The Post Office has come under fire from officials for its Horizon IT system for not being innovative or efficient enough.

In the report ‘Post Offices – securing their future’, the parliamentary Business and Enterprise Committee said the Horizon point of sale system needs to offer more automation in order to improve the efficiency of Post Office branches.

The Post Office, whose parent company is the CIO 100 ranked Royal Mail Group had “not been as innovative in information technology as it should have been”, the report said.

Horizon has been dogged with controversy since conception. The original project began in 1996, dubbed Pathway, and the aim was to computerise the Post Office's network and automate the payment of benefits to prevent fraud.

After a dispute over the technology, the Pathway project – along with the benefits automation - was scrapped in 2000, which resulted in a £180 million write-off. In that same year, the project was rejigged as the Horizon IT project, a contract for ICL to computerise the Post Office counters network by installing PCs and other electronic equipment in 18,000 branches across the UK, at a cost of £1.4 billion

The project was the subject of a National Audit Office report in 2000, which concluded that as much as £881m of taxpayers' money was wasted as a result of the change, and criticised a lack of leadership.

Today, the committee noted: “It would be a serious understatement to say that the project suffered teething troubles."

There needed to be more widespread barcode scanning, as well as more automated processes, the committee said. Current processes required too much manual input, including too many keystrokes. Transactions were "more complex and difficult to use than they need to be”.

Even the trade unions had highlighted problems with the system. “The Communication Workers Union and Unite the Union told us that post offices need to make better use of electronic terminals for routine processes, such as stamp sales, to free up staff to provide other services,” it said.

The Post Office will begin an upgrade of the Horizon system this September, a move the committee welcomed. But it said the Post Office needed to do more.

"Post Office Ltd should continue to seek technological innovations that make it more competitive at bidding for contracts, and simplify and speed up transactions in post offices," it said.

It questioned whether Post Office branches could cope with taking biometric details – such as fingerprints – for identity cards and passports, as detailed under recent proposals. “Many or even most identity services may well be too sophisticated to provide across the network,” it said.

The report said Post Office branches were vital, criticising some of the Digital Britain recommendations that stated the web should be the primary public service channel. It is “not appropriate” for the government to restrict the services “to those who can use web based services”, it said.

Fujitsu, which bought supplier ICL and inherited the Post Office contract, also has a £300 million 10 year deal for EPOS support with the department. Fujitsu referred requests for comment back to the Post Office.

A spokesperson at the Post Office said Horizon is "extremely robust, successfully records millions of transactions each day and has enabled Post Office Ltd to introduce a large number of new products including financial services". The spokesperson added that the system is "reviewed on a regular basis".