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HM Customs and Excise’s major programme to use e-technology to improve the efficiency of their business operations and services, although at an early stage, is already showing signs of being able to transform the department’s performance. However, today’s report to Parliament by head of the National Audit Office Sir John Bourn points out some big risks in implementing a programme of this size and recommends measures Customs should take to address them.

Customs are in the early stages of implementing the £327 million IT-based programme to improve services and efficiency mainly through electronic service delivery. They have made good progress in getting their core business areas to accept the new programme and have set clear responsibilities for delivery. They are also refining their business case to develop a detailed implementation plan.

At this stage Customs expect most of the financial benefits from the programme estimated by the department to be £1.2 billion over the ten year period from 2001 to 2010 – to come from increased revenue yield. This is in addition to the £2.7 billion extra that Customs expect to collect by 2005-06 from the VAT strategy introduced in November 2002.

Customs have gone a long way towards ensuring that they have adequately assessed the capacity human and IT needed to deliver the planned improvements. They have taken action to address some issues surrounding the procurement and management of consultants for the e-programme. Some of the Department’s old IT systems need replacing. After three years of a ten-year outsourcing deal with their IT infrastructure provider, Fujitsu, Customs have negotiated amendments to the contract to provide the enhanced technical platform necessary to support the provision of new services and the replacement of deteriorating legacy systems. The cost for these additional services is some £250 million over the remaining six years of the contract.

Custom’s progress in making their services available electronically and overall take-up levels to date compare favorably with that of other government departments. However, take-up of the electronic VAT return has so far been disappointing. Persuading firms to use this e-service will be a major challenge, not least because returns on paper are relatively cheap and easy to use. At present, more than 99 per cent of VAT returns are still made on paper. Customs are developing a strategy to encourage businesses to use their services, and this will establish specific priorities, detailed estimates and a plan for how benefits will be realised.

Today’s report also highlights other big risks to a programme of this size. It recommends that Customs have contingency plans to deal with any breakdowns in service to customers when the new e-services go live. The report also highlights the need to address the risk of new IT systems producing inaccurate information which is then used as the basis for decision-making in other parts of government. Moreover, the shape of the e-programme and decisions taken on its IT infrastructure will have to be flexible enough to handle any changes required as a result of the current major review of Customs and the Inland Revenue (announced by the government in July 2003).

The report recommends that Customs ensure that there are systems to determine what benefits are being delivered by the new e-programme and to enable the department regularly to review progress. There are also a number of lessons for government departments implementing IT-based business change programmes.

"Customs and Excise have made good progress in getting their electronic service delivery programme underway. The programme is, however, at the early stage of its development and there is a long way to go to translate the strategy and plans into performance improvements on the ground. An IT programme of this magnitude inevitably presents some large risks and our report recommends to Customs how to address these risks."

Sir John Bourn


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