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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future