HMRC Closures

Catherine McKinnell Excerpts

Tuesday 26th March 2013 Westminster Hall

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Benton. I commend the hon. Member for Isle of Wight (Mr Turner) on securing this afternoon’s extremely timely and important debate. His record of assiduously standing up for his constituents and their interests is well known to the House. The issue of HMRC closures is clearly of particular importance to the people living on the Isle of Wight, given its geographical isolation from the mainland. He set out clearly and carefully the potential impact of HMRC’s proposals on his constituents. I look forward to hearing the Minister’s reply and how he intends to ensure that such problems and issues are mitigated and addressed.

The debate is timely: we heard only two weeks ago about HMRC’s proposals to change the way in which it supports customers who need extra help. I use the word “customers”, because that is the language deployed by HMRC and, no doubt, the Minister will use it in his reply, but as the Public Accounts Committee has frequently articulated, those who come into contact with HMRC have little choice about whether they do so. Many of those people—an estimated 1.5 million—find dealing with HMRC difficult because they have a disability or a mental health condition; they have low literacy or numeracy skills; they do not speak or read English; they do not have the confidence or capacity to deal with what can be a very complex situation; or because of a combination of any or all of the above. Ensuring that such people have access to the best possible support and advice in their dealings with HMRC is, of course, something that we all wish for, and we on the Opposition side of the House have regularly advocated that.

[Mr Mark Williams]

I want to add something to the mix of problems that the hon. Lady identified. In my constituency, we have a problem with broadband: 20% of my constituency is not broadband-enabled. The assertion is made that a lot more of the transactions and discussions can take place over the internet, but that simply is not available for many of my constituents. The Government are doing some sterling work to change that, but a solution for my constituents is some way off.

[Catherine McKinnell]

I thank the hon. Gentleman for raising that issue, which is very important, not only for areas without access to good broadband that allowed online dealings with HMRC not to end in utter frustration —even when people have broadband, it may not be sufficiently fast—but for constituents who do not even have computers or have access to them. I will mention later a concern in my constituency, which is that many public services, such as libraries and community centres, are struggling, and some are set to close, but many provide the only access that some people have to a computer. Although we would love to live in a digital age, we are not there yet.

We heard from the hon. Member for Isle of Wight, in his excellent contribution, about the 10-week consultation that was launched on 14 March, and the proposal to close every one of the 281 inquiry centres that provide face-to-face advice for customers. The centres are apparently to be replaced by “more accessible”, “targeted” and “tailored” services for people who need extra help in engaging with HMRC, either all the time, or in response to a particular life event, such as a bereavement. It is proposed that the new service will include specialist expert help over the telephone by a new team, and face-to-face support delivered by a mobile team of advisers, who can meet customers at suitably convenient locations in the community, or in their home.

That issue is particularly pertinent to me, not only in my capacity as shadow Exchequer Secretary, responding to the debate, but because I represent the esteemed people of Newcastle upon Tyne North, and HMRC proposes to trial or pilot the new idea on them. From 3 June to 31 October, the pilot will run throughout my region of the north-east, and 13 inquiry centres will be closed in the process. For the record, those centres comprise Alnwick, Bishop Auckland, Hexham, Darlington, Durham, Middlesbrough, Morpeth, Newcastle, Stockton, Sunderland and—although I, and many proud Yorkshiremen and women, might quibble over the Minister’s geographical knowledge of the north-east—Bridlington, Scarborough and York. Apparently, depending on the outcome of the consultation and the pilot, HMRC states that it will look to introduce the new service across the UK in February 2014, resulting in the closure of the remaining inquiry centres between March and May next year—including the one in the Jobcentre Plus in Newport, on the Isle of Wight.

The proposal will clearly also have a direct impact on the 1,300 HMRC staff employed in inquiry centres across the country, although I understand the intention is that many of them will be redeployed either within HMRC or to other parts of the civil service, and that is to be welcomed. As I stated earlier, I fully support the notion of providing a better service to the most vulnerable people with whom HMRC comes into contact. I welcome the fact that HMRC has said that it is working with TaxAid, Tax Help for Older People, the Low Incomes Tax Reform Group, Citizens Advice, Gingerbread, the Child Poverty Action Group and Age UK as part of the consultation on what additional support may be required and how it might be delivered. However, I want to probe the Minister on exactly how he thinks that HMRC will be able to improve its performance in that area, given the context in which the Department is operating.





I have previously told the Minister—indeed, only last month in this Chamber—that serious concerns remain about the customer service provided by HMRC. The National Audit Office report on HMRC’s customer service performance, published in December, revealed genuinely troubling findings about the way in which HMRC treats some of its customers. To remind hon. Members, 20 million telephone calls went unanswered by HMRC last year, costing customers £33 million in call charges; that is in addition to the estimated £103 million cost of customers’ wasted time. As I have stated previously, that is particularly worrying for people on low incomes who cannot afford to sit waiting on the telephone, and for small businesses that could be making much better and more profitable use of their time, which is particularly important in the current economic climate.

The Public Accounts Committee report on HMRC customer service published earlier this month was equally scathing, describing the Department as having an “abysmal record” in this area. Those concerns have been echoed by eminent professional bodies, such as the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales, whose members’ surveys have found significant concerns regarding the customer service performance of HMRC, which often fails to meet its basic responsibilities.

I acknowledge that there appears to have been some recent improvement in HMRC’s handling of post, but I would be grateful if the Minister could clarify the current position on its call-handling performance. According to the answer to a parliamentary question I received from the Minister only last month, the percentage of calls not handled—in other words, unanswered—by HMRC had gone up from 25.6% last year to 28.6% in this financial year to date. Given that we are now only days away from the end of the financial year, will the Minister confirm whether that fall in performance has continued, and if it has, what specific measures he has put in place to ensure that it does not fall further?

That point is, of course, pertinent to this debate, not only because of the concerns raised by the hon. Member for Isle of Wight, but given the recent words of the Chair of the Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge):

“Just how the department is going to improve standards of customer service, given the prospect of its having fewer staff and receiving a higher volume of calls, is open to question. HMRC plans to cut the number of customer-facing staff by a third by 2015. At the same time, the stresses associated with introducing the Real Time Information System, Universal Credit and changes to child benefit are likely to drive up the number of phone calls to the department…Since our hearing it has also been announced that HMRC is to close all of its 281 enquiry centres which give face-to-face advice to customers. This will undoubtedly put even more pressure on phone lines.”

That is also relevant because HMRC’s consultation document appears to suggest that anyone who requires a face-to-face appointment with HMRC staff under the new system can obtain one only once they have spoken to at least two helpline advisers— and then a face-to-face appointment will be offered at the discretion of HMRC staff.

--- Later in debate ---

On resuming—

[Catherine McKinnell]

I would welcome a guarantee from the Minister today that HMRC will significantly increase its call handling and customer service performance —perhaps beyond the relatively low targets it sets for itself—before the new service is introduced.

Of course, the proposals that we are discussing today are simply out for consultation. Indeed, HMRC itself has stated:

“No final decision will be made until we have consulted on and piloted the new service, and fully assessed the findings of the consultation and the pilot.”

It has also said:

“We plan to close our Enquiry Centres as the new service is introduced in 2014. This is subject to our making a formal assessment of how the closures affect our customers, the local communities they serve and our staff—as well as to the outcome of a pilot of the new service in the North East of England.”

However, I question the extremely tight time scales and the nature of the process. HMRC’s consultation ends on 24 May, yet it proposes to introduce the pilot in my region, thereby closing the existing inquiry centres, on 3 June—five working days later. It would be a genuinely impressive improvement in HMRC’s response times if it were able to process and adequately respond to all the consultation submissions it receives in such a short period. What will happen to the inquiry centres in the north-east if the pilot does not turn out to be a success? Will they re-open? Indeed, what measures will HMRC use to determine whether the north-east trial delivers what is intended? We often hear that Government pilots are “doomed to succeed” and I very much suspect that that is the case in the present instance. Does the Minister share my concern that HMRC staff have apparently already been told that it is “highly likely” that all 281 centres will close before the outcomes of either the consultation or the pilot are even known?

I understand the rationale behind HMRC’s proposals, based as they are on the decline in the number of people using inquiry centres over recent years from more than 5 million in 2005-06 to around 2.5 million in 2011-12. HMRC also states that it has conducted detailed research, which

“confirms that inquiry centres no longer meet the needs of our customers”.

Will the Minister address the concerns of the PCS union that that research was flawed? Did those conducting research on behalf of HMRC really not give people the option of selecting “speaking to someone in person”, when asking whether customers would prefer to deal with the department “by phone, post or online”?

It is not only PCS that is raising concerns about the proposals. The director of tax at Berg Kaprow Lewis, David Whiscombe, has said:

“No doubt many taxpayers would be happy to deal with HMRC online or via call centres if either were reliably available. But there is a swathe of taxpayers who are uncomfortable with these methods including numbers of the elderly, less literate or less articulate sections of the population for whom face-to-face contact delivers the only sensible option.

For HMRC to disregard them is arrogant, insensitive and, dare I say it just plain stupid”.

Jane Moore, tax faculty technical manager at ICAEW, commented:

“I'm disappointed because I think a lot of people could still make use of the Enquiry Centres. For the last few years I don't think the Revenue has done enough to publicise them or provide a comprehensive service.”

Those are worrying concerns being expressed by experts in the field.

Finally, I would like to mention an important concern in addition to those that I have raised already, and those raised by the hon. Member for Isle of Wight. It was briefly addressed when the hon. Member for Ceredigion (Mr Williams) raised it. HMRC states that it will be able to provide its new tailored service to those customers who need most support in a number of venues, including local libraries and community centres. However, as I have said, hundreds of libraries, community centres and other local facilities are either closed or facing closure as a result of the cuts that the Government have dished out to local government funding.

Those cuts are being targeted at areas such as northern cities, and many of the London boroughs with the highest needs. In such places there are likely to be more of the type of people for whom HMRC states it wants to provide a better service. What discussions is the Minister having with his colleagues in the Department for Communities and Local Government about the impact of their funding decisions on the venues from which HMRC hopes to be able to provide its new service? I am sure we would all agree that there is little point in HMRC offering face-to-face advice in community facilities if those facilities no longer exist.

--- Later in debate ---

[Mr Gauke]

I am not in a position to answer that specific question. I am sure that my hon. Friend is closely informed of the job opportunities available on the Isle of Wight. I made a general point that HMRC will show considerable willingness to deal with staff in the best way possible. If one looks at the scale of the reduction in the number of people working for HMRC over a long period—since its formation in 2005—compulsory redundancy has been necessary on a very limited number of occasions. HMRC has a good record of ensuring that its staff are well looked after.

Concerns were raised that the closure of the inquiry centres marks the end of HMRC’s dedicated face-to-face advisory service. I can reassure hon. Members that that is simply not the case. A face-to-face service is about people, not bricks and mortar. What is important is that HMRC provides an accessible and flexible, face-to-face service that meets the needs of customers and can be tailored to the specific needs of particular locations, including the Isle of Wight. That is what HMRC proposes to do, only it will do it where it is most convenient for customers, whether that is in their local community, place of work or even, if they so wish, in their own homes. A modern face-to-face service is not about maintaining a patchwork network of buildings set up in the 1950s, when the needs and expectations of customers have changed. Inquiry centres are not universal; large parts of the UK are not even served by them.

The use of the centres has fallen sharply in recent years: visitor numbers have halved, from more than 5 million in 2005-06 to 2.5 million in 2011-12, and some inquiry centres are now open just one day a week, because local demand is so low. I shall address the Isle of Wight specifically. My hon. Friend quoted some numbers on the usage on the Isle of Wight. HMRC’s management information system shows that the Isle of Wight inquiry centre had 7,032 visitors in 2005-06, but since then the number has fallen: in the 2011 calendar year, it was 4,763; in the 2011-12 financial year, it was 3,622; in the 2012 calendar year, it was 3,298; and the projected number of visitors for the 2012-13 financial year is 2,886. There is a clear trend. The number is going down.

[Catherine McKinnell]

What does HMRC analyse as being the reason for the decline? Is it entirely because people contact it in a different way—over the internet, telephone and so on? Does the projected number take into consideration the significant changes pending for universal credit, the real-time information system, child care and so on?

[Mr Gauke]

As far as we can see, the driver for the fall in the number of people using inquiry centres is that people prefer to use other means of communication. There are always particular challenges within the tax system that might cause an increase in demand and phone calls. Steps are taken to reduce some of that demand from time to time.

In that context, it is worth turning to the research, which the hon. Lady touched on, that helped guide HMRC in its decision. It was undertaken by an independent agency, adhering to strict industry guidelines, and its findings confirm that face-to-face support works best for some HMRC customers who need extra help. It also says that any service for customers who need extra help must be as flexible and as accessible as possible, which is why HMRC is introducing specialist, expert over-the-phone help and working closely with the voluntary and community sector. A face-to-face service is an important part of the proposal, but it is worth underlining that the inquiries of the 2.5 million or so who visit HMRC centres are satisfied over the telephone. They use the inquiry centres to phone contact centres, which leads us to the important issue of ensuring that contact centres provide an adequate service.

I shall take this opportunity to respond to the hon. Lady’s questions. The number of call attempts handled for February this year was 91.8%, which is considerably higher than it has been at any time since HMRC’s formation. I remember that the number was 45% for 2010-11, and I think it was about 75% for the previous years, as it has been subsequently. HMRC’s ability to handle calls has therefore increased, which is welcome progress, and that, to be honest, is what we should expect from HMRC—progress on the standards.

To elaborate on the point I made a moment or so ago, HMRC’s analysis of inquiry centre use shows that 84% of the centres’ customers did not need a face-to-face meeting and were able to get the help they needed over the phone or online. The 400,000 customers who did need face-to-face advice had to travel to their nearest inquiry centre to make an appointment, and if there was no appointment free at that time, go back on another day to take up their appointment. The service is not particularly convenient even for those who do have a centre nearby.

HMRC’s research, which I referred to a moment ago, shows that up to 1.5 million customers need extra help with their tax and benefits affairs. Many just need help for a specific event in their lives—for example, when they approach retirement, deal with the death of a family member or declare new income for the first time—and others may have low literacy or numeracy skills, or difficulties coping with their affairs as a result of a mental health condition. Most of the 1.5 million people who need extra help do not currently use an inquiry centre. HMRC has researched the needs of those customers and that research has helped in the design of the new service.

The new service will provide specialist expert help over the phone for those who need it, and its advisers will take the time to sort out issues if they can. Customers will be able to phone from home and arrange a call-back if they cannot afford the call themselves, or they may use a free phone at a local Jobcentre Plus. Customers needing extra help will be quickly identified and put straight through to a trained adviser who has more time, as well as the skills, knowledge and empathy needed to handle the inquiry at a pace that suits the customer.

If the adviser cannot sort out issues over the phone, face-to-face support, delivered by a mobile adviser, will be arranged at a place and time convenient to the customer. It might be at a library or a local authority location close to the customer’s home, but I must reassure my hon. Friend that it will not involve the Isle of Wight ferry service. If someone needs a home visit, HMRC will arrange for a local home visitor to contact them and arrange a convenient appointment time between 8 am and 8 pm every working day. That is much more convenient than being constrained to a fixed location that is potentially difficult to access and often open for only one day a week. Extra help will also be delivered through voluntary and community sector organisations, such as Citizens Advice and TaxAid, with additional funding from HMRC.

The new service will be not only better but more cost- effective. Customers will save an estimated £12 million a year, through such things as reduced travel costs, and from April HMRC will convert its 0845 numbers to 03 numbers, making calling HMRC cheaper for all customers.

The current network of 281 inquiry centres is unsustainably expensive. The average cost of an appointment across the network has risen from £106 in 2009-10 to £152, and in some inquiry centres it is up to £500. By comparison, it costs an average of £3 per phone call and just 9p per online transaction. Members will appreciate that that expense is just not sustainable in the current economic climate. The new service will save HMRC up to £13 million a year.

HMRC will reinvest some of the savings from the closure of the inquiry centre network into the new face- to-face service and the voluntary and community sector support. To ensure that the phones are answered when people call, HMRC is investing £34 million in its contact centres. HMRC has also worked extremely hard to make big improvements to its customer service following the Public Accounts Committee report, which was touched upon by my hon. Friend the Member for Isle of Wight and the hon. Member for Newcastle upon Tyne North. As a result, it currently answers more than 90% of the call attempts it receives each week.

In designing the new service, HMRC has worked closely with a number of voluntary sector partners, including Citizens Advice, as well as tax charities such as TaxAid and Tax Help for Older People. On 14 March, HMRC launched a public consultation on how the new service would be implemented. The consultation focuses on the following: how a new service would be delivered in practice and whether refinements are needed for particular customer groups; the impact that closing inquiry centres would have on local communities, customers and diversity groups; the impact of the new service on the voluntary and community sector; and the support needed for customers to make the transition to other channels. The public consultation will enable staff also to feed in their views, and a summary of the responses will be published by the end of summer 2013.

A pilot of the new service in what I should perhaps describe as the greater north-east of England, will involve closing 13 inquiry centres and testing the new service between 3 June and 31 October 2013. That will help in gathering more information to ensure that the service is absolutely right for the customer, and a decision on whether to roll out the service nationwide will be made in December 2013. If the roll-out proceeds, the new service is expected to be launched between February and May 2014.

In conclusion, HMRC is making the changes in order better to meet the needs of the 1.5 million customers who need more help with their tax and benefits. HMRC is modernising its approach to break free from the outdated network of bricks and mortar and to provide a more flexible and accessible face-to-face service for people who really need it, including on the Isle of Wight. The proposals will target help at those who need it most, in a way that is better for them and more cost-effective for both them and the taxpayer. As a responsible employer, HMRC is taking all the right steps to minimise the impacts that the changes will have on its staff.