Headlines: May 25th, 1999

The government has confirmed that it will go ahead with controversial plans to install computers in local post offices to beat benefit fraud. The £1.5bn plan, initially proposed by the previous government, involves the installation of computer terminals in 19,000 local offices. There were fears that the government would abandon the plan after it went over budget, and rural post offices would lose much of their business and be forced to close.

The ambitious project aims to save at least £100m annually in fraud – but it involves managing some 890m transactions a year by some 19m claimants, dispensing some £70bn. But there have been changes to the initial programme, abandoning the idea of issuing magnetic strip benefit payment cards to millions of claimants.

The new computer system, developed by ICL, has already been piloted in the North and South-west. But critics said that the system, called Horizon, is three years late and still not working properly. They argue that the government has become too close to ICL, which has launched the project as part of the private finance initiative (PFI) to encourage public investment by the private sector. And they say that it would be far cheaper to pay benefits via direct debits into bank accounts.

It is the most complex PFI project to date, and ICL had already invested £200m in its success. The scheme is now scheduled for completion in 2003.