Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 100-119)



  100. I see. The Chairman said he has an agent and you answered a question earlier on and said that large income people do not do their own, they use agents, but I tend to do my own because I think if this place passed a rule that it should be self assessment I would like to see a rule that we are forced to do our own and then we will realise what people have to go through and what awful forms we first developed and how difficult it is to fill them in. I am glad to hear you say that the forms are going to be easier.
  (Sir Nicholas Montagu) The forms are going to be a lot easier, Mr Jenkins, particularly in the way that I described. In future we will even stop thinking of them as forms because they will be much more directly interactive. It will be Brian Jenkins on the screen and never mind the paper that there used to be.

  101. Excellent. When you do advertising you must do an assessment between the value you are going to get from TV advertising and the value you are going to get from putting fliers in with the normal tax demands. Which have the greatest impact?
  (Sir Nicholas Montagu) TV by far. Fliers are relatively cheap, and that is why we do them, and radio is cheaper than TV. TV is famously the most expensive medium but it is also famously the highest impact medium and before having any campaign we would always trial it to see what the impact was and see how people reacted to it. Again we use the Central Office of Information as our agent. We would have a competition to choose the company which offered us the best deal on what we judged to be the highest impact campaign.

  102. So even though you were only targeting a small number of people and you were targeting an even smaller actual number of active individuals, the ones who deal with people's tax returns, you still found that TV was the way to approach them?
  (Sir Nicholas Montagu) Remember we are targeting potentially nine million people. That is approximately a third of all taxpayers. Yes, it is worth it. If I can just stray slightly from my brief and remind you of our previous discussion, when we were talking specifically about self assessment. By following up all the people who had not returned forms by March last year and whom we would have expected to, we got in £208 million extra by the end of April and `that ain't hay'. It really is worth reminding people because it is not only the forms they have to get to us by 31 January, it is the money too.

  103. And the fine, yes. You answered one or two questions but I did not get the answer that I felt we required. If I were going to put a project together I would want to know when the break-even date was, when I could start saving. Although I see some savings in the Report, I am not sure I have read where we expect that my savings line overtakes my expenditure line and I start to make a profit. When did you anticipate this would occur?
  (Sir Nicholas Montagu) I cannot, Mr Jenkins, I am sorry. Again, I do not want to be unhelpful to the Committee, but it does go to that very difficult point of predicting customer behaviour. Every single public and private sector body that I know of—and again I think this is a point that Sir John makes—has not succeeded in accurately gauging likely levels of take up. What I am trying to do, and I shall be discussing this with my Treasury colleagues and ministers, is to break down that 50 per cent target that I described as "crude" to what we might reasonably set ourselves as targets for different groups.

  104. Okay, so you are sat around a table and you are discussing it and you say, "This will be a great idea, we will put this IT system in." Somebody says, "How much will it take? How many savings will it make?" "Oh, not a penny." I do not believe that as a scenario. I believe that someone set bands of take-up and pay-back date.
  (Sir Nicholas Montagu) I hate to disillusion you, Mr Jenkins, but we did not. We have been absolutely straight with the National Audit Office on the figures and they are reflected in Sir John's Report. We are committed to savings from internet services of 1,300 people which represents £30 million a year. I do come back to the point I made previously. The 1999 White Paper on Modernising Government contained the Prime Minister's wish to make this country the best to do business electronically, and the targets stem from that. What we have to do as a government department is to ensure that by 2005 we have the infrastructure in place that makes it possible for people to file their returns, access their data, make payments and communicate with us electronically, and that is what we are doing.

  105. I do not want to go down the realm of discussing what the Prime Minister or any other minister said, but are you honestly telling me that the British state at the present time does not have a priority for how it spends its resources and that we do not have to put schemes up to get a best value purchase out? We could have picked a plethora of electronic information delivery systems in this country and poured money into them with no expectation of a return whatsoever. Hopefully, we have a panel or someone sitting there to pick if not winners not every loser with the basis for a plan which you submit an application for the resources to be given to you?
  (Sir Nicholas Montagu) But I do not think it works that way, quite honestly Mr Jenkins. What I am not saying is that we do not have a rigorous business appraisal of every project. We do—and Barry could go into details if you wanted. Equally, what I am saying is I do have to go back to the Prime Minister's commitment because as civil servants we are here to deliver Government commitments, and one of those commitments is that by 2005 the Government should make it possible for all transactions between it and its citizens to be electronic. What we are doing is playing our part in delivering that commitment.

  106. Okay, albeit we are not sure what it is?
  (Sir Nicholas Montagu) I am absolutely sure, I have enunciated it; by 2005 everybody will be able to file their returns, access their data, make payments and communicate with us electronically. That is the totality of the transactions.

  107. I have just been given my two-minute warning so I have got be quick on these next ones. The next thing I have got a worry about is the expansion rate. I would have alarm bells ringing, but then again I was spending a company's money in the private sector so they wanted quick returns as much as possible. This is an inclusive deal and we have to make sure there is no social exclusion. We know that society is going to expand its usage of electronic projects. What expansion rate do we use nationally, because this must be part of a wider business and personal usage? I do not just mean e-mail but on effective usage of the system, what predictions have we got?
  (Sir Nicholas Montagu) I am sure that there are national projections of the increase in internet usage but I come back to the point that I made earlier—it is notoriously difficult to predict and nobody has succeeded in predicting internet usage for a particular purpose. Sir John cites the example of the State of California with a very simple flat rate tax.

  108. That is more worrying. I will get back to simpler ones which I think are within your control.
  (Sir Nicholas Montagu) Good.

  109. As the electronic revolution expands so does the demand on staff. How difficult is it now to retain staff and get staff who understand and can run these systems?
  (Sir Nicholas Montagu) As our business manager in this area, Terry is best placed to give you a detailed answer. More generally, it varies around the country. As Sir John's Report notes, we had to move very quickly to get the people in Terry's Electronic Business Unit properly skilled up and it remains a top priority that they should be properly skilled to provide services to the public. Terry, would you like to amplify that?
  (Mr Hawes) I would only say that the Electronic Business Unit is located in Yorkshire where we have a better opportunity to recruit the people. It has expanded rapidly and that itself is a challenge in getting the people trained and so on, but we are conscious of that problem and so far we have tackled that very successfully.

  110. Can I ask for one expansion on that. Would you say that it is easier and you get the right level of staff at the right pay rates outside the South East?
  (Sir Nicholas Montagu) Yes, that is generally true. Plus of course, Mr Jenkins, to schmooze you but at the risk of alienating the rest of the Committee, you get a better class of person in Yorkshire!

  Mr Jenkins: I shall not comment on that.


  111. Thank you. Mr David Rendel from Berkshire.
  (Sir Nicholas Montagu) You are not bad there either!

Mr Rendel

  112. We are fighting back. Can I ask you to turn to Paragraph 3.18 on Page 24 to start with. There are four different comments about how to run these schemes. I am interested in the third one there "keep initial publicity to a minimum". Is that a good idea to start off a scheme by keeping initial publicity to a minimum?
  (Sir Nicholas Montagu) I think with some schemes it makes sense. With a scheme that you are starting off almost experimentally where you do not want to be swamped by demand, where you want to be able to have a gradual start in order to apply the build and learn approach, I think that restricted publicity can make sense. With something like filing for self assessment electronically, which was a major Government undertaking, it would have been wrong to restrict publicity.

  113. If it is ever right because you need to restrict the amount of usage why do you not do it by piloting it in small groups rather than restricting the publicity? It is sheer chance which ones take it up.
  (Sir Nicholas Montagu) We do that too, Mr Rendel.

  114. You said that in some cases it was right to restrict publicity in order to make sure that not too many people use the system. If you want to make sure that not too many people use the system why do you not restrict it to a small number?
  (Sir Nicholas Montagu) We do that too. For example, the e-CT portal I mentioned is at the moment being rolled out to 20 companies on a trial basis.
  (Mr Hawes) There are practical difficulties with trialing an internet service, almost by definition. There are things you can do but the medium is not entirely under our control and we have software houses who release products and so on.

  115. Surely on the internet system you could say "this system can only be used by those whose names begin with an A"? Indeed, it is my understanding that in order to use the system at all you had to send out a CD. So you had a way of stopping more than a certain number having it and using it.
  (Mr Hawes) Two years ago it would have been very difficult for us to select individuals from around the country whom we were happy to use our system. That would have been very very difficult and potentially controversial. The technology we have now allows us to work with groups of people through the development phase and then use the technology to let them have the service. It will be invisible to anybody else. Then we can let everybody else see it while the trialists use perhaps a further development that other people cannot see. The technology has helped us to do exactly what you are suggesting much more efficiently.

  116. It does seem to be terribly hit and miss to keep initial publicity to a minimum. You have no idea then who is going to see it. You are completely at the whim of the public or whoever happens to look at the advert. Indeed, you do not even know how many. Just by keeping publicity to a minimum you have no real idea of how many people are going to see the publicity anyway. It is very hit and miss.
  (Mr Hawes) If I can reiterate, we did not have and I do not think anyone had two years ago technology which would sufficiently support that sort of operation. It could have been done but very messily and with great difficulty. We now have the means to do that effectively.

  117. It could have been done by not sending out CDs to more than a certain number of people. You could have said in your publicity "Only the first 100,000 will be allowed the CD-Rom".
  (Sir Nicholas Montagu) Our main concern, Mr Rendel, is with outcomes here, that in the sort of situation that the Comptroller and Auditor General describes, we need to see how a new service works. We do sometimes do it in the way I described. For example, we are trialing external e-mail on a very, very limited basis at the moment, not through limited publicity but in a more targeted way between certain of our offices.

  118. Sir Nicholas, I am not suggesting for a moment that you do not sometimes have to do it through small groups, the point is how do you choose that small group. It seems to me that just keeping publicity to a minimum is a very hit and miss way.
  (Sir Nicholas Montagu) It is one way. What we are really after is not a particular group but it is making sure that a system is okay before we roll it out more widely.

  119. It comes back to the way you choose the group.
  (Sir Nicholas Montagu) Yes.

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