Senior executives at the Post Office suggested that “lots and lots of cash lying around in unexpected places” might have meant sub-postmasters were led “into temptation”, rather than accept IT failings, an official inquiry has heard.
The inquiry into faulty Horizon IT software at the Post Office, and the associated prosecution of hundreds of sub-postmasters for theft and false accounting, heard evidence from former North East Hampshire MP Lord Arbuthnot on Wednesday.
He was a champion of victims in the late 2000s and 2010s and appeared in the ITV drama Mr Bates vs The Post Office, which reinvigorated interest in the scandal’s miscarriages of justice.
As well as those who were wrongly prosecuted many more wracked up significant debts, lost their homes, were ostracised from their communities and suffered ill health, while some left the country.
Image: Lord Arbuthnot was played by actor Alex Jennings in Mr Bates vs The Post Office. Pic: Little Gem / ITV Studios
Rather than accept the IT system’s failings, senior officials within the Post Office told Lord Arbuthnot that sub-postmasters were led “into temptation”, he told the inquiry.
“Alice Perkins [former Post Office chair] and Paula Vennells [former chief executive] had both raised the problem of there being lots and lots of cash lying around in unexpected places,” Lord Arbuthnot said.
“I do not know whether that point – which Alice Perkins made strongly – affected her approach towards the honesty or otherwise of sub-postmasters,” the peer added in his witness statement to the inquiry.
Minutes recorded of what Ms Vennells said during a meeting with MPs in 2012 read: “It appears that some sub-postmasters have been borrowing money from the Post Office account/till in the same way they might do in a retail business, but this is not how the Post Office works.
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“Post Office cash is public money and the Post Office must recover it if any goes missing.”
Image: Lord Arbuthnot arrives to give evidence to the Post Office Horizon IT inquiry. Pic: PA
Unsafe convictions
As early as March 2013 Lord Arbuthnot said he told the Post Office that its convictions of sub-postmasters could be unsafe as evidence of flaws within Horizon had been unearthed by forensic accountants Second Sight, who were hired by the organisation to investigate allegations.
Lord Arbuthnot felt this evidence undermined convictions and showed there was a risk the Post Office wasn’t doing its duty to disclose any evidence that might undermine its prosecution case or help sub-postmaster defendants.
Second Sight found Fujitsu – the company behind the Horizon system – could access Post Office accounts remotely.
Lord Arbuthnot told the inquiry: “If Fujitsu or the Post Office can manipulate a sub-postmaster’s account without the post business knowing about it, then how can you prosecute that sub-postmaster for something which could not be provably down to the postmaster?”
He added this fact alone undermined the “standard of proof required in a criminal trial”.
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Sub-postmaster victims of the faulty software were told they were the only ones having problems with Horizon – something Lord Arbuthnot found “profoundly wrong” and intimidating, as he was aware of several cases.
“There was something at the back of my mind which continued to trouble me, which was these people who were being told, ‘you are the only person this is happening to’.
“And that struck me as being profoundly wrong, because first – it was obviously disprovable. They were not the only people it was happening to.
“Second, it was isolating those sub-postmasters and sub-postmistresses so they could not get support from others in the same position.
“And third, it had an element of intimidation about it, all of which set the Post Office and its way of operating with its sub-postmasters in a bad light.”
Image: Lord Arbuthnot arrives at the Post Office inquiry. Pic: PA
‘Government refusing to take responsibility’
The whole nature of the government’s hands-off approach to the Post Office, which it entirely owns, came in for criticism from Lord Arbuthnot as the inquiry heard of the numerous government ministers he contacted about the injustices.
“What this arm’s length arrangement essentially means is the government is refusing to take the responsibilities that go with ownership,” he said.
“If you have an organisation that is as important to the community as the Post Office is, then the people have got to be able to have proper control over it.”
Lord Arbuthnot also accused the Post Office of “stringing MPs along” in a “behind-the-scenes deception process” to cover up issues with the Horizon system.
He said the organisation grew increasingly defensive in 2013 after the investigation by Second Sight.
The peer said: “They knew there was a large number of bugs in the system that they hadn’t told MPs about.
“That’s what I know now, but I didn’t know that then.”
The peer also told the inquiry he was not satisfied with the “brush-off” response he received from Ms Vennells after he raised concerns over sub-postmaster complaints about the Horizon system.
During her time as managing director, Ms Vennells defended the Horizon system when it was queried by the former MP, describing it as “robust”.
Image: Paula Vennells during her time at the Post Office in 2016. Pic: PA
In a statement this week after the inquiry resumed, Paula Vennells said: “I continue to support and focus on cooperating with the inquiry and expect to be giving evidence in the coming months.
“I am truly sorry for the devastation caused to the sub-postmasters and their families, whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system.
“I now intend to continue to focus on assisting the inquiry and will not make any further public comment until it has concluded.”
Donald Trump’s trade war escalation has sparked a global sell-off, with US stock markets seeing the biggest declines in a hit to values estimated above $2trn.
Tech and retail shares were among those worst hit when Wall Street opened for business, following on from a flight from risk across both Asia and Europe earlier in the day.
Analysis by the investment platform AJ Bell put the value of the peak losses among major indices at $2.2trn (£1.7trn).
The tech-focused Nasdaq Composite was down 5.8%, the S&P 500 by 4.3% and the Dow Jones Industrial Average by just under 4% at the height of the declines. It left all three on course for their worst one-day losses since at least September 2022 though the sell-off later eased back slightly.
Analysts said the focus in the US was largely on the impact that the expanded tariff regime will have on the domestic economy but also effects on global sales given widespread anger abroad among the more than 180 nations and territories hit by reciprocal tariffs on Mr Trump‘s self-styled “liberation day”.
They are set to take effect next week, with tariffs on all car, steel and aluminium imports already in effect.
Price rises are a certainty in the world’s largest economy as the president’s additional tariffs kick in, with those charges expected to be passed on down supply chains to the end user.
The White House believes its tariffs regime will force employers to build factories and hire workers in the US to escape the charges.
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The latest numbers on tariffs
Economists warn the additional costs will add upward pressure to US inflation and potentially choke demand and hiring, ricking a slide towards recession.
Apple was among the biggest losers in cash terms in Thursday’s trading as its shares fell by almost 9%, leaving it on track for its worst daily performance since the start of the COVID pandemic.
Concerns among shareholders were said to include the prospects for US price hikes when its products are shipped to the US from Asia.
Other losers included Tesla, down by almost 6% and Nvidia down by more than 6%.
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PM: It’s ‘a new era’ for trade and economy
Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values.
The European Union is expected to retaliate in a bid to put pressure on the US to back down.
The prospect of a tit-for-tat trade war saw the CAC 40 in France and German DAX fall by more than 3.4% and 3% respectively.
The FTSE 100, which is internationally focused, was 1.6% lower by the close – a three-month low.
Financial stocks were worst hit with Asia-focused Standard Chartered bank enduring the worst fall in percentage terms of 13%, followed closely by its larger rival HSBC.
Among the stocks seeing big declines were those for big energy as oil Brent crude costs fell back by 6% to $70 due to expectations a trade war will hurt demand.
The more domestically relevant FTSE 250 was 2.2% lower.
A weakening dollar saw the pound briefly hit a six-month high against the US currency at $1.32.
There was a rush for safe haven gold earlier in the day as a new record high was struck though it was later trading down.
Sean Sun, portfolio manager at Thornburg Investment Management, said of the state of play: “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade.”
He warned there was a big risk of escalation ahead through countermeasures against the US.
Sandra Ebner, senior economist at Union Investment, said: “We assume that the tariffs will not remain in place in the announced range, but will instead be a starting point for further negotiations.
“Trump has set a maximum demand from which the level of tariffs should decrease”.
She added: “Since the measures would not affect all regions and sectors equally, there will be winners and losers as in 2018 – although the losers are more likely to be in the EU than in North America.
“To protect companies in Europe from the effects of tariffs, the EU should not respond with high counter-tariffs. In any case, their impact in the US is not likely to be significant. It would be more efficient to provide targeted support to EU companies in the form of investment and stimulus.”
British companies and business groups have expressed alarm over President Donald Trump’s 10% tariff on UK goods entering the US – but cautioned against retaliatory measures.
It comes as Business Secretary Jonathan Reynolds launched a consultation with firms on taxes the UK could implement in response to the new levies.
A 400-page list of 8,000 US goods that could be targeted by UK tariffs has been published, including items like whiskey and jeans.
On so-called “Liberation Day”, Mr Trump announced UK goods entering the US will be subject to a 10% tax while cars will be slapped with a 25% levy.
The government’s handling of tariff negotiations with the US to date has been praised by representative and industry bodies as being “cool” and “calm” – and they urged ministers to continue that approach by not retaliating.
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Business lobby group the CBI (Confederation of British Industry) said: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices”.
Industry body the British Retail Consortium (BRC) also cautioned: “Retaliatory tariffs should only be a last resort”.
‘Deeply troubling’
While a major category of exports, in the form of services – like finance and information technology (IT) – has been exempted from the tariffs, the impact on UK business is expected to be significant.
Mr Trump’s announcement was described as “deeply troubling for businesses” by the CBI’s chief executive Rain Newton-Smith.
The Federation of Small Businesses (FSB) also said the tariffs were “a major blow” to small and medium companies (SMEs), as 59% of small UK exporters sell to the US. It called for emergency government aid to help those affected.
“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,” the FSB’s policy chair Tina McKenzie said. “The fallout will stifle growth” and “hurt opportunities”, she added.
Companies will need to adapt and overcome, the British Export Association said, but added: “Unfortunately adaptation will come at a cost that not all businesses will be able to bear.”
Watch dealer and component seller Darren Townend told Sky News the 10% hit would be “painful” as “people will buy less”.
“I am a fan of Trump, but this is nuts,” he said. “I expect some bad months ahead.”
Industry body Make UK said the 25% tariffs on cars, steel and aluminium would in particular be devastating for UK manufacturing.
Cars hard hit
Carmakers are among the biggest losers from the world trade order reshuffle.
Auto industry body the Society of Motor Manufacturers and Traders (SMMT) said the taxes were “deeply disappointing and potentially damaging measure”.
“These tariff costs cannot be absorbed by manufacturers”, SMMT chief executive Mike Hawes said. “UK producers may have to review output in the face of constrained demand”.
The new taxes on cars took effect on Thursday morning, while the measures impacting car parts are due to come in on 3 May.
Economists immediately started scratching their heads when Donald Trump raised his tariffs placard in the Rose Garden on Wednesday.
On that list he detailed the rate the US believes it is being charged by each country, along with its response: A reciprocal tariff at half that rate.
So, take China for example. Donald Trump said his team had run the numbers and the world’s second-largest economy was implementing an effective tariff of 67% on US imports. The US is responding with 34%.
How did he come up with that 67%? This is where things get a bit murky. The US claims it studied its trading relationship with individual countries, examining non-tariff barriers as well as tariff barriers. That includes, for example, regulations that make it difficult for US exporters.
However, the actual methodology appears to be far cruder. Instead of responding to individual countries’ trade barriers, Trump is attacking those enjoying large trade surpluses with the US.
A formula released by the US trade representative laid this bare. It took the US’s trade deficit in goods with each country and divided that by imports from that country. That figure was then divided by two.
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So, in the case of China, which has a trade surplus of $295bn on total US exports of $438bn, that gives a ratio of 68%. The US divided that by two, giving a reciprocal tariff of 34%.
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PM will ‘fight’ for deal with US
This is a blunt measure which targets big importers to the US, irrespective of the trade barriers they have erected. This is all part of Donald Trump’s efforts to shrink the country’s deficit – although it’s US consumers who will end up paying the price.
But what about the small number of countries where the US has a trade surplus? Shouldn’t they actually be benefiting from all of this?
That includes the UK, with whom the US has a surplus (by its own calculations) of $12bn. By its own reciprocal tariff formula, the UK should be benefitting from a “negative tariff” of 9%.
Instead, it has been hit by a 10% baseline tariff. Number 10 may be breathing a sigh of relief – the US could, after all, have gone after us for our 20% VAT rate on imports, which it takes issue with – but, by Trump’s own measure, we haven’t got off as lightly as we should have.