Chancellor George Osborne this morning promised "draconian" measures to slash IT costs, as part of £6.2 billion being cut from government spending.
Some £1.7 billion will be directly cut from “IT programmes, suppliers and property”, Osborne said in a speech outside the Treasury. A further £1.15 billion will come from discretionary spending, including consultancy, with “immediate” renegotiation to take place with suppliers.
The Chancellor did not go in to detail on what he called the “unnecessary” programmes to be cut, but last week deputy prime minister Nick Clegg set out a list of projects that would be ended, totalling £7 billion in value over their lifetime.
These projects include the £1.3 billion identity cards scheme, as well as the £3.6 billion biometric passports database. The £224 million ContactPoint database of children will also be scrapped. The plan for internet service providers and phone companies to hold records of all the web, email and phone communications of UK citizens will be shelved – some £2 billion of public money had been allocated for this.
No details have been revealed on the future of the controversial £12.7 billion NHS National Programme for IT, which includes a scheme to create centralised digital patient records for everyone in the country. But many of the contracts, including with NHS IT suppliers, are understood to contain tough penalty clauses meaning it would be difficult for the government to cancel them.
The British Educational Communications and Technology Agency (BECTA), will be closed, delivering up to £80 million in savings.
Osborne said he had “frozen” the “hundreds” of projects – including IT – that had been signed off by the Labour government between the start of the year and the election. While “vital” schemes, such as those affecting ongoing military operations in Afghanistan, would not be cancelled, the rest will be reviewed.
It is understood the projects include £1.8 billion of IT spending commitments before the election. These include a £1.2 billion e-Borders system for immigration, and a £600 million pensions processing offshoring deal.
Under a new office, called the Efficiency and Reform Group, there will also be an immediate freeze on all new IT spending over £1 million.
The government will now renegotiate contracts with its 70 main suppliers, including those providing IT. It promised that the new ERG office would provide “clout” in these negotiations.
“We are going to take some draconian measures on IT, advertising and consultancy,” said David Laws, chief secretary to the Treasury, at the same press conference. “We need to send out a shock wave to get step change in behaviour.”
A further £95 million will be cut from ongoing departmental IT operational costs. “Our first priority is to cut out waste,” said Laws.