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The Rt Hon Peter Mandelson MP
Secretary of State for Trade and industry
© Mr Macdonald Secretary of State
Mr Baker CGBPS Department of
Mr Macintyre CII Trade and industry
Dr Hopkins CII : Victoria Street
The Rt Hon Stephen Byers MP Mr Hosker FRM Londen SW2H DET
Mr Fraser IBB os
Chief Secretary to the Treasury
Parliament st Mr Sklaroff COM
London SW1F 3AC eon
ir Osborne Legal C
le December 1998 Mr Sibbick CGBPS emul
Mr Whitehead CGBPS Lo. Mandelson,
Ms Anderson CGBPS
de Pipe File: KR/69
T
BA/POCL AUTOMATION PROJECT Wir Wheeler DM
I was disappointed that our meeting yesterday was again unable
to reach a clear decision on the way forward for the BA/POCL
automation project. The continued uncertainty is becoming
increasingly damaging for all the parties concerned. As I see
it, the choice is a straightforward one:
* to continue with Horizon, we will need to secure heads of
agreement. Within two to three years Horizon will have
equipped the Post Office with a modern IT system, capable not
only of handling the benefit payment card, but also front-end
banking facilities in conjunction with the commercial banks.
This will help us to implement our social banking policies,
and to bring modern electronic government into communities
which ether organisations simply do not reach.
* ox we can take a major step into the unknown, delaying the
modernisation of the Post Office Counters network, risking
the departure of existing clients and virtually eliminating
the possibility of attracting new ones. The damage to the
confidence of subpostmasters and the knock-on effect of
network closures will produce political fall-out, no matter
how carefully we try to handle it. The reduction in the
network will reduce our ability to extend social banking and
modern government into the very communities we most wish to
target. Our relations with Fujitsu, a major inward investor
into the UK over the past decade, would be severely damaged,
as would the credibility of PFI.
dti
Department of Trade
nausery
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There is still some way to go to complete the Horizon project
but the basic development work has been thoroughly evaluated by
independent experts who have pronounced it viable, robust and
of a design which should accommodate future technological
developments. It can provide a seamless transition for benefit
recipients from existing outdated paper based systems to
eventual ACT, the end-game on which we are all agreed. The
price which we are now asked to pay is higher than we had hoped
but is one which the Post Office believe will make commercial
sense for them. Certainly, against the cost of any alternative
we should need to add the costs of terminating Horizon, which
could be considerable,
I believe the only sensible choice is to proceed with the
Horizon project. It is the way forward which offers the least
commercial and technological risk. We still need further
clarification of certain elements of the ICL package and there
ig still scope through further discussion with the company to
secure improvements to elements that are of key importance to
us, particularly acceptance procedures. Adrian Montague should
pursue these aspects urgently.
Jan McCartney and I stand ready to contribute in any way we
can. I regard it as one of my highest priorities to put in
place the automated system that will provide the unique channel
for delivering oux ambitions on social banking and modern
government .
I am copying this letter to the Prime Minister, Alistair
Darling, Jack Cunningham, Charlie Falconer and to Ian McCartney
here.
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