Customs & Excise is spending vast sums on IT for uncertain benefits, according to an influential group of MPs.

The Public Accounts Committee slammed Customs for spending "huge sums of public money without being confident about the scale of likely benefits". It also said the department had failed to properly test e-services before roll-out.

The MPs also note that Customs' Private Finance Initiative (PFI) contract with Fujitsu has increased from £500m to £929m. It said it was hard to tell if Customs has got a good deal because "many of expected benefits remain to be demonstrated".

Customs must offer services electronically as part of the e-government programme. By March 2006 it should have achieved 50 per cent takeup of electronic service delivery.

According to the PAC, the introduction of an electronic VAT return in March 2000 was a failure because business had no reason to use the system which was more complicated than the paper-based version. After two years less than one per cent of traders used the service. Customs is considering forcing some companies to complete the electronic form but the PAC said it would be more likely to hit targets by offering a decent service which businesses were willing to use.

Customs was also criticised for its management of consultants. The department spent £28m on 300 consultants between November 2001 and March 2003.

Customs is to be merged with the Inland Revenue later this year - a process meant to be made easier by IT.

The Public Accounts Committee report is here. ®

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