It was all so different for Paul Pester last December. Unveiling TSB’s new banking platform, he claimed that it had created “a more digital, agile and flexible TSB”. Before last weekend’s switch to the new system, TSB’s press office said that almost everything was running on the new platform; there was only the little matter of transferring 1.3bn account details for 5 million customers, and all would be done.
Now, Pester finds himself presiding over another example of a great British IT failure. In the same week, outsourcing company Capita, which has had problems with contracts with GP surgeries and London’s congestion charge, said it was seeking a £701m rights issue as part of an overhaul that includes rebuilding its technology and IT infrastructure. Meanwhile, the government has found itself in even further trouble over the Windrush scandal due to the Home Office’s inability to digitise a set of landing cards from 70 years ago. And that’s before we talk about the stuttering, long-delayed rollout of universal credit.
Is it that Britain is just bad at IT projects? You don’t have to look far to find examples at the banks: each of NatWest, HSBC, Barclays, Lloyds and RBS have had “glitches” of greater or lesser impact in the past few years. BT took a big writedown on a calamitous NHS computerisation nearly a decade ago. In the private or public sector, there seems to be a record of messing up.
But it’s easy to get the wrong impression. We generally don’t hear about all the projects that go right, because we just expect ATMs to serve us money, or tills to work, or unseen globe-spanning search engines to return results, or apps on our phones to open. TSB’s customers had already been using the platform behind last week’s crisis for almost everything, apart from their accounts; Sabadell, the Spanish parent of TSB, built the technology over nearly three years, building on earlier technology from Accenture. This wasn’t a rush job.
Managers who insist on hitting calendar targets probably aren’t familiar with the endless testing computer systems need
However, TSB’s chiefs may have forgotten the longstanding rule of IT projects: completing the first 80% of it takes 80% of your time – and the last 20% takes another 80%. Managers who insist on hitting calendar targets probably aren’t familiar with the endless testing that computer systems and code need.
To think that the UK excels at being bad at IT projects, though, is unnecessary self-flagellation. In the US, public and private mess up too: the launch of the Healthcare.gov site in 2013 was calamitously bad, with only a tiny percentage of people able to use it at first. It improved, but there were red faces all round. In September 2014, Apple pushed out a software update for the iPhone that killed its phone capability (it was quickly reverted). And Facebook, of course, allowed the personal data of more than 80 million people to be scraped from its site.
The difficulty is that software, unlike a steel beam, is hard to test for use in different environments; Nasa has managed to write error-free code, but it takes years of effort for comparatively short programs. The general level of sophistication in how software is written is “in the hunter-gatherer stage”, according to one professor studying it: professional code is full of bugs which have to be fixed, which often exposes other underlying bugs. The interaction between code on different systems can be unpredictable. And meanwhile managers want it done to a budget and a date.
In fact, there’s life in the IT project business. Capita says it will now focus on five outsourcing areas rather than 40; two of the survivors are software and IT outsourcing. Its results show that both had better profit margins than other divisions. Software is the future; and we aren’t that bad at it.
Powerful case for UK to get on board with onshore windfarms
When the UK went without coal for three days this week, it was wind turbines that provided much of the power to keep the lights on. Contrary to what the Conservative party might have you think, people like windfarms.
New government polling shows support for offshore windfarms is at a record high, with 83% of the public backing them. Even onshore windfarms, which energy minister Claire Perry said the Tories had blocked because they were “just so controversial”, are now more popular than ever. For the first time, more than three-quarters of the public (76%) say they support them. Solar energy has 87% in favour.
During the coal-free run, the government boasted that the UK’s “world-leading renewables” were going from strength to strength. Yet while there is more billpayer subsidy earmarked for offshore windfarms, there is still no support for solar and onshore wind power. Perry said she was now “looking carefully” at helping onshore windfarms to be built in Scotland and Wales.
More offshore wind is great. The UK is reaping the rewards for its leadership there – witness GE choosing the UK to test its new 12MW turbine, the world’s most powerful. But onshore windfarms are still significantly cheaper. Research has found they could be built without consumers paying any subsidy and for the same price as new gas power plants. Big firms are lining up to say they want to build more onshore wind power. Innogy, Vattenfall, SSE and ScottishPower are among the firms keen to develop windfarms in Scotland and Wales. Unlike nuclear plants, onshore windfarms can be built quickly.
Public and political debates on energy are dominated by the cost of bills, of price caps. What better time to unblock the cheapest source of green power?
Beast from the east isn’t to blame for GDP slump – it’s the frozen wages
It’s easy to read too much into a single set of figures, but Friday’s combination of almost zero GDP growth and rising personal insolvencies presents the British government with a gloomy economic health check.
Back in 2015 there were fewer than 20,000 personal insolvencies. In the first quarter of 2018 the total reached 27,388 – which was the highest quarterly figure recorded since 2012.
A fall in GDP growth from 0.4% in the last three months of 2017 to 0.1% in the first three months of 2018 was even more disturbing. This first estimate of economic output showed that the UK’s building industry is struggling and the manufacturing sector becalmed. The service industries continue to expand, especially banks in the Square Mile, but not at the pace seen at the height of the recovery in 2015.
One-off factors may have played a part, though apparently not the “beast from the east” cold snap that chancellor Philip Hammond reached for as an explanation.
A more convincing explanation is the damaging effect of falling real wages over the last year. Without inflation-busting pay rises, it was little surprise that household spending, for so long the heart of the economy, would start to wane.
The Treasury, meanwhile, is sitting pretty. It has refused to give government employees and welfare recipients an income increase of any significance and continued the squeeze on departmental spending, capping its costs. Yet it has benefited from the modest rise in private-sector wages, which have boosted PAYE tax receipts, while higher prices in the shops have lifted VAT receipts. As result the budget deficit at the end of March fell to its lowest level since 2007.
Labour and the unions are right to complain that this situation is unsustainable. By sapping middle- and low-income households of funds, it might boost its own finances, but it undermines the long-term strength of the British economy.