vote 'yes' in the Scottish referendum later this year, Computer Weekly has
calculated that Scotland could spend over £1bn on replicating the necessary IT
systems needed to run an independent state.
Professor Patrick Dunleavy at the London
School of Economics
stated that hundreds of millions of pounds would
be needed to build the necessary government IT systems, but no one has drilled
down a final figure.
Weekly has calculated an estimate of how much it would cost Scotland to
replicate Whitehall IT systems based on GOV.UK documents and statistics from
intelligence company Porge.
wasn't easy to figure out. And here's why...
Total Whitehall spend
there are still very few definitive figures available for government spending. Research from the Institute for Government
revealed last week that HP alone earns more than £1.7bn a
year from Whitehall, with its main
spender being the Department
of Work and Pensions (DWP), and Capgemini also depends heavily on spend from
Her Majesty's Revenue and Customs (HMRC). But "significant discrepancies" were apparently flagged up by DWP, and there
just isn't the data to go anywhere near finding out what government actually
spends on SMEs.
Meanwhile, intelligence company, Porge, which analyses
invoices to show what public sector bodies are spending their money on, managed
to calculate that central government spent £6.2bn on IT and back office
outsourcing between April 2012 and March 2013.
is significantly lower than the total spend figure floating around the internet
which varies but can be estimated as up to £16bn. However the figures from
Porge are lower because it excludes functions such as IT costs from the police.
Additionally, Porge tells us that central government departments generally only
disclose invoices down to a value of £25K, so the data would exclude smaller
So how can
we figure out how much money an independent Scottish state may have to spend on
replicating Whitehall IT, when we can't get a definitive answer on what
Whitehall is spending at the moment?
gave it a go...
How much would Scotland spend?
still a lot of figures in various government documents, but some quote start-up
costs of an independent Scottish state, while others cite annual operating
costs, and it's rather difficult to directly compare the two.
Computer Weekly has extrapolated data to deduce it is likely the cost of setting up all the necessary new IT systems for an independent Scotland starting completely from scratch would be £1.6bn.
Scotland already looks after a number of devolved institutions including
police, health, courts and education, yet the country still depends on
Whitehall for critical functions such as defence, social security and financial
independent Scotland would not be able to exist without two of the basic
functions of benefits and tax, provided by the DWP and HMRC respectively, so we
stuck with those departments and drilled down the figures.
DWP set-up costs
surprisingly - was easy. The deparment has estimated a one-off
cost to build a new social security system could be up to £400m (on top of annual operating costs of
HMRC set-up costs
was the only department to be transparent with their Scotland set-up estimates.
For HMRC a little further digging was needed.
to a document from the Department of
Business Innovation and Skills, Scotland would need to pay around £562m to create a whole new tax
regime, but it did not provide a breakdown of IT set-up costs.
to the same document entitled Scotland Analysis: Business
and Microeconomic Framework - in 2011 HMRC's tax collection running costs were
to data from Porge between 2012-2013 HMRC spent around £900m on IT which is 25%
of the total £3.6bn figure stated by the Treasury.
assume the running costs for 2012-2013 were similar. And from that we can
deduce the annual IT spend for an equivalent Scottish HMRC would be 25% of the £562m
total set-up costs, equating to £140m.
to The Scottish Government analysis of the cost of introducing and
administrating their replacements for UK Stamp Duty Land Tax (SDLT) and Landfill
Tax suggests that initial set-up costs equate to around 90% of annual running
costs. If the same proportion was applied to the maths above, the total set up
costs for a tax IT system for an independent Scotland would be £126m.
DWP and HMRC
For both DWP
and HMRC the total one-off IT startup costs equates to £526m. But other institutions
would also need to be replicated.
to Porge, DWP and HMRC roughly came to a third of total annual Whitehall IT spending
Scotland already have a number of devolved functions. It would not be
unreasonable to assume Scotland's devolved functions including police, health,
courts and education would take up a second third of public sector spending. Leaving
one third which would include the remaining institutions Scotland would need to
replicate from Whitehall.
the bill an independent Scotland would face for replicating the two thirds of
Whitehall IT systems would come to £1.1bn.
A chance to build something better?
over costs by various bodies have been worked out using the number of citizens -
the UK has 60 million people, while Scotland has 5.3 million people. But if you
are setting up a system from scratch the number of people doesn't matter. But
the difference comes when scaling up the size of the system. I'd hope, if
Scotland was to gain independence, they would take advantage of cloud software
which is much better designed to scale in a cost efficient manner, over the
mainframe systems DWP and HMRC are still running on today.
Take a look at Computer Weekly's analysis on
the costs and challenges of setting up IT for an independent Scotland.