HMRC: Building our Future Plan

Chris Stephens Excerpts

Thursday 28th April 2016 Commons Chamber

[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.

--- Later in debate ---

[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.