Tony Collins looks back at some of the successes and
failures of central government computing over several decades and
asks: what has happened to the public money that has been spent so
far?
In 1969 the UK civil service began experimenting with large and
complex schemes to use computers to standardise the running of
central departments the results are still keenly awaited.
Learning few of the lessons from the 1970s and 1980s, namely
keep IT simple, ministers and civil servants have continued to
launch ambitious and subsequently notorious schemes to help manage
payments of child support, tax credits and farming subsidies, the
issuing of passports, collating intelligence for the Ministry of
Defence, and the handling of police suspects.
Market researcher Kable said that £15bn a year is spent on
public sector IT, £2.6bn of it by central government in 2005/2006.
Over the 40 years since central government has used computers in
earnest, the money spent on IT is thought to be far in excess of
£25bn - about £400 for every man, woman and child in the UK. This
huge spend has served a few major suppliers well.
One recipient of Whitehall's largesse is EDS, which signed what
was in 1994 the government's biggest IT outsourcing deal, when the
Inland Revenue transferred its ICL mainframes and 2,000 computer
specialists to the supplier. With extra work, the £1bn contract
turned into one costing about £2bn.
By the time Capgemini took over from EDS in 2004, the estimated
cost of running the enlarged department's IT systems had doubled
again, to about £4bn over 10 years.
Consultancy firm Ovum reported recently that Capgemini makes 44%
of its profit on the Revenue deal from "essentially add-on work
over and above the original contract".
A third supplier, Accenture, bid £45m to build and run
replacement national insurance systems, and was given extra work
worth between £70m and £144m.
Another company, Fujitsu, won a £184m contract in 1998 -
Labour's first private finance initiative deal - to supply a
standard national system which would allow staff in magistrates'
courts to manage cases electronically.
It was unable to deliver the case management system, but was
still paid more than the original contract price - a final amount
of £232m.
In 1996, a fifth supplier, Siemens, was similarly contracted to
deliver a £77m system to help immigration officers manage their
case workload. It was unable to deliver the system and was paid
instead for helping immigration officers improve the way they did
things manually.
However, suppliers have not always had their own way. The
Department of Health in 2002 appointed Richard Granger as director
general of NHS IT, and he has managed to stop suppliers beaming all
the way to the bank whether they delivered or not.
There are other positive developments in the way civil servants
have managed projects in central government over the past four
decades.
The Driver and Vehicle Licensing Agency has made it possible to
renew car tax online without having to go to a post office with the
correct paperwork. This useful innovation has required a linking of
information from insurance companies and MoT garages. It was a
project with a simple, clear purpose which had the strong support
of all stakeholders.
Civil servants, with their supplier EDS, have had an IT success
with Pension Credits, a system which gives top-up payments to some
needy over-60s.
There are a plethora of other successes in which IT directors
have made a little money go a long way. The Land Registry has made
valuable information easily accessible online, as have many local
councils.
But the innumerable, unsung successes are dwarfed by Whitehall's
taste for the dark side of computing: the overly large and complex
projects which have limited support from potential end-users, and
which trudge on for years without hope of justifying their cost.
Over four decades these oversized projects have given central
government a reputation for serial mismanagement of IT.
It is not simply the failed projects that have soiled
Whitehall's reputation. Some central departments and agencies have
spent billions on systems, consultants and services, and still
struggle with antiquated equipment, giving the public a poor
service.
No administration has yet introduced a standardised means of
recording an individual's name and address in one place hence many
of us have our names spelt in different ways on different systems.
Our registered addresses on some systems are sometimes decades out
of date, and an unknown number of us have different national
insurance numbers on different systems.
Whitehall still has different e-mail systems, some of which
cannot exchange messages because they each have different levels of
security. Three departments which have overseas offices, the
Foreign and Commonwealth Office, the Ministry of Defence and the
Department for International Development, have e-mail systems on
different security levels which do not adequately communicate.
And the advent of an ID card, or at least the possibility of
one, has raised a new question for Whitehall's chief information
officers: should we be identified as citizens on government systems
by a national insurance number - even though these numbers cannot
always be relied on - or by a national ID number, even though the
national ID systems may eventually prove unworkable?
Experienced chief information officers from the private sector
have been recruited to end Whitehall's reactionary culture. But
they can appear to some as no more influential than a row of
powerful fists trying to demolish a 1960s tower block.
If they need extra help they can call on the Office of
Government Commerce which oversees computing in central government.
But the OGC is sometimes of limited help, though it will advise the
CIOs on new or revised methodologies for increasing the impact of
fists on 1960s tower blocks.
Meanwhile, two central departments with the largest IT budgets
also have some of the oldest systems. HM Revenue and Customs and
the Department for Work and Pensions rely on Fujitsu VME equipment,
key parts of which date back more than 20 years.
HMRC's disjointed PAYE systems, which collect more than £110bn a
year, were criticised in a report of the National Audit Office this
year.
"HMRC can have difficulty in ensuring that taxpayers with more
than one source of income pay the correct amount of tax because it
may not know about additional sources of income."
This department which has, for more than a decade, calculated
its annual IT spend in hundreds of millions, does not have
dependable information with which to manage tax affairs.
The report of the National Audit Office, dated 7 July 2006,
said: "Deficiencies in management information have also made it
difficult for HMRC to prevent or detect errors made by staff. And
several times in recent years HMRC has diverted PAYE resources to
other areas of work which it considered had higher operational
priority, such as tax credits."
The report also noted that the "operation of PAYE has been
compounded by inconsistent working practices within HMRC." The
department's CIO Steve Lamey has described some of the department's
IT equipment as of interest to technology historians.
So what has gone wrong? Why do some departments continue to
spend billions of pounds without making much apparent progress?
One answer is buried in exchanges 22 years ago between MPs on
the House of Commons' Public Accounts Committee and top civil
servants to discuss the "management and control of the development
of administrative computing in government departments".
The questions and answers on 28 March 1984 were pertinent
because MPs wanted to know why IT projects were regularly failing,
and civil servants were saying that there was a shortage of skilled
staff, that things were improving, and that the right project
methodologies and lessons were being learned.
Little has changed. Over the past 10 years there have been
countless exchanges along the same lines between top civil servants
and MPs over major projects in the NHS, Home Office, Department for
Work and Pensions and HM Revenue and Customs, and the Ministry of
Defence.
But civil servants change, and the ones who learn the lessons
move to other jobs, and their enthusiastic successors embark on
projects without a thorough knowledge of why past projects had to
be buried.
In 1984, MPs were concerned about a proposed project called the
Operational Strategy, the objective of which was to bring new
advanced levels of automation to the payment of welfare benefits.
They were questioning a director of the Central Computer and
Telecommunicatons Agency, now the OGC. They also questioned a
benighted Geoffrey Otton, a permanent secretary, and JWC Spackman,
director of the Operational Strategy.
MPs were sceptical that Opstrat, as the Operational Strategy was
called, would ever work or stay within budget. Camelot, a previous
benefits project, had failed at a cost of £12m.
Otton told the committee that Camelot was an experiment: "We
have, I hope, learned the lessons from Camelot. We have gone to a
great deal of trouble to restructure our management processes. We
have recruited Spackman who brings a great deal of technical
expertise into the department. We are making extensive use of
consultants we are on course very safely on the things we are
trying."
But the lesson of not being too ambitious was not then fully
understood. Camelot cost £12m and Opstrat would cost about 60 times
as much - about £700m. And its actual cost would go way beyond
this, setting a new record for overspent IT projects.
Back in 1984, the chairman of the Public Accounts Committee,
Robert Sheldon, asked Spackman whether a project as ambitious as
Opstrat had been undertaken successfully on a similar scale and
complexity.
Spackman's reply was indistinguishable from the assurances that
have been given to MPs decades later on the ID cards scheme, for
example. "What is possibly unique in this one is its size," said
Spackman.
"I do not know of a project that actually involves quite as
large a number of online terminals but it is fairly straightforward
if it were being done on a much smaller system it would indeed be a
pedestrian and fairly straightforward project. It is its size which
makes it complicated."
The then MP Eric Deakins asked Spackman whether the projected
costs of Opstrat of about £700m were likely to rise in real terms.
In good faith Spackman replied: "No, they are unlikely to rise in
real terms the equipment costs if anything are going to come
down."
Ten years later, on 5 May 1994, social security minister
Nicholas Scott confirmed to the House of Commons that the costs of
Opstrat had risen by £1.9bn - from £713m to £2.6bn. "The most
recent - 1993 - estimated total cost in real terms of the
operational strategy to 1998-1999 is £2.6bn, which includes an
estimated £315m, 11.9%, for consultancy services.
"The total cost of the operational strategy was originally, in
1982, estimated at £713m. The current estimated cost exceeds the
initial estimate by £1.9bn. The original specification did not
embrace the substantial cost of subsequent changes in social
security legislation."
But, as today, there was officially no such thing as an IT
failure. Scott made the £1.9bn overspend seem insignificant when he
claimed that "estimates of total savings over the period of the
operational strategy have also been revised from an initial
estimate of some £1.9bn to £3.3bn."
This portrayed the distended Opstrat project as an unqualified
success, saving hundreds of millions of pounds over its cost. But
Scott's announcement, based on a briefing by his department, needs
to be put into context.
Indeed, there is no evidence that Opstrat has achieved the
savings claimed for it. On 12 January 1989, the National Audit
Office had published a report on Opstrat. It suggested that the
government had no real idea how much Opstrat had saved, or would
save.
The report said the project had been hit by a shortage of
skilled staff, the department had "seriously underestimated" the
cost of installing systems in local offices, and it had
overestimated savings. So poor was the way costs were recorded that
double counting of savings "could not be identified".
The project exemplifies the problems with computing in 21st
century Whitehall. Failures do not officially exist.
In August 2006, the DWP, the successor of the organisation that
launched Opstrat, secretly cancelled a £141m IT project to replace
several benefits systems, dubbed the Benefits Processing
Replacement Programme.
In a statement issued after news leaked out, the DWP said that
the lessons had been learned, and that most of the work had been
reused in other projects. The full truth did not emerge.
In the 24 years between Camelot and the Benefits Processing
Replacement Programme little had changed.
One would like to think that the mistakes of the past few
decades would have made ministers and mandarins paranoid about
launching any more overambitious IT schemes. The opposite has
happened.
In a report published on 19 September 2006, non-profit
organisation The Work Foundation said that government executives
were too gung ho about IT programmes and projects, and had lost
millions of pounds in taxpayers' money. The report stated that
executives need to lose their "reckless streak" and concentrate on
what is practical.
The report claims that too many government IT projects are
insufficiently piloted before being rolled out, are overly complex
in design and ignore the advice of the staff who will use the
systems.
Alexandra Jones, associate director at The Work Foundation and
co-author of the report, said: "Too many government IT projects
fail to deliver the promised benefits because public sector
managers have a reckless streak - they become dazzled by the
potential of the technology and lose sight of what is practically
deliverable."
She said the government should not be about cutting edge
innovation, but about serving citizens well and efficiently. "The
private sector can afford the luxuries of innovating - in the
public sector, IT needs to work."
Her words will doubtless be ignored. The Department of Health
has launched the world's biggest non-military IT-based programme,
the £12.4bn National Programme for IT. It has been marred by
shortages of skilled staff, an underestimation of total costs and
over-optimistic statements by ministers on when systems would be
delivered. Officially it is already a success.
The private sector has its disasters - but over the decades one
can see that corporate victims tend not to repeat major failures.
If anything a large-scale failure encourages boards to think small
next time.
It is unlikely that ministers and mandarins will ever enjoy
thinking small when it comes to IT, not while a significant part of
the IT industry depends so heavily on the public sector's love of
high stakes gambling.