HMRC Estate Transformation

With permission, Mr Speaker, I would like to make a statement relating to Her Majesty’s Revenue and Customs estate transformation.

In the 2015 spending review, the Government announced HMRC’s locations programme to transport the Department’s office accommodation across the United Kingdom, moving from 170 legacy offices to 13 regional centres over the space of 10 years. I am pleased to report to the House that HMRC has now successfully secured sites for each of these 13 regional centres. This is a significant milestone in the Department’s trajectory towards serving the taxpayer from buildings that facilitate more efficient and technologically adept working across every region and country of the United Kingdom. This year will see two regional centres open in Belfast and Bristol —the first to follow the pilot in Croydon and to learn from the Department’s findings there. I will be receiving the keys from the developer on behalf of Her Majesty’s Government in the handover next month in Bristol.

The HMRC offices in 2015 varied hugely in size, quality and accessibility of location, but HMRC has since worked towards offices that are well equipped and large enough to offer serious career progression in city centre locations that allow for travel across the country as well as the recruitment of local graduates. The higher standard of building, designed to support digital, flexible ways of working, is an integral component of HMRC’s broader plans to better provide service to the taxpayer at a lower cost. It is by making better use of technology and working differently that HMRC can become a more highly skilled organisation, maximising revenue, increasing compliance and further reducing the tax gap. Its Croydon regional centre is already open, impressing those who visit it with a new understanding of what it means to work for the civil service and providing a valuable prototype for the remaining offices.

Securing the locations of these 13 offices is an important step in the wider Government plans to create hubs across the country, and to move civil servants out of London and the south-east. The regional centres are not just offices for HMRC, but form part of Government hubs and sites for cross-Government work. NHS Digital will be taking space in the Leeds regional centre, for example, and the Department for Work and Pensions will be taking space in Birmingham.

The Cabinet Office is responsible for the wider Government hubs programme and it plans to align Government policy so that it is efficiently used and maximises opportunities for, and productivity of, civil servants. HMRC’s 13 regional centres are the first phase of delivering this vision. I am proud that the public sector is stepping up to the forefront of industry, thinking about what an effective, flexible and inclusive working environment looks and feels like. Far from lagging behind the private sector, HMRC is delivering offices that are suited to the 21st century, maximising current technology and planning ahead for what further change might be in the pipeline. Not only will this enable HMRC to provide its customers with good service while cracking down on the dishonest minority, it is also excellent value for money, saving over £300 million in the 10 years of the programme up until 2025 and then saving a further £90 million a year from 2028.

The route to this transformation is balanced by the recognition that, to protect HMRC from business disruption, current staff and their expertise should be retained wherever possible. HMRC believes that about 90% of the staff that it had at the start of this transformational journey will move to a new regional centre or finish their careers in their current offices. To further manage potential disruption, the Department is keeping eight transitional sites that will be open for longer to help to maintain continuity.

As HMRC gears up to manage the workload resulting from exiting the European Union, it is also providing additional space in regional centre cities for additional staff and retaining some space for longer so that the planning can benefit from the knowledge and experience of existing personnel.

To transform the services that HMRC delivers for the United Kingdom, we are modernising almost every aspect of what we do. I am proud that HMRC is at the forefront of this change within the civil service, and I commend this statement to the House.

I was given advance notice of the contents of this statement while I was in the Chamber for Treasury questions, and therefore time has been limited to prepare for it. I am surprised that we are now discussing this matter given that I and many of my colleagues have repeatedly raised problems with the Building our Future programme and generally been met with one-sentence answers from the Government.

The Minister maintains that this announcement has come today because of the successful securing of sites for 13 regional centres, so I hope that he will indicate to this House which centre was secured yesterday to justify this statement being presented today. When will he publish the list of precise locations of each of these centres, given that he maintains that we have today secured those new places? That would be enormously helpful for us, because without that information we will be forced to conclude that this statement has been made today for reasons other than its newsworthiness.

In July 2014, HMRC published the Building our Future proposals on reforming tax collection services for the next five years. In November 2015, HMRC announced plans to cut the number of offices from 170 to the 13 that are, apparently, having their locations announced today. In January 2017, the National Audit Office published its report on that process. It indicated that that original plan was unrealistic. It stated that the estimate of estate costs over the next 10 years had risen by nearly £600 million—almost a fifth—with more than half of that being due to higher than anticipated running costs for the new buildings. The National Audit Office also forecast a further 5,000 job losses and said that the costs of redundancy and travel had tripled from £17 million to £54 million due to this programme.

So what exactly is happening now among the HMRC workforce as a result of Building our Future? Some 73% of HMRC staff surveyed said that the Building our Future plans will undermine their ability to provide tax collection services. Half of them said that it would actually undermine their ability to clamp down on tax evasion and avoidance. I have to say that that was my assessment as well when I visited a number of current and former HMRC offices right across the country— 10 of them—over the past few months.

I thank the hon. Lady for her response. I will pick up on some of the points that she has raised.

The hon. Lady asked why this statement is being delivered today. I think that she partly, at least, supplied the reason for that herself, in that she has shown a very keen interest in these matters, as have many other Members across the House, quite rightly. It is right, as we have always said, that we will be transparent in the roll-out of this transformation programme, and today is part of that process.

Towards the end of the hon. Lady’s remarks, she called for a review of our arrangements in the context of Brexit and the customs arrangements that our country may face. That is the second reason why it is important that we consider these matters. The debate this afternoon will rightly focus on preparedness, among other matters, and HMRC and its transformation programme lies at the heart of the issues that will be debated.

The hon. Lady asked for the locations of these sites. I believe they are all in the public domain, but I am happy to provide her with a list. She also made several observations about the NAO report and value for money. We are still confident that we will meet our roll-out end date of around 2025. In terms of value for money, there will be savings of some £300 million across the 10 years. I remind the hon. Lady that we will be getting out of a substantial number of private finance initiative contracts that the existing offices are engaged with—PFI contracts that were brought in under her party’s Government in 2001. One driver of additional value for money is that we will be able to unpick the unfavourable arrangements that her party’s Government got us into in the first place.

The hon. Lady asked about the cost of redundancy. I said in my opening remarks that some 90% of those who will be impacted by these moves will either conclude their career in their existing offices or relocate to the new regional hub. The overall thrust of these changes is to ensure that we are better equipped at getting in more tax. It is very much a Labour philosophy that every solution has to involve more money and more people, whereas our approach is adjusting with the times and getting offices in place that are fit for the 21st century, often using complicated data-based interrogation techniques, for which large regional hubs are the way forward.

More than 1,000 people work for HMRC in Southend. I understand that Southend will not be a regional centre, but what does this mean for the people who work in HMRC in Southend? Do the words “eight transitional sites” offer them any short-term hope? Will the Financial Secretary work with me to ensure that the figure is 90%-plus in Southend?

I thank my hon. Friend for his question. As he will be aware, we have announced that we will retain the Southend office until the end of 2022, but I am happy to meet him to discuss that matter.

I thank the Financial Secretary for giving this statement and for advance sight of it. It is clear that he has drawn the short straw today—perhaps it is penance for his “no food, no channel tunnel” gaffe. Somebody needed to give a statement so that we had less time for the Brexit debate, and at least 10 fewer Members will get to speak in it as a result of this statement.

This is an important statement, but the timing is bizarre, given that on 8 January HMRC produced on its website a list of addresses and details of the transitional sites. How come it has taken 21 days for the Financial Secretary to come to Parliament to allow us to ask questions on this statement? How come it happens to be on the day when we are discussing Brexit?

As the hon. Member for Oxford East (Anneliese Dodds) said, the entire programme of transformation and the way that this has been gone about is completely bonkers. Dedicated, experienced staff are being forced out of HMRC as a result of these closures. Communities such as Cumbernauld and Livingston are losing thousands of jobs as a result of these changes. Why on earth does the Financial Secretary think it is good value to close a large out-of-town office and move it to a city centre location where rents are hugely in excess of those in out-of-town locations, where staff will have massively increased travel costs to get to work and where business rates are likely to be far higher? Why does he think that this is a good idea?

The Financial Secretary said that 90% of staff who were at HMRC at the beginning of this process will still be there at the end. What about the 10% of staff who will not be there at the end? Will those staff be made redundant? How many of those 10% of staff are in Scotland?

People worked in HMRC offices in Inverness, Wick and Aberdeen, but the only regional offices in Scotland will be in Edinburgh and Glasgow. Does the Financial Secretary realise how long it takes to get from Aberdeen to Edinburgh, from Inverness to Glasgow or from Wick to Glasgow? It takes the best part of a day to get there from Wick. There is no way that people can commute that distance.

The hon. Lady raised a number of questions, one of which was about the issue of staff.

Answer the question.

If the hon. Gentleman gives me a moment, I will do precisely that, as I always do.

The answers to the hon. Lady’s questions relating to staff and the way in which we will be handling the staff are as I have set out. All staff will have at least one year’s notice of any impending move. The mapping process that HMRC undertook, as it went into the detail of where to locate the regional hubs, was very thorough. It took into account a number of principles, which I will come on to in a moment to answer another of the hon. Lady’s questions. Among those principles is the issue of the travel-to-work time, and every single employee’s home location was mapped against the possible new alternatives under consideration at the time those decisions were being made. I have also raised the issue of the transition offices, which are of course there, among other reasons, to provide employment opportunities for the staff.

The location principles—this comes to the questions the hon. Lady asked about why we have chosen one particular location rather than another, or indeed the existing location of the legacy offices—come down to eight key principles. They include transport connections, which are of course excellent in both Edinburgh and Glasgow, and the talent pool there, such as in universities—for example, Edinburgh and Glasgow have world-class universities—as well as the housing that is available, the quality of the schools and all the matters that will sustain the recruitment of the teams we will be bringing together in these 21st-century and much more sophisticated hubs for dealing with our tax purposes.

The hon. Lady raised the issue, which I know she has raised on previous occasions, of the location of these hubs in relation to our ports and points of entry into the United Kingdom. I think I can reassure her that, quite outside this whole process of the transitional arrangements, we will of course ensure that Border Force, HMRC and the Department for Environment, Food and Rural Affairs have the personnel available at those locations to make sure that they are able to run imports and exports efficiently. There is a general premise, however, in the suggestion that the offices somehow need to be close to people all the time. In fact, since 2014, it has been the case—[Interruption.]

Order. I think there is a sense in the Chamber that there is an inadvertent abuse going on. This is not a debate; it is a statement. The Financial Secretary has twice said that he commended the statement to the House: he said it in response to the first set of questions, and he had already said it when he delivered the statement. A brief and pithy encapsulation of the argument is what is required. A long dilation is not only not required, but notably irritating to the House.

I can only apologise, Mr Speaker, and I obviously accept your guidance on this matter. I believe I was asked about 20-plus questions between the two Front Benchers, but I take your point.

I will deal with one last point. The hon. Member for Aberdeen North (Kirsty Blackman) specifically asked me how many of the 5,000-plus personnel that HMRC is recruiting in the context of our Brexit planning will be based in Scotland. We are up to about 3,500 currently, and I will write to the hon. Lady to make sure that we provide her with the information she has sought.

When I was an inspector of taxes, the office network was totally incapable of being developed for a digital situation. How will this new programme make such development a possibility?

As a former tax inspector, my hon. Friend is probably about as popular as I am as a tax Minister, which is never the most popular job in the world. The answer to his question—in a short and pithy response, Mr Speaker—is that we have to move to the more digital-based, data-based and inspection-based system that is facilitated by the very hubs I have been describing.

This has already cost more; the projected savings have gone down; there are no break clauses in most of the 20 to 25-year leases; and there is little buy-in from other Departments. The Minister has said that the DWP and NHS Digital—interestingly, he picked only two small examples—are buying into a couple of the hubs. Will he list the other Departments that are buying in by locating in these regional hubs?

There has been a series of discussions right across Whitehall, led by the Cabinet Office, in the area in which the hon. Lady has framed her question. The hon. Lady levelled the charge of cost, but she then very quickly went on to talk about savings, and there will of course be net savings from this approach of some £300 million by 2025.

Representing a coastal community, as I do, regional centres tend to be very many miles away. This is clearly a problem for staff, but also for constituents in their dealings with HMRC. Will the Minister give an assurance that, even in this digital age, face-to-face meetings between staff and constituents, where necessary, will be available locally?

All requests for face-to-face meetings are of course treated on their merits, and they are certainly not discarded out of hand. I reiterate my point that, since 2014, tax offices have generally not been open for members of the public to walk in and ask to speak to a tax inspector. Indeed, some 80% of self-assessments are now done digitally online.