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  Common causes of project failure

This speech was given in the House of Commons on 12 March 2009 as part of the Public Accounts Committee debate

Mr. Richard Bacon (South Norfolk) (Con): It is a great pleasure to follow the hon. Member for Glasgow, South-West (Mr. Davidson), who is one of the most fearless of our interrogators, and sometimes one of the funniest of our members. I regret that the name of his constituency changed from Glasgow, Pollok to Glasgow, South-West because we always liked saying Glasgow, Pollok. I know little about his constituency except that I am fairly sure he has very few barristers as constituents—

Angela Browning: Or farmers.

Mr. Bacon: And very few farmers—

Mr. Leigh: Or members of the royal family.

Mr. Bacon: Indeed. The hon. Member for Glasgow, South-West did not actually say just now that all farmers are thieves, but I have heard him say that before; and he did say on the record that barristers are thieves.

The hon. Gentleman also said that the right balance had to be struck between talking about reports to the Committee in a way that was not too party political and getting enough attention paid to the issue. It is something I am aware of every time I broadcast on the Committee’s work. If I am being critical, I try to be critical of the Department concerned. The hon. Gentleman used the word “dull”, and one tries to make comments sound non-party political. I go out of my way to avoid ever using the phrase “the Labour party” when I am broadcasting about Committee matters, because that would simply be inappropriate. Were there to be a change of Government at some point, which is possible, I hope that the same thing would apply if the hon. Gentleman were broadcasting in that way as an Opposition Member.

In the same spirit, there might be occasions when the hon. Gentleman should think about tempering his words. I represent a lot of farmers, and they are not all rapacious. He will remember the National Audit Office report, and our Committee report, on the case of Joseph Bowden. He was a farmer claiming money under the arable area payments scheme and the fibre flax scheme for territories—I use that word advisedly—that on closer examination, when one used the entire grid reference rather than part of it, which is all the form had required him to fill in, turned out in one case to be in the North sea between Scotland and Denmark and, in another, to be on the mainland of Greenland. That fraud was brought to the attention of the authorities, not because of the diligence of the Ministry of Agriculture, Fisheries and Food, as it then was, but because of another farmer who realised what was going on and thought that something was odd.

I also regret that the Committee only narrowly failed to pass a resolution when we had the Duke of Westminster in front of us, as the Assistant Chief of Defence Staff, requiring the hon. Member for Glasgow, South-West to address him as “Your grace” each time he spoke to him, but that is, unfortunately, now water under the bridge.

I wondered which of the various reports I should focus on. I started the day reeling under the impact of the National Offender Management Service information system report published by the NAO. Although that report is outside the scope of this debate, as we have not even had a hearing on it, many of its themes are relevant not only to the reports before us today, but to the Committee’s work in general. The National Audit Office, together with the Office of Government Commerce, agreed in 2002 a list of eight of the most common causes of project failure. The first was the lack of a clear link between the project—whatever it was—and the organisation’s key strategic priorities, including agreed measures of success. The second was a lack of clear senior management and ministerial ownership and leadership—we certainly saw that in the case of the Rural Payments Agency, and in that of the shared services report from the Department for Transport. The third was a lack of effective engagement with stakeholders—we have seen that in many reports. The fourth was a lack of skills and a proven approach to project management and risk management. The fifth was too little attention to breaking down the development and implementation of projects into manageable steps. The sixth was that the evolution of proposals were driven by the initial price, rather than by considerations of longer-term value for money, especially the delivery of business benefits. The seventh was a lack of understanding of and contact with the supply industry at senior levels of the organisation, and the eighth was a lack of an effective project team working with the clients, supply team and supply chain.

The report published this morning happened to touch on almost all those factors, in full or in part, but they are common themes we see again and again in different reports. One thing that I hope the Minister will find time to do is to address the role of the Office of Government Commerce in scrutinising and challenging the management of Government projects and in ensuring that Departments are steering projects properly, because I do not think that there is nearly enough evidence to convince us that the system is working properly. The OGC gives advice, for sure, but time and again that advice is put to one side or ignored.

The Minister will know that applications to the fast track of the civil service are up 30 per cent., which is good news for the civil service. It is unsurprising that that should be the case in these straitened financial times. It gives the civil service a better choice from among those talented graduates, and that is good news. However, I want to know what the civil service is doing at the centre to ensure that the principles of project management and risk management—all the things that the hon. Member for Glasgow, South-West described as being seen to be rather dull in some cases, but which are incredibly important for the successful delivery of projects—are tattooed on the eyelids of new entrants to the civil service so that they understand as they join that effective project management and focusing on outcomes are important from that moment on. They need to understand that the civil service is not only about policy advice but, as the Committee Chairman said earlier, about successfully delivering projects. I would be grateful for the Minister’s comments on that.

Our report on the roll-out of Jobcentre Plus speaks on that theme. As was mentioned earlier, the key staff included Mrs. Lesley Strathie, who is now chief executive of HMRC and who started as a clerical assistant in 1974. I was very pleased, as it was a point that I made in the Committee, that one of the recommendations of our report noted the need to focus on the fact that key leadership roles should be taken by people with significant front-line experience who had started at the bottom. The three witnesses had a total of 112 years of experience between them, and because they had started at the bottom, as the poor bloody infantry, they were going to ensure that no project was imposed in a way that could not work at grass-roots level. That was welcome.

That goes back to the Fulton report and the way its proposals were eventually defeated by William Armstrong, who was then head of the civil service, ensuring that the generalist stream of the civil service remained on top. That has been a 30 or 40-year failure across successive Governments, and I would be interested to hear the Minister’s comments on it. I think we are now getting a little more expertise. I always read the CVs of our witnesses, and more and more of them come from the private sector, or have at least some private sector background, which is interesting. They also seem to have genuine expertise in the subject that they are appearing before us to discuss. That is most welcome, but I would like to know what that says about fast-track entry and how it will be integrated into the recruitment process for the future.

I also wanted to make a point about the report on the Revenue and Customs prosecutions office. David Green, QC, was hired to be director of the prosecutions office, not because he had management experience or knew how to run a budget or how to procure and deliver an IT system, but because he was one of the leading criminal barristers in this country specialising in Revenue work. That was an ideal background for somebody to become director of the Revenue and Customs prosecutions office. He is a leading silk in his area, but that does not mean that the Treasury or civil service, in giving him the responsibilities of an accounting officer, which include ensuring that there is probity in the use of public money and that the proper systems are in place, can assume that a man who is extremely talented in his field will have the requisite expertise in what one might call general management. I asked Mr. Green whether he was familiar with the Treasury document on the responsibilities of an accounting officer, and he said that he had been given it and that he had been on a training course. I asked how long the training course had lasted, and he said, “Half a day.”

think I am right in saying that the Treasury minute in response to the report acknowledges that more must be done for people from different backgrounds who come in as accounting officers. I am glad that that recommendation has been made, although it is slightly worrying that it was necessary. Perhaps it is a consequence of the fact that more people from different backgrounds are coming in from outside the civil service, but it is something that it is important to bear in mind.

Finally, I want to focus on the comments made by the hon. Member for Great Grimsby (Mr. Mitchell) about the use of consultants. A lot of flannel is talked about this subject. I have an interest, in that many years ago—in the mid-1990s, when there was a Conservative Government—I was employed for two years by the trade body representing the consulting industry. I remember someone who worked for one of our member firms saying that he was looking forward to a Labour Government being elected, because that would mean more work for consultants. I asked why that would be, and was told that consultants always get more work whenever there is change. Of course, there has been a great deal more work for consultants since then.

The public sector needs to be very careful about when it uses consultants. Of course, consultants have been used for a variety of purposes in many of the reports before us. We should not dismiss the possibility of using them, but nor should we assume that must use them.

There are three classic reasons for using consultants—first, because they have an expertise unavailable elsewhere: secondly, because a temporary shortage needs to be filled on an interim basis; and thirdly, because an independent view is required. Those three reasons always apply in the commercial or private sector, but in the public sector one would hope that the independent view came more often from the civil service.

However, the knee-jerk tendency that emerged under the previous Conservative Government, and which has continued under this Government, is to reach for consultants. That is because they provide an external and apparently independent endorsement of something that Ministers do not have the confidence to take forward solely on the basis of civil service advice.

Ministers use consultants for another reason—doing so allows them to say publicly, “Well, this is what KPMG has said,” as though what KPMG says were a mantra that cannot be disproved. We must be very careful about that, but we must also recognise that there are plenty of occasions—and I mentioned the building of motorways—when one would want to employ someone on a temporary rather than permanent basis. When we do that, however, we must make sure that the proper skills are transferred.

Although I do not go quite as far as my Taliban Friend the hon. Member for Harwich (Mr. Carswell) in the use of ideological language about the corporate state, I have a sneaking sympathy for some of what he said about the use of big firms.

I met representatives of Microsoft this morning. It is a very big firm, but I was surprised and interested to hear that its representatives were worried about the failure of the public sector to hire small and medium-sized enterprises, especially in the IT sector. Because of what it does and supplies, Microsoft gets a lot of business from small and medium-sized entrepreneurial companies that use their products to develop other things for the public sector.

One point made to me was that the Government are not very good at using SMEs, especially in the IT area, even though they may have fantastic products offering technically advanced solutions and often very good value for money. I know that the Government are aware of that, and I should be interested to hear the Minister’s comments on what more can be done.

I fully accept that there may not always be an alternative to using a big consultancy firm like KPMG or PricewaterhouseCoopers to deliver a big project, and projects set up by the Department for Work and Pensions would be a classic example of that. In the negotiations that have to take place, a big company can tell the Government that it is able to put 1,000 people on the project, with the result that civil servants are reassured that it has the necessary clout.

However, it seems to me—and this is where I have some sympathy with my hon. Friend the Member for Harwich—that the other side of the coin is that the big firm has 1,000 people on its payroll whom it has to put on a job somewhere. There is almost a kind of oligopoly at work, and if we are not careful it can shut out the smaller and more agile suppliers that may be able to provide taxpayers with much better value for money.

Angela Eagle: I hope that the hon. Gentleman recognises that the Government have accepted all the recommendations in the Glover report, which was published at the time of the last Budget. They are well on the way to being put into effect, and we hope that all of them will be adopted by the beginning of next year. That should make access to the large amounts of Government procurement that arise every year much easier and simpler for SMEs.

Mr. Bacon: I am grateful to the Minister for that intervention; it is good that she has put that on the record. Of course, the Government are aware of the problem, but a series of steps needs to be taken between being aware of the problem and ensuring that it is solved on the ground.

Dr. Pugh: The hon. Gentleman mentioned Microsoft. He will be aware of course that, in the Building Schools for the Future programme, small to medium-sized enterprises—IT companies—had grave difficulty getting a look in, whereas Microsoft has got its feet well under the table. So I hope that he will not take its protestations too seriously.

Mr. Bacon: When anyone comes to see us, we naturally think that they will have a vested interest. I am reminded of the diaries of the hon. Member for Sunderland, South (Mr. Mullin), which were published yesterday and in which he said that one of his first steps was to see no vested interests of any kind when he became a junior Minister. That did not last. Richard Branson wrote to the Prime Minister and was passed on to the Foreign Secretary, and when the issue was finally passed to the hon. Member for Sunderland, South, he felt unable to say no to meeting Mr. Branson.

Of course, the hon. Member for Southport (Dr. Pugh) is right. All companies have their own commercial interests, and it is quite right that they do their best to protect them. He mentioned Building Schools for the Future, which raises another issue about consultancy, on which I will finish. We had that hearing only a few months ago, so the issue is not yet before us in a Treasury minute. The average salary of the employees of Building Schools for the Future is 85,000, which is pretty high. It has 111 employees. Hon. Members might think that the reason why they have high salaries—indeed, this is the reason given—is that they are all specialists and therefore such salaries are needed to attract them.

The permanent secretary said that there is a market in such things. Perhaps he is right—one assumes that he is—but people might assume that, if there were a lot of in-house expertise, consultants would not be used so much. Yet since that body has been established, it has spent nearly 6 million on consultancy. In the past year alone, it has spent 750,000 on consultants and, when asked about that, those involved said, “Oh, that’s mostly for lawyers.” Why are the schemes so complex that people cannot bid for them without enormously thick contracts? The average cost of bidding for a Building Schools for the Future contract is about 1 million, which, admittedly, is a lot less than the cost of bidding for a PFI hospital, at 11 million, but that goes back to the point about oligopoly—people are possibly being shut out, and the Government, on behalf of taxpayers, must always be aware of that.


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