(8 years ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Chris Stephens (Glasgow South West) (SNP)
I beg to move,
That this House has considered HM Revenue and Customs’ (HMRC) plan Building our Future which will close most of its offices and make substantial staffing reductions; is concerned that this could seriously compromise the ability of HMRC to collect tax, enforce compliance and close the tax gap; believes the plan should have been subjected to parliamentary scrutiny; and calls on the Government to ensure that Building our Future is suspended until a comprehensive consultation and review has been undertaken.
I draw the attention of the House to my entry in the Register of Members’ Financial Interests, and to my position as chair of the PCS—Public and Commercial Services Union—parliamentary group and as an active trade unionist. I thank fellow Members from all parties represented in this House for their support in securing this debate, and I thank the Backbench Business Committee for granting it.
Before I move on to the substance of the debate, I hope I may be allowed to wish Calvin Thomas well on his last day of work in this place. Calvin arrived in the House in 1989, becoming a Doorkeeper in 2000, with nine years in the Members Lobby and seven years in the Special Lobby. I know that many of my colleagues are grateful for all the help that he has given us and our family members and guests over the years, and we wish him well as he returns to his beloved island of St Helena. [Hon. Members: “Hear, hear.”]
On 12 November 2015 Her Majesty’s Revenue and Customs published departmental plans for the future structure of HMRC, entitled “Building our Future”. It is important to note that the plans were issued by the Department, rather than via a ministerial statement. That is unsatisfactory, given their impact, which includes the closure of 90% of the office network and thousands of staffing reductions.
In 2005, HMRC employed approximately 105,000 staff; in 2016, the figure stands at approximately 58,000—an almost 50% reduction. The Building our Future plan seeks to close almost all the 160-plus HMRC offices and to move to 13 regional hubs and four specialist sites. It seeks to make further job cuts to bring the headcount down by 8,000, to 50,000, although some information suggests the intention is to reduce staffing levels to 41,000.
The timeline for the proposals is in two phases: in the first phase, HMRC proposes that 21 offices are to be vacated up to March 2017; in the second phase, 27 office closures are to take place between June 2017 and March 2018. HMRC will in future be based at 13 large offices and four specialist sites, where 95% of the staff who remain after the cuts will work.
On 16 February, HMRC issued compulsory redundancy notices to 152 members of staff, 70% of whom are members of the Public and Commercial Services Union. That is the biggest number of compulsory notices issued in a single instance by any UK civil service department.
Peter Grant (Glenrothes) (SNP)
My hon. Friend will be aware that 11 of the compulsory redundancy notices have been imposed on constituents of mine who work at the Glenrothes HMRC office, which is scheduled to close in June. When the closure was announced, staff got the same assurances that are being given to current members of staff, but the PCS told me that, in practice, their members—many of whom had given 30 or 40 years of dedicated service to the public—were made to feel they just did not matter. Part-time workers were asked to accept relocations that would have meant they spent longer commuting than at work. Employees with care commitments were expected to work more than two hours away from their home, where they might be called to an emergency. It was even claimed that the distance they were told they would have to travel between Glenrothes and Edinburgh was based on a straight line, but it was impossible for them to take that route unless they swam across the firth of Forth. Has my hon. Friend any reason to believe that employees who are currently being threatened with redeployment or redundancy will be treated any better than my constituents have been?
Chris Stephens
I thank my hon. Friend for that intervention—[Interruption.] Well, we will call it an intervention. He is right to be concerned about some of the practices we are hearing about from trade union members and staff members based in HMRC. People are being called into one-to-one meetings where they are denied trade union representation. If an employee is having a meeting with a manager to discuss their job prospects, I would expect the trade unions to have access to that meeting, but they do not. Perhaps the Minister can deal with that. I will come later to the issue of travel times.
Liz McInnes (Heywood and Middleton) (Lab)
It is my understanding from my experience as a trade union rep that it is compulsory to consult the trade unions when redundancies are announced, and that members of staff are entitled to have representation.
Chris Stephens
That is also my experience from when I was a trade union rep. We need to clarify that point, and I hope the Minister will do that.
Mark Durkan (Foyle) (SDLP)
Does the hon. Gentleman recognise that some people are receiving redundancy notices by email—not even face to face?
Chris Stephens
That is an interesting point, given that we had a debate yesterday about e-balloting and trade unions’ right to access email for a ballot. It seems it is okay to issue a compulsory redundancy notice by electronic means. Perhaps the Government will take that into account when they discuss the Trade Union Bill.
We believe that HMRC and the Government want to send a signal using the 152 staff facing compulsory redundancy to demonstrate exactly how they will go about the mass office closure arising from the Building our Future plan. We find this to be unacceptable and not acting in good faith.
Patrick Grady (Glasgow North) (SNP)
I congratulate my hon. Friend and others on securing this debate. Does he share my concern that a number of the arguments we were given in 2014 for Scotland remaining in the Union are beginning to unravel? We were told that separation shuts shipyards; that our heavy industry, such as the steel industry, would be at risk; and that a major benefit of the Union was having the civil service employees in the United Kingdom and Scotland. Now it seems that the case is unravelling on all those points.
Chris Stephens
My hon. Friend raises a fair point in that some workforces were told that offices would close if they voted for independence. To be fair, in my experience, workers in the shipyards and at HMRC came to an individual choice on the referendum. I do not think those scare stories were necessarily accepted by many parts of the workforce. However, again we hear the use of rhetoric around the constitution to say that places will close. We will find that it is not an independent Scotland that is closing those offices but a Tory Government.
In preparing for this debate, I came across a debate on the then Inland Revenue from over 30 years ago in the other place. A contribution by Baron Houghton of Sowerby, a former Chairman of the Public Accounts Committee and chair of the Inland Revenue Staff Association, stood out:
“the human factor is the ultimate right…and there is no substitute for it. No computers will deal with taxpayers who require consideration and attention, and to whom some measure of discretion or of consideration may be due.”—[Official Report, House of Lords, 20 July 1983; Vol. 443, c. 1199.]
Those words are as appropriate today as they were in 1983. They seem to me to be part of an ethos that all of us, across parties, should endorse as a cornerstone of public services. Sadly, those behind HMRC’s Building our Future plan are taking the wrecking ball to those foundations and not just demolishing the future of HMRC’s buildings but hammering the staff, the taxpayer, and the public. If they are allowed to proceed, towns and cities across these isles will be at the forefront of yet more ideological austerity. Hard- working and conscientious staff will once again be expected to clean up the mess, and taxpayers will foot the bill for the short-sightedness and short-termism of successive governments and Treasury Ministers. HMRC is not building a future—it is destroying it.
Fifteen years ago, the Inland Revenue and Customs and Excise combined had 701 offices across the country. Today we are being asked to accept that the 13 centres proposed by HMRC can possibly replicate that kind of coverage. Is there anyone who believes that the citizens of Penrith can better be served by a “super-centre” in Manchester, compared with Carlisle; those in Portlethen served better from Edinburgh than Aberdeen; or the people of Penzance served better from Bristol than Redruth? We are asked to believe that the best interests of the taxpayer and of society are met in a system that has staff in Glasgow travel halfway to Golspie to meet clients who have travelled halfway from Golspie to Glasgow, sitting down at some “neutral location” to discuss an individual’s sensitive and confidential tax affairs. I am told that one of these neutral locations is what can only be described as a hut in a public park. I am told—if I had not heard this with my own ears, I would not have believed it—that HMRC staff are advised to take a warm jumper and a bag of grit to these meetings during winter.
In truth, a look at the latest staff satisfaction survey from HMRC unfortunately makes this all too easy to believe. It would make some informative bedtime reading for those behind this closure programme. Fully 2% of staff strongly agree with the statements “I feel change is managed well in HMRC” and “When changes are made in HMRC they are usually for the better”, while 6% strongly agree that “I would recommend HMRC as a great place to work”, and 3% strongly agree that “HMRC as a whole is managed well”. On measure after measure, time after time, staff at HMRC are shown to be demoralised, demotivated, and depressed.
What other outcome in staff morale could result from the shuttering of office after office around the country? How enthused would anyone be knowing that, in a matter of months, their workplace is to be closed and that they and their friends and colleagues are to be relocated miles away? I suspect that if those behind this scheme were to be told tomorrow that their palatial offices were to be shuffled off from London to Norwich, Peterborough or Harwich—a journey that staff in these offices will be expected to do in reverse from next year —a murmur or two of discontent may well escape from their lips. Staff are entitled to ask exactly why a Government who invent catchphrase after catchphrase on regional policy—from the northern powerhouse to the midlands engine—are intent on such a centralising agenda. They may well ask why they are being shunted into sidings, rather than providing an express service to their communities.
I am sure that colleagues will touch later on the impact the closures will have on their constituencies, so I will not dwell too long on the specific towns and cities that will be hit, or on how hard they will be hit.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Does my hon. Friend agree that the loss of service will not only be geographic? Specific services are being abandoned. For example, HMRC has recently announced the abandonment of its valuation check service for small and medium-sized enterprises, thus completely compromising employee share ownership schemes.
Chris Stephens
I am aware of that and I hope to touch on it later. I thank my hon. Friend for his intervention.
Middlesbrough has the third highest unemployment rate in England, and nearly 3,000 people are already on the dole in Bootle, while Derry has the highest unemployment rate of any constituency. To see those places on a list guaranteed to create job losses at HMRC and in the wider community is to see a plan that will, in the words of the Public and Commercial Services Union,
“consciously increase unemployment in areas which are already employment blackspots.”
I suspect that the word “Mapeley” will come up in the course of this debate, so let me touch on it. I referred earlier to the more than 700 offices formerly used by HMRC. Mapeley Estates snapped up more than 130 of them for its offshore property portfolio after loading itself up with debt in order to front up its side of this rotten charade with the then Government: 84% of the funding that Mapeley obtained to acquire that lucrative contract came in the form of loans. That shabby deal with a shabby company comes to an end in 2021. For the privilege of renting publicly built offices sold off for a song, HMRC will have the
“right to occupy buildings, with leases based on market terms”
after that date. That is very generous of Mapeley.
I commend the National Audit Office on its 2009 report on the deal. It is redolent with phrases such as,
“the Department has not achieved value for money…The Department did not fully appreciate the risks… The Department has not had strong processes to monitor the overall cost of the contract and whether it is achieving value for money”.
The Exchequer Secretary admitted to this House last year that the end life of the Mapeley contracts represented a
“one-off opportunity to make this change to the estate footprint.”—[Official Report, 24 November 2015; Vol. 602, c. 1300.]
That is part of the truth behind the closures—a private finance initiative deal worth billions from the public purse, used to enrich a Bermuda-domiciled corporate entity, with the public left with nothing at the end of 20 years, except the right to sign a commercial lease.
I will end with the words of a PCS member and HMRC employee, my constituent Bobby Young, who is chair of the PCS Revenue and Customs branch:
“Whilst my branch welcomes the news of a slight increase of jobs in Glasgow, we absolutely oppose it if it comes at the cost of jobs elsewhere. Communities from Bathgate to Bootle will be devastated by these closures—that is not a price worth paying for the sake of a few extra jobs in Glasgow.”
If anyone should know about prices, it is an employee of Her Majesty’s Revenue and Customs. Sadly, it seems that their superiors know very little about value.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Could I just suggest that we try to aim for between five and six minutes, in order to give everybody the same amount of time?
Valerie Vaz
Thank you, Mr Deputy Speaker. I assume that that was an intervention, so I will get an extra minute! I thank the hon. Member for Glasgow South West (Chris Stephens) for securing this Backbench Business debate, and, of course, the Backbench Business Committee.
This is an important debate. The Government can raise money in three ways: create it, borrow it or raise taxes. The main purpose of HMRC, the subject of the debate, is to collect taxes. That enables the Government to take back what they have spent on public services. I want to focus on whether HMRC works, where it is going and what can be done to change it to make it more accountable.
The governance arrangements are quite bizarre, for a democracy. Given HMRC’s importance in collecting taxes, the fact that it is a non-ministerial Department is incongruous. There is no Minister to hold to account on behalf of the people for whom it ostensibly works. It is governed by a board, on which four out of five non-execs are from big business. There is no representation from pay-as-you-earn taxpayers, of which there are 31 million, or even from small businesses. There appears to be no accountability and no acting in the public interest. That needs to change.
From the Occupy movement at St Paul’s in 2011 to the Panama papers, the public are becoming more aware of what happens to the tax people pay—or, in fact, do not pay. They are becoming more aware of the fact that after a few lunches, large corporations can get the light-touch treatment. Google paid the equivalent of 3% in corporation tax. In 2011, Starbucks paid no corporation tax. Mr Deputy Speaker, I do not know whether you know the joke about people who wanted to raise awareness about the fact that Starbucks was not paying tax. They would go in, ask for a coffee and say that their name was “no tax”, so that the barista who came back with their coffee would call out, “Coffee for no tax!” That has had a huge effect on making people aware that Starbucks was not paying any money.
It has been pointed out by the International Business Times that Shell, British American Tobacco, Lloyds banking group and Vodafone all paid nothing in corporation tax. You will remember, Mr Deputy Speaker, that the former head, David Hartnett, had 10 lunches with KPMG, and it had its tax liability reduced. It even has a non-executive representative on the board.
Where is HMRC going now? As the hon. Member for Glasgow South West suggested, the document is called “Building our Future”, but its subtitle should be “Tearing it down”. I concur with him. The future of the country really depends on the amount of tax that is put back into the economy in Britain. Instead of investing in people who have skills, expertise, a commitment to public service and institutional memory, HMRC is reducing that capacity. In 2005, it had 105,000 members of staff, but in 2016 it has only 58,000. That is a reduction of nearly 50%.
HMRC is closing 170 offices, presumably to sell off the public estate to developers, and replacing them with 13 regional tax centres; actually, they are call centres. It plans to save £100 million, but it could recoup that if it closed the tax gap. I do not know whether you know this, Mr Deputy Speaker, but the tax gap is the difference between the tax owed and the tax collected. In 2013-14, it amounted to about £34 billion, and I think the current figure is about £25 billion. That is a lot of money.
Since 2010, only 11 people have been prosecuted by HMRC, despite the fact that it was given a list of 3,600 British people who hid their money in Switzerland. Revenue and Customs has not quite worked out that if it has more staff, it can collect more tax; and that the more people it employs, the more tax they pay and contribute to the economy. No wonder the wealthy—the 1%—are laughing all the way to the Cayman Islands.
The closure of the offices is having a direct impact on my constituency. Walsall faces the closure of its HMRC office, with the loss of 60 staff. My constituent Sahin Kathawala has said that she may not even qualify for one of the relocated jobs. If they are lucky, staff will have to go to Birmingham, where rents are higher so it will be more expensive to live there. It will be more expensive for staff to travel to Birmingham, so they will incur certain costs. My local people in Walsall South will have to telephone a call centre, rather than being lucky enough to have face-to-face contact like that between Dave Hartnett and KPMG. The Public Accounts Committee said in 2013 that the telephone services were absolutely abysmal, and The Telegraph reported that half of all calls to HMRC were not answered. The impact of that could be millions of people paying the wrong amount of tax.
This week in Walsall, we have had the news that BHS might close, and who knows what will happen to our local BHS. With the closure of the HMRC office, nearly £l million will be lost from the local economy, which Walsall cannot afford to lose.
PCS says that the plan is designed not to maximise tax collection, but to reduce spending, which is the opposite of what HMRC’s main objective should be. What can be done? I do not know if you have read “The Joy of Tax” by Richard Murphy, Mr Deputy Speaker, but it is very much worth reading. I think it should be required reading for everyone, including sixth-formers. In his books on making economics easy, which we should all read, Ha-Joon Chang says that people do not need to be economists to understand economics. Richard Murphy has said that HMRC should become a Government Department in its own right, subject to proper parliamentary scrutiny and to independent review.
We need to retain our local tax offices with local staff who have information about the local economy; stop the relocation until an equality impact assessment has been done; and invest in more staff. HMRC must reduce the tax gap, not the workforce. In that way, we can stop the outflow of capital and give back to the public purse all it is owed. After all, it is the Government who put in the investment in education, skills and infrastructure that enable communities, companies and the workforce to thrive.
Chris Law (Dundee West) (SNP)
I thank my hon. Friend the Member for Glasgow South West (Chris Stephens) for bringing forward this debate. The issue of tax avoidance has obviously been highlighted in the House by the recent publicity over the Panama papers. It is beyond doubt that powerful individuals in the UK have been shamefully implicated in those documents. These people want to keep their offshore tax affairs a secret. Let us be quite clear: both rich individuals and organisations are using trusts and shell companies in places such as Panama and the British Virgin Islands for one purpose and one purpose only—they hide their financial assets from the tax authorities of the countries where they actually live and do business. It then becomes extremely difficult or, indeed, even impossible for tax collection agencies such as HMRC to collect accurate levels of tax on their wealth.
To be effective, HMRC requires the recruitment, training and retention of skilled and experienced tax professionals. They are the very people who make sure that the Government have enough money to pay for schools, hospitals and pensions. It is in this context that the current misguided reorganisation of HMRC needs to be understood.
Since the Government came to power in 2010, they have invested vastly greater resources in pursuing benefit fraud than in going after the real villains—those who funnel billions of pounds out of our country. Figures show that 10 times more Government inspectors are employed to investigate benefit misuse by the poorest in society than to deal with tax evasion by the wealthiest. The Public Accounts Committee report on tax fraud stated that a meagre 35 wealthy individuals are investigated for tax fraud each year. To put that in perspective, it is only slightly more than the number of Government Members who could be bothered to turn up in the Chamber today. HMRC does not even know how many of these individuals are actually prosecuted. We need to put that in the context of the fact that this country still presides over a tax gap of £34 billion, which we should move urgently to close.
I recently discovered that the ownership of the leases of HMRC offices—this has already been mentioned by my hon. Friend—was transferred to a company called Mapeley in 2001. You could not make this up, Mr Deputy Speaker. Where is Mapeley based? In the Bahamas. That is right: HMRC pays rent to a company registered in a tax haven. To quote the chairman of the Public Accounts Committee, this Government have scored a “massive own goal”. Who stands to profit from the sales of HMRC local offices? You guessed it: Mapeley again. Why not use local council offices that may be available, and then any profits from the rents would go straight to the Treasury?
The UK Government intend to close 137 local HMRC offices across the UK. Two of them, Sidlaw House and Caledonian House, are in my Dundee constituency, where almost 800 staff are employed. This is of course driven by the Government’s austerity obsession, which means that the budgets for Departments and public bodies have suffered swingeing cuts. The Chancellor boasts of having increased the funding for HMRC, but it does not even come close to restoring the cuts he made in 2010. At this moment, about half as many people work for HMRC as did in 2005.
I have spoken in this Chamber before about HMRC and have tabled a number of questions, only to receive evasive and unhelpful answers. Employees, some of whom have more than 30 years’ skill and experience—decades of loyal service—are being abandoned by an organisation to which they dedicated their whole careers. At Caledonian House in Dundee alone, there are 10 couples working under the same roof. Those 10 couples could see their entire income disappear overnight. The proposals are set to destroy families’ lives.
Hannah Bardell (Livingston) (SNP)
My hon. Friend is making a powerful speech. Offices in my constituency are going to be moved to Edinburgh, as are many others in West Lothian. I am sure he will share my concern that the number of redundancies in February was the biggest ever across the civil service, and that carers and people with disabilities are being disproportionately affected by those compulsory redundancies. We should be doing all we can to support them and stand up for their jobs.
Chris Law
I completely agree with my hon. Friend. At a time when this is still in consultation, the forced redundancies coming through are an absolute shame and embarrassment for all of us in this House.
Relocating HMRC to regional centres in Glasgow and Edinburgh will mean not only job losses in Dundee, but a loss of boots on the ground, and will diminish the capacity for public contact anywhere north. For example, Aberdeen has paid more than £300 billion from its oil resources into this Government, yet there is not going to be an HMRC office there, and the largest growing city in Europe, Inverness, will not have any representation —not to mention the rural areas in between. It is essential for HMRC to offer its clients access to skilled, trained staff based in the local area. Speaking from previous business experience, I know what a struggle it can be getting through to HMRC on the phone; what sort of business will we come to expect? I have to share a story I have heard just in the past 10 minutes: one of my colleagues has tried eight times to pay a bill that is due and still cannot get through.
No one in their right mind would argue that it would make sense to have just two huge hospitals in Scotland, one in Edinburgh and one in Glasgow. If the NHS can maintain internationally recognised standards of service in thousands of clinics and hospitals around the country, surely it is possible for HMRC to do the same in a network of fewer than 200 local offices.
To return to my earlier point, the Panama papers have dramatically drawn attention to a fact that has been emphasised over and over again in this House, by colleagues from all parties, namely that sufficient resources need to be dedicated to HMRC so that it can scrutinise sources of income to ensure that the tax due is paid. It is clear that to do this we need HMRC offices all over the UK, staffed by experienced tax officers with local knowledge. No one would ridicule the Government for making a U-turn on HMRC’s Building our Future plan.
HMRC has the potential to become a paradigm of self-sufficiency, a public service that pays for itself. That idea is certainly less far-fetched and counter-intuitive than the measures currently set to be put in place, which are designed to boost, yet again, the income of companies based in offshore tax havens.
Peter Dowd (Bootle) (Lab)
I thank the hon. Member for Glasgow South West (Chris Stephens) for bringing this issue before us today.
For my constituency of Bootle these proposals are little short of disastrous—although I do not think they are proposals, as I fear that the Government have already made up their mind. At the same time, they have simply washed their hands of the matter, on the grounds that the reorganisation of HMRC has nothing to do with them. They want us to believe that HMRC is a sort of offshore haven, outside the Government’s control. I know that HMRC collects taxes on their behalf, but that is stretching the notion of a tax haven just a bit too far even for this Government.
Not only are the Government completely uninterested in what they cannot control, but they now seem to be in the business of being uninterested in what they can. They have put up a firewall between themselves and any decisions about the reorganisation, on the grounds that it is not a matter for them to interfere with. My hon. Friend the Member for Walsall South (Valerie Vaz) alluded to that. The Government believe that the HMRC board should be allowed to get on with things, unbridled by any political considerations that it might fall foul of. To put it another way, the Government have reached for the Treasury’s bargepole and are pushing this issue away from themselves.
Peter Grant
Does the hon. Gentleman agree it is extremely ironic that at the same time as the Government want to maintain an arm’s-length relationship between the client and HMRC, the relationship between HMRC and big businesses—including big, tax-dodging advisory businesses—is at a very short arm’s length?
Peter Dowd
The hon. Gentleman’s point is spot on, and in future we must try forensically to consider those connections.
I previously used the word “pusillanimous” to describe the Government’s past actions, and given the circumstances I thought that was a reasonable way of describing their approach to this issue. This issue affects the lives of thousands of dedicated civil servants up and down the country, but the Government’s claim that it has nothing to do with them rings hollow. On one hand the Government feel that the operation and reorganisation of HMRC is its business, and that they should not interfere as a matter of principle—in other words, senior civil servants and the board can just get on and do what they want, and the Government will remain silent. That is disingenuous at the very least. In short, the Government are ducking their responsibilities again.
On the other hand, like a medieval baron, the Government want to interfere in all sorts of matters that take their fancy. Only yesterday they decided that their attempts to interfere in the running of trade unions was a mistake, which led to a retreat to save the Prime Minister’s bacon and get trade union support in the referendum. The Government also feel able to interfere in the organisation of schools, how they are run, and who will or will not run them at a very local level—almost school by school. However, on a major issue to do with tax raising revenue in this country, they are silent because that is for someone else to deal with. That is not acceptable. The “nothing to do with us” old chestnut will not wash.
These proposals directly affect my constituency. HMRC has been sited in Bootle since the 1960s. There are a number of offices, with other Departments in situ employing more than 3,000 staff. That number is falling day by day. In 2005, HMRC employed 105,000 members of staff, but that number continues to fall. The so-called Building Our Future programme—a misnomer if ever there was one—seeks to close almost 160 HMRC offices and relocate them. A more accurate description would be “Demolishing our Future”.
Apparently, HMRC has criteria by which it chooses which offices are to close, but no account is taken of the impact of those closures on local communities like mine, which have thousands of jobs dependent on the service, the wider impact on the community’s social cohesion, or the effect on the many local businesses that serve those offices. I had a meeting with senior HMRC staff, for which I thank them. However, the criteria that they indicated had been used to inform the closure decisions did not on the whole stand up to much scrutiny for the offices in my constituency.
Let me give some examples. The HMRC staff talked about transport links needing to be available and robust. The Bootle office is three miles from Liverpool city centre where the new office is to be sited—I am not sure whether that site is even available yet. Bootle has excellent bus links across the city region. Indeed, there is a main bus interchange literally 200 yards from one of the main offices, and just a few hundred yards from another one. Both main sites are similarly close to five stations on the Northern and Ormskirk lines. Those stations have excellent cross-city region links, and are no more than 10 to 15 minutes ride from Lime Street station in the city centre, where apparently the office is to go. We are close to the city centre, yet the Government are saying that transport links are essential and therefore the office must be in the city centre.
No discussions have been held with the passenger transport authority in Merseyside, or with the Cheshire or Welsh transport authorities. I mention the Cheshire and Welsh authorities simply because if a substantial part of the decision is based on transport links—among other things that I do not have time to touch on now—the fact that we have not even discussed those links with the area’s transport authorities throws into doubt the robustness of the plan. Consultants were paid a huge amount for this plan, and we should get our money back from them because they pinched it from the taxpayer.
Several hon. Members rose—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. With three speakers left, if Members stick to exactly five minutes each, we will get everybody in.
Tom Elliott (Fermanagh and South Tyrone) (UUP)
I will certainly stick to five minutes, Mr Deputy Speaker.
I thank the hon. Member for Glasgow South West (Chris Stephens) for securing this debate. I heard the intervention from his colleague, the hon. Member for Glasgow North (Patrick Grady), about Scottish independence. He will forgive me if I do not agree with him, but that is a debate for another day.
It is difficult to follow the logic of the Government’s decision to close HMRC offices. In Northern Ireland, six offices are to close and everything is to be centralised in one office in Belfast. The office in my constituency is in Enniskillen. To anyone who thinks that people could easily relocate to Belfast from Enniskillen or surrounding areas, I point out that it is at least an 80-mile journey—in some cases, a 100-mile journey—to the office in Belfast. It is impractical, even impossible, for relocation.
I cannot follow the logic, particularly given that Northern Ireland is the one area of the UK with a land border with another EU state. HMRC is vital, especially in places such as Northern Ireland, where the smuggling of illegal fuel is a huge business. That major issue cannot be dealt with from just one office. We have to look at this in a more practical and sensible way. The end result of the closures will be a loss of jobs and services to the community. HMRC, not the Police Service of Northern Ireland, has the lead in dealing with smuggled and laundered fuel in Northern Ireland. How will it do that away from the border areas it is supposed to work in?
Another significant impact will be the loss of help desks—some offices have already lost them. It is a major blow to communities. I will cite one example, around foster and kinship carers, who now must register as self-employed. These people, providing a vital service to our community, do not want to be tied up with form filling and filling in tax returns every year. They might have to pay an accountant. Apologies to any accountants here but I do not have to tell Members the prices they charge. These people do not need that. Yes, the service is available online, but not everyone can use it online.
We hear about the telephone help desk. The Minister tells me that HMRC’s telephone communication service is an increasing choice for inquiries. Well, why would it not be, if it is the only choice? He also tells me that HMRC is improving the telephone service and that it now answers 80% of calls. What happened to the other 20%? He also tells me that the average queue time is 12 minutes, so I guess that some people wait 20 minutes, and probably some of them hang up. If that is the best we can do, for a front-line service, it is extremely poor and makes the argument, which I and my colleagues are making, that we should keep the offices and the front-line desks to help and support the community.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I congratulate my hon. Friend the Member for Glasgow South West (Chris Stephens) and others on securing this debate. I am proud to have added my name to the motion.
HMRC has been dismantling its services in Wales for over 15 years. Where there were previously 21 tax offices in towns and cities across the country, it is now proposed there only be one, in south-east Wales.
HMRC’s Porthmadog office in my constituency is one of those threatened by the latest round of closures. This is the home of the Tax Office’s Welsh language unit and of needs enhanced service staff. It is well placed to attract and retain fluent Welsh-speaking staff, and offers a naturally Welsh-speaking workplace. Needs enhanced service staff, by the nature of their work, have to be close to the clients whom they need to visit in their own homes. This service and, of course, the Welsh language unit serves the region of Wales where demand for Welsh language services is at its highest.
As one of the users, I would urge every Welsh speaker, even those who lack confidence to use the language to discuss financial matters, to take advantage of these services, because English words can always be dropped in as well. This is good not only for the good of the language, but particularly because the Porthmadog staff are excellent at their job.
Beyond Porthmadog’s limited Welsh language remit, HMRC’s commitment falls far short of the statutory requirement to treat the Welsh and English languages as equal when providing public services in Wales, particularly as regards the opportunity for businesses and charities such as chapels to have access to services in Welsh, as is their right. To be honest, the proposal that the service can be maintained just as well in Cardiff needs to be questioned. The county of Gwynedd is home to 77,000 Welsh speakers, 65.4% of the county’s population. Cardiff has fewer than half that number of Welsh speakers and, of course, is a capital city where those speakers are not so concentrated. HMRC is intent on moving the service from a rural region where Welsh is the language of everyday life and civic administration, to an urban centre, 150 miles and over four hours’ drive away—about as far from the great majority of its Welsh-speaking users as it would be physically possible to go and still be in Wales.
If the Porthmadog office building itself—Mapeley’s Ty Moelwyn, I might add— is the problem, I would strongly urge the Government to look at alternative sites in that area and to urge HMRC to do the same. I have corresponded with the Financial Secretary on a number of occasions, requesting that this be done. Porthmadog county councillor Selwyn Griffiths and Town Councillor Alwyn Gruffydd have met the Under-Secretary for Wales, following a public meeting and petition earlier this year. Discussions have been held with HMRC’s regional implementation lead officer, and I am—I hope—right to be quietly optimistic.
The DWP office in the same town is perfectly suitable to house the Porthmadog HMRC staff, as is the Gwynedd Council-owned canolfan galw Gwynedd, nearby in Minffordd. Both these offices are excellent Welsh-language workplaces, ideally placed to attract and retain experienced Welsh-speakers in the area where Welsh is both a community and professional language. This is an important point. Although Cardiff might look like an ideal centre for Wales, if we want to keep good staff, who are used to working in the Welsh medium and want to work in Welsh-speaking workplaces, this is the ideal place to locate and keep them. Simply closing these offices will also be a body blow to plans to devolve tax powers to Wales.
On the one hand, the Tory Government extol the virtue of Wales taking more control over our taxes—something that Plaid Cymru, of course, warmly welcomes, as we have done for years—yet on the other hand, the means of administering these powers is being systematically reduced. The level of reorganisation proposed should be subject to proper public and parliamentary scrutiny at the UK level, and I welcome today’s debate, but there are specific issues unique to Wales that must be addressed before any final decisions are reached.
First, we must recognise that increasing Wales’s fiscal powers will require increasing staff capacity, as opposed to moving jobs across the border and centralising down in south-east Wales. Secondly, an independent economic assessment of the impact of moving HMRC’s Welsh language unit and needs enhanced service jobs from Porthmadog to Cardiff must be undertaken. Thirdly, HMRC must work with the Welsh Language Commissioner to undertake a language assessment of the impact of moving these jobs from a Welsh-speaking community in terms of their effect on the rights of Welsh-speaking taxpayers and Welsh-speaking staff. Finally and most importantly, HMRC officers must consider alternative locations in the Porthmadog area, including co-location with Gwynedd Council or the Department for Work and Pensions, in order to agree a cost-effective solution to retain jobs in the area.
I urge the Government to commit to reconsidering the impact of HMRC proposals on their services in Wales, their services to Welsh speakers, their services to the nation as a whole in the light of the devolution agenda and the significance of well-paid public sector jobs to a low-wage economy such as Dwyfor Meirionnydd.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I am grateful to my hon. Friend the Member for Glasgow South West (Chris Stephens) for securing the debate, and to the Backbench Business Committee for making him such a success.
My constituency is home to one of Scotland’s best-known tax offices, Centre 1. My home town of East Kilbride is synonymous with personal tax affairs, which, indeed, are part of its identity. My own grandmother worked for the tax office there 30 years ago. HMRC is a major employer, and the movement of thousands of jobs from my town would be a massive blow to the local economy. The announcement of the planned closures of three sites has created anxiety and uncertainty. Only last month it was announced that the archive site at Hawbank Road would close by 2017; the Plaza Tower is to close by 2021, and Centre 1 by 2026.
The closure of the Hawbank Road site is particularly distressing given the timing of the announcement, and there are also real fears that the process of closures may be speeded up if lease terms cannot be agreed at what will be the last remaining site in East Kilbride in 2026. Despite reassurances from the Government, I have not been kept up to date on the status of the lease negotiations, and, again, I ask the Minister for that information.
Staff members to whom I have spoken have voiced their concern about the closures. They worry about the impact of a further staffing reductions on their ability to do their jobs well. They worry about having to travel to a new, unknown site, and about the difficulty of finding suitable childcare, given increased time away from home. They are significantly concerned about the lack of consultation, and about the effect of the proposed changes in the civil service compensation scheme if they lose their jobs. Thousands of those people both live and work in East Kilbride. They are integral to our economy—they spend money in local shops during their lunch breaks and after work—and their families are part of our community. If we are to promote economic growth in my constituency, we need to encourage companies and services to move to East Kilbride, not to leave it. “East Kilbride, here for business” is one of my main mottos. The Government must understand that if the site is closed, our local economy will be at real risk.
A few weeks ago, I asked the Secretary of State for Scotland to conduct an impact assessment of the closures. He assured me that no action would be taken without full consultation of all those involved, but that does little to allay the fears of those who will be affected, or to give any hope that the areas that will lose such vast work forces will be supported. What we require is a full impact assessment.
The staff at HMRC are specialists in their field and take pride in their roles, but decisions such as these have a detrimental impact on morale. They create staff stress and anxiety. HMRC staff should be supported so that they can do the vital work of ensuring that tax income is maximised to pay for our essential public services, rather than being left to worry about their jobs and their future while plans are put together that jeopardise their ability to do their jobs well.
HMRC’s Building our Future plan seeks to uproot staff from their established bases and communities, and to centralise them in the already well-equipped population centres around the country. The plan has been subjected to no robust parliamentary scrutiny or comprehensive consultation. My constituency can ill afford such a blow. I urge the Minister and HMRC to suspend the plan, to work with the dedicated staff at HMRC sites across the country to ensure that any proposals that are presented in the future address the revenue collection needs of the country, to conduct impact assessments, and to engage in comprehensive consultation and scrutiny.
Let me paraphrase the words of Oscar Wilde. To lose one site would be unfortunate, but, under this Conservative Government, to lose two or three sites in my constituency is nothing but extreme carelessness.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
I should like to thank my hon. Friend the Member for Glasgow South West (Chris Stephens) for securing this debate. There have been plenty of thoughtful and, indeed, robust contributions so far, with Members—notably all on this side of the House—doing their best to scrutinise the general principles behind HMRC’s proposals as well as individual local proposals. I shall add my tuppence-worth in a moment. What shines through in this debate is the frustration, which I share, at not having enough information or attempts at justification to enable us to do our job of scrutinising the proposals thoroughly at a strategic and local level.
Whatever view people might take of these proposals, they are certainly radical. As we have heard, thousands of jobs could be lost and a 93% cut in the number of HMRC offices could be implemented. This is not tinkering around the edges in any way, shape or form. It is therefore not only right but imperative to ask questions about how such cuts and closures will impact on HMRC’s ability to collect taxes and tackle tax dodging, particularly at a time of huge public concern over that issue in the light of the Panama papers. It is right that we should ask about the consequences for the towns and cities in which tax offices are marked for closure. It is also absolutely right that we should pose some of the many questions that the hard-working, dedicated and expert staff in our constituencies have raised.
Perhaps the Minister will be able to answer some of our questions today, but I must emphasise that debates alone will not be enough. We need the people behind these proposals to come here to explain them directly to Parliament. That would allow Members to get stuck into the nuts and bolts and to get behind the management-speak and buzzwords that are too often passed off as answers. If that does not happen, staff and taxpayers will be left questioning whether HMRC is really “building our future”, as the glossy brochure states, or whether this is in fact a question of buildings forcing our future. It has already been pointed out that this is taking place in the context of the expiry of the extraordinary contracts that were entered into in 2001, when 600 or so properties were sold to the offshore company, Mapeley Steps, and then leased back, PFI-style, to HMRC. Those contracts expire in the years leading up to 2021. In the absence of answers to our questions, many will conclude that this is more about digging HMRC out of the hole that it jumped into in 2001, rather than being about any kind of strategy. That is the only conclusion open to us.
The remaining questions are many and varied, but I shall get down to the basics of the issue. Why is 13 the magic number? Why are 13 offices preferable to 30 or 530? Why is the sensible range of hub sizes calculated at 1,200 to 6,000 staff? And if that size of office is perfectly efficient, why should offices such as Cumbernauld, which are within that range, have to close? Does the proposed configuration take suitable account of the expertise and local knowledge that can be built up by having a presence across the country? For example, the offices in Aberdeen and Inverness have experts in oil and fishing. And does it take into account the expertise that will be lost through employees being unable to travel to new locations?
The brochures and press releases tell us that saving £100 million a year by 2025 is apparently the goal. We are told:
“Moving more of HMRC’s work out of central London, which has some of the world’s most expensive office space, will enable HMRC to make substantial savings”.
How has that figure been calculated, particularly when HMRC does not know exactly where the new hubs will be? And how is the idea of moving out of expensive city centre locations consistent with closing offices in Cumbernauld, East Kilbride and Bathgate, for example, and centralising them in big prime city centre sites in Glasgow and Edinburgh? Can we see the sums?
Hannah Bardell
My hon. Friend makes a powerful point. On the specific issue of centralisation, virtually no work has been done in my constituency of Livingston to assess the impact of the proposals in relation to transport and travel. The distance between Livingston and Edinburgh is relatively short, but what about the people in Dundee who will be expected to travel? Is it not clear that this is an ill-conceived and ill-thought-out proposal?
Stuart C. McDonald
Absolutely.
We want to see the sums and the justifications for the proposals. Will each of these local decisions be revisited if the sums do not add up? Has the effect on local communities been factored into HMRC’s considerations? Does it feature at all? I have had a similar experience to that of my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), in that when I asked the Minister about this, his written answer stated simply that HMRC
“will undertake all necessary consultations and impact assessment work to inform”
its plans. No one is suggesting that any town or city where a public sector office is based can assume that the office will be there forever, but it is far from unreasonable to say that the local economic impact of office closures will be a significant factor in decision making, so what weight has been attached to that?
Most important to me and many MPs here are the questions of our constituents—the dedicated, skilled staff in the tax offices. They want to know whether jobs are moving with them or whether they are moving to new roles in a new location. HMRC claims that people will be better able to develop careers up to senior level, but my constituents fear that their good-quality roles will be replaced with poorer-quality work. How did HMRC calculate that 90% of employees will be within reasonable daily travel? Not only does it not know where offices will be, but reasonableness of travel does not just depend on distance but transport links, parking spaces, and accessibility. Will those issues be assessed on an individual basis?
For other staff, including a good number in my constituency, challenges arise through disabilities and care commitments. Why has HMRC not undertaken a proper equality impact assessment of its proposals? Why did HMRC change its HR policy in February 2016, particularly when redundancies were on the horizon, so that union members, as my hon. Friend the Member for Glasgow South West mentioned, were no longer entitled to take a trade union rep to one-to-one discussions?
Most concerning are the questions around the 152 compulsory redundancy notices that have been served. How can they be genuine redundancies given that the work that the employees are doing is continuing, that there are no immediate plans to close the offices, and that the Department has recruited over 1,000 new staff in other locations at the same grades? What is the explanation for that? Why will HMRC’s chief executive not meet the Public and Commercial Services Union about alternatives to compulsory redundancy? How can all that be happening while HMRC is apparently spending £1 million a month on overtime to mask staffing shortfalls?
Mark Durkan
At Foyle House in my constituency, staff are being made compulsorily redundant while other staff are being moved in from other locations, with it supposedly being used as a stepping-stone office. Those who have been told that they are being made redundant are being told that redundancies will happen on a workstream, rather than whole-office, basis. People are getting word week by week. HMRC calls that a plan, but it cannot tell people where they stand from week to week.
Stuart C. McDonald
I agree. That emphasises that the sums do not appear to add up and the plan is not any sort of plan, but a desperate attempt to get out of the hole that HMRC got itself in back in 2001.
The debate has been helpful and provided another opportunity to raise questions, but it also highlighted that much more scrutiny and consultation are required if we are to understand properly what the plan means for HMRC, for taxpayers, for towns and cities where offices are situated and for hard-working employees. The case for cuts and closures has not been made. We no longer need glossy brochures and buzzwords, but hard facts, detailed scrutiny and genuine consultation.
Rob Marris (Wolverhampton South West) (Lab)
Well, Minister, it’s all a bit of mess, isn’t it? I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. He touched on staff morale, the workforce figures and the fact that there has been no ministerial statement. Along with several other hon. Members, he also mentioned the shameful Mapeley contract, signed—I am sad to say—by a Labour Government who did not realise at the time that it was an overseas company.
My hon. Friend the Member for Walsall South (Valerie Vaz) touched on a point dear to my heart when she mentioned HMRC’s curious governance arrangements. She also referred to the strange fact that people in her constituency, which is close to my constituency, will have to travel to an HMRC centre in Birmingham, where rents are much higher than in Walsall or Wolverhampton, where, I am disappointed to say, the Government propose to close Crown House. The hon. Member for Dundee West (Chris Law) quite rightly mentioned the imbalance of resources devoted to benefit fraud versus tax evasion. To sum up what my hon. Friend the Member for Bootle (Peter Dowd) said movingly about his constituency: the Government are indeed uninterested.
The hon. Member for Fermanagh and South Tyrone (Tom Elliott) mentioned geography and spoke about foster carers as an example of people trying to help their community who need face-to-face access. The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) mentioned the difficulty that Welsh speakers are likely to have with the relocation to Cardiff. Finally, the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) quite properly pointed out the lack of an impact assessment.
The context of this is that HMRC is embarked on something called “Making tax digital”. The Chartered Institute of Taxation says that that promises significant potential benefits but that HMRC’s resources should not be cut further
“before the full cost-savings that digitisation promises are being delivered.”
There is the rub. We see that under “Making tax digital” businesses will be required to update HMRC quarterly, via digital tax accounts. As the right hon. Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee, said in a letter to the Financial Secretary this week:
“I understand that HMRC has recently clarified, for the first time, that businesses would be required not just to submit information to HMRC online once a quarter, but that they would also be required to do all their record keeping in a prescribed digital format.”
The Institute of Chartered Accountants in England and Wales—I suspect a similar situations pertains in Scotland and in Northern Ireland—found in its survey that 75% of all businesses and 82% of sole traders would need to change their record-keeping systems to comply with the Government’s new proposals for making tax digital.
As far as I can tell, HMRC is a mixed blessing on this—there is a mixed picture on digitisation. In a written answer to me on 1 February, the Financial Secretary to the Treasury said:
“HMRC’s Business Plan for 2016-17 is currently being finalised and will be published by the end of March 2016 on GOV.UK.”
That is an online publication, but unfortunately neither I, nor my excellent researcher, nor indeed the House of Commons Library, can find that document online. So if it is there, it is buried—not very good on digitisation there.
The office closures have been spoken about movingly today. They are happening all over the country and will make access for individuals much worse. We know that access by telephone has been appalling, although, to be fair to the Minister, with extra resources and extra staff, because of pressure from Opposition Members, that has improved somewhat. Again, the context of this is that we are trying to tackle tax avoidance, which we see in the Panama papers. HMRC staff are rushed off their feet now, so how are they going to deal with the fallout from the Panama papers? They are just not going to be able to do that. I would like the Minister to refer to that when he replies, because a similar situation applies in respect of the general anti-abuse rule that we hope we are going to have and to implement. I laud the Government on that, but staff will be required to enforce it; we do not have the enforcement if we do not have the staff.
The Office for Budget Responsibility made the following comments about the tax yield loss from Guernsey, Jersey and the Isle of Man:
“HMRC is also now less optimistic about how much of the lost yield can be recouped through additional compliance activity, on the basis that they are unlikely to be able to work the higher number of additional cases on top of existing workloads.”
The OBR estimates that HMRC will now recoup £530 million, which is down from a previous estimate of £1.05 billion. Talk about cutting off your nose to spite your face: cutting the number of staff and not being able to work the extra cases to get in the revenue. The staff would pay for themselves, and there are many, many studies to that effect.
All this comes coupled with a Government who have increased the size of the tax code by 50%. I understand that, as all Oppositions talk about simplifying taxation—it is the holy grail—but I am not aware of it happening in the 15 years since I first entered this Parliament. “Tolley’s Tax Guide” now runs to 1,500 odd pages, whereas it had 1,000 in 2010, so it is 50% longer. I am not saying to the Minister that we therefore need 50% more staff, but I think that most people would say, “If we are having more complexity rather than more simplification in tax, we probably need at least the same number of staff, with their expertise.” As it is, the number of staff in HMRC has plummeted in the past six years—some of this is a result of efficiency and some is because of digitisation.
Like all hon. Members, I suspect, I received a very helpful briefing from the Public and Commercial Services Union—PCS. I declare an interest, in that I am a member of the Unite trade union, and I am proud to be one. PCS represents more than 35,000 workers in HMRC, which is well over half the workforce, so I think PCS has some idea of what it is talking about. One thing it highlights is the lack of an equality impact assessment, which should have been done. There is anecdotal evidence—I stress that it is anecdotal—from London and the south-east of England that 40% of those being targeted who will not be able to transfer under this centralisation have disabilities. That may or may not be the case, but without that equality impact assessment we just do not know. Many staff with disabilities or with childcare or care for the elderly responsibilities will be disproportionately affected because the additional travel occasioned by centralisation—even if it is geographically possible which it is not in some parts of the country—will not be possible for them.
According to the PCS briefing, HMRC is not prepared to discuss the planned office closures with a recognised trade union, but it will discuss how those closures will be implemented. If that is the case, it is unacceptable. If that is really the Government’s view, they should put their money where their mouth is—I do not advise them to do this because it will be a lot more expensive in the long run—and de-recognise the trade union that represents more than half their staff, or they should comply with the spirit of the law and engage properly with a recognised trade union. They should have the one-to-one discussions, which were initially promised, but which are now being withdrawn in terms of having a union representative present. That is part of what union recognition is about—a person can have their union rep there when they have difficulties at work. The Government should be telling HMRC to do that.
HMRC is broadly going in the wrong direction. It is putting the cart before the horse. It is cutting staff—or proposing to cut staff—before there is any demonstration that digitisation is working smoothly. It should get it to work smoothly before it cuts staff.
Furthermore, making tax digital will increase costs for businesses, as they will have to put in information four times a year on new software and that will have a disproportionate effect on small businesses. With fewer staff, there is a reduced likelihood of success on tax avoidance and tax evasion, which, to be fair, the Government have done a lot about in the past six years, but they do need to do a lot more. These cuts will further restrict access to HMRC services for individuals and they will be further demoralising for a highly skilled workforce.
I say to the Government that there is a contradiction in what they are trying to do. Quite rightly, they are trying to make HMRC and its operations more efficient by using computers more. At the same time, they are saying that they need to centralise their offices. If computerisation works smoothly, they do not need to centralise geographically; they can do it in a dispersed manner, as is the case with the offices that we currently have, which the Government are proposing to close. I urge the Minister to think again.
The Financial Secretary to the Treasury (Mr David Gauke)
Back in November, HMRC announced important changes to how it would operate. Its aim was simple: to create a modern, efficient organisation that would continue to protect this country’s tax revenues, while, at the same time, providing better value to the taxpayer. HMRC is determined to make sure that it is better able to focus on its core priority—to bring in more revenue by tackling tax evasion and avoidance.
Since 2010, it has made real progress. For example, it has driven down the tax gap—the difference between what HMRC should theoretically bring in, and what it actually collects—from 7.3% in 2009-10 to 6.4% in 2013-14. That is one of the lowest rates in the world. To make the importance of that quite clear, let me put it this way: if the Government and HMRC had not taken action to achieve that, we would have collected £14.5 billion less in tax.
We are determined to transform HMRC into a more efficient, more highly skilled organisation, which offers the digital services people expect in the 21st century. That is why, in the spending review of 2015, we made the commitment to invest £1.3 billion in transforming the digital capabilities of HMRC. In this year’s Budget we allocated a further £71 million to help HMRC improve its customer services. By the end of this Parliament that will bring the change we need to make it quicker and easier for taxpayers to report and pay their taxes online. It will deliver a seven-day-a-week service, improved telephone services and reduced call waiting times, as well as dedicated phone lines for new businesses. This investment will pay off. By 2020, we expect HMRC to be saving £700 million a year, as well as delivering an additional £1 billion in revenue in 2020-21.
The next stage of the plan to bolster HMRC and help it deliver more for less is to transform the estate through which it works. In 2010 we challenged HMRC to make savings. We asked it to reduce costs by a quarter and reinvest £917 million of those savings in making sure that more businesses and people paid the tax that they should, bringing in an additional £7 billion a year in 2014-15. HMRC delivered, making savings of £991 million, including reducing the cost of the estate. At the same time, it kept up progress in cutting the tax gap and improving customer service. So far from endangering our plans to clamp down on tax avoidance and improve customer service, as some have suggested today, these plans are crucial to those aims.
Let me remind the House that HMRC’s plans will generate estate savings of £100 million a year by 2025.
Mr Gauke
I have many points to get through, but if I have time I will give way.
When HMRC was formed in 2005, it had around 570 offices spread out all over the country—an inefficient way of doing business in the 21st century. Reorganising this network of offices was a priority even then, which is why, following a number of reorganisations, that number was reduced to around 390 in 2010. It now stands at around 170 offices, ranging in size from 5,700 people to fewer than 10. That is a start, but it is not efficient enough. The changes that we announced in November represent the next stage of HMRC’s estate transformation programme.
Over the next 10 years, the department will bring its employees together in large, modern offices in 13 locations equipped with the digital infrastructure and training facilities they need to work effectively. These new high-quality regional centres will serve each and every region and nation in the United Kingdom, creating high-quality, skilled jobs and promotion opportunities in Birmingham, Belfast, Bristol, Cardiff, Croydon, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Stratford.
There are significant advantages to such a system: the new offices will have the capacity to encourage people working in different roles, at different levels, to work more closely together, as well as providing more opportunities for them to develop their careers. The offices will be in locations with strong transport links and with colleges and universities nearby, to ensure a ready talent pool close by. In short, they represent the way business is done in the 21st century. HMRC expects the first centre to open by 2017, with the others opening over the following four years.
On the point about consulting HMRC staff, HMRC fully recognises that its most valuable asset is its people. HMRC can only do what it does thanks to its dedicated members of staff who bring in the money that funds our essential public services, as well as helping hard-working families with the benefits they need. That is why HMRC has kept its workforce fully abreast of all its plans to change how it operates, which were first announced internally two years ago. Since then, HMRC has held around 2,000 events across the United Kingdom, talking to colleagues about these changes. Everyone working for HMRC will have the opportunity to discuss their personal circumstances with their manager ahead of any office closures or moves.
I should remind the House that this is about changing the locations, not cutting staff. Indeed, the department’s policy is to keep any redundancies to an absolute minimum. HMRC’s analysis indicates most employees are within reasonable daily travel of a new centre, although that is subject to the one-to-one discussions which every member of staff will have about a year before any planned closure.
Let me pick up the point about trade union representation. One-to-one meetings are an opportunity for managers and staff to discuss how the proposals will affect staff, and HMRC will consult every one of its staff. Once decisions are taken, staff will of course have the opportunity to have representation. This is not a change of approach; these are fact-finding discussions with all members of staff to understand their personal circumstances. Trade union reps have never been in such meetings, but they will be involved, as they would normally, at a later stage.
Chris Stephens
My understanding is that, once there is an outcome at the one-to-one meetings, there is an appeal mechanism, but the trade union will not have access to that either. Will the Minister clarify that?
Mr Gauke
The purpose of the one-to-one meetings is to ascertain the particular circumstances of each individual likely to be affected by the proposals. From that, further proposals will come forward, and the usual trade union representation will be available to members of staff.
Since announcing its decision on the locations of its new offices in November, HMRC has been busy negotiating with suppliers, designing the look and feel of buildings, and planning how it will move its existing workforce. That has included one-to-one meetings with almost 2,500 members of staff who are most immediately affected, to look at their individual needs.
I stress that those are operational changes, decided at an operational, rather than a political level. Making changes to how HMRC offices are organised is an integral part of the Government hubs programme. It is essential to make the organisation fit to deliver better customer service, as well as to make it harder for the dishonest minority to cheat the system—and all at a lower cost to the taxpayer. That has the Government’s full support.
On staff engagement, HMRC staff are currently spread across about 170 offices across the country, many of which are a legacy of the 1960s and 1970s, lack modern facilities and technology support, and do not reflect new ways of working. The current state of the estate is undoubtedly a factor in the levels of engagement from staff, many of whom look forward to working in new, modern, fit-for-purpose offices—the type of workplaces that will also help HMRC to attract and retain the skilled workforce it will require in the future.
There has been much comment about the Mapeley contract entered into by the previous Government, and I for one am certainly not going to defend it. It is not a good contract for the taxpayer, which is precisely why HMRC wants to get out of it. If we do not get out of it now, HMRC will be fixed in it for years to come.
On customer service standards, call handling last week was at 90%, and the average wait was six minutes, but we invested more money at the Budget to improve that.
On Welsh-speaking services, HMRC is committed to maintaining services in Welsh for its Welsh-speaking customers. The quality of those services must continue to be high, and HMRC is actively exploring the ways it can best achieve that.
If we want HMRC to do its job effectively, we must ensure that it is fit for the challenges it faces. We have to be willing to modernise, find efficiencies, target resources, and make long-term strategic decisions. That is precisely what HMRC is doing: transforming itself into a smaller, more highly skilled organisation with modern, digital services and a data-driven compliance operation that will deliver more for the taxpayer at lower cost. That is the policy it has embarked on, and I hope it will have the support of the House.
Chris Stephens
I thank all those who contributed to the debate. They represented all the nations of the United Kingdom, because this issue affects all the nations of the United Kingdom. We heard some excellent points, particularly on HMRC offices being the largest employer in an area in many instances.
Let me say to the Minister that it is cavalier to suggest that employees dragged into one-to-one meetings are denied trade union representation, and he really should look at that. I would also say to him that the lack of parliamentary scrutiny on this issue has been shocking, and many of us in the House will continue to hold the Government to account on it.
Question put and agreed to.
Resolved,
That this House has considered HM Revenue and Customs’ (HMRC) plan Building our Future which will close most of its offices and make substantial staffing reductions; is concerned that this could seriously compromise the ability of HMRC to collect tax, enforce compliance and close the tax gap; believes the plan should have been subjected to parliamentary scrutiny; and calls on the Government to ensure that Building our Future is suspended until a comprehensive consultation and review has been undertaken.