I beg to move,
That this House condemns the proposed closure of HMRC offices in Scotland and throughout the UK; believes that this will result in a reduced service to the public; is concerned about the potential loss of tax yield; is further concerned at the loss of jobs and expertise in local communities; further believes that this will undermine efforts to reduce the tax gap which currently stands at £34 billion; also believes that this proposal will undermine the ability of SMEs to access information and advice and that the proposed closure programme is flawed and counterproductive; and calls on the Government to halt its programme of HMRC office closures.
The UK Government’s recent announcement of the planned closure of 137 local Her Majesty’s Revenue and Customs offices across the UK is part of their continued drive to rain down a regime of austerity cuts on our family of nations.
HMRC employs 8,330 people across Scotland, which represents 13% of all UK HMRC staff. Although we do not have the full information from the Government on how many jobs will be lost, the BBC has reported—
Does my hon. Friend agree that it was a democratic outrage that the Government produced a statement on this matter during a parliamentary recess, and that a Government statement was not made at the Dispatch Box of this House?
I could not agree more with my hon. Friend. It is yet more evidence of this Government’s lack of respect for Scotland and for Scottish workers.
Following the announcement, the BBC reported that more than 2,000 jobs could be lost in Scotland. As yet, we have no detail. With your indulgence, Madam Deputy Speaker, I will list the offices that are set to close across Scotland to highlight the scale and impact of the decision: one office to close in Aberdeen by 2021; one office in Bathgate and Livingston, my own constituency, by 2020; one office in Cumbernauld by 2020; two offices in Dundee; three offices in East Kilbride; three offices to close and consolidate into one large office in Edinburgh; and two large offices to close and consolidate into one large office in Glasgow.
I am going to make some progress.
An office is also going to shut in Inverness, and offices in Irvine and Glenrothes are also in the process of closing. Those closures are distressing news for the employees, their families and the communities affected, including in my constituency of Livingston. We must remember that behind every closed office and every job lost are individual folk, some of whom I and my colleagues have met in recent weeks following the announced closures. Many of them have proudly worked for HMRC for 10, 20 or more than 30 years. Many have spent their whole careers in their local HMRC offices and are fiercely proud of the work they do.
I am going to make some progress. Three of the Scottish centres announced for closure—those in East Kilbride, Cumbernauld and my constituency of Livingston—employ staff who issue specific guidance to the public on access to and eligibility for tax credits. With the prospect on the horizon of the Chancellor returning with his tax credit cuts, it is unthinkable that that support will be withdrawn from our communities.
The budgets of Government Departments and public bodies will suffer as a result of the austerity measures. They will be reduced by the Chancellor, who continues to cut despite the advice of many academics. Indeed, only yesterday, a report by City University said:
“George Osborne could be forced to borrow billions of pounds more than forecast by 2020 if he sticks with spending cuts that will hit economic growth”.
Two academics from City University projected that by 2020 the Government will be forced to report a £40 billion deficit instead of the planned surplus, undermining the Chancellor’s fiscal charter, which dictates that the Government borrow only in times of distress.
New jobs in the hon. Gentleman’s constituency will, of course, be good news for his constituents, but I want to know what the Chancellor has to say to people in Scotland and other parts of the UK who are going to suffer and lose their local tax offices.
Let me make some progress. The City University report is proof that this Chancellor’s attempt to run an absolute surplus is not working and is not credible.
SNP Members were elected on a manifesto that offered an alternative, fiscally credible plan for a modest 0.5% increase in public spending, which would have injected £140 billion into the economy. The proposed closure of HMRC offices will have a disproportionate effect on Scotland, because the vast majority of the UK Government’s ring-fenced Departments lie outside Scotland.
If the hon. Gentleman gives me some time, I would like to make some progress.
The most recent proposed closure of local HMRC offices will result in Scotland being left with no HMRC offices beyond the central belt of Scotland. The plans fail to understand or take into account the diversity and needs of the Scottish economy. There are a wide range of industries beyond the central belt of Scotland, including farming, fishing, whisky, tourism and, indeed, oil and gas. Many of those industries rely on the ability to work with their local tax offices, given the complexities of their businesses.
I do not know why people are upset—I have not spoken yet. As a former resident of the great city of Aberdeen and a former worker in the oil industry, my hon. Friend will understand the complexity of an industry that relies heavily on contractors and the need for specialist tax advice. Will she explain to hon. Members the distance between Aberdeen and Edinburgh? They are not just down the road from each other, but those making this decision seem to think that that is the case.
I could not agree more with my hon. Friend. I am aware of the complexities of the oil and gas industry, but I am afraid that the Government and Conservative Members do not seem to appreciate them.
The world of work is changing, and many people across the UK are choosing to start and develop their own small businesses. In particular, women are choosing to take charge of their own destiny and start their own businesses, many of them from home. A network of good tax support is essential to support those businesses, run by men and women, if they are to thrive.
I was recently visited by a constituent who has a farming business. He impressed on me the importance of access to local HMRC services and face-to-face support. Industries such as farming often operate a year in arrears to very tight margins, and I and my colleagues have grave concerns about the impact on them and a wide range of other sectors, not least small and medium-sized enterprises.
I called my local tax offices today to see whether I could pop in to speak to them. For the past year they have been unwilling to allow anyone to see them face to face. People can contact them only by phone, so it makes no difference if they are based in the region or locally.
I have just got to my feet again, so let me continue. John Allan, the national chairman of the Federation of Small Businesses said:
“Our members have repeatedly told us about difficulties getting practical help from HMRC when complying with their tax requirements. The current online offering is limited, often hampered by poor broadband connectivity, and the phone help line is hard to navigate, with long waiting times.
Over the long-term, this modernisation programme must bring substantial benefits and efficiency savings. In the short-term however, members will be concerned that the closure of these tax offices will simply compound existing problems.
The Government need to reassure businesses that disruption is kept to a minimum. This should be used by HMRC as an opportunity to deliver services that are easy to access, provide clear and consistent help tailored for smaller businesses and provide the certainty they need for their tax affairs.”
If the Chancellor will not listen to the SNP, perhaps he will listen to the Federation of Small Businesses.
These closures have been happening for some time. In March 2013, the UK Government announced that they were to close all of their 281 inquiry centres by June 2015, and it was reported that closures would result in the loss of 1,300 jobs. A consultation on plans to streamline HMRC inquiry and support services through the use of telephone consultations occurred in 2012, and HMRC piloted the new service in the north-east of England from June to December 2013. In October 2014, HMRC announced plans to close 14 offices across the UK by December 2015. It was reported that that would affect 453 civil servants, and a further 690 administrative employees had been offered voluntary redundancy.
The Public Accounts Committee said in the first half of 2015, following the closures, that only 50% of calls from the public were answered by HMRC, down from 73% in the last financial year. Tam Dolan, the PCS branch chairman in Dundee, said:
“This decision is baffling. HMRC have trained staff doing an excellent job, receiving more calls than they can handle. For PCS members in Dundee, making these staff redundant while recruiting elsewhere sends a message that Dundee doesn’t feature in HMRC’s long-term plans.”
The hon. Lady is being typically generous with her time. In the sunny uplands of Scottish independence, what detailed analysis would her party, as a Government, have undertaken as to the quantum of HMRC staff and offices it would have in a newly independent Scotland?
The hon. Gentleman is getting a little ahead of himself; I will come to that.
Ironically, during the referendum many argued that independence for Scotland would result in job losses in public services. It was lauded as the Union dividend, and we in Scotland were told by the then Chief Secretary to the Treasury, Danny Alexander, who sadly is no longer in his place:
“That dividend is our share of a more prosperous future. It is the money that will pay for better public services and a fairer society.”
In July and August 2014, the Scottish Labour party tweeted that 3,200 jobs at HMRC were
“just one of the reasons that being part of the UK is best for Scottish jobs…and 1,400 jobs at HMRC in Cumbernauld are dependent on us staying in the UK.”
That was clearly not the case. I hope that those on the Labour Benches, who will also no doubt have constituencies affected by these closures, will reflect on those comments and think carefully about who can be trusted when it comes to jobs in Scotland.
The tax gap in 2013-14 was estimated to be £34 billion, which amounts to 6.4% of total theoretical tax liabilities. Small and medium-sized enterprises account for the largest portion of the overall tax gap—some £16.5 billion ––followed by large businesses with some £9.5 billion. We in the SNP take the view that the vast majority of SMEs actively want to contribute to society by paying tax and that a high proportion of the SME tax gap will have been lost through errors and miscommunications.
I shall continue. The UK Government’s plan to slash 137 local HMRC offices across the UK will inevitably have a knock-on impact on the ability of SMEs to access information and advice on tax.
I would like to give my personal thanks to Gary Stein and his PCS colleagues who met me, my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) and MSP Angela Constance immediately after the closure announcement. I know that other PCS colleagues held similar meetings across Scotland and the UK. Gary and his PCS colleagues are working hard to engage staff and management in offices in West Lothian and have made clear their concerns about morale and the range of issues that I have highlighted. It cannot remain unsaid how valuable our local unions are in this process, and I am sure that it is not without sinister intention that the Government have marched ahead with their undemocratic Trade Union Bill, which would mean that the important work that our unions do in such situations would be made ever more difficult. Never has it been more vital that we have good engagement with the workforces who deliver essential public services.
I know that the hon. Lady is storing up the best until last, but in the meantime I am grateful to her for allowing me to intervene. We have a serious issue in Northern Ireland. We are the only part of the United Kingdom to share a land frontier with another EU member state, which gives rise, very unfortunately for HM Treasury, to fuel smuggling and the loss of a huge amount of revenue along the border with the Republic of Ireland. The announcement of the closure of HMRC offices in Northern Ireland has serious consequences, so will the hon. Lady reflect on that before she calls on someone else to intervene?
I share the hon. Lady’s concerns, which will be shared across Scotland and other parts of the UK. My local PCS representatives spoke about what they felt was a perfect storm brewing. The greater the pressure we put on our public services and the more we squeeze them, the more likely it is that there will be major breakdowns in the system.
I am going to finish up. [Hon. Members: “Oh!”] I am sure that the hon. Member for Upper Bann (David Simpson) can save his intervention for speeches by other colleagues. I urge all parties across the Chamber to support our motion and ask this Tory Government in the strongest terms to think again on these nonsensical and ill-conceived HMRC closures.
I am delighted to be able to respond to this debate, because protecting the country’s tax revenues is a key part of the Government’s long-term economic plan, and because we have already made great steps in modernising the way in which tax is collected.
The changes announced on 12 November are an important part of HMRC’s operational modernisation programme, designed to create a modern, efficient organisation that continues to protect this country’s tax revenues. Modernising and improving the efficiency of HMRC, enabling it better to tackle evasion, drive down avoidance and improve compliance, has been a key Government objective since 2010.
We have made substantial investments to achieve that aim, not least the provision of an added £800 million in the summer Budget, which will help HMRC to recover an additional £7.2 billion. As a result, we have succeeded in driving down the tax gap as a percentage of total liabilities from 7.3% in 2009-10 to 6.4% in 2013-14. This fall represents an additional £14.5 billion in cumulative tax collected. Over the last Parliament, HMRC secured about £100 billion in additional compliance yield, including a record level of £26.6 billion in 2014-15. We have also made important cost reductions to the operational side of HMRC, and I make no apology for that. HMRC cannot be immune from the requirement that its resources are spent wisely.
I thank the Minister for giving way. It was friendly fire for the SNP, but it did not accept it.
The Minister will acknowledge the disappointment in Northern Ireland about the fact that 10 offices are closing. We do not have the full numbers for those who will lose their job or when the redundancies will happen. Further to the comment by the hon. Member for North Down (Lady Hermon), we are vulnerable at the best of times, but with the land border this will make it even worse.
First, this is about offices, not about staff. On the numbers of people likely to be employed—for example, in Northern Ireland—it should not be taken that because offices are closing, the total number of staff employed by HMRC in Northern Ireland as a whole will be reduced. Of course, HMRC is aware of the specific issues with smuggling and is determined to address them. Let me reassure the hon. Gentleman about numbers of staff. It should not be taken from the announcement of office closures that there will necessarily be a reduction in staff in Northern Ireland at all.
Does the Minister not realise that when offices are closed, that has an effect on staff? With the best will in the world, there will be redundancies. Can he give us the numbers of staff affected? More importantly, I have schoolteachers in my constituency who want to sort out their pension problems. They use the HMRC hotline but they cannot get through—nobody responds to them. What is the Minister going to do about that?
The point I am making is that of course the closure of offices has an impact on some of the staff working in those offices. To answer the hon. Gentleman’s first question, by 2027, when the process will have been completed, approximately 4,000 of the existing 58,000 people employed by HMRC will not be within reasonable daily travel distance to an HMRC office. I want to be completely straightforward with the House of Commons. That is the scale by 2027.
On customer service, I agree that HMRC’s standards need to be high, and there have been times in recent months when they have not been at an acceptable level. I am pleased that performance is significantly better than it was in April, May and June this year. It is still not as high as we would like it to be, but it is above the average standard over the past six or seven years. We still have further to go.
In order to ensure a high level of customer service and to make sure that we bring the yield in, it is important that HMRC’s resources are deployed efficiently and effectively, and it is important that we ensure that services can be delivered in the most efficient way possible.
On staff numbers, my hon. Friend will be aware that the office in Chelmsford will be closing and will be based in Stratford in east London—20 or 25 minutes’ train journey from Chelmsford. Can people who work in Chelmsford take some reassurance from what my hon. Friend has said that the redeployment of staff from Chelmsford to Stratford is a viable proposition?
Yes, I think I can provide that reassurance to my right hon. Friend. An organisation that can make better use of technology and improve the way it works will find that there are some activities that it currently performs for which it requires large numbers of staff, but that it will not necessarily need those staff members in future. There are, however, a number of things that HMRC does that will mean that it requires those staff members. HMRC will become a more highly skilled organisation. It will need highly talented people to be able to ensure that we get the money in. My right hon. Friend provides a good example. There may be people currently working in, for example, Chelmsford who have skills that HMRC needs. They will be able to work in Stratford. I can point to other examples of similar circumstances throughout the United Kingdom.
I do not disagree with the overall picture that my hon. Friend paints, but the decision to base the regional hub for Yorkshire in Leeds rather than in Bradford is crass. If it can be shown that locating the regional hub in the Bradford district will be cheaper for the taxpayer and offer better value for money, and that the calibre of the staff could be accommodated in and attracted to that base, will my hon. Friend give a commitment to revisit this decision and look at what the Bradford district can offer?
I welcome the fact that my hon. Friend supports the view that we should move to a smaller number of regional centres. I am conscious that there are different views on locating the hub in Leeds and Bradford. HMRC’s analysis is based on the fact that it has large numbers of staff who live and work in, for example, York, Harrogate or Sheffield. Returning to the point made by my right hon. Friend the Member for Chelmsford (Sir Simon Burns), if those people are to be redeployed, it is substantially easier for them to go to Leeds, because there is a direct train service to Leeds, than it would be for them to go to Bradford, for which they would have to travel into Leeds and change, and their commute could then be beyond what would constitute reasonable daily travel. In fact, I should have said Hull rather than Harrogate, but there are similar points as regards staff living in Harrogate, and in Doncaster, in that it is easier to get to Leeds than to Bradford. As always, I am more than happy to listen to the arguments made by my hon. Friend the Member for Shipley (Philip Davies), and by others. Indeed, I am to have a meeting with Bradford MPs over the course of the next week or two to hear the arguments that they wish to put.
On a very specific point, the Minister will be aware that there is a special investigations unit in Northern Ireland dealing with serious and organised crime gangs and extra-special tax affairs of certain individuals. That unit, which was based at Moira house, is faced with closure. Where will it now be based to deal with these specific issues for Northern Ireland?
There are a handful of specialist centres around the United Kingdom as a whole, but the intention with Northern Ireland is to work out of one main office in Belfast.
I welcome the fact that HMRC’s expenditure on its estates fell from £371 million in 2010-11 to £255 million in 2014-15, and that these plans will generate further savings of £100 million a year by 2025.
Let me just make this point and then I will take plenty of interventions.
That will allow HMRC better to concentrate on its core task of revenue collection. Yes, there are savings for HMRC in reducing its estate costs, but it has made it very clear to me that regardless of what the spending review settlement will be tomorrow, it would move in this direction because it believes that the best way in which it can deliver services and collect tax is through regional centres. That is the important point.
I pay tribute to the staff of HMRC, who do a very tough and challenging job in collecting the taxes that pay for our vital public services. The Minister has mentioned his recent concerns about customer service, and I have had constituency correspondence from HMRC confirming that that has not been adequate to date. Can he explain, in specific terms, how cutting office numbers, thereby removing the local knowledge and memory of staff, increases the quality of customer service that people can expect?
It might be helpful to the House if I set out a little history in terms of how HMRC has operated. When it was formed in 2005, it had 572 offices spread all over the country. That is an inefficient way of doing business in the 21st century. Reorganising that network of offices was a policy priority even then, and that is why, following several reorganisations, the number was reduced to 393 in 2010.
It now stands at 170 offices, ranging in size from 5,700 people to fewer than 10. That is a start, but it is still not enough in terms of finding efficiencies.
The changes announced last week represent the next stage of HMRC’s estate transformation programme. Over the next 10 years, the department will bring its employees together in 13 large modern offices, equipped with the digital infrastructure and training facilities they need to work effectively. The new high-quality regional centres will serve each and every region and nation in the United Kingdom, creating high-quality skilled jobs and promotion opportunities in Birmingham, Belfast, Bristol, Cardiff, Croydon, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Stratford.
Let me just make this point and I will then give way.
There are significant advantages to such a system. The new offices will have the capacity to host multiple lines of businesses and have senior jobs on site. They will offer employees the opportunity to build their careers and skills in one office, and encourage upskilling. They will be in locations with strong transport links and close to pipelines of talent. They represent the way in which business is done in the 21st century.
To return to that point, I gave the statistic that 4,000 of the current 58,000 people employed by HMRC will be outside a reasonable daily travel distance by 2027, as HMRC has acknowledged. I am afraid that there will have to be redundancies for those people, assuming that they are still working for HMRC, over the course of that period. I would make the point that the vast majority of HMRC staff—I recognise that this is difficult for those who are not in such a position—will clearly be able to work in the regional centres I have mentioned.
Does the Minister agree that the current level of customer service in HMRC is unacceptable? The speech of the hon. Member for Livingston (Hannah Bardell) would have made sense were it not for the fact that, currently, about 40% of calls are never answered. It is not even that they are answered after 40 minutes; they are never answered. Does he agree that regional centres enabling us to flex the number of staff must form a coherent approach to getting calls answered, which cannot be done with 190 centres?
My hon. Friend makes an important point. I am pleased to be able to tell him that the numbers are not quite as bad as that at the moment—80% of calls are getting through—but we need to ensure that quality is higher. The point is that it is easier to provide flexibility when there are fewer centres.
For example, people can be moved from processing jobs. As I said earlier, some processing jobs will not be necessary in future, but a lot of the compliance jobs will be necessary. If we want people to continue to work for HMRC by upskilling them—moving them out of processing jobs by getting them involved in more highly skilled compliance work—that will be easier to deliver if they are already working in the same building, with the same people and with training facilities. That is why it is absolutely the right measure to ensure that there are opportunities for existing staff.
I believe that 3,000 extra staff were laid on to help to handle phone calls at weekends, and I welcome that. May I put in a bid for the Minister to reassure us that we will still have human beings at the end of the telephone in this great new system, which I fully support?
Yes, there will be human beings. It is true that, following the problems earlier this year, HMRC brought in an additional 3,000 people to work on the telephones. Those people have been trained up and are now deployed. That explains why there has been a significant improvement in performance over the past few weeks, although there is still more work to do.
I commend the Government on making it a priority to clamp down on tax evasion. That contributed to the collection of an extra £11.9 billion in the last tax year. The Anchorage House site in Chatham in my constituency has long played a key role in closing the tax gap. Will my hon. Friend meet me to discuss the future of the large number of dedicated and skilled workers?
I am certainly happy to meet my hon. Friend. I have had a request from my hon. Friend the Member for Rochford and Southend East (James Duddridge) to discuss this matter. Again, I am happy to meet him and I suspect that my hon. Friend the Member for Southend West (Sir David Amess) would also like a meeting. I am happy to meet them. I think that HMRC is right to move in this direction, although I appreciate that it creates certain issues. Some of the constituents of my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst) will have the option to work in the Maidstone office, which will stay open for four years longer than the Chatham office. I am sure that a number of them will take that up.
The Minister has been most generous. Many MPs and tax experts support the view that a visible and local HMRC presence is essential to maintaining confidence in the tax system. Does he not believe that the measures that have been announced by HMRC will open the way for more tax avoidance?
No, I do not. As I have made clear, the number of HMRC officers has been falling since its creation in 2005, including over the past five years, and we have seen the closure of inquiry centres, as has been touched on, but HMRC’s success in dealing with tax avoidance and evasion over that period has been marked and has improved. The truth is that HMRC deals with tax avoidance and evasion principally through sophisticated data analysis and by bringing together highly skilled people. The more that we can do of that, the bigger the difference we will make.
If HMRC requires visibility, is any consideration being given to mobile offices in vans, like mobile libraries? For example, Northern Ireland has one big office in Belfast, but it could send vans down to Armagh, Enniskillen or Londonderry.
HMRC’s “needs enhanced support” service was brought in as a partial replacement of the inquiry centres. My hon. Friend raises an interesting point about HMRC’s presence. However, it has a strong record in dealing with avoidance and evasion, there has been a substantial increase in prosecutions and it is hard to open a newspaper without reading reports of the wealthy facing significant tax bills because HMRC is successfully closing down tax avoidance schemes. That shows that HMRC is reducing this behaviour.
I am heartened by the Minister’s confirmation that reducing the tax gap and protecting tax revenues remains a key priority. Will he confirm that the progress in that area has been strong since the Government took office, resulting in more than £57 billion extra tax revenue being collected compared with 2005-06?
Of whom—I know that the Minister will find this helpful—there are no fewer than 19. I point out very gently, because the Minister has been generous in taking interventions, that his speech, probably as a result of that, is significantly longer than that of the person who led the debate. I am sure he would not want that to be the case.
I certainly would not, Mr Speaker.
HMRC has done this the right way and told staff first. It has kept people fully abreast of its proposals for a number of months, and it has held events up and down the country to ensure that it works with staff. As I said earlier, this is a locations announcement, not a workforce announcement, and the Department’s policy is to keep redundancies to an absolute minimum.
Will the Minister give way?
I will not. I have listened to Mr Speaker and I take his words very seriously. I will make progress.
I say to the hon. Member for Livingston that the changes that HMRC is talking about, such as trying to find efficiencies through centralisation, are not unique to HMRC or the UK Government. The Scottish Government have also brought forward proposals to rationalise their estates. They brought forward proposals to close up to seven of Police Scotland’s 10 control rooms, and we hear of plans to close regional fire stations, following the consolidation of local fire authorities into one national body. There have been cuts to the number of court buildings across Scotland, and the number of incorporated colleges was cut by almost half. I am sure that the Scottish Government had good reasons for doing that, but so do we, and it is right that we take such steps.
In conclusion, if we want HMRC to do its job effectively, we must ensure that it is fit for the challenge. We must be willing to modernise, find efficiencies, target resources, and make long-term strategic decisions. That is precisely what HMRC is doing by transforming itself into a smaller, more highly-skilled organisation, with modern, digital services, and a data-driven compliance operation that will deliver more for the taxpayer at lower cost. What would the opponents of change prefer? Do they want to rely on a structure that in many respects dates from before the internet era, or to pump in more money without examining where it is going? It is surely right that HMRC carries out efficiencies, targets its resources, and concentrates on delivering for the British taxpayer. That is the policy it has embarked on, and it is already increasing revenue yield and closing the tax gap. That is the policy that the changes will help achieve, and I urge the House to reject the motion.
I salute the Minister’s efforts to make a good fist of things, and the efforts of this Government, and the previous coalition Government, to clamp down on tax avoidance. More should be done, but they took good steps. We need a well-functioning HMRC because we need taxes to pay for the goodies that we and our constituents want. We need a well-functioning HMRC to assist business and to maintain the confidence of taxpayers. We need a well-functioning HMRC for effective anti-money laundering steps, to clamp down on tax evasion, and to protect revenue.
It is desirable for HMRC to act efficiently, and technology is changing what it and other large organisations do. For example, 80% of self-assessment returns are now done online, and that availability of information from HMRC—including specialist knowledge—is greatly aided by the internet. There is a difficult balancing act for HMRC between providing information and guidance to businesses and individual taxpayers, and not providing tax advice, and sometimes that is difficult for staff. Like other Members, I pay tribute to the overwhelmingly hard-working and skilful staff at HMRC around the United Kingdom. It is no criticism of them that we still have a considerable tax gap. Having more staff is likely to help close that gap.
The National Audit Office estimates an 18:1 return on employing extra staff—that means that £1 more in salary means £18 more in revenue. There is, of course, a law of diminishing returns in that scenario. HMRC itself, through its chief executive, estimates a return of 11:1.
I agree, and I will come on to that in a moment. We have to look at the debate, and at what is happening with HMRC, in the context of the economy overall and the Government’s finances. In the past five years, national debt has gone up 55%. Instead of it taking five years to sort out the deficit, the Government’s own estimates say it will take 10 years. GDP per capita has stalled. The balance of payments deficit is at the highest it has been in peacetime, at 5% of GDP. Productivity has stalled. Home ownership is markedly down. It is now said that we have the fourth lowest rate of home ownership of any European Union member state. Correspondingly, net household debt is rising alarmingly. That is the economic context; we need to protect revenue.
There are problems, of course: the tax gap, to which I referred; an insufficient number of collectors; and an insufficient number of staff dealing with evasion and artificial avoidance measures. There is the difficulty—created, I have to say, by the previous Labour Government —of the disastrous contract with Mapeley, which is based, I think, in the Bahamas. The ownership of the leases of HMRC offices was transferred to Mapeley in 2001. As far as I am aware, the proposals we heard on 12 November do not address that issue in any way, except to say that we are dumping all the offices. Nothing has been said about what will happen to the leases and so on. Perhaps the Minister, in closing, could tell us a bit more about the intersection between the plans and the wretched leases with the wretched Mapeley.
Staff numbers are markedly down in recent years. According to the Office for National Statistics, between 2007 and 2010, under the previous Labour Government, the number of HMRC staff went down 9%. Under the five years of the coalition Government it went down a further 24.4%—a cumulative drop of 31.4%.
The hon. Gentleman may have been contacted by local trade union representatives in his area. The Public and Commercial Services Union came to see me. It understands that HMRC is currently spending in the region of £70 million on overtime. Does he agree that that indicates that HMRC needs more, and not fewer, staff?
I agree. There are problems with the workforce, to which several hon. Members have referred. The chief executive of HMRC wrote to me on 12 November, saying:
“We expect that 90% of our current workforce will be able to either work in a regional centre or see out their career in an HMRC office.”
That says to me that the chief executive of HMRC reckons 10% will either not transfer or will be made redundant. That is worrying.
Reference has been made this afternoon to response times. In the first two quarters of 2015, 12 million calls went unanswered—half of all calls to HMRC. Only 39% of calls were answered within five minutes. In the third quarter of this year, after an infusion of staff, the rate of answered calls went up to 76%. That is a great improvement—except that the target is 80%, and in 2014-15 the answer rate was 72.5%. I have to say to the Government, and particularly to the Chancellor of the Exchequer, who has a family business, that this is the worst of statism. If HMRC were a business, it would have gone bust with that appalling customer service, but because none of us has any choice but to pay taxes, it remains in business. It should not do so. It certainly needs transforming, but cutting the number of staff does not seem to me, or my party, the way to do it.
On anti-money laundering, London is thankfully a major world financial centre, but we have a huge problem with the regime set up to deal with money laundering and to counteract it. The average HMRC fine in 2014-15 for money laundering was £1,134, according to Transparency International, which I thank. That seems a remarkably low figure, although it is not helped by the fact that 14 different regulators are involved in accountancy. If that is not sorted out, HMRC staff cannot do their job properly in relation to anti-money laundering, let alone tax evasion.
As has been said, since June 2014, HMRC has not had any face-to-face walk-in centres. There are a few teams of mobile advisers—a man in a white van dashing around Northern Ireland or northern Scotland, up to Caithness or wherever—for those who desperately need a face-to-face interview, but that is a very unsatisfactory state of affairs, and not one that encourages the taxpayer to feel confident that they are getting the service they should from HMRC. It is extremely worrying that the number of offices is being reduced from 170 to 13.
My hon. Friend will recognise that this is a massive programme involving 56,000 staff, the closure of 140 offices and relocation to 20 sites that have yet to be acquired, all within five years. In the 2015 civil service staff survey, almost 80% of HMRC staff thought their management were unable to manage change effectively. Does he agree that there are huge risks in the programme, and that it is potentially a disaster waiting to happen?
There are huge risks, partly to do with insufficient funding, insufficient staffing and an insufficient number of offices. I regret to say that in my constituency, Crown house—the second and final HMRC office in my constituency—will close. The only silver lining for people in my region is that the specialist office in Telford, Shropshire, down the road, will continue to be HMRC’s IT headquarters.
As a result of these relocations and closures, it is likely that HMRC will haemorrhage staff. It employs a lot of specialist staff. Unlike in many other Departments, an awful lot of staff in the Treasury are very mobile, as there is a ready outlet to the private sector, which often pays more.
I do agree, but I will say more on that in a couple of minutes. Views vary on whether the closure programme is wise. Last week, the Financial Secretary to the Treasury and I again met Stephen Herring from the Institute of Directors, who broadly—this is paraphrasing his position—welcomes this kind of move because he thinks that technology has transformed, and should further transform, how HMRC operates, and that it should be driven by business efficiencies and so on. The Association of Chartered Certified Accountants is broadly in favour of this sort of change, too. Its head of taxation said it was
“reasonable to restructure the offices and we support there being higher skills”.
Correspondingly, the Public and Commercial Services Union, which does a great job representing its members in HMRC and across Government, has grave misgivings —to say the least—about the programme, as does the Association of Revenue and Customs, which is part of the FDA union and represents senior people in HMRC.
I do not, but again, I will say more in a couple of minutes.
At one end of the spectrum, the IOD says it broadly supports this type of change, and at the other end, the unions say they have grave misgivings. The president of the Chartered Institute of Taxation—hardly known as a supporter of the Labour party, the SNP or any political party—has said:
“Taxpayers and tax professionals alike will be anxious that a public body that is struggling to meet its public-facing service targets has announced that it is about to lose many staff and close its local offices.”
The Institute of Chartered Accountants in England and Wales—I do not know what the position is in Scotland—says that the timing of the changes
“could stretch HMRC to breaking point”,
and that the restructuring of HMRC could be disruptive and could distract its leadership.
Does my hon. Friend agree that the distribution of well-qualified civil servants around the country will alter fundamentally, and that it is simply not on to say to well-qualified civil servants in north Wales that they have to go to Liverpool, no tax offices being left in north Wales at all?
I tend to agree with my hon. Friend. I cannot make any commitment from the Front Bench that a Labour Government would keep every tax office open, but to keep this issue in proportion, in 2010 we had about 393 tax offices collecting an average of well over £1 billion each. Any business that was bringing in that amount of money would be kept open.
I am listening carefully to the hon. Gentleman’s argument. Perhaps he could tell us, on behalf of the Opposition, how many tax offices he thinks we should have. Do we go back to 310, or whatever the number was, or is 170 about right, or should it be even lower? What is the hon. Gentleman’s number?
This is a classic case of this Government putting the cart before the horse. They announce the closure programme before they have got adequate information. We need a public consultation on this kind of change; we need a business consultation; and we need parliamentary scrutiny, by the Public Accounts Committee and the Treasury Select Committee, for example. Only when that process has been gone through, could I—or, I would venture, other hon. Members—form a view about how many HMRC offices should be distributed around the United Kingdom, given the changes brought about by technology and the desire for efficiency, and, balanced against that, the desire for a customer-facing service.
My hon. Friend is generous in giving way. I accept that there has not been meaningful consultation and not enough scrutiny of the financial case. Does he agree with me, following what was said by the hon. Member for Shipley (Philip Davies), that where an alternative financial, economic and social case can be put, it should be reconsidered?
Order. Before the hon. Gentleman, who is an experienced and versatile Member, replies, I remind colleagues that the convention—a fairly long-standing one—is that the Opposition Front-Bench spokesperson for the party whose Opposition day it is not would ordinarily make a Front-Bench speech of about 10 minutes. The hon. Gentleman is a little over that. I am conscious that 18 Members wish to speak, and this is not a conventional Opposition day but the SNP’s Opposition day, so a brief contribution from the Labour spokesman is absolutely right and proper, but we need to get on to Back-Bench debate pretty sharpish.
I am grateful, Mr Speaker. In fact, I had finished my speech but for the intervention. I shall respond to it briefly now. I absolutely agree with my hon. Friend the Member for Bradford East (Imran Hussain), and I think the Minister was very open in responding to the hon. Member for Shipley (Philip Davies). That is precisely the sort of investigation we needed before these sweeping changes were announced. There should be consultation, investigation and much more publicly available evidence.
I am in a difficult position, because I did not agree with much of what the hon. Member for Livingston (Hannah Bardell) had to say in respect of her overall analysis of the situation. I tend to agree with the Minister’s view: it is preferable to save jobs rather than save buildings, if the choice comes down to that. However, I think the way in which HMRC has gone about this has been rather cack-handed, so I do not feel able to support the Government either. I shall have to reflect further before the Division at 7 o’clock.
I want to focus on the decision in West Yorkshire. In Shipley, a tax office employing 924 staff is due to close. In Bradford there are two further offices, one with 358 employees and the other with 632. HMRC currently employs a total of 2,300 people in the Bradford district. To close down all the offices in Bradford and locate a regional hub in Leeds makes absolutely no sense.
The Minister will say that of course everyone is going to be a nimby and argue for their own areas but he must look at the bigger picture, and I accept all that. I would not decry any of it. My starting point is this: what produces the best value for money for the taxpayer in the United Kingdom? That should be at the forefront of what the Government are trying to do, but what they are actually doing, in a rather bizarre way, is locating a regional hub in a place that will be more expensive for the taxpayer than a very feasible alternative. If this is all about value for money for the taxpayer, why on earth should the Government make that decision? They should be making decisions based on what will be cheapest for the taxpayer.
Let me explain to the Minister why it would be more sensible to base a regional hub in Bradford rather than Leeds, and draw his attention to the flaws in the Government’s decision. Accommodation costs in Bradford are at least 20% lower than those in Leeds. That, too, would be a considerable saving for the taxpayer, and I do not think the Minister should turn his nose up at it. Most of the staff who will be moved would commute over shorter distances, because so many existing workers are from the Bradford district, and it would be much better for most of the staff to stay there.
The Minister may or may not wish to confirm this, but the decision seems to have been made on the basis that the only way to recruit top-quality staff, or staff with a certain ability, is to locate the offices in Leeds rather than Bradford. Not only is that insulting to Bradford, but it is based on no facts whatsoever. It is complete and utter bunkum. Saltaire, in my constituency, contains one of the most technologically advanced businesses in the country, Pace International. It is the biggest provider of set-top boxes in the world, and it does not seem to have experienced any problems recruiting high-level and high-quality staff to the Bradford district. If HMRC’s argument made any sense, the Minister would be saying that companies like that could never locate in the Bradford district, and that they would have to go to Leeds to acquire staff of the necessary calibre. HMRC’s thinking has been flawed from the start.
If that has not persuaded the Minister, I suggest that he visit any of the stations on the Airedale line in the morning, and then visit Leeds station during the rush hour. If he does so, he will find legions and legions of people—thousands and thousands—who live in Airedale, in the Bradford district, and who would presumably prefer to work there but are making the journey into Leeds to their jobs. They are already attracted to the Bradford district. They are already living there. If the Minister and HMRC’s argument made any sense, they would all be living in Leeds. If that were the place to be, they would not be living in Bradford. Bradford is a place where many people choose and prefer to live, and it is ridiculous of HMRC to argue that the only way to attract quality staff is to base an office in Leeds.
It seems to me that this is all about what is in the best interests of the London-based HMRC staff. I am delighted that the hon. Members for Bradford East (Imran Hussain) and for Bradford South (Judith Cummins) are present. We will all work together, and I hope that the Minister will listen to the arguments and change his mind.
Thank you, Mr Speaker, for giving me an opportunity to contribute to the debate. The time constraint just goes to show how important the motion is. I hope that in future there will be time for us to debate this important issue seriously.
More than 800 staff are employed at HMRC’s two facilities in my constituency, Sidlaw House and Caledonian House. When I met some of the staff last Friday, they confided in me their fears about the recent announcement of significant job losses, which is just the latest in a series of devastating attacks on public service jobs that Dundee has endured at the hands of successive Westminster Governments. That is completely at odds with what is happening in Dundee just now. The city is undergoing a £1 billion regeneration project—one of the most extensive in these islands—and employment is on the up, bucking the national trend. At the stroke of a pen, however, this Westminster Government have single-handedly put at risk the progress the city has recently been making to create and protect jobs. This has been done without public consultation or ministerial sign-off.
Unlike Scottish Government civil servants, HMRC staff will not be covered by a ministerial commitment to no compulsory redundancies. At Caledonian House, for example, we understand that 130 jobs are to be stripped from the city. I am told that the work carried out there predominantly relates to corporation tax and compliance. Ten years ago, there were more than 200 HMRC staff there. The office now occupies half the space, and it looks as though it could be boarded up by 2018.
Skilled employees, some of whom have 30 years’ experience and have provided decades of loyal service, have been abandoned by an organisation to which they have dedicated their whole career. The office currently has only two members of staff at grade 6 or 7. I disagree with the Minister’s statement that training would continue. There used to be 10 staff at those grades as well as four trainees, of whom there are now only two.
Staff at Caledonian House are being told that the best outcome they can hope for is a possible transfer to the new Edinburgh or Glasgow centres. If—I repeat, if—HMRC chooses to re-employ those staff, which I am told is by no means automatic, the impact on them and their families will be dramatic. Most HMRC employees in Dundee will be well outwith an hour’s commute of the new regional offices in Edinburgh and Glasgow, which is what HMRC defines as “reasonable daily travel”. So by HMRC’s own definition, it will be asking staff to do something that it does not consider to be reasonable.
Caledonian House is set to be shut down and boarded up by 2018, as I have said, yet we are being told that the new regional centres in Edinburgh and Glasgow will not open until 2020-21 at the earliest. That raises another question. What plans, if any, does HMRC have for the 130 staff at Caledonian House? In a letter that I recently received from HMRC’s chief executive Lin Homer, she stated:
“As Caledonian House is some distance away from the new regional centre, our employees will not automatically move to the regional centre once this office closes.”
So there we have it, in black and white: HMRC can offer no guarantees of job safety to existing employees at Caledonian House. They will be forced to apply for a job at the new regional centres. If that is not a betrayal of a loyal and dedicated workforce, I do not know what is. At Caledonian House alone, there are 10 couples working under the same roof, so there will be an impact not just on sole employees but on couples. This will have a devastating effect on the lives of those families.
The rationale for closing Caledonian House early is shrouded in mystery. HMRC has stated:
“The closure date for Caledonian House reflects the timing of when we will restructure the work that is currently located there.”
However, two senior officials who visited Caledonian House on Tuesday 17 November could not tell staff how those restructuring plans would play out. What are we to take from this? One local union representative told me:
“Mixed messages or misinformation are the only assumptions that can be made.”
In a word, yes.
It is difficult to avoid the conclusion that HMRC is making this up as it goes along. There are 650 people working at Sidlaw House who have been offered nothing more than empty promises about a potential move to the Department for Work and Pensions to work on universal credit. We know that the DWP is undertaking its own potentially far-reaching estate review in the face of what are likely to be swingeing cuts in tomorrow’s autumn statement, which could very well see it, too, pulling out of the city altogether. The employees at Sidlaw House deserve better. They deserve to know the truth.
Dundee cannot afford to lose these highly skilled jobs. The plans as they stand represent an absolute hammer blow for the city, with at least 130 skilled jobs being cut by a Tory Government with no mandate in Scotland. As I have said, there is also no clarity about the 650 jobs at Sidlaw House, or whether they will be transferred to the DWP. Families across the city will be devastated by this news and worried about the future. I cannot stress my opposition to this strongly enough.
As a newly elected member of the Public Accounts Committee, I recently had the opportunity to look closely at HMRC’s efforts to increase the amount of tax it collects and how it plans to do better. Our latest report, published on 3 November, made it clear that it is our opinion that HMRC has continued to fail in its customer service standards, and that if it is to collect much more of the tax due to the Treasury, modern, fit-for-purposes systems that support the Government’s “Digital by default” agenda must be in place.
At the moment, HMRC’s 58,000 employees are spread across 170 offices, many a legacy of the 1960s and 1970s. Their staff numbers range from fewer than 10 to some 6,000 people. To meet the customer service standards and increase tax revenues, the service needs to be providing its customers with modern services, at a lower cost to the taxpayer. As the Minister mentioned, this year HMRC recruited 3,000 additional staff to customer-facing teams. Those staff are providing services in the evenings and at weekends, building capacity outside normal working hours, which helps the taxpayer who is trying to sort out her tax payments. That is a great step forward: a major government body is changing its working practices to meet its customer demand. Many more customers now want to work out their tax payments online, at a time of their choosing. HMRC’s investment in digital services, simpler and more user-friendly portals and work with accountancy software designers to make small business financial packages automatically link into HMRC’s reporting systems is freeing up staff to deal with more complex tax problems.
I thank my hon. Friend for her intervention, because what she says is exactly right. We have to be mindful of that situation as HMRC moves forward in this digital world. HMRC collected £518 billion from UK taxpayers in 2014-15, an increase of £12 billion on the previous year. Over the past five years, a continuously increasing tax take has been matched by a reduction in running costs from £3.4 billion to £3.1 billion. I believe the Chancellor is totally committed to supporting HMRC to do its job better, and the Budget in July gave it a further £800 million to invest in compliance work over the next five years and collect an additional £7 billion in tax take.
There will, however, remain a tax gap, and challenging and overcoming that will continue to need the most modern systems and highly qualified staff. In search of such, the move to modern, regional centres across the UK will bring together the skills and the efficiency of resource and talents to maximise tax collection. HMRC expects the majority of its existing staff to be able to move to the regional centres, with a 10-year phasing to minimise redundancies. There will eventually be a modern, digitised organisation with fewer staff, but I have every hope that the programme of change is being well managed—I will be continuing to monitor it, as will the PAC.
I have some concerns about the regional centre plans. For example, I question the need for two London-based sites, in Stratford and Croydon, given that there is no base in East Anglia, where I would have thought running costs were lower. In the north-east, we already have a major HMRC centre at Longbenton in Newcastle, which supports a wide variety of tax-collecting divisions. The changes in staffing levels and working hours are starting to improve customer service there, and it is key that we make sure HMRC maximises the investment in its quality of staff and effectiveness across the UK to get the maximum benefit. HMRC’s modernisation of its efficiency and digital service provision is vital if the service is to continue to reduce that tax gap in order to help us to pay for the public services—the goodies, as the hon. Member for Wolverhampton South West (Rob Marris) called them—we all want to see, to transform its services to customers and to be able to clamp down further on the minority who are still trying to cheat the system.
On 12 November, HMRC made its “Building our Future: location strategy” announcement. As far as I am concerned, that is the precursor to the end of 50 years of my constituency’s links with the civil service as a major public employer. More than 2,500 hard-working, committed, loyal and productive staff at four sites will be affected by the announcement, of whom almost 700 are my constituents. Many of them are my friends, and many of them work in specialist and complex areas of investigation and administration. Regrettably, I found out about the detail—I use the word “detail” very loosely—in a very short letter from the chief executive. It was sent at 2.14 pm on 12 November, which was when Parliament was in recess. It said:
“I am writing to let you know that HMRC has today announced the next step in our ten-year modernisation programme to create a tax authority fit for the future, committing to high quality jobs and the creation of 13 new regional centres serving every region and nation in the UK.”
Members should consider how it feels to tell that to the hundreds of people who will lose their jobs, and to the thousands who will be moved out of my town centre. It seems that every Tom, Dick and Harry knew about the change before I did, and that is disrespectful not to me, but to the thousands of people in my constituency who are affected.
On reading the letter, it almost felt as if I should be grateful to HMRC for continuing to employ people anywhere to collect tax, and as if the service was expanding rather than contracting. I do not know how it managed to do that, but it did.
As I understand it, almost 170 offices will be closing, and they will be replaced by 13 regional centres and four specialist sites over the next five years, although some existing sites will remain open for longer. By 2021, HMRC will be operating out of just 35 locations. For staff in Bootle, the news is particularly shocking.
Litherland House is expected to close in 2018-19, followed by the Triad tax office and St John’s House in 2019-20. Comben House will also close. Those closures will have a significant and, in many cases, devastating impact on large numbers of people, staff and families. The implication in the letter is that staff should be grateful for having a job, even if it has a major effect on their lives, which is an absolute disgrace.
Many staff will face additional costs, with car parking charges and so on, and a detrimental effect on their family lives. They will have to travel to a regional centre, the location of which they have not yet been told. HMRC has announced that it will move to these regional centres, but it will not say where those centres will be. It will be devastating news wherever it is if it is not in the centre of my town. Many questions must be asked, but before I ask some of them, let me just quote Accountancy Live, which is a web-based professional site. It says:
Tax advisers and professional bodies are sceptical about whether HMRC’s plans to close 137 offices…cut real estate costs and save £100m, will deliver improvements in customer service levels, amid concerns that the changes could stretch the tax department to breaking point.”
Does the hon. Gentleman agree that the cuts will put HMRC under even more pressure at a time when more resources are needed to militate against the ongoing problems that both HMRC and Concentrix are causing? Numerous constituents have contacted me, suffering from the inadequacies of both departments, and I am sure that those problems will only be exacerbated by the cuts.
The hon. Lady is absolutely right. It is a fantasy to suggest that, by closing all these offices, we will be able to collect more tax and to tackle fraud.
Let me put a few questions to the Minister. When will the locations of the new regional centres be announced? Has an equality impact assessment been carried out on all the areas affected, particularly the four sites in my constituency? When did HMRC establish which sites were to close, and why was the decision not subject to consultation with Members of Parliament, trade unions, the Treasury Committee, and the Public Accounts Committee? Will the impact of additional costs be factored into the departmental deals, as there has been a pay freeze for God knows how long? What level of community or local business consultation has taken place ahead of the announcements? As far as I am concerned, absolutely none has taken place. Have the following losses to HMRC been taken into account? What about redundancies, income tax, local business tax, increase in jobseeker’s allowance, income support claims, national insurance contributions? The list goes on.
In my constituency specifically, what will happen to the 136 benefits and credits staff currently based at the Triad? When Litherland House closes, how will the other Bootle offices accommodate the staff? What will be the cost of the temporary building adjustments needed until 2020? What will be the cost of altering the software in order to move profiles around sites during the transition period? The questions go on, but we have had not one answer. I demand answers to those questions.
I wish to make the case not only for Alexander House in Southend to remain open and keep its jobs, but for it to expand. I am beginning to think that my hon. Friend the Member for Berwick-upon-Tweed (Mrs Trevelyan) will support the idea of Southend becoming the regional site.
Like the hon. Member for Bootle (Peter Dowd), I knew nothing about the planned closure. My hon. Friend the Financial Secretary and I have had a private chat and I do not blame him. He is an excellent Minister and we have a very strong Treasury team. My hon. Friend the Member for Rochford and Southend East (James Duddridge) and I share responsibility for Southend and the building is in his constituency, but I think that just as many of my and his constituents work there. I have been on the back foot on this issue, but not anymore—I am on the front foot now. I remind my hon. Friend the Financial Secretary that he visited Alexander House two years ago. He, my hon. Friend and I had a wonderful tour of the building and he learned at first hand about its strong tradition and the loyalties among its staff. It has superb expertise and I think it is the second or third biggest employer in the borough of Southend. My hon. Friend the Financial Secretary seemed very impressed with everything he heard. Indeed, Her Majesty the Queen visited the building a few years ago and I know that she was also very impressed with everything she saw.
I absolutely support and accept the overall strategy. Our Treasury team is doing a wonderful job in sorting out the public finances in the light of the terrible mess we were left with in 2010. However, I was born in Stratford and I hate to be in the position of pitting one area against another. The hon. Member for West Ham (Lyn Brown) is a splendid colleague, but Stratford is getting everything. It got the Olympic games—I chaired the Bill for that—and it now has my football team, West Ham, so I am loth to stand by and remain silent. My hon. Friend the Member for Berwick-upon-Tweed spoke about East Anglia and questioned the logic of having the office in Stratford. I do not understand, either. I would have thought that, on economies of scale, Southend was entirely the right place for it to go.
As it stands, Southend will lose 1,265 jobs, which is absolutely devastating. I am also told that the Southend base will continue as a transitional office for staff from other nearby offices that are due to close before Southend. When my hon. Friend the Financial Secretary or my hon. Friend the Exchequer Secretary sum up the debate, I do not know whether they will say for how long Southend will be a transitional office, but I imagine that once those other employees have moved to Southend they will not want to leave, because, as we all know, it is this country’s premier seaside resort and the alternative city of culture 2017. I know from my discussions with the local authority that Southend will offer the Treasury a very attractive deal if my hon. Friend the Financial Secretary agrees to have Southend as a regional site.
I am delighted that my hon. Friend the Financial Secretary has agreed to meet my hon. Friend the Member for Rochford and Southend East and me. I hope we will have a detailed discussion about travel arrangements and possible redundancy payments, but I ask my hon. Friend the Financial Secretary to think again. I hope that I and my hon. Friend the Member for Rochford and Southend East will be able to persuade him to have the regional site in Southend.
I am pleased to have the opportunity to take part in this debate and to put on record the profound disappointment and, indeed, anger felt by my constituents, who have for years worked incredibly hard at Cumbernauld tax office. I want also to express the huge disquiet felt across the town at these proposals to close down our biggest employer and relocate good-quality jobs elsewhere. All that comes, as other hon. Members have said, with little in the way of explanation and even less in the way of consultation.
On any view at all, the announcement made two weeks ago about the HMRC offices is of enormous significance and has the potential to cause immense disruption to the staff affected, to the communities where those tax offices are currently based and to the services that HMRC provides in collecting taxes. It is astonishing to me that the Government think that such a major announcement does not merit so much as a ministerial statement.
I have received no correspondence from HMRC, so I feel like I have been missed out a little compared with honourable colleagues. However, my colleague Jamie Hepburn MSP received a letter similar to that sent to my hon. Friends, full of vague management-speak rather than information. There were no parliamentary debates until we secured this one. PCS representatives were not consulted on the criteria used by HMRC for site selection or on outline decisions, and they agree with neither. That is not good enough at such a huge moment for HMRC and its staff.
HMRC claims that £100 million of estate savings will be generated each year by 2025, despite not knowing where these brand-new city centre sites will be and how much they will cost. If HMRC has such confidence in the model it proposes, the supposed savings that it will make and the claimed benefits to service standards, it should have nothing to fear from extensive scrutiny, so let us have that extensive scrutiny. Will the Government agree to a full debate on, and scrutiny of these detailed proposals here in Parliament, to both public consultation and full consultation with PCS, and to the pausing of implementation while all that is under way?
To say that the months leading up to the announcement have been a frustrating and worrying time for hard-working and dedicated staff in HMRC offices across the UK would be a grave understatement. Up to 1,600 people in Cumbernauld will be directly impacted once we factor in IT staff provided by contractors, as well as catering and cleaning staff. Most frustratingly, between woolly press releases, vague correspondence and contradictory information at staff meetings, many questions remain unanswered. HMRC’s letter to my colleague Jamie Hepburn, which I think was almost identical to that received by the hon. Member for Wolverhampton South West (Rob Marris) and others, said that
“90% of our current workforce, including the majority of those working for us in your constituency, will be able to either work in a regional centre or see out their career in an HMRC office”.
The hon. Gentleman raised several issues arising from that letter. I would also ask, how big is the majority of staff who will continue to be able to work in HMRC offices? There is a grave lack of clarity.
The Government have said that there will be no compulsory redundancies. Yet, on the other hand, workers in Cumbernauld have been told that no voluntary packages will be available to them. Given that we know that the Government require a cut in the workforce in the west of Scotland in order to fit them in the new office, people are rightly asking whether the Government are seeking to lose staff on the cheap, hoping that they will jump without having properly to compensate them.
Staff also ask whether it is coincidence that rules on acceptable travel distances in the event of relocation have recently been tightened to their detriment and why travel allowances have been limited to three to five years. What about those who already commute from a considerable distance east or north of Cumbernauld, many of whom are closer to Edinburgh? Why are they not being allowed to choose the Edinburgh hub ahead of Glasgow? Will there be options such as home-working or other creative solutions? While measures on retraining and redeployment could be positive, we need to see so much more detail before we can judge how meaningful they are.
Most importantly, people need to know when exactly they will be expected to move. Is it soon, towards the end of the five-year period or some time in between? Is their job moving with them or are they moving to a new job in terms not only of location but of role? HMRC claims that people will be better able to develop careers up to senior levels, but my constituents fear that their good-quality roles will be replaced with poorer quality work.
On so many levels this does not seem a well thought-through plan, and it should go back to the drawing board. What is particularly perplexing in the context of Cumbernauld is that some of the proposed regional centres will hold as few as 1,200 staff. Cumbernauld hosts between 1,500 and 1,600, so why not retain it if that is efficient enough as part of the new model?
I welcome the opportunity to speak in this debate. I also welcome the modernisation of HMRC. It is right that the service is streamlined. Value for the taxpayer and customer service must be at the heart of our reforms, and I truly believe that it is possible to save money and improve customer service. At the end of the day, like many things in business, it comes down to efficiency and productivity, both of which have proved increasingly difficult to achieve in the current system, as has been pointed out.
It is imperative that we collect the taxes that are due and crack down on tax avoidance. People in my constituency of Taunton Deane often raise that with me, and Members from all parts of the House are concerned about it, which is why we need a system that will get to grips with problems, especially tax avoidance. Bringing together a highly skilled workforce based in specialist buildings will help to meet that challenge. I have sympathy for people who work in offices that are going to close, but the existing offices are old-fashioned, and many of them are in buildings built in the 1960s and ’70s. They are stuck in the dark ages.
I am going to plough on, because we have been told that we cannot speak for long.
A move out of outdated offices, many of them in London, will help to achieve major savings on those antiquated properties. It is the kind of common-sense approach that all businesses take to achieve cost savings and to improve efficiency. I have been assured that it is anticipated that many staff will move to new regional centres. Bristol has been proposed as the centre for the south-west, but I would like to suggest that the county town of Somerset—Taunton, in the heart of my constituency of Taunton Deane—be considered for a regional centre. I would welcome a discussion on that, and I have been contacted by the powers that be in Taunton Deane. There is a wonderful location for such a centre on junction 25 of the M5 in our new strategic employment site, providing easy access for everyone, everywhere.
I am going to plough on.
Streamlining office buildings is not the only component of the modernisation programme, as we have heard. There is a full programme of measures, including investment in online services; new compliance techniques; and other initiatives that make it easier for taxpayers to access the system. We are all keen to pay our taxes. The benefits of those measures, as I have said, have come into play, as 80% of customers complete their self-assessment online, saving time and money, and moving us towards a 21st-century system.
I have been approached by many constituents about the difficulty of accessing the tax office. I have intervened in such cases and, once I have done so, the service has been good. However, I welcome the upgrade and I fully expect that it will make life easier. Indeed, the 3,000 extra staff who came on board at the weekend to handle phone calls will help. As I have said, I applaud the opportunity for more personal contact where appropriate.
To sum up, major investment in a new, modern system with highly skilled staff, many of whom are already working for HMRC, and many of whom we will train, will bring in more revenue at less cost to the taxpayer, so the streamlining of HMRC, once it beds in, will be a win, win, win.
I say to the Minister that this was an absolutely appalling announcement. It was appalling in the way it was done. I was sitting in a conference at 2.14 pm—I thank my hon. Friend the Member for Bootle (Peter Dowd) for reminding me of the time—with two Tory Ministers talking to us in north Wales about rebalancing the economy when I received a missive, not from a Minister or the Government but from a civil servant telling me that 350 people in my constituency in Wrexham would be made redundant or transferred from north Wales to Liverpool, where they would be in hot competition with individuals from Bootle trying to find jobs. I was told by email what the Conservative Government think of north Wales.
Never has there been a sharper contrast between rhetoric and reality. This Government supposedly talk about rebalancing the economy. Other colleagues in the Chamber have made the point that the sites identified and set out in the letter that was sent to us do not yet exist. This was an ideal opportunity for the Government to take a sensible approach to rebalancing the economy with taxpayers’ money, by shifting jobs out of areas that are economically successful and expensive, such as London or Cardiff, to other areas, such as north Wales. In Wrexham there are places available to house highly skilled workers providing a first class service in a new online age. The House need not take my word for it. We have in Wrexham high quality service companies such as Moneypenny, which provides virtual office services, and DTCC Avox, which provides company search facilities not just within the UK, but right across the world. They are expanding and bringing jobs to Wrexham in order to be more competitive.
This Government do not know their backside from their elbow. They do not recognise that already we have 350 highly skilled people in Wrexham who are doing an excellent job. In addition, we have people in the local economy who have been identified by the private sector as being particularly skilled at providing exactly the services that this Government or any Government need to bring in more money to eliminate the deficit that the Minister told us in 2010 would be gone by today but is still there because of the economic incompetence of the Tory party.
The hon. Gentleman made the point, as did the hon. Member for Bootle (Peter Dowd), that the sites were not known yet. A site is already available in the Bradford district that HMRC could move to, whereas in Leeds there is no identified site yet. Does the hon. Gentleman agree that it is very bad negotiation for the Government to say that they are going to go to a particular place without a site, because if they do identify a site the landowner will have them over a barrel when the negotiations take place?
I am grateful to the hon. Gentleman, and I commend him—which, I think, is a first in the 14 years I have been here—for his excellent speech. The points that he made mirrored many of the points I have been making and intend to make. It makes no sense whatsoever for the Government to approach the issue in the way they have.
I shall speak specifically about Wrexham because I am here to represent my constituents. It is incredible that the only HMRC service in Wales will be in Cardiff city centre. Cardiff city centre is boom town. The announcement from HMRC was followed last week by the BBC announcing the creation of its new centre for Wales in Cardiff city centre, so HMRC had better hurry up and find a site or there will be no room left in Cardiff.
The Minister is a reasonable man. I find it incredible that he has been in the Treasury since 2010, because he is a reasonable man. I ask him please to look at the announcement again. I mean it seriously. I cannot understand the rationale for the announcement economically, politically, intellectually or in any sense. He should listen to the sensible debate. I am grateful to the SNP for bringing the topic to the Floor of the House and I will certainly support the motion today.
We desperately need a fundamental rethink, because the Government are talking about our money—our money, taking jobs away from a place like Bootle! They should be using public money to support economic development in the parts of our country that need it most. That is common sense, I say to the hon. Member for Taunton Deane (Rebecca Pow). I ran my own business, and if I did it pursuing policies like this, I would have been bankrupt before I started.
In opposing this motion, I wish to applaud HMRC’s excellent work over recent years. Thanks to its endeavours, there has been a reduction in the tax gap to its lowest level of 6.4%. That is a long-term trend showing that the targeted approach to tackling non-payment is working. However, the issue facing HMRC today is that in attempting to calculate and pay their taxes, taxpayers are spending 30 minutes or longer waiting to discuss their affairs. In the first half of 2015, 50% of callers were not answered at all.
It is clear to me that the current tax centre arrangements are not working and need modernising. It makes huge sense to replace the numerous local offices, where staff levels range from 6,000 employees to just 10, with regional centres that will give a more balanced and even coverage. This follows the trend of other service operators in moving to a regional model. Indeed, it is not just service centres that are moving to regional, or indeed country, models. Last Friday, listening to the First Minister of Scotland on an excellent “Desert Island Discs”, I was struck by her reasoning for moving Scotland’s police towards a one-country force. I therefore ask why it has taken so long for HMRC to move to this type of model. Banks were setting up current account centres when I was a 16-year-old working as a cashier for Abbey National in my holidays. [Interruption.] It was many years back.
In an increasingly technological age, it is outmoded to continue to argue, as this motion tacitly does, that the effectiveness of an operation is down to the number of workers, or their location, rather than the completion of the work itself. In many public-facing industries, technology means that human input is no longer required or is required less. In reducing and streamlining its staff numbers, I welcome HMRC’s intention to invest in technology to make itself more efficient. In an age when many of my constituents elect to complete their work online, it makes more sense to move funding to the areas where HMRC is able to target avoidance.
In my constituency, where we have two offices that will be replaced by a regional centre in Croydon, for the past year it has not been possible for my constituents to go and discuss their tax arrangements: that walk-in service has been unavailable. I therefore cannot see how they will be inconvenienced by the fact that the person they speak to on the phone is no longer in Hastings but in Croydon.
It is of course always regrettable when new service models, driven by new technologies, and the preference of the public to work online rather than deal face to face, lead to the potential for redundancies. As is the case for any employee faced with the uncertainty of redundancy, I have the greatest sympathy for those impacted, and I am glad that our economy is performing strongly enough to give confidence and optimism to those who may be rejoining the jobs market. However, I contend that it would be wrong to hold back modernisation, to use resources that can otherwise be better targeted in the sophisticated fight to win more tax receipts, and to fail to address the shortcomings in customer service. I therefore welcome these changes to HMRC and will vote favour of them today.
The Government have been dismantling their tax services in Wales for 15 years, and the “Building our Future” location proposals are the final nail in the coffin of a tax service that used to operate a very effective network for taxpayers across Wales. Not so long ago, there were offices to be found in 22 towns and cities. Fast forward five years from today and the Government propose that there will be only one centre, and that will be in south-east Wales.
HMRC’s Porthmadog office at Ty Moelwyn in my constituency is once again earmarked for closure. It is the home of the tax office’s Welsh language unit. This is not just about offices, but about staff. There was no mention of the Welsh language unit in the mail merged letter I received during the recess. The office in Gwynedd is well placed to attract and retain fluent Welsh-speaking staff. It offers that rare thing—a naturally Welsh-speaking workplace. Importantly, it also serves the region of Wales where demand for Welsh-language services is highest. As one of its users, I urge every Welsh speaker to take advantage of using the office, even those who lack the confidence to discuss financial matters in Welsh, not for the good of the language, but because the Porthmadog staff are good at their job.
Beyond Porthmadog’s specific and limited Welsh language remit, HMRC’s commitment falls far short of the statutory requirement, according to the Welsh Language Act 1993, to treat the Welsh and English languages as equal when providing public services in Wales. I am currently working on behalf of a constituent who has been told that he cannot use Welsh to resolve a chapel’s tax affairs. Business customers tell me the same about their businesses. Others complain of waiting for 40 minutes and more before the telephone system will allow them to access the service in Welsh.
The proposal is that the service can be maintained just as effectively in Cardiff. The county of Gwynedd is home to 77,000 Welsh speakers, which is 65.4% of the county’s population; Cardiff has fewer than half that number of Welsh speakers. The Government are intent on moving the service from a rural region where Welsh is the language of everyday life and civic administration to an urban centre 150 miles and four hours’ drive away, which is about as far from its likely users as it is possible to go and still be in Wales.
The tax office has had the honesty to admit that it is not realistic to expect workers from Porthmadog to travel to south-east Wales. Workers at Wrexham and Swansea are being offered the option of transferring to Liverpool or Cardiff. That sounds fair until we recall that former reorganisations offered workers the option of moving to workplaces that are now in turn threatened. This is in the month when it was announced that unemployment in Wales rose by 3,000—news that was described by the Secretary of State for Wales as a “disappointing set of figures”.
The closure of the offices is a body blow to plans to devolve tax powers to Wales. On the one hand, the Tory Government extol the virtue of Wales taking more control over our taxes—Plaid Cymru has proposed that for years—yet, on the other hand, the means of administrating such powers is shuffled across the border to England. The level of reorganisation proposed should be subject to proper public and parliamentary scrutiny at UK level, as well as with the PCS Union.
There are specific issues unique to Wales that must be addressed. First, changes to how Welsh language services are provided should be the subject of a language impact review, as is customarily required for public sector Welsh language schemes. Secondly, the administrative requirements of increasing tax devolution should be identified and the views of the National Assembly for Wales sought.
I urge the Government to reconsider the impact of their proposals on services in Wales, on services to Welsh speakers and on services to the nation as a whole in the light of the devolution agenda, and in particular to reconsider the significance of well-paid public sector jobs in a low-wage economy such as that of Dwyfor Meirionnydd.
Moving more of HMRC’s work out of central London, which has some of the world’s most expensive office space, will enable it to make substantial savings. It is right that HMRC makes whatever savings it can on its property costs so that the money that it does have can be used to improve customer service and maximise tax revenues. It cannot be sustainable for its 58,000 full-time employees to be spread across 170 offices around the country, many of which, as has been, said are little more than a legacy of the 1960s and 1970s. That is highly inefficient.
However, while recognising the need to modernise and reform, we have a responsibility to make sure that HMRC’s staff are treated fairly. I therefore hope that everything possible will be done to retain skills and expertise within HMRC by making sure that as many of the workforce as possible are redeployed. In particular, I emphasise the need for support for the local workers in Brierley Hill in my constituency who choose to transfer to the Birmingham regional centre, and for support and retraining for those who do not transfer to the new centre. I hope that in implementing the changes, HMRC’s management will work closely with colleagues to see how many Brierley Hill and Merry Hill staff might be taken on by the Department for Work and Pensions when the Merry Hill office is transferred to the DWP.
My constituents in Dudley South expect the same high standards from HMRC as they expect from banks and retailers. This programme will help meet those expectations. People in my constituency will welcome the creation of a regional centre in the west midlands, with the high-quality jobs and skills such a centre brings. I am pleased that as part of the modernisation programme, HMRC plans to work with universities and local colleges to attract the best and brightest talent. Although I recognise the importance of Birmingham as Britain’s second city, I urge HMRC not to rule out the black country as a suitable location for the west midlands regional centre.
Quite rightly, Members and residents expect HMRC to increase tax revenues, while cutting running costs, as it has done over the last five years. An additional £11.9 billion was collected last year and an additional £57 billion has been collected over the past decade. Total tax revenue has increased in each of the past five years, during which time HMRC has reduced its running costs from £3.4 billion to £3.1 billion, including £210 million in sustainable cost savings last year alone. However, HMRC cannot rest on its laurels; it must continue to build on these significant achievements. We expect a lot from HMRC.
The changing demands on the organisation mean that ways of operating that might have been appropriate in the past might not be appropriate for the future. Like all organisations, HMRC must continue to adapt if it is to be as effective and responsive as we all want, while operating as efficiently as we must all surely demand. We owe it to HMRC’s leadership to allow them the independence they need to make the changes that they have decided are necessary to meet the challenges. That is why I will support the Government and oppose the motion this evening.
Thank you, Madam Deputy Speaker, for allowing me to speak in this extremely important debate.
It has been announced that the Hawbank Stores site and the East Kilbride Plaza site in my constituency are due to close in 2021. The Queensway House site is due to close in 2026, but that proposal is tentative and depends on whether better lease terms can be agreed.
The restructuring of HMRC is a direct result of the Treasury’s demand for a 30% cut to its budget to satisfy the Chancellor’s austerity agenda, which the majority of the people of Scotland did not vote for. The result is that many people in my constituency face uncertainty and anxiety over their future because of the Westminster Government’s ideological drive to cut public services.
The East Kilbride tax office and its workforce are a significant and long-standing institution in the local community and in the economy of my constituency. Everyone in my constituency is related to or knows someone who works there or has worked there. In fact, my grandmother worked as a tax office clerk in East Kilbride some 30 years ago.
Some workers may have the opportunity to be relocated to the proposed regional offices. That will be of no consolation to those who lose their jobs and neither will it negate the anxiety in the interim, as people wait to find out their fate.
At a time when tens of billions of pounds are still lost to tax evasion, these cuts make no sense. They are likely to have a detrimental impact on society and the economy at a local and national level. Removing those jobs from the local area does not only affect the employees involved because it has a wider impact on the whole community. It is likely to have a significantly adverse impact on local businesses and other jobs, and cause great difficulty in promoting economic growth. We want to encourage companies and services to locate to our constituency, not to leave. For those workers who are moved to regional offices, the additional and enforced commute is likely to impact on their personal lives by reducing the time that they can spend with their families. That is likely to have additional financial implications owing to extra travel and the bearing it could have on childcare.
The closures are counterproductive and send a clear message that the Government are going soft on tax collection and tax evasion. It is appalling and draconian that three offices are proposed to close in my constituency. Oscar Wilde famously wrote:
“To lose one parent may be regarded as a misfortune; to lose both looks like carelessness.”
I suggest that to lose three tax offices is unforgivable, and if the closures go ahead, it will be ingrained forever that the Conservatives are no friends of the people of East Kilbride, Strathaven and Lesmahagow.
I urge the Minister to return to the drawing board—he has been described by some as “reasonable”—and to consult, review, conduct impact assessments, and urgently to meet me and local staff, my colleagues and devolved Governments, and my hon. Friends who have spoken today.
The hon. Member for Wrexham (Ian C. Lucas) mentioned that this announcement had been a surprise. The skilled staff of the HMRC office in Inverness were anticipating some changes, but instead they received a hammer blow. The plan to close 137 local offices and replace them with 13 regional centres by 2027 hid the news that that will happen in Inverness in 2017-18—hardly time to draw breath on the decision. HMRC employs 8,330 people in Scotland, which is 13% of all UK HMRC staff—hardly a dividend worth retaining if that is the way we are to be treated.
The Public and Commercial Services Union has said that 11,000 full-time equivalent staff posts had been cut from HMRC since 2010, and that any further cuts would be “absolutely devastating.” Its general secretary, Mark Serwotka, stated:
“Closing this many offices would pose a significant threat to the operation of HMRC, its service to the public and the working lives of staff, and the need for parliamentary scrutiny of the plans is undeniable and urgent.”
I am delighted that the SNP has initiated this debate in the House to provide just that.
In my constituency, more than 50 staff face losing their jobs. Many are women and over 50 years old, and—most importantly—all are skilled in dealing with complex tax problems for people across the UK. Not only do they save money for HMRC and the taxpayer, but they save businesses from going into administration and provide people with vital advice. I have met those workers, and I was impressed with how flexible they can be, and how they operate in a virtual team. They have been retrained many times in the past.
The Government talk about creating a more modern HMRC, but why have they not taken time to look at Inverness, the fastest growing city in Scotland? The hon. Member for Dudley South (Mike Wood) spoke about the expense of London, but there is nothing expensive about Inverness. It has great people and a great facility, yet that is being taken away. That is not the best way to deal with the issue. There is no evidence of any assessment of the impact on staff with disabilities or caring responsibilities, or of the social, economic and environmental effects of this move.
I completely agree with my hon. Friend, who is the vice-chair of the parliamentary Public and Commercial Services Union group and knows what he is talking about. There has been no assessment. Skilled workers in my constituency have dedicated their lives and careers to working for HMRC, and they have been left cold by this announcement. They have been hung out to dry. It is absolutely vital that there be a review focusing on the people who have spent many years training to do a job that it is very hard to do from a call centre elsewhere. To exploit their skills would be the right thing to do; to dismiss the skills and the people and throw them on the scrapheap is the wrong thing to do.
It is ludicrous for such a massive change to be made without any public or parliamentary consultation. The Minister has an opportunity to look again at this proposal. From around the Chamber he has heard, and will continue to hear, the stories of people who have devoted themselves to making HMRC work. There are still huge challenges ahead for HMRC. It is time to halt the plans and do something different: something that values the people working in the service, values the collection of revenue, and makes sure that the decision made is sensible for the people of Scotland and all the nations of the UK.
First, it is nice to see the Treasury Minister on the Front Bench. It is a shame, however, that he did not feel it was necessary to come to the House of his own accord to account for his unprecedented reorganisation of HMRC. I congratulate the Scottish National party on securing this important debate.
One issue that has not been covered so far is that of HMRC staff in lower bands who rely on tax credits to supplement their income. To travel from Sheffield to Leeds, as they will have to in future, some employees will receive an excess travel allowance. However, the allowance is tax deductible and could take them over the threshold for tax credits, meaning they lose their entitlement to that lifeline. Is the Minister aware of this issue, and will he look into the specific cases of those on tax credits employed by HMRC who may lose out as a result of this decision?
It is difficult to imagine that in a county such as Yorkshire—the largest in England, in which person could be up to 100 miles from Leeds—there will not be significant disruption for staff and taxpayers alike. What are the enhanced transitional arrangements to deal with HMRC being “rationalised”, in a county of our size, into one regional centre? What steps has the Minister put in place, not just for the tax official in my constituency who will have an 80-mile round commute—way beyond the one-hour suggested guideline—but for the small business owner living in Grimsby who wants face-to-face tax advice and will now face a 150-mile round trip for the privilege? The Minister and I both know it is unlikely that that person would make that trip. As a result, individuals will continue to be overpaid or underpaid, wasting HMRC’s time. In the past year for which figures are available, mistakes in the calculation of pay-as-you-earn led to almost 5 million people being mistakenly overpaid or underpaid. Almost a quarter of all tax investigations remain open more than 12 months later, and 3,800 are open over three years after being opened.
These issues are not new to the Government. In 2011, the Select Committee on the Treasury found that there were
“Unacceptable difficulties contacting HMRC by phone”;
it recommended that HMRC improve the service at contact centres, and the better targeting of letters that threaten serious consequences against individuals. That recommendation is particularly relevant. Many hon. Members have constituents who will have been contacted recently by the US multinational Concentrix, a company contracted by HMRC to handle some of its functions relating to tax credits. The performance of Concentrix has been little short of abysmal. A report by the National Audit Office in July revealed that the £75 million contract has resulted in savings of just £500,000—somewhat short of the £285 million that was projected. Tax credit recipients are bearing the brunt of the failing contract; tax credits have been wrongly stopped by Concentrix, and people have simply been unable to get in touch with it, leading to serious financial hardship.
In response to the same Select Committee report, the Government said that
“HMRC conducts full reviews before any changes are made to the opening hours of its face to face enquiry centres. The recently introduced changes”—
“in opening hours were made only after extensive public consultation, including a full equality impact review.”
They also said that the physical presence of HMRC is based on a geographical picture of the areas of higher tax risk across the country. In this unprecedented reorganisation, however, there has been no public consultation. The new offices’ locations have been based not on a picture of tax risk, but instead on wherever is most convenient to the Government in each region. I hope the Minister will correct me on this assumption and answer some of my questions. More broadly, the Opposition hope that the Government will recognise that the closures are the falsest of false economies, and will serve only to reduce tax take and damage further the relationship between HMRC and the businesses that sustain our economy.
I congratulate the SNP on securing this debate. Attempts were made to get it on the Order Paper earlier, but important worldwide events obviously squeezed it out.
I also congratulate the Government on having, in one fell swoop, cheesed off every region and nation of the UK. Some 300 workers in Middlesbrough and 400 in Stockton South, the constituency represented by the northern powerhouse Minister, will be affected by these closures. The Middlesbrough and Stockton offices will close in 2018 and 2019. This follows the loss of 2,200 jobs at Sahaviriya Steel Industries, as well as of 1,000 contractor jobs and more than 6,000 in the supply chain. We also had 800 workers sent home when construction stopped at Air Products and, on the same day this announcement was snuck out, 700 redundancies at the Boulby potash mine. I have never known such a tidal wave of job losses, and for the Government to rub salt into Teesside’s wound at this time shows a callous disregard for the fortunes of Teessiders.
I extend the solidarity of my constituents to those of the hon. Gentleman. This is an insult to his constituency, given the pressures it is already under. Is it not extraordinary to hear Government Members say that this is about modernisation and people filling out tax returns online, given we were told only a fortnight ago that a trade union member could not use online balloting?
The hon. Gentleman makes a good point. It is interesting how that rationale is adopted for certain arguments, but not universally spread.
It was a disgrace how the announcement was made. It was not made at the Dispatch Box by a Minister answerable to Members, but was snuck out on the internet during the recess. It was disrespectful to the people losing their jobs and to the House. The Government should be ashamed of themselves. I rang the chief executive and said, “What on earth are you playing at?”, and I asked whether a socioeconomic assessment had been done. The Minister is not interested in the impact on people’s lives, but Opposition Members are. I am sick to death of hearing Government Members say, “I feel your pain,” and “We’re doing everything to help.” I was told that about Teesside staff. Well, it is a funny way to look after staff—to say, “By the way, your job’s going.” It is ridiculous.
Ministers say that more than half of staff will retire in situ, so that is okay: they will not suffer because they can stay until they retire. Those jobs will disappear. There will be no continuity or benefit for future generations. Every time we have this consolidation in the north-east of England, it is always Teesside that loses out, and the jobs go north. On this occasion, we are talking, in the first instance, about consolidation at Waterview Park in Sunderland. It is only 30 miles away, but it is two hours 25 minutes by bus. It will add five hours to people’s working day. How on earth will people go to their school open evenings, attend to their elderly parents, or run the girl guides, or whatever it might be? What sort of quality of life is that? There is never any regard for these things.
These jobs will not come back, and there is no way people can maintain a decent pattern of life. This will simply mean more pain for Teesside. The Government must stop these closures, on which there has been no proper consultation, and use the comprehensive spending review tomorrow to provide targeted assistance to help Teesside attract the high-quality, well-paid work that is so urgently needed.
It is clear today that the Government have simply failed to make the case for these changes. They have failed to make the case in Scotland, Northern Ireland, Wales and England. Here, there are just a few loyal, new Tory MPs keen to curry favour by saying what a wonderful thing the proposal is, alongside some hard-working constituency MPs who have talked about the damage that it will do to their constituency—all credit to them for doing so.
More importantly, the Government have not made the case for these changes to the 8,000 staff who will lose their jobs and their livelihoods, or to the many businesses, particularly the small and medium-sized enterprises that are the so-called lifeblood of our economy, that are deeply concerned about the changes. The Government have not even made the case to the chartered accountants who deal with the tax offices and do such a good job to ensure that tax affairs are in order.
HMRC has failed to provide an acceptable service level to customers. We know that from the Public Accounts Committee report earlier this year, which pointed out that it takes an average of 14 minutes and 22 seconds to answer a call. We should think about what that means to a hard-working chartered accountant or a small business. Sometimes these people have a great need for advice about the future of their business. How can the Government possibly argue that cutting 8,000 jobs will make this poor performance, which is already not good enough, any better?
One Conservative Member said that there are many things that humans cannot do, but if we speak to these small businesses and chartered accountants, we find that what they think is lacking is the ability to talk to people when they need advice because they are not sure of something. Things are already not good enough, so getting rid of more people with local knowledge who are able to assist and advise is simply madness. In this case, humans are essential, and it is short-sighted thinking to deny it.
My constituent Stephen Oliver, a chartered accountant, is one such person who has advised people in my constituency. He has been telling me for years about the inadequacies of dealing with the tax office. He is one of the many people who are deeply concerned that these changes will make the situation worse. There is widespread opposition from the accountancy sector—surely something that this Government should take seriously, but currently do not. These entrepreneurs and SMEs are people who not only contribute to the economy, but want to stay on the right side of the law. They want to fulfil their tax obligations and contribute to society. Can Ministers confirm that they have done an analysis of the cost to the economy? There will be such a cost arising from lost productivity as a result of the increases in the time taken to answer the phone.
Finally, in the limited time available, let me say that in response to my written questions on how many staff will be reassigned from individual offices to regional centres, Ministers have confirmed that that has not yet been finalised. In my constituency, Peter Bennett house in West Park is being closed, which is regrettable for the employees. Will Ministers confirm that this move will be planned in such a way that it will have the least impact on staff and their families? That is something that they have not yet done. As right hon. and hon. Members have said, the Government have not made the case in any of the four nations. They really should think again and properly consult all those affected.
I align myself with comments made by Members across the House, and particularly those from my region, including my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) and my near neighbour, the hon. Member for Shipley (Philip Davies), who made a persuasive and common-sense argument that I want to build on.
In reply to my question last week about HMRC and about meeting Bradford MPs, the Prime Minister’s response was welcome, and I appreciate the opportunity to meet the Minister to discuss my concerns. However, the second part of the Prime Minister’s response was, quite frankly, unacceptable. His reply with statistics about the falling claimant count in Bradford completely misses the point. In any case, the count is falling in Bradford not because we suddenly have lots of a good new jobs, but because of sanctions, dubious self-employment and low-wage zero-hour contracts. We need a proper industrial strategy that will address that shortfall, and will help to bring high-quality, well-paid jobs to the city.
The decision to close HMRC offices in Bradford will mean the loss of more than 2,000 jobs which are precisely the type of jobs that we need. Regardless of the number of jobs that are transferred, that will have a devastating effect on our local economy.
Does my hon. Friend agree with what was said by his near neighbour the hon. Member for Shipley (Philip Davies) about the costs that will be incurred by the transfer of the service to Leeds, an area with significantly higher rental values, to a property that does not exist? How on earth will that save money? Does my hon. Friend agree that this is just a false argument?
I entirely agree. As I said in an intervention, this decision has been ill thought out, and no economic or social case has been made against Bradford and the surrounding region. The decision has come as something of a hammer blow to Bradford, as there is a clear case for siting the office there: a case that makes clear the positive reasons for doing so, as well as the danger of a negative economic impact if work is pulled out of the city. We have a talented and young workforce who are crying out for opportunities such as this, and, as we heard from the hon. Member for Shipley, we have an identified site next door to the transport interchange. As well as being close to four top universities, we have the internationally renowned Bradford University School of Management.
Nor can I find any good reason for moving the entire operation to Leeds. The Public and Commercial Services Union—the civil servants’ union—has already complained about the lack of consultation and the fact that no one has had a chance to see, let alone scrutinise, the figures that have been used to come up with this plan.
Is there not every indication that Leeds does not want the hub to be based there, because it could attract private sector investment to any of the sites involved? Have the Government not effectively, and unnecessarily, crowded out private sector investment in Leeds?
The hon. Gentleman is quite right. This could have a detrimental effect on Leeds, and on the private sector in particular.
As I stand here representing Bradford, let me make clear my demand to see the figures and the argument for the move to Leeds. Such an important decision must be made openly, and in the full glare of public scrutiny, if we are to be persuaded that the move is not taking place for the convenience of London-based civil servants. Bradford has struggled for years to overcome the effects of de-industrialisation, and has had to tackle many problems. If HMRC relocated to Bradford, it would be a great help and a step on the road to the city’s way forward. It is just starting to show signs of recovery and a return of confidence, but the removal of these jobs will be a bitter blow.
I urge the Government to ask HMRC to reconsider its decision and look seriously at the compelling case for Bradford, and I ask them to be bold enough to change their minds.
The debate has been very enlightening, and I thank every Member who has participated in it. I was going to begin by saying that the House was clearly divided on the matter, but I shall have to change that to “clearly not divided”, given the many fine contributions that we have heard from Conservative Members.
I was reminded that, many years ago, a sociologist called Georg Simmel had said that the most worrying thing was not people debating or arguing, because at least they were motivated enough to address the issue in question; the biggest problem arose, he said, when there was apathy and people did not participate. We have heard some tremendous contributions today, and witnessed some tremendous engagement. There is certainly no apathy in the House of Commons when it comes to this important issue. I remain of the view that the UK Government have made a serious error with their closure plans, and I think that the majority of those who have contributed to the debate would agree with that.
My hon. Friend the Member for Livingston (Hannah Bardell) pointed out that although some £34 billion was being lost through inefficient tax collection, the Government’s great idea was to close offices and make redundant the very staff we need to collect those taxes. She shone a light on a range of shortcomings in the Government’s plans, including the scale of office and personnel cuts.
In my summing up, I want to refer to everyone who has made a contribution today, as all the contributions have been important. I shall start with the Minister, who, with his usual calm and attempted reason, gave us a fine tour de force. I would like to pick him up on one or two points, however. I was particularly aggrieved when he used the Scottish Government as an example, saying, “Look at what they have done by bringing all those colleges together”, as though that were an example of the downsizing of an entire estate in Scotland. Nothing could be further from the truth. Let me give the Minister an example. There is now only one college in Ayrshire—Ayrshire college—but it retains not only its Ayrshire college campus but the campus that was James Watt college in Kilwinning. It has also retained the campus that was Kilmarnock college, and the Scottish Government are now investing £50 million to expand that campus.
I have met representatives of businesses in Ayrshire, and they have been nothing but complimentary about the courses at Ayrshire college and the students that come out of it. The college has just won three categories in the Scottish Qualifications Authority awards last week.
I thank my hon. Friend for that intervention. There are many hon. Members on these Benches who could say similar things about their colleges and the way in which they are served.
The Minister claimed that part of the reason for the proposed changes was to create greater efficiency. Well, that would be clever! As many Members have said, we currently have a rather inefficient way of gathering taxes. There are telephone calls that cannot be answered and letters that sometimes cannot even be opened, let alone responded to, yet the way we are supposed to solve this problem is to cut, cut and cut again. That does not make any sense.
The Minister also indicated that some of the closures would happen in such a way that it would be viable for the people affected to move from their current location to a new one.
I agree with the hon. Gentleman entirely. I know Enniskillen and many other places in Northern Ireland very well. I am sure he would agree that many people, particularly in communities on the fringes near the border, might feel vulnerable and fear having to go to the big city of Belfast to have their needs met. A number of Members from Northern Ireland have pointed out the specialist nature of the needs of people there, because of cross-border issues and the like.
I have happily crossed swords with the hon. Member for Wolverhampton South West (Rob Marris) on a number of occasions. He made one of his typically thoughtful and detailed speeches, and we are grateful for that. He will forgive me if I cannot cover all the points he made, but one thing that struck me about his contribution was his comment that of course there is a need to have new technology and the best new ways of working, but that does not mean we need to deny the right of people to have human contact and get advice and guidance that can be provided only by human beings. We are not luddites opposing the Government—
Or robots. We are people who want to see a balanced way of providing a service to the people in this important area. The hon. Gentleman also talked about things he has rehearsed in other places, such as the problems of the tax gap and the great need to have people with real expertise to tackle different forms of tax evasion. He gave many helpful quotes from many different professional groups that are with us in opposing what the Government are planning.
The hon. Member for Shipley (Philip Davies) gave an especially fine analysis of the situation in his local area. I particularly enjoyed his comment that HMRC was proposing a cack-handed approach to finding locations to site its offices. He provided a compelling critique of the regional positioning that is taking place, and I thank him for that. My hon. Friend the Member for Dundee West (Chris Law) pointed out that his city, undergoing a £1 billion expansion in so many ways, is now to be denied a tax centre for the many thriving and developing small businesses and individuals in that great city of Dundee—what a ridiculous proposition. He also said that the Scottish Government have a policy of “no compulsory redundancies”, but we have not heard those words trip off the tongue of any Minister in this debate.
The hon. Member for Berwick-upon-Tweed (Mrs Trevelyan) focused well on the issues of customer service that need addressing, giving a balanced critique of the Government yet cleverly still finding some areas to support—I pay tribute to her for being so adept at that. The hon. Member for Bootle (Peter Dowd) gave a fine, reasoned analysis, particularly of the human contact needed and the disrespect that has been shown in the way in which this announcement has been given to the public. He was the first to raise that point, but he will doubtless realise it was mirrored in what was said in many subsequent contributions. I want the Government to say something about that in a contrite manner when we hear from them shortly. Like others, the hon. Gentleman raised the need for impact assessments, including equality impact assessments. I have found no effective assessment of any sort connected with this major initiative, and that is completely ridiculous.
The hon. Member for Southend West (Sir David Amess) made another compelling case about location, even if it was surprisingly positive about the economic strategy being pursued by the Government. In the context of this debate, I will dwell on the fact that he, too, lent his voice to the critique that even people who believed in this type of policy would not choose the locations that have been chosen to enact it. My hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) pointed out how the significant, large and well-respected tax office in Cumbernauld is to be thrown to the wind, along with so many other offices in Scotland. He called, as have others, for much greater scrutiny of the Government’s proposals in this regard.
The hon. Member for Taunton Deane (Rebecca Pow) offered a paean to her Government, claiming that they were pursuing a policy of common sense, yet she, too, still managed to give a critique of the locations being chosen by the Government. Listening to almost all the contributions from Tory Members, it appears that they liked the policy but just did not agree with any one of the locations that have been chosen to enact it.
The hon. Member for Wrexham (Ian C. Lucas) talked about the appalling way in which this matter has been announced and pursued. He said that it showed disrespect to the House. I particularly liked his deep analysis of the situation, when he said “They don’t know their backside from their elbow.”
The hon. Member for Bexhill and Battle (Huw Merriman) gave the most loyal of speeches, but I have to say that I disagreed with almost every word of it. I could steal a line from someone else and say, “He had all the right words, but just in the wrong order.”
The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) mentioned the importance of the Welsh language and the need for an impact assessment. Something that was missing was the lack of concern about what is happening in the highlands and islands and the Gaelic-speaking communities in Scotland. We need to have proper impact analysis and proper care for the people in our communities.
The hon. Member for Dudley South (Mike Wood) called for effective care and support for the workers involved, as did my hon. Friend the Member for Glasgow South West (Chris Stephens), who made that point in at least six interventions. My hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) pointed out the way in which three offices in her constituency are again being cast to the winds without any real and effective consideration. [Interruption.] I think that I am being encouraged to wind up.
Let me quickly mention the fact that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) and the hon. Members for Sheffield, Heeley (Louise Haigh), for Middlesbrough (Andy McDonald), for Leeds North West (Greg Mulholland) and for Bradford East (Imran Hussain) were all stunning in their analysis.
I am not quite sure how to follow the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin).
Protecting the country’s tax revenues is of course a vital part of our long-term economic plan. It is particularly important given the contributions that we expect the tax system to make to delivering an overall surplus in 2019-20. As an integral part of that, we strengthened HM Revenue and Customs’ ability to carry out its job as effectively and as efficiently as possible.
In 2009-10, the tax gap stood at 7.3%. By 2013-14, it had fallen to 6.4%, and that represents an additional £14.5 billion in cumulative tax collected. Over the past Parliament, HMRC has secured around £100 billion in additional compliance yield, including more than £38 billion from big businesses and £1.2 billion from the UK’s richest 6,000 people. Our investments, including £800 million in the summer Budget, helping HMRC to recover an additional £7.2 billion, have been vital to achieving that success. As well as that, it is clearly important that the structure and organisation of HMRC are fully fit for the 21st century, and that is what these changes are all about.
I will not just at the moment, if that is all right with my hon. Friend.
The primary objective is for HMRC to bring its workforce closer together in regional centres so that they can collaborate better, providing more opportunities for economies of scale and of scope and for individuals’ career progression. That will allow them to deliver higher quality public services at a lower cost to the taxpayer. It is simply not efficient to have HMRC’s 58,000 employees spread throughout 170 offices across the UK.
As the Financial Secretary to the Treasury said, this is about moving into more efficient and more effective regional centres in which, in those places, jobs will be created. The great majority of people are within travel time of those centres and will be able to move.
I will not for the moment. I want to see how things go and to try to cover as many as possible of the points that have been raised during the debate.
The consolidation has been ongoing since the formation of HMRC in 2005, when it had more than 570 offices. Most recently, in 2014, it announced the closure of 135 older-style walk-in centres, to which vulnerable customers had to make the effort to travel. HMRC replaced them with a dedicated “needs extra support” service, whereby officials go to meet the customers in their own home or at a convenient location. I have met and spoken to HMRC staff who have made the change from the old service model to the new one, and have heard about how much more effective it is in supporting those who need most help.
If the hon. Gentleman will forgive me, I will not give way.
Keeping HMRC’s valued employees fully engaged has been a central part of the transformation programme. The proposals were initially announced internally 18 months ago. Since then, HMRC has held about 2,000 events across the country, talking to and consulting colleagues on the changes.
This is a really lazy reorganisation by HMRC, which appears to have picked either the biggest place in a region or the one that is easiest for the London staff to get to by train. Will the Exchequer Secretary consider what has been said in this debate and go away and look at the issues from a properly local perspective?
I assure my hon. Friend that that is not the way in which the process to identify the locations has been conducted. My hon. Friend the Financial Secretary mentioned earlier the combination of site and location-specific criteria. Critically, the process has also involved mapping out where HMRC staff live, in order to calculate reasonable travel distances and the locations to which those individuals can reasonably travel. In the case of HMRC staff employed in Leeds and Bradford, 130 live a more reasonable distance from Leeds than they do from Bradford.
There are a great number of job opportunities in Liverpool, near the hon. Gentleman’s constituency. This will be a different type of operation, with more disciplines co-located in the same building, so there will be more opportunities for collaborative and efficient working and for career progression and development. Everyone working for HMRC will have the opportunity to discuss their personal circumstances with their manager ahead of any office closures or moves, including any issues that need to be taken into account when making decisions.
Not at the moment. As I have said, HMRC has mapped the geographical location of all of its employees, to work out which locations work best for most people. We envisage that the new office structure will give more people more opportunities, which is good for them as well as for the organisations as a whole.
I have not given way as much as I might have done, because I wanted to respond to as many as possible of the points that have been raised during the debate. The questions were many and the minutes available are few, but I shall do my best. If I omit anything crucial that has been raised, I will write to the hon. Member concerned.
The official Opposition spokesman, the hon. Member for Wolverhampton South West (Rob Marris), rightly raised the question of the Mapeley leases. It is precisely because of the expiration date of those leases, which account for about two thirds of the estate, at the end of the private finance initiative contract in 2021 that this is a one-off opportunity to make this change to the estate footprint. If the opportunity is missed, there will not be another one like it for some 15 years.
I have been asked a number of times, quite rightly, about the number of compulsory redundancies. Of 58,000 staff in total, 4,000 are expected not to be in reasonable travel time of a regional centre, but that is not the same as saying that there will be 4,000 compulsory redundancies. Every year, many people retire or move away from organisations, including HMRC.
I will in a moment come to the point that the hon. Gentleman is shouting out from his seat. The average age of employees in the organisation is late 40s or early 50s, and this is a 10-year plan, so compulsory redundancy should be a last resort.
What counts as reasonable travel time will depend on the circumstances of the individual and will include consideration of factors such as caring responsibilities, which is one reason for providing the opportunity of one-to-one discussions, quite rightly, with all employees. Typically, reasonable travel time is taken to mean around an hour, but that does not mean that that is correct for everybody in every circumstance in every location.
A number of hon. Members, including the hon. Members for Middlesbrough (Andy McDonald) and for Bootle (Peter Dowd), my hon. Friend the Member for Shipley (Philip Davies) and the hon. Member for Wrexham (Ian C. Lucas), complained about the manner in which the announcement came out. I make no apology for the fact that the staff were told first. On the day of the announcement, the entire HMRC senior team was out in the field at those office locations to carry out face-to-face discussions with staff. The direction of travel had been shared with staff 18 months earlier, and in the intervening time some 2,000 events had been held up and down the country to discuss the changes. In terms of contact with MPs, I can confirm that HMRC will be happy to discuss the situation with them.
If the hon. Gentleman will forgive me, I will not, because of the time.
I want to respond to the specific points that hon. Members have rightly raised about their constituencies. On Shipley and Bradford, my hon. Friend the Financial Secretary has agreed to meet Bradford MPs, as they know. The chief executives of HMRC and of Bradford’s local authority are also due to meet to discuss the issue. We have heard about Chatham and Chelmsford. I should explain that they are both two-stage programmes with a transitional arrangement in place for three or four years at Maidstone and Southend respectively. The hon. Member for Bootle raised the question of not knowing exactly where in Liverpool the regional centre would be. This programme stretches over a number of years, and it is right that as an organisation goes into a commercial negotiation over premises, it does not identify the exact location it has in mind because, as was mentioned in the debate, that would put up the price that was asked.
I want to reassure the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) that HMRC is very conscious of the importance of the Welsh language service and intends there to be no denigration of service to Welsh speakers as a result of these changes. I want also to reassure colleagues from Northern Ireland that we expect the number of staff in Northern Ireland to go up at the end of this period, rather than down. HMRC absolutely recognises the unique issues in the Province.
The Scotland-specific proposals will see the opening of two regional centres, in Glasgow and Edinburgh. In addition, a specialist crime centre will be maintained in Gartcosh. Although discussions with individual employees are ongoing, HMRC’s presence in Scotland will remain consistent, at 12% of its total workforce as against only 8% of the UK’s population. To respond to the hon. Member for Dundee West (Chris Law), the 600 jobs at Sidlaw House will move to the Department for Work and Pensions, while we will do everything to find alternative options working one-to-one with those at Caledonian House who are outside reasonable travel times for the new regional centre.
On a point of order, Mr Deputy Speaker. I do not know whether you are aware that cinema distributors in this country have refused to carry an advertisement for the Lord’s prayer by the Church of England, despite the fact that it has been approved by the British Board of Film Classification and by the Equality and Human Rights Commission. What action do you think I might take to draw this to the attention of the Secretary of State for Culture, Media and Sport, who might do something about this fundamental attack on free speech?
That is not a point of order, but the good thing is that you have raised it on the Floor of the House, it is now on the record, and I am sure that, quite rightly, people will look at it closely. I hope that at some point people will come back to you on the point you raise.