Spotted By BOM Correspondents

BOM correspondents have spotted the following, including news of some real old favourites:

1. NHS Supercomputer still haemorrhaging cash

Were you by any chance under the impression that our new broom government had scrapped Blair's wildly expensive and wildly useless NHS Supercomputer (see many previous blogs)? Er, no. All they've actually done is attempt to renegotiate the contracts with the IT suppliers.

AMB highlights an interesting post on the latest position by Tony Collins, the former Editor of Computer Weekly and a man who did much to expose the lunacy in the first place. He tells us that the Department of Health are signing a new agreement with one of the main suppliers (CSC) to deploy a system (Lorenzo) that the hospitals themselves don't want and may never use. Collins writes:

"The deal will commit CSC to deploying the Lorenzo system to NHS trusts that have no intention of deploying it; and the deal commits the DoH to paying CSC for a minimum number of Lorenzo deployments even if NHS trusts don't actually deploy the system.

For some in the NHS, the deal will mark a new low in the history of the NHS IT programme. It may also show why central government is congenitally ill-suited to signing big IT contracts."

So WTF is Lansley's Health Department doing this?

Well, on the positive side, the new agreement will apparently save around £0.5bn compared to the previous contracts. But it will still leave this bit - that may well not ever be used - costing us £2.7bn. That aside, Collins suggests three other highly plausible explanations for the Department going ahead:

1. Pulling the plug might have led to CSC suing the Department, just as another main contractor (Fujitsu) is already doing
2. It "defers any day of reckoning within Whitehall over what many in the NHS regard as a failed programme"
3. It "relieves the health minister Simon Burns from taking any tough decisions about the future of the NPfIT, at least for the time being".

And the cost to us taxpayers? As always, it's virtually impossible to know. All we can say is that the Supercomputer has already cost us something like £6bn, for which we have got sweet FA in terms of value.

(PS This of course is not the first Labour contract our new government has tried and failed to get out of. The contract for those two new aircraft carriers had been so heavily tilted against taxpayers that it was actually cheaper to carry on rather than pull the plug. Even though we can't now afford the aircraft to go on them, and we will have the first navy ever to sail two carriers with nothing to carry. Nelson must be spinning - see this blog)


2. Student Loans Company still malfunctioning

Peter T highlights the fact that the Student Loans Company (SLC) is still not managing to pay loans on time when they are needed. In other words, despite all their promises to do better in 2010 after the shambles of 2009, the SLC still failed to pay 26% of students by the first day of term this year.

Which meant of course that many students were forced to look for emergency employment so they could eat. Bar-keeping and lap-dancing may well be good experience for later life, but that's not what we pay the SLC £94m pa in administration cost to deliver.


3. British Council still cocking-up

David Blackie reports on the latest cock-up by our old friends at the British Council.

The BC has a marketing arm for British education institutions seeking to sell courses to overseas students - Education UK. It was established a few years ago to provide a Big Government Solution in place of the private marketing operations that had existed previously. And yep, you guessed it - it's a disaster.

In fact, it's so shambolic, and its website is so dysfunctional, that the BC has now been forced to refund subscriptions to participating institutions. David writes:

"...the organisation has used taxpayers’ money and the machinery of government to send students to a site which is so bad that everyone gets their money back. Well, actually not everybody, because there will be no refund to the taxpayer for the extraordinary waste of public money, no refund to the schools and colleges who have lost business as students, parents and agents gave up trying to use a dysfunctional site, and – interest declared – no refund to the businesses compromised by the organisation using taxpayers’ money to divert monies into its own pockets."

As we've blogged many times, the hopeless BC should be abolished. And we're seriously disappointed that Cam has not only allowed it to survive, but reportedly clasped it to his bosom on those recent trips out East.

Gah.

4. International sports bunfights still losing money

Bobby Charlton (hmm... sounds familiar somehow) emailed to point out that South Africa didn't make nearly as much out of the 2010 World Cup as had been billed:

"South Africa made a return of just £323m on the £3bn it spent on building stadiums and infrastructure for this summer's tournament, according to official figures

Mike Schussler, director of consultants Economists.co.za, said: "The country made a bit of money but less than expected. We got a small part of the ticket sales and the foreign visitors' spending, but it's not as much as we expected."

Well, who'd have possibly guessed that?

Thank God we got shafted by that nice Mr Blatter.

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www.gudanggrosiran.com Categories: Bonfires, British Council, npfit, quangos

Scrapping The NHS Supercomputer

Best place for it

Earlier in the week, we said that Mr Cam's pledge to scrap the notorious NHS Supercomputer (the National Programme for IT - NPfIT) would save next to nothing. Having taken a closer look at the figures, we now think that we - yes, we, not Mr Cam - were wrong.

We now think scrapping NPfIT might save us around £1bn pa over the next five years. And that's not to be sniffed at.

We've blogged the Supercomputer many times over the years (see collection here). Foisted on NHS clinicians against their wishes, it is now budgeted at over five times its original supposed £2.3bn cost, and is running years behind schedule. Chuck in serious and unresolved concerns about patient confidentiality, and you are looking at a Grade A unmitigated disaster (one that was personally ordered by Bliar at a No 10 summit in 2002).

As always with such disasters, reliable up-to-date cost figures are hard to come by. But we do have a Public Accounts Committee report from earlier this year, and an associated National Audit Office report from 2008.

In summary, they give us a total cost estimate as at March 2008 of £12.7bn. That includes £6.8bn on the "core contracts" with IT suppliers, a further £0.7bn on later contract additions (scope creep), and £3.6bn on local implementation costs to be met by NHS trusts.

Unfortunately, those figures are at 2004-05 prices, so we need to adjust them. The IT contracts are effectively indexed against the RPI, which has already risen by about 15% since April 2004. And although we do not have a year-to-year spend profile, given that we are now only halfway through the supposed final delivery timetable, we can quite reasonably inflate the total by 15%. Which gives a total estimated budget spend in cash terms of around £14.6bn.

As at March 2008, just £3.6bn of that had been spent (c 25%), including £2.3bn on IT contractors. Which means there was still about £11bn left to spend over the next 7 years. And of that, £6.3bn will go to the contractors (= £7.5bn times 1.15 minus £2.3bn), with £4.7bn to be spent within the NHS, either centrally or locally.

Let's assume that the £11bn is spread evenly over the years from 2008-09 to 2015-16 (the end-date). That's a conservative assumption because in reality the spend is running well behind schedule and future inflation will lift the later year spends. But to be conservative, let's assume it anyway.

So that means future spending up to 2015-16 is c £1.6bn pa, of which the contractors wil be getting roughly £0.9bn pa.

The question is how much of that we could escape by scrapping the project now?

As per, there is a total lack of info on this. But we do know that the Dept of Health has signed contracts with the IT suppliers that commit the NHS to make payments whether or not the individual health trusts use the new systems or not. Which means that the contractors have quite sensibly locked us in: cancellation would incur financial penalties.

But how big are those penalties?

Unfortunately, we don't know - the contracts have not been published.

But bearing in mind that these contractors are struggling to deliver the project anyway (two of them - Accenture and Fujitsu having already dropped out), and bearing in mind that they will want to stay on the right side of Mr Cam, there ought to be an opportunity to negotiate a fairly keen exit deal.

It's a shot in the dark, but let's say we could get out for a 30% penalty charge (which is pretty hefty) spread over the remainder of the contract life. Then we'd save c £0.6bn pa on the contractors' costs.

To that, we could add savings within the NHS, both centrally and locally, of up to £0.7bn pa. True, some of those savings might need to be spent on alternative systems, but we should remember that according to the DoH, the Supercomputer was never meant to cut NHS costs. Total savings are estimated by the DoH at only £119m pa, so by the same token, scrapping it ought not to increase costs by much.

Overall, we estimate that scrapping the Supercomputer - net of penalty cancellation charges - could save us around £1.2bn pa (= £0.6bn saving on contractors' costs plus £0.7bn saving on internal NHS costs minus £0.1bn offsetting additional NHS costs).

To be ultra-conservative let's call it £1bn pa.

Now, can anyone see anything we've missed?

Surely even IT contractors wouldn't demand more than a 30% (=£1.5bn over the remaining five years) penalty cancellation charge? Not if they want to be seen as patriots, anyway.

PS In case anyone thinks we should press on with the project because we've already spent too much to stop, just read the damning PAC report. The guts of the new system - the patient care record - is nowhere near finished, and what has been delivered has been found seriously wanting by users. It's finally time to pull the plug.

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www.gudanggrosiran.com Categories: cuts, npfit