Post Office scandal and the land of the rising computer

Here’s another name to chuck on the list of those culpable for the Post Office Horizon computer scandal: the late Tony Benn.

As technology minister (and former postmaster general) in Harold Wilson's Labour government, Benn (pictured above) oversaw the rationalisation of the UK’s pioneering but amateurish computer industry. The 1968 Industrial Expansion Act created a new national champion, International Computers Limited (ICL) from a hodgepodge of ventures such as English Electric Computers. It in turn had absorbed the maker of the world’s first purely commercial computer, the Lyons Electronic Office, created by the eponymous tea shop. 

Benn's target was clear: to create a national champion that could take on the mighty International Business Machines (IBM), which dominated the hardware and software business. While the Lyons Electronic Office was calculating the ingredients for sausage rolls and macaroons, IBM's revolutionary System 360 mainframes were helping send men to the moon. It was the year in which the film 2001: A Space Odyssey starred all-seeing computer 'incapable of error': it's name was HAL, the initial of IBM shifted one place to the left. 

Meanwhile, across the world, another government had similar plans for its fragmented computer industry. Japan's Ministry of International Trade and Industry, fresh from nurturing the country's economic miracle in sectors from ships to transistor radios, decided that its computer sector needed a jolt. It proposed amalgamating six manufacturers, serving almost exclusively the domestic market, into two or three serious contenders. Unlike their British counterparts, the six, each representing a rival keiretsu (industrial group) wanted nothing to do with it. Instead, the government rowed back, introducing a funding scheme to help Japanese businesses computerise, along with a series of temporary research collaborations. 

As it happened, ICL - in which the UK government originally owned a 10% stake - never came close to rattling IBM on a global scale. In 1971 it had a 2.6% share of the world’s ‘installed base’ of mainframes, against IBM's 62.1%. (Fujitsu had 1.1%.) However during the 1970s ICL had one pretty well captive market: the British public sector. ICL was the natural supplier in first generation efforts to computerise the tax system, local authority administration and the NHS. Even IBM, which had been in the UK for decades, found it hard to compete in such procurements until the Thatcher government's market-opening moves. ICL became almost symbiotic with the government machine. But while having some excellent backroom technology, it was unable to convert this into products or sales. Its first venture into personal computers, for example, was a kludge called One Per Desk, a combined telephone and microcomputer which was the fruit of a brief collaboration with entrepreneur Clive Sinclair. Like many of Sinclair's ideas, the futuristic form was put on the market without the technology to make it work. 

But IBM was not having it all its own way. The company spent 13 years fighting an antitrust lawsuit from the Department of Justice before it was was thrown out in 1982. By then 'Big Blue' was being outflanked by innovative creators of computers - machines that would fit under, and eventually on, desks. When IBM launched its first personal computer in 1981, it relied on software from a feisty startup called Microsoft. 

This decision reflected another fundamental change made by IBM to fend off antitrust suits: its unbundling of software and hardware. This opened the way to rival manufacturers entering the 'plug compatible' market - producing would work with IBM systems but at a fraction of the price, and often with a technological edge. The Japanese company to make the most of that was Fujitsu. In 1975, in cooperation with US company Amdahl, one of the first IBM cloners, it delivered a system with twice the performance of the equivalent IBM box. An early installation was at IBM's flagship customer, NASA. By the mid 1980s, Fujitsu was riding high in both domestic and international markets. Sometimes attracting controversy: in 1989 it withdrew a one-yen bid for a waterworks contract following a furious protest from the US. 

Like other Japanee players riding on a soaring currency, Fujitsu expanded through international acquisitions: first, with a stake in Amdahl and then, in 1990, acquiring the loss-making ICL. That year, I asked chief executive Takuma Yamamoto what it would take for Fujitsu to be in IBM's league. 'We already are,' he said.

For ICL (the name survived until 2002), an injection of capital, innovative technology and Japanese work ethic came at the perfect time for attacking the newly fashionable public sector market. Hot on the tail of the dotcom boom came 'e-government' - an obsession with putting public services online. The move was heavily promoted by big IT with old-school hardware and software makers now presenting themselves as service transformation experts. In a frenzy of Blair-era activity, ICL - now rebranded as Fujitsu Services - won contracts worth billions. It was signed up to replace creaking mainframe NHS patient administration systems across the south of England with 'electronic patient records' (failed, sparking years of litigation) and to computerise magistrates' courts (subject of one of a series of scathing National Audit Office reports). 

And, of course, the Post Office Horizon contract, initially agreed by ICL Pathway in 1996 and given the green light by Blair in 1999. Here, it must be said that the modernisers had a good idea: a significant proportion of citizens would need help interacting with e-government online. What better intermediary than the universally trusted, if not always loved, Post Office?

But, in setting up IT systems with the enthusiasm of a three-year-old building a Lego tower, the Blair and Brown governments overlooked public sector's ability to place, and manage projects and the industry's capacity to deliver. Government IT became a synonym for delay, overspending and disaster. No doubt the report of Horizon public inquiry will tell us more. 

More than half a century on from Tony Benn's creation of a national champion, what have we learned? One lesson may be that intervention, whether to create or constrain, inevitably lags behind technological development. An entirely new set of tech giants are now promising - or threatening - to reinvent government. IBM, meanwhile, has reinvented itself multiple times. 

But, while the names have changed, big IT and big government are still locked in an unhealthy embrace. In a democracy, the important thing is to remember who is in charge. 

Michael Cross is the Gazette's news editor. He is a former Tokyo correspondent specialising in technology. He also reported on UK government computer disasters for many years.