Spending on the NHS’s national IT scheme up to April 2007 was £1.5bn less than the Department of Health had expected, according to figures released by the government yesterday [13 March 2008].
The reduced spend on the main IT contracts under the National Programme for IT – NPfIT – was largely because of delays in the delivery of new systems. BT, CSC and Fujitsu, the local service providers to the NPfIT, are paid mainly when they meet milestones and have systems accepted by trusts.
In 2004 the Department of Health had expected by April 2007 to have spent £2.8bn on the main NPfIT IT contracts. In fact it spent £1.3bn. The central costs of what are described as “activity and projects” within NHS Connecting for Health, which runs part of the NPfIT were more in line with its expectations. Officials had expected in 2004 to have spent £695m by April 2007 – the actual figure was £647m.
The figures were released by the Department of Health in its first “benefits statement” for the NPfIT after the National Audit Office recommended in a report on the programme in 2006 that the Department quantify financial benefits and service improvements, set against costs.
The National Audit Office had also called for a study to measure the impact of the programme on local NHS IT spending – both costs and savings – where national systems were being deployed. This should be used, said the NAO, to “provide an up to date assessment of the overall investment case for the Programme.
The benefits statement goes part of the way towards meeting the NAO recommendations. No up to date assessment of the overall investment case for the NPfIT has yet been published.
The benefits statement was released at a press conference chaired by the health minister Ben Bradshaw who was flanked by senior NPfIT people who included Richard Jeavons, Dr Stephen Miller, Dr Erika Denton, an Dr Gillian Braunold.
The statement said there had been savings of £208m up to April 2007, £192m of which was saved as a result of the “N3” National broadband network supplied by BT. By the time the 10-year contracts with local service providers expire in 2014, the Department of Health expects to have saved £1.14bn – not taking into account the expected improvements in services to doctors and patients.
David Nicholson, Chief Executive of the NHS, said the report showed that “we’ve made really solid progress against delivering an integrated IT systems for the NHS”.
Caroline Flint, the then NPfIT health minister, had told the House of Commons in March 2007 that the benefits statement would be available in the summer. But health officials now concede it has been a challenging task to research and produce the document.
Liberal democrat Health spokesman Norman Lamb had asked Caroline Flint what criteria her Department was employing to determine whether the NPfIT was a success.
Flint replied on 12 March 2007, giving Lamb a set of statistics. She added:
“Meanwhile, we are developing plans to respond to a recommendation, made by the National Audit Office in its June 2006 report on the national programme, for the publication of an annual statement quantifying the benefits delivered by all aspects of the programme, set against the costs incurred. The aim is for the first statement, to include information for 2006-07, to be available in summer 2007.”
The benefits statement released yesterday [13 March 2008] covered the year up to April 2007. It showed total spending on the NPfIT, including LSP contracts, central spending in support of local implementations, central costs, and local spending, of £2.4bn – about £2bn less than the predicted £4.5bn.
But the figures in the benefits statement were out of date. According to a Parliamentary answer in January 2008, NHS Connecting for Health was expected to have spent a further £1.3bn by the end of the year 2007/8. By the end of this month the total spent of the NPfIT is expected to be about £4bn. And by the end of 2006/7 £390.8m had been made in advance payments to suppliers. NHS Connecting for Health says that advance payments are not counted as earned revenue for suppliers or expenditure for the National Programme. So the £390.8m, when added to the £4bn spend until April 2008, means that taxpayers have paid about £4.4bn so far for the NPfIT.
At the Whitehall press conference to announce the benefits statement, officials were asked whether the benefits statement had been audited by the National Audit Office. They replied that it had been “shared” with auditors.
One national newspaper reporter at the press conference about the “contract reset” with Fujitsu and how negotiations were going. Officials refused to discuss the matter. The negotiations are protracted and, we understand, fraught with difficulties, mainly over money.