1 Wednesday, 24 July 2024 2 (10.05 am) 3 MS PRICE: Good morning, sir. Can you see and hear us? 4 SIR WYN WILLIAMS: Yes, thank you. 5 MS PRICE: Can we now call Margot James, who, as you now 6 know, is now attending remotely this morning? 7 SIR WYN WILLIAMS: Yes. 8 MS PRICE: Can you see the witness, sir? 9 SIR WYN WILLIAMS: I can indeed. 10 Can you see me, Ms James? 11 THE WITNESS: Yes, good morning. I can see you, Sir Wyn. 12 SIR WYN WILLIAMS: Thank you. Over to you, Ms Price. 13 MARGOT CATHLEEN JAMES (affirmed) 14 Questioned by MS PRICE 15 MS PRICE: Can you confirm your full name, please, Ms James? 16 A. Yes. It is Margot Cathleen James. 17 Q. As you know, my name is Emma Price and I ask questions 18 on behalf of the Inquiry. Thank you for attending to 19 assist the Inquiry in its work and for providing the 20 witness statement which you have ahead of today. Do you 21 have a hard copy of that witness statement with you? 22 A. Yes, I do. 23 Q. It is dated 26 June 2024. If you could turn to page 28 24 of the statement, please. 25 A. Yes, I have 28. 1 1 Q. Do you have a copy of the statement with a visible 2 signature with you? 3 A. The hard copy doesn't have the original signature but 4 I did have emailed my hard copy with the signature, and 5 I have looked at it this morning and I can attest to the 6 fact that it is my signature. 7 Q. Thank you. Are the contents of your statement true to 8 the best of your knowledge and belief? 9 A. Yes, they are. 10 Q. For the purposes of the transcript, the reference for 11 Ms James' statement is WITN10910100. Ms James, your 12 witness statement is now in evidence and will be 13 published on the Inquiry's website in due course. As 14 such, I will not be asking you about every aspect of 15 your statement this morning, just specific issues which 16 are addressed in it. Okay? 17 A. Yes, thank you. 18 Q. I understand that there's something you wanted to say at 19 the outset of your evidence? 20 A. Well, thank you very much for giving me the opportunity, 21 Ms Price, to apologise to Sir Wyn and to everybody 22 present that I am not in the room. Unfortunately, I got 23 Covid at the end of last week, and I respect the fact 24 that the rules that the Inquiry are following preclude 25 me from being able to give evidence in person, although 2 1 I am perfectly physically able to do so. Thank you. 2 Q. I'd like to start, please, with an overview of your 3 professional background and career in Government. You 4 explain in your statement that in 1985 you co-founded 5 and were Chief Executive Officer of a company providing 6 public relations and medical education services to 7 pharmaceutical companies and healthcare providers; is 8 that right? 9 A. Yes, that's correct. 10 Q. In 1999, that company was sold and you managed the 11 change to it becoming a subsidiary of a large 12 multinational? 13 A. Yes, that's right. 14 Q. You acted as chair of that subsidiary until 2002? 15 A. Yes. 16 Q. Then you joined an advertising agency in 2003 as Vice 17 President, Europe, with responsibility for the 18 integration and growth of its healthcare assets? 19 A. Yes, that's correct. 20 Q. You were first elected as a Member of Parliament in 21 2010 -- 22 A. Yes. 23 Q. -- and you served until 2019 when you stood down at the 24 general election? 25 A. Yes, that's right. 3 1 Q. Whilst a Member of Parliament, you served as 2 an Assistant Whip from 13 May 2015 to 17 July 2016? 3 A. Yes, I did. 4 Q. Then from 17 July 2016 to the 9 January 2018 you served 5 as Parliamentary Under-Secretary of State for Small 6 Business, Consumers and Corporate Responsibility with 7 the Department for Business, Energy and Industrial 8 Strategy; is that right? 9 A. Yes, that's right. 10 Q. It was in this role that you became involved in some of 11 the matters relevant to the work of this Inquiry? 12 A. Yes, correct. 13 Q. After you left the Department for Business, Energy and 14 Industrial Strategy, you held a further ministerial post 15 for as Minister of State for Digital and the Creative 16 Industries with the Department for Digital, Culture, 17 Media and Sport, from 9 January 2018 to 18 July 2019? 18 A. Yes, that's right. 19 Q. Since leaving Parliament, you have held number of roles, 20 including being the Executive Chair of the Warwick 21 Manufacturing Group at the University of Warwick, and 22 two non-executive board roles in the financial services 23 and technology sector? 24 A. That's correct. 25 Q. You now do independent consultancy and pro bono work in 4 1 the areas of decarbonisation and climate change? 2 A. Yes, that's right. 3 Q. You are also an Emeritus Governor of the London School 4 of Economics and Political Science? 5 A. Yes, I am. 6 Q. Turning then to an overview of the portfolio you had as 7 Parliamentary Under-Secretary at BEIS, and the Post 8 Office brief in particular, you describe your portfolio 9 in this role as broad in your statement and you have set 10 out the areas for which you were responsible at 11 paragraphs 11 to 14. You describe postal affairs and 12 the Post Office as one of eight policy areas and 13 statutory bodies for which you had responsibility, all 14 of which were responsibilities held in addition to the 15 three main areas of responsibility: small businesses, 16 consumers and corporate responsibility; is that right? 17 A. Yes, that's right. 18 Q. Did the breadth of the portfolio impact upon your 19 ability to provide effective oversight of the Post 20 Office? 21 A. I think that it would not have -- the answer, I think, 22 to the question, is no, in normal times. But I think 23 that if one were to be -- it made it very difficult -- 24 the breadth of the portfolio made it very difficult to 25 drill down into any areas within the overall brief that 5 1 weren't already pre-identified as being needing of 2 a significant amount of attention, over and above what 3 you might distribute if you were distributing your time 4 evenly across everything in your portfolio. 5 Q. You deal with the postal affairs brief at paragraph 15 6 of your statement. Could we have that on screen, 7 please, it's page 15. 8 Here you describe the postal affairs 9 responsibilities as themselves quite broad, and you say 10 this: 11 "The core of the brief was to ensure that BEIS held 12 the [Post Office Limited] Board to account for meeting 13 financial and non-financial targets and delivery of work 14 that was agreed to be central to the Government's 15 manifesto commitments. This included securing the 16 future of 3,000 rural branches ... and branches in lower 17 income urban neighbours, modernising the network, 18 meeting access criteria, and expanding services (in 19 particular a digital verification and identification 20 system, banking services and services to SMEs). Some of 21 the central work to that brief was to ensure all routine 22 small businesses and consumer banking services were 23 available throughout post office branches, and in 24 particular in rural areas and lower income urban areas." 25 Then at 16, you say this: 6 1 "Apart from this there was significant focus within 2 the postal affairs brief on planning and securing [Post 3 Office] funding. The Government provides funding to 4 [Post Office Limited] in the form of a subsidy (which 5 recognises the wider social purpose of the network that 6 goes beyond that which would be commercially viable)." 7 Picking up on the reference to the wider social 8 role, would you agree that the maintenance of the Post 9 Office's social role was a Government policy objective? 10 A. Yes, most definitely. 11 Q. Put simply, was it the case that, even if it did not 12 make financial sense to keep Post Office branches open 13 in rural and low income urban areas, the social value of 14 doing so justified it? 15 A. Yes, that was a very clear manifesto commitment in 2015, 16 that we'd protect the network and, by saying that, 17 I mean particularly those services in rural areas and 18 poorer urban areas, which would otherwise not be 19 commercially viable. So the subsidy was in respect of 20 the need for Post Office to deliver a service, 21 significant parts of which would not be commercially 22 viable if operated purely in the free market. 23 Q. Would it be fair to say that subpostmasters running 24 branches in rural areas and low income urban areas, as 25 well as their staff and Post Office employees employed 7 1 in such branches, played an integral part in the 2 delivery of the Post Office's social role? 3 A. An absolutely crucial part. It certainly couldn't have 4 been delivered without them. 5 Q. You deal with the distinction between operational or 6 contractual matters on the one hand and policy or 7 strategy matters on the other, at paragraphs 20 to 23 of 8 your statement. Could we go to paragraph 20, please, 9 it's page 6. By way of background, you say this: 10 "It was the intention of successive governments 11 that, although publicly owned, the Post Office should 12 have commercial freedom to raise funds, invest in new 13 technology, diversify its offering, and operate as 14 a retail company in a competitive market. It was 15 thought that these commercial freedoms were crucial to 16 the sustainability of the Post Office. The legislation 17 underpinning [Post Office Limited] (the Postal Services 18 Act 2000 and the Postal Services Act 2011) therefore 19 separated the functions of ownership and management. 20 The executives of [Post Office Limited] owed their 21 duties to the company, and were accountable to the [Post 22 Office Limited] Board, not directly to the Government of 23 the day." 24 You go on in paragraph 21 over the page to say: 25 "The Government's role is as sole shareholder. It 8 1 is responsible for setting the overall strategy, policy 2 or objectives for the Post Office, as well as ensuring 3 that [Post Office Limited] works to deliver on those 4 objectives, but not to have any involvement in the 5 day-to-day running of the operations of the business. 6 It was accepted that [Post Office Limited] would operate 7 at arm's length from Government, that such freedom was 8 crucial to its ability to grow and over time reduce its 9 dependence on the public finances. As shareholder the 10 Government would only get more involved (through UKGI, 11 who undertook the shareholder function on behalf of 12 Government ...) if the strategic aims or objectives 13 looked as if they might not be met, such as if a key 14 milestone had not been achieved." 15 Would you agree that there may be times when the way 16 in which an arm's-length body conducts itself at 17 an operational or contractual level can cause concern 18 for ministers at a policy or strategy level? 19 A. Yes, I can think of instances where that would be the 20 case. I've set out my answers, I hope with some 21 clarity, but there is a slightly theoretical nature to 22 those answers, I think. It is not always that -- the 23 line between strategy and execution and policy, it's 24 a grey area, and the lines sometimes can get rather 25 blurred. But, ideally, I think that the way that we've 9 1 set it out -- I've set it out -- probably works best, as 2 long as you have a board of directors that are acting in 3 good faith and owners that know enough about the 4 business to be able to make -- exercise their judgement 5 as to when they need to perhaps blur those lines 6 a little bit and get involved in something that might be 7 normally classified as operational, and when they can 8 draw back and act in the normal way that owners of 9 companies are supposed to act. 10 Q. Particularly where, as a matter of policy, there is 11 a social role performed by a government-owned asset, 12 would you agree that it is vital that there is effective 13 oversight of key operational and contractual matters 14 which might have a policy or strategy impact? 15 A. Yes, I think the social purpose heightens the need for 16 both the Board and the shareholders to ensure that the 17 highest standards of corporate governance and corporate 18 responsibility pertain, but I think, actually, those 19 standards should be respected, whether or not the 20 company has a specific social purpose, essentially 21 within its constitution. 22 Q. Would you agree that, in order for there to be such 23 effective oversight, the Government must have access to 24 adequate information about key operational and 25 contractual matters? 10 1 A. Yes, I think that the information about operational 2 matters should be at quite a high level. I don't think 3 it does the distinction between ownership and management 4 any favours if shareholders are getting a massive volume 5 of information about operational matters. That's not 6 appropriate but I think certainly the -- there's got to 7 be high-quality information at a high level about both 8 operational and strategic issues that are affecting the 9 company at any one time. 10 Q. Ministers need to be adequately briefed? 11 A. Yes, they do. They certainly do. 12 Q. And ministers must provide effective challenge to the 13 arm's-length body's approach to key -- 14 A. Yes. 15 Q. -- operational and contractual matters which have the 16 potential to impact upon policy and strategy? 17 A. Yes. I think that there's a role for both ministers 18 and, in a government-owned entity, the shareholder 19 representative function, which, when I was a minister, 20 was undertaken by UKGI. It's most important that they 21 are in a position to challenge on a day-to-day basis but 22 that doesn't remove the responsibility of ministers to 23 challenge maybe less frequently. But, you know, when -- 24 on the appropriate occasions when ministers meet 25 directors of the company for updates and things like 11 1 that, then ministers should also be challenging the 2 board. But on the day to day, that would be delegated 3 to UKGI in this instance. 4 Q. At paragraph 23 of your statement, further down the 5 page, please, you give your view on which side of the 6 albeit blurry line between contractual and operation and 7 policy and strategy Horizon IT issues fell. Starting 8 three lines down at paragraph 23 you say: 9 "The legislation assigned the management functions, 10 including the operations of the company, to [Post Office 11 Limited]. This meant that issues concerning [Post 12 Office Limited's] IT systems, aside from the issue of 13 further investment in it and budgeting for that 14 investment, were questions of day-to-day operation of 15 the company. Issues surrounding whether Horizon was 16 functioning as it should were matters for [Post Office 17 Limited] to resolve as part of its operations." 18 The complaints about the Horizon IT system, about 19 which you were briefed when you took up the role, were 20 that the way the system was functioning had led to 21 people who had run and staffed Post Office branches 22 being wrongfully prosecuted and/or their contracts being 23 wrongfully terminated. Were allegations like this not 24 relevant to the wider policy and strategy goals for the 25 Post Office? 12 1 A. Yes, I think that allegations like that were relevant to 2 the strategic -- the delivery of the strategic goals of 3 the Post Office. I don't feel, when I started in the 4 role, that that was the way in which I was briefed on 5 the Horizon issue. But, yes, in answer to your 6 question, had I been briefed in that way, yes. The 7 answer is yes, it should have been. 8 Q. Well, looking at it in a number of ways, first 9 considering the social role which the Government wished 10 to maintain as a matter of policy, which relied on the 11 people who had run and staffed Post Office branches, 12 there was a potential impact on that directly, wasn't 13 there? 14 A. Yes. Yes, there was. Based on what I now know, 15 certainly. 16 Q. We'll come on to that first briefing but, just taken at 17 the high level, whether the allegations were right or 18 wrong, the nature of those allegations were, on their 19 face, weren't they, relevant in that wider sense? 20 A. I think, when we come on to discuss the nature and scale 21 of the allegations which were briefed to me in the 22 early -- in my early days as minister with 23 responsibility, did not strike me immediately as 24 requiring in-depth oversight from myself as a minister 25 at that point in time. 13 1 Q. Looking at it in another way, wouldn't IT failings 2 resulting in wrongful prosecutions and terminations of 3 contract have been inconsistent with any valid policy or 4 strategy applying to the Post Office? 5 A. Yes, I believe so. I believe so. I wasn't aware -- 6 I don't think I was aware that there were wrongful 7 convictions. It may have been that I misunderstood my 8 early briefings but, in my early briefings, I was 9 advised that a number of people had gone to prison, but 10 that was as a result of being convicted of a criminal 11 offence in the courts. 12 Q. At this stage, I'm just talking about the allegations, 13 rather than whether those allegations were right or not, 14 and we'll come on to those prosecutions. But just in 15 terms of those allegations, you'd agree, wouldn't you, 16 that were those allegations correct, that would of 17 course be inconsistent? 18 A. Yes, it would. 19 Q. This is not to mention the impact on the future of the 20 Post Office of potentially expensive and reputationally 21 damaging litigation arising out of the allegations being 22 lost or the litigation being lost; would you agree that 23 that was a wider impact that needed to be considered? 24 A. Most definitely. 25 Q. Were those wider impact points considered at the time by 14 1 you as Parliamentary Under-Secretary? 2 A. No, not at the time. No. If you're -- yes, certainly 3 not in the first sort of half of my time as minister. 4 Q. Could we have on screen please paragraph 29 of Ms James' 5 statement, page 10. 6 You discuss here a potential distinction between the 7 role and responsibility of the Department and you as 8 responsible Minister when acting as a shareholder and 9 when acting as a Government Department. Can I ask, why 10 do you draw a distinction between the Government as 11 shareholder and the Government as a Department? 12 A. The shareholder role obviously is the ownership role, 13 and that is where I think we delegated the 14 responsibility for acting as an agent, if you like, on 15 behalf of the Department to UKGI and UKGI was there to 16 perform the normal responsibilities associated with the 17 shareholders. I did wonder -- when I wrote this, I did 18 consider that the Government Department, particularly as 19 it had, even in my own portfolio, you know, 20 responsibility for corporate responsibility and 21 corporate governance and the labour markets, that there 22 was a wider remit that my Department had, given its 23 responsibility for those areas of business policy that 24 were affecting all businesses, particularly publicly 25 quoted companies but also large private companies and, 15 1 by inference, large public bodies -- publicly-owned 2 bodies like the Post Office. 3 So I felt that my department and myself as 4 a minister should be more focused on those aspects than 5 perhaps the shareholder function, which was acting 6 purely as an agent of the owner. 7 That statement can come down now. Thank you. 8 I'd like to come, please, to the officials who 9 assisted you in the part of your role which related to 10 the Post Office and how, in general terms, they provided 11 information and advice. If I have understood your 12 written evidence correctly, there were, broadly 13 speaking, two pools of officials who provided you with 14 assistance on Post Office matters: first private 15 secretaries from the Department's private office, who 16 assisted in preparing paperwork for your ministerial box 17 and managed your diary; and second, officials who were 18 subject matter experts in particular policy areas who, 19 for the Post Office part of your role, worked for UKGI; 20 is that right? 21 A. Yes. That's right. 22 Q. Of these two groups, you say it was UKGI who prepared 23 advice to you on the Post Office? 24 A. Yes, they did. 25 Q. You describe UKGI officials as conduits of information 16 1 between the Post Office and BEIS and that, if you needed 2 a briefing on Post Office issues or wanted to raise 3 questions of the Post Office, this would be through UKGI 4 in the first instance? 5 A. Yes, that's right. 6 Q. You say at paragraph 25 of your statement that they also 7 look the lead in challenging the Post Office Executives, 8 and accounting for Post Office activities to BEIS. How 9 did you understand those officials to challenge the Post 10 Office Executives? 11 A. I saw most of the challenge during the time where we 12 were discussing budgetary matters, remuneration issues, 13 the level of subsidy and investment were two distinct 14 things that Government were providing. It was 15 a particularly busy time on that issue, because we were 16 approaching the negotiations around the next three years 17 of Government investment and subsidy. So I saw most of 18 the challenge in those terms because the early budgets 19 that we received from the Post Office Board were quite 20 considerably higher, or needing of more resource, than 21 once UKGI had finished its various levels of challenge. 22 So I took it to mean that UKGI had a representative 23 on the Board of POL and, in addition to that, a lot of 24 work goes on behind the scenes within UKGI to provide 25 good analysis, financial support, et cetera, and that 17 1 was the nature of challenge that was going on that 2 didn't need my day-to-day involvement. 3 I dare say, by the way, that challenge was going on 4 in other areas as well. I just answered the question by 5 means of an illustration of an area where I was 6 particularly aware. 7 Q. You deal with the standards you expected from your 8 officials at paragraph 26 of your statement. Could we 9 have that on screen, please. It's page 8. You see: 10 "As with the advice I received on all areas of my 11 policy portfolio, I relied on officials for objective 12 and honest advice. They were bound by the Civil Service 13 Code and so I expected the advice given to be of this 14 character. Given the breadth of all ministerial 15 portfolios, it is necessary that Ministers make 16 decisions on the basis of the advice given (except in 17 those cases where I had good reason to challenge that 18 advice) and we are reliant on its impartiality and 19 accuracy." 20 Why was impartiality in particular so important? 21 A. Well, I mean, the Civil Service Code requires advice to 22 be impartial and objective, and it's very important, the 23 impartiality aspect of it, for the advice to be given in 24 good faith, without whoever is giving it having 25 an agenda which may or may not be known to the intended 18 1 recipient of the advice. So I think that's what 2 I regard as important when it came to impartiality: 3 I required that the person providing the advice did not 4 have his or her own agenda that would potentially impact 5 the nature of that advice given. 6 And, throughout my ministerial career, I would say 7 that most of the advice, the vast majority of my advice, 8 met those criteria. On more than one occasion, though, 9 it didn't. 10 Q. The part in brackets, are you saying here that you would 11 follow advice given by officials in the absence of good 12 reason to challenge it? 13 A. Yes. I -- normally the advice -- if it's advising you 14 to take some action, the advice is usually provided in 15 a way that provides you with some options and very 16 cogent explanation of the implications of each option 17 and I would normally, especially when I was new in 18 post -- I think you have to have a very good reason to 19 challenge advice when you're learning your brief. 20 I mean, there are some exceptions to that but, in 21 general, I would follow the advice given, you know, 22 early on in any job I had in Government and, 23 occasionally, you do have good reason to challenge that 24 advice, yes. Generally not in the early days, I don't 25 think. 19 1 Q. What would constitute good reason to challenge advice? 2 A. When you feel that the -- when you feel there's some 3 partiality, for a start. If you don't trust the advice, 4 that is a very good reason to challenge it. And when 5 you think that it's contrary to the public interest is 6 usually the other reason. There can sometimes be -- you 7 have to have an eye on the Government and the impact 8 you're having on other Departments, Number 10, all these 9 other stakeholders within Government. That might be 10 a reason to challenge advice. You might feel that the 11 advice is all well and fine but you know that a key 12 player, whether that's the Chancellor or the Prime 13 Minister or your own Secretary of State, is going to 14 have an issue with it, then that might be a reason to 15 challenge it, against the public interest or you feel 16 that there's some partiality involved and you doubt its 17 integrity. Those are the reasons, really, that I would 18 have challenged advice. 19 Q. At the time did you ever feel there was partiality in 20 the advice being provided to you and the briefings being 21 provided to you about the Post Office? 22 A. No, I didn't. I didn't. 23 Q. You go on at paragraph 26 to say this: 24 "I would, for example, rely on the officials to 25 review and analyse the information provided to them and 20 1 provide me with sensible steers on action and draft 2 responses to correspondence or Parliamentary Questions 3 which advanced the Government's manifesto commitments 4 and policy more broadly." 5 You go on to deal with the process for dealing with 6 correspondence at paragraph 27, and you explain this: 7 "Correspondence would be received by my private 8 office and directed to me in a bundle a few times 9 a week. It would initially be triaged by my private 10 secretaries and I trusted them to deal with 11 correspondence on my behalf. Documents which they 12 referred to officials for analysis or advice would be 13 returned to me with a submission or note of advice and 14 often with a draft response for my consideration. 15 I would read the correspondence and documents returned 16 to me, but I relied on officials to direct me to the 17 paperwork that required my close attention." 18 How did you ensure that your private secretaries 19 knew how to respond to correspondence appropriately on 20 your behalf? 21 A. There would be a sort of Government position -- the 22 Department position, the policy position, would be 23 cleared and subject to review whenever circumstances 24 changed, so that the correspondence would be -- would 25 come in and people not in my private office would draft 21 1 responses using current Government approved lines in 2 order to respond to the key points raised by the letter 3 writer. 4 And they would then come into my private office, 5 they would be checked over by the private secretary in 6 my private office responsible for correspondence, and 7 then she would arrange the correspondence with the MP's 8 letter, and then the response, and then the 9 constituent's letter, if indeed there had been 10 a constituent's letter attached. Not all MPs sent them: 11 some did, some didn't. Occasionally you would get 12 letters from the public directly to the Department, to 13 the Minister for whatever you were, and that would be 14 dealt with in the same way, except there wouldn't be 15 an MP between you and the letter writer. 16 Q. So when you say you trusted your private secretaries to 17 deal with correspondence on your behalf, you're not 18 saying that they were replying on your behalf, you were 19 saying they were dealing with the correspondence before 20 it came to you? 21 A. Yes. I mean, I think that the private office would 22 reply to some forms of correspondence without checking 23 with the Minister. Usually things like meeting 24 requests, diary requests, lobbying campaigns, that sort 25 of thing. There was a vast volume of correspondence, 22 1 and some of it that would fall into that category would 2 not reach me. It would be replied to by a private 3 sector on behalf of the Minister -- sorry, a private 4 secretary on behalf of the Minister. But I think, for 5 the -- I think I'm understanding your questioning right: 6 you're talking about correspondence that did come 7 through me personally. 8 Q. I am talking about correspondence of substance, if I can 9 put it that way. 10 A. Yes. Correspondence of substance, it would be prepared 11 in the way I outlined and it would then reach me in 12 a big folder with the draft response for me to just 13 sign. 14 Q. Which officials did you rely upon to direct you to the 15 paperwork which required your close attention: was that 16 your private secretaries or the UKGI officials? 17 A. It might be both. It might be either or both, really. 18 It was exceptional. Normally it was just letters, they 19 spoke for themselves, they didn't need any particular 20 briefing but, occasionally, there might be a briefing or 21 an explanatory note and that would be provided to me 22 either by my private secretary with responsibility for 23 Postal Services or by an official from UKGI, depending 24 on the nature of it. 25 Q. You go on: 23 1 "There would be standard responses, based on agreed 2 policy lines, to a large proportion of correspondence on 3 any brief. Officials worked hard to draft those 4 responses in line with government policy and they were 5 updated over time and as circumstances changed." 6 Was it UKGI officials who provided the substance of 7 draft replies to correspondence in Post Office matters? 8 A. Yes, I'm pretty sure it would have been. I can't think 9 that -- they acted sort of in lieu of a normal BEIS team 10 of officials on the Post Office brief so, yes, it would 11 have been them. 12 Q. In relation to the standard responses based on agreed 13 policy lines, who proposed policy lines to take to you? 14 A. The policy lines were approved, I would imagine in the 15 early days, by the previous ministerial team and, 16 periodically, if they had to change, they would require 17 my approval. So you inherit, if you like, you 18 inherit -- because a minister comes in and it's very 19 automatic: the work continues and it's -- the identity 20 of the Minister is completely irrelevant for some of the 21 time, particularly in the early days, and the work just 22 churns through and, instead of your predecessor signing 23 it all, you're signing it all. 24 So you don't start afresh, looking at policies from 25 the moment you sit down in your new ministerial seat. 24 1 Not at all. You just carry on what's gone before. And 2 then, when circumstances change, of course, there may 3 well be a change and that would then be yours to 4 approve. 5 Q. In the absence of a change in circumstances, would you 6 routinely sit down and approve or consider whether you 7 wanted to approve standard lines on agreed policy lines 8 when you took up a role? 9 A. Not as a rule, no. The way I tended to work would be 10 to, if there was something I didn't like about a line or 11 the tone, sometimes -- regrettably not always -- 12 sometimes I made time to amend them myself and this 13 would either be, as I say a little bit later in the 14 evidence, I think, by adding a PS or by rewriting it and 15 sending it back, and, if I felt the change should be 16 made in perpetuity, I would ask officials to make sure 17 that the people responsible for the draft know that 18 there's a change here, and that they should make it -- 19 all future correspondence on that point. That's how 20 I tended to amend it. 21 Q. Looking a little further up the page, please, at 22 paragraph 26. Starting four lines from the top. You 23 say this: 24 "After I had been in office for six to nine months 25 it became clear to me that advice given by officials was 25 1 often constrained by expectations on the part of 2 officials of what might and might not be agreeable to 3 Number 10, Treasury, or to another department which 4 might be taking the lead on a particular issue. 5 Officials would require challenge from the Minister in 6 these circumstances if decisions were to be taken in 7 what the Minister determined to be the public interest." 8 Was this specific to the Post Office brief or the 9 entire portfolio while you were at BEIS? 10 A. It's actually not particular to the Post Office, it's 11 what I learnt interesting my time as a minister in both 12 departments. The only thing that jars with me there 13 really is the last sentence "officials would require 14 challenge", I mean "might require challenge". I think 15 that was a bit of an overstatement in those 16 circumstances. Yes, I did become aware of the great 17 frustration, actually, of advice being limited by what 18 the officials thought the Treasury would wear. It was 19 mostly the Treasury. 20 Q. What did you do to challenge this when you became aware 21 of it? 22 A. Well, I don't think it's -- I'm very happy to answer 23 that question. I don't think I can give you an example 24 from my postal affairs brief. Do you still want me to 25 give you an answer to -- an example of what could be the 26 1 case? 2 Q. That perhaps answers the question. In relation to the 3 postal affairs brief, did you ever challenge that or -- 4 forgive me, let me ask a different question: did you 5 ever observe that in your postal affairs brief? 6 A. Right. I understand your question. If I could just 7 give myself a minute to think. 8 Q. So a perception that officials were being constrained by 9 the expectations of what might and might not be 10 agreeable to Number 10 and the Treasury or another 11 department? 12 A. I think I -- I don't think so, no. I don't think there 13 is an example of the advice I received from the Post 14 Office team that was contingent on what might be 15 agreeable to another department, HMT or Number 10, no. 16 No. 17 Q. In the specific context of replies to subpostmasters in 18 correspondence, in the last two sentences of 19 paragraph 27, a little further down the page again, 20 please, you say this: 21 "I sometimes edited these responses myself [and 22 these are the draft responses to correspondence] or 23 added a postscript, when I had time and when the 24 response drafted for me struck, in my view, the wrong 25 tone. This began to happen with my replies to 27 1 [subpostmasters] as I became increasingly uncomfortable 2 with the line we were taking." 3 When did you start becoming increasingly 4 uncomfortable with the line which was being taken? 5 A. I think, after approximately six months in the role. 6 I couldn't give you a precise date. I can't -- it 7 wasn't sort of contingent on a particular event. It was 8 the letters I just occasionally received from 9 subpostmasters, who -- the ones who tended to write to 10 me directly as Minister for Postal Services at BEIS and, 11 after I had received a few of those letters, I started 12 to think that the advice I was getting did not reflect 13 what seemed to be happening to the people who were 14 writing to me. 15 Q. What aspect of the standard response or agreed policy 16 line were you increasingly uncomfortable with? 17 A. I was -- well, I was certainly uncomfortable with the 18 tone, and -- yes, it started out as I was uncomfortable 19 with the tone of the response that I was being asked to 20 send the letter writer, by way of a reply and it 21 gradually grew into a concern that the line that I was 22 being given on Horizon was -- I started to doubt it. 23 I mean, there's quite a bit in the line that I was being 24 given whenever I -- whenever the subject of Horizon came 25 up for discussion in meetings. The thing that I started 28 1 to doubt was the fact that all of the complainants were 2 guilty of some sort of incompetence or theft or false 3 accounting, or the things that I'd been told were 4 causing the criticism of the Post Office and its 5 computer system. 6 Q. Starting with the discomfort you felt about the line 7 that was being taken in response to subpostmasters, did 8 you raise that discomfort with anyone? 9 A. Initially, I rewrote -- to deal with the tonal aspect, 10 I did what I said I did up there: I either edited it or 11 added a PS. When I started to be concerned that there 12 were innocent people being caught up in something that 13 was presented to me at the time as being a blanket 14 problem with the complainant and not with the computer 15 system, I started to raise Horizon more actively in my 16 meetings with both UKGI and the Post Office, when I met 17 the Post Office Board representatives, which happened 18 sort of -- I think I say there quarterly: three or four 19 times a year, I suppose. 20 Q. What was the response when you raised things more 21 actively? 22 A. The response was essentially a repeat in a different way 23 of the lines that they always relied on and they -- 24 I mean, they conceded that there would be cases where 25 something might be wrong that was nothing to do with 29 1 dishonesty but, in general, they stuck to their line, 2 which was that, you know -- well, I don't know whether 3 you're coming on to talk about that. I can go through 4 it now if you wish me to. 5 Q. We will be coming on to that. Just sticking for the 6 moment with the question of draft replies to 7 subpostmasters, the Inquiry has not seen any draft 8 replies which show edits, as such, on them. What would 9 your process have been if you wanted to make those 10 changes? You've described a postscript, would that be 11 on a document? 12 A. It would be on the letter itself. I haven't seen any 13 either. It's frustrating that so few letters have been 14 retained. It's a curious situation because you would 15 think that the Department either retained all 16 correspondence or no correspondence but they seemed to 17 retain a few bits of correspondence. Who knows why. 18 But anyway, I don't know how many letters I sent out on 19 postal matters but certainly more than the three, four 20 or five that were included in the pack of information 21 that we received from the Department, for the purposes 22 of the Inquiry and I agree: none of them contain any 23 edits at all. 24 What I would do is I would either alter the copy and 25 then it would go back and be returned, you know, as 30 1 a new copy of correspondence with my changes 2 incorporated, and I would sign it and it would go, or, 3 if I felt the person had waited for long enough for 4 a response or I wanted to put it in my own words there 5 and then and get the thing off, I might literally write 6 in my own writing "PS" under my signature, and I might 7 write three lines, I might write sometimes seven or 8 eight lines, clarifying whatever was above and making 9 the point that I wanted to make to the recipient. 10 Q. Could we have on screen, please, UKGI00016320. This 11 appears to be a draft letter, given the "Dear xxx" to 12 the constituent of a fellow Member of Parliament. It is 13 dated 12 October 2016 and we can see that it's drafted 14 in your name, by the top right-hand corner and the 15 bottom of the second page. If we can just go to that 16 quickly, please. Going back to the first page, the 17 penultimate paragraph here says: 18 "[The individual] mentions the Post Office's IT 19 system. This system has over 50,000 users successfully 20 undertaking transactions every day and there is no 21 reason to consider that it is not fit for purpose. Your 22 constituent refers to current legal proceedings which 23 have been issued against the Post Office on the matter 24 of the Horizon IT system; this is a legal matter and 25 I am unable to comment further." 31 1 Then the last paragraph: 2 "Whilst the Post Office is publicly owned, it is 3 a commercial business operating in competitive markets, 4 and the Government allows it the freedom to operate 5 commercially on a day-to-day basis. Post Office places 6 great importance on the relationship it has with 7 postmasters, and I would encourage [the postmaster] to 8 discuss any concerns he has with his contacts at the 9 Post Office. [He] can also make use of the National 10 Federation of SubPostmasters, who remain the 11 representative body working for postmasters." 12 Does anything in those two paragraphs contain 13 anything which made you uncomfortable at the time? 14 A. I don't remember that particular letter and I think the 15 date was October 2016, so I don't think I would have 16 been uncomfortable about that response at that time. 17 But it would depend slightly on the nature of the letter 18 that the MP had received. Sometimes, MPs didn't attach 19 the letter that you were actually answering, which was 20 annoying but -- so I would caveat my response by saying, 21 if the letter had been a handwritten letter all about 22 the Horizon system and the problems the individual was 23 suffering, I think I would have found the tone of that 24 response a bit impersonal and abrupt. But if, however, 25 the letter had been of a more general nature as some 32 1 letters were, criticising, you know, some of the other 2 aspects of Post Office policy and throwing in the 3 dispute over Horizon as an additional item, ie not from 4 somebody who was actually personally affected by it, 5 then I would have found that line acceptable. 6 I hope that was a clear answer? As I gave it, 7 I started to feel it sounded a little bit convoluted. 8 Q. No, that's clear. In terms of the timings of this, 9 you've picked up already on the October 2016 date, so 10 you don't think you were editing draft replies by this 11 point in a substantial way? 12 A. No, not in a substantial way wouldn't have been, no. 13 Q. I'd like to come, please, to what you were told about 14 complaints and legal action relating to the Horizon IT 15 system, when you first took up the role of Parliamentary 16 Under-Secretary. You explain at paragraph 30 of your 17 statement that, upon your appointment to the role, you 18 were given a Day One briefing pack relating to the Post 19 Office. Could we have that on screen, please. It's 20 UKGI00020328. This has the date July 2016, so when you 21 took up the role. It is described as an overview and is 22 it right that you consider that this was the first time 23 that you became aware of the litigation? 24 A. Yes. 25 Q. Going over the first page, please, the first slide is 33 1 entitled "Summary and Key Issues", and this was 2 a document, wasn't it, that related to the whole Post 3 Office brief not specifically to Horizon issues or the 4 litigation? 5 A. Yes, that's correct. 6 Q. The third paragraph on the slide says this: 7 "This pack gives a high-level overview of how [Post 8 Office Limited] is set up, the areas in which it 9 operates, and its long-term strategy. There are also 10 some short-term matters (below) which you need to 11 understand and may require prompt action. We recommend 12 you receive more detailed advice on each." 13 Then the last paragraph is headed "Horizon" and 14 refers you to a later slide for more information but the 15 summary here says: 16 "A small number of mostly former subpostmasters have 17 raised concerns about [Post Office Limited's] Horizon IT 18 system, which they claim has caused their businesses 19 losses. Over two years' worth of independent 20 investigation has founding no systemic faults in 21 Horizon, but campaigning and media interest persists. 22 As well litigation has been commenced against [Post 23 Office Limited]." 24 Then going to page 14 of this document, which is 25 slide 13, the heading is "Horizon IT System: Complaints 34 1 and Legal Action", and this was the information which 2 was provided to you: 3 "Following complaints from a small number of (mostly 4 former) subpostmasters about the Horizon IT system, in 5 2012 [Post Office Limited] commissioned an independent 6 firm, Second Sight, to examine the system for systemic 7 flaws that could cause accounting discrepancies. 8 "Second Sight's Interim Report, published in July 9 2013, and Final Report, published in April 2015, both 10 make clear that there is no evidence of system-wide 11 problems with Horizon." 12 That's underlined: 13 "The Interim Report raised some questions about the 14 training and support offered to some subpostmasters, and 15 [Post Office Limited] implemented a series of measures 16 to improve its processes. It also created a mediation 17 to consider individual subpostmasters' cases." 18 The next paragraph addresses that Mediation Scheme 19 and it says: 20 "While some cases were resolved through mediation, 21 a number were not -- in particular, cases where 22 individuals had received criminal convictions (eg theft 23 or false accounting), since mediation cannot overturn 24 a court judgment. 25 "Earlier this year, group civil litigation on behalf 35 1 of 91 claimants was commenced at the High Court. This 2 is at an early stage and precise details of the claim 3 are unclear. As there are legal proceedings underway, 4 our advice is that this should remain independent of 5 Government. It is a matter of law. 6 "The Criminal Cases Review Commission is understood 7 to be considering [circa] 20 cases raised on this 8 subject. This review has been underway since early 9 2015; we have no indication of when the CCRC may reach 10 conclusions on any of the cases. [Post Office Limited] 11 are engaging fully with the CCRC's work." 12 Then in bold at the bottom: 13 "We recommend you receive further briefing on this 14 subject, and [Post Office Limited] would be happy to 15 meet with you and provide any further briefing or 16 information." 17 The second paragraph here flagged up that there were 18 two reports from an independent firm which had been 19 produced. Did you ask to see those reports when you 20 read this slide? 21 A. I doubt very much that I would have done that. I can 22 pretty much say no, I wouldn't have done. 23 Q. Why would you not have done? 24 A. Because I was being briefed at that point across many, 25 many different policy areas and I was just wanting to 36 1 take in sort of top-line advice and move on, absorb as 2 much as I could, and get to grips with my role. So 3 I wouldn't have requested any additional information, 4 I was going to say at this stage, and that's how it 5 should have been and I should definitely have asked for 6 it at a later date, and I don't think I did. And 7 I very, very much regret not asking for it. 8 Q. Did you understand from the information here that there 9 were people challenging the safety of their convictions 10 on the basis of discrepancies they said had been caused 11 by the computer system? 12 A. I thought that the 20 cases being reviewed by the 13 Criminal Cases Review Commission must have been a group 14 of people in that category, yes. 15 Q. Did you ask for any further information about how these 16 individuals had come to be prosecuted at this time? 17 A. I'm afraid I didn't. I think I thought that -- I would 18 have thought that the CCRC would investigate and justice 19 would be delivered via that route. I didn't see it as 20 a minister's role to get involved in that. 21 Q. In relation to the advice that this should remain 22 independent of Government, on 29 July 2016, Laura 23 Thompson from UKGI sent an email to your private office 24 about the litigation. Could we have that on screen, 25 please, the reference is UKGI00006961. 37 1 We can see here the email was copied to Richard 2 Callard and Gareth Evans, that was Richard Callard who 3 went on to give you a verbal briefing on 4 August; is 4 that right? 5 A. Yes. 6 Q. Ms Thompson says this: 7 "There is currently civil litigation underway in the 8 High Court against the Post Office by a group of [circa] 9 200 individuals, mostly former postmasters (postmasters 10 are essentially 'franchisees' ...). The claims relate 11 to the Post Office's 'Horizon' IT system, and 12 accusations that Post Office has treated its agents 13 unfairly. There is a chance that there could be some 14 media interest in this issue over the weekend, because 15 Post Office have today sent a letter to the claimants' 16 solicitor, which will be shared with the claimants and 17 could therefore be made public. 18 "This is a legal matter and the operational 19 responsibility of Post Office Limited, the company which 20 manages the Post Office Network. As such our advice 21 would be not to comment, and for Press Office to pass 22 any media enquiries to Post Office directly. This is 23 the approach we have taken previously on this issue -- 24 please let me know if you think SpAds or ministers would 25 disagree. 38 1 "We will provide full briefing on this issue to 2 ministers -- this is flagged in the Day One briefing 3 pack, and we have also included in our briefing to 4 Margot James." 5 Picking up in the middle paragraph here 6 specifically, were you told at the time that your 7 private office had been asked if they considered you 8 would disagree with the proposed approach that this was 9 a legal matter and the operational responsibility of the 10 Post Office? 11 A. I wouldn't have disagreed with that, so whether I was 12 told or whether I wasn't, because I can see that is 13 an email that I wouldn't have seen, I would have been 14 content with the advice. But I wouldn't have seen that 15 but I think it would have come to me in a different 16 form, potentially you have it in another form shortly, 17 but it would have come to me. But I didn't see that 18 particular email. 19 Q. But in any event, your response would have been that you 20 were content with that device, would it? 21 A. Yes. It would have been. 22 Q. Could we have -- 23 SIR WYN WILLIAMS: At that point in time, did you have 24 a Special Adviser who had any -- well, did you have 25 a Special Adviser, first of all? 39 1 A. No, I didn't but I did have access to Special Advisers 2 to the Department who advised the Secretary of State and 3 there were three of them and, with the benefit of 4 hindsight, actually, I think one was a lawyer and 5 I could have -- I should have asked him. But we didn't 6 have Special Advisers at my level in the ministerial 7 sort of hierarchy. 8 SIR WYN WILLIAMS: That's fine. Thank you. 9 Yes, Ms Price? 10 MS PRICE: Thank you, sir. 11 Could we have on screen please paragraph 35 of 12 Ms James' statement. It's page 11. Starting four lines 13 down, you note the advice provided by UKGI that the 14 proceedings "should remain independent of Government: it 15 is a matter of law", and you're referring here, aren't 16 you, to the Day One briefing that we've just looked at? 17 A. Yes. 18 Q. You provide this comment: 19 "I took this to mean, as I would do in any 20 litigation relating to the Government, that BEIS should 21 not look to interfere with it or comment on the process 22 until it was concluded." 23 What do you mean here by "interfere"? 24 A. That's a poor choice of word because it's obvious that 25 Government shouldn't be interfering in legal process. 40 1 I think I took it to mean that we have to be careful, as 2 ministers, not to say anything that might prejudice 3 legal outcomes of cases that are live within our court 4 system, and that's a general principle that most 5 Parliamentarians are aware of, whether you're a minister 6 or not. Of course, it doesn't preclude you from taking 7 a view but you have to be alive to the consequences, 8 which can interfere with the outcome of the trial. 9 I think also, an appreciation that once matters have 10 reached the courts, the courts are in the best position 11 to -- well, it's their job to adjudicate the outcome, 12 and they get to see all the evidence and all the 13 witnesses and, as a minister, you don't, so it's unwise 14 to opine, I think, on cases that are going through the 15 courts. As a general principle. 16 Q. By "comment", do you mean internal comment or public 17 comment? 18 A. Public comment. And, of course, that doesn't -- I might 19 go on to say this -- sorry, I'm not good at reading 20 while I'm talking but, yes, it's that constraint, if you 21 like does not preclude you, of course, from discussing 22 litigation in private, particularly with one of the 23 parties. 24 Q. Exploring a little what you say here, because you make 25 wider reference to "any litigation relating to the 41 1 Government", where a Government department is the 2 defendant in civil litigation, it's right, isn't it, 3 that instructions need to be provided by the Department 4 to lawyers acting for the Government, both as to the 5 substance of the claim and litigation strategy? 6 A. In general, yes, that's true but I don't think that 7 happened in this case. 8 Q. We'll come on to why this case might be different but 9 I'd just like to ask you some general questions about 10 that because it seems to influence your approach in this 11 particular instance. 12 So if litigation against Government is high-profile 13 enough, it's right, isn't it, that both the substance of 14 the defence and the litigation strategy may need to be 15 signed off by senior civil servants and potentially 16 ministers, would you agree? 17 A. Yes, I would agree. 18 Q. So, as a matter of principle, whilst a Government 19 Department which is a party to litigation may choose not 20 to comment publicly on the litigation, as you've just 21 referred to, it's not right to say that the relevant 22 Department will not be involved in the legal process 23 until it's concluded, is it? 24 A. No, I agree with what you've said, yes. 25 Q. Of course the position is one step removed where the 42 1 defendant is a government-owned asset but would you 2 agree that the fact that an issue is the subject of 3 litigation against a government-owned asset should not 4 prevent a minister holding the brief for that asset from 5 being fully briefed on the underlying issues in the 6 claim? 7 A. Yeah, you're right. I mean, it shouldn't just preclude, 8 it should happen as a matter of course, really. 9 Q. So that that minister can fully understand the case -- 10 A. Yes. 11 Q. -- or, whether or not comes to it, the proposed defence 12 and the proposed litigation strategy? 13 A. Yes. You are right. And we didn't, in this case. 14 Q. Looking again at paragraph 35 of your statement, six 15 lines up from the bottom, you say: 16 "Perhaps due to this position being taken [and that 17 is the position that it was a matter for the courts, 18 a matter of law] not many details were provided [and 19 this is in the Day One briefing pack]. Whilst the Day 20 One briefing pack did mention the litigation, it did 21 not, for example, contain any details about there being 22 concerns around remote access to Horizon or the deletion 23 and replacement of files. Whilst it referred to the 24 Second Sight Interim Report and Final Report, it did not 25 refer to any of the subsequent reports, reviews or 43 1 actions taken by [Post Office Limited]. It did not 2 contain any information on the Simon Clarke Advice, any 3 of the Deloitte reports or the Swift Review. With the 4 benefit of hindsight this briefing, even making 5 allowance for the fact it was a high-level summary, was 6 very selective and omitted several important 7 developments." 8 So to your mind, even taking the approach that this 9 was an operational matter for the Post Office and with 10 the courts, is it your view that this briefing did not 11 provide you with adequate information about the issues 12 underlying the litigation? 13 A. 100 per cent. I mean it certainly -- I think they 14 included reference to the Second Sight Reports, because 15 the Second Sight Reports, I presume, had been in the 16 public domain for so long that they had to include them. 17 But there'd been other reports -- and you just 18 summarised by name which reports are relevant -- that 19 were not mentioned at all, ever. 20 Q. We saw, on the "Summary and Key Issues" slide of the Day 21 One briefing on page 2, that there was a recommendation 22 that you receive more detailed advice on Horizon. There 23 was then a recommendation in bold, at the bottom of the 24 "Horizon IT System Complaints and Legal Actions" slide, 25 which recommended you receive further briefing on the 44 1 subject, noting that the Post Office was happy to meet 2 with you to provide any further information or briefing. 3 You deal with this at paragraph 38 of your 4 statement. Could we go to that, please. It is page 12, 5 please, towards the bottom of the page on page 12. 6 You refer to a promise that UKGI would provide 7 a full briefing on the issue to ministers. Is that the 8 promise in the email we looked at dated 29 July from 9 Laura Thompson? 10 A. Yes, I think so. 11 Q. Then you say this: 12 "It is correct that the Horizon IT system issues 13 were flagged in the Day One briefing pack as explained 14 above. But to the best of my recollection I never did 15 receive what might be termed a 'full briefing'. 16 I regret not asking for one and that my private office 17 did not follow up on this promise." 18 A. Well, that's true, I do very much regret not asking for 19 one. I had a briefing when I met with the Board, when 20 I asked questions, but it didn't build very much on what 21 I'd already been told, if at all. 22 Q. Well, we'll come on to what came next but, just for now, 23 thinking about those recommendations, which had been 24 made twice in the briefing pack, once in bold -- 25 A. Yes, I know. 45 1 Q. -- why didn't you ask for the briefing when you read 2 those recommendations? 3 A. I might have said, "Well, we must get that", but I might 4 not have specifically asked for it. I think I'm saying 5 that because I don't recall ever getting one and 6 I think, to be fair to UKGI, that they would have given 7 me one, had I pressed for it, but whether -- how full it 8 would have been, no one would know, but fuller than 9 perhaps had been included to date. 10 MS PRICE: Sir, I wonder if that might be a convenient 11 moment for the first morning break. 12 SIR WYN WILLIAMS: Yes. 13 MS PRICE: I think it is 11.25 now, so if we were to come 14 back at 11.35, please. 15 SIR WYN WILLIAMS: All right. 16 MS PRICE: Thank you, sir. 17 (11.24 am) 18 (A short break) 19 (11.36 am) 20 MS PRICE: Hello, sir. Can you still see and hear us 21 clearly? 22 SIR WYN WILLIAMS: Yes, I can. 23 MS PRICE: Is the link still working to the witness as well, 24 sir? 25 SIR WYN WILLIAMS: As far as I'm concerned, it is. 46 1 MS PRICE: Thank you, sir. 2 Ms James, you received a verbal briefing from UKGI 3 on 4 August 2016 -- is that right -- 4 A. Yes. 5 Q. -- from Mr Callard and Ms Thompson from UKGI? 6 A. Yes. 7 Q. This was another briefing spanning the whole of the Post 8 Office brief, rather than being specific to the 9 litigation and the issues underlying it; is that right? 10 A. Yes, that's right. 11 Q. Could we have on screen, please, UKGI00000015. This is 12 the note which you say in your statement you were 13 provided with ahead of this meeting. It is a three-page 14 document and Horizon IT issues are addressed on the 15 second page. Could we go to that second page, please, 16 and it is listed first under "Things you need to know". 17 The notes say this: 18 "'Project Sparrow' 19 "Alleged problems with IT system seeing postmasters 20 suffer losses and in some cases imprisonment. 21 "No evidence of bugs in the system despite three 22 years of investigation. 23 "High Court proceedings have begun. 24 "Suggest we give you a fuller briefing on this as it 25 regularly flares up." 47 1 Can you recall now what you were told about Project 2 Sparrow at the meeting? 3 A. I can't recall what I was told at the meeting -- at that 4 particular meeting, no. I would think that I was not 5 told very much. It was, as you say, an introductory 6 meeting for the whole of the Postal Services brief, 7 probably excluding the Royal -- oh, actually, Royal Mail 8 is down there. So I doubt I was told much more than 9 what appears there. 10 Q. There is here a further suggestion that you have 11 a fuller briefing. On this occasion, did you ask for 12 a fuller briefing specific to the Horizon IT issues? 13 A. Not on that occasion, no. 14 Q. Can you recall why not? 15 A. Because I was content with the briefings I was getting 16 on the issues which were, I suppose I thought at the 17 time, were the highest priority issues for the 18 responsibility I had for the Post Office and I wouldn't 19 have pursued a fuller briefing on something that fell 20 into the category of things I need to know. I would 21 hope for a fuller briefing on something I needed to know 22 when it became more of a priority matter for my 23 consideration, if you follow the distinction. 24 Q. Yes, could we have on screen, please, paragraph 40 of 25 Ms James' statement. It's page 13. Here you say this: 48 1 "I do not remember the detail of that verbal 2 briefing on 4 August. I believe it covered the topics 3 outlined in the July2016 Day One briefing pack. My 4 understanding was that there may be occasional faults in 5 the IT system, but nothing that was a structural flaw 6 across the system." 7 Did you understand at the time the occasional faults 8 in the system to be capable of causing accounting 9 discrepancies? 10 A. No, I wouldn't have understood that at the time. No. 11 Q. Did you ask for any further information about what those 12 occasional faults were? 13 A. Not at the introductory meetings, no. I asked for more 14 information about what the occasional faults might be 15 later on in my time as Minister but I wouldn't have done 16 during the meetings that you're talking about, the 17 introductory meetings. 18 Q. When later on in the time you held the role did you ask 19 about the nature of the faults? 20 A. I would have asked after a few months, after six months 21 or so, once I started getting concerned that there was 22 more to the Horizon issue than I had been briefed about. 23 Q. Who did you ask? 24 A. I asked at one of my meetings with Board 25 representatives. That would probably have been the CEO 49 1 and the CFO and, although I referred to meeting the Post 2 Office Board three or four times a year, I don't think 3 I ever met the whole Board, that wouldn't have been 4 a good use of their time. What I meant was I would meet 5 the key people from the Board: the CFO, the CEO, 6 possibly they might have with them the Government 7 Affairs Director. 8 Q. When you asked for more information about these 9 occasional faults, what were you told? 10 A. I was told that this had been the longstanding problem, 11 that there'd been independent investigations into 12 Horizon over two, if not three, years, that some faults 13 might be found but nothing systemic, nothing 14 system-wide, capable of causing a significant problem 15 for a large number of postmasters. I was told that 16 a number of postmasters had been convicted and there 17 were very few of them affected. Given the fact that 18 65,000 people used the Horizon system, the numbers 19 involved were very small indeed. 20 And I would say that the demeanour of the Post 21 Office was they were very good at presenting themselves 22 as the victim in all this. They came across as 23 beleaguered; what more could they have done; they'd set 24 up this Mediation Scheme; they'd improved their training 25 processes; they did acknowledge that there were 50 1 occasional faults, as with any computer system and 2 nothing capable of causing the amount of harm alleged. 3 So I wasn't wholly satisfied with this but that was 4 the sort of tenor of the conversation I got when 5 I probed more. And I said before, I should have asked 6 for the Second Sight documents and that was possibly my 7 biggest mistake, especially the second one, if I'd ever 8 been able to get the second one out of them. 9 Q. Could we go, please, to paragraph 49 of Ms James' 10 statement, that's page 15. Here you deal with a meeting 11 you had with Paula Vennells on 1 September 2016, and you 12 say this: 13 "I was briefed in advance of that meeting by Michael 14 Dollin of UKGI ... This was a routine introductory 15 meeting to help me understand the current issues facing 16 [Post Office Limited]. I do not recall the Horizon IT 17 system issues, the SPM complaints or the Group 18 Litigation being discussed in that matter. I was 19 certainly not briefed specifically on those issues and 20 matters relating to Horizon were not included in the 21 meeting agenda." 22 There is a document which may assist on why Horizon 23 issues were not addressed at that meeting. Could we 24 have on screen, please, POL00244227. This is an email 25 from Tom Wechsler to Paula Vennells, copied to others. 51 1 It is dated 30 August 2016. It appears to be Paula 2 Vennells' briefing, or referring to her briefing, ahead 3 of the meeting with you on 1 September. Underneath 4 points 1 to 4, there is this: 5 "Since the base material was pulled together we have 6 had some additional feedback from UKGI, including this 7 evening. 8 "Their advice was ..." 9 Then at the fourth bullet point: 10 "The Minister has been briefed on Sparrow but is 11 content that this is best left to the Courts -- no need 12 to cover the issue in the meeting." 13 Had you agreed by this point that this was a matter 14 best left to the courts which should be dealt with 15 independently of Government; that was the advice we saw 16 in the Day One briefing? 17 A. I don't think that would be an unfair summary of -- 18 a view I might have expressed at a meeting if, given the 19 advice that, "Now the litigation is underway, it would 20 be best to wait for the outcome of that litigation 21 before taking any further steps with relation to the 22 Horizon issue". I don't think that would be 23 an unfair -- I don't recall actually saying that, 24 proactively, at that time. I might have agreed the 25 advice. It's a moot point. 52 1 Q. Why do you say it's a moot point? 2 A. Because I think, at best, it's an overstatement of 3 a view that I had. I might have agreed advice, yes, it 4 is indeed best left to the courts, but that does not 5 need -- that does not mean, ergo, that the issue 6 shouldn't be covered. 7 Q. Of course, if I can just stop you there, my question at 8 the moment is limited to whether, regardless of the 9 consequences, you had agreed at that point that it was 10 a matter best left to the courts, independent of the 11 Government, which was the advice set out in the Day One 12 briefing pack? 13 A. All I can say was that I didn't disagree with it. 14 I wouldn't have disagreed with it. I doubt my agreement 15 was sought. Introductory meetings are not places -- 16 they're not times where ministers give guidance and 17 advice. They are -- the Minister is in reactive mode, 18 it's he or she is absorbing information. If something 19 strikes you, I think, as extraordinary or something you 20 wouldn't agree with, you would say that, but you 21 wouldn't be actively giving a view on an area of policy 22 in an introductory meeting. 23 Q. Were you aware at the time that this was the reason that 24 the issue was not covered in the meeting with Paula 25 Vennells? 53 1 A. No. 2 Q. What would your reaction have been, at the time, if you 3 had learned that you agreeing this was a matter best 4 resolved by the courts meant you were not going to be 5 given any information on the issues underlying the 6 litigation by the CEO of the Post Office? 7 A. I think that would have been wrong. I think it would 8 have been wrong for them to assume that, because 9 I seemed content with that advice, that that meant that 10 no further information was required. I mean, it should 11 really have been covered in the meeting. But it also 12 should have -- I should have been given a proper 13 briefing. If I can remind you of our discussion earlier 14 about the Civil Service Code and the importance of 15 impartial and objective advice, to have information 16 as -- well, as the Post Office did, well beyond the 17 Second Sight Reports that they disclosed they had, and 18 not provide ministers with the same level, if you like, 19 of information at the very least as they were providing 20 about Second Sight, was very wrong. 21 So I wouldn't think that bullet 4 is a free pass for 22 the Post Office never to mention Horizon or anything 23 about it to that minister ever again, no, definitely 24 not. 25 Q. We will come on to the press lines which were agreed 54 1 about the litigation but, just looking at this document 2 alone, do you think that your early agreement, or at 3 least lack of objection, to the approach that this was 4 an operational matter for Post Office best resolved by 5 the courts may have led to you receiving less 6 information from UKGI and the Post Office about 7 complaints and legal action relating to the Horizon 8 system? 9 A. Well, I think that -- yes, I think there is a partial 10 explanation for -- it gives -- I think it possibly gives 11 them an excuse to feel, "Well, she's happy for this to 12 be decided by the courts, so we're not going to provide 13 any further information". I think it gives them cover 14 for that, unfortunately. So ... 15 Q. Would you agree, though, that this should not have been 16 the case because a decision not to comment publicly on 17 an ongoing legal case should not prevent effective 18 oversight by the Government of such important matters, 19 which were the subject of those legal proceedings? 20 A. Yeah, I agree strongly with that. I agree strongly with 21 that and, indeed, had the initial briefing pack, which 22 you had on the screen an hour or so ago, had that 23 contained a comprehensive -- brief but comprehensive 24 briefing on the Horizon issue, then I would definitely 25 have expected to have covered it in my first meeting 55 1 with the CEO. 2 It was a selective briefing, as I think I have 3 already communicated and, therefore, the slant was -- 4 lulled me into a false state of security, I think, on 5 the issue. 6 Q. That document can come down now. Thank you. 7 You were given some information on Horizon IT issues 8 ahead of Parliamentary debates on the future of the Post 9 Office in November 2016 and March 2017; is that right? 10 These are covered in your paragraphs in your statement. 11 A. Yes. 12 Q. The information that you were provided with was part of 13 a wider briefing pack covering a range of issues; is 14 that right? 15 A. Huge range of issues, yes. 16 Q. You deal with this at paragraphs 51, 52 and 61 of your 17 statement, if you need to refer to them. 18 A. Thank you. 19 Q. You say that the briefing pack repeated the information 20 and advice you had previously received; is that right? 21 A. Yes. 22 Q. You describe at paragraph 22 of your statement 23 Parliamentary debates being of particular value to you 24 in keeping yourself informed independently. 25 A. (The witness nodded) 56 1 Q. Whilst neither of these debates focused specifically on 2 Horizon issues, would it have been helpful for you to 3 have had more fulsome information about Horizon issues 4 for those debates? 5 A. Well, no. Unfortunately, it wouldn't have helped me 6 because Horizon didn't come up in either of the debates. 7 If it had done, if one of the MPs who was very 8 knowledgeable about the matter had decided to attend the 9 debate and hold forth, then a briefing would have been 10 useful. But, in the absence of such a member, it 11 wouldn't have been useful because no one raised it. 12 Q. You were provided, ahead of such Parliamentary debates, 13 with these written briefings. Did they themselves not 14 serve a purpose in terms of you becoming more 15 independently informed, or more informed, about the -- 16 A. Um -- sorry, I shouldn't have interrupted you. 17 I apologise, what was your last sentence? 18 Q. My question is whether, regardless of what questions you 19 were asked in the debate, the briefings themselves 20 served a purpose for making sure you were informed in 21 relation to briefs you held? 22 A. Yes. Well, they did, although that wasn't the prime 23 purpose. One would hope that the Minister was informed 24 enough, certainly by the time of these debates, but you 25 still need a comprehensive briefing, you know, to remind 57 1 you so that you can refer to stuff during the debate. 2 If the debate had been about the Horizon issue or the 3 Mediation Scheme, about something relevant to the 4 Horizon issue, then I think that would have put UKGI 5 a real bothersome position because they would have had 6 to have briefed me more. I couldn't have gone into the 7 a Parliamentary debate with the usual ten lines or five 8 lines -- ten, if you were lucky. 9 They'd have had to have briefed a whole briefing 10 pack on the matter. But, alas, while I was Minister, 11 the only issue that really generated noise in Parliament 12 was potential Post Office closures. That was the thing 13 that was alive in Parliament during my 18 months in the 14 role. 15 Q. Turning, then, to the press lines which were agreed 16 about litigation, could we have on screen, please, 17 page 18 of Ms James' statement. At paragraph 56, you 18 deal with an update on the litigation, which you 19 received on 20 January 2017. This discussed an upcoming 20 hearing at the High Court on 26 January 2017. 21 Towards the end of the paragraph that you quote here 22 from that document, is a section on media interest. It 23 says this: 24 "If there is any media interest, I would suggest our 25 usual approach of referring any enquiries to Post 58 1 Office. I would not suggest we comment on legal 2 action -- but welcome thoughts from Press Office." 3 You then say at paragraph 57 that you decided to 4 accept this advice, the advice about media lines; is 5 that what you're referring to? 6 A. Yes, I think that's the only thing they're asking my 7 agreement to. 8 Q. Yes, after consultation with the BEIS Press Office. 9 Then you deal at paragraph 58 with an email dated 10 31 January 2017, in which Laura Thompson confirmed 11 UKGI's advice that: 12 "... 'we're content with the suggested lines -- pass 13 to Post Office in the first instance, 'operational 14 matter/legal proceedings', if needed ..." 15 Was this the established line by this point: that 16 this matter was an operational matter for Post Office 17 and being resolved in court? 18 A. Yes, that was the position, and I noticed the email came 19 from Claire French. I think she was the lead person 20 from the Press Office of what was BEIS at the time, and 21 that was the established position, yes. 22 Q. At the time, were you satisfied with that line? 23 A. Yes, I would have been, I would have been satisfied with 24 that line. I didn't suspect the Post Office of acting 25 in bad faith and they were best equipped to comment on 59 1 issues pertaining to their own operations. Far better 2 that they comment than the Government comments on 3 something which, yes, we did regard at the time as 4 an operational matter for the Post Office. 5 Q. Was this also the line which was being given to 6 subpostmasters in correspondence at this stage, so early 7 2017? 8 A. Yes, it would have been. It would have been. 9 Q. Did you think that that was a satisfactory response to 10 be given to subpostmasters in correspondence at that 11 time? 12 A. Early in January, yes, I probably would have done. 13 I would say that my feelings altered during Quarter 1 of 14 2017, I think. 15 Q. Do you accept now that the litigation and the underlying 16 Horizon allegations were not simply operational matters 17 for the Post Office? 18 A. I do. I do accept that, yes. They should have been. 19 If they'd been handled appropriately, they should have 20 been an operational matter for the Post Office but, 21 because of the way the Post Office was behaving, they 22 most certainly should have been a matter for the 23 Government, for the owner. 24 Q. Would you agree that the effect of this line, passed to 25 Post Office in the first instance, was to defer to the 60 1 Post Office on issues concerning the integrity of 2 Horizon? 3 A. Yes. I think that's a fair assessment. 4 Q. Is it right that the Post Office's interests were not 5 one and the same as the Government's? 6 A. That's quite a broad question. 7 Q. In the specific context of these issues? 8 A. Yes, I see. Well, given the regrettable lack of 9 suspicion on the part of myself -- I can only speak for 10 myself -- at the time, there was nothing wrong in my 11 view with that position. But anybody -- anybody who 12 knew what was going on at that point within the Post 13 Office on this issue, to anyone who was in possession of 14 that knowledge, it would not have been an appropriate or 15 adequate response because what was going on was 16 potentially so damaging, obviously, to the victims of 17 the behaviour but also to the Post Office itself, and to 18 its owner, that you wouldn't allow -- you wouldn't 19 delegate everything about the matter to the organisation 20 that was behaving in all the wrong ways in its 21 management of the matter. 22 Q. Had you seen the reports which you say you should have 23 been provided with -- and we went to that list earlier, 24 including the Deloitte reports, the Swift Report and the 25 Clarke Advice -- would you have agreed to defer to the 61 1 Post Office in this way? 2 A. No. No, definitely not. I think that we would have 3 had -- we wouldn't be at this position at that point in 4 time, had we had all that information that you've just 5 mentioned by virtue of those reports. I suspect the 6 Government's -- the BEIS Legal Department, myself, as 7 Minister, and the Secretary of State, would have been 8 all over it, demanding change -- I mean -- well, I mean 9 you can start by demanding the implementation of 10 Jonathan Swift's recommendations. That would have been 11 a good place to have started. 12 Q. Do you think that this line, "operational matter, legal 13 proceedings", may have had the continued effect of you 14 being provided with limited information about the 15 allegations which underpinned the litigation? 16 A. Sorry, I don't quite -- I don't really -- 17 Q. Well, going back to the discussion we had earlier about 18 the early lack of disagreement to this being 19 an operational matter and a matter for the courts, and 20 what the consequences of that might be, and we looked in 21 particular at the email to Paula Vennells, which appears 22 to have led to that issue not being discussed at that 23 meeting -- 24 A. Yeah, I see what you mean. 25 Q. -- we talked at that stage in the context of your early 62 1 briefings. My question is: looking at this line which 2 continues to be used throughout 2017, I'm asking whether 3 you think that continued potentially to have the effect 4 that less information was coming to you than should have 5 done? 6 A. Well, I mean, possibly they would use that as an excuse 7 to not provide the information but, of course, as we 8 just discussed and I think you just mentioned briefly 9 then, it all goes back to the partial briefing that was 10 included in my Day One pack and the first meeting I had 11 with UKGI. 12 Q. Does this serve to underline the fact that the 13 distinction between operational and contractual matters 14 and policy and strategy matters is necessarily blurred 15 and should have been blurred, and there is a danger in 16 putting things in a sealed box marked "Operational, 17 contractual, legal"? 18 A. Yes, I think so. I think you have to accept that you 19 use your best endeavours as a shareholder to hold the 20 Executive to account and, in general, that means leaving 21 the Executive with responsibility for execution and 22 operations because, obviously, if you interfere too 23 much, then the Executive can rightly challenge you back 24 when objectives aren't met. And too much blurring 25 compromises accountability. But having said that, there 63 1 is a blurred line between strategy and execution and 2 operations, and to deny any overlap can have the reverse 3 effect, whereby shareholders are completely blindsided, 4 on the basis that "This is an operational matter, 5 therefore you don't need to know anything about it 6 whatsoever". 7 I should add, though, that when you're in 8 Government -- and indeed in the private sector, it's no 9 different, really -- you do expect the people you're 10 dealing with to be complying with the law at the very 11 least and certainly to be acting in good faith and, of 12 course, that was not the case. 13 Q. The standard line to this effect was provided in further 14 briefings for you for an MP drop-in session, and you 15 deal with that at paragraph 65; a cribsheet on the Post 16 Office, which you deal with at paragraph 66; and a Hot 17 Topics pack, which you deal with at paragraph 67; all of 18 those being in 2017; is that right? 19 A. Yes, I think so. 20 Q. Did that standard line continue to be used in 21 correspondence to subpostmasters throughout 2017, as far 22 as you can recall? 23 A. As far as I can recall, it would have done, yes. 24 SIR WYN WILLIAMS: Can I just ask you, I'm not sure -- and 25 this is my ignorance, all right -- if Ms Price is going 64 1 to show you particular letters from subpostmasters 2 during this period but I'm slightly querying the extent 3 to which you would have received letters from 4 subpostmasters when there is active litigation ongoing, 5 all right? On the one hand, you've got the Group 6 Litigation -- I think it was made Group Litigation in 7 March 2017. So there's a legal process going on and, on 8 the face of it, I'm a little surprised if individual 9 postmasters were writing either to you or to ShEx or 10 whoever -- UKGI, I'm sorry -- while that litigation is 11 going on. 12 I mean, what is your memory of actual letters either 13 from subpostmasters or MPs on their behalf? 14 A. Don't recall receiving a letter from a subpostmaster who 15 was among the Group Litigation Order, one of the 16 complainants in that case. I don't recall anybody 17 writing to me who was themselves going through that 18 litigation. 19 SIR WYN WILLIAMS: Yes. 20 A. I do recall postmasters writing to me about the Horizon 21 issue in more detail and describing the experiences that 22 they were having with Horizon. 23 SIR WYN WILLIAMS: All right. 24 A. And that -- that would have been, I think, whilst this 25 litigation was going on but coincident to it. 65 1 SIR WYN WILLIAMS: All right. Well, if there are particular 2 letters that Ms Price wishes to refer to, no doubt she 3 will. But can you just give me an approximation of 4 a number of such letters you received, say in the last 5 12 months that you were relevant minister? 6 A. I would probably have received maybe ten-ish, I would 7 say. 8 SIR WYN WILLIAMS: All right, thank you. 9 A. Almost one a month. But not quite. 10 SIR WYN WILLIAMS: Fine. Thank you. 11 Sorry, Ms Price. 12 MS PRICE: Not at all, sir. If it assists, the letters that 13 I have for the purposes of this witness, the latest one 14 is in October 2016, so it was very much a question 15 without the documents providing a clear answer. 16 SIR WYN WILLIAMS: Without wishing to have a chat to you, 17 Ms Price, I rather suspected that, if there were 18 specific letters, you would have put them by now. Hence 19 my questions to try to clear my mind. 20 MS PRICE: Yes, sir. Thank you. 21 Sir, would that be a convenient moment for our 22 second morning break, please? 23 SIR WYN WILLIAMS: Yes. Just so that I can manage what goes 24 on, what are you anticipating in terms of the further 25 time necessary to examine Ms James? 66 1 MS PRICE: I will be very nearly finished by lunchtime. But 2 I think I will still have a little to go after lunch, 3 probably no more than 15 minutes or so after lunch, plus 4 Core Participant questions. 5 SIR WYN WILLIAMS: Well, I was going to ask you to check 6 about whether we actually need to have a full lunch 7 break, especially given that Ms James is recovering from 8 Covid. If it's the case that we could complete the 9 evidence by, say, 1.30 to 2.00, with just further short 10 beaks, that may be a preferable way of dealing with 11 things, so have a chat to Core Participants and see what 12 they say. All right? 13 MS PRICE: Yes, sir. I will do. Thank you. 14 SIR WYN WILLIAMS: Thank you very much. So what time shall 15 we resume? 16 MS PRICE: 12.25, sir, please? 17 SIR WYN WILLIAMS: Fine. 18 (12.14 pm) 19 (A short break) 20 (12.25 pm) 21 MS PRICE: Hello, sir. 22 SIR WYN WILLIAMS: Hello. 23 MS PRICE: I've discussed with Core Participants the likely 24 time estimate for questions, and there should be a total 25 of around 15 minutes, made up of five minutes from 67 1 Mr Stein and ten minutes from Mr Henry. So it should be 2 possible to conclude, I would hope, if we go through 3 now, by about 1.15. 4 SIR WYN WILLIAMS: That's perfect, Ms Price. You carry on 5 then, please. 6 MS PRICE: Thank you, sir. 7 I'd like to come, please, Ms James, to your 8 impression about the Post Office Board and the Chief 9 Executive Officer's willingness to discuss Horizon 10 issues. Could we have on screen, please, paragraph 49 11 of Ms James' statement. That's page 15. 12 Towards the bottom of the page, starting three lines 13 up, you say: 14 "Later in my time as Minister (it is hard to 15 remember exactly when) I formed an impression that 16 Horizon was the last thing that the [Post Office 17 Limited] Board or CEO ever wanted to discuss, that they 18 would never bring it up proactively and, if I asked 19 questions about it, they were reluctant to speak about 20 it in detail. To begin with, I simply put this down to 21 it a difficult issue which was subject to ongoing 22 litigation, but as time went on and as I started to get 23 number of letters from MPs raising complaints from 24 [subpostmasters] in their constituencies, and some 25 letters from [subpostmasters] themselves which contained 68 1 accounts of their personal experience of Horizon which 2 was at odds with the minimal details disclosed to me by 3 the CEO of [Post Office Limited]. I started to feel 4 that there might be more to the Horizon issues than 5 I was being told." 6 Starting, please, with the way you had contact with 7 the Post Office Board and the CEO, in your statement at 8 paragraph 22, you say that you would challenge the Post 9 Office Board where appropriate by questioning them at 10 quarterly meetings. Who attended those quarterly 11 meetings? You referred earlier to the CEO and the CFO; 12 did anyone else ever attend? 13 A. Yes. Others did attend but I'm afraid I can't remember 14 which individuals from the Board attended with the CEO 15 and CFO. I would imagine it would have been the 16 Government Affairs Director but I can't say for sure. 17 Occasionally, I would meet the CEO just on her own, and 18 I think there were occasions where it would just be the 19 CEO and CFO, and then there were occasions where they 20 might be accompanied by another Board Director. 21 I think the first time I met representatives of the 22 Board there were probably about four of them I met on 23 the first instance, but it was a reduced number after 24 that initial meeting. 25 Q. Those quarterly meetings, how long did they last? 69 1 A. They probably lasted 45 minutes. 2 Q. That was to cover all Post Office issues during that 3 time, was it? 4 A. Yes. 5 Q. Were Horizon issues ever on the agenda for those 6 meetings? 7 A. I think I can safely say no. 8 Q. Did you ever ask for Horizon issues to be put on 9 an agenda for those meetings? 10 A. Not to my knowledge. 11 Q. Did you ever attend a Post Office Board meeting? 12 A. I don't think I did, actually. I'm quite surprised but, 13 I mean, I should have done. But then, diary management 14 was extremely, extremely difficult and I think there 15 would have been an intention to have attended a Post 16 Office Board meeting but I don't recall ever attending 17 one and I suspect that it was a matter of diary 18 management, I think. I mean, certainly it was in the 19 case of other institutions for which I was responsible 20 for, for example, I wanted to attend a meeting of the 21 Board of the British Business Bank, and I failed to do 22 that. They were in Sheffield, which didn't help, in 23 terms of the lengthy travel time involved but, even so, 24 I would go up north quite regularly with my portfolio. 25 It's just -- it was a very, very difficult thing to 70 1 manage all the diary requirements for such a wide and 2 varied brief, really. 3 Q. If you didn't ask for Horizon issues to be on the agenda 4 for your quarterly meetings, do you think you did, in 5 fact, raise Horizon issues at those meetings or not? 6 A. I did, certainly at one of them, probably two of them, 7 I would say. Yes. 8 Q. Can you recall when you raised those Horizon issues? 9 A. It would have been, I think, probably after the funding 10 issues were resolved. So that would have been in the 11 second half of 2017. 12 Q. Did you say it was on one or two occasions at which you 13 raised Horizon issues at those meetings? 14 A. I can only really be sure of saying at least one, 15 probably two occasions because, inexplicably, although, 16 as you've seen, because you have the documentation in 17 front of you and you put some of it on the screen, 18 I have been given, you know, copies of meeting briefs, 19 agendas, even, but not one meeting minute. So there was 20 no readout or report, or whatever you want to call it, 21 from any of the meetings through the whole time I was at 22 the Department, which is strange. Not for now, but it 23 is of interest what is retained and what isn't. It 24 seems very random. 25 Q. If you think that you raised Horizon issues only once, 71 1 possibly twice, at your meetings with the CEO and the 2 CFO, what was it that led you to form the view that the 3 CFO and the Post Office Board were reluctant to discuss 4 issues to do with Horizon in detail? 5 A. Because occasionally I would meet with the CEO one to 6 one, in addition to the Board members which we're now 7 discussing, and I raised it with her as well, separately 8 from the Board meeting, and on all occasions, there was 9 a change in demeanour, a wish to shut the conversation 10 down as soon as could be done politely, and a general 11 reluctance to discuss further. And that would be the 12 same, whether it was one to one or as part of the update 13 I had with the Board. 14 Q. When, roughly, speaking to, in your time in the role, 15 did you first ask directly about Horizon issues to the 16 CEO? 17 A. I would say earlier than I would have raised it at the 18 Board. So probably either towards the end of 2016 or 19 early in 2017. 20 Q. On how many occasions in total do you think you asked 21 directly about Horizon issues? 22 A. I would say probably four, I would say we'd be safe to 23 say. Yeah, a good four times. 24 Q. The Inquiry has been unable to find any documentary 25 evidence that your concerns about this reluctance to 72 1 discuss Horizon issues were raised at the time you were 2 Parliamentary Under-Secretary. Did you raise those 3 concerns with anyone? 4 A. Do you mean with the people we've just been discussing, 5 the Post Office Board -- 6 Q. Either directly with Paula Vennells, or with anyone else 7 from the Board, or more widely? 8 A. Certainly. I'm sorry if I wasn't -- if I wasn't clear 9 when you asked me how many times I had raised the 10 Horizon -- 11 Q. Forgive me, I think we may be talking at cross purposes. 12 A. I wondered, sorry. 13 Q. My question was: if you were concerned that there was 14 a reluctance to talk about Horizon issues on the part of 15 the Post Office Board and the CEO, whether you raised 16 the fact that you were concerned, either directly with 17 the CEO, or anyone from the Board, or more widely? 18 A. I -- I don't recall ever alleging to the Board that 19 I felt they were trying to close down the discussion, 20 no. I persevered in the discussion against this kind of 21 pushback, when it came to discussion with the Board or 22 representatives of the Board of Post Office. So, on the 23 question of -- so I didn't raise directly with them that 24 I was concerned that they didn't want to seem to raise 25 this issue, I would just persevere with them. But 73 1 I did -- it did form some of the discussion that I had 2 with the Secretary of State, probably the Permanent 3 Secretary, and probably with UKGI, as well, but I can't 4 be sure about them because I can't remember. But I do 5 remember discussing it with the Secretary of State, 6 probably fairly later on. I wouldn't have raised 7 a misgiving or -- I wouldn't have raised that kind of 8 feeling with the Secretary of State, unless it grew in 9 substance. 10 So I would -- I suspect I didn't raise it with him, 11 probably until the second half -- certainly well into 12 2017. 13 Q. Was there any particular question that you asked the 14 Post Office Limited Board or the CEO that you didn't get 15 an answer to? 16 A. I can't really remember. I -- whether -- I felt I was 17 fobbed off because, in general, they would find 18 different things of saying the same thing in response to 19 my questions, and the best question I could have asked 20 them was "I want a copy of the Second Sight Report, both 21 of them, please", and that's -- and I didn't ask that 22 question, unfortunately. But I did ask other questions 23 about the computer system, why it was that the 24 assumption was that all of the subpostmasters in making 25 those complaints were guilty of misconduct or 74 1 incompetence, because I have explained that I had 2 received letters which I felt were very bona fide from 3 people who didn't appear to be in either camp but 4 nevertheless were experiencing problems with the system. 5 And those were the sort of questions I was asking, 6 and I didn't get good answers to my questions. I got 7 really a reiteration of how, you know, two or three 8 years of independent scrutiny had not actually come up 9 with anything system wide. They did give way that 10 sometimes there were occasional faults and they conceded 11 that that might cause some of the problems that the 12 campaigning group of postmasters were complaining about. 13 Q. One of your reflections on matters is that you wish you 14 had challenged the Post Office Board more vigorously 15 than you did, and you say that at paragraph 37 of your 16 statement. Looking back, what did you challenge the 17 Post Office Board on; the "more vigorously than [you] 18 did" suggests there was some challenge, what was that? 19 A. I think the challenge was that I wanted more information 20 about the system of Horizon and what it was capable of 21 doing in relation to subpostmasters who were not in the 22 camp of even being taken to court. I wanted more 23 information about that, the system. That was my main 24 challenge. I didn't challenge on the litigation 25 strategy and, I must say, I had no idea at the time of 75 1 the way that the Post Office were behaving when it came 2 to matters of disclosure and the quality of evidence 3 that they were allowing to be brought, and the matters 4 raised in the Cartwright King and Swift papers. 5 I wasn't aware of all of that so I didn't challenge them 6 about that. 7 I think the most effective challenge I made was to 8 their wish to cap the amount of compensation that they 9 were prepared to put into the Mediation Scheme, or any 10 of its successors, in terms of the compensation that 11 might be offered to subpostmasters because I was aware, 12 of course, of the -- of the Criminal Case Review 13 Compensation team, who were looking at -- I think it was 14 about 20 cases when I first came into my position. 15 So I was aware that compensation might be required 16 for all sorts of things and I wasn't sympathetic to the 17 Post Office Board's recommendation that they cap the 18 overall amount at what I suspected was a level below 19 what might transpire to be required. 20 Q. You wrote a letter to Tim Parker, the then Chair of Post 21 Office, on 20 December 2017, and you address this at 22 paragraph 68 of your statement. You describe it as 23 a standard letter drafted by UKGI, which reminded him of 24 the Government's strategic priorities for the Post 25 Office and confirmed the level of subsidy and investment 76 1 for the forthcoming year. 2 You note in your statement that there was no mention 3 of Horizon issues. You had been in the role for 4 18 months by this point, was this not an opportunity to 5 explain to the Chair the importance of ministers being 6 fully aware of developments in the litigation, 7 particularly if you had concerns that the Board was 8 reluctant to discuss Horizon? 9 A. Yes, it would have been a good opportunity, now you 10 point it out. Would you -- could you remind me of the 11 date of that letter? 12 Q. 20 December 2017. 13 A. Yes, it would have -- 14 Q. We can go to that if you'd like to. 15 A. No, I had forgotten the date and where it fitted into 16 the whole scheme of things. But, yes, you are right: 17 I should have brought his attention to my concerns 18 actually earlier than that. He was the Chairman and 19 I should have possibly sought a meeting one to one with 20 him to discuss the matter. I think that would have been 21 a -- and then possibly included a follow-up in the 22 letter to which you refer. I should have done that, 23 I didn't do that. But I -- with the benefit of 24 hindsight, I should have done that. 25 Q. Did you ever raise with Tim Parker a concern that the 77 1 Board was reluctant to discuss Horizon issues? 2 A. No, I didn't, which I certainly should have done. 3 Q. Could we have paragraph 70 of Ms James' statement on 4 screen, please. That's page 23. You deal here with 5 what you did after you became concerned that there may 6 be more to Horizon than had been communicated to you, 7 and you say that you decided to meet the outgoing leader 8 of the National Federation of SubPostmasters. Nine 9 lines down you say this: 10 "I decided to meet the outgoing leader of the 11 National Federation of SubPostmasters and took the 12 opportunity of questioning him about the alleged impact 13 of Horizon on some [subpostmasters]. Somewhat to my 14 surprise I was reassured by the representative of the 15 NFSP, who concurred with the line taken by the [Post 16 Office Limited] in response to my questions. This had 17 the effect of allaying my concerns which had been 18 growing prior to the meeting. This state of reassurance 19 was reinforced by Horizon never coming up during my 20 meetings with the leadership of the CWU." 21 You found reassurance in the stance taken by the 22 NFSP; is that right? 23 A. Yes, I did. 24 Q. You say you found that surprising at the time. Did you 25 discuss your surprise about this with anyone at BEIS or 78 1 UKGI? 2 A. I can't remember doing that, no. 3 Q. Could we have on screen, please, the Day One briefing 4 for the Post Office, UKGI00020328. That's page 13 of 5 that document, thank you. This is a slide about key 6 stakeholders, and covered here was the National 7 Federation of SubPostmasters. There is an explanation 8 here that: 9 "[Post Office Limited] has recently started funding 10 the NFSP directly, to enable it to transform into 11 a trade association working in partnership with [Post 12 Office Limited] and not a union-like organisation often 13 in conflict with it. Although this has been widely 14 welcomed there has been tensions in the group's 15 relationship with [Post Office Limited] (eg the NFSP 16 negotiates with [Post Office Limited] on subpostmaster 17 remuneration). 18 "In addition some subpostmasters ... believe the 19 NFSP is now compromised as it received funding direct 20 from [Post Office Limited]." 21 Did you consider, at the time you met with the NFSP, 22 whether its stance might have been influenced by the 23 fact it was being directly funded by the Post Office, 24 especially considering the information contained in this 25 briefing that some subpostmasters considered the NFSP 79 1 had been compromised? 2 A. It's a very good question that you ask and I don't think 3 I did consider that. It didn't strike me as 4 an explanation for the content of the meeting I had with 5 the outgoing Chair or Chief Exec of the NFSP, and 6 I think it was also sort of amplified by the fact that 7 I'd had several meetings with the leadership of the CWU, 8 and they had not raised Horizon at all with me. And 9 I asked them about it and they were not concerned, 10 I would say, would be the general tenor of what I got 11 back. 12 So a good reading of that briefing paper prior to 13 my -- I must have had a briefing on NFSP before I met 14 them because that was the standard process, if you were 15 going in for a meeting, you had a briefing first, and 16 that would have contained some background information on 17 the NFSP. Whether it would have been identical by then 18 to the two paragraphs you have up on the screen is 19 another matter. Quite possibly not. 20 Q. I'd like to turn, please, to your impression that 21 certain things were deliberately withheld from you. Can 22 we have on screen, please, paragraph 42 of Ms James' 23 statement, that's page 13. It's just the last sentence 24 here, with reference to the Simon Clarke Advice, the 25 Deloitte reports or the Swift Review, you say: 80 1 "Having now read these reports I have concluded that 2 they were withheld from me deliberately." 3 Who do you think was withholding the reports 4 deliberately? 5 A. Well, it depends on the report. Any of the -- any of 6 those reports I mention that were -- that had been 7 disclosed to UKGI, I would say they withheld it from me. 8 But I gathered, from watching a previous evidence 9 session, approximately a week or ten days ago, to my 10 absolute astonishment, it came out at that previous 11 evidence session that the Chairman of Post Office didn't 12 even share the Swift Report within his own Board, so 13 obviously I wasn't going to get a copy. 14 And if the Board weren't seeing it, then I presume 15 UKGI didn't see it either. So I'm not quite sure who, 16 in answer to your question, was withholding the 17 information from me. Either the Post Office were 18 withholding it from UKGI and, therefore, it didn't reach 19 me, or UKGI were aware of it, and excluded it from the 20 original briefing which, as I mentioned, did give me 21 a couple of lines on the Second Sight Report. 22 So my point would be that the Simon Clarke Advice, 23 Deloitte, you know, Bramble, et cetera, and the Swift 24 Review, any of those that UKGI knew about should have 25 been bullet pointed with the reference to Second Sight. 81 1 Q. Why do you conclude that it was deliberate? 2 A. Because there's no logic to advising a minister about 3 the presence of one report when there are other reports 4 which develop the thinking of the report mentioned 5 further, add to the volume of knowledge on the same 6 matter. It doesn't -- it's partial, in my view, to give 7 the Minister reference to one report and then remain 8 completely silent on the presence of further work to 9 of -- in the same vein which adds to the body of 10 knowledge. 11 Q. Could we have on screen, please, UKGI00016898. This is 12 a UKGI risk register dated 31 July 2016, so around the 13 time you took up the role, and going, please, to the -- 14 I think we already have it open -- the risk register 15 tab, which related to the Post Office. First of all, 16 have you ever seen a risk register like this from UKGI 17 before? 18 A. No, no. You sent me a copy of it as an additional 19 document approximately ten days ago, and I am 20 99 per cent sure that it was the first time I had seen 21 a copy of these risk registers, which doesn't 22 necessarily surprise me. I mean, it's -- they were 23 produced, I gathered from the reports that you sent me, 24 on a monthly basis from UKGI and I would expect them to 25 be internal management documents and ministers to be 82 1 made aware of highlights, I guess, from it. 2 Q. Under item 6, which is line 40, Project Sparrow is 3 addressed. The risks associated with the litigation are 4 addressed in columns D and E. Then in column K, there 5 is this -- and to read the full text you need to cast 6 your eyes up to the long bar at the top because of the 7 nature of the boxes: 8 "Responsibility rests with [Post Office Limited] to 9 manage both the Mediation Scheme and stakeholders 10 generally. [Post Office Limited] Chair undertaking 11 review with independent QC. We are managing Ministers' 12 involvement, with the intention of keeping the issue 13 independent of Government." 14 Then in column P, which is further mitigating 15 actions, there is this: 16 "Ensure [Post Office Limited] are proactively 17 managing interest and noise, and are aware of Ministers' 18 expectations. Manage interest and wobbles from 19 Ministers or the centre, including prepared fallback 20 options if current arm's-length position becomes 21 untenable." 22 What is your view of this express management of 23 Ministers by officials? 24 A. Alarmed. I find that very alarming. First of all, 25 would you mind reminding me of the date of this 83 1 particular risk register? 2 Q. 31 July 2016. 3 A. Right. Well, I was very surprised to read, on your 4 previous slide -- when you put up the full copy in 5 column -- I think it was column D, where it said that 6 the Chair is -- 7 Q. I think the column I showed you first was K. 8 A. Right. I mean, I'm very surprised, because I couldn't 9 see on my -- I did see this and I read it, but couldn't 10 see beneath, you know, what you're showing me above. 11 I could only see the first three lines; I was very 12 surprised to see, "POL Chair undertaking a review with 13 independent QC", which indicates to me that UKGI must 14 have known about that, because they are the ones 15 maintaining this risk register. So must -- they must 16 have known bit. 17 That doesn't mean to say they had a copy of it 18 because, of course, my understanding of the previous 19 evidence session was that the Chair didn't share it with 20 the Board and that would presumably include the UKGI 21 representative on the Board. But there it is. 22 Anyway, back to your the question about managing, 23 you know, to make sure there's no ministerial wobble, 24 and things like that, and maintain the arm's-length 25 position here, sort of -- it's not -- what is written 84 1 there -- and your previous statement about ministerial 2 wobbles and preserving the arms-length position -- that 3 is not really consistent with the Civil Service values 4 of integrity, honesty, impartiality and objectivity, in 5 my opinion. 6 I think it is an example of a team of people who 7 should be following those principles but who have gone 8 rogue and abandoned those principles. 9 Q. Do you agree that preparing fallback options, in case 10 the arms-length position becomes untenable, casts some 11 doubt on whether there was ever a justified basis for 12 saying that this was a reason for Ministers not to 13 become more involved? 14 A. Probably. As I might have mentioned right at the 15 beginning of our exchanges this morning, if the Post 16 Office had been managing this issue in an appropriate 17 manner, within the law and in good faith, it should 18 indeed have been the case that it was an operational 19 matter for the Post Office. But the fact that they 20 weren't meant that it should definitely have been on the 21 Government's radar. 22 MS PRICE: Sir, just at this juncture, I need to confess 23 that my time estimate was ambitious and I'm going to 24 need a little more time than I had budgeted for. Given 25 that that is the case, and with an eye to the 85 1 transcriber, I wonder whether we want to take another 2 short break and then complete all of the questioning 3 after that, or whether you'd like me to continue to the 4 end of my questions and then do that. 5 SIR WYN WILLIAMS: Well, we started at 12.25, did we not? 6 MS PRICE: Yes, sir. 7 SIR WYN WILLIAMS: Just ask if I can ask the transcriber 8 through you, whether, if we continue until about 1.30, 9 as opposed to 1.15, which I assume would be enough 10 time -- 11 MS PRICE: Yes, sir. 12 SIR WYN WILLIAMS: -- is that okay with her. 13 MS PRICE: Yes, I'm seeing nods. 14 SIR WYN WILLIAMS: Fine. Well, then, let's do that. 15 MS PRICE: Thank you, sir. 16 Could we have on screen, please, UKGI00006991. 17 Starting on page 2, please, this is an email from your 18 private office to Laura Thompson from UKGI, it's dated 19 23 August 2016. The last paragraph of this says: 20 "I also wondered if you could send me a copy of the 21 group civil litigation letter (and our response) on 22 Horizon? Just for further background for me." 23 The response from Ms Thompson is on page 1 and, in 24 her penultimate paragraph, she says: 25 "On the Horizon issue, we (Government) have not been 86 1 party to either the Letter of Claim from the claimants 2 or [Post Office Limited's] response -- [Post Office 3 Limited's] response in particular is subject to legal 4 privilege. I recommend we maintain that distance, 5 certainly at this stage in the proceedings. Happy to 6 chat through of course." 7 Were you aware at the time that this request had 8 been made on your behalf and refused, in effect? 9 A. I don't think I was, no. 10 Q. Would it have concerned you, had you been aware? 11 A. Not at that stage, it wouldn't have done. I think later 12 on, with my growing knowledge of the situation it would 13 have done. I think it was a good call on the part of my 14 private secretary. I think he did it on his own account 15 and, unfortunately, he left during my time in the job, 16 so I lost his continuity, unfortunately, because he 17 might have brought it back up again later, as my 18 interest in Horizon grew. But, at the time, I'm afraid 19 I probably would have been accepting of that. 20 Q. We looked at one of the UKGI risk registers. If we 21 could please have on screen the one from January 2017. 22 That's UKGI00042795, and this the risk register for Post 23 Office specifically. Item 21 deals with Project 24 Sparrow. The risks are addressed in columns D and E. 25 If we can start with D, please. The risk identified 87 1 here is: 2 "Civil litigation and/or Court of Appeal processes 3 judge that [Post Office Limited] has acted 4 inappropriately, or illegally. Even absent such 5 a finding, ongoing risk that they continue to be 6 perceived to have acted in that way." 7 Then the next box: 8 "Potential for significant compensation claims, if 9 civil or criminal courts rule against [Post Office 10 Limited]. More likely however, and certainly in the 11 short-term, is that this continues to be a significant 12 distraction (and cost) to the business as they defend 13 their actions." 14 Were the risks of the litigation ever expressed to 15 you in those terms? 16 A. No. 17 Q. That can come down now. Thank you. 18 A. Certainly not the first one. I think it was evident to 19 everybody that it could become a costly distraction, but 20 certainly not that the Post Office, you know, might have 21 acted illegally. 22 Q. You explain in your statement that you were not aware, 23 when you were Parliamentary Under-Secretary, that the 24 Post Office had brought private prosecutions against 25 subpostmasters and others, and you deal with this at 88 1 paragraph 44, and if I can summarise, you say, in 2 effect, you would have exerted greater challenge had you 3 been aware that prosecutions had been brought privately. 4 Why is that? 5 A. I was really shocked when I did discover, very 6 belatedly, that these had been private prosecutions 7 because I had assumed -- which is a very bad thing to 8 do, in the role I had, but I had assumed that the 9 prosecutions had gone through the normal process of 10 being cleared by the CPS and mounted in the normal way, 11 and that was why I allowed myself to be persuaded of 12 an important part of the Post Office's line to me, which 13 was, you know, and where people have been charged, they 14 have been found guilty, which was an important part of 15 the line that I was given by the Post Office. 16 But what I've since discovered, obviously the whole 17 issue of disclosure and the quality of evidence being 18 brought was thrown into doubt, as far as back as, 19 I think, 2013. 20 Q. Could we have on screen, please, paragraph 74 of 21 Ms James' statement. That's page 25. Towards the 22 bottom of that paragraph, you acknowledge here that you 23 should have asked for a copy of the Second Sight 24 Reports, but you say: 25 "These were held very close by [Post Office Limited] 89 1 but I could probably have had access to them and 2 I should have read them rather than taken as read the 3 only message [Post Office Limited] wanted the reports to 4 convey." 5 You were, in your first briefing, told about the 6 Second Sight Reports and you obviously regret not having 7 asked for them. It's right that you didn't ever ask for 8 copies of those reports, is it? 9 A. I'm pretty sure I didn't. I think I would have got 10 them, if I had have asked for them, and I think if I'd 11 asked for them and they hadn't been forthcoming, I would 12 have, you know, asked for them again. 13 Q. Why is it, therefore, that you say these were held very 14 close by Post Office Limited? 15 A. Oh, I think I meant the second Second Sight -- sorry, 16 it's a bit confusing, isn't it? The Second Sight Report 17 number Two, or final, or whatever it was. There's a bit 18 of a -- I think I should have said the final report 19 was -- I had the impression was held very close. 20 Q. How did you gain that impression, if you never asked for 21 it? 22 A. Yes. Um ... I think that might have been with the 23 benefit of hindsight. I think I might have read 24 somewhere in the evidence that I've been given to 25 prepare for this Inquiry -- it's coming back to me 90 1 slowly. Basically the first -- the Interim Report was 2 one thing but the -- I think Second Sight were dismissed 3 at or around the time they reported the second time, and 4 I think they had many complaints, which was certainly 5 not shared with me at the time, about the Post Office 6 withholding information, and obstructing their inquiries 7 when it came to their follow-up work, having produced 8 their Interim Report. And I think that I was imagining 9 that, given those conditions, I think it likely that the 10 Post Office would have been reluctant to reveal or 11 disclose the second or final report. 12 Q. That can come down now, thank you. One of the things 13 that you say would have been a red flag to you -- and to 14 give context, you say at paragraph 71 of your statement 15 that you had a generally favourable impression of the 16 Post Office around the time your concerns about Horizon 17 issues were increasing, so it would have taken a red 18 flag for you to become more proactive in relation to the 19 issues -- but one of the things you say would have been 20 a red flag was exposure to now Lord Arbuthnot's 21 campaign. 22 When you took up the role, did you ask which 23 Parliamentarians had an interest in the issue of Horizon 24 challenges? 25 A. No, I didn't. 91 1 Q. Did you request a briefing on any recent Parliamentary 2 debates which concerned the Post Office? 3 A. No. 4 Q. Did you ask your private office staff to provide you 5 with previous ministerial responses to Parliament on key 6 Post Office issues? 7 A. No. All of these would have been good things to ask for 8 but I'm afraid I didn't ask for any of them. 9 Q. At the time, was there any mechanism for incoming 10 ministers to be briefed on past relevant Parliamentary 11 debates? 12 A. No, I don't think there would have been no, no. 13 Q. Did that change at any point when you were in 14 a ministerial role, having gone on to be Minister of 15 State in a different department? 16 A. No, I don't think it did, actually. I gave my 17 predecessor -- sorry, my successor at BEIS a briefing on 18 all the kind of top line issues within my brief about 19 two weeks after he had assumed what were my 20 responsibilities. But I did that informally, without 21 any officials present. So, that's not really what 22 you're talking about, I don't think. There's no formal 23 handover process which enables the new Minister to 24 capture the top line, be it Parliamentary or any other 25 aspect of the brief, what had gone before. Which is 92 1 curious, I suppose, really, but it is -- that's my 2 experience. 3 SIR WYN WILLIAMS: I understand that might be the case as 4 between the respective ministers. Does not the Civil 5 Service provide a kind of handover in the sense of 6 highlighting important points which were being dealt 7 with by the previous minister and which now catch your 8 attention? I take it you're going to say "Well, that 9 was the initial briefing"? 10 A. Yes, I was going to say, Sir Wyn, that does happen, and 11 that is your introductory pack and all the introductory 12 meetings. I think one unfortunate aspect of when 13 I assumed this role was that it did coincide with a new 14 Government and an entirely new ministerial team and 15 private office team. I don't think my private office 16 had experience of handling any aspects of my brief left 17 over from my predecessor, unfortunately. That wouldn't 18 always be the case but when it's a new government, 19 I think it is the case. 20 MS PRICE: Turning finally to your reflections on the 21 governance structure in relation to the Post Office, 22 could we have on screen, please, paragraph 79 of 23 Ms James' statement. That's page 26. It's towards the 24 bottom of page 26. You say: 25 "The structural problems of the current system of 93 1 oversight are first that there are too many players 2 involved", and you list UKGI, HMT and DBT: 3 "This gives rise to communication challenges ..." 4 You go off to list other issues there. 5 Is the essence of the problem that you're getting at 6 here that nobody grips the problem, because there are so 7 many players involved? 8 A. There's the potential for that. I don't think it 9 automatically follows but I think that the potential for 10 that is heightened by the number of players involved. 11 And the agenda -- I think this whole -- the point about 12 stakeholders developing their own agendas is heightened 13 by the more there are in the mix. 14 Q. Going over the page, please, you say: 15 "The other problem with the status quo is that UKGI 16 as the representative of Government on the Board of 17 [Post Office Limited] reports directly to HMT." 18 You talk about: 19 "[The] power wielded by HMT across Government, which 20 can be absolute and heightens the risk that UKGI focuses 21 purely on the achievement of financial objectives with 22 the sole goal of reducing public subsidy." 23 I think you've seen in the documents provided to you 24 more recently two Memorandums of Understanding about the 25 role of UKGI officials. Have you had an opportunity to 94 1 look at those? 2 A. Yes, I have. 3 Q. Without displaying them, for the purposes of time, would 4 you agree that the Memorandum of Understanding which was 5 in place at the time, and the Memorandum of 6 Understanding in place now, states that UKGI formally 7 acts as an agent of the Department -- that is what was 8 at the time BEIS -- as opposed to the Treasury? 9 A. Well, it did act as an agent of the Department, I would 10 agree with that. But it doesn't change the position 11 that it is wholly owned by HMT. So whilst it might act 12 as an agent of the Department, it is accountable really 13 to the people who own it, and that's HMT. 14 Q. There is a section in the Memorandum of Understanding 15 relating to the accountability to Parliament for the 16 activities of UKGI, and the levels are BEIS ministers, 17 the Principal Accounting Officer level, BEIS Permanent 18 Secretary, and the senior official level, UKGI and BEIS. 19 Would you agree from that there is a degree of 20 accountability between UKGI and the Department already 21 in existence that was there at the time? 22 A. Yes. Yes, I would agree with that. Yes, whenever 23 I gave evidence or attended a debate in Parliament, led 24 a debate, answered a debate, I was always -- UKGI 25 support was always available to me, and it wasn't a BEIS 95 1 official, it was an official of the UKGI who would 2 support me in those matters. Yes. 3 I mean, they were interchangeable in most senses 4 with Department officials for that particular brief. It 5 is just that, although they are supposed to comply with 6 the Civil Service Code, they are not civil servants and 7 I can imagine it might be quite difficult to act, you 8 know, in -- as a civil servant, if you haven't had the 9 training to be one. 10 Q. Looking, then, to paragraph 81, a little further down 11 this page, there are two options, which you moot in your 12 statement, that might improve matters, and one is that 13 the Post Office should be taken essentially under DBT, 14 and the other is that the role of Ofcom should be 15 extended to give regulatory oversight, independent 16 regulatory oversight. Which of those two options, with 17 the benefit of having considered this matter with the 18 benefit of hindsight, do you consider to be the better? 19 A. Well, I don't think either option will resolve the 20 cultural crisis within the Post Office. In order to 21 resolve that, I think the machinery of Government is 22 probably adequate without a change. But long term -- 23 long term, I think I would favour the latter. If the 24 Post Office can be brought into an acceptable state, 25 which is a very big if, then I would favour the 96 1 regulated route rather than the DBT owned route. 2 I mean, we did, as I know you are aware, have 3 a long-term consideration that it might be mutualised as 4 a service, and that's another option. I didn't mention 5 that there, but that is another option, although it does 6 have to be, I think, to qualify for mutual status it 7 would have to be not in receipt of public subsidy, 8 I think. So that's an issue. The subsidy issue is 9 a bit of a -- that kind of leads more to the DBT-owned 10 model. But, I mean, none of this will solve the 11 cultural crisis in the Post Office, I suspect. That has 12 to be subject to radical surgery, I would imagine. 13 MS PRICE: Sir, those are all the questions I have for 14 Ms James. 15 SIR WYN WILLIAMS: Thank you, yes. 16 MS PRICE: Shall I hand over to Mr Henry first. 17 Questioned by MR HENRY 18 MR HENRY: Ms James, thank you so much. 19 I don't want to go back to the document but it's 20 UKGI00016898 and it's column D of the risk register of 21 31 July 2016, allocated to risk number 6, which was 22 entitled "Project Sparrow". Therein, one reads: 23 "... increasingly orchestrated campaign against the 24 [Post Office Limited] on alleged faults with the Horizon 25 system, including attempts to derail the Mediation 97 1 Scheme set up to address individual cases." 2 The author of that being Mr Callard. 3 Was that clearly communicated to you when you 4 assumed ministerial responsibility that month? 5 A. Not in those words, no. Not in those words. In fact, 6 I don't ever recall being told that there were attempts 7 to -- being made to derail the Mediation Scheme. 8 I wasn't informed of that. I was informed that there 9 was -- I think that term was almost used in an ongoing 10 to campaign against Horizon, in spite of the fact that 11 two or three years of independent scrutiny had found 12 there to be no systemic problems. That was 13 communicated, yes. 14 Q. That was communicated to you. 15 When you succeeded Baroness Neville-Rolfe, did she 16 brief you informally, as you did your successor? 17 A. No, I don't think she did. No. 18 Q. So, consequently, it seems, that the suspicions that she 19 harboured about the Post Office's reliability or 20 veracity over Horizon got lost on the handover to you 21 and you were starting from scratch? 22 A. I'm afraid so. I'm afraid so. 23 Q. You were, of course, depend upon your officials and 24 dependent upon ShEx? 25 A. Yes, I was. 98 1 Q. Now, again -- 2 A. To be -- so was she, of course, when she came in. 3 Q. Yes, of course. Now, I don't need to go to paragraph 56 4 of your statement but that is that on 20 January 2017, 5 Laura Thompson of UKGI provided your private office 6 with an update on the Group Litigation, and you remember 7 the passage that you were taken to by Ms Price. And 8 then, in the following paragraph, paragraph 57, you 9 said: 10 "I would have taken this email as an update only, 11 and not a request for action or decision of any sort. 12 I decided to accept this advice [in other words the 13 advice not to get involved] after consultation with the 14 BEIS Press Office." 15 Why the Press Office, Ms James? Is this concern, as 16 it were, about optics as opposed to substance; why the 17 Press Office, as opposed to a more considered briefing 18 on strategy? 19 A. That's a very fair question. I think -- I didn't often 20 seek advice from the Press Office. But I think, correct 21 me if I'm wrong because I don't have the document 22 absolutely to hand, but I think that that was advice in 23 relation to media handling. 24 Q. Quite right, it does say: 25 "If there is any media interest, I would suggest our 99 1 usual approach of referring any enquiries to Post 2 Office. I would not suggest we comment on legal action, 3 but welcome thoughts from Press Office." 4 A. I think that's probably why on that occasion I was 5 seeking guidance from the BEIS Press Office because I -- 6 you're quite right, I wouldn't normally, on matters of 7 substance, seek guidance from the Press office. 8 Q. I now want to move on to what you might have done 9 differently had you been properly apprised in a timely 10 fashion about material issues. No need to get it up on 11 screen, but your paragraph 74 begins: 12 "I should have been briefed on the scope and purpose 13 of Tim Parker's review and especially the conclusions as 14 set out in the report of 8 February 2016 by Jonathan 15 Swift, [Queen's Counsel]." 16 I then omit words, and you refer to Project Zebra of 17 June 2014, that you should have been told about, and 18 further work by Deloitte, Project Bramble, again, you 19 should have been told about. Then you say this: 20 "If I had known about these reports, we might have 21 been able to put pressure on POL to implement the 22 recommendations of the Swift Report, rather than just 23 commission yet more reports that served to delay the day 24 of reckoning for the [Post Office Limited]." 25 Had you been properly briefed in a timely fashion 100 1 and seen the writing on the wall, might you have gone 2 further at that stage than simply requiring the Post 3 Office to implement the Swift recommendations? 4 A. That's a very, very good question, and I am not sure 5 what -- well, I was going to say I'm not quite sure what 6 more I could have done at that point but, if I'd been 7 armed with all the knowledge that is contained within 8 the reports that you mentioned just now, then I suppose 9 what I should have done would be to go to my Secretary 10 of State, first of all, and the Permanent Secretary, and 11 say that we've got a massive problem here with the 12 leadership of the Post Office, and corners within the 13 Post Office who are behaving possibly illegally, 14 certainly unethically, in a substantial way. 15 I suppose I should have done that, had I had all 16 that information, as well as -- I think the 17 recommendations of the Swift Report were very sound and 18 that should have been done, but you are right in, 19 I think, what's behind your question: would that have 20 been enough based on what I would have then known? 21 Probably not. 22 Q. But, basically, Government could have been made aware 23 that the Post Office was staring disaster in the face, 24 and that the litigation was going to be a ruinous, 25 degrading failure? 101 1 A. Yes, I think you put that very well. 2 Q. Could I just pick up one sentence in that paragraph, 3 paragraph 74, where you say: 4 "If I had known about these reports, we might have 5 been able to put pressure [et cetera, et cetera] rather 6 than just commission, [that is the Post Office] yet more 7 reports that served to delay the day of reckoning for 8 the Post Office." 9 You see it might be said by some Board members that 10 they were being open and commissioning reports to get at 11 the truth but from your assay of the issue, having 12 looked at it now and being fully briefed on the matter, 13 it looked like they were commissioning reports in 14 accordance with a policy of obfuscation and delay, 15 putting off the evil day, covering the reports in 16 privilege and failing to detect or disclose the red 17 flags within them. Is that what you mean when you say, 18 "Rather than just commission yet more reports that 19 served to delay the day of reckoning"? 20 A. Yes, I think you put that extremely well. Yes, exactly 21 what I think, yes. Because I was anxious, when you 22 first read that quote out, that it looked as if I was 23 saying that we should be -- the Government should be 24 commissioning more reports or not just commissioning 25 more, because we hadn't commissioned any reports. But 102 1 what I meant was that the Post Office, rather than 2 continuing to commission yet more reports, should 3 actually face up to what's in front of them and deal 4 with it yesterday. 5 Q. Thank you. My final issue is a document that has been 6 provided by Ms Vennells, and it's PVEN00000503. This is 7 an exchange of messages from 2017, when you raise the 8 case of a subpostmaster directly with Paula Vennells, 9 and you were later told by Ms Vennells that she had been 10 the postmaster audited, which led to a loss being 11 identified of £130,000, and Ms Vennells told you that 12 the subpostmaster was vociferous and has been sharing 13 various and varying accounts of what has happened. 14 We can pick it up there where you contact her over 15 the weekend, because you're concerned about the Post 16 Office and the postmaster, and then can we go to the 17 next page, please, and you're on the matter, you agree 18 to speak, and then you give the details of the Post 19 Office, it's Moresby, in Cumbria. 20 Then can we go down to: 21 "Hi Margot. 22 "We briefed Trudy Harrison in June as to exactly 23 what was happening [I omit words]. 24 "However, the postmaster was suspended in May as 25 an audit showed she was missing over £130,000. That 103 1 possibly explains why she was putting in her own money. 2 She has since lodged a request to join the ... Group 3 Litigation -- not unusual in this kind of situation. 4 "I don't want to put more details into a text but 5 I am happy to explain. 6 "The location has been supported by a temporary post 7 office ... 8 "The postmaster is vociferous and has been sharing 9 various and varying accounts of what has happened." 10 Then referring to Trudy, who I think is the local MP 11 because it concerns her constituent. 12 From the papers that the Inquiry has seen, the Post 13 Office in general used dismissive language like this to 14 denigrate and discredit subpostmasters who suffered 15 losses. Did you experience this in any other settings 16 when you were liaising with the Post Office, that there 17 was a generally dismissive and highly robust approach 18 taken to subpostmasters who were complaining about 19 Horizon? 20 A. I would say that there was definitely an assumption on 21 the part of the Board members of the Post Office that 22 the postmasters were in the wrong. But there was -- 23 I mean, there was nothing wrong with Horizon. We've 24 covered all of that. But you asked about the sort of 25 demeanour and attitude towards the Post Office -- the 104 1 postmasters. I think that they sadly -- tragically, the 2 Post Office Board did regard them as criminal at best, 3 incompetent at worst, yes, and that was the assumption. 4 And, as I mentioned earlier, they were extraordinarily 5 good at seeing themselves as the victim. 6 You know, this campaign and -- it's not just 7 a campaign, it was an "orchestrated campaign", as if to 8 say there was absolutely legitimacy to this campaign 9 whatsoever. That sort of thing. The language would be 10 based on an assumption that postmasters were in general 11 guilty of something. It might be fraud, it might be 12 theft, it might be joining an illegitimate campaign to 13 undermine something that the Post Office was doing, like 14 putting the Mediation Scheme in place. 15 Yes, the postmasters were always in the wrong in any 16 conversation you had with representatives of the Post 17 Office. 18 MR HENRY: Well, those are my questions for you, Ms James. 19 Thank you so much. 20 THE WITNESS: Thank you very much. 21 SIR WYN WILLIAMS: Mr Stein? 22 Questioned by MR STEIN 23 MR STEIN: Sir, I do have questions that are less than five 24 minutes but I note the time is 1.35. 25 SIR WYN WILLIAMS: Then I will give you to 1.40 since you 105 1 will be less than five minutes. Off you go. 2 MR STEIN: Thank you, sir. 3 Ms James, you once heard questions very early on 4 from Ms Price in relation to when you first came in to 5 deal with matters concerning the Post Office, and you 6 were referring to the May 2015 manifesto pledge which 7 was to retain the Post Office for all of its purposes, 8 including the social purposes that it serves; do you 9 recall giving that evidence? 10 A. Yes, I do. 11 Q. You, like all of us, no doubt understand that the people 12 that operated these branches, the Post Office branches, 13 also felt that what they were doing was operating the 14 branch for purposes of supporting their own families, 15 but also an important place within the local community; 16 do you agree with that? 17 A. I agree strongly with that. 18 Q. Because the post of a subpostmaster or a subpostmistress 19 is a prestigious one in the local community. It has 20 meaning socially; do you accept that? 21 A. I totally endorse that. 22 Q. You've discussed in your statement, paragraph 2 -- 23 I don't need to take you to it because I can simply 24 refer to it -- you wish to express your deepest sympathy 25 for all subpostmasters and subpostmistresses and their 106 1 families who have been subject to such a terribly 2 miscarriage of justice. Later on in your evidence, you 3 spoke about the Post Office victims -- you said that at 4 just gone 12.00 today -- the victims of the Post Office. 5 Now, at the Inquiry today, there is Terry and Cindy 6 Seeney. Terry was the subpostmaster at the Bere Regis 7 branch of the Post Office in the Dorset. He held that 8 post from February 2002 to July 2006. Now, that's well 9 before your time in your dealings with the Post Office. 10 What happened in his Post Office branch, though, is 11 perhaps important on this question of the victims and 12 who have been affected. He had the usual litany of 13 shortfalls that he had to account for, and he had to pay 14 on a regular basis out of their own funds. He employed 15 his wife within the branch. What happened was that, 16 when trying to reconcile the amounts on any given week, 17 he would spend evenings and into the late night in the 18 post office branches. They find it funny now, they 19 certainly didn't find it at the time: Cindy actually 20 thought he was having an affair because he was spending 21 so much time working at the Post Office branch. 22 At the end of days, it got to the point whereby he, 23 Terry Seeney was searching the bags of the people he 24 employed within the branch. So I go back to your 25 evidence where you speak about the Post Office victims, 107 1 and in the excellent questions you have been asked by 2 Ms Price, and also the great questions being asked by my 3 learned friend Mr Henry, you have also considered the 4 question of the failures in governance by Government. 5 Do you agree the victims of both the Post Office, 6 Fujitsu and Government failures, those victims include 7 not just the subpostmasters, subpostmistresses but the 8 partners, the children, the wider family effects? 9 Could you say yes or no to that, so we have a record 10 here? 11 A. I most certainly agree with you and I would add -- 12 I don't know whether you include the staff in branches, 13 as well as family members. Yes, and a whole network, 14 I would imagine, of family, friends. Your statement did 15 touch on some of the consequences that are not 16 automatically visible to people from this tragedy. When 17 you mention the length of time Mr Seeney was spending in 18 the Post Office let his wife to doubt him, it can 19 have -- and I'm sure has had -- so many effects on 20 people's friendship groups and, you know, their esteem 21 within the community. You didn't mention that, that's 22 people's personal reputations. 23 All of this has obviously been widely commented on 24 and I know, and I hope, it's well understood but I agree 25 with what is behind your question. 108 1 MR STEIN: Thank you, Ms James. One last point before 2 I finish just about within the time limit set by the 3 Chair. 4 Those individuals, the partners, the family members, 5 do you agree they are no less deserving of recompense 6 and redress and compensation? 7 A. I do agree that they are deserving. Of course, yes, 8 I do. Most certainly. I mean, that obviously -- 9 MR STEIN: Thank you. 10 A. -- is not for me to judge but that is my opinion, yes. 11 SIR WYN WILLIAMS: All right. Thank you very much. 12 Is that it, Ms Price? 13 MS PRICE: Yes, sir. It is. 14 SIR WYN WILLIAMS: Well, thank you, Ms James, for giving 15 evidence today in circumstances where you are recovering 16 from an illness. You've been extremely helpful to the 17 Inquiry in facilitating our work, both in providing your 18 evidence and in doing so in a manner which you would 19 have preferred not to do. So thank you very much. 20 THE WITNESS: Thank you very much. 21 SIR WYN WILLIAMS: We'll resume again at 9.45 tomorrow. 22 MS PRICE: Yes, sir. Thank you. 23 (1.42 pm) 24 (The hearing adjourned until 9.45 am the following day) 25 109 I N D E X MARGOT CATHLEEN JAMES (affirmed) ..............1 Questioned by MS PRICE ........................1 Questioned by MR HENRY .......................97 Questioned by MR STEIN ......................105 110