Veil of secrecy drawn over failed projects: Millions of pounds were wasted on public-sector computers. Tim Kelsey reports

PROBLEMS with the Department of Social Security's multi-million pound computer project is the latest in a string of similar disasters.

Hundreds of millions of pounds have been wasted on computers in the public sector and the mismanagement appears to continue.

Two months ago, it was disclosed that the department had wasted about pounds 35m on 're-work' - dealing with mistakes. Sources within the department put the latest losses as high as pounds 125m.

The National Audit Office and the Commons' Public Accounts Committee, the parliamentary watchdog of public spending, have been frequent critics of computer management by civil servants.

In the early Eighties, the DSS commissioned what was then the largest computer project in Europe to put all social security payments on computer, and all offices on line. Consultants were called in to provide expertise, but 10 years later the system had run away with itself and cost twice as much as anticipated at pounds 2bn.

The DSS established a special internal unit, called the Information Technology Services Agency, to manage its computer operations and avoid using external consultants. ITSA should be foolproof, yet the it has allowed the current project to develop serious flaws and continues to employ hundreds of private-sector consultants.

Next year ITSA will become a privatised agency. Most of its staff will work for private companies. But there are many who feel that the lesson the public sector (and the taxpayer) is learning is that too close an association with private computer companies cannot be guaranteed to produce value for money.

Computer fiascos occur for many reasons: inefficient planning, poor-quality software design, and inadequate maintenance. But, generally, negligence is to blame. There are few bodies in the public sector capable of policing what is the largest growth market in government: information technology.

Whitehall spends about pounds 2bn annually on computers. One expert estimates that at least 10 per cent is wasted. More than pounds 60m was wasted by Wessex Regional Health Authority during the 1980s on a faulty scheme to link all its hospitals together on computer. The district auditor blamed local officials for failing to stop the project sooner, and for allowing consultants and suppliers to ride roughshod over their responsibilities to the taxpayer. The district auditor disclosed, in two reports which the authority tried to keep secret, that one private-sector consultant, who had lost one of the contracts, lobbied so hard afterwards that it finally won.

Around the same time, the London Ambulance Service pounds 1.5m ambulance dispatch system collapsed and led to allegations that people had died because of delays in sending vehicles on emergency calls.

Before that, the Foreign Office wrote off pounds 77m on an administrative system; and the Ministry of Defence wasted pounds 10m on a stores system.

The private sector is not immune to mistakes but it has less cash to throw away. The collapse last year of Taurus, a computer system at the London Stock Exchange, at an estimated cost of about pounds 70m and the loss of 350 jobs seems to have taught private commerce, particularly in the City, some important lessons.

But it is the public sector that provokes most worry. Earlier this year, Customs & Excise was told by those supposed to use a new pounds 82m computer freight system that it did not work. The project, called Chief, went over budget by pounds 12m, and has been frequently postponed. There are concerns it could be shelved.

Government departments could obtain cheaper office space if they adopted a more commercial approach, it is claimed today, writes Chris Blackhurst.

Property Holdings, the Whitehall agency set up to manage over 7 million square metres of government office space in 3,000 buildings, is handicapped by the departments it serves. Too often, says the National Audit Office, their instructions are 'ill-defined' and subject to frequent changes. When it comes to bargaining with landlords, the agency finds its position undermined by officials having already indicated their intention to occupy.

The report notes, however, that the agency has achieved rents 9 per cent below market levels, a 'significant achievement in relation to annual rental expenditure of pounds 500m'.

Leading article, page 15