How labour government squanders £300 billions with PFI schemes

On the face of it, PFI schemes does not sound like a good deal- decide what you want, find someone to supply it, then sign a contract that binds you into a legal straitjacket for decades, during which you pay them 37 times what the item is worth.

Such a deal makes even less financial sense in a country still struggling to escape the effects of the worst slump since the Great Depression. Yet this is what the labour Government's promotion of private finance initiatives (PFIs) to pay for public services has foisted on the taxpayer.

The taxpayer is, in effect, locked into making enormous annual payments for 667 school, hospital and other public-sector programmes with a capital value, or price, of around £55bn. The good news is that more than £37bn has been paid. 

But the overall bill for the contracts is more than £262bn, and this will not be fully paid off until 2047.

And that is not all. With a fresh catalogue of further projects valued at £11bn – in capital costs alone – currently under negotiation, Britain's liability for PFI projects since 1997 could exceed £300bn.

The PFI – the brainchild of the former Conservative chancellor Norman Lamont – was seized upon by Tony Blair in 1997, when he swept into power with a New Labour government determined to show that it could be the party of business. The Government committed itself to keeping the proportion of public debt to gross national product (GNP) below 40 per cent. Financing investment through PFI – with costs kept off the balance sheet – was seen as a way of achieving this, and led Alan Milburn, then health minister, to declare that PFI was "the only game in town".

PFI works on the principle of private firms building various forms of infrastructure – whether roads or bridges, schools, hospitals or prisons – then charging the public sector for using them over lengthy contracts that can run for more than 30 years.

But it has left a legacy of debt that will last a generation, according to unions who have slammed what they say is a credit-card approach to buying-in essential services. Calling for an end to the use of PFI to pay for public sector projects, Brian Strutton, the GMB's national secretary for public services, said: "PFI is building up a legacy of high-interest debt that will last for decades. The public is paying over the odds on PFI projects, with debt ratios in most areas at over 500 per cent. This is like paying for schools and hospitals by credit card."

Jean Shaoul, professor of public accountability at Manchester Business School, said: "They've mortgaged the future in the most profligate way... we have a government that acts in the interests of a financial oligarchy. Using the private sector as an intermediary to raise finance to build hospitals and to run them is extremely expensive and far more expensive than if the Government were to do it itself."

A case in point is the Norfolk and Norwich University Hospital, where the PFI consortium made tens of millions on a deal described by the Commons' Public Accounts Committee as "the unacceptable face of capitalism".

Firms have also made millions in profit by putting up the money for IT programmes that have become so expensive the Government now frowns on PFI being used to fund them. To take only one case: payments for the Crown Prosecution Service's Compass IT system come to £670m over the 10 years of the contract, 37 times the £18m capital value.

And the nature of PFI deals means that payments still have to be made even if the project is abandoned. Balmoral High School in Belfast closed six years after it was built, when pupil numbers halved. However, the Northern Ireland Department of Education owes the contractor £370,000 a year for the next 18 years.

Making changes to PFI-funded buildings and projects can cause costs to spiral. A 2008 National Audit Office report found that £180m a year is paid out for contractual amendments. And it highlighted extortionate charges for routine maintenance – such as £302 for an electric socket to be fitted, £47 for a key, and almost £500 to fit a lock.

Peter Dixon, chief executive of University College London Hospital – which pays some £43m in PFI charges a year – says that inflation is a real fear. "If we run into a bout of inflation, because all these payments are index-linked, then we are in trouble, all of us."

He described the arrangement as "expensive and inflexible", but added: "For the past 12 years the only way you were going to get a brand new hospital was by the PFI route... people knew they weren't cost effective but it was the only way they could get funding."

But a Treasury spokesman said: "PFI has a good record of delivering to time and budget, and represents good value for money over the whole life costing by telling us what it will cost to build and manage our assets."

Contracting out: Familiar faces with PFI connections

Alan Milburn MP
He famously described PFIs as the "only game in town" during a stint as health minister, and is now a director of Diaverum Healthcare – a company that is contracted to run the kidney dialysis unit at the PFI-funded Burnley General Hospital.

Quentin Davies MP
The Defence minister is a former director (he resigned in 2008) of Vinci UK and Vinci SA – firms involved in PFI projects with a total capital value of £223m which will cost £933m over the terms of their contracts.

John Reid MP
The former home secretary is (since November 2009) a paid consultant to G4S UK and Ireland. G4S is involved in PFIs, mainly in prisons, with a total capital value of £330m; they will end up costing £3.6bn.

Steven Norris
Once Conservative Transport minister under John Major, he is now the chairman of Jarvis, a major PFI player which has a number of contracts, worth £721m, with government. The total capital value of PFI programmes funded by Jarvis comes to £175m.

Adam Ingram MP
A defence minister for six years under Tony Blair, he now gets paid more than £50,000 a year as a consultant to Electronic Data Systems – an MoD contractor responsible for the PFI-funded Tafmis IT system which cost £171m over its 10-year contract.

Patricia Hewitt MP
During her tenure as health secretary, BT won IT contracts from the NHS. The former minister is now a director of BT Group and was paid £59,475 for 140 hours' work over the past six months – a rate of £424 an hour.

PFI initiatives - the Lords' inquiry

The continuing flaws in the PFI option have been exposed in evidence to a House of Lords inquiry into the system.

A consultant, T Martin Blaiklock, said the Government had used the PFI option "like a credit card". He added: "It allows payments, which would normally be due to be paid today, to be paid at some future date. The key is to know when to use it, for what, and for how much."

The British Medical Association said: "PFI appears to be an unnecessarily costly and short-sighted means of building new hospitals."

But the Confederation of British Industry claimed that PFIs had helped to deliver a broad range of modern projects with "high-quality services and maintenance activities".

It added: "Without this long-term investment, the UK would not have the infrastructure required to support our economy, nor the public services that are needed."

The soaring cost to taxpayers

Queen Mary's Hospital, Roehampton Cost £73.5m to build, but will cost taxpayers in excess of £340m by 2034.

John Radcliffe hospital, Oxford Taxpayers will have to pay back £832m for key developments at a hospital which cost £134m to build.

Queen Elizabeth Hospital, Greenwich Trust is locked into a PFI deal costing £9m a year more than if it had borrowed money from the Government. Last year it admitted its PFI contract is "underfunded" by £8m to £10m a year, and it was also carrying debts of £65m.

Norfolk and Norwich University Hospital The 953-bed hospital will cost not £229m, as announced in 1998, but £16bn, including PFI charges, staff and equipment. Rent costs are £800m until the end of the contract in 2037.

Paddington Health Scheme £900m super-hospital abandoned in 2007; costs rose £300m to £894m and finish date slipped to 2013.

Leicester hospitals Pathway Project Costs up from £711m to £921m; scrapped in 2007.

University College London Hospital PFI project, rose from £120m to £430m or so in the three years prior to signing off on the deal.

From:

http://www.independent.co.uk/news/uk/politics/iiosi-special-investigation-how-government-squanders-billions-1877276.html

Labour's computer blunders cost £26bn- and rising

Labour ministers blamed for 'stupendous incompetence' after taxpayers are left with huge bills for bungled IT projects.

A series of botched IT projects has left taxpayers with a bill of more than £26bn for computer systems that have suffered severe delays, run millions of pounds over budget or have been cancelled altogether.

An investigation by The Independent has found that the total cost of Labour's 10 most notorious IT failures is equivalent to more than half of the budget for Britain's schools last year. Parliament's spending watchdog has described the projects as "fundamentally flawed" and blamed ministers for "stupendous incompetence" in managing them.

Further evidence has emerged over the failings of Labour's most costly programme, the mammoth £12.7bn IT scheme to revolutionise the NHS. 

Following Health Direct's post last week- Labours' only success- wasting taxpayers money, the Independent has repeated that just 160 health organisations out of about 9,000 are using electronic patient records delivered under the scheme. 

The vast majority of those were GP practices. New figures have also revealed that millions of pounds have been paid out in legal fees. The taxpayer has footed a £39.2m bill for "legal and commercial support" for the National Programme for IT (NPfIT).

Alan Milburn, the former health secretary, said in 2001 that everyone would have access to their health records online by 2005, but it is understood that the Department for Health is still "years away" from fulfilling the pledge.

Government departments right across Whitehall have been guilty of overseeing embarrassing IT failures. A project that was meant to save the Department for Transport (DfT) about £57m eventually cost £81m, and workers at the Driver and Vehicle Licensing Agency (DVLA) were forced to brush up on their language skills when computer systems gave them messages in German.

Another ill-fated IT scheme, designed to allocate subsidies to farms, cost the Department for Environment, Food and Rural Affairs about £350m and left British farmers more than £1bn out of pocket. Last year the Public Accounts Committee (PAC) warned that the system was already "at risk of becoming obsolete". 

In 2004, the Department for Justice gave the go-ahead for the National Offender Management Information System (C-Nomis) to be rolled out to prisons and the probation service in an attempt to make sharing information about offenders easier. But in 2007, when the estimated cost doubled to more than £600m and senior officials questioned the validity of the project, it was abandoned – after £155m had been wasted.

The MoD's Defence Information Infrastructure project is currently running more than £180m over budget and 18 months late, and is now set to cost £7.1bn. Last year, Edward Leigh, chairman of the PAC, said: "No proper pilot for this highly complex programme was carried out, and entirely inadequate research led to a major miscalculation of the condition of the Department's buildings in which the new system would be installed."

Other botched IT projects include the identity cards scheme; the Libra system for modernising magistrates' courts; an attempt to move the Government's GCHQ computer systems into a new building which ended up costing more than £300m; the Benefit Processing Replacement Programme; and the Foreign and Commonwealth Office's Prism system.

IT experts blamed ministers for being too easily wooed by suppliers. Insiders said a lack of expertise within the Government about the technology industry meant they were willing to believe claims made by major IT firms before contracts were awarded.

Several projects are now under renewed threat of being cut back or abandoned altogether as Alistair Darling, the Chancellor, has targeted them as an area of government spending that can be reined in as he attempts to tackle Britain's record £175bn deficit.

Tony Collins, an expert on the Government's IT failures, said Labour had displayed an "irrational exuberance" for IT projects that has often led them to throw good money after bad at failing schemes. "There are too few people in the hierarchy of Labour who understand IT enough to understand that it is not a talisman – there is nothing magical about it."

David Cameron, the Tory leader, has signalled a move away from big IT projects, suggesting he will use technology to increase the transparency of government. "It is easy to make these noises out of office," said Mr Collins. "Once you've got civil servants giving you a host of reasons why you should not be more open, I fear the Tories will sink into the same depths of secrecy that Labour has found itself in."

Botched projects: The cost of failure
£12.7bn National Programme for IT (NHS)

It was meant to revolutionise the way the health service worked. But far from heralding a new age of efficiency, the National Programme for IT is now widely perceived as the greatest government IT white elephant of history. 

As well as the huge costs involved, suppliers have walked away, projects are running years behind schedule, while medical professionals have complained that they were never consulted on what they wanted the new system to achieve.

£7.1bn Defence Information Infrastructure (DII)
It seemed like a good idea at the time. In 2005, the Ministry of Defence decided to offer a contract to a consortium of suppliers to replace the hundreds of different computer systems being used by the military with a single system that would be used by the army, navy and air force, as well as the MoD itself. It was to be used by 300,000 people across 2,000 sites. 

However, it is running more than £180m over budget and 18 months late. A parliamentary inquiry also warned that forces' reliance on older systems put them at risk of a security breach.

£5bn National Identity Scheme
Originally budgeted at £3bn, the labour Government’s plan for new identity cards, containing biometric data and linked to a central database, soon came under heavy criticism from civil liberty campaigners. As the costs spiralled, so the Home Office began to water down the aims of the scheme to assuage the critics.

In July 2009, Alan Johnson announced that the cards would no longer be compulsory, while moves to force all airport workers to use the cards were also abandoned. However thousands are still being wasted trying to get students to sign up as an alcohol proof card.

£400m Libra system (for magistrates' courts)
An attempt to bring records used by magistrates courts into the digital age backfired when trying to introduce one universal IT system to all courts descended into a costly mess. Fujitsu originally bid £146m to deliver the Libra system in 1998. However, the project proved more complicated than anticipated, and costs have now been put at more than £400m.

£350m Single Payment Scheme system (SPS)
The Single Payment Scheme system was designed in 2003 to be a sophisticated way of giving farmers their subsidies, by mapping their land and working out their level of payment. But failures with the IT systems being used mean that farmers were left short-changed. 

In 2006, around £1.28bn of the £1.5bn subsidies destined for British farmers still had not been given out. 

The Rural Payments Agency overseeing the project was ordered to make 23 major changes to the system. Despite the £350m spent on the technology, the Public Accounts Committee warned last year that it was already “at risk of becoming obsolete”.

£300m GCHQ "box move" of technology
When the Government’s intelligence organisation, GCHQ, decided to move its complex computer systems into a new building in 1997, the projected £41m cost was so small that officials believed it could be absorbed within existing budgets. 

That was until the Curse of the Government IT Project struck. Costs of the so-called “box move” soon began to rise out of control. In 2003, the National Audit Office (NAO) put the costs at more than £300m. Edward Leigh, Tory chairman of the Commons Public Accounts Committee, called the original budget “staggeringly inaccurate”.

Now part of the "old office" housing super computers in Cheltenham has been retained in parallel to the new "doughnut".

£155m National Offender Management Information System (C-Nomis)
In an attempt to make sharing information about offenders easier, the Department for Justice gave the go-ahead for the National Offender Management Information System (C-Nomis) to be rolled out to prisons and the probation service. As the estimated cost doubled to more than £600m and senior officials questioned the whole point of the project, it was abandoned in 2007, with £155m already spent.

£106m Benefit Processing Replacement Programme
In June 2006, the Department for Work and Pensions confidently assured Parliament that new funding for its Benefit Processing Replacement Programme (BPRP) had been approved. So it came as a surprise to many when it emerged just three months later that the project had been quietly scrapped. Little information has emerged on why BPRP was abandoned, but the Government has admitted that £106m had already been spent on it before it pulled the plug.

£88.5m Prism IT project
Undeterred by past failures, the Foreign and Commonwealth Office (FCO) thought it would be a good idea in 2002 to order a new computer system for their 200 offices around the globe. The result was the Prism IT project, seemingly a bargain at just £54m. 

However, delays and costs have risen, while the contractor was even forced to temporarily halt the scheme in 2005 while an investigation took place into its various problems. The system has not proved a hit with staff. 

One wrote in 2004: “In all the FCO’s long history of ineptly implemented IT initiatives, Prism is the most badly designed, ill-considered one of the lot.”

£81m Shared Services Centre
To officials at the Department for Transport, the Shared Services Centre seemed to good to be true: not only would it integrate the human resources and financial services of the department and its various agencies, it would even save the taxpayer £57m. 

Unfortunately, those hopes were dashed as the scheme became another example of an IT project going horribly wrong. Workers at the Driver and Vehicle Licensing Agency (DVLA) were forced to brush up on their language skills as computer systems gave them messages in German. It will now cost £81m, a failure in management that the Public Accounts Committee described as a display of “stupendous incompetence”.

TOTAL: £26.3bn

From:

http://www.independent.co.uk/news/uk/politics/labours-computer-blunders-cost-16326bn-1871967.html

MRSA superbugs not the only threat to NHS warns MPs

The labour government has taken its "eye off the ball" on hospital infections other than MRSA and Clostridium difficile, a cross-party group of MPs says.

The Public Accounts Committee said setting targets in England for the two infections had led to a fall in cases.

But they warned there were signs other bugs, such as E. coli, were becoming more common and they called for better surveillance to curb the problem.

In England, MRSA rates are now a quarter of what they were at their peak in 2004, while C. difficile rates have fallen by nearly a third in the past year, following the introduction of targets.
   
THE OTHER THREATS
E. coli
Pneumonia
Surgical site infections
Urinary tract infections
Gastrointestinal infections
Skin infections

But the MPs said these only accounted for about a fifth of the total number of all infections seen in hospital.

While MRSA is the most high-profile bloodstream infection, E. coli is much more common and has actually increased by a third in the past four years, the report said.

It also highlighted surgical site infections, which were twice as common as bloodstream infections, and respiratory and urinary tract infections, which were three times as common.

MPs warned there was still no robust data on the extent and risks of at least 80% of bugs linked to hospital care.

Committee chairman Edward Leigh said this report was the third time the committee had warned about the threat of other infections, adding it was "disappointing" the issue had yet to be addressed.

"The government has taken its eye off the ball regarding all other healthcare associated infections - which actually constitute most by far of all infections."

The report suggested hospitals start reporting all types of infection and that they look to curb the use of antibiotics.

Professor Mark Enright, an infections expert at Imperial College London, said: "I can understand why the government focused on the infections it has, but now we are getting to grips with those it is time to look elsewhere.

"There are some strains of infections, such as E. coli, where we are seeing increasing levels of antibiotic resistance and that is concerning."

Nigel Edwards, of the NHS Confederation, which represents trusts, agreed it was time to review other infections.

But he added: "We would want to know the balance of costs and benefits from additional surveillance."

Katherine Murphy, director of the Patients Association, said: "This target culture is just like squeezing a balloon - if you squeeze one end it will bulge out at the other.

"But the problem for patients is that the balloon stays the same size. The problem of patient safety will stay the same huge size as long as it is regarded as an optional extra by some."

From:
http://news.bbc.co.uk/1/hi/health/8351269.stm

MPs criticise NHS in England for forcing patients to spend their last days in uncaring hospital surroundings

Elderly patients in the final stages of terminal illness are being denied the right to die at home due to inadequate NHS and social care, a critical parliamentary report warns.

Newly allocated funds aimed at improving end-of-life care are at risk of being spent on other medical priorities, the Public Accounts Committee (PAC) suggests.

Half a million people die in England every year; almost two-thirds of them are over 75. The vast majority of deaths follow a period of chronic illness such as cancer or heart disease.

About 60% of those deaths occur in an acute hospital despite the fact that "there is no clinical need" for the person to be there, the study says.

"Most people express a preference to die at home [surrounded by friends and family]. People should have the right to die in the place of their choice.

"[Health authorities should increase] the availability of community services, such as 24-hour district nursing, and access to advice and medication out of hours to help reduce the number of unnecessary hospital admissions."

Those who die in hospital are often deprived of effective pain management and not accorded adequate "dignity and respect" in their last days and moments by NHS staff, the report states.

"Because someone is approaching the end of life it should not mean we abandon concern for their quality of life. End of life care should seek to sustain people's quality of life as a priority."

There should be more checks, the paper suggests, to ensure staff receive education and training in end of life care. Specialist palliative care teams should always be deployed to deliver pain relief.

Residential homes, especially those without qualified nursing staff, often feel ill equipped to care for people in the final stages of life and send them to hospital or refuse to take residents back after a hospital admission.

In one local study, the report shows, at least 40% of patients who died in a Sheffield hospital "did not have medical needs which required them to be admitted". Many had been occupying a bed for more a month – suggesting that resources could be freed up and redirected to home care.

The National Audit Office has estimated the cost of caring for cancer patients (who account for 27% of all deaths) in the 12 months before death was £1.8bn. Reducing emergency admissions by 10% and cutting the average length of stay to three days would release £104m for redistribution to other end of life care services.

The Department of Health has allocated £286m over the next two years to improving end-of-life care. But the PAC warns "there is a risk that the additional [sum] will not be used as intended. The department should require primary care trusts to account for how the additional funding is spent."

Co-ordination between health and social care services in this area is "generally poor", the report notes.

"That health and social care providers have traditionally given a low priority to end-of-life care is shown by the lack of training in basic end of life care among front-line staff," the chairman of the PAC, Edward Leigh, said.

The catalogue of problems discovered in hospitals include poor support for basic comfort; lack of privacy for the patient and their family; poor communication by staff; and staff recognising too late that somebody is about to die.

"It is appalling that people dying in hospital are not always being given the end of life care they deserve," Leigh said, "including effective pain management and being treated with dignity and respect."

From:
http://www.guardian.co.uk/society/2009/may/14/end-of-life-care-report-nhs

NHS trust considers abandoning NPfIT electronic records fiasco

An NHS trust is considering ditching its new electronic patient record software in order to revert to its 20 year old system, in a move that underlines the troubles faced by the giant NHS IT project.

Worthing and Southlands Hospitals NHS Trust faced problems with its new system and is planning to abandon it to expedite a merger with a neighbouring trust, according to E-Health Insider, a website that has tracked the programme from its inception.

The news came as the Commons public accounts committee issued a scathing report arguing that the completion - even four years late - of the mighty £12.7bn NHS IT scheme "must now be in doubt".

Edward Leigh, the committee's chairman, said the delivery risks were "as serious as ever" following the termination last May of Fujitsu's contract to install and run the record across the whole of the south of England. Final arrangements for replacing Fujitsu have still not been agreed more than seven months after the company was fired.

"Ministers need to take their heads out of the sand," said Richard Bacon, a committee member. He added the programme was in "deep trouble" and "so far behind schedule that hospitals are walking away".

The first promised deployments of record software in the north of England have still not been completed, the latest deadline of last autumn having again been missed.

In London further deployments at large acute hospitals have been put on hold until serious problems with existing installations have been solved - contributing to a big profits warning last week from BT, the London supplier.

Mr Leigh said the original aim was for the systems to be fully implemented by 2010. "The truth is that, while some are complete or well advanced, the major ones such as the care record systems are way off the pace. Even the revised completion date of 2014-2015 now looks doubtful."

David Nicholson, the NHS chief executive, has conceded that the programme is "at a pivotal point" and cannot "go on and on" in its current state. He told the committee, however, that he remained confident the NHS would have a workable system by 2015.

From:
http://www.ft.com/cms/s/0/ac5b94f4-ec11-11dd-8838-0000779fd2ac.html?nclick_check=1

Health Direct is heartened by the fact that the NHS chief executive claims that the whole IT Connected For Health (NPfIT) system will be working in six years time.

As David Nicholson will be long gone well before then, it will be left to his successors to pick up the tab- and flak for the biggest IT disaster in the world.

Drug companies face fresh action after trial failure

Efforts to punish a group of drug companies allegedly behind one of the biggest price-fixing schemes to hit the public purse are being stepped up after the collapse of their criminal trial.

Frank Field, the former Labour social security minister, wrote to Alan Johnson, the health secretary, yesterday to urge further action against the businesses over a conspiracy that was allegedly taking place while prices of dozens of basic remedies rose as much as 800 per cent.

Mr Field made his intervention as lawyers acting for the National Health Service press for further "substantial recoveries" through a damages action against the companies that has already netted £34m. Many observers say the companies named have never been forced to account fully for their actions, bec-ause of weaknesses in the way Britain deals with financial misconduct.

Mr Field, a former member of the Commons' public accounts committee, said the companies should be "on their knees thanking their lucky stars" at the decision by Mr Justice Pitchford last month to stop their criminal trial on conspiracy to defraud charges.

Peters & Peters, the law firm acting for the NHS, is pressing ahead with a damages action founded on allegations that the companies were involved in a conspiracy to rig the prices of drugs including penicillin and warfarin, a blood thinner.

Jonathan Tickner, a Peters & Peters partner, said: "The obvious success of the civil proceedings . . . speaks for itself and we, on behalf of the Department of Health, fully expect further substantial recoveries to be made."

The main company still in the department's sights is Ashford-based Kent Pharmaceuticals, supplier of many basic antibiotics to NHS hospitals, retail pharmacists and dispensing doctors.

Kent declined to respond to questions on the case. All the other companies that faced criminal charges - Goldshield, Ranbaxy, Generics and Norton Healthcare - declined to comment when asked if they denied colluding with each other, saying they could not speak while the threat of criminal proceedings remained.

Mr Justice Pitchford last month scrapped fraud charges laid by the Serious Fraud Office against the companies after the House of Lords criticised the way the indictment was drafted but left open the possibility it could be amended. The SFO has launched an appeal against the judge's decision, arguing it should be allowed to reformulate the charges.

Since the trial collapsed, some senior executives - notably those at listed Goldshield, which is chaired by Keith Hellawell, the government's former drugs "tsar" - have gone on the offensive and complained £25m of taxpayers' money was wasted in mounting the trial. The companies have always argued that price-fixing was not a crime at the time of their alleged activities.

But lawyers said there seemed to be evidence of subterfuge to justify a prosecution, alleging companies conspired to defraud the government - and hence the taxpayer. Documents seized in the penicillin investigation included a presentation, known as "The Scenario", that contained a bullet-point overview of how to operate a price-fixing cartel.

The case could be picked up by the Office of Fair Trading, which has imposed fines totalling hundreds of millions of pounds over the past year or so on companies involved in cartels in industries such as aviation, supermarkets and tobacco.

Another possibility is that the NHS could launch a private prosecution. It declined to say whether it had plans to do so.

Health checks

2000 SFO starts probe into price-fixing in supply of generic drugs to NHS April 2002 More than 30 premises raided April 2006 Five companies and nine executives charged with conspiracy to defraud January 2008 Lords hear submissions from Goldshield and Ian Norris that price-fixing cannot be prosecuted under the common law offence of conspiracy to defraud March 2008 Lords rule in favour of Mr Norris and Goldshield July 2008 Judge quashes indictment against the five companies and nine executives charged

http://www.ft.com/cms/s/0/32776f1c-6806-11dd-8d3b-0000779fd18c.html

NHS IT delays hit cash savings

The potential savings from the £12.4bn NHS's IT project in England have been hit by delays dogging key parts of the programme, the labour government admits.

Officials said a prudent estimate from data from a fifth of NHS trusts showed it was on course to save £1.14bn. They said the figures were positive but acknowledged it could have been more.

The Tories said the savings were peanuts compared to the scale of the project - it is the biggest civilian IT scheme in the world.

Central parts of the 10-year programme - aimed at linking more than 30,000 GPs to nearly 300 hospitals by 2014 - have been running up to two years behind schedule.

Electronic medical records and "choose and book" - an online appointments system for GPs - have been the worst-hit.

Despite the problems, labour said £208m had been saved by March 2007, mainly because of the broadband network installed across the NHS and the progress made with the digital imaging and scanning.

And it predicted that by the end, the savings would top £1bn.

The figures were revealed in the government's benefits statement for the National Programme for IT.

Ministers were told to publish the accounts by the House of Commons' Public Accounts Committee in a report last year criticising the progress being made.

The document shows that the project has under-spent by over 40% so far.

This indicates the scale of the delays as suppliers are only paid when they deliver, although officials warned this could not be interpreted as exactly over 40% of project falling behind schedule.

Richard Jeavons, a senior IT official at the Department of Health, said: "We can be positive about the evidence emerging. Of course, if we had not had delays we would be further ahead."

But shadow health minister Stephen O'Brien criticised the fact only £208m had been saved so far, calling it "peanuts" compared to the cost of the programme.

"It is certainly nothing the government should be crowing about as it is the very least they should be doing to recover their incompetence on a grand scale."

From:
http://news.bbc.co.uk/1/hi/health/7295116.stm

Health Direct points out that labour's meddling, incompetence is beginning to come home to roost.

On March 20, 2006 Health Direct posted: NPfIT NHS plan is evolving but one-size-fits-all is a fundamental flaw, says hospital chief when Sir Jonathan Michael, a top NHS executive, who spoke at a healthcare symposium at London's City University pointed to a fundamental flaw in the NHS's IT-driven modernisation.

The flaw Michael sees in the National Programme for IT (NPfIT) is its centralised, standardised approach at a time when the health service is decentralising. The chief executive of Guy's and St Thomas' NHS Foundation Trust, Michael wants IT support for the specific ways people work in particular parts of his organisation, such as the accident and emergency department.

"The idea that the requirements for all hospitals are the same is, I think, simplistic. Flexibility is designed out of solutions and out of the implementation process. So standardisation of IT systems effectively dictates the standardisation of the business model," he said.

Michael's speech about the NPfIT commanded the rapt attention of his audience not simply because he is running one of the largest NHS trusts in the UK but because it is rare for any senior health service executive, especially one of Michael's standing, to criticise openly the NPfIT.

Caring for some cancer patients, for example, requires joint decisions being made increasingly in multi-disciplinary teams. Video conferencing is key to that, said Michael, but the original plans for the NPfIT did not set aside money for video conferencing.

Dr Foster health information service- call for new probe

MPs should consider reopening a probe into a contentious public private health data venture Dr Foster in the light of concerns raised by a senior official involved in the deal, the shadow health secretary said.

Andrew Lansley told the Financial Times he would write to the Commons public accounts committee and the Department of Health asking them to re-examine the circumstances around the resignation of Professor Denise Lievesley, former chief executive of the Information Centre, the National Health Service’s data factory.

Prof Lievesley, a former Royal Statistical Society president, claimed this week that she was made a “scapegoat” by the Department of Health after repeatedly raising the alarm about the joint venture’s worth and its handling of information. Dr Foster Intelligence, the joint venture, strongly rejects her criticisms.

Mr Lansley said it “might be appropriate” for the public accounts committee to respond to Prof Lievesley’s claims by making new inquiries about the joint venture, whose formation it attacked last year as a “backroom deal” set up at a cost of £12m to the taxpayer.

Mr Lansley said: “It seems to me to be clear that [Prof Lievesley] was, from her own professional point of view, highly sceptical, indeed internally critical, about what was being done. The evidence at the time [of the initial inquiry] doesn’t appear to have included some of the reservations she was expressing internally.”

Prof Lievesley’s claims, which emerged this week at a hearing at Leeds Employment Tribunal, have yet to be tested by cross-examination. Prof Lievesley did not attend the hearing, citing a previous commitment.

Mr Lansley said he also planned to ask the DoH why the Information Centre had agreed a deal under which Prof Lievesley received a pay-off in exchange for her silence about her departure.

Dr Foster Intelligence – which is half-owned by the Information Centre and half by Dr Foster LLP, a private health information company – has defended the quality of the information it provides. It said it and its partners, which include Imperial College, operated to the “highest standards of data quality”.

The Department of Health has declined to comment on Prof Lievesley’s case.

http://www.ft.com/cms/s/0/0ca6578e-c3c0-11dc-b083-0000779fd2ac.html

Labour's Whitehall advisers now cost £2bn a year

The increased use of external consultants by the labour government is costing the taxpayer nearly £2bn a year and is failing to ensure value for money, according to the public accounts committee. In a report published on Tuesday, the PAC estimates that in the past three years, spending on consultants in the public sector has risen by a third from £2.1bn in 2003-04 to £2.8bn in 2005-06, with central government accounting for £1.8bn, largely to increases in the NHS.

Central government has made “some progress” in implementing previous recommendations made by the National Audit Office, the report says. These include increased use of framework agreements to cut the costs of buying in consultancy as well as involving qualified procurement staff.

However, the report states that “much more can be done” to improve value for money and identifies several areas where departments across government require “significant improvement”.

These areas include controls on awarding contracts by single tender, planning for and carrying out the transfer of skills from consultants to internal staff and better assessment of whether internal resources could be used instead of consultants.

The PAC praises the Ministry of Defence for using consultants to add “real value” to a government department and helping it make improvements it would not have otherwise achieved.

However, the report notes that departments across Whitehall and the Office of Government Commerce (OGC) do not routinely know how much money is spent on consultants.

The PAC says departments should have comprehensive data to help assess whether benefits obtained are justified by the costs and to judge if the best prices are secured when a consultant has considerable ongoing business.

It also calls for improved sharing across Whitehall and with the OGC on the performance of consultants to minimise the risk of departments being overcharged.

In a veiled challenge to Gordon Brown’s incoming premiership, Edward Leigh, the PAC’s Conservative chairman, said government needed to adopt a “much more intelligent approach” to the use of external consultants and become commercially “much sharper”.

“It is impossible to believe that the public is receiving anything like full value for money from this expenditure. In fact a good proportion of it looks like sheer profligacy,” Mr Leigh said.

Alan Downey, chief operating officer for KPMG Risk Advisory Services, which provides consultancy services to the public and private sector, said that although government expenditure on consultancy had increased over the last three years, more recently it had been declining.

From:
http://www.ft.com/cms/s/f6a2b6e2-1dd6-11dc-89f7-000b5df10621,dwp_uuid=34c8a8a6-2f7b-11da-8b51-00000e2511c8.html

Health Direct has long deplored labour's waste of voter money- on Sept 12, 06 we posted:
NHS external manager bill soars to over £172m this year.

The NHS in England is set to spend £172m this year on external management consultants - a rise of 83% in two years - the Conservatives have claimed. The Tories warn spending on managers is detracting from clinical services.

Welwyn Hatfield MP Grant Shapps used the Freedom of Information Act to obtain figures from 76% of NHS trusts. The data shows a link between trusts with the biggest debts and most job cuts, the Tories said.

But the Department of Health said the figure should be seen in the context of the annual £70bn NHS budget. NHS trusts are able to employ external consultants for advice on how to run their services and staff.

The government has also enlisted companies like KPMG and Price Waterhouse Coopers to act as "turnaround teams" for some failing trusts.

In their report, the Tories said trusts' spending on management consultants was increasing, and that the use of consultants was a "reliable yardstick" for job losses and debts. The report added that a total of £93.8 million was spent in 2004/05 on external consultants, rising to £117.9 million in 2005/06.

The projected spend for 2006/07 is £171.6 million.

The figures were calculated using the data returned from trusts, and projections for the remainder.

Mr Shapps said several trusts refused to respond to his request, adding they had an even worse track record than some in the report.

He added: "I think it's extremely dubious as to how much effect these consultants are having, other than sacking lots of staff. The government needed to look at whether taxpayers were getting value for money when jobs and services were being cut and wards closed."

The report said 10 of the worst trusts had millions of Pounds of debt, yet had a projected spend each of between £1.9 million and £3.6 million on consultants for 2006/07.

Dr Paul Miller, chairman of the British Medical Association's (BMA) consultants' committee, said he would not be surprised if trusts' total spend was even higher.

He added: "The NHS is wasting hundreds of millions of pounds on management consultants who don't have the answers. I would like the secretary of state to stop the NHS wasting all this money on management consultants - it takes money away from patient care."

Dr Miller, who has an MBA, continued: "The NHS needs good management and good managers but that involves people who know the trust, the staff, the locality and the services it provides - not just people parachuted in from outside with no health experience."

Health Direct agreed with Dr Paul Miller, chairman of the British Medical Association's (BMA) consultants' committee, when he said that he would not be surprised if trusts' total spend was even higher.

On Tue 8 Aug 06 Health Direct noted in Public sector consultants to cost £20bn under Labour's stewardship that the bill for management consultancy within government is set to top £20bn over the lifetime of three parliaments, according to a former consultant who has carried out an extensive survey of public spending on external advice- David Craig, formerly of Capgemini, the consulting company.

Call for scrutiny of PFI equity sales says PAC

The market for sales of equity in Private Finance Initiative (PFI) deals should be closely watched by the Treasury, parliament's public spending watchdog said, as it raised fears that they might not be in the public interest.

When privately financed projects such as schools, hospitals and roads are refinanced, the public sector should now receive a share of the gains.

But "there is no requirement for the gains made by investors through selling on their shares in PFI projects to be shared with the government", Edward Leigh, the chairman of the House of Commons Public Accounts Committee, said.

The precise scale of the equity sale market is not known because the Treasury does not collect figures. But the number of such sales has been rising. All or part of the equity has been sold in 32 of the 80 projects surveyed by the National Audit Office, either to new investors or to one of the initial investors. Carillion, for example, has sold equity investments it acquired for £24m for £46m.

The Treasury takes the view that while debt refinancings affect the public sector's rights, a change in the equity ownership does not affect the public sector. Profits are taxed through capital gains, and the Treasury believes that, in essence, the transactions are no different to other private- sector deals.

But in the report the committee said the Treasury view "is only credible if there is an efficient equity market" and that the Treasury needed to demonstrate that.

Its report stops short of calling for the public sector to be given a share of the gains, as in debt refinancings. But Mr Leigh said the Treasury "must keep the working of the PFI equity market under close scrutiny to make sure the public interest is not being compromised".

David Metter, the chief executive of Innisfree and chairman of the PPP Forum, a lobby group for the PFI industry, said it was reasonable for the government to know who owned PFI projects. He said most contracts contained a so-called "Gadaffi clause" aimed at preventing their transfer to undesirable owners.

But the question of profits was "a difficult one" when the price paid would go up and down depending on the market, with people sometimes overpaying and at other times underpaying.

"The government is well placed to stay out of that," he said, "because if it wants a share of the gains, would it also want a share of the losses?"

The CBI employers' group said it would be opposed to any "increasing level of Treasury interference".

The committee also noted that the equity market was beginning to consolidate, so a small number of investors could wind up dominating the market.

Cash shortfall

The public sector has so far received £93m from its agreed share of PFI refinancings - well below an earlier estimate that it might have received £175m to £200m by now.

Parliament's public spending watchdog suggests the shortfall may arise from investors preferring to sell equity stakes, where the gains do not have to be shared with the public sector.

From:
http://www.ft.com/cms/s/b9e3a108-0283-11dc-ac32-000b5df10621.html

The inefficient financing that Gordon Stalin Brown has created with PFI was highlighted by Health Direct in our post on 16 Aug 06 in PFI profits exposed by Channel 4 as greater than credit card companies when in Public Service, Private Profit, Liam Halligan revealed how the private funding of state schools and hospitals is draining hundreds of millions of pounds from frontline services, while creating a £4 billion-a-year industry and a new elite of publicly- unaccountable PFI professionals.

The programme also highlighted the financial shenanegans that some PFI companies were using- including moving ownership of assets to Guernsey to circumnavigate the new labour PFI taxes.