Labour's scramble to launch £11bn spree

Labour was accused yesterday of rushing through huge contracts before the election to safeguard party's 'pet projects'.

Andrew Grice
Monday 08 March 2010 01:00 GMT

Labour was accused yesterday of rushing through £11bn of spending before the general election in a "scorched earth" policy to prevent its pet projects being scrapped by an incoming Conservative government.

Despite the looming squeeze on public spending, ministers are trying to push through several massive computer contracts before ballot day, which is widely expected on 6 May. The "break clauses" in some deals may make them very expensive to cancel, locking in the new government.

Tory frontbenchers believe that, if they win power, they would discover "poison pills", making it harder for them to announce the immediate spending cuts they have promised. As well as contracts that are difficult to scrap, the Conservatives fear that Whitehall budgets have been drawn up to protect flagship Labour projects such as housing and children's services, so that any attempt to find small-scale savings would inflict maximum political damage.

Labour insists it has every right to carry on governing and argues that the new information technology (IT) contracts will provide value for money. Cabinet Office rules say that decisions on matters of policy and "other issues such as large and/or contentious procurement contracts, on which a new government might be expected to want the opportunity to take a different view from the present government, should be postponed until after the election, provided that such postponement would not be detrimental to the national interest or wasteful of public money". However, the guidelines do not kick in until the election is called – which Gordon Brown is not expected to do for three weeks. Although the Tories would call an immediate halt to all IT contracts if they won power, The Independent understands that last-ditch actions planned by the Government this month include:

*approving local supplier contracts for the controversial £12.7bn NHS electronic patient records scheme, the largest computer project in the UK, which the Tories would dismantle;

*signing a £1bn logistics software contract for the Ministry of Defence;

*speeding up a £600m contract to run new personal pension accounts due to start in 2012;

*completing an £800m agreement for communications equipment and services at the Serious Organised Crime Agency;

*starting to print the 30 million forms for the 2011 census, even though the Tories have said they would scale back the £482m project.

Labour denies acting irresponsibly and says an incoming government would be able to cancel the personal pensions contract at a cost of only £25m this autumn. But one minister admitted privately: "We are pushing hard on what we can get through by the end of March and asking civil servants to prioritise that, rather than medium- and long-term projects which could not be completed by the election."

Sir Gus O'Donnell, the Cabinet Secretary and head of the Civil Service, has rejected Tory calls for him to intervene to block the computer contracts. In a letter to the Opposition, he said: "Ministers are entitled to take decisions about the administration of the country's affairs. Civil servants have a duty to support them in this function by providing impartial and objective advice.

"They will always prioritise value for money when advising ministers on any course of action. Value for money assessments will balance the cost of any delay against potential costs arising from uncertainty about the future. The forthcoming general election does introduce an element of uncertainty, but it would be inappropriate for civil servants to anticipate any particular election result."

However, some senior civil servants are frustrated that Labour and Tory frontbenchers will engage in frank talks with them about the spending cuts that will inevitably be needed to close this year's £178bn gap in the public finances. They say politicians fear their intentions would leak before the election.

Francis Maude, the shadow Cabinet Office Minister who heads an implementation unit planning the early work of a Tory government, said: "Labour's actions resemble a dying administration making reckless and irresponsible spending commitments to wreck the finances for any incoming government."

He added: "Once again we see Gordon Brown putting the Labour Party ahead of the country. Labour is unable to ditch its obsession with partisan dividing lines. The choice at the election will be clear: a responsible united government under David Cameron or a reckless irresponsible government under Gordon Brown who are only going to make things worse."

About £4bn is believed to have been spent already on the long-delayed NHS scheme for patient records to be available to any GP or hospital in England. The Tories want a local rather than a centralised scheme but fear the contracts would cost billions to unravel.

Labour insists the NHS contracts are being revised to save taxpayers £600m. The Health Minister, Mike O'Brien, said: "What we want to do is make sure we get these savings. I am certainly not going to get into a situation where because we are approaching a general election some day soon, the whole of government stops and we cannot make any contracts with suppliers of key NHS equipment. That would be complete nonsense."

But Stephen O'Brien, the shadow Health Minister, said: "At best it is a last-ditch attempt to tackle a deficit of Labour's own making. At worst it is an underhand effort to tie the hands of the next government."

Government IT projects: How Labour's spending adds up

The Government has spent an estimated £100bn on computer projects since 1997 – and several have run into big problems.

*National Programme for IT (NHS)

The cost of bringing in electronic patient records that could be accessed by all GPs and hospitals in England has ballooned to £12.7bn. The scheme, originally due to be completed in 2005, will not now take effect until 2015-16.

*Defence Information Infrastructure (DII)

Project to replace hundreds of Ministry of Defence computer systems, announced in 2005, is running more than £180m over budget at £7.1bn and 18 months late.

*National Identity Scheme

Originally costed at £3bn, the budget for controversial plan for identity cards has risen to £5bn and ministers have abandoned plans to move eventually to make them compulsory.

*Single Payment Scheme

The scheme for paying subsidies to Britain's 100,000 farmers has cost £350m but has been beset with problems. Spending watchdogs say it risks becoming obsolete.

*Libra system (magistrates courts)

Plans to set up an integrated system for courts have proved more difficult to implement than originally expected and the budget has increased to more than £400m.


The cost of transferring the computer systems of Britain's intelligence and eavesdropping centre to a new building has risen from £41m to more than £300m, according to the National Audit Office.

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