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Thursday, 27 October 2011
The Government Responds
The House of Commons Treasury Committee recently published this paper on HMRC "Administration and effectiveness of HMRC: Government Response to the Sixteenth Report from the Committee"
The committee's recommendations are in BOLD and the government responses (it is the government that ultimately is in charge and is responsible for HMRC, as noted in an earlier article about Jack, when MP's have a go at HMRC, they should in fact be directing their ire at the government/themselves) are in normal font.
Unsurprisingly there is a large section dealing with staff morale etc, eg "The evidence we have received about the management culture within HMRC, supported by the staff survey results, is very disturbing".
HMRC's handling of post and phones also receives some "comment".
Additionally, according to the government, it seems that the real time information system WILL be implemented on time!
I look forward to writing some pithy articles in 2013 referring back to this government statement.
Anyhoo, here are a few extracts:
"We welcome the fact that HMRC is updating the 2006 KPMG study on the burdens imposed by the tax system to take account of changes over time and urge it to broaden the study to examine the wider “hassle” costs imposed by complying with tax law. This work may be costly. We seek assurances from Government that the findings of the updated study will be acted upon....
HMRC is adopting a new and enhanced customer cost reduction measure. This measure is extended in scope in two regards: it includes individual customers (as well as business customers), and it includes wider customer compliance costs such as where processes do not run as smoothly as they
should or where there is error....
The possible displacing of costs from HMRC onto taxpayers has been a long-running concern for tax agents, businesses and individuals. Not enough is known about the impact of resource reductions at HMRC on the administrative burdens faced by businesses and individuals. It would be counterproductive if ‘efficiencies’ achieved at HMRC resulted in greater costs being placed on the wider economy. Such a result would impede growth. Government will be reluctant to take effective measures to address this issue in the absence of robust evidence about its extent. We urge the representative bodies who made these claims to us to come forward with quantitative evidence about the extent of this problem....
It is important that HMRC staff who are planning or implementing process changes have some personal understanding of the possible impact on the wider public. We recommend that HMRC staff, particularly senior staff, spend time visiting businesses, tax charities and tax practices to see the impact of process changes on the ground....
The Government accepts the Committee’s conclusion....HMRC staff do engage directly with its customers to get first-hand experience of the impact of changes it is making....
We recommend that the Government look again at the profiling of the savings HMRC is expected to make alongside the efficiencies that are expected to deliver them to ensure the two are commensurate and allow a degree of contingency in the case of unexpected problems with implementation. Technological improvements and process changes within HMRC have and will continue to deliver genuine efficiency savings. However, there have been credible suggestions that HMRC has in the past made savings by reducing staff numbers before the enabling efficiencies have been fully realised – with resulting impacts on performance and costs.
The Government partially accepts the Committee’s recommendation. HMRC keeps profiling of cash and benefits under systematic review and adjusts as necessary to ensure efficiencies and savings remain in step.....HMRC’s Workforce Management Plan is designed to manage the overall reduction in staff numbers and ensure the Department has the right people in the right place with the right skills to deliver core HMRC business, to maximise redeployment opportunities for those staff whose roles may be coming to an end at their current locations and to take advantage of estate reduction opportunities. Wherever possible the Department tries to ensure that staff numbers are reduced in line with enabled changes to work processes and systems, in order to maintain performance...
There is some evidence that the workforce change programme may have led to a disproportionate loss of experienced people at HMRC. We recommend that HMRC examine how it implements job cuts, with the aim of preserving the professional expertise in tax it needs to deliver an effective service, and report back on the changes that have been made as a result of this process. (Paragraph 27)
The Government accepts the Committee’s recommendation. HMRC’s Workforce Management Programme is working to take advantage of estate reduction opportunities as they arise and to maximise redeployment opportunities for those people whose roles may be coming to an end at their current locations. The work to get the right number of people with the right skills in the right place supports HMRC’s role in tackling the UK deficit by both contributing to the reduction in Government spending and by maximising the collection of revenue.
HMRC does not anticipate using large-scale severance schemes during the Spending Review period. Any schemes that are offered will be small-scale and closely targeted at people for whom there is really no other option. HMRC’s main tool for meeting staff reductions is the redeployment of those in need of new roles into other essential departmental operations....
HMRC’s task is made harder by the increasing complexity of the tax system and deficiencies in the underlying legislation. The Government has already announced a package of reforms to the way tax policy is made. Following the O’Donnell Review of 2004 HM Treasury has had lead responsibility for making tax policy, whilst HMRC is responsible for “policy maintenance”. The time has come to review how those arrangements are operating with a view to ensuring the practical impact of new tax legislation is adequately considered even before the consultation stage begins. (Paragraph 29)
The Government does not accept this recommendation....
Staff engagement at HMRC was a major concern of our predecessors throughout the last Parliament. The management team have achieved some small improvements in relation to organisational purpose whilst staff remain dedicated to their work despite the considerable pressures on them and the organisation, some of which originates from outside the Department. However, this cannot conceal the overall picture. Relatively positive staff attitudes towards immediate colleagues and superiors stand in stark contrast with overwhelmingly negative attitudes towards organisational change and the management of the Department. It appears likely that the poor handling of the recent PAYE reconciliations and relentless negative publicity has further harmed engagement and morale. This widespread disengagement is a serious problem for a Department about to undergo further restructuring, and which was described by one witness as “stretched almost to breaking point”. (Paragraph 50)
The Government notes the conclusion. HMRC’s Executive Committee (ExCom) accepts that action is required to improve leadership across the Department and acknowledges the need to strengthen trust in and across the Departments’ leadership. Working with the whole leadership community, ExCom will lead, direct and drive work to address this need. This provides opportunity to deliver improvement across every aspect of leadership and across the entire leadership cadre from ExCom downwards. The way in which this work will be carried out will be intended to build trust through a high degree of involvement and collaboration with people at all levels in HMRC.
The People Function at HMRC will have a clear role in proactively ensuring compliance with standards of delivery and behaviour on HMRC-wide issues and ExCom will hold all leaders to account in respect of these standards.
The Executive Committee will also ensure all leaders, from top to bottom in HMRC, visibly adopt and promote the Leadership Behaviours. ExCom members have also personally signed up to specific leadership behaviours that they will improve. ExCom recognised that it must be seen to be leading from the front in order to rebuild trust across the organisation and address engagement concerns. ExCom members are regularly visiting offices across the UK and proactively seeking views, listening to and acting upon feedback. They will be communicating frequently through intranet messages, video, blogs, staff dial-ins and hot seat forums so everyone knows how they are progressing in addressing concerns to improve engagement and morale.
Any organisation facing the constant job losses that HMRC has faced over the last five years would experience problems with staff engagement. The Spending Review settlement means that some areas are likely to experience greater stability, even expansion, whilst other parts of the Department continue to be reduced in size. Ensuring that engagement does not fall still further in these latter areas will be an enormous challenge for HMRC managers. (Paragraph 55)
The Government notes the Committee’s point.
The evidence we have received about the management culture within HMRC, supported by the staff survey results, is very disturbing. There is a perception that the Department is run on the principles of close control and management scrutiny, with little opportunity for individuals to develop autonomy and exercise their skills. Whilst there is a need for consistency in dealing with people’s tax affairs and appropriate performance management, a culture such as the one described to us is likely to harm staff morale and lead to disengagement and poor performance. (Paragraph 64)
The Government notes the Committee’s conclusion and HMRC is taking steps to build more productive relationships with its people as well as improve the leadership skills, in order to address the perception described.
HMRC is also committed to supporting its leaders in this challenging environment. HMRC is confident that, at the most senior levels, the recent selection processes have enabled the appointment of the right people into the right roles. New leadership behaviours have been introduced and used within the selection processes and as part of the overall development of the organisation. As such, managers at all levels will continue to be assessed against these behaviours as part of the regular appraisal process and used as a foundation to individual leadership development plans....
The National Insurance and PAYE Service should ultimately make PAYE work more effectively and ensure efficiencies across the Department. However, the problems resulting from its flawed implementation have done significant damage to the public perception of HMRC and the tax system more generally. It is crucially important for the credibility of the management team that the 2012 target for clearing open cases is met and that improvements in overall performance follow soon afterwards.(Paragraph 83)
The Government accepts this recommendation and HMRC is on track to hit its 2012 target to clear all old open cases.....
We welcome the move to introduce Real-time Information (RTI). We agree with the professional bodies that the system must be tested thoroughly before full implementation, with full consultation with users and close co-operation with the Department for Work and Pensions at all stages. We note that large employers will Administration and effectiveness of HMRC: Government Response 11 be required to use the new system in January 2013, which is before the system has been tested through one complete tax year. (Paragraph 91)
The Government agrees the Committee’s conclusion that the system should be thoroughly tested for a year....
HMRC has committed to an ambitious timescale to deliver Real-time Information, driven in part by the importance of the project in delivering the Universal Credit. The history of large IT projects subject to policy-driven timescales has been littered with failure. The timetable is made more ambitious by the fact HMRC will still be resolving the legacy of open cases and stabilising the National Insurance and PAYE Service during the project’s early stages. Introducing Real-time Information before HMRC and the Government can be sure it will work correctly would run 12 Administration and effectiveness of HMRC: Government Response unacceptable risks for the reputation of the Department and the tax system. We recommend that HMRC and DWP have contingency plans in place in case a delay becomes necessary. Given the importance of the project we further recommend that the preparations for Real-time Information in both HMRC and DWP are subject to external audit as implementation proceeds, for example through the National Audit Office, to ensure that they are as robust as possible. We expect arrangements to be put in place for the National Audit Office to report quarterly to Ministers, this Committee, the Public Accounts Committee and other relevant Committees to ensure Ministers in both Departments can be held properly accountable for the progress of the project. (Paragraph 93)
The Government partially agrees this recommendation...
We welcome HMRC senior management’s acknowledgement that the Department’s customer service performance has been unacceptable. We are not convinced, however, that the problems can solely be accounted for by the problems with PAYE in 2009–10. The evidence received by us and our predecessors suggest that poor service standards have been an issue for many years and have not been fully reflected in HMRC’s customer service measures....
The evidence we have received, correspondence from the public and the coverage in the professional press suggest that long delays in responding to post at HMRC are endemic. This is unacceptable...
The Government partially accepts this recommendation although it prefers to wait....
It is inevitable that HMRC will have to pursue some taxpayers for outstanding debts and it may have to be forceful in doing so. However, the tone of some of the letters being sent out suggest the “potential consequences” are inevitable unless payment is immediately forthcoming. These letters appear to have been widely used without sufficient thought to whom they were sent to, even being sent to people who did not 24 Administration and effectiveness of HMRC: Government Response actually owe money. Such language is appropriate only where there is strong evidence of persistent and deliberate non-payment; it is completely inappropriate where the amount owed is in dispute, where the amount may be zero, or where the recipient is vulnerable. We recommend HMRC take steps to ensure such hardhitting correspondence is used in a more proportionate way, is better tailored to individual case histories and contains information on the specific debt in question. (Paragraph 168)
The Government accepts the Committee’s recommendation."
Tax does have to be taxing.
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