Britain's Post Office pays millions for a faulty system

Summary

Marketplace Morning Report: Britain's Post Office Pays Millions for a Faulty System Release Date: April 25, 2025

Introduction In this episode of the Marketplace Morning Report, host David Brancaccio delves into the ongoing scandal surrounding the UK's Post Office and its faulty Horizon IT system. The discussion highlights the significant financial implications, the impact on innocent individuals, and the challenges faced in rectifying the situation. Additionally, the episode touches on various other global economic stories to provide a comprehensive overview of current events.

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Britain's Post Office Scandal: An Ongoing Crisis

00:01 – 03:24

Overview of the Scandal Nick Qureshi opens the report by outlining the severity of the Post Office scandal, where hundreds of Post Office managers were wrongfully accused of fraud due to discrepancies caused by the faulty Horizon system developed by Fujitsu.

Nick Qureshi [00:01]: "Britain's Post Office pays millions more to stay shackled to a faulty system."

Financial Implications Peter Ruddick from the BBC World Service provides an in-depth analysis of the financial toll, revealing that the Post Office has spent over $800 million to continue using the Horizon system since attempting to terminate the contract over a decade ago.

Peter Ruddick [02:22]: "So it's gone essentially to maintaining the system, to trying to fix the bugs and also the rental costs."

Faulty Horizon System Details Ruddick explains the origins of the Horizon system and its critical role in the Post Office's expansion of services beyond traditional mail, including financial transactions. The system's persistent bugs led to wrongful prosecutions and significant legal expenses.

Peter Ruddick [00:49]: "The problem is that fixing it is quite expensive and there isn't sort of an automatic system out there that you could just go to and buy."

Post Office and Government Response The Post Office has issued apologies to the affected individuals and is actively seeking a replacement for Horizon. However, transitioning to a new system is proving to be costly and time-consuming, compounded by leadership changes and the ongoing scandal.

Peter Ruddick [03:04]: "The Post Office themselves have apologised to the victims and they say they are working on a replacement."

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Global Economic Updates

03:24 – 07:25

California's Economic Surge California has surpassed Japan to become the world's fourth-largest economy, with a GDP reaching $4.1 trillion in the previous year.

UK Retail Sales Growth In the UK, retail sales have risen for the third consecutive month in March, increasing by 0.4%, buoyed by favorable weather conditions.

India-Pakistan Trade Halt Tensions escalate between India and Pakistan following a deadly attack in Indian-administered Kashmir, leading to halted trade and suspended cross-border visas. Prime Minister Narendra Modi has accused Islamabad of involvement, a claim Pakistan denies.

Gold Market Insights O. Hansen from Saxo Bank discusses the surge in gold prices, which hit $3,500 an ounce for the first time, reflecting a 30% increase this year. The factors driving this rise include strong demand from central banks, global debt concerns, and investor apprehensions in China regarding economic stability and currency devaluation.

O. Hansen [05:43]: "It's massive. Considering how far we traveled in a relatively short period of time... it clearly indicates that the world is in a bit of a flux right now."

Art Theft in the Netherlands A Dutch mayor has issued an apology after it was discovered that a valuable Andy Warhol print, along with several other artworks, was likely discarded during renovations of a town hall.

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Conclusion The episode underscores the profound impact of flawed technology on both individuals and large institutions, exemplified by the Post Office scandal. It also provides a snapshot of diverse global economic issues, from regional trade conflicts to fluctuations in commodity markets, offering listeners a comprehensive update to start their day informed.

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Notable Quotes

• Nick Qureshi [00:01]: "Britain's Post Office pays millions more to stay shackled to a faulty system."
• Peter Ruddick [00:49]: "There isn't sort of an automatic system out there that you could just go to and buy."
• O. Hansen [05:43]: "It clearly indicates that the world is in a bit of a flux right now."

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Additional Resources For more insights and detailed discussions on personal finance, consider tuning into Financially Inclined by Marketplace, hosted by Jannelli Espinal.

Transcript

[Nick Qureshi]

Britain's Post Office pays millions more to stay shackled to a faulty system. Live from the uk, this is the Marketplace morning Report from the BBC World Service. Hello, I'm Nick Qureshi in Fort Leanna Byrne. You might remember the UK Post Office scandal where hundreds of Post Office managers were accused of fraud because they couldn't balance the books. Some were even sent to jail, but they were innocent. It was all down to a faulty IT system developed by computer giant Fujitsu. Well, now the BBC's calculated the Post Office has spent more than $800 million to continue using the faulty Horizon system since attempting to end its contract more than a decade ago. The BBC's Peter Ruddick has been following this for us. Hello, Peter.

[Peter Ruddick]

Hi, Nick.

[Nick Qureshi]

Just remind us of the role this system has still has to this day.

[Peter Ruddick]

Absolutely. It might be a real surprise for people that the IT system, essentially partly responsible for the wrongful prosecution of hundreds of sub postmasters and many more who were pursued wrongly for money they were told they owed, is actually still in place in the Post. To understand this, you have to rewind back a bit to the turn of the millennium when the Post Office in the UK started doing more and more things than just sending letters. You could absolutely buy stamps from the Post Office, but you would also go there to get your welfare benefits or you might be managing your bank account from in store. And that meant that a system was needed to deal with all of these transactions, to log them, a point of sale and an accounting system. And that's where Horizon came in. The trouble is, as soon as it was introduced, it came with issues and Fujitsu, its owners, because it just rented the system to the Post Office, they never bought it outright. Fujitsu didn't fix the bugs or weren't quick enough in identifying issues. And that's when the wrongful data was used to pursue people. The problem is that fixing it is quite expensive and there isn't sort of an automatic system out there that you could just go to and buy. You would either have to kind of develop one in house or find another computer maker to make another massive system, which again would come at a really big cost. So that possibly explains why these amounts have totalled up over the years. Because as I say, the Post Office rents the system and so it's had to keep paying it until an alternative is found.

[Nick Qureshi]

So where's this £600 million of public money gone?

[Peter Ruddick]

So it's gone essentially to maintaining the system, to trying to fix the bugs and also the rental costs, because as I say, The Post Office never owned the system. In 2012, they did look at buying the system code so they would take everything in house. But at the time that was judged to just be not a good use of public money. So this kind of piecemeal system of rental costs carried on and unfortunately the Post Office leadership was really too busy dealing with the scandal itself and changing leadership quite a bit to get a proper replacement for the system. So that's what's going on at the moment. They're trying to find a new system to replace Horizon, but until then, the rental costs, the maintenance costs just keep racking up.

[Nick Qureshi]

Has the Post Office had anything to say?

[Peter Ruddick]

So the Post Office themselves have apologised to the victims and they say they are working on a replacement. Of course, the Post Office is owned by the government. The government say that as part of their plan, ministers will find a replacement for Horizon. It's just not going to be straight away.

[Nick Qureshi]

All right, thank you, Peter.

[Peter Ruddick]

Absolute pleasure. Thank you.

[Nick Qureshi]

Onto the numbers. California has overtaken Japan to become the world's fourth largest economy growth domestic product reached $4.1 trillion last year, according to preliminary data. And in the UK, retail sales rose for the third month in a row in March, up 4/10 of a percent, all boosted by some warm weather. Now India and Pakistan have announced measures halting trade after a deadly attack in Indian administered Kashmir. The Prime Minister, Narendra Modi has blamed Islamabad, killing 26 tourists and warned of retaliation. Cross border visas have already been suspended and critical water sharing agreements put on hold. Authorities in Pakistan deny involvement and say any attempt to divert or stop waters would be seen as an act of war. Gold hit $3,500 an ounce for the first time this week before slipping back. It's up about 30% this year. That's on top of a 25% rise in 2024. So then, what is the outlook for this classic safe haven asset? O. Hansen is head of commodity strategy at Saxo bank in Denmark. Morning, Ollie.

[O. Hansen]

Hi, Nick.

[Nick Qureshi]

So what's happened to gold this week?

[O. Hansen]

Well, gold is actually having a little bit of a retracement after hitting another fresh record high early in the week. $3,500 was was reached just after Easter when market worried that Trump was going to sack the head of the Federal Reserve. That was since later rolled back somewhat and now we're just seeing market running through a bit of consolidation. But that will happen and that needs to happen considering trading up almost around 30% already this year.

[Nick Qureshi]

One factor you mentioned there, that's Surely not the only one.

[O. Hansen]

No, absolutely. And probably the main two reasons we see now for the past couple of years is very, very strong demand from central banks around the world buying more than a thousand tons on an annual basis. Now for the past three years we have the debt situation around the world which is also raising some, some concerns. And then in China we, we're seeing investors continue to buy into gold. Perhaps they're worried about the local economic outlook, but also perhaps worried about the devaluation of the renmin in as a defense against the tariffs war against the US So there are plenty of drivers right now.

[Nick Qureshi]

How significant, Ollie, Is this benchmark? 3 and a half thousand dollars an ounce figure?

[O. Hansen]

It's massive. Considering that how far we traveled in a relatively short period of time. It clearly does indicate that the world is in a bit of a flux right now because why would you otherwise buy an asset that doesn't give you any return, no yield, no dividend, no coupon. It costs money to store and you have to worry about someone coming and stealing it from you and nevertheless invest piling into gold. And that clearly indicates that they are worried about the world as it is right now.

[Nick Qureshi]

So where is this all heading, Ollie?

[O. Hansen]

Well, I think we had a 3300 call for the year which was then lifted to 3500 just before Easter which would then actually reach within a week. So it's very difficult to say where, where this going to end. Again just using the round numbers, if we, if we see a renewed deterioration of the current situation which has eased a little bit. There are some talks now on the terrorist front between the Trump administration and China. There's Japan, Korea as well, potentially getting some deals done that has just eased the pressure somewhat. But the risk of something blowing up again could take it above 3500 and then my will start to focus on 4000 as the next level.

[Nick Qureshi]

It's great to talk to you. Thanks, Ollie.

[O. Hansen]

Thank you very much, Nick.

[Nick Qureshi]

Finally, a Dutch mayor has apologized after it emerged a valuable print by the artist Andy Warhol was probably taken out with the trash during renovations to a town hall. The rare silkscreen portrait of Queen Beatrix from Warhol's Reigning Queens series was among dozens of valuable artworks which have gone missing. This has been the Marketplace morning report from the BBC World Service. I'm Nick Quresh. Thanks for listening.

[Jannelli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Jannelli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to financially inclined Wherever you get your podcasts.