Post Office scandal: Inquiry’s final phase exposes dysfunction past and present
It is 25 years since Horizon was introduced and the same number of years since subpostmasters began experiencing problems with it.
About 16 years has passed since Computer Weekly’s first investigation into problems with the IT system, and it was just a few months after that when subpostmasters formed a campaign group to seek justice for the suffering they had endured due to errors in the system.
It was six years ago that subpostmasters took the Post Office to the High Court to try to prove that it was the Post Office’s branch computer system causing unexplained losses, not them. And five years ago, they did just that.
It was a mere four years ago that the first group of six subpostmasters had their convictions based on data from the Horizon system overturned at Southwark Crown Court, before 39 more joined them at the Court of Appeal four months later. More have followed.
Over three years ago, a public inquiry was established, initially as a non-statutory review before, under pressure, the government converted it to a statutory public inquiry in May 2021.
A little short of a year ago, an ITV dramatisation of what we now know as The Post Office Horizon scandal was broadcast, putting it at the top of the news agenda, where it has remained since.
And just few days ago, the statutory public inquiry looking at all these things – and more – ended after nearly three years.
The final phase of the inquiry, which examined current practice and procedure and recommendations for the future, left inquiry followers in little doubt of the scale of the problems at the Post Office.
Read more about how the scandal unfolded: Post Office Horizon scandal explained: Everything you need to know.
Core of the problem – and still a problem
It all began with a computer system that didn’t work properly. This was proven to be the case in the High Court in 2019, and according to evidence presented in the latest phase of the Post Office Horizon IT Inquiry, looking at the here and now, subpostmasters are still struggling with the system.
Phase seven kicked off with Gavin Ellison, from research company YouGov, which was commissioned by the public inquiry to carry out a survey of subpostmasters to better understand their experiences of Horizon and the wider technology platform they use in branches.
The results were not reassuring. Perhaps the most startling finding was that three-quarters of 1,000 current subpostmasters have used their own branch money to cover discrepancies or resolved the issue themselves since 2020.
It also revealed that 57% of subpostmasters have experienced unexplained shortfalls, with 19% reporting unexplained transactions and 14% having had transactions go missing. Two-thirds said they were experiencing these issues at least once a month.
Also giving oral evidence in this phase was the National Federation of Subpostmasters CEO, Calum Greenhow. He told the inquiry that subpostmasters are currently living with disputed but unresolved debts to the Post Office. He said some cases have been going on for years, and demanded the Post Office bring that to an open and transparent conclusion.
Read more about YouGov’s survey of subpostmasters: Post Office system still causing unexplained shortfalls for over half of subpostmasters.
Read more about Calum Greenhow’s oral evidence: Subpostmasters living years with disputed but unresolved debts to the Post Office, inquiry told.
Chaos in reaching the horizon
The YouGov numbers are another reminder to the Post Office that the Horizon system must go. Ever since the High Court judgment in 2019, which confirmed the system was error-prone, it has been obvious it is time to replace it. But the system is still hanging around, and the Post Office has made some huge mistakes in its rushed attempts to move away from Fujitsu’s software and services.
During a phase seven hearing, former Post Office chairman Henry Staunton and chief financial officer Alisdair Cameron said the New Branch IT (NBIT) project to replace the Horizon service lacks governance.
Saf Ismail, subpostmaster and non-executive director at the Post Office, also described some of the problems being experienced. Ismail told the inquiry that major mistakes when moving to a cloud platform resulted in £35m being spent with the sole gain to the Post Office being a new air-conditioning system.
The NBIT project was supposed to replace Horizon in 2025, after being announced in May 2022, but as revealed by Computer Weekly in May this year, the project hit major problems and the Post Office has requested £1bn of extra public funding from HM Treasury to get it back on track. The project has now been paused while the Post Office’s new leadership team decides the way forward.
Read more evidence to the inquiry revealing NBIT troubles: Post Office spending over £80,000 a week on engineers who can’t work as IT project burns cash.
Read more about Saf Ismail’s oral evidence: Post Office IT procurement mess saw £35m spent on air-conditioning, says board member.
Is there still rot at the core?
Police have been investigating individuals linked to the Post Office scandal since 2020, and earlier this year, following public uproar in relation to the Horizon scandal, a national investigation was announced by the Metropolitan Police.
But what was less known was the extent of the Post Office’s internal investigations related to the scandal.
During the appearance of the Post Office’s current company secretary, Rachel Scarrabelotti, a shocking revelation emerged that the Post Office was investigating one of its own senior managers, who had allegedly instructed staff to destroy documents that might be of interest to the public inquiry. The investigation has now been passed on to the police.
Read more about Rachel Scarrabelotti’s oral evidence to the inquiry: Post Office senior executive suspended over allegations of destroying evidence.
Culture of internal investigation
Former police officer John Bartlett, who now heads up the Post Office’s internal investigations, like the Met Police, has his hands full.
The inquiry heard his department had, in August this year as a snapshot, six major internal investigations on the go.
During Bartlett’s oral evidence, a document titled Post Office ad hoc board report was revealed, outlining the internal investigations underway at the Post Office in August.
They included Project Acer, an investigation into a manager who allegedly instructed staff to destroy material that could be of interest to the public inquiry, and Project Willow, which alleges that former transformation boss Chris Brocklesby misrepresented the off-the-shelf option to replace Horizon.
The document also revealed Project Alder, an investigation into allegations that contractors tasked with processing subpostmaster compensation schemes were deliberately going slow to extend their contracts, and Project Phoenix, which was investigating whether current Post Office staff were involved in the investigations and wrongful prosecutions of subpostmasters.
Then there’s Project Tiger, an investigation, overseen by acting CEO Neil Brocklehurst, set up to look into complaints from former subpostmaster and campaigner Tim McCormack about the Post Office’s handling of his recent freedom of information request responses.
Read more about internal investigations at the Post Office:
Former Post Office IT boss alleged to have misrepresented alternative to in-house build.
Who is the subject of the Post Office’s Project Tiger investigation?
Man on a mission
Post Office interim chairman Nigel Railton didn’t pussyfoot around the thorny issue of the NBIT project. He came right out with a claim that the NBIT project was “set up to fail” and needed to be reset.
He said two fundamental mistakes were made at the project’s outset – one was the decision to set the goal “to get off Horizon” rather than building a system for the future, and the second was the decision to build in-house.
Railton said there are many “horror stories” of people trying to build systems in-house, adding: “I think, based on my experience, that this was always set up to fail in the first place.”
Computer Weekly revealed later that the “writing is on the wall” for the Post Office’s plan to build the NBIT system in-house as it considers dumping it in favour of an off-the-shelf electronic point of sale (EPOS) alternative.
He also said the project is too reliant on third parties and likened it to the NHS being reliant on locum staff. A message has been sent to staff that the organisation is reassessing the project.
Read more about Nigel Railton’s evidence: Post Office IT transformation project was ‘set up to fail’, chairman tells inquiry.
Man who failed his mission
While Railton has set out his stall, one man that failed to achieve this is outgoing CEO Nick Read. He was brought in to steady the ship following the High Court judgment in 2019 and the exit of his disgraced predecessor Paula Vennells.
The inquiry had a taste of Read’s reputation before his arrival to give evidence. A damning whistleblowing letter, sent in May this year, was revealed during a recent hearing of the inquiry. It described a culture of lies and cover-ups in the organisation that employs him and has paid him millions of pounds to clean up.
A letter from Post Office staff to MPs, statutory inquiry chair Wyn Williams (pictured above) and the Post Office chairman, demanded their intervention and an investigation into the organisation’s leadership.
During Read’s evidence, it was revealed that the Post Office CEO job description advertised in 2019 didn’t mention the landmark High Court judgment against the organisation and its ramifications on the role. Nor were candidates made aware of the large and complex IT project that was required to replace the Post Office’s troubled Horizon IT system.
Read admitted, during his appearance at the inquiry, that the Post Office he led “dragged its feet” when dealing with employees who could have been involved in the wrongful prosecution of subpostmasters using flawed evidence.
He also revealed that the company so far estimates that individuals running branches repaid around £36m to cover the unexplained shortfalls.
Read more about Nick Read at the inquiry:
Under-fire Nick Read was unprepared for Post Office challenge.
Post Office dragging its feet in getting rid of tainted staff, despite government ‘green light’.
Post Office currently believes it took £36m from subpostmasters with unexplained losses.
Cost-cutting discussions ‘like drawing teeth’
Former Post Office minister Kevin Hollinrake was critical of Read’s inability to cut costs within the organisation to help it escape its financial struggles. During his appearance at the inquiry, Hollinrake revealed that 143 people working for the perpetually loss-making and government-backed Post Office earn over £100,000 per year.
Yet Hollinrake described his meetings with Read about cutting costs as being like “drawing teeth”, with the CEO seemingly unable to grasp the nettle.
But politicians also received criticism. During his appearance at the inquiry, Simon Recaldin, who heads up the Post Office’s schemes to provide financial redress to victims of the scandal, described the government’s take it or leave it offer of £600,000 to subpostmasters wrongly convicted as “political”. He told the inquiry the Post Office was not consulted on the offer, and while he supported it, he questioned how the policy was “imposed on the Post Office”.
Read more about Kevin Hollinrake’s evidence to the inquiry: Post Office was reluctant to cut costs despite 143 central staff earning more than £100,000.
Read more from Simon Recaldin at the inquiry: Government’s £600,000 offer to Horizon scandal victims was ‘political’.
Marriage of convenience on the rocks
There is a long history between Fujitsu and the Post Office, which began when the government decided the Post Office would take the Horizon system in the late 1990s.
In 1998, following a meeting between the British ambassador to Japan and Fujitsu executives, the British embassy in Tokyo wrote to the UK government warning it of serious economic repercussions, including UK job losses and reductions in trade, if the Horizon contract with the Post Office were, as feared, to be cancelled.
The system was developed by government IT specialist IT supplier ICL, which was acquired by Fujitsu. This saved ICL and gave Fujitsu access to a lucrative public sector market, which it still enjoys today.
But although the relationship has, at times, been toxic, the companies have been joined at the hip when it comes to defending the Horizon system and shifting blame for shortfalls onto the subpostmasters. Not anymore – the relationship has fallen apart and the two organisations can’t wait to see the back of each other.
Chris Brocklesby, chief transformation officer at the Post Office until recently, gave evidence to the inquiry in phase seven. He described a strained relationship between the two organisations.
He also said when he arrived at the Post Office in August 2023, there was no realistic plan in place for the delivery of a Horizon replacement, despite the plan of record being that NBIT would be deployed by March 2025.
Brocklesby said when he started his role, little to no software had been delivered.
Fujitsu knew this, but was still demanding that the Post Office appoint someone to manage its exit from the Horizon contract. During the hearing, he accused Fujitsu of “game playing”.
Later evidence in the inquiry revealed there is currently a standstill agreement over potential civil litigation between the supplier and the Post Office, meaning the two organisations have agreed not to take legal action against each other for a certain period of time.
Read more about Chris Brocklesby’s oral evidence: Post Office and Fujitsu – from blood brothers to bad blood.
Post Office misappropriated funds
Civil servants have featured throughout the public inquiry, with the evidence accompanying them often of the most revelatory variety.
Alex Chisholm, former chief operating officer and permanent secretary for the Cabinet Office, was no exception. During his evidence, it was revealed that the Post Office wrongly spent millions of pounds of taxpayers’ money to fund its High Court legal battle with subpostmasters.
The Post Office had wrongly spent at least £2.3m of public money in this way, and also wrongly requested a further £2.4m, before civil servants spotted it and put a stop to it.
Also appearing before the inquiry was Lorna Gratton, the civil servant who currently sits as a non-executive director of the Post Office on behalf of the government. Her evidence session revealed that the Horizon system is going to be investigated again, with a third party to be appointed imminently.
In relation to the discrepancies that subpostmasters continue to experience when using the Horizon system, she told the inquiry: “The Post Office executive team are in the process of appointing an independent third-party review of Horizon and its robustness.”
Read more about Alex Chisholm’s oral evidence at the inquiry: Post Office wrongly used public funds to pay for legal battle.
Read more about Lorna Gratton’s appearance at the inquiry: Post Office appointing third-party reviewer of current Horizon system.
Fujitsu’s fighting talk
Fujitsu boss Paul Patterson was profusely apologetic when he first gave oral evidence in January, during phase four of the inquiry, but this time around, Patterson appeared to have done many rounds of sparring with company lawyers. He came out fighting. Gone was the apologetic, grovelling executive, replaced by an aggressive figure punching back.
During his appearance, Patterson said the past seven months of inquiry hearings had revealed that many organisations were to blame for the scandal – not just Fujitsu and its faulty software. This is true, but where was this in his last appearance and where was he for the previous 24 months of the inquiry?
He also described the perilous state that Horizon is in having reached the end of its life and been starved of investment.
Read more about Paul Patterson’s latest oral evidence to the inquiry:
Post Office scandal not caused by software errors, says combative Fujitsu boss.
Post Office requests four-year Horizon contract extension.
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