Supplementary memorandum submitted by
Ian Lawrence, Public and Commercial Services Union
Firstly, may I express my appreciation to the
Select Committee for allowing PCS the opportunity to provide oral
evidence which I hope was helpful in terms of supplementing our
earlier written submission.
During the session I indicated that PCS would
do it's best to provide you with additional detail in a number
of areas. I have attempted to do so by matching our comments to
the questions that were recorded by the committee clerk as shown
below.
Number of permanent and temporary staff dealing
with tax credits and also how many are our members
PCS represents around 90% of the total number
of c8,200 HMRC staff working on Tax Credits. We estimate that
there are around 3,700 staff working in the Tax Credit Office
(TCO) offices at Preston and Liverpool where our membership level
stands somewhere between 88-90%. Our members at TCO are organised
into two Branches: Liverpool City Tax Credits and Lancashire Tax
Credits. Within these, PCS members elect their representatives
to negotiate locally with TCO management and they do an excellent
job under difficult circumstances.
We also represent members engaged in Child Benefit
administration in Washington and Northern Ireland and staff involved
in processing work for TCO in various locations around the UK.
These, together with our members employed in Contact Centres are
organised into various geographically based branches.
At the end of December we understand that the
number of Permanent staff working on Tax Credits at Preston and
Liverpool and the Operational Service Units elsewhere were:
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| Tax Credit offices | 2,519.99 Full time equivalents (FTE)
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| Operational Service Units | 101.64 FTE
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| Total: | 2,621.63 FTE
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Non-Permanent was:
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| TCO | 244.59 FTE
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| OSU | 908.76 FTE
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| Total: | 1,153.35 FTE
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It is also expected that further recruitment will take place
this year at TCO/OSUs as follows, to result in a year end forecast
of:
Permanent
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| TCO | 2,604.99
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| OSU | 105.96
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| Total: | 2,710.95
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Non Permanent
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| TCO | 709.22
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| OSU | 985.74
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| Total: | 1,694.96
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Given the c30% of staff at TCO who are on Fixed Term Appointments
(which typically fluctuate between six and 11 months), and that
the first six months membership of PCS is free, it is difficult
to provide an exact figure of current PCS membership within the
response timescale that was set by the Committee.
Details of variations of service in different customer contact
centres across the country (terms and conditions opening hours
etc)
The Tax Credit Contact Centres at Dundee, Peterlee, Bathgate
and Merryhill, provide a service seven days a week from 8:00-20:00.
However, during peak periods they are supported by non-Tax credit
Contact Centres whose opening times vary substantially (ie some
are open at weekends).
We believe that if hours were standardised this would enable
a superior level of support to claimants. We wish to engage with
HMRC management on this issue in line with our earlier proposals
to the 2004 Comprehensive Spending Review.
What weaknesses are there in the tax credit system in relation
to fraud?
PCS reiterates its view that the highly sensitive issue of
fraudulent activity is not solely relevant to the Tax Credits
System. The four areas of "criminal attack" that PCS
highlighted at the TSC eg: Fictitious names gleaned from other
peoples documents, adoption of identity, use of fictitious dependants
and Multiple Identity Fraud, are those which are known to be commonly
used by organised and/or individual criminals on many systems
involving personal identification, with or without financial transactions
being involved.
PCS understands the need to ensure that information on this
subject is provided and handled in a responsible manner that meets
the public interest. This is not served by the type of "sensationalist"
reporting that has recently appeared in the media, often as a
result of pure speculation or, worse still, information supplied
by individuals who PCS are reliably informed, appear to be pursuing
a particular political agenda.
PCS is happy to offer a contextual view of the issues that
can sometimes contribute to the possibility of fraudulent activity
on the tax credits system by criminals. We have however couched
these in terms of constructive solutions that we believe are worthy
of consideration by the Committee and hopefully HMRC.
— We believe that there needs to be a reduction
in TCO/Enquiry Centre (EC) reliance on manual giros (because they
are more open to fraud as well as loss or damage). Instead, consideration
needs to be given to introducing a method to enable a direct BACS
transaction, which allows the interim payment to be made into
a bank account.
There is still an inability to bring manual giros to account
on the system (ie so customer gets overpaid when system payments
issued in full). This happens on both pre-award cases and post
award cases where system payments breakdown and so manual payments
have to be made to avoid hardship.
Enquiry centres should be provided with a manual award notice
template for cases which cannot go through to TCO for award. This
is because of the difficulties caused for customers who need to
claim some "passported" benefits (eg school meals) where
proof of the Tax Credits award is required to verify entitlement.
— Hijacked Identity and Mismatch cases—these
cases take time to resolve and have to be dealt with by specialist
teams in Compliance and/or TCO. Yet the Enquiry Centre is faced
with difficult handling (and not allowed to make hardship payments)
whilst issue resolved. Even where (in a Change of Circumstances
case) these changes are corrected, staff have to manage the history
aspect (ie calculating themselves how the overpayment could have
accrued).
— Introduce genuine same day payments direct from
TCO—in reality, these currently take several days in all
but exceptional cases. This would reduce the reliance on Enquiry
Centres making manual payments, as they are currently the only
option to help claimants who require funds immediately.
The Tax Credits Core System does not show advisors when "cashcheques'
have been physically cashed (only shows the date issued). This
would be useful when dealing with enquiries regarding lost or
stolen "cashcheques".
Do we have an estimation on what percentage or amount is fraud
or claimant error, 460 million pounds is estimation, although
we believe it to be higher, what is our estimated figure?
PCS do not have access to any information that would substantiate
or refute this figure. For the sake of clarity I have looked at
the statement that I made last Wednesday to the TSC, and I did
indicate that "I had heard speculation that this could be
higher".
I would expect that HMRC would be in a better position to
advise the Committee on this question.
Why do some people fall off the system around October and also
what numbers?
I am able to confirm my initial answer to the committee that
this is the period when renewals take place, leading to a high
number of people moving in and out of the tax credit system. This
will inevitably include claimants making fresh applications, those
who are no longer eligible.
I have studied the recent exchanges between the representative
of the Citizens Advice Bureau (CAB) and TSC, and would obviously
have some sympathy with the case history that was used. Nevertheless,
it needs to be remembered that the vast majority of the 6.3 million
tax credit claimants receive what they are entitled to, and on
time.
PCS is broadly in agreement with the CAB recommendations,
especially those which link in to our own views about greater
co-ordination between HMRC and the public/voluntary sector.
Is there another way of providing the childcare part of the
tax credits payment?
PCS is unable to suggest any radical solutions on this issue
at the present time.
Frank Field made the point about staff having to "trick"
the system to suspend the overpayments, the committee would like
to know if we can provide further information on:
If this is HMRC's procedure for suspending overpayments and
whether it takes 40 extra minutes to do this for each case, is
this sustainable/effective? If not, what do we suggest?
PCS has considered Mr Field's comments and can only surmise
that any "tricking of the system" relates to localised
"workarounds" that staff may be operating to overcome
the problems we have already referred to in relation to "Full
Functionality" of the system. However, PCS would be pleased
to see examples of this if they exist.
One of the key measures for improvement among the six that
the Paymaster General announced last year, was that TCO will suspend
recovery action that is currently taking place on a "Disputed
Overpayment" case until that case has been worked or a decision
reached decided.
Recovery must be suspended on ongoing awards to prevent direct
recovery being made by staff in HMRC's Debt Management and Banking
directorate. Cases can be suspended in two ways, Auto suspension
and Manual Suspension.
Auto Suspension
We understand that a "one off exercise" was performed
by Cap Gemini on 06.11.05. Staff were apparently given a list
and guidance on how to identify these cases. Approximately 5,000
cases on the list provided could not be auto suspended. These
cases then had to be worked using the manual suspension guidance.
Manual Suspension
Written guidance: "Suspending Recovery of Disputed Overpayment"
is being used by TCO staff to undertake this work. The Guidance
is at least 10 pages long and is very complex and subject to constant
change. There are 3 types of recovery covered under Manual Suspension.
Direct Recovery—where the applicant is paying HMRC
back directly because of household breakdown, or is no longer
entitled to tax credits.
In Year Recovery—where payments are reduced by HMRC
due to paying the applicant too much at the beginning of the award.
Cross year recovery—where HMRC reduce payments to repay
overpayments from another year
Once a disputed overpayment case has been worked and a decision
made on the recoverability of the overpayment (either remit in
full, part remit, or full recovery the next procedure followed
depends on whether the suspension was auto or manual. Payment
suspension action and working a case through to a decision on
a disputed overpayment is complex and time consuming. It involves
understanding and following lengthy guidance and procedures relevant
to each type of case. The current expectation is that an experienced
member of staff can undertake full disputed overpayment action
on only 3 cases per day. (please see our commentary below on "Targets")
PCS's understanding is that the work load created by suspending
disputed overpayments was not envisaged when the base lined funding
for TCO staffing was agreed. The disputed overpayment work load
has significantly diverted resource from other essential areas
of work within TCO. PCS believes this has had a direct impact
on the increased need for expensive overtime work in the Tax Credit
Office.
Current problems around Overpayments—views from our "frontline"
members
The following is a summary of views and suggestions that
PCS have compiled from the many submissions that we have received
from our members directly involved in Tax Credits work. I commend
them to the Committee.
1. Introduce wider access to the Customer Management
IT Application so that all parts of the business have the same
information on the customer's contact history.
2. The current Hardship framework for Enquiry Centre
local payments does not allow the Contact Centre advisor to know
whether a payment will/will not be made when customer visits.
The decision on whether a payment should be made, and if so, how
much, rests with the Enquiry Centre. Our members in Contact Centres
perceive that the framework allows for inconsistency (ie one Enquiry
Centre might pay, another might not on circumstances presented
by customer).
3. Existing guidance requires regular updating in 3 key
areas—Payments, Childcare and Residency—to reflect
supplementary guidance contained in Newsboards, Hot Issues, etc.
4. Enquiry Centres are often dependent on specialist
teams within TCO to clear certain work-types—yet they have
insufficient access to these teams so that they can check progress,
and ultimately manage customer's expectation around likely resolution
time.
5. Household Notes entries are often ambiguous, cannot
be understood and/or contain jargon. Prevents advisors from establishing
accurately what current position is/what needs to be done.
6. Call Type Processes generally do not include any timescales
(illustrative or otherwise) as to when the particular task/activity
will be processed. Advisors are therefore unable to manage customer
expectation, which leads to repeat calls—and often escalations
and/or complaints.
7. Navigating through Call Type Processes can be difficult
and time consuming—and it is not always clear whether the
right one has been found. Use of a "search engine" would
give easier and more accurate links to the information required.
It would also cut call/enquiry times and improve customer service.
8. Customers do not realise that payments are paid in
advance when the due date coincides with a Bank Holiday. This
leads to confusion and additional (unnecessary) enquiries as customers
seek reassurance.
9. Where Contact Centre advisors have to refer a case
on to TCO via an electronic form, they have to populate the e-form
with standard customer identity information. This takes time and
leads to basic transposition errors. An automatic pre-population
of the e-form would eliminate this and reduce handling time.
10. It is difficult for Enquiry Centre and Contact Centre
staff to determine the exact status of manual giros issued by
the TCO. Household note entries only show when giro paperwork
was completed and despatched by TCO to Worthing TCABS (see above).
This makes it difficult when handling customer enquiries.
11. Delays in dealing with High Severity Verifications'
(HSV's) causes problems for Enquiry Centre/Contact Centre staff
as they cannot resolve the failures themselves. Customer circumstance
(eg low income / dependency on Tax Credits) should feature in
worklist prioritisation—ie introduce some sort of "Fast
Track" service for these vulnerable customers (similar to
the service already offered to Jobcentre Plus customers).
Current Issues on Overpayment Recovery
12. Inability to recover overpayments which have arisen
on ceased awards from any subsequent award to new household(s).
Customers do not understand the underlying principles of different
households—nor HMRC inability to recover from any new award
(even with customer authority) and this causes frustration.
13. Joint and several liability. Whilst Debt Management
and Banking Service (DMBS) staff can explain principles customers
do not understand and/or accept this—main problem usually
centres around who received the Tax Credits payments and those
who have previously been given incorrect advice (ie only have
to pay half). Other related issues:
— lack of clarity on notices issued (ie customers
don't understand whether amount quoted is "full" amount
or relevant "share");
— correspondence automatically issued to both customers—even
when one of them is "nominated" recipient;
— confidentiality (where Time to Pay arrangement
agreed for one customer, cannot divulge to the other);
— sensitivity of recovering from surviving customer
in deceased cases;
— where both customers make repayment, any excess
is automatically refunded to the recipient of the original credit.
14. Inability of DMBS advisors to give customers a full
explanation of the reasons (or combination of reasons) that have
caused the overpayment. Customer has to be "handed off"
to Contact Centres (and customer has to re-dial as no automatic
facility to transfer call) and is often unhappy that this cannot
be handled by DMBS.
15. Double handling when customer advises DMBS they want
to dispute or appeal against the overpayment. DMB do not determine
whether dispute/appeal is "genuine" or just a delaying
tactic—customer basically "handed off" to Contact
Centres. DMBS staff also need to understand when appeal or dispute
resolved and that collection can proceed. Household notes entries
can be unclear.
Other Issues
Overtime
PCS members are being invited to work massive amounts of
overtime to maintain the Tax Credits system. Latest figures that
we have obtained indicate that this typically involves weekend
working as well as weekdays.
We have already illustrated our opposition to the proposed
12,500 job losses across HMRC and believe that overtime is immoral
in this context. PCS calls for a clear commitment from HMRC to
prevent the excessive use of Taxpayers money on overtime which
in our view, masks the need for permanent, well-skilled jobs that
have some certainty of tenure for the individual.
Use of Temporary Promotion
PCS also has an issue around the numbers and duration of
Temporary Promotions that are in place within TCO.
Our estimates suggest that nearly 300 staff have been acting
in the higher grade with 40 of these in post for two years or
more. We are especially concerned at the high numbers of basic
grade staff at E2 who are acting in the higher E1 grade (we estimate
170 at last September). PCS calls for an urgent and comprehensive
joint review of staffing levels at TCO so that our concerns over
the masking of the need for permanent jobs can be addressed.
Targets at TCO
As I indicated last week, PCS has now received confirmation
that individual productivity targets have been introduced into
Disputed Overpayment Work at the TCO.
Whilst PCS has seen an explanation from management, there
has been no consultation about this with PCS under the terms of
the "Jobs Protocol Agreement" that I referred to last
week. We are currently pressing this with senior TCO management
and are investigating claims that individual staff have been denied
access to overtime if targets are not reached.
Fixed Term Appointments
In addition to the staff that are engaged on FTA contracts
there are also 122 staff employed within the Tax Credits &
Benefits Services (TCABS) at Barrington Road Worthing.
Since TCABS was originally set up in October 1999 the section
has increased substantially in size. It has a major operational
and developmental role and now deals primarily with the accounting
and reconciliation of Working Tax Credit (WTC), Child Tax Credit
(CTC) and Child Benefit payments. TCABS also provide a service
for issuing clerically produced Cheques on behalf of Tax Credit
Office (TCO) and Child Benefit Office (CBO).
TCABS are situated within the Finance Business Stream owing
to the fact that the main function of the team is to ensure that
payments made by HMRC are reconciled and that information fed
into the department's accounting systems is verified as being
accurate.
The staff are mainly clerical workers with 53 out of 88 (AA's
& AO's) employed as FTA's. Many of these contracts have been
extended more than once. Originally a number of FTA's were employed
to cope with the issue of larger than expected numbers of manual
payments. Although the levels have reduced from those reported
in previous years (500,000 in 2003) these remain a significant
source of work and inevitably a continuing problem to reconcile.
PCS has a number of issues that it wishes to draw to the
attention of the TSC in the context of our wider concerns over
staffing and the administrative aspects of Tax Credits.
— There are continuing concerns about the interface
between the work done within the Tax Credit Office and TCABS at
Worthing. We understand that a review is currently being undertaken
on this.
— The level of manual payments still exceeds original
estimates.
— There is continuing concern amongst our members
about the readiness of the replacement for the BACSTEL (BACS)
system.
— The reconciliation of payments to the departmental
accounts continue to be hampered by the ongoing problem of multiple
payments of Tax Credits.
— The need for interaction between the Tax Credit
system and the new departmental IT system being developed under
Enterprise Resource Planning (ERP) will require specific links
to be developed. These must be robust and effective to ensure
that further problems do not occur.
— PCS believes that the above narrative provides
a detailed example of how the continual use of Fixed Term Contracts
masks permanent staff deficiencies. The lack of stability in staffing
with the continued reliance on FTA workers has a detrimental effect
on staff morale and the image of HMRC as a good employer
PCS hopes that the foregoing is helpful to the committee
in their deliberations and we remain available to provide any
future assistance that we can to members of the Committee.
3 February 2006
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