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HMRC Offices (Sunderland)

Volume 464: debated on Wednesday 10 October 2007

Good afternoon, Dr. McCrea. It is a pleasure to serve under you.

My purpose this afternoon is to place on record my concern and that of many people in Sunderland about proposals by Her Majesty’s Revenue and Customs to close its two city centre offices, Gilbridge house and Shackleton house, which between them employ 430 people. Although the proposals might make sense to the number crunchers and master strategists at headquarters, they make no sense at all once the wider considerations are taken into account. Indeed, they are in several respects directly contrary to Government policy.

I thank Ministers and the management of HMRC for the wide-ranging and genuine consultation that they have undertaken with all interested parties on the impact of their proposals. I am grateful for my meetings with senior officials and with my right hon. Friend the Minister, who listened courteously to the representations that I made. They are also considering representations from the city council, the relevant trade unions and others. From my right hon. Friend’s predecessor, the Minister of State, Department of Health, my right hon. Friend the Member for Bristol, South (Dawn Primarolo), who has just departed from the Chamber, I welcome the assurance that wider considerations such as the impact on the local economy will be taken into account, as well as the assurance that whatever happens, the very successful drop-in service, which at peak times attracts up to 500 callers a day, will be retained at a city centre location.

Sunderland has come a long way in recent years. In the late 80s and early 90s, the local economy was devastated by the collapse of our shipyard, the colliery and a large swathe of our manufacturing industries. The process continues: only the other day we lost the last part of our historic glass-making industry. Today, thanks to a huge regeneration effort involving the public and private sectors, supported by successive Governments, our city has been transformed. Our once derelict riverside is coming back to life, thousands of new jobs have been created, the shopping centre is thriving and people are starting to want to live in the city centre again. However, the recovery is fragile, and it would not take much to tip the scales in the opposite direction. Acres of brownfield sites are still waiting to be redeveloped, which is why I am so concerned about HMRC’s plans to take several hundred secure and relatively well-paid jobs out of our city centre.

In several respects, the proposals are contrary to Government policy. I had understood—perhaps the Minister will confirm that this is still true—that it was Government policy to devolve civil service jobs from high-cost London and the south-east to areas such as Sunderland, where rents and wages are lower, and which are badly in need of jobs. I see the Minister nodding, I think, so I shall take that as read. Indeed, that is how we came by the Shackleton house jobs in the first place. I may be wrong, but I believe that the building was purpose built as recently as 10 or 12 years ago, precisely to house London tax jobs that were devolved to Sunderland as part of Government regional policy.

I put it to my right hon. Friend that in these days of allegedly joined-up government, it makes no sense at all for one part of the Treasury to seek to devolve jobs to the more deprived regions while another seeks to take them away. It is time that those parts of the same Department met up. I hope that by now my right hon. Friend has introduced them to each other.

It is also policy, or so we say, to encourage job creation in sustainable locations that are well served by public transport, which is precisely what we have: Shackleton house and Gilbridge house are close to the city centre and well served by public transport—bus and metro. The plan is to relocate most employees in two already congested out-of-town business parks—Longbenton near Newcastle, and Waterview Park in Washington. HMRC already employs 6,700 people at Longbenton and 2,300 at Washington. Clearly, it is going through a “big is beautiful” phase. There is no pretence that most of the Sunderland employees will get to their new place of work by anything other than car. Indeed, the consultation document contains a table showing:

“Indicative travelling times (by car).”

The journey times that are suggested to cover distances of 14 or 15 urban miles from their present location are a tad optimistic—at least as regards Longbenton. I would be very surprised if it is possible to get from Sunderland to Longbenton in rush-hour traffic via the frequently congested Tyne tunnel in 32 minutes, and goodness knows how long it would take by public transport.

In terms of planning and environmental policy, the proposal makes no sense at all. That point is made forcefully by the chief executive of Sunderland city council, Mr. Ged Fitzgerald, in the council’s response to the consultation, which I commend to the Minister. He states:

“I consider that the removal from a central location within a well-connected city centre and relocating them to a suburban area some distance from urban centres north of the Tyne is fundamentally unsustainable in planning terms, is against current Planning Policy Guidance and is likely to throw additional pressure on transport routes in the Longbenton area which are already struggling to cope with increased traffic.”

He adds:

“It may also not be in the interests of HMRC in terms of staff retention and staff turnover to have offices located in unsustainable locations away from good sources of labour.”

I also draw my right hon. Friend’s attention to a letter from Mr. David Walker, the chief executive of the Sunderland arc, the urban development company charged with overseeing the regeneration of much of Sunderland’s riverside. The arc is hoping to generate investment of nearly £1 billion, one third of it from the public sector, over the next 15 years. Mr. Walker states:

“The loss of 430 jobs and the creation of over 6,000 square metres of empty floor space at a time when Sunderland arc is trying to build confidence in the private sector market, gives us grave cause for concern.”

He adds that he is

“aware of the emphasis government places on promoting city centre office markets ahead of out of town business parks...I am, therefore, somewhat surprised that this proposed relocation appears to represent a disconnect with other strands of government policy.”

In conclusion, perhaps I might make a suggestion. Instead of moving Inland Revenue jobs out of Sunderland, how about moving some in? As Mr. Walker says, the arc is in the process of putting together a huge investment in state-of-the-art new office space on a site which, by happy coincidence, is exactly opposite Gilbridge and Shackleton houses. If HMRC is consolidating its estate in the north-east, where better than in Sunderland? If that is not possible, how about taking over a couple more floors of Gilbridge house and moving the staff from Shackleton house into it? Whatever happens, I hope that the Minister and her officials will look at the big picture, not just the small one.

It is a pleasure to see you in the Chair this afternoon, Dr. McCrea, and to serve under your chairmanship. It is always a pleasure to hear your lovely accent. I hope that you will not have too much cause to use it in the next 15 minutes.

I am pleased to have an opportunity to respond to the concerns expressed by my hon. Friend the Member for Sunderland, South (Mr. Mullin). His interest in the reorganisation of HMRC in Sunderland and the wider north-east—I see that his neighbouring colleagues, my hon. Friends the Members for Houghton and Washington, East (Mr. Kemp) and for Blaydon (Mr. Anderson) are present—has already been brought to my attention through questions in the House and the consultation process that HMRC has developed, for which I am grateful. At the meeting that we had in July, we were able to discuss in greater detail the concerns that my hon. Friend the Member for Sunderland, South has just expressed.

My hon. Friend has allowed me generous time to respond. As he will be aware, HMRC has designed a systematic process of review, consultation and announcements on decisions that is being implemented across the whole UK. I am grateful for his complimentary remarks on the process. As he rightly said, it is a genuine consultation, and I commend the hard work of the officials involved and the genuine efforts being made to take on board information and intelligence that is often brought up by local people. It helps to influence how the final decision is shaped.

The process is virtually complete for the urban centre of which Sunderland forms a part, and I expect an announcement to be made to staff and trade unions next week. At the same time, Members who have a constituency interest in the area will be notified. However, I reassure my hon. Friend, before he seeks to intervene, that the comments that he made today will be taken into account before a decision is taken.

Is the Minister saying that a conclusion on the future of the offices in Sunderland will be reached next week?

The conclusions are fairly well formed. I have yet to see them, but there is an opportunity as a result of today’s further debate and discussion to consider the arguments that my hon. Friend made and to have a look at the decision before it is actually communicated. He should consider that the decision is not finally taken until it is announced, if that helps.

I have been in government myself—I made a couple of visits—and I am aware that sometimes, decisions are all but set in stone by the time they reach the Minister. I hope that that is not the case this time.

I assure my hon. Friend that that is not the case. I have been taking a close interest in the reviews as they have rolled forward, not least because it is impossible to escape the close scrutiny that Members of all parties make of a review as wide-ranging as this one.

This is just a quick point. My hon. Friend the Member for Sunderland, South (Mr. Mullin) mentioned the impact on transport and the road network in the north-east being part of the consultation. Several issues have arisen with the Highways Agency over the past few years. Has it been involved in the consultation, particularly in respect of the impact on the Longbenton site?

I can assure my hon. Friend that all such considerations are taken into account before decisions are finalised. HMRC has developed a formulaic way of assessing whether travel times are appropriate, but it does not just apply a formula. It listens to representations that are made by staff, trade unions and managers in the locations to ensure that the formula that it applies fits the local circumstances, because, obviously, it will not fit all circumstances. HMRC looks closely at all the available advice and experience, particularly the experience of the staff involved, before arriving at a conclusion.

It is important that I re-emphasise why HMRC is conducting the review. It is making significant changes to the way in which it carries out its business, so that it can respond directly to customer demands and to a requirement that we are making of it to maximise operational efficiency. For some years, there has been very little work carried on in the back offices of each of the departments’ buildings that is directly connected to the local community. In other words, the processing work that is being done in the back offices is not necessarily directly connected to the local communities in which they are located.

My hon. Friend the Member for Sunderland, South asked me to ensure that Government policy is coherent, and that the drive to decentralise civil service jobs is maintained. I reassure him that this process fits within that policy, in the sense that we are not drawing jobs back to the centre in Whitehall but are maintaining regional centres.

I shall give way to my hon. Friend in a moment, but first I want to make this point. I readily accept that we are examining the way in which we do much of the processing and routine work, in order to maximise the efficiencies that we know can be gained if people are pooled into larger groups of staff. Unfortunately, all the evidence demonstrates that that is the best way forward.

My hon. Friend the Member for Sunderland, South said that that happens to be the policy of the moment, but that it will go out of fashion and we will go back in 10 years’ time. I have to tell him that, from what I have seen in other Departments that have asked a public sector service to examine how it has been doing such work, the move has been toward larger concentrations of staff performing what are, generally, similar types of activities. There are sound reasons why we need flexibility in how we deploy staff. I shall touch on those after I give way to my hon. Friend the Member for Blaydon.

It is a pleasure to serve under your chairmanship, Dr. McCrea.

The Minister referred to decentralisation, but that decentralisation is from a town that suffered badly during the 1980s and has now turned round. A small number of key people will be decentralised to a site that is bursting at the seams and, from the transport point of view, that is not needed. The problem is not just the traffic on the A19; it is the traffic that will be diverted on to the A1, which is a nightmare. If anyone can travel from Sunderland to Longbenton in 32 minutes, they are driving faster than Lewis Hamilton.

I know the A1 because my parents still live in the north-east, and I have not-so-fond memories of difficult journeys on it. I know the point that my hon. Friend makes.

I want to make one or two further comments to emphasise the way in which the service that HMRC delivers is changing, and how that is impacting on the decision-making process, before I come to directly to the points about Sunderland. I am aware that I have a few minutes in which to do so.

Many customers now choose to telephone HMRC offices and staff or to use the internet to file returns or make claims, so it is right and appropriate for the organisation’s senior management to look at all their operations to ensure that they are run as efficiently as possible. In some work areas, it believes that that need is best served by concentrating work, as I have described, in larger units where processes can be streamlined and improved. In other areas, a more mobile work force is seen as the best solution to meet customer needs. Finally, there must be an emphasis on improving compliance throughout HMRC by matching resources to the risks that it deals with in particular locations.

I want to emphasise some of the key commitments given by the Minister of State, Department of Health, my right hon. Friend the Member for Bristol, South (Dawn Primarolo), who responded to the previous debate. I am happy to confirm her commitment that, whatever the outcome of the review for the offices in which my hon. Friends have shown an interest, the inquiry centre in Sunderland will be maintained and the same level of customer service will be provided. The face-to-face opportunity will continue to be made available to the constituents whom my hon. Friends represent. Staff will not be required to move to an office beyond reasonable daily travel, and that test of reasonability will be rigorously applied.

An established process for managers and staff to discuss options for their future employment, dependent on the outcome of the review, is open, transparent and accessible to the trade unions. I encourage my hon. Friends to consider the experience of staff in areas where the process has taken place and where a fair effort was made to meet the concerns and aspirations of staff who were affected.

Turning to Sunderland and the sustained case that has been made by my hon. Friend the Member for Sunderland, South and the organisations to which he referred, not least the local authority, the proposals to rationalise work and office space throughout Sunderland, Washington and Newcastle were put forward for consultation earlier this year. Staff, trade unions, Members of Parliament and local authorities all contributed to that consultation. Information on travel routes, economic interests in the locations—that is important—the position of other employers and Departments, as well as individual circumstances, will be taken into account. A report summarising those main responses was published in June, and we have listened to the further reaction to the report. I acknowledge the strong representations and I am aware of my hon. Friends’ concerns.

Turning to the jobs that were created in 2005, as recently as 17 September this year the Sunderland Echo carried the story that Northern Rock may be unable to carry through its plans to bring a further 1,500 jobs to the area as a result of its recent difficulties. My hon. Friends’ concerns are real, and I do not wish to minimise them in any way.

The two responses that I quoted—one from the chief executive and one from the head of the arc—have come in since June, so they are not part of the document published in June, to which the Minister referred.

I am aware of that, but their representations have been taken into account and considered as part of the review process. All the information that was provided during that consultation and since has been considered and will be reconsidered during the remaining week.

I want to take the opportunity briefly to outline some of the factors that have been considered. The three offices in Sunderland—two in the city centre and one on the outskirts—accommodate some 900 staff in total. Throughout the entire urban centre, HMRC expect to need approximately 4 per cent. fewer staff than they currently employ by 2010. That contrasts with a net reduction through efficiencies that we are requiring HMRC to achieve of around 25 per cent. since it was created. That is a measure of the high level of efficiency that already applies in the areas that we are discussing today.

Public sector jobs in Sunderland increased by more than 8,500, or 33 per cent., between 1997 and 2005. An analysis of the individual travel times for staff suggests a high degree of mobility between existing sites in the area that might allow staff to commute between them. In proposing to move to an efficient structure—notwithstanding my hon. Friend’s comments about the purpose-built building that is being considered for closure—HMRC is confident that the majority of staff can be relocated with their own or similar work nearby. Overall, HMRC estimates that it has up to 40 per cent. too much accommodation throughout the UK, and the position is no different in this area.

I well understand the concerns of people who work in the area about the extra travelling time that might be involved for some if they are relocated to different offices, the availability of transport links from their homes, including private transport, and the A1. I would like to reassure the Chamber that individual members of staff will have the opportunity to discuss their circumstances with managers before any decision is taken on their suitability to relocate, and that that will be backed by a trade union supported appeal process.

Throughout the programme, senior management in HMRC are committed to being open with staff, to explaining the options available to individuals and to exploring how their expectations can be matched with the need to make the operations more efficient. However, I want to make it clear that those are not easy decisions, and they can be made only when all the facts are known.

With the exception of one year, I have been in government for nearly 10 years, and in almost every Department in which I have worked I have had to rationalise to some extent the estate for which I was responsible, so I am battle-scarred from dealing with those processes. I understand how traumatic they can be, and you may be amazed, Dr. McCrea, to learn that when I was first in the Lord Chancellor’s Department, local magistrates courts suddenly became popular when proposals were made for them to be closed. I was the responsible Minister then. I appreciate hon. Members’ concerns and I have a lot confidence in what I have seen of the process being followed in HMRC. The staff taking it forward are to be commended.

When decisions have been announced in this location, as elsewhere, HMRC will begin the process of relocation and release of its surplus accommodation according to the decision. That process will take some time, as individual cases and contractual commitments must be reviewed. As individual buildings are identified for closure, HMRC will publish an individual building impact assessment covering customers, staff, local communities and local diversity. HMRC is keen to match those skills and experience with its aims of achieving a more efficient operation and improving customer service. I welcome this debate as part of the Department’s commitment to the process of consultation and openness. It is a long-term programme that will deliver a more responsive and efficient service for taxpayers and claimants, and I know that in the long run, my hon. Friends want us to achieve that.

Question put and agreed to.

Adjourned accordingly at ten minutes past Five o’clock.