PN A15
12 July 2004
Creating a world class tax system : HM Revenue and Customs
The Spending Review today announced the detailed spending plans for a new single tax organisation, designed to enhance service to businesses and improve taxpayer compliance, while delivering substantial efficiency savings.
As first set out in the 2004 Budget, spending for the Chancellor’s Departments will be frozen in cash terms until 2008, with significant efficiency savings to release resources for front-line delivery and other priorities.
Paymaster General Dawn Primarolo said:
“This settlement reflects the challenges of the efficiency savings the new HM Revenue and Customs department must deliver, the increased emphasis on its front-line responsibilities, and the huge opportunity we now have to grasp the vision of the O’Donnell Review and turn the benefits envisaged into reality.”
Details
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Following the O’Donnell Review of the Chancellor’s Departments, the new integrated HM Revenue & Customs (HMRC) department is being created to improve customer service and cut compliance costs, to tackle the revenue losses caused by non-compliance, avoidance and fraud, and to ensure the UK’s tax system is administered as efficiently as possible.
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The Spending Review settlement sets aside funds for the creation of the new department, for further action to combat fraud, for the implementation of the Lorry Road-User Charging scheme, and for the improved collection of national statistics on population, pensions, assets and wealth, government output and of similar regional statistics.
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Tougher targets will be adopted for reducing revenue losses affecting the VAT (to reduce losses to 11% of the theoretical yield), tobacco duty (to reduce the illicit market share to 13%), spirits duty (to reduce the illicit market share by at least half) and direct tax regimes (to reduce the scale of losses by £3 billion a year by 2007-08).
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Across the Chancellor’s Departments total annual efficiency savings of around £550 million will be achieved by 2007-08. This will include a total gross reduction of 16,850 departmental civil service posts and, after 3,500 redeployments to front line activities, a total net reduction of 13,350 posts.
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HMRC is also to relocate some 1,950 posts from London and the South East, in response to the recommendations of the Lyons Review. Across the Chancellor’s departments, 2,550 jobs are to be relocated by March 2008, with a further 2,500 by March 2010, giving 5,050 relocations in total.
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The Spending Review announced the continued implementation of the Lorry Road-User Charging scheme, designed to provide a level-playing field for all hauliers using UK roads, irrespective of their nationality, and to be revenue neutral to hauliers who already pay UK fuel duty.
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HM Treasury’s core administration budget has been set flat in cash terms.
|
£ million
|
2004-05
|
2005-06
|
2006-07
|
2007-08
|
|
The Chancellor’s Departments
|
|
|
|
|
|
|
|
|
|
|
Chancellor’s Departments
|
|
|
|
|
|
Resource Budget
|
4,770
|
5,083
|
5,133
|
5,183
|
|
Of which Admin Budget
|
4,640
|
4,962
|
4,962
|
4,962
|
|
Capital Budget
|
341
|
310
|
410
|
510
|
|
Total DEL 1
|
4,891
|
5,169
|
5,319
|
5,469
|
|
|
|
|
|
|
HM Revenue and Customs 1
|
4,330
|
4,582
|
4,737
|
4,892
|
|
HM Treasury 1
|
228
|
237
|
239
|
236
|
|
Office for National Statistics 1
|
163
|
179
|
175
|
173
|
|
National Savings and Investments 1
|
170
|
168
|
168
|
168
|
|
Government Actuary’s Department 1
|
0
|
0
|
0
|
0
|
1 Full resource budgeting basis, net of depreciation
|
Notes for editors
- The O’Donnell Review of the organisations dealing with tax policy and administration was announced by the Chancellor in July 2003. The report, “Financing Britain’s Future” was published on Budget day 2004, and can be seen at the website address below.
- A designate Executive Chairman (David Varney) and Deputy (Paul Gray) have been appointed to HMRC, and will join the department on 1 September 2004. A Bill containing the legislation necessary to integrate Inland Revenue and HM Customs and Excise will be introduced as soon as Parliamentary time allows.
- Further details of Lorry Road User Charging can be seen on the Customs website.
- Media enquiries to HM Treasury press office on 020 7 270 5238. Further information available at the HM Treasury website.
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