Examination of Witnesses (Questions 100
- 119)
MONDAY 23 MARCH 1998
MR ALAN LANGLANDS, MR FRANK BURNS, DR JAMES READ AND MR DAVID BIRD.
100. There is no direct or indirect conflict
of interest and the NHS can be assured this is the case and we
are not going to see any more things of this kind in the future?
We are not going to see Dr Read or his family getting salaries
or profits by exploiting a relationship with the NHS? Can you
say that to the Committee today?
(Mr Langlands) Dr Read and the CAMS
organisation has rights that were negotiated in 1988 to market
and distribute the codes in the NHS and that will continue. It
will continue until next year at which point we will put that
process of marketing, licensing and distributing the codes out
to tender. We have to give in the agreement that was signed with
Dr Read and his company in 1988 adequate notice of that. We have
done that. It will change. It is possible that we may distribute
the codes ourselves. It is possible we will let that contract
to another company. That is the first point to make and there
was no abuse in that arrangement. That is an arrangement that
has not been criticised in the NAO Report.
101. I will get an answer one way or the
other. There is no direct or indirect conflict of interest in
the arrangements now in place to spend money up to March 1999?
(Mr Langlands) I do not believe
that to be the case. Dr Read will have no powers in making decisions
to let contracts over and above the marketing and distribution
costs to his own company. That will be the job of the new Director.
102. What is Dr Read doing at present as
an employee of the centre?
(Mr Langlands) He is continuing
his work in developing the codes. He is the inventor of the codes
and has been the driving force in developing them over the years
and as things currently stand he will continue in that role until
March 1999 when his contract expires.
103. He is engaged in work directly related
to the codes and he is a majority shareholder of the organisation
that distributes those codes?
(Mr Langlands) That is right and
that is the agreement that was made with his company in 1988.
The agreement will be drawn to a close as quickly as we can do
so within the law in that his contract will end in March 1999
and we will put out to competitive tender the marking and distribution
costs. In the meantime he is not in the line that could make decisions
that could, for example, award contracts to his own company. That
conflict of interest which was perceived-no abuse was identified
in the NAO Report-will not be continued and has not continued
since December 1996.
104. If there was no abuse why did you change
the arrangement?
(Mr Langlands) Pardon?
105. If there was no abuse why did you change
the arrangement?
(Mr Langlands) Because the Treasury
guidance, the 1997 guidance, indeed the NHS guidance that we produced
ourselves in 1994, not only deals with the actuality of abuse
or possible abuse but the perception of abuse. I said right at
the outset of this Committee meeting that the dual role that was
given to Dr Read was a flawed arrangement. That is not an arrangement
that I thought should be continued, I stopped it in 1996 and I
will take further action within the law and within our contractual
agreement as time allows.
106. I have been looking at the fact that
self-employed people were given pay-offs of £128,000, consultants
were brought in at £98,000. Roughly what is the total cost
of this whole mess?
(Mr Langlands) There were two payments
identified in the NAO Report, the £128,000 and another figure
of £20,000. As on previous occasions at this Committee there
was no suggestion in the report that these payments were ultra
vires.
107. I am not asking if it is ultra vires,
I am just intrigued adding up all the numbers really. We paid
£1.25 million for Version 1, we paid a million for Version
2, we paid £3.8 million for Version 3 and we paid £13
million in one cost to the Centre. We have had to pay another
£4 million while we carry on upgrading a system which does
not work. And looking back we see a lot of anomalous payments
in these figures. I just wondered in total how much did this whole
lot cost?
(Mr Langlands) The figure in the
report is £19.55 million[7].
108. That includes all the payments to these
self-employed people?
(Mr Langlands) It includes all the
running costs.
109. So £19.5 million[8].
How much of that has been spent on actually getting delivery of
the product out of what we are doing and how much was just paying
people off for bad management? How much was the cost of competence
and how much was the cost of incompetence?
(Mr Langlands) We have identified
from the £19.5 million [9]
£148,000 in severance payments. These were not payments that
were ultra vires.
110. No, I am not worried about ultra vires,
I am worried about who is competent and who is not and where the
money has gone. Have you got the computers back?
(Mr Langlands) I think what I cannot
concede, given that these payments were made within the law, was
that they necessarily arose from incompetence.
111. Have you read the report of the NAO?
12
(Mr Langlands) The vast majority
of the costs, the £19.5 million[10],
were not--
112. I am intrigued to know what the cost
is. We have spent enough money on developing a system that does
not work so we have obviously spent money on being incompetent.
It must be incompetence to give somebody £128,000 for doing
nothing. It has to be incompetence. There is no other word I can
think of to use for that.
(Mr Langlands) That is not what
the report says.
113. Two years' payment, £128,000,
was given to somebody in 1991 for doing nothing in lieu of notice.
(Mr Langlands) Yes. That was a decision
made on the legal position that presented itself.
114. Indeed.
(Mr Langlands) I am not in saying
that supporting the management of the Read Code Centre in making
these decisions, I am merely making the point that they were not
ultra vires. We have identified from the £19.55 million [11]
£148,000 that was made in such payments. The vast majority
of the money went into developing the Codes[12].
Only £3.8 million of the £19.5 [13]
was paid in developing Version 3 of the Codes. I have rejected
the notion this evening that is money wasted. These Codes do work
and do have the potential to work and are an essential ingredient
of improving the information management service in the NHS across
the next four or five years.
115. Thank you. Could I ask Dr Read then,
please, if he could explain how much of the money that he was
spending as Director of the Centre was being spent on frankly
developing nothing and paying people off for doing nothing? What
was the total cost of the computers and everything else that has
obviously gone in the wrong mismanagement of the Centre in the
past?
(Dr Read) We have identified those
two members of staff who were paid the sums of money that you
have mentioned. I think you have probably referred to a sum of
money for computer equipment that was not recovered.
116. I am just trying to get the total picture.
We paid people off for doing nothing, we lost computers, there
has been mismanagement. Roughly what is your estimate of how much
was spent in that kind of way? If you cannot answer me now I would
be happy to receive a note to the Committee on the total cost
to the taxpayer of failing to manage the Centre properly.
(Dr Read) I think you should recall
the fact that we had at one stage about 2,000 clinicians in 55
working groups, all of whom were around the country, with computers
on loan, and we had a very small management staff at the Centre.
We even sent our staff round the country in vans at one stage[14].
117. You paid yourself twice on travel I
notice. That was another helpful approach to spending taxpayer's
money.
(Dr Read) I think you will have
seen a letter from my accountant saying unfortunately that was
an internal accounting error on his part, that he did not pick
up and he wrote to volunteer that fact.
118. So can you give us a figure roughly
of how much it has cost?
(Dr Read) Its cost to?
119. I am trying to get to the point that
having spent money on developing a system we know does not work,
I want to know how much of the money that we spent actually was
spent on people not doing things, on travel costs that were double
payments, paying people for not being employed, paying them off
for self- employed, or the cost of losing computers. I would just
like a figure really to get some idea of the scale of incompetence
that we are talking about.
(Dr Read) We have not got a figure.
As Mr Langlands has said, I would not agree that this does not
work. We did a very complex job with all the clinical professions
and we have these clinical terms that certainly did work. It is
a different issue putting them into a clinical information system
and putting them into a hospital. That is the work that has to
be done on it. The terms themselves that we were asked to produce
from the professions were produced and we have got those terms.
It was a very complicated project to organise and by all accounts
it was the world's first.
7 Note by C&AG: The figure in the report is actually
£19 million. Back
8
Note by C&AG: The figure in the report is actually £19
million. Back
9
Note by C&AG: The figure in the report is actually £19
million. Back
10
Note by C&AG: The figure in the report is actually £19
million. Back
11
Note by C&AG: The figure in the report is actually £19
million. Back
12
Note by Witness: This refers to the specific costs of the clinical
terms projects. Back
13
Note by C&AG: The figure in the report is actually £19
million. Back
14
Note by Witness: To try to retrieve the overdue equipment. Back
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