Fresh HMRC cuts raise MP’s concerns over repeat phoneline chaos

HMRC plans to reduce spending on the services by one-third over the next five years and a Public Accounts Committee (PAC) report published today slammed the department for its previous failures, which involved huge delays for customers phoning its helplines.

The chaos was the consequence of previous major round of job cuts undertaken by the department after it was told to reduce costs by the government.

The committee expressed concerns about the future plans of the tax-collection organisation to reduce the costs of these services by a third in the next five years.

MPs on the PAC expressed concern about the proposals and warned that helpline services “collapsed” in 2014/15 due to HMRC underestimating the demand for telephone assistance when it reduced available staff by 5,600.

It said in a report that HMRC admitted its service levels were “unacceptable” at times and, in October 2015, the average wait to have a call answered reached almost 35 minutes due to HMRC underestimating demand for its telephone services and cutting 5,600 staff.

Waiting times only recovered when 2,400 new staff were recruited.

However, the 2015 Spending Review commits HMRC to further reduce costs by 2019-20, which it plans to do by digitising its services.

In the report, the committee said that during the previous round of staff redundancies, HMRC did not consider the costs to customers of “providing a sub-standard service”.

It advises HMRC to clarify its understanding of customer behavior to estimate how demand will change. It must also be confident that it can maintain service standards, the PAC said.

The committee found that for every £1 saved by HMRC by cutting telephone services staff, the additional waiting times and call charges cost customers £4.

It suggested the government should carefully estimate the financial costs of people using its services, and use this information when allocating resources. An optimal balance needed to be struck between the government’s needs and that of customers.

Meg Hillier, chair of the PAC, said: “The prospect of HMRC making further cuts to spending on customer service will chill the blood of many taxpayers.

“HMRC’s recent performance in this area has been appalling for long periods and left members of the public counting the cost in time and money.”

The long waiting times and costs to customers sent a “dismal message” to small businesses, the self-employed, and people simply seeking advice, she said.

Hillier also stressed that government spending targets “must not come through ill-conceived measures that effectively penalise the people departments are intended to serve”.

She observed that HMRC was now aiming to reduce call waiting times to five minutes or less, and said “we will be holding senior officials to account on this target”.

An HMRC spokesman said: “This is an inaccurate, out-of-date reflection of our phone performance. We acknowledge that service levels in the early part of last year were not acceptable and we apologised at the time.”

Also in the PAC report was an analysis of the tax office’s current plans to change its IT contract with Capgemini, which provides its major tax collection systems.

This has been the government’s largest IT contract and accounted for 84 per cent of the HMRC’s total spend on technology between 2006 and 2014.

The committee agreed that the HMRC was in a better place to make this significant change than it was in 2015, but stressed the next two years would be crucial in delivering it successfully.