There can be few – if any – initiatives more important to the future of the Post Office than the replacement of the controversial Horizon IT system at the heart of the scandal that led to the UK’s most widespread miscarriage of justice.
And yet recent revelations at the public inquiry into the scandal show that the replacement project is riven with problems – a project team that distrusts company leaders and is in return distrusted by those leaders; poor governance; a lack of suitable technical and agile development skills; limited understanding of modern software development practices; and insufficient clarity of purpose beyond that of simply “replacing Horizon”.
As such, it is perhaps unsurprising that the programme is running many years and hundreds of millions of pounds over budget.
As Computer Weekly revealed in May this year, a review by government project management experts at the Infrastructure and Projects Authority (IPA) rated the project as “currently unachievable”, with budgets ballooning from £180m to £1.1bn, and implementation being delayed by as much as five years.
Computer Weekly understands that the Post Office announced internally last week that it is reassessing its approach to the Horizon replacement project, and plans further engagement with government and other external experts – but there are enormous challenges ahead to get the project back on track.
Catastrophic consequences
As things stand, the Post Office contract with IT supplier Fujitsu to support Horizon ends in March 2025, and if that’s not extended, the consequences could be catastrophic for the branch network. Even Fujitsu is cautious about continuing, and has said it will only do so if convinced the Post Office has a viable replacement plan in place.
The Post Office has asked for a five-year extension, with a three-year break point. The full five years could see up to £180m of additional taxpayer money go to the IT supplier.
But, according to witnesses at the public inquiry into the Post Office scandal, the two companies have yet to agree a new contract, with less than six months to go.
Former Post Office chief transformation officer Chris Brocklesby told the inquiry that, if everything went according to plan, the earliest that the Horizon replacement – dubbed New Branch IT (NBIT) – would begin roll-out is June 2026, with Horizon finally switched off at the end of 2028.
Even those timescales seem ambitious given the apparent chaos within the Post Office around such a vital project.
Board meeting
Minutes from 4 July 2024 Post Office board meeting raise questions over how seriously its leadership is taking the highly critical IPA report.
The minutes cite Brocklesby as saying, “The IPA team were not system building experts”, and that the IPA giving its highest “red” warning rating for the NBIT programme was “due to the profile of the company and the complexity of the programme”.
This view came despite the IPA team concluding that, “There are major issues which, at this stage, do not appear to be manageable or resolvable entirely within POL [Post Office Limited].” The IPA made seven recommendations, including improving governance, increasing digital expertise in the organisation, better engagement with HM Treasury, and clarity around risk appetite.
However, Brocklesby told the Post Office board meeting that, in terms of the seven IPA recommendations, there were only two that the Post Office “could do something about”. He described the 32-page, in-depth IPA report as “very top down”.
The IPA is the government’s highest authority for monitoring the progress of critical public sector programmes, overseeing projects from HS2 to defence procurement as well as large-scale Whitehall IT implementations. It was brought in to review NBIT by the Treasury as a condition of providing the near £1bn of additional funds needed to meet the revised budget for the programme as a result of all the ongoing problems.
Damning review
The July board meeting minutes also referenced a separate review conducted by consultancy Public Digital, which specialises in major public sector digital transformation projects.
Computer Weekly has now seen a copy of the review, and its findings are as damning as those from the IPA.
The report, produced in May following interviews with 47 Post Office employees, including board members and CEO Nick Read, describes the NBIT project as “not currently in a healthy place”, while acknowledging “pockets of excellent work and deeply expert people”.
However, “throwing ever more resources at the programme will not solve its problems”, said the review.
Core to the problems on NBIT, says the report, is a view within Post Office that is simply an “IT replatforming” – effectively, replicating Horizon in a new system. However, it found that, “replacing Horizon is not simply an IT project. It is a massive business change activity affecting every single one of its employees and franchisees.”
It said: “The historical framing of [the project] as ‘exiting Horizon’ has meant that the programme has become disconnected from a set of programme outcomes which is rooted in rebuilding trust with enabling postmasters and helping them do their jobs.”
Lack of skills
Achieving that goal is hindered by the lack of relevant skills and knowledge at all levels of the Post Office.
“From the board level through to the programme, there are insufficient senior leaders with experience of digital transformation at this scale,” said the report.
In particular, the review found a lack of modern, agile development experience: “Although we have met some experienced and highly capable agile delivery people, and improvements have been made, it was widely acknowledged that this approach is brand new for the programme.”
For example, the report highlighted gaps in resources around user experience design – a formerly 20-strong team had been reduced to four in 2023, when large numbers of contractors were let go due to the delays in the project. The knock-on effect could have a direct impact on the subpostmasters who will eventually use NBIT.
“For this scale of delivery, this is a skeletal team which is not large enough to embed within the product teams, or undertake the scale of research with users that is required for product decisions to be genuinely informed by user insight and to balance the risk attached to building the wrong thing by not engaging directly and regularly with postmasters,” said the report.
Furthermore, development and testing to date has been focused on users in Crown branches – those which are directly managed by the Post Office – rather than the more typical rural branches owned and run by self-employed subpostmasters.
The experts at Public Digital proposed this should be reversed: “We would suggest the rural franchise branch archetype should be the priority for research and design, as designing for the most difficult set up makes the rest easier.”
But the NBIT development team had so far only limited discussions with branch operators, they said: “Current engagement with postmasters is considered inadequate and engagement too late, which creates a risk that the programme will not meet user needs and will require significant remediation. The focus of replicating what already exists within Horizon is limiting.”
A dose of realism
The report cites a Post Office plan to increase the number of people working on NBIT from 327 to 526 by March 2025, but adds that “the recruitment profile for the programme requires a heavy dose of realism”, and that the plan was “unachievable” – “a view commonly shared by interviewees”.
The reviewers note that the type of skills required are in high demand, typically take three to six months to recruit, and that Post Office salaries are not competitive.
“The required velocity of hiring is incredibly ambitious, and POL have a track record of failing to meet ambitious recruitment targets. Several people inside the business have raised this as a risk,” said the report.
The consultants who reviewed NBIT found low morale within the team, a mutual lack of trust between the NBIT team and Post Office leadership, and a negative culture.
“The low levels of trust between the [NBIT] programme and POL business functions was a very common theme in interviews,” said the report.
“The disconnect and breakdown in trust between the programme and wider POL business functions is impacting delivery,” it added.
“We have observed a reluctance for individuals to take accountability, and decisions being unnecessarily escalated or taken by committee. Delays are often caused by process dysfunction and an inherent lack of trust between the business and the programme.”
John Doe letter
This lack of trust was reinforced by a letter revealed to the inquiry, sent anonymously to then Post Office chair Henry Staunton as long ago as June 2023. The letter appears to have been sent by someone working in the NBIT team.
“The disaster of NBIT is well known across different levels within the business,” the “John Doe” letter begins.
The message cites “secretive” teams working in silos and “told not to share updates or information with anyone from the wider business”.
“Anyone who questions the CIO or programme director are badged as difficult and troublemakers”, even though they are only trying to do the right thing and point out mistakes being made, said the anonymous author.
“The treatment of some of the people that have tried to step up to resolve the situation is also nothing short of disgraceful, most of whom are looking to leave because they don’t want to be part of history repeating itself.”
The letter claimed that the CIO, who was not named by the author, “is open about misleading the board with inaccurate dates and costs for NBIT.” It added: “The culture in the business is disgusting and this starts at the top.”
Staunton said during his inquiry session that it was only after this letter that the board was informed that budgets had ballooned. “You can’t have a project go from over £300m to over £800m without some intention to hold back that information,” he said.
Code quality issues
The John Doe letter also said defects in NBIT were “not under control” at the time of writing last year. The Public Digital report suggested that this problem has not been resolved.
“Historic code quality issues remain widespread,” it said. “Good software development practices do not appear to have been in place during [the] early build, which is evidenced by the low level of test coverage, incomplete integration and deployment pipeline, and patchy consideration for non-functional requirements such as security, performance, scalability, operability and thoughtful design patterns.”
The report quotes one unnamed interviewee during the review, who said: “In an urgency to demonstrate to paymasters that we can do this, we’ve rushed to show you a beautiful red car, but under the bonnet there’s a lot of technical debt.”
The report partly attributes technical problems to the Post Office decision to largely develop NBIT in-house, rather than looking to buy in existing software. “More consideration should have been given to use of commodity technology – e.g. it is not clear why the [Post Office] would want to build an electronic point of sale system from scratch,” it said.
As previously revealed by Computer Weekly, the NBIT project has already bought significant amounts of hardware and equipment, even though it cannot yet be rolled out to branches and the kit remains sitting in a warehouse.
More worryingly, the report suggested that IT security is not being given suitable priority – the lack of security functionality to date was also referenced by Brocklesby during his inquiry session as a cause of delays.
The Public Digital report said: “Secure-by-design principles and assurance processes are in place but culturally POL struggles to embed cyber security practices into digital delivery as a ‘delivery first, security later’ practice seems to be the prevailing approach, despite best efforts of security professionals.”
A troubling picture
Taken together, the IPA report, the latest evidence to the inquiry, the Public Digital review and the John Doe letter present a damaging and highly troubling picture of the Post Office’s attempts to replace Horizon. Short-term funding for the NBIT project has been rubber-stamped by the Treasury, but the full £1.1bn cost has yet to be approved.
A Post Office spokesperson said: “Today’s Post Office is working to ensure that the mistakes of the past can never be repeated and getting the right IT solution is crucial to that. We have been working with Public Digital since April for external input to our work on the development of our new branch IT solution. We are exploring all options, working with a range of stakeholders, to ensure a better digital infrastructure for our branches.”
However, if the findings of the consultants at Public Digital are not addressed, subpostmasters will continue to be worried about ever getting off the hated Horizon system.
“The goal of ‘getting off Horizon’, i.e. as an IT replatforming seen purely through a technology lens, will never engage the wider organisation sufficiently in the need to work together towards specific outcomes: e.g. rebuild trust with postmasters, and provide excellent services to postmasters and their customers,” said the report.
“In any case, moving off the existing technology platform is, in and of itself, a false Nirvana, particularly when the current programme largely mirrors the Horizon scope. Even having exited Horizon the organisation will continue to face changing needs and will require the ongoing muscle, and will, to do so.”
The Post Office scandal was first exposed by Computer Weekly 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).
• Also read: What you need to know about the Horizon scandal •
• Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story •
• Also read: Post Office and Fujitsu malevolence and incompetence means huge taxpayers’ bill •