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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.