Since the merger of the old Inland Revenue and HM Customs & Excise in 2005 to form HMRC, headcount in the merged department has fallen steadily from circa 95,000¹ (FTE) to 58,883² in September 2015.

Of course, some reduction in headcount was inevitable, indeed desirable, if only from the synergies of merging the two former departments. What is concerning to most people with an interest in the management of the UK’s tax system is the fact that, ten years after the creation of HMRC in that merger, headcount is still on a downward trajectory. As I said above, the FTE headcount for September 2015 was 58,883 but in April 2011 it was 66,701. A fall of almost 12% in just under 4.5 years.

Falling headcount could, of course, be the result of increased efficiencies but we all know that isn’t true. The recent Public Accounts Committee (PAC) report into HMRC’s performance (aspects of which I blogged upon here) left us in no doubt at all as to their view of HMRC’s performance. Even allowing some margin for exaggeration by the PAC, HMRC’s performance generally is on the same downward slope as its headcount. Yes, that is my opinion but, from what I see and hear daily, it is an opinion shared by very many others who interact regularly with HRMC.

The issue isn’t really about absolute headcount, of course, it’s about the quality of those people and the way in which the resource is managed by those in leadership roles. Indeed, even though the total headcount is falling, HMRC continues to recruit, and not just in dribs and drabs, in July the department announced it would take on 3,000 new staff to help with its appalling record in answering phones. So headcount is falling despite the recruitment of significant numbers of new staff. That 12% fall since April 2011 is a net reduction, the actual number leaving is much greater. Unfortunately, this is not simply a numbers game, the problem for HMRC – and ultimately for all of us – is that a lot of those leaving will be experienced professionals and my worry is that that experience is not being replaced.

This morning, the Telegraph reports that HMRC is to announce the closure of a large number of its offices around the UK as it creates 13 new regional tax centres. Apparently, HMRC hopes to “minimise redundancies wherever possible” in this process – which could take up to ten years to implement – but I have no doubt at all that staff will leave as a result. Some of this will be through redundancy but some will be because staff may not want to relocate to new “regional” offices. This sounds like a major reorganisation exercise and it will need to be very well managed if it is to deliver real savings without damaging the effectiveness of HMRC. I’m not sure I am completely confident that the current leadership of HMRC is up to that challenge.

What’s more worrying, though, is that I don’t think HMRC staff will have confidence in their leadership either – the 2014 Staff Survey reports that only 19% feel change is well managed in HMRC.

 

  1. Taken from the NAO report The performance of HM Revenue & Customs 2012-13 at paragraph 1.13.
  2. HMRC Workforce Management Information for September 2015 published on Gov.uk.