After news of the data loss scandal broke, there was a joke was doing the rounds at HMRC about Paul Gray.

“Paul Gray didn’t resign,” it went. “He was pensioned off due to ill-health. He had two slipped discs.”

Boom boom, as Basil Brush would add. But the joke came far closer to the truth than any journalist did. Paul Gray, for those of you with short or just very selective memories, was chief executive of HMRC, who resigned when the missing CDs were formally announced. The action was lauded as a rare example of professional honour in an age where most politicians and senior civil servants carry on regardless. But is that what really happened? On closer inspection, it appears that Gray never really resigned at all.

The devil is in the detail

The Paul Gray story is a classic example of modern media manipulation: never lie, but lead the press and the opposition to make a desired assumption, and then fail to correct it. Famously, this was what the government did with the 45 minute claim in the “dodgy dossier.” If the Sun took it to mean that Saddam’s Iraq could drop anthrax warheads on Cyprus with less than an hour’s notice, then so be it. It was untrue, and the government knew it was untrue, but it was politically convenient, so they let it lie. This is exactly what happened with Paul Gray. Here’s how they did it.

First off, Gray’s so-called “resignation” letter doesn’t actually have the word resignation anywhere in it. He refers to his “standing down as chairman” and his “departure”, and that is all.

“I am announcing today I will be standing down,” opens the letter. But when will he be standing down? The absence of any actual date surrounding Gray’s departure is significant, so bear this in mind.

“I am extremely sorry that you may have learned about this first from the media,” Gray apologises. This is rather disingenuous, for a number of reasons. Firstly, Cerberus has been unable to find any media reports of Gray’s resignation that predate Darling’s speech in parliament. Secondly, given that Gray and Darling had been having private discussions in the long weeks prior to making the data loss public, a likely topic of conversation would be how to spin the story to minimise political damage. The media had to know first because it was the media that had to make the assumption. Darling, Gray et al couldn’t say that Gray had actually resigned, because he hadn’t.

In his letter Gray also says that he will “provide further details after the parliamentary statement.” But he failed to do so.

So that’s Gray, what about the Chancellor? An examination of Hansard shows that Darling never said that Gray had resigned at all, only that he accepted responsibility.

“Last week Paul Gray told me on his own initiative that given the seriousness of the operational failing he should resign,” was what the Chancellor actually said. “He has now confirmed that intention, and I am grateful to him.”

Confirming your intention to resign, it must be pointed out, is not the same as resigning. At no point that day did Darling or Gray announce that the HMRC chief exec had actually resigned. Vince Cable, the Lib Dem shadow chancellor, was the first to respond to Darling’s speech, and he bought into the noble image of the honourable civil servant falling on his sword hook, line and sinker.

“Paul Gray has now resigned as a matter of honour,” Cable said, as if Gray had already gone. In reality, Gray was clinging on in the shadows, waiting until he could take early retirement at the end of the year.

Non-immediate effect

Less than a fortnight later, Gray turned up in Whitehall working on a “special project” on “cross-governmental matters” for Sir Gus O’Donnell.

“Paul Gray resigned with immediate effect on November 20,” the cabinet office finally announced in early December, which was more than HMRC or the Chancellor ever did. But the letter Gray drafted on that date, as we have seen, said no such thing.

“For contractual reasons he remains a senior civil servant,” the cabinet office then added, contradicting itself somewhat. “When he resigned, his period of notice meant he would be paid until the end of the year. As a result, he could receive payment for no work, or receive payment for doing some work. It was thought to be better in the public interest that he did some work. There is no additional cost. He will leave the payroll on 31 December.”

According to Charles Ramsden, secretary to the cabinet office’s very own Committee on Standards in Public Life, this is a very unusual state of affairs.

“You could resign and then be re-employed, or you could not resign and then switch departments,” he told Cerberus. “But if you resign, then the normal rule is that once you have resigned, until such time as you pop up in another government department, you are not a civil servant. It’s not like being a lawyer, whereby if you leave your firm you can still be a solicitor. The civil service doesn’t have a corporate existence in that way.”

So what was Gray really doing at the cabinet office, if he had left “with immediate effect” in November? If he was working out his notice, there is little evidence of his labours. Cerberus spoke to the cabinet office and found that there had never been any listing for Paul Gray in its internal telephone directory, and neither did its HR department have any records of him.

In December, a cabinet office spokesperson let slip that Gray was not only still on full pay, but that he would collect his full pension (a not inconsiderable sum of £1.7 million) and that severance terms were still being negotiated.

Severance is of course most commonly given to those who have retired or been sacked. In some instances, it’s true, severance packages are given to those who resign regardless of circumstances. But in such instances, why would it ever need to be negotiated? How could negotiation even be possible? What, exactly, does a man who has already quit have to bargain with?

In effect, rather than resigning as a point of honour, Gray stayed on and managed to bag a very successful early retirement. Unable or unwilling to shift him, it looks like the cabinet office position was little more than the government’s attempt to justify why Gray was still around.

When Cerberus spoke to HMRC, a press officer confirmed the truth: Gray retired, he did not resign. But the Revenue has still made no formal announcement on the matter. What’s more, there have been no departmental board minutes posted on the HMRC website since August last year, and no executive committee minutes since June. At board level, the department has been on a general media lock-down since the summer (something that looks set to continue).

In part it may be a political reward for his timely illusion of civic honour; in part it may be that Gray knows the real and more damaging truth about the story of the missing discs, but Gray will not have to worry about his future. Compare that with the exit of Stuart Cruikshank.

Room at the top

When it comes to HMRC, the one thing everybody agrees about is that relentless budget cuts and office closures have left it with real performance issues. The one person you’d expect to know more about these cuts than any other was the chief financial officer. Nobody knows why, but CFO Stuart Cruickshank quit suddenly last week.

The HMRC website still lists him as chief finance officer. His department said he left to pursue other career interests, but as far as we know he had no job lined up. At the Treasury, on the other hand, Jane Kennedy, said he left because of the data loss scandal, but did not elaborate. HMRC said he had simply come to the end of his fixed-term contract, which sounds a bit fishy considering the Revenue made no mention of this contract when Cruikshank joined in December 2006. Fifteen months is rather odd length for a contract anyway, especially given the timing of his departure.

Perhaps he left because he was pushed, or perhaps it was some point of principle. Perhaps it was because it was somebody in Cruikshank’s department who told the NAO that they would receive the full, and not the amended, child benefit database. But that’s what a real resignation looks like: abrupt and chaotic and definitive. Maybe Cruikshank managed to negotiate his own, more secretive, golden goodbye. We will find out.

All in all, it’s no wonder that Kieran Poynter reckons HMRC staff are “disconnected” with bosses. Things have been changing so fast amongst the top brass they might as well stick a revolving door on the boardroom.

Dave Hartnett is still technically only acting chairman, there’s only an acting chief executive (business), and there’s no chief financial officer. Meanwhile the Revenue’s chief people officer, Robin Roberts from Egon Zehdner, is an interim on a six month contract, and a chunk of that will be spent finding a permanent successor. The chief information officer, Steve Lamey, the person most would consider primarily responsible for data security issues, has instead been promoted to chief operating officer. Lamey was hired on a four year contract in October 2004, so unless his terms and conditions have been renewed he could be out in nine months too.

Personally, the only solution that occurs to Cerberus is to pay everyone at HMRC more money. But that’s just what a monstrous three-headed dog with a snake for tail would probably say.

The howls of Cerberus:

Deckchair Re-Arrangement Squad, RMS Titanic: the Northern Rock non-execs [1]
Paymaster General wanted: must know about money laundering [2]
Sir John Bourn to write Good Hotel Guide? [3]