The Post Office Horizon Scandal through a Service Design lens: Part one

If you live in the UK and you don't live under a rock, you've likely recently heard about the Post Office Horizon Scandal.  Stretching from 1999 to 2015, the saga is a disheartening tale of layers upon layers of service failures. As I write this, a public inquiry is underway, shedding light on the details of what has become a scandal of unprecedented proportions.

To get some context, we must go back to the mid 1990’s. The Post Office was a crucial part of everyday life in the UK. All benefits and pensions were accessed through a Post Office branch. At the time the Post Office had over 3,000,000 transactions annually and turned over £140,000,000 per year. Over 7,000,000 people in the UK did not have a bank account at all and relied on the Post Office for cash. However, the Post Office's operations were archaic and paper accounting and basic cash tills were the norm.

Enter Horizon – an electronic point of sale service (EPOSS) with automatic digital accounting. It was designed to modernise the Post Office and save it from managed decline. ICL (Later known as Fujitsu) were responsible for building the technology. At the time Horizon was a complex and arguably innovative piece of technology.

However, beneath the surface, Horizon had a slew of issues that would prove catastrophic for Sub-Postmasters. Software bugs, hardware malfunctions, and poor service support created a perfect storm. The problems left many Sub-Postmasters unable to reconcile their accounts and led to horrific outcomes that damaged many people’s lives.

After learning about the scandal, I became interested in what had gone wrong from a service design perspective. In this blog post, I'll examine some of the components and layers that were at play in the development and operation of the Horizon service. I'll examine where some of the failures happened, what the impact was, and explore the potential role of service design methods in averting such failures and improving the overall service delivery.

Understanding the service

Before we get started understanding the service’s failures, it’s important to first understand the service itself.

Services are made up of many layers and might include:

• Touchpoints – things users interact with like a pin pad, till or telephone
• Actors – the types of users who interact with it, like customers or branch workers
• Systems and processes – the things that people can’t see that make the service work, like a computer system or helpline process

The Post Office is a unique service. It essentially acts a gateway to many other services and products and is therefore very complex.  Below is a diagram I have drawn to roughly represent how the service worked at the time.

The service had three main user types, one being the customers themselves; your everyday Joe Bloggs going to send a parcel or pay their utility bill. They would then interact with the other user types, the branch worker or the Sub-Postmaster/mistress (SPM) to access products or services.

It is estimated that at the time, each Post Office branch offered more than 170 different products and services. This included things like withdrawal of state benefits or pensions, paying vehicle tax, paying utility bills, withdrawing, and depositing cash from a giro bank account, right through to things you might expect like sending a parcel or buying a stamp.  

The SPM had distinct tasks to perform outside of serving customers. Once a week they would have to balance their weekly accounts, to make sure that what the transactions they’d processed matched the money in the account. If they had problems with Horizon, either when trying to balance or when serving a customer, they could phone a helpline who could provide support and troubleshooting.

This second scenario is key to the scandal, and it was the internal users, the SPM’s, that The Post Office failed. Often when designing services, we focus on the “end users”, but it is important to remember the “internal” users who operate our services – and in this case, these were the users who were failed.

Pace layering helps us sequence the complexity

Pace layering, a concept originally developed by Stewart Brand, explains how different parts of a system change at different speeds, and how the whole system learns. It recognises that different elements evolve at different rates. For example, technology changes quickly, whilst layers like strategy or culture move slowly and take more time to change. Pace layering is one of the key lenses we use in our service design team at Nexer, to examine where change might need to occur to improve a service and to understand where our work fits in.

I’ll use this lens of pace layering to consider some aspects of how the scandal unfolded. In part one, we’ll be taking a look at Culture, Intent and Strategy and in part two we’ll cover Processes & Technology and Touchpoints.

Culture drove so much of what happened

Culture and Governance layers tend to move and to change slowly, and yet they exert a powerful influence on outer layers. The Post Office is an old organisation, with roots in the aristocracy and royalty. In a country like Britain where the class system was (and still is) prolific, such organisations often have outdated cultural values. This class culture can be seen even in its business model, whereby larger Post Offices were called ‘Crown Post Offices’. In these more “esteemed” branches, Postmasters would have all the benefits of being an employee of the Post Office.

Sub-Postmasters on the other hand, whilst technically being employees, were contractually “business agents operating ‘Sub-Post Offices’ as Franchises.” These ‘Sub-Post Offices’ tended to exist in smaller, rural or less affluent areas where less money could be made. In the Sub-Postmasters’ contract, they were obliged to balance the books each week and make up any shortfalls from their own money. It is clear to see how the Post Office’s outdated cultural values therefore played a role in how it treated its staff.

The Post Office also has long held power to intercept letters on behalf of British Intelligence and is known to be intensely secretive. This can be seen in the way it has handled the crisis through denials and cover ups.

To stack the Post Office’s power even higher, it had its own investigative unit that had direct access to the criminal justice system. “In fact, the Post Office Investigation Branch is the oldest recognised criminal investigation force in the world. It pre-dates the police.” (Nick Wallis).

The organisation also operated in a very hierarchical system. Communication was top-down and through accepted channels only, and management relationships were formal. In organisational cultures like these, the issue is that people at the bottom do not have the processes, or the confidence to communicate upwards. People are siloed and disempowered, and miscommunications are commonplace.

Organisational change is one of any good service designer’s long term goals when trying to embed user centred design to improve the service for users. Culture can be a large part of that organisational change, recognising the power it has over other layers of the service.

Collaborative workshops

This is where internal collaborative workshops could have played a key role. Well-facilitated workshops help to encourage open communication, feedback, and collaboration. This helps to create a more transparent culture based on empathy and would help to bridge the gap between different hierarchical levels to create a more inclusive and responsive culture.

Facilitating change

Some of us in the service design team worked with the auto-enrolment pension provider, Nest, to support their transition from one IT partner to another. We were there to help embed and augment design practice, and especially to help shift mindsets to thinking about the pension as a service. We were able to work with a range of senior staff, as well as technical colleagues and other designers, and incorporate their desire to give people financial security and the kind of retirement they want. This shared sense of purpose is an important aspect of culture at Nest.

Intent drove the creation of Horizon

Sarah Drummond put it best when she said “Our intent affects the way we build our services because the things we want to achieve as an organisation drive the creation of services. It can be common for organisations to forget what that intent is or fail to work out how to deliver it in the real world.”

The intent that led to the creation of Horizon came from the highest levels of government. The government wanted to reduce benefit fraud which was estimated to be costing the Department for Social Security (DSS) £101 million annually. The policy was a flagship one that the Conservatives used to try and drum up support for the 1992 election. Back in the 90s, benefits were received at the Post Office by using social security books to get cash, the paper system was very vulnerable to fraud and needed updating, and hence the idea for Horizon was born.

Strategy flip-flopped

A strategy should be a plan for how to achieve a desired outcome. The plan was to introduce a customer touchpoint in Post Office’s where people could use a swipe card to draw their benefits, for example their state pension, with a digital accounting system in the background to modernise the Post Office.

The project required a collaborative effort between the Department for Social Security and the Post Office. Recognising the need to stay relevant, the Post Office planned to use the project as an opportunity to modernise itself. The success of this strategy hinged on collaboration with DSS, since

25% of the Post Office’s turnover relied on benefits withdrawal from their branches. In fact, The Post Office knew that “unless counters developed a modern front end delivery system of services, it was not going to survive.” and without Horizon and retaining all its current services, it would fall into managed decline.

Unfortunately, the DSS lacked buy-in and decided to withdraw from the project in 1998. They thought the better solution was for benefits to be paid directly into people’s bank accounts. And indeed, this system was implemented in 2003 and is still the way benefits are paid today.

This unexpected development left the Post Office and its technical delivery partner, ICL (Later Fujitsu), in a challenging situation. “The Government put us in a difficult position and made us live a lie.  They decided in January they did not want to use the magnetic stripe payments card.” This change necessitated a reimagining of the system to meet the evolving requirements.

Despite the setbacks and a considerable £150 million already invested, the Government decided that the Post Office would continue the project rather than scrapping it altogether. The chop-and-change in the strategy affected the delivery of the project.

Alignment and vision workshops

This could have been mitigated by facilitating comprehensive involvement of key stakeholders to align objectives and expectations. Establishing a shared vision of what success looks like minimizes disruptions caused by frequent changes in strategy.

A tool that we sometimes use to help with this is impact mapping, which allows us to figure out what things need to be done or made (the outputs) to bring about defined impacts focused on a specific goal (the outcomes). In service design work we led at the Department for Education, we introduced impact mapping as a way to inform strategy for the Schools Technology Services programme.  

Designing for outcomes

In the service design team at Nexer, we are big fans of designing for outcomes. This means looking at what we are trying to achieve holistically and understanding the intent, rather than only focusing on an output, such as a new website. For example, an outcome might be ‘Benefit fraud is reduced by 80%’, whereas an output is ‘A card swipe system that allows people’s benefits to be tracked.”. I do wonder how different this project might have been if the government had used more of an outcomes approach. Though their intent was clear, it does feel like they tried to kill two birds with one stone. They used the project as an opportunity to modernise the Post Office as well as their original intent. If the government had taken an outcomes approach before commissioning the project around a solution. Would the Post Office have been involved at all?

Coming in part two…

Hopefully you’ve enjoyed reading about the failures in the Culture, Intent and Strategy layers of The Post Office and what Service Design techniques might have helped. In part two I’ll cover Processes & Technology, and Touchpoints, as well as reflecting on what we can learn as people working in tech about avoiding such scandals in future.

To speak to us about our service design work and how we can help your organisation, get in touch with us at: hello@nexerdigital.com 

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People icons by https://thenounproject.com/llisole/

Sources: 

Miller, D. (2023). The Post Office Horizon Inquiry. https://www.postofficehorizoninquiry.org.uk/hearings/phase-2-28-october-2022

Rich, P. (2023). The Post Office Horizon Inquiry. https://www.postofficehorizoninquiry.org.uk/hearings/phase-2-20-october-2022

Brand, S (2018). Pace layering: How complex systems learn and keep learning. 
https://jods.mitpress.mit.edu/pub/issue3-brand/release/2

Chipone, C (2022) The Post Office Horizon Inquiry, Expert Witness Report. https://www.postofficehorizoninquiry.org.uk/evidence/expg0000001-expert-report-charles-cipione

Wallis, N. (2022).  ‘The great Post Office scandal: the fight to expose a multimillion pound scandal which put innocent people in jail’ Bath Publishing Ltd

Drummond, S. Full stack Service Design, https://sarah-drummond.com/full-stack-service-design/

Sweetman, S. (2023). The Post Office Horizon Inquiry https://www.postofficehorizoninquiry.org.uk/hearings/phase-2-1-november-2022

Impact Mapping, https://www.impactmapping.org/