The Post Office has been incurring costs exceeding £80,000 weekly for contracted IT engineers who are currently unable to work, resulting from significant delays in implementing hardware for its New Business IT (NBIT) project.
This episode exemplifies the ongoing misallocation of taxpayer funds as the Post Office attempts to eliminate the system at the center of a major scandal. Computer Weekly has uncovered that £1.6 million may be spent on IT personnel waiting idly due to issues with power supply units, which are crucial for the project intended to replace the problematic Horizon system. Initially projected to cost £180 million, the NBIT project’s expenses have surged to £1 billion.
The latest revelations emerged during the public inquiry into the Post Office scandal, where two former executives—chairman Henry Staunton and CFO Alisdair Cameron—testified that the NBIT project currently lacks adequate governance.
Progress Update
An internal update on the NBIT project notes that there are “high level issues” preventing tech engineers from IT supplier DXC, who were contracted in mid-June, from performing their tasks due to problems with the power supply units. The engineers will need to wait an estimated 16 to 20 weeks for replacement units to be available, which would allow them to fulfill their contracts. The Post Office has suggested redeploying these engineers for other tasks, such as surveying branches or installing HP point-of-sale equipment as part of NBIT.
The NBIT initiative, initially slated to replace the Horizon system by 2025 and announced in May 2022, has faced substantial setbacks. In May, Computer Weekly reported that the Post Office had sought an additional £1 billion in public funding from HM Treasury to address these challenges. Current project leaders are also grappling with uncertainty regarding the quantities of necessary PIN pads and card terminals, as well as issues with contracts with IT suppliers DXC and SCC that are inadequate to meet the demands of the project.
A Post Office spokesperson informed Computer Weekly that the organization has redirected these engineering resources to conduct surveys at branch sites. To date, DXC engineers have surveyed 775 branches, encompassing 2,150 counters, providing critical insights to facilitate the new HP devices and PEDs rollout later this year.
High-Level Risks
The Post Office has identified several “high level risks” that could exacerbate these issues and costs. One identified risk pertains to NBIT hardware not being ergonomically suitable for branches, necessitating redesigns that may lead to further delays and unrest among subpostmasters. Additionally, ambiguity about the total number of required HP point-of-sale, PIN pad, and card terminals is impeding project managers from assessing the necessary funding.
Another major concern is the “Programme funding Branch Technology Refresh Programme,” classified under “high level risks.” The Post Office document notes that the organization may need to cut the number of counter terminals and PEDs in select branches, a move that would likely displease subpostmasters. The Post Office stated, “We regularly assess the usage of branch devices and will engage with branches regarding devices that are unused or underutilized as part of our strategy for asset management across the network.”
The progress report from the Post Office expressed concern that the project might need to reduce the number of PEDs and counter terminals during implementation, potentially requiring additional funding not accounted for in the initial budget for pad replacements or any DXC fees to remove but not replace pads.
Escalating Costs
The financial burden of the NBIT project on taxpayers has dramatically escalated, with its ongoing challenges being a significant focus of the current public inquiry into the Post Office scandal. During last week’s inquiry session, Amanda Burton, a non-executive director at the Post Office, attributed the delays and cost overruns to the IT department. When questioned about who bears ultimate responsibility for these issues, Burton acknowledged that it lies with the board but noted a lack of accurate information regarding the complexity of the issues faced by the NBIT project.
Burton mentioned former chief digital and information officer Zdravko Mlandenov, who left the Post Office in April, as one individual partly accountable for the insufficient information provided to the board, although she admitted unfamiliarity with the IT team.
In a subsequent inquiry hearing, former Post Office chairman Henry Staunton expressed his concerns regarding governance and cost overruns within the NBIT project. He revealed that the executive committee overseeing the initiative had been disbanded around November 2022, a decision that recently resigned CFO Alisdair Cameron deemed “reckless.”
Staunton reported that the board was informed in June 2023 that the project’s costs had ballooned from an original estimate of £330 million to £840 million, highlighting the severe mismanagement of the initiative. Inquiry barrister Julian Blake inquired whether the scarcity of information shared with the board was intentional, to which Staunton commented, “That would be reflective of what was occurring within the IT department—there may have been a deliberate intention not to disclose the full picture.”
Cameron concurred, emphasizing significant governance issues at the Post Office, particularly with the NBIT steering group, which had been underperforming and lacked proper operational input. Upon taking leadership of the steering group, Cameron recognized the need for a fundamental restructuring of the governance framework, but was instructed by CEO Nick Read to discontinue these plans due to alternative priorities.
According to an internal progress report, the Branch Technology Refresh Programme currently operates outside of the governance structure due to its risk profile, requiring a formal review of scope, funding, and delivery timelines. Cameron noted that the Post Office remains tied to Fujitsu until a replacement for Horizon is fully operational, indicating that over the years, the idea of moving away from Fujitsu had been contemplated, but confidence in replacing Horizon had never been established before his departure.
As recently revealed by Computer Weekly, Fujitsu is anticipated to receive an additional £180 million in taxpayer funding to extend its contract for managing the contentious Horizon system for another five years.
The squandered millions resulting from the Post Office’s mishandling of the NBIT project contribute to the staggering financial ramifications from the institution’s malicious treatment of subpostmasters associated with the Horizon scandal, which is expected to amount to billions of pounds.
The Post Office scandal was first highlighted by Computer Weekly back in 2009, chronicling the experiences of seven subpostmasters affected by the Horizon accounting system, which ultimately caused the most extensive miscarriage of justice in British history.