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HMRC cuts IT spending in half in 2 years

Almost too easy... Tax authority cut £700m from budget, loses 'no quality'

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HMRC has reduced its spending on IT from £1.4bn to £700m in two years, according to Phil Pavitt, the organisation's chief information officer (CIO) and director of change.

Pavitt told the public sector efficiency expo in London that HMRC that the cuts had not come at the expense of quality of service.

"This year it was just under £700m, and by the end of the spending review it will be just over £600m. And yet the service quality has dramatically improved, not measured by me, but measured by the speaker after me [Amyas Morse, comptroller and auditor general at the National Audit Office]," he said.

HMRC has been critcised in the past for problems with delivery of IT projects, and major system errors that saw millions of people paying too much tax. Pavitt told the audience that, although the authority faces huge challenges, but it is working hard to become more efficient, including by getting incumbent suppliers to match competitors' lower quotes and generally being smarter about buying applications.

In the case of customer relationship management (CRM) software, Pavitt told the audience that the authority had 31 platforms in place two years ago, but that number has now been whittled down to one.

"We identified one of those and said, 'Okay, we're going to migrate to that. Whatever that one is we're also going to modernise to the latest version,' which we perhaps hadn't always had in every part of our business," he said.

To keep the costs of such a process down, HMRC has a commercial arrangement whereby one supplier performs the migration and then the upgrade - all done with no capital investment from the authority, Pavitt said.

"The cost of the new platform is much cheaper than the running and the maintenance of the old platform. Freeing up and reinvesting that money means we'll replace every single application - two-thirds of our infrastructure - in the next four years for the outlay of less than £20m, when the original bill was closer to £200m. Not a pipe dream, but a commercial reality."

HMRC has also been working on improving IT that underpins its call centres, according to the CIO.

"If you have call centres attracting a large number of calls, but their IT is not available for 120 to 150 minutes a week, that introduces a level of inefficiency. If you have call centres whose IT is a 100% month after month, inevitably you give the business a chance to improve their operation, which they have done, to meet the need of the customer," said Pavitt. "IT transformation, which foreruns some of the bigger transformations at HMRC, was critical to get right."

This article was originally published at Guardian Government Computing.

Guardian Government Computing is a business division of Guardian Professional, and covers the latest news and analysis of public sector technology. For updates on public sector IT, join the Government Computing Network here.

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