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Crabb: Re-organisation of HM Revenue & Customs offices in Wales

Speech during a Westminster Hall Debate.

"I am very grateful to have secured this short debate on the reorganisation of Revenue & Customs offices in Wales. I will try to be as succinct as possible in my remarks because I know the Hon Member for Llanelli would like to make a few comments before the Minister replies - and there may be one or two interventions as well.

Other Members - notably the Hon Member for Caernarfon and my Hon Friend the Member for Clwyd West have also indicated that, had this been a longer debate, then they too would certainly have wanted to participate.

The title of this debate really does not capture what it is that is troubling many Hon Members about the Revenue & Customs plans.

Because the consultation, published on 16th November, outlining a suggested programme of HMRC office closures in Wales, amounts less to a reorganisation than to a fundamental and dramatic cut in the presence of HMRC in Wales and the near-total decimation of the network of tax offices in rural West, Mid and North Wales.

Under the Review Cardiff, Swansea and Wrexham will be the principal processing centres while the rest of the network is radically downsized or closed altogether with the projected loss of 1,000 jobs. An enormous swathe of offices from Pembroke Dock to Holyhead is being lined up for closure.

Mid and West Wales will be hit particularly hard by the plans for centralisation:

Aberystwyth, Brecon, Newtown and Welshpool - where more than 200 staff are employed will be reduced to a mere handful of employees.

Carmarthen - drop by two thirds from 127 down to 40.

In my own community of Pembrokeshire, 72 staff at the offices in Haverfordwest and Pembroke Dock would be similarly reduced to a handful of employees.

Devastating blow to one of the poorest regions of the EU Paul Gray (Acting Chairman of HMRC) - said on 16th November in a letter announcing the consultation exercise: 'We think it is essential that we take full account of the impact of our plans on communities before final decisions are taken'.

I think it is essential too.

That's why I would ask the Minister to ensure that, before any changes get signed-off, a proper economic impact assessment is conducted to investigate the localised effects of the office closures, particularly when it comes to Pembrokeshire and the Mid and West Wales region. And it would be helpful if a copy of that impact assessment gets placed in the Commons Library.

The Minister must be aware that we are talking here about one of the poorest regions - not just in the UK but of the entire EU - a region which, once again, has qualified for Objective One funding precisely because of its low GDP per capita, low average earnings and the fragility of its economy.

Like many peripheral rural areas, the economy is characterised by low-margin activities like agriculture and tourism, with low levels of manufacturing and business services.

The result is that Pembrokeshire's economy is dominated by micro-businesses - 83% of businesses employing fewer than 5 people and a high proportion of self-employed workers. The public sector is, in places, actually the dominant economic activity.

When you start wielding the knife to the public sector in places like Pembrokeshire and Ceredigion you risk seriously undermining their local economies.

It really is perverse that, at a time when numerous Government agencies are trying hard to see new sustainable jobs created in Mid & West Wales, another arm of Government is removing a high number of excellent skilled jobs from these communities.

So, I would welcome the Minister's views on the compatibility of the initial HMRC proposals with the Objective 1 programme.

I would also be grateful if the Minister could comment on how the plans help deliver on the stated aim of the Welsh Assembly Administration to see public sector jobs moved out of Cardiff and distributed more equitably in the regions of Wales.

It seems to me that the HMRC proposals would do precisely the opposite. What discussions have there been between her department and officials at the Assembly about this?

The starting point for the re-organisation was, of course, the merger between Revenue and Customs last year which has led to the need for some rationalisation in the office estate. Bringing accommodation back into line with operational requirements seems entirely reasonable.

And I think most Members would agree wholeheartedly that an efficient public sector is a good thing and that Government has a duty to maximise value to taxpayers. I would go further than that and say that Ministers should positively seek out opportunities for streamlining operations.

But what we are talking about here, I believe, is not streamlining of back-office functions at all but deep and severe cuts in the frontline of a vital public service.

And I find it very hard to square the proposals that were outlined in the 'Transforming HMRC' document with the stated aim of the review to ensure that "service standards are improved".

Take my local office in Haverfordwest - one of the ones ear-marked for closure, employing about 65 staff - thus making it one of the major employers in the town.

You have staff working in the function of Debt Management & Banking. These are the people who actually recover money for the Treasury. Their work involves visits to homes. In fact, these visits are a vital part of the operation. How can this be done from Cardiff?

You have Compliance. All the work carried out by the Compliance team in Haverfordwest is location-specific. I.e. it has to be undertaken actually in the locality; it includes visits to businesses to examine records and accounts. How can this work be done remotely from a super Tax Office in Cardiff?

Then you have Processing - or what is known currently as Distributed Processing. This is the business of processing Self Assessed Tax Returns. All of this work, I understand, is to be centralised now in Cardiff.

I would ask the Minister if she could offer some clues as to how these functions are to be delivered to individuals and businesses in Pembrokeshire and across rural Wales to the same or better standard by a centralised contact centre in Cardiff.

My other local office in Pembroke Dock is focused mainly on collection of excise from the two local oil refiners and also a VAT team. There is a no longer a permanent Customs presence at the Port working on detection.

The intelligence side of things is now based in Birmingham. But the VAT team at Pembroke Dock, I am told, is comprised entirely of ex-uniformed staff. One employee there suggested to me that, given the renewed interest in Border Security by this Government, if VAT jobs are to go from Pembroke Dock then the staff could be transferred easily into a new Customs & Security team.

Perhaps things will really come full circle and a proper uniformed Customs presence will return to Pembrokeshire. I would welcome the Minister's view on this idea.

Coming back to quality of service, the Federation of Small Business in Wales has stated that there is "genuine concern" among businesses about the impact of the proposed cuts on the quality of service from HMRC.

Many of these businesses and the self-employed have no specific financial, accounting or taxation expertise. Local contact with Revenue & Customs services is therefore something that they really do value. And, to quote the FSB again, there is a danger that HMRC becomes increasingly perceived as "a faceless agency of enforcement rather than an agency able to afford help and advice".

I note that, under the terms of the Review, HMRC is specifically committed to retaining a face-to-face service in all locations where such a service currently exists.

But, given the sheer scale of the proposed cuts in the document, it really is incumbent on the Minister to spell out just how such a face-to-face service can be maintained to a high standard when the offices themselves will disappear.

Isn't it the problem that HMRC just does not see small businesses in places like Pembrokeshire and West Wales as key customers? I noted the press statement from her Department on 20th November announcing the implementation of the recommendations of the Varney Review into links with large businesses.

The positive approach to providing big business with a high quality tax service contrasts, I am afraid, with the message being sent out by the proposals we are discussing this afternoon.

I would also ask the Minister what assessment she is making of the potential lost revenue as a result of the proposed cuts to HMRC.

I understand her Department is saving £74 million nationally by cutting some 2,500 compliance jobs but that its own figures identify that it will lose £250 million in yield to the Exchequer.

It may be that she considers that the potential loss in yield as a result of this new wave of centralisation will be less than the efficiency margin which can be squeezed out, thus making it worthwhile, but I would be very sceptical. In any case, such calculations should surely be in the public domain.

I would like to conclude - rather negatively I am afraid - by drawing attention to a letter to me from the Paymaster General on 28th July this year about the HMRC estate in which she said - I quote - "There are no current plans for closure of Haverfordwest or any other offices in West Wales."

She then signed-off the letter cheerily "I hope your constituents will find this letter helpful."

Well, no, they don't find that letter very helpful because just four months later they are now staring at a massive programme of office closures and job cuts by HMRC in Pembrokeshire and West Wales.

And this is not the first time my constituents have been given an assurance in writing or at the Despatch Box from a Minister about a threatened local service in Pembrokeshire - only for the assurance to appear totally worthless just a matter of weeks or months later.

I refer specifically to the assurance we were given about the future of Withybush Hospital.

I do hope that the Minister will look hard at what is being proposed in the HMRC Review for West Wales.

If she looks at the evidence I believe that she will see that the proposed closures fly in the face of Westminster and Assembly government economic policy towards this Objective 1 area;

that they will cause real economic damage to a number of sensitive areas;

that they will not lead to an improved taxation service for businesses in West Wales;

and that they risk further undermining the accessibility, the reputation and perception of HM Revenue and Customs among honest taxpaying individuals, families and companies.

I look forward to the Minister's reply."

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