Examination of Witnesses (Questions 1-19)|
22 NOVEMBER 2006
Q1 Chairman: Mr Gray, welcome back to
the Sub-Committee. Could you introduce yourself formally please
and your colleagues.
Mr Gray: I am Paul Gray, Acting
Chairman of HM Revenue & Customs. On my right is Mike Eland,
who is the Director-General for Enforcement and Compliance; and
on my left is Stephen Jones, who is the Finance Director.
Q2 Chairman: Mr Gray, it was announced
in July that Sir David Varney was leaving and he left nearly three
months ago. Why are you still the Acting Chairman?
Mr Gray: I am not sure I am best
placed to answer that, Chairman. I was asked at the beginning
of August to take over as Acting Chairman from 1 September. Sir
David did not leave until the end of August and I took over as
Acting Chairman on 1 September and, as I understand it, no decision
has yet been made about who should be the substantive Chairman,
so I have seen it as my job to get on and act as Chairman and
carry forward the work of the Department with the support of my
Q3 Chairman: Has it been decided
yet whether there will be an Executive Chairman and a Chief Executive?
Mr Gray: No, I do not think it
has. The former arrangement was to have an Executive Chairman,
which was Sir David, and myself as Deputy Chairman. I assume the
initial decision will be taken on the appointment of a Chairman
and then decisions will follow from that on what supporting structure
there should be.
Q4 Chairman: But this is a very big
and important department of government. Why is all this taking
so long to resolve?
Mr Gray: As I said, Chairman,
as the incumbent, the decision as to who should be made substantive
Chairman is clearly not one addressed to me. As I say, I see it
as my job to get on with the job in hand, and that is what I am
seeking to do.
Q5 Chairman: You have introduced
Mr Jones but he is leaving you.
Mr Gray: He is indeed leaving
at the end of this year. We are in the process of appointing a
new Finance Director to succeed him.
Q6 Chairman: Has the attrition rate
of senior staff in your Department increased since the merger?
Mr Gray: No, I do not think it
has overall. On our overall Executive Committee, the 10 people
who form the executive members of the board, we have had no departures
of the incumbents of that prior to Sir David and Mr Jones, so
we actually have in place a top team, most of whom have been in
continuity through the now nearly two years since Sir David and
I were appointed.
Q7 Chairman: Your 2005-06 Accounts
refer to "problems with the procurement of consultancy services
in respect of non-adherence both to public procurement rules and
recommended governance processes." What was the total value
of the consultancy services affected by those problems?
Mr Gray: The total value of our
consultancy budget overall is of the order of about £100
million a year. The issues that we were anxious to make sure were
fully in accordance with best practice affected only a small proportion
of those. I am afraid I do not have a figure in my head. I am
not sure whether Mr Jones is in a position to add to that detail.
We have put in place new procedures. Since I assumed the role
of Acting Chairman I have also in recent weeks put in place additional
arrangements requiring all my directors in the business to further
increase their level of oversight and accountability to me for
all arrangements being put in place for new consultancy contracts.
Q8 Chairman: In July the National
Audit Office reported that the Department had spent £52 million
in order to secure a competition when it put its ASPIRE contract
out to re-competition. How would you justify that £52 million?
Mr Gray: This now goes back two
years to July of 2004we were re-competing in relation to
the then Inland Revenue a contract for 10 years for the supply
of our major IT services. The value of that contract over such
a long period runs to many hundreds of millions of pounds. We
thought it was appropriate in reaching what would be a very important
decision on who was best placed to support the Department in this
core service to spend an appropriate amount of money to assure
that process of competition and selection.
Q9 Chairman: As I understand it,
your Janet Champion has circulated a note saying that Christmas
lunches must now be taken out of holiday leave. Is that the position?
Mr Gray: That is the position.
Last year for Christmas 2005, which was the first Christmas since
the two former departments had come together into the integrated
HM Revenue & Customs, there had been rather differing practices
in different parts of the former departments in the past, and
we decided to leave it to managers' discretion around the Department
as to how they operated their arrangements. In the event, there
was clear inconsistency of practice. In some areas of the business,
for example where we are operating contact centre services where
the provision right through the day from eight to eight to our
customers requires a high level of attendance, different arrangements
were adopted from, for example, some other areas of the Department
without that minute-to-minute customer contact. We concluded this
autumn in looking ahead that the appropriate arrangement was to
say we were not going to allow formal use of (in the jargon) flexi
credits to people for the purpose of Christmas lunches. This is
in the overall context of arrangements for our staff which provide
huge amounts of flexibility for their hours, a whole range of
different forms of contract, very favourable conditions for members
of staff wishing to work part-time hours
Q10 Chairman: I understand all that.
Is it the position that Christmas lunch has to taken out of holiday
Mr Gray: Yes.
Q11 Chairman: Will you be taking
unpaid leave to attend lunches in the Department?
Mr Gray: Yes, any time on that
I will work in addition outside my normal condition hours.
Q12 Jim Cousins: It does strike me
that that is not quite the same thing as unpaid leave though,
is it? You will not actually suffer any reduction of pay for the
time you take out for your Christmas lunch?
Mr Gray: I will suffer a reduction
of free time that I would otherwise have had.
Q13 Jim Cousins: Yes. Will your staff
all be treated in the same way?
Mr Gray: That is our intention
and that was the purpose of the guidance note going round to which
the Chairman referred.
Q14 Jim Cousins: So that if any of
your staff ended up paying by loss of wages to go out for their
Christmas lunch that really would not be proper if they were willing
to work the extra time?
Mr Gray: Sorry, could you rephrase
that, I did not quite follow your point.
Q15 Jim Cousins: The point I am making
is if somebody on your staff were to suffer a reduction of income
because of going out for a Christmas lunch and were willing to
make the time up, that would be quite wrong.
Mr Gray: Sorry, I am not quite
following the point you are making.
Q16 Jim Cousins: Would you treat
a member of staff, if they did that, the same way as you are treating
Mr Gray: I would look to operate
for myself in a consistent way with what I am expecting my staff
Q17 Jim Cousins: Thank you. Coming
to the issue of staffing reductions, I just want to get my head
round what the real situation is because the formal target is
a reduction of 12,500 jobs nationally and that is for the period
running up to March 2008.
Mr Gray: Yes.
Q18 Jim Cousins: I am greatly indebted
to one of my constituents in Newcastle who sent me a message you
posted on the intranet which says that beyond 2008 to 2011, although
you do not have a target "we will need to save around a further
Mr Gray: That is indeed what I
Q19 Jim Cousins: Thank you. I am
also indebted to one of my constituents in Newcastle who has shown
me that the figures I have been giving you for the reductions
of staff in Newcastle up to 2008 do not include reductions of
staff on fixed-term appointments, of whom in Newcastle there appear
to be about 600. They will be on top of that figure; is that correct?
Mr Gray: What we are looking to
do in those figures is to identify the anticipated number of posts
that we will have in future in each broad location. There is then
I think a secondary question of what is the composition of those
jobs between full-time employees and fixed-term appointments.