News Library

HMRC’s customer service quality ‘collapsed’, says National Audit Office

The quality of service at HM Revenue & Customs (HMRC) ‘collapsed’ over an 18-month period between 2014 and 2015, according to a report by the National Audit Office (NAO).

The report found that average call waiting times tripled in 2014/15 and in the first seven months of 2015/16. Call waiting times for self-assessment tax returns peaked at 47 minutes last autumn, which resulted in HMRC having to bring in 2,400 extra staff to its tax helpline.

Using HMRC's own criteria, the NAO valued people's time at an average of £17 an hour, and, as a result, calculated that callers would have wasted a total of £66 million while waiting on the phone, £21 million while actually talking to HMRC and £10 million on the cost of the call itself.

The NAO blamed the poor performance on HMRC’s decision to cut 11,000 staff between 2010 and 2014 as it tried to persuade more people to complete their tax returns online. The report claims that HMRC ‘misjudged the cumulative impact of its complex transition and released too many customer service staff before completing service changes’.

In other words, it greatly underestimated how many call centre staff would still be required to help taxpayers with self-assessment queries.

Amyas Morse, head of the NAO, said: ‘HMRC’s overall strategy of using digitally enabled information to improve efficiency and deliver service in new ways make sense to the NAO. This does not change the fact that they got their timing badly wrong in 2014, letting significant numbers of call handling staff go before their new approach was working reliably.

‘This led to a collapse in service quality and forced a rapid expansion of headcount. HMRC needs to move forward carefully and get their strategy back on track while maintaining, and hopefully improving, service standards.’

HMRC said its service levels had improved since the period analysed in the NAO report, and that, over the last six months, call waiting times had averaged six minutes.

Ruth Owen, HMRC's director general for customer services, said: ‘We recognise that early in 2015 we didn't provide the standard of service that people are entitled to expect and we apologised at the time. We have since fully recovered and are now offering our best service levels in years.’

Number of multi-generational households set to rise as house prices increase

Up to one million more young people may have to live with their parents instead of renting or purchasing their own home, according to new research by insurance company Aviva.

This may be partly due to rising property costs: prices rose by 52% between 2005 and 2015, increasing from an average price of £184,000 to £279,000.  

There has also been a 46% increase in the number of multi-generational households during the same period.

Of this increase, 32% of individuals were aged between 21 and 34.

The report suggests that, based on the rate of growth over the last ten years and assuming that property prices will continue to soar, there could potentially be 2.2 million people residing in multi-generational households, and 3.8 million people aged between 21 and 34 living with their parents by the year 2025.  

Furthermore, previously-released figures from the 2011 census revealed that 1.1 million households within England and Wales were officially classed as overcrowded.

Lindsey Rix, managing director of personal lines at Aviva UK, stated: ‘Multi-generational living is often seen as a necessity rather than a choice, particularly when adults are forced to move back in with family to help save for long-term goals like buying their own house’.

Payment by cheque still proving popular, new research indicates

Over 500 million cheques were written during 2015, new data from Payments UK has revealed.

However, this number was 13% down compared to the year before.

Payments UK indicated that the latest figures showed that paying by cheque is still a valued form of payment.

The research also suggested that cheques provide a secure method of payment for individuals who choose to use them.

During 2011, measures were put into place by MPs to prevent the Payments Council from abolishing cheques as a form of payment. They had been due to be phased out by 2018.

Adrian Buckle, chief economist at Payments UK, stated: ‘The cheque is still a popular payment mechanism for certain groups of people and in certain situations.

‘Businesses use cheques to pay their trade suppliers and for ad hoc payments to other small businesses. Cheques are also commonly used by older people and in any situation where you know the name of the person you want to pay but not their account number or sort code.

‘Although not as popular as it once was, the indications are that the cheque will be around for a long time to come.’

Queen’s Speech outlines Government’s legislative plans for the year ahead

The Queen has delivered her annual speech at the state opening of Parliament, outlining the Government’s legislative agenda for the upcoming year.

This year’s speech announced radical changes to prisons and the adoption and care systems, together with changes to the education and university systems.

However, there were some notable amendments to the Government’s plans, including revisions to the previously announced intention to convert all schools in England into academies, together with a lack of any detailed plans regarding the new British Bill of Rights, which is intended to replace the current Human Rights Act.

The Government’s much-debated Soft Drinks Industry Levy was announced, and is due to come into effect in April 2018. This measure will be included in the 2017 Finance Bill.

The Help to Save scheme and the Lifetime ISA measure, announced in the 2016 Budget, will also be established under the Lifetime Savings Bill, in a bid to encourage saving.

A number of other key legislative ventures were announced, including plans to make it easier for utility customers to switch providers under the Better Markets Bill, and the removal of barriers to accessing pension savings, covered by the Pension Bill.

The Gift Aid Small Donations Scheme (GASDS) is also set to be changed following a public consultation, and every household in the UK will be entitled to a fast broadband connection.

Meanwhile, under the new Criminal Finances Bill, companies that fail to prevent employees from facilitating tax evasion will now be committing a criminal offence.

Commenting on the announcements, Dr Adam Marshall, Acting Director General of the British Chambers of Commerce (BCC), stated: ‘Businesses will see the merit in many of the bills announced in the Queen’s Speech, particularly the commitment to high-speed broadband for all households and business premises.

‘Yet on most of the issues where business is impatient for action, what’s needed are big decisions – not new legislation. Businesses want decisive action to boost aviation capacity, help companies plug skills gaps, and stop the steady drip of new taxes and costs piled on their bottom lines at a time of significant uncertainty.’

Savers to receive additional retirement scheme protection

Individuals’ retirement savings are set to be better protected under the new Pensions Bill.

Some had expressed concerns that those paying into auto-enrolment pensions could potentially lose their funds in the event of their scheme collapsing.

The Bill, which was recently announced in the Queen’s Speech, will provide extra supervision for ‘master trusts’. These trusts supply employers with occupational pension schemes.

Pension industry experts have previously warned that nearly a quarter of a million people were at risk of potentially losing their retirement savings, after a BBC investigation discovered that many master trusts were not large enough to survive.

Under the Bill, The Pensions Regulator (TPR) will be granted greater powers to authorise any schemes and take action where appropriate.

Master trusts will also need to demonstrate that they comply with strict new criteria before they can enter the market.   

Lesley Titcomb, TPR’s chief executive, stated: ‘We have voiced concerns for some time about the need for stronger legislative standards for master trusts and have worked with government and other regulators to improve levels of protection for members’.

Furthermore, a new guidance body will also be established, amalgamating the Pensions Advisory Service, Pension Wise and the Money Advice Service. This body aims to help those retiring and individuals in debt.

Property sales plummet after stamp duty changes, says HMRC

The number of UK properties sold fell by 45% between March and April as stamp duty changes came into effect, according to official figures from HM Revenue & Customs (HMRC).

Since 1 April 2016, those buying an additional property, such as a second home or a buy-to-let, have been required to pay an additional 3% stamp duty surcharge. This led to a rush to bring forward property purchases before the surcharge was introduced, and March saw a record high of 164,400 transactions.

By contrast, just 94,370 properties in total were sold in April, and the number of residential properties sold - 84,280 - was the lowest for three years. Compared to April last year, the number of transactions was down by 14.5%.

The stamp duty surcharge for second homes was announced as part of Chancellor George Osborne’s 2015 Autumn Statement. It is expected to boost Treasury coffers by some £1 billion by the year 2021, but there have been many critics of the change, who argue that the measure will damage investment in property.

Andy Sommerville, director of Search Acumen, said: ‘A 45% month-on-month drop in transactions is a powerful testament to how Government reform can alter forecasts and sway public attitude.

‘Whilst the spike in March more than makes up for the fall in April, what is worrying is that this dip is not just the consequence of buy-to-let landlords and second homeowners clearing transactions ahead of April. It’s also the result of people trying to find their bearings, preferably even trying to stay away from the market as Brexit speculation grows louder.

‘The Chancellor, in efforts to sway voters to stay, has predicted economic shock and plummeting house prices in the event of the UK leaving the EU, while others believe falling house prices could be a good thing. Either way, the uncertainty is stagnating the market. This is likely to continue well into June, with transactions picking up once there is greater clarity on the UK’s direction.’