HMRC seeks smaller IT contracts – a big risk, but worth taking?

By Tony Collins

Public Accounts Committee MPs today criticise HM Revenue and Customs for not preparing well or quickly enough for a planned switch from one main long-term IT contract to a new model of many short-duration contracts with multiple suppliers.

It’s a big and risky change in IT strategy for HMRC that could put the safe collection of the nation’s taxes at risk, say the MPs in a report “Managing and replacing the Aspire contract”.

But the Committee doesn’t much consider the benefits of switching from one large contract to smaller ones, potentially with SMEs.

Is the risk of breaking up the huge “Aspire” contract with Capgemini, and its subcontractors Fujitsu and Accenture, worth taking?

Suppliers “outmanoeuvre” HMRC

The PAC’s report makes some important points. It says that HMRC has been “outmanoeuvred by suppliers at key moments in the Aspire contract, hindering its ability to get long term value for money”.

The costs of the Aspire deal have soared, in part because of extra work. Before it merged with Customs and Excise, Inland Revenue spent about £200m a year on its IT outsourcing contract with EDS, now HP.  Customs and Excise’s contract with Fujitsu cost about £100m a year.

After the Revenue and Customs merged, and a new deal was signed with Capgemini, the money spent on IT services soared to about £800m a year – arguably out of control.

HM Revenue and Customs spent £7.9bn on the Aspire contract from July 2004 to March 2014, giving a combined profit to Capgemini and Fujitsu of £1.2bn, equal to 16% of the contract value paid to these suppliers.

HMRC considers the contract to have been expensive,  and pressure to find cost savings in the short-term led it to trade away important value for money controls, says the PAC report.

“For example, in a series of disastrous concessions, HMRC  conceded its rights to withdraw activities from Aspire, to benchmark the contract prices against the market to determine whether they were reasonable,” says the report.

“It also gave up  its right to share in any excess profits. In 2007, HMRC negotiated a three-year  extension to the Aspire contract just three years after the contract was let, extending the end of the contract from 2014 to 2017.

“The Department has still not renegotiated the terms of the contract in line with a memorandum of agreement it signed in 2012 designed to separate Capgemini’s role in service provision from its role as service integrator and introduce more competition.”

Big or small IT suppliers?

The Aspire contract between HMRC and Capgemini is the government’s largest
technology contract.  It accounts for for 84% of HMRC’s total spend on ICT.

Today’s report says that Aspire has delivered certainty and continuity over the past decade but HMRC now plans a change in IT strategy in line with the Cabinet Office’s plan to break up monopolistic contracts.

In 2010, the Cabinet Office announced that long-term contracts with one main supplier do not deliver optimal levels of innovation, value for money or pace of change.

In 2014, it announced new rules to limit the value, length and structure of ICT contracts. No contract should exceed £100m and no single supplier should provide both services and systems integration to the same area of government. Existing contracts should not be extended without a compelling case.

The Cabinet Office says that smaller contracts should allow many more companies to bid, including SMEs, and provide an increase in competition.

HMRC agrees. So it doesn’t plan to appoint a single main supplier when Aspire expires in 2017.  But PAC members are worried that the switch to smaller contracts could jeopardize the collection of taxes. Says the PAC report:

“HMRC has made little progress in defining its needs and has still not presented a business case to government. Once funding is agreed, it will have only two years to recruit the skills and procure the services it will need.

“Moreover, HMRC’s record in managing the Aspire contract and other IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.

“HMRC also demonstrates little appreciation of the scale of the challenge it faces or the substantial risks to tax collection if the transition fails. Failure to collect taxes efficiently would create havoc with the public finances.”

The PAC recommends that HMRC “move quickly to develop a coherent business case, setting out the commercial and operational model it intends to put in place to replace the Aspire contract. This should include a robust transition plan and budget”.

Richard Bacon, a long-standing member of the PAC, said HMRC has yet to produce a detailed business case for the change in IT strategy.

“HMRC faces an enormous challenge in moving to a new contracting model by 2017, with many short-duration contracts with multiple suppliers, and appears complacent given the scale of the transformation required.

“Moreover, HMRC’s record in managing IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.”

Comment

The PAC has a duty to express its concerns. HMRC needs stable and proven systems to do its main job of collecting taxes. A switch from a single, safe contract with a big supplier to multiple, smaller contracts could be destablizing.

But it needn’t be. The Department for Work and Pensions is making huge IT – and organisational – changes in bringing in Universal Credit. That is a high-risk programme. And at one time it was badly managed, according to the National Audit Office. But the gradual introduction of new systems hasn’t hit the stability of payments to existing DWP claimants.

This is, perhaps,  because the DWP is doing 4 things at once: running existing benefit systems, building something entirely new (the so-called digital service), introducing hybrid legacy/new systems to pay some new claimants Universal Credit, and is asking its staff to do some things manually to calculate UC payments. Expensive – but safe.

The DWP’s mostly vulnerable claimants should continue to be paid whatever happens with the new IT. So the risks of major change within the department are financial. The DWP has written off tens of millions of pounds on the UC programme so far, says the NAO. Many more tens of millions may yet be wasted.

But many regard the risks as worth taking to simplify the benefits system. It could work out a lot cheaper in the end.

At HMRC the potential benefits of a major change in IT strategy are enormous too. Billions more than expected has already been spent on having one main supplier tied into the long-term Aspire contract (13 years).  Isn’t it worth spending a few tens of millions extra running parallel processes and systems during the transition from Aspire to smaller multiple contracts?

It could end up costing much less in the end. And running parallel new and existing systems and processes should ensure the safe collection of taxes.

If government departments are not prepared to take risks they’ll never change – and monolithic contracts and out-of-control costs will continue. Is there anything more risky than for HMRC to stay as it is, locked into Aspire, or a similar long-term commitment?

HMRC not ready to replace £10bn Aspire contract, MPs warn – Computerworld

Taxpayers face havoc from HMRC computer changes – Telegraph

Post Office’s Horizon IT – an unusual case study?

By Tony Collins

post office logoIn the House of Commons in December Conservative MP Andrew Bridgen spoke about his constituent Michael Rudkin, a former Post Office subpostmaster.

Rudkin was a magistrate. He also served as the most senior member on the national executive of the National Federation of SubPostmasters. He  was chairman of the Federation’s negotiating committee, responsible for negotiations with Post Office Ltd and Royal Mail Group.

In 2008, after Post Office accounts showed a loss of £44,000 at his local branch office, Rudkin lost his business, his reputation, his position as a magistrate, some property and his good name, and he has been unable to work since.

Bridgen claimed in the House of Commons on 17 December 2014 that a Post Office auditor told Rudkin of the £44,000 loss the day after Rudkin had visited the Fujitsu/Post Office Ltd offices at Bracknell.

Campaign4Change put the whole of Bridgen’s speech to the Post Office. It declined to comment on the specifics but gave a strongly-worded statement (below).

post-office-signBridgen’s speech

Like other MPs, including Labour MPs, who spoke at the debate, Bridgen began by paying tribute to Conservative MP James Arbuthnot who has been leading a Parliamentary campaign for justice for more than 150 subpostmasters, some of whom have been jailed, made bankrupt and have had their lives ruined after the Post Office’s Horizon system showed shortfalls on local branch accounts.

Arbuthnot had secured the “adjournment” debate on the Post Office’s mediation scheme that was set up to resolve disputes between subpostmasters and the PO over discrepancies shown on the Horizon system.  Arbuthnot said it was the first time in his 28 years in Parliament he had sought an adjournment debate (a debate that ends with no vote).

“In 28 years in the House, I have never needed to apply for an adjournment debate, but the way in which the Post Office has treated sub-postmasters and members of parliament who have expressed concern about the matter is so worrying, and to my mind shocking, that in my final few months in Parliament it has become necessary for me to apply for an adjournment debate,” said Arbuthnot.

Bridgen said in the debate (the names he mentioned are not included here):

“The issue first came to my attention because of the plight of a constituent, Mr Michael Rudkin. For 15 years, he was a sub-postmaster… He was responsible for negotiations with Post Office Ltd and Royal Mail Group, so he is an experienced sub-postmaster.

“I would like to share with members his experience of the problems with the Horizon system, which demonstrates that significant questions need to be asked of the Post Office, although it is reluctant to answer them.

“Mr Rudkin’s story starts on Tuesday 19 August 2008. In his official capacity as a negotiator on behalf of sub-postmasters, he was invited to a meeting at the Fujitsu/Post Office Ltd offices in Bracknell to discuss problems with the Horizon system.

“If Mr Rudkin is telling the truth, which I have no doubt he is, this sequence of events raises questions about the system, which the Post Office must answer.

“On arrival that morning, my constituent signed the visitors’ book in reception and waited for his chaperone, a Mr R.

“Mr R took him to the second/third floor, and they entered a suite where Mr Rudkin recognised Horizon equipment on the benches.

“There was only one other person in the room – a male of approximately 30 to 35 who was reluctant to engage in conversation with Mr Rudkin or Mr R.

“Mr R asked Mr Rudkin to follow him through a number of pass card-protected security doors to some stairs. They went down to the ground floor and then entered the boiler room [an office in the Fujitsu building].

“Mr Rudkin states that a number of men dressed in casual office wear were standing around the doorway. They became very uncomfortable about Mr Rudkin’s presence and left.

“Having entered the boiler room, Mr Rudkin instantly recognised two Horizon terminals. There were data on both screens, and an operative was sitting in front of one of them, on which the pure feed for the Horizon system came into the building.

“Mr Rudkin asked if what he could see were real-time data available on the system. Mr R. said, ‘Yes. I can actually alter a bureau de change figure to demonstrate that this is live’ – he was going to alter a figure in a sub-postmaster’s account.

“He then laughed and said, ‘I’ll have to put it back. Otherwise, the sub-postmaster’s account will be short tonight.’

“Mr Rudkin expressed deep concern, because he had been told that no one had remote access to a sub-postmaster’s account. At that point, he was politely but speedily taken to reception, and he was told to leave the building.

“Mysteriously, the next day, Wednesday 20 August 2008, a Post Office Ltd auditor—a gentleman Mr Rudkin knew, by the name of P.F. – arrived at Mr Rudkin’s sub-post office. He proceeded to tell Mr Rudkin that his branch had a loss of £44,000.

“Interestingly, Mr Rudkin maintains that the investigator knew the size of the loss before he even entered the premises.

post officeMr Rudkin was absolved of all knowledge of the loss by Post Office Ltd, but he was ordered to pay the money back at the rate of £1,000 a month from his salary.

“As we have heard, the sub-postmaster is completely liable under the contract for all losses.

“As Mr Rudkin points out, why would someone steal money from themselves when they know that?

“After Mr Rudkin had paid £13,000 back to Post Office Ltd, the Post Office started proceedings against Mr Rudkin’s wife for false accounting. It also applied for a confiscation order on all his property and had his bank account frozen under the Proceeds of Crime Act 2002.

“Mr Rudkin has since cleared all his debts to Post Office Ltd. In the process, he has lost his business, his reputation, his position as a magistrate, some property and his good name, and he has been unable to work since.

“Second Sight – the team of independent investigators appointed by the Post Office to look into the matter - questioned the Post Office about Mr Rudkin’s allegations and his visit.

” Initially, Post Office Ltd consistently denied the visit had ever taken place – until Mr Rudkin produced an e-mail from Mr R. from the day before the visit, which invited Mr Rudkin to visit and said that Mr R. would meet him in reception, at which point the Post Office did admit that the meeting had taken place.

“Second Sight has repeatedly requested e-mail data from before, during and after Mr Rudkin’s visit, as well as a copy of the visitor’s book, but all those things have been withheld or are, we are told, now missing. That raises serious questions about the Post Office.

“Second Sight told me that it has looked at the contract sub-postmasters are asked to sign and that, in its view, a person would have to be an economic and legal illiterate to be willing to sign it, because it is so slanted in favour of the Post Office.

“As we know, the Horizon system is imposed on sub-postmasters by the Post Office.

“Effectively, the sub-postmasters become the fall guys – they are ultimately liable for all losses – so there is little incentive for the Post Office to ensure that the system or the support for it are robust.

“The way in which Post Office senior management have dealt with our working group of MPs has been extremely high-handed. I share my right hon. friend’s concerns: if Post Office management speak to Cabinet members and senior members of parliament in the way they do, the way they treat their sub-postmasters must be feudal …

“There are many questions to be answered, and I hope that as a result of parliamentary pressure and debates such as this, we will get the Post Office to move to a position where genuine negotiations can take place with aggrieved parties on a level playing field.

“We are some way from that yet, and I honestly think we will need a full clear-out of Post Office management before we get a change of attitude in this important public institution.”

Post Office statement

Questioned by Campaign4Change on the speech in the House of Commons about Rudkin, the Post Office issued this statement:

“There is very selective, misleading and incorrect information being put into the public domain about a number of cases but Post Office cannot and will not breach the privacy of individual applicants by discussing their cases, even though this means it cannot defend itself against unsubstantiated, baseless or malicious allegations.  To do so would lead to us being accused of breaching confidentiality and undermining the mediation process.

“Each and every allegation is being reinvestigated and to date there is no evidence of either system-wide computer faults or malicious remote tampering with Post Office branch transaction data in subpostmasters’ accounts.  Further, it is not possible for Post Office to alter that transaction data.

“Post Office has retrieved the available records for every case and these have been rigorously investigated and made available for independent review. For cases that are many years old it is not always possible to confirm, for example, every event – such as a meeting – referred to in a complaint.  However, Post Office has investigated, as far as it is able, on the information now available, including that provided by the applicants.”

Mediation Scheme – facts and figures

This is a letter written by Sir Anthony Hooper, chair of the Working Group Initial Complaint Review and Mediation Scheme, to Jo Swinson, the Post Office minister – Sir Anthony Hooper letter to PO minister Jo Swinson Dec 2014.

BBC’s The One Show

TV investigative journalist Nick Wallis has covered the Post Office Horizon IT dispute extensively. He has presented reports on the dispute for BBC’s The One Show.

Computer Weekly’s timeline of the problems since 2009.

House of Commons debate on Post Office mediation scheme 17 December 2014`

Second Sight report on Horizon

Justice for Subpostmasters Alliance

Post Office “tries to sabotage” mediation scheme it set up after IT complaints?

By Tony Collins

BBC R4’s Today programme broadcast interviews yesterday with campaigning Conservative MP James Arbuthnot (who is standing down at the next election) and Mark Davies, Communications Director at the Post Office.

At issue is whether the Post Office wants genuinely to establish the facts after complaints by more than 150 subpostmasters that they have been unfairly treated – in some cases jailed, made bankrupt or forced to remortgage their homes – because the PO’s Horizon IT system wrongly showed cash shortfalls.

The Post Office contends that there’s no evidence the systems were faulty in the cases in question.  But, as I am quoted in today’s Financial Times as saying,

“It’s going to be very hard to detect what went wrong. The Post Office is behaving as if its system was virtually infallible when, in fact, no system is, especially when there are many different network interactions involved.”

Last year the Post Office set up a mediation scheme, in part to respond to 144 MPs who’ve had representations from former subpostmasters about the Horizon system.

But the MPs announced yesterday that they have lost faith in the mediation scheme.

Arbuthnot, who leads the group, said in a press release, “The [mediation] scheme was set up to help our constituents seek redress and to maintain the Post Office’s good reputation. It is doing neither.

“It has ended up mired in legal wrangling, with the Post Office objecting to most of the cases even going into the mediation that the scheme was designed to provide.  I can no longer give it my support. I shall now be pursuing justice for SubPostmasters in other ways.”

Andrew Bridgen MP said:

“MPs have been working with the Post Office for two years now in the belief that they would work towards a solution to this issue. It would appear that this belief is increasingly looking misplaced.”

Mike Wood MP said:

“Either the Post Office is awash with criminals who open Sub Post Offices for personal gain or something has gone terribly wrong. MPs are inclined to believe the latter and we are all shocked that the Post Office seems not to want to get to the bottom of all this.”

Kevan Jones MP who will lead the Parliamentary campaign for justice for subpostmasters when Arbuthnot stands down at the election, said: “My constituent has lost everything – his livelihood, his house, his good name, and he is not the only person who faced ruin.”

Huw Irranca-Davies MP said: “The mediation process has failed even those sub-postmasters who were originally included. But there are also many who fell outside the scheme, and have had no chance to be heard. They all deserve fair play, they all deserve justice, so the fight goes on.”

The big unanswered question is whether the Post Office is deliberately hampering mediation because the scheme, as it turns out, is not going in its favour.

The Post Office hired forensic accounts Second Sight to investigate the Horizon system. It found that the system was not fit for purpose in some branches. The Post Office has said the leak of that Second Sight report was “regrettable” and it has not released it.

Yesterday on the Today programme (approx 0735) Arbuthnot told presenter John Humphrys:

“At considerable public expense the Post Office set up a medication scheme but sadly they are now trying to sabotage that very mediation scheme they set up. They are doing it in secret. It’s an extraordinary story.

“They are trying to bar from mediation 90% of subpostmasters for whom it was set up. They are arguing that those like Jo Hamilton, who pleaded guilty to false accounting, shouldn’t have the mediation scheme available to them, despite having agreed expressly with MPs that those who had pleaded guilty to false accounting should have it available to them. They are doing it in secret, and they are doing it at a stage when there is no legal representation available to these subpostmasters…  I am afraid I have no confidence that the Post Office is trying to clear it up.

Humphrys:  What they say is that they  pay for people to get independent advice; they have advertised for people to come forward with their stories; they have investigated the cases; they have done everything that could be reasonably requested of them.

Arbuthnot: “They talk about this legal advice but then they try to prevent the subpostmasters from going into the mediation scheme at a stage of the process when the subpostmaster is not represented.

“You won’t get any of the [Post Office’s] legal advisers coming onto this programme because the Post Office has bound them to secrecy.  You won’t get Second Sight, the independent investigators, coming onto this programme, because the PO has bound them to secrecy.”

Humphrys:  They have a relationship  with their clients and therefore they are inevitably bound to secrecy?

Arbuthnot: “Yes. There was a concern at the beginning of this that Second Sight, the independent forensic accountants whom the Post Office chose and are paying for, did have a relationship with the Post Office. That worried MPs about whether they would have the independence required, but they have had.

“Now that they have shown that independence the Post Office is doing its utmost to pooh-pooh the recommendations that Second Sight  is putting forward. It is trying to override those recommendations, possibly because of that very independence.

Humphrys:  The investigation isn’t over. That may change.

Arbuthnot: “That is my hope.  But since this investigation and mediation scheme which is in the hands largely of the Post Office is paid for by the Post Office, for myself I have lost faith in the Post Office’s determination to see this through to a proper end.”

Humphrys turned to Mark Davies, the Post Office’s Director of Communications. It is a very serious charge: that you sabotaged this scheme?

Davies: “It is an extremely serious charge John, and clearly we reject it outright. It is very regrettable, some of the things Mr Arbuthnot has said.”

What did he say that was wrong?

“To go back to the original setting up of this inquiry, we the Post Office take our responsibilities extremely seriously.”

What did he say that was wrong?

“If I could just finish the point. It is really, really important to set this out. The Horizon system that Mr Arbuthnot refers to is used  every single day by about 80,000 people. In the course of the last decade half a million people have used that system, without any problems, face to face with customers,  across the 11,500 branches in the Post Office network.

“That said, a very small number of people came to us  through their MP with some questions, some issues. They said they had problems with the system. That amounts to 0.03% of those people who have dealt with the Horizon system.”

It’s still 150 people …Each individual with their own life being ruined. Now what was it that Mr Arbuthnot said  about your handling of this scheme that is wrong?

“What is wrong is that the scheme, first and foremost, hasn’t finished yet, John.  Two and half years ago we set up a review into the Horizon system. That review has found no evidence at all of any systemic problems with the Horizon system.”

That was your own review?

“It was with independent forensic accountants John. We set up the complaints mediation scheme for those 150 people who came forward. Look – we advertised for people to come forward.  We went to our people across the Post Office network and said, if you feel you have been treated unfairly please come and talk to us about that. If we weren’t taking this seriously we would not have done that.

But you heard the story of Jo Hamilton there. She has tried to do everything that she could … and she has got nowhere.

“You’ll forgive me John for not getting into an individual case.”

I understand that but nonetheless she is representative of many like her and they are in desperate trouble now. They have a case don’t they?

“I am really sorry if people have faced lifetime difficulties – lifestyle problems – as a result of their having been working in Post Office branches. It does not necessarily follow though that the Post Office is responsible for the issues people have had. I think our commitment to seeking to look at every single case is underlined …

But you have barred 90% of them?

“No. That’s not true. I don’t accept that figure at all.”

What is the figure?

“If the working group, which is chaired independently by a former High Court judge, is bound by confidentiality, the Post Office is bound –

So you can’t tell me how many have been barred? It might be 90%?

“I’m afraid I can’t John because the working group was set up with confidentiality in mind. We are bound by that.”

I am not asking you for the names of the people. I am asking you for the number of people who have been barred [from the mediation scheme].

And I cannot go into the details of …

So we’re entitled to accept what Mr Arbuthnot said which is that it is 90%?

“I don’t accept that at all. It is not 90%.”

Without being able to give me a figure, with the best will in the world, it is impossible for us to do anything other than accept the figure Mr Arbuthnot’s gives.

“We are being placed in an intolerable position at the Post Office because we are bound by a confidentiality agreement which was agreed with all parties including the Justice for Subpostmasters Alliance.

“We are in an extremely difficult position. It’s not the case that 90% have been rejected. We are actually looking at every single case, on a case by case basis. We are absolutely committed to doing that… in some cases there is evidence whereby we have looked at what’s happened and we have held our hands up and said in some cases we could have done some things differently and we have reached agreement with some people. In other cases we have not reached that conclusion because we have to take it extremely seriously.

“We are a large retail organisation. We conduct audits in our branches, across 11,500 branches, every single day. Where there are cases of losses in those branches,  then clearly we have a duty to look at those, and you’d expect  us to do that on behalf of customers, on behalf of taxpayers.”

A very quick word Mr Arbuthnot?

Arbuthnot: “Mark Davies says it is a tiny proportion of transactions in the Post Office and yet one single miscarriage of justice ought to galvanise the nation. I have more than 140 MPs, some of them with more than one case. This is not a small problem.”

Davies: “If evidence emerges where there is evidence that a case should be looked at through the legal processes, absolutely the Post Office has a legal duty to take that forward and we will do so.”

Pleaded Guilty

Jo Hamilton, Arbuthnot’s constituent, used to run a sub-post office from her village shop in South Warnborough, Hampshire. She pleaded guilty to false accounting following a discrepancy of £2,000 in December 2003.

She told the BBC: “I rang the helpdesk and they told me to do various things and I did that and the amount I was down doubled.  I asked to speak to a supervisor.  Whatever we did, it would not go back to minus £2,000. The upshot  was they asked me to pay the money into the Post Office which I didn’t have.  Then they decided to take my wages to pay it back. …at the time they told me I was the only person who had had problems with Horizon. I did think I was the only person in the world who had had problems with it.  I hadn’t taken any money but I didn’t know what the hell was  going on…

“I had to remortgage the house and repay the money. Originally, I was charged with stealing. They said if I repaid and pleaded guilty to 14 counts of false accounting, they would drop the theft, so the decision was made – I’d be less likely to go to prison for false accounting than theft.

Universal Credit: some highlights of today’s NAO report

By Tony Collins

Excerpts from today’s National Audit Office report “Universal Credit: progress update”

Not complete by 2020 

“Not all legacy benefit claimants will have moved to Universal Credit by the end of 2019.”

 Assumptions are changing massively

“Universal Credit impacts depend on policy assumptions. For example, there was a £30 billion movement between 2011 and 2012 in the Department’s estimate of benefit spending, which went from a £19.7 billion cost to a £10.8 billion saving. The Department changed its methodology over this time but the size of this movement was largely due to changes in benefit entitlement and conditionality.”

Spending on existing UC systems questionable?

“HM Treasury has expressed concerns about the value for money of further investment in live service systems.”

What if the digital system fails?

“ Following the Major Projects Authority’s review, HM Treasury requested, in April 2014, the Department provide it with contingency plans should the digital service be delayed or fail. The Department is due to update HM Treasury at the end of November 2014 on its progress in developing such plans.”

The small print

You can claim Universal Credit if you:

– fall into one of the accepted groups

– do not own or part own your home;

– have a bank or building society account;

– do not live in temporary accommodation;

– are not pregnant or given birth within the last 15 weeks;

– are not a carer;

– are not self-employed;

– are unemployed or have household earnings of less than £330 per month if over 25 or £270 if under 25;

– are not challenging or awaiting a decision on Jobseekers Allowance, Housing Benefit, Employment and Support Allowance, Income Support or tax credits;

– are not staying away from your main home;

– are not responsible for a child or young person who is: adopted, fostered, being looked after, registered blind or have a disability benefit.

UC security

“In June 2012, CESG [the IT security arm of GCHQ) found that security had not been properly considered from the start. The [UC] systems were developed by multiple suppliers without an overarching plan for how it would work as a whole.

“A Red Team review concluded that the programme lacked appropriate detail around the security measures it needed because of: ineffective links between design and security teams; invalid assumptions being made by technical teams about what was acceptable to the business; a lack of balance between usability and security; poor understanding of dependencies between components; and little consideration of the technical implications of business design activities. The Department was unable to address these concerns prior to the reset in February 2013.”

A good approach to agile

“Since the reset (in 2013), the Department has concentrated its use of agile on developing digital service using a co-located, mixed-skill team. In June 2014, consultants commissioned by the programme board reported that a good agile approach is in place, and that a strong agile culture and organisation has been found inside the digital service.

“The consultants also found that a focus on long-term planning and effective communication of progress is required to drive scale and delivery, and that adjustments to the team structure will be required to ensure scalability…

“To remain on track, the Department will have 18 months to increase functionality to create a fully integrated service eventually capable of handling up to 10 million claimants. It will use an agile approach to do this. The Department plans to trial new systems in spring 2015, when it intends to start testing efficiencies and delivery against policy intent. It then plans to test increased capacity from November 2015.”

Not so agile

“…The Department will continue to use traditional approaches for buying and maintaining systems supplied commercially, such as existing Department‑wide systems and cloud hosting…”

Inaccurate payments

In April 2014, a software update [from a major supplier] created new problems for [UC] calculations and inaccuracy increased again. Between April and June 2014, over 10% of payments made to claimants were incorrect. This damaged staff and stakeholder confidence in the system and the Department had to reintroduce 100% manual checking of payments in June 2014 …

“… At present the Department is undertaking 100% checking of all payments before they go out.”

Better leadership

Confidence in the leadership team has improved despite continuing difficulties and the heavy demands on the programme director through 2014 caused by the limited availability of the senior responsible owner. A follow-up survey found a large increase in the number of staff expressing confidence in the actions of senior leadership (from 30% in 2013 to 75% in 2014) and an increase in the number of staff who feel that senior management encourages challenge and welcomes their suggestions (from 30% in 2013 to 70% in 2014).

Do major suppliers have too much control of DWP IT?

“The Department’s management of suppliers has been tested by the problems that emerged following an IT update in April 2014 designed to enhance live service. A supplier made significant changes in addition to the work that had been commissioned by the Department. It did not fully inform the Department of this, therefore the update was not adequately tested before it went live.

“The release caused an increase in payment errors described in Part Three. The supplier agreed to rectify the coding at its own expense. This delayed the next release by 2 weeks because of constraints on departmental and supplier resources, and the need to implement further controls recommended in a review commissioned by the Department after the April release.

“In November 2014, the Department’s internal audit reported that the programme has built technical capability to challenge, monitor and review supplier performance, including challenge of the management information provided.”

Manual interventions

“As planned, many processes in live service and digital service areas currently remain dependent on manual interventions.”

Universal Credit: progress update

Universal Credit full business case “a long way from Treasury approval”

Universal Credit full business case “a long way from Treasury approval”

By Tony Collins

Yesterday in Parliament Iain Duncan Smith gave a statement on Universal Credit – then MPs asked him questions.  Conservative MP Nigel Mills asked IDS a straightforward question:

“Can the secretary of state confirm that the Treasury has now signed off the whole business case and laid to rest that fear that they were not going to do that?”

IDS gave a clear reply: “That is exactly what was being asked before the summer break and the answer is they have …”

But the UC programme has not received Treasury approval for the full business case, nor even the outline business case. Today’s National Audit Office report “Universal Credit: progress update” says that the UC programme received approval in September 2014 for the “strategic outline business case” only.

An NAO official says this is a “long way from Treasury approval” of the full business case.

Until the full business case is approved, UC has no formal funding beyond the current spending review. Meanwhile the Treasury has been funding UC in “small increments” according to the NAO.

The Department of Work and Pensions is due to produce the outline business case next summer, before the next government’s spending review.

The “outline” business case is supposed to set out how the programme is affordable and will be successfully delivered. It summarises the results so far and sets out the case for proceeding to a formal procurement phase.

The “full” business case documents the contractual arrangements,
confirms funding and affordability and sets out the detailed management
arrangements and plans for successful delivery and post evaluation.

The absence of approval for the outline or full business case underlines the uncertainties still in the UC programme. Indeed the latest NAO report says it’s too early to tell whether UC will prove value for money.

But the DWP has reduced risks by extending the roll-out. The programme is now not expected to be completed before 2020. The original completion date was 2017.

The DWP has a twin-track approach to the UC IT programme. It is paying its existing main IT suppliers to support the introduction of UC – the so-called “live” service – while an agile team develops a fully-automated “digital” service that is designed to do all that the “live” service cannot do without manual intervention.

The agile system has yet to be tested – but it has cost only about £8m compared with more than £90m spent on the “live service”.

Porkies?

Labour MP Glenda Jackson, who is a member of the Work and Pensions committee, suggested to IDS yesterday that his promises to MPs on Universal Credit’s roll-out have all been broken and that he has told the House of Commons “porky pies”.

IDS replied that his intention is to ensure that UC is rolled out in a safe and secure way.

Comment:

You’d never know from IDS’s replies to MPs yesterday that the Universal Credit programme doesn’t yet have either outline business case approval or full business case approval.

In other words, the Treasury has yet to be convinced the UC programme is feasible or affordable. It is paying for the programme in increments.

IDS told MPs the programme has business case approval. He did not make it  clear that the programme has the early-stage strategic outline business case approval.

His comments reinforce the need for the National Audit Office to scrutinise the Universal Credit programme. Left to the Department for Work and Pensions, the facts about the programme’s progress, problems and challenges would probably not emerge, not in the House of Commons at least.

Some MPs have said for years that Parliament is the last place to look for the truth.

IDS also said yesterday that the original deadline for completion of UC by 2017 was “artificial” – though he has quoted the 2017 date to MPs on several occasions.

Will UC succeed?

UC as an IT-based programme is not doing too badly, to judge from today’s NAO report.

Indeed it seems that the Department for Work and Pensions, when under intense scrutiny, can start to get things right.

Though existing systems from major suppliers look increasingly unlikely to be able to handle the predicted volumes without a large and expensive amount of manual intervention, the agile digital system, though delayed by 6 months, looks promising, at a fraction of the cost of the conventional “live” system.

Scrutiny

The NAO is scrutinising the programme. The DWP’s own auditors seem to be doing a good job. The Cabinet Office’s Major Projects Authority is making useful recommendations. And the programme has an independently-chaired board. [The NAO says the programme board has been hampered by limited information and suggests this is because the DWP gives the board “good news” statements rather than facts.]

All this scrutiny is powering the programme in the right direction, though the uncertainties remain massive. As Campaign4Change predicted, the programme will not be complete before 2020. But who cares, if it works well in the end and losses are minimised?

DWP officials are learning lessons – and UC could end up as a template for big government IT-enabled programmes  The twin-track approach of using existing suppliers to deliver support for major business changes that yield problems and lessons  that then feed into an entirely new agile-based system is not a cheap way to develop government IT –  but it may work.

What DWP officials have yet to learn is how to be open and truthful to Parliament, the media – and even its own programme board.

Universal Credit: progress update

Some highlights of today’s NAO report

NAO warns over costs of further Universal Credit digital delay

Universal Credit: watchdog warns of costs of further delays

Government may have to write off more than £200m invested in IT on Universal Credit

Some of the strengths and weaknesses in GovIT – Phil Pavitt

By Tony Collins

Phil Pavitt was CIO at HM Revenue & Customs. He left two years ago and arrived at Specsavers via Aviva where he was global director of IT transformation.

At HMRC he was a main board member, responsible for all technology across the estate, delivering the change agenda, and managing a total annual IT budget of more than £1bn.

Now he has given an interview to Government Computing in which he talks about his role at Specsavers but also some of the challenges faced by those who are responsible for IT in central government.

He:

–  applauds the Government Digital Service’s (GDS) role in increasing digital traction, but believes the putting down of CIOs has been unnecessary and counter-productive.

– laments a lack of attention to legacy systems. “Name me the departments that have revolutionised themselves and their legacy engines. There’s not many to name. But the front end looks really really good. But who is going to change that legacy because one day that disconnect will be huge? They [GDS] are playing into the hands of the big SIs [systems integrators] who will turn out and say, ‘You’ll have to swap it out, and only we can do it.

“So I think there’s an interesting fundamental dichotomy that will eventually appear where the front of government will look really good and rightly so, and the back of government increasingly becomes expensive, archaic and out of date. And that’s going to be a problem.”

Pavitt also talks about the challenges faced by SMEs when trying to do business with departments, and the role of big suppliers, the so-called systems integrators.

Phil Pavitt’s interview in Government Computing.

After hundreds of millions spent on criminal justice IT …

By Tony Collins

From UKAuthority.com …

England’s most senior judge, the Lord Chief Justice, has voiced frustration at the state of government IT systems - in particular its continued reliance on obsolete Microsoft operating systems.

At his annual press conference, Lord Thomas of Cwmgiedd urged the government to exempt IT investment from any new spending cuts.

“If that [investment] is not to go ahead for any reason at all, then in my view the justice system would face a severe crisis,’ he said. ‘We have not been able to use modern technology, for example… in doing a judgment, I am doing it on Word 2003 with the XP operating system which Microsoft is supporting by special arrangement.”

He described the state of courtroom IT as I “wholly antiquated”.

The special arrangement mentioned by Thomas was the £5.5m deal signed with Microsoft earlier this year to provide 12 months support and security updates to Windows XP, Office 2003 and Exchange 2003 after the software giant ended support for XP in April.

Under the Ministry of Justice’s IT transformation programme, courts in England and Wales are due to go paperless by the end of 2016.

Top judge grumbles about “wholly antiquated” IT

Universal Credit project costs reach £36,222 per claimant (excluding the claim)

By Tony Collins

Iain Duncan Smith has told MPs that the costs of the Universal Credit project are £652m to March 2014 – which is about £36,222 per successful claimant.

The figure includes the money paid to the DWP’s Universal Credit IT suppliers which was £303m by the end of 2012/13.  An updated figure will be published in a UC report by the National Audit Office due to be published near the end of this month.

The costs of Universal Credit per successful claimant are disproportionately high for an IT-enabled programme that has been running for more than three years because numbers on the system are small.

If the UC programme were complete, at a forecast cost of £1.8bn, and the predicted 7.7 million people were receiving the benefit, the scheme’s delivery costs per claimant would be only about £234.

As at October 2014 17,850 people were on the Universal Credit caseload.  IDS told the Work and Pensions Committee on 5 November, in a hearing that lasted more than 2 hours,  that the costs of UC were £652m by March 2014.

That works out at about £36, 222 per successful UC claimant.

Total delivery costs for the programme are expected to be £1.8bn, down from an original prediction of £2.4bn, IDS told the committee.

IDS and the DWP hope many more successful claimants will be added to the systems next year when Universal Credit is rolled out to all jobcentres and local authorities across the country. But the scheme is subject to growing uncertainties, as the DWP’s permanent secretary Robert Devereux and IDS made clear to the committee.

DWP drops firm end date for UC

When an MP put it to IDS that he no longer has a concrete end date for when  7.7 million people will be on UC, he paused. Then he said the plan was for UC to be complete “by the end of 2018″. He gave no commitment and did not deny that there is no concrete end date.

“Er yes, yeah,” replied IDS. “We do envisage UC being complete by the end of 2018. That’s our plan.”  He said that UC would handle singles, couples, then families. In the meantime the DWP is developing an “end-state digital process” that will deliver benefits for claimants and the departments.

“The roll-out gives us phenomenal understanding of what we need to do to make sure the digital service ultimately comes in and completes that process properly. There is a de-risking of the process.”

UC may never be fully automated

Another uncertainty for UC is its ability to handle an estimated 1.6 million changes per month to people’s claims.

Changes in circumstances are handled manually at present.

Robert Devereux, permanent secretary at the DWP, told the committee that the UC systems are, for some claimants,  part manual, part automated. Devereux said:

“The peculiar nooks and crannies with individual circumstances  – we have deliberately not tried to code every permutation as we go along. We are trying to make sure it can be safely delivered within costs in a sensible fashion.

“It would not be sensible to code every possible permutation back at the start while you are still learning.  There are different elements of the system, some of which will be [digital] all the way through, some which are not.”

The committee chair Dame Anne Begg questioned whether UC will ever work effectively if manual processing is applied to some of the 7.7 million claimants. She received no clear answer.

Comment

It’s a good thing that the DWP is going slowly and cautiously but a spend of £652m to March 2014 per UC recipient does not seem cautious at all. If the project is being run on agile principles of fail early and fail cheaply, can this sum be justified?

On a more positive note IDS has stopped quoting a firm end date for UC. At first the DWP was saying UC would be completed by the end of 2017, then IDS said the programme would be “essentially complete” by the end of 2017.  Now he is saying it may be complete by the end of 2018 but is giving no commitment. His caution is probably because the NAO’s update on UC later this month will suggest that the programme is unlikely to be delivered in any certain time period. Nobody can say with authority or credibility when UC’s implementation will be complete.

It’s also a good thing that the DWP is conceding that UC can never be fully automated. It doesn’t make sense spending disproportionate sums on automating calculations that can be done more cheaply by hand.  But if the exceptions prove the rule UC could prove much more expensive to implement than planned.

UC is a good idea in theory but the next government needs to do a full review of its financial and practical feasibility, which the present government is unlikely to do.

Universal Credit could be complete by 2018 – Government Computing

Universal Credit and its IT – an inside track?

By Tony Collins

An excellent BBC Radio 4 “Inside Welfare Reform” Analysis broadcast yesterday evening gave an insider’s view of the IT-based Universal Credit programme from its beginnings to today.

It depicted Iain Duncan Smith as a courageous reformer who’s kept faith with important welfare changes that all parties support. If they work, the reforms will benefit taxpayers and claimants. The broadcast concludes with an apparent endorsement of IDS’s very slow introduction of UC.

“When real lives and real money are at stake, being cautious is not the worst mistake you can make.”

So says the BBC R4 “Analysis” guest presenter Jonathan Portes who worked on welfare spending at the Treasury in the 1980s and became Chief Economist at the Department for Work and Pensions in 2002. He left the DWP in 2011 and is now director at the National Institute of Economic and Social Research.

The BBC broadcast left me with the impression that UC would today be perceived as meeting expectations if DWP officials and ministers had, in the early days:

– been open and honest about the complexities of IT-related and business change

– outlined the potential problems of implementing UC as set out in internal reports and the minutes of programme team meetings

– explained the likelihood of the UC programme taking more time and money than initially envisaged

– urged the need for extreme caution

– made a decision at the outset to protect – at all costs – those most in genuine need of disability benefits

– not sold UC to a sceptical Treasury on the basis it would save billions in disability claims  – for today thousands of disability claimants are in genuine need of state help, some of whom are desperately sick, and are not receiving money because of delays.

Instead UC is perceived as a disaster, as set out in Channel 4’s Dispatches documentary last night.

A £500m write-off on IT?

Other noteworthy parts of the BBC R4 Analysis broadcast:

– The Department for Work and Pensions gave selective responses to the BBC’s questions. Portes: “We did ask the Department for Work and Pensions for an interview for this programme but neither Iain Duncan  Smith nor any minister was available. We sent a detailed list of questions and have had answers to some.”

– Margaret Hodge, chairman of the Public Accounts Committee, gave her view that the next government will have to write off £500m on IT investment on Universal Credit – about £360m more than the Department for Work and Pensions has stated publicly.

Hodge told the BBC: “We are now on our fourth or official in charge of the project and the project has only been going four or five years. Anyone who knows about project management will tell you that consistency of leadership is vital. I don’t think there has been ownership of the project by a senior official within DWP.  I think they and ministers have only wanted to hear the good news. Management of the IT companies has been abysmal.

“I still believe, though I haven’t t got officials to admit to this, that after the general election we will probably be writing off in excess of half a billion  pounds on investment in IT that had failed to deliver… The investment in IT that they are presently saying they can re-use in other ways is not fit for purpose. The system simply cannot cope.”

The BBC asked the DWP for its comment on the scale of the write-offs. “No answer,” said Portes.

Parliament told the truth?

Stephen Brien, who has been dubbed the architect of Universal Credit, gave his first broadcast interview to Analysis. He worked with IDS at the Centre for Social Justice, a think tank set up by IDS in 2004. Brien saw IDS on a nearly daily basis.

Portes asked Brien when IDS first realised things were going off track. “The challenge became very stark in the summer of 2012,” said Brien.

Portes: What was your relationship with IDS?

“My office was across the corridor from his.  I would join him for all the senior meetings about the programme. I would keep him updated as a result of the other meetings I was addressing within the programme team. When it became materially obvious we had to change plans it was over that summer [2012].

Portes: But that was not the public line. In September 2012 this is what IDS said (in the House of Commons):

“We will deliver Universal Credit on time, as it is, on budget, right now.”

IDS appears to have given that assurance while being aware of the change to UC plans.

UC oversold to Treasury?

Portes: “The really big savings were supposed to come from disability benefit. And here trouble was brewing. The problem was the deal IDS had done with the Treasury. The Treasury never liked UC. It thought it was both risky and expensive. And the Treasury, faced with a huge budget deficit, wanted to save not spend.

“With pensions protected disability benefits were really the only place savings could be made.  The previous government had contracted ATOS to administer a new medical test – the Work Capability Assessment – to all 2.5 million people on Incapacity Benefit but only a few pilots had started.

“IDS and the Treasury agreed to press ahead.  Some claimants would be moved to new Employment and Support Allowance but the plan was that several hundred thousand would lose the benefit entirely – saving about £3bn a year.

“Disability living allowance which helps with the extra cost of disability would also be replaced with the new, saving another £2bn…

But …

“By now the new work capability assessment was supposed to have got more than 500,000 people off incapacity benefits. Instead they are stuck in limbo waiting for an assessment.

“By now the new Personal Independence Payment should have replaced disability living allowance saving billions of pounds more. Instead it too has been dogged by delay.

“Just a few days ago the Office for Budget Responsibility said delays in these benefits are costing taxpayers close to £5bn a year. This dwarfs any savings made elsewhere and leaves a potential black hole in the next government budget.”

How many people left stuck in the system?

The BBC asked the Department of Work and Pensions’ press office how many claimants, and for how long, they have been waiting for claims to be resolved. Portes: “They didn’t answer. But their own published statistics suggest it is at least half a million.

“One aim of the reforms was to cut incapacity benefit and the numbers had been on a long slow decline between 2003 and 2012 but now it is rising again. So much for the Treasury saving.”

Who is at fault?

Publicly IDS talks about a lack of professionalism among civil servants and that he has lost faith with their ability to manage the UC-related problems. Rumours in the corridors of Westminster are that behind the scenes IDS has attempted to blame his permanent secretary Robert Devereux.  On this point, again, the DWP refused the BBC’s request for a comment.

Gus O’Donnell, former head of the civil service, who appointed Devereux, told the BBC that tensions between IDS and Francis Maude at the Cabinet Office did not help. “Robert [Devereux] was in a very difficult position. He was in a world where Francis Maude was trying to deliver, efficiently, programmes for government and on the other hand IDS was seeing the centre as interfering and criticising whereas he knew best: it was his project; he was living it every day. There was a lot of tension there. Really what we need to do is get everyone sitting round a table trying to work out how we can deliver outcomes that matter.”

Was Devereux set up to fail?

O’Donnell: “With hindsight one can say this is a project that could not be delivered to time and cost.”

Were DWP officials to blame?

Stephen Brien said: “There was a real desire from the very beginning to get this done. I think there was a desire within DWP to demonstrate that it could again do big programmes. The DWP had not been involved in very large transformation programmes over the previous decade. There was a great enthusiasm to get back in the saddle,  a sense that it [UC] had to get underway and it had to be well entrenched through Parliament.

“These forces – each of them – contributed to a sense of ‘we have got to get this done and therefore we will get this done.’”

Too ambitious?

Richard Bacon, a member of the Public Accounts Committee, told the BBC: “If you know what it is you want to do and you understand what is required to get there, then what’s wrong with being ambitious?

“The trouble is that when you get into the detail you find you are bruising people, damaging people, people who genuinely will always need our help. Taxpayers, our constituents, expect us to implement things so that they work, rather than see project after project go wrong and money squandered.

“There may come a point where we say: ‘we have spent so much money on this and achieved so little, is the game worth the candle?’”

Thank you to Dave Orr for drawing my attention to the Dispatches documentary. 

Too easy for councils to make up savings for IT outsourcing?

By Tony Collins

Birmingham City Council, Barnet Council and Somerset County Council have in common outsourcing deals that are subject to effective, independent scrutiny.

That scrutiny comes from bloggers and a former council IT employee. Their unpaid commitment continues for years. They are energetic, tenacious, local citizens with strong social consciences who look closely at what their local officials and councillors say in public about the benefits of their outsourcing contracts.

What they have found out shows that official claims for savings from IT-based outsourcing deals are based on subjective interpretations of council-supplied information. Interpreted differently, the same facts and figures could show the success of the contract – or the opposite.

This is usually because the council-supplied information raises questions that it does not always answer.

In the published costs of the outsourcing deal what is not included? Charges and mark-ups for items the outsourcer buys from other suppliers? Are redundancy payments taken into account? Are the costs of consultants and agency staff taken into account? Are the costs included of hiring a company to handle work that would otherwise present the potential for a conflict of interest if handled by the outsourcer Capita – as has happened at Barnet?

And what assumptions have council and supplier made about profit sharing? Somerset County Council concedes it has had endless arguments with IBM over what should be included and excluded when calculating the profit sharing in their joint venture.

Some of the uncertainties in working out savings from a big IT-based outsourcing contract are set out in an  email from Somerset County Council to an investigative and campaigning former IT employee Dave Orr:

“Since internalising the service, we have revised our working arrangements within the procurement service as many of the reports and practices performed by SWO [Southwest One, owned by IBM] were not satisfactory.”

Orr elicited this admission by Somerset County Council on the extent to which savings figures can be the subject of  dispute:

“Over the years there were disputes on individual savings initiatives and therefore also on the overall total that qualified towards the threshold. That dispute escalated to the courts and was settled before a full hearing.

“Along the way, for 6 years, a running total was kept by both sides as to how much they thought savings were and these were reported to various committees of the Council (and indeed to other authorities’ committees too).

“The agreed savings (where there was no dispute) and the value of savings believed to be achievable by SCC were fed into the Council’s budget process and reduced the overall need for budget pressures within services. Again, this is as per guidance in SERCOP and was reported to Scrutiny and Full Council meetings as councillors regularly asked what was happening with regard to savings realised.”

A murky pond

Those who support an outsourcing deal can fish facts and figures from a pond of numbers that show huge savings, while critics of the deal can fish in the same pool and show that payments to outsourcers are excessive.

Establishing the truth about the success or otherwise of a complex outsourcing deal can be impossible – because the truth may be subject to variables and interpretations.

At least, though, the independent scrutineers bring into the open facts and figures that would otherwise be unnoticed. And they hold officials and councillors to account in a way that internal auditors – who answer to the council – don’t always do.

Birmingham

For the Birmingham Post, Professor David Bailey of the Aston Business School writes regularly on the cost to the city council of Service Birmingham, which is two-thirds owned by Capita, the rest by the council.

SB was set up in April 2006 “to support the council in changing the way it works, using information communications technology to pave the way”.

Bailey gives detailed arguments for his belief that the council is making excessive payments to Service Birmingham. He questions the council’s claims that terminating the contract would be uneconomic.  Too much information is withheld by the council under the guise of commercial confidentiality, he says.

His columns go some way to countering the secrecy; he gives Birmingham’s residents a chance to see figures the council would probably not want exposed in an easy-to-understand context.

One of his latest blog posts says that Birmingham City Council paid Service Birmingham £102m in 2013 – of which £23m went in dividend payments and £5m in taxes.

“So that’s £28m that went out of the council in 2013 that could have been avoided if Service Birmingham had been scrapped,” says Bailey.

Barnet

Mrs Angry [Theresa Musgrove] is a much-respected blogger who writes the “Broken Barnet” blog, in part about Capita’s outsourcing contracts with the London Borough of Barnet.

She calls the borough “Capitaville”. Under the banner of “One Barnet” Capita runs a range of services from IT to cemeteries (and has produced a produced a business document for the council on the “opportunities” from making funerals more efficient).

Her blog posts are humourous, passionate and full of informed comment. She attends some council meetings and asks awkward questions that are often obliquely answered, if at all. She shows what happens when the council’s attempts to be open meet reality.

Barnet Council is lucky enough to have several effective scrutineers of the Capita contracts including “Mr Reasonable” who wrote in September that Barnet paid Capita £59m in 2013/2014 – compared to £53m which he says the services cost before outsourcing.

Does Barnet know what it is doing? Not according to the bloggers who, as well as Mrs Angry and Mr Reasonable, include The Barnet Eye and Mr Mustard. The Barnet Alliance is also a useful campaigning website.

Somerset 

Like the bloggers at Barnet and David Bailey at Birmingham, Dave Orr is not put off by unsubstantiated, vague or impenetrable council claims on outsourcing savings. A former IT employee at Somerset County Council, Orr has followed closely the authority’s joint venture with IBM-owned Southwest One.

He has objected formally to the council’s 2013/14 accounts, with the result that Somerset’s  officers and its auditors Grant Thornton in essence have negotiated to persuade him to withdraw his objection.

Orr agreed to withdraw his 0bjection on condition that:

–   2013/14 procurement savings figures are publicly published

– future years’ procurement savings figures are publicly published

The council agreed to the changes.

Comment

When interpretations of the known facts are optimistic,  proclaimed savings from IT-based outsourcing deals can seem large. When interpreted coldly or sceptically, the same facts may suggest there are no savings at all.

The truth may be that the council has no real idea whether costs are lower or higher than before given that the costs at the point of outsourcing were complex and uncertain and subject to an interpretation of the facts.

As Somerset council suggests: some lower costs can be cancelled out by reducing an overspend elsewhere.

It seems that big council IT-based outsourcing deals are like GPS systems which have parts of the map missing and the “my location” designation is never very close to where it actually is – while the supplier and council officials who are enthusiasts of the deal can claim without fear of authoritative contradiction that the facts are 100% certain and the savings are guaranteed.

The Barnet and Birmingham bloggers, and Dave Orr, have forced councils to be more open than they would otherwise be but there is still too much secrecy, especially at Birmingham and Barnet.

Can council officials and councillors always self-justify their decision to outsource IT and other services in a major long-term contract? Yes – always.

Can the critics credibly show that the outsourced service costs more than claimed, or that the savings are less than the council could have made itself if it didn’t have to pay the supplier’s profits?

The critics usually produce more credible arguments than the unnecessarily complicated and sometimes obfuscatory arguments of the council’s outsourcing enthusiasts.

Update:

Such are the bizarre complexities around council outsourcing deals and the claimed potential savings that a new trend is emerging: councils claiming savings by bringing IT-based outsourced deals back in-house.

This happened at Somerset and now Liverpool Council, which is full of praise for BT , is nevertheless scrapping its “Liverpool Direct” joint venture with the company. The Council is taking ownership of Liverpool Direct from BT.

The move will save  £30m over three years, as reported by Computerworld UK.

A Liverpool Council report on the savings says:

“Following the transfer of ownership, it is anticipated that the integration
of services from Liverpool Direct Limited to Liverpool City Council will deliver budget savings over a 3 year period from 2014-2017 totalling £30m.

“This delivers the best value option for Liverpool City Council, reflecting an
internal service delivery model with no further investment requirement
from BT and hence no return needing to be paid to BT for such
investment.”

Achievements

Service Birmingham lists its achievements here.

Barnet says its Capita contracts “will save £165m”

Southwest One – delivering value

BT and Liverpool Council’s “Liverpool Direct” delivers “growth and success”.

Should Liverpool Council smile now it’s ending joint venture with BT?

Liverpool Council expects to save £30m by ending joint venture with BT