HMRC CIO and digital officer Mark Dearnley has claimed that his Department will need to spend around £600m if it is to replace its Aspire contract successfully.
Aspire is the government’s largest IT contract, running since 2004 at a cost of £10.4bn and due to expire in June 2017.
HMRC has been widely criticised for its handling of the contract, with the Commons Public Accounts Committee (PAC) claiming in January its ability to transition away from it was “questionable.”
The National Audit Office (NAO) has also slammed Aspire, saying it has only enjoyed “limited success.”
Dearnley has now told PAC that adding an extra £600m to the contract’s bill will actually help reduce HMRC’s annual IT costs by 25% by the end of 2020.
The money will be used to hire new staff, modernise infrastructure, build three more “digital delivery centres” and to test services.
“Overall the transition cost for the entire business case will be about £600m,” Dearnley said, clarifying that this represents costs accumulated over the entire duration of the project.
He added that although it will take large amounts of expenditure before the cost savings are fully realised, benefits will start becoming obvious over the course of five years.
Dearnley also revealed his intentions to remain in his position at HMRC until he has seen the transition from Aspire through to the end.
Meanwhile, HMRC permanent secretary Lin Homer told PAC that Aspire would not be renewed and that Department has already begun the process of phasing out the old and bringing in the new services.
“Part of the reason why we are moving towards this phased transition at the moment is to allow us to test some of these new approaches without the whole system being under the pressure of change at the same time,” Homer claimed.
“A phased transition allows us to take over and do differently elements of the work whilst other bits are running as they always did and we think this seriously de-risks the transition.
“We are confident we will not just get to 2017 and roll Aspire over,” she added, noting that’s there no question of having to extend the whole contract.
HMRC recently came under fire after it was revealed that it was paying staff to go home for a three month period because IT systems were not working correctly.