HM Revenue and Customs

Debate between John McDonnell and Sharon Hodgson

Tuesday 5th February 2013 Westminster Hall

[John McDonnell]

I will come on to that in due course. The expression that has been used by non-HMRC staff—observers—is that staff morale is “at rock bottom.” That was demonstrated by a recent internal Government survey, which reported that fewer than one in five staff thought that HMRC was well managed. That is how bad it has got.

I want to get back to the important issue of staff numbers. The Minister claimed in a previous debate that there had been an increase in the numbers of tax inspectors, with 100 new ones having been or being recruited, but that fails to appreciate the role of other front-line staff in dealing with tax inquiries and chasing up payments. Those essential back-room staff, who are not respected in the role they play, seem to be the ones who are vulnerable to losing their jobs. The Government have partially recognised some of the staff resource issues, providing £900 million to secure an extra £7 billion in tax revenue, and announcing a further £77 million in December to expand HMRC’s anti-avoidance and evasion activities, which they predict will secure another £2 billion. That small investment over the coming years will secure a total of £22 billion of additional taxation, demonstrating that investing in the staff and the professionals will have an economic success in tackling the tax collection problems.

Although limited, the additional funding is welcome, but it fails to appreciate the impact of previous job cuts and the threat to staff of another 10,000 jobs going between now and 2015. It is not just PCS members who urge the Government to think again about the cuts; accountants, including the Institute of Chartered Accountants, have expressed their concern in public. One of them described the cuts as happening “wildly”, with little planning, resulting in the loss of highly skilled professional staff.

I urge Members to read the Commons Library briefing note, which cites a number of independent accountants who have gone public with their worries about the impact of staffing cuts on HMRC, including Ken Frost, the accountant blogger, and Mike Warburton. The running theme is that the cuts are causing difficulties and leading to lost experience, and that staff are overwhelmed at a time when more demands are being placed upon them. According to the briefing by the Institute of Chartered Accountants, the recent child benefit changes are predicted to bring an extra 500,000 taxpayers into self-assessment, stretching the already overstretched system.

HMRC staff have expressed their concerns that under-resourcing is leading to mistakes. In an article in the Institute of Chartered Accountants journal, one staff member states:

“The pressure we’re under to hit targets and get post turned round leads to errors because we’re having to do it that fast…The emphasis is placed on getting rid of the stuff whether it’s right or wrong.”

It cannot be right that that is happening in our system. To deal with the work load with fewer staff, HMRC management has introduced a working system based on what have been described as manufacturing principles. The pacesetter system is a rigid, time-limited process with specific targets, which leaves little room for professional judgments, resulting in further errors and failures to resolve problems.

It is not just accountants and other professionals who are complaining about the impact of cuts on services; members of the public, individual taxpayers and small businesses are complaining about the often nightmare problems of accessing HMRC services. The closure of local offices has meant that virtually all contact for some taxpayers is now by telephone.

The National Audit Office reported in December that, in 2011-12, HMRC answered 74% of phone calls. The NAO acknowledges that, despite exceeding an interim target of 58%, the level of service is low. For example, 20 million calls, including calls where customers rang back because they did not get through the first time, were not answered. Customers who got through to HMRC in 2011-12 had to wait on average 282 seconds to speak to an adviser. Between April and September 2011, 6.5 million customers waited more than 10 minutes to have their call answered. Depending on the tariff they pay their phone company, customers are charged from when their call is connected, even if they are held in a queue. The NAO estimates that being in a queue cost customers £33 million in call charges; the estimated value of customers’ time while they were in a queue is £103 million, which cannot be right.

I am pleased that the Government have announced that, from the end of the summer, people who phone for advice will no longer use the costly 0845 number. They are also setting a new target from April for 80% of people to wait no longer than five minutes to speak to a real person, including recorded messages. I am grateful to the Government, because there have been improvements and HMRC has hired an extra 2,500 staff. Those staff, however, are employed only on temporary contracts, and the union and others feel that the Government need to allow HMRC to employ properly trained, permanent staff who will benefit the organisation, rather than the reactive, quick-fix recruitment policy that many people feel will not bring about sustained improvement in service delivery.

There is anxiety about over-reliance on phone services. The reason for high caller demand and over-reliance on caller services is because 200 local HMRC offices have closed over the past six years, and there are more to follow.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

My hon. Friend is right that there are more closures to follow. In my constituency, Weardale house is due to close, and in the neighbouring constituency of Sunderland Central, the closure of Shackleton and Gilbridge houses is under consultation. That is three offices and a number of staff in just one city, and in Sunderland unemployment is 7.5%. Does he agree that that is not only bad for HMRC services but devastating for the local area?

[John McDonnell]

I will use the example of Sunderland, because my hon. Friend has hit on a wider issue than just the impact on staff. HMRC plans to close Gilbridge and Shackleton houses, which are in the centre of Sunderland, and Weardale house next to the Washington Galleries. Some 300 staff from Sunderland and 200 staff from Washington could be moved to Waterside house, which is on an enterprise park outside the centre of town.

PCS asked staff at Gilbridge and Shackleton houses to keep track of their city centre expenditure for two weeks as a sample. They spent more than £22,000 across more than 100 businesses in that particular area. I have details of a survey that I would like to hand to the Minister after the debate, because it demonstrates the financial impact on a town centre of removing that number of staff. To a previous question on the union’s assessment that £600,000 would be lost each year, the Minister’s response was that that will be made up for when the buildings are let. Well, those buildings are not being let; the offices are being closed and not being replaced by firms that recruit and employ the same number of staff with the same spending power in a town centre.