Examination of Witnesses (Questions 140-159)
MR DAVID
VARNEY, MR
PAUL GRAY
AND MISS
SARAH WALKER
12 OCTOBER 2005
Q140 Jim Cousins: Could you let us
know what projections you have of the staff consequences of introducing
manual suspension of overpayments?
Mr Gray: We will—although
this tends to be, I am afraid, an art rather than a science because
of the number of assumptions that need to be made.[9]
Q141 Jim Cousins: It has already been
pointed out that a lot of people do report to tax offices their
difficulties about tax credits. How many tax offices are you proposing
to close?
Mr Varney: We have a process now
where we are looking at rationalising our organisation. We have
towns where we have more than one office. We are looking at that.
We are going through quite a detailed process to see the implications
in terms of service delivery. There are some bits which do not
touch the public and that process is underway but has not yet
by any means reached a conclusion in terms of job cuts. We have
already made some decisions which are being communicated to staff
about particular locations where we will close offices with no
consequence for the total level of staffing.
Q142 Jim Cousins: You cannot tell
us how many tax offices you are proposing to close.
Mr Varney: No.
Q143 Jim Cousins: When will you be
able to tell us that?
Mr Varney: When I have gone through
the process we are going through at the moment. An organisation
which has barely been in existence for six months is now looking
at the sort of structures it needs to achieve the tasks it has
to achieve, and that is what we are going through. Obviously we
have to consult with the unions as well—we said we would
do that—and we have a process for doing that.
Q144 Jim Cousins: When can we expect
the outcome for Parliament to see the pattern of tax office closures?
When can we expect a statement on it?
Mr Varney: As we come to the decisions,
then we will be in a position to make a statement of what we are
going to do.
Q145 Jim Cousins: When will that
be?
Mr Varney: We are working through
at the moment. I am as keen as you are to get this result, because
I have a set of targets that I have to deliver. But I have to
do this in the best way possible. We have to look at what we can
do, given the design of the business we have to deliver the outcomes
that we are required to deliver.
Q146 Jim Cousins: I have a question
on a related topic. The whole House obviously has the issue of
our security very much in mind—and this is a matter I have
raised with you before, about Programme Cyclamen, which is the
testing of radiological substances. It is now working. It is in
place.
Mr Varney: It is in place in some—
Q147 Jim Cousins: How many sites
at any one time can you cover?
Mr Varney: Full time on five sites.
I think some of the kit is mobile and therefore can be used at
other sites.
Q148 Jim Cousins: Could you let the
Committee know how many units there are and whether they are mobile.
You are part of the container security programme in the United
States. What proportion of containers entering the country do
you check?
Mr Varney: I am happy to write
to you on that. I do not have the statistics at first hand.
The Committee suspended from 4.00 pm to 4.10
pm for a division in the House.
Q149 Chairman: Jim Cousins, I think,
asked a question before the break.
Mr Varney: You asked a question
about the percentage of containers. We are trying to find out,
but we do not know the answer.
Q150 Chairman: Would you let us have
a note.
Mr Varney: Yes.[10]
Q151 Jim Cousins: In the Auditor-General's
report, R29, there is a reference to financial services sector
of the economy and the difficulties with improving payments of
tax, particularly corporation tax. You will see in paragraph 3.34
there is a reference to the difference of tax yields relative
to costs between the financial services sector and other sectors
of the economy. Could you give us more explanation as to that,
as to what costs are involved and what difficulties are experienced—possibly
in written form. Generally, the staff in the large business service
which is going to replace the large business offices of both Customs
and Revenue, are those staffing levels to be increased or decreased?
What is the scale of the increase? There is clearly a big problem
of non-payment by some of the wealthier sectors of the economy.
Mr Varney: We brought the two
organisations together. I will give you the note which you requested.
We will look at what the staffing levels are appropriately. There
is an issue here which is about compliance and the investigations.
We are looking at doing a series of things. One is to encourage
companies to put tax on the boardroom agenda and encouraging more
work by them where they discuss in their boards what their tax
structure is. We are also looking at the impact of investigations
and visits we have in terms of what it uncovers. We want to take
a risk management approach to the deployment of the resources
we have. We want to look at where they are deployed, that they
are deployed in areas where they can make a substantial contribution
to our tax gathering efforts, and not that we just repeat year
after year the same audit and we get very little result for it.
We will be looking at the organisation as part of 2008. That is
what we are doing at the moment.[11]
Q152 Mr Todd: Is there a new IT strategy
for the merger?
Mr Varney: Yes, I think it is
coming about. We are very lucky to have recruited Steve Lamey
from the private sector. We have two sets of issues, one of which
I think is probably pretty generic, which is that IT has, in a
sense, been a free resource. I do not want to be misunderstood,
it has had to be paid for, but what has happened is that businesses
get IT and they therefore make bids for what they want done on
their systems. We have just taken the whole 46 leadership away
to talk about how we might create a system in which we can have
much better prioritisation and much better risk management. We
are going to experiment with soft charging, to see what implication
that has for ensuring that we deploy the resources we have in
the most efficient and effective way for public value. We always
have more things to do than we have capacity.
Q153 Mr Todd: Indeed. That is why
a strategy is a useful document to have. I take your answer to
be: "Not yet."
Mr Varney: I think you may have
some sympathy with this: I want the strategy to be led by the
businesses, which in the end are led by the customers. We want
to do what is going to serve the needs of our customers, whether
they are new tax credits, large businesses or small- and medium-sized
enterprises, then we have to decide what the priorities are, and
we have to get to a situation where we have less going on but
when it goes on it is done effectively and efficiently.
Q154 Mr Todd: I think that methodology
sounds fine from my own personal experience. But when do you think
you are going to arrive at a position where you have some certainty
as to how you are going to direct an absolutely critical resource
in your team. Jim has been questioning you on the issue of job
losses. If that is to be delivered, you are certainly going to
need more effective deployment of information technology than
you currently have.
Mr Varney: I would like to think
that at the end of the next 12 months we have a clear statement
of direction of travel. Could I explain why it is going to take
time, which is relevant—and I would like it yesterday too.
A key group of people we have had to recruit whom we did not have
are the people who know about the business of HM Revenue and Customs
and know enough about the technology to be able to interface with
our technical people.
Q155 Mr Todd: Business analysts.
Mr Varney: Yes. Those, as you
know, are pretty scarce and are pretty hard to find. That outfit
has to be built up. We are encouraging a much more—
Q156 Mr Todd: You have alarmed me
that these people did not exist in the organisation before, but
. . .
Mr Varney: Before, there was the
business talking to the technology people—which is a similar
situation I have seen in other private sector companies, particularly
the big ones—where the technology people would be advancing
what the technology could do and the business people would be
grabbing at it because they thought it would solve a problem.
The end result is that you have a more sophisticated problem.
Q157 Mr Todd: I do not know if the
Committee would, but I would find it useful if you did a note
on how you are going to establish an information technology strategy
for your organisations and the methodology you are going to use
to set it out. You have then the difficulty of two suppliers of
technology in your organisation because there are two different
contracts. You were admirably calm, and one might even say blasé,
about this in your interview with the Financial Times,
suggesting that this was something that would sort itself out
by having the two sides chat to each other.[12]
Mr Varney: I was not exactly .
. .
Q158 Mr Todd: You asked them to exercise
"commercial imagination"—presumably together,
I do not know.
Mr Varney: Yes. I did not want
them to see me as the financier of whatever plot they came up
with. They are talking to each other. I have a commitment to go
back to the Paymaster-General with a business case for whatever
the results of that conversation are. I will listen to it and
then I will think what is in it.
Q159 Mr Todd: Do you see the problem
in not having a strategy in place before you have to make those
sorts of decisions?
Mr Varney: Both Cap Gemini and
Fujitsu will be part of that strategy, at least for the early
years.
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