Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents

Examination of Witnesses (Questions 260 - 279)



  Q260  Nick Ainger: Coming back to the point I was making and that you seemed to be agreeing with me about the problems of your management, in that same period only seven posts in the senior Civil Service category were removed. I do not know what has happened before that, but we have seen literally tens of thousands of people in the past four or five years lose their jobs in HMRC. I just wondered how many of these, quite frankly, according to this survey and your admission, very poor management have actually lost their jobs or had their posts removed, combined, altered in some way.

  Ms Strathie: There are several points in that. First, the Senior Civil Service in HMRC, which is the largest in the Civil Service, has a very different shape to the Senior Civil Service in most departments, even DWP, my previous department—that is the only other big comparator in terms of a big deliverer—and that is because a very large chunk of ours are senior tax professionals who are in that category, who do not have large commands at all. Most of our management and leadership is actually in the two feeder grades below the SCS, what we would traditionally know as grade six and grade seven, but there are obviously a number of SCS. I would be very happy to provide the figures on what the pattern has been on the three different levels within the SCS and over the period of time, but I would also say that most of the modernisation has eradicated lower level work. The leaning and eradication of waste in process, the move for customers who want to serve themselves online or through telephony, the way that we do the job, means that huge numbers of lower level jobs disappear, and that, as I have said, is the current challenge for the department. It has been the challenge for a long time and it will continue to be a challenge for us.

  Q261  Nick Ainger: We have heard criticism in the past that the number of business sectors which exist in HMRC actually leads to a top-heavy management structure. Have you reviewed that? Are there 37, something like that, separate business sectors?

  Ms Strathie: The original creation of the department had 36 different business units. The organisation was reshaped into lines of business (personal tax, business tax, benefits and credits and compliance and enforcement) in February 2008, I believe, and since I arrived last November, along with other changes, we have been building the new Executive Committee and the new Board and we have been developing a unified approach to HMRC in terms of our strategy and then what that means for the organisation design, the management structures, and so on, that we need for that. So the 36 business units would not be recognised in quite the same way as they were then and we will all be subject to shaping ourselves fit for the future.

  Q262  Nick Ainger: Will that lead to savings in management?

  Ms Strathie: The efficiency challenge we face means that we have to look at every cost burner in the organisation, and good organisation design is always a central plank in any efficiency programme.

  Q263  Nick Ainger: The year 2007-08, the year before (and admittedly you were not there then) saw the biggest reduction, I think, year-on-year of staff. It also coincided with a 38% increase in overtime. Is that poor planning? In other words, you were making too many people redundant and you ended up having to pay some substantial amounts of overtime.

  Ms Strathie: Overtime is something I would have looked very hard at myself, because it is always an indicator. I personally believe that we should manage the business in a way that we only use overtime on two occasions: one where we have "out of hours" type work, of course, very much in the Customs space and some others, and in the enforcement and compliance space we need that—we have to do the work when the work needs to be done—and the other is when we have large peaks of work to be done, like when you are preparing to land a big programme. You are not going to take on an army of permanent staff and the cost of training all those goes up, but you will ask for staff to voluntarily work additional hours for that period. I am quite sure Simon has a view too on how we are managing the whole of those finances.

  Chairman: We are running into our last 15 minutes, so we have got to keep the answers as brief as we can.

  Q264  Nick Ainger: Can I move on to a different issue, and that is litigation and the policy that is followed by HMRC in terms of bankruptcy petitions? Have you any idea—I cannot find any numbers in the annual report—of the number of bankruptcy petitions that you have sought against businesses? The reason I ask the question is that I have had a number of companies in my constituency come to me, basically, extremely concerned at the attitude that is being followed by HMRC, in that they are following a rigid structure rather than taking each case on its merits. For example, if an IVA has failed, then HMRC will not consider a second IVA, despite the viability of the company and, as a result of that, people are being pursued through the courts. Could you, first of all, give the committee numbers (previous years and current) of the number of bankruptcies sought, and, secondly, whether you are keeping under review the policies which are being followed which seem to me to be too rigid and may well be putting viable companies actually into bankruptcy, resulting in further unemployment in the recession?

  Ms Strathie: Firstly, I believe we have had a PQ and answered on this, so I shall take it away and confirm. I go back to our business payment support service. We are not a preferred creditor. Insolvency produces a very poor return for the Exchequer. We have worked very, very hard with companies, if we believe they are otherwise viable, to avoid that—I am very clear—but in terms of numbers we will take that away.[10]

  Q265  Ms Keeble: According to this survey, you have only 12% of people who think that they are energised to go the extra mile and 71% who intend to still be working for you in 12 months.

  Ms Strathie: I know.

  Q266  Ms Keeble: That means you have a poorly motivated workforce but one that intends to stay with you, and that is a big challenge given what you have to do. How do you intend to energise them?

  Ms Strathie: We have done a lot of work. In fact, one of my members of the Executive Committee on our General Council is leading this, with the rest of the Executive Committee, in having champions in place, following through with conversations with our people, and we have the new survey and the amount we are putting into it, but I do feel very strongly. I have never seen a set of results quite this shape in my very long career where we have twice as many people who would want to be with us, in fact three times as many people who want to be with us and stay in the organisation, but are not proud to work there and would not recommend to it anybody else. That in itself tells a story, and I do not think it is just the economic conditions that prevail that make them want to stay. I think it tells me that people do want to stay but they want HMRC to be different.

  Q267  Mr Breed: In my experience, low morale often goes together with high sickness.

  Ms Strathie: Yes.

  Q268  Mr Breed: That seems to be the case in yours, so what are you going to do about it?

  Ms Strathie: Our current attendance figures are above ten days—that is global—in terms of average working days lost per person. That is about 8,000 days per year.

  Q269  Mr Breed: What are you going to do?

  Ms Strathie: We are doing quite a lot of things, and in many pockets of the business we have significantly reduced the numbers. We have a number of strands of work but it starts with best practice and making sure it is applied. All of our policies in this area are as good as anybody else's, but it is the quality of the intervention. making sure that everybody has a back-to-work interview when they come back and that that back-to-work interview is very clear about what the impact of their absence was and what is expected. We have recently piloted and are now introducing nursing support, where people need to report in.

  Q270  Mr Breed: When you come back next year, what do you think the average absence will be?

  Ms Strathie: I think, if we look right across Whitehall, bearing in mind we now do all measure this the same way—we do not measure it the same as the private sector; we are pretty tough on ourselves; we do not discount anything—the target that we are working towards is eight days. Do I think that that is good enough? No, I do not, but it will be a struggle to get there.

  Q271  Mr Breed: Eight days in a year's time?

  Ms Strathie: Yes.

  Q272  Mr Breed: You acknowledged in your account a serious weakness in the management of health and safety. Why is it, briefly, and to what extent is health and safety a matter for your PFI contractor, Mapeley, to address?

  Ms Strathie: I think, with a workforce the size I have and an estate network the size I have, health and safety has just got to be up there as a priority, and we believe, for an organisation going through the amount of change we are, especially the change to our network and estates, we need to be clear that all of our managers are equipped to discharge their duty of care.

  Q273  Mr Breed: Who is the serious weakness: HMRC or Mapeley?

  Ms Strathie: I do not think that I can say it falls neatly, bearing in mind this a PFI and we are talking about what happens inside the organisation as well as the buildings. It is a shared responsibility, but, ultimately, we are the employer. Every manager in every site carries that duty of care.

  Q274  John Thurso: Can I ask you about your remuneration policy, first, on the non-executive directors? You seem to have two bands the 30/35 and another band at 20/25. Is it an accident that all the women are on the lower band?

  Ms Strathie: I suppose I prefer to celebrate the fact that there are women there. I think the figures that we are referring to are probably the change-over in terms of those who came in part way through the year and left and those who were appointed in January. I can say that all of my non-execs are on the same,[11] those who were all confirmed in January after we went through an open process. So that is six of them, plus the Chair.

  Q275  John Thurso: So if I look at his table for 2009-10, this time next year, I will see that they are all on the same: all the non-execs, bar the chairman, are on the same.

  Ms Strathie: Yes.

  Q276  John Thurso: Turning to the executive remuneration, why is the chief financial officer on 15K more than the chief executive officer?

  Ms Strathie: Why is that! Simon?

  Mr Bowles: I guess I was recruited from the private sector and I assume that the remuneration was targeted to reflect a private sector salary.

  Q277  John Thurso: Just as a matter of interest, you have got half the remuneration reported in the remuneration report but the table on bonuses is actually in the other document. Would it not be helpful, in one of these documents, to have a complete remuneration report, as you might find in a plc set of accounts?

  Ms Strathie: Yes.

  Q278  John Thurso: Would it not also be helpful, instead of having lots of funny little 5K bands with any one person, to actually just make a straight statement as to what is earned and each component of remuneration? If you are going down the plc route, why do you not just follow the model code?

  Ms Strathie: I take your point about transparency and making it very clear. I have covered this in several departments and over several years, and I would prefer just a stark statement of exactly what everybody gets, but I do know of colleagues in other departments who were targeted because they did not get a performance bonus. Therefore, they are identified and targeted as that somehow makes you a poor performer when, actually, we did not have any bonuses this year, and we tried very much to do it in line with the rest of Whitehall in how we protected some people from being identified or attacked wrongly in that way.

  Q279  John Thurso: In the table on bonuses, Steve Lammy is 30 to 35; everybody else is either five to ten or ten to 15. Was he spectacularly better than anybody else or were the rest spectacularly worse than he was?

  Ms Strathie: I think it is fair to say that there are a number of different contracts and remuneration packages in play, particularly if you were on a fixed-term contract with a particular set of objectives and a reward system that went around that, rather than if, like me, you were a permanent civil servant who accepted a salary. So we are where we are with the contracts that people have and I think it is important in any of these to say that contracts will be shaped, in any case, without talking about anybody personally as "eligible for a bonus up to, or a non-consolidated award up to", and, as you will see next year, they are very much reduced.

10   Ev 96 Back

11   Note by witness: The amounts reported reflect the various periods of appointment during the year. Two of our Non-Executive Directors receive an additional payment for chairing committees.  Back

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