Customs accused over computers: National Audit Office shelved value-for-money report into planned system which has cost pounds 82m. Tim Kelsey reports

CUSTOMS and Excise is accused of being 'economical with the truth' over a proposed computer project which has cost pounds 82m and which some users insist is so flawed it should be scrapped.

It has also emerged that the National Audit Office shelved a value-for-money report into the project last year. It has denied doing so because political pressure was applied.

When first asked by the Independent earlier this week, a NAO spokeswoman denied that there had been any plans for a study. But she admitted yesterday, after documents had been obtained showing the contrary, that such plans had existed.

Letters were sent to users of the computer announcing plans for a study to establish 'whether the project has been delivered to time and cost'.

The spokeswoman said that the NAO did not decide to mount a formal inquiry because it was satisfied that the system, which has gone over-budget by pounds 12m and been postponed several times, represented value for money. She denied that there was any political pressure.

This view contrasts sharply with that taken by many of those who will be using the computer, called Chief, which monitors imports and exports. The British International Freight Association (BIFA) has written to Customs, in a letter leaked to the Independent yesterday, demanding that plans to implement Chief in March are halted. BIFA wants the system to be subject to an independent audit.

The letter discloses major operating problems with the system, which was built by British Telecom. On one recent occasion, the computer developed a fault and had to be withdrawn from trials. BIFA, which represents 1,000 freight forwarders, described Customs' claims that the system had been tested successfully earlier this month as 'erroneous'. The letter also accuses Customs of being 'economical with the truth' in publicly stating that most of Chief's users 'were happy with its performance'.

A copy of the letter has been sent to the Paymaster-General, Sir John Cope, who has responsibility for the Customs and Excise.

One director of BIFA said yesterday: 'I believe Chief should be killed off. Even Customs officers we have talked to think it is a disaster.'

If Chief was scrapped, it would heap further embarrassment on the Government's record for incompetence in public sector computer projects. The collapse of the computer system at Wessex Regional Health Authority, which drew much criticism from the House of Common's Public Accounts Committee, wasted only pounds 63m of taxpayer's money. Chief would set a new precedent.

Accounting problems caused by a computer fault led to pounds 44.5m in Social Fund loans being under-estimated by the Benefits Agency, according to a report to Parliament published yesterday.

The National Audit Office, the taxpayers' watchdog, has decided to 'qualify' its audit opinion - which means it refuses to endorse the Social Fund Account for 1992- 93 - because of the 'material uncertainty remaining about the accuracy of the 'loans outstanding' figure at 31 March 1993'.

The NAO Comptroller and Auditor General, Sir John Bourn, said in his report that the difference between outstanding loans shown in the Social Fund account and the figure from its computer system, which contained details of individual loans, was due mainly to faults in the computer programme. 'They estimate that the programme was understating the total amount of loans actually held on the computer system by pounds 44.5m,' he said.

However, the report said there was no evidence that these faults had affected the records of amounts owed by individuals or had resulted in a cash loss.

The Commons Public Accounts Committee is expected to consider the NAO's report on 28 February. A new Social Fund computer system is expected to be running by May.