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Dog with a piggy bank | AccountingWEB | HMRC wage bill soars despite staff cuts
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HMRC’s wage bill soars despite staff cuts

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HMRC has found itself in the spotlight again after new data showed a rise in overtime costs is driving an increased wage bill on the back of staff cuts.

28th Jun 2024
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HMRC reducing its core workforce in the past year has led to such a reliance on overtime that its wage bill has actually increased by £5.5m, according to new research.

The Global Payroll Association (GPA) has analysed the changing number of full-time jobs in the department between March 2023 and March 2024, as well as the impact it has had on its annual paybill.

Jobs down, but wage bill up

The research found that HMRC has reduced its full-time equivalent positions by -3.8% in the past year, with the number of jobs falling from 67,469 to 64,875.

The “most drastic” cuts have been made in the administration department, with the number of administration assistants and administration officers falling by -9.3%.

GPA’s analysis also shows that despite this, HMRC’s wage bill has increased over the past year, rising by £5.5m, or 2%, to £285m driven by a 45.2% rise in overtime costs.

The reference periods are based on paybill expenditure for the months of March 2023 and March 2024, and includes HMRC’s Executive Agency and the Valuation Agency Office but does not reflect annual expenditure.

It’s understood the department’s deployment of overtime fluctuates on a monthly basis as it is driven by customer demand and operational requirements. The average monthly overtime bill for 2023/24 was £3.66m, which was an increase of 1.45% on 2022/23’s of £3.6m.

One step forward, two steps back

Speaking to AccountingWEB, Melanie Pizzey, chief executive and founder of the Global Payroll Association (GPA), noted that while the internal workings of most government departments “remain a mystery”, based on the figures “it’s fair to assume that HMRC isn’t running particularly efficiently”.

“To cut staff count in an attempt to reduce costs, only to pay out considerably more as a result of a reliance on overtime, seems like one step forward and two steps backwards.

“Job cuts are always likely to put a strain on those left within an organisation, as they pick up the slack in addition to their existing workload. This will inevitably impact morale.

“However, if this impact is being offset with a flexible working arrangement and the additional carrot of overtime, then staff are likely to feel more incentivised.”

Steadying the ship

Pizzey believes that if HMRC were to “steady the ship with appropriate full-time staffing levels, there’s a good chance that it would reduce the overtime requirements currently being seen, which in turn would help reduce the total sum spent via payroll”.

“The figures in relation to the reduction in staff count are based on equivalent full-time positions, which essentially means you have multiple people filling one role.

“While this may be down to allowing a more flexible working lifestyle to staff, it could be argued that one person, filling one role, would make for a more efficient operation.”

She added that the likelihood is that decisions are being made to “meet short-term goals without the proper long-term considerations”.

“It’s important to note that in the current economic landscape government departments are under incredible pressure to streamline.

“The decision to cut staff count is unlikely to have been made with the expectation that overtime pay would jump substantially as a result and it’s rare that a company would adopt such a strategy.”

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Replies (20)

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By JustAnotherUser
28th Jun 2024 16:02

.

Thanks (1)
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By Paul Crowley
28th Jun 2024 18:24

I blame the massive increases each year in minimum wage for the average worker at HMRC.

Thanks (2)
Replying to Paul Crowley:
Rob Swan
By Rob Swan
29th Jun 2024 10:00

The payroll cost increase is due to increased overtime payments caused by lower staff numbers. AND... they couldn't work that one out before reducing numbers.

The lunatics really have taken over!
NOT!! a public 'service'.

Thanks (9)
Replying to Rob Swan:
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By Paul Crowley
29th Jun 2024 11:28

Basic business planning, but HMRC people have never been in business.

Thanks (8)
Replying to Paul Crowley:
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By Open all hours
29th Jun 2024 11:40

Despite claiming to have millions of customers.

Thanks (7)
Replying to Open all hours:
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By bendybod
01st Jul 2024 10:15

Exactly what my response was going to be!

Thanks (2)
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By FactChecker
29th Jun 2024 00:37

So ... pay more - for fewer people - with lower skills.

No wonder Jim got a knighthood!

Thanks (14)
Rob Swan
By Rob Swan
29th Jun 2024 09:57

AND.... £1,000,000+ (YES! over one million!) on - very expensive - office furniture!
While... more working from home.

Outstanding! Irresponsible!

Thanks (4)
Replying to Rob Swan:
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By Paul Crowley
29th Jun 2024 11:30

I suspect that working from home causes the overtime. On the clock while watching Netflix. Three hours extra to get the same work done.

Thanks (7)
Replying to Rob Swan:
By Duggimon
01st Jul 2024 09:22

That's about £15 per person, roughly equivalent to a new keyboard or half an uncomfy chair.

Thanks (4)
Replying to Rob Swan:
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By bendybod
01st Jul 2024 10:16

And a massive amount on a new office building here which is almost empty.

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By AndyC555
01st Jul 2024 11:00

Great. Work really slowly and then get paid overtime because there's a backlog because you've been working really slowly.

Thanks (4)
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By Justin Bryant
01st Jul 2024 13:20

Might there also be a correlation between HMRC man-hours and the ridiculously lengthy and complex UK tax legislation? Here's one small example of how bonkers complex it is just to confirm if there's a valid HMRC enquiry on a dodgy tax avoidance scheme (luckily for HMRC there was).
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2024/537

Thanks (3)
Replying to Justin Bryant:
Rob Swan
By Rob Swan
01st Jul 2024 15:06

Bonkers indeed.

Not sure why HMRC would want to 'simplify' things if that would reduce their pay. I expect that's their thinking. They did abolish the Office For Tax Simplification in 'The Growth Plan 2022'! Take 'growth' as you will...... Clearly, it's working well ;)

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By Nebs
01st Jul 2024 13:25

The best investment HMRC could make is to buy every member of staff a diary, in which they record the name/reference of the file they worked on, what they did, and the time they did it. A bit like the timesheets that just about every similar business in the private sector has to keep.

Thanks (2)
Replying to Nebs:
Rob Swan
By Rob Swan
01st Jul 2024 15:13

Steady on there Nebs! HMRC is going all-in on 'digital'...l

...and fouling everything up nicely ;)

You simply cannot suggest that a pencil and paper diary will solve the problem. I'm pretty sure they'd have 'no appetite' for your suggestion. Would work though ;)

Thanks (1)
Replying to Nebs:
paddle steamer
By DJKL
01st Jul 2024 17:11

Timesheets are so old fashioned, what they need is fixed price tax- quote each taxpayer a figure, if accepts that is his/her tax bill, no need to do a return.

Thanks (3)
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By hje
04th Jul 2024 09:54

Pfft, Melanie Pizzey captain obvious.

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By Self-Employed and Happy
04th Jul 2024 10:09

Imagine running it like a business, getting knowledgeable accountants in to run departments, paying them a very decent wage.

Then imagine a well trained, well staffed team under those knowledgeable people.

Instead poorly trained people answering the phone trained by managers without knowledge or care.

Its an absolute crapshow and needs starting again from the top down.

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By alan.falcondale
04th Jul 2024 11:00

If it takes 2 men one hour to dig a hole 6ft by 3ft,, how long would it take 1 man to dig a hole 6ft by 3ft

I would hazard a guess that the original proposal for staff cuts possibly did not take into account (no pun intended) the figures for man-hours of work required...seems basic logic , but then again, since when did logic come into the equation

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