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Austin Mitchell (Great Grimsby) (Lab)
I am grateful to be able to raise the issue of the transfer of between 20 and 30 compliance staff in Her Majesty’s Revenue and Customs and 20 Valuation Office Agency staff out of Grimsby, where they are happily living and working. Grimsby is a very good place to live and work, but they are being transferred away, reluctantly in most cases. I raise the issue because the Treasury is responding this week, and the responsibility is HMRC’s.
The numbers are small, it is true. HMRC states in its impact assessment that they are
“less than 1% of those employed within the local authority area. It is therefore reasonable to infer that the local economy is not dependent on the HMRC presence at this office.”
That is true, but they are simply part of a wider exodus from Grimsby and other smaller centres produced by the concentration policy, designed to concentrate Government services in larger centres and so to dispose of property and to produce efficiency savings.
In the context of that wider problem, Dame Lesley Strathie, the chief executive of HMRC, is the new Moses—leading her people not into the promised land but out of it, because Grimsby is surely the promised land and the best place for those people to be. She is leading them instead into some traffic-jammed wasteland of a bigger city, where they do not want to be. That is counterproductive, expensive and wrong. They will all have to drive for well over an hour, at enormous expense, to a destination where they do not want to work or be. I apologise to the Minister, because he is dealing not only with the issue of HMRC staff but with the policy of concentration and its impact on Grimsby and other small centres.
The impact is damaging, and Grimsby has higher unemployment than most of the country, in common with a lot of other one-industry towns in which the industry has declined. Grimsby needs jobs—public sector jobs: 21% of employment in Grimsby is in the public sector, compared with 9% in a place such as Wokingham in the prosperous south. Any transfer or loss of public sector jobs, therefore, has a disproportionate effect in Grimsby.
We have a higher proportion of the work force in manual jobs in north-east Lincolnshire than in most of the rest of the country, and fewer people in white collar and managerial jobs. According to the figures, 20% of the work force are classified under the categories of managers, senior officials and professionals, as opposed to 30% for Great Britain overall.
It is a great shame that the founders or forefathers of Grimsby did not take the trouble to invent a Grimsby building society or a Grimsby insurance company, such as the Norwich or the Halifax, which can continue to give employment to local people. We have not got that. We need more white collar and professional jobs in the employment mix, not only to leaven the lump—I should not describe it as that—but to widen employment prospects, providing more diversity and a better choice of careers for young people growing up in Grimsby. Those are the very jobs being taken away from us, however, by transfers based on what I see as a series of wrong decisions—by an act of folly.
Let me turn to specifics and, in particular, to the HMRC tax compliance staff, who are widely praised. In our deliberations on the Public Accounts Committee, we praised them for their achievement in recouping tax and for their great service. They have been praised by HMRC itself. Twenty-nine of them work in Heritage house, which is available to them until 2021—I think it was built to house Government departments and services, and it is certainly co-owned by Mapeley Estates, of glorious memory.
I cannot see why there is a rush to leave Heritage house. Why the exodus? The heads of the Valuation Office Agency and the chief executive of HMRC give different reasons for moving out of Heritage house, which will still be available. People from other departments, notably the Crown Prosecution Service, are also fleeing. That is part of the wider problem. The exodus involves not only HMRC, the Valuation Office Agency and the Crown Prosecution Service, but VAT staff and, we now hear, Jobcentre Plus and Department for Work and Pensions staff. All of them are moving out of Grimsby. Why the exodus from Heritage house? What is the effect on Heritage house?
Those people do not need to leave Grimsby at all. The HMRC staff could certainly be transferred to Imperial house, which also houses Inland Revenue staff. Thanks to the reduction in the Revenue staff employed in Grimsby, the fourth floor is now vacant. HMRC has to hang on to it—the fourth floor cannot be lopped off and turned into an entertainment centre, disco or whatever, to alleviate the problems of the staff. If the staff have to be transferred from Heritage house, why can they not be transferred to the fourth floor of Imperial house, to work with the other tax staff?
They are not being offered that, however, and nor are they being offered the opportunity to work from home, which they told me they could do. Instead, the proposal is to transfer them to Hull or to Cromwell house in Lincoln. The chief executive of HMRC told me that the policy was to
“consolidate its teams into fewer sites and place more location-specific work into larger, more efficient teams in urban centres.”
That will be costly, because both Hull and Lincoln are more than an hour and a quarter’s drive away. If people are transferred to Hull rather than Lincoln, they will have to pay £30 a week in toll charges on the Humber bridge—an expensive business which, incidentally, was not mentioned in the impact survey.
If staff who are transferred must travel for more than an hour—these people will be travelling for well over an hour and a quarter—their travelling expenses must be paid for five years and not only for three years. The department’s calculations are made on the basis of three years’ payment of travelling expenses, for 27 staff I think, at a total cost of £492,000. I think it would be a higher figure than that to transfer those staff to Lincoln: probably £600,000 or more, because they have to be paid for five years given the distance involved. That is deemed by the Treasury to be taxable income. We are taking on a major expense for a minimal service, and shuffling expenditure from the property portfolio to continuous travel expenses. If staff are transferred to Cromwell house, they will arrive there knackered. The drive is not pleasant—I do it quite often—and the drive to Halton is even worse. I like going to Lincoln, but it is unpleasant driving there, particularly at peak travel time.
I am not sure whether it is HMRC’s intention that compliance staff should arrive at Lincoln after an hour-and-a-half drive exhausted and bad tempered, so that they will be more aggressive with the claims they deal with and produce an even greater return. I hope that is not the intention, but it will certainly be the effect. The work done by HMRC staff is not local but non-specific; however, that done by VOA staff is largely local. In the recent fracas about retrospective property valuations, VOA did not have enough staff to complete them. They should have been done from 2006 onwards, but there were not finished until 2010 because of staff shortages arising from efficiency decisions. Yet it is proposed to move staff.
The problem varies in each department, but the overall transfer of not only HMRC staff but staff in other departments is damaging to the employment mix in Grimsby and the recruitment prospects of young Grimbarians, and is unnecessary. I am sorry to say that it will also be damaging to the work, morale and lives of the staff who will be shuttled around willy-nilly, because they do not want to go. They like living and working in Grimsby, which is understandable; I do, too. Why must they move when it would be cheaper for them to continue working in Grimsby, it is expensive to move them to Lincoln, and there is existing office space in Grimsby?
The policy is short-sighted and wrong. It is yesterday’s policy from the mid-noughties, and it is being forced on today’s work force at a time when unemployment is higher than when the policy was arrived at. I have been arguing and have had extensive correspondence with the chief executive of HMRC, who is a courteous and place-worthy lady, and the chief executive of VOA, but it is like arguing with a speak-your-weight machine. Their replies are about a policy that was forced on them when they took over their jobs. The correspondence has not been satisfactory, and their letters always end, “I hope you find this helpful.” Frankly, I do not, because they do not respond to my points. The policy is dictated by the need for economy and efficiency savings, but it will work against both because staff will not be more efficient after an hour-and-a-half drive to work, and it will not be economic to pay them £200,000 a year in travel expenses to do so.
The answer is not to take staff from Grimsby, but to transfer them to Grimsby. It is a good place to live and work. Office expenses are low, and rents per square foot are much lower than in the big centres where it is proposed staff should be transferred. Staff like being there, and do not want to leave. Why pursue at this late stage an expensive policy of concentration when staff who must be transferred could come to Grimsby, where office rents are lower, where staff can live more cheaply in the real world, and where they prefer to be? The problem with Grimsby is its name—I did not give it its name—and it is anything but grim as a place to live. That should be recognised, because people can live there more economically and have a more satisfactory life in a smaller urban centre than in a big city. It is time to reverse the priorities and to bring functions and staff to Grimsby, which is cheaper, instead of driving people out as a result of the policy of concentration in larger centres.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship again, Dr McCrea. I congratulate the hon. Member for Great Grimsby (Austin Mitchell) on securing this debate. I am pleased to have the opportunity to explain and to discuss the Government’s policy on people and estate issues, and its impact on public sector jobs in HMRC and the Valuation Office Agency in Grimsby.
I recognise and appreciate the hon. Gentleman’s passion for his constituency—perhaps we should all call it the promised land—and the fact that he wants to retain as many local services, jobs and employment opportunities for the area as possible. He set out with great knowledge and understanding some of the challenges facing Grimsby, because the private sector is not as strong as he and I would like it to be.
The issue before us is that the main department, HMRC, and its agency, VOA, like others, have been going through a transformation to ensure that they operate in the most efficient and cost-effective way. That process has been taking place for some years, and further efficiencies are required under the spending review settlement. For HMRC, that also provides for reinvestment of more than £900 million to combat tax avoidance, evasion and fraud in return for a reduction in the tax gap of £7 billion a year by 2014-15. That will lead to increased opportunities in enforcement and compliance, but by 2015 HMRC overall will be operating with around 13,000 fewer staff than in 2010.
For both organisations, having the right mix of people and skills in the right-sized teams and locations is important to ensure that they can deliver the services that their customers need. Balancing the need to retain a national network of offices with consistency across operations, while building capability to handle different areas of work, is core to maintaining customer service. Both HMRC and VOA have been carrying out good housekeeping of their estates for a number of years to utilise existing space to the maximum, and that has realised significant savings. For example, VOA has reduced its estate by 25%, saving in excess of £5 million in running costs a year since 2008. HMRC has made cumulative estate savings of £239 million since 2006.
The core efficiency agenda is key to deficit reduction, and managing Government property can contribute to that. The Government’s £370 billion estate costs around £25 billion per annum to run. The highly diverse estate has substantial scope for efficiency improvement, and the Government are the UK’s largest landowner and largest tenant, so it is important to achieve clarity on what is expected from property and how it is to be achieved.
The Government’s property unit leads the property strategy and is responsible for delivering the targeted savings, as well improving the building environment and promoting economic growth where possible. The decisions made by HMRC and VOA working together in a co-ordinated, cross-departmental way on their estates have identified savings to be made, as well as opportunities for work to remain in Grimsby. In December 2008, as part of HMRC’s earlier restructuring programme, the decision on HMRC’s offices in Grimsby was announced. It was decided to vacate Heritage house and retain Imperial house, the larger of the two offices. Heritage house is occupied by HMRC under a memorandum of terms of occupation with the VOA. The VOA now wishes to terminate that memorandum, and HMRC and the VOA will vacate the office by 31 March 2012. HMRC staff in Heritage house were informed of that decision on 24 March 2011.
The office closures will have an immediate impact on people in those locations, and I understand that that is a big concern for the hon. Gentleman. There are around 200 HMRC staff in Grimsby—15 at Heritage house and the remainder at Imperial house. As the hon. Gentleman has said, Imperial house has sufficient space to accommodate all HMRC staff when Heritage house is vacated. The vast majority of staff—167 people—work in the VAT directorate, and about 25 people work in the local compliance department. Local compliance work is being consolidated in Lincoln and Hull where there are established teams.
Austin Mitchell
The Minister has still not said why Heritage house is being disposed of. It is as if the place needs fumigating—there is a mass exodus. Staff from the VOA and HMRC are going, and those from the Crown Prosecution Service have fled to Hull. The building was designed to provide office accommodation for public administration staff. It is beautifully situated; there is parking; and there is a wonderful fish and chip shop nearby. Why the exodus from Heritage house? Why do the Government want to get rid of it?
Mr Gauke
The hon. Gentleman has described a somewhat idyllic scene for Heritage house, and the proximity of an excellent fish and chip shop cannot be entirely ignored. Nevertheless, HMRC has to find savings in its estate and, as the hon. Gentleman has pointed out, Imperial house has the capacity to take in additional staff. HMRC needs to find savings to be more efficient and to ensure that it is as effective as possible at collecting taxes. Together with the VOA, it has taken the view that Heritage house is surplus to requirements.
The long-term strategy for local compliance is to consolidate teams in fewer sites and place non-specific work in larger teams in urban centres. The local compliance department carries out a risk assessment of location specific work, and it assessed that there is no need for a longer-term compliance presence in Grimsby. It has stretching targets for performance improvement and must deliver those with a reduced work force. The aim is to achieve that by setting up co-located teams that will provide greater opportunity to share skills and experience. That has been happening for some years, and as a member of the Public Accounts Committee, the hon. Gentleman will be aware of recent improvements in the compliance yield obtained by HMRC.
There are similar issues for the 20 VOA staff located in Heritage house. The VOA is working towards having fewer locations nationally, each with a critical mass of staff to enable the sharing of knowledge and skills and improve efficiency. Discussions are taking place between VOA staff and their managers before a formal preference exercise in June. The consideration for HMRC is whether or not the 25 local compliance staff are able to travel to Lincoln or Hull, and they have been asked to express their favoured options by the end of May. The focus at present is on supporting HMRC and VOA staff through that change, while ensuring the continuity of service required for customers—the taxpayer or ratepayer—and in the case of VOA, delivery partners such as billing authorities.
HMRC and the VOA are seeking to avoid any job losses, and the staff consultation will enable them to explore all available options. HMRC staff unable to relocate to Lincoln or Hull will continue to undertake compliance-related work for the foreseeable future, based at Imperial house. No one who lives further away than a distance of reasonable daily travel will be forced to move. The 20 VOA staff, many of whom live in and cover properties in the Grimsby area, may be based elsewhere as a result of those decisions. It is not, however, uncommon for VOA property inspectors to start or end their day from home, if that is more effective and efficient. In addition, the VOA has made provision—subject to business need—for home working, which staff may opt for in the preference exercise. The local impacts of the change will be minimal.
The policy for both HMRC and the VOA is to avoid compulsory redundancies. They will do everything possible to help staff find a suitable role, which may be at the closest neighbouring offices or elsewhere. The VOA will continue to carry out property valuations and assessments locally, and many local staff will continue to carry out that work for Grimsby, so that local knowledge of the area and conditions will not be affected. The specific issue of ports will require specialist expertise, but it should not be disrupted by the changes.
Decisions to inspect specific properties or areas are not necessarily determined by the office location; understanding the area and having the right supporting information is key. In all cases, the decision to inspect a property or locality is made after other avenues have been exhausted and when the information required can be gleaned only by a visit.
The hon. Gentleman raised the issue of increased travel costs as a consequence of the changes. Travel costs may increase, but HMRC and the VOA believe that those increases will be significantly outweighed by savings on accommodation. The hon. Gentleman pointed out that costs are greater in Hull and Lincoln, but as far as the VOA is concerned, accommodation in those places is considerably cheaper than it is in Grimsby. The issue affects many areas, and I thank the hon. Gentleman for raising it today and defending the interests of his constituents with such passion. Nevertheless, HMRC and the VOA must make a contribution to clearing the fiscal deficit.
Austin Mitchell
This is the second survey that staff have received—the first must have been inconclusive. This time HMRC staff are not signing the option forms, because they feel that there are no alternative jobs in the tax system in north-east Lincolnshire or in other areas. The Minister has not answered the question about why jobs should not be transferred to Grimsby. It would be a cheaper centre from which to carry out non-locational work. If the work can be done from anywhere, why not Grimsby?
Mr Gauke
As I understand it, the view taken by HMRC and the VOA is that the options presented by Hull and Lincoln were more financially persuasive. Accommodation in Lincoln and Hull for the VOA is considerably cheaper than in Grimsby, and decisions were taken for those reasons and on the basis of good estate management. I know that will disappoint the hon. Gentleman, but it is important that HMRC and the VOA take a businesslike approach to the issue and ensure that assets are distributed in the most effective and efficient manner possible.
Question put and agreed to.