HMRC has “big challenge” to meet 25% cuts, says NAO

HMRC faces a big challenge to cut its running costs by £1.6bn and staff numbers by 10,000 over the next four years while having to increase revenues, according to a report from the National Audit Office.

Released yesterday, the report says the revenue has already reported savings of £1.4bn since 2005. It must cut its running costs by 25 per cent from £3.5bn between now and 2015 meaning a cumulative saving of £1.6bn.

The report adds says the cost cutting measures and the wide ranging changes already underway at the Revenue – which range from updating IT systems to reducing sickness absence – “carry significant risks”.

It says: “Its recent experience of implementing the new PAYE system emphasises the importance of robust strategies to mitigate the risks.”

It adds that HMRC has made no allowance in the plans for under-delivery on its targets and it has no reserves to draw on.

National Audit Office head Amyas Morse says: “Reducing costs by £1.6bn over four years is a big challenge for HMRC. It is making progress but there is no contingency in its plans. To achieve value for money, it needs to better define the service it is aiming for, improve its understanding of costs and develop its implementation plan.”