Lord Arbuthnot says Post Office bosses blamed ‘temptation’ of ‘cash lying around’ rather than accept IT faults
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.
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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.
“Post Office cash is public money and the Post Office must recover it if any goes missing.”
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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‘Profoundly wrong’
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.”
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”.
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.”
Business
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The average two-year mortgage rate has fallen below 5% for the first time since the Liz Truss mini-budget.
The interest rate charged on a typical two-year fixed mortgage deal is now 4.99%, according to financial information company Moneyfacts.
It means there are more expensive and also cheaper two-year mortgage products on the market, but the average has fallen to a near three-year low.
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Not since September 2022 has the average been at this level, before former prime minister Liz Truss announced her so-called mini-budget.
The programme of unfunded spending and tax cuts, done without the commentary of independent watchdog the Office for Budget Responsibility, led to a steep rise in the cost of government borrowing and necessitated an intervention by monetary regulator the Bank of England to prevent a collapse of pension funds.
It was also a key reason mortgage costs rose as high as they did – up to 6% for a typical two-year deal in the weeks after the mini-budget.
Why?
The mortgage borrowing rate dropped on Wednesday as the base interest rate – set by the Bank of England – was cut last week to 4%. The reduction made borrowing less expensive, as signs of a struggling economy were evident to the rate-setting central bankers and despite inflation forecast to rise further.
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Bank of England cuts interest rate
It’s that expectation of elevated price rises that has stopped mortgage rates from falling further. The Bank had raised interest rates and has kept them comparatively high as inflation is anticipated to rise faster due to poor harvests and increased employer costs, making goods more expensive.
The group behind the figures, Moneyfacts, said “While the cost of borrowing is still well above the rock-bottom rates of the years immediately preceding that fiscal event, this milestone shows lenders are competing more aggressively for business.”
In turn, mortgage providers are reluctant to offer cheaper products.
A further cut to the base interest rate is expected before the end of 2025, according to London Stock Exchange Group (LSEG) data. Traders currently bet the rate will be brought to 3.75% in December.
This expectation can influence what rates lenders offer.
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