Afternoon:
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If people needed any more confirmation that we live in an Orwellian world where words are frequently used to convey just the opposite of what they mean, consider the comments that resulted from a survey into the work of HM Revenue & Customs, conducted by accountancy body the ICAEW.
Its members deal all the time with the tax authority, so it asked how the quality of work compared with previous years. Its members replied that the service from the tax office was deteriorating and this showed particularly in lengthy delays.
These came in various forms. It is now commonplace for taxpayers to wait for up to three months before they get refunds — which is, of course, in stark contrast to the way HMRC treats any lateness from the taxpayer. It also found, astonishingly, that letters written by Revenue officials are often sent out three weeks after the date on the letter.
Apart from being seriously incompetent, this can cause particular difficulty for the recipient, especially when those letters are final demands and routinely give the taxpayer only 28 days to pay — from the date on the letter. The 400 accountants in the survey also claimed that they found errors in about a quarter of all tax codes sent out. There is, however, a reason for this alarming deterioration in service that will appeal to those with a dark sense of humour.
It is apparently a consequence of HMRC's efficiency drive. When Gordon Brown hammered the Inland Revenue and Customs & Excise into one unit a few years ago, he insisted that costs should be cut year by year in real terms. So HMRC is getting rid of people, and standards are plunging as a consequence.
There is a lesson here that will no doubt be ignored, but which is particularly relevant in the month in which General Motors has gone bust. That business rose to greatness on the back of mass-production techniques that in their day were unrivalled in the world.
It fell to earth as it gradually lost touch with its customers. It produced what it wanted to produce rather than what the customers wanted, and was outmanoeuvred by Toyota and others that were much closer to the market and less ponderous in their manufacturing processes.
This ought to underline the limits of automation and mass production in the modern age, but instead in this country, the same failed techniques and philosophy are being imported wholesale from manufacturing into services.
The most obvious examples are the call centres, which will answer any question from the customer provided it is on the script but are worse than useless for anything else. The philosophy so amply demonstrated by the HMRC is that the customer will get the service they choose to provide, not the other way round. In time, like General Motors, they will all fail. But meanwhile the customer is ever more alienated.
Now is the time to be charitable
There are some big issues businesses do not like to discuss in public, and one of these is what to do about philanthropy and corporate responsibility programmes when there is a recession on. Is it good or bad PR to hand payments to charity just as the business is making people redundant? When all parts of the business are being asked to economise, should the corporate responsibility budget be spared?
The temptation is to duck the issue, as the chief executive of one bank did recently. His organisation is a major donor to one of the big charities. A few weeks ago, it handed over the cheque for the usual amount in the usual way but with one important new proviso. On no account was the charity to publicise the donation.
Happily other businesses such as National Grid are going full-on maintaining their commitment to CSR programmes — chief executive Steve Holliday has set a target of doubling to 20% the number of employees who do voluntary work in company time.
So banks are an extreme case perhaps but there seems little doubt the philanthropic side of corporate life is under pressure. How much pressure we may know more of tomorrow when Business in the Community runs a conference — also sponsored by National Grid — on the challenges of maintaining such programmes in a recession.
It seems self-evident that the need for philanthropy is even greater in bad times than in good, so this is exactly the time companies should be upping, not cutting, their donations — a view made forcibly by Nick Ferguson of SVG, in a recent letter to the Financial Times, albeit wearing his philanthropic not his investment trust hat. But it is also the case that corporate responsibility programmes have to be rooted in the business because only then will people come to trust in them and allow them to drive corporate reputation.
It also follows that slashing the budget to save money is the worst thing companies can do, because it plays straight into the hands of those who claim such programmes are only ever PR hype. How companies react in these difficult times will show whether or not the sceptics are right.
