POL00039877
POL00039877
76: JONATHAN EVANS 4B
9 i ° .
RESTRICTED - POLICY &
e I COMMERCIAL
Horizon Working Group Members
TO: Adam Sharples HMT. FAX: {I DATE: 6 November 1998
Adrian Mortague = HMT I ;
Ross Newby - HMT ! I
Yoseph Halligan © HMT
Elizabeth Hambley. HMT I
David sibbid DII I PAGES: 7
e Isabel Andeison DTI i !
Jeremy Grup CITU
Chis Wood Cabinet Office
Geoff Motel No. 10 .
Jonathan ‘Evins Post Office
George MeCorkell BA”
Chris Nicholion _ KPMG
FROM: Sarah Griham DSS
PED Special Project
Room 535 North West
The Adelphi 4
@ 1-11 John Adam Sifeet
LONDON, WC2N'SHT
MESSAGE: Bs
If you have reveived this fax in error, please call back on the telephone number given
above, and then,destroy the material. Please treat our information with the same
confidentiality that you would expect us to do with yours.
06/11 ‘98 16:13 TX/RX NO. 0044 POL
POL00039877
POL00039877
DEPARTMENT OF SOCIAL SECURITY
: §. The Adelphi, 1-11 John Adam Stree! London WC2N 6HT
Sarah Mullen im Treasury Telephon¢
Parliament Street ' Gin. 391
LONDON
SW1P 3AG
: 6 November 1998
BA/POCL AUTOMATION PROJECT: TOWARDS AN INTER-
MINISTERIAL: DECISION :
1. Thankycu for your letter of 4 November in reply to mine to Adam Sharples of the
day before. i
it
2. I accept thal ‘there may not be much mileage now in amending the version of the
Working Group Refiort that went forward to the Chief Secretary. However, as you say, we
should not paper over genuine differences; and it does not seem right to let the issues that
were unresolved at that, Stage to remain unaddressed by default. It seems to me therefore that
perhaps the best way forward is formally to annotate the version that went forward on Friday
16 October to the effect that, in order to meet the Chief Secretary’s timetable, it was not
possible to gain thelpgreement of all parties on all issues. As I recall, we had the final draft
for comment including some new material) at 6.45pm on the Friday evening and beyond a
brief conversation IL was able to hold with you then, there was no further opportunity. I
recall that David Sibbick also was concerned about the implications of this quick turnaround.
But, provided the reds an overt "caveat " up-front on that version of the report, I am content
to move on and oh to address the issues in your "update" instead.
3. Turning to the meat of our concerns, I remain unhappy about the presentation of the
tisks to. the network under the various options. It may be that the additional work
commissioned by Lord Falconer for inclusion in your "update" report, will sort this out. But
it may nonetheless be helpful in preparing your report, if I stress again that we find it
Sslapp' tnovimulten. LL
06/11 ‘98 16:13 TX/RX NO. 0044
Po2
POL00039877
POL00039877
RESTRICTED - COMMERCIAL & POLICY
it may nonethclesg be helpful in preparing your report, if I stress again that we find it
fficult to understand the basis for the clear statement in the summary of the Working Group
report, that Option’ 2 & 3 are significantly worse for the network than Option 1. This Yeally
is not proven - ‘certainly not in the longer-term. All would accept that, if the Benefit
Payment Card option is pursued via an extended period for the contact, then it buys for Post
Office another wo" to three years of indirect, subsidy via DSS. But the long term future of
the Post Office network must be addressed some time; and as I understand it, a run-down
of around 6 000 offices is envisaged over the next decade to reach a potentially commercially
viable size for the network. What are POCL's plans to deal with this run-down?
Presumably they hive some and this includes a managed run-down. When does it start?
How long does‘the ‘current situation of 200 a year Post Offices closing on an "unmanaged"
basis continue? The Post Office is Claiming that Option 2 means the "unmanaged" run-down
of the Post Office Hrwork - see John Roberts’ letter of 4 November to Peter Mandelson -
why? Why can it not be "managed"? Against this background surely there must be some
probing on the partiot the Working Group about POCL’s view of the dangers to the network
of the various aptichs? Alternatively, you could flag up in your drafting that POCL’s view
is that Options 2 & 3 would be very much worse for the network, but there is an alternative
view that, with 1 properly “managed" programme of run-down these disadvantages could be
minimised (ie. as Qriginally suggested in our comments on the draft report) - and indeed
could be used to enshtre that those Offices with a "social" value to Government are sustained,
unlike the current Position, :
t
4, On this - afid other remaining contentious issues - a way through may be to
distinguish: :
. agreed cross-Working Group views;
. views, which are held by one party or another but are not shared across the
pice}
. views: where the Chair/Secretarlat have used their casting vote in favour of
2 Sslapp\novimullen. 611.
06/11 ‘98 16:13 TX/RX NO. I 0044
PO3
POL00039877
POL00039877
°
RESTRICTED - COMMERCIAL & POLICY
one side or the other.
. t
e.. I
5. On the draft outline, I attach some specific comments, which focus in particular on
the risk, analysin. { think there are also some limitations in any tabular Tepresentation of risk
analysis; and you could usefully elaborate with some additional text.
i
6. On the legal advice, thankyou for arranging for Robert Ricks to come back to me.
We will be taking forward those issues separately.
SARAH GRAHAM _
Department of Social Security
@ -
tov, Cyn Rebs Pets Neth, CE BA
Rein, Certs BR/CKAS Sen Meleg PFO
PED Spek Paject Teor Com Prt . EOL
Cops :
: 3 sitapplnovinnulten.611
OG/11 ‘98 16:13 TX/RX NO. 0044 P04
POL00039877
POL00039877
* RESTRICTED - POLICY & COMMERCIAL
Fy
HMT Draft Ontline Progress Report: Comments
1 Main Body of Document
Very much outline at this stage so comments limited to:
¢ . Assessment of the ICL/PO proposal, This must include details of any
impact on the Post Office E.F.L, position.
* — Next Steps: This section need to emphasise the potential two phase
approach to a negotiated settlement i.e. if ministers decide that Option
.1 isnot achievable they need to decide whether a negotiation around
{Option 2 is to be offered or whether Option 3 (termination) is the
‘preferred route. The-likely outcome is to offer a negotiation around
Option 2 and only if that fails, move to a negotiated settlement around
Option 3.
2. Annex @
A number of coltcerns here. Overall the way the table on objectives is presented
gives an imprestion of an assumed ranking of objectives (A, B, C, D). This is
not helpful . . .
{
Specific conmmelits/ suggested redrafts on the table of option/objectives follow:
Objective At NB. Should not all the options assume that POCL
management will anyway be "managing" a reduction of
the network?
Option 1
- Provides ‘technology platform to secure existing clients inthe short term.
- Ih Jongesi term network threatened by clients moving to more modern,
commercially attractive and readily available alternative.
1
Option 2 'e .
- In gh on promises some level of BA footfall and income.
- In lum term requires managed reduction in network with potential
reductjoniin BA business following migration to ACT; and some potential
increaged security of footfall in those Post Offices where banking services
not rebdily available nearby,
06/11 ‘98 16:13 TX/RX NO. 0044
Sslapplnovikont. 611
POS
POL00039877
POL00039877
RESTRICTED - POLICY & COMMERCIAL
ig
@ - cr term provides sustainable network.
Option 3 « ¢
- Implementation need not be delayed depending on sophistication of
solution and procurement route,
Objective B
No comments: :
Objective Cs What exactly is meant here? Government services like DVLA?
Grr new initiatives?
Option 1
. Don't uifderstand why “PO services"are relevant here.
- “Could support government initiatives” would be more accurate as “may
be able to support government initiatives”,
NB. But at later date, after completion of BPC roll-out (there must be no
diversion of management resources « in ICL or POCL - from the main
requirement).
Option 2
.
- with banking facilities available earlier this must score higher than option
1; and banking would probably support wider Government initiatives (eg
SGA) better than Horizon, and could more feasibly be developed
concurrently/sooner.
Option3 * :
& f
- This assumes the point on delayed implementation is accepted.
Objective D
- . “Trusted brand” - not perhaps quite the right phrase in comparison with
banks? It's perhaps more the "cosiness” factor!
2 sslapp\novlimt.61L
06/11 '98 16:13 TX/RX NO. 0044 PO6
POL00039877
POL00039877
are ; I
i RESTRICTED - POLICY & COMMERCIAL
{
@ Options 2 aad 3
- No cominents
Tuming to the tables on risks these obviously require more work - and I believe
that some assesyment of probability would be useful. Once included, we could
then provide the DSS opinion. Some specific comments follow:
Option 1 i
- Should show an additional risk “Sustainability of services”
Option 2
“ACT aifration delay“ ignores the fact that at BA can migrate to 50%
ACT utilisatio(A without any change to the current practices,
- Difficult] to determine risk management approach for “ICL Commitment“
until details of any settlement are known
Option 2 and 3}
- Researelilandertaken so far has indicated that “reaction of the banks”
would be positive.
3 sslapp\novikint.612
a ene
06/11 "98 16:13 TX/RX NO. 0044 POo7