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Tuesday 11 May 2010

Tory-Lib Dem alliance will agree on most tech issues

As David Cameron is named as the new Prime Minister and he commits to forming a “proper and full coalition” with the Liberal Democrats, it’s worth considering where the two parties agree (and disagree) in terms of their Technology Manifestos. The headlines of the last few days have concentrated on deal makers or breakers such as electoral reform, deficit reduction, banking reform, and environmental issues, as well as civil liberties. The last issue – civil liberties – will impact decisions made over IT projects such as the National Identity Scheme and the DNA Database.

One thing that all both parties agree on (and indeed, Labour also agreed on), is that they will be looking for major cuts in IT spending. Sir Peter Gershon advised the Tories that cuts in IT spending of between £2b and £4b p.a. could be made by renegotiating contracts with suppliers. The Liberal Democrats have gone into more detail, stating that, by scrapping ICT schemes, they would be able to save £3.37b over five years (they’ve stated that scrapping fingerprint passports would save £1.83b, scrapping ID cards would save £550m, scrapping the Interception Modernisation Programme (IMP) would save £800m and scrapping ContactPoint would save £190m).

As always, when it comes to the approach to IT procurement, the devil is (and will be) in the detail. On some issues there seems to be broad cross-party agreement – opening the way for increased adoption of open source software, moving towards software-as-a-service where possible, the consolidation and rationalisation of IT infrastructure, and opening up the Government IT market to smaller providers. Where the parties differ is in their approach to achieving these goals – and that will raise its head when dealing with the practicalities begins and procurement reform is put under the spotlight. For example, while the Liberal Democrats (and Labour) have been vague on the ‘how’ (with the Lib Dems simply saying that they would conduct a full IT procurement review), the Tories have been a little more forthright in stating pledges such as a £100m limit on IT projects. Such pledges will now be under scrutiny as Clegg and Cameron attempt to find common ground.

The IT ‘elephants in the room’ in the weeks and months ahead will be: 1. Some of the existing IT programmes, and 2. The use of business process outsourcing. However, the good news is that the Tories and Lib Dems are far more closely aligned with each other than they are with Labour when it comes to their views on surveillance, data transparency and civil liberties.  And as a result, it looks likely that we will have certainty on the future of some programmes, such as the National Identity Scheme, DNA Database, ContactPoint, CCTV and the Interception Modernisation Programme, sooner rather than later. Cameron and Clegg also agree on the future for the NHS National Programme for IT. The Lib Dems' opinion on Building Schools for the Future is unclear, but it appears that both the Tories and the Lib Dems would support investment in education and in the IT to support education (in some shape or form). Labour has been poles apart from both the Lib Dems and the Tories on most of these big IT project issues.

  • NHS Programme for IT - Labour pledged to scale down the programme saving “hundreds of millions of pounds” over the next four years (as an aside, Labour Health Minister, Mike O’Brien, lost his seat in the election), whereas the Tories have said they will “halt and renegotiate” contracts and have also talked about dismantling ‘The Spine’ as decision-making is moved to the local level. The Lib Dems are supportive of the Conservative view. A Con-Lib Dem coalition would probably result in BT and CSC’s NHS NPfIT LSP contracts being further renegotiated. BT is also the prime contractor on the ‘Spine’ contract.
  • Interception Modernisation Programme (to extend capabilities for intercepting and storing communications data) – Labour had no plans to change the programme. However, the Tories plan to review the programme, and the Lib Dems have proposed an alternative approach based on targeting, warrants from law enforcement agencies and other safeguards. The supplier(s) on this Programme have never been revealed.
  • Building Schools for the Future – Labour promised to increase spending on the programme but Tories favour Academies. The Liberal Democrats have not made their views clear on BSF, however, they have pledged a £2.5b ‘Pupil Premium’ and it is unclear how that would be funded.  Existing BSF contract should be safe (as the Tories pledged to go ahead with contracts that had reached financial close and the procurements have been expensive), but those targeting future deals, such as Capita and RM, will be keen to understand what shape future investment in IT will take.
  • National Identity Scheme – Labour pledged to increase spending on the premise that the programme would be self-financing as it cut benefits fraud etc, while the Tories and Lib Dems both oppose the scheme (and would scrap both the National Identity Register and ID cards). The Liberal Democrats would go one step further and also “scrap plans for expensive unnecessary new passports with additional biometric data”. They have also said that the money saved would be used for 3,000 more police officers as well as investment in better mobile technology for use on the beat. IBM’s contract to build and run the National Biometric Information Service (NBIS) database and Thales’ contract to design, build, test and operate the technology for the NIR will be most at risk. CSC’s contract to improve the application and enrolment contract for the Passport Service should be relatively safe (although is also likely to be subject to scrutiny).
  • ContactPoint childrens’ database – Labour continue to support the programme, but the Tories have pledged to scrap the database in favour of something smaller and more targeted. The Lib Dems support the Conservative view. Capgemini built the database and hosts it under a £40m contract awarded in 2007.
  • DNA Database – Labour planned to maintain the current stance on storing DNA data while both the Tories and the Lib Dems support the scaling back of the database by putting an end to the indefinite retention of the DNA of innocent people.
  • CCTV – Labour would have invested more but both the Tories and Lib Dems favour regulation.

So when it comes to investment in major IT programmes, we can expect far greater cuts under a Conservative-Liberal Democrat coalition than we would have had with any coalition involving Labour. This is likely to be bad news for some of the big IT services suppliers as highlighted above. However, let’s not forget that the government is likely to find that it’s a costly business trying to reduce the value of a contract midway through its term (there’ll be all sorts of penalties to pay) – cutting costs on existing IT projects won’t be as simple as just turning off the tap.

So, then we come to the use of business process outsourcing (of course closely linked, though not synonymous to shared services). When it comes to the use of business process outsourcing, the Tories pledge to outsource all UK Government back office functions, while Labour had pledged to create business service companies to handle back office functions, and the Lib Dems' stance remains unclear. The Liberal Democrats had previously supported the Labour view that spending cuts should be made starting next year (rather than immediately). However, Vince Cable, Liberal Democrat’s main economic spokesperson, today conceded that making cuts sooner rather than later would be a good idea, provided stimulus in the British economy is maintained by other means. A strong agreed stance on immediate cost cutting will be good news for the business services companies – the likes of Capita and Serco – and IT services players with UK Government BPO experience (see Yet another Election update).

Overall, when it comes to IT, a Tory-Lib Dem alliance will agree on a lot more issues. However, their policies will have a mixed impact on the IT industry – bad news for the major IT services companies whose existing IT contracts are at risk of cancellation, curtailment or renegotiation, but good news for those with strength in business process outsourcing.

Posted by: Georgina O'Toole at 21:35

Tags: publicsector  

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