As the government hands the Post Office £400m in public funds to replace its controversial Horizon system, details emerge of millions more wasted as a result of botched IT.
The latest costs come as the Post Office agrees to pay millions of pounds in compensation to scandal victims hit by a data breach last year. Computer Weekly can also reveal that the Post Office paid IBM about £10m when it abandoned a Horizon replacement project in 2015.
The Post Office scandal, which caused devastation to its victims, is costing UK taxpayers billions of pounds. But while the costs associated with financial redress and legal battles steal the headlines, the Post Office has been haemorrhaging funds in its IT department.
As Computer Weekly revealed in March, the Post Office made interim compensation offers to a number of former subpostmasters affected by the major data breach. The breach was caused by human error during a project to upgrade a website, which resulted in a link to an unredacted document being put online, rather than the redacted document.
The 555 members of the Justice for Subpostmasters Alliance (JFSA), who took part in the 2018/19 group litigation action, had their names and addresses exposed on the website.
The Post Office has confirmed it will pay the affected subpostmasters compensation.
“Post Office can confirm that it has agreed to pay individuals whose names appeared in last year’s data breach either £5,000 or £3,500, depending on whether the individual was also living at the [leaked] address at that time,” said a spokesperson. “Post Office has confirmed that it will consider any special cases if any individuals consider they are entitled to further amounts.”
This is yet more money wasted as a result of Post Office IT mistakes.
Mounting costs
Last week’s announcement that the organisation is officially seeking a supplier to replace Horizon also signalled an end to its in-house New Branch IT (NBIT) project – another failed initiative. The project was canned after a government report last year found that budgets ballooned from £180m to £1.1bn and implementation was delayed by as much as five years.
During his appearance at the Post Office scandal public inquiry in October 2024, Post Office chairman Nigel Railton said the company’s decision to build the NBIT system in-house was one of two reasons the project was “set up to fail”.
The delays and mistakes cost money. For example, as revealed by Computer Weekly in October last year, the Post Office was paying more than £80,000 per week for contracted IT engineers to sit idle due to major delays in the NBIT project. The Post Office also acquired hardware for NBIT, which is now being repurposed to run with the current system.
NBIT was not the first costly failed attempt to replace Horizon. In 2015, a project to replace it with IBM technology was scrapped when it became too complex. IBM was paid what Computer Weekly can reveal was in the region of £10m to walk away.
Much more recently, the Post Office abandoned another project at huge cost to taxpayers. Last year, Saf Ismail, subpostmaster and non-executive director at the Post Office, told the public inquiry that £35m was spent on an abandoned plan to migrate from its datacentre in Northern Ireland to the cloud.
The planned cloud migration in Belfast was halted due to complexity, Ismail said in his witness statement to the inquiry.
There is also a project on pause, which plans to migrate Horizon data from Fujitsu systems to the Post Office’s. The pause was implemented after the Metropolitan Police, which is currently investigating potential crimes in the Post Office scandal, put the brakes on until it was satisfied with the approach. Computer Weekly has no details of the costs related to this delay.
In the meantime, the Post Office has been extending Fujitsu’s stay at the heart of its IT, with its current £40m deal set to expire in March 2026.
Computer Weekly first exposed the scandal in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to Horizon accounting software, which led to the most widespread miscarriage of justice in British history (see below timeline of Computer Weekly articles about the scandal since 2009).
