HMRC Closures

Peter Dowd Excerpts

Thursday 2nd November 2017 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr Davies. Where do we begin with this situation? It is an absolute dog’s dinner. The Minister has inherited a number of dogs’ dinners since coming into post and I almost feel sorry for him.

My hon. Friend the Member for Bradford East (Imran Hussain) talked about the need for human intervention, but I think we need divine intervention. St Matthew is the patron saint of tax collectors, and he will have to be prayed to an awful lot for this particular mess to be put right. We all sit up when somebody talks about modernisation, because we know what it means: job cuts and closures of this, that and the other. And this is a classic case of modernisation.

I met senior HMRC officers to discuss the criteria used for the decisions. I declare an interest: HMRC is a significant presence in my constituency and well over 2,000 of my constituents work there. Members will, therefore, forgive me if I spend a little time on Bootle, because it is an exemplar of the problems facing other places.

The officers told me that one of the criteria is that offices need to be near a city centre, but Liverpool city centre is closer to my constituency of Bootle than it is to parts of Liverpool itself. They also said that they need to be near a university, but the situation is exactly the same: Liverpool University and Liverpool John Moores University are closer to Bootle than they are to the proposed new Liverpool site. The officers talked about transport and infrastructure access, but the HMRC offices in Bootle are literally surrounded by stations, including a railway station. In fact, a bus station right next to my office is literally a minute’s walk from the HMRC offices in the Triad building and the new St John’s House.

We were told that we needed to maintain staff retention, but the turnover at HMRC in my constituency is negligible. They are high-skilled, high-performing, loyal staff, so that criterion does not apply. There has been no impact assessment. Nipping back to the transport situation, no assessment was made of the transport links. Mersey Travel, the Cheshire transport authority and the Welsh transport authority were not contacted, even though they will also be affected by the proposals. The way in which this has been dealt with has been an absolute dog’s dinner.

My hon. Friend the Member for Wrexham (Ian C. Lucas)—he apologises for not being here—has written to the Chancellor, because the issue affects his north Wales constituency, which is virtually on the border. The letter mentions the proposed closure of the Wrexham HMRC office, which will result in the loss of 350 jobs, as part of the proposal to centralise Wales staff in Cardiff. It states:

“I am incredulous that the Government is continuing to propose a policy course of moving staff away from the regions to centralised city centre locations and it seems to me that the new political environment created by Brexit allows us to pursue a new regional policy by maintaining jobs in, for example, Wrexham, the largest town in North Wales.”

That is a very good point.

I apologise for only mentioning this now, but I am pleased that the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) has brought this issue to our attention again. How many times have we discussed this matter without ever receiving any proper answers from the Government? Interventions from my hon. Friends the Members for Coventry South (Mr Cunningham) and for Bradford East made a compelling case for why it needs—at the very least—to be looked at.

My hon. Friend the Member for Oldham West and Royton (Jim McMahon) graciously shared with us his experience of the heart-rending closure process in his constituency. I thank him for bringing that to our attention, because, if the proposals go ahead, that will be the future for communities right across the country, including mine. Thousands of people who work in my constituency will be moved to the iconic but very expensive India Buildings—car parking is at an absolute premium—in Liverpool. Why do they have to move three miles up the road when it is going to cost more money? There will be a net cost to the taxpayer in my constituency—but not, apparently, to the so-called national envelope—as a result of those offices being moved. That is dreadful.

Colleagues have made those points time after time, but let us hear what other people are saying. In a report on professional bodies, Accountancy Live noted:

“HMRC reorganisation risks pushing tax authority to breaking point. Tax advisers and professional bodies are sceptical about…HMRC’s plans to close 137 offices”.

Those are not our words, but those of professionals who work on these issues every single day.

The Institute of Chartered Accountants in England and Wales said it was staggered by the argument that HMRC will actually be adequate to provide any sort of service to 5 million or 6 million taxpayers in the London area, notwithstanding what reconfigurations may be made to the service. The word “disastrous” has been used and I agree that the situation is and will be disastrous. I ask the Government to take a step back and reconsider.

On Mapeley, something does not smell right, to be frank, about the deal for the India Buildings—to which HMRC will be moving—prior to HMRC’s involvement. People are coming to me all the time about that, so I am going to have to look in much more detail at the proposal. I have no doubt that in due course I will have to either come back here or write to the Chancellor, although I hope that I will not have to do so.

Opposition Members have raised the social and economic impact, but I do not think that any Government Members have done so, with the exception of the hon. Member for Ochil and South Perthshire (Luke Graham), whom I thank. It is symptomatic of the debate that only one Conservative Member is in attendance. Others do not appear to be in the least bit interested in the impact that the proposal will have on whole swathes of the nation, including Scotland, as the hon. Member for Glasgow South West (Chris Stephens) has said, and Wales, which will have one office. There will be 10 or 11 offices in the rest of the country and possibly one in Northern Ireland.

This is a pretty grim situation. To add insult to injury, some of these deals were signed de facto during purdah. If a Labour Government had done that, there would have been absolute screeching from the press, the media and the Conservatives about how we were trying to tie the hands of a subsequent Government. We would have been pilloried for it and—do you know what?—rightly so.

[The Financial Secretary to the Treasury (Mel Stride)]

The issue of making decisions during purdah has already been raised. It is right and proper that those decisions were made because, as the hon. Gentleman will know, under the appropriate arrangements, the Government should never act such as to incur costs through delay. Furthermore, those decisions were signed off in entirely the right manner by the Cabinet Office.

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[Peter Dowd]

I take the Minister’s point, but there is always an issue in government.

[Chris Stephens]

I listened to the Minister’s intervention. Does the shadow Minister agree that it is somewhat ironic that during purdah, some of these contracts—for example, the contract signed in Edinburgh—were signed on some of the most expensive buildings in Scotland?

[Peter Dowd]

The hon. Gentleman is absolutely right. Some of them cost an arm and a leg. The Minister should take on board the question of perception. In a democracy, when we are in the middle of an election, it might be technically, legally and administratively okay to do this, that and the other.

[Jim McMahon]

I am afraid that I do not buy the Minister’s explanation at all. The delays to the lease being confirmed for the Manchester office meant that additional costs were already being incurred. The incurred costs for one scheme were because of commercial and development reasons. The Government say that they could not wait for purdah to complete, but that would have given a new, incoming Government the freedom to change that decision. The situation is very odd.

[Peter Dowd]

My hon. Friend makes an excellent and valid point. The Government should think those sorts of things through.

As I was saying, there is, at the very least, an issue of perception about whether this is all above board. Even if it is above board, it has to be seen to be above board. The issue is that people do not feel that that is the case. We all feel that something is not quite right. In a democracy, we have to be seen to be above board. That feeds into the concern that some of us have that Parliament is being ridden over roughshod on a whole range of issues. For example, we did not have Opposition day debates for months on end. When we did get them, the Government virtually did not turn up to respond, and they continue to take that approach. It feeds into the perception that they are developing contempt for the views of Members in this Chamber and, specifically, the main Chamber.

There is a perception—and in this case, it is a reality—that the Government treat people with contempt. A briefing on the civil service compensation scheme feeds into that narrative:

“On 18 July 2017 the High Court held that the Government had failed to comply with the duty to consult prior to amending the CSCS, in that it had imposed conditions on union participation in the consultation process.”

That seems to be saying, “You either agree with us in advance what we want you to discuss, or you’re going to be brushed aside and not considered.” The briefing continues:

“As such, the 2016 amendments were unlawful.”

There is getting to be a pattern of unlawfulness with the Government—for example, the issues on tribunal fees and in relation to social security. It goes on:

“The Court’s decision is at the time of writing subject to appeal to the Court of Appeal.”

I have no doubt that the Government will do that. That is dated 26 October—just a few days ago.

We are not the only ones making this argument. The Public Accounts Committee said:

“We do not believe that it will save as much money as HMRC has predicted”—

that is the understatement of the decade—

“and we are concerned that it has not thought through all the negative costs to the wider economy of its approach and the impact on local employment”.

That is another understatement, if ever there was one. Many people and communities will be dreadfully affected by this.

Let us talk about service issues. The Institute of Chartered Accountants in England and Wales said:

“Service standards are deteriorating with taxpayers having to spend longer and longer on the phone trying to get through or waiting for their letters to be answered.”

My hon. Friend the Member for Stockton South (Dr Williams) alluded to that. To boot, the National Audit Office says that this has cost £600 million more than first thought. That is the situation we are in. Why the Government are persisting with this dog’s dinner is absolutely beyond me.

Members today have made fantastic contributions that were forensic, surgical, factual, objective and mixed with a bit of humanity, which seems to be completely missing from the Government’s approach. I ask the Government to take these proposals back, give them further consideration and think about the communities and people affected.

[The Financial Secretary to the Treasury (Mel Stride)]

May I say what a pleasure it is to serve under your chairmanship, Mr Davies? I know this is an important subject to you, so if I hear any stifled gurgling or funny sounds, I will put them down to your general condition, rather than to you expressing an opinion on the matter at hand.

I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) for securing this very important debate. We are talking about very important matters—people’s jobs and local communities. Of course, the overarching matter we are talking about is the efficient collection of tax. We all know why that is extremely important.

Before I get into the specifics of the plans we have been discussing, perhaps I could make some general points that will be useful. HMRC’s work is fundamental to that of the Government. It provides the funds for the public services on which we all rely. Every pound we raise through taxation is another pound we have to support our nurses in the NHS, keep our police force functioning effectively and support our armed forces. In other words, HMRC is not engaged in some kind of theoretical exercise. One of the most important functions Government have is to bring in the money to support public services. Taxpayers expect and demand that the money be spent responsibly, with good reason.

I think all Members here would agree that it is vital that HMRC can deliver value for money and maximise the tax it collects, relative to the tax due. It follows from that that we must have a tax authority that is fit for the modern age. I make no apologies for using that expression.

[Peter Dowd]

I do not think anybody disagrees with the Minister on the collection of tax, but that is all the more reason for the Government to get their facts right about the places where tax will effectively be collected from, and to not revise the costs time after time. This has now cost an additional £600 million. Is it not incumbent on the Government to get those figures right before they come to Parliament and wave these proposals through?

[Mel Stride]

A number of Members in the debate raised the costs mentioned in the National Audit Office report, the Public Accounts Committee report and so on. Certainly, the business plan has gone through various iterations, but where we are is quite clear: the total investment over the next 10 years will be £552 million. The NAO has disputed some of our figures, and the Government’s view is that the NAO has looked at those figures on a different basis—for example, over a 10-year period, whereas we were initially looking at figures over five years.

We have some cost avoidance of £75 million per annum from 2021 through getting out of the private finance initiative arrangement—which, incidentally, we entered into in 2001, which was of course under a Labour Government. On top of that, we will have £300 million-worth of savings over the next 10 years, and we will have annual cost savings of £74 million in 2025-26 compared with 2015-16, rising to around £90 million from 2026-27. The savings are ongoing and will be long standing.[Official Report, 27 November 2017, Vol. 632, c. 2MC.]

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[Mel Stride]

That prompts the question of what the overarching purpose of HMRC is: to provide customer service efficiently to those who need access to it, and, at the end of the day, to bring in tax. We have a tremendous record, and it has a tremendous record, of doing exactly that. The main thrust of these decisions has ultimately to be about having a 21st-century organisation for a changing environment, and that means the kind of model that this process is driving towards.

[Peter Dowd]

The Minister has referred to the eight criteria on numerous occasions. I am trying to get my head around this question: when the criteria for the move are not fulfilled, what are the criteria used to override those criteria?

[Mel Stride]

The criteria are there to allow a balanced judgment across the eight criteria as to where the best place is for the regional hubs. That is exactly the approach that HMRC has taken. I fully appreciate that there are Members here who are very unhappy with the fact that there may be some closures in their constituency, but that does not necessarily mean that the criteria are being inappropriately exercised.

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[Mel Stride]

As the hon. Gentleman knows, the criteria applied in taking the decision were not simply about cost. As to his assertion that the decision that has been taken is an exceptionally high-cost option, I cannot comment, because I do not have access to that level of detail at this precise moment; but the decisions are taken in the round, using eight different criteria, of which cost is but one. As I have repeatedly stated, the overarching objective must be the effective and efficient collection of tax, which provides all the funding for our public services. That is the basis on which the decisions are taken.

HMRC is now open to take calls from customers and engage in webchats seven days a week, so people can contact the Department at times to suit them. This year, more than 987,000 tax credit customers renewed online using the digital service. It would simply not be possible to continue to drive improvements without transforming the offices from which HMRC staff work.

The changes are an integral part of HMRC’s transformation into a smaller, more highly-skilled organisation—one that has modern digital services and a data-driven compliance operation, which will deliver more for the taxpayer, at lower cost.

[Peter Dowd]

Will the Minister give way?

[Mel Stride]

This must be about my 30th intervention; I am delighted to give way to the shadow Minister.

[Peter Dowd]

The Minister is being incredibly generous with his time. The question of the criteria goes to the heart of the matter, Mr Stringer; incidentally, I welcome you to the Chair, and am delighted to see you. The Minister persists with the issue of the criteria, one of which is the ability to get to a particular site via transport mechanisms and infrastructure. The problem, however, is that in many situations there has not even been an assessment of how the particular criterion applies to particular sites. I understand what the Minister says—the criteria exist. They may do, but does he agree that if they are not applied, that shoots a hole through the whole process?

[Graham Stringer (in the Chair)]

Order. We have just over an hour left, but I remind hon. Members that interventions should be short and to the point.

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[Graham Stringer (in the Chair)]

That is a matter of fact, not a point of order relating to the debate.

[Peter Dowd]

rose—

[Mel Stride]

I give way to the hon. Gentleman.

[Peter Dowd]

I shall write to the Minister about this; but the bottom line is that when I asked senior officers about the criterion on transport access, I asked them if they had spoken to the transport authorities for the areas affected, and they told me they had not. It is an important point. If an assessment relating to the transport authorities was not done—if the officers did a desktop assessment—that is not proper consideration of the criterion.

[Mel Stride]

We can go round and round this for some time, but HMRC has a very clear set of criteria. It has looked extremely carefully. As I explained earlier, when it comes to travel distances to work and journey times it has mapped every single employee within its employ, to make sure that that aspect of that particular decision is taken as rigorously and robustly as possible. I am afraid I do not recognise the hon. Gentleman’s suggestion that this is somehow just a case of putting a finger in the air and a pin in a map. It has been well thought through.

To conclude, raising taxes is vital to our public services.