Question to the HM Treasury:

To ask the Chancellor of the Exchequer, how HMRC will ensure that workforce planning decisions do not incentivise replacement of permanent staff with externally supplied labour.

Customer demand for HMRC services can fluctuate significantly, both seasonally and in response to external events. HMRC uses Managed Service Providers (MSPs) to provide additional, flexible capacity to help manage these types of variations and support performance on customer helplines. Incorporating MSPs into the overall resourcing mix helps HMRC maintain customer service standards, while retaining expertise within its workforce.

This contract was procured through a Government Commercial Agency (previous Crown Commercial Service) framework and meets the stringent controls and standards set by the Agency for Government contracts. This includes ensuring all employment legislation, including National Minimum Wage and Employment Rights Act are adhered to. As Customer Service is skilled work, all suppliers must pay market rates to secure people with the appropriate skills to meet HMRC’s needs.

HMRC are not privatising their services. HMRC will continue to deliver the majority of its customer services through its own customer service staff, and overall HMRC staffing levels are expected to increase over the Spending Review period. HMRC can only recruit to known average levels of customer demand or it risks not providing value for money to the taxpayer. Using mixed resourcing approaches, including MSPs, gives HMRC more flexibility to support customers.

HMRC provides the initial training for the services covered by the MSPs, before approving suppliers to train subsequent cohorts of staff themselves. All operational guidance is developed, owned and updated by HMRC, and HMRC retains full decision‑making authority, with a dedicated team actively managing the partnership.

HMRC is currently in an initial approximately 18 month ‘proof of value’ phase for its use of MSPs and has no plans to publish full staffing projections for MSPs or customer services staff at this stage. Overall the projected cost for 12 months was approximately £23m of resourcing spend. Future workforce decisions will be informed by the outcome of this phase and taken in line with normal business planning and Spending Review processes.