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Kelly Tolhurst MP ae cee cia oa Industral Strategy Department for eee Business, Energy SWiH OBT & Industrial Strategy T +44 (0)20 7218 5000 Ms Orfhlaith Begley MP E enquires @beis.gov.uk House of Commons We wvgou London SW1A AA Our ef: MCB2018/26673 I \ January 2019 /) y Vou Ofhlad ut On nah, Thank you for your letter 11 December 2018 to the Rt Hon Greg Clark MP about Group Litigation vs Post Office Limited. | am replying as this matter falls within my Ministerial portfolio. Firstly, | should explain that while the Post Office is publicly owned, it is a commercial business operating across a range of competitive markets. The Government sets the strategic direction for the Post Office - to maintain a national network accessible to all and to do so more sustainably for the taxpayer — and allows the company the commercial freedom to deliver this strategy as an independent business. This approach has resulted in a more commercially sustainable business with decreasing reliance on taxpayer subsidy and a post office branch network that is at its most stable and accessible in decades at 11,500 branches and with 99.7% of customers living within 3 miles of their nearest branch The claim Alan Bates and Others v Post Office Limited is currently being conducted in the High Court pursuant to a Group Litigation Order, with the first trial having concluded on 6 December 2018 and a second trial being due to commence on 11 March 2019. The legal defence of this litigation and the costs involved in doing so are being handled by Post Office Ltd and | would refer you to the notes to the accounts in Post Office Ltd’s Annual Report for 2017/18 which state: “On 11 April 2016, a High Court claim was issued on behalf of a number of postmasters against Post Office in relation to various legal, technical and operational matters, many of which have been the subject of significant external focus for a number of years. Post Office is robustly defending the claim, believes it lacks merit, but welcomes the opportunity to have these matters resolved through the Court-managed Group Litigation Order. The Court has ordered two trials to be heard in 2018/19 to determine a subset of the preliminary issues in dispute between the parties. The Court has not yet ordered a process for determining any issues of liability or quantum. To date, the Claimants have not asserted the aggregate value of their claims in any of the Particulars of Claim filed in the litigation. While the Directors recognise that an adverse outcome could be material, they are currently unable to determine whether the outcome of these proceedings would have a material adverse impact on the consolidated position of the Group, and are unlikely to be able to do so until the Court has made further determinations and the Claimants have provided the necessary information about the value of their claims. The Directors continue to keep this under close review. In 2017/18 the costs of £3 million included in operating exceptional items relate to Post Office defending the Post Office Group Litigation. These have been disclosed as operating exceptional items because we expect costs to be more significant in 2018/19 and 2019/20.” The outcome of this litigation is a matter for the court to decide and the Government is unable to comment further on any matters relating to this litigation. The Post Office's Articles of Association state under Article 11.1(O) that one of the matters requiring the consent of the Special Shareholder (the Secretary of State) is “the entry info or implementation of a relevant transaction by any member of the group which involves or is likely to involve (either individually or when taken together with all other related relevant transactions (other than any related relevant transaction previously approved under this article 11.1(O) entered into or implemented in the previous 12 months)) the incurrence of a commitment or liability, or the payment of a sum, by any member of the group which is an amount in excess of £50,000,000.” As the sole Shareholder, the Government expects Post Office Limited to ensure value for money principles in its use of resources at all times. Therefore, any requests for consent under Article 11.1(O), for whatever purpose, are considered in the light of these value for money principles. | l KELLY TOLHURST MI Minister for Small Business, Cohsumers & Cdyporate Responsibility