Post Office has spent more than £600 million of public money continuing to use the faulty Horizon IT system, despite making the decision to replace it over a decade ago, according to a BBC investigation.
Post Office’s 1999 contract with Fujitsu, reportedly signed under pressure from the then-Labour government, locked the organisation into the flawed system. Crucially, Post Office did not own the intellectual property rights to Horizon’s core software, leaving it unable to modify or replace the system without Fujitsu’s involvement.
Even after Horizon’s role in the wrongful prosecution of 700 sub-postmasters between 1999 and 2015 – a scandal later deemed one of the UK’s worst miscarriages of justice – Post Office remained trapped in the contract. Attempts to switch suppliers, including a failed £40m project with IBM in 2016, proved too costly.
Internal documents obtained by the BBC reveal that senior Labour figures, including former prime minister Sir Tony Blair and then-chancellor Gordon Brown, were warned about the risks of the Fujitsu deal before it was signed.
A Treasury document from May 1999 sent to Blair specifically highlighted that discussions with ICL, a Fujitsu subsidiary, had “foundered” partly because ICL was “not prepared to... give perpetual licences for all the IPR [intellectual property rights]”.
The document warned that if Post Office ever wanted to change suppliers, the owner of the IPR “would be in a strong position to drive a costly settlement with Post Office.”
Despite these warnings, the contract proceeded. IT expert Jason Coyne, one of the first to identify Horizon’s flaws, told the BBC it was “utter madness” for Post Office to become “operationally reliant” on a system it didn’t fully own.
Since 1999, the Post Office has spent a staggering £2.5 billion on contracts with Fujitsu. This includes more than £600 million spent on bridging or extension contracts to continue the Horizon contract since the Post Office began looking for new suppliers in 2012.
In 2023, it finally acquired some Horizon software rights for £10m, a price Coyne called “cheap – because who else would buy it?” However, experts believe Fujitsu’s contract will need extending beyond its March 2026 expiry date while a replacement is developed.
Ongoing issues
Sub-postmasters continue to report problems with Horizon. A 2024 YouGov survey commissioned by the Post Office Inquiry found that 70 per cent of respondents had experienced unexplained discrepancies since 2020.
Post Office said it has not undertaken any prosecutions related to Horizon since 2015 and “has no intention of doing so”. It is now implementing a five-year plan called the “Future Technology Portfolio” to replace Horizon in stages rather than with one “big bang” transition.
Procurement specialist Ian Makgill told the BBC that IP ownership was the key barrier to replacing Horizon. “IPR is the reason why the Post Office hasn't been able to move away from Fujitsu and the Horizon software,” he said.
He explained that building new software without any of the intellectual property from Horizon would have required starting from scratch, potentially costing “hundreds of millions of pounds”.
The Department of Business and Trade has committed £136 million of funding over the next five years for the Future Technology Portfolio and says it is “working at pace” to ensure Post Office has the technology it needs.
