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Friday, 5 August 2011

How Whitehall Pays £3,500 For A £250 Computer In 'Obscene' Waste Of Public Money

Whitehall is wasting an ‘obscene’ amount of public money on IT systems, a report by MPs admits.

The report cites some Whitehall departments who blow an average of £3,500 on a desktop computer, while they can be bought for as little as £250 on the High Street, 14 times cheaper.

Ministers have created a ‘recipe for rip-offs’ by buying from a cartel of suppliers at massively inflated prices, it says.

The Public Administration Select Committee described the Government’s overall record in developing and implementing IT systems as ‘appalling’.

According to the most recent figures, those for 2009, an estimated £16billion of public money was spent on IT in a single year.

But over the past 20 years, a number of high-profile government computer projects have run late, over budget, underperformed or failed.

The latest shocking example of Government profligacy comes at a time when ministers are making savage cuts across Whitehall in a bid to reduce Britain’s largest peace-time deficit.

Billionaire retail magnate Sir Philip Green last year produced a report which catalogued staggering examples of Whitehall waste.

Claiming his Topshop business would ‘go bust’ if it was run like the Government, he told ministers they could slash £20billion a year from public spending without sacking a single civil servant.

Examples of extraordinary waste have included officials paying £73 for a box of copier paper that can be bought in bulk for just £8 and an NHS Trust spending £47 on a bag of gluten-free pasta that costs just £2.

Calling for the Coalition to widen its IT supplier base to smaller firms, the MPs’ report said: ‘The lack of IT skills in Government and over-reliance on contracting out is a fundamental problem which has been described as a “recipe for rip-offs”.

‘IT procurement has too often resulted in late, over-budget IT systems that are not fit for purpose. Given the cuts that they are having to make in response to the fiscal deficit it is ridiculous that some departments spend an average of £3,500 on a desktop PC.’

The MPs went on to criticise the Government’s reliance on a ‘cartel’ of suppliers who regularly charge between seven and ten times more than the standard rate.

Tory MP Bernard Jenkin, chairman of the PASC, said: ‘The Government has said that it is overly reliant on an “oligopoly” of suppliers; some witnesses went further and described the situation as a “cartel”.

‘Whatever we call the situation it has led to an inexcusable situation that sees governments waste an obscene amount of public money.’

The report pointed to a number of disastrous IT initiatives including the trouble-prone Child Support Agency’s computer system.

In March this year, the CSA computers malfunctioned, leaving staff having to sort out 100,000 maintenance claims by hand. Previous failures by the system mean that nearly £3.7billion is still owed by absent parents to their children.

Tony Blair’s former IT chief Ian Watmore has blamed ministers in the previous Labour government for ordering expensive computer projects as an afterthought or in an effort to make their policies ‘sound sexy’.

The Coalition has already called a halt to big IT projects, vowing no scheme will cost over £100million.

It has also promised to open up the procurement process to smaller companies. The current process can take up to 77 weeks, which puts off smaller firms, who often cannot afford to have staff working for so long on a bid they may not win.

Tory MP Nadhim Zadawi said: ‘A “recipe for rip-offs” could sum up Labour’s entire tenure in government. And yet Ed Miliband and Ed Balls would not do anything differently. The Labour Party just does not seem to appreciate that the amount of money they have wasted is unacceptable.’

Emma Boon, from the TaxPayers’ Alliance, said: ‘It smacks of incompetence that the Government has been paying way over the odds for IT, and means that millions of pounds of taxpayers’ money has been wasted.

‘It is simply unacceptable for departments to be haemorrhaging cash because there is a lack of skills and too much reliance on contracting out.’

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