Public Accounts Committee
Thursday 29th October 2026
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10:20
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
Good morning everybody. Order, order! Welcome to this session of the Public Accounts Committee on Thursday the 29th of October 2026. Child benefit supports around 6.9 million families and 11.7 million children, with 13.3 billion paid out in 2045 makes it one of the largest individual benefits HMRC pays out. HMRC must protect public money from fraud and error, while ensuring that eligible families receive the support support which they rely. In 2025, HMRC began using the Home Office travel data to identify claimants who might have moved overseas and no longer be eligible to child benefit.
Whilst this was an innovative attempt to address the estimated 270 million in fraud and error, the rollout of this intervention was poorly handled and led to avoidable hardship for thousands of legitimate claimants. More than 8000 eligible claimants had their payments suspended without warning, and while many faced a difficult and stressful process to prove their legitimate entitlement, today the committee will examine why HMRC altered the approach used in its pilot without adequately assessing the consequences. Whether it's government and safeguards are now strong enough, and how the government can use data innovatively to tackle fraud and error while protecting payments to legitimate claimants.
So before we start, I'd like to extend a very warm welcome to Catherine West, who's joining us as a member of the Treasury Select Committee, as one of our guests. So warm. Welcome, Catherine. Thank you very much for attending. John-Paul Marks. Unless you wish to make any opening remarks, I'm going to turn to our first question. But is there anything you want to say right at the beginning on this whole matter?
Whilst this was an innovative attempt to address the estimated 270 million in fraud and error, the rollout of this intervention was poorly handled and led to avoidable hardship for thousands of legitimate claimants. More than 8000 eligible claimants had their payments suspended without warning, and while many faced a difficult and stressful process to prove their legitimate entitlement, today the committee will examine why HMRC altered the approach used in its pilot without adequately assessing the consequences. Whether it's government and safeguards are now strong enough, and how the government can use data innovatively to tackle fraud and error while protecting payments to legitimate claimants.
So before we start, I'd like to extend a very warm welcome to Catherine West, who's joining us as a member of the Treasury Select Committee, as one of our guests. So warm. Welcome, Catherine. Thank you very much for attending. John-Paul Marks. Unless you wish to make any opening remarks, I'm going to turn to our first question. But is there anything you want to say right at the beginning on this whole matter?
10:22
10:22
10:22
Speaker 1
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Speaker 1
Well, firstly morning to the committee and thank you for those messages, which we accept in full and grateful to the Auditor General and his team for the Nao report. We've accepted all those recommendations and are in the process of implementing them. I think, as you say, child benefit is an essential benefit for millions of families in this country, and we are stepping through a process of transforming the experience to make it much more digital, easier to access and stay in touch with us through our app. And that is working well. But the error and fraud level is too high, and we need to bring it down.
And we're trying to use innovative approaches to target that on a small number of customers for whom we think that is a higher level of risk. And that included, as you say, the Home Office data to identify those that may have left the country but are still claiming, and I think the pilot was well intended to prove the concept. And I'm confident the exercise has now settled down . Well in delivery. We can talk about both those points and how I derive that assurance, but I acknowledge that in the first rollout phase, we made some mistakes.
I wrote to Parliament to apologise for that and we fixed it fast, put those claims back into payments for those that were disrupted. And there are some important lessons, of course, which will no doubt touch on in this hearing around risk tolerance, safeguards, guardrails and controls. It was with good intent. We had discovered a process which was identifying 6 in 10 claims which were in error, and so serious loss to the taxpayer. We wanted to scale it quickly to take advantage of that innovation. But I suppose a sort of catchphrase would be a little less haste and more speed, and make sure the guardrails are good through that.
Make scalable phase to get to business as usual sooner. We're confident we can recover the benefits over the scorecard period. Through the approach that we are taking, we will continue to innovate using data to drive error and fraud down in child benefit, given it qualifies our accounts. But again, to emphasize my apology to the customers that were impacted in that first rollout phase, we put them back into payment, we've apologised and we offered redress to any of those customers if they wanted it.
And we're trying to use innovative approaches to target that on a small number of customers for whom we think that is a higher level of risk. And that included, as you say, the Home Office data to identify those that may have left the country but are still claiming, and I think the pilot was well intended to prove the concept. And I'm confident the exercise has now settled down . Well in delivery. We can talk about both those points and how I derive that assurance, but I acknowledge that in the first rollout phase, we made some mistakes.
I wrote to Parliament to apologise for that and we fixed it fast, put those claims back into payments for those that were disrupted. And there are some important lessons, of course, which will no doubt touch on in this hearing around risk tolerance, safeguards, guardrails and controls. It was with good intent. We had discovered a process which was identifying 6 in 10 claims which were in error, and so serious loss to the taxpayer. We wanted to scale it quickly to take advantage of that innovation. But I suppose a sort of catchphrase would be a little less haste and more speed, and make sure the guardrails are good through that.
Make scalable phase to get to business as usual sooner. We're confident we can recover the benefits over the scorecard period. Through the approach that we are taking, we will continue to innovate using data to drive error and fraud down in child benefit, given it qualifies our accounts. But again, to emphasize my apology to the customers that were impacted in that first rollout phase, we put them back into payment, we've apologised and we offered redress to any of those customers if they wanted it.
10:25
10:25
Rupert Lowe
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Rupert Lowe
Thank you. Thank you, chairman, and thank you to the Nao for an excellent report, which I thought it sort of made simple of quite a complicated, complicated subject for me. I thought this was a very interesting report and I and I, those are very useful opening comments. John Paul, I, I thought, you know, you've used data as I would like to see data being used. And I was pretty shocked that actually in your 23,794 inquiries, 61% of claims were eligible and 39% were ineligible, which seems to be a massive percentage of ineligible claims. And as we all know, when you live in a welfare society or you live in a society which transfers money from wealthy parts to poor parts such as Italy, I'm afraid one one upshot of that is fraud and and misfeasance.
So I think you shouldn't lose confidence in doing what you've done. And when I read the report, I could clearly see that the pilot worked very well. Yeah. But I want to just the key key and I run lots of businesses. The key for me here is responsibility. And who is actually taking charge of these projects, because the pilot worked very well and you had a tremendous success there. But then when I look at page 20 and it says here, HMRC explained the decisions to remove the upfront pay cheques and change the form from E travellers were made in May 23rd during a workshop involving operations staff, operational analysts and policy staff working on the intervention.
HMRC told us that staff felt empowered to make these decisions. Well, that seems to be where it's all gone wrong and my question to you is how is it that, I mean, are there any minutes of those meetings? Who made those decisions? Do you know who took responsibility for it? And going forward, are you going to implement some form of holding people to account if they do change both the pay data and the length that you're effectively running your, your, your, your, your intervention over? Because that seems to be to me where it's gone wrong.
So I think the committee is keen to know, have you got minutes of those meetings? Who was responsible. Yeah.
So I think you shouldn't lose confidence in doing what you've done. And when I read the report, I could clearly see that the pilot worked very well. Yeah. But I want to just the key key and I run lots of businesses. The key for me here is responsibility. And who is actually taking charge of these projects, because the pilot worked very well and you had a tremendous success there. But then when I look at page 20 and it says here, HMRC explained the decisions to remove the upfront pay cheques and change the form from E travellers were made in May 23rd during a workshop involving operations staff, operational analysts and policy staff working on the intervention.
HMRC told us that staff felt empowered to make these decisions. Well, that seems to be where it's all gone wrong and my question to you is how is it that, I mean, are there any minutes of those meetings? Who made those decisions? Do you know who took responsibility for it? And going forward, are you going to implement some form of holding people to account if they do change both the pay data and the length that you're effectively running your, your, your, your, your intervention over? Because that seems to be to me where it's gone wrong.
So I think the committee is keen to know, have you got minutes of those meetings? Who was responsible. Yeah.
10:27
Speaker 1
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Speaker 1
I'm happy to happy to talk to that. And I'm sure you'd expect me to say. But let me make sure I say it. I'm accountable. As the chief executive of HMRC for the control framework, the governance model and the risk tolerance. So it is true that I want accelerated innovation, as you say, to leverage data to deliver better value for the UK taxpayer. And I have been talking a lot about empowerment and autonomy for my teams to accelerate that. But at the same time, we need good guardrails and safeguards in place to do it responsibly and well to take care of our customers as we go through that process.
As you say, we got it right in the pilot. I'm confident we're now getting it right and business as usual. But some of the choices that were made in that first rollout were outside of that risk tolerance, but that was not understood immediately at the time. As soon as we did understand it, we this group on this panel took accountability for fixing it far. So we put the pay check back in to the upfront journey. We added a grace period so that customers didn't have their benefits suspended immediately, but had more time to engage with us.
First, we changed the form. So we now ask for two pieces of evidence with a digital journey, rather than a sort of analogue one, and we slowed it right down as well in terms of the volumes. So over 20,000, you say in that first phase, we've now done another 9000 in more of a hypercare phase to stress tests, the moving to scale with more control. And that's giving us good confidence that we can now roll this out over the next few years at significant scale and realise, we think, over a quarter of £1 billion of benefits to the taxpayer.
Like you said, I want to encourage innovation, and we'll come on to the next steps about what else we need to do with data to reduce the child benefit error and fraud level more. But of course, it's got to be responsibly done with care. So we did an internal audit report. The Nao have set their recommendations. We've accepted all of those. And it includes more senior oversight, more more care on the governance and clarifying the safeguards and controls the decisions around the pay check. The form were a function of trying to scale it quickly, using contingent resources, with the skill level of the capability of what was available to deploy at the time.
And all of those were logical, but more assessment of the risk was needed. And if you're going to change the treatment from pilot to scale, you need to test it again before you add the volume. So the lessons well learned, the Ssfa are here and we're sharing this learning across government. So it's not just for HMRC. Two we've spoken about this, of course, as an executive team with our director Leadership Group, because we want a high appetite for innovation, obviously very low appetite for negative disruption to our customers. And that's the balance we've been trying to strike here.
We didn't get the balance right in that first roll out. Hence I wrote to Parliament and apologised, but I but I like you. I don't want a dampening effect where everybody sort of reverts to to caution because the status quo is a quarter of £1 billion of error and fraud every year in the child benefit system currently. And it's qualifying our accounts and we need to get that number down.
As you say, we got it right in the pilot. I'm confident we're now getting it right and business as usual. But some of the choices that were made in that first rollout were outside of that risk tolerance, but that was not understood immediately at the time. As soon as we did understand it, we this group on this panel took accountability for fixing it far. So we put the pay check back in to the upfront journey. We added a grace period so that customers didn't have their benefits suspended immediately, but had more time to engage with us.
First, we changed the form. So we now ask for two pieces of evidence with a digital journey, rather than a sort of analogue one, and we slowed it right down as well in terms of the volumes. So over 20,000, you say in that first phase, we've now done another 9000 in more of a hypercare phase to stress tests, the moving to scale with more control. And that's giving us good confidence that we can now roll this out over the next few years at significant scale and realise, we think, over a quarter of £1 billion of benefits to the taxpayer.
Like you said, I want to encourage innovation, and we'll come on to the next steps about what else we need to do with data to reduce the child benefit error and fraud level more. But of course, it's got to be responsibly done with care. So we did an internal audit report. The Nao have set their recommendations. We've accepted all of those. And it includes more senior oversight, more more care on the governance and clarifying the safeguards and controls the decisions around the pay check. The form were a function of trying to scale it quickly, using contingent resources, with the skill level of the capability of what was available to deploy at the time.
And all of those were logical, but more assessment of the risk was needed. And if you're going to change the treatment from pilot to scale, you need to test it again before you add the volume. So the lessons well learned, the Ssfa are here and we're sharing this learning across government. So it's not just for HMRC. Two we've spoken about this, of course, as an executive team with our director Leadership Group, because we want a high appetite for innovation, obviously very low appetite for negative disruption to our customers. And that's the balance we've been trying to strike here.
We didn't get the balance right in that first roll out. Hence I wrote to Parliament and apologised, but I but I like you. I don't want a dampening effect where everybody sort of reverts to to caution because the status quo is a quarter of £1 billion of error and fraud every year in the child benefit system currently. And it's qualifying our accounts and we need to get that number down.
10:33
Rupert Lowe
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Rupert Lowe
I'd rather you crushed error and fraud than you would crushed honest, decent, tax paying citizens. That that's the key balance you've got to get. Right. So were there any minutes of this meeting, because it's not clearly evident to me that anyone was in charge here. So the question now I guess for you is who's in charge now?
10:36
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10:37
Speaker 1
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Speaker 1
Yeah. So it relates to the control framework. I've got Myrtle with me, my chief Customer Officer. So the delivery now of this child benefit exercise has moved into business as usual. Myrtle is the director general accountable for that and has a director who leads on benefits and credits, who's accountable for the day to day delivery of that service. And we have more senior oversight carers as the regime owner. So between the policy and the delivery, we have the two senior civil servants here who are accountable for its delivery.
10:40
Rupert Lowe
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Rupert Lowe
But you've now got a proper process. So where AI and data improves and you're able to cross check and actually use what you've used here very effectively, you're confident you've now got the right process. So you're not going to run a pilot and then find some Joker changes the rules once you've run the pilot, because, you know, it's interesting. Political people look at things differently and I look at the amount of fraud and error. Other people look at the amount of discomfort honest people have had to suffer. So there's two ways of looking at it.
Now. They've suffered inconvenience. You're hopefully crushing fraud. So so that's the key I think there.
Now. They've suffered inconvenience. You're hopefully crushing fraud. So so that's the key I think there.
10:40
10:40
10:41
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
Thank you. I'm going to bring Sarah Olney in a minute. But I think this issue goes to the issue. The problem of trust in HMRC. There's a tension here between reducing fraud and error which this committee is. It's already been conversations about the Chancellor's statement yesterday about your target of recovering tax debts. And you have been given new unprecedented powers to remove money from people's bank accounts. And there is comment around the fact that HMRC have these unprecedented powers. If you are seen to use them unfairly, this will really damage HMRC's trust by the public and you rely on trust from the public to get cooperation from the public to pay their taxes.
So I'd like you to give this committee some assurance that in using these new, fairly draconian powers, you will be very, very careful how you use them. Yeah.
So I'd like you to give this committee some assurance that in using these new, fairly draconian powers, you will be very, very careful how you use them. Yeah.
10:45
Speaker 1
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Speaker 1
I'm happy to give that assurance. And we're coming back to this committee, I think, in December to talk about the now's report on debt. I'd be very happy to set out for the committee, either in writing before or when we're when we're here, about our experience on direct deduction already, of course, it has been used pre-pandemic, and we've now restarted some of that. As you say. The Chancellor announced new measures yesterday. We've got good time between now and when those are scored to ensure that the guardrails and the safeguards are well understood in the public domain, subject to public scrutiny.
And the lessons from this exercise are applied again in terms of governance, senior oversight, scrutiny and control. And Myrtle leads our debt operation. Maybe might want to say a couple of things, but on that measure, I do think it is an important addition to reducing debt in this country. We were just looking at some of the numbers, and it is significant, you know, small amounts of debt. We don't want to trigger bankruptcy. We don't want to wind up companies. We don't want to, you know, burden the court system. But at the same time, it's a last resort when we've done everything else to offer people time to pay arrangements and any other opportunity to engage with us.
But the money is in their account and they are choosing not to pay a small debt. And we think with the right safeguards, a refund first policy. If there is a concern, we can do this well. But I absolutely agree with your point. It needs to be underpinned with confidence and trust so that you know it's sustainable.
And the lessons from this exercise are applied again in terms of governance, senior oversight, scrutiny and control. And Myrtle leads our debt operation. Maybe might want to say a couple of things, but on that measure, I do think it is an important addition to reducing debt in this country. We were just looking at some of the numbers, and it is significant, you know, small amounts of debt. We don't want to trigger bankruptcy. We don't want to wind up companies. We don't want to, you know, burden the court system. But at the same time, it's a last resort when we've done everything else to offer people time to pay arrangements and any other opportunity to engage with us.
But the money is in their account and they are choosing not to pay a small debt. And we think with the right safeguards, a refund first policy. If there is a concern, we can do this well. But I absolutely agree with your point. It needs to be underpinned with confidence and trust so that you know it's sustainable.
10:46
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
JD, JP I don't know why I call you. JD. JP it's not the first time. So not, not from you. And I must apologize to our witnesses for not asking you to introduce yourselves. But it will be on our our minutes exactly who you all are. And you were here. Thank you for that assurance. If we could have that information well before that hearing in December, so that we've got time to ask questions about it , would be really helpful. One other question arising from yesterday's statement by the Chancellor. You were. You were given a longer term cost and benefit estimate for the autumn budget and anticipating that 350 million that initially estimated would would save would reduce, but the actual updated estimate wasn't given in the budget yesterday.
So what is the latest figure on how much you will recover.
So what is the latest figure on how much you will recover.
10:47
10:47
10:47
Speaker 2
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Speaker 2
Yeah that's okay. Don't worry. And that covered both the activity we were planning to do on residency, but also some other compliance activity as well, including on tax free childcare. The benefits from that have been revised down to 305 million. But I want to emphasize the reason for that was when the original costing was done back in autumn budget 24. We only had the pilot to go on in terms of building the evidence base to support that costing. There's actually an improved methodology that is contributing, contributed mostly to that revision downwards. It was always our intention to revise that costing at this event.
But of course we have changed the profile of the cases that we would work. So there is a timing effect in there as well. But as JP said, we are really confident that we will do the full 70,000 cases that we always predicated that original work on by the end of this scorecard period.
But of course we have changed the profile of the cases that we would work. So there is a timing effect in there as well. But as JP said, we are really confident that we will do the full 70,000 cases that we always predicated that original work on by the end of this scorecard period.
10:47
Sarah Olney
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Sarah Olney
Thank you, chair. Mr. Mark. So you talked there about scaling innovation faster. And obviously, the committee welcomes innovation, particularly around tackling fraud and error. But surely it's the case that where you're being more innovative, you have to put in place greater risk mitigations because you are trying something new. You don't know how it's going to work. So you need to have, have, have built a framework to manage the risks around that, which is perhaps a framework with, with, with, with more protection than you would do risk mitigation for your, your established processes. Did you have that in place, do you think for this, and particularly from the moving from the pilot to the to the rollout rollout?
10:47
10:57
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10:57
Speaker 1
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Speaker 1
Having both run where we are really beginning to think much more innovatively about how we are come down 16 and fall out of that and therefore fall out of entitlement. So that's the other big risk on that loss to the taxpayer. And in particular, we are doing not just using data innovatively, but thinking about our customer interactions. So now from next year, parents will get a kind of a text message nudge sort of periodically throughout the school year just to ask them, is your child still in education? Because people might tell us that their child intends to go back to school come September.
But of course, that child might change their mind 3 or 4 months in. And if we don't check for two years, that's two years worth of child benefit that paid out in error. So that's a good example. I think of us trying to be a little bit more innovative and nudge customers to do the the right thing. And we also, as JP has already alluded to, drawing on data from the student loans company as well, if we've got a young person that's gone into advanced.
But of course, that child might change their mind 3 or 4 months in. And if we don't check for two years, that's two years worth of child benefit that paid out in error. So that's a good example. I think of us trying to be a little bit more innovative and nudge customers to do the the right thing. And we also, as JP has already alluded to, drawing on data from the student loans company as well, if we've got a young person that's gone into advanced.
10:57
10:58
Speaker 2
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Speaker 2
Intervene early. So hopefully that gives you a good sense of. And if I may, it's worth noting HMRC have been really open and. collaborative in sharing what went wrong with us, the lessons from that and their new hyper hyper care framework there as well. I think there's an opportunity for some. external kind of. understanding as as a data share scale up into business as usual as well. So from a digital economy perspective, as noted in the Nao report, we're asking for like an annual compliance check that everything is still working as intended within there as well.
But there's an opportunity through consultation that we could go further. We could we could. require public bodies using these data powers to effectively provide a readiness assessment and say, we've got the right SROs in place, we've got the right. oversight and governance in place here as well. And we we wholly. understand how we should be using this data and and codify further if there are. variances through innovation, there will be reasons you will want to evolve how you use and. operationalize the data insights you might have. So through that. variation process, make it clear where that is an SRO.
accountable matter and where actually that requires further. conversation with the Digital Economy Act .
But there's an opportunity through consultation that we could go further. We could we could. require public bodies using these data powers to effectively provide a readiness assessment and say, we've got the right SROs in place, we've got the right. oversight and governance in place here as well. And we we wholly. understand how we should be using this data and and codify further if there are. variances through innovation, there will be reasons you will want to evolve how you use and. operationalize the data insights you might have. So through that. variation process, make it clear where that is an SRO.
accountable matter and where actually that requires further. conversation with the Digital Economy Act .
10:59
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11:00
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11:00
Blake Stephenson
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Blake Stephenson
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11:01
Blake Stephenson
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Blake Stephenson
Rate of 60%. Even in the first rollout phase, it was still just under. 4 in 10 claims were in error, which were stopped. And now that has recovered again. So we think this is a very strong. intervention that protects the UK taxpayer. But there have been some important lessons around. implementation which must be learned for the future. Back to the point on public trust. So I am trying to continually say this to my team and thank them for the pilot. The business as usual. Ask us to be thoughtful and take additional care on governance, oversight and control and testing in hypercare phases when we scale in the future.
But I'm also positive about this. exercise because I think that it's good value for money for the UK taxpayer, and I'm expecting us to do more of this in the future. Obviously, be nice not to come back with the bump in the road in the middle of the journey, but I'll be honest, I expect that there will be moments where that will happen because in an organisation with the scale of HMRC. I use this phrase bump in the road because I'm trying to humanise the fact that there will be moments when things don't go well, and I don't want those to be traumatic.
I want us to be confident to say when we're worried, escalate fast. As happened in this situation. The now recognized that in their report. And so as soon as someone flags to me or we've got a problem with child benefit, we've scaled the thing and the success rate has dropped. And ineligible customers like pause the.
But I'm also positive about this. exercise because I think that it's good value for money for the UK taxpayer, and I'm expecting us to do more of this in the future. Obviously, be nice not to come back with the bump in the road in the middle of the journey, but I'll be honest, I expect that there will be moments where that will happen because in an organisation with the scale of HMRC. I use this phrase bump in the road because I'm trying to humanise the fact that there will be moments when things don't go well, and I don't want those to be traumatic.
I want us to be confident to say when we're worried, escalate fast. As happened in this situation. The now recognized that in their report. And so as soon as someone flags to me or we've got a problem with child benefit, we've scaled the thing and the success rate has dropped. And ineligible customers like pause the.
11:02
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11:02
Blake Stephenson
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Blake Stephenson
High appetite approach to innovation is really going to matter. In a world where resources are scarce, we need to improve value for money and we need better outcomes faster. But I, I say, you know, your point on public trust is essential. And it's probably one of the most important underlying indicators that I would like to improve in HMRC in my time. As you know, we are reporting on it annually and our annual report, we survey different cohorts to talk about trust. We've seen some improvement for some cohorts, not for others. Myrtle. You know, stewards are customer charter for us brilliantly here with our adjudicator.
And again that is governed. But we would like, you know, to get to a future point in time, whether it's 2030 or wherever, where outcomes are up, value for money is proven. And, you know, people have .
And again that is governed. But we would like, you know, to get to a future point in time, whether it's 2030 or wherever, where outcomes are up, value for money is proven. And, you know, people have .
11:03
Speaker 2
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Speaker 2
Confidence that we're doing the right thing, you know, and if I if I may just briefly chair, I think there is some I've seen some really great practice across government of co-design, this principle of co-design, bringing your legal, your data governance, your operational, your. policy and your SRO colleagues. together and really thinking through what you're trying to achieve in the use of the data, in the design of the analytics, and then the. implementation where it's operationalized as well.
And through that.
And through that.
11:04
11:04
Speaker 2
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Speaker 2
But manage those risks and still being iterative. Often people say, oh no, we don't want to do this. Go into that lower common denominator point because it's a really a lack of understanding of what you're trying to do. So those principles, again, everybody around the table really kind of thrashing it out in my experience, is then seen better, more. impactful kind of innovation happen .
11:04
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
With those safe guardrails around it. So before I bring Sarah and I don't want to steal Rupert's sandwiches because I think he's going to come on to this as well. But I want to just start on this. JP, can I take you to paragraph 2.4 on page 20? This is to do with the senior responsible owner. We've criticised across government not having senior responsible owners in at the beginning and being continuously there throughout the project. And now you didn't have that that here. The second bullet point is key decisions such as the removal of upfront, P, e, y, e checks were made at inappropriate levels without sufficient oversight.
I'm sure Rupert will come on to the third bullet point there, but I'd just like you to address that point, that senior enough people were not making .
I'm sure Rupert will come on to the third bullet point there, but I'd just like you to address that point, that senior enough people were not making .
11:05
Blake Stephenson
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Blake Stephenson
Decisions and there wasn't an SRO there throughout the project. Yeah, I think I try to address some of that earlier, but I've acknowledged those points from the Nao and agreed that that should have been the case. And it is now. And once we'd. understood that some changes had been made that had that adverse.
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Blake Stephenson
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Blake Stephenson
You know, long term. SROs for programs that go from inception and pilot through to scale and agree with it, of course. So we recognize it. And, you know, as I say, the the change on the pay check was logical at operational level to scale this process, but it had an adverse effect on the. non-compliance rate, which was not as understood as it could have been at that time, which is why we put it back very quickly once we understood that had occurred. So it is back to the point around Hypercare when you move from pilot to scale with that level of senior.
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11:06
Sarah Olney
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Sarah Olney
Confident that is now fixed. Okay. Sarah Olney Thank you, chair. JP I was surprised to hear you talk about the the number of people who had eligible payments who had their child benefits stopped as a result of this intervention. You describe that as a bump in the road, that I'm sure there will be people who will have heard you saying that, who lost their child benefit for which they were. eligible as a result of this.
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11:07
11:07
Blake Stephenson
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Blake Stephenson
I'll give you an invitation for you , perhaps to reconsider that phrase. So forgive me. Let me be very clear to address the point directly to those individual customers, I apologize. I apologized at the time I wrote to Parliament at the time to apologize. We put those cases back into payment and we offered redress. If there had been financial hardship to any of those customers. So I want to be clear, you know that phrase, I don't mean to relate to any of the individual. experiences for the customers. affected and. genuinely underline, again, my apology for that disruption.
The phrase is more. general in terms of when undertaking innovation. There's always be moments when things don't go. always as you'd expect or as you plan. The important thing is to calmly understand what's driving that and respond. responsibly and quickly to the learning.
The phrase is more. general in terms of when undertaking innovation. There's always be moments when things don't go. always as you'd expect or as you plan. The important thing is to calmly understand what's driving that and respond. responsibly and quickly to the learning.
11:08
Sarah Olney
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Sarah Olney
And I guess that is that was the point I was trying to make, if I may. I found that quite. illustrative of perhaps the approach that HMRC took in terms of thinking about it entirely in terms of its internal. processes and not enough. consideration of the potential impact on the customers. So for you, it's a bump in the road. It's a it's it's interrupted your smooth rollout of a new process. But obviously for the customers themselves, it was very much more than a bump in the road. Why do you think that when these these changes were made?
And I think we have we have we've pinned down that it's the changes that were made to the programme between the pilot and the scale up. Why do you think there was such little. consideration of what the impact would have been on customers if you were, you know, stopping people's child benefit? And let's not forget, for some people who had their child benefit stopped, that will have had a serious impact on their household income. Some of them will have struggled to feed their children.
Some people might have had difficulty paying the rent.
And I think we have we have we've pinned down that it's the changes that were made to the programme between the pilot and the scale up. Why do you think there was such little. consideration of what the impact would have been on customers if you were, you know, stopping people's child benefit? And let's not forget, for some people who had their child benefit stopped, that will have had a serious impact on their household income. Some of them will have struggled to feed their children.
Some people might have had difficulty paying the rent.
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11:09
Sarah Olney
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Sarah Olney
You know, will have had to forgo perhaps, you know. essential shoes and clothing purchases, which for growing children is a really, really serious thing. So why do you think there was such little attention paid to these kinds of impacts when you were, or when your staff were thinking about changes .
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Blake Stephenson
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Blake Stephenson
To the to the pilot? So. Well, firstly to I agree, the hard. reality of cash flow for somebody on benefits and low. incomes must always be understood by us, which is why we talk a lot about trust our charter and. responding to that type of feedback. So I do want to underline again, I absolutely understand the point you're making, and we should never be complacent about that.
I don't think that the changes that were made at the beginning of the first.
I don't think that the changes that were made at the beginning of the first.
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11:10
Blake Stephenson
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Blake Stephenson
At any point had any intent to create that effect. It was just not. understood as well as it should have been. And it could have been tested at lower. volume first, which is the whole point of the pilot. So the thinking around the pay check was that, you know, the team could. undertake that final decision making, mandatory consideration, appeal journey and still scale what was quite a. targeted error and fraud exercise in a way that would protect customers. But and that the pilot had shown there was good evidence of that, and they could put some of the.
additional evidence that they wanted to collect into the form. But as I say, I don't want to particularly defend all of that, because I think some errors of judgment were made outside of our risk tolerance. And as soon as we understood that, we paused, changed the journey and put it right. I suppose your underlying point, though, around, you know, our sort of customer service culture, customer.
additional evidence that they wanted to collect into the form. But as I say, I don't want to particularly defend all of that, because I think some errors of judgment were made outside of our risk tolerance. And as soon as we understood that, we paused, changed the journey and put it right. I suppose your underlying point, though, around, you know, our sort of customer service culture, customer.
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Sarah Olney
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Sarah Olney
Importance of that. leadership in everything we do. Three further questions. Quickly, if I may, chair. So, firstly, one of the things I'm really concerned about is there will have been women who had their child benefit stopped. Women in particular, who had their child benefit stopped, who needed that child benefit claim to go towards their. eligibility for state pension? Can you provide an. undertaking to this, this committee that .
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11:12
Speaker 1
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Speaker 1
Come in. Yeah. Go on. So I think it's important to draw out that when we were undertaking this activity , both in the pilot but also in the initial rollout, and now stopping the payment up front is a. suspension to the payment and not a. termination of the benefit. So the underlying. entitlement is still there at that point. And what the the reason that that model was first adopted is a long standing principle of the way that child benefit compliance has been done historically, that we suspend the payment if we think there is a good if we've got good intelligence that the eligibility may no longer stand.
And it provides us with a four week window to engage with the customer and establish whether or not they have indeed fallen out of entitlement, or whether or not there's good grounds to put them back into payment.
And it provides us with a four week window to engage with the customer and establish whether or not they have indeed fallen out of entitlement, or whether or not there's good grounds to put them back into payment.
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11:13
Sarah Olney
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Sarah Olney
Team, anything comes through , that means that's not true. But of course, write to the committee. So the second question I have is around the form and the form that went to to claimants or people who suspected may no longer be eligible for claimants was sort of 17 pages long. Have I got that correct? But the amount of. information you are asking for people to, to, to confirm that they're claiming you're asking for letters from the school, you're asking for letters from GPS.
None of this is. required up front to establish your initial, you know,
None of this is. required up front to establish your initial, you know,
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Speaker 3
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Speaker 3
This. information for people who who are eligible for child benefit. Yeah. And, and that's where we went wrong. So we put in a lot more into that initial about. 73 questions to get the additional information. So when we rolled it out the second time and we went into Hypercare, we took the, that feedback into account and that.
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Speaker 3
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Speaker 3
Just two pieces of evidence. So evidence that you've returned, whether it's a return ticket and bank account, details showing evidence of transactions in the UK to determine for us to. determine you have been in the UK. So so yes, I think the the. response was was I think not. proportionate to the .
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Sarah Olney
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Sarah Olney
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Blake Stephenson
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Blake Stephenson
As Keras says, it's a. suspension pending confirmation of entitlement. And we've tried to make that as easy as possible for the customer to ring us to be in touch so that things can continue. And to be clear, at the point in which that happens, we can continue the payment and or do any backdating to make sure that they're not worse off. But take .
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Blake Stephenson
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Blake Stephenson
If that is if the customer is eligible. But I, you know, I used to run Jobcentre Plus, I absolutely understand the point you're making around the. dependency of the benefit system and making sure that cash flow is flowing and people are getting paid their entitlements on time, which is why on child benefit, it's very important that this exercise is only.
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11:18
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
You've very clearly expressed, which I totally get. Thank you. Thank you, chair. Thanks very much, Sarah. I don't mind who answers my questions, whoever which whichever of you. So perhaps to start with, I can take you to page 32, paragraph 3.4. Bullet the middle bullet point. HMRC told us that it relied on feedback via phone calls, letters and MP representation to identify that this was causing problems for claimants.
It has since simplified the forms and evidence requirement for the second rollout.
It has since simplified the forms and evidence requirement for the second rollout.
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Blake Stephenson
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Blake Stephenson
So we paused the. process and. Put those customers back into payment, apologised and offered redress. And as you say, you know, go through the changes we've made, reinstating the pay check, as Keira said, adding the grace period. So, as Miss Olney says, we don't suspend at the first first. point any more. Changing that journey to the digital upload of two pieces of evidence your return ticket and your bank statement to show your living in the UK with stronger guardrails on on governance and control. And this does come back to the underlying point that we've been making good in the pilot, working well now in business as usual.
Need to do more of that in a hypercare phase before you roll out. And we've accepted those.
Need to do more of that in a hypercare phase before you roll out. And we've accepted those.
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11:19
Blake Stephenson
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Blake Stephenson
Agree with them and we've put it all in place. I think the first problem was escalated to us sort of September. October last year. We had put those changes in place, you know, by Christmas time. And we had. immediately paused the journey. and engaged those customers who had been disrupted to put them back into payment and backdated. So that was relatively swift.
Of course, it would have been better if to make those. changes in the first roll out phase , rather than .
Of course, it would have been better if to make those. changes in the first roll out phase , rather than .
11:20
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
After the fact. And we've accepted that and apologised. Okay, so paragraph 18 on page ten says 40% of eligible claimants had their patents automatically reinstated by November 2025. Yeah, but it goes on to say it was unable to provide you. The HMRC was unable to provide us with average time for reinstating payments. Why can't you .
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Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
Process, it's been hard for the analysts to do. We can double check, but JP, I don't I mean averages, I'm not very keen on averages because they can actually cover a huge wide variation. I'm very happy if you let us have a letter on that after the hearing, but I think we do want to know why, why, why, why, what was the what was the range at least from the very worst to the very best. But I don't mind if you don't have the information. Now you can write to us. On that same paragraph. This is sort of slightly going to to Sarah's questions on about hardships.
The bottom of that paragraph 18, it says, as of April 2026, HMRC had paid a total of 3220 2200 of compensation to just 51 claimants. Yeah, that does seem to me to be a pretty low level of compensation. Are you making it unnecessarily difficult for claimants to claim compensation, and can they .
The bottom of that paragraph 18, it says, as of April 2026, HMRC had paid a total of 3220 2200 of compensation to just 51 claimants. Yeah, that does seem to me to be a pretty low level of compensation. Are you making it unnecessarily difficult for claimants to claim compensation, and can they .
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Blake Stephenson
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Blake Stephenson
Claim interest on late payments? We can double check on, you know, the the journey on compensation. We've not absolutely we want to make our redress process as easy as. possible to address hardship or any detrimental impact on customers. I think partly the fact that it is low is because we got the payments reinstated quickly and backdated. Thank you. So you know that that sort of covers the point around, you know, interest if you like, in sort of it is a cash flow disruption. But the entitlement was still honoured. But I recognise some of it was late on on redress, as I say.
Yes. The volume, you know, hasn't been high. Partly it's a small volume of cases and in total. But we do have a pretty well established redress process that we use all the time. And I don't know if you want to say anything else about how the redress process works, the assurance around it. But I think we haven't had any escalation to us or any concern raised by the Nao or our internal .
Yes. The volume, you know, hasn't been high. Partly it's a small volume of cases and in total. But we do have a pretty well established redress process that we use all the time. And I don't know if you want to say anything else about how the redress process works, the assurance around it. But I think we haven't had any escalation to us or any concern raised by the Nao or our internal .
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Speaker 3
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Speaker 3
To suggest that that is not clear. But and it is it was it was we didn't put a very high bar or put any barriers in the way on the on the claimants. So it was 51 was what what we got highest reward we made was. £300 and the lowest was £5.75. But it was pretty much the speed at which we put people back into payment. And we didn't have an.
overwhelming number.
overwhelming number.
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Blake Stephenson
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Blake Stephenson
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Blake Stephenson
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Blake Stephenson
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Blake Stephenson
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Blake Stephenson
Settled on a much longer time scale than that? So there will be a few. cases that are beyond that November date, and it will be because there is still a doubt of entitlement. So the customer has not engaged and not come back to us. So we suspect they left the country. If they do come back to us, we can put them back into payment and backdate it. But we can't do that if they don't confirm that they are indeed in the UK.
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11:26
Rupert Lowe
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Rupert Lowe
Why it's not. 100% okay, Rupert, please. Thank you. Jeffrey, I think my question's for Jonathan, who's been silently sitting at the end of the table. So, Jonathan, am I right in thinking you're chairman of the HMRC Professional Standards Committee? Yes. That's you. Is it okay. One of my roles. Yes. Okay. And have you been doing that for a while? Yes, since I joined.
Took this role about five years ago. Okay. Because we went and had a look at the.
Took this role about five years ago. Okay. Because we went and had a look at the.
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11:26
Rupert Lowe
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Rupert Lowe
So we did an after action review, partly to support the the evidence we were gathering about the lessons we needed to learn. So we looked at it after the event. So normally we would not discuss specific. interventions at the committee. We look at more broad brush issues, very much to the point that the chairman made around trust. So we look at how trust looks in the round. We will look at our data principles, but often not look at specific. interventions in this. In this way we have other routes to do that. Obviously, we've talked about the Digital Economy Board and other routes to that scrutiny.
Do you think part of the process of improving this would be that you should look at this sort of thing? I don't know, what do you what do you collectively think? So I think we do need to learn the lessons and we we have done so. And, you know, we took a paper to the Professional Standards Committee very much reflecting on what we've heard today about how we've learned the lessons from that, and to give. reassurance that, you know, we want to innovate, we want to innovate safely. So it's very much that we did that in.
2026 rather than in 2025. Okay. I was just a question. It just seemed to me logical that that would be a committee that might. Yeah, as part of putting this right might be involved. So, so going on. I mean, I think from the point of view of common sense, I found it difficult to understand why, if you're handing out this money in child benefit, you don't ask people to certify each year that they're still eligible. And it doesn't seem to me obvious. I mean, it's mentioned briefly in this report, but it doesn't seem obvious that you've got a policy on that.
Would it not be wise to ask people who are receiving this money to simply confirm that they qualify each year, and then you've actually got a record of communicating with them. And if they are found to be.
Do you think part of the process of improving this would be that you should look at this sort of thing? I don't know, what do you what do you collectively think? So I think we do need to learn the lessons and we we have done so. And, you know, we took a paper to the Professional Standards Committee very much reflecting on what we've heard today about how we've learned the lessons from that, and to give. reassurance that, you know, we want to innovate, we want to innovate safely. So it's very much that we did that in.
2026 rather than in 2025. Okay. I was just a question. It just seemed to me logical that that would be a committee that might. Yeah, as part of putting this right might be involved. So, so going on. I mean, I think from the point of view of common sense, I found it difficult to understand why, if you're handing out this money in child benefit, you don't ask people to certify each year that they're still eligible. And it doesn't seem to me obvious. I mean, it's mentioned briefly in this report, but it doesn't seem obvious that you've got a policy on that.
Would it not be wise to ask people who are receiving this money to simply confirm that they qualify each year, and then you've actually got a record of communicating with them. And if they are found to be.
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11:29
Blake Stephenson
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Blake Stephenson
Certify that they're annually eligible? Yeah, it was me. Say a bit if that's okay. But I absolutely. understand the point you're making. And to an extent, what we're trying have been trying to do is. target that eligibility check where we think there is risk. So where we think you might have left the country and or we think your child may have, for example, moved into advanced. education or made a benefit claim, partly because, you know. 7 million families and we don't want to. disrupt them with additional burdens if it's unnecessary. But where we can use technology now and nudges and prompts and making that more seamless, I think your point is right.
We should try to do so to see if we can get the 2% error fraud rate .
We should try to do so to see if we can get the 2% error fraud rate .
11:29
Rupert Lowe
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Rupert Lowe
Closer to one and address the qualification on the accounts, but I would strongly recommend that you annually. I mean, it's not a big burden to ask people to sign annually that they're still eligible for the for the payment. That way, if they are ineligible, you've got the basis to prosecute them. I would have thought it's logic,
11:30
Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
But that that would be would be my view. And going on from there. Well, can I just interrupt there? I do think there is quite a lot of bureaucracy involved in what you're requesting. It seems to me that actually there are two two really important points in the path of child benefit. One is if the parents move abroad and you could address that when they when you initially approve the claim, you can make it very clear that if they do move abroad, they must notify you. And if they don't, there will be consequences. The second point is to reconfirm at 16, the status of .
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11:30
Speaker 2
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Speaker 2
Child, whether it is in full time education or whether it is not J. If I may just add to that, under the Fraud Act, there is fraud by omission as well as fraud by misrepresentation. So the absence of telling you they no longer qualify would still be a basis to which then challenge them on fraudulent grounds .
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Speaker 1
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Speaker 1
The circumstances don't change and they remain eligibility. So it is about trying to strike the right balance, which is why we've been much more focused on the data that we've got on residency. And now, from the age of 16 onwards, there isn't already an annual. reconfirmation at the point a child hit 16 before they hit the going to sixth form, essentially. But we are now building out from that. including more regular nudges to the parents to notify us and remind them they have to notify us if their child has dropped out, even if they've had the intention of going into school.
And we may well consider bringing forward more. confirmations in that part of the child's lifetime.
And we may well consider bringing forward more. confirmations in that part of the child's lifetime.
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Blake Stephenson
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Blake Stephenson
Taxpayer and the and the benefit claimant? If someone makes a claim for child benefit, which they're not entitled to, that would trigger a trigger, a debt which we would then seek to recover if we could. Obviously, if the customer has moved abroad, that is difficult, but not always impossible. And then your point on tax more generally, obviously, we ask customers to take reasonable care and to avoid error in their reporting. The vast majority do that really well. But where there is, you know, late, late payment of taxation to protect the the cost of money with regards the Exchequer, then interest is charged because it is the time value of money is represented there.
I don't yeah, we could say a bit more on the the debt treatment for .
I don't yeah, we could say a bit more on the the debt treatment for .
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Speaker 3
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Speaker 3
In terms of in terms of the money that's due. Yeah. So the current we've got. 122 million in child benefit debt across about. 103,200 cases. So the the median for each debt value is about. 618 per case. So we and the customers abroad that that's been rising. And that's one of the reasons for us to also look at this area for intervention.
So once these debts are then moved on to our debt.
So once these debts are then moved on to our debt.
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11:35
Blake Stephenson
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Blake Stephenson
Is no penalty, they tend to abuse the system. So, so and if I may, just back to the point the chair made at the beginning of the hearing around direct deduction. So those small debts where it is not high value for money and it timely and costly to pursue it, we face the challenge of, you know, struggling to get after all of it. And as Myrtle says, we've got time to pay arrangements for for a good proportion, but not all of it, but where that customer is in the UK and with money in their bank account, then in terms of fairness to the rest of the.
taxpayers who have paid their taxes on time, is it not right then that HMRC starts to take a deduction from that account to recover the money that is owed to the taxpayer? And that is the underlying principle around direct deduction? But of course, with the right safeguards and controls, given the points around cash flow. So I think this is an example of low.
taxpayers who have paid their taxes on time, is it not right then that HMRC starts to take a deduction from that account to recover the money that is owed to the taxpayer? And that is the underlying principle around direct deduction? But of course, with the right safeguards and controls, given the points around cash flow. So I think this is an example of low.
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Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
Have more powers to be able to to recover it. Okay. Thank you. The point I was making, which I think is worth just questioning you again, it is a very draconian power to be able to take money out of people's bank accounts. And before you exercise that power, I think you need to be absolutely clear that .
11:37
Blake Stephenson
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Blake Stephenson
You put in place the appropriate warnings that you're going to do it if they don't comply. Agreed. And very happy to write to you before we come and see you. I think it's in December on the now's debt report, and we could set out for you how we have used direct deduction. before and the current. safeguards and the process we're going to step through to build trust and. confidence for the future process to testing at low volume with senior oversight, single senior and end to end low volume and lots of public reporting. So we can strike the.
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Blake Stephenson
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Blake Stephenson
It should be last resort. The customer can stop it at any time by getting in touch with us and putting their own time to pay arrangement in place. And if there's a doubt, then we have a refund. First policy to put the money back. But I do think it's one of the important innovations necessary to get the debt balance down, which is still currently over. 40 billion a year.
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Blake Stephenson
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Blake Stephenson
Or would you like us to focus on child benefit and error and fraud? Happy to do either. Generally first. Okay, maybe if I do a bit generally and then a bit on child benefit if that's okay. And Myrtle could do a bit on child benefit transformation. I mean, generally for. HMRC we are on a on an improving trajectory. I'm pleased to say if you take our first strategic.
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Blake Stephenson
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Blake Stephenson
You know, obviously we are our first and foremost here to collect tax receipts, but also to make sure we're collecting the tax from those that don't, for example, follow the rules, take reasonable care and where there is error. And we had record. yield last year over. 50 billion for the first time. So we're making progress. Receipts are ahead of forecast yield record high and debt falling as a percentage of receipts for customer services. Myrtle can say more. I'm really pleased to say that our average speed of answer, it was double digit over. 20 minutes 18 months ago or so.
It's now single digit. I think it was seven minutes in the last month really matters in terms of confidence and trust for the front door to get through to us, where you have a concern and quite right too. We've been able to eliminate some backlogs that we faced and things like construction industry scheme and A1. certificates making good progress on.
It's now single digit. I think it was seven minutes in the last month really matters in terms of confidence and trust for the front door to get through to us, where you have a concern and quite right too. We've been able to eliminate some backlogs that we faced and things like construction industry scheme and A1. certificates making good progress on.
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Blake Stephenson
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Blake Stephenson
Which is a software as a service. transformation that will be AI enabled to drive better outcomes for for less cost. And that is about shifting the dial so that at least 90% of our customer interactions are digital. Latest data I've seen is just under 83%. It was around. 79% last year. So going up at a healthy rate, but more, more to do. And then of course, we're a big people. organisation and our engagement score was. 60% in the last survey. It's the first time we've hit that level up 4% on the year before. So we're continually trying to build.
capability and confidence within our teams to deliver better public services. Maybe it .
capability and confidence within our teams to deliver better public services. Maybe it .
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Speaker 1
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Speaker 1
We are trying to think a little bit much more customer. focused around what are the touch points in people's lives where circumstances might change, and how can we prompt them to support? The eligibility might have changed. So that points to the the point I mentioned earlier about sending text messages to remind parents, for example, to to tell us if their child has dropped out of education. We're also really conscious that some customers who receive child benefit pay the high income child benefit charge. And over the last. 12 to 18 months, we have rolled out two really important improvements to strengthen their experience.
So now you can opt to have your high income child benefit charged, collected via pay, rather than just having to complete a self-assessment form purely because you're subject to that charge. And those that do use self-assessment to pay that charge now see that charge. pre-populated on their essay return, and they have to just verify that they think it's correct. So I hope that gives you a good sense of the kind of .
So now you can opt to have your high income child benefit charged, collected via pay, rather than just having to complete a self-assessment form purely because you're subject to that charge. And those that do use self-assessment to pay that charge now see that charge. pre-populated on their essay return, and they have to just verify that they think it's correct. So I hope that gives you a good sense of the kind of .
11:42
Sarah Hall
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Sarah Hall
Customer centric approach we're taking to improving continuous improvement in terms of the future. Obviously, we don't know which direction the economy is going to take, but, you know, if there is more need for more help for children, because I would imagine you've got an approximate figure of people who don't bother to claim the benefit. Yeah, yeah.
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11:42
Sarah Hall
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Sarah Hall
AI, etc. is being used so that we can understand the latent need in case because a lot of people actually are too scared of because of all this to actually claim benefits. And so I'd like to know, you know, let's say things don't improve in the economy. What's the sort of. predictive capability that we have to understand? There might be more liability in there for the government, which is correct. Benefits are meant to be there as a as a sort of safety net.
Have you done .
Have you done .
11:43
Speaker 1
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Speaker 1
Any of that thinking or are we all still being optimistic? Well, we are we have been tracking and we do track sort of the claim rate for child benefit very carefully. It has actually been falling since 2013. We think partly that is people opting out as a result of the high income child benefit rate. But also, I think a bit of customer confusion around the two child, the two child limit, which doesn't actually apply for child benefit, but the way that that is sort of sometimes presented in the press might people feel that they're not eligible for child benefit.
So we are we've got a really strong comms. campaign to encourage parents, particularly new parents, to, to make that first claim into child benefit, even if their incomes are above the child benefit charge threshold, there are still good reasons to make the claim. Even if you opt out of the payment, it gives your child access to a Nino later down the line and importantly, can allow individuals to gain access to the National Insurance Credit for future state pension entitlement. So we do still put out quite a lot of both social media comms, but also when parents have their first child, we do still have a traditional sort of bit of.
material that parents get .
So we are we've got a really strong comms. campaign to encourage parents, particularly new parents, to, to make that first claim into child benefit, even if their incomes are above the child benefit charge threshold, there are still good reasons to make the claim. Even if you opt out of the payment, it gives your child access to a Nino later down the line and importantly, can allow individuals to gain access to the National Insurance Credit for future state pension entitlement. So we do still put out quite a lot of both social media comms, but also when parents have their first child, we do still have a traditional sort of bit of.
material that parents get .
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Speaker 2
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Speaker 2
As our government, digital colleagues, are. modernising digital infrastructure across government. There will be opportunities using data and insights to actually proactively. identify those eligible, you know. families which are not claiming this as well. You could see you could see a world where. understanding children education and able to kind of connect whether they're in receipt of child benefit, for example. So I think we are on a broader government journey .
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Sarah Hall
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Sarah Hall
Streamlining the process and giving it a really good experience. Of course, originally when it was first introduced, it was the one benefit for just having children. Wasn't it as similar to the state pension, of course, which is because you've reached a certain age. So I think given that everything is now means tested, I think just trying to put that in context for those of us who enjoy the. universality of this benefit.
When it was first.
When it was first.
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Sarah Hall
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Sarah Hall
And that was obviously clear from some of the questions in Parliament. What are the other mechanisms that have since been introduced to understand more fully how we can ascertain whether somebody is abroad, apart from the day to day spending on on cards? But I think there was some talk about different ways that people travel. You know, obviously in Northern Ireland, air travel is so frequent compared to if you're living in this part of the UK,
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Blake Stephenson
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Blake Stephenson
What are the learnings that just sort of very briefly. Yeah. So I think once again, reinforced the apology to those customers that were affected in Northern Ireland and should not have been, I think although the pilot had a sizeable sample, I don't think we picked up that risk in the pilot as much as we could of, and we could have targeted additional sample in Northern Ireland to make sure we'd taken account of the Windsor framework and got that right. We've now. removed from the. cohort customers who are moving within the island of Ireland so that they are not.
disrupted and apologize for that. I think it was.
disrupted and apologize for that. I think it was.
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Speaker 1
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Speaker 1
But I don't know if there's anything else to say on the data. No. Another another good source of data for us. We get school census data regularly. You know, it does have a lag, but it can indicate or a local authority can do a direct referral to us. If a family has known to them to have left the country. So we don't rely solely and exclusively on the Home Office travel data, but it .
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Geoffrey Clifton-Brown
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Geoffrey Clifton-Brown
Is probably the most powerful in terms of using it at scale to do some of this risky, right order order. I'm sorry, I'm going to have to interrupt proceedings. Catherine, if you've got other questions, we we are going to take a break now. It's 1150. If we could be back at 1155. I don't wish any discourtesy to our witnesses or the committee, but I have to go to go and ask a question in the chamber.
So Clive Betts, my able deputy, will take over when we return.
So Clive Betts, my able deputy, will take over when we return.
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Rupert Lowe
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Rupert Lowe
That's fine. Right, over to Rupert Lowe. Me again? Yes. You again. Thank you very much. Right. Well, I guess the key question for me on this is what lessons have been learned more widely across. HMRC from from this chapter. And I do underline that. I think you shouldn't, as you say, JP give up because I think I think this is a good initiative basically executed arguably could have been executed better.
So I see from paragraph 14 on .
So I see from paragraph 14 on .
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Rupert Lowe
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Rupert Lowe
Nine that you've commissioned an internal audit review, the results of which you've now got and which I think I'm right in saying the Nao is seen. Yeah. So, so it would be quite interesting, I think, if you were happy for the committee to see those minutes. And I'm assuming you're going to use those as the broad basis .
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Blake Stephenson
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Blake Stephenson
Learn from it, but also extrapolate the learning more broadly, including working with the public sector fraud Authority so we can learn it more generally across government. And of course, yes, the internal audit report , all shared with the Nao, who of course sit on our audit and risk committee as well. And .
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Speaker 1
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Speaker 1
Spoken about already around senior oversight and making sure that that's consistent throughout. It was there at the beginning. It's there now that we sort of, as we say, we had a level of empowerment as we. operationalized that first. rollout where changes were made, which in hindsight we reversed and which we'd not made. So senior oversight, governance and control, there's that control framework point. There's the point that was being made.
around integrating more customer.
around integrating more customer.
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Speaker 1
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Speaker 1
Which is. fundamental to the establishment of the chief customer office in HMRC, which Myrtle now leads. So we are much more user centric, I think, as an. organisation than we were a couple of years ago. But we've got more more to do there. We can give you some. examples and we are absolutely trying to hardwire our. charter into our approach. If you look at our first tier complaints, for example, I think they're down around. 40% this year, which is which is great, but more to more to do. So yes, the learning is documented. I think we've covered it well today.
You know, risk.
You know, risk.
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Speaker 1
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Speaker 1
Child benefit. Do you call them customers or do you call them claimants? Generally in HMRC we talk about our customers. We talk about customer service as a as a. philosophy of operational delivery, as would be true in, you know, high street bank or. supermarket or any other high volume. retail customer service organisation. You know, many of my teams will be working with customer service institute.
And so that that concept of service matters. But in the benefit system.
And so that that concept of service matters. But in the benefit system.
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Rupert Lowe
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Rupert Lowe
Claimant has grown up. So yes, that's what you're seeing in there is, I think, on the basis of English Matters, claimants , probably more accurate than customer in this case. I mean, if you're going to apply that, you should probably call the taxpayers donors, which which I'm sure they're happy with taxpayer. But anyway, no, I .
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Speaker 1
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Speaker 1
Was just interested because the report does mix and match. It does. And I, you know, I think it is because generally HMRC will use the word customer generally in the benefit. system you'll hear the word claimant. So in. DWP probably, although I haven't checked for a while, you know the claimant will be spoken about more. But as you know we are running a tax. service and every business in this country pretty much is interacting with us and or most households. And as you say, we want to provide a service to them that makes it as easy as .
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Speaker 2
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Speaker 2
Because we know in data things will go wrong. There are blind spots in data. It can be. incomplete as well. So a key lesson is making sure that people. understand working with data, that this is not one silver bullet. That in and of itself, the data does not. determine a conclusive outcome. It requires further checks and corroboration. And because of those limitations in data, the. importance of really considered customer contact is, is, is key. The hyper care model, as I, as I referenced earlier, I think is a good model for how we can apply those lessons more broadly.
And we're doing that through. sharing these insights and these. lessons with our Counter-fraud community of practice made up right across the public sector. We're doing specific sessions with those that lead Counter-fraud work in government departments and their albs as well. Mark Cheeseman is the chief executive of the CFA, is writing to accounting officers as well to remind them of these principles. And as we go into the.
consultation review period for the Code of Practice, which underpins the Digital Economy Act and the legal gateway in which this data share.
And we're doing that through. sharing these insights and these. lessons with our Counter-fraud community of practice made up right across the public sector. We're doing specific sessions with those that lead Counter-fraud work in government departments and their albs as well. Mark Cheeseman is the chief executive of the CFA, is writing to accounting officers as well to remind them of these principles. And as we go into the.
consultation review period for the Code of Practice, which underpins the Digital Economy Act and the legal gateway in which this data share.
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Speaker 2
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Speaker 2
Bringing and combining that data in a safe. proportionate way will help address the challenges around levels of confidence that there's a problem here. But I think the, the, the optimum way to deal with this type of challenge is through fraud prevention and the idea that we can bring that data at point in time to, to. inform decisions around if there's an issue, a means that if there is a problem, we're catching it sooner, ideally stopping it in the first instance or we're catching it. quicker is helpful. It means then we're not creating significant debt. That then has to be chased as a consequence of that as well.
And if we can, if we can kind of create awareness that we're doing this type of advanced analytics and data sharing, there is in of itself a deterrent effect that comes from that also. So I think we should be. confident in letting it be known that we are bringing data together to find this, because all the academic research and my experience as a cultural practitioner tells me it is the. likelihood of being caught that stops people fraudulently .
And if we can, if we can kind of create awareness that we're doing this type of advanced analytics and data sharing, there is in of itself a deterrent effect that comes from that also. So I think we should be. confident in letting it be known that we are bringing data together to find this, because all the academic research and my experience as a cultural practitioner tells me it is the. likelihood of being caught that stops people fraudulently .
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Speaker 2
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Speaker 2
Kind of call it fuzzy matching, how you kind of bring data together that can compensate for differences across different data sets as well. So we have well tried and tested. proven ways of joining data where you don't have perhaps exact information to work from. But of course, that is a. probabilistic confidence, as it were, to, you know, talking the data science for a moment. So in other words, it doesn't give you an absolute guarantee that there is you've found an issue, which is why then the combination of using the data insights to say there's something not quite right here, but we're not going to make a decision alone based on that joining of that data.
But instead, actually what we're going to do now is further.
But instead, actually what we're going to do now is further.
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Speaker 2
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Speaker 2
You could do this job of identifying fraud a bit better? Yes. If if we can get to. So I think there's a couple of data quality fundamentals. So as, as the public sector, we don't have. a clear and confident understanding of who lives in what property, wherever, at any one point in time. That's quite difficult to establish. So again, we have to layer up insights to kind of say, we think Rob Malcolmson lives here or here, but the, the ability to then bring in more insight from like what we call like a unique reference. So like a national insurance number is a good example of that.
When you have, say, somebody's national insurance number in two different data sets, joining that up becomes much more, you know, easy to do. So if we're in a world where we can kind of bring a. uniformed data. specifications together, so we can ask that how data is collected from citizens is done in a uniform way, we can overcome some of those data deficiencies, as .
When you have, say, somebody's national insurance number in two different data sets, joining that up becomes much more, you know, easy to do. So if we're in a world where we can kind of bring a. uniformed data. specifications together, so we can ask that how data is collected from citizens is done in a uniform way, we can overcome some of those data deficiencies, as .
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Speaker 4
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Speaker 4
That once it's in the budget, it just comes in. Yeah. Jonathan. So it depends on the proposals. Normally, anything that's requiring legislation, we will publish. legislation in. draft and then that will be part of the consultation process. But it will very much depend on the exact measure. But we will want, particularly around some of the issues that we've already touched on around debt. We will want to consult widely on those. We have very good engagement with the, for example, the low income tax reform group. They've been really helpful in shaping proposals. So we will want to do that because, again, we want to have as many safeguards and protections in .
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Sarah Olney
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Sarah Olney
Thinking about other. departments and their ongoing efforts to kind of innovate, particularly around fraud and loss, what, what what. recommendations will, will you be making that will that will encourage them to continue innovating, even though as we've explored today, this this particular experience, HMRC what are the what are, if you like the positives that you've .
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Speaker 2
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Speaker 2
Will look like to that problem as well. Two, I think this shows us we solve it in this pilot. We see it in other contexts as well, that we know that fraud, you know, fraud costs. between 55 and £81 billion against the public sector each and every year. And one of our key kind of. defenses in that is the use of data sharing analytics. So we should be bold and. confident in our use of that. And as long as we bring colleagues together. co-design it with, as I mentioned, you know, operational and policy colleagues, counter fraud experts in the room, lawyers, data governance colleagues, you can bring people together at a really kind of crack, kind of how you can do this work well.
So let's, let's lean into that because we see case after case in the public sector fraud authority alone since.
So let's, let's lean into that because we see case after case in the public sector fraud authority alone since.
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Speaker 2
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Speaker 2
The work that I'm responsible for, we have audited. savings of fraud, prevented or detected and brought back into the exchequer of £1.5 billion. We can show this work can be done well, can be done effectively, and have real impact as well. So let's lean into doing more of this. But let's learn the lessons around safeguards, around customer.
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Clive Betts
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Clive Betts
Okay, right. That was the end of our questions for today. And thank you all very much for coming and giving evidence to the committee. I think we've had an interesting session, and we've probably learned that mistakes do happen when they happen. It's really important that they aren't covered up and that they are actually put out in the open and a sharing of those and an attempt to put them right as quickly as possible, and then to learn lessons from the future. I think that's, you know, what we what we've seen today, hopefully, and we thank you for trying to explain that to us.
We will now consider the evidence that you've given to us. We'll produce a report as a committee in due course. An uncorrected version of today's. transcript .
We will now consider the evidence that you've given to us. We'll produce a report as a committee in due course. An uncorrected version of today's. transcript .
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