Cannot connect to sqLite when testing Laravel

I get this error when trying to execute my tests (Laravel 5.3):

PHPUnit 5.7.13 by Sebastian Bergmann and contributors.

E{"sError":"An error occurred while connecting to the database ':memory:'. The error reported by the server was: SQLSTATE[HY000] [1044] Access denied for user 'mick'@'%' to database ':memory:'"}

phpUnit.xml

<php>
        <env name="APP_ENV" value="testing"/>
        <env name="DB_CONNECTION" value="sqlite"/>
        <env name="DB_DATABASE" value=":memory:"/>
        <env name="CACHE_DRIVER" value="array"/>
        <env name="SESSION_DRIVER" value="array"/>
        <env name="QUEUE_DRIVER" value="sync"/>
    </php>

database.php

 'sqlite' => [
            'driver' => 'sqlite',
            'database' => env('DB_DATABASE', database_path('database.sqlite')),
            'prefix' => '',
        ],

What am I doing wrong? These settings work OK in another project?

I am not using config caching.

It looks like it is still using the values from my .env

Mick