The replacement of HMRC’s £10-billion Aspire IT contract needs “firm and consistent leadership”, the Public Accounts Committee has said.

Steady as she goes: PAC praises HMRC’s progress but calls for consistent leadership – Photo credit: Flickr, meenakshi madhavan

In a report on the Aspire contract – which was the largest single ICT contract in all of government –published on 27 July, MPs said that although HMRC had made good progress in the past year, there was still much work to be done.

HMRC moved to replace the Capgemini contract after the 2014 Cabinet Office ruling that departments should extricate themselves from the long-term, legacy IT contracts that were commonplace within Whitehall at the time in a bid to boost innovation.

HMRC’s management of process has been repeatedly criticised by a range of commentators, including the spending watchdog the National Audit Office and the PAC.

In January 2015, the previous incarnation of the PAC said that HMRC had little appreciation of the challenge it faced in replacing the contract.

Although the latest report praised HMRC’s decision to adopt a phased approach to replacing the contract – which was originally due to end in 2017 – between 2015 and 2020, it emphasised the importance of effective leadership.

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The MPs said that there were still a number of important decisions to make over the next two years that would be crucial for the success of the project, adding that they were concerned HMRC “may struggle to integrate” services from different providers.

“As we have seen from elsewhere in government, one of the main factors that determines the success of complex programmes such as this is the quality and stability of their leadership,” the report said.

“HMRC must ensure continuity in the leadership of the Aspire programme to maximise its ability to design and introduce a new IT model successfully.”

However, the committee heard during its inquiry that HMRC was in negotiations with Mark Dearnley, chief digital information officer, who has been at HMRC since October 2013, as his contract ends in September this year.

During that hearing, which took place on 13 June, committee member Richard Bacon, MP for South Norfolk, said that the department should aim to keep Dearnley.

In response HMRC chief executive Jon Thompson said: “We all share the same aspiration. We are in negotiations.”

Further recommendations in the report were that HMRC ensure that the transition did not damage the stability and continuity of its services and for it to update it on progress at every key point, so the committee could assess whether this was the case.

Pilot new digital services

Meanwhile, the report also looked at HMRC’s customer service, following the collapse in service levels during 2014-15 and early 2015-16 when it underestimated demand for telephone contact and cut staff numbers by 5,600.

The committee said that the department’s plan to cut costs of personal tax services by a further 34% in the next five years could end in a similar collapse.

HMRC must ensure it more accurately assess customer demand and is able maintain acceptable service levels before it makes more staff redundant, it said.

This includes testing how customers will respond to a new digital service before it is widely implemented, the committee said.

Moreover, HMRC should ensure it understands and evaluates the relationships between service quality and tax revenue, as well as striking the right balance between cost saving measure for HMRC and extra costs incurred by users.