Category Archives: National Audit Office

How is Post Office paying for increasing costs of Horizon IT litigation – MP asks questions

The Post Office has lost all four High Court rulings  (so far) in a series of hearings over its Horizon IT system. There are still three trials to go. With appeals, the number of hearings and judgements, and  the duration of the case, are indeterminate.

How is the publicly-funded Post Office paying for litigation that is, in essence, its defence of the Horizon system?

By Tony Collins

Labour MP Kevan Jones has this week asked a series of pertinent questions about costs and the Post Office’s dispute with former sub-postmasters over the Horizon branch accounting system.

His Parliamentary questions are likely to draw the attention of business secretary Greg Clark to the increasing costs of a High Court trial in which more than 550 former sub-postmasters seek compensation and damages from the Post Office. They say they were made to pay for unexplained shortfalls shown on Horizon that could have been caused by bugs or other system weaknesses.

The Post Office says Horizon is robust and the shortfalls were the result of dishonesty or mistakes by sub-postmasters or their staff. The Post Office has pursued sub-postmasters for “debts” shown on the Horizon system of millions of pounds in total.

Kevin Jones’ questions follow a judgement last month in which a High Court judge, Mr Justice Peter Fraser, referred to the Post Office’s approach to the costs of the litigation.

“The Post Office has appeared determined to make this litigation, and therefore resolution of this intractable dispute, as difficult and expensive as it can,” said the judge.

Since that judgement, costs have risen further because the Post Office has decided to appeal last month’s judgement. The Post Office has also applied for the judge to remove himself from three remaining trials over the Horizon system. which caused the second trial to be suspended.

This week it has emerged that costs, which could run into tens millions of pounds, are set to rise again. Although the judge has refused permission for the Post Office to appeal his refusal to remove – “recuse”  himself, the Post Office can ask the Court of Appeal to grant that permission.  BBC legal commentator Joshua Rozenberg has tweeted,

 

 

Kevan Jones has asked the business secretary Greg Clark:

  • what steps he is taking to ensure the Government is held accountable for the decisions and actions of Post Office Limited in the handling of postmasters’ problems with Horizon.
  • whether public money has been used to pay costs involved in the ongoing dispute with postmasters since 2000.
  • whether the Lord Chancellor will determine the extent of any conflict of interest on the part of Tim Parker by reason of his dual roles of (a) the Chairman of Post Office Limited; and (b) the Independent Chair of the HM Courts and Tribunal Service Board.
  • what the anticipated increased cost implications are for Post Office Limited in its dealing with serving Subpostmasters following the High Court decision handed down on 15 March 2019.
  • whether the Post Office has ever taken into profit from its suspense accounts any unreconciled sums recovered from Subpostmasters.

Former sub-postmaster Alan Bates, founder of Justice for Subpostmasters Alliance and lead claimant in the case, told Computer Weekly, 

“This move by Post Office Ltd to have the judge recused was just another act by an organisation abusing the use of public money to litigate a valid case into the ground in order to protect the reputations of just a few individuals and a dysfunctional business.”

The Post Office said, “We will be seeking to appeal the judgment on the recusal application and to continue to vigorously defend this litigation. We believe the overall litigation remains the best opportunity to resolve long-standing issues in order to ensure a stable and sustainable Post Office network for the benefit of the communities who rely on our services every single day.”

Freeths, solicitors for the sub-postmasters,  has submitted an application for the Post Office to pay the legal costs in the first trial, likely to be for several million pounds.

Comment:

Kevan Jones is right to ask questions about the publicly-funded Post Office and costs. The Post Office appears to have no cap on how much it is prepared to spend on the litigation; and it has shown little or no concern about how many years the case will continue.

Institutions, particularly public ones,  have a duty to spend money wisely. Not cutting your losses when you are losing a series of High Court hearings is poor judgement.

The Post Office has a choice: continue to pour money into a case that looks, on the basis of evidence so far, to be unwinnable.  Or pay the millions it is giving lawyers to its former sub-postmasters instead.

It’s a decision the Post Office will not make on its own – in which case Kevan Jones and his Parliamentary colleagues must continue their campaign for justice.

Thank you to sub-postmaster “Mrs Goggins”  and former sub-postmaster Jo Hamilton whose tweets alerted me to Kevan Jones’ questions.

Computer Weekly’s coverage

Journalist Nick Wallis’ coverage

Former sub-postmaster and campaigner Tim McCormack’s blog

 

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Will more campaigners die as they await justice in extended Post Office IT dispute?

A High Court dispute over the Post Office Horizon IT system is expected to cost tens of millions of pounds. But what is the human cost of delaying the outcome?

Tomorrow a High Court judge will consider an application by the Post Office to recuse – remove – himself from a series of trials that relate to the Post Office’s Horizon IT system. The Post Office accuses him of bias.

The Post Office’s application means that the second of four trials is currently suspended. A final outcome of the various hearings, after appeals,  could be years away.

Will any delayed final outcome have an effect on the 600 or so sub-postmasters who are part of the litigation?

It is a concern expressed by the judge in the case, Sir Peter Fraser, QC who is head of the High Court’s Technology and Construction Court. In his 1,100-paragraph judgement delivered last month after the first trial, he said,

“Even on that intended timetable, some Claimants [sub-postmasters] may be waiting far longer than is ideal to have their claims fully resolved either in their favour, or against them.

“Some of the Claimants are retired; some are elderly; some have  criminal convictions under review by the Criminal Cases Review Commission.

“Nobody involved in this litigation is getting any younger as time passes. The Post Office itself is under a cloud in respect of these unresolved allegations and I consider it to be an obvious point that resolution of this litigation as soon as possible is in the interests of all the parties – all the Claimants and the Post Office – in the interests of justice and the wider public interest.”

Is the Post Office trying its best to expedite an outcome? Mr Justice Fraser suggested the opposite. His judgement said,

“The Post Office has appeared determined to make this litigation, and therefore resolution of this intractable dispute, as difficult and expensive as it can.” [Par 544].

Separately, the judge said,

“It does appear to me that the Post Office in particular has resisted timely resolution of this Group Litigation whenever it can, and certainly throughout 2017 and well into 2018.” [Par 14]

The judgement referred to the Post Office’s “attritional approach of the Post Office to this litigation”. [Par 569]

If the judge is right and if the Post Office board is determined to make the litigation as difficult and expensive as it can, what of the human cost of any delays taking into account the age of some of those involved and the hopes of those with criminal convictions whose cases are under review?

Traumatised

Journalist Nick Wallis who is covering the High Court trials reports that he has been told that some sub-postmasters remain “traumatised” by their experience of losses shown on the Horizon system that they were required to make good.

Some of the sub-postmasters, says Wallis,  “are having to work long past retirement age” with all their life savings taken to pay for losses that are now in dispute as part of the sub-postmasters versus Post Office litigation.

The Post Office contends that Horizon is robust and that it was justified in holding sub-postmasters responsible for discrepancies and shortfalls shown on the system. The sub-postmasters claim damages saying the Post Office unjustly required payments for losses shown on an imperfect Horizon system. They argue the losses were not real shortfalls.

For one justice campaigner, Julian Wilson, a former sub-postmaster from Redditch in Worcestershire,  time ran out in 2016. Nick Wallis knew Wilson as a gentle, generous and good humoured man. The Post Office prosecuted Wilson for false accounting after unexplained shortfalls on the Horizon system.

The Criminal Cases Review Commission was reviewing his conviction when he died.

Wilson had been sentenced to 200 hours of community service and had to pay the Post Office £27,500 plus £3,000 costs. He told the Daily Telegraph in 2013,

“Initially, when there were discrepancies [on the Horizon system], my wife and I were putting the money in. As the discrepancies got larger and larger, we were no longer able to afford it.

“I told my line managers on several occasions that I was concerned about this, and the comment I got back from them was: ‘Don’t worry, the system will put itself right.’

“But it never did, so I was taken to court. I hadn’t taken a penny. Everything we’ve got has gone. In the last few weeks, we’ve been doing car boot sales to try to get some money to put some food on the table. My wife even had to sell her engagement ring.”

Comment

It is by no means certain that all of the 600 or so former sub-postmasters who are fighting for justice will live to know the final outcome of the trials.

If sympathetic to its former sub-postmasters, the Post Office could settle the litigation or seek expedited judgements. On the other hand, the Post Office could, given its deep pockets as a public institution,  seek to replace trial judges and appeal judgements. If so, a final outcome could be delayed with no end date in sight,

Business minister Kelly Tolhurst MP has responsibility for postal affairs. In deciding whether or not to intervene, will she weigh up the cost in human terms of a dispute that began more than 10 years before the start of the High Court Horizon trials?

MPs called the Post Office Horizon dispute a national scandal but to the family of Julian Wilson it is a tragedy. They live with the knowledge that he went to his grave a near-bankrupt convicted criminal whose wife ended up selling her engagement ring  because of events that followed losses shown on a branch accounting system.

Nick Wallis’ Post Office trial coverage

Post Office lacked humanity in treatment of sub-postmasters, says peer – Computer Weekly’s coverage of the Post Office’s trial

Blog of campaigning former sub-postmaster Tim McCormack

Could MPs hold Post Office directors to account for Horizon IT trial costs – after they have left?

By Tony Collins

The Public Accounts Committee and the National Audit Office have been alerted to the costs of the High Court trials over the Post Office Horizon IT system.

Parliamentary committees have the power to hold people to account after they have left an organisation.

Could this happen in the case of the publicly-owned Post Office whose directors have decided to spend, potentially, tens of millions of pounds on an avoidable High Court litigation?

Nearly 600 sub-postmasters are suing the Post Office because they say their lives were ruined when the Post Office required them to make good non-existent shortfalls shown on an imperfect Horizon system. The Post Office says Horizon has always been robust and that they were entitled to hold the sub-postmasters liable for losses shown on Horizon.

The Post Office appears resolved not to settle the case despite campaigns for justice in Parliament and by the Justice for Sub-postmasters Alliance. One unanswered question is whether the Post Office board is hardening its position in the face of the campaigns.

Campaign4Change emailed the Public Accounts Committee about costs of the litigation. As a result, the National Audit Office, which works closely with the accounts committee, contacted UK Government Investments, which represents the Government’s interest as sole shareholder of Post Office Limited.

The Committee told us,

“The NAO has now completed its enquiries and reviewed supporting evidence.

“Post Office Limited is a government owned company which is primarily funded through income from it is operations and is not audited by the Comptroller and Auditor General.

“The NAO has therefore limited its enquiries to understanding the role of UKGI [UK Government Investments] given it has no remit to audit the actions of Post Office Limited.

“The NAO discussed the case with UKGI to understand the governance in place between Post Office Limited and UKGI and to confirm there was appropriate oversight of Post Office Limited’s decision to defend the litigation.”

Regarding the accountability of individual Post Office Limited’s directors, the National Audit Office said,  “Since Post Office Limited’s inception in 2012, UKGI has had a representative on the Board as a Non-Executive Director. The same government representative is also a member of the subcommittee of the Board which specifically considers this issue. These committees are involved in decision making around the litigation case and the representative regularly reports to ministers on these matters.

“From the work performed by the NAO, they have concluded that the involvement of UKGI in decision making appears appropriate and the level of oversight proportionate.”

The Committee said the National Audit Office has not  directly considered the actions taken by the Post Office Board but the case is being kept under review.

Following the NAO’s investigation, the Department for Business Energy and Industrial Strategy, which is responsible for the Post Office, sought an assurance from the Post Office’s CEO Paula Vennells that departmental funds meant for transformation and business investment will not be used on the Horizon litigation.

Also the BEIS department now requires regular written assurances that BEIS funding will be used for the intended purposes only.

Summons?

When a Parliamentary committee decides to summon a witness formally, the witness is summoned to attend the committee by an order signed by the chairman.

Failure to attend a committee when formally summoned is a contempt and if a witness fails to appear, when summoned in this manner, his or her conduct is reported to the House of Commons which can deal with the matter as an act of disobedience.

MPs and peers are expected to look more closely at the actions of the Post Office in the light of its decision to try and remove Sir Peter Fraser, the judge in the Horizon IT case. The Post Office’s application to remove the judge could greatly increase costs of the case which are already expected to run into tens of millions of pounds.

Following the Post Office’s application for the judge’s removal, the second of four High Court trials has been suspended and will not resume until 3 April.

Journalist Nick Wallis reports that the application for the judge’s removal coincided with evidence being given, in part, by the chief architect for the Horizon system at Fujitsu. He was being questioned on the system and possible errors.

Thank you to campaigner Tim McCormack whose Freedom of Information requests unearthed the letter dated January 2019 to the Post Office from the Department for Business, Energy and Industrial Strategy that seeks assurances on funding for the Horizon IT litigation.

Postofficetrial– Nick Wallis

Post Office Horizon IT trial suspended after Post Office accuses judge of bias – Computer Weekly

The power to summon witnesses

The process for formally summoning a witness is outlined in a House of Commons paper: 

“When a committee decides to summon a witness formally, the witness is summoned to attend the committee by an order signed by the chairman. Failure to attend a committee when formally summoned is a contempt and if a witness fails to appear, when summoned in this manner, his conduct is reported to the House… If he still neglects to appear, he will be dealt with as in other cases of disobedience.

“It is the House which will ultimately decide how a case of disobedience should be dealt with.”

More public sector IT-related failures for which nobody will be accountable – a solution?

The Times front page – 23 January 2019

By Tony Collins

Criminal trials were delayed, jurors unable to enrol and witness statements inaccessible.

Quoting a tweet by the authoritative @BarristerSecret, the BBC said the “entire digital infrastructure” of courts was “broken for days”.

@BarristerSecret added,

“No accountability, no lessons learned.”

In the Spectator, Matthew Scott, a criminal barrister at Pump Court Chambers, said,

“Nobody seems to know exactly what has gone wrong or, if they do, they do not like to say.”

His Spectator blog was headlined,

The Spectator – 24 Jan 2019

 

 

“The most irritating fault has been for a few days the near total seizure (or ‘major service degradation’ to use the official non-explanation) of the secure email system (‘CJSM’) which for several years now has been the only authorised means of written communication between the Crown Prosecution Service and defence lawyers, probation, prisons, police and others.”

The Law Society Gazette said,

Law Society Gazette – 22 Jan 2019

 

 

 

The Law Society Gazette gave examples of how the problems had caused disruption and angst in the criminal justice system. It said,

“Major disruption that affected multiple Ministry of Justice IT systems last week continues to cause chaos.

“Lawyers on the front line have told the Gazette that trials have been delayed, jurors have been unable to enrol and practitioners have been prevented from confirming attendance that will enable them to get paid.

“Last week the ministry’s digital and technology team said most systems were improving. However, the Gazette has spoken to practitioners whose experiences suggest otherwise.”

A criminal barrister who spent the day in Leicester Crown Court said  none of the court’s computer systems was operational, jurors could not be enrolled, and no advocates could sign into the Ministry of Justice’s XHIBIT system, an online service that logs lawyers’ attendance so they can get paid.

A lawyer at Lincoln Crown Court said the XHIBIT system was down again. The Crown Court Digital Case System, on which all cases are accessed, was also down.

A criminal defence solicitor arrived at Highbury Magistrates’ Court in London at 9.15am, where there were several clients in the cells. But jailers did not know which courts the cases would be heard in and  because there was no wi-fi in the building magistrates had no access to any papers on their ipads before the hearings.

“The Gazette was told that several people attended Scarborough Magistrates’ Court last week to make statutory declarations in respect of driving matters. ‘Most of these people had come suited and booted, with all the anxiety that marks ordinary members of the public out as different from the frequent flyers who regularly come before the courts.

“These poor souls were left hanging around all morning, until 1pm, when they were advised that the systems were still not back up. Two of them agreed to come back on an adjourned date, 14 days later, but one of them explained that he couldn’t take further time off work. He was asked to come back in the afternoon, in the vain hope that the case management system might be back online.”

Former government chief technology officer Andy Beale quoted The Times in a tweet,

 

 

 

In another tweet, Beale said,

 

 

 

The Guardian reported yesterday (28 January 2019) that the Ministry of Justice knew its court computer systems were “obsolete” and “out of support” long before the network went into meltdown, internal documents have revealed.

The MoJ document, entitled Digital & Technology, said, “Historical under-investment in ageing IT systems has built our technical debt to unacceptable levels and we are carrying significant risk that will result in a large-scale data breach if the vulnerabilities are exploited.”

It added, “We have a Technology 2022 strategy, but it is not funded to help us address the long-term issues with current systems and allow us to make best use of new technologies to improve service delivery.”

It referred to a database used by 16 employment tribunal administrative offices in which the “scale of outage” accounted for 33% of incidents over the previous six months. Users were unable to access systems for a “significant number of hours”.

The report cited problems such as “risk of database corrupted leading to data loss; unable to restore service in a timely manner”, and added: “Judges say they will put tribunal activity on hold because of the poor running of the application.”

Government response

In the Commons, the government’s justice minister Lucy Frazer, responding to an urgent Labour request for a statement on the IT problems, was relaxed in her comments. She said the disruption was “intermittent” and the problems were merely “frustrating”. She added,

“The issue that has arisen relates mainly to email systems. There has been minimal disruption, I am told, to the courts system as a whole.”

She said there had been an “infrastructure failure in our supplier’s data centre”.

“The Prison Service has not been affected and—to correct inaccurate reporting—criminals have not gone free as a result of the problem. We have been working closely with our suppliers, Atos and Microsoft, to get our systems working again, and yesterday we had restored services to 180 court sites, including the largest ones.

“Today (23 January 2019), 90% of staff have working computer systems. Work continues to restore services and we expect the remainder of the court sites to be fully operational by the time they open tomorrow morning. We are very disappointed that our suppliers have not yet been able to resolve the network problems in full.

“This afternoon, the permanent secretary, Sir Richard Heaton, will meet the chief executive of Atos and write personally to all members of the judiciary. I am very grateful to all our staff who have been working tirelessly and around the clock, alongside our suppliers, to resolve the issues.”

Labour’s Yasmin Qureshi asked if Microsoft and Atos have paid any penalties to which Frazer gave a vague, non-committal reply,

“… the permanent secretary is meeting the supplier’s chief executive this afternoon and of course we will look carefully at the contracts, which include penalty clauses.”

Frazer later said the problem related to a “server” which raised questions about how the failure of a single server, or servers, could cause widespread chaos in the courts.

Labour’s Steve McCabe said the server problem was not a  single or unusual event.

“… her Department has been receiving reports of failures in the criminal justice secure email service for at least six months now”.

Police systems

The BBC reported last week that problems with a police IT system were causing some criminals to escape justice.

Nine forces in England and Wales use Athena from Northgate Public Services. They are Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Kent, Norfolk, Suffolk, Warwickshire and West Mercia. The system is designed to help speed up the detection of crimes.

But officers told the BBC’s Victoria Derbyshire programme that it crashes regularly and is overly complicated, meaning some cases are not built in time or dropped.

Developers Northgate Public Services apologised for problems “in small areas”, which it said it was fixing.

A joint response from nine police forces said Athena – which has cost £35m over the past 10 years – had been “resilient and stable, although no system is perfect”.

The system was introduced following a government directive for forces to share intelligence after the Soham murders of Holly Wells and Jessica Chapman, in 2002.

Officers said the intelligence-sharing function works well but problems arise when they use the system to build cases for the Crown Prosecution Service.

The delays it causes means officers can struggle to get the information together in time to charge suspects or the cases are not up to a high-enough standard and are dropped.

Serving officers at Bedfordshire, Hertfordshire and Essex told the programme the process could now take up to twice as long.

The BBC did not name any officers who revealed details of the problems because they could face disciplinary action for speaking out. Their comments included:

  • “The first two weeks it (the system) was brought in were the worst two weeks of my entire career. It’s overly bureaucratic. It doesn’t understand the police investigative process at all. From day one, it malfunctioned. Four years on, it is still malfunctioning”
  • “It often requires information that is totally irrelevant and if you miss just one data entry point (like whether a solicitor is male or female), I have to reject the whole case and send it back to the officer”
  • “Even for a simple shoplift, I probably have to press about 50 buttons, with a 30-second minimum loading time between each task”
  • “There have been incidents where charges have been dropped because of the inadequacies of the system. There have been cases of assaults, albeit fairly minor assaults, but these are still people who should be facing criminal charges”
  • “It slows the whole criminal justice system down. At the moment, it is not fit for purpose. This is the most challenging time I have come across. We’re at breaking point already. This has pushed some officers over the edge”
  • “When you’ve got detainees in a custody block who’ve got various illnesses and ailments, medical conditions that are all recorded on there and they need medication at certain times – it became very dangerous because we were unable to access the records”

The nine forces – which also include those in Cambridgeshire, Kent, Norfolk, Suffolk, Warwickshire and West Mercia – said in a joint statement that they had been working with the supplier to identify and correct issues as they arose.

“Over the 12 months up to November 2018, there have only been 72 hours of total downtime and there are detailed plans in place of how to manage business when this occurs.”

Northgate Public Services, which created Athena, said 40,000 officers accessed the system and benefited from improved criminal intelligence.

It said it was working to make improvements to the “complex system”.

“We recognise there are a small number of areas of the solution where improvements can be made and we apologise for any difficulties this has caused.

“We are working hard with the customer and other parties to make these improvements as a priority.”

Comment:

As @BarristerSecret said,

“No accountability, no lessons learned.”

In central and local government, accountability means suppliers sometimes have to pay small penalties. Outsourcing supplier Capita last year paid Barnet Council about £4.2m in compensation for poor performance.

It was a fraction of the hundreds of millions Capita has received from Barnet Council.

Sometimes the opposite happens and it is the supplier that wins money from the government after a failure.

The Home Office sacked Raytheon over problems on an e-borders IT systems and ended up paying Raytheon £224m in compensation.

The Department of Heath ended up paying Fujitsu hundreds of millions of pounds after the supplier’s contract to deliver systems under the National Programme for IT [NPfIT] was ended.

A major failure in one area of the public sector will not  stop or deter officials from awarding the same supplier a major contract in the same or another part of the public sector.

Were a major failure or legal dispute to preclude a supplier from bidding for further UK public sector work, most if not all major suppliers would today have little UK government business.

A solution?

There is an effective way to encourage IT suppliers and the public sector to avoid public service failures. But the senior civil service isn’t interested.

That solution would be to publish – after every major public services failure – a full, independent third-party report into what went wrong and why.

Some senior officials seem unruffled by public criticism or even contempt after a services failure. But particularly in some of the major departments, there is a high-level fear of the full truth emerging after an administrative disaster.  Departments would do almost anything to avoid IT-related failures if reports on the causes were routinely published.

But unless there is a Parliamentary or public clamour for such internal analyses to be published, they will remain hidden or uncommissioned.

When the National Audit Office publishes a report on a departmental failure, the report has usually been agreed and signed off by the department; and it is usually a one-off report.

When public services descend into chaos, as happened in the court service last week, immense pressure falls on the IT teams to restore normal services urgently. But without the routine publication of reports on major IT-related public service failures, where is the motivation for senior officials to avoid chaos in the first place?

House of Commons debate on the courts’ IT failures

Thank you to Celina Bledowska for her tweet alerting me to the criminal justice IT problems.

Do some councils serve their own officials and councillors better than they serve the public?

By Tony Collins

Increasing numbers of local government and NHS officials are paying themselves salaries of £100,000 upwards, and some more than £500,000, but competence in handling public money appears to be diminishing.

Today, the outgoing head of the National Audit Office Amyas Morse expresses “shock”. He said,

“I am shocked by the persistent high level of qualified audit reports at local public bodies.

“A qualification is a judgement that something is seriously wrong, but despite these continued warnings, the number of bodies receiving qualifications is trending upwards.

“Let us hear no cries of ‘where were the auditors?’ when things go wrong. The answer will be ‘they did the job, but you weren’t listening’.

“This is not good enough; local bodies need to address their weaknesses, and departments across government should ensure they are challenging local bodies to demonstrate how they are responding.”

Today’s National Audit Office report “Local auditor reporting in England 2018″ says that the number of NHS and local government bodies with significant weaknesses in their arrangements for delivering value for money for taxpayers is “unacceptably high and increasing”.

The report makes no comparison between how well or badly NHS and council organisations are run in comparison with the salaries paid but it makes a point of saying that there are no consequences for councils and other public bodies of having a poor grip on how they spend public money.

Says the National Audit Office,

“There is no direct consequence of receiving a ‘non-standard’ report from a local auditor.

“While departments responsible for the oversight of local bodies may intervene in connection with an issue, such as failure to meet expenditure limits, there are no formal processes for reporting publicly whether bodies are tackling these issues.

“Departments use information from local auditors’ reports to differing extents to inform their understanding of the issues local bodies are facing, but they also need to be able to challenge local bodies to demonstrate that they are taking appropriate action where necessary.

“Given increasing financial and demand pressures on local bodies, they need to take prompt and effective action to strengthen their arrangements and improve their performance when issues are raised.

“The proportion of bodies with insufficient plans for keeping spending within budget or who have significant weaknesses in their governance, is too high.

“This is a risk to public money and undermines confidence in how well local services are managed. Local auditors need to exercise the full range of their additional reporting powers, especially where they consider that local bodies are not taking sufficient action.”

Comment

Anyone who reads the National Audit Office latest findings together with the numerous reports about poorly-run council IT-based outsourcing deals, including ones at Somerset County Council and Barnet Council, and an IT-related fraud involving Barnet council that was spotted by chance,  is entitled to ask: are some council officers and councillors serving themselves better than local communities?

Alongside amounting evidence of poor decision-making – or worse – in local government and the corporate NHS, there is a general lack of openness and, as the National Audit Office points out, widespread failures to act diligently on auditor findings.

Council taxes are rising, spending on important local services is diminishing yet the amounts paid to layers of senior management at councils and within the NHS and NHS England are rising without any link to competent decision-making.

For the most part, top officials cannot be fired. Their jobs are not appraised or at risk as they would be in the private sector.   Indeed some councils change senior job titles regularly and increase the salaries they pay themselves.

There is no sign of austerity when it comes to the pay of departmental leaders in local government.

Published figures indicate that at least 2,500 council officials were paid more than £100,000 each last year — and about 500 of them grossed in excess of £150,000, more than the prime minister earns.

The number whose total remuneration was in six figures has also risen. A report by the Taxpayers’ Alliance found that 16 local government CEOs received more than £300,000 and four grossed in excess of £500,000 in 2016-17.

All of which raises the question in the headline of this post: do some councils serve their own officials and councillors better than the public?

Local government officers defend their pay levels by saying that if you pay peanuts you get monkeys.

But some primates with large brains work remarkably well in their local communities. Do council departmental chiefs on unjustifiably large salaries always work well for their local communities? Or do they serve their own interests rather better than they serve the public?

Local auditor reporting in England – NAO report

 

£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

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

Capita’s problems were “preventable” says Royal London

By Tony Collins

Royal London, a Capita investor, said yesterday it has been “raising concerns about Capita’s weak governance with the firm for a number of years, and voting against many resolutions on director re-elections and pay consistently since 2014.”

Royal London is the UK’s largest mutual life, pensions and investment company. It managed £113bn of funds as of 31 December 2017. It owns a 0.44% stake in Capita.

Ashley Hamilton Claxton, Royal London Asset Mananagement’s Head of Responsible Investment, said in a statement,

“We welcome the honesty and transparency with which Capita’s new CEO has accepted the company’s past failings, and put a plan in place to simplify and improve the business. However, we believe this was preventable and have been privately raising concerns about Capita’s weak governance with the firm for a number of years, and voting against many resolutions on director re-elections and pay consistently since 2014.

“Until recently, Capita’s board flouted one of the basic rules of the corporate governance code, with a small board primarily comprised of management insiders. The result was a board that lacked the independent spirit to rigorously assess whether the company was making the right long-term decisions.

“Our concerns about governance were compounded by the complexity of the underlying business and the company’s acquisition strategy. Capita’s approach to remuneration also left something to be desired, with major losses in 2013 being excluded from the profit figures used to assess the bonuses paid to executives at the firm.

“The sea change in the board over the past 18 months has been welcome and has addressed the key issue of independence. It will be up to the new Chairman and the Board to ensure that Capita does not repeat the mistakes of the past, and that its strategy is fit for purpose during a particularly turbulent time for the outsourcing sector.”

Last week Capita issued a profits warning and announced plans to raise £700m from investors to reduce debts.

With Capita seeking to raise money and cut costs, where will this leave local government customers that are reliant on the supplier to cut the costs of running local services?

Barnet Council has, controversially, contracted out a large chunk of its services to Capita – and also gives the company tens of millions in advance payments in return for a discount on the supplier’s fees.

By becoming a “commissioning council”, Barnet has made itself wholly reliant on Capita, say critics of the outsourcing deal. Among other responsibilities, Capita produced the council’s latest annual accounts – including a financial account of its own services to the council. The accounts were not produced on time which created extra chargeable work for the council’s auditors BDO.

Capita has run into problems on a number of its major outsourcing deals. The National Audit Office is investigating its work on GP support services.

Councillor Barry Rawlings, leader of the Labour group in Barnet, said the profits warning and Capita’s low share price raised questions about how it may respond to further troubles.

He told The Guardian that Capita may be looking to cut back services it supplies.

“Capita handles all of the back office, enforcement, planning, environmental health, trading standards, estates, payroll and so on. Will that be part of their core services? We might be one of the only places they do some things. If they narrow their scope, what is going to happen to these services?

Conservative leader of  Barnet council, Councillor Richard Cornelius, said,  “Capita currently runs approximately 10 per cent of our services by value. They do not run the entire council as some reports have suggested.

“The council regularly reviews the financial status of its major suppliers as part of its contract management and contingency planning arrangements. This is what any responsible local authority would do.”

Capita’s share price has more than halved in the last month – from about 400p to a low on 1 February 2018 of 158p – but today rose by about 10% to 196.

Comment

When an outsourcing giant is looking to cut its costs and raise money to cover debts, how does that square with local government customers that also want to cut costs – which is why they outsourced to Capita?

Outsourcing can make good sense – when for example a global company like BP wants to standardise IT services across the world. It doesn’t always make sense when an organisation wants a service transformation while also cutting costs. Something usually has to give which, perhaps, Barnet Council and its taxpayers are slowly finding out.

Ministers told of major problem on Capita NHS contract more than a year later

By Tony Collins

Today’s Financial Times and other newspapers cover a National Audit Office report into GP clinical notes and correspondence, some of it urgent, that was not directed to the patient’s GP.

The correspondence was archived by Capita under its contract to provide GP support services. But patient notes were still “live”. They included patient invitation letters, treatment/diagnosis notes, test results and documents/referrals marked ‘urgent’.

What isn’t well reported is that ministers were left in the dark about the problems for more than a year. The National Audit Office does not blame anyone – its remit does not include questioning policy decisions – but its report is impressive in setting out of the facts.

Before NHS England outsourced GP support services to Capita in 2015, GPs practices sent correspondence for patients that were not registered at their practice to local primary care services centres, which would attempt to redirect the mail.

By the time Capita took over GP support services on 1 September 2015, GPs were supposed to “return to sender” any correspondence that was sent to them incorrectly – and not send it to primary care services centres that were now run, in part, by Capita.

But some GPs continued to send incorrectly-addressed correspondence to the primary care services centres. Capita’s contract did not require it to redirect clinical correspondence.

An unknown number of GP practices continued to send mail to the centres, expecting the centre’s staff to redirect it. A further complication was that Capita had “transformation” plans to cut costs by closing the primary care services support centres.

Capita made an inventory of all records at each site and shared this with NHS England. The inventories made reference to ‘clinical notes’ but at this point no one identified these notes as live clinical correspondence. Capita stored the correspondence in its archive.

In line with its contract, Capita did not forward the mail. It was not until May 2016 – eight months after Capita took over the primary care services centres – that Capita told a member of NHS England’s primary care support team that there was a problem with an unquantified accumulation of clinical notes.

It was a further five months before Capita formally reported the incident to NHS England. At that time Capita estimated that there was an accumulation of hundreds of thousands of clinical notes. When the National Audit Office questioned Capita on the matter, it replied that, with hindsight, it believes it could have reported the backlog sooner.

In November 2016, Capita and NHS England carried out initial checks on the reported backlog of 580,000 clinical notes. It wasn’t until December 2016 that ministers were informed of problems – more than a year after Capita took over the contract.

Even in December 2016 ministers were not fully informed. Information about a backlog of live clinical notes was within in a number of items in the quarterly ministerial reports. NHS England did not report the matter to the Department of Health until April 2017 – about two years after the problems began.

Even then, officials told ministers that clinical notes had been sampled and were considered “low clinical and patient risk”. But a later study by NHS England’s National Incident Team identified a backlog of 1,811 high priority patient notes such as documents deemed to be related to screening or urgent test results.

The National Audit Office says, “NHS England expects to know by March 2018 whether there has been any harm to patients as a result of the delay in redirecting correspondence. NHS England will investigate further where GPs have identified that there could be potential harm to patients. The review will be led by NHS England’s national clinical directors, with consultant level input where required.”

Last month Richard Vautrey, chairman of British Medical Association’s General Practitioners Committee, wrote to the NHS Chief Executive Simon Stevens criticising a lack of substantial improvement on Capita’s contract to run primary care service centres.

In December, the GP Committee surveyed practices and individual GPs on the Capita contract. The results showed a little improvement across all service lines, when compared to its previous survey in October 2016, but a “significant deterioration” in some services. Vautrey’s letter said,

“While any new organisation takes time to take over services effectively, the situation has gone from bad to worse since Capita took over the PCSE [Primary Care Support England] service almost two and a half years ago …

“This situation is completely unacceptable. As a result of the lack of improvement in the service delivery of PCSE we are now left with no option but to support practices and individual doctors in taking legal routes to seek resolution. While this is taking place, we believe it is imperative that NHS England conducts a transparent and comprehensive review of all policy, procedures and processes used by PCSE across each service line.”

Comment:

It’ll be clear to some who read the NAO report that the problems with urgent patient notes going astray or being put mistakenly into storage, stems from NHS England’s decision to outsource a complex range of GP support services without fully considering – or caring about – what could go wrong.

It’s not yet known if patients have come to harm. It’s clear, though, that patients have been caught in the middle of a major administrative blunder that has complex causes and for which nobody in particular can be held responsible.

That ministers learned of a major failure on a public sector outsourcing deal over a year after live patient notes began to be archived is not surprising.

About four million civil and public servants have strict rules governing confidentiality. There are no requirements for civil and public service openness except when it comes to the Freedom of Information Act which many officials can – and do – easily circumvent.

Even today, the fourth year of Capita’s contract to run GP support services, the implications for patients of what has gone wrong are not yet fully known or understood.

It’s a familiar story: a public sector blunder for which nobody will take responsibility, for which nobody in particular seems to care about, and for which the preoccupation of officialdom will be to continue playing down the implications or not say anything at all.

Why would they be open when there is no effective requirement for it? It’s a truism that serious problems cannot be fixed until they are admitted. In the public sector, serious problems on large IT-related contracts are not usually fixed until the seriousness of the problems can no longer be denied.

For hundreds of years UK governments have struggled to reconcile a theoretical desire for openness with an instinctive and institutional need to hide mistakes. Nothing is likely to change now.

National Audit Office report – Investigation into clinical correspondence handling in the NHS.

Companies nervous over HMRC customs IT deadline?

By Tony Collins

This Computer Weekly article in 1994 was about the much-delayed customs system CHIEF. Will its CDS replacement that’s being built for the post-Brexit customs regime also be delayed by years?

The Financial Times  reported this week that UK companies are nervous over a deadline next year for the introduction of a new customs system three months before Brexit.

HMRC’s existing customs system CHIEF (Customs Handling of Import Export Freight) copes well with about 100 million transactions a year. It’s expected a £157m replacement system using software from IBM and European Dynamics will have to handle about 255 million transactions and with many more complexities and interdependencies than the existing system.

If the new system fails post-Brexit and CHIEF cannot be adapted to cope, it could be disastrous for companies that import and export freight. A post-Brexit failure could also have a serious impact on the UK economy and the collection of billions of pounds in VAT, according to the National Audit Office.

The FT quoted me on Monday as calling for an independent review of the new customs system by an outside body.

I told the FT of my concern that officials will, at times, tell ministers what they want to hear. Only a fully independent review of the new customs system (as opposed to a comfortable internal review conducted by the Infrastructure and Projects Authority) would stand a chance of revealing whether the new customs system was likely to work on time and whether smaller and medium-sized companies handling freight had been adequately consulted and would be able to integrate the new system into their own technology.

The National Audit Office reported last year that HMRC has a well-established forum for engaging with some stakeholders but has

“significant gaps in its knowledge of important groups. In particular it needs to know more about the number and needs of the smaller and less established traders who might be affected by the customs changes for the first time”.

The National Audit Office said that the new system will need to cope with 180,000 new traders who will use the system for the first time after Brexit, in addition to the 141,000 traders who currently make customs declarations for trade outside the EU.

The introduction in 1994 of CHIEF was labelled a disaster at the time by some traders,  in part because it was designed and developed without their close involvement. CHIEF  was eventually accepted and is now much liked – though it’s 24 years old.

Involve end-users – or risk failure

Lack of involvement of prospective end-users is a common factor in government IT disasters. It happened on the Universal Credit IT programme, which turned out to be a failure in its early years, and on the £10bn National Programme for IT which was dismantled in 2010. Billions of pounds were wasted.

The FT quoted me as saying that the chances of the new customs system CDS [Customs Declaration Service) doing all the things that traders need it to do from day one are almost nil.

The FT quotes one trader as saying,

“HMRC is introducing a massive new programme at what is already a critical time. It would be a complex undertaking at the best of times but proceeding with it at this very moment feels like a high stakes gamble.”

HMRC has been preparing to replace CHIEF with CDS since 2013. Its civil servants say that the use of the SAFe agile methodology when combined with the skills and capabilities of its staff mean that programme risks and issues will be effectively managed.

But, like other government departments, HMRC does not publish its reports on the state of major IT-related projects and programmes. One risk, then,  is that ministers may not know the full truth until a disaster is imminent.

In the meantime ministerial confidence is likely to remain high.

Learning from past mistakes?

HMRC has a mixed record on learning from past failures of big government IT-based projects.  Taking some of the lessons from “Crash”, these are the best  things about the new customs project:

  • It’s designed to be simple to use – a rarity for a government IT system. Last year HMRC reduced the number of system features it plans to implement from 968 to 519. It considered that there were many duplicated and redundant features listed in its programme backlog.
  • The SAFe agile methodology HMRC is using is supposed to help organisations implement large-scale, business-critical systems in the shortest possible time.
  • HMRC is directly managing the technical development and is carrying out this work using its own resources, independent contractors and the resources of its government technology company, RCDTS. Last year it had about 200 people working on the IT programme.

These are the potentially bad things:

  • It’s not HMRC’s fault but it doesn’t know how much work is going to be involved because talks over the post-Brexit customs regime are ongoing.
  • It’s accepted in IT project management that a big bang go-live is not a good idea. The new Customs Declaration Service is due to go live in January 2019, three months before Britain is due to leave the EU. CHIEF system was commissioned from BT in 1989 and its scheduled go-live was delayed by two years. Could CDS be delayed by two years as well? In pre-live trials CHIEF rejected hundreds of test customs declarations for no obvious reason.
  • The new service will use, at its core,  commercially available software (from IBM) to manage customs declarations and software (from European Dynamics) to calculate tariffs. The use of software packages is a good idea – but not if they need large-scale modification.  Tampering with proven packages is a much riskier strategy than developing software from scratch.  The new system will need to integrate with other HMRC systems and a range of third-party systems. It will need to provide information to 85 systems across 26 other government bodies.
  • If a software package works well in another country it almost certainly won’t work when deployed by the UK government. Core software in the new system uses a customs declaration management component that works well in the Netherlands but is not integrated with other systems, as it would be required to do in HMRC, and handles only 14 million declarations each year.
  • The IBM component has been tested in laboratory conditions to cope with 180 million declarations, but the UK may need to process 255 million declarations each year.
  • Testing software in laboratory conditions will give you little idea of whether it will work in the field. This was one of the costly lessons from the NHS IT programme NPfIT.
  • The National Audit Office said in a report last year that HMRC’s contingency plans were under-developed and that there were “significant gaps in staff resources”.

Comment

HMRC has an impressive new CIO Jackie Wright but whether she will have the freedom to work within Whitehall’s restrictive practices is uncertain. It seems that the more talented the CIO the more they’re made to feel like outsiders by senior civil servants who haven’t worked in the private sector.  It’s a pity that some of the best CIOs don’t usually last long in Whitehall.

Meanwhile HMRC’s top civil servants and IT specialists seem to be confident that CDS, the new customs system, will work on time.  Their confidence is not reassuring.  Ministers and civil servants publicly and repeatedly expressed confidence that Universal Credit would be fully rolled by the end of 2017. Now it’s running five years late.  The NHS IT programme NPfIT was to have been rolled out by 2015.  By 2010 it was dismantled as hopeless.

With some important exceptions, Whitehall’s track record on IT-related projects is poor – and that’s when what is needed is known. Brexit is still being negotiated. How can anyone build a new bridge when you’re not sure how long it’ll need to be and what the many and varied external stresses will be?

If the new or existing systems cannot cope with customs declarations after Brexit it may not be the fault of HMRC. But that’ll be little comfort for the hundreds of thousands of traders whose businesses rely, in part, on a speedy and efficient customs service.

FT article – UK companies nervous over deadline for new Customs system

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