Outsourcing dominates HMRC IT spend

HM Revenue and Customs spent 44% of its 2009-10 supplier budget on its Aspire IT outsourcing deal led by Capgemini.

Overall HM Revenue and Customs (HMRC) spent £1.75bn on suppliers in the last financial year, but spending was dominated by two outsourcing deals. One was Mapeley Steps, a PFI contract for the management of HMRC's property, which cost £333m in 2009-10. while the other was the Aspire programme for IT which is due to run until 2017.

Other IT spending included budget allocated to: Specialist Computer Holdings, which received £20m; BT, which received £15.2m; Detica Detica, which received £9.2m; Fujitsu (£7.2m); Airwave (£2.9m); Cable & Wireless (£2m); and Vodafone (£1.9m). Capgemini also picked up a further £2m outside of the terms of the Aspire contract.

Capgemini was one the first providers to sign up to Francis Maude's Memorandum of Understanding to review the terms and conditions of its contracts with the public sector. Chancellor George Osborne has demanded an improvement in HMRC's IT contracts with resource savings of 15% to come from "new technology, greater efficiency and better IT contracts."

Osborne has also allocated a £900 million investment for HM Revenue & Customs to spend on IT to clamp down on tax evasion and tax fraud. HMRC recently rolled out a new PAYE tax system, but the delay to the launch created seven million more unresolved tax cases.

Meanwhile HMRC needs to come up with a real time, improved PAYE system if the new Universal Benefit is not to need massive IT investment. The new HMRC system will need to respond more quickly to changes in earnings, be simpler and not "face the same complexities as they do now, particularly at the end of a tax year [so] people will be much clearer about their entitlements and the beneficial effects of increasing their earnings by taking on more hours or doing some overtime."

"We intend to use HM Revenue & Customs' proposed real-time information system to identify earnings and to calculate the net Universal Credit payment due by applying the appropriate taper to the gross payment," says a whitepaper on the new benefits legislation.

Getting there would only "involve an IT development of moderate scale, which the Department for Work and Pensions and its suppliers are confident of handling within budget and timescale," says the paper.