Post Office scandal: Government would not have accepted ending Horizon software, David Mills says
The government would not have accepted faulty accounting software Horizon being phased out, a former Post Office chief executive told the inquiry into the wrongful prosecution of sub-postmasters.
The inquiry seeks to find out who knew what and when about the accounting computer programme that falsely generated financial losses at Post Office branches across the UK and led to the conviction of hundreds of sub-postmasters who ran branches for theft and false accounting.
As a result of Horizon’s errors, many other sub-postmasters lost homes, moved out of their communities, and became unwell having wracked up significant debts and had their reputations ruined.
‘Loosing £1m a day’
But it was the state of Post Office’s finances in the early to mid-2000s that was the focus for the company and government who owned it, former chief executive David Mills told the inquiry on Tuesday.
When he took on the job in 2002, “Post Office Limited was insolvent. It was a crisis”, he said.
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Ex-Post Office boss under fire
“It didn’t take me very long to realise that we had a burning ship. It was losing £1m every single day it operated”.
As a result of the financial situation, there was no way Horizon would be phased out, despite it “not being fit for purpose”, Mr Mills said.
“It would have been a massive write-off for the government, just a huge hit on the bottom line of a company that was already insolvent.
“It was pretty obvious that Horizon was not going to be written off, nor was it going to be closed down. No one would have accepted that in government or indeed in the wider surroundings,” he added.
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‘More focus on solvency than prosecutions’
Issues with Horizon were already being raised with shortfalls at the time.
The Post Office, however, “certainly had more focus on solvency than it did on prosecutions”, Mr Mills said.
“It took me at least six months to really understand what was going on… I didn’t have any briefing whatsoever about it. I had no papers, no people telling me what was going on. I had to try and discover all these things myself,” he said.
“Even the building security team was not expecting me. On my first day I arrived to an empty open plan office”.
By the time he exited in 2005, Mr Mills had received more than £2m in pay and bonuses.
It would be another 10 years before prosecutions based on Horizon data would end and another 14 before an apology came for sub-postmaster victims.
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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