HMRC bonuses 'unjustified' say MPs

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The influential Treasury Select Committee said complaints about tax credits rose and VAT processing targets were missed in 2006/07, but lump sums paid to senior staff soared by 60%.

The Chancellor's other departments also came under fire, with the MPs insisting they were not giving enough value for money or setting a good example for the rest of Government.

Michael Fallon, who headed the probe, said the Treasury was the "engine of Government spending", and must demonstrate it was hitting targets.

"Sadly in some areas, such as the Value for Money Delivery Agreements, we have found them failing to lead by example," he said. "If they can't get this right, how can any other department be expected to?"

The Treasury had aimed to ensure all Government departments had financial directors with accountancy qualifications by December 2006, but this has still not been achieved, according to the report.

Mr Fallon insisted: "I find it astonishing that the Government has recently recruited a finance director with no relevant professional qualifications to the Ministry of Defence to run one of the most significant departmental budgets."

The committee found that senior managers at HMRC received an average bonus of £7,727 in 2006/07, up three-fifths on the previous year. The total pot was £18.9 million - and that rose again to £23 million in 2007/08.

The 2006/07 cash was paid mainly due to a 4.8% cut in the agency's headcount, but at the same time there was a "decline in the quality" of its services - which may be linked to staff reductions.

Mr Fallon said HMRC - which was engulfed in controversy over the loss of 20 million child benefit records last year - appeared to be "rewarding failure".