A remarkable story - one reason State spending is so high?

Phil Pavitt, CIO at HM Revenue and Customs, has been, as one commentator put it, courageously honest.

His disclosure that there is an unofficial club of high-spenders in Government who exercise influence by keeping their budgets high is one of the most important revelations yet made by any public sector CIO.

Soon after he appointed HMRC CIO in September 2009, Pavitt was visited by officials from the Office of Government Commerce, he says. The OGC is, ironically, responsible for helping central departments achieve efficiency savings of £3.2bn a year.



This is what Pavitt said of the OGC’s visit:

“In that conversation with me they mentioned I am in the top purchasingclub… That means you have tremendous influence on buying power,buying ideas and management and so on.

“I said, ‘If I reduce costs by 50%, what happens?’ ‘You leave the club,’ I was told.

“Sohere I am, relieved of my ability to influence government’s ability topurchase if I am clever and do my job. It is one of the most perversethings that I have heard.

“Wedon’t have a ‘demonstrable reduction of cost club’, we have a ‘sheersize of spend club’. Surely this is the wrong way round.”

Pavitt’s disclosure at the Govnet2010 Government IT conference was reported by silicon.com and not deniedby HMRC, whose spokesman told me: “Our job is to delivervalue for money to the department and our customers, and that does notmean artificially ramping up our spending to be regarded as a player.

“Thebigger your budget, the more leverage you have, but HMRC is not drivenby this consideration. The scale of our IT needs alone ensures that wehave sufficient presence in the IT market to engage meaningfully withany supplier we choose to achieve maximum service delivery in tandemwith value for money.”

Yes Minister without the jokes

Thatdepartments retain influence by keeping their spending high is not newto the writers of Yes Minister. These are two quotes from a co-writerof Yes Minister Jonathan Lynn. I have slightly amended the first quote::

“Asking Whitehall to slim down its staff is like asking an alcoholic to blowup a distillery.”

“If Civil Servants did not fight for the budgets of their departments they couldend up with departments so small that even the Ministers could run them.”

Thosewho’ve watched the series know how real it is. But it’s supposed to bereal-life exaggerated. Pavitt’s comments show that real life inWhitehall is a descent from the comic to the ludicrous.

If Sir Humphrey Applebywere visited by officials who told him to keep his department’sspending high so as not to embarrass other permanent secretaries, thedialogue would probably be deleted from the final broadcast as tooprosaic.

Cabinet Office accepts Pavitt’s comments

Noteven the Cabinet Office, which oversees the Civil Service, has deniedPavitt’s disclosure. I put what he’d said to a Cabinet Office spokesmanwho said:

“The buying power of the larger departments is an important factor inleveraging the market to provide best value deals across the publicsector ICT landscape….”
 
This is what two commentators say about Pavitt’s comments.

Bloated costs?

Chris Goodall, a director of consultancy Five One Two who has worked at IBM, UBS and Citigroup, said:

“Government CIOs should be rewarded and recognised for breaking away from this old school club.

“Ithink this is a fairly typical example of bloated IT costs whichgovernment ministers have been encouraged to pay for years. The tenderprocess is not delivering best value for money in terms of pound notesand, as Pavitt revealed, they are not incentivised to do so either.

“Themessage looks to be that government should go with the highest bidder,regardless of the quality of what is being delivered or what skills andinnovations a smaller – and cheaper – provider could offer,” he said.

Pavitt’s courageous honesty

Bob Evans at Information Week writes

“Ina stunning portrayal of undisciplined IT spending based solely on adesire to retain maximum leverage via ever-increasing spending, aComputerWeekly.com article offers a sobering look at what can happenwhen IT priorities are managed by out-of-touch bureaucrats with nosense of delivering value to stakeholders.

“I hope Pavitt’sbold disclosure wins him support from his fellow public-sector CIOs inthe U.K. rather than leading to a desk near the men’s room and apermanent assignment to the PC Help Desk.

“While it’s hard toimagine that such courageous honesty will play well in the type ofdetached and delusional Whitehall culture that the article portrays, wecan hope that today’s challenging economic conditions will allowPavitt’s challenge to this truly perverse policy to remain in light andlead to substantive change…”

Will Pavitt’scomments lead to change? Perhaps superficial change. But give Darknessthe job of Illumination and you can’t expect Light.

Is the Civil Service embalmed in complexity? 

The machinery of Government is incalculably complex. It seems to become more complex every yearas more statues and amendments are added to the libraries oflegislation, thus making the automation of routine tasks morelabyrinthine.

Pavitt has seen some of this complexity at HMRC.

Hesuggested that HMRC has amassed 650 major tax and benefit systems, and 2,500 databases hosted on 6,300 servers in nine datacentres, partly as a result of a reluctance to evertake a system out of action in case it might be needed in future.

“Youmight point out to lines of business that they had a system that foreight years [was] unused but they worry about the ninth year when itmight be.” 

Maybe the Conservatives will reform Government administration. Or maybe not. They’d have to change Sir Humphrey first. This is what Jonathan Lynn said about the ability of officials to welcome change:

“Itis axiomatic in government that hornets’ nests should be leftunstirred, cans of worms should remain unopened, and cats should beleft firmly in bags and not set among the pigeons. Ministers shouldalso leave boats unrocked, nettles ungrasped, refrain from taking bullsby the horns, and resolutely turn their backs to the music.”

Links:

CIO warned to keep spending high to retain influence – ComputerWeekly.com

It’s time to kill big IT contracts says Pavitt – silicon.com

Bizarre IT spending incentives – Michael Krigsman

Tories slippery on committing to Government IT reform – IT projects blog

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The idea that the public sector can be "reformed" is wrong and wasteful in its own right. Since all government departments except HMRC are spending departments, then expansion (which is the goal of much human endeavour) means they want to spend more and more. Even if you were to persuade a Department head to "make savings" how would he actually do it? The staff simply won't put any ideas into action. The only way to cut departmental spending is to cut off the supply of cash.

Reform and efficiency in the public sector? There is no such thing and never will be all the time they enjoy monopoly status.

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Why don't you report this truthfully Tony. To say "..they didnt deny it" doesn't mean it is still true. This is why journalism and papers are in crash mode...let's hope this sloppyness accelerates your downfall.

I telephoned John Suffolk about this and he said, and I quote, "if this is true it is outrageous. We were not even aware of this "club" in the Cabinet Office". When I pushed him on why the Cabinet had not denied it he said "we will work with colleagues in OGC to help the understand the inference implied by Phil's comments. We won't have our heated internal debates in public"

However, it is clear that OGC need lining up and shooting. They are the worst department that, as a supplier, I have ever had the misfortune to do business with. Conservatives what will you do?

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I am not sure what you regard as sloppy or untruthful. I agree that "they didn't deny it" doesn't mean it's true.

Government departments are rarely reluctant to issue denials of media articles.

In this case the original article was published by silicon.com (as I reported). The Cabinet Office, in its statement, issued no denial, as I reported.

There is something I should have mentioned in the piece. Phil Pavitt, HMRC's CIO, was quoted by silicon.com as saying he'd been visited by the Cabinet Office. I quoted from the silicom.com article which reported this.

HMRC contacted me after my article to say that Phil Pavitt had been visited by the OGC, not the Cabinet Office.

I corrected this in my article, but kept the quote from the Cabinet Office because it oversees the work of central departments and the civil service as a whole. Its view on Phil Pavitt's comments was still relevant.

I am glad you mentioned John Suffolk. I note that in his comments to you, John doesn't jump to any conclusions about whether a club of high spenders exists. He has answered your question very carefully and given what is, in my view, the best possible answer.

Somebody said to me that Phil Pavitt is a "national hero" for revealing that he was put under pressure to keep spending high to retain influence. All credit to HMRC's press office for supporting what Phil said.

My aim in writing the piece was to draw attention to Phil's comments. He has highlighted something momentous.

You criticise the OGC - but I don't see how your criticism of me helps to reinforce the importance of what Pavitt is saying.

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