Can IT save public sector billions?

The National Audit Office (NAO) has cast doubt on the government's claim that it can realise significant public sector savings by investing in new IT systems.

The Chancellor, Gordon Brown, has stated that Whitehall should aim to save £21.5bn by 2008 by laying off staff and making other structural changes. Some £3.2bn of the total saving are meant to come from upgraded or new IT systems such as the NHS Connecting for Health (CfH) project.

But an NAO report released on Friday has questioned whether the government's poor track record managing large IT projects really justifies the savings that new technology systems are meant to achieve.

The NAO said: "The public sector has yet to demonstrate that it can consistently deliver successful IT programmes of this magnitude."

Sir Peter Gershon was commissioned in August 2003 to conduct a review of efficiency in the public sector. His findings were published in July 2004, and based on these results the government announced an efficiency programme from April 2005 to cut spending by the £21.5bn target.

The NAO suggested that the government was failing to fully follow Gershon's advice. It pointed out: "The Gershon Review stated that it had been careful to avoid such proposals requiring large new ICT systems because such projects often involved significant risk, in terms of cost and time overruns."

In December last year, The Public Accounts Committee (PAC) released a report, Achieving Value for Money in the Delivery of Public Services, that claimed despite many high-profile IT failures over the last decade, many departments still disregard common and well-publicised pitfalls when they approach projects.

Edward Leigh MP, chairman of the PAC, speaking at the time said: "If one lesson stands out from the work of the PAC over the years, it is that government departments are masters at spending public money but often far less proficient at ensuring that this translates into better public services. Basic errors are repeated time and again."

The NHS CfH project has already seen some problems. Last month, UK software vendor iSoft warned that its contract to supply software to the NHS IT project had been hit by delays. In November 2005, Richard Granger, director general of IT for the NHS, revealed that the whole project could be derailed by problems with a system allowing patients to book their own appointments.

silicon.com's Andy McCue contributed to this report

Andrew Donoghue writes for ZDNet UK