HM Revenue and Customs chief executive Jon Thompson has revealed that an Infrastructure and Projects Authority review on the tax department's controversial office closures programme was given an ‘amber’ risk rating, with specific concerns raised around staff engagement.
Speaking to the Public Accounts Committee in a session on HMRC’s annual report and accounts, Thompson told MPs that the programme, which will move staff from 170 current offices into 13 regional hubs, remained the correct strategy.
The programme would ensure that HMRC was able to move out of its existing offices before its current contracts are renewed in 2021 under the existing STEPS (the Strategic Transfer of the Estate to the Private Sector) PFI deal.
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Thompson told MPs that the hubs programme was working “to make sure we are out in 2021, because it is reasonable to assume that PFI cost will increase in 2021, so we’re trying to get out of that”.
He revealed that a review of the £500m ten-year programme undertaken by the government’s Infrastructure and Projects Authority had been completed last week, and concluded that the project had an amber risk rating, under the red-amber-green traffic light system used by the IPA.
“For a project at this stage that is pretty strong,” Thomson said. “The main recommendation of the IPA last week was that we needed to do further work with staff to recognise the benefits of the regionalisation programme, but the fundamentals of this programme are on track according to the IPA."
He confirmed to MPs that contracts for nine of the 13 regional centres had been signed, adding that deals for offices in Glasgow, Nottingham, Manchester and Stratford remained to be completed.
Thompson said that there was a risk “at the margin” that not all the sites would be ready to move into each regional centre by 2021. However, this is HMRC's target, given that it estimates the increase in costs under the PFI deal could be £75m a year from this point, while the savings are estimated at a cumulative £300m by 2025 and £74m annually from 2025-26.
The committee also heard that the business plan to create the Government Property Agency was "maturing but had not yet been approved" by the Treasury. Thompson indicated that if the agency was not approved then HMRC would run the hubs itself rather than transfer them centrally.
After MPs expressed concerns that the hub leases of up to 25 years without a break clause would mean the government did not have flexibility in its property decisions in the future, Justin Holliday, chief finance officer at HMRC, said he was confident there would be enough demand for the office space in the buildings.
“I am confident for two reasons. One is, as a total requirement of the civil service, the first wave of the hubs is a relatively small proportion and HMRC is not filling the entirely of these hubs, they are government hubs. I am confident there will be demand from elsewhere in the civil service.
"I am also confident, second reason, in the fact that the national property controls [across government] do work and they... required different bits of government to do things that are in the interests of government overall as opposed to the individual departments. If we had shorter leases it would cost more."
Elsewhere in the session, Thompson told MPs that HMRC had requested details of the Paradise Papers leak from the news outlets that broke the story but had not yet received a reply.
He told committee chair Meg Hillier that HMRC had not seen the papers leaked to the International Consortium of Investigative Journalists, who have shared the material with the BBC and the Guardian among others.
“We knew a leak was coming, we have known for some time but we have not had access to the material that has been provided by the International Consortium of Investigative Journalists to the BBC and to the Guardian. We requested access to it two weeks ago... [and] we have not received a reply.
“So it is different from the Panama Papers in 2016 which were published on a website in a sort of unstructured way and you could enquire though those papers. In this instance those papers have not been made publicly available, they are only available to those within the International Consortium of Investigative Journalists.
“We have not made any further requests because I think our request made two weeks ago strong enough. I should also be transparent that in 2016 we also made a request for additional information from the ICIJ then and there was no response at that point or subsequently.
“We will very happily take the data, we would like to have it so we can investigate whether there has been any tax evasion or criminality.”