HMRC: The Control and Facilitation of Imports - Public Accounts Committee Contents

Examination of Witnesses (Questions 20-39)


9 MARCH 2009

  Q20  Mr Williams: The actuality is that you are doing the least and you are getting the least. The least for the least; it is unbelievably bad. You must have walked into that department feeling delighted at the promotion you got, Ms Strathie (which you undoubtedly genuinely deserved), and after a few weeks you must have looked around and thought, "Who did this to me?" You have inherited an absolute shambles, have you not?

  Ms Strathie: No I do not recognise that at all, Mr Williams.

  Q21  Mr Williams: You say you do not recognise it, but it is divided into eight directorates and in addition you now have the UK Border Agency, so there are nine separate organisations. The customs and international directorate is in the process of developing a customs operational framework which will set the objectives, the priorities and reporting for their work. Why are they only just doing it? Why now? Seven directorates and another body added on and still you do not have any meaningful method of liaison.

  Ms Strathie: I am going to hand over to Mr Clark in a moment to give you some of the detail and achievements of the UK Border Force in relation to this. I do have to say that this is one part of HMRC and that most of this work has been drawn into Customs and International as part of the business tax area.

  Q22  Mr Williams: This is one part which itself divided into many parts, and yet even though it is only one part of HMRC you cannot even get the one little part properly organised or structured.

  Ms Strathie: I do not accept that at all.

  Q23  Mr Williams: You say you do not accept it, but if you turn to appendix seven it says, "The Customs EU definition of risk management is a technique for the systematic identification and implementation of all measures necessary to limit the likelihood of risk occurring". That is the statement of risk objectives and yet we are told in appendix seven that, "Risk identification is fragmented against isolated objectives and limited feedback". Does that sound like systematic work to you?

  Mr Clark: The UK Border Agency is not part of HMRC. The UK Border Agency is a very separate agency that works to the Home Office.

  Q24  Mr Williams: Even more importantly therefore that its work is integrated into what you want as the prime customer.

  Mr Clark: Absolutely. That is exactly the opportunity we have taken in setting up the Border Force and pulling together custom detection services—

  Q25  Mr Williams: Yes, but you are not answering the question I asked. They are new, but you had seven other directorates and they were not coordinated according to this; it is in the process of developing an operational framework. Why is it only in the process of developing it? Did you start that process, Ms Strathie?

  Ms Strathie: No. Much as I would like to take the credit for that I think the good work had already started long before I arrived in HMRC.

  Ms Dawes: You are quite right that it was a very fragmented picture and we have reduced that fragmentation firstly by introducing a much clearer strategic framework for customs work. We did that in 2007 and it is beginning to bear fruit with a much clearer delivery plan that we are improving all the time in the course of our work. We have also moved a number of those operations, including the clearance hub and the collection of trade statistics, into the Customs and International area so it is no long eight directorates, it is now six directorates. More generally, we do still, across HMRC on all of our business tax regimes, choose to operate our compliance work as a group rather than having our compliance work separated into the regimes and that actually gives us more resource flexibility and it allows us to look across the taxes.

  Q26  Mr Williams: It says again in this appendix that there is "No consistent assessment approach to enable comparative and aggregate risk view"; it does not exist. Why not?

  Ms Dawes: I think again that that is an area where we do accept the NAO's recommendation that we need to look more holistically and to develop a much more holistic picture of risk. We have begun to do that and we are prioritising the regimes where we know we have already got either the biggest use by companies or we think they are subject to greatest areas of risk like warehousing and so on. We are working through each of our regimes in turn and hope to have that much more holistic picture by the end of the year. You are right, it will allow us to target our resource much more effectively once we have got that picture in place.

  Q27  Mr Williams: What comes over is that you are lost; I do not mean individually, I am not being impolite to you personally. The organisation is lost in a morass that it cannot control. We even have service level agreements with other government departments but they have limited or no risk assessment or defined outcomes. What point is there in having them if you do not have set targets?

  Mr Tweddle: I have to say, Mr Williams, that I would refer you to page six of the Report which gives a list of the various parts of HMRC which come together to form the customs business. When Revenue and Customs were formed the decision was made to set up particular directorates looking after particular activities and therefore the work of customs was spread over a number of directorates.

  Q28  Mr Williams: Exactly. We are back where I started; we have gone full circle. That is exactly where I started with you: a mass of different organisations, so it is all the more important to integrate their activities so they can cross feed and operate to similar standards.

  Mr Tweddle: That is the road we are very much going down, recognising—

  Q29  Mr Williams: Very much going down? It says here, "In the process of developing". You are not very much going down; you are just starting going down. What have you been doing all these years?

  Mr Tweddle: We started this about two years ago and we are finding, as we are going along --

  Q30  Mr Williams: Two years ago? What happened before the two years? Nothing seems to have happened; it was just a mess. It is still a mess and you are trying to create something out of the mess.

  Mr Clark: In the last 12 months within the framework of the UK Border Force we have pulled together an absolutely fresh and new intelligence organisation. We have developed that in the light of the experience of HMRC and in comments associated with the sorts of observations of this Report. We have pulled that together. That operates centrally; it links in with HMRC and it works right through the regions to the front line delivery in terms of Border Force activity. There are very, very clear signs of improvement and development on intelligence, risk management and risk targeting and the results are beginning to show that.

  Q31  Mr Williams: I will come back to the phrase I quoted to you at the beginning, "a technique for the systematic identification". Elsewhere in the appendix we read, "The various directorates involved in managing an aspect of international trade each have their own recording and reporting systems but the information is not always widely available across the Department or easily comparable." You have the information but you do not how to use it because it has not been translated into common form where one section can understand what another section is doing. No wonder it is a mess.

  Mr Tweddle: We have established a central risk theme which is coming together which will actually be pulling all these strands together.

  Q32  Chairman: I have to say, Ms Strathie, that the National Audit Office wanted to put to you in my initial questions that this Report conveys a chaotic picture and I, always trying to defend government departments—as I do—said that I should put it to you as a fragmented regime. After the questions that have just been asked by Mr Williams do you think perhaps the description "chaotic picture" is more accurate than "fragmented regime"?

  Ms Strathie: No, I think it is less fragmented than it is and it is more systematised than it was, but the notion that we live in a world where we can put things in one directorate and simply have a command and control regime is one that is not sustainable. The fact that we had things fragmented over a number of years meant there was increased risk and we welcome the NAO Report on this, but modern delivery has to be about supply chain management. During the journey we had the announcement of the machinery of government change, the creation of the UK Border Agency; we are in transition and at the moment people who were technically HMRC personnel are operating in that integrated way. I think this is a huge effort to ensure that every part of the supply chain, every bit of intelligence, is a virtual circle. It is still more fragmented than we would like but I am much more confident that we have made inroads and we are well placed.

  Chairman: Thank you. Don Touhig?

  Q33  Mr Touhig: Ms Strathie, Britain remains on alert and the days of terrorist attack are with us and are very, very real. Both the Chairman and Mr Williams have referred to pages 16 and 17, paragraphs 2.16 and 2.18 which tell us that we have the lowest rates of physical examination of goods coming into this country for the whole of the European Union. Why is this and are you not compromising our country's security?

  Ms Strathie: We have probably answered some of the questions already, but I would restate the levels. The levels that are quoted in the Report—we accept them and we have spent a long time looking at them—reflect those of the CHIEF system and physical examinations at the port. It does not in any way show the full extent of our interventions both inland—through business—and through other audits (pre-entry checks and post-entry). I think it is really, really important to understand that this is about the control and facilitation of trade and imports and we have to strike the right balance—from all the intelligence we have and all of the constant risk assessment and moving our resources as risk moves—from having the just in time approach that business requires to move its products, between the cost of delaying entry into the country as business would need to warehouse and store, and indeed what would happen if we stopped much more at the border and the tailbacks we would get.

  Q34  Mr Touhig: In our present economic times, Ms Strathie, nobody would want to interfere with trade, but surely our country's security is more important. If you have the lowest rate of examination of goods coming into any EU country I come back to my question, are you not putting our country's security at risk?

  Mr Tweddle: It is not correct to say that we have the lowest rate of examination.

  Q35  Mr Touhig: That is what the Report says.

  Mr Tweddle: It does not. If you actually look at the chart on page 17 we are between 2% and 3.9% so there are seven countries with a lower rate of examination than ourselves.

  Q36  Mr Touhig: Is that supposed to reassure us?

  Mr Tweddle: It is not as bad as if we were the lowest.

  Q37  Mr Touhig: It is a pretty low rate compared with many in the rest of the European Union. Ms Strathie, you talked about paperwork and so on; are you putting a great reliance on paperwork checks? The fact that it says that that container has agricultural machinery yet it has explosives that are meant to kill and maim British citizens, provided the paperwork is all right that is okay, is it?

  Ms Strathie: No, I do not think that is okay at all.

  Q38  Mr Touhig: You said you had paperwork checks; what does that tell you? You do not physically do the checks.

  Ms Strathie: What I was saying is that our approach is one of balance; our approach is one of facilitation; our approach is one of building compliance and working with trade to make sure that when we do intervene we have very good reason for intervening and for examination.

  Q39  Mr Touhig: You intervene in so little. We have one of the lowest examinations of goods coming into this country of any country in the European Union. Do you work closely with the security systems?

  Ms Strathie: Physical examination is absolutely for the UK Border Agency; perhaps Mr Clark can answer your question.

  Mr Clark: On the one hand there is examining vehicles for illegal goods coming in, there is another agenda around the security into the UK. We have equipment around the borders in terms of detecting radioactive material coming into the country. I would prefer to write to you privately around that.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 21 July 2009