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HMRC (Newport)

Volume 475: debated on Monday 12 May 2008

Motion made, and Question proposed, That this House do now adjourn.—[Ms Diana R. Johnson.]

I am grateful for this opportunity to raise with my right hon. Friend the Financial Secretary to the Treasury the impact of the work force change programme on my constituents, especially those who work in the Newport office of Her Majesty’s Revenue and Customs. In the light of significant new developments, I shall be asking my right hon. Friend to look again at plans to relocate staff from the Newport office. Many thanks to my right hon. Friend for responding to the debate, because I know that she is extremely busy at present; I thank her, too, for affording me opportunities recently to talk about the issue.

Over the past 18 months I have worked closely with groups of dedicated staff from a number of Government agencies, including HMRC in Newport and the Valuation Office Agency, who have been faced with a series of overlapping reviews in the name of gaining greater efficiency. Although I and undoubtedly all taxpayers applaud the drive to ensure value for money in Government services, those reviews have been marked by lack of co-ordination, shifting goalposts and contradictory outcomes, leading me to consider that such actions are largely counter-productive in my constituency.

I pay tribute to the professionalism and dedication of the staff in Newport who have worked as civil servants for many years. I pay tribute, too, to the Public and Commercial Services Union in Wales, which has campaigned alongside staff to highlight their concerns. The fear is that dedicated employees who have a track record of success may be forced to leave the service. In the short term, staff face an uncertain future and in the longer term, the objectives of the Welsh Assembly Government to move jobs out of Cardiff to benefit the whole of Wales have been trampled underfoot.

In Newport, we find ourselves in a particularly incongruous position. Some HMRC staff in Newport are being moved to a location on the outskirts of Cardiff, outside reasonable daily travel by public transport. At the same time, the VOA, which has also just concluded a review of its office locations, will move into part of the offices that the HMRC has vacated, use of which was deemed inefficient by the HMRC. During the debate, I want to examine how much more efficient the review and its outcomes could be if a more co-ordinated approach were considered. I ask the Minister to look again at the situation in Newport.

The overall objective of seeking out inefficiencies and improving services may be necessary but many more problems have been created by the unco-ordinated review on top of review approach. Back in 2004, Gershon focused on the objective of releasing to front-line services major resources from activities that could be done more efficiently, but he was at pains to stipulate that the savings should not be achieved at the expense of service delivery. Gershon repeatedly emphasised the need for joined-up approaches as the key to securing an efficient future for service delivery.

In HMRC in Newport, a local departmental review was launched just weeks before the HMRC-wide work force change programme began the department’s review of the Cardiff urban centre. That confused staff and demonstrated a lack of joined-up thinking and planning from the start. There are a number of concerns about the fact that Newport was even included in the Cardiff urban centre. HMRC initially asserted that it was within the 25 km boundary of the Llanishen site. However, later documentation puts the Newport office at 28 km from the Ty Glas office in Llanishen. I fully appreciate that is a difference of only 3 km but the boundary has to be drawn somewhere and if Newport was outside the boundary it should have been included in the cluster group of offices now being considered, not in the Cardiff urban centre review.

The outcome of the review was issued by the work force change team in February and the conclusion was that Newport HMRC should

“withdraw from Crown Building and relocate staff in…Cardiff by spring 2010”.

The move will result in difficult if not impossible public transport options and thus increased reliance on cars, which will have an impact both on traffic in an already congested commute and also on the environment. Staff will face large parking problems as the Cardiff office is in a residential area that is notoriously congested. I understand that management has no responsibility for providing parking, and those with young families and caring responsibilities will face particular difficulties in getting there.

The initial review revealed that more than 90 per cent. of staff from Newport faced travelling for more than an hour to work. That calls into question the decision to opt for relocation. Following the review, Paul Grey stated, in a reply to a staff hot-seat question, that HMRC expected that most people would find it easier to travel to a central office, and that the majority of staff would travel by public transport. In this case, that is clearly not true.

Given a set of criteria, the staff in Newport were able to demonstrate successfully and in great detail why moving the whole Newport team was not an effective or efficient option, in view of travel issues and the impact on staff, service and the environment. I have learned that a significant proportion of the staff have successfully made individual cases for why they should not be moved, citing unreasonable travel requirements, or caring or other responsibilities. I would like to thank HMRC for looking in detail at each of those cases and for taking seriously the concerns of employees. The members of staff concerned are understandably grateful for that reprieve, despite concerns about how the split of the team will work in practice, and how it will affect their future employment. However, that does not negate the bigger question that I am posing today about the nature of the reviews and the failure of the Department to take a more holistic approach to seeking efficiency; in fact, in many ways, it reinforces my point.

If more than 50 of the 124 members of staff will now not be transferred to Llanishen, additional arrangements will be made for them. That calls into question the whole premise of the review and reveals the failure of HMRC to undertake the promised full equality impact assessment, which could have revealed in the early stages of the process that 41 per cent. of staff have disabilities, that 31 per cent. are part-time, that 66 per cent. are women, and that a high number of staff would be unable to transfer.

HMRC has announced the closure of the Newport office by 2010, with some staff expected to transfer to Cardiff. The HMRC presence planned for Newport is an inquiry centre with three members of staff. Experienced staff who are now to be retained in Newport will also have new working arrangements. At the same time, the Department for Work and Pensions announced plans to relocate Cardiff members of staff to Newport, so civil servants will literally cross each other on the M4 to travel to new places of work as a result of relocation decisions. In addition, as I have already mentioned, the Valuation Office Agency announced, following its review, that it sees Newport as one of its strategic locations and will move into the office currently populated by HMRC staff. The valuation office will also recruit 50 new members of staff.

I very much welcome the decision by the valuation office and the additional jobs, but it is hard to see how the Treasury is saving any money whatever by relocating staff from Newport to Llanishen, given that the valuation office will occupy the office space, and that a proportion of HMRC staff will have to be located there. According to the work force change programme, there would be a £470,000 saving if the building were vacated. The valuation office will take up one floor, so the savings will be smaller than anticipated if the building is not fully vacated by HMRC.

In addition, there are costs associated with prolonged journeys. Many staff who will relocate will be eligible to claim money for the additional travelling. Many members of staff report to me that the travel allowance will have a knock-on effect on their tax credits, and those are the people who report that they are affected by the abolition of the 10p tax band.

Does my hon. Friend agree that a number of HMRC Llanelli staff would experience acute difficulties in transferring to other offices, and that by the time that the additional excess fares that would have to be paid are taken into account, plus the cost of keeping the Llanelli office open with a skeleton staff, there would be virtually no saving from closing the Llanelli office? The decision is particularly difficult given that Llanelli is in an objective 1 area. It seems quite unjustifiable in that respect.

I agree with my hon. Friend entirely. She has campaigned vigorously on the issue, and has been a feisty advocate for her constituents. I will come on to the point about the Welsh Assembly shortly.

I struggle to see how the changes will bring about the desired savings and efficiencies, but they will have a negative impact on staff and, importantly, on front-line services. I also want to focus on the impact that the proposals are having on Newport as a city. Newport is a regenerating and developing city. The council, Newport Unlimited—our regeneration company—politicians and business leaders are working hard to make Newport a prime location for investment and for doing business. The ongoing success of Newport’s regeneration has resulted in its being ranked 7th in the UK tables showing the predicted economic strength of cities.

Success in attracting new employers, investment and jobs is shaken each time a high-profile decision is taken by a Government agency to buck the trend and take not only jobs, but front-line services such as the employers’ section, out of Newport. In addition, the National Assembly for Wales has a clear policy that public sector jobs and the benefits that they bring to an area should be spread out of Cardiff to other parts of Wales. Will the Minister comment on the steps that were taken to work with the Assembly during the making of those significant decisions?

Over the past 18 months there has been a lack of co-ordination between Departments and agencies involved in conducting the reviews and making decisions, and a reluctance to consider alternative or more holistic solutions. During the consultation period I was pleased to work with a number of partners including Newport council to explore alternative solutions, such as the collocation of services. However, these independently run reviews, with specific parameters, are too inflexible to consider cross-boundary solutions, ignoring the joined-up approach whose aim was identified as the key to success.

In the light of the situation that I have outlined, will the Minister review as a matter of urgency the decision to relocate HMRC Newport? In particular, what thought was given to the wider consequences, such as the impact on Newport or the wider aims of the National Assembly for Wales? Given the outcome of the interviews with employees, would it not be wise to reconsider the whole decision? In a recent hot-seat question from staff to management, staff were told that the decision to vacate an HMRC office would be reconsidered if significant new information came to light. In view of the fact that, as I understand it, more than 56 out of 124 staff are now to remain in Newport, would it not make sense to rethink the move to Cardiff and allow all staff to continue their careers and public service in their present location?

I understand that the Newport office has just been given a major national project looking at 400,000 historical employer cases. Given the expertise and experience of staff there, would it not make sense to give them also the national employer work which, I understand, is looking for a home, and to make Newport truly a centre of excellence?

Finally, I urge the Minister in future to ensure that the Department and its agencies consider a more practical and holistic approach so that agencies and Departments work together to create joined-up solutions that will make real efficiency gains, improve services and, crucially, value the staff.

I am pleased to have an opportunity to respond to the concerns expressed by my hon. Friends the Members for Newport, East (Jessica Morden) and for Llanelli (Nia Griffith).

My hon. Friend the Member for Newport, East has pursued this matter vigorously on behalf of her constituents, and I acknowledge the strength of feeling in her constituency, which she described. Members’ interest in the reorganisation of HMRC in Newport and across Wales has already been brought to my attention through petitions and questions in the House, in addition to contributions to the consultation process that HMRC has developed, for which I am grateful. I have also had the benefit of a meeting with my hon. Friend and her colleagues from Wales on at least two occasions. That is a formidable representation when it arrives in the office all at the same time. The force of the arguments was not lost on me or on HMRC.

As my hon. Friend is aware, as a result of pressures from Ministers—she mentioned Gershon—and other reforms, Revenue and Customs is being required to increase its effectiveness while making efficiencies. Because of the changing demands on the Department, HMRC estimates that it will have up to 40 per cent. too much accommodation. I acknowledge the justice of the case that my hon. Friend makes about the need for Government as a whole to be coherent about decisions affecting public sector job distribution. I shall come to that in a moment, in greater detail.

In order to manage the pressures on it while responding to new and changing customer demands, HMRC is making significant changes to the way it carries out its business. For example, many customers now choose to telephone HMRC offices or use the internet to file returns or make claims. As a result, for some years very little work directly connected to the local community has been done in HMRC buildings.

Although it is right for HMRC to keep its network of inquiry centres, it is also right for the organisation’s senior management to look at its back-office operations. They must ensure that those are run as efficiently and effectively as possible. In some work areas, that is done best by concentrating work in large units, but in others the best solution to meet customer needs is a more mobile work force.

Given that so many things can be done from local areas, does the Minister agree that there is no particular logic in favour of centralising things in the biggest cities, where there are the most job opportunities? Jobs could be maintained and created in the areas that most need them, such as objective 1 areas, if the offices in those places, rather than those in the big cities, were kept open.

My hon. Friend’s point relates to keeping public sector jobs in certain locations for economic reasons. My constituency on Merseyside has benefited from objective 1 status, so I understand the arguments for that. However, as I shall explain, HMRC has a responsibility to the taxpayer to ensure that it achieves the best possible arrangement of its resources. HMRC is subject to enormous pressures to change how its staff work. The benefits gained by people working together in larger offices, so that they can be more flexible about the priority of work and the areas of work that they cover, are essential to the efficiency of HMRC in responding to public demand.

As I will explain, those pressures mean that HMRC is required to look at issues across the particular business—whether in respect of VAT, income tax or corporation tax. All those different sectors have been looking carefully at how best to use their resources—in this case, particularly human resources—to deliver an ever-improving service to the public.

There must be an emphasis on improving compliance by focusing resources on the risk with which the organisation is dealing in respect of different taxes and customer groups. I have used the example of missing trader intra-Community fraud, which we call more prosaically “carousel fraud”. That resulted in a threat to the Revenue of some billions of pounds; there was a sudden escalation in that particular type of fraud and HMRC had to respond quickly. That brought about pressures in parts of the organisation. HMRC representatives tell me that to be able to respond rapidly and efficiently to such pressure, it is better that staff work together in larger groups, rather than according to the approach recommended by my hon. Friends the Members for Newport, East and for Llanelli.

I hope that my hon. Friend the Member for Newport, East will accept that HMRC values the face-to-face contact that the public appreciate, and it is determined to maintain that. I reassure her that, in respect of the decisions for Newport, the HMRC inquiry centre services will be maintained in their current location or nearby. Staff in Newport will not be required to commute to an office beyond reasonable daily travel, and there is an established process for managers and staff, which she has described. I am grateful for her welcome for the way in which HMRC has managed and responded to staff representations. The process is open, transparent and accessible to the trade unions.

The systematic process of review designed by HMRC involves consultations and announcements on decisions, and is being implemented across the whole UK. As we heard from my hon. Friend, in February the decisions on Newport were announced to all staff and trade unions, and all Members with a constituency interest were notified at the same time.

Newport was reviewed as part of the larger Cardiff urban centre. The proposals to rationalise work and office space across this urban centre were put forward for consultation in June last year. It is not true to say that a blanket policy of moving jobs from more rural and less highly populated areas into urban centres is being applied. The process is very much influenced by experience of what HMRC sees on the ground, and decisions have been adjusted according to the representations that it received.

Let me briefly outline some of the factors that have been considered in reaching the decision to vacate Newport. Cardiff urban centre has four offices accommodating some 3,100 staff. HMRC expects its staff requirement to reduce to around 2,800 by 2011. The decision to consolidate work on one site within this urban centre—Ty Glas in Cardiff—was based on HMRC’s strategic requirements, the excess of accommodation, and the continuing drive to improve customer services across all its business areas. Although my hon. Friend may not agree with HMRC’s decision to vacate Newport, the Department has an obligation to spend what is ultimately taxpayers’ money to good effect. The decision factored in the latest travel and diversity data available, and managers within HMRC are in the process of discussing with individuals their own personal circumstances.

I well understand the concerns of some people about any extra travel time that they may face and their dependency on the availability of transport links from their homes. My hon. Friend is right that the analysis undertaken by HMRC to support its recommendations was extensive. It recognises that although an analysis of travel times for staff suggests that 88 per cent. of staff in the Newport office are within reasonable daily travel of Ty Glas by car, a majority of staff may not be able to make the journey by public transport. In order to move to the more efficient structure that HMRC needs, it will relocate all staff who can reasonably make the journey to Ty Glas.

For those who cannot move, the department is looking at how best to accommodate them while continuing to provide them with suitable work and offering a variety of support—for example, assisted home moves for pre-surplus staff to fill specialised posts elsewhere in the department, a public sector release scheme which offers grants to staff leaving to train for front-line public sector jobs, and perhaps moves to suitable jobs available in other Government Departments. I welcome the fact that the Valuation Office Agency has been able to work together with other departments to ensure that the best use is made of the Government estate in Newport. There may even be opportunities for staff to transfer between the two departments. My hon. Friend cited the example of jobcentre staff moving one way up the motorway as HMRC staff move in the opposite direction. In fact, this will create opportunities for staff to transfer between the departments, and I hope that that will prove helpful.

Throughout the programme, senior management in Revenue and Customs have been committed to being open with staff, explaining the options available to individuals and exploring how their expectations can be matched with the need to make its operations more efficient and effective. As I have indicated, HMRC is keen to retain the skills and experience of staff in the Cardiff urban centre and to match these with its aims of achieving improved customer service and more efficient operations. I can reassure both my hon. Friends that meetings have been arranged between HMRC and Welsh Assembly Government officials at the end of this month to discuss the consultation process in advance of its next stage. Officials have been made aware of the policy of the Welsh Assembly in this regard. I expect the review of the remainder of HMRC locations in Wales—cluster and individual locations—to begin in June. HMRC will engage with the Welsh Assembly and with other Government Departments, where appropriate, during the course of consultation.

I welcome this debate as part of our commitment to the process of consultation and openness in moving forwards. It is a long-term programme that will deliver a more responsive and efficient service for taxpayers and claimants.

Although I cannot respond to my hon. Friend the Member for Newport, East in the way that she would wish, by committing to review the decision, I acknowledge the continuing concerns that she expressed. I believe that the process of change will be broadly for the long-term benefit of her constituents in Newport. I acknowledge that such public sector jobs are of particular value in a place like Newport, but none the less, the changes that HMRC is making will be for the long-term benefit of the customers that it serves. It would not be right if taxpayers’ money were used to support public sector jobs in a way that would be unjustifiable if it were closely scrutinised with regard to efficiency. Notwithstanding the disappointment that my hon. Friend will feel on the decision on Newport, I hope that she will support the organisation in the future and encourage staff to be committed to the overall change, which will be for the benefit of the customers whom they serve.

Question put and agreed to.

Adjourned accordingly at four minutes to Eleven o’clock.