Brown's bet on successful IT delivery puts a premium on project management skills

The chancellor relies on job cuts and computerisation to free up cash.

Chancellor Gordon Brown is relying on the successful delivery of IT to free up millions of pounds through job cuts to invest in public services.

The chancellor's statements in the Budget earlier this month highlight the government's determination to get a payback from its heavy investment in IT, but success will depend on spreading good practice in IT project management across Whitehall.

The issue is the subject of a parliamentary inquiry by the House of Commons select committee on work and pensions, to which outsourcer EDS was due to give evidence yesterday.

It is also the subject of Computer Weekly's Shaking Up Government IT campaign, which has won cross-party support from MPs for its call for best practice to be enshrined in UK law and for Gateway reviews to be published.

Brown's plan is for the Department of Work and Pensions to lose 30,000 staff and the Inland Revenue and Customs and Excise, which will merge into a single tax department, to cut 10,500 staff.

Eric Woods, practice director for the public sector at Ovum Holway, said, "The government is openly banking on IT and business change as a means of enabling public service investment. It will have to pay as much attention to ensuring strong and experienced IT management as it will to procurement savings."

The government's plans are all the more difficult because, given the IT investment in the NHS, the project managers needed to drive these projects might be in short supply, said Bob Forthrop, chief executive of outsourcing consultancy Morgan Chambers.

If the history of government IT projects is anything to go by, it is a strategy fraught with risk. Past experience has shown that IT projects often do not lead to the job cuts and savings anticipated.

The Department of Work and Pension's IT modernisation project, one of the largest of its kind in Europe, is about to come under the scrutiny of MPs following a series of problems with IT projects at the Child Support Agency.

The CSA had to take on extra staff after protracted delays in implementing its EDS-based CS2 computer system, which was to support the government's simplified child maintenance payments.

The project ran into difficulties when it emerged that up to 40% of the data from the old child support computer system could not be easily transferred because of anomalies, inaccuracies and missing data in the records.

As a result, thousands of parents on income support missed out on an extra £10 a week, and other parents were overcharged thousands of pounds with no prospect of a refund. Far from achieving the anticipated savings, the cost of the project escalated from £427m to £526m.

The Passport Agency also hoped that a new system, supplied by Siemens Business Systems, would bring savings. Instead, the implementation led to a backlog of 565,000 passports, long queues outside passport offices and delays of up to 50 days. The Passport Agency incurred extra costs of £12.6m.

The government's plans to cut 10,500 jobs over the next four years from the Inland Revenue and Customs and Excise will hinge on the successful rationalisation of 1,000 IT systems.

A review of the departments by permanent secretary to the Treasury Gus O'Donnell, published alongside the Budget, made it clear that the departments will need to adopt a common information strategy if the government is to meet its cost savings targets.

The Inland Revenue and Customs and Excise computerised extensively more than 10 years ago, but have so far failed to make reductions in staff.

In addition, the Revenue has a poor record on IT projects. According to the National Audit Office, problems with the national insurance IT systems cost taxpayers an extra £150m. The tax credit systems, supplied by EDS, also ran into difficulties. Helpdesks were swamped during a rushed implementation, which led to disruption in processing more than 1.1 million tax credit claims.

Inland Revenue hires more staff

The Inland Revenue has had to create nine temporary project offices and recruit 12,000 temporary staff to manage the end-of-year processes for the new tax credits.The department has also put in place a reserve of a further 750 staff, who can be called in at short notice, and an additional 300 staff to deal with 260,000 new tax credit calls each week.

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