IT market analysts are warning that the expected IT cutbacks in the public sector are likely to be more severe than originally anticipated. The Sunday Times has reported that the new government discovered “previously unknown contracts and uncosted spending commitments”.
Georgina O’Toole, a Markey analyst from TechMarketView commented on the issue and stated their belief that “we may well see even more spending cuts or higher tax rises” once the government ministers realise “the full extent of the budgetary problems facing their departments”.
O’Toole reflected on the notion that Labour ministers had deliberately left the new government with prohibitive costs by working together with civil servants to sign off as many new IT contracted as possible. O’Toole commented that she was not “wholly surprised” by these revelations, referring to the scheme as a “scorched earth policy”. O’Toole maid particular reference to three state run IT programmes which were signed off by the previous Labour Government in the months and weeks prior to the general election. However, the new government has now called a halt to IT programmes whose contracts have been recently signed.
With regards to this development, O’Toole said: “Without a view of the contracts and the penalties that the government would incur should it cancel these deals, it is hard to determine the likely outcome.”
The government is already under pressure from the E-Borders initiative which has run significantly over budget and deadlines. According to TechMarketView the new government is sitting with £8billion worth of IT contracts which are facing possible cancellation. This could affect many IT suppliers including Fujitsu, IBM, BT, CSC and HP.
The firm concluded: “[These IT suppliers] will have all fingers crossed that the axe won’t fall on their contracts. However it appears that their coming through this period completely unscathed is highly unlikely.”