UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 141-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

THE COMMITTEE OF PUBLIC ACCOUNTS

Monday 7 December 2009

 

Dealing with the tax obligations of older people

 

HM REVENUE AND CUSTOMS

MS LESLEY STRATHIE, MS SARAH WALKER and MS JANE FROST

 

Evidence heard in Public Questions 1 - 124

 

 

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Oral evidence

Taken before the Committee of Public Accounts

on Monday 7 December 2009

Members present:

Mr Edward Leigh, in the Chair

Mr Richard Bacon

Angela Browning

Mr David Curry

Mr Austin Mitchell

Geraldine Smith

________________

Mr Amyas Morse, Comptroller and Auditor General and Ms Jane Wheeler, Director, National Audit Office, gave evidence.

Ms Paula Diggle, Treasury Officer of Accounts, HM Treasury, gave evidence.

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL

DEALING WITH THE TAX OBLIGATIONS OF OLDER PEOPLE (HC 961)

Examination of Witnesses

Witnesses: Ms Lesley Strathie, Permanent Secretary and Chief Executive, Ms Sarah Walker, Director, Benefits and Credits, and Ms Jane Frost, Director Individuals Customer Unit, HM Revenue and Customs, gave evidence.

Q1 Chairman: Good afternoon and welcome to the Committee of Public Accounts where today we are considering the Comptroller and Auditor General's Report on HM Revenue and Customs, Dealing with the Tax Obligations of Older People. We welcome back to our Committee Lesley Strathie, who is the Chief Executive of HM Revenue and Customs. Would you like to introduce your colleagues, please?

Ms Strathie: Thank you Chairman. On my left is Jane Frost who is our Director of Individuals Customer Unit, who deals with all our customer insight and third party providers and stakeholders. On my right is Sarah Walker who is Director of PAYE, Self Assessment and National Insurance.

Q2 Chairman: Obviously this is a very important and interesting subject. There are growing numbers of older people, their tax affairs tend to be more complex than younger people because, particularly nowadays, they may have more than one pension and they also tend to be more compliant and worry more about these issues, so it is a very important matter. Further, if you are a retired person you can have a pension of as little as 9,000 but that is your allowance basically and after that you are paying tax, so just a matter of a few hundred pounds over-claimed can make a lot of difference to a lot of older people. I am sure, Ms Strathie, we both take this very seriously. The Report tells us, if you look at page 5, paragraph 8, that up to 3.2 million older people may be eligible for age-related allowances but do not receive them. Do you accept that figure?

Ms Strathie: I can see where that figure was drawn from. In welcoming this Report and in the work that we have done since the NAO completed their Report we have worked more closely to try and understand that figure and particularly worked with the DWP where we have seen 2.7 million people are actually on pension credit and, therefore, not in the tax system, they are below that threshold. We think that figure is probably closer to half a million - not that that is still not a figure to work for.

Q3 Chairman: I say to you having read the Report that 3.2 million older people may be eligible for age-related allowances but do not claim them, and you say it is half a million.

Ms Strathie: We are saying that based on the work that we have done since the Report was completed we reckon about 2.7 million of those, because that is the pension credit take-up, is an area that we are now working on and we think that the number is much lower.

Q4 Chairman: What does the Comptroller and Auditor-General say to that?

Ms Wheeler: The figure is a maximum, it is an estimate.

Q5 Chairman: I said "up to", yes.

Ms Wheeler: Yes. It is an estimate which is comparing ONS data on the one hand in terms of the total population with those that are in HMRC's processes, so it was a figure which needed to be explained and needed to be examined further to see whether there are cases in there where people should be getting the allowance but are not or whether there are cases where it is perfectly right that people are not getting that allowance.

Q6 Chairman: All right. Anyway, it is anything between half a million people and three million people who are not getting the allowances they should be getting. The truth is that you are not certain of the figures, are you, Ms Strathie? You just do not know, do you, that is the honest answer?

Ms Strathie: We know slightly more and each time we explore and sample this group we find out more. Jane, perhaps you would like to say just exactly what we have learned about how many people there are.

Q7 Chairman: That leads me to my next question. If you are getting to know more about these people what more are you doing now to reach these people, to help them, so that they are not overpaying their tax?

Ms Strathie: Over the last five weeks we have launched our new TaxBack campaign which is where we have written to 2.9 million customers over a five-week period, phasing that, to promote the fact that some of those people may be entitled to some tax back. I do have to say that thus far, as with all of our campaigns, the take-up has been quite small but the amounts of tax that people have been entitled to average around 51 at this point. I know that is not a lot of money but if you are a pensioner it is 51 that you are entitled to.

Q8 Chairman: Every little helps.

Ms Strathie: We have also worked with all the third party representative groups to find other ways of targeting these people too.

Q9 Chairman: After all, the Government has this objective of helping people financially in later life.

Ms Strathie: Yes.

Q10 Chairman: Let us try and explore a bit why it is so difficult for older people. Would it not be simpler to have automatic allowances so that you do the work and, unless you know anything to the contrary, they get the allowance. Why should older people have to always work themselves? They find it very difficult, complicated, they may not have the energy, why do you not just award the allowances automatically?

Ms Strathie: Because we would inevitably pay to large numbers of the population who would not be entitled to the allowance and we would have to claw it back.

Q11 Chairman: No, I am not saying there should be a single allowance for everybody, I am saying that you know that X has a certain pension and you could pay the allowance automatically, and unless there is something known to the contrary they get it, you do not make them do all the work.

Ms Strathie: You are saying that everybody would be awarded the allowance.

Q12 Chairman: Yes, based on the information you have about them.

Ms Walker: Can I help? The point is that at the point where somebody moves from employment into retirement we do not know before they retire what their income will be. We send them a form at that point to try to collect as much information about the different sources of income they might have and the different types of pensions so that we can get their tax codes and tax allowances right from the start, otherwise if we gave allowances without that information we would be likely to collect not enough tax and people would get used to a net income that was not the net income they were entitled to.

Q13 Chairman: What does the Comptroller and Auditor-General say about that; are they acting fairly, is there some way that we could help people with more automatic payments?

Ms Wheeler: The issue that people face is the difficulty of dealing with the claim form and being able to complete it and that creates a number of enquiries for the Department. Older people find it difficult, particularly in terms of forecasting the details of their income because they do not necessarily know what it will be. There are issues around what would result if you were awarded the allowance incorrectly, but equally it seems that actually the claim form is a problem and, therefore, are there other ways of dealing with older people to try and get over the problems of those claim forms.

Q14 Chairman: Is there not a problem, Ms Strathie, in that people have to cope with several coding notices? Why not just have a single notice, a single code? It would be much easier for them to understand.

Ms Strathie: That is absolutely right because if you are pensioner with a state pension and maybe three small occupational pensions, then there will be a tax code for each of those occupational pension providers. You might even have a part-time job these days and you would have another tax code for that. Our aspiration over the longer term, and now that we have better IT support through the new service, would be to reach a point where we could bring that together once a year in single documentation, but we cannot really get away from several tax codes because the income sources are from different people.

Q15 Chairman: Again, National Audit Office, could we have some sort of single tax code?

Ms Wheeler: I am afraid I do not know the details of the mechanics of putting together the coding notice but the idea of bringing something together in a document which somebody can understand, in other words it is actually brought together, the details are understandable and the person can check the details, that would be good.

Ms Strathie: The alternative would be, like some countries, to have universal filing where everybody had to file a tax return and was dealt with, but there are huge benefits in this country to operating a PAYE service and it is a success for the majority of people.

Q16 Chairman: You have had various pilots, should you perhaps have more specialist staff to deal with older people?

Ms Strathie: Yes, and that is something we have certainly taken from the Report and it is something we have in place now. In fact, we have one site in Cardiff and 40% of our pensioner population are dealt with from that site but in others we have staff who are specialised in this customer group. They do take longer to deal with, they are more expensive to handle and there is a certain level of expertise needed to support them.

Chairman: You are trying to discourage face-to-face interviews; do you not think you should fully help people come where they want to have a face-to-face interview? I know why you do not want to do it: you are increasingly moving on-line but older people may find the internet difficult, they may find automatic telephone systems very irritating, why not face-to-face interviews?

Mr Curry: Not just older people.

Q17 Chairman: Yes, we are all driven to despair by them - press button 1, 2, 3, 4. After all, you have worked all your life, you are now taxing them in a very complex system, why can they not just go and see you face-to-face and argue it out?

Ms Strathie: I do have some empathy for people whose preferred means of dealing with things is face-to-face; I have a 78 year old mother who expects me to sort out all of her benefits and the tax system, so I have routed my way through both systems.

Q18 Chairman: She has got the right daughter anyway.

Ms Strathie: Thank you. What we have done is reviewed this from a service point of view rather than from a bricks and mortar or telephone point of view and said what do our customers tell us about what they need and how can we best help within the resources available. We have actually refreshed our face-to-face service by looking at the demand, the customers that we have in that location, and changing the skill-sets that we have, so even in our estate rationalisation it has not been about withdrawing completely face-to-face service. There will be reductions in places in line with the business reduction of hours but we do recognise that this customer group has more of a need for face-to-face.

Q19 Chairman: Will you commit to a one-stop-shop or increase the availability of one-stop shop?

Ms Strathie: We are working very closely with DWP on one-stop-shop; we have responded and we are now part of the strategy for ageing customer groups. We very much want to but, again, an awful lot of that is web-based and what we need to look at is the totality of our customer group and what DWP are trying to achieve because it is not just tax and benefits, there are many calls, health as well, in trying to do that. It is absolutely the right concept.

Q20 Chairman: Ms Strathie, when did you personally last discuss with DWP about one-stop shop in this context?

Ms Strathie: About three weeks ago.

Q21 Chairman: Okay, fair enough. In conclusion then just describe for me the steps you are going to take, summing all this up, to help older people get easier access to the help that they need, whether it is face-to-face interviews, one-stop-shops, easier coding, advertising campaigns, because I am sure you will agree that there are very, very large numbers of older people who are paying more tax than they need to, so just sum up all the things that you are doing.

Ms Strathie: I would start with the customer and what we know about the customer group. Each time Jane and her unit have carried out something with this group and their representatives we have learned more about them and we are trying to tailor our service. An example of that would be the form P161 that we ask people to complete when they are retiring and, working with that customer insight, we have significantly improved the guidance and shortened it. We have also learned in research that the more guidance you give people the more error you get in completion, that is just how human beings behave, so giving them pages and pages of instructions that you and I might struggle with is not the best way of getting accurate forms. We are committed to working with DWP through our joint working to look at this from a customer perspective and we have already started joint communications so that rather than people being confused, as they have been quite often when DWP have issued new forms, we have a project now that looks at all of these and tries to get a joined-up message. About 50% of this client group do not have access to the internet; that is much lower than the general population and we expect that is not going to change an awful lot, even in Digital Britain. Therefore, we are committed to maintaining our telephone services and committed to working in partnership with third parties to support them. Indeed, we have funded third parties to help support delivery.

Q22 Chairman: Having said all that it is surprising to read in the Report that these people, who have more difficulties than other groups, are contacting you less. That is strange, is it not? That leads me to believe there is something fundamentally wrong with your systems.

Ms Strathie: From everything I have known about older people in my career they tend to go to other parties, whether it is their family members, their friends, the Citizens Advice or third parties rather than direct contact with Government, but it is quite a complex group. Many pensioners are only at the start of pension age, living full, active lives; some of them have several jobs, portfolios, some of them are just having children, right through to people in their eighties and nineties. There is quite a range.

Mr Curry: These people are having children in their eighties?

Q23 Angela Browning: I will not go into the child tax credit entitlement of pensioners and I probably shall not be the only one of this Committee today who declares a personal interest in the subject matter in front of us, but I would just like some clarification. On page 17, 3.4, where it talks about the use of that form P161 which we have heard about, I am a bit concerned that down towards the bottom of that paragraph it says: "Some people do not receive a claim form because the Department does not know their address." I can see that if it is a man who has not yet claimed the state pension at the age of 65 but of course you would have women pensioners already claiming a state pension. Why would you not know people's addresses?

Ms Strathie: Some people have never been in contact with Government. We have information systems like the National Insurance system where if people have engaged with the Government we are updating their addresses, but for many people if you have never claimed benefits or had any other engagement there may be no reason at all for us to hold a current address. People are not obliged by law to tell us every time they change their address or to tell DWP.

Q24 Angela Browning: Once they start claiming their state pension you do have an address for them, I assume.

Ms Strathie: Do we?

Ms Walker: DWP will have.

Q25 Angela Browning: But you do not.

Ms Strathie: Not necessarily. If they had a tax code then DWP would notify us that the state pension was in payment to someone who had a tax reference number, suggesting they were in the tax system, but many women in particular are not in the tax system.

Q26 Angela Browning: They must be a particularly difficult group then for you to get information across to. I am going to come in a minute to the problem with interest on savings which might affect quite a lot of people who are non-taxpayers. How are you going to attempt to find this group?

Ms Walker: The current exercise to try and contact people about tax on savings actually involves letters being sent out by DWP to pension credit claimants, so we know those people are on low incomes and we know that their incomes are so low they should not pay tax, so if they are getting tax deducted from their interest then they ought to be claiming that back, so we have got DWP to send these letters out using their records to reach those people.

Q27 Angela Browning: Are we not still concerned about the lack of uptake on pension credit? There are still a lot of people who should be claiming who are not.

Ms Walker: Yes, that is right.

Q28 Angela Browning: It is a group of people who are difficult to identify and who are not necessarily coming forward anyway for what they are entitled to.

Ms Walker: That is right, yes. We are using the best and quickest database we have got in order to reach a large number of older people on low incomes, and that is the exercise that we are doing at the moment.

Q29 Angela Browning: Thank you. Could I move on then to this question of people who do not get their full entitlement to the tax relief on savings, some of which are incredibly modest. In my experience if you go in personally and open an account with a bank or a building society it is pretty routine that they would ask you to tick the box which would enable you not to have any deduction at all from your savings, but of course so many products now are sold through newspaper adverts where people telephone in or use the internet, I am not sure that for that group there is the same rigour in making sure they are aware of their rights and they fill that form in. Have you looked at that area?

Ms Strathie: That is exactly what the TaxBack campaign is because we have used a number of different means to communicate that message and, indeed, we have tried to work with banks and building societies on this too, but inevitably a lot of people simply do not understand that they need to ask for their interest to be paid gross without that 20% deduction. On the TaxBack campaign we have done through local radio and through national media and by writing individual letters saying we may owe you money and invite people to claim, the amounts are much smaller than anticipated because of course interest payments are a lot smaller, with interest rates where they are, than you might otherwise have expected, but the downside of some of this in the campaign is that a lot of people have contacted us quite alarmed because they think that they might owe us money, but we are trying to help.

Q30 Angela Browning: From the other point of view is there not some way you can require, even on a voluntary basis, the building societies and banks who sell these products to be as vigilant with the method of selling as they are if people go in and purchase over the counter? There are certain statutory requirements even if you open an account on-line or by phone that they have to ask you. Why do they not then say to people, "By the way" and fill that bit of the box in at the time? Why is the onus not on them rather than the general public having an awareness?

Ms Strathie: The onus issue is quite a delicate one because it is making an assumption about the rest of someone's income and whether they are due to pay tax or not, because it is the total tax liability, is it not? We would be actually asking banks to advise on tax, but what we have asked people to do is to draw attention and if this is the only additional income they have got they could ask for that to be paid gross.

Q31 Angela Browning: I can see your delicacy there but it sounds a rather convoluted way round whereas if it was ---

Ms Strathie: It would require legislation to mandate any action for the banks or building societies but I just know the dangers of asking third parties to be advisers of something like that.

Q32 Angela Browning: Yes, I can see that.

Ms Strathie: Many, many taxpayers, let us not forget, pensioners included, do have their interest paid gross, but it is for those who do not quite understand to do that.

Q33 Angela Browning: They ask a lot of daft questions to do with money laundering rules; you wonder why they cannot drop half a dozen of those and put in something useful like this.

Ms Strathie: Do you want to add anything about the banks' response?

Ms Frost: Not quite about the banks but what we have found is that working with the third sector is a really good place for putting the right amount of information out on a number of these issues. We have got a grant-in-aid programme at HMRC and we do move monies through the relevant third sectors to help in the communication and advice area. A project over two years for 100,000 with Age Concern, for example, has a tax health-check with it and we are also working with the Life Academy who provide tutoring to build capacity in the third sector for advisers, but the critical thing is for people like Tax Help for Older People who get a grant from us of about 80,000 a year to increase their capacity for giving direct help for people who ring up. It is putting it at a place where people would naturally want to be that is critical.

Q34 Angela Browning: I do refer constituents to them and I have to say they do a fantastic job, they really are worth their money, it is a very good service. Could I just ask you about codes because I am sometimes a bit mystified by this. If you have more than one income stream, as we know many pensioners do, why is it, for example - as I have, I have a very, very tiny pot of a pension that goes back about 30 years; it is minute and it is paid once a year it is so small, that is the only way they will pay it - yet the Revenue insists on allocating a quite obscure tax number for that because they cannot let this particular pension company know what my real tax number is for some reason - I would be quite happy for them to know - and then my accountant has to juggle all this together when they do my tax return. Why do we have to have these obscure numbers that do not mean anything to anybody?

Ms Walker: I am not sure I can answer that. The general question about tax codes is that the point of the tax codes is to allocate your personal allowance against each of your sources of income and that is why you end up with different codes for different sources of income in order that they all add together to get the right amount of tax in aggregate.

Q35 Angela Browning: It seems a very complicated system and there is a level of secrecy that seems to be attached to it. Does that not complicate it even more?

Ms Walker: There is a principle that the information is concealed, if you like, in the code number so that the employer or payer does not know what other sources of income the employee has for reasons of confidentiality. It is right that if the employee does not necessarily want the employer to know what other income he has got then we should not be telling him and we should not be letting him deduce it.

Q36 Angela Browning: Okay, thank you. I still think it is a very complex system.

Ms Walker: It is a complex system because it is designed to get exactly the right amount of tax in the year however complicated your affairs are.

Angela Browning: Thank you. I am afraid my time is up and I would have liked to ask you about direct payments, but perhaps, Chairman, you would allow me an extra question on that at the end.

Chairman: Ask it now.

Q37 Angela Browning: Thank you, you are very kind. Direct payments: again, this is something that we are going to see a lot more of and I notice this section in the Report about employing a personal care assistant. Sometimes the funding for that personal care assistant is directly funded through the local authority. How do you disaggregate somebody's personal liability as an employer if the payment of that employee for these purposes is coming out of their personal income, and where there is a pot of money specifically allocated by a local authority? It would not just apply to older people, it would apply to people of all ages with disabilities who qualify for such grants.

Ms Strathie: If the issue is just one of a direct employee, you become an employer.

Ms Walker: I do not think the source of the money affects the obligations of the employer. The obligations of a person taking on an employee are the same regardless of where that money comes from, whether it is their own personal money or money they had in a grant. People do get grants from local authorities to help them to decide what sort of care they want, what sort of assistance they want and to pay for it themselves. People then have a choice as to whether they get it in all sorts of different ways, go to an agency or whatever, but if they decide to directly employ somebody to look after them then they have to take on the obligations that go with employment.

Angela Browning: I might finally just remind you, as I have said before in these sessions, you do still pay people 100 to do an on-line nil tax return in these circumstances. I know in the past, Chairman, I have been told that this is because it is more cost-effective to do, but I just wonder how much that adds up to across the country every year.

Q38 Mr Bacon: Ms Walker, you mentioned the issue of confidentiality. Is it correct - I have got your CV here but I am not sure I am reading the right bit - that you are currently, since October 2008, the Director of PAYE, Self Assessment and National Insurance?

Ms Walker: That is right.

Q39 Mr Bacon: Good. On the National Insurance and PAYE service, the NPS section of the HMRC website, there is a reference under current issues to some notices and statements having been sent to the wrong agents. I will just read the first sentence. It says: "Even though HMRC's self assessment and PAYE systems are showing the correct details some notices and statements have been issued incorrectly to the wrong agent", by which one presumably means in most cases a tax accountant or something like that. How many cases?

Ms Walker: I do not have those figures with me I am afraid.

Q40 Mr Bacon: You do not. Over what period has this been going on?

Ms Walker: It happened over a period in the summer. It has now been fixed as I understand it.

Q41 Mr Bacon: It says on the website - you have anticipated one of my later questions - that "HMRC is due to put a fix in place in December 2009". That has now happened, has it?

Ms Walker: I believe it has.

Q42 Mr Bacon: When you say "over the summer", when did it start?

Ms Walker: The new PAYE system went live at the end of June.

Q43 Mr Bacon: Right, and this breach, data being sent to the wrong people, occurred starting at what point?

Ms Walker: I do not know the details of that; I know it was something that happened in the summer.

Q44 Mr Bacon: Could you write to the Committee with a note explaining that?

Ms Walker: I will do, yes.

Q45 Mr Bacon: Have you had any discussions with the Information Commissioner about this or anyone in HMRC because it would be appear to be an obvious breach of one of the principles of data protection, which is that information must be securely kept.

Ms Walker: We have taken advice on that; I would need to write to you and tell you the total answer.

Mr Bacon: You have not talked to the Information Commissioner or you do not know if anyone has talked to the Information Commissioner. You have put on your website - which is what I find extraordinary, especially after the issues with the HMRC and the National Audit Office where, famously, 25 million names went missing - that you have been sending notices and statements out to the wrong people. You have admitted the breach on your website but you do not know whether you have had any discussions with the Information Commissioner.

Q46 Chairman: What is the answer? Do not just all shake your head, either say yes or no.

Ms Strathie: We have taken this in a different context. What you have read, I am assuming, Mr Bacon, is the known problems that we keep updating so that agents and so on know what we are working on and what we are fixing. We owe the Committee a note and we will explain the Information Commissioner point in that.

Q47 Mr Bacon: You are quite right, there are issues that have been resolved and there are current issues. This one is under "Current issues" which suggests that it has not yet been resolved.

Ms Strathie: Yes, and we are just into December, so we will confirm that.

Q48 Mr Bacon: What is the difference between sending a notice to someone who has no right to know it, that informs them, say, that Mrs Smith of Middlesbrough or Mr Jones of Cornwall is on the verge of retirement and T-Mobile sending out information or using the information that they have no right to, to phone people up and say, "Your mobile phone contract is about to expire"? This information can easily be misused by people to do marketing that they have no right to do. You can easily imagine phone calls where people would say, "Hello Mrs Smith, now that you are about to retire ..." and start selling them products. This is potentially an extremely serious breach.

Ms Walker: This is not about information about people who are about to retire as I understand it.

Q49 Mr Bacon: It does not say what it is about but some of them may be in that category, we do not know. If someone is aged 64 then presumably they are about to retire, if they are 53 they are probably less likely to.

Ms Walker: Yes, but that will not be obvious from the information that was sent out.

Q50 Mr Bacon: It might if their date of birth was there.

Ms Walker: I believe these were notices of coding which were sent to the agent when they did not have the correct authority to receive them.

Q51 Mr Bacon: It says they were sent to the wrong agent, had been issued incorrectly to the wrong agent so Mr Smith's tax accountant in Cornwall gets sent something that should have been sent to Mrs Smith's tax accountant in Middlesbrough. That is what it reads like to me. Are you saying that is not the case, that I have misunderstood it?

Ms Walker: I would need to be properly briefed on that. I am sorry, I have not got the details with me.

Q52 Mr Bacon: Perhaps you could send the Committee a detailed note.

Ms Walker: Yes, indeed.

Q53 Chairman: I did not hear that last answer; what did you say?

Ms Walker: I am sorry, I said I do not have the information with me.

Q54 Mr Bacon: Could I specifically on the question of tax obligations of older people ask about the investigations that the HMRC has done, if any, into the impact of reducing the opening of enquiry centres for older people? Have you done any work on assessing the impact of that?

Ms Frost: Yes. The basic business case is based on the footfall to the enquiry centre itself but we are in the process of consultation for what else should be taken into consideration, and one of the things we are taking into consideration is the demographics of the area in which those enquiry centres sit. Where there appears to be a higher proportion of people in need of that enquiry centre we are looking at actually keeping the centre open for longer, despite the fact that the footfall currently does not necessarily merit that.

Q55 Mr Bacon: You have specifically undertaken work on the demographics of service users in particular areas?

Ms Frost: Yes, that is right.

Q56 Mr Bacon: What evidence have you got to suggest that older people would prefer to use the telephone or the internet?

Ms Frost: We have quite a lot of data in one-off research formats on what preferences are. You will appreciate that familiarity changes preference, so if you are used to something then obviously you have a preference for it. We do know the availability of the internet to older people and their usage of the same, so we check that on a fairly regular basis and are aware that we need to make sure that we have got a range of options open to the older people so that their preference can be met as far as possible, right time right place. As Ms Strathie says, prior to this we do know that working with the third sector is one of the best ways of reaching those people in need.

Q57 Mr Bacon: The Report says that you have spent 165,000 with voluntary organisations. Can you say how successful that funding of those organisations has been? What has it achieved?

Ms Frost: The 165,000 you are talking about is part of a rolling programme, so none of those programmes have completed as yet. There are evaluation processes agreed with the third sectors involved that they have to meet as it goes through, but they will not have completed those programmes until the end of next year because it is a rolling funding provision.

Q58 Mr Bacon: Are you saying that subject to their performing well you would then consider putting in place longer term funding, which is presumably what the organisations would need in order to reach more of the older people you are trying to target?

Ms Frost: They would need longer term funding and introducing rolling funding was an innovation and actually a commitment of faith to the third sector because they did not always have the data that they needed when we started this. We will be reviewing the grant-in-aid programme in total, which is wider than just the third sector, as part of the Spending Review and value for money considerations, and a key part of that will be what is being delivered in these pilots. We are also looking to work with the Low Income Tax Reform Group and other people to see where the future of face-to-face and outbound contacts should be for hard to reach groups, and that is a piece of work which will take this data into account.

Q59 Mr Bacon: I am glad you are talking to the Low Income Tax Reform Group, that is good news. While we are talking about pilots, you have a pilot called Tell us Once which is about partners who die and not being distressed by being besieged with post several times, even after you have told the HMRC that your partner has sadly died. That is just in two or three areas at the moment, is it not?

Ms Frost: Tell us Once for bereavement is a DWP initiative and we are working with them on that one.

Q60 Mr Bacon: How is it going, because it affects you too?

Ms Frost: It will affect us. It has limited impact on us in terms of the current scope of what is in Tell us Once.

Q61 Mr Bacon: Is that because it is in only a couple of geographical areas?

Ms Frost: It is also the total scope of what it covers at the moment, and we are working with DWP to put more tax points into the programme which are not there at the moment.

Q62 Mr Bacon: One of the things the Report identifies is that more and more older people may end up having to be employers and operate a PAYE service. What work are you doing with the Department of Health in England and the other home nations to try and make that easier for people?

Ms Frost: There is a piece of work currently in hand with the Department of Health and local authorities which are the key touch points for communication for a lot of these to improve their guidance and the way that communication goes out, particularly when they are doing the funding of this particular group.

Q63 Mr Bacon: One of the things that surprised me was that operating even the simplified scheme of PAYE - this is in paragraph 3.23 - can involve completing up to five forms. Have you done any work on redesigning that process so that it could be done in one form, albeit perhaps with bits that do not need to be completed in particular cases?

Ms Frost: We have some specific work with the Department for Work and Pensions, the Pensions and Carers Service, where we can streamline, but Ms Walker would be better placed to comment on that.

Ms Walker: As I said before, if you choose to take on the responsibility of being an employer inevitably there are things you have to do around things like statutory sick pay, statutory maternity pay, income tax and National Insurance, and there are end of year returns that people have to fill in. We do give small employers a CD-Rom every year which includes calculators.

Q64 Mr Bacon: A starter pack.

Ms Walker: Yes, there is a starter pack when you start but there is also an annual CD-Rom.

Q65 Mr Bacon: There is an as it gets more complicated pack as you go on, is there?

Ms Walker: There is a trying to make it less complicated pack, yes, but it does ---

Q66 Mr Bacon: What you are saying is you are trying to explain it more clearly. What I was really getting at was designing the process to make it simpler.

Ms Walker: It is inevitably complicated because you are operating a number of different systems and it is not just tax, it is tax, National Insurance and statutory payments. There are a number of obligations that you have.

Q67 Mr Bacon: Can I just check with the NAO, are the five forms that are referred to in paragraph 3.23 purely forms relating to the PAYE because that is how it reads to me: "Using the Simplified PAYE Deduction Scheme or the main PAYE scheme operated by most employers depends on the personal assistant's taxable earnings. Operating the simplified scheme can involve completing up to five forms"? Are they all PAYE/HMRC-related forms or are they to do with other aspects that have nothing to do with HMRC?

Ms Wheeler: We would have to double-check on that. I understand your point that it looks like it is PAYE but it is actually about being an employer.

Q68 Mr Bacon: Yes, so Ms Walker's point is right, it is not that HMRC has got five forms that they could turn into one. Anyway, if there is any more information on that perhaps you could send it to us.

Ms Walker: We will certainly explore it.

Q69 Mr Bacon: If it is easier it is going to make your life as well as their life easier and it is going to increase, there are going to be more and more people who are employing people as carers.

Ms Walker: Yes, and it is certainly in our interest to make it as simple as we can.

Mr Bacon: Right. I am sadly running out of time.

Chairman: You have run out of time.

Mr Bacon: That takes care of that then.

Chairman: Did you want to ask another question?

Q70 Mr Bacon: The question I wanted to ask was about people deferring their state pension and, therefore, could be paying too much tax. I would have thought that the universe of people who have deferred their state pension in any one given year is a pretty definable thing and DWP ought to know what it is and, therefore, they just ought to be able to tell you on a regular basis. Why do you not know how many people have deferred taking their state pension?

Ms Walker: We are informed by DWP when their pension starts, we are not normally informed by DWP at the point where they decide not to take their pension.

Q71 Mr Bacon: But from this it sounds like you are taxing them as if they are taking their state pension when they are not, when they have deferred it.

Ms Strathie: Do you mean because the allowances are in relation to age rather than pension?

Q72 Mr Bacon: Are you not in some cases imputing that because they are of pensionable age they have started to take their state pension because you would have expected them to but actually they have deferred it?

Ms Strathie: No, I do not think the system operates in that way. Bearing in mind that you are not in work and then you suddenly get an invitation to claim retirement pension, it is something that you as an individual citizen needs to contact DWP about and make that claim. Therefore, many people simply do not make that claim.

Mr Bacon: The reference is paragraph 2.7: "If a person has deferred taking their State Pension and has not informed the Department, they will overpay tax." It is down to the individual to inform you that they have deferred taking their state pension, is it not?

Chairman: You are obviously struggling. Do us a note.

Mr Bacon: I am saying that should be information you have anyway because the DWP knows all of that.

Chairman: Ms Strathie, you should do a note on this.

Q73 Geraldine Smith: Can I ask Lesley Strathie, you said earlier that you were "refreshing" the face-to-face services for the public, but surely what you really meant was you are just cutting them, you are just reducing the face to face services, starting with 59 offices.

Ms Strathie: Absolutely, since 2006 HMRC has been announcing and ministers have announced all of the places where we will reduce and rationalise the estate.

Q74 Geraldine Smith: Why say "refresh"?

Ms Strathie: What I am saying is we are refreshing that approach from the original planning. There were three waves of announcements, the last being December last year, on those sites that we would pull out of. They were not face-to-face offices, they were where we have given up floors or have come out of a whole building. They are much more to do with processing rather than face-to-face. What I said was the services that we are refreshing ---

Q75 Geraldine Smith: Can I just stop you there?

Ms Strathie: Let me finish, please.

Geraldine Smith: I do not think you are being clear.

Chairman: We cannot have two people talking at once.

Q76 Geraldine Smith: If I can just ask you to clarify that because in Lancaster there is an enquiry office and a face-to-face service that is involved in having a reduction in the days that they will be open each week.

Ms Strathie: That is right.

Q77 Geraldine Smith: There are also 25 staff that have been left stranded in Lancaster for the last three years because they have not been redeployed and they have not been told what job they are doing. That is a very bad way, a very poor way to treat staff, and I am sure you would agree, but what I am talking about specifically is enquiry staff where you are reducing the service that you are offering to the public there.

Ms Strathie: What I am saying is that the original plans were very much around the total numbers of people and what would be in that location.

Q78 Geraldine Smith: Can we stick to the enquiry staff, please, the face-to-face element?

Ms Strathie: On the face-to-face my point in the refresh was the skills of the staff that were there in the enquiry centres in relation to the question that we were asked here about older people, being clear that face-to-face is much more likely to be required to a greater extent for this customer group than it is for many others. That was why I said we were refreshing it based on the customer insight and fact that 50% of these customers do not have access to internet or any desire to use it.

Q79 Geraldine Smith: I hope having said that you will look closely at Lancaster because 30% of their customers are actually pensioners or tax credit claimants who fall into a similar bracket.

Ms Strathie: I absolutely do agree with you in terms of the uncertainty facing so many of the people who work for HMRC. We have to bring that to an end, but that will not necessarily mean that everybody has a future in HMRC.

Q80 Geraldine Smith: Can I just ask Jane Frost, you mentioned that you look at the face-to-face services, you look at the footfall of people entering those offices; can you tell me what you mean by that?

Ms Frost: It means how many people go through the door and seek either information or an appointment. We have seen a reduction over the past 18 months to three years of about two million people going directly to enquiry centres down from five million to three million. Of the people who currently go through the door to ask for information, the customer contact directorate say only 15% actually need a full blown one-to-one appointment, the others are dealt with - and please bear in mind this is not just older people, this is the total number of people through the door - either by being directed to the phones or to the internet.

Q81 Geraldine Smith: That seems to contradict information that your own staff are giving me because they say, again using Lancaster as an example, there are 1,553 pre-arranged interviews that you would count as your footfall but there are 16,000 people who go through the doors. They may just come in, they may have a question, they may have an issue they wish to raise about their tax, but because it is not a pre-arranged interview it has not been counted on your figures.

Ms Frost: We do direct those people either to the phone or the internet, so those are the people who are ---

Q82 Geraldine Smith: But do they count on your statistics as people using that office when you are looking at closing or reducing the service?

Ms Frost: We will look at the number of people through the doors and the number of people requiring appointments. One of the things I must make very clear in this area is that if we are going to improve the service to older people actually bricks and mortar are not always - and I am not talking about Lancaster but in general - the best way to do it because we are talking about less mobile people and people with other difficulties. We are working with Customer Contact and with the Low Income Tax Reform Group and others on piloting more peripatetic aid which is sending people out to places where that need and help is much more defined.

Q83 Geraldine Smith: You see, I would have no problem with that nor, I think, would the staff at Lancaster, if you were saying to them, "We are going to reduce the amount of time you are actually in the office at Lancaster, but what we will do is send you out to Morecambe", which is my own constituency which does not have an enquiry point but has a very large number of pensioners living there, and other nearby rural areas. I do not think there would be a problem if that was the approach, but there is a lot of cynicism and suspicion amongst staff that it will just be purely cost-cutting and you will have large distances where you will just have a small group of travelling staff, moving from office to office, paying for travelling time and everything to be included in their work, and maybe not giving the best service - I am sure not giving the best service - to pensioners, for whom face-to-face is important. We all believe in choice and whilst some pensioners are great at using the internet - the silver surfers - and are great on the telephone, others find it very frustrating and they do want to be able to see someone face-to-face. Can you give me some assurances that you are going to look after that group, the group that do want to see a human being and talk about their tax? Sometimes it can be very complicated.

Ms Frost: There are a number of ways of dealing with that group and we have to look at what the value for money in total is in terms of face-to-face, which is one of our most expensive ways of handling people. We have referred to Tax Help for Older People before and they are providing really good value for money in terms of direct contact. To be clear, some of these changes in opening hours for the frontline footfall face-to-face is to provide more space for the back office processing, so we are not actually saying that by closing the enquiry centre those people are not going to be dealing with customers, they are moving to help with the processing in the back office.

Q84 Geraldine Smith: I can only judge from my own experience and that is not the case in Lancaster. Can I ask a little bit about the evidence, what you have actually done to find out - Mr Bacon touched on it before - exactly what older people want from you, because your mission statement says that you put the customer at the heart of all you do. It is quite right that you say that, so what evidence have you got that the older people do not want face-to-face, that they are quite happy with the internet and telephone and they are quite happy for you to reduce these services?

Ms Frost: We have a number of ways of looking at older people particularly. We have just completed a quantitative survey of 2,000 older people, what their preferences are for contact, what their abilities are, what sort of information they need going into pension, because one of the things that research has found for us is that actually post-pension age is a bit too late to start helping people with their obligations and that the time to start talking to people who are going to have pension issues and tax is pre-pension, three to five years before, and that comes from that research. We also do, but this would not be specific to pensioners per se, exit interviews at the face-to-face and enquiry centres and a survey of all our contact and how we have delivered the contact, so we have a number of ways of looking at it.

Q85 Geraldine Smith: Do you actually ask people, "If you had a choice what would you prefer, would you prefer a local enquiry centre where you can go and talk to someone about your tax affairs or would you rather do it on the phone or over the internet"?

Ms Frost: We ask them whether they prefer face-to-face, telephone or post.

Q86 Geraldine Smith: What do they say, what are the results?

Ms Frost: I would have to ask for the information on that.

Q87 Geraldine Smith: Could we have the results of those surveys, please?

Ms Frost: Yes.

Ms Strathie: The more general point is for the Department to deliver efficiently and to continue to modernise the things that we are trying to do in moving the way that we do things is for the very points you are making, so for that 12% to 15% of our total customer base of 40 million we are able to focus our resources on those who need it.

Geraldine Smith: Can I just finally make the point that it is not only older people that like face-to-face contact, I think you will find that most of the public would prefer a local enquiry office where they could go and talk to someone.

Chairman: Thank you, Ms Smith. Your last questioners are Austin Mitchell and then David Curry.

Q88 Mr Mitchell: The PCS tell us that you are undergoing a workforce change programme which could, in their estimate, see 25,000 job losses and over 200 office closures by 2011. How is this going to help service to older people who, as Geraldine Smith has pointed out, probably need the personal contact more than most?

Ms Strathie: I do not recognise the number of 25,000.

Q89 Mr Mitchell: There are going to be substantial cuts, are there not?

Ms Strathie: We will continue; we have already downsized the Department considerably and that will continue for quite a number of years.

Q90 Mr Mitchell: Their estimate is probably fairly close.

Ms Strathie: I do not know how close it will be because head count is basically a cashed-up budget, so depending on the grade mix and the way you design your services would determine how many people we have at any one time.

Q91 Mr Mitchell: The more jobs you cut the less personal service.

Ms Strathie: No, my challenge is to deliver the best possible customer service within the resources made available to the Department to do that job, and that is the big challenge of taking advantage of technology, getting those customers who can help themselves to help themselves and then focusing our resources on those who most need support. If you take numbers like nearly six million people filing on-line when that used to all be a single process and if you look right across all our taxes, more and more automation will inevitably reduce ---

Q92 Mr Mitchell: Older people are less likely to file on-line.

Ms Strathie: Not necessarily.

Q93 Mr Mitchell: I can say that authoritatively as the oldest person here.

Ms Strathie: As I have already pointed out, pensioners span decades now, they are not one homogenous group and people have many different preferences. What I am saying is the challenge is the pace at which you make those changes and the pace at which we adjust the cost of running the Department.

Q94 Mr Mitchell: You say you want to strive to provide the service but you are also proposing to reduce the opening hours of enquiry centres. It seems impossible to improve service and personal contact if you are reducing the hours.

Ms Strathie: Service has got to be about understanding what the customer needs in order to get the things they are entitled to and in order for us to ensure that they get those things and comply with what Government asks them to do. Starting from all the research we have been speaking about, we have to find the best way of using our resources to meet that need. I mean, at the end of the day we are here to get the tax in.

Q95 Mr Mitchell: Let me take a local example. You have reduced staff in the offices in Grimsby; can you tell me what the nearest enquiry centre to Grimsby is?

Ms Strathie: I do not know, sorry.

Mr Mitchell: Can you give us a note on that?

Chairman: It would not be very difficult to do research on who are the Members of this Committee. You are closing my tax office in Gainsborough. You could have found out who the Members are, you should have come briefed and you should have been able to answer that question for Mr Mitchell. It is elementary.

Q96 Mr Mitchell: So you know where the knives are coming from.

Ms Strathie: We will take that up.

Chairman: Do you not learn this sort of thing at the Civil Service College about how to make friends and understand Members of Parliament?

Q97 Mr Bacon: On those expensive courses.

Ms Strathie: I am sorry, I have not been on any of them obviously. I will take that as a reprimand, Chairman.

Q98 Chairman: It is a reprimand.

Ms Strathie: I accept it. At the end of the day we are not closing face-to-face, we are actually trying to reduce the cost of the number of buildings that we rent with the shrinking workforce, which has already been reduced by something around 16,000 headcount to around 90,000 people.

Q99 Mr Mitchell: Jane Frost said that you are consulting people on what kind of service they like - telephone or personal contact or whatever - but paragraph 4.8 says: "A Departmental survey in 2008 showed that 58% of older people contacting [the Department] were frustrated or annoyed by their experience" on the telephone.

Ms Strathie: Yes, and I do not think that is restricted to older people.

Q100 Mr Mitchell: That seems a very high figure. Either the calls are not being dealt with properly or ---

Ms Strathie: What we are finding in current research is that we answer the phone more frequently of total calls offered now. We have also shown that in up to three contacts we get a very high satisfaction score from pensioners. If they have to contact us more than three times then that reduces over a period of time, so our aim has got to be that we answer 90%-plus of all calls offered and that our customers are satisfied with what they get.

Q101 Mr Mitchell: Paragraph 4.8 says you do not provide them with information about the time they are going to have to wait, they are in a queue and their call will be dealt with personally in two hours' time.

Ms Strathie: We have even launched a call-back where people can log if they hit one of our peak times, being told that we will do the call-back for them.

Q102 Mr Mitchell: Where, over the whole country?

Ms Strathie: I would have to check the details. We launched it within the last couple of months.

Q103 Mr Curry: You have to stay in all day waiting for it.

Ms Strathie: No, I do not think that is fair. I am very happy to give you the figures on our recent contact centre performance and the improvements year-on-year, particularly the improvements this year.

Q104 Mr Mitchell: The PCS also tell us that people are being encouraged to contact the centres for tax queries, but while calls have increased by six million over the last three years, the staff has not increased proportionately. Even if there were the capacity, you are forcing older people to deal with their queries by telephone. You have not increased the staff proportionately to the number of calls, therefore older people are being forced to use the telephone with which they are dissatisfied.

Ms Strathie: I do not have unlimited resources. We have a constant prioritisation. We had some deterioration in service in the summer as we moved our contact centre priorities around while we delivered the MPPC Programme and had to train 30,000 of our people. Overall, our contact centre performance is on an improving trend.

Q105 Mr Mitchell: It seems a much more complicated tax situation for older people. Why can you not deal with them on a personal basis? The complication seems to be there are so many sources of revenue, pensions or whatever it is, so why can you not shift the basis once people retire and deal with them personally rather than every source of revenue? Your approach is now centred around sources of revenue, is it not? Why can you not centre it around the people once they retire?

Ms Strathie: For us the system is predicated on either PAYE or self-assessment. Either we require somebody to send in a return once a year and tell us all of their income and then we will do a calculation or we are striving to prevent people from having to do that by allocating their tax allowance through a series of codes. That is the basic concept. Many pensioners have their tax done through agents. Many more do not have any tax return or pay any tax and are not in the system. In trying to create an efficient service within the resources available to us we are trying to get as many of those people who can help themselves to do so, so that we can focus our effort on those most in need.

Q106 Mr Mitchell: I see you have got an enormous number of open cases on overpayment and 6.6 million of those are for older payers. Why can the cases of overpayment by the taxpayer not be dealt with more quickly?

Ms Strathie: When we froze and closed the old system when we introduced the 12 databases into one on 29 June we lost the capability to clear these cases until April. We will. We have already worked through the changes. Each year under the old system we had just under 17 million open cases to work and under the new system that will come down to about four million a year. We have plans at the moment for those open cases, starting with those who we believe are owed some tax back, about two million, and then working through those ---

Q107 Mr Mitchell: Why can you not give priority to cases of overpayment and specifically why can you not pay those people back before 6 May next year, which will be the election date?

Ms Strathie: Is it? It is the introduction of the new system that allows us to bring everybody's income into one source. A lot of this was in different parts of the country on 12 different databases. We will work those cases and give priority to those people who we believe are owed tax back, and we have plans to do so. I cannot say it will be before 6 May.

Q108 Mr Curry: You are under the cosh financially in any case, are you not, and it is going to get worse if you look ahead? What is the worst possible scenario? When this Government or the next government say, "We are going to save zillions out of Westminster, get much more efficiency" and you are all going to be located in some Godforsaken spot, it is going to get much worse and harder to keep the service going, is it not?

Ms Strathie: I think the challenge of delivering high quality public services and finding the resources to invest in the transformation will just get tougher and tougher.

Q109 Mr Curry: What do you think is the maximum efficiency saving you can achieve per year without services suffering? A yield of wheat goes about 2% a year and it is now 1% a year.

Ms Strathie: It depends on the route, bearing in mind how many huge systems HMRC has and where you decide to invest. We decided to invest heavily in PAYE because it is so critical to the tax revenues flowing. For us, the challenge now is productivity, realising the benefits of that big investment the Government has made. That is one strand. We have renegotiated our contract with our IT supplier, which we will take considerable efficiencies from.

Q110 Mr Curry: Put some sort of number on this, just have a go.

Ms Strathie: I do not think I can.

Q111 Mr Curry: If your boss comes along to you and says, "Ms Strathie, we want you to get 2% a year", do you say, "We can just about do that", but if they want 5% do you say, "We can't do it without there being casualties"?

Ms Strathie: We have been dealing with 5% a year all through the 2007 Spending Review. I was not in HMRC for most of that, I have been there a year, but we had the same challenge in DWP and we will no doubt face exactly the same challenge going forward. When you have done 5% a year for five or six years, inevitably that gets tougher but you just have to find more innovative ways of doing it.

Q112 Mr Curry: That begs a question, does it not, the innovative ways of doing it? It is going to be tougher, is it not, we can agree on that?

Ms Strathie: It is tough and will continue to be tough, but it will be tough for probably everybody in this country for quite a long time.

Q113 Mr Curry: I was not excluding anybody from this. Let me just look at this from the opposite end of the telescope. Like everybody else, I loathe paying taxes.

Ms Strathie: Did you say you loathe paying taxes?

Q114 Mr Curry: Absolutely. My view is I can always spend it better than the Government, but that is one of the reasons I am a Tory I suppose. On 5 April every year I take a large plastic folder and I write on it "tax" and whatever the year is, put it in the bottom left-hand drawer of my desk, and whenever a document comes in which might be relevant to that tax year, that document goes in the folder so I know I have got it. When I get the list from my accountant of all the documents he wants, I know it is down there in the bottom left-hand drawer. What information do you give, and how accessible is it to elderly people, so they actually know what bits of paper they need to keep and assemble?

Ms Strathie: I take your point. I too have a folder.

Ms Frost: We actually did start some work with benefits and credits where there is a similar issue in terms of ability to cope. We looked at whether people could manage the system and how organised they had to be with the system and introduced, funnily enough, sending out an envelope saying, "Keep these things in here". We did start at that end of the spectrum. The form that we send out now at the start of pension age, the P161, has a help sheet attached to it and the early indications are that there is a reduction in customer error from 19% to 10% which is quite a lot of error reduction. The other thing that we are looking at, and I think this will make a whole difference, is working with the large employers to start off with to ensure that when they are sending information out for how people prepare for pension and what they need to do, they have got the right tax information there. We are just about to start a pilot, and I am just looking at the concept, which will tell people the sorts of things that we know they ask us later in life. We will help them be that organised.

Q115 Mr Curry: Elderly people can get a bit intimidated by documents which look official and have lots of numbers in them, it is not easy.

Ms Frost: It is not easy for older people and it is not easy for a lot of people.

Q116 Mr Curry: No, I do not find it easy.

Ms Frost: There is a lot of work going on to reduce the amount of text, the amount of numbers, and simplify all the forms. That is a general thing that we know we have to do.

Q117 Mr Curry: Since we are all in the business of defending our local offices, let me join on behalf of Skipton and Ripon. I had a letter today saying you have extended the consultation by a month, I think.

Ms Frost: Yes.

Q118 Mr Curry: You have said you are going to take into account the demographic. Since I am used to these letters with all sorts of words which then need other words to say what they mean, what do you mean by that? What are the criteria? Do you have to be over 80 or 90 or x per cent of people? What do you mean by the term you are going to "take into account the demographic"? Without deviation, hesitation or repetition, for a minute tell me what it means in real life?

Ms Frost: I do not know if I can do it without the repetition! We will look at more than old people's demographics because enquiry centres are about people who need face-to-face help. In looking at the customer base we have identified a group of people we have characterised as "needs help" and there are marginally more older people in that group, as you might expect, than normal PAYE employees. We have a very good idea of what the age, literacy capability, social class and those sorts of things are and they will be taken into account in looking at the demographics, much more of the "needs help" than just older people.

Q119 Mr Curry: Where will you get that information from?

Ms Frost: That information is readily available on databases like Experian.

Q120 Mr Curry: So you could look at Craven, for example, which is a hinterland of Skipton, which is not an elderly population, and you could come to conclusions about the probability of need, is that what we are talking about?

Ms Frost: The overall profile of the people there. If we are not actually getting people through the door in the nearest enquiry centre then we would have to say the demand does not seem to match the overall template of the area.

Q121 Mr Curry: If you were to move the enquiries to a larger centre, on what basis do you calculate the travel times? My experience has always been with HMRC that their assumptions of how you can get to Skipton, Bradford or Leeds are different from those of every person who actually lives there, and you assume trains run on time and bizarre things like that, or that trains exist.

Ms Frost: There is not an easy way of doing public transport provision except on a case-by-case basis because I am afraid the data does not exist for that. One of the things we are looking at, and I know this sounds simplistic but it is the nearest thing we can do, is the provision of rail services because at least we can find the railway station nearest there.

Q122 Mr Curry: Access to the railway station, of course, is often much more difficult.

Ms Frost: It is on a case-by-case basis because there is no national data on any of these things. In fact, frequently there is no comparable regional data that we can easily draw from. The most important thing is to work with our third sector partners who are more flexible than we are because a lot of their services are flexibly based on telephone and multiple working from home areas even, and see where the provision they can make can contribute to any gaps that we identify.

Mr Curry: Time flies when you are enjoying yourself and the Chairman has told me my time is up.

Q123 Chairman: I think all our time is up. One last question. You said that you think only half a million people are missing out, but why did you take the trouble to find out this information before the NAO Report?

Ms Strathie: We had many discussions about many of the figures and trying to understand them. There is no implied criticism. It was a number that was unaccounted for and explored. We were exploring it then, we carried on exploring it and we will continue. In my view, in driving good customer service, even if it is half a million, it is still half a million people we want to target. We do not have a choice about who gets the allowance or not, that is a decision for the Government, but the alternative would be to overpay more people and then have to claw it back, and that does not seem very good service. We have to find the most efficient way of targeting those people and trying to get them to help themselves by claiming what they are entitled to.

Q124 Chairman: You might get some of this money back because it already costs the Department twice as much to deal with tax enquiries from older people as it does dealing with ones from other taxpayers. If you made your processes more consumer-friendly and more efficient you might get some of your money back. For instance, we read in paragraph 4.17 that there is funding of 165,000 organisations helping older people. How much are you investing in developing services for older people? Can you put a figure on it for us, if not now in a note?

Ms Strathie: We will take that away and give you a note.

Chairman: Thank you very much. That concludes our hearing. Clearly there is a lot more work you need to do working with the Treasury to help older people ensure they are not overpaying their tax. Thank you.