HMRC: Building our Future Plan

Patrick Grady Excerpts

Thursday 28th April 2016 Commons Chamber

[Chris Stephens]

That is an interesting point, given that we had a debate yesterday about e-balloting and trade unions’ right to access email for a ballot. It seems it is okay to issue a compulsory redundancy notice by electronic means. Perhaps the Government will take that into account when they discuss the Trade Union Bill.

We believe that HMRC and the Government want to send a signal using the 152 staff facing compulsory redundancy to demonstrate exactly how they will go about the mass office closure arising from the Building our Future plan. We find this to be unacceptable and not acting in good faith.

[Patrick Grady (Glasgow North) (SNP)]

I congratulate my hon. Friend and others on securing this debate. Does he share my concern that a number of the arguments we were given in 2014 for Scotland remaining in the Union are beginning to unravel? We were told that separation shuts shipyards; that our heavy industry, such as the steel industry, would be at risk; and that a major benefit of the Union was having the civil service employees in the United Kingdom and Scotland. Now it seems that the case is unravelling on all those points.

[Chris Stephens]

My hon. Friend raises a fair point in that some workforces were told that offices would close if they voted for independence. To be fair, in my experience, workers in the shipyards and at HMRC came to an individual choice on the referendum. I do not think those scare stories were necessarily accepted by many parts of the workforce. However, again we hear the use of rhetoric around the constitution to say that places will close. We will find that it is not an independent Scotland that is closing those offices but a Tory Government.

In preparing for this debate, I came across a debate on the then Inland Revenue from over 30 years ago in the other place. A contribution by Baron Houghton of Sowerby, a former Chairman of the Public Accounts Committee and chair of the Inland Revenue Staff Association, stood out:

“the human factor is the ultimate right…and there is no substitute for it. No computers will deal with taxpayers who require consideration and attention, and to whom some measure of discretion or of consideration may be due.”—[Official Report, House of Lords, 20 July 1983; Vol. 443, c. 1199.]

Those words are as appropriate today as they were in 1983. They seem to me to be part of an ethos that all of us, across parties, should endorse as a cornerstone of public services. Sadly, those behind HMRC’s Building our Future plan are taking the wrecking ball to those foundations and not just demolishing the future of HMRC’s buildings but hammering the staff, the taxpayer, and the public. If they are allowed to proceed, towns and cities across these isles will be at the forefront of yet more ideological austerity. Hard- working and conscientious staff will once again be expected to clean up the mess, and taxpayers will foot the bill for the short-sightedness and short-termism of successive governments and Treasury Ministers. HMRC is not building a future—it is destroying it.

Fifteen years ago, the Inland Revenue and Customs and Excise combined had 701 offices across the country. Today we are being asked to accept that the 13 centres proposed by HMRC can possibly replicate that kind of coverage. Is there anyone who believes that the citizens of Penrith can better be served by a “super-centre” in Manchester, compared with Carlisle; those in Portlethen served better from Edinburgh than Aberdeen; or the people of Penzance served better from Bristol than Redruth? We are asked to believe that the best interests of the taxpayer and of society are met in a system that has staff in Glasgow travel halfway to Golspie to meet clients who have travelled halfway from Golspie to Glasgow, sitting down at some “neutral location” to discuss an individual’s sensitive and confidential tax affairs. I am told that one of these neutral locations is what can only be described as a hut in a public park. I am told—if I had not heard this with my own ears, I would not have believed it—that HMRC staff are advised to take a warm jumper and a bag of grit to these meetings during winter.

In truth, a look at the latest staff satisfaction survey from HMRC unfortunately makes this all too easy to believe. It would make some informative bedtime reading for those behind this closure programme. Fully 2% of staff strongly agree with the statements “I feel change is managed well in HMRC” and “When changes are made in HMRC they are usually for the better”, while 6% strongly agree that “I would recommend HMRC as a great place to work”, and 3% strongly agree that “HMRC as a whole is managed well”. On measure after measure, time after time, staff at HMRC are shown to be demoralised, demotivated, and depressed.

What other outcome in staff morale could result from the shuttering of office after office around the country? How enthused would anyone be knowing that, in a matter of months, their workplace is to be closed and that they and their friends and colleagues are to be relocated miles away? I suspect that if those behind this scheme were to be told tomorrow that their palatial offices were to be shuffled off from London to Norwich, Peterborough or Harwich—a journey that staff in these offices will be expected to do in reverse from next year —a murmur or two of discontent may well escape from their lips. Staff are entitled to ask exactly why a Government who invent catchphrase after catchphrase on regional policy—from the northern powerhouse to the midlands engine—are intent on such a centralising agenda. They may well ask why they are being shunted into sidings, rather than providing an express service to their communities.

I am sure that colleagues will touch later on the impact the closures will have on their constituencies, so I will not dwell too long on the specific towns and cities that will be hit, or on how hard they will be hit.

--- Later in debate ---

[The Financial Secretary to the Treasury (Mr David Gauke)]

Back in November, HMRC announced important changes to how it would operate. Its aim was simple: to create a modern, efficient organisation that would continue to protect this country’s tax revenues, while, at the same time, providing better value to the taxpayer. HMRC is determined to make sure that it is better able to focus on its core priority—to bring in more revenue by tackling tax evasion and avoidance.

Since 2010, it has made real progress. For example, it has driven down the tax gap—the difference between what HMRC should theoretically bring in, and what it actually collects—from 7.3% in 2009-10 to 6.4% in 2013-14. That is one of the lowest rates in the world. To make the importance of that quite clear, let me put it this way: if the Government and HMRC had not taken action to achieve that, we would have collected £14.5 billion less in tax.

We are determined to transform HMRC into a more efficient, more highly skilled organisation, which offers the digital services people expect in the 21st century. That is why, in the spending review of 2015, we made the commitment to invest £1.3 billion in transforming the digital capabilities of HMRC. In this year’s Budget we allocated a further £71 million to help HMRC improve its customer services. By the end of this Parliament that will bring the change we need to make it quicker and easier for taxpayers to report and pay their taxes online. It will deliver a seven-day-a-week service, improved telephone services and reduced call waiting times, as well as dedicated phone lines for new businesses. This investment will pay off. By 2020, we expect HMRC to be saving £700 million a year, as well as delivering an additional £1 billion in revenue in 2020-21.

The next stage of the plan to bolster HMRC and help it deliver more for less is to transform the estate through which it works. In 2010 we challenged HMRC to make savings. We asked it to reduce costs by a quarter and reinvest £917 million of those savings in making sure that more businesses and people paid the tax that they should, bringing in an additional £7 billion a year in 2014-15. HMRC delivered, making savings of £991 million, including reducing the cost of the estate. At the same time, it kept up progress in cutting the tax gap and improving customer service. So far from endangering our plans to clamp down on tax avoidance and improve customer service, as some have suggested today, these plans are crucial to those aims.

Let me remind the House that HMRC’s plans will generate estate savings of £100 million a year by 2025.

[Patrick Grady]

Will the Financial Secretary give way?

[Mr Gauke]

I have many points to get through, but if I have time I will give way.

When HMRC was formed in 2005, it had around 570 offices spread out all over the country—an inefficient way of doing business in the 21st century. Reorganising this network of offices was a priority even then, which is why, following a number of reorganisations, that number was reduced to around 390 in 2010. It now stands at around 170 offices, ranging in size from 5,700 people to fewer than 10. That is a start, but it is not efficient enough. The changes that we announced in November represent the next stage of HMRC’s estate transformation programme.

Over the next 10 years, the department will bring its employees together in large, modern offices in 13 locations equipped with the digital infrastructure and training facilities they need to work effectively. These new high-quality regional centres will serve each and every region and nation in the United Kingdom, creating high-quality, skilled jobs and promotion opportunities in Birmingham, Belfast, Bristol, Cardiff, Croydon, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Stratford.

There are significant advantages to such a system: the new offices will have the capacity to encourage people working in different roles, at different levels, to work more closely together, as well as providing more opportunities for them to develop their careers. The offices will be in locations with strong transport links and with colleges and universities nearby, to ensure a ready talent pool close by. In short, they represent the way business is done in the 21st century. HMRC expects the first centre to open by 2017, with the others opening over the following four years.

On the point about consulting HMRC staff, HMRC fully recognises that its most valuable asset is its people. HMRC can only do what it does thanks to its dedicated members of staff who bring in the money that funds our essential public services, as well as helping hard-working families with the benefits they need. That is why HMRC has kept its workforce fully abreast of all its plans to change how it operates, which were first announced internally two years ago. Since then, HMRC has held around 2,000 events across the United Kingdom, talking to colleagues about these changes. Everyone working for HMRC will have the opportunity to discuss their personal circumstances with their manager ahead of any office closures or moves.

I should remind the House that this is about changing the locations, not cutting staff. Indeed, the department’s policy is to keep any redundancies to an absolute minimum. HMRC’s analysis indicates most employees are within reasonable daily travel of a new centre, although that is subject to the one-to-one discussions which every member of staff will have about a year before any planned closure.

Let me pick up the point about trade union representation. One-to-one meetings are an opportunity for managers and staff to discuss how the proposals will affect staff, and HMRC will consult every one of its staff. Once decisions are taken, staff will of course have the opportunity to have representation. This is not a change of approach; these are fact-finding discussions with all members of staff to understand their personal circumstances. Trade union reps have never been in such meetings, but they will be involved, as they would normally, at a later stage.