HMRC chiefs say office closure programme will not "fundamentally change" after bruising NAO report

Written by Matt Foster & Suzannah Brecknell on 10 January 2017 in News

Internal message to HM Revenue & Customs staff – seen by CSW – acknowledges that its estate overhaul will save less than expected, but dismisses talk of a major rethink as "just wrong"

Senior officials at HM Revenue and Customs have vowed to press ahead with the tax authority's major programme of office closures, after a report by the National Audit Office revealed that its plans will save significantly less than originally estimated.

HMRC's "Building Our Future" programme will see it close 137 offices by 2021, and move its employees into just 13 new regional sites.

The move has been partly prompted by the looming end of a controversial 20-year PFI deal with property firm Mapeley, and it puts HMRC at the forefront of departments making the shift to larger, regional sites over the next decade under the so-called "Government Hubs" model.

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But while the latest report from the NAO praised the department for improving the management of its deal with Mapeley, it said HMRC's Building Our Future plans had "proved unrealistic", with the department now estimating it could lose "up to 5,000 staff" as it moves to regional centres.

HMRC now expects the Building Our Future programme to save £212m by 2026, down sharply from the £499m it originally expected in its 2015 case.

However, senior figures at the tax authority have now reiterated their commitment to Building Our Future and insisted that the programme will not "fundamentally change", as they pushed back at some of the coverage of the NAO's findings in an internal message to HMRC officials, seen by CSW.

"The media reports pick up on only part of the NAO's report, and the suggestion by some media that we're reconsidering the whole basis for the move to Regional Centres is just wrong," HMRC's chief finance officer Justin Holliday said.

"Our overall plans, including the fact that offices will be closing, haven’t changed. The full report is much more balanced. It recognises that we are right to be tackling our estate, that what we are doing fits with and is part of our broader strategy and that we will save money."

"The suggestion by some media that we're reconsidering the whole basis for the move to Regional Centres is just wrong" – HMRC chief financial officer Justin Holliday

Holliday acknowledged that the department was "having to change and evolve our plans" when compared to its 2015 Spending Review bid, but he said the NAO had conducted its review of the programme while HMRC was "in the middle" of  "detailed planning".

"As is often the case when you are planning, there is a gap and work to do to bring this down," he said. "This is the £600m shortfall over 10 years reported by NAO and in the press.

"In fact the gap is lower than this because we have added some things to the scope of the programme; but there is a gap. We are working this through and I am confident we will close it and that in doing this we will remain true to why we are doing the programme."

A separate Q&A for staff defended the 2015 savings projections, saying they had been "realistic based on our understanding of the property market at the end of 2015".

But it attributed the reduced estimates to shifting "circumstances in the property market", and sought to highlight tweaks made to the original plans in light of those.

"For example, we now know that, to secure the high quality buildings we need, we’ll be moving into our Regional Centres in Bristol and Belfast later than we originally announced," the message said.

Steven Boyd, HMRC's director of estates, meanwhile acknowledged the programme's cost estimates had increased "by around £600 million over the next ten years".

But he added: “We’re confident that we will bring the programme’s costs down. We’ve been open about the fact that our plans will change, and that cost will be one factor in this. For example, we’ve talked about the fact we think some further Regional Centre opening dates, or sizes, might change – and the NAO acknowledges this when it says that we are reconsidering these aspects of our original plan.

“However, we don’t expect our overall plan to fundamentally change, and we still expect our Regional Centres to be based in the same cities we announced in 2015. As we take decisions about any changes to the detail of our plans, you’ll continue to be the first to know.”

"Emerging disaster"

The internal messages from HMRC's leadership came as shadow chancellor John McDonnell (pictured left) used an urgent question in the House of Commons to press the government on the NAO's "damning" findings.

"As we predicted, this is an emerging disaster," the Labour frontbencher said.

"Even the government now accepts there's a tax gap of at least £36bn. These plans will do nothing but hinder tackling tax evasion and tax avoidance."

McDonnell called on Treasury minister Jane Ellison to put a "halt to the planned office closures, end the job cuts at HMRC, and come back with a realistic plan to fully resource HMRC in its vitally important tax collection work".

But Ellison insisted that many of the changes made to the Building Our Future programme had been "about supporting staff better and putting more things in place to support their move".

"It's interesting that the shadow chancellor makes no mention of the potential benefit to staff of this move," she said. 

"These plans will do nothing but hinder tackling tax evasion and tax avoidance" – shadow chancellor John McDonnell

"Of course some people will not be able to make the move, but the vast majority of people are within an hour's journey. They will be supported – one-to-one conversations happen with staff ahead of moves."

Ellison added: "The move to regional centres has never been just about cost savings. It's partly about the way they work in those buildings. Ultimately, we'll have an opportunity to change the way they work."

The ARC union – which represents senior managers in HMRC – has meanwhile called an urgent committee meeting to discuss the implications of the NAO's report.

The union has until now remained neutral on the plans, and focused on supporting members and scrutinising the way the department handles the changes.

But ARC president Vicky Johnson told CSW that although the union had been aware that HMRC's plans were being reviewed, the details set out in the spending watchdog's report had prompted ARC to consider whether their position on the plans should change.



About the author

Matt Foster is CSW's deputy editor. He tweets as @CSWDepEd. Suzannah Brecknell is CSW's senior reporter. She tweets as @SuzannahCSW

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Anonymous (not verified)

Submitted on 16 January, 2017 - 11:15
HMRC have consistently stated that 90% of staff will be able to move to a Regional Centre and Jane Ellison has re-enforced this message, however, the department has repeatedly refused to answer questions about this figure or provide evidence to back-up it

Anon (not verified)

Submitted on 16 January, 2017 - 11:22
HMRC have consistently stated that since the start of the `Building our Future` programme 90% of staff will be able to move to a Regional Centre and Jane Ellison has re-enforced this message, however, the department has repeatedly refused to answer questions raised from staff about this figure or provide evidence to back-up its claim. From the office closures which have taken place so far all evidence seems to be to the contrary and there is a huge risk that very experienced staff will be lost and replaced with new, inexperienced recruits on worse terms and conditions, who are simply unable to provide the expected standard of customer service.

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