Summary
As detailed in ‘The Efficiency of National Insurance Administration: HM Revenue & Customs’ (HC 184), by reducing staff, HM Revenue and Customs (HMRC) have made significant progress to improve the efficiency of National Insurance administration.
There were 1,200 National Insurance (NI) administration staffing reductions in the period of 2009-10, which has encouraged wider savings targets set by the Spending Reviews of 2004 and 2007.
Reduction in staff numbers is likely to have led to an improvement in overall efficiency; the relationship between costs of the system and the operational performance achieved. The extent of this efficiency however, is not quantifiable.
In terms of operational performance, the National Audit Office reported that there have been no major failures in systems but trends at a business unit level create uncertainty about how far NI administration has become more efficient.
HMRC could improve how the system of National Insurance functions through:
- Accuracy: HMRC needs to ensure standards of accuracy for NI records are applied consistently across all operations and take account of the longer term costs and consequences of inaccuracies in processing.
- Efficiency: Although some improvements would depend on the availability of funding for IT enhancements, considering the system in its entirety would help secure savings.
HMRC needs to demonstrate more clearly that it is providing value for money from the £350 million it spends each year and take advantage of opportunities to secure further savings.
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