MPs criticise Revenue pay bonuses

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MPs have criticised HM Revenue and Customs for giving senior staff big bonus increases in the last tax year.

The bonuses went up by an average of 60% during a year when complaints about tax credits rose and VAT processing targets were missed.

The Treasury Select Committee said the payments were "completely unjustified".

A HMRC spokesman said the bonuses were "paid to encourage and reward performance and to enable HMRC to improve its service".

The Treasury Select Committee found that senior managers at HMRC received an average bonus of £7,727 in 2006/07, up three-fifths on the previous year. The total amount was £18.9m, which rose again to £23m in 2007/08.

With millions of personal records lost, a tax credit system in chaos and the debacle of Northern Rock, why on earth does the Treasury think it is appropriate to increase staff bonuses by 60%? Vince Cable, Liberal Democrat MP

Michael Fallon, who headed the probe, said: "Sadly in some areas, such as the Value for Money Delivery Agreements, we have found them failing to lead by example.

"If they can't get this right, how can any other department be expected to?"

'Encourage and reward'

According to the report, the treasury had aimed to ensure all government departments had financial directors with accountancy qualifications by December 2006, but this has not been achieved.

Mr Fallon said: "I find it astonishing that the government has recently recruited a finance director with no relevant professional qualifications to the Ministry of Defence to run one of the most significant departmental budgets."

Shadow chief secretary to the Treasury Philip Hammond said: "From the tax credit chaos, to the missed targets, to the lavish bonuses paid to HMRC staff, it is clear that the chancellor (Alistair Darling) and his predecessor, Gordon Brown, have failed to deliver competent leadership."

Liberal Democrat Treasury spokesman Vince Cable said: "It is clear that the days of prudence in the Treasury are well and truly over.

"With millions of personal records lost, a tax credit system in chaos and the debacle of Northern Rock, why on earth does the Treasury think it is appropriate to increase staff bonuses by 60%?"

A spokesman for HM Revenue and Customs said: "In line with the wider civil service, bonuses are paid to encourage and reward performance and to enable HMRC to improve its service to taxpayers and the government.

"The payment of staff bonuses is set within current year-on-year reductions in HMRC's running costs of 5%."