Post Office gets government handout as Horizon replacement costs increase ‘significantly’

Increasing costs and a lengthening timeline have forced the government to hand the Post Office an extra £103m towards its project to replace the controversial Horizon software used by thousands of subpostmasters.

The Horizon system, from Fujitsu, is at the centre of what is regarded the widest miscarriage of justice in UK history when subpostmasters were blamed for unexplained accounting shortfalls, which it caused.

In 2021, the Post Office extended its IT services contract with Fujitsu while it prepared to migrate from Horizon, and it’s currently working on a project to replace the system by 2025, with what is known as New Branch IT (NBIT).

The department of business and trade said: “The costs associated with developing a fit-for-purpose replacement for the Horizon IT system have increased significantly. While this is a Post Office-led programme, it’s essential for the future of the company and the Government is therefore providing £103m to support the development of the replacement and to ensure the Horizon system is maintained before the replacement is rolled out.” 

A Post Office spokesperson said: “Transforming our technology is one of the three key priorities we are delivering for subpostmasters, and at our Postmaster Business Update on 21 November, our chief transformation officer provided an update on the Horizon replacement. This year at our two pilot branches, we’ve been testing basic mails transactions live on our New Branch IT.

“In early 2024, the next pilot phase at these two branches will take place – adding core inland mails and back-office functionality to enable payment and cash counting. After we have rigorously tested and evaluated this pilot phase, this will be the version that we plan to roll out into the first Postmaster pilot branches later in 2024.”

One subpostmaster said: “We don’t know much about this system, although it’s being road-tested with ‘selective subpostmasters’, we don’t know who they are. Yet again we are going to get a new system with little say whether it is going to be any good.”

New contract

He also asked when a new subpostmaster contract will be introduced, to prevent the same problems arising. Under the current contract, subpostmasters are responsible for all losses – even unexplained ones.

The Horizon contract with Fujitsu – and the retail and accounting system at its core – led to hundreds of subpostmasters being prosecuted for financial crimes, such as theft and false accounting, based on evidence from the IT system. In what has been called one of the biggest miscarriages of justice in UK history, more than 900 subpostmasters were prosecuted for crimes including theft and false accounting, based on evidence from the flawed Horizon system.

Some subpostmasters were sent to jail and many were made bankrupt after being blamed for unexplained losses. A High Court case in 2019 proved that the Horizon system contained errors that could have caused unexplained losses. Nearly 100 convicted former subpostmasters have had their convictions overturned so far, with more expected.

In 2009, Computer Weekly told the stories of seven subpostmasters affected by the losses, which led to many more who had suffered losses coming forward (see timeline below for Computer Weekly coverage since 2009).

The controversy is set to cost UK taxpayers more than £1bn after the government agreed to bail the Post Office out and pay compensation to victims of the scandal. No senior officials at the Post Office have been held to account.

There has been a failed attempt to migrate from Horizon before. In 2015, Fujitsu used its influence at the Post Office to plant seeds of doubt within management over a proposed contract to replace the IT service provider’s software with IBM technology, according to a source working on Post Office IT at the time.

The source, who wished to remain anonymous, revealed more details of the Post Office’s failed attempt to ditch Fujitsu and move to a multi-supplier contract, which would have seen IBM replace its controversial Horizon software.

Computer Weekly first exposed the scandal in 2009, with the stories of seven subpostmasters.

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