HL Deb 26 October 1992 vol 539 cc901-4

3 p.m.

Lord Dean of Beswick asked Her Majesty's Government:

Under what circumstances over the last 10 years the Wessex Regional Health Authority incurred a financial deficit of £40 million on the purchase and operation of a computer system which proved unsatisfactory, and what measures Her Majesty's Government have taken or are taking to deal with the situation.

The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege)

My Lords, the Wessex Regional Health Authority has stated that mismanagement led to that problem. The National Health Service management executive has issued revised guidance to health authorities concerning the control of such contracts.

Lord Dean of Beswick

My Lords, I am grateful for the information given by the noble Baroness in her reply. However, is she aware that the regional authorities are managed by people appointed by the Secretary of State, including the chairmen, who, we are told, possess special qualities and have the special knowledge to manage this kind of organisation? Does she agree that not enough attention was given to this matter by these people or that not enough knowledge of the subject was available to them? Or was it complete incompetence that allowed the situation to continue for 10 years? Would the Minister care to take to the Secretary of State the suggestion that these people are not up to the job that they were given and that other people ought to be found to do it?

Baroness Cumberlege

My Lords, the noble Lord is right up to a point. But the people concerned in the letting of these contracts are no longer involved with the regional health authority.

Lord Ennals

My Lords, what kind of financial control enables such a deficit to build up over 10 years? Does the noble Baroness agree that this is a matter which ought to be of concern to Ministers? There is no suggestion that the noble Baroness is in any way responsible for this situation. But will she confirm that in respect of such a sum the Minister ought to have been involved to ensure that there was proper control'?

Baroness Cumberlege

My Lords, the department was concerned. Although the scheme was very much a regional one and the region has taken responsibility for the mistakes that were made, the department on a number of occasions, through its regular review system, raised the issue with the region. The Secretary of State quickly appointed a new chairman, who in turn appointed a new regional general manager, whose first act was to call for an inquiry into the scheme and to abandon the project.

Lord Cocks of Hartcliffe

My Lords, is the Minister aware that this sum of £40 million squandered, in her own words by "mismanagement", would have paid for the hospital for which my former constituents in Bristol South have been waiting since 1932?

Baroness Cumberlege

My Lords, I should like to make it absolutely clear that £23 million of the expenditure has been put to good use. In addition the regional health authority has recovered a significant amount of money. It is also taking legal action to recover further amounts from the other companies involved.

Lord Carter

My Lords, will the Minister confirm that a substantial proportion of the £40 million expenditure referred to a contract let to a company formed by former employees of the health authority? Can she inform the House whether her department, the management executive or the Audit Commission have the power to investigate and if necessary stop the so-called "sweetheart" deals between health authorities and former employees for the supply of goods or services?

Baroness Cumberlege

My Lords, it was that very concern which led the regional general manager to institute an inquiry. He involved the district auditor, who has now said that he is satisfied with the financial and management arrangements that have been introduced by the region.

The Earl of Onslow

My Lords, one of the most exciting and sensible things that my noble friends on the Front Bench have done has been to introduce the National Health Service reforms. Does my noble friend agree that the corollary is that if someone makes a mistake—I put it as mildly as that—of this calibre, someone's head ought to be on the block? Have there been any resignations or sackings and if not, why not?

Baroness Cumberlege

My Lords, the present regional general manager arrived in 1990, by which time the officers concerned had either moved to other jobs or retired. Two former senior members of staff were dismissed by the regional health authority in 1991 for gross misconduct, following its own investigation into the circumstances surrounding the placing of contracts for certain IT services. Those former officers are currently under investigation by the police for alleged fraud. All the evidence that the regional health authority possesses, including the district auditor's report, has been shared with the police and the RHA's own legal advisers.

Lord Tordoff

My Lords, does the Minister feel that the district auditors should be fired as well?

Baroness Cumberlege

My Lords, fortunately that is not a matter for me.

Lord Campbell of Alloway

My Lords, apart from sacking the chairman, can my noble friend say what other steps have been taken to rectify the situation so that it will not happen again? Is she satisfied that all appropriate steps have been taken?

Baroness Cumberlege

My Lords, I thank my noble friend for that question. I am satisfied that all steps have been taken. In addition, the NHS management executive issued fresh guidance to the NHS on 9th September on the standards of management and conduct. That included advice on the tendering, management and monitoring of contracts with management or information technology consultants.

Lord Dean of Beswick

My Lords, in reply to my first question, the Minister referred to the wrong people. She spoke about management staff and officers moving from the authority. My question was targeted at the people who were appointed as members of the regional management committee; it referred not to officers but to regional members, including the chairman. Are we to assume that they do not have any responsibility in this matter? Will not people think otherwise? Does the Minister agree that if a local authority had acted in that way, the council members would have been surcharged'?

Baroness Cumberlege

My Lords, I should explain that the scheme was launched in 1984. In 1986 core tender invitations were issued and the contract awarded. In 1988 the facilities management contract was awarded. The new chairman was also appointed in 1988 but that was after the contract had been awarded.

Lord Ezra

My Lords, following the question put by the noble Lord, Lord Campbell of Alloway, will the Minister confirm that in a case of this kind the health authorities receive advice from government departments which, after all, have much experience of computer systems? I had intended to ask whether they received advice from the Treasury but, judging by the Treasury's computer operations recently, maybe that would not be very appropriate.

Baroness Cumberlege

My Lords, that is the case. I think I spelled out in an earlier Answer that the management executive issued fresh guidance on 9th September.