3.10 The Department and the Contributions Agency concluded that the Private Finance deal was worth signing notwithstanding its greater direct costs to the taxpayer because of its many advantages compared to remaining in existing, outdated accommodation. They noted that efficiency gains equivalent to only three per cent of annual running costs would offset the additional costs of the deal, and concluded that the new, modern accommodation would enable efficiency gains of at least this magnitude to be realised.
3.11 During the course of our examination, the Contributions Agency were able to identify the following factors that could potentially produce such savings. These savings apply principally to the business units that will occupy newly-built accommodation at Longbenton and Waterview Park:
a) Information Technology is a key driver in achieving operational efficiencies. The new accommodation provided by the Private Finance deal ought to allow the Department to provide, maintain and update an efficient Information Technology infrastructure. The existing accommodation is unsuitable for modern cabling.
b) Improved working practices such as shift-working, desk sharing, and open-plan working should enhance productivity. Such practices should enable closer teamwork and enhanced communication. These practices would be harder to introduce if the Department stayed in existing premises.
c) The improved working environment is expected to reduce the incidence of staff sickness, absenteeism, and low productivity. The new buildings are also much less likely than existing buildings to suffer from major defects, such as heating failure, that lead to staff being sent home.
d) Better location of business units, which are currently dispersed, hindering communication and co-ordination. The new accommodation will allow the Department to locate each business unit more coherently and logically, and should also permit easier reorganisation when necessary.
e) Reduced facilities costs: During our examination, the Contributions Agency estimated the likely savings on facilities costs from having a more compact and efficient estate. They estimated that these savings could amount to £16.9 million over the life of the deal, arising from reduced costs for mail services (£4.5 million), administrative functions (£0.8 million) and less travelling time between different sites on the estate (£11.6 million).