Montagu served over the next 30 years in a number of government Departments, including
Health and Social Security, the
Cabinet Office,
Transport and
Social Security. He was involved, as a civil servant, in a number of key policies for both
Labour and
Conservative governments, including the establishment of
executive agencies, major pension reforms and the
privatisation of the railway. In 1997 he was appointed Chairman of the Inland Revenue through an open competition. Over the next seven years, Montagu led the Inland Revenue through the greatest changes in its history, as it became a social department responsible for paying out what had previously been social security benefits and led the rest of Whitehall in the development of electronic services. He changed the culture of the department, making it more outward-facing and responsive to its customers, and took a particular interest in diversity, for which he was appointed the Civil Service Diversity Champion. Montagu also chaired the Civil Service Benevolent Fund. During his time the Revenue won numerous awards for its achievements in this field. In his last year as chairman, Montagu became embroiled in two controversies, the first when the systems installed by IT firm
EDS for the new tax credits system failed to work (EDS subsequently paid nearly £100m compensation for this failure and the second over the joint sale, with Customs, of the Revenue's estate to Mapeley Steps Limited headquartered in Bermuda. This decision, required by the
Treasury as part of the 1998 public spending settlement, was based on legal advice that to have excluded the company would have been illegal under European law; it was subsequently described by the National Audit Office as a model for other departments and a commercially sound deal ["PFI: the STEPS Deal" HC: 530 2003-2004 . ==Retirement==