1 The implementation of the e-programme
1. In 2001 Customs began a ten year e-programme to
transform its business mainly through electronic service delivery.
While continuing to offer paper-based systems Customs has Public
Service Agreement targets to deliver 100% of its services electronically
by 2005 and achieve 50% take up by March 2006. This is Customs'
contribution to the wider Government agenda to make all departmental
services available online by 2005 with key services achieving
high levels of use. The e-programme is aimed at achieving these
targets and further improvements in performance and capability
in the longer term. At the end of 2003 around 80% of Customs'
services were available electronically and over half of all transactions
with customers were completed electronically but take-up of e-VAT
was very low.[3]
2. The aims of the e-programme are to increase revenue
and improve efficiency by using new ways of working and new integrated
IT systems, including a new website, to deliver a wider range
of services electronically. It also involves replacing existing
IT systems, which are nearing the end of their operational life.
Customs has made good progress on some parts of the e-programme
but it needs to improve its business case and benefits realisation
plans (Figure 1).[4]
Figure 1:
Customs' progress in taking forward the e-programme
Source: C&AG's Report, p10
3. Customs estimates that the programme will cost
over £300 million over the ten-year period. In return Customs
expects to achieve increased revenue of £500 million a year
by the end of the period by producing better information and analysis
to target resources more effectively on tax compliance and anti-smuggling
activities, in addition to the £2.7 billion extra revenue
expected by 2005-06 from implementing its VAT strategy. Customs
also expects the e-programme to deliver £130 million in efficiency
savings from redeploying staff from processing jobs into other
parts of the department, and to reduce compliance costs for businesses.
Since 2001 Customs has undertaken extensive planning and spent
over £100 million on the programme.[5]
4. The main risk for Customs is that the significant
expenditure on the e-programme does not generate the expected
benefits in service delivery, increased revenue collection and
improved efficiency. Private sector and international comparisons
show that it can take a long time to secure a positive return
on investments in e-services. For example Canada, although accepted
as a leader in the implementation of e-government, had found that
e-services have not generated any major cost savings to date.[6]
5. Our Report on e-Revenue in February 2002 concluded
that the drive to meet 2005 e-government targets should not compromise
the need to develop rigorous business cases for each service and
the overall e-strategy. Customs developed an outline business
case in October 2002 estimating the financial benefits of the
e-programme at £4 billion but this was not a rigorous estimate.
Customs then reduced it to £1.2 billion in November 2003.
As a result the expected return on investment fell from 12:1 to
between 4:1and 3:1. It has yet to complete a detailed analysis
of the costs and benefits and needed to revisit the estimated
cost of the e-programme in the light of contractual amendments
to the PFI contract with Fujitsu.[7]
6. On the basis of the latest figures, Customs expects
the e-programme to break even by 2007 (Figure 2). This
date could be delayed, however, because benefits may come on stream
later than Customs expects or costs could prove to be greater
than the original estimate of £327 million. Customs planned
to complete a full business case by March 2004 which would take
account of all the costs of the e-programme, including IT development
and business changes.[8]
7. Customs' IT projects go through the Office of
Government Commerce's gateway reviews and it will not go live
with an application if a gateway review indicates a major problem.
In implementing initial stages of the e-programme, however, Customs
had not followed good practice as recommended by Treasury in the
following areas.[9]
- Sensitivity analysis should
be used to test the vulnerability of options to unavoidable uncertainties.
Customs did not subject the estimated financial benefits in its
outline business case to sensitivity analysis to show, for example,
the effect of variations in take-up levels. Customs proposes to
undertake such analysis for the full business case, which will
be subject to Treasury review.[10]
- There should be proper management of consultants.
Customs spent nearly £28 million on 300 consultants for the
e-programme between November 2001 and March 2003. Consultants
were engaged and contracts extended with insufficient evidence
to assess their performance or to support the need for the services
they were to provide. Following an internal review, Customs has
reduced the number of consultants to 130 and strengthened management
controls.[11]
- High risk and important projects should have
clearly identified senior responsible owners. Customs assigned
this responsibility for each sub-programme but did not appoint
an overall senior responsible owner for the e-programme until
May 2003.[12]
8. In a programme of this scale contingency planning
is particularly important. Customs has procedures for measuring
risk at project level and some short-term contingency plans. But
there is no contingency plan for the e-programme as a whole to
cover, for example, the risks of breakdowns in service. As part
of the PFI contract with Fujitsu, Customs has begun to develop
recovery plans for each site and critical service, which will
be subject to annual review.[13]
3 Q 40; C&AG's Report, Executive Summary paras
1, 2 and Report, para 1.6 Back
4
C&AG's Report, para 1.4 Back
5
Qq 53, 55-56, 61, 65-66, 101; C&AG's Report, Preface, para
1.11 and Figure 7, p15 Back
6
Qq 104-107; C&AG's Report, para 1.13 Back
7
Qq 113-114; 52nd Report from the Committee of Public
Accounts, E-Revenue (HC 707, Session 2001-02); C&AG's
Report, paras 1.11-1.12, 2.7 Back
8
Qq 2-4 ; C&AG's Report, paras 1.11-1.12 Back
9
Qq 26-39 Back
10
Qq 23, 25; C&AG's Report, para 2.7; The Green Book: Appraisal
and evaluation in Central Government, HM Treasury, 2003 Back
11
Qq 8, 11-18 Back
12
Qq 10, 25; C&AG's Report, para 2.12; Delivering success
in Government IT-enabled projects & programmes, HM Treasury,
2003, p2 Back
13
Q 111; C&AG's Report, Executive Summary para 18 and Appendix
3, para 43 Back
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