1 Tuesday, 5 November 2024 2 (10.00 am) 3 SIMON DOMINIC RECALDIN (continued) 4 Questioned by MR BLAKE (continued) 5 MR BLAKE: Good morning, sir. 6 SIR WYN WILLIAMS: Morning. 7 MR BLAKE: Mr Recaldin, I think you did a bit of homework 8 overnight. Are you able to assist us with the product 9 of that research? 10 A. I hope to help the Inquiry, yes. So Sir Wyn queried 11 whether it is correct to say that 111 claimants is the 12 closed number for the OC process and, quite rightly, 13 Sir Wyn pointed out that the PNC population would now 14 expand that -- potentially expand that number. 15 But I've got a bit more colour on that. So 111 is 16 the number of claimants in the OC process who have had 17 their convictions overturned by the courts, we knew 18 that. As such, based on the current picture in the 19 criminal courts, it's considered closed. However, the 20 OC process also includes PNCs -- 21 Q. That's prosecuted but not convicted? 22 A. -- prosecuted but not convicted -- and other appeals 23 that are excluded from the legislation. So I've been 24 reminded that the course that the legislation went 25 through, it covered England, Wales, Scotland and 1 1 Northern Ireland and I think the CPS, but it did not 2 cover the Department for Work and Pensions and RMGs who 3 were also prosecutors. So if they -- if cases came 4 forward -- cases from them could come forward through 5 the courts and therefore that number could expand 6 further because of that. 7 But also, the Chair asked whether cautions were 8 included in the OC process, so we are in ongoing 9 discussions with Government about the non-postmaster PNC 10 cohort, eg assistants and managers, and have sought 11 clarification on whether all cautions would fall into 12 the definition of PNC -- prosecuted not convictions -- 13 such that would be eligible for OC and therefore covered 14 by the Government funding. We recognise that the PNC 15 category is covered by Government funding. 16 This is and always has been the working assumption 17 based on conversations with Government officials to date 18 but, currently, no formal agreement has been reached on 19 that basis. 20 Q. So there is discussion currently ongoing -- 21 A. Yeah. 22 Q. -- about whether cautions are considered prosecuted but 23 not convicted? 24 A. Yeah, within that cohort. Correct. 25 Q. Are any of those cautions being dealt with or being 2 1 referred to other schemes, as far as you're aware? 2 A. I think there is -- this is my recollection. I think 3 there has been one case that has gone through the HSS 4 scheme and the caution has been recognised and 5 redressed. 6 Q. Has that matter concluded, as far as you're aware? 7 A. Yes, as far as I'm aware it has, yes. There was also 8 a question -- if I can go on? 9 Q. Yes. 10 A. There was also a question both numbers of pecuniary and 11 non-pecuniary settlements in the OC space and I can 12 confirm there are -- as of 31 October, there are 81 13 non-pecuniary claims that have been settled and 61 14 pecuniary claims have been settled, and, as advised 15 yesterday, there have been 61 full and final 16 settlements. So put another way, there are 61 full and 17 final settlements; in addition to that, there are 18 a further 20 non-pecuniary claims settled. 19 Q. Thank you. Were there any other matters arising from 20 yesterday that you wanted to clarify? 21 A. I think that was my homework. Thank you. 22 Q. Thank you. We left off yesterday on the overturned 23 convictions process. I have a few more questions on 24 that. We will then go through very quickly the other 25 schemes just to cover those off, and then we'll move on 3 1 to a separate topic. 2 So sticking with overturned convictions. The stage 3 we reached, we went through the non-pecuniary, the 4 pecuniary, we're now at the independent assessment panel 5 stage. If agreement can't be reached between the 6 parties, there is an independent panel. It's 7 a three-person panel that's chaired by Sir Gary 8 Hickinbottom, is that correct? 9 A. Correct. 10 Q. I think Sir Gary was nominated by Hudgells Solicitors 11 and the Post Office jointly; is that correct? 12 A. Proposed by Hudgells Solicitors and appointed 13 accordingly, yeah. 14 Q. Thank you. That hasn't yet considered any appeals? 15 A. No. 16 Q. We spoke yesterday about Lord Dyson and three cases that 17 the Post Office wanted to be referred to Lord Dyson and 18 that hadn't been agreed between the parties. Can you 19 assist us with why those cases haven't, in fact, gone to 20 the independent assessment panel stage? 21 A. Because Lord Dyson is non-pecuniary and Sir Gary is 22 pecuniary. 23 Q. So the independent assessment panel only deals with 24 pecuniary cases? 25 A. Correct. 4 1 Q. Thank you. In terms of legal costs, I think you've said 2 in your witness statement that only one of the 111 3 claimants is not legally represented -- 4 A. Yes. 5 Q. -- and reasonable legal costs are paid when a claimant 6 seeks the full assessment of their claim? 7 A. Yes. 8 Q. In respect of the Government offer that we spoke about 9 yesterday, there is effectively a fixed fee: it's 10 £20,000 of legal costs or I think, if they pre-dated the 11 announcement of the £600,000, it is reasonable costs 12 plus costs incurred prior to that date, is it? 13 A. Correct. 14 Q. Thank you. Tax issues. On 16 March 2023, the Post 15 Office Horizon and Infected Blood Compensation Payment 16 Scheme regulations came into force, which effectively 17 solved the tax issues for those living in the United 18 Kingdom; is that correct? 19 A. Yes. 20 Q. You've said in your witness statement that there are two 21 applicants living outside of the United Kingdom. Have 22 those matters been resolved or where are they at? 23 A. I don't know whether they've been resolved but I know 24 we're working with Government to find a solution for 25 those. 5 1 Q. Thank you. We can then move on to the Group Litigation 2 Order scheme, the GLO scheme, not run by the Post 3 Office. Could we please turn to BEIS0000641. Thank 4 you. 5 If we could start on page 4, please. This is 6 an email chain from 20 February 2023. It's an email 7 from you, we see your name there, and it's the 8 highlighted passage that I'd just like to ask you about. 9 You say: 10 "There is also a more delicate issue of ensuring the 11 GLO is consistent with the HSS ..." 12 That's something you spoke about yesterday, trying 13 to ensure consistency between the schemes: 14 "... and the risks associated if it is not -- the 15 inclusion of [I think that's Lord Arbuthnot] etc could 16 be building in risks to consistencies. I will be guided 17 if to raise such an issue and if so how. Whatever the 18 case we should mention that there is a risk of having to 19 reopen cases and the Inquiry oversight if the GLO does 20 not generate similar outcomes to Post Office." 21 Can you assist us with what you were saying there 22 and what you meant by that? 23 A. Hopefully that's quite clear. It's a risk. That's what 24 I do: I articulate risks. And the risk was that if the 25 GLO scheme was inconsistent with the HSS scheme -- and 6 1 that might be correct but, if it was inconsistent, then 2 the risk is we would have to reopen up the HSS in order 3 to correct that. 4 Q. Why is it that the inclusion of somebody like Lord 5 Arbuthnot could build in those risks? 6 A. I -- forgive me, I don't know why Lord Arbuthnot's name 7 is in there. I don't know the context of why that's 8 there. 9 Q. Can you recall any specific concerns you had as at 10 February 2023 regarding the scheme? 11 A. About the GLO scheme? 12 Q. Well, if we see there, the subject is "OHC 13 Remediation -- Engagement with Parliament". Does that 14 assist you at all with knowing what your concern was? 15 A. I think, from recollection, this was a meeting that 16 I was being invited to with interested MPs and 17 postmaster campaigners, including Lord Arbuthnot and 18 others. And the debate was whether I should be invited 19 or not be invited, et cetera, and it was a critical time 20 at the Inquiry as well. I think the next compensation 21 hearing was imminent and this was about the -- what were 22 the risks around me attending that meeting prior to 23 coming here for the redress hearings. And that's 24 what -- and that's why Lord Arbuthnot might have crept 25 into that paragraph. 7 1 Q. Thank you. One more email on the Group Litigation Order 2 scheme. It's BEIS0000656. This is a note of a meeting 3 with Minister Hollinrake on 25 May 2023. 4 A. Yeah. 5 Q. So on a few months from the last email that we saw. If 6 we scroll down the page we can see there that you 7 attended a meeting. There's a GLO update over the page, 8 please, page 2. That says: 9 "[Minister Hollinrake] said he'd seen that Alan 10 Bates had been critical of the slow pace of the [GLO] 11 scheme and pointed towards disclosure as the issue. 12 "SR [I think that's you] said the issue is not the 13 slowness of disclosure at present ([the Post Office] has 14 committed to 32 weeks as an end-to-end process). The 15 issue is that they are waiting for cases to come in, as 16 the process of disclosure can only properly start once 17 cases are received. SR [I think you] said in the 18 meantime, his team are collecting the base data that 19 they know they will need. SR said his team are working 20 at risk as [the Post Office] hasn't received payment for 21 the work yet." 22 Just pausing there, that was a phrase we spoke about 23 yesterday. 24 A. Mm. 25 Q. So, as at May 2023, had the Government not committed 8 1 funding to the Post Office's work on the GLO scheme? 2 A. So this is -- as I said yesterday and in my statement, 3 this is a regular occurrence, and I want to be clear to 4 the Inquiry on this. You know, Government commit to the 5 funding verbally and in emails, et cetera, et cetera, 6 and, clearly, that commitment is well meaning and, of 7 course, Government will pay but, from a legal entity 8 perspective, that has to be crystallised by 9 formalisation. And therefore, working at risk is we 10 know we're going to be paid, we know it's all going to 11 be sorted out, but the formal documentation has yet to 12 be in place. 13 Now, optically, I can't cross my arms and say, 14 "Well, until that formal documentation is in place I'm 15 not going to do anything", because that will be slowing 16 down redress, wouldn't it? So I can't do that and 17 I won't do that. But I have to explain that to the 18 Board to say -- and get permission from the Board, to 19 say, "Look, I'm making a commitment here that we're 20 working a risk here, on the assumption that the 21 Government will pay us". And, of course, they will pay 22 us but it's getting those formalities and, indeed, legal 23 advisers more comfortable with that. But I want to be 24 clear: working at risk is not slowing down redress. 25 Q. "CC [I think Mr Creswell] said [the Post Office] 9 1 received the contract in January; the delay has been on 2 due to going back and forth on specifics. But he 3 understand [the Post Office] is currently operating at 4 risk." 5 A. Sorry, there's the acceptance from Government, they 6 accept that we're working at risk and they sort of say, 7 "Don't worry, the money's on its way". 8 Q. Thank you. 9 "[Minister Hollinrake] said he feels we need to be 10 getting on the front foot here comms-wise. If the issue 11 is that cases aren't coming through, then we should say 12 this. SR [you] said he would take this on board, as how 13 Alan Bates described the situation is slightly 14 misleading." 15 Can you assist us with what you meant there? 16 A. Well, I think it's the first bullet isn't it, where 17 Mr Bates had been critical of the slow pace of the 18 scheme and pointed towards disclosure as the issue. 19 Disclosure was not the issue because we weren't being 20 asked for disclosure. 21 Q. Thank you. Finally on this scheme, what is your current 22 view of the progress of the scheme, as at today's date? 23 A. Of the GLO? 24 Q. Yes. 25 A. I don't operate it. All I can say is what I heard at 10 1 the Select Committee in February when I found it very, 2 very interesting and, hopefully, Post Office has helped 3 in that the challenges that the GLO scheme were very 4 similar to the challenges of the OC and HSS schemes, in 5 terms of getting cases in, and then lessons can be 6 learnt from that, in terms of the numbers that have come 7 in weren't as expected, at the pace expected. 8 Q. Let's move on, then, to the Horizon Compensation Review 9 Scheme. Do you have anything to say on that: any 10 updates as far as you're aware? We'll be hearing from 11 Mr Creswell and others in due course but is there 12 anything you're aware of that you think is of note for 13 the Inquiry? 14 A. Apart from the fact that it's an absolutely excellent 15 initiative, in terms of clearing this mess up, in terms 16 of the initiative and the impact it's made. It's been 17 absolutely fantastic. 18 Q. I'd like to move on to a slightly different topic to 19 compensation and that is the Past Roles Review. Can we 20 please turn to POL00448307. This is the document of 21 30 October 2023, and it lists you as the Chair of the 22 Past Roles Review panel; is that correct? Were you 23 chair or are you chair of that panel? 24 A. I am indeed. 25 Q. Please can we turn to POL00458391. When were you first 11 1 appointed chair, approximately? 2 A. It would have been about the time but that is a draft 3 and some of those names are not on that committee but it 4 would have been around that time, yeah. 5 Q. Thank you. So around October 2023. 6 A. Yeah, yeah. 7 Q. This is an email chain from December 2023. If we scroll 8 down, please, we can see a number of different names on 9 this email chain. We see, for example, towards the 10 bottom there, on the left-hand side, Caroline Richards. 11 A. Mm-hm. 12 Q. She's someone who the Inquiry has heard visited 13 a postmaster with Stephen Bradshaw, the Investigator. 14 If we scroll down, please, we see at the bottom of 15 the second page the name Melanie Corfield -- these are 16 all in alphabetical order, I think. Thank you very 17 much. Melanie Corfield was a member of the 18 Communications Team. She was involved in liaising with 19 press regarding issues relating to Paula Vennells, 20 Panorama. The Inquiry has seen an email from her 21 describing the remote access issue as "totally loony". 22 If we scroll over the page, please, we see, about 23 halfway down, Rodric Williams well known to the Inquiry, 24 a witness in the Inquiry: he received the Clarke Advice; 25 Project Zebra; he was involved in notifying the insurers 12 1 about issues relating to Gareth Jenkins; he was involved 2 in briefing Paula Vennells on issues relating to bugs, 3 errors and defects. 4 We saw yesterday that email from Mark Underwood 5 regarding fees and criteria to be imposed in the 6 compensation schemes and he was a recipient of that 7 email. 8 If we scroll down, please, we see on the bottom of 9 page 7, it's an email from you, and it's relating to the 10 Remediation Unit. You say: 11 "Yesterday marked a significant milestone in the 12 [Remediation Unit's] journey -- providing compensation 13 to postmasters and postmistresses all across our 14 remediation programmes." 15 You say: 16 "Yesterday we issued the last HSS offer from the 17 original cohort. This is a significant milestone and 18 one [to be] recognised." 19 You say a bit further down: 20 "It also calls for me to recognise all of you for 21 a job superbly executed ..." 22 Now, at that time, those names that I've just read 23 out, were they involved in matters relating to the 24 Remediation Unit? 25 A. So testing my dates, yeah. So to -- Mel Corfield in 13 1 particular doesn't work in the Remediation Unit; she's 2 works in comms. So that distribution list would have 3 been an all RU and related because, again, Mel doesn't 4 work for RU. So that would have been a mailing list 5 that would have been used for anybody sort of involved 6 or helped in RU. And at the time, I certainly know that 7 Rod Williams wasn't in the business, and I know 8 certainly Caroline Richards now is not in the business. 9 But they would have been on that circulation list. 10 At the time, I don't know where -- certainly Rod 11 would have been out; Caroline, I don't know whether she 12 was still in the business or not at the time. I think 13 she would have been in the business at that time still. 14 But Mel is communication; she's not within RU. 15 Q. Around that time, though, late 2023, did you have 16 concerns regarding people working in the Remediation 17 Unit who had those kinds of past roles and past 18 involvements in matters that the Inquiry is 19 investigating? 20 A. Yes. 21 Q. We see at the beginning of that chain -- sorry, if we go 22 to the first page, we can see that it's forwarded to 23 Nick Read and Lorna Gratton. Were you aware at that 24 time of any concerns that Nick Read, for example, had 25 about those kinds of individuals working within the 14 1 Remediation Unit? 2 A. Yes. 3 Q. Did you see it as a high priority to address? 4 A. Yes. 5 Q. If we could please turn to POL00448864. This is a Group 6 Executive meeting from 13 March 2024. So we're moving 7 on a few months. It's page 3 that I'd like to look at. 8 If we scroll down, please, to the section on "Past 9 Roles". I think you attended this meeting and spoke to 10 the issue of Past Roles; is that correct? 11 A. Correct. 12 Q. So "SR" is you; "NM" is Ms Marriott: 13 "[Simon Recaldin and Nicola Marriott] spoke to the 14 paper which set out a recommendation on the approach to 15 be taken in relation to the Past Roles Review and 16 staffing at the [Remediation Unit] in the light of the 17 change in operational context and political 18 environment." 19 We know that by then there had been the ITV drama. 20 Was that the operational context and political 21 environment, or was it something else? 22 A. It was absolutely the TV drama but, also, it was clear 23 that the Advisory Board were very uncomfortable. 24 Q. Thank you: 25 "As a reminder, the Past Roles Review had been 15 1 commissioned to look at the roles and activities of 2 current employees who may have previously undertaken 3 a role related to the subject of [the Inquiry], to 4 examine whether any conflicts, or perception of 5 conflict, arose." 6 How long had that been going on by then? I mean, 7 this is March 2024. 8 A. So the issue about Past Roles first came to my attention 9 and the Inquiry had a role to play in that -- I'm 10 grateful to the Inquiry for that -- in an individual 11 called Brian Trotter came and gave evidence to the 12 Inquiry, and I think that was March 2023. So that's 13 when the issue first came to my attention. 14 I was concerned about that background and that Past 15 Roles risk that that raised, and I escalated that 16 straight to the Chief Executive, who then mandated the 17 then Chief People Officer to conduct whatever needed to 18 be conducted in terms of the review of the issue and the 19 risk and how we were going to mitigate that risk. 20 Q. We're now here a year after that concern arose. Do you 21 think it was acting quickly enough? 22 A. Absolutely not. 23 Q. What do you feel was the hold-up? 24 A. Inactivity. This is a very delicate area and the first 25 thing was to do the review -- and I was very much 16 1 involved in that review, I actually chaired the forum -- 2 and to identify the individuals who might be of concern 3 in terms of -- not the activity. Again, to be clear, 4 there's no allegations here at all, that's separate. 5 This is nothing to do with Phoenix. This is -- 6 there are no allegations against these people. There is 7 no wrongdoing, and we've got to make that really, really 8 clear. There is no evidence of any wrongdoing of these 9 individuals. 10 And therefore, the first thing we had to do is -- so 11 if these people were around at the time of interest for 12 the Inquiry, what roles were they performing? So we 13 then, we started that exercise by looking at roles. So 14 what roles at the time would the Inquiry be interested 15 in? And we came up with a list of Investigators, 16 Contract Managers, et cetera, et cetera, that we knew 17 the Inquiry was interested in and where there could be 18 potential conflict. So we said, right, here are the 19 roles and are any of those people -- did they occupy 20 those roles at the time? 21 Q. Why does it take an Inquiry to realise that people who 22 worked as Investigators, for example, might be people 23 that you don't want in the team that's deciding 24 compensation and redress? 25 A. I think that's an excellent question, and one that 17 1 certainly wasn't addressed at the time. So when that 2 team was built, I don't think that was taken formally 3 into consideration. Now, in my work -- after Brian 4 Trotter's evidence, in my work that I did, I did look 5 for conflicts policies, and there were conflicts 6 policies, and they were mainly about you can't work for 7 two employers at the same time. That sort of conflict 8 policies. 9 But I did discover there were conflict policies 10 agreed between team members that, if there was a case 11 that they had previously been involved in or previously 12 knew any information about, they then would pass it to 13 somebody else who didn't have any background knowledge 14 of those. I was concerned about the lack of formality 15 around that conflict policy and I escalated that as 16 well. 17 So my regret is -- and it is a genuine regret -- is 18 that when I came in, in January 2022, that I didn't do 19 that conflicts check -- check back on my inherited 20 team -- and challenge that. And that I absolutely 21 apologise for because I think that's something that 22 should have been done. 23 As I said yesterday, that team was sort of 24 leaderless for about eight months, whilst I was being 25 recruited, and I think there was an assumption by the 18 1 business that that conflict check would have happened at 2 the time that team was being built, but it clearly 3 hadn't been. 4 Q. Who built up that team, do you know? 5 A. I think it was my predecessor. 6 Q. Who was that. 7 A. I can't remember the gentleman's name now. 8 Q. If we look at the bottom two bullet points, we have 9 description about the red category: 10 "Colleagues were rated 'RED', however, if they were 11 identified as giving rise to a perceived risk in terms 12 of undermining the integrity and independence of 13 remediation and redress work being done and in those 14 cases, redeployment had been recommended. 15 "Since the review had been undertaken, there had 16 been a significant increase in late applications and 17 [the Remediation Unit] work driven by current external 18 scrutiny and the heightened awareness that was 19 generating, organisational design delays had meant 20 an increase in colleagues who were deemed as 'RED' and 21 there no clarity yet on the Government's role in 22 relation to redress going forward and associate 23 processes and procedures. 24 "[Simon Recaldin and Nicola Marriott] noted the 25 implications arising from a reduction in headcount and 19 1 the risks posed to redress claim processing times." 2 So you were concerned at this point about -- you had 3 two problems: one was people were live to the issue of 4 those working in past roles in the Remediation Unit, but 5 you also have an increased amount of work for the 6 Remediation Unit to deal with; is that a fair summary? 7 A. Yeah, and I think, if -- to help the Inquiry, the 8 background here, which I think in Karen's evidence as 9 well was that these people were originally recruited in 10 this space because of their knowledge: their system 11 knowledge. And I talked yesterday about the SFA, 12 shortfall analysis, and their technical expertise and 13 experience required to do that in a professional and 14 appropriate way. 15 So they were there for good reasons and because of 16 their skill base. But as I did explain yesterday, as 17 well, we knew the volumes were dropping off and we also 18 had this issue where, through this process that we did 19 in identifying roles, I think the numbers have been well 20 articulated, there were 27 individuals who were around 21 at the time who were occupying what we deemed as "red" 22 roles who were still in the business. And, therefore, 23 a proposal was that you could potentially redeploy those 24 individuals to mitigate that risk, that perceived risk. 25 Again, to be clear, you know, we've got unemployment 20 1 law and all of the rest of it. Now, a counter to that 2 would be, well, don't forget at the same time we're now 3 getting increasing volumes in because of the Bates Post 4 Office drama and, therefore, what we can't afford to do 5 is slow down redress. So if we redeploy those people, 6 is there a risk we'll slow down redress? 7 Q. The decision as at March 2024, as shown here, was that 8 there would be what's referred to as a "many-to-few" 9 approach, which is effectively getting rid of those 10 individuals, is it? 11 A. Or redeploying, yeah, redeploying those individuals. 12 But many-to-few is you would actually backfill, so you 13 would recruit people and these individuals would help 14 train the new individuals, and then move off. So you 15 would effectively ring-fence them. 16 Q. Okay. Moving on to April 2024, can we please look at 17 POL00448649. We then have a Board meeting. It's a note 18 of a Board meeting that we've seen before, so I'll take 19 it pretty quickly but, if we go to the second page, it 20 sets out there, if we scroll down slightly, the three 21 categories: one is employees due to give evidence; the 22 second is the Past Roles people; and the third is those 23 who are in the Project Phoenix category. 24 If we go over the page there's discussion, page 3, 25 about halfway down. Were you involved in Phoenix at 21 1 all? 2 A. No. Well, if I can clarify that: I think as the 3 evidence of Mr Read said, during restorative justice 4 meetings, that myself and other Post Office Executives 5 attended, if there was any allegation of wrongdoing by 6 an individual member of staff current or indeed past, 7 then we would log that and that will be referred to 8 Project Phoenix. That's my only involvement. 9 Q. It says there, slightly further down, at the top: 10 "The Chair asked NM [Ms Marriott] to provide 11 an overview of category two [the Past Roles category]. 12 [She] spoke through the category outlining the work that 13 had been undertaken to assess from conflicts arising 14 from roles associated with the activity covered by the 15 Inquiry in current roles and detailed the employee 16 population that this work had identified. NM noted 17 proposed restructuring however this had not been 18 actioned due to the need to retain the workforce given 19 the high number of new applications to HSS ..." 20 So this is a month later, after the many-to-few 21 approach had been determined. Am I right to understand 22 from this that, in fact, that slowed down, to some 23 extent, because of the new applications to the Historic 24 Shortfall Scheme? 25 A. I think you can. 22 1 Q. Did you have any concerns about that? 2 A. Apologies, can you remind me of the date of this Board 3 meeting. 4 Q. This one is April. 5 A. 20? 6 Q. It's 29 April 2024. 7 A. I think I had concerns about the pace of the activity 8 and I was extremely aware of the optics and the concern 9 that I was receiving from the Advisory Board. 10 Q. Was there anything you were able to do about that? 11 A. I was part of the working party. I was engaged in 12 working this -- the solution. So, and as previously 13 advised, I was actually chairing the forum that 14 determined whether a role was red or not, and therefore 15 we went through, you know, religiously and in very fine 16 detail about the individuals that were occupying those 17 roles at the time, and therefore what category they were 18 to be determined. 19 It's a very, very sensitive area because you are 20 also -- you're on the edge of employment legislation and 21 all sorts of things. It's a very, very delicate thing 22 and, you know, these people have done nothing wrong. 23 Q. There were suggestions, especially from the 24 Subpostmaster Non-Executive Directors, that a suspend 25 first policy should have been approached. What's your 23 1 view on that? 2 A. I'm aware of that approach. And, look, this was treated 3 as seriously as it should be, and these were Board 4 decisions. 5 Q. Would you support a "suspend first" approach or not; did 6 you support a suspend first approach or not? 7 A. These were Board decisions and the Board made those 8 decisions. I personally would not support -- you know, 9 whilst investigations were going on, a suspension no, 10 I personally wouldn't. That would have not been one of 11 my recommendations for the paper. 12 Q. Thank you. If we scroll over, we can see: 13 "NM detailed the proposed approaches in relation to 14 the different employee populations within category 2 15 noting the benefits and risk involved. For the 23 'red' 16 employees it was proposed that a preferencing exercise 17 was run to understand the appetite for voluntary 18 redundancy or redeployment. If neither of these options 19 were taken a forced change in employment would be 20 affected or as a last resort the employee would be 21 dismissed." 22 It all seems to be dragging on a little bit at this 23 stage, doesn't it? 24 A. I agree. 25 Q. Who do you say is responsible for that? 24 1 A. I think the Grant Thornton report actually articulated 2 it better than I could possibly do. Is -- there is some 3 serious challenges in Post Office around decision making 4 and making very, very tough decisions and, therefore, 5 not wanting to make decisions, and therefore potentially 6 elongating processes. And, for lack of better words -- 7 and this is not appropriate wording -- but kicking 8 things into the long grass for a decision later, for 9 a decision later. 10 And I think that, combined with some pretty serious 11 cultural issues in this space, I think it was a cauldron 12 of indecisiveness about of what to do, including, you 13 know, proper legal advice about employment law, 14 et cetera, et cetera, of what can be done on optics. 15 These conflicts -- this is optical because there is no 16 evidence here that -- these people are not involved in 17 decision making, they're just involved in the process 18 and, therefore, it is -- I keep on saying it's 19 a sensitive area and it is, so there's a delegate path 20 here to travel. 21 In the meantime, the political environment and what 22 I call the Man on the Clapham Omnibus, the public 23 opinion, optically, the message is clear. 24 Q. I can take you to an email chain specifically on the 25 topic of Brian Trotter, who is somebody you have already 25 1 mentioned. If we look at BEIS0000851 and start on 2 page 2, please. On the bottom of page 2, you can see 3 an email from Mr Brightwell from the Department for 4 Business and Trade to yourself. He says: 5 "This from Richard Moorhead: 6 "An SPM approached me worried that two staff 7 involved in Horizon matters pre-Bates are, have been, or 8 may be involved in redress. Brian Trotter and Mervyn 9 Jones. 10 "Helpful to know where these stand, please." 11 If we scroll up, you say: 12 "[Brian Trotter] exited (by me) mid-2023 -- he gave 13 evidence at the Inquiry late 2022. Previously he had 14 been a Contract Manager -- hence why he was called as 15 a witness -- but after leaving Post Office he came back 16 as a contractor in [the Remediation Unit] but not in 17 a role with any influence/decision making -- purely 18 admin." 19 As you said, Mr Trotter was a witness in the 20 Inquiry, he was an Area Manager, he was a Contracts 21 Manager. We saw him involved in, for example, an email 22 chain in the context of Callendar Square; emails from 23 Anne Chambers of Fujitsu; he was involved in the 24 suspension of subpostmasters; he was, I think, 25 criticised by Mr Justice Fraser. What do you say was 26 1 his purely administrative role and do you recognise 2 that, even in that role, there is a problem if somebody 3 like that is employed in the Remediation Unit? 4 A. It doesn't matter what role he was employed in as 5 a Contract Manager. It's a problem, it should never 6 have happened. It's outrageous that that was allowed to 7 happen. It's a blatant conflict of interest. It should 8 have never happened. 9 Q. Can you assist us with what kind of a role within your 10 unit he was performing? 11 A. I am reliably advised it was a purely admin role, there 12 wasn't any influencing in terms of what he was doing but 13 what I would add -- not that you've asked me, but what 14 I would add, and I've been very clear to the entire 15 Executive of Post Office, and I think, you know, it's 16 a reflection on probably the cultural environment that 17 we're dealing with here, is that sentence there, "BT 18 exited (by me) mid-2023", that was one of the most 19 difficult things I've had to do in Post Office, in terms 20 of working the system in order to exit Mr Trotter when 21 his fixed-term contract simply expired at mid-2023. 22 It was one of the most difficult things I had to go 23 through in terms of engagement with the right people and 24 the appropriate action to be taken. 25 Q. You spoke about the Grant Thornton report and the 27 1 indecisiveness. Did you experience any of that in 2 relation to Mr Trotter? 3 A. In spades. 4 Q. Where was that coming from? 5 A. A lot of it by -- an example was fortuitously, or by 6 accident, I actually met his line manager, who was 7 required to deliver the message because -- as line 8 manager, and she was clearly very, very uncomfortable 9 with being able to do it and advised me that it might 10 have implications on other people, and nobody has done 11 anything wrong, et cetera, et cetera, and therefore -- 12 it was clear from her body language and everything that 13 she was very, very uncomfortable with it. 14 And I said, "Look, you're uncomfortable, I don't 15 want to put you in a position where you're going to be 16 too uncomfortable, that's fine, and do you want to take 17 the opportunity for somebody else delivering the 18 message?" And she took that opportunity. So 19 I escalated that up and somebody else had to deliver it. 20 But the whole process of getting Mr Trotter into that 21 position, appropriate position, was torturous. 22 Q. In light of the time and in light of your evidence 23 I won't take you to it, I have that whole series of 24 correspondence that you will have seen in your bundle 25 around this time: there's the letter to Professor 28 1 Hodges; that BEIS0000843; there is an email chain 2 involving Professor Moorhead, Lord Arbuthnot, that's 3 BEIS0000846, that's July 2024; there's also BEIS0000848; 4 an email from Professor Moorhead to Chris Hodges and 5 others, that's BEIS0000849, that's August 2024. 6 You'll have seen those chains in your bundle. Do 7 you think that you personally had a sufficient grasp of 8 the risks involved, irrespective of whether those 9 individuals were working in your unit, were involved in 10 specific allegations of wrongdoing, do you think that 11 you understood and were doing enough about the potential 12 risks that were posed by them working within the unit? 13 A. I absolutely understood the risks and the potential 14 risks. And, as a number of Board members will confirm, 15 in terms of making my views clear about what could be 16 done, what we should do about it, I've been very, very 17 clear. 18 Q. Final topic from me today is Project Alder and I want to 19 deal with this very briefly. Could we please bring up 20 on to screen POL00448907. This is a report that we've 21 seen before from John Bartlett. It outlines various 22 investigations that were ongoing within the business. 23 If we could please turn to page 12 and onwards, it makes 24 clear that outside agencies have been involved in these 25 investigations and, therefore, we don't need to deal 29 1 with them in depth. But just to outline, Project Alder, 2 there are two slides there. It says: 3 "The principal allegation is that the senior 4 contractors in the [Remediation Unit] caused the 5 handling of compensation claims to go slow in order to 6 extend their well-paid tenure at [Post Office]." 7 "DLA Piper was engaged to conduct an independent 8 investigation." 9 If we scroll over, there's an outline of the current 10 situation: 11 "A large number of interviews have been conducted 12 [including with you]. 13 "No evidence to date [about a gravy train]." 14 It does say here that: 15 "There is considerable evidence gathered so far 16 which shows that some delays could have been avoided and 17 that a contributing factor was the dysfunctional 18 relationship within [the Remediation Unit] between the 19 [Post Office] staff and contractors. There are two or 20 three key interviews remaining but this looks like 21 an established position. 22 "There is also evidence of a failure of leadership 23 at several levels in the [Remediation Unit] and that 24 decisions made within the [Remediation Unit] were very 25 focused on value for money rather than best outcome for 30 1 [postmasters], to the detriment of some [postmasters]." 2 Can you assist us with what the current position is 3 in relation to Project Alder? Any findings, if you 4 could just summarise those for us, that would be very 5 helpful. 6 A. Of course I can. The two -- the two most significant 7 allegations -- well, as advised there -- were that -- 8 it's interesting in there the word "deliberate" is not 9 in there but the allegations were -- well, the word 10 "deliberate" is in the allegation -- is that RU senior 11 members of staff deliberately delayed redress in 12 a non-Horizon -- by the way, a non-Horizon compensation 13 scheme, suspension remuneration: they deliberately 14 delayed redress. 15 And the second allegation was, actually -- I think 16 it was a named individual deliberately dragged their 17 feet in order to get their contract renewed. Those are 18 the two most significant allegations in there. 19 And I'm -- you asked me yesterday about whether 20 I had enough time to deal with all the things I had to 21 do and whether I had an appropriate resource. It says 22 in that report I was interviewed four times. I was 23 interviewed for over 11.5 hours by DLA on this issue. 24 So you ask me what -- to summarise what the outcome 25 was, which I'll get to straightaway. Those two serious 31 1 allegations -- and you cannot make this up, Mr Blake -- 2 those two serious allegations were actually withdrawn 3 during the investigation by the individual who made the 4 allegations. In addition, the report concluded that 5 there were no findings about whether redress -- it said 6 that redress was not delayed at all and the individual 7 named did not deliberately drag their feet in order to 8 have their contract. 9 So there were no findings at all but those 10 allegations were actually withdrawn and the report in 11 the management summary, paragraph 3.2, makes it 12 absolutely crystal clear that the reason why the report 13 was commissioned in the first place was because of these 14 allegations, and the author recognised that the 15 withdrawal of those allegations made the report 16 superfluous. 17 As you say -- as you can see, I'm quite passionate 18 about this because this was a direct poor reflection on 19 my team, which was totally inappropriate and uncalled 20 for. 21 Q. I don't know if you've heard the evidence in the Inquiry 22 when we heard from the Subpostmaster Non-Executive 23 Directors. There was a suggestion of 24 an over-investigations culture within the Post Office. 25 Is that something that you agree with, that you share, 32 1 or what are your views on that? 2 A. Mr Blake, I share with a passion. 3 Q. Who do you hold responsible for that? 4 A. I've been here before with you, Mr Blake: it's 5 a cultural thing. I truly believe it's a cultural 6 thing. And it's interesting the new Senior Management 7 Team in have already mentioned it to me about a culture 8 of raising, you know -- and absolutely within the rules 9 -- you know, raising grievances and raising 10 a whistleblowing on a number of issues because it's 11 there. And it is, you know, it's -- we're in a very 12 sensitive environment. I mean, Post Office is shot to 13 pieces, okay. It absolutely -- and, therefore, 14 everybody is extremely sensitive. Nobody wants to make 15 a decision, okay, and every decision, they worry about 16 the consequences of making a decision. 17 And it's been in this environment, quite 18 understandably, because of the bad place that Post 19 Office has been in. And by the way, you know, it's all 20 true. 21 So it's such a bad place but there's a culture, it's 22 absolutely -- you know, that I experienced, and I have 23 to caveat that, is that only the bit that I experienced, 24 that I have seen culture within Post Office elsewhere, 25 you know, in the retail business, in many -- in 33 1 Procurement, et cetera, and many other areas, 2 Communications, where the culture is clearly not like 3 this. The area that I work in, the culture is very, 4 very challenging and, to answer your question, is there 5 is this environment. 6 You know, I feel very strongly about this. I have 7 worked for 35 years -- 38 years now I've worked, and for 8 the best part of 35 years I've worked for NatWest Royal 9 Bank of Scotland, going through a number of different 10 management levels. And for 25 years of those, I've 11 managed people either from one team up to over 1,000. 12 During those 25 years of managing people, I've never 13 ever had a grievance against me. I've never had 14 an investigation about me about anything. 15 And this is very personal, Mr Blake, and I hope you 16 don't mind me sharing it, and I feel very strongly about 17 this. And in those 25 years, never an investigation, 18 never a grievance, nothing. In fact, I'm happy to 19 share, you know, 360 feedback on a consistent basis, 20 done annually has been outstanding. 21 I've worked for three years in Post Office and I've 22 been investigated five times, Mr Blake. You've asked me 23 "Who do you blame?" I don't blame an individual and 24 I don't blame anybody. I point to the culture that 25 I face. And I think it's really unfair, really, really 34 1 unfair, to say that culture is across Post Office 2 because it's not. You know, Post Office keep over 3 11,500 branches open every single day. It's amazing 4 what they do and how they do it. Cash centres, 5 distribution networks, motivating postmasters, 6 remuneration schemes. You know, I genuinely don't know 7 how. It's a very sophisticated business and it's 8 amazing how they do it and, you know, the culture in 9 there is absolutely appropriate. 10 I'm only talking about the culture that I have 11 experienced in the last three years. 12 MR BLAKE: Thank you. Mr Recaldin, I don't have any further 13 questions. 14 There are questions from Core Participants. 15 Sir, do you have any questions before we -- 16 Questioned by SIR WYN WILLIAMS 17 SIR WYN WILLIAMS: Yes, just one or two. I want to be clear 18 about that last long answer, Mr Recaldin, which included 19 the phrase "Post Office is shot to pieces". All right? 20 At one level, that could be taken as a description 21 of the whole of the organisation and, if that is 22 accurate, obviously, it is extremely concerning. But 23 you seem to have qualified it, in effect, to that part 24 of the Post Office with which you are most concerned, 25 which I take to be activities around the Remediation 35 1 Unit. 2 So could you actually, as clearly as possible, try 3 to define whether you are making a general criticism of 4 the Post Office as an organisation or whether you are 5 making a specific criticism about a specific part of it? 6 A. I think -- thank you, Sir Wyn, for the opportunity for 7 clarification. 8 As I've said, I have caveated it and, in terms of -- 9 there are -- yeah, almost the entire Post Office I do 10 not experience and therefore I cannot comment on the 11 culture in the other areas. I am restricting it to me. 12 But I look at the challenges -- putting my leadership 13 hat on of Post Office, I look at the challenges around 14 governance and the issues that have been raised by the 15 Inquiry in terms of the Board and dysfunctional 16 behaviour at that level as well. And so when I say 17 "shot", I mean a number of issues during my tenure at 18 Post Office have been raised that, you know, in terms of 19 challenges of professionalism, of how you run 20 a business. 21 And so I think it's a good challenge back, and thank 22 you for the opportunity of clarification, Sir Wyn, in 23 I have to say it's my challenge -- I don't see it as 24 a criticism -- my cultural challenge is very much in the 25 space that I occupy, and that I am -- you know, I am 36 1 frustrated by a number of aspects of it in terms of all 2 I want to do, all I want to do, is pay redress as much 3 as I possibly can to postmasters. 4 SIR WYN WILLIAMS: But are you telling me -- and I'm sorry 5 to put you on the spot -- in terms that the culture 6 related to the persons who are leading and determining 7 compensation in the Remediation Unit is such that it is 8 having a really serious, damaging effect on the ability 9 to pay compensation fully, fairly and promptly? 10 A. Sir Wyn, I'm not going to go that far because, if it -- 11 if I was facing that situation, Sir Wyn, I would not be 12 here. I would not tolerate that; I would not be here. 13 But is it one of my many challenges? Yes. 14 SIR WYN WILLIAMS: So if I modified it to say that the 15 culture, as you describe it, is a significant 16 contributing factor to some of the difficulties which 17 have occurring in paying compensation fully, fairly and 18 promptly, would you agree with that? 19 A. I don't think it has impacted on fully, fairly and as 20 timely as possible. I don't think it has impacted on 21 that. But it is another issue to be dealt with, and has 22 impacted, in terms of my time, other people's time, in 23 dealing with those challenges. So for example, dealing 24 with the past roles issue, has been extremely time 25 consuming. 37 1 SIR WYN WILLIAMS: Right. So it's a constant challenge -- 2 it's a constant challenge? 3 A. It's a con-- and, therefore, taking my bandwidth, 4 Sir Wyn, does that mean I'm not making decisions on 5 redress? Potentially. Do I feel that has delayed 6 redress or curtailed redress? No, I don't because 7 I just work harder. 8 SIR WYN WILLIAMS: Right. On Past Roles, just so I'm clear, 9 have you now completed any work you needed to do in 10 relation to Past Roles? 11 A. Yes, and a plan is now in place around those 27 12 individuals and that plan is in the course of being 13 executed as we speak, Sir Wyn. 14 SIR WYN WILLIAMS: Right. Well, that, in effect, is 15 confirmation, I think, of what Ms McEwan told me -- 16 A. Correct. 17 SIR WYN WILLIAMS: -- that this was very close to the end of 18 the process. 19 A. Correct. 20 SIR WYN WILLIAMS: So that's where we are, yes? 21 A. Yes. 22 SIR WYN WILLIAMS: Right. Then, finally, just trying to 23 pinpoint who your predecessor may have been, can 24 I mention a name and you tell me if I've got the right 25 person. 38 1 A. Of course you can, Sir Wyn. 2 SIR WYN WILLIAMS: Mr Salter. 3 A. Declan Salter. Thank you very much. 4 SIR WYN WILLIAMS: Right. As I understand it, there was 5 a gap of about eight months between -- 6 A. That's right. 7 SIR WYN WILLIAMS: -- Mr Salter departing and you arriving? 8 A. Yes, Sir Wyn. 9 SIR WYN WILLIAMS: All right. Those are my questions. Over 10 to the Core Participants. 11 MR BLAKE: Thank you very much. I think it's going to be 12 Mr Jacobs first. 13 Questioned by MR JACOBS 14 MR JACOBS: Thank you, sir. 15 Mr Recaldin, good morning. I want to ask you about 16 restorative justice. 17 A. Oh, right. 18 Q. You deal with restorative justice meetings at 19 paragraph 35 of your sixth witness statement. These are 20 meetings where postmasters meet -- meet you and Mr Read 21 and other senior executives -- and relay their 22 experiences and concerns in relation to of the scandal; 23 that's right, isn't it? 24 A. It is. 25 Q. You may or may not know but Howe+Co, who instruct me, 39 1 raised this issue with the Inquiry on 13 October 2022, 2 and since 22 June 2023, there have been 20 days of 3 restorative justice meetings that you have held. 4 I think you have been to every single meeting, haven't 5 you? 6 A. I have. 7 Q. 57 of our clients, along with at least one supporting 8 family member attended those meetings and over 114 9 individuals and victims have met you and other 10 directors; is that right? 11 A. That's right. 12 Q. Here today are Maureen McKelvey, who sits next to me, 13 Heather Earley, and behind me Fiona Elliott and 14 Katherine McAlerney. They are three rows behind me, 15 there wasn't enough room on the row for them. They were 16 present at the first meeting with you in Belfast in June 17 2023; is that right? 18 A. Yes. 19 Q. They're still awaiting for their compensation claims to 20 conclude and I know that you're going to meet them next 21 month, aren't you, to discuss -- 22 A. Yes. 23 Q. -- their -- 24 A. I was hoping to meet them today. 25 Q. You were indeed. Other matters have intervened. 40 1 So very generally -- I don't want to discuss their 2 individual cases, obviously you're going to be meeting 3 with them to talk about these cases -- where these 4 meetings take place and you or Post Office directors 5 give assurances that everything is being done to deal 6 with things very quickly in terms of compensation, 7 perhaps assurances are given that matters will be looked 8 at within months, what can you do to make good on those 9 assurances now, now that we're in 2024, coming into 10 2025, if claims are still ongoing? 11 A. What can I do? And I am grateful because the four 12 lovely ladies that you referred to, they do approach me 13 directly. You know, "We've had this meeting with you, 14 you know, can you help me with where is my case?" And 15 I'm very comfortable, by the way, with those sort of 16 approaches. 17 Again, we can't talk about individual cases. 18 Q. Of course. 19 A. But they are split across -- to Mr Blake's point 20 yesterday, they are split across the Post Office and the 21 Government schemes. And in terms of if the case is in 22 the Government space, I am limited in terms of what 23 I can do about that, but I will escalate within the 24 Government in terms of using my contacts within the 25 Government to say I've had a concerning email and 41 1 approach about the speed, or whatever it is, can you 2 help? And I understand that they do proactively reach 3 out to people to say, "This is where your case and we 4 have this SLA of working within X days, et cetera, 5 et cetera". 6 In terms of the cases that are in my schemes -- and 7 it's interesting I call them my schemes, isn't it -- is 8 I escalate within my teams to say "So why are we waiting 9 so long on this? What's going on on that case? Why 10 haven't we received the medical report on that?" So 11 I will escalate accordingly. 12 So your question is what can I do? I'm conscious 13 that I'm talking too fast, sorry. What I can do is 14 I can escalate and intervene to try and help. 15 Q. Okay. Thank you. The feedback from our clients who 16 have attended these meetings have been generally very 17 positive. People say, "I'm glad" -- I'm reading a quote 18 from a client now: 19 "They listened to our experiences and I felt they 20 were appalled by our stories. Nick and Simon were very 21 engaged with the impact the Post Office had on our lives 22 ..." 23 I'm assuming that's Nick Read, who sits behind me as 24 well. 25 You say in your statement that these meetings help 42 1 you to understand the wide-reaching and long-lasting 2 effects of the scandal on each person and their 3 families. What messages have you felt that it is 4 important to pass on from these meetings? 5 A. Where do you want me to start? 6 Q. Well, what are the main take-home points? For example, 7 Ms McKelvey was acquitted in 2007 and there was no 8 inquiry, no publication of her trial, and other cases 9 where the Post Office secured convictions, they were 10 crowing from the rooftops. That sort of thing -- 11 A. Yeah. 12 Q. -- these stark issues. 13 A. So to be clear, Nick and I mandated ourselves -- 14 especially coming back from Belfast. It made a huge 15 impression. And we mandated ourselves that people 16 needed to -- you know, people in Post Office needed to 17 hear these stories and that's exactly what we did. And 18 we started from the top. We started at Board meetings. 19 I can remember when we came back from restorative 20 justice, we mandated ourselves to communicate down, 21 cascade down, these horrific stories, okay? 22 And "stories" -- you use the word "stories", if it 23 is made up. This isn't made up; this is real life. And 24 they're absolutely horrific. And my apologies again for 25 the experiences that you have -- you ladies have been 43 1 through. 2 It's unforgivable. And Nick and I made ourselves to 3 ensure that those messages got through. Indeed, as 4 a result of that, there is a sort of training programme, 5 a governance training programme that is now in place, 6 that actually tells some of these stories in -- I think 7 they take snippets from the Panorama programme and 8 snippets from the Inquiry when people were giving their 9 witness statements, in terms of cascading those messages 10 back how serious this actually was. 11 And, you know, this is a bit of a wake-up call. 12 This is the place we've come from and we must ensure 13 this never ever happens again. 14 This is not -- of course, it's about the shortfall. 15 Of course, it's about the Horizon system. But you know 16 what this is really about? This is about the journey 17 that Post Office took people through, and that's the 18 issue. Of course, it's the IT issue. Of course, it's 19 the technology thing and the alleged potential cover-up 20 et cetera, et cetera. 21 But it actually is the way that Post Office spoke to 22 people and dealt with these issues. It's absolutely 23 disgraceful. 24 Q. You talk about cascading back and, in your witness 25 statement, you say at paragraph 38 that, following the 44 1 meetings, you ensure each of the victims' experiences is 2 shared with the Executive Team. 3 A. Yes. 4 Q. Which members of the Executive Team in particular do you 5 share this with; how does that work? 6 A. So I usually post a restorative justice meeting. It's 7 usually a SEG meeting, which was GE and now it's SEG, 8 and I have the opportunity to download, more often with 9 the senior executive who was with me at the time, so we 10 do a bit of a joint approach. So it will be the 11 Executive Team. 12 Q. Part of our clients' concerns are that there has been 13 a churn in the Executive Team, people move on, and these 14 experiences need to be shared throughout the whole 15 company; do you agree? 16 A. I agree. 17 Q. Do you accept that the culture at the Post Office is 18 still very much a work in progress? 19 A. Yes. 20 Q. You've heard the evidence of Mr Ismail and Mr Jacobs in 21 that regard? 22 A. Yes. 23 Q. So what proposals do you have to ensure that the 24 experiences of people like my clients, who are with me 25 today, are communicated throughout the whole of the Post 45 1 Office, not just the executives who may move on in 2 a couple of years? 3 A. Yeah, and there are executives who have attended these 4 who have not moved on or who are not moving on, so there 5 are some there already who will not -- Karen is a great 6 example, Karen has done couple of restorative justice 7 meetings and she is very proactive in communicating the 8 message down. And part of the -- part of one of our 9 many workstreams is to understand and help build a -- 10 whatever a legacy means, ie something permanent that 11 ensures that these stories are never ever forgotten 12 about. 13 Q. Will these stories be dealt with within the strategic 14 review that the Post Office is conducting? 15 A. Not necessarily. It's yet to be determined about how 16 they are. I'll give you an example of, at a higher 17 level, in terms of in the Post Office Head Office at 18 Wood Street there is a timeline of where Post Office 19 came from, all the way from wagon and horses, et cetera, 20 all the way thorough. And in there, if you visit it, 21 there is a recognition of the Horizon scandal. So it's 22 formally on the timeline. It's formally embedded in 23 history. 24 Now it's important that these journeys that many 25 postmasters experienced, these awful journeys, that 46 1 they're embroiled and embedded in the understanding of 2 Post Office, and to ensure it never happens again. 3 Q. I want to ask you about wider restorative justice and 4 this was something that was raised in correspondence 5 back in 2022 with the Inquiry. The proposals that those 6 instructing me have put forward are for a number of 7 measures that go beyond simple payments of compensation. 8 It's not an exhaustive list but I'm just going to tell 9 you what they are and ask you questions about them. 10 So the first proposal is for ongoing psychiatric and 11 counselling support for subpostmasters and their 12 families. 13 A. Mm-hm. 14 Q. Second is bursaries to assist with the retraining of 15 postmasters and for the education of their children 16 whose education was disrupted by the scandal. Then 17 a tangible memorial scheme to mark this as the largest 18 miscarriage of justice in British legal history, that 19 sympathetically records the experiences of the 20 subpostmasters and how profoundly they and their 21 communities were affected. 22 Then steps to restore reputations within local 23 communities, engagement with the local press. 24 What steps have Post Office taken to bring these 25 sort of schemes about? 47 1 A. So a number of those opportunities have already been 2 taken. So in a restorative justice meeting, we do offer 3 how can we -- is there anything we can do to help you? 4 Now, we also recognise, you know, money is not going 5 to fix this. These ladies know that: money ain't going 6 to fix this. So it is what else can you do? And it's 7 about -- there's a journey here. And if those 8 restorative justice meetings mean they can move one 9 millimetre towards a better place on that journey, then 10 that's a success. 11 And many what appear innocuous requests, actually we 12 can do it, and we have done: articles in local press 13 about complete exoneration because of the stigma in the 14 particular area. Done those sort of things. Offering 15 references, simple things like that. 16 One lady I met wanted to have the exoneration signed 17 by Nick Read that her conviction had been overturned 18 because she wanted to put it in her toilet next to the 19 conviction that she'd had. 20 These are -- but to your point, sorry, to your 21 point, all those other things you've mentioned are all 22 being considered in terms of so what legacy are we going 23 to leave here to reflect this? 24 Q. The point I'm making is that this isn't really something 25 for individuals to ask for. There will be many people 48 1 who are affected by the scandal who feel too traumatised 2 to even meet with Post Office. Is there a plan for 3 a wider restorative justice scheme, for example to 4 include straight-up compensation for the family members 5 who might not form part of the existing schemes; is 6 there any provision that's being planned for a wider 7 scheme, statement of principles, as to what Post Office 8 will do rather than just individual offers? 9 A. So there is a working party that is pulling together 10 proposed ideas of what legacy we should leave and 11 bursary, extra, in terms of the legacy, something to be 12 referred to, something to be used in the future. You 13 specifically talked about friends and immediate 14 relatives. We have had an approach from a group 15 representing the children of victims, and we are meeting 16 them shortly, to listen to their story. 17 Now, they've already met, I understand they've 18 already met with Fujitsu and their request is not 19 necessarily to talk about compensation, they just want 20 to tell the story and, absolutely, we should listen to 21 their story. 22 Q. What about Fujitsu? Paul Patterson has been recalled to 23 give evidence on 11 November. Has he contacted you or 24 has anyone in Fujitsu contacted you about restorative 25 justice proposals? 49 1 A. Not to me, no. Not me personally. 2 Q. We'll hear what he says about this next week but my 3 question for you is: do you think it would be 4 appropriate for Post Office to speak to them about these 5 issues, to speak to Fujitsu? 6 A. I think all options should be explored. 7 Q. When do you think these restorative justice proposals 8 that you've outlined will be implemented? 9 A. If they're implemented -- and, you know, the thorny 10 issue of funding, as ever, will have to come up, 11 outrageous as it does seem to be -- then it will 12 certainly -- I would suggest, you know, it would have to 13 be in the next year, they would have to establish 14 something. I don't know is the answer but I'm trying 15 not to put a timescale on it but it's recognised that 16 something that should be done. 17 MR JACOBS: I need to ask if I have any further questions to 18 ask. 19 MR STEIN: Sir, just give me one moment to speak to my 20 junior. 21 SIR WYN WILLIAMS: Hang on, I can't quite hear. 22 MR STEIN: Sir, that was my interruption. I just need to 23 speak for one moment to Mr Jacobs about one matter of 24 further questioning for Mr Recaldin. 25 SIR WYN WILLIAMS: Yes. (Pause) 50 1 MR JACOBS: Thank you. I've got one question to ask you, 2 a very good point that Mr Stein has asked me to raise. 3 This Inquiry is going to finish at the end of this 4 year, isn't it? 5 A. Yes. 6 Q. The hearings. How can there be any clarity and 7 oversight by the Inquiry in relation to restorative 8 justice if the Post Office won't commit to a programme 9 between now and the end of this year? 10 A. Well, I can absolutely give you assurance it is an issue 11 that is live, and that is being discussed as we speak in 12 terms of what -- I had a meeting about it literally last 13 week. So I can give you that commitment that this issue 14 is not going away, this opportunity is not going away. 15 I mean, I am sure Sir Wyn will make his own mind up 16 around how that's incorporated into the Inquiry. 17 But you have my assurance that this is absolutely 18 a work in progress. I don't know what more I can give 19 there. Apologies. 20 Q. Will you commit to providing a report in relation to 21 proposals and progress before the final report of this 22 Inquiry, so that this is something that will be 23 considered and subpostmasters will know what the 24 proposals are and it will be part of the Inquiry 25 process? 51 1 A. I think that's absolutely reasonable. 2 Q. So you will commit to do that? 3 A. I will commit to a proposal of what we should do in -- 4 absolutely, yes. 5 MR JACOBS: I have no further questions. Thank you. I'm 6 grateful. 7 MR BLAKE: Thank you. Sir, if we could take our morning 8 break now, and then we have questions from two further 9 Core Participants, I believe. 10 SIR WYN WILLIAMS: Fine. So what time shall we resume? 11 MR BLAKE: 11.30? 12 SIR WYN WILLIAMS: 11.30? Thank you. 13 MR BLAKE: Yes, thank you. 14 (11.15 am) 15 (A short break) 16 (11.30 am) 17 MR BLAKE: Thank you, sir. We're going to hear from Ms Page 18 and then Mr Moloney. 19 SIR WYN WILLIAMS: Yes. 20 Questioned by MS PAGE 21 MS PAGE: Mr Recaldin, do you take responsibility for the 22 mess that the Post Office compensation schemes are in? 23 A. I feel very accountable for the state that the 24 compensation schemes are in. I make myself accountable 25 for them. 52 1 Q. Should you have resigned by now? 2 A. That's a good question. I think there is a very, very 3 strong argument that maybe I should have done. 4 Q. Do you think your mistake was to accept the job, even 5 though you knew that the Post Office should not be 6 running the compensation schemes itself? 7 A. No, absolutely not. 8 Q. Is that why they're not working, though? 9 A. I wouldn't say they're not working. Nobody has said to 10 me they're not working. 11 Q. You tell us, no doubt sincerely, that the schemes you 12 run are not bureaucratic, that they are sympathetic. 13 You say you don't recognise the idea that they were set 14 up to deter applicants through tough eligibility 15 criteria, evidential requirements, and yet our clients 16 tell us the opposite and the fact is nowhere near enough 17 of their claims have been resolved after all this time. 18 Do you not accept that the problem is the very one that 19 you identified in your interview: too many of the people 20 administering the scheme are not independent? 21 A. No, I don't accept that. I don't accept that too many 22 people are not independent enough. I think -- no, 23 I don't accept that. 24 Q. In one of the emails, and I'll just give the reference 25 rather than bring it up, BEIS0000849, that's the email 53 1 chain with Professor Moorhead from the Horizon 2 Compensation Board, and in it you tell him that 73 3 people -- 4 A. That's right. 5 Q. -- who worked for the Post Office over the 20-year 6 period that the Inquiry is looking at, 73 of those 7 people were found to be working in the Remediation Unit. 8 Now, those are people who worked in the Post Office 9 when it maintained a fortress mentality towards 10 subpostmasters. So whatever they say to you and 11 whatever they say to themselves, they are effectively 12 the old guard, aren't they? 13 A. I don't know what "old guard" means. I recognise the 14 number -- I think that note was to Chris Hodges, the 15 Chair of the Advisory Board and that number is a number 16 of how many people were working in Post Office at the 17 time who were currently in RU at the time -- were in RU. 18 Q. Yes. 19 A. That's not where they used to occupy roles that the 20 Inquiry -- is of interest to the Inquiry. That's 21 a completely different number. That number is the 27 22 number that has been articulated here. So I was asking 23 the specific question that the Advisory Board were 24 asking me about how many were working at the time, and 25 many of these were counter clerks -- 54 1 Q. Yes. 2 A. -- ie roles which were of not interest to the Inquiry. 3 Q. But, nevertheless, they grew up in a Post Office which 4 encouraged them to think of postmasters, subpostmasters, 5 as the enemy, and that's why your unit has a culture 6 which gives claimants a hard time, no? 7 A. I don't agree with that statement. 8 Q. They are asked to provide documents from many years ago, 9 sometimes documents which the Post Office would have 10 sent to them in the first place, or surely should have 11 kept on file; they are asked to provide further and 12 further update medical records, as we've already heard 13 about Ms Skinner's case, but she's not alone in this. 14 This is the sort of conduct where postmasters are made 15 to prove every point. Do you not recognise that? 16 A. No. 17 Q. You've told this Inquiry that you are or were outraged 18 that Brian Trotter was still in the unit but you have 19 described how hard it was to get rid of him and how, 20 even at the end of his fixed-term contract, his line 21 manager, ie a member of your unit, would not deal with 22 it, felt that it would impact badly on others, felt that 23 he'd done nothing wrong. That shows the rot in your 24 unit, doesn't it, Mr Recaldin? 25 A. I think I've been clear with the Inquiry in the last 55 1 session about the culture that I face. And forgive me, 2 I've never used the term "get rid". That's 3 disrespectful. I've never used that term. 4 Q. No, but the term is not the point; it's the people 5 around -- 6 A. It is the point because it's about respect. It's about 7 the respect of individuals. 8 Q. It's the people around Mr Trotter not just Mr Trotter 9 himself that's the issue. Everyone in the unit affects 10 the people around them. And you've described how his 11 line manager was unable to see the point, was unable to 12 see why he should be exited. I think that's the term 13 you like. She couldn't see the point, could she? "He's 14 done nothing wrong", she said. 15 A. I didn't say that, I said -- and hopefully the script 16 will help me -- I think I said she was clearly 17 uncomfortable with delivering the message, and I asked 18 her "Are you uncomfortable in doing this?" And she 19 said, "Yes". I said, "Would you like somebody else to 20 deliver it?" And she said, "Yes, I would". So I took 21 her up on that option. 22 Q. Here's an example of how having these people in your 23 unit can play out. Mr Shiju, one of our clients, 24 applied to the HSS, and Caroline Richards attended 25 a good faith meeting in his case -- Caroline Richards, 56 1 who Mr Blake pointed out to you had been 2 an Investigator. She attended that good faith meeting 3 to explain the frankly risible £2,000-odd offer that was 4 being made to Mr Shiju. Following that meeting, she was 5 the main point of contact for Mr Shiju and Mr Marshall, 6 his lawyer, and it then transpired that she had been 7 an Investigator, which had never been disclosed. 8 Mr Marshall wrote to the Post Office asking about 9 her role and there was no reply from April 2024, all the 10 way through until September 2024, when Post Office 11 explained who she was, and that she had worked as 12 "Dispute Manager" from May 2022 to April 2024, so in 13 other words nearly two years. 14 Now, is it a coincidence that she was removed from 15 being the Disputes Manager in the same month that 16 Mr Marshall wrote about it or is it another case, like 17 Mr Trotter, of somebody only being exited once they had 18 been caught? 19 A. I don't know whether that's a coincidence or not. 20 I can't talk about individual cases, and apologies for 21 that. What I do know is that Caroline Richards is no 22 longer working in the Remediation Unit. 23 Q. Why did it take so long to admit what had been going on? 24 A. I'm not quite sure what "going on" is. 25 Q. Well, two years of her working as Disputes Manager and 57 1 then many months before that was confirmed, why did it 2 take so long to admit that she was in that role when she 3 plainly shouldn't have been? 4 A. I don't think there's any -- so these individuals are 5 not -- they're not decision makers around that. They 6 are in roles which do not require decisions so -- 7 Q. She attended a good faith meeting. 8 A. Yes, she did. 9 Q. Do you not see the problem? 10 A. Good faith meetings are not decision making meetings. 11 I recognise the optic, of course I do. I recognise the 12 optic of that -- 13 Q. Is it about the optic or is it about the reality that 14 she should not have been in that role? 15 A. And the fact that that individual has been moved out is 16 a recognition of that. And I am aware of the case. It 17 is -- look, it's really difficult to talk about 18 individual cases but I'm -- you know, absolutely from my 19 understanding of the case and in terms of the 20 individual, I apologise that that risk has become 21 apparent and I believe that Post Office have dealt with 22 that risk. 23 Q. These claimants are not difficult people, are they, 24 Mr Recaldin. They want to settle and move on but your 25 schemes are failing to deliver, aren't they? 58 1 A. These people are wonderful people. 2 Q. In the circumstances of significant delays, interim 3 payments are crucial, aren't they, because it's what 4 makes the difference for people who are sometimes very 5 desperate, between being able to carry on to get full 6 and fair compensation and giving up, isn't it -- 7 A. Yes. 8 Q. -- that interim payment can be that difference? 9 A. Yes. 10 Q. Yet you told us yesterday that the Department had 11 prevailed upon you not to offer interim payments and 12 countermanded interims that had been authorised? 13 A. I did. 14 Q. You also told us that in the HSS scheme, if an offer is 15 made but not accepted, people will receive the offer as 16 an interim payment if they ask. Why make them ask, 17 Mr Recaldin? 18 A. I don't think I said that. If I do, I apologise. 19 I think I said that, if they dispute their offer -- if 20 we make an offer and they say, "No, we dispute it", 21 we -- in that letter, we offer them 100 per cent interim 22 payments. 23 Q. Why not just send them the money? 24 A. They have to accept it. So we have to -- they have to 25 sign something to say, "We accept that interim payment". 59 1 So it's just an administration thing but the offer of 2 that payment is in that dispute letter. 3 Q. Well, then there's HSF. 4 A. Yes. 5 Q. You've been told directly by our clients, Ms Felstead 6 and Ms Skinner, that HSF press every advantage on behalf 7 of their client, the Post Office, just as they did when 8 settling the GLO. Alan Watts, lead partner for Post 9 Office compensation, also responsible for negotiating 10 the 2019 GLO settlement. Catherine Emanuel, the 11 recipient of a highly contentious email from Rodric 12 Williams, has conduct of much of the compensation 13 arrangements. It was an obvious problem, it was 14 an obvious problem from the start, and yet there's HSF, 15 one of the most expensive firms in the country, still 16 there, no doubt getting paid faster than the SPMs. Why? 17 A. Sorry, the question is why are HSF still there? 18 Q. Why are they still there? 19 A. Because they are still instructed by Post Office on 20 certain cases. As you know, they operate the back 21 office, the working environment, the operational engine 22 of the HSS and they still advise Post Office on the OC 23 claims. 24 Much, much more of that OC process is -- over the 25 time of my tenure, is now with Post Office. But there 60 1 is the independent panel, and that's the key thing about 2 the OC, is that Sir Gary is there now to provide that 3 independence for anything. And it is -- and Mr Blake 4 mentioned it earlier, that Sir Gary's services in terms 5 of opining on those cases has yet to be utilised. 6 I would encourage, absolutely encourage, for the usage 7 of Sir Gary. 8 Q. There's another structural problem, I would suggest, 9 with the HSS scheme. You've told us that it's built on 10 the principle that redress can only be paid to the 11 person or legal entity that the Post Office contracts 12 with. 13 A. Mm. 14 Q. That might have worked perfectly well as a principle, 15 were it not for the history, because, as we've learned, 16 at no stage over the 20-year period that we're looking 17 at did the Post Office make sure that every branch had 18 a clear and well-understood contract in place. Have you 19 taken that on board: are there any processes to ensure 20 that both the Post Office and the applicant agree that 21 the claim is actually based on the correct contract? 22 A. I don't know how to answer that question. I go back to 23 the scheme, in terms of the scheme is there to deal with 24 any entity who has a contract with Post Office or had or 25 has a contract with Post Office. 61 1 Q. Well, here's the difficulty -- and I'll give you two 2 examples, but they will by no means be the only people, 3 I'm sure, in this situation -- applicants who didn't 4 necessarily have the contract are being rejected, even 5 though it's clear that there is no eligible person left 6 to claim. 7 So, first of all, I'll talk about Mr Colin Savage. 8 He worked in partnership with his father at a branch. 9 When his father became unwell he was treated as if he 10 was the postmaster. Importantly, he was reported to the 11 Procurator Fiscal as if he was the postmaster. He was 12 interviewed about the shortfalls, criminally, as if he 13 was the postmaster. His father has passed away, the 14 partnership no longer exists and his claim has been 15 rejected: Post Office say he has no contractual 16 relationship. 17 This is essentially the same problem faced by Gowri 18 Jayakanthan -- who I'm sure you've already heard about, 19 the tragic case of the husband who took his life after 20 the Post Office goons came for him -- and her claim was 21 rejected on the basis that the company who he operated 22 through has been dissolved. These are people who are 23 the obvious only person who could claim because there is 24 no other person or legal entity in existence that could 25 claim and yet they are being rejected; do you see the 62 1 problem? 2 A. I do. I absolutely do see the problem and, in terms of 3 the -- you know we're in engagement on the -- I can't 4 talk about individual cases. I really apologise. 5 Q. The principle is the point. 6 A. I understand that and, in that first case, I do not -- 7 I recognise the second case, I do not recognise that 8 first case but you mentioned partnership there. If 9 you'd like to give me further details outside this, I'm 10 more than happy to look at that but I don't recognise 11 it. 12 Q. Well, we can certainly give you details -- 13 SIR WYN WILLIAMS: Can I just interrupt a moment because 14 I don't want to be too bogged down in the individual 15 case, but I am interested in the process, Mr Recaldin, 16 that should follow when, for example, an applicant is 17 rejected on the basis, shall we say, that they were not 18 the contracting party. Now, if that is disputed, what 19 should be the next step and how quickly should it 20 happen? 21 A. So the -- if -- for an eligibility issue, it sounds as 22 though this is an eligibility issue -- 23 SIR WYN WILLIAMS: Yes. 24 A. -- then they can absolutely have the right to challenge 25 that rejection of eligibility and that would come into 63 1 my governance and then we would say -- well, we would 2 look at it to say, well, is there any more information 3 we need to clear up this eligibility challenge? 4 SIR WYN WILLIAMS: Right. 5 A. I think in my evidence when I talked to Mr Blake, he 6 asked me how many of those cases there were, and I think 7 there were a handful of those cases. 8 SIR WYN WILLIAMS: Sure but -- 9 A. There is a process. 10 SIR WYN WILLIAMS: So the process is to go back to Post 11 Office. What about going to someone independent, at 12 what stage does that happen? If there's an impasse, 13 both sides are acting in good faith, they simply can't 14 agree, all right? 15 A. Yeah. 16 SIR WYN WILLIAMS: At what point does an independent panel 17 or person cut the knot, so to speak, and make 18 a decision? 19 A. Well, then we can escalate it and I think we have 20 escalated similar issues into the panel, into the 21 independent panel, to make that call. 22 SIR WYN WILLIAMS: Right, so in the overturned conviction 23 process, that will go to Sir Gary and his panel? 24 A. Yes, in an overturned conviction, yes, that world be 25 an opportunity, yes, correct. 64 1 SIR WYN WILLIAMS: In HSS, it would go through the various 2 stages which ultimately would lead to a mediation or 3 arbitration. At the moment there's no appeal process 4 that you can use? 5 A. No, I'm suggesting, actually, that if it's 6 an eligibility issue, that can go to the independent 7 panel, for them to opine on. 8 SIR WYN WILLIAMS: Okay, the same panel that decides the 9 compensation? 10 A. Yes. 11 SIR WYN WILLIAMS: That would be non-binding, would it not, 12 because they don't bind anybody, but the Post Office 13 always, so far, has accepted what they've said? 14 A. Thank you, Sir Wyn. Correct. 15 SIR WYN WILLIAMS: Okay, fine. So I've got the process. 16 A. Yes. 17 SIR WYN WILLIAMS: Thank you, Ms Page. I think we have to 18 leave it with the process, if we may. 19 MS PAGE: Thank you, sir. 20 Just then two final bones of contention, if I may. 21 Firstly, for many subpostmasters who were 22 prosecuted, they gave the Post Office the money which 23 was said to be the Horizon shortfall, either as 24 compensation or confiscation. 25 A. That's right. 65 1 Q. Those who have had their convictions overturned 2 obviously should receive that back with compound 3 interest, agreed? 4 A. Mm-hm. 5 Q. Why hasn't that been carried out proactively? Mr Kalia, 6 who sits at the end of the bench here, had his 7 conviction overturned in 2021. He borrowed £22,000 from 8 his late mother and he still hasn't had that money back. 9 Why hasn't this been done proactively; why does it wait 10 for the claimant to ask? 11 A. I don't know, and I understand that others have been 12 done proactively. So it's a good shout. Thank you. 13 I'll look at that because I don't know why because 14 others, I know, have been. 15 Q. Well, thank you. No doubt Mr Kalia will look forward to 16 that and, no doubt, others too. 17 Then finally this, and this is a tricky one 18 I acknowledge, but many subpostmasters have described 19 how they spent weeks, months, sometimes even years 20 covering shortfalls from their own money before running 21 out or running out of people they could borrow from, and 22 obviously those figures won't show in Horizon. What 23 effort has been made to try to think about how to 24 compensate people for that? 25 A. Compensate them for the monies they've put into -- 66 1 Q. Yes. 2 A. So if they've had a shortfall and the used their savings 3 to make good -- 4 Q. Yes. 5 A. -- to balance the books, then I might have missed the 6 point and I apologise if I have, is that not an HSS 7 claim? 8 Q. Well, as I understand it, the HSS claim only works if 9 the shortfall shows on Horizon but, if they've been 10 covering the loss, as many of them did, before they 11 started to say, "I just can't do this any more", Horizon 12 won't tell you how much they've done, have they? 13 A. The scheme activates when the shortfall has been 14 settled. So we can see the cash coming in, and so, you 15 know, the scheme is activated by a shortfall and it's 16 settlement. 17 Q. I see. 18 A. And, therefore, that would be an HSS claim. 19 Q. So -- 20 A. I might have misinterpreted that and I apologise if 21 I have. 22 Q. No, it may well be that I'm thinking about it from the 23 perspective of those who have had their convictions 24 overturned. 25 A. Yeah, okay, understood. 67 1 Q. Under those circumstances, does that mean that they 2 should apply to the HSS? 3 A. No, no. They should get that redress. They should get 4 it through the OC process. 5 Q. Is that something that you can take forward because, 6 again, we have clients who have not had that sort to 7 compensation repaid? 8 A. Well, I need to know about that then because, if that is 9 the case, they should have been and I apologise if they 10 haven't been. But that's the process. The process is 11 wrapped up in that. So I'd be very interested in 12 hearing about those cases, please. 13 SIR WYN WILLIAMS: But in relation to that, Mr Recaldin, it 14 surely is inherent in the fact that they were convicted, 15 that there was, at the time, alleged to be a loss -- 16 A. Correct. 17 SIR WYN WILLIAMS: -- which has now been shown to be wrong 18 and so the figure simply needs to be accepted, does it 19 not? 20 A. Correct, correct. 21 MS PAGE: I'm looking at two slightly different losses, sir. 22 I apologise if I'm not making myself clear but there's 23 obviously the loss which showed, and they were -- 24 SIR WYN WILLIAMS: I see -- 25 MS PAGE: -- prosecuted -- 68 1 SIR WYN WILLIAMS: But on other occasions when they put 2 money in -- 3 MS PAGE: Yes. 4 SIR WYN WILLIAMS: -- which was not the subject of a charge; 5 that's what you're talking about, is it? 6 MS PAGE: Exactly, so previous to whatever shortfall they 7 were prosecuted over. So that's the bit that I was 8 asking about but I think we're all clear now and you're 9 saying that they should be recompensed for that? 10 A. Okay. 11 MS PAGE: Thank you. 12 SIR WYN WILLIAMS: Yes, fine. Thank you, Ms Page. 13 Mr Moloney? 14 Questioned by MR MOLONEY 15 MR MOLONEY: Thank you, sir. 16 Mr Recaldin, I'd just like to ask you some questions 17 about aspects of the working of the schemes. The first 18 matter I'd like to ask you about is the £600,000 offer 19 in the OC context, if I can use that abbreviation, the 20 overturned convictions. 21 The £600,000 offer is not a floor for contribution, 22 is it? You're not guaranteed £600,000 within the OC 23 process? 24 A. Correct. 25 Q. Yes. 69 1 A. Well, sorry. You are if you accept it as full and final 2 settlement. 3 Q. I'll ask you a few more questions and then that will 4 elucidate essentially what I think you're able to say. 5 During the OC scheme, a schedule of loss is 6 submitted by the claimant, or can be -- and this was 7 always the case before the £600,000 offer -- schedule of 8 loss is submitted, and there might be disagreement 9 between the claimant and Post Office about the 10 appropriate quantum for the different heads of loss. 11 As an example, and no more, it's possible that 12 a postmaster might submit a claim for, let's say, 13 £650,000, and Post Office might come back and say, 14 "Well, actually, we only think it's worth 550". 15 Once a postmaster has submitted a schedule of loss, 16 after the implementation of the £600,000 offer, once 17 a postmaster has submitted a schedule of loss, the 18 £600,000 offer is no longer available to them, is it? 19 A. Correct. 20 Q. Yes. Would you agree that some postmasters who have 21 claims which are more than, but relatively close to, 22 £600,000, might feel pressure, in those circumstances, 23 to accept the offer of the £600,000 rather than risk 24 months of delay in negotiation, perhaps even ending with 25 an offer of less than £600,000 that they have to fight 70 1 on to the independent panel? 2 A. Mr Moloney, you know my views. My views were 3 articulated in the email which has been shared with the 4 Inquiry. So I do agree with you: that is a risk. 5 Q. Yes. Can I just give one more illustration -- 6 A. Of course. 7 Q. -- of how, in particular, that might occur within the OC 8 process, that many of the claims involve heads of damage 9 associated with loss of opportunity. 10 A. Yes. 11 Q. Yes. For example, a classic loss of opportunity is 12 a plan to take on another branch that didn't come to 13 fruition because all plans were interrupted by 14 shortfall, termination, prosecution, conviction, and so 15 on, yes? So there was that loss of opportunity. 16 Inevitably, such claims involve a degree of 17 estimation -- 18 A. Yes. 19 Q. -- of losses over many years, don't they? 20 A. Yes. 21 Q. So there's a potential for significant difference 22 between the parties -- 23 A. Yes. 24 Q. -- in the estimation of those losses? 25 A. Yes. 71 1 Q. Again, just to use an example, it might be that a claim 2 for £800,000, just to move it well beyond the 600, might 3 be assessed as worth only 450 in response. 4 A. Mm-hm. 5 Q. Again, that's a classic situation where that pressure 6 might be felt by the postmaster to essentially resolve 7 the claim, rather than face stress upon stress of 8 pursuing negotiations around that figure and going to 9 the independent panel. 10 Did you always understand that the 600,000 was not 11 a floor when it came in? 12 A. I think to be fair, yes. So -- and, again, that email 13 which the Inquiry has kindly circulated in the bundle, 14 I think, you know, that was me clarifying that because, 15 if it is a minimum payment, then I've got 60 cases here 16 that I can quickly top up to 600,000, and they made it 17 clear, no, it's not. This is not a minimum payment. 18 And I think the Government have been quite clear on 19 that, in terms of the 600,000 was designed to get to 20 settlement. 21 Q. Yes. 22 A. The -- I call it the risk, I've shared the -- the risk 23 of that is, as you have beautifully, if I might say, 24 articulated in those two examples, of does the 25 postmaster therefore feel under pressure to accept that 72 1 because it's too much hassle to fight for your 800 -- 2 you know what, because what happens if it does come out 3 as 450, I'm only going to get 450, as opposed to I could 4 take 600 now. So why take the risk? 5 And is that pressure? You know, and I understand 6 that. And also the ones on the cusp, where the legal 7 advisers are saying, "You know what, it looks about 8 650/625, but you could settle for 600". Is that 9 pressure; is that fair? 10 Q. You know, of course, don't you, Mr Recaldin, that 11 postmasters making applications are often, even now, 12 very vulnerable, aren't they? 13 A. Absolutely. 14 Q. They face financial pressures, no matter the interim 15 payments because the interim payments are often having 16 to be used for debts that have been built up over many 17 years, as a result of what happened with the conviction. 18 So they are vulnerable in terms of those pressures, 19 aren't they? 20 A. They've been waiting too long, Mr Moloney. 21 Q. Can I now move on to ask you some questions about the 22 HSS, the Horizon Shortfall Scheme, and, first of all, 23 about the relationship between -- if we can describe it 24 as a relationship -- as it were, legal representation, 25 the potential for increased determinations of 73 1 compensation offers following a panel assessment. 2 A. Yes. 3 Q. Lawyers for claimants are not involved -- just to 4 reiterate -- lawyers for claimants are not involved 5 until after the first offer, are they? 6 A. Correct. 7 Q. Yes. 8 A. Oh, sorry -- 9 Q. To put it another way -- 10 A. -- they can be involved -- 11 Q. -- there is no funding available for lawyers in -- 12 A. Thank you. 13 Q. But, of course, looking at it realistically, most 14 postmasters are in the position where they can't 15 afford -- 16 A. I agree, I agree. 17 Q. -- to instruct lawyers at that stage, can they? 18 A. No objections. 19 Q. Post Office, you said yesterday, wanted the process to 20 be legally light. You accept, of course, though that 21 it's not so light on Post Office side, is it, because 22 there are solicitors who have been instructed to, as it 23 were, deal with the initial application and assess it 24 before it goes to the panel? 25 A. (The witness nodded) 74 1 Q. That's a nod, Mr Recaldin, but I believe you might be in 2 trouble for not saying the word "Yes". 3 A. I agree. 4 Q. I've just seen that you would have been in trouble. 5 Thank you for saying "Yes", Mr Recaldin. 6 A. It was a nod, yes. 7 Q. Yes. Now, obviously, I can't speak for all claimants 8 but we've seen from the correspondence between Hudgells 9 Solicitors and you, that there have been substantially 10 increased offers in relation to cases where they've had 11 the benefit of legal advice and there's been 12 a redetermination of their claim. Could we please put 13 up HUJ00000007, please, that Mr Blakey took you to 14 yesterday, Mr Recaldin, and he identified four examples 15 of those increases. 16 A. That's right, yeah. 17 Q. There's one example I want to take you to in it, in 18 a moment, and thank you. If we could stay on that page 19 and go down towards the bottom. Just to, as it were, 20 examine why these figures may be so substantially 21 increased, it is sometimes, isn't it, because of the 22 identification of additional heads of loss? 23 There is a nod again there, Mr Recaldin. I'm sorry 24 but if you could put "Yes", as I believe is the 25 indication. 75 1 Indeed, you know that was something we alighted on 2 in our compensation submissions as long ago as 10 June 3 2022, for the Inquiry's compensation hearing in July 4 2022, that concern about missing heads of loss. 5 A. I do recall that, yes. 6 Q. Back in 2022, a number of small HSS claims had been 7 settled, and it was thought that the more complex claims 8 were the ones that were outstanding and would take 9 a long time to be dealt with. Can we just have a look 10 at number 4 on this page, Mr Recaldin, please. It's one 11 of those that Mr Blake took you to yesterday. It's just 12 4,500 to close to 134. 13 Now, would you agree, on the basis of that -- and 14 I don't suggest this applies to all small settlements -- 15 that it's not safe to assume that all small claims have 16 been properly settled? 17 A. So are you suggesting -- sorry, can you repeat that 18 question again? 19 Q. We see £4,000 is a relatively small claim? 20 A. Yeah. 21 Q. Back in 2022, there was a degree to confidence that 22 a lot of the small claims had been properly settled -- 23 A. Yeah. 24 Q. -- and that it was the more complex ones that were 25 outstanding. Would you agree, and I don't suggest this 76 1 applies to all the small settlements, but that is 2 an illustration of how it would be wrong to assume that 3 all of the small cases have been safely settled in the 4 absence of legal advice? 5 A. I think there is a case here, that looks like a small -- 6 and I don't know whether that's an offer or 7 a settlement. I would need to know more context behind 8 this case because I think what may have happen is that 9 the lawyers have done their usual excellent job in 10 identifying additional heads of loss and additional 11 information to make that significant jump. So I'm not 12 quite sure whether you can there that into all small 13 offers are -- 14 Q. Quite. 15 A. -- unsafe. 16 Q. No -- 17 A. You're not going to that far? 18 Q. -- I'm reversing that because I'm saying it would be 19 wrong to assume that they all are safe? 20 A. Correct, yes. 21 Q. That, perhaps, I hope you'd agree, is an illustration of 22 why it would be wrong to assume why they all are safe -- 23 A. Yes. 24 Q. -- and we see because that is a revised offer in 2024. 25 Now, if I can just use this as an example for another 77 1 potential concern, is that that 4,500, going to 134, 2 would not be saved by the 75,000 offer, would it? So we 3 have a situation where we have small offers and then, 4 while the 75,000 will cover that, but that wouldn't save 5 that, would it? 6 A. No. 7 Q. No. Just to slightly explain that in slightly more 8 detail, a person who had received £4,000, a postmaster 9 in financial difficulties, might consider £75,000 to be 10 an offer that could not be refused. It's a very 11 generous offer, it might be thought but, once that offer 12 was accepted, there would be no potential for appeal of 13 that, would there? 14 A. That's correct. So, again, this is the motivation 15 behind settlement. 16 Q. Yes. 17 A. So they were keen to get settlement, so people can move 18 on in their lives and, therefore -- but in that example, 19 absolutely, if there's -- if the 75,000 were offered on 20 your line 4, and they accepted it, they would be walking 21 away from their appeal rights. 22 Q. Yes, and accordingly, given the process, they 23 essentially might be in the position where they'd lost 24 out on £58,000 by not being able to pursue that appeal? 25 A. Correct. But I would have hoped that that would have 78 1 been an informed decision. 2 Q. Yes, yes. Are you able to help with this: it's right, 3 isn't it, that, so far as the IAP is concerned, the 4 independent appeals process, are you aware there's been 5 no consultation with postmaster legal representatives on 6 the proposed structure of it? 7 A. I'm pretty sure there hasn't been. It's very much 8 a Government initiative at the moment, so no doubt 9 I will suggest that might be coming. But I am not aware 10 of any engagement so far. 11 Q. Thank you. Can I just deal very briefly with one issue 12 of evidential uncertainty? 13 A. Yes. 14 Q. You said yesterday that you believed that evidential 15 uncertainty is always resolved in favour of the 16 postmaster. I don't suggest that evidential uncertainty 17 leads to, as it were, the complete dismissal of a claim 18 under a particular head of loss but it can reduce the 19 level of payment if there isn't sufficient, as it were, 20 documentary proof, can't it? 21 A. You are referring to potential discounts -- 22 Q. Yeah. 23 A. -- to the amount being claimed because of the 24 evidential -- the evidence that has been reduced? 25 Q. That's it. 79 1 A. I sort of -- and I guess I would, wouldn't I, 2 Mr Moloney -- but I might see it in a slightly different 3 way, if I can just share that? 4 Q. Of course. 5 A. It is a different optic on it to say -- let's use 6 an example that the claim is for £100,000 but because 7 there's -- and it does say this in the letters, 8 I appreciate it says this, but because of the evidential 9 uncertainty we're going to discount by 25 per cent and, 10 therefore, our offer is 75,000, that's an example that 11 you might be using. 12 Q. Precisely. All I wanted to just clear up, 13 Mr Recaldin -- and I'm not suggesting that anything that 14 you said yesterday was wrong -- but there may be, as it 15 were, a reduction in the payment for the evidential 16 uncertainty -- 17 A. Yes. 18 Q. -- it wouldn't be a dismissal of the head -- 19 A. Correct. 20 Q. -- simply a reduction? 21 A. Correct. And I think there is another opportunity 22 here -- but I would say this, wouldn't I -- is that, 23 actually, the evidence that's been adduced on those is 24 not enough -- is not enough -- is actually zero. So the 25 claim is for 100,000 but, on the evidence that has been 80 1 adduced is zero. But because of the overall claim, the 2 overall story and the overall approach, actually, we 3 after going to pay 75,000 of that. 4 It's a different optic, I understand that, but it 5 is -- it reflects on the evidential standards. So 6 because the panel understand that the bar is very, very 7 low, so it doesn't have to get much to get to a full 8 claim. So if there's virtually nothing then, actually, 9 well, we are going to go -- in that example, we are 10 going to go to 75,000 anyway, despite the fact that 11 there's very, very little evidence. 12 I do appreciate, however, that when the letter comes 13 out, it does look like you claimed 100,000 and, because 14 of the evidence, we are discounting you by 25 per cent. 15 I do appreciate that. 16 Q. If the Chair will forgive me, just moving from 17 a question in relation to the HSS back to the OC scheme, 18 just to try and help in terms of the clarification of 19 a question Ms Page just asked, shortfalls which are not 20 related to the shortfall that led to conviction are 21 routinely claimed in the OC scheme? 22 A. Yes. 23 Q. Often, as Ms Page said, then there is no documentation 24 to support those shortfalls but a similar process 25 applies in relation to consideration of those shortfalls 81 1 within the OC process, as we've just examined within the 2 HSS? 3 A. That's my understanding. 4 Q. Can I ask you about delay in HSS, and one particular 5 aspect of it, which is raised in the correspondence -- 6 A. Of course you can. 7 Q. -- which is about there being significant delay with 8 HSS, which you've acknowledged that there are occasions 9 on which there is significant delay, and one of the 10 aspects of that is cases going back to panel. 11 A. Yes. 12 Q. Is the decision at the moment about cases going back to 13 panel being taken, essentially, by Post Office, rather 14 than it being a joint decision between Post Office and 15 the claimant? 16 A. I think that's a fair challenge, Mr Moloney. I think it 17 has been a Post Office decision and for good reasons, in 18 terms of consistency of outcomes, because as I've 19 described, I think, yesterday, the independent panel 20 have that moment when they opine, they recommend and 21 then they take that step back and say, "Right, how 22 consistent is this and how fair is this?" And if 23 something does go back to panel it is usually supported 24 with new information, a different take, a different -- 25 a witness statement, et cetera, et cetera. So there is 82 1 more information to consider. 2 So to put it back into the same forum would seem 3 logical and seem the right thing to do, to maintain the 4 independence and to maintain the consistency and the 5 fair overview. 6 However, as I articulated to Mr Hudgell the other 7 day in my response to his -- to this letter you've just 8 showed -- is I think, you know, Post Office should be 9 more flexible about that now and -- not as a result of 10 delays but all the schemes maturing in a way, that that 11 could be now a choice of the legal representative and 12 the client around whether or not they want that to go to 13 panel or whether they prefer to have a mediation or 14 a face-to-face. 15 Q. Because going back to panel does significantly increase 16 legal costs, doesn't it? 17 A. Which are paid. 18 Q. Of course. 19 A. Yes. 20 Q. But in terms of getting the money out there quickly, as 21 it were -- 22 A. Yes, yes. I'm more concerned about the delay -- 23 Q. -- to get people into a room, without there being 24 additional legal costs, without there being the costs of 25 the panel, it may actually save money -- 83 1 A. Correct. 2 Q. -- just to get people in the room and hammer out 3 a result, rather than going back to panel? 4 A. I have to say I'm more concerned about the time it takes 5 to get into panel and get out of panel. But yes, you're 6 absolutely right, it would save legal costs. 7 Q. Yes. Just one other aspect of HSS costs, if I may. 8 It's only recently that people have been able to secure 9 treatment costs under HSS, isn't it? 10 A. Mm, yes. 11 Q. That, whilst it was decided in June, was not essentially 12 communicated until September of this year? 13 A. I'll take -- forgive me, I don't know but you are -- 14 you're usually very fact based, Mr Moloney. 15 Q. Thank you very much for that, Mr Recaldin. 16 There's been delay on that. Have governance issues 17 slowed that down, in terms of -- 18 A. Yes. 19 Q. Yeah? 20 A. Yes. 21 Q. Is it unduly pessimistic to think that it might take 22 another two years for all HSS decisions to work through 23 at current rates? 24 A. Yes. I think it is unduly -- 25 Q. You think it is? 84 1 A. Yeah. 2 Q. What do you think is a realistic time limit? 3 A. For all the dispute cases? 4 Q. I think you've said there are 1,300/1,400 cases left. 5 How long do you think they're going to take? 6 A. Oh, for all of the -- 7 Q. All of the HSS cases. 8 A. So that depends on incoming because, if you're talking 9 about the current cohort, but we've got 30 coming in 10 every day, and with the £75,000, which is an HSS case, 11 with that live on the system and live in terms of 12 mailing, we are expecting that the overall number to 13 grow significantly. Now, in terms of getting all that 14 done -- and we, you know, we are optimistic in our 15 forecasts about how much of that will be the 75,000 and, 16 therefore, we can automate as much as we can and be 17 efficient around that. So it does depend on those 18 numbers coming in, Mr Moloney, and that is an unknown. 19 But, you know, I think -- I shared with the Inquiry the 20 projections on the provisions, and that was pretty clear 21 that the -- we are expecting to use those provisions at 22 least up to March 2026. 23 So I can't give you -- I'm afraid, I can't give you 24 a precise answer because it depends how many come in. 25 Q. So that's 18 months, potentially, rather than two years? 85 1 A. But many of those cases we will be dealing with will be 2 new cases. 3 Q. Of course. You're getting about 30 a week in terms of 4 new cases? 5 A. At the moment, we're getting about 30 a week but that's 6 going to ramp up significantly. 7 SIR WYN WILLIAMS: Isn't the reality, Mr Recaldin, that it's 8 wholly dependent on how many people take £75,000 9 quickly? If a lot of people decide that's not enough, 10 then we're still -- I think Mr Moloney may be 11 underestimating in saying two years away from finishing? 12 A. It -- you're right, it does depend of the take-up of the 13 75,000. I would say, Sir Wyn, that other efficiencies 14 that we're putting in place in the over 75,000 cohort 15 will speed that up too. 16 SIR WYN WILLIAMS: No, I'm sure you're trying your best, 17 Mr Recaldin, to be as efficient as possible but the 18 overwhelming feeling I get from your evidence is that 19 a reasonably quick resolution of all cases in HSS is 20 very dependent upon many people accepting £75,000. 21 A. Yes. 22 SIR WYN WILLIAMS: Fine. 23 MR MOLONEY: Just two very short matters to finish with, 24 please, Mr Recaldin. 25 You've explained that joint losses aren't available 86 1 under the HSS scheme, and that's because the HSS is 2 based on contractual relationships. 3 A. That's right. 4 Q. Ms Page asked you about this. 5 That absence of compensation for joint losses stands 6 in contrast to all the other schemes, doesn't it? 7 A. Mm. I appreciate that. Correct. 8 Q. Do you think that inconsistency needs to be addressed? 9 A. I think it will be discussed. I think it needs to be 10 discussed. I don't know whether it will be addressed. 11 Q. Finally, you've mentioned culture at Post Office and 12 I just want to ask you one aspect about that. I'm not 13 going to ask you to elaborate any further but there was 14 a serious data breach earlier this year when the GLO 15 settlement deed was published online and it included the 16 personal details of those parties in the GLO, their 17 names and addresses, and so on? 18 A. It did. 19 Q. Was that data breach a reflection of culture at Post 20 Office in any way or not? 21 A. No, absolutely not. That was a genuine -- genuine human 22 error. And Post Office are so sorry that it happened. 23 It shouldn't have happened. We put in a process of who 24 should have been in place that would pick that up. 25 Genuinely, it was an upgrade of the website and the link 87 1 to the GLO settlement agreement had broken, which was on 2 the website. Just the link had broken and they were 3 refreshing that link. To refresh the link they had to 4 go and get the original document to put it there, and 5 they picked the wrong one, ie they picked the unredacted 6 as opposed to the redacted. And Post Office regret that 7 and are very, very sorry for that. 8 And you know we're in discussions with legal 9 advisers about what we need to do about that. And it 10 will be very regrettable and absolute apologies for 11 that. It was just -- literally it was a human error, 12 they picked the wrong document. 13 MR MOLONEY: That's all I ask, sir. Thank you. 14 SIR WYN WILLIAMS: That's fine. Thank you. 15 Further questioned by SIR WYN WILLIAMS 16 SIR WYN WILLIAMS: There are just a few more questions from 17 me, I'm sorry, Mr Blake. This is to make sure that 18 I have no misunderstandings about things that are 19 swirling around in my head and concerning me. 20 Let's start with HSS. As of today, a new applicant 21 can opt to accept £75,000, yes? 22 A. Correct. 23 SIR WYN WILLIAMS: What would I have to do, Wyn Williams, if 24 I was an eligible applicant to HSS, to get the £75,000? 25 A. So you would either pick up your post with all the 88 1 application form in and explanatory notes, or you would 2 go to the website and you would fill in the form and, if 3 you believe that you want to accept the 75,000 offer, 4 then there are -- there is a shorter version, there is 5 a short form, and you only have to fill in the first 6 number of questions and then you don't have to fill in 7 anything else. You send that in and then, providing 8 it's proved to be an eligible case, you will get 9 an offer of 75,000. 10 SIR WYN WILLIAMS: Right. 11 A. You sign the offer and you will be paid within ten 12 working days. 13 SIR WYN WILLIAMS: Right. If Wyn Williams had been a bit 14 quicker off the mark and had submitted an application 15 a month before the £75,000 offer scheme came into 16 existence, I would have submitted different information 17 to the Post Office, yes? 18 A. You would have submitted the same information but more. 19 SIR WYN WILLIAMS: Yes. At the point in time when the 20 £75,000 offer came into being, would I, in those 21 circumstances, be able to say, "Right, stop, I'm very 22 happy to take £75,000"? 23 A. Yes. 24 SIR WYN WILLIAMS: That would be by me just writing you 25 a letter saying that or ... 89 1 A. No, so if your claim with all the questions answered, if 2 your claim is in the process today, you will actually 3 get a letter to say, "We've got your claim but would you 4 prefer to have the £75,000?" And so you will -- 5 SIR WYN WILLIAMS: I will say -- 6 A. -- be approached, Sir Wyn. 7 SIR WYN WILLIAMS: Right. Fine. In fact, I was one of the 8 earlier people to make an application, and so I had 9 accepted £53,000, all right? 10 A. And you've settled, Sir Wyn? 11 SIR WYN WILLIAMS: Yes. So I assume I get a letter saying 12 "In due course, you'll get another [if my maths is 13 right] £18,000"? 14 A. You do indeed, Sir Wyn. That's exactly what happens. 15 SIR WYN WILLIAMS: Right, and then I could accept that. 16 A. (The witness nodded) 17 SIR WYN WILLIAMS: That would be true whether it was £53,000 18 that I'd accepted or £2,000? I'm entitled to the 19 difference? 20 A. Or anything in between. Indeed. 21 SIR WYN WILLIAMS: Yes, exactly. Right. 22 One further variation on that. I have filled in the 23 form. I'm now back in making an application post the 24 offer of £75,000 being announced. So I've filled in the 25 form and, at that point in time, I decide £75,000 isn't 90 1 enough: I'm entitled to much more. So I fill in that 2 part of the form. I don't ask for the 75,000. 3 A. Yes, so you -- 4 SIR WYN WILLIAMS: Can I change my mind? 5 A. You would complete the entire form, as opposed to just 6 part of the form and -- 7 SIR WYN WILLIAMS: Yes, because I think my claim is worth 8 150,000. 9 A. Yes, and you would make it clear. 10 SIR WYN WILLIAMS: As time is going along, I get fed up with 11 it all. Can I change my mind? 12 A. So, yes. So if you then get fed up, and your claim is 13 in for 150 and is being processed, as part of the 14 process, anyway, you will still, even though your claim 15 is for 150, you will still get a letter from Post Office 16 saying, "We know your you're claiming for 150 but, 17 actually, there is still this opportunity of 75,000, do 18 you want to take it or not?" 19 SIR WYN WILLIAMS: Yes. 20 A. That will still be an offer to you -- made available to 21 you, even if your claim is for over 75. 22 SIR WYN WILLIAMS: Does that offer to me remain open right 23 up until you actually assess my claim? 24 A. No, it doesn't, because -- 25 SIR WYN WILLIAMS: Because -- 91 1 A. You have to take -- again, it's the settlement, Sir Wyn. 2 So if you then -- you're not going to accept the 75, and 3 the jeopardy you face is your claim goes into panel at 4 150, and it comes out at 50. 5 SIR WYN WILLIAMS: Then that's it? 6 A. That's it: you get 50. 7 SIR WYN WILLIAMS: In between my decision to go for 150 and 8 the actual offer, I can't change my mind, in reality, 9 can I? 10 A. Well, unless you -- again, part of the process is, "Yes, 11 you've applied for 150 but here's your opportunity to 12 take 75, do you want to take it?", you say, "No, 13 I don't". Fine, your 150 will continue in the process. 14 SIR WYN WILLIAMS: Yes, sure but I can't say I don't want to 15 take £75,000 on the day I fill in the forms but, say, 16 six months later, because I'm frustrated with the 17 process, I say "Okay, I'll take the 75". That 18 opportunity is gone? 19 A. You can intercept that. Again, even though you've 20 submitted 150, you will get a letter saying, "Yes, 21 you've submitted 150 but do you want to take" -- so that 22 is in the process. 23 SIR WYN WILLIAMS: Yes, but it's -- 24 A. If you reject that, you're right. 25 SIR WYN WILLIAMS: -- at the beginning of the process. 92 1 A. Yes. 2 SIR WYN WILLIAMS: So once I say, "No, no, I'm carrying on 3 with it", then that's it? 4 A. Yes, correct. 5 SIR WYN WILLIAMS: So in that sense it's the same as the 6 overturned convictions process, where, once you go down 7 the road of trying to get more than 600, you are stuck 8 with whatever you ultimately get? 9 A. To Mr Moloney's point, yes. 10 SIR WYN WILLIAMS: Yes, the two are the same? 11 A. Yes. 12 SIR WYN WILLIAMS: Right. 13 A. The jeopardy is there, yes. 14 SIR WYN WILLIAMS: It's the same jeopardy in both schemes, 15 which is what I was concerned about. 16 A. Yes, correct. 17 SIR WYN WILLIAMS: Okay, thank you very much Mr Recaldin. 18 Is that it, Mr Blake? 19 MR BLAKE: It is. Yes, sir. Can we take a five-minute 20 break before Ms Munby comes into the room? 21 SIR WYN WILLIAMS: Of course I'll can do that but, first, 22 I'd like to thank Mr Recaldin for giving evidence over 23 a considerable period of time about issues which are 24 close to the heart of very many people. So thank you 25 very much, Mr Recaldin, for your written and oral 93 1 evidence to this Inquiry. 2 THE WITNESS: Sir Wyn, can I just take the opportunity of 3 saying one very short statement, please? 4 SIR WYN WILLIAMS: Of course, yes. 5 THE WITNESS: I'm just very, very conscious for the Inquiry 6 that my statements, that my latest statements of 6, 7 7 and 8 -- get that right, 6, 7 and 8 -- are hugely number 8 based and the questions I was asked was about trends. 9 I hope I've helped the Inquiry with their cogitations on 10 it, in terms of that. But I would like to say the same 11 as I basically said to the Select Committee on Friday, 12 and this is not contrite in any way, please, is I am 13 very, very conscious that it's all about numbers. How 14 many -- and I've been asked questions about numbers: how 15 many; how long. Behind every number there's a person 16 and there's a person whose been taken on a journey and 17 that journey is not a great journey. 18 And I would like to take this opportunity again to 19 apologise to all the postmasters and postmistresses who 20 have had to experience that journey, not just about the 21 event itself in terms of the shortfall but, obviously 22 that -- the journey that Post Office have taken 23 everybody through, which is not a great journey, and 24 it's something that we really need to learn from because 25 it's not a great experience and, quite frankly, the way 94 1 these people have been managed and handled is 2 a disgrace. And we should make sure this never ever 3 happens again. 4 SIR WYN WILLIAMS: All right, thank you very much, 5 Mr Recaldin. 6 We will now have a few minutes break. I won't 7 wander away, so to speak. I'll just wait here, 8 Mr Blake, and then, when you're ready, in about five 9 minutes we'll reconnect. All right? 10 MR BLAKE: Thank you very much, sir. 11 (12.28 pm) 12 (A short break) 13 (12.35 pm) 14 MR STEVENS: Good afternoon, sir. Can you see and hear me? 15 SIR WYN WILLIAMS: Yes, I can. Thank you. 16 MR STEVENS: We will hear from Ms Munby. 17 SIR WYN WILLIAMS: Yes. 18 SARAH ANNE MUNBY (affirmed) 19 Questioned by MR STEVENS 20 MR STEVENS: Please can you state your full name? 21 A. Sarah Anne Munby. 22 Q. Ms Munby, thank you very much for attending the Inquiry 23 today to give oral evidence and thank you for producing 24 two written statements, to which I now would like to 25 turn. They should be in a bundle of documents in front 95 1 of you. Could I ask you, please, to turn your first 2 witness statement up and do you see 23 September 2024? 3 A. Yes. 4 Q. For the record, the first statement is reference number 5 WITN11520100. Please can I ask you to turn to page 24 6 of that statement. Do you see a signature? 7 A. I do. 8 Q. Is that your signature? 9 A. It is. 10 Q. Now, can I ask you please to turn to your second witness 11 statement, dated 2 October 2024. Again, for the record, 12 the URN is WITN11520200. Please can I ask you to turn 13 to page 35. Do you see your signature? 14 A. I do. 15 Q. Are the contents of those statements true to the best of 16 your knowledge and belief? 17 A. Yes, they are. 18 Q. Thank you, Ms Munby. Those statements now stand as your 19 evidence to this Inquiry. They will be uploaded onto 20 the Inquiry's website shortly. I'm going to ask you 21 a few questions about some parts of those statements now 22 and I'll start with your background, please. 23 You joined the Department of Business, Enterprise 24 and Regulatory Reform in July 2019? 25 A. At that time it was the Department for Business, Energy 96 1 and Industrial Strategy but, yes, in principle, that's 2 exactly right. 3 Q. Sorry, predecessor department. You'd spent 15 years at 4 that point as a managing consultant? 5 A. That's right. 6 Q. Your first role at the Department in 2019 was as 7 Director General? 8 A. That's right. 9 Q. What was your area of responsibility as Director 10 General? 11 A. The job title was Director General Business Sectors and 12 it was primarily a business facing role, looking after 13 the major sectors of the economy that BEIS then had 14 responsibility for, including the car industry, steel, 15 life sciences and various others. At that time, I would 16 say the primary focus of that role was on working with 17 business on the issues related to EU exit and 18 particularly the possibility of a no deal exit. That 19 was probably the single overriding priority of the 20 people in that Department at the time. 21 Q. To what extent, when you were a Director General, were 22 you involved in postal affairs? 23 A. Not very much. You'll see from various of the documents 24 that I was copied in and kept informed, so I knew what 25 was happening but, at that point, the sort of channel of 97 1 decision making and advice was primarily running through 2 Carl Creswell, the Director, up to Alex Chisholm, who 3 was the then Permanent Secretary. 4 When Alex Chisholm moved on and Sam Beckett became 5 the acting Permanent Secretary, I stepped up my 6 involvement to make sure that there was the right level 7 of senior cover but, prior to that, I think it's fair to 8 say that Alex had been involved in it for some time, it 9 was obviously a really serious priority issue for the 10 Department. I was new both to the Department and the 11 Civil Service, and so he was taking kind of primary 12 carriage of that issue. 13 I was kept informed but I think you'll see from the 14 record that I wasn't an active player on the scene, 15 really, until that point that Alex left the Department. 16 Q. You were appointed Permanent Secretary to the Department 17 in July 2020? 18 A. That's right. 19 Q. You remained there until 6 February 2023, when you moved 20 to the Department for Science, Innovation and 21 Technology, again as Permanent Secretary? 22 A. That's right, that was the point at which BEIS, the then 23 Department, ceased to exist. 24 Q. I want to start by looking at the Department's oversight 25 of Post Office. Please can we look at your second 98 1 statement, page 12, paragraph 24. You say: 2 "Historically, I understand from the record, there 3 had been serious inadequacies in [His Majesty's 4 Government's] oversight of Post Office." 5 Pausing there, what are the serious inadequacies 6 you're referring to in this paragraph? 7 A. Well, I think it's, first of all, important to say that, 8 you know, clearly a terrible, horrific miscarriage of 9 justice had occurred and, regardless of what the 10 arrangements had or hadn't been at that time, I think it 11 would be reasonable to say that there -- you know, it 12 almost sort of goes without saying that there must have 13 been some serious inadequacies in order for that to have 14 taken place. 15 But, specifically, I know there'd had been a kind of 16 series of conversations -- to which I wasn't party, 17 I only know this from the later record -- about the 18 extent to which UKGI were able to access senior 19 officials within the Department, and that Carl 20 Creswell's team had been created as a policy team within 21 BEIS, in order to (a) make sure, frankly, that there 22 was, you know, broader and deeper oversight and (b) to 23 make sure that that connection between the activities of 24 UKGI and the Department was much stronger. 25 And that team was sort of in place and functioning 99 1 by the time I joined the Department. 2 Q. So you go on to say, immediately after that sentence, 3 about the dedicated Post Office policy team which had 4 been created in the Department. As you say, that was 5 established before you joined as a Director General. 6 How do you say that the establishment of the Policy Team 7 assisted the Department with its oversight 8 responsibilities of Post Office? 9 A. Well, there was a distinction between the primary role 10 of the UKGI Shareholder Team and the Policy Team. I'd 11 characterise it in a couple of ways. The first is that 12 UKGI were focused on, I suppose, the issues as they 13 relate to sort of looking at the Post Office itself: 14 governance, quality of the Board, quality of management, 15 financial performance, risk management, that sort of set 16 of corporate governance issues. 17 And the Policy Team had a broader remit, which you 18 might say is sort of looking outward at the issues as 19 they related to the Post Office, including the policy 20 framework set by Government, the relationship between 21 Government, not just BEIS -- because, of course, Post 22 Office was providing services to many other departments 23 as well -- that relationship between the Post Office and 24 Government. They did a lot of the work on securing 25 financial approvals, both within the Department and more 100 1 broadly within Government, from the Treasury. 2 And I think the second distinction I would draw, and 3 this is true in general, where you have UKGI and 4 a Policy Team in the Department or, indeed, any other 5 Department in Government, I draw a sort of distinction 6 in personnel as well. So what you've got inside UKGI 7 are typically people who are involved in multiple 8 corporate governance situations who might be sitting on 9 multiple boards, supported in a community that's made up 10 of people who do that kind of work. The Policy Team, by 11 contrast, would be made up of what civil servants would 12 recognise as sort of fairly kind of mainstream policy 13 colleagues who have sort of spent most of their career 14 thinking about how you deal with ministers, what are the 15 Parliamentary considerations, all of the sort of set of 16 issues like that. 17 And so I think that's just the other thing to note: 18 as well as having different areas of focus, I would 19 characterise those two teams as having a kind of 20 different backgrounds and skillsets. That's not 21 particularly commenting on the individuals involved; 22 it's more of a general point about the sorts of skills 23 and capabilities that you would look for from UKGI, as 24 a Permanent Secretary, versus those that you would look 25 for from your departmental Policy Team. 101 1 Q. Again, how does that split, as you've described it, 2 assist with improving oversight of Post Office itself? 3 A. I think probably, in part, by addressing the weakness 4 that I was talking about earlier, ie the extent to which 5 UKGI colleagues, who were obviously closely involved in 6 events at the Post Office, were able to sort of access 7 ministers and senior officials within the Department. 8 And the second is, frankly, it's a set of people who 9 are focused on where are ministers on this; where are 10 Parliament on this; what's the broader context? And 11 that isn't directly about kind of specifically 12 governance of the Post Office, but I do think it's 13 really important contextual work that you would want to 14 have in place as part of your overall system of 15 oversight. 16 Q. Could we please look at UKGI00011874, please. You see 17 it's a document dated 31 October 2019, "BEIS, Partner 18 Organisation Governance & Sponsorship: Post Office". We 19 don't need to turn it up but at page 23 you are listed 20 in the distribution list for this document. Would you 21 have read this at the time it was issued? 22 A. Yes, I would assume so. 23 Q. Could we turn, please, to page 3. We have an "Executive 24 summary" of this document. It says, "Opinion": 25 "Some improvements are required to enhance the 102 1 adequacy and effectiveness of the framework of 2 governance, risk management and control." 3 Is this referring to effectively the Department's 4 oversight of Post Office itself? 5 A. I think that's right, yes. 6 Q. We see there a series of bullet points at the bottom, 7 the first of which says -- well, no, let's look at the 8 head before that: 9 "In the context of improving existing sponsorship 10 and shareholder activities, we have identified the 11 following areas for improvement for which corresponding 12 recommendations have been made in the action plan in 13 this report: 14 "[1] Improving communication links between the Post 15 Office Policy Team ..." 16 Pausing there, is that the team you were just 17 describing in distinction from the UKGI team? 18 A. Yes, that would be the team led by Carl Creswell. 19 Q. "... and the BEIS Partnerships Team." 20 What is the BEIS Partnerships Team? 21 A. The BEIS Partnerships Team was a team that sat at the 22 centre of the Department, responsible for looking not 23 specifically at our relationship with the Post Office 24 but more broadly at the structures and capabilities 25 across BEIS for dealing with what we referred to in BEIS 103 1 as partner organisations, but you would more normally 2 see referred to as ALBs. So, in effect, it's sort of 3 centre of excellence for ALB management and governance. 4 So what they're commenting on here is the extent to 5 which the Post Office Policy Team is engaging with that 6 departmental internal central team who were looking at 7 how we look at the Post Office but, also, you know, 8 UKRI, the Met Office, Companies House, et cetera, 9 et cetera. There were around 40 such organisations that 10 that central team would have been looking at. 11 Q. Some of the companies you referred to there, or public 12 corporations, were also assets that were overseen by 13 UKGI. 14 A. Yes. Some also had UKGI involvement. Some didn't -- 15 Q. Some didn't? 16 A. -- among that 40 group. 17 Q. It says: 18 "Discussions between the Policy Team and the 19 Partnerships Team are infrequent with no regular 20 engagement around performance, risks, issues or 21 concerns. This could result in risks or opportunities 22 to share good practice being missed, negatively 23 impacting [Post Office's] operations or BEIS' oversight 24 of [Post Office]." 25 Do you know what, if any, steps were taken to 104 1 address this point? 2 A. I don't remember specifically but, typically, I mean 3 this was an internal audit report, so we would have 4 taken a series of actions around it and then tracked 5 them through. I think it's perhaps useful to say that 6 although, you know, this is absolutely a point that was, 7 you know, raised by internal audit and something that, 8 you know, I would have wanted us to address and would 9 assume that we did, I wouldn't put this point on a kind 10 of enormously serious level because what we're 11 discussing here isn't, you know, for example the extent 12 to which the Post Office Policy Team were engaged with 13 the Post Office, or the extent to which they were 14 engaged with UKGI. 15 What we're really talking about here, I suspect, is 16 a Post Office team who were dealing with quite a unique 17 asset. It doesn't have that much in common with the 18 majority of the other ALBs that BEIS were looking after, 19 and has its own, like, very serious and specific issues 20 at this time. 21 So I can imagine it seems plausible that the Post 22 Office Policy Team weren't making it their top priority 23 to engage with that central Partnerships Team within the 24 Department and, although that would be something you 25 would want to improve, I wouldn't have seen that as 105 1 a sort of critical failure point, and indeed, I think 2 that's reflected in the yellow RAG rating assigned here. 3 Q. If we turn the page, please, there's a bullet point, the 4 first one on the screen: 5 "Providing greater visibility of [Post Office] risks 6 within BEIS. The BEIS Policy Team does not have 7 oversight of risk management activities conducted within 8 [Post Office] and/or concerning [Post Office] by UKGI or 9 the BEIS Partnerships Team ... This could impact the 10 Department's ability to influence/oversee the mitigating 11 actions in place to ensure risks are aligned to their 12 risk appetite and the quality of risk reporting to the 13 Permanent Secretary." 14 Would you agree that seems a more significant 15 concern? 16 A. Yes, absolutely. 17 Q. What steps, if any, were taken to address that point 18 following the issuance of this document? 19 A. I think it probably makes sense to sort of put this in 20 context of wider work that was going on to improve risk 21 management in the Department at the time, including then 22 when I was Permanent Secretary. I mean, this feature 23 that you're seeing here of, you know, an insufficiently 24 clear risk escalation process, which is sort of one way 25 of describing what you're seeing here, I don't think was 106 1 a specific Post Office issue. Actually, there was just 2 more maturity needed around risk. 3 You know, later we, for example, created a new 4 Implementation Directorate with new SCS roles, who were 5 responsible for improving the system. It was something 6 that, you know, I, as Permanent Secretary, worked on -- 7 Q. When you say "the system", what system? 8 A. The risk reporting system, as in how do you make sure 9 that when a risk has been identified in one place in the 10 organisation, it is cascaded up through a Directorate 11 level risk register to a group, ie Director General 12 level risk register, and into the departmental risk 13 register? If I may just make one comment: I do not 14 think that, at this point, there was any lack of 15 visibility of the risks around the Post Office for the 16 Permanent Secretary. 17 It was one of the areas of the Department that the 18 then Permanent Secretary was very highly personally 19 involved in. So I think it is absolutely an important 20 sort of process point to address in the context of the 21 quality of risk reporting in the Department. But do 22 I think at this time there was any danger that there was 23 sort of invisible, unknown risks surrounding the Post 24 Office specifically, as it related to the Permanent 25 Secretary? I would not have been concerned about that 107 1 at the time, given the frequency of interactions and the 2 level of personal attention that was being paid to these 3 issues. 4 That doesn't mean this isn't something that, you 5 know, needs looking at but I would see it more as a kind 6 of a challenge to the maturity of the risk processes, 7 rather than a kind of danger to Post Office oversight 8 specifically. 9 Q. On that, we have seen plenty of evidence of the approach 10 to Post Office, following the Common Issues Judgment and 11 the involvement of the Department in overseeing matters. 12 A lot of time was spent on it. Looking forward, one of 13 the things the Inquiry is investigating is what systems 14 are in place to ensure that risk is properly identified 15 in the Post Office going forward and so are there 16 systems in place in response to this document? 17 You said in your evidence then that it needs looking 18 at. My question is: has it been looked at and what 19 concrete steps have been put in place to ensure that 20 Post Office risks are properly visible within the 21 Department? 22 A. Well, if I may say so, referring to current state, that 23 would be a question best put to the Permanent Secretary 24 for the Department for Business and Trade. I can't 25 comment on current state. I can only comment on what 108 1 happened during my tenure, which I'm very happy to do. 2 I just wanted to clarify that. 3 Q. Let's limit it to by the time you left the Department. 4 A. I'm struggling to recall in detail. I'm sorry, I wasn't 5 particularly prepared for this line of questioning, and 6 I'm happy to go back and look at the documents. I can't 7 remember exactly in detail what the kind of process 8 forms were by which the risk process went through but, 9 by that point, we had in place Directorate level, DG 10 level, risk registers, we that principal risks at 11 a departmental level, and we had a team responsible for 12 oversight of that overall system, and I would certainly 13 expect that the risks involving the Post Office would be 14 kind of flowed through that. 15 We, of course, also had an Audit and Risk Committee 16 within the Department. I know that they spent quite 17 some considerable time going around arm's-length bodies, 18 including the Post Office. I forget the exact details 19 but I think there were occasions where the chair of the 20 BEIS ARAC was involved in risk discussions at the Post 21 Office. I'd have to check the record on the detail. 22 So I would say it was a reasonably effective risk 23 management framework. My experience of risk management 24 in the Civil Service has been that, given the diversity 25 of risks that you are dealing with, it's quite difficult 109 1 to establish what I would call a really best practice 2 risk management framework. Just worth noting. 3 UKGI, of course, also has its own risk management 4 approach, and you also see Post Office risks tracked 5 there. I just thought that was worth mentioning. 6 Q. I'll move on to another point you raise at paragraph 24. 7 It doesn't need to come up on the screen, I'll read it 8 to you. One of the points, you say there's been serious 9 inadequacies in the oversight of POL, Post Office, by 10 the time you took over: 11 "I do think much of this had been addressed." 12 One of the points you make is: 13 "We had a minister leading on postal affairs 14 spending very significant time on the Post Office who, 15 for example, met monthly with the CEO." 16 Can I just clarify that. Was there a change in the 17 Minister's portfolio at that time to enable the Minister 18 to spend more time on Post Office or was it just that he 19 or she chose to do so at the time? 20 A. I'm not completely sure about that because I think that 21 changed -- I don't know if there was a change that sort 22 of predated my involvement. What I can say with 23 confidence is that for Paul Scully, who was the Minister 24 for the majority of this period, Post Office was -- just 25 to give you some examples, when I would have a regular 110 1 catch-up with him, it would always be sort of the first 2 point on the agenda. You know, I saw from sort of the 3 flow of submissions and responses that it was something 4 that was getting very serious ministerial attention. 5 I think I have heard, but I have -- I wasn't able to 6 kind of put together a record to demonstrate this from 7 the papers that DBT were able to supply -- I think 8 I have heard that the portfolio had shrunk at that 9 point. But the change clearly wasn't really 10 significant, otherwise you would sort of see it in the 11 public portfolios very straightforwardly, and I couldn't 12 quite pick it up when I tried to check the record on 13 this point. 14 So I'm not sure I could say that with confidence but 15 I did not perceive, during my time as Permanent 16 Secretary, that we had a problem with a lack of 17 ministerial sort of time or energy on the Post Office. 18 I -- others, of course, may have a different view but 19 I didn't see that problem. 20 MR STEVENS: Sir, I know we've only just started but I am 21 moving on to another topic, so I wonder if it's a good 22 time to break for lunch there? 23 SIR WYN WILLIAMS: Yes, by all means. 2.00 all right? 24 MR STEVENS: Yes, sir. Thank you. 25 SIR WYN WILLIAMS: Fine. 111 1 (1.00 pm) 2 (The Short Adjournment) 3 (2.00 pm) 4 MR STEVENS: Could good afternoon, sir. Can you see and 5 hear us? 6 SIR WYN WILLIAMS: Yes, thank you. 7 MR STEVENS: Can we please bring up the second witness 8 statement at page 13, paragraph 26. You're discussing 9 governance arrangements at this point of your statement 10 and at paragraph 26 you say: 11 "I think the hard part tended to be actually getting 12 [Post Office] to do what ministers wanted. As described 13 above, the Department did, from 2020, have a power to 14 issue directions to [Post Office], but ministers could 15 not routinely become involved in the nuts and bolts of 16 operational decision making." 17 At paragraph 27, you give an example of this in 18 managing legal costs, which we'll come back to. But if 19 we could go over the page to the bottom of paragraph 27, 20 you say: 21 "For these kinds of important but ultimately 22 operational matters, if [Post Office] did not do as we 23 asked we had relatively few levers with 'teeth' other 24 than the ones that had other issues (like removing the 25 Chair or pushing the organisation into financial 112 1 trouble)." 2 Did you experience similar problems with other ALBs, 3 namely finding it hard to get the ALB to do what the 4 Minister wanted, whilst you were Permanent Secretary? 5 A. I'm just sort of testing my mind for examples. Yes, 6 I think, is the right answer to that. It would be -- it 7 varies according to the structure of the arm's-length 8 bodies and an example like Post Office is sort of quite 9 arm's length, so there will be other examples like 10 executive agencies where you might have, you know, much 11 more explicit clearances over salaries within the 12 organisation, for example. 13 But the idea that, you know, like in many situations 14 where you're in a supervisory or a management function 15 over somebody or another organisation, although you may 16 have a sort of set of formal levers at your disposal, 17 often sort of your first port of call is influencing. 18 You know, it's a bit like if you're managing 19 an employee, you might ultimately have the ability to 20 terminate them but that's a really drastic step and one 21 that you wouldn't take until you've gone through talking 22 to them about why you want them to do what you want them 23 to do, hearing what they think about it, trying to give 24 them some training, increase their capability. 25 You know, I think it's a very common journey and 113 1 I certainly saw it with other arm's-length bodies as 2 well. I do think it's particularly acute in this case 3 because the combination of being at the more extreme 4 end -- like a long arm, if that makes sense, in the 5 context of the Post Office, combined with being so 6 troubled and having, rightly, so much political 7 attention on it, I think that's a really difficult 8 combination, whereas if you took a body -- 9 If I compared it to something like the Ordnance 10 Survey, just to take an example, you'd have a similar 11 set of levers and a similar degree of arm's lengthness, 12 but just a much lower level of heat, at least during 13 this period, around the organisation and its 14 performance. 15 So I think that's why it sort of comes quite acutely 16 in the case of Post Office, because you're combining 17 a long arm with a very great deal of legitimate 18 political interest. 19 Q. Reflecting on matters, have you thought or can you 20 assist us with whether there are any other levers that 21 would assist in managing Post Office in this way? 22 A. It's a good question. It's maybe worth just reflecting 23 for a minute on -- you might say, if we had the ability 24 to make directions, why isn't that sufficient? I mean, 25 that's actually quite a strong lever, right? That's 114 1 effectively creating a capability for the Secretary of 2 State to say, "Post Office, you must do X". 3 I think the reason that has tended not to be that 4 relevant is there aren't that many decisions in 5 a complex organisation like the Post Office that are 6 sort of really, like, simple and binary: should I X or 7 should I Y? It's often much more complex. So if it 8 comes to something isolated and specific, a sort of 9 direction power, where you can say "You must X", works 10 well. 11 I think that direction power came about in response 12 to the events that surrounded earlier handling of the 13 litigation, where there were some quite specific 14 questions, including the one about recusal of a judge -- 15 I'm not over all of the detail. But those sorts of 16 matters, you can imagine a department being able to say 17 to an arm's-length body "You must X, therefore X" but 18 something like "Reduce your legal costs", which is the 19 example I use in my witness statement, it's much more of 20 a sort of debatable point because the Post Office, not 21 illegitimately, would want to come back and say, "Well, 22 we need these legal costs for reasons X, Y, Z, we are 23 going to reduce them but not until next year because the 24 contract needs to come up for renewal", et cetera, 25 et cetera. 115 1 So it's much more of a dialogue about what is and 2 isn't reasonable, rather than you can order people to do 3 things. 4 That tends to be over simplistic for what we're 5 talking about here, which is why, actually, the 6 influence, you know, presence on the Board matters, 7 being part of the discussion, understanding the nuance 8 and the detail. So I think I find it quite hard to 9 answer your question with a really specific, "If only we 10 had power X, we would be able to make everything okay". 11 I don't think it's like that. I think it's more 12 like having a strong productive relationship with 13 respect on both sides and listening to each other has 14 got to be the right starting point and I don't think the 15 formal arrangements we had in this period precluded 16 that. 17 Q. I want to look at one example, please. We don't need to 18 bring it up, actually. You refer to the review of Tim 19 Parker's decision not to share the Swift Report -- 20 that's, for the record, paragraph 18 of your 21 statement -- you describe it as a governance failure. 22 You say: 23 "After learning of this and giving consideration to 24 whether we should advise ministers to fire Mr Parker, 25 formal censure was chosen as the appropriate course of 116 1 action." 2 Was a minister involved in the decision to censure 3 Mr Parker rather than terminate his contract? 4 A. Yes. That decision would ultimately have gone to -- 5 I'm -- I know for sure it went to Paul Scully, the 6 Minister. I don't recall specifically whether it went 7 to Secretary of State. It may not have, it may have 8 been a delegated decision. But that was signed off by 9 ministers. But, as I do say -- you know, just for the 10 sake of clarity, I do say in my statement that was on 11 our advice, and our advice was formal censure. So you 12 might -- I wouldn't wish to put it only on ministers 13 but, yes, of course, any decision like that would be 14 signed off by ministers. 15 Q. Can we look, please, at POL00104180. This is your 16 letter to Tim Parker after that decision was made on 17 7 October 2020. In the second paragraph, please, you 18 refer to the background to that, which is well known. 19 Towards the end, you say: 20 "... we consider it was a mistake not to have 21 ensured that the whole Board had an opportunity to see 22 and discuss the detail of its findings and agree what 23 any next steps should be. With hindsight, this 24 information should have been seen by the Board and we 25 are disappointed that it wasn't." 117 1 You go on to matters about sharing documents said to 2 be legally privileged. 3 Firstly, why did you say "With hindsight this 4 information should have been seen by the Board"? 5 A. I think it's sort of felicitous drafting. I'm not sure 6 there is any deep significance to "with hindsight". Had 7 we been asked the question at the time, in possession of 8 the full data, one would have said the same thing at the 9 time. If you or I was transported back to the moment 10 where that decision was made, with the report in front 11 of us, I hope we would have decided that it should have 12 gone to the Board. 13 Q. It might be said that this letter doesn't contain 14 a sufficient degree of criticism or disapproval to be 15 described as a formal censure. What would you say to 16 that? 17 A. It's certainly one of the harshest letters, if not the 18 harshest letter, I have ever written to a chair of 19 an arm's-length body I've been involved with, and I've 20 been involved with a very great many arm's-length bodies 21 over some considerable period. So, you know, opinion 22 could differ, but I would say that as a matter of fact. 23 It's fair to say that, I think as I say in my 24 witness statement, as I reflect on it now, I actually 25 think the advice probably should have been to -- 118 1 Q. We'll come to that in a -- 2 A. -- go further. 3 Q. -- in a moment. 4 A. So I agree, in other words, that sort of looking at it 5 now, you wonder why we didn't go further, and that could 6 include either a sort of harsher drafting or, indeed, 7 a different decision altogether. 8 Q. Was Mr Parker told that dismissal had been considered as 9 an option? 10 A. I couldn't say for sure. 11 Q. You just said there about what you say in your statement 12 regarding whether that was the right decision. We don't 13 need to bring it up, sir, but, for your reference, it's 14 paragraph 18, page 10 of the second statement. You say: 15 "With the benefit of hindsight, it was perhaps the 16 wrong decision not to take the harsher course of action 17 and terminate Mr Parker's appointment." 18 So, again, you say "with the benefit of hindsight", 19 have you learnt anything since October 2020 that now 20 makes you doubt the decision that was made? 21 A. Well, yes. 22 Q. What would -- 23 A. I mean, I think probably lots of things fall into that 24 category. So, first of all, I think all of us, at least 25 on the HMG and Post Office Management side, over time, 119 1 you know, the full depth of the scandal in the first 2 place has been sort of further elucidated. So I'm not 3 saying it -- obviously, at the time that this decision 4 was made, we knew this had been a very serious error 5 but, as the picture grows around it and you try to 6 isolate, what were the moments that could have made 7 a difference? I think now I would see that moment where 8 the Swift Report wasn't shared as a relatively critical 9 one in the story. 10 At the time, I don't think that was as clear to me, 11 simply because -- I mean, I've obviously been following 12 the Inquiry closely and all of the events that have 13 happened in HMG as well. That just wasn't as clear to 14 me at that time. I don't think there's one sort of 15 particular fact I've learnt but as just the picture 16 becomes deeper and clearer that looks like a critical 17 moment. 18 I also think at the time, you know, it was an in the 19 balance decision that was considered both ways, if you 20 see what I mean, and, at the time, the advice of the SID 21 was taken into account, and it was also kind of top 22 of -- 23 Q. When you say SID, do you mean Ken McCall? 24 A. Yes, I'm sorry, the Senior Independent Director, Ken 25 McCall. Thank you. It was also kind of the decision in 120 1 the round was taken in recognition of the fact that, you 2 know, switching people out causes instability and that 3 there would have been all sorts of challenges with 4 trying to get another chair at that time. And I guess 5 that felt like a very important issue in the moment. 6 And now, when you look back at the picture overall, 7 on lots of cases here I think you ask: should people 8 have been bolder in making changes? I think, therefore, 9 I probably see it with that perspective now. 10 SIR WYN WILLIAMS: At the time, Ms Munby, were there senior 11 people who were consulted about the issue, who actually 12 favoured terminating the chair, or was it more or less 13 a unanimous view that censure was appropriate? 14 A. I don't remember anybody sort of specifically pushing, 15 but it was certainly a decision on which many of us, 16 myself included, felt was very much in the balance, if 17 that makes sense. I don't think there was a sort of 18 a one -- there wasn't a censure side and a termination 19 side and we were having a face off. It was more like 20 a debated issue that we were discussing as a senior team 21 what we thought was best. And this was where we landed. 22 SIR WYN WILLIAMS: Okay. Thanks. 23 MR STEVENS: At the time, were you involved in any oversight 24 or investigation of whether officials within the 25 Department had knowledge of the Swift Review? 121 1 A. No, or not that I remember. 2 Q. Do you think such an investigation should have been 3 carried out? 4 A. Possibly. I don't remember enough of the facts 5 surrounding the case to give you a really confident 6 answer on that, if I'm honest. 7 Q. I want to turn now to look at some of the compensation 8 schemes. I'm going to deal with it at a relatively high 9 level because we've heard evidence from Simon Recaldin, 10 and Carl Creswell will be giving evidence on the issue 11 later this week. 12 In your statement, is it fair to say that a common 13 theme that you point to as the reason for the delays in 14 compensation is what you describe as an underestimation, 15 initially, of the scale and depth of the challenge in 16 providing redress to subpostmasters? 17 A. Yes. 18 Q. I want to begin by looking at the effect of Managing 19 Public Money on compensation schemes, please. Could we 20 bring up POL00413475. This is "Managing Public Money", 21 the May 2021 edition. Would you agree a fair summary of 22 this is that it sets out the main principles for dealing 23 with financial resources in the public sector? 24 A. Yes. 25 Q. During your time as Permanent Secretary, the Chief 122 1 Executive of Post Office was an Accounting Officer for 2 Post Office? 3 A. Yes, it's a little bit more complicated than that 4 because you have a structure where you have a Principal 5 Accounting Officer at the departmental level and then, 6 depending on the nature of the status of an arm's-length 7 body, the CEO may be an Accounting Officer in their own 8 right. I think it might be the case in POL, 9 specifically, that they're more correctly described as 10 an accountable officer, which is -- I think it's 11 a technicality. 12 But it is, of course, fair to say that what's in 13 here would represent principles that the CEO of the Post 14 Office should have in mind. 15 Q. As Permanent Secretary and Principal Accounting Officer 16 for the Department, your responsibility was to make sure 17 that there were arrangements in place to satisfy 18 yourself that Post Office had systems adequate to meet 19 the standards required of Managing Public Money? 20 A. Yes, insofar as they applied to any particular aspect of 21 the Post Office's operations -- 22 Q. Yes. 23 A. -- because, obviously, much of the money that Post 24 Office was dealing with wasn't quite correctly described 25 as public money. 123 1 Q. Could we look, please, at page 20. Paragraph 3.3.3 2 says: 3 "There are several other areas where Accounting 4 Officers should take personal responsible ..." 5 At points 1 and 3, we see, "regularity and 6 propriety" and "value for money". 7 In the documents that we'll go to, it's fair, isn't 8 it, that regularity and propriety, and value for money 9 are concepts that were applied to the establishment of 10 the various compensation schemes. 11 A. If I may, there are four core concepts that underpin any 12 Accounting Officer test, as I would put on any new 13 announcement that the Department was making. Those are 14 regularity, propriety, value for money and feasibility. 15 And any major new initiative by the Department needs to 16 be assessed against each of those four criteria and 17 needs to have personal sign-off from the Accounting 18 Officer before it can be launched. 19 Q. So I think, subject to you adding feasibility, the 20 answer to my question was yes? 21 A. Yes, I mean, I guess I'm saying yes, very, very much so. 22 Q. If we turn, please, to page 15, in box 2.4, just sliding 23 down, we have a description of "Regularity". It says: 24 "Regularity: compliant with the relevant legislation 25 and wider legal principles such as subsidy control and 124 1 procurement law, delegated authorities and following the 2 guidance in this document." 3 When we are considering compensation schemes, does 4 regularity apply in the sense that the question is 5 whether or not this legal authority to make compensation 6 payments themselves, or does it also apply to whether 7 any compensation payment that is made must itself be 8 justifiable in legal terms? 9 A. I don't think it follows from the principles of 10 regularity that you can any compensate people to the 11 extent of your legal obligation. And indeed, I'm sure 12 you know that, you know, within the sort of framework 13 for initially the HSS, the sort of core documents of the 14 scheme were about trying to offer fair compensation, 15 even insofar as that went above what was a strictly 16 legal obligation. And I have certainly never understood 17 regularity to mean that. 18 Where regularity has been very relevant in the 19 context of the Post Office, where this test has been 20 particularly live, is actually where you're talking 21 about payments from the Department to the Post Office 22 and then from the Post Office to members of the GLO 23 class, where the question of under what Parliamentary 24 authority were we making those payments -- I'm -- this 25 is probably well known to the Inquiry -- was very kind 125 1 of extensively explored. That would be a regularity 2 issue: is the expenditure regular; is it properly 3 sponsored by Parliament? 4 I have never made any comment, I don't think, on 5 regularity in the context of individual compensation 6 payments, and the reason for that is, ultimately, the 7 Accounting Officer requirements come second to the 8 question of whether the policy intent of the Minister is 9 being fulfilled. So you're asking the question -- the 10 compensation needs to be full and fair, and then we need 11 to find a way of making it regular. You don't say, "I'm 12 going to use regularity as a way of not making it full 13 and fair". 14 So if ministers think that fair goes beyond legal 15 liability -- and, ultimately, that's the sort of 16 question that is for ministers -- then the only 17 regularity question is whether we have a piece of 18 Parliamentary authority that we can use to make those 19 payments. You would never use regularity to sort of 20 undermine that ministerial perspective. 21 Q. Just out of that point, how does the value for money 22 aspect of managing public money fit in, in the context 23 of compensation schemes? 24 A. So basically the same point. It's worth mentioning 25 there's -- at least in the latest edition of Managing 126 1 Public Money, there's quite specific reference to 2 compensation schemes, in which, in effect, it says the 3 same processes apply in compensation schemes. They're 4 like any other form of public money expenditure and 5 value for money, regularity, et cetera, et cetera, 6 apply. 7 Again, value for money is always about value for 8 money for a given ministerial objective. So it's not 9 like you have to justify, you know, is it value for 10 money to deliver full and fair compensation? The 11 requirement is to deliver full and fair compensation. 12 The question that an Accounting Officer would be asking 13 themselves, and I did ask myself, is: are we delivering 14 that full and fair compensation in a value for money 15 way? And there's probably a few aspects that come up 16 there. 17 Firstly, and very obviously, are the procedural 18 arrangements for running the scheme good value for 19 money? Normally you would want those costs to be as low 20 as possible, although clearly that's not an absolute 21 rule because, you know, being slow also adds cost. 22 The second thing you would usually have top of mind 23 when you're thinking about a scheme like this is the 24 area of fraud and error. That's been a really 25 substantial problem in a lot of Government schemes. In 127 1 this case, I want to be clear I'm not suggesting that 2 there was any fraud in any claims made but you would, 3 for example, want to be confident that you weren't 4 making payments to people who weren't postmasters, would 5 be a good example. 6 An error is another, like, very common 7 characteristic. That would be particularly things like 8 where you make the same payment twice, so you don't have 9 sufficiently good recordkeeping and you pay out a grant 10 and then you make the same grant again to the same 11 person without realising. That would be an example of 12 error and, again, that would be -- regardless of what 13 sort of scheme you were looking at, that would be top of 14 your mind as an Accounting Officer. 15 I think with compensation schemes it gets more 16 complicated, when you get to what level of compensation 17 is value for money? And, ultimately, the first place 18 you look there is for what was the original policy 19 intent and, in this case, that was for the compensation 20 to be full and fair. 21 Q. But is it fair to say that the value for money is 22 relevant to the question of the amount of compensation 23 that is paid: namely, when considering value for money, 24 does one have to consider whether compensation payments 25 made are too generous or overly generous? 128 1 A. It would really depend on what the ministerial steer 2 was. So let me give you an example. In this context, 3 at the kind of early stages of HSS and indeed for some 4 time, this was not just a short-term thing, the sort of 5 principle on which the payments were being made was that 6 there should be fair compensation at an individual 7 level, ie the amount of compensation that an individual 8 received should relate directly to the injury and 9 suffering that they had experienced as an individual. 10 Once you -- once that's your policy intent, then 11 yes, value for money principles would suggest that you 12 should compensate people to that point, and not further, 13 except insofar as that was a sort of reasonable, you 14 know, compromise in the grand scheme of things. 15 Whereas, you know, later, I know that the schemes 16 have moved to much more sort of fixed offers that move 17 away from the principle of sort of compensating 18 according to individual level of loss. Once you've made 19 that decision that that's your intent, then you would 20 look at value for money from a different angle. 21 So I guess you can't sort of discuss value for money 22 in the abstract without understanding the goal that 23 you're trying to achieve. But once you have specified 24 that goal and once you have specified a principle like 25 you're compensating on kind of an individual basis, 129 1 then, yes, of course you would expect value for money to 2 be relevant, just as it is, I should say, in absolutely 3 every other aspect of any Government money spent 4 anywhere. 5 Q. Can we look, please, at UKGI00018879. If we could go to 6 page 2, please. We see an email from you on 30 June 7 2020, and it says the subject is "FOR COMMENT CLOSE ... 8 [Post Office] Convicted Postmasters Compensation 9 Scheme". You say: 10 "One point of clarification from me. Does the 11 establishment of the compensation scheme prevent the 12 malicious prosecution claims? (Ie can it actually close 13 off the risk of larger sums materialising in any case). 14 "Is it that we expect claimants to prefer 15 a cheaper/less risky route even if for lower benefit? 16 If so how sure are we that will be true?" 17 What was the purpose of your questions at that 18 point; why did you seek those answers? 19 A. I hope this won't seem like a cheap answer. I mean, 20 because I was seeking to understand. So this is very 21 early on in my engagement with this scheme. I've just 22 been given a piece of advice. I actually remember, 23 interestingly, not getting, factually, whether it was 24 the case that, by running a scheme, you sort close off 25 the legal route or don't. And that seemed to me 130 1 an important point. I wasn't pushing a particular point 2 of view here. I was genuinely just seeking to clarify 3 the situation and to understand better, it's quite 4 a large, you know -- it's a significant piece of policy 5 work, significant money associated, and I felt I should 6 understand what was going on. 7 You'll see later I get a reply and I say "Sounds 8 good, go ahead". I didn't have an agenda. 9 Q. I'm going to look at that reply now, please. Could we 10 go to the bottom of page 1. It's an email from Tom 11 Cooper, 1 July 2020. It says that it won't prevent 12 claimants from pursuing a malicious prosecution claim 13 but goes on to say: 14 "The point is to provide a quicker and cheaper route 15 to redress/compensation than having to go through the 16 courts again. This is in the interests of all parties 17 of course -- claimants, [Post office] and [His Majesty's 18 Government]. 19 "To your last point, we would always expect 20 claimants to take some discount to the full potential 21 value of a malicious prosecution claim because: 22 "[1] The outcome will be inherently uncertain as in 23 any litigation. 24 "[2] It will take a very long time (particularly if 25 there are appeals). 131 1 "[3] It will involve substantial costs which 2 some/all claimants may have to fund externally and for 3 which they will end up having to give up a large share 4 of the proceeds if they win ..." 5 Is it fair to say that, at this point, one of the 6 policies behind the schemes was to seek to settle the 7 claims at a value less than they may have been at trial? 8 A. Yes, although I would caveat that by saying I don't 9 think the sort of overriding consideration was to settle 10 the claims at a value less than they would have received 11 at trial. It was that settlement is -- I mean, 12 generally, I think -- lawyers might disagree -- but 13 generally a better approach for all parties. So I would 14 just -- I don't think that's to negate what you just 15 said but I just think it was more that context than 16 a sort of, you know, financial minimisation, as the core 17 motivating factor. 18 Q. Can we look, please, at BEIS0000961, please. It's 19 an email on 8 September referring to a meeting the day 20 before. We see there are attendees from Post Office, 21 including Nick Read and Tim Parker. You are listed 22 there as Perm Sec -- Perm Secretary. Can we go to 23 page 2, please, for part of the readout. It says: 24 "Tom noted that although Alan has taken the thinking 25 on this quite a way, Tom is keen that BEIS/UKGI don't 132 1 get too involved in the detail of the schemes but focus 2 more on the communication side of things." 3 Pausing there, was that an accepted position within 4 BEIS at that time in September 2020? 5 A. Hmm, I'm not sure. Sometime around this time, and I'm 6 not sure I could put the chronology, you know, was it 7 exactly before this meeting or after this meeting, but 8 this was during the period where we moved from sort of 9 thinking "This is mostly a Post Office thing" to "We 10 really need to get across this in a very great deal of 11 detail". And I'm just not sure I could put exactly 12 where this fits in that chronology, apologies. 13 Q. It goes on to say: 14 "Carl asked whether Perm Sec [referring to you] had 15 any views as Accounting Officer, and ensuring propriety 16 VFM [value for money], ethical considerations on any 17 comms statement. [Permanent Secretary] wanted to know 18 if the wording of the statement was consistent with only 19 mediating on the cases that would come up." 20 Can you help us with what that means? 21 A. I don't remember. 22 Q. It says: 23 "The Permanent Secretary noted that none of the 24 schemes are terribly attractive." 25 Why did you think none of the schemes were terribly 133 1 attractive? 2 A. At that point, we were discussing a range of different 3 options, all of which were expensive, all of which were 4 onerous for everybody involved -- you know, Government 5 and postmasters -- and kind of being given a set of 6 options to choose from about how we might approach 7 compensation, there wasn't one that I looked at and 8 thought, "Yeah, you know what? That's great". It was 9 choosing between, you know, sort of choosing between 10 difficult options, none of which were perfect. 11 SIR WYN WILLIAMS: I'm sorry to interrupt again but can I be 12 clear. At this point in time I think we're in early 13 July, are we, 2020? 14 MR STEVENS: This is September 2020, sir. 15 SIR WYN WILLIAMS: Right, so HSS has already launched. So 16 presumably you're here talking about what to do with the 17 people who were having their convictions quashed. Is 18 that it? 19 A. That's right. I think there was a presentation at this 20 meeting about various different approaches for dealing 21 with what later became the OHC. 22 SIR WYN WILLIAMS: Fine. Thanks. 23 MR STEVENS: It says: 24 "Carl said that 'all options' and 'entitled to' in 25 the statement suggests that Government is committing to 134 1 give more compensation to claimants than they would 2 actually be receiving. 3 "Carl/Perm Sec noted that through mediation, some 4 claimants would receive much less than they think they 5 are entitled to." 6 Again, can you recall what your -- precisely what 7 your concern was here? 8 A. So I'm going more by reading the text and thinking what 9 it probably meant, rather than having an exact precise 10 recollection. But we were looking at a draft of 11 a public statement, which is very normal at this stage, 12 like what are you going to announce, basically. And 13 here this is, you know, talking about making sure that 14 the statement doesn't over-promise, relative to what 15 we're actually planning to do. 16 And without having the statement draft in front of 17 me, I'm not sure I could tell you what exactly the 18 problem with the statement was but what this looks to me 19 like is a discussion where we're saying, "Look, the two 20 need to match. If we're going to give this sort of, 21 like, very forwarded leaning statement are we confident 22 that what we're proposing, this mediation driven 23 process, are we confident that it actually delivers 24 against it?" 25 Q. Can we move on slightly in the chronology, please, to 135 1 UKGI00043126. Page 5, please. If we go down slightly, 2 please. So this is from Permanent Secretary: I assume 3 that's your private office email address? 4 A. That's right, yes. 5 Q. "Just had a conversation with Joshua. Sarah has some 6 concerns with the AO assessment ..." 7 Presumably Accounting Officer assessment? 8 A. That's right. 9 Q. "... and isn't happy to clear yet." 10 If you could go down, please. 11 "It has a high [value for money] risk, and we're not 12 sure why. What we need is an assessment of this 13 announcement, which leaves room to design a [value for 14 money] scheme." 15 It goes on to say: 16 "We need a clearer answer on why we are confident 17 this won't lead to a regularity challenge." 18 Can you recall what was driving your concerns in 19 respect of your Accounting Officer assessment of the 20 schemes at this time? 21 A. Yes. And with all due respect to those who wrote this 22 particular piece of advice, what this feedback is, is me 23 saying this advice is not good enough. So the advice 24 I received at that time, just to take VFM as the 25 example, had -- what an Accounting Officer normally does 136 1 it is take those four tests I was talking about earlier 2 and gives a rating against each of them. And this piece 3 of advice had a red rating against value for money. 4 You can't, as Accounting Officer, just let that pass 5 by. If it has a red rating for value for money or one 6 of the other tests, you need to engage. And, 7 ultimately, if you really thought it was a red rating 8 for value for money, if that was your considered opinion 9 after getting the best advice you could, then you would 10 actually need to ask for a ministerial direction. 11 Now, I absolutely did not think that was the case 12 here. And what I was asking for is for the team to come 13 back with basically a more intelligent piece of advice. 14 What they had done at the time is they'd said, "We 15 haven't designed all the details of this scheme yet, 16 it's still quite uncertain. And so it feels risky so 17 we're putting a 'red' for value for money". 18 But what I was trying to point out is all we're 19 doing is making one step forward: we're announcing the 20 scheme. We're not tying ourselves down to an exact set 21 of details. There's plenty of room within that to make 22 sure that we do design a scheme that passes the 23 Accounting Officer tests and, of course, that would be 24 our intent, and that's what we would do. 25 So I was asking them to go back and, I mean, 137 1 basically create a piece of paper, that rather than 2 saying this is all red and bad and you cannot announce 3 it, reflect the truth, which is that: this is fine from 4 an Accounting Officer point of view and it's perfectly 5 ready to be announced; which was my view. 6 Q. So we take this as a criticism of a draft, rather than 7 a substantive position on the Managing Public Money 8 assessment? 9 A. 100 per cent. 10 Q. Please can we look at BEIS0000990. This a briefing on 11 10 June 2021, so we're jumping ahead again in the 12 chronology. It's a briefing which we will come back to. 13 You see it's on the ownership of criminal convictions 14 compensation, regarding who runs that scheme. 15 Could we please look at page 3, and paragraph 12 -- 16 sorry, not paragraph 12, it's just a bit further down 17 where it says, "Efficiency". Thank you. So this is one 18 of the pros, it says, of the Government taking on direct 19 ownership of compensation from Post Office: 20 "... in either situation, we will need to scrutinise 21 aspects of the compensation closely from an MPM 22 [presumably 'Managing Public Money'] perspective." 23 A. That's right. 24 Q. "This has caused [Post Office] some frustration in 25 relation to the HSS scheme because of the process and 138 1 conditions that we have had to mandate." 2 Do you recall what Post Office's concerns were in 3 relation to Managing Public Money in relation to HSS? 4 A. I don't really remember them as being specifically about 5 Managing Public Money, but there had certainly been back 6 and forth around governance and our involvement in the 7 governance around HSS. I think, by this point, we had 8 started putting pressure on around legal costs and 9 administrative costs which had been a very kind of tense 10 set of discussions, and that certainly was a Managing 11 Public Money issue. 12 I think if I had characterised what I knew at this 13 point, I think I would have said more that they had sort 14 of concerns or frustration from a governance 15 perspective, maybe, rather than it being particularly 16 an explicit dispute about Managing Public Money. But, 17 you know, clearly the drafting here suggests that. 18 I just -- that would just be my perspective. 19 Q. That document can come down. Thank you. 20 It's been suggested by some that the approach to the 21 compensation schemes has been litigious or legalistic. 22 Have you heard that criticism? 23 A. Yes. 24 Q. Do you have sufficient knowledge of the operation of the 25 schemes to have a view on that? 139 1 A. I think I do, although it's a partial one and I'll just 2 sort of say it as I see it. I think there's two aspects 3 to this. The first comes back to what I was talking 4 about earlier, about taking a case-by-case approach to 5 the schemes. And, I mean, in my witness statement 6 I talked about sort of if you went back, what might you 7 do differently? In a way, that original decision to 8 have a scheme that was based on individual applications 9 and assessments of individual applications, even if, for 10 a moment you put aside any concerns about how you do 11 that -- I'll come to those in a second, but just putting 12 those aside -- just inherently asking people who have 13 been through something truly awful to go back over it as 14 part of an application process has challenges, even if 15 you do it in the absolute best possible way. 16 So I think that's sort of point one. 17 Point two, then, is actually, particularly through 18 the process here, I think there have been cases -- but, 19 you know, frankly, the Inquiry would be as well placed 20 to comment as I am -- there have been places where you 21 look back and you think, you know, an individual case 22 was handled not as generously as would be sort of 23 properly viewed as compatible with full and fair. 24 I don't think, certainly from my perspective, 25 I never saw ministers or officials seek to achieve that 140 1 outcome, and I didn't at the time see any evidence that 2 the Post Office, at a sort of corporate level, was 3 seeking to achieve that outcome. I think others are 4 probably better placed to sort of say what happened on 5 the ground and how it felt. But maybe a reflection 6 would be that, you know, once you pass intent through 7 a system, at the end you might not always sort of feel 8 the intent you started with, especially once you've gone 9 down the, you know, perhaps necessary or necessary at 10 the time, road of assessing each case individually 11 because, if you assess cases individually, it takes you 12 down a path of wanting to see some level of evidence. 13 And you can get into, and you may well wish to, 14 discussions about like what the bar -- what the 15 evidential bar is. But the difficulty with a system 16 that assesses individual cases and has no bar whatsoever 17 for evidence, if you have no requirement, is then it is 18 100 per cent a matter of whatever is asked for, you will 19 pay out, without any process at all. And that is 20 difficult, from a Managing Public Money point of view 21 because, of course, everybody would always like to 22 receive more money and, if you don't ask for any 23 evidence at all, it's really hard to know are we 24 compensating fairly or are we starting to get to the 25 point of -- I don't mean sort of minor over-compensation 141 1 but, you know, really serious over-compensation based on 2 claims that aren't right. 3 And that I just -- I think that's a really difficult 4 trade-off. And I do sort of wonder, looking back, you 5 know, how easy really is it to design a scheme that 6 looks case by case but that doesn't end up feeling 7 litigious to at least some of the participants in that 8 scheme? 9 Q. If we look at your statement, I think you deal with some 10 of those issues. It's your second statement, please, 11 page 25. It's paragraph 51. You refer to other 12 approaches and the sort of application-based approach, 13 as it: 14 "... would necessarily have been much more 'blanket' 15 in its nature, and probably would have meant we all had 16 to accept paying people whose circumstances were 17 different the same amount as each other. Likely the 18 only way it could have proved acceptable to 19 [subpostmasters] is if the numbers had in general been 20 much higher overall ('levelling up' ...). For [His 21 Majesty's Government] to have gone down this road 22 officials and Ministers would have had to have given up 23 on two quite funnel principles. First, fairness, both 24 as to between different applicants, and to as to between 25 [subpostmasters] and other victims of past injustices. 142 1 Second, standard use of public money, as we would have 2 had to accept making payments that could not by any 3 normal standard of judgement be viewed as compatible 4 with the formal guidance for spending taxpayer money 5 ([or] Managing Public Money)." 6 Do we take from your evidence at the time, so 7 putting ourselves back to September 2020 thereafter, 8 that there wasn't a discussion on these more blanket 9 approaches, which we've seen in sort of post-2024? 10 A. I think I remember we were talking about that meeting 11 earlier where you had the readout from it and you were 12 asking me what things meant. 13 Q. Yes. 14 A. As I remember, there were options in there that went to 15 tranche-driven approaches, ie where you define a series 16 of classes and then have kind of flat payments within 17 class. I don't specifically recall but it could have 18 been. I don't specifically recall a proposal which was 19 around kind of a single very generous class, which is in 20 effect what I'm describing here. 21 Q. So the proposal you're describing here wasn't put 22 forward to a minister? 23 A. It's not -- yes. I think it's important to say it's not 24 that lots of people were saying that this was what we 25 should do and I or somebody else and came out and said 143 1 no, that isn't compatible with Managing Public Money. 2 I think it was almost perhaps taken as read that we 3 would have a scheme that, broadly speaking, sought to 4 provide as close as possible to full and fair to 5 individuals. And that that might -- you might have gone 6 as far as a tranche-based approach, which obviously is 7 not quite as precisely gradated as an individual 8 approach, but is still gradated. 9 I certainly don't remember an extensive debate. It 10 may have come up once. I couldn't swear to that but it 11 certainly wasn't extensively debated and I certainly 12 never said, "You can't do that because of value for 13 money reasons", because the question was never put to me 14 in that anyway. 15 Q. Looking back again at that time, do you think sufficient 16 consideration was paid to all the available options? 17 A. In one sense, the answer to that has to be no because 18 we've now -- we're much further down the path and you 19 look at where the schemes are now and, knowing that that 20 is where you're going to land, it is just undoubtedly, 21 irrefutably true that, if that's where you're going to 22 land, you would have been much better doing it earlier, 23 for everybody's sake, and particularly for postmasters. 24 So, in that sense, you know, it was definitively 25 wrong. However, if you go back and look at the 144 1 environment that we were operating in at the time, you 2 know, being absolutely frank, I think if the proposals, 3 as they are now, had been put on the table at that 4 moment in their current form, but sort of put back into 5 the historical context, I think we would have had 6 insurmountable difficulties with HMT, the Treasury, with 7 Ministers, actually, and possibly, although it's always 8 hard to answer this, possibly with me as an Accounting 9 Officer. 10 I think all of those -- all of those sort of formal 11 clearance moments would have been very, very difficult 12 to get through. And so I don't think that kind of 13 radicalism was properly contemplated at the time. And 14 so the question I asked myself is what would have to 15 have been true to get the system as a whole to operate 16 in a more radical mode, faster? 17 Q. What changed between then and now, in the sense of you 18 said, if we know where we are now, it wouldn't have been 19 possible back then? What do you think the key 20 differences were between the two times? 21 A. I mean, ultimately, and sort of operationally, the 22 strength of the ministerial steer to address the problem 23 in full, sort of -- and I use these words sort of 24 appropriately but kind of at any cost. 25 Q. What caused that change in position? 145 1 A. That -- it wouldn't be for me to answer. It happened 2 after my involvement and I wasn't there. 3 Q. Let's go to what you say -- you talk about some of the 4 reasons for the delay. If we could -- 5 SIR WYN WILLIAMS: Before we do that, Mr Stevens, just so 6 I'm clear, what you mean by "the now" are things like 7 having fixed offers of £600,000 for convicted people 8 whose convictions have been quashed, or fixed payments 9 of £75,000 for people in the HSS; that's the sort of 10 thing you mean in relation to "the now", is it, 11 Ms Munby? 12 A. Yes, that's exactly right, Sir Wyn. I would add to that 13 list, although it's not a VFM issue, but the other kind 14 of fundamental overturning of the initial principles 15 would be the mass exoneration -- 16 SIR WYN WILLIAMS: Yes, well -- 17 A. -- which would be another example. 18 SIR WYN WILLIAMS: -- that's the ultimate step, if I can put 19 it in that way. 20 A. Yes. 21 SIR WYN WILLIAMS: But the steps to it were things like, in 22 inverted commas, what might be considered -- and 23 I choose my words carefully -- as "realistic" fixed 24 payment type options for postmasters to take up if they 25 didn't want to go through a process of individual 146 1 assessment. 2 A. Yes, I think fixed payment and interim payment options 3 were of course considered earlier and, indeed, at least 4 in the case of interim payments, implemented earlier. 5 So I think it's the combination of being fixed and also 6 the relative scale of them. I think that, it's that 7 combination that it would have been hard -- I think, 8 even if we had had an official who was pushing that 9 agenda, I think they would have met obstacles in the 10 system. I just want to be honest about that. 11 SIR WYN WILLIAMS: Yes. So I don't mean this in any flip 12 sense at all but Mr Recaldin was talking about the 13 journey that postmasters have been on. You're almost 14 describing a journey that civil servants and politicians 15 have been on in terms of trying to achieve full and fair 16 compensation? 17 A. Yes, I think that's right although, like you, I wouldn't 18 compare the journeys in their, you know, challenge or 19 emotional cost or anything else, but I think the thing 20 I've reflected on is, when you get to the end, you 21 always look back and you think, "Well, why didn't we 22 just do that to begin with?", because, as I've said, if 23 you know that's the destination, it's much better to get 24 there quickly than more slowly. So the question really 25 is: why not; what was it that meant that that didn't 147 1 happen? 2 And I think, you know, there are probably a series 3 of reasons to do with under estimating the scale of the 4 challenge, which you mentioned, Mr Stevens, earlier, but 5 also a belief that the processes would go better than 6 they actually did. A sort of -- what now with hindsight 7 is obvious was an excessively high level of faith. 8 I don't mean in the Post Office's ability to run those 9 operations, actually, because, as I said in my witness 10 statement, I think many of the challenges might have 11 been similar, even if they had been run by the 12 Department or by an independent body, but a sort of 13 confidence that the application of sensible governance 14 and processes would lead to the correct outcomes. 15 And, actually, what we saw is that that application 16 of what looked, you know, broadly speaking from my point 17 of view at the time, like quite sensible arrangements, 18 there were quite a lot of errors made. There were 19 points missed, be that around impact on benefits or 20 insolvent businesses, you know, points missed, errors 21 made and approaches that didn't work out in practice how 22 they were originally envisaged. 23 I guess, overall, I would look back and say you're 24 too optimistic about how well the processes would get 25 rolled out. And that's partly a critique of how they 148 1 were rolled out but it is in equal part a critique of 2 the sort of optimism that can often plague us when we 3 begin schemes of any kind. I don't just mean 4 compensation schemes; I mean, a sort of confidence that 5 things will be okay, whereas, you know, perhaps a more 6 sceptical, pessimistic approach that said, "Look, this 7 is going to run into an absolute whole load of really 8 specific challenges and it's going to end up being slow 9 and painful, we've got to cut to the chase quicker". 10 If I could sort of put myself back in my own shoes, 11 I think that is the message I would want to have given 12 more. 13 SIR WYN WILLIAMS: Thank you. 14 Sorry, Mr Stevens. 15 MR STEVENS: Not at all, sir. Can we please bring up 16 page 23 of the second witness statement. You've got 17 a section there "HSS and the slow beginning", and at 47 18 you say: 19 "I add my own personal apology to the institutional 20 apology that [Post Office] has already made for slow 21 progress during the early part of the scheme's 22 operation. [Post Office] (and, in turn, [His Majesty's 23 Government]) had seriously underestimated the scale, 24 complexity and cost of the problem and consequently [His 25 Majesty's Government] did not press [Post Office] hard 149 1 enough to, and [Post Office] did not themselves, set up 2 a sufficiently robust operation at the start." 3 I think that's part of what you were referring to 4 there. 5 Could we go, please, to UKGI00013178. 6 Sir, just for your note, this document is the note 7 for the meeting in September 2020 that we went to 8 earlier, the briefing note which sets out matters which 9 would have been discussed at that meeting. Not the 10 minutes, I should say, sorry, the briefing note. 11 SIR WYN WILLIAMS: Sorry, Mr Stevens can you repeat that? 12 MR STEVENS: Earlier we went to a meeting in September 13 2020 -- 14 SIR WYN WILLIAMS: Yes. 15 MR STEVENS: -- and you asked a question about the timing of 16 it. 17 SIR WYN WILLIAMS: Can you just give me the reference to 18 that, and then I can crossreference it in my note. 19 MR STEVENS: Yes, of course. It is BEIS0000961. 20 SIR WYN WILLIAMS: Yes, fine. I've got it. Thanks. 21 MR STEVENS: So if we go, please, to page 10, we see what 22 was then the "Historical Shortfall Scheme Update 23 20 August, (Updated Version from 25 August)": 24 "Closure of Application Window: The HSS application 25 window officially closed on 14 August ..." 150 1 It says that: 2 "As of 25 August, 2013 claims have been received 3 amounting to around £100 million", being what has been 4 claimed. 5 So in your statement you referred to the estimates 6 in July 2020 as being 500 claims costing £35 million. 7 So, already, there's a significant increase in the scale 8 of the claims facing Post Office by September 2020, yes? 9 A. Yes, that looks right. 10 Q. It goes on to say: 11 "Please not that there are a few exceptions to the 12 deadline, notably the cohort of [circa] 6,200 former 13 postmasters who were identified late by [Post Office] 14 and notified about the scheme in July." 15 So it must have been clear by September the 16 significance of the claims facing Post Office; would you 17 agree? 18 A. Yes. 19 Q. The Inquiry will hear evidence that it became clear that 20 the Post Office could not afford to meet the HSS in 21 November 2020; do you recall that? 22 A. I don't remember the exact date but that sounds 23 perfectly plausible. 24 Q. It then took four months to resolve funding within 25 Government to meet the HSS -- 151 1 A. Yes. 2 Q. -- do you remember that? Do you recall why it took four 3 months to resolve the funding issues? 4 A. I think this is going to be a not very attractive answer 5 but four months is not particularly slow, in the context 6 of resolving funding issues. Sort of in between 7 spending reviews, going back and asking for more money 8 for things is really difficult. So I sort of say that 9 by way of context. 10 The second issue is that, at this point, this is 11 effectively the first moment at which HMG says, "We are 12 fully taking on the financial responsibility that comes 13 with the" -- you know, by this point, we knew, right, 14 that this was not the only compensation scheme that we 15 were talking about because the sort of other issues were 16 queueing up behind. 17 So that was quite an important principal decision 18 that was taking during that time. So yes, first of all 19 it's about getting money signed off and being able to 20 demonstrate why it's the correct number and, you know, 21 going back and forth on, you know, are you sure it's 22 really this number? How much money do you really need? 23 Where are we going to get it from? BEIS, can you find 24 it from your underspends? Do you really need extra 25 money from HMT, et cetera? 152 1 But it's also quite a pivotal moment because it's 2 the moment where, in effect, HMG sort of takes -- like, 3 takes a financial liability that, you know, ultimately 4 by this point was clear was going to be, you know, over 5 £1 billion in aggregate, sort of takes it on to the 6 public purse. 7 Now, by the way, I'm not in any way suggesting that 8 that wasn't 100 per cent the right thing to do but it is 9 a swallow, and I think it took a bit of time for the 10 system to make that swallow. 11 Q. Could we look, please, at page 28 of your second 12 statement. 13 A. Perhaps I might just add -- apologies, I was just 14 thinking while you were pulling the document up -- that 15 it's also true to say that the kind of obligations that 16 the Treasury likes least are open-ended, difficult to 17 quantify ones. So that's why it's a difficult call, 18 because you sort of knew that the number was going to go 19 up. And however important, however worthy the case is, 20 those are not numbers Treasury likes to deal with 21 because they really make a mess of the kind of bigger 22 picture of the financial forecasts. 23 So it's just worth noting that. It's a sort of -- 24 it's not the just -- if it was just a one-off bill and 25 you knew exactly the size of it, sort of one picture, 153 1 but a bill you don't know the size of, that you're going 2 to be committed to over multiple years in 3 an unpredictable manner that's just particularly 4 challenging from a public finance point of view. 5 Right that the Government took it on but I think 6 that would be one of the reasons why it took a bit. 7 Q. So do we take it from your evidence that it took four 8 months because, firstly, it was a big decision; secondly 9 it was a difficult decision for the Treasury; and, 10 thirdly, four months, in the grand scheme of things for 11 the Government, isn't a long time for a funding 12 decision? 13 A. Yes, I'm not sure I would say it was a difficult 14 decision exactly because I don't really think there was 15 any sort of meaningful -- it's not like there was 16 a cohort of people who were saying, "We shouldn't pay 17 this", it was more just like, okay, really getting to 18 grips with it, and sort of, as you always do with these 19 things, kind of hoping that maybe the first number is 20 too big. You know, when people come to you and this is 21 true in any element of public finance, whether you're 22 the Treasury dealing with the Department, or the 23 Department dealing with an arm's-length body, or 24 Director General dealing with the Directorate, people 25 come to you and say they want X, and the first thing you 154 1 sort of do is go back and say "Are you sure? Is that 2 really the number? Are you sure it's not X minus 3 a bit?" 4 Those sorts of negotiations, sort of trying to make 5 the problem be less of a problem from a finance point of 6 view, you would expect that same kind of approach here. 7 Even though, arguably, it's completely inappropriate 8 here, I think that muscle is just like so deeply 9 ingrained that that will have been going on as well. 10 Q. If we could look, please, at paragraph 59, thank you. 11 You refer to an email from Carl Creswell to you, on 12 26 April 2021, "Update on the ... compensation next 13 steps", and you highlight: 14 "It looks increasingly likely to me that we should 15 consider taking on responsibility for the design and 16 delivery of the compensation scheme within BEIS, though 17 that would have large resource implications." 18 Sorry, 58, just to orientate us, you're talking 19 about the question of ownership of OHCS. If we then go 20 to paragraph 60, please, over the page, you say: 21 "I agreed with Mr Creswell that this was an issue 22 ..." 23 What was your position on whether the Department 24 should take ownership of the design and running of the 25 scheme? 155 1 A. I don't think at that point in the chronology of sort of 2 receiving Carl's email I would necessarily have 3 immediately jumped to a position but I completely agreed 4 with Carl that we needed to look at it seriously and it 5 was a really important question and it was one we were 6 going to have to face into and address. That's what 7 I mean by "I agreed with Mr Creswell that this was 8 an issue". 9 Q. If we look at the briefing that follows please, we've 10 looked at it already, it's BEIS0000990. Have you had 11 a chance to review this briefing recently? 12 A. Yes, I've seen this document recently. 13 Q. Did you contribute to its drafting? 14 A. I couldn't tell you. I wouldn't imagine terribly 15 substantially. It wouldn't be usual for me to be 16 involved in the detail of a piece of drafting like this 17 but I may have commented on it. 18 Q. We see it's for the Secretary of State to 19 approve/decide, Post Office ownership of criminal 20 convictions. If we look, please, at page 3, 21 paragraph 12, which I erroneously tried to go to 22 earlier, it says at the end: 23 "Whether or not to take on direct responsibility is 24 a delicate decision, so we would welcome your views, in 25 light of the following analysis." 156 1 Is it fair to say that, in this briefing, there 2 wasn't a suggested course offered for the Secretary of 3 State? 4 A. That's right. 5 Q. That can come down. Thank you. 6 Outside of this written briefing, did you advise the 7 Secretary of State on a position to take at any point in 8 respect of whether the Department should take over the 9 running of the scheme? 10 A. Not that I recall. 11 Q. We know that, in your documents, it refers to the fact 12 that the Secretary of State made a decision. Were you 13 involved in the decision-making process, in the sense of 14 advising him on that? 15 A. Not that I recall, although I couldn't absolutely swear 16 to it. I mean, what I do know is that, at the time, you 17 know, perhaps you say this is sort of typical, but this 18 was another one which I thought was pretty finely 19 balanced. So I didn't have a kind of -- I wasn't 20 pushing a particular perspective because I think if 21 I had felt very strongly that one answer was correct, 22 then I would have pushed for the advice to offer 23 ministers a much kind of clearer perspective. 24 But, ultimately, I think we all thought that this 25 was a -- quite a difficult call and one that ministers 157 1 should make. 2 Q. So from your perspective the decision to keep it with 3 Post Office was a ministerial decision without 4 significant steer from the Civil Service? 5 A. With advice around sort of the pros and cons, but not -- 6 I don't think we pushed ministers into one option or the 7 other. 8 Q. Could we look, please, at your statement again, 9 page 31 -- second statement, sorry. At the bottom, 10 please, paragraph 64, you refer to the GLO scheme. You 11 say: 12 "Even at the beginning of my tenure, it was obvious 13 that the GLO settlement had (while being legally sound) 14 caught a deep natural injustice, as those involved 15 received so little money in their pockets are legal 16 bills were settled and the litigation funders received 17 their slice ..." 18 You refer to the scheme being announced. 19 If we go over the page, please: 20 "This was, in the early part, probably due to 21 a conceptual assumption by officials and Ministers that 22 the GLO settlement had closed the book on this issue. 23 Obviously this was legally true (the relevant 24 postmasters had no further legal claim against [Post 25 Office]) but it was not morally true. But by Carl 158 1 Creswell's email of May 2021 we were clear we needed to 2 act. This proved difficult to make happen. It took 3 significant time to find a legal means to pay the 4 money." 5 Which I think you were referring to earlier in your 6 evidence, when we were discussing a legal basis for 7 making payments. 8 A. Exactly. This was a -- this is a very hard constraint, 9 in the sense that the Department literally just cannot 10 pay out money without a legal basis. It's not a sort of 11 matter for opinion or judgement, we didn't have a legal 12 basis as we understood it. We later found one. 13 Therefore we couldn't make the payment until we had 14 a legal basis. 15 And that's got -- just to be clear, legal basis here 16 has nothing to do with the legal claims or anything like 17 that. It's a Parliamentary ability to spend. You can 18 only spend in line with the authority that Parliament 19 has given you. 20 Q. At 66, you say: 21 "This problem was real (and I think BEIS and HMT 22 officials did a good job at locating the Appropriation 23 Act option). It does of course a raise the question why 24 [His Majesty's Government] didn't just legislate to 25 create spending authority, rather as eventually happened 159 1 in 2024 under the Post Office (Horizon System) 2 Compensation Act. I think the answer comes back to my 3 point above about the extent of radicalism both 4 officials and Ministers were contemplating -- emergency 5 legislation of this type is exceptionally difficult to 6 make happen, and, speaking frankly, requires an enormous 7 head of political steam to have built up." 8 Why do you think the sufficient amount of political 9 steam wasn't there to push through a specific piece of 10 legislation such as this? 11 A. I think two reasons. The first is, as indeed turned out 12 to be true, a sense that had we really turned over every 13 stone to make sure a spending power didn't really exist? 14 So it's obviously in the situation you find yourself 15 where you think, "Oh, I don't have a spending power, 16 it's obviously much preferable to find that you actually 17 do have one, rather than to run a very unusual, very 18 unusual, piece of legislation designed to create 19 a power, you know, very specifically around something 20 like this on an emergency basis". 21 That's -- you know, it's very much out of the 22 ordinary. That doesn't mean it's not good thing to do 23 but people would always turn to "What do we have, what 24 do we have, what do we have?" 25 And I think there was a -- as there often is when 160 1 you're searching for something, you think you might find 2 it in the first week, and then you think, "Oh, I'm going 3 to find it in one more week", and you sort of keep going 4 looking for it and, in the end, we did find it but it 5 took a while. How could you have shortcut that process? 6 We could have found it faster but it was pretty obscure, 7 or we could have just said, "Stop looking, I'm just 8 going to legislate". But finding Parliamentary time is 9 really hard and so I think all throughout, not that the 10 question particularly came up in that form, but I think 11 Ministers would have probably said, like, "Okay, just 12 before I go to what will be a very, like, difficult 13 Parliamentary journey, could you just be really, really 14 confident that you definitely haven't got one?" 15 Q. Was there sufficient consideration of the effect the 16 delays were having on the subpostmasters who were 17 affected by the absence of compensation payments? 18 A. Good question. I think there's probably a bit of sort 19 of boiled frog going on here, in the sense that you -- 20 each little individual bit of delay to look a little bit 21 longer, to avoid having to pass legislation, probably 22 didn't seem that bad. You know, you always think, "Oh, 23 it's worth looking a little bit more, it's worth looking 24 a little bit more, it's worth looking a little bit 25 more". Each marginal extra bit of time makes sense and 161 1 all of those little ones are manageable from 2 a postmaster point of view. 3 But when you look at how long the whole thing took 4 in aggregate, you say, "How can you have taken so long? 5 You should have done something completely different at 6 the start". 7 But it doesn't -- the problem doesn't arrive at you 8 in that form. You think -- you constantly think you're 9 about to find something. 10 MR STEVENS: Sir, that's probably a good time to take the 11 afternoon break. If we could come back at 3.30. 12 SIR WYN WILLIAMS: Yes, certainly. Fine. 13 MR STEVENS: Thank you, sir. 14 (3.17 pm) 15 (A short break) 16 (3.30 pm) 17 MR STEVENS: Good afternoon, sir. Can you see and hear us? 18 SIR WYN WILLIAMS: Yes, thank you. 19 MR STEVENS: Thank you, I'll carry on. 20 Please can we bring up BEIS0000975. We see this is 21 a letter from Nick Read to you, dated 29 September 2021. 22 At paragraph 2, we see it says: 23 "However, on account of the management and controls 24 of [Post Office's] litigation costs not being adequate, 25 I am unable to release the payment due until [Post 162 1 Office] can demonstrate satisfactory control. Payments 2 would be made by BEIS following a shareholding approved 3 budget." 4 So what you're referring to here is withholding the 5 network investment and network subsidy payment because 6 the Department's position was that Post Office hadn't 7 got control of its litigation costs; is that fair? 8 A. Yes, litigation costs meaning payments to lawyers. 9 Q. Would you accept this was quite a drastic step to take 10 in terms of the levers that you can pull, withholding 11 payments to Post Office? 12 A. Yes, and only done after, shall we say, exhausting 13 persuasion as a tool. It is worth saying that, of 14 course, before we did this, we did analyse whether it 15 would actually sort of cause an immediate operational 16 challenge to POL, and it we didn't think it would. 17 Q. Can I just pause you there. My question is: did you 18 ever consider doing something similar to put pressure on 19 Post Office to increase the efficiency with which it 20 dealt with the applicants to the various schemes? 21 A. No, I don't remember that being proposed. 22 Q. Why not? 23 A. I don't know why people didn't propose it to me. 24 Q. Why did you not consider it? 25 A. Indeed. Sorry, I just thought it was important to 163 1 clarify. I don't know. Ultimately, probably, because 2 we never quite got to the point where there was 3 resistance from Post Office. So I would say, on legal 4 costs, by the point of this letter, there'd been a long 5 period of debate around it, and certain people on the 6 Government side, in both the Treasury and UKGI, felt 7 really strongly about this point, and felt they were 8 just never ever sort of breaking through and getting the 9 right traction and Post Office's position at the time 10 was like sort of resistive, as in, "We have done all we 11 can, there is no more. We are not doing more". And so 12 there was a kind of sufficiently clear clash to make 13 that feel like an appropriate move. 14 I don't quite remember on pace ever reaching that 15 point where you had a sort of an ask and a resistance. 16 It was more like ongoing pressure, ongoing movement. It 17 got a bit better, it got a bit better, it got a bit 18 better, and so there was probably never quite like the 19 triggering moment where that sort of, like, specific 20 intervention felt like the right thing to do. That's my 21 best answer, although, as I say, it's always hard to 22 say, you know, if something didn't come up why it didn't 23 come up but that would be my best interpretation. 24 Q. Was the reason why the Department did not run into the 25 resistance as you've described, because it simply didn't 164 1 push Post Office hard enough on the compensation 2 schemes? 3 A. I think it was probably more like, let's say on HSS 4 during those relatively early days, you know, the scale 5 of the response set up in Post Office wasn't robust 6 enough as discussed, because they had underestimated the 7 scale of the challenge. But, as it became clear, they 8 were moving. It's not like the dynamic was we were 9 saying, "Get a move on, make this happen", and the Post 10 Office was saying, "We don't agree, we don't think it's 11 important. We're not trying". 12 They were saying, "Yeah, we're scaling up the team, 13 we're getting going, we're putting this in place". So 14 there was a sense of responsiveness. It was ongoing, 15 you know: you push a bit more, you get a bit more; you 16 push a bit more, you get a bit more. But I didn't feel 17 the Post Office was not responsive to asks. They 18 couldn't always enact them because sometimes you can't 19 kind of flick a switch and make something happen 20 overnight. But they weren't kind of rebutting or 21 denying them, if that makes sense. 22 Q. If we look, please, at BEIS0000967. This is a letter to 23 you from Lisa Harrington, Chair of Post Office 24 Remuneration Committee of 4 October 2022. We see: 25 "... I am writing to you to apologise for the 165 1 situation we find ourselves in regarding Managing Public 2 Money and the payment of the CEO's Short Term Investment 3 Plan." 4 Further down, it effectively says that the CEO's 5 STIP payment was paid without shareholder approval; is 6 that broadly the issue? 7 A. Yes. 8 Q. That's been raised directly with you to deal with 9 because it's a matter of Managing Public Money? 10 A. That's right. So it's come to me as Accounting Officer. 11 Q. Could we look, please, at WITN11520201. This is 12 a readout of the call you had with Lisa Harrington on 13 this issue. The email is sent on 28 October 2022. If 14 we go to the bottom, please, it says that: 15 "SM [you] noted that if we looked at this cold, 16 without breach, the likelihood is we would've approved. 17 However noted that it will be tricky navigating 18 ministerial approval." 19 It discusses issues of flight risks and then 20 "Suggested next steps", right at the bottom, it says: 21 "UKGI & BEIS to rework advice for ministers around 22 the retrospective approval -- will need careful 23 handling." 24 Do we take it from this that your position was that 25 the Minister should be guided to retrospectively approve 166 1 the STIP payment? 2 A. Yes, on the basis that it would have been approved in 3 the first place, had it been asked about in the proper 4 way by the Post Office, and the fact that a serious 5 mistake was made in governance in not asking for that 6 permission shouldn't ultimately be a reason not to do 7 what we would have done in the normal course of business 8 in terms of approving a -- what is ultimately really 9 a Post Office decision about the STIP. 10 Q. Did you have any similar meetings with members of the 11 Post Office Board to test Post Office's approach to the 12 compensation schemes? 13 A. No, and I'd like to say why this meeting took place, 14 because I think it's important to understand. This 15 wasn't a meeting that took place because I thought, or 16 any of my team thought that the STIP was ultimately 17 a really important and strategic issue. It's because 18 failure to comply with your duties under Managing Public 19 Money and to do what's described here, that's the right 20 language, is a breach in Managing Public Money; it's 21 a really serious error in compliance. 22 Now, in this case, it's actually not that big 23 an error, right? I mean, in the grand scheme of the 24 things we're talking about this is, in my view, 25 an insignificant matter in the big picture, but the fact 167 1 that an arm's-length body commits a breach of Managing 2 Public Money, I can't remember ever seeing it. And 3 I would absolutely expect, just as a matter of course, 4 that that would come with a letter of apology and 5 a personal meeting in order to apologise, frankly to 6 sort of put on record that the seriousness of the fault 7 had been recognised and that systems had been put in 8 place to make sure it didn't happen again, not in 9 relation to the STIP payment but in relation to the 10 bigger picture of -- back to the sort of regularity 11 issues we were talking about earlier -- you just can't 12 have public bodies ignoring or flouting kind of core 13 rules of how public money is administered. 14 So, you know, the fault itself is ultimately 15 a relatively insignificant one in the big picture but 16 the fact that any fault of this type would take place is 17 a really serious matter and it's kind of 18 a disciplinary-type affair and so you're bringing in 19 a particular kind of energy, which is you are meeting 20 the Accounting Officer, this is kind of a moment of 21 formality, I would say. 22 Q. You were the Permanent Secretary during a period of time 23 in which this Inquiry held compensation hearings; is 24 that right? 25 A. Yes. 168 1 Q. You were aware of various criticisms that had been made 2 against the Post Office and the Department in the way 3 the schemes were being funded and run? 4 A. Yes. 5 Q. Why was that not of sufficient importance for you as 6 Permanent Secretary to meet with Board members to 7 discuss those matters in particular? 8 A. Well, I did meet with Board members. I met regularly 9 with the Chair. So that was a normal part of the course 10 of doing business and those were exactly the sorts of 11 things I would discuss regularly with Tim Parker. And 12 I met with the CEO, as well, so I was engaged in all 13 sorts of different ways. 14 Q. My question was a specific meeting, such as this, set up 15 to discuss compensation schemes in particular? 16 A. Because the nature of this meeting was the right person, 17 sort of the offence was an Accounting Officer offence, 18 if you see what I mean. So I was the channel that this 19 needed to go through. So I was the appropriate 20 escalation point for this kind of issue. There were 21 a whole series of different bits of governance going on 22 around all of the various issues that came up with the 23 Inquiry, including the Inquiry itself, very regular 24 ministerial contact -- regular contact with the Board. 25 This was sort of quite a specific and different channel. 169 1 I wouldn't have usually felt this was a normal approach 2 to an, you know, important issue. I would normally take 3 an important issue to the Chair, the CEO, sort of more 4 in the course of an ordinary series of meetings, rather 5 than have a kind of Accounting Officer censure moment. 6 Q. I want to turn to one of those meetings, please, and 7 that's the meeting with Henry Staunton, which is 8 predominantly the focus of your first witness statement. 9 You say in your first statement, we don't need to bring 10 it up, page 6, paragraph 17, in response to the 11 allegation well known to the Inquiry, you say: 12 "I never told Mr Staunton directly or indirectly, 13 expressly or by implication, that Post Office should 14 stall on compensation or otherwise delay or reduce 15 compensation payments to subpostmasters. I did not say 16 anything that could sensibly have been understood to 17 convey that implication." 18 A. That's completely correct. 19 Q. Can we look, please, at BEIS0000607. This is your 20 letter to Henry Staunton congratulating him on his 21 appointment. If we see at paragraphs 2 and 3 you say: 22 "Each year, I write to the Chair to set out the keys 23 strategic priorities that BEIS, as sole Shareholder, 24 would like [Post Office] to focus on over the coming 25 12 months. Earlier this year, I wrote to Tim Parker, 170 1 the outgoing Chair, setting out the strategic priorities 2 ..." 3 You say you attach that letter. You are, in effect, 4 asking him to take over and continue the work that you'd 5 set for Tim Parker; is that fair? 6 A. Yeah, with a particular focus on the three points that 7 I specified below. 8 Q. Those three points that you specified below include: 9 "Effective financial management and performance, 10 including effective management of legal costs to ensure 11 medium-term viability." 12 I understand your evidence is that, when you say 13 "legal costs" you're referring to litigation costs, 14 namely the costs Post Office pays to its lawyers rather 15 than compensation payments? 16 A. Yes, that was very well understood between us and the 17 Post Office at the time. 18 Q. Could we look, please, at the letter to Mr Parker which 19 you refer to, which is BEIS0000984. I think it's 20 undated on this copy but in your statement you say this 21 was sent on 23 May 2023. If we could go to page 2, 22 please. 23 A. It can't have been sent in May 2023. 24 Q. Sorry to intervene, it must be 2022. Sorry, that's 25 an error in my -- 171 1 A. No probs. 2 Q. Page 3, please. This is under the heading on the second 3 page, "Resolving historical litigation issues", and, if 4 you can go further down, it says at the bottom, we will 5 see: 6 "It is right that these issues receive the attention 7 they require to ensure their swift resolution. For 8 [financial year 22/23], POL should ..." 9 Then there's an indented paragraph, if we could just 10 go down slightly. Thank you. The last entry there is: 11 "Challenge [Post Office] Management so their 12 activities are reflective of our shared objectives for 13 compensation: to see postmasters are treated with 14 consistency and they receive swift compensation that is 15 fair for claimants and taxpayers." 16 What do you mean by fair for claimants and 17 taxpayers? 18 A. I think this probably goes back to what we talked about 19 earlier about value for money. I think you'll see it in 20 some other letters written to Tim at other times that 21 talk about value for money and, ultimately, this is 22 about saying we need you to pay full, fair and prompt 23 compensation but that should be done without wasting 24 money, without wasting money on lawyers, without wasting 25 money through fraud and error, and compensating 172 1 fairly -- generously, fairly, appropriately. 2 But that clearly is different from a process that 3 starts from the premise of, you know, taxpayers have no 4 interest here whatsoever and it doesn't matter how much 5 you spend. 6 Q. How do you read "generously" into that paragraph? 7 A. I'm sort of paraphrasing to say that we -- our 8 objectives for compensation were for it to be full, fair 9 and prompt. It is consistent with that to care about 10 the interests of taxpayers and to want full and fair and 11 prompt compensation to be delivered in a way that 12 protects value for money, ie in a way that makes sure 13 that you're not wasting money as you do it, just as any 14 other Government goal. You know, if you want to build 15 a power station, build a nuclear power station, let's 16 say, you should do that in a way that, you know, is fair 17 for taxpayers but it should still be safe and it should 18 still be operational; it should still be full and fair. 19 Q. Mr Staunton evidence was that, effectively, this was, as 20 he took it, a message to say that the Government did not 21 want compensation to be overly generous; would you agree 22 with that? 23 A. No. 24 Q. Why not? 25 A. Well, I don't -- I'm shocked that, if that is what he 173 1 thought, he never raised that with us at any point. So 2 I don't agree that he has that reading, although 3 I understand that is his evidence. And that isn't what 4 we meant in writing it because, if we were stepping back 5 from the ministerial objective of fulfilling full and 6 fair and prompt compensation, we would have needed to 7 say so. Nobody ever told us to step back from that. 8 Nobody ever indicated we should step back from that. 9 There wasn't any advice provided, either to me or to 10 ministers, that we were stepping back from that. So 11 there was -- that wasn't our intent in writing this and 12 I don't believe that's how it was read by those 13 receiving it. 14 Q. Just so I understand your evidence: is your evidence 15 that "full, fair and prompt" also means generous 16 compensation? 17 A. No, I don't think I'm saying that. I'm saying that 18 full, fair and prompt compensation should be delivered 19 in a way that is fair for taxpayers but that doesn't 20 mean that it should not be full, fair and prompt. 21 "Full, fair and prompt" is sort of the first 22 requirement. Within that, like everything else, 23 whatever you're doing in Government, you want to do it 24 in a way that is as fair as possible for taxpayers, 25 which essential means don't waste money while you're 174 1 doing it. 2 Q. Can we look, please, at the briefing for your meeting 3 with Henry Staunton. It's -- 4 SIR WYN WILLIAMS: Before we do, Mr Stevens, the paragraph 5 that follows that, Ms Munby, and it's use of the word 6 "balancing", if you read that sentence to yourself. 7 A. Yes, I've looked at that and reflected on that. I'm not 8 sure that "balancing" is a good word to use in this 9 context and, as you can imagine, of course I signed the 10 letter and I stand by it but I didn't draft every line 11 myself, and as I sort of look back on it, I think sort 12 of "balancing" isn't really the right way of talking 13 about this, certainly, when it comes to fair 14 compensation. 15 I do think that balancing has some role when it 16 comes to pace and swift compensation. It gets more 17 complicated in that case because you can go faster at 18 greater expense, or not. And that's something that the 19 National Audit Office talk about in their Lessons 20 Learned Report. When it comes to full and fair, it's 21 quite straightforward to say that isn't a trade-off with 22 value for money or with fairness to taxpayers. I think 23 it's in pace of delivery that you start to see that 24 balance maybe begin to bite. And I think that's 25 probably -- the use of "swift" here I think indicates 175 1 that's what's running through the mind of the person 2 drafting it. 3 SIR WYN WILLIAMS: Yes, all right. It's those two, the 4 indented last paragraph and that paragraph, which led me 5 to ask questions both of Mr Staunton and Mr Cameron 6 about whether they thought that issues like value for 7 money were being taken into account in terms of 8 individual payments or offers, rather, to postmasters, 9 and they both, at least as it seems to me at the moment, 10 thought that might be happening. Now, you wouldn't know 11 what was happening in the actual administration of the 12 HSS and the overturned convictions process, obviously. 13 But do you think that those words in that letter might 14 have contributed to that sort of thought process? 15 A. If they did, I'm sorry. That's certainly wasn't the 16 intent in writing the letter. I think it's just maybe 17 useful to note that you're back to Managing Public 18 Money: it says very explicitly that value for money is 19 always a consideration, including in compensation 20 schemes. So, from my perspective when I was reading 21 either this drafting or the drafting in other letters, 22 I wouldn't have felt there was anything particularly 23 unusual or radical in mentioning value for money in the 24 context of a compensation scheme. Indeed, that's what 25 Managing Public Money, which is sort of The Bible when 176 1 it comes to managing these things, itself does. So I'm 2 reflecting that overall point of view of Government as 3 a whole. 4 I think there is a very big difference between 5 saying, you know, looked at as a whole, you should 6 deliver compensation in a way that is value for money 7 and doesn't waste money. That shouldn't be, but 8 I totally understand what you're saying, Sir Wyn, that 9 it may have been, but that shouldn't be taken to imply 10 that an individual claim should be settled at anything 11 less than full and fair, which was the ministerial 12 intent throughout. 13 SIR WYN WILLIAMS: Well, that was my last question, really. 14 Whatever may be said about those couple of sentences in 15 that letter, so far as you're concerned, when you were 16 Permanent Secretary, did your political masters ever 17 deviate from the policy objective of delivering full, 18 fair and prompt compensation? 19 A. No, I think they and we and the Post Office could all be 20 criticised for whether that was always, you know, 21 implemented in full. There's lots of debate about had 22 about that but in terms of intent, absolutely not. 23 SIR WYN WILLIAMS: All right, thank you very much. 24 MR STEVENS: Just one point arising from that. When you 25 were thinking about -- I think you said, "full fair and 177 1 prompt", when you refer to "fair", by what standard 2 would you refer an offer to or compensation to, to 3 determine whether it was fair? 4 A. Well, I mean, ultimately, I think that's a question that 5 goes to ministers in what their intent was, just to be 6 clear. It's not for me to be sort of the arbiter of 7 fair. You know -- and indeed, I think the schemes, if 8 you look at what HSS says, it goes so far as to say that 9 fair may be greater than the sort of legal obligation 10 but it doesn't particularly give an exact, precise 11 definition of "fair". I think it uses -- I'll get the 12 wrong exact expression -- but I think it uses something 13 like "fair, fully in the round, looking at everything 14 and bringing it altogether into a rounded view". 15 "Fair" certainly means at least what you're legally 16 entitled to, that's probably a floor, as it were, on 17 "fair". But I don't think it defines exactly what 18 "fair" is. You would think that that would be sort of 19 set by kind of the moment of approval of the sort of 20 terms and arrangements of any individual scheme: you 21 know, what did "fair" mean in that context; you know, 22 "fair" means something different when you're talking 23 about overturned convictions than when you're talking 24 about shortfalls, for example. 25 Q. Could we look, please, at BEIS0000631. This is your 178 1 briefing for your introductory meeting with Henry 2 Staunton. If we scroll down, please, we see the agenda. 3 We have, first, the CEO pay, then NED appointments, 4 finances, recent correspondence, and so on. 5 At page 4, please, if we go down, thank you, we see 6 under 4, which was "Recent Correspondence", we have 7 references to the Overturned Historical Convictions and 8 Historical Shortfall Scheme, with some briefing on that. 9 Why was CEO pay at this stage at the forefront of your 10 agenda in the briefing, rather than the compensation 11 schemes? 12 A. Because Mr Staunton had just written to the Department 13 about it. 14 Q. So it was reactive, basically to -- 15 A. Yeah, just this is an initial meeting with somebody. 16 I haven't that anything from him so far, if you see what 17 I mean. It's a new slate but the one interaction we 18 have had is a letter from him to the Secretary of State 19 asking about CEO pay. So it would be just normal to 20 respond to that. 21 It's also perhaps worth saying that that's an agenda 22 prepared for me by the team. You'll note, having seen 23 the read-outs from the meeting, that I didn't take the 24 agenda as a gospel of exactly what would be covered in 25 the meeting. I just think it's worth saying that. 179 1 Q. Okay, let's look at the readout then. It's BEIS0000752. 2 If we go to the bottom, please, this is the read-out 3 prepared by the Department, and we'll come to the first 4 sections in more detail shortly. As I understand your 5 evidence, but tell me if I'm wrong, the discussion on 6 compensation you say is further down. If we go down, 7 please. 8 A. Not quite, no. Actually, we didn't talk about 9 compensation at any great extent in this meeting. 10 Q. Okay, that, I take that point and that's your evidence 11 on that, but where it says: 12 "HS mentions target ref in Inquiry hearing -- wasn't 13 looking for apology but wider point around being synced 14 up and acknowledging where each others roles lie. Was 15 keen him and Sarah strategically aligned where 16 [possible]." 17 Was that a discussion about compensation, something 18 that had been said in the Inquiry hearings regarding 19 Post Office meeting targets? 20 A. That's right. That was -- I believe it was either 21 a BEIS or UKGI lawyer misspoke and suggested that 22 100 per cent was a target rather than an aspiration, and 23 POL were upset because it made them look like they 24 hadn't met the target when, in fact, they had met what 25 was the target, which was 95 per cent. So it was 180 1 a relatively minor point in the grand scheme of things 2 but Post Office felt we had, you know, unfairly 3 represented them in front of the Inquiry and that was 4 a fair point. It was a mistake and we apologised for 5 it. 6 Q. Just to clarify, is your evidence that that was really 7 the extent of the discussion on compensation? 8 A. Yes. 9 Q. Why did it play such a minor role in your first meeting 10 with the Chairman? 11 A. Well, I think there's probably two reasons for that: one 12 is -- and they sort of go one on each side, right? So 13 the first question: why did Mr Staunton not raise it as 14 a major issue with me? That would be a question for him 15 but he didn't. So it wasn't like I was responding to 16 any prompting around it. 17 Q. My question is to you about your reading -- 18 A. Understood. So why didn't I raise it with him? It's 19 quite specific to the context, actually. So he had just 20 been recently appointed and I'd been involved in the 21 appointment process. And I was actually really at that 22 point very pleased with this appointment because 23 Mr Staunton had real hands-on experience, particularly 24 I from his role at WHSmith, in helping turn around 25 performance at a business that -- of course no business 181 1 is the same as Post Office but WHSmith has some quite 2 obvious commonalities with the Post Office. 3 And of the various perspectives that I wanted to get 4 from Mr Staunton particularly at this point, I was 5 really interested in what would a serious, experienced, 6 commercial leader, who had like sort of done a similar 7 kind of a job before, in turning around the performance 8 of a really challenged high street business, I really 9 wanted to understand his take on that and, in my mind at 10 this point, correctly or not, I imagine that 11 Mr Staunton's personal focus would be, in very 12 significant part, on the commercial turnaround of the 13 Post Office because that was his experience and that was 14 what he was bringing to bear. 15 So he was very new in role. At this point, I could 16 have asked and enquired lots of things about the 17 compensation work but I think my perception would have 18 been kind of he needed a bit more time on that to really 19 come up the curve. Whereas I was, to be honest, hungry 20 for what he was going to say about the commercial 21 performance of the Post Office because, as you'll see 22 from the briefing documents that run up to this meeting 23 as well as being concerned about compensation payments, 24 we were acutely concerned about the strategic and 25 financial position of the Post Office as a business, and 182 1 its viability and future. And I was really worried 2 about that and I really thought Henry himself -- 3 Mr Staunton, I'm sorry -- would have a lot of value to 4 bring to it. And that was the conversation I most 5 wanted to have with him. 6 Q. So you most wanted to have a conversation with him on 7 commercial issues. We saw earlier in a letter, the 8 letter to Mr Parker and the letter to Mr Staunton, that 9 achieving settlements was a key strategic aim for the 10 Post Office? 11 A. Yes. 12 Q. Did you see, as part of your role, ensuring that the 13 Chair took that strategic objective seriously? 14 A. Yes, I didn't use this as a meeting to run through the 15 strategic objectives for the Post Office. You can see 16 there isn't a sort of "Let me recap my letter", that 17 wasn't how the meeting went. I would have assumed that 18 he had sort of taken those points as read, they'd been 19 formally transferred over. This was meant to be more of 20 a -- I don't mean off the record in a formal sense but, 21 you know, just a bit more of an informal chance to 22 exchange views about the situation, for him to offer me 23 some perspective and for me to offer him some advice as 24 someone new into role. 25 Q. If we look at the start of the note, please. It's the 183 1 bottom of page 1. It says that: 2 "SM flagged that the relationship and funding [with 3 the Treasury] is difficult, their view will always lean 4 towards the 'begging bowl' type scenario, a dynamic 5 worsened by Horizon/Inquiry costs." 6 What are you referring to by the "begging bowl"? 7 A. There had been a long goal of Government, including 8 Treasury but Government as a whole, that Post Office 9 should move to being self-sustaining from a financial 10 point of view, ie that it shouldn't be reliant on 11 Government subsidy. We can come to discussion about 12 whether that was a realistic or achievable goal but that 13 was the stated position of Government. And, in that 14 context, Treasury in particular, throughout this period, 15 long pre-dating this conversation, Treasury in 16 particular had a long record of basically being 17 sceptical of Post Office's claims that it needed 18 Government subsidy, and believing that what Post Office 19 should do was focus on improving their own performance, 20 sort of getting their own house in order, strengthening 21 their financial and strategic position, so that they 22 wouldn't need Government subsidy. And I think a real 23 sense that there was a risk of essentially sort of 24 creating easy money, and, you know, if you create a sort 25 of path of easy money for a corporation, you lessen 184 1 their incentive to improve their own performance. 2 That perspective, that's what I'm getting at with 3 the begging bowl. They were always sort of asking for 4 more money. That was how Treasury saw Post Office when 5 it came to asks for subsidy. They believed those 6 subsidies should be going to zero and the Post Office 7 should be weaning themselves off those subsidies and 8 they were -- they were sort of -- "irritated" is not 9 quite the right word. I can't bring the right word to 10 mind but they were frustrated by the constant asks for 11 more and more money. 12 Q. I'm going to have to stop you there, given the time. 13 I've got that point. 14 The "dynamic worsened by Horizon/Inquiry costs", 15 where it says Horizon costs, is that referring there to 16 settlement costs, namely costs associated with the 17 fallout from the Horizon issues? 18 A. I couldn't be 100 per cent sure. It could equally be 19 referring to Horizon replacement costs. 20 Q. It would have been likely, wouldn't it? For those to be 21 together, it's more likely, would you not think, for 22 "Horizon/Inquiry costs" to refer to (i) the costs of the 23 Inquiry but that arises from the Horizon issues and (ii) 24 the costs associated with the compensation that arises 25 from the Horizon issues? 185 1 A. Not necessarily, because Henry had just talked about 2 what the big financial pressures were on the Post Office 3 and he'd talked about Horizon replacement, and he'd 4 talked about rising Inquiry costs and he's talked about 5 telephony. He hadn't mentioned compensation costs 6 because, of course, those came from a different budget 7 and were not really part of this dynamic that we're 8 discussing here. 9 Q. Mr Staunton's evidence was that effectively the message 10 was that he could not expect significantly more money to 11 be forthcoming from the Government, even if he thought 12 the remediation schemes needed it; would you agree with 13 that position? 14 A. Absolutely not. I do not believe that is a plausible 15 thing you could take away from the conversation we had 16 in any way. 17 Q. Why are you so confident on that? 18 A. Because I don't think that explanation makes any sense, 19 given the conversation that we had. The conversation 20 that we had was about my efforts to try to secure more 21 money for the Post Office. So if you go further down in 22 the note, we're discussing how difficult it is, 23 basically this scenario of HMT don't want to give the 24 Post Office more operational subsidy, and I'm talking 25 about why is that difficult. You've got to make 186 1 trade-offs within budgets, you've got to manage subsidy 2 control legislation and, specifically, HMT at the time 3 had very clear policy that they wouldn't provide more 4 subsidy to the Post Office in the absence of a long-term 5 strategy. And we didn't have a long-term strategy. 6 So what I was describing was a set of difficulties 7 about securing operational subsidy, I never said 8 anything both difficulties of securing money for paying 9 compensation and Mr Staunton himself never mentioned any 10 difficulties with funding for compensation. Indeed, as 11 you rightly point out, the issue of compensation was, 12 broadly speaking, not discussed, which you can criticise 13 for other reasons but it is inconceivable that you could 14 have understood me to be saying "Don't spent money on 15 compensation", when what I was saying, as is recorded in 16 the read-outs, is, "I'm going to try and get you a bit 17 more money to deal with these really big operational and 18 strategic challenges you're facing but I want you to 19 know it's not that easy to do that because of these kind 20 of practical difficulties of getting money over the 21 wall", none of which apply in the case of -- like, 22 subsidy control, for example, isn't an issue in the case 23 of the compensation money. 24 Q. Can we look, please, at Mr Staunton's note of the 25 meeting. It's BEIS0000918. If we go to the bottom, it 187 1 says: 2 "She also referred to 'operational' issues colouring 3 [the Treasury's] thinking. ('Trust' in the [Post 4 Office] Board and management has not been high). They 5 could see this is another 'begging bowl' [so you see the 6 same words used there] request from the [Post Office]. 7 I said the funding issues revolved around poor decisions 8 made many years ago wrt Horizon and related legal 9 issues." 10 Do you accept that's an accurate note of the 11 conversation that happen? 12 A. I think it's just further saying what we were talking 13 about there by Horizon and related legal issues. If we 14 go back to the beginning of the conversation, 15 Mr Staunton had laid out these three big new difficult 16 cost pressures that the Post Office were dealing with, 17 one which I think was sort of smaller and less relevant 18 was the telephony issues. One was the Horizon 19 replacement system, and one was the costs of responding 20 to the Inquiry, ie the costs of gathering the evidence, 21 working with the lawyers, et cetera. Those were the 22 three points that he laid out at the very beginning of 23 the meeting and he's playing back two of those here 24 towards the end. 25 Q. So just so I'm clear on your evidence, your evidence is 188 1 that what was discussed was, amongst other things, the 2 cost of replacing Horizon, was that -- 3 A. Yes. 4 Q. Yes? The costs associated with the Inquiry? 5 A. Yes. 6 Q. But your evidence is compensation itself wasn't 7 discussed? 8 A. Yeah, I mean, it might be worth going in to the bit in 9 this note where those three points are laid out because 10 it makes it clear. 11 Q. We can read them out, that's fine but just so we're 12 clear? 13 A. Absolutely, yes. 14 Q. We have your evidence, thank you. 15 That document can come down. Thank you. 16 What are your views on Mr Staunton's competence as 17 Chair, while you were Permanent Secretary? 18 A. I had very little interaction. We overlapped by a very 19 short period between his appointment late in 2022 and me 20 moving on to the Department for Science, Innovation and 21 Technology very early in 2023. So I think it would be 22 a totally unfair to draw any conclusions about his 23 performance as a chair during that period. 24 Q. I want to look at a couple of points on what you say 25 about improvements in Post Office governance. We don't 189 1 need it up but paragraph 20, page 11 of your second 2 statement you say: 3 "I think Post Office's internal governance was very 4 much improved but still not adequate." 5 I think that's by the time you left; is that right? 6 A. Yeah. 7 Q. Can we look, please, at POL00446476. This is a Post 8 Office Limited Board Effectiveness Report, dated 19 June 9 2024, so you wouldn't have seen it in your role as 10 Permanent Secretary, but have you had a chance to review 11 it in preparation for the Inquiry? 12 A. Yes, I've seen it after being provided with it by the 13 Inquiry. 14 Q. Can we look, please, at page 8. We've got some key 15 findings there, including: 16 "Lack of clarity on the purpose of the Board, with 17 the Shareholder relationship inhibiting the Board's 18 effectiveness due to perceived interference in [Post 19 Office's] work and limited visibility around the 20 longer-term funding and objectives of the organisation." 21 Is that a problem of which you were aware as 22 Permanent Secretary, namely a query over the longer-term 23 funding and objective of the organisation from the 24 Department's perspective? 25 A. Absolutely 100 per cent, yes. 190 1 Q. In your view, that had been resolved by the time you 2 finished as Permanent Secretary? 3 A. No, and, if I may, I'll just expand very briefly on 4 that. We had had for some time work running, following 5 the settlement at SR2021, which was actually condition 6 on carrying out a review of POL's long-term -- or rather 7 HMG's long-term strategy for POL, which is not quite the 8 same term as POL's long-term strategy, and we had done 9 a bit of work on that, including getting to the point 10 towards the end of 2022, ie briefly before that meeting 11 with Mr Staunton, just to put it in schedule, as it 12 were, of trying to go to right round across 13 Government -- that's the sort of approval process by 14 which you get Cabinet sign-off -- right round to launch 15 a formal, a more formal review of the long-term 16 requirements of the Post Office by Government. 17 And ministers had declined that opportunity and said 18 "No, now is not the right time". So I really recognise 19 this complaint. I was very concerned, I was talking 20 earlier about my level of concern about the sort of 21 financial viability of the Post Office going forward. 22 Of course, that was like deeply associated with a lack 23 of clarity about what the Post Office was in the 24 long-term, there for. 25 And at the time -- and this is reflected in what 191 1 I said to Mr Staunton about the sort of we need to 2 hobble on, we need to find a way of managing under the 3 strategic steer we already have because, in the 4 short-term, ministers were not ready to carry out the 5 kind of full review of Post Office's roles and 6 responsibilities that was really needed in order for 7 Government to more clearly define, you know, not just 8 the branch footprint but the services provided, the 9 nature of the financial relationship. All of that 10 needed fundamental refresh, in my view, but it was 11 difficult to get ministers to sign off, I think partly 12 because of frankly the political toxicity around the 13 whole issue, and the fact that we knew that any review 14 sort of regardless of what it ended up concluding about 15 the corporate structure of the Post Office. 16 And I know there have been all sorts of proposals 17 about, you know, different kinds of mutualisation, and 18 so on but, whatever you did, you faced quite 19 a fundamental challenge that you probably either needed 20 to really seriously increase the level of public subsidy 21 to the Post Office, which had its own challenges, 22 politically, or be prepared to say that you needed many 23 fewer Post Office branches, which is also a really 24 difficult thing to say politically and incredibly 25 difficult for postmasters as well, who were, of course, 192 1 under enormous challenge during this period. 2 And I think ministers were sort of looking at that 3 really, really difficult choice and saying, "Now isn't 4 the time, let's get through the Inquiry, let's get 5 through the compensation processes and let's come back 6 to this question in due course". 7 But that did leave a period of really challenging 8 ambiguity for Post Office and I think that's one of the 9 reasons why, ultimately, we did end up with, following 10 spending review 2021, a series of what you might 11 legitimately describe as sort of short-termist funding 12 interventions, giving over some more money to Post 13 Office to manage the Horizon replacement programme, to 14 deal with the rise in Inquiry costs, et cetera. You 15 know, sort of dealing with the problems as they arose 16 rather than fundamentally refreshing the strategy and 17 rebuilding the organisation towards that new strategy. 18 MR STEVENS: Thank you. That document can come down. 19 Sir, I don't propose to ask any more questions. 20 I'll see if there's any -- yes. 21 Mr Henry and Ms Patrick have asked for five minutes 22 each, sir. 23 SIR WYN WILLIAMS: Fine. I look forward to their accuracy 24 in estimation. 25 Who is going first? 193 1 MR HENRY: I'm being forced to go first by Ms Patrick, so 2 I shall go first, sir. 3 SIR WYN WILLIAMS: I've never known you to be forced to do 4 anything, Mr Henry, but there's always a first. 5 Questioned by MR HENRY 6 MR HENRY: Thank you, Ms Munby. 7 As Accounting Officer/Permanent Secretary until 8 6 February 2023, did you ever cancel an interim payment 9 owed or even due to a subpostmaster? 10 A. Not that I remember. 11 Q. Did anyone do so on your behalf, cancelling an interim 12 payment agreed with a subpostmaster? 13 A. They may have. I'm not sure what "on my behalf" means, 14 if you see what I mean, certainly not at my request. 15 Q. Certainly not at your request but, obviously, under your 16 aegis because, of course, you're the Permanent 17 Secretary, you're the Accounting Officer. Do I take it 18 from your answers that you were unaware, and I'm not 19 suggesting necessarily that this did occur on your watch 20 but that you -- I'll rephrase it, particularly since 21 I've got very little time? 22 Did you ever become aware of interim payments being 23 subject to a moratorium? 24 A. I don't recall that. 25 Q. Right. You see, we've heard evidence yesterday and 194 1 today from Mr Recaldin that such practices were 2 occurring in your successor Department from January this 3 year for some months. He said, among other things, and 4 the transcript, I don't think, is on Relativity but I'm 5 going to read out a little bit to you so that you're 6 familiar with it. 7 I omit words but this is at page 48 of 86, beginning 8 at line 11, page 191 in the internal numbering: 9 "... in OC there are many opportunities, as 10 I explained earlier, to pay out more -- further interim 11 payments, and what the Department was saying to me was 12 'No, we don't want you to do that. That's not the 13 objective any more. We'd rather you hold on to those 14 and hold out for settlement'." 15 I emphasise the words "hold out": 16 "I was extremely uncomfortable with that, and 17 I think I'm making my point, articulating, of what is 18 the right thing to do because I didn't want to delay -- 19 it seemed to me I was getting an implication to delay 20 redress in order to hold out for full and final 21 settlement." 22 Then I omit words and this is the facing page, 23 line 7, 192: 24 "... that was the moral dilemma that I was facing 25 and they made it clear to me, absolutely crystal clear, 195 1 'No, Simon, the objective, it's there. Black and white, 2 full and final settlement'. So I then had to issue 3 instructions internally to say those potential interim 4 payments, the Government will not approve them now, and 5 they didn't approve them, because they were holding out 6 for full and final settlement." 7 Now that, coming from Mr Recaldin today and 8 yesterday, is an extraordinary state of affairs, you 9 would agree, in your successor Department, to cancel 10 agreed interim payments that had been notified but would 11 now not be approved because the Department was holding 12 out for a full and final settlement? Notice the absence 13 of the word "fair". That would be an extraordinary 14 situation developing from January this year. You must 15 accept that? 16 A. I mean, I haven't heard any of that until just now, so, 17 you know, I say -- 18 Q. So what's your reaction? 19 A. My reaction is that doesn't sound right, as you've just 20 put it to me there. The only thing I've heard of that's 21 similar, so I think the only thing I can sort of draw on 22 from my experience, is in the very early days of HSS, 23 I do remember there being discussions about the merits 24 of introducing interim payments or not. And one of the 25 arguments that was made at the time, and probably one of 196 1 the reasons why we were, in my view, too slow to 2 introduce interim payments in the first place, was about 3 the question of whether kind of efforts to provide 4 interim payments would actually delay making final 5 payments and that that would be bad for postmasters -- 6 Q. Or would it actually, worse than that, expedite 7 settlements at an unrealistically low level because 8 postmasters had been starved of cash, it was as if they 9 were in a famine with the purse strings being tightened 10 against them to force them into precipitate and 11 unrealistically low settlements? 12 A. I mean, the language that you just used in describing 13 the evidence just received, it does sound closer to that 14 than to -- you know, I'm making a balance of is 15 a smaller payment earlier or a bigger payment a bit 16 later better. 17 Q. It does, doesn't it? Now, you know how the Civil 18 Service works. Who would have given the order to cancel 19 interim payments, even though those, most reprehensibly, 20 which had already been agreed? 21 A. I don't know. It -- 22 Q. Well, now, I must ask you to reflect very carefully on 23 the answer you have given. You know how the Civil 24 Service work. This is your successor department. 25 I realise that it's not the same department that you 197 1 were Permanent Secretary of but can you help us please? 2 A. It could have come from a few different places -- 3 Q. Such as? 4 A. It could have come from the -- one of the oversight 5 bodies. It could have come from one of the officials in 6 the chain at, you know, a member of the senior Civil 7 Service or the Director General or the Permanent 8 Secretary. It could have come from a minister. 9 I suppose, in theory, it could have come from the 10 Treasury because they were involved in governance. I am 11 not trying to be unhelpful at all, I just -- I don't 12 know much about the case and I don't know -- 13 Q. So there's a whole host -- 14 A. -- therefore where it might have begun. 15 MR HENRY: Right, I see. Thank you. Nothing further. 16 SIR WYN WILLIAMS: Thank you, Mr Henry. 17 Ms Patrick. 18 Questioned by MS PATRICK 19 MS PATRICK: Thank you, sir, and thank you to Mr Henry. 20 Ms Munby, I have very few questions of you. I know 21 that Mr Stevens has covered quite a lot of detail about 22 your witness statement and your reflections on when 23 Government can and can't take a radical approach to 24 solving problems. We know your witness statement covers 25 the approach to Ukraine and the approach to Covid, for 198 1 example. 2 I'm not going to go back over that, and I know 3 you've said you can't really comment on things that 4 happened after you left your post as Permanent Secretary 5 and you don't want to comment necessarily on how the 6 change of approach came about. But I'd like to look at 7 a couple of your observations in your second witness 8 statement, if that's okay. 9 You don't have to turn it up. I'll read it for you 10 and you can trust me that I'm reading it from the page. 11 A. I know my witness statement reasonably well. 12 Q. Indeed. At paragraph 72, you say: 13 "In the round, looking back at events, an initial 14 underestimation of the scale and depth of the challenge 15 in truly delivering 'redress' was then followed up by 16 a plausible and incremental set of decisions on how to 17 deliver full and fair compensation. With those 18 decisions focused on deliverability, fairness, 19 appropriate use of public money, and good governance, 20 justifying and building up the response piece by piece." 21 Just stopping there, you said something a little bit 22 like the "boiling frog" scenario. 23 A. Yes. 24 Q. Yes. 25 "Such considerations are the mainstay of Government 199 1 and we should not leave them behind hastily. However, 2 had we begun down the path with a deeper and more 3 complete understanding at the start of the true human 4 impact of all that had happened previously, I wonder 5 whether both officials and Ministers might have taken 6 bolder, more radical decisions earlier, that would have 7 allowed us to reach towards full and fair redress faster 8 and with less distress for postmasters." 9 I just want to ask you, did Ministers, looking back 10 with your reflection, see this scandal, this scenario, 11 as a 'business as usual' project that could be 12 approached with 'business as usual' solutions, always 13 falling back to the usual principles of Government and 14 public restraint at the initial stages? 15 A. Broadly, yes, but 'business as usual' is a very, very 16 broad tent in Government, and includes doing absolutely 17 extraordinary things that are very unusual. So I don't 18 mean that they thought it was ordinary or 19 straightforward, or very much like everything else we 20 were doing. But the distinction I was seeking to draw 21 in my witness statement was I have seen a few -- very 22 few, but non-zero -- number of things in my roughly five 23 years in the Civil Service where Ministers have very 24 explicitly said, you know, from almost day one, "I want 25 you to put precedent completely aside. I am not 200 1 interested in any of your useful, practical points about 2 governance or Managing Public Money. You know, just do 3 it. Make it happen", and have sort of like broken the 4 frame. 5 And the two examples -- sorry, I know you said, and 6 don't want to waste time, but the two example where I've 7 seen that were at the very beginning of the Covid 8 crisis, as it related to the survival of small 9 businesses, and, secondly, after Russia's invasion of 10 Ukraine, as it related to preventing the very 11 precipitate rise in energy bills for households and 12 businesses across the country. 13 When I say "business as usual", I mean not that, 14 rather than sort of saying it was seen as a sort of in 15 a box with a load of things in the kitchen sink to be 16 dealt with in a very ordinary way. 17 Q. Indeed. 18 What we can see -- and I think, taking from your 19 evidence -- is that it was only when ministers were 20 forced by the political pressure to face up to the 21 realities of this scandal and its impact on the 22 individuals concerned, the subpostmasters themselves and 23 their families, and the impact that that was having on 24 public consciousness, then it was seen that this was 25 an issue which needed a truly radical solution which 201 1 stepped beyond those -- and I'm calling them 'business 2 as usual' prospects, and the underlying principles 3 behind them. 4 A. Yes, I think that's a fair summary of my evidence. 5 Q. Can we look just at one other section of your evidence. 6 I just want to look at a part of your evidence on the 7 briefing that was being provided to you. At the very 8 earliest part of your second witness statement, you say: 9 "With hindsight, [you] have two ... reflections. 10 First, that the briefings were (perhaps unsurprisingly) 11 typical Civil Service briefings, focused on the facts 12 and next steps. I couldn't honestly say that they 13 brought home the ongoing human tragedies at the heart of 14 this case, and with hindsight I think I should have 15 personally pushed to meet with the postmasters myself. 16 Second, I am not sure that these ... emphasised 17 sufficiently the ongoing cultural challenge at [the Post 18 Office]." 19 Now, that's reflecting on the briefing provided to 20 you. Do you think there was a similar failing in the 21 briefing that was being provided to Ministers? 22 A. I think that sort of probably goes almost necessarily, 23 because there was a great deal of overlap in the 24 briefings. I suspect, though, Ministers, more 25 conventionally as part of their role, will have been 202 1 meeting postmasters at various points in this process 2 and, of course, you know, officials within the 3 Department and very extensively in the Post Office -- 4 I'm sure Simon Recaldin talked about the work that he 5 did on that front. 6 But I think that the straight answer to your 7 question is: yes, I think that same criticism is likely 8 to be true, indeed is true, of the briefings that were 9 provided to Ministers. 10 Q. No matter what subpostmasters and those who are 11 representing them and others may have been saying about 12 this being the biggest miscarriage of justice in modern 13 history, and about the impact on individuals who'd lived 14 for decades, some of them, with the stigma and the harm 15 that resulted from the events of their prosecution, that 16 Ministers themselves, at the outset, may not have 17 appreciated that this was a truly unique set of 18 circumstances that really needed a radical solution? 19 A. I think it is difficult to calibrate when something 20 moves into that radical space. I'm trying to think of 21 sort of sensible analogies, but very terrible, 22 challenging things happen an awful lot in Government, 23 you know, dealing with, you know, widespread rioting 24 across the country or, you know, dealing with, you know, 25 a shortage of prison places. You know, just to take 203 1 some examples, say, from the last six months or so. 2 So the scale of what we're talking about in terms of 3 kind of outrage, perception, really has to be very, 4 very, very high indeed. And I think it is true what you 5 say, but I also just really want to emphasise that that 6 doesn't mean that Ministers didn't understand that this 7 was a terrible, horrific injustice, or think that it was 8 a really important priority to fix. And even within 9 what I've described as a kind of incrementalist 10 approach -- and I appreciate that, you know, many would 11 criticise it but, nevertheless, it did involve 12 committing, you know, well over £1 billion of public 13 money, you know, even within that frame, and that was 14 a -- 15 Q. Ms Munby -- 16 A. -- insufficient but serious response. 17 Q. Thank you for your response. I was simply reflecting on 18 your own evidence that there was a shift in perception. 19 A. Yes. 20 MS PATRICK: Thank you. I don't have any further questions. 21 SIR WYN WILLIAMS: Is that it, Mr Stevens? 22 MR STEVENS: Yes, sir. That's it. 23 SIR WYN WILLIAMS: Well, thank you very much, Ms Munby, for 24 making two witness statements and for coming to the 25 Inquiry to give evidence -- well, it's all been this 204 1 afternoon, although I dare say you may have been here 2 during part of the morning. Anyway, thank you very 3 much. I'm very grateful to you for helping the Inquiry 4 in the way that you have. 5 THE WITNESS: Thank you. 6 SIR WYN WILLIAMS: So we'll resume again at 10.00 tomorrow, 7 Mr Stevens? 8 MR STEVENS: Sir, I think it's 9.30. 9 SIR WYN WILLIAMS: 9.30. I'm so sorry, you're quite right. 10 Yes. 9.30 tomorrow morning. 11 MR STEVENS: Thank you, sir. 12 (4.37 pm) 13 (The hearing adjourned until 9.30 am the following day) 14 15 16 17 18 19 20 21 22 23 24 25 205 I N D E X SIMON DOMINIC RECALDIN (continued) ............1 Questioned by MR BLAKE (continued) ............1 Questioned by SIR WYN WILLIAMS ...............35 Questioned by MR JACOBS ......................39 Questioned by MS PAGE ........................52 Questioned by MR MOLONEY .....................69 Further questioned by SIR WYN WILLIAMS .......88 SARAH ANNE MUNBY (affirmed) ..................95 Questioned by MR STEVENS .....................95 Questioned by MR HENRY ......................194 Questioned by MS PATRICK ....................198 206