Civil servants exclude some major IT and other projects from proper oversight, finds National Audit Office

By Tony Collins

Civil servants are excluding some of the biggest and riskiest IT and other projects from oversight by the Infrastructure and Projects Authority, the National Audit Office has found.

A report of the NAO, which is published today, raises questions about why officials are removing projects from oversight for no clear reason.

Amyas Morse, head of the NAO, calls for the Infrastructure and Projects Authority to exercise a “tougher discipline over the terms on which projects are included, or more to the point excluded from its oversight”.

The NAO report says that 29 major ICT projects costing about £10bn fall within the Authority’s remit, as well as a further 41 major projects worth £83bn that are described as “Government transformation and service delivery” projects. These 41 projects include the modernising of government “back office” activities.

Specific major projects that fall within the Authority’s remit include the Universal Credit IT programme, the separate Department for Work and Pensions “IT transformation” and the Department for Business, Energy and Industrial Strategy’s smart meters roll-out.

The NAO criticises the “poor records and incomplete reporting of the process for projects entering or leaving” the Authority’s portfolio. This lack of transparency “increases the risk and perception that projects are removed inappropriately”, says the NAO.

Major IT projects such as the one that supports the roll-out of Universal Credit are not subject to independent oversight where the results are published, except when the National Audit Office investigates or when the projects are reported on in a general and vague sense by departments. Public Accounts MPs regard oversight by the Infrastructure and Projects Authority as important because it reveals whether projects have had “red”, “amber” or “green” traffic light reviews.

But for years senior civil servants have resisted publication of the traffic light status of their major projects. A test case went to the High Court in 2008 when the civil service fought the publication of “Gateway Reviews” which included the traffic light status of the ID cards scheme.

Co-presenter of the BBC R4 Today programme John Humphrys covered the High Court case at the time. He began his interview with Computer Weekly by saying,

“The government does not want us to know how its big IT projects are going. It’s using an ancient law to keep these massive projects, most recently ID Cards, from public view…”

Thanks to the insistence of the then Cabinet Office minister Francis Maude, who introduced measures in 2011 to force departments to be more openness about major IT projects, the annual report of the Infrastructure and Projects Authority contains short summaries of the status of major projects.

But the civil service continues to refuse FOI requests to publish the results of its reviews of the status of major projects such as Universal Credit and the smart meters roll-out.

And today’s NAO report – “Leaving the government major projects portfolio” – underlines the fact that departments close down some major IT and other projects without mentioning anything to Parliament or the public. The NAO calls on the civil service to “publish a statement on project closure that assesses what has been delivered”. The NAO says,

“Departments are responsible for delivering the benefits of projects and such a statement would close the gap in visibility of major projects…Publication of evaluations would help departments learn lessons from major projects, including the realism of expected benefits.”

The NAO finds that the Infrastructure and Projects Authority is agreeing to requests by departments to remove major projects from the Authority’s oversight.

The NAO goes further: it says it is not clear why some programmes were not included in the Authority’s portfolio of projects in the first place.

The NAO report also found that the civil service has:

  • Revised a project’s original plans and targets, then given the project a “green” traffic light status based on the revised baseline rather than the original plan. The NAO cited the Mobile Infrastructure Project to fill gaps in commercial mobile telephone coverage. The Department for Digital, Culture, Media & Sport worked in partnership with four mobile network operators. It initially committed to building 575 mobile telephone masts to expand coverage to 60,000 premises, at an estimated cost of £150m. But after approval, these targets proved over-optimistic and ultimately unattainable. It built 75 masts against a revised target of 40, reaching 7,199 premises at a cost of £36m. The Infrastructure and Project Authority’s exit review gave the project a “green” traffic light status against the new baseline. The subsequent evaluation used only the revised baselines and reported that they had been achieved.
  • Changed the scope of projects without reporting it.
  • Withdrawn projects from the Authority’s oversight without carrying out a final “Gate 5 Review” – or any other exit review – of whether the project has achieved the intended benefits. Sometimes departments are “not clear” what the withdrawn project has achieved”, said the NAO.
  • Withdrawn projects from the Authority’s scrutiny after they have obtained poor results during reviews (Par 14).
  • Withdrawn projects before they are complete or have achieved their objectives. “The Authority monitors benefits when a project is on the Portfolio but is not in a position to monitor whether they are realised once it leaves,” says the NAO.
  • Withdrawn projects from the Authority’s scrutiny without anyone knowing why. The NAO report said, “We saw very limited documentation to support the Authority’s agreement to remove a large number of projects from the Portfolio on three occasions. This reduces transparency. Similarly, departments often had difficulties in responding to our questions about sample projects when relevant people had moved on, indicating a lack of central record-keeping on projects within departments.”
  • Embarked on major projects without a dedicated project team, a clear end point or a business case. “Out of the 302 projects that left, the Authority recorded 48 as having no business case,” said the NAO.

Comment:

The NAO report is thorough. It suggests that little has changed in decades.

MPs and the public have no secure right to know if major IT projects are failing, have been cancelled or are going massively over their budget.

Francis Maude tried to force departments to be open about their major IT projects but since he left as Cabinet Office minister the civil service has returned to its old unaccountable ways.

Tens of billions of public money are being spent on major IT-related projects. Why would any government want information published on whether its major projects are failing?

As John Humphys of the BBC Today programme said in 2008, “The government does not want us to know how its big IT projects are going”. It’s up to public accounts MPs and the NAO to continue to campaign for this to change.

Projects leaving the government major projects portfolio – NAO report

 

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Uupublished plan to throw another £13bn at the NHS’s IT problems?

By Tony Collins

The Health Service Journal yesterday revealed details of NHS IT investment plans that have been costed at about £12.9bn over the next five years.

The HSJ’s award-winning technology correspondent Ben Heather  says the sums currently involved – which could reduce as proposals are “reined in” – are on a par with the notorious National Programme for IT in the NHS.

He says that officials working on the plan have produced an estimate of between £10.9bn and £12.9bn for the cost of supporting proposals across 15 long-term plan “workstreams” ranging from creating personalised care to improving cancer survival.

The figures form part of the work of the digital and technology workstream for the long term plan, which is being developed by NHS England and NHS Improvement.

“The sum would be on par with the National Programme for IT, the most expensive push to improve IT systems in NHS history and an infamously costly and troubled project. It is likely to reduce substantially, however, as ambitions for the plan are negotiated and reined in over coming weeks.”

The plan is due to be published in late November or early December. The health secretary is known to be a keen advocate of new IT-related investments.

It is likely that a sizeable portion of the new £20bn planned for the NHS – which will be financed partly by tax increases that are due to be announced in the budget later this month – will go on NHS technology.

But the Health Service Journal suggests the investments will be controlled centrally, which may be a bad sign given that one of the major flaws in the failed £13bn NPfIT was that money was controlled centrally rather than by local groups of doctors and nurses.

Comment

On the face of it the current investment proposals bear no resemblance to the NHS IT programme NPfIT which was “dismantled” in 2011.

The NPfIT comprised a handful of specific major projects that were to be implemented nationally under the umbrella of “ruthless standardisation”.

The current proposals look very different. The investments fall into vague categories such as digitalising secondary care, improvements to IT infrastructure, data gathering and analytics.

The proposals have all the appearance of a different way the NHS has found to waste vast sums of public money.

It has never been acknowledged by the Treasury, NHS England or the Department of Health that the NPfIT wasted billions on spending that was invisible to the public, such as numerous consultants, years of globe-trotting by officials, first-class hotels across the world, sponsored conferences and unreported funds for marketing items that included DVDs and board games designed especially to promote the IT programme.

For officials, there’s nothing more exciting than going to work on a £13bn technology programme where money flows more freely than water. It’s no wonder officialdom is lobbying for the money.

No doubt it will be easy for officials to obtain the new billions. At any time in the recent history of the NHS it would have been easy on paper to justify £13bn for new NHS technology. Much of the £13bn could be justified simply enough by submitting plans to HM Treasury to modernise what already exists.

It was easy to justify the NPfIT. Tony Blair approved it at a Downing Street meeting that lasted 40 minutes. Computer Weekly obtained minutes of the Downing Street meeting after various FOI appeals.

But the NHS needs £13bn to be spent wisely on technology. The last thing the NHS needs is for Whitehall officials to be involved. History shows that Whitehall has the reverse Midas touch when it comes to major NHS IT investments. It is local groups of doctors and nurses who know how to spend the money wisely.

If either NHS England or the Department of Health and Social Care is involved in the new proposals for NHS IT investments – and they both are – it’s almost certain the new plans will end up as costly failures.

How would the public feel if they realised that a sizeable portion of their increased taxes for the NHS is almost certainly destined for the dustbin marked “mismanaged Whitehall IT schemes”.

Revealed: Officials’ £13bn funding ask to modernise NHS IT

Another NPfIT scandal in the making?

How widespread is undetected fraud and corruption in UK local government?

By Tony Collins

Private Eye’s “Rotten Boroughs” has two stories in its current edition that seem unrelated but there may be a link.

One of the stories is about a £2m fraud at Tory-controlled Barnet Council. It was committed by a former council employee whose job was outsourced to Capita. He made use of his budget-holder status on Capita’s Integra financial system. He gave instructions for 62 payments, totalling £2,630,972, into his own bank accounts between July 2016 and December 2017.

Internal and external auditors failed to spot the fraud. Highly-paid local government officers did not spot it; and accounting controls were ineffective, in part because they were geared to highlighting irregularities of £15m or more. The fraud was detected by chance, by a query raised by the employee’s bank. This raises the question: could other frauds be happening now in local government across the country, unnoticed?

The other Private Eye story in the current edition is about attempts by various (Tory-controlled) councils, Harrogate, Nottinghamshire and Thurrock, to stifle reporting of their affairs. And at South Ayrshire Council the chief executive wanted councillors to attend mandatory re-education sessions on why they should not talk to journalists.

What does a fraud at Barnet have to do with attempts by councils to stop journalists looking too closely at what’s going on?

Comment:

Local reporters (and local bloggers) may turn out to be the only effective check on local councils exploiting local taxpayers. Is this one reason many councils seem to regard journalists’ scrutiny as an unnecessary evil?

It may be difficult for some in British society to imagine it but what if some local council officials and councillors found themselves operating in such a void of accountability that they realised that frauds and corruption were likely to go unnoticed?

Have the sums spent in local government – the plethora of multi-million contracts – become so vast that it’s easy for small amounts – say £2m – to go unnoticed? Does the lack of accountability in local government encourage some officials and councillors to look after their own interests?

Auditors are beholden to councils for future work. This may give them a disincentive to be too nosy when things don’t look right. They’ll investigate – but how deep will they want to dig? How much cooperation will they have if they dip too deep?

An incentive to stamp out fraud and corruption exists when council officers have a public service ethos which most undoubtedly have – but what when they don’t?

It could be said that the public service ethos went out the window years ago when departmental officers began receiving private sector-type salaries for jobs in which a failure to run the department properly was no drawback to a successful career in local government.

Failure matters only to taxpayers – and how much do they matter?

Some blame Capita and outsourcing for the Barnet fraud but it could have happened unnoticed whether or not the council had outsourced IT and other services to Capita. The point about the fraud is that it was spotted by chance. Could undetected fraud and corruption be prevalent in local government?

The uncomfortable truth is that nobody knows; and taxpayers will remain in the dark if councils continue to avoid the accountability and oversight provided by journalists (and local bloggers).

At least Barnet knows what to do to put robust controls in place, thanks to Grant Thornton’s in-depth report on the causes of the fraud. Will other councils have the slightest interest in Grant Thornton’s report? They have not the slightest incentive to read it let alone check whether they have the same weaknesses.

In 2013 Transparency International published a report funded by the Joseph Rowntree Charitable Trust Corruption in Local Government: the mounting risks”. It said that a “disturbing picture emerges”, and one on which experts and interviewees were agreed:

“On the one hand, the conditions are present in which corruption is likely to thrive – low levels of transparency, poor external scrutiny, networks of cronyism, reluctance or lack of resource to investigate, outsourcing of public services, significant sums of money at play and perhaps a denial that corruption is an issue at all.

“On the other hand, the system of checks and balances that previously existed to limit corruption has been eroded or deliberately removed. These changes include the removal of independent public audit of local authorities, the withdrawal of a universal national code of conduct, the reduced capacity of the local press and a reduced potential scope to apply for freedom of information requests. We have identified 16 areas in which we find a marked decline in the robustness of local government to resist corruption.”

Some will argue that the cases of fraud and corruption that have come to light, including the Barnet fraud, will represent the tip of the iceberg. Others will argue equally strongly that the relatively small number of obvious corruption and fraud cases is a sign that there is no iceberg.

But one point made by Transparency International is unarguable:

“When accountability is absent, public officials may exercise their power for private ends unchecked by scrutiny, complaint, or the threat of punishment. Clear opportunities exist for unethical officers and members to exploit public trust for private gain. In any sector, corruption tends to increase as oversight and enforcement are weakened.”

Private Eye reports regularly on attempts by councils to gag local reporters. Perhaps some councils are aware that in trying to escape journalistic scrutiny they are providing the perfect conditions in which fraud and corruption thrive.

Conclusion

Is fraud and corruption widespread in UK local government? The most obvious answer is that we don’t know. It could be. But it’s not the British way to force councils to act. In the circumstances, taxpayers have only one effective control against widespread fraud and corruption in UK local government: trust.

Thank you to openness campaigner David Orr for his help on this blog post.

Postscript

It’s tempting to praise Barnet Council for publishing Grant Thornton’s report on the fraud but a much-respected local blogger Mr Reasonable has provided the facts that show Barnet was, initially, less than open.

Mr Reasonable was aware of the fraud in February 2018 but nothing was mentioned publicly until April when a major fraud investigation was mentioned at an Audit Committee meeting, although no details were given. In July some councillors were given a draft copy of the Grant Thornton Report in private session. Mr Reasonable asked the council at the time why the public were not allowed to see this report. The reason?

Council officers/the report author determined that Appendix 1 (the Grant Thornton report) should be exempt. Capita has made a request for more time to respond on the accuracy of this document and this was considered”.

The Grant Thornton report was not published until September 2018 – by which time it was in its seventh draft.

Mr Reasonable has an excellent analysis of the GrantThornton report here.

Corruption in local government: the mounting risks

 

Ex Tory minister expresses “horror” at the way NHS IT money is allocated. But will anything change?

By Tony Collins

On Monday 29 October the Chancellor will announce his 2018 budget. Taxes are expected to go up to provide extra funds for the NHS.

Health secretary Matt Hancock has already said that part of £20bn extra for the NHS will be spent on making “making the NHS an ecosystem for the best technology available”.

But a former Conservative minister George Freeman – who is an advocate for more NHS IT spending – has expressed his “horror” at the way money has been allocated to NHS IT.

His comments suggest that no lessons have been learned from NPfIT, the disastrous £10bn NHS IT programme.

Freeman is no stranger to the world of IT. Before entering politics he ran a predictive toxicology business that created an algorithm to look at existing drugs and side effects and how drugs could be more effective.

When in government in 2014 he was Life Sciences minister with a responsibility for digitising the NHS. In 2016 he moved to head up the upcoming Prime Minister Theresa May’s policy board. He resigned from that role last year.

Now the BBC reports a talk by Freeman to the Taxpayers’ Alliance in which he described his “horror”, when he was Life Sciences minister, at being handed £4.2bn to create a “paperless” NHS in England by 2020 without a plan how to do it.

Although Freeman’s ministerial role was digitising the NHS, he had not been involved in the 2016 public spending talks. He said his civil servants were ordered to set out how they would spend the money only after it was allocated.

This is how things are done in government, said Mr Freeman. This is why schemes go wrong, he suggested.

“The deal was done between Jeremy (Hunt) and George (Osborne) – it was a good thing, a big chunk of money to digitalise the NHS,” he said. His civil servants were delighted to have secured the money, he said, but when they were asked to produce a delivery plan, involving 26 different “work streams”, the “system” proved incapable of doing it.

When he visited the team charged with designing a new digital health care system, he found the designers were “nice people” who had based their work on academic literature rather than the experiences of patients and clinicians.

Freeman wanted to make his point that “top down” solutions never work. He said,

“The Treasury should have said you are not even having a penny until we have got your delivery plan and until we know that you are not just going to buy a system off the shelf from some big company.”

Freeman said it was scandalous that the health service still relied on “paper and cardboard” – and 20 year-old computers – when doctors, nurses and patients all had smart devices that could be used to access records and online communities.

He said the answer was “lots of local digital solutions” designed by doctors – and he claimed the IT industry would “quickly” work out how to get the different systems to talk to each other.

“Hiring an off-the-shelf big package from one of the big companies has been proven time and again to fail,” he said.

NPfIT – in which big IT companies were given contracts worth billions of pounds – was “dismantled” in 2011 as a failed £10bn scheme.

As in Freeman’s time as Life Sciences minister, the NPfiT began as a generalised scheme without any clear or precise plan as to how the new billions would be spent.

Comment

It’s astonishing that after 30 years of repeated and costly IT failures in the NHS, little or nothing in Whitehall seems to have changed in the way policy-makers allocate central funds to NHS IT.

All governments want to digitise the NHS without knowing what that involves and without getting the basics right.

Today ministers will talk at every opportunity about the benefits of artificial intelligence and “building an ecosystem for the best technology available” rather than listening to what clinicians and nursing staff want. Clinicians and nurses do not want to spend 20 minutes or more every day logging into a plethora of different systems that don’t talk to each other.

Clinicians and doctors do not want to hear from ministers about how much is going to be spent on a paperless NHS, or on making the NHS world-class, when their existing systems are, for various reasons, unavailable.

It’s true that, apart from all GP practises and a small number of hospitals where impressive systems are part of the culture of the organisation, the NHS is still largely reliant on paper. Still, that does not justify spending £4.2bn without a clear idea of what clinicians and nurses want and need.

How many more governments will over the next 30 years continue the apparently hard-wired trend in Whitehall of professing to have learned lessons from past failures while overtly displaying a contempt for those same lessons?

As Freeman suggests, the best way to spend money on NHS IT is to allocate it to groups of local clinicians and nurses (and especially not hospital boards) to decide how to spend it within a coherent national plan for systems to talk to each other, over secure internet links if necessary.

This isn’t to the taste of senior Whitehall officials who’d rather have central control and a grand strategy to announce in ministerial statements.

Will anything change? Probably not. The likelihood is that we’ll all be paying increased taxes – to be announced on 29 October – for more NHS IT disasters.

Thank you to openness campaigner David Orr for alerting me to Freeman’s comments. 

MP’s horror at getting £4.2bn to spend on digitising the NHS without a plan – BBC

£20bn for the NHS … not spent like this please.

How much of NHS tax rise is destined for international IT companies?

By Tony Collins

Matt Hancock, the health secretary, told the BBC’s “Today” programme yesterday that part of the £20bn a year extra funding for the NHS will pay for “vital” new technology.

“The money is coming,” said Hancock in reply to Today presenter Justin Webb who asked whether it was right for the £20bn to be spent on technology rather than, say, more GPs.

Webb asked, “This money [for new systems] comes out the money recently announced for the NHS that I think people will have thought was for patient care but a significant amount of it will be spent on IT?

“Improving the IT does improve patient care,” said Hancock, “You need the best technology to get the most out of that [£20bn] money.”

Hancock said lessons from the disastrous £10bn NPfIT have been learnt and it’s time to move on.

“One of the problems of the history of bad NHS IT decisions is that people have run away from this subject,” said Hancock, “Leadership has run away from this subject in too many cases. We must all embrace it [new  technology].”

He said the new approach to NHS IT will be markedly different to the NPfIT.

“The £10bn NPfIT imposed a top down solution on every trust in the land.” The new plan means “required standards – data protection, cyber security and crucially standards of interoperability – but you buy the kit and crucially it has got to be able to work with the rest of the NHS’s IT”.

He said the new money will go into much more than having systems talking to each other. “Clinicians are demanding the sorts of changes we are proposing.”

In the short term, more than £200m will be spent to make a “group of NHS trusts into internationally recognised centres for technological and digital innovation”.

Justin Webb said the Hancock plan sounds much like the NPfIT – which Hancock denied.

Comment

NPfIT was a disaster for taxpayers but not for all international IT companies.

About £10bn was spent, much of it with IT companies and on consultants. Perhaps for this reason parts of the private sector have good reason to take a pragmatic view of public sector IT disasters.

And behind the scenes, the lobbying of senior officials over new NHS IT plans has become routine, from the sponsoring of break-off groups at party conferences to off-the-record events and briefings.

It’s unlikely Hancock will have been in the job long enough to have been lobbied personally but it’s likely his officials have – and for the best of reasons: to ensure they are keeping up with what’sh on the market and what new technology is capable of achieving in the NHS.

To his credit, Hancock acknowledged this week that the biggest problem with NHS IT is that systems do not talk to each other.  Indeed, he is fond of the vogue word beloved of NHS IT suppliers – interoperability.

Matt Hancock’s Telegraph article 6 Sept 2018

But much of what he said this week in his Telegraph article and speech at NHS Expo in Manchester could have come from the press release of an international IT company. That same press release has been issued numerous times over the past 20 years: about the spending of more money on an IT-led transformation while learning lessons from the past.

What ministers and the press releases rarely say – if ever  – is that the NHS’s biggest IT-related problems could be solved with only little money. There’s no need for self-aggrandizing announcements. No need to buy warehouses of new systems from IT corporations. It’s simply a question of finding the best and cheapest way to allow existing NHS systems to talk to each other: perhaps using secure web links in the way banks enable customers to see their accounts and carry out banking transactions.

Why don’t NHS England and the Department of Health and Social Care fund a joint practical study into the best and simplest way of linking existing systems – rather than spending money centrally on a new app for booking GP appointments – which sounds like a repeat of the NPfIT  “Choose and Book” system?

Too boring perhaps. No politician wants to announce a mere study, especially when one where there’s no big money involved, no guaranteed mention of either artificial intelligence or a new app and no mention of an IT-led transformation that will save the NHS hundreds of millions. And no mention of a paperless NHS by the end of 2018 or the use of leading-edge technologies for the benefit of officials’ CVs.

But, as Apple said, and Da Vinci was purported to have said, “Simplicity is the ultimate sophistication”.

Would that Hancock were lobbied to learn the main lesson from NHS IT disasters of the past 20 years: that the biggest reforms don’t have to be wrapped in big financial packages.

It won’t take much to make interoperability happen. But sorry – it’s a reform that doesn’t come with glory. No immortalised legacy for ministers.

Please Mr Hancock do not talk about artificial intelligence and new apps while people are dying because NHS systems don’t talk to each other.

For those who are faced with a tax rise to fund an extra £20bn a year for the NHS, “investment” in new IT from international suppliers will not be top of their list of priorities.

Given the pressures within the health service to meet increasing demands from an ageing population, perhaps the new maxim for central planning of NHS IT ought to be: do nothing other than what is absolutely necessary.

Nobody is inspired by technocratic talk. What inspires is the bringing about of a major common good at a surprisingly low cost.

BBC Today interview with Matt Hancock on NHS IT – 6 September 2018

£20bn for the NHS? – not spent like this please

Johnathan Lewis, CEO Capita (right) and Simon Stevens, Chief Executive, NHS England (left) at Monday’s Public Accounts Committee.

By Tony Collins

Capita apologies for working “blind” on NHS outsourcing contract – but no humility from NHS England

Capita’s CEO Johnathan Lewis was contrite and authoritative when he appeared before public accounts MPs in the House of Commons on Monday.

He apologised unreservedly for what the committee chairwoman Meg Hillier called “a shambles”, which was Capita’s £330 seven to ten-year contract to run a range of services for GPs, dentists and ophthalmologists, as well as handle invitations and test results for cervical screening.

Capita’s Primary Care Support Services contract began in 2015 and complaints about the service from medical practitioners began to flow months later.

Capita made mistakes, said Lewis who was supported by his colleague Stephen Sharp, who reports directly to Lewis on public sector contracts. One mistake was that Capita tried to save money too soon by folding the work of 47 local NHS offices with 1650 staff into three offices without fully understanding that each office had a different way of working and a different way of delivering NHS services.

[A similar mistake helped to floor the £10bn National Programme for IT in the NHS (NPfIT), where suppliers and Whitehall officials tried unsuccessfully to use computers to standardise working practices and services in hundreds of hospitals before they fully understood the widely-different approaches of each hospital.]

Lewis told the Public Accounts Committee on Monday,

“This was an extremely complex outsourcing of services that I think both parties would recognise were not fully understood when the work was outsourced – the volumes, the scope, the fact that the service was being delivered in different ways across the different regions that became NHS England. At the same time I recognise the pressure NHS England were under to reduce costs and hence the pressure on them to outsource.”

His colleague Stephen Sharp added,

“I think mistakes were made. During the bid stage, NHS England did say there were some inconsistencies and differences within the various operations. But once Capita got into all the offices and looked at it, the inconsistencies and differences were not inconsequential. It was more or less 45 different services being run from 45 different offices, so the closure programme, which we adhered to and carried on with, we maybe should have stopped. We just made the problem worse as we went along.”

Why didn’t you stop the office closures, asked Conservative MP Anne Marie Morris who added that “even the NHS said, ‘We think you need to stop’.”

Sharp replied,

“We were actually working blind for a period of time. It was only once the service had been running under our control for a few months that complaints started to come in and we started to see visibility that there were bigger issues than we thought there were.”

With hindsight he said he would not have closed offices “until we had got the procedures operating on a national basis”. He conceded that if NHS England and Capita had deferred closing offices, the first two years of savings of about £60m would not have been achieved.

Capita’s losses of £140m

Lewis said that Capita had invested £125m in the contract but, given the loss of profit margin, the losses would be closer to £140m. “We will not make money over the life of this contract,” said Lewis.

An MP asked: why not walk away?

Lewis replied, “Because we made a commitment to deliver this service and reputations depend on that commitment. We see the public sector as a segment of our market that helps us achieve a diversified revenue base. It is a segment where we have services and solutions, where we can create value for the taxpayer and that is why it is an attractive segment.”

Capita is now meeting 41 of the 45 KPIs and, though the company is making good progress against the remaining four KPIs, it doesn’t change the fact that “our initial execution on this contract was not good and for that we apologise unreservedly,” said Lewis.

There were failings on the part of NHS England too. Health officials were so anxious to achieve the savings from closing offices and replacing old IT that couldn’t be relied on that they failed to test new national, standardised working practices and services before they asked a supplier to implement this strategy.

The result was that officials at NHS England had no clear idea of how much work they were outsourcing. They left due diligence to Capita; and Capita admitted at the hearing it did not do enough due diligence at the bid stage. If it had understood how much work was involved it would have bid a higher price or not bid at all.

NHS England also failed to involve most of the potential end-users – GPs, dentists and ophthalmologists in the design and planning of new services that would directly affect them such as pensions and payments.

Lewis said.

“There are other stakeholders that have historically not been brought into this process to the extent that they should have been, such as the BMA [British Medical Association] in how we might implement the digitisation of pension payments and the management of its pensions, or the Confederation of Dental Employers with regard to ophthalmic payments.

“We want to bring them into the process in ways that they have not been historically because we think that that will ultimately lead to a more successful roll out of the technology… They rightly have influence over the process. If we are going to roll out a process for digitising the 20,000 paper documents that cover the process by which you get refunded for an ophthalmic prescription today, surely those people need to be involved in the final roll-out and configuration of that solution.”

Absence of humility?

When MPs questioned the top official at NHS England, Simon Stevens, there was little sign of humility, contrition or regret. He left an impression that the same problems could end up being repeated by a different supplier under a different contract. One Conservative MP Bim Afolami found himself “sticking up for Capita”.

Afolami said,

“Do you feel, Mr Stevens, that criticism of this contract is in any way unfair on Capita? The more I hear, the more I feel that Capita has taken the sharp end of this and NHS England, despite slight reputational difficulty, has saved £60 million. To what extent do you feel that you should take more of the blame here and Capita should take less of it?”

Stevens emphasised the £60m savings but made no mention any of the contract’s specific problems such as the thousands of patient records that went missing, dozens of women left off cancer-screening lists, the qualified GPs who were unable to work for months while the system delayed verifying their entitlement to go onto a “National Performers List”, the GPs who ran short of basic supplies or the GPs and ophthalmologists who suffered financial detriment because of delayed payments.

Said Stevens,

“First, let me say that this has clearly been a rocky road, and the National Audit Office accurately described the bumps along the way, which are regrettable. That should not obscure the fact that, notwithstanding the economic pain that Capita has experienced, the contract has saved taxpayers £60 million in lower administrative costs in the National Health Service over the first two years of its life … that £60 million of savings is not to be sniffed at; it is the equivalent of 30,000 operations.”

Comment:

Campaign4Change has repeatedly criticised Capita’s performance on Barnet’s outsourcing contract, in part because Capita and the council have been markedly defensive – thin-skinned.

It was refreshing, therefore, to hear Capita’s newish CEO Jonathan Lewis being openly contrite over highly-visible failings in the NHS contract. He gave the impression to public accounts MPs of being a CEO who is determined to put right the failings for the sake of Capita’s reputation. The cost of correcting the problems seemed a secondary consideration.

With Lewis at the helm, Capita’s share price has continued to rise in recent weeks.

Less impressive at Monday’s hearing was Simon Stevens, NHS England’s chief executive, who seemed to imply that NHS England had done nothing wrong.  It was a reaction we’ve come to expect from top civil servants after an IT-related programme disaster. It’s never the fault of officialdom.

The reality is that NHS England was almost as culpable as Capita. NHS England rushed the whole outsourcing exercise – which doomed it from the start. It didn’t listen to critics who warned that primary care support services were too locally diverse and inherently problematic to standardise as part of a national  outsourcing deal.

Instead of first piloting and agreeing with GPs, dentists and ophthalmologists fundamental changes in working practices that would be needed across the country, NHS England went ahead with signing a co-called transformation deal with Capita.

NHS England paid only lip service to engagement with the new system’s end-users in the medical professions. By its own admission Capita, because of its own internal shortcomings, went into the contract blind.

What’s worrying is the way civil servants blithely repeat mistakes of the past and later say they did everything right.

The National Programme for IT in the NHS – NPfIT – failed in part because it was rushed, the implications of “ruthless standardisation” were not fully understood at the outset and there was a lack of proper engagement with potential end-users in hospitals and GP practices. All these same mistakes were made by Capita and NHS England on the Primary Care Support Services contract.

When ordinary human beings become senior civil servants there seems to be a requirement that they lose at a cellular level the facility to express humility and contrition. That loss is replaced by an overly prominent complacency. Whatever goes wrong is not their fault.

Stevens said in essence that NHS England did everything right. Through its unpublished project reviews, the Major Projects Authority – now the Infrastructure and Projects Authority –  endorsed NHS England’ s plans. All the so-called experts gave the outsourcing deal what Stevens called a “thumbs-up”.

It would have been surprising if Stevens had said the public sector was in any way to blame.

At least Capita has learned the lessons. It has a financial interest in doing so.

Ministers can learn from Capita’s candid chief executive

NHS England’s management of Primary Care Support Services contract with Capita – National Audit Office report

Monday’s televised Public Accounts Committee hearing with Capita’s Jonathan Lewis and Simon Stevens of NHS England

£837m wasted on Universal Credit IT?

By Tony Collins

Is Universal Credit an IT disaster or a qualified success for the government’s biggest agile programme?

A less obvious part of today’s National Audit Office report “Rolling out Universal Credit” raises a question of whether taxpayers have paid £837m on a computer system that wasn’t essential.

The so-called “live service” system has been built in part by the DWP’s major IT suppliers Accenture, IBM, HP and BT. It will be decommissioned in July next year. Instead the DWP will continue to use an internally-supplied agile “full service” system to support Universal Credit claims.

Amyas Morse, head of the National Audit Office, questions in today’s report whether Universal Credit is any better or more efficient than the decades-old benefit system it is supposed to replace. He says,

“Universal Credit has taken significantly longer to roll-out than intended, may cost more than the benefits system it replaces, and the Department for Work and Pensions will never be able to measure whether it has achieved its stated goal of increasing employment…

“Universal Credit has not delivered value for money and it is uncertain that it ever will.”

Whitehall officials and ministers including the then work and pensions secretary Iain Duncan Smith expected the roll out of Universal Credit to have finished by October last year. In fact only around 10% of the final expected caseload are currently claiming Universal Credit, says the report.

There are no plans to re-use most of the hardware or software that taxpayers paid for as part of the £837m “live service” system.

The “live service” was built on a foundation of existing DWP IT hardware and software. The new agile system which is called the “full service” is built largely from scratch. It’s the government’s largest ever agile development programme.

Simplify?

Universal Credit is supposed to simplify an overly complex benefits system. It  rolls six working-age benefits into one system but its current running costs are £699 per Universal Credit claim. Officials had expected it to cost £173 per claim by 2024-25.

The Department for Work and Pensions has spent a total of £1.9bn on administering the programme so far -and it’s at least five years from completion.

It looks likely that Universal Credit will take much longer than the 10 years it took originally to computerise the benefits system in the 1980s. That original benefits system, called “Operational Strategy” was supposed to cost £713m. It ended up costing £2.6bn.

In reply to its critics, the Department for Work and Pensions says the estimated savings of Universal Credit are much greater than the costs. But the National Audit Office has learned that the DWP keeps re-calculating its savings estimates upwards, sometimes for no sound reason.

Indeed the report finds that DWP officials are already overstating savings by “approximately £462 million each year”.

Other findings in the report suggest that:

  • The full business case was a piece of creative writing. The full business case is supposed to be a final check on whether the Treasury releases funds for a roll-out. But the Treasury had approved funds anyway, before the business case was signed off last month (May 2018). The report says the full business case was “produced at a time when the government was already committed to rolling out the programme using an agile approach”.
  • Officials have yet to fully understand the risks of fraudulent claims. DWP managers do not have the means to “enable them to identify potential fraud”. The report says DWP officials must “understand the causes of Universal Credit fraud and error identified to date and respond to these promptly”.
  • Officials are making up savings estimates as they go along. Savings estimates of introducing Universal Credit are put at £8bn a year but, says the report, “these benefits remain theoretical. We have significant doubt about the main benefits …”
  • The DWP has a cultural resistance to accepting criticism or bad news. It regards its critics as ill-informed. The DWP’s response to criticism is to say that “anecdote is stronger than management information”. The National Audit Office says that officials “often dismiss evidence of claimants’ difficulties and hardship instead of working with these bodies to establish an evidence base for what is actually happening”. The result, says the report, “has been a dialogue of claim and counter-claim and gives the unhelpful impression of a Department that is unsympathetic to claimants”.
  • A good news culture prevails. Says the National Audit Office, “The Department’s view of the success of Universal Credit contrasts sharply with those of the external organisations we spoke to.”
  • The roll-out is already six years behind its original schedule and is not due to complete until 2023 at the earliest. The report hints that the DWP ought to slow down even more. It says the DWP hshould “ensure the programme does not expand before business-as-usual operations can cope with higher claimant volumes”.
  • Five years into the roll-out the DWP has “enough functionality to run a basic system, but many processes are still manual and inefficient”.
  • The DWP “significantly overestimated the number of claimants that would be able to confirm their identity online”. Only 38% compared with its expected 90% succeeded in using Verify, the government’s online identity verification tool.

Comment

The National Audit Office has produced a superb, thoroughly-researched report.

It would be easy to conclude from its findings that Universal Credit IT has been a disaster.  In fact it’s a qualified success for the government’s biggest agile programme. A parallel “waterfall” project that was developed in case the agile system didn’t work is being decommissioned next year. The waterfall “live service” has cost £837m so far which appears to have been wasted.

Had the DWP and ministers not rushed Universal Credit in the early stages – which is what happened with the NHS National Programme for IT NPfIT – officials could have fully understood what they were doing and not needed to develop two completely separate systems in parallel.

The private sector would love the luxury of developing two completely different computers at the same time and adopting only the one it preferred. But having access to public funds, the DWP could afford to be profligate. And it has been – with impunity. In the public sector there is collective responsibility. No individual will be held responsible for spending £837m unnecessarily.

Indeed the DWP will tell MPs on the Public Accounts Committee that both systems were needed. The “Live Service” that will be decommissioned has enabled the DWP to obtain the benefits of Universal Credit earlier than would have been the case had it waited for an agile system to be rolled out.

But what benefits? The National Audit Office report questions the DWP’s benefit claims. Indeed the DWP’s poor record on accurate forecasting  of the costs and savings on IT programmes and the frequency with which its officials revise costs and savings figures on Universal Credit, are enough to cast doubt on the credibility of the DWP’s every public assertion or announcement.

Universal Credit IT is by no means a disaster story but with £837m of wasted spending and the numerous problems and risks the programme still faces, it can hardly be categorised as a success – unless you believe the DWP’s announcements, press releases and statements.

National Audit Office report – Rolling out Universal Credit

 

A system-wide problem with Horizon connectivity?

By Tony Collins

The Post Office has said in the past that its controversial Horizon system has not had system-wide problems.

This month, however, the system has had two serious widespread outages. On 10 May 2018, Computer Weekly reported that about 2,000 Post Office branches were unable to connect to the organisation’s computer system for a few hours on 9 May because of a connectivity issue.

A second problem last week affected “the whole network” according to a spokesperson at the National Federation of SubPostmasters.

“In the past two weeks we’ve had two instances, just under a quarter of the network was affected earlier in the month, and yesterday the whole network was down for a couple of hours,”

The spokesperson told BBC News that its members have suffered financially because of the problems.

“Sub-postmasters only get paid if they are serving customers so any downtime means they are out of pocket, and people are unable to send their mail.

“The Post Office uses a nationwide computer system to make sure all items are tracked correctly before being sent. If this suddenly stops working then it means potential delays to your parcel across all depots in the UK.”

Those reading Post Office statements on its Horizon system over the years could have gained the impression that the system was able to cope with every eventuality. These are some of the Post Office’s comments on the Horizon system:

“… Post Office maintains that Horizon is capable of handling power and telecommunications problems.”

“Horizon is operated by thousands of Subpostmasters, the majority of whom have not had any issue with the system or its effectiveness.”

“Post Office maintains that the fact that almost 500,000 users have used Horizon since its inception and only 150 have raised a complaint to the Scheme shows that it is fit for purpose.”

“Post Office considers it fair to assume that if a loss has occurred then it has been caused in the branch and is something for which, in most circumstances, a Subpostmaster is liable to make good.”

“… there is no evidence of systemic problems with branch accounting on Horizon. All existing evidence overwhelmingly supports this position.

“The very small number of sub-postmasters who have experienced issues with the Horizon system are a minute proportion of the tens of thousands of people who have been successfully using the system across the network of 11,500 branches on a daily basis since 1995.”

“It is also important to recognise, however, that to date this system has handled more than 45 billion transactions and that there have been issues with only a tiny, tiny number of them.”

“Our computer system has been used by around 500,000 people in our network over more than a decade, processing billions of transactions during that time for our customers.”

“We have now spent three years investigating and addressing various complaints by a small number of former postmasters. We have done everything and more than we committed to do at the outset. We set up an independent enquiry, which found no systemic flaws in the system …”

Last week, the Post Office said in a statement: “We’re really sorry for any inconvenience that the connectivity issues at some of our branches caused yesterday. The issue was resolved within a few hours, and our branches are now back to business as usual.”

 Legal action

 Subpostmasters are taking a group legal action against the Post Office through Justice for Subpostmasters Alliance. The subpostmasters and mistresses blame the Horizon system for financial losses that the Post Office has sought to recover from the individual Post Office branch owners.

Some branch owners lost their livelihoods and had their lives ruined. At least one was said to have committed suicide. Some were jailed, made bankrupt or died while awaiting justice.

The Post Office has claimed the number of complainants is “tiny”, but the actual number of subpostmaster-claimants is now 561.

A High Court hearing is planned for November 2018. It will hear from 12 potential “lead cases”, six of which were selected by Post Office Limited and six by Freeths solicitors who represent the claimants.

These individual cases will be decided ahead of the rest of the Group of 561 and will be used to demonstrate some of the key issues, in particular the fairness of the contract between the claimants and the Post Office.

Computer Weekly reported last month that a forensic examination of the Horizon system by specialists commissioned by the Criminal Courts Review Commission has raised further questions.

“The forensic accounting company hired by the Criminal Courts Review Commission to look more closely at the controversial IT system blamed by sub-postmasters for their wrongful prosecutions has completed its initial findings, and from this has decided to make further enquiries,” said Computer Weekly.

Comment

No computer system is infallible,. The Horizon system is decades-old and has had innumerable patches, additions and enhancements.

After two outages this month, one of which is said to have been network-wide, will the Post Office be able to continue with its claim that the system has not had any system-wide problems?

Indeed how credible in general is the Post Office’s case against 541 subpostmasters? At long last the answer to that question no longer rests with the Post Office. A decision on whether injustices that date back years can be corrected will rest with a High Court judge.

It’s a matter the Post Office ought to have settled long ago. Instead it has relied on the public purse to fund the perpetuation of a series of injustices.

Connectivity issue hits thousands of Post Office branches – Computer Weekly May 2018

Post Office hit by computer problems – BBC News May 2018

Justice for Subpostmasters Alliance

 

NHS England’s Capita contract repeats past blunders

By Tony Collins

A National Audit Office report published today on NHS England’s £330m Capita contract highlights blunders that will be familiar to anyone who recalls the mistakes and false assumptions that floored the £10bn National Programme for IT [NPfIT] in the NHS.

Labour MP Meg Hillier, who heads the Public Accounts Committee, said of the Capita contract,

“Trying to slash costs by more than a third at the same time as implementing a raft of modernisation measures was over-ambitious, disruptive for thousands of doctors, dentists, opticians and pharmacists and potentially put patients at risk of serious harm.

“Neither NHS England nor Capita properly understood the scale of the challenge before agreeing the contract and are still in dispute over future payments.

“Yet again this is poor contracting by Government with one of its major suppliers and it must learn lessons.”

But will any lessons be learned? Those who have followed the problems that beset the NPfIT and the NHS Capita contracts will see a similar pattern of mistaken beliefs, false assumptions, flawed risk assessments and over-optimistic reviews on both deals.

The NPfIT was “dismantled” in 2011. The Capita contract, which was signed in 2015 and started in September that year, has improved, says the National Audit Office, but there are still disputes between Capita and NHS England over the supplier’s performance.

These are some of the main findings of today’s National Audit Office report NHS England’s management of the primary care support services contract with Capita. The Capita (and NPFIT) contracts were floored by:

– over-ambitious, unrealistic plans that were not challenged by anyone who was taken seriously

– too little involvement of prospective end-users

– – a lack of Whitehall understanding of how people worked at the coal-face

– inadequate piloting of proposed changes

– a false assumption that IT on its own can standardise diverse working practices

– a false assumption that IT suppliers will be able to take over and understand a complex and problematic safety-related public service while at the same time transforming it.

– a false assumption that the contract will make up for a suppliers’ inadequacies

– over-optimistic internal project “review” reports by civil servants for civil servants which will say what civil servants want them to say

– the wrong risks being assessed – in this case whether the savings would be achieved rather than whether Capita would provide a good service

– the alienation of medical professionals by the NHS’s issuing statements claiming the problems were teething when they were going on for years and getting worse.

Numerous complaints by GPs and their trade association the BMA and campaigning articles in Pulse magazine eventually caused NHS England to act on the contract.

[In the case of the NPfIT, a Whitehall and House of Commons reaction was eventually triggered by GPs, hospital staff and others complaining to Computer Weekly, national newspapers and broadcasters.]

Below are some of the detailed findings of today’s National Audit Office report on Capita’s NHS contract. My sub-headings on the lessons not learned from the NPfIT are in italics:

Was NHS England in control of Capita contract – or was Capita in full control?

  • Capita initially denied being in breach of service obligations
  • Capita argued there was no pre-contract baseline data on which to judge its performance
  • NHS England assured itself Capita’s improvement plan was fit for purpose – then found it was “ineffectual”.
  • Despite Capita’s improvement plan issues became “more widespread”.

National Audit Office report:

“On 27 May 2016, NHS England wrote to Capita formally expressing concerns about performance issues and seeking to enact the recovery arrangements set out in the contract. Capita initially denied being in breach of its service obligations. It argued that there were no baseline data from before the contract to benchmark its performance against and confirm whether service standards were being met. In its response of 17 June 2016, NHS England stated that the lack of performance data meant that Capita could not yet prove that it was meeting performance standards. It considered that there was enough evidence to place Capita in a formal process to rectify services, given the delays in setting up the customer support centre, the medical records service, and payments to opticians. However, NHS England considered that the improvement plan that Capita had developed would be sufficient to resolve the problems.
“NHS England formally intervened in Capita’s management of the contract in September 2016. It told us that by the end of summer 2016, it had become clear that Capita’s improvement plans were ineffectual in some key areas and that issues had become more widespread. NHS England served default notices, placing five of Capita’s nine services in a formal rectification process: the customer support centre; the medical records service; the patient registration service; the national performers lists service; and payments to opticians. It also embedded an ‘expert management team’ in Capita, to work alongside operational staff and provide additional oversight and support. 

Just because outsourcing together with standardising systems and working practices seem justified doesn’t mean you should

 NHS England aimed to reduce its costs by 35% from the first year of the contract and transform and modernise the service. The government’s mandate to NHS England required it to make significant reductions in its administrative running costs. NHS England also wanted to provide a high-quality and standardised service.
When NHS England took responsibility for primary care support services in 2013 they were being delivered by 1,650 staff from 47 local offices, managed under separate local arrangements, with no national leadership, no common standards in service specification or operating processes, and with limited data on performance. Services were supported by a 20-year-old IT system that NHS England considered was unsustainable and in urgent need of replacement, and many processes relied on the manual processing of paper‑based documents. NHS England considered that it would not be possible to deliver the required savings in‑house as it did not have the necessary skills in transforming services through better use of IT.

Major Projects Authority blunder – no wonder its reports are secret

The final review by the Major Projects Authority – which is now the Infrastructure and Projects Authority – noted that this was a well-run programme and that successful delivery appeared probable… The procurement was supported by commercial experts in the Cabinet Office … and was approved by the then Department of Health and HM Treasury

Don’t outsource until you know precisely what you’re outsourcing

  • NHS England didn’t understand the diverse local processes Capita was supposed to standarise
  • False assumptions were made
  • NHS England didn’t benchmark existing data before outsourcing
“NHS England did not know enough about the services it inherited to set achievable service specifications and performance standards from the start of the contract. This was a complex first generation outsourcing. NHS England lacked adequate data on the volume and cost of the services before the contract was awarded, and there were no consistent measures of performance. It told us that it recognised that there was variation in how services were delivered across the country, but that it did not have a detailed understanding of how local processes were different. As a result, it made a number of assumptions about the volume, cost and performance of the services in order to set service specifications and performance standards. To mitigate the risk around the robustness of the activity data, the contract included a clause to ensure that volume data could be reviewed in the first few months and, if necessary, the contract starting volumes could be revised. Capita only requested one ‘allowable assumption’ that permitted future adjustments related to uncertainty in the number of staff to be transferred

**

“Because of gaps in its knowledge, NHS England had to make a number of assumptions about the volumes and costs of the services before awarding the contract. For example, it used data on the number of GP practices and the types of contract they held to estimate the number of GP payments that would be needed and the volume of orders for NHS supplies. NHS England told us, that to mitigate the risk around the robustness of the activity data, the contract included a clause to ensure that volume data could be reviewed in the first few months and if necessary the contract starting volumes could be revised. It also told us that it provided all the information and service access that bidders needed to develop their bids and as a result Capita only requested one allowable assumption that allows for future adjustments in cases of uncertainty. This related to the number of staff to be transferred.
“NHS England also made assumptions about current performance in order to set service specifications and measures for assessing PCSE’s performance. The contract set out 58 performance indicators – 24 key performance indicators and 34 standard service levels. NHS England considers that the key performance indicators are more important, as failure to deliver them would result in greater operational and reputational loss to NHS England.
**
“The mobilisation period did not give NHS England and Capita enough time to assess whether Capita was ready to start transforming the service. As a result, neither NHS England nor Capita knew enough about PCSE’s performance when Capita started making changes to the service in March 2016.
“It took longer than expected for Capita to develop consistent information about its performance. The contract allowed a three-month period to assess how performance at the start of the contract differed from expectations set out in the performance measures. Where performance measures were not being met, Capita could propose variations or alternative measures. If agreed, these would be applied for a period of two years (known as the transformation period). However, NHS England told us that it took Capita five months to start providing consistent information about its performance. NHS England considers that the quality of Capita’s data has improved but it still has concerns about its quality and reliability.”

Another repeated NPfIT blunder – contracting out and transforming at the same time

“NHS England’s decision to contract with Capita both to run existing services and also simultaneously to transform those services, was high risk. Capita was incentivised through the contract to close existing services to minimise its losses but the interaction between running, closing and transforming services was more complex than Capita or NHS England had anticipated. This was a high-risk strategy, particularly for a set of incompletely understood services being outsourced for the first time.”

Savings at a personal cost and risk to patients?

  • Despite the massive disruption for GPs, opticians and dentists, 87 women being notified incorrectly that they were no longer a part of the cervical screening programme, a backlog of 500,00 patient registration letters, some 64% of GP practices saying they had received incorrect patient records in the last three months, 1,000 GPs, dentists and opticians being unable to work and a loss of earnings and missed and inaccurate payments to practitioners, the savings Capita was contracted to deliver were delivered.
“In the first two years of the contract, NHS England achieved savings of £60 million compared to expected savings of £64 million. NHS England has reduced the cost of delivering the service by 30% from £87.8 million in 2014-15 to £62.7 million in 2016‑17. In 2016-17, NHS England’s costs included £41 million made in payments to Capita. It also spent £22 million on other related costs such as buying NHS forms, records archiving facilities and managing the PCSE contract.”

Don’t cut staff until you know for certain you don’t need them. The worst time to cut staff is before the IT-related changes have bedded in. Until then, you’ll need more people – not fewer. 

“Performance issues emerged shortly after Capita started closing primary care support offices and making other changes to the service. In March 2016, Capita introduced a new online portal for primary care providers to use to order supplies. In April 2016, it introduced a new courier arrangement and labelling system for moving medical records, which replaced different local arrangements. These changes were poorly implemented and providers struggled with the new systems. There were also problems caused by shortages of stock in the NHS supply chain. These issues resulted in a significant increase in the number of calls to Capita’s customer support centre, which could not cope with the increase. Between December 2015 and November 2016, Capita closed 35 of the 38 support offices it inherited and cut staff numbers from 1,300 to 660.
**
“Capita underestimated the scale and nature of the task and the impact of closing sites and losing local knowledge. Capita acknowledges that it took longer than anticipated to make changes to primary care support services. It underestimated the number of staff that would be needed to deliver the services, in part due to inaccurate assumptions about the volume of activity. It originally anticipated that it would only need around 314 staff by March 2018, but its actual headcount was 736. Capita also acknowledges that it made performance issues worse, by continuing to close support offices in summer 2016 even though it was aware the customer service centre was struggling to meet demand. The site closures resulted in the loss of local expertise. Procedures in place to retain local expertise did not work effectively as the staff who were retained did not always understand the systems being used in other regions.
**
“Capita Business Services Ltd (Capita) acknowledges that it underestimated the number of staff that it would need to deliver PCSE and the time it would take to implement changes. Capita’s bid involved reducing the number of staff from 1,390 at the start of the contract to 314 by March 2018, in order to minimise its losses over the first two years of the contract (Figure 10). As at March 2018, it had 736 staff working on PCSE, as the number it originally forecast was insufficient. Capita told us that contributing factors to this underestimation included higher service volumes than predicted and the significant variation in how services were delivered, including by NHS England area teams. It has also taken longer than it anticipated to make changes to the service, because it underestimated the extent of variation in the way local support offices operated and the time it would take primary care providers to adapt to new ways of working.”

NHS England took months to act against Capita

“NHS England formally intervened in Capita’s management of the contract in September 2016. It told us that by the end of summer 2016, it had become clear that Capita’s improvement plans were ineffectual in some key areas and that issues had become more widespread. NHS England served default notices, placing five of Capita’s nine services in a formal rectification process: the customer support centre; the medical records service; the patient registration service; the national performers lists service; and payments to opticians. It also embedded an ‘expert management team’ in Capita, to work alongside operational staff and provide additional oversight and support.”

An appalling contract?

“NHS England’s performance measures did not cover all the service areas Capita were required to deliver. Without comprehensive service indicators, NHS England cannot tell whether the services meet the needs of primary care providers. NHS England did include performance measures in the contract, although these did not cover all the activities that Capita was required to deliver. A review of the contract, carried out by NHS England in March 2016, found that of 78 key activities that Capita was contracted to carry out, some 23 were not captured by performance measures and were therefore ‘invisible’ to NHS England. It identified that 13 of the 23 activities without performance measures could affect patient safety if not delivered to standard. NHS England are in ongoing discussions around extending performance monitoring (paragraphs 3.8 and 3.13).
**
“Performance measures lack indicators on providing a high-quality service, as NHS England’s focus was on efficiency. For example, the performance measure for payments to GPs measured whether Capita is making payments on time but not whether the payments are accurate.

**

“Performance measures do not always cover the end-to-end performance of PCSE. For example, the contract measures Capita’s performance in delivering patient records only from when the records are picked up from GP surgeries. They ignore any delays picking up the records – a particularly acute problem for GPs.”

What’s the point of a few KPIs in an appalling contract?

“There were still gaps in the performance measures used to monitor Capita’s performance when it started to make changes to PCSE. NHS England’s review of the contract, in March 2016, found that of 78 key activities that Capita was contracted to carry out, some 23 were not captured by performance measures and were therefore ‘invisible’ to NHS England. It identified that 13 of the 23 activities without performance measures could affect patient safety if not delivered to standard.
“NHS England’s performance measures were not flagging issues when stakeholders started raising concerns in April 2016. At this time, Capita was reporting that it was meeting all but 4 of the 49 performance measures set by NHS England. The stakeholders we spoke to consider that there is still a mismatch between Capita’s reported performance that takes into account factors that Capita considers to be outside its control, and the issues that they are experiencing on the ground.
“NHS England told us that service specifications lack detail in some areas which leads to disagreements, as they are open to different interpretations. Areas of misunderstanding include:
  • Performance measures. The contract allowed Capita to use less onerous performance measures during the transformation period, from February 2016 to August 2017. However, as the transformation is not yet complete, it is unclear whether Capita should still be using these measures. The measures that were to be applied from August 2017 set a higher standard of performance.
  • By May 2018, NHS England and Capita had still not agreed how to calculate 11 performance measures.
  • The method of calculating the volumes of services and payments. NHS England does not agree with the approach that Capita has used to calculate the volumes of services. It considers this approach to be inconsistent with the methodology described in the contract. The volumes being reported by Capita are significantly different to the baselines set out in the contract for some services.”

What’s the point of a contractual “target”?

“Capita’s contract with NHS England gave a three-month period to agree final service volumes and performance targets with NHS England. At the end of this period, Capita reported that it had not been able to collect sufficient information to complete this exercise.”

Problems escalate – and further contractual measures make things worse

“In March 2016, it (Capita) opened an online portal for primary care providers to order NHS forms and some medical supplies. However, the number of orders far exceeded its expectations and there were not enough vehicles to fulfil the orders. This also affected the movement of medical records, as the service used the same vehicles. There was also a shortage of stock in the NHS supply chain which resulted in further delays in fulfilling orders. As a result of these issues, the number of calls to Capita’s customer support centre was higher than predicted, and the centre could not cope with the increase in demand.
“In April 2016, Capita implemented a contingency arrangement for moving medical records, following the decision to delay the full roll-out in March. This involved a single courier collecting records from GP practices and taking them all to Capita’s Darlington depot for sorting before being distributed. All legacy local couriers ceased to operate at this point. There was a further increase in the number of calls to the customer support centre as GP practices raised queries about the new process.”

Incompetent risk assessment?

The biggest risk was whether Capita would perform – but NHS England put the focus of its risk assessment on the threat of not meeting the financial savings targets.

“NHS England’s assessment of the contract risk focused on the likelihood of it failing to achieve its financial savings target and did not adequately assess the risk of Capita failing to provide the service to a good standard. Gaps in the data meant that NHS England could not challenge whether assumptions in the contract were reasonable. NHS England considered that Capita had access to existing service expertise that they had used to inform and test their transformation plans. It did not bring in staff with senior-level skills in transforming a service, as it expected this expertise to sit within Capita .
**
“NHS England also did little to assess whether Capita had the necessary skills to transform services successfully. Capita had partnered with an existing provider of primary care support services, Anglian Community Enterprise, which Capita was to contract services from. NHS England told us that it therefore considered that Capita had access to existing service expertise that they could use to inform and test their transformation plans. NHS England did not bring in staff with senior-level skills in transforming a service, as it expected this expertise to sit within Capita.”

 Capita acts against NHS England’s wishes

NHS England did not have the contractual mechanisms to intervene in some of Capita’s service changes. Capita expected to make a loss of £64 million in the first two years of the contract. Its bid involved reducing the number of staff by two‑thirds by January 2018. Capita therefore had an incentive to close support offices and cut back on staff as quickly as possible, in order to minimise its losses in the first two years of the contract. In May 2016, NHS England wrote to Capita expressing concerns about the closure of support offices, and asked Capita to reconsider its plans to reduce its number of staff. Although Capita’s site closure programme required NHS England’s engagement throughout the process, the contract did not require NHS England’s agreement to close offices, and between May and November 2016, Capita closed a further 20 offices.
**
“NHS England was unable to stop Capita’s aggressive office closure programme, without cancelling the contract, even though it was having a harmful impact on service delivery.
“The contract provided incentives for Capita to close primary care support offices and cut back on staff as quickly as possible, so that it could minimise its losses in the first two years. However, NHS England wrote to Capita on 6 May 2016, expressing concerns about Capita’s plans to significantly reduce its staff numbers at a time when there were significant issues with its performance. It also questioned whether Capita’s plans to deliver efficiency savings over a period of a few weeks, to compensate for the reduction in staff, were realistic. Although Capita’s site closure programme required NHS England’s engagement throughout the process, the contract did not require NHS England’s agreement for Capita to close offices or reduce staff.
“Between May and November 2016, Capita closed a further 20 offices and reduced its headcount from 820 to 660 employees. Both NHS England and Capita recognise that Capita made performance issues worse in spring 2016, by continuing to close support offices, as this resulted in the loss of local expertise.”

Basic contract principles still not agreed – 3 years into the contract

“Basic principles about the contract are still not agreed, which limits NHS England’s ability to hold Capita to account. NHS England and Capita have still not agreed how to calculate the volume of work carried out in some areas, and how these data should be used to calculate payments owed to Capita for delivering the services. By May 2018, two and a half years into the contract, they have not yet agreed on how to calculate 11 performance measures. There is a contractual mechanism for putting a service in rectification but none for exiting the rectification process. Capita provided NHS England with reports in August and September 2017 setting out why services should be taken out of rectification, but NHS England has not formally responded to three of these service reports. NHS England told us that it was waiting for further evidence from Capita on two services before it could consider if rectification was complete.”

NHS England claims maximum service credits from Capita – but these are contractually capped

“NHS England has largely secured the financial savings it expected. In the first two years of the contract, NHS England made savings of £60 million compared with expected savings of £64 million, as the financial risk of increased costs sits with Capita. To date, NHS England has deducted £5.3 million from payments to Capita as penalties for poor performance. The financial penalties are capped at £480,000 a month and were applied in full between July 2016 and April 2017. NHS England noted in its 2016-17 financial statements that it expected that it may have to pay up to £3 million in compensation to primary care providers. Contract penalties have yet to be applied from May 2017 because NHS England does not accept Capita’s reported performance data due to disagreements about the scope of some of the measures. This disagreement only emerged once Capita’s self-reported performance no longer triggered maximum service credits.
**
“The contract allows NHS England to apply financial deductions if Capita does not meet certain performance standards from January 2016. For example, if Capita processes fewer than 98.25% of GP payments on time, it is deemed a moderate failure and triggers a minimum penalty of £10,800 a month. The maximum penalty that can be applied for service failures was £480,000 a month in the first two years of the contract. From year three, it is set at 20% of payments to Capita, excluding fixed investment changes. Figure 9 on page 28 shows that, by April 2017, NHS England had deducted £5.3 million from payments, represented 7% of the total payable to that point. The maximum penalty was applied between July 2016 and April 2017. Contract penalties have yet to be applied from May 2017 because NHS England does not accept Capita’s reported performance data due to disagreements about the scope of some of the measures.
**
“No contract penalties have yet been applied for the period after April 2017. Negotiations are continuing on the penalties to be applied for the rest of year two and beyond.”

Capita’s losses?

“NHS England and Capita have reached a settlement on the first two years of the contract but commercial discussions about the future of the service are ongoing. Both parties have agreed a full and final settlement of all known commercial issues for the first two years of the contract, to 31 August 2017. NHS England paid Capita an additional £3.2 million. Capita has absorbed significant additional costs in excess of the £64 million losses it anticipated in the first two years, resulting in a £125 million loss over this period, including write-offs and service credits. Since September 2017, there has been no agreement on the full basis of charging. Capita stopped invoicing NHS England for services from September 2017, but resumed invoicing in February 2018 on the agreement that it would not prejudice the commercial discussions.”

NHS England to blame as well as Capita

“As well as Capita, a number of other organisations, including NHS England, have contributed to the underperformance of PCSE services. For example:
“For the market entry service, Capita is required to provide NHS England with a file, so that they can make a decision about applications for new pharmacies within 70 days of receipt of the initial application. In November 2017, only 41% of applications were processed on time – either because applicants and referees had not provided key information, or decisions had not yet been received from NHS England.
“The performance of the medical records service has been affected by difficulties retrieving medical records held in NHS England’s archives as well as from current GP practices. It was also affected by poor implementation by Capita of the new national courier arrangement for moving records, and difficulties that GP practices experienced complying with a new labelling system.
“The performance of the national performers lists service has been affected by the lack of timely decisions on removals and suspension requests by NHS England’s area teams.
“NHS England acknowledges that some of the issues with GP payments and pensions are a result of legacy issues predating the contract with Capita. In particular, there are a number of inaccuracies and missing documents affecting GP pension records, which can affect the accuracy of payments.”

Take some services back in-house?

NAO recommendation: “Determine whether all current services within the PCSE contract are best delivered through that contract or whether some should be taken in-house by NHS England. Experience has now highlighted which services can most easily be delivered by Capita and which have more complex dependencies. The current commercial discussions present an opportunity to revisit responsibilities.”

Get the buy-in of service users (also an NPfIT failure)

NAO recommendation: “Secure user engagement in advance of service changes. Primary care providers are a valuable source of practical feedback and can offer insights that will improve service delivery, especially where changes through transformation are significant.”

Pilot changes properly (also an NPfIT failure)

NAO recommendation: “Pilot significant transformation changes effectively. Several changes to services were not initially implemented effectively. NHS England could profitably discuss with Capita when pilots would offer the greatest benefit.”

Don’t under-estimate risks (also an NPfIT failure)

NAO recommendation: “Create a joint risk register which would more thoroughly set out dependencies, mitigations, responsibilities and required actions. NHS England did not adequately assess the risk of service failure and Capita failed to recognise the scale and nature of the task it was taking on. A joint risk register would allow delivery challenges and actions to surface at an earlier stage.”

Risk-assess bidders

NAO recommendation: “Risk assess the likelihood of bidders being able to deliver their promises and challenge the targets and assumptions of bidders. This should include benchmarking bidders on their capability to deliver their promises, such as by examining past performance. There should also be sufficient modelling to understand the contractor’s cost drivers and incentives.”

Disputes continue …

“Whether Capita has met the criteria for services to be removed from the formal rectification process. Capita considers that services should be taken out of formal rectification, but NHS England thinks there are still issues that need to be resolved. NHS England told us that the contract does not set out the process for removing services from rectification. Capita provided NHS England with a report for each service in August and September 2017, setting out why it should be taken out of formal rectification. However, NHS England has not formally responded to three of these reports. It told us that it was waiting for further evidence from Capita on two services before it could consider if rectification was complete.
**
“NHS England told us it considers that PCSE’s performance has improved. In February 2018, Capita Business Services Ltd (Capita) reported that it was meeting 41 out of 45 of its mitigated performance indicators, where information was available after taking into account factors Capita considered beyond its control. Capita was reporting one severe failure, which was for not notifying opticians that they had submitted an invalid payment claim within 30 calendar days. In November 2017, Capita reported it was meeting 40 out of 43 of its mitigated indicators, with one severe service failure. NHS England has not accepted Capita’s reported performance since May 2017 for 11 measures where there is a difference of view about how it should be calculated.
“The unadjusted underlying performance provides a better indicator of the performance that primary care providers are experiencing on the ground. In February 2018, unadjusted performance was more variable (32 out of 45 indicators being met) with seven severe service failures. In November 2017, only 28 out of 43 unadjusted performance indicators were being met, with 10 areas of severe service failure. Paragraph 2.13 describes how unmitigated performance is influenced not just by Capita, but by other organisations, including NHS England.
**
“For the period from 1 September 2017, NHS England and Capita are currently in unresolved commercial discussions. The main areas of disagreement are:
  • price bands – NHS England and Capita do not agree on the methodology for calculating the volumes of services
  • uncertainties about which performance measures should apply and the methodology for measuring performance against these measures
  • whether contract changes should be made for services that Capita considers are outside the scope of the original contract; and
  • the financial costs of delays in delivering transformation and the dependencies on NHS England and NHS Digital to support transformation.
“Because of the absence of an agreed basis for charging, Capita stopped invoicing NHS England for services from September 2017. Capita resumed invoicing in February 2018 on the agreement that it would not prejudice the commercial discussions.”

Comment

Today’s excellent National Audit Office report makes invaluable reading for anyone who is involved in implementing a major IT-related project or programme.

The depressing thing is that lessons from the 1997 book “Crash” – a collection of post mortems of the world’s worst IT disasters – have changed little in 20 years.

Capita has its accountabilities – in the share price and the jobs of senior people on the NHS England contract, some of whom have been replaced, including the PCSS managing director.

Who will be held responsible at NHS England for failures on the Capita contract? Nobody, as you’d expect in the public service. Decisions to outsource GP support services – against the firm advice of many GPs – were taken collectively. The responsibility is therefore diffuse and unidentifiable.

Clearly NHS England has repeated many of the classic mistakes; and in years to come NHS England, or its successor organisation, will probably do the same again because there’s no such thing as an institutional memory.

One possible answer may be for those involved in making big decisions on IT-related contracts in the public sector to be mandated to read – and assimilate – today’s National Audit Office report on GP support services, knowing that the report unwittingly identifies so many of the classic IT-related project and programme blunders.

National Audit Office report on Capita’s Primary Care Support Services contract 

Are you happy paying to help with problem Capita contract?

By Tony Collins

This week, as Barnet residents go to the polls, how many will be influenced by the continuing national and local media coverage of the council’s mass outsourcing deal with Capita?

Barnet’s Capita contracts are a local election issue. The council’s conservatives and Capita say the outsourcing contracts have saved money and are performing as expected “in many areas”.

But a former local Tory councillor Sury Khatri , who has been deselected after criticising the Capita contract, described the deal as “disastrous”. Barnet has paid Capita £327m since the deals were signed in 2013. Capita runs council services that range from cemeteries to IT.

Councillor Khatri said,  “My time at the council has been overshadowed by the disastrous Capita contract that is falling apart at the seams. Four years on, issues still keep rolling out of the woodwork. This contract represents poor value for money, and the residents are being fleeced.”

Another critic of the Capita contracts is John Dix who blogs as “Mr Reasonable” and is one of several highly respected local bloggers. He has been studying the council’s accounts for some years. He runs a small business and is comfortable with accounts and balance sheets.

He writes,

“I have no problem with outsourcing so long as it is being done for the right reasons. Typically this is where it involves very specialist, non core activities where technical expertise may be difficult to secure and retain in house.

“In Barnet’s case this outsourcing programme covered so many services which were core to the running of the council and which in 2010 were rated as 4 star (good). Barnet has been an experiment in mass outsourcing and almost five years in, it appears to be a failure.

“Last night’s [19 April 2018] audit committee was a litany of service problems, system failures, lack of controls, under performance, a major fraud. Internal audit saying issues were a problem, Capita saying they weren’t.”

Shadow Chancellor John McDonnell has entered the debate. He has applauded Barnet’s Unison branch for its enduring, close scrutiny of the Capita contracts. Unison this week published a report on the deal.

Capita’s share price rises

Earlier this month the national press reported extensively on concerns that Capita would follow Carillion into liquidation.

Since the bad publicity, the company’s announcement of a pre-tax loss of £535m, up from £90m the previous year, £1.2bn of debt and a rights issue to raise £662m after fees by selling new shares at a discount, Capita’s share price has risen steadily, from a low a month ago of about 130p to about 191 yesterday.

Could it be that investors sense that Capita’s long-term future is secure: the company has a wide range of complex and impenetrable public sector contracts where history shows that public sector clients – ruling politicians and officials – will defend Capita more enthusiastically than Capita itself, whatever the facts?

A list of some of Capita’s problem contracts is below the comment.

Comment

Carillion, a facilities management and construction company, collapsed in part because the effects of its failures were usually obvious: it was desperately short of money and new roads and hospitals were left unfinished.

When IT-based outsourcing deals go wrong, the effects are usually more nuanced. Losses can be hidden in balance sheets that can be interpreted in different ways; and when clients’ employees go unpaid, or the army’s Defence Recruiting System has glitches or medical records are lost, the problems will almost always be officially described as teething even if, as in Capita’s NHS contracts, they last for years.

It is spin that rules and protects IT outsourcing contracts in the public sector. Spin hides what’s really going on. It is as integral as projected savings and key performance indicators.

When Somerset County Council signed a mass outsourcing deal with IBM, its ruling councillors boasted of huge savings. When the deal went wrong and was ended early after a legal dispute with IBM the council announced that bringing the deal in-house would bring large savings: savings either way. Liverpool council said the same thing when it outsourced to BT – setting up a joint venture called Liverpool Direct – and brought services back-in house: savings each time.

Barnet Council is still claiming savings while the council’s auditors are struggling to find them.

Spinmeisters know there is rarely any such thing as a failed public sector IT contract: the worst failures are simply in transition from failure to success. Barnet’s council taxpayers will never know the full truth, whoever is in power.

Even when a council goes bust, the truth is disputed. Critics of spending at Northamptonshire County Council, which has gone bust, blame secretive and dysfunctional management. Officials, ruling councillors and even the National Audit Office blame underfunding.

In March The Times reported that Northamptonshire had paid almost £1m to a consultancy owned by its former chief executive. It also reported that the council’s former director of people, transformation and transactions for services, was re-hired on a one-year contract that made her company £185,000 within days of being made redundant in 2016.  Her firm was awarded a £650-a-day IT contract that was not advertised.

In the same month, the National Audit Office put Northamptonshire’s difficulties down to underfunding. It conceded that the “precise causes of Northamptonshire’s financial difficulties are not as yet clear”.

Perhaps it’s only investors in Capita who will really know the truth: that the full truth on complex public sector contracts in which IT is central will rarely, if ever, emerge; and although Capita has internal accountability for failures – bonuses, the share price and jobs can be affected – there is no reason for anyone in the public sector to fear failure. No jobs are ever affected. Why not sign a few more big outsourcing deals, for good or ill?

Thank you to FOI campaigners David Orr and Andrew Rowson for information that helped me write this post.

Some of Capita’s problem contracts

There is no definitive list of Capita’s problem contracts. Indeed the Institute for Government’s Associate Director Nick Davies says that poor quality of contract data means the government “doesn’t have a clear picture of who it is buying from and what it is buying”. Here, nevertheless, is a list of some of Capita’s problem contracts in the public sector:

Barnet Council

A Capita spokesperson said: “The partnership between Capita and Barnet Council is performing as expected in many areas. We continue to work closely with the council to make service enhancements as required.”

Birmingham City Council

“The new deal will deliver a mix of services currently provided under the joint venture, plus project based work aimed at providing extra savings, with forecasts of £10 million of savings in the current financial year and £43 million by 2020-21.”

West Sussex County Council

A spokesman said, “Whatever your concerns and small hiccups along the way, I believe this contract has been and will continue to be of great benefit to this county council.”

Hounslow Council

A Capita spokesperson said: “We are working closely with the London Borough of Hounslow to ensure a smooth transition of the pensions administration service to a new provider.”

Breckland Council

“They concluded that planning officers, working for outsourcing company Capita, had misinterpreted a policy, known as DC11, which dictates the amount of outdoor playing space required for a development..”

Army

Mark Francois, a Conservative former defence minister,  said Capita was known “universally in the army as Crapita”. But Capita said in a statement,

“Capita is trusted by multiple private and public clients to deliver technology-led customer and business process services, as demonstrated by recent wins and contract extensions from clients including British Gas, Royal Mail, BBC, TfL Networks, M&S and VW.”

Electronic tagging

(but it’s alright now)

A Ministry of Justice spokeswoman said: “As the National Audit Office makes clear, there were challenges in the delivery of the electronic monitoring programme between 2010 and 2015…

“As a direct result, we fundamentally changed our approach in 2015, expanding and strengthening our commercial teams and bringing responsibility for oversight of the programme in-house.

“We are now in a strong position to continue improving confidence in the new service and providing better value for money for the taxpayer.”

Disability benefits

A spokesperson for the Department for Work and Pensions said, “Assessments work for the majority of people, with 83 per cent of ESA claimants and 76 per cent of PIP claimants telling us that they’re happy with their overall experience…”

Miners

A Capita spokesperson said: “This issue has been resolved and all members affected will shortly receive letters to advise that they do not need to take any action. We sincerely apologise for any concern and inconvenience this has caused.”

NHS

Opticians

Dentists

BBC licence fee

Windrush

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