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8 Apr 2003 : Column 240—continued
DEFERRED DIVISIONS
Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 29 October 2002],
- That, at this day's sitting, the Orders of the House of 28th June 2001 and 29th October 2002 relating to deferred Divisions shall not apply to the Question on the Motion relating to Northern Ireland.—[Joan Ryan.]
DELEGATED LEGISLATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6)(Standing Committees on Delegated Legislation),
Northern Ireland
- That the draft Northern Ireland Act 2000 (Modification) Order 2003, which was laid before this House on 27th March, be approved.—[Joan Ryan.]
DELEGATED LEGISLATION
- That the Housing (Right to Buy) (Limits on Discount) (Amendment) Order 2003 (S.I., 2003, No. 498), be referred to a Standing Committee on Delegated Legislation.—[Joan Ryan.]
- That the Care Homes (Amendment) Regulations 2003 (S.I., 2003, No. 534), be referred to a Standing Committee on Delegated Legislation.—[Joan Ryan.]
PETITIONS
Pharmacies
7.16 pm
Mr. David Kidney (Stafford): A number of Members have recently presented petitions on the subject of the Office of Fair Trading report on pharmacies. I am now presenting a petition on the same subject, on behalf of residents of my constituents. Four hundred and sixty-one signatures have been collected.
- Declares that the proposals made by the Office of Fair Trading allowing the unrestricted opening of pharmacies able to dispense NHS prescriptions will have a detrimental impact on local pharmacies and their continued services to local communities.
The petitioners therefore request that the House of Commons urge the Government to reject the proposals made by the OFT for the unrestricted opening of pharmacies,
And the Petitioners remain, etc.
7.17 pm
Jim Dobbin (Heywood and Middleton): My petition is similar to that of my hon. Friend the Member for Stafford (Mr. Kidney). This issue has caught the public's imagination. My constituents fear that proposals in the OFT's report on pharmaceutical services will adversely affect community pharmacists' ability to deliver a comprehensive service. The petition, signed by approximately 2,000 of my constituents, asks for the protection of opening hours of pharmacies serving local communities.
- The Petitioners therefore request that the House of Commons urge the Government to keep the present framework by rejecting proposals which could lead to the closure of community pharmacies.
And the Petitioners remain, etc.
Information Technology (DEFRA)
Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]
7.18 pm
David Taylor (North-West Leicestershire): I am delighted to have secured this debate, at the fifth or sixth time of asking.
Before coming to the House in 1997, I worked for three decades in the world of information technology. I worked in a range of jobs, from software development through systems analysis and lecturing to project and team management. All that experience was in local government, so it is not surprising that I have taken a keen interest in the use of IT in national Government—and especially in the sad Gadarene rush of Departments towards the expensive abandonment of control called "outsourcing".
When I joined the new Select Committee on Environment, Food and Rural Affairs after the 2001 election, one of our reports was on the performance of the new Department. I think I am right in saying that we were all disappointed at the weak, perhaps even woeful, approach to IT.
My public sector experience has been that outsourcing can often be the last desperate act of an IT-illiterate top management who are drowning in a whirlpool of technology they do not understand and who are seduced by private sector IT sharks into buying solutions claimed to be a panacea for all ills, including their organisational incompetence.
The new DEFRA top management were said to be the finest available in what was always likely to be a Department with numerous challenges. As an MP representing a rural constituency, with a personal focus on environmental issues, I was and am convinced that the new Department has the ability to boost the quality of life for millions, especially with the Ministers it now has, so I regretted the lack of an IT strategy, other than to sell off IT and throw DEFRA to the mercies of the private sector.
Under the previous Government, IT services went through a market-testing programme that brought flexibility in terms of numbers and skills while the Department retained control and the ability swiftly to reposition staff if necessary without incurring penalties, financial or otherwise. Years later, the better quality service programme suggested better utilisation of the private sector and better investment within the Department but not the transfer of the in-house capability. Following the end of the foot and mouth outbreak, internal management decided that the BQS recommendations were no longer viable and that a new review to include looking at outsourcing the service should take place.
The Department rushed to finalise its IT strategy by the end of March 2003 in response to criticisms from the Select Committee and to meet its timetable for procurement. As that strategy did not exist before the decision to privatise the IT services, it has been heavily influenced by the privatisation proposals. It is therefore a strategy to support the programme rather than reflect the true business needs of DEFRA.
The Office of Government Commerce gateway one report stated:
- "There remains a strong resistance from the trade unions and the majority of Defra staff. There is a serious risk of disruption to business through poor morale, loss of staff, or industrial action. Delays in decision making and consequent uncertainty amongst Defra staff and management as to which individuals are in scope and how services will be provided is leading to reduced support for the privatisation option".
Sue Doughty (Guildford): I am concerned about the staff retention issue. There are considerable skills in that sector. IT in this area is complex and needs the skills that are at Guildford. What are the hon. Gentleman's comments about how DEFRA can retain those skills within the plans that it has?
David Taylor: I think that that is possible given imagination and knowledge, which are not necessarily always present in the right places—although that is one of the questions that I shall put to the Minister at the end of my speech.
A notice placed in the Official Journal of the European Union includes the following statement:
- "For guidance, the current spend"
- "is approximately 85 million GBP per annum."
- "The contract will be for an initial term of 7 to 10 years with the ability to extend up to a maximum contract term of 17 years subject to mutually agreeable terms."
DEFRA is a new organisation and still coming to terms with its remit. It is going through major changes. Lord Haskins is reviewing the links of all the countryside agencies, for example. There are over 30 current reviews of the work and infrastructure of the Department and those can hardly allow a clear picture of the potential IT work load. This is a time for flexibility, not for rigid contracting out of services. It is not the time to try to privatise IT service delivery, which nowadays, if not core to, is at least the lifeblood of any business.
An IT strategy has at last been produced, and the management board has insisted on the corporate governance of IT. Both were sorely needed, and although required for the outsourcing, they will also allow internal staff to be more efficient and cost-effective. However, it is difficult to understand why the Department's own staff are not being allowed the
opportunity to show their worth under this new regime, especially given the extra funding being made available to improve the infrastructure, rather than wasting taxpayers' money on privatisation—unless, of course, this is a purely political decision.The Department is also rightly trying to improve the infrastructure before privatisation takes place. The maxim is: never outsource a problem, and I agree with that. However, it is not as if this action and the investment have not been sought before by in-house staff, who are now asking why they were denied this opportunity to work efficiently, and why it is being granted to an external supplier.
While the privatisation programme has been meandering along, staff have been providing an excellent service. There has been a preference exercise, and details of which posts will be TUPE-ed to the external supplier are about to be issued. If a sufficient number of unhappy staff take their careers elsewhere, DEFRA business continuity will be seriously compromised. But the Department is not offering staff any incentives to remain. During the foot and mouth crisis, in-house IT staff worked long hours in remote locations for many weeks away from home, setting up emergency IT networks to improve communication. At the height of the crisis, the Department tried to get additional support from the private sector, but—surprise, surprise—it was found to be inflexible and extortionately expensive. How will DEFRA cope with future emergencies without the flexibility of its in-house capability? No modern business can divorce IT from its day-to-day business requirement skills. To do so is restrictive, backward-looking, not cost-effective and very unlikely to attract able young people into the work force.
The list of recent Government IT failures linked to private finance initiatives, public-private partnerships or outsourcing grows ever longer. The consequent cost to the public purse has become truly astonishing. I shall briefly touch on two examples, as they provide important lessons for DEFRA. As a justice of the peace, I had close experience of computerisation within magistrates courts. The Libra system, which linked courts, was an abysmal failure and needed total re-designing last year at a cost of some £134 million. The coruscating National Audit Office report into that debacle points to serious mistakes, which could be replicated by DEFRA. The Inland Revenue, with which I had many contacts as an accountant, is now trying to re-tender contracts worth £5 billion over 10 years. However, EDS and Accenture are so embedded after a 12-year contract that other companies cannot really take part in the tender process. So the Inland Revenue—and the taxpayer—will enjoy astonishingly poor value in the marketplace.
Whitehall has never learned the IT lessons of the 1992 Wessex disaster. The audit report into that health authority found a management style that discouraged criticism and open debate, led to too close a relationship between the authority and suppliers, and imposed systems on resistant IT specialists. This has a good deal of resonance for DEFRA.
So what are the main reasons for the two frequent failures in Government IT contracts? At the edge of what void do I feel DEFRA is perilously teetering? The size of contracts means that competition is rare, because
only a handful of companies is able to provide services on such a large scale. There is also an attitude in Whitehall of never taking risks with the unknown. Almost all IT contracts in government go to five companies: EDS, Accenture, ICL/Fujitsu, BT and IBM.The private sector cancels more quickly if it has financial or time problems with a company. The Government tend to carry on topping up the costs and extending the deadlines. The IT industry knows that there is little IT expertise in senior positions within Government Departments, so control is effectively handed over to the contractors. Private companies build in expensive clauses for change. The Government constantly change requirements in Departments such as DEFRA—which is still, as I said, an emerging structure—and at the whim of EU legislation. This can make long-term contracts hugely expensive.
Government Departments are also rarely able to pin liability on private companies, which are much smarter at writing contracts. So taxpayers end up carrying the extra costs of delay and poor specification. The Minister should not just take my word for the bottomless bear-traps that lie down the outsourcing route. He should listen to how key advisers slam Whitehall IT suppliers. They say:
- "Strategic IT partnerships between the public and private sector have no future unless suppliers get their act together, stop making exorbitant claims and deliver true value for the whole life of contracts."
I absolutely agree with every word. IT suppliers often regard Government as a cash cow. If the Government really want to emulate the private sector, in which they have such touching and abiding faith, they should look at the sector's present attitude to outsourcing. Companies are going for shorter-term contracts, and for rebuilding internal IT provision to increase flexibility and competition. In today's market, there is no sense in the long-term contracts that DEFRA is pursuing.
Many outsourcing contracts entered into during the 1990s are coming up for renewal, and the hard-earned experience from those contracts too frequently reveals that services failed to deliver the anticipated benefits, that the exact scope of the outsourced services was unclear, and that there were insufficient contractual remedies to ensure proper supplier performance. We need no crystal ball: the stack of critical reports casts a shadow right down Whitehall.
In addition to the points raised in my speech, there are four key questions that I hope that my right hon. Friend the Minister will address, either now or in writing.
How much money has DEFRA spent on employing consultants on the IT privatisation project in the past year? What is the average daily rate paid to those consultants?
Given that the Office of Government Commerce made strong recommendations last year to DEFRA to introduce a staff retention strategy because of the risk of skills loss to the privatisation project, what measures has DEFRA introduced to ensure skilled staff are not lost to the Department?
Will the Minister explain what is meant by the statement by the permanent secretary that IT was not part of the "core business" of DEFRA? Is it not true that any modern organisation must have an effective and reactive IT service embedded in its core business if it is to provide efficient delivery?
Finally, the recent Official Journal of the European Union advertisement seeking expressions of interest from IT suppliers contains the statement that the current spend for DEFRA IT is approximately £85 million a year. Will the Secretary of State or the Minister provide a breakdown to show how that figure was arrived at? Will they also provide a similar breakdown for IT spending in MAFF or DEFRA over the previous three years?
Finally, I am relieved that DEFRA has adopted a more sensible approach to corporate governance and corporate data, and that it is, albeit slowly, feeling its way towards a higher profile for IT and a coherent strategy for its utilisation. I say sincerely that all of that is most welcome. IT is common ground for top civil servants, and lowly Back Benchers, but the chosen route of privatisation is as astonishing as it is unnecessary. It could well prove to be a most costly folly, which will doubtless be criticised by future MPs and Ministers, but defended by that impervious layer of top civil servants who forget nothing and learn nothing, and who are paid for by poor, long-suffering taxpayers and citizens.
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