Fujitsu is poised to receive an additional £180m in public funds to extend its contract to operate the Post Office Horizon IT system for another five years. The project to replace Horizon has faced significant obstacles, leading the Post Office to request £1bn in extra funding from the Treasury to address the issues. The budget has increased from £180m to £1.1bn, and the implementation timeline has been pushed back from 2025 to 2030.
The existing contract with Fujitsu for Horizon is set to end in March 2025, with plans to have a replacement system, called New Branch IT (NBIT), in place by then. However, delays, increased costs, and software quality issues have resulted in a likely full shutdown of Horizon not happening until 2030. Fujitsu has informed the government that it will not support Horizon beyond March 2025 unless the Post Office has a solid exit plan in place.
Should Fujitsu withdraw its services after March 2025, the Post Office would need to find another provider to manage Horizon or handle it in-house. Government auditors have determined that neither option is economically viable. If the contract with Fujitsu is extended, it would likely be on similar terms as a previous one-year extension costing £36m.
Post Office representatives are working with postmasters to develop a new system that will be sustainable for the future. Fujitsu has not commented on the matter. The Post Office expects that NBIT will be cheaper to operate than Horizon, with estimates suggesting an annual cost of £18m-£25m compared to £60m-£70m for Horizon.
The IPA has warned that failure or slow progress with the replacement programme could have serious operational and financial risks. As a result, the Post Office may need to convince Fujitsu to extend the contract. Plans for a potential extension not being achieved are just getting underway, and there is concern that a contingency plan may not be mature enough.
Issues with the Horizon replacement project have been ongoing, with IBM initially working on a replacement system in 2015 before the complexity led to the Post Office returning to Fujitsu. The Post Office has already received an additional £103m towards the project due to increasing costs and delays. Fujitsu has reportedly earned over £2.5bn from its Horizon contract over the past 25 years.
