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To: Jo Swinson B I S
From: Peter Batten C i
Department for Business
Date: 12 December 2014 Innovation & Skills
Subject: I Westminster Hall Debate: Horizon Case Review and Mediation Scheme
Purpose
1.
James Arbuthnot MP has secured a Westminster Hall Debate on the Case Review and
Mediation Scheme (“the Scheme”) that was established to provide a process for former-
subpostmasters to have their cases considered for mediation. It is overseen by an
independent Working Group. The Post Office is a member of the Working Group, but
does not ‘own’ or is responsible for the Working Group or the Scheme.
Your objectives
2.
To be clear that matters concerning the Horizon system do not relate to any Government
action or policy decision, but are wholly operational matters in which HMG has no role;
The independent Second Sight review published in July 2013 explicitly confirms that
there are no systemic problems with the Horizon software;
Following last year’s report, there have been further detailed investigations into individual
cases that corroborate the Post Office’s view that there are no issues with the system;
That those detailed investigations have taken place as part of the Scheme that was
designed in concert with the JFSA, Second Sight and James Arbuthnot MP; and
That the small number of subpostmasters who have experienced issues are a minute
proportion of the tens of thousands (68,000) of people successfully using the system
across the network of over 11,500 branches on a daily basis.
Background to the Scheme
7.
8.
In response to the publication last year of the Second Sight report, you made a statement
to Parliament setting out three initiatives that the Post Office has since been delivering:
a. To set up a Working Group that includes the Justice for Subpostmasters
Alliance to review cases;
b. To ensure an independent chair is appointed to oversee the process; and
c. To provide a branch user forum providing a channel for subpostmasters to
raise concerns at the highest level in the business.
The Working Group comprises representatives from the JFSA, the Post Office and
Second Sight. It is overseen by an independent Chair, Sir Anthony Hooper, who was
recommended by the JFSA, and whose appointment was approved by members of the
Working Group. The Working Group, collectively, is responsible for the design and
delivery of the Scheme. Both are entirely independent of Government, which has played
no role in either the design or delivery of the Working Group or the Scheme. This is
entirely appropriate as HMG cannot intervene in any process that reviews past
convictions, as this should only properly be dealt with by the relevant judicial
authorities.
A process map of the Scheme is included at annex E, and the Post Office has completed
reviews for XX cases. By comparison, Second Sight has completed just XX, and took XX
months to complete their first case report; with a consequent delay to the operation of the
Working Group.
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Key facts
10.Commissioned and awaited from POL.
Recent developments
11. The Working Group has made slower progress than originally envisaged, though this is
in part due to the necessary trade-off between taking time to design and test a process at
the outset (which would have been time consuming) or rapidly moving to open a scheme
and learning and improving through the process (which is the route adopted to meet
stakeholder expectation in summer 2013). Despite that slow progress, the Working
Group and Scheme have been operational and delivering outcomes as seen above. On
current trends the work of the Scheme is expected to be completed in November 2015.
12.On 8 December, James Arbuthnot published a letter (attached at annex C) placing heavy
criticism on the Post Office’s role in the Scheme, and announcing that he was
withdrawing his support for the Scheme and the Working Group. A high level summary of
Arbuthnot’s criticisms are set out below (paras 16 — 20), and fuller rebuttals are included
in the speech Q&A (annex B).
13.On 10 December, ShEx became aware that the JFSA has instructed a legal firm, Edwin
Coe, to "pursue the rights" of subpostmasters whose claims are currently being
considered through the Scheme. The JFSA did not inform the Post Office (as joint
member of the Working Group) of this and the nature of the instruction is not clear. The
Post Office has written to JFSA for more information about their intention with relation to
the Scheme and the Working Group and next steps will be informed by the JFSA
response.
14. This change in behaviour by the JFSA and James Arbuthnot can be understood due to
the absence of any evidence of systemic issues with the Horizon system from either the
2013 independent report, or the further detailed investigations undertaken as part of the
Scheme. The JFSA (and James Arbuthnot MP as their sponsor) are in an increasingly
uncomfortable position due to their mismanagement of their members’ expectations that
has led to the situation where it is understood that many applicants believe they will
receive large payouts under the Scheme.
15.Although the outcomes of the mediation process are subject to strict confidentiality
arrangements, ShEx understands that where cases have been resolved with a financial
payment, the scale of these payments is very low and can be generally classed as
‘goodwill’. This is information that should not be relayed publicly as it relates to the
outcome of a confidential mediation process, but it does serve to provide insight into the
motivations behind JFSA and James Arbuthnot behaviours. Although neither JFSA nor
Arbuthnot should be party to the outcome of the mediation processes, it is obvious that
applicants are feeding information to both parties.
James Arbuthnot’s position
16.In his letter of 8 December, Arbuthnot focuses on two key themes:
a. The Post Office’s approach within the confines of the Scheme for those
applicants who were convicted following a guilty plea; and
b. The interpretation of what is meant by ‘Horizon’
17.On the first of these points, Arbuthnot is pushing a line that suggests the Post Office is
excluding 90% of applicants from mediation. This is a number that the Post Office does
not recognise, but struggled to clearly explain its position publicly on the ‘Today’
programme. Arbuthnot is arguing that all cases should proceed to mediation as a default
position. This is contended by the Post Office that argue the purpose of the Working
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Group is to consider applications on a case-by-case basis and to reach a decision
whether to mediate.
18. Arbuthnot wants cases that involve a subpostmaster who has been convicted on a guilty
plea to be mediated, but the Post Office is not accepting mediation in such cases as this
would undermine a judicial ruling. However, the Post Office is willing to consider
mediation for cases where a subpostmaster has been convicted on a guilty plea but
where their application for mediation does not relate to that conviction (i.e. if the
conviction relates to false accounting, but the application relates to concerns about
training).
19. It is current understanding that where Arbuthnot refers to the Post Office blocking 90% of
cases, this actually relates to cases that are discussed at the Working Group. The other
10% are those cases where there is agreement to mediate without need for a Working
Group discussion. The role of the Working Group is to decide whether cases should be
mediated — to say that this important part of the process is ‘blocking’ is specious.
20.On the second point (that the Post Office is changing the definition of what is meant by
Horizon) we need a little more input from POL...
List of annexes
A-— Speech modules (see separate attachment)
B - Q&A (see separate attachment)
C - Arbuthnot letter (8 December)
D - Paula Vennells letter (28 November)
E -— Scheme process map
Copied to: Cable MPST; Perm Sec MPST; SpAd MPST; ShEx Post Office Team
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Annex C - Arbuthnot letter (8 December)
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Annex D - Paula Vennells letter (28 November)
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Annex E — Scheme process map
Post Office provides
information on the
Subpostmaster's
case
Subposimaster
submits Application to
Second Sight
Subposimaster
engages
professional advisor
(optional)
Case confirmed as
Suitable for
investigation
Second Sight
investigates the
Subposimaster's
case
Subposimaster
submits Case
Questionnaire
Second Sight produces a Case
Review of its findings and a
recommendation on whether the
case is suitable for mediation
Mediation Administrator
liaises with Subpostmaster to
arrange mediation
Mediation meeting
if an agreement is
reached, the case
is resolved