Post Office spent £600m to keep Horizon despite plans to replace it: Report

THE POST OFFICE has spent more than £600 million of public funds to continue using the Horizon IT system, according to a news report.

Despite deciding over a decade ago to move away from the software, the original 1999 contract with Fujitsu prevented the Post Office from doing so, as it did not own the core software code, a BBC investigation shows.

The Horizon system, developed by Fujitsu and its subsidiary ICL Pathway, has been at the centre of one of the UK's most significant miscarriages of justice, leading to the wrongful prosecution of about 700 sub-postmasters between 1999 and 2015.

The convictions, based on alleged cash shortfalls flagged by the system, were overturned by Parliament last year.

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The BBC has obtained documents showing that former prime minister Tony Blair and senior Labour officials were warned about intellectual property rights (IPR) issues before signing the contract.

A 1999 Treasury update stated that ICL would not provide perpetual licences for all IPR, which would place the Post Office in a weak position when attempting to switch suppliers in the future.

Because the Post Office did not own the Horizon code, it could not inspect how the system processed transactions and had to rely on Fujitsu’s assurances.

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When the Post Office tried to replace Horizon with an IBM-built system in 2016, the project failed at a cost of £40 million, leading to a four-year contract extension with Fujitsu for £107 million.

IT expert Jason Coyne described the deal as "utter madness", while procurement specialist Ian Makgill said that the IPR issue made it nearly impossible to change suppliers.

The BBC also reported that the Post Office obtained some rights to the Horizon code in 2023, with plans to use this in its replacement strategy. However, experts believe the Fujitsu contract may have to be extended beyond March 2026.

The Department for Business and Trade told the BBC it is providing £136 million over five years to fund a new system under the "Future Technology Portfolio". The Post Office said it is implementing changes across the organisation and working with Fujitsu to phase out Horizon.