As HM Treasury commits £51m to boost capacity of the tax agency’s helplines, an NAO study has found that not enough has been done to raise awareness of digital alternatives
A report has found that customers spent a cumulative on hold to HM Revenue and Customs phonelines during the 2023 tax year – a figure that has more than doubled in the space of three years.
In recent years, work to direct customers to digital services has been a key part of HMRC’s plan to reduce costs and meet savings targets set out in the 2021 Spending Review and the 2022-23 efficiency and savings review – which together require the department to cut £149m in spending a year. HMRC’s strategy has aimed to reduce call volumes and free up staff to deal with more complex queries by encouraging people to turn to its digital services instead.
However, a new report from the National Audit Office found that the efforts have yet to ease pressure on services as much as hoped, and that the department has “not yet done enough” to raise awareness of its digital services.
The report was published in the same week as ministers revealed a commitment of £51m in extra funding to help boost the capacity of HMRC phonelines. The cash injection comes two months after the department announced – and then quickly U-turned on – plans to close its tax self-assessment helpline over the summer months.
When HMRC dropped the proposals in response to criticism, HMRC permanent secretary Jim Harra said it recognised that “more needs to be done to ensure all taxpayers’ needs are met, whilst also encouraging them to transition to online services”.
Yesterday’s NAO report also found HMRC had begun cost-saving staff cuts too early. “At the start of 2024-25, HMRC needed to reduce its overall customer service workforce by 14% in-year to live within its budget. It only achieved a 9% reduction between 2019-20 and 2023-24, over which time its call-handling performance significantly worsened,” the report said.
The NAO also said that digital services have not yet become successful enough to warrant a reduction in helplines. The report revealed that “approximately half the queries we sampled would need contact with an adviser to resolve, including queries about tax on multiple jobs.”
Despite this, HMRC directed to online services nearly a third of callers in the first 11 months of 2023-24, as the enquiries were deemed suitable for an online resolution. Worryingly “HMRC does not currently know how many of these customers succeeded in resolving their query online”, auditors found.
The NAO report recommended “testing and evaluation that is proportionate to the scale of the service change, including understanding customer experiences and obtaining views from customers”.
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And it recommended that “for future spending reviews, HMRC should only plan to realise staff reductions from changes to its digital services once improvements have taken effect and the benefits can be estimated with confidence”.
It urged HMRC to “allow more time for new services to bed in, understand the difference they make, and then make staff reductions when the benefits are demonstrated”.
“Otherwise, services will continue to suffer, and unnecessary service pressures and contact will remain,” it said.
The report also called on HMRC to reassess what levels of customer service performance it needs to achieve value for money; come up with a plan for how it will support customers to use digital services; and invest in raising awareness of its digital services.
To engage with any of its recommendations, HMRC must first “agree sufficient funding with HM Treasury to achieve those target levels or be clear on the level of performance it can achieve if funding is not sufficient”, the report said.
HMRC estimates that 66% of customers’ calls in 2023-24 were avoidable as they could have been dealt with online instead, according to the NAO report.
Responding to the report, an HMRC spokesperson said: “We continue to encourage people to deal with us online or via the app where they can, and we are working to provide even better, easier and always-available online services. But, as we have recognised, these changes need to happen at a speed and in ways that our customers are comfortable with.”
Jim Harra, HMRC’s chief executive, said: “We remain committed to expanding our online services and encouraging customers to go online where they can, as we strive to deliver good services as cost-effectively as possible. But we recognise this must happen at a pace the public is comfortable with.”
