UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 869-i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

PUBLIC ACCOUNTS COMMITTEE

CUSTOMER SERVICE PERFORMANCE

MONDAY 28 JANUARY 2013

LIN HOMER and RUTH OWEN

Evidence heard in Public

Questions 1 - 96

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Public Accounts Committee

on Monday 28 January 2013

Members present:

Margaret Hodge (Chair)

Guto Bebb

Chris Heaton-Harris

Meg Hillier

Fiona Mactaggart

Austin Mitchell

Nick Smith

Justin Tomlinson

Amyas Morse, Comptroller and Auditor General, Gabrielle Cohen, Assistant Auditor General, David Clark, Director, National Audit Office, and Marius Gallaher, Alternate Treasury Officer of Accounts, were in attendance.

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL

Customer service performance (HC 795)

Examination of Witnesses

Witnesses: Lin Homer, Chief Executive, Her Majesty’s Revenue and Customs, and Ruth Owen, Director General, Personal Tax, HMRC.

Q1 Chair: Happy new year. You hoped that you would not have as many hearings in the new year. I have looked at the programme and I am not sure that your hope will become a reality, but let’s see.

The Report is disappointing. It is difficult to know where to start. The failure simply to answer the phone cost customers an estimated £130 million in 2011-12, if you add together the extra costs of the phones and the estimated loss to them individually, or to their businesses. Is that acceptable?

Lin Homer: I do not think it is acceptable. We have made some significant progress. I want to put on record my thanks to the staff concerned. The organisation has to recognise that it has got to do better. That is one reason why I have made some more money available in-year and asked Ruth to have a really good look at what we have to do differently.

To Ruth and PT’s credit we held the 90% through October, November and December and, so far, more or less through January, which, given that it is a busy month, is encouragement. That is much more in the realm that we have got to achieve all of the time.

Q2 Chair: So what is acceptable in terms of cost to individuals and businesses?

Lin Homer: I think the NAO Report sets out some proper challenges to us. The costs that you have referred to are accounted for by the time that people have to spend on the telephone to us and the cost of the call charge. The cost of the call charge is about £34 million of that. On the work that we have been doing, we think that if we increase the number of calls handled to the 90% we have held in the last quarter of this year, that will about halve the time of the call. So the four minutes and 42 seconds that is referred to in the Report will drop to about two minutes. Ruth has decided to bring over some of DWP’s experience. Those figures used by NAO do not include the time spend on the IVR, which we know real people-

Q3 Chair: IVR?

Lin Homer: The interactive voice recognition system.

We think real people start counting the call from when they pick up the phone, so we are going to measure that. We reckon that that will mean that we will achieve a call of about five to six minutes, up till the change in technology later in the year.

Q4 Chair: Five minutes waiting.

Lin Homer: Well, five minutes listening and waiting, because the IVR does answer a lot of people.

Q5 Chair: But that is so frustrating, more than anything, if you are user. It is a dead frustrating five minutes, which is costing them.

Lin Homer: But that will take a third to half of the cost.

Q6 Chair: You are going to cut the £34 million by half. We will come back to the 0845 numbers, but what about the cost to individuals and businesses of delay, ringing back again and getting the wrong answer? Put the £100 million against the extra money that you are putting into the system short-term, and it is more lost to individuals and businesses than it is investment from the taxpayer.

Lin Homer: Perhaps I could ask Ruth to tell you what we think we can do.

Q7 Chair: What is acceptable to you, Lin? What then starts coming out is what is acceptable in terms of the time you wait.

Lin Homer: We do a lot of looking at our own management information-we do some surveys-and if we can answer 90% of the calls, which we have been doing for the last quarter, we think that people will wait up to five minutes. In the last survey, which we published just last week, the majority of people answering that survey said that a wait of up to five minutes was acceptable to them.

Q8 Fiona Mactaggart: In that five minutes, do you include calls that only get to an automated service?

Lin Homer: That does include that proportion now. We are going to start measuring that, because that is one of the changes Ruth has suggested we bring in. What we have received from the feedback in the customer survey is that people believe that one or two minutes listening to the automated information, which in our new system will be reduced slightly, because the voice recognition will be quicker, followed by two to three minutes waiting to speak to a person, is reasonable. That is what we are currently achieving. That is an improvement of, as I said, up to half for most people. Whether we should go further, we will look at once we get to that level. But as the Report points out, there is a trade-off between cost of doing it even faster and the overall reductions we are required to make.

Q9 Chair: Let me just put two points to you on that. According to the Report, industry benchmarks are 80% in 20 seconds, and some have an industry benchmark of 90% in 10 seconds. So your ambition is miles below industry benchmarks. That is the first point.

The second point is: do you really trust your own customer checks? Your own internal quality checks, if you look at page 20, paragraph 1.22, do not make the external validation of experiencers’ expectations. Some 29% of tax agents-one in three of the people who probably have to interact with you more than anyone else-did not agree that HMRC are good at getting things right.

There are two questions. The first is low ambition, and the second is that you are talking about how your customers feel, but we don’t think that your customers, according to the Report, feel the way you think they do.

Lin Homer: On the ambition, it is important that we put against ourselves an ambition that reflects the scale of the calls that we receive and where we start from. If you look at the achievements of big Departments, such as the IRS in the US or DWP in this country, then we think that we should challenge ourselves to be in the same kind of space as they are.

One of the other recommendations that you are making to us, which again Ruth has been looking at, is that we should look at the proportion of calls being answered within a set time. We have not had a measure for that before, so we are looking at that. If you like, we could just briefly explain how we are going to go about that.

Q10 Chair: Perhaps you can deal with the second question. There is a difference between looking at and starting and implementing.

Ruth Owen: In terms of changing the way we measure calls, as Lin said, first of all, the thing that I wanted to bring in was to start from the customers’ perspectives. When we measure how long it takes to get through, at the moment we measure the time on the IVR and the automated message service separately from how long it takes to get through. I did not think that that was appropriate in terms of what our customers’ experience was. So going forward, we will be measuring that, and that will be part-

Q11 Chair: You will be measuring what?

Lin Homer: The time on interactive voice recognition.

Chair: So from picking up the phone to chatting to somebody.

Lin Homer: Yes, exactly.

Q12 Chair: And you are measuring that from when?

Lin Homer: April. That will be a more straightforward measure.

Q13 Chair: With an outcome?

Ruth Owen: The measure in terms of timing is, we think at the moment, we would like to start the measure at 80% in five minutes.

Q14 Chair: Eighty per cent in five minutes? Jesus!

Lin Homer: But at least it is a measure. Once we hit that, we can improve. What we are seeing is that-

Q15 Chair: Dear, dear, dear. Eighty per cent in 20 seconds is the industry norm. You are going for 80% in five minutes.

Lin Homer: I would challenge that, Chair, in a number of ways. First, much of the industry measures from the end of the interactive voice recognition, rather than, as we are going to do, from the beginning. The second is that that is achieved in a number of organisations that deal with much smaller numbers. I think you have to measure like for like.

The point is that we have agreed also, when we last saw you, to publish quarterly information, and that will include information-and we agreed this with the agents-about all of our calls; so we will have much more accurate information about how many were less than 30 seconds, how many less than a minute, how many less than two minutes. In going for 80% below five minutes it does not mean at all that everyone will be waiting five minutes. Already nearly half wait less than two minutes. What we want to do is have better granular information.

Q16 Chair: But 20% is how many million? Twenty per cent. waiting more than five minutes is a disappointment. It is unambitious. It is a criticism in the Report that they are very unambitious targets; but just tell me, 20% at the moment-assuming there is no change-is how many calls?

Lin Homer: We get 80 million calls.

Q17 Chair: So 20% is 20 million-well, it’s 17 million or 16 million. That is a heck of a lot. On the other point: you say what your customers want. According to the Report, 29% of tax agents-page 20, paragraph 1.22-did not agree HMRC are good at getting things right.

Lin Homer: Yes, and we are seeing improvements in what tax agents think of us, and that is good, and they have been working very closely with us over the last-

Q18 Chair: Who has done that? That is where I would say you trust-because if you look at it, your internal quality checks suggest that you were providing a good service; the external surveys of experience and expectations did not match your internal checks, so there is something wrong with the way you measure, internally, your customer experience.

Lin Homer: I think there are, again, some complex issues there. Overall 80% of people who were surveyed think that the service they get when they get through is good or very good. It is almost inevitable that tax agents, who themselves are specialists, will be more demanding. We think if we use their expectations to drive up our quality that is a good thing.

Q19 Chair: Can I just put to you-I know I am interrupting you a bit there-but tax agents ought to be the ones that are easiest to deal with, because they know what they are talking about, and if the people at the other end of the phone know what they are talking about their satisfaction rates should be greater. I know my own accountant who deals with you as a tax agent always says at least he gets through, and that is about the only thing that he can say is good about the system; and then there is a question about whether he ought to have priority over others-but he does. I don’t think it is good enough to say their demands are greater. I think quite the opposite: that they ought to be more informed and intelligent customers on the end of the line and if you were providing the appropriate response their satisfaction levels would be much higher.

Lin Homer: That is why I started by sharing with you a view that we have got to do better. I don’t think we are satisfied with where we are at, but we have to build from where we are to go forwards. I think everybody would agree with the agents that the first thing you have got to do is have a system that gets them through; the second thing you have got to do is push up the quality of the answers; and the third is to keep making sure that you build up your routes so that they suit the individuals who are trying to phone. That will be different for individuals, for different life events, for agents; and what we are increasingly trying to do is ensure that we do get better at that.

Q20 Austin Mitchell: Do you get a cut from the profits of the 0845 number?

Lin Homer: No, we don’t, but what we do get is some additional services from Cable and Wireless, so that if you like we get some additional services out of them that we don’t pay for, so we get some benefit, yes.

Q21 Austin Mitchell: That is very generous of them. How much profit do they make?

Lin Homer: They make a small amount of profit; they think about 10% on the amount that is charged for 0845 numbers, which is not the entire call charge. Most of that goes to the operator that the individual is with. About a third of the money they give back to us as additional services. A third they have to pay over to British Telecom and the remainder is, about half the cost goes to operating the 0845 and the remainder of that-

Q22 Austin Mitchell: You say it is a small sum they make. How much is it?

Lin Homer: It is considerably less than £1 million and will be smaller still if we move on to 03 numbers as we plan to do early in the new financial year.

Q23 Austin Mitchell: But you will know how much it is for them to pay tax on it.

Lin Homer: I think I am entitled to know how much it is, because I am their client.

Q24 Chair: And I think we are entitled to know how much it is, because it is taxpayers’ money.

Lin Homer: Well, I have given you a broad figure-

Q25 Chair: It is about a million. On a contract of what?

Lin Homer: Well, we are seeing a number of you tomorrow, and I would be very happy to discuss this a little more in private. You will remember that we are renegotiating this contract over the next 12 months. I am loth to give out information publicly in Committee about how much I am prepared to pay for such services until I have received bids. However, I am very happy to give you a bit more information in a private setting.

Q26 Austin Mitchell: You should know, because, on the other hand, it must have been bad contract, which is shown by the fact that you are having to renegotiate it.

Lin Homer: No, the contract is up. Its term has run. It expires in 2013. It is always easier to look back at what has changed. Telephony has changed enormously in the last period, and we have learnt a lot during this period that will help us contract differently in the future, but I would not say that the contract was necessarily bad. It was made in the time that it was made.

Amyas Morse: Very quickly-I am sure it will be valuable to have these private discussions-we are a little surprised to hear details of the internal costing of services being provided under this contract as none of that has been available to us in doing our work. It is nice that that has come out now, but we are surprised.

Lin Homer: I have been prompted by the NAO’s Report to push a bit harder for this information than we had done.

Chair: It is good to get it out.

Amyas Morse: I think it is great. I am just surprised that it could only come out today.

Q27 Austin Mitchell: It is going to be mess, isn’t it? There was an improvement last year over the disastrous year before, but you now have the crazed single benefit system, which will be horrendous and will produce lots and lots of queries at a time when you also have staff reduction targets. You are going to have more problems coming in and fewer people to deal with them. This is a precursor to disaster.

Lin Homer: I think personal tax has quite a lot of change still to go through. We have to acknowledge and recognise that the Department has, in the last couple of years, undertaken some big changes that have been very challenging-NPS was very challenging-and has committed to doing some things to sort that out, which have been done.

Q28 Austin Mitchell: How can you sort it out if you have a flood of calls coming in over this new system and fewer staff?

Lin Homer: May I answer that? We have dealt with the backlog of cases. By the time we conclude this financial year, the PAYE system will be operating as it is meant to do, with only the resolution of last year and the issue of tax codes for the next year to be considered. We have the first opportunity since 2007 to operate the system as it is meant to be. We are maintaining call handling at over 90% at the moment. We peaked at 96% in some weeks. We are therefore confident that we can continue to deliver a better service.

There are some big challenges, but we are also learning about how to handle those. Last time I came to see you, there were quite a lot of voices, including some in the sector, suggesting that child benefit would be difficult for us and that it would cause a great number of telephone calls. Actually, we found that with a well-designed website-we had over 2 million hits and already over 350,000 opt-outs-we only had 80,000 telephone calls from that piece of work.

Q29 Fiona Mactaggart: But that is a very particular client group.

Lin Homer: Well, we have to learn how to do that with more people. That is considerably less than was said at the time, and some of the words that Mr Mitchell has used were used about that as well. Nobody pointed out that they were a particular client group then.

We think that demand management will take a lot of calls out, but we also have to be flexible, which is why Ruth’s people have been looking at additional telephony, a more flexible work force and more demand management. We will have to keep a very careful eye on this. We do not think that we are at a point of comfort, and we do not think that all that lies ahead of us is easy, but we do think that we have a stronger chance of giving the kind of service levels that we want to give going forward.

Q30 Austin Mitchell: Why can you not have a system where you ring people back? Why do you not ring people? Why could you not have a system where they ring in and say what their problem is? That ends the call, and then you refer to an expert who rings them back. That would be much better than having them hanging around on the telephone.

Lin Homer: Ruth is thinking about a number of these. Do you want her to mention them to you?

Ruth Owen: On callbacks, I prefer first-contact resolution, which the NAO recommended. If you phone somebody up, you get through to us. To answer the call correctly there and then is the best service for everybody, and it is most efficient as well.

Q31 Austin Mitchell: Well, that is the ideal, but in a lot of cases, you cannot do it.

Ruth Owen: Where you cannot do that-where somebody is phoning on a pay-as-you-go mobile and does not have credit, for example-what we have not done to date in HMRC is offer a phoneback. I have tried it in DWP, and I think we will introduce it. I am starting it in April on the child benefit line to make sure we understand how to do it, and then I should expect that all lines will be able to phone people back.

Q32 Austin Mitchell: Lastly, can you deal with questions via e-mail?

Ruth Owen: That is a slightly different issue. We prefer not to deal with e-mail because it is not secure. We published our digital strategy at the end of last year; it says that through an online service a bit like online banking, you can go into a secure message service with us. Once you have logged on to "My tax business" if you are a small business, for example, you can then communicate with us online without the risk of going on the internet.

Q33 Chair: That will take for ever to roll out, though.

Lin Homer: No.

Q34 Chair: What is your time frame for that?

Lin Homer: Some of the business versions for small businesses will launch this Easter, and we will pilot it for individuals starting in October this year and growing from there.

Q35 Chair: And you expect everybody to have their own protected e-mail account by-

Lin Homer: By 2015.

Q36 Chair: April 2015?

Lin Homer: Could we confirm that? I was being a little more vague than spring, but it will be some time during the financial year 2015.

Ruth Owen: I think we will grow it piece by piece. We will do it both by function and by people, so we know what we are doing and we can handle it. There will be a limited number of people who can do a limited number of things, so first of all you can write to us online about your benefits in kind or your code, and as we get better and better at it, we will expand it out. That is the plan we published last year.

Q37 Fiona Mactaggart: Paragraph 1.14 shows that you estimate that 15 million callers who get the automated message are answered. If you estimate that a call like that is answered satisfactorily, how do you explain the fact that 4.25 million of them call back within 24 hours?

Lin Homer: I think what that paragraph says is that we assume that 28% of the 15 million callers-

Q38 Fiona Mactaggart: Yes, that is 4.25 million. I did the maths.

Lin Homer: Yes. I think the NAO says in the Report that somewhere between 0% and 5% of the calls that we assumed were dealt with may have led to a call again. We think that we ought to do more work in that area. At the moment, we have a judgment call to make. If someone goes into the interactive voice recognition and they get a reminder that what they need is the national insurance number and details of their child’s schooling, and they realise that it is not worth waiting in the queue if they have not got them-if someone calls off because they do not have those-I think we would regard that as a call that was dealt with, because otherwise they would have waited in a long queue.

You are right that the NAO is saying to us, "You’d better challenge your assumptions and make sure that’s right." We are going to look at that. I do not think we are going straight to the assumption that every call that the NAO thinks was not sorted is sorted. That is an area for deeper review as we go forward.

Q39 Chair: David, do you want to comment on that?

David Clarke: Our point is that we did not think that everybody who hangs up while listening to the messages is a satisfied customer who thinks their call is resolved.

Q40 Chair: How did you get to your 28%?

David Clarke: Well, those are the Department’s figures.

Q41 Fiona Mactaggart: So how is that going to work? How are you going to measure whether they are or are not satisfied customers? I accept that some of them might be, but it is quite clear that some of them are not.

Lin Homer: Our management information is quite difficult to use when there is so much pressure in the system. We had 80 million calls last year. We know and accept that a number of those are people who called in, waited a period of time, dialled off and called back. We have estimated that possibly the underlying demand might be 64 million not 80 million, so there is a proportion of people dialling again. One of the challenges for us is that it is hard to pick those out until you get to a position where you are answering the calls much more quickly. If we are right that answering 90% will give most people an adequate wait time, even if it is not best, we think you will get to see whether the underlying level of calls drops, which will show that proportion of callbacks or not.

We think we are just going to have to watch this very carefully over the next 12 months. We would be very happy for NAO to do that in real time with us, to keep our feet to fire on whether we are being challenging enough. It has been quite hard to work that out when there is such a level of churn in the system.

Q42 Nick Smith: Listening to your answer I got the distinct impression you were putting your finger in the air, wetting it, and seeing what happens.

Lin Homer: No, but when you have 80 million calls, however much you profile those calls, the volumes are very large, and a fairly small adjustment in your assumptions could add up to quite a lot of people. What I am saying is that we don’t think it is good enough and do want the MI to be improved during the next year.

Q43 Nick Smith: You said that your management information wasn’t good enough to allow you to analyse what was going on. That makes me think you just don’t know what is going on.

Lin Homer: I think we know a lot about what is going on, but as the system gets into better order, we will know more and be able to make better adjustments to our system. The new voice recognition, which is voice activated not push-button, will also allow us a much richer range of information about what people are calling about. That will help us to decide which lines have most demand and what to do about that. This is one of those areas where we know a great deal but I think we can be better informed as we go forward.

Q44 Fiona Mactaggart: On that issue, what is your reaction to my pointing out that the people who are affected by the tax changes on child benefit are a particular client group, in that they are more likely to have access to the internet and be better informed and so on? Are you able to provide us with information about where most calls are coming from? Which issues and areas have provoked most inquiries, changes and so on? That is relevant for us to ensure that you are responding efficiently.

Lin Homer: Yes, we have got some segmentation. As you know, we are trying to publish more, so it is perhaps a proposition we could discuss with the tax agents and consider whether what we have got might not only inform you but be put more into the public domain.

Chair: Real-time information is going to affect a different group, when that comes in. I know it is being introduced very slowly, but these are the people whose information to you will impact on their benefits, so it is the other end of the spectrum.

Q45 Fiona Mactaggart: It would also be helpful to us as Members of Parliament, because we would know about policies that we have introduced, that some of us feel that we know from our postbag and constituency casework, but we don’t always know. You are the people who will know this and it is quite important to have that information in the public domain, so we can see what is causing what.

Lin Homer: Yes.

Q46 Guto Bebb: From figure 12 in the Report, it looks as if something like 18% of dissatisfied customers report mistakes or errors or misleading advice. Do you have the figures to indicate whether the professional advisers and agents who phone have a higher figure for that type of complaint?

Lin Homer: I am afraid I don’t off the top of my head, but I am pretty sure, knowing our stats, that we could ask whether we could break down those complaints by type of caller. You are right that we would not expect agents to feature anything like as much in the delay because they have the dedicated line, as the Chairman has said. We could certainly have a look at whether we could segment the complaints picture in figure 12 by type of caller, at least agent and individual.

Q47 Guto Bebb: The reason I ask is that I understand we have 17 call centres and a telephone call will automatically just fall, but the agents have a dedicated phone line. When I asked the head of your debt management team whether there was any possibility of having a dedicated phone line for a specific issue that I was concerned about, the advice I had was that it was very difficult to do that because the degree of expertise required by the call centre staff would not be able to justify having specific teams of staff trained. My question is, in the 17 centres, how many staff do you have working on this issue? Depending on the answer, why haven’t you looked at the possibility of training specific teams to deal with specific issues?

Lin Homer: Do you mean the debt issue?

Guto Bebb: It was specifically a debt issue, yes.

Lin Homer: Okay. Ruth has been working with our contact centre staff to ensure that we can deploy them flexibly, so there are now many more contact centre staff who can deal with a range of issues than we have traditionally had, which means that we have the flexibility to deploy more people at peak times. One of our problems is that all calls tend to be spiky over a year, and if you set up a dedicated call centre and that is all they do, there is the risk that at some parts of the year they are not doing very much, so we are trying to make sure our advisers are able to deal with more than one thing. What we are doing is routing rather than dedicating, if I can put it like that, and that is for flexibility, but we have lines that are predominantly about certain things, and in the new system we will use word recognition to get people put through to an adviser who will know in advance what they are calling about. So we are heading in that direction.

On the issue of debt, you have myself and Nick Lodge in front of you on 6 March-perhaps on the basis of not leaving me time to get bored. I believe that one of the things we will be talking about is the degree to which we can back up debt work with a line for use in emergencies. There is an issue at the point of distraint, where sometimes people assert that a payment has been made just then. So we are looking at debt and whether there are any additional services we can put in at that very sharp end. That might be something I can more properly discuss further at that hearing.

Q48 Guto Bebb: The debt is just an example; my main concern is whether a degree of specialism within the call centre staff would deal with some of the complaints about mistakes or errors, but that is obviously an issue you are already working on.

I see from paragraph 1.10 in the Report that you are doing quite a bit of work on demand management. Could you expand on how you are trying to persuade people that their issues are not important enough for them to call?

Ruth Owen: This comes back to the core of what you are saying to us, which is that a lot of people phone because they are chasing up HMRC for something that has not been done, or because they are confused about something because our letters to them are too confusing. We know that there are a lot of what we call low-value calls. I am not demeaning the customer at all: it simply means that when we talk to the customer, we find they really did not want to phone us at all, but they were confused about something that quite often was created by our own systems. There has been lots of research, which is why we can provide you with further analysis of what types of calls people make. People will say, "I really didn’t need to make that call at all."

A good example is the letter we send out to people about their tax code. A lot of research has shown how confusing that can be. By working with customers and agents we made some changes to that, and we can identify that 1 million fewer calls came through in the last year because of the changes to that letter. So you can have a big impact if you think about things like improving our letters and answering calls first time, and if you upskill agents, people do not have to phone back because they are not clear what happens next. I think we can remove quite a lot of the latent demand from the system without customers feeling like we are stopping them getting in touch with us.

Q49 Guto Bebb: You commented on demand management and the issues in people contacting you via e-mail. What sort of work are you doing to try to deal with the demand management issue by utilising the internet in a more proactive manner?

Ruth Owen: As I say, our digital approach is to go not to e-mail, but to secure messaging. That can use intelligent ways of identifying the key questions that people are asking. It can give personal answers through the internal messaging service, when that is up and running, and start to inform such things as frequently asked questions, because we will have much more data on what type of things people are asking us electronically.

Q50 Guto Bebb: Finally, Mr Mitchell has already touched on the changes to the universal credit system-I would describe it as universal credit, but Mr Mitchell had a different description. How worried are you that that will create a huge new burden in terms of customer calls? In my view, it is just as important that significant numbers of people have not registered to not take their child benefit, so obviously there will be a huge new burden in terms of tax returns. What sorts of plans have you got in place to deal with that demand when it comes through the system?

Lin Homer: Real-time information is the big project of the year and I am sure we will talk to you about it on a number of occasions. Ruth and the team are trying to make sure that we give as good a quality of information and support as possible, particularly to small businesses as they take up this new system. You will remember that we have signalled that we are not going to apply any penalties in the first year, so we see it as a year to help people settle down.

My own view is that we will need to put a variety of things in place: we are doing teach-ins; some of the software houses are helping their users; and we have lots of work with agents, who will obviously help settle people in. As Ruth said, if we make the website very clear, we know from experience that people will use that first and will call us only if it is not clear.

Q51 Chair: On real-time information, you are not going out 100%; you are doing only a very small number.

Lin Homer: We have been moving through and we have more stepped changes from April onwards, but we have a big movement towards small businesses coming on from the spring. We are absolutely determined to try to make sure that we are hand-holding through the first year.

Q52 Chair: So when will all businesses have to give you real-time information?

Lin Homer: All small businesses will need to start in the spring of this year. It will depend how often their payroll is run and when their first payroll is, but during April through to the summer, we will be helping the majority of small businesses-except those that are not already on-on to the RTI. I am not expecting them all to land perfectly, and we will use as much of the first year as we need to go back round and help make sure people settle, but they will all have to move over during that period. If we get that hand-holding right, people will not have problems.

On child benefit, we do not think that there is a massive number of people. We anticipate about 300,000 more people may have to go into self-assessment. They have from now until 5 October to register, if they are not registered. We will use a number of regular communications with them to keep giving them memory bursts. As I say, the numbers that have already opted out are higher than we expected, so the numbers we have left to deal with are lower than we expected. Evidence suggests that we can help those people predominantly through web-based information and letters, not through telephone calls.

Q53 Guto Bebb: I have some more questions to fire off. First, on real-time information, are you planning any dedicated phone lines for that?

Lin Homer: Yes, I think we are.

Ruth Owen: Yes, our employer helpline is being staffed up to deal with that.

Q54 Guto Bebb: Secondly, with 300,000 new tax returns, how many man-hours will that demand?

Lin Homer: We took 800,000 new SAs into the system last year, and that was managed within existing resources, so we do not anticipate that this will be outwith our normal resources. For most people, it is an online application that will just go straight into our system, and for most people, that will not take very long; but again, if that generates some calls, we are ready to deal with them.

Q55 Chair: Real-time information is really important and we have talked about businesses, but what about individuals? Let us take the most extreme example of a zero-hours contract-your earnings may vary week on week, and your benefit is impacted by the hours you work-you may well want to ring HMRC to query or challenge the hours that your employer has said that you have worked, won’t you?

Lin Homer: Universal credit will begin to be piloted in October this year, and we will work very closely with DWP regarding what demand that generates for the employer, the DWP and for us. We will need to learn through those pilots-

Q56 Chair: You will have a responsibility to deal with that call.

Lin Homer: We and the DWP need to work out where we want to direct those calls, because universal credit will be a DWP service. I think that, predominantly, those calls will go to the DWP, but to the extent that claimants are transferring from us to the DWP, we clearly want to stand alongside and help.

Q57 Chair: But if they are challenging the data-you can see it all happening, and I can see them in my surgery-that their employer, the SME has put in about the hours that they worked last week, they will want to talk to you.

Lin Homer: One of the benefits is that we will get exactly the same information that they get. They may well be challenging their employer once they become aware, through the pilot, that the information that their employer gives to us is what their claim will be based on. I envisage that this will generate a degree more interest among those people in their payroll information, because that is the basis of-

Q58 Chair: Hang on, is it their responsibility to make sure that the employer gives you the right information?

Lin Homer: It is the individual’s responsibility to make sure that their tax affairs are in good shape and-

Q59 Chair: No, let me repeat the question. Mrs Smith has got a zero hours contract. Is it her responsibility to make sure that her SME employer gave you, HMRC, the right information?

Lin Homer: The employer has responsibility to give us the information from the payroll, but the individual has responsibility to ensure that the employer has the information about them. So, for instance, one of the questions-

Chair: You have not really answered the question.

Lin Homer: What I am saying is that there is responsibility on the individual, the employer and HMRC and DWP. That is why the pilot, when it is undertaken, will be important to make sure that we are clear where people get information from and where they challenge.

Chair: I can just see the chaos. There will be endless phone calls.

Amyas Morse: We have got more work going on on this. It will not be a surprise to Lin, but it is worth pointing out that the co-ordination between DWP and HMRC is going to be very important because there is a quality of information question that will have an effect on universal credit that will be perhaps a little bit less critical for determining tax liability. It is really important that both those criteria come through into the way that you run RTI from the beginning. I am pleased to see you here because I realise that you understand-

Q60 Chair: I can tell you: if I am an MP and somebody comes to see me and says that they have had their benefit cut because the employer put in the wrong information to HMRC, I would expect HMRC to sort that out.

Lin Homer: Yes. We will have to work closely through the pilot in October.

Q61 Meg Hillier: On the subject of child benefit, you said that you expect most people not already to be filling in tax returns. So, with the 300,000 new ones, there are others who you expect are already filling in tax returns?

Lin Homer: Yes. 300,000 have opted out. We assume that-

Meg Hillier: So 300,000 have opted out?

Lin Homer: More than that by now, actually. We assume that about 300,000 to 350,000 are staying in because they are in the taper; about half of those may well already be in SA and half will have to register. We assume that there are another 300,000 who do not fall in yet; they are not sure so they are waiting to see what their earnings are for the year. Again, half of those may already be in SA and half may not. That is what gives us a belief that there are somewhere between 300,000 and 350,000 to register.

Q62 Meg Hillier: You talked about having regular communications with people in those categories. How are you identifying people in receipt of child benefit?

Lin Homer: There are a variety of mechanisms. Obviously, we send out letters to higher-rate PAYE earners reminding them of the need to be in SA if their income gets to a certain level; there are questions in the SA form for those who are already in SA to remind them to let us know whether they or their partner have child benefit-

Meg Hillier: Is that next year?

Lin Homer: And we also have the original database that we use to send letters out. Over time, we can cross-reference those to the folk who have opted out and the folk who haven’t. Then we can follow up with those where we want to check whether they stayed in deliberately and need to register or not. So, as the cohort gets smaller, we can then dovetail some more information.

Q63 Meg Hillier: How confident are you about the quality of that database?

Lin Homer: It is never going to be completely up to date, as there is always a lag. We know that there are some people who will have ticked into the higher rate over the year, and we will get a notification about those at the end of the financial year. So at the end of each financial year, we get a retrospective look and we can cross-check to work out whether there are some that we did not contact.

Q64 Meg Hillier: Chair, I asked the question because I am a higher-rate taxpayer-I have been an MP since 2005, and a higher-rate taxpayer for longer than that. My eldest child is 13, so I have been receiving child benefit for a while, but a letter came there none.

Lin Homer: No, and that was one of the reasons why we spent quite a lot of time doing national media.

Q65 Meg Hillier: So why did that happen to people such as me? I was fully embedded in the system and had done self-assessment for a while-I was not hiding.

Lin Homer: One of the issues for us is that our databases are not always up to date-people move or they have a different partner.

Meg Hillier: Sorry, none of those apply to me. My husband and I celebrate our 16th wedding anniversary this year. We are very happy.

Lin Homer: Short of talking about you in particular, I have no idea why we did not write to you, because we should have done.

Q66 Meg Hillier: Okay. One example does not prove the point, but it does prove that things are perhaps not 100%. Interestingly, my husband got the letter. Are you looking at couples and cross-matching?

Lin Homer: Oh yes. If one of you got a letter, that is success.

Q67 Meg Hillier: What about independent, individual taxation for women?

Lin Homer: The decision we made was that we could have written to all 8 million people who got child benefit. Then you would have had approximately 7 million worried well, whom the change did not affect, but who were not worried if it did. We decided to use our databases to cross-check and to write to the about 1 million who were affected. We knew that we would not catch everyone. One of the reasons we undertook a fairly extensive media campaign was to signal to the rest, "If you haven’t got a letter, you still need to go on the website."

Q68 Meg Hillier: The point is, how did you decide who, in what you assumed to be a couple-presumably, on your tax records, their addresses matched and so on-got the letter?

Lin Homer: We were writing to people we could see were over a certain level, in receipt of child benefit or at a certain address.

Q69 Meg Hillier: And then you automatically excluded the other adult at that address?

Lin Homer: I guess we were trying not to write two letters to one address. I am not sure what protocol we used to avoid doing that.

Meg Hillier: It would be interesting if you could do us a short note on that.

Lin Homer: I am happy to.

Meg Hillier: There are important issues there.

Lin Homer: I can see the point you are getting at, but I think you would have minded if-

Q70 Meg Hillier: Happily, my husband and I still are still a couple, but we could have been in different circumstances.

If I may, Chair, I would like to touch on small businesses. In figure 14, the NAO makes some helpful suggestions. This is quite basic stuff for small and medium-sized enterprises. My local businesses find going online to do some of these forms very cumbersome. They welcome the idea, but they say it is so complicated. What messages do you have for them about the concrete plans you have to make things much easier for small and medium-sized enterprises.

Lin Homer: First, we are getting an enormous amount of benefit from working with the industry in this area. Agents and stakeholders are giving us a really good list of things we should do differently, and we are increasingly working with them to sort that out.

When it comes to SMEs, one of the things we are trying to do is to give them products that work in the real world they are in. We have produced a number of apps for smartphones and handhelds that allow a small business person-particularly a newly established one-effectively to capture much of the information they need for us in their smartphone as they carry out their business. We have five or six apps that have been developed by different software providers and that are free to the small business. Small businesses can use an app in a way that is useful for them so that they have all the information they need to download to us later. That is an example of something that works for them and works for us.

We are providing education for small businesses through online education, and we are getting very good feedback from that. We are also, as Ruth has said, looking to trial digital accounts for small businesses from April this year. We will work with the small businesses. We will trial things, and we will build on what works for small businesses. Our experience shows us that if you do things with small businesses that help them in the first three months of operation, they remain compliant through their existence, whereas if they get in a muddle in their first few months, it is much harder to help them. All of those things are being shaped by small businesses with us.

Q71 Meg Hillier: Those are good words. I am sure we will be watching how well that works. May I just ask a question about online? Paragraph 1.27 talks about quality of service and website usability. You make judgments about how well people have interacted with the internet. When are you going to introduce a proper customer service standard that measures how good the online service is? Do you have a way of measuring how many queries are answered first time on the internet?

Ruth Owen: The short answer is April. We will be expanding a number of these measures that are recommended by the NAO Report to a wider range of quality and quantitative measures, and getting into the heart of what customers feel about our service, both online and by the phone.

Meg Hillier: To make a constituency point, I represent Tech City, and there are plenty of businesses out there that will be keen to bid for business on a small level to make your website more user-friendly.

Q72 Chris Heaton-Harris: On child benefit, I did not get the letter but I heard that the campaign went online and I found it very easy to opt out, so you should be congratulated on that. Some of the questions were a bit iffy, and I had to read them two or three times. In general terms, though, it was a very simple thing to do. Within 10 days, I received a letter to say that that had been confirmed and I had opted out. You should be congratulated on that, because lots of the other stuff in the Report is pretty poor, so I just wanted to stick a tiny positive in there.

You would have seen in the Daily Mail, not that you can believe everything that you read in the papers, that "Money Mail" gave you the wooden spoon for customer services. Considering that Public Accounts has been banging on about your customer service in HMRC for a number of years, that you are ranked worse that some pretty poor private sector companies with terrible reputations and that we have been asking this for a very long time, how can we be assured that what you are saying now will actually come through?

Lin Homer: I was not at all happy to receive the wooden spoon. I hope that some of the changes that we have already put in place and some of the things that we have talked about will mean that we do not get it next year; that would be a great way to finish this year. I understand that you all judge us on what we do, and not on what we promise, but part of why we are committed to publishing a wider range of information quarterly is so that you do not have to wait so long before you can haul us back in and say, "Is that movement or not? I thought that you said you would sustain that." Publishing information is one of the ways that we can show progress. Quite a lot of the recommendations that you have given us have caused change in HMRC. If Lesley were still here, she might well say that it is not as soon as you wanted, but we have to give some credit to both Lesley and Stephen for picking up quite a lot of what you said and implementing it. I do not think that we could be talking about the changes that Ruth is talking about for 2013 were some of the things that were achieved in 2011-12 not under our belt. We just have to keep going, and I suspect that you will keep nagging us.

In terms of the feedback, the most important thing is that until you answer the phone, people do not trust you with the harder stuff. That is why, for me, we should get up that call answering level to 90%. It may not be good enough, but once we get it there, you can tell us to get it higher. We think that once we do that, we can then get more focused on the next levels of change and then build on from that.

Q73 Chris Heaton-Harris: One of the things that we have talked about in the past here, and that you have been reticent in picking up at HMRC, is mystery shopping. Is there any movement on that particular issue?

Lin Homer: I know that that is something you have discussed with Lesley before, and I think that it was discounted. To be honest, what we are doing is very good evaluative surveys. My inclination is that we should have a really good look at the survey work we do, and potentially share a bit more of that with the NAO and take some wider advice as to whether there are some other things that we could do to complement that. I do get quite a lot of ad hoc mystery shopping, such as MPs who tell me they have not got letters. There is the question of whether a qualitative rather than a quantitative thing would add much above what we do not know. We do know what is wrong with the service. The challenge, as you have rightly said, is to do something about it. I do not think that I would spend a great deal more on customer surveys than we are doing now, unless I was clear that we were really missing some tricks.

Q74 Chris Heaton-Harris: The NAO Report says that about 90% of the post is responded to in about 40 days. What constitutes an answer? Is it just an acknowledgement of a receipt or-

Ruth Owen: It is a full answer.

Chris Heaton-Harris: Good. I am happy about that.

Lin Homer: And it has improved over the past three months.

Ruth Owen: I think we are now at 98%.

Q75 Chris Heaton-Harris: I want to emphasise Mr Bebb’s point about perhaps differentiating different things. I do not know how many returned or damaged cheques that you send out you get back in the post, but I have a constituent who spent months trying to contact you about an issue-it was about a damaged cheque, at the end of the day, but it took months to sort out. That should have been the most simple of things to have got done, but it was not. Some simple customer resolution-diversion-would have been able to sort it out, but it turned out to be a lot of correspondence between us, on this lady’s behalf, and a load of hassle that she did not need either.

Lin Homer: We would accept that. There were points 12 months ago when we had 1 million pieces of post dotted about the organisation. Once you get to that, you are getting to chase the letter before you have unpacked the letter. At our last check, around Christmas time, we had less than 100,000 pieces of post anywhere in the system. Once you get to that, your ability to resolve simple things quickly is improved. The system, once it works, works better.

Q76 Chair: I hope that that is an accurate figure and not a UKBA-style figure. I hope that you know what is around.

Lin Homer: I believe so. I have visited a number of the post rooms up and down the country, and I have seen my staff in what are now empty rooms pointing at a very small amount of post and saying that six, nine or 12 months ago this whole room was full of post. So I do think that that improvement is solid.

Q77 Chris Heaton-Harris: As a benchmark for us, could you write to us-I do not think you have the figures to hand-about how many HMRC cases were referred to the ombudsman in the past couple of years, relating to maladministration and poor customer service, and how many were upheld? I know that I have had to refer one or two, and I am sure that other Members have. It is a quite interesting benchmark for what you have managed to achieve, hopefully, in a year or two’s time-we should be seeing less of those coming.

Chair: Do you know that?

Ruth Owen: I don’t know that as a figure. I know that it did go up significantly in the past two years because, as we got up to date, lots of people then wanted to complain about how we had handled their case and what we call the extra-statutory concession-whether they could have their tax written off-so I know, because the adjudicator speaks to us regularly, that she has seen a significant increase in cases over the past six months. We are forecasting that to come down again in the year ahead because we have got up to date, therefore that is the peak of what she would receive. Likewise with the number of cases she has upheld. I do not have the actual data, but we can send it.

Chris Heaton-Harris: It would be helpful to have that.

Q78 Nick Smith: It is good to see performance progressing in recent months-fingers crossed that it continues. I was also pleased to hear that you are going to improve letters out because, as you say, if you avoid confusion, it means that people will not contact you. I was not surprised to hear that you had had 1 million people call you back last year, but what did surprise me was that you should have done something before-that would have saved lots of calls, lots of money, surely. I hear what you are saying about secure contact via the web. Can you tell us a bit more about this? Would it be similar to the PIN systems that banks use?

Ruth Owen: Yes. We are modelling it on that sort of thing. You go into a secure area in your HMRC account online-with whatever security we deem necessary-and you are then safe within that particular website to converse with us and to give us your personal details, such as salary, tax details, etc., which we would not recommend that people e-mail us with.

Q79 Nick Smith: Okay. Will that be for everyone and not only agents?

Ruth Owen: As I said earlier, it is segment by segment. Small businesses is where we are starting off, from April; from October, we will start with individuals who are on PAYE; and from next April, we will have people who are on self-assessment. So bit by bit, and it is not just agents but individuals and businesses.

Q80 Nick Smith: I am really pleased to hear about that. On figure 14, bullet point 4, which is on page 33, there is a suggestion from tax agents that you introduce an electronic case-management system to make it easier to track progress and to avoid progress-chasing-this whole thing again, about people calling you all the time when they are not sure how things are going. Are you going to introduce that as part of the new system?

Lin Homer: That is the "Where’s my reply?" system, and I think that that is already at least being piloted-

Ruth Owen: It is only used by agents, currently.

Lin Homer: So at the moment, an agent can go online and check where a piece of post is in our system. Again, if that works, the opportunity to roll that out more widely will be developed.

Q81 Nick Smith: So it is already introduced and already working.

Lin Homer: Yes.

Q82 Nick Smith: Good. May I talk a bit more about the issue of high-tax payers and child benefit? You galloped through it rather.

Lin Homer: Sorry.

Q83 Nick Smith: That’s okay. Right at the end of it all, I heard you say that you think about 1 million will be affected, that about 300,000 have opted out already and that some 350,000 have opted in, but you will be contacting them over time. There is another segment of 350,000 or so on which I did not garner information.

Lin Homer: It is work in progress, because, obviously, people may opt out of child benefit at any time. Indeed, people may opt back in if they have opted out and decide that they were wrong about their salary level. So, in very simple terms, over 300,000 have already taken a decision to opt out and will not receive child benefit in the future. Obviously, whether or not they are already in self-assessment, they do not need to do any more.

We modelled about 350,000 as being best advised to stay in receipt of child benefit because they are within the taper arrangement. Their income is between £50,000 and £60,000, so they will keep some of their child benefit. Our advice was to stay in and, if they need to, register, because although they will have to pay some back, they will be a net beneficiary.

The other 300,000 are people making a choice. Some of those will choose for the child benefit recipient to keep getting child benefit, although they know they will then pay a charge of the same amount through self-assessment. That is the last third. The question for us is how many of those people have chosen to stay in receipt of child benefit and to pay it back, and how many simply did not opt out. We will keep communicating with them to remind them that they can opt out at a future point if they choose to do so. Those are the broad cohorts.

Q84 Nick Smith: Could you tell us more about that last group? There seems to be a lot of administration for people who oughtn’t to get child benefit, although they have to pay tax on it. That seems to be to no one’s real benefit, and certainly not to the state’s benefit, because there is a lot of extra administration.

Lin Homer: Some people will make that as a positive choice. The recipient of child benefit will say, "I have always had my child benefit. I pay it into a certain account. I do certain things with it. I want to keep having that." They and their partner will agree that they will still receive it, but they or their partner will then pay it back through a coded out charge. It could just be a separation of money: it has been a tradition that child benefit goes to the person caring for children.

Others just haven’t got round to it, and we will keep reminding them. At some point they will go, "Oh, yes, this is a faff," and opt out late. If they opt out by the end of March this year, they will have to do self-assessment only once. We will have another push at reminding those people that, if it is just because they did not get round to doing it, there still might be some value in finishing off this financial year by opting out.

We will have ongoing administration in the system anyway, because people will drop into high rate or drop into having children, so there will always be people having to make a judgment, and we anticipate maintaining a good website and maintaining an option to opt out online. There will be a degree of telephone calls from people saying, "Am I affected, or not?" This is now part of our work.

Q85 Nick Smith: Have you assessed how much that is going to cost?

Lin Homer: We originally thought it would cost us about £22 million, including set-up costs. We have halved that cost because we are ahead of schedule and more people did it online. The ongoing cost will be a small number of millions. The absolute cost will be determined by how much of it is digital and how much of it is phone-based.

Q86 Chair: I will raise three issues, and then I think we are there. The first is 0845 numbers, about which I have a bee in my bonnet. I think it is unacceptable that people have to relate to a public service through an 0845 number. We have asked Amyas to look at that more widely. DWP makes massive use of such numbers, and I have found GP surgeries in my constituency that use them. If you are poor, or if you do not have a landline, and you use a mobile phone, it costs you 41p a minute. People very quickly rack up massive costs. You are renegotiating now, and I understand that you are going to talk to us about that in more detail, but I think it is unacceptable that a public service expects the public to use an 0845 number.

Ruth Owen: We are renegotiating the contract now, but we are going to move ahead of that, because that renegotiation will take some time. I am planning to start moving from 0845 to 03-prefix numbers, starting from April with the child benefit line, and to get all our lines on 03 prefix by the end of the summer.

Chair: Good. I am glad to hear that. I hope that other Departments take a similar view, particularly the Department of Health

Amyas Morse: I just wanted to pick up on one thing before we finish.

Q87 Chair: No, I have two more things. They look into the future. I want you to look at paragraph 1.9 on page 15. I was a bit shocked and want to check that I am reading this paragraph right. It suggests that your staff spend less than 60% of their time in work working. 58% of their time is working. Did I read that right?

Ruth Owen: No. It is tricky. I went through this again myself this morning to ensure that I understood it. It is the amount of time that they spend of their working year at work taking calls. If you exclude the time that they are on holiday, off sick or in training, for example, that would be excluded. If you look at how much time they spend in work taking calls, it goes up to something like 77%.

Q88 Chair: Well I am not going to exclude the time that they take off sick, because I was going to ask you their sickness rate. What is the average sickness rate of this cohort of staff?

Lin Homer: 7.9 average working days lost across the whole of the Department.

Q89 Chair: So it is not that huge. It is too big.

Ruth Owen: It is quite good for a contact centre.

Meg Hillier: It is good for the civil service.

Lin Homer: That is not bad for front-line work.

Q90 Chair: It is not the worst. It is bad in comparison with the private sector. What would it be in a private sector contact centre?

Amyas Morse: We noted it because it is improving, not because we particularly thought it was a shocking figure.

Chair: I know you did, but I was quite shocked. I accept that it is better than it was.

Q91 Meg Hillier: Just for a comparison, the DWP is 8 days. If you are on benefits, it is 14 days. The target in the UK Passport Service used to be 9.5 days, but hopefully that has reduced. Although I do not think that it is great, it is better than some.

Lin Homer: The contact centre staff have done some good work to reduce their own sick levels, but we are, as you know, trialling some private sector provision in this area, and I think it has taken quite a long time for the private sector to match our productivity level. I am not sure that they are quite there yet. This is an area that is worth benchmarking, but contact centre work is traditionally not a place where you would expect anything like 100%. It is perfectly legitimate for us to benchmark. We think we benchmark well, but we are very happy to maintain the information in such a way that that is more transparent.

Q92 Chair: Okay, maybe the next time we look at this we can do that.

I want to look to the future a bit, because I understand that the strategy is to get fewer people ringing up and, if you deal with people, to deal with them efficiently the first time. On the other hand, we know that you have been pursuing that strategy for a period and, while there have been successes, the number of calls has not gone down, particularly with real-time information. I accept the child benefit point, but my intelligent guess on real-time information would be that it will probably go up again. If I am reading this right, on page 28, paragraph 2.2, you say that you are reducing the contact centre staff by nearly 50%-from 6,900 to 3,700-to meet your budget reductions.

Lin Homer: Yes,

Q93 Chair: You then say on page 30, paragraph 2.9, that you are reducing processing staff.

Lin Homer: Yes.

Q94 Chair: You are bringing in 1,000 temporary staff-page 29, paragraph 2.5-only until March 2014. This builds on Chris’s question. With that cut in your front line resources, accepting that you will try to raise productivity-I don’t believe you will reduce the calls-how on earth have you any hope of meeting your targets?

Lin Homer: Ruth may want to run through a bit more of the detail, but this is dependent on us doing a range of things including the demand management we have talked about, including improving productivity and including better use of the interactive voice recognition so that we get people through the system more quickly. We have also been creating an environment where we can use some of our processing staff to support telephony at peak times. If you took out 30 and 31 July last year, our performance for that month jumps from 63% answered to 90% answered, so we have a few very peaky moments in our year. Using up to 2,000 of our processing staff to be back-up telephony, as well as trialling spike demand with the private sector-we think that all of those things will help. But we are just going to have to watch this and readjust our plans if we are wrong.

What we must accept is that we have to have a plan that delivers the levels of service that we are aspiring to now. We think our plans will work. The NAO challenges us. In paragraph 2.13 you say you think we will need between 200 and 300 more staff redeployed than we think. I think this is an area where very close scrutiny of us by ourselves, but with the NAO’s help, would mean that we would have time to readjust our plans if what we are doing does not deliver. I am not going to sit here and say that I am 100% sure, but we have to have a plan and if the plan doesn’t work then this is an area where we have to have a plan B.

Q95 Chair: Amyas, do you want to make your point?

Amyas Morse: In that context, I think that is all fine, but we have to keep moving it forward, of course. It is difficult. I want to make sure that I have understood what you were saying about the 80% within five minutes target, inclusive of recordings. Including them makes perfectly good sense as a baseline. How different is that from what you are achieving now, Ruth? Are you not pretty much already achieving that target?

Ruth Owen: Not according to your Report.

Amyas Morse: No, I am just asking what your understanding of it is.

Ruth Owen: We are not measuring the first part of the call. We are measuring only when people leave the recorded message and go through into the queue to wait for an adviser.

Amyas Morse: I am just trying to find out how much of a stretch this is. Do you really think this is a stretch or do you think this is pretty much what you can do already?

Ruth Owen: It relies on us firstly hitting the 90%. There is a mathematical algorithm. The number of calls we hit at 90% in the flat profile compared with-

Amyas Morse: I understand that.

Ruth Owen: If you then add to that the amount of time a customer experiences being on a recorded message, then that would be over six minutes and we will reduce that to 80% in five minutes. That is what I am trying to achieve.

Amyas Morse: So that, in your view, is quite a big step and you expect to achieve that consistently by when?

Ruth Owen: The measure we are setting ourselves is from April this year. The plan is over the 2013-14 tax year we want to sustain 90% as an average, and therefore over that time, again with the new recorded message service, to average that over the same operational year.

Amyas Morse: Excellent.

Q96 Chair: Good, and plan B would come in when? When are you reviewing this?

Lin Homer: I think we will look at this every quarter. The step down in the numbers you referred to is targeted effectively for each financial year. We have put additional resource into the system to get us through 2013-14. I would say by the third quarter we will have to make a judgment about whether that resource can fall out at the end of this financial year or whether something else is needed. I should have thought that we ought to be looking at this at the latest in October, but we will look at it each quarter as we go.

Chair: Okay. Thank you. This has been a shortish session. And thank you for coming over here tomorrow.

Lin Homer: It is a pleasure.

Prepared 5th February 2013