ANNEX
1 Examples of Reports
on the need for proper preparation and project implementation
7th Report, Home Office: The Immigration
and Nationality Directorate's Casework Programme (HC 130, Session
1999-00)
- We note that the Home Office
consider that the original scope and goals of the project remain
valid but they now recognise that the timetable for completion
of the entire project had been much too ambitious. The business
requirement took longer to finalise than either they or Siemens
expected. As Siemens had started to develop the IT system before
the business requirement was finalised, the two strands had diverged
over time and this was a major factor in the delay to the entire
project.
- We are concerned that, during the selection process,
the Home Office underestimated the difficulty of scaling up existing
applications, developed by Siemens in other fields, to the relatively
large processing volumes needed for the Directorate's workload.
We agree with the Home Office that careful phasing of the implementation
of the separate elements of such projects is something that should
be examined very carefully in the future.
43rd Report, Ministry of Defence:
Major Projects Report (HC 383, Session 2003-04)
- In a number of cases, such
as the Astute submarine and the Support Vehicle, the Department
and industry made poor decisions and committed to unrealistic
programmes. The Department
is in a long lasting relationship with many of its suppliers where
success will only be achieved by establishing programmes which
hold the prospect of securing a fair risk and reward balance.
The Department and industry should explore how better to share
information on costs, risks and potential opportunities for mutual
gain to help both partners to structure deals appropriate to the
circumstances of individual programmes.
- Smart Acquisition principles were not fully applied
to the Support Vehicle which is currently predicted to be a year
late entering service. The Department decided to proceed without
a formal Assessment Phase on the basis of three years work done
to examine the suitability of the project for a Private Finance
Initiative solution and because potential solutions were already
available in the commercial sector. In retrospect, the Department
accepts that it made a mistake in omitting the Assessment Phase
and that both its and industry's understanding of the requirement
was immature.
23rd Report, Reducing Crime - The
Home Office Working with Crime and Disorder Reduction Partnerships
(HC 147, Session 2004-05)
- Motivated by a desire to make
sure that annual allocations were spent by the year end, Home
Office regional crime reduction teams had encouraged Partnerships
to implement projects quickly. Such a policy, based on end of
year considerations had inevitably led to inefficiencies. The
Home Office had allocated, for example, funding for a CCTV and
automatic number plate recognition system to the Portsmouth Partnership
in December 2002. It had then required the Partnership to spend
the funds by March 2003. The rushed procurement led to the acquisition
of a system which was not fully operational until August 2003.
By making use of existing government flexibility for funding non-government
organisations, the Home Office could have rolled forward funding
for Partnerships from one year to the next, provided the programme
money had not been spent and was still available for that project.
62nd Report, The purchase of the
Read Codes and the management of the NHS Centre for Coding and
Classification (HC 657, Session 1997-98)
- It is axiomatic that sound
project appraisal includes a rigorous assessment of costs and
benefits and a realistic assessment of any risks. In their purchase
and development of the Read Codes, the NHS Executive failed to
undertake such an appraisal and they did not produce a business
case for a project on which they have now spent £32 million.
It will cost much more to implement the project in full. This
failure reinforces our concerns on other NHS information technology
projects, such as the development of hospital information systems.
C&AG's Report, The cancellation of the Benefits
Payment Card Project (HC 857, Session 1999-2000)
- Inadequate time was allocated
for specifying the requirement and piloting. To save time and
money, insufficient work went into specifying the project and
for demonstrations by bidders. The result of skimping at the start
was vast delay and as it turned out, wasted money. A key lesson
is that allowing realistic timescales for early planning and detailed
specification will pay dividends in time, cost and quality.
16th Report, Improving public services
through innovation: the Invest to Save Budget (HC 170, Session
2002-03)
- The Department for Work and
Pensions ONE project—by far the largest ISB project to-date—had,
as one of its main objectives, the aim of increasing levels of
employment by piloting new and innovative ways of getting benefit
recipients into work. The Department's February 2003 evaluation
of the project indicated, however, that it had made no difference
to the chances of benefit recipients securing employment. While
this is a disappointing outcome for an innovative project the
Department did recognise from the outset the risks inherent in
such a scheme, given the often difficult task of getting those
on welfare back to work. It took steps to address these risks
by regularly monitoring the progress of the pilot and candidly
evaluating its impact, so that clear lessons could be drawn as
the initiative went forward. In this respect, the Department managed
the project and its inherent risks well.
C&AG's Report, Innovation in PFI financing:
the Treasury Building Project (HC 328, 2001-02)
- One of the risks in running
a funding competition is that the procurement process will be
lengthened, delaying the realisation of project benefits. This
is because the funding competition represents a separate procurement
at the end of the main contractual negotiations where a third
party, that has not previously been involved in the negotiations,
is required to sign up to the project agreement. However, the
Treasury building competition showed that this risk can be negated
if the competition is planned in advance and the process is well
managed. By running the funding competition at the same time that
the project was receiving planning and listed building permission,
financial close was reached only two weeks later than if there
had been no competition.
10th Report, Individual Learning
Accounts (HC 544, Session 2002-03)
- The Department had 5 years
to put in place arrangements to implement the Government's commitment
to have 1 million individual learning accounts by March 2002.
While the Department undertook extensive piloting to test innovative
schemes, these did not provide workable solutions, and the scheme
implemented was not well thought through or tested and was implemented
in too short a time. While the tight timetable was of the Department's
own making, after the pilots did not work it should have re-planned
the project and ensured full testing before implementation, rather
than over-ride sound project and risk management.
24th Report, The passport delays
of summer 1999 (HC 208, Session 1999-2000)
- The origin of the crisis was
the introduction in late 1998 of a new computerised system for
processing passports. The Agency assumed that their new system,
involving substantial changes in working methods, could be implemented
over a few months without detriment to services. That assumption
was far too optimistic. The flawed implementation of the Agency's
new system had a major impact on productivity, which resulted
in the lost production of 400,000 passports. The Agency should
have been more realistic about the time, resources and management
effort needed to secure the successful introduction of information
technology and, just as importantly, the associated changes to
operating procedures.
- There was a four month delay before testing of
the new system was started, and testing of the new system's impact
on productivity was not completed before it went live in late
1998. In addition, testing and initial implementation raised questions
about the new system's effect on productivity, which were not
adequately resolved. We found little evidence of any systematic
evaluation of the risks of going ahead once these problems had
emerged, or of timely consideration of alternatives. We emphasise
the importance of sound risk-management arrangements, especially
for projects where mistakes could lead to major costs or disruption
for the public.
- The Agency took the risk of launching the new
system in their largest offices, at Liverpool and Newport, which
together accounted for half of the Agency's normal processing
capacity. The problems at these two pilot sites resulted in the
lost production of 400,000 passports in late 1998 and the first
half of 1999, and the Agency were never able to make up for this
significant loss in processing capacity. The decision to continue
the roll-out of the new system to a second office, at Newport,
was crucial because it further diminished the Agency's processing
capacity when they already needed to make up for shortfalls in
production in Liverpool. The Committee emphasises the need for
pilot testing of new computer systems should wherever possible
begin on a small scale and be rolled-out for testing at larger
volumes only when initial tests prove satisfactory.
2 Examples of Reports
highlighting the need to strengthen project management
28th Report, Sale of DTELS (HC 151,
Session 1995-96)
- We are surprised that, in October
1991, at a time when DTELS was being considered for privatisation,
the Home Office entered into a legally binding commitment to a
25 year lease on a new headquarters building for DTELS which,
in the event, was not required by the new owners and so remained
a charge on the Home Office.
- We strongly urge that, where departments are
considering selling a business or part of their operations, they
should carry out a risk analysis of the likely costs and benefits
to the taxpayer from a major relocation, on a range of assumptions,
which include the possible timing of a sale and the possibility
that a new owner might not require the premises concerned.
46th Report, The contract to develop
and update the replacement National Insurance Recording System
(HC 472, Session 1997-98)
- In May 1995, the Contributions
Agency, an Executive Agency of the Department of Social Security,
let a contract to Andersen Consulting to develop by February 1997
a replacement for the existing National Insurance Recording system
(NIRS1). The successful development of the new system (NIRS2)
is critical to provide necessary support for new pensions provisions
which came into effect in April 1997. Under the original
deal, Andersen Consulting were to develop the new system and operate
it for a period of seven years from February 1997 and provide
further enhancements by April 1999.
- Departments should ensure that they understand
fully the potential impact of delay on their business and customers.
The Agency were not able to transfer to Andersen Consulting the
business risk of not having the new system fully operational by
the date it was required. In those circumstances it was clearly
the Agency's responsibility to draw up contingency plans to cover
the risk that delivery of the system would be delayed. Yet, only
two and a half months before the delivery date, the Agency had
not made any firm contingency plans for this eventuality. And,
in the face of the delay having actually occurred, the Agency
have had to develop and operate contingency plans at the same
time as managing their relationship with their contractor.
1st Report, Improving the delivery
of government IT projects (HC 65, Session 1999-2000)
- The management and oversight
of IT projects by skilled project managers is essential for ensuring
that projects are delivered to time and budget. But the successful
implementation of IT systems calls for imagination and well-conceived
risk management, as well as sound project management methodologies.
- The increasing use of complex external contracts
for the delivery of major public sector IT projects and the supply
of strategic IT services has highlighted the need for a high degree
of professionalism in the definition, negotiation and management
of IT contracts. It is essential that public sector bodies get
the right contracts in place. With large sums of public money
at stake, any lack of clarity, or debatable interpretation in
a contract can lead to expensive misunderstandings that might
have to be resolved in the courts.
44th Report, New IT systems for
Magistrates Courts: the LIBRA project (HC 434, Session 2002-03)
- The contract was renegotiated
twice, each time ICL asking for more money. As a result of the
first re-negotiation, a revised contract for 14.5 years at a price
of £319 million was signed in May 2000. Within ten months
ICL informed the Department it was in financial difficulties even
at the price negotiated a year before. Negotiations for ICL to
continue with the whole contract failed, and the Department reached
agreement for ICL to deliver only the infrastructure at a cost
of £232 million over 8.5 years. The Department has signed
a separate contract with STL to provide the core software application.
A systems integrator will be appointed towards the end of 2003
to roll out and run the application. The total cost of the project
is now estimated at £390 million for just 8.5 years of service,
rather than the original 10.5 years
32nd Report, The implementation
of the National Probation Service Information Systems Strategy
(HC 357, Session 2001-02)
- The full economic cost of the
NPSISS programme, including CRAMS, was expected to be at least
£118 million by the end of 2001 (£105 million at 1994-95
prices), 70% at constant prices above the expenditure forecast
in the Home Office's original business case.
- The project management team assigned to the NPSISS
programme was, however, badly under-resources; lacked the skills
and capacity necessary to perform effectively; and, with seven
programme directors in seven years, suffered from frequent changes
of leadership. If future projects are to succeed, the Home Office
needs to strike a better balance between developing and rewarding
people for their breadth of knowledge, and developing people with
specialist project management and other information technology
skills.
7th Report, The Hospital Information
Support Systems Initiative (HC 97, Session 1996-97)
- By the late 1980s, many acute
hospitals in the National Health Service (NHS) had developed their
own computer systems. These systems were based in hospital departments
and were not linked together. As a result, the recording of information
was slow and inefficient. During 1988, the NHS Executive concluded
that NHS hospital trusts would need new, integrated, computer
systems to support the reforms which were to be introduced in
the 1989 White Paper "Working for Patients". The Executive
launched the Hospital Information Support Systems Initiative (the
Initiative) in 1988 to explore the costs and issues involved in
implementing integrated systems in NHS hospitals in England.
- The purpose of this Initiative was to learn lessons
which would inform the development of integrated computer systems
across the rest of the NHS. We are therefore concerned that there
were delays in implementation in all six of the projects examined
by the National Audit Office, ranging from eight months to more
than three years.
- We are concerned that the Executive did not make
the best use of the experience from the projects already in place
before embarking on high risk and expensive pilot schemes. We
note that by the time the Executive established the first three
pilot projects, for which contracts were signed in 1990 and 1992,
four hospitals including Winchester and the Wirral were already
implementing integrated systems at their own initiative.
28th Report, Department of Health:
Cost over-runs, funding problems and delays on Guy's Hospital
Phase III Development (HC 289, Session 1998-99)
- What is clear from our examination
is that the Guy's Hospital Phase III development was very poorly
managed. The NHS Executive accept that the first sense of realism
in controlling the costs of the development came in 1994, when
costs had risen to £147 million. It is unacceptable that
a project of this magnitude should have spiralled out of control
without effective management for nine years. The net effect of
this incompetence is that the cost to the taxpayer rose by over
£98 million, at the expense of other expenditure on NHS services.
- The Guy's Hospital Phase III project cost £115
million more than the original estimate of £35.5 million
and was delivered over three years late. It is a disgrace that
the original estimate was so inadequate, and was approved by both
the Department of Health and the Treasury quickly, even though
both had strong reservations about it.
- The design was not finalised until 5 years after
the initial estimate was approved, and by leaving key aspects—such
as atria, mental health and asthma and allergy services—open,
significant extra costs were incurred in client and design team
variations. We are concerned that although they recognised the
value of freezing the design as soon as possible, the NHS Executive
failed to do so and allowed this uncontrolled situation to develop
against the interests of the taxpayer.
- In addition to failing to control the costs of
the project, and delivery on time, those responsible for Guy's
Phase III also proceeded at various stages without full funding
for the project. This was reckless. The net outcome was that the
public sector contribution rose from £19.5 million to £117.9
million including a £25.3 million funding gap; a total cost
increase to the taxpayer of £98.4 million. While it is not
possible to link this extra cost to specific delays to other patient
services and projects elsewhere, it is clear that there must have
been a considerable adverse impact in other parts of the country.
The NHS Executive put the impact of financing the funding gap
as equivalent to each NHS trust receiving a one off reduction
of about £58,000, or a large capital project being delayed
by one year.
3 Examples of Reports
highlighting the need to reduce complexity and bureaucracy
26th Report, Difficult forms: how
government departments interact with citizens (HC 255, Session
2003-04)
- It costs the Department for
Work and Pensions, for example, just over £40 to deal with
each application for Attendance Allowance. If forms are well designed
and easy to handle, then errors will be fewer and the administrative
load reduced, leading to considerable efficiency gains.
- Departments should determine the administrative
costs of processing forms. For example, the Inland Revenue's introduction
of the short tax return to three customer segments offers considerable
benefits in reducing citizens' compliance costs and improving
administrative efficiency. Yet at present the Inland Revenue does
not know the relative costs of processing the short form as against
the standard one.
- Provision of a premium service should not become
a substitute for improving basic forms and processes. For example,
the difference in error rates between people paying £5 for
the Post Office to check their passport application form against
those submitted directly by customers (1% and 15% respectively)
show that people do have difficulties with this form. The Passport
Service should devise ways of improving its form and business
processes to reduce this differential.
55th Report, Fraud and error in
Income Support (HC 595, Session 2001-02)
- The Department for Work and
Pensions pays some £100 billion a year in benefits. In broad
terms across all benefits, there is likely to be fraud of around
£2 billion and customer and official error of £1 billion.
The Department have more reliable figures for some benefits, notably
Income Support and Jobseeker's Allowance, where some £1.2
billion was lost through fraud and error in 2000-01.
- PAC conclusion (iii) Many of those receiving
benefits find it difficult to understand complex system and rules.
Our predecessors have recommended simplification on a number of
occasions, but limited progress has been made. The Department
should undertake analytical work designed to identify options
for change, based on the needs of specific client groups.
5th Report, The Draft Social Security
(Inherited SERPS) Regulations (HC 243, Session 2000-01)
- The Department have estimated
the cost of the new proposals to be £12 billion to 2050.
The assumptions made in the costings, and the costs of alternative
options, such as varying the taper arrangements, have not yet
been published. In their response to our earlier Report the Department
did however agree that this Committee and Parliament would be
provided with all available information before being asked to
approve the scheme
1st Report, Child Support Agency
(HC 31, Session 1995-96)
- We are gravely disturbed that
40% of the child maintenance assessments made on absent parents
in 1993-94 contained errors. We severely criticise the Department
and the Agency for allowing this state of affairs to arise. While
recognising the difficulty the Agency face in getting accurate
information from up to four parties, not all of whom may wish
to be cooperative, achieving accuracy in maintenance assessment
is essential if the Agency are to provide a fair and efficient
service in the interests of children. We therefore urge the Agency
to continue their efforts to explain to parents why the law requires
the information concerned and to pursue non compliance tactfully
but firmly
4th Report, Inland Revenue: Getting
tax right first time, and dealing with more complex postal queries
(HC 105, Session 1994-95)
- We are concerned that the Department
is not yet meeting its main objective of getting tax right first
time, particularly for Schedule D taxpayers. The Department's
broad estimates are that errors are resulting in a net undercharge
to taxpayers of about £100 million and a consequent loss
of revenue to the Exchequer.
- We note that the complexity of tax legislation
causes problems for taxpayers and Inland Revenue staff. We recommend
that the Department continues to use every opportunity to simplify
the tax system to make it easier for taxpayers to comply with
the rules, reduce taxpayer compliance costs and limit the scope
for costly errors. We recognise, however, that a balance needs
to be drawn between legislating to promote equity and to reduce
tax avoidance, and keeping the system simple and easy to use.
29th Report, Inland Revenue: Tax
Credits and Tax Debt Management (HC 332, Session 2002-03)
- The new Tax Credit schemes
operating from April 2003 are very different in scale and scope
from the previous schemes and the systems developed by the Department
have been informed to an extent by the lessons of past schemes,
including deficiencies pointed out by the C&AG. The Department
are relying on more sophisticated risk management structures to
minimise the errors and fraud that have characterised comparable
benefit schemes in the past, and will need to demonstrate their
effectiveness.
14th Report, Inland Revenue: Tax
Credits (HC 89, Session 2003-04)
- The Department estimated the
level of overpayments at between 10% and 14% by value, equivalent
to between £510 and £710 million for a full year. The
Department did not disclose these results until August 2003. As
the procedures were not changed significantly in subsequent years,
it is reasonable to assume overpayments continued on broadly the
same scale
51st Report, Success in the regions
(HC 592, Session 2003-04)
- ODPM should further streamline
the array of funding sources available to support regional development.
South East England Development Agency had to devise an initiative
to help applicants deal with problems created by over 40 different
relevant funding streams with separate monitoring and evaluation
criteria. ODPM agreed with us that there are still far too many
individual funding streams. The need to make repeated applications
and to satisfy a range of monitoring regimes, often with different
requirements, creates a bureaucratic burden and is highly wasteful.
- ODPM should adopt a presumption against establishing
new organisations unless its policy objectives are not achievable
though existing bodies. In the Thames Gateway strategic area,
three RDAs have to work with two new urban development corporations
as well as partnerships of local authorities, three Government
Offices and the Ministerial Committee on Housing Growth and Sustainable
Communities.
34th Report, Strategic Rail Authority:
improving passenger rail services through new trains (HC 408,
Session 2003-04)
- Bringing a new train into service
is a complex process, involving more than 60 key stages and at
least nine organisations. This complexity has contributed to delays
in bringing new passenger trains into service.
- The SRA should work with the rail industry to
streamline the complex process for introducing new trains. The
industry does not share a common understanding of the process
and this, together with its complexity, brings delays and contributes
to the poor reliability of new trains. The Government should use
the opportunity of its review of the industry to reduce the number
of organisations involved in introducing new trains.
33rd Report, Crown Prosecution Service
(HC 526, Session 1997-98)
- In 1990 our predecessors reported on the establishment
and early performance of the CPS. Their report highlighted considerable
scope for improvements in collaboration between the CPS and the
police. The Committee endorsed the CPS's intentions to reduce
dependence on lawyer agents to present cases in the magistrates'
courts and to improve its performance indicators, and expected
the CPS to give priority to installing its new computer system.
In February 1998 we took evidence from the CPS on the basis of
a follow-up report by the Comptroller and Auditor General.
- We are struck by the extent
to which the performance of other agencies, and the interdependence
of different parts of the criminal justice system affect the performance
of the CPS. The CPS and police, for example, are working closely
together, but only one third of police files meet both timeliness
and quality guidelines. And the time taken to process cases (some
20 weeks for magistrates' courts' cases) is unacceptably long.
- Examples of Reports highlighting
the need to improve public service productivity
C&AG's Report, Managing resources to deliver
better public services (HC 61, Session 2003-04)
- A key focus of departments'
resource management should be delivering better services but it
can also help to identify and realise opportunities to improve
efficiency - just a one% efficiency improvement in the utilisation
of the £1,447 billion of resources allocated to departments
over the next three years would release just under £14.5
billion to redeploy to front line services.
33rd Report, Managing sickness absence
in the Prison Service (HC 453, Session 1998-99)
- Where staff, particularly prison
officers, are unavailable for duty, the prison's ability to maintain
a safe environment and to ensure that prisoners spend time on
purposeful activity can be affected. The estimated cost of sickness
absence in the Prison Service is at least £56 million
a year. The additional cost of medical retirements—525 in
1997-98—is not known.
- In 1997-98 Prison Service staff recorded on average
12.6 working days sickness, and prison officers 13.8 working days.
Although sickness absence has been at these high levels for a
long time, we found that the Prison Service had not in the past
given sufficient attention to tackling it. Drawing on the work
of the National Audit Office's team, the Prison Service has more
recently been developing a strategy for managing sickness absence
and now sees sickness reduction as a key management priority.
There are three weak areas which we consider require particular
attention.
50th Report, The management of sickness
absence in the Metropolitan Police Service (HC 594, Session 1997-98)
- The Metropolitan Police Service
(the MPS) employs some 27,000 officers and 16,000 civil staff
to police the Greater London area at around £1.6 billion
a year. Managing sickness absence in the police service is important
because high levels of absence can reduce police efficiency, morale
and the number of "feet on the beat". Sickness absence
costs an estimated £96 million a year in the MPS, and
a further £26 million is spent on medical retirements.
- The MPS has only recently set targets for reductions
in sickness absence despite the fact that such absences have been
a problem for some years. The targets are aimed at generating
savings of nearly £10 million in 1998-99, and show a
commitment to managing sickness absence more effectively. We expect
the MPS to monitor the achievement of these savings and to set
challenging targets for future years.
34th Report, Her Majesty's Land
Registry: the management of sickness absence (HC 307, Session
1995-96)
- We note that sickness absence
cost the Civil Service as a whole £491 million in 1994. Better
management of staff leading to a reduction in such absences could
therefore lead to worthwhile gains. We accept the Registry's evidence
that the great majority of people are way from work for reasons
of genuine illness. Within the Civil Service sickness absence
in 1994 averaged 9.2 working days per staff year.
C&AG's Report, Managing attendance in the
Department for Work and Pensions (HC 18, Session 2004-05)
- Across the civil service, rates
of sickness absence have been a concern for some time. Annual
surveys by the Chartered Institute of Personnel and Development
and the Confederation of British Industry consistently show public
services have higher than average rates of sickness absence. In
1998, the Cabinet Office set a target to achieve a reduction in
the overall average Civil Service sickness absence rate of 20%
by 2001, rising to 30% in 2003. They recommended this be measured
in terms of the number of days lost out of the number of days
employees were expected to work, or average working days lost.
For the then Department of Social Security, this translated into
sickness absence targets of 9.3 days for 2001 and 8.0 days for
2003. The Department did not meet these targets and the average
for 2003-04 was 12.6 days.
14th Report, Ministry of Defence:
Managing reductions in the number of vacant family quarters (HC
391, Session 2000-01)
- The proportion of quarters
that are vacant is disturbingly high, at 24% of the estate. The
cost to the taxpayer of vacant quarters is £41 million annually.
This proportion has risen in recent years, and while there are
signs that the Department are on course to reduce the scale of
the problem, their track record in hitting their targets on vacant
housing is poor. We have asked for quarterly monitoring Reports
so that we can monitor their progress on reducing vacancy levels.
20th Report, NHS Executive: The
management of medical equipment in NHS acute Trusts in England
(HC 173, Session 1999-2000)
- We recognise that unexplained
variations in trusts' holdings of medical equipment, and in maintenance
costs, identified by the Comptroller and Auditor General, do not
necessarily match the scope for savings in costs. However, there
is strong evidence that by adopting good practice, and learning
from the successes some trusts have achieved, trusts can deliver
major savings, which can then be used to improve healthcare.
26th Report, Vacant office property
(HC 395, Session 1997-98)
- In April 1996 the newly formed
executive agency, Property Advisers to the Civil Estate (PACE),
assumed responsibility for disposing of some 830,000 square metres
of surplus leasehold and freehold accommodation in 384 Government
properties. This surplus accommodation, largely offices, and over
one and a half times the size of the Canary Wharf office development,
cost the Exchequer about £132 million in 1996-97.
21st Report, The management of space
in higher education institutions in Wales (HC 159, Session 1996-97)
- The Higher Education Funding
Council for Wales (the Funding Council) was created by statute
in the Further and Higher Education Act 1992. From 1 April 1993
the Funding Council assumed responsibility for the funding, oversight,
and assessment of quality in the country's higher education institutions.
Since August 1996 there have been 13 institutions within the sector.
Funding Council grants provided £232 million of the Welsh
higher education sector's total income of £490 million in
the year ending 31 July 1995. Of these grants, approximately £13
million represented capital allocations dedicated for estates
purposes. In addition, institutions themselves spent some £29
million on providing, maintaining and running their non-residential
estate in 1994-95. The way in which institutions manage their
space is a key factor in the efficient application of the resources
at their disposal.
- We note that the Funding Council consider that
a target of at least 30% utilisation of space is achievable in
the next four years, which compares with achieved utilisation
rates of 19 to 22% found by the National Audit Office. We recommend
that the Funding Council should encourage institutions to set
themselves challenging targets for improving utilisation of space
and that the Funding Council should monitor performance against
those targets
33rd Report, Ensuring the effective
discharge of older patients from NHS acute hospitals (HC 459,
Session 2002-03)
- On any given day, some 3,500
older patients remain in National Health Service (NHS) acute hospitals
after medical staff have declared them fit and safe to be discharged,
because arrangements are not complete for them to move on. Many
delays are for a few days, but about one-third are for more than
28 days. The Department of Health estimate that delayed discharges
cost the National Health Service around 170 million a year (or
around 0.5 million for every day of the year), and account for
1.7 million lost bed days annually. Reducing delays has become
a Government priority, and was the subject of legislation during
the winter of 2002-03.
1st Report, NHS Supplies in England
(HC 349, Session 1997-98)
- In October 1991 the Committee
of Public Accounts reported the outcome of their examination of
National Health Service supplies in England. They recommended,
in particular, that the NHS Executive needed better information
about their main suppliers and about the lines they purchased,
so that they could tighten their grip on supplies activities and
get better value for money from the enormous expenditure involved.
They also expected the NHS to attain a position where the price
levels they achieved stood comparison with the very best of purchasing
organisations, and that action taken on supplies should be related
to financial or service targets and closely monitored.
21st Report, Better value for money
from professional services (HC 309, Session 2001-02)
- Departments spend over £600
million each year purchasing from external suppliers financial
support and advice, legal services, management consultancy and
human resource advice and assistance. In 1994 a Cabinet Office
Efficiency Scrutiny into departments' use of external consultants
recommended how their procurement and management could be improved
to achieve savings, mainly in consultancy fees, of £65 million.
Many of the Efficiency Scrutiny's recommendations were, however,
not implemented and nobody knows to what extent the savings of
£65 million were achieved.
4 Examples of Reports
highlighting the need for departments to be more commercially
astute
43rd Report, Ministry of Defence:
Major Projects Report 2003 (HC 383, Session 2003-04)
- In the past, the relationship
between the Department and its contractors has too often been
characterised by an emphasis on what to do in case of failure
and a culture based on the apportionment of blame. In agreeing
future programmes the Department and industry should define commercial
arrangements which provide a financial incentive to both parties
to improve on cost, time and performance estimates, without setting
targets which are easy to beat and so provide a false impression
of success.
45th Report, Ministry of Defence:
Acceptance of the Chinook Mk2 helicopter (HC 975, Session 1999-2000)
- The Chinook Mark 2 helicopter
is the product of a programme to upgrade 32 Mark 1 helicopters
which was undertaken by Boeing Helicopters under a contract worth
£143 million placed by the Department in 1990. The upgrade
encompassed various structural and mechanical modifications including
fitting new engines with a computerised fuel control system, known
as the Full Authority Digital Electronic Control (FADEC) system.
There were significant problems accepting the Chinook Mark 2 into
Service which centred on the FADEC system software, which the
Department's test and evaluation agency—Boscombe Down—found
to be "unverifiable".
13th Report, Ministry of Defence:
Progress in reducing stocks (HC 566, Session 2002-03)
- The Department still needs
to take radical action to tackle its long-standing inventory management
problems. Some 19 years after the first fire at Donnington, the
C&AG's Report shows that the Department's inventory still
contains large amounts of obsolete and very slow moving stock.
Yet other Reports from the National Audit Office have revealed
shortages of key items on exercises and deployed operations and
instances where the stock issued has been of poor quality. The
Department needs to get a grip on its inventory, ensuring that
it holds what it genuinely needs and gets rid of what it does
not.
27th Report, Disposal by sale of
Defence surplus equipment and stores (HC 194, Session 1993-94)
- Sales of ships in operational
condition are potentially the most profitable disposals. We are
concerned, therefore, that the Department have achieved this in
relatively few cases. We note that the ships now becoming available
for sale are newer than in the past and, with useful life left,
have better prospects for sale as operational vessels. There should
therefore be an increase in the number of such sales, and it will
be important to take measures aimed at maximising sales proceeds
in a highly competitive market.
- We are concerned that the sale values of ships
and aircraft have often been reduced by removing items for use
as spares to meet the Services' operational requirements. Spares
are often then put on the market later than the equipment to which
they relate. We emphasise the importance of ensuring that decisions
to remove items for spares have regard to the potential sales
value of the main equipment. This is especially important now
that newer and more valuable ships and aircraft are becoming available
for disposal.
41st Report, Improving procurement:
Progress by the Office of Government Commerce in improving departments'
capability to procure cost effectively (HC 541, Session 2003-04)
- Against the backdrop of the
need to achieve a further £3 billion savings by 2006, together
with a drive towards improved efficiency across the public sector,
there is a greater need than ever for departments to measure their
existing procurement practices against OGC good practice guidance
to see where improvements can be made. There will for example
be the scope for significantly reduced transaction costs, greater
use of e-commerce solutions, increased collaboration between departments
and the wider public sector, and greater use of framework agreements.
2nd Report, Improving construction
performance (HC 337, Session 2001-02 )
- Business generated by the UK
construction industry is worth some £65 billion a year, of
which direct expenditure by government departments and their agencies
accounts for £7.5 billion. Government departments and agencies
can have a major influence on the construction industry as sponsors,
regulators and purchasers of building and repair and maintenance
projects.
- A recurring feature in traditional construction
projects is the acceptance by departments of lowest price tenders,
following which contractors seek to recoup their profit margins
through variations and claims for additional work. This often
results in poor performance, made evident by confrontation, delay
and substantial cost overruns. Better value for money may therefore
be found by looking beyond the lowest price, as long as the improvements
to be secured are clearly identified and closely monitored.
68th Report, Collection of fines
and other financial penalties in the criminal justice system (HC
999, Session 2001-02)
- In 2001-02, financial penalties
imposed totalled £387 million and collections amounted to
£228 million, some of which related to impositions made in
previous years. In the same year, penalties totalling £58
million were written off, largely because the offender could not
be traced, and a further £90 million was cancelled because,
for example, the defendant had successfully appealed against the
imposition or because the offender's circumstances had changed
to such an extent that there was no prospect of the penalty being
collected. These figures suggest therefore that around 59% of
impositions are collected.
49th Report, The recovery of debt
by the Inland Revenue (HC 584, Session 2003-04)
- The longer a debt remains outstanding
the more costly and difficult it becomes to collect. The Department
may reach a point where it has to write off a debt because there
is no longer any prospect of recovery. Around £0.7 billion
is lost in write-offs each year. Preventing the accumulation of
debt is therefore important in securing earlier receipt of taxes
owed and keeping collection costs to a minimum.
35th Report, Public Trust Office:
Protecting the financial wealth of people with mental incapacity
(HC 278, Session 1998-99)
- The Public Trust Office did
not obtain accounts of how patients' income has been used from
40% of private receivers for 1996-97, and around 90% of the accounts
received were late. And it reviewed less than one third of accounts
within its four-week target in 1997-98. It must do better than
this if it is to fulfil its responsibility to protect patients'
money from misuse. The Public Trust Office also needs to improve
its supervision of patients' investments by introducing more comprehensive
and rigorous measures to assess brokers' performance in handling
patients' funds.
39th Report, Looking after the financial
affairs of people with mental incapacity (HC 278, Session 1993-94)
- We are seriously concerned
that the Public Trust Office has failed to keep up-to-date in
reviewing receivership accounts, since this check is vital to
protect patients' funds and help prevent fraud and abuse. It is
particularly unsatisfactory that such a large backlog of unreviewed
accounts has been allowed to build up in cases where the Public
Trustee is receiver, and that over the last twelve months no progress
at all has been made to clear it. We note that the rate at which
the Office reviewed private receivership accounts even deteriorated
in 1993-94
18th Report, Reaping the rewards
of agricultural research (HC 414, Session 2002-03)
- The Department's income from
commercialisation is less than 1% of its expenditure on research,
suggesting that the Department lacks the leadership and enthusiasm
to promote commercialisation. The Department needs to specify
the outcomes expected from commercialisation, drawing for example
on achievements by research bodies, other departments and universities.
It should monitor trends in commercialisation activity to help
determine whether enough is being done to identify opportunities
for exploitation of research.
5 Examples of Reports
highlighting the need to tackle fraud
27th Report, Measures to combat
housing benefit fraud (HC 366, Session 1997-98)
- It is totally unacceptable
that seven years after we last looked at this issue, Housing Benefit
fraud should exceed £900 million, and the Department still
do not have information to show whether fraud is increasing, or
all the information they need on the types of fraud, including
landlord fraud, and variations at regional and local level. The
absence of reliable information must cast doubt over the decisions
the Department have taken to invest in anti-fraud work and over
the achievements they have claimed
55th Report, Fraud and error in
Income Support (HC 595, Session 2001-02)
- The Department have developed
annual estimates of the level of fraud and error in Income Support
and Jobseeker's Allowance, which underpin Government targets for
a progressive reduction in fraud and error by 2006. The Department
are undertaking work to develop robust estimates for Housing Benefit.
On other benefits, their estimates are out of date. Until they
have robust estimates for all benefits, it is difficult to measure
their performance in reducing this substantial drain on public
funds - in the order of £2 billion in fraud alone.
31st Report, Tackling benefit fraud
(HC 488, Session 2001-02)
- The Department's best estimate
of the level of fraud on Housing Benefit was in the region of
£500 million, based on data collected in 1997-98. Since April
2001 they had been seeking to measure the level of fraud and error,
using the same techniques as those used on Income Support and
Jobseeker's Allowance. Because of the failure of the pilot, however,
the results of the 2001-02 exercise, which cost £3.2 million,
were not sufficiently accurate to be published.
36th Report, Tackling VAT fraud
(HC 512, Session 2003-04)
- Customs' work to measure the
losses from fraud and error on VAT is an important first step
in determining the size and nature of the problem, as well as
providing a benchmark for judging progress. Customs produces annual
estimates for missing trader fraud but only has one-off estimates,
made in 2001-02, for the other main areas of loss. It should regularly
updates these estimates, so that it can assess progress in tackling
the different types of loss, alongside progress in meeting its
overall target.
1st Report, Tackling fraud against
the Inland Revenue (HC 62, Session 2003-04)
- The low number of fraud investigations
and prosecutions is not commensurate with the potential sums at
stake in lost revenue. Nor has the overall scale of work kept
pace with the expansion in the Revenue's business. Investigation
work on tax fraud appears to have reduced as work on tax credit
fraud has increased, despite additional resources being provided.
The financial returns on investigations suggest that it would
be cost-effective to do many more. The Revenue should increase
the level of investigations and prosecutions sufficiently to permit
a meaningful evaluation of the effects of doing so. They should
also seek to increase the effectiveness of such work by greater
publicity to heighten public awareness about the risk of detection
and punishment for those who commit fraud.
54th Report, HM Customs Appropriation
Accounts (HC 717, Session 1997-98)
- The large amount of revenue
lost suggests that there remains considerable scope for cost-effective
deployment of resources to bring cross-channel smuggling and other
excise fraud under better control. In addition, we would encourage
the Department to continue to:
- increase the use of criminal prosecution of smugglers;
- supplement fines and penalties with other sanctions
such as the removal of driving and haulage licences, which may
have a greater impact on some offenders; and
- seek further tightening of controls and procedures,
both within the United Kingdom and the European Union, to combat
fraudulent abuse of warehousing and transit arrangements.
1st Report, Tackling fraud against
the Inland Revenue (HC 62, Session 2003-04)
- In 2001-02 the Revenue spent
£428 million on activities to tackle non-compliance and achieved
an overall yield to cost ratio of 8.3:1. This ratio was lower
than in previous years but the Revenue expected recent initiatives
to result in increased yield in future years. Over 80% of these
resources are deployed on compliance work by local tax offices
which carry out targeted enquiries on tax returns. These activities
generate a yield: cost ratio of 3.6:1 in additional settlements
and penalties. The remainder is spent on compliance activities
by the Revenue's Specialist Offices, which deal with enquiry work
on large and specialist businesses and on tax credits, and the
Special Compliance Office whose main role is to investigate serious
fraud and complex non-compliance.
6 Examples of Reports
on the need for better and more timely implementation of programmes
and policies
42nd Report, The management and
control of hospital acquired infection in acute NHS Trusts in
England (HC 306, Session 1999-2000)
- Hospital acquired infections
are those that are neither present nor incubating when a patient
enters hospital. Their effects vary from discomfort for the patient,
to prolonged or permanent disability and even death. This is a
very serious subject in terms of the impact on patients and costs
to the National Health Service. The best estimates we have suggest
that each year there are at least 100,000 cases of hospital acquired
infection in England causing around 5,000 deaths, and the cost
of the NHS may be as much as £1 billion a year.
- The NHS do not have a grip on the extent of hospital
acquired infection and the costs involved and are unlikely to
have the information they need for a further 3 to 4 years.
C&AG's Report, Improving patient care by reducing
the risk of hospital acquired infection: A progress report (HC
876, Session 2003-04)
- Implementation of our and the
Committee's recommendations has been patchy. There has been notable
progress at trust level in putting the systems and processes in
place and in strengthening infection control teams, but wider
factors continue to impede good infection control practice and
there has been limited progress in improving information on the
extent and costs of hospital acquired infections. Progress in
preventing and reducing the number of infections acquired whilst
in hospital is dependent on changing staff behaviour, but change
continues to be constrained by the lack of data, limited progress
in implementing a national mandatory surveillance programme that
meets the needs of the NHS, and a lack of evidence of the impact
of different intervention strategies.
69th Report, The performance of
the NHS Cervical Screening Programme in England (HC 757, Session
1997-98)
- There are considerable variations
in deaths from cervical screening across regions, and research
indicates that women in the lower socio-economic groups and ethnic
minorities are under-screened. While the NHS Executive are taking
action to address these inequalities, the fact remains that the
NHS is failing many of the most vulnerable in our society. We
are therefore looking for new initiatives and renewed vigour in
tackling these issues.
21st Report, Government on the Web
(HC 331, Session 1999-2000)
- Government Web sites make feasible
new forms of service provision for the benefit of citizens and
businesses. Realising these benefits requires departments to be
innovative and look afresh at existing ways of doing things to
determine if by delivering services electronically they can improve
for example, the speed of service delivery; provide services at
times more convenient to citizens; reduce the cost of services
by streamlining the number of forms which citizens have to complete
and reducing other unnecessary procedures; or provide services
in completely new and innovative ways. While some departments
are making good progress in using the Web to improve service delivery
in others however it is not possible for citizens to down load
simple forms, submit returns electronically or for citizens to
interrogate Web sites to access basic information.
54th Report, Improving public services
through e-government (HC 845, Session 2001-02)
- Government departments currently
have underway 100 major IT projects with a total value of £10
billion. This expenditure is part of the Government's strategy
to make the full range of services which departments and their
agencies provide for citizens and businesses accessible electronically.
To achieve this the Government has set the target that 100 percent
of services should be available on-line by 31 December 2005. Harnessing
new technology is also intended to enable departments to improve
their operational efficiency by replacing labour intensive processes
with electronic systems.
- Achieving such a change in the way in which departments
deliver services involves risks which need to be carefully managed.
Previous Reports by this Committee have stressed the need for
departments to improve the management of their IT projects which
have often experienced significant implementation problems with
an adverse impact on the quality of services for citizens. There
is also the risk, however, that departments provide services on-line
but the public do not use them because they see no benefit in
doing so. Should this happen the significant investment in e-government
would be wasted.
66th Report, Progress in achieving
Government on the Web (HC 936, Session 2001-02)
- Many of the recommendations
in our previous Report on Government on the Web published in June
2000, which were accepted by the Government, have yet to be fully
implemented. In particular the Office of the e-Envoy has made
limited progress in collecting and publishing systematic information
on the development of government Web traffic, the take-up of electronic
services by the public, and the condition of government Web sites,
and in developing a methodology for justifying expenditure on
Web provision.
- Departments need to consider how information
technology can be used to streamline current ways of working,
reduce time consuming procedures and improve productivity. Simply
converting conventional processes to Internet-based applications
will not realise the significant improvements in efficiency which
IT can make possible.
3rd Report, The cancellation of
the Benefits Payment Card Project (HC 358, Session 2001-02)
- Successful delivery of innovative
and complex projects involves risks that need to be identified
and managed. This project had special features that added to its
risks; notably its status as a pioneering PFI project and the
need to join up the systems of two purchasers with differing business
objectives. While various parties identified many of the risks
at various stages, they underestimated the difficulty of attempting
to tackle a huge and complex project, at the heart of improving
benefit delivery and Post Office automation, in one exercise using
relatively untried PFI arrangements. There were also many basic
project management failures, which mirror those referred to in
our Report in January 2000.
31st Report, Tackling benefit fraud
(HC 488, Session 2002-03)
- The Department's inadequate
information technology systems are a further constraint in tackling
fraud. Benefit data are held in 20 separate systems with no common
access point to all the systems. Consequently staff cannot readily
detect incorrect information supplied by customers. The systems
also rely on clerical interventions in the calculation of benefits.
18th Report, Ministry of Defence:
Appropriation Accounts 1997-98 (HC 207, Session 1998-99)
- When procuring computer systems
it is essential that the complexity of the requirement is properly
recognised at the outset. The Committee conclude that the Department
failed to do this in the case of Trawlerman, and that this was
a key factor in the eventual decision to abandon the project and
write off some £40 million.
- We note that the Trawlerman project was affected
by rapid technological progress as regards the security and interconnectivity
of commercial off-the-shelf systems. By failing to phase the introduction
of the system the Department did not position themselves to take
advantage of technological advances.
46th Report, Ministry of Defence:
Building an air manoeuvre capability: the introduction of the
Apache helicopter (HC 533, Session 2002-03)
- The introduction of the Apache
into full military service has been delayed by problems with the
separate weapons and training contracts, despite reasonable progress
being made with delivery of the basic helicopter. As a result
40 of the helicopters, worth over £1.2 billion, will have
to be stored at considerable expense, and the Armed Forces will
not benefit from the enhanced operational capability that the
helicopter will provide. If the Department had met its original
timetable the Apache would now be in service. Under current plans,
Full Operating Capability will not be delivered until August 2006.
23rd Report, Government Communications
Headquarters: new accommodation programme (HC 65, Session 2003-04)
- Independently of the PFI deal,
GCHQ retained responsibility for moving its technical capability
into the new building, largely for security reasons. In 1997 GCHQ
estimated the costs for this technical transition, that are additional
to the PFI deal, at £41 million. By 1999 GCHQ's estimate
had risen to £450 million.
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