Actual letter :
From: Geoff Mulgan (9 December 1998)
To: Prime Minister (cc Lord Falconer, Jonathan Powell, David Miliband, Jeremy Heywood, Geoffrey Norris, Sharon White)
Horizon, ICL and the Post Office
1. A decision now needs to be taken on whether to proceed with the Horizon project. You will recall this is the initiative to automate the Post Office network, involving ICL. The project is nearly three years behind schedule, having been plagued with problems. Negotiations have been underway since the summer to find a way to continue the project.
2. The sums involved are big. Total spending, through DSS contracts, will be around £5bn between now and 2008.
3. After a tough period of negotiation ICL has made an offer which represents a significant move. Acceptance would still cost the government around £200m more than previously envisaged; equally, ICL would be set to lose £270 in total on the project. Their offer still leaves a significant gap with the government: £110m on funding, as well as differences over the practicalities of implementation. But the Post Office would be prepared to meet the funding gap out of existing resources, and, despite the continued opposition of the Benefits Agency, it will only certainly now be possible to reach a settlement