Whips briefing: Post Office Ltd ‘Horizon’ accounting system
Issue:
The Horizon accounting system was introduced into post offices in 1999 and records
every post office transaction (6 million per day) across a network of nearly 12,000
branches. The integrity of the system has been called into doubt by a very small
minority of ex-subpostmasters who claimed that irregularities in the system caused
losses to be recorded at their branches which have led to the termination of their
contracts. Post Office Ltd (POL) has always vigorously contested these claims, but
agreed to an independent review in 2012 to investigate the claims.
The review:
In June 2012, POL appointed Second Sight (forensic accountants) to undertake an
independent review of Horizon. The review has been conducted independently and
POL and BIS will not see a draft of the report until Friday 5 July. Second Sight are
preparing to make their report available on Monday 8 July.
James Arbuthnot’s involvement:
James Arbuthnot has been informally championing ex-subpostmasters who have
expressed concerns about the integrity of the Horizon system. He led calls for a
review of the system, and acted as a conduit for passing cases to Second Sight
(thereby preserving BIS and POL independence). Arbuthnot is not due to see a copy
of the report until it is published on Monday 8 July.
What the report likely to say:
BIS understands that the review has not found issues with the integrity of Horizon,
but that the report could be critical of the training and support provided by POL to
subpostmasters with respect of certain operating procedures. We do not believe
that the report suggests that any convictions against subpostmasters for theft or
false accounting are unsafe, as Arbuthnot has suggested.
Of the 49 cases referred, Second Sight has looked in depth at the four ‘strongest’
cases (those where it was felt there was the greatest possibility of finding evidence
of system weakness). The review also looked at two specific anomalies that POL
itself identified. Again, POL has reported that it is confident that the Second Sight
review has not found any systemic issues with the system.
What has happened so far:
Both POL and Arbuthnot have separately spoken to Second Sight. Arbuthnot has
spoken to Paula Vennells (POL CEO), who has briefed Jo Swinson. Jo has
subsequently spoken to Arbuthnot.
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Likely next steps:
Given his role as champion, BIS suspects that Arbuthnot is seeking to achieve
maximum coverage for this report, and understand that he is trying to arrange pre-
recorded broadcast interviews, and has also approached the Speaker with regard to
tabling an urgent question, or requesting the Minister make a statement.
POL (and BIS) is very keen that this report is not spun by Arbuthnot or the
campaigning group ‘Justice for Subpostmasters Alliance’ (JFSA) to construe that ex-
subpostmasters have been falsely accused and convicted of false accounting and
theft. Furthermore, POL is alive to the reputational impact that a sensationalised
story could have on it as a company, and the impact it could have on its thousands of
subpostmasters (who provide Post Office services under a contract agreement) and
its millions of customers (c.20 million use post offices weekly) many of whom are
vulnerable members of society who rely on post offices to access a range of services
including benefit and pension payments.
Wide impacts — Royal Mail privatisation
The timing of Arbuthnot’s intended statement should be considered in the context of
the Royal Mail privatisation. Vince Cable and Michael Fallon are making a statement
to Parliament on Wednesday 10 July, setting out the steps towards a Royal Mail
transaction. In the eyes of many MPs, the media and the public at large, Royal Mail
and the Post Office are the same entity. Although not related, the adverse coverage
that Arbuthnot is seeking to attract is likely to have a significant and diversionary
impact on the messaging of the Royal Mail statement.
Key players:
James Arbuthnot MP — Parliamentary champion for ex-subpostmasters claiming
against the integrity of the Horizon system.
Justice for Subpostmasters Alliance — pressure group set up to campaign for ex-
subpostmasters claiming against the integrity of the Horizon system.
Key lines to take:
"Matters relating to the operation of the Horizon accounting system are the
responsibility of Post Office Ltd. The Government does not play a role in operational
matters."
"POL commissioned an independent report of the Horizon system. As this is an
independent review, it would not be appropriate to comment or speculate ahead of
publication."