11 July 2003
It is hard not to feel sorry for Inland Revenue chair Sir Nick Montagu.
With Treasury permanent secretary Gus O'Donnell intent on subjecting the Inland Revenue and Customs & Excise to a major review of tax policy, Montagu could be forgiven for wondering where things went wrong.
Stung by mounting criticism over the past few years, he must view his forthcoming retirement with relief. However, his last few months look as if they will be far from an easy ride.
The Treasury insists that the review has not been prompted by cock-ups that have taken place in both departments, maintaining that 'the primary focus will be making public service delivery more effective and efficient'.
What is clear, though, is that ministers are averse to further embarrassment, so the review will look at several ways to improve the management of the Revenue and Customs & Excise.
O'Donnell is expected to consider a merger of the departments, which have many clients in common, as well as ways of making the administrative systems more coherent.
The review follows a series of high-profile debacles – in which the Revenue has come off worse. The problems included the bungled implementation of new tax credits and a failure to get to grips with the pensions arrears of 10 million people.
Both Montagu and Customs & Excise chair Sir Richard Broadbent also faced huge criticism over the Mapeley Steps fiasco, which involved the £220m sale and leaseback of 600 Inland Revenue and Customs & Excise properties under the Private Finance Initiative to an offshore company.
What is most embarrassing for the government is the imminent departure of Broadbent, who is to become a non-executive director of Trillium, a leading player in the kind of government outsourcing deal that Mapeley struck with Customs & Excise.
Staff in both departments are up in arms about the fact that Montagu and Broadbent are unlikely to face sanctions for what is considered poor management.
However, although members of the Public and Commercial Services union demanded Montagu's resignation at their conference earlier this week and accused him of incompetence, many observers inside and outside Whitehall believe that Montagu and Broadbent have done a reasonably good job, managing large and unwieldy departments through monumental change.
Montagu confined himself to saying: 'I welcome this review and look forward to playing a full part in it. It is an exciting time to look at how we can change and improve customer services.'
One Whitehall insider told Public Finance: 'Nick has been a very good manager at IR. Although he has made mistakes, it is wrong to suggest that he is incompetent. He has steered the department through several tough moments. You could argue that the tax credits problems have been caused by the private sector IT failing to deliver, and the pensions issue was a decision made years ago at the Contributions Agency. So a lot of the flak is unfair.'
Critics claim Montagu failed to tackle the problems quickly. One pointed to his appearance before a Commons' select committee in May, where he appeared not to have done his homework.
At Customs, Broadbent is similarly lauded for trying to turn around a difficult department. His three years in Whitehall are considered a success but several observers have pointed to his eagerness to get back to the private sector.
One told Public Finance: 'He has struggled with the slow pace in Whitehall and although he leaves the department in a much better position than when he joined, there is a feeling that he was not impressed with how things were done.'
What is clear is that the finer details in both departments were not sufficiently managed and got out of control. It remains to be seen whether the Treasury will avoid the pitfalls and deal with any future problems in a better way.
One civil servant said the current plan to move some Revenue and customs staff to the Treasury as part of a revamp of tax policy was a poisoned chalice.
'There is a feeling that Nick and Richard have taken the hit for ministers and will take the problems with them. If anything else comes up, the blame will lie firmly at the door of the Treasury. Who wants to take responsibility for that?'
PFjul2003
