Yesterday’s post explained how high tech projects and contracts became too big to fail in the UK, beginning in the 1960s with the late Labour MP Tony Benn serving under Prime Minister Harold Wilson.

Since then, whether the government is Labour or Conservative, the same mindset has continued. It is thought that the 2023 Procurement Act will put an end to contracts continually being awarded to companies with either faulty products or with too high a financial cost.

Yesterday’s post discussed the creation and rise of ICL, which developed the faulty Pathway system that Fujitsu UK eventually took over and branded as Horizon for use in the Post Office. Pathway had started under the previous Conservative government, which came to an end in May 1997.

Today we look at Tony Blair’s involvement during his premiership. It seems that only one person attempted to put him off Horizon, his special adviser (SpAd) Geoff Mulgan, but to no avail.

The Post Office inquiry continues. It started (thankfully) under the current Conservative government. What we have discovered just over the past month alone beggars belief.

Better technology available

On January 12, 2024, a 1998 memo found its way to the inquiry.

At this point, the then-Department of Social Security did not want to use Horizon for benefits administration, and the Post Office system needed to move towards automation. Blair was interested in finding a solution for the Post Office, which was struggling with profitability at the time.

The Guardian, via PA Media, reported (emphases mine):

Sir Tony Blair was warned the IT system at the centre of the Post Office scandal was “flawed” before it was rolled out, a document shows.

The warning appears in a memo written to the former prime minister by special adviser Geoff Mulgan in 1998, which has been released by the public inquiry into the scandal.

It said the problems which beset the Horizon system “may well continue” and that signing it off could leave “what many see as a flawed system” in place for more than a decade.

Mulgan said cancellation would allow the Post Office to take advantage of “newer, cheaper and more flexible” technology instead.

Pushing ahead would be “unsatisfactory” and leave the government “dependent on a hugely expensive, inflexible, inappropriate and possibly unreliable system”, the adviser warned.

However “short-term considerations and expediency” pointed towards the deal going ahead, he added.

The adviser said then-work and pensions secretary Alistair Darling was against the deal, but the department for trade and industry was more supportive.

No one could have foreseen then the trouble that would beset the subpostmasters using Horizon. In fact, it was quite the opposite with the trial system:

Mulgan acknowledged concerns in his memo that post office operators feared scrapping Horizon would lead them to lose customers and a support package would be needed if it was scrapped.

Blair expressed his concerns:

In response, the former prime minister said: “I would favour Option 1 (pressing ahead with Horizon) but for Geoff’s statement that the system itself is flawed.

“Surely there must be a clear view on this. Speak to me on that: ie reading the enclosed paper, it all focuses on the financial deal.

“But there the risks are pretty even, probably coming down on the side of continuing. The real of heart of it is the system itself.”

No clear view

Unfortunately for Blair, there was no ‘clear view’ despite appearances to the contrary as the response to his request depended on where his advisers’ priorities lay:

In a separate letter released by the inquiry, then-trade and industry secretary Lord Mandelson told then chief secretary to the Treasury Stephen Byers he believed proceeding with Horizon was the “only sensible choice” available.

He said the system had been “thoroughly evaluated by independent experts” who pronounced it “viable, robust and of a design which should accommodate future technological developments”.

Any alternative could lead to post offices being closed, damage the confidence of post office operators in the government and “produce political fallout, no matter how carefully we try to handle it”.

On January 10, it emerged that an IT manager working for Royal Mail said that Adam Crozier, who headed the organisation during this time (the Post Office had not yet been hived off), would have been aware of the problems with the system. I would have thought that Blair would have asked Crozier for input. Crozier was a high profile CEO before he headed Royal Mail.

The Telegraph reported:

Adam Crozier, the former chief executive of Royal Mail, would have been aware about the faulty Horizon IT system after it was identified as “problematic” by his technology specialists, an insider has claimed.

An IT manager, who was employed by Royal Mail, told the BBC that concerns with the Post Office software were discussed by senior management but that resolving the issues was not considered a priority.

The unnamed man, who the BBC identified as Tony, was contracted to work for Royal Mail’s technology leadership team from 2007 to 2009.

“We were certainly discussing the fact that Horizon was problematic and needed to be replaced,” Tony told BBC Five Live.

Asked whether Mr Crozier would have known about the problems, Tony said he’d “struggle to think” he wasn’t alerted “at some point”, adding reports he submitted would likely have been escalated from Royal Mail’s then chief information officer (CIO).

He said the Post Office, which formed part of Royal Mail before it became independent in 2012, was never deemed to be a “problem child”, with Royal Mail executives likely to be more focused on improving profitability following a decline in the use of letters.

“The fact that nobody joined the dots is what I find incredulous,” Tony added.

Mr Crozier has denied any involvement with Horizon. He served as chief executive from 2003 to 2010 before he was succeeded by Canadian businesswoman Dame Moya Greene.

I wrote more about the former Royal Mail and Post Office’s executives’ gilded lives here.

In response, Crozier issued a statement which says, in part:

While I did not have any involvement in the Horizon issue during my time at Royal Mail, I feel deeply sorry for those whose lives were ruined by what happened and stand ready to participate in the inquiry’s continued efforts to make sure this tragic situation never happens again.

Subpostmasters affected by Horizon wondered how Crozier and his ilk could continue their rise in the corporate sphere:

… postmasters questioned why Mr Crozier had been rewarded with lucrative appointments.

One postmaster said: “For a job application, mortgage, even to get a mobile contract, we common people have to go through credit checks, conviction checks and a lot more; wherever, whoever involved in a court proceeding gets CBE, gets titles, what kind of checks [do] they do?

“They were the people who were the head of the Post Office when my trial was going on…What are they doing now? Chairman of BT [Crozier’s current position]. So they don’t have to go through all these checks and all that.

“It’s just only for the common people. The people in the authorities, they can just – we took you to court, you are criminal, we ruined your life but forget it.”

Potential diplomatic incident with Japan

While Blair was making up his mind, the Foreign Office stepped in.

On January 13, The Telegraph carried the story, ‘Tony Blair told scrapping Horizon would damage relations with Japan’:

The Foreign Office warned Sir Tony Blair that scrapping the Horizon scheme would damage relations with Japan, The Telegraph can disclose …

Documents released by the Cabinet Office show that Sir Tony’s decision came after Sir David Wright, the UK ambassador to Japan, warned that scrapping the deal would lead to the collapse of the Japanese-owned firm building the system and have “profound implications … for bilateral ties” with Tokyo.

Sir Geoff Mulgan, a Number 10 adviser to Sir Tony and now professor of public policy at University College London, told The Telegraph that a reluctance to strain relations with Japan “had a big influence” on decision-making over Horizon.

The revelation raises fresh questions over the then PM’s decision to continue with the troubled scheme, which Labour inherited from the Conservatives after coming to power in 1997 …

A spokesman for Sir Tony said Britain’s relationship with Japan was “one of a number of factors” considered when he decided to go ahead with Horizon, but his “primary concern was the technical capability of the system” …

Now it can be revealed that the decision followed an intervention by Sir David in which Sir Tony was warned that scrapping the agreement with ICL, owned by Fujitsu, would “lead to major internal difficulties within Fujitsu and the collapse of ICL.”

The warning came in an urgent dispatch written in December 1998, which stated at the top: “CABINET OFFICE PLEASE PASS TO PS/NO 10” – a reference to Sir Tony’s private secretary in Downing Street.

Sir David warned that “we have a major and potentially damaging problem on our hands.” He described a meeting in which Michio Naruto, the Fujitsu vice-president and chairman of ICL, expressed concerns about the risk of the Government pulling out of the scheme.

He said Naruto “repeatedly stressed that failure of the project will have serious repercussions for Fujitsu’s international standing, lead to major internal difficulties within Fujitsu and the collapse of ICL”, adding: “Any threat to ICL’s continued viability would have profound implications for jobs in the UK and for bilateral ties.

“The waves created would be damaging politically at home and to the UK’s position of strength here vis-a-vis our European competitors. This is already being weakened by perceptions of distancing from the centre of Europe over the single currency. We can do without more trouble.”

Sir Geoff said it was difficult to overstate “just how important Japanese inward investment was in the 1980s, and in the 1990s, it almost saved British manufacturing. So the stakes were pretty high, and that was definitely an important factor.”

He added: “My recommendation was, despite that, I still thought [Horizon] should have been cancelled and started again. I think Alistair Darling took a similar view.”

According to testimony by a former senior official at the trade department, in early 1999 Downing Street made it clear to ministers and officials that Sir Tony “was not looking for an outcome that involved walking away from Horizon or ICL” …

They were, as I made clear in yesterday’s post, too big to fail.

In the end

In 1999, Tony Blair signed off on Horizon. This 2024 article summarises the decision:

This was the announcement Blair made in the House of Commons about Horizon:

Later, Michio Naruto received a CBE for services to UK-Japan trade. He died in May 2009.

2024 responses

The Guardian article says that PA Media received the following response from Tony Blair’s office in January:

A spokesperson for Blair said: “As the documents show, and make completely clear, Mr Blair took the issue very seriously.

“His response to the Mulgan note, and in other interactions, was to raise the issue of the viability and reliability of the end project as this was his overarching concern. He subsequently received these reassurances.

“It is now clear that the Horizon product was seriously flawed, leading to tragic and completely unacceptable consequences, and he has deep sympathy with all those affected.”

On Friday, January 26, Sir Geoff Mulgan had more to say to The Telegraph, ‘I told Blair to cancel Horizon in 1998 — even I could see it was likely to go wrong’:

… Sir Geoff Mulgan, is now helping Sir Keir Starmer to prepare for government, and the Labour leader would do well to listen to him. Mulgan worries that political leaders still have too little grip on science and technology, and that mistakes like Horizon are still happening around the world. 

“I did recommend cancelling it,” he says of Horizon, “and then tried to look at some of the lessons to be learnt – there was a gap in capability in the British Government of people with an understanding of technology.

“The Government’s very strong on finance, especially the Treasury, obviously strong on things like law, but I was often the only person in the room who had any tech background. And I was definitely not a deep expert on Horizon-type projects, but even I could see that it was unreliable, likely to go wrong.

Mulgan says something which would indicate that Adam Crozier might not have ever known much about Horizon:

“These were monstrously big projects, which didn’t involve the users at all in the design process. Even the Post Office management didn’t get to see the software. Blair, to his credit, did at least, say ‘surely we need a reassurance that the technology will work’. He was given that reassurance by the then Department of Trade and Industry. So he asked the right question, but didn’t get the right answer from the system.”

Mulgan reacted “with horror” as the Post Office scandal unfolded over the course of 20 years, adding: “I think this is a topic where guilt is very widely shared. Certainly people from all the political parties made wrong decisions at certain points. The Government machine should also be held to account. The Civil Service got this wrong. 

“For me, the crucial thing is not just that justice has to be done, but the right lessons are learnt. And I’m still not quite sure that process is yet happening. Because we will probably be in a blame festival rather than lesson learning. The same applies to the Covid Inquiry.”

And how.

I will have more on Sir Geoff Mulgan in a separate post.

For now, next week I will have more posts on politicians involved in the Horizon scandal.