In this edition of eNews, we look at a scathing report on HMRC’s customer service levels and the review of the Loan Charge commissioned by the government.. There is also news on the UK jobs market, an upgrade to the nation’s economic outlook, business confidence for early 2025 and pensions reform to update you on.
- Parliamentary watchdog accuses HMRC of deliberately ‘degrading’ phone services
- Labour market challenges remain as wages grow
- IMF upgrades UK’s economic outlook
- Government commissions review of the Loan Charge
- UK firms expecting slowdown
- Pension reforms to ‘unlock billions’ for government growth agenda
Parliamentary watchdog accuses HMRC of deliberately ‘degrading’ phone services
Parliament’s spending watchdog has accused HMRC of deliberately running down its phone services to force people to go online, according to a report.
The Public Accounts Committee’s (PAC) report into HMRC’s customer service levels found that the average call waiting time has passed 23 minutes.
It also found that 44,000 customers were cut off without warning after being on hold for more than an hour last year.
The report said:
‘HMRC’s customer services have deteriorated even further since this Committee last reported a year ago.’
It continued:
‘HMRC says it has not been adequately resourced to meet telephone demand from customers, but it must take responsibility for its own failings to offer sufficiently effective digital services to customers. We are concerned that it has sought to degrade its telephone service to drive taxpayers to digital channels.’
It added:
‘HMRC has been too willing to let its telephone services fail in the hope this forces people to use its digital services instead.’
The PAC report made this recommendation:
‘HMRC should ensure it understands how far its digital services can replace telephone services and what level of telephone service it needs to retain to meet customers’ needs – including those of small businesses. HMRC should ensure it meets a minimum level of service for all customers, including those seven million customers HMRC estimates can’t use digital services.’
Internet link: Parliament website
Labour market challenges remain as wages grow
The UK labour market remains challenging as employers cut staff numbers and wage growth accelerated, according to the latest data from the Office for National Statistics (ONS).
Average weekly earnings in the three months to November were 5.6 per cent higher than a year earlier, both including and excluding bonuses, the ONS said.
Payrolled employment fell by 0.1 per cent between October and November and was 11,000 lower in the three months to November than in the previous quarter, said the ONS
Early estimates for December suggest a bigger month on month drop of 47,000 to 30.3mn in the payrolled workforce.
Jane Gratton, Deputy Director Public Policy at the British Chambers of Commerce (BCC) said:
‘The labour market continues to be challenging for many businesses, with wage growth continuing to rise as firms compete for skilled workers. This is a concern as they face a significant rise in employment costs in April.
‘However, there are also signs of further loosening as unemployment ticks up, vacancies continue to fall and economic inactivity dips.
‘The full impact of the changes to national insurance and the minimum wage, announced at the Budget, won’t be fully seen until later in the year. However, the warning lights on recruitment, employment and training are already flashing.’
Internet link: ONS website BCC website
IMF upgrades UK’s economic outlook
The International Monetary Fund (IMF) has upgraded its growth forecast for the UK economy this year.
The global institution upgraded its prediction for UK growth to 1.6% for this year from its previous estimate of 1.5%.
As well as upgrading its outlook for the UK, the IMF suggested the UK economy would perform better than European economies such as Germany, France and Italy over the next two years.
However, the latest IMF figures suggested the UK economy had weaker growth last year than the organisation had expected.
Rachel Reeves, Chancellor of the Exchequer said:
‘The UK is forecast to be the fastest growing major European economy over the next two years and the only G7 economy, apart from the US, to have its growth forecast upgraded for this year.
‘I will go further and faster in my mission for growth through intelligent investment and relentless reform and deliver on our promise to improve living standards in every part of the UK through the Plan for Change.’
Internet link: IMF website HM Treasury website
Government commissions review of the Loan Charge
The government has commissioned an independent review of the Loan Charge.
The Exchequer Secretary to the Treasury made a Written Ministerial Statement announcing that Ray McCann, a former President of the Chartered Institute of Taxation, would lead the review.
The review will examine the barriers preventing those who are subject to the Loan Charge but have not already settled and paid their tax liabilities in full from reaching resolution with HMRC. It will recommend ways in which they can be encouraged to settle with HMRC.
The reviewer will report and present their recommendations to the Exchequer Secretary to the Treasury by summer 2025.
However, the announcement drew criticism from campaigners.
Steve Packham, from the Loan Charge Action Group, said:
‘What the government has announced today is not a review at all, as it actually astonishingly excludes reviewing the Loan Charge. It is a complete sham and a betrayal of the promise made by Rachel Reeves last year.
‘The terms of reference start by justifying the Loan Charge and the whole approach taken and instead of being any review of the issue and scandal, is just about how people can be persuaded to give in and pay the unfair and disputed demands. This will not only not get to the truth, it will not resolve the matter and cases will unfortunately drag on and on.’
Internet link: GOV.UK Loan Charge Action Group website
UK firms expecting slowdown
UK firms are expecting to reduce both output and hiring this quarter, according to a survey conducted by the Confederation of British Industry (CBI).
Activity has been flat or falling since the middle of 2022, reflecting a prolonged period of stagnation.
The survey suggested that sentiment among businesses dipped in the aftermath of the Government’s Autumn Budget.
Some businesses said that the tax rises had resulted in them reviewing their budgets at short notice and taking steps to mitigate higher costs.
Plans include raising prices to pass on additional costs to clients, trimming investment plans and cutting staff to reduce business expenses.
Alpesh Paleja, Interim Deputy Chief Economist at the CBI, said:
‘After a grim lead-up to Christmas, the New Year hasn’t brought any sense of renewal, with businesses still expecting a significant fall in activity. Alongside plans to cut staff and raise prices further, this risks an increasingly awkward trade-off for policymakers.
‘Anecdotes suggest that companies are being hit by lacklustre demand and caution among consumers, while also continuing to adjust to measures announced in the Budget.
‘There is an urgent need to get momentum back into the economy. The government can help shift the UK’s economic narrative with more determined focus on measures that could drive growth.’
Internet link: CBI website
Pension reforms to ‘unlock billions’ for government growth agenda
New rules that will give more flexibility over how occupational defined benefit pension schemes are managed, according to the government.
The government said this will remove blockages that are inhibiting its growth agenda.
Approximately 75% of schemes are currently in surplus, worth £160 billion, but restrictions have meant that businesses have struggled to invest them.
Where trustees agree to share a portion of scheme surplus with a sponsoring employer, the employer may choose to invest these funds in their core business, for example to purchase equipment or supplies, and/or provide additional benefits to members of the pension scheme.
Prime Minister, Keir Starmer said:
‘The number one mission of my government is to secure growth, drive higher living standards for everyone, and get more money into people’s pockets.
‘To achieve the change our country needs requires nothing short of rewiring the economy. It needs creative reform, the removal of hurdles, and unrelenting focus.
‘Whether it’s how public services are run, regulation or pension rules, my government will not accept the status quo. Today’s changes will unlock billions of investment, pushing forward in delivering my Plan for Change.’
Internet link: GOV.UK
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