Harra: HMRC needs to reverse customer services headcount cuts

HMRC perm sec says tax helplines need more resources following U-turn on plan to radically reduce phone-based support
Harra at Treasury Committee. Photo: Parliamentlive.tv

By Tevye Markson

26 Apr 2024

HMRC permanent secretary Jim Harra has said the department has been tasked with cutting its customer services staff headcount by 5,000 but is now planning to increase staffing levels again in this area.

Harra said “diminishing resources”, along with a growing customer base, means HM Revenue and Customs' tax helplines are providing customers with support “well below the service standard that we want to give them”.

Answering questions from parliament's Treasury Committee on Wednesday, Harra said boosting the helpline workforce is the only solution remaining to get these services back on track following the U-turn on plans to radically scale back telephone support.

“I am making preparations on the assumption that I will be able to deploy additional resources, whether that comes with additional funding or whether it comes from reprioritising, because there is a lead-in time for recruiting and training and deploying additional helpline advisers so I need to be getting on with that,” he said.

Harra said the 2021 Spending Review set an expectation that HMRC would reduce the headcount of its customer services group – which includes call handlers as well as officials providing postal and digital services – by 5,000 between April 2020 and March 2025.

But he said the cancellation of the department’s plan to shut its tax self-assessment helpline for half the year, with customers to be directed online, among other changes, means the only choice left is to strengthen the helpline workforce.

Asked whether the department had a plan B up its sleeve, Harra said: “Frankly, there really only is one alternative plan and that is to deploy more helpline resources.

“We currently do not have the funding to do that. But we are, of course, in discussions with ministers following the decision on 20 March not to go ahead with these changes. I believe the response will have to be that we deploy additional resources on our helplines,” he added.

“The question is whether that involves reprioritising what the department does or whether we can get additional funding for that additional resource.”

Harra said that talks with ministers have been “very positive and constructive”, but added that ministers have not made any promises.

Under the now-suspended plans, which followed trials last year, the tax self-assessment helpline would have only opened from October to March, and dealt only with "priority queries". The department's VAT and PAYE helplines would have also been scaled back. Support would have remained year-round for customers "who cannot use online services or who have health or personal circumstances that mean they need extra support".

Harra said the cancellation of the plans, which were announced on 19 March and then reversed within 24 hours, means “today, a lower proportion of those calls is being answered”. 

“That wouldn’t have been the case if we'd been able to implement these changes, because customers who we would have deflected to online services are today going through to those helplines,” he added. “So what we've now got to do, given that we are not proceeding with those changes, is to replan what we can do to push our service levels up as high as we can.”

However, Harra suggested changes to the helpline could return in the future. "I'm not saying we will not return to this because it is part of implementing our strategy. We do think it was effective last year. But we're not just pausing to try again. We will reflect with stakeholders, and we will replan the implementation of our strategy and that may or may not include these type of measures."

The perm sec also apologised for the increase in helpline waiting times, which have gone up in each of the last five years. 

“That is our key problem and it's very regrettable and I'm sorry for the experience that our customers get, but we have got very high wait times on some of our helplines,” he said. Waiting times for self-assessment calls had peaked at an average of 38 minutes, he said, "which is far, far too long".

“There are really only two ways of addressing that,” he added. “Either we reduce the demand on the helpline by deflecting demand online... or we increase the resources on the helpline to meet that demand." 

Harra said last year's high inflation levels have only added to the pressures on customer services.

“When we settled the Spending Review in 2021, that assumed that we would have to make £550m annual savings by the end of the spending review period. But some of those pressures on our own costs, like inflation, will actually push that target up to about £770m. So while we are on track to deliver the £550m, there is a gap at the moment in delivering the £770m, which is reflected in the customer service that we can offer.”

The spending review target to cut 5,000 customer-service staff is the same number of officials the Labour Party has said it would add to HMRC's ranks. Labour said last month that its recruitment drive would focus on increasing tax-compliance work.

A poll of 700 HMRC staff by the FDA union, published last month, found that 68% said a staffing shortfall had impacted their work. The union has estimated that investing £1bn in HMRC could raise more than £11bn.

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