Summary
Over the next four years, HM Revenue & Customs (HMRC) is expected to reduce its overall running costs by £1.6 million which will lead to 10,000 redundancies.
The National Audit Office (NAO) report 'Reducing Costs in HM Revenue & Customs' (HC 1278) details that at the same time as significantly reducing costs, HMRC must increase tax revenues, improve customer service and achieve reductions in welfare payments.
HMRC has reported savings of some £1.4 billion since 2005.
To achieve scheduled cost reductions, there are plans to implement 24 change projects and other measures including savings in the provision of IT services, improvements in productivity, reduced sickness absence and headcount reductions.
The size and shape of HMRC will change substantially as it reduces staff numbers by 10,000 and significantly reduces the number of offices it operates.
The NAO feels that HMRC has established a clear vision, specified operational priorities, and revenue targets, but has not yet sufficiently defined the business performance and customer service it intends to achieve by 2015.
HMRC has good information on the different costs it incurs but only limited information on the cost of its end-to-end processes and on the cost of servicing different customer groups. It also has a limited understanding of the link between the cost and value of its activities. This has restricted its ability to assess fully the impact of cost reductions on business performance.
HMRC has made no allowance in its cost reduction plans for under-delivery or slippage, and currently has no reserve of proposals on which to draw.
HMRC has begun to implement its cost reduction plans but has not yet assessed all the dependencies between projects and the critical path for delivery.
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