Heseltine vows to slash civil service red tape

Michael Heseltine yesterday announced that the Government is to streamline the two offices for collecting income tax and National Insurance contributions.

The deputy Prime Minister stopped short of announcing merger of the Contributions Agency and the Inland Revenue offices, although that was recommended by the Government's own task force on deregulation. "They are hugely significant recommendations. This is a very big idea. You have two very large organisations. There are costs associated with merging them. One wants to be sure it is the right way to go forward," Mr Heseltine said.

In a move anticipating a possible merger, civil servants have voted to form Whitehall's largest union through a merger of the two unions covering the departments. The National Union of Civil and Public Servants (NUPCS), whose members are spread throughout the government service, is to merge with the Inland Revenue Staff Federation (IRSF) to create the 160,000- strong Public Services, Tax and Commerce Union (PTC).

Further talks will follow and are expected to lead to an even bigger 300,000-strong organisation with the inclusion of the Civil and Public Services Association, which represents clerical grades.

John Sheldon, joint general secretary of PTC, said Mr Heseltine's plans had shown the logic of the merger between the two unions, adding: "Mr Heseltine will no doubt become our best recruiting sergeant. We are in a much stronger position today to defend the interests both of our members and high quality public service."

Mr Heseltine, who is also in charge of the Government's fight-back against Labour, made it clear he was rejecting total merger of the offices because it would lead to speculation that the Government planned the long-term merger of the two tax systems.

He pointed out at a press conference to announce a series of deregulation measures that Labour ran into difficulty over plans to lift the ceiling on NICs, because it would lead to higher taxes for those on average earnings.

The merger would be too controversial for the Government to touch before the election. Such a move would be disastrous for the Tories, after being accused of breaking election pledges by raising taxes. He sidestepped that minefield, but it could now become a perilous area for the Government.

Some Whitehall insiders believe yesterday's announcement could still leave the merger of the taxes on the agenda for after the next general election.

"Once you start going down the road of merging the collection and administration, immediately questions are asked about how you are heading for merger,'' he told reporters. "It is a limited step because we are not taking the decisions you are asking about."

Other measures to reduce red tape include a review leading to abolition of licences before businesses can start operating; scrapping "need" tests restricting the opening of new off- licences, pubs and bookmakers and the repeal of redundant food hygiene regulations and labelling.

Denying it would open the public to the risk of food poisoning, Francis Maude, the former Treasury minister heading the task force, said they included regulations on fish cakes. Pressed by a journalist over the contents of fish cakes, Mr Heseltine said: "I don't know what world you live in but it sounds like a gold fish bowl. I'll have to tell the Prime Minister."