HMRC Closures

Stuart C McDonald Excerpts

Thursday 2nd November 2017 Westminster Hall

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

I beg to move,

That this House has considered HM Revenue and Customs closures.

It is a pleasure to serve under your chairmanship, Mr Davies, and I thank the Backbench Business Committee for allowing me to open this hugely important debate. I also thank more than 20 colleagues from different parties for their support in making the debate happen—including you, of course, Mr Davies. Thank you very much indeed for your enthusiastic support.

We need this debate first and foremost for the sake of hard-working staff at Her Majesty’s Revenue and Customs, who face massive change and uncertainty. I know that many Members present represent HMRC employees in their own constituencies. I put on record my thanks for everything that those workers do, and I also highlight the hard work done by the local shop stewards in the Public and Commercial Services Union. The Government are fond of saying that there is no magic money tree, but there is the hard work of tens of thousands of public sector workers who are putting up with what has become years of uncertainty, thanks to endless change programmes.

This debate is hugely important for towns such as Cumbernauld in my constituency, which seem set to lose major employers.

[Mr Jim Cunningham (Coventry South) (Lab)]

The HMRC office in Coventry is going to close very soon, costing about 300 jobs. People will be expected either to travel into Birmingham or to use modern technology. We all know that at least a third of the population is not familiar with modern technology, so they will have great difficulties in terms of travel, expense and inconvenience.

[Stuart C. McDonald]

The hon. Gentleman makes a series of valid points, and they are valid for the whole range of sites affected by the “Building our Future” agenda. In Cumbernauld, for example, HMRC is the largest employer, providing about 1,500 good-quality jobs. I am not making the argument that once a Government Department opens in a particular location, it must stay there forever. What I am saying is that, first, the implications for that town should form part of the Government’s thinking and, secondly, there should be very good reasons for closing any such office. “Building our Future” fails on both counts.

[Imran Hussain (Bradford East) (Lab)]

I am grateful to the hon. Gentleman for securing this important debate on a subject that matters to many people in many of our constituencies. Does he agree that surely it makes sense for HMRC to put high-quality, high-wage jobs into areas where there is a deficiency of those jobs? In my district of Bradford, two thirds of the civil service jobs—more than 2,000 of them—are with HMRC. Putting those jobs at risk surely makes no sense whatsoever.

[Stuart C. McDonald]

Indeed. That is the argument that I will come on to make. Centralising those jobs in city centres, which are already in many cases doing very well in terms of employment, makes absolutely no sense at all.

This debate is also important to the public and taxpayers generally. When it was formed in 2005, HMRC had 96,000 full-time equivalent members of staff and 593 offices. Less than a decade later, staff numbers had fallen to below 50,000, in fewer than 190 offices. “Building our Future” sets out to close 137 offices and centralise even fewer staff in 13 large regional hubs, with between 1,200 and 6,000 staff. Some 38,000 staff are either going to have to move or leave HMRC. From any perspective, that is a massive and radical change to how our taxes are collected to pay for the services that we all use and rely on, so it deserves the closest of scrutiny.

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the hon. Gentleman agree that it would help if, at the very least, some research was done into those areas that have already lost offices through the previous NOS programme, of which new Labour was monumentally supportive? We should look at the impact on those areas that have no tax office and rely entirely on phone lines or email, where lots of people cannot get any satisfaction from HMRC at all now. Would he support such an investigation?

[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.

--- Later in debate ---

[Mel Stride]

The hon. Gentleman is right: much of the debate has focused on the matters to which he refers. I am not seeking to avoid those other elements of the debate at all and was coming on to them, but I shall deal with them now, as he has raised them. HMRC has had eight very sensible criteria by which to judge where to locate the new hubs. He will know that we are looking at sustainable large sites, with the capacity to hold all HMRC’s requirements for the region in a single building. The talent pipeline, which has been mentioned, is extremely important.

[Stuart C. McDonald]

Everyone in the Chamber is in favour of much of the approach to digitalisation of the tax process, but does not that process itself undermine the case for saying that everyone has to be in one location? The fact that everything is being done digitally means that folk can stay in the offices that they are in currently and we can get on with it.

[Mel Stride]

I do not accept that point. We could take it to its logical conclusion and assume that everyone could work from home, and we could then have a very disparate workforce. There may be some attractions to that, but there is huge value in bringing people together in a single building, where there is a critical mass of individuals: collaborative working and the sharing of experience and ideas can take place, meetings can be held, and the technology is all in one place. I would have thought the hon. Gentleman would recognise that. Let us face it: if we went back to 2005, we might be debating whether we should shrink the number of offices from 600, which is what it was at that point. There will always be arguments about whether we should do things and the local impacts and so on, but this overarching direction of travel, it seems to me, has to be right.

--- Later in debate ---

[Stuart C. McDonald]

It is a pleasure to see you in the Chair, Mr Stringer. I thank all hon. Members for their contributions. They have been surgical in their analysis of the situation, as well as powerful and passionate.

It has been a frustrating debate, to an extent. We have, as has been said, been here before. The Minister expressed his confidence in HMRC, in its forecasts and assessments, but I gently suggest that the Minster should start challenging what HMRC officials are telling him. After all, the starting point for all of this was a business case that has been shown to have been inaccurate to the tune of hundreds of millions of pounds, so he should not just listen to what HMRC is saying. He should challenge everything that it is coming to Ministers with.

I ask the Minister to listen to the concerns that have been expressed by hon. Members across the House: about Brexit; about devolved taxation; about tax credits; about reaching out to areas remote from HMRC offices, including rural areas; about the bizarre siting of offices in expensive city-centre locations and the lack of value for money that that represents; about the impact on the town and city centres that have been left behind; about the loss of local knowledge, experienced staff and local contact; about the impact on staff and families; and about the lack of consultation and lack of care for too many HMRC workers.

We have two simple asks. The first is for a bit of openness and transparency. Publish those assessments. There is no excuse for hiding them away from scrutiny. Secondly, stop and assess what has already happened. If HMRC and Ministers are really that confident in their case, stop and prove it. Show us that the first couple of regional centres are a roaring success, that everyone is happy and that they prove to be value for money. Show us what has happened in the towns where the tax offices have closed. Prove it with facts and not just a dodgy business case. If, as most hon. Members here expect, what HMRC has forecast does not turn out to be the case, the Minister can be a hero and save the rest of us from experiencing what has happened in Oldham. He would then be able to send HMRC back to the drawing board. Again, I thank all hon. Members for their contributions.

Question put and agreed to.

Resolved,

That this House has considered HM Revenue and Customs closures.