UKGI00014038 - Email from Phillips Edward to Armstrong Sue, Atkinson Tony, Bell Gavin, Boyd Fiona and others cc;ing Corporate Alerts RE: Corporate Escalated Issue Ref 1218- Post Office- Closure Report

Evidence on official site

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Edward Davey MP
Glenda Jackson MP Our ref: 237315
House of Commons Your ref-PARE01003/01110181
London
SW1A OAA
March 2011

Thank you for your letter of 22 February to Vince Cable on behalf of your
constituent, Bhavisha Parekh of: whose father, a
former subpostmaster, was prosecuted for cash losses. Your constituent
suggests that Post Office Ltd’s Horizon computer system caused these losses.
I am replying as Minister for Postal Affairs and I am aware of a number of
similar cases.

The issues raised in your letter are, however, operational and contractual
matters between Post Office Ltd (POL) and your constituent’s father and I
should make clear that neither I nor the Department can intervene in cases
which are sub judice or where court action has been determined.

Whilst the Horizon system has been blamed for the financial discrepancies
and shortages which in a number of cases where subpostmasters have had
their contracts terminated and there has been subsequent court action, POL
continues to express full confidence in the integrity and robustness of the
Horizon system. The Horizon computerized accounting system operates in all
post office branches and has done so for over 10 years, processing up to 750
transactions a second across the country at peak times. The system and the
processes around it offer a very high level of security and resilience and are
designed to ensure that should part of the system or equipment fail that the
integrity of the accounting records is always maintained. The system has
proved to be very robust since its introduction.

POL has advised that the Horizon system was fully tested at the time of the
nationwide implementation some 10 years ago and all new software releases
since then have undergone rigorous testing prior to going live in order to
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assure the accuracy of the accounting processes. For example, the testing for
the latest upgrade to the system introduced over the past year was
independently assured by Wipro as being ‘best practice’ (Wipro is amongst the
largest global IT services companies in the world and recognised experts for
Product Engineering and Testing).

In addition to being subject to these independently-assured, robust testing
procedures, the system’s information security processes meet the relevant
industry standards which apply to such organisations as banks and building
societies. As regards ongoing performance, the Horizon information security
management systems are accredited to industry standards and there are
extensive controls to ensure data validation and reconciliation. A transaction
log is available for every branch and full audit logs of all system and user
activity and transactions are securely sealed, backed up and retained to
provide an evidential and investigative repository.

The system is based on the principles of ‘double entry book keeping.’ If an
accounting issue is identified at a particular branch (which may have been
caused by, for example, incorrect keying of a transaction by the
subpostmaster), there are full processes in place between Post Office Ltd’s
central accounting team and the individual subpostmaster to investigate and
resolve such issues and identify the responsibility. It is important to note that
these are the kinds of issues that can occur in all businesses (incorrect data
entries by branch staff, incorrect amounts of cash taken etc). These are user
issues and are not examples of the Horizon system itself creating errors.

All subpostmasters and branch managers are able to utilize the reporting
functions within Horizon and to perform counts of their cash and stock in order
to confirm their accounting position on a timely basis.

EDWARD DAVEY