HMRC told to rethink ‘expensive’ regional hubs plan

MPs question need for tax collection agency’s shift to city centre bases amid digital services drive

By Jim Dunton

28 Apr 2017

Public Accounts Committee chair Meg Hillier

HM Revenue & Customs has been urged reconsider its plans to shut around 170 regional offices and replace them with 13 regional hubs, a central London headquarters and four support centres.

A report from the Public Accounts Committee said the tax collection agency had been unable demonstrate that it had a “realistic and affordable plan” to deliver such a radical change to its estate, and questioned the need for offices to be based in city-centre locations.

They pointed to projections that the programme would require 38,000 HMRC staff to move workplace, with some 5,000 predicted to leave their jobs, and warned that the programme contributed to a significant risk of the agency not being able to continue business as usual. 

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MPs on the committee, which is chaired by Meg Hillier, said HMRC had twice revised estimates of how much the programme would save, quoting a November 2015 projection that £499m in savings would be realised by 2026, a figure which had reduced to a projection of £212m by September last year.

“We do not believe that it will save as much money as HMRC has predicted and we are concerned that it has not thought through all the negative costs to the wider economy of its approach and the impact on local employment,” they said.

HMRC’s proposals have added significance because they are the first element of a wider government shift to regional hubs being overseen by the Government Property Unit. Eighteen to 22 regional hubs in major cities and 200 “mini hubs” are proposed.

The report said HMRC’s strategy was predicated on a more modern and flexible estate to support flexible ways of working both for HMRC and other government departments which would use the hubs, but was unclear about the extent to which saving money was the motivating factor.

“[The agency] told us that it would consider the programme worth doing even if no savings were generated,” the PAC report said.

“It was not clear to us that the twin aims of improving the estate and saving money were reconcilable, or how HMRC, the Treasury and the Government Property Unit will make judgments where there is trade-off between quality and cost.

“Unless there is clarity about the main objective of the programme, there is a high risk that decisions made now to reduce its scope could prove to be wrong in the long run.”

MPs said HMRC needed to re-work its business case for its estate programme and reconsider whether moving to major city centres was the optimal way to deliver its objectives and achieve value for money. They demanded an update with costs and benefits, and contingency plans by the end of June.

“It has not adequately explained why offices in such expensive locations are necessary to serve customers better or increase the efficiency and effectiveness of its tax compliance work,” they said.

“For example, HMRC has chosen to locate its Yorkshire office in Leeds, despite being more expensive than Bradford, where many HMRC staff already work.”

MPs also said they were unconvinced by the GPU’s proposals to create a new executive agency to centralise the management of the government estate and asked it to “set out clearly” why it thinks quality and efficiency will improve, and what authority the new organisation will have over departments.

Additionally, MPs noted that the HMRC consolidation programme would have a “serious impact” on towns like Cumbernauld in Scotland, where the agency employs around 1,500 staff whose jobs would relocate to Glasgow

They asked the GPU to explain how it planned to take into account the impacts on local economies when deciding how the government estate should be configured.

“We have concerns that HMRC savings could end up shunting costs to other parts of the public sector particularly if jobs are lost,” they said.

The PCS union, which has thousands of members in HMRC, said the report underscored its concerns that the office closure programme posed a significant threat to the agency’s operations and the working lives of staff.

General-secretary Mark Serwotka said: “Cutting thousands of HMRC staff in recent years has hit the services it provides to the public, yet the department and this Tory government are ploughing ahead with poorly thought through plans that would mean thousands more job cuts.”

Civil Service World asked HMRC for its views on the report, but it had not responded at the time of publication.

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