Post Office paid Fujitsu £95m to extend Horizon

The Post Office has paid Fujitsu over £95m to extend the troubled Horizon IT system for two years after a plan to move to Amazon had to be abandoned.

A serving postmaster told the BBC the software is still unreliable, and causes money to disappear.

Costs and delays are still dogging the Horizon project more than two decades after the contracts were first signed.

The Post Office said it plans to start trialling a new system in branches this year.

When Fujitsu won the contract to install computer terminals in over 17,000 Post Office branches around the UK, it called it "the biggest non-military IT project in Europe", designed to automate and simplify everything from selling stamps to paying pensions.

Nearly 28 years later, it is still in use throughout the country, still plagued with difficulties, and the Post Office is struggling to replace it.

It led to what has been called one of the most widespread miscarriages of justice in British history. Thousands of sub-postmasters who used Horizon to manage their businesses were held accountable for losses which were not their fault, with 983 receiving criminal convictions.

Their plight received new public attention this year when ITV broadcast a drama series about their fight for justice.

Horizon is still in use in UK Post Offices to this day. One postmaster, who runs two Post Offices in the South East of England and spoke to the BBC on condition of anonymity, said the system is still unreliable.

“You still get shortfalls. You can’t trust it. You can’t rely on it.” However, since the sub-postmasters won their court case in 2019, the Post Office is more likely to resolve significant disputes in the sub-postmaster’s favour, he said.

A Post Office spokesperson said: "As you would expect, we have made significant changes in the way we work with postmasters."

Abandoning the cloud

Horizon is currently housed in two Fujitsu-owned data centres in Belfast. In December 2022, the Post Office abandoned a plan to move it onto the vast network of data centres run by Amazon – a more up-to-date, flexible and robust system used by thousands of other online services known as ‘the cloud’.

“Everything seems to be ‘in the cloud’ these days,” a Post Office announcement breezily noted in 2022. “You may well use the cloud to store photos and music on your devices, for example.”

But later that year, the plan proved too difficult, and was abandoned.

A Post Office spokesperson said: “The age of Horizon and the complexity involved meant that particular programme proved too technically challenging and costly. A decision was taken in November 2022 to discontinue this particular programme and resulted in a need to extend support services for our current data centres.”

The cost of abandoning this plan was £31m, according to the Post Office’s latest accounts, published in December and first reported by The Stack news website.

The Horizon contract was meant to expire in 2023 but the challenges of replacing it have been so great that it has been extended twice - for £42.5m in 2021, and again last year in two contracts worth £16.5m and £36.6m.

These take the contract up to 1 April 2025, at a total cost of £95.6m.

The Post Office justified the £16m contract extension because a “program to transfer the services to a new cloud provider created fundamental technical challenges that POL [Post Office Limited] could not economically and technically overcome.”

The Post Office is still working on a replacement for Horizon, dubbed “New Branch IT”. The first installations were meant to happen last year, but it is behind schedule.

A Post Office spokesperson said: “We are still working to come off Horizon. We’ve been testing basic mails transactions live on this new system in two pilot branches. Next, we are adding and testing more mails and back-office functionality. After evaluation, this will be the version that we plan to install in pilot branches later in 2024.”

In 2022 the Post Office awarded Accenture a £27m contract to assist with moving their IT systems onto the cloud, and a separate contract to work on the user interface for the new system.

The Post Office’s accounts also note that: “A further impairment review at the cash generating unit (“CGU”) level was performed during the year resulting in an additional impairment of capitalised software costs of £115 million.”

In accounting terms, an impairment usually means that an asset which was once considered valuable has become less valuable, creating a loss for the business. The Post Office has not given the BBC more detail about how this loss had come about.

Fujitsu and Accenture declined to comment.

Ben King is on X (formerly Twitter)