Watchdog report puts taxman relocation on hold

The National Audit Office rules HMRC plan to relocate staff to regional centres unrealistic, accusing HMRC of underestimating the scale of disruption to service.

HMRC, black case
Plans to relocate thousands of HM Revenue and Customs staff from local offices to regional centres throughout the UK have been put on hold after a review from a government spending watchdog said costs were far higher than originally estimated, while savings were much less.HMRC planned to centralise operations by shutting 170 offices and moving staff to 13 large regional centres, shedding some 5,000 jobs in the process while improving both efficiency and working conditions.But now the National Audit Office (NAO) has ruled that the plan was "unrealistic" and accused HMRC of underestimating the scale of disruption to services and of failing to find suitable locations for some its planned regional HQs.The NAO said that, since HMRC first presented its business case for the plan in 2015, the estimate of its estate costs over the next decade had increased by 22 per cent or almost £600 million, much of it due to higher-than-expected running costs. Meanwhile, efficiency savings were now estimated to reach £212 million by 2025-26, less than half the £500 million originally envisaged.NAO's report added: “HMRC has yet to define fully how regional centres will support better customer service and more efficient and effective compliance activities."During the transition to regional centres, HMRC must ensure that its service to taxpayers and its ability to collect tax revenue are not impaired. It will, therefore, need to recruit to its new centres and train new staff, while managing redundancies and the moves of existing employees and operations into new buildings."It has concluded that its original plans were over-optimistic about the availability of suitable properties and carried too high a risk of disruption to its business, as they involved moving or replacing too many staff too quickly, while delivering other major change programmes in parallel."
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Sir Amyas Morse, the head of the NAO, commented: "HMRC should step back and consider whether this strategy still best supports its wider business transformation and will deliver the sustainable cost savings it set out to achieve in the long run."Responding to the report, an HMRC spokesman said: "HMRC's employees are currently spread across offices around the country, many of which are a legacy of the 1960s and 1970s, ranging in size from around 6,000 people to fewer than 10."Our 13 new regional centres are an essential part of our work to modernise HMRC and provide an even better service for our customers, while delivering annual savings to the taxpayer of over £80 million from 2025/26. It also means modern offices for our staff, with the latest technology, better collaboration between teams, local training and wider career opportunities."He maintained that the NAO was "not comparing like for like" on costs. "Not only has the property market shifted over the course of the past year, but our most recent calculations now include updated day-to-day running costs and additional investment in two transitional sites which will ease the move for both staff and customers," he said.Rebecca Long-Bailey, Labour's shadow treasury minister, said: “Despite issues such as the Panama Papers (about tax avoidance) dominating the headlines in 2016, it is clear that the government has failed to provide HMRC with the necessary resources to tackle tax avoidance."What is even more worrying is that today's report states that HMRC has yet to define fully how its plans will support better customer service and more efficient and effective compliance activities."The NAO report said HMRC's problems were exacerbated by a private finance initiative agreement with contractor Mapeley, which meant that it faced rising rental and service costs if the move was not completed by 2021.Mark Serwotka, the general secretary of the PCS public service union, said it was now "imperative" the plans were halted to give Parliament and the public a chance to have their say. "Cutting thousands of HMRC staff in recent years has hit the services it provides to the public, yet the department and this government are ploughing ahead with poorly thought through plans that would mean thousands more job cuts," he said.Access hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory  Get access to our free Global Mobility Toolkit

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