Labour calls in heavy hitters to advise on 'modernising' HMRC

Former HMRC perm sec Edward Troup is among expert panel that will also look at how to boost tax compliance
Shadow financial secretary James Murray will chair the panel. Photo: ZUMA Press, Inc./Alamy Stock Photo

A former permanent secretary is among a panel of experts Labour has appointed to advise on its efforts to “modernise” HM Revenue and Customs and improve tax compliance.

Sir Edward Troup, who was a special adviser to then-chancellor Ken Clarke in the 1990s and later spent 13 years as a civil servant at the Treasury and HMRC, will sit on the panel. He was HMRC executive chair and permanent secretary from 2016-2017. 

Troup will be joined by Labour MP and former Public Accounts Committee chair Dame Margaret Hodge; Bill Dodwell, former tax director of the Office for Tax Simplification; and Mike Bracken, former executive director of the UK Government Digital Service.

Chaired by shadow financial secretary James Murray, the panel will advise on Labour’s plans for the tax agency, including strategic and operational issues standing in the way of increasing tax compliance and any potential legislative changes to HMRC’s powers and penalties.

It will also look at plans to improve customer service, digitise more of its services and replace legacy IT systems.

The experts will also advise on the future of key programmes including the Single Customer Account and Making Tax Digital. Recently, MPs on PAC have been pushing HMRC for answers on how it will address flaws in the flagship MTD programme, which has suffered several cost and budget overruns.

'Big uncertainty' about return on investment in HMRC

The announcement comes after shadow chancellor Rachel Reeves said a Labour government would grow HMRC by 5,000 staff over the course of a parliament to enable a crackdown on tax avoidance.

The plans aim to raise £5bn a year by 2029-30, which would fund spending pledges on the NHS and school breakfast clubs.

But speaking to CSW's sister publication PoliticsHome, deputy director and head of tax at the Institute for Fiscal Studies Helen Miller warned that while it "makes sense" to invest money in HMRC to raise revenue from tax evasion, there was "big uncertainty about what the return on investment will be". 

"Nobody knows exactly the answer to that, because what you have to do is go and work out where this evasion is happening, how you can crack down on it," said Miller. 

"They're talking about training 5,000 new members of staff, who would need to be specialists in this kind of stuff. There probably is more revenue to be had, but I think there's a lot of uncertainty about whether for their £550m they would get £5bn.

"That doesn't mean you shouldn't do it, there's lots of things in life that are uncertain, but in terms of planning in the public finances, I think it's worth bearing in mind that they've got some uncertain sources of revenue that may underperform."

Miller also said while £5bn was "not a trivial" amount of money, and may have the ability to make a significant difference in terms of school breakfast clubs, when it comes to the overall fiscal picture for the UK "it's really quite small". 

Appearing on Sky News yesterday, Reeves was challenged on whether the £5bn would truly be a “transformational” figure, given that it is a “tiny fraction” of public spending, which stood at £1,189 billion in 2023-24.

She insisted that the investment would not be a “drop in the ocean”, saying £2bn would fund a reduction in NHS waiting lists by providing two million more appointments a year.

"I think that will make a big difference to the lives of hundreds of thousands of people across our country and that is the difference that a Labour government will bring," she said.

Commenting on the appointment of the expert panel, shadow financial secretary Murray said: “I am grateful to the panel for agreeing to support us with this incredibly important piece of work. I am looking forward to working with them over the coming months as we prepare Labour’s plans for government if we win the next general election.”

Panel member Mike Bracken, who founded the consultancy Public Digital after leaving government in 2015, said: “Better public services require an efficient, modern tax system. The opportunity to help improve tax collection is better for the country, and for the improved working of the state as a whole. 

“I’m delighted that with this announcement the Labour Party is showing that it is serious about implementing much-needed reform, ensuring HMRC is ready to grasp the opportunities of digitisation and the internet era. Working with this brilliant panel is a golden opportunity to develop policies which will make our tax system fairer, more effective, and easier for all of us to use.”

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