Category Archives: openness and transparency

Universal Credit at “amber/red” says latest DWP report

By Tony Collins

The Major Projects Authority, which is part of the Cabinet Office’s Efficiency and Reform Group, has today published its annual report on 188 projects including Universal Credit, about which it makes only positive comments.

But the authority’s annual report is, it appears, economical with the actualité. At the same time as the MPA published the report, the Department for Work and Pensions published a spreadsheet with statistics and its own narrative on the state of its major projects including the Universal Credit programme.

The spreadsheet said that the UC programme had an “amber/red” rating – but neither the MPA nor the Department for Work and Pensions has given the MPA’s reasons for the rating.

At the request of permanent secretaries the MPA has agreed not to publish its comments on the traffic light status of certain projects, including Universal Credit. The MPA and the Cabinet Office have agreed to allow officials in each departmental to give their own narrative to explain the traffic light status of their projects.

So the DWP, on its website, gives a summary of the state of its major projects, but its narrative on Universal Credit says nothing about the programme’s problems. Neither is there any of the MPA’s recommendations which related to the “amber/red” rating.

In a further shrinking from openness, the MPA and Cabinet Office have agreed with permanent secretaries that the traffic light status of major projects will be published only when they are out of date. So the “amber/red” rating on Universal Credit, although published today, is dated September 2014.

Comment

It is odd in a modern democracy that a large central government department – the DWP – can spend £330m on the IT for a major project and get away with publishing such obviously contradictory information on the scheme.

On the one hand the MPA, the Cabinet Office and the DWP publish only positive comments about progress on the Universal Credit programme.

These are some of the MPA’s comments on Universal Credit:

“Delivery remains on track against plans announced in September 2014. Additionally the Programme has brought forward testing of initiatives from which the programme can learn including the:

• Continued trialling of Universal Support in partnership areas to ensure the right integrated local foundations are in place to support UC expansion.

• Extending In work progression trials to help households increase their earnings once they have found work. • Extending the role of UC Work Coaches to engage with households at their work search interview to assess financial capability.”

Similarly the DWP’s comments in its spreadsheet on the status of its major projects reads like a government press release. Why was one of the government’s major projects – the whole life project costs of UC are estimated at £15.8bn – given an amber/red status?

We don’t know. Except we know that the MPA gives an amber/red rating when it regards a programme as not on track – a programme that needs an assurance and action plan to improve confidence in delivery. Why is the programme not on track? What does the assurance and action plan say? What is the rating today?

So much for open government. Indeed the DWP’s external lawyers are going to an FOI tribunal in London next month as part of a long legal battle to stop four old reports on Universal Credit being published.

Any ministerial announcements about open government in future should, perhaps, take this unedifying FOI episode into account.

Major Projects Authority annual report 2014/2015

Does Barnet know if it’s saving money with Capita?

By Tony Collins

Are council outsourcing contracts becoming so unfathomably complex that officials and leading councillors have no real idea whether they’re saving money?

A Somerset County Council report on the lessons learnt from its troubled outsourcing/joint venture deal with IBM emphasized the importance  of “not making  contracts overly complicated”.

The report said:

” Both the provider [IBM] and the Council would agree that the contract is incredibly complicated. A contract with over 3,000 pages was drawn up back in 2007 which was considered necessary at the time given the range of services and the partnership and contractual arrangements created…

“The sheer size and complexity of this contract has proven difficult to manage.”

For years there have been arguments in Somerset over whether the council has saved or spent more as a result of the relationship with IBM.  The absence of audited figures means nobody knows for certain.

It seems to be the same at Barnet. An absence of audited figures – the council does not have to produce them for an outsourcing contract – means that nobody knows for certain if Capita is costing or saving money.

It’s likely that councillors who supported the outsourcing to Capita, and critics of the deal, will never agree on whether local residents are better or worse off.

Now a Barnet resident and respected blogger Mr Reasonable, who studies the accounts of the local council as part of his efforts to be more open and accountable, has offered £250 to charity if the Tory leader Richard Cornelius provides evidence of how Capita is making savings as promised.

Mr Reasonable made the offer on 24 May 2015 and has heard nothing. His request to Barnet was followed up by Aditya Chakrabortty, senior economics commentator at the Guardian. The council didn’t reply within his deadline. Says Chakrabortty:

“If you want to see the world of outsourcing at its most illogical, spend a bit of time with detail-hunters like Mr Reasonable.

“He tells me about phoning his local library to see if a children’s book was in stock. The call was of course routed to a Capita call centre in Coventry, where staff spent ages unable to help before connecting him back to the librarians just down the road. By his calculations, for that wasted call Capita would charge Barnet £8.

“Outsourcing is full of these invented costs, which is how the privateers make their billions.

“Mr Reasonable can tell you about how Barnet now pays £800 for a day’s training in how to take minutes, or £14,628 for just two months of occupational health assessments. In both cases these are services that would previously have been provided in-house for minimal cost…

“These examples would be comic, if they didn’t cost blameless taxpayers so much money…”

Commercial confidentiality

Mr Reasonable says all the commercially sensitive elements of Barnet’s contracts with Capita are redacted and there are “numerous clauses relating to incentives and penalties which would have made publishing a single payments schedule almost impossible”.

It’s also impossible he says to know what Capita has billed for or not.

“I have asked repeatedly to see the evidence of precisely what we are paying for and a detailed explanation of why the payments are so high. Whilst a few promises of evidence were made when the previous COO was in place, none actually materialised.”

Open day?

He adds:

“If Barnet Council is serious about openness then why not host an open day where they go through the contract in detail so that we can understand exactly what we are paying for?

“I would have thought it would have made sense for Capita to get involved with this, to work through the contract with interested citizens and to demonstrate clearly how much money they are saving.

“So I hereby throw down a challenge to the Chief Executive Mr Travers, to Richard Cornelius and to Capita – host an open day, bring bloggers and critics in and show them what you are doing, how the contract is working in reality what money is being paid to whom and how much is really being saved – evidence is essential.

“Indeed a few Conservative councillors might want to come along as well seeing as they voted for this contract. I know some of them privately had serious concerns about the contract but were worried about making those views public.

“And to put my money where my mouth is, I will donate £250 to a charity of Richard Cornelius’ choice if he makes this contract open day happen.”

Comment 

Outsourcing deals should be signed on the basis of pure pragmatism, never because of an ideology.

Barnet’s deal with Capita (and Somerset’s) was signed for largely ideological reasons. Somerset wanted to “go beyond excellence” and Barnet’s ruling councillors want to be immortalised by establishing a new frontier for local government – a “commissioning council” whereby all services are bought in.

It might have been cheaper for Barnet’s residents if the council had given its ruling councillors immortality by building statutes of them in the council’s grounds.

Will council officers have enough time or understanding of the nuances of the contract, with its maze of incentives and penalties,  to know whether they are saving money or not?

In any case how accurate were the pre-outsourcing baseline figures and assumptions on which to make a comparison between what services were costing then, and what they are costing now?

There is no equivalent in local government of the National Audit Office, no organisation that will audit a local government outsourcing deal and publish the results.

This means councillors can say what they like in public about the success of a deal without fear of authoritative contradiction. Their critics can only speculate on what is really happening while they try to shine a light at the dense fog that is commercial confidentiality.

It appears that more and more councils are seriously considering large-scale outsourcing, perhaps on the basis that they can promise guaranteed savings without anyone being able to hold them to account on whether genuine savings materialise.

The first we’ll know anything is awry is when a council report, years into a contract, reveals some of the difficulties and says a resolution is being discussed with the supplier; and it’s another year or two before the contract is terminated at considerable extra cost to the council – and nobody is in post from the time of the original contract to be held accountable.

Is this really the shape of local government outsourcing to come?

Mr Reas0nable

 

DWP gives out “selective” information on welfare reform even to its auditors

By Tony Collins

If the National Audit Office cannot obtain reliable and comprehensive information from the DWP, who can?

The NAO is the department’s auditor. Its head Amyas Morse signs off (or rather qualifies) the DWP’s accounts. His staff also produce regular “value for money” reports on the DWP’s projects and performance.

But an NAO report published today on welfare reform gives more than a hint of the problems its auditors face when trying to verify the information the DWP gives them.

The report “Welfare reform – lessons learned says the DWP failed twice to answer the NAO’s questions. Then, when the NAO gave the department its draft report, the DWP provided some information – which the NAO describes as “selective”. It is worth quoting the NAO’s comment in full:

“We have relied largely on our past audit reports to understand the implementation of welfare reform. Past work provides a sufficiently strong and comparable evidence base to identify different approaches and what works well and less well.

“We requested audit evidence from the Department for Work & Pensions (the Department) in August and November 2014.

“This would have allowed us to validate or comment on the Department’s performance more broadly and how they have subsequently addressed issues identified in previous reports. However, the Department failed to send the evidence despite requests.

“Following receipt of a draft report in April 2015, the Department provided some evidence on how it has tried to address issues identified in previous reports and how other welfare reforms have considered these themes.

“In the Department’s view it has made progress across programmes since the time of our initial reports. This includes addressing concerns about programme management on Universal Credit and reducing the time taken to process Personal Independence Payment claims.

“Given the selective nature of the evidence provided and the limited time to review a wide range of programmes, we were unable to audit the evidence or consider the additional information in detail…”

Separately, the DWP is in a protracted legal case to prevent the publication under FOI of four old – 2012 – reports on the Universal Credit programme.  A one-day hearing will be held in London on 15 July 2015.

Comment

The DWP is astonishingly thin-skinned. Its officials are probably not hiding anything – they just don’t want anybody knowing how well, or how badly, they are managing projects and programmes such as Universal Credit.

Since Universal Credit went live press officers have been allowed to give out only selective information on Universal Credit. It has  been difficult to establish from them that the programme has had 6 programme directors and 6 senior responsible owners since 2010.

The NAO’s latest report says the DWP needs to “recognise openly” when it has not met expectations. It needs greater internal challenge, says the NAO.

But the DWP seems unable to change its culture of defensiveness and the selective release of information to Parliament, the public and even its own auditors.

Why is it spending so much public money on trying to stop the release of the four UC reports?

Better than anyone else the late Lord Chief Justice Lord Bingham has summed up the need for openness:

“… Modern democratic government means government of the people by the people for the people. But there can be no government by the people if they are ignorant of the issues to be resolved, the arguments for and against different solutions and the facts underlying those arguments.

“The business of government is not an activity about which only those professionally engaged are entitled to receive information and express opinions.

“It is, or should be, a participatory process. But there can be no assurance that government is carried out for the people unless the facts are made known, the issues publicly ventilated.

“Sometimes, inevitably, those involved in the conduct of government, as in any other walk of life, are guilty of error, incompetence, misbehaviour, dereliction of duty, even dishonesty and malpractice.

“Those concerned may very strongly wish that the facts relating to such matters are not made public. Publicity may reflect discredit on them or their predecessors. It may embarrass the authorities. It may impede the process of administration. Experience however shows, in this country and elsewhere, that publicity is a powerful disinfectant.

“Where abuses are exposed, they can be remedied. Even where abuses have already been remedied, the public may be entitled to know that they occurred.” R v Shayler(2002) UKHL 11, (2003)1 AC 247.

Thank you to John Slater for providing Lord Bingham’s quote.

Welfare reform – lessons learned

DWP wastes money on another Universal Credit FOI appeal

A great speech in praise of the Public Accounts Committee

By Tony Collins

Margaret Hodge spoke incisively this week about her five years as chairman of the 160 year-old Public Accounts Committee.

It’s assumed that civil servants answer to ministers who are then accountable to Parliament when things go wrong. Hodge mentioned failed IT projects several times.

But she painted a picture of senior officialdom as a force independent and sometimes opposed to Parliament. She said some senior officials had a “fundamental lack of respect for Parliament”. She had come up against an opposition that was “akin to a freemasonry”.

She said:

“With accountability comes responsibility. I can’t think how often we ask whether those responsible for dreadfully poor implementation are held to account for their failures.

“It rarely happens. People rarely lose their job. Those responsible for monumental failures all too often show up again in another lucrative job paid for by the taxpayer…”

Some excerpts from Hodge’s “Speaker’s Lecture” are worth quoting at length …

“… I have been truly shocked by the extent of the waste we have encountered. This is not a party political point. It’s not that this Conservative- Lib-Dem Coalition is worse or better than the previous Labour Government.

“It’s not that the private sector is more efficient than the public sector.

“It’s not about questioning the dedication of hundreds of thousands of public sector workers wanting to do their best… for me personally, sitting on the left of the political spectrum, I passionately believe in the power of public spending and public services to transform and equalise life chances.

“Yet if I am to ask other people to give up their money so that we can use it to secure greater equality, then I must earn their trust that I will use that money well.

“From £700m which I believe is likely to be written off with the botched attempt to introduce a politically uncontroversial benefit change with Universal Credit, to £1.6bn extra cost incurred by the previous Government in signing the contract for the Aircraft Carriers without any money in the Defence budget and then delaying its implementation; from the failure of successive Governments to tackle the many billions lost through fraud and error or IT investment, to the inability of successive Governments to deport foreign nationals who have committed crimes and ended up in our prisons, the failures are too many, they occur too often and they occur with persistent and unbroken regularity.”

Media shuns “good news” stories

“Of course we do things well. I think of recent positive reports on the Troubled Families programme, the Prison buildings programme or the implementation of the Crossrail contract. And trying to get proper recognition of these successes is well-nigh impossible. …

“I remember being rung up by a researcher on the Today programme who wanted me to go on to speak about education for 16-18 year olds. She asked what I would be minded to say and I told her that it was a good report and I would be complimentary. ‘I thought you would be critical’ she responded. No it’s a positive report I replied. Well, she said, I’d better go away and read it, She  rang me half an hour later to tell me they had dropped the item from the programme.

“But despite acknowledging the good things that are done, I remain frustrated and angry at so much wasted expenditure and poor value for money.”

Grandstanding

“… If we do want to ensure public attention is drawn to something, it may involve the occasional bit of grandstanding. I don’t apologise for that, for I have very few tools available which I can use to get purchase and have an impact.

“If a bit of grandstanding is the only way to stop something happening again and again, we will use it – with big corporations, top civil servants and any establishment figure whom we believe has a case to answer…”

PAC versus a civil service freemasonry?

“I received a letter from the departing Cabinet Secretary which was widely circulated around Whitehall and to officials of the House accusing the Committee of treating officials unfairly and reminding me that civil servants are bound by duties of honesty and integrity and therefore should only be asked to give evidence on oath as ‘an extremely unusual step’.

“Then a researcher from the Institute of Government came to see me, armed with a report of interviews she had undertaken with senior civil servants. She was just the messenger, but her message from senior civil servants was blunt. I quote:

‘The NAO/PAC are modeled on the red guards – not a convincing grown up model of Government… the chair is an abysmal failure… the worst chair I have ever seen….. MH is informed by friends in the media… PAC profile is seen to be bashing senior officials and determined to get media soundbites.’ ‘It is under appreciated how important dull committees are.’

And then the final shot…  ‘Should the PAC be broken up?’

“Basically, the explicit threat relayed to me was that if we did not change how we held civil servants to account, we would be closed down. Shut up or we’ll shut you down.

“The story sounds like something from Yes Minister, but more seriously demonstrates a fundamental lack of respect for Parliament that I find deeply worrying.

‘How dare you MPs touch us’ was what they were saying. It felt like we were up against something akin to a freemasonry.

“Now that was January 2012 and things have moved on… but have they?

Civil servants unaccountable?

“The sad truth is that in that struggle between civil servants and politicians, the civil servants are most likely to win, because whereas we are here today and gone tomorrow, they are there for the long term.

“There remains a deep reluctance among too many senior civil servants to be accountable to Parliament and through us, to the public. The senior civil servants hide behind the traditional convention that civil servants are accountable to ministers who in turn are accountable to Parliament.

“That principle worked when it was first invented by Haldane after the First World War and the Home Secretary worked with just 28 civil servants in the Home Office. Today there are over 26,000.

“It worked when the public did not demand transparency. Today they do.

“It worked when public spending was primarily funneled through large departments running large contracts. In today’s world with a plethora of autonomous health trusts and academy schools, in a world where  private providers are providing public services in a range of fragmented contracts, delivering everything from welfare to work, healthcare and now probation services, in today’s world the old accountability framework with the minister being responsible for everything is plainly a nonsense.

“And whilst we, of course, want to maintain an impartial civil service, that is not inconsistent with the need to modernize accountability to Parliament and the public.

“There is a fundamental problem at the heart of the traditional accountability system. How can civil servants be accountable to ministers if the ministers do not have the power to hire and fire them?

“It is the accountability framework that is broke and in need of reform – not the Public Accounts Committee…

Need for reform

“The promise to reform the Civil Service has produced a few welcome changes, like a Major Projects Academy to train people to manage big projects, but the change has been too little, too piecemeal and too marginal, not fundamental.

“We just need to build different skills and do it, not talk about it.

“We may need to pay more so that working in and staying in the public sector becomes a more attractive proposition for more talented people. Trumpeting success in keeping public sector salaries down is not sensible if you end up wasting money or hiring in expensive consultants to clear up the mess or do the work for you.

“We need to transform the way people get promoted. At the moment, you’re a success if you leave your post after two years in the job and move on.

“When I was Children’s Minister, after two years I had a better institutional memory than any of the civil servants with whom I was working.

“And when the PAC reviewed the Fire Control Programme, which aimed at reducing costs by rationalising how 999 calls were dealt with, but ended up costing nearly £1/2 bn when it was written off as a failure; we found that there had been 10 different responsible officers in charge of the project over a five year period.

“I know some projects take longer than the Second World War, but continuity of responsibility is critical to securing better value.

Centre of government “not fit for purpose”

“It is also clear to me that the way the centre of Government works is not fit for purpose. We have three departments Treasury, Cabinet Office and Number 10 all competing for power, rather than working together.

“And all of them seem to be completely unable to use their power to drive better value.  Treasury carves up the money and then does little to ensure it is spent wisely.

“They only worry whether the departments keep within their totals. This is not a proper modern finance function at the heart of Government that you would see in any other complex organisation.

“So, for instance we all know that early action saves money, be it in health, education, welfare spending or the criminal justice system. Treasury knows this too, but they are doing nothing to force a change in the way money is spent.”

Lessons unlearnt

“There is little learning across Government. The mistakes in the early PFI contracts are being repeated in the energy contracts negotiated by DECC [Department of Energy and Climate Change]…

“Nobody at the centre seems to think through the impact of decisions in one area on another. So of course cuts in local authority spending, where nearly 40% of their money goes on community care services, will impact on hospitals and bed blocking.”

“Too much thinking is short-term.  PFI, to which the current Government is as wedded as past governments, is building up a huge bill for future generations; assets worth £30bn today will cost £151bn over time. And using PFI locks us into ways of delivering services which quickly become outdated – like large district hospitals when we now want to care for people outside hospitals in the community.”

Price of fish 

“None of this is rocket science. So why doesn’t change happen? Why is there such resistance? Radically transforming the culture must be at the heart of securing better value.

“If the machinery of Government is so resistant, we need to take that challenge outside party politics. Only by working together across parties and over time will we be able to secure the culture, capability and organisation that we all need to deliver on our different political priorities.

“When I first took this job I read the IPPR study which said that whilst officials dreaded their appearance before the Public Accounts Committee, they were confident that it would never ‘change the price of fish’.

“I am determined to change the price of fish.

That is why we have instituted new ways. We now have regular recall sessions, calling back people to tell us why they haven’t accepted our recommendations, or why they haven’t implemented them. We bring back people after they have moved jobs to hold them to account for what they did in post.

“That caused a minor revolution when we first did it. I wanted Helen Gosch, who had moved from DEFRA to the Home Office to come back and account for the mess she had made administering the rural payments agency, paying farmers late, paying them the wrong amounts and having to send money back to Brussels because of the errors. She refused our invitation and only caved in when I ordered her to appear.”

More protection for whistleblowers please

“We try to use our analysis of past expenditure to improve spending in the future; understanding problems with past rail investment can help improve the delivery of future projects. We take regular evidence on the big change programmes, like Universal Credit or the Probation service.

“And I take seriously the material I get from whistleblowers. My time on the PAC has strengthened my respect for whistleblowers. Without them, we would have been less effective on tax avoidance and on the performance of private companies receiving taxpayer’s money to deliver public services.

“A major regret for me is that I was unable to prevent the treatment meted out to Osita Mba by HMRC. He was the official who sent us the documents on the Goldman Sachs affair. The department used the Regulation of Investigatory Powers Act, designed to get terrorists, to get into not just his emails and phone calls, but into his wife’s phone records. In the end he couldn’t stand it any more and quit HMRC. We clearly need to do more to protect whistleblowers.”

Investigative journalism

“I am also probably one of very few MPs who has a good word to say about journalists. From  eye Eye to the Times and from the Guardian to Reuters, their fantastic investigative work (when they do it properly) has helped us uncover abuse, malpractice and waste in a way we just couldn’t have done without them.

“For despite the excellent work produced by the National Audit Office, they are constitutionally separate from and different to the Parliamentary Committee. So we need our independent sources of help.”

My goal

“Unlike our American counterparts, who have 120 staff working to their committee, 80 working for the majority party and 40 for the minority party, we have a small committee staff who focus purely on process.

“If select committees are to increase their effectiveness they need to be better resourced. It’s partly about people, although I would hate to mirror our American colleagues because their system is very much more partisan.

“But it is also absurd that when we wanted to hold an international conference on tax avoidance we were told we had no money. It is just plain wrong that when we wanted to test whether a parliamentary committee should have access to company tax files to hold HMRC properly to account, we were unable to fund legal advice to support our case that HMRC should be accountable to us.

“Both the NAO and HMRC paid for expensive legal advice to oppose us. We had no money to secure our own advice.

“Select committees should have clear statutory powers to call for all papers and people to help them hold the Executive to account. We still don’t know whether Vodafone should have paid £6bn or £2bn with an interest free staging of the payments when they settled their tax bill with the Revenue. We should know and you should too…

“Reflecting on what I have said may leave you thinking everything is wrong. I know that there are many brilliant public sector workers and many stunning public services.

“Inevitably our work focuses on the problems and the challenges. But I come at it with a determination to seek and secure improvements. Because I care about public service and because I passionately believe in the power of public services to transform people’s life chances and to create greater equality in our society. That is my goal.”

Comment

One of the striking things about the PAC is the way it leaves crude tribal party politics at the door. That’s one of the reasons it’s quietly disliked by some senior officials: they cannot condemn the committee’s partisanship. It produces 60 unanimous reports a year. But do they make any difference?

One irony is that senior officials cite the PAC as a key Parliamentary device holding them to account. They lasso and rope in the PAC for their own purpose.

The work of the PAC in holding the civil service to account is cited by lawyers for the Department for Work and Pensions in repeatedly refusing to release four old Universal Credit documents.

In reality the PAC does not make much difference to the way Whitehall departments are run. But waste would probably be much greater if it didn’t exist.

What’s not in doubt is that Hodge is a great chairman of the PAC. If anyone can change the price of fish she will.

Governup

Lives ruined by IT glitches? Post Office officials face the critics

By Tony Collins

post officeAfter dozens of subpostmasters were jailed, bankrupted or lost their livelihoods because of irregularities and shortfalls they say were not their fault, MPs met on Tuesday [3 February 2015) to question senior Post Office officials and their critics.

It was the first time, in public, that Post Office officials have answered a comprehensive set of points made by their critics.

Ian Henderson of forensic accountants Second Sight, who were brought in by the PO to investigate possible miscarriages of justice and complaints by subpostmasters, made some trenchant criticisms of Post Office IT, processes, attitudes and culture.

Dozens of subpostmasters were accused of false accounting, fraud or theft because of shortfalls in their daily balances that, they say, were due to  a lack of training or IT problems related to the Post Office Horizon system.

Some were jailed. Some have had their lives ruined by having to pay back to the Post Office tens of thousands of pounds they say they did not owe. Some have had to sell their homes to pay the Post Office.

Those answering questions at a hearing this week of the House of Commons’ Business Innovation and Skills Committee included Paula Vennells, Chief Executive of the Post Office.

The uniqueness of the hearing and the incisiveness of the points raised make it worthwhile to report on the proceedings in depth. Excerpts are below.

The campaign for justice is important not only because of the impact that accounting discrepancies have had on the lives of more than 150 subpostmasters but because of the wider questions:

–  how has it come to be that the output of a computer system has been trusted over the integrity of individuals who are – were – pillars of their local communities?

– should independent controls exist to ensure innocents are not branded criminals because of output from a complex system that has multiple interfaces and known fallibilities?

Excerpts from Business, Innovation and Skills Committee, House of Commons, 3 February 2015.  Witnesses:

– Andy Furey, Assistant General Secretary, Communication Workers Union

– Mark Baker, National Branch Secretary, Postmasters Branch, Communication Workers Union

– George Thomson, General Secretary, National Federation of Subpostmasters

– Alan Bates, Chairman, Justice for Subpostmasters Alliance

– Kay Linnell, Chartered Accountant, Kay Linnell & Co, adviser to the Justice for Subpostmasters Alliance

– Ian Henderson, forensic computing expert, Advanced Forensics (Second Sight Ltd). The Post Office commissioned Second Sight to investigate complaints by subpostmasters.

– Paula Vennells, Post Office Chief Executive

– Angela van den Bogerd, Head of Partnerships, Post Office Ltd

 

Mediation Scheme [set up by the Post Office in August 2013 to deal with complaints by subpostmasters that they have been incorrectly blamed for shortfalls in daily balances shown on the PO/Fujitsu Horizon system].

Paula Vennells: “As you have heard, 136 cases have come into the scheme. We set it up [the mediation scheme] with the ambition to find out exactly what those people are concerned about, because it is of concern to me and the Post Office that we do that…

“What we have seen from the scheme is that yes, as you heard earlier, it has taken longer than we would have liked. The reason for that – this is one of the benefits of having put the scheme in place –  is that we have investigated every single case in the most thorough detail.

“We have been rigorous about this. As chief executive of the Post Office, I could not put this scheme in place and not do it properly. The system and the people who work in our branches are too important for that.

“Perhaps the most significant finding from it is that we can continue to have confidence in the Horizon system and how people are running post offices across the country…”

**

Andy Furey (Communication Workers Union): “Our concern overall is the hundreds of postmasters who seemingly have not had justice.

“They were dismissed for irregularities that were not down to them as individuals or their staff, and which are seemingly a problem of the system.

“We were pleased that the mediation scheme was erected and set up, but we do not think it has delivered as it was envisaged to in the first place. We are concerned about the pace of the process of mediation, and the number of cases that seem to have fallen out of the process. Overall, we are not particularly happy with the way that the mediation scheme has been conducted.

**

Angela van den Bogerd (Post Office):  “I am part of the working group, and I have been the Post Office person who has been in there from the start until today. As you heard earlier, the investigation—the whole process of cases into the mediation scheme – has taken longer than we all anticipated it would, at every stage, from the applicant putting in their initial application, through to asking whether they want an investigation to Second Sight doing theirs.

“These are individual cases and very complex. What we have wanted to do, and are very committed to doing, is a thorough investigation of each of the issues raised by each of the applicants to the scheme. That has been a very long process.

“We have not dragged our feet. I have had 20 people working on this full-time for over a year. We have produced thousands and thousands of pieces of evidence in support of each of the cases that we have put.

“I would have liked it to have been quicker, but not at the expense of a thorough investigation.”

George Thomson (National Federation of Subpostmasters):  “Can I just say, firstly, 99% of postmasters are dead straight and honest? But on this very important issue about mediation, I think it was probably the training.

“Some people believe that money went missing and it had to be Horizon where it was maybe staff error. But the third point, and this is contentious, the difficulty the Post Office must have is that some of the people are chancing their luck…

**

Alan Bates (Justice for Subpostmasters Alliance): “… from what I am hearing from the membership who received these [mediation] reports of their cases from the Post Office, basically the Post Office are saying that they have done everything right and the sub-postmaster did everything wrong. That seems to be the summary of the majority of the cases at the moment.”

**

Mark Baker (Communication Workers Union):  “I have three members in the mediation scheme and from our experience, it is agonisingly slow. I have only got one member who got to the stage where he gets the Post Office response…I do not know why Mr Thomson comments on the mediation scheme; he does not have any members in it.

“The scheme could do with some form of external body sitting on it that could perhaps keep the pace of progress going a bit faster and maybe offer a bit more of a robust challenge to the Post Office on some of the reasons it gives why things have to be done the way they are. ..”

**

Kay Linnell (Fellow of the Institute of Chartered Accountants and Liveryman of the Worshipful Company of Arbitrators): “The reason the working group is not as fast at pushing this scheme through to mediation as it was, is because some of the goalposts have been moved by the Post Office…”

**

Katy Clark (Labour MP and member of the Business, Innovation and Skills Committee): “Is there anyone with an IT background on the mediation scheme?”

Vennells: “The mediation scheme is the scheme where the individuals go into -”

Clark: “I understand that, but can you answer the question of whether there is anyone on the scheme with an IT background?”

Vennells: “When you say on the scheme, as part of the working group? No, there is not.”

Clark: “Are you aware that that is a major criticism?”

Vennells: “Yes, I am.”

Clark:  “Are you able to address that at this stage?”

Vennells:  “For each of the 150 cases for which we have now concluded our investigations, where there have been IT issues, we have looked into those and taken the right advice from our IT experts in the business. Yes, we have.”

**

Contract between Post Office and subpostmasters

Kay Linnell:  “When the Post Office moved to a computerised system in 2000-01, they did not amend the contract between the sub-postmasters and the Post Office. The individual subpostmaster remained totally responsible for all gains and losses, but they were no longer able to check each and every transaction because there were no slips.

“My understanding is that the Post Office had to pay for metadata from their contractors Fujitsu. This meant that when a shortage or overage arose and subpostmasters tried to investigate it and asked the Post Office about it, there was an extreme reluctance to investigate each and every shortage or overage…”

**

Ian Henderson (Second Sight, forensic accountants investigating individual cases):  “Over a period of time, Post Office has quite sensibly introduced a number of system changes.

“Some have benefited sub-postmasters and Post Office, of which the changes to lottery and scratch cards are a very good example.

“Bearing in mind that, under the contract, the sub-postmaster is responsible for making good all losses, I am concerned that a number of those process changes have reduced costs to Post Office or have benefited Post Office, and have acted to the disadvantage of sub-postmasters.

“A number of those changes have been implemented without any consultation or adequate consultation. I am concerned that, over time, Post Office has been gradually transferring risk from itself to sub-postmasters, which is ultimately being reflected in the losses they are bearing…

“While the contract has been changed in part, it has remained substantially the same for 20 or 30 years. We think that it does not provide sufficient safeguards for sub-postmasters.

“For example, there is no entitlement to investigative support. We have been told that many sub-postmasters were not even provided with a copy of the contract.

“In the contract, it states that investigative support will be provided only in cases of suspected criminality – in other words, if a criminal prosecution can or may be brought by Post Office.

“It does not seem to cover a situation where a sub-postmaster identifies a problem, has exhausted all the readily available help mechanisms and wants some serious, professional help from a trained Post Office auditor.

“To his surprise, he will find that he has no entitlement to that. Bearing in mind that Post Office holds all the data, we find that surprising. In the context of modern business practices and best practice, we think that that is unfortunate.

“Our view is that the contract needs a fundamental overhaul to reflect far better an appropriate relationship. It strikes us that it is written very much in words reflecting a master/servant relationship that perhaps was appropriate 70 years ago but should not be part of a modern contract.

“Sub-postmasters are described as partners, but it is certainly not a partnership of equals. The risk is largely borne by sub-postmasters, and some of the changes that have happened recently have benefited Post Office.”

Training

Brian Binley (Conservative member of the Committee): I would like to take a vote. Was the support and ongoing training good enough when this sizeable system was launched? Yes or no?

George Thomson: Yes.

Andy Furey: No.

Mark Baker: No.

Alan Bates: No.

Kay Linnell: No.

**

Mark Baker: “As a serving sub-postmaster, live, as we speak—I should be back at the branch, but I am here—perhaps I should tell you that training is generally received by serving subpostmasters through the form of manuals. We call them Branch Focuses.

“They arrive every week and we read them to receive training and instructions on how to operate certain transactions. They are hopeless.

“My wife prepared a 54-page dossier, randomly taking one month’s selection of Focuses and highlighting all the misinformation and errors contained within them, which she sent to the board of directors. She did not get a single reply from any director.

“The file was passed on to a functionary further down the line, who made a hopeless job of trying to explain everything my wife was trying to point out. She was trying to point out that we are reliant on receiving the correct instructions in order to be able to operate Horizon and perform the transactions, and the people who are telling us how to do it cannot even get it right. That is the reality in the Post Office world as we speak today.”

**

Mark Baker: “The training started off reasonably good, but as the system evolved there was no back-up training of any adequacy. Postmasters are just sent manuals and are expected to not only teach themselves but have to teach their staff as well. So training is a huge issue.”

**

Alan Bates: “I was also involved with the training at that point when the system came in, and I was a sub-postmaster then. I had one and a half days’ training, my staff had one day’s training and I believe that the regional people who worked for the Post Office had two and half days’ training.

“I, too, received a 500-page pack to take away and learn how to use the system afterwards. That is how it was dropped on everyone. I had five members of staff who did training at that session. One of them had never even turned on a computer before, but she did a day’s training and then she was certified as being sound and correct and fine to use the system at the end of one day.

“It was madness; she had no idea what she was doing. Staff were just abandoned at that point.”

 Chaotic IT?

Mark Baker: Apart from representing postmasters nationally, I am still a serving sub-postmaster. I have been doing the job now for 27 years, and 10 years prior to that I was working for the head Post Office. Horizon was introduced for a specific purpose: mainly to fulfill the wishes of the Department for Work and Pensions to have more automated process for pension allowances.

“Horizon could also do other things in its early says, but its basic requirement changed as the DWP changed their requirements and the Post Office needed to use Horizon for more commercial reasons and had developed application upon application upon application. They had more and more data centres talking to each other, exchanging information.

“It is a very chaotic, behind-the-scenes set of circumstances in IT terms.”

Glitches?

Ian Henderson: “… the Post Office disclosed to us that a number of software defects had been identified that affected 76 branches. It took some time for those defects to be identified—somewhere in the order of 12 months.

“A feature of a number of the matters reported to us appeared to be the old and unreliable hardware that features in the Horizon system – old Horizon and new Horizon.

“We have heard about communication failures and the consequences of that. We have been advised that approximately 12,000 communication failures occur each year, and all of those can have consequences for sub-postmasters…

“Particularly under new Horizon, the servers are located centrally. All the branches, and indeed Crown offices, have to communicate electronically with those servers. There are fall-back procedures…some rural branches have broadband and technology problems. Some of those branches also suffer from a poor mobile phone signal…

“Failures are inevitable with that infrastructure. In general, Horizon has a robust recovery mechanism to cope with those failures. The cases we have looked at are primarily the 150 applications to the mediation scheme.

“They have shown that when there has been an unusual combination of circumstances – they are relatively rare, and I would emphasise the point made previously that, most of the time, Horizon works well – such as power and telephone communication failures, errors being made at the counter or some of the other errors that we have now highlighted and that we will report on in our next report, it is how the Post Office has responded to those that has contributed to the problem. This is partly about a lack of training, partly about a lack of support and, in particular, about a lack of investigation.”

**

Kay Linnell:  “If you talk to anybody who has served in one these smaller, independent subpostmaster branches, you will see that there is a succession of people who have had problems with the hardware, the software or the support, and there are unanswered questions as to why the differences arose—small or large. It is that not knowing how the difference arose for which they are responsible that has, frankly, driven some of them to the edge of sanity.

**

Mark Baker:  “I think there are a lot of areas which have been highlighted since Second Sight issued their first report. I have the benefit, because it was issued to one of my members, of reading their report that they prepare for the mediation scheme, where they are now highlighting lots of areas that have the potential to cause discrepancies.”

**

Andy Furey: “I think it is that question of whether there are some glitches in the system that have created problems for some individual postmasters. Let me put this into scale. There are 11,500 post offices and 30,000 or 40,000 Horizon terminals up and down the length and breadth of the country, so this is not a wide-scale problem, but nonetheless it is a problem for the individuals who were impacted, who have lost their livelihoods.”

**

Mark Baker: “There will always be human error when humans interact with computers. However, what has been systemic and consistent throughout Horizon’s life is the failure to recognise that parts of the infrastructure could be to blame for some of these discrepancies occurring.”

**

Kay Linnell: “We have evidence of historic failures. A lot of the connections on very complicated things like ATMs were done through a mobile phone connection, which sometimes dropped before both ends of the transaction were captured…”

**

Mark Baker: “I have a lot of experience in another life in IT network systems working over virtual private networks, and I have been doing a lot of research into data flow disruption. Horizon just produces packets of data. It has to be transmitted, and it needs a secure network over which to be transmitted. The ADSL lines are not interleaved. If you do not interleave an ADSL line and put other equipment on it, you run the risk of disruption happening to the data flow.

“Power can cause the same kind of disruption. The infrastructure in branch has not been maintained at all since it was introduced. The power lines have never been checked. The plugs have never been PAT tested.

“The trip control switches, which are designed to protect the electrical circuitry, have never been looked at since the day they went in. I have no idea whether they still work, so what damage can power surges and power outages cause.

“The interaction of Horizon when it loses its ADSL connectivity for whatever reason and defaults to its modem is another area of concern to me. We are doing highly encrypted secure banking transactions on a mobile phone chip, and that is a recipe for disaster.

“In the rural areas, it will be worse than in the urban areas. Urban areas get the same problem, but in the rural areas, you are a long way away from your BT exchange.

“The signals are not always very good if you have to go on to the backup through the modem, and it is a recipe for disaster. This is not only my opinion. Second Sight have raised this issue, particularly if you read the report that they have provided to the mediation scheme.

**

Angela van den Bogerd: [Regarding telecommunications problems and a loss of power]. “The system is designed to cope with that. If there is a loss of power or of communication mid-transaction, none of those data are lost. It freezes in time, and when the system comes back on, the screen asks the user to give it some information about what point in the transaction you were at. Did that transaction complete? Had you given money? Had you taken money?

“That recovery process, as it is called, actually resets the system to that moment in time, so no data are lost. Yes, it is inconvenient, and yes it is frustrating for branches and sub-postmasters and assistants, who want serve their customers, but that does not cause the discrepancies that it has been claimed it does. It does not do that.”

**

Ian Henderson:  “In terms of IT support, we are concerned about some of the interfaces with third-party partners such as Bank of Ireland and other banks, ATMs and so on. The issue is those interfaces and the flow of information from those third parties, which of course would not happen in a high street bank where everything is integrated. It is those third-party interfaces that seem to cause a disproportionate number of problems… In 2009, when the Post Office performed an audit of 20 branches relating to the lottery scratchcards. Those 20 branches caused £147,000 in losses, and as a result of that, certain process changes were eventually developed.

“In 2010, over a three-month period, more than 1,000 transaction corrections –TCs – were issued to branches, the financial value of which was £744,000.

“To our minds, that indicates that there was a system-wide problem with lottery scratchcards. Two years later, the Post Office introduced a number of changes that largely prevented that problem occurring. However, it was three years before those early problems that had been identified were fully resolved, and I am sure there were other examples.”

Mike Crockart (Lib-Dem member of the Committee): “And during those three years, sub-postmasters would have been expected to make up the loss?”

Henderson: Correct.

Angela van den Bogerd:  “We have tried to automate products, so that less human interaction is required. In the case of lottery scratchcards, those error notices were particular to cases where sub-postmasters had sold scratchcards before they had booked them in.

“They were selling scratchcards with a value of, say, £200 that they had not actually booked into that account. So they would have had a surplus of £200, which if you scale up reaches a sum of £700,000. So it is not an actual loss; it is just that they have accounted for it incorrectly at the start.”

Aren’t Crown-owned Post Offices hit by discrepancies?

George Thomson:  “If there was a systemic issue … there would be big problems in the Crown offices as well. I cannot recall a single big issue where someone in Crown offices has blamed Horizon.

“If it was systemic, it would be a nonsense to suggest that the only time there are computer faults is to do with independent sub-postmasters or franchise sub-postmasters; and yet there does not seem to be any noise at all that has developed with the Crown offices over 15 years. That is very strange, given they are doing 16% of all the volumes.”

**

Alan Bates: “One of the few documents that has come to light in all of this is a 2007-08 internal report from the Post Office, which showed that the Crown offices lost £2.2m across their counters that year. So Crown offices do lose money.

Henderson:  “Crown offices have one significant difference compared with branches: they have the ability to write off losses up to certain levels. A sub-postmaster cannot do that; he is accountable for every penny.

“If there is a discrepancy, he has to make that good. The same principle does not apply to Crown offices.

“Another of the outstanding questions we have put to Post Office is that we want data comparing and contrasting losses written off by Crown offices and the equivalent losses borne by sub-postmasters.

“Our work to date has indicated that they both suffer from the same underlying problems. However, the solutions are very different because, generally speaking, a sub-postmaster cannot write off a loss; he has to make it good.”

Is the Federation of Subpostmasters supporting members hit by shortfalls?

Alan Bates: “The reason why the Justice for Subpostmasters Alliance was set up was that the Federation refused to support sub-postmasters in any cases about Horizon. It never once supported people in court cases or anything like that.

“It was just saying to people, ‘Right, you’re saying it’s a Horizon problem. Oh, I’m sorry. There’s nothing wrong with Horizon. The Post Office has told us there’s nothing wrong.’ That is why the JFSA came about. Every one of our members wants their dues back from the federation because of its so-called support -or lack of support – over the years.

“It is really frustrating to have to sit here listening to somebody who is meant to be representing sub-postmasters – it is like they are in a paid position in the Post Office.”

**

Kay Linnell: “Frankly, it [the Federation] is supposed to be representing sub-postmasters who have lost their livelihoods, their homes, their money and their reputation because of faults put at their door by the Horizon system.”

**

George Thomson: “We have to be careful that we are not creating a cottage industry that damages the brand and makes clients like the DWP and the DVLA think twice…

“We pay out £18bn a year for the DWP in Government benefits. The DWP would not have re-awarded the Post Office card account contract … in the last month if they thought for a minute that this computer system was not reliable…

“If we are not careful, we damage the brand, we damage the franchise and we cost my members’ ability to sell the franchise.

“If we lose big contracts, Andy’s members lose their jobs as well. So we have to be careful that we do not create a cottage industry that is built on supposition.”

Proper investigation of shortfalls?

Kay Linnell: “My understanding is that the Post Office had to pay for metadata from their contractors Fujitsu. This meant that when a shortage or overage arose and SPMs tried to investigate it and asked the Post Office about it, there was an extreme reluctance to investigate each and every shortage or overage.

“When they [subpostmasters] made calls to the helpline supporting them, these were not dealt with, or were marked with low priority…”

**

Mark Baker:  “The Post Office failed to recognise that they needed to drill down into each and every kind of discrepancy – whether that was a surplus or a shortage is irrelevant: it is a discrepancy; and refused to look at their system and analyse, ‘Is it fit for purpose in the modern day? Is it independently audited by accredited IT professionals?’

“It was not supporting the postmasters – the ones that find themselves in the JFSA group – or looking into their cases. Why has that happened over the years that Horizon has been in life? That very much is the core reason why we find ourselves here today.

**

Alan Bates:  The Post Office never investigate cases if a sub-postmaster has an issue. If they raise that they have a problem, they suddenly get landed on by Post Office’s audit and, more than likely, they will be thrown out or even charged afterwards.

“That is what has gone on in the past. I think they are trying to change it these days, but I do not know how successful because two or three new people a week call me, and these are serving sub-postmasters having problems as well. There are ongoing issues.

**

Henderson:  “… we think that there have been prosecutions brought by the Post Office where there has been inadequate investigation and inadequate evidence to support some of the charges brought against defendants -sub-postmasters and former sub-postmasters.

“In particular, we are aware -this, again, is why we need to see the full prosecution files – that a common tactic employed by the Post Office, or lawyers acting on its behalf, is to bring charges for both false accounting, which is a relatively easy charge to prove, and theft; then, as a bargaining point -a plea-bargain, almost – before trial, they drop the charge for theft on the basis that, first, the defendant will probably avoid a custodial sentence and, secondly, the evidence is much simpler.

“When we have looked at the evidence made available to us – bear in mind that I have been an expert witness for the Crown Prosecution Service, instructed by the CPS on fraud cases – I have not been satisfied that there is sufficient evidence to support a charge for theft. You can imagine the consequences that flow from that. That is why we, Second Sight, are determined to get to the bottom of this matter, which we regard as extremely serious.”

How many postmasters are affected?

Mike Crockart:  “I want very briefly to try to get a feel for the size of the problem because we are talking in generalities here. Andy, you just said that hundreds of postmasters have had this problem. How big is the problem? How many postmasters have reported incidents?”

George Thomson:  “I will put it in perspective over the whole 15 years. At one time, 100,000 postmasters and their staff were dealing with Horizon every week on the computers when the network was bigger; that is down to 50,000. It has always been a tiny amount. Going on to Paul’s point to put it together, some of it is training. A small element is that –

Crockart: “I am trying to get an idea of the size of the problem. You said that it is a small number – what does that mean?”

Thomson: “It’s tiny, because you are talking about something in the region of more than 30 million transactions every single week. It used to be about 60 million transactions.

Crockart: “The question was: what number of postmasters are affected by this? Perhaps I can turn to somebody else.”

George Thomson: “Tiny.”

Alan Bates: “During the 12-week period in which the mediation scheme was open, we had 150 people apply for it. Since then, probably a similar amount have been trying to get into the scheme, but it is closed.

“Before that, the JFSA was going for maybe two or three years and we had probably a similar amount. There are still people finding out about all of this all the time, so it is a growing number.”

Crockart: “There are 150 in the mediation system and roughly 150 that you know about that would have liked to, but have missed the boat.”

Bates: “And there are more coming along.”

Did postmasters have full control over their accounts?

Kay Linnell:  “The problem that the members of JFSA and the complainants have is that the analysis and evidence has not been produced…  What has happened with the small sub-postmasters is that, even where there is only the subpostmaster operating the tills, money has gone missing which is outwith their control.

“For example, if cash collection is picked up and remitted to head office, it is sometimes not logged against them in head office and a shortage arises.

“Sometimes, an entry goes through -a transaction correction or credit – and they do not know about it. Although the sub-postmaster is personally responsible to pay cash, they are not aware of how the differences have arisen.

“If this mediation scheme had told the complainants – the applicants – where the money had gone, there would be a lot of settlements, but we still do not know. The accounting is outside the subpostmasters’ control.”

Binley: “But how can the sub-postmaster be responsible?”

Linnell: “Because, under the contract with the Post Office, they are responsible…”

Binley:  “How can they be expected to be responsible when in fact they do not have the tools to carry through that responsibility? Is that the nub of it?”

Linnell: “That is absolutely the key question.”

Support when things go wrong?

Linnell: “People today are still getting shorts [shortfalls] and overs [surpluses] on a daily basis and still have no clue why the accounting systems that they can see do not balance.

“To my mind, that is the support that the subpostmaster on the ground needs today. Helplines are all very well, but you get a person on the end who may log the call and mark it low priority. That doesn’t help you.”

**

Ian Henderson: “The core system – the software, for want of a better word – works well most of the time. Like any large system, it occasionally generates errors. Our concern is the response by Post Office to supporting sub-postmasters when they face those problems.

“Yes, there is a helpline facility, and, yes, training is provided, but there is no formal investigative support.

“Under the contract, sub-postmasters are not entitled to investigative support when they say, ‘Look, we’ve got this discrepancy. I don’t understand how it happened.’ They are left largely to their own resources, supported by the helpline and so on, to get to the bottom of those problems.

“As we have seen time and again, they have failed to do that. In some cases, Post Office has refused to provide information to them on the grounds of cost – this comes back to the contract with Fujitsu. They say, ‘It is too expensive. It is outside the terms of our service level agreement. We cannot provide you with the detailed information that Post Office holds.’ It is not prepared to disclose that information to sub-postmasters, even though, under the contract, it has a legal obligation to make good those losses. It is matters such as that that we are looking into.”

**

Paula Vennells:  “We monitor very carefully the training and support that we give. The first point that I want the Committee to hear is that there are always opportunities for us to do it better. I have no doubt about that; it applies to any organisation. We are not perfect, and we continually try to improve things.

“The satisfaction rate for the support desk for the sub-postmasters is running at about 87%. It has improved since we put in place changes last year, but it has always been good.

“As you heard from George Thomson, the vast majority of people have no issue with the system, and they are actually quite satisfied with the training and support around it. We are dealing with a very small number of people who have had some really difficult things happen to them.

“Going through this process, which Angela has built on, we have learned where we could have done some of those things better. However, that is not to say that throughout that period—we are talking about 10 years—the system, the support and the training were not good. In the vast majority of cases, they were. Angela will tell you about what we have done and the improvements that we have made.”

**

Angela van den Bogerd: “If a branch finds that it has a large unexplained loss, the first port of call is for them to ring the helpline. There is a process in place for them to be helped remotely. If the helpline cannot solve their problem at the time, it goes to another team—a branch support team, which has a bit more expertise and can dive a bit deeper into the information.

“If that fails, we send someone out to visit the branch and see if they can help them there. That process is in place.

“Looking back over the cases that we have investigated, we could have done that a bit better in some of those cases. It is not that there is a culture of denial here. I have personally been involved in each of those 150 cases and got into the detail.

“Where we could have done better – it is only a handful of cases – we have absolutely said that. I cannot accept that we are in denial about that, because we are looking at it…

Is PO/Fujitsu forthcoming with information?

Ian Henderson:  “I have spent a lot of the past 12 months, frankly, dealing with Post Office, requesting access to documents that have been challenged, as I understand it, on legal advice.

“One issue we have been looking at relates to the Fujitsu office in Bracknell. We first requested documents relating to that in February 2013 – almost two years ago. We have still not been provided with those documents.

“We are very concerned about the operation of the suspense account by Post Office. We have been asking for that information since July last year. Perhaps the most important failure to disclose to us is the full access to the legal and prosecution files.

“When this scheme first started we were given full access to those files. Again, presumably on legal advice, that access has been extremely restricted. We feel that this is a very severe constraint on our ability to conduct an independent investigation into what has happened.”

**

Alan Bates: “It [the mediation scheme] was originally launched in 2013 and it closed on 18 November that year. There were thoughts that it would be a matter of weeks for the Post Office. I think the Post Office allowed four weeks to look at cases and investigate them, whereas it has been taking them four, five, six or seven months to investigate a case.

“Second Sight is also taking not quite as long, but it is certainly taking considerably more time to investigate these cases. So it is taking far longer than was thought. One of the problems is trying to get hold of information. I think people have been struggling to get hold of information from Post Office and from Fujitsu down the way to investigate records. No, it is not satisfactory how long it has taken. You are quite right.”

**

Angela van den Bogerd:  It is not that we are not sharing information; it is about understanding the format the information is in.

**

Paula Vennells:

Second Sight are independent; there will be disagreements about requirements for information at some stage. I do know that where we are able to we have shared everything we possibly can.

**

Nadhim Zahawi (Conservative MP on the Committee):  “Mr Henderson, did you ask for the e-mails from 2008?”

Henderson: “Yes, we did.”

Zahawi:  “And you were provided with 2009 instead?”

Henderson: “We were provided with 2009. We were told at the time that with the first batch there were some technology issues relating to the provision of the 2008 e-mails. Two years down the line, we still don’t have those.”

Zahawi:  “You are saying that you actually asked for the correct ones, and you still don’t have those?”

Henderson: “Yes.”

**

Henderson:  “The final category, and probably the most important, is full access to the legal and prosecution files held by Post Office.”

Chair: “I understand that they did do that initially.”

Henderson: “Initially, yes; but for the past year access to those files has been blocked…”

**

Henderson: “When we were first appointed, we were told that the principle behind what we were doing was to seek the truth, irrespective of the consequences.

“We could look at anything that we felt,  as an independent investigator, was necessary to conduct our investigation. Unsurprisingly, with cases that came into the early part of the scheme that involved a criminal prosecution, we were provided with full access to a small number of files.

“As further cases were accepted into the scheme, we unsurprisingly asked for full access to those legal files. Responses were to the effect, ‘Under no circumstances are we going to give you access to those files. You are entitled to the public documents that would normally be available to the defendant if the case had gone to trial.’

“We felt it was necessary for us to review the internal legal files, looking at the depth of any investigation that had happened and possibly even legal advice relating to the prosecution…”

Zahawi:  Angela, will you provide it? If your CEO cannot answer, will you provide the prosecution files as requested by Ian Henderson?”

Angela van den Bogerd: Mr Zahawi, as Ian said, we have previously provided them, and we have provided the information necessary for those investigations as a pack. So there are thousands of pieces of information already provided to Second Sight.”

Zahawi:  “But we have heard already that he has been obstructed from getting the legal files that you use internally, which he used to get before. That is what I have heard. Will you now commit to providing those files going forward?”

Angela van den Bogerd:  “We provided them to Second Sight early in the investigation.”

Zahawi: Will you provide them?

Angela van den Bogerd:  “Just let me finish, please. We have been working with Second Sight over the last few weeks to get to an understanding of what we need to provide. We are working through those, and information has been flowing.”

Zahawi: “So you do not understand what you need to provide?”

Angela van den Bogerd:  “We have been providing what we agreed we would provide at the outset. In some cases, Second Sight have concluded their investigation on that basis. What has been asked in the last few weeks is for access to further information that we were not providing under the agreement that we had.”

Zahawi:  “What he is asking you for – there is no wriggle room – is to provide the prosecution files going forward. Will you commit to doing that? That is all I am asking.”

Angela van den Bogerd: “What I am saying is that we have already been exchanging that information over the last few weeks.”

Zahawi: “So you have been providing them?”

Angela van den Bogerd:  “We have been providing that over the last few weeks.”

Zahawi: “Is that right, Mr Henderson?”

Henderson: “No, it is not, I am sorry to say…”

**

Henderson: “Chairman, may I add something by way of clarification? It is the general counsel of Post Office, to whom I have spoken, who said that he is not prepared to disclose to us the full legal files. I do not know to what extent he gave the same answer and advice to the chief executive of the Post Office.”

Binley: “Thank you, Mr Henderson.”

Chair: “That is very helpful indeed. Could you just repeat who it was for the record?”

Henderson: “The general counsel -the head of legal for Post Office.”

**

 PO approach to mediation dominated by lawyers?

Alan Bates:  “At the outset, the people who were involved with it, JFSA, Post Office and Second Sight, all thought we were doing one thing. We were heading in one direction.

“But since the scheme has moved forward, I think we are finding ourselves at odds with each other. People are becoming far more partisan in their approach. Post Office has gone straight to lawyer-based support and response to queries. So it has become very unsatisfactory.”

Culture of denial?

Paul Blomfield (Labour MP on the Committee)  … “It appears that there is a culture of denial about the problems…”

Vennells:  “In terms of the culture, the reason I came today, is that I really want the Committee to hear that that is not the case. We put this scheme in place because we wanted to find out what was going on.

“Inevitably, because of their distress, the people who have gone through this are very vocal and very challenging about what they have been through – quite rightly so. As we have gone through the investigations, we have looked at where there are things we could improve. There were things that we could improve, absolutely.

“The only point I am trying to make to the Committee is that for the vast majority of people—70,000 people are using the system today, and half a million people over the last 10 years have not had those problems.

“I am not denying at all that there are problems. Of course there are—there are problems in any organisation – but this is about the reputation of the Post Office.

“This system works well for the vast majority of people. For those it does not work for, we are doing our utmost. I have worked for huge businesses before, but I have not worked for any that could have done this as well as we have, in terms of our rigour and the detail we have gone into to try to get to the bottom of this.”

Blomfield:  “We have heard considerable evidence from all involved that the system usually – overwhelmingly works well, but the focus of this inquiry is how the Post Office handles that small number of cases where it does not.”

Vennells: Yes.

**

Henderson:  “On the culture point, until we issued our interim report, the mantra that we regularly heard from Post Office was, ‘Horizon is perfect. We have total confidence in the Horizon system’.

“That position is slowly changing; however, in the limited cases that we have looked at – we are very concerned about the prosecution cases – we have seen no evidence that the Post Office’s own investigators were ever trained or prepared to consider that Horizon was at fault. That was never a factor that was taken into account in any of the investigations by Post Office that we have looked at…”

Audit trails

Angela van den Bogerd: … “The information that the sub-postmaster needs to balance their accounts is available in branch. There has always been an audit trail in branch. Before we went on to the online system in 2010, the reports were available for a period of 42 days.

“They could look back into their accounts for 42 days. Since 2010, that has extended to 60 days, so the information has always been available in branch. The difficulty with some of those cases is that they did not declare their loss at that time. In some cases, they have hidden the loss and falsified their accounts, and we have only discovered later that the error occurred. Those reports in branch have then obviously expired.”

**

Ian Henderson: May I come back on a couple of points made by Angela? She is quite correct on the numbers that she has quoted, referring to the audit trail available to sub-postmasters; for a long time, there was a limit of 42 days. Unfortunately, the transaction corrections that they are asked to accept – if they do – often generate losses for that branch and that sub-postmaster.

“When the audit trail was 42 days, the delay in producing the corresponding TC [transaction correction] that they needed to investigate was in the order of three months. It was three months late, and therefore outside the 42 days of the audit period.

“That, I would argue, is another example of a systemic flaw in the overall process, because we have a mismatch between the TC – the adjustment made by Post Office – and the audit data available to the sub-postmaster.

False accounting

Henderson:  “False accounting is a relatively easy charge to bring. When we have spoken to sub-postmasters who have been charged with that – some of whom have pleaded guilty – their response has been, ‘I had no options; I was not aware at the time of the range of options available to me at the end of a trading period, when I was faced with a substantial discrepancy that I didn’t understand and hadn’t investigated properly, and on which I had had inadequate support by the help desk. I therefore did the only thing that I felt was possible or sensible at the time: I entered false figures into my month-end balances. I did that out of desperation because I did not know what else to do’

“Bear in mind that the help desk does not operate 24/7. At the end of trading periods, often when sub-postmasters are working late at night to try to resolve a significant discrepancy, the help desk is not even available.”

Angela van den Bogerd:  “The help desk has always been available after the trading hours of the post offices – until 10 o’clock at night, back in those days – and if they were unable to get hold of somebody, they were able to leave a message for a call back.

“There was always some access to help in those situations… a sub-postmaster has a choice. At the time that they make their balance and find that they have a discrepancy, they have a choice to declare that loss and make us aware of that, or – as happened in some cases, unfortunately – cover up that loss and hide it from the Post Office. That is false accounting.

As Ian said, that charge is quite easy to bring, because it is evident, but they have a choice at that point and they are not forced to do anything; it is a conscious decision.”

Are subpostmaster  “losses” in a secret PO suspense account?

Henderson:  “We know that every year Post Office takes the credit of its profit and loss account, generally a six-figure number, from a suspense account. The concern raised by a number of sub-postmasters is that some of those credits actually relate to transactions where they have suffered a loss.

“We have been asking for that data since July last year. We had a meeting with the new finance director of Post Office yesterday and we hope we will make some further progress, but it is already almost nine months since we first asked for that data.”

Thousands of abandoned helpline calls

Binley:  “Evidence has been submitted to us by a very high-level person, James Arbuthnot (MP – leader of Parliamentary campaign for justice for postmasters), who has been looking into this matter for a considerable time. As part of his evidence, he says: ‘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,’ and this is the bit that counts, ‘but tens of thousands of them were abandoned; they were not just made, but abandoned.’ Does that cause you considerable concern?”

Angela van den Bogerd: “… We do not want to have tens of thousands of calls abandoned … Obviously, as you are aware with contact centres, when people ring up initially, there might be other options that take them to a different route and they therefore go a different route and they put the phone down. It does not necessarily mean they are not answered.”

Destroyed documents

William Bain (Labour MP on the Committee):  “We have heard some evidence that some documents that could be relevant in mediation have been destroyed as a result of your particular policy. What steps are you taking to ensure that that does not happen?”

Vennells:  “As soon as we went into the scheme, I had a conversation – in fact, I have had it several times because I know that people are concerned about this – with Mr Arbuthnot and Mr Bates – to reassure them that nothing would be destroyed when the scheme was set up.

“Prior to that, we did not know that we were going into the scheme. We have a data retention policy that is the same as many businesses. Some of these cases are regrettably very old, so some of the data are simply not there. As soon as the scheme started, we made sure that we did not destroy any data related to it at all. That would have lacked integrity.”

Bain:  “And your policy is to keep everything from the last seven years?”

Angela van den Bogerd:  “Sorry, not everything. The seven years is the information in the Horizon system. The hard files for post offices are kept for six years. Within branches, there are different retention periods, but the majority of where we got the information from is the Horizon system, and that is seven years.”

Bain:  “Why did you make that particular distinction when you drew up the policy?”

Angela van den Bogerd:  “So normal retention policies for commercial organisations are for six years. That is in line, usually, with the statute of limitation. We have gone a little bit further with the Horizon system, where it is seven years.

“In branch, we ask them to keep some reports for two years and others for six years. It comes down to volume and how you store paper. That is a decision that most commercial organisations take, because it costs to store all the data.”

PO deficient  in duty of care to subpostmasters?

Chair: “Do you not accept that the Post Office has been deficient in its duty of care towards the sub-postmasters who are so important in reinforcing that positive brand?”

Vennells:  “Not at all, in terms of the vast majority. As we have said to you today, yes, in some cases we could have done better in terms of training and support.”

Improvements

Katy Clark:  “The Post Office will obviously be very aware of the high level of concerns among MPs on a cross-party basis about this issue – a huge number of MPs have been involved in the group that Sir James Arbuthnot has been involved with – and they have no doubt read the transcript of the recent Adjournment debate, which made very clear the anger among many MPs about how this whole matter has been handled. What do you think you are doing or could do to address these concerns?

Vennells:  “I completely understand that MPs are concerned, quite rightly, because people have suffered some pretty terrible things as a result of what has happened.”

Clark: “Yes, with people going to jail.”

Vennells: We have listened very carefully. We have been in contact with all the MPs. We offered all the MPs with constituents involved in the meetings, at the beginning of the process and throughout it, after the Westminster Hall debate—

Clark:  “I am not particularly concerned about the MPs; I am concerned about what the Post Office is doing to get its own act in order. What lessons are you learning from everything that has happened so that you can improve your organisation?”

Vennells:  “I think we have learned a number of lessons as we have gone through this. You have heard about the improvements we have made in training and support. The other thing that is important for us today is that the Committee can hear both sides, because the Post Office has put a huge amount – ”

Katy Clark: I asked a question, and I would like an answer to the question. What are you doing, or what have you done, to improve the way that your organisation works?

“For example, one of the issues that has been put to me is that there is a lack of qualified people within the Post Office hierarchy with whom it is possible for a sub-postmaster to have a discussion when there is a technical issue to do with the Horizon system. What are you doing to improve that, for example, and what other lessons have you learned?”

Vennells: I would say that that isn’t true. If sub-postmasters have queries, they can escalate them as high as they need to. I get phone calls and e-mails, and I personally take them on a regular basis.

Clark:  “But you are not an IT specialist?”

Vennells:  “If they have an IT query, I will immediately go to my CIO, and she is prepared to talk to any sub-postmaster about it. The organisation wants to help sub-postmasters to run post offices properly- of course we do- and we have put ourselves out as much as we possibly can.

“Where we have got it wrong, because human error happens, then we have put in really significant changes in terms of the training and support that is available. The fact that you can access training 24/7 has to be a significant improvement.

“We have set up a branch user forum – we have sub-postmasters coming to it who are very critical of us, which is why we did it – is to learn the things that we can improve.

“We would not have wanted to be in this situation. As soon as I found out about it, we set up the [mediation] scheme. We put in hours and hours and hours of detailed work to make sure that we have done investigations as thoroughly as we can. At the same time, we have a list of things that we will deal with as we go along.”

Clark:  “What do you think needs to be done as a result of everything you have learned from that process so that these kinds of problems do not happen again?”

Vennells:  “We have outlined some of those things already, such as the way that we listen to sub-postmasters through the branch user forum, and the training. It seems to me that one of the big issues to come out of this is that in some cases – not the majority, but I accept Mr Blomfield’s point that this is about the small number of cases here today – we could have done things better.

What should happen now?

Alan Bates: “First, Post Office has to be investigated – it has to become part of the investigation. It is trying to act as an agent and as everything – it is trying to control the information coming out, what is released and all the rest of it.

“It has to be investigated and taken out of the scheme, which Government have to take over. They really do. While Post Office is still sat there controlling all the information, we will never really find out the truth.”

George Thomson:  “For a tiny percentage of complaints over a 15-year history, it would be nonsense for the Government to take over. Let’s bring it to conclusion as quickly as we can.

“The cases that are in mediation, let’s deal with them. Let’s get out the way, let’s move forward and let’s try to make sure that Post Office has a decent future as a stand-alone company outside the Royal Mail group. Let’s get on with that.”

Andy Furey: I would suggest that the mediation scheme needs to be opened up for some of the contemporary cases that are ongoing today.

“I would ask the Post Office to withdraw any obstacles in the way of CWU [Communication Workers Union]  representing postmasters. Mark gets lots of obstacles, such as lack of recognition for representing postmasters.

“The filtering through the walk-in group to stop cases getting to mediation needs to be removed and they need somebody to bring some independence in the mediation scheme beyond the current people involved.”

“Kay Linnell:  “The initial complaint review and mediation scheme, with 150 cases in it, needs to be drawn to a conclusion by making the Post Office go back to the original brief and stop doing this legal defence thing.

“But I also think that a permanent, Government-based solution for new complainants to a third-party individual such as an ombudsman for future fault reporting, without any recrimination or redress from the Post Office on the person raising the complaint, is an essential way to go forward.

“We need something for future complainants to do, albeit that the MPs have been fabulous. It should not be necessary for somebody with a current problem to fall back on their MP and raise it in that way.”

Mark Baker:  “We [the Communication Workers Union] are an organisation that is excellent at advocacy and being able to sort the weaker claims out from the stronger claims; and we know how to work with Post Office.

“We know how to challenge it—we are not in awe of it, as some people are. We would make a valuable contribution to improving and moving the mediation scheme on.

“If that cannot be achieved, I would support what Alan said: perhaps the Government should take it over and get it sorted out.”

Business, Innovation and Skills Committee hearing on Post Office Horizon system and mediation scheme – 3 February 2015

 

Jailed and bankrupt because of “unfit” Post Office IT? What now?

By Tony Collins

post office logoThe BBC’s “PM” programme returned to the topic last week of subpostmasters who were stripped of their post office contracts and bankrupted because of theft, fraud and false accounting. Some went to jail.

“Is it possible they were innocent and that a computer system was to blame instead?” asked Eddie Mair, the programme’s presenter.

The BBC has seen a leaked copy of an independent report the Post Office commissioned into its “Horizon” branch office accounting system. An interim version of the report by consultancy Second Sight was released last year.

The leaked report says the system was unfit for purpose in some branches, says the BBC. When Post Office investigators checked out shortfalls they did not look for the root cause of the errors – and instead accused the sub-postmasters of theft or false accounting, says the BBC, quoting from the report.

£1bn Horizon system

More than 11,000 post offices use Fujitsu’s £1bn Horizon system for branch accounting and rarely have problems. At the close of each day, the system balances money coming in from customers and money going out, to banks, energy companies, for tax disc sales and for lottery tickets.

If the system showed there was a shortfall, subpostmasters had few options: make up the deficit themselves, sign off the accounts as correct, or refuse to sign off – which might have meant closing the post office (and upsetting customers) while a financial audit took place.

The BBC PM programme last week re-broadcast its interview in June 2012 with a gently-spoken Welshman, Noel Thomas, who worked for the Post Office for 42 years before he had problems with the Horizon branch accounting system at Gaerwen. When he went to balance the accounts the system kept telling him there was a deficit – a shortfall in the daily takings.

post-office-signPrison

After speaking to the Post Office helpline several times he believed the matter would be sorted out in time. He signed off the accounts – and the Post Office took him to court for false accounting. He pleaded guilty and went to prison; and he went bankrupt.

In his interview with Eddie Mair, Thomas came across as a man of guileless integrity.

“I had a very busy post office,” said Thomas. “I am not ashamed to tell you I had a very good income of between £20,000 and £30,000 a year. I worked very hard for it: I looked after my customers.”

Mair: What was the first sign of trouble?

“I did have trouble over about 12 months actually. The last six months it went worse. You just couldn’t balance. It was going in the end (into deficit) at the rate of £2,000-£3,000 a week.”

Mair: This wasn’t your own personal books – you weren’t filling in a ledger – this was the computer system?

“This was the computer system. In the end I was convicted on the basis that I false accounted for over £50,000.”

Mair: They thought you’d stolen it?

“Yes. But when it came to the court case they dropped the theft [charge] very very quickly and just went for false accounting.”

Mair: You went to jail?

“Yes… I was lucky. I only had eight days. Time went very very quickly.”

Mair: But I am guessing for you that was not really the problem, the passing of time. You’d been branded a criminal?

“Yes. That’s what got me you see.”

Mair: The Post Office still says it is confident about this computer system. It is still happy with it.

“It would say [that], wouldn’t it?”

Mair: As for you, are you confident you didn’t make a lot of mistakes?

“Yes. I can say I didn’t make mistakes. I can say with my hand on my heart I didn’t take the money.”

Mair: What effect has this had on you?

“A big effect, because I was declared bankrupt. The Post Office are paying my pension but they took my private pensions away.”

Mair: What would you like to happen?

“Not for me myself but for (other subpostmasters and mistresses). It has ruined their lives hasn’t it? If you pilfer off the Royal Mail you need to be punished –”

Mair: But Noel if you are correct – and obviously the Post Office has a different view of this – if you are right then you have been made bankrupt, you have lost almost everything –

“Yes.”

You have been to jail –

“Yes.”

Over a computer mistake –

“Yes.”

Mair: What do you want from them?

“That we can get justice for everybody.”

post officeCriminals or faulty systems?

Thomas had given up trying to prove his innocence when he received a phone call from retired senior probation officer Roch Garrard who said the same thing had happened to his local postmistress in Hampshire.

In time Thomas found that dozens of middle-aged, middle-class subpostmasters and mistresses who had never put a foot wrong were being branded criminals.

“It didn’t make sense to me so I started to contact some of them and said to them ‘this is what happened to our postmistress, what happened to you’ and the stories were all so similar that I thought there must be something wrong,” he said.

Now, more than 150 sub-postmasters say they were wrongly prosecuted, or made to repay money, because of the system. The Post Office remains defensive. Its public statements express little sympathy. It is, though, in secret talks with the subpostmasters over possible compensation. But can money ever put right injustices that have ruined lives?

New Second Sight report

BBC reporter Dan Johnson said the latest report explains exactly was going on with the Post Office computer system. “The thrust of this report is that it was faults in that computer system as well as communication problems, and issues around training that led to these mistakes. It wasn’t dishonesty,” said Johnson.

The report said training was not good enough for those without IT skills and power failures and communication issues made things worse. Helpline staff gave conflicting advice or said problems would sort themselves out.

Second Sight found in its research on Horizon that bugs were  not unknown. It said in its interim report that “some combinations of events can trigger situations where problems occur”.

A tearful Sarah Burgess Boyd, from Newcastle-upon-Tyne told the BBC she lost her life savings in repaying an incorrect shortfall. She said of the Post Office, “I just don’t know of another business that would conduct themselves in such a callous and inhumane manner.”

The Post Office said the leaking of the report was “unhelpful”. In a statement, the Post Office told the BBC:

“Although we will not comment on the contents of any confidential documents, after two years of investigation it remains the case that there is absolutely no evidence of any systemic issues with the computer system which is used by over 78,000 people across our 11,500 branches and which successfully processes over six million transactions every day.”

The Post Office is in mediation with some of the affected subpostmasters, in part because of campaigning for justice by MPs, particularly North East Hampshire MP James Arbuthnot.

Also leading the campaign is the Justice for Subpostmasters Alliance, which was set up to “raise awareness of the problems around the Post Office Horizon system which for many years Post Office Limited has denied exist”.

Despite the mediation, the relationship between the accused subpostmasters and the Post Office remains strained. Alan Bates, a former subpostmaster in Wales who founded the Justice for Subpostmasters Alliance, continues to submit FOI requests to the Post Office, the latest being August 2014. The Post Office tends to refuse his requests or gives him unsympathetic replies.

In one of his FOI appeals, Bates tells the Post Office that the concern is not about the millions of successful weekly and monthly financial reconciliations that take place but the “numerous unsuccessful reconciliations that take place that Post Office refuses to even consider may occur”. Post Office management “seems blind to such possibilities”.

He told BBC Wales in 2012:

“One of the big problems with Horizon is the inability to fully examine all the data you have put in the system. You were not allowed to interrogate it. They restricted the access. I refused to be held liable for a system that I and my staff were unable to access to check.”

Under the FOI Act, Bates asked the Post Office last month for the total amount in value and number of all “transaction correction” invoices and credit notes issued to post offices in the latest accounts period; and he asked in April 2014

“Has Post Office ever been made aware of faults within the software of their Horizon System that would have impacted in any way on the accuracy of the accounts of any post office?”

The Post Office did not say. Its reply was that the question was not specific enough.

Ministers have been unsympathetic to the accused subpostmasters –  although the campaign to clear the names of the accused has come mostly from Conservative MPs. Minister Jo Swinson told the House of Commons last year that the number of subpostmasters who’d complained about the Horizon system was “tiny, tiny”.

The National Federation of SubPostmasters has also been unsympathetic and has backed the Post Office. The Federation said: “We continue to have complete confidence in the Horizon system, which carries out hundreds of millions of transactions every week at 11,500 Post Office outlets across the country.

“The NFSP has seen no evidence to suggest that Horizon has been at fault and we believe it to be robust.”

Contract Law

Bhavisha Parekh, a case handler at Contact Law, was approached in 2009 by a sub-postmaster whose accounts had been audited that morning – and they’d found a loss of £7,000.

Parekh writes on the Contract Law website:

“The client had found this loss when doing her daily accounts a week earlier and asked the Post Office auditors to assist her and investigate the matter to locate the loss and rectify the accounts.

“Post Office accounts consist of cash, stamps, and postal orders as well as anything else they trade in; everything is given a financial value. The client’s loss was not of cash and all her transactions were showing to be completed correctly.

“However, upon the auditor’s confirmation of the loss she was charged with theft from the Post Office and given notice of being given a statutory demand for the £7,000.

“The client was in tears over the phone as she felt she had been wrongly charged; the client had run the Post Office for many years without fault and had become a pillar of the community.

“She felt victimised, as when trying to resolve this problem with the Post Office she had asked them to audit her branch and now she was being charged with theft.

“That day I gave the client details of a firm local to her (solicitors) to assist her with this matter. A few weeks later when calling the client to get feedback on the outcome of her case, she explained that she had had been investigated by the Post Office but they had not found anything to show she had taken the money.

“When auditing her branch the final accounts showed a loss; however, the auditors were unable to trace where this loss occurred. After further investigation and having a forensic accountant look into the matter, there were still no answers as to where this loss had occurred.

“This seemed pretty strange; the client in the meantime was told she could not work in the Post Office or even enter the building so she was left without an income and fear of being criminally prosecuted.

“However, after a month or so the Post Office wrote to her to state they had dropped the charges. She would however not be able to commence work as a sub-postmaster, and no explanation of the matter was given.

“Since speaking to this client I was approached by two more former sub-postmasters with the same case. However, they have not been as ‘lucky’ as my initial client – one was dismissed as a sub-postmaster and asked to repay this ‘lost’ amount, and the other was charged with theft and imprisoned for 18 months as well as ordered to pay a sum of £75,000.

“In all three cases the Post Office and their trained auditors have been unable to locate what this loss is; further they have not been able to trace any money into the postmasters’ accounts. Apart from there actually being a loss, there has been no evidence of any theft ever taking place.

“I have only spoken to three sub-postmasters; however this is happening at an increasing scale all over England. Computer experts are now stating that the ‘Horizon’ software the Postmasters use is flawed and so showing these losses.

“Potentially, due to this computer error, many sub-postmasters have lost their jobs, been imprisoned, and left traumatised by the Post Office’s actions.”

Comment

The Post Office deserves credit for investigating some of the complaints (after years of pressure from MPs) and it is said to have settled some of the less serious cases. But five years since the accumulation of problems came to light the convictions against subpostmasters remain. Computer Weekly highlighted the plight of subpostmasters in 2009.

Second Sight’s latest report will add to concern that lives were ruined because unexplained deficits on the Post Office’s Horizon system were not thoroughly investigated – and the root cause established – before the Post Office ticked the legal box to prosecute.

There is scope for systems to go wrong when there are multiple interfaces, occasional power failures and faults in networks and communications equipment. The Post Office’s Horizon system has multiple interfaces; and in any case no IT system is perfect. That Horizon works well for tens of thousands of subpostmasters is no guarantee it will work well for all.

Telling the family of someone struck by lightning that millions of people are not struck by lightning every year is extraordinarily insensitive. What’s the point of the Post Office’s continuing to insist that most subpostmasters have no problem with Horizon? Clearly there are no system-wide issues but nobody is saying there are – and why would those sent to prison, made bankrupt or deprived of their livelihoods care if IT issues were systemic or not? They say it happened to them.

Nobody in the general population would believe that 150 or more subpostmasters were dishonest.

Who would put the integrity of a computer system above the integrity of 150 subpostmasters?

The Post Office, as the prosecuting authority, could argue it is only doing its job in protecting its money and the investments of taxpayers. But in doing their jobs Post Office managers seem to be behaving more like machines than humans. They prosecuted for false accounting because they could.

They could, because sub-postmasters, when confronted by a deficit they didn’t understand, signed off accounts after being told by the IT helpdesk that the problems would probably clear in time. Strictly speaking, signing off accounts as correct when they are  known to be incorrect is false accounting. But was it something the Post Office should have prosecuted, given the mounting complaints about the accuracy of the system’s deficit figures?

Still the Post Office is refusing to answer subpostmaster’s questions. Its managers know they have the legal and contractual upper hand; and as owners of the system they possess the facts. What they do not have is the moral upper ground: they lost any claim to neutrality when they took subpostmasters to be dishonest before properly investigating the potential for shortcomings of the system.

It will be damaging to justice and the reputations of the subpostmasters if the Post Office continues to conform to the stereotype of a large organisation that, once it has denied liability for anything, refuses repeatedly to alter its position, whatever the facts.

As individuals, Post Office managers are probably understanding. As an institution the Post Office appears hostile to those whose lives have been ruined. It seems content to allow the cry for justice to stretch out for years, while it remains defensive and unsympathetic.

Shadow business minister Ian Murray asked in the House of Commons last year:

What processes will be put in place to compensate sub-postmasters and former sub-postmasters who have been disadvantaged, fined, lost their businesses, homes or even jailed, as a result of the problems with the Horizon system?

Wronged subpostmasters deserve far more in compensation than the sums originally in dispute. Is the Post Office institutionally capable of righting egregious wrongs?

Are disaffected subpostmasters having to sign gagging orders?

Second Sight interim report

Subpostmasters tell their story

Justice for Subpostmasters Alliance

 

Publish Universal Credit and other project reports, says ex-gov’t CIO

By Tony Collins

John SuffolkJohn Suffolk, the government’s former chief information officer, says warnings that publishing Universal Credit reports will have a chilling effect are “poppycock”.

His comments were prompted by the Department for Work and Pensions’ appeals against a ruling by the first-tier information tribunal that 4 reports on the Universal Credit programme be published.

The DWP has failed in every legal move it has made to stop the reports being published but is continuing its attempts although costs for taxpayers are increasing.

The DWP and its external lawyers argue that publishing the 4 reports would have a chilling effect by inhibiting the candour and boldness of civil servants who contribute to such reports.

But Suffolk says the claims of a chilling effect are “poppycock”. Suffolk was responding to a Campaign4Change blog “DWP tries again to stop disclosure of Universal Credit reports“.  He says:

“As you know I am a great fan of publishing all of the project reports. I note all of the comments on the “chilling effect” but this is poppycock.

“There is no chilling effect and if there was it would be countered by the extra scrutiny change programmes would receive by increased transparency. We should publish everything on projects and programmes.

“Transparency is a good thing. Government does complex work and more eyes on the problem would be a help not a hindrance, accepting we all need to know ‘who is the cook and who is the food critic’.

Suffolk was government CIO for nearly 5 years between 2006 and 2011 where he helped to steer an annual IT budget of billions of pounds.  He is now Head of Cyber Security/SVP at Huawei Technologies

His comments in full:

“It is such a shame that we have reached this position. Part of the Conservative Party (not the coalition) election thrust was on openness, transparency etc.

“Indeed some work has been done on this such as publishing the finance data, a summary report on major projects, but we appear to have gone backwards on no longer publishing an annual report for ICT spend, no longer publishing benchmark data – a prime driver that can reduce costs. According to the NAO some of what is published in terms of progress, is a little, how can I phrase this suspect.

“The realism is the only time a government can introduce transparency is at the beginning of a political cycle, this should have been executed at the beginning of the coalition as it becomes almost impossible to become transparent at the beginning of a new election cycle.

“A few words about UC. Before I left Government we reviewed the outline of UC as part of Francis Maude’s project control. I have to say the Ministers were excellent.

“They fully understood the policy objectives, fully understood the likely benefits and costs, understood the challenges but rightly deferred to officials on execution – how do we get from A to B.

“The Officials were far less impressive… Since then the ICT Team and Executive at DWP have gone through substantial change, the Civil Service have gone through a period of “transition” or “turmoil”; suppliers have gone through similar experiences and here we are trying to undertake one of the largest changes to the benefits system.

“We should not be surprised if there are a few wrinkles, nor should we be surprised if things move around a bit (what doesn’t – big or small) but what we should be surprised at is that Cabinet Office doesn’t appear to be backing the programme.

“I read with some mild amusement that GDS had taken their toys home and withdrew troops from “supporting” the programme.

“Excuse me, but isn’t this a flagship Programme? Won’t this programme save billions of pounds? Won’t this programme begin to change the something-for-nothing culture to nothing-for- nothing culture (unless there are real health reasons etc)?

“So we should have robbed all of the most talented resources of less priority programmes to support this. We didn’t. We went and sulked in the corner because they wouldn’t accept our ideas – instead we go and play around with websites and mess with tactical online services rather than focussing on the things that matter.

“You could also see this manifested in the major projects report where they singled out UC in a special category. Boys boys your job is to work together not squabble like little children.

“Get the best resources on UC, accept it is complex and dates will move around, take steady small steps and prove the programme and then get your shoulders behind it to make the implementation a success.

“Without doubt the Government have made many substantial improvements but when it comes to getting big changed implemented there is a long way to go.”

Millions of pounds of secret DWP reports

Judge refuses DWP leave to appeal ruling on Universal Credit reports

Minister didn’t lie over UC business case – but did officials deliberately mislead?

By Tony Collins

Comment

DWP minister Esther McVey is facing criticism that she misled Parliament by saying that the Universal Credit business case had been approved when it hadn’t.

A close look at the facts shows that the minister spoke the truth, and the DWP officials who wrote her Parliamentary answer also told the truth. But MPs were still misled, perhaps deliberately so.

The officials who wrote the minister’s reply knew that there is an early and very basic business case for Universal Credit,  the strategic outline business case, which had been approved.

All big projects in central government have strategic outline business case approval before they get underway. Universal Credit was the same as any other big programme in this respect.

What hadn’t been approved was the full business case which requires much more detail than the strategic outline case – and it requires plans and costs to be finalised among other things.

When, on 30 June 2014,  Rachel Reeves, Labour’s spokeswoman on work and pensions, asked the government whether the business case for Universal Credit had been approved officials wrote a cleverly deceptive answer.

They wrote that the strategic outline business case had been approved. They did not mention that the full business case had not been approved. It’s certain that the minister did not realise that this answer was deceitful.

That said, the  answer was in line with the DWP’s culture which is to project good news and conceal bad news (NAO report Universal Credit: early progress, September 2013).

This was the original Parliamentary question and answer on 30 June 2014.

Rachel Reeves (Shadow Secretary of State for Work and Pensions; Leeds West, Labour)  

To ask the Secretary of State for Work and Pensions … whether he has approved the Department for Work and Pensions’ business case for the implementation of universal credit.”

Esther McVey (The Minister of State, Department for Work and Pensions; Wirral West, Conservative)

“The Chief Secretary to the Treasury has approved the UC Strategic Outline Business Case plans for the remainder of this Parliament (2014-15) as per the ministerial announcement.”

It’s difficult to avoid the conclusion that the DWP, in drafting the minister’s reply to Reeves, intended to mislead.

That’s politics. On the other hand it is an extraordinary misuse of power by senior civil servants.

A strategic outline business case is very different to a full business case.

The strategic outline case merely sets out the strategic context and the case for change, together with the supporting investment objectives for the scheme. It sets out likely funding needs and speculates that the scheme is achievable and meets best practice principles.

The full business case has finalised arrangements including key contractual arrangements , costs,  agreed implementation timescales, main risks, constraints, dependencies, benefits and “dis-benefits”. It sets out an argument on the affordability of the scheme.

The controversy over whether Parliament was misled – which it was – shows the ease with which the senior civil service can protect the government of the day from embarrassment. Except that this time the truth came out; and it came out unexpectedly because a tenacious Margaret Hodge, chairman of the Public Accounts Committee, kept asking civil servants whether the business case for UC had been approved. Eventually, though with some reluctance, they told her the truth.

If a little truth comes out in such an unplanned way, one can only guess at how much other information on the Universal Credit programme is being hidden. Perhaps deliberately so.

Are passport officials hiding IT problems?

By Tony Collins

Are Passport Office systems crashing regularly – for up to half a day – without anyone outside knowing?

passport officeLast month a Home Office spokesman told Government Computing that IT was “not to blame” for delays in issuing passports.

But yesterday a Passport Office insider gave the opposite impression to Eddie Mair’s BBC R4 “PM” programme. She said that passport systems are sometimes out of action for up to half a day.

It also emerges that the Passport Office’s contract with one of its contractors, Steria, takes into account, in peak periods, the sorts of numbers of applications that offices are receiving – about 150,000 a week.

Home Office minister James Brokenshire told the House of Commons yesterday (7 July 2014) that there have been about 4 million applications so far this year, implying that the number is unexpectedly high.

But 4 million applications is not out of line with Steria’s contractual expectations of up to 150,000 applications a week.

This raises the question of whether the delays are due to a combination of IT problems and high numbers of applications – rather than high numbers alone.

On the BBC “PM” programme the comments by the Passport Office insider were spoken by an actor.  She said the backlog of passport applications has increased since the government announced emergency measures last month.

” The numbers have increased significantly and they are just the ones in the system.  What you need to take into account – and I don’t think people have realised – is that we have another huge backlog of applications that have not been scanned onto the system and are not in process.

“The backlog of applications – what they call “work in progress” – is not a true figure because but you still have another backlog that has not been scanned …”

BBC reporter: So there is another set of passports that don’t appear in official figures?

“That’s correct.”

She said that increasing backlogs are indicated on figures on boards around offices that give dates of which offices are working on what on certain dates.

“Her Majesty’s Passport Office is in total crisis. It’s a total mess …  it is chaos.”

BBC reporter:  A member of my family phoned up to try and make an appointment to sort out a passport last week and while she was on the phone she was told the computer kept crashing. Is that a common problem?

“Yes.  Once the system crashes you cannot issue anything or do anything. You just have to sit there until the technicians or the IT experts reboot the system or put a patch in to get it up and running again.”

BBC: How long does that last? How long are the computers and therefore the people handling the passports out of action for?

“Sometimes I would say a minimum of half an hour up to half a day.”

passportsShe said that passports are being stored in meeting and conference rooms which are locked. The windows have been “blacked out or covered with paper so no photos can appear, for instance, in the Guardian“.

She does not believe the Home Secretary Theresa May or her ministers have a grip of the situation. “I don’t think they understand. I am not too sure whether it is because they haven’t been fed the correct information or whether they are just putting their heads in the sand.”

The Home Office said a minister was not available to speak to the BBC.  It provided a statement instead – which gave no response to the insider’s claims of computer problems.

The statement said:

“These allegations are false. We receive thousands of application every week with their numbers constantly changing. We aim to log applications within 48 hours of receipt at which point they become active work in progress…”

Update 18.00 8 July 2014

Paul Pugh, Chief Executive of the Passport Office, appeared before MPs on the Home Affairs Committee this afternoon and was not asked about IT problems and made no mention of any.

He declined to say how many applications have been received by the Passport Office which have not been scanned into the systems. He said the number varied daily. He conveyed a quiet self-confidence which wasn’t in any way dented by committee members who in general did not put him under pressure.

They thanked him repeatedly for dealing with complaints from their constituents.  Committee chairman Keith Vaz handed Pugh 180 emails from people who are facing delays and need a passport urgently.

He denied the Passport Office was in chaos and said the “vast majority” of people working there would disagree with the comments of the anonymous contributor to the BBC “PM” programme.

Comment

The insider’s comments may be relevant given that the Passport Office had serious IT processing difficulties when it has changed its main processing systems in 1989 and 1999.   Has it had a third IT-related calamity as a result of an upgrade of passport systems in 2013?

US-based supplier CSC helped with the upgrade last year but no information has been released on the change-over.  The new system was installed as part of a $570m services contract the Passport Office awarded CSC in 2009.

Steria manages the front-end of passport application processing. It receives applications from the public, scans them digitally, verifies the contents, checksthe scanned documents for accuracy and makes corrections where necessary, and banks payments received. It then passes applications to Her Majesty’s Passport Office to complete the examination.

Steria expected up to 150,000 passport applications a week at peak times and it appears that actual applications have been around this number for much of this year. So why are ministers and officials blaming delays on a record number of applications?

There may be IT problems that nobody in officialdom is mentioning.

The most worrying thing is that they do not have to mention them. Perhaps the cause or causes are complex and they are unsure who bears most of the responsibility.

In politics nobody seems to expect the truth to be told. So it’s likely that ministers and officials will continue to blame the delays in issuing passports on record numbers of applications, and not mention anything to do with IT, except to deny it has anything to do with the backlog.

BBC PM programme (approx 47 minutes into the programme).

HP’s tacit threat to government not to bid for contracts?

By Tony Collins

HP has written to the Treasury  questioning whether it is worthwhile competing for contracts if the Government is no longer interested in doing business with multinationals, says The Independent.

Cabinet Office minister Francis Maude is encouraging departments to spend more with SMEs and be less reliant on a small number of major IT suppliers. He wants departments to avoid signing long-term contracts which lock-in ministers to one major supplier.

The Independent says:

“In a striking case of Goliath accusing David of bullying, the American giants Microsoft and Hewlett Packard have complained that they are being unfairly picked on by the Cabinet Office minister Francis Maude.

“…the Government’s largest IT supplier Hewlett Packard has written to the Treasury to express its concern at plans by Mr Maude to award more Government contracts to smaller suppliers.

“At the same time Microsoft is fighting a rearguard action against the Cabinet Office to protect the million pounds it gets each year from Whitehall by selling popular Office programmes such as Word and Excel.

“Both companies are concerned that they are being singled out by ministers as unpopular and easy targets in their rhetoric about cutting public sector waste…

“Microsoft is attempting to prevent the Government from migrating its own computer systems from those that rely on the multinational to open-source documents that are free to use…

“Both companies look set to be disappointed – at least unless there is a change in Government. Mr Maude is understood to be looking to next year – when a significant number of big IT contracts are up for renewal – to push ahead with the new policy that could significantly denude the profits of IT multinationals.”

A Cabinet Office spokesman said it was unaware of HP’s letter to the Treasury and added: “We value the contribution companies of all sizes make to the UK economy, driving innovation, growth and jobs.”

A spokeswoman for HP told The Independent:  “HP is a proud and long-standing supplier of IT products and services to Her Majesty’s Government and provides vital public services to UK citizens.  We maintain an ongoing dialogue with government about our programme of work.”

A report by the Institute for Government Government Contracting:  Public data, private providers says that HP is the largest supplier to government with earnings in excess of 1.7bn in both 2012 and 2013.

In 2013, 86% (£1.49bn) of HP’s revenue from central government came from a DWP contract to supply infrastructure and systems for DWP and its job centres. “This contract is likely to be the largest single non-defence contract in central government,” says the Institute.

Capgemini, BT and Capita were the next largest suppliers to central government. Capgemini’s work is mainly from HMRC through the “Aspire” contract which is worth about £850m a year.

Departments are more open than they used to be but the Institute found big gaps in the information provided.

These gaps include:

– Contractual transparency –  contracts and contractual terms, including who will bear financial liabilities in the event of failures

– Information about how well contractors perform, allowing a vital assessment of value for money

– Supply chain transparency – information including the proportion of work subcontracted to others, terms of subcontracting (particularly levels of risk transfer), and details on the types of organisation (for example, voluntary and community sector organisations) in the supply chain.

Comment

What concerns Maude and his team is not the existence of major suppliers in central government contracts but the reliance by central departments on long-term contracts that lock-in ministers and lead to costly minor changes.

Nobody wants the major suppliers to stop bidding for contracts. What’s needed is for departments to have the in-house expertise to manage suppliers adroitly, and not to be adroitly managed by their suppliers which seems to be the position at present.

Thank you to openness campaigner Dave Orr for the information he sent me which helped with this article.

The IT giants who fear losing the government’s favour

Opening the door to data transparency