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Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 220-239)



  220. I have to ask my question. You then said that what happened was you called in EzGov, as you have called it, and they, as we see in the Report, begun to resolve some of the problems, not all of them. It says on page 27, "Many of the early teething problems have now been fixed." So we have not yet got a system doing what you originally thought it was intended to do. What was wrong with the performance objectives you set in the original contract that you have not been able to claim any penalty from those who were supposed to be supplying you a working system?
  (Sir Nicholas Montagu) They supplied us with a system—

  221. Yes, but it does not work.
  (Sir Nicholas Montagu) They supplied us with a system which did work. As I have indicated, there was nothing wrong with the fundamental system, there was nothing wrong with the forms, it was a system which worked, it was a system within the contract with EDS. The issue with EzGov was the need to get a rather different lot of skills in for moving to wider internet use. We were delighted when EDS partnered with them, we were delighted to have them reporting on it, but I must emphasise that Sir John's Report has not found a system which did not work. He has found a system which has, "teething problems, which are to be expected". We were breaking new ground in e-services between Government and the citizen. I have readily conceded there was room for improvement. There will always be room for improvement, and that is why build and learn and the iterative process I have described is of such great importance to providing a decent customised service. All you have shown is that in the first year take-up was relatively low.

  222. And in the second year.
  (Sir Nicholas Montagu) In the second year it was up by 94 per cent.

  223. Only because those who had not been able to get through the first time got through the second time.
  (Sir Nicholas Montagu) Similarly, as Sir John's Report shows, that was not out of line with the private or public sector; look at the first year of the Australian Tax Office.

  224. You have had a first year, you have had a second year.
  (Sir Nicholas Montagu) And up by 94 per cent in the second year. I am well pleased with that.

  225. Anyway, you and I are not going to agree on that.
  (Sir Nicholas Montagu) I fear we are not, Mr Williams, it is a source of great sadness to me.

  226. I will end the discussion there, while we are still friends.
  (Sir Nicholas Montagu) As always.


  227. I always enjoy the confrontations between you and Mr Williams, so it is rather sad when they end.
  (Sir Nicholas Montagu) I hope you did not say "confrontation", Chairman. I hope you said "conversation".

  228. Conversation. What month and what year did you start your work on this project?
  (Sir Nicholas Montagu) April 1999.

  229. In other words, you had not done any work at all before the March 1999 Budget?
  (Sir Nicholas Montagu) Terry, would you answer that? You were involved.
  (Mr Hawes) Speaking from personal experience, the answer to that is yes. In terms of preparing a project to deliver this particular service, that started around April 1999, but I had been working for at least six months or so before that establishing an electronic business unit and doing various other preparation work so we could go ahead straight away.

  230. So you could go straight away. So for six months before the March 1999 Budget were you intending to bring out a system within a year or 18 months?
  (Mr Hawes) At that time we were doing exploratory work. It seems strange to say it now but the idea of government on the internet, transactions services, was very new. We were making sure we had in place the basic building blocks so we could start to deliver internet services when ministers asked us to do that.

  231. What internet services?
  (Mr Hawes) The internet services we have gone on to deliver. There are basic foundations we have to lay, and that would have been the same in many respects whether it was for self-assessment tax returns or pay-as-you-earn, and that is the work we were doing.

  232. Before April 1999, were you doing any specific work in order to achieve self-assessment by the internet within a year?
  (Mr Hawes) No, not in project terms we were not.

  233. Although Sir Nicholas quite rightly refused to answer my question about whether the Chancellor's statement took you by surprise in March 1999, one must assume that although you will not and should not answer that question the answer is yes?
  (Sir Nicholas Montagu) As you say, Chairman. I think what Terry portrays is a big public service department gearing itself up in general terms to do business in a completely new way. As he says, even three years on, one thinks of how e-business has expanded.

Jon Trickett

  234. Chairman, can I just come back on one particular point which is this—thinking about my bypass and motorway analogy a little bit further—we seem to have built a road, an electronic highway with sufficient capacity for the whole population in a fairly limited period of time to utilise simultaneously. The fact is that we know that only a very small fraction of that population are using it or are likely to use it in the near future. Is it arguable that the cost of establishing all of this huge capacity is larger than it need be had a more realistic estimate been made of the number of users in the first instance? What we have here is a wonderful machine capable of dealing with the whole population and in fact handling less than 100,000.
  (Sir Nicholas Montagu) At the moment, Mr Trickett, this is one bit of our e-business. In January our website had 5½ million hits on it. As I was saying to Mr Williams, we have seen a 94 per cent increase year on year. I do not want to pursue your road analogy for the kind of reason that Sir John was talking about; but yes, it is true that we have been busy putting in place an infrastructure which we are confident can deliver the Government's 2005 pledge which is for universal e-availability.

  235. The question I was asking you was, you now have very, very substantial over-capacity to handle, is it arguable that your costs would have been less or the cash flow could have been configured differently had you made a more realistic estimate of the number of users?
  (Sir Nicholas Montagu) I think not, Mr Trickett. I do not think one builds a system for X thousand as opposed to X million. We are putting in place, as I indicated, a long term investment for universal use.

Mr Williams

  236. That is interesting. Following on precisely what has been said, you are saying with great satisfaction we have achieved 90 odd, say 100 per cent—for ease—improvement on last year but last year you started off with a figure of 129,000 who were wanting to use the system, only 39,000 managed to get through so only a quarter got through.
  (Sir Nicholas Montagu) Sorry, could you repeat again how many got through?

  237. 39,000, if I remember correctly.
  (Sir Nicholas Montagu) Yes.

  238. It was 129,000 indicated they wished to do so.
  (Sir Nicholas Montagu) Yes.

  239. So 80,000 failed.
  (Sir Nicholas Montagu) No, it is not a question of failing, it is a question of opting.

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