Examination of Witnesses (Questions 309-366)
Q309 Chair: Good
afternoon. We are a bit depleted in numbers but the fierce ones
are here, so be warned; I will try and keep them in order. Mr
Holden, you took a job in May 2010 and another job in March 2011.
It seems you are shooting through the organisation at some pace,
aren't you?
Mark Holden: I
think it was a natural progression. I was asked to expand the
role I took on originally, which was quite focused on IT programmes,
to encompass the RTI programme.
Q310 Chair: Is
it a promotion? Is it more money, for example?
Mark Holden: Yes,
it is a promotion.
Q311 Chair: Promotion.
You moved away from money there, is it more money?
Mark Holden: No.
Q312 Chair: Good
on you. You have been given £100 million to spend on improving
the Pay As You Earn system. How will that £100 million be
spent?
Stephen Banyard:
We are building a real time information facility to build on to
our existing Pay As You Earn system. Pay As You Earn collects
the right tax for the majority of people and RTI will build on
our existing Pay As You Earn system. It will bring benefits to
particular groups. Employers will see a particular reduction in
their admin burden of about a third. It will improve our revenue
collection because we will know how much employers have paid to
their employees during the year, and therefore how much tax they
should remit to us. It will improve the accuracy of Pay As You
Earn for some people. It will help us reduce error and fraud in
tax credits by £300 million a year, and it will provide the
dynamic information for the universal credit.
Q313 Chair: Are
there any more notes on there that you want to read out? Is that
it?
Stephen Banyard:
That's the headlines of what it does.
Q314 Chair: When
you started that, you did not say "the software", you
said "a facility". What do you mean by "facility"?
Stephen Banyard:
At the moment, when employers pay their—
Q315 Chair: No,
is it physical or is it software?
Stephen Banyard:
It is both. It is a physical ability to bring in data more regularly
than we do now, so it is a channel of data. It is a place to hold
it and it is the software to manage it, and match it, and so forth.
Q316 Chair: What
is the division between the two songs, software and hardware?
Stephen Banyard:
I am going to ask Mark Holden to comment on that.
Mark Holden: I
can't give you a detailed breakdown of the split because predominantly
there will be a lot of hardware that is already built into the
infrastructure that we will be using across both our existing
service, so the NPS, our existing PAYE service, and also the national
infrastructure that is within BACS, so there will be some expansion
of that service. A lot of it will be in the configuration and
development of the software, but I don't have the exact split
on them.
Q317 Chair: Did
you put up a detailed bid with the division between capital and
software, physical stuff and hardware? Because £100 million
just seems a lot, first of all, and it seems a nice round sum
that covers every eventuality. Is that costed as we sit?
Mark Holden: It
has the initial outline costings that you would expect at this
stage of a programme, and it is split between the development,
which includes both hardware and software, and also the business
change costs of the organisation.
Q318 Chair: When
somebody says "at this stage of the programme" that
signals that it is pretty vague.
Stephen Banyard:
No—
Q319 Chair: So
you could give us it and we could have a look at it, couldn't
we? Who agreed this? Was it the board or the Minister?
Stephen Banyard:
It was agreed with the Treasury. We produced a business case for
them, which detailed how we thought the money would be spent over
the spending review period.
Q320 Chair: I
would not mind seeing the details of that because it is a suspiciously
large figure. When Dame Lesley appeared before us last year she
said real time information is high cost, high risk. A few months
later she said that it would be available without problems in
2013. Why the sudden change? Which of you convinced her that it
was the right thing to do?
Stephen Banyard:
I think we have always thought it was a doable proposition.
Q321 Chair: Do
you share a view then that it is high risk, high cost?
Stephen Banyard:
There are risks attached to it. I do not believe it is high risk.
We wouldn't have committed to a timetable we did not believe we
could meet. We have looked at this in detail and we believe we
can do it on the timescale, and we have designed a programme or
an implementation that de-risks its introduction. For example,
it includes a 12- month pilot in which we and payroll software
manufacturers and employers will be able to test the service and
learn from it before we go live.
Q322 Chair: Do
you agree it is high cost?
Stephen Banyard:
I don't think it is high cost for what we are getting.
Q323 Chair: So
Dame Strathie was wrong?
Stephen Banyard:
No, she was not wrong.
Chair: She said the opposite
of what you have said.
Stephen Banyard:
It is relative judgement, isn't it?
Q324 Chair: Anyway,
okay. Right, now we have heard from a former employee about the
difficulty middle management have of passing bad news up because
they don't get any reward for passing it up or any thanks. You
tend to shoot the messenger. There is some worry that if this
is the culture that is here this programme could run into trouble,
and it is a key Government programme. Are you certain you are
going to deliver this on time, no problem?
Stephen Banyard:
We are confident we can deliver it on time. We also go out and
talk to our frontline staff. We talk to the staff, we talk to
managers, we understand their concerns. We try and build them
in.
Q325 Chair: So
the unions and the staff members who have given evidence to the
opposite are wrong again?
Stephen Banyard:
No. We have listened to their concerns. We have tried to build
a timetable and an implementation that does reflect the real circumstances
we will face.
Q326 Chair: How
confident are you that your partner, DWP in this exercise, is
included, agreeing and is not confusing or adding to the difficulties
in meeting the date? There has been some information reach us
that it is hard enough dealing with one Government department,
but dealing with two is just impossible. Is that wrong? It has
always been my experience.
Stephen Banyard:
DWP have a very strong interest in real time information because
the universal credit programme has a strong dependency on it.
They are therefore interested in it for that reason. It is also
important we work well together. They are a key stakeholder so
we cannot drive on in isolation to them and we have to produce
something that works for us but also works for them. I think it
is my job to make sure that they are confident, as it is my job
to make sure HMRC is confident. We are doing the right thing and
we can do it.
Q327 Mr Tyrie:
Just following on from that point; when Lesley Strathie came before
us she said that the sharing of RTI information with DWP was an
ambition for universal credit. Why won't you share the information
with DWP?
Stephen Banyard:
Why would we?
Mr Tyrie: Why won't you
at the moment?
Stephen Banyard:
We will. HMRC takes the security of its data very seriously and
we share it where there is a legal gateway. We have legal gateways
with DWP but, from a public interest point of view, we are collecting
data from employers about income, which will be used by us to
help deal with people's tax—
Q328 Mr Tyrie:
I understand. You have answered my question. Do you think you
are going to be, and have you taken advice on this, liable in
law? It is not just a question of fulfilling your legal responsibility
or is it that it might cost the Government money because you will
get sued if you were to hand information over in a way that could
be held to have been deleterious subsequently?
Stephen Banyard:
We are subject to normal data security legislation—
Q329 Mr Tyrie:
I am asking you whether you have taken advice on whether these
legal restrictions have real bite in the sense that you may find
yourself generating a bill for the taxpayer.
Stephen Banyard:
We take it very seriously. We take proper advice on what we can
do and we make sure that we have the legal—
Q330 Mr Tyrie:
There is a note coming up for my second question, so why don't
you tell me what the note says, that would be handy.
Stephen Banyard:
Shall I bring Phil in?
Phil Pavitt: The
advice we have taken also incorporated legislation, the Welfare
Reform Bill, which obviously set out the criteria whereby we exchanged
the data, and that also took account of any liability, any restrictions,
and any ongoing liability that may arise from the use of that
data. Just to remind you, we already swap about 13 million pieces
of data between us already, those two authorities, on a daily
basis, which is also covered by the same restrictions.
Q331 Mr Tyrie:
The answer is yes, and if you get this wrong you might find yourself
generating a bill as a consequence of people taking legal action
against you at some future date.
Stephen Banyard:
We would work very closely with DWP to make sure we were not in
that situation. We would manage that risk.
Q332 Mr Tyrie:
I am just trying to be clear that that risk is there and that
you are taking legal advice on it. I am asking you a very simple
straight question.
Phil Pavitt: We
have taken legal advice.
Q333 Mr Tyrie:
You have taken legal advice on it, the answer to that is yes.
The reason you are taking legal advice, and part of that legal
advice, is the fact that there is a risk of costs accruing because
of challenges—
Stephen Banyard:
We have taken legal advice to make—
Mr Tyrie: —with
a transfer of that information.
Stephen Banyard:
We would test all data transfers against our experts in that and
to make sure that we do have the legal cover.
Q334 Mr Tyrie:
I think I will give up on that point, but I think the answer is
pretty close to yes, isn't it? The answer is yes, there is a risk
that you may find yourself footing a bill as a consequence of
a legal challenge if you get this wrong.
Stephen Banyard:
No, I don't think there is a risk.
Q335 Mr Tyrie:
There is no risk of a legal challenge?
Stephen Banyard:
Not in what we are doing, no.
Q336 Mr Tyrie:
My question was, if you were to get this wrong would you be vulnerable
to a legal challenge that could trigger costs to HMRC?
Stephen Banyard:
If we got it wrong then we would be open to challenge, yes. I
am not sure what the form of the challenge would be. We are taking
great care to make sure we get it right.
Q337 Mr Tyrie:
I think behind you I am getting an answer yes, so I am going to
go with what I thought I saw from a sedentary position behind
you. Let me just move on. Are DWP sharing the footing of the bill
for the implementation of this policy?
Stephen Banyard:
RTI has its own spending or has its own funding, which came as
a side letter to our settlement. It is funded by the Treasury
with a vote to HMRC.
Q338 Mr Tyrie:
If this all goes turtle up who is carrying the can?
Stephen Banyard:
I guess I will.
Q339 Mr Tyrie:
You personally at HMRC?
Stephen Banyard:
I am the senior responsible officer and HMRC would, yes.
Mr Tyrie: That is very
helpful. Thank you, Chairman.
Q340 Stewart Hosie:
The introduction of RTI will see an end to the single end-of-
year reconciliations and the introduction of multiple in-year
reconciliations. There is huge concern that will increase the
attendant cost to business and HMRC. Stephen, in your opening
remarks you spoke about RTI delivering significant business savings.
I am at a loss. Maybe you can explain why you think doing the
work multiple times in-year rather than once a year will reap
savings for business.
Stephen Banyard:
At the moment employers operate payroll systems, which remain
automatic every time they make a payment, be it weekly or monthly.
They send us the information at the end of the year, having done
a reconciliation themselves. That reconciliation is a one-off.
It is based on forms. It is about a third of their total burden
from operating Pay As You Earn. We are not asking them to do monthly
or weekly reconciliations under RTI. We are simply asking them
to send us the information behind their payroll payments. We will
be totalling it up and at the end of the year they won't need
to do a reconciliation, or it will be a very light reconciliation.
Q341 Stewart Hosie:
You are asking them to do that through the use of BACS, and you
have said in the consultation employers with fewer than 50 employees,
which from memory is certainly 95%-plus of every business in Scotland,
will not be required to do that initially but they will at some
point. When do you foresee every business required to use BACS
to provide you that information?
Stephen Banyard:
We have no plans for every business to use BACS. We recognise
that large businesses use the BACS system, and it looks good for
them to use it, but for those that don't we have an internet channel.
For the very small employers we are developing an HMRC product
that they can use. We do not see additional costs for them from
that.
Q342 Stewart Hosie:
We have BACS for large companies and those small ones who use
it, there is a separate internet channel and there is a further
means of providing the same information. Before this is even implemented
there are three points of failure, three weaknesses, a multiplicity
of channels to receive the information. How confident are you
this model is going to work?
Stephen Banyard:
You portrayed it as a weakness. You could see it as a strength
in that what we have is different channels. What we are trying
to do is to match what we are doing to the customers, the employers
that we are dealing with. We provide a channel for large employers,
which is one that they are used to using; we provide a channel
for small employers, which they are used to using. We can easily
combine the data. We are used to using multiple channels anyway.
At the moment large employers send their data to us at the end
of the year using a channel called EDI, electronic data interchange.
It is a bulk exchange channel. Small employers use the internet.
We put that together. Very few employers are exempt from using
the internet and they can use paper. We put that in as well. I
think you can see multiple channels as a strength, it gives you
contingency.
Q343 Stewart Hosie:
You are satisfied that with multiple channels and it being as
close to real time as it can be, we should set aside any worries
about the difficulties HMRC have had recently in terms of managing
data, and expect and believe all this information coming in, in
a multiplicity of ways, can be operated in a real time basis that
we should all have confidence in?
Mark Holden: Could
I just help to give some confidence? The existing BACS channel
is part of the national banking infrastructure of the UK. This
is a highly resilient, highly robust and well known, well understood
channel for transmission. The internet channels that we use are
the same channels that we use for our self-assessment filing each
year, which supports some 7 million to 8 million filing through
the year. These are well understood, well managed and have good
track records in terms of their delivery and their sustainability.
In terms of the concerns around those infrastructures, and our
use of them, I think we do have a track record that demonstrates
that we can manage those services properly.
Q344 Stewart Hosie:
My final question on this then, would it be your intention at
some point to move to the single BACS transmission channel so
there is uniformity across the board irrespective of business
size? Would that be an objective?
Stephen Banyard:
We have seen in recent years a greater take up of direct credit
by businesses and if that continued we might want to use it, but
we have no plans at the moment to encourage people to move. We
are simply going into the market, as it is at the moment.
Q345 Andrea Leadsom:
Just to press a bit, I think you can probably sense that there
is a great deal of scepticism around the room, bearing in mind
the enormous problems that HMRC have had in the last few years,
and the enormous inconvenience and expense that that has given
to taxpayers. What seems to me extraordinary is that we have quotes
from David Gauke in HMRC's remit letter saying, "Real time
information is crucial to the delivery of the Government's welfare
reform agenda." Then we have Dame Lesley Strathie saying,
"The biggest challenge for RTI is data quality" talking
about the problems with VAT numbers being in erroneously, and
so on. Yet it does not seem to me that there has been an absolutely
massive data cleansing programme. Surely RTI is utterly dependent
on the quality of the data input. There is this enormous lack
of credibility, I am afraid, about HMRC's ability to deal with
that. Can you just address that head on, and tell us what you
are doing to ensure the quality of data?
Stephen Banyard:
That is a very good question. The first thing we have been doing
is that with our new Pay As You Earn system we have been working
very hard to improve the quality of the data on it. For example,
a year ago, when we issued the annual codes, that was the first
that the public knew that there were data problems—first
the Department knew there were data problems. We have worked very
hard over the last year to get the data into much better shape,
and before we issued the codes this year we tested every batch,
using some of our most experienced staff, and we tested each batch
back to the customer record. As a result of that the codes that
we have issued this year have been the most accurate and complete
set that we have issued for many years.
Q346 Andrea Leadsom:
Can you give us a percentage accuracy that you think you have
achieved? Do you know what the percentage is?
Stephen Banyard:
We believe the percentage accuracy is 98.2% against something
like 80% last year. We anticipate being able to move that up,
but that is probably the most accurate set of codes that we have
issued for many years. We are continuing to implement every stage
of NPS as we go through the annual Pay As You Earn cycle using
that very robust testing that we used on the codes, so that over
time the NPS data quality will be much improved.
Then we come to RTI. We very much recognise that
for RTI to work well, we have to focus on data quality. We set
up a separate project, or a project within the programme, to deal
with it. We have to work with employers, and we have developed
a tool that enables us to look at employers' performance and we
can identify those who are having problems and those who are not.
We are going to deploy 50 customer relationship managers to work
in partnership with employers to help them and us match our data,
and get it right. We are planning additional data cleansing exercises
so that we can raise the whole profile of data quality, not only
in HMRC but right along the supply chain. In that way we believe
we can produce data that is of sufficient quality.
Q347 Andrea Leadsom:
Bearing in mind how much rests on it—including the welfare
reform plans of this Government, do you feel confident that HMRC
is going to be able to deliver that absolutely crucial link in
the chain?
Stephen Banyard:
Yes, we are, and we will work very hard to make sure we do.
Q348 Andrea Leadsom:
Will the multi-year reconciliations following RTI exacerbate data
quality issues? I am assuming it would do because any one error
gets multiplied in multi-year reconciliations or is that not right?
Stephen Banyard:
The multi-year reconciliations was a one-off to enable HMRC to
try and catch up last year. The reconciliations hereon will be
one year at a time, at the time they should be conducted. Perhaps
go back to what I said before. Every part of the Pay As You Earn
cycle, which we are carrying out, we are testing very thoroughly
to make sure what we are putting out to the public, what we are
calculating, is correct. We are using our most experienced staff
to do that.
Q349 Andrea Leadsom:
Do you think we should ignore the experience of the past few years
in assessing our level of confidence in HMRC's ability to deliver
RTI?
Stephen Banyard:
I think you should take the past into account, but you should
also take into account the lessons we are learning from the past.
It is worth saying—and perhaps may give you some comfort—that
whereas the introduction of NPS was a big change, in other words
one system completely replaced another, the introduction of RTI
is an addition to an existing system, and we don't have to play
it in as a big bang. We can phase the introduction of RTI into
Pay As You Earn, and that is what we plan to do, so that we will
first of all pilot it, we will have early adopters, we will phase
people on to this system and then we will phase the use of it.
Meanwhile, the existing NPS system, which is now bedding down
well, will continue to operate Pay As You Earn.
Q350 Mr Umunna:
Can I just ask about the IT system through which RTI is going
to be delivered, and perhaps if you could just start with clarifying
for us whether RTI will be delivered through the Aspire contract
led by Capgemini or whether it will have to be delivered through
another system? When Dame Lesley came in front of us she said
that it was not covered by the Aspire contract. It seems that
we have been subsequently informed by yourselves that it is. For
the record, could you provide some clarity, please?
Stephen Banyard:
Yes, I will ask Phil to come in on that, but I would say that
RTI is going to be an integral part of our Pay As You Earn system,
and I would want the people building RTI to be experts in Pay
As You Earn, and Aspire are IT experts in Pay As You Earn. I would
naturally look to them because this is not a greenfield development.
This is very much an integral part of Pay As You Earn.
Phil Pavitt: To
clarify what Dame Lesley said, on new systems we can go outside
the Aspire contract and there is a laid down reason to do so,
which I am happy to explain, should you wish. This is building
on what we already have, so falls well within the remit of the
Aspire work that we use. We are going through the Aspire mechanism
to provide the service called RTI.
Q351 Mr Umunna:
Obviously the contract is delivered for a certain cost. Will the
costs remain the same with the additional burden of RTI?
Phil Pavitt: The
quotes for the service, both the actual build of that service
and the ongoing maintenance to that service, is in the business
case that was referred to in the opening set of questions, and
that then obviously is part of the ongoing fees that we pay for
Aspire's maintenance once the system is in place.
Q352 Mr Umunna:
I suppose what I was getting at is, is it cheaper to deliver RTI
through the existing Aspire contract as opposed to having a separate
contract to deal with that, given the issues with the contract,
which I will come on to?
Phil Pavitt: I
think the common belief is if it goes through an existing contract
is there some form of additional payment or is it not competitive?
I know we are referring to RTI, but we are placing IT amendments
and changes and new work all the time in HMRC. Each of those is
subject to a well articulated and very open rigorous process to
get value for money. If we are not happy as the requirer of those
services we are allowed to go either outside or look for some
check of those services using an external sort of process. Value
for money in terms of making sure that it is not just some sort
of black box, we have no examinations of costs, that is not the
case in this point.
The reason why the Aspire contract is quite valuable
to us in this place, of course, is elements of that are acting
as a service integrator and what we get for that is, of course,
they take end to end responsibility for delivery, they take end
to end responsibility for daily management, the commercial responsibility,
all of which we would have to do if we let the contracts ourselves—
Mr Umunna: I understand
that.
Phil Pavitt: —which
is acceptable.
Q353 Mr Umunna:
Are you able to guarantee to this Committee that by delivering
RTI through the existing Aspire contract you are giving maximum
value for money to the taxpayer as compared to, say, delivering
it separately? I understand the reasons for delivering it within
the integrated contract.
Phil Pavitt: The
short answer is yes, and the second answer is that things will
change as the project goes on. I am sure things will appear, and
they go through the same value for money process, which we have
to make public account for, and people can test that or challenge
that. But, yes.
Q354 Mr Umunna:
Just in relation to the contract, and do correct me if my facts
here are wrong, but my understanding is that it was entered into
around 2009, beginning of 2010, for an eight-year period; is that
correct?
Phil Pavitt: The
RTI—
Mr Umunna: The Aspire
contract I am talking about now.
Phil Pavitt: The
Aspire contract started in 2004 and there have been three subsequent
negotiations since that was done. There is a recent negotiation
in 2009, which I think may be the one you are referring to.
Q355 Mr Umunna:
That is the one I am referring to. Is it right to say that in
terms of the way the costs are structured within that contract
that there is a reasonably low upfront cost to effect changes
but as you get further along into the term of the contract it
is more expensive to make changes?
Phil Pavitt: Let
me answer that in probably a more generic IT way first of all.
I think the older software gets, no matter what your contract,
directly contracted, individually contracted, changes to those
applications or that hardware is always more expensive. That is
not a contractual issue. That is whether you own the IT directly
or you own it through an outsource arrangement. Because as it
gets older it gets more complicated to manage, the technology
gets older or, of course, you have made so many additions to it
that to go back and do testing of it, to make sure it is accurate,
becomes more complex. I think the life cycle of IT, hardware and
software, as it gets older it all gets expensive.
Q356 Mr Umunna:
Then why enter into such long-term contracts, particularly given
that as a department you are susceptible to change with electoral
cycles? I would rather it did not change so often in some cases,
but the fact is those are the boundaries within which you are
operating, and whenever a new Government enters, no doubt regardless
of what party persuasion they are, they are going to cause you
a headache because somebody like Mr Gauke will come to you and
say, "Oh, I want all these changes made." Therefore
why enter into such long-term contracts when you know that you
are probably going to have to make a lot of changes and towards
the end of these contracts, and given what you say about software,
it is quite expensive later on.
Stephen Banyard:
We have a very complex IT estate, which runs a very large number
of systems so, in a sense, to be able to accommodate new Governments
with new ideas, you need a continuity of experience to know what
the impact is on the systems you have. My experience as a business
manager in HMRC, watching contracts change, as it did from EDS
to Aspire, is that however carefully you try and manage that change
there is a discontinuity at that point of experience. You do not
want to have those breaks any more often than—
Q357 Mr Umunna:
In a way that is an argument for never changing your contractor.
Stephen Banyard:
No, it is not an argument for never changing. It is an argument
for doing it sparingly.
Phil Pavitt: Let
me give you some reassurance around the contract itself to deal
with the specifics. Longevity of contract is always open to challenge
in terms of its value for money, and what we have introduced in
the last two negotiations with Aspire is two important elements.
First of all we have asked them within the costs we are already
paying to renew the hardware and the core applications in the
remaining period, which is 2017, of the contract for no additional
costs, so we are not caught out by your very question, which is
as stuff gets old, it gets more complex to manage and renew and
change.
The second thing is we have a new process, which
we call "costs not to exceed", and basically for every
change that we make on every new addition we make, we have to
retire or remove costs from applications of hardware that are
already in there. We are not untypical of many Government departments
that often stuff just stays in the estate because the decommissioning
cost can be quite high. We have asked Aspire to manage and keep
those costs and now we are, through decommissioning, reducing
our overall burden, so we have not seen that constant spiral up
that we may have seen over the last few years.
Q358 Mr Umunna:
Do you find that because of the costs involved in making changes
under the contract, under Aspire, you, if you like, hesitate and
sometimes decide not to proceed with the implementation of updated
and new technologies?
Phil Pavitt: Sometimes
understanding the cost is where outsourcing can be very powerful,
because sometimes if it is not outsourced the costs are almost
not visible to the person commissioning that change. Understanding
the precise cost does often ask people to, I guess, take a small
check and just make sure they are getting value for money. That
is never a bad thing. Does it prevent us doing stuff we have to
do? Absolutely not. That is why we have good commercial negotiation
and get the right answer.
The change that has been made recently, between now
and the end of the contract, will save HMRC over £1 billion
from what we intended to pay two years ago. It is a real tangible
effect of making sure. There is nothing wrong with understanding
the full cost before you launch in. Those companies that have
not outsourced—and I come from the private sector, as you
know—sometimes when it is in-source, you go ahead and the
costs are kind of lost somewhere in the payroll side or internal
costs. We do not get the true cost and therefore perhaps you do
go ahead with things that perhaps in the end, business case wise,
do not cost in. I think you use it positively as well as make
sure it does not stop you doing essential stuff.
Q359 Chair: You
may have technically answered this, but say I was another computer
company and wanted to bid, how do you know I won't come in with
a better offer? How can you convince me that this is not—it
started with £2.5 billion or something in 2004, was it?
Phil Pavitt: The
actual original contract was just under £4 billion.
Q360 Chair: It
went up to £8.5 billion. What does this give Aspire now as
the third phase? How much is it, this third phase?
Phil Pavitt: Basically,
Aspire is a collection of organisations and we give them annual
figures around £700 million, depending on the size of the
projects. That then splits across organisations in it. So if you
are asking about the Capgemini side, or the Fujitsu side, each
of them get an element of it. Is that your question?
Q361 Chair: I
might ask you to write to us with this because the Minister is
here for the next session, but of the £8.5 billion how much
did Aspire get?
Phil Pavitt: The
whole contract goes to Aspire.
Q362 Chair: That
is what I am saying. Does the £8.5 billion go to Aspire?
Phil Pavitt: It
goes to the companies that make up Aspire, yes.
Q363 Chair: I
am asking what is the total amount of money that goes to the third
phase, this recently negotiated contract?
Phil Pavitt: The
£8.5 billion, which is the whole period, we have taken £1
billion off that, so it is the balance between now and 2017. It
is easier if I write it down and send it to you, so you can see
the breakdown.
Q364 Chair: I
hear that is £8.5 billion but when this is finished how much
will have been passed to Aspire in money terms? What is this latest
extension relating to real time information giving the contractor?
Why is it so difficult to tell me that?
Phil Pavitt: But
there has been no contract extension. The last contract extension
was the 2007 negotiation.
Q365 Chair: You
are just using words here. They have, because you have extended
their contract, this big job that you have just received £100
million from the Treasury; how much of that is going to go to
Aspire? That is what I am asking.
Phil Pavitt: Right,
okay.
Stephen Banyard:
We are still in contractual negotiations with that, but in a broad
sense the IT part of that would be about 70%.
Chair: How much?
Stephen Banyard:
About 70%.
Chair: £70 million.
Stephen Banyard:
That order of figure.
Q366 Chair: What
is the figure? Just finish off the question for me, which was
how can you persuade the Committee that you could not have had
someone else to come in to even undercut, because the basis of
them getting the privileged position at the moment is they received
it so many years ago at a low price, and it has been well worthwhile
to put that low price in first, hasn't it? So with this big contract
coming through you would think the market would be fighting to
come in.
Phil Pavitt: I
think there are a couple of answers to that. The first thing is
whether those organisations who would like to undercut or be part
of any bid for work for HMRC have the skills and the track record
to do the work. That is the first point. There are 204 organisations
in the Aspire organisation. We call it an ecosystem, the supply
side of it, which covers virtually all the worldwide known application
hardware organisations. Any company can join that ecosystem, there
is a way of getting into it, but many of the people in that group
who we don't do business with are there in case they have the
skill set we need. So other people can join it.
Organisations come to us direct and say, "Do
you know what, we are not in the ecosystem, we are great at doing
this and we have a mechanism for handling that." They are
able to that, it is very open. We ask them to join the ecosystem
so they are part of that Aspire construction that you referred
to.
Stephen Banyard:
We also have rigorous negotiations and we benchmark the costs
against other suppliers.
Chair: We keep hearing,
Mr Banyard, about vigorous negotiations on all things like Vodafone
contracts and other people. It is a phrase bandied about with
HMRC apparently. So there you are. Come on, we will finish with
you because we have the Minister standing. Thank you very much,
gentlemen.
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