Examination of Witnesses (Questions 100-119)|
MONTAGU KCB, MR
MONDAY 18 MARCH 2002
100. I see. The Chairman said he has an agent
and you answered a question earlier on and said that large income
people do not do their own, they use agents, but I tend to do
my own because I think if this place passed a rule that it should
be self assessment I would like to see a rule that we are forced
to do our own and then we will realise what people have to go
through and what awful forms we first developed and how difficult
it is to fill them in. I am glad to hear you say that the forms
are going to be easier.
(Sir Nicholas Montagu) The forms are going to be a
lot easier, Mr Jenkins, particularly in the way that I described.
In future we will even stop thinking of them as forms because
they will be much more directly interactive. It will be Brian
Jenkins on the screen and never mind the paper that there used
101. Excellent. When you do advertising you
must do an assessment between the value you are going to get from
TV advertising and the value you are going to get from putting
fliers in with the normal tax demands. Which have the greatest
(Sir Nicholas Montagu) TV by far. Fliers are relatively
cheap, and that is why we do them, and radio is cheaper than TV.
TV is famously the most expensive medium but it is also famously
the highest impact medium and before having any campaign we would
always trial it to see what the impact was and see how people
reacted to it. Again we use the Central Office of Information
as our agent. We would have a competition to choose the company
which offered us the best deal on what we judged to be the highest
102. So even though you were only targeting
a small number of people and you were targeting an even smaller
actual number of active individuals, the ones who deal with people's
tax returns, you still found that TV was the way to approach them?
(Sir Nicholas Montagu) Remember we are targeting potentially
nine million people. That is approximately a third of all taxpayers.
Yes, it is worth it. If I can just stray slightly from my brief
and remind you of our previous discussion, when we were talking
specifically about self assessment. By following up all the people
who had not returned forms by March last year and whom we would
have expected to, we got in £208 million extra by the end
of April and `that ain't hay'. It really is worth reminding people
because it is not only the forms they have to get to us by 31
January, it is the money too.
103. And the fine, yes. You answered one or
two questions but I did not get the answer that I felt we required.
If I were going to put a project together I would want to know
when the break-even date was, when I could start saving. Although
I see some savings in the Report, I am not sure I have read where
we expect that my savings line overtakes my expenditure line and
I start to make a profit. When did you anticipate this would occur?
(Sir Nicholas Montagu) I cannot, Mr Jenkins, I am
sorry. Again, I do not want to be unhelpful to the Committee,
but it does go to that very difficult point of predicting customer
behaviour. Every single public and private sector body that I
know ofand again I think this is a point that Sir John
makeshas not succeeded in accurately gauging likely levels
of take up. What I am trying to do, and I shall be discussing
this with my Treasury colleagues and ministers, is to break down
that 50 per cent target that I described as "crude"
to what we might reasonably set ourselves as targets for different
104. Okay, so you are sat around a table and
you are discussing it and you say, "This will be a great
idea, we will put this IT system in." Somebody says, "How
much will it take? How many savings will it make?" "Oh,
not a penny." I do not believe that as a scenario. I believe
that someone set bands of take-up and pay-back date.
(Sir Nicholas Montagu) I hate to disillusion you,
Mr Jenkins, but we did not. We have been absolutely straight with
the National Audit Office on the figures and they are reflected
in Sir John's Report. We are committed to savings from internet
services of 1,300 people which represents £30 million a year.
I do come back to the point I made previously. The 1999 White
Paper on Modernising Government contained the Prime Minister's
wish to make this country the best to do business electronically,
and the targets stem from that. What we have to do as a government
department is to ensure that by 2005 we have the infrastructure
in place that makes it possible for people to file their returns,
access their data, make payments and communicate with us electronically,
and that is what we are doing.
105. I do not want to go down the realm of discussing
what the Prime Minister or any other minister said, but are you
honestly telling me that the British state at the present time
does not have a priority for how it spends its resources and that
we do not have to put schemes up to get a best value purchase
out? We could have picked a plethora of electronic information
delivery systems in this country and poured money into them with
no expectation of a return whatsoever. Hopefully, we have a panel
or someone sitting there to pick if not winners not every loser
with the basis for a plan which you submit an application for
the resources to be given to you?
(Sir Nicholas Montagu) But I do not think it works
that way, quite honestly Mr Jenkins. What I am not saying is that
we do not have a rigorous business appraisal of every project.
We doand Barry could go into details if you wanted. Equally,
what I am saying is I do have to go back to the Prime Minister's
commitment because as civil servants we are here to deliver Government
commitments, and one of those commitments is that by 2005 the
Government should make it possible for all transactions between
it and its citizens to be electronic. What we are doing is playing
our part in delivering that commitment.
106. Okay, albeit we are not sure what it is?
(Sir Nicholas Montagu) I am absolutely sure, I have
enunciated it; by 2005 everybody will be able to file their returns,
access their data, make payments and communicate with us electronically.
That is the totality of the transactions.
107. I have just been given my two-minute warning
so I have got be quick on these next ones. The next thing I have
got a worry about is the expansion rate. I would have alarm bells
ringing, but then again I was spending a company's money in the
private sector so they wanted quick returns as much as possible.
This is an inclusive deal and we have to make sure there is no
social exclusion. We know that society is going to expand its
usage of electronic projects. What expansion rate do we use nationally,
because this must be part of a wider business and personal usage?
I do not just mean e-mail but on effective usage of the system,
what predictions have we got?
(Sir Nicholas Montagu) I am sure that there are national
projections of the increase in internet usage but I come back
to the point that I made earlierit is notoriously difficult
to predict and nobody has succeeded in predicting internet usage
for a particular purpose. Sir John cites the example of the State
of California with a very simple flat rate tax.
108. That is more worrying. I will get back
to simpler ones which I think are within your control.
(Sir Nicholas Montagu) Good.
109. As the electronic revolution expands so
does the demand on staff. How difficult is it now to retain staff
and get staff who understand and can run these systems?
(Sir Nicholas Montagu) As our business manager in
this area, Terry is best placed to give you a detailed answer.
More generally, it varies around the country. As Sir John's Report
notes, we had to move very quickly to get the people in Terry's
Electronic Business Unit properly skilled up and it remains a
top priority that they should be properly skilled to provide services
to the public. Terry, would you like to amplify that?
(Mr Hawes) I would only say that the Electronic Business
Unit is located in Yorkshire where we have a better opportunity
to recruit the people. It has expanded rapidly and that itself
is a challenge in getting the people trained and so on, but we
are conscious of that problem and so far we have tackled that
110. Can I ask for one expansion on that. Would
you say that it is easier and you get the right level of staff
at the right pay rates outside the South East?
(Sir Nicholas Montagu) Yes, that is generally true.
Plus of course, Mr Jenkins, to schmooze you but at the risk of
alienating the rest of the Committee, you get a better class of
person in Yorkshire!
Mr Jenkins: I shall not comment on that.
111. Thank you. Mr David Rendel from Berkshire.
(Sir Nicholas Montagu) You are not bad there either!
112. We are fighting back. Can I ask you to
turn to Paragraph 3.18 on Page 24 to start with. There are four
different comments about how to run these schemes. I am interested
in the third one there "keep initial publicity to a minimum".
Is that a good idea to start off a scheme by keeping initial publicity
to a minimum?
(Sir Nicholas Montagu) I think with some schemes it
makes sense. With a scheme that you are starting off almost experimentally
where you do not want to be swamped by demand, where you want
to be able to have a gradual start in order to apply the build
and learn approach, I think that restricted publicity can make
sense. With something like filing for self assessment electronically,
which was a major Government undertaking, it would have been wrong
to restrict publicity.
113. If it is ever right because you need to
restrict the amount of usage why do you not do it by piloting
it in small groups rather than restricting the publicity? It is
sheer chance which ones take it up.
(Sir Nicholas Montagu) We do that too, Mr Rendel.
114. You said that in some cases it was right
to restrict publicity in order to make sure that not too many
people use the system. If you want to make sure that not too many
people use the system why do you not restrict it to a small number?
(Sir Nicholas Montagu) We do that too. For example,
the e-CT portal I mentioned is at the moment being rolled out
to 20 companies on a trial basis.
(Mr Hawes) There are practical difficulties with trialing
an internet service, almost by definition. There are things you
can do but the medium is not entirely under our control and we
have software houses who release products and so on.
115. Surely on the internet system you could
say "this system can only be used by those whose names begin
with an A"? Indeed, it is my understanding that in order
to use the system at all you had to send out a CD. So you had
a way of stopping more than a certain number having it and using
(Mr Hawes) Two years ago it would have been very difficult
for us to select individuals from around the country whom we were
happy to use our system. That would have been very very difficult
and potentially controversial. The technology we have now allows
us to work with groups of people through the development phase
and then use the technology to let them have the service. It will
be invisible to anybody else. Then we can let everybody else see
it while the trialists use perhaps a further development that
other people cannot see. The technology has helped us to do exactly
what you are suggesting much more efficiently.
116. It does seem to be terribly hit and miss
to keep initial publicity to a minimum. You have no idea then
who is going to see it. You are completely at the whim of the
public or whoever happens to look at the advert. Indeed, you do
not even know how many. Just by keeping publicity to a minimum
you have no real idea of how many people are going to see the
publicity anyway. It is very hit and miss.
(Mr Hawes) If I can reiterate, we did not have and
I do not think anyone had two years ago technology which would
sufficiently support that sort of operation. It could have been
done but very messily and with great difficulty. We now have the
means to do that effectively.
117. It could have been done by not sending
out CDs to more than a certain number of people. You could have
said in your publicity "Only the first 100,000 will be allowed
(Sir Nicholas Montagu) Our main concern, Mr Rendel,
is with outcomes here, that in the sort of situation that the
Comptroller and Auditor General describes, we need to see how
a new service works. We do sometimes do it in the way I described.
For example, we are trialing external e-mail on a very, very limited
basis at the moment, not through limited publicity but in a more
targeted way between certain of our offices.
118. Sir Nicholas, I am not suggesting for a
moment that you do not sometimes have to do it through small groups,
the point is how do you choose that small group. It seems to me
that just keeping publicity to a minimum is a very hit and miss
(Sir Nicholas Montagu) It is one way. What we are
really after is not a particular group but it is making sure that
a system is okay before we roll it out more widely.
119. It comes back to the way you choose the
(Sir Nicholas Montagu) Yes.