The £57m efficiency drive that cost £81m

Transport department accused of 'stupendous incompetence'

Transport ministers showed "stupendous incompetence" in leaving taxpayers an £81m bill for an efficiency drive designed to save the department millions of pounds, MPs said.

The Commons Public Accounts Committee condemned the "lamentable" handling of the scheme to cut back-office costs at the Department for Transport, "one of the worst cases of project management" they had seen.

Problems were so severe that efforts to share personnel, payroll and other services between the DfT and agencies such as the Driver and Vehicle Licensing Agency (DVLA) left staff dealing with computer systems which give messages in German.

The shared service centre in Swansea had been intended to cost £55m but make £112m in savings – which would have given an overall cut of £57m. Instead, the latest estimates show that the programme will cost £121m and save just £40m, leaving taxpayers with a bill of £81m.

In a report published today, the MPs blame senior officials in the department for the fiasco, but warned that "despite the extent of mismanagement in this case, no individuals have been dismissed or properly held to account".

Officials told MPs that staff involved in the failed project had suffered "consequences" including lost bonuses.

But the committee said axing bonuses was not "adequate punishment", adding: "Bonuses should only be awarded for good performance ... simply taking them away does not constitute an adequate punishment for [this] particularly poor performance."

The MPs said only two of the department's seven agencies were using the new centre. Users of the new computer system had "little confidence", apparently, while the new shared service centre was failing to meet performance targets.

Edward Leigh, the Public Accounts Committee's chairman, said: "The Department for Transport planned and implemented its shared corporate services project with stupendous incompetence. This is one of the worst cases of project management seen by this committee. The plan was for the central part of the DfT and its seven agencies to be sharing services by April 2008. The Department knew that it was pushing things with such a tight timetable but, without robust challenge to such a risky strategy, ploughed on confidently.

"The result was lamentable. The underlying computer system was inadequately procured and tested, resulting in an unstable setup when it was switched on. DfT staff do not trust the system which is hardly surprising when we hear that on occasion it took to issuing messages in German. So far only the central department and two of its agencies are using it."

The report criticised transport department officials for failing to put the work to build the new system out to tender, and said they had tried to implement their cost-saving plan too fast, leaving little time for testing.

Transport department civil servants insisted that the cost of the project had been estimated over the next six years, and that they would keep trying to produce savings. "As with any large-scale, and long-term project, there have been aspects of shared services that have taken longer to implement than others," a Department for Transport spokesman said. "However, the system is now starting to deliver real change within the department with smoother and more streamlined processes."