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3.44 pm
Lord Mitchell: My Lords, this debate is long overdue, and I thank the noble Lord, Lord Lucas, for introducing it today. I speak as someone whose total professional career has been in the IT industry: first with IBM, as a systems engineer, and then as an entrepreneur in the services sector. I have also consulted for IBM and Hewlett-Packard. I have never been directly involved in a big IT project, but I know people who have. I am indebted to all those who have helped me with their views, opinions and deep experience in the preparation of this speech.
Political life is not always fair. An impression gains hold in the public psyche and once there it is hard to remove; and so it is with public sector IT projects. Rightly or wrongly, the general view is that Governments—this one or any other—are unable to control those large projects and as a result taxpayers’ money goes down the drain. The truth is that some projects go well and are unsung, but others go spectacularly wrong and grab the headlines.
In my day, the government sector was a no-go area, light years behind the private sector. Less qualified people worked there. Decision processes went on for ever. Life was too short and the rewards uncertain. That has changed. Since this Government came to power, quite correctly in my view, the managerial emphasis has been on information. Without information, you simply cannot manage. Obtaining information is not easy, especially if you are starting with primitive
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Then there was an about-turn. In the late 1990s, all the IT companies became very focused on the public sector. That is where the money was. After the dotcom crash, when the private sector froze, the opportunity presented itself. The problem was that, unlike the private sector, the public sector was not equipped to handle such huge projects. It did not have the people, it did not have the culture and, in particular, it had to deal with snooping politicians who did not have a clue how to ask the right questions.
I should like to analyse why public sector IT projects have had such a dismal time and then make a few suggestions as to how they may be improved. First, there is a problem of scale. It seems to me that the public sector has always favoured the big-bang approach—introducing a fully completed project in one fell swoop. That is a very dangerous game. It is far better and much safer to make the project as small as possible, make sure all the bugs are ironed out and then roll it out slowly.
Then there is what I would call the major problem: the public sector fixation with contracts and penalties. I am afraid that that is part of the Civil Service mentality. Somehow the Civil Service believes that, if you make the contract tight enough and the penalties onerous enough, everything will come good. It is a mentality that says that the supplier is the bad guy who is out to rip us off, therefore we must use the power of the contract to protect ourselves.
I have always had a simple mantra in business: sign the contract, stick it in the drawer and never look at it again. The day that you take it out of the drawer, you are in serious trouble. But, then, I come from the private sector, where we regard suppliers as partners. Our attitude is that there will always be problems, but we sort them out by sitting on the same side of the table, not glaring at each other across the room. Here is the truth about onerous penalties: they do not incentivise suppliers; they make them live in fear. Furthermore, no penalty, no matter how large, will ever compensate for a failed project.
Then there is the problem with the departments’ personnel. Those huge projects take ages to spec, ages to negotiate, ages to procure and ages to implement. Those who start the project are seldom there at the end. How many civil servants are still in post after three years? No one takes responsibility for the project from beginning to end.
Then there is the whole area of consultants. A few years ago, I was consulting for Hewlett-Packard. A new CEO was appointed in the United States. His first act was to fire almost every consultant—including me, I am sad to say. That action resulted in a saving of nearly $1 billion a year. Did the company collapse without those paragons of wisdom present? Not a bit of it. Freed from those interfering
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It may seem obvious, but consultants, like lawyers and accountants, are all in it for fee income. Shortening the project by making it easy and simple is not in their remit. It is not how they are assessed at head office. Their incentive is to make every project as big and as complex as possible, and their hope is that it goes on generating fees for ever. I am not joking when I say that we would all be served if every consultant were fired tomorrow. Managers should stand on their own feet and take responsibility for their own decisions, and not hide behind the skirts of overpaid time-wasters.
The result of bad practice in government departments is that many IT companies also behave badly. The suppliers overplay their abilities. They over-promise what they cannot deliver, they underbid on costs, and they try to recapture revenues every time the specification is changed—and the specifications often change. They get themselves into a terrible mess. Let us imagine, if we can, the state of mind that Accenture must have been in, as my noble friend Lord Warner said, when it withdrew from the NHS project. It cost the company £220 million—an amazing figure—to get out of the contract. Clearly, it judged that it was better to cut its losses than to continue losing money hand over fist dealing with the NHS. This is not a triumph of contract, but a total failure of the whole project. I am of the old school, but I really want my suppliers to make a reasonable profit when they deal with me. If they are happy, I am happy. If they are disgruntled, I will have problems. The Civil Service will never understand that, which is why it gets into so much trouble. An arrogance also pervades these big projects—a “we know best” frame of mind. If nothing else, it has proved beyond doubt that it does not know best.
What can we do about it? First, civil servants need to be trained and educated about the nature of contracts and partnership. They should know that, in any project, we are all on the same side. There should be a senior responsible owner on every project. In the private sector, IT is increasingly deemed to be too important to be left to the nerds. One cannot imagine Goldman Sachs having a chief information officer at a junior rank. Data are life and death to an investment bank, and too important to be relegated. It should be the same in government departments. Here is a suggestion. Why does not the whole public sector adopt a uniform delivery infrastructure? Why not make it all one utility, from which various departments can work?
Finally, on the human side of IT, why don’t we market what is out there? The noble Lord, Lord Birt, talked about all the projects that are out there. I bet that most people in the street have no clue about what
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3.52 pm
Earl Howe: My Lords, the NHS Connecting for Health programme, if its constituent parts are put together, is the largest civilian IT contract in the world. It started in 2002 as the National Programme for IT. The Government’s central vision was to establish an integrated system known as the NHS Care Records Service, consisting of detailed electronic patient records that could be used by GPs and in local healthcare communities. Alongside that is a national summary clinical record known as the spine. In addition, the programme comprises an electronic booking system for patients known as choose and book; electronic prescriptions to enable GPs to transmit prescriptions instantly to pharmacies; an e-mail service for NHS staff; computer-accessible X-rays; and a broadband network known as N3.
To achieve all this, Ministers took a conscious decision to centralise procurement for the entire NHS in England at the Department of Health. This was achieved extremely rapidly. By 2004, contracts worth £6.2 billion had been awarded to four lead service providers, covering the five designated regions of the country. The total cost over 10 years, according to the most recent NAO estimate, is £12.4 billion. Nevertheless, about a year ago, the noble Lord, Lord Warner, was reported as saying that the full cost was likely to be in the region of £20 billion.
Lord Warner: My Lords, may I correct the noble Earl? I actually said that the NHS would spend a total of about £20 billion on IT overall—not on this project alone—over the 10 years of the contract.
Earl Howe: My Lords, I am sure that the House will be grateful to the noble Lord. He will be relieved to know that I am not going to make a strident attack on Connecting for Health. Indeed, I support its aims, for the most part enthusiastically. However, in April this year, the Public Accounts Committee in another place published a report on the current state of play. The largest single element of Connecting for Health—the Care Records Service—is running about two years behind schedule. The suppliers to the programme are struggling to deliver. Not only that, but the department has failed to win hearts and minds in the NHS, especially on the question of whether the system will be fit for purpose. Four years after the programme started, there is still huge uncertainty about its cost across the wider NHS and considerable woolliness about the value of the benefits that it will eventually provide.
The noble Lord, Lord Warner, is right: this is not a picture of a disaster. However, the conclusions were nevertheless pretty disturbing. On the surface, the Government insist that everything is on course, albeit delayed. The Prime Minister was informed in
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That situation is worrying enough, but in three of the other clusters the position is, if anything, even worse. The software programme on which the system is to rely has not yet even been written. iSoft, the company responsible for writing it, is in severe financial difficulties as a result of its failure to deliver and is currently under investigation by the Financial Services Authority. As we have heard, Accenture, the main service provider for two of the clusters, resigned last year and in so doing made a provision in its books for $450 million. Its contracts are being taken over by CSC. In CSC there have been no fewer than 10 resignations at very senior management level in recent months. We may well be told that these are not significant, but such events do not serve to reassure the outside observer. Equally unreassuring is the fact that two other key suppliers to the programme—ComMedica and IDX—have also fallen by the wayside.
The line taken by Ministers, which we will probably hear again today, is that it is better to get things right than to rush. Fair enough, but where are we heading? One of the concerns expressed about the Care Records Service is its potential to blow patient confidentiality out of the water. How do you make someone’s medical details available to any NHS doctor in the country while at the same time giving that patient the cast-iron reassurance that there will be no unauthorised access to his file? This is a fundamental consideration, which was not properly thought through when the programme was commissioned. It is one that has come to the fore again in the context of the online application system for postgraduate doctors, MTAS. So insecure was this system that extremely personal details about individual doctors, including their sexual orientation, were accessed by reporters working for Channel 4. It has been said that if the Government cannot guarantee the security of 30,000 doctors, what hope is there for 50 million patients. It is not surprising that in a recent poll only a third of GPs said that they would advise their patients to allow their information go on to the national spine. The Government have agreed that any patient will be able to opt out of the spine, which is surely right. However, I believe that part of the Connecting for Health budget should be directed towards a public information campaign on that issue.
Records held by a GP and made available to the local hospital present little or no difficulty, but when records are placed on a national spine there is a real problem of accountability for the security of the data. Who exactly is accountable? But there is a wider issue
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It is telling that in Wales the Assembly has opted for a much less ambitious and much less costly IT solution. The original estimate for a Welsh equivalent of the Care Records Service was £1.5 billion. That option was rejected in favour of a system costing a mere £3 million. For that sum of money, the Welsh NHS will get a single patient record system available to GPs, local acute trusts and doctors performing out-of-hours duties. In other words, the vast majority of situations for the vast majority of patients will be covered. I am told that doctors in Wales are more than content with this approach. That is the key difference between Wales and England, where stakeholders feel resentful about not being more involved in the procurement process and, above all, lack a sense of ownership of a system that they are being asked to operate. How do the Government propose to remedy this, given that only one-quarter of GPs now say that they support the programme? In 2004, the figure was well over 50 per cent.
I do not for a minute doubt the benefits that Connecting for Health will bring, especially those relating to patient safety; I acknowledge them fully. But there are serious question marks over the programme’s design and the benefits that it will offer at the margin measured against the marginal costs, both originally and now. All that points towards adopting two things that my noble friend Lord Lucas so eloquently argued for: honest and regular re-evaluation, and greater openness, including publication of gateway reviews. Surely that is how this vast and vital project, whose success we must all wish for, stands the best chance of reaching fruition both on time and on budget.
4.01 pm
Baroness Harris of Richmond: My Lords, I, too, am grateful to the noble Lord, Lord Lucas, for securing this debate. I assure him that my contribution will be on only the IT area in which I was involved a number of years ago, which is slowly proving to be a success. That was not always the case but, as your Lordships know, large IT systems cost far more than originally expected and generally take much longer than anticipated. It was and still is so with Airwave, the terrestrial, trunked, digital
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Airwave is managed through a programme board made up of representatives from the Home Office, the Association of Chief Police Officers, the Association of Chief Police Officers in Scotland, the Association of Police Authorities and the National Policing Improvement Agency. It is procured by the NPIA and provided by Airwave O2 Limited under a private finance initiative.
I must declare my interest in this area. I was a member of my police authority for 20 years and chaired it for almost eight years until 2001. I was also a member and deputy chair of the Association of Police Authorities and sat on a number of national committees including the Police Negotiating Board and the Police Advisory Board. Moreover, I was a member of the National Crime Squad Service Authority before it was absorbed into the Serious Organised Crime Agency.
Airwave was crucial to the accurate relaying of messages throughout all the force areas on the UK mainland, before which we all had our own systems and hardware, much of which, in my force, North Yorkshire Police, was at the end of its natural life. Indeed, it was so much at the end of its life that I recall us having to cannibalise old radios to make sure that most of the operational ones that were needed actually worked. It was a desperate and wholly unacceptable situation, which only the introduction of a modern, affordable and technically competent radio system could remedy.
I was present when the then policing Minister, Charles Clarke, told a small deputation from the Police Advisory Board that—I will not be able to use the word he chose to use to describe what he would do to the reluctant forces that did not want to purchase Airwave—we would all take it, whatever we thought and whatever the cost, because it was to be the only solution on offer. However, he coated his threat with a promise of more money for forces to purchase the system, on which he was true to his word.
Airwave began its life as the Public Safety Radio Communication Project in the early 1990s. It was to be managed through the Police Information Technology Organisation, which was a public body set up to support police and partnership agencies in the criminal justice community. PITO has now evolved into the National Policing Improvement Agency. Initially, as I well recall, the Government emphatically refused to pay for the PSRCP, knowing that it would cost a huge amount of money, but eventually they capitulated and, in the end, all police forces received a capital grant towards its purchase. A decision was made by the then chief constable of North Yorkshire Police that it was absolutely essential that we were one of the first forces to go “live” with Airwave.
We took operational early access of the system—which meant that we were going live in one district while Airwave, the company name, was still building sites in other parts of the country—in 2001. It certainly had its teething troubles. Rolling it out over
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Officers in Scarborough made the first switchover to Airwave and colleagues within the district soon began to appreciate the benefits from the vastly improved communication in areas where previously their old analogue sets had struggled to get radio coverage—not a pleasant situation to find oneself in when on the tops of the moors, out of radio contact with any help and having to stop a suspicious car with four tough-looking men in it. So it was a great relief to be able to be in contact with the rest of the world in a potentially dangerous situation. Airwave handsets provided emergency buttons for officers, enabling instant radio access to help.
The cost of obtaining Airwave was the single most important factor for forces having to make the decision to purchase. The original arrangement with PITO and O2, formerly the mobile communications arm of BT, for a new radio service for police forces, was that O2 would design, build, finance and operate the service, while PITO and the police would pay charges over 19 years of some £1.5 billion. As we will see in a moment, this is now much, much more. In the 64th report of the Committee of Public Accounts—House of Commons Paper 783 of 2001-02, published on 28 November 2002—the conclusions of the committee were as follows:
“In negotiating a deal with O2, PITO and the Home Office failed to secure any clawback for the taxpayer of additional profits if other emergency services decide to join Airwave or if the system is sold by O2 to overseas governments. O2 was prepared to share the rewards from bringing extra users onto the system only if the Home Office was prepared to share the risk if extra users did not join. Failure to negotiate a clawback agreement was a product not just of O2 being in a powerful position as the only bidder but also the inability of the Home Office to bring the fire service and other safety organisations on board by demonstrating the real benefits that Airwave had to offer”.
So, in the initial stages at least, proper thought had not been given to such a massive investment, and a public sector comparator was not made until much later on in the procurement process. As it happened, the committee felt that at that stage it was doubtful whether the use of a comparator added anything significant to the decision-making process. It suggested that departments needed to think through what financial and other analyses would be needed at each stage of the procurement process to determine and implement the most effective means of ensuring value for money. Can the Minister assure me that this kind of late comparator is no longer a favoured form of doing business and that in future large projects such as Airwave will be managed in a more efficient manner at the outset?
The National Audit Office, in its evaluation of the Airwave project, said in the report of the Comptroller and Auditor General in April 2002:
“When procuring a step change in technology, such as Airwave, it must make sense to develop mechanisms to ensure that the maximum possible benefits are obtained for what will be a considerable investment of public money. This requires the allocation of resources up front to analyse performance before
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The Airwave system is very significant—currently costing around £4 billion—and we must ensure that we get the planned benefits from it.
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