HMRC Closures

Andrew Turner Excerpts

Tuesday 26th March 2013 Westminster Hall

[Mr Andrew Turner (Isle of Wight) (Con)]

I thank the Exchequer Secretary to the Treasury for being present to respond to my debate.

Her Majesty’s Revenue and Customs recently changed its services: it is trying to become “leaner and more efficient”. Two weeks ago, we learned that HMRC has hatched a plan to close all 281 inquiry centres throughout the country. Last year, those offices gave advice to more than 2.5 million people, but HMRC is closing them because the number of visits has halved since 2006 and, it claims, closing them will save £13 million a year. Other Members would no doubt have their own tales to tell, were they here to speak, but I invite the Minister to consider the claims about usage and cost savings as they apply to the Isle of Wight, because he will find them completely spurious.

Let us look first at the number of people visiting the office. The old HMRC office was open from 9 o’clock to 5 o’clock, five days a week; now it is open only from 10 o’clock to 3.30 pm, three days a week. HMRC shares a building on the island, Broadlands house, with Jobcentre Plus, so people with tax problems can often see HMRC staff through the glass but are unable to speak to them, which is ludicrous. Furthermore, staff are discouraged from dealing with clients personally, face to face; instead, they must floor walk them to a free phone in the next office and get them to speak to someone in the contact centre on the mainland. People are not supposed simply to walk in and get advice: if a taxpayer turns up and insists on talking to a real live person, staff are supposed to make an appointment for another time, a rule which applies even if the office is open and staff are available. I am pleased that the staff on the Isle of Wight do their best to be helpful and tend to ignore that particular edict from on high. None the less, it is little wonder that figures show fewer personal calls being made to inquiry centres, because HMRC has done everything it can to make visiting in person difficult and inconvenient. I have estimates for the island for the past two years. In 2011-12, there were 4,925 visits to HMRC’s Newport office and the two outreach offices; in 2012-13, that figure dropped, but by fewer than 300, so that the total was 4,630. That is more than 4% of the island’s adult population visiting HMRC, which is hardly insignificant.

We should also consider the major changes to the tax and benefits system being introduced by my right hon. Friend the Secretary of State for Work and Pensions. Planned changes to child benefit are likely to lead to 1 million extra people filling in self-assessment forms. In addition, real-time information, as it is called, starts in two weeks. HMRC itself describes the changes as

“the biggest shakeup of the Pay As You Earn…system in nearly 70 years”.

It cannot be safely assumed that the number of people needing face-to-face help on the island or elsewhere will fall.

Let us look at the claimed savings on the Isle of Wight. The original HMRC office in Upper St James street was closed and 36 staff moved into the newly built Apex centre, although taxpayers needed to walk for 10 minutes from the bus stop or had to drive to reach it. The move was always planned to be temporary, and in May 2011 the HMRC office moved again, to Broadlands house. It was anticipated that some staff would relocate to other HMRC offices within what was described as reasonable daily travel distances, but that turned out to be a journey of an hour and a half each way. The majority of staff lost their jobs, and only nine people now work in the HMRC office on the island. Broadlands house is also home to the main Jobcentre Plus office, as I said, and to the valuation office. HMRC’s nine remaining staff moved into empty offices in the building, which seems an eminently sensible solution. The Government already pay for the upkeep of the entire building, so the costs are minimal, and it is hard to see what savings could be made on rent, rates or utility charges from closing the office. The only other opportunity for substantial savings, therefore, would be on staff.

In addition to being open to the public three days a week, the staff carry out what are called personal taxes operations, which is computerised work generated centrally. The work can be obtained by HMRC officers anywhere in the country and includes activities such as changes to tax codes, addresses and so on. The staff on the Isle of Wight are justifiably proud to be achieving 100% of their target. They should be proud: they are an efficient and experienced team—in fact, the nine staff have a combined total of 186 years’ experience, which may well be a record, but certainly represents a large investment by HMRC in training and development over the years. HMRC claims that it intends to deploy the staff affected by the proposed changes elsewhere, and such experienced officers must be a valuable asset, but there are no opportunities within reasonable daily travelling distance from the Isle of Wight. HMRC would therefore be willing to pay the costs for staff to relocate, not only paying the costs of removals, legal fees, stamp duty and so on for a new house, but perhaps even extending to cover the difference in house prices if staff move to a more expensive part of the country. HMRC could therefore incur significant costs for Isle of Wight staff to move elsewhere to undertake exactly the same work that they are doing now. The alleged £13 million savings appear to take into account neither that nor the costs of redundancy packages for staff who cannot be redeployed to another job or do not wish to move.

As part of the plans, HMRC is going to invest in a shiny new telephone system costing £34 million—to save £13 million a year. Looking at HMRC’s record, I would not put my trust in that working out too well. HMRC spends money, but that does not necessarily bring success. Despite HMRC spending £900 million on customer service, the Public Accounts Committee found it had “an abysmal record”. Last year, HMRC allowed 20 million telephone calls to go unanswered—a quarter of all the people who tried to call it. Even its new targets for call answering are described by our colleagues on the PAC as “woefully inadequate and unambitious”. For callers who do get through, there can be other problems.

I want to raise an issue brought to my attention by Jonathan Isaby, of that excellent organisation the Taxpayers Alliance. He received an e-mail from a customer adviser working in an HMRC call service. Apparently, advisers do not have targets based on how long a telephone call takes; instead, the focus is on what they call “wrap-up time”, which is the time after a call in which necessary administration is carried out, such as tax coding, sending e-mails, making referrals and updating customer records. Customer advisers are targeted to keep their wrap-up time to an absolute minimum. They do that by putting people on hold and keeping them on the phone unnecessarily, which increases the cost to the taxpayer and generates income from the telephone call for HMRC. That cannot be right and I urge the Minister to look carefully into that allegation. I know that Mr Isaby will do all he can to assist in getting to the bottom of it.

For those who still need face-to-face advice after the closures, the plan is to replace the current system with a mobile team. They will talk to taxpayers using community centres or local libraries, or, if called for, by making a home visit; but home visits by experts are expensive and inefficient. We do not usually call a lawyer or an accountant to visit us at home.

[Mr Mark Williams (Ceredigion) (LD)]

I am delighted that my hon. Friend has secured this debate. He makes an important point about efficiency savings and HMRC’s proposals. Rurality is a huge issue in itself. Mobile units going round to support small business people and farmers in my community across mid-west Wales would be a huge cost. One wonders how much that has been factored into the equation.

[Mr Turner]

I am not able to say how much it has been factored in, but I can say that doing this over two weeks once a year, which is what I do in the summer when I visit people locally, takes a lot of time. I can only judge that the same business will be included.

It is clear that HMRC does not intend home visits to be the norm. That is a most important point. I feel certain that only a very few people who currently use the face-to-face system will be offered a home visit. It is hard to see the financial sense of somebody coming across from the mainland to visit a small business man or an elderly pensioner on the island, but island staff have been told categorically that the mobile team covering the island will be based on the mainland and that they cannot be part of that team.

What is the poor taxpayer to do if he cannot work out the answer to his question online, cannot get through on the telephone and cannot persuade the chap from the mainland to visit him at home? He could go along to meet an adviser in a community centre or library, which is exactly what happens now on the Isle of Wight. Local staff have introduced an outreach service in Ryde and Freshwater on the days that the Newport office is closed. So what this decision means is that islanders will not be able to visit a tax office to talk to local advisers, but HMRC staff from the mainland will travel over at huge expense to provide a service that is already being provided by qualified, experienced people, and those people will have been paid to move away or made redundant. I understand the mobile teams may even hold sessions in tax offices. They could use the empty office in Broadlands house, which would no longer be open to the pesky public. You could not make it up, Mr Benton. It is the Isle of Wight version of “Yes Minister”. I can picture Sir Humphrey’s self-satisfied smile now—he will be in his element.

The Minister must be aware that a face-to-face session can achieve things that cannot be achieved over the phone. An experienced adviser can quickly spot that a figure has been put in the wrong box, and a taxpayer who does not understand what information should go where can show the relevant paperwork to somebody who understands it. That simply does not happen online or over the phone, and vulnerable groups may find it particularly difficult to engage by those means. Most people deal with HMRC not because they want to, but because they have to. Those 2.5 million people did not go to their tax office because they wanted a jolly day out. If they felt that they could have dealt with the issue online or by telephone, presumably the vast majority would have done so.

HMRC is running a pilot in the north to see how the new telephone advice service will work. It follows a previous trial undertaken last year when taxpayers were telephoned to try to sort out queries. I understand that of 1,354 calls made, only 259—less than 20%—resulted in the query being sorted out over the phone; the other 80% of cases still needed a face-to-face appointment. Yet HMRC still intends to close all 281 inquiry centres next year, come what may, and issue telephone advice from Bradford and Peterlee. I wonder why considerations of job shortages never seem to apply to places such as the Isle of Wight.

All of us in this House and the other place understand the need to make savings, but our tax system is fiendishly complicated. I know that the Government are trying to sort that out, but in the meantime we must make sure that those who need advice can get it. We must make sure that the claimed savings are not based on flawed research or shoddy decision making. Only yesterday, the Home Affairs Select Committee highlighted the “catastrophic leadership failure” of Lin Homer, the current chief executive of HMRC, when she ran the UK Border Agency. Previously, as chief executive of Birmingham city council, she was criticised by an election judge for having

“thrown the rule book out of the window”

during the 2004 postal vote fraud. Such a record hardly fills us with confidence. As for the Isle of Wight, it is obvious that closing the only accessible tax office will not benefit my constituents, or achieve the cost savings that HMRC is claiming for the closure.

I suspect that we are not unique. If the issues facing the Isle of Wight are not exceptional, I hope that the Minister, who is an eminently sensible gentleman, will intervene. He needs to make sure that HMRC looks again at this decision. On the other hand, HMRC could argue that the circumstances I have outlined this afternoon are unique: the island’s physical separation from the mainland makes us different. If so, HMRC must look again at the decision to close the office on the Isle of Wight and come up with a unique plan. An appropriate decision must be made, and it must be made soon, before HMRC pays to get rid of further staff or pays for them to move to the mainland, and, even more significant, before islanders lose access to the expert advice they need.

--- Later in debate ---

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

It is a pleasure to serve under your chairmanship once again, Mr Benton. I congratulate my hon. Friend the Member for Isle of Wight (Mr Turner) on securing the debate, which has provided an opportunity to discuss why HMRC is introducing a new service to support customers who need extra help, and to clarify what that means for customers and staff. I thank the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for her remarks and her balanced comments about the proposal. I hope to address the questions raised by both Members in my remarks.

Several concerns have been raised in the debate about the new service, and particularly HMRC’s plans to close its network of inquiry centres. I would like to address the three main concerns that have been raised today: the impact on HMRC staff; whether a face-to-face service will continue; and what the changes really mean for people who currently use inquiry centres.

First, in relation to the impact of these proposals on HMRC staff, as Members will be aware, HMRC has recently written to all Members of Parliament about the proposal. That included a confirmation of something that I want to stress again today: that the proposals are no reflection on the dedication and commitment of the 1,300 HMRC staff working in the inquiry centres, including the nine staff based in Newport on the Isle of Wight. HMRC will be looking to redeploy staff affected by the proposals, including those in the north-east pilot area—I hesitate to call it that, since, as the hon. Member for Newcastle upon Tyne North pointed out, it extends beyond the north-east region—to other roles within HMRC or in other Departments.

For the majority of affected staff—about 1,000 of them in fact—we expect redeployment to be relatively straightforward. Many inquiry centres are based in buildings alongside other HMRC staff, or near other HMRC offices, where inquiry centre staff can be moved into new roles, either in HMRC or in other Departments. There will also be a need for staff in the new mobile face-to-face advisory service that will be introduced, and that could include staff based on the Isle of Wight.

My hon. Friend asked about the situation on the Isle of Wight. I think that he has been informed that a post in the mobile advisory service will not be available for those who are based there, but let me reassure him that that has not been decided. The pilot will test the new service and the skills and needs necessary for the mobile service. HMRC will work closely with all stakeholders to ensure that customers get the service they need. No decisions have been taken on where the people serving the Isle of Wight will be based. I shall take on board my hon. Friend’s comments and his representation that some of those providing the mobile service on the Isle of Wight should be permanently based there. I can provide no guarantees, but equally I can provide some reassurance that no decisions have been made on that front.

Where there is no HMRC office nearby, staff might be offered roles that will involve slightly longer travel times. If there is no redeployment possibility in HMRC, remaining staff will be helped to find another role in the civil service. HMRC has tried-and-tested methods in place to manage the impact on staff and will endeavour to avoid compulsory redundancies where possible.

[Mr Andrew Turner]

I am glad to hear what the Minister says and am grateful for his non-promise—I understand why he gave it in that way. How many other jobs are there in the civil service on the Isle of Wight?

[Mr Gauke]

I am not in a position to answer that specific question. I am sure that my hon. Friend is closely informed of the job opportunities available on the Isle of Wight. I made a general point that HMRC will show considerable willingness to deal with staff in the best way possible. If one looks at the scale of the reduction in the number of people working for HMRC over a long period—since its formation in 2005—compulsory redundancy has been necessary on a very limited number of occasions. HMRC has a good record of ensuring that its staff are well looked after.

Concerns were raised that the closure of the inquiry centres marks the end of HMRC’s dedicated face-to-face advisory service. I can reassure hon. Members that that is simply not the case. A face-to-face service is about people, not bricks and mortar. What is important is that HMRC provides an accessible and flexible, face-to-face service that meets the needs of customers and can be tailored to the specific needs of particular locations, including the Isle of Wight. That is what HMRC proposes to do, only it will do it where it is most convenient for customers, whether that is in their local community, place of work or even, if they so wish, in their own homes. A modern face-to-face service is not about maintaining a patchwork network of buildings set up in the 1950s, when the needs and expectations of customers have changed. Inquiry centres are not universal; large parts of the UK are not even served by them.

The use of the centres has fallen sharply in recent years: visitor numbers have halved, from more than 5 million in 2005-06 to 2.5 million in 2011-12, and some inquiry centres are now open just one day a week, because local demand is so low. I shall address the Isle of Wight specifically. My hon. Friend quoted some numbers on the usage on the Isle of Wight. HMRC’s management information system shows that the Isle of Wight inquiry centre had 7,032 visitors in 2005-06, but since then the number has fallen: in the 2011 calendar year, it was 4,763; in the 2011-12 financial year, it was 3,622; in the 2012 calendar year, it was 3,298; and the projected number of visitors for the 2012-13 financial year is 2,886. There is a clear trend. The number is going down.