Health service will move half a million licences over to government volume buying deal...The NHS is planning to move half a million software licences over to a central government agreement with Microsoft that will save UK taxpayers millions of pounds. The health service currently has a three-year volume subscription licensing deal with Microsoft, signed in October 2001, but it is already in talks with Microsoft to switch these to a bulk discount agreement brokered by the government's procurement agency last year. The switch will double the number of licences purchased by the Office of Government Commerce (OGC) and consequently trigger much bigger discount levels. silicon.com understands that the improved discount from the addition of the NHS licences will equate to an average £12 per licence saving for government departments and agencies buying Microsoft software through the OGC deal. Neil Jordan, head of healthcare at Microsoft UK, admitted there will be increased savings for the government but would not be drawn on the exact figure, saying there are different discount levels and prices for different groups of products. He said: "There are different discount levels for server and desktop products. It would make a significant difference to both." But although the public sector as a whole and taxpayers will benefit from the NHS switch, NHS Information Authority programme manager Peter Bladen, who is responsible for the health service's Microsoft and Novell agreements, admitted to silicon.com that the NHS will be slightly worse off per licence. The OGC was unable to confirm whether some of those savings will be passed back to the NHS. The NHS is believed to currently spend around £50m on Microsoft licences though this differs significantly from the figure given out by health minister John Hutton in response to a Parliamentary question last week. Hutton put the figure at £62.3m for 2002/2003 – compared to just £16.9m for 2001/2002 - but both Microsoft and health service IT body the NHS Information Authority contest this and said they do not know how the Department of Health calculated it. The NHSIA said the increase was much smaller and was wholly down to an increase in the amount of software bought from Microsoft by the NHS. Bladen said: "The cost per licence decreases with the number of licences so the cost per licence has gone down but the overall cost has gone up." The NHS volume licensing deal with Microsoft is a subscription one, meaning at the end of the contract the customer loses the rights to use the software. The OGC deal is for perpetual licensing, meaning at the end of the contract the customer retains the right to continue using the last version of the software they have paid for. Microsoft does not normally allow customers to switch from subscription to perpetual licensing as it could be used by firms as a way to licence unlicensed software. But Jordan said the company will make an exception if the NHS does move over. He said: "We are very keen to do the right thing by the NHS. At the end of the three-year agreement the NHS doesn't have permanent rights for the software and the ability to enter into a perpetual agreement is based on correct licensing. We can find a way because it is an untenable position for us both to be in." NHS Information Authority programme manager Bladen told silicon.com that Microsoft had played fair with the NHS over the issue. But he admitted that while the rest of the public sector will benefit from the inclusion of the NHS licences, the NHS itself will be slightly worse off. The Department of Health was contacted and asked how it calculated the figures and whether it still stood by them but did not respond at time of publication.