HM Revenue and Customs

John McDonnell Excerpts

Tuesday 5th February 2013 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

I am grateful for hon. Members’ attendance this morning at this debate about Her Majesty’s Revenue and Customs and its capacity and resources. Over the past decade or so, tax debates in Westminster Hall have usually been attended by the usual public administration anoraks—a club that I am a member of—or failed accountants who have been elected to the House of Commons, which is even worse. Not any more, however: the recession means that we all take an interest in public expenditure and look at every element of public income. A tax justice campaign is being waged as a result of the recession, and I pay tribute to tax justice campaigners John Christensen and Richard Murphy for their work over the years, as well as to UK Uncut, whose direct action campaign brought the issue to the attention of the public. It is concerned about the scandal of unpaid and uncollected tax. The debate reveals that our system does not work effectively.

There is another scandal associated with our taxation system: not just how much taxation is avoided or evaded, but how badly our tax collection and administration is managed overall—and, to be frank, how it has been mismanaged by politicians over the past few decades. At times, there has been almost catastrophic short-sightedness and incompetence. The genesis of the debate was a lobby by the Public and Commercial Services Union that happened in the past six months, and meetings with members. I chair the PCS parliamentary group, and the union represents 55,000 staff at Her Majesty’s Revenue and Customs. There have been many meetings with Members, and meetings in constituencies, to express the overwhelming sense of frustration, which has at times verged on anger that, as professionals, staff have been held back from fulfilling their role of ensuring that taxes are collected efficiently.

There is a particular sense of frustration because during the recession HMRC could, through tax collection, make a significant contribution to tackling the economic crisis and, indeed, the overall deficit. Staff feel that they are being held back professionally, and undermined by cuts: staffing cuts, office closures, deteriorating work conditions resulting in low morale, and the lack of appropriate professional and legislative tools to do the job. Time and again the view has been expressed that more and more policy changes load responsibilities on to them—more work for an overstretched and overburdened work force. The expression used by many of the staff is that they have been set up to fail—in some instances so that their jobs can be privatised. I want to explore the current situation in HMRC and consider the remedies that are needed. The Government need to stand back at this point, and consider staffing resources and the challenges that staff face.

What is the job? It dates back to the time of Chaucer, the earliest famous tax collector—a putative PCS shop steward. It is simply to collect taxes. The Institute of Chartered Accountants in England and Wales circulated an excellent brief before the debate, and summed it up. HMRC simply makes the tax system work: that is what it is meant to do, but the reality is that it struggles to do so. We know that from the evidence that is available to us. If the main role of HMRC is to collect the taxes, it is clear from the recent evidence that it has not the resources and legislative tools to do so. That is clear from the evidence of the tax gap—we have debated the tax gap at length in this Chamber and I appreciate that there are disputes about using it as an overall assessment of performance, and about the overall level of the tax gap itself, but we know that the range is anything from the £70 billion to £120 billion estimated by Tax Research UK, under Richard Murphy, and the HMRC’s and the Minister’s estimate of between £30 billion and £40 billion a year. In other words, even on the Government’s own assessment, half the current deficit is not being collected in taxes, because of tax avoidance and evasion.

The scale of tax avoidance and evasion has caused anger throughout our communities. It is not only the tax justice campaigns and the media that have been railing against them—so have the Government. In December the Chancellor said that people are “right to be angry” about companies not paying their fair share of the tax, and I fully agree with him. The Secretary of State for Business, Innovation and Skills said in November that it was “completely unacceptable” that companies could get away with what he described as gaming the system, to avoid tax, and referred to “appalling stories of abuse” within the tax system.

Last week, the Public Accounts Committee, which has been consistently complimented on its excellent role, under the chairmanship of my right hon. Friend the Member for Barking (Margaret Hodge), tore aside the veil that covered the operation, mainly in secret, of the major accountancy companies of devising, and ruthlessly implementing, large-scale—massive—avoidance schemes described by some as obscene. It is worth repeating the scale of what we have seen, in example after example: Starbucks paying only £8.5 million in corporation tax since it was launched here in 1998, despite £3 billion of sales; Google paying £6 million in tax last year on a turnover of £395 million; Apple paying £14.5 million in tax on £1 billion of sales. Numerous other examples have been highlighted by the PAC and others in the investigations of the past year.

[Mark Field (Cities of London and Westminster) (Con)]

The hon. Gentleman has listed a range of selective statistics, but he is well aware that tax is paid on profits, not turnover. Part and parcel of sales is VAT, so taxes other than corporation tax are involved. Does he think that a big danger in the debate is the intermingling of the sense of tax evasion, which is absolutely illegal, with tax avoidance? Not only is tax avoidance legal, but it is bizarre for politicians in government to rail about it, as they have it within their power to change the law to remove loopholes.

[John McDonnell]

That is an excellent point, which goes to the heart of the debate, because I agree with the Prime Minister that much of what is happening is morally repugnant, but the onus is on us to ensure that the system works effectively in relation to tax evasion and avoidance, and other matters, so that we serve the community that elected us well and so that HMRC does its basic job of collecting taxes. That means giving it sufficient staff and the right resources, so that they can do the job.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining the debate. Does he agree that a simpler form of tax collection is needed, in relation to administration? I understand that the UK is second to India for paperwork. Does he also agree that HMRC needs to make a radical change to its approach to tax collection in Northern Ireland? We have a major problem with fuel smuggling. More than £200 million should be going to the Exchequer and is not.

[John McDonnell]

That excellent point about simplification of our taxation system, and focusing on priorities, is made time and again, and I fully agree. We shall return to it, and perhaps new measures that the Government are presenting this year will help. However, there is no use in our introducing measures or making policy demands without the staffing resources and professionals to implement them.

Last week’s PAC interrogation of the big four accountancy firms revealed the scale of the resources that they plough into advising their clients—the big corporations, and the wealthy—on how to avoid tax. Private sector accountancy firms, including many of the banks—it is not just the big four, but some banks and other financial advisers—have a long history of devising ingenious tax avoidance schemes on what I believe the Minister once described, with reference to a scheme that Barclays Bank once operated, as an industrial scale. Schemes to enable companies to avoid tax have been operated on such a scale. It has been going on for at least the past two decades.

Although the big accountancy firms, along with banks and financial advisers, have been investing in staff recruitment and training on a scale that has produced this massive base of tax avoidance opportunities for companies, there have been massive staff cuts in HMRC and the department feels, therefore, that it has one hand tied behind its back when trying to confront the issue.

[Sir Peter Bottomley (Worthing West) (Con)]

The greater part of the hon. Gentleman’s speech is obviously about the collection service and HMRC’s resources, but as he has talked about some of the bigger companies and the accountancy firms, does he agree that it is right to consider whether each company should state on the front of its annual accounts its turnover, surplus, calculated profit, and tax paid other than on staff wages and national insurance? That would bring things out in the open, and directors might ask themselves, “Is this justifiable?” let alone lawful.

[John McDonnell]

That is an excellent proposal. The hon. Gentleman has hit the nail on the head regarding transparency and openness. It is not only the directors; the shareholders have a responsibility as well. The veil of secrecy over tax avoidance, and the advice given on it, undermines the opportunity for shareholders to hold directors and companies to account. Many shareholders are institutional ones, and they have a commitment to their companies behaving morally as well as legally.

It is not just avoidance though. On January 7, I read —in The Daily Telegraph, so it must be true:

“Tax fraud has reached its highest level since the onset of the financial crisis, as VAT evasion has exploded, costing Britain more than £3bn a year…The size of the so-called ‘VAT gap’ due to fraud, the difference between the amount of tax HMRC expects to receive and what it actually collects, is reckoned to have reached £3.3bn, or enough to fund a 1p reduction in the tax of every UK taxpayer.”

So it is not just evasion and avoidance; it is VAT fraud as well. It is no wonder there are problems. I again quote from The Daily Telegraph—I am going to have to give up reading it:

“taxman embroiled in 20,000 tribunal cases”.

According to the article, HMRC estimates that because of the lack of staff the backlog of cases will take “38 years to clear.” That is how bad it has got.

The Institute of Chartered Accountants briefing states simply that, in the view of independent accountants, the system is not working. Why not? One reason is the scale of the cuts. HMRC has been charged with finding a 25% reduction in expenditure. I accept that that was under the previous Government, but I was critical then also. Under this Government, it is expected to find another 15%. What does that mean? The Minister and I were involved in a discussion about this in the main Chamber a few weeks ago. That scale of reduction would be startling for any organisation. In 2005, HMRC employed 97,000; by 2015 it is planned that the total staff numbers will be 55,000—almost half the staff cut. Since this Government were elected, 7,000 HMRC jobs have gone. The objective in all this is to save what? Some £1 billion. That makes no economic sense when there is a tax gap—tax that remains uncollected—of, according to Government figures, £40 billion or, according to other people, potentially £120 billion.

To be frank, HMRC is woefully under-resourced to tackle the tax gap, and fraud and evasion, and the view of professionals in the field is that the staff cuts seriously hinder the department’s effectiveness. The Government have claimed that they have recently overseen a rise in staff levels, and that is true. There have been some additional staff, and I congratulate the Minister on that. Overall, however, staff numbers have dropped by 7,000 since the Government were elected.

[John Mann (Bassetlaw) (Lab)]

Does my hon. Friend accept that it is not just about the numbers of staff but about their morale? Has he read the repeated surveys, over a number of years, that demonstrate that HMRC staff are the most demoralised anywhere in Government?

[John McDonnell]

I will come on to that in due course. The expression that has been used by non-HMRC staff—observers—is that staff morale is “at rock bottom.” That was demonstrated by a recent internal Government survey, which reported that fewer than one in five staff thought that HMRC was well managed. That is how bad it has got.

I want to get back to the important issue of staff numbers. The Minister claimed in a previous debate that there had been an increase in the numbers of tax inspectors, with 100 new ones having been or being recruited, but that fails to appreciate the role of other front-line staff in dealing with tax inquiries and chasing up payments. Those essential back-room staff, who are not respected in the role they play, seem to be the ones who are vulnerable to losing their jobs. The Government have partially recognised some of the staff resource issues, providing £900 million to secure an extra £7 billion in tax revenue, and announcing a further £77 million in December to expand HMRC’s anti-avoidance and evasion activities, which they predict will secure another £2 billion. That small investment over the coming years will secure a total of £22 billion of additional taxation, demonstrating that investing in the staff and the professionals will have an economic success in tackling the tax collection problems.

Although limited, the additional funding is welcome, but it fails to appreciate the impact of previous job cuts and the threat to staff of another 10,000 jobs going between now and 2015. It is not just PCS members who urge the Government to think again about the cuts; accountants, including the Institute of Chartered Accountants, have expressed their concern in public. One of them described the cuts as happening “wildly”, with little planning, resulting in the loss of highly skilled professional staff.

I urge Members to read the Commons Library briefing note, which cites a number of independent accountants who have gone public with their worries about the impact of staffing cuts on HMRC, including Ken Frost, the accountant blogger, and Mike Warburton. The running theme is that the cuts are causing difficulties and leading to lost experience, and that staff are overwhelmed at a time when more demands are being placed upon them. According to the briefing by the Institute of Chartered Accountants, the recent child benefit changes are predicted to bring an extra 500,000 taxpayers into self-assessment, stretching the already overstretched system.

HMRC staff have expressed their concerns that under-resourcing is leading to mistakes. In an article in the Institute of Chartered Accountants journal, one staff member states:

“The pressure we’re under to hit targets and get post turned round leads to errors because we’re having to do it that fast…The emphasis is placed on getting rid of the stuff whether it’s right or wrong.”

It cannot be right that that is happening in our system. To deal with the work load with fewer staff, HMRC management has introduced a working system based on what have been described as manufacturing principles. The pacesetter system is a rigid, time-limited process with specific targets, which leaves little room for professional judgments, resulting in further errors and failures to resolve problems.

It is not just accountants and other professionals who are complaining about the impact of cuts on services; members of the public, individual taxpayers and small businesses are complaining about the often nightmare problems of accessing HMRC services. The closure of local offices has meant that virtually all contact for some taxpayers is now by telephone.

The National Audit Office reported in December that, in 2011-12, HMRC answered 74% of phone calls. The NAO acknowledges that, despite exceeding an interim target of 58%, the level of service is low. For example, 20 million calls, including calls where customers rang back because they did not get through the first time, were not answered. Customers who got through to HMRC in 2011-12 had to wait on average 282 seconds to speak to an adviser. Between April and September 2011, 6.5 million customers waited more than 10 minutes to have their call answered. Depending on the tariff they pay their phone company, customers are charged from when their call is connected, even if they are held in a queue. The NAO estimates that being in a queue cost customers £33 million in call charges; the estimated value of customers’ time while they were in a queue is £103 million, which cannot be right.

I am pleased that the Government have announced that, from the end of the summer, people who phone for advice will no longer use the costly 0845 number. They are also setting a new target from April for 80% of people to wait no longer than five minutes to speak to a real person, including recorded messages. I am grateful to the Government, because there have been improvements and HMRC has hired an extra 2,500 staff. Those staff, however, are employed only on temporary contracts, and the union and others feel that the Government need to allow HMRC to employ properly trained, permanent staff who will benefit the organisation, rather than the reactive, quick-fix recruitment policy that many people feel will not bring about sustained improvement in service delivery.

There is anxiety about over-reliance on phone services. The reason for high caller demand and over-reliance on caller services is because 200 local HMRC offices have closed over the past six years, and there are more to follow.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

My hon. Friend is right that there are more closures to follow. In my constituency, Weardale house is due to close, and in the neighbouring constituency of Sunderland Central, the closure of Shackleton and Gilbridge houses is under consultation. That is three offices and a number of staff in just one city, and in Sunderland unemployment is 7.5%. Does he agree that that is not only bad for HMRC services but devastating for the local area?

[John McDonnell]

I will use the example of Sunderland, because my hon. Friend has hit on a wider issue than just the impact on staff. HMRC plans to close Gilbridge and Shackleton houses, which are in the centre of Sunderland, and Weardale house next to the Washington Galleries. Some 300 staff from Sunderland and 200 staff from Washington could be moved to Waterside house, which is on an enterprise park outside the centre of town.

PCS asked staff at Gilbridge and Shackleton houses to keep track of their city centre expenditure for two weeks as a sample. They spent more than £22,000 across more than 100 businesses in that particular area. I have details of a survey that I would like to hand to the Minister after the debate, because it demonstrates the financial impact on a town centre of removing that number of staff. To a previous question on the union’s assessment that £600,000 would be lost each year, the Minister’s response was that that will be made up for when the buildings are let. Well, those buildings are not being let; the offices are being closed and not being replaced by firms that recruit and employ the same number of staff with the same spending power in a town centre.

[Mr George Mudie (Leeds East) (Lab)]

Does my hon. Friend agree that closing offices is a false and unfair economy, because it limits the opportunity for face-to-face discussion in settling complex tax matters, which now have to be decided by either calling a call centre, going online or writing?

[John McDonnell]

That is both frustrating for the person who is trying to identify what they should properly pay and counter-productive given the lost revenue to the HMRC.

[John Mann]

Has my hon. Friend considered the disproportionate impact of tax office closures on traditional market towns such as Retford? Where a significant number of staff are moved out and the offices are not re-let, the consequence is that other small businesses, newsagents, cafés and so on get into difficulties because part of their core lunch-time business disappears.

[John McDonnell]

It flies in the face of all the statements by this Government and previous Governments about moving staff out of London into the regions to boost regional economies. We now have a hokey-cokey, with staff being brought in as other staff are taken out. The result is not only instability but, through overall cuts in staff numbers, a depressing effect on local economies, as evidenced across the country where there have been closures.

The offices set to close by 2014-15 are: City Gate house in Leicester, where there are 124 staff; Pentland house, Livingston, with 220 staff; Crownhill court, Plymouth, with 76 staff; Wingfield house, Portsmouth, with 510 staff; Merrywalks house, Stroud, with 53 staff; Gilbridge and Shackleton houses, Sunderland, with 213 and 103 staff respectively; Truro with 49 staff; Weardale house, Washington, with 181 staff; Valiant house, Wembley, with 40 staff; and Lingate house, Wigan, with 69 staff. Those are enormous figures within a particular local economy. HMRC has also confirmed plans to shut nine offices in 2013-14 that were threatened with closure in September 2011, including one in Wick in northern Scotland that won a reprieve after a previous union campaign. Those offices are: Norfolk house, Bristol, with 213 staff; Norwich with 72 staff; St John’s house, Poole, with 67 staff; Somerset house, London, with 265 staff; Slough with 101 staff; Stockport with 415 staff; Twickenham with 51 staff; Quorum contact centre, Newcastle, with 647 staff; and Government buildings, Wick, with 17 staff.

More than 100 staff in Stockport have recently been offered voluntary redundancy as the office prepares to close, which means the loss of many staff with many years’ experience of administering the system and delivering customer services. We are losing staff with years of knowledge and experience. That is local knowledge of local tax collection policies and of where the local tax gap may be addressed.

I will not delay the Chamber too long, but I have an example of the contradictory nature of the whole affair, which is the closure of the Wick office. All 15 staff based at the office work in local compliance, or local tax collection. The total cost of commercial rent and staff comes to £494,475—I will offer the Minister my detailed brief afterwards if he so wishes. The total tax yield for the same period is £14 million. Each member of staff is responsible for bringing in close to £1 million in one tax year. The office, which we think has a realistic target of £20 million a year, is to close. To save £500,000, therefore, we lose £20 million as a result of the staff cuts. The Wick staff are all experienced and have used that experience gained over the years to be successful in their work. The loss of 15 jobs in Wick is equivalent, per head of population, to the loss of 17,000 jobs in London. There is a significant impact on the local economy, and that is repeated in area after area. The problem is that local office closures will mean new demands on call centres.

The transition to universal credit will bring added problems. The Government expect 80% of universal credit claimants to use online services, but it is likely that many of those people will not have internet access. In the absence of local offices, the next port of call will be the telephone service, on which the cost burden will fall ever more greatly as people are called on to fill out more detailed information in order to access benefits such as tax credits and employment and support allowance. That demonstrates the digital divide in our country and the divide between those who can access a local office and those who cannot. That is worrying.

My hon. Friend the Member for Bassetlaw (John Mann) mentioned staff morale. Any manager would say that an organisation that deals with the general public, provides a public service and works in such a complex field needs committed, dedicated, well-trained and professional staff, which HMRC has built up over the years, and which both the Inland Revenue and Customs and Excise had before HMRC was formed from their merger. I still believe that HMRC staff want to work in an organisation that values them for that.

I warn the Minister and others here that staff morale in the organisation, as the media have described, is at rock bottom. Recent evidence in documents leaked from the department has confirmed that, and I have mentioned the recent survey in which only 18%—fewer than one in five—of staff felt that the organisation was well managed. Any manager in such an organisation will tell you that there are problems if staff morale is that low.

Industrial action has taken place in HMRC in recent years; in some areas, for the first time in the history of tax collection and administration arrangements in this country. Staff morale is low because of the continuing threat to jobs and terms and conditions, and of privatisation. It is wearing people down and undermining morale. Insecurity is ever present. Staff have suffered a pay freeze, pension cuts, job cuts and office closures, and now, as a result of Cabinet Office procedures, the department is reviewing all terms and conditions, including hours of work, leave, parental and special leave, child care, job sharing, flexitime and part-time working, all of which affect HMRC staff, many of whom are women with caring responsibilities whose arrangements are being destabilised as a result of the review.

The handling of the HMRC nursery closures was brutal and incompetent. HMRC announced on 23 August 2012 that it was to close eight workplace nurseries by November. The nurseries were in Blackburn, Cardiff, East Kilbride, Leeds, Leicester, Nottingham, Salford and Wolverhampton. Parents were given just 12 weeks’ notice, and the decision was taken without any consultation with the trade unions. PCS led a campaign with the support of numerous Members, whom I thank, and one of my hon. Friends secured an Adjournment debate on the topic. HMRC agreed to keep the two biggest nurseries open until October 2015 and provide financial compensation for the carers and parents affected.

HMRC’s rationale for closing the nurseries was that it would be fairer to everyone to have the same level of child care provision, so it introduced a child care voucher scheme, taking no account of the financial or personal impact of the decision on staff. It raised serious concerns among staff about HMRC’s commitment to family-friendly policies. The organisation’s management have admitted that it was not their finest hour. It has certainly hit morale badly within the department.

The threat of privatisation is ongoing. All jobs are up for sale. What is most galling to HMRC staff and to us is that contracts are being handed out to corporations involved in large-scale tax avoidance. It is extraordinary. I raised the issue in the House some weeks ago, but I will run through the examples. Capgemini and Accenture, two IT companies with HMRC contracts, were both identified recently as having avoided paying tax. Capgemini, the lead contractor on the £8 billion Aspire contract, paid only £308,000—or less than 1%—in corporation tax last year on £38 million in profits. There is no justification for that happening in the first place, and certainly no justification for us feeding a tax avoider with Government contracts. Accenture, which has a £9.6 million contract with HMRC to supply technical support, managed to reduce its tax bill to 3.5%, paying only £2.8 million in tax on nearly £82 million in profits in Britain last year, yet we awarded it another contract.

To be fair, the last Government were to blame as well, and under them I raised the issue of the selling-off of the HMRC estate to Mapeley. HMRC now leases the buildings back. In 2010, NAO findings showed that if Mapeley, which is now part of the US offshore group Fortress Management Services, were based in Britain, the Treasury could expect to receive around £184 million in tax revenues. In fact, the company is expected to pay only £14 million on its lucrative HMRC contract. We have to learn some lessons. If nothing else, we must ensure that we do not provide tax avoiders with incentives by giving them Government contracts.

Many staff members and independent advisers have expressed the view that the general tax avoidance mechanisms that the Government are introducing will not give them the tools that they need to tackle tax avoidance. That needs a much wider debate than we have had so far in the House and elsewhere about the parameters, role and remit of the tax avoidance measures that the Government are introducing. As the hon. Member for Upper Bann (David Simpson) said, that also includes simplification of the system.

Cut after cut has been made. Staffing cuts are undermining professionalism, reducing the number of local offices and creating low morale among staff. It all points to a key department labouring under intense pressure without the resources to cope. HMRC has been on the edge of a crisis for some time. I believe that Ministers have begun to become aware of it in recent months, but there are public fears about tax justice, and the Ministers responsible for HMRC must recognise that the department needs to be re-resourced. Staffing levels must be brought back up. A new sense of purpose and a new direction must be injected into the department. Staff must be re-motivated, and the threats of privatisation must end, as well as the cutbacks to terms and conditions that are impeding staff in undertaking their professional work.

All staff want is the chance to make their contribution by collecting taxes, enforcing legislation and advising us how to create a system that is fair, efficient and effective. They are professionals, and they should be treated as such. I hope that as a result of this debate, the Government will open a wider dialogue, particularly through the trade unions, especially PCS, about how HMRC will go forward, working with the grain of its staff’s professionalism and with their good will to turn the department around so that it can implement a fair and effective tax collection system.

[Several hon. Members]

rose—

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

It is a pleasure to serve under your chairmanship, Mr Howarth, and to respond to the debate. I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing it. He has taken a close interest in HMRC funding over a number of years. Although I did not agree with everything he said, I commend him for his consistency and the non-partisan way in which he has pursued this issue over many years with a willingness to criticise Governments of both descriptions.

Time may be short, but before addressing the points raised today, it will be helpful to set out some context by discussing the history of the resources available to HMRC over recent years and the results that it has managed to achieve with those resources.

As hon. Members will know, HMRC was formed a little under eight years ago by the merger of Customs and Excise and the Inland Revenue. At that time, it was made up of around 100,000 staff. The previous Government sought efficiencies and, as a result, staff numbers fell by around 25,000 between 2005 and 2010. As part of that process, the number of staff engaged in compliance work also fell each year, and by 2010, about 10,000 staff had been lost in those important revenue-raising areas.

In 2010, as part of this Government’s first spending review, it was crucial that we recognised the dual role that HMRC would play in contributing to deficit reduction, through both cost reductions and, more significantly, collecting additional revenue by tackling tax avoidance and evasion—a point that several hon. Members raised this morning. Our priority was to ensure that HMRC delivered a service that would provide the best possible value for money to taxpayers. Consequently, we required HMRC to make 25% efficiencies to reduce its costs. We then agreed to reinvest a proportion of those efficiencies to tackle avoidance and evasion. The result was a net impact of overall savings over the spending review period of about 16% and a net reduction in overall staff numbers of about 10,000. I say “net” because in that figure is an actual increase of about 2,500 in the number of staff HMRC deployed on its compliance activities over the period.

[John McDonnell]

The Minister mentioned the impact. One of the points made by PCS, ARC and the ICAEW is that the impact assessments religiously fail properly to assess not only the implications for staff, but the cost to business and taxpayers overall. Will the Minister look at, and perhaps consult on, how such impact assessments are undertaken and how they can be improved?

[Mr Gauke]

I will indeed. I understand that the NAO will publish a report tomorrow on cost savings in HMRC and the way in which HMRC has proceeded. Time prevents me from running through in detail all the areas in which there have been savings, but it is worth pointing out that there have been significant savings of £74 million in the price paid for IT equipment and services, and savings in estate costs through vacating buildings. It is important that HMRC seeks savings, but it is also important that we raise the revenue. A number of hon. Members mentioned the tax gap.