Ministerial briefing - Fees for access to public services by telephone (in particular HMRC, also DWP agencies)

I quote below a briefing message sent to Ministers in the Treasury with responsibility for HMRC and Tax Credits.

Sent: 07 June 2010 06:54
To: Justine Greening MP - Economic Secretary – HM Treasury; David Gauke MP - Exchequer Secretary – HM Treasury

Ms Greening
Mr Gauke

Briefing from: David Hickson - Public Services Campaigner

I am perhaps best known for my work on seeking to expose and expunge the scandal of charging for access to NHS services through use of expensive telephone numbers. My focus on this issue does however extend across the public sector. The NHS Constitution prohibits charging fees for access to NHS services, by statute. I understand that no such constraint applies to HMRC services such as Tax Credits, or to the services provided by DWP agencies.

This briefing is intended to draw your attention to the fact that HMRC deliberately charges users for access to its services by telephone. Exactly the same situation applies across many DWP agencies, so all of my comments may be taken as being generally, if not specifically, relevant to them also.

I understand that you hold ministerial responsibility for development and implementation of government policy in relation to, respectively, Tax Credits and the activities of HMRC. I copy your ministerial colleagues holding equivalent responsibilities for the DWP agencies.

0845 numbers

Most HMRC (and DWP agency) telephone services are provided using 0845 telephone numbers. These numbers are all subject to "revenue sharing", whereby the call originating telephone company pays over an amount of additional money to the "terminating" telephone company, i.e. that serving HMRC, at an agreed rate per minute with each call.

Whether the telephone company serving HMRC pays on this benefit in cash, or reflects it in a discount, or a waiver of charges that would otherwise be levied, on services provided, is immaterial. If HMRC is allowing its telephone company to retain this money or if it is being directed elsewhere, then this is an even greater scandal. One therefore hopes that receipt of this financial benefit would not be denied.

Most originating telephone companies reflect this additional cost to them in surcharged rates for 0845 calls. As the largest provider (originating nearly 25% of telephone calls) BT is uniquely regulated to prevent it from doing so. To evade this regulation, BT now offers 0845 calls as inclusive in its packages. This enables a value equivalent to the surcharge to be reflected in its calculation of the bundled price charged for the package. This can be seen from the fact that the price of BT packages was increased a few weeks after 0845 calls were made inclusive in 2009.

Wherever a 0845 number is used, callers are subsidising the costs of the organisation called through surcharges on their telephone bill. This subsidy is obtained indirectly and the cost is generally part of an aggregate call charge, although it may be further hidden within a bundled package fee. Furthermore, the benefit received may be concealed by a discounted, or waived, charge for services, rather than in a potentially embarrassing “cashback”. (DWP made the switch from the latter to the former some years ago; the COI formally recommends this concealment of the benefit.)

This is nonetheless a service fee and should be clearly declared as such. It applies regardless of the total call cost incurred, which will of course vary as a result of the caller's choice of telephone service provider and tariff. It is important to understand that, put simply, the actual cost of calling any 084 number invariably includes two components representing: the amount retained by the originating telephone company itself, and the surcharge which is passed on to the benefit of the recipient of the call. Under current regulations there is no requirement to show these separately.

Alternative geographic numbers

There may have been doubt about whether HMRC is collecting this service fee deliberately. I must report having now discovered that that it is.

HMRC publishes some "geographic" numbers for use by callers from overseas, e.g. 01355 359007 as an alternative to 0845 300 3900. Those who try to access the services from the UK using these numbers are told to re-dial using the 0845 number.

I had, perhaps naively, assumed that this could be because these numbers offer some service features properly reserved for the exclusive benefit of overseas callers, e.g. shorter waiting times or specialist advisers. I have now confirmed that this is not the case. These numbers place callers in exactly the same queue to be answered by the same agents as those calling the 0845 number. The only reason for requiring UK callers to redial therefore is so that HMRC (through its telephone service provider) may benefit from the "revenue share", with the consequence that callers incur a higher charge.

I understand that the geographic numbers are provided because it is not possible to dial +44 845 from all international locations. They give exactly the same access as the 0845 numbers, but specific measures are in place to prevent UK callers from using them. This same revenue protection technique is used by many private companies with premium rate service numbers.

Deliberate imposition of a fee to access public services

Having been rather gentle in my representations on this matter in the past, I am now absolutely furious to learn that HMRC is deliberately levying a fee for access to the services it provides by telephone. I now know that there is no other reason for denying access to UK callers through the geographic numbers.

The service referred to above is the "Tax Credits Helpline", only one example, but perhaps the most disturbing in the context of HMRC. Whilst many benefit claimants may complain about paying their own telephone service provider whilst waiting in a lengthy queue for their enquiry to be handled, they may see it as a scandal that they are also required to pay at a premium rate to the benefit of HMRC (and similarly DWP agencies) for whatever may be the entire duration of the call. At the very least, the fact that this fee is imposed on benefit claimants must be openly declared.

Under present regulations it is not possible to specify the amount of the surcharge incurred, as this is seen to vary between providers. Furthermore, the extent to which some providers profiteer on the back of those who directly benefit from revenue sharing may be seen to be commercially confidential. Some might comment how convenient it is that the scale of this Stealth Tax has to be kept secret! Others would say that the only valid taxation is that which is open and transparent and it should not be subject to profiteering by those who collect it indirectly!

Is this government policy?

This matter was brought to the attention of the previous government in respect of both HMRC and the DWP agencies, which operate in very similar ways. The issue was under some type of formal departmental review in both cases when the previous government resigned.

By copy of this message, I bring my discovery of the deliberate nature of what is being done to the attention of officials in both Departments and (by blind copy) to many MPs with constituents who are known to have relevant concerns. With principles of equity and fairness underlying all that the present government is seeking to do, I am sure that this matter will receive the most urgent possible attention, according to the importance which is attached to it.

I also copy the Chairman of the Contact Council, a body within the Cabinet Office, and to the relevant CO officials and the Minister. This body started work on addressing this issue for the public sector as a whole over twelve months ago. After benefitting from my active engagement and support, that work has apparently been abandoned with no outcome whatsoever. Information from Departments that was due to be provided to it by last July has apparently still not been received.

The Contact Council is charged to ensure that Departments (and all other public bodies) are aware of the fact that 03 numbers should now be used where the benefits of a non-geographic number are required and a service charge on service users is not appropriate. 03 numbers are cost-neutral in respect of the relationship between the caller and the called and are therefore suitable for use where no fee is to be charged for access to a service provided by telephone. By regulation, revenue sharing is prohibited on 03 numbers and the cost of calling cannot be any greater than that of calling a geographic number. The latter requirement applies to all types of telephone service and covers the terms of call-inclusive packages.

The essential facts are now well known and recognised – I do not believe the work that has already been done yielded no information whatsoever. I believe that the new government must immediately establish a position of principle on whether these service fees are to be allowed to continue. Detailed points about the level at which they set, to which service users they are to apply and the when and how of them perhaps being withdrawn, can be addressed in due course for each particular case.

If the fiscal situation demands that benefit claimants and other users of public services accessed by telephone must continue to pay service fees to the provider agency, then let us at least be able to discuss this openly and honestly. One is led to understand that the political gimmick of Stealth Taxation has had its day.

Perhaps the forthcoming budget statement would provide a good opportunity for the government to announce that this Stealth Tax on benefit claimants and those who question their taxes is now to be brought out of the shadows and confirmed as one of the measures being used to address the deficit. Its recognition may help the programme of deficit reduction further, by providing an open disincentive to claim benefits or challenge tax demands.

If one change to our way of life will be accepting that we must pay fees to access public services, when this has previously been done in secret, then that is for the government to propose to parliament and perhaps debate with the people.

To help encourage and inform such public debate, I copy this message with a statement to the media.

I will be delighted to help anyone with further information and comment on this matter. I also remain happy to assist in any way I can to ensure a proper and sensible resolution of this issue.