Transparency data

Summary business case

Published 14 July 2026

1. Executive summary

Post Office Limited’s (POL) strategic transformation plan (STP) and future technology portfolio (FTP) programme business cases (PBCs) sought approval to launch a business transformation programme over 5 years worth approximately £1.4 billion, from financial year 2025 to 2026 to financial year 2029 to 2030. This is a summary of the FTP PBC which sought spending approval of £289.9 million for financial year 2026 to 2027 and 2027 to 2028, with an estimated total Department for Business and Trade (DBT) funding of £551.8 million over from the financial years 2025 to 2026 to the financial year of 2029 to 2030.

The POL transformation plan was launched in response to the findings of the strategic review, conducted in 2024, that identified critical financial and organisational challenges. It is a 5-year strategic initiative designed to secure the future of the Post Office at the heart of communities across the UK. It aims to deliver substantial benefits to DBT, POL, postmasters, retail and small and medium-sized enterprise (SME) customers, and their communities. The transformation plan addresses the challenges facing POL and sets a clear trajectory toward a more sustainable, efficient, and community-focused business. 

The transformation plan will be delivered through 5 pillars of change. Four are covered in the STP PBC:

• strengthen the commercial offer
• ensure the network is fit for purpose
• deliver a new operating model
• reset stakeholder relationships

One is covered in FTP PBC (transform technology and data).

Figure 1: Scope of POL’s transformation plan

Text description of figure 1:

FTP programme business case:

• transform technology and data: transformation of POL’s estate by building resilience into current infrastructure to enable development and delivery of transition to a new end-state platform and operating model. Enabler for future business success

STP programme business case:

• strengthen our commercial offer: strengthening POL’s core commercial offer by building resilience in mails and growth in cash, alongside growth in new product areas. Also includes new ways for customers to interact with POL, particularly online and omnichannel
• ensure network is fit for purpose: move POL to an all-franchise model (for example, close 108 DMBs) and drive wider efficiencies across the network and resilience in the supply chain. Deploy new format plans including growing Banking Hub footprint
• deliver a new operating model: streamline POL’s core central structures to simplify operations, reduce costs and focus, and build capability where it is needed. Also includes interventions in talent development and culture change
• reset stakeholder relationships: intent to reset postmaster relationships, led by a “New Deal” plan to grow revenue share by £250 million per annum by end of the financial year 2029 to 2030. Also activities focused on rebuilding trust with postmasters, strategic partners, and the UK government

The transformation plan is also closely aligned with government priorities and delivery of government policy (for example, access to cash). It supports high street regeneration, SME growth, and financial inclusion – all of which are underpinned by the Post Office network’s unique national footprint and social value. It also responds where possible to the Post Office Horizon IT (POHIT) Inquiry and the government’s commitment to justice and redress for affected postmasters.

2. Strategic case

2.1 Case for change and strategic fit

FTP is designed to stabilise, modernise, and streamline POL’s technology estate. At the heart of FTP is the need to transition away from the legacy Horizon system, POL’s core trading platform. Horizon has been heavily customised since its inception, making it slow, difficult, and costly to maintain. Moreover, Horizon has been at the centre of the Horizon IT Scandal which has severely damaged public trust and exposed deep flaws in POL’s technology.

There are broader issues in POL’s current technology portfolio which suffers from fragmentation, duplication, and foundational infrastructure nearing end-of-life. This has led to inefficiencies, increased operational risk, and a diminished ability to respond to market demands or deliver new services.

FTP aims to avoid further deterioration of POL’s technology estate, mitigate operational and reputational risks, and lay the groundwork for a more sustainable future. This programme forms part of POL’s response to the Post Office Horizon IT (POHIT) Inquiry to demonstrate meaningful change.

FTP is a strategic enabler for the other 4 pillars of the transformation plan (STP), which rely on a modernised technology estate for successful delivery of their objectives.

2.2 Objectives

The transformation plan adopts 3 spending objectives:

• improved community service: secure POL’s role at the core of communities across the UK, delivering against customers’ evolving needs and protecting the significant social and economic value the Post Office network delivers each year
• new deal for postmasters: postmasters can generate a fair living from running a Post Office branch, that compares acceptably to independent retail benchmarks of profitability and return
• lasting financial stability: streamline and simplify POL’s corporate centre to reduce costs, minimise financial and operational risk and lower the long-term funding requirement from HMG

FTP comprises 5 strategic programmes:

• Horizon and resilience: a programme transitioning Horizon away from Fujitsu and replacing end‑of‑life systems and data‑centre infrastructure to secure and future‑proof POL’s core transaction platform
• branch technology refresh: a programme replacing POL’s obsolete in‑branch technology and upgrading connectivity to modernise customer journeys and support new products and services
• back office modernisation: a programme that reduces risks from legacy systems, ensuring business continuity, while establishing a modern, scalable architecture, enhanced integration capabilities, and a partner model designed for future growth
• cyber maturity: a programme strengthening POL’s cyber resilience by modernising security capability, enhancing CISO products and services, aligning the organisation on risk, empowering colleagues and securing with intent
• data enablement: a programme modernising POL’s fragmented and end‑of‑life data estate to create unified, accessible, and reliable data that enables insight‑driven decision‑making and improved operations

POL is also investing in its transformation function capability to ensure it has the capacity and expertise required to manage large‑scale, complex transformation.

3. Economic case

FTP is an enabler of the overall transformation plan, which has the following benefits:

• increased revenue
• reduced investment and operating costs
• reduced branch churn rates
• increased Postmaster satisfaction
• increased customer satisfaction
• increased POL staff satisfaction
• increased POL staff productivity
• increased stakeholder satisfaction

The economic rationale for FTP is based on addressing 2 market failures. First, the Post Office network generates significant positive externalities. Research commissioned by DBT on the value of the Post Office Network has highlighted the significant positive externalities provided by POL and its network, in the form of wider economic and social value. The research found that households and SMEs valued the network at £5.2 billion and £1.3 billion per annum respectively, with the highest rated qualities being that the Post Office network is “nearby and convenient to get to, and available when you need it”. Investment through STP will help to protect this significant social value by enabling POL to deliver an improved service to customers across the UK.  

Second, coordination failures are prevented by the Post Office acting as central delivery point for wide-ranging services, avoiding duplication of infrastructure and mitigating the risk of key services not being offered in some areas due to lack of commercial incentive.

3.1 Shortlist of options

POL developed a longlist of options through stakeholder workshops and structured analysis. These were assessed against 5 critical success factors:

• strategic fit
• value for money
• supplier capability
• affordability
• deliverability

From this process, 3 options were shortlisted for detailed appraisal:

• option 1: business as usual (BAU) maintains current arrangements with minimal investment, restricted to activities already underway or deemed essential. It includes exiting the Fujitsu contract, fortifying Horizon data centres, and replacing obsolete hardware. While affordable and requiring the least time and resource to deliver, it fails to support the transformation plan’s strategic objectives and delivers limited social value
• option 2: do the minimum builds on BAU by adding targeted improvements to resilience, branch hardware, back-office systems, and data infrastructure. It is delivered over 7 years and jointly funded by DBT and POL. However, it includes limited investment in new branch hardware and non-core back-office systems, the development of a single unified data platform for POL and delivery of transformation capabilities, limiting its ability to deliver transformational change
• option 3: Preferred Way Forward (PWF) is a 7-year transformation programme that includes all elements of Option 2, plus larger scale investment in the modernisation of branch hardware and back-office systems, as well as in replacing fragmented data systems with a single unified and fit for purpose future data platform. It is delivered through a hybrid model that leverages external partners where appropriate. This option strikes the best balance of cost, risk, and benefit, delivering high strategic alignment, strong qualitative benefits, and enabling the wider transformation plan

3.2 Appraisal methods used

Appraisal methods used include:

• a value for money (VfM) appraisal of costs, risks and benefits under each option
• a qualitative appraisal of benefits and risks not captured by the VfM appraisal
• an appraisal of the place-based impacts of each option
• an appraisal of the environmental sustainability impacts of each option

All appraisal methods were in line with HM Treasury and National Infrastructure and Service Transformation Authority (NISTA) Green Book Standards.

3.3 Rationale for the choice of the preferred option

The PWF strikes the best balance of cost, risk, and benefit, delivering high strategic alignment, strong qualitative benefits, and enabling the wider transformation plan. While FTP has a negative net present social value (NPSV) when assessed in isolation, this reflects the fact that monetised benefits are not attributed to FTP directly, but are realised through the delivery of STP, for which FTP is a critical enabler.  When considered as part of the full 5-year transformation plan (STP and FTP), the PWF for FTP contributes to an aggregate NPSV of £156 million and a benefit-cost ratio (BCR) of 1.34. Overall, this option offers the best value for money for the public purse compared with the alternatives.  

The PWF also had the most positive scores for non-monetised risks and benefits and other considerations (sustainability impact and place-based impacts).

4. Commercial case

4.1 Procurement strategy

A robust commercial governance framework has been established for FTP. This is underpinned by the POL’s Contract Management Framework, which is evolving to reflect the requirements of conducting the Horizon replacement programme.

Contracts are segmented by strategic importance and risk, with tailored oversight and performance management mechanisms. Key procurements which meet the necessary value and complexity threshold are subject to DBT’s Commercial Approvals and Assurance Group (CAAG) governance, with approval to award scheduled following final tender evaluations.

The biggest procurements will use the Cabinet Office Model Services Contract and the Competitive Flexible procedure. The Fujitsu Exit project for the Horizon and Resilience Programmes is split into 2 parts:

• lot 1: taking over the existing Horizon system and transforming core services
• lot 2: introducing an off‑the‑shelf EPOS system to replace applications used in branches

Payments will be linked to key milestones, with penalties for delays and incentives for early completion. This approach is designed to reduce delivery risk and encourage a safe, timely transition.

5. Ensuring value for money

Value for money is driven through FTP’s commercial strategy, including:

• utilising competitive tendering processes or leveraging economies of scale via existing contracts where appropriate to achieve competitive pricing
• linking delivery and performance to payment (particularly for Fujitsu Exit)
• utilising strategic lotting to avoid supplier lock-in and ensure market appetite for Fujitsu Exit contracts

POL has also embedded social value into its procurement strategy, requiring suppliers to report on carbon emissions and waste reduction, and aligning contracts with government procurement policy notes.

The overall commercial VfM approach explicitly addresses the legacy and history of the Horizon system and the importance of delivering clear value for money for POL, postmasters, customers, and the taxpayer.

6. Financial case

6.1 Financial costs of the preferred option

Across financial year 2026 to 2027 to financial year 2029 to 2030, DBT funding for FTP is projected at £551.8 million under the 5 programmes that make up the scope of this PBC (set out in section 2.2). This spend totals £289.9 million in the PBC drawdown period covering financial year 2026 to 2027 and financial year 2027 to 2028.

Table 1: DBT funding for FPT

	Phase 1: 2025 to 2026, approved	Phase 2: 2026 to 2027 to 2029 and 2030, estimate	Phase 3: 2028 to 2029 to 2029 to 2030	Total
Total	£136 million	£229.9 million	£125.9 million	£551.8 million

6.2 Financial assumptions and key risks

POL faces a risk relating to the classification of spend between RDEL and CDEL since a final determination on spend type can only be made at the point of expenditure, forecasts prepared today may not be accurate. This creates a risk to POL in relation to accessing funding. This is mitigated through regular engagement and reporting between POL and DBT.

In addition, POL has made assumptions for the phasing of activity in the Preferred Way Forward, meaning that if activity is delayed spend would take place later and total spend and POL’s funding requirement may be higher. The impact on funding would be greater if funds allocated to one year cannot be carried forward.

Each of the programmes within FTP have been subject to an optimism bias assessment which was applied in line with HMG best practice guidance. POL estimates a total contingency of £124 million across the forecast period from financial year 2026 to 2027 to financial year 2029 to 20230, and £61 million in the drawdown period, which is excluded from Table 1.

7. Management case

7.1 Governance and programme structure

The Shareholder Relationship Framework Document sets out the broad governance framework which POL operates within. DBT is the shareholder of Post Office Limited and UK Government Investments (UKGI) is the shareholder representative with a shareholder director on the POL Board.

Governance for the transformation plan (STP and FTP) is structured across 3 levels: board, executive, and pillar:

• the board level and its Transformation Subcommittee provide strategic oversight and approve spend between £15 million and £50 million
• the executive level and its subcommittees oversee delivery and risk management as well as spend below £15 million. They provide external reporting to relevant government departments
• the pillar level has a pillar board, programme and project boards, which manage day-to-day delivery

DBT, UKGI, and HMT are fully embedded in the relevant governance forums across transformation plan delivery, ensuring transparency and alignment with shareholder expectations. In recognition of the history of Horizon and the criticality of successful replacement, DBT is also providing enhanced independent assurance for the Fujitsu Transition Programme through additional specialist digital oversight, strengthening confidence in delivery and value for money.

7.2 Risk management

POL employs a structured 3 lines of defence model in relation to risk management.

1. First line assurance is embedded within delivery teams and supported by the Transformation PMO, which ensures conformance with controls and provides quality of compliance.
2. Second-line assurance is provided by POL’s corporate functions and internal audit, with stakeholder gating at key lifecycle stages and independent reviews.
3. Third-line assurance is externally led and includes NISTA Gateway Reviews, Cabinet Office functional support (for example, Complex Transactions Team).

STP and FTP are part of the Government Major Project Portfolio (GMPP), and therefore the programme benefits from the added assurance provided by the NISTA.

7.3 Evaluation plan

The POL Monitoring and Evaluation plan sets out a clear framework for systematically measuring the progress of the transformation plan (STP and FTP). It assesses the effectiveness of the programmes’ delivery processes, the extent to which the programme is delivering the desired impacts, and determines the programme’s value for money.