HMRC in pay 'crisis', admits perm sec

Written by Beckie Smith on 23 October 2019 in News

Interim chief says reform is the only way to fix pay system's structural problems

Photo: Parliament TV

Jim Harra, the newly-installed interim permanent secretary at HM Revenue and Customs, has revealed plans to overhaul pay in his department, which he said has reached crisis point.

Harra said the tax agency had appealed to the Treasury and the Cabinet Office for more funding to reform its pay system, given that employees had gone “many years” without a real-terms pay rise.

Unions slammed the department for offering staff a “derisory” 2% average pay rise in August. The award, for the 2019-20 financial year, saw staff wages rise by between 1.86% and 2.08%. The most recent cross-government pay settlement allowed for a increase of up to 2% of departmental pay bills, which departments could divide between staff as they saw fit.


The department has submitted a business case into the Treasury and the Cabinet Office for significant pay reform that would enable HMRC to “attract and retain the right skills and also make sure that our people are engaged”, Harra told the Treasury Select Committee yesterday.

“The only way we can fix... the structural problems we have in our pay system is to implement pay reform and we are committed to that,” he added.

He said the reform would aim to address “three key issues with our pay system which I would regard as a crisis, really”.

The first issue is that HMRC staff had not have real-terms pay increases for many years, Harra said. “In fact, when you take pension and national insurance increases into account have had cuts,” he added.

The second is what he described as an “inbuilt unfairness” in the pay system that means two people doing the same job in the same office could be paid different rates, because people cannot progress up pay scales.

And the third main issue is that stagnating wages are set to push some of the department’s employees at administrative grade below the statutory minimum wage – also called the national living wage – next year. “I will have to increasingly have to put my pay flexibility into meeting that statutory obligation to pay the national living wage, which is not a position as an employer that I want to be in at all,” Harra said.

Harra was responding to MPs’ questions about widespread dissatisfaction in the department about pay. In last year’s Civil Service People Survey, HMRC had the lowest engagement score of any major department, and just 21% of respondents from the agency believed their pay adequately reflected their performance.

The perm sec told MPs that staff were “very, very dissatisfied with their pay and they’ve left us with no doubt on that”.

He said the tax agency was also looking at how it could improve working conditions and use its estate more efficiently to save money that could be recycled into pay rises.

“We also have to bear in mind that it’s about 15 years since we modernised the conditions of our workforce, in terms of the ways that they work. So I think there is a case for, if we can get our business case signed off, opening up both the pay and the terms and conditions of our people to give them maximum flexibility to get pay rises,” he said.

Reforming HMRC's culture

The evidence session also shed some light on how the agency is responding to the findings of a major review earlier year that revealed widespread bullying and abuse in the organisation. The review, by former John Lewis personnel director Laura Whyte, found that “swearing, breaching confidentiality [and] mocking colleagues, seemed to be unremarkable” in the workplace.

Appearing alongside Harra, Penny Ciniewicz, director general for customer compliance, said the department was focusing on two areas: behavioural standards, and policies and processes.

She said HMRC was in the process of developing a new set of standards setting out how staff should behave, in light of Whyte’s recommendation that the department ensure there is a “clear, shared understanding of behavioural standards in the organisation”. She said around 17,000 HMRC employees had given feedback in a major exercise to determine what those standards should be.

The department is also considering how it can improve the policies and processes to raise and respond to concerns or complaints about behaviour.

The department has set up a director-level “complaints insight board” to examine the evidence on complaints and how best to resolve them, said Ruth Stanier, director general for customer strategy and tax design.

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Beckie Smith
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Beckie Smith is a reporter for CSW who tweets @Beckie__Smith.

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Submitted on 23 October, 2019 - 14:02
I was encouraged that Mr Harra has identified the key issues of years of real term pay cuts, the lack of progression and the appallingly low pay of those at the bottom who keep getting uplifted by minimum wage. So far so good until he said about: "opening up both the pay and the terms and conditions of our people to give them maximum flexibility to get pay rises". This is where the slight of hand comes in and pay rises will be linked to accepting worse T&C. This is not acceptable


Submitted on 23 October, 2019 - 14:14
The article implies that the Complaints Insight Board (CIB) will look at insight from our staff. My understanding is that the CIB will look at external complaints from our customers. Not sure how this links to improving our culture?


Submitted on 25 October, 2019 - 14:12
There is genuine anger in HMRC at the spinning of this subject. Exchanging Terms & Conditions is not a pay increase, it is a swap. HMRC staff have had a (real terms) 20-25% pay cut in the last 9 years whilst producing record breaking results. It is bad enough the offices are being reduced down from 171 to 12 across the UK, leaving thousands of incredibly experienced staff out of work, but the insistence that staff need to give up T&Cs as a condition to get closer to the 'going rate' is an insult.


Submitted on 21 November, 2019 - 00:01
The swap of a pay increase for Victorian working terms and condition has always been in the planning. (Austerity)The regional centre restructure is nothing more than a form of constructive dismissal for the long serving staff of HMRC. Mr Harra is trying to make out he is the saviour of HMRC workers when he is part of a cult that is using bullying to force good honest employees out of the door. We have what we call a departure lounge at the North East office where people are being forced from skilled office tasks to contact centre work with 1 week of e-learning training then told to wing it on the phones. People leaving increased sickness due to stress. All part of the plan isn't it Mr Harra! You should all be ashamed of yourselves

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