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Overview of Post Office Horizon Scheme Issues: August 2015
1. Government faces calls to launch an independent inquiry into Post Office’s
Horizon IT system and the way that Post Office has handled cases where money
has gone missing from branches.
2. We recommend Government resist these calls for the following reasons:
a. Despite three years of independent scrutiny, no systemic issues with the IT
have been found
b. Many of the allegations raised against Post Office have been mischaracterised
by campaigners and the media, and indeed in Parliament
c. Post Office have gone further than most commercial organisations would in
attempting to resolve this issue — however they cannot respond publicly to the
most serious allegations while they still respect individuals’ confidentiality
d. Existing routes to resolution, including mediation, appeal or litigation, remain
available to individuals — it would be wrong to create a new quasi-judicial
process while these options have not been exhausted (or even attempted, in the
case of appeal or litigation).
e. Absent any evidence of wrongdoing by Post Office, there is no need for a
judicial inquiry.
3. By maintaining that Government sees no need for an inquiry, ambiguity is
removed and applicants can be clear on the options available: mediation and/or
legal action. This would help bring cases to resolution as swiftly as possible.
4. We anticipate a BBC Panorama programme on Monday 17 August will repeat
these allegations. The claims will appear very serious but do not stand up to
scrutiny once the full facts are known. Our reactive line will be that these are
operational matters for the Post Office, unless pressed.
Lines to take
¢ The issues raised are an operational matter for Post Office Limited and
subpostmasters
If pressed:
e Despite three years of independent scrutiny no systemic issues found with the IT
system
e There are options available for resolution. Government encourages mediation,
but individuals can still pursue other routes to resolution through the courts
e While there is no evidence of wrongdoing by Post Office, Government sees no
need for a judicial inquiry.
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Background
5. Concerns were raised by campaigners and a small group of MPs in 2012 that systemic flaws in
the Horizon IT system were causing accounting losses. Subpostmasters, who operate branches
as contractors (not employees), are liable for branch losses including if caused by negligence or
carelessness. A subpostmaster with excessive losses can have their contract terminated, and can
face prosecution if there have been instances of false accounting and/or theft.
6. Post Office responded to these allegations in a fair and transparent way, commissioning
independent scrutiny of Horizon, and setting up a mediation scheme for individuals to raise
concerns and seek resolution, established in collaboration with campaigners and MPs.
7. After more than three years of independent scrutiny, the forensic accountants (Second Sight)
appointed to scrutinise Horizon produced no evidence of systemic (i.e. constantly recurring)
flaws. Second Sight did identify some issues specific to individual circumstances, although
many of these were unrelated to the IT system., Post Office is making improvements to address
those points and have resolved some of those specific cases to the individuals’ satisfaction.
8. Absent any system-wide “smoking gun”, campaigners have broadened the scope of
investigations to focus increasingly on prosecutions, claiming there have been miscarriages of
justice with subpostmasters wrongly accused and convicted. Formerly constructive relationships
between Post Office and campaigners have broken down as it has become clear that the scheme
is not delivering what campaigners want, namely, large compensation payouts. Applicants are
increasingly declining (or seeking to “defer”) mediation in the hope of a judicial inquiry.
9. There is a large amount of misinformed or inaccurate comment on this matter, including in the
media and in Parliament. Many individual cases involve difficult or sad stories, and appear
compelling; the Post Office has little opportunity to respond as it has committed to maintaining
individuals’ confidentiality, even when facing intense (and in many cases unfounded) criticism.
10. The intensity of criticism, and the work of campaigners, has given many applicants unrealistic
expectations of both the nature of mediation as a process and the likely outcomes. Post Office
estimate the total amount of money lost in branches for all applicants at £1.3 million (this is
money owed to Post Office). The total amount of compensation claimed by applicants is over
£65 million. One applicant is seeking £13 million in compensation.
11. While purportedly independent, Second Sight appear to side against the Post Office, and indeed
have done so publicly on social media and to some extent when giving evidence to the BIS
Select Committee. They are also due to appear on Panorama next week.
12. Second Sight have also recently written to Ministers claiming that their work has been
misrepresented and does in fact demonstrate that Horizon is flawed (this letter has been shared
with and publicised by campaigners). However, the matters they identify as “systemic flaws”
appear to actually be operational issues in specific circumstances, often unrelated to the IT
system but described as “the Horizon experience”, and which are best resolved directly between
Post Office and the individual (through mediation or the courts).
13. Importantly, the National Federation of Subpostmasters (NFSP), who represent c.6,000
subpostmasters, are supportive of Post Office’s position and have publicly expressed scepticism
at the motives of the campaign against Post Office and some individuals’ claims.
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Status
14. In total, 136 applicants were accepted into the mediation scheme, mostly former subpostmasters.
In context, Post Office has over 11,500 branches across the UK and estimate that around
500,000 individuals have used the Horizon system since its roll-out in 2000.
15. To date, 26 of the 136 cases have been resolved; 43 applicants have criminal convictions
(usually false accounting / theft) received prior to entering the scheme and these cases are
unsuitable for mediation (which cannot overturn a conviction). In the majority of the remaining
cases mediation has been offered but not yet taken place, largely due to stalling tactics.
Options for resolution
16. Mediation remains an option for many, although Post Office are unwilling to keep the offer open
in perpetuity and applicants have until early September to accept the offer.
17. Mediation is conducted by an independent mediator from the Centre for Effective Dispute
Resolution (CEDR) and Post Office pay the costs of mediation, the reasonable expenses of the
applicant and their representatives, and contribute to the applicant’s independent legal advice.
18. If mediation is not successful, or if the applicant chooses not to mediate, they retain their
existing legal rights such as seeking damages through litigation or pursuing a class action. To
date no applicant has pursued a civil claim against Post Office.
19. Mediation cannot overturn a criminal conviction but an individual can appeal the Court’s
judgement (although no applicant has done so to date). They can also raise their case with the
Criminal Cases Review Commission (CCRC). These are the right avenues for applicants to
pursue potential miscarriages of justice and around 20 have submitted applications to the CCRC.
20. A Government or judicial inquiry would seem inappropriate when these options exist and have
not been exhausted (or indeed explored at all in some cases). A Government investigation would
be unlikely to find the “smoking gun” campaigners are seeking or provide large compensation
payouts, given the amount of scrutiny this issue has received, thus risking accusations that
Government too is part of the “conspiracy”. So, unless there is evidence of wrongdoing on the
part of Post Office, there is no need for Government to intervene.
21. By maintaining that Government sees no need for another inquiry, ambiguity is removed and
applicants can be clear on the options available to them: mediation and/or legal action. This
would help all involved bring cases to resolution as swiftly as possible.