Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 80-99)

SIR NICHOLAS MONTAGU KCB, MR BARRY GLASSBERG AND MR TERRY HAWES

MONDAY 18 MARCH 2002

  80. What is the figure? You have given a figure of £3, as I understand it, at the moment but I am not quite sure, what is the figure you would envisage later on down the line?
  (Sir Nicholas Montagu) For the reasons that I gave earlier on, what we are talking about here is a long term investment. The difficulty is that we have obviously to keep all sorts of channels of communication for doing business open at the moment. We are putting in the infrastructure for doing business with us electronically at the same time as we are carrying on looking after the good citizens of Pollok by letting them call into our enquiry centre, letting them file by paper, or whatever. Does that answer it, or not really?

  81. Not really, actually.
  (Sir Nicholas Montagu) What about the 1,300 figure Sir John gives, does that help?

  82. That is quite helpful. You think there would be a saving of 1,300 per head in costs?
  (Sir Nicholas Montagu) That is not Sir John's figure. That is the figure we gave as the staff savings in very plain terms for the number of people carrying out clerical and processing tasks on a 50 per cent across the board take-up.

  83. £1,300 per what?
  (Sir Nicholas Montagu) No, 1,300 people.

  84. Sorry, I misheard you. That would work out as being how much of a saving per person who was lodging in that way? Rather than pursuing this now, would it be possible to get a note on that?
  (Sir Nicholas Montagu) I do not think I could be much more helpful in a note than I am trying to be now. Look, try it this way: if 50 per cent of our transactions were carried out electronically we would immediately save 1,300 people, which represents £30 million a year. Over and above that there would be savings, which I cannot quantify at the moment, on things like postage and stationery. Over time if take-up increased and we saved more, then correspondingly you would save on things like telephone calls and ultimately you might save on accommodation. Because it is long term investment I cannot really give you more precise figures than that.

  85. Okay, I understand that. Can I make one point on advertising, you may or may not be aware that you won an award, apparently, from Marketing Magazine for your Mrs Doyle advert?
  (Sir Nicholas Montagu) That it was the most irritating. I was absolutely thrilled. People remember annoying advertisments.

  86. Is that necessarily the image that the Inland Revenue want to have?
  (Sir Nicholas Montagu) You have to put this in context, Mr Davidson, Mrs Doyle is not the successor to that odious little Hector. The Committee know from my previous appearances that I could bore on forever about Hector, which is why I compulsorily retired him. There is a very serious point here. Hector was brilliant at what he was brought in to do, which was to raise self assessment awareness. He became associated with the Revenue, and a white, middle-aged, male stereotypical taxman is not the image for the 21st Century Revenue. Mrs Doyle was a one-off to remind people—

  87. Thank God for that!
  (Sir Nicholas Montagu) She did awfully well. We actually reversed a downward trend in filing by the due date. She served a dual purpose, reminding people of deadlines—I will not attempt the accent—and encouraging them to, "go on-line, go on-line, go on-line".

  88. I will not pursue that.
  (Sir Nicholas Montagu) Sorry to disappoint you, you might have tempted me at one time.

  89. Can I turn to the question of specialist staff? There is a point made in 3.19 and onwards about staff skills and difficulties. It indicates in one of them that EDS, 3.21, had some difficulties in finding staff. Can you clarify for me whether or not any penalties descended upon EDS? Was there any difficulty caused to the whole process because EDS could not find appropriate staff and if so where were the penalties and what were they?
  (Sir Nicholas Montagu) Our contract provides for penalties when EDS fail to deliver contracted levels of service, and that did not happen in this case. What happened was in 1999 there was a peak of activity among the dot-coms. I took this up with Dick Brown, who is the Chairman and Chief Executive of EDS, as being an issue that we needed to resolve. They resolved it in a way that I think is extremely interesting, which is by teaming up with EzGov, who are small and whizzy and internet-literate, which complemented the traditional EDS skills very successfully. As Sir John notes in his Report, we got EzGov to do us a report on what people did and did not like about self assessment, and acted on it.

  90. The final point I want to raise comes back to the point Mr Bacon touched upon, it is the question of professional advisers. Given what you have said it would be reasonable, would it not, for anybody who has a professional adviser to expect a cut in fees in the near future if they are filing, given that they have the option to file electronically which is easier and, presumably, cheaper?
  (Sir Nicholas Montagu) I think that people would be entitled to ask their professional adviser if they filed electronically for them how much time they need to do that compared to doing it under the old traditional way.

  91. If they were not filing electronically it would be reasonable to ask the adviser why not?
  (Sir Nicholas Montagu) That would be up to the individual, certainly.

  92. What sort of saving do you anticipate would be reasonable?
  (Sir Nicholas Montagu) I do not have at clue, Mr Davidson, I just do not know. A lot would depend on the complexity of the individual's affairs.

  Chairman: Thank very much, Mr Davidson.

Mr Jenkins

  93. Good afternoon, I do not want to be cynical, you did not want the image of being white, middle-class tax inspectors?
  (Sir Nicholas Montagu) Yes.

  94. I look across at the three of you and think—no, you did not! We are the same.
  (Sir Nicholas Montagu) You will also know, Mr Jenkins, that the Inland Revenue is the leading Department in Whitehall on diversity and that I am the Permanent Secretary Champion across the Civil Service for the subject.

  95. Excellent. If I can put one or two things past you. They might seem like repeat questions but I want to take it from a slightly different angle. When I heard `build and learn' I thought it was just `suck it and see' but it is not, it is different, is it not?
  (Sir Nicholas Montagu) In our young days, if you will forgive me for bracketing us together generationally, it might have been called `trial and error'. There certainly is an element of suck it and see. The point that I must make is that we would never, never introduce any release of systems or anything new unless we were satisfied through pre-release trialling that it was fit for purpose. One can certainly, particularly with the internet, do things much more provisionally now because you know if it is not absolutely spot on you can put it right very quickly and very easily through this iterative process.

  96. That is good because at one time IT to us just meant `pay up and look happy'. Each project was a major project, we paid up, they put it together, it fell over, and we did not know that at the start. With this system of build and learn it is like a Lego set; you build each component part and each part is tried so we should not have any major fall overs.
  (Sir Nicholas Montagu) That is right. We would always trial it before release but, equally, after release if we pick up a blip or if we pick up particularly that our customers using the service are not happy with something, we can put it right very quickly indeed. Again, if the Committee will not find me tedious on this, the e-CT portal that I described is a prime example. The Committee may find me tedious on it, my own Department find me tedious, but I boast because it is one of the few things where I have made fellow tax commissioners green with envy.

  97. Can I take you to something which is probably outside your remit, but it is certainly something you should have considered. At the present time access to broad band and digital TV is not going very well, particularly in the private sector. There is a certain company that has got into a lot of debt and there is a merger. I have got the awful feeling that this is not going to go as fast as we thought it would. In fact, some of it may fall over. You must have done a risk assessment on this proposal—what if this does not roll out as fast or if access is not available—so what conclusions have you come to?
  (Sir Nicholas Montagu) I will ask Terry to comment on the more detailed technical side in a moment, although obviously we will not be commenting on particular companies. More generally, if broad band were on the scale that it is, let's say, in Singapore or in Canberra, the Australian Capital Territory, we would have a great deal more scope. We would not be starting from where we are now. What we aim to do is in all things to make our systems robust. We recognise that there will be developments absolutely outside our control and that is why in particular we do still have a whole range of services, including a range of electronic services. To take the very obvious example, picking up three from Sir John's Report, we now have electronic data interchange, electronic lodgement and use of the internet, so we try to make a broad range of options available and to make sure that what we provide is robust against any future developments. Terry, do you want to add anything on Mr Jenkins' specific point?
  (Mr Hawes) Only a very brief point. The risk reduction that we try to run here is that the services which are most dependent on broad band type access we provide over the electronic data interchange service, which has much greater capacity and speed. The self assessment tax return message that is sent to us is very, very small and therefore broad band access is fairly irrelevant to that particular service.

  98. Okay. I find the service we have got at present, particularly for my part of the world, slow, difficult and at times I cannot even access it. If you are happy that that awful standard is allowed to continue without us getting at least a digital TV system up or broad band system up and running, I think we have got difficulties in the private sector.
  (Mr Hawes) What I was suggesting was we would love to see widespread broad band access but on the particular services that are most vulnerable to lack of carriage capacity we do have the alternative EDI services which do not suffer that problem.

  99. Could I ask you, Sir Nicholas, on self assessment; do you do your own?
  (Sir Nicholas Montagu) No, I do not. I am a represented taxpayer.


 
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