HMRC pleased with cost cuts

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HMRC admits faultsThe UK tax authority has made a good start at cutting costs but faces a longer term battle to protect customer service, a report has found.

HM Revenue and Customs (HMRC) improved its value for money in 2011-12 as it began a programme to reduce annual running costs by 25% by 2014-15.

The National Audit Office (NAO) said that HMRC had maintained performance during the first £296m of cuts.

But this would become “more challenging” as deeper cuts were made.

Job losses

In total, HMRC is targeting a £955m annual reduction in running costs, as well as bringing in an extra £7bn in tax.

This will include cutting the equivalent of 10,000 full-time staff, with 2,400 of these having already gone.

Other savings plans include cutting computer costs, moving out of scores of buildings, and improving staff efficiency.

The NAO said it had made a good start, with savings already ahead of target.

“In one year, HMRC has managed to deliver a third of the savings it is required to deliver over the four years of the spending period, at the same time as maintaining performance in key areas such as maintaining tax collection and reducing tax debt,” said Amyas Morse, the head of the NAO.

A spokesman for HMRC said: “We are now taking a more strategic approach to managing our resources resulting in us answering phone calls faster and turning post around more quickly than ever before.”

Call waiting

HMRC has faced a number of critical reports in recent years, and last month MPs put the authority’s helpline under scrutiny.

The UK’s head of tax, Lin Homer, admitted to the Commons Public Accounts Committee that some people faced waits of more than 10 minutes to get through.

From April, HMRC will have a target of making 80% of people wait no longer than five minutes to speak to a real person.

Call costs will also be reduced by the end of the summer.

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