HM Revenue and Customs' status as a non-ministerial department "may no longer be accurate" in light of Treasury minister James Murray's appointment as chair of the tax-collection agency's board, a senior MP has said.
Dame Meg Hillier, chair of parliament's Treasury Committee, said last week that "clarity" was required after Murray, who is exchequer secretary to the Treasury, repeatedly told her committee that he was "politically responsible" for delivery at HMRC.
Historically, HMRC's status as a non-ministerial department has meant it is run by civil servants and operates at arm’s length from ministers "to ensure that the administration of the tax system is fair and impartial".
However, in September, chancellor Rachel Reeves appointed Murray, who is the minister responsible for the UK’s tax system, to replace businesswoman Dame Jayne-Anne Gadhia as chair of the HMRC board.
At the time, the Treasury said Murray had been appointed to “help oversee the implementation of his three strategic priorities" for HMRC: closing the tax gap; modernising and reforming; and improving customer service.
At a Treasury Committee meeting last week, Hillier asked Murray directly whether HMRC is still a non-ministerial department, as its website suggests.
"I suppose it depends whether you're talking in the strict letter of the law or whether you're talking about how I relate to HMRC and how I see my responsibilities," the minister replied. "My position is that I lead change at HMRC."
Murray said no legal change had been required for a minister to become chair of the HMRC board.
"The setup and the relationship between myself and the HMRC commissioners and the way in which ministers can issue directions hasn't legally changed," he said. "But in terms of the role that I take, it's one of leadership to help deliver the change that we were elected to do."
The minister also told MPs that as far as he was concerned, the change to having a minister as chair of the HMRC board was permanent – although he acknowledged he could not bind the hands of a future government.
Hillier subsequently put Murray on notice that, based on what he had said, HMRC's publicised status as a non-ministerial department "may no longer be accurate". She added: "That is something we would like clarity on."
'HMRC needs to leave its comfort zone'
During the same evidence session, Murray was quizzed by MPs on what he brought to the role of chair of the HMRC board.
He told the committee the government had "some very clear" priorities" for HMRC. Murray said he had "decided from day one" that he wanted to be "very hands on, talking at the most senior level to the perm sec but also throughout the organisation" to make sure the government's agenda was being delivered "effectively and at pace".
Murray, who previously served as a deputy mayor of London responsible for housing and as a cabinet member at Islington Council, said he was "very focused" on how public sector organisations could be helped to deliver against political priorities.
He said his impression was that in recent years, ministers responsible for HMRC had been too distant from the department's operations.
"There's a principle here where the issue of taxpayer confidentiality has spawned a bit of a culture whereby there's a greater separation between ministers and the broad operational decisions of HMRC than I think there should be," he said.
"Ministers do ultimately have responsibility to give general directions about how HMRC operates, and I wanted to make clear that I would take a role in developing HMRC's operations.
"I fear that what's happened in recent years is that there's been too much of a culture of ministers stepping back and not being directly involved in driving priorities forward."
Murray said HMRC had "some brilliant employees" but that he was keen to add pace to reform.
"What I think is helpful by me being involved is to make sure that, as an organisation, we can transform and take some risks as well," he said. "Maybe get out outside of our comfort zone, say that actually we need to do things slightly differently. We need to test and learn a bit more. We need to work out how we can make this transition to a digital-first organisation, and so on."
Murray said that bringing in external insight to help HMRC was also something he could help with.
He added that the department's current non-executive directors – who include former chair Jayne-Anne Gadhia – were an "absolutely fantastic asset" and that being chair of the board allowed him to get their thoughts "firsthand".
Treasury Committee member John Glen, a former Cabinet Office minister, questioned the rationale for Murray's desire for hands-on involvement with the department at the level of detail he was proposing. He said the minister appeared to be suggesting that he had insights on issues that the "vast, significant professional machine of delivery" that is HMRC does not.
Committee chair Hillier added that HMRC had already drafted in professionals from around the globe as part of its transformation work.
Murray reiterated that his focus was on being involved in delivering change at HMRC.
"I want to work with the excellent people who are employed by HMRC to give my direction, to provide my challenge, to make sure I'm offering my support, to push their change. And to make sure that I'm working with people from across the organisation to deliver that," he said.