HMRC Closures

Martyn Day Excerpts

Thursday 2nd November 2017 Westminster Hall

[Stuart C. McDonald]

I agree entirely. In a nutshell, that is the point of my speech. We have an opportunity now to pause and look at what has happened and the impact it has had. When the proposals come under scrutiny, the business case for change looks decidedly dodgy, and it is also proving something of a moveable feast.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

Does my hon. Friend agree that it is extremely disappointing that the UK Government decided to relocate HMRC services from west Lothian to a regional centre in Edinburgh, affecting potentially 1,200 local jobs, without proper parliamentary scrutiny and despite concerns raised by the National Audit Office about the financial integrity of such a move? Although I hope that the Government will seriously reconsider their position, if it is their intention to press ahead regardless does he agree that they should at least consider west Lothian as a centre for a mini-hub, so that we can retain the skilled, experienced staff who would not otherwise transfer to the regional centre, and support a key part of the local economy? I hope my hon. Friend will join me in calling for the Minister to address that point.

[Stuart C. McDonald]

I happily join my hon. Friend in making that call of the Minister. In essence, there are strong reasons for a moratorium on further implementation of the “Building our Future” programme, while HMRC, Parliament and the public can take stock, scrutinise what has happened in areas that have already experienced change, and consider whether all the further moves make sense. Since the last time we had the opportunity to debate the changes, we have had reports from the National Audit Office, as my hon. Friend has mentioned, and the Public Accounts Committee.

The National Audit Office noted that HMRC now accepts that its original plan was unrealistic. Little more than one year on from submitting its original business case, when the NAO report was published in January, HMRC’s estimate of the costs over the next 10 years had risen by £600 million—more than half of which was due to higher than anticipated running costs for new buildings. Similarly, estimated cumulative efficiency savings to 2025-26 had fallen from £499 million to £212 million.

I cannot honestly say that I am surprised. I was astonished to learn that the Government Property Unit is in negotiations for some of the most expensive commercial properties in Scotland in Glasgow’s international business district. It may pay the market rate for those properties, but it will certainly be a far higher rate than it would have to pay for the same capacity in Cumbernauld. As the Public Accounts Committee said, HMRC

“has yet to demonstrate that it has a realistic and affordable plan to deliver such a radical change to its estate, and we do not believe that it needs to be based in expensive cities across the UK.”

To cut to the point, with the original business case inaccurate to the tune of hundreds of millions of pounds, is it not time to halt the signing of new leases and deals, take stock of what has happened so far with those hubs that have been established and revise the plans accordingly?

In the case of Cumbernauld, and I have no doubt many other offices, HMRC’s rush to closure is simply incomprehensible. One of the biggest frustrations felt by staff in Cumbernauld is the fact that, to all intents and purposes, the site already meets the criteria that HMRC are looking for in a regional hub. It is a large, easily accessible site that will be nowhere near as expensive as the equivalent space in Glasgow city centre. It is situated between world-leading universities in Glasgow, Stirling and Edinburgh, in the heart of Scotland’s central belt, with all the accompanying digital and transport infrastructure of that region. Why close it and move, as it is rumoured, to somewhere that is currently no more than a car park in Glasgow’s financial district? Just how sure is HMRC about that being the right model for the future?

There are also very real concerns about capacity. The Government are opting to buy into inflexible situations, with 25-year leases apparently signed without break clauses. In the case of Glasgow, if the capacity is wrongly assessed, the office block next door cannot just be demolished, nor is it possible to just build into the Clyde—and requirements do change. Brexit will apparently require HMRC to recruit thousands of additional workers. Brexit post-dates “Building our Future”, so, again, “Building our Future” requires revisiting.

Finally, let us not forget that in 2015, HMRC suffered from the lowest staff morale in the civil service survey. In 2016, it climbed five places to 94th out of 99. That impacts on the Government’s goals for maximising revenue and efficiency. It also impacts on the workforce turnover rate. The chief executive officer of HMRC stated in September 2017 that even he found the level of turnover at HMRC surprisingly high.

There can be costings, revised costings and even more revised costings for brand new governmental hubs, but HMRC will never operate efficiently if it does not invest in its staff and its workforce. There is no point in centralising and saying that the opportunities for staff to progress are being maximised, if staff and their expertise do not stay in the organisation long enough, due to low morale and high turnover.

I know from my discussions with staff that those who have worked diligently for many years distrust the management and its agenda. Members will be aware that support for relocated staff has been reduced from five to three years. The mismatch between the capacity at the new sites and the existing workforces, the lack of clarity, the redundancies and many other factors have contributed to the lack of trust between the staff and HMRC, and the low morale, which is clearly documented in civil service surveys.

In September 2016, the then Chair of the Treasury Committee wrote to HMRC’s chief executive and pointed out:

“There appear to have been over a dozen major reorganisations in HMRC since the merger in 2005. There is a trade-off between stability and what may work better on a management consultant’s whiteboard”.

That, in a nutshell, is why I fear “Building our Future” will be proved wrong: the management consultants’ nice ideas will prove to be drastically different in reality, and when we look back, stability will appear to have been the better option. We have a chance to stop and reflect on whether what was envisaged for the first couple of regional hubs really happened in reality, so let us not waste this opportunity. Let us do what is right for staff, our communities and taxpayers. Let us halt the “Building our Future” programme.