Integration in the public sector: HM Revenue and Customs
A HMRC case study

Page 2: Why integrate the Inland Revenue and HM Cutoms?

Gordon Brown, The Chancellor of the Exchequer, asked for an independent review into whether this integration would be a good idea. Gus O'Donnel, a leading civil servant, produced the review. His report, 'Financing the Future', came to the conclusion that it would be. Gordon Brown announced the decision to merge the Inland Revenue and HM Customs in the 2004 Budget and the two departments became one on 18 April 2005. When businesses in the private sector merge, the main reasons are:

• cutting costs by operating on a large scale (economies of scale)
• reducing waste
• lower prices and faster service to consumers
• other objectives such as increasing market share and increasing profits.
• The first three of these reasons also apply to integration in the public sector. The main reason for public services is to help people rather than produce profits.

The O'Donnel review showed that integration would lead to:

• an improved level of service
• lower costs
• more efficient service for the public
• a reduction in administration for all.

The new organisation was created in April 2005 and will continue to change to become better at what it does.