The UK’s HM Revenue and Customs (HMRC) has reported a staggering £3.8 billion ($4.67 billion) spent on technology contracts with various suppliers over the past five years. This expenditure highlights the ongoing efforts to modernize the tax collection agency’s IT infrastructure, which has faced criticism for relying on outdated systems.
Key Takeaways
- HMRC’s tech spending totals £3.8 billion since 2020.
- £591 million of this amount was awarded without competition.
- The Aspire agreement, originally set for £7.9 billion, ballooned to £10 billion.
- HMRC is transitioning to cloud services, with 70% of the migration completed.
Overview of HMRC’s Tech Spending
Since 2020, HMRC has engaged in significant spending on technology, primarily to enhance its IT systems and services. The recent figures reveal that a considerable portion of this spending was directed towards long-standing suppliers, including Fujitsu, Capgemini, and Accenture.
The £3.8 billion figure includes:
- £2.37 billion awarded through competitive frameworks.
- £839 million through open competition.
- £591 million awarded without competition, raising concerns about procurement practices.
The Aspire Agreement
The Aspire agreement, initiated in 2004, was intended to modernize HMRC’s IT systems with a budget of £7.9 billion. However, it was extended to 2017, ultimately costing £10 billion. The National Audit Office has described the systems provided under this agreement as "stable but expensive."
Despite the conclusion of the Aspire contracts in June 2022, HMRC continues to work with the same suppliers, indicating a reliance on legacy systems that have been in place for over two decades.
Recent Contracts and Awards
Recent contracts awarded by HMRC include:
- Fujitsu: £168.8 million for maintaining the Customs Handling of Import and Export Freight (CHIEF) system.
- Accenture: £105.6 million for the National Insurance and PAYE system, with an increase due to unforeseen work.
- Capgemini: £215 million for application decommissioning over three to five years.
- Fujitsu: £52 million for application migration.
- Capgemini: £50 million for application migration.
These contracts reflect HMRC’s ongoing efforts to modernize its IT infrastructure while grappling with the challenges posed by legacy systems.
Cloud Migration Efforts
In 2021, HMRC initiated a Technology Sourcing Programme aimed at breaking down its major contracts into smaller, more manageable ones. This program is expected to be completed by December 2025. As of August 2024, HMRC reported that it had achieved approximately 70% completion of its cloud migration process.
The transition to cloud services is seen as a crucial step in enhancing the agency’s operational efficiency and security, especially in light of the vulnerabilities associated with outdated systems.
Concerns Over Legacy Systems
The reliance on legacy IT systems has raised alarms among experts and former civil servants. A whistleblower highlighted the risks associated with outdated technology, stating that some systems could be easily compromised due to known vulnerabilities. The TaxPayers’ Alliance has also pointed out that many of HMRC’s systems are no longer supported by major software providers like Microsoft.
As HMRC continues its modernization journey, the focus remains on ensuring that taxpayer money is spent effectively while addressing the pressing need for updated and secure IT systems.
Sources
- UK’s HMRC has spent £3.8 billion with tech suppliers since 2020 – DCD, Data Center Dynamics.