HMRC Inquiry Centre Closures

John McDonnell Excerpts

Tuesday 4th March 2014 Westminster Hall

[Ian Lavery]

The Minister nods positively. I am pleased: perhaps he can assure me that support will be given to staff who are uncertain about their future and that compulsory redundancies will not be made.

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

We are all grateful that the Minister met the union, but let us be clear: he met the union only after this debate was announced. There has not been full transparency in the sharing of information with the union by management about the various options going forward. The Government introduce changes, but it is best to do so in a negotiated way rather than by imposing them, as this management seems to have done.

[Ian Lavery]

Again, I thank my hon. Friend for a positive intervention.

The pilot scheme has been rolled out not just in my constituency, but in my region—the north-east area. In June last year, 13 offices in the north-east of England were closed, including Royal Sovereign house in my constituency, in Morpeth. They were closed as part of a pilot of the new needs-enhanced support service model. If the closures of all 281 offices throughout the UK go as planned in June, I hope that HMRC does a better job of letting the public know than it did in our region last year.

I have heard examples of people travelling miles, only to find their local office no longer open to the public. In one prime example, an 85-year-old man used two buses to get to Scarborough, only to find the inquiry centre closed. Staff were actively prevented from assisting him: I repeat that they were actively prevented from assisting an 85-year-old gentleman. Another member of the public was trapped inside Gilbridge house in Sunderland, while trying to look for the inquiry centre, which had been closed. Many taxpayers decided to travel outside the region to inquiry centres that were still open, just so they could get face-to-face advice.

A recently widowed elderly woman turned up at Gilbridge house office for assistance with a tax form she needed to complete on behalf of her late husband. She told a member of HMRC staff that she simply did not feel that she could discuss her affairs over the phone, that she was afraid of completing it herself, just in case she did anything wrong, and that she could not grieve properly while she had this worry on her mind. I use this specific example, because staff are particularly concerned about the prospect of mainly older customers getting the support they need to complete the R27 form over the telephone, as these appointments need time. They not only need time; they need empathy, understanding and a common touch. It is common for staff, so they tell me, to keep a box of tissues handy on their desk for such occasions. It is hard to see how this kind of personal service can be replaced over the phone or on the internet. What assurances can the Minister give that such people, who will be in a particularly vulnerable state, will not be disadvantaged by the new service?

There are also problems involving equality issues. It is clear that the pilot scheme could not possibly identify the equality impacts on customers and staff, due to the demographics of our north-east region. For example, migrant workers make up 25% of all inquiry centre customers. However, the percentage of these customers is much lower in the north-east of England than it would be in other regions, such as London, which is a prime example. The consultation carried out by HMRC last year did not present equality data about customers. The document was not produced in different languages, which is of particular concern considering the high number of migrant workers who use the service. Only 11% of staff work part time in the north-east, compared with a national average of 36%. For example, 45% of workers in Wales and Scotland work part time. Only 7% of staff declared a disability in the north-east, compared with 27% based in Wales. Some 30% of inquiry centre staff in London and south-east are black, Asian and minority ethnic, compared with just 2% in the pilot area. How can the pilot area possibly identify the equality impact these closures will have on the country as a whole?

It is also worth mentioning, while considering the equality implications of this decision, that in October 2013 three appellants supported by the Low Incomes tax Reform Group won their appeal against the HMRC’s requirement that they must file their VAT returns online. A tax tribunal found that HMRC’s regulations that required online filing of VAT returns without providing exemptions for older people or disabled people, many of whom live in parts of the country that are too remote for broadband access, breached the appellants’ human rights and were unlawful in EU law.

If we consider the intervention of the hon. Member for Ceredigion (Mr Williams), it is important that ordinary people can access those services. It does not matter whether those people live in London or in rural areas where access is extremely difficult. It was identified early in the pilot that a significant number of customers will not be able to call contact centres or interact with the website owing to the cost and low mobile or internet access in many parts of the UK. The taxpayers who are most likely to be prevented from accessing the proposed new service owing to the cost are the most vulnerable members of society. They are not able to afford a landline or a mobile telephone, and even if they own a mobile telephone it is often on a pay-as-you-go facility with a minimum amount of credit reserved for emergency calls only. Those taxpayers include the unemployed, people on low incomes, migrant workers, pensioners, people on child benefit and child tax credit claimants. Those taxpayers rely heavily on the free service that is currently provided by our inquiry centre network because their tax queries are often complex.

Low earners, for example, often work in multiple jobs to provide for their family, which means that the tax code is often incorrect. They visit the HMRC inquiry centres to use the free phones and free internet facilities or to receive face-to-face support and advice. HMRC agreed that an alternative access solution needed to be found if the new model was to be rolled out nationally. It is therefore concerning that the decision to move to the new service model and to close the inquiry centres has been made despite HMRC not having found those solutions.

Can the Minister reassure me that solutions have been found? If not, why has a decision been made without the Department having been able to resolve those important issues? Even in areas that have decent mobile phone coverage, taxpayers need to be reassured that contact centres will be sufficiently staffed to handle their calls. If the closures go ahead, people will no longer be able to walk into their local inquiry centre and receive face-to-face assistance on tax issues that are often complex. Instead, they will have to call a contact centre. A member of staff will then vet them and determine whether to refer them to another adviser. Only if that two-tier adviser deems it appropriate will a taxpayer classed as needing enhanced support be given access to face-to-face advice. Call handling levels have consistently been criticised by the Public Accounts Committee and the National Audit Office. There are figures that prove conclusively that people will find it extremely difficult to contact the centres.

The fact that we are removing HMRC offices from local communities is one of the most important issues. HMRC is effectively moving its presence away from people who are supposed to pay, which will make closing the tax gap even harder. It will make tax compliance more difficult, both for those who want to comply but cannot get access to the information they need and for those who intentionally want to slip under the radar because they are disengaged with the tax authority at a local level. Those concerns have been raised by a large number of stakeholders in the public consultation exercise, including by the Association of Taxation Technicians, Citizens Advice, Gingerbread, the Institute of Chartered Accountants in England and Wales, Lancaster city council, Milton Keynes council, TaxAid and a number of individual taxpayers. What work has HMRC done to estimate the amount of money that could be lost in uncollected tax owing to large numbers of taxpayers being prevented from engaging with the Department?

I conclude simply by asking the Minister to reconsider the decision to close the offices. There is a real danger that if the plans go ahead, some of the most vulnerable people in society will lose their access to HMRC’s services. Hundreds of quality jobs will be lost, and the Government’s attempts to tackle the tax gap will be seriously set back. It would surely benefit society and the economy if the Government would concentrate on closing the tax gap, not tax offices.

--- Later in debate ---

[Mr Gauke]

The point I was making is that, yes, 281 inquiry centres are being closed, but there will be something like 350 venues that will be used for face-to-face meetings under the new regime. HMRC fully acknowledges that there is a need to deal with those people who require enhanced support and face-to-face meetings. It has been clear about that.

[John McDonnell]

The problem with call centres is that in order to secure a face-to-face meeting, someone has to get through on the phone. At the moment, the Public Accounts Committee has set HMRC a performance target of 90% of calls for 2013-14, but performance, as at December 2013, was 76.2%. So HMRC is significantly failing its existing call centre targets already.

[Mr Gauke]

It is worth making the point that HMRC has recently gone through one of the biggest peaks for telephone calls during the year, which is the self-assessment deadline at the end of January, and it met the 90% target even on the last day of January, so there is some progress in terms of HMRC’s contact centre performance.

In the time that I have available, I will turn to the consultation and pilots. As many hon. Members will be aware, in developing and refining the new service, HMRC undertook a wide-ranging consultation on its proposals last year. It also piloted the new service in the north-east of England from June to December 2013, closing 13 inquiry centres including, as we have heard, the Morpeth inquiry centre in the constituency of the hon. Member for Wansbeck, so as to run the live trial. Feedback from customers and staff has helped to shape the service that will now be rolled out nationally, which includes introducing alternative routes for deaf, hard-of-hearing and speech-impaired customers to contact HMRC online, and making it easier for a friend or family member to contact HMRC on behalf of a customer to arrange a face-to-face appointment.

Customers who have used the new service have liked it. Independent research has shown that the new service has delivered an improved service for customers who need extra help, compared with their previous experiences with HMRC. Some calls, particularly those about tax credits, can also be handled effectively by HMRC’s contact centre advisers. I know that concerns have been raised about the ability of contact centres to cope with the increased demand, as the hon. Member for Hayes and Harlington (John McDonnell) said. However, as I have said, even in the self-assessment tax return peak in January, HMRC handled almost nine out of 10 calls first time.

I conclude by reassuring hon. Members that HMRC is making these changes for two main reasons: first, to better meet the needs of those 1.5 million customers who need more help with their tax and benefits; and, secondly, to ensure that the services it provides represent the best value for money for taxpayers. Many inquiry centre staff will have the opportunity to apply for roles in the new service; many others will choose to leave HMRC through a voluntary exit scheme, or will seek redeployment to other roles within HMRC or in other Government Departments. In short, HMRC is doing the right thing for its customers and for the country, and as a responsible employer it is treating its staff with consideration and respect as it implements this important new service.

Question put and agreed to.