Examination of Witnesses (Questions 260
- 279)
WEDNESDAY 28 OCTOBER 2009
MS LESLEY
STRATHIE, MR
SIMON BOWLES
AND MR
RICHARD SUMMERSGILL
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.
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