Labour’s scramble to launch £11bn IT spending spree

Labour was accused of rushing through huge contracts before the election to safeguard the party’s “nanny state pet projects”.
The NHS computer scheme has cost £12.7bn; Home Secretary Alan Johnson with the aborted compulsory National ID card; the MOD computer system is £180m over budget.

Labour was accused yesterday of rushing through £11bn of spending before the general election in a “scorched earth” policy to prevent its pet projects being scrapped by an incoming Conservative government.

Despite the looming squeeze on public spending, ministers are trying to push through several massive computer contracts before ballot day, which is widely expected on 6 May. The “break clauses” in some deals may make them very expensive to cancel, locking in the new government.

Tory frontbenchers believe that, if they win power, they would discover “poison pills”, making it harder for them to announce the immediate spending cuts they have promised. As well as contracts that are difficult to scrap, the Conservatives fear that Whitehall budgets have been drawn up to protect flagship Labour projects such as housing and children’s services, so that any attempt to find small-scale savings would inflict maximum political damage.

Labour insists it has every right to carry on governing and argues that the new information technology (IT) contracts will provide value for money. Cabinet Office rules say that decisions on matters of policy and “other issues such as large and/or contentious procurement contracts, on which a new government might be expected to want the opportunity to take a different view from the present government, should be postponed until after the election, provided that such postponement would not be detrimental to the national interest or wasteful of public money”. 

However, the guidelines do not kick in until the election is called – which Gordon Brown is not expected to do for three weeks. Although the Tories would call an immediate halt to all IT contracts if they won power, The Independent understands that last-ditch actions planned by the labour Government this month include:

*approving local supplier contracts for the controversial £12.7bn NHS electronic patient records scheme, the largest computer project in the UK, which the Tories would dismantle;
*signing a £1bn logistics software contract for the Ministry of Defence;
*speeding up a £600m contract to run new personal pension accounts due to start in 2012;
*completing an £800m agreement for communications equipment and services at the Serious Organised Crime Agency;
*starting to print the 30 million forms for the 2011 census, even though the Tories have said they would scale back the £482m project.

Labour denies acting irresponsibly and says an incoming government would be able to cancel the personal pensions contract at a cost of only £25m this autumn. But one minister admitted privately: “We are pushing hard on what we can get through by the end of March and asking civil servants to prioritise that, rather than medium- and long-term projects which could not be completed by the election.”

However, some senior civil servants are frustrated that Labour and Tory frontbenchers will engage in frank talks with them about the spending cuts that will inevitably be needed to close this year’s £178bn gap in the public finances. They say politicians fear their intentions would leak before the election.

Francis Maude, the shadow Cabinet Office Minister who heads an implementation unit planning the early work of a Tory government, said: “Labour’s actions resemble a dying administration making reckless and irresponsible spending commitments to wreck the finances for any incoming government.”

He added: “Once again we see Gordon Brown putting the Labour Party ahead of the country. Labour is unable to ditch its obsession with partisan dividing lines. The choice at the election will be clear: a responsible united government under David Cameron or a reckless irresponsible government under Gordon Brown who are only going to make things worse.”

About £4bn is believed to have been spent already on the long-delayed NHS scheme for patient records to be available to any GP or hospital in England. The Tories want a local rather than a centralised scheme but fear the contracts would cost billions to unravel.

Labour insists the NHS contracts are being revised to save taxpayers £600m. The Health Minister, Mike O’Brien, said: “What we want to do is make sure we get these savings. I am certainly not going to get into a situation where because we are approaching a general election some day soon, the whole of government stops and we cannot make any contracts with suppliers of key NHS equipment. That would be complete nonsense.”

But Stephen O’Brien, the shadow Health Minister, said: “At best it is a last-ditch attempt to tackle a deficit of Labour’s own making. At worst it is an underhand effort to tie the hands of the next government.”

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