The Financial Secretary to the Treasury (Jesse Norman)
I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) for calling this debate, following up on the Backbench Business debate he secured a couple of years ago.
Mr Speaker, I greatly appreciated the unusual range of guttural noises that you displayed a few seconds ago in relation to the hon. Member for Strangford (Jim Shannon). I think it is an attractive aspect of your speakership, if I may say so.
In November 2015, as hon. Members on both sides of the House will know, Her Majesty’s Revenue and Customs announced a location strategy to support its work to create what is understood to be a world-class tax authority. That, in turn, was part of the then Government’s long-term economic plan for prosperity across this country.
Since 2010, successive Governments have made substantial investments to enable HMRC to do more to tackle evasion and avoidance, and to improve compliance, while also becoming more digital and more skilled in order to improve the services it offers to businesses and individuals.
Changes to HMRC and its office estate are an important part of that transformation. As the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East mentioned, before 2010 there was a wide sprawl of offices, varying in size and quality, across the UK. HMRC is seeking to bring the estate towards a more consistent and better integrated network of large, modern regional hubs, and to do so in the interests of its workforce who rightly deserve a modern workplace in which to work and thrive.
Stuart C. McDonald
I am grateful to the Minister for giving way so early. He might come on to this point, but Cumbernauld essentially met all the criteria that HMRC was looking for in selecting its hubs. Why can we not persevere with Cumbernauld? What role do the economic implications for Cumbernauld have in the thinking of HMRC and the Government?
Jesse Norman
Of course, HMRC was focusing on the needs of its operational business and the wellbeing of its staff. It went through a procedure for the whole series of potential locations, and it concluded that, on a wide range of eight criteria designed to support that, the move was justifiable and, indeed, required. It is fair to say that HMRC looked at the wellbeing of its staff and at the future of its business, which is as it should be.
Stuart C. McDonald
The Public and Commercial Services Union and employees would be distraught if I did not simply point out that the staff themselves do not agree; the workers at HMRC Cumbernauld do not, for a minute, think that moving them to an inaccessible location in Glasgow city centre is remotely in their interests. I do not see how HMRC can possibly defend that position.
Jesse Norman
Of course, in any relocation there will be people who disagree with it, and that is to be anticipated. As the hon. Gentleman will know, HMRC has an elaborate and established process—I will come to it—of working with staff and seeking to support them in making the transition to a different working environment. The point I was making was that they can expect a significant improvement in the quality of the space that they are working and thriving in, and this should be beneficial for them and for the Revenue if they are allowed to do that. Of course HMRC will in turn benefit from bringing different skills and specialities together, and form a more connected and more technology-enabled environment.
Jesse Norman
No, I will not. The hon. Gentleman has absolutely no basis for coming in late to this debate in order to ask a question; I am a great fan of his and I have answered questions of his on many previous occasions, but I regard this as a discourtesy to the House. I am happy to take any further interventions that other Members may make.
Stuart C. McDonald
I sense that HMRC Cumbernauld workers will be watching this debate and screaming at their television sets. The Minister paints this rosy picture of this office in Glasgow where they will all be able to move around. First, as I said, 1,700 or so workers will not be able to make that transition at all. Secondly, they are all reasonably happy precisely where they are and they are not remotely impressed with what has been offered to them in Glasgow city centre. Why does he not speak directly with PCS and the representatives of the staff, whom he seems to be talking about?
Jesse Norman
I have no doubt that HMRC, which is operationally responsible for this change and for the management of its business, will have spoken very closely with the relevant unions on this issue, as it has been doing in other areas, too.
If I may, with your permission, Mr Speaker, I will continue to make some progress on my speech. In November 2015, HMRC announced that in the following 10 years it would seek to bring its employees together in 13 regional offices based in locations where it already had a significant presence, such as Glasgow, which is one of the two HMRC regional centres in Scotland. The co-locating of teams across HMRC is designed to lead to increased collaboration and flexibility, making it easier for skills across a lot of teams to be shared and for teams to switch between communications channels and subject areas in order to meet the evolving needs of taxpayers. HMRC recognises that the transition may not be easy and has put considerable support in place to help its workforce through these changes. The hon. Gentleman has mentioned that and I will address that support in due course.
In Glasgow, the regional centre will be situated in the heart of the city at 1 Atlantic Square and is currently in development. It will be home to some 2,600 HMRC staff, who will be moving from six offices around the region in order to fulfil a wide range of tax professional and operational roles, including in compliance and in large business relationships.
Dr Cameron
Does the Minister recognise, however, that HMRC’s plans to move the hubs to city locations are counterproductive and undermine the Government’s own agenda to try to support development in towns? The specialist expertise is already in the towns, so why are we moving the hubs to cities, against even the Prime Minister’s aims of reinvigorating towns?
Jesse Norman
The hon. Lady is right to say that the Government take the needs of towns seriously. That is why we have a towns fund, which, in turn, works with a much wider spread of support that we are giving to cities. Of course towns have their uses and functions, and cities have theirs. HMRC is seeking to use the benefits of the city: the capacity to agglomerate services and bring people together, and give them proper communications and technology support. Those are things from which both HMRC and those staff will benefit.
I have taken a lot of interventions and I now have a limited amount of time, so I will make progress. HMRC has already opened three new regional centres in Croydon, Bristol and Belfast, with staff planned to move to the Edinburgh regional centre later this year. Construction is under way at all the remaining new locations, including Cardiff, Leeds, Liverpool, Manchester, Nottingham, Birmingham and Stratford.
In addition to the 13 regional centres, HMRC will keep eight transitional sites open across the UK for several years to help retain key skills during the transition period, as well as five specialist sites for work that cannot be done elsewhere. For example, HMRC will retain Telford as a site for some of its specialist digital teams. Through this phased approach, HMRC will seek to minimise disruption to business operations.
The overall programme will deliver savings to the taxpayer of around £300 million up to 2025 and then rising cash savings, estimated to be more than £90 million by 2028. It also avoids additional costs of £75 million a year from 2021, when the current PFI contract with Mapeley, agreed by the last Labour Government, comes to an end.
Patricia Gibson
I am grateful to the Minister for giving way as I know he has points that he wants to go on to make. Can he explain to me, and to the House, how the savings he has talked about and the reduction in staff can help mitigate and tackle the £35 billion tax gap that will inevitably grow with fewer staff?
Jesse Norman
The hon. Lady rightly raises the tax gap. When expressed as an absolute number, £35 billion is a large amount of money. Some £7 billion or £8 billion of that sum is caused by people not filling the forms out correctly, and there are many other components to it. As she will know, at 5.6% the tax gap is not only near to its historic low in this country but low against international comparators. It is key to see it as a percentage in the context of the overall amount of money the Revenue collects. HMRC remains an extremely efficient tax collection agency.
It is important to stress that the strategy that HMRC has adopted is not just about cost savings or bricks and mortar. The new office in Glasgow, as well as the other sites, will allow people to develop more fulfilling careers. There will be a wider variety of jobs and, therefore, of career paths to senior roles, as a wider range of work will be based in single sites. The judgment has been that the current office in Cumbernauld does not provide the kind of space that HMRC wants for its staff; nor does HMRC judge it to be fit, over time, for a tax authority operating in the digital age. Modern buildings such as the Glasgow regional centre will deliver a better working environment and experience for HMRC’s workforce. Such buildings will increase HMRC’s attractiveness as an employer, enabling it to recruit and retain the next generation of skilled professionals.
Jesse Norman
I have very little time, and I want to talk about the support that HMRC is giving to staff. As I have said, HMRC will do all it can to retain the skills, knowledge and experience of the existing workforce and minimise any redundancies. The vast majority of existing employees are within reasonable daily travel of a regional centre, specialist site or transitional site, and that is part of the overall strategy. In 2015, HMRC estimated that 90% of its workforce would be able to move to one of the regional centres or complete their careers in their current offices. HMRC expects that the figure will be close to that once all moves to regional centres or other locations have been completed.
For those who are currently based in Cumbernauld, the travel time from Cumbernauld to Glasgow city centre is generally between 45 and 55 minutes by car, or 30 minutes by train to Queen Street station. In the locations that it is closing, HMRC has been proactive and has sought to provide a range of support for staff. In Cumbernauld, it has maintained continuous dialogue between staff and senior leaders. Local managers have received extra training to prepare and support them in that process. For some staff, HMRC is funding visits to the locations of new offices, so that they can experience the travel options that are available to them. As well as regular engagement through online forums and in person, HMRC has supported local trade unions to ensure that they can assist members and provide up-to-date information in order to retain people.
Of course, HMRC recognises that individual employees have distinct and different personal circumstances, so it has put in place structured support to help those who can move, as well as those who cannot. One year ahead of any move, every staff member affected has the opportunity to discuss their personal circumstances with their manager, to talk through any particular needs that must be taken into account when making decisions and any help that individuals may need—for instance, help with additional travel costs for up to the first five years. I understand that that is a tried-and-tested process, with tens of thousands of these conversations having been held in HMRC over the last two years. With that in mind, I hope Members agree that what we are proposing is a sane and sensible solution to the problem.