Written evidence submitted by Nigel D Cook (HCSA0001)             

 

Customer service performance

The majority of HMRC operating cost expenditure is on staff costs. 

HMRC Service levels to customers (tax-payers!) have deteriorated over the last 5 years.  Examination of HMRC workforce management information shows that from December 2019 (pre COVID-19 pandemic) the numbers of HMRC call centre staff (EO and AO/AA level) have fallen by 3% and 25% respectively while the numbers of senior staff increased during the pandemic and are now 38% higher compared to 2019 levels ….

Action is needed post the COVID-19 pandemic to restore HMRC to the pre COVID-19 pandemic grade structure, this would increase HMRC call centre resources and directly benefit HMRC customers while at the same time delivering financial efficiency savings.

The following 3 page paper sets out the current situation and how HMRC productivity could be improved.

The writer of this briefing paper is a Subject Matter Expert on Business Efficiency Delivery and is keen to ensure that the HMRC is properly managed post the COVID-19 pandemic to maximise HMRC capabilities while minimising costs.  This short briefing paper is an extract from the initial draft of a Strategic Outline Case (SOC) which is available for free on request.

 

 

 


HMRC Operating Cost Inflation

  1.                Before the COVID-19 pandemic, HMRC was efficiently and effectively run. But since December 2019, while total staff numbers [Endnote 1] across HMRC have increased by only 5% , HMRC has become increasingly inefficient due to much larger than required increases (38%) in the numbers of senior grade staff at Grade 6/7 level.  Of note is that such senior staff do not provide public facing services such as Call centre staff resources.
  2.                Post the COVID-19 pandemic, the 2021 declaration [Endnote 2] on Government Reform issued by the last Government stated: “We will reduce the number of people needed to make decisions, taking out layers of reporting wherever we can”.  But there have been no reductions in the size of the senior grade cadre within HMRC at Grade 6/7 level (or Senior Civil Service). Over the years from December 2019 to April 2024, SCS staff numbers increased by 27% and Grade 6/7 staff numbers increased by 38% while staff numbers at EO and below fell. 
  3.                From December 2019, SCS and G6/G7 post numbers increased by 1.5 new SCS/G6/7 posts created each and every working day.  Each senior post costs ~ £70,000 a year, and therefore on every working day, the annual HMRC paybill has increased by £100,000 while customers (taxpayers) have experienced more and more difficulty in contacting HMRC re their tax affairs.  It is accepted that COVID-19 was a unique event with severe impact on all Government Departments, but now that the COVID-19 pandemic is over it is time to return to a pre COVID-19 pandemic staffing mix for the HMRC.
  4.                Given increases in total Civil Service numbers across Government Departments (particularly senior grade posts created for the response to the COVID-19 pandemic) the then Chancellor announced [Endnote 3] an end to Civil Service expansion and capped headcount.  Government Departments were to submit productivity plans that modernise the Civil Service and reduce the size of the state.  The HMRC Annual Report does report that staffing levels have delivered efficiencies but the reality is unclear given that such efficiency savings (SEO and below) have been more than cancelled by the growth in senior staff numbers…….  Of note is that the HMRC 2023/24 Report states that “In May 2024, HM Treasury announced £51 million additional funding for HMRC to cover approximately 1,500 temporary staff for 2024-25 to bring customer service performance to target levels for answering the telephone and handling correspondence within 15 working days.”  It would be more efficient for HMRC to reduce the numbers of senior SCS/G6/G7 staff, and dispense with temporary staff by using some of the savings to recruit permanent junior (EO/AO/AA) staff to permanently provide telephone call services to those taxpayers whose tax affairs often prove too complicated for on-line services to resolve. If the lack of call centre staff is not corrected by March 2025 then HM Treasury will have to provide additional funding for HMRC in 2025/26 to again bring customer service levels back to target levels.
  5.                If workforce planning takes place over the remainder of this Parliament and SCS/G6/G7 senior grade numbers in HMRC are reduced back to pre COVID-19 pandemic levels with other staff grade numbers being fixed at current levels, the HMRC civil service pay bill could be £144M lower per annum than today with total savings over the remainder of this Parliament of £563M.  The simple financial analysis on the last page also shows that even if the numbers of HMRC junior (call centre) staff were to be increased back up to 2019 levels this proposal would still deliver an overall nett saving of £22M a year.

Recommended Way Ahead

  1.                Workforce planning needs to be carried out within HMRC over the next few years to address the HMRC senior grade post structure, and return senior grade post numbers to pre COVID-19 pandemic levels before the end of this Parliament.
  2.                Step 1 : Freeze all HMRC grade numbers at current complement levels (ie no new posts at any grade could be created without deleting an existing post at the same grade). This should avoid £770M in extra HMRC paybill costs over the remainder of this Parliament.
  3.                Step 2 :  “HMRC Senior Grade Workforce Plan” : Set up a dedicated team to reverse the growth in senior grade staff numbers by total workforce planning - Centrally manage reductions in numbers of SCS/G6/G7 staff across HMRC by carrying out productivity reviews and scrutinising grading of all senior posts created since December 2019, deleting non-value adding work (COVID-19 specific, PR, Comms, Diversity, Equality and by delegating work to lowest possible grade and delayering by removing management posts at G6 and G7). This step should deliver a gross saving of £563M and nett savings (nett of redeployment/restructuring costs) would be £415M over the remainder of this Parliament.  This efficiency cost saving can then be used to recruit additional permanent call centre staff to improve customer facing (taxpayer) services.

This briefing paper is an extract from a draft Strategic Outline Case (26 pages), which has been drafted against the HM Treasury 5 business case model.  The draft Strategic Outline Case is available free on request.

End Notes:

[1]: https://www.gov.uk/government/collections/hmrc-workforce-management-information

[2] :  https://www.gov.uk/government/publications/declaration-on-government-reform/declaration-on-government-reform

[3]: https://www.gov.uk/government/news/end-to-civil-service-expansion-and-review-of-equality-and-diversity-spending-announced-in-productivity-drive

All financial figures in this paper are in FY2023/24 values.

 


              Written evidence submitted by Nigel D Cook (HCSA0001)