Examination of Witnesses (Questions 40-59)
HM REVENUE &
CUSTOMS
10 OCTOBER 2007
Q40 Mr Curry: Mr Gray, you run a
business you said which is paying out about £20 billion,
which must be roughly what the Bank of England has lent Northern
Rock over the last few weeks.
Mr Gray: That is just Tax Credits.
Q41 Mr Curry: Yes, that is just Tax
Credits. My constituents are probably earning a great deal less
than the mean of the people you are helping, and the problem arises
how does the little chap or lady in Skipton deal with this huge
organisation which you run. What happens when they phone? If they
phone you what happens; what do they get on the end of a line.
When did you last phone Customs & Excise—not to your
office but the general line?
Mr Gray: I do it periodically
because I wish to test the effectiveness of my organisation. What
they find increasingly is that the phone is answered quickly and
they get a reasonable service. In the past we have had difficulties
with our contact systems, but in the last year 2006-07 99% of
the people who called were able to get through on the day they
called and 85% of the calls were answered within 20 seconds and
the overall satisfaction levels—and we have independent
surveys done on this, we do not just run our own survey and 87%
of the people surveyed who use our telephone service expressed
either that they were very satisfied or satisfied.[2]
I wish to make that higher than 87%, but I think that is not too
bad a record and one that compares pretty favourably with other
large organisations.
Mr Williams: There is a division so we
will pause for about ten minutes. Can Members be back as soon
as possible.
The Committee suspended from 4.00pm to 4.06 pm
for a division in the House.
Mr Williams: Thank you, Mr Curry, continue,
please.
Q42 Mr Curry: Mr Gray, what I am
getting at is that when we were talking a couple of years ago
I guess the issue of overpayment would have been the predominant
issue in my constituents' postbag. I do not argue, this is public
money and you are not in the business of handing out gifts, it
is a question of recovering it in a manner which is as little
damaging as possible, but the problem I am finding now increasingly
is people saying: "Our circumstances changed, we did our
best to inform Customs & Excise that our circumstances had
changed, and yet it was like tickling a crocodile, we could not
get a response, the message never seemed to get through."
There is a constant series of adjustments—it is like the
worst days of the Child Support Agency, exactly the same problem
where we get through but nothing seems to happen, the file is
not available. When somebody does phone, first of all does a human
being answer the phone, in the first instance?
Mr Gray: A human being answers
the phone.[3]
Q43 Mr Curry: So there is no recorded
message, none of this stuff where you need a degree in physics
to work out where you are trying to go.
Mr Gray: And no Greensleeves.
Q44 Mr Curry: And the people are
based in the UK?
Mr Gray: Yes.
Q45 Mr Curry: If I phone and say,
"I just want to let you know that I am in receipt of Tax
Credits and my partner has got a new job, he has ceased to have
a job, or he has got into a job" or something like that,
what happens to that information?
Mr Gray: What happens is they
will get through to one of our call centre staff who, having gone
through the appropriate identification checks—and that is
of course very important—will—
Q46 Mr Curry: What, ask you things
like date of birth?
Mr Gray: Yes, for verification.
Having got that identification complete will go into the online
Tax Credits system.[4]
Q47 Mr Curry: When somebody calls and
says my name is Mrs Bloggs they will pull up the data on the screen.
Mr Gray: Yes, and in the great
majority of cases they then successfully record whatever the change
of circumstance is which will then automatically generate an adjustment
to that case and will generate a revised award notice, or award
notices, given that we are legally obliged in the case of couples
to send award notices to both, recording hopefully accurately
the change of information that has been given. That is accompanied
by a request to the claimant or claimants to check that we have
satisfactorily recorded the change and implemented what they have
reported. In the great majority of cases that works very satisfactorily.
Q48 Mr Curry: Is there a process
of verification that what you have been told is accurate at that
stage or not?
Mr Gray: Not in terms of—let
us say it is a change of income, my income has gone up by £2,000
or whatever. We accept that change in good faith, we then get
to the end of the year in question—coming back to what I
was saying that it is an annual system—we then send out
a form to people that they are required to fill in giving their
income and other circumstances for the year, and we then go through
a process of finalisation which, if there is any change in that
information, will generate either an underpayment or an overpayment
to be implemented. That is how the system is meant to work, in
the great majority of cases it does. In some cases, as you imply,
we do not get complete success with that and either the information
is not correctly inputted to the system or there is some other
error on the way.
Q49 Mr Curry: But it is the person
in the call centre who puts the new input in, and that goes straight
through, without an intermediate phase, to the payment body.
Mr Gray: Yes, it is a computerised
system, as the input goes in that will happen.
Q50 Mr Curry: Have you got any note
of the percentage of accuracy of the new information given, because
if I were to call you in May how soon would the new payments come
through?
Mr Gray: Typically within a few
weeks. I do not know if Sarah wants to be more accurate on that,
but the information is input, the system is operated and there
are then, obviously, kind of lags in terms of, for example, most
people are paid into the bank and the thing has to go through
the bank system and so on. Typically it would happen in a few
weeks, is that right?
Ms Walker: Yes.
Q51 Mr Curry: What proportion of
your claimants do in fact have changed circumstances in the course
of a year?
Mr Gray: The great majority, to
one extent or another, but the extent in the change of circumstances
varies a great deal and the significance of the change of circumstance
also varies, because people who are at the upper end of the income
range who are just getting the simple child payment who are not
on the taper within the system, then a modest change in their
income will not generate any change in entitlement. For the people
who are in the taper part where, as their income goes up their
entitlement goes down, there is a significant gearing because
the taper is 37% as you go up the scale.
Q52 Mr Curry: Yes, but you cannot
have a criterion which says to the claimant there is a point at
which it might not be worthwhile your letting us know, can you?
Mr Gray: No.
Q53 Mr Curry: You must require that
all changes in circumstances are notified to you.
Mr Gray: All changes except in
relation to where we have a de minimis income range which
was £2,500 and now is actually £25,000.
Ms Walker: But even in those cases
we need the customer to tell us because even if it does not affect
the payments they get in that year it will affect the payments
they get in the subsequent year, so all relevant changes of circumstances
we encourage people to report.
Q54 Mr Curry: How many people drop
out of the system roughly a year, other than by dying, which is
a fairly dramatic way of dropping out?
Mr Gray: I do not have the precise
figure, I am afraid, I do not know if Sarah has. There obviously
are people moving out of entitlement, particularly in relation
to children because as their children move beyond the fulltime
education stage then they cease to be eligible, so it is probably
getting on for a million possibly.
Ms Walker: I do not know. There
are people who change awards; if they leave a partner—for
instance they split up and they start again as a single parent—they
will have a different award so the cycling between awards is quite
a high number, but also there are people whose income goes up
above the point at which they are entitled to Tax Credits.
Q55 Mr Curry: You are keeping a lot
of balls in the air simultaneously, almost on every single claimant.
The people who work in your call centres, what sort of rate of
turnover is there, is that a very stable workforce?
Mr Gray: In our contact centres
it is relatively high compared with the rest of our organisation,
something like 15%; it is relatively low compared with the contact
centre industry in general. For our back office staff—we
have just been talking about telephone contact here but a lot
of the work within the tax credit office will be paper-based work—there
the turnover is significantly lower, probably not much more than
5%.
Q56 Mr Curry: But basically you are
operating a business in which you have a very large number of
claimants, you are dependent upon the information given to you
by those claimants and the interface between the two is a workforce
which is subject to relatively rapid turnover compared with the
rest of the organisation. I guess it is quite a stressful job,
is it not?
Mr Gray: The fact that our turnover
in our contact centres is less than the generality of contact
centres says to me that it is not particularly stressful compared
with that type of telephone work generally. We have no significant
difficulty in any area of the country in recruiting people.
Q57 Mr Curry: My final question,
Chairman, if somebody gives you new information and they feel
that you have got it wrong, let us put it in those terms, have
you got a fire brigade mechanism which says there is obviously
a problem with that case, can we just sort it out, so they do
not just rumble on and on?
Mr Gray: Traditionally we have
operated a relatively uniform approach for dealing with all claimants
and have relied, if we have got something wrong, on the claimant
recontacting us when they get their new award notice. What we
are increasingly introducing is what we are calling the Tax Credits
Transformation Programme, under which we are seeking to identify
particular categories of tax credit claims and particular changes
of circumstance that we know are liable to cause difficulty—the
break-up of a partnership is probably the most significant of
these—and we are looking to have a much more dedicated approach
to dealing with people in that circumstance and also in cases
which have had significant difficulty, and a number of you may
have seen references in letters I have sent to you, we are appointing
individual case workers now to deal with those cases. Frankly,
we could not do that for six million families but we are seeking
to move to a system in which we are more flexible about the way
we operate the system with different categories of claimants so
that we get more uniformity of outcome for people rather than
relying on uniformity of process.
Q58 Mr Bacon: Mr Gray, I would like
to start by asking you about the settlement with EDS and the payments
that you have received under this. You wrote to this Committee
last year to say that the level of payments had been lower than
expected and that this was a real concern. You will recall that
the settlement was originally some £71 million of which £44
million or so was upfront in cash or near cash and the rest, about
£26.5 million, was deferred; when I asked you about this
before you told us also that you were not happy with the level
of payments—from the figures you gave us less than £250,000
had been paid. How much has been paid now?
Mr Gray: As I explained to you
last time we had this discussion in public session, Mr Bacon,
I am not in a position in public to give you the precise figures.
As you will recall I have agreed on previous occasions if you
wanted to pursue that to go into private session and to give you
precise figures. The reason for that is that I am bound by a confidentiality
agreement and given that, following an earlier hearing with my
predecessor, the Committee published the formula which determines
how much EDS should be paying us in relation to the amount of
new business they are getting, if I give a figure of how much
they have paid us it is possible for people to work out precisely
how much new business they have got. I cannot do that in public;
I am happy later to go into private session if you wanted. What
I can say, Mr Bacon, is that the flow of further payments over
the last few quarters has continued to be extremely small. It
is quite clear that over the last two years EDS has been less
successful in winning contracts for provision of public sector
IT support in the UK than it was expected to be. Against that
background we have recently been having a series of meetings with
the management of EDS here in the UK; I have been in contact with
my counterpart, the Chairman of EDS in the US as part of that
process. I and my team have been making clear to EDS that the
present level of payments cannot continue indefinitely, I am determined
to ensure that we do obtain the full amount of the settlement
even if the flow of new business to EDS is not enough to generate
the full payment to us.
Q59 Mr Bacon: Can I stop you there,
that was a very helpful summary. You said to us a year ago—I
did not look up the date before I came but it was roughly a year
ago—
Mr Gray: I think I said I was
getting concerned; I am seeking to sound a little more concerned
now than I was then.
2 Note by witness: Survey figures refer to
2006-07. Back
3
Note by witness: HMRC operate a number of different help
lines, with differing arrangements to help callers navigate to
the assistance that they are seeking. On further investigation
it has been established that recorded introductory messages are
played on the Tax Credits Helpline as well as interactive voice
recording which gives caller options to aid call routing to the
appropriate human adviser. Recorded music is played while customers
are held in any queues. Back
4
Note by witness: This is a reference to HMRC's computerised
Tax Credits system which can only be accessed by HMRC staff. It
is not an online system. Back
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