More than £600 million of public money has been spent keeping the Post Office tied to the Horizon IT system, despite the decision to move away from it more than a decade ago. The costly arrangement is the result of an old contract that left the Post Office without ownership of the system’s core code. A detail that’s had long-lasting consequences for thousands of branches across the UK, and for the sub-postmasters who relied on the technology to run them. Consequently, the Post Office Horizon scandal is likely to dominate conversations once again as more details emerge about the structure of the original 1999 deal.
Under pressure from government at the time, the Post Office signed a contract that allowed an outside tech supplier to maintain full control over the intellectual property behind the software. That meant any future changes, whether switching supplier or building something new, came with an enormous price tag.
Even though the Post Office has been trying to replace Horizon since 2012, attempts to walk away have repeatedly failed. A costly replacement project in 2016 collapsed without result, and the original supplier was brought back in with a fresh contract worth more than £100 million. Meanwhile, because the Post Office didn’t own the underlying code, it couldn’t inspect or verify the part of the system that handled financial transactions. It had to trust the supplier’s word despite mounting evidence that the software wasn’t working as it should.
For postmasters across the country, the impact was devastating. Hundreds were wrongly prosecuted for theft or fraud based on what Horizon reported. And while those convictions have now been quashed, many say the damage to their lives and reputations can’t be undone. Efforts to move on are hampered by the simple fact that the system remains in place, still used by staff today, and still reported to be causing unexplained errors at some branches.
The Post Office finally acquired some rights to the software last year, but it remains unclear whether this includes the part of the system that was always out of reach. The plan now is to gradually roll out a new system through a programme called the “Future Technology Portfolio”, but that too has a long road ahead. The current contract with the existing supplier runs until 2026 and may yet be extended again to keep things running while the transition unfolds.
It’s easy to wonder how such a long-standing issue could have been allowed to continue. Internal documents from the early days warned that not owning the software would put the Post Office in a weak position. Those warnings appear to have been accurate. The long-running dispute over software ownership highlights the importance of understanding intellectual property rights in public sector contracts, especially when core systems remain in third-party hands for decades. Industry observers now say the inability to access or replace the Horizon system has led to years of dependence – a situation few public bodies would accept today.
The financial cost is only one part of the picture. Since 1999, billions have been paid out under various contracts, and over £600 million of that has gone towards short-term extensions or stopgap measures designed to buy time. Meanwhile, postmasters continue to work with software that many still mistrust, and the organisation as a whole is left trying to rebuild public confidence.
A new IT system is expected to be phased in over the next five years, but the roll-out won’t happen overnight. Instead, gradual steps are being taken to update parts of the system while keeping branches open and functioning. The government has pledged more than £100 million in support, and a detailed review is under way into what went wrong and how to stop anything like it happening again.
At its heart, the Post Office Horizon story is a lesson in how public money, contracts, and accountability can go wrong. For Londoners who still rely on their local post office, and for the hundreds of former staff affected by the original failures, the hope is that real change is finally coming.
For more updates on Post Office Horizon spending and further insights, visit EyeOnLondon. We’d love to hear your views in the comments.
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