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Thursday, 26 June 2014 12:44

UK taxes pay a fortune to private IT outfits

Written by Nick Farrell



More than £5 billion a year

Private IT companies are being paid almost £5 billion a year by the taxpayer to run Government computer networks. The maker of expensive printer ink HP was paid £140 million a month last year by the Department of Work and Pensions (DWP) and the Ministry of Justice for computer services. 

Capgemini, holds contracts worth £1bn a year to supply and maintain computers across central and local government. The money dwarfs the more controversial £2.2 billion paid to ‘outsourcing’ companies like Serco and G4S. The figures were uncovered by the Whitehall think-tank, the Institute for Government, and Spend Network, which aggregates raw Whitehall spending data to show which private companies are the biggest recipients of taxpayer largesse.

Among the biggest departmental spenders on IT were HM Revenue & Customs (HMRC), DWP and the Ministry of Defence. HMRC for example spent 86 per cent of its contracting budget with Capgemini. HP has contracts worth £1.7bn a year.

The firm was one of the contractors given money by the DWP to develop its so far ill-fated Universal Credit project. £34 million of that has so far been written-off. What is alarming is that the UK government suspects that it is paying “over the odds” on a significant number of IT projects across Whitehall.

But claim that there was little they could do as the Government was locked into long-term contracts signed under the last Labour administration.

Nick Farrell

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