House of COMMONS




Monday 26 June 2006








Evidence heard in Public Questions 1-260





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Oral evidence

Taken before the Committee of Public Accounts

on Monday 26 June 2006

Members present:

Mr Edward Leigh, in the Chair

Mr Richard Bacon

Annette Brooke

Greg Clark

Mr David Curry

Mr Sadiq Khan

Sarah McCarthy-Fry

Mr Austin Mitchell

Dr John Pugh

Kitty Ussher

Mr Alan Williams


Sir John Bourn KCB, Comptroller and Auditor General and Mr Chris Shapcott, Director of Health VFM, National Audit Office, gave evidence.

Ms Paula Diggle, Treasury Officer of Accounts, HM Treasury, gave evidence.




Memoranda submitted by Dr Anthony Nowlan and Professor Peter Hutton

Examination of Witnesses

Witnesses: Sir Ian Carruthers OBE, Acting Chief Executive of the NHS, Mr Richard Granger, Director General of IT, Mr Richard Jeavons, Director of IT Service Implementation and Director of Service Implementation, NHS Connecting for Health, Sir Muir Gray, Director of Clinical Safety for Connecting for Health, Dr Mark Davies, Primary Care Medical Director for the Choose and Book programmes and a practising GP in Hebden Bridge Dr Gillian Braunold, a National Clinical Lead and a practising GP, Department of Health, Professor Peter Hutton and Dr Anthony Nowlan, gave evidence

Q1 Chairman: Good afternoon. Today we are considering the Comptroller and Auditor General's report The National Programme for IT in the NHS and I should like to welcome the following witnesses: Sir Ian Carruthers, who is the Acting Chief Executive of the NHS, Mr Richard Granger, who is the Director General of IT, Mr Richard Jeavons, who is the Director of IT Service Implementation, Professor Hutton and Dr Anthony Nowlan. You are all very welcome to our hearing. You will see that there are quite a few members present today, so may I please appeal for short answers because otherwise it will be a very long hearing. If I feel that the answers given are unduly lengthy, the only result will be that the hearing itself will lengthen, so I appeal to you for crisp answers. Although I appreciate that you will want to get your entire answer out quickly, because you are obviously very heavily briefed on this, you will have the best part of two hours to get your case across, so you will have plenty of time to get it across. I shall address my remarks, if I may, to you Sir Ian because you are the accounting officer, but please feel free to bring any of your team in, either those sitting on either side of you or anybody indeed sitting behind you. This is not a point-scoring exercise: we are simply after the evidence here, so feel free to bring anybody in. Could you please start by looking at the summary on page four where it says in point 5m "... the advanced integrated IT systems that are central to the long-term vision for the Programme will now be later than originally planned. Deployment of the national clinical record is now planned in pilot form from late 2006, compared to the original plan of December 2004". I am sure you will agree that the National Care Records Service is the central part of this programme. Why is it running two years later than originally scheduled?

Sir Ian Carruthers: Before answering that Chairman, may I introduce the colleagues with me because we shall call on them. On my far left is Dr Mark Davies, who is the Primary Care Medical Director for the Choose and Book programmes and a practising GP in Hebden Bridge. Next to him is Professor Sir Muir Grey, who is the Director of Clinical Safety for Connecting for Health and next to him is Dr Gillian Braunold, who is a national clinical leader and a practising GP. Your first question was about the delay in the national clinical record. It is important to recognise that the programme is amongst the largest in the world and it is extremely ambitious. The delay was actually a decision that was taken following two things: first of all some suppliers were having difficulty in meeting the timetable and clinicians wanted to pilot the scheme and see how it operated. It is for those reasons that the timetable was deferred until 2006 when we hope to pilot it and it will be operable in 2007. It is important to recognise that with a programme of this scale there is bound to be risk, there is bound to be some delay. However, as the National Audit Office report says, what we have achieved is substantial progress in many, many other areas where targets have been exceeded and indeed in some cases accelerated. We need to see this in a wider context where much has been achieved with over 10,000 installations already in place.

Q2 Chairman: It is not just delays, important as those are. There are about 170 acute hospitals, are there not? In terms of patient administration, the national clinical record system has been deployed into just 12 hospitals and no clinical systems have been deployed into any hospital. Is that right?

Sir Ian Carruthers: No. PACS, for example, have been employed across various parts of the country and large numbers of other programmes have been done. If I may, I shall ask Mr Granger to take that forward in detail.

Q3 Chairman: May I just ask the National Audit Office? Are those figures right that I quoted of 170 acute hospitals and the system only being deployed into 12 of those hospitals in terms of patient administration alone?

Mr Shapcott: I believe there are 104 hospital trusts; a number of those may be on more than one site. The clinical record element in the National Care Records Service is not in yet, but there are other types of systems.

Q4 Chairman: Has not been deployed? Has it been deployed into any hospitals?

Mr Shapcott: As I understand it, not at all.

Q5 Chairman: Okay. Mr Granger, do you want to comment?

Mr Granger: There is a highly selective marshalling of the data about the 10,000 or so deployments that have been achieved in the last 24 months. It is important to note that 33 acute trusts are now not using X-ray film. I think if you were having an X-ray, you would not draw the distinction between a system which required a clinician to type and one which required them to hold an X-ray film up to a light box.

Q6 Chairman: I am not sure that is answering the question that I put. What is actually key about this, you will accept Mr Granger, is the national clinical record. My clinical record being able to be deployed into any hospital in the country is the key part of it, is it not? What I was told was that there are 170 hospitals and my clinical record, under the systems that you are developing, cannot be deployed into any hospital. Is that right or not?

Mr Granger: What is correct is that every day 375,000 patients have their details searched on the demographic database which is a core part of the national clinical record and there are over 240,000 people registered in the NHS to use that system already and that covers all the major acute hospitals. They are all now connected up to a secure national network as well.

Q7 Chairman: Right. Well I cannot pursue this point but other members can come in on it. Sir Ian, how are you going to make up for the lost time in implementing the National Care Records Service? What is your plan? When will it be delivered? You are two years behind already, although there is some argument about the basis of the discussion. My essential point is that it has not been delivered in essence to any hospitals yet. How are you going to make up for lost time?

Sir Ian Carruthers: We have to see the piloting, we have then to move on to implementation and the overall part of the programme is that we would hope, as the National Audit Office report says, to have implemented most of the compliant system by 2010. However, the scale of implementation and the risks associated with it, because we are trying to do something here that has not been done on this scale before, do need to be recognised because what we want is a system that works rather than a system which is put in quickly for its own sake. The overall benefits that we shall achieve, clinically and in terms of patient safety as well as value for money, will be significant.

Q8 Chairman: That is precisely the point I want to take you to, because it is important that you answer this essential criticism of what you are trying to do. This is dealt with on page 29 of the Comptroller and Auditor General's report "Taking account of earlier experiences, the Department decided to procure and manage the Programme centrally". Why are you seeking to impose such a massive system from above on the NHS instead of building on local initiatives?

Sir Ian Carruthers: First of all, it is important to say that there are two parts to the programme: one is the national procurement and the second is the implementation. The national procurement is being undertaken nationally, but actually implementation is locally driven. The reason why we are undertaking it nationally is because we want to overcome past poor track record, we want to get value for money, we want to deliver integrated systems which we can upgrade and change in future at reduced costs. There is a whole series of benefits such as standardising practice and allowing people to move between employers without re-training. It is the procurement that is being driven nationally and in fact that has paid off, because the National Audit Office have been very clear in saying that the procurement has brought with it great benefit in terms of value for money, it has brought with it a lot of good practice that others can learn from. Of course within that we have tried to adopt the advice of this Committee itself which is about saying "Can we be contestable? Can we pay only on delivery?" and, firstly, "Can we actually not rely on any single supplier?". So good practice elements have been built in. The delivery locally is through each NHS organisation and we have established a system where the chief executives of each of the new strategic health authorities which come into being on 1 July will be accountable for overseeing the actual delivery in their local NHS. In any hospital or in any PCT, the implementation will take place locally with national support, so it is not centralised in that way at all.

Q9 Chairman: On the other hand, if we read the key paragraph in this report which you can find on page 11, paragraph 1.8 "The scope, vision, scale and complexity of the Programme is wider and more extensive than any ongoing or planned healthcare IT development programme in the world. Whilst other countries are seeking to adopt elements of the services within the National Programme, such as electronic patient records, these are not being introduced on a country-wide basis". So you are doing something that no other country apparently is attempting. Is this not unwise?

Sir Ian Carruthers: It is true that we are doing it; we think it is the right way, but I shall hand over to Mr Granger.

Q10 Chairman: May I just add a rider to that? The NHS itself is very diverse. You are attempting to impose centrally-imposed procurement from above on what is a very diverse organisation in the biggest IT health project in the world. Is this not a very dangerous undertaking you are engaged on Mr Granger?

Sir Ian Carruthers: If I may, there are risks, we have said that. I have also said that nationally we are only procuring and the benefits of that have come through. Implementation will be local and in fact, elsewhere in the report, it says that every local implementation has its own characteristics and needs to be locally tailored. Yes, it is diverse but we need to handle that in a local sense.

Mr Granger: The statement that no other countries are implementing systems such as this is only partially accurate.

Q11 Chairman: It is in the report which you spent a whole year arguing with the NAO to get right. I have just read to you from the report and one of the reasons why you apparently had to fight street by street, block by block with the NAO - their own phrase to me - was that you wanted to agree on this. I have just read it to you, so please do not come back to me and say it is only partially true. Why has this NAO report been delayed a whole year then, if it is not right?

Mr Granger: Let us clear that point up. The Department of Health had possession of the report for review for 59 days out of the last year and a half. Aside from that, if we look at what other countries are doing, many of them are now looking at implementing a central infrastructure that will move patient information around. It is already present in Holland, it is already present in Denmark, it is being implemented in Sweden, Canada have a scheme to do the same thing which is rolling out across several provinces at the moment, Australia are procuring a system to do that as well. Some of these are procurements which are ongoing or schemes which have been partially implemented to date. Many countries are looking carefully at what the NHS is doing; it is at times uncomfortable being in a leadership position. As the NHS is a diverse organisation, one of the things that binds it together and moves millions of messages between trusts and between GP practices right now today is the spine infrastructure which is live; that provides a coherent backbone to the NHS to move clinical messages around in a secure and reliable manner.

Q12 Chairman: Let us go on as quickly as possible. Can we look at some of these contractors, some of whom are showing signs of strain? Is it right that Accenture has made provision for $450 million losses on this contract?

Mr Granger: No, it is not. They have made a provision against potential future losses which have not crystallised.

Q13 Chairman: Are some of your suppliers showing signs of strain on this?

Mr Granger: They are and better they are than the taxpayer.

Q14 Chairman: Can you be sure that they have the strength to handle these risks?

Mr Granger: Yes. We regularly, in conjunction with Partnerships UK, the Treasury agency, assess the financial fitness and capacity of our prime contractors. At the last report from Adrian Kamellard of Partnerships UK, a body of the Treasury, he confirmed that all the key contractors have sufficient financial capacity to fulfil their liabilities and continue to discharge their obligations under the contracts.

Q15 Chairman: Page 27, paragraph 1.33 on the cost of this. Why do you not know how much the NHS is spending on implementing the programme? "NHS Connecting for Health has not sought to monitor systematically the actual impact the Programme is having on local IT spending." Is that not a fairly key point?

Sir Ian Carruthers: First of all, as you have just said, we want to do this as locally as possible. On that page, if we go back to the earlier paragraphs, what people are saying is that 3.4 billion is based on forecasts which have come from business cases, 70 million of that, or thereabouts, is from PACS and the other is 2.6 billion. Individual business cases are actually being prepared and have formed the basis of that and we shall not know the true savings until they are implemented. If I might ask Mr Jeavons, he could give you one or two examples because significant savings are being made.

Mr Jeavons: On PACS, for example, where we projected 682 million worth of cash savings against the contracts, we are already seeing clear evidence from both business cases and post-implementation reviews that the scale of those cash releasing savings are there. That is not surprising because they are extremely clear and very predictable.

Q16 Chairman: Are you worried at all about patient confidentiality? My records are potentially going to be driven around the countryside, if this works. Am I really happy with that idea? I know some doctors have expressed concern about this.

Sir Ian Carruthers: What we should say is that obviously we recognise the importance and Mr Jeavons, who is leading that part of the programme, will comment.

Q17 Chairman: Can you give me an absolute reassurance that your systems are sufficiently robust that there is no way in which my clinical records can leak out?

Mr Jeavons: The position is that the policy has always been implied consent, the programme is implementing the highest levels of security and access ever seen in any public project and so is setting standards which have never been surpassed.

Q18 Chairman: Lastly, there has been a lot of criticism from the doctors, that this is being imposed by diktat from above rather than getting the consent of the medical community. Do you have any comment to make on this Professor Hutton?

Professor Hutton: I do feel that the clinical community was disadvantaged in the early stages of the programme and that this has led to some of the problems we now see. I am pleased that you have concentrated on the issue of the healthcare record because it is absolutely central and does not really get very much mileage in the report. The report fails to emphasise that key decisions were taken in the early period without proper clinical input and that the resulting consequences are still having a major impact on the viability of the core programme. Nowhere does it mention that the recommendations on the care record were actually only developed towards the end of the contracting process, so one can ask what was actually being contracted for. It fails to state that there is no good audit trail for clinical input into the production of the output-based specification, which was the basis of the contracts and the placing millions of pounds of public money.

Q19 Chairman: May I just say Professor Hutton, as the afternoon wears on, that it is better if you do not read. Talk to us. Lift up your head and talk to me, do not read from a long prepared script; it is not going to help your case. Just talk to me. In your own words, was this imposed by diktat from above or did it engage the medical community?

Professor Hutton: It did not adequately engage the medical community and there is good evidence for that.

Q20 Chairman: Thank you. Mr Granger, do you want to comment on that point before I pass on to my colleagues?

Mr Granger: Yes I do. I want to supply you with a note which will include a copy of an e-mail from Peter Hutton to me, marked confidential, 18 November 2003 at 11:27. "I am seriously concerned that everyone who contacts you about clinical engagement is made welcome by you. This will lead to chaos and undermine those of us who are trying to prevent that. We will need meetings with a plan, not a random selection". On 21 November at 9:09 I asked Professor Hutton to provide a plan. I am still waiting for it.

Q21 Chairman: Right, well Professor Hutton, you will have a chance later to come back on that because I know that some people wish to ask you questions.

Sir Ian Carruthers: May I just make one point? When you look at the National Audit Office report, there is a big debate about what is adequate and what is fair. What is beyond doubt is that there was clinical engagement. If I may look at this, I have been in the health service for 37 years and I have never known the NHS go to so much trouble to identify what clinicians would feel in any project as they have for the output-based specification,

Chairman: Thank you for that. It is an important point and we shall discuss it in the course of the afternoon.

Q22 Sarah McCarthy-Fry: My first question is to Sir John Bourn. We only received this report last week; it has been very quick. Most of your reports are externally evaluated. Has this report been externally evaluated?

Mr Shapcott: No, it has not. This went into clearance before we started that as a routine process, so it did not go through that.

Q23 Sarah McCarthy-Fry: I rather guessed it had not. I am also concerned about the length of time it has taken to get published. We have had all sorts of newspaper articles; we have had briefings about the horse-trading that went on. May I ask you whether you are happy that the report you have done fully reflects what you found that you have not been compromised in any way?

Sir John Bourn: Yes, I am happy with the report. It is a complicated subject. It took a long time to prepare. It was discussed in detail between ourselves, the Department and the National Health Service. Although reference was made in the media to delay, the only date to which we were ever committed was today; that was the only date on which we ever said we should produce a report in time for the Committee's discussion. It took some time to do, as you would expect for a professional piece of work which is directed to produce a statement of the facts which were agreed by the external auditor and by the auditee, which is what the report is.

Q24 Sarah McCarthy-Fry: May I ask the same question of Sir Ian and Richard Granger? Are you happy that the report reflects adequately your reading of the situation?

Sir Ian Carruthers: From my perspective, as Sir John said, there was a lot of discussion and it does reflect our reading of the situation; we should not have agreed it otherwise.

Mr Granger: It is an agreed report.

Q25 Sarah McCarthy-Fry: There is nothing in the report that you take issue with; you are perfectly happy with the report.

Sir Ian Carruthers: No, nothing.

Q26 Sarah McCarthy-Fry: Okay, having got that one out of the way, I have the two written pieces from Professor Hutton and from Dr Anthony Nowlan. Picking up the point you made about engagement with clinical staff, what was the process that you underwent?

Mr Granger: The process was that in 1992 a strategy was produced which led to very little in the way of implementation in the NHS. In 1998 another strategy was produced. A number of pilots occurred after that known as IRDIT pilots. In 2002 a further strategy was produced. Dr Nowlan and other people have been interested in this for a number of years, have been involved in extensive consultation and piloting. It has been described to me by medical colleagues as a bad case of "pilotitis". There has been extensive clinical engagement. When I started this process, we took all the outputs from those pilots and consultations, some of which were undertaken by Dr Nowlan when he was employed by the Information Authority and we put those into a structured requirements-evaluation process. This was not perfect and I fully accept the criticism that is made in the NAO report that we failed to map input from every single clinician who had input - there were thousands of them - into a requirements document which, unusually for a government department, we then published. Since the production of that requirements inventory, further structures have been set up, one of which was chaired by Professor Hutton and we have had a more stable and long-term structure in place for about a year and a half now, a care record development board with structured clinical and patient engagement. I should emphasise that last point: patient engagement. I should just like my colleague Sir Muir to comment because he has been involved in this for many years.

Sir Muir Gray: I shall answer your question briefly. I have been involved since 1998. We started with the National Clinical Advisory Board chaired by Professor Hutton. That made very good progress across the whole piece, but there were three things that it became apparent we wanted to strengthen. One was patient involvement, so we set up the Care Record Development Board. The second was to get some people giving significant amounts of time, so we employed national clinical leads and that has been very highly praised in the report. The third key issue is that when you get these big medical committees together, medicine is a bit of a gerontocracy, there are older people like me. We want to get people who are committed to 2015-20, so we now have some younger people involved. That is what we have done.

Q27 Sarah McCarthy-Fry: A few more points I want to raise. I want to come to Dr Nowlan and to Professor Hutton. Do you believe in the principle, do you believe that there is one standard UK system that can deliver what the project is trying to deliver? Is it the principle of one standard UK system you object to or the way that this particular system was procured?

Dr Nowlan: Certainly the way it was procured. To answer the question, unless you test whether it will fit, how do you actually know? The problem was that the urgency to procure really trumped all other aspects of consideration. Clearly there are parts of this that are very innovative and without proper work to assess the need and the chance of success, it is rather hasty to proceed on some of these matters. The focus of the national leadership in 2002-03 was to find something which they believed was highly useful, but also achievable and that is the one piece that was subject to reasonable scrutiny.

Q28 Sarah McCarthy-Fry: You mentioned that you felt there was a danger about patient confidentiality.

Dr Nowlan: The danger is not a system danger. The whole thing hinges on trust and governance really and if you carry people with you and you have the right oversight, then, like anything in healthcare, it can be made to work. There are always risks and benefits and trade-offs. It is not a technological system fix, it is about the arrangements for governance and trust and people supporting and following it. If that is not there, that is where the risks then come in of transparency and what is happening really.

Q29 Sarah McCarthy-Fry: May I come back to Mr Granger? Do you believe you do have a buy-in from clinicians? Is that what you fundamentally disagree with?

Mr Granger: I shall just answer in summary and then I should like a couple of the GPs who are using these systems every day to comment on this. Dr Nowlan produced a document on 16 December 2002 entitled "Confidentiality work stream technical implementation project" which set out his opinion, and I summarise for you Anthony, that opt-out was the best model. We know that there are significant and legitimate concerns from patients and the clinicians who serve them, which is one of the reasons we have taken a more gradualist approach to the introduction of summarisation, not just summarisation on a read-only basis as exists in some parts of the UK, but summarisation with people able to input things as well as just read them.

Q30 Sarah McCarthy-Fry: I only have two minutes. I should love to hear from the GPs.

Dr Gillian Braunold: In answer to why things have been delayed, one of the reasons is in order to get that very consensus around some of the really complex issues around exactly how the workforce changes will work which are implicit in how we consult and how we jointly publish with patients information to the spine and to the other shared care bits of the record. So although theoretically technically lots of very complex models are possible, sometimes we as clinicians have had to pull back and say yes, we know that you can create 1.3 million different roles within the health service to access the security arrangements, but when we have consulted with the colleagues within the BMA and within the colleges, we have found that we do not really need more than ten. Although the technology can do it and the provision is there and all this stuff is being built, when you then work with the colleagues, you find that that is going to be undermined by human beings who are going to undermine the very information governance structures that you are putting in place. As national clinical leads we have been doing a lot of work, influencing and bringing together colleagues in the national advisory groups that are mentioned in here and consulting with them on some of the technical issues and how they will work in implementation, to make sure we do not build something so complex that it will be undermined by the human beings trying to implement it.

Q31 Sarah McCarthy-Fry: May I come to Mr Granger? If you believe you have the support of GPs, why does the medics' survey on page 47 of the report suggest that support for the new system is falling and that over the space of two years a 30% drop in enthusiasm has been recorded? Why do you think that is?

Mr Granger: I will just say that GPs are very, very shrewd consumers. They are very happy with the QMASS system which is paying them more money and they are very happy with the network connections. They find systems which are more disruptive to their working practice more difficult to assimilate to start with.

Dr Gillian Braunold: The most important thing to remember is that GPs thrive on being able to consult in a ten-minute window which is very, very concise and they have their current systems smoothly flying to be able to deliver that. Anything that they need to take on board to deliver something else has to be accommodated and they are very resistant to that. They were very resistant to the negotiators within the General Practitioner Committee over-delivering them a 30% pay rise because the way they had to do it was to put in more data and that was resisted fiercely and still is frankly. Nevertheless, as patients benefit, then the GPs stopped complaining. We have now started to ask GPs whether they would like us to take Choose and Book away and there is resistance amongst those who are actively delivering patient benefit and clinician benefit with Choose and Book. They are actually saying that they are going home for the smartcards they have forgotten. The medics' survey, if you look at when it was done on the Choose and Book curve, was very early in the curve against the number of deployments of Choose and Book and 54% of GPs are using it now.

Q32 Greg Clark: May I start my questions to Sir John? Sir John, we have a conundrum here. In a year on the Committee I have read 62 NAO reports. This is easily the most gushing and yet we know that the report was published on the very last day that it could have been to be in time for this Committee because it had been, we assume, haggled over. How can you square these two things? Is it that Mr Granger was bashful at the extent of the praise that was being lavished on him? What were the concerns?

Sir John Bourn: What we needed to do was get it right, to catalogue those things which had gone well and to underline those things where improvements could have been made. The report does that. Although, as I said a few moments ago, it took a long time to take it forward, it did reach an agreement, as it were, warts and all. Therefore I was glad to be able to present it to the Committee in the form that they asked: facts agreed.

Q33 Greg Clark: What were the areas that you had trouble agreeing for so long?

Sir John Bourn: I personally had no trouble at all. I do not want to say "trouble", because that suggests an antithetical relationship, which is not right. We should probe and we should press and we should get out the facts and that is what we did. It is a very long subject with many, many aspects to it, the biggest programme in the world, so it is not surprising that it took a long time to do it. Yes, of course, as we came towards 26 June, there was concern. As I have told the Committee, I was very keen that you should have it in time to have two clear weekends, which is your rule and so I pressed forward to get it to you at that time. From my point of view, it is a report on an important subject, perhaps the biggest subject we have ever done since you were on the Committee Mr Clark and it covers the waterfront, pluses and minuses.

Q34 Greg Clark: Nick Timmins in the FT says that the NAO's report was the outcome of one of the fiercest Whitehall battles in recent years. Can you explain the background to that?

Sir John Bourn: I am not responsible for what appears in the newspapers and I do not see it as a battle between us; I see it as an important subject in which both sides were anxious to get at the truth. Of course there was proper debate and of course one side argued with the other. I do not regard it in any way as an illegitimate series of discussions which led up to that.

Q35 Greg Clark: Sir John, I am keen on getting to the areas of contention. As you know, this is the world's biggest civilian IT project, funding up to 12 billion and IT projects are notorious for going wrong. We rely on you to alert us to the areas of major concern and I was struck by the very positive, almost universally positive tone of this report. Could we perhaps turn to your conclusions, page 50 of the report, appendix one, "Methodology". This was the methodology you applied to answer the Committee's questions. The first aspect of the methodology raised the question of whether the programme's vision is soundly based. What is your conclusion on that? Is the programme's vision soundly based?

Sir John Bourn: My conclusion is that for a system of the kind it is, it is soundly based.

Q36 Greg Clark: That is helpful. The second aspect is whether the contracts are likely to deliver value for money. In your view are the contracts likely to deliver value for money?

Sir John Bourn: I think they are because, unlike most contracts in this field, they do involve payment for results which often has not been the case with IT contracts.

Q37 Greg Clark: Part four of your methodology is whether you consider the project management is fit for purpose.

Sir John Bourn: Yes, I do. The point that I would make about that is the one that has been implicit in discussions and that Sir Ian and Mr Granger have said. Of course in a project of this kind there is the question, as the general practitioner herself said, in which you are developing a system and you want, as it were, to take the customers with you. That is a very difficult thing to do; it has not been done with 100% success but, given its size, scale and nature, I do regard the project itself as well conceived.

Q38 Greg Clark: That is extremely helpful because it is an ambitious project and it is helpful to be able to assess it. We know that it is risky and that it is innovative. From where we are sitting today, are you confident that this programme will deliver on schedule its core objective of transforming patient care by providing an integrated healthcare record?

Sir John Bourn: If the recommendations I have made are followed out, then it will.

Q39 Greg Clark: Would it be fair to summarise your view that at the moment there are no material grounds for concern that that should not be the case?

Sir John Bourn: Of course a difficult challenge remains and there is no gainsaying that and I do not want to diminish that. Recognising it is not easy, I still think that it can be done.

Q40 Greg Clark: We know from other studies that have been before this Committee that IT projects and public sector projects in general are often criticised for a lack of clear leadership or protracted procurement processes, for risks falling on the taxpayer, overruns in time and incompatible systems. I assume you would agree that there is an attempt here to break out of that and to learn some of those lessons.

Sir John Bourn: That is right, there is clear leadership here in a way that has not been the case with all projects, but of course it is a scale larger than any other project which has been attempted in British Government.

Q41 Greg Clark: Can I turn to Mr Granger then, who is the leader of this project? I was intrigued by a quote of something you said which I read, which was very consistent with what we have said. You referred to the management of this project - I am sure you know what I am going to say - being a bit like a sled pulled by huskies. You said that when one of the dogs goes lame and begins to slow the others down, it is shot. It is then chopped up and fed to the other dogs. The survivors work harder, not just because they have had a meal but also because they have seen what will happen should they themselves go lame. That is an accurate quote, a very vivid one.

Mr Granger: I am delighted that it will now endure in the Official Report.

Q42 Greg Clark: This stands in contrast to some of the approaches which have been taken and there is something to admire in that. Just to look at the other side of this. You are placing a lot of risk on sub-contractors, are you not? I read recently that the share price of iSoft, which is one of the providers, has taken a tumble and some people say is vulnerable. Is the network of suppliers robust enough to withstand this pressure that you are putting on them?

Mr Granger: It is a matter which we are concerned about. Having broken away from a pattern that was described in the first report of the 1999-2000 session of this Committee, where large contracts were let with single suppliers, and moved into a contestable framework, there is a balance to strike between the inefficiency of having lots of suppliers and the efficiency of single supply and we are three years into a ten-year programme.

Q43 Greg Clark: What happens if iSoft goes bust?

Mr Granger: Technically, according to information that is in the public domain, iSoft have breached their banking covenants. What will happen, if that impairs their delivery, is that the prime contractors with whom they have contracted to supply the NHS, namely Accenture and CSC, will have either to put money or resources, human resources, into bolstering their delivery. I suspect that the capital markets will respond to the opportunity to acquire them through an appropriate mechanism should their stock price continue to fall.

Q44 Greg Clark: What is the other alternative? You said either/or.

Mr Granger: Or, in some parts of the country alternative suppliers may exist.

Q45 Greg Clark: Will it delay the programme or will it end up costing the taxpayer more?

Mr Granger: It has led to delay.

Q46 Greg Clark: How long will the delay be?

Mr Granger: If we look at picture archiving in the North West and West Midlands, the key sub-contractor there, a company called ComMedica, failed to provide us with a reference solution which has led to between nine and 12 months' delay and I am sorry for that delay. In fact I live in that part of the country and in my bag I have an X-ray taken of one of my daughters. It is not an ideal situation, but it is a better situation than spending tens or hundreds of millions of pounds with a supplier that then fails and the taxpayer owning the problem of dealing with partially completed work.

Q47 Mr Mitchell: Why, if the programme was originally estimated too cost 6.2 billion and then 12.4 billion did Lord Warner say it cost 20 billion?

Sir Ian Carruthers: It is important to distinguish the differences in the cost. The 6.2 billion refers to the national programme: it is within budget and in fact, as the report says, there is an under-spending on it. As Mr Clark has said, that is rather rare for a national IT project. We need to be clear about the 12.4 billion. That is made up of the 6.2 billion and a number of other elements: 382 million brought forward from additions to the programme and a further 239 million for approved additions to the programme. Then there is a sum of 1.9 billion for some associated costs which, as the report says, we think will be lower. We then move on to the forecast of 3.4 billion for the NHS and in fact 337 million, which is the extrapolation of contracts.

Q48 Mr Mitchell: That does not take us near 20 billion.

Sir Ian Carruthers: No; I am going to take you to the 20 billion. The first point I want to make is that the 12.14 billion is a mixture of actual costs, extrapolation and forecast. As the report rightly says, it is not a budget and it is not something you can measure against. The 20 billion relates to the overall spend within the total NHS, not only for this programme but for everything else. May I just mention that if we look at the Wanless recommendation, that is substantially less, even at the end of this period, than he would recommend.

Q49 Mr Mitchell: Is it possible that you are facing problems because you have tried to do too much with this programme, tried to do too many things, added things on later and, secondly, because you have used it as an agent of centralisation to impose the central will on the disparate parts of the health service? Are those the two reasons why it is going wrong?

Sir Ian Carruthers: First of all, it is not going wrong.

Q50 Mr Mitchell: Facing problems then.

Sir Ian Carruthers: Apart from the care record everything is going right and that is what is causing the Committee's surprise.

Q51 Mr Mitchell: Put it that way: facing problems. Is it too ambitious?

Sir Ian Carruthers: It is ambitious and, as Sir John has said, in a programme of this scale, there are risks, but we are where we are and we need to progress it and it does mean that we need to move on and handle implementation and other facets. You are suggesting that the national procurement decision was somehow made without reference to the NHS. That is not so. The decision was taken by the top team of the NHS where the 28 strategic health authority leaders, who are accountable for implementing this, took part and agreed to that way forward. So there was consultation with the NHS and the reason why the NHS felt, in its leadership, that we should move to this national procurement was actually to get the best practice benefits and the value for money that have turned out well incidentally.

Q52 Mr Mitchell: Okay. Your husky image is very vivid, but have you not been a bit over-heavy with the husky killing?

Mr Granger: I am a cat lover myself. We need to look at the history of public-sector IT programmes.

Q53 Mr Mitchell: You have Accenture with estimated losses of half a billion dollars, you have iSoft going belly-up fairly soon, IDX which is blamed by BT and Fujitsu and from which BT wants to walk away and you have Cerner brought in, which, I am told, is only able to support one hospital in one region using their standard software, yet it has been stretched to two regions. So there are problems, are there not? You are killing too many huskies.

Mr Granger: There is a more fundamental problem than the analogy around huskies. It is a very ambitious programme, we are trying to do an awful lot of work very quickly and we are trying to catch up with around 20 years of under-investment in IT in the NHS.

Q54 Mr Mitchell: History tells us that all these rushes to catch up and then to do things which have not been done for 20 years and then to cram other things on top lead to a mess.

Mr Granger: There is a shortage of capacity in the healthcare IT industry and we have had to bring in a lot of resources from abroad, from India and the USA in particular, and some things have unfortunately gone wrong as a consequence of that with some of their suppliers. We knew that was a risk when we started and it will, I am afraid, continue to be something that requires close attention.

Q55 Mr Mitchell: Did it turn out to be a bigger risk than you thought?

Mr Granger: I thought it would be a big risk from day one because when we started this programme the NHS was spending roughly half what it is now on IT.

Q56 Mr Mitchell: While you are busy killing huskies, the huskies are fining the NHS locally, are they not?

Mr Granger: "Fine" is a word which grabs a headline.

Q57 Mr Mitchell: They are having to cough up.

Professor Hutton: The situation we are in was entirely predictable in the early part of 2004. I wrote then to the chief executive of the NHS Sir Nigel Crisp and these are the words "I remain concerned that the current arrangements within the programme are unsafe from a variety of angles and in particular that the constraints of the contracting process, with its absence of clinical input, may have resulted in the purchase of a product that will not potentially fulfil our goals". Within ten days of writing that, I was asked to resign. My feeling is that the contracting process did not purchase what we wanted. In those early days, it was like being in a juggernaut lorry going up the M1 and it did not really matter where you went as long as you arrived somewhere on time. Then, when you had arrived somewhere, you would go out and buy a product, but you were not quite sure what you wanted to buy. To be honest, I do not think the people selling it knew what we needed. I do feel that at that early stage the accepted clinical bodies that were around were not consulted.

Q58 Mr Mitchell: You were asked to consider your position were you not? Dr Nowlan was pushed out, made redundant. You are both suffering from sour grapes, are you not?

Professor Hutton: We are not suffering from sour grapes; we have both got on with our lives. There is plenty to do and I earn more now than I did then.

Dr Nowlan: Absolutely not. In many ways personally it was an enormous relief because I was increasingly feeling my position was so compromised.

Q59 Mr Mitchell: But you both feel that the clinicians and the localities were not sufficiently taken into account and did not have sufficient say.

Dr Nowlan: Yes.

Professor Hutton: That is correct. In the latter part of 2003, a senior person in the management of the programme spoke to me saying that he felt that the consultation as it had been carried out was a sham. We used to meet secretly at Starbucks on Leeds station to talk about it. I tried to find out exactly how it had been done. Indeed, I asked Mr Granger - and he cooperated in this - whether I could have a list of the names of the people who were involved in that consultation.

Q60 Mr Mitchell: Were you not asked to pump up the number?

Dr Nowlan: Yes, I was approached and they wanted hundreds of names of people who supported it and I refused to support that. I said it was not on.

Professor Hutton: I was sent a list by somebody within the programme which I have submitted to the Committee. I rang up ten people at random on that list only last week. None of them has any memory of having any meaningful input into the programme.

Q61 Mr Mitchell: Let me stop you there. Mr Granger, there is a point there, is there not? You did not really want to consult the clinicians and you did not want the localities making too much fuss because that would stop your husky-taming ambitions. It would make it far more difficult to negotiate the contracts. Clinicians are quite a querulous lot, are they not? They raise all kinds of doubts and hesitations. You did not consult them because they would have raised all those doubts and hesitations.

Mr Granger: I am sorry but that is neither my recollection of events, nor is it borne out by the evidence. In fact there are two clinicians sitting to my left.

Q62 Mr Mitchell: Surely it is borne out by the evidence now there is so much protest among clinicians and among the localities that they do not want the system, it is not going to work and they have had no real input and no benefit.

Mr Granger: There are thousands of clinicians every day using the systems which we have already delivered who are quietly getting on with it. One needs to recognise that a system programme of this scale is going to cause a degree of controversy and dissent, but to delay and have another decade of consultation ---

Q63 Mr Mitchell: Yes, but the people who are going to use it centrally, for whom it is going to be important and who are going to be making their own clinical demands on it, are crucial.

Mr Granger: There has been massive input to the original design documents that went into procurement and on an ongoing basis; hundreds of people.

Sir Ian Carruthers: I do not want to enter a debate about Professor Hutton and Dr Nowlan, but if we look back, the issue is, as the National Audit Office report says, that steps were taken to engage with chief information officers, clinicians of the academies of colleges, there was consultations with 400 or more clinicians, which is the biggest I have ever known in the NHS. More importantly, there is a lot of work going on behind that. I can only talk about what happened in my area where in fact we had clinical inputs to some of the submissions that were sent back. In fact at the same time, there was a bit of anger in some parts of the country because more clinicians had a chance to take part. In the South West we were all ready to go with our own version of this. In reality, from my experience, there has been more involvement than ever before.

Mr Mitchell: But there has still been a chorus of grumbling.

Q64 Annette Brooke: I am particularly interested in how the top-down approach then actually has an impact on local services. May I start by looking at paragraphs 3.27 and 3.28, where we have a series of different decisions made in terms of the GPs' ability to choose and use their own systems? In fact we have one decision in 2003, something happened in 2004, March 2005, then in March 2006 the Department announced its GP Systems of Choice initiative. Why all that chopping and changing? Why was there not an overall vision for the top-down system which started much earlier than all this chopping and changing?

Sir Ian Carruthers: The best thing is for us to ask a GP to explain what it was like and why.

Dr Gillian Braunold: The GP contract that was being negotiated at the same time as these contracts were going out was being negotiated at the same time by a different section of the Department of Health. The negotiated settlement for the new GP contract required the choice of GP systems. It was therefore required for each cluster to offer a choice of systems and it started off really being that they were offering an alternative system or their own reference solution. It became very evident very quickly that the LSPs were not going to be delivering what was called the reference solution, their own contracted solution, for quite some time and GPs understandably were very concerned that they were not being given a real choice, but a Hobson's choice. When the GP national clinical leads were appointed we asked from the word go whether we could tackle this problem and look at it from the bottom of the problem up, from the fact that we have got very good GP systems which are capable of integrating with the rest of the national programme, if we leave aside the integrated Care Records Service, but the Choose and Book, ETP, GP to GP and lots of the other work that was perfectly capable of moving forward and being invested in. Also there was a threat and a problem with the number of migrations of patient data if people were changing systems all the time and we wanted to limit that. We have worked very hard to provide the GP Systems of Choice model which is now being negotiated with suppliers which provides a safe way for the NHS to invest in current systems.

Q65 Annette Brooke: May I just cut across and ask a simple question? Looking at this in retrospect, was there not a case for consultation with GPs at an earlier stage?

Dr Gillian Braunold: I do not dispute that, because I was sitting on the other side of the fence then and we were bashing at the door. The first time we were let in that is the first thing that we addressed. It is fair to say that from the general practitioner community the importance of GP records, where we are already in a paper-free environment, needed to be explained and articulated very clearly within the programme and that is what we have done.

Q66 Annette Brooke: So we do have a gap between local decision making and the top-down approach. I should really particularly like to ask some questions on Choose and Book, if I might? You mentioned earlier that 54% of GPs are now using Choose and Book. What I should like to have is some understanding, when the Choose and Book decision is made by a patient, presumably recorded at the GP level, of how the primary care trust monitors the bill it is going to have to pick up at the end of the day with all these IT systems.

Dr Mark Davies: The situation, as far as Choose and Book is concerned, is when a GP is sitting with a patient and agrees a referral is appropriate to secondary care what will happen will be that the GP will select a list of clinically appropriate choices for that patient to choose from. They may well make the appointment there and then; they may well issue a document which allows the patient to go off and book in a variety of different ways, according to their own convenience. Your question in terms of the monitoring of the contracts depends on where the commissioning actually sits and historically the commissioning has sat with PCTs, but increasingly that will, in the future, sit with the practices themselves. There is an interface within the Choose and Book system for the commissioners to be able to monitor that activity. In fact one of the benefits of the Choose and Book system is that we shall have the kind of quality of referral data and the robustness of the referral data that in fact we never have had before in the NHS.

Q67 Annette Brooke: Are you aware of any problems within the NHS which have actually stemmed from the Choose and Book system in terms of disputes between a primary care trust and a NHS trust hospital?

Dr Mark Davies: I do not understand the question. Could you explain?

Q68 Annette Brooke: There is a situation locally where part of the issue appears to be that the primary care trust has not budgeted for all of the choosing by the patients and there is a stand-off and patients are not going to be admitted to hospital under certain circumstances, which is seriously worrying. What I wanted to know in my question was how the bits of the NHS link up so that we do not have a dispute. You are saying this might be sorted, but here and now there are patients in my area who will possibly not be admitted to hospital as a consequence of this.

Sir Ian Carruthers: I think you are referring to the Royal Bournemouth Hospital and Bournemouth Primary Care Trust. That is not about Choose and Book; that is really about whether in fact there should be an agreement on the payment by results system. It is not to do with the Choose and Book methodology. One of the things you will also know about your area, is that it is one of the biggest users in the country; in fact it has the most functioning there. It is not related to Choose and Book itself; it is related to the incentive system of payment by results where there is a difference of opinion between the primary care trust and the hospital.

Q69 Annette Brooke: Are you giving me assurance that the primary care trust can actually monitor what is happening through Choose and Book in terms of budgeting?

Sir Ian Carruthers: Each month they will receive how many people have chosen and booked. The reality is that when you are hitting a rate of only 34% to 35%, which we are, the issue is that there are many more patients going into hospital where the system is not being used, but ultimately that should be the way of doing it. At the present time, until take-up is fully undertaken, that will not be the case. One of the things we are looking at is the fact that quite often one of the problems with GPs' experience is that they want a Choose and Book within the requisite timeframe, but there are no slots available in the hospital. One of the things we need to look at is how we help hospitals make more time and slots available so that the system can expand. This is work in progress. We have incentivised GPs, we need now to look at incentivising the hospital system to make that work.

Q70 Annette Brooke: Finally, can you actually give me a categorical assurance that all the different parts of the commissioning, the provider and obviously a strategic health authority are actually going to be joined up and that there will not be any gaps at all from now on?

Sir Ian Carruthers: You should never give a categoric assurance, as you well know. The point is that Choose and Book is a system that is building up at the moment. When it gets to its ultimate, we should be able to identify and GPs should be able identify, where they have referred people to and they should be able to translate that back into what care they have had and how they have been able to fund them out of their practice-based indicative budget. When it is fully operational, that should be done in large measure.

Annette Brooke: Just to reiterate, I am concerned about the gaps locally.

Q71 Mr Khan: Can you reassure me those medical notes lying on the floor over there are not the Chairman's that he is worried about?

Mr Granger: I can.

Q72 Mr Khan: I just wanted to make sure that my Chairman's privacy had not been breached. That is fine.

Mr Granger: These are very important because these are notes that we have consent to have here and this is where we are today. This is one patient.

Q73 Mr Khan: Superb. I hope they are better. Sir John, nobody has criticised the NAO for what some of us would call a balanced report, others a gushing report. Mr Clark put to you the FT article by Nick Timmins. I am going to put to you another quote which is quite a serious one. It is written by a specialist, one of the country's leading IT journalists and he says, and I quote, "Sources suggest that the NAO was ground down in a war of attrition with Connecting for Health who fought a dogged rearguard action to keep back criticisms it found unpalatable or unacceptable". Were you ground down?

Sir John Bourn: I was not ground down: the Department may feel that they were ground down. I refute what the journalist said.

Q74 Mr Khan: I am relieved. The second very serious allegation and aspersion cast against the NAO is in this week's Computer Weekly, also by one of the country's leading health IT journalists, Tony Collins. He is talking about the senior executive observer at Connecting for Health and comments "The potential placement leaves the NAO vulnerable to a perception of a potential conflict of interest. Could the National Audit Office criticise a programme that has been advised by one of its senior executives, even if he did not take part in decision making?".

Sir John Bourn: I am not constrained in any way in what I say.

Q75 Mr Khan: I am surprised that you are not angrier than you are. People are casting aspersions at the quality of your work over a long period of time, examining a major IT project.

Sir John Bourn: I bring my work to Parliament and I am satisfied that what I have brought to you is work of high quality, done by my staff. I do not seek to engage in discussion with the media and play some game of exchanging slogans and points with them. I come with my views to you.

Q76 Mr Khan: I am grateful. My final question is to you Sir John. I read from your NAO report that the NHS appears to have followed the recommendations made by the PAC in its report Improving the delivery of Government IT projects, before my time, in 1999-2000. One of them, to do with an incremental as opposed to a big-bang approach to IT projects, is mentioned on page 11 of your report; another one is to do with the importance of risk management and professionalism for successful implementation of IT systems. Are you reasonably happy that your best practice advice has been followed by the NHS?

Sir John Bourn: I am. The emphasis on professionalism has been taken forward. This programme is run by people who actually have experience rather than by generalist civil servants. I should pick up the particularly crucial point that the PAC have discussed in the past that you should only pay for what you get and this is absolutely following that principle.

Q77 Mr Khan: Hardly surprising that your report is gushing.

Sir John Bourn: Yes, you are right. If doing it properly is gushing, then it is gushing, but if it is proper, I should say so.

Q78 Mr Khan: Absolutely; I agree. Thank you Sir John, that was very helpful and the brevity of the answers was one of the strengths. May I move on to a question to you Sir Ian? Why does the implementation of the programme feature neither in the current Department of Health's PSA targets nor in the supporting targets?

Sir Ian Carruthers: Normally the PSA targets are about service outcomes in the main. It is clear though that this particular grouping will have an impact on the wide range of targets. Whilst it is not specifically mentioned, it will impact upon them all.

Q79 Mr Khan: Why is it not specifically mentioned in the PSA targets?

Sir Ian Carruthers: I do not know. We can let you have a note on that.

Q80 Mr Khan: Please.

Sir Ian Carruthers: We shall do that.

Q81 Mr Khan: Okay. Despite this slippage, you are still extremely confident and you have persuaded the NAO that the entire implementation will be completed by 2010 in accordance with the originally-contracted timescales. How can you be so confident?

Sir Ian Carruthers: What we have is an end-point. What I have also said, and I have said it earlier this afternoon, is that it is a large project, it has its risk and it has its delay. Whilst we are working to those timeframes, it is more important that we have safe systems which are right and appropriate and with value for money. That will be the emphasis because at the end of the day we want those ingredients rather than a system that is put in quickly and less good than it should be. We are working to that.

Mr Granger: Two further reasons. One, when one looks at BT's core contract to deliver the spine, they had five software deliveries to make last year, they made each of them on schedule. Secondly, the work in progress that has been carried on the balance sheets of the suppliers is a strong incentive for them to catch up. They will only get to a position of financial balance by doing it; the dogs will then get fed.

Q82 Mr Khan: In percentage terms, how confident are you of us reaching completion by 2010?

Mr Granger: I am confident that by 2010 we shall have done far more work than was set out in 2002 and the core elements of the programme will be in place.

Q83 Mr Khan: Are you 100% confident?

Mr Granger: One hundred per cent is a dangerous statistic.

Q84 Mr Khan: The question was: what percentage? How confident are you?

Mr Granger: We shall have done more work by 2010. There will be more benefits out there and more systems out there.

Q85 Mr Khan: You do not want to answer the question. That is fine. May I put to you Sir Ian an article in one of yesterday's newspapers, I am sure you have read it, in The Observer? There is a heading saying "NHS computer chaos puts patients at risk". Have you not read this article?

Sir Ian Carruthers: We have read that but not the one you were brandishing.

Q86 Mr Khan: It starts by saying that people could be put at clinical risk. What do you say to that?

Sir Ian Carruthers: We should like Professor Sir Muir Gray to answer that.

Sir Muir Gray: Like all technology, information technology has a clinical risk. Everything we do is a clinical risk.

Q87 Mr Khan: So what do you say in relation to the specific example they gave about the e-mail in February from one of the managers in West Midlands who acknowledges the potentially "significant" clinical risk?

Sir Muir Gray: We have a system now to identify potential clinical risk. We deal with that at the design stage, the bill stage and the test stage when it is first put into practice and then we shall be monitoring when things are in practice.

Q88 Mr Khan: You are not reassuring my constituents. Are you saying my constituents are at risk because of problems with the implementation?

Sir Muir Gray: Everything is a risk; a balance of risk. There is a risk with all technology, but when this is in, at minimal risk, which we shall do through our risk and safety process, this will dramatically reduce the risk of prescribing and of lab tests.

Q89 Mr Khan: My time is running out. Could you please do me a note on the very serious points made in this article and your reassurance for me, my constituents and colleagues about the points they raise. My final area of questions is on the area around an issue raised by the Chairman and I raised it earlier on. How are you going to make sure that staff follow the rules so the security and confidentiality of patients' records is protected?

Mr Granger: Gillian will say a few words on this as somebody who carries one of these smartcards which are more secure than the instruments we are all using to access money in this country. This is more secure than single factor authentication chip and pin technology. We are supporting the Information Commissioner in his demands for higher penalties for information abuse and you will be aware that the penalty for information abuse in this country is currently capped at 5,000. That is not a sufficient penalty, given the risks that are carried there, but you have to look at the risks that paper itself carries in the absence of audit trails.

Dr Gillian Braunold: I shall not keep you long because I know that time is very short. We try to make sure that through all of the ---

Q90 Mr Khan: I am sorry but may I be very rude and cut you short? Could you do us a note about that as well, because my time is up?

Dr Gillian Braunold: Yes, we could

Q91 Mr Khan: My final question, with the Chairman's indulgence, is that the main aim of the programme is clearly to improve services rather than reduce costs. Why have you been so poor at selling the benefits of the programme?

Sir Ian Carruthers: The benefits of the programme are clear.

Q92 Mr Khan: Why have you been so poor at selling them?

Sir Ian Carruthers: There is a matter as to whether we are so poor. Many clinicians, as the report says, think that this will very much improve their working life. Secondly, seven out of ten know a great deal about the programme and to one of the questions before where you were saying that the clinician impasse was reducing, it was because they are keen to get hold of it. It depends what you mean.

Q93 Mr Khan: Sorry, my time is up. What I mean is the research carried out by MORI on pages 45, 46, 47, 48 and 49. My time is up and the Chairman has indulged me. Can you also do a note on those comments on pages 45 to 49 please?

Sir Ian Carruthers: Yes, we can do that.

Q94 Mr Curry: I do think that if we do have doubts about the inherent quality of the NAO report, then we ought to discuss those in private before we have witnesses, rather than make it part of our public debate. Sir Ian, what bothers me is the local end of this. If I look at my local NHS, at the moment it is in turmoil. We have a reorganisation of the PCTs, we have a reorganisation of the strategic health authorities and we have the GPs pretty disaffected by what is happening. How confident are you? It only has to go wrong in one place, has it not, for the system to go wrong? How confident are you that in this very difficult circumstance for the local NHS, this is going to be okay on the night?

Sir Ian Carruthers: Firstly, we are going through a period of structural change as you rightly mention. During the course of this year, we shall have new leaders in place, new organisations and it will be their responsibility to take forward the programme. In actual fact, it is only at that level where this can be implemented in the most appropriate way.

Q95 Mr Curry: How is that going to happen in practice? We have PCT reorganisation, we discussed this before, we are moving to much larger PCTs. Some of them are serving a population of 650,000 to 750,000 and some are inheriting huge deficits they have to work through the system and at the moment they are trying to work back through the system, which is why a lot of people are disaffected and fed up and then the strategic health authorities. Is there one person who has specifically been told that he is in charge of getting this thing delivered?

Sir Ian Carruthers: Yes.

Q96 Mr Curry: Who is it and how did you choose him or her?

Sir Ian Carruthers: The senior responsible officer for the programme in each area is the chief executive of the new strategic health authority and there are ten of those. The responsibility for delivering in each organisation is the chief executive of that organisation. As the end of the report says, we are putting in monitoring systems to check that.

Q97 Mr Curry: Is it your advice to them that they should have a Mr Granger alongside them, as it were, to deliver this? They are going to have lots of other things to deliver, are they not? They have to live within their means, to quote the Government's favourite expression at the moment and lots of other things.

Sir Ian Carruthers: As the new strategic health authorities are established, we are making sure that each one has a senior chief information officer who will be accountable to the chief executive for taking it forward. We would expect that to be mirrored in more local organisations. So we do have that. Whether it is another Mr Granger remains to be seen, but we want someone to be accountable for that particular area.

Q98 Mr Curry: So we shall be able to see this handful of people. Are they going to be Mr Granger's disciples in the new strategic health authorities?

Sir Ian Carruthers: No, they are going to be accountable ---

Q99 Mr Curry: I do not wish to push the analogy too far Mr Granger.

Sir Ian Carruthers: There will be people who will be working to their chief executive to deliver this programme and this programme is important for the reasons of patient safety, improving resource use, better operational efficiency. I cannot imagine an NHS in the years to come where we are not going to maximise the benefits of using IT.

Q100 Mr Curry: What would happen if in just one of them though things were not ... They are bound to be different in their performances, are they not? We have seen in the PCTs how different the performances are and in the NHS trusts.

Sir Ian Carruthers: There are two things. If something goes wrong, it will go wrong in a particular implementation. One would expect that the strategic health authority would intervene in that. If we felt the programme was going wrong on too big a scale, we too would intervene.

Q101 Mr Curry: By what means would you intervene? Who is your fire brigade?

Sir Ian Carruthers: Through the performance management process. We would discuss with the strategic health authority chief executives, if it went wrong in a place, how we could support them, what we would need to do and that is what we would actually do.

Q102 Mr Curry: How long would that take? How long would it be between the perception that there was a problem and the identification of the fix?

Sir Ian Carruthers: We do monitor this regularly. At the moment it is on a quarterly basis, is it not?

Mr Jeavons: We actually monitor on a monthly basis already against performance targets.

Q103 Mr Curry: So you have a failsafe mechanism. Somewhere a red light goes on in your office.

Sir Ian Carruthers: Not in my office, but yes, a red light does go on.

Q104 Mr Curry: And he is immediately on nuclear alert, is that right.

Sir Ian Carruthers: I should not quite put it like that.

Q105 Mr Curry: It is important because I must emphasise that an awful lot is changing locally in the NHS at the moment, there is a great deal of turmoil, the financial problems are causing severe problems and of course they are causing disaffection amongst the GPs; there is no point pretending that is not the case. I think you were here before when we were talking about Paddington Green and what we discovered there was that, after having conceived the project, they then went and asked the users what they thought it ought to be doing and they said that it ought to be doing something slightly different. So when they reconfigured the project, they did not have any land for it. There is a bit of a history here of conceiving projects in abstract from the people who might have to use them. I am just anxious to make sure that this disaffection by what one might call the poor bloody infantry, which is how the GPs might see themselves, would be important.

Sir Ian Carruthers: Two things. First of all, it was not a discussion on Paddington Basin with me, it was with my colleague Hugh Taylor, but the point that you make is well made. In many local areas, and I can only speak for mine, what we do have are local implementation systems where in fact there are groups of managers, hospital clinicians and GPs who are working together with clinical advice and support to avoid some of those. Mr Jeavons can add to that and reassure you a bit more.

Mr Jeavons: It is important to recognise that that is the model that we are pursuing. A national programme backed by a national policy that is the responsibility locally to implement. Just to counter some of the suggestions there, just as some are struggling, others are seizing these opportunities and are taking them as part of moving their services forward very positively and the role of the centre is to do two things: one is to make sure that that which we know works is explained and understood by everybody; secondly, where we can offer national support, we do exactly that. Our job is not to go and do it all for people locally. It is that clarity about local accountability and the capability to do it which we really need to concentrate on.

Q106 Mr Curry: In Skipton there is a system called EMIS which is used by my GPs which they like and say it works very well and is better than anything else that is currently on offer. When I spoke to them a month ago, the only problem was that the PCT had not actually paid the licence fees for it, several months late, so that every time they switched on their computer, they got a big thing on the screen telling them that if the fees were not paid shortly, the whole thing would go bust. That sort of thing is what might well undermine their confidence in even more complex machines, is it not?

Mr Jeavons: It is very important that primary care trusts are clear about their responsibilities for supporting local information technology for general practitioners. As it happens, I am actually aware of some of the issues in that particular primary care trust and we have given them an absolutely clear statement about what the primary care trust's responsibilities are.

Q107 Mr Curry: In the past we have had discussions in which we have agreed that when one is trying to estimate the cost of things in an organisation as big as the NHS, it is quite difficult to have sufficient data to be able to come to proper costings. In the out-of-hours service we came across you had uprated the tariffs to pay for this. How confident are you that the up-rating, which is quite a precise sum, will actually pay for it and what danger is there that that will not go right? Again, quoting one of my Harrogate trusts, Harrogate Hospital was delivering services for less than the tariff, so it now gets paid more for doing the same. How confident are you that that figure is right, whatever it was?

Mr Jeavons: Those figures were based on data that were taken from typical hospitals for the costs of those implementation, so inevitably, as you would with a national tariff, they are average figures. The purpose of that was to ensure that through the tariff system, trusts that needed to take on the cost of implementation and new systems had the money channelled to them through the tariff. It was an addition to the cost up-lift and then it was of course netted down for productivity and so forth in the final tariff calculation.

Q108 Mr Curry: You mentioned the deadly word "average". Average is by definition something which nobody performs, is it not?

Mr Jeavons: But that is the definition of the tariff. It is a national tariff, so it has to be an average.

Q109 Mr Curry: Is there a danger that this tariff may not be sufficient for certain areas or trusts?

Mr Jeavons: We are talking about acute hospitals here because that is where the tariff applies. Acute hospitals will all be starting in slightly different places with their IT implementation. That is a fact and that is noted in the NAO report. Individual circumstances will differ. However, over a period of time, they will all need to invest in information technology, if nothing else to see the rise in expenditure that we expect through Wanless and this programme, so we have to direct money to trusts. The way to direct it now is through the tariff, the tariff is a national calculation.

Q110 Mr Curry: So you are confident that if there is a problem, let us say in North Yorkshire, they will not say "My gosh, we are going to have to find some extra money, so we shall close the remaining beds in the community hospitals". You can give me the assurance that funding this will never cut into other services.

Mr Jeavons: We are absolutely clear that the evidence that was laid out in the business cases gives you a very clear direction in terms of pursuing benefits of these investments. Individual organisations put their own business case together for investing in this technology and it is that business case they sign off and they should sign it off on the basis that it will deliver the benefits and will allow them to meet their other responsibilities. That is the model.

Q111 Mr Curry: But if it did not, they would have to find the money from somewhere else.

Mr Jeavons: They take the decisions to do it and then they live with that.

Sir Ian Carruthers: The underlying point which you are after is the cause of problems or deficits. The Audit Commission have recently produced a report on the financial management of the NHS and in that they say two things: one is that there is no single reason in any organisation why the deficits occur because it is a multiplicity of things and the real point is that although they get average prices, people manage them differently. It is a test as much of local management, of financial position as it is of the allocations. The second thing is that it lists in paragraph 8 of that report a number of things that may have contributed, whilst saying that there is no single cause and Connecting for Health is not listed in that list because they do not believe that it is the cause of any of the financial problems in the NHS at the present time.

Q112 Kitty Ussher: A lot of the questions I had have already been asked, so I just want to ask two additional ones. The first concerns Choose and Book. I had a little delegation of GPs come to see me on Friday in my constituency of Burnley in Lancashire and they were actually coming to discuss some rather worrying proposals locally to change the A&E configuration, which I will not trouble you with at this point, although I am happy to come back to you later. In the course of the conversation they said, and I wrote it down "Choose and Book, why does it not work?". They had an example. They are in their GP surgery and then various options come up on the screen, all of which seem quite far away. They try to choose one of them and either the technology fails or there have been situations where they have then rung the local hospital and said "Why do you not have any places available for this outpatient appointment" and they said "But we do, we have loads". Why does it not work?

Dr Mark Davies: Speaking as a GP who uses Choose and Book on a daily basis when I am not working for Connecting for Health, I am telling you that it certainly does work. In fact in the last working week, almost 20% of the referrals that were from GPs to consultants went through Choose and Book, which is evidence of that. It is interesting. There are two groups of people who talk about Choose and Book who are using it: those who are using it every day, whose patients love it and have a positive experience of it; those perhaps who have had one or two goes who are really struggling. It is undoubtedly the case that there are some GPs who have had a go and, for whatever reason, have not had a good experience of it. Often the reason they have not had a good experience is down to the local implementation issues that we were just discussing, for example how a local workstation might be configured or indeed the availability of slots of appointments at a hospital. It is certainly not the case that it does not work.

Q113 Kitty Ussher: That has not quite answered the question. Could you explain specifically what has gone wrong, when on the screen it says there are no appointments available, but if you pick up the phone to speak to the hospital, they say there are lots of appointments available?

Mr Granger: That is very simple. The patient administration system in the hospital they are trying to book into is not up to date. It would be very, very similar and you might have seen only today EasyJet finally announcing they are going to offer something about 1% as complicated as Choose and Book and you will be able to book all slots on-line. You have had a situation where an airline has been trading as an internet airline that has not had most of its inventory available on the internet. We have NHS trusts that have been putting up appointment availability which has not been updated.

Q114 Kitty Ussher: So East Lancashire Hospital Trust, which owns and manages my hospital in my constituency simply does not have their software in place and has not sorted it out.

Mr Granger: And they are due for their system to be replaced in October of this year.

Q115 Kitty Ussher: That is an extremely useful clarification. I shall feed that back to the GPs. My other question was about the procurement process generally. We have seen quite a lot of these processes in front of this Committee, as you probably gathered, and I am intrigued by how successful on paper the process appears to have been compared to the traps that various government departments have fallen into in the past. The NAO says, for example, that you have managed to get the lowest prices in the world for Microsoft products. My understanding seems to be that you have managed to push all the risk onto the supplier companies to protect the taxpayer and obviously this Committee will be delighted by that. Could you say perhaps what are the key elements that have been learned from problems in the past and can we spread these out across the Whitehall machine? Where is it working?

Sir Ian Carruthers: There are some in the back of the document, but I shall ask Mr Granger to comment because he led most of this.

Q116 Kitty Ussher: What was it that made it work? What was new?

Mr Granger: We put a team together, not without difficulty, at the same time as starting the procurement process. We got work packages, the LSP contracts, each around 1 billion, of sufficient magnitude to attract high quality, large suppliers to bid and the NHS had not had that supplier base for the preceding decade. We were very clear and before we put the procurement advertisements in we published a procurement strategy which we have endeavoured to adhere to. We were transparent about the nature of the terms and conditions and in fact the terms and conditions owe their provenance to contracts I put in place for congestion charging. Clearly, for those of us who use the roads in London, you can see that they worked. Capita did deliver to schedule. We undertook financial analysis as to the capacity of the suppliers and their delivery capacity. Some things have gone wrong. We also undertook a prima facie evaluation of their ability to work together and to get different components to work together as part of a technical design study. As much as possible we tried to stick to a timetable, recognising that some other public sector procurements take 27 months; the NAO referred to standard PFI transactions. That is generous for some large-scale IT procurements and that carries significant risks around technology obsolescence, cost over-run and the taxpayer ends up paying for that process through inflated costs because the suppliers have to recover the costs somehow. We have been very clear about what we wanted to buy, very clear about the basis we wanted to buy it on and very clear about the consequences of delivery or non-delivery. I tried to apply some of the principles that you would want if you were buying consumer goods to the more complex world of IT procurement.

Q117 Kitty Ussher: Am I right in thinking therefore that the risk is in the timescale rather than the costs? Is that right?

Mr Granger: Yes. Because we have transferred finance and completion risk for the most part to the suppliers, the primary risk that we continue to bear is a timescale risk.

Q118 Kitty Ussher: Is that built into your deadline for the completion of the roll-out of the entire project? Are you on track still?

Mr Granger: We are on track for the deadline of the programme. Nothing is ever totally certain, but if you look at the rate of progress we are achieving now in terms of volumes of users picking up every week, we shall be in a place where, for most of the MPs here, at least two thirds of your constituents now have access to a number of NHS services which are dependent on things that my organisation delivers. We shall move to 100% position on that over the next 12 months. Already the NHS cannot function without the things we have delivered: passing messages, pathology results, e-mail, a number of GP systems and, as Dr Davies said, 20% of appointments now into secondary care. There is a large volume of core NHS services now being delivered by electronic means under these contracts.

Q119 Kitty Ussher: In terms of spreading best practice on procurement, how will that be done across Whitehall? Are you working with the OGC and Gershon processes?

Mr Granger: We made available to the OGC, when they were producing new guidance to replace the Treasury task force on standard terms and conditions for PFI contracts, all our contracts and indeed some of the lawyers we had worked with participated in that and our head of procurement participated as well. They took on board our terms and conditions and negotiation approaches, some of which are set out in this report, and have made those available to other departments.

Q120 Dr Pugh: Can we test this hypothesis that robust procurement saves the day? May I start with the big numbers first? In the NAO report it said that 6.8 billion was saved from the initial bids and 4.5 billion through central procurement. These are very big figures and I cannot help speculating on how you arrive at them. Do you simply take up the gross bids and add them all up and put them down as savings or does a more subtle process take place?

Mr Granger: Those numbers are not my numbers; those numbers are numbers which owe their provenance to Ovum, who are respected independent industry analysts who looked at the cost of comparable systems when procured on a trust-by-trust basis.

Q121 Dr Pugh: You did say before that as part of the procurement process you looked at the delivery capacity of whatever suppliers came forward. EDS were replaced eventually by Cable and Wireless on NHSMail. Why was that? What happened there? What were they paid for their efforts?

Mr Granger: I am afraid I do not have the exact figure with me that they were paid to termination of the contract. I shall let you have a note on that. The reason the contract with EDS was terminated was because, in our opinion, the service which was being delivered was not sufficiently reliable and the new functionality we required was significantly delayed.

Q122 Dr Pugh: So they did not have the delivery capacity.

Mr Granger: I did not let the contract with EDS. The contract with EDS was let by the organisation of which Dr Nowlan was a director.

Q123 Dr Pugh: One way of reducing procurement costs is obviously to shift some of the cost to the local NHS. The figure for additional income is 3.4 billion but presumably this excludes what they would normally spend on IT prior to that. I understand there are savings in the process for introducing the new schemes and so on, but that is not all they are going to spend on IT, is it, by any stretch of the imagination?

Mr Granger: That is correct. From our business cases it looks as though that number might be a bit high as we get into large-scale deployment. That number was the total estimated cost three years ago in the Treasury business cases around what it would cost the NHS to take on board these systems, not their net cost, and it looks as though the actual cost is going to be significantly lower.

Q124 Dr Pugh: Significantly lower?

Mr Granger: Yes.

Q125 Dr Pugh: One feature which has been commented on is that some of the contracts appear to be let on the basis that the NHS trusts themselves, willingly or not, will provide IT specialism. Is that the case?

Mr Granger: It is the case that it is good practice, as set out in many reports from this Committee and indeed significant commentary this afternoon, that significant user involvement is key to the successful delivery of IT programmes. The strategic health authority is committed to provide a number of clinicians primarily rather than IT staff.

Q126 Dr Pugh: You said earlier - I heard the very words - that there is a known shortage of capacity in NHS IT. Against that background was it wise to construct contracts like that?

Mr Granger: I am sorry but I was talking about suppliers' capacity. There is a shortage of supplier capacity, which is why capacity has come from other jurisdictions.

Q127 Dr Pugh: You had no doubts about the trusts' capacity.

Mr Granger: We left the trusts' capacity in tact, rather than having an outsourcing arrangement under TUPE and effectively asset-stripping the trusts out to the supplier communities. We did not repeat a mistake which has been made with some traditional outsourcing arrangements. We recognised that it was essential to have sufficient end-user input to the design and deployment as well. We undertook obligations to make that available as a fair bargain.

Q128 Dr Pugh: The delays have to some extent cost the trusts money, have they not, because some of them have had to go ahead with renewing their own patient administration systems and so on, as well as making them compliant with the spine? Can you quantify the cost of that or have you been able to quantify the cost of that?

Mr Granger: A number of trusts have had to extend their existing systems and they do therefore have cost. When the new systems come in, after the implementation of them, they do not have to pay for that system any more. I do not have an exact number, but in many cases we are providing financial support to trusts for upgrading their existing systems and indeed some of the 80 million support around Choose and Book implementation is to upgrade their existing systems.

Q129 Dr Pugh: I understand that some of the GPs are very fond of their own kit and software and that you tried to make the system more compliant with that. There is going to be a significant write-off cost, is there not, for stuff which is not spine-compliant at the end of the day? Have you quantified that?

Mr Granger: Most of it is life expired. If you look at its position on balance sheets it is either leased or life expired. One of the difficulties we have is that a trust such as the Nuffield, which has been the source of much inquiry, had only one month left in which the hospital could operate with its existing system. The same was true 30 miles up the road with an installation you may not have heard of, University Hospital Birmingham, where there were one to two months of life left in the hardware they were using before the hospital would start to run into problems operating; obviously a much larger hospital in Birmingham than the Nuffield. There is limited investment in the existing installations and in many cases - in fact around 50 cases in terms of application software - their systems have been tested to be partially upgraded and become spine-compliant. We are making best use of existing investment wherever we can as well.

Q130 Dr Pugh: So you have a fairly shrewd idea of the additional hardware costs for most trusts.

Mr Granger: I do not know exactly what each trust is spending on additional hardware because that cost is an ongoing expenditure and they are standard arrangements. Where we have gone through full-scale upgrades we now have those numbers and can supply them to you.

Q131 Dr Pugh: One thing the NAO say about you is that you exerted downward pressure on sub-contractors which are used by many suppliers, Microsoft was just mentioned and in fact is mentioned in the NAO report. I know you have met Mr Gates and Mr Baumer. How much does the NHS now spend on Microsoft licences?

Mr Granger: I think you will find the number accurately reflected in this report. From memory, I think it is something of the order of 50 million a year.

Q132 Dr Pugh: I think it is 53 million in 2003.

Mr Granger: I guarantee we have been spending less per licence than anybody else on the planet.

Q133 Dr Pugh: Is that figure likely to remain somewhat similar.

Mr Granger: Yes, it is. It is important to note that we have a three-year mark and a six-year mark and the opportunity to step out of that contract if we want to move to open source software if that became mature and more cost effective.

Q134 Dr Pugh: You do not accept kit, software, hardware or anything unless it is working and somebody has to decide that it is working. Who makes the decision? I certainly do know general practitioners who feel that is satisfactory. I know others who feel it is not. How is the general verdict arrived at that a piece of equipment, a piece of software is working and now has to be paid for?

Mr Granger: We have a very clear acceptance process. It is agreed with the suppliers during the contracting phase that they sign up to that it goes through this acceptance process. In most cases they are paid, once it has been used, generally 45 days after commencement by users. It has to be in use and accepted by the end-users as well as going through a technical acceptance process.

Q135 Dr Pugh: May I ask you about an article in the Evening Standard which suggested that you had said to suppliers that if they complained about the system they would be struck off the bidding list, that you had implied as much. You have not done that presumably.

Mr Granger: Not at all. I think you will find more reliable evidence than the Evening Standard.

Q136 Dr Pugh: I am just giving you the opportunity to put it on the record.

Mr Granger: We ran a procurement process which the NAO refer to as bringing the high standards of Civil Service procurements in terms of the probity of the process and we applied those standards. Our suppliers are in many cases somewhat reticent to discuss things but the reticence is for the most part theirs rather than mine.

Q137 Dr Pugh: You recruited some medical advisers at some point by advertisement to advise you on the project. Did you make them sign a confidentiality agreement and if so why?

Mr Granger: The people working on the programme have signed arrangements which are similar to those signed by civil servants. For the most part they are being paid for out of funds which flowed through the Department of Health so I see no reason not to do that. We also caused a degree of consternation in our arrangements under those job advertisements that people declared their conflicts of interest. That was quite a quaint and novel arrangement which caused consternation amongst a number of the specialist IT interest groups.

Q138 Mr Bacon: May I start by asking how much the Treasury has now agreed to pay towards the national programme? How much has been irrevocably committed in terms of funding?

Ms Diggle: I have to turn to the NHS and ask Sir Ian for that.

Q139 Mr Bacon: It is the Treasury which is supplying the money, is it not?

Ms Diggle: As part of the overall settlement to the NHS, yes.

Q140 Mr Bacon: How much has been committed irrevocably to the programme so far?

Mr Granger: I do not have that exact figure right now.

Q141 Mr Bacon: You do not know? You do not know? We have been told that this programme is going to cost 2.3 billion, we have been told it is going to cost 6.2 billion, we have been told it is going to cost 6.8 billion and we have been told it is going to cost 12.4 billion or 12.6 billion. Lord Warner the minister said only three weeks ago on 30 May that it was going to cost 20 billion and you still cannot tell this Committee how much has actually been committed to it.

Mr Granger: We have under-spent by approximately 700 million.

Q142 Mr Bacon: That was not my question. My question was not: how much have you spent? My question was: how much have you committed? How much is there in terms of secure funding?

Mr Granger: I am sorry. I now understand the question. You have said it would cost 30 billion; we want to add another number.

Q143 Mr Bacon: If you would concentrate on answering my question rather than saying what I have said, that would be very helpful because we do have a limited amount of time. What I am interested in is how much secure funding there is.

Mr Granger: The committed expenditure for the programme is just over 12 billion as set out in the NAO's report.

Q144 Mr Bacon: So as far as you are concerned the Treasury has committed to that 12 billion.

Mr Granger: Some of that money is committed through contracts - approximately 9 billion - and the balance is committed through core NHS funding.

Q145 Mr Bacon: How much has actually been spent so far?

Mr Granger: Approximately 1.5 billion.

Q146 Mr Bacon: What is the difference between the 654 million which is referred to in paragraph 1.22 and the 1.5 billion you have just mentioned?

Mr Granger: Some of that is central administration cost, some of that is forward payments to contractors covered by an instrument I am sure you are familiar with, letters of credit from their banks and so on.

Q147 Mr Bacon: Is it possible you could send us a breakdown of that 1.5 billion with its major headlines, so to speak?

Mr Granger: I should be delighted to do that.

Q148 Mr Bacon: Particularly of the difference between the 654 million referred to in the report and the 1.5 billion you have just mentioned. That would be very helpful. Sir John is it fair to say that you regard one of the central strengths of the whole contracting process as the fact that there is no payment unless there is delivery, so there is no advance payment; it is really payment by results, to coin a phrase? Is it fair to say that you regard that as a main strength?

Sir John Bourn: Yes, that is fair. Payment should be by results achieved.

Q149 Mr Bacon: Mr Granger you would presumably basically agree with that.

Mr Granger: Yes.

Q150 Mr Bacon: So you would not make advance payments.

Mr Granger: There is a difference between an advance payment which is covered by a letter of credit.

Q151 Mr Bacon: Do you mean a letter of credit from a bank?

Mr Granger: Correct.

Q152 Mr Bacon: So you would not make any payments other than those covered by a bank so you were guaranteed by a commercial bank that the money would come back to you?

Mr Granger: Correct.

Q153 Mr Bacon: Mr Shapcott, you mentioned at the press conference the week before last when the report was published that you had seen a cost benefit analysis of each part of the programme which analysed all the different aspects and that there was a gap between the identifiable costs and the identifiable benefits. I am not sure whether it was done by you, but it was probably done by the Treasury. How big was that gap?

Mr Shapcott: Yes, investment appraisals were carried out for all the big contracts produced by the Department of Health for the Treasury.

Q154 Mr Bacon: How big was the gap?

Mr Shapcott: I do not have the exact figures here.

Q155 Mr Bacon: How big was the gap?

Mr Shapcott: Certainly substantial.

Q156 Mr Bacon: How much: 10 million, 100 million, more than 1 billion, 2 billion? It was the Treasury's analysis was it not?

Mr Shapcott: They are the Department's papers.

Q157 Mr Bacon: Sir Ian, what was the gap?

Sir Ian Carruthers: May I ask Mr Jeavons?

Q158 Mr Bacon: Nobody seems to know the answer to this question. You are doing a project of the scale described in paragraph 1.8 "The scope, vision, scale and complexity of the Programme is wider and more extensive than any ongoing or planned healthcare IT development programme in the world" and it goes on "... the programme is developing a system not being attempted elsewhere on this scale" and you are telling me that nobody, not Mr Shapcott, nobody, not you Sir Ian, not you Mr Jeavons, appears to have at his fingertips a figure of the cost benefit analysis.

Mr Jeavons: I was just going to try to give you some numbers, if that is okay?

Q159 Mr Bacon: Please.

Mr Jeavons: On the PACS contract the costs are 1.3 billion for the total cost of the contract. The cash releasing benefits which are identified in the business case are 682 million. So the difference is what are called non-cash-releasing benefits and those are the ones where you need both to measure and then place a value on those in order to demonstrate overall value for money.

Q160 Mr Bacon: What about the other main parts of the programme? PACS is the picture archiving, is it not?

Mr Jeavons: Yes, the picture archiving.

Q161 Mr Bacon: When did that become part of the national programme? Was it at the outset?

Mr Jeavons: It was always identified in the strategy.

Q162 Mr Bacon: Was it always part of the national programme from the outset?

Mr Granger: Yes.

Mr Jeavons: Yes, it was set out in Delivering 21st Century IT Support to the NHS.

Q163 Mr Bacon: It was set out in that, was it?

Mr Jeavons: It was indeed.

Mr Granger: You will find it at appendix four.

Q164 Mr Bacon: What was the risk score in Delivering 21st Century IT Support to the NHS for this programme? Perhaps you know the answer to that Sir Ian. You do not?

Mr Granger: It is high.

Q165 Mr Bacon: What was it?

Mr Granger: I do not remember the exact number, but it was high.

Q166 Mr Bacon: It was high?

Mr Granger: Yes.

Q167 Mr Bacon: As it happens I have a copy of Delivering 21st Century IT Support to the NHS here. It says that the Office of Government Commerce has introduced a system of gateway reviews for major public sector projects. You will be familiar with this. It says that the first step is for the senior responsible owner to use the project profile model to determine the overall level of risk for a given project, that an assessment of the strategic programme against the PMDU project guidance for ensuring successful delivery has been undertaken. By the way, while we are on the subject of senior responsible owners, I take it Sir Ian that you are now a senior responsible owner with Mr Granger. Is that right?

Sir Ian Carruthers: Yes, for the moment.

Q168 Mr Bacon: How many senior responsible owners have there been altogether?

Sir Ian Carruthers: First of all, as the report says, we started off with one, Sir John Pattison. Then there was a change where Mr Granger took on the senior responsibility when Sir John retired.

Q169 Mr Bacon: That is two.

Sir Ian Carruthers: He was the senior responsible owner for the programme and at that time there was an appointment of senior responsible owner accountable to the Chief Medical Officer.

Q170 Mr Bacon: That was Aidan Halligan. That is three.

Sir Ian Carruthers: Then we moved on and Dr Halligan left and Mr Burns ---

Q171 Mr Bacon: How long was Dr Halligan there?

Sir Ian Carruthers: I think it says in the report. I think it was about a year.

Q172 Mr Bacon: We shall look that up later. I think it was about six months. The fourth one was ...?

Sir Ian Carruthers: Then the chief executive of Trent Strategic Health Authority, Alan Burns came to do that.

Q173 Mr Bacon: Then there was Mr John Bacon - no relation. Was he senior responsible owner? He told me he was at the last hearing.

Sir Ian Carruthers: No, he was to do the benefits realisation. John Bacon, then - I am just looking up the date now ---

Q174 Mr Bacon: And then yourself, so there were actually six altogether, six senior responsible owners.

Sir Ian Carruthers: Absolutely.

Q175 Mr Bacon: In how many years?

Sir Ian Carruthers: I think the report says since 2004.

Q176 Mr Bacon: Could somebody explain to me why, in the copy I have here of Delivering 21st Century IT Support to the NHS, the project profile in appendix three has been removed? There are two versions: one with appendix three and one without. The one with says that the score is 53. Why was appendix three with the actual project profile model in it removed from Delivering 21st Century IT Support to the NHS?

Sir Ian Carruthers: We shall do a note.

Q177 Mr Bacon: Do not worry. I shall give them both to the Clerk and then he can use them as evidence. I need to move on. Professor Hutton, I know that you have had some concerns about this, as has Dr Nowlan. You already said that you were concerned whether the programme was or was not on schedule to deliver the core objectives. Dr Nowlan, do you have a similar concern?

Dr Nowlan: Absolutely.

Q178 Mr Bacon: What are the consequences for the NHS, for example for Patient Pathways, if the programme is not delivered on schedule?

Dr Nowlan: The way all modern healthcare is going, certainly in the NHS, is moving away from packing people into buildings to do things, to caring for them in many settings; care is a lot more complex. The thing that will hold that together safely and effectively is information. Without certain key pieces it is going to be extremely difficult to practice that healthcare and that is why there is such huge support from the clinical leadership for at least four principles of the health record.

Q179 Mr Bacon: So you would not describe yourself as a Neanderthal in terms of electronic patient records.

Dr Nowlan: I have made it my career for the best part of the last 20 years.

Q180 Mr Bacon: If you could make this work, you would be in favour of it.

Dr Nowlan: Absolutely; it is the single most important thing to do in healthcare.

Q181 Mr Bacon: May I ask you to turn to page 31? There is a reference here in paragraph 2.12 to these 400 clinicians. You wrote to the Committee about this and said you were asked to find hundreds of clinicians. What exactly did you mean by this?

Dr Nowlan: In preparing for various reviews I was told that they required lots of names of clinicians who had been consulted or involved. I said I did not think that was appropriate.

Q182 Mr Bacon: In your letter you put "hundreds".

Dr Nowlan: Yes, hundreds.

Q183 Mr Bacon: You put "hundreds" in inverted commas.

Dr Nowlan: Yes; "lots", "hundreds".

Q184 Mr Bacon: It was just "Go and find some clinicians".

Dr Nowlan: Yes. I just felt it was not at all a fair representation of the actual situation in the few months that work had been done. Besides which, just having given people a document and got some view is not a satisfactory test of the feasibility of doing this.

Q185 Mr Bacon: Were people on that list people who had signed up to the output-based specification?

Dr Nowlan: I did not take part in producing any list of names for the output-based specification. I know that subsequently Professor Hutton managed to secure some names. The evidence was not there. The main work that was done with the leadership specifically on that common national part of the record, which then became confusingly referred to as the spine; that was the piece that the main work was done about.

Q186 Mr Bacon: If the clinicians were not really controlling the creation of the specification for the healthcare record, who was?

Dr Nowlan: A design authority was established.

Q187 Mr Bacon: Was this within the NPfIT?

Dr Nowlan: Yes; at the end of 2002.

Q188 Mr Bacon: What experience did the design authority have of healthcare?

Dr Nowlan: In terms of the people who took charge of it, none to speak of.

Q189 Mr Bacon: None? No experience of healthcare at all?

Dr Nowlan: No, not that I can recall. We worked within that team to produce the specification but it was done at breakneck speed and largely by putting together information from a whole raft of previous specifications and then it had to be reduced. I must say it was not exactly the ideal process to commit this sort of resource.

Q190 Mr Bacon: Is it not right that the output-based specification is the thing which drives inside the contract what people get paid basically?

Dr Nowlan: Yes.

Q191 Mr Bacon: In paragraph 2.13 it says "... there was no recorded link between the detailed item in the OBS and the source of the person or group making the contribution. NHS Connecting for Health replied that these links were not directly attributable, given that much of the OBS was developed in workshops involving a cross section of stakeholders and NHS Connecting for Health had not had the resources to record the attributions individually". Of course there was 900 million on top of the 654 million, but plainly not enough resources to do that. I should have thought, would you not, that if you are going to be spending all this money on the world's largest IT programme, having a good audit trail for where you had done your consultation would be paramount, would it not?

Dr Nowlan: It is certainly paramount if things go wrong. It is even more important for getting it right and moving it forward, yes.

Q192 Mr Bacon: Mr Granger may I ask you a question about your contract? Are you incentivised in your contract by the speed with which the procurement took place?

Mr Granger: Are we talking about my personal contract?

Q193 Mr Bacon: Yes, your contract of employment. Are there financial incentives for you relating to the speed of the contracting process or were there for you at the time you were doing the contracting? Everyone commented on the incredible speed with which the contracts were let.

Mr Granger: I am sorry; what a strange question. Are you imputing my motives for driving the programme on time to my personal remuneration?

Q194 Mr Bacon: No, I am asking you a question which admits of a clear answer; there either were or were not.

Mr Granger: My remuneration has absolutely no incentives associated with having concluded the procurement process within a given period of time.

Q195 Mr Bacon: Thank you.

Mr Granger: Dr Nowlan's statement that there were no clinicians involved in the OBS is a slur on the character of three whose names I have here, who were his colleagues: Mike Bainbridge, Steve Bentley and Ian Arrowsmith, who have actually managed to stay the pace and continue to work in a difficult programme environment.

Q196 Mr Bacon: In addition to the PAS timetables which you very kindly sent me, could you send me also the original schedules, this is inside the LSP contract schedules, for what CRS modules would be deployed where and by when? Can you do that? In other words, the original target dates which are contained in the LSP contracts.

Mr Granger: If the LSPs are content for that. If they are not, I shall contact you and the power of this Committee will be used to get them.

Q197 Mr Bacon: Professor Hutton, did you want to come back in?

Professor Hutton: A couple of things. On a point of accuracy, PACS was not part of the original specification.

Mr Bacon: I did not think it was.

Q198 Mr Williams: On page 29 we are told that from the outset this project went ahead with day-to-day oversight provided by ministers. What did that consist of? What did day-to-day oversight mean and who was calling the shots?

Mr Granger: In general ministers had regular meetings with key members of the leadership of the programme and other interested parties every two weeks, four weeks or so, initially with Lord Hunt of Kings Heath and then with John Hutton and then with Lord Warner.

Q199 Mr Williams: Was it all harmonious and free of confrontation? No-one was talking about seeking directions or anything like that.

Mr Granger: Not in meetings I have attended.

Q200 Mr Williams: I asked that because the leadership seemed to be rather spasmodic in terms of continuity. If you look at page 44, paragraph 4.6 says that at the inception the director of research was the senior responsible owner. "In March 2004 he gave up this role" and you end up with two senior responsible owners with a further senior responsible owner responsible for individual contracts. Then further down we have another four sub-paragraphs of changes, all of which took place in a very short time at the leadership level of this project. Why on earth was so much mobility and lack of continuity permitted?

Sir Ian Carruthers: First of all, there was continuity through Mr Granger and his team on the procurement; that was there. You are well aware of the changes which have taken place in the Department of Health over time.

Q201 Mr Williams: What changes are you referring to?

Sir Ian Carruthers: Sir Nigel Crisp has retired, John Bacon has also retired.

Q202 Mr Williams: Sir Nigel retired relatively recently.

Sir Ian Carruthers: Yes. Changes were made for reasons ---

Q203 Mr Williams: Who at official level was in charge?

Sir Ian Carruthers: At official level obviously the chief executive of the NHS was in charge. That function, as it says in the report, was discharged at varying times by the deputy chief medical officer and the chief executive of Trent who was brought in as a director of service implementation. Then Sir Nigel's assistant, John Bacon, who was director of health and social care delivery. Those were the people in charge at that time and since 7 April I am.

Q204 Mr Williams: This Committee has had a whole series of reports to look at where things have gone wrong. We do understand things going wrong; we do not expect infallibility. I regard what you are trying to achieve as eminently desirable. Let us start from that proposition. You had had RISP, the regional scheme which wasted millions of pounds and then did not deliver. Then you had HISP, which was the next major venture into IT. You are not exactly unfamiliar with these matters and indeed it says in the report that a key lesson for many unsuccessful IT projects is that success requires engagement of NHS managers and clinicians in order to win their support for the overall vision and purpose. In fact, what we have emphasised has been the need to involve the users from the very outset in developing the vision. Do you feel that is what you have done?

Sir Ian Carruthers: I should like to say three things.

Q205 Mr Williams: No, I just asked whether you think that is what you have done.

Sir Ian Carruthers: We have engaged clinicians but, as the report says, there is very much more to do.

Q206 Mr Williams: But it is a bit late for there to be "very much more to do", because the "very much more to do" was to be done before you placed the contracts, that is if you had learned the lesson.

Sir Ian Carruthers: No, that needs to be dealt with in the implementation phase.

Q207 Mr Williams: No, no, no.

Sir Ian Carruthers: There was engagement with clinicians in doing the specification.

Q208 Mr Williams: The specification has to be drawn up very closely and with very intense input from potential users.

Sir Ian Carruthers: Yes, but the report says that users were involved.

Q209 Mr Williams: It does not say they were used intensively or to what extent.

Mr Jeavons: If I may, I think I can help here. There was clinical involvement in the original specification but the specification was for a ten-year programme. It is utterly and totally realistic that, as the programme proceeds, clinicians and other users get involved in much more detail. Let me give you one example, e-prescribing, which is one of the most important facets of the care record service because it is directly related to the reduction in medication errors and adverse events, 470 clinicians have been involved in workshops over the last month looking in detail at the national requirement to support e-prescribing across the programme so that could be fed into design with our suppliers and produce a coherent system. It is not a one-off, one-stop shop.

Q210 Mr Williams: I seem to remember that in fact clinicians were confronted with a very large number of very detailed documents and were given about two weeks to try to absorb them. Professor Hutton or Dr Nowlan can clarify this. What really happened?

Professor Hutton: I should like to comment on the e-prescribing. The e-prescribing was a great point of contention because in the original contracts it had been put back to 2008, as I recall, and it has actually been brought forward. That is an example of the fact that the contracts did not actually meet the clinical need. I do repeat what I said earlier, that the core of this programme is the NHS care record. Other things are very helpful, but it is the care record which matters. That is the picture we have on here: e-learning and the map of medicine are add-ons. The thing which will actually enable this White Paper to take care back to the community is the NHS care record and that has not moved forward.

Q211 Mr Williams: Is the spine the essence of it?

Professor Hutton: The spine does two things: it moves messages across and that is developing well. The spine is also used as a phrase for a repository of knowledge about individual patients. That particular function, as far as I know but I may be wrong, has not moved forward at all. The specification for that, as to what should go on that record and the criteria for that, was that the information put on that record is that which is required when a healthcare worker sees a patient with a new complaint or at follow-up or after referral from another healthcare worker and what information they then need to pass onto the next person who will see them. That was the novel concept of the spine. It was not developed until after ---

Q212 Mr Williams: Leave it there for the moment because I am limited on time. I want to come to Dr Nowlan and what he has said. I have here a copy of the document you provided. You say "At a meeting of the Ministerial Taskforce in December 2002 several members of the Clinical Care Advisory Group were asked to develop proposals for what they considered the most important health care needs to address". You then go on at the end of that paragraph to say "The principles of the proposal were accepted in March 2003 by a meeting of the CCAG, on the understanding of continuing close involvement in the development of the proposals".

Dr Nowlan: Yes.

Q213 Mr Williams: How important was that commitment which was required that they should have ongoing involvement?

Dr Nowlan: It was essential. They all recognised the enormous value if we could do this particular piece of it, but that to carry it through would be challenging and to implement it in particular would need full support.

Q214 Mr Williams: So it was essential.

Dr Nowlan: It was vital.

Q215 Mr Williams: Vital, essential, critical, you cannot emphasise it too strongly. But, according to your submission - and obviously I shall give you a chance to come back on this in a moment - "Subsequent incorporation of this work into contracts was ... done without further involvement of the CCAG". So it ended up forming only a relatively small part of the overall specification, yet on the basis of that contracts were placed. Is that what you are saying happened?

Dr Nowlan: Yes.

Q216 Mr Williams: That sounds unbelievable, does it not? Would you like to clarify that Sir Ian? Is that wrong?

Sir Ian Carruthers: We would not entirely agree with that.

Q217 Mr Williams: "Not entirely" but you do agree with some of it.

Sir Ian Carruthers: Dr Braunold is going to give a different version of what occurred and Mr Granger.

Mr Granger: I have to say that when we supply you with the notes, one of the notes you will get is a request from me to Dr Nowlan on three occasions that he supply a structure to the clinicians that he was working with. It is lamentable that his expertise ceased to be available when he left the IA in December 2003, but his recollection of events is somewhat different from that of the people who have been working on the programme for the past four years and of Sir Muir Gray, who tells me that over 6,000 clinicians have been involved in a programme called Do Once and Share.

Dr Gillian Braunold: In particular the bit I really need to clarify is the fact that the content of the shared care record on the spine has moved forward a great deal. We have been building a consensus on papers which have been published on the CRDB website since last summer. We have had more than 100 unique responses to our consensus-building document, we have been through three iterations of that document and we are now in a position to pilot with the approval of the colleges and the BMA in slow incremental ways so that we can learn the lessons of implementation and test those very access controls and the legitimate relationships that people are concerned about, to make sure that the information governance structures are secure. We are ready to pilot that at the end of this year and that is against specifications which have been agreed in consensus building with clinicians. It is not true to say that we have not moved at all.

Q218 Mr Williams: I have had rather long answers, but it is only fair to allow them to answer fully. Comptroller and Auditor General you, even more than we, are aware of the importance of the involvement of the user early on. I believe the information Dr Nowlan has given us was also made available to the National Audit Office and Professor Sutton. From the examinations you carried out did you feel, given the scale of this and the nature of the contracts, the complexity of the contracts, that there had been adequate time and scope, width of consultation before they entered into the contract-seeking stage?

Sir John Bourn: What I feel about the programme as a whole is that the approach from the top down had not admitted the full degree of consultation with all the members of the National Health Service who will have to operate it, as the general practitioner herself said and as Sir Ian and colleagues have said. There was more that could usefully have been done and the report has drawn attention to that.

Q219 Mr Williams: We are talking about systems, part of which are two and a half years late, which are dependent upon detail and yet you are saying that there had not been adequate consultation before the contracts relating to this work were placed.

Sir John Bourn: I put it in relation to the development of the system as a whole, for which the contract is an important and necessary aspect. Overall you have a system which is, as we know, the biggest system in the world.

Q220 Mr Williams: It is not working, mind. It is going to be the biggest system in the world if it works and when it works.

Sir John Bourn: It is going to be the biggest system in the world and the design of that system is complicated. It is a system which has to have regard to the thousands of people who will be engaged in working it. Perhaps inevitably there was not a full engagement of both sides.

Q221 Mr Williams: Does the complexity not mean that it was absolutely imperative that there was the fullest possible involvement of users before the contracts were placed in view of the scale of those contracts?

Sir John Bourn: The fullest possible given all the exigencies of the situation in which the programme was sought to be introduced.

Q222 Mr Williams: I appreciate that. What you have had to say is very important; it is also somewhat damning.

Mr Granger: Out in the real world, in the hospital where Professor Hutton works six sessions a week there is a new system with significant clinical functionality as well. One could differentiate between some aspects of the programme where consultation has been ongoing, the summary clinical record, and a significant number of systems which have been implemented.

Q223 Mr Williams: But as Kitty demonstrated and we know from other evidence, it is not working where it is needed. It is not delivering what it is supposed to be delivering even at this stage and it is several years behind meeting targets you set it.

Sir Ian Carruthers: We should be clear about what is not working. I said at the very beginning ---

Q224 Mr Williams: Be sure to tell us what is.

Sir Ian Carruthers: Some PACS systems have been introduced.

Q225 Mr Williams: Some?

Sir Ian Carruthers: Yes, because it is part of a rolling programme. There are something like 10,000 applications - 9,600 is the actual figure in this report. We have a spine which is handling personal demographics and so on which GPs are using every day. The NHS sees delivery. The thing which is behind is the care record and that is behind for two reasons: one is because suppliers felt it would be appropriate, because of the delivery of products and the difficulties with that; secondly, because clinicians said they wanted to pilot it first, which is another way of handling the clinical involvement in a much more dramatic way. So I should say that the pilots which are about to start will do more than any consultation because people have the chance from experience to say how it works and what it can do. The notion that nothing is happening is quite erroneous.

Mr Williams: But contracts have already been placed.

Q226 Chairman: In all fairness I must let Professor Hutton comment on this. Do you remember that right at the beginning of the session I asked about the 170-odd acute hospitals and that the clinical system actually has not been deployed into any of them? Is this right? I did not give you a chance to comment at that stage; Mr Granger commented. This follows on directly from Mr Williams' question and is absolutely key, is it not? What is going on?

Professor Hutton: I have not been in the programme for two years. My understanding is that your assertion is correct. That is my understanding.

Sir Ian Carruthers: That is just not the case. Your question is on clinical systems and we can deal with that.

Mr Jeavons: The heart of this is that there are many systems which have already been deployed which bring real benefit to patients and clinicians in the execution and delivery of care. You only have to go and talk to real clinicians using some of these things to hear that for yourself. The heart of this however is the National Care Records Service.

Q227 Chairman: Are my care records arriving through these systems at the hospital yet? Is the answer yes or no?

Mr Jeavons: There is already national care record functionality available, a personal demographic service ---

Q228 Chairman: Is my GP able to send my records to a hospital from London up to an accident I have in Middlesbrough or somewhere? Is that now happening?

Mr Granger: Yes, he can do that because for the first time the NHS has a reliable network of over 14,000 end points on it which are available almost all the time. The point about hospitals and the systems they have is that 13 acute patient administration systems were deployed as of 26 June across 40 sites, 17 community hospital PAS solutions delivered, 129 community care solutions delivered, 13 mental health patient administration systems delivered, 59 child health solutions delivered, 118 different communities with a single assessment process solution delivered, 255 map of medicines solutions delivered, five ambulance solutions delivered, 122 LSP solutions delivered to GP practices, 24 departmental solutions.

Q229 Chairman: We could have a ding-dong here. It is quite useful to know what has been delivered. Professor Hutton, do you want to comment on this? We are only laymen and it is very difficult to find a way through this.

Professor Hutton: Just to sum up, I do not doubt that all those things have been delivered, but they are nothing to do with the NHS care record which is a central repository of key information of each person that is available anywhere within the NHS with their consent.

Q230 Chairman: Yes, that is how I understand it.

Professor Hutton: As far as I know, that has not yet happened.

Q231 Chairman: Mr Shapcott, what is the truth of this. You have been writing this report for the best part of two years. What is the truth of this?

Mr Shapcott: My understanding of the situation is that there are many systems in hospitals which are delivering some clinical functionality such as X-rays and so on. The core nationally available information on your clinical condition, as I understand it, still has some time to go.

Q232 Chairman: Still has some time to go?

Mr Shapcott: Yes.

Q233 Chairman: So your conclusion is that it has not been delivered.

Mr Shapcott: That is my understanding.

Mr Granger: The demographic component of it is live with 72 million records on it, five million of which have been converted and cleansed in the last year, the name, address and so on.

Dr Nowlan: That has existed in the NHS for many, many years.

Mr Granger: I am sorry, but if you want to come to see what we have done since you left, you might be pleasantly surprised.

Chairman: I should like you to put in a note.

Q234 Greg Clark: Is it true that Fujitsu, who were responsible for the southern region, have fined the local NHS 19 million because the local NHS failed a contract obligation to second 50 employees.

Mr Jeavons: No, that is not true.

Q235 Mr Bacon: What word would you use? Has a 19 million payment been made or is it due?

Mr Jeavons: The original contract included, quite sensibly, recognition of the contribution that local NHS staff needed to make to deliver the types of systems which were required. A contract change notice was done in September 2005. Part of that renegotiation took that part of the obligation out. That is what that number refers to.

Q236 Mr Bacon: This is basically the supplier attachment scheme, is it?

Mr Jeavons: It is called managed employee scheme.

Q237 Greg Clark: Basically no NHS region has been fined or charged a penalty - I do not want to play with words here - had a financial consequence for failing to give enough staff. Can you give me a categorical assurance about that?

Mr Jeavons: Part of the contract change notice included ---

Q238 Greg Clark: Just on that, yes or no.

Mr Jeavons: ---renegotiation of the commitment from the NHS to the managed employee scheme. In other words, the NHS was committed and that commitment was changed as part of that contract change.

Q239 Greg Clark: That is the same thing, is it not? If they were committed to supplying some staff and they have bought themselves out of that, they have effectively paid commercial suppliers.

Mr Jeavons: That was part of the overall negotiation.

Q240 Greg Clark: You seem to be playing with words. The original contract was renegotiated and it is now less advantageous to the local NHS.

Mr Jeavons: The NHS was committed. There was a financial value in the original contract which committed the NHS to commit NHS staff and that was changed as part of the contract change notice.

Q241 Greg Clark: Why was it changed?

Mr Jeavons: Because experience showed that it would be easier to deliver the contract without that commitment. The main reason for that was that the NHS found the opportunity cost of NHS staff was higher than the value they had placed on them and that is what resulted. It was a very sensible change.

Q242 Greg Clark: When it came to Fujitsu in the southern region, how much did the NHS pay to be released from that obligation?

Mr Jeavons: I cannot remember.

Sir Ian Carruthers: We shall get you a note on that.

Mr Jeavons: We shall give you the exact number.

Q243 Greg Clark: But it bears no relation to 19 million.

Mr Jeavons: We shall give you a note on that.

Q244 Greg Clark: Does it bear any relation to 19 million? Is that a figure that you recognise?

Mr Jeavons: It could be around 19 million.

Q245 Greg Clark: Is it a figure you recognise, yes or no.

Mr Jeavons: If I could remember the figure, I would tell you.

Sir Ian Carruthers: We shall give you a note.

Q246 Greg Clark: Is 19 million a figure you recognise to be released from this obligation?

Mr Jeavons: I recognise the figure of 19 million from press reports.

Q247 Mr Bacon: What is the figure for CSC in the North West? How much will the NHS have to pay to CSC? There is a contractual obligation to pay 6.9 million per year for ten years, which is 69 million, is it not, if the NHS does not supply the requisite number of staff? Are you negotiating your way out of that one and what is it going to cost? Is it correct that it is 37 million?

Mr Jeavons: I cannot recall the number. We can give you that.

Chairman: Send us a note.

Q248 Mr Khan: How soon before 100% of bookings are made by Choose and Book? It is 12% now.

Mr Granger: It is more than 12%.

Q249 Mr Khan: Good. How soon then?

Dr Mark Davies: I wish I had a graph so I could show you the trajectory.

Q250 Mr Khan: I just need a time line.

Dr Mark Davies: It is going up. The intention is for 90% of referrals from GPs to first consultant outpatient appointment to be reached by March next year and we anticipate being on plan for that.

Q251 Mr Bacon: Going back to this question of paying to be released from obligations, were the NHS trusts locally, the local acute hospitals, aware that there were these contractual obligations which had been agreed centrally with the main LSPs such as Fujitsu and CSC and that if they did not supply the number of staff they were supposed to supply, the NHS would have to make financial payments? Were they aware that if they did not supply the required staff the NHS would have to make financial payments?

Mr Jeavons: I believe they were aware and the reason I can say that is because I was personally involved in discussions where these arrangements were described.

Q252 Chairman: There has been a lot of confusion Mr Shapcott about the 6.2 billion and the 12.4 billion. When was the 6.2 billion cost announced?

Mr Shapcott: At the time the contracts were placed, that is the end of 2003/beginning of 2004.

Q253 Chairman: So it is not so much that this is an overspend, it is just that you, as a result of your work, have uncovered that it is now going to cost 12.4 billion to the public sector. Is that right? At the time of the publication of the report there was some reportage that the private sector might be going to take the extra cost. It is going to be the public sector, is it, in the shape of the NHS trusts? Is that right?

Mr Shapcott: The additional costs are falling on the public sector.

Q254 Chairman: The 6 billion extra?

Mr Shapcott: Yes.

Sir Ian Carruthers: May I say that some of the 6 billion extra is not actually real cost it is a mixture of forecasting, extrapolation and other things? We need to be cautious.

Q255 Chairman: If you want to send us a note, here is your chance. May I ask about this famous meeting with the Prime Minister in February 2002? Who was at that meeting?

Mr Granger: Nobody who is here, so I am sorry, but we cannot comment.

Sir Ian Carruthers: Nobody who is here.

Q256 Chairman: Can you let us know?

Sir Ian Carruthers: I am not sure how we do that, but we can try.

Q257 Chairman: Did the Prime Minister give the provisional go-ahead for the NHS National IT Programme which would last two years and nine months? This has been reported. Can you get us a note on it?

Mr Granger: Delivering 21st Century IT Support to the NHS is the document which was the starting point for the programme.

Q258 Mr Bacon: Is it not correct that Sir John Pattison said in a speech the following March, a month later, that the programme would last two years and nine months?

Mr Granger: In March 2002?

Q259 Mr Bacon: Starting from April 2003 it would last two years and nine months. That was the maximum he was able to get, so it should have been finished by December 2005, should it not?

Mr Granger: I am sorry but I was obsessed with congestion charging in March 2002.

Q260 Chairman: So nobody can tell us about the two years and nine months yet, but you are going to send us a note.

Sir Ian Carruthers: We shall try to clarify that.

Chairman: Let me try to sum up. The NHS chose a very ambitious system, a top-down system, a system with some positive elements: professional control, clear leadership, paying companies only for what they can deliver. However, as we know, the NHS is a micro system with hundreds of trusts and thousands of clinicians, nurses and GPs. Here the report and the evidence of your own GPs and what Sir John has said to us in evidence and the experience of members in their constituencies show that it is not yet working fully on the ground. So the recommendations in this report and the recommendations we shall make are vitally important. We expect you Sir Ian to implement them and we shall ask the NAO to report on your progress in another PAC meeting. Thank you very much.