Examination of Witnesses (Questions 20-39)|
HM REVENUE AND
UK BORDER AGENCY
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
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
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
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 departmentsas I dosaid
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 Reportwe accept them
and we have spent a long time looking at themreflect 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 inlandthrough businessand 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 balancefrom
all the intelligence we have and all of the constant risk assessment
and moving our resources as risk movesfrom 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
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
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
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
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
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.