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9.55 am

Dr. John Pugh (Southport) (LD): It is a pleasure to serve under your chairmanship, Mr. Bercow. I congratulate the hon. Member for East Londonderry (Mr. Campbell) on introducing this timely debate and enlightening us about the special problems of Northern Ireland. We all know and accept that tax offices across the land are affected in similar ways to those in Northern Ireland, and that includes those in my constituency. I should add that it is difficult for Members of Parliament to take up the cudgels on behalf of tax officers, as opposed to groups such as nurses, because they are not always the most popular people in the land.

Tax offices are currently the object of the Gershon savings, which were announced without a clear plan in 2003. At the time, my hon. Friend the Member for Twickenham (Dr. Cable)—a man gifted, as we all know, with exceptional foresight—said that it was all very well announcing big global savings, but that it was not so easy to know how they would be implemented in practice, particularly when they affected individuals’ jobs and individual communities.

The general assumption behind the Gershon savings is that they are about efficiency and having cashable, bankable savings, not about cuts and reductions. With that in mind, we must ask the Minister certain key questions, and one pivotal question obviously relates to redundancies. I am still not clear about the nature of the allegedly benign agreement between the unions and the Government, and I have spoken to the Minister about it at the Dispatch Box. I get different stories from the Public and Commercial Services Union and the Government, and I should like a clear answer on whether we anticipate any compulsory redundancies and whether the Government are budgeting for them. Are the offers to staff so impractical as to amount almost to constructive dismissal, as has been suggested? Do the savings that the Government anticipate include an allowed attrition rate that will arise as a result of people simply throwing in the towel, because they cannot move to the jobs that they are offered?

There are also questions about savings. Obviously, big savings are possible, particularly in relation to the buildings. Given the number of buildings that are going, the savings could be considerable. In my constituency, it is said that savings of £230,000 will follow from the change in use of the building and the emptying out of most of it, although we are told—there is a certain vagueness about this—that more detailed information on savings will be available only when the closure timetable is announced.

That leads me to speculate, as the hon. Member for East Londonderry did, that there is a certain amount of uncertainty about the savings on property. What will be the capital dividend from the release of the property? Will the revenue savings that are engineered depend on the sale of the asset or on finding a new tenant? Some buildings in town centres are obviously highly valued, but not all are. There are also the costs of removal and de-installation.

Furthermore, a lot of the property that we are talking about is not freehold and is covered by the private finance initiative, on which there is an annual charge. Do we need to keep paying that charge or to find someone to take it over? How does that charge affect
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the disposal value? In other words, we need a clear account of the Government’s intention towards the estate and of how much everything will cost.

Another issue is the reduction in service. The Government claim that there will be no reduction; but unquestionably, the service will be less local, with fewer inquiry points, and there will be incalculable damage to public confidence in the tax service, because it will not be as accessible. That is especially true in Northern Ireland and in a town such as mine, which has lots of small businesses, as well as elderly people and migrant labourers who have complex tax affairs. All their cases need resolution. There seems to be no overwhelming case for centralisation, particularly in an age of IT, when networks between different buildings can often be very sophisticated.

That brings me to my final point, which other hon. Members have touched on: what about the localism agenda and the work-life balance that is so desired, for female employees in particular? What about helping disabled people back into work? Is there any upside to the centralised processing that is being suggested, such as the lean system, from which the Government hope to get most of their savings? That has not been properly assessed. A passage from the National Audit Office report on accuracy in the processing of income tax, which was produced in July 2007, comments on the centralised system:

That is not exactly a clean bill of health for the centralisation system.

Dr. William McCrea (South Antrim) (DUP): We are talking about improvements to the service, but how can we have an improved service if employees, including those who are disabled, travel for two hours before arriving at work, stressed out? I see the Minister shaking her head, but she knows that people travelling from certain parts of the Province will travel for that long. If they must sit for an hour, as the rest of us must, trying to get into the city of Belfast, that will add to their stress. How will that assist the progress of the centralisation?

Dr. Pugh: I was coming to precisely that point. Clearly, how staff are treated affects the way that the workplace functions, including its efficiency. Deskilling, which is what we are really talking about in this case, will not necessarily lead to a gain in efficiency; it can mean that problems that do not involve standard tax cases take longer to sort out. Plenty of documentary evidence suggests that HMRC does not have brilliant success with its current forms and procedures. There are anecdotal stories to the effect that such an approach can lead to the stockpiling of post, when post is simply left in cupboards and treated as not having been received, which significantly reduces processing times. It can lead to the “computer says no” syndrome, with which I am familiar: when someone asks why their letter about tax credits was not received, they are told, “It wasn’t received on our computer.” Unquestionably—this is the point
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that the hon. Member for South Antrim (Dr. McCrea) just touched on—staff will become demoralised. All research tends to show that, in such highly centralised institutions, absence rates are higher and there are recruitment problems. That is perfectly well documented.

In the office that is being closed in Southport, the office staff, as in Northern Ireland, are mostly female and many have caring responsibilities, but most of them have good knowledge of the area. When the office was previously scheduled for closure, they all won their appeals. I question what will happen to those people with caring responsibilities and to those who are disabled when they have to move. I fear what will happen; I assume that many of those people will simply throw in the towel and look for work elsewhere. That will be a loss not only to them but to the Revenue. Those employees make the point that their local knowledge helps to clear up problems that would be difficult to solve otherwise. It makes it easier for them to track down evasion in the area.

I suppose that a cynic might not be surprised to see the Government abandon some of their own agenda of localism, work-life balance and keeping disabled people in employment. It is more of a surprise to see them spurn efficiency. My conclusion, about which I am quite sincere, is that HMRC is acting in somewhat of a panic, to a higher, unreasoned political imperative. It simply must do something to get the savings that Gershon has said can be made. I used the word “political” in connection with the imperative, and it has been noted with some bitterness in my area that certain constituencies, notably Blackburn, are unaffected by closures of tax offices. If we act in such a rush, we end up with ersatz savings, pseudo-efficiency and, in consequence, a lot of unnecessary human anxiety.

10.5 am

Mr. David Gauke (South-West Hertfordshire) (Con): It is a pleasure to serve under your chairmanship again, Mr. Bercow, and to speak in the debate. I congratulate the hon. Member for East Londonderry (Mr. Campbell) on securing it. It might not attract the greatest attention among all the Treasury events that are occurring today, but it is nevertheless important to the hon. Gentleman’s constituents and others. He set out his case with great skill on behalf of those of his constituents who are employed in Coleraine and other offices in his part of the world.

The hon. Gentleman raised several important questions about the practicality of the Government’s proposals for the reorganisation of HMRC offices in Northern Ireland. He also raised some of the specific issues that relate to Northern Ireland, such as section 75 of the Northern Ireland Act 1998. I also congratulate the hon. Member for Foyle (Mark Durkan) on raising issues that relate to organised crime in Northern Ireland and the impact that some of the proposals might have in that respect.

The Minister has great knowledge of and, it would be fair to say, fondness for Northern Ireland from her time as a Minister there. We all look forward to her response to points specific to Northern Ireland, as well as to her comments on the other issues that have been raised. She has debated them before; she and I took part in a debate on reforms of HMRC offices in the midlands on 18 July
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last year. Indeed, many of the points that have been raised today were raised in that debate.

In preparation for today’s debate, I looked back at what I said on that occasion, and I want to reiterate a couple of those points. First, I do not think that anyone will disagree that efficiency is no bad thing. It is right for the Government to seek to make efficiencies and to deal with inefficiency. On occasion, that will require a reduction in the head count, and I do not want to shy away from that aspect. However, several hon. Members have today raised an important concern about supposed efficiencies that result in a reduction in the quality of the service being provided.

We should examine whether the changes that the Government propose will cause a decline in customer service. To repeat a point that I made in the previous debate, I feel that the word “customer” is not always the appropriate term for taxpayers. In last year’s debate, I drew attention to the concern raised by the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Taxation that some head count reductions and supposed efficiency savings were causing a decline in customer services.

Mr. Jeffrey M. Donaldson (Lagan Valley) (DUP): I agree with the hon. Gentleman that the reduction in the quality of service is an important matter, but is not the reduction in the quality of life of staff in HMRC offices equally important? If the proposals go ahead, staff in my constituency who work at Moira house in Lisburn will have to travel on the M1—a very congested motorway—into Belfast and find parking. Some of those people are young mothers with children. Should not we take into account the impact on the quality of life of staff in places such as Moira house before we take such decisions?

Mr. Gauke: The right hon. Gentleman sets out his case very well, and I do not want to dispute what he says. Indeed, I shall return specifically to the point about the impact on staff and morale. He other hon. Members have made that point very well.

A number of targets are set out in the HMRC’s 2004 public service agreement. Some relate to customer service and experience, which were assessed as suffering slippage in the 2007 departmental annual report and the 2007 autumn performance report. In particular, the departmental report highlighted the indicator of an 80 per cent. response rate of businesses and individuals who said that they achieved success at the first point of contact but that that was not sustained. That will be of concern to customers within Northern Ireland and elsewhere in the UK. Furthermore, last month’s Treasury Committee report, referred to by the hon. Members for East Londonderry and for Foyle, stated:

I would be grateful for the Minister’s comments on that.

Staff morale is, of course, relevant to this debate, given the difficulties that the efficiency reforms will create for them, which feeds into customer service, because staff with low morale are unlikely to provide as good a service as those with high morale. There is concern about morale in Northern Ireland and generally. I suspect that proposals, such as those being discussed
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today, play a part in that. We have heard about issues with missing data discs and performance on VAT registrations. However, the combination of a variety of Government initiatives, such as the Lyons and Gershon reviews, and tight budgets appears to have an impact on morale. The Financial Times reported, a few days ago, on a staff survey that referred to very low morale in HMRC and, in particular, highlighted a lack of confidence in the leadership of HMRC. Certainly, the HMRC capability review identified leadership as a weakness. What is the Minister’s assessment of morale in HMRC, in Northern Ireland and more generally?

Evidence for strains within HMRC emerged in a report in The Mail on Sunday on 24 February that claimed that HMRC was not pursuing debts of up to £20,000. I do not know whether that report is correct, but it went on to argue that tax collectors were being drafted from Belfast and elsewhere to London to address that backlog. Is that the case?

Another issue directly related to Northern Ireland concerns the status of HMRC’s VAT registration centre in Newry. Some months ago, it was intended that various registration offices, including Newry, would close and that there would be one centre in Wolverhampton. Owing to difficulties in the area, the Newry office was not closed and was maintained to address a backlog of VAT registrations. What is the up-to-date position on the future of the Newry office? Is the intention that it will remain open for much longer? The VAT registration backlog has been addressed to a large extent and HMRC is meeting its target of dealing with 70 per cent. of VAT registration applications within 14 days. In the light of that, is the Newry office safe, or is it more likely to close? There are further concerns about VAT registrations; it still takes about 75 days to deal with high-risk applications. Will the Minister comment on that?

Furthermore, about 23 per cent. of VAT registration applications are judged to be incomplete, which suggests a problem with the process. The Treasury Committee addressed that matter in its recent report:

That issue applies as much to Northern Ireland as to the rest of the United Kingdom.

In closing, once again, I congratulate the hon. Member for East Londonderry on initiating this debate and setting out his case very well on behalf of his constituents, staff and the wider community using HMRC offices. In July last year, I made the point that we increasingly want some personal contact and that distant contact centres do not always provide the type of service that we want. I would be grateful for the Minister’s comments.

10.16 am

The Financial Secretary to the Treasury (Jane Kennedy): It is a pleasure to see you in the Chair, Mr. Bercow. I have enjoyed your chairmanship. In all honesty, in preparing for this debate, my opening phrase was to be, “I am pleased to have an opportunity to respond to the concerns expressed by hon. Members.” I was thinking
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about that in the context of what is happening elsewhere today and wondered whether I could say it with sincerity. However, just a few moments into the debate, listening to Members whom I regard in very friendly terms—many of them are friends whom I have got to know over some very difficult years—I can honestly say that it has been a pleasure to listen to this debate and to have the opportunity to respond. I congratulate the hon. Member for East Londonderry (Mr. Campbell) on arranging the debate.

Members’ interest in the reorganisation of HMRC in Northern Ireland has already been brought to my attention through questions to the House and the consultation process that HMRC has developed, for which I am grateful. As others have said, the taxman has never been a popular figure, particularly in Northern Ireland. On many occasions, he has led a dangerous life. However, as the hon. Member for East Londonderry is aware, HMRC has designed a systematic review process—not a panic response. In some sense, it was a response to pressures brought to bear on it by Ministers to ensure that its processes and procedures are as efficient as possible. As a result of those pressures and the Gershon and other reforms, HMRC has developed a very good and thorough process for dealing with the matter, which involves review, consultation and announcements on decisions that are then very carefully taken forward. That process is being implemented across the UK.

The review process for the Belfast urban centre is virtually complete and I expect an announcement to be made to staff and trade unions in the next couple of months. Hon. Members with a constituency interest in the area will be notified at the same time. To meet its requirements under section 75 of the Northern Ireland Act 1998, the importance of which the hon. Member for East Londonderry rightly emphasised, HMRC has undertaken a full equality impact assessment of its proposals for the Belfast urban centre taking into account the particular issues affecting the region. It has worked with the Equality Commission for Northern Ireland to ensure that it does not unlawfully discriminate against particular groups.

Mark Durkan: The Minister said that the equality impact assessment relates to the Belfast urban review. Did the Equality Commission not advise the Department that the equality impact assessment should cover the whole of Northern Ireland?

Jane Kennedy: I shall come to that in a moment, if my hon. Friend will give me time. I anticipate that the review of clusters, which will include Coleraine and individual offices in Northern Ireland will begin within the next couple of months, supported by a full equality impact assessment for those locations. The issue will not be decided quickly; it will be a process in which the staff, service users, Members of this House and—I am sure the Chamber will want to be reassured—Members of the Northern Ireland Assembly will be involved.

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