§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Andrew Mitchell.]
2.30 pm§ Sir Roger Moate (Faversham)I am grateful to my hon. Friend the Financial Secretary for being here personally on, no doubt, an inconvenient Friday afternoon to respond to this debate on the proposed closure of local tax offices.
If the debate had been held at a more convenient time in the parliamentary week, it would have been supported by the hon. Member for Birmingham, Hodge Hill (Mr. Davis), who is an adviser to the Inland Revenue Staff Federation. May I say how supportive he has been and that he would have been here were it not for prior commitments?
I have been impressed by the case put, and the manner in which it has been put, by members of the staff federation. They must be, and are, concerned about the disruption to the lives of their colleagues, but their arguments have related principally and genuinely to the question of providing a service to local taxpayers. Despite the likelihood of the closures going ahead, their concern, and mine, is that this should not happen unless we can retain a proper Inland Revenue presence, even a small but proper one, to provide good customer service to local taxpayers.
I have long been impressed by the commitment of the Inland Revenue to service to the taxpayer under the taxpayers charter. Even before the citizens charter entered our political life, I recall visiting Somerset house to be greeted by a large and splendid board proclaiming the taxpayers charter. Like the Ten Commandents, it was there, proud and dominant. There was and is a genuine commitment to the charter, and I understand that it is displayed in every tax office.
If it were not a Friday afternoon, we might have been graced by the presence of the Home Secretary, who once had an Adjournment debate on the closure of Folkestone tax office. Perhaps Mr. Matthew Parris would have been in the Press Gallery, because when he was a Member of Parliament he took the same course fora tax office in his Derbyshire constituency. Those were the last two Adjournment debates on the subject.
It is proposed that the Sittingbourne tax office should close this August. It is not the conventional wisdom that the Inland Revenue is held in love and esteem by its customers, but the proposal has created a great deal of local opposition and concern. I shall later give the Minister a petition that was gathered in the space of a few hours in Sittingbourne. It has been signed by more than 700 taxpayers who oppose the closure. I must warn him that the second signature on the petition is that of a Mr. Major, who may have friends in high places. Local companies, business interests and professional accountants have also objected to the proposal. I, too, oppose the closure most strongly.
I hope that, over the years, I have not troubled the local tax office too often, but when I have done so I have always received a most courteous and helpful response. The office has been of great assistance both to me and to my constituents. I shall be very sorry if that valuable link is lost.
609 Time after time, local offices have been withdrawn in many spheres of government, the public services or public utilities. It seems that there is a relentless drive towards centralisation which, we are told, will save money, use resources more efficiently or improve services to the customer. However, the opposite almost always happens: centralisation costs more, wastes resources and reduces the level of customer services. In any event, it certainly reduces the quality of face-to-face service.
We are often told that such changes are the inevitable consequence of the computer age and the revolution in information technology, but the reverse should be the case. Just as the computer terminal allows professional skills to be employed even at home, the computer link should encourage rather than undermine the provision of local services in local offices, offering face-to-face help to the consumer, backed up by direct and instant access to all necessary information.
I am not convinced that it will be cheaper or better to close local tax offices and centralise their services in a few, very large offices. Taxation officers and Revenue staff will need the same phones, desks, offices and computer terminals. It is not immediately clear where the substantial economies of scale are to be made, but it is clear that there will be greater travel costs for everyone—public and staff alike—and that local services to the customer will be lost.
My immediate concern relates to the proposed closure of the Sittingbourne office. It is a large office employing 80 or 90 staff who dealt with no fewer than 1,100 personal inquirers in the past 12 months. That was in addition to telephone inquiries and inquiries from visitors who wanted literature or those who attended for formal interviews. Let there be no doubt about the importance of the office in terms of local service or about the inconvenience that the closure will cause.
It is proposed to relocate the office in Maidstone. The journey to Maidstone by public transport is so long that it will deter most people. It is bad enough getting from Sheppey or other parts of my constituency to Sittingbourne, but the round trip of about 50 miles from Sheppey to Maidstone is unthinkable. One would have to allow a couple of hours for a return journey even from Sittingbourne to Maidstone or about three hours from Faversham or Sheppey to Maidstone. One must also take into account the inconvenience, the time lost and the cost of transport. The Minister and the Inland Revenue must understand that, in practice, people will not make such long journeys. Indeed, they cannot make such journeys, so customer services will be lost.
I shall concentrate on a number of issues that arise from the Sittingbourne closure but which apply equally to the question of Inland Revenue reorganisation. I do not think that most people—or, indeed, most hon. Members—are aware that we are on the threshold of an enormous reorganisation of the Inland Revenue network of local tax collection offices. I am told that there are 766 local offices, the majority of which will cease to exist in the next decade. There has been very little debate and very little justification for this immense exercise. I have suggested that the Treasury Select Committee should look into it, but I do not know whether it will. I hope that it will, because it is important that it should.
Let me put it on record that it is possible—probable, I suspect—that the Inland Revenue could make a powerful and first-class case for the process, but, equally, it is right that the process should be scrutinised, challenged and 610 justified. I suspect that, after proper analysis, the case might prove not to be so strong, but it should at the very least be scrutinised. If it is not scrutinised properly by the House, we may be inundated with hundreds of similar Adjournment debates on Friday afternoons. If that is not a deterrent, I do not know what is.
I recently asked the Minister questions—through parliamentary questions and in correspondence—to which he gave frank and helpful answers. I asked whether there had been proper consultation with everyone involved. I wanted to know about the projected savings and how the Minister intended to continue to provide good customer services locally in order to meet the criteria of the citizens charter.
My hon. Friend gave some full and courteous answers. I do not intend to be abrasive—I hope that I never am —in saying that the answers simply serve to increase my scepticism about the whole exercise. I hope that my hon. Friend does not think that I am being too dismissive of the information he gave me. In effect, the savings are minuscule, if they exist at all. My hon. Friend has given me more information in a letter I received today which bears that out. In some areas there may be some savings, but in other areas there may not be. New central costs are incurred in terms of computer services and the like. It is clear that an immediate and substantial saving is not the objective of the exercise; even if it is, it will not occur.
I asked my hon. Friend about consultation, and he said that a number of representations had been received. However, I had the impression that, although the representations might have been courteously received, the programme was under way and virtually unstoppable, and that consultation was not really part of the exercise. I refer to public rather than to internal consultation. I leave it to others to decide whether that has been proper. I gather that there may be some complaints in that respect, but my objective today is not to deal with those.
The answers on the citizens charter implications were not satisfactory. My hon. Friend said:
the Department is investigating alternative ways of meeting taxpayers' needs."—[Official Report, 10 May 1993; Vol. 224, c. 326.]It is not satisfactory to be told that alternative ways of providing help are being investigated when it is proposed that closure should take place this August.I do not intend to dwell on the question of cost, but I point out that I was told that the total saving from the reorganisation in our area would be £1.25 million. That figure is rather dubious. Even the rental savings in Sittingbourne are likely to be only £79,000, which is such a small amount that it is likely to be absorbed by the margin of error. The £1.25 million saving arises from the substantial reorganisation of many offices.
It points to the scale of the exercise that, by March 1994, as my hon. Friend has told me, 15 reorganisations involving 71 existing offices will have taken place. Of those, 61 offices will cease to exist in their present form. It is that larger reorganisation which saves the relatively small amount of £1.25 million. I wonder whether that allows for the number of local offices that will be vacated and left empty, such as the excellent Revenue office in Sittingbourne? Taking all that into account, are we saving anything at all? So often in such reorganisations the costs go up. Reorganisation costs money.
I return to the key issue of' meeting taxpayers' needs, on which I believe my hon. Friend can and should do 611 something. He should make it clear to the Revenue that providing proper tax advice offices in every significant town where offices exist today is a condition which must be met before reorganisation proceeds any further, either in my constituency or anywhere else in the land.
As a Treasury Minister, my hon. Friend is a perceptive and fair man. I never used to say that when he was a Whip, but I hope now that he will acknowledge that his answers have fudged the issue. They do not deal properly with the provision of a future service for taxpayers. I do not blame my hon. Friend the Minister or the Inland Revenue officials for doing their best with the reorganisation. They are working to their brief and doing their best, but such schemes develop a life and momentum of their own and sometimes need correcting. What should be provided to replace tax offices if and when they are closed? The answer I first received from my hon. Friend was:
The Department is investigating alternative ways of meeting taxpayers' needs.The closure is to take place in August, so it is a bit late to be investigating it. That is fundamental.I then gathered that there might be a proper tax advice office locally. I take that to mean a small office—in Sittingbourne or anywhere else that is appropriate—manned by a small professionally qualified team of staff who can deal with most inquiries and help taxpayers, with direct access to computer records and enabling taxpayers to make appointments for interviews with inspectors on agreed dates. All such Revenue staff could be fully engaged all the time, doing normal tax work as well as providing a face-to-face customer service. But is that on offer? I think not.
I am told that such an office might be created at Maidstone or at other new large tax offices when they are established to replace the existing 766 offices. It is of little use to my constituents if the office is at Maidstone and in an inaccessible location.
My hon. Friend the Minister tells me in his letter today that there will be an improved telephone service. That is very good, but it is not what most people mean by a face-to-face personal service. Remember: there are 11,000 personal callers at our local tax office. A telephone service is not enough; it is not what people consider to be local service in accordance with the taxpayers charter.
We are then told about a mobile advisory service—a tax man in a tax van. Like the mobile library service, that may be good for villages, but most people will not consider it an adequate alternative to a regular, permanent, proper service in substantial towns and communities throughout the country. We are also told about tax clinics. I cannot really distinguish between the tax clinic and a mobile tax service. Neither sounds very substantial or permanent.
The solution to the problem is clear and would be easy to implement if my hon. Friend would take it on board. My suggestion is constructive rather than obstructive. It is simply that we should ensure that there are properly manned genuine tax advice or tax assistance offices in towns throughout the country.
The Government and the Inland Revenue should take a much harder look at the reorganisation scheme and should pause before closing any offices and, in particular, the Sittingbourne office. I have neither read nor heard anything to persuade me that the exercise will be anything other than more costly, more bureaucratic and more 612 inconvenient for staff and public alike. In its present form and without improvement, it runs contrary to the whole spirit of the citizens charter and the taxpayers charter, to which I know and believe the Inland Revenue is truly dedicated.
§ The Financial Secretary to the Treasury (Mr. Stephen Dorrell)I thank my hon. Friend for what he said about the commitment of everyone who works for the Revenue to the principle of quality of service. I am sure that he is right in what he said. The Inland Revenue is not always presented in a favourable light and when an opportunity to recognise the importance of its work arises, it should be taken. I thank my hon. Friend for doing that and wish to associate myself with his remarks on that subject.
My hon. Friend fairly sought to present his argument in the context both of the specific circumstances affecting Sittingbourne and of the general programme of office reorganisation on which the Revenue is embarked. Let me try to respond to his arguments in very much the same spirit. I shall start with the general and work towards the specific, using Sittingbourne to illustrate some of the general points. I should say in parenthesis to my hon. Friend that I share his natural suspicion of many of the arguments advanced in favour of improving efficiency and value for money by centralisation. That is a prejudice which I share with him absolutely.
I also share some of my hon. Friend's discomfort about the application of the principles of change within the Inland Revenue in the local office context. One of the things that my hon. Friend and I have in common—apart from the fact that I was once his Whip—is that the local tax office that serves Loughborough is also tied up in a programme of change similar to that which affects his constituents in Faversham. Therefore, I share his prejudice and his local constituency interest in the issue.
I want to refer to the programme of reform which my hon. Friend described and which, he rightly said, would merit more debate. One of the frustrating things about being a Minister is that one can commit a fair amount of time and effort to working out a policy programme and one can announce it, but if it does not capture the imagination, securing a debate on the issue is very much easier said than done. I would not run away from a debate on the programme and I agree with what my hon. Friend said about the merits of having a better understanding in the House and outside about what the Revenue is seeking to do.
I believe that the arguments in favour of the programme of change which was announced to the House—it was not kept secret—as a 10-year programme by the previous Chancellor of the Exchequer, are very powerful. The programme was announced just before the last election, so clearly we did not believe that it was something which needed to be shuffled under the carpet.
To understand those arguments, perhaps it is best to start by understanding the present situation and the disadvantages in the present structure of tax offices, which should be balanced against some of the advantages to which my hon. Friend referred.
It is quite right to say that, under the present system, we have an extensive office structure which is represented in most significant towns and cities all over the country. That much is true. However, it is also important to remember 613 that that office structure has weaknesses, one of which is that we still have in our tax system a distinction which no one, starting with a clean sheet of paper, would wish to defend as a principle that we would want to reinvent. That is the distinction between the inspector of taxes and the collector of taxes.
One of the most frustrating things about dealing with the tax system as it is presently structured is to be told by the inspector or collector—whoever it is one wishes to speak to—that he does not deal with the issue that one wants to talk to him about and that it is the responsibility of his colleague—the collector or inspector—on the other side of the fence. The distinction between inspector and collector is not something that I regard as a strength of our system.
Another disadvantage in our system is that although there is a local tax office in each significant town and city, it does not mean that a resident of that town will have his tax affairs handled in that office. The vast majority of residents have their tax affairs dealt with through the schedule E system of PAYE. The PAYE base is not in the tax office where the resident lives, it is in the tax office of the payment point of the employing company. With regard to large national companies, it can take some time to find the right tax office to inquire about one's affairs. One does not deal with one's local tax office as the tax office is determined by the employer's payment point.
Another disadvantage of our present system is that even if one ultimately finds the PAYE office that deals with one's PAYE affairs, if one has more complex tax affairs it is likely that that office will not deal with other aspects of one's circumstances. Individuals might find themselves dealing with more than one tax office in relation to different aspects of their private affairs.
All that is the result of our traditional system. Those are weaknesses of that system. That is why the Revenue has embarked on the process of change to try to address some of those weaknesses and at the same time—I do not apologise for this—to deliver significant cost savings.
What does the programme of change announced by the Chancellor in March 1992 do? First, it addresses directly the distinction between inspector and collector as it commits the Revenue to merge those two operations. Secondly, it seeks to establish the new office structure—the three-tier office structure—to which my hon. Friend referred and with which he is clearly familiar.
That structure will bring significant benefits. It will bring, first and foremost from the taxpayer's point of view, a new system which will ensure that there is, for each taxpayer, a single point of contact with the Inland Revenue for the first time. Whether one is dealing with a collection function or an inspection function, and whichever part of one's affairs—if they are complex—one is dealing with, there will be a single point of contact.
Dealing directly with my hon. Friend's point about the taxpayer assistance system, because it will be a more specific function within the Revenue, there will be a more direct commitment and a greater capacity to deliver a high-quality taxpayer assistance service than exists at the moment. I know that my hon. Friend doubts that, because he read my letter on the subject and he says that we have not yet committed ourselves in concrete to what precisely the structure of that service will look like in Sittingbourne.
My hon. Friend is on to a fair point, except that it seems that what is important in the context of taxpayer assistance is not the bricks and mortar, the nature of the 614 office and telephone and the qualifications of the person who will sit there, but that the taxpayer assistance service directly answers the specific concerns of the citizen, the taxpayer, whom it is there to serve.
I turn my hon. Friend's arguments back on him and stress to him the benefit of having a commitment to taxpayer assistance which is flexible and which we are determined should respond to the specific concerns that are expressed in my hon. Friend's constituency, for example. I am not sure whether my hon. Friend would think that the interests of taxpayers in Faversham are best served by having bricks and mortar in Sittingbourne or having a specific support provided more closely to them in Faversham. Those are questions which the Revenue management is quite correct to address to seek to deliver a better service.
I understand my hon. Friend's natural concern to see something that is firm and a commitment that can be readily understood. The commitment is not to a specific nature of service. The commitment, as the citizens charter enjoins it to be, is to deliver a quality of service in terms of taxpayer assistance.
The third benefit, which we should not sneeze at, is that the programme of change to which the Revenue is committed will deliver running-cost savings over a 10-year period which, at the end of that period, will amount to roughly £70 million a year in today's values. I accept my hon. Friend's point that we must tie that down and that matter has been the subject of more than one intense conversation between myself as the Minister responsible and the chairman of the Board of the Inland Revenue. I entirely agree with my hon. Friend that if we embark on a 10-year programme at the end of which we are promised Revenue savings of £70 million a year, it is part of the functions of Ministers on behalf of the taxpayer to insist that that saving is secured. And, furthermore, it is a part of Ministers' responsibilities to set out milestones along the way so that we do not suddenly get to a point in 10 years when we say that we were promised £70 million in savings and suddenly they are found not to be there.
There will be savings, there will be a single point of contact, and there will be a greater commitment to taxpayer assistance, because that is part of the purpose of the changes that we are undertaking.
On the specifics of the programme in Sittingbourne, as my hon. Friend will know, what is being done in Sittingbourne is not in a sense what was done in the tax office case of Matthew Parris or even, I suspect, of my right hon. and learned Friend the Home Secretary in Folkestone, to quote the two examples to which my hon. Friend referred. It is quite consciously part of the wider process of change which I have been describing. It brings together the functions of the Sittingbourne tax office, the existing two offices in Maidstone, and part of the collection activities in Chatham and Canterbury. It delivers significant short-term savings—never mind the contribution to the wider programme and the £70 million over 10 years that I have been talking about. The new Maidstone office will deliver the service to the area for which it is responsible for a figure which will cost the taxpayer in Revenue savings about £340,000 a year less than the existing tax office structure does.
Once again, I agree with my hon. Friend that we must make certain that those savings are real and secured, but £340,000 a year out of a local tax office does not seem to me to be an insignificant quantum of savings.
615 The justification of the change is two-fold in terms of the Sittingbourne office. The first is that it delivers cost savings in its own right as a scheme and the second is that it is part of a wider reorganisation of the Revenue which 616 is designed to improve the service to taxpayers and provide a better value-for-money service for taxpayers as part of the Inland Revenue's contribution to the citizens charter programme and improving the public service.
§ Question put and agreed to.
§ Adjourned accordingly at Three o'clock.