Corporate report

HMRC and Valuation Office Agency: gender pay gap report and data 2020

Published 15 December 2020

Introduction

As HMRC’s Gender Champion and Chief People Officer, I am pleased to publish our 2020 gender pay gap report for HMRC and the Valuation Office Agency (VOA).

This coincides with the refresh of our Equality, Diversity and Inclusion (EDI) Strategy for 2020 to 2024, which has a clear focus on expecting all colleagues to actively consider equality, diversity and inclusion in everything we do.

Our EDI strategy focusses on creating an inclusive, respectful and representative workplace that reflects the society we serve, where all colleagues can thrive and where difference is valued.

We will do this through actively attracting and retaining colleagues from diverse backgrounds and by each of us taking personal responsibility and holding one another to account through our systems and behaviours.

Embedding EDI into everything we do isn’t just the right thing to do. We know that diverse teams lead to better decision making and improved outcomes. Having a representative, balanced and diverse workforce is essential to creating a great place to work for all our colleagues and will ensure HMRC represents the UK population we serve.

I am delighted that we have improved on our gender pay gap and bonus pay gap from last year. The mean gender pay gap is 4.8%, and the median gender pay gap is 5.4%. The mean bonus gap is 0.6% and the median bonus gap is 0%.

Despite our progress, we want to reduce our pay gap further and we can only do this by understanding the reasons it exists. Our gender pay gap is related to workforce distribution. Women are over-represented in more junior grades, where pay is lower (see table 1). Increasing the representation of women in senior roles has reduced our gender pay gap in 2020.

We have reduced our gender pay gap for bonuses by improving our in-year reward system, and we will continue to monitor the impact of our changes. In addition to monitoring, we will be including analysis of our pay and bonus gap data by grade in our wider policy improvement work (see action 2).

I am committed to deepening our understanding of why we have any gender pay gap and taking action to close any unfair gaps.

We have embedded pay gap reduction actions into work already being undertaken to review and improve policies and processes, and are enabling managers and colleagues to make informed and actively inclusive decisions. We will also review how we develop our talent to identify where we might target support at specific points in the pipeline.

To further work towards gender equality, it is important that we continue to be led by insight and remain focussed on outcomes. We have recently made our departmental diversity data more accessible to all colleagues.

We intend to work with and support our Regional Centre Change Leads and Customer Group EDI leads to use diversity data to inform their decision making and action planning, and to review it to measure the impact of their interventions (see action 3).

Finally, a note about COVID-19. We recognise there may be specific and negative effects of the crisis on individuals. For example, the pandemic has more impact on carers, more of whom are women; and we recognise that there are also positives as a result of the added flexibility of working from home. We will ensure that we continue to seek feedback from our staff networks about this as we shape our future strategy.

Our aim longer-term is to provide flexibility where we can, and although there is more work to do on this over the coming months before we make decisions, we will take the opportunity to review how we will work in the future, and actively seek to retain a more diverse workforce.

Collectively, the actions developed as a result of this gender pay gap report reflect our broader approach to embed consideration of equality, diversity and inclusion into our decision-making, and make HMRC and VOA a great place to work where we celebrate and champion gender equality.

Esther Wallington, Chief People Officer, HMRC

Overview

In 2017, the government introduced legislation that made it a statutory requirement for organisations with 250 or more employees to report annually on their gender pay gap. Government departments are covered by the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017, which came into force on 31 March 2017.

These regulations underpin the Public Sector Equality Duty and require relevant organisations to publish their gender pay gap by 30 March annually. This includes:

• the mean and median gender pay gaps in hourly pay
• the mean and median gender bonus pay gaps
• the proportion of male and female relevant employees who received bonuses
• the proportion of male and female full-pay relevant employees in each pay quartile

The gender pay gap measures the difference between the average earnings of men and women across an organisation of the labour market. It is expressed as a percentage of earnings for men.

If a workforce has a particularly high gender pay gap, this can indicate there may be a number of issues to deal with, and the individual calculations may help to identify what those issues are.

The gender pay gap is different to equal pay. Equal pay legislation deals with unlawful pay differences between men and women who do equal work. That means they carry out the same jobs, similar jobs or work of equal value.

We have not included contractors who are on HMRC’s payroll and provide a personal service. Under the Equality Act 2010 (2017 Regulations, schedule 1, paragraph 2(3)) we are not required to include data relating to a relevant employee if the employee is under a contract personally to do work, and the public authority does not have, and it is not reasonably practicable for the public authority to obtain, the data.

HMRC supports the fair treatment and reward of all our people irrespective of gender through our values of:

• being professional
• acting with integrity
• showing respect
• being innovative

This report gives the gender pay gap data in HMRC and VOA as at 31 March 2020 and covers 68,258 employees as defined by Regulation 2(1) of the Equality Act 2019 (Specific Duties and Public Authorities) Regulations 2017.

Our calculations followed the legislative requirements and we confirm the data reported is accurate.

Organisation structure and pay

HMRC and VOA uses the standard Civil Service grading system ranging from Administrative Assistant (AA) to Senior Civil Service (SCS), plus a Training grade covering our tax programmes.

Since 2019, HMRC and VOA has reduced its workforce by 304, with the largest decreases in our AA and Administrative Officer (AO) grades.

Women continue to be over-represented in more junior grades, where pay is lower, and under-represented in more senior grades.

Table 1: HMRC and VOA Data as at 31 March 2020 showing relevant employees

Grade (increasing seniority)	Number of men (% of men who work in this grade)	Number of women (% of women who work in this grade)	% Women
AA/AO	9,608 (30.5%)	14,614 (39.8%)	60.3%
Officer(O)	7,244 (23.0%)	8,960 (24.4%)	55.3%
Higher Officer (HO)/Senior Officer (SO)	10,147 (32.2%)	9,705 (26.4%)	48.9%
Band T	360 (1.1%)	265 (0.7%)	42.4%
Grade 7/6	3,906 (12.4%)	3,003 (8.2%)	43.5%
SCS	230 (0.7%)	198 (0.5%)	46.3%
non-grade	9 (0.03%)	9 (0.02%)	50.0%
Total	31,504	36,754	53.8%

Delegated grades - AA to Grade 6

As a Civil Service department, HMRC and VOA is governed by public sector pay policy as set out in the Civil Service Pay Guidance for delegated grades. SCS is covered by separate SCS pay guidance published by government.

The pay guidance defines the overall financial parameters for Civil Service pay awards each year to ensure that these pay awards are consistent with the government’s overall objectives.

The AA grade consists of a single spot rate of pay, whereas grades AO to Grade 6 each have basic pay ranges consisting of a minimum and maximum rate of basic pay. There are no target rates, steps or progression points within the pay ranges. Upward movement within the pay ranges is via annual pay awards.

To cover our geographical offices across the UK, each grade has 2 pay ranges, London and national.

HMRC’s settlement date for annual pay awards is 1 June. For 2019 a consolidated award was paid to all our people, irrespective of performance and gender.

Dependant on the nature of the work undertaken in certain roles, additional allowances or supplements may also be paid, which together with the basic pay forms the annual salary.

The values of the pay award are negotiated with our 2 recognised trade unions.

Senior Civil Service

Pay and grading for the SCS across the Civil Service are governed by the Cabinet Office.

The SCS structure consists of 3 grades: Deputy Director (SCS1); Director (SCS2); and Directors General (SCS3), and each grade has a set pay range with a minimum and maximum rate of basic pay.

The settlement date for annual pay awards is 1 April, and for 2020 the award comprised 3 elements:

• a consolidated award paid to all our people in the SCS
• a non-consolidated, non-pensionable award linked to exceptional (moderated) performance against objectives for the performance year 2019 to 2020
• a non-consolidated, non-pensionable award linked to short-term exceptional performance during the year

The parameters for SCS pay in HMRC are managed by the Cabinet Office.

Gender pay gaps data

Gender composition

Image showing that females make up 53.8% of the workforce at 36,754, down by 1.4% from 2019, and males make up 46.2% at 31,504, up by 0.7%.

2020 gender pay gaps in hourly pay

Mean pay gap

Image showing the mean hourly rate is £14.11 for females and £14.82 for males, a gap of 4.8%. This is a reduction of 2.8% from 2019.

Median pay gap

Image showing the median hourly rate is £12.72 for females and £13.44 for males, a gap of 5.4%. This is a reduction of 4.2% from 2019.

HMRC and VOA’s gender pay gaps in hourly pay have reduced this year. This is due to more women having been promoted or recruited to higher grades.

Compared to 2019, there was an increase of 2.7% women in the Higher Officer (HO) grade; a 3.3% increase of women in the Senior Officer (SO) grade, an 8.3% increase of women in Grade 7 and a 6.7% increase in Grade 6. There was a 16.5% decrease of women in the AO grade.

The combination of the distribution and pay for our workforce continues to drive our mean and median figures, and whilst we have a very diverse workforce, a large number of our female workforce remain in the lower pay grades.

Pay elements used in the calculation include allowances. Voluntary salary sacrifice for childcare vouchers and cycle to work schemes are excluded.

Proportion of men and women by pay quartiles

Table 2 shows the proportion of full-time female and male relevant employees in each pay quartile.

Table 2

Quartile	Female %	Male %
First (lower) quartile	52.6	47.4
Second quartile	59.7	40.3
Third quartile	54.6	45.4
Fourth (upper) quartile	47.3	52.7

The pay quartiles are created by ranking each full-time employee in order from lowest earning (first quartile) to highest earning (fourth quartile).

The pay quartiles broadly reflect the uneven distribution of women through the grades in HMRC and VOA, meaning that proportionally more women than men are in lower paid grades.

We will look further into the data and roles that are represented in these quartiles, to identify any unjustifiable disparities and develop actions accordingly (action 4).

Bonus pay gap data

Bonus pay gap

Mean bonus gap

Image showing the mean bonus pay gap between males and females is 0.6%, a reduction of 3.0% from 2019.

Median bonus gap.

Image showing the median bonus pay gap is 0%, a reduction of 6.3% from 2019.

For bonus pay we captured data for the 12-month period between 1 April 2019 and 31 March 2020 from our in-year and end-year reward schemes.

HMRC and VOA’s bonus pay gaps have decreased this year as 62.4% of men and 61.3% of women received a bonus. In 2019, 62.6% of men and 62% of women received a bonus. HMRC’s in-year reward system for HMRC allows individuals to be rewarded for exceptional performance in real-time and VOA has reduced the number of levels of awards.

Image showing 61.3% of females and 62.4% of males received a bonus in 2020. This was down by 0.7% for females and 0.2% for males from 2019.

Our bonus systems are all gender neutral by design. However, the larger female workforce in the lower pay grades drives our mean gender bonus pay gap, in the same way that it drives our mean gender hourly pay gap.

At HMRC and VOA we are proud to offer our people alternative working patterns, including reduced hours if it suits their lifestyle. However, this does not impact upon the bonus pay gaps, as year-end bonuses are pro-rated for people working part-time.

The median gender bonus pay gap remains unchanged from 2019 at 0%, which for HMRC is due to the large number of Simply Thanks vouchers that were issued during the year (Simply Thanks made up 60% of all bonuses for HMRC and are worth £20).

In 2020 men in VOA received more bonus cash proportionately than women. It is the first time VOA has shown a significant gender disparity within its bonus scheme. Men seem to have received a significantly higher proportion of the higher awards (£300) towards the end of the VOA’s former bonus award scheme.

The VOA bonus award scheme has since been replaced with Simply Thanks vouchers which are largely based on one lower cash level of £20. The new vouchers will be more widely and frequently distributed and we do not expect this disparity to be repeated.

Progress since the 2019 report

Performance management

Following a review of our performance management system we introduced a fundamentally new approach in July 2018. Our Performance and Development Conversations (P&DCs) are for our people in grades AA to Grade 6.

The new approach aims to encourage, support and improve the quality of conversations between managers and their people that focus on the ‘how’ of performance, as well as development, progress, aspirations and wellbeing.

More positively, there are no overall performance ratings, which removes perceptions of bias and increases opportunities for development, engagement, and productivity.

Managers and employees have regular conversations and are asked to record these on the system at least every quarter. We are currently planning to review how P&DC is operating across HMRC, working with the P&DC leads in each part of the business, which may lead to further improvements to the policy and system over the next 12 months.

Reward and Recognition

To support our new P&DC approach, we have our in-year reward schemes. In particular we set upper limits by grade for the High-Performance Award, and the short-term Recognition Award has 3 fixed rates, which means that the award is received in full by people who work part-time.

Equal Pay Audit

HMRC conducts an equal pay audit every 3 years. The 2019 report is due to be published soon after the publication of this gender pay gap report.

Talent and development programmes

In HMRC we celebrate diversity and recognise that our people don’t all want the same things from their careers. Considering this, we provide a wide range of opportunities to help employees to be the best they can be and to progress, whether to more senior roles, or other roles in HMRC or the Civil Service.

To support this, accessibility of our offer is at the heart of our thinking around our talent and development programmes.

Internally we run the Spring, Leap and Ascend programmes, which are now all delivered using digital classrooms (prior to lockdown these were run using a mixture of regional and digital events). We continue to value the inclusivity of our programmes and have put this at the heart of their design, making sure that people of all backgrounds, locations and professions are encouraged to take part.

Across government we continue to work with Civil Service Talent in the Cabinet Office to increase the regional offer for the centrally run Civil Service-wide Future Leaders Scheme and Senior Leaders Scheme programmes.

We have also been working on developing our supporting offer as a department to supplement these cross-government programmes and provide further opportunities for individuals, many of which will be virtual in the current climate. Through this work our aim is to provide an offer that is accessible to all our people and that recognises the challenge for employees with caring responsibilities to otherwise participate.

Flexible working

We continue to support people across all grades who wish to work more flexibly, particularly where representation of women is lower. Most roles are available as job-share, reduced hours or flexible working patterns.

We continue to learn from our experience of COVID-19 and are exploring how we can sustain greater permanent flexibility across our workforce, particularly for employees in exit schemes who are unable to travel to regional centres. A significant proportion of these are female.

Smarter working

To give all employees more choice and a better experience in how, where and when they work, we have invested significantly in mobile technology, launched our Smarter Ways of Working standards and improved our digital skills. Employees can consider a range of remote and flexible working options.

While the majority of our people are currently working at home because of COVID-19, in normal circumstances we offer varying start and finish times as well as remote working including from home, to help support wellbeing, caring responsibilities and work-life balance.

Wellbeing

Through the health and wellbeing campaigns we support and promote, we remind employees of all the wellbeing support and services that are available to everyone. We continue to raise awareness of work-life balance and caring responsibilities, regardless of gender.

Working with our provider for our Employee Assistance Programme, we have introduced two workshops on men’s health and women’s health to build awareness of common gender-associated health issues and offer advice on how to look after your body and mind.

We continue to work towards creating a culture where employees and managers feel confident to talk openly about health concerns and we have embedded this into our performance management approach, encouraging regular conversations about personal wellbeing and establishing what support may be needed.

Data from our annual survey [Civil Service People Survey; December 2019] shows a very small difference between genders in the ‘flourishing at work’ scores [PERMA index], with women reporting a score of 72%, 3% higher than men. Working closely with our colleague-led gender network, gives us valuable insights to enable targeted wellbeing activity to maximise positive impacts for both sexes.

With even greater focus on colleague wellbeing this year during the COVID-19 pandemic, we have provided additional support and advice, created new wellbeing products, and further promoted the services available to all.

SCS locations

We are actively increasing the number of SCS roles outside of London and are developing career opportunities across the regions. We currently have 4 SCS roles filled by job-share (3 at SCS 1 level and 1 at SCS 3 level) and this is always considered as part of our vacancy planning process at SCS. There are 6 women and 2 men, and all job share roles involve at least 1 woman. No job share role is totally covered by men.

Specific actions

For HMRC:

1. we will profile and encourage flexible and part time working for men and women in our communication campaigns, to build a more inclusive workplace

2. we will ensure gender equality is actively considered as part of our policy improvement activity, particularly in our review of how performance and development conversations are operating across HMRC and in ensuring gender parity throughout recruitment and selection processes

3. we will work with and support Regional Centre leads and Customer Groups to take an evidence-based approach to identifying and addressing any gender imbalances in their areas

4. we will evaluate the effectiveness of our talent development activities and target interventions to identify, understand and address points in the pipeline where the proportion of women decreases

5. we will proactively consider gender and grade as part of our planned work to analyse bonus data, to identify if manager discretion could lead to bias in outcome

For VOA:

we will monitor the newly implemented voucher scheme to ensure awards are widely distributed and safeguard against gender disparity.

Annex A

HMRC and VOA

	%
Mean gender pay gap - ordinary pay	4.8
Median gender pay gap - ordinary pay	5.4
Mean gender pay gap - bonus pay in the 12 months ending 31 March	0.6
Median gender pay gap - bonus pay in the 12 months ending 31 March	0.0
The proportion of male employees paid a bonus in the 12 months ending 31 March	62.4
The proportion of female employees paid a bonus in the 12 months ending 31 March	61.3

Proportion of male and female full pay relevant employees in each quartile

Quartile	Female %	Male %
First (lower) quartile	52.6	47.4
Second quartile	59.7	40.3
Third quartile	54.6	45.4
Fourth (upper) quartile	47.3	52.7

	Total Staff
Female	36,754
Male	31,504
Total	68,258