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Post Office back-office error leaves subpostmaster with thousands of pounds extra

The Post Office has admitted that some subpostmasters are at risk of accounts not balancing due to an error it does not understand

Karl Flinders
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Published: 02 Jul 2019 9:15

The Post Office has warned its branch network about an error affecting some branches that means money received from the Post Office cash centre may not be registering correctly in the accounting system when scanned in by branch staff.

The error, in what is known as the automatic REM (remittance) process, which the Post Office has admitted, is a possible variant of a known error which has featured heavily in an ongoing High Court trial where the Post Office’s Horizon accounting system is under the microscope.

This is part of a dispute over allegations that computer errors caused unexplained losses which subpostmasters had to make good or were punished, including some being sent to prison. The plight of some subpostmasters, who run Post Office branches, was first reported over a decade ago (see timeline of events below).

In the last week of June, a subpostmaster informed the Post Office that on 17 June his branch had an £18,000 surplus after the REM process failed to register all the cash received. Scanning the barcodes on the cash pouches received from the Post Office cash centre should trigger an automatic process, which then adds the balance to Horizon.

In this case, a Post Office branch member of staff took £20,000 in cash for the branch. This was made up of £2,000 in £5 notes and the rest a mixture of £10 and £20 notes. The barcodes were scanned and a receipt was printed.

When the manager returned, he found that there was £18,000 extra in money in the branch, because only the £2,000 was added to Horizon.

In an email to then CIO and change director Rob Houghton the subpostmaster explained what he found when he returned to his branch and the events that followed..

“When I returned, I performed my usual checks on the main branch and did a variance check, [only] to discover to my shock that I had a £18,000 discrepancy,” he said. “I couldn’t understand what had gone wrong. All the cash agreed with what had been booked in, or so I thought.”

The receipt printed would have shown the discrepancy, but these are not always checked because the REM-in is an automated process and something that cannot be altered, so this wasn’t picked up.

A few days later, the subpostmaster did his accounts for the trading period and found that the branch was indeed £18,000 in surplus. He then contacted the Post Office branch helpline which initially advised him make good to cash, but when it realised this was credit and not loss, the helpline told him to settle centrally, which he did.

After settling centrally with the surplus, the subpostmaster was contacted by someone at the Post Office financial department in Chesterfield who said he had not booked the REM correctly.

He wrote in his email to Houghton: “I told this person that REM’s are automatically booked in by the system so how could the REM not be booked in correctly?” It was also suggested he had manually booked in the REM, but this is not possible without helpdesk support.

The financial department said he would receive a negative transfer correction for £18,000 and that when he next balanced he should settle the shortage centrally.

But in his email to the Post Office CIO, he said: “I am disinclined to accept this transaction correction when it hits my system until I have had a full written explanation as to how the failure to auto-replenish a REM has occurred.”

He added that he had discovered his was not an isolated case. “I have since been made aware of two other Postmasters who have experienced the same bug,” he wrote.

Under union pressure

This has emerged as a High Court trial – which looked at the Horizon systems alleged role in subpostmasters being wrongly prosecuted and fined for accounting shortfalls – is coming to an end. This is part of a multi-million pound group litigation order brought by 550 subpostmasters, which has already seen two trials with two more planned later this year and early next year.

The plight of some subpostmasters was first reported in 2009, when Computer Weekly revealed that the lives of some subpostmasters had been turned upside-down after being fined, sacked, made bankrupt or even imprisoned because of unexplained accounting shortfalls. They blamed the Horizon accounting and retail system for the problems, but the Post Office has refuted this.

In response to the subpostmaster email, Julie Thomas, operations director at Post Office, acknowledged the issue.

“We are currently going through a process of identifying the specific branches impacted so that we can contact them, we want to be absolutely sure that all branches are aware of the issue and can notify us if they believe they may have been impacted,” she said in an email response to the subpostmaster.

She said the cause is unclear and under investigation: “The impact reported is exactly as you describe; a REM pouch is scanned in and the amount booked in is far less than the actual cash in the pouch, so the branches impacted have seen surpluses. We believe the issue is in the Transtrack barcode system, but we know no more than this currently.”

She apologised for the way the subpostmaster was treated by the Post Office financial centre: “They deal with hundreds of transaction corrections per day and these are almost always to do with mistakes made in branches which need to be rectified by a transaction correction. But this doesn’t excuse their manner in assuming you were to blame and for this I apologise wholeheartedly.”

Under pressure from subpostmaster representatives at the Communication Workers Union (CWU), the Post Office sent a warning about the error to the subpostmaster network.

“We are aware of an issue with a small number of Cash Pouch REM barcodes, which we are working to resolve as quickly as possible,” it said.

“The issue means that when the barcode is scanned, it is only recognising part of the REM, which means it does not register the full value of the REM on Horizon. This may also impact Bureau services.”

The issue has echoes of an error revealed in 2015, known as the Dalmellington Bug, which has featured in the group litigation as evidence that errors could cause loss for subpostmasters.

Mark Baker, postmaster branch secretary at the CWU, said: “We have discovered a variant of the Dalmellington error that works against the Post Office and this time in favour of the subpostmaster. The Post Office had no idea about it. If the subpostmaster had done what the manual says and settle to cash, the subpostmaster could take the cash out of physical stock and keep it.”

“But that would be immoral and potentially illegal, so my advice to subpostmasters is don’t settle to cash, settle centrally.”

In November 2015, the CWU wrote to subpostmasters warning them of a problem with the system, following an incident at a Post Office branch in Dalmellington in which thousands of pounds of payments were duplicated for one subpostmaster.

If undetected, this would appear as losses when the accounts are completed, which would be the responsibility of the subpostmaster. The problem involves the process where subpostmasters transfer money from a core Post Office branch to a remote branch created to serve rural areas, known as an outreach, which is basically a branch on a laptop.

For live tweeting from court, see the Twitter account of broadcast journalist Nick Wallis. Also read his Post Office trial blog.

Timeline of the Post Office Horizon case since Computer Weekly first reported on it in 2009

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