Six lessons government should learn from the Post Office scandal

There have been almost 1,000 convictions in connection with the faulty Horizon IT programme provided by Fujitsu to the Post Office, with many more people affected. The scandal has been a very slow burn, but the recent ITV dramatisation of the experiences of sub-postmasters and sub-postmistresses accused of theft and false accounting, and their battle to prove that Horizon was at fault, has captured the public imagination and prompted the government to accelerate compensation. ¹⁴ www.bbc.co.uk/news/uk-67942935

A public inquiry has been ongoing since 2020. Clarifying what happened in this specific case is important, but there are also much wider lessons for government about how large contracts in public bodies are managed and overseen, and about the importance of clear accountability between ministers, civil servants, regulators and public body leaders.

1. Ministers are accountable – but what can that really mean?

There has been much focus on certain ministers who held responsibility for the Post Office brief over the last 20 years, from Labour’s Pat McFadden to the Liberal Democrat leader Ed Davey – although Conservatives have held the brief since 2015. Why didn’t they spot the issue at the time? Why did they take the reassurances from the Post Office at face value? 

These are valid questions and individual former ministers should answer for the decisions they made in government. But when faced with hundreds of requests for meetings, campaigns and constituents with their specific problems, it is difficult for ministers to know where to prioritise. 

Ministers should always test, not simply accept, the advice they receive from the civil service and from external groups, with this case highlighting the value of constituency casework in bringing important issues to the attention of elected politicians. But it is not the job of ministers to correct the mistakes of everyone else in government – civil servants should have been spotting the pattern of problems at the Post Office too. The Horizon case exposes the failings of the wider government machine, not just those of individual ministers.

2. Civil servants should not outsource their personal judgement to fallible oversight structures

Civil servants would do well to reflect on the failings exposed by this miscarriage of justice. Alan Bates was told that “the integrity of the Post Office Horizon system is an operational and contractual matter” for the Post Office, and that the organisation “continues to express full confidence in the integrity and robustness” of the system. These letters would have been written by civil servants, even when signed by ministers. 

Civil servants should not be constantly second-guessing arm’s-length bodies or working on the assumption that every complainant who writes to a minister has been the victim of an injustice. Government would grind to a halt if everybody was investigating everybody else. But with matters as persistent as this, officials should do more to look for patterns of complaints, keep an open mind when considering the credibility of accusations of malpractice and seek out the views of junior colleagues closer to the facts. The civil service must also make sure that there is a strong sponsorship function – holding delivery organisations to account as well as being a conduit for smoothing relationships – for bodies held at arm’s length from a department. 

Civil servants should not outsource their personal judgement to fallible structures of accountability and oversight. If an explanation doesn’t pass the sniff test then it needs to be taken seriously.

3. Complex governance arrangements can make it hard to pin accountability on individuals

Post Office Ltd is a public corporation. This means that it has greater autonomy from government than most public bodies, and its board is responsible for its operations. But the government is its sole shareholder and agrees its business plan.

The relationships between ministers, civil servants, and a public corporation’s board and senior team always make accountability complex. But there are additional complexities in the Post Office case, due to changes in regulatory structures, Fujitsu’s role in delivering Horizon, and the privatisation of Royal Mail – with the Shareholder Executive (now UK Government Investments) also playing a role in overseeing the privatisation as well as the Post Office’s regulatory and policy framework. ¹⁶ www.nao.org.uk/wp-content/uploads/2007/02/0607255.pdf, p. 5

The Royal Mail privatisation process would have been at least distracting for senior leaders, even if it did not actively incentivise the avoidance of bad news. The merger of Postcomm – which oversaw the postal market until 2011 – with Ofcom could also have meant less focus from the regulator on postal issues than other parties assumed was the case. Post Office Ltd had its own prosecutorial powers, so assumptions as to how the justice system would have held it to account could also have been misplaced.

These complexities mean that if any accountable person wanted to believe that someone else should have gripped the problem instead of them, plenty of such candidates were available. It is not yet clear which of the successive chairs, chief executives, board members, shareholder directors, regulators, departmental sponsors or ministers should carry the can, if any – but, collectively, there was a lack of clear accountability from which the government must learn. This is not just a question of who should have spotted and acknowledged the problem, but who should have driven its resolution over time.

4. Government is learning about large scale procurement - but mistakes are hard to unwind

Coverage of the scandal has increasingly focused on the role of Fujitsu, the firm that supplied the Horizon system, and the case highlights two longstanding problems with government procurement.

First, our research has found that government contracts have often been poorly managed. Public bodies tend to employ fewer people, with less experience and seniority to manage contracts than their private sector counterparts, which makes it harder to properly hold suppliers to account. But without proper scrutiny, problems like those seen with Horizon can persist for years.

Second, this is not the first example of government finding it hard to get out of an underperforming IT contract. These systems can’t simply be turned off, because services can grind to a halt without them. Nor can alternative suppliers easily take over the running of proprietary software provided by another company. As a result, government can find itself with little choice but to extend the contract of the existing supplier. Horizon was originally meant to be replaced in 2023, while Fujitsu’s contract for the Police National Computer was extended in 2022 because, according to the Home Office, there were no viable alternative solutions.

The new Procurement Act 2023, which is expected to come into force in October, will make it easier for the government to prevent poorly performing suppliers from winning more business in the future, potentially including Fujitsu. 

5. Technology cannot be presumed to work as intended

The courts currently presume that computer systems – like Horizon – are running properly unless proven otherwise. ²⁰ www.postofficetrial.com/2020/12/horizon-trial-judgment-could-force.html  Sub-postmasters and sub-postmistresses defending themselves against the Post Office therefore faced an uphill battle to demonstrate the contrary. Senior politicians have already called for this specific point of law to be changed. ²¹ twitter.com/darrenpjones/status/1742498809228222624

Horizon joins the fallout of the algorithm used for A-Level results in 2020, the failed Robodebt scheme in Australia, and the child care benefits scandal which brought down the Dutch government, in providing salutary lessons about the human suffering that can be caused by the deployment of technology in government – and the very human decisions behind ‘technical’ failures.

These examples show that we should not have blind faith in automated systems. We need transparency about how they operate, better understanding in government and the legal system about how they work (or may not), and proper routes for redress and accountability. As both the government and the opposition talk about AI’s potential to revolutionise public services and administration, these considerations will become even more critical. The government’s Data Protection and Digital Information Bill is proposing to relax – rather than tighten – data protection requirements and reduce rights – including when considering the impact of new technology in the workplace. ²² www.tuc.org.uk/research-analysis/reports/briefing-data-protection-and-digital-information-bill-v2

6. The public inquiry's governance module should trawl this case for lessons learned

The statutory inquiry into the Post Office and Horizon IT system has now spent two years taking evidence on human impact and investigating the implementation and failings of the system over its lifetime, and will soon turn to victims’ access to redress. In its penultimate module this summer it is slated to examine issues of governance, including oversight of the Horizon system, stakeholder engagement and whistleblowing.

While the inquiry is understandably focusing on the specifics of the case, it should not rush this governance module. ²⁴ www.postofficehorizoninquiry.org.uk/public-hearings-timeline The processes in place to provide checks and balances may seem far removed but they are central to the way decisions were made in the Post Office and in government. They clearly did not set the right incentives through the system or catch serious problems when they arose. 

The inquiry should also be careful not to define this module too narrowly. Governance goes beyond audit requirements. It should take into account the problems we have set out, including the role of civil servants in sponsor teams for public bodies and the systems for effectively escalating concerns, the role of the Post Office’s chair and board in challenging its executive leadership, the role of regulators and the scrutiny of non-police prosecutorial powers.

The Post Office case is striking, but its constituent elements are not unique, and there has clearly been a lack of responsiveness over a long period of time. Government must learn not only how to prevent such major failings from happening, but also how to implement forms of accountability that can more swiftly identify and address them when they do.