Newry HMRC Centre

Baroness Ritchie of Downpatrick Excerpts

Tuesday 3rd December 2013 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I would like to thank the Minister for coming here to respond to the debate this evening. HMRC centres throughout the UK, including in Newry, have been subject to turbulent change since 2006, and staff have grown accustomed to their jobs being under threat. However, I was alarmed to hear that the Treasury is now offering voluntary exits and effectively seems to have decided to close down HMRC centres across Northern Ireland—in Newry, Enniskillen and Derry.

The Newry centre currently employs 134 staff, many of whom live in my constituency, and I know that this news came as a shock to them and their families. It represents a real blow to working people and families across Northern Ireland, and the removal of these jobs will be a severe drain on the local economy. These people are also vastly experienced, and as it appears they are not being offered re-deployment, this will be a great loss of expertise.

Despite being hit hard by the financial crisis since 2008, Newry and the surrounding area has great economic potential to harness north-south business development. Significant steps taken under the “Newry Vision” programme have bolstered the private sector, and consideration has been given to where public-private partnerships can be effective. The Newry area, given its strategic location on the Belfast-Dublin corridor, has been identified as a vital economic hub within the Northern Ireland regional development strategy. As has been highlighted by economists and spatial geographers such as Professor John Driscoll, the area could be the fulcrum for key north-south economic development.

However, it is critical for the balance and sustainability of the local economy that these public sector jobs be maintained. Indeed, with 12 public sector jobs per 100 of the working-age population, Newry is under-represented in public sector jobs in Northern Ireland, and removing them would put severe pressure on the whole local economy, including the private sector. Only last week, I was told that staff numbers in the administration sector of the Public Prosecution Service in Newry will be reduced, and that Driver and Vehicle Licensing Agency offices could be closed. That is still open for discussion, and hopefully the Minister with responsibility for transport here could reverse that decision.

[Lady Hermon (North Down) (Ind)]

I am very grateful to the hon. Lady for allowing me to intervene. She will know that the Northern Ireland Affairs Committee recently looked into the appalling crime of fuel laundering in Northern Ireland. I and the other members of the Committee were indebted to the HMRC for its work throughout Northern Ireland, but particularly in the Newry area. One thing we were very concerned about was the evidence given to us about the cost to Newry and Mourne district council of cleaning up the rubbish left behind by these criminal gangs. We need more HMRC staff in Newry, not fewer.

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[Ms Ritchie]

I thank the hon. Lady for her intervention. I sit on a cross-border committee organised by Newry and Mourne district council. A representative from HMRC in Newry attends its meetings and deals with illegal fuel laundering. The last meeting was some six weeks ago, and good progress has been made on that, on foot of the report of the Northern Ireland Affairs Committee, and the good work being carried out by HMRC in dealing with illegal fuel laundering.

[Mark Durkan (Foyle) (SDLP)]

As my hon. Friend knows, Foyle House in Derry, in my constituency, is also affected by the proposals. She is rightly emphasising the fact that jobs are at stake, but does she agree that the quality of services is also at stake? When other taxation services have moved out of Northern Ireland, not least those involving the administration of tax credits, many people—particularly cross-border workers—have been left with very poor services and chronic problems.

[Ms Ritchie]

I thank my hon. Friend for his useful intervention. I agree wholeheartedly that there is a need for this service, particularly in regard to cross-border working, as there is a considerable interchange of population between the north and the south. In his case, it is between Derry and Donegal; in my case, it is between Newry and Dundalk. In my area, there is a memorandum of understanding between both councils, north and south, to deal with economic issues in order to pump-prime the local economy.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady feel that the closure of the office with the loss of 134 jobs will affect the ability of the Treasury to bring in the revenue that this country needs?

[Ms Ritchie]

The face-to-face services provided by HMRC in Newry are vital to my constituency, because of the lack of access to broadband and the need to deal on a cross-border basis with matters such as tax avoidance. Newry’s strategic location means that it is vital to have those services there.

The programme of voluntary exits for staff cannot be euphemistically explained away by the normal rhetoric of “modernisation and streamlining”. It represents the wholesale removal of vital face-to-face and personal tax services, and a distinct refashioning of the link between people and revenue collection. My hon. Friend the Member for Foyle (Mark Durkan) has just made that point as well. Time and again it has been reported that consumers and businesses prefer face-to-face transactions when dealing with tax and revenue issues. The new strategy will have severe limitations, particularly when complex matters are being discussed.

The decision will drastically alter the link between the community and a vital public service. That point has been made by my hon. Friend the Member for Foyle, as well as by the hon. Members for North Down (Lady Hermon) and for Strangford (Jim Shannon). That is already a problem, and I know that many local people and businesses already struggle to access services from HMRC. People can feel disconnected from the system, especially in Northern Ireland, and that will be further exacerbated by the changes.

It might seem more efficient for the Treasury to implement these changes, but it will almost certainly not be more efficient for those people forced to rely on telephone lines, with all the long delays involved, or for those who lack access to the internet or find it difficult to use modern technology. This could leave many people isolated from access to vital services, particularly at a time of widespread changes to the tax and benefits system.

South Down and the region supported by the Newry HMRC centre are predominantly rural areas and as such they face all the problems associated with that, including limited broadband access and people living in remote and isolated locations. Those people cannot simply be expected to adopt online and phone services, especially when complex personal tax issues are under discussion. Recent immigrants, the poor, the elderly and the disabled will all be made more vulnerable by the removal of these services. Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, has warned that this action is being carried out too rapidly and without due consideration.

The Treasury has claimed, through statements to the media and in written answers here, that it is not closing down these centres, but the voluntary exits that are being offered surely amount to a de facto closure. These exit offers are a clear statement of intent, and the closure of the sites, which the Treasury has seemingly made inevitable, will almost certainly increase the pressure on staff to accept the terms on offer. I am deeply concerned about this tactic of offering exit packages before proper, full consultations and impact assessments have been carried out on the closures. It is deeply cynical to hang this uncertainty over the heads of the staff at the same time as offering a redundancy package.

I would therefore like the Minister to clarify the terms on which these exits are being carried out. I would also like clarification on the future of the Newry centre, which dealt with 500,000 queries and cases over the past year. Such clarification will include a time scale for the future strategy for staffing and operations in Northern Ireland. The Minister needs to address why there has been no equality impact assessment, as required under section 75 of the Northern Ireland Act 1998 and as produced for the initial proposal in 1998. Why has there been no consultation with staff, unions or, apparently, the Northern Ireland Executive? Did the First Minister and Deputy First Minister in Northern Ireland make any representations as far back as March or April, when there were some intimations that this might happen? Have they received a response to such representations?

In similar circumstances in the past, the Treasury has sought ministerial approval from the Northern Ireland Executive, as well as a full equality impact assessment and stakeholder consultation. This new approach of offering voluntary exits before this process has begun is deeply worrying, particularly given the devastating impact this closure could have on the local community and economy. There are very real equality issues relating to the closure of this centre, as it is mostly the lower paid, disabled and part-time staff and women who will be most vulnerable and will find it the hardest to get new work; a higher proportion of women will be affected. I also have to point out that the three centres being closed are all in predominantly nationalist constituencies, which could bring its own equality implications.

Before following through with these measures in Northern Ireland, I would also be grateful if the Minister could include more information on the pilot study carried out in the north of England on the introduction of the reformed service. Critical questions are outstanding on the capacity of non-face-to-face and reduced personal tax services to deal with the range of queries that these centres deal with daily. How long will people have to wait on hold to have their inquiry heard? How many cases took more than one call to resolve? How many required a subsequent face-to-face meeting? What was the experience of people and businesses using the new system, and how much will it cost them? There is a clear onus on the Treasury to provide this information before coming to any decision on removing the existing centres. Instead we get the impression of a Department that has made its decision and will find the appropriate reasons from there.

More broadly, we know that tax evasion and avoidance cost the public purse an astronomical amount every year, and that is surely only likely to rise with the closure of local compliance centres. With tax evasion and avoidance costing our economy more than £100 billion a year, HMRC should be expanding rather than cutting offices and staff. Surely the Treasury should be looking at how local tax centres can be adequately resourced and given the scope to take on some of these functions. Indeed, initially we were led to believe the Newry centre would be retained and would assume further responsibility for some cross-border issues, including compliance and tax co-operation with Irish authorities—where better to locate a cross-border taxation co-operation centre than Newry in the context of the development of north-south business links? I am disappointed that that no longer seems to be the case. I would like the Minster to explain what consideration he has given to this. Will he take a more constructive approach?

This Government never tire of telling us of their desire to rebuild and rebalance the economy in Northern Ireland. The message sent out by the decision to remove jobs from the Newry HMRC centre sharply contradicts that, as there are simply not jobs available for these people to move into. Instead, this decision will remove money from the local economy, hitting not just those families directly involved, but businesses across the whole area. I ask the Minister, who has been generous with his time on previous occasions, to hold further meetings with local politicians, the Public and Commercial Services Union and representatives in Newry to look at a constructive solution. I am sure that my hon. Friend the Member for Foyle would join us at such a meeting to discuss Derry. There is an urgent need for the Treasury to review this decision and make a full assessment of the impact of it on the local economy and community.

I am absolutely certain that a viable, economically sound centre can be retained that protects local jobs, perhaps through a centre that also considers aspects related to cross-border tax issues and wider anti tax avoidance and evasion measures. What is absolutely not acceptable is the degree of uncertainty that has been created while staff are being offered exit deals.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

I congratulate the hon. Member for South Down (Ms Ritchie) on securing this debate this evening. I welcome this opportunity to clarify what Her Majesty’s Revenue and Customs is doing in respect of the office in Newry and to give the House as much information as possible.

The answer to the written parliamentary question that the hon. Lady tabled last week highlighted the fact that HMRC has not announced the closure of the office in Newry. However, on 20 November, HMRC invited around 1,500 people in 21 locations to apply for a voluntary exit. That included more than 130 people in Custom House in Newry. The invitation gives people the option to leave HMRC if that fits with their life choices, but HMRC is not making redundancies at this stage.

Before I go into detail on the voluntary exits and what it means for staff in Newry and other offices, it is important to explain the context. HMRC is reshaping itself to become a more modern, flexible and cost-effective organisation that can deliver better, more personalised services for customers at the same time as increasing tax revenues from compliance. Like other Departments, it has to deliver that within ever-tighter fiscal constraints.

HMRC has been steadily reducing in size since it was formed in 2005. Over the past eight years, it has cut its staff from around 97,000 full-time equivalent people to just under 63,000 FTEs at the end of October 2013. It has reduced its estate by more than 200 offices, and is now more concentrated in urban centres. It has done that while improving service and increasing yield. Since HMRC was created, it has more than doubled its compliance yield and delivered major projects, including Real Time Information. During 2012-13, it brought pay-as-you-earn up to date for the first time, answered 75.2% of the calls made to its contact centres—hitting 90% during the last six months of the year—and, for the first time since HMRC was formed, cleared more than 80% of customer post within 15 days.

HMRC has committed to reducing its work force from 63,000 FTEs today to 54,000 by the end of 2014-15 and then to 52,000 by the end of 2015-16. Although retirements, resignations and people reducing their working hours will deliver some of those work force reductions, they will not be sufficient if HMRC is to achieve its work force target. HMRC has always made it clear to its staff that it was likely that voluntary exits would be needed and that is what it announced last month. Targeted groups of staff will be asked to consider whether a voluntary exit is right for them. People in those groups might be in roles that are needed less and less because of new ways of working, including increased automation and the fact that some administrative work has dried up. Others are in locations where, according to all the indications, one, some or all lines of business in HMRC are unlikely to be based in the medium to long term.

Although the specifics of the announcement will, I appreciate, come as a shock or surprise to many people, the reality is that HMRC will continue to contract its work force. That has long been known by staff and many have been waiting to find out where that contraction will take place. Indeed, the hon. Member for South Down acknowledged that there has been uncertainty in Newry for some time.

The background to the news is that in June 2011 HMRC announced that it would be located in 16 key centres until at least 2020. Those centres include Belfast. Newry was one of most of the other offices in which HMRC said that it would be located until at least 2015. As HMRC reduces in size, it will need to continue to bring together its people in larger sites where they can work more flexibly and to reduce its footprint to be more cost-effective. Smaller offices will not be viable as overall numbers reduce and the skills pool in smaller local communities will not necessarily provide all the skills that HMRC needs when it needs them. HMRC has therefore started to identify locations that do not fit business needs in the medium to long term. In seven of the 21 locations where people have been invited to apply for voluntary exit, one or more lines of business intend to withdraw from the office in time. In the other 14 offices, all of the lines of business wish to withdraw. Newry is one of those offices.

There is not at present a proposal to close those offices, since HMRC is honouring the commitment it made to staff in 2011 that they would stay open until at least 2015. However, HMRC’s executive committee took the view that staff should know that there might not be a long-term future for those offices well in advance of any decision on office closures, so that they can think about their options and start planning their futures.

The voluntary exit scheme—I stress that it is entirely voluntary—gives those staff who want to leave HMRC the opportunity to do so on favourable financial terms. Some people will welcome the opportunity to leave the Department given that change and uncertainty in the air. The compensation provided by accepting a voluntary exit will enable people to pursue other life choices if that is what they want to do.

[Ms Ritchie]

If the staff choose to stay and do not take voluntary exit, what is the long-term future for them, for Newry and for the other 13 centres?

[Mr Gauke]

Let me say a bit more and I shall answer the hon. Lady’s question directly. Those who wish to take up the exit package will need to apply by 18 December and decide on a formal offer by 31 January. Their last day of service will be 30 April. As she says, other people will not want to leave and there is no compulsion on them to apply for a voluntary exit if they wish to stay, but they have been given notice of the likely longer-term picture for their offices and will ultimately need to consider their future after 2015. HMRC will not be closing Newry or any of the offices where it invited people to consider applying for a voluntary exit before April 2015, in line with the picture it gave in 2012 about how long it would be based in current locations.

I do not underestimate the fact that for many people this news was a shock and was unwelcome, but I believe that HMRC was right to provide its staff with an honest assessment about the future of their offices or, in some cases, their roles, and to offer them the opportunity to consider applying for a voluntary exit.

HMRC needs to do further work to be able to say if and when it sees itself moving away from Newry and the 13 other locations where all lines of business will be reducing. A future decision to close the office will need to be accompanied by a proper consultation process and equality impacts, involving the employees themselves, their trade unions, right hon. and hon. Members and other local interests.

Let me pick up on a couple of the questions asked by the hon. Lady. She asked why there has not been consultation at this point and I stress that HMRC has not yet taken a decision to close Newry or any other office. Newry does not feature in HMRC’s long-term plans, but as long as there are people in the office, HMRC will not break its previous commitment that no occupied office will close before April 2015. HMRC follows a tried and tested process in these circumstances. If and when there is a proposal to close the office, consultation will be undertaken with interested parties, both within and outside the Department, and feedback will be invited from staff, unions, hon. Members, other elected local representatives, and the local community. Any representations will be considered fully before a final decision is made.

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[Mr Gauke]

The hon. Gentleman makes an interesting point. HMRC is going in the direction of concentration on larger urban offices that have the flexibility to operate. Included in those larger urban offices is Belfast. He tempts me to speculate on future policy matters in the devolution of tax, but I want to make it clear that this is not a proposal to withdraw from Northern Ireland. This is a proposal that applies across the United Kingdom, with a move to larger urban centres. That applies in Northern Ireland, as well as elsewhere.

May I deal quickly with the issue of the equality impact assessment, which is an important matter raised by the hon. Member for South Down? The equality position has been considered, and it has been concluded that there is unlikely to be a disproportionate impact on any of the protected equality groups as a result of the voluntary exit schemes. Consequently, completion of an equality impact assessment is unnecessary. A people impact assessment has been completed, however, and audiences likely to be affected have been identified and appropriate mitigating action will be taken to eliminate those impacts.

If HMRC does decide to close any offices in future it will identify all redeployment options for affected staff. However, because its estate and work force will become smaller, there will clearly be less chance of redeployment in HMRC, particularly in areas that are outside a reasonable daily commute.

[Ms Ritchie]

rose—

[Mr Gauke]

I am conscious that I have two minutes left, but I shall give way one last time.

[Ms Ritchie]

I thank the Minister for his generosity; I hope that that will be extended to HMRC in Newry. May I also ask him to provide us with some information about the pilot study in the north-east of England and its outcomes?

[Mr Gauke]

I will answer the hon. Lady’s question, although I suspect that I will be unable to conclude my remarks as I had wanted to. This issue is very much focused on the inquiry centre, which is only a small part of what is currently undertaken in Newry. With regard to the inquiry centre pilot in the north-east of England, HMRC will decide in January 2014 whether to roll out that service and move away from inquiry centres and face-to-face services and towards a telephone service with additional enhanced support for vulnerable people. HMRC remains committed to providing face-to-face support for those who need it in future, including in Newry and across Northern Ireland. If we decide to roll out the new service next year, HMRC believes that it will provide that face-to-face support in a way that is more flexible and accessible to customers.

Time is constrained, so I will conclude by saying—