Post Office drops £264m debt on government doorstep

The Post Office has blamed its first loss in 24 years on abandoned government plans to pay benefits from Post Offices.

The Post Office has made a loss after tax of £264m, after writing off £571m for the cost of IT systems for the scrapped project.

The decision was made to abandon the automated system last year. Named "Pathway" the project had suffered lengthy delays. Its failure also cost contractor ICL £180m.

ICL is, however, on schedule to roll out a new system - called Horizon - that will automate systems like stamp purchase and driving licence enquiries over Post Office counters. The Post Office currently gains a third of its business from the payment of benefits over the counter.