1.28 By late April 1999 the main remaining alternative to outright termination of the entire project was that Post Office Counters Ltd would extend arrangements that would allow them to cash benefits paid by the Department of Social Security into existing accounts at the commercial banks. This option eventually formed the basis for the agreement with ICL plc, which comprised:
■ Cancellation of the benefits payment card system;
■ A fixed payment contract to Pathway for rolling out by 2001 the basic post office automation infrastructure to support post office services and to support the national use of bar-coding of benefit order books to reduce encashment fraud;
■ Development of a network banking strategy by Post Office Counters Ltd with a view to introducing extended banking facilities in good time for the start of the withdrawal of paper-based benefit payment methods in 2003; and
■ the Department of Social Security to take no active steps in marketing bank transfers as their normal method of payment until 2003, to allow the Post Office an adequate period to manage the transition.
The Government saw this solution as giving Post Office Counters Ltd the earliest route to automation and through this, further comfort to sub-postmasters about maintaining their customer base and support for the Post Office's strategy to sustain its long-term commercial viability by developing new services and allowing it a reasonable time to achieve this. It also reduced the complexity and risk of the automation project.
1.29 On 24th May 1999 the Government announced that:
■ the Benefits Payment Card element of the project would be dropped, simplifying and assuring post office automation;
■ automation of post offices would proceed, for completion by 2001;
■ nearly all benefit payments would be made by bank transfers, starting in 2003 and completing by 2005. Until 2003 existing arrangements would continue;
■ people who wished to continue to collect their cash at post offices would continue to be able to do so, the Post Office would introduce suitable banking technology and develop its commercial arrangements with banks to allow this to happen; and
■ for the relatively few people for whom a bank account might remain an unsuitable option, special arrangements would be made.