HMRC ‘too reliant’ on consultants

18 July 2011

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18 July 2011 | Adam Leach

HM Revenue & Customs (HMRC) relied too much and for too long on consultants for the implementation of a centralisation initiative, according to a report  by the National Audit Office (NAO).

The PaceSetter programme, launched to make the department’s business processes more streamlined and efficient, failed to transfer the skills and expertise of consultants to government staff by its deadline of 2007.

Launched in 2006, the programme saw HMRC apply a ‘lean philosophy’ – where processes are made more agile through constant review and change – to large-scale operations, such as processing self-assessment tax forms. One of the key aspects of the programme was establishing skills and expertise across the department to successfully implement and manage the project. In order to achieve this, consultants were hired to train government staff, at a cost of £39.7 million between 2005 and 2011.

While the report accepted that using consultants to establish the programme was justified, it concluded that their duties should have been transferred to the department’s own staff earlier. The first trialled area of HMRC was originally expected to be free of consultants by March 2007. However, this was delayed until 2009, while consultancy spend was increased in the other areas where the programme was rolled out.

HRMC admitted that it had been over-reliant on external skills and announced it planned to spend no money on consultants by 2013. As a result, spending was cut from £8.4 million in 2009/10 to just £600,000 in 2010/11.

Amyas Morse, head of the NAO, said: “PaceSetter is travelling in the right direction, but not fast enough. After five years, HMRC’s approach to process improvement should be better measured, more sophisticated and more ambitious in its transformation of the department.”

Overall, the NAO concluded that while the project is increasing the efficiency of business processes, it is not yet doing so to the degree expected and therefore must go further before being judged as providing value for money.

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