Morale at Revenue & Customs has sunk to a new low, according to a staff survey published as the department launched a shake-up of its top management structure.

It will on Sunday advertise for a non-executive chairman to help turn round the reputation of the department, which was badly hit by last autumn’s loss of computer discs containing data on child benefit recipients.

The decision to appoint a non-executive chairman – who is likely to come from the private sector – marks a new departure for the Revenue, which has previously been led by an executive chairman. The job is seen as too big for a single individual, given the scale of the challenges it faces.

Even before November’s furore over the loss of child benefit data, the Revenue was under attack for deteriorating service levels.

It has struggled to maintain standards while being obliged to cut costs by 5 per cent a year in real terms and reduce staff by 25,000 out of a total workforce of 94,000.

It acknowledged that the lost of the computer discs, announced in November, was part of a wider systemic failure, although it denied that it was linked to workforce reductions.

The staff survey – which was conducted in the week when the discs were lost – revealed a lack of confidence in the leadership of the Revenue. But since then, senior management has conducted extensive meetings with the workforce in an attempt to rebuild morale. Service levels in some particularly badly performing areas such as value added tax registrations have improved markedly, according to tax professionals.

The Revenue, which is led by Dave Hartnett, the acting chairman, will advertise the position of chief executive later in the year.

It is calling on advice from Naguib Kheraj, Barclays former chief financial officer, Kate Barker, a member of the Bank of England’s monetary policy committee, Phil Hodkinson, former group finance officer of HBOS, and Rudy Markham, former group financial officer of Unilever.

They are acting as “an external challenge function with experience of [the] running and organisation of large business” for six months.

Kieran Poynter, the chairman of PwC who was appointed to review data security at the Revenue, published an interim review in December which criticised the complexity of its management structure. He said his “immediate impression of HMRC was one of complexity, both in terms of its many constituent parts and its matrix management structure”. This coincided with an overhaul by the Revenue of its organisational structure, designed to produce clearer accountability.

Mr Poynter said that he would address both short-term measures to improve data security and longer-term issues, including “the management accountability framework, tone from the top, culture and training as well as technical measures”.

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