Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 73-79)

RT HON DAWN PRIMAROLO MP, MR MIKE HANSON AND MR PETER SHORT

24 JANUARY 2007

  Q73 Chairman: Paymaster General, welcome back to the sub-committee, I am sorry we have kept you waiting slightly longer than advertised. Could you introduce your team please and yourself.

  Dawn Primarolo: On my left is Mr Peter Short and he is the Team Leader in the Revenue Service Delivery in Her Majesty's Treasury; and on my right is Mike Hanson who is a Director General in Her Majesty's Revenue.

  Q74  Chairman: Sir David Varney, the Chairman of the Revenue, announced seven months ago he was standing down and he stood down nearly six months ago. Why have we not got a successor appointed?

  Dawn Primarolo: David actually left the Board in December and this would be a matter for the Senior Civil Service Appointments Committee and ministers who are more senior than I am. At the moment, as you would have heard from Paul Gray, he is Acting Chairman with the same team, an excellent team, and I have every confidence that they are taking the plans forward that we developed for merger.

  Q75  Chairman: Okay, but you are the Minister responsible for HMRC and the Permanent Secretary last October told us that the Treasury would resolve this very soon. Are you really not able to tell us for an organisation for which you are responsible about the chairmancy?

  Dawn Primarolo: I am afraid I am not able to update you on this, Chairman. As you know, it is higher than a minister of state who would take a decision on appointments of this type. What I know is that it is being considered and when I have information I will certainly pass it on to the Committee and ensure that it is, but I am not able to take it further. I think what is important is that Paul Gray was part of the management team before, he leads the same management team, the plans are in place, and we are taking those forward.

  Q76  Chairman: I understand that but one of the issues we were told was being considered is whether this position should be split between a non-executive chairman and a chief executive unlike the way in which David Varney combined both roles. Has that decision been taken?

  Dawn Primarolo: No, it has not. Can I ask, is there discussion on this? As far as I am concerned, I am acting with the management team I have now with an Acting Chairman of the Board and what view the Senior Civil Service Appointments Committee and other ministers take on appointments I would not be privy to at this stage.

  Q77  Chairman: I just find it rather odd that you do not know what is likely to be going on in the bit of the department for which you are responsible.

  Dawn Primarolo: What I think is important, Mr Fallon, is that the department that I am responsible for is taking forward its obligations in collecting tax, running the system, the mergers and the arrangements necessary in order to deliver the service that taxpayers want to see, and that is my focus. If I were able to give you any more details on the questions that you were asking me, I would of course share it with the Committee, but I simply do not have that information at this time.

  Q78  Chairman: Looking at the merger process then, David Varney said that when he moved on in August last year he saw that as ending the first stage of the merger process. In your view, how many more stages are there?

  Dawn Primarolo: I think the next stage (and it is very much in line with what the Committee said in its report on the merger when it considered this in 2004) is actually now a five-year plan which is about the resources and the configuration of the department. I assume, and if not I am happy to go through it with the Committee, that Paul Gray covered the structural changes and the very important building blocks that are in place. And, therefore, in my view, by the time we reach 2011 we should have the department, along with the powers and, hopefully, the Management Act, which we are making preparations for, using efficiently the estate and the staff we have to deliver that taxpayer-focused service that we are supposed to be working towards.

  Q79  Chairman: One of the criticisms we made at the time, and it seems to have come since in the memorandum from HMRC, is that no specific detailed targets for the merger to achieve were actually set, and there were reasons for that, but how can you, therefore, be satisfied that all the benefits are being realised?

  Dawn Primarolo: When the Committee made those observations with its recommendations in 2004, I agreed with the points that were being made, and also the Committee said it is very difficult—and at that point we had our Gershon savings as well, now we have the forecast of a reducing budget year-on-year in the next spending round—to try, wherever possible, to identify costs directly with the merger. We have tried to do this in the note we sent to the Committee, which I am sure you have gone through. Then at other points it is more difficult to break down the precise costs. For instance, with STRIDE, how much was it development costs, how much then did it become? That is the desk-top system, which was one of the O'Donnell recommendations. Where would you actually put the costs? There were two issues in the Regulatory Impact Assessment which, rightly, the Select Committee focused on. One is what might be the staff savings from merger. In fact, the Select Committee did draw attention to the difficulty of trying to identify that when we also had the other objectives, and what we expected the costs to be. So, there was the £75 million in terms of costs. The department has identified some of them both to me and the Committee. It tells me it is within those costs, but with such change going on it is increasingly difficult to tease out the precise costs.


 
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