With Homer gone, will HMRC prioritise digital in its selection of a new chief exec?

SUMMARY:

The UK tax office has got an uphill struggle in transforming into a digital organisation. But savvy leadership at HMRC would go a long way to making it happen.

Lin Homer
Lin Homer

The chief executive of the UK’s tax office, HMRC, has announced that she will be stepping down from her position. And about time too. I don’t want to deliver a personal attack, but it’s a matter of record that Lin Homer has overseen a number of disastrous projects across Whitehall and has failed to establish services that are deserving of taxpayers’ money.

This is now an opportunity for the government to focus its attention on finding a new chief executive that has the capabilities to deliver on a number of complex digital problems facing HMRC. But will it?

Customer service problems, pivoting away from Aspire and a new £1.3 billion investment from the Chancellor to create “one of the most digitally advanced tax administrations in the world” are all at the top of the agenda. A chief executive that doesn’t understand or doesn’t have the skills to deliver on these complex transformation projects could set the organisation back another 10 years.

HMRC is one of the departments in Whitehall that is critical to the day-to-day running of the country and it deserves (and needs) the best digital talent it can get – even right at the top of the chain.

Personal experience

It just so happens that I had to deal with HMRC myself yesterday, given that tax returns are due to be filed in the coming weeks. I was informed by my accountant that I needed my UTR (unique tax reference) number, which I hadn’t received because I stupidly had forgotten to give HMRC my new address.

So last night I phoned up the department (calling 15 minutes before it shut, given that during working hours its near-impossible to get through without a 30 minute wait) with the intention of asking them for my UTR number.

Despite the automated voice recognition systems informing me that I wouldn’t be able to receive it over the phone, when I got through to somebody I was told that if I answered some security questions I would be able to get it there and then.

But before I answered the security questions for the UTR, I needed to answer some preliminary security questions to verify who I was. Which I passed.

However, when I got asked the additional two security questions for the UTR, apparently I failed one. (“Where were you living in February 2012?” – as someone who has moved around London a fair bit over the past few years, I suspect it was this one).

I was then told that I wouldn’t be able to receive the UTR number over the phone. But because I passed the first security questions I could update my address on the system and get it sent out in the post.

Hold on – so you won’t give me the number over the phone, as a one off, because I’ve failed one of your five security questions. But you WILL update my files on record with information I am giving you over the phone and then send out the information to that address?

Doesn’t. Make. Sense.

And when I suggested to the person I was speaking to that this didn’t make much sense (politely, may I add), I was given a lot of attitude and told that it did make sense and that was that. Oh, okay then. So my UTR number is in the post and will be with me in 10 days…

Why can’t I just log-in online, with details I could use for all government services, and find my UTR number there?

In a separate incident, a few weeks ago I realised that I had paid my VAT incorrectly for one quarter last year. Not deliberately, of course, but because the online system is so incredibly difficult to use that if you tick one box incorrectly the whole thing goes disastrously wrong.

Anyway, I realised that I had paid HMRC the correct amount, but on my VAT return I’d said that HMRC owed me the same amount (which it does not) – and it paid me the money back.

Again, I rang up the department to try and get this corrected. Can I do it online or over the phone? Of course not. I’ve got to write to HMRC to inform them of the mistake. I’ve got to send them an actual physical letter in the post.

These are not the digital experiences that we deserve as taxpayers. Especially considering we are actually people that want to pay our taxes!

Homer’s departure

One of the fundamental criticisms of Homer’s tenure at HMRC, after she joined from the HMRC_2293694bDepartment for Transport in 2012, and having served 33 years in the Civil Service up to this point, is that of her ability to deliver on customer service.

For example, in the first half of 2015 HMRC answered just 50% of its incoming calls. 50%! And this is despite previous criticism from the Public Accounts Committee, which called the department out for its “abysmal record on customer service”.

A more recent report said:

HMRC has consistently refused to set more demanding targets, however, and in 2014-15 it answered only 39% of calls within five minutes. HMRC did not provide us with any indication of when or by how much its customer service would improve, beyond a vague aim to improve year on year.

It acknowledged that people are more likely to pay the right tax when they find HMRC easy to deal with, but, in the words of its own Chief Executive and Permanent Secretary, “we are still struggling”. We are concerned that customer service levels are so bad that they are having an adverse impact on the collection of tax revenues.

Homer has taken the brunt of the blame for this.

Equally, in a previous role as the chief executive of the UK Border Agency, Homer was blamed for a “chaotic” immigration system by a group of MPs, which had a backlog that was said would take 24 years to clear. Homer denied she misled MPs during her time at the organisation, but either way, the systems there were also a failure.

Interestingly, in HMRC’s press release for Homer’s resignation, it cites both a recovery in customer service and an “ambitious transformation programme to digitise services” as part of her successes. Homer said:

After ten years as a Chief Executive and Permanent Secretary in the Civil Service, the start of the next Spending Review period seemed to be a sensible time to move on. HMRC has secured Ministerial support and funding for our ambitious transformation programme and it has the leadership team in place to deliver it. My successor will be able to put their full weight behind seeing the transformation through to 2020.

It has been a privilege to have been with HMRC during a period when the improved performance of the Department has been increasingly recognised and we have the full backing of Ministers for our future plans.

The future

Homer’s departure comes at a critical time for HMRC – given that over the next few years the department is going to have to have transitioned away from its multi-billion pound, multi-year outsourcing contract and created a new online tax system.

Aspire has been running for over ten years and has cost over £11 billion. It’s been the focus of much attention in recent years, given that HMRC is going to attempt to break this up and spread it across 400 smaller providers with no single supplier receiving more than £100 million. HMRC recently admitted that this was going to require an “injection of strategic-level experience”.

And a recent National Audit Office report highlighted the challenges facing the organisation, where it said:

HMRC managed its Aspire contract well (for outsourcing most of its technology projects and services since 2004). We praised HMRC’s strong track record in introducing new technology and providing continuity of its core systems that are essential to collecting tax revenue. However, we identified that the phasing out of Aspire presented significant risks to HMRC’s technology strategy if it cannot build commercial and technical capability before contract end in 2017.

In January 2015 the Committee of Public Accounts said that HMRC had made little progress in defining its needs and appeared not to appreciate the scale of the challenge. In March 2015, HMRC told the Committee it had set up direct commercial relationships with each of the major companies, Capgemini, Fujitsu and Accenture, who were previously part of the Aspire consortium. This was helping with some early transition work and controlling ICT costs. However, HMRC had not had formal sign-off of its business case for replacing Aspire.

Equally, George Osborne’s investment of £1.3 billion to transform HMRC into a digital tax organisation will pile on additional pressure. The National Audit Office notes that this too won’t be plain sailing. It said:

The transformation will be complex, and more radical than HMRC’s previous change programmes. HMRC already has an ambitious timescale to phase out the tax return starting in 2016, and this is just one part of its transformation plans. HMRC will need to balance ambition with realism about its critical assumptions and contingency planning.

success-failure-road-for-businessmanIt also has to manage significant operational change while it changes how it procures and manages its IT (including digital) services. Implementation problems are inevitable and HMRC will need commitment and resilience if it is not to be deflected from the delivery of its strategic vision, paragraph.

My take

It shouldn’t be underestimated the challenges that Homer faced during her time in Whitehall. It’s never easy being the person that gets hauled in from of Public Accounts Committees to take the blame for everything that’s gone wrong. That being said, a hell of a lot has gone wrong…

My plea to HMRC is to recognise that her replacement needs to be someone that not only has a track record of delivering on huge transformation projects, but also someone that understands what introducing digital capabilities to the department could mean.

Will the government be able to find someone interested for the job? That will be a challenge in itself…

HMRC has some excellent talent and it has proven to have some pockets of great innovation and capability. However, for the projects above to be completed successfully, it need someone at the top driving transformation throughout the organisation.