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A National Audit Office report says that limited money for IT is hampering improvements to the administration of National Insurance.

The report, published on 30 June, says that HM Revenue and Customs' Contributions Office, which maintains personal records on the National Insurance (NI) database, would like to make significant improvements but is constrained by a lack of funding.

"The selection criteria across HMRC for IT projects have become more stringent and there is no funding in 2010-11 for routine improvements," says the NAO's report on HMRC's use of resources to administer NI since 2006-07.

It says that although the Contributions Office makes extensive use of IT to carry out its work, it does not always have "up-to-date functionality".

One example given in the report is that Contributions Office staff have to type in the whole address on letters to the public because the IT system has no postcode-based search link. Key information sometimes has to be retrieved through searches of paper files and microfiches.

These processes are more time-consuming and less successful than an electronic search, but HMRC will only fund IT improvements if they are related to the implementation of legislation.

"Although there are presently very limited funds available for major IT enhancements, HMRC should consider how individual administrative procedures might undergo a more fundamental change over the longer term to achieve optimum efficiency," the report recommends.

"It should also consider the opportunities for reducing incorrect or incomplete incoming data and for exerting greater control of how work is received, with special attention to further reducing the use of more costly paper based processes."

The document also provides an update on the fluctuating service provided by NI telephone helplines since its previous report in January.

In 2007‑08, the department answered 96 per cent of calls on NI matters compared with 61 per cent in 2008-09, well below industry best practice benchmarks. This increased in 2009-10, but only to 73 per cent.

However, the quality of advice provided to callers by the National Insurance contact centre was found to have exceeded its target performance in recent years. In 2009-10 96.5 per cent of calls met the standard of advice required and followed security procedures, compared with a target performance of 89 per cent.

The report says this is partly due to the "considerable experience" of contact centre staff.

Chris Pennell, principal analyst at Kable, said: "HMRC is caught between a rock and a hard place. It cannot justify extra funding for ICT unless it can deliver savings or improved productivity, but it is fast reaching the apogee of what can be achieved through improvements to working practices alone.

"Certainly, without further investment into management reporting and data processing tools, the department will struggle to deliver on improvements to revenue collection and tackling tax evasion."

This article was originally published at Kable.

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