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Of course, getting the right attitudes and behaviours to support the programme—and, indeed, any IT programme—are central. That is why experts say that many problems are not about IT but getting human beings, especially well-paid, intelligent and independent-minded human beings, to operate in the right way. Of course, change management must happen, but the idea that no serious technical problem remains is nonsense. The fact that the Prime Minister is being told that there is no serious technical problem is worrying, because it suggests that Ministers have not always been told all the facts that they need to know.

One need look no further than the visit that took place on 14 May by David Nicholson, chief executive of the NHS, and Richard Granger, director general of IT, to Milton Keynes to examine the problems there. One IT contact of mine charitably described the visit as a catastrophe. It followed a letter, to which the hon. Member for North Norfolk (Norman Lamb) referred, from 79 doctors, nurses and secretaries at Milton Keynes general hospital, which said:

Milton Keynes is in the southern cluster, where Fujitsu is installing the product from Cerner Millennium. The staff say that it does not work, is not fit for purpose and should be withdrawn.

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Let us consider the position of the other clusters—the north-east, eastern, north-west and west midlands—where CSC, following the withdrawal of Accenture, has control of three clusters and is installing iSOFT Lorenzo. The only problem is that iSOFT’s Lorenzo product has not yet been written. It is therefore nonsensical to claim that there are no technical problems. It is worrying that the Prime Minister has been told otherwise.

When David Nicholson and Richard Granger visited Milton Keynes, they acknowledged the scale of the problems. Yesterday they were cited in E-Health Insider, which stated that a spokesman had said:

However, big problems remain.

I now turn to iSOFT—and I note that the hon. Member for Newcastle-under-Lyme (Paul Farrelly), who has done much work in this area, is now in his place. The funny thing is that page 6 of the iSOFT Group plc’s 2005 annual report and accounts says:

I stress, “available from early 2004”. Yet when CSC and Accenture, which was still involved at that point, wrote a review of Lorenzo in February 2006—some considerable time after the statement about its availability—they concluded:

Lorenzo GP is a basic version for GPs. The review continues:

When iSOFT’s financial results were published—rather late—it said:

How can a firm begin to deliver functionality to users in the NPfIT before the end of 2007, and individual solution modules on a phased basis through 2008, for something that its 2005 annual report claimed was already available in 2004? Perhaps that is why it has been under investigation by the Financial Services Authority. It appears that in the past it has been making statements to the stock market that are not justified by the facts. Those statements probably caused the share price to be higher than it otherwise would have been. Many directors subsequently sold their shares. However, that is a matter for the Department of Trade and Industry, and probably outside the scope of the debate.

Mr. Stephen O'Brien: My hon. Friend’s expertise is invaluable. In evaluating the risks to the programme’s progress, we want to be constructive about the Government’s difficulties. What is valuable in iSOFT at
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the moment if there is no developed product? Is it simply that it happens to have the Government contract?

Mr. Bacon: That is a good question. The company has a range of other products. Many experts would say that some of them, especially some GP systems, work well. However, what people would be paying for if they bought iSOFT is a moot point. It is especially worrying that CSC announced this morning that it might consider a bid for iSOFT. The idea of having a vertically integrated model under which the local service provider actually owns its main software subcontractor is very worrying at a time when the Government, the Department of Health and the NHS are only just beginning to acknowledge the need for more choice locally.

In that environment, if CSC actually owns iSOFT and the area is controlled by CSC, it is hard to see how, if that bid went through, other suppliers of competitive products for mental health and other aspects, such as primary care, would get a look-in. It was an odd reflection on customer relations when iSOFT sought last week to improve its relationship with CSC, which must be one of its biggest customers, by saying that it was probably going to take legal action against it. That is not what one normally thinks of as a way of improving relations with one’s biggest customer. The company seems to have come to its senses yesterday, saying that it was probably going to suspend the legal action for the time being.

Paul Farrelly (Newcastle-under-Lyme) (Lab): The hon. Gentleman rightly saw me rummaging through my notes on iSOFT, whose affairs I have followed since July 2004, with my old investigative journalist’s hat on. I note that the hon. Gentleman is not criticising the Government for putting investment into IT, but is making some good points about the way in which they are doing it, which I believe the Government should listen to. Clearly, it is not the Government’s fault that iSOFT is a thoroughly dodgy company, but does the hon. Gentleman agree that it would instil more confidence in the programme and the regulatory environment if the City authorities speeded up their investigation into iSOFT—and, indeed, if the DTI also took up the case?

Mr. Bacon: I very much agree with that, as these investigations take far too long. The hon. Gentleman referred to his previous role as an investigative journalist, and I commend him for the work that he has done. I also commend the excellent work of Simon Bowers on the financial pages of The Guardian. Yes, the DTI should get involved and the current investigation by the Financial Services Authority should be speeded up. No, it is not the Government’s fault if iSOFT is a dodgy company, but it may be their fault if, not having exercised sufficient and due diligence, they continue to make advance payments through the local service provider and in effect prop up a dodgy company that has failed to deliver, has made false statements about the availability of its products to the stock market, and has misled investors, the public and the NHS.

The way forward—clearly, there must be one—proposed by David Nicholson, the chief executive, is to
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put greater emphasis on the local side through the local ownership programme. It sounds good in theory, but I fear that what it means is something different. I quote a piece from E-Health Insider of 25 May, which pointed out that the chief executive said that the aim of the local ownership programme was

That sounds fine, but does it mean that if people do not want to, they will not have to install Cerner Millennium? No. Does it mean that if they do not want to, they will not have to install iSOFT’s Lorenzo—apart from the fact that it has not been written yet? No, it does not, so they do not really have choice. I fear this is all about not real localisation, but the decentralisation of blame. It is about handing over to others the responsibility for implementing the unimplementable, and then being in a position later to blame them when they cannot do it. I thus have my doubts about the national local ownership programme.

Mr. Stewart Jackson: Does my hon. Friend agree that if iSOFT is unsuccessful in refinancing its business in November, it will be the fourth IT company to bail out of this particular IT programme?

Mr. Bacon: It probably will, which is one of the reasons why I suspect that CSC has been sniffing around with iSOFT’s banks. By the way, iSOFT was not aware of this until after it had happened, but CSC—the local service provider for three fifths of the programme—has been talking to its main software subcontractor’s banks about buying iSOFT’s debt, presumably because that would put it in pole position for a bid, should it wish to make one. I believe that it is incumbent on the Government to state their view of local service providers owning a main software subcontractor and the potential impact on competition and choice, which are essential if we are to get out of this mess. Greater choice, I believe, is essential.

If the notes to the Prime Minister may not have been completely accurate in saying that technology was not a problem, it remains true—as I mentioned earlier, and I saw the hon. Member for South Derbyshire nodding in agreement—that a lot of the problem is about human behaviour, changing attitudes and so forth. In order to do that, we have to have ownership. The question is how we get ownership, and the answer is through choice, and by making local trusts accountable for choosing what they want, and then accountable for delivering it. That, rather than having systems foisted on them that they do not want and will not use, is what is needed. We must have more choice.

Some hon. Members have referred to the Public Accounts Committee report, which I had some hand in. I want to draw the Minister’s attention to two particular paragraphs: one a recommendation, the other a rather worrying conclusion, which the Government should reflect on far more than they have so far. The first is recommendation 4 on page 5 of the report, which says:

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My belief is that such a review of the performance of LSPs against their contractual obligations would strengthen the Government’s arm in the negotiations that would be necessary if the value of the contracts were reduced. Let us look at what has been going on with British Telecom in London, for example. BT employed the software firm IDX for a considerable period, and my best estimate is that about £200 million was spent before it sacked the firm and moved over to the Cerner product. The effect is akin to owning a Ford transit van, getting rid of it, then buying a Mercedes van, but still trying to do the maintenance with the old Ford transit manual; it does not work.

The money is completely wasted, yet neither BT in London nor CSC in its areas—not to mention Fujitsu in the south—has done anything to try to account for the losses that must have been made. At least Accenture had the honesty to come up front and say that it was making provision for $450 million. I am certain that the other local service providers are hiding millions of pounds—probably hundreds of millions—of losses. The Government ought to be aware of that now, because it has consequences for the behaviour of the LSPs in trying to claw back money because they did not make any on the contracts.

Finally, I want to say a quick word about CSC and iSOFT. I have already mentioned them in passing and in response to interventions. We cannot overstate the importance of the fact that three fifths of the national programme for IT in the health service depends on this relationship between CSC and iSOFT, so it is of considerable interest that the president of European business development, the president of the northern region of the UK and the Netherlands, the senior vice-president of global infrastructure services for Europe, the middle east and Africa, the vice-president of service delivery for Europe, the middle east and Africa, the service delivery director of the NHS for the original contract in the north-west region, the vice-president for new NHS accounts, the chief operating officer for Europe, the middle east and Africa, the vice-president for service delivery to BAE Systems, the president for CSC southern region, and the director of services for global accounts have all resigned quite recently. I therefore wonder in what fit state this company is, in terms of its senior management, to continue to be a local service provider, let alone to bid for one of the main software subcontractors.

It is interesting to note that CSC in Europe, the middle east and Africa has recently announced a continuation of the two-year freeze on all training. What does that mean for the NHS? Contrary to what the Minister said earlier, I do not think that Opposition Members have any interest in protecting local service providers or IT suppliers. We want to see competition and choice and things working. It is not obvious to me from the available evidence that CSC is in a particularly healthy position.

Dr. Pugh: Might not the company become heavily dependent on the expertise provided by local hospitals rather than use its own—with costs to local hospitals?

Mr. Bacon: In so far as I have understood the hon. Gentleman’s question—it is important to have expertise
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locally in hospitals. As the hon. Member for North Norfolk mentioned, one of the great problems has been a whole incubus of a central layer trying to impose what happens locally from a great distance. Plainly, one size does not fit all.

I shall now conclude, as other Members wish to speak. I hope that the Government will acknowledge that the criticisms of the programme are not made in a party political spirit, at least not by me. I would like to see the programme work. If it is to work, however, serious problems need to be overcome.

2.59 pm

Mr. Mark Todd (South Derbyshire) (Lab): To give my background briefly, I was an IT director before coming to this place. At one time in the distant past, about 15 years ago—which shows how easy it was to conceive of such things—I did an acquisition study of a small company that sold systems to general practitioners, in which I dismissed the original purpose of the acquisition and instead set out an argument for a network in information provision in the NHS. At that time, my company did not choose to buy into that—it was correct in thinking of the huge risks that lay ahead. Nevertheless, it was possible some years ago to conceive of many of the things discussed today in relation to the NHS IT programme.

To be honest, any IT programme is misunderstood in this place; we are talking about business change programmes facilitated by technology. Some key preconditions exist for success in that area. First, the project must be rooted clearly in a business strategy. Challenging targets must be set by the business that wishes to run the project. A clear understanding is needed of the environment in which the project will operate. There also needs to be an understanding of the politics of the organisation, any professional constraints that might be in the way, protectionism—which is almost inevitable, and on which other Members have touched briefly—where the accountabilities lie for delivery of the project, and the balance between local and central decision making in delivering outcomes.

As the hon. Member for South Norfolk (Mr. Bacon) said, any project is largely about people, not technologies. More than 10 years ago—given that I have been in the House for 10 years—I used to advise my company that its task was to conceive of the business that it wished to run, and that by and large we would find the technologies to deliver what it conceived of. In relation to people, the critical issues to be resolved are normally their motivation, their engagement with the goals of the project, and how to retain them through a process of disruption and change, which many might find unwelcome. The project needs clear organisational leadership, both professionally and at board level—and, in the context, at political and ministerial level—to ensure a clear direction for the project. That leadership needs to be focused on delivering the benefits identified in the first place, and on resisting creep and diversion, which are all too readily put forward as the directions that any project should take. I shall return to that issue.

A robust risk analysis and approach to managing the risks identified is needed. There are some obvious risks
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in the collection of projects under discussion, and there are problems inherent in working within the NHS. One is a lack of what most people in the private sector would regard as corporate accountability. General practitioners are effectively small businesses, with their own IT choices and a history of making such choices. Consultants are not actually employees, but carry out duties within a defined contract. There is also a huge problem of scale.

There are also problems inherent in working in a political environment, such as the likelihood of high-profile opposition to what is being attempted, and changes in political leadership—not changes of Government, but the reshuffling of Ministers, once they get some grasp of a subject, into another job in double quick time. A learning process is involved, and the management of projects of such a scale and complexity takes time.

Other problems have been introduced from outside. One of those is the restructuring of primary care trusts and other trusts through the project, so that partners established at local level to deliver certain parts of the programme have changed, and have had to reapply for their jobs and reconsider their futures, which is certainly a risk that would have to be taken into account. I was surprised by the view expressed by some Opposition Members that there is no local process, and that everything is centrally driven. In fact, each trust must produce its own business case for implementing substantial parts of the programme. Bearing in mind that skills and enthusiasm are differential, passing that task on to those trusts has also introduced significant risks to the project. Most suppliers would have started by thinking that the project was likely to be a bed of nails.

Many of the people involved in working in the NHS would have had dissenting opinions. However long we consulted, we would not have consulted all those who wished to have an opinion on the matter. I genuinely accept the view, which I have heard expressed by Richard Granger, that the consultation was at great length. It would not have covered everyone who had an opinion, however, because opinions are numerous in that organisation. The consultation could be going on now and still leave many unsatisfied. I am not therefore surprised at the dissenting voices.

Bearing in mind the very tough purchasing model used, which has transferred risk to suppliers, there have also been supplier problems. Too many suppliers were tempted by the scale of the opportunity and the potential for sell-ons of technologies developed under the contract into other environments. I attended a briefing with CSC yesterday, and it was reasonably clear that that was its view, and it was certainly its interpretation of Fujitsu’s view of how it participated in the programme in the first place. In spite of my repeated question as to whether CSC were making money, it was extremely careful about what it said in response.

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