Thursday, January 17, 2008

Time to look tough by beating up on the public sector again…

Yes, it’s that time of year once again, when the Government decides that the best way to look like it is cracking down on wage inflation is to offer below-inflationary pay rises to civil servants noting, as usual, that MPs will be offered a rather more generous settlement.

In my own beloved Revenue & Customs (HMRC), we are in the midst of a programme to cut staffing numbers by 25,000 over six years, i.e. a staffing reduction of 26%. I have no fundamental objection to that, if we can deliver the level of service that the public demand. We are, alongside that, being asked to deliver a 5% reduction in costs, year on year. Again, no fundamental objection there, after all, we are a public body, accountable to, and paid by, the public.

But, in truth, we are being asked to lay our bodies on the line for the Chancellor and his boss. Morale has been low for some time, and too many of my colleagues, whose capabilities I respect, are talking about their retirement with more anticipation than is good in an organisation which has much to do amidst rapid change. The expectation is that our reward for being co-operative is a real terms pay cut, to be delivered over three years.

Curiously enough, there are already stirrings of discontent beyond the walls of HMRC buildings. “Taxation”, described as ‘the market-leading magazine for tax practitioners’, has started a campaign against further staff cuts (we’re about halfway through the programme, I’m told), triggered by the recent loss of those pesky CD’s, but focusing on the alleged deterioration in the level of service provided by HMRC. I can’t really comment on that, for a whole bunch of reasons, but I’m sure that they can provide plenty of evidence to support their contention.

In order to achieve the required cut in staffing numbers, recruitment will dry up (as will advancement opportunities), and departing staff will not be replaced. Whilst staff are moving around to fill the gaps, and retrained as necessary, pressure will build on those remaining, lowering morale further. A real pay cut will exacerbate the problem and encourage the best and the brightest (at least, those who haven’t become institutionalised, as I have) to flee to the private sector (the bigger accountancy firms have a pretty good idea as to the quality of HMRC training – and can pay rather attractive salaries to our technically trained Inspectors, especially in London).

And, once we finally start to recruit again, whenever staff numbers stabilise, salaries will be less attractive, less competitive, and we will struggle to recruit the quality of staff required to provide a decent service both to the public and to the public purse.

So, if you’re reading this Alastair, give it just a little thought before you make the expected derisory offer. You’ve had a tough introduction to the job, so a few friends might be a useful investment for a rainy day…

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