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  Government projects: getting the basics right

This speech was given in the House of Commons on 23 October 2007 as part of the Public Accounts Committee debate

Mr. Richard Bacon (South Norfolk) (Con): It is a pleasure to take part in the debate. I have been a member of the Committee for six years, and have seen a number of common themes emerge. I want to address just a few of those themes, with particular reference to the reports mentioned in the motion.

The first issue that I shall deal with—I hope that the Exchequer Secretary to the Treasury will address this point in her reply—was touched on by the hon. Member for North-West Leicestershire (David Taylor) in his intervention on the hon. Member for Falmouth and Camborne (Julia Goldsworthy). The question is: what is the centre doing to make sure that when projects are spread out across Whitehall Departments and agencies, things actually happen? Obviously, there is inherent tension between avoiding a situation in which the Treasury is too involved, and tries to micro-manage matters that should be the responsibility of Departments, and avoiding sitting back and watching a Department make a mess of things with the taxpayers’ money given to it by the Treasury.

I have not had the pleasure of being a Treasury Minister and being vexed by such issues—although I am sure that that is something that history will correct in the fullness of time. I am sure that Treasury Ministers worry very much about that tension between the centre and departmental responsibility. The tendency has been to let Departments sort things out. Some years ago, there was the fiasco of the individual learning accounts—an adult training scheme with great intentions, which was designed to help the most vulnerable, and which failed miserably. I remember thinking, “Where was the Treasury?” Similarly, in the case of the Rural Payments Agency—although I respect the fact that we are not talking about that issue today, Mr. Deputy Speaker—it was for the Department to sort out the issue. The Treasury left the Department to it, and left it to bear the financial brunt, too.

The Paddington health campus scheme was the subject of our ninth report, and at the time I found myself thinking about not where the Treasury involvement was, but where the Department of Health involvement was, in relation to the local strategic health authority and the local hospital trusts involved. The ostensible purpose of the scheme was to merge the St. Mary’s NHS Trust and the Royal Brompton and Harefield NHS Trust. However, as conclusion (i) of our report said,

“The Paddington Health Campus scheme, as proposed...was based on an inadequate Outline Business Case, constructed without the benefit of input from doctors and nurses as to the required clinical content.”

We went on to say, in conclusion (iii), that

“It took several years after the initial outline business case for the Campus partners to reach a clear position on the clinical content of the Campus, the land required, the planning constraints and the likely cost and affordability of the scheme. The scheme’s development was also handicapped by insufficient manpower and capability. NHS Trusts taking forward building schemes should have early external assessments...of their capacity to deliver complex schemes and firm timetables against which they can measure progress.”

The Treasury minutes responded:

“Trusts are advised to appoint a dedicated full-time project director and DH has established specialist Project Director’s courses at selected universities. Proven, high quality Project Directors are also deliberately moved to new schemes so hard won experience and expertise is not wasted.”

That is all very good, and I think that we all say amen to that. However, the question is this: the Government may think that it is good to have full-time project directors, and that they are necessary for delivering projects successfully, but are they actually acting on that in practice?

That brings me to my second question, which is not so much about the centre versus the local, but about whether we are getting the basics right, at whatever level. Our 14th report was on delivering digital communications through the Bowman programme. That was a so-called combat infrastructure platform—a battlefield communications system. The project was inherently complicated, because it sought to make sure that all the different players in a battle, whether they were battle tanks, infantry or air support, could talk to each other, and to HQ, and all that had to be delivered properly. It was an extraordinarily complex project, yet it did not have a senior responsible owner. It was not that the senior responsible owners kept changing, as we have seen happen in many projects; there just was not one at all. As our report concluded,

“There is no individual within the Department with full responsibility for ensuring that the Bowman CIP”—

combat infrastructure platform—

“project meets its objectives. In 2006, the Department belatedly appointed a senior officer to act as Senior Responsible Owner. But he lacks the authority and time to effectively discharge this onerous responsibility and is only supported by a small staff.”

The Ministry of Defence, and subsequently the Treasury in its minutes, concluded that that was an omission, and that

“It is the Department’s policy that large and complex projects or groups of projects have a Senior Responsible Owner appointed on behalf of and accountable to the Defence Management Board.”

It is a good idea to have project directors and senior responsible owners in charge of projects, but even if a senior responsible owner is in charge, is that enough? It would appear not, because our first conclusion in our 27th report on IT-enabled business change, which was referred to earlier, was that

“A fifth (21 per cent.) of Senior Responsible Owners of mission critical and high risk IT-enabled programmes had not met with the nominated Minister and a further 28 per cent. met the Minister less than once a quarter. For these major high risk undertakings to succeed, Ministers need to be briefed fully and candidly at least quarterly on risks, progress and cost escalations”.

In its reply, the Treasury states:

“Ministers and Accounting Officers should, in particular, be briefed when there is significant deviation from the programme or project plan—that is, where there is more than three months slippage”.

I am bound to ask, why should Ministers not be briefed all the time? Why should they be briefed only when there is slippage? Should not Ministers know what is going on in mission-critical projects all the time, whether they are going well or not? Why do Ministers not say, at an early stage, “Why don’t you have a senior responsible owner?”?

I remember talking to a Minister who was involved in one high-profile case that the Committee considered—a typical IT project that had gone wrong. I am sad to say that that Minister resigned, because he had the wisdom to vote the right way on the Iraq war—that is to say, against—and he could not do that and support the Government policy of the day. I am glad to say that his career has been restored now; he is actually in the Cabinet, so that may give hon. Members a clue as to who I am talking about. I remember him saying, in respect of a particular project, “I sat in a room, having listened to what people said, and having read about the matter, and I said, ‘This isn’t going to work, is it?’” He said that there were 12 people in the room—civil servants and consultants—and they all said, “Oh yes, Minister, it will work.” He said that there was no one in the room who said, “Well, actually, no. You’ve got a point; there are some serious concerns.” There was no critical friend at court to make sure that the concerns were given a serious airing and had a serious voice, and as a result, he signed off the project. Of course, his instincts and concerns were absolutely right, and the project hit the buffers, just as so many others do.

In another case, I was talking to the senior computer contractor from a major firm which has been involved in many of the projects that we have examined, who was desperate to talk to the Minister to find out how to resolve an impasse and get some clarity on direction, and finally begged the Department for a meeting with the Minister. Within 10 minutes of that request, the permanent secretary himself was on the phone saying, “You don’t talk to Ministers. We talk to Ministers.”

If I were a Minister—as I mentioned to the Exchequer Secretary earlier, she does not seem to think that that is likely, but in the fullness of time I very much hope that we will have the chance to put into practice some of the things that we are talking about. It seems to me essential for Ministers to find critical friends at court, who would tell them not what they wanted to hear, but what they did not want to hear. I am sure that the more intelligent and switched-on Ministers do that. There is also the problem, as we heard earlier, of civil servants not being able to get the access that they require to Ministers, as we heard again in the context of the Rural Payments Agency.

In relation to the 27th report, there was one answer from the Treasury that I thought was particularly interesting. We said in our conclusion (iii) that

“over half of Senior Responsible Owners (SROs) are in their first SRO role, and nearly half spend less than 20 per cent. of their time on such duties.”

Lack of time was a key factor in some of the other projects that we looked at. We went on to say:

“Lack of relevant experience, combined with a regular turnover of post-holders, adds unnecessary risk to the management of IT-enabled change.”

We said:

“To address these issues, departments should appoint a Senior Responsible Owner at the outset of an IT-enabled business change on the presumption that he or she will remain in post until the programme or project is delivered, with performance and reward linked to agreed targets and milestones.”

David Taylor: I shall not refer to the RPA, as that report is not under discussion, but I worked on major IT projects for almost 30 years before coming to this place, and does the hon. Gentleman agree that one of the common themes with major IT project failures is that the client Department needs to be an intelligent client, and it cannot be an intelligent client if it outsources virtually every aspect of the development of computer systems? It needs to have its own internal trusted, experienced people, who can balance out the glowing reports given by the would-be supplier of the software.

Mr. Bacon: I completely agree. I remember the then chairman of the Inland Revenue, as it was then, Sir Nick Montagu, fiercely denying what was plain to everybody else—that the Inland Revenue had ceased to be an intelligent client, because so much of its sourcing function and its buying function was spread out among different consultancies that it was only one or two of the consulting firms that had an overview of what was going on. The Inland Revenue was no longer capable of answering the intelligent questions that one wanted to ask, because too much of its expertise was outsourced.

I was talking about the appointment of a senior responsible owner, and the presumption that the SRO would remain in post until the project was seen through. The interesting thing was the Government’s answer in the Treasury minute, in which the Treasury says:

“The Government agrees that continuity of leadership is of critical importance”.

That is in paragraph 11, on page 3 of the minute on the 27th report. However, the next sentence states:

“Although the natural progression of civil servants between roles may mean that a project has more than one SRO during its lifetime, the expectation should be that the SRO should change only when absolutely necessary, at appropriate stages to allow an orderly handover, and that the SRO will not move on until a replacement has been put in place.”

That is common sense, but why does the natural progression of civil servants between roles mean that a project should have more than one SRO? Why should not the SRO finish the project, deliver it and then get the natural progression to the next post in their career? Unless and until they have completed the project, they should not have a natural progression. If that means paying civil servants more in post, so be it.

I know that I am not talking rubbish about this, because I have heard Sir Peter Gershon, and before him various other civil servants, talking about the need to reward civil servants who stay in post to see projects through. Yet here we have the Treasury saying:

“the natural progression of civil servants between roles may mean that a project has more than one SRO”.

I say that the SRO should see the thing through. The project should be short enough for one SRO to deliver it. It should be done in bite-size chunks that can be delivered. That is one of the central problems that we face in getting an improvement across Government.

Julia Goldsworthy: Does the hon. Gentleman think that one of the reasons why civil servants may move on is that projects tend to overrun for so long that if they stayed for the duration, civil servants might be claiming their pension by the time the project was finished?

Mr. Bacon: The hon. Lady probably has a point. No matter where a project stands and how well developed it may or may not be, the culture of the civil service says, “Come on, Carruthers, your two and a half years are up. It’s time for you to get some more experience. You’re going to be transferred to the Cabinet Office”— or to stamping passports in Tristan da Cunha, depending on how well or badly he has done. That is valued more highly than the delivery of a project. I do not think that the delivery of a project has enough value inside Whitehall.

There is an explanation for that, which is unfortunate. Delivery of a project is not what causes civil servants to do well, because in a Darwinian sense it is not highly enough valued. What is highly valued is the ability to get Ministers out of a hole—I do not blame the present Government; I think this is universal with Governments of all parties—and to help Ministers explain why things that look like a disaster are “the best that we can possibly have done, considering the difficult combination of circumstances with which we were faced, Minister.” A civil servant who can do that will prosper. That is the fault of politicians, not civil servants.

Mr. Leigh: And until recently, not a single project director had ever become a permanent secretary.

Mr. Bacon: That is a scandal. We must start changing the culture and valuing the delivery of projects, and that requires changes on the part of politicians, so that Ministers are not trying simply to grab a quick headline, but to deliver commitments and see them through. That is probably as difficult for the present Labour Government as it will be for a future Conservative Government. It is a fundamental and inherent problem in delivering good government.

I shall refer to one more thing in the Treasury minutes on the report. We had said in recommendation (ix):

“The Office of Government Commerce and the Delivery and Transformation Group have not had the power to halt failing programmes and projects. The Treasury’s new Major Projects Review Group will however be reviewing all new business cases for high risk or mission critical programmes”.

For some years I have wanted to see some central capacity—some power at the centre— to say, “You’ve failed. No more money. We’re pulling the plug.” It seems obvious that that power should sit in the Treasury, but the Treasury minute answering that point, paragraph 21, says not that the Treasury will have that power, but rather that

“The Government agrees that the MPRG should make it clear to Departmental project owners what they need to do to address its concerns.”

There is enormous fear of greater interference. I appreciate that there are people saying that there is too much interference from the centre with Departments, just as there is from Departments down across the country—but one of my first points, which I hope the Exchequer Secretary will address, is whether the balance is right. We do not want huge amounts of intervention. We want the right intervention and the right power at the right time at the centre. I am not convinced that we have got that balance right.

My next point, which is related, is that the same problems occur again and again. In our 31st report on the Government’s use of consultants is a good example. We said in recommendation (ii):

“Departments and OGC do not routinely know how much money is spent on consultants”,

in recommendation (iii):

“Consultants are often used when in-house staff have the necessary skills and are less expensive”,

in recommendation (iv):

“Departments do not routinely assess the value of the work they receive from consultants”,

in recommendation (v):

“The capability of departments to be intelligent customers”—

the point made by the hon. Member for North-West Leicestershire—

“is weakened by insufficient sharing of information on consultants’ performance”,

and in recommendation (vi) that

“40 per cent of clients consider they have used consultants when it was not necessary.”

We said in recommendation (viii):

“Departments do not regularly plan for, or achieve, the transfer of skills from consultants to their staff to build internal capabilities”

and in recommendation (ix):

“Some consultant charges lack transparency”,

and so on.

The interesting thing is that not only were all those recommendations and the themes relating to them clearly identified in our Committee’s 2002 report on better value for money from professional services—we make this point in our recommendation (i), which the Treasury refers to in its minute in reply on page 31—but the Cabinet Office identified those problems in a study which its own scrutiny unit did eight years previously, in 1994. It stated clearly that the Government were poor at identifying when consultants should be used, poor at appointing them, poor at project management during the process, poor at transferring skills to in-house staff and poor at learning lessons for the future.

None of this is new at all, which is why I asked the Exchequer Secretary about the tension between the centre and the local and the centre and the Department, and about whether, without being heavy-handed or bureaucratic, things can be done to improve that balance. I hope that she will find time to address that issue specifically.

I have been reading Michael Barber’s book “Instruction to Deliver”, in which he discusses the need to improve Departments’ performance, in an environment in which the Treasury would not co-operate. He refers to Sir David Normington, who is now at the Home Office, telling him about the problems that he would face. The Treasury would shut him out, permanent secretaries would neither talk to him nor give him information and he would not be able to get to the Prime Minister—then Mr. Blair—because the policy unit would be in the way. That meant that he would probably be finished before he even started, so he had to think about how to get round the situation. He proposed a series of simple measures and behaviours to be adhered to—including, by the way, abolishing the delivery unit after a few years. He thought that that would help to improve its performance, and I think that in some ways it did. The whole story illustrates a vexing and long-term problem in the nature of how we govern ourselves, and I would be interested in the Exchequer Secretary’s thoughts on that.

Finally, I want to say a quick word about the BBC. I see no good reason why it should not be subject to the same degree, quality and type of scrutiny as other bodies that undertake public expenditure. The criticism that it, an important national institution, has come in for recently may be down to the fact that it has not had enough of the right scrutiny early enough. I am sorry that the hon. Member for Falmouth and Camborne (Julia Goldsworthy) is no longer in her place, because a good example of BBC extravagance took place in her constituency, when Dame Ellen MacArthur arrived back from sailing around the world. We are all familiar with BBC producers turning up to cover the same event; I have asked people, as a party game, how many BBC producers they think turned up to cover the return of Dame Ellen. They usually say five, 10, 15, 20 or even 30—but in fact 64 BBC producers were there. With the best will in the world—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman is going a little far from the brief that is before the House; I suggest that he steer his way back.

Mr. Bacon: I shall steer away from those rip tides, Mr. Deputy Speaker, but I hope that the Exchequer Secretary will think about that issue, because I know that other Members, including the right hon. Member for Swansea, West (Mr. Williams), are concerned about it.

I shall make one other point before concluding. The Public Accounts Committee’s 20th report on the national programme for IT stated on page viii:

“We are concerned in particular that iSOFT’s flagship software product, ‘Lorenzo’—on which three fifths of the Programme depends—is not yet available despite statements by the company in its 2005 Annual report that the product was available from early 2004.”

The software company said that the product would be available, but still it was not. Paragraph 33 of the Treasury response stated:

“The Lorenzo product is expected to be available during 2008.”

I will not dwell on the issue, because I am a bit bored with making well-researched and informed speeches on the national programme for IT in the health service, only for Ministers to say things that are manifest nonsense. I shall not encourage the Exchequer Secretary to say something that is probably not true; all I ask is that she, or one of her colleagues, will come to the House to inform us when the Lorenzo product becomes available. I do not think that paragraph 33 is true; time will tell us that.

I said that I would refer only to paragraph 33, but I should also refer to recommendation 4, one of the most important of our report. It stated:

“In view of the slippage in the deployment of local systems, the Department should also commission an urgent independent review of the performance of Local Service Providers against their contractual obligations.”

The purpose of that recommendation was to help the Treasury and central Government in their battle against computer contractors. Such an independent review would show that the local service providers had failed in respect of a whole panoply of contractual obligations into which they had entered, and make it much easier to unravel the contracts without huge cost to the taxpayer.



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