Failing to Deliver

From 1999-2015, more than 900 sub-postmasters were falsely prosecuted for false accounting and theft in what became known as the Post Office Horizon scandal. Described as “the biggest single series of wrongful convictions in British legal history,” sub-postmasters were accused of crimes they did not commit, averaging over one prosecution per week. These accusations were based on data collected from the defective accounting software Horizon, provided by the Japanese tech giant Fujitsu.  By the time Fujitsu’s contract ends next year, it will have earned £1.5 billion since its inauguration. However, this is just another chapter in the long history of procurement and outsourcing failure in Britain, where private firms have been able to make huge profits while providing poor public services.

Outsourcing is at the centre of this scandal. All the data used in the prosecutions came from the Horizon software. When Horizon was rolled out across the country in 1999, it was the “biggest non-military IT project in Europe” and was the core of the government's digitisation efforts, influenced by the New Public Management (NPM) theory of the 1990s. NPM argued that the government should adopt private sector practices to maximise value, and this was the logic behind the shift away from operating public services in-house towards using private actors. 

Mariana Mazzucato, Director of the UCL Institute for Innovation and Public Purpose, has long been a critic of NPM. In her book The Big Con, Mazzucato uses Denmark’s e-government reforms in the late 1990s as an example to demonstrate how NPM reforms weakened Danish policymakers. Backed by NPM, successive Danish governments, nationally and regionally, began to outsource their IT capabilities to the private sector, attempting to create more effective governance. However, all that was accomplished was the destruction of public sector knowledge of IT systems. The state became reliant on the private sector for policy to be implemented as they no longer had the capacity to act independently. Consequently, the consultancies overseeing IT systems began to dictate the speed of government policy. This loss of knowledge meant that when the Copenhagen government was approached by IBM to use their new AI Watson in the provision of public healthcare in 2018, they did not realise its ineffectiveness until after the contract was signed. Watson was intended to advise doctors on how to treat cancer patients, however oncologists only agreed with its recommendations 33% of the time. If public sector IT knowledge was not stripped away from the government, policymakers would have had a much better understanding of how IT systems work and which vendors to trust.

But how is this relevant to the Post Office? Britain's equivalent digitalisation reforms were also driven by NPM thinking, with British policymakers being some of the keenest supporters of IT outsourcing globally. The adoption of the Horizon software may not have occurred if the public sector had not been stripped of its knowledge of effective IT systems. Problems were found in Horizon almost immediately after its national rollout, however the erosion of public digital capacity meant that the civil servants running the Post Office did not have the ability to remove Horizon early, as the scale of the policy created a sunk-cost mentality. Instead, Fujitsu dictated the pace of policy by putting pressure on the British embassy in Japan. The weakness of the post office, caused by NPM-led digitalisation, meant civil servants were unable to challenge Fujitsu and had to take their claims that the sub-postmasters were committing fraud at face value. The Post Office was incentivised to cover up their own errors, ruining the lives of the over 900 sub-postmasters instead of creating a better system. Outsourcing made the system less accountable; the sub-postmasters were unable to defend themselves, and campaigners and the media had to expose the flawed system to the public for action to be taken.

Britain cannot risk having another Horizon scandal. The human cost of the post office’s actions has been immense. It ruined the lives of the 900 sub-postmasters, with many becoming destitute and 236 going to prison. The toll extended beyond incarceration: 37 individuals have died, four of whom took their own lives. These people were unable to get justice, and their voices were silenced by the weight of institutional failure. So how can we rebuild state capacity in the UK and restore accountability in public services? Currently, there is no incentive for knowledge to be retained in the public sector, as years of austerity and outsourcing have made being in the civil service an unappealing job prospect compared to entering the private sector. A lack of expertise creates ignorant civil servants, who become reliant on outside actors and poor public services. Mazzucato suggests that Britain should look towards how Germany has reduced government reliance on private consultancies by creating a publicly owned consultancy firm which has been awarded the most effective consultancy firm in the public sector. This would be a positive step towards keeping specialist knowledge in-house, maintaining institutional memory, preventing the circumstances that the Post Office fell into, and improving public services.

All articles and opinions posted give the views of the author(s) and do not necessarily reflect the views of the Leeds Think Tank, the Leeds University Union, or the University of Leeds.