HMRC Estate

John McDonnell Excerpts

Tuesday 10th January 2017 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer to make a statement on the National Audit Office report, published today, on the Government’s management of the HMRC Estate.

[The Financial Secretary to the Treasury (Jane Ellison)]

HMRC’s transformation plans will allow it to become a more efficient and effective tax collector fit for the digital age. HMRC’s large estate is ageing and not delivering the best value for money for the taxpayer. The NAO has confirmed that savings of £80 million per year will be made by 2025.

The size of HMRC’s estate has been reducing since 2006, and the NAO report published today shows that HMRC has made some effective changes since 2010, while reducing staff numbers by a quarter and saving the taxpayer over £350 million pounds. However, HMRC wants to keep up the momentum to provide a better service at a reduced cost. As it announced in 2015, that means taking forward big reforms of how the estate works, which will see over 170 small offices consolidated into 13 larger regional offices, an approach which is used across government. This brings with it a whole range of advantages, from efficiently sharing resources and quality digital infrastructure to better support and career opportunities for the staff who can more effectively share expertise. For the public, what this really means is a better, more modern service run by fewer staff costing about £80 million a year less by the time the changes take effect.

The report out today suggests that the costs of bringing about this transformation are likely to be higher than was first forecast. Of course, certain aspects of the programme could not be definitively made at the start. There is a wide range of factors behind that, from rising property costs and changes to the programme, for example to help staff to adjust and to ensure a smooth transition for customers, so the programme costs are of course updated to reflect that. I therefore thank the NAO for its timely report.

The strategy to modernise the service that HMRC provides to taxpayers is the right approach and reflects the way taxpayers now interact with it. It is a plan to say goodbye to the days of the manual processing of tasks that can be done more easily with today’s technology. In short, we remain fully committed to taking forward the changes to the HMRC estate that will help us to bring a better tax service for the people of this country.

[John McDonnell]

In reality, the report is damning of the Government’s plans to close 170 offices. We on the Opposition Benches have warned consistently that the Government’s proposals will have a detrimental impact on HMRC’s ability to provide advice and to tackle tax evasion and tax avoidance.

The NAO report confirms our fears. First, it called the original office closure plan unrealistic. The estimates of the costs of the move increased by 22%, which is £600 million extra. It forecasts a further 5,000 job losses and finds that the costs of redundancy and travel have tripled from £17 million to £54 million. It also says that HMRC cannot demonstrate how its services can be improved and has not even produced a clear programme business case for the planned closures.

As we predicted, this is an emerging disaster. Even the Government now accept that there is a tax gap of at least £36 billion, yet these plans will do nothing but hinder the effort to tackle tax evasion and avoidance. Some 73% of the staff surveyed said that the plans would undermine their ability to provide tax collection services, while 50% said they would actually undermine their ability to clamp down on tax evasion and avoidance. Will the Minister now call a halt to the planned office closures, end the job cuts at HMRC and come back with a realistic plan to resource HMRC fully in its vital tax collection role?

[Jane Ellison]

The shadow Chancellor is right that HMRC’s tax collection role is vital. At the heart of many of the changes made since the original estimates and planning for this part of the transformation are measures to better support staff and put more things in place to support their move. It is interesting that he makes no mention of the potential benefit to staff of the move. Of course, some will not be able to make the move, but the vast majority will live within an hour’s journey and will be supported, including through the one-to-one conversations which happen with staff ahead of any move.

The shadow Chancellor’s comments do not accurately represent what the NAO said. It has actually recognised that HMRC’s move to regional centres is central to its strategic aim to increase tax revenue, improve customer service and make cost savings. The move to regional centres has never been just about cost savings or buildings; it is partly about how people work in those buildings. Ultimately, we will have an opportunity to change how we work. In 1982, my first job after leaving school was in an old tax office. Some of those offices are over 100 years old and some have not changed since I was working in one as a school leaver. It is absolutely right that we commit to making sure that staff can work in a modern environment.

All staff will be offered the chance to move, and for those who cannot, there will be one-to-one, bespoke support, and some of them will go to other Departments, so some of the comments we have heard are absolute nonsense. [Interruption.] There is a lot of chuntering from the Opposition Front-Bench team, but they are not listening to the facts and they have not read what the NAO actually said. This is a major programme, and it is right that the overall costs be periodically reviewed, but HMRC is not looking to make any significant changes to its overall strategy. We want its staff to work closer together in regional centres and specialist sites in a modern, flexible and high-quality working space.

Lastly, on tackling tax evasion and the tax gap, no Government have done more than this one. It is absolute nonsense to say that HMRC’s capacity to tackle those two issues is diminished; far from it—the UK’s tax gap is one of the smallest in the world and at its lowest ever level. In the summer Budget, we gave HMRC an extra £800 million to tackle tax evasion, and it has done that extremely well, such that once again we have reached record levels of compliance with regards to money from anti-tax evasion measures. I therefore rebut entirely the shadow Chancellor’s points in that regard.