as 2008, an inquiry has heard.
The public inquiry into the Horizon IT scandal has revealed internal documents circulated within Fujitsu admitting that there were a string of problems with its Audit Record Query (ARQ) service, which involved teams extracting Post Office counter transactions that had failed to complete, that found issues including the duplication of as many as one-third of transactions.
Emails between Fujitsu managers and its fraud and litigation team over two years, which ran the ARQ queries for the Post Office, highlight a string of ongoing problems that had to be repeatedly fixed or circumvented with “manual workarounds” over a number of years.
“If we do not fix this problem our spreadsheets presented in court are liable to be brought into doubt if duplicate transactions are spotted,” said one executive in an email exchange presented as evidence.
While the issues with the system were supposedly fixed, the problems kept recurring over a number of years, with another internal email from a Fujitsu executive stating: “In essence we have a problem with the ARQ extraction tool. Under Horizon this woud inhibit the duplicate transactions held from the audit servier and thus supply evidence for court etc without duplicated records. This could allow for legal challenge integrity of the system.”
It has also been revealed how Fujitsu was keenly aware that the issues with the ARQ service, which was worth £850,000 annually, could impact its contract with the Post Office and involve fines.
In a 2008 email under the heading “benefits and risks” Fujitsu executive Graham Welsh said: “If we cannot better identify where data integrity can or cannot be guaranteed then we are in breach of contract and may be fined heavily, [and] not be able to offer the ARQ service or will undermine confidence in the service.”
Rajbinder Sangha, who joined Fujitsu in mid-2010 as part of a three member team working on ARQ requests, told the inquiry that she was not aware of the scale of the issues with the system.
This was dealt with senior members of the team who had more knowledge of the system. It causes me concern now because obviously we had bugs in the system.
Updated
Hamilton told MPs how she took her case to the court of appeal via the criminal cases review commission process.
I applied and I didn’t hear anything for years, literally years and every now and again, you get a letter saying we’re still looking at it.
When she was wrongly accused of false accounting by the Post Office, she had to remortgage twice.
At the time I felt helpless when they told me I was the only one that was having problems. I just presumed it was me because I didn’t know any better. They kept my wages and I had to remortgage.
Ex-post office operator Hamilton: Compensation process 'like being retried'
Hamilton was forced to plead guilty to false accounting to avoid prison, and her conviction was later overturned. She told MPs about her experience of getting compensation:
I’ve been in the overturned convictions scheme and, and that is painfully slow and they have to literally drill into the minute details of everything they think you might be claiming. It’s almost like you’re a criminal all over again, you’ve got to justify everything. And they get forensic reports for this and forensic reports for that. And you put it back into the machine and then months later, it comes back with a query, you send it back months later, again, it comes back.
It’s almost like being retried because everything you say, they say: justify that and justify that. And it just goes on and on and on.
Earlier, when she was wrongly convicted:
They convinced me that it was all my fault. And I wasn’t tech savvy at all 20 years ago. And yeah, they convinced me it was my fault. And that was before the days of social media. So you felt like, I really was alone.
It’s the feeling that nobody’s listening, when you say you’ve got a problem, you just need people to listen.
Updated
Bates said after he had submitted his claim “it took 53 days before they asked three very simple questions”.
The whole thing is madness. There’s no transparency behind it, which is even more frustrating.
I hear a lot of stories about government lawyers or the firms that governments are using for lawyers are not happy about working extra hours or working at weekends or working evenings.
Updated
Bates: Compensation process 'frustrating,' 'people are suffering, they're dying'
Alan Bates and former post office operator Jo Hamilton are up next.
Speaking from his home, Bates said:
It is frustrating to put it mildly.
I mean, there is no reason at all why full financial redress shouldn’t have been delivered by now. It’s gone on for far too long. People are suffering, they’re dying … And it just seems to be tied up in bureaucracy. And that seems to be the big problem.
Hamilton said:
They’re in this factory of bureaucracy that just swallows up paperwork.
Updated
The first session is over. Business and trade committee chair Liam Byrne summed up the main findings so far:
A tiny number of people have had redress. You’ve told us that there is red tape that is dragging out the process for months. You’ve told us that there are hundreds more potential victims out there. You’ve told us that many of the victims who have had redress may have been shortchanged. You’ve told us the legislation is potentially welcome and Fujitsu have a role to play in providing some compensation.
Arbuthnot said he had faith in the Post Office Horizon IT inquiry, led by retired high court judge Sir Wyn Williams.
Today, the inquiry is hearing evidence from four Fujitsu employees. You can watch it here:
Updated
Arbuthnot: 'cases need urgent overturning' as 'can't have more people going to their graves with convictions'
Urging the government to overturn the wrongful convictions as quickly as possible, Arbuthnot made this plea:
These cases need urgent overturning because we can’t have more people going to their graves with convictions still on their record.
Updated
You can watch the Post Office Horizon IT inquiry hearing live here:
Updated
Hudgell said there is a danger that of the thousands of post office operators affected by the scandal, many will settle without legal advice.
The Post Office has said that 85% of people who have claimed on the Horizon shortfall scheme have had money paid out. The scheme was put in place by the Post Office to compensate postmasters who, while not subject to criminal conviction, made good the apparent losses caused by the faulty software from their own pockets.
Responding to a question about the need for Post Office investigators to be fair, Hudgell said “it was culturally ingrained” that the new IT system that was brought in
was going to catch out a nation of dishonest people, and the narrative from there was to collect evidence to support that and to ignore anything to the contrary.
Hudgell said:
It’s fair to say that Fujitsu have a role to play. At the end of the day though, this isn’t about the IT system.. it’s about decisions made on the back of that flawed IT system. So who made those decisions? Who’s responsible for that? Fujitsu are certainly part and parcel of that.
We’ve got in excess of 100 psychiatric reports for people diagnosed with all sorts of depressive illnesses, post traumatic stress disorder, paranoia, everything that you can possibly think of.
Turning to Fujitsu, which manufactured the faulty accounting software used by the Post Office, Lord Arbuthnot said:
I hope that Fujitsu would accept that they have played a part in the devastation that has been visited upon the subpostmasters and they might also like to accept that they should play a part in the redress that the subpostmasters need now.
Neil Hudgell, executive chairman at Hudgell Solicitors, which represents up to 400 former post office operators in the scandal, including 77 who have been wrongly convicted, said between 28 and 30 have accepted the fixed £600,000 compensation and “most of the others have had some form of interim compensation but no final conclusion”. He said:
There are too many levels of bureaucracy.
We need to give the sub postmasters the benefit of the doubt on key matters
because some don’t have (all the) supporting documentation.
He urged the government to speed up the process, and said he hopes it will be a “matter of weeks”.
It’s essential for these people who are living hand to mouth, and some of them are bankrupt that there’s money to be paid as soon as possible. I hope it is a matter of weeks, rather than months. In some cases it will be a matter of months, but it must not be a matter of years, it mustn’t spill into next year.
Updated
Lord Arbuthnot says there needs to be a “mass solution” - overturning mass numbers of convictions. Of the 900-plus wrongful convictions of sub postmasters over the years, only 95 convictions have been overturned and “so all the rest were not able to get or claim any compensation”.
The committee hearing has just kicked off.
The business committee hearing is about to start. You can watch it live here.
First up are: Neil Hudgell, executive chairman at Hudgell Solicitors, which has represented former post office operators in the scandal, and Lord Arbuthnot of Edrom, the Conservative peer and former MP who led the campaign in parliament on behalf of workers.
Updated
A Post Office whistleblower has claimed that branch accounts could be changed remotely without postmasters’ knowledge as early as 2001, the Times reported.
The former employee, who worked in a call centre in Yorkshire during the 2000s, said that their helpdesk team had the power to edit cash and stock on live terminals running the Horizon IT system, the newspaper said.
“You could go into their cash and adjust it, or wipe their cash off completely,” the source told the Times. “You could go into their stock declaration and add 500 stamps on, or take 500 off. We wouldn’t do it, but if somebody wanted to muck them around, you could do it.”
Data from the Horizon computer system was used to prosecute up to 983 postmasters between 1999 and 2015 on the basis that the accounts were secure.
Exc: Whistleblower claims Post Office staff could edit branch accounts remotely from early 2000s.
— Tom Witherow (@TomWitherow) January 16, 2024
“You could wipe their cash completely, add 500 stamps on, or take 500 off," a source claims. Post Office denied "remote access" until 2017.
Full details 👇https://t.co/AV46Q9yfXN
The Post Office could be facing a £100m bill and insolvency after claiming tax relief for its compensation payments to post office operators, according to a tax expert.
Dan Neidle, the head of non-profit organisation Tax Policy Associates, said the Post Office claimed £934m tax relief for its compensation payments, and suggested it could be unlawful.
As first reported by the Financial Times, Neidle said the Post Office had treated the compensation it paid to post office operators as tax deductible, which is “not correct”, adding: “You only get a tax deduction for payments made ‘wholly and exclusively’ for the purposes of the trade.”
Other tax experts told the FT it was not clearcut, with one saying a business “can generally claim tax deductions for expenses incurred that are closely connected with its trade, even if it is a compensation payment”.
The Post Office said its disclosed information on taxation was “appropriate and accurate”.
It is the first time Fujitsu faces scrutiny from MPs. Here’s what they might be asked – my colleague Rob Davies has done this handy preview.
What did Fujitsu bosses know and when?
MPs at Tuesday’s select committee hearing will interrogate what Fujitsu and the Post Office knew about flaws in the Horizon system and how early they knew it.
The Post Office first became aware of Horizon’s deficiencies in 2010. However, the investigative journalist Nick Wallis, an expert on the scandal, has claimed that Fujitsu was aware of gremlins in the system before that.
Did Fujitsu contribute to wrongful prosecutions?
At the judge-led inquiry, Fujitsu staff are due to give evidence about the company’s role in the various legal battles between the Post Office and victims of the Horizon scandal.
Liam Byrne, who chairs the business and trade committee, told the Guardian:
It’s high time Fujitsu broke their vow of silence about whether they put profit before people and stayed silent about Horizon’s problems when their evidence was being used to send innocent people to prison.
Should Fujitsu pay compensation?
Calls have been growing for Fujitsu to contribute to compensation payments for Horizon victims, a bill that could reach £1bn, funded by taxpayers.
This is likely to be one of the key targets for MPs on the select committee, particularly given that Fujitsu has yet to face any consequences, financial or contractual, for its flawed work for the Post Office.
Should Fujitsu be winning government contracts?
Fujitsu has won nearly 200 public sector contracts worth £6.78bn, according to analysis by the procurement experts Tussell.
As government officials began to realise the full horror of the Horizon scandal, they sought in vain to exclude Fujitsu from tendering for public contracts under the dubiously titled “Project Sushi”, the Financial Times reported on Monday.
Introduction: Post Office, Fujitsu bosses and government to be quizzed by MPs over Horizon scandal
Good morning, and welcome to our coverage of this morning’s parliamentary committee hearing on the Post Office Horizon scandal.
MPs on the business and trade committee will question bosses from the Post Office and Fujitsu, the Japanese technology company that manufactured the Horizon computer system at the heart of the scandal.
MPs will quiz them and the government on what more can be done to deliver full, fair and fast compensation for victims of the scandal, which has been called the worst miscarriage of justice in British history.
Thousands of local branch operators were relentlessly pursued by the Post Office and wrongly accused of false accounting, theft and fraud, and more than 700 were handed criminal convictions, after the faulty Fujitsu software made it look as though money was missing at their branches. Several took their own lives.
Last week, after the ITV drama Mr Bates vs The Post Office aired, the UK prime minister, Rishi Sunak, announced that those wrongly prosecuted in England and Wales would have their convictions squashed by the end of the year under blanket legislation to be introduced within weeks.
This is the schedule for the committee hearing, which starts at 10am GMT:
10am GMT: Neil Hudgell, executive chairman at Hudgell Solicitors, which has represented former post office operators in the scandal, and Lord Arbuthnot of Edrom, the Conservative peer and former MP who led the campaign in parliament on behalf of workers.
10.30am GMT: Alan Bates, founder of Justice for Subpostmasters Alliance, who successfully fought a claim against the Post Office, and Jo Hamilton, a former post office operator.
11am GMT: Nick Read, the chief executive of the Post Office, and Paul Patterson, the chief executive for Europe at Fujitsu.
11.30am GMT: Kevin Hollinrake, the business minister, and Carl Creswell, the director of business resilience at the Department for Business and Trade.
