In March this year the Cabinet Office minister Francis Maude
that his officials and Capgemini have agreed savings of more than £200m on the "Aspire" contract with HM Revenue and Customs.
English: Francis Maude MP, Minister for the Cabinet Office (Photo credit: Wikipedia)
What Maude and the Cabinet Office didn't say in their press release was how much the
contract was costing. Without knowing this, how was it possible for anyone reading the press release to put the £200m savings into context?
Now it has emerged that HMRC's IT spend on Aspire in the year up until Maude's announcement was a record amount: £964.2m. In the same one-year period, HMRC spent a further £42.6m with Serco on website development and support. The promised savings of £200m are between 2012 and 2017 so, if achieved, they are worth £40m a year.
Yet the Aspire spend is apparently rising by far more than this. Under the Freedom of Information Act HMRC disclosed in 2010 that the Aspire contract with Capgemini, and its main subcontractors Fujitsu and Accenture, was costing £700m a year.
But HMRC spent about £260m more than this on Aspire in 2011/12. So are savings of £40m a year up until 2017 reassuringly high enough to show that HMRC has a firm grip on its outsourcing IT costs? A simple calculation shows that HMRC's IT costs could be rising each year several times the amount of the promised savings.
When Inland Revenue first outsourced its 2,000-strong IT department in 1994 to EDS (now HP) the outsourcing contract was worth about £1bn over 10 years. Based on HMRC's 2011/12 IT spend, a 10-year outsourcing contract today would cost about £10bn.
Without an outsourcing contract in place HMRC might not have been able to achieve what it has: replacement national insurance recording systems, a reduction in data centres, less reliance on technology that dates back decades and an ability to bring about a major change with the advent of Real-Time Information, an essential part of Universal Credit.
But has Aspire been value for money? And with a long-term commitment to outsourced suppliers does HMRC have the ability to control its costs?
Thank you to Matt Boyle, a former Inland Revenue IT employee and now payroll specialist at Research4paye who collected the figures and worked out HMRC's spend on Aspire. The figures were published by HMRC under the Cabinet Office "transparency" requirements.
More on HMRC's IT spend