Mid Staffordshire NHS Foundation Trust (Inquiry)
John Pugh Excerpts(13 years, 2 months ago)
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The Prime Minister
It is right for my hon. Friend to speak out for the victims and to raise a specific case. The Health Ministers here with me today will look carefully at the issue of a duty of candour to see whether that would make a difference in the way that we want for this hospital and for others as well.
John Pugh (Southport) (LD)
One of the clear causes of the tragedy, according to Francis, is a
“failure to appreciate…the…disruptive loss of corporate memory and focus resulting from repeated, multi-level reorganisation.”
What lessons does the Prime Minister draw from this about NHS reorganisations?
The Prime Minister
The hon. Gentleman makes an important point. What Francis says is:
“A failure to appreciate until recently the risk of disruptive loss of corporate memory and focus resulting from repeated, multi-level reorganisation.”
He also says, though, that he thinks the changes required
“can largely be implemented within the system that has now been created by the new reforms”,
so I hope we can allow the changes that Francis is talking about to be made within the proposed structure. Everyone—all parties, all Governments—should learn from this report. I hope we can then allow the structure to bed down and to deliver the changes that everybody wants.
Mental Health (Discrimination) (No. 2) Bill
John Pugh Excerpts(13 years, 6 months ago)
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John Pugh (Southport) (LD)
The issue of mental health has crossed my path many times throughout my life. In fact, I have seen some of the extremes of it. I once worked on all the wards of a very old-fashioned mental hospital, Oakwood hospital in Maidstone. In the north, I taught at Ashworth’s predecessor institution, known as Park Lane. I am probably the only MP who has had the experience of showing somebody into a padded cell and of helping administer electro-convulsive therapy—that is quite a distinction, I guess. I have seen the extremes, therefore, and my conclusion is that mental health covers a very wide spectrum—a whole range of issues.
There are two fallacies to which I strongly object. First, there is the idea that the world is divided into those who have perfect mental health and those who do not—hands-up anybody in the Chamber who has got perfect mental health. It is undoubtedly the case that some people cannot do certain kinds of work because of mental health issues, of course, but it is also the case that many people work despite having mental health issues; they might work through mental health issues with occasional mental health episodes while at work, and some people will be oblivious to the mental health issues they have. It is a fallacy to think there are people who are available for work with perfect mental health, and those who are unavailable for work, who lack perfect mental health.
The second fallacy is that having an acute episode of a mental health issue permanently disqualifies someone from work. That must be resisted entirely. The philosopher Nietzsche said that what does not destroy us makes us stronger, and there is plenty of evidence to support that; some people are strengthened by having had a mental health problem. The hon. Member for Broxbourne (Mr Walker) has been able to work very satisfactorily for his constituents and in all sorts of jobs, which serves to show that people can work through chronic mental health problems. I worked with colleagues in the teaching profession who had obsessive compulsive disorder. Lots of people manage to cope with, and overcome, chronic mental health issues and go back to work.
Belief in either of those fallacies leads to the unfair discrimination that the Bill seeks to tackle. Discrimination itself is not a bad thing, however. We frequently need to discriminate; we do so all the time. Older Members will remember the Peter Cook and Dudley Moore sketch about the one-legged man applying for a film role as Tarzan, and we can think of circumstances in which having certain mental health issues would disqualify people from following a profession: it is probably not a good idea for those with a phobia of heights to apply for a job in the Shard, and it might well be inadvisable for those with suicidal tendencies to apply for a post involving firearms. The generalised stigma that prevails throughout wider society is wholly inappropriate, however.
I looked up the Mental Health Act 1983. Its provisions apply not to MPs with mental health problems, but to MPs who are subject to compulsory detention under that Act, such as, perhaps, those with suicidal impulses or those with delusions and hallucinations, and where the prognosis is poor. The question then is what to do. We are torn between discrimination, which we reject, and the need to make sure people have proper and adequate representation. That question requires a solution of some subtlety. As has been said, this is not an issue of mental health; it is an issue of the capacity of an MP, and to make it merely an issue about mental health is pure discrimination.
Regional Pay
John Pugh Excerpts(13 years, 9 months ago)
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John Pugh (Southport) (LD)
I thank the hon. Member for Dumfries and Galloway (Mr Brown) for that introduction; I am not used to it.
The battle over regional and local pay is one, frankly, that in the current circumstances the coalition could do without. It would be a battle—a gruelling, energy sapping and pointless battle between and within parties. Even the Labour party is divided on its proposals for regional welfare. Opposition among the Liberal Democrats to the underlying principle and philosophy behind the suggestions is now widespread. We are not against the collection of evidence, but the evidence means that we are against the proposals. Shortly I and a number of colleagues will submit evidence that we hope will convince further. There was no problem recently getting 22 Liberal Democrat Members to sign a letter to The Times opposing regional pay, and of course those numbers were limited because our ministerial colleagues could not be asked to participate.
The politics of the proposal are lethal and divisive. It pits region against region, abandons the principle of equal pay for equal work, and treats the low-paid and local differently from the high-paid and mobile. The economics of it are nonsense, too, being bolstered largely by clichés and prejudice from the usual suspects—the Institute of Directors to name but one.
Kelvin Hopkins (Luton North) (Lab)
It is refreshing to hear some common sense from the Liberal Democrats. The hon. Gentleman might be aware that a survey reported by the CBI suggests that 94% of private sector employers are concerned, above all, about markets and consumer demand for their goods and services, and the proposal would reduce consumer demand.
John Pugh
That is certainly true, and a lot of UK national firms—building societies, banks and the like—do not have regional pay structures.
No one can dispute that reducing public sector pay in low-wage areas necessarily reduces the money spent, and therefore demand, in those areas. No one can dispute that putting relatively more money into the pockets of public sector workers in high-wage areas increases the money in circulation in those areas, and thus demand. Ultimately, economic division will be cemented in and, frankly, a good reason would be needed for doing that.
Jacob Rees-Mogg (North East Somerset) (Con)
The hon. Gentleman said that no one would dispute his points, but I will. If more private sector employment is created, greater total pay is created in the region, thus increasing demand.
John Pugh
That is my next point, because the only good reason for taking forward the approach would be if it was thought that it would improve private sector job opportunities in the poor regions on the basis that public sector jobs appear to be relatively well paid and crowd out private sector employment. If that is happening, one piece of essential evidence—one killer fact—is needed to show that, but it is not differences in the rates of pay in the two sectors, because that reflects a range of things such as job profiles and qualifications. We need evidence to show that as the number of public sector jobs increased in such regions, the number of unfilled vacancies for comparable employment in the private sector grew. That would be the clinching fact, but there is no such evidence. In fact, vacancies in the public sector in the north take longer to fill, because 50% of them are out for eight or more weeks compared with 15% in the private sector. Jobs that pay a living wage and for which skills exist get snapped up. Vacancies do not abound in the private sector except where there are definite skills shortages, and that is because of unemployment. There is no parallel difficulty with failing to fill public sector vacancies in better-off areas.
In the absence of that one piece of clinching evidence, which simply is not there, one could take a barrow-boy view that one could none the less get away with paying people less in the public sector in less advantaged areas, and especially get away with lower pay for the less well-paid, thus banking a cash saving for the state. I understand that argument, but it would be a wholly inappropriate way for a state to behave. It would be inappropriate for the state to discriminate simply by doing what can it get away with. We do not pay women or ethnic minorities less because they might be willing to work for less. If it was easy to get people to take the king’s shilling in the north, would we offer them sixpence instead?
John Pugh
The special housing problems connected with London have been recognised for about 30 years. No one is arguing about that—it is not what the Government are arguing for, and it is not what divides the House.
I have been in politics for quite a long time and worked hard in my region. I have met oodles of people, worried and fretted about regional regeneration, met industrialists, attended forums and spoken to experts. However, no one outside London has ever said to me, “Do you know what we want in this area? What we really need is regional pay.”
Oral Answers to Questions
John Pugh Excerpts(14 years ago)
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Mr Speaker
Order. I am not altogether sure that the Minister heard the question. If he did not, he was not the only one. There is too much noise and Members are yelling even when Members from their own party are asking questions. A bit of order would help.
John Pugh (Southport) (LD)
T7. Had we reached Question 10, I would have asked what recent assessment has been made of Government policy on open source software and open standards.
Mr Maude
We are strongly in favour of using open source software wherever possible. We have established that that can cut the cost of providing digital services massively, while producing better results. On a recent visit to silicon valley, I and a number of colleagues found businesses that were capable of cutting those costs on a massive scale.
Oral Answers to Questions
John Pugh Excerpts(14 years, 3 months ago)
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John Pugh (Southport) (LD)
10. What recent progress he has made on reforming the House of Lords; and if he will make a statement.
The Deputy Prime Minister (Mr Nick Clegg)
A Joint Committee of both Houses is currently scrutinising the Government’s White Paper and draft Bill, which we published last May. The Committee is making good progress, and today the other place is debating a motion proposing an extension enabling it to report by 27 March next year.
John Pugh
Does the Deputy Prime Minister agree that if we have an unreformed and larger House of Lords and a smaller House of Commons in 2015, with the payroll vote constituting a larger percentage, it will be a huge step backwards for democracy in this country? We cannot take an à la carte attitude to constitutional reform.
The Deputy Prime Minister
I do not think that there is anything à la carte about the White Paper and the draft Bill and the scrutiny to which they are being subjected by a Joint Committee. Indeed, I do not think that there is anything à la carte or arbitrary left in a debate that has been raging for more than 100 years. I think that it would be a big step forward for democracy if we were finally to secure elections to a Chamber which, let us remember, makes the laws of this land, but is as yet not directly legitimate and accountable, through the ballot box, to the people of this country.
Oral Answers to Questions
John Pugh Excerpts(14 years, 5 months ago)
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The Prime Minister
What I can say is that the funding we set aside for carbon capture and storage is still there and will be made available. Clearly, the Longannet scheme is not working in the way that was intended, but the money and support from the Government for this vital technology is there.
John Pugh (Southport) (LD)
Q6. Given the huge savings for the nation made by the Cabinet Office across government without legislation and the huge financial risks provoked by constant structural reorganisation, as in the NHS, would it not be better if politicians learned to manage more and meddle less—even if Governments find the latter easier and more interesting?
The Prime Minister
My hon. Friend makes an important point. Let me pay tribute to the Minister for the Cabinet Office and Paymaster General, my right hon. Friend the Member for Horsham (Mr Maude), who does this patient work at the heart of government and does not always get recognised for it. We have reduced management consultants by 70%, saving £870 million; we have spent £490 million less on temporary labour; we have spent £400 million less on marketing and advertising: that is an 80% reduction. These are serious changes to cut the cost of central Government and make sure we provide good value for money. None of those things was done under the last Government.
Open Public Services White Paper
John Pugh Excerpts(14 years, 9 months ago)
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Mr Letwin
My hon. Friend is absolutely right that there is no point in a system that does not allow genuine innovation. My hon. Friend the Member for Bournemouth West (Conor Burns) rightly made it clear in a previous question that the recent productivity record of the public services has been lamentable; their productivity has not increased commensurately with the increase in investment. Part of the reason for that is lack of innovation. In the most effective services across the world, there is continuous innovation, and that often comes from new small entrants. That is why the thrust of the White Paper is to promote and enlarge the scope for new entrants with new ideas to create innovations and more productive methods of doing things, which will, of course, result in the public’s money being used better in providing the services people want.
John Pugh (Southport) (LD)
It was an interesting statement, but is not the danger that the Government may get a great reputation for reorganising public services rather than actually running them? Why cannot the Government concentrate on the boring, unglamorous job of promoting efficient, accountable management? Indeed, the word “management” was curiously missing from the statement.
Oral Answers to Questions
John Pugh Excerpts(15 years, 1 month ago)
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Mr Maude
The social investment bank planned by the last Government would have received a meagre £75 million of investment at best, and probably a great deal less than that.
I do not know whether the right hon. Lady noted what my right hon. Friend the Secretary of State for Communities and Local Government told the conference of the National Council for Voluntary Organisations yesterday. He said that the Government had “reasonable expectations” that local authorities would not impose greater cuts in their funding for community, social and voluntary organisations than they imposed on their in-house services, and that if authorities did not follow those “reasonable expectations”, he would contemplate making them statutory.
The fact is that we face the biggest budget deficit in the developed world. As a result of the legacy of the Government of whom the right hon. Lady was a prominent member, we are spending £4 for every £3 in revenue, and we cannot carry on like that. The necessity—and it is a necessity—to eradicate the structural deficit is something for which the right hon. Lady should bear her full share of responsibility.
John Pugh (Southport) (LD)
3. What assessment his Department has made of the potential efficiency savings from the use of teleconferencing.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
Teleconferencing and video conferencing are a key part of our strategy to minimise travel in the civil service. Officials have been encouraged, indeed instructed, to use alternatives. Telephone calls can be quite helpful in that regard, when possible. So far, Departments have saved £50 million in the current financial year by avoiding travel, but by the better buying of travel services we have saved an additional £50 million. We are also reducing the cost of teleconferencing itself. We have opened up fresh discussions with major suppliers, and as a result of the Crown renegotiations that I have been overseeing, one of our suppliers has already offered a significant reduction in its audio conferencing tariffs.
Government IT Procurement
John Pugh Excerpts(15 years, 2 months ago)
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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John Pugh (Southport) (LD)
It is a pleasure to serve under your chairmanship, Mrs Brooke. Few things are as beguiling as an anoraky discussion about IT on a wet Wednesday afternoon; I am sure that we are all looking forward to it.
I want to add to an improving narrative about the Government and IT, which are not normally considered a good combination; in fact, some would argue that a successful Government IT project is some sort of oxymoron. None the less, the Government are committed to saving money by advancing IT applications. They must save money, and that is one sensible way, on the face of it, to do so. Developing better applications, better use and better value in IT is part of the efficiency agenda that the Government are destined to follow.
That might seem in some ways to be a triumph of hope over experience, but IT is recommended primarily because it offers hope. It offers the hope of speeding up processes or eliminating manual processes, and the opportunity to reduce costs, especially—and, perhaps, regrettably—manpower costs. Those are real benefits in the long term. Unfortunately, the procurer—in this case, the Government—must shell out quite a lot of money in the short term. They must pay up and hope that they get results, and we are all aware of the disasters that occur when they do not.
I encountered a number of those disasters during the previous Parliament through my work on the Select Committee on Public Accounts. Nearly every Department can list one. I do not want to embarrass particular Departments, but I will cite a few. The Lorenzo patient administration software, which I saw demonstrated over the road in Richmond house, has not been implemented anywhere so far, although it was developed at appreciable cost. The Libra project, which affected the Ministry of Justice and the courts, went from £146 million to £232 million. A Department for Transport project ended up unexpectedly spitting out messages in German. The Ministry of Defence, which excels everybody in this respect, developed an infrastructure system that went from £2.3 billion to about £7 billion. I could add other examples with which we are all familiar through our casework: the Child Support Agency, tax credits, the Rural Payments Agency and so on.
I am extremely grateful for some of those illustrations, which were provided to me by the hon. Member for South Norfolk (Mr Bacon), who is something of an expert in the field and who is currently producing a book on why Government IT projects fail. I am sure that it will be available in all good bookshops and via Amazon. From what I have seen of it, it will be a forensic and rattling good read.
However, even the hon. Member for South Norfolk, with his expertise, accepts that there are mitigating factors. Even in the private sector, IT projects are not guaranteed to work. Sainsbury’s had to write off a scheme developed at the cost of £260 million because its failure to operate properly was affecting the company’s share price. The London stock exchange had a heck of a problem over many years developing some of its IT systems, presumably to the detriment of many traders.
Against that, one could say that there are many instances in which the Government are successful, but they are never noticed because they are never of any interest to the press. “Another successful Government IT project accomplished” will never be a headline anywhere. However, I can think of things that we use daily that work satisfactorily that were developed by the Government or Government agencies. I use an Oyster card regularly, for instance. The congestion charge is extraordinarily efficient; sometimes, regrettably, too efficient as far as some of us are concerned. The passport office’s renewal service is good, and the Driver and Vehicle Licensing Agency system for renewing car tax is exemplary as a development of Government via the internet.
There are quiet signs—the Minister will wish to draw attention to them—that the Government have improved incrementally, and maybe substantially, even in the short time that they have been the Government. I believe that it is now common practice to deal with major suppliers, at any rate, as a Government, rather than allowing Departments to be picked off one by one by clever salesmen from software companies and the big IT firms. That is a laudable development, and one modelled on what happens in private enterprise. There are also various hurdles to get over. If some permanent secretary in some Department outside the Cabinet Office thinks that he has an IT project that will run, work and do the trick, he must now satisfy the Cabinet Office that that is actually the case. Such vetting and approval is surely a development that we want to encourage.
Getting things right is a hard art to acquire, and we as a Government and a country might not quite be there. The net effect is that some of the softer savings that we seek—those that are not publicly contentious and do not involve cutting services—will not be secured unless we drill down hard into that area and anatomise what goes wrong.
There are two schools of thought about what goes wrong. One school blames Government procurement: the specification fails, the tendering process is inadequate or civil servants are being suckered by streetwise corporates or conned by the consultants whom they often rope in to advise them. Essentially, they are being sold a pup and getting the wrong thing out of the box. The other school of thought—there is a lot to it—is that it is not the procurement and tendering that are going wrong so much as project management by Government. People talk about deficiencies in client-side expertise in managing, developing and evolving IT projects and about the Government’s relatively poor understanding of software development, saying that there are few experts in the civil service with a thorough grasp of it.
Over the years, there has certainly been appreciable evidence of inadequate cost control and checking, as well as evidence that during the course of a project, Ministers or civil servants often suggest some innovation that ends up costing far more than expected. A classic and highly publicised instance was when the Government asked Boeing to improve the avionics of helicopters. The net effect was a price tag that they could not bear at the time, so we ended up with grounded helicopters, largely because we did not understand what we were asking Boeing for and because the company was certainly not prepared to be thoroughly transparent about what costs might be incurred. Strangely, on that occasion, the MOD did not have the money.
I can think of other instances. EDS was almost taken to court by the Government for the failure of the tax credit system, but part of the problem was obviously the previous Government’s haste to get it up and running, even though EDS genuinely mentioned the problems that it could see. Despite the Government’s bluster about their intention to take EDS to court, they never actually did, ending in a settlement that was more favourable to EDS than some people might have expected given the debacle. That leads one to believe that EDS was not solely to blame for how the project evolved. There is also evidence that in the process of developing the system for the Rural Payments Agency, in particular, civil servants—perhaps the people one expects to monitor the process—took their eye off the ball.
We are therefore torn between two different diagnoses of the ill. It could be procurement; it could be project management. I suggest that they are two sides of the same coin. It might be genuinely insufficiently appreciated how different IT procurement is from other sorts of procurement with which Government are familiar, such as office furniture, tarmac and trains, although even trains have a software dimension nowadays. There is a failure to appreciate that what the Government are ultimately buying is not just things but new ways of doing things. I genuinely think that it is easy for Government to get the procurement of things almost right. I say “almost right”; we MPs are familiar with the printers procured for us by the House. I dare say the House got a good price for the printers, but replacement cartridges cost way over the odds. I must say that that does not seem to be an excellent form of procurement. Equally, there are countless incidents of Government simply not acknowledging that they will have to pay huge amounts in licence fees as part and parcel of what they are ordering, and that often leads to new deals with the companies when Government are alerted to the fact and they simply end up bearing the costs.
With regard to IT hardware procurement, the Public Accounts Committee and the National Audit Office recommended some time ago that it would be sensible for all Government Departments to refresh their hardware every three years and that to leave it longer would be detrimental to true value. In a sense, even that advice is dated. I still work daily with a Power Mac that I ordered in 2001, so its lifespan is already three times longer than the NAO recommends. Therefore, I am not convinced that there is not an art to ordering hardware successfully, but I think that the chances of Government getting that bit right are higher than their chances of getting the new work processes and software processes right.
There are certain implications of Government buying new ways of doing things, rather than simply buying things. To raise a negative point, and one that is not implied, the solution that is often advocated is that we need ever more detailed and expensive tendering processes and more consultant advice. We certainly do not want sloppy tendering or a lack of clarity on objectives, but the problem will not be resolved by having greater detail in the specifications. That is not the answer, unless the name of the game is simply to mind one’s back and prove that one has covered all the bases.
Prolonged over-specification does not seem to be the route out of the problem. Why is that? One thing that it does is put off small suppliers that cannot bear the cost or time constraints of a long tendering process and so cannot stay the pace. One consoling point about the demise of Building Schools for the Future is that its tendering process often excluded many capable and competent people and small and medium-sized enterprises. They might have had a real future role, but they were simply excluded by the nature of the tendering process because they could not match certain preordained criteria.
Another unhelpful consequence of over-specification is that it discourages innovative approaches. I spoke recently with representatives of a computer company that does a lot of business with Government, and they said that they are sometimes hampered not only by the fact that they have a well-defined tendering process, but by the OJEC—Official Journal of the European Community—regulations. They said that Government sometimes interpret those regulations as meaning that they are obliged to tell a company’s competitors if it suggests a new way that it can do what the Government want it to do that is different from what was set out in the original tender, and that is a distinct commercial disadvantage that companies would not welcome.
Over-specification also often leads to the development of complex and expensive bespoke solutions to problems that could otherwise be solved by adapting off-the-peg solutions. I do not want to mention it because it is a sad business, but the Independent Parliamentary Standards Authority had to develop a new expenses system for MPs even though there are probably many available commercially that would have been adequate. I will give another example in which we are perhaps guilty of reinventing the wheel in order to protect our own interests. If a Member wants to look up what they have said in a debate, they can go to Hansard’s search engine, which presumably was specially commissioned, where they will find a rather dismal process. If I try in a week’s time to find what I said about IT, I will probably receive a message telling me that there are no matching criteria, or something like that. Instead, I will go to a commercially-developed website, TheyWorkForYou, which will take me straight to the Hansard pages that the Hansard search engine would not bring me to.
There is much to be said for Government simply making themselves open to a sensible counter offer when there is something out there that meets their needs, rather than demanding bespoke alternatives at every point and turn, because that plays to the big players, and we see evidence of that in Connecting for Health. Highly detailed criteria and inflexibility in the tendering process also rules out the kind of procurement, which works well in the private sector, whereby companies are approached not by individual big companies, but by consortiums that have a variety of skills and can operate in a fluid market.
Another route that we do not want or need to go down in order to find new ways of doing things successfully, which is what software procurement is really about, is having a new army of software programmers and geeks employed by the civil service. Essentially, we need better project managers who can understand the end-user experience, iron out unnecessary complexity and comprehend the implications of changes that are demanded. We need project managers who understand not only the technical implications of project change, but its human aspects. The classic example of failure to do so is the tax credit system, which was developed by a firm that had no familiarity with the circumstances and life conditions of the people who would be applying for tax credits.
I think that there is a route through, but it is not a command and control model. I suggest—I am sure that the Minister is inclined to agree with me—that any successful negotiation of IT and software matters must be a type of conversation, with an acceptance that product delivery requires refinement, hand holding and long-term maintenance. Therefore, we need to get smarter and recognise that it is a specific type of process.
There is a remaining issue that I will try to address in the minutes I have left—I want to leave the Minister 10 minutes in which to respond to the debate. Even if we accept that there is a new way of doing things, that the Cabinet Office will wise up to it and that computer procurement is more like a conversation than an adversarial game, we must recognise that sometimes even conversations turn sour and we end up with ineffectual and underperforming suppliers that are overly costly. What then can Government do? The normal response would be to think that such suppliers should be shown the door, notwithstanding the complication that might ensue for maintenance and further development.
What—if anything—tends to happen depends to some extent on Government’s command over the whole process. If they are looking at a very proprietary solution, such as some quirky software over which a firm has sole and patented control, the options are dramatically reduced. Government can start the project again, which would be expensive and embarrassing, or they can continue to pay up and hope that the costs do not rack up too high, or they can just abandon a particular project and hope that everyone quietly forgets about it. There are incidents of that happening, such as Fujitsu’s withdrawal from Connecting for Health. I suggest that it is in Government’s interests, in most of their procurement, to insist on open standards, although not necessarily open-source software. As a powerful customer, that is exactly what they need to do.
I will make a brief comment on open source software, which is something of an enthusiasm of mine and had the Chancellor’s backing back in 2009. I think that there are real merits in overcoming the Government’s aversion to open source and recognising that it has advanced, that it is producing some very sophisticated SMEs and that it is not comprised entirely of bearded men in pullovers working in garages. There is a widespread belief that it represents a substantial challenge to some proprietary brands of software, and many of the big companies try to stifle open-source encroachment in the public sector.
In 2009, the Chancellor said that open standards, if not open source, could engineer a good deal of saving for the Government. He stated:
“We need to move in the direction of what are known as ‘open standards’—in effect, creating a common language for government IT. This technical change is crucial because it allows different types of software and systems to work side by side in government. At a stroke it means big projects can be split into smaller elements, which can be delivered by different suppliers and then bolted together.”
The article I am reading from is titled,
“When it comes to IT, big is not beautiful”.
It states at the top:
“Agile, modern technology can transform public services and relieve taxpayers of bloated budgets”.
I am sure that we would support that.
There is an overwhelming case for open standards, if not open source, as the Chancellor suggests. If we despair of a construction firm that is not building things properly, we can get in another firm that understands bricks. In mission-critical IT, projects need to be similarly resilient. If that does not mean open source, it certainly means open standards.
To conclude, the Government are moving in the right direction. They are trying to get the boring bit of government right, and that is important—we all subscribe to that—and the Cabinet Office has tried hard to embrace and spread good practice. I would like to hear from the Minister that that will be pushed further and faster, and with more success, because, if we are to believe the Chancellor, the savings would be substantial.
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
I welcome you to the Chair, Mrs Brooke. This is the first time I have served under your chairmanship, and it is a real pleasure. I do not know whether you count yourself as one of life’s anoraks. I do not, but I thoroughly enjoyed that speech by the hon. Member for Southport (John Pugh). I congratulate him on securing this debate and, if I may say so, on the elegant way in which he plugged the forthcoming book by my hon. Friend the Member for South Norfolk (Mr Bacon), with whom he served on the Public Accounts Committee.
It is one of the oddities of this place that the Minister for Civil Society should find himself responding to a debate on cost reduction in information and communications technology procurement, but that is my fate as the junior Minister in the Cabinet Office. I should start with an apology to the hon. Member for Southport: this is not my area of day-to-day responsibility, so I am a fish out of water here, but I shall flap to the best of my abilities for the next eight minutes or so. I take this opportunity to reassure him that the Cabinet Office takes seriously the opportunity he has identified to find substantial savings and efficiencies, and better ways for the Government to commission, procure and manage ICT. I shall focus more on procurement, because that is where the Cabinet Office is in a leadership role and where it is particularly focused at present.
The hon. Gentleman was clear about the context in which this debate takes place, including the overriding priority to control the deficit. He will know from his experience on the Public Accounts Committee that there clearly is considerable scope to make savings on ICT, and we are focusing on that. Specifically, there has been a review of major programmes, the introduction of the ICT moratorium and a new, rigorous approval process for procuring consultants and contractors. We expect that up to £1 billion might be saved through the moratoriums in this financial year, if current buying behaviour continues.
In addition to those short-term measures, the Government are committed to delivering sustainable reductions in ICT expenditure—both the cost of goods and services, and the cost of procurement—through the following key initiatives, which are being incorporated. The first one involves managing the Government’s strategic suppliers on a consolidated basis from the centre as the Crown, not from individual Departments—an opportunity that the hon. Gentleman identified. We expect that work to deliver up to £800 million of savings through renegotiating and de-scoping existing contracts with the Government’s top suppliers.
The second initiative involves centralising the procurement of commonly used goods and services, including ICT commodities, to standardise specifications and aggregate the Government’s expenditure more effectively than in the past. That will deliver significant sustainable cost reductions from the existing baseline of £13 billion over the next four years and, in doing so, build on the recommendations made in the Green review.
The third initiative involves streamlining the current process used to source from and contract with suppliers through the application of industry best practice—in this case, “lean” techniques, which have identified the potential to reduce procurement and sourcing project times from an astonishing 85 weeks to 27 weeks, depending on the size, complexity and risk of the procurement, while ensuring compliance with European Union directives.
The fourth initiative involves introducing new spending controls, including a moratorium on any new ICT spend with a value of £1 million or more, and a review of all major projects, a number of which are IT-based. So far, we have reviewed more than 300 Government ICT projects worth nearly £3 billion, and have recommended that more than £1 billion of expenditure be stopped or curtailed. We estimate that the review of major projects has saved £400 million this year. Those are all serious numbers.
We are also developing a strategy that increases the agility of public sector ICT in supporting policy delivery, that achieves greater value for money, that enables effective and efficient digital services and that empowers the big society through greater collaboration and transparency, which is a theme the hon. Gentleman discussed.
Let me elaborate further on each of the initiatives. First, on managing the Government’s strategic suppliers as the Crown rather than as individual Departments, one of the first actions that we took as a new Government was to announce saving targets of £6.2 billion for this financial year. A key part of that involves working with our leading suppliers, including ICT suppliers, to reform our commercial relationships and try to eliminate waste while protecting the fundamental services that we need to provide.
We are driving down the cost of Government IT contracts by negotiating directly with suppliers to achieve cost reductions and efficiency savings in our contracts. As I said, those renegotiation activities are expected to yield £800 million of in-year savings and substantial future savings. In addition, we are commencing reviews of large contracts with more than £100 million remaining contract value to identify further potential savings opportunities.
Secondly, on centralisation of the procurement of commonly used goods and services, we know that the Government buy the same commodity many times but at different price points. We are working to eradicate duplication, apply common specifications, and leverage the Government’s considerable collective buying power more effectively. We are creating a new centralised procurement operating model, and that capability will be mandated across all Government Departments. That transformation of how the Government procure common goods and services through centralised category management is targeted to deliver significant sustainable cost reductions in the region of 25% from the existing baseline of £13 billion.
For each category, there will be a single supply strategy that will deliver a centralised sourcing solution, so that central Government can significantly reduce their spend through aggregation, standardisation and rationalisation. Centralised category management teams will negotiate best-value contracts for central Government Departments based on volume-bound agreements.
John Pugh
The Minister mentioned a moratorium. Clearly, a moratorium by itself stops the spend and in doing so saves money, but advocates and supporters of a project who want it to go forward will say that, if it goes forward, it will save far more money than will be saved by virtue of the moratorium. How does the Cabinet Office in its approval mechanism make a judgment about a specific project? Does it take a broad view on how credible a project is or how secure the savings are, or is it simply the case that a certain number of projects need to be stopped in order to meet a certain figure?
Mr Hurd
It is more the case that the moratorium provides an opportunity to go through the discipline of looking closely at what is actually going on.
In my last minute, I would like to expand a little on the third pillar of our approach, which involves improving procurement processes. We know that bid costs range from £20,000 to £200,000 for every month. We are determined to reduce that, and the 6,000 pages of guidance on procurement within Government. The “lean” study has set out the task ahead of us: to refine and introduce a lean, new procurement process.
The point of all that is to try to reassure the hon. Gentleman that the Government take extremely seriously the need and the opportunity to be more efficient in how they procure IT and manage it on an ongoing basis.
Oral Answers to Questions
John Pugh Excerpts(15 years, 4 months ago)
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Mr Hurd
I am not entirely sure to which contract the hon. Lady refers, but if she means the recently announced awarding of contracts to 12 providers of the national citizen service, that process was run in an impeccably transparent way. We are absolutely delighted with the outcome and with the prospects for that programme.
Dr John Pugh (Southport) (LD)
On probity and transparency, what puts off most charitable organisations is the time, the expense and the long drawn-out nature of the process. Is the Minister going to do something about that?
Mr Hurd
Absolutely. That is a hugely important point. Everything I have learned over the past two years suggests that for many organisations the whole process of applying for and reporting public money is a bureaucratic nightmare—often totally disproportionate to the sums involved. Changing that is fundamental to the reform of commissioning and procurement that we are undertaking.