‘A tragedy is not far away’: 25-year-old Post Office memo predicted scandal | Post Office Horizon scandal

In any big scandal with the power to dominate the nation’s attention, there are inevitably key moments when events could have been stopped in their tracks. Yet few early warnings could have been as prescient as a seven-page memo handed to a Post Office official 25 years ago.

During a fractious meeting at Newcastle rugby club in 1999, the note set out a litany of concerns from subpostmasters in the north-east of England who had been piloting the now infamous Horizon accounting system. The issues, including with balancing their accounts, were causing stress and forcing some to work well into the night.

Soon after those concerns were raised, subpostmasters gathered again to discuss the potential severity of the problems. “The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional wellbeing,” the meeting was told.

“It was felt by some that a tragedy was not far away if something was not altered soon. The software was considered to be poor quality and not intended to run such a huge network.”

The warning of a potential tragedy was made before the flawed software – subsequently found to be capable of producing erroneous losses that had been blamed on post office staff – had been rolled out across the Post Office network.

Yet from the moment of the fateful decision to press ahead, a ruinous cocktail of legal reforms, geopolitics, a crippling lack of political curiosity and – above all – apparent deceit ultimately led to thousands of innocent workers being victimised and prosecuted, with devastating effects.

This was the week that Westminster finally acknowledged that an unprecedented mass exoneration was needed to remedy 20 years or more of injustice – sadly too late for the dozens of wronged subpostmasters who have died, including at least four who have taken their own lives.

However, questions are naturally being asked about the political failings, from the initial approval of the system through to the apparent indifference of successive ministers.

Now, in an election year, there have already been various attempts to weaponise the scandal for political advantage. Nigel Farage has been targeting Keir Starmer, who was director of public prosecutions when a small number of subpostmasters were prosecuted by the Crown Prosecution Service.

Conservatives in “blue wall” seats have also been aiming fire at Liberal Democrat leader Ed Davey, one of 20 ministers responsible for the Post Office since 1999. Meanwhile, the Tories have been attacked for refusing to hold a proper inquiry for so long.

If ever there was a collective, cross-party failing, however, the Horizon scandal was it.

“There are three parties involved – three parties with postal affairs ministers during this period,” said Paul Scully, the former minister who finally announced an independent inquiry in 2020 after the court victory of former subpostmaster Alan Bates and his colleagues, who were the subjects of Mr Bates vs the Post Office, the ITV drama that has brought the historic injustice to the wider public.

Scully added: “This is a human story. It just needed a human approach rather than that stock politician approach.”

Political calculation appears to have played a key role in the project even going ahead. Documents submitted to the official inquiry into the scandal show that, in 1998, executives at the Japanese company Fujitsu, which developed the Horizon system, met with the British ambassador to Japan and warned of dire consequences for both the company and Tony Blair’s new government if the project was scrapped. The ambassador said he had been told that the project could not be abandoned because of the potential repercussions.

The British embassy’s letter to the government warned that if it were to be scrapped, there would be a devastating impact on UK jobs as well as a potential knock-on effect for bilateral relations. The Horizon software was thereafter rapidly rolled out to thousands of branches.

Then there was a potent ingredient thrown in by the legal world. Just before the scandal began to unfold in 1999, a legal change was introduced stating that there would now be an assumption that computers were “reliable” unless proven otherwise.

Previously, a machine’s reliability had to be proved if it was being used as evidence. It has now been revealed that the Post Office itself lobbied for that law change. In its submission to the official consultation on the issue, it said the previous requirements were “far too strict and can hamper prosecutions”. The legal change would help it go on to privately prosecute more than 700 subpostmasters.

So how did such a succession of ministers fail to notice a rise in Post Office-led prosecutions that now look like one of the biggest miscarriages of justice in British history? Those who spoke to the Observer – all of whom are horrified at what has now emerged – described a combination of factors.

While they may be described as being post office ministers, they say, that was usually only a tiny part of a much wider portfolio of responsibilities. They also describe a context in which they were receiving reassurances from the Post Office over the Horizon system, while the courts did appear to be finding against those in the dock.

During meetings with the Post Office, the focus was on cuts and budgets – unsurprisingly, “they never wanted to talk about the Horizon issue”, said one former minister.

Another former post office minister said: “You’ve got something as big as the Post Office saying: ‘No, no, no, no – it’s definitely stolen money.’ Then they’ve gone through a court of law and been convicted. Unless you’re sitting there going through all the court transcripts, you’re going to think: ‘It’s British justice. There must be something in it.’ It does take a hell of a lot of curiosity [to challenge that].”

Another post office minister said that they had become more concerned as time went on – not as a result of what their officials or the Post Office were saying, but by the trickle of letters from subpostmasters caught up in the crisis.

“These letters would be heart-rending and shocking,” they said. “There was absolutely no coordination between them. I’m sorry to say that the first few probably got the department-drafted response. And it wasn’t until I had a few that I started thinking that something’s wrong here.”

The ministers’ questions, however, led to the same reassurances from the Post Office that “there was no systemic problem”. Minister after minister accepted the Post Office’s line – together with an assumption that the British courts could not be getting things so wrong.

Davey’s discomfort in recent days stems from a letter that has emerged in which he refused to meet Bates, saying he did not believe it “would serve any purpose”. Unfortunately for Davey, the exchange has come to characterise what looks like political indifference. It is also true, however, that Davey was the first minister to meet with Bates in October 2010.

For all the institutional resistance to the pleas from subpostmasters, there were MPs notable in their support for the victims – often because they knew of individual cases and met an affected constituent face to face. Former MPs James Arbuthnot and Oliver Letwin, as well as sitting MP Kevan Jones, were among their advocates.

Some institutional inertia would carry on even after Bates’s group won its David v Goliath high court victory in 2019. The judge said the Post Office’s repeated denials that Horizon could have been to blame for balance shortfalls “amounts to the 21st-century equivalent of maintaining that the Earth is flat”. However, the battle for a workable compensation scheme continued.

“It’s a process that didn’t have the capacity to deal with something as egregious as this, basically,” said Scully, explaining that the Treasury has to complete a value for money exercise when looking to reopen compensation claims for the 555 people involved in the Bates-led court case.

“You actually, literally, have to justify whether it’s value for money for the taxpayers to be restoring these people’s lives. Of course it is, but again, you’ve got to go through that.”

Richard Roll, who worked at Fujitsu and emerged as a key whistleblower, said the victims now needed compensation reflecting their ordeals. “A couple spent the last 20 years living in a mobile home because they lost everything – their business, their home. How can you repay that – £600,000 is not enough, is it? It’s just phenomenal. I don’t know what the solution is.”

The sudden peak of interest in the scandal has been welcomed by those who have been involved for years, but some are now urging attention on the stark unanswered questions, most notably focused on the Post Office and Fujitsu.

Speaking to the Observer, one figure involved in Horizon in its early days said there were clear issues left to resolve: “What exactly caused account balance mismatches to occur in some post office branches? Who was responsible for those errors occurring and who knew about them, but did nothing?”

Fujitsu said it is “fully committed to supporting the inquiry in order to understand what happened and to learn from it. Out of respect for the inquiry process, it would be inappropriate for Fujitsu to comment further at this time.”

Likewise, Post Office executives will soon be held to account at the continuing inquiry. They will include Paula Vennells, the Post Office’s former boss, who has already said she will hand back her CBE with immediate effect as a result of the fallout, and her predecessor Adam Crozier.

It may be 25 years and counting, but the true facts around the extraordinary episode are still emerging.

In any big scandal with the power to dominate the nation’s attention, there are inevitably key moments when events could have been stopped in their tracks. Yet few early warnings could have been as prescient as a seven-page memo handed to a Post Office official 25 years ago.

During a fractious meeting at Newcastle rugby club in 1999, the note set out a litany of concerns from subpostmasters in the north-east of England who had been piloting the now infamous Horizon accounting system. The issues, including with balancing their accounts, were causing stress and forcing some to work well into the night.

Soon after those concerns were raised, subpostmasters gathered again to discuss the potential severity of the problems. “The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional wellbeing,” the meeting was told.

“It was felt by some that a tragedy was not far away if something was not altered soon. The software was considered to be poor quality and not intended to run such a huge network.”

The warning of a potential tragedy was made before the flawed software – subsequently found to be capable of producing erroneous losses that had been blamed on post office staff – had been rolled out across the Post Office network.

Yet from the moment of the fateful decision to press ahead, a ruinous cocktail of legal reforms, geopolitics, a crippling lack of political curiosity and – above all – apparent deceit ultimately led to thousands of innocent workers being victimised and prosecuted, with devastating effects.

This was the week that Westminster finally acknowledged that an unprecedented mass exoneration was needed to remedy 20 years or more of injustice – sadly too late for the dozens of wronged subpostmasters who have died, including at least four who have taken their own lives.

However, questions are naturally being asked about the political failings, from the initial approval of the system through to the apparent indifference of successive ministers.

Now, in an election year, there have already been various attempts to weaponise the scandal for political advantage. Nigel Farage has been targeting Keir Starmer, who was director of public prosecutions when a small number of subpostmasters were prosecuted by the Crown Prosecution Service.

Conservatives in “blue wall” seats have also been aiming fire at Liberal Democrat leader Ed Davey, one of 20 ministers responsible for the Post Office since 1999. Meanwhile, the Tories have been attacked for refusing to hold a proper inquiry for so long.

If ever there was a collective, cross-party failing, however, the Horizon scandal was it.

“There are three parties involved – three parties with postal affairs ministers during this period,” said Paul Scully, the former minister who finally announced an independent inquiry in 2020 after the court victory of former subpostmaster Alan Bates and his colleagues, who were the subjects of Mr Bates vs the Post Office, the ITV drama that has brought the historic injustice to the wider public.

Scully added: “This is a human story. It just needed a human approach rather than that stock politician approach.”

Political calculation appears to have played a key role in the project even going ahead. Documents submitted to the official inquiry into the scandal show that, in 1998, executives at the Japanese company Fujitsu, which developed the Horizon system, met with the British ambassador to Japan and warned of dire consequences for both the company and Tony Blair’s new government if the project was scrapped. The ambassador said he had been told that the project could not be abandoned because of the potential repercussions.

The British embassy’s letter to the government warned that if it were to be scrapped, there would be a devastating impact on UK jobs as well as a potential knock-on effect for bilateral relations. The Horizon software was thereafter rapidly rolled out to thousands of branches.

Then there was a potent ingredient thrown in by the legal world. Just before the scandal began to unfold in 1999, a legal change was introduced stating that there would now be an assumption that computers were “reliable” unless proven otherwise.

Previously, a machine’s reliability had to be proved if it was being used as evidence. It has now been revealed that the Post Office itself lobbied for that law change. In its submission to the official consultation on the issue, it said the previous requirements were “far too strict and can hamper prosecutions”. The legal change would help it go on to privately prosecute more than 700 subpostmasters.

So how did such a succession of ministers fail to notice a rise in Post Office-led prosecutions that now look like one of the biggest miscarriages of justice in British history? Those who spoke to the Observer – all of whom are horrified at what has now emerged – described a combination of factors.

While they may be described as being post office ministers, they say, that was usually only a tiny part of a much wider portfolio of responsibilities. They also describe a context in which they were receiving reassurances from the Post Office over the Horizon system, while the courts did appear to be finding against those in the dock.

During meetings with the Post Office, the focus was on cuts and budgets – unsurprisingly, “they never wanted to talk about the Horizon issue”, said one former minister.

Another former post office minister said: “You’ve got something as big as the Post Office saying: ‘No, no, no, no – it’s definitely stolen money.’ Then they’ve gone through a court of law and been convicted. Unless you’re sitting there going through all the court transcripts, you’re going to think: ‘It’s British justice. There must be something in it.’ It does take a hell of a lot of curiosity [to challenge that].”

Another post office minister said that they had become more concerned as time went on – not as a result of what their officials or the Post Office were saying, but by the trickle of letters from subpostmasters caught up in the crisis.

“These letters would be heart-rending and shocking,” they said. “There was absolutely no coordination between them. I’m sorry to say that the first few probably got the department-drafted response. And it wasn’t until I had a few that I started thinking that something’s wrong here.”

The ministers’ questions, however, led to the same reassurances from the Post Office that “there was no systemic problem”. Minister after minister accepted the Post Office’s line – together with an assumption that the British courts could not be getting things so wrong.

Davey’s discomfort in recent days stems from a letter that has emerged in which he refused to meet Bates, saying he did not believe it “would serve any purpose”. Unfortunately for Davey, the exchange has come to characterise what looks like political indifference. It is also true, however, that Davey was the first minister to meet with Bates in October 2010.

For all the institutional resistance to the pleas from subpostmasters, there were MPs notable in their support for the victims – often because they knew of individual cases and met an affected constituent face to face. Former MPs James Arbuthnot and Oliver Letwin, as well as sitting MP Kevan Jones, were among their advocates.

Some institutional inertia would carry on even after Bates’s group won its David v Goliath high court victory in 2019. The judge said the Post Office’s repeated denials that Horizon could have been to blame for balance shortfalls “amounts to the 21st-century equivalent of maintaining that the Earth is flat”. However, the battle for a workable compensation scheme continued.

“It’s a process that didn’t have the capacity to deal with something as egregious as this, basically,” said Scully, explaining that the Treasury has to complete a value for money exercise when looking to reopen compensation claims for the 555 people involved in the Bates-led court case.

“You actually, literally, have to justify whether it’s value for money for the taxpayers to be restoring these people’s lives. Of course it is, but again, you’ve got to go through that.”

Richard Roll, who worked at Fujitsu and emerged as a key whistleblower, said the victims now needed compensation reflecting their ordeals. “A couple spent the last 20 years living in a mobile home because they lost everything – their business, their home. How can you repay that – £600,000 is not enough, is it? It’s just phenomenal. I don’t know what the solution is.”

The sudden peak of interest in the scandal has been welcomed by those who have been involved for years, but some are now urging attention on the stark unanswered questions, most notably focused on the Post Office and Fujitsu.

Speaking to the Observer, one figure involved in Horizon in its early days said there were clear issues left to resolve: “What exactly caused account balance mismatches to occur in some post office branches? Who was responsible for those errors occurring and who knew about them, but did nothing?”

Fujitsu said it is “fully committed to supporting the inquiry in order to understand what happened and to learn from it. Out of respect for the inquiry process, it would be inappropriate for Fujitsu to comment further at this time.”

Likewise, Post Office executives will soon be held to account at the continuing inquiry. They will include Paula Vennells, the Post Office’s former boss, who has already said she will hand back her CBE with immediate effect as a result of the fallout, and her predecessor Adam Crozier.

It may be 25 years and counting, but the true facts around the extraordinary episode are still emerging.