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In Strictest Confidence
Meeting with George Thomson
March 13th 2012
Agenda items:
Horizon reliability
NT discussions
BIS select committee
Remuneration claim
Mutualisation
Strategic Partnership Board
AwaYND
1. Horizon reliability
George’s has 2 main issues arising from the recent failures:
e Is Horizon capacity capable of handling the peak volume periods?
e What compensation will POL pay subpostmasters for these failures and how does this
align to what we have received from Fujitsu?
Various briefings have been provided related to the incidents and a Board Paper has been
submitted outlining the position. (This will be in the pack for the Board, but can be supplied
separately if required).
Regarding his issue around capacity, suggested lines to George should be taken from the
briefing prepared by Comms:
The four service incidents have all had a different root-cause and have not been connected to each
other. As each incident has been different, we have identified the root cause of the issue and put in
place mitigating actions to prevent the same issue from happening again.
@ 27th July 2011 — Pin pad failure caused by a change activity
12th December 2011 — Horizon service failure caused by a hardware failure
© 1st February 2012 — Card account failure caused by a change activity
@ 1st March 2012 — Horizon service failure caused by a hardware failure
As well as taking lessons learned from each incident, we have also put in place additional changes to
make sure we have more rigorous testing and evaluation before we introduce anything to our live
environment. Fujitsu Services has also put in place further improvements to monitoring and alerting.
So we have a more fundamental overview of our IT services, we are putting an independent person
in to complete a full review of our IT infrastructure to prevent further service issues.
With regard to his claim for compensation, current Goodwill Payments agreements only kick
in if service is lost for more than 48 hours, so these do not apply. Of the 4 incidents, one has
resulted in a payment from Fujitsu to POL (£250k) — George is not aware of this.
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The most recent incident will only give rise to a payment if service levels decline further
through March. We have no plans to make any payment to agents — any payment would be
subject to business case and ET approval.
2. Network Transformation discussions
Following the workshop held 15" and 16" of Feb, 2 follow up workshops have been held:
e 7" March — Operational workshop whereby Mervyn and Paul Haines were
taken, in detail, through our implementation processes. Feedback was that
they recognised (and were somewhat overwhelmed by) the high volume of
detailed activity that had been undertaken and were pleased with the
robustness of the proposed processes.
e 8" March — Follow up with George and Mervyn on key contractual issues.
Agreement has been reached on the majority of areas and the letter to George
outlining this and required necessary actions is attached. We are pleased with
progress and the collaborative way we have achieved agreements so far. Key
outstanding issues are:
i. Items for inclusion in the compensation payments — we have improved
our offer in this area but NFSP may still be looking to include some
transition sums which we have said we will not include.
ii. Year in which compensation is calculated from — NFSP are looking to
give the option of best year from 2008/09 at any point in the
programme. Our position is that it must be from best in 3 previous
years (and this would start with 2009/10) with an exception for any
branch that volunteers in year I but is prioritised to a later year,
whereby we would honour any compensation offer made, which would
equate to 2009/10 onwards.
[ EMBED AcroExch.Document.7 ]
3. BIS Select committee
Mike Granville has provided a separate note (March 9") on this and will be preparing a
schedule of briefing production, discussions and potential rehearsals over the next few days.
Date has been confirmed as 15‘ May.
4, Remuneration claim
No further conversations have been had with NFSP since their demand was submitted,
pending gaining a business mandate to make a formal response.
This mandate has now been given:
e Up to £3m from 2011/12 budgets as a one off payment distributed (via discussions
with NFSP) across all branches (excluding outreach & satellites)
e Re-distribution of some of the remuneration arising from 2012 RM Tariff increases
into one off sums for branches on CTP to alleviate reduction in CTP arising from un-
freezing
e Flow-through of remainder of remuneration arising from RM Tariff increases
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In Strictest Confidence
Subject to any discussions arising at the 121, the intention is now have an off-line
conversation with George to sound out his reaction to our proposal. This is likely to be
towards the end of w/c 9" March in order to allow outstanding NT issues to be resolved.
5. Mutualisation
George is beginning to turn more attention to this. He is clear in his mind that there needs to
be commitments, via appropriate Parliamentary approval, prior to the next election as he
would be sceptical of the next Government having the same aspirations as the coalition.
He is beginning to shape his thinking around how the Board and Trustees could be
constructed — an initial view on this was outlined in NFSP’s submission to the consultation,
whereby they were part of the Trustee Board representing all agents (including multiples).
Alice is meeting George on March 15" and there are a series of pre-mects leading up to this
that will refine our current thinking from the work already prepared. The first of these is
Monday am (Kevin, Sue, Nick) followed by Paula/Kevin on Monday pm.
A further update to this briefing will be made as required following these meetings.
6. Strategic Partnership Board
Current thinking/positioning is that the re-establishment of the SPB is part of the journey to
Mutualisation.
One of the requests NFSP made during the NT discussions was a platform for discussing
Network Policy etc and we have agreed the SPB will be the mechanism for this.
We have drafted a TOR which will form part of the pre-meet review to the Alice/George
meeting and then be shared with NFSP for input.
NFSP are on board with this approach — main sensitivities are likely to continue to be sharing
sensitive information.
Update on additional topics that might be raised:
7. Additional expenses payments to NFSP
George has sought an additional payment of £286k to cover additional NFSP costs (£180k)
incurred in supporting POL strategic activity and a further amount (£106k) to fund a DVLA
lobbying campaign.
Sue has discussed this with Chris Day and subsequently with George. We are able to
recommend a contribution of £200k as an exceptional facilities payment made up of £100k
towards campaigning activities and a further £100k towards NFSP’s exceptional NT related
costs, funded from NT budgets.
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Sue has indicated to George that this payment can be made swiftly but we would expect him
to have agreed the outstanding elements relating to the NT contractual discussions.
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