The unlikely villain of the Horizon scandal? Tony Benn
The Post Office scandal goes back to procurement blunders perpetrated in the 1960s. We’re still making the same mistakes
There are many villains in the Horizon scandal. But one of the crucial figures has mostly escaped public censure — and even attention. I am referring, of course, to Tony Benn.
In the 1960s the Wilson government had a problem. No one wanted to buy the products Britain was making. So it decided to form giant new national champions that could conquer the export markets, by merging a host of existing companies at gunpoint. This was the process that gave us British Leyland. And, thanks to Benn, then minister for technology, it also gave us Britain’s answer to IBM — International Computers Ltd, or ICL.
Over the years, ICL had some successes. But it had more failures. In 1981, crippled by the expense of trying to keep up with IBM and others, it axed its main R&D programme and bought in better tech from Fujitsu. Eventually, the Japanese took over completely.
What does this have to do with Horizon? Well, Benn didn’t just shower ICL with grants. He gave it first refusal on government contracts. Even into the 1980s, any computer above a certain size had to come from ICL. Which was a problem, because ICL’s computers weren’t very good. “It would be fair to say,” recalled Sir Peter Gershon, who worked at the firm, “that most of the customers were not very happy.” Not least because the products those public servants were forced to use, as he euphemistically recalled, “had quite a lot of technical challenges”.
ICL wasn’t good enough to beat IBM. So it made most of its money from the British government. But that left the government with computers that weren’t good enough. In 1981, when ICL was facing bankruptcy, Margaret Thatcher wanted to let it die. But, says Gershon, “some very very brave civil servants … stood up and basically persuaded her, and Keith Joseph, that … if ICL went bust, the government would grind to a halt.” ICL was, like the banks in 2008, too big to fail. So a rescue was arranged. The tie-up with Fujitsu was critical to that process, because ICL’s customers actually trusted the Japanese tech.
ICL lost its monopoly status, but throughout its complicated corporate history it remained deeply embedded in the British state, which continued to provide the lion’s share of its revenue. In the 1980s it got the contract for the state pension database. So it was the natural choice when, in 1995, the government decided to automate the entire benefits system.
That project, called Pathway, was awarded jointly by the Department of Social Security and the Post Office. It was a disaster, and in 1999 it was abandoned with nine-figure write-offs. But it was agreed that ICL (by then fully owned by Fujitsu, which knew a captive market when it saw one) would get another massive contract: to use the Pathway technology to computerise the Post Office branch network. The project’s name? Horizon.
An anonymous member of the Horizon team, speaking to Computer Weekly in 2021, said that “everybody in the building … knew [the software] was a bag of shit. It had gone through the test labs God knows how many times, and the testers were raising bugs by the thousand.” But according to evidence submitted to the official inquiry, Fujitsu executives told the Blair government that if it didn’t sign the deal, ICL would collapse, with catastrophic implications for the services it was already running. As in 1981, it was too big to fail. And the sub-postmasters paid the price.
This is an incredibly depressing story. But it teaches all manner of important lessons. Beware of politicians who think they know more about industry than industry does. Beware of “national champions”. Beware of monopolies, both public and private. Beware of the way that bad decisions cascade through the generations, not least because the people who built the shoddy software are often the only ones who know how to maintain it.
But the ICL/Fujitsu story also reminds us of something else: how very bad the British state is at spending money. In 2020 the procurement expert Peter Smith published a book called Bad Buying. A disproportionate number of his examples involved the British state: HS2, PFI, Blair’s NHS IT programme, the lease rip-off that left a Suffolk primary school owing £500,000 for 125 laptops.
But the anecdotes were even worse. Smith had been appointed commercial director of a huge government project that involved paying a large consultancy firm more than £600,000 a week. He asked to talk to the person managing the contract. There wasn’t one. Whitehall officials “didn’t think it was worth it” to pay someone £30,000 to £40,000 a year to oversee a deal worth a thousand times that. So Smith looked at the invoices himself. He found that the 100 “full-time” staff the contractor was providing included the partners’ personal assistants. And that the firm had charged full whack for the day of its Christmas lunch. “An unfortunate error,” the consultants said.
Our procurement systems were designed to prevent officials from just giving contracts to their mates. But the result has been a process that too often revolved around ticking the right boxes and offering the lowest headline price, rather than actual performance.
David Halpern, founder of the government’s Behavioural Insights Team (aka the Nudge Unit), tells a Fujitsu-related horror story. The company built a system for No 10 and the Cabinet Office to work on highly classified material. But it was a living nightmare: just booting it up took half an hour. The minister in charge got so fed up he refused to use it.
Eventually the system was dumped — prompting Fujitsu to sue for breach of contract. But, even as the Cabinet Office was decommissioning the software, another branch of government was buying the same product. How on earth could that happen? Well, partly because of EU rules, government procurement policies banned departments from telling one another about their experiences with a given supplier or system, lest it should prejudice future buying decisions or disadvantage new suppliers.
The results could be absurd. In 2017 Halpern’s team asked a sample of public sector buyers to rate their suppliers on a five-star scale. But when they showed the minister the results — which did not exactly match up with the number of contracts those firms received — there was a heated debate over whether he could legally see the company names. Because if he knew who was doing a good or a bad job, it might inform decisions on future contracts. And everyone would be sued.
Which answers the question, asked by many, many people, of why Fujitsu kept getting contracts after Horizon. The government was legally prevented from taking Horizon into account.
Thanks to the efforts of various Whitehall reformers, this flaw is being addressed. The Procurement Act, passed last year, makes it easier for past performance to be considered. But Britain’s poor public procurement is ripping all of us off. We need to give it a hell of a lot more attention.
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