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Revenue and Customs Offices (Cornwall)

Volume 461: debated on Wednesday 20 June 2007

It is a pleasure to serve under your chairmanship, Mrs. Dean. I am grateful to have an opportunity to raise this issue, which is a matter of growing concern to people across Cornwall, particularly in the town of Launceston in my constituency.

I shall start by sketching out the situation in which my constituents who are employed by Her Majesty’s Revenue and Customs in Launceston find themselves. The office is one of several across Cornwall. There is a network of offices in the towns of St. Austell, Truro, Redruth, Penzance and Launceston, and it is important to recognise that each one provides slightly different functions.

The work in Cornwall involves compliance—that is, the examination of tax returns and the tax affairs of individuals and companies to ensure that the Exchequer receives exactly what it should, and that tax law is complied with. There is also an element of risk assessment—employees consider which files ought to be examined further by compliance teams—and an inquiry element that allows people to have face-to-face meetings with the experts employed by HMRC to discuss their affairs and raise particular problems. That is a valuable service, and I shall return to it later. Some staff are employed in processing and have particularly busy periods of the year, but processing work carries on throughout the year. Finally, there is a historical Customs presence in Falmouth.

The surrounding area of Cornwall—the region that I am discussing—is one of the poorest in the country in terms of incomes and some of the problems that people face on a day-to-day basis. That has been recognised by the European Union through the provision of objective 1 funding, and in the move to convergence. It is one of only two areas in the country that will benefit from convergence. Those are indications of the sort of area that it is. It is not an affluent part of the country, and it does not have many alternative jobs for people who are currently employed in Revenue and Customs work to take up.

House prices, particularly in north Cornwall, have been pushed up because of second-home ownership and related problems. As measured by the ratio of incomes to house prices, the area is the second most unaffordable place in the country to live after Kensington and Chelsea. The serious effects of any decision to close HMRC offices must be borne in mind. There would be negative effects on, first, the local economy. I have already given some reasons for that, but I will go on to explore it further later. Secondly, the customers—those people who interact with HMRC in the local area—will be affected, and, thirdly, there would be an effect on what I hope are the ultimate aims of the Treasury to maximise the amount of revenue that is collected through the tax system so that the Government can deliver all the projects that MPs up and down the country demand for their areas. We want to maintain the stream of revenue and maximise it.

A national axe, however, could fall on some of those vital jobs. I shall focus on the office in Launceston, which is a small market town with a fantastic history. However, as one might imagine, agriculture in the surrounding area is under pressure. There is an industrial base at the Pennygillam industrial estate in the town, but, as there is a shortage across Cornwall of high-quality jobs, the public sector has an important part to play in providing employment. In this instance, about 60 highly skilled people are employed in the HMRC office in Launceston. There is low staff turnover. The employees have put down roots in the community. They have a high quality of life and are committed to remaining in the Launceston area. They are very much part of the community.

The uncertainty over the future of the office, as well as the introduction of regulations about taking on new people, mean that temporary staff are used to carry out some of the work, particularly processing work. Some people are there for only a short time. They are trained to do the work and then, because of regulations that apply if they are in the job longer than 11 months, they have to go to other jobs, and a new set of temporary staff is brought in. Of course, that can undermine the work that the office does. I am seeking to show that there could be a damaging effect on the local economy if the jobs were withdrawn.

Redruth in my constituency is another area that is likely to be affected by job losses. There is concern not only about the loss of high-quality jobs, which my hon. Friend has just mentioned, but about the loss of footfall to the town, which Redruth has been struggling to build up. There are many vulnerable independent shops. The town council has done everything that it can to attract additional footfall, and it is concerned that job losses will have an impact on the town’s wider economy.

My hon. Friend makes an important point. She illustrates the effect that any closures could have on towns in Cornwall.

In discussing job losses, it is fair, too, to discuss the effect on customers who can speak to someone at the inquiry centres in offices around Cornwall. We have highly skilled people, as I said, and customers can go to them with their concerns. Cornwall is largely a small-business economy. Many people in the area have accountants, but others might be new to business or lack the resources to investigate tax matters without some form of support. Surely it is more efficient to provide local resources so that people can have face-to-face contact?

There is pressure to move to a call-centre approach. Indeed, that is under way. However, I have received feedback from people who often find that the person whom they get through to on the phone—the calls are answered quite quickly—does not necessarily have the information at hand to be able to offer advice. Even worse, they could be given incorrect advice, which could lead to further work and greater inefficiency. There are therefore problems with the call-centre approach. We must consider, too, issues of accessibility and distance if people need to see someone at an inquiry centre and are successful in getting an appointment. If the closure programme left us with one office, for example, people would have to travel large distances. From Launceston, it is 35 miles to St. Austell—a journey of about 50 minutes—and about 26 miles or so to one of the offices in Plymouth, which is in Devon, on the other side of the Tamar river. It is 47 miles to Truro; 52 or 53 miles to Redruth; and nearly 70 miles to Penzance. We are talking about significant distances and inconvenience for people who require face-to-face meetings.

I have spoken about the impact on local businesses and customers of HMRC in Cornwall, but we should explore the impact on the objectives of the Minister and her colleagues. I certainly accept in principle that it is absolutely right for any responsible Government to examine the number of civil servants employed in central and local government, to analyse just what they are doing and to determine whether efficiency savings could be made, thereby bringing down the wage bill and freeing up more resources for front-line services. I am sure that we would all support that approach where it is taken effectively.

People working in HMRC, however, are the very people who raise money for all the services that we want. Those who work in compliance, in particular, return 10 or 12 times their salary through the work that they do, the fraud that they uncover and the anomalies with which they deal. It is important to make the point that those people do not cost money but generate it. If jobs are concentrated in larger urban areas, that will have an effect on the Cornish economy. Moving those jobs is also a bad use of resources, because it is cheaper to accommodate offices in market towns where there is less competition for office space.

If, for example, we ask people who are employed in Cornwall to drive in and out of Plymouth every day when they are offered alternative employment, that would add to the traffic pressure on such cities, and would not offer the sustainable approach that would be provided if people worked in the other population centres around Cornwall. I will draw my remarks to a close soon because my hon. Friends may wish to contribute, and I want to leave the Minister enough time to respond. I understand that pressure has been put on rural west Wales, which is a similar area where closures would have an impact on the economy. The Under-Secretary of State for Wales met the Minister to discuss the effect of proposals in that area and I hope that, whatever measures she is contemplating, when she considers the effects of a closure programme on west Wales, she will consider, too, the effects on Cornwall.

Closing offices in areas such as Launceston would damage the local economy, as jobs and money would be taken out and it would undermine the best efforts of objective 1 and convergence programmes to support and strengthen the Cornish economy. The closures would reduce and worsen the service provided to customers and those people who interact with HMRC daily, and could cost money as a result of the loss both of skilled jobs and of people who uncover problems in tax returns and anomalies. Closures would be damaging for all those reasons and, when the Minister considers what proposals to adopt when the reconfiguration of HMRC takes place, I urge her to examine the Cornish case closely and to do whatever she can to ensure that the effects that I have described do not come to pass.

I am pleased to follow the excellent contribution of my hon. Friend the Member for North Cornwall (Mr. Rogerson). He made an excellent case, and I congratulate him on securing this important debate. The issue has led to concerns not just among staff, but among customers of the service in Cornwall and elsewhere.

At the last Treasury questions, I asked the Financial Secretary about this subject and he reassured me that the full review of Cornwall offices would not commence until next year and therefore we must wait and see what happens to reviews in other places. The Government are therefore at least claiming to be listening to the responses that they have received and are adjusting their proposals accordingly. Before that review takes place, it would be helpful if the Department and the Paymaster General reflected on the concerns that have been expressed by my hon. Friends across Cornwall. The staff and trade unions are very anxious about the socio-economic impact of the proposals on the poorest region of the UK—Cornwall—so it would be reassuring if the Paymaster General acknowledged that that factor will weigh heavily in the assessment of the proposals.

There would also be a wider impact on the Treasury itself, and I hope that the Paymaster General will reflect on that. The problem is not unique to Cornwall, although there are unique reasons why it would have a significant effect on Cornwall, where staff reductions and office closures would have an impact on recoverable tax. When considering the nature and structure of businesses and tax paying in Cornwall, we must recognise that there are large numbers—in fact the highest proportion in the country—of self-employed people, and of small and micro-businesses. In such an economic environment, the existence of local tax offices is an issue of particular sensitivity and importance. Given the climate, I hope that the Department will reflect on the impact of closures on the Treasury itself and on its ability to recover tax from the local community.

I have met staff at the Penzance office in my constituency, and they expressed anxiety because the office has been subject to almost perpetual review in the past 10 years. It would be helpful if the burden could be lifted from tax offices after the full review commences next year and if they could be given reassurance about their future. Those members of staff perform excellent work at a very high level and are often recruited to assist in other parts of the country, which may not be reflected in the review that is about to commence. However, consideration should be given to that fact, and those officers should be given not just a clean bill of health, but the support to continue in the future with the proper backing that they richly deserve.

I congratulate the hon. Member for North Cornwall (Mr. Rogerson) on initiating the debate, although, if I may delicately say so, he is a little premature. He may stand up in this Chamber and make statements that local offices collect local tax and give the ratio, but that does not necessarily make those statements accurate. On the whole, there is no correlation between what local offices do and their location, although it is sometimes the case.

The hon. Member for St. Ives (Andrew George) has also pursued this matter, as has the hon. Member for Falmouth and Camborne (Julia Goldsworthy). They have rightly been assiduous in raising the issue with me, but they need go no further in seeking reassurance that the Government listen when they consult than speak to their hon. Friend, the hon. Member for Kingston and Surbiton (Mr. Davey). They will then find out what happened in the reviews undertaken in his area. All hon. Members should be interested, regardless of the location of their constituency, in the proposals and the future formation of the merged Revenue and Customs. May I tell the hon. Members for North Cornwall and for St. Ives that the notion that officers in Cornwall have somehow lived under a cloud of insecurity for the past 10 years simply does not stand up to scrutiny, and I shall give two examples to show why. The hon. Member for North Cornwall referred to contact centres, and he will be well aware that one has recently relocated to St Austell and that that guarantees more than 200 jobs. I do not recollect that he was unhappy about that type of job and I do not accept his description of the expertise of our staff in contact centres. I say gently to him that taxpayers increasingly want to contact the Department outside normal working hours, when it is convenient for them to do so, by phone or via the internet. If we are to continue to be a responsive Department that uses its resources efficiently, as the hon. Gentleman rightly identified, it is vital that such a service is provided in an efficient and effective way. The continued collection of tax at the correct level is, of course, part of that process.

The figures on HMRC’s presence in Cornwall show that there has been an increase since 1998 from 417 staff to a headcount now of 781. By any stretch of the imagination, that cannot have led to staff living in insecurity and fearing for their jobs. In fact, jobs have been transferred to the area. The hon. Gentleman is right to point out Cornwall’s importance as an objective 1 area. Let me explain to him how I intend to proceed and how the reviews are progressing, because, to be honest, that will answer many of his questions. I shall address the key commitments in the review programme and the issues facing the Department. Although there are slight variations across the country owing to mergers and changes within the Department, its accommodation is some 40 per cent. over capacity, which means that we are paying for accommodation that we are not using, which does not make sense.

The Department has key commitments on the way in which it works with and supports taxpayers. I shall outline the basics, because they are the ones that the hon. Gentleman touched on, but there are many more. Of course, the economic impact and the likely effect on the local labour market are part of that. There is an absolute commitment to ensure that inquiry contact centres, which are the only part of tax offices providing the type of support and advice that he rightly identified, will be maintained. Staff will not be moved compulsorily from an office before a review has taken place, so there is no need for anybody to feel insecure. No review is going on. We have not started one yet.

I thank the Paymaster General for the comments that she has put on the record. However, it is difficult for me to take on board her comment that there is no need for people to feel insecure. Clearly, one of the major factors that led to my involvement in this matter and to my visit to the Launceston office, with her permission, for which I thank her, was the fact that some people are highly insecure about the future of that office and of their jobs. That is what led to my involvement and to this debate.

I hope that the hon. Gentleman will forgive me for saying so, but is it not one of his responsibilities as the local MP to ensure that people do not fear what has not happened? Should he not reassure them, rather than take up and elevate rumours about something that does not exist?

I should like to point out to the hon. Gentleman and to his hon. Friends the Members for Falmouth and Camborne and for St. Ives that there have been no announcements or decisions to close any office in Cornwall. It seems to me that in serving his constituents well, the hon. Gentleman needs to ensure that he gets that message across very strongly. No decisions have been taken, but there will be a review of office space in the county later this year and in 2008, after which there will be a consultation. As a result of that consultation, staff, stakeholders, local authorities, Members of Parliament, taxpayers and their representatives will be asked for their views. The simple fact is that if we are over capacity, we need to know what to do with the office space.

We have a good track record of consulting on our proposals and listening to the public, and I have every intention of ensuring that consultation on the proposals, which will not begin until the autumn, is transparent and reflects the views of the local community, staff and the unions. Their points will be taken on board during the consultation.

I would like to follow up the issue of excess office space, as other Departments and local government are looking at it, too. Will the Paymaster General reassure me that there will be cross-departmental conversations to ensure that services are protected and that the Government as a whole use their space efficiently?

I understand that the Cabinet Office has responsibility for ensuring that that is the case. The hon. Lady is quite right, and her party supports, for instance, the relocation of staff from London and the south-east wherever possible, as well as the efficient use of departmental expertise and of available office space.

There is always the possibility, of course, which has been raised in consultation, of sharing office space, if not between Departments, between Her Majesty’s Revenue and Customs and local authorities, for instance. We all want to ensure that we maintain the best possible service at the most efficient rate and that, as the hon. Member for North Cornwall quite rightly pointed out, more money is spent on front-line services and perhaps on other Departments—I know that people in Cornwall would have a view on which Departments. That is important.

I have asked departmental managers to look at our offices, cluster by cluster, and they have made reasonable proposals. We will put those proposals out to consultation and ask people for their views, rather than act on them immediately. That is not because I do not trust the departmental managers, but because people have their own views on the economic impact of the proposals and about what is happening in particular markets. Of course, the point that the hon. Gentleman made about transport is much more pertinent to some areas than to others. I cannot make a rule that would cover all offices, because clearly it is easier to travel between some offices than between others. However, his point about the difficulties that might arise was well put.

The hon. Gentleman mentioned objective 1 status. In case he thinks that I have forgotten about that, Cornwall is not the only area, but all those things need to be considered. When the results of the consultation are in, I shall publish the response rate and the comments made, as I have done with reviews undertaken thus far, and they will be open to everyone and be circulated to all staff and stakeholders. If the hon. Members submit written submissions, they will be given that information. There will be briefings for the local MPs as well. On that basis, I shall decide with managers whether to vary the proposals.

The Paymaster General is being very helpful, but would she kindly advise me on the criteria that will be used to assess the responses and whether, as I asked earlier, the impact of staff reductions on recoverable tax and socio-economic impacts will be factored into the assessment?

Yes, socio-economic points will be factored in. However, I should point out gently to the hon. Gentleman—and I will not say of which reviews this been a feature—office staff do not always speak with one voice about their preferred options for the future. There is a belief that there is a united view; there is no such view. Some staff said, “Yes, we would quite like to go and work in that office instead of this one.” Such information will be available in the report on the consultation, although we will not identify the individuals concerned.

The Department will consider its future structure, where particular services are needed and how best to deliver those services efficiently. Hon. Members might find that surprising, but I thought that it was fairer and more transparent to take each cluster, tell them what suggestions have been made, if any, then ask people what they thought of them. In addition, in each office, local managers will conduct meetings and consultations. The staff will have many ways in which to contribute.