Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 40-59)



  40. It does seem to have been beset by problems because the take-up of this was well below what the target was. It was a tenth of what the target was.
  (Dawn Primarolo) Yes. Ironically the take-up had vastly improved this year and obviously one of the issues when we are clear on the security system—and I hope we will be soon—is that when we restore the line we will have to address again the question of take-up, because it has been very well publicised and obviously people cannot get on-line at the moment, so they know it is down and they know why.

  41. I do not want to rub salt in the wound but we saw the Irish system a few weeks ago.
  (Dawn Primarolo) Yes. The irony was I only saw you on the Wednesday and this happened the following weekend.

Mr Plaskitt

  42. It was never cause and effect?
  (Dawn Primarolo) I did not mean to imply that!

Mr Beard

  43. The question really is whether we are comparing notes because, first of all, they had a higher expectation of take-up than we seem to have and their systems seemed to work.
  (Dawn Primarolo) Well, I think we discussed when I last visited the Committee some of the differences with the Irish system and the discussions that had taken place between our officials and the officials in Ireland, and our system was going well, we were increasing take-up and it was a vastly improved system this year. Now this has occurred and it cannot go back on-line until we are absolutely satisfied. As I have said, I hope that will be soon and I think the Committee would be entitled to, and we would be happy to provide, a full explanation of how we think it happened and what we have done to secure the system.

  44. Is this interruption likely to have an impact this year on the number of people filing by the due date?
  (Dawn Primarolo) No.

  45. And will special steps be taken, given this will have diminished confidence in the confidentiality of the system, to reassure people?
  (Dawn Primarolo) Yes, of course. We will have to do that and make sure that we have contacted them and explained all the issues.


  46. We may have to return to this. Our visit to the Revenue has been postponed at the Revenue's request until the service is operational.
  (Dawn Primarolo) Well, if you decide you want to go before that, then that is for you to say to me and me to say, if you thought that would be helpful, because there are other parts of the service. I am not expecting this to take a long time.

  47. But if we go you are saying we will see something working?
  (Dawn Primarolo) Yes, I sincerely hope so. I am reassured you will.

Mr Plaskitt

  48. Quickly I want to look at another of the PSA targets, productivity gains, where you say in the report that you did not get to the target for tax processing work. Why do you think that was?
  (Dawn Primarolo) Increased workload on the staff that were already working. If we measured our increased workload and had a way of calculating that in this area and then measured against it, and that is not the way we are required to do it, we would be demonstrating very clear levels of workload increase and delivery of the system, but we continued to work with the same resources with greater demand on the system basically in that particular area, and to make efficiency savings would have led to a reduction in the service. You cannot have workload increase in proportion and at this point make those savings.

  49. Generally speaking, however, in any sort of business or enterprise, to get productivity results, you have to match staffing levels and resources with workload, and there is an optimal point. If the number of taxpayers is going up quite steadily and you have a fairly static work force or related work, is it the case that you are not getting a productivity because there is no chance of that work force meeting that demand, or are you going to have to increase the work force, in fact, to deliver productivity results?
  (Dawn Primarolo) Firstly, and we touched on this earlier on, there is this question of quantity and quality and our targets go, of course, across both in the sense of the productivity targets. In processing the returns, what we need to do as well is improve the quality alongside that, so in improving quality we have greater workload, and we have to see that alongside the productivity gains. We met our productivity targets on self-assessment but not for Pay As You Earn. We are doing more work on this, and it ties back to this question of not having clean data and having to chase a lot of information. If we had had it correct in the first place, that would have led to us responding and being able to reach all of these targets.

  50. Have you got quality targets built into the productivity measure, because I understand from the report that you are measuring productivity by a fairly simple equation which has two variables in it, the amount of work coming in and the number of staff?
  (Dawn Primarolo) We do have a quality measure alongside it, and our quality measure I am told went up by 1 per cent over the last year. Again, we can supply that information to you. It is really a straight choice here and a very difficult one because we are being asked to improve, rightly so, the quality of the service that we deliver—and this the problem of the Government making choices, where it has to, about spending. So with an increased workload with an improvement in quality it meant we did miss productivity in this one area. But, if we look at the Department across the piste, given the huge number of transactions and communications that they are dealing with as well as what the Revenue collect, I am satisfied that the Department is doing more than its level best, and that the people are working really hard to maintain both quality and quantity and produce earnings and productivity savings.

  Chairman: Can we turn now to the issue of non compliance?

Mr Cousins

  51. Is it your intention, Minister, to publish at a reasonably early date the counter fraud strategy that is referred to in your report?
  (Dawn Primarolo) What we are looking at is a high level strategic approach to counter fraud and evasion, and we have already had one attempt at this with the Grabiner report in trying to look at it. It is quite difficult to have specific targets when one is dealing with, for instance, profits, and the Department looking at raising corporation tax there but yes, it is the intention to have that strategic approach to fraud and evasion. I cannot remember exactly how Lord Grabiner phrased it but it is somewhat difficult in some areas, for instance the shadow economy, to calculate exactly what is out there that we should have collected.

  52. Indeed, but my question was not whether you were developing this strategic approach because the report makes it very clear that you are; my question was will you be publishing this strategy at an early date for Parliament to see?
  (Dawn Primarolo) Yes. My understanding is that the Inland Revenue Board will be considering these issues and then will report to me, and I think the intention is that that high level strategic approach would be made available.

  53. That it will be published?
  (Dawn Primarolo) Yes.

  54. Do you have any idea of timing on that?
  (Dawn Primarolo) I do not. Months, I am informed. I still have not had the information through to me but we are talking in terms of months, I understand.

  55. Is it your intention that this strategy should contain some kind of fix on the size of the shadow economy, precisely these issues you have referred to that Grabiner raised in his report, and on the level of tax floor generally?
  (Dawn Primarolo) Lord Grabiner said that you could not fix how large the shadow economy was. In the specific work he was commissioned to do—I cannot remember exactly his phraseology on this—he said that it was not actually possible to put a figure on what was there to be collected if only you were out there collecting it.

  56. But a range of figures?
  (Dawn Primarolo) He even said that a range of figures, given the nature of the shadow economy, was not possible given that we commissioned him specifically to look at that. Then it raises the question of how can we be sure—

  57. That you are tackling it.
  (Dawn Primarolo)—that we are tackling it and that we have an approach, although we may not know exactly the quantity but there is no doubt that it is out there, of increasing our effectiveness in that area. It is somewhat different, for instance, if we look at cigarettes. Customs and Excise know how many cigarettes are produced because that is what they collect information on and, for instance, when you are dealing with company profits it is somewhat more complex and not necessarily an exact science. What we need to have and what we are working to is that strategic approach that demonstrates how we are countering fraud and evasion.

  58. Surely the Joint Shadow Economy teams which are now at work in various parts of the country must be producing some kind of indicators of the size of the problem?
  (Dawn Primarolo) What they are engaged in is encouraging and bringing back into the formal economy those who have been operating outside of it and measuring the success of companies, self-employed people in fact coming on to the books, if you like, does not necessarily give us an indication of how much more is still out there, how many people are actually on PAYE but might also be working in the shadow economy as well.

  59. Is it intended to have a report on the work of the Shadow Economy Teams?
  (Dawn Primarolo) Yes. I think that I have just seen, which is coming to the Committee as we promised, a further report—I think you asked me to do it on a regular basis—on the closer working and the areas of activity and what was being produced in those areas. I think that will be with you soon. I think I signed that off yesterday.


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