Post Office Mediation Scheme

Mike Wood Excerpts

Wednesday 17th December 2014 Westminster Hall

[Mr Arbuthnot]

Well, yes, it has been. My hon. Friend has been working on this issue since the very beginning. Obviously, constituency cases are confidential to constituency MPs. All I can say is that my own constituent, Jo Hamilton, has been told that she cannot have a result until after Second Sight has produced its report in April. I first became concerned about her case in 2008, and this sort of time lapse is utterly unacceptable.

Not only is the Post Office doing this in breach of its word to Members of Parliament and in breach of its duties to the people it works with—the sub-postmasters—but it is undermining and belittling the work of the forensic accountants whom it chose. It is the independence of these accountants, which MPs initially questioned but which we now welcome, that the Post Office finds hard to take.

The Post Office has accepted that its support systems left much to be desired, and as a result it has changed them. The sheer number of calls to the Post Office helpline is astonishing. The calls are from professional users, but tens of thousands of them were abandoned; they were not just made, but abandoned. Jo Hamilton encountered support staff who could not tell her what was going on. She herself had not been trained at all, let alone trained to deal with issues such as this. What has the Post Office done about the absence of such training? It has blamed Jo herself, and others like her, for not having asked for more training, despite the fact that it should have been clear to the Post Office itself, if it was not clear to Jo herself, that she needed such help.

[Mike Wood (Batley and Spen) (Lab)]

Indeed, has the Post Office not done more than that, because as late as 24 November it announced that a quarter of the staff who provide advice and support to sub-postmasters and sub-postmistresses will be made redundant by the middle of February? So the very poor service that sub-postmasters can draw on at present will be reduced by the Post Office by 25%.

[Mr Arbuthnot]

My understanding is that the figure is something like that, but I hope that the hon. Gentleman, who has been a key member of the working group of MPs on this issue, will be able to expand on that point when he makes his speech, because I do not know the full detail.

The Post Office carried out no proper investigation into what had happened to Jo Hamilton. Julian Wilson, of the Redditch constituency, was told by Post Office staff that if there was money over at the end of the day, he should put it in an envelope and put that envelope in the safe, and then use that money to pay later shortfalls. It is so obvious that that amounts to false accounting, on the instructions of the Post Office itself, that it is bewildering. He kept asking for audits but the Post Office said, “We’ll audit you when we think you need an audit.” And yet he gets prosecuted and decides to plead guilty.

What allowance has been made by the Post Office for the fact that historically its support was so poor? So far as I can tell, none. What allowance has been made for the contract term that provides that the weakest links in the Post Office—the sub-postmasters—have to be found guilty unless they prove their innocence? So far as I can tell, none. This is not the way that our criminal law should work. What has happened to the money that the Post Office got from people such as Jo Hamilton via the South Warnborough village? Did it get taken into Post Office profits? This is, essentially, an issue of Post Office culture—the protection of assets at the expense of people.

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[Mike Wood (Batley and Spen) (Lab)]

I am pleased to be called in this important debate. I, too, thank the right hon. Member for North East Hampshire (Mr Arbuthnot), who has tried valiantly over the past two to three years to get the Post Office to do the honourable thing by sub-postmasters and sub-postmistresses who have been slighted—all, it would appear, to no avail. None the less, we should place on record our thanks to him for his valiant efforts.

Central to this issue and to the operation of all 11,500 sub-post offices is the Horizon system. We must remember that it is ancient: it was second hand when the Post Office took it on between 1996 and 2000, and it was, in any case, designed for other purposes. We are now 18 or 20 years down the road, and, in IT terms, the system is a dinosaur. If we add to that the problems that are found in all large-scale IT systems when things are bolted on or updated, or when they are expected to interface with systems they were never designed to interface with, we patently have a very flawed, degraded and deteriorating system. That system, which accounts for about 60 million transactions a year, is central to this issue. However, its influence—we might say its malevolent influence—on the lives of sub-postmasters and mistresses is added to by two features. First, there is their relationship with Post Office Ltd and, secondly, there is the attitude of Post Office Ltd senior staff.

Sub-postmasters and mistresses are bound in their relationship with the Post Office by a contract that has been described as Dickensian, but even our Victorian forebears would struggle to justify a contract that is 114 pages long, all in the usual small print, which was first put together in 1994, and which, essentially, places on them all responsibility for problems and shortcomings in Post Office Ltd’s own equipment and system. Therefore, the responsibility for any shortfall or shortcoming rests contractually with the postmaster or postmistress. As the hon. Member for North West Leicestershire (Andrew Bridgen) said, that removes any compunction from Post Office Ltd to do anything about its flawed system, even though it appears to have had the ability to bolt on a facility to alter figures from an individual post office remotely after they have been signed off for the day by the postmaster or postmistress who is responsible for them. The system is flawed, but apparently Post Office Ltd has used it to good effect.

When such a flawed and ancient system is backed up with poor, and often non-existent, training and support, we have the recipe for a disaster. However, we must remember that, in the short term, that is a disaster not for the Post Office, but for those postmasters and postmistresses who get caught out by the glitches and failings in the system that were illustrated earlier.

The second issue is the attitude of Post Office Ltd’s management. The right hon. Member for North East Hampshire and the hon. Member for North West Leicestershire were present when we met the five senior managers of Post Office Ltd—the chair of the board, the chief executive, the chief technical officer and two others—who said, “We cannot conceive of there being failings in our Horizon system.” I asked all five of them about that.

First, that makes us wonder which planet they live on. Secondly, we know that if the organisation operates from the premise that, uniquely, it has a computer system with which there are no problems and can be no problems, that explains its behaviour further down the line. Its investigation department should be renamed, because it has never done an investigation since it was set up. When problems are found, eventually it goes to the individual postmasters and postmistresses and says, “There is a problem here. Patently, it is not our system—it’s faultless—so it must be you. So, now, under caution”—because the Post Office has the ability to prosecute—“without you having legal representation, we would like you to sign a statement that you have taken part in false accounting. Then we will think about not prosecuting.”

People in such circumstances, in the knowledge that there was a problem, are often encouraged to do that by the advice and support team. Many are told, “It’ll sort itself out—don’t worry about it. Put it in an envelope and sort it out later.” Therefore, if they follow that advice, they find themselves agreeing, “Yes, of course that is false accounting—I will sign the statement.”

[Nadine Dorries (in the Chair)]

Order. That is more than six minutes now, so can you speed up?

[Mike Wood]

Okay. We need to look to the future, and I support what the hon. Member for North West Leicestershire said about the removal of the very poor senior management in Post Office Ltd, but we must have justice for the hundreds of postmasters and postmistresses who have had their lives ruined by this flawed system.

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[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I congratulate my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) on securing this debate on the review and mediation scheme relating to the Post Office and Horizon. He set out his concerns clearly and eloquently and cares passionately about the subject. He has worked tirelessly over a long period of time on the matter, as have many other hon. Members present today. I appreciate hon. Members taking forward their constituents’ concerns. Today’s debate obviously follows on from the statement in the House of July 2013 and the important foundations laid and commitments made at that point.

I have listened carefully to the concerns expressed by hon. Members today and I recognise the real and genuinely distressing situations described and their concern for their constituents. I wanted to respond as thoroughly and fully as possible to the debate, so I was keen to get views on how the scheme was going from the working group. I contacted its chair, Sir Anthony Hooper, and received a letter back from him, copies of which I circulated to hon. Members present. I had placed it in the Library of the House yesterday, but, appreciating that not everyone would have noticed that that had happened, I thought it would be helpful to bring copies along today.

Sir Anthony Hooper is, of course, a Court of Appeal judge. He was appointed chair of the working group at the suggestion of the Justice for Subpostmasters Alliance. His appointment was welcomed by many hon. Members, including my right hon. Friend the Member for North East Hampshire, who I understand still has confidence in Sir Anthony as chair of the working group.

Sir Anthony Hooper has set out the confidentiality requirements clearly and, as such, was not able to have a discussion. He said that he could give only limited information—that was not Post Office Ltd, as the hon. Member for North Durham (Mr Jones) suggested, but the Court of Appeal judge. Sir Anthony has provided details of the number of cases and the progress made. So far, the scheme has received 150 applications, with 10 cases resolved before the scheme started, four applications rejected outright and a couple of cases resolved after investigation. The rest of the cases are working their way through the scheme and are at different points on the timeline. So far, 24 cases have been recommended for mediation by the working group, of which only two have not gone to mediation because the Post Office has not been happy to mediate—

[Mike Wood]

Will the Minister give way?

[Jo Swinson]

I will give way after the next sentence or two. I understand the concerns expressed by hon. Members, but two out of 24 is nothing like the figure of 90% that has been put forward. A basic principle of mediation is that both parties agree to it voluntarily, so that it can be entered into in the proper, constructive spirit.

[Jo Swinson]

I will give way to the hon. Member for Batley and Spen (Mike Wood) first. I will tally up the interventions.

There would be no point in entering a mediation if one of the parties was adamant that it could not reach any possible positive outcome. Most of the cases recommended for mediation, however, are going to mediation.

[Mike Wood]

Is the Minister happy that the mediation process, which started on one basis, is now being interpreted on a completely different one by the Post Office? As a result, the vast majority of cases listed as going through the process will be excluded and never get to mediation. Is the Minister happy about that?

[Jo Swinson]

I do not accept the premise of the question. The scheme was set up and it was agreed that any case could apply to the scheme, even those cases in which the individual had pleaded guilty to a charge. The working group, which is made up of representatives of the Justice for Subpostmasters Alliance through Second Sight, the Post Office, and its chair Sir Anthony Hooper, will consider the report from Second Sight about whether a case should go to mediation. As a result of the process, the cases then go to mediation, but it was never anticipated that every single case would do so. There is the point at which the working group considers it.

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[Jo Swinson]

In order to do something, what is required is independent investigation that is done thoroughly and forensically—

[Mike Wood]

Will the Minister give way?

[Jo Swinson]

I will finish the point, if hon. Members will allow me.

The hon. Member for North Durham said “do something”, and in such a situation what I would normally propose doing is to get a team of forensic accountants to go through every scenario and to have the report looked at by someone independent, such as a former Court of Appeal judge. We have a system in place to look at cases therefore, but if particular cases can be mediated, that is an ideal solution. If any information comes to light during the course of the mediation or the investigations, that suggests that any of the convictions that have taken place are unsafe, there is a legal duty for that information to be disclosed to the individuals convicted and to their legal representation. I fail to see how action can be taken without properly looking in detail at every single one of the cases through exactly the kind of scheme that we have set up.

[Jo Swinson]

Absolutely. That is a serious accusation, and many serious issues have been raised in the debate and in correspondence that Post Office Ltd needs to look at and to respond to, perhaps to reassure itself that such things did not occur, or to look into whether they were the case and, if so, to take appropriate action. We do not for a second take lightly the issues raised today, but I caution against the expectation of some swift and easy magic solution. We have to look at the details and the facts, and that has to be done forensically. That is why Second Sight, the team of forensic accountants, has been employed and why we have someone of the calibre of Sir Anthony Hooper to oversee the process.

[Mike Wood]

Will the Minister give way?

[Jo Swinson]

I will give way, but time is short.

[Mike Wood]

The Minister rightly sets great store by the involvement of Second Sight, but—

[Nadine Dorries (in the Chair)]

Order. If the Minister wishes to wind up, there are only a few seconds to go.