Pay and Contract Reform in HMRC

After being trailed for several years, HMRC has finally got a business case approved by the Treasury for a pay rise attached to contractual changes and is entering collective bargaining with the unions. The final outcome is still some time away, but it’s a matter of great interest to all PCS members in the department.

The negotiations need to be conducted in the open, with details of any and all proposals – not just the final offer – available so that we can organise members around the issue, build pressure through campaigning to strengthen our hand in negotiations, and give members the maximum say at all stages.

A low pay department

Whilst pay in the Civil Service as a whole has been stagnant for a decade, the subject of the national union’s pay campaign, HMRC is one of the lowest paid departments. Statistics from the institute for government show that HMRC has the lowest median earnings across the Civil Service, and only the Home Office and DWP sit alongside it below the CS-wide median.

Part of this is because HMRC has the second highest proportion of staff who earn £30,000 or less and the second highest proportion who earn £20,000 or less – only the DWP beating it in either category. HMRC also has the lowest paid AAs, AOs and EOs in the civil service. In terms of the A grades, AA pay is now so low that they require a mid-year uplift every year to comply with the minimum wage, whilst AOs on the minimum of their national pay scale are a matter of pennies above the minimum wage.

Little wonder, then, that satisfaction with pay in the Civil Service People Survey is consistently lowest amongst HMRC workers.

Meanwhile, HMRC’s Grade 7 and 6 pay ranges are already significantly above other government departments and overlap with the Senior Civil Service pay band 1 minima. The median pay for Senior Civil Servants in the department is roughly in line with the CS-wide median for the SCS but as for the highest earners, only the Department for International Trade, Cabinet Office, Department of Health and Social Care and DWP have anyone at the top of the organisation earning more. When Jim Harra took the First Permanent Secretary role, his previous job as Second Permanent Secretary was advertised with a salary of £150-160,000, whilst the Chief Digital and Information Officer job was advertised with a salary of £200,000 and bonuses of up to 30% of this. In both cases, more than the Prime Minister.

It is also worth noting that, as the SCS pay award is separate from that of the junior civil service, those overseeing the pay and contract reform will not have to face any changes to their working conditions.

What kind of trade off are we looking at?

At the moment, there is no concrete information on what will be in the deal. The strongest rumour states that the deal will offer a 15% pay rise over three years, but provides no clue as to what the trade off will be.

Last year, a leaked document suggested that increases to the working week, the abolition of flexi time in favour of the kind of shift working seen in Contact Centres, only paying overtime and unsocial hours at plain time, reducing paid sick pay, and more were all on the table. It now appears that what was leaked was part of the scoping process with HMRC’s various sections, but it also tallies up with a lot of what was on the table in the MEP deal at the Ministry of Justice, and of course the Employee Deal at the DWP is still on most members’ minds when this subject comes up.

Speculating further at this point doesn’t particularly add much to the discussion. It has been suggested that details of “worst-case scenarios” may even serve as a useful stalking horse for HMRC, making anything less severe, though still detrimental, appear positive by comparison.

Any changes to our terms and conditions should not be linked to our pay. In the current negotiations, pay and contract reform are being dealt with in two separate sets of talks, but will be “brought together” at the end, making the link clear. This needs to be rejected, not just because it is an important principle but especially because no new money is being offered for this pay deal and it is constrained by what can be found within existing budgets.

Part of the savings that will account for a pay rise will clearly come from what efficiencies HMRC feels will result from contractual changes. However, although not explicitly stated, it is apparent that various other developments on the horizon such as savings from office closures, the false economy offered by the proposed privatisation of Brexit-related work, perhaps even the benefits of automation following on from the lessons learned by the lockdown and the hasty increase required in digital capacity, will all figure into the calculation.

In opposition to these, we should seize the space to argue for positive changes. If more work can be automated, does that allow for workers to have more leisure time by decreasing the full-time working week? Can we equalise annual leave not by giving everyone less but by scrapping the ten year wait to go up to a full thirty-day entitlement? If working from home reduces the amount of time that we are taking off sick, can we therefore afford to return everyone to an entitlement of six months’ full sick pay from day one of employment? If we have improved our digital infrastructure, does that aid the planning of work in a way that lets more workers rather than less to enjoy the benefits of flexi time? And so on.

It is clear that the negotiators will not be asking these questions when talking about contract reform, sadly. However, it is not clear what they will be talking about.

HMRC managing the message

That latter point leads on to the problems inherent to negotiations in confidence. In general terms, it takes control and agency away from union members, making it harder for them to hold negotiators accountable for what is said.

This form of collective bargaining, then, isn’t about delegates of the workforce advancing collectively agreed demands, with the vigilance of the workers themselves and their activity leverage for a positive response to those demands. Instead, it is about the union as a middleman, negotiating with the bosses for something they can sell to the workers, who in this scenario are passive customers rather than active participants.

The obvious objection to this is that the union’s membership is not clamouring for activity, held back only by the machinations of the bureaucracy. Members expect the negotiators to reach a deal on their behalf and make a recommendation in a ballot, and whilst they may be hungry for a conclusion, they’re not particularly clamouring for the kind of transparent bargaining process outlined above. This is true, and without going too much into it here, this is a situation that unions themselves have engineered over decades – managerialism encouraging passivity.

This doesn’t mean that the situation is therefore to be tolerated, or that there’s no gain to be made in trying to push for a more genuinely transparent, collective approach through serious organising. There absolutely is. Instead, the Group appears content to try and grow through a service provider union model, and to allow HMRC to manage the message.

The department is adept at propaganda, as the last five years of the Building Our Future programme shows. The 2015 announcement of mass office closures in favour of a limited number of regional hubs followed the leak of a document showing the bosses’ union-busting approach. The communication of the closures then followed to a tee the union buster’s script: direct communication between senior leaders and staff, cultivation of a direct employer-employee relationship, the promotion of HMRC as a “community” built around its new hubs, and a constant flow of announcements and events designed to cultivate acceptance and even enthusiasm for its approach.

The union then, in line with the explicit stated aim of the union busting paper, waged no industrial campaign against closures but instead “work[ed] with [HMRC] to achieve [HMRC’s] change agenda whilst seeking to protect the legitimate interests of members as far as possible.” The fruits of this approach are some offices open longer than expected and some additional hubs where not previously planned – alongside the largest redundancy programme in Civil Service history going ahead in the middle of a global pandemic at the same time as the union is debating how it responds to a failure to grow its membership.

In the same vein, HMRC have moved to manage the debate over pay and contract reform to their benefit. This hasn’t been as easy, since contractual rights still provoke strong responses from members, but pay provokes equally strong responses and so the employer has been keen to frame contractual reform as about fairness whilst also offering it as the only way to resolve pay. This isn’t impossible for the union to refute, but to do so it needs to articulate its industrial action strategy clearly enough to convince more members the worth of voting for it and put a plan in place to deliver the ballot and the subsequent action.

In the meantime, as well as its direct propaganda, HMRC has also produced support packs for both senior and front-line managers so that they understand what’s required of them to ensure the employer’s line lands with the workers. This is explicitly tied in with senior management’s newfound desire to promote union membership, emphasising that the “collective” in collective bargaining is the employer and the union acting in partnership, again allowing for an easier sell of whatever deal emerges and – crucially – laying the groundwork to frame the union as wreckers if necessary, e.g. opposition to a deal would be presented as the union denying members a pay rise, despite HMRC’s efforts to work in partnership, and so on.

Negotiations in confidence up until the point a final deal is available to be published only plays into HMRC’s strategy. This was raised by the one member of the PCS Independent Left on the GEC back in August, where a seemingly positive response from one of the lay negotiators agreeing that members should be kept informed was contradicted by the Group Secretary expounding at length on the supposed virtue of keeping the employer’s confidence.

Worryingly, not only can members not scrutinise the direction of travel in talks, but the GEC itself is also being updated only in vagaries.

At the GEC meeting on 14 October, the Group Secretary advised that reports on the talks were being provided to the General Secretary’s office. This is due to Mark Serwotka, with good reason, multiple times voicing concerns that what is happening in HMRC is the biggest potential threat to the unity of the national pay campaign. However, when asked whether the GEC could also receive these reports or at least the information in them, the response was to respond at length about what the reports did not say, but not to provide a concrete yes or no to the actual question asked.

This question was again asked by the IL member on the GEC. However, it is notable that the Broad Left Network have published an article laying out similar concerns. They, too, argue that “negotiators must resist the pressure of talks behind closed doors, designed to exclude members from the process, so the pressure of tens of thousands of members can’t be mobilised during negotiations. This makes it difficult to consult with members and to organise a response when the final terms of a deal are on the table; any campaign has to begin from a standing start.” As is clear above, we agree.

Unfortunately, whilst the IL have spoken up at the GEC, the BLN have not. Their members in HMRC have opted so far to remain within Left Unity, unlike BLN members elsewhere, which is why the BLN claims it is working with members of the HMRC GEC who are “fighting a rear-guard action” within LU. That rear-guard action, it seems, remains behind closed doors as much as the pay negotiations – making forcing movement towards our apparent common position all but impossible.

What next?

It is possible for PCS to use this situation to improve our organisation on the ground, vital as membership continues to decline, and strengthen our hand in negotiations. To do this, we need:

  1. Clear demands. We need to make sure the national pay claim, of 10% underpinned by a real living wage, isn’t lost in the discussions. We also need to articulate a case for terms and conditions to not only be uncoupled from pay but also improved for all through positive rather than detrimental changes.
  2. Open, transparent negotiations. All members should know what stage negotiations are up to, what their negotiators are saying on their behalf, and what is and isn’t on the table.
  3. Regular mass members’ meetings. Ideally these should be on the employer’s time, and we should ask for that. Even if they aren’t, they should be the beating heart of the campaign, with open debate allowing all members to have their say, and feedback from the meetings informing the GEC’s decisions.
  4. A serious grassroots organising effort. As well as the obvious stuff such as producing leaflets and tailored recruitment materials, we need to encourage branches to engage with members, one-on-one, to agitate, educate and organise. Using the Organising App to map responses, we need to ensure our arguments are getting across and turn passive support into active participation.
  5. Visible campaigning activity. That active participation should reflect where we are in the campaign and what leverage we need, from everyone putting a sign on their desk or signing a petition to protests and lightning walkouts.
  6. The option of industrial action. The best offer we can achieve through negotiations, even backed up by robust organising and campaigning, isn’t necessarily the best offer we can achieve at all. If we end up in a ‘take it or leave it’ situation with a bad offer, we should be prepared to force the employer’s hand by striking.

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