Q61 Dr Pugh: The contract is extremely odd to my way of thinking about it because it seems to me that you are committed to a process of building rationalisation regardless of any other corporate needs you may have. Just to test my understanding of it, do I conclude correctly if I think that if you go too fast in shedding buildings, there will be penalties attached, but if you go slowly, as you apparently have done according to the NAO, you will be castigated for making fewer savings?
Ms Strathie: I think I am well used to being in that "damned-if-you-do-and-damned-if-you-don't" situation because it is difficult to please everybody all of the time. The contract enables us to take different actions in coming out of properties according to whether they are core or otherwise. First I would say that after this contract was signed in 2001, you then had an expansion of business in the shape of tax credits in 2003. Whilst you had enabled a contract here which allows you to vacate the estate, you had lots of other changes which have happened. I am not driving the rationalisation of our estate simply from getting value from this contract. I need to reshape the business to match the risks that we face in tax collection.
Q62 Dr Pugh: If you had a business requirement which involved fewer savings on this contract you would be comfortable with that.
Ms Strathie: If I had a business requirement-
Q63 Dr Pugh: You needed more accommodation than you thought.
Ms Strathie: It would not change my decisions or the consultation exercise and the result about vacating the premises and ceasing business.
Q64 Dr Pugh: If you vacate at too rapid a rate, presumably Mapeley then invokes some penalty clauses to some effect, do they not?
Mr Bowles: Yes, there are costs involved if we go faster in using the vacation allowances.
Q65 Dr Pugh: You cannot go too fast and you cannot go too slowly without getting the wrath of the NAO. Following through on that, the Chief Secretary to the Treasury wrote to lots of Members of the House of Commons last week saying that 130 tax offices were scheduled to be closed in the financial year 2010-11. That is correct, is it not?
Ms Strathie: Yes.
Q66 Dr Pugh: In terms of those parameters, too fast or too slow, which side are you on?
Ms Strathie: The first thing to say is that we are exercising the contract; we are not exceeding that. It is important here to say that what I have written and announced is that we will cease business and the first people we had to tell that to were the individuals who are located in those offices who are employed by HMRC. The vacation notice and actual vacation is quite separate from ceasing business to allow the next stage.
Q67 Dr Pugh: Of those 130 properties, how many are leasehold, how many are freehold? It would be helpful if you could send us a note.2 Mr Friedlos, what is going to be the effect on Mapeley and their finances if 130 tax offices become surplus to requirements? You could propose in one case you get a huge penalty sum from HMRC. In the other case you might be landed with a lot of property you cannot sell. What has been the effect?
Mr Friedlos: The effect when a property becomes vacant is broadly that if it is a freehold property and it is vacant, we can sell it. If it is a leasehold property and it is vacant, our job is to re-let it.
Q68 Dr Pugh: Do you welcome the prospect of having a large tranche of freehold property, some of it quite unattractive, to have to sell in current market circumstances? Is it good for Mapeley?
Mr Friedlos: It is our business to deal with it; it is the contract we signed up to.
Q69 Dr Pugh: If 130 tax offices close on time will you receive any financial help from HMRC because of the contract?
Mr Friedlos: Those vacations will all be dealt with under the contract. We will not receive any money.
Q70 Dr Pugh: Will you get any money because of the 130 suddenly being put on the table that were not there before?
Mr Friedlos: It will be dealt with in accordance with the contract.
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