Examination of Witnesses (Questions 240-259)
MR RICHARD DOUGLAS, DR PETER DRURY, MR ANDREW HOLT AND MR DUNCAN EATON
WEDNESDAY 23 JANUARY 2002
240. You mentioned one of the lessons was that you wanted a senior person responsible for the project. What other lessons have you learned besides that?
(Mr Douglas) I think they are the ones that come through to me as the main lessons. The other one I would probably draw from my discussions with OGC as well is the need for someone to be involved who is independent from the approval process for projects.
241. What sort of projects are we talking about here that are being reviewed in this way?
(Mr Douglas) The NHS Estates tend to be smaller construction projects.
242. Hospital projects?
(Mr Douglas) No. We have not used the Gateway on major hospital programmes. That is part of the move to introduce Gateway into the NHS more widely.
243. How many medium and low risk projects are there going to be subject to this sort of review?
(Mr Douglas) I do not know.
244. Maybe you could let us have that?
(Mr Douglas) I think, again, if we look at how we approach the NHS Gateway, when we have actually designed the system with the OGC we will have a better answer on that. I can drop you a line from NHS Estates.
245. We had evidence from the OGC in connection with the purchasing of low value goods and services electronically. The objective, according to the OGC, was to purchase 90 per cent of low value goods and services electronically by March 2001 and the OGC told us that recent measurements undertaken by them indicate that at present just over half of such transactions are conducted electronically. What is the figure for the Department of Health?
(Mr Holt) It is about 36 per cent in that year.
246. Against a target that you have been set of 90 per cent?
(Mr Holt) Yes. We have not done very well!
247. That is quite a shortfall, is it not, against target? What are the reasons for that rather poor performance?
(Mr Holt) Partly we were rather slow to move, frankly. That is the honest answer. Obviously on receipt of that I started thinking, "Well, how can we move?", and I have in train three steps: more use of the government procurement card, more on-line ordering, and some rationalisation of the way we process things electronically in turn so we do not get more electronic as opposed to manual signatures, which I hope will go some way to bridge that gap over the next year.
248. I do not wish to be rude but it seems that you are not only far away from the 90 per cent target but quite adrift from what seems to be the batting average for other government departments which is 50 per cent. Why do you think your performance is so much more slovenly than other departments on average? What is special about your department that makes you less interested in money-saving in this particular area?
(Mr Holt) Obviously we are rather small and we just did not pay attention to this quickly enough. That is the honest answer.
249. It is good to have an honest answerI think we appreciate thatbut what target have you set yourself for getting back on track fairly rapidly? What targets are you working to in order to get further towards the 90 per cent target of the OGC?
(Mr Holt) I have told you the three steps I am taking.
250. You have, but not a time by which this is going to deliver a much improved performance.
(Mr Holt) I certainly hope to be over the 50 per cent figure by the next financial year.
251. That would be by what date? March?
(Mr Holt) 2003.
252. As a matter of interest, how does this compare with the National Health Service figure and, just so we are specific, on the purchase of low value goods and services?
(Mr Eaton) The target which has been set for the NHS which is part of my corporate contract is that, within three years, one hundred per cent of transactions will be electronic. At the moment we are just over 62 per cent for the whole of the NHS.
253. Just so I am clear, three years from when?
(Mr Eaton) By March 31, 2005 the target is to be trading fully electronically on low value transactions.
254. And by 31 March this year you will be at what percentage?
(Mr Eaton) We are about 62 per cent now so I would not have thought it is going to change a great deal between nowa lot of the difference will be made up by the implementation of our strategy for electronic commerce that we are working on.
255. Forgive me but just on this, the OGC said that by March 2001 it was to be 90 per cent. That is last Marchnearly a year ago. Neither DH nor the NHS are even remotely getting near thatindeed, you are telling us that even this year you are not getting near to it. There is a three-year programme in your case and, again, you are asking for more time not even to get to the 90 per cent figure in the DH case. I do not wish to be rude or personal in any way but I just get the impression that, if you are so far adrift, neither DH nor the NHS have taken this figure seriously. The facts are objective. You have not taken this very serious means of reducing waste seriously. I just wonder what you would say to Parliamentarians who say, "There is a target here of 90 per cent for last year and you are not anywhere near getting to it"? What is going on?
(Mr Douglas) It would be wrong to say that we did not take seriously the need to find savings in procurement
256. Hang on. It was 90 per cent by March 2001 and we are 2002. It seems to me that something is going wrong and I would really very much appreciate an explanation of why you are so far adrift.
(Mr Douglas) We have made major changes to procurement and particularly on the NHS side what we need to do to deliver that saving is to make some pretty large investment in procurement systems, and that is effectively what Duncan is now looking at. We need to invest and at the moment we are looking at the combined e-commerce and financial systems that will allow us to do this and then we will go beyond the 90 per cent to the one hundred per cent.
257. Finally on this, are you saying to this Committee that the 90 per cent target given to you by the OGC by March 2001 was unrealistic?
(Mr Eaton) The NHS was not included in that target figure so, when the Agency started, we had to establish our own target which is one hundred per cent and, in the last year or so, we have increased the figure from I think it was about 40 per cent up to 60 per cent. The NHS is a massive organisation with thousands of transactions obviously going on in any trust, so I must say we have established very ambitious targets and we have delivered great improvements over the last year or so and we will continue to do that and we have a whole range of targets.
258. What about DH?
(Mr Holt) From where we stood at the time it would have been very difficult to achieve that.
259. The OGC have a target of one billion pounds value-for-money improvements from central government commercial activities by 2002/3by the end of that financial year. Could you tell me what your target share of that one billion pound figure is for value-for-money improvements? There is global figure of a billion and I just wonder what the departmental figure is.
(Mr Holt) The commercial spend in the department is about £200 million. This year we achieved £4.8 million savings. There are not any department-by-department targets as such but it is that sort of standard, perhaps a little higher, that we would expect to achieve.
6 See Ev 63-68. Back