Commissioned by PCS, this joint work examines the economic impact of HMRC’s plans to close departments around Scotland and establish two regional offices in Glasgow and Edinburgh.
It is found that over 2,300 jobs could be lost due to these changes with an overall negative impact on GDP of £89 million.
The economic impact will be particularly magnified in local areas where the current HMRC departmental office employs a substantial proportion of the local workforce.
Dr Craig Dalzell
Ben WrayDownload Now
This report will critically examine the Building Our Future proposals in Scotland and offer constructive principles about how to organise a better reform package. Part 1 presents a detailed study of how the changes will damage Scotland’s economy, focusing particularly on the towns and cities affected by centralisation. Part 2 identifies principles for a more effective set of reforms. These reforms aren’t simply plucked from policy experts: they are the suggestions, solutions and conclusions of ‘worker experts’. That is, the workers’ vision for a better taxation system, presented in Part 2 of this report, has been created from countless workshops held in offices across the country. HMRC workers have come together, collectively through the trade union to put their vision forward for a better system and more fulfilling working life. The UK Government, according to our research, has significantly overestimated the benefits and significantly underestimated the costs of it plans.
― The UK Government’s modelling for the impact of cuts on the broader economy is outdated. We use the IMF?s revised estimates for the fiscal multiplier, which take greater account of data after the Great Recession. Using these findings, we show that any ?efficiency savings? from cuts will eventually be wiped out by the resulting contraction in tax revenue.
― However, the reality could be far more damaging if HMRC cuts make the campaign against tax avoidance and evasion less efficient. If so, HMRC cuts will mean a reduction in tax revenue for all public services. They will also damage the drive to reduce the social inequality and injustice caused by failure to enforce the tax system
― Current HMRC plans foresee a leaner service that does more with less thanks to centralised digital technology systems. Our research suggests that the practicalities of this model have not been thought out, particularly in areas like customs and excise which will be inundated with new problems after Brexit.
― According to widespread reports, existing cuts have already had a “chaotic” and “shocking” impact on HMRC administration, suggesting that a more cautious estimate of administrative change is needed. The current plans are, by contrast, radically optimistic in assessing the impact of replacing human services with technology.
― International evidence suggests that Britain’s model is inefficient and will not work. Where digital technology has been a success, it has been married to increases in staff numbers, not decreases.
― These decisions have been made by the UK Government with little consultation with the Scottish Government over the likely impact. This raises constitutional questions about democratic accountability.
― The cuts will exacerbate uneven development, both across the UK and within Scotland. Edinburgh, which already gets a significant subsidy from jobs created by public sector administration, will get a further boost under the plans. By contrast, businesses and communities in poorer areas like West Lothian, Cumbernauld and East Kilbride will suffer from centralisation.
― The plans risk a breakdown in trust and authority between central Government and Scotland’s communities.
― The plans make heroic assumptions about Scotland’s vast geography. They underestimate commuting times (and stresses on both individual and existing transport systems) in Greater Glasgow. They also take insufficient account of the waste and cost of sending mobile teams from Edinburgh or Glasgow to crucial economic areas like Aberdeen and Inverness.
― The Scottish Government has its own semi-independent taxation system, Revenue Scotland. However, HMRC’s Building Our Future proposals would violate many of the principles advocated by the Scottish Government as basic norms for a just tax administration. Moreover, and perhaps most significantly in the current political climate, we expect the proposed changes to interfere with the collection of the Scottish Rate of Income Tax, with consequences for funding public services in Scotland.