Supplementary written evidence from Mark Sedwill, Permanent Secretary, Home Office

 

When I appeared before the Committee on 16 December 2015 with Sir Charles Montgomery, I undertook to write to you providing further information on a number of issues that arose.

 

Carrying Value of Expenditure on e-Borders/Successor Programmes

 

Mr Mowat asked the NAO how much of the £830m expenditure on e-Borders had been written off. The Annex sets out analysis of our financial records. It shows that of the £830m expenditure, the total amount written off comprised the £156m impairment charge, plus £101m net cost of the settlement with Raytheon (i.e. £150m ex gratia payment less £49m letter of credit). This amounts to £257m, or 31% of total expenditure.

 

Pre-2006/07 Financial Records

 

Ms Brock referred to the statement in the NAO report that spending records prior to 2006-07 were not available because the accounting system had changed. She asked me why those records were not available; whether they were available for the arbitration process with Raytheon; and, if they were, when they were destroyed and who authorised the destruction.

 

The Department changed its accounting system from BASS to Oracle in 2006-07, which is the principal reason why records prior to 2006-07 are unavailable.

 

The accounts of Government departments and agencies (Vote Accounts and Trading Accounts) are laid before Parliament and are preserved as published Parliamentary papers. These published accounts are sufficient for most future research purposes – the supporting departmental journals, ledgers and vouchers can be destroyed as soon as any limitation periods specified by statute have expired. The Department follows the document retention guidance for accounting records set out by the National Archives. This guidance follows the general National Audit Office (NAO) requirement that main accounting ledgers should be retained for six years and supporting documents for eighteen months following the end of the financial year to which they relate.

 

Sufficient information was retained by the Department to support the arbitration.

 


Annex

 

Analysis of E-borders expenditure

 

£342m

spend on e-Borders between 2006 and 2010-11

of which

 

£218m

Capital spend.

£62m of this figure relates to earned value from assets (i.e. depreciation) associated with the first delivery phase of the e-Borders programme (RP1) which was operational prior to termination. The remaining £156m was the net impairment cost incurred at the point of termination.

£78m

Non-capitalised programme spend.

Costs that were expensed in-year as they related to programme team costs, research and project management

£46m

Live services management

The cost of the systems in operation throughout the period

 

£303m

border security enhancements throughout the period 2011-12 to 2014-15, not written off, although has been depreciated as per accounting policy

 

£185m

costs of out of court settlement and legal fees 

of which

 

£150m

ex-gratia payment to Raytheon to settle all claims in relation to the termination (although the actual cash payment by the department was reduced by £49m as a result of drawing from letters of credit held at the time). 

£35m

arbitration legal fees for which the relevant services were delivered to and used by the department

 

8 January 2016