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DRAFT MINUTE FOR THE SIGNATURE OF MR McCARTNEY TO THE
SECRETARY OF STATE
HORIZON PROJECT
As you know, I have been working with officials on the preparation of an initial
draft of our White Paper on the future of the Post Office.
In this context I have become increasingly concerned at the lack of any DTI
involvement - or even feedback - on discussions with ICL to find a way forward for
the BA/POCL automation project Horizon. This project is so central to the future of
the counters business of the Post Office that it is difficult to see how, in practice, we
could issue our White Paper on the future of the Post Office before we know where
we are going on Horizon.
You will recall that Jeremy Heywood's letter of 28 January agreed that a senior
Treasury official, Steve Robson, should lead a further approach to ICL to see
whether a way forward could be found for the project which better met wider
Government objectives, but that if no such "improvement" could be found, then we
should go ahead with Horizon with the benefit payment card on the basis of ICL's
offer contained in their letters of 9 and 18 December.
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Officials tell me that Steve Robson and one other Treasury official have apparently
had two meetings with ICL, the second more than a week ago. Treasury officials
say that they have been forbidden by Charles Falconer and Alan Milburn, who
jointly gave Robson his marching orders for the meetings with ICL, to discuss what
transpired at those meetings or indeed since. Our officials believe privately that at
them, ICL were asked for a technical view of how certain Government objectives
including an early move to the payment of benefit through ACT, the introduction of
social banking and the early introduction of a smart card has a basis for access at
post offices to new electronic services under the Modernising Government
initiative. ICL duly responded as requested and were then put under great pressure
to sign up to these suggestions as a proposal which they could support. ICL rightly
and angrily refused, pointing out that they had put forward as requested certain
suggestions of what might be technically possible. They had not at any stage been
asked whether they believed that there was either a commercial or financial case for
taking forward such suggestions which involved dispensing with the benefit
payment card. Their view remains that the only commercially and financially viable
way forward lies through the initial introduction of a benefit payment card, its
subsequent and early migration to a smart card, and the building of other services
such as front-end banking and electronic Government on the back of that.
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This outcome was apparently reported back to Charles Falconer and Alan Milburn,
but not more widely. Since then there has been complete silence with, so far as we
have been able to establish, no further contacts with ICL, with ourselves or with
DSS, or with POCL or BA.
I regard this as a wholly unsatisfactory way of proceeding. It seems unlikely that a
process which excludes all the main protagonists will arrive at a solution which has
so far escaped us all despite a year of careful study, yet which we can all accept. In
the meantime, if what has transpired is as our officials believe to be the case, there is
a serious risk that we will lose ICL/Fujitsu - exactly the outcome that No 10 have
made clear they wish to avoid. I see it as essential that we put ourselves back into
the decision making loop before more time is wasted pursuing unrealistic and
unacceptable options. I propose, therefore, to write today to Alan Milburn on a
personal basis seeking an urgent discussion with him on the Horizon project in the
context of our pressing need to make progress with the White Paper. I will keep
you informed of what transpires.