What IT challenges would an independent Scotland face?

If Scotland votes ‘Yes’ for independence in September, what are the costs and challenges of building new government IT systems?

If Scotland votes ‘Yes’ for independence this September, there will clearly be costs and challenges in rebuilding government IT systems which are currently shared with Whitehall.

Scotland currently shares over 200 institutions as part of the UK. They range from large organisations such as the Department of Work and Pensions (DWP), Ministry of Defence (MoD) and Her Majesty’s Revenue and Customs (HMRC), to quangos such as the BBC, UK Sport and the NHS Blood and Transplant service (NHSB&T). If replicated by an independent Scotland, each of these services would need some form of IT system, whether that was continued use of the UK’s on an outsourced basis or one entirely rebuilt by the new state.

According to a GOV.UK document entitled ‘United Kingdom, united future: Conclusions of the Scotland analysis programme’: “If people in Scotland vote to leave the UK, they will be voting to leave its supporting institutions and public bodies. These would operate on behalf of the continuing UK, and could not be shared without the agreement of the other parts of the continuing UK.”

The document pointed out that independent states can cooperate. Ireland, for example, aligns its immigration policy with the UK’s to reduce border controls, and states in the EU collaborate so that businesses can trade more easily. However, the UK does not currently share its public services, tax administration, pension systems or currency arrangements with any other state and “there are no states in existence that provide their neighbours with shared access to their public institutions on the scale the Scottish Government are promising on behalf of the continuing UK”.

So how much would it cost Scotland to create new IT systems as the engine rooms on which an independent Scotland would run? And what challenges would it face?

Hundreds of millions of pounds?

Estimates from academics, politicians and the Treasury of the potential total setup costs of new administrative structures for Scotland range from as little as £200m all the way up to billions of pounds. 

Professor Patrick Dunleavy at the London School of Economics has said that hundreds of millions of pounds would still be needed to build the necessary government IT systems.

“In the medium term (by 2018 to 2021) Scotland would need to build its own, new IT systems to allow policy control to be fully exercised from Edinburgh, in each of these areas,” he said. “These tasks would certainly cost several hundred million pounds, but they would also be investments in modern systems, and not just ‘setup’ costs. Significant policy savings may also accrue, and offset some of this burden.”

Why working out the IT replacement cost is so difficult 

Computer Weekly has calculated that Scotland could be faced with a bill of over £1bn to replicate all the necessary Whitehall IT systems it would need in the event of independence.

For calculations and explanations, visit the blog post on Management Matters.

Using available government statistics, analysis and statistics from intelligence company Porge, Computer Weekly estimated that Scotland could spend over £1bn on replicating the necessary IT systems needed to run an independent state.

From those statistics, DWP alone estimated that the one-off cost to build a new social security system could be between £300m and £400m, on top of annual operating costs of around £720m.

But this is clearly not going to happen overnight.

Sharing Whitehall systems

The Scottish Government has indicated that in event of independence it may want to continue using UK systems, staff and services for a transitional period that could run up to 2018.

However, Scotland and the rest of the UK will have different priorities. The UK has made it clear that there would be no sharing Whitehall’s IT systems and services if an independent Scottish state plans to make changes to existing social security policy, to avoid putting at risk the continuity of payments to UK citizens.

The Scotland devolution settlement

Matters currently reserved to the UK parliament:

  • the constitution
  • foreign affairs
  • defence
  • international development
  • the civil service
  • financial and economic matters
  • immigration and nationality
  • misuse of drugs
  • trade and industry
  • aspects of energy regulation (eg electricity, coal, oil and gas and nuclear energy)
  • aspects of transport (eg regulation of air services, rail and international shipping)
  • employment
  • social security
  • abortion, genetics, surrogacy, medicines
  • broadcasting
  • equal opportunities

Devolved matters:

  • health and social work
  • education and training
  • local government and housing
  • justice and policing
  • agriculture, forestry and fisheries
  • the environment
  • tourism, sport and heritage
  • economic development and internal transport

Source: GOV.UK

Additionally because the three main UK political parties have declared they would not enter into a currency union with an independent Scotland, then the use of another currency than sterling would rule out the sharing of any IT systems with monetary transactions, even for a transitional period.

A Scottish Government spokesperson said: “Services currently devolved to the Scottish Government, such as health, schools, policing and Scottish courts are already delivered through Scottish public sector IT systems. Other services presently reserved to the UK government (eg taxation and welfare) are delivered through a mixture of Scottish and Whitehall departments’ systems.

“On independence, we would work closely with Westminster departments to ensure continuity of service and to identify and scope any transition to new systems.

“Independence provides an opportunity to develop better integrated and more cost-effective IT systems for public services.”

An opportunity for better systems

Arguments about setup costs aside, rebuilding IT systems in the event of Scottish independence would be a large task, not without equally large challenges. Yet it could also be an opportunity for Scotland to start afresh and make improvements to some less popular Whitehall systems.

“What about benefits administration? Nobody would want to copy the DWP’s systems,” wrote Iain McLean, professor of politics at Oxford University, on his blog. He said the two huge setup costs lie in tax collection and benefits distribution. “One may fairly say that these (especially the latter) are things that the UK does not do very well, and that an independent Scotland could do better.”

Central government adviser Alan Mather agreed that Scotland could use this as an opportunity to build much better IT systems than the UK.

“Scotland could build something from scratch,” he said, pointing to the digital example the Estonian government has set since its independence from the Soviet Union. Just 1% of Estonia’s GDP goes on technology and services, with 0.1% going on software licences, thanks to a heavy reliance on open source software. But Estonia was starting from scratch and had no legacy IT weighing it down.

Scotland has already been looking towards Scandinavia for inspiration for welfare, but a working group set up by the Scottish Government said it couldn’t import the model used in Nordic societies.

A large challenge for Scotland if it exits the UK is to move its citizens from the existing UK legacy IT systems and onto new Scottish systems.

Mather, who is also a former Whitehall IT chief,  said the main challenge would be when a citizen moves out of the UK into a Scottish system; the UK doesn’t account for individuals because departments across Whitehall have different details on each citizen – such as PAYE, benefits, and student loans – located on different IT systems.

Mather said Scotland would need to account for citizens collectively at the point of transition to simplify the IT and understand each citizen’s account balance. “At the point of transition they would have to sum up – who has student loans outstanding, who owes tax to who, and what benefits,” he said. “All of those things need to be looked at, so on the day the new system goes live it knows where the money is and who it’s paying and who it’s not paying.”

Chris Chant, retired executive director of the Cabinet Office, who now works with niche consultancy Rainmaker Solutions, predicted Scotland will face challenges around skills – which the rest of the UK is currently struggling with.

“They need to make sure they’ve got the right people,” he told Computer Weekly.

He explained that because IT has been outsourced to half a dozen big companies in recent years, in-house skills in the public sector have been significantly depleted. He said Scotland would have to be wary of this skills gap and make sure it gets the right skills in quickly, while also reskilling and creating the right skill base for the future.

Chant – who was also programme director of the government’s G-Cloud initiative – said the framework would be easy for Scotland to replicate and therefore allow the state to access people with the right skills very quickly.

Back in Whitehall, the Government Digital Service (GDS) is working on transforming 25 of the most used public sector services into digital transactions over a two-year period. Chant said in the event of independence Scotland could enquire about taking the front-end of existing web applications to use on an interim basis, but this would work only for modern applications.

“All of the applications [across government] are monstrously different,” he said. “Some they could use, and some they would want to start again.”

But overall he believes Scotland is in a much better position to rebuild IT systems today, than it would have been 10 years ago.

“The good news is you can build systems today 100 times faster,” he said. “Whatever they need to do can be done quickly. Today is the best way to do it. Trying to do this 10 years ago, you’d have to have a 10-year plan.

“The time taken to rebuild the online applications that GDS has already done – those seem to be going at a pretty good pace, so there’s no reason this couldn’t be done quite quickly by Scotland.”

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