Lord James Arbuthnot speaks at Post Office inquiry

Lord James Arbuthnot told the probe he was also “frustrated and annoyed” with then business secretary Lord Mandelson after describing his approach as “no, not me, gov”.

READ MORE: Exclusive - Lord James Arbuthnot speaks out over Post Office scandal 

Former Post Office chief executive Ms Vennells wrote to the former Conservative MP for North East Hampshire in 2012, during her time as managing director, to defend the Horizon system, describing it as “robust”.

Lord Arbuthnot first learned of issues with the Horizon system from subpostmasters in his constituency, including Jo Hamilton, who was falsely accused of stealing £36,000 from the Post Office branch she ran in South Warnborough, Hampshire.

Asked by counsel to the inquiry Jason Beer KC on Wednesday why he had asked the government directly about the matter in 2009, he said: “I was not hugely interested in the intricacies of who was responsible for what, I just wanted it sorted out and I thought I might as well write to the person who owned it, who was Peter Mandelson.”

In her 2012 letter addressing the complaints raised by the former Tory MP, Ms Vennells said: “There are a small number of previous and existing subpostmasters, including (Jo) Hamilton who used to run South Warnborough Post Office, who allege that financial discrepancies at their branch are due to a fault with the system.

“We are also aware of the activities of a group called Justice For Subpostmasters Alliance, JFSA.

“There has been no evidence to support any of the allegations and we have no reason to doubt the integrity of the system, which we remain confident is robust and fit for purpose.”

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Commenting on the response he received from Ms Vennells in 2012, Lord Arbuthnot said in his witness statement to the inquiry: “Paula Vennells, then managing director of POL, wrote an unsigned letter of January 9 2012, referring to the JFSA and allegations about financial discrepancies being due in some way to the system; she said there was no evidence to support those allegations and she was confident that the system was robust (that word again) and fit for purpose.

“At this stage I did not know the truth of the matter but it was clear that a detailed investigation was needed. I thought it was conceivable but unlikely that all of these allegations were wrong — there were too many for it to be a coincidence, and by this time I had come across three in my own constituency (from my vague memory I later came across a fourth).

“The subpostmasters I had met seemed to me to be transparently honest. I do not remember anyone suggesting to me that the introduction of a new computerised accounting system had uncovered previously hidden fraudsters.

“If they did I would have given it little credence, both because of the self-evident honesty of the subpostmasters I had met and because of the sudden rash of similar allegations appearing shortly after the installation of a new computer system, an exercise which inevitably will have teething problems.

“I was, therefore, not satisfied with the brush-off I was getting by way of reply to my letters.”

Lord Arbuthnot also received a letter from then-minister Pat McFadden which suggested concerns about Horizon were a matter for the Post Office.

Mr Beer asked: “What was your reaction to this letter?”

Lord Arbuthnot replied: “I was frustrated and annoyed. It was clear that the government was saying it was nothing to do with them and I didn’t see at that stage where I could take it.

Mr Beer continued: “Why were you frustrated?”

The former Conservative MP replied: “Because I wanted what had seemed to me to be something that was potentially an injustice to be sorted out and, since the government owned the Post Office, I assumed that the government would be in a position to sort it out. But they were saying ‘No, not me, guv’.”

Speaking from the witness box on Wednesday, Lord Arbuthnot also criticised the then Labour government for avoiding responsibility for addressing the Horizon IT scandal in 2010.

The inquiry was shown a letter written by then-business minister, Pat McFadden, in which Mr McFadden said the government had an “arm’s length” relationship with the Post Office.

Lord Arbuthnot said: “What this ‘arm’s length’ arrangement essentially means is that the government is refusing to take the responsibilities that go with ownership and I don’t think it’s right to do that for various reasons.

“One reason is that if you have an organisation that is as important to the community as the Post Office, then the people have got to be able to have proper control over it, if the people own it.

“There’s a sort of democratic deficit that is popping up here if the government is refusing to take responsibility for it.”

Lord Arbuthnot then compared the situation with the owner of a dangerous dog refusing to take responsibility for their pet.

The Post Office has come under fire since the broadcast of ITV drama Mr Bates Vs The Post Office, which put the Horizon IT scandal under the spotlight.

More than 700 subpostmasters were prosecuted by the Government-owned organisation and handed criminal convictions between 1999 and 2015 as Fujitsu’s faulty Horizon system made it appear as though money was missing at their branches.

Hundreds of subpostmasters are awaiting compensation despite the Government announcing that those who have had convictions quashed are eligible for £600,000 payouts.