HM Revenue & Customs is reconsidering the “scope and timing” of its planned consolidation of 170 offices to 13 regional centres and four London hubs.
A National Audit Office report found that since HMRC first announced its relocation plans in 2015, the projected cost had risen by £594m over the next decade.
Options now under review include changing the timetable for opening regional centres; reconsidering the functionality, location and size of some regional centres; and re-assessing how and when to introduce flexible ways of working.
HMRC still estimates that the move to regional centres will lead to an £83m annual reduction in running costs for its estate by 2025-26.
The relocation is being driven by the 2021 expiry of its 20-year property management contract with Mapeley Steps.
The NAO warned HMRC that it “must manage the risk” from locking itself into long-term property deals, noting that the tax authority has not negotiated any break points in the 25-year leases it has signed so far in Croydon and Bristol.
HMRC agreed a deal last year to take 184,000 sq ft at Stanhope and Schroder’s Ruskin Square in Croydon. In Bristol, it has signed a lease to take 110,000 sq ft at Salmon Harvester Properties’ 3 Glass Wharf.
HMRC has reduced the size of its estate by over a quarter since 2011, saving £102m (30%) in its annual running costs, according to the NAO report. However, the NAO said the scale of the changes it could make has been limited by the terms of its contract with Mapeley Steps, which covers around two-thirds of HMRC’s estate.
Following advice from the NAO and Public Account Committee about the value for money achieved from the Mapeley contract, HMRC has already closed 160 buildings managed under the contract and reduced its annual cost by £54m.
HMRC’s assessment of Mapeley’s performance in 2014-15 was that it was below the standards set by HMRC. As a result, the HMRC reduced its payments for facilities management by £700,000 to compensate for underperformance. The sum represents 20% of the annual £3.5m HMRC pays to Mapeley for facilities management.
The NAO has recommended that HMRC should improve its control of the costs of the regional centres and demonstrate how in practice they will help its employees provide a better service to customers while increasing the efficiency and effectiveness of its compliance work.
An HMRC spokesman said: “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 more than £80m 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.”
• To send feedback, e-mail louisa.clarence-smith@estatesgazette.com or tweet @LouisaClarence or @estatesgazette
