I have the following blog on the CIPFA Public Finance site today:

HMRC is in trouble. Maybe the only people who are surprised are the senior management of our tax authority. But the fact is that HMRC and its management (in the form of the never publicity-shy Dave Hartnett, in particular) have hit the buffers hard.

I can, I think, see why Dave Hartnett thought that odd. For years HMRC have been admitting they’ve been behind in reconciling year end PAYE returns. Some 18 million cases were believed to be outstanding because the staff to do the job had been sacked and their computer replacements had yet to work. Then, at long last H M Revenue & Customs apply the IT system that they’ve been waiting to use for so long to the data they have in hand — for which, one guesses, the management was expecting plaudits — and their world collapsed around their ears.

But if the management  were caught off guard — as Dave Hartnett’s unfortunate comments to the BBC Money Box programme revealed — then I’m afraid to say it is largely their own fault.  The simple fact is that HMRC have been out of step with their staff, the tax profession and taxpayers for a long time.

It’s simplistic to explain this away in one blog — but one apparently semantic issue gives an insight into why things have gone so wrong. That issue is the insistence on the part of HMRC that the people they deal with are their customers. Let’s be clear: whether those people are taxpayers, tax credit claimants, or anyone else, they are not customers of HMRC. And to say that they are offends them. They want to be treated as taxpayers, paying tax; as tax credit claimants claiming payments due to them; as national insurance contributors paying their dues: but not one of them I suspect, has ever wanted to be called a customer when they know they aren’t.

I happen to think language is important: and that it fundamentally reveals the mindset of participants in a dialogue. In this case, HMRC senior management’s insistence that the people they are dealing have a status they do not recognise alienates taxpayers and all others alike. More importantly, it suggests that HMRC thinks it’s a business. But it isn’t.

A business does have customers, and they can pick or choose who they wish to deal with. If they get a poor service (and we all know some businesses that survive by being cheap despite persistently doing so — not wishing to mention any airlines by name) then they can expect the consequence. But every indication is that from the era of David Varney onwards HMRC has had much the same attitude as a low cost airline, preferring to deal  with people online, making it as hard as possible to communicate effectively with a named person, cutting costs whenever possible, and delivering a service which would be (possibly) acceptable to some if the majority had a choice of going elsewhere — except that option was not available to us. So we got annoyed instead. Even the tax profession got annoyed and demanded more tax inspectors!

This is the malaise that the HMRC has hidden from view. And now it’s revealed it indicates something more worrying still — which is a belief that public services can be supplied on the cheap and people will put up with them. I think we’re now realising that this is not true. Far from it. The fundamental difference between a public service that only a public agency can supply (and forget all the twaddle about privatising HMRC that some on the right wing of politics are now rolling out: the British public are not going to accept that) and a private sector operation is that the public sector supply has to be of the best possible standard precisely because there is no alternative. That’s why nothing else will do.

HMRC have not understood that. Its management has delivered a service seriously below expected quality as a result. And this has to change.

Can the HMRC board, dominated by people experienced in the private sector and with no evidenced commitment to quality of public sector supply — or even of evidenced awareness that the two are fundamentally different — deliver the required change? I don’t know. But if you push me I’ll say I doubt it.

There’s a need for serious change at HMRC. Start by calling us by our proper name. But go on to then to deal with underlying fundamentals as well. HMRC will never be loved. But things can get a lot, lot better than they are.