NAO queries HMRC plans to relocate people instead of using technology

The BBC News today carries the news that HMRC has just realised that current plans to move 38,000 staff into 13 regional centres may be “unrealistic” . The intention to move from 170 local offices to shared city centre “Government Hubs” and regional “Mini-hubs” was announced some time ago.  According to the National Audit Office report “Managing the HMRC Estate” this was part of a Civil Service strategy to move staff to “Offices based in city centre locations forming part of government hubs, close to Universities and Colleges and with stronger skills bases and talent pipelines”, with “a good local supply of housing, schools and recreation facilities” and “high speed broadband and mobile networks”

The shared “Hub” concept does not relate to the locations where specialist IT skills are needed. User staff will move from Redruth to Bristol, Dundee to Edinburgh and Norwich to Croydon (not known for broadband excellence). Meanwhile the HMRC IT development complexes (now to be called Specialist Centres) will stay where they are – at Telford and Worthing, with two new centres at the well-known University towns of Dover and Gartcosh.

Does that mean HMRC’s IT centres do not need a talent pipeline or that they are too important to risk moving staff from where:

  • office property is cheap and available to hot spots where it is expensive and may be rationed
  • where housing is cheap and available to where it is not
  • commuting is relatively easy to where it is not (even when the trains and tubes are not on strike)
  • alternative employment opportunities are limited to where there is intense competition for talent.

The National Audit Office report is nearly as savage over the forward property plans of HMRC as it is over those which led to the current proposals. Page 48 of the report lists the HMRC failure to respond to previous recommendations.  The consequent summary of the NAO recommendations is polite but devastating. The biggest sting is in the tail.

25 HMRC is seeking to implement an ambitious estate strategy alongside 14 other major programmes designed to transform the way it administers the tax system. Many of these programmes are interdependent. It is inevitable that not every aspect of the transition to regional centres will run smoothly and HMRC must learn as it goes and respond proactively as issues arise. It should:

a Improve its control of the costs of the new regional centres. HMRC needs to be realistic in re-forecasting costs and guard against optimism bias. Given the inherent uncertainty in the property market, it should plan for the worst case rather than risk basing its plans on optimistic assumptions. It should put in place an adequate contingency for the programme of regional centres as a whole to make it resilient to emerging cost increases.

b Plan in detail how the infrastructure it is putting in place through regional centres will support the ways of working its business aspires to. HMRC has yet to demonstrate how in practice the regional centres will help its employees provide a better service to customers while increasing the efficiency and effectiveness of its compliance work. It should prioritise engagement with its business to identify what features of the new estate will be most important to support working practices that will deliver the outcomes it is seeking.

c  Put in place a process to learn lessons by analysing the costs and benefits of occupying and operating regional centres. HMRC should be clear how it will establish whether it is achieving the benefits it expects from its regional centres once they become operational, and at what cost. It should identify and apply good practice from its occupation of the Croydon regional centre in 2017, and evaluate how its forecasts of the timetable, costs and benefits were affected by events. It should build a framework to compare the performance of the regional centres by identifying each centre’s annual running costs, service levels and business outcomes.

d Build in flexibility to respond to future changes in technology and working practices. In negotiating property deals for the regional centres, it must therefore balance cost considerations against the benefits of retaining flexibility to make future changes to its estate.

Equally interesting is the way the public Government policy of devolution appears to be accompanied by a private Civil Service policy of recentralisation as well as of insourcing.  In short – there appears to have been a quiet decision to reverse the long standing policy of relocating government staff out of London wherever possible. But not when it comes to IT staff – where HMRC and DWP have begun to rebuild their in-house expertise with staff training programmes which put most other employers to shame and appear to have no wish to risk driving away those attracted to areas where public sector pay, even before pensions, outstrips that in the private sector.

So why is HMRC going down such an odd road?

The clue is the press release for the NAO report  “Managing the HMRC Estate” . The driving force behind the HMRC proposals is the need to escape from one of Gordon Brown’s more expensive and inflexible sale and leaseback deals.  It is particularly interesting that the landlord in this case, was formed specifically to bid for the HMRC deal.  HMRC has declined to look at the offshore tax arrangements of Mapely.

Perhaps the time has come for the Public Accounts Committee to call for specials audits the tax affairs of all off-shore property companies currently milking the public sector – including all those NHS Hospital Trusts and Schools also trapped with exhorbitant maintenance charges. Might this form part of the Flexit deal – to which we are inexorably moving: with our departure from “ever closure Union”  accompanied by deals with the major member states to address aggressive tax avoidance of all types, halt free movement of terrorists and enhance co-operation on surveillance.

Meanwhile, if Government is serious about using “digital” to transform the way it does business, it should be putting communications availability at the heart of its future plans. Until recently Croydon was a communications notspot. The history of the UK’s porous borders was linked to the inability to connect Lunar House in Croydon with our ports and airports.  Has BT overhauled its local networks sufficiently to handle the many firms planning to relocate to within easy reach of Gatwick? How many of its competitors are planning global terrabit links to the area?

Meanwhile the war between Southern and the Rail Unions has led to a growing number of  CEOs asking whether it is cheaper and more efficient to collectively contract fibre to the homes of key staff and/or hot desking office suites in commuter towns and villages, than to rely on being able to travel into City centre office complexes. This gives added bite to the current consultation  on how to extend full fibre cover across the UK