Richard Bacon MP, member of the Committee of Public Accounts, today said:
“The taxpayer is continuing to pay the price for the ill-fated National Programme for IT in the NHS.
“Although officially ‘dismantled’, the National Programme continues in the form of separate component programmes which are still racking up big costs.
“The original contracts with CSC totalled £3.1 billion for the setting up of the Lorenzo care records system in trusts in the North, Midlands and East. Despite the contractor’s weak performance, the Department of Health is itself in a weak position in its attempts to renegotiate the contracts. It couldn’t meet the contractual obligation to make enough trusts available to take the system.
“The Department is now assuming that just 22 trusts will take the Lorenzo system.
“We still don’t know what the full cost of the National Programme will be. The Department’s latest estimate of £9.8 billion leaves out the future costs of Lorenzo or the potential large future costs arising from the Department’s termination of Fujitsu’s contract for care records systems in the South of England.
“Parliament needs to be kept informed not only of what additional costs are being incurred, but also of exactly what has been delivered so far for the billions of pounds spent on the National Programme.
“The benefits flowing from the National Programme to date are extremely disappointing. The Department estimates £3.7 billion of benefits to March 2012, just half of the costs incurred.
“This saga is one of the worst and most expensive contracting fiascos in the history of the public sector. Yet, as the much more recent Universal Credit project shows, there is still a long way to go before government departments can honestly say that they have learned and properly applied the lessons from previous contracting failures such as the National Programme. It should be plain to anyone that we are witnessing systemic failure in the government’s ability to contract.
“Given the Department’s track record with the National Programme, it is very hard to believe that the paperless NHS towards which the Department is working has much chance of being achieved by the target date of 2018.”
Richard Bacon was speaking as the Committee published its 19th Report of this Session which examines the current position on the dismantled National Programme for IT in the NHS.
Launched in 2002, the National Programme was designed to reform the way that the NHS in England uses information. While some parts of the National Programme were delivered successfully, other important elements encountered significant difficulties. In particular, there were delays in developing and deploying the detailed care records systems. Following three reports on the National Programme by both the National Audit Office and this Committee, and a review by the Major Projects Authority, the Government announced in September 2011 that it would dismantle the National Programme but keep the component parts in place with separate management and accountability structures. That process has now taken place. In June 2013, the Department published a statement on the benefits to date and in future from the programmes that made up the National Programme.
The public purse is continuing to pay the price for failures by the Department and its contractors. The Department’s original contracts with CSC totalled £3.1 billion for the delivery of care records systems to 220 trusts in the North, Midlands and East. In 2011, the Department decided to renegotiate the contracts with CSC due to delays in developing and deploying the Lorenzo system. However, despite CSC’s poor performance, the Department’s negotiating position is weak because it could not meet its own contractual obligation to make available 160 trusts in the North and Midlands to take the new system. Despite two years of negotiations the full re-setting of the contract is yet to be agreed with CSC, but the Department estimates that the contract is still likely to cost about £2.2 billion, including £572 million for the Lorenzo care records system, assuming just 22 trusts take the system. This cost should have been less had the Department not undermined its negotiating position by being unable to honour its side of the deal.
Recommendation: The Department must manage the re-set contract with CSC robustly, so that its negotiating position is protected for the future.
The full cost of the National Programme is still not certain. The Department’s most recent statement reported a total forecast cost of £9.8 billion. However, this figure did not include the future costs associated with the Department’s contract with CSC for the Lorenzo care records system or the potential future costs arising from the Department terminating Fujitsu’s contract for care records systems in the South of England, where arbitration is still on-going. These costs are likely to be significant. For example, the Department’s legal costs in relation to the termination of Fujitsu’s contract have totalled £31.5 million over the last four years.
Recommendation: Given the scale of the sums involved, the Department should report to Parliament details of all the additional costs of the National Programme, including legal costs, as soon as they are known.
The benefits to date from the National Programme are extremely disappointing. The Department’s benefits statement reported estimated benefits to March 2012 of £3.7 billion, just half of the costs incurred to this point. The benefits include financial savings, efficiency gains and wider benefits to society (for example, where patients spend less time chasing referrals). However, two-thirds of the £10.7 billion of total forecast benefits were still to be realised in March 2012. For three programmes, including the care records programmes in London and the South, nearly all (98%) of the total estimated benefits were future benefits. The Department acknowledged that insufficient attention has been paid to securing benefits. The risk of benefits not being realised has increased with the transfer of responsibility for benefit realisation to NHS trusts and NHS foundation trusts from April 2013.
Recommendation: The Department should set out how it will support local trusts to secure benefits, and should track and report benefits achieved in the coming period.
It is important that Parliament is updated about what has been delivered for the billions of pounds that have been invested in the National Programme. The systems deployed through the National Programme will continue to be used for years to come. The end-of-life dates for the various systems extend well into the future, to 2024 in the case of the care records programme in the North, Midlands and East. We welcome the Department’s assurance that it intends to continue to monitor the costs and benefits of all the programmes that were formerly part of the National Programme.
Recommendation: The Department should provide the Committee with an annual update of the costs and benefits of the programmes previously managed under the National Programme.
After the sorry history of the National Programme, we are sceptical that the Department can deliver its vision of a paperless NHS by 2018. We have reported previously on the shortcomings of the National Programme, which included poor negotiating capability, resulting in deals which were poor value for money and weak programme management and oversight. There were also failures to understand the complexity of the tasks, to recognise the difficulties of persuading NHS trusts to take new systems that had been procured nationally, and to get people to operate the systems effectively even when they were adopted. Making the NHS paperless will involve further significant investment in IT and business transformation. However, the Department has not even set aside a specific budget for this purpose. As with the National Programme, it will be important to balance the need for standardisation across the NHS with the desire for local ownership and flexibility. The first ‘milestone’ towards the ambition of a paperless NHS is for GP referrals to be paperless by 2015.
Recommendation: If the Department is to deliver a paperless NHS, it needs to draw on the lessons from the National Programme and develop a clear plan, including estimates of costs and benefits and a realistic timetable.