A Tory-Lib Dem government will mostly agree on IT

As David Cameron is named as the new Prime Minister and he commits to forming a "proper and full coalition" with the Liberal Democrats, Georgina O'Toole, analyst at TechMarketView considers where the two parties agree (and disagree) in terms of their Technology Manifestos.



IT spending cuts



One thing that both parties agree on (and indeed, Labour also agreed on), is that they will be looking for major cuts in IT spending. Sir Peter Gershon advised the Tories that cuts in IT spending of between £2bn and £4bn a year could be made by renegotiating contracts with suppliers. The Liberal Democrats have gone into more detail, stating that, by scrapping ICT schemes, they would be able to save £3.37bn over five years. They claim this sum is achievable by scrapping fingerprint passports (saving £1.83bn), scrapping ID cards (saving £550m), scrapping the Interception Modernisation Programme (saving £800m) and scrapping ContactPoint (saving £190m).



As always, when it comes to the approach to IT procurement, the devil is (and will be) in the detail. On some issues there seems to be broad cross-party agreement – opening the way for increased adoption of open source software, moving towards software-as-a-service where possible, the consolidation and rationalisation of IT infrastructure, and opening up the government IT market to smaller providers.



Same end, different means



Where the parties differ is in their approach to achieving these goals – and that will raise its head when dealing with the practicalities begins and procurement reform is put under the spotlight. For example, while the Liberal Democrats (and Labour) have been vague on the 'how' (with the Lib Dems simply saying that they would conduct a full IT procurement review), the Tories have been a little more forthright in stating pledges such as a £100m limit on IT projects. Such pledges will now be under scrutiny as Messrs Clegg and Cameron attempt to find common ground.



The IT 'elephants in the room' in the weeks and months ahead will be:



o Some of the existing IT programmes

o The use of business process outsourcing



More suited together than Labour



However, the good news is that the Tories and Lib Dems are far more closely aligned with each other than they are with Labour when it comes to their views on surveillance, data transparency and civil liberties. And as a result, it looks likely that we will have certainty on the future of some programmes, such as the National Identity Scheme, DNA Database, ContactPoint, CCTV and the Interception Modernisation Programme, sooner rather than later.



David Cameron and Nick Clegg also agree on the future for the NHS National Programme for IT. The Lib Dems' opinion on Building Schools for the Future is unclear, but it appears that both the Tories and the Lib Dems would support investment in education and in the IT to support education, in some shape or form. Labour has been poles apart from both the Lib Dems and the Tories on most of these big IT project issues.



IT programmes - the ones to watch



NHS Programme for IT



Labour pledged to scale down the programme saving "hundreds of millions of pounds" over the next four years, whereas the Tories have said they will "halt and renegotiate" contracts, while also talking about dismantling 'The Spine,' as decision-making is moved to the local level. The Lib Dems are supportive of the Conservative view. A Con-Lib Dem coalition would probably result in BT and CSC's NHS NPfIT LSP contracts being further renegotiated. BT is also the prime contractor on the 'Spine' contract.



Interception Modernisation Programme



Labour had no plans to change the programme. However, the Tories plan to review the programme, and the Lib Dems have proposed an alternative approach based on targeting, warrants from law enforcement agencies and other safeguards. The supplier(s) on this Programme have never been revealed.



Building Schools for the Future



Labour promised to increase spending on the programme but Tories favour Academies. The Liberal Democrats have not made their views clear on BSF. However, they have pledged a £2.5bn 'Pupil Premium,' though it is unclear how that would be funded. Existing BSF contracts should be safe (as the Tories pledged to go ahead with contracts that had reached financial close and the procurements have been expensive), but those targeting future deals, such as Capita and RM, will be keen to understand what shape future investment in IT will take.



National Identity Scheme



Labour pledged to increase spending on the premise that the programme would be self-financing, while the Tories and Lib Dems both oppose the scheme (and would scrap both the National Identity Register and ID cards). The Lib Dems would go one step further and also "scrap plans for expensive unnecessary new passports with additional biometric data". They have also said that the money saved would be used for 3,000 more police officers as well as investment in better mobile technology for use on the beat. As a result, IBM's contract to build and run the National Biometric Information Service (NBIS) database and Thales' contract to design, build, test and operate the technology for the NIR will be most at risk. CSC's contract to improve the application and enrolment contract for the Passport Service should be relatively safe, although is also likely to be subject to scrutiny.



ContactPoint childrens' database



Labour continue to support the programme, but the Tories have pledged to scrap the database in favour of something smaller and more targeted. The Lib Dems support the Conservative view. Capgemini built the database and hosts it under a £40m contract awarded in 2007.



DNA Database



Labour planned to maintain the current stance on storing DNA data, while both the Tories and the Lib Dems support the scaling back of the database by putting an end to the indefinite retention of the DNA of innocent people.



CCTV



Labour would have invested more but both the Tories and Lib Dems favour regulation.



Tough decisions, tough actions



So in terms of investment in major IT programmes, we can expect far greater cuts under a Conservative-Liberal Democrat coalition than we would have had with any shape of government involving Labour. This is likely to be bad news for some of the big IT services suppliers. However, let's not forget that the government is likely to find that it's a costly business trying to reduce the value of a contract midway through its term – cutting costs on existing IT projects won't be as simple as just turning off the tap.



Business Process Outsourcing



When it comes to BPO, which is of course closely linked though not synonymous to shared services, the Tories have pledged to outsource all UK Government back-office functions, while Labour would have created business service companies to handle back-office functions, and the Lib Dems' stance remains unclear. The Liberal Democrats had previously supported the Labour view that spending cuts should be made starting next year, rather than immediately. However, Vince Cable, the Liberal Democrat's main economic spokesperson, yesterday conceded that making cuts sooner rather than later would be a good idea, provided stimulus in the British economy is maintained by other means.



Mixed Prospects



A strong agreed stance on immediate cost cutting will be good news for the business services companies – the likes of Capita and Serco – and IT services players with UK Government BPO experience.



Overall, when it comes to IT, a Tory-Lib Dem alliance will agree on a lot more issues. However, their policies will have a mixed impact on the IT industry: bad news for the major IT services companies whose existing IT contracts are at risk of cancellation, curtailment or renegotiation, but good news for those with strength in business process outsourcing.



An edited extract from TechMarketView's UKHotViews service.