HMRC Closures

Mark Williams Excerpts

Tuesday 26th March 2013 Westminster Hall

[Mr Andrew Turner (Isle of Wight) (Con)]

I thank the Exchequer Secretary to the Treasury for being present to respond to my debate.

Her Majesty’s Revenue and Customs recently changed its services: it is trying to become “leaner and more efficient”. Two weeks ago, we learned that HMRC has hatched a plan to close all 281 inquiry centres throughout the country. Last year, those offices gave advice to more than 2.5 million people, but HMRC is closing them because the number of visits has halved since 2006 and, it claims, closing them will save £13 million a year. Other Members would no doubt have their own tales to tell, were they here to speak, but I invite the Minister to consider the claims about usage and cost savings as they apply to the Isle of Wight, because he will find them completely spurious.

Let us look first at the number of people visiting the office. The old HMRC office was open from 9 o’clock to 5 o’clock, five days a week; now it is open only from 10 o’clock to 3.30 pm, three days a week. HMRC shares a building on the island, Broadlands house, with Jobcentre Plus, so people with tax problems can often see HMRC staff through the glass but are unable to speak to them, which is ludicrous. Furthermore, staff are discouraged from dealing with clients personally, face to face; instead, they must floor walk them to a free phone in the next office and get them to speak to someone in the contact centre on the mainland. People are not supposed simply to walk in and get advice: if a taxpayer turns up and insists on talking to a real live person, staff are supposed to make an appointment for another time, a rule which applies even if the office is open and staff are available. I am pleased that the staff on the Isle of Wight do their best to be helpful and tend to ignore that particular edict from on high. None the less, it is little wonder that figures show fewer personal calls being made to inquiry centres, because HMRC has done everything it can to make visiting in person difficult and inconvenient. I have estimates for the island for the past two years. In 2011-12, there were 4,925 visits to HMRC’s Newport office and the two outreach offices; in 2012-13, that figure dropped, but by fewer than 300, so that the total was 4,630. That is more than 4% of the island’s adult population visiting HMRC, which is hardly insignificant.

We should also consider the major changes to the tax and benefits system being introduced by my right hon. Friend the Secretary of State for Work and Pensions. Planned changes to child benefit are likely to lead to 1 million extra people filling in self-assessment forms. In addition, real-time information, as it is called, starts in two weeks. HMRC itself describes the changes as

“the biggest shakeup of the Pay As You Earn…system in nearly 70 years”.

It cannot be safely assumed that the number of people needing face-to-face help on the island or elsewhere will fall.

Let us look at the claimed savings on the Isle of Wight. The original HMRC office in Upper St James street was closed and 36 staff moved into the newly built Apex centre, although taxpayers needed to walk for 10 minutes from the bus stop or had to drive to reach it. The move was always planned to be temporary, and in May 2011 the HMRC office moved again, to Broadlands house. It was anticipated that some staff would relocate to other HMRC offices within what was described as reasonable daily travel distances, but that turned out to be a journey of an hour and a half each way. The majority of staff lost their jobs, and only nine people now work in the HMRC office on the island. Broadlands house is also home to the main Jobcentre Plus office, as I said, and to the valuation office. HMRC’s nine remaining staff moved into empty offices in the building, which seems an eminently sensible solution. The Government already pay for the upkeep of the entire building, so the costs are minimal, and it is hard to see what savings could be made on rent, rates or utility charges from closing the office. The only other opportunity for substantial savings, therefore, would be on staff.

In addition to being open to the public three days a week, the staff carry out what are called personal taxes operations, which is computerised work generated centrally. The work can be obtained by HMRC officers anywhere in the country and includes activities such as changes to tax codes, addresses and so on. The staff on the Isle of Wight are justifiably proud to be achieving 100% of their target. They should be proud: they are an efficient and experienced team—in fact, the nine staff have a combined total of 186 years’ experience, which may well be a record, but certainly represents a large investment by HMRC in training and development over the years. HMRC claims that it intends to deploy the staff affected by the proposed changes elsewhere, and such experienced officers must be a valuable asset, but there are no opportunities within reasonable daily travelling distance from the Isle of Wight. HMRC would therefore be willing to pay the costs for staff to relocate, not only paying the costs of removals, legal fees, stamp duty and so on for a new house, but perhaps even extending to cover the difference in house prices if staff move to a more expensive part of the country. HMRC could therefore incur significant costs for Isle of Wight staff to move elsewhere to undertake exactly the same work that they are doing now. The alleged £13 million savings appear to take into account neither that nor the costs of redundancy packages for staff who cannot be redeployed to another job or do not wish to move.

As part of the plans, HMRC is going to invest in a shiny new telephone system costing £34 million—to save £13 million a year. Looking at HMRC’s record, I would not put my trust in that working out too well. HMRC spends money, but that does not necessarily bring success. Despite HMRC spending £900 million on customer service, the Public Accounts Committee found it had “an abysmal record”. Last year, HMRC allowed 20 million telephone calls to go unanswered—a quarter of all the people who tried to call it. Even its new targets for call answering are described by our colleagues on the PAC as “woefully inadequate and unambitious”. For callers who do get through, there can be other problems.

I want to raise an issue brought to my attention by Jonathan Isaby, of that excellent organisation the Taxpayers Alliance. He received an e-mail from a customer adviser working in an HMRC call service. Apparently, advisers do not have targets based on how long a telephone call takes; instead, the focus is on what they call “wrap-up time”, which is the time after a call in which necessary administration is carried out, such as tax coding, sending e-mails, making referrals and updating customer records. Customer advisers are targeted to keep their wrap-up time to an absolute minimum. They do that by putting people on hold and keeping them on the phone unnecessarily, which increases the cost to the taxpayer and generates income from the telephone call for HMRC. That cannot be right and I urge the Minister to look carefully into that allegation. I know that Mr Isaby will do all he can to assist in getting to the bottom of it.

For those who still need face-to-face advice after the closures, the plan is to replace the current system with a mobile team. They will talk to taxpayers using community centres or local libraries, or, if called for, by making a home visit; but home visits by experts are expensive and inefficient. We do not usually call a lawyer or an accountant to visit us at home.

[Mr Mark Williams (Ceredigion) (LD)]

I am delighted that my hon. Friend has secured this debate. He makes an important point about efficiency savings and HMRC’s proposals. Rurality is a huge issue in itself. Mobile units going round to support small business people and farmers in my community across mid-west Wales would be a huge cost. One wonders how much that has been factored into the equation.

[Mr Turner]

I am not able to say how much it has been factored in, but I can say that doing this over two weeks once a year, which is what I do in the summer when I visit people locally, takes a lot of time. I can only judge that the same business will be included.

It is clear that HMRC does not intend home visits to be the norm. That is a most important point. I feel certain that only a very few people who currently use the face-to-face system will be offered a home visit. It is hard to see the financial sense of somebody coming across from the mainland to visit a small business man or an elderly pensioner on the island, but island staff have been told categorically that the mobile team covering the island will be based on the mainland and that they cannot be part of that team.

What is the poor taxpayer to do if he cannot work out the answer to his question online, cannot get through on the telephone and cannot persuade the chap from the mainland to visit him at home? He could go along to meet an adviser in a community centre or library, which is exactly what happens now on the Isle of Wight. Local staff have introduced an outreach service in Ryde and Freshwater on the days that the Newport office is closed. So what this decision means is that islanders will not be able to visit a tax office to talk to local advisers, but HMRC staff from the mainland will travel over at huge expense to provide a service that is already being provided by qualified, experienced people, and those people will have been paid to move away or made redundant. I understand the mobile teams may even hold sessions in tax offices. They could use the empty office in Broadlands house, which would no longer be open to the pesky public. You could not make it up, Mr Benton. It is the Isle of Wight version of “Yes Minister”. I can picture Sir Humphrey’s self-satisfied smile now—he will be in his element.

The Minister must be aware that a face-to-face session can achieve things that cannot be achieved over the phone. An experienced adviser can quickly spot that a figure has been put in the wrong box, and a taxpayer who does not understand what information should go where can show the relevant paperwork to somebody who understands it. That simply does not happen online or over the phone, and vulnerable groups may find it particularly difficult to engage by those means. Most people deal with HMRC not because they want to, but because they have to. Those 2.5 million people did not go to their tax office because they wanted a jolly day out. If they felt that they could have dealt with the issue online or by telephone, presumably the vast majority would have done so.

HMRC is running a pilot in the north to see how the new telephone advice service will work. It follows a previous trial undertaken last year when taxpayers were telephoned to try to sort out queries. I understand that of 1,354 calls made, only 259—less than 20%—resulted in the query being sorted out over the phone; the other 80% of cases still needed a face-to-face appointment. Yet HMRC still intends to close all 281 inquiry centres next year, come what may, and issue telephone advice from Bradford and Peterlee. I wonder why considerations of job shortages never seem to apply to places such as the Isle of Wight.

All of us in this House and the other place understand the need to make savings, but our tax system is fiendishly complicated. I know that the Government are trying to sort that out, but in the meantime we must make sure that those who need advice can get it. We must make sure that the claimed savings are not based on flawed research or shoddy decision making. Only yesterday, the Home Affairs Select Committee highlighted the “catastrophic leadership failure” of Lin Homer, the current chief executive of HMRC, when she ran the UK Border Agency. Previously, as chief executive of Birmingham city council, she was criticised by an election judge for having

“thrown the rule book out of the window”

during the 2004 postal vote fraud. Such a record hardly fills us with confidence. As for the Isle of Wight, it is obvious that closing the only accessible tax office will not benefit my constituents, or achieve the cost savings that HMRC is claiming for the closure.

I suspect that we are not unique. If the issues facing the Isle of Wight are not exceptional, I hope that the Minister, who is an eminently sensible gentleman, will intervene. He needs to make sure that HMRC looks again at this decision. On the other hand, HMRC could argue that the circumstances I have outlined this afternoon are unique: the island’s physical separation from the mainland makes us different. If so, HMRC must look again at the decision to close the office on the Isle of Wight and come up with a unique plan. An appropriate decision must be made, and it must be made soon, before HMRC pays to get rid of further staff or pays for them to move to the mainland, and, even more significant, before islanders lose access to the expert advice they need.

[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.