HMRC Closures

Chris Stephens Excerpts

Thursday 2nd November 2017 Westminster Hall

[John Grogan (Keighley) (Lab)]

I want to make one central point, which is to do with the eight location principles that the Revenue used to decide where the regional hubs should go. All of the proposed regional hubs will be in big, successful cities, such as Leeds, Glasgow, Birmingham and Cardiff. One could argue that, in those cities, a big HMRC office will crowd out private investment. Alternative choices would have been a lot cheaper and would have pump-primed the local economies. In west Yorkshire, if the regional centre had gone to Bradford, rather than Leeds, where there is a severe danger of crowding out, it would have acted as a pump-primer, boosting the local economy.

I do not know whether management consultants or HMRC bosses thought up the eight principles, but they include sustainable large sites, a talent pipeline, single location career paths, a catchment for a mix of business activity, digital infrastructure, facilities for HMRC’s people and robust long-term infrastructure. Only one of the eight—market rates—has anything to do with cost and savings to the HMRC. Obviously, in some of the smaller towns, rents are a lot cheaper. Given that the driving force of the review is meant to be to reduce costs, that seems odd.

[Chris Stephens (Glasgow South West) (SNP)]

Does the hon. Gentleman agree that there should have been an assessment of the social and economic impact that the office closures will have on the local economy? In many towns and cities in the UK, the HMRC office is the largest employer.

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[Jim McMahon]

That is a good point. One of the biggest gaps in the whole Brexit conversation is not only the transactional relationship with Europe and what our future relationship will be but the biggest deficit in all our debates—what type of United Kingdom will we be at the end of Brexit? What type of Britain do we want? What will our communities look like? How will our economies be framed in the future? It strikes me that there is a complete absence of a direction and a vision for what type of Britain there can be after Brexit. I feel that in Oldham.

The frustrating thing about the HMRC relocation from Oldham to Manchester is that there was no value-for-money assessment. A wider review was done, which said, “If you close x number of offices, you will save money for the public purse”, but no financial assessment was made of the decision to relocate from Oldham to Manchester. That was admitted by the Minister in a February written answer to me.

Let us think about this: if the relocation was meant to be about value for money and about saving money for the taxpayer of this country, why would HMRC relocate from a town where the average office cost is £70 per square metre to a city centre where the average cost is £120 per square metre? Why would HMRC not do an assessment? If we need to rationalise the number of offices in a conurbation, surely we assess the cheapest and most efficient place to put the ultimate office when all the others have been merged into that one. However, that did not take place.

I am pretty sure that part of the reason why that did not take place is the same reason why we have seen the county court closed and relocated from Oldham to Manchester, and why we have seen our magistrates court closed too. It is because the people doing the assessment, or the people who are making the decisions, do not live in Oldham; they do not even live in the north of Greater Manchester. The people making the decisions live in the affluent suburbs, closer to where the offices will ultimately be located when the decision is made. That is fundamental: what voice did staff have in the conversation?

[Chris Stephens]

The hon. Gentleman raises an important point. Does he agree that local knowledge is vital and that in terms of minimum wage compliance, an office in Oldham would know who the rogues were in Oldham, not elsewhere in the country?

[Jim McMahon]

The hon. Gentleman makes a very fair point. The relationships among other local service providers are equally important—the local authority and the local police in Oldham know what is going on in the community. Those localised conversations can no longer take place because the facility is not in the town as it used to be. It is ridiculous that Phoenix House, where HMRC was based in Oldham, is right outside the Oldham Central stop of the Metrolink tram line that takes just 18 minutes to get to Manchester city centre. It would have been very easy to make Phoenix House the new regional hub if there was a desire to do that, but the truth was that it was not even on the list for consideration because it was assumed that the regional hubs had to be in the city centre, at the expense of the town. That is shameless.

The Government tell us that times are hard, austerity bites and we have to live within our means, so surely there is a greater onus on them to maximise every bit of public investment where there is capital or revenue, and to provide proper scrutiny of where the investment goes, to make sure that the money is spent in the most efficient way for the taxpayer. The Government themselves have said that they did not do that. At best, that is approaching bad administration. The very basic things that I would expect a Government to do when spending public money—ensuring that it has the best effect—have not taken place.

What does that mean for a town such as Oldham? The loss of 2,000 staff by the local authority, on top of staff losses at the county court, the magistrates court, the police service and a range of other public institutions in the town, means that there are fewer people going out at lunchtime to buy a sandwich and supporting the local retail environment. There are fewer people going out shopping and using the bars and restaurants after work. There is less footfall in the town generally of people supporting the local economy. None of that was taken into account. We ask what was the local economic impact assessment; the answer is “there wasn’t one”.

If the Government are serious about having a stronger Britain after Brexit, about ensuring that public money is used to the best effect and about ensuring that our towns can be as strong as our cities, it is important to have a new approach. That new approach has to be to ensure that central Government decisions take into account the economic decisions at a local level. We also need to ensure that there is joined-up government. Government Departments that do not talk to one another are doing estate reorganisations in HMRC, the Department for Work and Pensions, local authorities and sub-regional government. No one has asked the basic question, “If we’re being forced to reduce staff and to reconfigure office accommodation, would it make sense to come together in Oldham and share office provision in that town, to support the local economy?” The conversation is not taking place.

It is too late for Oldham. That callous, reckless decision has been made; it has not provided value for money to the taxpayer and it has kicked Oldham when it was already struggling to get up from the ground. But there is still a chance to do the right thing for the towns that have not yet seen their office closed. I urge the Government to do the right thing.

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[Imran Hussain]

As always, my hon. Friend is absolutely right. These issues are arising with increasing consistency and, frankly, I believe that more needs to be done about them.

I come on to the workforce. The hon. Member for Ochil and South Perthshire (Luke Graham) made the good point that these decisions have to be about more than just value for money; they have to be about community, too. That point should not be lost. In Bradford, we have one of the most diverse and vibrant workforces, and one of the youngest populations. We have 84,000-plus work-ready people with degrees. We have Bradford University, which is a centre of excellence for MBAs. We have many things to offer, and those frankly have just been ignored.

Much has been made of the argument that Bradford is not the right location and does not have the same connectivity as Leeds. We may not have the same connectivity, but we have suitable connectivity. We have real proximity to the M1 and the M62. Although we may not be where Leeds is, we are certainly not far away from connections, so that argument does not persuade me.

The powerful business case for Bradford was completely rejected. We have heard from hon. Members from across the House that all the cases that have been put forward have fallen on deaf ears. We have shown today that no economic case—no value for money case—has been established for these proposals. That makes me wonder whether they are the result of decisions by individuals sat in ivory towers, who chose places that were better for them to work and live in. That is the real question, and I urge the Minister to answer it.

[Chris Stephens]

The hon. Gentleman talks about people in ivory towers. Is it not ironic that people who are made redundant as a result of their town or city losing its HMRC office will find that they do not have a Department for Work and Pensions office or jobcentre to go to in their town either?

[Imran Hussain]

I absolutely agree; the hon. Gentleman makes a fine point.

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[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Mr Davies. Like other hon. Members, I thank you for your guidance and support and your interest in this area. First, I refer the House to my entry in the Register of Members’ Financial Interests and my position as chair of the Public and Commercial Services Union parliamentary group. As you are aware, Mr Davies, we have been here debating HMRC office closures many times, and each time I and other Members have asked HMRC to think again and pause for thought.

The debate was opened superbly by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald), who rightly thanked HMRC staff for their contribution. I will give some statistics to back that up. He rightly mentioned the low staff morale in HMRC as a result of the way in which management have handled the issue.

What was most telling in the contributions so far—it is the common thread—was the social and economic impact that the closures will have in towns and cities across the UK. We heard from the hon. Member for Keighley (John Grogan), and my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) talked about East Kilbride being Centre 1 for tax collection services in Scotland and the UK, and the lack of consultation by HMRC with parliamentarians. We also heard from the hon. Members for Oldham West and Royton (Jim McMahon), for Stockton South (Dr Williams) and for Bradford East (Imran Hussain), who continued the theme of the social and economic impact that the closures will have in their communities.

The starting point was 12 November 2015, when HMRC announced plans to close nearly every office—approximately 170 in the HMRC estate—and replace them with 13 regional centres and four specialist sites, mostly based, as we have heard, in major UK cities. The plans were titled “Building our Future” and if implemented in full would involve vast areas of the UK being left with no local HMRC office, including restricting the department to two offices and one specialist site covering the entirety of Scotland; two offices and one specialist site covering the entirety of the midlands; two offices and two specialist sites covering the entirety of London and the south-east of England; two offices covering the entire north-west of England; two offices covering the north-east of England and the great region of Yorkshire, Mr Davies; one office covering the entirety of Northern Ireland; one office covering the entire south-west of England; and one office covering the entirety of Wales. Like many hon. Members, I am gravely concerned that, if the plans are not halted, they will leave vast areas of the country with no nearby HMRC office. I am also concerned that, more than 15 years on from the troubled private finance deal that HMRC entered into with the contractor Mapeley, significant risks remain in the handling of the contract. The Department has learnt nothing. A National Audit Office report draws attention to the fact that HMRC has not negotiated

“any break points in the 25-year leases it has signed so far for regional centres in Bristol and Croydon.”

Of course, there have been some changes to those plans—not all of them for the better. Let us go through them in turn. The original proposals meant there would be no physical presence in East Anglia. HMRC has subsequently decided to retain a presence in Ipswich, first as a specialist site but potentially to include broader work streams. Plans to close the only Welsh-language unit have also been dropped, with staff now co-locating with the Department for Work and Pensions—that is a point I will develop later in my contribution.

The estate negotiations on the location and buildings for the proposed Manchester regional centre are taking longer than HMRC initially anticipated, meaning that the regional centre will now open at least a year late, and possibly even later than that. When it eventually opens, it will do so in two phases. The overall capacity of the regional centre is in a state of flux, forcing the Department to extend the existing leases of three major sites in Manchester.

There have also been problems in Northern Ireland; the opening of the Belfast regional centre has been subject to significant delay. In other areas, closures have been brought forward, including at Blackburn, Bolton, Netherton and St Helens in the north-west; Derby, Worcester and two sites in Solihull in the midlands; and York in the north. Those closures, with point-blank notice, cause significant stress, upset and practical difficulties. That is not an efficient way to run a Department.

As a direct result of staff leaving the Department because of the office closures, HMRC is losing a vast amount of irreplaceable experience. Based on data provided to the Public and Commercial Services union by HMRC, in 2017 alone the Department will lose the equivalent of more than 17,000 years of staff experience, and the vast majority of that comes from customer compliance work.

We believe that the “Building our Future” proposals are completely driven by the deadlines within the STEPS contract of 2021 and that those are flawed. The existing proposals should be put on hold until appropriate parliamentary scrutiny, public consultation and socio- economic impact assessments are carried out.

[Jim McMahon]

Does the hon. Gentleman agree with my suspicion that the end was decided before the criteria that support it?

[Chris Stephens]

I do, and I think it has been driven by cost. One other area is that while I and my hon. Friends were campaigning in our constituencies to get re-elected, HMRC, during purdah, was signing contracts, and it did not wait until after the election to inform the House of those changes. I sympathise with the point that the hon. Gentleman made. Of course, during the process, we had the Concentrix disaster. HMRC had to terminate its contract early because Members of Parliament from right across the House had major complaints about how Concentrix was dealing with its business.

In the National Audit Office’s report, the key findings stated that:

“it will be longer until HMRC starts to realise savings. In the long term, it still expects its new estate to reduce its running costs. It now estimates cumulative efficiency savings by 2025-26 of £212 million, reduced from the £499 million estimated in its strategic outline case in November 2015. By 2025-26, HMRC expects its annual running costs to be £83 million lower than they are now”.

Whether it is £83 million, £212 million or even £499 million, those are drops in the ocean compared with the Government’s own accepted figure for the tax gap of £36 billion. The figure researched by the Tax Justice Network and PCS puts the tax gap at £119 billion. A major reorganisation and rationalisation of the most vital Government Department, putting at risk the very ability to carry out the tax collecting function for savings that are not properly costed, is irresponsible management and governance.

The Scottish Government are consulting today on the Scottish approach to taxation, to accompany gradual increases in its taxation powers. HMRC’s plans could well result in the severe limiting of HMRC expertise based in Scotland, which will become even more important as the Scottish Parliament debates increases in taxation.

[Luke Graham]

Does the hon. Gentleman agree that recent figures show that unpaid tax is at a record low, so some of HMRC’s performance has improved and it is actually doing quite well? Will he join me in asking the Minister to give assurances that that performance will continue, even with the closures and movements going forward?

[Chris Stephens]

I will meet the hon. Gentleman halfway. I do not believe that unpaid taxes are at a new low. In fact, I think the report I referred to earlier, published by Tax Justice Network and PCS, showed a gap of £119 billion. That certainly suggests to me that one of the major focuses of HMRC should be collecting tax and going after the rogues who are registered in the Cayman Islands and other places, shuffling money. I will meet the hon. Gentleman halfway on that.

HMRC faces a number of challenges requiring investment in offices and infrastructure, and no one from HMRC or from the Treasury has so far explained what changes they will make in the “Building our Future” programme to meet these challenges. I will not avoid saying, “We told you so,” because we did, time after time, in this place and elsewhere. We know that UK overseas territories are used to avoid billions of pounds of tax. We know that the uncollected tax avoided by these high-rolling spivs runs into tens or even hundreds of billions of pounds. It beggars belief that, at a time when there is more focus than ever on tax dodgers and their theft from public services, HMRC are shuttering dozens of offices across the country, losing staff and skills that could otherwise be used to target the high rollers who cost our hospitals, infrastructure and schools billions each year.

It is therefore somewhat ironic that Mapeley, to which HMRC’s office estate has been outsourced, is based in Guernsey, a notorious tax avoidance hub overseen by the UK Government. Downing Street confirmed yesterday that HMRC will need up to 5,000 new staff as a direct consequence of Brexit and the UK leaving the customs union.

[Gerard Killen (Rutherglen and Hamilton West) (Lab/Co-op)]

Does the hon. Gentleman agree with me that, with the combination of Brexit and the devolution of increased powers over tax and income bands to Scotland, it is exactly the wrong time for HMRC to consider scaling back its operations?

[Chris Stephens]

I agree with the hon. Gentleman. The next question is rather obvious: “Where are all these staff going to go?” Some will be deployed at the new hard border, which those on the Government Benches seem to believe will have virtually no impact on our economy. At least, I can only assume that they believe it will have zero impact; that can be the only reason for yesterday’s refusal to publish 58 impact assessments that they commissioned. Some will be based in HMRC offices, but what offices? Where in the country will these new recruits be based? Over the last two decades the number of HMRC offices has gone from 700 to, under the Government’s plans, just 13.

Where exactly are the HMRC staff tasked with border duties in the north of Scotland going to work? They cannot work at the Lerwick office, because it is closed. They cannot work at the Ullapool office, because it is closed. They cannot work at the Wick office, because it is to close. They cannot work at the Peterhead office, because—guess what?—it is closed. The only offices left in Scotland will be in Glasgow and Edinburgh. We will have legions of new HMRC staff, tasked with policing the customs border that it appears to be the Government’s wish to create, with nowhere to carry out their office role, in an area of work that is guaranteed to involve more paperwork, more deskwork and more IT skills. I mention those offices in particular because each of those towns is a port, importing and exporting on a daily basis—the very places where, one would assume, HMRC staff are needed most. The lack of joined-up thinking on the issue would be laughable were the consequences felt across the country not so serious.

We also found out in July this year that only 399 staff are employed by HMRC in enforcing the national minimum wage, less than one full-time staff member for each constituency represented in this House. I simply do not believe, and neither do HMRC staff members, that the number of exploitative and criminal employers is so low as to allow for that low level of staffing. Indeed, the Government confirmed to me in a written answer in June that it would not, and had no plans to, fill the 83 current vacancies in the HMRC minimum wage compliance unit.

In the last financial year, HMRC closed 2,600 cases of non-compliance with the national minimum wage. That such a small staff team managed to bring so many criminals to book is incredible, and a tribute to their tenacity and hard work. However, I simply do not believe that that is even the tip of the iceberg. There are many thousands of other criminals out there, exploiting low-paid staff and pocketing profits for themselves. These individuals must be rooted out and dealt with, but what hope do 399 staff have of policing the full gamut of employer exploitation when 2.67 million businesses are registered for VAT or pay-as-you-earn? How can an office in Edinburgh properly and sustainably investigate employer criminality in Islay or Caithness? HMRC’s cuts agenda is putting the poorest and most vulnerable employees at risk of exploitation by crooks and gangsters the length and breadth of these islands.

The hon. Member for Ochil and South Perthshire talked about the closures in the round. I mentioned earlier that the proposal for the Welsh language unit in Wales means there will be a relationship with the Department for Work and Pensions, but what is that relationship? It is time for the Government to produce a map of office closures for all Government Departments, because we will find ourselves in the farcical situation of an HMRC employee having to take redundancy because they cannot travel hundreds of miles to the new regional centre, only to find that the jobcentre has been removed from their town as well and they will have to travel further to sign on, never mind go to work at HMRC. I hope that the Government will produce a map of office closures across the United Kingdom.

I will touch on the roll-out of universal credit and HMRC’s role in how this is paid to claimants. Universal credit fundamentally depends on the ability of HMRC to provide real-time information to DWP about an individual’s earnings from work. The entitlement to UC for the following month is calculated from that, based on the Government’s own formula. It is therefore vital that the information provided by HMRC is 100% correct and accurate. Any errors in the processing or transfer across to DWP of the employee’s salary information could be catastrophic for someone relying on universal credit to top up their low salary.

We all know the carnage being wrought by the roll-out of universal credit; but I fear that the cuts to HMRC’s capacity could result in further devastating implications for people receiving in-work benefits. If things go wrong with the flow of real-time information to DWP, if errors are not identified before universal credit payments are calculated or if the data is provided to DWP late, the consequences for the worker pile up, with fewer staff and fewer offices within HMRC to correct these errors and ensure that the correct payments are made.

Improvements in digital services are welcome, but not at the expense of the capacity for human intervention and expertise to fix problems and resolve issues. I fear that the Government have not properly recognised these new, massive interactions between DWP and HMRC in its “Building our Future” programme, and that the price to all of us, particularly those who need help the most through universal credit, will only become apparent when people’s finances and lives are devastated through no fault of their own. The landscape has changed immensely since the “Building our Future” programme started. Customs barriers could be erected in a little over 18 months. Thousands of new HMRC employees will be recruited, after years in which we were told that job losses were the inevitable result of progress. I hope that the complexities of universal credit, with all the potential for human disaster that they entail, are now becoming apparent to those on the Government Benches.

There are growing demands for tax justice from across the political spectrum. It is surely time for HMRC and the Treasury to hold their hands up and admit that they got this one wrong. It is time to admit that the world has shifted on its axis since “Building our Future” commenced and that the burden on HMRC staff, both current and future, represented by the programme is unsustainable, unjust, and cannot be a rational way to run a taxation system. It is time for HMRC to go back to the drawing board and begin planning the next generation of accommodation for HMRC staff and services, serving communities and the people in them, rather than the bureaucratic nonsense that my constituents and others have to endure.

The plans to close HMRC offices will be extremely damaging to HMRC’s operations. They fail to understand or take into account the diversity of the needs of the Scottish or, indeed the UK, economy and have the potential to seriously compromise the ability to collect tax, enforce compliance and close the tax gap. They also create massive uncertainty about jobs and locations across Scotland and the UK. With Brexit looming on the horizon, the Government must now urgently review their plans for the future of HMRC and ensure that it is fit for purpose.

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[Peter Dowd]

I take the Minister’s point, but there is always an issue in government.

[Chris Stephens]

I listened to the Minister’s intervention. Does the shadow Minister agree that it is somewhat ironic that during purdah, some of these contracts—for example, the contract signed in Edinburgh—were signed on some of the most expensive buildings in Scotland?

[Peter Dowd]

The hon. Gentleman is absolutely right. Some of them cost an arm and a leg. The Minister should take on board the question of perception. In a democracy, when we are in the middle of an election, it might be technically, legally and administratively okay to do this, that and the other.

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[Mel Stride]

I do not accept that point. We could take it to its logical conclusion and assume that everyone could work from home, and we could then have a very disparate workforce. There may be some attractions to that, but there is huge value in bringing people together in a single building, where there is a critical mass of individuals: collaborative working and the sharing of experience and ideas can take place, meetings can be held, and the technology is all in one place. I would have thought the hon. Gentleman would recognise that. Let us face it: if we went back to 2005, we might be debating whether we should shrink the number of offices from 600, which is what it was at that point. There will always be arguments about whether we should do things and the local impacts and so on, but this overarching direction of travel, it seems to me, has to be right.

[Chris Stephens]

Could I ask the Minister two questions, then? First, on the criteria for where to locate the offices, was a social-economic impact assessment made for the towns and cities whose HMRC offices are closing? Secondly, given that he has mentioned homeworking, can he confirm whether the Department has published the information from the homeworking pilot in Wick?

[Mel Stride]

On the latter point—the specific query— I will have to get back to the hon. Gentleman, but on the general point about impacts, HMRC has looked extremely closely not just across the eight criteria, which I was working my way through, but at the impact on the individuals working at the existing offices. I know for a fact that that has gone right down to literally every single employee, plotting where those people live, and working out travel-to-work times and so on.

[Chris Stephens]

rose—

[Mel Stride]

Could I just make one other point? The relocation does not necessarily mean that all the employees who worked at the previous office, for want of a better expression, will no longer be working for HMRC. Many of them—about 90%—will either work through to retirement at that office or migrate to working at the new hub.

[Chris Stephens]

I thank the Minister for giving way again. Can he confirm whether the Department will publish an economic impact analysis of staff moves? If people based in, for example, Inverness or Wick will be working in Glasgow or Edinburgh, I would think it would be very difficult for them to travel to their work every day.

[Mel Stride]

We are not publishing the kind of impact assessment that the hon. Gentleman suggests, but my point is that it is not the case that HMRC has not very carefully looked at those individuals who will be affected—at where they live, the travelling issues and so on—to ensure that it is as helpful as it possibly can be to all the employees in those circumstances. We heard in the debate about providing assistance with travel costs, for example. There is also relocation assistance. All that is being very carefully looked at and engaged with by HMRC.

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[Mel Stride]

The hon. Gentleman raises the issue of crowding out private sector investment, but I am primarily concerned about the possibility of crowding out tax collection. If we do not have hubs that are fit for the 21st century, that are bristling with new technology, talent, and well-qualified, well-trained individuals working collaboratively from those units, we will be less effective at bringing the money in.

The tax gap was mentioned; it stands at 6%, a record low. Under Labour in 2005 it was around 8%. If it was 8% today, we would have £11.8 billion less coming into the Treasury, which is enough to pay for all the police forces in England and Wales, so these things matter. I understand why Members here are vexed about their constituency—I totally get it—but we cannot allow that to trump the really important job of bringing our tax collection into the 21st century, and making sure that it is effective, so that we keep our public services going.

[Chris Stephens]

Can the Minister explain how closing HMRC offices, with a lack of local knowledge, helps to bridge the tax gap? I am genuinely confused, so perhaps he can explain.

[Mel Stride]

The corollary to that argument is that we might better close the tax gap by opening another several hundred offices. I do not think anyone would argue with that. It does not necessarily follow that more offices mean more tax collected. I think quite the reverse, as I have explained. We need centres of excellence with a critical mass of people who are well trained and where there is good access to the labour market and the skills that we need; where people work collaboratively and all the technology is right; and where they operate, as we do in this country, a risk-based approach to clamping down on tax avoidance, which involves a lot of data and analysis from the centre. That is much better done from a well-resourced organisation of critical mass than by a larger number of smaller offices, many of which operate in a manner that is more manual, for example, than computer-driven, and that needs to be changed.

[Mel Stride]

The answer is similar to the one I gave the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) a moment ago. Nobody is suggesting that Bradford is not a superb location in many different ways for many different business activities—absolutely not. I do not have the figures to hand, but I would probably agree with the hon. Gentleman that in terms of office space, the cost per square foot is probably less in Bradford than in Leeds. However, we have a series of criteria, and the overarching objective of those criteria is to collect tax and to have access to the best available within the region—the best talent pool and the best digital and physical connectivity. On balance, the decision is that Leeds fits that bill better than Bradford, but that is not for a moment to suggest that Bradford is not a wonderful place to run businesses.

[Chris Stephens]

The Minister is being more than generous. Can he confirm that there are currently 400 employees in the high net worth unit dealing with tax evasion? Does HMRC intend to increase or reduce that figure over the coming years?

[Mel Stride]

It depends. The hon. Gentleman’s question begs another question, which is what exactly he means by the high net worth individuals he refers to.

[Chris Stephens]

It is a specific department.

[Mel Stride]

If it is a specific department—I am sure it is—I am happy to get back to him on that point. I will move to another point relating to what the hon. Gentleman said earlier in his speech. When he talked about clamping down on tax avoidance, he very much started to drift into—understandably so—complex tax avoidance. He mentioned the Cayman Islands. I do not think he mentioned trusts specifically, but I suspect that would be a part of the mix of his thinking, which is exactly my point. If we are going to start targeting that kind of tax avoidance, it is far better to be in a well-resourced hub, the nature of which I have described already, rather than to have myriad other offices around the place. That is the nature of the tax challenge, so we have to have a configuration that is appropriate to meet it.

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[Mel Stride]

I shall get back to the hon. Gentleman on precisely what that means. I suspect it is a travel-to-work time, but it will probably vary depending on location.

[Chris Stephens]

Can the Minister confirm that the original criterion for reasonable travel distance that was used, and that was put to the trade union and staff, was 100 miles?

[Mel Stride]

I shall give the hon. Gentleman the same answer I gave to the hon. Member for Stockton South (Dr Williams); I am certainly happy to look into it—although I have now had some divine inspiration, and I believe that the criterion is an hour’s travel time. St Matthew has come to my aid.

Let us not lose sight of the bigger picture. As I have said, the programme is underpinned by the aim of making HMRC a more efficient and effective tax authority. I want to dwell briefly on our record in that area, because what we are doing is part of a broader drive to transform HMRC that has been going on for some years. Its performance has been improving considerably. I have already mentioned that the tax gap is the lowest in our history; it is also one of the lowest tax gaps in the world.

The hon. Member for Bootle bemoaned the Mapeley PFI deal. As I said, it was a Labour Government who put us into that deal, but he is right that there will be considerable savings from not having to continue with the deal, as a consequence of pursuing the current programme.

HMRC has improved customer service. Almost all its business customers now choose to deal with it online, and more than eight out of 10 self-assessment returns come in digitally.

[Mel Stride]

The cost savings are for an investment of £552 million over 10 years. Firstly, they arise through the avoidance of future costs that would be incurred in the event of our not going ahead with the programme. Those would be the costs of the PFI deal, were we to continue with it. That cost is £75 million per annum—obviously from 2021, when the contract for strategic transfer of the estate to the private sector comes to an end. There is a cost saving of £300 million in the 10 years to 2025. That gives an annual cash saving, as compared with 2016-17, of £74 million in 2025-26, rising to about £90 million in 2026-27.[Official Report, 27 November 2017, Vol. 632, c. 2MC.]

[Chris Stephens]

On cost savings, can the Minister provide an explanation of why, during purdah, a contract was signed in relation to an office in Edinburgh, which was the most expensive office to rent not just in Edinburgh but in Scotland? How does that lead to cost savings?

[Mel Stride]

As the hon. Gentleman knows, the criteria applied in taking the decision were not simply about cost. As to his assertion that the decision that has been taken is an exceptionally high-cost option, I cannot comment, because I do not have access to that level of detail at this precise moment; but the decisions are taken in the round, using eight different criteria, of which cost is but one. As I have repeatedly stated, the overarching objective must be the effective and efficient collection of tax, which provides all the funding for our public services. That is the basis on which the decisions are taken.

HMRC is now open to take calls from customers and engage in webchats seven days a week, so people can contact the Department at times to suit them. This year, more than 987,000 tax credit customers renewed online using the digital service. It would simply not be possible to continue to drive improvements without transforming the offices from which HMRC staff work.

The changes are an integral part of HMRC’s transformation into a smaller, more highly-skilled organisation—one that has modern digital services and a data-driven compliance operation, which will deliver more for the taxpayer, at lower cost.

--- Later in debate ---

[Mel Stride]

We can go round and round this for some time, but HMRC has a very clear set of criteria. It has looked extremely carefully. As I explained earlier, when it comes to travel distances to work and journey times it has mapped every single employee within its employ, to make sure that that aspect of that particular decision is taken as rigorously and robustly as possible. I am afraid I do not recognise the hon. Gentleman’s suggestion that this is somehow just a case of putting a finger in the air and a pin in a map. It has been well thought through.

To conclude, raising taxes is vital to our public services.

[Chris Stephens]

It is a pleasure to see you in the Chair, Mr Stringer. The Minister has not yet mentioned the minimum wage compliance, which was mentioned in the debate. Does he have some words to say about that?

[Mel Stride]

It is the duty of HMRC to ensure the minimum wage is adhered to and that it is rigorous and robust in its approach to that. It does not hesitate to go after those who break the law and do not pay the minimum wage. It has the ability to go after those companies or individuals for back tax and penalties, and it does that with vigour. I would argue that under a more modern system with large numbers of people working collaboratively in the way I have described, it would be even more effective in doing that.

I think we have given this matter a good, broad and wide airing. I am grateful to all hon. Members for their contributions. I take all the issues raised seriously, even though we disagree on a number of matters, and I am particularly grateful for what is probably a record number of interventions in a Westminster Hall debate.