14 February 2003
The permanent secretary at the Lord Chancellor's Department was forced to apologise to MPs this week after admitting that he misled them over the progress of the Libra IT project.
Sir Hayden Phillips conceded that he misinformed the Public Accounts Committee in June 2002 when he told them that a decision on the future of the ailing Libra Private Finance Initiative project, described as the 'shoddiest ever', had not yet been taken.
In fact, Phillips was in the process of completing the final deal with contractor ICL, now Fujitsu, which jettisoned plans for a software system to link magistrates courts in favour of a more simple infrastructure project. The company was told of the decision in March 2002.
Phillips told MPs that he was compelled not to reveal the details of the deal for fear of compromising its 'commercial confidentiality'.
'I concluded as we had not signed the contract or had government approval, I could not at that stage announce it to the committee,' he said on February 10. 'Discussions were ongoing and I did not want to scupper the deal.'
Phillips maintained that he did not deliberately mislead the committee but when asked why he didn't request a closed session, he again said that he was forced to protect commercial confidentiality.
In a two-and-a-half-hour grilling, Phillips also acknowledged that Treasury advice on the PFI in 1998, particularly risk transfer, was flawed and that his department grossly underestimated the cost of the Libra project. This was originally £146m over 11 years but spiralled to £318m over 8.5 years.
Fujitsu chief executive Richard Christou admitted that the company and its partner Unisys did not understand the complexities of the project. He added that continuing under the original contract could have jeopardised Fujitsu's existence.
The renegotiated contract for simple infrastructure, such as computers, is now worth £232m, although the project will become obsolete by 2007.
Phillips also came under fire when it emerged that Fujitsu had sacked the management team that had presided over the project, while civil servants had been transferred to new roles. But he defended this, saying: 'Civil servants shouldn't have careers blighted by taking advice at the time.'
PFfeb2003
