Examination of Witnesses (Questions 60-79)
INLAND REVENUE/HM
CUSTOMS & EXCISE
AND MAPELEY
WEDNESDAY 27 OCTOBER 2004
Q60 Jim Sheridan: How many consultants
have you used?
Mr Varney: I can give you the
answer.
Ms Ghosh: We are happy to provide
a list.[4]
Q61 Jim Sheridan: PCS seem to have a
number. They say that you have used 40 firms of consultants.
Ms McHale: That has been provided
in a previous answer before, I think—.
Q62 Jim Sheridan: If it was provided
in an answer previously, why does Mr Varney not know that?
Ms McHale: We do not have the
detail at our fingertips today.
Q63 Jim Sheridan: He just said he did
not know. You said it was provided in a previous answer.
Ms McHale: Some of these are construction
providers who help on the various major works projects that we
do. There can be quite a high number of consultants involved in
those types of projects.
Q64 Jim Sheridan: But we do not know
how many?
Ms Ghosh: We do know how many,
but—
Mr Varney: I did not bring it
with me and I answered about the contract.
Q65 Jim Sheridan: I would have thought
one of the things we would want to know is how many consultants
were used.
Mr Varney: I have said we will
give you an answer.
Q66 Jim Sheridan: Prior to bringing in
consultants, was there any assessment done in-house in terms of
those people who may have been capable given the proper training
to do the job rather than employing consultants?
Mr Varney: I am sure there was.
Q67 Jim Sheridan: You are sure there
was?
Mr Varney: I am sure there was.
We had historically managed this estate through individual locations.
We were now pulling it together and managing it as a whole. Therefore,
we were managing the estate across all of the Inland Revenue and
Customs and Excise. That clearly threw up problems that we had
not had to deal with before across the whole estate. We are not
a real estate business.
Q68 Jim Sheridan: You understand the
confusion and perhaps the frustration caused when people are being
made redundant at the same time as you are bringing in consultants?
Ms McHale: To clarify, a lot of
the consultants that we are using are extremely specialist skill
sets. They are not skill sets that we could develop as transferable
skills in-house. It is a preference and a priority to professionalise
the contract management unit and grow that skill inside but sometimes
we are not able to do that and we have to buy external advice.
Q69 Jim Sheridan: With the greatest respect,
I have a view about consultants and certainly within the Civil
Service it is too easy, when managers arrive at a difficult decision,
to just reach out for consultants. It does not happen in the private
sector. In the private sector if a manager asks for a consultant
the manager gets sacked. They do not have two of them making the
same decisions.
Mr Varney: With great respect,
you have a very different experience of the private sector than
I do.
Q70 Jim Sheridan: If we have to bring
in consultants, why do we need managers?
Mr Varney: Because sometimes the
consultants bring in specialist expertise. The consultant firms
do quite well, most of it out of private industry.
Q71 Jim Sheridan: There has been a high
turnover of staff. Could you explain the reason for that?
Ms Ghosh: Within the area covered
by the contract?
Q72 Jim Sheridan: Yes.
Ms Ghosh: We would expect to have
seen a significant turnover because of the different kinds of
skill sets that you need in carrying out a procurement process,
as opposed to delivering, managing and running a contract. We
had always anticipated that there would be a reasonable staff
turnover following the delivery of the contract. We did not recruit
in particular Siobhán who arrived in April this year soon
enough. Nonetheless, I should emphasise we have a highly respected
contractual procurement group within the two departments—and
there there has been considerable stability of personnel—who
have been consistently offering very high quality, professional
advice on contract management. We would have expected some turnover
because it was a different set of skills. With hindsight, we were
probably a bit slow in bringing in Siobhán but I brought
her in under my leadership earlier this year. Meanwhile, we did
have good in-house procurement advisers working with us.
Q73 Mr Steinberg: Mr Varney, you remind
me of all chief accounting officers. You are desperate for praise.
You made a comment about it being a good Report and you will learn
as you come here over the next two or three years, I would suspect,
that you will not get any praise whatsoever because it means that
you are doing your job properly when you are being praised and
that is what we would expect. It is the cock ups that we look
at and you are responsible. Have you met Sir Nick recently?
Mr Varney: Not very recently.
I saw him about a couple of months ago.
Q74 Mr Steinberg: Did he say he had dropped
you in the mire?
Mr Varney: He was not as precise
as that. I thought I read the other day that you were saying that
the Committee had a very positive relationship with most of the
people who came in front of it.
Q75 Mr Steinberg: We do. The department,
I am told, expects to reduce the costs of running this estate
by something like £344 million over the contract period of
20 years. Is that right?
Mr Varney: Yes, that was the public
sector comparator.
Q76 Mr Steinberg: I certainly would never
get a job at the Inland Revenue but my simple arithmetic says
that is something like £17 million a year savings? Is it
really worth it?
Mr Varney: We free up in total
£220 million up front. We thought and we still think that
on the back of the contract we will be able to better procure
services because we will be able to do it on a consistent basis.
For example, utilities. That is why we see the value being greater
than is in the model. The comparator put up by the NAO envisages
that 40% of the estate will be reduced. With the pressures that
are on both in terms of efficiency on the one side—
Q77 Mr Steinberg: It is a yes, is it?
Mr Varney:— and technical
change. I think it is inconceivable that in 20 years' time Revenue
and Customs will operate the way they operate today, which is
with a lot of paper based systems.
Q78 Mr Steinberg: I will take that as
a yes. How much have you saved up to now?
Mr Varney: We can identify the
values that we have saved in terms of the utilities fairly easily.
We can include the £220 million paid up front. It is quite
difficult because of the number of decisions to go back and see
what you would have done had you not had this contract.
Q79 Mr Steinberg: How much have you saved?
Mr Varney: It is very difficult
to get to an answer. What we have done is—
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