1. Launched in 2002, the National Programme for IT in the NHS (the National Programme) was designed to reform the way that the NHS in England uses information. The vision of the Department of Health (the Department) was to implement modern information technologies to improve the way the NHS delivers services, and ultimately enhance the quality of patient care. The National Programme comprised a number of component programmes including a broadband network, electronic appointment booking and prescription services, and local care records systems.[1]
2. Previous reports on the National Programme by both the National Audit Office and this Committee found that, while some parts of the National Programme were delivered successfully, other important elements encountered significant difficulties.[2] In particular, there were delays in developing and deploying the detailed care records systems.[3] Following these reports and a review by the Major Projects Authority, the Government announced in September 2011 that the National Programme would be dismantled into its separate component parts.[4]
3. In June 2013 the Department published its benefits statement which set out the benefits it expects to be realised from the programmes previously managed under the National Programme[5]. On the basis of the Comptroller and Auditor General's published review of the benefits statement and a separate note on NHS care records systems in the North, Midlands and East (Lorenzo), we took evidence from the Department of Health and the former Chief Executive of the NHS about the current position on the dismantled National Programme. [6]
4. Although the Department told us that the National Programme had been dismantled, the component programmes are all continuing, the existing contracts are being honoured and significant costs are still being incurred.[7] The only change from the National Programme that the Department could tell us about was that new governance arrangements were now in place.[8]
5. The benefits statement reported that the costs of these programmes was £7.3 billion to March 2012, and estimated that the final costs would be £9.8 billion.[9] However, the estimate of the final total cost does not include the future costs associated with the Department's contract with CSC to supply the Lorenzo care records system to acute trusts, mental health trusts and community services in the North, Midlands and East of England.[10] The Department's current estimate of the likely cost of the Lorenzo system is £572 million.[11]
6. The contract with CSC-signed in 2003-was originally worth a total of £3.1 billion.[12] However, ten years on, CSC has still not delivered the necessary software and not a single trust has a fully functioning Lorenzo care records system. The extraordinary lack of progress on Lorenzo is illustrated by the Department's statement during the course of our hearing that, at what it describes as the 'key site' of Morecambe Bay, the Lorenzo system is working fully "with the exception of the parts of the software that have not been fully delivered".[13]
7. In 2011, following the delays in developing and deploying the Lorenzo care records system, the Department decided to renegotiate the contract with CSC. In February 2013 the Department expected the contract negotiations with CSC to be completed by the end of March 2013. However, the negotiations were still continuing at the time of our hearing in June 2013.[14]
8. Despite the delays and CSC's failure to deliver, the Department's negotiating position with CSC is weak.[15] Under the contract, CSC had the exclusive right to supply systems to 160 trusts in the North and Midlands. However, the Department could not meet its contractual obligation to make 160 trusts available to CSC to deploy the care records system. The Department therefore judged that terminating the contract would not have offered good value for money because, potentially, under legal challenge it would have had to pay CSC the full value of the contract. Despite CSC's poor performance, the Department could not enforce the contract because of its failure to honour its side of the deal.[16]
9. In August 2012, the Department struck a new, legally binding interim agreement with CSC, as a precursor to the full re-setting of the contract.[17] The Department agreed to pay CSC compensation of £100 million for removing CSC's exclusive right to supply care records systems in the North and Midlands.[18] Nevertheless, trusts in these regions and in the East that wish to take the Lorenzo system continue to have access to funding from the Department. No funding is available for trusts in the North, Midlands and East that choose to deploy systems from other suppliers.[19]
10. The available funding covers the cost of the Lorenzo system itself and five years of service costs, typically worth over £9 million per trust, plus implementation support, worth up to £3.1 million per trust.[20] The Department estimates it will spend £572 million in total, assuming that 22 trusts take the Lorenzo system. This represents just a tenth of the 220 trusts in the North, Midlands and East. [21]
11. The benefits statement published in June 2013 also excludes the potential future costs relating to the termination of the Department's contract with Fujitsu to provide care records systems in the South of England. This contract was terminated in 2008, but the dispute is still on-going. The Department is currently in arbitration with Fujitsu, with both parties seeking compensation. The Department told us that the parties will be making closing statements at the end of June 2013, and that it will probably be a further six months before the outcome of the arbitration is known.[22] Over the last four years, the Department's legal costs in relation to the termination of Fujitsu's contract and the re-setting of the CSC contract have totalled £31.5 million and £2.9 million respectively.[23]
___________________________________________________________________________
1 C&AG's memorandum, Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS, para 1
2 National Audit Office, The National Programme for IT in the NHS, HC 1173 Session 2005-06, June 2006;
National Audit Office, The National Programme for IT in the NHS: progress since 2006 , HC 484 Session 2007-08, May 2008;
National Audit Office, The National Programme for IT in the NHS: an update on the delivery of detailed care records systems, HC 888 Session 2010-12, May 2011;
Committee of Public Accounts, Department of Health: The National Programme for IT in the NHS, 20th report of session 2006-07, HC 390, March 2007;
Committee of public Accounts, The National Programme for IT in the NHS: progress since 2006 , 2nd report of session 2008-09, HC 153, January 2009;
Committee of Public Accounts, The National Programme for IT in the NHS: an update on the delivery of detailed care records systems, 45th report of session 2010-12, HC1070, July 2011.
3 The National Programme for IT in the NHS: an update on the delivery of detailed care records systems, National Audit Office, HC 888 Session 2010-12, May 2011; The National Programme for IT in the NHS: an update on the delivery of detailed care records systems, 45th report of session 2010-12, HC1070, July 2011.
4 Q 1, C&AG's memorandum, Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS, para 2
5 C&AG's memorandum, Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS
6 Ev 26
9 C&AG's memorandum, Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS, Figure 1
10 C&AG's memorandum, Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS, para 33
11 Ev 26
18 Qq 94-95, 111-112
21 Qq 64, 69, 80; Ev 26
22 Q 115, C&AG's memorandum, Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS, para 34