Savings and strike threats at the ministry

Technology is bringing about big improvements at the Department for Work and Pensions, according to Stephen Timms.

Technology is bringing about big improvements at the Department for Work and Pensions, according to Stephen Timms.

In a rare briefing, the minister of state for pensions skipped lightly over the problems at the department's Child Support Agency, whose future is in doubt, claiming the IT systems there were "stabilising".

For Timms, the technology-enabled dreams of the future were intact and on track.

As the minister was briefing reporters, veteran MP Frank Field wrote to Tony Blair urging radical action to tackle the ongoing problems at the Child Support Agency.

To complicate the situation, staff at the DWP are next week gearing up for a strike over job losses that are linked to productivity gains expected from the DWP's technology programme. So what is really going on?

The DWP has started the year by setting out an upbeat technology vision for 2006, focusing on the IT-driven transformation it is undergoing, and on agreed improvements to contract terms with its key IT service providers.

Timms said the DWP was making a £7bn investment in IT from 2001 to 2008, which was on course to achieve savings of £1bn a year by 2008, and was already delivering improved services for the public.

According to Timms, technology had in particular brought about huge savings in the area of benefit payments, with the introduction of the Electronic Benefits Transfer system in April 2003 boosting the proportion of payments being paid directly into customers' bank or Post Office card accounts from 43% to more than 95%. He said the change, which had required the installation of a national network of swipe-card terminals covering every Post Office counter in the country, was expected generate savings of £1bn over the next five years.

Timms also cited the introduction of 8,600 touch-screen Jobpoint terminals to give users access to a national jobs database as another example of the DWP's successful innovation.

He said he was proud of the transformation of the pensions systems currently under way, with the introduction of a network of pensions contact centres enabling more citizens to make pension queries over the telephone.

At the same time, he dismissed suggestions that several of the new contact centres were missing their call-back targets, claiming that at the end of last year 21 of the 22 centres were meeting their goal of returning phone calls within one working day.

Timms did not mention that the Post Office modernisation, of which the government is so proud, came on the back of the failure of the £1bn Pathway project between the Post Office and the DWP's predecessor - one of the more spectacular government IT project failures of recent years.

He said the implementation of technology was also enabling efficiencies which put the DWP "substantially on track" to meet the Gershon efficiency targets set by Gordon Brown to cut staff numbers from 130,000 in 2004 to 100,000 by 2008. The DWP's current staff headcount was about 116,000, he said.

The minister also said 2005 was striking for how the DWP was transforming the relationship it has with its IT suppliers. "We are future-proofing the business through systematic industry benchmarking to make sure we continue to get industry-leading value for money," he said.

In August, the DWP substantially revised and rationalised 150 separate contracts with EDS, to cut the department's IT spend by £900m over five years - or £180m annually. The contract puts the 2005 cost of the EDS contract at £520m, against £700m previously. It also puts the focus squarely on using standard software more widely to keep costs down.

Last month, the DWP also confirmed it was consolidating its voice and data contracts with BT in a deal worth £870m over five years. Under the contract, the department is due to get a new managed network from BT which boasts greater resilience and provides higher overall service levels than currently. Bandwidth will increase by an average of five times over the life of the contract.

In the years ahead, Timms said there were five guiding principles in the DWP's IT strategy:

  • To adopt a single enterprise architecture across the department
  • To use integration technologies to link applications and services together
  • To obtain greater leverage from existing legacy systems by integrating them rather than replacing them
  • To use commercial, off-the-shelf packages rather than bespoke solutions
  • To introduce change incrementally, breaking projects up into manageable chunks rather than adopting a big-bang approach

After the extensive problems with the IT and telephony systems at the Child Support Agency, DWP chief operating officer Stephen Holt said the department would never again undertake such an all-or-nothing bespoke development. "There will no longer be big bang launches - no one builds systems like that anymore and we will not do it as long as I am in charge."

Timms insisted the conditions were now in place for DWP's investment in technology to begin to bring about major benefits and savings across its services - while managing to avoid some of the costly mistakes of the past.


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