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To: ci: Sir Michael Scholar
SECRETARY OF STATE } separate Mr Macdonald
MRMCCARTNEY _} copies Mr Baker GBPS
Mr Macintyre cil
Mrs Britton PORT
From: ( Soult 2-6, Mr Se4brook COM
DAVID SIBBICK =" 3 raser IBB
DIRECTOR POSTS ir Hosker FRM
I I ud Dr Hopkins cll
Mr Osborne Legal C
G RO i Mr Whitehead CGBPS 1
Lo Ms Anderson CGBPS1
Mr Corry SpAdv
SEW LEN ETE Ms Moore SpAdv
POCLAICL AUTOMATION PROJECT HORIZON
1. Your asked for advice on terms of reference for the Working Group under the
chairmanship of Mr McCartney to take forward the work on Horizon following the
agreement reached last weekend.
2. There are, I think, four separate issues. First there are the negotiations between
POCL and ICL that need to take place over the next 2-3 months to put in place the
detailed contractual arrangement that will give effect to the outline agreement reached
last weekend. These negotiations will need to be carefully monitored, and any sticking
points addressed and resolved. There is clearly a role here for Mr McCartney,
supported by officials, though it is less clear whether the Communications Workers
Union (CWU) or the National Federation of Sub-Postmasters (NSFP) will be able to
contribute much to this process. Nevertheless, both organisations will be anxiously
awaiting a successful conclusion of this phase, and keen to contribute in any way that
they can. This next phase of the process therefore seems one that could sensibly
form a part of the remit of the Working Group.
3. The second issue is to ensure that the remaining development phases of
Horizon, including large scale live trials are completed without further slippage; and
most crucially that the rollout of the system following acceptance to all offices within
the network is accomplished in a smooth and timely fashion. The CWU and NFSP
members will be in the front line of the action during these phases, and both
organisations have much to contribute to the successful completion of these phases.
These aspects of the project should clearly fall within the remit of the Working
Group.
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4. The third issue is how to maximise the commercial potential of the Horizon
platform. Here I suggest that the wide experience of daily face-to-face contact with
the Post Office’s customers should give the both CWU and NSFP the ability to
contribute significantly to the task of identifying potential commercial applications
which could be delivered through the Horizon platform. Given that there is no longer
to be a base of some 15 million smartcards carrying a Benefits Agency application, the
task of finding replacement business, particularly based on smartcard technology,
together with associated revenue streams, now becomes one of the pressing issues
facing POCL. It is significant that the CWU have already suggested, and have
followed up with Frank Dobson, the possibility of a smartcard- based interface
between the citizen and the National Health Service utilising the Horizon platform.
This work should, I suggest, also be central to the remit of the Working Group,
and can be ongoing for as long as it appears productive.
5: The fourth issue is how POCL is to be funded in the medium and longer term
future once some £400 million pounds of revenue from BA (and no doubt further
revenue streams, for example DVLA), begin progressively to walk out through the
door from 2003. This is of course a much wider issue than the £480 million pounds
we will contribute to the capital cost of the Horizon project. To the extent that POCL,
with help from the Working Group, is able to drum up new sources of revenue from
exploiting the Horizon platform, POCL's funding gap will be less would otherwise
would have been the case, but is still likely to remain significant. The options facing
Ministers will lie between large - hopefully controlled - reductions in the network;
direct subsidy to replace the lost revenue streams; or reserving to POCL areas of
Government business which POCL will then be paid for delivering. This broader
issue on the future of POCL and how it should be financed is the subject of a
separate and parallel submission to you this weekend. It is an issue which will
need to be decided in consultation with a number of your colleagues. The report of
Martin Baker's Steering Group leading to the 7th December statement on the future of
the Post Office was informed by the work of a Working Group on Counters Issues,
with very broad interdepartmental and government agency representation. I suggest
that it is again in such a wider forum that this work needs to be taken forward
rather than in Mr McCartney's much more restricted and non governmental
working group. I have therefore excluded it from my propose terms of reference,
which are:-
SUGGESTED TERMS OF REFERENCE
In relation to carrying forward the work on the POCL/ICL Horizon project:
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e To oversee the negotiations between POCL and ICL which will develop the
letter of agreement signed between the parties on 24 May into a Codified
Agreement governing the contractual relationship under which the project will
be taken forward; and to facilitate solutions to any problems which may arise;
e To oversee, to contribute actively to, and to facilitate solutions where problems
arise, the completion of the development phases of the Horizon project, and in
particular the smooth and timely rollout of the system to all offices within the
post office network; and
e To contribute through ideas, contacts and other practical measures, to
maximising the commercial potential of the Horizon infrastructure, thereby to
the future viability of the post office network as a whole.
SUGGESTED MEMBERSHIP
DTI (Mr McCartney to chair, support and secretariat provided from CGBPS1;
other Directorates - CII, Legal, IBB, FRM may also wish/need to be represented,
or to see papers), POCL, CWU, NFSP. ICL would not formally be a member,
but would be invited to attend meetings as appropriate.
MEETINGS
Once every three weeks (additional ad hoc meetings as necessary) during the
negotiation and development/rollout phases; less frequently thereafter.
6. If you are content with these proposals, I will draft letters of invitation to the
Post Office, CWU and NFSP; together with a letter to ICL telling them of the
arrangement.
DAVID SIBBICK
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