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I tabled a question yesterday about the number of hospital trusts where Lorenzo has been partially deployed, asking how many users-how many concurrent users-of Lorenzo there are. I look forward to the answer, but the Exchequer Secretary will not need to consult the written answer that has not yet been written to know that the answer is not very many. It is literally just a handful, which means that the cost per user is not what one would expect. If one was deploying a software system in an acute hospital with 3,000 to 4,000 workers, one might expect that the cost per user would be a few hundred pounds per user per year, but the cost is going to be many hundreds of thousands-possibly even more than a million-pounds per user per year. How that is consistent
with conclusion No. 15-with the Treasury saying that it does not accept that the programme fails to provide value for money-I simply do not understand.
It is not just that Lorenzo is not working. The other system produced by the other main company involved-the Cerner Millennium system-has also caused absolute havoc where it has been deployed. Barts hospital has been forced more or less to its knees because of the Cerner Millennium system. Back in March this year, it suspended its 18-week reporting-one of its obligations, saying it expected to resume them in September. It did not do so, and by the beginning of this October it had a backlog of 23,000 breaches.
We could talk about missed targets, but what really matters is that patients are being kept waiting longer than they should-in some cases, for longer than six months-because the hospital is unable to manage its information as a result of struggling with that dreadful system. As a consequence-it gets worse-the hospital is to be fined £400,000 a month by its primary care trust, NHS Tower Hamlets. This hospital already has a deficit of £6.7 million. That is no reflection on the clinical work done at Barts hospital, some of which is absolutely outstanding-world class, with no question about it. Yet having a system that does not work properly foisted on it is hampering its ability to continue to be a world-class hospital.
I am afraid that it gets still worse. Under the terms of the contract that the NHS has signed with the local service provider, BT, to deploy Cerner Millennium in the south of England, if the NHS fails to deliver four new greenfield sites that are ready and willing to take the Cerner Millennium product, it will be liable to pay BT £44 million. If all goes well, the Department of Health will pay £73 million to BT for installing Cerner Millennium in four hospital trusts in the south, but not if those trusts baulked at taking the software-they would, of course, be quite right to do so because it does not work. What is more, the Treasury tells them that they do not have to take it, as note No. 16 of the Treasury minutes states:
"Trusts will not be expected to take the systems until they work effectively".
Thank you, Treasury-and quite right, too! That means that if the trusts cannot be persuaded to take the systems because they do not work-they will not, of course, if they do not work-the taxpayer will have to pay BT 60 per cent. of that £73 million for not taking them.
By the way, this is not as a result of one of the old contracts; it is a result of a contract signed quite recently. Let me quote from a piece in e Health Insider of 1 October:
"The liabilities date not from the beginning of the National Programme in the NHS but are set in a contract signed just three months ago".
There are still some very serious problems with the national programme for IT in the health service.
Mr. Leigh: In the light of my maxim that no taxpayer pound should be a source of easy profit, has my hon. Friend conducted any research into how much profit has gone to the private companies involved, and how much they have sucked out of the Exchequer so far?
Mr. Bacon: I am afraid that the answer is extremely hard to find. The Government will say that value for money has been obtained precisely because the original contract required that suppliers were not to be paid until they had delivered, but the position is not quite as simple as that. In some instances suppliers have been paid by the back door in respect of other programmes, and it is therefore difficult to see where they have made money and where they have lost it. I have little doubt that suppliers have lost a lot of money, but I would much rather see them offer the NHS something that it wants and be paid a reasonable profit in return than see patients kept waiting, hospital waiting lists in a complete mess, and hospitals unable to tell whether they have sent cancer patients messages with the results of their oncology tests. I would much rather see something that actually worked and produced value for money.
"Unless the position on care records system deployments improves appreciably in the very near future",
the Department of Health should allow hospital trusts to seek central funding. We think that rather than funds going to local service providers that have not delivered, trusts should be able to look to the Department for those same funds, in order to spend them on systems that they actually want and that stand a chance of delivering something. That is the way in which to achieve value for money.
We have already lost a great deal that we are not going to get back. What I want to hear from the Exchequer Secretary is how she thinks we can start making some sense of this mess, and how she thinks we can start receiving sensible answers to some of the questions that a number of us have been asking for a very long time.
3.31 pm
Mr. Greg Hands (Hammersmith and Fulham) (Con): This is the second of these debates to which I have responded on behalf of the Opposition. In my parliamentary experience at least, they remain unique in respect of the multiplicity of subjects covered. In some contexts breadth is an indicator of superficiality, but the reports that we are considering today provide ample evidence of the forensic abilities of the Public Accounts Committee, and I am delighted that we have heard from a few of its members this afternoon.
We were, of course, treated to a masterly opening summary from the Committee's Chairman, my hon. Friend the Member for Gainsborough (Mr. Leigh). It is a great sadness and a great pity that this may be the last debate of this nature to take place under his chairmanship. I have seen in his office on the second floor of this building the photographs and engravings of his predecessors, and I am sure that his own portrait will be a worthy addition to that collection. It may even end up having pride of place, given his work over the past eight years.
I shall talk in due course about the importance of my hon. Friend's contribution and that of his Committee in the current context of a record public sector borrowing requirement and a record deficit, but let me say first that, during his eight years in charge, my hon. Friend has done a brilliant job. One of my regrets is that I do not expect to have served under his chairmanship. He
says that he has secured £4 billion in savings, which is indeed a proud record, but he does not want to rest on his laurels; he wants to do more. If he is able to find a further £4 billion in savings, perhaps over the next six months, we should all be extremely grateful. I had been going to say that it would be even better if he could find £175 billion in savings, but in fact he helpfully told us where further large-scale savings to the tune of £9 billion might be found. I am sure that my colleagues in the shadow Treasury team will examine that in some detail in the coming months.
While giving the details of where savings could be made, my hon. Friend also attacked increases in Government spending in many areas. One of the more remarkable facts is that at the same time as the rapid increase in public borrowing, there has been a 4.8 per cent. increase in Government spending over the year to September. That is, of course, far above the rate of inflation.
I commend the Chairman for his years in charge. I am sure that he will maintain his close scrutiny of public spending after the election in whatever role he takes on-although I for one hope that we may squeeze in one more public accounts debate if the Government decide to delay the election until May or even beyond.
The hon. Member for South-East Cornwall (Mr. Breed) highlighted two or three important reports, including one on the appalling blunders on the Chinook project, about which I will talk as well. I was a little more surprised by his words on Trident. If I understood him correctly, he was praising the good work at Devonport dockyards and the boost to the local economy in Devon and Cornwall as a result of Trident. But he then went on to tell us that he was not in favour of renewing the project. I am not sure how that will go down in that part of the country.
The hon. Gentleman was on much safer ground when he referred to CDC and its failings, which I will also mention. One of the other reports that he mentioned- I was not going to look at this one-was on the letting of the rail franchises, a fascinating topic. Generally I am a strong supporter of privatised rail. I have used trains in the hon. Gentleman's constituency quite a lot. He knows that I was brought up in Looe. The last time I took the Liskeard to Looe line was in 2007, when I thought that the quality of First Great Western rolling stock on that line left a lot to be desired. I hope that it has been renewed since. [ Interruption. ] By the look on the hon. Gentleman's face, it would seem that, unfortunately, it has not. Nevertheless, it is still a delight to use the Looe valley line in his constituency.
The hon. Member for Great Grimsby (Mr. Mitchell) was unique in being a Labour contributor to the debate. I agree that efficient government is essential but I must strongly disagree that big government is inevitable. Big government is by its nature inefficient.
Mr. Austin Mitchell indicated dissent.
Mr. Hands:
I see the hon. Gentleman shaking his head but I challenge him to find anywhere in the world that has gained efficiency by increasing the size of its government. However, I agree with him on the huge sums paid to consultancies and how undesirable that is. History will record that one of the defining characteristics
of the new Labour Government over these past 12 years has been the extraordinary waste of money on consultancies.
I am looking forward to seeing the Committee's report on Metronet-the report is not before us today-whose failure will have a direct impact on my constituents. I am glad that the hon. Member for Great Grimsby raised the issue today. He rightly focused on a number of MOD, education and other IT projects and, despite our vastly different political views, I think he spoke a great deal of common sense in terms of his desire to see better value for money in public spending, even though he and I might disagree on the precise size of the cake.
My hon. Friend the Member for South Norfolk (Mr. Bacon) spoke with his customary forensic skills and fluency and outlined important changes-I will have to read his comments carefully-as to how the NAO will effect better financial controls in Government Departments, which sound like they are welcome. He also said some important words about the culture of the civil service and on working to change attitudes in the public sector in the present environment to focus more on efficiency; getting more for less, as the leader of my party put it.
My hon. Friend then launched a devastating critique of the NHS IT contract and its moving goalposts in terms of objectives and what has been delivered in a project that will come to symbolise Government waste as whole over the past 12 years. His examination of the details of the failings and the Treasury's failure to get a grip, as well as the astonishing consequences for frontline NHS services, should be compulsory reading for all Treasury and Department of Health Ministers.
I mentioned the apparent lack of enthusiasm of Labour and Liberal Democrat members for debating the Government's earlier motion on securing the recovery. I note that, in this debate, there has been no Liberal Democrat speaker from the Back Benches and only one Back-Bench Labour speaker; although the hon. Member for Great Grimsby can hardly be described normally as a pro-Government speaker. It is a great pity that in a full day to debate first the economy and then the public finances, there has been almost no contribution from Labour or the Liberal Democrats.
Several themes have emerged today, but all against a common backdrop. No one in this Chamber can fail to be aware of the woeful state of the public finances. The deficit this year is projected to reach round about £175 billion; £14.8 billion was borrowed in September alone, the highest figure on record. September's borrowing brings net debt to a staggering £824.8 billion and means that debt as a percentage of GDP increased by 2.5 per cent. in just one month, to 59 percent using the Treasury's own figures. To put it another way, the Government are currently borrowing £500 million a day.
To see the seriousness of the situation we are all faced with, we only have to open the inside back page of The Economist and note that of the 42 countries in the magazine's tables, Britain has the worst budget deficit of all, currently estimated to be heading to about 14 per cent. of GDP. That is twice what it was coming out of the last two recessions. The work of the Committee becomes ever more relevant in such a context, and its reports will prove a valuable resource for the next Government, of whichever party.
Value for taxpayers' money should, of course, always be a priority for those charged with its proper use, but it is a duty that the current Government neglected in a milder economic climate. Perhaps this was an unconscious effect of their verbal trick of labelling all spending as investment and regarding it as an automatic good irrespective of frameworks and controls, and sometimes irrespective of ends. Whatever the cause, there has certainly been a pattern of failure to ask the right questions or to draw the right lessons from mistakes, and the reports before us today provide further evidence to support this view.
Collecting the stack of documents from the Vote Office, one ended up with a veritable armful of reading after a slightly hassled clerk had fished out each of the 27 reports-I think that is the right number. As many Members have suggested, the large number of reports presents a dilemma as they all contain insights into their objects of inquiry but it is impossible to comment on all of them. I will focus on some of the reports that particularly interested me, but I shall be as comprehensive as possible in the available time.
A number of reports focused on defence. After both the roll call of those who died in the service of our country over the summer months and the general debate last week, the House has been particularly aware of defence matters since it returned from the recess. There are four reports on the Ministry of Defence before us. One has a particular bearing on the situation of our troops in Afghanistan, and all have some relevance in the debate over resources.
The Chinook helicopter provides crucial heavy-lift capacity for the Army. It played a battlefield role in the Falklands war and has done so ever since. The current versions were ordered in 1995, in what the PAC described five years ago as one of the worst examples of equipment procurement it had ever seen. The latest report on the eight Chinook Mk 3 helicopters suggests the delays are abysmal "even"-that is the Committee's telling phrase-by the MOD's standards. The Committee says:
"The absence of these helicopters has meant that British troops in Afghanistan have had to make do with fewer helicopters, make an increased number of dangerous journeys by road and, due to the specialist nature of the Mk3, rely on heavily modified Mk2 helicopters for use on high risk special operations."
Further, the night enhancement package referred to at the end of the assessment is, as the Committee discovered, still regarded as a key safety risk by Joint Helicopter Command.
It is shameful that our soldiers have died from roadside bombs when additional helicopter support might have prevented the need for some of the road journeys they undertook and that our troops continue to undertake as we speak. While the Government can, and do, point to other measures they have taken since, that cannot alter the fact that our forces would be safer were it not for a series of Whitehall blunders, many of which have been examined by the PAC.
Even the abandonment of the "fix to field" project, a decision taken to accelerate additional lift capacity, led to a 70 per cent. increase in the costs of the successor reversion scheme. The Government dispute the Committee's claim that this was due to inadequate analysis and lack of consultation with Boeing, but an impression of hurried misjudgement remains.
The departmental response also seems reluctant to accept the MOD's tendency to over-modify what are intended to be off-the-shelf purchases, or the extent to which the pursuit of perfection on paper leads to defects, delays and cost overruns in practice. While they may sometimes be unavoidable, modifications of contracts run a high risk of undoing the advantages that off-the-shelf procurement can offer, and the attitude displayed is worrying. When our country is at war and lives are being sacrificed, it is damning to know that equipment shortages and deficiencies could have been avoided.
Almost the only encouraging note in the entire Chinook report is the reported 20 per cent. increase in flying hours resulting from joint work with Boeing on maintenance procedures. Better use of our existing assets will be essential in Afghanistan and elsewhere. The capabilities review that my Front-Bench colleagues have outlined is just one aspect of the Conservative response to these problems.
The other reports on the MOD indicate the scale of the challenges that may face it. The major projects report states:
"In the last year, the 20 biggest projects suffered a further £205 million of cost increases, and 96 months additional slippage... Total slippage stands at over 40 years".
Although we accept the uncertainties involving new technology, those statistics bear witness to endemic failures in project management in the Department. Projects are not mysterious entities, and basic causes of project failure are the same whether projects are defence-related or civil, public or private. Yet again and again in the pages of these reports we read about over-optimism and poor controls.
The report on the defence information infrastructure system is a case in point. The project was 18 months late at the time of publication as a result of fundamental weaknesses in planning. This huge project is replacing separate systems ranging from those within Whitehall to the onboard systems on Royal Navy ships. The cost was last estimated at £7.1 billion, and some 150,000 terminals are involved, yet assumptions were made on the basis of "totally inadequate research", the timetable was too ambitious and no pilot was undertaken before rolling out the implementation. Like so many Government IT projects-I will discuss the NHS IT system shortly-this one has come unstuck, and is 18 months behind schedule. It should not be necessary for PAC reports to have to include among its recommendations such basic advice as the following:
"Where accurate information is not available, assumptions should be prudent and cautious."
It is extraordinary that a need was felt for such basic advice to be included in the report.
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