[Slide: The challenge of scale]
I’d like to start by putting into context what we do, and how we do it.
We deal with the tax affairs of 45 million individual taxpayers, as well every business in the UK.
And we also pay tax credits to around five million families and child benefit for nearly 14 million children.
As a result, we receive 60 million phone calls a year, and 10 million pieces of post.
And we have an added challenge that, due to the pattern of the tax year, demand fluctuates significantly over the year.
For example, we can receive a million calls in a single day when a tax or tax credit deadline is near.
Our budget, of £3.7bn, had reduced by £245 million over the last year alone, while we have increased the amount of revenue we collect.
This means that our cost of collection, a key performance measure, has improved and we now spend less than a penny for every pound coming in.
But we need to do more.
Our aim is to increase the revenue we collect, improve the service we offer, at reduced cost.
We believe that is possible with the plans we have.
[Slide: Where we were]
Let’s just briefly re-cap where we have come from over the last few years.
It’s a fact that we have struggled to deliver an acceptable level of service.
We had a massive backlog of PAYE cases and correspondence, and the additional phone calls it generated.
Fewer than half of the people calling our contact centres during 2011/12 were able to get through.
Clearly that was unacceptable.
So I’m pleased that we’ve been able to improve on every single one of these measures over the last year.
But we have much further still to go.
[Slide: Where we are now]
We’ve cleared the backlog of nearly 18 million legacy PAYE bringing the PAYE system up to date for the first time since the Department was formed.
Last year overall, we answered 75 per cent of calls.
But following the investment Lin mentioned - an additional £34 million over two years - we answered 90 per cent of calls over the last five months of the year.
We’re turning round post faster than ever before, meeting our target of 80 per cent processed in 15 days.
And we are making it cheaper for customers to contact us.
We have moved almost all our 0845 numbers to cheaper 03 numbers by the end of the summer, responding to customers’ feedback about the cost of their calls to us.
NAO estimate that this could save callers £33 million a year.
[Slide: New RTI campaign visual]
And we have started a major modernisation of PAYE – introducing Real Time Information reporting from April this year.
That means, as many of you know, we receive information about PAYE as people are paid and no longer have to wait for all information to reach us at year end.
So our records will be more up-to-date in future.
Real Time Information is the biggest change we will introduce this year, and we’ve been developing it, with some of you here today, since 2009
Right now, over 1.5 million employers’ and pension providers’ schemes are already reporting in real time.
And while we continue to iron out early teething problems and support those still to join, the general sense is that RTI is working well and has gone more smoothly than many had anticipated.
[Slide: Tax credits appeals]
Another issue we know caused concern for our customers last year was the time it took us to process their tax credits appeals.
We’ve reviewed our approach and have reduced the number of appeals on hand by over 80 per cent (from 18,000 in January this year, to just over 3,000 waiting for our decision at the end of June).
And we’ll turn round appeals made from 1 July within a maximum of 42 days.
There’s more to do, but this is a significant step forward.
Tax credits error and fraud has long been a challenge for us.
I’m pleased that we’ve reduced error and fraud in the tax credits system to its lowest-ever level, 7.3 per cent of total expenditure, or £2.1 billion of incorrect payments.
The reduction is another good step forward, but the figures are still too high.
[Slide: Tax credits timeliness]`
In the same vein, we’ve also reduced the number of days it takes us to process new UK tax credits and child benefit claims and changes of circumstances.
Last year, our average was 15.4 days, against a target of 22 days.
This is a good outcome for customers in its own right.
But what it has also done is to reduce progress-chasing calls, saving our customers’ time and freeing up our contact centre staff to respond to other enquiries.
So we’re moving in the right direction, and are making some real improvements for our customers.
But as I think as everyone in this room would agree, there’s still plenty of room for improvement in our customer service.
[Slide: Contact centre performance]
Here’s a slide showing how quickly we pick up the phone in our contact centres.
As Ruth has said, the headline numbers on our overall call handling performance are hugely improved.
And within these figures, we are answering most calls within two minutes.
So for the vast majority of customers, this is an improved service.
But picking up the phone is only the start.
What happens next is just as important.
Resolving people’s queries at first point of contact wherever we can, and doing so in a professional manner and, courteous and approachable tone.
We also know that once they get through to us, 80 per cent of customers indicate a high level of satisfaction with the service they receive.
But that’s little consolation to those customers who wait longer for their call to be answered.
Or the one in five who are not satisfied with the service once they do get through.
They can articulate what this feels like far better than me so let’s hear from some of those customers now.
As someone who is responsible for customer service in HMRC, that is not easy to listen to.
But we must.
We must because we need to understand the experience people have when they deal with us, if we are to improve it.
And we are listening.
These videos were not made for today’s event.
They were made for a session we had with our senior team to help them understand the impact we have on our customers when we get things wrong.
These, indeed all customers, deserve a better service and we are determined to find ways to deliver it.
We need to make a radical change to our internal processes so customers don’t bounce around between different bits of our organisation, who don’t appear to talk to each other.
We need to improve our phone service so that the vast majority of customers queries are dealt with there and then, not passed off or call backs arranged.
But where we do have to call back, we keep our promises to customers.
It is not for customers to be chasing us.
We need to make sure our service is personal – that we understand our customers’ circumstances – as the customer said “every case is different”.
And we need to show some humanity when they are in difficulty.
It should not take months to sort out issues which impact on a family’s income.
We are determined to make the customer experience far, far better.
And we believe we can do that, at lower cost, by getting things right first time.
And helping our customers do the same.
[Slide: Our objectives – triangle]
As we heard earlier, our Spending Review settlement means a five per cent reduction to our budget over 2015/16.
We expect to have 12,500 fewer employees by the end of March 2016.
And we expect we can do this mostly through natural turnover and without major redundancy programmes.
If we are to achieve our goals of increased revenue, improved service and lower costs, it is clear that the way we currently run our business is too costly and is unsustainable in its current form.
Our customers, and indeed our own people, tell us there is a better way.
We need to find ways to do things differently.
One example of innovation is our recent trial with a private sector provider to carry out checks on tax credits claims, as part of our efforts to reduce error and fraud still further.
We’re now evaluating the results of the trial to see if it proved a success.
Removing error is just as important to our customers as it is to HMRC.
And we do know that by using data better, and exploring alternative business models, we have the potential to increase productivity and significantly tackle current levels of error and fraud.
We also know that our customers’ expectations are changing in line with the services they are accessing in other areas of their lives.
Look at the growth in the number of people over the last ten years who now prefer to bank online and almost never visit a branch.
So our focus now is to build the technology and services that will support customers to do much more for themselves online, without needing to call or write to us.
[Slide: Higher Income Child Benefit Charge]
An early example of this approach was the Higher Income Child Benefit Charge, introduced in January this year.
We provided a simple, online service that helped people to understand how the change affected them, and to opt-out easily, if that’s what they chose to do.
The website has received two million hits to-date, and of the customers who have elected to stop receiving Child Benefit, three quarters of them have done so on-line.
And because of this approach, we received only 40 per cent of the phone calls we had forecast.
We also want to provide a more tailored service for individuals or businesses dealing with their day-to-day affairs, so that they can have easy access to all of their taxes in one place.
And since so many of our customers use agents to represent them, we also want to make it easier for agents to self-serve online.
We’ve been talking to some of you about how to do that.
We’ll only get this right by our customers and by you, in the design of these services, and the policies and processes that sit behind them.
We’ve learned this through the implementation of RTI for instance, where our work with stakeholders – some of you in this room – helped us to build a better understanding of how employers run payroll in their offices, factories, farms and homes.
For example, my visits to a Somerset swede farm and a Scottish haulage firm enabled me to hear direct from people doing their best to run a successful business and to get their tax right.
We had to change our plans to work around what employers actually do in administering PAYE, rather than what we thought they did.
We’re working with customers and representatives more and more to incorporate their views into the design of our products and services – looking at how we can make the system easier to navigate and easier to get right.
Through enabling the vast majority of customers to deal with their day-to-day affairs digitally, without needing to pick up a phone or pen, we can focus our expert customer advice on the more complex cases.
And on those who genuinely need extra help.
[Slide: Putting customers first bereavement service]
One example of where we’ve done that is our bereavement service.
We worked closely with Tax Help for Older People and the Society of Trust and Estates Practitioners to simplify and improve the service we provide to customers faced with resolving a relative’s or close friend’s tax affairs.
They told us that it was important to conclude the outstanding tax affairs as quickly as possible, and not to wait to the end of the tax year.
They also taught us about the right tone in which to deal with bereaved customers.
Another example is how we are planning to change how we provide services for our vulnerable customers who need extra help.
Finding out why some vulnerable customers don’t use our Enquiry centres has been invaluable to designing our new service
In both these examples, our customers and our partners are not just consulted; they have a seat at the project board and are part of our decision making.
[Slide: Tax free child care]
We’re also looking at designing the new tax-free childcare scheme from the customer perspective – creating an end-to-end process that starts from the customer.
We will soon be publishing our consultation document and I would really encourage you to get involved and feed in your views about its design.
The one thing we are clear about is that we want this to be an easy-to-use, online service.
Mark Hall, HMRC Chief Information Officer:
We clearly need to do things differently.
We need to make more use of automation and digitise our customer-facing services.
That’s what we’re going to spend the bulk of the £200 million digital investment on over the next three years.
We are putting in place joined-up ways for more of our customers to self serve and helping those who need support.
The cornerstone of this change is to design our services from the customer “in” rather than from HMRC “out”.
Our goal is to become digital – “as if paper never existed”.
To give you a flavour of the work we have already kicked off:
[Slide: PAYE online]
PAYE online is the heart of the individual tax account and ultimately will deliver a digital service to 45 million taxpayers.
A large ambition, but one we’ll deliver in phases, ordered based on what customer’s tell us they need help with the most.
For example, around 10 million PAYE customers contact us each year, of these 4 ¾ million customers are querying their tax code.
By March 2015, up to 2 million PAYE customers (or their agents) will be able to use a range of services on their digital tax account. If customers have had a change in circumstances that affects their tax code, they’ll be able to submit information online that will automatically update our systems.
We’re starting in October with company cars and medical benefits as around one in six of tax code calls relate to changes to car, van, fuel and medical benefits with a full rollout in April 2014.
We’ll also offer improved online guidance that leads customers through a clearer explanation of their tax code and pilot a simple electronic version of the paper tax statement.
The new Identity Assurance Solution needed to ensure online identity verification will also go live in stages during this year.
[Slide: Digital Self Assessment]
Digital Self Assessment will move Self Assessment customers to a completely digital service.
SA is already a mature and well-used online service and more than 80 per cent of our ten million customers already file their returns online.
But that’s where the digital experience currently ends, because we then send out 44 million pieces of paper a year!
We can halve this over the next few years and ultimately remove all paper for online customers.
Also, because we will be doing more with PAYE and online tax accounts, we will be able to remove up to two million less-complex Self Assessment taxpayers from SA altogether.
[Slide: Tax for my business]
For businesses, Tax for my Business will offer tailored services for 4.8 million SMEs in one place.
We already provide many online services for Business, but now they will be able to see a single overview of their HMRC account.
They’ll link straight through to pre-populated payment screens.
They’ll get direct access to all the online transactions relevant to them.
And they’ll receive instant answers to simple questions, and be able to submit detailed questions via secure digital messaging for a personalised answer.
Nick mentioned customers being able to access all their tax records in one place.
We’re calling this the Whole Customer View, and it means a single record for each of HMRC’s business customers, bringing together all the data we hold for them.
So they won’t have to bounce around our system dealing with different people for each different aspect of their tax affairs.
We’ve also been working in partnership with agents to make transacting with HMRC easier.
A single agent often has multiple agent codes and references.
We are introducing a single procedure to obtain a Unique Agent Reference, which will replace the various current processes making registering to act as an agent easier and quicker.
So you can see – we are already on the journey to change the shape of our services.
But becoming more digital is only part of the answer.
Improving the customer experience goes beyond the front end of websites and contact centres, to how we work across the department.
There will always be complexity in the tax system – however we will increasingly make it easier and easier to navigate.
So we will look at how we can hide some of that complexity - designing services, products and processes that make it easier for customers to get things right, and harder for them to get it wrong.
We’re clear that we need to start that design work, not with the architecture of the tax system, but with the needs of our customers at the centre of our thinking.
And that means closer working with many of the people in this room.
I’m sure that some of you will wonder if this new world is achievable.
But some of our Customs colleagues will be wondering what’s the big deal?
Because they’re in this new world already, and have been for some time.
99 per cent of customs clearances are already done online.
And 92 per cent are turned around in two to five seconds.
We’re also already one of the largest online parts of Government for businesses and some individuals.
Delivering around 200 plus services such as Self Assessment, VAT etc.
So we’re not starting from scratch.
And we’ve got strong support:-
from the Government Digital Service (GDS) who’ve shaped the design award-winning GOV.UK, are leading major change on how Government thinks about services and are helping us build new capability;
from a strong and transforming IT supply chain and internal Digital team;
and from a team of non executives who have among their credentials; the data skills behind Tesco Club Card, major blue chip organisational change programmes and leadership of Cyber security across UK Police forces.
So we know it’s doable; we’ve just needed to put as much effort into customer service as we have into controlling and reducing our costs and into maximising the revenues we bring in for the country.
It’s a challenge, but it’s one that we are determined and confident that we can meet.