Public Accounts - Minutes of EvidenceHC 617

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Oral Evidence

Taken before the Committee of Public Accounts

on Monday 2 September 2013

Members present:

Margaret Hodge (Chair)

Stephen Barclay

Guto Bebb

Jackie Doyle-Price

Meg Hillier

Mr Stewart Jackson

Fiona Mactaggart

Justin Tomlinson

________________

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

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL

Charges for customer telephone lines (HC 541)

Examination of Witnesses

Witnesses: Ruth Owen, Director General Personal Tax, HM Revenue and Customs, Richard Heaton, Permanent Secretary, Cabinet Office, and Robert Devereux, Permanent Secretary, Department for Work and Pensions, gave evidence.

Q1 Chair: Welcome back from the summer break, everybody. We are probably going to see a lot of all of you over the coming Session, and we look forward to our conversations.

I will start with Richard Heaton, if I may. Can you tell me what the Government policy is on the use of 0845 and 0844 numbers?

Richard Heaton: Thank you, Mrs Hodge. There is, and has been for the last three years, no central Government policy, guidance or activity from the Cabinet Office on this subject, beyond the guidance that you saw, which dates back from 2010. That is for all sorts of reasons. The Cabinet Office has been doing lots of things in adjacent fields, but we have not been playing in this game, and there has been no central policy activity at all on this subject.

Q2 Chair: So you do not have a central Government policy?

Richard Heaton: That is the position up to date. This has been a very interesting and useful Report. I have discussed it with Ministers and with colleagues, and a case has certainly been made for there to be greater central involvement in this subject.

We recognise the case for the Cabinet Office to step back into this field, which we were in until 2010, and get some stuff together and talk principally to the two big Departments on my right, who run 80% of the telephony, but also other Departments, to make sure that there are principles that are understood, that there is guidance that is understood, that there is a light-touch monitoring regime and so on. That is what we have just started to do. The case is made, so far as we are concerned, and that is what we will do.

Q3 Chair: Do you think it is appropriate to charge for what is ultimately a public service?

Richard Heaton: I am not a telephony expert, and I do not have Government policy at my fingertips, but my observation-I am sure this is agreed by the two Departments on my right-is that for vulnerable citizens accessing public services, it is inappropriate for them to pay a substantial charge. Whether that equates to free in all circumstances, and what that means in view of the complexity of the market, is a different question, but as a matter of principle, taxpayers should not pay the double taxation on telephony-

Q4 Chair: Yes-a "telephone tax" is what John Healey, who has been a great campaigner on this issue, has called it.

Richard Heaton: Mr Healey and other campaigners have made that case extremely well.

Q5 Chair: I have to say, in the debate that was called on this, Nick Hurd himself said, "I sense that there is frankly a substantial problem". Do you agree with that?

Richard Heaton: Yes. He is my Minister, and he went on to say that-I am very happy to quote my Minister-as soon as the NAO Report was out, as it was not out then, we would be looking at it and assessing the case for Cabinet Office involvement. We have assessed it; there is a case for involvement, and we are going to get stuck in.

We are going to rely heavily on the expertise of the big Departments. I am not a telephony expert and I do not have a telephony team in my Department on this at the moment, but we will certainly bring the Departments together-we started last week-and get some central expertise.

Q6 Chair: Do you agree with what the NAO has put in paragraph 1.2, on page 12: "All other things being equal, the government should aim to offer telephone numbers with low tariffs. In particular it should ensure that vulnerable people are not prevented or deterred from accessing services"?

Richard Heaton: That looks absolutely right to me, yes.

Q7 Chair: Okay. When we looked at HMRC, we uncovered-I think, actually, after our Report you uncovered, in further inquiries-that Cable and Wireless was making £1 million out of the telephone deal with HMRC on the use of 0845 or 0844 numbers. That’s a bit of a racket, isn’t it?

Richard Heaton: I do not have knowledge of that contract.

Q8 Chair: Well, you should have, to be honest, to prepare for today. The genesis of this Report is that it partly arose out of the inquiry when we looked at HMRC-when was it, six months ago?

Ruth Owen: It was in January.

Chair: In January. I would have thought that, with overall Government responsibility, you ought to know, Mr Heaton. We looked at that and then we had representations from John Healey. I have had experience myself in my own constituency. It is a racket.

Richard Heaton: I confess that we are late to this game. We will come in and help Departments achieve a position that makes sense for particularly vulnerable consumers, to make sure that they are not ripped off by telephone charges. We have an interest in making that happen, as the Minister explained in Westminster Hall.

Q9 Chair: Can you give us a time frame, at least? I welcome that-it is good to see an NAO Report being taken seriously-but what is the time frame? I will come to the other witnesses in a minute; I was going to ask you the next question.

Richard Heaton: The bulk of the work can be done really very quickly-something like six to eight weeks-to work out what the principles are, where there is a-

Q10 Chair: Six to eight weeks? So, by the time you have our report, in your response to it you are going to be able to set out a new Government approach-underpinned, I hope, by a policy-to the use of high-charge phone numbers?

Richard Heaton: It may be that the basic principles will come out quicker than that. My difficulty is that, before we get stuck into this, I do not know how big the divergent issues are and how knotty they will be, and whether we will need to take them to Ministers and so on and so forth. But the basic principles ought to emerge very quickly, I think.

Q11 Chair: Do you accept the Ofcom research in this Report, that customers are deterred from using phones because of higher charges, and that therefore that will cost the Government more because they are more likely then to visit the diminishing number of HMRC offices or the Jobcentre Plus, which will cost a lot of money? You accept that Ofcom research?

Richard Heaton: I have no reason to disagree. I have not seen it. I have no reason to disagree with it. I cannot sign up to it, but it sounds plausible.

Q12 Chair: Can I ask both of you-Robert Devereux as well-why have you taken the decision to use 0845 and 0844 for universal credit and PIP, given all this background?

Robert Devereux: Maybe it is worth just making one observation to start with. People got into 0845, both my Department and HMRC, at the time when that was the way in which local-rate charge calls could be networked around the country. So, just to be really clear about why we use them in the first place, we are both running very large, nationwide, networked operations and the only way that you can actually get the calls moved around between Lowestoft and Exeter and Warrington is by having access at that level into the BT system-

Q13 Chair: But I have to say-sorry to interrupt you, I hate doing this, but I’ve got it here: the report that we should all move to 03 was a report done by the guy who was in-

Robert Devereux: I am part way through the answer, which might help you on why that-

Chair: Yes, but it was a long time ago.

Robert Devereux: Yes, it was. But-

Chair: December 2006, David Varney’s report.

Robert Devereux: If I could continue, then, if you are running a large, national, networked set of contact centres, you need to be playing in that level of telephony, which historically has come with 0845 numbers. You are right to say that 03 numbers were then introduced back in the time you talked about.

Chair: In 2006-seven years ago.

Robert Devereux: At the time, and it remains the case today that it is not the case that 0845 is universally better for all possible customers and all circumstances, okay? So, in our world-we said we would do this in the Report and we have done it-we ran a sample during the course of August where we asked our customers, "Do you know what your package is? Do you know whether this would be better for you on 03 or not?" and a couple of things came out of it.

First of all, actually, many more claimants than you would imagine do know what their package is, which is not surprising because they have not a lot of cash. Secondly, it became very apparent that it is broadly the case that if we were to switch from 0845 uniquely to 03, about a third of the claimants would see no difference, about a third, typically on mobiles, would make a big benefit and about a third, typically pensioners calling from landlines, would see a disbenefit.

So the position the Department has been in for a while is to say, "Actually, I’ve got plusses and minuses here and, by the way, there are costs to the taxpayer in going to 03, because 0845 I am not paying for; 03 I have to pay half a pence a minute for."

Andy Morrison: Sorry, can I just clarify on that? So, overall, I recognise those numbers in terms of the breakdown of people who would be better off or worse off or about the same in terms of the charge that they pay, but what it does not take account of is, actually, the scale of difference.

Robert Devereux: I am coming to that; I am trying to tell the story. First of all, I need to be playing at either 0845 or 0345 to make national contact centres work. Secondly, historically to date we have looked at the proportions of people who are better off and worse off and found, actually, that they are broadly the same.

Q14 Chair: The Report says that that research was flawed.

Robert Devereux: The Report says that with the growth of free minutes, which has had growth over the last few years, there is a net benefit here. This is the net benefit which the NAO score at £14 million; we’ve done some more sums on the back of our sample and it is a bit smaller than that, but the bottom line is it is actually a £20 million benefit for mobile customers and a £6 million disbenefit for pensioners and other landline users.

So the question that we need to wrestle with is, actually, what should you do in that respect? Now, to date we have been constrained by the fact that I have budgets for running this Department which are declining, so what should I do? Our conclusion is, because we have made such big strides in respect of some of the costs of the 0800 calls, the free ones-my Department is the only one that has negotiated genuinely free calls for mobiles-because we have now got so many people claiming JSA online because we stopped doing the crisis loans because we have got people putting vacancies on to universal job match, not ringing up, we have actually got a very sharp reduction in the money we were otherwise paying mobile telephony providers for 0800.

In a sense, that means I am now in a position to come back to the Committee to say, actually, we will introduce 0345 numbers for DWP services, which is a change from where we are at the moment, because even within the declining budget, because of the productivity and policy changes that I am making, I could afford to do that.

Our position now is that I will offer 0345; I will do it exactly as Ruth Owen has done-in parallel with 0845 numbers. It leaves a question, for both us and, no doubt, the Committee to reflect on, because otherwise we will all be back here in two years’ time: whether you positively want me to disadvantage landline users of 0845 into the future, or whether you would prefer us to have two numbers with that inherent complexity. So, long answer, but a happy conclusion.

Q15 Chair: I welcome that response. The rethink is welcome. At the end, we are not a policy Committee, as you well know-

Robert Devereux: No, but you will make recommendations so I thought I would leave the thought with you.

Q16 Chair: My line on all this is always simplicity. I think we have all been too clever by half and that is how you end up with systems which disbenefit too many people.

Robert Devereux: One reason why I think we may well end up with just 03 is that if Ofcom’s proposals actually see the light of the day, as they are supposed to do shortly, it is not impossible that the 0845 position for the major landline supplier will change. I do not know, but if it did, it would eat into this disbenefit, in which case we would just stick with 03.

Q17 Chair: We welcome that. Also, I notice from the Report that you are the only ones to have negotiated the Freephone deal. Ruth Owen, why are you not doing the same?

Ruth Owen: Our policy, as you know, is that we were moving from 0845 to 03. As the NAO report draws out, there is a balance to be struck between the cost to the customer, the cost to the Department and the cost to the taxpayer of subsidising free calls to people.

Q18 Fiona Mactaggart: Aren’t your customers all taxpayers, apart from big companies?

Chair: Apart from Vodafone.

Ruth Owen: Well, then, the cost to the Exchequer-let me put it that way-of subsidising free calls. We have taken the balance of the analysis that we have done, which said it is actually better for end users or customers to use 03. We think it is a better service if we offer that. So many of the plans that people are on now make 03 numbers free to call as part of minutes in a package that we do not think a move to 0800 at the expense of the Exchequer is worth while.

Q19 Chair: You have not negotiated a deal, though. What the Department for Work and Pensions has done-this is a question to you, but it is also a question for Richard, as it is absolutely typical of so much we see-is an example of excellent practice which gives a free service to needy citizens and saves the taxpayer money at the same time. Why on earth can’t we replicate that across other areas, particularly where we know that vulnerable citizens on low incomes are likely to be using the phones?

Robert Devereux: Can I help here? It is the case that we have negotiated that, but within the Ofcom proposals, they propose to charge HMRC and us new, even lower rates for the use of 0800 numbers than we are currently paying them.

Q20 Chair: They are proposing to charge you?

Robert Devereux: Yes. Ofcom is proposing to limit the amount which a service provider like us has got to pay for offering an 0800 number. Whereas at the moment I am paying a particular number, it will be nearly one third of that. It will be more in scope in a hard-pressed Department to have an 0800 number that is genuinely free, because that is the way it is going to be in future.

Q21 Chair: My final question is to Richard, and then I will pass on to Fiona, who is waiting. We have seen progress here, but I was shocked. If you look at appendix 4, there is a list of the organisations that use higher-rate lines for vulnerable groups. There are a lot of shocking ones, Robert Devereux, including the crisis loan line and the bereavement service line, but I was equally shocked to find victim support and the student hotline being charged at 0845. You only ring the student hotline if your money has not come through. That is the only reason. You are not going to ring them otherwise, and every student will be using a mobile phone. For the Student Loans Company to tell us that they cannot afford to move off 0845 because it gets them a million quid in income is unacceptable. It is a tax on people who are very vulnerable and at a poor stage in their lives. It is just not on.

Richard Heaton: I agree that annexe 4 does not read well or comfortably.

Q22 Chair: So you are going to tell the Student Loans Company that they have to change?

Richard Heaton: As I said, we are going to get some work going immediately on this to make sure of best practice. I am sure that those Departments, between them, have best practice, or very close to it-as Robert describes, he is about to go across to 03-and will make sure that best practice is followed across Government. Of course that is what we are doing. In the light of this Report, we could not do otherwise.

Q23 Chair: Okay. So the Student Loans Company is an example of where it is outrageous practice. Victim Support was the other one that hit me, and the bereavement service helpline. This is all outside Robert Devereux’s DWP ones, where I think there were a number. Those are shocking, shocking things. Can we, in concluding our inquiry, be assured that in your review accepting the main tenet of this Report, you from the Cabinet Office will insist that these Departments instruct their non-departmental public bodies or whatever they are to drop these outrageous higher-level call lines?

Richard Heaton: I would love to say, "Absolutely." The only thing I would say is what we have not done yet is pick up the phone to these service providers and say, "What is going on here?" That is the only bit I have not done. So there may be something lurking here which is completely beyond my sight. On the face of it, we will have to go in that direction.

Q24 Chair: Well, the Student Loans Company-in the body of the Report-have just said they can’t afford not to have the £1 million.

Andy Morrison: Just to clarify that, the £1 million is the cost of lost revenue share and the cost of making the change, but there is no other reason, other than cost, for not changing that number.

Q25 Chair: So you are going to make sure that they absorb that.

Richard Heaton: I will give you as close to a guarantee as I can. As I say, I have not spoken to them and I do not know what their response to this challenge will be, but we certainly want to achieve consistency.

Q26 Chair: And you will also think through a system of sanctions? It is an interesting example. The Cabinet Office is trying to get consistency on data; they are trying to get consistency on a whole range. The Major Projects Authority is trying to get much tougher control. It matters a lot, particularly to poor people-I shall come back to my constituents and GPs later on in the hearing; but it is a lot of money, if you are talking about the highest rate, of 40p. It cost one of my constituents £30 to make an appointment for her 30-year-old disabled son with a GP. I don’t know how many calls she had to make. That is a shocker.

Richard Heaton: I absolutely do not take it lightly at all.

Q27 Chair: But there is no sanction. I can tell you, I have been pursuing this since last February and there is no sanction. Nobody at the moment can force the GP to shift to a landline, or at least to alternatives.

Richard Heaton: No, there is no control in place at the moment, and the case may be made out, in egregious instances, for there to be some sort of control or sanction. I do not know what it would look like and I have not spoken to the "offenders", but there may be some case for some tougher central intervention.

Robert Devereux: Let me just make an observation. If the entire afternoon is spent literally on the cost of the call we may miss a trick, because, actually, in my particular world, I am running an organisation of 7,500 people; I am paying probably £80 million to BT for just the running of the system; I have got 7,500 staff. It is a £200 million or £300 million business. The costs of the calls within that are of the order of £20 million; so the challenge I found, when I read this, is plus or minus a million or two on the calls, and the cost of the organisation is £200 million or £300 million: it is the wrong variable to worry about. So when I started by telling you how many calls actually we have managed to get out of the system in the last quarter-that is the way to generate savings for the taxpayer and, indeed, for the customers.

At the margins, going for 0345 I have to pay for, rather than 0845 I don’t have to pay for, is sort of neither here nor there; and that is an argument we ought to be making with other Government Departments, not all of whom-let’s be clear-have got quite the infrastructure that Ruth and I have got, because between us we have got virtually all the calls there are anyway.

Amyas Morse: I am sympathetic to that. It would be helpful if another product of the afternoon’s discussion was that we got some commitment to set call-answering objectives that meant something across Government as well, so that people did not have their time wasted sitting on the phone waiting to be spoken to.

Chair: Yes, we will come back to that issue, because I think that is very important.

Q28 Fiona Mactaggart: We have talked about exploiting people financially, but I want to look at how much of their time we are using up. I worked out from the figures in the NAO Report that citizens of Britain have in the last year spent 76 centuries1, if you put them one after the other, waiting to be answered by Government Departments. All of us know that that is not tolerable. I have to say I did a little bit of secret shopping, and I was pleased, Mr Devereux, that your Department won, keeping my assistant waiting for just over two minutes, compared to 24 minutes and 50 seconds on the HMRC line and seven minutes and a quarter on the Home Office line.

That is an anecdote, but, actually, as well as the costs of calls, it is extremely frustrating not to be able to get through to an answer, which is why I giggled a bit, Mr Heaton, when you said you would give us a response in six or eight weeks; because actually that is part of the problem-it is about getting responses timelily. If we look at this Report it says, "The industry benchmark is to answer 80 per cent of calls in 20 seconds." The Government are nowhere near that. What I want to know is what is the plan to get somewhere near that.

Robert Devereux: Maybe I could answer that. I have got by far the most 0845 calls and 60% of all of those are the ones to our inquiry lines. The work that we have been doing to concentrate on how to answer these questions completely and to do it once rather than to take a call and promise a call back from another part of the organisation which, if it fails, prompts them to call the call centre again is having really large dividends. In the first quarter of this year, call minutes to 0845-that is 60% of all of 0845 numbers-are down 20%. In the same period, the proportion of calls answered within 20 seconds has more than doubled. When I say more than doubled, you immediately say, "From what to what?" The answer is from 23% to 54%, so it is still not 80%. If I could make a change from 23% to 54% answered within 20 seconds in one quarter by applying a little bit of managing the Department well and getting people to join up and think laterally, then the answer to the question ought to be that we should be aspiring to 80% in 20 seconds if we possibly can. To be fair, we are constrained by cash, so I cannot just throw resources at it. It seems that the effort that we are putting in to drive up efficiency across the Department is paying real dividends. Coming back to your waiting time, waiting time in 2012-13 on average on those calls was four minutes 12 seconds. In the first quarter of this year, it is one minute 44 seconds.

Fiona Mactaggart: My secret shopping was worse than the average.

Q29 Chair: Fiona, I think it is worth moving to Ruth on the same issue. Not only did your mystery shopping confirm our view, but the Treasury has turned down our recommendation that you should improve on the standard of answering 80% within five minutes. You have turned down our recommendation and I want to know why. Even if you could not meet that, you could have done better than you are currently doing.

Ruth Owen: Yes, absolutely. We aspire to be better than where we are. You have identified through your own mystery shopping that the length of time people have to wait to get through to HMRC is not good enough. Like DWP, we are doing a range of things to improve the service to our customers, not least in terms of things such as ensuring that calls get handled, if they can, through the automated system and doing things more online, and that when you do get through, making sure that we do answer that call straight away, so the actual repeats in the system come down. I have an ambition to offer a better service to our customers. Quarter one results for this year were that people were waiting about seven minutes to get through, which is not even up to the standard that we talked about when we were last at the Committee. Of those, about 50% got through-once they got through the recorded message-within one to two minutes. There are ways that we can improve both in terms of reducing the length of the recorded message-we are bringing in a voice recognition service at the back end of this year which will make sure that that is reduced more quickly-and then getting people through more quickly once they are through into the queue.

Q30 Fiona Mactaggart: I understand that, but what Mr Devereux is saying is key to this-putting on the front line people who are able properly to respond to inquiries. Too often historically the people on the front line-it seems to me that the new NHS non-emergency number has been making this mistake-are not competent to answer questions properly. In the end, that is a false economy, because it takes longer and people recall and so on. This is a matter not just of telephony and of getting the telephony better and a bit of central guidance, but of understanding that, as Government, most of your customers will probably first of all use the telephone. They might be able to be migrated on to the internet or whatever, but that will probably be their first contact. We do not yet have a system that says, "If you need to contact the Government about something, here is the one portal." We do not have that, and that is something that the Cabinet Office should be working out. Secondly, we do not seem to have an understanding across Government-it is good to hear it being said by Mr Devereux-that you need to put on the front line the people who have the competencies and the qualifications to be able to do more than sometimes historically the people who have been on the front line have been able to do. I am not hearing from you at HMRC that that is your strategy. Without that strategy, it will not work.

Ruth Owen: I will restate my strategy, because it is exactly the same as what Mr Devereux has just said about DWP. It is about a once-and-done service. When you phone HMRC, we would like you to get through as quickly as possible. When you get through, our people are very competent on the phones. When we do customer surveys, people rate us very highly for the quality of service that our advisers give. Increasingly, like DWP, we are training them up to do more and more. It is not the competence of the people on the phones; it is the restrictions that we have sometimes had in terms of our processes. There are certain things that we can do on the phone, but for quite a lot at the moment we say to people that they can phone up but that some things must be confirmed in writing. That is one way that we can change our policies. It is not about the competence of the people. There are good people on the end of the phone. It is our processes that I will be changing, so I would like to aim for around 80% of calls to be done once you get through.

Q31 Fiona Mactaggart: Do you monitor the performance of all your lines?

Ruth Owen: Yes, we do.

Q32 Fiona Mactaggart: Does DWP monitor the performance of all its lines?

Robert Devereux: Yes.

Q33 Fiona Mactaggart: But if you are telling me that your two Departments have the majority of Government lines, that seems to be in contrast to the NAO Report, which says that monitoring of performance is for less than half of the higher-rate lines, for example.

Robert Devereux: I think you have to read that paragraph carefully. I think what it actually means is that not all of them have targets set for x% in 20 seconds, so when they say "monitoring" they actually mean that there is no target.

Q34 Fiona Mactaggart: I do not think that that is what it means. It says, "Central government bodies monitored the proportion of calls answered" not the proportion of calls answered within 20 seconds. It refers to the proportion of calls actually answered.

Andy Morrison: Just to clarify that, we collected data from about 250 telephone lines. Around 110 or so of those provided data that showed that they had any sort of management information or performance measure for those lines. There were large numbers of generally lower-volume lines where that management information was not provided to us.

Q35 Fiona Mactaggart: Perhaps Mr Heaton can promise us that by the next time he comes to this Committee he can say that we actually monitor 100% of Government information lines. That would be a good start.

Richard Heaton: I do not want to over-promise. There are some things that work really fantastically well when the Cabinet Office plays a big part. As you know, we are putting a lot of effort into, for example, procuring as a central Government rather than as several different Departments, doing projects better and all the rest of the things that we have talked about on various occasions. We have not traditionally played a very big part in telling operational delivery Departments how to run their businesses, simply because we do not have the expertise and Departments do.

Q36 Fiona Mactaggart: But I think you have said to me that they do not necessarily have expertise in telephony. That is what this Report says to us. I absolutely accept that some Departments are developing it, but there are some that absolutely do not seem to understand even how much things cost them.

Richard Heaton: I suspect-I will not predict exactly what we will come up with-that we will certainly look at whether it is a matter of policy that we move towards 03 or whether we mandate some usages and some non-usages. We may also look at whether to mandate the systemic uniform collecting of response data, because that may be a basic thing, without which people like you cannot hold us to account. There may be something there, but I do not want to over-promise standards for how people design operational delivery, because I think we will go wrong.

Q37 Chair: Can I just ask one question? You said that you are not going beyond your target of 80% in five minutes. PCS wrote to us all, I think, saying that for tax credit renewals, when people rang up, presumably to inform about changes in circumstances for tax credits, you were unable to answer 89.74% of incoming calls by the deadline date of 31 July 2013.

Ruth Owen: That is not quite correct, but the performance on the last day of July-

Q38 Chair: What is not correct about it? What is the right figure?

Ruth Owen: The figure for calls answered on 31 July on the tax credits line was 16%.

Q39 Chair: It was 16%? So they are out by 5 percentage points. Only 16% of calls were answered. That is pretty outrageous.

Ruth Owen: Yes. I am not denying the fact that that is not an acceptable level of service. We have designed in the tax credit process a means by which millions of people all phone us on one day. I do not think that any organisation would design a process like that, because it really-

Q40 Chair: I have to stop you there. This is ridiculous because you know that when renewals come in will be a point when there will be a hike in demand. Any sensible management system staffs up to deal with the fluctuations in demand.

Ruth Owen: We had a plan to deal with the tax credits peak, as we do every year. This year’s plan did not work, clearly. I do start from the point of view that you do not staff up to meet that peak; you flatten the peak, because it is a very expensive thing to do to have lots of people sitting by on one day of the year to address those millions of calls coming through. So the plan is now to have another look at what we can do to flatten the peak so that we do not offer that level of service again.

Q41 Chair: Frankly-and I’m sorry, because on the whole I think you are trying really hard-I think that is not good enough. If people know that the date is coming when their tax credit is going to be renewed, that is the time at which they will ring up because they are worried about a change of circumstance. That’s the time they do it. You can’t manage that.

You are the provider of the service; you have to respond to what is a completely natural, understandable way for people to react. They are not automatons that will do what they are told because they get a leaflet in some remote tax office telling them not to ring at the last minute.

Ruth Owen: We did have a plan. We had all sorts of plans to try to flatten that peak, to bring forward demand-outbound calling to say to people, "Do you want to renew now rather than wait till the end of the year?" You can think about things like incentivisation of people. There are things that you can do that can change people’s behaviour.

I completely recognise that this year’s plan did not work; we worked up a plan. Next year’s plan, which we have already started to work on, is a combination of recognising that people do leave it to the last minute-that’s fine; that is how the system works. We need to change that system. We need to think about how we can flatten it off and we need to think of a contingency plan, which is about how much resource we can have available should everybody leave it to the last minute, which clearly we did not have big enough this year.

Once you do not answer a certain number of calls, obviously there are repeat calls in the system. It is not millions of people all trying to get through; it is a smaller number than that constantly repeat-dialling, which I recognise is not good enough for them.

Q42 Stephen Barclay: First, I welcome Mr Heaton’s very constructive response in terms of the Cabinet Office looking at this. None of us wants to see vulnerable people paying high phone bills to access essential services, so that is very welcome.

Could I go back to the point that Mr Devereux was making? This is about the analysis that the Departments are doing on what the main groupings of calls are and trying to reduce the need for the calls in the first place, against the difficulties budget-wise of investment in, perhaps, new mobile apps, because young people would access a service through a mobile app as opposed to phoning up. It would be quite interesting, certainly to me, to understand what the data is showing in terms of where the main usage of these calls is and how you are prioritising spending around getting down the need for people to phone in the first place.

Robert Devereux: The size of the challenge to reduce the cost to the Department is so great that we have no alternative but to fundamentally re-engineer it. As I said earlier, the actual cost of the call is the least of my problems; it is actually all the ancillary costs. Let me explain the sort of things that we are doing and what the data tells you. We are looking at why people are calling us more than once-a lot of people who called us last month called us again this month-and trying to work out how to prevent that.

To pick up the point that Fiona Mactaggart made, a lot of this comes down to past choices that were deemed to be efficient: "If we have a whole bunch of calls coming in that are really easy to answer, let’s get some people in and train them up just to answer those calls and, as soon as it gets remotely more complicated, let’s pass them across to somebody else, because they’re better off just doing the bread and butter."

In some of the pilots that we have been running just in the last few months up in Newcastle, we put some of the people from benefit processing centres who would otherwise have had the call handed off to them physically in the contact centre and just tried an experiment to say, "If you can’t answer this call once and be done, can you just wave this green flag? Then this person will run across and see what you’re trying to do."

In the space of finding the top 10 things that caused hand-offs, we have managed to fix six or seven of them, and hey presto, all the other calls are now being answered once and done. So the productivity has gone up 20% or 30%. Call backs in the last quarter are down 30%-the number of handovers, sorry, is down 30%. That is down to rather boring mechanical management that says, "Okay, what is the issue? What is being transferred? What can I do about this?"

Part of what we are trying to do culturally in the organisation is to get everybody to realise that if you work in a jobcentre, a benefits centre or a contact centre, you still work for the Secretary of State and me, there is still a claimant out there and please can we think about what behaviour in these individual silos is or is not creating harmony. We are getting many, many more ideas coming through now, saying, "Actually, the way to improve this is if I do this and if you do that", or "We’ll move this around." This telephony happens to be just one example of a series of things that are going on to drive costs down.

Q43 Stephen Barclay: One of the triggers of significant calls is repeat calls-the same people phoning on more than one occasion-and there is the upskill in your call-handling staff on that pilot. Therefore, it will be interesting to see how the Cabinet Office is challenging other Departments around that. I am also interested in what is triggering the calls in the first place. Why are people having to phone, and what work is being done to reduce those calls?

Robert Devereux: As I said, there are two different things going on here. In some cases, people have been having to phone because that is the only way in which they could transact some business. Now that we have opened some online channels-we now have the jobseeker’s allowance claiming online-the figure is within nought point something of a per cent of 80%.

The target that we have been chasing after, that you keep coming back to, saying, "We will never get to 80%"-well, we are basically there now. The consequence is that I am not having people sitting on the phones, answering those calls, so I have some resource that I can then deploy on other things. One answer to your question is that where I am making policy choices and opening other ways into the system, I can stop people calling in the first place.

The second thing is to literally-and, as I said, rather dully-go through what the things are that cause people to ring back. One thing is, "Have you released my payment?" It has been the case historically that people in the contact centre could see that a payment is about to be made, but they could not physically press the button to make the payment go. It was waiting for something else.

We have simply changed that up in Newcastle, so that now, with all the calls that say, "Am I waiting for a payment?", we can say "Yes, this one’s due-ping. There it goes." I am afraid that it is a very low level of just rolling your sleeves up and going through it line by line. I think you have had Noel Shanahan here-he is my chief operating officer. This is the sort of stuff he does for breakfast. He just loves it, and is making a very-

Q44 Stephen Barclay: Sure, although some of it has not been done as much in the past, perhaps, as it might, but you are putting that in-but it is very welcome. Both examples are very welcome, which brings me on to the point about what the forward delivery expectations are, and what the stretch targets around those are, and how we get visibility for that.

You have given two really good examples, which someone might unfairly say should have been happening anyway, but on the other hand, it is very welcome that they are happening. How do we-it may be an issue for the Cabinet Office-get some sort of sight across Government as to what, in two years’ time, we would expect the call volumes to be? I accept that if you bring in a new product line or a new service, sometimes you will see spikes, but we should be able to see some sort of projection to say, "We are doing these things. The number of calls as a metric has fallen significantly." How would we get visibility on that?

Chair: I think that is for Richard to answer.

Richard Heaton: Can I add something about the longer-term channel shift towards digital, which I do not use to undermine the importance of telephony? Let me make that really clear. There will be vulnerable citizens using telephony in their millions, so the shift towards digital is not an excuse for not doing telephony well. The big answer, I think, to Stephen Barclay’s question has to be achieving a channel shift so that people are comfortable with a digital service, and it is digital by default, which means that they go there as preference and would not dream of using any other channel. As you know, that is our aspiration in Government, and that is what we are leading on with great energy in the Cabinet Office. We are some way there, as is the private sector-

Stephen Barclay: I absolutely agree with you-

Chair: Remember that 46%, at present, of contacts between the public and-it is very high.

Q45 Stephen Barclay: I absolutely agree both with the intention and the point you make. The Chair has just mentioned the existing contact, but it is not just that. More worryingly, when the NAO looked at the budgets of Departments, there was a very small amount of budgets on service transformation, because budgets were being squeezed. It is easier to pay for today than to invest in tomorrow. It is really that dialogue between the Cabinet Office and the budgets around service transformation that I am most interested in, in terms of the Cabinet Office’s role.

Robert Devereux: I think you can ask too much of the Cabinet Office in this space, because anybody who thinks that a business must have extra cash to transform itself-

Q46 Stephen Barclay: Supermarkets operate in a smarter way.

Robert Devereux: My sense is that the more you can do some of the stuff I just said, the more you will end up reducing your costs, and if there is a need to do something with investment, you better get it out of there. The days when we sought extra cash to do investment are long since passed.

Q47 Stephen Barclay: Fine, but in terms of the investment, going back to the NAO Report, regardless of whether the budget is coming down or flatlining-or in the case of DFID, going up-the actual amount being allocated to service transformation, to my mind, was remarkably low and short-sighted.

The point is, if you are all saying, "We are introducing things to reduce the number of calls, and we are channel-shifting to more online platforms", how do we, as a Committee, get sight of those Departments in 18 months’ time that have done well, and those Departments that have done badly? What are the stretch targets that are going to be set out? At the moment, I do not see any data, broken down by Department, saying, "This is our aim. This is our stretch target. This is what success looks like."

Richard Heaton: It is a fair challenge. I think you will certainly be able to see which Departments have done digital well in three years’ time; that will be as plain as a pikestaff.

I agree with you. There does seem to be a shortage of decent data for what a Department’s direction of travel is in reducing the proportion of, for example, wasted call volume. That is why I said, if we can get some decent metrics in as part of what all Departments have to do to equip themselves to be measured by us, I think that would be good. Preparing for this Committee, I could not see any consistent data. So I think you are on to something.

As I said, I do not want to over-promise, because I do not quite know what the data set would look like, but it would be good if we can get something there that would discount the move to digital and just measure how well you are churning out call volumes and reducing the waiting times, for example. That would be worth while. I do not think it is there consistently.

Robert Devereux: May I just add one thing? If you think about my business, I can give you two different answers, really. I am running a large, minute-by-minute business now, for which all the things I have described are going on in real time. Secondly, whether it is child maintenance, personal independence payment, universal credit or anything else, there are huge reform programmes going on. They give me the opportunity to think, "Well, how do I want to incorporate it?"

In the personal independence space, just to take the disability one, one of the key findings in the DLA world is that it was based on paper, and actually people did not understand why decisions were turned down. So we consciously put in there ringing people up when we have decided not to give you the benefit you have claimed, in order that you can understand the decision and know what your rights are. That is going to increase telephony-

Q48 Stephen Barclay: That is outward. It is not an inward call.

Robert Devereux: No, but on the inward side, we are allowing them now to do what we have been doing with jobseekers for years, which is for them to come in, talk to us and complete the forms. Some of the answer to your question about what should be up or down will depend on which bit of which business you are talking. You can, I think, ask for consistent data on telephony. It is sort of interesting, but possibly not as interesting as-

Q49 Stephen Barclay: You slightly misquote my question. I absolutely accept that point, but you slightly misquote. I was saying broken down, because if you took it for the Department as a whole, it would be masked; it would do well in one area-one DG might do well, but there would be a problem with another. I think I said in my earlier question: if you introduce a new reform or a new product, you would expect to see spikes. It is having the breakdown to see what the data are in the different areas, not one holistic view.

Chair: I think there are pretty basic data that are consistent. Percentage of calls answered and time answered do not make a difference.

Robert Devereux: I would certainly be happy to come back and do that for ourselves. One of the things that I think is worth observing is that if you run large operations, they are almost geared up to have a lot of this information. When you get to smaller Departments, I do not know what they will or will not have by way of the ability to answer that sort of stuff. I think that is fair game to explore.

Chair: I think the Student Loans Company is a classic one. This is so central to their business that they have to do it well. It is the same with the bereavement service or something like that. It is absolutely central. It might be a small Department, but it is important.

Q50 Meg Hillier: Mr Heaton, you talked about the digital data that you will have in about three years’ time. Do you think you will be able to, or do you think you should, analyse the difference between people making a general inquiry and people who have complaints or problems, because presumably, they are hanging on and having longer conversations when they are on the phone?

Richard Heaton: If they are trying to access a basic public service-whether to access it the first time, to complain or to do a follow-up call-my instinctive reaction is that I regard all those as essential telephone calls to a public service.

Q51 Meg Hillier: Perhaps I should make myself clearer. I recently made calls to the UKBA’s employers’ hotline. I looked on the website first. As it happened, I did not have a complaint, but I phoned them. A nice young man called Andrew answered the phone straight away and gave me all the information I needed, so fair play to them on that. But if I had a complaint, I would ring first, because it would be very much harder to do the complaint, problem or difficult issue online.

Online is fantastic if you have a simple query-if you want a phone number or a bit of basic information. Will that be something that the Cabinet Office will look at? There is quite a difference about how much you might spend if you have to ring up and have a complex issue to discuss, whereas a simple query could be done online. So the digital can only take us so far, I suppose.

Richard Heaton: Sorry-I see where you are coming from. I think a well designed digital service ought to offer a digital channel for complaints as well as for ordinary access to services. I guess most of them probably offer a telephony service as well, because someone complaining may not find digital access to be the most appropriate means. However, I would not rule it out in the future as digital natives become digital citizens. After all, people complain on Twitter, which is a digital channel, and that seems to be quite effective.

Q52 Meg Hillier: That is a challenge.

Richard Heaton: I would not necessary say that complaints must be telephony and access must be digital. I think digital can cover both, although the complaints bit is certainly more difficult.

Q53 Meg Hillier: I will come to the service departments in a moment. To finish with Mr Heaton, does the Cabinet Office or your Minister espouse any views on private companies that provide a public service in providing a hotline? For example, in the NHS, GPs have always effectively been private contractors. We have heard from the Chair, and locally I have GPs who have premium rate numbers. Energy companies arguably provide a public service, even though they are private companies. There are all sorts of bodies such as A4e, which we have had here, and Serco that provide public services entirely funded by the taxpayer. Will the Cabinet Office be setting out any rules for them and their use of numbers?

Richard Heaton: I cannot speculate on that. You asked me whether I have a ministerial line on that-I don’t. I don’t know.

Meg Hillier: So I should write to the Minister?

Chair: The Committee will take a view. If it is a public service, whoever it is provided from, you have to have a consistent approach. The provider does not matter.

Q54 Meg Hillier: We have been sharing anecdotes-I remember some time ago when I was caring for somebody, I rang the care agency, who told me that they could not provide e-mails and that I had to ring during the day. They were a public service provider, but they were contracted, and it was very difficult to reach them. When you are a working carer, that is quite challenging. I am sure we all have examples of times when we have tried to contact an organisation. My constituents all the time now have to deal with private bodies that provide public services but are funded by the taxpayer. They have to ring premium rate numbers or perhaps are not able to get through easily on the telephone at all. It is about more than just what is happening in Government, from the point of view of our constituents.

Richard Heaton: I would expect the principles that we will be looking at in the cross-departmental group that I mentioned to cover the provision of services, whether directly or through contracted parties. Beyond that, I cannot speculate.

Meg Hillier: That is very helpful. I am sure that I and others on the Committee will follow that through. Can I go back quickly to HMRC and DWP, and the difference between inquiries and complaints? Have you done an analysis of how long it takes somebody to make a simple inquiry-it might be a simple, quick call? I suspect-maybe you can tell us-that a complaint or a problem takes longer to deal with, and will therefore cost people more. I wonder whether you have an analysis of the impact of that, and whether that has had any impact on your thinking about the type of lines you use.

Ruth Owen: I do not have any actual data, but I think you are probably right. A straightforward inquiry is generally three to four minutes, in terms of giving somebody information. We break down our calls into calls that are straightforward and those that are complex-that is where we were going earlier about the capability of our people to deal with complex areas such as the taxation system-so there are different types that we can measure. We take complaints over the phone, we take complaints by letter, and, increasingly, we take them on online channels too. Increasingly, it is down to personal preference; it is for the customer to decide which is the channel by which they find it most convenient to make their views known, and we should respect that.

Q55 Meg Hillier: I find it quite convenient to phone, but I look and see what the number costs, and I am a rich MP. Pensioners, people on income support, people on disability benefits in my constituency, who may have issues to raise with both your Departments, might find it easier to do it on the telephone-they might not be very literate; it can be for all sorts of reasons. But it will cost them a lot of money as they are kept on hold first, then put through to the right person. You made a point about personal preference, but it is not really a choice. If you are not very literate online, you may feel that you have to phone.

Ruth Owen: Yes, and telephony will always be part of the service that we offer so people can complain to us by phone. That is part of our commitment to trying to reduce the cost to customers of phoning.

Q56 Meg Hillier: You do not think about having a separate complaint line that is cheaper, or offering to ring people back, for instance?

Ruth Owen: We have offered to phone people back, absolutely. Rather than a separate complaint line, what I would prefer is that they phone the people to whom they are complaining in the first place. Again, it is about getting it right first time: if you get it wrong, putting it right straight away, rather than having a separate tier of people.

Q57 Meg Hillier: I completely see what you are saying from a management perspective, but from the perspective of a constituent in Hackney ringing up, they can ring you and maybe they start to solve the problem, but they find the problem is still there and they ring again and keep ringing. It might be great for your personal training if you are the call operator, but not for the constituent who is having to ring a premium rate line lots of times.

Ruth Owen: We are not on premium rates any more, but on the 03 numbers, they can always ask to speak to a manager.

Q58 Meg Hillier: So you would say that speeding up the call would be the best option. What about you, Mr Devereux? Has there been any analysis, because you have a lot of complexity in DWP?

Robert Devereux: Yes, we do. The big story on complaints is the extent to which we are resolving them first time round, rather than going to second and third tier. We gave a lot of evidence to the Public Administration Committee a couple of months back. You can see that the Department is getting better at doing this. One way that that works is because you positively want the complainant to go back to whoever it was they are complaining about, not a third party, which only produces a hand-off, if you want it dealt with. It may work neatly if you are an MP trying to do these in volume, which potentially cuts across that philosophy. I am not sitting here with particular data on the use of phones for complaints. If people do not like the service they are getting at a jobcentre, people will go back to the jobcentre to say, "You are not giving me a good service." It is a personal thing. I do not think I particularly want to encourage people to take their complaints somewhere other than the person against whom they are complaining.

Q59 Meg Hillier: You talked about the complexity of the different types of telephone system. We will touch on that in a moment. Would it be possible to have two different numbers for some of the services you both provide, so that there is a choice of an 03 or an 08, so that you might ring on your own mobile or your own landline tariff? How much is that in your thinking?

Robert Devereux: The position in the Revenue at the moment is that in moving to 03, they are currently running both in parallel for a while. In moving to 03, I am going to run both in parallel. The question, which I raised earlier, is a question yet to be determined. When we are further through the migration and we have actually looked at the data, do we just want to close it out so that you cannot do 0845 even if it is cheaper for you, because we keep saying that 0845 is more expensive, but it is not for some people? A 10-minute call on a landline is 30p if you use 0845. So we are going to start with both lines running. Let us look at the data and have a think about where that takes you is my view.

Q60 Meg Hillier: That takes me to target time for waiting for both Departments. I think I am right in saying that HMRC has got a five-minute target time. DWP has lots of different services. You might have different targets for different services, but not one overall target. Is that right? What is your thinking about how long people might have to be on hold on these expensive calls?

Robert Devereux: Sorry-I have given you the data on the 60% of 0845 calls, which tell you it has gone from four minutes down to one and three quarters, which is a very big improvement. In my view, if there is an industry standard out there, which is x% in y seconds, we should aspire to that. We have historically simply tried to make sure that we are targeting the percentage of calls we ever answer, without prejudice to how long it takes us. Since the only way to run the business is to run it efficiently, we may as well put our money where our mouth is and stick a time on it.

Q61 Meg Hillier: It seems to take a long time. This is not new in the industry. It seems to be taking a long while for Government Departments generally, as opposed to spokespeople for Government. Why is it taking so long to come to that awareness? Ruth might have some comments as well.

Robert Devereux: I guess it is possible that we have not actually made enough connection in how you resource different parts of an organisation. On the conversation we were having earlier, we went for contact centres separate from benefit centres. We are not going to do that with universal credit; we are putting the two together. It seems self-evident, but it was not previously. I can only play the ball in front of me, and the one in front of me is a big chance to improve this, and we are doing it.

Q62 Meg Hillier: Okay. The improvement in times will be very welcome among my constituents.

Q63 Chair: Ruth, will you answer that question? Then I will move on.

Ruth Owen: We have always measured how long it takes to get through. To some extent, the headline measure for how many people get answered is the mathematical algorithm of how many seconds it takes on average to get through. I think it is quite interesting what is happening in the industry at the moment. Companies are moving away from having targets for numbers of seconds to answer, because of this point about, "I’d rather be answered and get it right than have somebody who is in a call centre feeling that they are rushed and have to get through and answer the next call."

Q64 Chair: I think 24 minutes is not acceptable.

Ruth Owen: I have never said 24 minutes is acceptable. Absolutely not. I am just reflecting that industry best practice is a quality service. Get it right, allow the agent to feel they have the time to answer the call correctly and do not make them feel rushed into, "I’ve got a call waiting. I must take another one within 30 seconds, because that is my KPI." That is not now the right way to run call centres.

Q65 Meg Hillier: I think most of us as consumers would agree with that. I want to pick up on an interesting point that Mr Devereux raised about how the original set-up had been on the basis of a certain financial understanding or regime to do with 03 numbers. Now you are moving from 08 to 03. You seemed to indicate that the charging policies of the telephone companies-plus all this competition-mean that the goalposts are shifting. Am I right in that understanding?

Robert Devereux: Yes. I will try to get this accurate. When 03 numbers were introduced, our first calculation of how much it might all cost the organisation to pay for each of those 03 minutes was going to take us to £10 million-worth.

Q66 Meg Hillier: £10 million?

Robert Devereux: Yes. We now think it could be a factor of 10 less than that.

Q67 Meg Hillier: It could be £9 million?

Robert Devereux: No, a factor of 10 less means £1 million.

Meg Hillier: £1 million-sorry.

Robert Devereux: That is because the market has changed. In terms of the prices, they have been changing.

Q68 Meg Hillier: That brings me to my point about how possible it is for a huge machine like the DWP, with all your complex systems, similarly at HMRC, and, for Mr Heaton, the whole of Government, as well as the private companies providing public services, to keep up to speed with these changes, and how fast. If tomorrow Ofcom said it had to be done differently, how fast could you change? And, Richard Heaton, would this be something that Government would push for? So that you are always pursuing the best, cheapest deal for the customer.

Robert Devereux: One of the things the Report talks about is whether Departments have policies for their use of numbers, and it noted that we both do. One policy I inherited when I arrived said that whatever we had needed to be sustainable, because I cannot be chopping and changing a £300 million business every five minutes. It would be the case that mobile phone companies will think of tariffs faster than I can have breakfast, so I need to have something that is broadly stable. The good news about 03, at the level of pricing it is now, with my ability to pay for it, is that I hope that this is a constitutional settlement in the industry that gives me some advantage. It is going to lock the call of these phones only to public services and charities. I hope that it is not going to move away from it, but I am not going to promise every twist and turn because that would be madness.

Q69 Meg Hillier: No, I would imagine that could be difficult. So it just means that things could change at any time.

Robert Devereux: They could and we could be back here again.

Q70 Guto Bebb: I have only two or three questions. On the comments made by Ruth Owen in relation to managing demand, I think the gist of them was that the problems tend to happen because of the way that demand comes in, and that results in people having to wait much longer for calls to be answered. Have you got examples of how you have tried to manage demand? Have you any success stories in trying to manage demand in that way?

Ruth Owen: Yes, there is a range of examples. Mr Devereux has already talked about opening up online channels. If you compare the tax credit peak, which is the peak that did not go very well for us this year, with the self-assessment peak, when millions of people need to give us their self-assessment tax return by 31 January, we managed to maintain service levels, both on the phone and online, because we have rebalanced those channels and opened up the channel of choosing to go online on 31 January.

Offering people the choice of channel clearly worked, and therefore those people who needed to phone us during that time could get through, unlike on tax credits where it is the only channel, and therefore you are channelling a large demand through a limited pipe, if you like.

I think I gave examples when I was here in the Committee in January of other things that we are doing regarding what we were talking about earlier about the root cause of demand. The real reason people phone HMRC is not for pleasure generally. It is because they are confused or we have got something wrong or they do not understand what we have sent out to them. It is about getting underneath why somebody phones. After tax credit renewals, which is our No. 1 cause of calls, the second highest is understanding tax codes.

The more we can do to help people, through the information that we send out to them to the information that is available to them online, means that if they get a tax code that they do not understand they do not feel the need to phone up, several times in some cases, for an explanation of why a tax code has changed. With regard to that underlying demand, it is about removing confusion as far as possible from the tax system; that is what we have been doing to date.

Q71 Guto Bebb: A key part of this is having the two channels and using digital as a means by which people can communicate with you.

Ruth Owen: Yes.

Q72 Guto Bebb: So my concern is whether HMRC has done any research on whether, with that sort of offer, there is any difference to those areas of the country where connectivity to broadband is very poor, for example. When you are planning these separate channels, are you taking that sort of issue into account?

Ruth Owen: We are very aware of people’s access to a digital channel, which is why it is generally a choice for people to use those channels. So over the next few months we are opening up greater services for individuals who are on PAYE, for whom at the moment there is no online service at all. If you are on self-assessment you are at least allowed to choose to file online. If they are on PAYE generally there is no online offer at all. So increasing their choice to bring them into the online system will start from next month.

Q73 Guto Bebb: But that choice will always recognise the fact that some people will need to have that telephone access?

Ruth Owen: Yes.

Q74 Guto Bebb: Turning to Robert Devereux and the DWP, the Committee will applaud the fact that you have gone down the route of an 0800 number. But you mentioned that the Committee must take into account at all times the total cost of your telephone services and the cost of calls. Yet the Report indicates on page 31 that the cost of the 0800 free calls for mobile users is about £5 million per year. So would spreading that out to all these premium numbers that you still use be prohibitively expensive?

Robert Devereux: One of the other policies that was written down in the policy document that the NAO referred to was a positive choice on our part to make 0800 numbers available principally for claiming. We have lots of other calls and we have not to date concluded that there is enough spare cash provided in our budget settlement to make everything free. So the conversation we are having today is about making sure that 0845 moves to 0345, which advantages our mobile customers. That seems to me to be a sensible step. Turning it all on for free would be a further expense on top of all that, which is not a step that we would take lightly.

Q75 Guto Bebb: In terms of the cost, is the £5 million more or less the cost of the 0800 offer? It is mentioned on page 31 as being the cost.

Robert Devereux: Let me check that.

Andy Morrison: Just to clarify, figure 11 relates to a decision that DWP took to negotiate for mobile callers to have free calls. It is for that element.

Robert Devereux: That is the envelope within which we are making payments to mobile companies to make sure that 0800s are genuinely free. That is not the sum total of all of the 0800 costs because you also have to pay BT for 0800 over and above what you pay the mobiles. So the total cost of an 0800 number to the taxpayer is more than the number in figure 11.

Q76 Guto Bebb: That is the point I was trying to get at. You initially stated that the cost of the calls was comparatively low in terms of overall costs; if we are looking at £5 million being not even the total cost of this development then the cost becomes a big issue, doesn’t it?

Robert Devereux: From memory, the call itself and the 0800 bit plus this top-off that we are paying is of the order of £20 million a year. So £20 million is a non-trivial sum for our Department. I am not going to promise that I can just turn that off and make it zero. By putting in £5 million, it at least means that there are genuinely free calls for mobiles. That number will be cheaper if the Ofcom proposal gets through satisfactorily, but it isn’t there yet. It is one thing to stick with that but, at the level of £20 million, I don’t think that just because it would be nice to do it necessarily makes it a priority.

Q77 Guto Bebb: Obviously you will have to pick and choose which services you can migrate into a cheaper option.

Robert Devereux: Not quite. I thought your question was why can’t I just make everything free, to which the answer is that it is already costing me £20 million to have the free ones free. To have all the non-free ones free as well, you are going to add on at least as much again-in fact, slightly more. I think we have 70 million 0845 calls and 30 million free calls. So you could be into £40 million, £50 million worth of costs down that track. That is not a number that I can just say it would be nice to do. It would be nice to do but I don’t think it is practicable. So effectively the move from 0845 to 0345 means that we are putting some money on the table because I have to pay 0.5p a minute for it, but it will produce quite large savings for mobile customers without too much further cost to the taxpayers. That seems to me a reasonable judgment to reach.

Q78 Guto Bebb: I understand the point you are making. The question I was asking in effect was this. Looking at the back of this Report, we see the number of lines that we have in DWP, which would make uncomfortable reading for anybody who is concerned about people having to pay to contact the Department: how will you prioritise which of those lines will be supported?

Robert Devereux: One thing we have not covered in this evidence today is that the Cabinet Office guidance from 2010 said that no Department should rely exclusively on 0845 numbers. I have a network of retail outlets in jobcentres. You can walk into any jobcentre and make any call you like for free. I do not require you to call 0845. You are perfectly able, if you have a friend or a grandparent who has got a BT line, to call me from their number and it is actually cheaper. I will offer you a call back if you ask for one. So there are all kinds of things that are actually-

Q79 Fiona Mactaggart: If you ask for one.

Robert Devereux: I will come back to that. There are a number of things we are doing that mean that even this long list of 0845 does not mean I am locking people into using 0845.

Q80 Fiona Mactaggart: If you ask for a call back, one of the issues that I am concerned about is people who have waited a long time and who then might spend quite a bit of time with a recorded message-it is all costing them. Helping them to know that they could be called back, particularly if they are under financial pressure, then calling them back straight away-

Robert Devereux: Among the recommendations that the NAO makes, this is the one that I am not sure I believe in, because I think the idea that you would set up an organisation that is taking a hundred million calls basically to say, "Well, we’ll stop this call and I’ll call you back and do it again," is the wrong answer. The right answer is to stop this waiting period, answer the calls once and done, stop people having the volumes and move on to an 03 price bracket. I think that is the main game in town. I think that if I were still swilling around in very expensive calls and endless waiting, you might have a point, but actually I do not think that is the right answer.

Q81 Fiona Mactaggart: The person to your right is doing exactly that.

Robert Devereux: I think she is trying to improve in the same way that we are. On the recommendation in paragraph 23, I cannot see how, "Well, I tell you what, let’s just keep offering everybody a free call back," works in a large organisation. I would rather get the basic job done properly.

Amyas Morse: There is a somewhat different area I will ask about, if I can, and Richard, if I may, I would like to voice this to you. Taking a strategic view of what is happening in Government, what we have done, and HMRC has had a big role in developing it as well, is going away from personal interactions, aiming to move people largely on to telephony and aiming to move them through into digital. Not all of them-there will be a residual population in each case.

Can I take it that your involvement means that you recognise that, quite apart from these big Departments that are doing their own improvements and processes, there is a need for an overall change process, where you keep everybody honest that they move on through and that you are making progress from having a sensible proportion of telephony, so that you do not get stuck with a massive telephony operation, and you move into digital as much as you should be moving into it? In other words, if you see it as a composite of contact with the public to deliver services, rather than just, "We are now talking about phone lines and then next week we will be talking about digital," keeping track of how all that is supposed to be combining across these very major areas of service delivery makes it an important subject, and I am interested to know what you see a Cabinet Office role in that as being.

Richard Heaton: The Cabinet Office’s principal contribution is helping Departments save money for the taxpayer-that has been our huge focus since 2010-and digital is one of those areas where we think savings to the taxpayer can be in exactly the same space as a much, much better experience for citizens. So, that is why-unashamedly-we are putting a lot of energy and effort into helping Departments, through the Government Digital Service, achieve digital transformation.

Amyas Morse: Sorry, but supposing you saw that Departments were spending a huge amount on telephony and you did not feel that they were transitioning into digital fast enough, how would you know if that was true or not?

Richard Heaton: All Departments have a digital strategy-all of them. All Departments report against digital strategies, so this is one area where we actually have quite good machinery for tracking progress. All those things are public, and any Committee or any office such as yours can hold Departments to account for what they have promised to do. So we are concentrating on the big projects first-the big 25 projects that will really make a difference-but we have got aspirations for the whole of Government for citizens to be online. We have also got efforts to improve digital take-up, which includes rural broadband roll-out, digital inclusion and encouraging-

Chair: Don’t talk to us about that.

Amyas Morse: What I was trying to get to is that I think it’s quite interesting that if that case is successful, you would expect there to be shrinkage in the amount of telephony, wouldn’t you?

Richard Heaton: Yes. That will cause one shrinkage. Other shrinkage will be better service design, better designed letters so that people do not phone in confusion and all the rest of it. All those things will lead to a shrink in volume.

Robert Devereux: May I just add one thing? It comes back slightly to what I was saying to Mr Barclay. I think there are ways of answering the question, "How is your digital strategy going?", etc. There is nothing to beat the good old "take the cash away from Departments" trick. I am now running this Department on an aggregate saving of £3 billion against 2010-112. All the savings of this Parliament sum to £3 billion. You do not get that by ticking a little bit of this strategy and a little bit of that strategy; it is done by endless work on the basic productivity of the organisation. I would be a bit cautious on the back of this hearing.

If I answer the question of how telephony is going, all of a sudden you unlock the principle. We were under incredible coshes to run these businesses very effectively. Taking the cash away is the Treasury’s basic approach, but I need to have digital and good telephony. I have all the incentive in the world to improve.

Q82 Jackie Doyle-Price: Very good, Mr Devereux. You have just articulated why austerity is so good for the public sector. Thank you very much for that.

Robert Devereux: Better that than not succeeding in it.

Q83 Jackie Doyle-Price: While we are still in the business of praise, can I point you to figure 6 on page 21? It shows some of the things that Departments are doing to reduce the costs to their customers in terms of calls. I want to ask Mr Devereux and Ruth about one of the alternatives, which is alternative contact by e-mail or website. What are you doing on that? Is there a growing appetite for using e-mail and website contact?

Ruth Owen: Let me start, because I have started on that already. Offering online contact for the vast majority of our customers has got to be where we are heading. We offer limited access to e-mail services at the moment, but it is not offered to the broad majority of taxpayers. We are aiming, as I said earlier, to open a digital online account, which will be very much like what any of you would recognise from online banking services, if you bank online. That would not be about e-mailing me your personal details and your salary for the year; it would be used as a secure channel once you have logged on to our service. That is what we plan to offer both self-assessment people and PAYE people, starting next year.

Q84 Chair: Starting in April 2014?

Ruth Owen: Yes. It goes live in an alpha service next month.

Q85 Chair: Are you piloting it?

Ruth Owen: We are piloting it from next month, with 1,000 people getting access to that service. Businesses, as you know, already have access to that, and that is an increasing part of how businesses understand what their tax position is.

Q86 Jackie Doyle-Price: What about tax credits?

Ruth Owen: It is the same.3

Q87 Jackie Doyle-Price: That is where, from personal experience, there is the most difficulty. With all these alternatives, it is very easy if you are just trying to get information, but when people-particularly vulnerable people-are trying to talk about difficult circumstances of their own, telephone is not necessarily the best channel for them. They would benefit from advocacy and working with people on their behalf, if they have had an e-mail channel. Is there any thought as to how that might be expanded?

Ruth Owen: We have already got, as I have said, some limited e-mail channels, which are for people such as advocates, third parties, the voluntary sector and other people with whom we have an agreement and can contact us. We do not advise people to e-mail us with their personal details, because it is not secure. It is like writing personal details on a postcard and hoping that no one reads it. On the internet, you must go through these secure channels, and that is what we are building at the moment. We are starting with businesses first. Self-assessment people and PAYE are next, and then we will be exploring tax credits.4

Q88 Jackie Doyle-Price: I guess that we are in an inclusion debate, because our problem is the vulnerable customers accessing secure online channels. They are likely to be excluded from that.

Robert Devereux: That is not quite what the evidence shows. We have done a lot of work on this, and people’s access to online is rather higher than we normally give them credit for, and their facility with it is normally a lot higher than we give them credit for. One of the things that people get anxious about is whether telling us something online is quite as good as telling a human.

Q89 Chair: Pensioners are much less likely to do it. They are one of your key groups. Pensioners, disabled people and all those groups-

Robert Devereux: I wouldn’t clump everybody together in quite that way. The point I am trying to make is that there is a difference between whether people own a computer and whether they have internet access, and, if they have internet access, whether they are happy to transact-that is learning stuff as opposed to telling Government stuff. There is some evidence that even with access, however it is, their confidence in saying things is more difficult. That is something that you have to get over.

Q90 Jackie Doyle-Price: It is generational. To what extent are the online channels becoming the bigger part of your business?

Robert Devereux: We want to be in the same position as Ruth. The challenge is to ensure that you can actually do it securely, because the last thing I need is for people to be able to get in and read your records on the back of what appears to be a private service for you. Getting that security right, when the potential sums of money and the fraud are quite hard, goes to the heart of some of the challenges we have got. We have been working on this for a while-it is one of the things that the Government generally are having difficulty getting straight. Exactly how you police identity in an online world is a challenge. It is a challenge for banks as much as it is for us.

Q91 Chair: I have two or three little questions and then we are done.

First, we talked about tax credits a little earlier, and your poor performance on them. It rather shocked me that, in reply to a question from Guto, you said that most of your phone calls are on the issue of tax credits.

Ruth Owen: Forty percent of our calls are from tax credits. What I said was that when you look at a single issue for which people call, renewal of your tax credits-because that is the only way you can renew them-

Q92 Chair: I hear that, which therefore makes it doubly concerning that you got that so wrong.

Ruth Owen: Yes, which is why I am equally determined to make sure that we get it right next year.

Q93 Chair: I think it would be helpful for the Committee if you could provide for us a little note on why it went wrong and what you are doing for next year to put it right so that we can incorporate that into the evidence.

My second question is for Mr Heaton. Transparency is hugely important. People do not know what they are paying, unless they are really clued up about their package. Transparency has two parts: one is transparency for the customer, and the other, from the taxpayer’s point of view, is transparency on whether Government Departments are getting the pay-back from the providers. There is a worrying note somewhere in the Report that Robert Devereux’s Department is too embarrassed to collect the £700,000 that it could have had due. I want an assurance that in your review, both transparency and open book with providers and transparency and clarity for customers will be part of the agenda that you set out.

Richard Heaton: You’re right. Again, as Mr Hurd said in that debate, there is a transparency failure here. One of the things that we are doing to sort that out is that when Departments procure their contracts with the likes of BT and Vodafone-the big providers-under the new telephony framework directive, which we have led from the Cabinet Office, there will be more access to granular information about costs, charges, minutes and so on. So for Departments gathering data, there will be greater transparency from suppliers about the circumstances in which we are charging and being charged. That will help transparency.

On your two specific questions-

Q94 Chair: One was about the customers, so that they know that there is greater transparency on what they are paying for with calls.

Richard Heaton: That of course is a function of a very fast-moving telephony market at the moment, so there is only some degree to which that is within our control.

Q95 Chair: I accept that you have got to keep updating it, but that does not mean that it should not be-

Robert Devereux: It’s worse than that, I am afraid. I have here a list of 50 packages, and there are almost 50 different numbers down here. So I think that the idea that we would play back by saying, "If you are on this particular package with Orange, you are probably paying 22p"-

Q96 Chair: No, which is why simplicity must be the order of the day.

Robert Devereux: But we don’t control that. The market determines what it will charge for 03 numbers.

Q97 Chair: Nevertheless, there is the general point that 0845 costs you more on a mobile than using a landline. That is generally true, right?

Robert Devereux: Yes.

Q98 Chair: That is the limited transparency about relative costs.

Robert Devereux: That we can do.

Q99 Chair: For the different packages that people have, you can obviously always say, "Subject to your individual package." The other transparency is the provider and the money that they make out of this. The PAC and the taxpayer want to know who is getting the income if 084 numbers are being used. There is a demand in the Report for much more open book contracts around this issue, and transparency both for us, the people who look after the taxpayer’s interest, and the taxpayer themselves. We should be able to see that.

Richard Heaton: That is something that I would hope that the working group can cover.

Robert Devereux: I think it’s better than that because the feature of the PSN network contracts we negotiated make it clear that that needs to be transparent.

Q100 Chair: Okay, so you are giving us a commitment on that?

Richard Heaton: I can write about the precise details of the commitment, but yes, we will offer you something on that.

Chair: Thank you.

Robert Devereux: May I go back to your throwaway remark about being too embarrassed to collect the £700,000? The Report records that we decided that we did not want to have revenue for it. That revenue was just 0.3p per minute. In the same year we negotiated the same discount on the cost of the 0800 numbers so I talked to Mr Beale about it.

Q101 Chair: Okay. I think transparency around that would be extremely helpful.

Robert Devereux: It would. The Report makes it look as though we did not do some offsetting, and there was some. I’m not sure it was quite as intelligently connected as that.

Q102 Chair: No, but the offsetting needs to be transparent.

Andy Morrison: We are clear on that point. Our understanding was that the revenue share was given up because you did not want to be seen to be taking money from benefit claimants, and the reason for the reduction in the 0800 rate was actually down to benchmarking information.

Robert Devereux: There was a left hand and a right hand, but the net effect was that we had the same from one or the other.

Q103 Chair: Good. We have ended this session with many positive thoughts from you and intent about looking across Government for a policy with some consistency, some form of mandation, particularly looking after vulnerable groups so that they do not pay a higher rate for phone calls, better performance data, and some sort of sanction policy to be implemented so that people do that, Robert Devereux’s very helpful information that 03 will be an option for the new universal credit and PIPs, and your hopefully helpful note on your actual performance. That is very helpful.

I have one final question to HMRC about the Vodafone issue that is around today. Clearly, there are concerns about the deal. I just want some assurance that HMRC will go through the deal with a toothcomb to ensure that the taxpayer gets the proper benefit under the law of the tax that Vodafone should pay on the massive windfall profit that it is making.

Ruth Owen: You are aware that I cannot comment on this particular taxpayer’s tax affairs, but I assure the Committee that HMRC plays its full role in keeping very close to every large business to make sure it pays the tax that is legally due. That is our role.

Q104 Chair: And you will also look at whether there is aggressive tax avoidance in this instance in using the Dutch-based company as the vehicle for filtering the profits?

Ruth Owen: I’m not going to be drawn into discussing this particular example, but our role is to make sure UK companies pay the tax that is legally due in this country. That is what we do very closely with large and small businesses, and individuals.

Q105 Chair: It is a heck of a lot of money, and it makes Vodafone’s profits from 0845 numbers from the Government look minuscule. Thank you.


[1] Note by Member: Is actually 7.6 centuries not 76.

[1]

[2] Note by witness: should be ‘2010-11.’

[3] Note by witness: Renewals can also be made using the paper channel.

[4] Alongside the new digital services for tax, we are looking at the extent to which we could provide the same for our tax credits customers, but we have no firm plans.

Prepared 8th November 2013