POL00028649
POL00028649
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ao 9 JUL 1998
To Paul Rich bvibd
seowesJonathar Evans””
David Morphey
Dav€ Mill
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From Mena Rego 8 July 1998
Subject: TREASURY WORKING GROUP: HORIZON
From the tenor of questions from DTI as well as sight of Hamish Sandison’s
comments on the draft Working Group Report it is clear that for the Working
Group option 2 (ie BA terminating its contract with ICL/Pathway and ceasing
the Payment Card - buying off ICL Pathway with compensation and
continuation of its contract with POCL including provision of front end
banking services) is currently running at least neck to neck with continuation
of the programme - if not slightly ahead! This is the option Frank Field has
also espoused.
If this is the case then we do need to be very clear in our mind whether we
wish to continue with Pathway without a payment card.
The preliminary conclusion of the Deep Pink Team is that it would only be
worth POCL continuing with Pathway if:
1 The commercial terms for continuation and future partnership working
with Pathway are right and any costs of termination/structural change
of the solution are met upfront by Government. (NB: cessation of the
payment card is likely to mean re design/ further delays to the
programme).
2 Pathway’s technical solution is “best fit” for an emerging POCL
strategy ie Network Banking, Smartcard services, kiosks etc.
This means that we have to get the message across very clearly to
officials/ Ministers that we are not a pawn in the game between DSS desire to
exit and Treasury /DTI desire to prop'up ICL and that if BA cease the
payment Card we reserve our right to make our own decision on
continuation/ extension of the contract or termination and this would depend
on our satisfaction on the 2 points above.
As you know I am concerned that DTI continue to maintain Chinese walls
between us and the Working Group ie asking for information/clearing
numbers but not really indicating the thrust of the Working Group’s
Rich53
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deliberations. Unless Sibbick is more forthcoming with Jonathan, we need to.
find out what is going on from other sources ie Stuart to Harry Bush?
If we cannot get in to see Ministers ie Field and/or McCartney then we need *
to put our position formally in writing so that it does not get overlooked or
watered down by DTI/ Working Group.
Thad a conversation with Liam Foley yesterday (he rang). He expressed
concern that we were not getting together more on briefing DTI/Treasury etc
- I fudged about needing to be seen to be playing it straight etc but challenged
him on
¢ Pathway’s continuing references to subsidy - implications for Competition
Law etc
¢ The outrageous nature of Pathway’s incentives paper ie hidden price rises
of £250m or more
¢ The need for POCL not just DTI/Treasury to be satisfied that Pathway
could provide a suitable Banking solution. He was adamant that they
could and said he would be happy to set something up for us to pursue this
point with Pathway Do you want to take up this offer?
Iknow you were holding various meeting with “experts” on our
requirements in terms of a Banking solution. Are we any further on this?
Will it be part of the 60-90 days McKinsey programme streams? This is a key
piece of information in the decision making process whether POCL should
continue with Horizon on its own and decisions may be needed in the next
few weeks, earlier than the 90 days for the strategy streams.
Can we discuss this afternoon please?
Mena