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2 July 2008 : Column 298WH—continued

The hon. Gentleman asked me to explain how I could justify the proposals, given the reduction in service that he perceived in respect of VAT registration. He will recall that the problems that grew up around VAT registration arose from a calculated, organised and concerted attack on UK revenue through the fraudulent use of what were called carousel systems, whereby serious
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organised criminals were trying to defraud the Exchequer. The measures that HMRC put in place to counter that have had a very significant effect, and registrations are now meeting the standard that we set and that we expect in relation to businesses applying for new registrations. Yes, HMRC got knocked off course in terms of performance, but that was as a result of a specific attack.

One of the constraints on HMRC being able to respond as quickly as we would have liked to the situation was the fact that it had so many different offices that it could not reallocate the staff as swiftly as it wanted to in order to switch them from doing one form of process to another. Unfortunately for hon. Members representing small offices in their constituencies, that has merely borne out HMRC managers’ case—that to achieve the maximum benefits and improvements from reform and change, they need to bring staff together in larger units so that they can not only drive up standards and the ability of staff to get the tax and the processes right, but ensure that they maximise the use of public resources.

I will take into account the representations that I receive about the impact of closures, but HMRC has to balance that with the requirement to be as efficient as it can be. Although it is right for HMRC to keep its network of inquiry centres, it is also right for HMRC’s senior management to examine its back-office operations. They must ensure that those are run as efficiently and effectively as possible. In some work areas, that is best done by concentrating work in large units, but in others, a more mobile work force is seen as the best solution to customer needs. There must be an emphasis on improving compliance by focusing resources on the risks that HMRC deals with regarding different taxes and customer groups. Within HMRC, there is a better understanding—an improving understanding—of the risks to the Exchequer and the response that needs to be put in place to deal with those risks. I hope that the hon. Gentleman will accept that HMRC places great value on the face-to-face contact that the public appreciate, and it is determined to maintain that.

That said, I recently visited one of the biggest and busiest inquiry centres in Northern Ireland and made careful note of the fact that it was remarkably quiet on that particular morning. That was rather embarrassing for the staff working there, who were clearly very skilled and well able to deal with inquiries about all sorts of tax matters. When I look at the footfall in inquiry centres, I am not sure that we are using in the most productive way some of the best and most capable staff that HMRC employs. When no members of the public are in the office, those members of staff are given processing work to fill up their time, whereas we might be able to use them better by sending them out of the office. I am talking about taking HMRC advice out of a confined office and perhaps to local markets on particular market days. Such an innovative way of using staff is a better approach, and that is the kind of thinking that I am encouraging HMRC to follow.

I can give the hon. Gentleman a number of reassurances. In respect of the decisions for Scotland, all inquiry centre services will be maintained in their current location or nearby. Staff in offices being vacated will not be required to commute to an office beyond a reasonable
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daily travel distance. There is an established process for managers and staff to discuss options for their future employment following the announcement of HMRC’s decisions to vacate offices. That process is open, transparent and accessible to trade unions. It has stood the test of time, in that we have been going through the process for about 18 months and I have not had any serious complaints that the process is flawed. Impact assessments are carried out before a final decision is taken to vacate an office. Those assessments consider the possible effects of closure on staff, customers and the wider local community, while recognising HMRC’s need to restructure its business and estate in the most efficient way possible.

If we look at where Dunoon, Rothesay and Oban are on the map, it will pose significant problems not only for the staff but for HMRC to meet the commitment that staff will not be required to commute beyond a reasonable travelling distance. A great deal of thought must be given to how staff there can respond to the decisions that HMRC might recommend me to take. That will involve a very close and detailed consultation with each member of staff. That is a consultation that HMRC does with every member of staff, but in the case of the offices in the hon. Gentleman’s constituency and other offices in far-flung places in Scotland, careful thought will need to be given to it. Work is under way. I cannot go into the sort of detailed examples that the hon. Gentleman gave, but I assure him that HMRC managers take the time to talk to staff and find out about an individual’s detailed personal circumstances. Consultation with about 1,900 staff in the remaining 29 HMRC office buildings in Scotland began on 11 June.

Mr. Alan Reid: I am encouraged by what the Minister said about opportunities for the staff, but will she give some indication of what those options might be? If the office is being moved to somewhere too far away, I understand that the only option will be redundancy. I was pleased that the Minister said that there might be other options. Will she expand on them, and give us an idea of what they are?

Jane Kennedy: I am happy to do so. In the time that is left to me, I want to be explicit about what that will involve.

I recognise, as does HMRC, that some offices proposed for vacation are in areas that are too remote for the staff reasonably to travel every day to another HMRC office—for example, the 15 or so staff working in the Dunoon office in the hon. Gentleman’s constituency.

HMRC is considering how best to accommodate those who cannot move, while still continuing to offer them suitable work, and it is offering a variety of support tools. Those tools may not be welcome to all staff, but some may take them up. They include assisted home moves that allow 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, when available, suitable moves to other Departments.

HMRC is committed to offering more support to staff than was previously available, in recognition of the difficulties that I anticipate may be experienced by some staff in the hon. Gentleman’s constituency. We have an agreement with the trade unions that there will be no compulsory redundancies. We are working hard with
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HMRC to maintain that agreement, but there sometimes comes a point when the individual has the right to receive compensation for losing a job, as it will allow the person to move on and make a new start in another job elsewhere. We are not at that stage yet, but I need to consider carefully the implications for staff of closures of that nature. We would not do anything without the fullest consultation with the trade unions involved.

I shall speak briefly about the range of offices across Scotland, as it will illustrate the work that HMRC is undertaking. The consultation involves staff, trade unions, Members of Parliament, Members of the Scottish Parliament and local authorities. All have been invited to contribute, and to provide information on travel routes, economic and socio-economic interests in the various localities and the position of other employers and Departments. HMRC plans to announce decisions on the locations toward the end of the year.

I understand the hon. Gentleman’s concern about the possible impact on rural locations. Those factors are important, and I will take them into account. However, as I said earlier those factors have to be weighed against HMRC’s wider need to restructure its business in the most efficient and effective way. The changes that HMRC has gone through since the merger have resulted in increased tax revenues, and the measures taken to reduce the tax gap have already reduced annual underpayments of tax by more than £5 billion compared with five years ago.

The reform and modernisation of the tax authority in the UK, which brought customs and revenue tax functions together in one institution, have proved beneficial
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to the UK, and I believe that the arrangements will continue to bear fruit. The changes were in line with what tax authorities in every other developed economy in the world are doing. I realise that we are taking customs out again and putting it in the new UK Border Agency, but that will prove beneficial, and certainly the staff involved welcomed the announcement when it was made some little while ago.

There will be a period of further reform and change and I appreciate the pressure that that puts on staff—it is reflected in surveys of staff morale. On occasions such as this, I like to put on record the Government’s appreciation of the quality of the work that HMRC staff do, and of their dedication and commitment. The 15 members of staff in the hon. Gentleman’s constituency and those in other nearby offices should not take the fact that we are considering vacating their offices as any reflection on their ability and the skills that they apply to their work.

Finally, the hon. Gentleman said that there was a concern about the loss of local information. I appreciate that there is a lot of local knowledge and that people have worked for HMRC for a long time in many such small locations, but the evidence is that local knowledge is relied upon less as more people use the internet and telephone to conduct their business with HMRC.

I will take what the hon. Gentleman said today very seriously and respond in due course.

Question put and agreed to.

Adjourned accordingly at fourteen minutes past Five o’clock.

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