Watchdog slams £1bn waste on Giro card IT project

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More than £1bn of taxpayers' money was wasted on a disastrous attempt to introduce computerised swipe cards for all benefit claimants, Whitehall's financial watchdog has found.

More than £1bn of taxpayers' money was wasted on a disastrous attempt to introduce computerised swipe cards for all benefit claimants, Whitehall's financial watchdog has found.

Tory and Labour ministers are blamed by the National Audit Office (NAO) in a report today on their handling of the failed project, which was supposed to end Giro cheques.

"Today's report is the latest, and probably worst example, in a long line of public-sector IT débâcles," said David Davis, the chairman of the Commons' public accounts committee.

Sir John Bourn, the Comptroller and Auditor General, said the card had cost the Department of Social Security (DSS) £427m and the Post Office £571m. Work on the benefits payments card began in 1996 but was cancelled in 1999 when it became clear the scheme was too complex and untested to justify more public funds.

The Benefits Agency and the publicly owned Post Office Counters awarded a private finance initiative contract to devise the card to Pathway, a subsidiary of the ICL computer group. Peter Lilley, then Secretary of State for Social Security, approved the ambitious scheme to replace paper-based methods of paying social security benefits with a magnetic stripe payment card by 1999.

About 17 million benefit recipients would have been issued with the cards and up to 20,000 post offices were to get the new computerised system.

Sir John says competing objectives from the Post Office and the DSS, plus lack of a pilot version, were among the main reasons for the blunder. The NAO said the Tory government was so keen to pursue a PFI it failed to heed major risks.

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