Q21 Austin Mitchell: My understanding was that it was £6 billion in the first year. You cannot pull it back and say you have £3 billion.
Ian Watmore: The £6 billion was the total reduction in the budget that the Government set in its emergency Budget, about £3 billion of which came from programmes that were not efficiency-related programmes. The other came from efficiency-related and we have set about doing the efficiency half and actually exceeded it.
Q22 Chair: We will come back when we come on to the detail.
Ian Watmore: That is the first point I would make. Secondly, obviously your point about the Treasury controlling the purse strings is correct; they do. That is what they do, that is why we work very closely with them. To give you one example-I know we have quoted it before but it is our biggest saving-we achieved £800 million of that saving by calling all the suppliers in from Government and renegotiating their contracts in-year. For the first time ever in my working lifetime, we operated as the Crown rather than as individual Departments. We involved our best negotiators around Whitehall and we got £800 million off the bill from suppliers. That then feeds through into the numbers that the Treasury collect, but it was not the Treasury that renegotiated those supplier contracts. It was a partnership between the two.
Q23 Chair: Can I just stop you on that one? We had the NHS IT people before us, as you well know, and there was a lot of renegotiating went on in those two contracts both with BT and CSC. What was clear was there was a renegotiation-I cannot remember if they got it but they were trying to get £500 million out of the CSC one-but it was a renegotiation that led to cuts in the amount delivered as well as cuts in the budget. I do not see that as an efficiency. It is a thread running through a lot of the questions we want to ask you today. You got money out of it, but you also got less for it. That is a perfectly fair policy decision but do not say that it was just efficiency. It certainly was not on the IT.
Ian Watmore: The generality of what we did with the suppliers was that we got them to reduce their price.
Q24 Chair: Except for NHS IT.
Ian Watmore: As you know, the NHS IT is in a completely different place and we are in litigation with at least one of the suppliers there, so I would rather not talk about the specifics with a commercial litigation.
Q25 Chair: But the BT one.
Ian Watmore: With BT in general, right across the board, they supply us across the whole of Government. I think they are our biggest supplier, up with HP and Fujitsu. I do not have the precise figures but I can supply them to you.
Q26 Chair: I can tell you from what they told us, that on the NHS, the renegotiated contract delivered care record systems to only 47% of the acute trusts that were previously promised them.
Ian Watmore: I think we are overlapping two things. There was something around the NHS IT programme, which is because it is in a bad place and we should talk about that separately. The generality of what we did was renegotiate existing deals where people were providing a service and we either got them to take money off their price or not do stuff that was not necessary. The combination of the two reduced the bill by £800 million. That is £800 million that we would have otherwise had to pay.
Q27 Chair: Was ID cards in that?
Ian Watmore: I do not think ID cards were because I think that had already been cancelled by the Government. I think that was already a cancelled contract. There were suppliers from right across the board: there were property contractors, Trillium; there was Group 4, the people doing prisons and safe and secure custodial services. It was not just IT companies; it was the broad panoply of companies in order to reduce the bill.
Q28 Mr Bacon: I understood you to be saying you were getting more or less the same but just for a lower price which is a great achievement.
Ian Watmore: Yes.
Q29 Mr Bacon: Going back to it, and I do not want to harp on about NHS IT, but there is a reference in this report to volume commitments. This is paragraph 2.9, "All departments (including arm's length bodies) will be required to commit spend through the centralised contracts". That is all very well if you know that you are going to get something that you need, and that it is of the right quality. One of the specific problems, of the many specific problems with NPfIT, was you were getting volume commitments that then allowed the suppliers to fine the NHS if the volume commitment was not achieved, despite the fact that the reason it was not achieved was because nobody wanted the product because the product was useless. Does the intention to require Departments to take part in centralised volume commitments address that risk?
Ian Watmore: I think I would have to re-read the section of the report. If it is the centralised commodity procurement aspect, that is completely not the sort of thing that NPfIT is. NPfIT is the ultimate in what you might call-
Mr Bacon: This is basically, "If you want a laser printer then you will buy this one."
Ian Watmore: Exactly.
Q30 Austin Mitchell: I want to ask Lord Browne what business can contribute here. Business imperatives are much simpler and more straightforward. The board decides a central role and it is left to the rest to implement it. Businesses in problems cut costs, corners and staff. They fire people, that is what they do. BP was accused of cutting standards on safety at Galveston, for instance. Government cannot do that; you are in a much more difficult situation. Going for those kind of efficiency savings-you have old people being beaten up in homes because of inadequate spending on care. What can business contribute in this, with its simplistic views in this complex situation?
Lord Browne: I am sad that business has exactly that characterisation, or perhaps caricature, which I do not think is right. I will just push back to you on BP as well to say that that statement is not proven. So here is the point: there are plenty of different ways of looking at how you create efficiency. One is of course to redeploy people, to change their skill base-not actually to fire them, get rid of them-and there are plenty of different ways of doing that. I cannot speak for industry widely, but in my own experience in all the companies that I have been involved in, laying people off is the thing you do as a last resort. It is the thing where you clearly no longer have a business that merits doing. You do not do it in the first instance. In the first instance you redeploy, you retrain, and you reskill in order to use a great resource that you have. That is what you do.