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John Healey: There is no ducking the fact that there is a legal bar until the HMRC is closer to being formally constituted. There is a bar on deploying resources. It is obvious that, until more detailed plans are worked out about how integration can be effected to secure the general purposes and gains that the O'Donnell review sets out, it is not possible to quantify the costs and the benefits precisely. I shall shortly spell out the costs and benefits analysis that we were able to set out in the regulatory impact assessment that accompanies the Bill.
Mr. Francois: I thank the Economic Secretary for his courtesy. The NAO report on IT procurement that I mentioned in my speech contains a list of recommendations to the Government from Sir Peter Gershon from the time that he spent at the Office of Government Commerce. One recommendation, on page 3 of the executive summary of the report, states:
John Healey: I shall deal with IT, if the hon. Gentleman, like the hon. Member for Chichester, will be patient. Let us be clear: the Bill and the changes for which it provides do not directly depend on changes and integration in IT.
The regulatory impact assessment confirms the figure of 3,200 for staff savings as a direct benefit and gain of the integration of the two departments. Her Majesty's
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Revenue and Customs is committed to delivering those figures from integration as part of its efficiency plan up to 200708. Let me be clear and direct: the savings from those 3,200 posts, including the associated overheads, could be £100 million of a total of £507 million that the department will save by 200708. Those are Gershon savings.
John Healey: I am sorry but I need to explain the point to the hon. Gentleman again. The staff savings that flow directly from integration are set at 3,200HMRC has signed up to deliver that target by the end of 200708. The costs of those posts plus the associated overheads could be approximately £100 million. That is part of a total saving, set at £507 million, that the department will achieve by the end of 200708. They are Gershon savings and include additional savings on posts through integration. Those efficiency savings will save at least £507 million by the end of 200708. Hon. Members should not regard that as new information, because in September a 16-page note, entitled "HMRC Efficiency Technical Note" was produced on the department's efficiency plan. Hon. Members will find plenty of information in that publication that they do not seem to have.
Mr. Laws: The Economic Secretary says that the information is available. It did not appear to be available to the Paymaster General earlier. I am grateful that he has corrected her comment that the £500 million savings were down to the merger. Will he clearly answer two other questions? He said that the figure of 3,200 was a target for job cuts that had been signed up to. However, the Paymaster General admitted earlier that the figure was a guesstimate of savings. Is it appropriate to sign up to a target of 3,200 job reductions on the basis of a guesstimate? Will there be any net savings from the Bill in the period of the existing spending review?
John Healey: The existing spending review is entirely consistent with the period that I have just outlined, to 200708. The savings involved will flow from the posts. The hon. Gentleman has failed to see what has been going on in other Departments as part of the general efficiency drive in Government. This is precisely the nature of the targets that have been set and signed up to. Department by Department, senior managers and Ministers are examining how they can be realised. There is nothing different about this stage of the process for HMRC.
I am going to make some progress, if I may. I want to move on to a point that the hon. Gentleman raised earlier, and which was also mentioned by the hon. Members for Sevenoaks and for Yeovil. The provisions in the Bill are not a downgrading of the Inland Revenue oath, as the hon. Member for
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Sevenoaks tried to argue. The statutory duty set out in clause 17 places the staff of HMRC under the same strict obligations as the Inland Revenue oath does, but in a modern guise. Protecting customer confidentiality will remain an essential characteristic of the new department, as my right hon. Friend the Paymaster General spelled out earlier, and all staff will continue to take their obligations on confidentiality extremely seriously.
Mr. John McFall (Dumbarton) (Lab/Co-op): I would like to pay tribute to my colleague, the Chairman of the Sub-Committee, the hon. Member for Sevenoaks, for his work on this inquiry. It was a very productive inquiry: the fact that Customs and Excise and the Committee worked together was very good, and the fact that the Treasury has taken up our suggestion is very welcome. Confidentiality was a concern for us, however. Will the Minister assure us that he will ensure the confidentiality of each department, and that that will be in the Bill?
Mr. Fallon: The Minister has not quite reassured me on the specific point as to whether the statutory declaration will continue to be practised. Is it to be wrapped up inside the employment contract, or will members of the service still make the statutory declaration in front of a witness when they join?
John Healey: The staff will have a statutory duty, which will be binding on them, regardless of what they have already signed. As my right hon. Friend the Paymaster General said, the statutory duty set out in the Bill replaces the Inland Revenue oath and for the first time extends it across former Customs and Excise matters, giving statutory backing to existing duties of confidentiality under employment contracts across a wider range of functions.
The hon. Member for Chichester raised the question of information technology, as did the hon. Members for Rayleigh (Mr. Francois) and for Bury St. Edmunds (Mr. Ruffley). The Paymaster General and I know only too well how central information and communications technology is to the delivery of the essential functions of both revenue departments. As we look forward to their integration and to the formation of HMRC, we are creating a single chief information office which will bring together the planning for both organisations. I want to make it clear that HMRC will not have a single operating environment. Both departments have many systems at present, a number of which are stand-alone systems that are likely to remain so under HMRC. As Members would expect, detailed contingency plans and disaster recovery arrangements are already in place, together with strategic sites for back-up. However, I do not accept the argument of the hon. Member for Chichester that it would be appropriate to publish that information.
I am grateful to the hon. Member for Yeovil for his general support for the change that we are proposing. He says that he can see the potential benefits of
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integrating the departments, as we can, and he came to the same conclusion as the Treasury Committee that gains were more likely to come from integration than from the further closer working of the two independent departments. He outlined the three principal objectives involved: the further closing of the tax gaps; the provision of a better service to business and individual customers; and the efficiencies that can be gained. I say to him that the focus is certainly not only on the efficiency savings that could come from integration, although it is true to say that, on Budget day, when the integration was confirmed, the focus of the media was very much on those savings. The lengthy O'Donnell report, the policy and plans in place in both departments to improve services to taxpayers, and the public service targets that are set for HMRC to continue to reduce tax gaps, will all, I hope, reassure him that this is not a merger that will be driven by efficiency savings alone.
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