Former Tory ministers linked to wasted 63m pounds: Government accused of misleading Parliament over Wessex health authority's computer contracts

NEW EVIDENCE that the Government misled Parliament over computer contracts awarded by Wessex Regional Health Authority emerged yesterday amid a growing political row about a report to MPs linking former Tory cabinet ministers to the waste of pounds 63m.

The district auditor's report could be highly damaging for the Tory party on the eve of the local elections and the Newbury by-election.

Labour members of the cross-party Commons Public Accounts Committee, which meets today to consider the Wessex affair, were angry when they found it stamped 'confidential'.

The Independent and Computer Weekly, in a joint investigation earlier this year, revealed the existence of two confidential reports by the district auditor which castigated Wessex and its present chairman, Sir Robin Buchanan, for grossly mismanaging a regional computerisation scheme between 1982 and 1991. It also questioned the role of Lord Jenkin, a former Tory cabinet minister, in lobbying for one contract.

Additional documents leaked to the Independent yesterday, but not made available officially to PAC members, reveal that three Tory cabinet ministers ignored warnings by internal Department of Health auditors.

In a report dated 9 February 1987 which was submitted in confidence to the Conservative Party Chairman, Sir Norman Fowler, then Secretary of State for Social Services, auditors expressed serious reservations about the award of a computer contract, worth an initial pounds 7m, to Arthur Andersen & Co.

The report questions the contract's legality and the circumstances of the tender itself. The auditor describes how Arthur Andersen was allowed 'access to evaluation data' denied to others tendering. Consultants employed by Wessex, who advised against Andersen, cost the authority pounds 130,000, the report adds.

A month before getting the report, Sir Norman wrote to Ann Clwyd, Labour MP for Cynon Valley: 'If you know, or have heard, of any supposed irregularities that I do not know about, I would be obliged if you would let me know what they are so that I can investigate them thoroughly.'

However, three months after receiving the report, on 15 May 1987, Tony Newton, then Minister for Health, answering a question on behalf of the Secretary of State, assured MPs that the computer contract which Andersen's won conformed to EC/General Agreement on Tariffs and Trade arrangements. According to the secret report, that was far from the reality.

A second internal report to the Secretary of State warned that costs were escalating on the computer project, and that there was evidence of overcharging, and duplicate payments.

Kenneth Clarke, while Secretary of State, ignored warnings about contract irregularities in a report dated 2 November 1988. William Waldegrave, the next Secretary of State, also received a report critical of the authority.