HMRC Closures

Imran Hussain Excerpts

Thursday 2nd November 2017 Westminster Hall

[Imran Hussain (Bradford East) (Lab)]

I am grateful to the hon. Gentleman for securing this important debate on a subject that matters to many people in many of our constituencies. Does he agree that surely it makes sense for HMRC to put high-quality, high-wage jobs into areas where there is a deficiency of those jobs? In my district of Bradford, two thirds of the civil service jobs—more than 2,000 of them—are with HMRC. Putting those jobs at risk surely makes no sense whatsoever.

[Stuart C. McDonald]

Indeed. That is the argument that I will come on to make. Centralising those jobs in city centres, which are already in many cases doing very well in terms of employment, makes absolutely no sense at all.

This debate is also important to the public and taxpayers generally. When it was formed in 2005, HMRC had 96,000 full-time equivalent members of staff and 593 offices. Less than a decade later, staff numbers had fallen to below 50,000, in fewer than 190 offices. “Building our Future” sets out to close 137 offices and centralise even fewer staff in 13 large regional hubs, with between 1,200 and 6,000 staff. Some 38,000 staff are either going to have to move or leave HMRC. From any perspective, that is a massive and radical change to how our taxes are collected to pay for the services that we all use and rely on, so it deserves the closest of scrutiny.

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[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

This is a really important debate. To provide some context, the HMRC office in my constituency closed in 2014, with staff relocated to Manchester, so I can give the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) two ends of the perspective: I can tell him about the conversations that took place before the closure and about the impact on the town, after the closure.

If the plans are about value for money, we have to ask ourselves why HMRC head office still occupies some of the most expensive real estate in Europe, at the Treasury. That building would make a fantastic five-star hotel, I am sure. The plans are not about value for money but about a fixed view of government, which is, “To hell with towns!”

If all we do is focus on our city centres, we will not be able to realise the true potential of our country. If all we do is to think that what matters is to have our cities thriving, at the expense of the surrounding towns, this country will not move on and make progress—we will not address that very real anger that I felt during the Brexit campaign. People were saying that they were sick of the settlement they have been given, they are sick of industry and well-paid, decent jobs going, and they are sick of seeing their town centres in decline. Those who are in a position to do something about that seem completely indifferent to the impact on their communities.

[Imran Hussain]

My hon. Friend makes his point, as always, very eloquently. He mentioned Brexit, and another angle of that is that many of the HMRC proposals were decided before the European Union referendum. Does he agree that once the Brexit negotiations reach a settlement—if we ever get one—that will inevitably cause issues for HMRC, not least the customs union and related areas? Is that not enough to put the HMRC proposals on pause at least until we get to that stage?

[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?

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[Imran Hussain (Bradford East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies. May I put on the record my appreciation of your work in this area? You, like me, have made a case for Bradford, and you continue to do so.

I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald)—I have failed miserably to pronounce that—for securing this important debate. Hon. Members from across the House have made forceful and persuasive arguments, and I hope that the Minister really listens and tries to understand Members’ genuine concerns about these ill-thought-out proposals. I am also grateful to my hon. Friends the Members for Keighley (John Grogan), and for Oldham West and Royton (Jim McMahon), both of whom made very good points, some of which I will try to elaborate on. In particular, the point about value for money that they both made eloquently needs to be looked at much further, certainly in the case of the Bradford district and the negotiations that have led us to where we are.

Let me set out the impact of the proposals for the Bradford district. The closure of the HMRC offices would have huge financial consequences for Bradford. As well as potentially putting 2,300 high-wage jobs at risk, it would mean a £110 million reduction in the district’s gross value added, and the loss of around £10.5 million of district retail spending. The local authority would lose out on £1.2 million in business rate receipts, and there would be a £2.5 million increase in public spending costs. Put together, those things would be disastrous for the Bradford district.

I mentioned fairness and inclusion in an intervention. Two thirds of our civil service jobs come from HMRC. The Bradford district is already at the bottom end of comparable towns up and down the country in terms of high-wage, high-skill Government jobs. It really is unfair to impose this closure on the district. I absolutely accept that Leeds, where it is proposed the regional hub should be, is a great place for business, but my hon. Friend the Member for Keighley made the pertinent point that there is a real danger that putting more civil service jobs in Leeds will overcrowd the private sector there, so this may not be a good thing for Leeds, either.

Let me come back to value for money and the economic case that hon. Members eloquently set out, and use Bradford as an example. The case put forward by Bradford would have saved £30 million, compared with the current proposals. That is a huge figure. As my hon. Friend the Member for Oldham West and Royton pointed out, there would have been lower accommodation costs per square metre, shorter commuting distances and lower redundancy and relocation costs, so why was that case not considered?

[Jim McMahon]

Does my hon. Friend agree that the consistent message that value for money reviews were not carried out when offices were relocated probably warrants a referral to the National Audit Office?

[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.

[Luke Graham]

As the hon. Gentleman mentioned, connectivity is key. I represent a constituency that is not so well connected, so I certainly empathise with some of the challenges that his constituents face. Will he join me in asking the Minister whether, if the Government do not change their position on some of these closures, we can do as Opposition Members have mentioned and use Brexit as an opportunity to look at moving Departments outside London and other key cities, to ensure that our towns and secondary cities—especially those that have already faced closures by other Departments—are just as well connected?

[Imran Hussain]

Absolutely; I agree. I was coming to that very point and to the point made by my hon. Friend the Member for Oldham West and Royton, who I thank for giving us a perspective from a place where closure has already happened. He showed us the failures there, and made the plea that we should learn from that lesson and not do the same in other places.

My final point, which is related to the point made by the hon. Member for Ochil and South Perthshire, is about the northern powerhouse. If we are serious about these things—certainly in the case of Bradford—the economic distribution must be fair and equitable, but again the distribution is swinging to the major city in the region. With respect to Leeds and everyone there—my point is not against Leeds—it is the northern powerhouse, not the Leeds powerhouse. We must have equitable distribution in our economic welfare. I urge the Minister to listen to all Members today, and to use this opportunity to pause the proposals. I have already made the point around Brexit, and I think the Minister has scope to pause the proposals and give further time for consideration.

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[Mel Stride]

No. I am not going to commit to bringing forward all sorts of reports and things that various hon. Members may or may not call for. I understand why the hon. Gentleman may call for those things, but I can reassure him that we have published the criteria on which the decisions were made. They are in the public domain. There are eight criteria, and they are very clearly available.

[Imran Hussain]

Does the Minister agree that one of the most important areas that needs an assessment in these processes is the economic impact on those areas where the regional hub is not based? That information, in my view, is vital when we are looking at the holistic picture. Does the Minister accept that that information is important, and was it obtained in every instance?

[Mel Stride]

That prompts the question of what the overarching purpose of HMRC is: to provide customer service efficiently to those who need access to it, and, at the end of the day, to bring in tax. We have a tremendous record, and it has a tremendous record, of doing exactly that. The main thrust of these decisions has ultimately to be about having a 21st-century organisation for a changing environment, and that means the kind of model that this process is driving towards.

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[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.

[Imran Hussain]

The Minister is being very kind with his time today. He talks about the need for regional hubs and centres of excellence, which we all accept. The argument is not about collecting tax and whether we should have centres of excellence and the best facilities, but about where they should be located. That is the point we are making. In my case, an office based in Bradford would be considerably cheaper. Is the Minister saying that Bradford cannot provide a centre of excellence?

[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.