INLAND REVENUE AND CUSTOMS AND EXCISE: NEXT STEPS (Hansard, 25 July 1990)

§ The Earl of Strathmore and Kinghorne

In February 1988 the Prime Minister launched the Next Steps initiative. In addition to their policy responsibilities, both Inland Revenue and Customs and Excise have significant executive functions, and they are therefore entirely suitable for applying the principles of Next Steps. We have now conducted a review with the Chairman of Inland Revenue and Customs and Excise of the best way to do so.

Each department already operates within an individual statutory framework which defines the tasks of the department and the relationship between the chairman and the board on the one hand and Treasury Ministers on the other. These arrangements will remain, but we have decided that it would be in the interests of the taxpayer, the public and the staff of the departments to introduce changes which will enable them to operate fully on Next Steps lines. In particular we want to give greater impetus to enhancing internal accountability and delegation, consistent with the management of a tax system which needs to offer all taxpayers equality of treatment.

Following a review by Inland Revenue officials, we have concluded that the valuation offices for England and Wales and for Scotland should be launched as a single executive agency under a chief executive who will be appointed by open competition. The aim is to set up the agency in the summer of 1991. The valuation offices already operate as discrete management units and are responsible for negotiating the valuation of land and buildings for a variety of purposes for central and local government; the 1605WA valuation office for England and Wales also undertakes the valuation of business property for rating purposes. The offices employ over 5,000 staff. Agency status for this work will increase the offices' ability to focus on the work to be done and give their managers more responsibility and flexibility to carry out their task. These benefits should enable them to achieve continuing improvements in efficiency, effectiveness and accountability, and increase the commitment of staff to providing a high quality valuation service for their customers.

In its other work also the Inland Revenue has well-defined lines of management responsibility and internal accountability through its network of regions and local offices, and its specialist units. It operates a comprehensive system of performance targets which are published annually in its management plans with departmental performance reviewed in the board's annual report, and there is an extensive training and management development programme for staff. It is also tackling major changes flowing from recent reforms in the tax system and in the way it does its work. The department will need great flexibility to cope with these changes. To this end it will be further extending internal delegation and accountability, and examining ways of reshaping the structure and organisation of its work, all on Next Steps lines, so as to ensure that the department continues to be responsive to the needs of taxpayers and provide a high level of service. I have asked the chairman of the Inland Revenue to draw up and submit to me an action programme for this work.

The Inland Revenue is also reviewing the organisation of information technology in the department to determine what arrangements will best meet the needs of the department throughout the 1990s. An announcement will be made in due course.

To the same ends Customs and Excise will reorganise the bulk of its activity into executive units encompassing some 95 per cent. of its staff. The head of each unit will be appointed by the Chairman and enjoy increased managerial and operational freedoms within a clearly defined framework of targets, responsibilities and accountabilities. Key features are:

(i) there will be a published framework document for the department, and a separate framework document for each unit. The head of each unit will be appointed by the chairman and will be accountable to the board;
(ii) the Customs and Excise management plan and the board's annual report will contain progressively improved information about financial and other targets and outturns for the board and for each unit;
(iii) a radical change in the management of staff and their methods of conducting the department's business, giving managers the maximum possible freedom to operate controls according to assessments of risk and local circumstances and to exercise local authority and discretion both in financial controls and operational systems;
(iv) new emphasis on the individual initiative and expertise of staff with an ambitious programme of management training and development; and
(v) further improvements in service, aimed at minimising burdens on business and the travelling public, and making significant improvements in the information and services the department provides.

We have asked the chairman of Customs and Excise to draw up an action programme for making these changes, with the objective of having the executive unit structure in place by April 1991. The first step will be to publish the departmental framework document in the autumn. At the same time, the department will publish the first individual framework documents in a series which will set out the objectives and responsibilities of each executive unit. The programme will be kept under review, and this will include consideration as to whether certain of the units should become candidates for conversion into freestanding agencies.

Each department has already made considerable progress in improving its management. But these are important changes. We are confident that, operating fully on Next Steps lines, the two departments will deliver further significant improvements in the way they are managed, and, in turn, greater efficiency, better service to the public and enhanced commitment and enthusiasm from their staff.