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Notes of the Meeting with James Arbuthnot, Alice Perkins and Alwen Lyons
March 13" 2012-
1.
4
JA started the meeting by explaining why he was concerned about the Horizon
system and the support that sub-postmasters receive from the Business when
they are faced with a discrepancy in their accounts. He told us about a recent
meeting at which he and another 8 MPs had met some of the affected sub-
postmaster and Shoosmiths their legal representatives.
AL explained the training and support given to sub-postmasters both in the
class room before the start and in their offices, as well as follow up balance
support and helpline advice.
AP agreed to look at the support we give to sub-postmasters especially around
balancing to see if it could be more effective. Action Point
AP invited JA to visit the model office to see how Horizon works.
JA made a counter proposal offering to come to Old Street but accompanied
by a computer expert possibly someone from Computer Weekly. He puts
credence on Computer Weekly’s opinion because of their involvement in the
chinook helicopter crash enquiry, which successfully challenged the initial
assumption of pilot error. He knows that Computer Weekly have also been
‘sceptical about Horizon’.
AP explained that the system had been independently reviewed by several
people including RM Internal audit and Deloittes (who had no relationship
with the Business or Fujitsu). JA was not convinced that this had been done by
IT experts.
AP offered to consider a further review of the system by an IT expert
specifically looking at the integrity of the data and discrepancy errors thrown
up in sub-postmaster’s balances. Action Point
JA came back to the training which he did not think was adequate and
introduced the issue that the sub-postmasters’ contact was over 100 pages
long, and was written in 1994 when the Horizon system was not in place and
did not explain the process for making good errors clearly enough. He also
suggested that the sub-postmasters did not get a copy of their contract until
they had taken up their appointment by which time it was too late to
understand the full commitment they were making.
Need to check if this is accurate. Action Point
AP asked if the issues being discussed were wider than Horizon. JA returned
to the moment when a sub-postmaster has to make the decision on a
misbalance, when they have to declare a shortage and make good, or settle
centrally. In his mind this is the issue as the sub-postmaster has to choose to
continue trading the following day.
AP promised to reflect on the meeting and invited JA to another meeting,
possibly at Old Street. Action Point
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10. In closing JA informed AP that there had been discussion about an
adjournment debate on the topic.
A meeting is in the diary for 28" March but before then we need to:
a) Put together a brief covering the facts about the issues JA raised eg contract and
training. Kevin Gilliland
b) Be ready to present our view on Computer Weekly and what are these views based
on. Lesley Sewell
c) Find out the views of the IT industry and the Govt on Computer Weekly (possibly
ask Ian Watmore’s new CIO) Lesley Sewell
d) Consider who we might suggest as an independent IT consultant who could carry
out a review, 2 or 3 possibilities so there is a choice. Lesley Sewell
e) Is there something else we would suggest to counter this proposal
All
f) Find out if we invited JA in to the model office what could we show him about
balancing and how a sub-postmaster can check their accounts during balancing.
Kevin Gilliland
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Summary of Issues affecting Sub-Postmasters
. Sub-post offices make up the vast majority of the Post Office Network. A sub-postmaster or
sub-postmistress (“SPM”) is a self employed manager of a sub-post office. They contract with
Post Office Limited (“POL”) to provide this service.
. Although SPM’s are self-employed, many are under the mistaken impression that they are
employed by the POL such is the control exercised by POL as to how the carry out their duties.
. Access Legal from Shoosmiths, a national law firm, have been contacted by almost 100 SPM's
who have suffered losses they cannot explain, and have been subjected to disciplinary
measures by POL. All are adamant that they or their staff have not stolen any money. They
claim that the Horizon system, an electronic point-of-sale and accounting system that the POL
require them to use, has caused the errors, or not enabled them to work out why the errors
have appeared in the first place. They claim there has been no real investigation by POL as to
the cause of the losses that have appeared — and SPMs are expected to pay it back regardless
of how it was caused.
. POL is adamant that the Horizon system has no faults.
Horizon & the balancing of accounts
. All transactions in a sub-post office are processed through Horizon. At the end of a trading
period (a 4 or 5 week period) an SPM must balance his accounts and send a declaration, plus
any related receipts, checks, and cash to POL. The Horizon system will produce figures based
on the transactions that have taken place as to what the cash and stock total at the sub-post
Office should be. The SPM will then have to count the stock and cash held to check it matches
up.
. When an SPM has completed a cash and stock check and discovers that there is less cash or
stock than Horizon believes there should be, the SPM must make good this loss if it was
caused by his/her error or that of an employee. It is also the case that if the SPM has more cash
than the Horizon system believes there should be, the SPM is entitled to take the surplus
money from the system. At the Crown offices (the larger post offices run by POL) the managers ?
do not have to repay these losses as they are written offbyPOL. ists He? Uke is Ye HAaeke-
. If the SPM is ever faced with a loss when balancing, the SPM is presented with two options on
the Horizon system: “Settle Centrally” or “Make Good Loss”. Settle centrally means that,
according to POL, the loss can be investigated. However the description of this from SPMs is
that it just means the loss will be taken from the SPM’s remuneration either as a lump payment
or in stages. If "make good loss” is selected, the SPM must make good the loss there and then
out of his or her own pocket. One of these options must be selected, otherwise an SPM will not
be able to trade the following day.
. Some of the SPMs have told Horizon that they have made good the losses when in fact they
haven't. The reasons they do this vary, but are typically telated to an inability to pay (often due
to have made various repayments previously) and a desire to keep the post office open for their
community.
. When doing the above, an SPM is committing false accounting, albeit not to enrich themselves,
or deny POL what is rightfully theirs.
. When discrepancies are found at audit, a SPM will be suspended and all the accounts papers
at the post office will be taken away for investigation. The SPM will not be allowed to go behind
the post office counters in their shop. The losses at this stage have been between £6,000.00
and £150,000.00.
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. The SPM then has a supposed chance to explain the losses, but without access to the papers
or the post office system, the SPM’s ability to do this is extremely limited. Typically the SPM’s
contract will be terminated and POL will request that any losses are repaid under the Contract.
. POL will ask an SPM to repay all losses that occur and as such there appears no distinction
between losses that may be the fault of the SPM and those which may have been caused by
something else. SPMs have no opportunity to investigate the reason for the loss, nor do POL
‘seem inclined to do so either. It is far from clear whether when there is a loss in a sub post
office, that POL has actually lost any money.
. If the loss is not repaid, POL will prosecute the SPM for false accounting. SPMs are typically
advised by their legal advisors to plead guilty to false accounting, as in the above
circumstances they will have committed it. Many will charged with theft or fraud but these
charges are typically dropped in these circumstances. SPMs have been imprisoned as a result
of convictions for false accounting.
Other relevant issues
Interview — At interview for the position of SPM, most are not questioned about their accounting or
computer-literacy skills. Very few of the SPMs had any experience or qualifications in accounting
before taking on the role of SPM, although even those with accounting qualifications have struggled
with Horizon. The SPMs are then expected to take over the full accounting and balancing procedures
upon their appointment as SPM without even basic knowledge of the same.
Contract - The contract with POL is a standard form 100 page contract that was drawn up in 1994
when a paper-based accounting system, with a full paper audit trail, was used. SPMs are routinely not
provided with this contract until they have purchase the sub-post office and completed the interview
and training process. The SPMs are typically not made aware of the onerous sections of the contract,
specifically those sections relating to repayment of losses, termination of the contract and lack of
compensation for loss of office.
Training - POL provide training for SPMs on how to use the Horizon system which is undertaken prior
to an SPM commencing their contract. This tends to vary between 2 days and two weeks, The
training typically focuses on sales technique with very little focus on accounting skills. When an SPM
starts they are typically accompanied by a trainer for their first week who shows them how to use the
system, in their own post office. The majority of SPMs believe that their training was not,adequate, in
particular in relation to the accounting and balancing procedures and what to do if a loss occurs.
Requests for further training are denied and there is no possibility for a SPM to obtain further training
‘on the Horizon system without it being provided by POL. The support provided by the Helpline POL
operate to assist SPMs is reported to be inadequate.
Faults with Horizon — It appears that there are numerous ways in which these losses could have
occurred, whether it is as a result system errors, human errors when entering data, faults with cross
system communication or electrical faults. The technical reasons why the errors are occurring is not
the main issue that needs be addressed, instead it is that the Horizon system is does not allows
SPMs to find where an error has occurred and rectify before having to repay losses.
National Federation of Sub-Postmasters - The NFSP are the trade association for SPM’s. They
negotiate with POL on behalf of SPMs and provide representation at disciplinary meetings. They state
publicly that there are no issues with Horizon. Many SPMs report that they receive no useful
assistance from the NFSP when they have accounting difficulties. The Communications Workers
Union, the relevant union for POL employees, has recently set up a branch to assist and represent
SPM's. This has been set up by former executive members of the NFSP. Many SPMs are now
seeking assistance from the CWU as opposed to the NFSP.
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