Post Office Network Transformation
PONT 14
Written evidence submitted by Shoosmiths
SUMMARY OF ISSUES AFFECTING SUB-POSTMASTERS
1. 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.
2. 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 subject to
disciplinary measures by POL. All are adamant that they or their staff have not stolen
any money. They claim that the Horizon system (by which we mean both Horizon
OnLine and its predecessor Horizon), an electronic point of sale and accounting
system 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 — SPM’s are
expected to pay it back regardless of how it was caused.
3. POL are adamant that the Horizon system has no faults.
4. Those SPMs have told us that:
HORIZON & THE BALANCING OF ACCOUNTS
5. All transactions in a sub-post office are processed through Horizon. At the end of a
trading period (a 4 or 5 week period) a SPM must balance his accounts and send a
declaration, plus any related receipts, cheques and cash to POL. The Horizon system
will produce figures based on the transactions that have taken place as to what he 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.
6. 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 off by POL — these losses are reportedly in the millions per year.
7. 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
SPMs 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 their own pocket.
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One of these options must be selected otherwise an SPM will not be able to trade the
following day.
8. Some of the SPMs have told Horizon that they have made good the losses when in
actual fact they haven’t. The reasons they do this vary, but are typically related 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.
9. If a SPM, over a period of time, settles centrally lots of losses or appears to POL to
making good lots of losses they will be audited. If 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.
10. The SPM then has, according to POL, an opportunity 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.
11. 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 have actually lost any money.
12. 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 be 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
13. Interview — At interview for the position of SPM most are not questioned about
their accounting or computer literacy skills. Very few of the SPM’s 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.
14. 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. SPM’s are routinely not provided with this contract for services until they
have purchased 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.
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15. 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 SPM’s 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.
16. Faults with Horizon — It appears that there are numerous ways in which these
losses could have occurred, whether it is as a result of 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 to be
addressed, instead it is that the Horizon system does not allow SPMs to find where an
error has occurred and rectify before having to repay losses.
17. National Federation of Sub-Postmasters - The NFSP are the trade association for
SPM’s. They negotiate with POL on behalf of SPM’s 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, have 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.
5 May 2012
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