A PRIVATE firm is raking in millions of pounds because of long delays before telephone calls are answered at North-East tax offices, it is revealed today.

Around 6.5 m people - most dialling expensive 0845 numbers - were left waiting more than ten minutes before their call was answered by HM Revenue and Customs (HMRC), over a six-month period.

The calls - mainly inquiries about tax bills, plus claims for tax credits and child benefit - are answered in Peterlee, County Durham, Newcastle and Sunderland, three of 17 HMRC 'contact centres'.

Now a watchdog has revealed that some of the £33m spent on those calls last year was handed to Cable and Wireless, under a secret deal struck with the 'phone company.

And it has raised the alarm over a worsening service, if ministers plough on with plans to axe 8,500 HMRC staff by 2015, around one-third of the total.

Last night, Margaret Hodge, chairwoman of the Commons Public Accounts Committee (PAC), condemned HMRC, saying: "People have no choice, but to contact the Revenue to discuss their tax affairs.

"I find it totally unacceptable that HMRC uses costly 0845 numbers and charges people for the privilege of waiting for the department to pick up.

"As the minutes tick by, the profits of HMRC's phone service provider, Cable and Wireless, rack up as they pocket a proportion of customer call charges."

Today's report, by the National Audit Office (NAO), found HMRC was unable to say how many millions Cable and Wireless received last year, because it had "no contractual access to this information".

However, people spent 600m minutes ringing HMRC in 2011-12 - much more than the 400m expected - suggesting "Cable & Wireless could have received 50 per cent more revenue than it expected".

The NAO found HMRC had improved its call handling record this autumn, after spending £34m on up to 1,000 extra staff - answering 91 per cent of calls in October, up from 74 per cent in 2011-12.

However, the organisation still planned to slash the number of contact centre staff handling telephone calls from 6,900 in 2011-12, to 3,700 in 2014-15.

The NAO warned HMRC would require around 1,800 more staff than planned, at peak times, to keep the proportion of calls being answered above 90 per cent.

Even that target is below the industry standard of 95 per cent - and callers who hang up during the automated message are counted as being answered.

Mrs Hodge added: "Current call answering targets are far too soft. I am concerned that customers will continue to receive a substandard service in the years to come."

At the start of this year, HMRC had 3,000 staff in Newcastle, 600 in Sunderland as well as several hundred in Peterlee, County Durham.