Government wasted millions on IT projects - report

Taxpayers' Alliance claims cancelled IT deals cost government almost £5m

Failed IT deals cost the government £4.9m in 2013/2014, according to a new report from the Taxpayers' Alliance (TA), which claims the findings damage the public's trust in civil servants.

The TA report claims that in 2013/2014, inefficiency in Whitehall departments led to losses of a whopping £5.1bn, including £6m on earplugs which were not fit for purpose and £1.2m after a school paid into an incorrect bank account.

Of that total, £4.9 of the wasted cash related directly to IT deals, according to the report.

A loss of £2.2m was recorded by Highways Agency in relation to compensation for the early termination of an IT contract, while the Department for Work and Pensions lost almost £1m after an analytics project was terminated early because another department would take on the duties as part of a shared services deal instead.

The Department for Business, Innovation and Skills wasted £1.24m on IT relating to its Flite programme, which aimed to refresh its IT infrastructure.

"Following a change in strategic direction, the initial work undertaken on the programme was reapplied where possible," the report said. "£1.24m of costs incurred could not be recycled, and have been treated as sunk costs by the department."

The Home Office lost nearly half a million pounds after it decommissioned an IT system which was no longer required following staff relocation, and the Ministry of Justice made a "constructive loss" of £1.7m relating to a software programme "which was curtailed following a reappraisal of the economic benefits of the business case".

A constructive loss refers to a payment being made when the continued expense of a programme does not represent value for money and any costs already incurred are written off, the TA said.

Jonathan Isaby, chief executive of the TaxPayers' Alliance, said:

"While in some cases closing a programme or getting out of a rental agreement early may make long-term sense, many of these losses are simply ludicrous and will seriously damage the trust taxpayers have in Whitehall civil servants.

"It is clear there remains far too much waste in the system. With an ever-growing debt burden, we must make government more efficient and ensure taxpayers are getting real value for money."

A government spokesperson said: "Like any business, government departments will always have write-downs for things like unused stock, and as the report recognises, some of these figures are outside the control of the public sector. However, this government has clamped down on wasteful spend and last year saved £14.3bn for the taxpayer."