An influential committee of MPs has launched a scathing attack on the Treasury and Revenue & Customs, days before the Chancellor is due to deliver his first Budget.

In a damning report, which reprimanded the Chancellor’s departments for “failing to lead by example”, the Commons Treasury Committee criticised poor service at HMRC and demanded to know why senior civil servants there had been awarded 60 per cent rises in their bonus payments to an average of £7,727. Other staff received an average £453 bonus.

This came just weeks after it emerged that bonus payments are set to rise again this year to £23.1 million, up from £18.9 million. Last year HMRC was responsible for losing the personal details of 25 million people, prompting the resignation of Paul Gray, its chairman.

The MPs’ criticism comes at a critical time for Alistair Darling as he strives to draw up a Budget that will shore up confidence in the faltering economy.

It will also come as a blow to staff at HMRC, where morale has hit a new low. More than half believe the quality of service they offer is worsening and 78 per cent believe it has changed for the worse, according to a survey of 20,000 staff from UHY Hacker Young, the accountant. Nearly 60 per cent of them do not feel that the department is well-managed, it found.

The Treasury also came under fire for appointing unsuitable people to government departments. Despite an undertaking to stop this by 2006, the Ministry of Defence recently recruited a finance director with no relevent professional qualifications.

The MPs said that the Treasury was failing to measure the service it provided adequately. They recommended that the Cabinet Office should oversee the Treasury’s performance.

The committee’s report said: “Whilst other government departments may sometimes fail to give a good account of their performance, we look to the Chancellor’s departments, the engine of government spending, to demonstrate clear progress against their targets. Sadly in some areas the Chancellor’s departments fail to lead by example.”

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