HM Revenue and Customs permanent secretary Jim Harra has hit back at the accusation that the department has provided a “deliberately poor” level of customer service on its telephone lines.
In a report published today, the Public Accounts Committee said it is “concerned” that the tax agency has “sought to degrade its telephone service to drive taxpayers to digital channels”.
In a letter responding to the report, Harra –who is stepping down in April after more than five years as HMRC's perm sec and more than 40 years at the tax agency – said the committee’s claims about the department's customer service "are completely baseless".
"In reality, we’ve made huge improvements to our service standards, with call wait times down by 17 minutes since April last year," he added. "We will always be there to answer the phone for those who need extra help.”
The PAC report pointed to a National Audit Office report on HMRC customer service in 2023-24, which found the service had “continued to decline” in 2023-24 following criticism of its 2022-23 performance.
The NAO report found the proportion of calls answered had dropped, the average wait time had gone up, and that the number of calls cut off has soared.
PAC’s follow-up inquiry into the state of HMRC’s customer service, published today, says the tax agency has been “too willing to let its telephone services fail in the hope this forces people to use its digital services instead”.
HMRC says customers switching to digital services frees up its lines for vulnerable people and more complex cases, but PAC warned that phone access has been restricted before digital services are ready and that not all services are available online.
Where services have been digitalised, they “do not always provide the reassurance that customers need”, the committee found. As an example, the report says HMRC has recognised that it is behind other organisations in providing the ability for customers to send secure messages digitally and that it envisages customers doing this more through the HMRC App and the Personal Tax Account.
PAC chair Sir Geoffrey Clifton-Brown said: “Given that citizens have no choice but to engage with HMRC, it has a responsibility to aspire to the highest standards of service. Unfortunately, what we have instead is a tax authority excavating its way to new lows in service levels every year.
“Worse, it seems to be degrading its own services as a matter of policy. HMRC is an organisation in defensive mode, and needs bold and ambitious leadership to begin to chart its recovery.”
Last May, the Treasury allocated HMRC an extra £51m to improve its telephone helplines, paying for around 1,500 additional staff. Later in the year, HMRC hit its telephone performance target for the first time in more than three years.
HMRC told PAC it expects to sustain this for the remainder of 2024-25 and for 2025-26.
The department said its call wait times have also improved significantly in recent months, coming down from an average of around 28 minutes in March 2024 to 11 minutes in October.
The PAC report acknowledged this improvement, but the committee said it is “concerned that performance will deteriorate again if HMRC struggles to meet further increases in demand from customers”.
Harra told CSW in December that improving customer service in the latter months of 2024 was one of his highlights of the year. He also said having to prioritise which customers the department helped with the service earlier in the year, due to resourcing issues, was one of the hardest parts of being a leader in 2024.
Improving customer service is one of HMRC's three strategic priorities under the Labour government, alongside modernising and reforming, and closing the tax gap.
Last week, exchequer secretary to the Treasury James Murray, who is the first minister to chair the HMRC board, told the Treasury Committee about his "hands-on" approach to his HMRC role. He said this has included "going to see private sector organisations to get some ideas from them, feeding them back to HMRC and sometimes having joint meetings with HMRC and the private sector". Murray also said he is considering whether to change the metrics "inherited from the previous government" for measuring customer service levels.
The department will publish a digital roadmap in the spring which will set out the digital services it is expecting to develop and the investment it needs.
How bad were HMRC's telephone customer service figures in 2023-24?
Taking a closer look at the customer service figures, the department answered 66% of callers’ attempts to speak to an adviser in 2023-24, down from 71% in 2022-23 and well below its target of 85%.
Callers who got through waited around 23 minutes on average, compared to 16 minutes in 2022-23 and significantly longer than the average of five minutes recorded in 2018-19.
HMRC also cut off more than 40,000 calls in 2023-24, under its policy to do so when a customer has been waiting for 70 minutes to speak to an adviser – up from 6,875 in 2022-23.
On the other hand, HMRC improved the proportion of correspondence handled within 15 working days from 73% in 2022-23 to 76% in 2023-24, although this is still below its target of 80%. The proportion handled within 40 working days has remained at 89%.
HMRC’s digital services performance in 2023-24 stayed at 83%.