Q71 Jim Sheridan: There has been a high turnover of staff. Could you explain the reason for that?
Ms Ghosh: Within the area covered by the contract?
Q72 Jim Sheridan: Yes.
Ms Ghosh: We would expect to have seen a significant turnover because of the different kinds of skill sets that you need in carrying out a procurement process, as opposed to delivering, managing and running a contract. We had always anticipated that there would be a reasonable staff turnover following the delivery of the contract. We did not recruit in particular Siobhán who arrived in April this year soon enough. Nonetheless, I should emphasise we have a highly respected contractual procurement group within the two departments -and there there has been considerable stability of personnel -who have been consistently offering very high quality, professional advice on contract management. We would have expected some turnover because it was a different set of skills. With hindsight, we were probably a bit slow in bringing in Siobhán but I brought her in under my leadership earlier this year. Meanwhile, we did have good in-house procurement advisers working with us.
Q73 Mr Steinberg: Mr Varney, you remind me of all chief accounting officers. You are desperate for praise. You made a comment about it being a good Report and you will learn as you come here over the next two or three years, I would suspect, that you will not get any praise whatsoever because it means that you are doing your job properly when you are being praised and that is what we would expect. It is the cock ups that we look at and you are responsible. Have you met Sir Nick recently?
Mr Varney: Not very recently. I saw him about a couple of months ago.
Q74 Mr Steinberg: Did he say he had dropped you in the mire?
Mr Varney: He was not as precise as that. I thought I read the other day that you were saying that the Committee had a very positive relationship with most of the people who came in front of it.
Q75 Mr Steinberg: We do. The department, I am told, expects to reduce the costs of running this estate by something like £344 million over the contract period of 20 years. Is that right?
Mr Varney: Yes, that was the public sector comparator.
Q76 Mr Steinberg: I certainly would never get a job at the Inland Revenue but my simple arithmetic says that is something like £17 million a year savings? Is it really worth it?
Mr Varney: We free up in total £220 million up front. We thought and we still think that on the back of the contract we will be able to better procure services because we will be able to do it on a consistent basis. For example, utilities. That is why we see the value being greater than is in the model. The comparator put up by the NAO envisages that 40% of the estate will be reduced. With the pressures that are on both in terms of efficiency on the one side -
Q77 Mr Steinberg: It is a yes, is it?
Mr Varney: -and technical change. I think it is inconceivable that in 20 years' time Revenue and Customs will operate the way they operate today, which is with a lot of paper based systems.
Q78 Mr Steinberg: I will take that as a yes. How much have you saved up to now?
Mr Varney: We can identify the values that we have saved in terms of the utilities fairly easily. We can include the £220 million paid up front. It is quite difficult because of the number of decisions to go back and see what you would have done had you not had this contract.
Q79 Mr Steinberg: How much have you saved?
Mr Varney: It is very difficult to get to an answer. What we have done is -
Q80 Mr Steinberg: Surely you must know. If you are going to know whether the contract is successful or not, you have to know whether you have saved any money or not. You cannot wait 20 years to see whether you have saved the £344 million we are told you are going to. You must have some idea that you are saving money, or are you losing money at the moment?
Mr Varney: No. What you try and do in a situation like this is you try and work out what the alternative is at the point you make the decision. That was on the basis of the public sector comparator which is in this Report. Because of new tax credits and law enforcement work, we have more office space now than we had when we signed the contract. If I want to give you a saving, I have to go back and recreate the public sector comparator and then do a comparison.