Inside HMRC’s coronavirus response: Jim Harra on how the furlough scheme was created in a month

In an exclusive interview, HMRC's chief executive reveals how the department set up some of the biggest schemes in government history in the middle of a global pandemic
HMRC's chief executive Jim Harra. Photo: HMRC

Friday 20 March 2020 will go down as the day that the work of the UK government changed utterly, perhaps forever. With coronavirus cases rising and the country on the verge of a nationwide lockdown, chancellor Rishi Sunak unveiled a series of massive support programmes to save the economy from total collapse. 

Most notable among these was the Coronavirus Job Retention Scheme, or CJRS, that allowed employers to furlough staff who could no longer do their jobs due to government action to stop the spread of the virus.

The retention scheme, as well as an expanded statutory sick pay entitlement that the chancellor had announced in his 11 March Budget, and the Self-Employment Income Support scheme that followed, represented a huge intervention in the economy. 

According to figures released in early July, the CJRS, which pays 80% of the wages of furloughed staff, supported 9.4m jobs across 1.1m employers, at a cost of £27.4bn. The Self-Employment Income Support Scheme, which provides 70% of self-employed people’s average monthly trading profits, has supported 2.7m people, at a cost of £7.7bn. 

These unprecedented interventions were also put in place at breakneck speed by HM Revenue and Customs, which developed whole new systems – including an online portal for applications – in a matter of weeks. The furlough scheme was up and running on 20 April, exactly a month after Sunak announced the extraordinary measures and a full 10 days sooner than expected. It was followed by the self-employment scheme and expanded sick pay entitlement, which went live on 13 May and 26 May respectively.  

The government's three major coronavirus support schemes. Pic: GOV.UK

Reflecting on the rollout of the programmes, HMRC permanent secretary Jim Harra is justifiably proud at the way his department managed to turn on a sixpence.

“We had to switch the tanker around in a different direction very, very quickly,” he tells CSW in an exclusive interview. “I’m very proud of what everybody achieved, both in developing the technology from our in-house team, and our suppliers, but also all the operational colleagues who got behind that to man the phone lines and the web chat, and to write guidance and train colleagues.”

The announcement of the retention schemes came just two weeks after Sunak’s 11 March budget. Although that budget had set out an initial £12bn economic package that was widely lauded at the time,  it quickly became apparent that the scale of the challenge would far outstrip this.

Harra, who has been HMRC chief since October, says it was in the build-up to that budget statement the scale of the task facing government, and HMRC specifically, became apparent.

“Statutory sick pay policy really belongs to the Department for Work and Pensions, but when it was announced that small- and medium-sized employers would get reimbursed for the cost of statutory sick pay paid to people affected by Covid-19, we were identified as the department best placed to handle those refunds,” he says. “So we were engaged in the run up to the budget to make sure that we could do that.”

HMRC’s policy partnership with the Treasury means it was able to bring “both our insight on customers but also our insight on operational implementation” as the various support schemes were planned, Harra says.

This approach paid dividends. “One of the reasons why we've been able to implement them so fast is that implementation was built into the design of the policy – and for these schemes to achieve their objectives, they had to be delivered fast, otherwise they wouldn't have worked.”

In fact, the development of these extraordinary policies during the most surreal and abnormal time of people’s working lives actually used a standard civil service approach, according to Harra. “This is [that] we engage early with the policy thinking, understand what the policy is intended to achieve, and feed in what are the most effective ways to deliver that. 

“What wasn't standard, obviously, was the pace at which it was all done and the fact that there really wasn't time to go out and consult widely which normally, with something of this scale, we'd have done.” 

There were three factors HMRC had to balance in developing the schemes: to reach as many people as possible who would be eligible for the support, to get to them as quickly as possible, and to do so in a way which was reasonably secure and protected the public purse.

“And it's obviously a political decision about where you draw the balance between those three things,” Harra says. “So that's what we did – we advised ministers on what was possible, what their choices were and the different implications of the different choices. But we had to move very fast.”

At the same time, it was also difficult for HMRC to forecast what the demand for these schemes would be, and as a result, how many civil servants would be needed to run them.

Making policy forecasts is a matter for the Treasury, Harra points out, but the key thing for HMRC was “that we scaled our services, both the technology and our operational support, to cope”. 

In total, approximately 6,000 full-time equivalent hours were working on HMRC’s coronavirus response at the peak. 

"Such was the need to get the support out, we thought: we can't have a gradual release of this, we have to have a big bang"

Getting this right was particularly crucial with the Coronavirus Job Retention Scheme, which was opened to all employers on the same day, and there were 5,000 staff manning phone lines and webchat services to answer any questions and as many as 10,000 people trained to support the launch.

“Such was the need to get the support out, we thought: we can't have a gradual release of this, we have to have a big bang, so we scaled that service as big as we possibly could. And it withstood the hammering that it got [in terms of user demand] really well.”

For the self-employed scheme, HMRC had data indicating that around 3.5 million people could be eligible, and it invited them to apply over five days to manage the demand, which was “not so much on the IT system, but on the back office support”. 

Doing all this in normal times would be praiseworthy, but after factoring in the sudden switch by HMRC civil servants – along with their peers across the civil service – to home working, and often to increased parenting and caring responsibilities alongside this, the scale of the achievement becomes apparent.

“It really was a huge exercise,” Harra says.

This move was helped by the fact that all HMRC officials had been issued with Surface Pro laptops as part of the organisation’s Building Our Future programme to streamline the department's offices into 13 regional hubs. But there were still challenges – including making sure that HMRC’s systems could handle the increased numbers of people working remotely. 

“Pre Covid-19, on any given day, maybe 12% of our workforce would be working from home. Today, on any given day, I have a workforce of 64,000 and we've only got about 4,000 in the office,” Harra  – who is speaking to us in June  – tells CSW. “So we really had to expand our VPN [virtual private network] very, very quickly to cope with that. And within a week our technology team, together with external suppliers, had done that. And that was the thing that made the big change for us.”

Around 23,000 officials were offered help with equipment that they needed for home working, but when people suddenly had to balance work with things like homeschooling, the challenges officials faced couldn’t be met by new hardware and furniture alone.

Harra says the department is examining its home working policies to ensure “we are giving everybody the support they need to do their job effectively at home”. It is also looking to learn lessons for the longer term – in particular whether the organisation can now accommodate more flexible ways of working than it had previously built into its plans. 

The Job Retention Scheme became more flexible at the start of July, when the government allowed employers to bring furloughed staff back to work part-time. The government hopes to shift workers fully back into their jobs before the scheme ends at the end of October – efforts that were bolstered by Sunak’s 8 July announcement of a £1,000 bonus for employers who retain returning staff to the end of January. Harra requested a ministerial direction for that particular plan, writing that although there was a “sound policy rationale” for it, “the advice that we have both received highlights uncertainty around the value for money of this proposal”.

Overall, HMRC has earned a lot of praise both in government and outside for the way it has been able to implement the schemes at such pace. 

“One of the amazing things was how people normally slag HMRC off, but with Covid people have been saying ‘why doesn’t government get HMRC to build x or y’ when other bits of government have failed to deliver,” says one departmental official. “It’s been a gamechanger in terms of how we’re now viewed.”

Harra agrees. “Clearly what we've achieved has helped our reputation,” he acknowledges.

Two things were key to successful delivery, he suggests. One is the integration of implementation into the policy design, which he has mentioned earlier: “So getting the people with expertise about how you  put this thing in place working alongside the policymakers who are thinking about what sort of detailed rules and conditions they want to have. 

“The other thing was making it the department's number one operational priority. So we really swung our whole effort and attention onto getting these schemes over the line on time or early if at all possible. So it was both that working well together in integrated teams, and just sheer organisational focus.”

The challenge is, he says, to maintain this when HMRC’s work gets back to something approaching normal. 

“How do I bottle that when we go back to collecting people's contributions to pay for public service, rather than paying out support?” Harra asks. “If we can bottle that reputation for competence, but also that reputation for actually having a human face for dealing with our customers and making sure that people recognise that we understand that some people find it challenging to meet their obligations and that we're here to help them if they try.”

Among Harra’s reflections is that there will be a post mortem of where the tax system stood up to the Covid pressures, and where it didn’t. “I think one of the things that will come out of this pandemic is probably a focus on where the tax system was fit for purpose, in the way we administer it in the 21st century, and where was it not.”

A tax professional himself, Harra says “concentrating on what the big things are that could make a difference is something that I would like to do”. 

But he also took on a wider range of responsibilities when he became perm sec. He had “to think very carefully about how I stepped out of my previous role and stepped into being chief executive”, with a greater focus on communicating the organisation’s sense of purpose and values and vision. “I was really enjoying my first few months of doing that and I’m now enjoying trying to keep it going alongside leading through a crisis,” he says. 

He “didn't particularly want to be leading through a crisis” in his first few months in the post, but “those are the events that happen to you as a leader and that's when you've got to step up and do it”.

And the revenue and customs department as a whole did just that too, in a historic achievement that will likely feature prominently in the many as-yet-unwritten histories of 2020.

“The most rewarding thing for me through the pandemic has just been my pride in how we have delivered, on behalf of ministers, the support for those who desperately needed it, and how the people in HMRC have really risen to the challenge, some of them while dealing with quite difficult situations,” Harra says. 

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