Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 60-72)

MR PAUL GRAY, MR MIKE ELAND AND MR DAVE HARTNETT

24 JANUARY 2007

  Q60  Kerry McCarthy: When is the next survey going to be published, the winter survey?

  Mr Gray: I am sorry, I am afraid I have not got a precise date but the measurement was around the end of the year and it will be earlyish this calendar year.

  Q61  Kerry McCarthy: There is talk of industrial action at the end of the month in time for people completing their tax returns. To what degree do you think that is associated with problems arising from the merger?

  Mr Gray: The ballot that the PCS union ran in the early part of this month was a Civil Service-wide ballot. It included HMRC along with all other departments, so this was not an issue about HMRC specifically. Quite what impact it had on PCS members within HMRC and how they chose to vote I really do not know, but I think the key point is that although 31 January, the date of the planned one-day strike, is perhaps a particularly significant date for our department given the self-assessment deadline, we are talking about a context which is Civil Service wide.

  Q62  Kerry McCarthy: But would you be able to identify then the factors that have led to staff within HMRC to decide to join that industrial action?

  Mr Gray: Not precisely no because this has been a secret ballot process as appropriate.

  Q63  Kerry McCarthy: If your staff are going on strike, is it not important to have some idea of why they have felt sufficiently motivated to take that decision?

  Mr Gray: The factors which have been identified by the union leadership in relation to the ballot concern issues on Civil Service pensions where there has recently been a Civil Service-wide agreement between the management and unions on future pension arrangements; on pay where within HMRC we have an agreed pay settlement that runs through to 2008; and in relation to job security where we have been discussing some of those issues and my colleagues and I are seeking to bring much more certainty to our staff over time.

  Q64  Ms Keeble: If you are managing a big operation like the return of people's income tax forms and it is a peak activity, as managers is it not really your job to know what is likely to happen in terms of any industrial action that might disrupt this key service?

  Mr Gray: Yes it certainly is and my responsibility is to ensure that we do everything we possibly can to ensure that we maintain our levels of customer service, notwithstanding the possibility of industrial action and, as you would expect, my senior team and I have been putting in place plans to ensure that we can maintain the service on that last day for self-assessment returns to the maximum extent possible. It is worth bearing in mind that you are not obliged to put in your self-assessment return on 31 January, there is a period of about 10 months in the run-up to that where this can be done, so we are talking just about the last day. A number of people, a number of tax agents do choose to take advantage of the last day—and I am sure no members of the Committee would submit their returns as late as that—but we will make sure that we provide the best level of service we possibly can on that day.

  Q65  Ms Keeble: Regardless of the fact that everybody can have 10 months to put in their tax returns, everybody knows it is left to the last minute. Have you got arrangements in place so that if there is disruption to the service that there will not be chaos around people's returns of income tax?

  Mr Gray: Yes I have.

  Q66  Ms Keeble: Most employers would make sure that they know or they would find out pretty quickly what the results are of a strike ballot otherwise you have got problems.

  Mr Gray: I have found out as quickly as I possibly can. I was notified yesterday along with all other heads of department of the results of the ballot. The ballot was conducted, as I said to Kerry McCarthy, on a Civil Service-wide basis. We have not been given a breakdown of the voting figures between departments, so I knew as soon as anybody else did as soon as the PCS announced the result yesterday lunchtime. I was not waiting for the result of that ballot in order to make sure in the event of a positive vote we had put in place business plans to make sure we provided the best possible service we can, and that is what we will do.

  Q67  John Thurso: Your memorandum notes that you have closed or part-vacated 58 properties since the merger removing office space—and these are your words—"worth £9.5 million in annual running savings". What savings within that amount have actually been achieved in cash terms?

  Mr Gray: The £9.5 million is the value of the reduction in our estate costs from having vacated or part-vacated those buildings, so that is a cash saving.

  Q68  John Thurso: It is a cash saving, in other words £9.5 million less cost, it is not an outgoing any more?

  Mr Gray: Yes.

  Q69  John Thurso: Fantastic. Without the merger, to what extent would each of the two sides, Revenue and Customs, have been in a position to consolidate their individual estates, ie how much is merger driven?

  Mr Gray: I think to a much more limited extent. We are looking in major towns and cities at the plans for reducing the number of buildings we are occupying and, as Members know, we are going through a series of regional consultations now on that process. In a great many large towns and cities you find that there are two quite large buildings, one of which was occupied by the former Customs and one of which was occupied by the former Revenue. Within the context of the merger it is much easier for us to realise those estate savings because we are introducing new business processes that mean we are having much more single interaction across all the range of taxes for example, so I think it is much easier for us to do it. It would have been possible to some degree to do it previously but I cannot give you a precise figure of how much that would have been possible because it is a hypothetical question.

  Q70  John Thurso: Can you indicate how much of the estate is owned and available for sale or leased and available to be let out as opposed to those properties which cannot be either sold or leased out to others?

  Mr Gray: The vast bulk of our buildings are now owned by Mapeley under the contract that the two former departments entered into in 2002 and under our contract with Mapeley we have measures of flexibility under which we can give notice to them that we wish to cease to occupy. So I think the point that you are asking is really an issue for Mapeley as our property provider in that we are in all those buildings paying an annual service charge to them rather than now being the owner or the leaseholder of those buildings.

  Q71  John Thurso: What I am driving at is very often in the private sector you take a decision to relocate and that might work for the business and be more efficient in lots of ways but you have sometimes got a residual cost until the lease term runs out and unless you can sublet it you are stuck with that cost. What I am fishing for is have you got those costs?

  Mr Gray: We have not because a key feature of the contract with Mapeley is that, in effect, we transferred that risk to Mapeley because we had the right under the contract to say "the following buildings this year we no longer wish to occupy" and they are managing that risk. At the same time our contract with them also provides that we get an appropriate share of any development gain that Mapeley would achieve if at some point they are able to sell and redevelop the properties.

  Q72  John Thurso: So when you say that you can reduce the property size by 40%, effectively you are able to do that without penalty?

  Mr Gray: Yes. If we sought to do it all on one day the contract does not allow that flexibility. Over the period of years that we are talking about we can do that, but in any given year there is a limit to how much property we can give up without incurring penalties.

  Chairman: Mr Gray, thank you very much and we look forward to further information from you. Can we ask you now to vacate as quickly as possible because there is the Paymaster General in your place.





 
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