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"98 17:40 FA)
© July 1998 “A
Mr Frank Field MP
Minister for Welfare Reform
Room 216
Richmond House
79 Whitehall
LONDON
SW1A2NS
Yeax Fate,
T enclose a letter I have sent today to Ian McCartney setting out our views on the best way
forward with the Horizon project.
Sf you would find it helpful, I would welcome another discussion with you to cxpand on any
of these points further.
b THE POST OFFICE
’
(oscus
JOHN ROBERTS CBE
09/07 '98 16:41
CHIEF EXEC PO
ahunanecaccenaees
JOHN ROBERTS Coe
Chief Exceutive
148 Old Street
LONDON
ceIV gH
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RS CHIEF EXEC PO Hoo
THE POST OFFICE
July 1998 camer txrcumive
148 Old Street
LONDON
ECIVSHQ
Mr Tan McCarincy MP nme
Minister of State
Department of Trade & Industry
1 Victoria Street
LONDON
SWIH 9ET
Dea . ar .
J am aware that final decisions on Horizon are imminent. I felt ¥ should set down our
position, based on our current understanding of the issues, including discussion with
officials and the outcome of the independent pane! set up by the Treasury to
investigate the Horizon programme.
_ Our unequivocal view is that the Horizon programme, and with it the Benefits
Payment Card, should proceed. Not only are we firmly convinced that this is in the
best interests of the commercial future of The Post Office, but also that it will help
fulfil Government’s wider ambitions. We are in no doubt that the programme is now
capable of heing implemented successfully - a conclusion also reached by the expert
panel, .
We also recognise, as does the panel, that there will need to be some discussion and
negotintion among the contracting parties, and a further strengthening of programme
Management arrangements. The Post Office stands ready to play its full part.in this. It
‘will be important to ensure that arrangements are reached which do not leave any of
the parties in unsustainable positions. As part of these discussions, we will need to
plan seriously for the eventual take-up of other services such as universal banking.
For us, this means being allowed cnough time to put a new commercial model in place
before the Benefits Agency makes its major switches to payment through the banks.
Otherwise POCL, with ils slender margins, could easily get into a position of
unprofitability and instability - and with it rapid network decline or the need for
subsidy. This is something the Post Office Board could not countenance. We are
pleased that the Treasury panel also recognises the need for a transitional period to
achieve a viable way forward.
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The panel also identified‘an option of continuing with Horizon but abandoning the
Benefits Payment Card. We see this almost as a contradiction - the kcy design feature
for Horizon has bccn as:a platform to support the card - but more importantly we fail
to see how this would be a feasible option. In essence, we fear that it would be
impossible to support the costs of the Harizon infrastructure without the assured Jevels
of Benefits Agency payments, and the millions of customers, which the card would
bring. Moreover, we see that the payment card wauld be a popular, reassuring and
fraud-free step to more widespread usc of banking. While we have some ambitious
plans for introducing new business to POCL - which would make use of the ICL
system - these would be insufficient to support the costs of Tlorizon, which we would
theri be bearing alone. All these factors make us conclude that The Post Office could
not support this option. 1fDSS wish to abort the card, it would not necessarily follow
that we would wish, or indeed be able, to continue our contracts with ICL.
I fully recognise the complexity of the decision being faced. There are a number of
- important factors which need to be balanced - long-term value for money for the
taxpayer, flexibility and choice for the customer, the reasonable aspirations of the
contracting parties and - an aim shared I believe universally - the avoidance of
‘uncontrollable disruptions to the Post Office network. Continuing with Horizon and
the card, and in parallel developing new services, offers us all the best chance of
achicving that result - and will help create the modern Post Office enterprise for the
next century. .
lam copying this letter to the Minister tor Welfare Reform.
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