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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 initial report (into 4 cases) until Friday 5 July.
Second Sight are preparing to make their report available to MPs on Monday 8 July at
6pm. BIS and Post Office will see a near final draft on Friday 5 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 and confirmed this when he spoke
to Jo Swinson on Wednesday on 3 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 previously 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:
Conversations between POL and Arbuthnot; POL and Jo Swinson and Jo Swinson and
Arbuthnot took place yesterday, 3 July. In his conversation with Jo Swinson,
Arbuthnot conceded that it appeared that the report was unlikely to find any
systemic failures in the Horizon system but he remained concerned that the overall
picture it would paint was one of a lack of support for subpostmasters which in his
view brought into question the soundness of previous convictions. BIS does not
support this view.
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.
BIS does not intend to make a statement on this issue as we have seen no evidence
to suggest that the integrity of the Horizon system is compromised, or that any
previous convictions of subpostmasters for fraud or false accounting should have
been cast into doubt.
Wide impacts — 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 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."
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