18:59 - The House divided: - Ayes: 154 / Noes: 301 - Question accordingly negatived.
The Financial Secretary to the Treasury (Mr David Gauke)
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.
David Simpson
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.
Mr Gauke
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.
Mr Jim Cunningham (Coventry South) (Lab)
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?
Mr Gauke
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.
Sir Simon Burns (Chelmsford) (Con)
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?
Mr Gauke
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.
Philip Davies (Shipley) (Con)
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?
Mr Gauke
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.
Several hon. Members rose—
Ian Paisley (North Antrim) (DUP)
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?
Mr Gauke
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.
Several hon. Members rose—
Mr Gauke
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.
Neil Gray (Airdrie and Shotts) (SNP)
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?
Mr Gauke
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.
Several hon. Members rose—
Mr Gauke
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.
Mr Jim Cunningham
The Minister has been very generous in and good about giving way. He mentioned that 4,000 employees may be affected by 2027. Is he saying that he can redeploy all those employees?
Mr Gauke
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.
David Mowat (Warrington South) (Con)
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?
Mr Gauke
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.
Several hon. Members rose—
Rebecca Pow (Taunton Deane) (Con)
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?
Mr Gauke
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.
Kelly Tolhurst (Rochester and Strood) (Con)
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?
Mr Gauke
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.
Chris Stephens
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?
Mr Gauke
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.
Bob Stewart (Beckenham) (Con)
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.
Mr Gauke
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.
Mr Mak
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?
Mr Speaker
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.
Mr Gauke
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.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Will the Minister give way?
Mr Gauke
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.
The Exchequer Secretary to the Treasury (Damian Hinds)
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.
Damian Hinds
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.
Andy McDonald
While the Minister is on the subject, does he want to tell the House what assessment he has made in socio-economic terms of the damage that will be caused by those tax offices and workers withdrawing from those very communities?
Damian Hinds
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.
Damian Hinds
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.
Damian Hinds
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.
Philip Davies
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?
Damian Hinds
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.
Peter Dowd
What does the Exchequer Secretary have to say to my constituents who have been connected to the civil service for half a century? What does he have to say to the town that will be devastated when those 2,500 jobs move out?
Damian Hinds
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.
Damian Hinds
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.
Damian Hinds
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.
Damian Hinds
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.
Owen Thompson (Midlothian) (SNP)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.