MPs publish report on HMRC: customer service

• Report: HMRC: customer service (HTML)
• Report: HMRC: customer service (PDF)
• Public Accounts Committee

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

“HMRC’s ‘customers’ have no choice over whether or not they deal with the department. It is therefore disgraceful to subject them to unacceptable levels of service when they try to contact the department by phone or letter.

“In 2011-12, 20 million phone calls were not answered. It cost the callers £136 million while they waited to speak to an adviser. And, against its target of responding to 80% of letters within 15 days, the department managed to reply to just 66%. This is an abysmal record.

“We are pleased to see signs that HMRC is changing its attitude. Officials are beginning to realize that good customer service lies at the heart of any strategy to maximize revenues while cutting costs.

“It’s good news for those trying to phone the department that they will no longer be forced to use the more expensive 0845 numbers. Other planned changes include the resolution of more queries first time and a call-back service where this is not possible.

“However, HMRC’s new target of answering 80% of calls within five minutes is woefully inadequate and un-ambitious. The department should set a more demanding target in the short term and a long-term target that is much closer to the industry standard of answering 80% of calls within 20 seconds.

“Just how the department is going to improve standards of customer service, given the prospect of its having fewer staff and receiving a higher volume of calls, is open to question. HMRC plans to cut the number of customer-facing staff by a third by 2015. At the same time, the stresses associated with introducing the Real Time Information System, Universal Credit and changes to child benefit are likely to drive up the number of phone calls to the department.

“Since our hearing it has also been announced that HMRC is to close all of its 281 enquiry centres which give face-to-face advice to customers. This will undoubtedly put even more pressure on phone lines.

“HMRC considers that it will be able to improve service standards by reducing avoidable contact with customers and using its staff more flexibly. It may need to put in additional resources, though, to avoid the kind of plummeting performance we have seen in the past.”

Margaret Hodge was speaking as the Committee published its 36th Report of this Session which, on the basis of evidence from HM Revenue & Customs (HMRC), examined its customer service performance.

HMRC spent approximately £900 million on customer service in 2011-12, around a quarter of its £3.7 billion total expenditure. It received 79 million phone calls and 25 million items of post in the year. People contact HMRC because they want to get their tax right and HMRC is obliged to make sure they get a good service. 

However, in recent years the standard of HMRC’s customer service has been unacceptable. For example, in 2011-12 20 million of the 79 million telephone calls made to HMRC went unanswered and customers incurred costs of £136 million while they waited to speak to an adviser. 

In the past HMRC has considered it too difficult to implement the recommendations we have made to improve services and reach standards that are commonplace elsewhere. We are pleased to report signs that HMRC is now changing its attitude. The Department seems to be realising that good customer service is not a ‘nice to have’ feature that can be sacrificed when resources are tight and workloads high, but an essential part of any strategy to collect revenues while also reducing costs.

While there is much to be done, we welcome the commitments HMRC has now given us to improve the service taxpayers receive. Planned changes include the introduction of a call-back service for customers whose queries cannot be resolved first time, resolution of more queries first time round, and the replacement of all 0845 numbers with cheaper 03 numbers.

HMRC has now set itself a target to answer 80% of calls within five minutes.  While achieving this target would be an improvement on current performance, it remains unambitious and woefully inadequate. It will still leave 16 million people waiting more than five minutes and is far below the industry benchmark of answering 80% of calls within 20 seconds. On quality of service, HMRC meets its internal standards but many are still not happy with the standard of advice they receive. 

Challenges

Challenges for HMRC will increase as the new Real Time Information System, the introduction of Universal Credit, and changes to Child Benefit are likely to lead to more phone calls. At the same time, the Department’s cost reduction plans include having a third less customer-facing staff. 

HMRC expects to maintain customer service with fewer staff by reducing avoidable contact and using staff more flexibly, but recognises that it needs a ‘Plan B’ if things go wrong. If there are significant increases in customer contact, HMRC may need to put in additional resources to avoid its performance plummeting, as it has in the past, let alone improving as it should.

Further information

• About Parliament: Select Committees