28 October 2022 – David Miller
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(10.05)
Sir Wyn Williams: Morning everyone. Morning, Mr Blake.
Mr Blake: Morning, sir. Today’s witness is David Miller.
David Miller
DAVID MILLER (affirmed).
Questioned by Mr Blake
Mr Blake: Thank you. Can you give your full name please?
David Miller: David William Miller.
Mr Blake: Mr Miller, in front of you should have a witness statement in a bundle. Is that witness statement dated 20 September of this year?
David Miller: It is.
Mr Blake: On the final page, or page 18, is that your signature?
David Miller: It is.
Mr Blake: Is that statement true to the best of your knowledge and belief?
David Miller: There is one point, if I may, in – I think it’s paragraph 24 –
Mr Blake: Perhaps we could bring it on screen. It’s WITN03470100.
David Miller: Where I have said “I was not aware of any issue with ICL’s ability to assist with the automation process”, that should have been “I was not aware of any overriding issue”. Clearly there are lots of issues that are in the bundle.
Mr Blake: Thank you. Mr Miller, we have all day. We will probably finish around 3 o’clock at the latest, but – so I will take you through relatively slowly today, perhaps slower than those witnesses who were on yesterday, because we do have time, and if you need any time to look at any documents that are on screen, please do say.
Your witness statement and exhibits are now in evidence, so the areas that I will be covering will be supplementary largely, although I will start with your background.
You joined the Post Office in 1970 as a management trainee; is that right?
David Miller: That’s correct.
Mr Blake: What was your academic background: was it technical, managerial or …?
David Miller: It was academic.
Mr Blake: Academic. You moved to Post Office Counters Limited in 1983?
David Miller: Correct.
Mr Blake: In 1994 to 1995 you were senior line manager for post offices in South West England.
David Miller: That’s correct.
Mr Blake: In 1995 you moved to the Horizon project in what we know is the Programme Development Authority, that’s the joint programme between the Benefits Agency and Post Office Counters Limited, and you were a deputy director in that position; is that right?
David Miller: Yes.
Mr Blake: In 1998, you took over as Horizon programme director. Your witness statement says it was at short notice. Are we to read anything into that in particular?
David Miller: No. It was – but it was at short notice.
Mr Blake: Do you know why that was?
David Miller: I think there was a view taken about the right people to do the right jobs and the person who was doing it at that point, I think, had other skills and therefore I was drafted in.
Mr Blake: So you were considered to be better skilled for the job?
David Miller: I believe so.
Mr Blake: Did you feel qualified for that role?
David Miller: I was conscious that I did not have a technical background, but I did have a background in delivering, nothing of this size, but a significantly sized nationwide project for the Post Office a few years before.
Mr Blake: Do you remember how you were selected for the role: was there an interview process, was it a competitive process or were you handpicked for the role?
David Miller: I was – no, there was no selection process. I was contacted and there was a brief discussion.
Mr Blake: Sorry, I believe there may be an issue with the transcript? No? No, that’s fine, thank you.
You have acknowledged in your statement – it is paragraph 51(c) of your statement, if it assists – that Post Office Counters Limited lacked experience in really big IT projects at the time. Were you aware of any attempt to recruit people at managerial level with those kinds of expertise?
David Miller: No. I think there was a tendency to look for – when you say “recruit”, I’m sorry, there was a tendency to use people from other organisations who would be moved in to do specific roles and functions.
Mr Blake: But at managerial level – I mean, we have heard from some witnesses who spent a long time in the Post Office and worked their way up. Did you feel that there was a sufficient attempt to build technical expertise, for example, at a higher level in the organisation?
David Miller: That was – that sort of expertise was held in Group, who had a IT director and a IT function, and, in fact, a number of people came to work on the programme eventually from that area, so IT resource tended to be recruited centrally into Group.
Mr Blake: When you say “Group”, that’s the Post Office Group that included Royal Mail, at the time –
David Miller: Yes.
Mr Blake: – Post Office Counters Limited –
David Miller: There was an overarching organisation, which I’m referring to as “Group”, which sat above the constituent businesses.
Mr Blake: Would you rely on them to provide that expertise or provide the people who had those expertise?
David Miller: Yes. There was some – in the programme phase, there was some bringing in of expertise from outside, but that would have been coordinated with Group IT.
Mr Blake: We have heard that it was the Post Office board, not the Post Office Counters Limited board, that took – where the real decisions were made –
David Miller: Yes.
Mr Blake: – would you agree with that? Yes.
You have said at paragraph 41 of your statement that the board did not involve itself in day-to-day Horizon matters, only the bigger picture. Was that something you knew at the time?
David Miller: Yes.
Mr Blake: Did it concern you at all?
David Miller: The sponsor of the project was my immediate boss and he sat on that board.
Mr Blake: Who was that, sorry?
David Miller: Stuart Sweetman.
Mr Blake: Yes.
David Miller: So it didn’t concern me at that time.
Mr Blake: Was that because you had faith in Mr Sweetman to tell the board what they needed to know?
David Miller: Yes.
Mr Blake: You said “at the time”, is that no longer the case?
David Miller: No – sorry, I thought we were talking about events at this particular time and that was the case.
Mr Blake: And is it still the case?
David Miller: Yes.
Mr Blake: Did, in your opinion, the board place a lot of faith then in what they were told?
David Miller: Yes.
Mr Blake: John Roberts has given evidence about the commercial importance of the Horizon project. Is that something that you were aware of at the time?
David Miller: Very much.
Mr Blake: Did you see it as vital to the survival of the Post Office?
David Miller: I did.
Mr Blake: I’m going to take you through chronologically today – I’m going to go far back, I’m going to start in 1995 but I won’t stay on those early years for too long. But let’s start in 1995 and let’s look at DWP00000006, please.
That is a programme management board meeting of 9 May. Could we go over the page to page 3. So this is a meeting, 9 May 1995, and you are listed there as present as a representative of – as a representative of the Benefits Agency and Post Office Counters Limited, or representing –
David Miller: “BA/POCL” was a term that was used for the PDA, for the delivery organisation.
Mr Blake: Can you very briefly remind us what the programme management board was?
David Miller: It was looking at progress on what was happening in the PDA.
Mr Blake: Can we turn over the page to page 4 and look at paragraphs 2.5 and 2.6. I don’t think I need to read them out aloud, but perhaps you can just briefly look at 2.5 and 2.6. There’s an update there that PA consultancy have been constructed to study the wider Benefits Agency programme, and there were two further pieces of work. Then at 2.6, it says:
“David Miller was concerned that this would result in a delay to the programme.”
1995, it’s quite early in the story, but were there time pressures at that stage?
David Miller: I think in any programme of this sort there are time pressures. Time pressures intensified as the time period went on.
Mr Blake: But this is quite early on?
David Miller: Yes.
Mr Blake: Were those time pressures felt from the moment you joined in your role?
David Miller: Because it was a programme I was aware that things should be done to time, but there wasn’t inordinate pressure at this stage.
Mr Blake: Can we look at 2.9, please. Again, I don’t think the detail of this particular paragraph is all that relevant. It’s the final sentence which says:
“David Miller had staff come in to these areas shortly.”
It looks from that paragraph as though you were building up a technical team of some sort; would that be right?
David Miller: Yes, that would be right.
Mr Blake: Again, I think you told us just earlier, that the managerial technical team had come from the board, but how would you find these staff?
David Miller: Well, there would be discussions with the central IT function about what the roles required and they would aim to fill those.
Mr Blake: Can we move on to 1996, please, and look at POL00028451. Now, this is a meeting of the Major Project Expenditure Committee. I don’t think you attended that committee, did you?
David Miller: No.
Mr Blake: Certainly not on this occasion. Can we look at page 3, please. I don’t know if you have been following previous hearings, but we have looked at this document before and we have looked at the procurement exercise and the Tom, Dick and Harry exercise. Do you remember that?
David Miller: Yes, I’m familiar with it.
Mr Blake: Can we look at (xxi) on that page, so it’s at the bottom, and it says there – this is just really for clarification.
In your statement, it is paragraph 26, you said that Pathway wasn’t awarded the contract because it was the cheapest option. Just, I think for clarification, you are aware that it was, in fact, the cheapest option?
David Miller: It was. Having reviewed the paperwork, at the end of the day, it was the cheapest option.
Mr Blake: “Harry”, which is Cardlink, was eliminated because, amongst other things, it had been the most expensive. Do you remember that?
David Miller: I do and – yes, I do.
Mr Blake: Can we look at page 4, please, and can we look at (xxvi) so it is:
“As a technical solution ‘Dick’ was the least preferred bidder providing a higher risk to delivering the programme.”
Were you aware at the time that ICL Pathway was the least preferred when it came to the technical solution?
David Miller: I think there were concerns at the time about the technical solution, particularly in relation to the use of the product Riposte, but what – in reviewing the papers, which I have been, what was interesting is that Riposte appeared to offer, particularly to the BA, distributed functionality, so that data could be passed down and held at post offices. And this was, to the BA, as I recall at the time, a significant matter.
Mr Blake: Thank you. If we look at the paragraph below it says:
“The preferred supplier [that’s ICL] … proposed a technical solution for which the architecture was unusual (complex design not proven on a large scale deployment using bespoke code which then had to be modified). Initially ‘Dick’ did not have the technical or project management expertise within their project team, as compared to the other bidders who had proposed off-the-shelf solutions to be then modified. This had now been addressed by the computer supplier.”
Were you aware of those concerns at the time?
David Miller: I was and the process that we went through, in terms of tendering, the initial bids were then reviewed in great detail and then there was a further round of discussions and negotiations to try and remedy some of the deficiencies of the first round.
Mr Blake: Yes. At the bottom of this page, it highlights some of those risks:
“The risks associated with ‘Dick’ were both short-term: liable to be late; pressure to accept incomplete functionality; premature rollout could prove unreliable; and long-term: fragile software system; difficult to enhance; if Dick lost money it would be difficult to do future changes …”
Again, you were aware of those risks at the time?
David Miller: I haven’t seen them put in that way before.
Mr Blake: But were those risks familiar to you at the time, those kinds of risks?
David Miller: Yes, I think so.
Mr Blake: Then the paragraph below talks about how the risks could be managed. Were you aware from the Major Project Expenditure Committee – which included John Roberts, and which heard, we know, from Stuart Sweetman – were you aware that they considered that risks needed to be managed in this way?
David Miller: Yes, I think I was.
Mr Blake: That included what we see there:
“rigorous user and system testing prior to rollout to be built into the contract.”
David Miller: Yes.
Mr Blake: Then can we look at that final paragraph, to the bottom of the page –
Sorry, can we scroll down a little bit. Thank you.
Those final paragraphs there effectively stress the importance of making the system work.
David Miller: Yes.
Mr Blake: Were those messages passed back to you by Stuart Sweetman or John Roberts or somebody else?
David Miller: I don’t remember precisely how that happened at the time.
Mr Blake: That’s fine. The fact that things like this – the need for rigorous testing prior to rollout – were being emphasised as a way of meeting the higher technical risks, that was all something that you were aware of at the time?
David Miller: It was.
Mr Blake: Can we move on another year now to 1997 and can we go to POL00031231, please. This was an internal review in October 1997. Is that something that you remember?
David Miller: I don’t remember it, but I have read the document.
Mr Blake: Can we look at the third page, please, and it is paragraph 1.3. It seems that you were part of the team at that time. I appreciate it’s a long time ago.
David Miller: Yes, indeed, I contributed to it but I – you know, when I read this document, I remembered it, but I previously hadn’t.
Mr Blake: No. It says there that:
“Extensive interviews were held with a wide range of managers spanning the commercial, financial and technical aspects of the programme.”
Can we look at the management summary, that’s paragraph 2 on the same page, please. It says:
“Horizon remains crucial to POCL’s commercial strategy. It is needed as soon as possible and requires the full functionality as currently defined, or improved within acceptable time limits, and is needed throughout the network.”
Now, again, that reference to “as soon as possible”, echoes of what we heard from 1995: was there some time pressure at that stage?
David Miller: Yes, in the sense that, in a programme like this, I believe there is always time pressure, but this was Post Office reaffirming that Horizon was crucial to its strategy and it wanted the full functionality and it wanted it throughout the network because there are questions as to whether the functionality could be descoped and there was the questions as to whether the whole network needed the same product. So this was a significant set of conclusions.
Mr Blake: Can we go over the page to paragraph 2.4. We read earlier the reference to PA Consulting undertaking their investigations and it says that:
“PA Consultants … indicates that much improvement is needed”, but it is not “fatally flawed”; do you remember that?
David Miller: Yes. Just – I wasn’t actually on the programme at this point. I contributed to this report.
Mr Blake: When you say you weren’t on the programme at this point was that because you were on the development board at this point or because you were –
David Miller: No, I had – between the development board and becoming Horizon programme director, I went back to Bristol and managed the line for South Wales and South West.
Mr Blake: But you kept an eye on what was going on with the Horizon programme?
David Miller: And my advice was sought in certain matters regarding this report.
Mr Blake: Now, that term “fatally flawed”, I have suggested to other witnesses that that seems like a low baseline for Horizon to satisfy; would you agree with that?
David Miller: Sorry, can you just point me –
Mr Blake: Paragraph 2.4, it is PA consultants’ conclusions that they don’t suggest the programme is “fatally flawed”.
David Miller: Yes, I – I think that they were asked the question “Should this programme continue?” and that was what they said.
Mr Blake: Is your view that “fatally flawed” is too low a baseline for consideration of whether to proceed with a significant IT project?
David Miller: I think, looking at it now, it does rather come off the page.
Mr Blake: Paragraph 2.5:
“Delay to the completion of Horizon certainly enables competitors to attack POCL’s share and continued erosion of income and market share is inevitable. However, there has been no evidence that delays within the broad timescales under review present any market ‘show stoppers’.”
So, again, delays impacting business potentially, was that something that you remember?
David Miller: Yes, there was activity in the bill payment market, particularly, from a company called PayPoint, which was of concern to the marketing department.
Mr Blake: Can we scroll down to paragraph 2.8. We don’t necessarily need to read that paragraph, but it talks about an opportunity, potentially, given by delay, which is that it may be possible to find something more reliable than EPOSS. Do you remember that at all?
David Miller: No.
Mr Blake: Do you remember early problems with EPOSS?
David Miller: Not at this time because I wasn’t involved with the programme. The EPOSS product was very much behind the work – the massive amount of work that went on with regard to the Benefits Agency, so I’m aware of that order of things.
Mr Blake: Can you remember discussions in 1997 that it may be possible to revisit the EPOSS system, given that there were delays at that time?
David Miller: I don’t.
Mr Blake: Can we please look at page 15. There’s a section there on replacing the manual cash account. I’ll read that paragraph, it says:
“It will always be difficult to get a definitive statement on this but there appears sufficient evidence that POCL’s current accounting system is not fully fit for purpose. Current systems are error prone and incur significant costs to clean up the data before it becomes management information, or used for settlement with clients. The parallel automation projects, TIP/TMS, SAPCON, SAPADS …”
Do you remember those at all?
David Miller: I remember some of them.
Mr Blake: Can you briefly tell us what they were?
David Miller: I remember most of all TIP, which was a backend system that was about communicating information to clients in particular.
Mr Blake: “… [they] all need a sort of transaction data to enable them to operate effectively and deliver the benefits in their individual business cases. This is not to say that there might not be alternative routes to achieving these functionalities but, given the need for the platform for BA it remains logical to use that same platform for EPOSS. This functionality appears to duplicate part of that of TIP/TMS and there is a need to review that to see if better value for money is achievable.
“POCL has always suffered from slow, sometimes inaccurate management information of inadequate granularity. The need to squeeze out operational improvements both at outlet level and within the Business’ logistics requires a consistent, once only capture of transactional data from outlets. The need to avoid the complexities of dual information streams both for POCL and its clients drives the conclusion that EPOSS is inescapable, albeit further refinements might be possible if time permits.”
Do you understand that to mean that, for it to work, all of the parts, including those other automation projects, would need to work effectively together?
David Miller: I think that’s what it says.
Mr Blake: And the Horizon System should be used for EPOSS because it is being used for the Benefits Agency part of the project as well; is that your recollection? Sorry?
David Miller: Yes, I’m sorry.
Mr Blake: By logical extension, if Horizon wasn’t being used for the Benefits Agency project, a simpler solution might have been sufficient; would you agree with that?
David Miller: Yes.
Mr Blake: Was that something that was being considered at the time?
David Miller: I don’t – I’m not sure it was being considered at this time.
Mr Blake: Can we move on to 1998, please, and look at POL00028597. Now, that is report that you were sent – we can see there that you were on the distribution list – and it covers the period February 1998. Do you remember this document at all?
David Miller: I think I have seen it subsequently and I would have seen it at the time, I was on the distribution list.
Mr Blake: Can we look at page 3, please. It is the bottom half of page 3, “End to End Business Continuity”, and it says:
“Overall there are no major threats to business continuity, however there are still growing concerns regarding the continuation of lost transactions, it was anticipated that lost transactions would decline after the software fix dated 16 February 1998. Continuation of this trend will seriously undermine the credibility of the system.”
Over the page, the bottom of page 4, please, it talks about the Benefit Payment System and it talks about lost transactions, and it says:
“ICL Pathway are continuing their investigation concerning the four categories of lost transactions identified in the last interim report. The objective is to ascertain the root cause at the POCL customer interface. Service Management has escalated the aforementioned problems to Product Management for action to facilitate a solution within the ICL Pathway domain.”
Now, this is very early on, it’s 1998, and I think it all relates to the Benefits Agency part of the system, but were you aware, in that period, of concerns relating to lost transactions?
David Miller: It would be something I would have picked up as I was getting into the project or programme.
Mr Blake: So you were aware of it in 1998?
David Miller: Yes.
Mr Blake: Do you know if they found the root cause of the problems in this particular document?
David Miller: There was a lot of work that went into lost transactions, which was then turned into the term “incomplete transactions”, and there was a huge amount of work that went on to analyse what was causing this and solutions.
Mr Blake: Was the seriousness of those kinds of issues appreciated at the Post Office in 1998.
(Pause)
Mr Blake: I’m not asking you about the document itself but just –
David Miller: No. I’m sorry, but I am really trying to think about what – not entirely related to the document. I certainly think that people in the programme understood it.
Mr Blake: Can we look at another document, POL00069096. This is a document from March/April of the same year, 1998. You can see there, at the bottom, that you are a recipient of notes from a meeting. Can we go over the page, please. It’s the Counter Automation Steering Group and, again, you are named as having been present on 27 March 1998.
Can we look at page 2, please – sorry, we’re on page 2 – the second half of that page. If you look at the top of the page now, it says:
“The Committee noted the update by Dave Miller”, et cetera.
So it seems as though you provided an update to that meeting. Do you remember that at all?
David Miller: I don’t – my – no, I don’t remember it but I was clearly there.
Sir Wyn Williams: As I understand it, by this time you had become the programme director.
David Miller: Yes.
Sir Wyn Williams: Yes, fine.
David Miller: There was a handover period, sir, of three months, I think, between – as the PDA was wound down and the Horizon programme took over.
Mr Blake: We can see from the first bullet point there:
“The PDA would cease to exist on 31 March which control passing to POCL who intended working more closely with Pathway to develop integrated plans with clear interdependencies, particularly with regard to POCL feeder systems and implementation”, et cetera.
Can we go over the page, please, to point 4. I think I have put this to other witnesses, you may have seen it before, it says:
“Work on EPOSS was continuing and Pathway had indicated that whilst it could provide a system which met the contract, its lack of robustness could generate high level of errors within POCL. This was being investigated although it was difficult to quantify how the system would work until after it had been installed and was operational.”
Did you understand from that that live testing was therefore important and perhaps more important than it had seemed at the procurement stage?
David Miller: Certainly live testing was going to be important. It’s the – there are words here about “its lack of robustness could generate high level errors within POCL”. There was some discussion yesterday of this issue and the depth of knowledge in the two organisations about it. So I’m – I was clearly aware of it, but I wasn’t aware of the detail that was revealed yesterday in the first document I believe you discussed.
Mr Blake: Can you give us an indication of what kind of detail that you weren’t aware of?
David Miller: There was a lot of detail about how ICL Pathway had produced the system and ICL Pathway expressing serious concerns about what had gone on.
Mr Blake: Absolutely, so it’s around this period – it’s August and September 1998 – that ICL was carrying out what we know was the EPOSS PinICL task force. Is that something that you were aware of at the time?
David Miller: I would have been aware at the time, yes.
Mr Blake: So you were certainly aware that there were significant concerns about the EPOSS product?
David Miller: Yes.
Mr Blake: Can we go to another document, a bit later in 1998, and the reference is POL00028320. It’s a document of 23 November 1998 and it’s the Transformation Steering Group. Was this something that you would have received?
David Miller: Yes, I think I would.
Mr Blake: I don’t know if you are able to assist with any of the handwriting that’s on it?
David Miller: June Lilley was my secretary at the time.
Mr Blake: So it definitely went to your secretary and presumably would have been passed to you?
David Miller: Yes.
Mr Blake: Can we please look at page 6, “Red Light Issues”:
“There are major concerns about the test results emanating from Model Office and End to End.
“The results indicate that cash accounts and transaction data delivered to POCL’s downstream systems lack accounting integrity, all of which raises serious doubt about Pathway’s ability to enter into the next phase of Model Office and End to End testing without some form of remedial action.”
What did you understand by a “red light issue”?
David Miller: A serious issue that the Automation Steering Group needed to take note of.
Mr Blake: And accounting integrity, presumably, was pretty central to the overall project at that stage, or at any stage?
David Miller: Yes.
Mr Blake: There’s some handwriting at the bottom. From what it sounds like, it may be either your secretary’s or your own. Do you recognise that?
David Miller: Yes, I do.
Mr Blake: Whose handwriting is that?
David Miller: That’s my handwriting.
Mr Blake: Perhaps could you read that to us?
David Miller: “Remedial analysis has taken place fully involving TIP and Reference Data personnel. Remedial action is now underway. The point must be made that we will not enter the final phase of testing until we are content that we have a robust set of code. The criteria for entering the final stage of testing being complied by the testing manager for review by interested parties this week.”
Mr Blake: Thank you very much. So you’re saying there that you won’t enter the final phase of testing until you are confident that you have a robust set of data and that was seen by you as the solution to what was then a red light issue. Would you agree with that?
David Miller: From the documentation, yes.
Mr Blake: Thank you. Can we go over the page to page 7, please. Thank you very much. There is a list of existing issues and the second one “Horizon testing”:
“The testing strategy is not being deployed as originally planned. There is evidence that the early phases of testing are not covering the scope that they should, and there is a danger that the true purpose of MOT testing will be lost, that major faults will be detected during it, and that this will result either in delay or workarounds.”
You are named as the owner of that particular issue. What do you understand by “owner”?
David Miller: That it was for me to deal with.
Mr Blake: And it mentions the red light programme issues there as well.
David Miller: Yes.
Mr Blake: Now, there’s a date there when it was raised. This seems to be not just an existing issue, but it seems to be an issue that was raised on 24 July 1998, four months before; would you agree with that?
David Miller: From the date when it was raised, yes.
Mr Blake: Now, who should have been testing?
David Miller: I’m sorry?
Mr Blake: It says the testing strategy isn’t being deployed as originally planned; whose fault is all of this?
David Miller: Well, as I was in charge of the programme it was down to me to do something about it.
Mr Blake: But it says it’s not covering the scope that it should. What was going on there?
David Miller: I’m sorry but I do not recall.
Mr Blake: Were you aware that that same month ICL were seeking to amend the acceptance procedures which took some emphasis off live testing? I don’t need to go to the document, but the relevant document is POL00031119 and it is page 13, for the purpose of the transcript.
David Miller: I don’t have a memory of that but I would have known at the time, I think.
Mr Blake: Do you have a memory of late 1998, some emphasis being taken off live testing at all?
David Miller: No, I don’t.
Mr Blake: Now, the previous document that I took you to showed that, for example, EPOSS problems would be difficult to quantify until it was operational. So how important was testing at this time?
David Miller: I still think it was important to do the testing, to get some indication of what issues might be arising as the thing progressed.
Mr Blake: Knowing that there were previous errors or concerns going back quite a few years by this stage, would it have been important to live test the system?
David Miller: Yes, I think it would.
Mr Blake: Can we move on to December 1998 and it is POL00038829. Now, on this document I think Paul Rich suggested that he thought “Dave” was you there. Might that be right?
David Miller: I don’t know, but …
Mr Blake: This is the Project Mentors’ report being sent?
David Miller: Yes.
Mr Blake: Is that Mena Rego?
David Miller: That’s Mena Rego, so I think it is likely it was me. I can’t say definitely.
Mr Blake: Can we look at page 5 of this document, please. Now, is this something you remember at all, the Project Mentors’ report being received from Bird & Bird?
David Miller: I was aware of it. It became a lot clearer to me having read this documentation again.
Mr Blake: An important passage which I have taken previous witnesses to is slightly further down – sorry, can we just scroll slightly – there it is.
It is the quote from Andrew Davies of Project Mentors and it says that his team are:
“… deeply concerned that their findings show a serious problem with the way in which ICL Pathway have developed the system. The impact of this is likely to be that there will be failures to meet essential user requirements, causing the need for extensive rework before the system can be accepted and potentially operational problems if the system is rolled out.”
Is that something that you remember?
David Miller: I do, having read the documentation.
Mr Blake: Can we please go to page 9. This is the paper itself and, over two pages to page 11, please, and it is paragraph 1.3 I would like to look at. This outlines the scope of that Project Mentors’ report and the second paragraph at the bottom, it says:
“We have to date considered only the BPS system [that’s the Benefit Payment System]. Further work has recently started to perform a similar assessment of the approach adopted for other elements of the system, such as EPOSS. Nevertheless our findings are, in our view, sufficiently serious to bring into question the whole of Pathway’s design process.”
Again, presumably something you would have read at the time?
David Miller: Yes.
Mr Blake: Can we look at page 14 of that document, please, and the bottom of that page. So the very final paragraph on that page:
“Of particular concern is the EPOSS system. We are informed that at a relatively early stage Pathway wanted the authorities, principally POCL, to be involved with the design of this element. The plan was to use the Rapid Application Development (‘RAD’) methodology to design this system. This approach was started, but discontinued after some months, when the Pathway staff member involved left the project. The suggestion to use RAD leads us to believe that more traditional methods have not been used, and since the RAD experiment was abandoned, we have doubts whether any proper requirements analysis has been performed.”
Onto the next paragraph, please:
“Impacts on the Programme in the Future
“Our experience of systems where requirements have not been analysed satisfactorily is that the system fails to meet the users’ needs. An effective acceptance test will identify many such failings necessitating considerable rework. The result is a significant extension of the time and cost required to complete the system and roll it out. The alternative is to allow unacceptable processing in the operational environment, with unpredictable and potentially damaging results.”
Now, we know that this document was passed to you by Mena Rego. Are you able to tell us who else would have seen this document? Perhaps we can look at page 3. There are obviously some direct recipients but who, within your organisation, would have seen or at least known about the contents of this report?
David Miller: I honestly don’t know.
Mr Blake: Do you think – I mean, Stuart Sweetman, would he have known about the report?
David Miller: I don’t know.
Mr Blake: Why would it have been passed to you in particular? If we look at page 1 –
David Miller: Because it had suggestions that there were issues with EPOSS.
Mr Blake: Do you remember discussing it with anybody?
David Miller: I’m sure I would, but I have no recollection.
Mr Blake: Do you remember discussing it with ICL at all?
David Miller: No.
Mr Blake: Do you think you would have discussed it with ICL?
David Miller: I would have expected to have got their views on it. The question was: this was a report commissioned by Bird & Bird for the Benefits Agency, so there might have been issues about content, and so on.
Mr Blake: We have heard suggestion that it may not have been totally partial. Is that something that you know about or shared at the time?
David Miller: I mean, the – can I just remind on the context of this. This was, at the time, a few months before BA pulled out of the project. I think there was concern within the Post Office that this exercise by project manager – Project Mentors, I’m sorry – was part of an exercise to contribute to an understanding of the situation with regard to BA pulling out of the programme.
Mr Blake: Do you think it wasn’t taken seriously enough for that reason?
David Miller: I think it’s not right to say it wasn’t taken seriously, but I think there was a different angle of viewing it than just simply: this is a report that’s been produced by Project Mentors.
Mr Blake: I mean, the concerns raised about EPOSS, for example, were consistent with those raised in 1997, for example, weren’t they?
David Miller: Yes.
Mr Blake: So there are certainly consistencies with –
David Miller: I was unaware – there was an earlier Project Mentors report and I was unaware of this featuring strongly in that, in that report.
Mr Blake: But the concerns about EPOSS were consistent, for example, with concerns raised at the Counter Automation Steering Group on 27 March 1998 that we have already looked at?
David Miller: Yes.
Mr Blake: Do you agree with that?
David Miller: Yes.
Mr Blake: Were you aware, at the time, that ICL internal audits had suggested a redesign and a rewrite of EPOSS?
David Miller: I wasn’t at the time.
Mr Blake: Did you share the kinds of concerns that we have seen in this Project Mentors report about the system?
David Miller: It would have been discussed, definitely.
Mr Blake: Certainly from the evidence that we have heard, it looks like both Post Office Counters Limited and Pathway had serious concerns about EPOSS at that stage. Were those concerns shared with one another?
David Miller: There would certainly have been discussion about EPOSS and what was going on and what needed to be done.
Mr Blake: Do you think that the two organisations were being open with one another at that stage?
David Miller: There was a document that I may already have alluded to that was discussed yesterday morning about – which was an ICL Pathway internal document, which I was personally unaware of, and was, in my view, a very significant document.
Mr Blake: You may not be able to give us the title of that document, but can you tell us, in particular, what information was significant to you?
David Miller: What was significant was the degree of – from within ICL Pathway – was the degree of discussion and going into details about how the thing had been produced from day one and there were significant criticisms in there about the approach.
Mr Blake: Might that have been the report that was produced by Jan Holmes and Mr McDonnell, which, towards the end, I think, was very critical of, for example, the way the code was built?
David Miller: Yes.
Mr Blake: Thank you. Do you think that ICL was being honest with the Post Office at this stage?
David Miller: I don’t know to what extent the sort of very honest appraisal of what had happened in EPOSS was being shared with the Post Office.
Mr Blake: Can we look at POL00039891, please, and can we go straight to page 37, because it’s a packet of documents, so a lot of the pages are not relevant. This is a letter from yourself to Mike Coombs at ICL on 17 August 1998 and it encloses a document which is over the page. Do you remember this at all?
(Pause)
Mr Blake: Perhaps I will read from the –
David Miller: No, sorry, I’m reading it because I’m not that familiar with it.
Mr Blake: I will read it for the purpose of the record as well, the first half of that first paragraph. It says:
“The Sponsors wish to make clear that the approach they have proposed in the Replan takes into account Pathway’s previous track record, for example in terms of failure to meet planned dates, and in particular the 5th October 1998 software delivery date for Nile Release 2.0 despite all milestones having been hit or on target for delivery of components from CAPS.”
It looks as though it is being critical of ICL’s track record.
David Miller: I think it was. I –
Mr Blake: In fact, we can see a response from ICL at page 45 of the same document, it’s a response from Tony Oppenheim and dated 18 September and it begins, in the second paragraph:
“We were surprised and disappointed at the aggressive tone of the letter and by the number of gratuitous and unjustified allegations of fault on the part of ICL Pathway.”
Do you remember –
David Miller: I – sorry, I remember having read the documentation.
Mr Blake: Yes. We see quite a lot of letters in this period marked as “Without Prejudice”. Was there distrust between the parties?
David Miller: No, but there was a behind-the-scenes level of legal activity going on with regard to the possibility of whether this contract would continue.
Mr Blake: I mean, reference to “aggressive tone”, was there some hostility between the two parties?
David Miller: No. I mean, I was representing BA’s honest views at that time.
Mr Blake: At that time, did you have faith in ICL’s performance?
David Miller: I had concerns about ICL’s performance.
Mr Blake: How long did this state of affairs last?
David Miller: Which state of affairs? I’m sorry.
Mr Blake: The confrontation between the two parties of this nature.
David Miller: If I remember correctly, at this stage, we were trying to work a lot more closely and a lot more constructively with ICL Pathway and there’s some reference, I believe, to that in some of this correspondence, so we were deliberately trying not to have – I hesitate to use the term “Punch and Judy”, but, you know, there was a degree at some times, in the early parts of this programme, of that and we were trying to say “We really need to work with the ICL Pathway, we need to get close to them and closer to them to understand what is going on”.
Mr Blake: I think in a document we saw just a few moments ago, there was some concern about the sharing of information there or a lack of sharing of information from ICL. Do you agree with that at around that time?
David Miller: Yes. I mean, remember that we are still in the PFI era here and remember I have certainly heard, over the past couple of weeks, a number of references to how ICL Pathway reacted to others, particularly the Benefits Agency, trying to get close to the precise nature of the solution. And there was a feeling in BA that they needed to because of the nature of the product, and I think there was a feeling in ICL Pathway that BA, having defined what they wanted, should let ICL Pathway go and provide it under PFI rules.
Mr Blake: Can we move to the spring of 1999 and look at POL00028370. This is a meeting of the Horizon management team and at page 3 are the actions from an earlier meeting of 3 March 1999. You are the top attendee there. Does that mean – were you the chair at that stage of the Horizon management team?
David Miller: Yes.
Mr Blake: Can we go to page 6, please, and that is the agenda for a meeting on 10 March 1999 and you are listed there as chair, and the “Purpose” is:
“To ensure the HORIZON Programme is fully scoped, planned and managed to deliver in all areas. To monitor the delivery of HORIZON within the agreed Programme timescales and ensure that issues are resolved and risks are managed.”
At the bottom of the page:
“For this meeting, the emphasis is on ensuring action is being taken to manage the key issues and risks and agreeing those that should be escalated to the next Horizon and CAPS and Cards Programme Boards.”
Can we look at page 7, please. There, if you look at the top of the page, those are what are called “Horizon Programme Significant Issues” and then, over to page 9, we have there “Programme Risk Status Report, Most Significant Risks”, and I’m going to take you to the top box, so that’s number 5. It says there:
“Due to a lack of adequate visibility of the ICL Pathway design, and the lack of support from the contract to leverage this visibility, we have been unable to gain a high level of assurance in the adequacy or suitability of the service to support the POCL business. POCL therefore risks the implementation of a service in Live Trial and beyond which will have negative operational impacts, resulting either in a level of service degradation or delay to the start of National Rollout.”
So “Due to a lack of adequate visibility”, that, again, implies that there was some lack of sharing of information; is that your recollection or not?
David Miller: I think this refers back to the problem that I was talking about a minute ago, which is ICL Pathway were still saying this is a PFI contract and that was a continual problem I think.
Mr Blake: Yes, and let’s look on the right-hand side, red, amber green status: red. So this is seen as a serious issue?
David Miller: Yes.
Mr Blake: There were various actions there. Can we look perhaps at the second one:
“Mike Coombs pressed (by DWM) …”
Are you “DWM” there?
David Miller: I am.
Mr Blake: “… to respond to earlier letters regarding the need for ICL Pathway to cooperate …
“… No risk reduction possible whilst ICL Pathway continues to use the terms and conditions of the contract to deny Horizon access to the information necessary for technical assurance of NR2.”
And you are listed there as the person who is responsible for action there. Is it the case that in March 1999 POCL was concerned that it didn’t have enough information to adequately address the adequacy or suitability of Horizon?
David Miller: I think it was. I’m clearly going by the written record before me, yes.
Mr Blake: Let’s stay in the same month and look at POL00028419. This is an “End to End Testing” report. Can we look at the second page. You are listed there in about the middle of the page, “Dave Miller Horizon” you were a recipient – do you remember receiving this kind of document, even if you don’t remember the specific one?
David Miller: I certainly received documents of this kind.
Mr Blake: Can we look at page 6, please. It is the second paragraph there:
“The final pass of End to End was the culmination of earlier passes, which achieved their test objectives to an extent. However, throughout the earlier passes some areas of functionality were not available in the build being used for the test, and other areas fell short of the expected functionality.”
Slightly lower down on this page, it says:
“Lessons learnt from previous passes of End to End were implemented prior to the commencement of the final pass. These were …”
The first one there:
“A reduction in the volume of transactions entered onto the Horizon counter throughout the cycle.”
Can we look over the page, please, thank you very much. The first major paragraph there:
“Throughout the final pass issues were identified by all parties. Some issues were remedied and retested within the cycle, ie POCL reference data drop to change the Cash Account type from London to Provincial. It was necessary to apply fixes to the counter environment to either move forward, or to improve the quality of the test results, ie the incorrect cash account mapping for a stock item would have caused misbalancing Cash Accounts in all offices.”
Can we scroll down. There are conclusions there and it says, for example:
“The ability to maintain day for day running was achieved by careful management and communication between all parties.”
Then, at the bottom it says, the final sentence:
“Outstanding incidents are under discussion for inclusion on the Known Problem Register …”
Is a fair reading of those points that I have just taken you to that earlier tests had fallen short of their expected functionality? I think that was page 6, sorry, the page before. It’s that part beginning “The final pass”, really, and there’s reference on that page then to carefully managing testing, such as –
Sorry, can we go one page back. Thank you:
“A reduction in the volume of transactions entered onto the Horizon counter throughout the cycle.”
Do you remember that? It appears to be some sort of need to quite carefully manage the testing at that stage?
David Miller: I think – I’m sorry, I don’t recall this level of detail.
Mr Blake: Do you perhaps – if we can over the page, again, to that paragraph that started “Throughout”, that’s the first major paragraph. Do you remember – it’s the final sentence there – some issues with cash accounts that needed fixes, for example?
David Miller: I mean, I was aware of issues with cash accounts at this time, yes.
Mr Blake: So this is March 1999 and there were outstanding – and the very bottom of that page, it’s that there are outstanding incidents which need to be included on a known problem register.
Can I just ask you, in that paragraph – sorry, if we go slightly up again to “Throughout” – I don’t know the answer to this at all, it says “apply fixes to the counter environment”; do you know what that meant at all?
David Miller: I could think of a few things it could well mean but I’m afraid I can’t give you a definitive answer to that.
Mr Blake: Did you see misbalancing cash accounts as a serious issue at that stage?
David Miller: Yes, it was an issue that was being dealt with.
Mr Blake: I have quite a few more questions on this particular topic. This might be, sir, a convenient moment for a break for as long as you would like, 10 or 15 minutes?
Sir Wyn Williams: Yes, okay. Well, by that clock, it’s about 12 minutes past, isn’t it. So can we start at 25 past, is that all right?
Mr Blake: Absolutely. Thank you very much.
Sir Wyn Williams: Thank you.
(11.12 am)
(Short Break)
(11.26 am)
Mr Blake: Mr Miller, before the break we were going over concerns with EPOSS, Project Mentors’ concerns, visibility issues, cash account issues and that was 1997/1998 and we’re into 1999 now.
Can we go to NSFP000084, please. This is a report of the special meeting of the national executive council of the NFSP on 11 June 1999. Can we go over the page, please. The second substantive paragraph there, you’re not listed as present, although you clearly were, present because it says:
“Executive council members had submitted questions which they wanted to be put to Mr Sweetman and Mr Miller.”
I think you came in halfway through that meeting.
David Miller: That’s correct, yes.
Mr Blake: Can we look at page 6, please, and that’s the point at which you joined the meeting, so there, just below question 9, it says:
“Mr Sweetman & Mr Miller joined the meeting.”
Do you remember that meeting?
David Miller: I don’t have a very good recollection of it but I have read this document and I’m reasonably content with what I see there.
Mr Blake: Page 9 of this document, please. There are plenty of issues that seem to have been covered by Mr Sweetman, but page 9 is the significant part where your name is mentioned. I’m going to read those three paragraphs for the purposes of the record. It says:
“Mr Miller further explained that they were in the process of a ‘live trial’ running the software in 300 offices. If that was done successfully by the end of July they would be looking to start the national rollout in the third week in August. This would be built up at a relatively low rate to Christmas, when they would review how the offices on the system were working. It was probable that there would be around 2,000 offices operation by Christmas and it was estimated that by around 10th January 2000 they would start the rollout at the full rate of …”
It says “£300”, it must be “300 per week”:
“Present indications were that this timescale to be achieved.
“Mr Butlin …”
Who was Mr Butlin, do you remember?
David Miller: Yes, I knew Mr Butlin. He was the lead man for the National Federation of SubPostmasters in the South West and he was a subpostmaster in Torquay.
Mr Blake: Thank you:
“Mr Butlin referred to the serious problems that the South West was having with the software, especially with the balance, and asked Mr Miller whether any changes were to be made in that respect. An assurance was sought by the Committee that the balance would become more user-friendly, more logical and easier for subpostmasters to use. Would it be possible for subpostmasters to have more input into the way the balance was done. The North East was facing similar problems, subpostmasters were incurring additional staff costs, an example being around £350 in the four weeks that his office had been up and running.
“Mr Miller acknowledged that there was a problem and said that there would be a software change to improve the situation. If there were serious problems that could not be overcome in the timescale the rollout would be delayed.”
So what’s going on there is subpostmasters seem to be experiencing issues including balancing problems. Do you agree with that?
David Miller: Yes, I think Alan was particularly concerned about the time it was taking to balance and I think there was an issue of, because it was taking longer time to balance, they felt they ought to be given some money to support that.
Mr Blake: But on the second line of that second paragraph from Mr Butlin, it does seem to include some problems with the software and I think your response acknowledged that there was going to be changes to the software. Were you aware, at that stage, that the subpostmasters were experiencing software problems?
David Miller: At the time I simply cannot remember but it does say that here.
Mr Blake: Part of your response was that if there were serious problems that could not be overcome in the timescale, the rollout would be delayed?
David Miller: Yes.
Mr Blake: Yes. Then if we scroll down, more questions in this document were answered by Mr Sweetman, but this particular one was answered by you. Was that because you were the technical representative, between the two of you at that meeting, or because you were more hands on with the Horizon project or …?
David Miller: Yes, and I think also because Alan was known to me, I think.
Mr Blake: At that stage, given the evidence that you have already given today, you would have been aware of, for example, the concerns about EPOSS that we have already discussed. Do you agree with that?
David Miller: Yes.
Mr Blake: Can we go to another NFSP meeting, this time on 21 to 23 June 1999 and that’s NFSP00000471, please. Thank you very much. This is a meeting of the national executive council on those three days.
I don’t think you attended this particular meeting but you’re mentioned in it and that’s why I’m going to take you to the relevant pages, and it is page 15, please. Thank you very much.
So these are the minutes, or this is the report of the meeting and it’s at page 22 where there’s discussion of counter automation. It’s the bottom of the page. It’s at 9(c) where there is discussion of counter automation begins and can we go over the page, please, and it’s the bottom half of page 23 that I would like to look at. Again, I’m going to read the relevant passages for the transcript. It says:
“There was general discussion on the severe difficulties being experienced by subpostmasters who are already running an automated system. Seven sheets of comments from the North East had been passed to Mr Dave Miller. The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional wellbeing. It was felt by some that a tragedy was not far away if something was not altered soon. The software was considered to be poor quality and not intended to run such a huge network. The system is based on ECCO which was originally written for a network of 700 – not 15,500.
“Although there may be improvements to the general system, most members present wanted to know if the committee had the power to say that the current system is obviously not working and instruct ICL and the Post Office to review or restart with more ‘subpostmaster friendly’ software.”
So, at that stage, at that meeting – I appreciate you weren’t present – but it appears as though serious problems were being raised by subpostmasters about software issues; would you agree with that?
David Miller: Yes, and I personally attended a meeting in the North East – a large number of subpostmasters.
Mr Blake: Do you remember receiving those seven sheets of comments?
David Miller: Well, I think actually one of my members of staff was at the meeting with me in Newcastle and produced that document.
Mr Blake: Does that passage reflect the kinds of concerns that you heard at your meeting?
David Miller: Well, that meeting was a very lively meeting. It was held at Newcastle Rugby Club. It – there was a recital of concerns and problems, quite genuinely from the subpostmasters and, towards the end of the meeting, I actually said “If any subpostmaster here does not want this in their offices, if they can’t cope with it or whatever, please say so and it will be removed in the next fortnight”. There was one person in the room, one subpostmaster who said they wanted the equipment removed.
Mr Blake: Reference here to concerns about their health and emotional wellbeing at this stage, in the summer of 1999. Presumably, it wasn’t an all or nothing. They could have had an improved version, couldn’t they?
David Miller: Well, I mean, there was a huge amount of work going on on the products to try and get them into shape, so I think that was a given.
What I was trying to find out, given the words you have quoted to me here, is whether it was as extreme as it may appear here and I’m only saying that, when given the opportunity not to have the equipment in the office, only one subpostmaster took up that option.
Mr Blake: Would you accept that, from the information that you were told, you were aware that there were, nevertheless, significant concerns with the existing system?
David Miller: I think they – what came over was their concern with it. It was a new system – just, if you remind me, is the date of this –
Mr Blake: 21 to 23 June 1999.
David Miller: Yes, and they had also just been told, remember, that the BA product was not going to be there and available for them.
Mr Blake: In fact, one attendee makes very much that point. Can we go over the page to page 24, please. It is Mr Jannetta. Do you know Mr Jannetta at all?
David Miller: I don’t.
Mr Blake: So:
“Mr Jannetta said that he and others of his colleagues would have to rely on those subpostmasters in the North East and South West who currently have this system in place, to make sure their voices are heard with their problems and to ensure that all the difficulties encountered are satisfactorily overcome. The point must clearly be made to the Business that this automation is not going to do the job, that subpostmasters have learned enough to know that it will not work satisfactorily and that it must not be rolled out to an excess of [15,000] sub post offices until all the problems had been overcome.”
It says:
“The Richard Jackson automated system …”
Were you aware of something called the Richard Jackson automated system?
David Miller: I believe so, yes.
Mr Blake: Is that an alternative system of some –
David Miller: I think it was something that some – a few subpostmasters were interested in, maybe commercially, but I couldn’t substantiate that.
Mr Blake: So:
“The Richard Jackson automated system was considered by both Mr Marshall and Mr Darvill to be an easier to use, preferable, alternative to the present system. Mr Darvill wanted to know if the lawyers had some hold on the Horizon system for some reason, that it could not be changed.”
Just pausing there, you have said that you offered them “system or no system”; did you, at any stage in this period, offer them an improved system, a different system?
David Miller: Sorry, what I meant to convey was that, besides what is said here, we were working hard on the programme with ICL Pathway to improve these systems, so that was going on all the time, constantly, and – so, in response to part of your question, the thing was being improved, as far as I was concerned.
Mr Blake: The next passage:
“The General Secretary assured the meeting that Mr David Miller had been informed of the difficulties in no uncertain terms. Mr Butlin said we must insist access to ICL Pathway so that we can tell them what we would like to see. It is not difficult and does not take long to rewrite software. The problems must be resolved with Pathway and they must sort it out with POCL. We cannot continue to have experienced subpostmasters/mistresses in distress on the telephone, struggling until all hours to balance. These situations must not be permitted to arise. It was pointed out that if the Lottery offices had to deal with this situation it would not be tolerated.”
David Miller: Can I just – with reference to Mr Butlin, he was concerned, and because I knew him, I made a special point of keeping in touch with him, to the point where he had it installed, we had a conversation about his experience there. When he did his first balance and we had a conversation there, and the conversations continued, to a point where he was able to say to me that, in fact, the system was speeding up his balance and that he was content with it.
Now, that’s a – you know, not a documented conversation but, as I say, Alan was known to me very well, I visited his office on two or three occasions and I was concerned to maintain contact to see how things were going.
Mr Blake: The feedback that’s being revealed there, though, isn’t just about his personal experience, is it?
David Miller: No, no, it’s not. I agree.
Mr Blake: Yes. Did the general secretary – I think that’s Colin Baker at that time – did he inform you “in no uncertain terms” as it says there?
David Miller: He was certainly expressing concerns through the piece, so whatever his members were saying to him would be fed back to me.
This is, of course, a report of a general debate at this meeting, an internal debate in the National Federation of SubPostmasters, and I can’t – I was just aware of fairly continuous feedback from the NFSP, negative and positive, throughout this piece.
Mr Blake: I’m not sure we can see positive feedback in this particular –
David Miller: No, I agree, I’m sorry, I wasn’t suggesting that.
Mr Blake: Knowing what we know happened to subpostmasters, would you accept that this kind of information is highly relevant information?
David Miller: Yes, I do.
Mr Blake: The next page, Miss Lindon – do you know Miss Lindon at all?
David Miller: I’m not sure I do.
Mr Blake: Miss Lindon makes some comments, and it’s the second half of that, it says:
“Pointing out that it is now three years since the project was first mooted, which is a very long time in the technological world, she suggested that a different system be tried, smaller and less complicated, which would be of greater benefit to the smaller offices and probably be a good deal cheaper and easier to operate. POCL seem to be attempting to build an audit system into the project, making the whole thing far too big, too cumbersome and too complicated.”
Was that a view that you were aware of at the time, not necessarily from this particular –
David Miller: I wasn’t aware of this particular view, no.
Mr Blake: Not from that individual, but were you aware of views that a simpler system could be adopted if the Benefits Agency project was not going to be going ahead?
David Miller: There was an option, which was to say “Stop all work on what’s going on in this contract”, and to redefine and to retender and to have a system that was, as it were, direct for POCL, not one that had been adopted from the BA/POCL routes.
Mr Blake: Do you think the suggestion that’s being made here might have been a sensible suggestion?
David Miller: Well, I think we – we looked in various parts of the business, when BA unilaterally pulled out, about going forward and, certainly, the advice I was getting was “We need to go forward, and ICL Pathway, because they’re there and they have a large degree of experience, are still the best option”.
Mr Blake: The final paragraph on the page, currently:
“As no one appeared to be listening to, or acting upon, the problems being experienced by subpostmasters, Mr Ingham suggested the Federation take the bull by the horns and write to whoever is Bruce McNiven’s senior …”
Who was Bruce McNiven’s senior?
David Miller: Me.
Mr Blake: “… stating that we have lost confidence in the system. The national president confirmed that this provide test had already been made to David Miller and we must now wait to see what they come back with.”
Can we keep on scrolling –
David Miller: Sorry, could I comment on that?
Mr Blake: Absolutely.
David Miller: I was never aware of a communication from the National Federation, a formal communication or informal, that said they had lost confidence in the system.
Mr Blake: I will very shortly take you to correspondence between yourself and the NFSP.
David Miller: Okay, all right.
Mr Blake: Let’s just finish with this document by reading that final passage that’s on the screen:
“Mr Peberdy thanked the Council for their information. These were exactly the problems expressed to Dave Miller at their meeting on 11th June. The National President had taken 7 pages of faults and other things the Federation knew to be wrong, including the fact that some faults dated back to January 18997, since when POCL have not addressed the problems, only been fire-fighting. Clearly we cannot accept something which keeps people at work until after 10.00 pm at night.”
Do you remember those conversations with Mr Baker?
David Miller: I know they reflected to me there was concern from their members about how long it was taking to balance.
Mr Blake: Can we go to NFSP00000073, please. This is the correspondence that I mentioned.
Now, this covering letter is dated 24 June but, if we go over the page, it’s a letter from you to Colin Baker, it’s dated 22 June, so actually it seems to have been at least sent during that meeting of the NFSP. Do you remember that at all?
David Miller: I remember writing to Colin.
Mr Blake: Paragraph 1, it refers to dealing with problems and it talks about the meetings:
“Through these meetings we were able to identify the same items that you have raised and these are now all in the process of being dealt with through our negotiations with ICL Pathway. However, it is also the case that we have some very tight timescales in which to convert the Heads of Agreement drawn up by the Treasury and the DTI into a revised contract structure. Unfortunately, our room for manoeuvre has been constrained and we are working extremely hard to ensure all the key issues are identified as part of the acceptance process.”
Now, something we discussed at the very beginning of today was tight timescales, time pressures. A that point in time, June 1999, were you feeling some time pressure to get on with the system?
David Miller: Absolutely.
Mr Blake: Now, the explanation starts by talking about surveys. Could we scroll over the page, please. Thank you very much. “Modifications” – I want to look at “Training”. It says there:
“Training
“This is probably our greatest area of concern and is being pursued vigorously with ICL Pathway. The areas you have identified such as balancing and cash account are part of the redesign which is currently taking place and is based on subpostmasters … experience.”
The next paragraph responds to a suggestion that there be office-by-office training and the response there is “we can’t provide that because that is too expensive”.
Over the page, please, to “Balancing”. It says:
“Your concerns about printing, redeclaration of stocks, the identification of First and Second Class stamps and postal orders are already in the process of resolution and a software drop in July will deal with them. However, there are issues around the balancing process which are part of the training response and have yet to be satisfactorily addressed by Pathway. Clearly, this is something on which we will base our decisions about acceptance and rollout”.
Now, it looks very much, by this stage and in this correspondence, that by that time the blame had shifted to focus on training issues. Do you agree with that?
David Miller: I think there were training issues and we ploughed money in – I think we ploughed more money in and we had our own resource supporting subpostmasters during this process. So I think we were pressuring Pathway but we were also prepared to put our hand in our pocket to actually support subpostmasters through the early stages of this process.
Mr Blake: I think hand in your pocket only to some extent because, under the training, it said that you couldn’t do office-by-office training?
David Miller: No, and I think that would have been prohibitively expensive.
Mr Blake: Looking back at the first paragraph on the first page, so that’s page 2 of this particular document, do you remember I took you to this paragraph where it mentions working up against tight timescales. Do you think it was convenient, at that stage, to be focusing on training issues and for it to be seen as an issue with training because of the tight timescales?
David Miller: I think training was genuinely an issue at that time.
Mr Blake: But what we don’t see in this document is an explanation such as “We’re going to rewrite EPOSS”, or any kind of software-type issues that we had previously been discussing and had been raised, for example, by subpostmasters.
I mean, earlier in June, for example, you seemed to accept that balancing was a software issue. Do you think the perception had changed within POCL, by this stage, and the focus had shifted to training?
David Miller: I don’t think the software issues had, in any way, gone away and they were still being worked on, but the pressure on – to get the training right was very strong, not just from the National Federation, but from people within the programme.
Mr Blake: I mean, let’s look at page 4 of this document. It is the final paragraph on page 4. It says:
“I am keenly aware of the pressures and concerns experienced by the subpostmasters at the front end of automation. Subpostmasters feelings of incompetence and abandonment really do hit us hard and understanding their experiences at first hand has been the single most important lesson we have all learned.”
Now, “feelings of incompetence” doesn’t sound really like the kind of feelings we heard about being expressed at that NFSP meeting. They sounded less of competence and more of concerns with the actual system. Do you think things have shifted here to blaming subpostmasters?
David Miller: Well, I think this – I think this relates to an increasing understanding that the introduction of this system into a population of very varied IT experience could provoke feelings of incompetence amongst some individuals and we were trying to support that and get through that stage where then they then felt competent.
Mr Blake: But do you accept that, at that stage, it wasn’t just feelings of incompetence but feelings of stress and health concerns dealing with a system that wasn’t working, rather than a person who couldn’t work a system?
David Miller: Judging by what I was – was being fed to me and what I learned at Newcastle, I would say yes. I would also take you back to the question I asked them and the fact that only one of them said “I don’t want this system”.
If I – I asked that question in the real knowledge that, if a significant number of those people in the room had said “Take it out”, that would have stopped me and the programme in my tracks.
Mr Blake: Well, would that be offering them the system or no system, rather than an improved system?
David Miller: Well, it was – the system, I think I have said to you, was being improved constantly. What I was trying to get to was, if a significant number of people who had been taking part in the trial simply didn’t want to do it, didn’t want the system, then that would have given me a signal in one direction.
The signal I got was that, whilst they were very conscious of being guinea pigs, of having had to work hard, of having to put up with frustrations and all the things associated with a live trial, that actually they still thought it was worth carrying on with it.
Mr Blake: Do you think the word “incompetence” there might be problematic?
David Miller: On reflection, with the benefit of hindsight, possibly.
Mr Blake: Because it wasn’t just incompetence at that stage, or even incompetence: there were significant problems with the software, weren’t there?
David Miller: Yes, but the Federation were representing to me a – what their members were feeling and the balance – just to go back, the balancing issue, at that time, was very much one of how long is it taking us to do this and is it going to improve the time that it takes us to do it, or is it going to go on being a long time.
Mr Blake: Were those higher up the chain in the Post Office aware of those kinds of concerns that we have heard today that were being expressed at those NFSP meetings?
David Miller: You mean above me?
Mr Blake: Yes.
David Miller: I don’t know, is the honest answer. That doesn’t mean to say – I mean, Stewart and I discussed the programme fairly frequently and I’m sure you will have the opportunity to find that out.
Mr Blake: I don’t know if you saw the evidence of John Roberts, but he seemed to suggest, in his evidence, that there weren’t significant complaints from the NFSP at this time. Do you think he was being kept sufficiently informed?
David Miller: Well, if that – I don’t recall that, but if that’s what was being said then, clearly, that was not right.
Mr Blake: Do you think it was well-known amongst those at POCL that there were these kinds of complaints from members of the NFSP?
David Miller: I think – I mean, there wasn’t a general briefing note issued on the matter, as far as I remember. I would certainly have communicated my experience in Newcastle to my colleagues on the programme.
Mr Blake: So this is June 1999 and I want to take you to one month later, 20 July 1999 and can we look at POL00000352 please. This is the Post Office board meeting on 20 July and you are listed there as “Others attending”. I think you were attending for matters PO99/78 and 79. Do you remember that?
David Miller: I don’t actually remember it but it is quite clear I was there.
Mr Blake: Can we look at page 8, please. This is where discussion of Horizon begins and that’s the PO99/78. Can we go over the page, please, at the bottom of this page “Implication on the Post Office of the 24 May 1999 Horizon Agreement” and you can see there it says “PO99/79”, so that’s the second of those items.
Can we just have a look at what it says at the bottom of that page. So those board minutes, in relation to the implication on the Post Office of 24 May 1999 begin by saying:
“The Board has considered the Horizon contract in detail …”
Over the page please. It talks about an awayday discussion. Do you remember the awayday discussion? Were you present?
David Miller: I’m not sure I was.
Mr Blake: I think this took place in a – is this the meeting in the manor house in Gloucestershire? Do you remember that at all?
David Miller: I don’t. I’m not in any way saying it didn’t happen and what’s here is not a record of it, but I just don’t remember it.
Mr Blake: “(ii) The Board had to decide by 31 July 1999 whether it wanted to terminate or sign the revised contract with ICL for the automation of post offices. Key elements of the new contract were …”
For example:
“Electronic Point of Sale functionality, automated payments, local feeder systems and Order Book Control Systems …”
Now, was this, therefore, a, if not the, key decision-making moment in respect of the Horizon programme?
David Miller: This was taking place on the – please remind me, was it 19 July?
Mr Blake: 20 July. In fact, it was an away weekend, so I think it was a weekend. But, anyway, these minutes are from 20 July.
David Miller: Whether it was “the”, it was clearly “a” key decision point.
Mr Blake: I think in May the heads of agreement had been signed but here the board are saying “We need to decide whether we want to terminate or sign a revised contract”. I mean, that must have been a pretty significant moment in the life of the Horizon programme.
David Miller: Yes.
Mr Blake: Can we go over the page, please, and look at point (v):
“System rollout was scheduled for 23 August 1999 with acceptance needed by 18 August. There were three categories of acceptance each with a threshold which would determine whether or not rollout could proceed: high, medium and low.
“One incident within the high category, or more than 20 incidents within the medium category, would result in the system not being accepted. Currently there were 270 incidents of which 1 was high and 29 were medium. Of greatest concern was the inadequate training of employees although a new package had been produced and work on the other incidents was underway. At this stage it was expected that there would be no reason for not accepting the system by 18 August.”
Now, was your impression that those who attended that meeting did or did not understand what an incident was? We know they had read the contract.
David Miller: I honestly don’t know.
Mr Blake: Now, looking at point (vi):
“Excluding the concerns over training, David Miller considered the system robust and fit for service.
“(vii) A number of subpostmasters were experiencing difficulties operating the system and in particular with balancing.”
Now, “robust and fit for service”, that all sounds quite different to all those documents that we have been looking at this morning; would you agree with that?
David Miller: Yes, and I have read this document and I agree with you.
Mr Blake: This is only a month after the NFSP meeting –
David Miller: Yes.
Mr Blake: – where concern was being raised about the trauma and health and wellbeing of subpostmasters. What’s your view on this now then?
David Miller: That if that is – if I went in there and said “David Miller considered the system robust and fit for service”, that wasn’t correct.
Mr Blake: Do you remember, did the board question you on that at all?
David Miller: I’m sorry, and this is genuine, I have no recollection of this.
Mr Blake: If you made that statement do you regret it now?
David Miller: If I made that statement, I do regret it.
Mr Blake: Let’s look at what, in fact, unraveled after that statement that it was “robust and fit for service” and then let’s look at August 1999 and that’s POL00028363. This is 10 August, so not long after, and I think there is an email from Chris French. Who was Chris French, do you remember?
David Miller: Chris French was a contractor. He ran a company called French Thornton which advised various levels of the Post Office about IT and he was involved with the Horizon programme.
Mr Blake: That’s an email sent to you on 10 August:
“From yesterday’s wrap up meeting, you were considering whether or not … it was in POCL’s interests to declare to ICL Pathway that acceptance could not be given on 16th.”
We see there reference to Acceptance Incident 376. Do you remember that Acceptance Incident?
David Miller: I’m aware of it having gone through all the paperwork, yes.
Mr Blake: So that was high. It had not been retested satisfactorily on time and the only plan seemed to be a workaround. That seems to be the information that you are being given by Chris French.
I’m going to go to another document that’s two days later, 12 August, it’s POL00028362. This is a meeting of the Management Resolution – it’s a pre-meeting.
Were you involved in this at all or would you have been involved in this?
David Miller: It says it’s a Management Resolution Pre-Meeting. I don’t know.
Mr Blake: Let’s have a look at the top. I think you presumably would have been aware of this information, that, by 12 August, there was a clear failure to meet conditions. Acceptance Incident 298 was “Definite high”. Acceptance Incident 376 was “high but may not be supported by Copping given rectification plan”.
If we look at “KB” – do you know who “KB” was?
David Miller: Keith Baines, the late Keith Baines.
Mr Blake: At the bottom of Keith Baines, it says:
“Therefore failure would require full retest – do we want this? Not in our interest to do everything again.
“Stability issue
“Not an acceptable position
“Root and branch review required – 2 months but the solution is likely to be incremental.”
Can we go down, “Proposed approach”. It says there – it is the third bullet point:
“Also we need assurance that problem will not recur – we need to be convinced that there is a solution that will allow monitoring of this reconciliation and that there is a reporting that demonstrates it is satisfactory
“External auditors say this problem could lead to a qualification of the accounts – although we do need to reach a financial estimate of the likely scale of errors.”
What’s being said there, do you remember?
David Miller: Well, I think there was discussion on what we needed to do to sort the issues out and the external auditor problem, specifically, was that I think Stuart Sweetman and I agreed of – exposure of these issues to our external auditors and I received, yesterday afternoon, a copy of that letter, so we had made the external auditors aware that there could be issues and they told us what would happen if these issues weren’t sorted.
Mr Blake: I’m going to take you to that letter in a moment. Let’s look at “Training issue” it says support was needed for subpostmasters to produce their first balance.
Can we go over the page please, “View on NRO”, so that’s the view on national rollout.
David Miller: Yes.
Mr Blake: It says:
“The steer from the Board is not to accept a sub-standard system.”
But surely, by that stage, you had already told the board that the system was not substandard; would you accept that?
David Miller: Well, you quoted from the board comments. You didn’t go over the page where I believe there is some reference to board members being aware that there were issues. Am I right?
Mr Blake: Well, I’m happy to look at that document again and I think I know what you’re talking about. Let’s have a quick look at POL00000352, and I think it’s page 12 that you’re talking about, which says:
“Members were concerned that a number of technical issues remained unresolved and that the BA contract position was still unclear.”
So, certainly, I’m happy – more than happy – to spend some time on that. You don’t deny, though, having said that it was “robust and fit for service”?
David Miller: I – that was the record of the meeting. Whether I was given the minutes to agree or not, I don’t know, but that’s the record of the meeting.
Mr Blake: So over, sorry, to the document that we were just on, that’s POL00028362, and the final page which was the view on the national rollout, where it says:
“The steer from the Board is not to accept a sub-standard system.”
We have, at the bottom there, a long list of high and medium severity incidents. I mean, this whole meeting here seems to be about Pathway not meeting conditions; would you accept that?
David Miller: It’s an analysis of where that was clearly correct.
Mr Blake: Were there concerns, at that stage, amongst those who were working on the project?
David Miller: Yes. There were also concerns, if you look at Pathway’s view and POCL’s view, about the view of certain incidents.
Mr Blake: It seems as though POCL’s view was things were worse than Pathway were accepting?
David Miller: Yes.
Mr Blake: How did you feel at that stage, having told the board a month earlier that it was “robust and fit for service”?
David Miller: I think I was – the programme was concentrating on sorting out the issues in front of us.
Mr Blake: So it was looking forward, rather than looking back?
David Miller: Yes, it was.
Mr Blake: Let’s look at a couple of incidents during this period. Can we look at POL00028337, please, and that’s a document from 15 August 1999 and it looks at AI298 “System Stability”.
Point 2:
“Evidence from the live trial shows that the counter system is unstable and lacking the ‘industrial strength’ necessary for a production environment.”
Over the page, please – sorry, if we could scroll because I can tell you it looks at the business impact at 3 and one of the business impacts – or it is, in fact, phrased as an “other impact”, over the page, point (v), it refers to:
“Risk of errors and impact on POCL transaction processing due to increased errors in fall back.”
Point 4 talks about a severity rating. POCL’s severely rating in relation to this issue is high, and I’m going to read that paragraph below the rating of high. It says:
“POCL assert that this Acceptance Incident is High because it clearly comes under the contractual beginnings of High ‘Failure to meet an Acceptance Criterion which would have a substantial impact on the service received by the customer’. Pathway have advised that their understanding of the rate of occurrence constitutes a Low severity rating. However, the statistics on which this conclusion was based has now been proven to be incorrect. In fact, the rate of occurrence has now been shown to be 48 times greater than that on which ICL Pathway based their assessment. In comparing the performance of Horizon with that of POCL’s legacy systems (ECCO and ALPS), it should be noted that the reboot rate per terminal for Horizon is 35% compared with ECCO at 0.30% and ALPS at 0.75%.”
So this was an Acceptance Incident where the main problems were things like system freezes, non-visible problems – sorry, visible problems, rather than necessarily –
David Miller: It was.
Mr Blake: – invisible problems but, as we saw slightly above on this page, at page 5, there was, nevertheless, included in this Acceptance Incident a risk of errors and impact on transaction processing. Do you remember that?
David Miller: I – in this detail at the time, I don’t.
Mr Blake: At the time, would you have been aware of this detail? This kind of document, would you have seen that?
David Miller: I’m not aware of having seen this document before. I am not saying that I didn’t see it at the time.
Mr Blake: Do you remember issues of this nature being brought to your attention?
David Miller: I certainly remember issues of this nature.
Mr Blake: Over to page 5 and this looks at Acceptance Incident 376, “Lack of data integrity on the data stream(s) across the TIP interface”. Can we look at paragraph 2:
“Pathway claim that they have discovered all the root causes …”
Then, just while we are on this, sorry, it’s still 15 August 1999, let’s look at paragraph 3:
“However, Pathway’s paper TIP Acceptance Incident Clearance – Update from Lorraine Holt (13/8/99) – provided to POCL on [13 August 1999] indicate that this problem can be caused by a number of root causes, including faults that do not have the same profile as that described above and not all of which have been fully analysed or fixed.”
Can we look at paragraph 4:
“Furthermore, there has been an incident where wholesale numbers of transactions were not sent to TIP due to an (albeit unusual) internal processing error within Pathway’s central systems.”
The final sentence in that paragraph is:
“Pathway have indicated that they would be willing to discuss with POCL how they might do this (on an ongoing basis) and admit that there may well be future occurrences which they cannot predict.”
Can we go over the page, please, to “Business Impact”, paragraph 1 – I will, unfortunately, spend a bit of time on this document, do let me know if you need a break at any stage:
“The ICL Pathway service is an integral part of POCL’s client accounting system – indeed the service is an accounting service. As such it accounts for turnover of £140 billion per annum involving some 3 billion transactions. Given the scale of this system even relatively small defects are capable of generating errors within the accounts of very significant amounts. POCL’s existing manual and legacy automation systems, which Pathway’s service will replace, are designed to minimise and correct such errors by incorporating controls and appropriate validation procedures.”
Can we go to paragraph 3, please:
“Pathway has not provided POCL with a complete description of all the faults creating the missing data and therefore POCL has not received any description of how and when all these faults will be fixed. Pathway has admitted that they do not yet fully understand the root cause of all the problems. A ‘workaround’ has been offered which attempts to trap and correct errors after they have occurred but this cannot provide assurance of a complete solution to the faults in the service, nor has POCL had visibility of the testing plan to ensure that the fix does not introduce further problems.
“It is a fundamental of any accounting system that it provides a complete and accurate record of all transactions.”
It goes on to talk about the problems if there is not a complete and accurate record of all transactions, including, for example, if we look at paragraph 5, it says:
“Given the nature of the errors concerned the potential is for these write-offs to be significantly threatening the business performance against shareholder targets and potentially as a going concern.”
I mean, it seems as though they had in mind at that stage the errors being dealt with by way of write-offs, rather than possibly prosecutions.
If we look at paragraph –
David Miller: Whether – I – I would be interested to know what – the accounts that they’re talking about here because this is reflected in the balance sheet accounts –
Mr Blake: Yes.
David Miller: – and TIP was harvesting information on the front end and was then settling with major clients. And I think there was a serious concern if that was not happening correctly. So – and it is actually highlighted, I believe, as one of the issues in the Deloittes letter.
Mr Blake: Absolutely, and I will, I promise you, get to that letter. I think that’s actually the next paragraph, that’s paragraph 6, where it talks about:
“These balances are also the basis of settlement with clients.”
Might that be the relevant paragraph about –
David Miller: Yes.
Mr Blake: It’s the final sentence, or final sentences of that paragraph, actually, that I wanted to draw to your attention, which is:
“Integrity failures could thus become a matter of public record damaging the reputation of POCL. Integrity is one of the major attributes of the brand such damage would, therefore, be substantial.”
Over the page, paragraph 7:
“Finally this level of difference is operationally unsustainable. The level of resource necessary to investigate and resolve these differences is significant at the 5,500 level and at the higher level the resource requirements are impractical …”
It says a little further on:
“… error levels are currently running at twice the normal pre-Horizon baseline.”
Can we go over the page, please. There’s a “Rectification Plan”, and it is paragraph 3 of that rectification plan, it says:
“POCL require a period of time with no incidents being reported or identified by TIP this must, as a minimum, cover two full consecutive cash account weeks and include a cash account period end.”
Now, would it be fair to say, it looks from this document as though it is seen as a very significant issue relating to accounting integrity and it seems to be so serious that, at that stage, that is August 1999, POCL would like a period of time with no incidents being reported or identified by TIP?
David Miller: That’s what this says, yes.
Mr Blake: And, I think, even though it seems at this stage ICL are saying that they can’t guarantee that there wouldn’t be further incidents. Do you remember these kinds of discussions about AI376?
David Miller: I don’t remember the discussions at that detail, the level of detail being dealt with here, but clearly it was – it was in my view.
Mr Blake: The severity of the issues there presumably would have been on your mind in August 1999?
David Miller: Yes.
Mr Blake: Still in August 1999, can we look at POL00090839, please. Now, this is the letter that we have been talking about. I think you were originally provided with an incomplete version of this letter and we have now managed to obtain the entire letter. For the record, the incomplete version was at POL00028439 but this now is the complete version.
It is the second page here which is the letter to you from Ernst & Young. “Horizon acceptance testing”:
“As auditors of The Post Office we have been asked by Post Office Counters Limited to provide you with our views in respect of certain accounting integrity issues arising from tests performed by POCL on Horizon data in the live trial.”
Can I just confirm, I think you have said that – did you request this specifically from Ernst & Young?
David Miller: Somebody in the business did, quite possibly Stuart Sweetman.
Mr Blake: Presumably because they were so concerned about the impact on accounting integrity?
David Miller: Yes, but I think as a general issue that we wanted to keep our auditors informed of progress and possible impacts.
Mr Blake: It’s the third paragraph down, it talks about the live trial at that stage being limited to 323 outlets, and it now goes on to talk about incident 376. It says:
“The following issue, as described to us by POCL gives us concern as to the ability of POCL to produce statutory accounts to a suitable degree of integrity. We understand that POCL has attributed a severity rating of ‘High’ to this matter.
“Incident 376. Data Integrity – In order to test the integrity of weekly polling of Horizon cash account transactions, POCL are reconstructing a weekly total by outlet from daily Horizon pollings. At present this control test is showing discrepancies in that certain transactions do not record the full set of attributes and this results in the whole transaction being lost from the daily polling.”
So that’s talking about in branch, isn’t it?
David Miller: Yes, it’s talking about information in the branch that has not got the attributes that it should have.
Mr Blake: It says:
“We are informed that an incident has also occurred where transactional data committed at the counter has been lost by the Pathway system during the creation of the outlet cash account and has not therefore been passed to TIP in the weekly cash account sub [figures].
“Both types of incident result in a lack of integrity on each of the two data streams used by POCL to populate its central accounting systems. We understand that the cash account data stream is the primary feed for POCL’s main ledgers and client reconciliation processes.”
Can we go over the page, please. Let’s look at the second paragraph, it says:
“It is a fundamental of any accounting system that it provides a complete and accurate record of all transactions. These discrepancies suggest that the ICL Pathway system is currently not supporting this fundamental.
“POCL have informed us that these items have resulted in difficulties substantiating the cash account balances which form the basis of certain items in the balance sheet. We understand that the issues are not attributable to specific outlets or to specific products on a continuing basis. It is not therefore possible to quantify the likely impact on client balances, or the resulting implications for POCL’s financial statements, as the incidents cannot be forecast.”
Looking at one more paragraph just above “Impact” it says:
“We also understand that POCL have identified a number of other incidents which also impact on the accounts. These may also be relevant to us in reaching our audit opinion, as they may be indicative of further uncertainties.”
Now, accountants telling a company that its statutory accounts are at risk is very serious indeed, isn’t it?
David Miller: Yes.
Mr Blake: Did you understand the term “fundamental uncertainty”?
David Miller: Yes.
Mr Blake: If we go over the page, it is explained there. What did you understand by that?
David Miller: That was a qualification on the account.
Mr Blake: Now, surely this was something to bring to the attention of the board, wasn’t it?
David Miller: Yes.
Mr Blake: If we look at the first –
David Miller: Sorry, I think what this was saying is, if these things aren’t sorted, this will what will happen when we do your next audit.
Mr Blake: Yes, and if we look at page 2 of this document, is that your writing at the top?
David Miller: It is.
Mr Blake: So I think you are bringing it to Bruce McNiven and Keith Baines’ attention –
David Miller: Yes.
Mr Blake: – and saying:
“Please ensure that these issues are fully addressed during the remaining acceptance process. Keep me in touch.”
Do you know if there was follow up from that?
David Miller: I’m sure there would have been.
Mr Blake: How well-known would this issue have been within the organisation?
David Miller: I don’t think it was generally known but I think it was known by the people who ought to have known about it. Certainly, Stuart Sweetman would have been aware of this.
Mr Blake: Do you remember discussing it with Stuart Sweetman?
David Miller: I don’t remember but, given what it’s about, I find it very difficult to think it wasn’t discussed with him.
Mr Blake: Wasn’t this the time to go back to the board and say “I made a mistake with the assurance I previously gave you”?
David Miller: I’m not sure. I was – I was, again, looking to solve the problem. You have pointed out very clearly what was said in the board minutes to me. Whether my awareness of that was sufficiently strong at that time, I really can’t remember. In reviewing all this, I admit to a certain unease.
Mr Blake: So are you saying that, looking back, things should have been done differently?
David Miller: Possibly, but I would point out that this – Stuart Sweetman was the managing director and he was a member of the board that we have been discussing. So there was an assumption, I think, on my part that, as a member of that board, he would be taking forward key issues.
Mr Blake: It was you at that original board meeting though who was the technical man?
David Miller: Yes.
Mr Blake: It lay on your shoulders, at least at that meeting, to assure them in terms of the robustness of the system?
David Miller: Yes.
Mr Blake: So do you think, looking back now, that, having received a pretty significant letter from Ernst & Young about accounting integrity, that might have been the moment to go back to the board?
David Miller: I’m – the route back to the board was through Stuart Sweetman, as far as I was concerned.
Mr Blake: Were there high-level meetings taking place within Post Office Counters Limited about the significance of this document?
David Miller: I think there was an awareness amongst the people who should have known about it.
Sir Wyn Williams: When you say “the people who should have known about it”, can you actually tell me their names, so I’ve got them on my radar, so to speak?
David Miller: Well, certainly, the finance director, people preparing the accounts. And I’m sorry, sir, I cannot tell you the names.
Sir Wyn Williams: No, no, all right. I follow you might not remember precisely their names, but you started with the finance director. Are there any other particular directors or senior managers that you think should have been aware of this at the time?
David Miller: Well, certainly the managing director, sir.
Sir Wyn Williams: So finance director, managing director.
David Miller: Yes.
Sir Wyn Williams: And you knew, obviously.
David Miller: Yes.
Sir Wyn Williams: All right.
Mr Blake: We know that the route to the Post Office board was through the managing director but also – who would have been the route to the Post Office board, the overall board for this kind of information.
David Miller: Stuart Sweetman, the managing director. He was on that board.
Mr Blake: I think he wasn’t technically a member but he attended the board; is that correct?
David Miller: Yes, he did.
Mr Blake: While we’re on Acceptance Incident 376, can we look at FUJ00079178, please. Now, this was a resolution plan at September 1999. You may well not have seen this document. I don’t think you are named on the document. I’m just going to take you to a couple of points there and you can tell me if you do or don’t recall anything.
Can we go to page 5, please. This sets out the “Purpose”, and it says:
“This document sets out ICL Pathway’s proposal that Acceptance Incident 376, currently categorised as Medium by Pathway and High by POCL, should be recategorised by POCL as Medium, and that the Resolution Plan is satisfactory and should be agreed.”
Do you remember that, ICL wanting this particular incident –
David Miller: I don’t, I’m afraid. But it wouldn’t be uncommon for there to be debate at this time across a range of issues about their severity.
Mr Blake: Let’s have a look at page 9 and see if it assists at all. It discusses “Closure Criteria” there. It’s the bottom of page 9, please. Thank you. We see there the third point, “Closure criteria”, that’s being agreed between ICL Pathway and POCL is that:
“During the Observation Period not more than 0.6% of cash accounts sent to TIP will be found by TIP not to reconcile to the Cash Account derived by TIP from the transaction stream due to Pathway processing error.”
Now, we saw earlier the document that I took you to. It seemed as though POCL originally wanted no errors relating to this particular Acceptance Incident. Do you recall a move over this period where, in essence, it was accepted that a degree of error was inevitable?
David Miller: I don’t recall directly, but I’m not surprised that there was a move away from zero.
Mr Blake: Would you, at that period, August 1999, or September 1999, have been well aware that there would, inevitably, be issues that arose and therefore a degree of acceptance would be required?
David Miller: Yes.
Mr Blake: Essentially, a degree of error is inevitable?
David Miller: Yes.
Mr Blake: Can we look at POL00028338, please. This is a different Acceptance Incident. It is Acceptance Incident 211, what we know as the receipts and payments mismatch.
Now, let’s look at the first paragraph:
“A large number of incidents have been reported during the live trial period whereby the receipts and payments totals do not balance on the outlet weekly Cash Account. This exposes a lack of integrity in the double entry accounting functions of the Horizon System, contrary to requirement 803.”
Can we turn over the page, please. About halfway down that page, it begins “Prior”:
“Prior to the introduction of LT2 …”
I think is LT2 is a fix of some sort; do you remember?
David Miller: I don’t, I’m afraid.
Mr Blake: Do you at least remember that kind of terminology related to a fix, LT?
David Miller: Yes, I think so.
Mr Blake: I think, in fact, the paragraph before says:
“Fixes were introduced into the LT1 system to correct the single sided sales problem and the print preview corruption. The revised balancing process introduced at LT2 addressed the two other identified causes.
“Prior to the introduction of LT2 incidents were occurring at a rate of around 30-50 outlets per week. Following LT2 it was anticipated no further incidents would arise, other than the accepted migration problem.
“Since the introduction of LT2 there have been some recurrences of the incident although at a much reduced rate (less than 10 in three weeks). Some of these have been attributed to migration errors which are accepted”, et cetera.
So even in this incident, when Pathway had closed, fixes LT1 and LT2 had been introduced, there were still, it seems, at least some problems occurring; would you accept that?
David Miller: Yes, but the sense of this is that those are at a very much reduced level.
Mr Blake: Absolutely but, again, it couldn’t possibly be zero, could it? It seems to be an acceptance that there would, nevertheless, still be some problems?
David Miller: But they were still working on the problem.
Mr Blake: Yes, but the impression you get here is that there are fixes applied but, even where there are purported fixes, you need to be careful. Would you agree with that?
David Miller: Yes. I think it’s saying that, whilst this has had a good impact, it’s not yet a complete impact.
Mr Blake: Let’s look at November 1999, POL00028550. So this is now November 1999, very late in the day, quite close to the national rollout. There is an email that is from Keith Baines to yourself and others.
Can we go over the page, please – actually, sorry, if we could stay with that page, I think it explains that Keith Baines has written you some speaking notes. Do you remember this?
David Miller: I don’t, but if Keith wrote that then I accept it.
Mr Blake: I think it’s called “Negotiation Brief”.
David Miller: Mm-hm.
Mr Blake: Then we look over the page, and there’s the briefing. Let’s look at paragraph 3, it says:
“It is now clear that some of the criteria will not be met. This is serious cause for concern.”
It goes on to list the various key issues and, at paragraph 7, it talks about the first issue:
“The first of these, system stability, has been a success. The level of incidents has reduced and the target level has been met – though only just. The one remaining concern is that there have been a number of one-off events that have resulted in ‘spikes’ and clearly we need you to continue making progress, both the make [or ‘to make’] the further level in overall incidents, in line with the rectification plan, and to eliminate the occurrence of ‘spikes’ which would be increasingly disruptive as the automated estate increases.”
Can we go over the page, please, to paragraph 9. Paragraph 9 talks about area of concern about the helpdesk.
Paragraph 11 is a third area, and that says:
“The third area was the reduction in errors in accounting data passed from your systems into TIP, and the development of appropriate integrity controls for that interface. Progress in this area had not been encouraging. The overall level of errors has greatly exceeded the 0.6% target level – by an order of magnitude or more.”
What does that mean, “an order of magnitude or more”?
David Miller: I don’t know.
Mr Blake: Does it mean significantly over that –
David Miller: Yes, it does, sorry. I don’t know precisely.
Mr Blake: “Other criteria have also not been met. Analysis of the causes of in you incidents has not met the 10 day turnaround target.”
It says:
“DN John Meagher to confirm if this is correct. Also, there have been new incidents that it seems would not have been trapped by the integrity control you are developing.”
So potential new incidents that won’t be met by an integrity control:
“Thus there is cause for concern, both at the level of work that will be required to manage errors, and that some errors may ‘slip through the net’ and cause errors in POCL’s or even worse our Client’s systems.”
Can we scroll down – sorry, who would it mean when it says the “Client’s systems”? Is that talking about –
David Miller: Yes, this is – what the TIP system was doing, as I understand it and understood it, was that it was taking certain data from the data available in the branch. It identified – there were parts of the system that – front and back of those pieces of data, that should have identified it to the harvester, it would then be taken to TIP.
TIP would then assemble a set of accounts and the clients, that is the – from us – not customers who came in off the street, but the clients were the big people like Benefits Agency, and so on, and would settle with them. And I think this is expressing a concern about whether we’d be accurately charging our large clients.
Mr Blake: Yes, so it seems to be an acknowledgement that some errors may slip through the net but the concern seems to be focused on POCL’s clients rather than, for example, on subpostmasters and the effect on them?
David Miller: Because I think, in this respect, that was probably true.
Mr Blake: What do you mean, sorry?
David Miller: Well, in what I have read, it was – the issue was not about the information that was produced in the branch and being produced in the branch, it was how the relevant bits of that information, that had to go forward to settle with the client, were being taken out and was this being done completely and properly. So I don’t think it was interfering with the accounts in the branch but it was meaning that we wouldn’t be billing our major clients properly if this was happening. That is my understanding.
Mr Blake: Would you accept that, at that particular time, there were incidents that were affecting the cash accounting of individual subpostmasters?
David Miller: Yes, I think so, but my point is we spent, understandably, quite a bit of time on this. But it was looking at our clients, as opposed to our subpostmasters and customers.
Mr Blake: The focus is certainly on the clients, would you accept that?
David Miller: Absolutely, yes.
Mr Blake: Paragraph 12:
“We also have some concerns about progress with the new integrity control. While Pathway have been reporting satisfactory progress against plans, our people on the ground perceive that there has been a reversion to the old ways of working with the shutters being brought down.”
Do you know what that means there?
David Miller: It means that, under PFI and the contract which involved the Benefits Agency, there was a Pathway way of working, which was not to encourage close involvement from either BA or POCL. We had worked very hard to try and break that down. There is a lot of evidence in the bundle about the workshops that were going on, the intense activity which was focusing on the key problems. This is saying that – “reversion to old ways of working with the shutters being brought down” means that we were not being allowed in so we could satisfy ourselves what was happening.
Mr Blake: It continues:
“We have seen no progress on development of the joint processes that will be needed to manage the errors trapped by the control, and on this, and on the specification of interface processes, we have found Pathway unwilling to engage in meaningful discussions.”
Perhaps we can briefly look over the next page, so this goes on to talk about reference data and it says:
“The prime responsibility under the contract is Pathway’s. The requirement … is for Pathway to provide a robust service that checks the consistency of reference data. POCL does not have access to Pathway’s reference data design, and so it is Pathway’s responsibility to ensure that any reference data that complies with the interface specification is implemented safely and with the expressed effect.”
Now, I mean, this is all, as I say, late on – we’re in November 1999 – four months on from the board meeting where it was described as “robust and fit for service”; were you not, at that stage, banging on the doors of the board and saying “Hang on a minute”?
David Miller: No.
Mr Blake: Do you think you should have been?
David Miller: I’m afraid I will go back to what I was saying to you before. The project sponsor was a member who attended that board and my view was the route back to the board was through Stuart Sweetman. I – in retrospect, thinking about it now, should I have looped and gone directly to the board? The organisation and the way that was deployed certainly didn’t encourage that.
Mr Blake: In what way?
David Miller: Well, because we were given responsibilities at a certain level. Those – and the targets to meet. The targets to meet would be monitored, sometimes more intensely than others. But looping back up and down the organisation was not encouraged because you were seen to have a role and you were meant to fulfil that role at that level.
Mr Blake: Was it difficult in the organisation to speak up?
David Miller: No. I’m just saying there were channels through which things went.
Mr Blake: So it was too hierarchical or …?
We’re interested from a governance perspective.
David Miller: Absolutely, and I understand that. The business had been through a process which it called “Customer First”, the whole corporation had, where there was a lot of emphasis on being quite clear what people were meant to do and deliver, and letting them get on with it and making appropriate checks at the appropriate time. And the idea that – I think, John Roberts alluded to this when he spoke – that he would constantly be diving into the organisation and interfering was something he resisted, so – and I think most of the organisation – well, probably all the organisation understood that.
Mr Blake: I don’t want to put words into your mouth, but is it the left hand not speaking to the right hand?
David Miller: No, it’s: there is a defined channel for doing it and that needs to happen.
Sir Wyn Williams: I follow that you may have thought it appropriate to raise these issues – those are my words, not yours – with Mr Sweetman, as a means of taking it to the board, but, having raised them with him, was there any kind of discourse between you as to what would happen and, if so, what was the result of what was to happen, if I can put it in that way.
David Miller: I’m sorry, sir, but I genuinely can’t remember, but I would be meeting with Stuart Sweetman and being in contact with him on a regular basis, very regular basis.
Sir Wyn Williams: All right.
Mr Blake: Thank you. I only have very few matters now to deal with before lunch, and I may not be on after lunch, I may hand over to others.
Can we go to FUJ00118186, please. This is the third supplemental agreement. Is this something that you remember at all?
David Miller: Yes, I do.
Mr Blake: Can we look at page 5, please, and it is 5.3, so it’s at the bottom of 5. This is something that some other witnesses have been asked about. I will just read that out, it says:
“The Contractor shall from the date of this Agreement until the end of the TIP Integrity Checking Period make available to POCL promptly upon request appropriate experts to explain to POCL the Contractor’s analysis of all root causes of Cash Account Discrepancies and the measures which the Contractor shall have implemented in order to prevent the recurrence of any Cash Account Discrepancies which would not have been detected by the Accounting Integrity Control Release.”
I think we have heard from some witnesses, and tell me if you agree with this, that this provision was an acknowledgement that it was not always possible to get to the root cause of an imbalance or to make the appropriate correction?
David Miller: I think that’s correct.
Mr Blake: Thank you. I’m going to move to January 2000. Can we look at POL00028507. Now, this is a document – you don’t seem to be a recipient of this document, so I won’t go into it in any detail?
David Miller: Possibly because I was on my way out of the programme at that point.
Mr Blake: Absolutely. There is a discussion in this document about receipts and payments still not matching. Perhaps we can go to page 4, it’s the final page, and it is paragraph (d), and the final sentence:
“Even if in the future we have an increased number of these errors, posting them to a discrete line will not help TP to manage them.”
The point is very simple but, in that period, so at the time when you were on your way out, were you aware that it may be possible that errors could even increase after the time that you were there? It doesn’t have to be in relation to this –
David Miller: Sorry, I had a view at the time that we had done our very best to tie ICL Pathway down to an increasingly improving system and that was what we planned to do, from the point where it was clear that Benefits Agency were getting out, that a deal was done by the Group board, the DTI, permanent secretary, and so on, and a set of criteria were handed down about how this thing was going to be going forward.
It was clear to us that we needed to get as close as we possibly could to ICL Pathway, so I – so that was my view.
How that stands up to a reading of the Horizon judgment is something, as you can imagine, I have been grappling with for a while.
Mr Blake: Yes. One very final document, and it may be that this is after your time. Can we look at POL00029221, please. So this is an ICL management monthly incident review, covering the period 1 to 30 November 2000. Were you still in post at that point?
David Miller: Oh, no. I was – by then, I was away.
Mr Blake: I think the point that’s made in this – and I don’t need to take you to the page because it wasn’t when you were around – was that there were, during that period it seems, an increase in incidents.
Would it surprise you that there were an increase of incidents after you left? We can look at page 6, if it assists. It probably won’t. I mean, this wasn’t a document that you would ever have seen anyway, but it says:
“During November the number of incidents received by MSU increased to 109, in comparison to October where 91 received and resolved by MSU.”
David Miller: I’m sorry, I just wasn’t there –
Mr Blake: No.
David Miller: – and this is actually some time after I – a number of months after I departed.
Mr Blake: Yes, but when you departed, would it have been in your contemplation that things might get worse, not better?
David Miller: I would have been very disappointed.
Mr Blake: In terms of handover, how did you hand over the knowledge that you had gained over those years?
David Miller: Well, I handed over to David Smith, who is known to this Inquiry, who was the Automation Steering Group project manager – sorry, the broad Automation Steering Group, who was heavily involved with TIP, and we would – we would have discussed things, he would have been aware of issues. So it wasn’t as though somebody who was completely fresh to all this was moved in to replace me. It was somebody who was part of the programme, a qualified accountant who had significant experience in all the systems that were going on in the business.
Mr Blake: Thank you very much, Mr Miller. It is now approaching lunchtime. There are some questions from other Core Participants.
Is there anything before they speak that you would like to say at all?
David Miller: No, I don’t think at this stage.
Mr Blake: Very good.
Sir, did you have any questions at this stage?
Sir Wyn Williams: No. Let me ascertain how we should best proceed.
First of all, it became clear to me that some people were cold, not least because extra clothing was being put on, but I also saw the usher attempting to fix it, to use the word “fix”, as we often do. Have we succeeded in fixing it?
New Speaker: Very much so, sir, we’re very grateful.
Sir Wyn Williams: Right, well, I’m glad of that.
Mr Blake: Sir, may I say, it may be fixed for some but not others. It’s a problem with this room and the problem is some of us are under the lights and Mr Stein also seems to be –
Mr Stein: Quite comfortable.
Mr Blake: So, unfortunately, in this building we will never satisfy everyone.
Sir Wyn Williams: The consensus appears to be that things did get better after the usher’s intervention. So thank you very much.
Secondly, I make no secret of the fact that I have an important legal meeting with my team this afternoon, some of whose members are joining by video, and so I would like to do it – you know, I would like to have some idea where we’re going from here. So what is the consensus view about how much longer we need for additional questions?
Mr Jacobs: Sir, if it assists, I’m not going to be very long, probably five minutes at the most.
Sir Wyn Williams: Right. Mr Henry or Ms Page?
Mr Henry: Forgive me, sir, may I ask for 20 minutes.
Sir Wyn Williams: So if we say 30 minutes, is that reasonable, do you think? Then I’m going to ask the witness something now.
If we were to break for say ten minutes to stretch our legs, would you prefer to do that 30 minutes and get it out of the way, or would you prefer to have a normal lunch break?
David Miller: I would prefer to do the first thing, sir.
Sir Wyn Williams: Fine, then that’s what we will do. We will break for ten minutes and then we will complete the witness.
Mr Blake: Thank you.
(1.00 pm)
(Short Break)
(1.10 pm)
Questioned by Mr Jacobs
Mr Jacobs: Thank you, sir.
I ask questions on behalf of 153 subpostmasters and mistresses who are represented by Howe+Co and, Mr Blake, we are grateful for him dealing with many of the questions we would raise, so I only have a couple of points for you, Mr Miller.
I want to ask you about Post Office IT capabilities. Can we perhaps turn up paragraph 21 of your witness statement, and I think Frankie has the reference for that.
It is WITN03470100, and we can see that there.
You say in your statement that there were differences in the organisations’ approach to major IT projects and the Benefits Agency had a well-established process for undertaking large computer projects but POCL did not and this did not assist smooth working.
Now, do you accept that the Post Office lacked technical competence to fully understand all the complexities of the Horizon System?
David Miller: Yes, but I would caveat that by saying it wasn’t just the Post Office.
Mr Jacobs: Right. Who else was it then?
David Miller: Well, all three parties.
Mr Jacobs: But you do accept that the Post Office were lacking in technical competencies in this regard?
David Miller: I think we learned about it as time went on but it was a huge and extremely complex system.
Mr Jacobs: Now, we know that subpostmasters were in court in 2001 and, therefore, they were being investigated by the Post Office in 2000; you accept that?
David Miller: Yes.
Mr Jacobs: Our clients say, and they have given evidence between February and May of this year, that the Post Office auditors and investigators who investigated them and suspended them on the basis of apparent shortfalls, appeared to know very little, if anything at all, about the Horizon System.
My question for you is: do you agree that when the Post Office started to pursue subpostmasters, very shortly after rollout, when you were still in post, that those auditors and investigators who pursued them for these shortfalls didn’t have the necessary technical knowledge to understand the errors within the Horizon that were causing the shortfalls?
David Miller: I’m pausing –
Mr Jacobs: It’s a long question, I’m sorry.
David Miller: No, I understand exactly. There was, for instance, training courses for auditors as part of the Horizon programme, so I couldn’t say I couldn’t agree with you. What I’m not sure about is what training the investigators got but there was certainly a package for training auditors.
Mr Jacobs: If we turn to investigators then, did you hear the evidence that was given between February and May of this year by the subpostmasters?
David Miller: I have heard a number of those sessions, yes.
Mr Jacobs: The evidence that was largely given was that the investigators – and the auditors – did not appear to be interested in what the subpostmasters were saying about problems with the system. Do you accept that from what you heard?
David Miller: Oh certainly, they were saying that, yes.
Mr Jacobs: What you say in your statement is that Post Office didn’t have well-established processes for undertaking projects of this kind?
David Miller: In the statement, I think what I’m saying is that the Benefits Agency had very well-established processes. It had done a number and was doing an number of significant major programmes in this area, and Post Office Counters didn’t. So the Benefits Agency took the lead, the Benefits Agency was saying, basically, “This is how we do it”, and there was a certain tension there, I think, but …
Mr Jacobs: When you say “this didn’t assist smooth working”, what do you mean by that?
David Miller: Well, there was a lot of work that went on to try and ensure smooth working with the original development agency and the guy who ran that was from Benefits Agency, but he really tried – and I think the Post Office tried to get that going.
What happened in the – and this may sound too convenient, if so I apologise, but what happened in the period when I had left that original and before I came back, I can’t comment on. I’m just aware that, when I came back, I said “Where’s the spend been on this programme?” and over 80 per cent of it, at the time I came back in 1998, was on the Benefits Agency part.
Mr Jacobs: Are you able to say anything more about the training that the auditors received?
David Miller: I don’t, I’m sorry.
Mr Jacobs: But you’re not aware of any training that investigators received on the IT system?
David Miller: I’m not. That doesn’t mean to say they weren’t trained but I’m not aware of it.
Mr Jacobs: I’m not sure I have any further questions for you but I will just check with Mr Enright.
I don’t have anything else for you. Thank you very much, Mr Miller.
Mr Henry: Sir, could Mr Maloney go before me, at his own request?
Sir Wyn Williams: Certainly.
Mr Maloney: Thank you, and thank you to Mr Henry.
Questioned by Mr Maloney
Mr Maloney: My name is Tim Maloney and I represent a number of subpostmasters.
We have seen from various documents this morning that there were, if I could use this generic term, problems with acceptance, and, in fact, it’s probably now beyond dispute within the Inquiry that there were problems with acceptance.
There are board minutes that suggest that you, if I could paraphrase, said to the board that Horizon was “robust and fit for service” and I acknowledge that you may or may not have seen the minutes, Mr Miller, and that – but, firstly, is there any reason you might wish to convey to the Inquiry as to why the minutes might be inaccurate?
David Miller: No.
Mr Maloney: Then, whatever the case, you certainly did not tell the board that it was not “robust and fit for service”?
David Miller: That’s correct.
Mr Maloney: Now, subsequent to that board meeting matters developed which Mr Blake has asked you about this morning: the Ernst & Young letter and things of that nature. You have acknowledged that, in the wake of your – if I could describe it as a clean bill of health for Horizon, your character reference for Horizon perhaps, it would be better if the board knew about those things, yes? I see you nodding and I don’t –
David Miller: I’m sorry.
Mr Maloney: Absolutely.
David Miller: Yes.
Mr Maloney: Now, you have said that Mr Sweetman was the person best placed to bring those matters to the attention of the board for the reasons that you have explained.
David Miller: Yes.
Mr Maloney: When you left the project where did you go?
David Miller: I went to set up a business unit called Post Office Network, which was a proportion of the old Post Office Limited.
Mr Maloney: Right. When did you leave?
David Miller: 2006.
Mr Maloney: Right. When did you leave this project?
David Miller: I can’t remember exactly, but working back from – it would have been early 2000.
Mr Maloney: Early 2000. When did you find out that you were going to be leaving the project? How many months notice, effectively, did you have before –
David Miller: I didn’t have “months” notice.
Mr Maloney: Sorry?
David Miller: There wasn’t a month in it, it was –
Mr Maloney: “You’re going”?
David Miller: – days.
Mr Maloney: Right. You now know that many subpostmasters were unjustly convicted –
David Miller: I do.
Mr Maloney: – and their lives have been ruined, in many cases.
David Miller: I do.
Mr Maloney: Many of the difficulties that you saw in the testing of Horizon were the problems that those subpostmasters suffered before they were prosecuted. So if I may just give an example, that it took them many hours to balance – we have seen that in documents this morning, the feedback from the NFSP – and that it was causing them real upset, and those were the problems that they experienced before they were prosecuted, ultimately.
Has it ever crossed your mind, Mr Miller, that, well, “Is there anything I personally could have done but didn’t” to try and prevent that?
David Miller: Yes, it has. Just for the record, I bitterly regret what’s happened to the subpostmasters.
Mr Maloney: No, of course.
David Miller: Sorry, I –
Mr Maloney: No, no, of course. But you, no doubt, would have asked yourself “Right, well, here I am in this position of responsibility, I’m seeing these problems when we are live testing Horizon. Actually, as it turns out, the problems that were suffered by subpostmasters ultimately were the very same problems that were experienced during live testing. I was in this position, is there anything I could have done?”
Have you asked yourself that question and have you ever asked yourself the question “Could I’ve got this information to the board?”
David Miller: No on the latter, although I have been forced by the questioning to think should I have looped around.
Mr Maloney: Yes.
David Miller: I only became aware of this problem, I regret to say, well into the period when the trial, Bates v, were going on and I’m, you know – sorry, I – you know, I’m not proud of that, but that’s true.
Mr Maloney: You only became aware of it as a problem – would you mean as a continuing problem – after you had left the project, because you were aware of the problems that subpostmasters were facing in the feedback that you received from the NFSP and, indeed, we see it in that crucial document of the audit qualification that would be necessary that you received that letter, so you were aware of problems with the operation of Horizon at the time that you were in post, weren’t you?
David Miller: Yes.
Mr Maloney: Yes. But essentially the full extent of the problem you weren’t aware of, you say, until the Bates litigation?
David Miller: Of – I’m sorry?
Mr Maloney: Until the Bates litigation.
David Miller: Yes.
Mr Maloney: What I was asking you about – you have talked about looping around, “Could I have looped around?” Your point of contact was Mr Sweetman, yes?
David Miller: Correct, sorry.
Mr Maloney: Now, the chair has asked you this morning about the conversations or any conversations that you may have had with Mr Sweetman about this issue. If you have racked your brain about what you might have done differently, have you ever racked your brain about what it was that you said to Mr Sweetman, if anything, about whether or not what you were coming to know should go to the board?
David Miller: I am sorry, but I honestly have no recollection of 20-odd years ago of those discussions.
Mr Maloney: Have you thought about it?
David Miller: I clearly have thought about it.
Mr Maloney: Thank you, sir, that’s all I ask.
Sir Wyn Williams: Mr Henry.
Questioned by Mr Henry
Mr Henry: Thank you so much.
Mr Miller, I suppose so much depends on who writes the minutes and whether you were given an opportunity to approve them?
David Miller: Are we talking about the board minutes?
Mr Henry: Yes, 20 July at Charingworth Manor. It says that you were present – no need to pick it up, but it says that you were present for item agendas 99/78 and 79. That’s on page 1. But I will come back to that. What I wanted to really ask you, sir, is who appointed you in the first place as Horizon programme director?
David Miller: Stuart Sweetman.
Mr Henry: And did Mr John Roberts have anything to do with your appointment?
David Miller: I – I assume that John would have had to approve it, but I was appointed as a line reportee to Stuart Sweetman, so I was unaware of who else in the corporation had been part of that decision.
Mr Henry: Yes. We know, don’t we, that this was a time that the project was bedevilled by delay?
David Miller: Yes. Sorry, yes.
Mr Henry: We also know that there were emerging very, very considerable rifts between the DTI on the one hand and the DSS on the other. The Benefits Agency on the one hand and POCL on the other.
David Miller: Are we talking – sorry, can I be very clear about the context that you’re asking me about. Is this in 1998, at the beginning of 1998 that you’re asking me about?
Mr Henry: No, I’m talking now, moving on – and I should have made that clear to you, sir – certainly by April 1999.
David Miller: By April 1999 there had been a number of reviews, the Corbett review, the Treasury review and so on, and there was clearly work going on at the highest levels of politics in this country to decide where this programme was going.
Mr Henry: Yes, of course. I think I have been given permission to put a document to you, but I will defer to Counsel to the Inquiry, but it was a letter that you wrote to a Mr Vince Gaskell, CAPS and cards programmes director of the Benefits Agency dated 8 April 1999. Have you seen it, sir?
David Miller: I have.
Mr Henry: You have. Well, I’m going to take it that you have had an opportunity to study it in some –
David Miller: Well, I haven’t got it in front of me.
Mr Henry: You haven’t got it in front of you. May it be shown – if it isn’t possible to be shown I will then just concentrate on the final paragraph. It is 00028406 but obviously I will defer to Mr Blake if it isn’t ready then we will not –
Mr Blake: Sorry, what does it start with?
Mr Henry: It is POL00028406.
Mr Blake: We can have a look. Mr Miller, if it’s not a document that you have seen before today please do let us know.
David Miller: Okay. Was Mr Henry indicating that he wished to talk about the end of it or …?
Mr Henry: I will take the letter really just to the conclusion. May I read out the conclusion, sir, to you.
There are substantial points that have been dealt with beforehand, so outstanding faults, factually there are no known outstanding faults that prevent entry to live trial. Can you remember how this conclusion was reached?
David Miller: This is talking about DSS and the CAPS, I believe, being migrated onto the system and trialled.
Mr Henry: I see. So be it. “Additional testing”, which is the second page:
“We did not intend to suggest that the additional testing that is due to take place will simply replace the previous model office end to end cycles.”
Changes during live trial, et cetera, et cetera, but I really come to this, your conclusion:
“Both of our organisations have made their different viewpoints clear to each other in recent months. We have also sought to co-operate with each other in taking the Programme forward. But it has been my role and responsibility as the Horizon Programme Director to lead in the delivery of this service. This has required me to balance the interests of all parties, and to consider both programme delivery and contractual implications.”
Mr Miller, who gave you that task, that objective? Was it Mr Roberts together with Mr Sweetman?
David Miller: I worked with Stuart Sweetman. He was the sponsor of the project.
Mr Henry: Of course, but I mean – I’m not suggesting that you remember the meeting, but in open source material, Mr Roberts, Mr Sweetman and yourself attended the DTI Select Committee. You weren’t asked to give evidence, but Mr Roberts, in June 1999, effectively answered nearly every question that was put by that committee. I mean he was really the dominant force, wasn’t he?
David Miller: He was called to the Select Committee and he was briefed before he went to that Select Committee and – I mean I’m sorry, I cannot – I cannot comment on what it was appropriate – which senior – very senior person, it was appropriate to go to a DTI Select Committee. I’m sorry, Mr Henry, I can’t.
Mr Henry: Of course, of course, Mr Miller, and I don’t want to put you in an invidious position at all, but you said to Mr Blake this morning that you were aware of Mr Roberts’ view as to the commercial importance of Horizon, you said in fact you were very much aware, and you seemed to agree with his point of view that it was vital to the survival of the Post Office.
David Miller: Post Office Limited.
Mr Henry: Sorry?
David Miller: Post Office Counters Limited.
Mr Henry: Post Office Counters, yes. That you concurred, in other words, with that view. It is no secret that Mr Roberts saw the future of the Post Office Counters Limited as being wedded to automation.
David Miller: Well, I think if you look at the documents in the bundle, the work on strategy and so on, it was pretty clear that the whole POCL organisation felt that. John Roberts was the Group managing director, which was a company – letters, parcels and counters – which was about 7 or 8 billion quid, so there were many other issues on his agenda than just the Horizon project.
Mr Henry: Mr Miller, are you trying to protect him?
David Miller: I’m not trying to protect him at all. I’m trying to – I’m sorry, I do apologise. I am trying to get a sense of perspective because it seems to me, from your line of questioning, you are trying to say “Mr Roberts was responsible for all this” and I don’t – I don’t agree with that.
Mr Henry: Well, I’m not saying solely responsible, sir, but what about Mr Sweetman, because you said earlier to Mr Blake, very close to the beginning of your evidence, that he would tell the board what they needed to know – not your exact words but that was the essence.
David Miller: Well, he was the project sponsor, Mr Henry, and he was on that board, or he attended that board.
Mr Henry: Yes, of course.
Could I – I mean surely in relation – no need to put it up on the screen, but a document you were taken to this morning, POL00028451, talking about the short-term and the long-term risks, short-term liable to be late, incomplete functionality, premature rollout could prove unreliable, long-term fragile software system, difficult to enhance if TIP lost money, difficult to do future changes. I mean surely Mr Roberts, together with Mr Sweetman, would have been sighted, fully sighted on that?
David Miller: I’m sorry, I don’t have this document in front of me.
Mr Henry: It was one that you were actually taken to, but it was the Tom, Dick and Harry document where there was an analysis of short-term and long-term risks associated with this. If you would wish to see it, sir –
David Miller: The date would – sorry, it would be 1996 perhaps?
Mr Henry: I believe it was. I believe it was. So in other words, from a very early stage they were aware of potential risks associated with Dick?
David Miller: Yes, there was a whole raft of things that are documented in the bundle about each of the suppliers, so, Mr Henry, yes, you know, there was stuff in there about ICL Pathway quite clearly.
Mr Henry: Well, it’s up on the screen now. I don’t need to take you to it but I just want to concentrate on your background very, very briefly because obviously you had worked at the Post Office since 1970 and you had had a distinguished career in management and you had, for example, been the senior line manager for south west England. We know as well that you were sent off to Bristol to deal with Bristol and South Wales at one point during the currency of this project and so therefore you were, perhaps better than most, aware of the problems and pressures that subpostmasters would encounter.
David Miller: Yes.
Mr Henry: Yes. I just want to bring this back to “fatally flawed”, which has been suggested to be a low baseline and I think it is – if I may respectfully submit – ask you to consider this, whether we should look at that in two senses: from a commercial point of view “fatally flawed”, it would be a low baseline and there may have been, I do not know, from the commercial perspective the sense that “these are teething problems, we can work our way through it”. Do you follow?
David Miller: Was the phrase, “not fatally flawed?
Mr Henry: Yes, exactly, “not fatally flawed”, and that being, as it were, too low a baseline. But from a commercial point of view, eminently pragmatic it might be thought, particularly if there were insuperable political pressures from above, you would have to make it work. But from the point of view of prosecuting people, from the point of view of having unimpeachable and infallible data for prosecutions, that would be a hopeless test, wouldn’t it?
David Miller: I don’t understand that, sir.
Sir Wyn Williams: I don’t think he needs to answer that, Mr Henry, because it’s obvious.
Mr Henry: It’s obvious, yes. Thank you, sir.
The only reason I mention it is because, you see, two of the clients I represent, Ms Felstead and Ms Arch, were prosecuted very, very near the beginning, Ms Felstead almost at the beginning of the rollout and she went to prison, you see. Ms Arch was acquitted. But can I ask you, was that ever considered, to your knowledge, by anybody in the working group, as to how the prosecution arm of the Post Office, with which you must have been familiar, how they should treat this data, how they should treat the product generated by Horizon?
David Miller: I am unaware of any such consideration, Mr Henry.
Mr Henry: Right. Could I ask you now to consider this. Would it be fair to say, from the evidence that you have given, that as far as compatibility issues and EPOSS, that you were effectively saddled with Horizon because Horizon had been very, very important, as perceived by the Benefits Agency, because of the fact that there was a way of getting functionality of data passed down to post offices which was, as you said this morning, a significant matter for the Benefits Agency?
David Miller: I wouldn’t say “saddle”, but certainly a change of direction would have involved significant and very difficult changes for Post Office Counters Limited.
Mr Henry: I see, because obviously if you had had a free choice you might not necessarily have gone for Horizon – gone to Horizon for the EPOSS function.
David Miller: In an ideal world we would have – we probably wouldn’t have started with a system that originated with the Benefits Agency.
Mr Henry: Exactly. Could I also just ask you to consider now the issue of rifts and the Project Mentors’ report and you talked about a different angle –
Mr Blake: Sorry, sir, I’m just rising. Mr Henry is straying quite far outside, I think, of the –
Mr Henry: So be it. I was given permission to deal with this document though.
Mr Blake: Is this the final issue?
Mr Henry: Yes.
Sir Wyn Williams: I think I would just like to say generally that I understand the temptation to pick up on points –
Mr Henry: I’m so sorry, sir.
Sir Wyn Williams: – that you think haven’t been quite pushed to their logical conclusion by Mr Blake, or for that matter by me, but the idea is that you ask additional and different points, not go for the jugular so to speak.
Mr Henry: Oh, I’m sorry, sir. I hope I wasn’t going for the jugular.
Sir Wyn Williams: No, no, I’m just being gentle at the moment.
Mr Henry: Very sorry.
I will return to the board minutes, if I may, because we can see from the documents that you were shown this morning that you were also expressing views around that time, for example an email that passed between you and Mr Baines, as to whether Horizon should be accepted at all. Do you recall that?
David Miller: I don’t recall it exactly, but I’m sure there were conversations between me and Keith and other people about whether we should be accepting.
Mr Henry: Exactly, which would be inconsistent with what you are reported to have said at the board.
David Miller: Yes.
Mr Henry: And you were present, weren’t you, at that meeting with the NFSP on 11 June?
David Miller: I was.
Mr Henry: And wasn’t it made clear by Mr Baker, Mr Colin Baker, at that meeting that essentially government had given an ultimatum and you had been told, “You have just got to work with this, POCL have just got to get on and get it done”?
David Miller: I have read those lines in the – in that report.
Mr Henry: Do you disagree with them?
David Miller: Certainly there was a degree – a very high degree of pressure to get on with it.
Mr Henry: Yes. And do you think, sir, that as a result of that pressure it may have clouded – and you can only speak for yourself, sir, but it may have clouded at times your judgment?
David Miller: I was balancing a number of pressures about getting this done and a lot of people in various parts of the UK who were very interested in getting it done, and what was happening on the ground.
One of the problems I’ve got at the minute is there is a raft of documents which will explain decisions that took place between August and probably January, release board papers, acceptance papers, which I have not had sight of, and that would explain why we did what we did in terms at the time and in detail and I have asked and I think the Inquiry has asked on my behalf, but, so far, I’m not aware of those documents being forthcoming.
So I would like to know, in detail, going over the ground, the considerations that took place at the time. I’m not denying that there was significant pressure to be coped with.
Mr Henry: I hope it is apparent by the tone of my questioning that one has sympathy for your position in respect of that but, in conclusion, could I just ask –
Sir, may I be permitted to ask, finally, some questions in respect of POL00028419?
Sir Wyn Williams: Well, you will forgive me for not having that document at my fingertips, Mr Henry. Is this a significant document, Mr Blake?
Mr Blake: I don’t have that document at my fingertips either.
Mr Henry: Paragraph 2.1, sir:
“The incorrect cash account mapping for a stock item would have caused misbalancing cash accounts in all offices.”
Sir Wyn Williams: Well, we’ve got it up on the screen now, so ask your question, Mr Henry.
Mr Henry: I’m very grateful.
The date of that document, sir, can you help? Is it September –
David Miller: It is.
Mr Henry: – or is it earlier?
David Miller: Oh, no, sorry. Is it the 3rd – March –
Mr Henry: March. And so this would have been before the letter to Mr Gaskell. Again, the rift with the Benefits Agency would have been apparent by then, would it not?
David Miller: The rift with the Benefits Agency, in my mind, is very much when they – when we were told that they were leaving the project.
Mr Henry: Yes.
David Miller: We were aware, because of the various reviews going on, that they wanted to leave the project, but I think that – I mean, that was a fraught period.
Mr Henry: Of course, we know that they left the project in May 1999?
David Miller: Yes.
Mr Henry: Then, by June, agreements had been signed?
David Miller: Yes. I mean, those agreements were quite heavily prescribed in the agreement that was done by the Treasury board, and so on.
Mr Henry: Thank you. Because at 2.1, we have – you remember the reduction in the number of transactions throughout the cycle. Do you remember reference –
Mr Blake: Sorry, can I just ask Mr Henry which rule 10 question this relates to?
Mr Henry: Well, I’m afraid it doesn’t and I was hoping for a little bit of indulgence.
Sir Wyn Williams: Well, I think – just tell me what the point is, Mr Henry, rather than – is there a specific point in this document that I should underline, so to speak?
Mr Henry: I suppose it is the question about whether you would want to do your driving test in London or whether you would choose to do it in the Highlands, because it’s basically – I wanted to take the witness, Mr Miller, if he could, to help me about reading between the lines about the reduction in the way in which testing was managed by all parties.
Sir Wyn Williams: Well, I think we will call it a day, if we may, Mr Henry, and I think I would like to say –
Mr Henry: I do apologise.
Sir Wyn Williams: – that as a result of the evidence that I have heard in the last two weeks, I’m not suggesting for a minute that what occurred in the run-up to the Benefits Agency removing themselves from the contract is irrelevant, but I’m becoming increasingly of the view that what happened afterwards is much more significant, as far as I’m concerned. All right? Just to give everybody a broad hint.
On that happy hint we shall adjourn now and start again at 10 o’clock on Tuesday. Thank you.
Mr Henry: Sir, thank you very much for your indulgence.
(1.49 pm)
(The Inquiry adjourned until 10.00 am on Tuesday, 1 November 2022)