NAO: HMRC saved £74m on IT costs between 2011 and 2012

The National Audit Office has found that HM Revenue & Customs saved some £74.1 million on IT costs during 2011 and 2012, contributing to a total of £296 million savings over the period.

HMRC’s savings in IT come from a reduction in service charges made to the department, price reductions in IT equipment, and better contract management.

However, last year's savings could be difficult to replicate as the department struggles to meet its spending review obligations up to  2015.

The savings come despite a £22 million increase in spend on IT administration between 2010 and 2012, which occurred due to contractors limiting credits to the department and HMRC receiving £10 million less income than expected from other government departments using its IT services.

HMRC outsources most of its IT support and development to a consortium of suppliers through it’s ASPIRE contract, which is led by Capgemini. Aspire was signed in 2004 and is due to end in 2017. In March last year HMRC and the ASPIRE partners signed a memorandum of agreement to create a different way of working that introduces competition for HMRC working outside the ASPIRE suppliers.

The department hopes that this will make additional savings of £200 million by 2017, but could not include all the savings in the figures released today because it is yet to finalise an estimate of what savings are sustainable.

HMRC has said that it expects to progress beyond the memorandum of agreement to formally change the contract in 2013.

"In one year, HMRC has managed to deliver a third of the savings it is required to deliver over the four years of the spending period, at the same time as maintaining performance in key areas such as maintaining tax collection and reducing tax debt,” said Amyas Morse, head of the National Audit Office.

The department is expected to save an additional £585 million across all areas of the business by 2014-15.

"HMRC is moving from making tactical efficiency savings and quick wins towards a more strategic approach to managing its resources. We recognise the importance of this change and note that HMRC is addressing PAC and NAO recommendations in the process. The big challenge ahead will be to make more and deeper spending reductions without impairing its performance."

Copyright © 2013 IDG Communications, Inc.

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