Varney takes big pay cut for challenge of top Revenue job

David Varney, the chairman of mmO2, is taking a substantial pay cut to head the merged Inland Revenue and Customs & Excise departments.

David Varney, the chairman of mmO2, is taking a substantial pay cut to head the merged Inland Revenue and Customs & Excise departments.

Mr Varney, who was seen as a candidate for the top job at Marks & Spencer, will implement the Government's plan to merge the two bodies and to cut 14,000 jobs across the tax-collection services.

He will be paid between £130,000 and £150,000 ­ at the bottom end of the pay scale for a Whitehall permanent secretary ­ when he takes over as executive chairman on 1 September.

He is currently paid £350,000 for two and a half days a week at the mobile phone company mm02, from where he will stand down as chairman in July.

His decision effectively rules him out of the race to take over as chairman at M&S, the troubled retail giant.

The appointment is also being seen as a coup for the Treasury, which has persuaded an experienced private sector businessman to take a 60 per cent pay cut to take on one of the toughest challenges in Government.

The merger is part of a plan to cut 40,000 jobs and save £20bn by 2006 to allow more cash to be pumped into frontline services without raising taxes.

Gordon Brown, the Chancellor, told MPs yesterday: "His remit will include implementing staff reductions. Varney is an outstanding business leader with a first-rate record proven across the private sector."

The Public and Commercial Services Union, which represents almost 80,000 of the 100,000-strong combined workforce, gave his appointment and salary a lukewarm welcome. "I hope he's worth it," an official said.

A spokesman said the union, which is considering taking industrial action over job cuts at the Department for Work and Pensions, said it was seeking an early meeting with Mr Varney.

"As far as industrial action over the merger, we are not at that stage yet," he said. "We are opposed to job losses but if there are to be redundancies we would expect them to be voluntary and with full consultation with unions. We are keen to get the relationship off to a positive start."

Mr Varney will have to oversee 8,000 job cuts at Revenue, 3,000 at Customs and a further 3,000 as a result of the merger to save £200m a year in costs and streamline the administration of VAT and business taxes. He said yesterday: "This is one of the biggest delivery jobs in Government and I am very excited about the challenge of making the new department a success."

In a submission to the review of the departments headed by Gus O'Donnell, the permanent secretary of the Treasury, Mr Varney said the merger would be a "tremendous challenge".

"This includes the staff, who will have to balance the demands of the ongoing work with the uncertainty of change," he said. "It will be a challenge to keep a long-term focus on the effectiveness prizes and not fall prey to the temptation to substitute short-term cost reduction objectives."

Mr Varney, 58, has considerable experience in corporate restructuring. At British Gas he steered through the demerger of the exploration and production arm, which became BG Group, from the pipelines business. He was BG's chief executive from 1996 to 2000.

He has been chairman of mm02 since it was set up in May 2001 as part of the demerger of the mobile business from BT. Between 1968 and 1998 he worked for Shell, rising to director responsible for its European oil products business.

One current business associate said: "What attracted David to this job was that it was unique in Government while he had a track record in change management."

Start your day with The Independent, sign up for daily news emails
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas