MPs give merger cautious welcome
The merger of Customs & Excise with the Inland Revenue into a single tax collection agency should save money on administration, and be of benefit to the taxpayer, says a report published by the Treasury Committee. However, it recognises that some risks remain.
The Committee welcomed the decision to unite the departments, which it recommended back in 2000, but suggests a detailed analysis of expected costs and benefits should be carried out as soon as possible.
MPs also point out that significant risks are attached to a move of this size. They warn service may be affected during the upheaval, particularly when taking into account plans to reduce staff by 12,500.
It stressed that taxpayer confidentiality must also be upheld. The Committee supported plans to block Treasury officials and special advisers gaining access to individual tax records, and recommended this principle should be put into the Bill.
The Committee also noted that the new Executive Chairman, David Varney, reports to three different Treasury Ministers, an arrangement it describes as 'cumbersome' and which it recommends be reviewed.
Michael Fallon MP, Chairman of the Treasury Sub-committee which undertook the inquiry, today said: "The merger should provide benefits to both taxpayer and government. But tax receipts and the level of service to the public will be at risk as a result of the disruption and the decision to cut 12,500 jobs. Moving Revenue and Customs officials into the Treasury building also raises concerns about the confidentiality of tax records and we want this safeguarded in the Bill. We will keep a close eye on both these issues."
Information Technology
The IT implications of merging two departments who operate on different models and with different suppliers were also raised. Customs contracts with Fujitsu for infrastructure whilst outsourcing other work on a project basis or keeping it in house, while the Revenue act as an 'intelligent client' of a single strategic IT partner, bringing in co-partners as required. In January 2004, the Revenue signed the 'Aspire' contract with their new strategic partner Cap Gemini Ernst and Young, which will run from July 2004 to June 2014 (with the option to continue for a further eight years).
The Committee asked the new Executive Chairman, David Varney, about the proposals for merging the departments' IT systems. Mr Varney told the Committee: "First of all, we are trying to bring the various IT arrangements that we have with the Inland Revenue and Customs and Excise into some coherence.
"We have the Aspire contract in the Inland Revenue with Cap Gemini, and in Customs & Excise we have the deal with Fujitsu. So we are talking, and I am hopeful that by the end of this year we will start the process of bringing them together....We have 250 major IT systems, and we have 3,000 staff, as I said, working [in IT].
"It is a huge expenditure of money. We per year put out 170 million forms and we run 100 thousand desktops. So it is a big issue for us. I think what we are bringing in [in the recent recruitment of a Chief Information Officer] is expertise of somebody who has a track record of managing change in IT and delivering business benefits. We also have to get smarter at our pre-risking and big risk minimisation projects, talking through both the IT risk and the operation."
Asked when an integrated IT system was likely to be in place, Mr Varney said "it will take time, there is no getting away from that, and part of the modernisation of the PAYE system, for example, is critical to our achievement of the efficiency savings we have to make. So some of these projects are mission critical for both delivering cost and service objectives. I think we will bring what we want to bring because we bring the management potential and the discipline to the problem of investing in technology. What differentiates successful oil companies that use technology and those that are unsuccessful is essentially not the technology but the people and the attitudes."
The full report is available here