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11 Mar 2009 : Column 85WH—continued

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.

10.18 am

Geraldine Smith (Morecambe and Lunesdale) (Lab): I shall be brief. The consultation was a complete sham. The hon. Member for Lancaster and Wyre (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?

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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.

10.21 am

Mr. Lindsay Hoyle (Chorley) (Lab): I thank my hon. Friend the Member for Great Yarmouth (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 the Member for Morecambe and Lunesdale (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
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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?

James Duddridge: Will the hon. Gentleman name the Ministers and constituencies?

Mr. Hoyle: 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?

10.24 am

Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): 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.

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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 the Member for Great Yarmouth (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 the Member for Central Ayrshire (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.

10.28 am

Dr. John Pugh (Southport) (LD): I am grateful to the hon. Member for Great Yarmouth (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.

Mr. Hoyle: Some consistency.

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Dr. Pugh: 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 the Member for Twickenham (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
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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.

10.34 am

Mr. David Gauke (South-West Hertfordshire) (Con): It is a pleasure to serve under your chairmanship, Mr. Caton. I congratulate the hon. Member for Great Yarmouth (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 the hon. Member for Chorley (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.

Mr. Hoyle: 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.

Mr. Gauke: 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, the right hon. Member for Blackburn (Mr. Straw) and
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the Lord Commissioner of Her Majesty’s Treasury, the hon. Member for St. Helens, North (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 the Member for Runnymede and Weybridge (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.

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