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goysth
09/87 to 108 POST OFFICE BOARD
Minutes of the meeting held at 148 Old Street
on4 September 1999
ville Bain Chairman
Oey Roberts Chief Executive
Richard Close Managing Director Finance
Jerry Cope Managing Director Strategy & Personnel
Mike Kinski Non-Executive Member
Miles Templeman Non-Executive Member
Rosemary Thorne Non-Executive Member
Richard Adams Secretary
Scott Childes Notes
stuart Sweetman, Managing Director Post Office Counters Limited.
Kevin Williams, Managing Director Parcelforce Worldwide
Jonathan Evans, Secretary Designate
Others attending: Mick Linsell, Managing Director Service Delivery for
POS9/91 to 94
Bob Peapie, Director Personnel & Employee
Development, for PO99/94.
Andrew Wilson, Director POSIS, for PO99/95
Alan Jackson, Director Purchasing Services for
PO9S/96
Roy Chapman, Chairman, POPTL, Michae! Duncombe,
Chief Executive POPTL, Gerry Degaute, Finance
Director, POPTL, Terry Arthur, POPTL Trustee, Bill
Flaherty, POPTL Trustee for POS9/S9
APOLOGIES PO99/87
John Lioyd and Richard Dykes were unable to attend.
MINUTES OF PO99/88
PREVIOUS MEETING
The Board noted.
20 July meeting;
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CHAIRMAN’S
BUSINESS
Gi)
(iv)
Action (vy)
John Roberts
CHIEF EXECUTIVE’S
REPORT (POB(99)55)
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POsg/90
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Standards. The procedure for dealing with
Pi ints, particularly those arising from customer
Service call centres, was being reviewed by the Controller
Chairman's Office in liaison with the Head of Customer
Services. There was a concern that computer generated
responses tended to be dismissive and failed to address
customers’ concerns. A similar problem occurred in many
large organisations although improvements were possible
through positive management.
Strategic Plan. On 6 September the Chairman, Jerry Cope
and David Bum, Strategy Development Director, had met
Alan Johnson, The Post Office Minister, together with
senior officials from the Treasury and 10 Downing Street,
to discuss the Strategic Plan; this was the first occasion
that The Post Office had had an opportunity to present a
Strategic Plan to Ministers. The meeting had gone well
although some of the time was spent discussing Royal
Mail's Way Forward Agreement. it was also somewhat
surprising, given the significance of the meeting, that no
actions had emerged for The Post Office to pursue.
Government's response to the Plan was not expected for
at least six weeks. Alan Johnson's appointment as The
Post Office Minister was believed to be a deliberate move.
It remained to be seen whether, as a fairly junior Minister,
he had the weight to support The Post Office in
discussions with other Departments.
Arrange for the current customer complaints process to be
reviewed, in particular the style and tone of computer
generated responses, and of call centre effectiveness.
PO99/91
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(iv)
(v)
(vi)
(vii)
(vill)
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Horizon. When the Board last met in July (PO99/79),
POCL's Horizon Programme Director had been confident
that system acceptance would occur as planned on 18
August. Unfortunately, three high priority acceptance
incidents around training, stability of the system (lockups
and screen freezes) and quality of accounting data,
remained unresolved and whilst ICL did not accept the
categorisation of these incidents, they had nevertheless
resulted in acceptance being deferred until 24 September.
A decision on national rollout had also been deferred
although POCL had agreed to continue with live trials with
the number of offices operating the system extended to
900.
Progress on training had gone well and the incident had
now been downgraded to medium priority. However,
system stability and accounting was still being analysed
and rectification was not expected before December.
Under the terms of the revised contract, signed at the end
of July, the final acceptance date was 15 November 1999
and it remained uncertain whether the pians that were
currently in place would enable this deadline to be met.
Counters was clear that the system would only be
accepted if it achieved the necessary service standards.
it was noted that
The continued rollout of the system to a limited number of
offices was at no cost to Counters who would not make
any payments to ICL until the system had been accepted.
However, the logic behind this approach was questioned
as serious doubts over the reliability of the software
remained. It was also felt that by continuing unchecked it
might also be harder ultimately to refuse to accept the
sysiem.
In continuing with rollout the momentum that had been
established with regard to training and education of staff
using the system was maintained and valuable operating
experience gained. Stopping for even a short period of
time would lose this momentum and also undermine the
morale of employees and particularly subpostmasters. The
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decision to continue had not been taken lightly but had
been in the knowledge that financially the business would
Not suffer and that it in no way altered the fact that the
system would not be accepted if it did not work. Rollout
would not go beyond 900 offices. Notwithstanding this,
the decision to continue would be reviewed
(ix) The appointment of Alan Johnson MP to succeed fan
McCartney as The Post Office Minister had interrupted
negotiations with DSS on a revised commercial
arrangement. Whilst The Post Office proposals had not
been rejected, it was unlikely that Treasury or OSS would
be prepared to alter their position. The ‘gap’ between DSS
and POCL was £400m. An independent review of the
charging arrangement was possibly the only way forward
should it not be possible to reach an acceptable
agreement with DSS.
Stuart Sweetman (xiii) Review the decision to continue with the limited rollout of
Horizon to 900 pilot offices.
FINANCIAL PO99/92
OVERVIEW [ronnannesmenstnannnennsnnnsnnanneinennsnnenaneiiinnnntnniieng
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(xvi) The audi
ICL agre
vad Now accepted that whether or not the
ment was concluded before the half year, it
could be accounted for within The Post Office half year
accounts.
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(xviii) wing full year profit figure be released
AUDIT COMMITTEE PO99/93
REPORT
(i) The Audit Committee had highlighted three key areas of
concern:
¢ the level of spend on external consultancy;
* the impact on implementation of Royal Mail's
productivity scheme given the rejection of the
Way Forward agreement; and
* the apparent inadequacies in the working
relationship between the businesses and IT
providers in major projects.
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(ili) The SCS programme would result in a restructuring of IT
Services and this would go someway to improving the
relationship with the Businesses.
Action (iv) Review and report back to the Board on the extent to
John Roberts which external consultants are used and the
appropriateness and value for money of this work.
Jerry Cope (vy) Provide the Board with a descriptive paper on apparent
inadequacies in the working relationship between the
Businesses and IT and how this was being addressed.
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POST OFFICE POS9/95
SECURITY
(POB(99)56)
(i) Security was taken very seriously across The Post Office
where unfortunately, a number of employees faced
serious injury and occasionally death in the course of their
duties.
(ii) 75m letter items were handled each day, £250bn handled
each year and 18,000 outlets managed. The Post Office
operated its own prosecuting authority with no reliance
upon the Crown Prosecution Service or Police. 700 people
were employed within The Post Office's security
community.
(iii) Although losses through burglary and robbery had
lessened in Cashco, The Post Office’s cash distributor, it
had increased in both Royal Maii and Counters. in overall
terms losses had decreased in the year to £8.2m
compared with £10.1m in 1997/98. One criminal gang
(three people) had recently been arrested in the
Manchester/Liverpool area, believed to have been
responsible for a large proportion of the losses. Certainly
since their arrest the level of losses had reduced. Robbery
was much more prevalent than burglary and this had a
greater impact on employees as the majority would come
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(iv)
(vi)
(wii)
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face to face with their attacker. Insurance only covered
losses over £1m.
Under the SCS programme it had been decided to retain
Security within Business Units, de-centralising security
and investigation resources wherever possible
Additionally, a more rigorous performance management
regime was being introduced which would facilitate the
monitoring of success against a number of high level KPIs.
Since the last Board report (PO98/15) substantial progress
had been made with regard to information security. In fact
The Post Office was now used as benchmark for other
organisations.
The protection of employees from violent attack was
paramount and to help reduce the tevel of risk, investment
in Counters to ‘harden’ the network was continuing with
780 of the 4,000 offices most at risk having had their
security equipment significantly upgraded. Some
displacement of attacks into other areas had occurred.
With increased commercial opportunities, it was important
to ensure that Post Office assets were properly protected
and that opportunities for fraud were minimised.
It was noted that
Whilst some staff saving could be made through the
outsourcing of specialised services, such as finger printing
and forensic work, the day to day operation could not
easily be placed outside the business. The Police service
had no desire to take on what was largely time consuming
investigative work. Staff numbers would have to be
reduced across Royal Mail and the network.
Thanked Andrew Wilson for his informative presentation
and report.
Endorsed the approach being taken to manage the
Corporation’s key security issues and the associated risks
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PROJECTS PO99/97
APPROVED BY
MaPEC & REQUIRING
ENDORSEMENT BY
THE BOARD - GEMINI
(P0B(99)58)
(i) The opening of the two fully automated hubs had been
delayed due to the late delivery of an upgrade to the
Parcel Management System. The operational functionality
of the International hub had been set for 11 October 1999,
one month later than scheduled. The National hub was to
be used in a semi-automatic mode from the Spring 2000.
fc) Additional net costs of £9.1m on construction and the
provision of alternative IT solutions had been approved by
MaPEC in the context that the project's overall NPV had
improved by £17m.
It was noted that
(iti) Post Office Information Technology Services (POITS) had
significantly underestimated the complexity of the facility
and whilst individual elements of the system had been
approved or were on an approved list, the IT system was
an entity had not been evaluated as an overail discrete
entity. In hindsight this piecemeal approach was probably
mistaken.
{iv) External quality assurance had now been brought in to
ensure completion by the due date
Ww) Re-endorsed the Gemini project at an increased sum of
£122.2m.
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APPOINTMENT OF PO99/102
NEW SECRETARY
{POB(99)63x)
(i) The Board noted with regret that Richard Adams was to
retire shortly and that this was his last Board meeting.
(ii) On behalf of colleagues the Chairman warmly thanked him
for his help and support during his time as Secretary and
wished him weil in the future.
(if) Appointed Jonathan Evans Secretary of The Post Office
with effect from 25 October 1999
(iv) Revoked with effect from 24 October +999 the authority
for authentication of the seal of The Post Office granted to
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Richard Adams in minute PO97/101.
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DATE OF NEXT PO99/105
MEETING
The next meeting was scheduled for 26 October 1999, at
148 Old Street.
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