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The Chairman: Order. The right hon. Gentleman is straying back to the desirability or otherwise of the existing terms of the Mapeley STEPS contract. As I have already indicated, that is not the issue being debated by the Committee, nor is this the appropriate forum for that discussion. The Committee is debating whether it is necessary for us to have the new clause the right hon. Gentleman has proposed. I hope, therefore, that he will confine his remarks to that.
Mr. Heathcoat-Amory: Of course I accept that, Sir John, but the contract is extant and runs for 20 years, so we are not simply talking about the years up to now since signature, but about what will happen from now on until the end of the contract—the remaining 16 or 17 years. That is highly relevant to the Bill and the new clause.
My question is a simple one: when the merged Revenue department comes into existence, consequential on the Bill becoming an Act of Parliament, is there a provision under existing arrangements for the payment to decrease? We know that payments have increased in recent years in response to additional legislation and additional buildings being taken on by the Revenue department. Is there a symmetry here, and, if not, can we ensure that the contract is changed to reflect the possibility of Revenue officials moving out of buildings to achieve the savings and economies that underlie the purpose of the merger?
The Chairman: Order. The right hon. Gentleman is trying my patience. The Committee is not here to consider the existing Mapeley STEPS contract, or what may or may not happen in the future; it is here to consider the new clause. I will not allow the Committee to be used as an inquest on that particular contract.
Mr. Heathcoat-Amory: I am not interested in the contract, but in what the new clause says. I can only refer to it. It says:
''The Treasury shall make a scheme identifying any rights and liabilities in the property of the old commissioners.''
I do not know how it is possible to make a new scheme without some reference to the contracts that bind the old commissioners. Will you accept that, Mr. Chairman?
The Chairman: I am perfectly happy for the right hon. Gentleman to argue the case for such a scheme in the course of the clause. What I am unhappy about is a disinterment of all the detailed terms of the existing contract and its examination in detail by the Committee.
Mr. Heathcoat-Amory: Well, I will just have to rephrase my question in terms of the new clause. Will the Treasury make a new scheme—we will call it Mapeley II—to identify the obligations of the old commissioners, that is, of the existing Revenue departments, and will those payments under the new
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scheme provide for reductions in the annual payment consequential on the anticipated savings when the new Revenue departments merge into one?
We have seen that the existing contract provides for escalation of costs. I wish to know whether there is provision for decreasing them. That is the scheme that my new clause calls for. I am therefore, it seems to me, entirely in order in asking the Paymaster General what existing contractual arrangements may prevent such a new scheme taking effect.
Dawn Primarolo: Briefly, I told the right hon. Gentleman in my opening remarks that the contract gave significant flexibility so that Mapeley will carry the risk of changes to departments' accommodation requirements. I went on to specifically point out the risk of disposing of leasehold or freehold, as an example, once the departments had said that the accommodation was no longer required. I can confirm, again, that the contract provides the opportunity to realise the benefits of the merger through rationalisation of the estate. The contract was designed specifically to do that. The departments contract and grow. When they contract, their costs reduce; when they grow, they increase. Parliament is informed of all of that. Unlike previous contracts, this contract provides for both reductions and increases within the negotiated terms.
The right hon. Gentleman comes back with his basic premise that there was a failure, and that lessons therefore have to be learned and new procedures are necessary. My contention is that there was not a failure, and the Comptroller and Auditor General also takes that view. On 7 May 2004, he said that the department had got an exceptionally good price for a deal that should bring a range of benefits. He went on to mention the very important point that there are risks to such a keenly priced deal, which the department must manage very carefully if it is to realise its full value.
I have explained, without trying to try your patience too much, Sir John, that those matters have been taken forward and therefore that the clause is not required. The accounting officer, the requirements of all departments for value for money, the view of the National Audit Office and their ability to investigate all successfully worked in this case, will work in future cases and the recommendations are being taken forward as well. Therefore the right hon. Gentleman does not need his new clause, because the mechanisms are already in place. If he wishes to put it to vote, I will ask my hon. Friends to oppose it.
Mr. Heathcoat-Amory: It has to be dragged out of them, does it not? I think, however, that we are now a little bit clearer about the arrangements for the future, which are consequential on arrangements for the past. In light of the more recent comments of the right hon. Lady, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
<<130>>New Clause 2
Information technology
'(1) The Treasury shall make a scheme identifying any information technology system owned or operated by the old commissioners which shall, by virtue of section 43, vest in the new commissioners.
(2) A scheme may include consequential and incidental provision.
(3) A scheme shall include provision that any information technology system identified therein shall be managed in accordance with best value.
''best value'' means arrangements to secure continuous improvement in the way in which functions are exercised, having regard to a combination of economy, efficiency and effectiveness and
the expressions ''the new commissioners'' and ''the old commissioners'' have the same meaning as in section 43.'.—[Mr. Heathcoat-Amory]
Brought up, and read the First time.
Mr. Heathcoat-Amory: I beg to move, That the clause be read a Second time.
The terms of this new clause are similar to those of the one that we were just discussing. They refer again to any information technology systems owned or operated by the old commissioners, so I hope that you, Sir John, will not judge me out of order if I refer, at least, to recent, if not ancient, history. That is included in the terms of the new clause.
The information technology story is not wholly dissimilar to the one that we have just been discussing in that it is punctuated by a number of procurement problems, and I am talking about the generality of the public estate. We all, as Members of Parliament, suffer as a result of the Child Support Agency computer failure. The problems are not unique to the Revenue department, but they are particularly important there because all of us, in one way or another are either taxpayers or are in receipt of benefits now administered by the Inland Revenue.
I draw the Committee's attention to the comments of the tax faculty of the Institute of Chartered Accounts in England and Wales, which were submitted as evidence to the Treasury Committee, of which I am a member. Perhaps I should declare an interest. I am a chartered accountant but I had nothing to do with that evidence. I also do not practise as an accountant or as a tax adviser, except to my occasionally bemused constituents who have to grapple with such problems.
The evidence referred to information technology problems as they exist. It said that many of the problems of the tax system appear to emanate partly from IT inputting of data and partly from the computer programming, which was categorised as poor. The particular example that was given was of the tax credit system, and it was pointed out that the computer system in the Inland Revenue does not show how the credit has been calculated. The tax faculty of the ICAEW was surprised that no one thought that this was necessary at the time that the computer was set up and installed.
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The evidence goes on to refer to other problems, particularly to do with the self-assessment system for tax and how, again, the correct data are not captured by the Inland Revenue system. It concludes by saying:
''The result of these types of problems is that few people have much confidence in the Revenue's computer systems.''
That is a harsh criticism, but I think that it is generally fair.
All of us who, in our various ways, have to grapple with the Inland Revenue on behalf of our constituents know that the tax credit system was brought in with inadequate preparation. Indeed, there are continuing problems. The question is whether the merger under the Bill will make those problems better or worse.
Again, the evidence given by the chairman designate of the new department is not altogether reassuring. Mr. Varney referred to 250 major IT systems in the two departments. He said that they ''have 3,000 staff'' working in IT and that they send out 170 million forms a year. He said that
''we run 100 thousand desktops. So it is a big issue for us.''
I think that that was said without fear of exaggeration.
Mr. Varney also commented on the general issue of computer management. He said:
''We also have to get smarter at our pre-risking and big risk minimisation projects, talking through both the IT risk and the operation.''
I am not completely clear what that means. I am afraid that it is a feature of all public servants that they fall into a terrible form of jargon when trying to explain such matters.
It does not get any better, because when Mr. Varney was asked by the Select Committee when an integrated system was due to take place, he said:
''So some of these projects are mission critical for both delivering cost and service objectives. I think we will bring what we want to bring because we bring the management potential and the discipline to the problem of investing in technology.''
I think I know what he means: the body will do its best to make it all much better in future.
11 am
Mr. Varney is a very able man, and he is certainly trying to do the right thing, but he is grappling with two very different systems. There is a reference in my new clause to the old commissioners. They have their own information technology systems, administering different taxes with a different culture; we have observed that at various times in our proceedings. There is not only a different culture, but different contractors. Customs and Excise has a contract with Fujitsu, whereas the Inland Revenue has signed the ASPIRE contract with what is called a new strategic partner, Cap Gemini Ernst & Young. So two reasonably recent very big IT contracts have been signed with different suppliers. They seek to do different things and I would imagine that, under the terms of the contracts, it is not possible for one to give way to the other.
What will happen in the new merged department? Will we simply bring together the two different sets of IT facilities; all 250 major systems, as the chairman-designate described them? How are they to be managed for the benefit of the public, particularly
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when the departments have to keep their existing duties going? It is not a question of saying, ''Down tools and let's design something different.'' The departments have to continue with their existing collection and payment functions, as well as design an integrated system with the promised economies.
The purpose of the new clause tabled by my hon. Friend the Member for Sevenoaks and me is to produce a plan. There are two plans and two contracts at the minute, as well as myriad different systems. We want a single plan, because we certainly have not seen one. One of the Treasury Committee's criticisms when taking evidence was that although Gus O'Donnell made a report into the reason for the merger—and a way ahead was identified on that—it is not a detailed plan. It certainly does not go into the interstices of the department in trying to discover what systems it is running, and whether it is even possible, under the terms of the contract, to get a uniform or integrated IT management system. Many of the supposed benefits to the public purse and to taxpayers of the merger will be lost unless there is a plan to bring the IT systems together, perhaps not immediately but over time.
What provision was made in the existing contracts for the eventuality of a merger? Does a plan exist to adapt them to the new circumstances envisaged under the Bill, and what savings does she anticipate from that plan? It is entirely appropriate to impose a best value obligation on the new department, and indeed on the Treasury. It is not an adequate response simply to say that the public sector pursued best value anyway. I am afraid that the history of both the property and IT systems is littered with examples of aspirations—but not obligations—to pursue best value, and when the targets are not met, no one suffers apart form the tax-paying public. That is the purpose and reasoning behind my new clause, and I look forward to the Paymaster General's response.
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