HMRC: Building our Future Plan

Hannah Bardell Excerpts

Thursday 28th April 2016 Commons Chamber

[Chris Law (Dundee West) (SNP)]

I thank my hon. Friend the Member for Glasgow South West (Chris Stephens) for bringing forward this debate. The issue of tax avoidance has obviously been highlighted in the House by the recent publicity over the Panama papers. It is beyond doubt that powerful individuals in the UK have been shamefully implicated in those documents. These people want to keep their offshore tax affairs a secret. Let us be quite clear: both rich individuals and organisations are using trusts and shell companies in places such as Panama and the British Virgin Islands for one purpose and one purpose only—they hide their financial assets from the tax authorities of the countries where they actually live and do business. It then becomes extremely difficult or, indeed, even impossible for tax collection agencies such as HMRC to collect accurate levels of tax on their wealth.

To be effective, HMRC requires the recruitment, training and retention of skilled and experienced tax professionals. They are the very people who make sure that the Government have enough money to pay for schools, hospitals and pensions. It is in this context that the current misguided reorganisation of HMRC needs to be understood.

Since the Government came to power in 2010, they have invested vastly greater resources in pursuing benefit fraud than in going after the real villains—those who funnel billions of pounds out of our country. Figures show that 10 times more Government inspectors are employed to investigate benefit misuse by the poorest in society than to deal with tax evasion by the wealthiest. The Public Accounts Committee report on tax fraud stated that a meagre 35 wealthy individuals are investigated for tax fraud each year. To put that in perspective, it is only slightly more than the number of Government Members who could be bothered to turn up in the Chamber today. HMRC does not even know how many of these individuals are actually prosecuted. We need to put that in the context of the fact that this country still presides over a tax gap of £34 billion, which we should move urgently to close.

I recently discovered that the ownership of the leases of HMRC offices—this has already been mentioned by my hon. Friend—was transferred to a company called Mapeley in 2001. You could not make this up, Mr Deputy Speaker. Where is Mapeley based? In the Bahamas. That is right: HMRC pays rent to a company registered in a tax haven. To quote the chairman of the Public Accounts Committee, this Government have scored a “massive own goal”. Who stands to profit from the sales of HMRC local offices? You guessed it: Mapeley again. Why not use local council offices that may be available, and then any profits from the rents would go straight to the Treasury?

The UK Government intend to close 137 local HMRC offices across the UK. Two of them, Sidlaw House and Caledonian House, are in my Dundee constituency, where almost 800 staff are employed. This is of course driven by the Government’s austerity obsession, which means that the budgets for Departments and public bodies have suffered swingeing cuts. The Chancellor boasts of having increased the funding for HMRC, but it does not even come close to restoring the cuts he made in 2010. At this moment, about half as many people work for HMRC as did in 2005.

I have spoken in this Chamber before about HMRC and have tabled a number of questions, only to receive evasive and unhelpful answers. Employees, some of whom have more than 30 years’ skill and experience—decades of loyal service—are being abandoned by an organisation to which they dedicated their whole careers. At Caledonian House in Dundee alone, there are 10 couples working under the same roof. Those 10 couples could see their entire income disappear overnight. The proposals are set to destroy families’ lives.

[Hannah Bardell (Livingston) (SNP)]

My hon. Friend is making a powerful speech. Offices in my constituency are going to be moved to Edinburgh, as are many others in West Lothian. I am sure he will share my concern that the number of redundancies in February was the biggest ever across the civil service, and that carers and people with disabilities are being disproportionately affected by those compulsory redundancies. We should be doing all we can to support them and stand up for their jobs.

[Chris Law]

I completely agree with my hon. Friend. At a time when this is still in consultation, the forced redundancies coming through are an absolute shame and embarrassment for all of us in this House.

Relocating HMRC to regional centres in Glasgow and Edinburgh will mean not only job losses in Dundee, but a loss of boots on the ground, and will diminish the capacity for public contact anywhere north. For example, Aberdeen has paid more than £300 billion from its oil resources into this Government, yet there is not going to be an HMRC office there, and the largest growing city in Europe, Inverness, will not have any representation —not to mention the rural areas in between. It is essential for HMRC to offer its clients access to skilled, trained staff based in the local area. Speaking from previous business experience, I know what a struggle it can be getting through to HMRC on the phone; what sort of business will we come to expect? I have to share a story I have heard just in the past 10 minutes: one of my colleagues has tried eight times to pay a bill that is due and still cannot get through.

No one in their right mind would argue that it would make sense to have just two huge hospitals in Scotland, one in Edinburgh and one in Glasgow. If the NHS can maintain internationally recognised standards of service in thousands of clinics and hospitals around the country, surely it is possible for HMRC to do the same in a network of fewer than 200 local offices.

To return to my earlier point, the Panama papers have dramatically drawn attention to a fact that has been emphasised over and over again in this House, by colleagues from all parties, namely that sufficient resources need to be dedicated to HMRC so that it can scrutinise sources of income to ensure that the tax due is paid. It is clear that to do this we need HMRC offices all over the UK, staffed by experienced tax officers with local knowledge. No one would ridicule the Government for making a U-turn on HMRC’s Building our Future plan.

HMRC has the potential to become a paradigm of self-sufficiency, a public service that pays for itself. That idea is certainly less far-fetched and counter-intuitive than the measures currently set to be put in place, which are designed to boost, yet again, the income of companies based in offshore tax havens.

--- Later in debate ---

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

I should like to thank my hon. Friend the Member for Glasgow South West (Chris Stephens) for securing this debate. There have been plenty of thoughtful and, indeed, robust contributions so far, with Members—notably all on this side of the House—doing their best to scrutinise the general principles behind HMRC’s proposals as well as individual local proposals. I shall add my tuppence-worth in a moment. What shines through in this debate is the frustration, which I share, at not having enough information or attempts at justification to enable us to do our job of scrutinising the proposals thoroughly at a strategic and local level.

Whatever view people might take of these proposals, they are certainly radical. As we have heard, thousands of jobs could be lost and a 93% cut in the number of HMRC offices could be implemented. This is not tinkering around the edges in any way, shape or form. It is therefore not only right but imperative to ask questions about how such cuts and closures will impact on HMRC’s ability to collect taxes and tackle tax dodging, particularly at a time of huge public concern over that issue in the light of the Panama papers. It is right that we should ask about the consequences for the towns and cities in which tax offices are marked for closure. It is also absolutely right that we should pose some of the many questions that the hard-working, dedicated and expert staff in our constituencies have raised.

Perhaps the Minister will be able to answer some of our questions today, but I must emphasise that debates alone will not be enough. We need the people behind these proposals to come here to explain them directly to Parliament. That would allow Members to get stuck into the nuts and bolts and to get behind the management-speak and buzzwords that are too often passed off as answers. If that does not happen, staff and taxpayers will be left questioning whether HMRC is really “building our future”, as the glossy brochure states, or whether this is in fact a question of buildings forcing our future. It has already been pointed out that this is taking place in the context of the expiry of the extraordinary contracts that were entered into in 2001, when 600 or so properties were sold to the offshore company, Mapeley Steps, and then leased back, PFI-style, to HMRC. Those contracts expire in the years leading up to 2021. In the absence of answers to our questions, many will conclude that this is more about digging HMRC out of the hole that it jumped into in 2001, rather than being about any kind of strategy. That is the only conclusion open to us.

The remaining questions are many and varied, but I shall get down to the basics of the issue. Why is 13 the magic number? Why are 13 offices preferable to 30 or 530? Why is the sensible range of hub sizes calculated at 1,200 to 6,000 staff? And if that size of office is perfectly efficient, why should offices such as Cumbernauld, which are within that range, have to close? Does the proposed configuration take suitable account of the expertise and local knowledge that can be built up by having a presence across the country? For example, the offices in Aberdeen and Inverness have experts in oil and fishing. And does it take into account the expertise that will be lost through employees being unable to travel to new locations?

The brochures and press releases tell us that saving £100 million a year by 2025 is apparently the goal. We are told:

“Moving more of HMRC’s work out of central London, which has some of the world’s most expensive office space, will enable HMRC to make substantial savings”.

How has that figure been calculated, particularly when HMRC does not know exactly where the new hubs will be? And how is the idea of moving out of expensive city centre locations consistent with closing offices in Cumbernauld, East Kilbride and Bathgate, for example, and centralising them in big prime city centre sites in Glasgow and Edinburgh? Can we see the sums?

[Hannah Bardell]

My hon. Friend makes a powerful point. On the specific issue of centralisation, virtually no work has been done in my constituency of Livingston to assess the impact of the proposals in relation to transport and travel. The distance between Livingston and Edinburgh is relatively short, but what about the people in Dundee who will be expected to travel? Is it not clear that this is an ill-conceived and ill-thought-out proposal?

[Stuart C. McDonald]

Absolutely.

We want to see the sums and the justifications for the proposals. Will each of these local decisions be revisited if the sums do not add up? Has the effect on local communities been factored into HMRC’s considerations? Does it feature at all? I have had a similar experience to that of my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), in that when I asked the Minister about this, his written answer stated simply that HMRC

“will undertake all necessary consultations and impact assessment work to inform”

its plans. No one is suggesting that any town or city where a public sector office is based can assume that the office will be there forever, but it is far from unreasonable to say that the local economic impact of office closures will be a significant factor in decision making, so what weight has been attached to that?

Most important to me and many MPs here are the questions of our constituents—the dedicated, skilled staff in the tax offices. They want to know whether jobs are moving with them or whether they are moving to new roles in a new location. HMRC claims that people will be better able to develop careers up to senior level, but my constituents fear that their good-quality roles will be replaced with poorer-quality work. How did HMRC calculate that 90% of employees will be within reasonable daily travel? Not only does it not know where offices will be, but reasonableness of travel does not just depend on distance but transport links, parking spaces, and accessibility. Will those issues be assessed on an individual basis?

For other staff, including a good number in my constituency, challenges arise through disabilities and care commitments. Why has HMRC not undertaken a proper equality impact assessment of its proposals? Why did HMRC change its HR policy in February 2016, particularly when redundancies were on the horizon, so that union members, as my hon. Friend the Member for Glasgow South West mentioned, were no longer entitled to take a trade union rep to one-to-one discussions?

Most concerning are the questions around the 152 compulsory redundancy notices that have been served. How can they be genuine redundancies given that the work that the employees are doing is continuing, that there are no immediate plans to close the offices, and that the Department has recruited over 1,000 new staff in other locations at the same grades? What is the explanation for that? Why will HMRC’s chief executive not meet the Public and Commercial Services Union about alternatives to compulsory redundancy? How can all that be happening while HMRC is apparently spending £1 million a month on overtime to mask staffing shortfalls?