Wednesday, 11 January 2017

Failings at Revenue and Customs

I failed to insinuate the term Thamablab into the English language. It was meant to encapsulate the essential sameness of the governments from 1979 to 2010, no matter what their party label. The inspiration was German portmanteau words like "flak", truncating THAtcher, MAjor, BLAir and Brown. (The time for my invention has clearly now passed, but perhaps we could coin "Camay" for the post-2015 government. In that David Cameron and Mrs May have been more intent on surface appearance than actually improving the body of the UK, its coincidence with a beauty soap seems appropriate.)

Anyway, page 5 (Summary) of the National Audit Office's report on HMRC's management of the departmental estate brought the concept back to mind. In 2001, the Labour government did a sale-and-leaseback private finance initiative (PFI) deal with Mapeley STEPS Contractor Ltd (Mapeley).
Under the deal, HMRC sold its freehold properties, which comprised two-thirds of its estate, to Mapeley for £370 million. HMRC immediately leased back the properties from Mapeley, with Mapeley providing facilities management and maintenance services. As HMRC has reduced its workforce over this period, it has moved out of some of these buildings each year. The remaining third of HMRC’s current estate is managed under smaller PFI deals and individual leases with landlords.

2001/2 was the last financial year in which we had a budget surplus, before Gordon Brown embarked on his reckless spending spree which left the UK struggling when confidence in transatlantic financial institutions crashed in 2008. It seems that the 2001/2 figures may have been artificially boosted by such short-term deals as STEPS, pushing the leasing costs over the horizon. Pages 8 to 11 of the report reveal a history of NAO dissatisfaction with the way that Mapeley was monitored, though things did improve with the change of government in 2010. The PFI deal expires in 2021.

To be fair, the NAO concludes:
that the handling of HMRC’s STEPS contract has improved, and is more likely to deliver value for money though significant risks remain. As far as the new programme is concerned, HMRC has already recognised that its original plan was unrealistic and it is considering how it can adjust the scope and timing of the programme to reduce the cost and delivery risk. It is, of course, better management practice to recognise cost underestimates early and to consider options for recovery early as well. However, we think it important for HMRC to step back and consider the benefits afforded by the wider business transformation, and whether they might be reduced or placed at risk by cutting back on, or delaying, the estate plans, before going ahead.

The new programme referred to is a plan to close even more local offices, concentrating on new regional centres. In the House yesterday, Labour members understandably avoided criticism of the PFI deal and concentrated their fire on the loss of employment or increased travel time on the part of HMRC employees as a result of centralisation - though this again was a Gordon Brown initiative.

Also touched on was what to me was the main concern, service to the public, in particular to small businesses. Travel to a regional centre is an expensive hardship and it will be necessary in the case of those wanting to sort out their tax affairs face-to-face, especially in areas where connection to the Internet is impractically slow.

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