Post Office Horizon System

Wayne David Excerpts

Monday 29th June 2015 Commons Chamber

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

I congratulate my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) on securing this debate. I commend him and other hon. Members across the House for raising here and elsewhere the concerns of their constituents—sub-postmasters who face problems. I echo the tributes paid to the former Members for North East Hampshire and for Batley and Spen for their work on this issue. They, my hon. Friend and others can take a great deal of credit for raising this issue and encouraging the Post Office to take action to address sub-postmasters’ concerns and to improve business for the thousands of sub-postmasters and staff working in the network today. My hon. Friend kindly informed me before the debate of the points he wanted to raise, and I will try to deal with all his questions, but I want first to set out a little background.

Hon. Members do not need me to wax lyrical about the important role that post offices play in communities in providing access to essential mail, financial and Government services. I am sure that we all agree on and understand that. The Post Office is undergoing a very significant transformation programme to remove central costs, grow new revenue streams and modernise its extensive branch network. Already, more than half of eligible sub-postmasters have benefited from investment in their branches or have signed up to do so. These changes will help the post office network to survive in the digital age. The way we live and communicate is changing, and post offices need to adapt to that. The Government are supporting and investing in the Post Office to ensure that it can become sustainable for the long term and reduce its reliance on taxpayer subsidy. The network is now at its most stable for a generation. Having halted the closure programmes we saw under previous Governments, we are committed to securing the future of 3,000 branches that are the last shop in a local community.

The Government are, of course, the shareholder of Post Office Ltd, and in that role we make sure that there is a wide network of branches across the whole country, and we provide subsidy for the Post Office to do so. We also recognise, however, that it is a commercial business and we allow it to operate as such. Furthermore, as I am sure most hon. Members are aware, the vast majority of post office branches are operated not by Post Office Ltd, but by sub-postmasters. They are independent businesspeople who choose to contract with Post Office Ltd to provide post office services, usually from a small business such as a shop.

Small businesses are the lifeblood of the local economy in so many communities, and Post Office Ltd needs to ensure that it supports its sub-postmasters properly. I am pleased that the Post Office takes that role very seriously and that it has made significant improvements to the way in which it works with its sub-postmasters, not least following many of the cases that hon. Members have raised.

The Post Office already ensures that new sub-postmasters receive full training on all aspects of their role, including the Horizon system, through both classroom and in-branch training. There is also a dedicated helpline available to sub-postmasters to help resolve any issues they are having.

[Wayne David (Caerphilly) (Lab)]

I am listening carefully to the Minister, but surely he accepts that there is a fundamental problem with the Horizon system, because we have heard complaints right across the country from all sections of the population, as well as from the sub-postmasters themselves.

[George Freeman]

I will come to the quality of the system. It is difficult on the face of it to characterise either the training or the helpline as having been inadequate. The vast majority of people who use or have used the Horizon system since it was introduced 15 years ago have in fact done so successfully. However, there is always room for improvement and the Post Office has implemented a business support programme to that end, including improvements to training, with both classroom and new online training available 24/7; improvements to the Post Office’s support helpline, including new ways of identifying and proactively supporting branches in difficulty; and new processes to help sub-postmasters manage their branch and protect against fraud.

I now come to some of the points that have been made about the Horizon IT system. It is used by tens of thousands of people working in the post office network, performing more than 6 million transactions every working day in branches up and down the country, so it is essential that it functions correctly. Like any large IT system, it is subject to rigorous testing, independent audit and industry accreditation. Nevertheless, in the light of the concerns raised about serious glitches in the Horizon system, the Post Office commissioned an independent firm of forensic accountants, Second Sight, to investigate.

Second Sight produced two independent reports—one in 2013 and the other earlier this year—both of which found there was no evidence of systemic flaws in the system. That is an important point that I would like to reiterate in response to the shadow Minister’s point: there is no evidence of systemic flaws in the system. Second Sight’s reports have, rightly, pointed out some areas where the Post Office could have improved how it operates, particularly on the training and support that it provided in some individual cases. As I said earlier, the Post Office is acting on those points.

The general secretary of the National Federation of SubPostmasters, George Thomson, told the Business, Innovation and Skills Committee in the last Parliament that the NFSP

“represent 7,000 sub-postmasters…If there was a systemic problem…we would be absolutely inundated.”

He went on to say:

“Over the 15 years, the Horizon system has been fantastically robust.”

As well as improvements to training and support, the Post Office also launched a mediation scheme so that any current or former sub-postmaster who felt they had problems with the Horizon system could bring forward an application. They would have their cases thoroughly reinvestigated both by the Post Office and by Second Sight, and, if appropriate, proceed to mediation to seek to resolve any issues.

It is important to understand that the mediation scheme is independent of the Government. That is the right approach for something that is a contractual matter between two independent businesses, and we should remember that sub-postmasters are independent businesspeople who have contracts with Post Office Ltd.

Mediation is, of course, a voluntary process. Both parties need to consent to it, and for it to be successful there needs to be a reasonable chance of coming to a common understanding. Sometimes mediation will not be appropriate or will not succeed, but it is important to note that mediation cannot overturn a criminal conviction. I will come back to that point.

My hon. Friend the Member for North West Leicestershire and others have been critical of the mediation scheme and how it is progressing. He mentioned that 90% of cases are being excluded from mediation, but that statistic is not borne out by the information provided by the Centre for Effective Dispute Resolution, which oversees the mediation scheme and is independent.