The National Audit Office found they fixed figures to help BT avoid fines for not answering calls quickly enough.

The targets were part of a £3bn Private Finance Initiative (PFI) deal to operate the forces’ telephone system.

BT has sacked some of the “small number of staff” involved and the call centre concerned no longer operates.

The company has also paid £1,021,000 in service payments, the £122,000 cost of investigating the fraud and the £197,000 cost of the fake calls.

The call centre concerned, in Kettering, Northamptonshire, has been taken out of operation.

The National Audit Office, the public spending watchdog, said the discovery showed the need for better monitoring of the way such projects are being run.

Tory MP Edward Leigh, chairman of the Commons public accounts committee, described the incident as “a real-life Whitehall farce”.

It says a lot about the MoD’s oversight of its contractors that the department’s systems failed to spot a serious fraud , Edward Leigh, MP

He said: “It says a lot about the MoD’s oversight of its contractors that the department’s systems failed to spot a serious fraud.

“BT staff working on the MoD’s PFI telecoms project actually plotted to phone each other in order to beef up their performance statistics for answering calls.

“It was only later that the department found out it was £1.3m out of pocket and had to recover this from BT.”

The National Audit Office said the fake calls were not immediately spotted because they did not have enough impact on the phone service to spark an investigation.

It eventually came to light within BT – which is now required to provide more detailed reporting and undergo regular detailed checks of the integrity of its reporting system.

Risk alert

Tim Burr, head of the National Audit Office, said: “Most of the private finance projects in its portfolio of more than 50 have been delivered successfully by the Ministry of Defence.

“But the department needs to be more alert to the risks that can emerge once the project is up and running, such as inaccurate performance reporting.”

The Liberal Democrats said the problems encountered with PFIs were a “scandalous” waste of public money.

Defence spokesman Nick Harvey said: “PFI projects should only be used where they can be clearly proved to provide the best value for money.

Robust management controls should ensure that there is no recurrence of this fraud, Ministry of Defence spokesman

“Instead, the MoD appears to be signing up to PFI schemes without thinking, then throwing away millions abandoning them years later.

“This level of waste is scandalous when our troops are still going without vital equipment and helicopter support in the field.”

An MoD spokesman said: “The Defence Fixed Networks Integrated Project Team, which is responsible for managing the contract, has reviewed and strengthened their service assurance and management process, with the assistance of external independent advisors.

“These robust management controls should ensure that there is no recurrence of this fraud.”

News reported by The BBC

09 October 2008

BT has launched a subsidised, cheap telephone service to help low-income families in the UK cope with the rising cost of household bills.

BT Basics will offer cheap phone line rental costing £4.50 a month for people who receive one of three specific benefits – Income Support, income-based Job Seekers Allowance or Guaranteed Pensions Credit. This is less than half the £10.50 a month phone line rental which customers on the cheapest non-subsidised option pay.

The phone line rental fee includes £4.50 worth of phone calls a quarter and there is no surcharge for non direct debit payments.

Broadband users eligible

Unlike BT’s previous social telephony offering, customers on relevant benefits who have a broadband service will be entitled to sign up to BT Basic. Under BT’s former social telephony offering – its Light User Scheme – people who had broadband were ineligible for the cheap phone deal.

Claudio Pollack of telecoms regulator Ofcom said: ‘We welcome and support BT Basic. Special schemes provided under the Universal Service Obligation can bring real benefits for those who have difficulty affording telephony.’

Signing up to the BT Basic phone tariff

BT has already begun automatically transferring eligible customers on to the BT Basic phone deal from old tariffs, such as the Light User Scheme. BT will be writing to all its home phone customers already on its Light User Scheme about the BT Basic phone tariff, so there’s no need for these customers to call BT.

BT has also started to put eligible new customers, who meet the criteria agreed with Ofcom and verified by the Department for Work and Pensions, on to the BT Basic phone deal. Customers should call 0800 783 1675 to inquire about BT Basic.

Home phone alternatives to BT basic

Which? telecoms expert Ceri Stanaway says: ’BT Basic is a great low cost option for eligible people on benefits who are finding it hard to cope with the rising cost of bills in the current credit crunch – but there will be many people who don’t qualify. 

‘If you’re not eligible for BT Basic’s phone service but think you’re paying too much for your phone bill, or you’re not happy with your home phone provider, there’s nothing stopping you from switching your phone service to a better deal.

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