Examination of Witnesses (Questions 40-59)
DEPARTMENT OF
HEALTH, PROFESSOR
PETER HUTTON
AND DR
ANTHONY NOWLAN
26 JUNE 2006
Q40 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.
Q41 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.
Q42 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.
Q43 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.
Q44 Greg Clark: What happens if iSoft
goes bust?
Mr Granger: Technically, according
to information that is in the public domain, iSoft may 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.
Q45 Greg Clark: What is the other
alternative? You said either/or.
Mr Granger: Or, in some parts
of the country alternative suppliers may exist.
Q46 Greg Clark: Will it delay the
programme or will it end up costing the taxpayer more?
Mr Granger: It has led to delay.
Q47 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.
Q48 Mr Mitchell: Why, if the programme
was originally estimated to 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.
Q49 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[3]
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.
Q50 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.
Q51 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.
Q52 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.
Q53 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.
Q54 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.
Q55 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.
Q56 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.
Q57 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.
Q58 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 10 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.
Q59 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.
3 Correction of matters of fact (by witness):
This should have been £12.4 billion as in the answer to question
47 above. Back
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