[Mr. Martin Caton in the Chair] — HMRC (Office Closures)

– in Westminster Hall at 12:00 am on 11th March 2009.

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Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Ian Austin.)

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth 9:30 am, 11th March 2009

As you can see, Mr. Caton, I brought my fans along as well—[Interruption.] Unfortunately, I cannot control them, as I am sure the record will show.

I am pleased to have secured this debate, but it is unfortunate that we have to discuss the possibility of up to 200 offices of Her Majesty's Revenue and Customs throughout the UK closing. Many Members have turned up today, but I know that many others would have loved to be here to join the debate and make their arguments on why it is wrong of HMRC to close many of its offices.

The possibility of up to 200 offices closing was announced two or three years ago. Some have closed already and more closures were announced in December. To give an idea of how many offices are to close: the eastern region would lose 18, the south-west 19, Yorkshire and Humber 9, Northern Ireland 5, Scotland 20, Wales 11 and the north-west 11. The spread of closures will have a huge impact on all parts of the United Kingdom.

I am sure that other hon. Members will relate stories from their own constituencies, so I shall concentrate mainly on the proposal to close Havenbridge house in my constituency. As a result, not only will people suffer poorer service, but staff in Great Yarmouth will be faced with the prospect of losing their jobs, which many of them have been doing for more than 20 years. The situation in many constituencies throughout the UK that are facing similar closure proposals will be identical.

Against that background is the fact that we in Great Yarmouth have already suffered from public sector job moves. In the past two years, we have lost the criminal justice unit—approximately 50 jobs moved to Norwich—and the Department for Work and Pensions has streamlined its Jobcentre Plus services, resulting in the closure of the office in Yarmouth house, Yarmouth way.

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Photo of Ian Gibson Ian Gibson Labour, Norwich North

My hon. Friend and I are both in a good mood this morning because Norwich City managed to get three points last night and may yet escape relegation. Despite the bad news, there is some good news as well.

If jobs were to move from Great Yarmouth, which is a centre that desperately needs support because of deprivation, would they go to Norwich? The last thing anyone who represents constituents and working people in Norwich would want is a competitive environment in which jobs are taken from one place and put in another. Jobs are needed in both places.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

I absolutely agree with my hon. Friend on job moves, which will affect the whole of Norfolk; for example, the office in Dereham is also up for closure. I believe that we would all say exactly the same thing: we do not want jobs to be taken from other areas. I shall discuss the deprivation indices in my constituency, but first I want to develop my argument a bit further.

As I said, Great Yarmouth has already lost many offices and jobs to other areas. The last closure, just recently, was of Norfolk mental health care trust's adult unit in Northgate hospital, which was moved to Carlton Court hospital in Lowestoft. There has been a migration of jobs from my constituency to other areas—not a million miles away, but problems are created for the staff and, in the case of Norfolk mental health care trust, for patients and their families.

The debate about the HMRC closures is not new. People in the local branch of the Public and Commercial Services Union have been writing to ask for my support ever since the announcement in 2004 of the consultation. As well as asking questions, I had a debate on the subject in May 2007 to which the present Minister for Local Government, who was then the Minister responsible, responded. I shall quote from that debate later. I have had meetings with three Ministers with responsibility for the matter over that time. The last was with my right hon. Friend the Minister who will respond today. He has been given a poisoned chalice, as it will be on his watch that many people will see the demise of their livelihood.

During the consultation, there were written agreements about jobs. I quote from the response that I got from the Minister for Local Government on 2 May 2007. He stated:

"As part of the staff support process, managers will meet their staff to discuss whether the moves that result from the decisions are reasonable in the light of their circumstances and, if not, HMRC will provide work for them in a location that is within a reasonable daily travel distance or it will consider other arrangements such as alternative hours or home working. Staff will not be made redundant as a result of the announcements; that is entirely in line with the current no-redundancy agreement with the trade unions."—[Hansard, 2 May 2007; Vol. 459, c. 477WH.]

On the face of it, there appears to be a guarantee that employees and unions alike would find acceptable; in practice, however, that is not the case. For example, what is a reasonable daily travel distance? In negotiations last year, the PCS and HMRC concluded an agreement on staffing, working conditions and job security. The process was designed to establish, on an individual basis, the reasonableness of expecting members of staff to move to another office. A journey time of one hour each way—to and from work—was adopted as the limit beyond which it was not reasonable to expect any individual to travel. HMRC accepted that although reasonable daily travel should not exceed one hour each way, individual personal circumstances—for example, disability and caring responsibilities—could mean that less than one hour each way might legitimately be beyond a reasonable daily travel limit.

To achieve consistency and fairness, the process called for every member of staff situated in an office whose closure was proposed to be interviewed by their manager, on a one-to-one basis, to provide an indication of whether they were within or outside the reasonable daily travel limit. The preliminary indication from the one-to-one interview was then to be quality assured by a moderating panel of more senior managers, who would decide on the issue of reasonable daily travel and notify each individual of their decision. Those deemed to be within the reasonable daily travel limit would be instructed to move to another office. However, experience has shown that, far from providing an assurance of fairness, the moderation procedure has consistently delivered perverse outcomes. I shall give examples.

One part-time single mother has two children, both of early school age. She is an administration officer—the second lowest grade—and works during term time only for 20 hours per week. Despite having a planned journey each way of between one and one quarter hours by car or two hours by bus and train, and fixed working times due to child care commitments, that member of staff was told that she is within reasonable daily travel of Norwich. Although part-time workers do not have their travel time calculated pro rata, like their pay and holiday entitlement, they are expected to undertake the same length of journey as their full-time colleagues, in effect making a disproportionately longer day. In that person's case, the proposed travel time is four times longer than at present and would make up one third of her working week, albeit one third that is not paid.

The present child care arrangements further complicate the situation. No child care is available in the village where my constituent lives. To maintain her working pattern, her two girls would have to attend pre-school and after-school child care in the nearest town. That would mean that the girls would have to travel to and from the child care facilities by taxi. The member of staff has estimated that that would cost up to £31 a day, or £124 a week—just under £500 a month out of a take-home wage of £756. The only other option would be to reduce her working hours so that she could continue to take her children to and from school herself. That option, however, would result in her having to work nine hours less a week and suffer a 24 per cent. reduction in her take-home pay. I would call that constructive dismissal.

Another member of staff has long-term care responsibilities for a disabled parent who is housebound and who receives no support from social services. The individual has a back injury and therefore cannot drive very far. Despite the fact that public transport will take 85 minutes each way and obviously have a particularly detrimental effect on the individual's ability to carry out their caring responsibilities, HMRC has not deemed them to be outside the reasonable travel limit.

Another individual who lives in Great Yarmouth transferred to Havenbridge house from Norwich because of elder care responsibilities. Even by HMRC's questionable method of calculating journey times, the travelling time to the new location exceeds one hour each way, but it is still deemed to be reasonable daily travel. HMRC's moderating panel ignored the individual's changed circumstances and simply decided that because they had once done the journey, it was reasonable to expect them to do it again.

Although HMRC is prepared to make a contribution for a period to an individual's additional travel costs once they are compulsorily transferred, the daily travel allowance is regarded as income and taxable. Other colleagues will lose tax credits because of the daily travel allowance, so they will be financially disadvantaged.

Another example is that of a 62-year-old male part-time admin assistant. He did a financial breakdown of the effects of having to relocate to Nelson house in Norwich. His monthly wage of £852 will increase due to the daily travel assistance of £90 a month—the amount is higher, but these figures refer to the actual increase in net pay after the employee has paid tax and national insurance on the gross sum. The increase in total earnings, however, means that the individual loses £75 a month in tax credits, because the daily travel allowance counts toward total income, so it reduces his tax credit entitlement. He will incur further financial detriment, as the increase in gross income will reduce his housing and council tax benefits by £29 a month. This constituent will be £104 worse off every month owing to the relocation of the office to Norwich—and that is before he actually travels.

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Mr Wright you are quite right to raise this issue, more and more we see the heartbeat being restricted in Great Yarmouth and moving jobs 22 miles up the road only goes to strengthen the fact our town is loosing its will.

With the major devolopments we currently see in our town investment should be on the agenda not closure, yet again we see our hard working MP fighting our corner.

Submitted by Carl Harding

Photo of Gwyn Prosser Gwyn Prosser Labour, Dover

My hon. Friend carefully paints a very accurate picture of the difficulties that PCS workers and others face during the programme. Is it not true, however, that even before the formal proposals are introduced, offices such as Centurion house in Dover, from where business streams are being transferred to other areas, face closure by default, and that its employees face, as my hon. Friend says, constructive dismissal?

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

Yes, absolutely. As I said earlier, everything that is happening to us in Great Yarmouth is replicated throughout the country. I shall prove that point when I develop my argument about the issues that were not taken into account when assurances were given.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

The hon. Gentleman makes an excellent case, and we can all make strong cases for not closing tax offices in our constituencies. Penzance, in my constituency, sits at the poorest end of the poorest region in the UK, so cutting jobs at the present time is not especially wise. The specific problem, however, is the bizarre way in which HMRC has treated its main asset: its human resource. The people in the Penzance office's compliance team, for example, provide the service with the type of stability that will not be replicated in the new centres, where job turnover will be much more rapid. That stability among HMRC's human resource is its greatest asset, and it is going to lose it.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

Absolutely. The hon. Gentleman has hit the nail on the head in terms of experience, because, in my constituency, the average number of years that people have worked in the department exceeds 20. I do not know of any other industry or profession with such consistency, and over those 20 years, people have built up their professionalism, contacts and local knowledge. However, if we put in their way obstacles such as travel or care responsibilities, which do not allow them to strike a work-life balance, we will lose that professionalism.

Photo of David Taylor David Taylor Labour, North West Leicestershire

My hon. Friend mentions local knowledge, and it is particularly important in tackling tax evasion, because local knowledge is a major factor in the success of compliance. Today, and every day in this country, a minimum of £100 million in income tax payments is evaded, but compliance officers typically obtain an extra £600,000 to £700,000 tax each year through their work. If we distribute those people to the winds, to areas that they do not know, we will seriously weaken that valuable compliance role throughout the UK.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

That is a very valid point about compliance offices. The proposal creates other issues, problems and, indeed, questions about what will happen within the compliance units when they are moved away from their localities, where they know local businesses and people and can keep their finger on the pulse. Bridging the gap created by the huge amount of businesses and business people who may evade tax is, indeed, an issue. Another perverse point is that, Mapeley, the managing agents of Havenbridge house, is based in the tax haven of Guernsey.

Photo of David Taylor David Taylor Labour, North West Leicestershire

And whether or not the tax offices are left open, we still have to pay rent.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

Absolutely.

I really wanted to give those examples, because we can multiply them hundreds of times over, and individuals find themselves in such situations throughout the country.

Photo of Alan Reid Alan Reid Shadow Minister (Northern Ireland), Shadow Minister (Scotland)

The hon. Gentleman makes a very powerful case on behalf of his constituents. Does he agree that the proposal, as well as having a devastating effect on current staff, has a knock-on effect in our areas, where jobs will be lost for ever? That will affect future generations. In my constituency, tax offices in Rothesay, Oban and Dunoon provide employment in remote areas where alternative employment is often difficult to find. The losses will have a devastating effect on those communities for generations to come.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

Absolutely. I could not have written the script much better if I had asked hon. Members to intervene. The hon. Gentleman raises another issue that must be looked at. I expressed my constituents' concerns about these job moves, because they weaken the base for young people to come through and take up jobs in what they consider to be good, long-term professions in the civil service or public sector. They will not have that opportunity, and, once the skills are gone, they are gone for ever. Great Yarmouth thrived on the herring industry for centuries, then on oil and gas, and now we are into renewables. We were able to adapt those skills, but, in the case under discussion, it will be almost impossible. We will lose people with 25 to 35 years' experience. In the Public Gallery, there is one gentleman with 39 years' experience. He is coming up to retirement, so does he really want to move to Norwich? I suggest not. We will lose that experience, but we will also lose—the other side of the coin—the opportunities for young people to move from education into a profession, and, in an area such as Great Yarmouth, that will have a devastating effect.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I congratulate my hon. Friend on the campaign that he has waged in Great Yarmouth. I particularly enjoyed the PCS stick of rock at Yarmouth market; it was an effective tool. The anecdotal evidence that we have from all our experiences is that the job cuts and their impact fall disproportionately on women, largely because of carers' issues and the amount of women who work for HMRC. Interestingly, there is a contradiction, because the Government are going to introduce their Equality Bill in May, in which we will focus on how we protect people, particularly women, on an equal opportunities basis; yet, here we are introducing a policy that will put large numbers of women at a financial detriment and, often, out of employment.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

Again, that is an extremely valid response to an issue that affects Great Yarmouth, as well as other areas. Many of the jobs are part time, and people took them because they were flexible and allowed them to strike a work-life balance. I commend the Government's moves on equality to give women the opportunity to go back to work, but here we have the perverse opposite. The profession contains a large proportion of women, and I have anecdotal evidence of single mothers who will not be able to continue with their work but may be penalised by further legislation for not actually going to work. We are not giving them many opportunities, and, in area such as Great Yarmouth, that will have a profound effect on the economy.

During the 2007 debate, the then Minister said that management would meet staff and discuss whether the proposed moved was

"reasonable in the light of their circumstances". —[Hansard, 2 May 2007; Vol. 459, c. 477WH.]

I do not believe that that has happened, or that it was considered important. From my discussions and the letters that I have received, there is no doubt that many staff will not be able to commute to their new place of work.

When I met the then chief executive, Paul Gray, at the insistence of the then Minister, Mr. Gray confirmed that those issues would be taken into account when considering the possibility of office closures. I left his office with a degree of comfort and thought that we had won the argument, because I knew the cases, arguments, difficulties and unemployment levels in my constituency. Back in 1989 we were at 20 per cent. unemployment. We constantly have the highest unemployment level in the eastern region and there are severe deprivation factors. Fortunately, during the last 10 or 12 years significant sums of Government money have been pumped into the regeneration of our new harbour and the integration programme, for example, and dozens of other projects, which have created a new impetus in the town to give us encouragement that we are combating unemployment there, even in the dire circumstances of the recession. I do not want another arm of the Government creating other difficulties in the difficult circumstances of the recession.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

The problem is that there are low-level businesses, such as the ones that the hon. Gentleman and other hon. Members are speaking about—like the one in my constituency on the Isle of Wight—and then there is something up at the top. There is a difference between hon. Members from all parties and what is being said at the top. Those differences need to be brought together gradually and the people who organise things should not allow the opportunity to do so to run away.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

I can develop an argument about the procedure that was missing from the consultation. During the post office closures, for instance, criteria were laid down saying that a post office in an area with deprivation could not even be considered for closure unless there was another one within a mile and, if that was so, it was taken out of the equation all together. However, no account has been taken of different socioeconomic circumstances in the areas I am talking about. If the Department says that those have been taken into account, it has been given the wrong information or it has had the wool pulled over its eyes by the officers who have taken the process forward. Other hon. Members' constituencies have suffered in the same way and are losing jobs.

Photo of James Duddridge James Duddridge Opposition Whip (Commons)

I congratulate the hon. Gentleman on securing this debate. He paints a bleak picture, but I fear that it may be even worse, because in Great Yarmouth, like Southend, jobs are moving away from constituencies with serious deprivation and unemployment levels that are higher than regional and national levels. The Government, through the Lyons review, are saying no to relocating other Government offices within those areas, but at the same time the Department for Communities and Local Government is pumping in regeneration money. That is incoherent and inconsistent and it is bad for the hon. Gentleman's constituents and mine.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

That is a point, but as I just mentioned the millions of pounds that have been put into my constituency have created further employment opportunities. I find it perverse that, as the hon. Gentleman rightly says, we are supporting regeneration in our communities—mainly seaside ones, by and large—and a huge amount of investment is going in, yet because of the peripherality and transport links the Department seems to say that it is more convenient to move away into city centres, forgetting the difficulties that it will face. I suppose I am thankful that there are no forced redundancies and job losses in this area, although there are thousands of job losses across the civil service. Obviously, there is a degree of concern about that.

As I said earlier, the proposal that I am talking about is constructive dismissal in a different format. If I was a trade union official in a factory and was faced with this argument and told, "We are moving, this is fair," I would say, "It is constructive dismissal." We are not making people redundant and I applaud the Government for not enforcing redundancies, but they are forcing people in these circumstances into deciding that they cannot continue in their employment for whatever reason.

After my meeting with Paul Grey he gave me the assurances that I mentioned. But recently the new chief executive wrote to PCS on a question about impact assessments, saying,

"Impact assessments were carried out on all offices proposed for closure, including Havenbridge House...all impact assessments in the same criteria to assess socio-economic impact."

It is clear that that comment on the socioeconomic impact did not feature at all in the decision-making process, otherwise there would be clear indications of the unemployment levels that we have in Great Yarmouth, which are the highest in the eastern region, albeit much lower than in the past two decades.

The tragedy is that answers and solutions that the Department could have used to make significant savings across the board have not been taken into account. The PCS Norwich taxes branch issued a document called "Change we can believe in". What a title! It is a change that I could believe in. It advances clearly and concisely in dozens of pages the argument about how the Department could save millions of pounds in respect of office space, among other things. The PCS was disappointed that it did not even get a response saying, "Sorry, we disagree with your argument, which is wrong because of A, B, C and D." When I challenged the Department, saying that office space in Great Yarmouth is substantially lower in cost than that in Norwich, I was told that such information is commercially confidential. That is a constant argument. We can never get to the bottom of what the difference in cost is. So how can we come to a conclusion about the savings that the Department will make?

There is another disturbing point. I have kept details of nearly every single letter and debate and of arguments advanced by many hon. Members in questions. Every time the answer comes back:

"HMRC recognises that there will be short-term costs, including staff relocation costs, associated with the closure of Haverfordwest"— this is in reply to a question asked by Mr. Crabb

"reliable figures will only be established once solutions have been found for all staff and the building has been vacated."—[Hansard, 15 January 2009; Vol. 486, c. 909W.]

So it does not know what the saving will be, and so we go on. How can an alternative be prepared when the savings are not known? It is like saying, "We know that there will be savings, but we don't know how much." Yet there has been a clear indication of where the savings would come from in respect of the three offices at Dereham, Great Yarmouth and Norwich. To my knowledge and from the information that I have received nobody has said, "Those figures are wrong." I can only assume that the savings, which are in excess of a third of a million pounds a year, and running on, must be true or even on the low side, and that is not taking into account the extra costs for travel. I understand that there is no figure in HMRC's budgets for redundancy payments. So where somebody cannot take their job up and we make them redundant how do we pay them? Is there a costing for that? I do not believe that there is any evidence that there has been a true reflection of costs and savings across the range.

Photo of Gwyn Prosser Gwyn Prosser Labour, Dover

On savings, my hon. Friend will be aware that the location of some offices is dictated by their geography and they cannot relocate, but even in those cases there are moves being made to privatise certain elements. For instance, in Priory court in Dover, which is a highly sensitive high-security centre, the Department wants to get rid of the highly regarded security systems and put in private companies. Is my hon. Friend aware, and does he agree, that not only will that undermine the security of such places, but there is no proved saving at the end of a difficult process? Does he not think that the Department should think again about these matters?

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

Absolutely. Using the argument about the recession and what my hon. Friend has said, the latest closure programme covering all the offices that I have mentioned should be ceased forthwith and the Department should have another rethink. Let us get the answers to this problem and find out what the savings will be, compared with the alternative advanced by the unions. The union in this case is open to negotiations and clearly accepts that we need to modernise and save the taxpayer's money. I think everyone would agree, and I cannot understand why we are going into the matter blindfolded, not knowing what the savings will be. When questions are asked about differences in rent, one is told that the information is commercially sensitive, and no answer is forthcoming. Unless someone gives me the figures, I say clearly and categorically, without the evidence before me, that Yarmouth office space is far cheaper than Norwich office space.

I had a meeting with the owner of the building. HMRC rents five floors, but for the past two years only three floors have been used. The rent could have been negotiated down—considerable sums are involved—because only 60 per cent. of the floor space was being used and 40 per cent. was being wasted. I know that there are contractual obligations and so on, but I also know that the owner wants to negotiate with Mapeley because they could put someone else into the accommodation. There are issues, but the evidence in the report has been put into the consultation process, to which there has been no response, and there is no dispute about the figures and so on, so will my right hon. Friend reconsider the whole programme of closures, not just at Havenbridge house, but throughout the country?

There are deficits in the consultation process, and I am sure that savings will be made, but at what cost? I do not want that cost to force some of my constituents, who may be on the lowest pay and have severe difficulties with their life-work balance, to have no option but to leave the profession that they have worked in for 25 years because they cannot travel to Norwich. I urge my right hon. Friend to reconsider the issue seriously for that reason, and because this is a difficult time with the recession. I am not saying that there is ever a right time, but now is not the time for uncertainty.

Photo of James Duddridge James Duddridge Opposition Whip (Commons) 10:02 am, 11th March 2009

I will keep my comments brief, because many hon. Members feel as I do. There are many similarities between Great Yarmouth and Southend in the stories and problems related by Mr. Wright. My personal interaction with HMRC started in 2006, shortly after my election in 2005, when the executive summary of a technical office accommodation review said:

"No jobs will be lost directly as a result of this proposal."

However, buried in the document, reference was made to 344 jobs, which I was told were nothing to worry about because they would go through natural wastage. How offensive it is to discuss people's livelihoods as being naturally wasted. That is insulting to anyone.

In 2004, 2,491 people were employed by HMRC in Rochford and Southend, East, but the 2011 figure is projected to be only 1,500, a loss of about 1,000 jobs. It is now clear that one of the two major office blocks in Southend—Alexander house and Portcullis house—will close entirely. The Mapeley saga could not be made up. If it was in Private Eye one would think it satirical that the Inland Revenue was offshoring its property arrangements. That is shabby and duplicitous, and if anyone else did it, no doubt the Treasury would examine the arrangement to see whether it was tax avoidance or something more serious.

In Southend, unemployment is higher than the regional and national average, as it is in Great Yarmouth. There is enormous inconsistency, with some Departments not recognising the value of local jobs in pockets of deprivation in the east and south-east of England, but recognising it in the need for regeneration. All credit to the Department for Communities and Local Government for recognising that Southend, Great Yarmouth and other seaside towns with pockets of deprivation need regeneration. Some money comes forward in one hand, but is taken away by the other hand through all the administrative costs associated with the changes.

The Lyons review needs further consideration, because for our constituents the situation is even worse than the hon. Member for Great Yarmouth said, not only because of the jobs that are going, but because when there are future big infrastructure projects in towns consideration will be given to areas with deprivation over a longer period. Opposite Portcullis house in Southend are some tower blocks where the occupants are in the bottom 10 per cent. of deprivation in the whole United Kingdom. For many of them, work is hard to find and they have difficult family situations. They are exactly the sort of people whom we should be helping. The Government are trying to get young, single mothers back into work, as we will if we are in government, and jobs in HMRC, which are predominantly part-time, are critical, yet the heart of them has been ripped out.

Constructive dismissal has been mentioned, because people will have a journey of one and a half hours. The hon. Member for Great Yarmouth is right in saying that they are being treated shabbily by being expected to travel long distances. In Southend, in addition to part-time work, there is also monthly periodic work with VAT returns, and dealing with peak flows and so on. Over 20 or 30 years, many people have changed their personal arrangements to fit in with HMRC, which is now jettisoning them because those arrangements are no longer convenient for it.

The relationship and merger between Customs and Excise and the Inland Revenue is not working well. It is certainly not working well in Southend. The cultural clash, with misunderstandings and constant change, is difficult. Only last weekend, I sat down with someone who told me that she used to enjoy her job and used to be able to do a good job, but with the changes, and with IT infrastructure and files in a different place, she is completely demotivated and cannot do her job as well as she did it in the old-fashioned way. The merger is not working.

I had a meeting with the acting chairman of HMRC, who was then Paul Gray, but the relationship locally between management and Members of Parliament is appalling, certainly in Southend. That is a criticism not of individuals, but of the structure. Southend has a relatively small but important IT operation, an anti-fraud operation, a VAT processing operation and some slightly more traditional operations. Because of the reporting lines, many different people are in charge of different departments, but no one in HMRC in Southend is in overall charge, so it is impossible for me, as a Member of Parliament, to have a relationship with a local employer of 2,500 people.

I encourage the Minister to appoint one senior individual in HMRC's hubs in constituencies to represent it in the local community. I am not the only person who wants such a relationship; the chief executive of Southend borough council, the leader of the council and other civic and community groups want HMRC to integrate with the community. There is much to be done, and it is clear from hon. Members' comments that there are many problems.

Several hon. Members:

rose—

Photo of Martin Caton Martin Caton Labour, Gower

Order. Five more hon. Members have indicated that they would like to contribute to the debate, and we must start the winding-up speeches at 10.30, so I appeal for brevity from Members.

Photo of Katy Clark Katy Clark Labour, North Ayrshire and Arran 10:08 am, 11th March 2009

I am grateful for this opportunity to speak on behalf of my constituents, who are directly affected by the closures. As hon. Members are aware, the intention is to close more than 200 offices nationally, and 25,000 jobs will be lost by 2011. It is clear from the number of hon. Members in the Chamber today that many people throughout the country are worried about the proposals.

I shall be brief, but I want to put on record my concern about the relationship between MPs and their local tax offices. In the west of Scotland, some MPs have had difficulty visiting tax offices during the past few months to speak to management and the work force about the difficult processes that are going ahead. That is not what we expect in the public sector, and I hope that the Minister will take the matter up because it has made a difficult process worse for those involved.

In Scotland, 19 tax offices are under threat, and their closure was announced on 4 December. The tax office that probably most affects my constituents is at Greenock. The Greenock customs house is an historic building and there is great concern locally about the fact that so historic a building, a working customs house, with its own museum and history, is being closed. It is in an area of high unemployment and high deprivation, so there are serious questions about how much money will be saved as a result of the closure. The belief is that the amounts will be quite small. Will the Minister respond, perhaps after today's debate, about the amount of money that will be saved by closing the tax office at Greenock?

As I said, the tax office is in an area of high unemployment. Both Inverclyde and Ayrshire, which will be directly affected if the closure goes ahead, are areas of historically high unemployment—areas that traditionally had huge levels of employment in manufacturing and industry, which have closed over the past 13 years. Of course, over the 18 years of Conservative government there were massive job losses and the area has not recovered. At a time of recession, when things are already difficult, job losses of the type that we are discussing are far from helpful.

Women workers are particularly affected by the closures. Greenock is in a geographically remote area where the transport links are not good and public transport links in particular are very poor. The women who are affected are well educated and most of them come from the local area, so they have worked for that employer for many years—decades, in many instances. The reality is that they simply will not be in a position to travel to the alternatives that might be available to them, because of child care and other caring responsibilities. From a public policy point of view, that does not seem consistent with the Government's other policies.

The other issue that has been raised is tax avoidance. The TUC estimates that £12 billion is lost each year through what is called tax planning, and indeed tax avoidance, by the largest 700 corporations in Britain. I understand that it is equivalent to one tenth of all households paying over their entire annual income to plug that tax gap. Anything that causes us to lose experienced staff and moves us a step away from ensuring that we see proper payment of tax must be regretted.

I know that my colleagues have many points to make on behalf of their constituents, but I want to raise a few issues that have been raised with me by constituents who are directly affected—in particular, the lack of assistance from HMRC in obtaining alternative employment with other Departments. Those people are being treated as voluntarily moving their employment, whereas in fact they are being forced into a new job. If a job with similar terms and conditions and similar pay is not available, what will happen to them? The reality is that they will have to take a lower salary or an alternative job. Will the Minister spell out the plans for members of staff who are left stranded with no alternative employment at the end of the exercise?

We need to consider what is happening in other areas. For example, Cumbernauld, one of the tax offices to which it is suggested that my constituents move, is training staff to learn new skills. We are losing staff who have a wealth of experience gained over many years, but we are taking on and training people who do not have those skills. The issues that I have raised are of great concern and I ask the Minister to reconsider the policy.

Photo of Tim Farron Tim Farron Shadow Secretary of State (Environment) 10:14 am, 11th March 2009

I congratulate Mr. Wright on securing an incredibly important debate. I shall speak for only a few minutes and restrict my comments to my great concern about the imminent proposed closure of the tax offices in Kendal in my constituency, although many of my constituents work in the tax offices in Barrow and Lancaster, both of which have also been put down for closure.

It has been a privilege to work alongside the many people who work in the tax offices in Kendal and to see at first hand their dedication to their role. Over the years, I have seen the number of staff working at the tax offices in Kendal go down from almost 100 to about 40 at present. Because of the proposed closures of Barrow and Lancaster as well, the powers that be have agreed that there is no possibility of a reasonable travel-to-work distance to an alternative tax office at Carlisle or Preston, for example. Although there is still, thankfully, the promise of no compulsory redundancies—we shall hold the Government to that—that means closure of an office by atrophy over time, which is appalling and demoralising for all the people there during that time.

Photo of Alan Beith Alan Beith Chair, Justice Committee, Chair, Justice Committee

Does my hon. Friend not agree that in such a situation, which is comparable to ours in Alnwick in Northumberland, where the work will be relocated to a business park more than 30 miles away, the Government ought to have a programme of decentralising other work, because they are pulling the heart out of many small towns—the main source of office employment? As Governments have sometimes done in the past, the Government could have a programme to take work from central locations into small towns.

Photo of Tim Farron Tim Farron Shadow Secretary of State (Environment)

My right hon. Friend is absolutely right. The Government appear to be sucking public sector jobs into areas that already have plenty of them and taking them away from smaller areas that desperately need them. Those jobs will be lost to our area—that is the bottom line—and in an area such as South Lakeland, where average house prices are about 13 times average annual wages, the possibility of decent well-paid work is essential. The proposal is a huge blow to South Lakeland and Kendal. I ask the Minister to please rethink, for the reasons that I have given and for two other reasons.

There are two other reasons why the decisions generally and those specifically affecting my constituency are foolish. The first relates to the economic situation. As has been mentioned, the plans were drawn up before the recession. Now that John Maynard Keynes, a great Liberal, is fashionable again, I remind hon. Members of one of the many wise things that he said:

"When the facts change, I change my mind."

The facts have changed. Why on earth would the Government disinvest in parts of the public sector in the middle of the recession? That is the one part of the economy that they really can control, so why on earth would they withdraw from public sector investment in this way?

The second reason relates to HMRC's own business case. We have already heard that the employees whose jobs are at risk are doing an outstanding job in bringing revenue in for the tax man—for the Exchequer. In my area—the lakes and dales and Kendal—many small and medium-sized businesses in tourism and retail do not have the money for their own financial advisers on tap and in-house. They rely on the excellent service they receive from the tax office in Kendal to ensure that they pay the right amount of tax, and they want to pay the right amount of tax.

The outcome of the closure programme will be mistakes and reductions in revenue. It is a counter-productive decision and move on the part of the Government. In the interests of my constituents in Westmorland and Lonsdale and, indeed, in the interests of the wider economy and the Exchequer, I plead with the Minister to rethink.

Photo of Geraldine Smith Geraldine Smith Labour, Morecambe and Lunesdale 10:18 am, 11th March 2009

I shall be brief. The consultation was a complete sham. Mr. Wallace and I, Lancaster city council, the chamber of trade and many local organisations objected to the closure of the Lancaster office, but it was still announced on 4 December. May I ask my right hon. Friend the Minister why we always do such things before Christmas? Is it to cause the maximum stress and upset to staff at that time?

Some 61 per cent. of staff in Lancaster have no viable option for future employment, because the nearest office that carries out work that they can do—I am talking about the processing teams—is at Salford, so at present they are surplus to requirements. They are told that they may be offered other jobs outside the current business stream, but so far none has been brought to their attention. They have not been given viable alternatives, yet voluntarily leaving the service is not an option in the current economic circumstances. We should be doing all we can to help those people.

I want to ask the Minister about the costings. How long will it take to make a saving on some of those offices, given all the relocation costs, severance pay and everything else that has to be taken into consideration?

I believe that in our area there is a solution. The original proposal for the Lancaster office was to withdraw from Charter house and relocate the staff to other offices within a reasonable daily travelling distance. Preston was to have been the main office, but the department has now withdrawn that option, which leaves the majority of staff stranded in Lancaster. I believe that the Preston option has been withdrawn because HMRC has finally realised that there is no capacity in Preston because of the redevelopment of the city centre. Preston has 2,000 staff because it is a national centre for tax credits, and those people need to be relocated now that their offices are to be demolished.

I and my hon. Friends the Members for Chorley (Mr. Hoyle) and for Hyndburn (Mr. Pope), who was here earlier, would like to meet the Minister. We believe that there can be a Lancashire solution and that people can be relocated; many of those in the Preston office already travel in from other parts of Lancashire, such as Lancaster, Morecambe, Chorley and Hyndburn. Let us get together to reach a solution and help them. At the moment, they do not feel that the Government are on their side. We should be on the side of public sector workers, doing all we can to help them in these difficult circumstances.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley 10:21 am, 11th March 2009

I thank my hon. Friend Mr. Wright for introducing the debate. This is a very important subject, as we can see from the fact that hon. Members from all over the United Kingdom are here to tell the Government that they have got it wrong.

That is nowhere truer than in Chorley. I am still waiting for answers from my right hon. Friend the Minister. The big question is why the Government are doing this. They talk about uncertainty and they have said that they do not want to create uncertainty, but he has created more uncertainty than ever. As my hon. Friend Geraldine Smith said, there is a question over Preston. There is a major redevelopment. What about sharing the work out, sorting out the problems in Lancashire and working towards a solution?

There is no greater asset than the people my hon. Friend represents—the hard-working staff at HMRC. The Government have built up a reputation claiming to be—[Interruption.] Shall we give the Minister a minute? The Government have built up a reputation for being a caring employer, but all that has been thrown to the wind. We encouraged people to go part-time and we encouraged family-friendly working hours and practices, but all that has been thrown to the wind. That should not happen.

The big question is why the offices were ever down for closure. It made no economic sense to close them, but they have somehow suddenly closed. Will the Minister investigate whether there was political interference that closed our offices but kept offices open in the constituencies of right hon. Ministers, particularly given the fact that those offices cost more to run than ours? Something smells and something needs to be investigated. I hope the Minister will take the issue away and come back to us with honesty. We need transparency about what has happened, but we have not seen any yet. It makes no sense to close purpose-built offices and throw award-winning staff out of their jobs, particularly when they are cheaper. What has changed? What has gone wrong? Can the Minister look into that? Will he promise to come back to us?

As my hon. Friend the Member for Morecambe and Lunesdale said, there is work that can be put into our offices. Will the Minister please look at the issue and rethink? Will he start standing up for the staff we represent?

Photo of James Duddridge James Duddridge Opposition Whip (Commons)

Will the hon. Gentleman name the Ministers and constituencies?

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

Blackburn and St. Helens were down for closure, and they both cost more than Chorley to run. My office was never down to close, and it was the same with Lancaster and Accrington. Something has gone on, and we need to know why. The Minister should stand up for Back-Bench MPs like us and for the people and constituencies we represent. It is unfair to treat us like this, and it is certainly unfair on the staff we represent and on the Public and Commercial Services Union. We want some fairness, and it is time that we were shown some.

I cannot explain the issue any further, but I will tell my right hon. Friend that we are not giving up now. We have to keep going. The sooner we can have a meeting the better. Will he please meet us so that we can discuss the issue and see what we can do for the people we represent?

Photo of Sandra Osborne Sandra Osborne Labour, Ayr, Carrick and Cumnock 10:24 am, 11th March 2009

I add my voice to those of hon. Members who have complained about MPs' lack of access to HMRC offices. It seems that a ministerial decision is almost required before MPs are allowed into local offices; when my constituents met me, there was certainly a bit of skulduggery about it, and they were clearly frightened to disclose to management that they were meeting their MP. That is unacceptable, particularly in the public sector.

It will come as no surprise to the Minister to hear that I want to talk about the closure of the Ayr office. Under the initial proposals on the potential for change in Ayr and Irvine, Ayr was the preferred option to stay open because it was far more cost-effective and best suited to business needs. As others have said, however, the staff who first contacted us were more concerned about the jobs situation and did not want any offices to close.

For time reasons, I will not repeat what hon. Members have said about that, except to echo what has been said about local jobs and family circumstances. I appreciate that family circumstances are being taken into account to an extent, but I echo the comments of my hon. Friend Mr. Wright, who illustrated the circumstances of his constituents. Again, I will not go into the individual circumstances of my constituents, which are very similar, except to say that, in terms of the Department's consideration, the situation of families is neither as positive nor as straightforward as it appears practically or financially.

Understandably, staff in Ayr were surprised, as I was, when it was decided to close Ayr and keep Irvine open, given that we had all been told that Ayr was the preferred option. I have requested the facts and figures behind the reason for the change, but the Department has given me only a bland response. HMRC has said that the decision was finely balanced, but the information to date does not show why it was decided that the Ayr office was less viable. There must, for example, be a record of the running costs of the two offices over the past three years and of the projected costs for the next three years and into the future. I would be grateful if the Minister could at last supply those figures. I also understand that the lease on Russell house in Ayr is not due to expire for a considerable time, so there must be a sizeable penalty if it is vacated before the end of the lease. Again, I would be grateful for information on that.

It has been suggested to me that socioeconomic factors are partly behind the decision, and I know that my hon. Friend Mr. Donohoe has campaigned long and hard for civil service jobs in his area. However, I would make two points. First, I doubt whether the majority of staff who work in Irvine actually live there and I am also sure that few, if any, staff from Ayr will move to Irvine if the final decision is taken. That is for purely practical and, given the current economic climate, financial reasons. It is not, therefore, a question of protecting jobs for local people.

Secondly, and more importantly, however, my constituency has an unemployment rate of 6.3 per cent, while Central Ayrshire has a rate of 5.7 per cent., so unemployment is higher in my constituency. As a result, I fail to see how that can explain the decision. I therefore plead with the Minister to give us a proper detailed explanation of why Ayr is no longer the preferred option.

Photo of John Pugh John Pugh Shadow Minister (Treasury) 10:28 am, 11th March 2009

I am grateful to Mr. Wright for triggering this debate. Although I am speaking from the Front Bench, I also want to speak on behalf of the hard-working, diligent and loyal staff at Duke's house in Southport, who have been sorely affected by this issue.

The justice of the case is well illustrated by the fact that we have an array of some of the most caring, diligent, thoughtful, industrious and independent members of the parliamentary Labour party here, all of whom have spoken with no aspiration—or, frankly, realistic hope—of promotion.

Photo of John Pugh John Pugh Shadow Minister (Treasury)

Well, there is a clear and consistent explanation behind all this, because it all started with the then Chancellor's announcement of the Gershon review in 2004. At the time, he was involved in a Dutch auction with the Tories, who had the James review, and both sides were working to more or less the same formula: there would be job losses in the public sector, a reduction in the estate, shared services, increased use of IT, outsourcing and smart procurement.

When the issue was debated in 2004, my hon. Friend Dr. Cable, in his usual prophetic way, pointed out the sheer irresponsibility of announcing figures for job cuts without saying how they would be made or whose jobs they would be. It was all broad-brush, big-canvas stuff about the direction of travel—there were no detailed plans. The result is here with us today: it is that decisions made at the top have had to be implemented somehow, on the ground, by third or fourth-tier civil servants. And so it is in the Treasury. I do not think that any serious calculation has been made of how many officers are needed, or how many people need to be involved in the process of tax collection. There is a general suggestion that the Treasury can be rationalised; its estate can be rationalised, its staff reduced and its processes simplified on Henry Ford-style principles, through the breaking down of the complex business of tax assessment. I remember when tax inspector jobs were advertised by saying that it was a job appealing to reason. That can no longer be put in the advert, because what we are talking about now is reducing complex tasks to simple tasks done through the lean process, in what one might call tax factories.

The process of change from workshop to factory has, to the credit of HMRC, been carried out as sensitively as it knows how, which may not be that sensitively in the end. HMRC promised—the same has been promised in this Chamber—detailed personnel analysis before any move was made, and guarantees to be given to the union. It said that it hoped for heavy reliance on natural wastage rather than redundancy. However, there are strong arguments to be made about the process in principle. The lean process in taxation is relatively new, and it has hidden costs. Most of the larger institutions have poor recruitment, high staff absence rates, an increased carbon footprint for the people who work there—which is also a concern for the Treasury—and reduced public satisfaction with the handling of complex and non-standard cases. The standard cases go through as they do at DVLA and similar places, but the more complex and troublesome ones take longer. The evidence for the lean process is not overwhelming. It can be argued that fraud detection will be better with a local presence; it can also quite reasonably be argued that the protection of vulnerable customers, such as the digitally excluded, the elderly and migrant workers, cannot exclusively be dealt with through a process of central data matching. It is good, useful and worth having, but it is not enough to get the tax job done efficiently. In an IT-enabled, carbon-aware, family-friendly world, warehousing workers is neither necessary nor particularly smart.

The one argument that counts, and counts now, is whether the costs of change outweigh the assumed benefits. The guarantees given to staff about such things as deployment, disability, family responsibility and travel, which were all given with some degree of sincerity, have in some cases been pushed through. Some rearrangements have been made in a brutalist fashion, but by and large a process has been conducted—a fallible process that lacks credibility in certain respects. However, even where only lip- service has been paid to the procedures and closures, it has become apparent that some were very hard to carry out. In the short term, if relocation and other costs such as voluntary redundancy are added in, they are very expensive. If to that is added the fact that it will not be easy to pull out of property that the Treasury no longer owns, but holds under the public-private finance initiative, particularly given the collapse of the commercial property market and the present financial difficulties of the owner—it is a tax-dodging hedge fund but it still has severe financial problems of its own—the true cost of all the rearrangement is simply not known. It is obviously shrouded in confidentiality.

One thing is emerging—and it is certain that it is emerging, because of the extent to which the pace has slowed down in some places: some closures make no savings in the short term, but just bring added costs. Some closures—I suggest that Southport is a quite good example—bring no savings in the medium term. Despite all this, third-tier officers may press on blindly following orders and implementing what they assume to be the master plan from above; but with an election nigh, I should be surprised if, higher up, some people were not having second thoughts.

Photo of David Gauke David Gauke Shadow Minister (Treasury) 10:34 am, 11th March 2009

It is a pleasure to serve under your chairmanship, Mr. Caton. I congratulate Mr. Wright on securing the debate. He has clearly touched a nerve, given the number of speeches by Members of the House from all over England and Wales, representing all parties. There is clearly great concern among hon. Members about the impact of the HMRC office closures. Several hon. Members have set out the difficulties of their constituents, and the problems created by office closures. Some have raised concerns about the manner in which the process has gone forward. I was very struck by the remarks of Mr. Hoyle when he made the serious allegation that the details of the office closure programme have been driven not solely on efficiency grounds, but also on the grounds of the constituencies where offices were.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

I want the matter cleared up. One can only suspect political interference because the case was made that the Chorley office cost less to run, which was why it remained open. Suddenly it is closing and the two offices that were down for closure remain open. That is what leads one to ask, "Is it political interference or something else?" I want it cleared up; I want transparency and I want the Minister to reply honestly about it.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I am grateful to the hon. Gentleman for setting out his suspicions. Let me put it no more strongly; I do not think that the hon. Gentleman wants to put it any more strongly than that. It would be helpful if the Minister would discuss that concern and any representations the Treasury and HMRC might have received from the Secretary of State for Justice and Lord Chancellor, Mr. Straw and the Lord Commissioner of Her Majesty's Treasury, Mr. Watts: I think that that would be the basis for the suspicions of the hon. Member for Chorley.

The hon. Member for Great Yarmouth set out well the detailed concerns of his constituents, and gave some significant case studies—examples of the difficulties created for some of his constituents. There is strong local cross-party opposition to the closure of Havenbridge house. I have been in touch with Brandon Lewis, the Conservative parliamentary candidate for Great Yarmouth, who has been heavily involved in opposing the proposals for some time. He has made representations to the shadow Chief Secretary to the Treasury, my hon. Friend Mr. Hammond, who visited Great Yarmouth a week or so ago. I do not know whether the Minister has had an opportunity to meet representatives of the Public and Commercial Services Union in Great Yarmouth and discuss the proposals with them, but if he has not done so I suggest he should visit Brandon Lewis's website, on which there is a video of an interview with Lee Sutton of PCS and a clip from a public meeting that Mr. Lewis attended with employees at Havenbridge house. There is agreement across the board in Great Yarmouth about the damage that may well be done.

No Government or putative Government would rule out ever making any office closures or staff cuts. However, there are questions that the Minister should address, many of which have been raised during the debate. I want to highlight three areas on which I would be grateful for a response from the Minister. Some of them have already been touched on. First, how much will be saved by the consolidation of offices? The consolidation and closure of offices is part of HMRC's transformation plan. The National Audit Office considered the process and published a report in July, but the figures for March 2008 stated that of the £2.4 billion of savings that it was hoped to achieve, the benefits were largely from programmes that were under way when the transformation programme began. Since last year there have been significant changes in property values. It would be helpful if the Minister were to give the House some details of the impact that changes in property prices will have made; I suspect that the savings may have been reduced as a consequence. It would help if we were to be kept fully informed.

My second point is that HMRC faces various initiatives, such as reorganisation, office closures, staff movement and so on, and they appear to be having a significant impact on staff morale. I have met many HMRC employees and trade union representatives during the past year or so, and there is no doubt—I think that the Government recognise the fact—that HMRC has a problem with staff morale.

I shall highlight two sets of figures, which I know that the Minister will be aware of as he gave them to me in answer to parliamentary questions. Many hon. Members, including the hon. Member for Great Yarmouth, said that experienced and skilled staff were being lost. Staff turnover at HMRC is 8.77 per cent. overall. In contact centres, it is an astonishing 15.76 per cent. The figures for sick leave, too, are striking. The average is 10.37 days a year; at contact centres, it is 17.45 days a year. Those figures raise a number of questions, but they are certainly indicative of a failure in staff morale.

My next point relates to taxpayer contact with HMRC. Much of our debate has focused on the concerns of employees—understandably so—but what about the quality of service being provided to the taxpayer? Will the office closures and staff reductions have an impact on that? We should remember that the tax system has been moving towards self-assessment; and the past 10 to 12 years has seen the introduction of the tax credit system, which imposes considerable demands on claimants and HMRC. It could be argued that greater self-assessment, tax credit claims and so on will result in the need for a more face-to-face service, with more people needing to meet HMRC staff in order to deal with their tax.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

I agree wholeheartedly with the hon. Gentleman. Is he suggesting that the Conservative party manifesto will propose an increase in public-sector jobs rather than what we have been hearing for a number of months—billions of pounds-worth of cuts in the public sector?

Photo of David Gauke David Gauke Shadow Minister (Treasury)

In this part of my speech, I am relying heavily on representations that I have received from the low incomes tax reform group of the Chartered Institute of Taxation. I question whether the reforms of HMRC are being done in the most efficient way. In representations to me, the group said that

"by diverting resources away from front-line services, HMRC are not only making life more difficult for unrepresented customers at a time when the tax system is becoming at once more complex and more unforgiving of error, but also creating the necessity for more expensive interventions into taxpayers' affairs. Alternative ways of contacting HMRC do not always work well, and exclude a considerable proportion of the taxpaying population who find the telephone or the internet beyond their skills."

What assessment have the Government made of the reforms? Do they accept that services are being transferred away from the front line, and do they consider that to be the best way for HMRC to be managed?

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

I agree with the hon. Gentleman. The one thing that we have done wrong is to remove front-line services; as a result, jobs have gone in the Department for Work and Pensions and in other areas. Over the past two and a half or three years I have been working extremely hard on the consultation, and I have come to know many of those in HMRC who work with individuals. It is clear and apparent that we need to increase the number of face-to-face contacts rather than diminish them. I merely ask whether the Conservative party spokesman agrees with that point of view. Is it his party's policy to increase front-line services in the public sector, and specifically within HMRC, should the opportunity arise?

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I appreciate what the hon. Gentleman says, but I believe that HMRC needs to be more efficient and more effective. The professional bodies are concerned that HMRC is not becoming more effective, and that problems are being stored up for later intervention. That is the point that I wish to put to the Minister.

A number of helpful points have been raised in the course of this morning's discussion. It was useful for the House to have had this debate, and I am grateful to the hon. Gentleman for initiating it. I want to give the Minister as much time as possible, to enable him to respond, but it is perfectly legitimate to ask serious questions about the effectiveness of the proposals.

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills) 10:46 am, 11th March 2009

I congratulate my hon. Friend Mr. Wright on securing this debate and on the consistent and determined way in which he has defended his local tax office. I have not heard of anyone with a name like Mr. Brandon Lewis speaking on the subject. However, I am pleased to have the chance to respond to the points that have been made. I shall set out the rationale behind the exercise, but before doing so, I shall comment on what my hon. Friend said when highlighting the issues that face individual members of staff.

HMRC exists for taxpayers. It has to provide its service in the most efficient way. I shall set out later why it needs to restructure in order to become more efficient, but not the least reason is that it has to deal with the big challenges of tax evasion that have been mentioned today, as well as other challenges. It also needs to plan its office structure to suit its new business models. Many private sector organisations would expect staff to move to where the work is; in contrast, HMRC has gone to great lengths to work with staff, taking personal circumstances into account whenever it can. However, HMRC has to keep those office buildings that are the most useful to it from the business point of view.

My hon. Friend and others made the point that now is a difficult time for staff in any office that is to be closed. I put it on that record that what is proposed is not a reflection of the performance of those staff. Most HMRC staff, particularly those in smaller towns, have a large amount of valuable experience, which is why staff are being asked to move with their work, whenever that it is possible.

Throughout the programme, senior HMRC management have been, and continue to be, committed to being open with staff, explaining the options to individuals and exploring how their expectations can be matched with the need to make business operations more efficient. After decisions are announced, individual staff members have the opportunity to discuss their personal circumstances with managers and to determine their suitability for relocation. That is backed, as it should be, by a trade union-supported appeals process.

In making those judgments, HMRC takes account of personal circumstances, such as the caring responsibilities rightly mentioned by my hon. Friend, as far as is possible, given the constraints of the need to rationalise the office network. HMRC will provide staff with as much flexibility as it can—for example, by allowing a change to working patterns, provided that it meets the needs of its business—but I cannot give my hon. Friend the assurance that no member of staff will be inconvenienced by the changes. None the less, a great deal is being done to minimise the difficulties.

Photo of Anthony D Wright Anthony D Wright Labour, Great Yarmouth

We are not talking about an individual member of staff; I know of dozens of members of staff who are finding things extremely difficult. I can understand perhaps that one or two might fall through the net, but about 30 or 40 per cent. of the 135-strong work force at Havenbridge house are going to find things extremely difficult. Multiply that across every other constituency, and we have a considerable number of people who will be given no alternative but to lose their jobs. They have not been taken into account. Will the Government not admit that they have got this wrong? Perhaps we should review the estate and make savings there.

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

I think that the circumstances of 103 members of staff at Great Yarmouth are being looked at. HMRC is considering how best to accommodate those who cannot move with their existing business while continuing to do appropriate work. A range of options and support is being offered including, for example, redeployment to another business stream in HMRC within reasonable daily travelling distance, assisted home moves for staff to fill posts elsewhere in the Department, a public sector release scheme that offers grants to staff leaving for other front-line public sector jobs and, where available, moves to other Departments.

In January, HMRC signed an agreement with the Department for Work and Pensions. For reasons that we all understand, Jobcentre Plus needs to recruit additional staff. Until a solution can be found, work will continue to be fed back to staff in this position. HMRC is phasing the closure of buildings by partial vacations, which will help to achieve some financial savings, and to accommodate in the interim those staff who cannot move for the types of reason set out by my hon. Friend. The work of reviewing the position of each member of staff will be complete by the end of the month, and it should then be possible to be much clearer about the likely time scale for individual offices to remain open, given our determination to minimise, or preferably avoid, compulsory redundancies. Staff at Great Yarmouth have been told that the office will close by spring next year, but it is pretty clear—he drew attention to some of the reasons—that a number of staff will continue to work in the Great Yarmouth office well after that. As I said, however, details should become clearer next month.

I understand the strength of the concerns expressed by my hon. Friend and others, but I would like to set out the context of the work force change programme. We have long challenged—I know that my hon. Friend supports this—all Departments to increase their effectiveness while making significant efficiency savings. In HMRC, as elsewhere, that can be done only by making radical changes. That was a key reason behind the merger of the two former Departments—Inland Revenue and Customs and Excise—in 2005. The merger was designed to create efficiencies by cutting out the duplication of function and effort. Was that an easy change to make? James Duddridge criticised the way in which that merger has worked out. It is true that these are difficult changes to bring about, but if our aim is to have the most efficient possible delivery of public service, that is the sort of change that we must be willing to make and we must ensure that it succeeds. We are now enabling the combined organisation to reduce the size of its office network. HMRC recognised from the start that it would have to set itself up on national business lines to achieve the benefits of integration and to be in a position to respond more quickly and effectively to changing demands.

The old Inland Revenue was a geographically-based regional organisation, and it was clear from the start that that was not an appropriate way of organising HMRC, which inherited two separate office networks comprising nearly 600 office buildings across the UK. The former Inland Revenue's network of small local offices had developed historically to meet the needs of local employers and taxpayers. Originally, most local offices had a local customer base, but even before the merger that had largely ceased to be the case. The old idea of a local tax office simply serving the local community has long been obsolete.

J

"The old idea of a local tax office simply serving the local community has long been obsolete..."

Well, this just sums up this government's attitude to taxpayers. Everything has to be big and remote, because big and remote is better. Utter rubbish! Extrapolating from this ridiculous argument, government might as well wrap up all local councils and county councils, because they're too close to the citizens. Imagine the savings!

Commercial companies have long realized a lack of personal touch has damaged their rapport with customers (which government now calls us, constantly, too). Local offices for government services are vital and these closures are clearly a disgrace.

The race to drive everything online has been a disaster, with countless IT projects over budget and not yet implemented. Now that IS a waste of taxpayer's money...

Submitted by John Freeman

Photo of Ian Gibson Ian Gibson Labour, Norwich North

I want to cut through some of the information that the Minister has provided. What is the difference in rent between offices in Norwich, where it is proposed that people from Great Yarmouth will be housed, and those elsewhere? When will we know? Is he in possession of a document containing such information, or must we use the Freedom of Information Act 2000?

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

I am grateful to my hon. Friend for raising that point, because the exercise is not about simply finding the cheapest offices in the country. That has been a serious misunderstanding throughout this debate. The question for HMRC is: how best can it organise its business to deal, for example, with the challenges of tax evasion? That is not about finding the cheapest possible office space in the country. That has not been a driving consideration.

For a long time now, we have not had local tax offices whose job it is just to serve the local community. Thirty years ago, work on pay-as-you-earn for those working in London was moved out into large regional centres. That did not damage customer service, because PAYE work does not require local knowledge, and nor does the other high-volume processing work that HMRC is concentrating in a much smaller number of large units. Most staff in local offices, therefore, do not have regular contact with local customers. An increasing number of people prefer to do business with HMRC by telephone or over the internet.

In response to the question from Mr. Gauke, some taxpayers and claimants—tax-credit claimants, for example—want the reassurance of being able to call in to a local enquiry centre, and they must continue to have that opportunity. Inquiry centre services, where people can get free face-to-face advice, will continue to be provided at or near all their current locations, including in Great Yarmouth. In the current economic climate, which has been referred to in this debate, it is more important than ever that HMRC uses its resources to best effect. The Conservative party argues that £5 billion should be cut from public spending, with effect from next month, but that is an extremely ill-advised policy. We must continue to improve customer services while managing costs downward. One way to do that is to consolidate teams of staff in particular businesses into a smaller number of locations. That can introduce new and more effective working practices, resulting in more work done by the same number of staff.

HMRC has to achieve efficiency savings that roughly equate to a reduction in staff of about 25,000 between 2004 and 2011. Very substantial staff savings—down from 105,000 to 89,000—have been made already without any compulsory redundancies. Furthermore, it was clear that 40 per cent. of the office space with which the organisation started would no longer be needed by 2011-12. For example, the office in Great Yarmouth can accommodate more than 250 people, but it currently houses just over 100. We need to manage the process of ensuring that the organisation has the necessary office space to do its job.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

Will the Minister meet the Lancashire Members?

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

I am very happy to talk to my hon. Friend about a possible meeting. What I will not do, however, is give hon. Members the impression that these things might change.