By Helen Mooney
3 December 2009
Revenue and Customs has wasted
more than £300m on a private sector contract to run two-thirds of its estate, according to a damning report by the National Audit Office.
In 2001, R&C transferred the ownership and leases of 591 properties, around 60%
of its estate, to private contractor Mapeley in a bid to reduce running costs and save up to £1.2bn.
However, an NAO report published on December 3 found that R&C failed to ensure value for money on the contract because it had no long-term plan and subsequently failed to reap all the savings available.
The report said the department had not ‘recognised the contract as a major strategic asset nor committed appropriate commercial skills to managing it. As a result, the total possible savings available now amount to £900m.
‘To date, the contract has cost £312m more than originally forecast, as a result of fewer instances than forecast of vacating buildings, unrecoverable VAT payments, and changes in requirements.’
According to the report, although R&C had now drawn up a plan to ‘vacate a significant number of its buildings by 2011’, this programme was likely to have a detrimental financial effect on Mapeley, with which it has not yet agreed a way forward.
It warns that if Mapeley were to default on the contract, R&C could incur significant one-off and ongoing costs.
Amyas Morse, head of the National Audit Office, said: ‘This major contract has been significantly affected, for the contractor Mapeley in particular, by the current economic climate.
‘Mapeley benefited when the property market was expanding but the economic downturn has made the contract more onerous. Revenue & Customs must take a significantly more astute commercial approach if it is to deliver value for money for the taxpayer.’
3 December 2009
Revenue and Customs has wasted
more than £300m on a private sector contract to run two-thirds of its estate, according to a damning report by the National Audit Office.
In 2001, R&C transferred the ownership and leases of 591 properties, around 60%
of its estate, to private contractor Mapeley in a bid to reduce running costs and save up to £1.2bn.
However, an NAO report published on December 3 found that R&C failed to ensure value for money on the contract because it had no long-term plan and subsequently failed to reap all the savings available.
The report said the department had not ‘recognised the contract as a major strategic asset nor committed appropriate commercial skills to managing it. As a result, the total possible savings available now amount to £900m.
‘To date, the contract has cost £312m more than originally forecast, as a result of fewer instances than forecast of vacating buildings, unrecoverable VAT payments, and changes in requirements.’
According to the report, although R&C had now drawn up a plan to ‘vacate a significant number of its buildings by 2011’, this programme was likely to have a detrimental financial effect on Mapeley, with which it has not yet agreed a way forward.
It warns that if Mapeley were to default on the contract, R&C could incur significant one-off and ongoing costs.
Amyas Morse, head of the National Audit Office, said: ‘This major contract has been significantly affected, for the contractor Mapeley in particular, by the current economic climate.
‘Mapeley benefited when the property market was expanding but the economic downturn has made the contract more onerous. Revenue & Customs must take a significantly more astute commercial approach if it is to deliver value for money for the taxpayer.’
