Q31 Jon Trickett: I am asking you not whether you used the best of your ability but whether or not you protected the public sector from the risks which were inherent in externalising the contract. It is a simple question.
Mr Varney: I think that is what we tried to do.
Q32 Jon Trickett: Did you achieve it?
Mr Varney: I think we did because what we have done and what this paragraph talks about is taking a public sector comparison and, £101 million is the difference between the mean cost and the minimum likely cost, so there was a range of cost outcomes. What it says is it took the mean cost as the comparator and in other words added back the £101 million.
Q33 Jon Trickett: I am not sure you are addressing the point I am making. I want to move on to the questions which were tabled by the Member for Llanelli, responded to by Dawn Primarolo, which I think you are probably aware of. The contract was supposed to be running at £170 million a year, was it not?
Mr Varney: No.
Q34 Jon Trickett: The document here seems to say that.
Mr Varney: No, that is not what it says.
Q35 Jon Trickett: The facts are here, are they not: £234 million, £305 million and then the £311 million? They are the three sets of annual costs. I do not have the paragraph in front of me but the document elsewhere talks about £170 million a year. Why am I misunderstanding what the document says?
Mr Varney: Members can go to point four, paragraph 3(b)(iii), which is the £170 million. The £170 million comes from the cost of the total contract, which is estimated at £3.4 billion, divided by 20 which is £170 million. That number is a net number because it includes the £220 million we were paid up front. If you add that back, you get to £3.6 billion, which is about £180 million a year. That is the result of a model which assumes we will reduce our estate over 20 years by 40%. It is a model which gives you an average. It is not the price we will pay each and every year. We have audited what we paid to Mapeley. We are paying them in accordance with the contract. We have not bailed them out. We are paying for costs including utility costs, pass through costs and various other elements which we wanted to procure from them when it is value for money.
Q36 Jon Trickett: Given the fact that you have agreed this Report yourself personally, do you feel that that paragraph which you have just referred to gives an accurate picture of what is happening, given the fact that we are running in the last two years at over £300 million a year? Can you give us an estimate as to what the total value of the contract will be then?
Mr Varney: No, I cannot. We have obviously worried about how to do this and how to present this. When the Accounting Officers accepted this Report, it was accepted it on the basis that this was helpful information but it is not the basis of a comparison, year by year, of what is expected. In order to do that, we have to model two things which are unknown: the extent to which the estate is going to be reduced and passed back to Mapeley which is one of the flexibilities we have; and whether we procure through Mapeley services, building works or minor building works. Each time we procure through Mapeley anything that is of a service nature, there is a value for money test and that is why I cannot predict how much money, in the end, will go to Mapeley.
Q37 Jon Trickett: There is a prediction in this paper and it would be reasonable for a Member of this Committee to draw the conclusion that that was the likely sum of money which would be spent and that it would average out at £170 million, given that that is what is in the text. If you are saying that that is not the whole picture -it may be accurate in and of itself -are you able to provide us with a note telling us what your latest estimate of the annual costs is likely to be and what the aggregated costs at the end of the contract will have been?
Mr Varney: I can provide the Committee with a breakdown of what we have spent money on so far. I can then indicate the range of uncertainty that we will face as we make decisions going forward.1
Q38 Jon Trickett: I think the Report is inadequate to that extent, if that is the case. We have had a note from the PCS,2 one of the trade unions, that describes a number of matters which I do not have time to go into. One of the things that gives concern is the extent to which the management within the Civil Service no longer has control of what is happening inside the buildings. Are you aware of concerns in management at very senior level that some of the decision making procedures now are handled by Mapeley as to what goes on inside the buildings? Are you aware that there is frustration at senior level?
Mr Varney: Yes. I receive letters from time to time about the state of buildings and we take that up with Mapeley. I think that is a big issue for us but I do not think we should paint a picture that everything in the past was incredibly rosy and every office worked absolutely perfectly at all times.
Q39 Jon Trickett: I am asking about this contract. Are you aware, for example, that Mapeley have refused permission for staff to have third parties onto some of the buildings from time to time?
Mr Varney: That has not specifically been addressed to me in a letter.
Ms McHale: That is part of Mapeley's role as a landlord in this situation and on certain occasions they have provided permission for third parties to visit the sites.
Q40 Jon Trickett: When staff invite third parties into the building to discuss matters of relevance to the staff, perhaps staff welfare, are you aware that Mapeley are refusing permission for those third parties to come on site?
Mr Varney: I have not had a letter to that effect.
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