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ie
Department sues
for Business london
SW1H OET
Innovation & Skills
Adrian Bailey MP
Chair - Business, Innovation and Skills Committee
14 Tothill Street
House of Commons
London SW1H SNB
www. gov.ukibis
ZGMarch 2015
Sada
POST OFFICE MEDIATION SCHEME
Thank you for your letter of 17 March 2015 regarding the Business, Innovation and Skills
Committee’s inquiry into the Post Office mediation scheme. I am grateful to the Committee for
considering this matter and am pleased to provide a response to the points the Committee has
raised, attached to this letter.
It is important to reiterate that the mediation scheme is independent of Government. Given that
the cases in the scheme are disputes between independent businesspeople and Post Office,
and are of course sensitive and confidential, it would not be appropriate for Government to
intervene or seek to influence the outcome. It is important that independence is maintained.
Since these issues were first raised over two years ago, Post Office’s Horizon system has been
under considerable scrutiny and I note that it remains the case that there is no evidence of
systemic problems with Horizon. That conclusion has stood firm through independent
investigation by Second Sight. The vast majority of subpostmasters continue to use Horizon
successfully every day in operating their branches across the country. There are fewer than 150
cases in the mediation scheme, while there have been around 500,000 users who have worked
with Horizon since it was introduced, and the system processes over six million transactions
every working day.
I agree that it is regrettable that, in a small number of cases, the relationship between Post
Office and subpostmasters has deteriorated. That is why it is important that those current and
former subpostmasters with cases remaining in the mediation scheme can progress swiftly to
mediation. Post Office have committed to learning lessons from this matter, and I note that they
have already taken on board several improvements, working closely with the National
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Federation of Subpostmasters, who are the representative body for subpostmasters across the
country. These changes will help ensure that the Post Office network is stronger for the future.
lam copying this letter to Paula Vennells, Chief Executive of Post Office Limited, so that she
may consider the points the Committee have raised.
VINCE CABLE
Secretary of State for Business, Innovation and Skills
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1. Individuals with cases involving previous Court rulings
1.1. The Committee were concerned whether there was a contradiction
between the letter from Paula Vennells to Jo Swinson MP dated 9
March 2015, and the evidence provided by Post Office to the
Committee on 3 February 2015, regarding individuals who had
previously been the subject of Court rulings.
1.2. As Post Office explained during their evidence to the Committee,
individuals whose cases involved previous Court rulings were eligible
to apply to the mediation scheme. This was set out in the original
scheme documentation, which is available as an Annex to Post
Office’s recent report on the scheme.
1.3. Those individuals who have a case in the scheme involving a
previous Court ruling have had their cases thoroughly re-investigated
by Post Office. Post Office have a duty to disclose any new
information which comes to light (including as part of that re-
investigation) which could undermine the case for prosecution or aid
the applicant in their defence. Post Office have confirmed that no
such information has come to light in any of the 136 cases they have
investigated.
1.4. As Post Office set out in their letter to Jo Swinson on 9 March, and
their announcement the following day, any case remaining in the
scheme which invoives a previous Court ruling will be considered on
a case-by-case basis. Mediation cannot overturn a Court ruling, and
as such, it may not be appropriate to proceed. An exception might be
if the applicant's claim for mediation does not relate to the Court
tuling, in which case Post Office may mediate. It is important to note
that any applicant who believes their conviction is unsafe may
continue to pursue the legal avenues open to them, and will have the
benefit of the re-investigation by Post Office and the independent
report by Second Sight to inform them should they choose to
challenge their conviction.
2. Post Office’s approach to mediation
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2.1. The Committee were concerned at suggestions that Post Office had
not engaged constructively in the mediation process and had adopted
an overly legalistic approach to mediation.
2.2. Mediation is a voluntary process and requires the consent of both
parties to proceed. if one party feels there is no prospect of resolution
through mediation, they may choose not to take part. Post Office
have however agreed to take part in mediation in the majority of
cases, and indeed have announced that they will mediate in all cases
not involving a Court ruling (while considering the remainder on a
case-by-case basis).
2.3. The mediation scheme is provided by the Centre for Effective Dispute
Resolution (CEDR), and the arrangements are in line with CEDR’s
Code of Conduct as well as the European Code of Conduct for
Mediators. CEDR were appointed to ensure that mediations under
the scheme are conducted in line with best practice.
2.4. CEDR have provided feedback on the mediations which have taken
place to date, in general terms given the need for confidentiality. This
feedback is included in Post Office’s detailed report on the scheme,
published on their website last week. In particular, the feedback from
CEDR notes that “there are some indications that legal representation
provides better support” and recommends that “applicants should be
strongly urged to seek legal advice and if at all possible legal
representation at the mediations’. It is also worth noting that from the
outset of the scheme Post Office have agreed to provide each
applicant with funding towards the cost of a professional advisor in
preparing for and attending mediation.
3. Support available to subpostmasters to report discrepancies
3.1. The Committee questioned whether there were sufficient support
mechanisms in place for subpostmasters experiencing accounting
discrepancies. As Post Office explained in their evidence to the
Committee, there are helplines available to subpostmasters and their
staff in dealing with Horizon. The Network Business Support Centre
(NBSC) has been in operation since 1999, and its operating hours
have been extended (it is now open until 11pm Monday-Saturday, for
example). There is also a technical helpline, the Horizon Service
3.2.
3.3.
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Desk (HSD), for technical issues with the system, as well as an online
help service.
it remains the case that there is no evidence of systemic problems
with the Horizon system. If a subpostmaster finds the system is
showing a loss, they have the choice of whether to accept the loss
(on the basis that they are responsible for it) or to dispute the loss for
further investigation.
Post Office has committed to continuous improvement of its training
and support and it will look into issues raised as part of this scheme
(where it has not already done so). For example, Post Office has
established a Branch User Forum which meets around six times a
year and enables subpostmasters and Crown Office employees to
raise issues and insights about business processes. The Branch User
Forum is already making an impact on how things are done in
branches, instigating a number of changes to transactions, as well as
sharing and generating ideas to inform Post Office’s wider business
support programme.
4. Second Sight’s final report
4.1.
4.2.
43.
44.
The Committee recommended that the Department for Business,
Innovation and Skills should receive a copy of Second Sight’s final
thematic report.
It remains the case that there is no evidence of systemic problems
with Horizon, and as such, the remaining issues discussed in Second
Sight’s further report will relate to disputes between independent
businesspeople and Post Office. These are operational matters for
Post Office and the Government does not intervene in these matters.
As set out above, the mediation scheme is independent of
Government and details of the cases involved are confidential.
Second Sight’s further report, which is yet to be completed, is not
intended for publication but will instead be made available to
applicants and their advisors involved in mediation.
Post Office will also receive a copy of the report, and as their Chief
Executive Paula Vennells confirmed to the Committee when she gave
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45.
evidence in February, Post Office has committed that it will not
destroy information relating to the scheme. Post Office complies with
all relevant legislation regarding data retention and protection, and is
subject to the Freedom of Information Act.
The Government is happy to accept the Committee’s
recommendation that, when Second Sight’s further report is
completed, Post Office should provide a copy to the Department for
Business, Innovation and Skills.
5. Exchange and storage of information
5.1.
5.2.
5.3.
5.4.
The Committee expressed concern that there had been a lack of
information provided to Second Sight, and that reasons for
withholding information should be made clear. The Committee were
also concerned that Second Sight would be required to destroy
documentation at the end of their investigation.
The Government agrees that best practice in this case would be
timely sharing of information from all parties involved in the scheme.
Post Office have provided a considerable amount of information to
Second Sight throughout the duration of the scheme. Some
information has proved more difficult than others, often due to the
length of time that has elapsed in some of the cases under
investigation. It is also apparent that on both sides there have been
instances of miscommunication around the information that was
required and could be provided, which will have delayed the progress
of Second Sight’s investigations.
Regarding information which has been withheld, Post Office have
explained that they are not providing legally privileged material. It is
standard practice that such information is not shared with anyone
else, even the Courts. Post Office has made available to Second
Sight all appropriate documentation from its prosecution files — this
information is also available to each applicant in the scheme as part
of the re-investigation by Post Office into their case.
The Government recognises the importance of information relating to
the scheme being preserved. All parties involved in the mediation
scheme are bound by confidentiality agreements and these include
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the requirement to store information appropriately, and dispose of it
when it is no longer needed (such as at the termination of a contract)
or return it to the information owner. Post Office have confirmed
repeatedly that they will not destroy documentation relating to the
scheme, including information provided to (and returned by) Second
Sight. Given the confidential nature of this information, it would not be
appropriate for Government to also retain a copy.
6. Outcomes of mediation
6.1.
6.2.
6.3.
The Committee recommended that the House should be updated on
the outcomes of the mediation scheme.
The Centre for Effective Dispute Resolution (CEDR), in their
feedback on the mediations which have taken place to date, provide
an update on outcomes. Of the 12 mediations which had been
undertaken at the time of writing — a very small sample, which was
noted by CEDR - the current settlement rate was approximately 45%.
“Settlement” refers to mediations where the parties have agreed a
resolution to ail of their differences. Mediations may also be
“progressed”, which means that the differences between the parties
have been narrowed, and further negotiations may or may not be
undertaken. CEDR observe that in an average year across all
mediations the settlement rate tends to range between 65% and
75%, with a further 10% to 15% of cases resulting in some
progression.
CEDR note that the current settlement rate is somewhat lower than
the average settlement rate. They offer a number of additional
observations, which include that in a number of cases the applicant
has not fully understood the nature of mediation, and has instead
attended with an expectation they were going into a compensation
process. In some cases, the applicant has raised claims during the
mediation which had not previously been disclosed, and that this can
often lead to an unsuccessful mediation or a more difficult process.
All applicants are provided with information about mediation from
CEDR prior to starting their mediation, details of which are contained
in Post Office’s detailed scheme report. However, CEDR and Post
Office will consider whether additional information or guidance could
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6.4.
be made available to applicants to help them better understand
mediation and what they can expect.
CEDR has agreed that it will provide information relating to the
number of mediations conducted, and the number of claims settled,
progressed and not settled, at key milestones throughout the
process. The Government encourages Post Office to share this
information as appropriate, recognising the interest in this matter from
applicants and from Parliament.