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Observer Comment

The start of the new century may be remembered for the outrageous cost of The Millennium Dome and the political embarrassment that accompanied it. The project demonstrated just how easily this government could be dazzled by a large and expensive white elephant.

If the Dome was a momentary lapse of reason, then even as it was being built, a single Information and Communications Technology (ICT) project for the Post Office and Benefits Agency, named ‘Pathway’, was well on its way to wasting almost twice the £700 million of public money that was squandered on a large tent in Docklands. But Pathway, which was supposed to tackle the annual £1.3 billion cost of identity fraud, was only one drop in an ocean of failure and leads me to ask whether the first casualty of a so-called, “Knowledge Economy’ is judgment?

Recalling the last year’s Passport Agency fiasco and this summer’s problems with the Air Traffic Control System, there are rather more high-profile examples of the technology failing than there are successes and every reason to believe that Government, in pursuit of a grand experiment, is wasting taxpayers’ money in the most outrageous manner.

Today, with the manufacturing sector increasingly decimated by the forces of the global economy, government increasingly views information technology and the Internet as a magic wand for a new kind of Britain. Electronic government (eGovernment) it believes, will, if enough money is thrown at it, quickly transform the public sector into a smoothly efficient 24*7 machine, one promising a cash-point vision of both central and local government services which will allow you to pay your taxes or buy a fishing license at any time of the night or day.

Downing Street’s objective is that by 2005, the transformative impact of joined-up-government and with it, the availability of cheap and universal broadband Internet access, will swiftly create the climate for a knowledge economy as a by-product. But before it can deliver this dream, it needs to have in place the basics and the first of these is an irrefutable and totally secure means of proving one’s identity over the Internet; cheap, available digital identification for every citizen and every business. It may come as no surprise then that millions of pounds may have been wasted, following the promises of several of the world’s best known software companies towards a technology dead-end.

Last month the Chancellor allocated £2.4 billion for the further development of electronic government a dramatic jump from the £1billion spending review of 2000. To understand the size of this increase and why it might be necessary, it’s important to grasp the scale of the failures swallowing public money. In August, it was reported that the £200 million computer system, managed by EDS and designed to speed up the operation of the Child Support Agency (CSA) is months behind schedule and £50 million over budget. Meanwhile, children in the poorest families receiving income support are reportedly losing £10 for every week this project is delayed.

I’m never entirely sure these days whether the monumental failures that constantly plague the Public Sector are the result of technology being cynically oversold by big corporations or are the responsibility of senior civil servants who still believe in fairies. History offers clear evidence that the massive infrastructure plans so favoured by socialist governments rarely if ever deliver against expectations. The so-called ‘competitive bidding’ for public sector projects, is farcical and an “unholy trinity” of ‘approved’ contractors for the most lucrative of large infrastructure projects, is milking the Treasury in a manner which would be inconceivable within the private sector.

According to Babak Khakpour, of specialist publication, eGov monitor, “The wholesale departure of reasonable judgment has been the hallmark of large government technology projects; this technology which was feted as the great enabling and equalizing tool of the 21st century”, and with so many examples of costs run amok, it’s no wonder that there is evidence of real alarm both from the National Audit Office and the Treasury.

Of course, a valid reason for using IT in the first place is to reduce the overall cost of the public sector or more accurately, “Spend Avoidance”, where investing money in IT now will show a reduction in costs later. With a public sector IT budget of £10 billion annually, the goal is to use the promised efficiencies of information technology – and there is plenty of good work happening the mid-range project level - to save the equivalent of 2% on GDP but as yet, with 19 million households and over 40% of the population ‘On-line’, there is little or no solid evidence of eGovernment services making a difference or attracting wider public acceptance.

The Inland Revenue is a leader in the development of public services that can be accessed by PC or over the telephone but in February the National Audit Office revealed how a disappointing the acceptance of the online self-assessment service was. According to research released by the Liberal Democrats, The Inland Revenue's online tax return system costs the public nearly four times more than the original postal method and has only 80,000 people registered for a service, which by itself, cost £17 million to implement. Edward Davey, the Liberal Democrat’s shadow chief secretary to the Treasury, accuses the government of failing the taxpayer and claims that." The £212 cost per person is nearly four times higher than the £60 per person cost of the existing system”.

Because of its size, complexity and the demand for tight security, the Inland Revenue has more problems than most other agencies and in another twist, the powerful all-party House of Commons Public Accounts Committee (PAC) has warned that the Inland Revenue might have to buy the rights to secure one of its most essential systems. These are expected to have exceeded the original valuation of £100m, on a project that is already over budget.

Babak Khakpour believes that the present cycle of failure will persist without direct and urgent intervention at the highest level of government.

“What is essential”, he says, “Is that the enormous current and future government IT expenditure be managed – central, local, education, health, police and justice and other areas – joined-up. There is no organisation that keeps an eye on the entirety of public sector IT and has a role of hands-on guidance and communication. The Office of the e-Envoy (OeE) has its hands full with policy and devising some guidance rather than monitoring, feedback and communication The Office of Government Commerce has also gone some way in addressing the challenges but what is required to control the huge fragmentation, is a team five times the size of the OeE that acts as in-house government consultants. For a structure that is supposed to be joined-up this is a huge oversight and the public management targets of the Chancellor and Prime Minister will never be met unless this is implemented”.

It now appears that when Labour lost one Dome, it found another more expensive project to replace it, a ‘Virtual Dome’ in which all the expensive failures of an unrestrained enthusiasm for the Internet and new technology are kept hidden until they leak reluctantly into the public domain. There are more expensive disasters now waiting in the shadows and millions upon millions of taxpayers money will continue to be wasted on projects that at times, are little more than public sector experiments with unproven technologies.

Prime Minister, can Britain afford your vision of joined-up government as it exists today? The continued risk of expensive failure threatens the credibility of the entire programme and with it, any hope of building a knowledge economy. It’s action. That’s needed, not advertising.

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