Why the Post Office paid £600m to stay shackled to the faulty Horizon system

The post office has paid more than £ 600M public funds to continue using the defective horizon IT system, which may reveal the BBC, despite deciding to dig more than a decade ago.

The terms of the original 1999 deal with computer giant Fujitsu means that the post office is stuck with the system and unable to build a replacement so far, even though it contributed to one of the greatest abortion of justice in Britain.

The data of former Prime Minister Sir Tony Blair and other senior labor government was warned of potential problems with the terms of the deal, before the BBC learned before it was signed.

The post office stated that it “was unreserved apologizes to the victims of the horizon IT scandal” and said that it was committed to move away from Fujitsu and Horizon Software.

Under the terms of the original £ 548M deal, the then Labor was killed under pressure from the government, the post office did not owe the computer code for the main part of the horizon system.

Although the post office wants to switch suppliers from 2012, buying the rights of the code from Fuzitsu or the creation of a completely new system was considered very expensive – even the amount given to Fujitsu to maintain and grow the horizon system was also increased.

Because it was not the owner of the code, the post office was also unable to inspect the part of the software that processes the transaction, and had to rely on the assurance from Fujitsu that it was working correctly.

The post office, which is owned by the government, prosecuted about 700 sub-postmasters for theft, fraud and false accounting for theft, fraud and false accounting in the branches reported by the horizon system. Last year was convicted by Parliament.

Earlier this year, Business Minister The Baronchar’s Baronic Jones told the House of Lords that the post office is “unfortunately dependent on the horizon system”, and Fuzitsu’s only way “may be out of the picture” must immediately mean closure of all local post offices.

Attempt to replace the system with an IBM created by IBM failed at a cost of £ 40m in 2016, and the post office extended its contract Fuzitsu for at least four and years from a cost of £ 107m.

The post office told the BBC that it has finally gained rights For horizon software and code in 2023, although it is not known that it includes the original system that processes the transaction.

The price of £ 10m for the license is “cheaper – because else will buy it?” According to this expert Jason Coin, One of the first people to identify flaws in the system,

The BBC understands that the post office can try to use this license for the replacement of the horizon. But when it is being built, IT experts believe that the post office contract with Fujitsu will need to be extended beyond March 2026 – when it is currently due to the end.

Issues of being the owner of horizon software after the contract to computerize the network of post office branches – then in number of 18,000 – the post office, Fujitsu and its subsidiary ICL route and the government were interacted between the ICL route and the government.

In May 1999, Sir Tony Blair received an update from Treasury, warning in a document that the discussion with ICL on the terms of a deal has “found”.

One of the glued points was around intellectual property rights (IPR) – Which included the ownership of the code within the horizon software.

The document says that the ICL “was not ready … Always license for all IPR “.

It is said that if the post office wanted to change the suppliers at any time, the owner of the IPR would “be in a strong position to settle an expensive disposal with the post office”.

The BBC has also received a document from May 20 the same year, which was sent to the then-Chancellor of Chancellor Gordon Brown and other government officials of that year, warning the issue of who was owned by the code.

In this, a Treasury Civil Servant states that one of the “main problems” was with the terms of the deal with ICL for horizon software. “Issues and kit IPRs around the ownership of the assets were acquired by the post office.

IT expert, Mr. Koyne said that it was “completely madness” that the deal proceeded in July 1999 because it meant that the post office became “dependent on the horizon”, even though it was not the owner of the right to use the system without Fujitsu.

A spokesperson of Sir Tony Blair did not address BBC questions about his knowledge of IPR issues, but said “at that time took the issues raised about the horizon contract very seriously”.

“The final decision was taken after an investigation by an independent panel, it was recommended.

“It is now clear that the horizon product was severely flawed, causing tragic and completely unacceptable consequences, and Mr. Blair has deep sympathy with the affected people.”

A spokesman from Gordon Brown said that he would have been copied as “Memo not shown” from 20 May 1999 and he would have been copied as “formality”.

“He was not involved in any work related to the purchase, prize or management of the horizon contract.”

The warnings about the ownership of IPR came true after more than a decade when the post office decided to invite other companies to handle the horizon contract.

Former officials told the post office investigation, which is investigating the leading decisions for the wrong faults of hundreds of sub-postmasters, how the company found it difficult to change Fujitsu.

Former Chief Financial Officer Elisadare Cameron at the post office said Fujitsu said “Hard colleagues” and “it was accepted that the horizon, and on which the infrastructure was created was unsafe”.

But between October 2010 and April 2012, Chief Operating Officer Mike Young told the investigation at the post office that Fujitsu management told him “Code is ours. You are the owner of the service because you pay for it but you do not pay the code”.

Documents released by the post office check show that “IPR points” were often discussed at the top-level. Post office officials.

“There is a risk that we may be unable to agree on an IP license with Fuzitsu on appropriate terms”, a Post Office Board meeting in July 2013 said – while other documents describe concerns on costs.

Procurement expert Ian Makgil told us that he believes that horizon is not the owner of IPR for software, a factor of the 2016 IBM deal collapse to change the system.

He said that if IBM tried to create new software without IPR from the horizon, it would “need to start with scratch, which would cost the post office hundreds of crores of pounds”.

“IPR This is why the post office is not able to move away from Fujitsu and Horizon Software,” he said.

Since 1999, the post office has spent £ 2.5bn on a contract with Fujitsu. This figure includes more than £ 600m spent on bridgeing or extension contracts to continue the horizon contract, as the post office started searching for new suppliers in 2012, according to the analysis of data firm Tussell and BBC.

Many sub-postmasters, incorrectly accused by the post office, said that there was no missing money and there was a shortage. Bottom for errors in the horizon system.

But, unable to inspect the system directly with the post office, which processed the transaction, accepted the assurance from Fujitsu that the system was working correctly.

“Fujitsu was fighting for the whole time to protect his investment and his intellectual property, but rather, rather, taking care of the interests of the sub-postmaster,” said Mr. Makil.

Fujitsu did not respond to the BBC specific questions, but said that it was “focused on supporting the post office in its plans for a new service distribution model” so branches could be operated.

Mr. Makgil said that the post office incorrectly tolerates the “final responsibility” on the fate of the accused sub-posts.

“They did not have to take those prosecutors, they did not have to take people to court.”

Currently sub-postmasters using horizon IT software continue to report issues with it. Seven of the seven said that they had experienced a “unexplained discrepancy” on the system since January 2020. A yougov survey In 2024, 1,015 respondents were commissioned by checking the post office.

The post office has said that it has not made any prosecution related to the horizon since 2015 and “no intention of doing so”.

This told the BBC that it is “implementing changes in the entire organization” so that it “fitted for the future, originally changed and with postmaster in its heart”.

This includes working with Fujitsu to fix discrepancies and review the current version of the horizon – converting it into stages under a five -year plan called “Future Technology Portfolio”.

Post office president Nigel Railton has said that a new IT system will not be introduced in a “Big Bang”, but there will be gradual changes.

The post office did not respond to BBC’s specific Questions about IPR This is the reason why the company was unable to dig the Fujitsu, and said that it would not be appropriate To comment further to the final report of the post office inquiry.

The Department of Trade and Trade told the BBC that it was providing £ 136M funding to future technology portfolio over the next five years, and to ensure that post office technology was required, including changing the horizon system, “was working at a speed.