I was once told, by a graduate trainee at the evil City firm where I used to work, that my most annoying phrase was “I hate to say ‘I told you so’ but….”. Yes, I’m afraid this is going to be another one of those posts.
My good friend Vince Lammas has posted this morning about the future of the NHS HR and Payroll system. For those who are not familiar with it, the Electronic Staff Records system (ESR) is almost certainly the largest HR and Payroll system in the world. It holds the employee data of all 1.2 million NHS employees in England and Wales and thus pays some 7 percent of the working population.
But how will ESR work now that the NHS is being broken up and devolved? Will the increasingly autonomous foundation trusts and the new GP commissioning bodies continue to use ESR? Will those who work for these organisations still be NHS employees? Clearly, with some NHS functions transferring to the Third Sector, many will not. The ESR system, which was introduced to save money, is starting to look like an expensive overhead. The technology may be up to date but the concept suddenly looks old fashioned. As Vince says:
A child of it’s time, commencing in 2000, when national IT renewal efforts in the NHS were viewed as a significant enabler for change and service improvement, the NHS invested resources and effort in replacing more than 90 different human resources and payroll systems plus myriad local records with a single integrated system. The aim was to save the NHS around £300m over the life of its 10 year contract.
ESR was conceived in the context of a national human resources strategy – the new ORACLE platform introducing new functionality which most NHS Trusts would never have bought in local procurement exercises. Admittedly, there were exceptions – Trusts already using modern HR systems – but, accepting the retrograde step for them, the NHS saw these few ”local losses” as a price worth paying for the common good.
When it commenced, ESR’s “standardisation project” was an initial step on the way to a wider shared service strategy – the eventual objective being to centralise administration of staff records for around 1.3 million NHS employees in no more than 20 transactional processing centres. In most shared service strategies, “standardise, centralise and streamline” forms a common mantra.
Sounds like something from a bygone age doesn’t it? Standardise, centralise and streamline? A national human resources strategy? How do these ideas fit with foundation trusts and 700 GP commissioning bodies?
But, like all large centralised systems, ESR has high fixed costs. If parts of the NHS stop using it, the per capita charge levied on those remaining will increase. Running ESR for 600,000 people will not be much cheaper than running it for 1.2 million. Those left will just pick up more of the total cost. There is then a danger, as Vince warns, of a flight from ESR as NHS trusts abandon it for something cheaper – or at least, something which looks cheaper from the perspective of individual trusts.
Of course a system like ESR does give NHS organisations a chance to cut their costs. In theory, it should be possible to run all the transactional HR and payroll activities from a single location or, at least, from a few regional hubs. However, the creation of these shared service centres has been left to individual NHS trusts, may of whom have proved reluctant to hand over control of their payrolls, even with the incentive of significantly reduced costs.
This is yet another example of the vacillation between centralisation and localism that blights the public sector. The British state usually bottles out of enforcing standardisation. It goes so far then seems to lose its nerve. It forced all NHS trusts to take on a new IT system but left them to work out how to make the promised cost savings individually. Some of them just didn’t bother. To take the project to its logical conclusion, setting up shared service centres and forcing NHS trusts to participate, would have saved millions but it would have been….well….a bit French, wouldn’t it? We don’t really do that standardisation stuff in Britain, we just, sort of, half do it.
Now for the really annoying bit. I saw all this coming almost a decade ago when I was still at that evil City firm. Within a short time, we received invitations to tender for the early design phases of two NHS projects. One was ESR, the other was foundation trusts. At the time, I said that there was a contradiction between the drive for centralisation, represented by the ESR project and the trend towards devolution implicit in the move to foundation trusts. And so it proved. Over the past ten years, centralisation’s star has set and devolution’s has risen. This process started under Labour and will continue under the Coalition.
That the NHS is left with an expensive IT system, which will now probably never deliver all the savings it was designed to achieve, is yet another symptom of the confusion between localism and centralisation which I keep banging on about on this blog and which the British state has never seemed able to resolve.