Fujitsu: Government Contracts

Question

Asked by

To ask His Majesty’s Government what assessment they have made of Fujitsu’s suitability to hold government contracts.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and refer to my entry in the register of Members’ interests.

My Lords, the impact of the Horizon scandal on postmasters and their families has been horrendous. The Government are determined to hold those responsible to account and will continue to seek to make rapid progress on compensation and redress. Fujitsu’s role in Horizon is one of the issues currently being reviewed by Sir Wyn Williams’s statutory inquiry. In January 2024, Fujitsu committed to withdraw from bidding for contracts with new government customers until the Post Office Horizon inquiry concludes. It will bid for work with existing government customers only where it already has a contract with them or where there is an agreed need for Fujitsu’s skills and capabilities. The Government are carefully considering volume 1 of the report, published yesterday, which is limited in scope. Once the inquiry has established the full facts, we will review its final report and consider any further action, where appropriate.

My Lords, I thank my noble friend the Minister for her Answer. Given yesterday’s results from the official inquiry into the Post Office scandal, and the human tragedies which unfolded as a result of wrongful convictions of postmasters, what additional due diligence measures have the Government implemented or will the Government implement to ensure that contractors with a history of significant failures or legal issues can demonstrate that they have addressed these concerns before being awarded new contracts? In this, I am mindful of the bid by Fujitsu for the controversial trader support scheme in Northern Ireland.

My noble friend makes the most important of points, which is about the impact on people, and the victims of the Horizon scandal, a lot of which we heard yet again yesterday. It broke my heart and other people’s hearts.

On my noble friend’s specific question, the Procurement Act, which was passed by Your Lordships’ House in 2023, provides buyers with more scope to exclude suppliers who have performed poorly on previous relevant contracts. Previously, exclusion was possible only if poor performance had led to termination of a contract, damages or comparable sanctions. Due diligence on such failures is also more straightforward as the Act now provides for the sharing of information on poorly performing suppliers. This information is publicly available via notices published on the central digital platform.

With regards to the Trader Support Service contract, HMRC is currently undertaking a competitive procurement process for the renewal of that scheme, and it would therefore be inappropriate of me to comment further.

My Lords, Fujitsu has paid not one penny towards the victims of the havoc and misery that it helped to cause. Is the Government —is the country—over a barrel to Fujitsu? If not, why is Fujitsu still winning government work? If we are, what are the Government doing about it?

I want to put on record my personal thanks for the work that the noble Lord did in getting us to this point. Even with yesterday’s report, we would not have got as far as we have without his work and that of my noble friend Lord Beamish.

With regard to the role of Fujitsu and its contribution towards compensation and redress, it has accepted that it has a moral obligation to give funds, but the noble Lord will be even more aware than I am that we are yet to see a penny. The Secretary of State met the CEO of Fujitsu on 7 March. Fujitsu has agreed that it will have to make a financial contribution, but I am urged not to give a running commentary, although we will welcome any interim payment in due course.

With regards to ongoing contracts, the noble Lord will be aware that there have been 12 contracts in the last 12 months issued to Fujitsu. Some of that is to transition away from Fujitsu contracts, where we have to make sure there is a smooth transition process. I must remind and urge noble Lords that there are, as yet, no criminal proceedings against Fujitsu, and until then, we have to operate in a quasi-judicial way with regards to our approach to the contracts.

My Lords, the noble Baroness will be aware that I have asked quite a number of questions about the Fujitsu contracts, and she has repeated, word for word, quite a bit of what she said in her Written Answers. The Treasury was particularly shocking in its response. When asked why HMRC had retendered to Fujitsu and given Fujitsu contracts this year, it said:

“Contract opportunities are available to any economic operator that is able to meet the requirements of the procurement in compliance with the Public Contracts Regulations 2015 or the Procurement Regulations 2024, as applicable”.

That is a totally dead-bat answer to something quite shocking in my view. In the light of the Horizon report yesterday, which condemned Fujitsu’s conduct as a key contributor to the suffering of thousands of innocent people, is it not already clear that Fujitsu should be nowhere near any new contract?

The noble Lord makes an incredibly important point. Yesterday, we saw the first volume of Sir Wyn Williams’s 160-page report, based on 2 million pages of evidence, which included 19 recommendations, and we will come back to it in due course. The Government are committed to responding in full to the findings of the report by 10 October.

With regard to Fujitsu and the ongoing contracts, I believe that the Treasury contract is about the HMRC platform. Some of this is about continuity of service, to make sure that we are still able to have business supply secured. But I think everyone in your Lordships’ House would agree with the noble Lord’s sentiment that this is about how we operate in a way that is based on evidence going forward, so that we can ensure that those who need to be held accountable are held accountable and we do not make mistakes at the Dispatch Box, which I might by saying something that is unhelpful going forward as we progress after volume 2 is published.

My Lords, yesterday Sir Wyn produced the first volume of his report. It is worth all noble Lords reading section 2, because it gives a summary of individual cases of those who have been affected. I challenge anyone to read some of those without being moved: something that my good friend, the noble Lord, Lord Arbuthnot, and I have got used to over the years.

He also raises in the report the issue around compensation and Fujitsu. To date, the Government and taxpayers have paid over £1 billion, quite rightly, to those victims. Fujitsu has not paid one penny piece. It may have a moral obligation, but moral obligations do not pay compensation. I have raised on numerous occasions an issue that has been raised about ongoing contracts. I dispute the fact that some of these are ongoing contracts; some are new contracts. I have called, along with my good friend, the noble Lord, Lord Arbuthnot, for Fujitsu to at least pay some interim payments. When will the Government get on and force Fujitsu to act on its moral obligations, put its hands in its pockets and at least pay some interim payments?

I thank my noble friend for the work he has done and for his ongoing participation in the Horizon compensation schemes. I agree that all noble Lords should review the 17 cases Sir Wyn Williams has highlighted. Many of us will have listened again last night to the personal testimonies of Jo Hamilton and Seema Misra, which are totally and completely heartbreaking and give us an indication of the human cost of the Horizon scandal, including the 13 people who have committed suicide because of it.

We have urged Fujitsu to make interim payments. There are ongoing conversations with Fujitsu, including regular meetings with the Crown Representative, the Cabinet Office and DBT. We will continue to have such meetings.

My Lords, the Post Office Horizon IT scandal has seriously damaged public trust in procurement processes and, yet again, Fujitsu is right at the heart of it. Can the Minister tell the House exactly what the Government are going to do to finally hold Fujitsu to account and confirm whether the Government will be taking advantage of the new procurement regime enshrined by the previous Government, which allows the exclusion of suppliers from future procurement processes based on the grounds of professional misconduct?

The noble Baroness is absolutely correct that the tools now exist because of the Procurement Act 2023. They came into effect on 25 February this year. But the process the noble Baroness describes is quasi-judicial and it is vitally important that we follow the evidence and make sure that we are acting appropriately with government money in the application of any investigation into Fujitsu. Obviously, there are also other accountability measures that are ongoing, including those currently being undertaken by the Metropolitan Police. There are many different levels of this investigation and the Government will respond in due course on our next steps after we have the full public inquiry findings.