What’s gone wrong at HMRC?

'Managerialism' and cosy deals for big business have sucked the life from Her Majesty's Revenue and Customs.

Jenny Manson
6 March 2015

HMRC (Britain's tax collecting agency) has been headline news recently, following its admission that it has prosecuted only one individual out of thousands reported to have undeclared Swiss bank accounts. Tory MP Richard Bacon told the Today programme last week that HMRC’s troubles come from the merger with Customs and Excise in 2005 and from excessively complex tax law. He blamed Labour governments. What he didn’t say was that the merger had cross-party support. Nor did he say that a complex tax code historically was intended to ensure fairness but that the recent huge expansion of tax legislation has been driven by government ministers’ obsession with tax reliefs for risky “entrepreneurial’ enterprises and the necessity for concomitant anti-avoidance rules that have become a playground for the tax-planners who promote these reliefs.

As I see it, HMRC has been emasculated by managerialism, a new style of punitive management, and the kid-glove treatment of big business. Politicians have very little understanding of the business world. Labour leaders are showing some recognition that business has to contribute to the greater good as evidence has grown that the trickle down of wealth didn’t happen, but this is politically dangerous for them. 

Then of course there are the cuts:  their worst impact has been on the services provided to ordinary taxpayers who face endless delays on undermanned helplines especially since the closure of the last tax enquiry offices in 2014. Talent has been lost from the specialist areas as pay levels have been frozen. Big money ‘customers’ however have their own service relationship managers and so have no problem contacting HMRC. 

Faced with a reducing budget and the leakage of high level tax expertise, tax staff have concentrated on the easier cases (as in the recent large-scale prosecution of plumbers, rather than bankers (see Private Eye no 1386 on “Plumb Tidings”).

But money is found for expensive consultant-led courses on “behaviours” and “customer relationships” while gone is the continuous training on tax law changes which once matched the equivalent professional development outside HMRC among lawyers, accountants and others who advise on tax matters.  

As I wrote on the dangers of managerialism in Public Service on the Brink (Imprint Academic Ltd, Exeter, 2012), reflecting on my time at HMRC:  

I know what my job is and I want to do it as well as I can. Indeed I would love my work if I could get one day's peace to get on with it. But I am beset at every turn by unintelligible, time wasting and fruitless management initiatives, constant change, ill-judged targets, wrong-headed "commercial" exemplars and continuous and misguided restructuring. I have to watch as, instead of my "customers" (actually patients, pupils, taxpayers) getting a better deal from me, the only beneficiaries seem to be those who can lobby for special treatment.

In the same book Rodric Braithwaite quotes fellow ambassador Ivor Roberts in his final despatch from Rome in 2004. Imposed on the Foreign Office by the Cabinet Office and the Treasury was a “change-management agenda.. written in Wall Street management speak, already ... discredited by the time it is introduced. Synergies, best practice, benchmarking... roll out, stakeholder.... fit for purpose, are all prime candidates for a game of bullshit bingo, a substitute for clarity and succinctness."

In conversation, no one has a good word for managerialism but it is rampant and only gets worse.  Lord Green (of HSBC fame) has just submitted a report for the Church of England, which according to Giles Frazer, advises clergymen to get an MBA! And last week the House of Lords EU Committee reported that the drainage of hard analysis from the Foreign office could explain how the UK took their eye off the significance of Russian resurgence. 

At HMRC nonsense initiatives and the punishing reaction to non-conformity (managers are effectively obliged to classify 10% staff as ‘failing’) drives out some of the most able staff. I know of a manager who left rather than impose programmes he did not believe in and another who resigned when forced to apply for his own job, redesigned without any substance. Promotion is based on self-aggrandisement (the so- called competence based assessment system) so talk the talk wins instead of impartial evidence of career to date. 

A contributor to ARC (the HMRC branch of a civil service union) writes in the current union journal:

“Ironically as I have progressed through the grades, departmental change has ensured that my autonomy has decreased... departmental focus on progress and ticking boxes leaves little time to actually lead... in the last three years I have felt more over-worked, more overpaid and less valued by my employer than any of the preceding 30 years.”


This article was first published in the Camden New Journal.

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