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From : Jan McCartney
To : Secretary of State
9 February 1999
HORIZON PROJECT
1. I regret having to bring this matter to your attention when I know that there are so many
other issues, outside my portfolio, which are taking up your time. 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.
2, 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.
3. 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.
4. 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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5. 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.
6. 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.
7. Iam, therefore, seeking your agreement to me writing to Alan Milburn tomorrow,
seeking an urgent meeting with him on the Horizon project in the context of our pressing need
to make progress with the White Paper.
Tan McCartney