Budget: Darling axes £500m of IT spend from 2012

NHS IT cutbacks and government-wide shared services centres announced

NHS IT cutbacks and government-wide shared services centres announced

The government is to cut annual spending on IT by £500m from 2012, including on its £12.7bn project to revamp NHS technology, the Chancellor Alistair Darling announced in yesterday's budget.

The NHS IT cuts are expected to save £100m each year and will realise part of plans to slash £600m from the overall cost of the programme announced by Health Secretary Andy Burnham last year.

The savings will come from "taking a new approach to the NHS National Programme for IT that offers a more flexible delivery model and greater choice to local hospitals", according to a government budget document.

Under the cutbacks, the Department of Health will scale back its contracts with BT and CSC to implement new IT systems - known as patient administration systems (PAS) - in hospitals across England.

The deployment of the new PASes at hospitals is years behind schedule and early systems have been dogged by complaints about technical and training problems.

The DoH is talking to BT and CSC to identify where the savings could be made and has predicted that these contract renegotiations will be complete by the end of March.

The Chancellor is planning to cut £500m from the government's IT spend from 2012

The Chancellor is planning to cut £500m from the government's IT spend by 2012-13
(Photo credit: Shutterstock)

The £500m annual IT savings announced in the budget...

...will also include cuts within the Ministry of Defence, which will save £130m by replacing legacy IT systems and greater use of collaborative procurement on IT. And the Home Office, which will cut £80m from its annual spend through measures such as renegotiating contracts.

The IT savings will contribute towards efficiency savings of £11bn per year by 2012-13, £8bn of which will be delivered from the Operational Efficiency Programme.

The budget also includes other IT savings that have previously been announced, such as HM Revenue and Customs saving more than £100m from annual costs by decommissioning and rationalising its datacentre estate.

Shared services will help realise the £11bn savings target. The DWP Shared Services Centre, which provides back office function to three central government departments, is to take on four additional departments by April 2011.

In addition, the Ministry of Justice will introduce a shared service centre for human resources, payroll, finance and procurement to 81,000 staff.

Georgina O'Toole, research director with analyst house TechMarketView, said in a research note: "There's no change to our view that no UK government ICT programme is 100 per cent safe and that many will get scaled back.

"There's also no change to our prediction that it is outsourcing, in support of back office efficiency savings, that will be one of the few growth areas in the UK public sector SITS [software and IT services] market."

Darling also announced £5bn-worth of cuts to government programmes, including removing £25m from the annual budget of educational IT support body, Becta.