HMRC seeks to extend contracts with company behind Post Office scandal

Telegraph

17-06-2025

HMRC is seeking to extend two contracts with the beleaguered IT firm at the centre of the Post Office scandal.
Fujitsu's faulty Horizon software led to the wrongful prosecution of more than 900 sub-postmasters by the Post Office between 1999 and 2015.
However, the tax authority has sought ministerial approval to extend two highly lucrative contracts currently valued at more than £330 million with the Japanese firm, just weeks before the inquiry into the scandal is due to produce its first report.
It comes more than a year after Fujitsu wrote to the Cabinet Office to say it would not bid for new government contracts during the inquiry unless it was asked.
When approached by The Telegraph about the extensions, a Fujitsu spokesman said the firm continued to adhere to the restrictions it had put in place.
Lord Arbuthnot, who campaigned for the Horizon victims as a Tory MP, called any extension of Fujitsu government contracts 'truly wrong'.
Meanwhile a former sub-postmistress who was sent to prison while pregnant because of Fujitsu's faulty IT system, said extending such contracts was 'an insult to victims and the inquiry itself'.
HMRC, which recently admitted to losing £49 million in a series of phishing attacks on taxpayers, has sought ministerial approval to extend two contracts – one for its data centre operations and project services and another for hosting more than a dozen applications on a virtual platform through a virtually managed environment (VME) support contract.
These contracts were initially valued at £52 million and £168.8 million, respectively.
However, in written evidence to the Treasury select committee, then chaired by Harriet Baldwin, HMRC went on to cite higher figures – £78 million for the data centre operations contract and £253 million for the VME Support Contract.
It is not known the exact sum the taxman has proposed to pay to extend the two contracts, the first of which expired at the end of March. The second will come to an end this month.
The Telegraph can reveal that HMRC officials have sought ministerial sign-off in order to finalise both deals.
Lord Arbuthnot said: 'I think it is truly wrong. [Fujitsu] helped the Post Office prosecute sub-postmasters even though Fujitsu knew well of the flaws in the software on which the sub-postmasters were being prosecuted
'And they told everybody that they couldn't remotely change the sub-postmasters' accounts, even though they themselves were doing it and knew they were doing it.
'If that was an individual doing things like that they would be facing many years in prison, and for the Government to extend contracts to someone who really ought to be behind bars seems to me to be quite wrong.
'Fujitsu has also not yet paid a penny towards the redress that sub-postmasters are getting and they're trying to minimise the hundreds of millions of pounds that they really ought to be paying.'
In January last year, Paul Patterson, the chief executive of Fujitsu's European arm, told MPs at a business and trade committee hearing that his firm had a 'moral obligation' to contribute to compensation for victims of the scandal.
Seema Misra, who was eight weeks pregnant when sent to prison for theft and false accounting at her old branch in West Byfleet, Surrey, said: 'It's terrible, especially when the whole country knows this is a firm at the forefront of the scandal.
'The international company ruined people's lives and HMRC shouldn't be thinking about renewing the contacts at this point.'
Mrs Misra, 50, who was awarded an OBE this year for services to justice, said: ' Fujitsu has a lot to answer for, and instead of holding them to account, they are just extending contracts. It's a real insult, not just to victims but to the inquiry itself, to do this before the chair has produced any part of his report.'
A Government source said: 'We inherited these contracts from the previous government. Extending them would be for a limited time on strict terms whilst we remove Fujitsu from government systems securely. If the previous government had acted earlier, we would not be in this position.
'We must never forget the lives ruined by the Horizon scandal, and no amount of redress can take away that pain. But justice can and must be done. This government is determined to hold those responsible to account, and will continue to make rapid progress on compensation and redress.
'Since we took office we have more than quadrupled the amount of redress paid to the victims and in March the business secretary, Johnny Reynolds, met with Fujitsu to begin the process of talking to them about paying compensation.'
A Fujitsu spokesman said: 'We continue to work with the UK Government to ensure we adhere to the voluntary restrictions we put in place regarding bidding for new contracts while the Post Office inquiry is ongoing.'
Former postal affairs minister Kevin Hollinrake said: 'Fujitsu has already admitted corporate responsibility for this national scandal and the biggest miscarriage of justice in modern history.
'The least Labour could do is secure the interim payment that we pushed for whilst in office before pressing on with these multi-hundred million contracts.
'Anything less would be another betrayal of postmasters and the British taxpayer.'