Examination of Witnesses (Questions 140
- 159)
MONDAY 24 JANUARY 2005
INLAND REVENUE
Q140 Mr Davidson: I heard that. Can
I pick up on the point you made there, the question of it being
reasonable to assume it was a valid payment. We have had cases
where initially people did not believe it and came back on to
your office and had it confirmed to them that yes, it was right.
Clearly they went off and spent it and said: "Christmas has
arrived early" and then found they were asked to repay the
amount.
Mr Varney: I have explained that
we are guided by this code of practice. If we have said that and
we can prove that has happened, then that is a case for official
error.
Q141 Mr Davidson: Can I clarify the
point about proving this has happened. Many of these people's
lives are less than completely ordered and they are not necessarily
going to have taken notes of times and exact conversations.
Mr Varney: We tape all calls.
Q142 Mr Davidson: None of these has
been wiped?
Mr Varney: No.
Q143 Mr Davidson: That is helpful
because they are findable, are they? If someone comes along and
says: "I phoned up ages ago", they are able to find
these particular conversations?
Mr Varney: We hope so.
Q144 Jim Sheridan: Unless they have
been wiped clean.
Mr Varney: They have not been
wiped clean.
Q145 Mr Bacon: Mr Varney, a lot of
these problems are to do with IT systems. You are merging with
Customs and Excise now. You are the Chairman of both organisations.
We spoke about this briefly the last time you were before us.
The system you are keeping is the Capgemini system for Inland
Revenue and not the Fujitsu system which Customs have, is that
correct?
Mr Varney: No, we are keeping
both.
Q146 Mr Bacon: Why are you keeping
both? Is not one of the recommendations of the Gershon Review
to stop having duplication of systems especially when they are
doing one function, such as collecting revenue?
Mr Varney: I think collecting
revenue is a very high level of the structure. These systems are
being modelled on individual taxes and individual events. Given
where we are, which is that we have not been able to spend money
on the merger in any large amount until the Second Reading and
we cannot spend money on the core of HMRC until after it is established
by Parliament, which is happening at the moment, I think it makes
sense that what we do is we are going to run the systems we have
got.
Q147 Mr Bacon: In parallel?
Mr Varney: They do different things.
Then we will converge over time.
Q148 Mr Bacon: How much time?
Mr Varney: I have not done the
studies, so it is very hard to give you an estimate.
Q149 Mr Bacon: The Fujitsu contract
is a PFI contract, is it not?
Mr Varney: These are all partly
of a PFI nature. The real issue is what we will be doing, first
of all, is to seek to get functionality of data, not the fundamental
systems and, able to integrate the information so we can get that
to an integrated department and then look at what is sensible
to do with the systems.
Q150 Mr Bacon: Who owns the intellectual
property of the Customs' Fujitsu systems?
Mr Varney: I would think it is
us, but let me come back to you[8].
Q151 Mr Bacon: Are you sure?
Mr Varney: No, I said I will come
back to you.
Q152 Mr Bacon: As I understand it,
there is a PFI contract whereby essentially Fujitsu supplies you
with a service and they own the intellectual property. We have
had this problem in Norfolk with Jarvis because they own the designs
of the schools except they are not capable of fulfilling them.
Mr Varney: Let me not guess, I
will come back to you absolutely clearly on who owns it. It is
a much more complicated question than at first sight.
Q153 Mr Bacon: Have you examined
the possibility of paying Fujitsu compensation for the Customs
contract and discovered it was too expensive?
Mr Varney: Certainly, I know it
is expensive.
Q154 Mr Bacon: You have examined
the possibility of paying them compensation?
Mr Varney: What Capgemini and
Fujitsu said to me was they would find ways of working together.
Q155 Mr Bacon: Have you examined
the possibility of initiating compensation?
Mr Varney: Obviously I have looked
at what the alternatives are in terms of terminating the contract.
Q156 Mr Bacon: How much would it
cost for you to terminate the contract?
Mr Varney: It is not something
we are going to do at this stage.
Q157 Mr Bacon: How much would it
cost?
Mr Varney: It is quite substantial.
Q158 Mr Bacon: How much?
Mr Varney: I think we are talking
tens of millions.
Q159 Mr Bacon: Only tens of millions,
not hundreds of millions?
Mr Varney: Tens of millions.
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