HMRC, PCS and The 10% Pay Demand - Losing Touch With Reality

 

HMRC, PCS and the 10% Pay Demand: Is the Civil Service Losing Touch with Reality?

A 10% pay rise. A four-day week. No loss of pay. At a time when taxpayers are under pressure and public finances remain stretched, PCS's demands raise a serious question: where does employee entitlement end and public service responsibility begin?

The Public and Commercial Services Union (PCS) is preparing for a major civil service dispute, with demands that include a 10% pay rise and a four-day working week without a reduction in salary.

And for HM Revenue & Customs (HMRC), this is no distant Westminster squabble. PCS has members within the department, meaning a national dispute could have direct consequences for the people responsible for collecting taxes, tackling evasion and keeping essential services running.

The question is not whether civil servants deserve fair pay. Of course they do. The question is whether these particular demands are realistic, proportionate and defensible when measured against the economic pressures facing the country — and the expectations placed on those working in public service.

Ten per cent more pay. One day less work. Who picks up the bill?

Let's be blunt: demanding a 10% pay increase alongside a four-day working week with no loss of pay is an enormous ask.

A 10% rise is not a modest adjustment. It is a substantial increase in payroll costs. Introduce a shorter working week on top, and the government faces an even bigger challenge: maintaining service levels while potentially paying more for fewer contracted hours.

Someone must fund that arrangement. Ultimately, public spending comes from taxpayers, borrowing or money redirected from other priorities.

Those taxpayers include people whose own salaries have barely kept pace with the cost of living, employees who cannot simply decide to work one day less, and small businesses that must balance wage increases against the cost of keeping their doors open.

Why should the public sector automatically be entitled to a package that many private-sector workers could only dream of negotiating?

PCS will argue that pay has fallen behind inflation and that better conditions improve recruitment and retention. Those concerns deserve scrutiny. But they do not automatically justify a 10% award, let alone a simultaneous reduction in working hours without any reduction in salary.

Want more pay? Make the case. Want a four-day week? Prove it works. Demand both without demonstrating affordability or productivity gains, and the burden of justification becomes much harder to meet.

HMRC is not an ordinary employer

The implications for HMRC are particularly serious.

HMRC is responsible for collecting the revenue that pays for public services. Its employees deal with taxpayers, support businesses, investigate non-compliance and help ensure that the tax system operates effectively.

This is not work that can simply be switched off without consequences.

If industrial action affects operational teams, the potential results include longer customer waiting times, delayed casework, growing backlogs and disruption to compliance activity. The extent of any impact would depend on participation, the teams involved and the department's contingency plans.

That creates an uncomfortable contradiction.

The union is demanding more money and fewer working days from an organisation whose job is to secure the money that funds the country.

There is nothing inherently wrong with public servants seeking better conditions. But those demands must be considered alongside the service they are employed to deliver.

Public service is not just another transaction. It comes with responsibilities to the people who pay for it.

The four-day week: a right, or a reward to be earned?

A four-day week can work in some organisations. Where productivity improves, unnecessary work is removed or services can be redesigned, shorter hours may offer genuine benefits.

But it does not follow that every organisation can reduce working hours by 20% without compromising output or increasing costs.

HMRC is not one uniform workplace. Contact centres, compliance teams and specialist operational functions face different demands. Taxpayers cannot necessarily arrange their needs around a department-wide reduction in availability.

If employees work fewer hours, the department must explain how it will maintain service standards. Will existing staff deliver the same output in less time? Will processes become more efficient? Will technology make up the difference? Or will additional staff be required?

Each possibility has practical and financial consequences.

And if the answer is that productivity gains will cover the cost, where is the evidence? A demand of this scale should be supported by credible modelling, measurable targets and a convincing plan for protecting services.

Without that evidence, the four-day week risks looking less like a carefully designed productivity reform and more like a demand for improved terms without a sufficiently clear account of what the public receives in return.

The public-sector pay problem cannot be ignored — but neither can affordability

PCS has a case to make about pay, living costs, job security and working conditions. Those are legitimate subjects for negotiation.

However, there is a difference between arguing that employees deserve better remuneration and insisting that the taxpayer should fund a particular settlement regardless of the cost.

The government's pay framework exists because departments must operate within budgets. HMRC cannot simply increase its wage bill without considering the consequences for other spending, recruitment, investment and service delivery.

Nor should every pay dispute be reduced to a simplistic argument that public servants are overpaid. Many civil servants perform demanding work, and retaining experienced employees matters.

But the reverse is equally true: working for the state does not mean every pay demand is automatically reasonable.

A 10% rise combined with a four-day week without loss of pay requires a robust justification. It should not be treated as an entitlement merely because a union has put it on the negotiating table.

The same principle applies to industrial action. Employees have lawful rights to organise and take action, subject to the relevant legal requirements. But exercising those rights can still have consequences for the public, particularly when essential government services are affected.

Why HMRC should be concerned now

The proposed national ballot makes this more than an abstract argument. The planned ballot period is 20 October to 1 December 2026, subject to the necessary statutory requirements. A ballot does not itself mean strikes will happen, but it brings the prospect of disruption into sharper focus.

HMRC management must consider the potential impact on customer service, operational capacity and staff relations. It also needs to recognise that a prolonged dispute can create costs of its own through lost working time, recovery efforts and damaged trust.

There is a wider strategic question, too: what happens if employees and management become locked into a cycle of escalating demands and increasingly entrenched positions?

A sustainable outcome requires more than slogans. It requires an honest assessment of what the department can afford, what employees reasonably need and what service taxpayers should expect.

That means challenging unrealistic proposals where necessary, while being equally prepared to address genuine problems with pay, workloads and working conditions.

Neither side should be exempt from scrutiny.

The bottom line: demands are easy; paying for them is harder

PCS is entitled to campaign for its members. But the public is entitled to ask whether a 10% pay rise and a four-day week without loss of pay represent a reasonable use of public money.

Those are substantial demands, and the union should be expected to demonstrate how they can be delivered without undermining HMRC's capacity to serve taxpayers.

A shorter working week might have a place in a modern civil service. Higher pay may be justified in particular circumstances. But combining the two on a national scale, without clear evidence of affordability and productivity gains, is a different proposition altogether.

HMRC cannot lose sight of its central purpose. Its job is to collect the money that keeps the country running, not to become a test case for employment demands that have not been properly costed or operationally justified.

Fair pay is a legitimate objective. A blank cheque is not. And a four-day week cannot simply be declared affordable because it is popular with those asking for it.

The question PCS must answer is simple: if taxpayers are expected to pay more while receiving fewer contracted working hours, what concrete improvements will they get in return?

Until that question has a convincing answer, the union's demands will remain open to a fundamental challenge — not because civil servants should accept poor conditions, but because public money comes with public responsibilities.

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HMRC Trainee Wins £16,000 - Tribunal Finds ‘Kill Russians’ Allegations Were Invented

An HMRC trainee has been awarded more than £16,000 in compensation after an employment tribunal found that serious allegations made against her were fabricated.

The trainee, known as Ms X, had been accused of saying she wanted to use her position at HMRC to “kill Russians for killing her family”.

But the tribunal heard that she never made the comments attributed to her.

Instead, the judge found that her line manager had invented the allegations and made false notes about a private meeting with the trainee.

Ms X, originally from Abkhazia in Georgia, speaks English with a Russian accent. She was granted asylum in the UK in 2004 and subsequently became a British citizen.

The case raises questions about the importance of accurate records, proper management procedures and fairness when serious allegations are made in the workplace.

I have to say, I didn't have "kill Russians" on my HMRC bingo card! 

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HMRC’s Inability To Part With Capgem

There is something profoundly dispiriting about a government department promising to break up an old outsourcing relationship, and then continuing to hand the same supplier billions of pounds.

That is the uncomfortable lesson from HM Revenue & Customs and Capgemini.

The figures are extraordinary. Research by The Register, using HMRC's own published transaction data, found that the tax authority paid Capgemini at least £4.2 billion across 15,726 transactions between 2014 and July 2026. Sixteen months of data are missing, meaning the true figure could be higher.

And this is not simply an argument about one contract. It is about the ability of the state to learn from its own experience.

HMRC's original Aspire outsourcing arrangement with Capgemini began in 2004. It was supposed to be a ten-year deal. Instead, it became a sprawling technological dependency. By the time Aspire was due to end in 2017, the National Audit Office estimated that HMRC would have spent £10.4 billion, against the £4.1 billion figure used when Capgemini's bid was evaluated. The NAO said HMRC had not market-tested significant elements of the arrangement and that benchmarking indicated it had paid above-market prices for some work.

The lesson appeared obvious: disentangle the department from the contractor, bring greater control in-house, diversify suppliers and make future contracts shorter and more flexible.

HMRC itself said precisely that.

Its 2015-16 annual report described a phased exit from Aspire, with more development and delivery brought under HMRC's direct control. It said this would provide greater flexibility and control over its digital strategy.

Yet the divorce has proved remarkably amicable.

Capgemini continued to win lucrative work supporting systems associated with its former empire. In 2022, HMRC awarded it a £51 million contract for tax-system support. It subsequently received a deal worth up to £214 million for maintaining legacy applications, followed by a contract worth up to £245.5 million in 2024. A separate five-year agreement to operate two major tax platforms runs to 2029 and is valued at between £403 million and £574 million.

Then came the latest twist. In 2026, Capgemini won HMRC's contact-centre contract, worth up to £500 million, with a basic term running to 2034 and extensions capable of taking it to 2036. The official procurement notice confirms the two possible one-year extensions.

So much for breaking up!

HMRC is entitled to say that these are new procurements, not simply Aspire being quietly extended through the back door. It says its awards comply with procurement law and that it has moved from a handful of large legacy contracts towards a more diverse supplier base.

That defence may be legally correct. It does not make the broader picture any less troubling.

The central question is not whether every individual contract was technically lawful. It is whether the taxpayer has escaped the dependency that HMRC itself identified as a problem.

There is a particularly revealing example. In 2022, HMRC awarded Capgemini a contract without prior publication, arguing that, for technical reasons, only Capgemini could provide the required services and that there was no reasonable alternative. The official procurement notice says those services were necessary to maintain business-critical systems while they were replaced, modernised or decommissioned.

That is precisely how technological dependency perpetuates itself.

The incumbent built the system. The incumbent understands the system. The incumbent is then needed to keep the system running while the government replaces it. The replacement takes time. The government cannot risk disrupting the tax system. Another contract follows.

Repeat.

This is not an argument for pretending that government can simply rip out complex computer systems overnight. HMRC collects hundreds of billions of pounds in tax and the NAO acknowledged that Aspire provided continuity of service with few significant failures.

But that is precisely why the department should have been so determined to avoid recreating the dependency.

There is also a wider political embarrassment here. Ministers increasingly talk about using the enormous purchasing power of the state to support British businesses. Yet one of the government's biggest technology purchasers remains deeply reliant on a multinational supplier whose relationship with the tax authority stretches back more than two decades.

The issue is not that Capgemini is foreign. Nor should nationality become a substitute for value, competence or competition.

The issue is choice.

A government department should be able to say: this is our system, this is our data, these are our skills, and here are several suppliers capable of competing for the work.

It should not repeatedly find itself saying: this system is too complicated, too important or too dependent on its incumbent supplier for anyone else to take over.

That is the real scandal here; not that Capgemini keeps winning contracts, but that HMRC appears to have found it extraordinarily difficult to make itself genuinely independent of one.

The taxpayer deserves better than an outsourcing relationship that refuses to die.

And if ministers really mean what they say about competition, resilience, British capability and better value from public procurement, HMRC should be among the first departments required to demonstrate exactly how it intends to end this cycle.

Because a contract that was supposed to end in 2017, yet leaves its incumbent potentially embedded until 2036, is not much of a break-up.

It is a very expensive long-distance relationship.

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HMRC Steps Up Scrutiny of UK Billionaires with Dedicated Compliance Managers

HMRC has assigned a personal compliance manager to every billionaire within its reach, in a significant tightening of oversight on the super-rich.

According to reports from mid-to-late September 2026, His Majesty’s Revenue and Customs (HMRC) has refreshed its list of billionaires to cover all those with a UK tax footprint, not only those who file personal tax returns in Britain. The move draws on HMRC data, public information, and data shared by other countries. It follows criticism from the National Audit Office and a parliamentary Public Accounts Committee, which previously highlighted gaps in HMRC’s understanding of billionaires’ affairs and noted that allocation of managers had been risk-based rather than purely wealth-based.

Customer Compliance Managers (CCMs) are senior tax professionals who act as a single point of contact. They develop a detailed picture of an individual’s finances, behaviours, and risks, review returns with intelligence from UK and international sources, and challenge underpayments through compliance checks. HMRC already used CCMs for the most complex or high-risk wealthy taxpayers (roughly 15,000 people, or about 2% of its broader “wealthy” population of those with incomes of £200,000+ or assets of £2 million+). Extending this systematically to all identified billionaires marks a clear shift.

An HMRC spokesperson stated: “We want to help all customers get their tax right, including the UK’s wealthiest people. We’ve had dedicated customer compliance managers for wealthy individuals for several years, allowing us to identify and address tax risks effectively.”

The change aims to improve grip on complex, often international structures used by the ultra-wealthy and close gaps in the tax collected from this group. Wealthy individuals as a whole already contribute a large share of personal tax receipts, but previous reviews found incomplete coverage of the very richest. This dedicated approach is expected to help ensure more accurate compliance going forward.

Given the exodus from the UK, these new roles may not be that secure! 

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HMRC’s Four Day Week Bonanza

Nearly one in ten of HMRC’s most senior staff have stopped turning up on Fridays, as the taxman’s four-day week perk has exploded while taxpayers continue to wait for answers.

Figures released to Guido’s FOI Unit show that, as of 31 July this year, 9.1% of Grade 6 officials and 9.0% of Senior Civil Servants at HMRC were working compressed hours over a four-day week.

And the perk is growing fast.

In June 2024, 1,542 full-time HMRC staff were on a compressed four-day week. By July this year, that had risen to 2,267, a 47% increase in just two years.

Among the senior ranks, the growth is even more striking. The number of Grade 6 officials on compressed hours jumped 64%, while Grade 7 numbers rose 55%. The Senior Civil Service figure increased by 37.5%.

This is overwhelmingly a management phenomenon. The numbers at the bottom of the organisation have barely shifted: Assistant Officers and Administrative Assistants on four-day compressed hours remain at around 1%.

So while the junior staff keep the machinery running, an ever-growing slice of the management ranks are squeezing the working week into four days.

The obvious question is whether taxpayers are getting an equivalent service in return.

A Cabinet Office source told Guido: “It’s often the case that staff working on compressed hours do less work overall because of the way their weekday structure changes.”

HMRC insists that isn't happening, claiming employees on compressed hours “receive no reduction in expected workload, performance standards or accountability”.

There is, however, a rather awkward problem with that assurance: HMRC cannot produce the evidence to demonstrate that the arrangement has no effect on productivity or service delivery.

Asked for any internal review of the impact on productivity, output or customer service, HMRC confirmed that it “does not hold a central assessment, review or monitoring report”.

In other words, the taxman is expanding a working arrangement across thousands of staff, including a significant and growing proportion of its senior officials, without centrally monitoring whether it actually works.

Worse still, HMRC cannot even say how many applications for compressed hours it rejects, because there is no central record of applications.

That makes it rather difficult for taxpayers to know whether this is a carefully managed workforce policy or simply another benefit being handed out with remarkably little scrutiny.

And the backdrop is hardly one of flawless performance.

HMRC's own 2024/25 accounts show that just 76.9% of customer correspondence was dealt with within 15 working days, below its own 80% service standard. At the end of March 2025, 2.29 million items of correspondence were still on hand. HMRC also managed to answer only 71.5% of callers seeking an adviser, against an 85% target.

Yet at the same time as taxpayers were waiting for the taxman to answer their correspondence, HMRC was expanding a system under which staff can work their hours across four days instead of five.

The internal guidance says employees on compressed hours work 9 hours and 15 minutes across four days, rather than 7.4 hours across five. Arrangements can last for up to five years before staff have to reapply.

Temporary arrangements can be approved by a line manager without formal HMRC involvement, while the policy itself acknowledges that such arrangements can cover periods when “not all duties of your role are fulfilled”.

And then there is the rather generous interaction with home working.

Compressed hours sit alongside HMRC's two-days-a-week home-working arrangements, meaning a Grade 6 employee could potentially be physically in an HMRC office for just two days a week — while enjoying a three-day weekend.

Bank holidays are handled with a distinctly relaxed approach too: staff are told that their entitlement is not calculated automatically and that they must “keep a manual record”.

HMRC's wider policy document says it “believe[s] that flexible working can promote work-life balance and improve wellbeing and performance”.

That may be true for employees.

But for the taxpayer, the more important question is whether flexibility for HMRC staff is being matched by flexibility, speed and competence for the people who actually fund the organisation.

HMRC's own figures suggest there is still plenty of room for improvement. The department says customer service is getting better, but its correspondence performance remains below target, with millions of pieces of correspondence still being handled and hundreds of thousands missing the 15 day standard.

Before HMRC congratulates itself on the wonders of flexible working, perhaps it should first demonstrate that the taxpayer isn't the one paying for it!

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Hypocritical Wankers!

 

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