Budget 09: public sector efficiencies could harm HMRC services

Plans to seek an additional £9bn in public sector efficiency savings are likely to hurt services and add to delays at HM Revenue & Customs, according to tax advisers.

Alistair Darling announced the plans in the Budget that ‘recoverable value for money’ public sector savings of £5bn were planned for 2011/12. He said that in the next Spending Review period additional efficiencies of £9bn were planned for 2013-14.

Chris Oates, Ernst & Young tax partner, feared the additional planned spending cuts would further hit HMRC operations. ‘There remain significant delays in the dispute resolution process and staff are already under pressure following the last round of staffing cuts,’ he said.

Richard Mannion, national tax director at Smith & Williamson, said that, following the shedding of around 20,000 HMRC staff in recent years, service levels have already slipped. He said: ‘The last round of job cuts led to the introduction of more call centres to serve taxpayers. There is no indication that service is getting any better.’

Bill Dodwell, tax partner at Deloitte, hopes that significant efficiency savings can be achieved at HMRC through more integrated IT systems, whatever the impact of the government’s comprehensive spending review on HMRC. He urged better use of IT systems to track down tax evaders while reducing costs over the medium term.

‘HMRC should get better at tracking down evaders through improved IT systems, such as the ‘matching’ software used by the Department of Work and Pensions, to bear down on benefit fraud,’ said Dodwell.

Mark Serwotka, general secretary of the Public and Commercial Services Union, said that HMRC was due to cut 25,000 jobs by 2011 under the current programme,with 17,500 job cut so far. The PCS was unclear at this stage what impact the additional efficiency savings announced in the Budget would have on HMRC jobs and services.

HMRC said it was ‘scoping savings as part of a wider departmental efficiency programme which will augment the existing substantial efficiencies being delivered by the Departmental Transformation Programme’.

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