HMRC Closures

Luke Graham Excerpts

Thursday 2nd November 2017 Westminster Hall

[Luke Graham (Ochil and South Perthshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) on securing this important debate.

This reform of the HMRC estate takes place against the backdrop of large organisational changes in HMRC and the drift towards a more digital economy. The changes, some of which are being made in the Finance Bill, are about making tax digital. People’s interaction with tax and HMRC services online is becoming increasingly important. That change, combined with the change in footfall on the high street and accessibility reviews carried out across the HMRC estate, led the Minister and the Government to make these changes.

Making tax digital is a key part of these changes. Although slightly delayed, it is still in line with the timeline for some of the individual office closures. Combining our staff and skills resources in regional hubs will enable us to improve customer support, which, as hon. Members have said, is allegedly poor, by clustering skills together, and technology will enable us to deliver a better service for our constituents.

It is important that we strike the right balance between cost savings and the accessibility of services. I am sure the Minister appreciates that HMRC is a vital public service, so it is important that we ensure that there is access in smaller towns and cities throughout Scotland and the rest of the United Kingdom. Although the closures in Scotland are proportionate with those in other parts of the United Kingdom, it is important that HMRC proactively looks at outreach schemes to ensure smaller towns and villages still have access to HMRC facilities and services. That is very important to many of my constituents in South Perthshire, Kinross-shire and Clackmannanshire.

I will close on this point. I want to be very brief, because lots of other Members want to speak. The closures are taking place in the context of massive change in our economy and our society as a whole. They are not just about cost saving, but about looking at how our constituents engage with the Government. If this were just a stand-alone measure without the other Government initiatives to make tax digital and increase online accessibility and interaction with constituents, I would stand firmly against it. However, because it is part of a suite of options, HMRC services and investment in digital infrastructure, I believe that some of these measures can and should work for our constituents.

I reinforce the point I made earlier. Many smaller towns and villages in rural parts of our country will need accessibility, especially if their broadband connectivity is not as good as it is in other parts of the UK. We need to ensure that HMRC is proactive in reaching out to those communities and ensuring that they can still access the services they require. The Government want them to engage with the cost-saving initiatives over the next five to 10 years, as outlined in the paper under discussion and others.

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[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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[Chris Stephens]

I do, and I think it has been driven by cost. One other area is that while I and my hon. Friends were campaigning in our constituencies to get re-elected, HMRC, during purdah, was signing contracts, and it did not wait until after the election to inform the House of those changes. I sympathise with the point that the hon. Gentleman made. Of course, during the process, we had the Concentrix disaster. HMRC had to terminate its contract early because Members of Parliament from right across the House had major complaints about how Concentrix was dealing with its business.

In the National Audit Office’s report, the key findings stated that:

“it will be longer until HMRC starts to realise savings. In the long term, it still expects its new estate to reduce its running costs. It now estimates cumulative efficiency savings by 2025-26 of £212 million, reduced from the £499 million estimated in its strategic outline case in November 2015. By 2025-26, HMRC expects its annual running costs to be £83 million lower than they are now”.

Whether it is £83 million, £212 million or even £499 million, those are drops in the ocean compared with the Government’s own accepted figure for the tax gap of £36 billion. The figure researched by the Tax Justice Network and PCS puts the tax gap at £119 billion. A major reorganisation and rationalisation of the most vital Government Department, putting at risk the very ability to carry out the tax collecting function for savings that are not properly costed, is irresponsible management and governance.

The Scottish Government are consulting today on the Scottish approach to taxation, to accompany gradual increases in its taxation powers. HMRC’s plans could well result in the severe limiting of HMRC expertise based in Scotland, which will become even more important as the Scottish Parliament debates increases in taxation.

[Luke Graham]

Does the hon. Gentleman agree that recent figures show that unpaid tax is at a record low, so some of HMRC’s performance has improved and it is actually doing quite well? Will he join me in asking the Minister to give assurances that that performance will continue, even with the closures and movements going forward?

[Chris Stephens]

I will meet the hon. Gentleman halfway. I do not believe that unpaid taxes are at a new low. In fact, I think the report I referred to earlier, published by Tax Justice Network and PCS, showed a gap of £119 billion. That certainly suggests to me that one of the major focuses of HMRC should be collecting tax and going after the rogues who are registered in the Cayman Islands and other places, shuffling money. I will meet the hon. Gentleman halfway on that.

HMRC faces a number of challenges requiring investment in offices and infrastructure, and no one from HMRC or from the Treasury has so far explained what changes they will make in the “Building our Future” programme to meet these challenges. I will not avoid saying, “We told you so,” because we did, time after time, in this place and elsewhere. We know that UK overseas territories are used to avoid billions of pounds of tax. We know that the uncollected tax avoided by these high-rolling spivs runs into tens or even hundreds of billions of pounds. It beggars belief that, at a time when there is more focus than ever on tax dodgers and their theft from public services, HMRC are shuttering dozens of offices across the country, losing staff and skills that could otherwise be used to target the high rollers who cost our hospitals, infrastructure and schools billions each year.

It is therefore somewhat ironic that Mapeley, to which HMRC’s office estate has been outsourced, is based in Guernsey, a notorious tax avoidance hub overseen by the UK Government. Downing Street confirmed yesterday that HMRC will need up to 5,000 new staff as a direct consequence of Brexit and the UK leaving the customs union.