Tories demand computer inquiry

Labour's Millbank HQ where computer system was installed

The Conservatives are demanding an inquiry into suggestions that IBM won a £10m Whitehall computer contract after giving the Labour party a big discount on a new computer system for its London headquarters.

Shadow cabinet office minister Andrew Lansley has written to Cabinet Secretary Sir Richard Wilson asking him to investigate any links between the two deals.

The Labour Party was treated as a commercial customer... We try to offer competitive prices where we can

IBM spokeswoman

The row blew up after a leaked e-mail from Lord Mitchell, Labour's information technology adviser, revealed the party paid "next to nothing" for a system installed by Lotus, an IBM subsidiary, at its Millbank headquarters in London before the 1997 election.

It includes supplying hundreds of PCs and what IBM describes as "professional services".

Last year the same firm was part of a winning consortium for a £10m deal using similar Lotus Notes software to set up an information system called the Knowledge Network for the Cabinet Office.

Streamlined

The e-mail was sent to Lord McIntosh, Labour's deputy chief whip in the House of Lords, but later leaked to a newspaper.

It says: "Lotus has worked for the party for some time and I persuaded them to do a lot of work at Millbank for next to nothing - work which will come into its own in the election when we will have a super-streamlined system of communicating with each other."

Mr Lansley wants the Cabinet Secretary to ask:

How similar were the two projects?

Was the Knowledge Network designed to be linked to Labour's system?

Were the same Lotus staff involved in the two deals?

Labour has denied its contract cost "next to nothing".

A spokesman said the Lotus Notes system was used by thousands of organisations worldwide and it was no surprise that a political party and government department used it too.

Sir Richard Wilson: asked to investigate deals

He added that Labour party and government contracts are dealt with separately.

A Cabinet Office spokesman said the contract for the Knowledge Network, which sends out information on government activities in different constituencies, was put out to tender.

Sir Richard had approved guidance to ensure the network could not be used for party political purposes.

Competitive

An IBM spokeswoman refused to say how much Labour paid.

"The Labour Party was treated as a commercial customer... We try to offer competitive prices where we can."

She added that Lotus was a subcontractor in the Knowledge Network deal which was won through a process which complied with European rules for major public projects.

She said it was "not relevant" whether the same managers worked on both projects.

Lord Mitchell, a computer entrepreneur ennobled by Prime Minister Tony Blair last year, began his career at IBM.