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HM Revenue and Customs: Bonuses

Volume 473: debated on Thursday 13 March 2008

To ask the Chancellor of the Exchequer what criteria are used to determine (a) the total amount available for bonus payments to HM Revenue and Customs staff in each pay year and (b) the amounts awarded to individuals as bonuses. (193313)

A common pay framework for the Senior Civil Service (SCS) is determined by the Cabinet Office, and not delegated to individual Departments. This framework includes incentive payments for the highest-performing staff who can demonstrate that they have delivered the outcomes expected of them and service improvements that matter to the public. The Cabinet Office also determines the size of the overall SCS bonus pot each year.

Full details of SCS pay criteria and awards are set out annually by the Senior Salaries Review Body. Its 29th Report on Senior Salaries 2007 (Cm 7030) includes a review of the pay system in 2005-06 and recommendations for 2006-07.

In accordance with this guidance, HMRC paid performance awards in four non-consolidated, non-pensionable tranches for 2006-07: zero, minimum (£3,000), medium (9 per cent. of base salary) and high (15 per cent. of base salary). Payment of these bonuses was made in November 2007.

Pay for other staff is delegated to individual Departments, who are expected to negotiate pay deals with their staff in accordance with pay remit guidance issued by HM Treasury. HMRC agreed a three-year pay remit with the Treasury in 2005, and a three-year pay settlement with staff and unions for pay awards in 2005-06, 2006-07 and 2007-08. HMRC has made provision for a proportion of the overall funds available to be invested in non-consolidated performance awards.

HMRC’s bonus pot of 0.80 per cent. is currently below the minimum level of 2.5 per cent. recommended in the pay remit guidance. HMRC’s pay settlement provides for a payment for a “top performer” of between 2.5 per cent. and 5 per cent. of salary, and a smaller payment for a “good performer” whose salary has reached the range maximum.

HMRC sets the actual percentage of performance awards paid each year on the basis of affordability, after analysing performance marks received by staff and the resulting cost implications.