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

Big IT buying change at HMRC

Huge HMRC IT contract to be split up – a real break with tradition?

Francis Maude, the minister in charge of Whitehall reform, has, with his team, achieved some success in cutting IT-related costs, changing buying habits, and holding big suppliers to account for failures.

The perception is that many of the achievements have been around the periphery of high-cost government IT: the number of government websites has been cut but mega IT contracts remain in place, particularly at the DWP and HMRC.

That may now change.

According to Government Computing, HMRC has decided against issuing an invitation to tender for the replacement of its key Customs Handling of Import & Export Freight (CHIEF) system. The system, supplied by BT and run on Fujitsu hardware, has cost hundreds of millions of pounds.

An ITT was expected to be issued this summer but Government Computing understoods that HMRC has decided against the plan and will now adopt a more flexible approach. Even so it is still planning to deliver the CHIEF replacement in 2017.

An HMRC spokesperson said: “Following discussions with stakeholders and market providers, HMRC has decided not to launch an invitation to tender at this time.

“Instead, we plan to develop a CHIEF replacement using a mix of internal development, commercial off the shelf (COTS) packages and external suppliers, as required…”

CHIEF automates the rules and processes for moving goods in and out of the UK. It allows importers, exporters and forwarders to meet their customs obligations with minimum manual intervention.

The system helps collect £34bn a year, and controls the import and export of restricted goods. It helps to detect smuggling.

Capgemini runs CHIEF as part of the Aspire IT services contract for HMRC, which expires in 2017. HMRC plans to bring the Capgemini element of the CHIEF contract in-house to ensure an uninterrupted service until the replacement is delivered. The Treasury and Cabinet Office have agreed the approach.

HMRC consulted the market about CHIEF in late 2013. Its officials  say they decided to build the replacement system on an incremental, modular basis, with frequent testing to ensure its components all work, both on their own and as a whole.

CHIEF was originally built by BT in 1989 and runs on Fujitsu’s Super Nova platform using the VME operating system. Capgemini took over the management of CHIEF from BT in January 2010 as part of Aspire.

A replacement for CHIEF is necessary because it’s based on ageing technology and within the next seven to 10 years the EU will make legislative changes to international trade processes, notably the Union Customs Code (UCC), part of the modernisation of customs which will serve as the new framework regulation on the rules and procedures for customs throughout the EU. UCC cannot be accommodated within the existing CHIEF service.

It’s unclear what HMRC will do with the Aspire contract as a whole when it expires in 2017.

Comment

It would be much easier for HMRC to bring in a new supplier for CHIEF, or give a new contract to Capgemini. But that would put the customs side of HMRC in the hands of one main supplier again. By relying on internal development, commercial off the shelf packages and a range of external suppliers, HMRC will have control of its IT and the costs of change and innovation.

Well done to HMRC for complying with the Cabinet Office’s “presumption” that no IT contract will cost more than £100m.

The replacement of CHIEF may not go smoothly – but it’s unlikely to go as badly as the introduction of CHIEF, for which importers and exporters bore the scars for years.

HMRC adopts a mixed approach to CHIEF replacement

Real time information – the good and bad

By Tony Collins

Widespread publicity over the past week has drawn attention to inaccuracies in Real Time Information, HMRC’s system for handling PAYE submissions from employers every time they pay an employee rather that at the year-end. The Daily Telegraph broke the story with the headline

“Five million UK workers face uncertainty after tax bills wrongly calculated twice in HMRC blunder”

The BBC said tax  statement errors affect thousands of people.  Accountancy Live reported that tax experts were urging HMRC to review RTI to see if it’s fit for purpose. The FT reported HMRC as admitting that an “unknown number of inaccurate P800 statements and payment orders for the 2013/14 tax year had been sent to taxpayers since September 15″.

But HMRC says that RTI is a success for more than 98% of those employers who have to use it.

Tens of millions of PAYE employees are now on RTI – and if the system were a disaster HMRC and MPs would be deluged with complaints. That hasn’t happened.

Indeed the National Audit Office was complimentary in its audit of HMRC’s 2013/14 accounts of the ability of RTI to give employees the correct tax code when their jobs change – thereby reducing the levels of under and overpayments.

“Data quality has improved and HMRC’s own evaluation suggests that RTI is helping to change employer behaviour by encouraging them to tell HMRC of changes in employee circumstances earlier,” said the NAO.

RTI – the good and bad

The good news for HMRC and the government’s welfare reformers is that Universal Credit, which relies on RTI to calculate benefits, is running well behind its original schedule.

UC is rolling out to a small number of people – fewer than 12,000 by 14 August 2014 –  rather than the expected 184,000 by April 2014, according to the DWP’s revised December 2012 business case.  This means that inaccuracies in RTI will have little effect on UC for the foreseeable future.

The bad

If RTI cannot be relied on to provide accurate information on whether Universal Credit claimants are paying the right amount of tax, UC cannot be relied on to provide correct payments to claimants – which would undermine the welfare reform programme.

Another problem is that tax experts are weary of HMRC’s repeated blaming of employers for RTI’s problems. One of the reasons RTI contains inaccuracies is that HMRC uses employers’ changing internal “works” numbers as individual identifiers, as well as the National Insurance Number.

Employers change their payroll works numbers for a variety of reasons, say when an employee is promoted to management, when the company wants to distinguish various groups for the employer’s own purpose, or when an employee moves location.

The works number is for the internal use of the employer but is included in information submitted to HMRC. The number is “owned” by employers and is for them to use and administer as they see fit. It should have no relevance to HMRC.  But when the works number changes, it can trigger a false assumption in HMRC’s systems that the employee has two employments, with the same employer.  This would generate an incorrect tax code – and would be HMRC’s fault, not the employer’s.

Steve Wade, tax director at KPMG, puts it well.  He says of the latest publicity about RTI errors:

“These systems issues are causing so called ‘employer errors’, which is where the data supplied by the employer is not processed by HMRC systems as expected.

“Sometimes this can be due to bad data being supplied but equally it can be due to errors in HMRC systems which were not designed to deal with all the complexities of PAYE.

“The upshot for employers and employees is that they find that the PAYE tax and National Insurance Contributions that have been paid do not match those calculated by HMRC, despite their providing the information as requested.  As a result, they now face uncertainty over whether they have paid the right amount of tax.

“There needs to be some significant and urgent investment in the processing and back end software systems at HMRC which collect and process this data to generate the operational efficiencies envisaged when the whole RTI initiative was conceived.”

Wade told Accountancy Live: “At the moment, RTI just does not seem to be delivering information that is real. What we need is a thorough investigation of what has happened by a team which includes not just HMRC personnel but external specialists. Only that will give the necessary degree of confidence in the system that is vital for everyone who depends upon it.”

Natalie Miller, President of the Association of Taxation Technicians, says of RTI’s inaccuracies:

“This is an alarming revelation and further underscores the need for collaboration with external stakeholders, all of whom have a vested interest in the success of RTI.

“We have been drawing HMRC’s attention to the quirks and complexities of RTI in meetings and correspondence from its inception. We have also highlighted the significant burdens it places on employers and agents. What we are seeing now are real and serious practical problems for possibly many thousands of employees at a time when building confidence in the system is crucial.

“Some of those difficulties might have been avoided if HMRC had heeded advice from ATT and similar bodies at an early stage.

“In light of this latest revelation, we are calling for an urgent review of the RTI system to ensure that it is fit for purpose. This is essential because every employer and employee is entitled to know that PAYE is being dealt with properly. It is doubly important because the RTI system underpins the Universal Credit system that is being rolled out by the Department for Work and Pensions to replace certain state benefits.

“If, as HMRC’s reported comments suggest, the particular problem arose because employers had failed to send in final payment statements for the full 2013/2014 tax year, that suggests two things.

“Firstly, that the process is simply too complex for employers to understand. Secondly, that either HMRC know the information to be incomplete and are failing to address this before placing reliance on the information, or HMRC do not know the information is incomplete, which raises the equally worrying prospect that the system cannot identify when important information is missing.

“It is in nobody’s interest that RTI stumbles from problem to problem; that threatens its credibility. We all need a system that does what it says on the tin. At the moment, Real Time Information just does not seem to be delivering information that is real. What we need is a thorough investigation of what has happened by a team which includes not just HMRC personnel but external specialists.

“Only that will give the necessary degree of confidence in the system that is vital for everyone who depends upon it (employees, pensioners, employers, payroll bureaux, tax advisers, other parts of government and HMRC itself). The review’s remit should extend to other areas of RTI where systemic problems have been identified. The ATT and many other professional bodies stand ready to assist HMRC in that review.”

George Bull, senior tax partner at Baker Tilly, said that the RTI system had so far failed to demonstrate that it can put an end to the annual problem of incorrect tax demands and refunds. “It seems to me that in 2014, this is a pretty sorry state to be in.”

HMRC note to employers, professional bodies and business groups in full (published by Accountingweb)

“We are today emailing our stakeholders to explain that we are aware that a number of employees recently received a form 2013-14 P800 which was issued during our bulk 2013-14 End of Year reconciliation exercise.

“The 2013-14 P800 shows an incorrect overpayment or underpayment where the pay and tax shown on the P800 is incorrect and does not match that shown on their 2013-14 P60.

“The most common scenarios are where:

  • An incorrect overpayment is created as the 2013-14 reconciliation is based upon the Full Payment Submission (FPS) up to month 11 although the employment continued all year.
  • Where the year to date figures supplied are incorrect, for example where an employer reference changed in-year and the previous pay and tax is incorrectly included in the “year to date” (YTD) totals.
  • We have received an “Earlier Year Update” (EYU) and this is yet to be processed to the account.
  • There is a duplicate employment (often caused by differences in works numbers and other changes throughout the year)

“We are urgently investigating these cases and will look to resolve the matter in the next 6-8 weeks.

“We currently do not know the scale of the issue, but some large employers are involved, so several thousands of employees may be affected.

“Next Steps

“We are very sorry that some customers will receive an incorrect 2013-14 P800 tax calculation.

“We are urgently investigating these cases and will look to resolve the matter and issue a revised P800 to the employee in the next 6-8 weeks.

“Employers and their agents should not send any 2013-14 EYUs unless requested by us. We are aware that there are still some 2013-14 EYUs which we have yet to process to the relevant account.

“If an employee asks about a 2013-14 P800 which they think is incorrect, they should advise them:

  • Not to repay any underpayment shown on the P800
  • Not to cash any payable order they may have received
  • Employees will not be affected by the incorrect tax code as we will issue a revised P800 before Annual Coding.”

Comment

RTI is not a disaster but it’s clearly not in a fit state to support Universal Credit – another uncertainty for UC. When the National Audit Office reports on UC, as it is due to do in the next few weeks, it would be useful if it also reports on the state of RTI.

If it does so report, the NAO should not take at face value HMRC’s claims that the fault with RTI lies mainly with employers.

[The NAO will find that, even after the modernisation of PAYE processes, the systems still incorporate COP/CODA/BROCS software that dates back more than 30 years.]

Universal Credit’s “multiple frustrations and complications”

By Tony Collins

universal creditJournalists who are trying to find out the current state of the Universal Credit programme will get little help from the Department for Work and Pensions unless its press officers sense that the eventual outcome will be positive.

Sometimes journalists call me as part of their research. They want to know whether UC will end up as another government IT disaster. I had such a call yesterday.

The conversation focused on IT. But it’s a maxim in the industry that major change programmes in the public sector usually fail or are delayed for managerial rather than technical reasons.

The introduction of a new passport system failed when a better, more secure system slowed down the issuing of new passport applications.

Instead of halting the roll-out to see how to speed up the issuing of passports – by changing procedures or spending more on staff and equipment – the Home Office continued the rollout and chaos ensured. That wasn’t the fault of the IT.

It may be a similar story with Universal Credit. Even if the IT as far as it goes works well, claims handling is a laborious process,  The main systems do not handle calculations of gross income, net income or back-office integration, all of which are managed manually.

Chaos is unlikely because the rollout is going so slowly.  But the amount of manual intervention required means the slow rollout is enforced rather than merely voluntary.

[This slow rollout is despite an IT budget for UC including migration costs from 2010 to 2014/15 of £812m as at December 2012. Within this budget, £303m had been spent to March 2013, mostly with the DWP's main IT suppliers Accenture, IBM, HP and BT.]

The programme is also running into non-IT difficulties such as delays in issuing first-time payments to claimants because of a variety of reasons around the complexity of new procedures, and tenants unable to pay rent because the money hasn’t gone directly to landlords.

If UC goes nationwide, as Iain Duncan Smith says it will next year, it will still be able to handle only limited numbers of claimants, in the tens of thousands, not hundreds of thousands and certainly not millions.

This article is a reminder that Universal Credit faces problems that go beyond the IT. A North West housing association said a survey of its tenants had exposed flaws in the universal credit system, with some claimants turning to pay day lenders to get by.

After taking part in a pilot in 2013 of the roll out of UC, First Choice Homes Oldham found that their tenants had suffered “multiple frustrations and complications with the system”. Data collected this summer from 40% of the housing association’s tenants on UC found that:

• 55% found the period between making their UC claim and receiving their first payment very difficult. 44% managed financially by borrowing and 18% had taken out a pay day loan.

• 74% had not been offered personal budgeting support by the Department for Work and Pensions. However, 57% of the tenants that were offered this service took up the offer.

• 37% did not receive their payment on the same day each month, making budgeting even more difficult.

• 59% of tenants had not found work since claiming UC.

When asked by FCHO to name the first three bills that would be paid once they were in receipt of UC, 19% of tenants did not name rent as a priority bill.

So will UC succeed?

It’s laudable that the coalition is trying to simplify the benefits system. No pain no gain. But it’s not doing it openly. IDS pretends all is well when clearly it isn’t.

This means that UC becomes an impossible project to manage well. No programme leader can take big problems to IDS because big problems are not supposed to exist. UC desperately needs a new political leader who has no emotional equity in its success.

It’s right (and largely involuntary) that the DWP is going slowly in rolling out UC. This way chaos is avoided.

But to handle millions of claims, the processing of UC transactions and payments needs to be a fully automated process. The DWP is working on that – what Iain Duncan Smith calls an “enhanced digital service”.  Nobody seems to know much about it. IDS says it is going to be tested later this year.

Uncertainty

Now into its fourth year of implementation, UC is still mired in uncertainty, despite IDS’s self-confident remarks at the Tory conference.

The facts are likely to emerge when the National Audit Office publishes its updated report which is expected before the end of this year. The DWP may already have drafted its press release saying the NAO report is outdated, which is part of the problem with UC and other big government IT-based programmes: they are more governed by politics than pragmatism.

 

Is the Post Office making money from disputed transactions?

By Tony Collins

This month the Shields Gazette reported that Kevin Carter and his wife Julie, who is registered disabled, had little choice but to re-mortgage their home after the Post Office’s Horizon system showed a deficit of tens of thousands of pounds.

The Carters and dozens of other former sub-postmasters say that Horizon showed shortfalls that didn’t exist by logging some transactions twice.

Sub-postmasters are not directly employed by the Post Office, and under their contracts, are responsible for deficits at their branches.

More than 150 sub-postmasters say they were prosecuted, or made to repay money, because of the system. Some of them were ruined, made bankrupt, or sent to prison.

Five years on, the Carters say they are still no further forward in their fight to reclaim their cash, and have been left with no option but to wait and see what happens.

Mr Carter told the Shields Gazette earlier this month: “We are still in limbo. The Post Office is adamant there was nothing wrong with the system but how can 150 people be wrong?

“We are hoping to have this sorted soon, and hopefully we can get our money back. But, right now, all we can do is sit and wait.”

The couple were allowed to sell their Post Office in Dickens Avenue, Biddick Hall, South Shields, only after they agreed to pay the Post Office £45,000 from the sale, which the PO claimed the couple owed. They have made further payments to the PO from their own pockets, and deductions from Mrs Carter’s salary.

Mr Carter said: “This is a nightmare for us. We were made to feel like criminals, when we haven’t done anything wrong. We contacted the Post Office and asked for help as we were sure it was down to the computer system. But the losses continued to get bigger and bigger and, in the end, they suspended us pending further inquiries.”

The couple are receiving support from Justice for Sub-postmasters Alliance which is representing sub-postmasters across the country.

PO statement

A spokeswoman for the Post Office said: “We cannot comment on individual cases and while mediation is taking place. We will also not comment on the contents of any confidential documents.”

“After two years of investigation, it remains the case that there is absolutely no evidence of any systemic issues with the computer system which is used by over 78,000 people across our 11,500 branches, and which successfully processes over six million transactions every day.”

Campaign

After a campaign for justice by MPs, led by Hampshire Conservative MP James Arbuthnot, forensic accountants Second Sight have investigated the Horizon system. The company’s interim report said its investigation was hampered by a lack of information from the Post Office. The full version of the report has not been published but Private Eye appears to have a copy.

It quotes Second Sight as saying that PO investigators often “fail to identify the underlying root cause of shortfalls prior to initiating civil recovery action or criminal proceedings”.

PO officials then “seem to have defaulted to seeking evidence that would support a charge of false accounting, rather than carrying out an investigation into the root cause of any suspected problems… investigators seem to have found that recording admissions of false accounting was the key to achieving relatively rapid, and inexpensive, asset recovery.”

The 23-page document also notes poor training of sub-postmasters using Horizon, inadequate record-keeping and shoddy auditing processes.

Suicide?

Surrey postmistress Seema Misra went to prison while pregnant on the strength of disputed Horizon evidence. Lee Castleton from East Yorkshire was told to repay £25,000 even though the Post Office wouldn’t tell him how it had disappeared. Tom Brown from County Durham was pursued for four years, accused of stealing £85,000. After sacking and bankrupting Brown, the Post Office couldn’t provide any evidence against him in court.

Private Eye says there are “dozens more heartbreaking stories behind this scandal, with at least one suicide”.

Comment

The PO has received, cumulatively, large sums from the Carters and other former sub-postmasters.

What has happened to the money while it has been in dispute – and who is earning interest on it? Is the Post Office earning money – and has it been earning money for years – on payments made as a result of the disputed transactions?

The longer the disputes continue the greater the suspicion that the Post Office is letting matters drift because it cannot see a way of resolving them. Meanwhile the interest on the disputed payments mounts. And ruined lives continue in ruins.

Private Eye suggests there might have been “miscarriages on a grand scale”. If so,  what’s the PO doing about it?  Some of the disputes are in mediation. But is this a way to park the most difficult cases indefinitely?

Private Eye says the PO pressured a working group, which was set up to coordinate the mediation process, to ignore Second Sight’s report and not pass it on to the mediation team, but it was overruled on the casting vote of working group chairman Lord Cooper.

Does the PO really want injustices to be righted? Or will it let the most contentious of the disputes drag on?

Computer blunder has left us in limbo

Jailed and bankrupt because of “unfit” Post Office IT?

Are some sub-postmasters being gagged?

Private Eye – more trouble looms over the Horizon

Justice for Subpostmasters Alliance

Reasons for councils to avoid large-scale outsourcing? – lessons learnt report

By Tony Collins

Somerset County Council’s Audit Committee has just published “Update on Lessons Learnt from the Experience of the South West One Contract”. The lessons could be read by some as a warning against any all-encompassing outsourcing deal between a council and a supplier, in this case IBM.

The carefully-worded report is written by Kevin Nacey, the county council’s Director of Finance and Performance. It updates a “lessons learnt” report the council published in February 2014.

The latest report concludes:

“… All parties have been working very hard to keep good relationships and to fix service issues as they arise. The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind.”

All local authority large-scale outsourcing deals are complex and difficult to manage. So are councils that sign big outsourcing deals courting trouble? Should councils avoid such contracts whatever the supplier incentives?

Somerset County Council was a top performing council when it created a joint venture owned by IBM in 2007. The aim was to take the council “beyond excellence” in the words of the then Somerset chief executive Alan Jones. His councillors hoped that the new company, Southwest One, would attract much new business and so cut costs for each of the partners.

But even without attracting new business, IBM had difficulties managing the sometimes conflicting expectations and services for each of the initial three clients: the county council, Taunton Deane Borough Council and Avon and Somerset Police.

Former Somerset County Council IT specialist Dave Orr has written a well-informed series of articles on the Southwest One contract.

What’s interesting now is that Somerset County Council, under pressure from Orr and others, has investigated what has gone wrong and why, and is disseminating the lessons, after giving them much thought.

Originally Somerset was proud of its deal with two councils and a police force. Its auditors in 2007 praised the deal’s innovative approach. Now we learn from the latest Somerset report that the contract was “incredibly complicated”. The report says:

“One of the most significant lessons learnt related to the sheer size, breadth and complexity of the contract. Both the provider [IBM] and the Council would agree that the contract is incredibly complicated.

“A contract with over 3,000 pages was drawn up back in 2007 which was considered necessary at the time given the range of services and the partnership and contractual arrangements created.”

[But all big outsourcing contracts run to thousands of pages and are unlikely to be anything but incredibly complicated.]

More from the council’s latest lessons learnt report:

“What has become clear over time is that any such partnership depends upon having similar incentives …”

[Does any big outsourcing deal have similar incentives for supplier and client? Only, perhaps, in the press releases. In reality suppliers exist to make money and, in times of austerity, councils want to spend less.]

“Dissatisfaction can occur”

The county council’s report: “The well-documented financial difficulties faced by the provider [IBM] early into the contract life also affected its ability to meet client expectations. The net effect is that at times the provider and partner aims in service delivery do not always match and discord and dissatisfaction can occur.”

Client function too small

“The Client function monitoring a major contract needs to be adequately resourced. At the outset the size of the client unit was deemed commensurate with the tasks ahead … However, as performance issues became evident and legal and other contractual disputes escalated, the team had to cope with increasing workloads and increasing pressure from service managers and Council Members to address these issues. This is a difficult balancing act.

“You do not want to assemble a large client function that in part duplicates the management of the services being provided nor overstaff to the extent that there is insufficient work if contract performance is such that no issues are created.

“With hindsight, the initial team was too small to manage the contract when SAP and other performance issues were not resolved quickly enough. Sizing the function is tricky but we do now have an extremely knowledgeable and experienced client team.”

3,000-page contract of little use?

“Performance indicators need to be meaningful rather than simply what can be measured. Agreement between the provider and the SCC client of all the appropriate performance measures was a long and difficult exercise at the beginning of the contract.

“Early on in the first year of the contract, there were a large number of meetings held to agree how to record performance and what steps would be necessary should performance slip below targets. Internal audit advice was taken (and has been at least twice since under further reviews) on the quality and value of the performance indicator regime.

“It is regrettable and again with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and SCC was positive. Perhaps the regime was too onerous for both sides to administer.”

[A 3,000 page contract proved of little value in holding the supplier to account on performance. So was there much value in the contract apart from making a lot of money for lawyers? Too tight a contract and it’s “too onerous for both sides to administer”. Too loose and there’s no point in the contract. Another reason for councils to avoid entering a big outsourcing deal?]

“Too ambitious for all parties”

The report says:

“Contract periods need to be different for different services as the pace of change is different. The range of services provided under the initial few years of the contract were quite extensive. On another related point the provider also had to manage different services for different clients. This level of complexity was perhaps too ambitious for all parties.

“Although there were many successful parts to the contract, it is inevitable that most will remember those that did not work so well. The contract period of 10 years is a long time for 9 different services to change at the same pace…”

Drawback of seconding staff

“The secondment model introduced as part of the contract arrangements had been used elsewhere in the country. Nevertheless, it was the first time that 3 separate organisations had seconded staff into one provider.

“In many ways the model worked as staff felt both loyalty to their “home” employer, keeping the public service ethos we all felt to be important, and to Southwest One as they merged staff into a centre of excellence model.

“The disadvantage was that Southwest One was hampered by the terms and conditions staff kept as they tried to find savings for their business model and to provide savings to the Council in recent years given the changing financial conditions we now operate under.”

Different clients on one main contract – a nightmare?

“Another aspect of this contract in terms of complexity is the nature of the partnering arrangement. It is not easy for all partners to have exactly the same view or stance on an issue. Southwest One had to manage competing priorities from its clients and the partners also had varying opinions on the level of performance provided.

“Remedy for such circumstances differed depending upon initial views of the scale of the performance issue and what each client required for its service.”

Quick audit work “stifled”

“It has been particularly challenging to achieve effective audit of the contract, both by internal and external auditors. Access for auditors has been a prime issue with clearance of those auditors often being slow as process involved all clients being satisfied that audit scope, coverage and findings were appropriate.

“The contract allowed for transparent audit access and there is no suggestion here that SWO did not welcome audit.

“Indeed, for the first few years of the contract there was a team within business controls in SWO that enabled and carried out their own audit work on behalf of IBM. It again proved to be the controls required by all partners and the complexity of access that stifled quick audit work to be performed.

“Increasingly, there was debate about capacity to support audit work within SWO and therefore, SWAP [South West Audit Partnership] suffered in terms of their ability to conduct audit work in good time. In addition,

“Police levels of security needed to be far higher than SCC and this complicated access for auditors.”

Arguments over confidentiality – FOI requests “incredibly difficult to answer”

“The most recent SWAP [South West Audit Partnership] audit of the contract client function found that there has been effective monitoring of SWO performance.

“The problem is that reporting of that performance has been hampered by arguments over commercial confidentiality and sensitivities about the validity of reporting.

“It is fair to say that the three clients do not always agree on the quality of service provided, which of course gives rise to SWO management challenging SCC’s robust approach if other clients do not agree when in our view service is deficient.

“The transparency surrounding contract performance has been a contentious issue given these difficulties, and especially at times of dispute and with court proceedings pending. Future contracts must make these issues clearer and give the authority the ability to follow the national agenda for transparency more explicitly and without fear of upsetting either partners or the provider.

“The Freedom of Information legislation is there to serve the transparency agenda but such requests have been incredibly difficult to answer because of need to ensure all parties are sighted on information made public.”

Confused data ownership

“A further issue is that of data ownership and responsibility. SCC must make available data if indeed it has that data. On a number of occasions SCC did not and SWO held data that contained references to other authorities.

“The shared service platform and the nature of service delivery occasionally made it costly to segregate data to respond to FoI and other requests. Secondees were also often torn between their allegiance to their ‘home’ employing authority and their commitment to SWO, which did cause some confusion regarding information ownership.

“In all contracts SCC must strive to ensure transparency is foremost in our thoughts and that clearance of data release is not subject to other parties’ views.”

ICT, SAP and splitting a one-vendor database – a host of issues

“Another lesson learnt from this contract relates to the use of ICT systems to be delivered and managed by the provider in any contract… Firstly, the introduction of SAP so early in the contract life and the system issues experienced meant that SWO performance became synonymous with SAP performance.

“There were many other benefits provided by SWO in the first few years of the contract related to other improvements in the network and associated applications but this was overshadowed by the SAP technology issue.

“Over time SAP has worked for SCC albeit there are still outstanding issues with its configuration and its flexibility to adjust to the Council’s changing needs.

“The creation of one vendor database in support of the shared service agenda is now with hindsight going to be a bigger issue for all clients as we approach the end of the contract.

“There is still insufficient knowledge transfer to secondees and this will leave a legacy issue for our authorities. Future contracts must clarify asset ownership, system maintenance and replacement infrastructure issues.”

Comment

Somerset County Council’s Audit Committee deserves recognition for the work it has put into the lessons learnt report.

It has produced the report under the pressure of years of intense outside scrutiny, by Dave Orr, and others.

Without such scrutiny Somerset could have ended up concealing contractual problems even from itself. We’ve seen in other parts of the country, where councils have failing outsourcing contracts, that the most enthusiastic councillors convince themselves that all is well.

They assume that negative local newspaper reports of problems on their major outsourcing contract are prompted by the profoundly disaffected, just as some councillors and officials in parts of the UK wrongly blamed the lifestyles of complainants when they alleged child abuse.

Mutual incentives?

The Somerset report says each side in an outsourcing relationship needs to be motivated by similar incentives. But can that ever happen? Councils exist to provide good public services as cheaply as possible. Suppliers exist to make as much money as possible.

There can only be similar incentives if a council is so inefficient that there’s enough spare cash to cover council savings and the supplier’s profits.

If there isn’t the spare cash, the council, in its enthusiasm to do something different by outsourcing, can simply fictionalise the figures for benefits and potential savings.

This creative (and legal) exercise is perfectly possible given the depth of the conjecture needed to project costs and savings over 6 years or more.

Part-time councillors who are considering a big outsourcing contract have the time only to glance at summary documents or the preferred supplier’s Powerpoint slides. They are unlikely to spot the assumptions that pervade the formalised legal language.

During such a pre-contract exercise, the most sceptical councillors are often excluded from internal scrutiny, and the disinterested ones who are admitted into the inner chamber can find their heads swimming in a supplier-inspired language that either swathes uncertainty in the business jargon of near certainty or obscures reality in opaque legalese.

How are these lay councillors to get at the truth? Do they have the time?

Big outsourcing deals between councils and suppliers are inherently flawed, as this Somerset report indicates. Too many such deals have ended badly for council taxpayers as Dexter Whitfield’s investigations have shown.

But still some councils sign huge outsourcing deals. Their leading officials and councillors say they took lessons from failed contracts around the country into account. But what does that mean? If a deal is inherently flawed, perhaps because of diverging incentives, it is inherently flawed.

The disaster that is Southwest One could be a priceless jewel in the public sector’s display case if it serves to deter councillors and officials signing further large-scale council outsourcing deals.

Thanks to Dave Orr for alerting me to the lessons learnt report.

Somerset report “Update on Lessons Learnt from the Experience of the South West One Contract”.

UK outsourcing expands despite high failure rates.

 

Labour asks good questions on Universal Credit programme

By Tony Collins

Labour has a “Universal Credit Rescue Committee” whose membership includes a former Rolls Royce CIO Jonathan Mitchell.

Mitchell is quoted in Government Computing as saying that it would be irresponsible for a Labour government to continue spending large amounts of money on Universal Credit without getting answers to important questions such as:

  • Is there a comprehensive business case – one that clearly outlines the expected benefits, demonstrating that the Universal Credit project is viable?
  • Is the business case agreed by all stakeholders?
  • Is there clarity about what needs to be achieved?
  • Is there a stable specification explaining exactly how the new processes will work and how they will be automated?
  • Is the project being managed and staffed by people and organisations with appropriate levels of experience, track-record and expertise, all of whom are capable of delivering the benefits of the project and ensuring safe roll-out in a timely manner?
  • Is the project fully under control?
  • Can it absorb the changes demanded by a new incoming Government? If not, can the project be brought under control at an acceptable cost with respect to the business case, through a re-planning exercise?
  • Once such a re-planning exercise is completed, are we convinced that it was successful and that the project will now proceed to a satisfactory completion in a controlled fashion?
  • Are there appropriate “control gates” in place to ensure that all aspects of each phase of the plan are fully completed (and that projected costs to completion preserve the business case) before allowing the project to move safely onto each next stage?

Mitchell said, “Universal Credit is one of those applications that might look straightforward when you first look at it, but this is most definitely not the case. I believe there are significant process and technical challenges to overcome.”

Comment

Good questions, most of which the Department for Work and Pensions is unlikely to be able to answer satisfactorily today.

The Treasury still hasn’t approved the full business case, which is odd for a project that started in earnest more than three years ago.

It’s hard to see, given the rate of progress, the amount of work being completed manually, the lack of integration with legacy systems, the complexity of changes of behaviour required, the reliance on other parties such as local authorities, the inflexibility of some supplier contracts, regularly changing project leadership, the variable performance of HMRC’s RTI systems, and the DWP’s poor history of success on big IT-related projects, how the UC programme will be completed before 2020 whoever wins the next election.

Labour committee outlines Universal Credit “rescue” strategy – Government Computing

Jailed and bankrupt because of “unfit” Post Office IT? What now?

By Tony Collins

post office logoThe BBC’s “PM” programme returned to the topic last week of subpostmasters who were stripped of their post office contracts and bankrupted because of theft, fraud and false accounting. Some went to jail.

“Is it possible they were innocent and that a computer system was to blame instead?” asked Eddie Mair, the programme’s presenter.

The BBC has seen a leaked copy of an independent report the Post Office commissioned into its “Horizon” branch office accounting system. An interim version of the report by consultancy Second Sight was released last year.

The leaked report says the system was unfit for purpose in some branches, says to the BBC. When Post Office investigators checked out shortfalls they did not look for the root cause of the errors – and instead accused the sub-postmasters of theft or false accounting, says the BBC, quoting from the report.

£1bn Horizon system

More than 11,000 post offices use Fujitsu’s £1bn Horizon system for branch accounting and rarely have problems. At the close of each day, the system balances money coming in from customers and money going out, to banks, energy companies, for tax disc sales and for lottery tickets.

If the system showed there was a shortfall, subpostmasters had few options: make up the deficit themselves, sign off the accounts as correct, or refuse to sign off – which might have meant closing the post office (and upsetting customers) while a financial audit took place.

The BBC PM programme last week re-broadcast its interview in June 2012 with a gently-spoken Welshman, Noel Thomas, who worked for the Post Office for 42 years before he had problems with the Horizon branch accounting system at Gaerwen. When he went to balance the accounts the system kept telling him there was a deficit – a shortfall in the daily takings.

post-office-signPrison

After speaking to the Post Office helpline several times he believed the matter would be sorted out in time. He signed off the accounts – and the Post Office took him to court for false accounting. He pleaded guilty and went to prison; and he went bankrupt.

In his interview with Eddie Mair, Thomas came across as a man of guileless integrity.

“I had a very busy post office,” said Thomas. “I am not ashamed to tell you I had a very good income of between £20,000 and £30,000 a year. I worked very hard for it: I looked after my customers.”

Mair: What was the first sign of trouble?

“I did have trouble over about 12 months actually. The last six months it went worse. You just couldn’t balance. It was going in the end (into deficit) at the rate of £2,000-£3,000 a week.”

Mair: This wasn’t your own personal books – you weren’t filling in a ledger – this was the computer system?

“This was the computer system. In the end I was convicted on the basis that I false accounted for over £50,000.”

Mair: They thought you’d stolen it?

“Yes. But when it came to the court case they dropped the theft [charge] very very quickly and just went for false accounting.”

Mair: You went to jail?

“Yes… I was lucky. I only had eight days. Time went very very quickly.”

Mair: But I am guessing for you that was not really the problem, the passing of time. You’d been branded a criminal?

“Yes. That’s what got me you see.”

Mair: The Post Office still says it is confident about this computer system. It is still happy with it.

“It would say [that], wouldn’t it?”

Mair: As for you, are you confident you didn’t make a lot of mistakes?

“Yes. I can say I didn’t make mistakes. I can say with my hand on my heart I didn’t take the money.”

Mair: What effect has this had on you?

“A big effect, because I was declared bankrupt. The Post Office are paying my pension but they took my private pensions away.”

Mair: What would you like to happen?

“Not for me myself but for (other subpostmasters and mistresses). It has ruined their lives hasn’t it? If you pilfer off the Royal Mail you need to be punished –”

Mair: But Noel if you are correct – and obviously the Post Office has a different view of this – if you are right then you have been made bankrupt, you have lost almost everything -

“Yes.”

You have been to jail -

“Yes.”

Over a computer mistake -

“Yes.”

Mair: What do you want from them?

“That we can get justice for everybody.”

post officeCriminals or faulty systems?

Thomas had given up trying to prove his innocence when he received a phone call from retired senior probation officer Roch Garrard who said the same thing had happened to his local postmistress in Hampshire.

In time Thomas found that dozens of middle-aged, middle-class subpostmasters and mistresses who had never put a foot wrong were being branded criminals.

“It didn’t make sense to me so I started to contact some of them and said to them ‘this is what happened to our postmistress, what happened to you’ and the stories were all so similar that I thought there must be something wrong,” he said.

Now, more than 150 sub-postmasters say they were wrongly prosecuted, or made to repay money, because of the system. The Post Office remains defensive. Its public statements express little sympathy. It is, though, in secret talks with the subpostmasters over possible compensation. But can money ever put right injustices that have ruined lives?

New Second Sight report

BBC reporter Dan Johnson said the latest report explains exactly was going on with the Post Office computer system. “The thrust of this report is that it was faults in that computer system as well as communication problems, and issues around training that led to these mistakes. It wasn’t dishonesty,” said Johnson.

The report said training was not good enough for those without IT skills and power failures and communication issues made things worse. Helpline staff gave conflicting advice or said problems would sort themselves out.

Second Sight found in its research on Horizon that bugs were  not unknown. It said in its interim report that “some combinations of events can trigger situations where problems occur”.

A tearful Sarah Burgess Boyd, from Newcastle-upon-Tyne told the BBC she lost her life savings in repaying an incorrect shortfall. She said of the Post Office, “I just don’t know of another business that would conduct themselves in such a callous and inhumane manner.”

The Post Office said the leaking of the report was “unhelpful”. In a statement, the Post Office told the BBC:

“Although we will not comment on the contents of any confidential documents, after two years of investigation it remains the case that there is absolutely no evidence of any systemic issues with the computer system which is used by over 78,000 people across our 11,500 branches and which successfully processes over six million transactions every day.”

The Post Office is in mediation with some of the affected subpostmasters, in part because of campaigning for justice by MPs, particularly North East Hampshire MP James Arbuthnot.

Also leading the campaign is the Justice for Subpostmasters Alliance, which was set up to “raise awareness of the problems around the Post Office Horizon system which for many years Post Office Limited has denied exist”.

Despite the mediation, the relationship between the accused subpostmasters and the Post Office remains strained. Alan Bates, a former subpostmaster in Wales who founded the Justice for Subpostmasters Alliance, continues to submit FOI requests to the Post Office, the latest being August 2014. The Post Office tends to refuse his requests or gives him unsympathetic replies.

In one of his FOI appeals, Bates tells the Post Office that the concern is not about the millions of successful weekly and monthly financial reconciliations that take place but the “numerous unsuccessful reconciliations that take place that Post Office refuses to even consider may occur”. Post Office management “seems blind to such possibilities”.

He told BBC Wales in 2012:

“One of the big problems with Horizon is the inability to fully examine all the data you have put in the system. You were not allowed to interrogate it. They restricted the access. I refused to be held liable for a system that I and my staff were unable to access to check.”

Under the FOI Act, Bates asked the Post Office last month for the total amount in value and number of all “transaction correction” invoices and credit notes issued to post offices in the latest accounts period; and he asked in April 2014

“Has Post Office ever been made aware of faults within the software of their Horizon System that would have impacted in any way on the accuracy of the accounts of any post office?”

The Post Office did not say. Its reply was that the question was not specific enough.

Ministers have been unsympathetic to the accused subpostmasters –  although the campaign to clear the names of the accused has come mostly from Conservative MPs. Minister Jo Swinson told the House of Commons last year that the number of subpostmasters who’d complained about the Horizon system was “tiny, tiny”.

The National Federation of SubPostmasters has also been unsympathetic and has backed the Post Office. The Federation said: “We continue to have complete confidence in the Horizon system, which carries out hundreds of millions of transactions every week at 11,500 Post Office outlets across the country.

“The NFSP has seen no evidence to suggest that Horizon has been at fault and we believe it to be robust.”

Contract Law

Bhavisha Parekh, a case handler at Contact Law, was approached in 2009 by a sub-postmaster whose accounts had been audited that morning – and they’d found a loss of £7,000.

Parekh writes on the Contract Law website:

“The client had found this loss when doing her daily accounts a week earlier and asked the Post Office auditors to assist her and investigate the matter to locate the loss and rectify the accounts.

“Post Office accounts consist of cash, stamps, and postal orders as well as anything else they trade in; everything is given a financial value. The client’s loss was not of cash and all her transactions were showing to be completed correctly.

“However, upon the auditor’s confirmation of the loss she was charged with theft from the Post Office and given notice of being given a statutory demand for the £7,000.

“The client was in tears over the phone as she felt she had been wrongly charged; the client had run the Post Office for many years without fault and had become a pillar of the community.

“She felt victimised, as when trying to resolve this problem with the Post Office she had asked them to audit her branch and now she was being charged with theft.

“That day I gave the client details of a firm local to her (solicitors) to assist her with this matter. A few weeks later when calling the client to get feedback on the outcome of her case, she explained that she had had been investigated by the Post Office but they had not found anything to show she had taken the money.

“When auditing her branch the final accounts showed a loss; however, the auditors were unable to trace where this loss occurred. After further investigation and having a forensic accountant look into the matter, there were still no answers as to where this loss had occurred.

“This seemed pretty strange; the client in the meantime was told she could not work in the Post Office or even enter the building so she was left without an income and fear of being criminally prosecuted.

“However, after a month or so the Post Office wrote to her to state they had dropped the charges. She would however not be able to commence work as a sub-postmaster, and no explanation of the matter was given.

“Since speaking to this client I was approached by two more former sub-postmasters with the same case. However, they have not been as ‘lucky’ as my initial client – one was dismissed as a sub-postmaster and asked to repay this ‘lost’ amount, and the other was charged with theft and imprisoned for 18 months as well as ordered to pay a sum of £75,000.

“In all three cases the Post Office and their trained auditors have been unable to locate what this loss is; further they have not been able to trace any money into the postmasters’ accounts. Apart from there actually being a loss, there has been no evidence of any theft ever taking place.

“I have only spoken to three sub-postmasters; however this is happening at an increasing scale all over England. Computer experts are now stating that the ‘Horizon’ software the Postmasters use is flawed and so showing these losses.

“Potentially, due to this computer error, many sub-postmasters have lost their jobs, been imprisoned, and left traumatised by the Post Office’s actions.”

Comment

The Post Office deserves credit for investigating some of the complaints (after years of pressure from MPs) and it is said to have settled some of the less serious cases. But five years since the accumulation of problems came to light the convictions against subpostmasters remain. Computer Weekly highlighted the plight of subpostmasters in 2009.

Second Sight’s latest report will add to concern that lives were ruined because unexplained deficits on the Post Office’s Horizon system were not thoroughly investigated – and the root cause established – before the Post Office ticked the legal box to prosecute.

There is scope for systems to go wrong when there are multiple interfaces, occasional power failures and faults in networks and communications equipment. The Post Office’s Horizon system has multiple interfaces; and in any case no IT system is perfect. That Horizon works well for tens of thousands of subpostmasters is no guarantee it will work well for all.

Telling the family of someone struck by lightning that millions of people are not struck by lightning every year is extraordinarily insensitive. What’s the point of the Post Office’s continuing to insist that most subpostmasters have no problem with Horizon? Clearly there are no system-wide issues but nobody is saying there are – and why would those sent to prison, made bankrupt or deprived of their livelihoods care if IT issues were systemic or not? They say it happened to them.

Nobody in the general population would believe that 150 or more subpostmasters were dishonest.

Who would put the integrity of a computer system above the integrity of 150 subpostmasters?

The Post Office, as the prosecuting authority, could argue it is only doing its job in protecting its money and the investments of its shareholders. But in doing their jobs Post Office managers seem to be behaving more like machines than humans. They prosecuted for false accounting because they could.

They could, because sub-postmasters, when confronted by a deficit they didn’t understand, signed off accounts after being told by the IT helpdesk that the problems would probably clear in time. Strictly speaking, signing off accounts as correct when they are  known to be incorrect is false accounting. But was it something the Post Office should have prosecuted, given the mounting complaints about the accuracy of the system’s deficit figures?

Still the Post Office is refusing to answer subpostmaster’s questions. Its managers know they have the legal and contractual upper hand; and as owners of the system they possess the facts. What they do not have is the moral upper ground: they lost any claim to neutrality when they took subpostmasters to be dishonest before properly investigating the potential for shortcomings of the system.

It will be damaging to justice and the reputations of the subpostmasters if the Post Office continues to conform to the stereotype of a large organisation that, once it has denied liability for anything, refuses repeatedly to alter its position, whatever the facts.

As individuals, Post Office managers are probably understanding. As an institution the Post Office appears hostile to those whose lives have been ruined. It seems content to allow the cry for justice to stretch out for years, while it remains defensive and unsympathetic.

Shadow business minister Ian Murray asked in the House of Commons last year:

What processes will be put in place to compensate sub-postmasters and former sub-postmasters who have been disadvantaged, fined, lost their businesses, homes or even jailed, as a result of the problems with the Horizon system?

Wronged subpostmasters deserve far more in compensation than the sums originally in dispute. Is the Post Office institutionally capable of righting egregious wrongs?

Are disaffected subpostmasters having to sign gagging orders?

Second Sight interim report

Subpostmasters tell their story

Justice for Subpostmasters Alliance

 

DWP appoints 180k DG Technology

By Tony Collins

Mayank Prakash is the new Director General for Technology at the Department for Work and Pensions. He’ll be responsible for the DWP’s IT services and ensuring that its technology supports current and new digital services. He is the permanent replacement for DWP Chief Information Officer Andy Nelson who was in the role less than a year.

Prakash was previously Managing Director of Wealth and Asset Management Technology delivery centres at Morgan Stanley. Before that he led IT, security and digital business transformation at Sage UK.

He said: “This is a once in a lifetime opportunity to simplify welfare by transforming one of the UK’s largest IT estates to deliver easy to use digital services. It is a professional privilege to improve how the government delivers services to 22 million citizens.”

He’ll start in November.

His early career was in leading technology and eBusiness teams for Lucent and then Avaya where he was the International IT Director. He has an MBA from Manchester Business School.

He will be partly responsible for Universal Credit.

DWP’s advert for a £180k IT head – what it doesn’t say

IDS not quite as bullish on Universal Credit programme?

By Tony Collins

Iain Duncan Smith told the House of Commons in January 2013:

“Universal Credit is on track and on budget. The systems are not new or complex. After all, more than 60% of the total developed system is based on reusing existing IT. New developments will use tried and tested technology.

“The key difference between how this Government are doing things and how they were done before is that we have adopted commercial “agile” design principles to build the IT service for universal credit in four stages, each four months long.”

No longer does IDS say the Universal Credit programme is on time or on budget. Indeed in the House of Commons yesterday he was asked by Labour if the Treasury has approved the full business case for Universal Credit. His replies to MPs were not quite as bullish as they sometimes have been.

He spoke about the programme almost entirely in the future tense, and when he mentioned the present state of the programme he quoted someone else –  John Manzoni, the chief executive of the Cabinet Office’s Major Projects Authority.

Labour’s Nicholas Brown asked IDS when he expects the business case for Universal Credit to be fully signed off.

IDS: “I announced in December that Her Majesty’s Treasury has approved funding for the universal credit programme in 2013-14 and 2014-15. The final stage in Treasury approvals is sign-off of the full business case, which covers the full lifetime of the programme. We expect to agree that very shortly.”

Brown: The answer to a similar question two months ago was “very shortly”, but it is taking rather longer than the Secretary of State intended. What are the major outstanding issues between his Department and the Treasury, and where does universal credit now stand in the Cabinet Office’s traffic light system?

IDS: “… the reality is that we have agreed all the spending that is relevant to the plan that we set out at the end of last year. The final point relates to the full lifetime of that programme, which will take it all the way through, probably beyond all the years that anybody present will be in government. [MPs: 'Certainly you!'] …  That is now being agreed and the reality is that it has to be done very carefully. I genuinely believe, from my discussions, that it will be signed off very shortly. The result will be that the programme will be seen for what it is: a programme that will deliver hugely to those who have the toughest lives and need the most support and help.”

Labour’s Andrew Gwynne asked when the government is going to get a grip on a “chaotic shambles”.

IDS: “It is always nice to live in the past, but the reality is that if the hon. Gentleman waits he will see that this programme is running well and will be delivering, that this programme of universal credit will benefit everybody who needs the support they most need, and all the nonsense he is talking about will all go away.

Chris Bryant, Labour, said that IDS keeps telling MPs that the UC business case will be approved very shortly.  “What has gone wrong?” he asked IDS.

IDS: “There are no sticking points, but these matters need to be agreed carefully. This test-first-and-then-implement process is the way all future programmes will be implemented.

“I just want to quote Mr Manzoni, the new chief executive of the Major Projects Authority, who made it clear to the Public Accounts Committee in June that universal credit is stable and on track with the reset plan.”

Comment

The National Audit Office is re-investigating the UC programme and is expected to publish its second “progress” report on the state of the programme by December.

If IDS says anything unjustifiably positive about the programme now, MPs and the media will compare his comments today with what the NAO says in its new report. Is that why he refers to the programme only in the future tense? And who can say with certainty what will or will not happen in the future?

It may be worth mentioning that ministers and officials, some years into the NPfIT, referred to the state of the programme almost entirely in the future tense.