§ 2.30pm
§ Mr. Michael Howard (Folkestone and Hythe)I am grateful for at last having the opportunity to raise the closure of the tax office at Folkestone, which is of such concern to many of my constituents. However, I am sorry that this concern should have caused the Minister the inevitable inconvenience of participating in a debate at this late stage before the House rises for the recess.
I am particularly sorry that the Financial Secretary to the Treasury, who has ministerial responsibility for the decision which I seek to question, is unable to reply, although I understand why it has not been possible for him to be here.
I raise this subject without enthusiasm. I wish to make it clear that I support the objectives that the Government are pursuing, both in general and in particular. I also support the way in which they are seeking to achieve those objectives. It is of the utmost importance for our economic future that the public service in all its manifestations should be efficient, effective and economic. Indeed, the economic future of the country is central to our future in all other respects. In particular, we cannot hope to achieve the social objectives that we all share in terms of education, health and the ability to help those in need if we do not have the resources necessary to achieve them and that can only come with economic success.
I also accept that economic success means change. It means that we cannot expect everything to carry on as before, that we cannot expect all the services to which we have been accustomed to be provided in exactly the same way, and, even, that we cannot expect all our tax offices to remain intact.
I believe that my constituents understand that and are prepared to support it. Indeed, the general election result in my constituency bears that out. However, if their support is to be retained and reinforced and increased, as I hope it will, it is essential that these necessary changes, particularly when they disrupt habitual patterns of life, are handled sensitively. Above all, they must be explained in a way which makes sense to those affected by them.
On the major issues which occupy the centre of the political stage, this has been done. For those who are prepared to listen, the explanations exist and they are convincing. Had the Financial Secretary, during our lengthy exchanges on this matter, been able to convince me of the good sense of the Inland Revenue's decision to close the Folkestone tax office, and had he been able to convince me that that decision had been taken with full regard for all its implications for those affected and after a proper consideration for all the alternatives, I would have been prepared to commend that decision to my constituents and to defend it.
However, it is a matter of regret that the Financial Secretary has not convinced me and that I have not been able to commend it, and having failed over a considerable period to convince my hon. Friend of the soundness of my criticisms of this decision, the only step now left open to me is to raise the matter in the House.
To explain the basis of my dissatisfaction it is necessary to recite the history of my involvement in this matter. I shall not refer to all the correspondence that has passed between me and the Financial Secretary, but some of it is at least relevant, and I shall be obliged to refer to it.
403 The first I heard of the proposed closure of the Folkestone tax office was when, in late October of last year, I received a letter from the Financial Secretary. I do not blame him or anyone for that. I readily accept, as he told me in that letter, that his predecessor wrote a letter to my predecessor in April of last year giving initial notice of the Inland Revenue's plans. As it happens, neither my predecessor nor his secretary has any record or recollection of receiving such a letter. Nor have I, though my communications with my predecessor were, and are, excellent, and he was punctilious in keeping me informed of matters about which I might need to know. I do not complain or argue about that today. As I say, I accept that the letter was sent, and there could be many reasons why it failed to reach my predecessor and me.
Whatever the reason, I knew nothing about this proposal until I received, towards the end of October, the letter from the Financial Secretary. In it he said, as one would expect, that a great deal of thought had been given to the effect which the proposal would have on the local community and whether that would outweigh the need for savings and greater efficiency. That is precisely the approach which I would have expected to be adopted. What has disturbed me about this decision is that I am not convinced that it has been.
When I received my hon. Friend's letter, I took soundings in the constituency and then wrote to my hon. Friend. I asked him some questions. I asked whether an assessment had been made of the savings which could be expected to accrue from the closure. I asked for the result of such an assessment and, in particular, whether account had been taken of the fact that Folkestone had a high proportion of elderly residents who might be inconvenienced by having to travel further afield. I regret to say that I have not had answers which I consider to be satisfactory to the first two questions and that the answers to the third are not only mutually inconsistent but flatly contradictory of each other. That, in a nutshell, is the essence of my complaint.
The Financial Secretary dealt with my first two questions in a letter to me in January of this year. He said that Folkestone dealt with fewer taxpayers and employers than either the Ashford or Dover tax offices, which lie on either side of the area currently served by the Folkestone tax office; that the geographical area dealt with by Folkestone district was smaller than that covered by the other two; and that its closure would cause less disruption to taxpayers and members of staff than the closure of Ashford or Dover.
As criteria for decision-taking in this important area, those factors reveal a simplistic approach. First, they are based on a consideration of the three districts of Folkestone, Ashford and Dover in isolation from other districts in a way which I find surprising. Secondly, they ignore the qualitative differences between the various offices and their convenience in terms of location. Thirdly, they ignore such important factors as the ownership of the various premises under consideration.
I will comment on each of those criticisms, but first explain the course which my discussions on the matter took. The Financial Secretary, having failed to satisfy me in correspondence, agreed to see me about the issue. When I put the various points to him at that meeting, he suggested that I meet the official at the Inland Revenue who had carried out the analysis on which the decision was 404 based and who would have detailed answers to questions of that kind. I welcomed that suggestion and the meeting duly took place.
As I shall refer more than once to what was said at that meeting, let me make it clear at the outset that the official whom I met was courteous, helpful and, I have every reason to believe, frank. We had a useful discussion and he answered my questions fully. I asked him whether consideration had been given to the possibility of reorganising other units so as to arrive at a more satisfactory arrangement for the whole area. He replied that it had not, since other districts which were relevant were the right size and were not, therefore, the subject of further consideration.
In one of his most recent letters to me, the Financial Secretary says:
It is not the case that the possibility of including Canterbury in the original appraisal was not looked at.I find that a puzzling assertion. If it means that Canterbury was looked at, found to be the right size and then ignored, it is consistent with what I was told by the official. It is no doubt accurate, but it is irrelevant since it does not meet the point that I was making.If it is to be ascribed a more substantive meaning, it is inconsistent with what I was told by the official to whom I was specifically referred by my hon. Friend as the person with all the detailed information at his disposal. Either way, the position is unsatisfactory and my first criticism of the first part of the decision, namely that the tax districts of Folkestone, Ashford and Dover were considered in isolation, is not satisfactorily met.
My second criticism relates to what I described as the qualitative differences between the offices and their convenience in terms of location. If I sought to substantiate that point on the basis of a comparison between the Folkestone and Dover offices, it is not because I asked that the Dover office should be closed. I do not know whether any of the tax offices in the area should be closed, or, if one or more of them were closed, which of them it should be. My argument is that the question has not been properly examined and it is purely by way of illustration of that proposition that I make this comparison between the Folkestone office and the Dover office.
The Folkestone tax office has a most convenient location. It is close to the railway station and it has ample car parking facilities. As my hon. Friend is doubtless aware, the Dover office does not have its own car park and is at least 15 minutes' walk from the railway station. These important matters should have been taken into account and given full weight in the decision. They were not mentioned as part of the simplistic criteria that were identified by the Financial Secretary in our correspondence. I have no confidence that they were given the weight that was justified.
My third criticism relates to such matters as the ownership of the premises under consideration. On 25 January the Financial Secretary replied to a motion on the Adjournment that was raised by my hon. Friend the Member for Derbyshire, West (Mr. Parris) about the closure of the tax office at Matlock. The Financial Secretary, as one of his principal reasons in justifying that decision, relied on the fact that closure of the Matlock office would enable the Department to give up leased 405 premises in Matlock and to use more fully the existing Crown building in Alfreton. That was a sensible basis on which to take the decision.
In south-east Kent, the Folkestone tax office is a Crown building that could be used more fully, but the Dover office — again, I use Dover merely for illustrative purposes—is in leased premises. Therefore, if my hon. Friend were to adopt the same criteria for Kent as for Derbyshire, that would have been a powerful consideration in favour of retaining the Folkestone office, especially as I have repeatedly asked my hon. Friend in correspondence whether there were any plans to use the space in the Crown office at Folkestone after it was vacated by the Inland Revenue. The answer that I received from my hon. Friend on that point was that the Property Services Agency has not yet decided to what use the vacated floor in the Crown building would be put. The important point, however, is that the Inland Revenue is reducing its demands on the Government estate, thus giving the potential for savings.
With the greatest respect to my hon. Friend, that was a most surprising statement. My hon. Friend is saying in effect that, for the sake of a purely notional saving that may never be translated into hard cash, he is prepared to continue with a certain liability in the form of the rent payable on the premises in Dover, which would otherwise be unnecessary. I hope that that sort of logic is not allowed to extend too far into other areas that come under the wing of my hon. Friend's Department.
Finally, I turn to a factor in the issue that is of great importance in itself, and that illustrates the unsatisfactory way in which the decision-making process has operated in this case. Folkestone has a population with a proportion of elderly citizens that is well above average. That is important in this context for two reasons. First, it is especially important that they should have access to facilities of this kind. Secondly, they are likely to have particular need to call at their local tax office. The complications that can arise for someone who receives a small private income in addition to a retirement pension are considerable and can lead to much confusion. The problems can be substantially eased by a personal discussion at the local tax office.
I was especially anxious, therefore, to establish whether the fact that Folkestone has an unusually large number of elderly people had been taken into account. In a letter of 1 December, my hon. Friend assured me that the problems faced by the elderly in Folkestone had been taken into account before the final decision was taken.
When I met the official to whom my hon. Friend had referred me as the person responsible for the analysis—the man with detailed knowledge of the facts—I asked him how this fact had been taken into account. He replied that it had not. I was so surprised by this answer that I repeated the question, but the answer was the same. When I drew this inconsistency to the attention of my hon. Friend he suggested that there must have been a misunderstanding at our meeting. With the greatest of respect to my hon. Friend, the question, "Was the fact that Folkestone has an above-average proportion of elderly people taken into account?" and the answer "No" do not admit of much misunderstanding. While I cannot speak of any misunderstanding that may exist in my hon. Friend's Department, there was no misunderstanding at the meeting 406 that I had with his official. Nor was I greatly impressed by my hon. Friend's parenthetical reference in his letter after the meeting to the effect that Dover and the south coast generally have a high proportion of elderly taxpayers. The proportion of residents of pensionable age and over is over 25 per cent. in my constituency, just over 20 per cent. in Dover and under 18 per cent. in Ashford. That significant factor should have been taken into account. It is not surprising, in the light of the events that I have described, that I am not satisfied that that has been done or that, if it has, anything like sufficient weight has been given to it.
When I think over the matter and try to identify the essence of my hon. Friend's reasons for the decision that was taken, I am driven back again and again to one sentence in his letter to me of 30 May this year, which reads:
Folkestone district is sandwiched between Ashford and Dover Districts and is the obvious office to close given the reorganisation of the three Districts into two".I am very conscious of the fact that I am a relatively new Member of the House. I am conscious of my inexperience, and I may be naive in such matters, but I had hoped, in my inexperience and naivety, that such decisions were taken on the basis of a rather more edifying principle than piggy in the middle. I have failed to discover any more edifying principle in my hon. Friend's justification of the decision on the matter and, even at this late stage, I beg him to reconsider it.
§ The Minister of State, Treasury (Mr. Barney Hayhoe)I appreciate the courteous comments of my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) in opening the debate. There was no need for him to apologise for raising a matter of concern to his constituency. It does not matter what hour it is in the House. Part of the reason why we are all here is to provide just such opportunities. I am also grateful to my hon. and learned Friend for his understanding reference to my hon. Friend the Financial Secretary to the Treasury, whose unavoidable absence from the debate, I can assure my hon. and learned Friend, is no more regretted by him than it is by myself. I shall try to respond to the points that my hon. and learned Friend made with the customary force and clarity that we associate with him, particularly when he is arguing a case on behalf of his constituency. I assure him that the Financial Secretary, with his officials, will study what he said. No doubt he will be in touch with my hon. and learned Friend if he feels that that is appropriate.
Before dealing with the specific points about Folkestone, I think that it is right to try to set this matter in the wider context, as my hon. and learned Friend did. The general background is that in 1982 an Inland Revenue committee completed a review of the organisation of the local tax district network. It reported on the principles that should decide the size, and hence the number, of these offices. The report was part of a more general review of the work of inspectors of taxes, the aim of which was to help the Department to make the most effective use of those highly trained staff.
As a first step, the Inland Revenue fused the principles recommended by the committee to prepare an outline plan for reorganising the tax district network. That was 407 announced to the House in April 1983, and a copy of the Inland Revenue report was placed in the Library, together with a note on the reorganisation proposals.
The Department also circulated details of the proposals to staff and their union representatives to enable them to consider the plans and make representations. Press releases were also made in April 1983.
In a relatively small number of cases the proposals involved the closure of the only tax district in a town, Folkestone being an example. Recognising the particular difficulties that those towns and their communities might face, the then Financial Secretary, now my right hon. Friend the Secretary of State for Transport, wrote in April last year to each of the hon. Members representing those towns to alert them to the plans. I was sorry to hear today that that letter was not seen by my hon. and learned Friend, who was then a candidate, or by the former Member for his constituency. Nevertheless, the records show that a letter was sent. As I have explained, other ways were also found to publicise the proposals.
In reaching final decisions, the views of hon. Members, other interested parties and staff were carefully considered. The consultative process lasted about six months and it was not until late October that the final plans were announced. My hon. and learned Friend said that that was the first he heard of the plans, and I am sorry that that should be so. I do not believe that it would have been possible to contact individually all those who might have had an interest in the matter to bring the proposals to their attention. That would have involved an enormous work load. Nevertheless, I believe that the Department has behaved reasonably and properly. Indeed, I believe that my right hon. Friend the former Financial Secretary was especially courteous in writing individually to those Members whom he believed were particularly concerned.
Implementation of the final plans will mean the closure of 164 out of a total of 765 offices. That will allow more efficient and effective use of existing staff resources, especially trained inspectors, which is the prime purpose of the exercise. It will also provide significant savings in the cost of accommodation and administration throughout the country.
More effective use of inspector resources will be achieved in various ways. For example, a large number of fully trained inspectors will be released from management duties for redeployment in areas in which it has already been shown that they will be more cost effective, although I am afraid that it is not possible to translate this move towards greater effectiveness and efficiency into some kind of profit and loss account with quantifiable financial savings. I should stress that the reorganisation plans are not a staff cutting exercise. The intention is to make better, more effective use of existing resources.
The closures will come mainly in cities and towns which currently have more than one tax district. Birmingham, for example, which now has 21 tax districts will be reorganised into 10 offices. The plans also mean, however, that 23 towns—including Folkestone—will lose their only tax office.
Where the proposals involved the closure of the only tax district in a town it was recognised from the beginning that factors other than efficiency and savings had to be taken into account. In particular, loss of access and the effect on the community generally and on the staff of the offices were of considerable importance. A difficult balance had to be struck. After careful consideration, it 408 was decided that of the 39 towns scheduled to lose their tax offices under the outline proposals announced in April 1983, 16 would retain their offices, which shows the willingness of the officials and Ministers concerned to listen to and take account of the representations that were made.
Let me now deal with Folkestone specifically. I understand that the plan is to reduce the three tax districts in Folkestone, Ashford and Dover to two districts based in Ashford and Dover. Of the three existing districts, two are below the minimum recommended size and the other is less than optimum size. The arguments for change are compelling as the reorganised districts will both be of optimum size so that the best use of staff can be achieved.
In arriving at this decision, south-east Kent was looked at as a whole. It was in that context that the decision was taken about Folkestone. At present there are five tax districts—Margate, Canterbury and the three previously named. In the event, it was decided that Margate and Canterbury should remain unchanged. Margate is already of optimum size and covers a compact geographical area. The same may be said of Canterbury, which is situated in the centre of the area for which it is responsible.
Although it has been suggested that a feasible alternative would be to transfer part of the area now dealt with by the Dover office to Canterbury, with the remainder going to Folkestone, thereby closing the Dover office, I am advised that the fundamental objection to that suggestion is that Canterbury would consequently have to shed a significant part of its area to Sittingbourne district, which would be generally undesirable because Sittingbourne is both 16 miles away from Canterbury and is also a vital element in another reorganisation of six tax districts.
We are dealing with an interlocking pattern. The disturbance of one part of that pattern can lead to considerable difficulties. The compelling reason for selecting Folkestone for closure was that it was judged to produce the least inconvenience to the tax paying public in the general area on the basis that one of the three district offices was to be closed.
My hon. Friend the Financial Secretary is well aware that the closure of the Folkestone office will cause inconvenience to many of my hon. and learned Friend's constituents. It is true that a large number of elderly tax payers live in Folkestone, a proportion of whom undoubtedly find it difficult to understand all aspects of their tax affairs—do not we all?—and that for some personal contact is often the best and perhaps the only way in which matters can be properly explained to them. As my hon. and learned Friend acknowledged, Dover and the south coast generally are popular areas for pensioners and the closure of Dover, or indeed Ashford, would pose similarly difficult problems to that of Folkestone. Therefore, this was not an easy matter to decide. However, the Inland Revenue and my hon. Friend the Financial Secretry concluded that on balance the argument for the closure of Folkestone should prevail.
My hon. and learned Friend referred to discussions that he had had with officials. As I have not seen a full record of them, it would probably be best if I did not comment on them. I hope my hon. and learned Friend will accept that the decision does not rest with the officials. The fact: that he raised the matter with my hon. Friend the Financial Secretary should make it clear that Ministers have reconsidered all the matters in the light of the 409 representations made by my hon. and learned Friend. It would have been wholly wrong if the Financial Secretary had not done that. My hon. and learned Friend and all other hon. Members will recognise the courtesy and care which the Financial Secretary takes when he deals with such matters.
The arguments have undoubtedly been considered. Proper arrangements were made for consultations to be made before the decision was reached. My only regret is that the letter sent by tile previous Financial Secretary did not reach my hon. and learned Friend and that the possiblity of representations from him did not arise. My hon. Friend the Financial Secretary is satisfied that due weight and consideration were given to all the arguments.
More generally, the cost savings and improved operational efficiency that will result from the closure of 164 tax offices, including Folkestone, will make a worthwhile contribution to the Government's programme of improving the efficiency and cost-effectiveness of public services. Although my hon. and learned Friend may remain unconvinced about the Folkestone decision, I am glad that he underlined in his opening remarks his general support for the wider objective of getting better value for the money spent on the administration of the tax system. I was grateful for the general support which he gave to those plans.
My hon. Friend the Financial Secretary will consider what my hon. and learned Friend said. It would be wrong if I held out any hope or gave any commitment of the likelihood of a change in the decision. I am sure that my hon. Friend the Financial Secretary will write to my hon. and learned Friend if anything that he said during the debate raises a new issue to which it would be appropriate for the Financial Secretary to respond.
I hope that what I have said about the broader contents of this decision will go some way to assuring my hon. and learned Friend's constituents that the inconvenience which some of them will undoubtedly suffer as a result of the decision will be balanced overall by greater efficiency in the public services—an aim which we all share and support.