Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister for Civil Society (Mr Nick Hurd)
It is a great pleasure, Mr Owen, to serve under your chairmanship, I think for the first time. I congratulate the hon. Member for Sheffield Central (Paul Blomfield) on securing the debate and on the sincerity with which he has presented his arguments on behalf of concerned constituents. I totally understand where that comes from; if I were in his shoes, I would probably utter similar sentiments.
The hon. Gentleman endeared himself to me by opening with a quote from the Prime Minister. Of course, the Prime Minister was right in saying that jobs are coming back. I do not have the statistics for Sheffield, Newport or other constituencies represented on the Opposition Benches, but it is undeniable that since the 2010 election, more than 1 million private sector jobs have been created in this country. We have record numbers of people in work.
Mr Hurd
I was putting the debate into a wider context, which I hope the hon. Member for Sheffield Central would welcome, of vibrant job generation in this country. It does not just matter for statistics; it offers hope and security for people across the country. When the Prime Minister talks about jobs coming back, he means it. The issue is about restoring the means by which this country can secure its long-term future and competitiveness. The fact that that was entirely absent from the debate is regrettable.
Paul Blomfield
On that specific point, will the Minister note the regional imbalance in the creation of private sector jobs? He might have seen the report two or three weeks ago from the Centre for Cities, which pointed out that so many of the jobs being created are in London and the south-east, sucked away from the rest of the country. I think it said that there have been 217,000 new private sector jobs in London, with a net decline in private sector jobs of 7,500 in my city of Sheffield. The Government have a particular responsibility to address that regional imbalance and not take more jobs away.
Mr Hurd
That is a fair point, which the Chancellor has addressed directly by saying, “Yes, there is some very good news on job creation, but we still face a stubborn underlying challenge on the imbalance in the economy.” That is a fact, reality and challenge that the Government are addressing.
It would nice if we heard some voices from the Opposition Benches that recognised that these problems have been entrenched for a long time and were substantially not addressed by the previous Administration. I am trying to make the point that the broader context is one where the country is beginning to generate jobs again after some difficult years. Part of the reason why we have been able to create jobs is that at the core of the long-term economic plan is a plan to pay down the deficit. It would be nice to have a reality check on the Opposition Benches: that is the environment in which this Government have to work and in which the next Government will have to work, whatever their political colour.
Mrs Glindon
Will the Minister not acknowledge that sustaining jobs is as important as creating jobs in a successful economy? Offshoring these jobs is not about sustaining work in this country. If there is to be job creation, offshoring jobs negates some of that.
Paul Flynn
On a point of order, Mr Owen. Is it in order for a Minister to cast a slur over a Member by claiming that he was not present at the beginning of a debate without giving that Member an opportunity to explain that he was at a Select Committee meeting and that, had he left, it would not have been quorate?
Albert Owen (in the Chair)
The hon. Gentleman has been in Parliament an awfully long time and he knows that that is not a point of order for the Chair. It is up to the Minister whether he gives way to any Member in the Chamber. The Minister indicated that he would not give way to the hon. Gentleman, but he has since done so to other Members.
Mr Hurd
I am trying to stress to the hon. Member for North Tyneside (Mrs Glindon) that the bigger context is job creation throughout the country, which I hope she welcomes and is evidenced in her constituency as well. She makes a valid point about offshoring, to which I will return, because it was at the core of the speech of the hon. Member for Sheffield Central.
My point was that we are in the place where we are in terms of vibrant job creation around the country partly because of the confidence in the business community that there is a plan for economic recovery and that, at the heart of the plan, is a determination to get on top of the public finances. Simply put, that will be the reality for whoever is in power after the next general election, which is acknowledged by the people at the top of the Labour party. The Government therefore have to get serious about where they find savings and efficiencies. For a long time now, including under the previous Government, as highlighted in 2004 by the Gershon review, there has been consistent advocacy for the need and opportunity to consolidate back-office functions throughout government. The belief is that we can deliver between £400 million and £600 million per annum in savings for the taxpayer in such a process, while freeing the civil service to concentrate on its core role of delivering exceptional public services.
Significant public gain is to be had through the pursuit of efficiency, which the previous Administration did not pursue rigorously, despite the words. If any evidence were needed, the Efficiency and Reform Group in the Cabinet Office last year was able to realise £10 billion in savings to the taxpayer through our process. That is £10 billion that does not have to come in cuts to front-line services. It tells us a lot about the attitude of the previous Government to efficiency in the public finances.
Paul Blomfield
Does the Minister acknowledge that that is stretching the definition of efficiency a little? We are simply talking about taking jobs done in proper working conditions by loyal civil servants in the UK and putting them into a cheap labour market in India. That is not efficiency; that is exploiting the labour force.
Mr Hurd
I would like to see some recognition that it is not in the interests of the British taxpayer for there to be duplication or inefficiency in how services are delivered. For some time, and under the previous Administration, there has been widespread acceptance of the opportunity to share services such as HR, procurement, finance and payroll functions, and of the need to consolidate where those services are shared, given the number of centres that were in place. Obviously, in that process there is an ability to deliver efficiency, cost-effectiveness and, I hope, a better service.
There is no dispute about the opportunity—as I said, the debate has been going on for a long time—but the question is whether anyone is prepared to do something about it, and we are. We are delighted that the National Audit Office recognises our progress and, in a report of 31 March, considers that the programme is
“on track with the first shared service centre being outsourced by its target date of March 2013 and the second having a joint venture partner in place before its target date of March 2014.”
It also found
“no major issues with the services offered by”
either of the two independent shared service centres.
As the hon. Gentleman said, the second of the two centres was created in November 2013, when the Government signed an agreement with a private sector partner, Steria Ltd, to create a joint venture to deliver back-office services to 13 Government customers. The resulting company, known as Shared Services Connected Ltd, was formed from a consolidation of some existing shared service centres including the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Environment Agency. In addition, in-scope services delivered by UK Shared Business Services Ltd are expected to move across by 2015.
It is important to keep in mind that the model is not a conventional outsourcing one. As the contracts are constructed, the bigger the volume, the lower the unit price goes, so it is in everyone’s interest, whether Government, private sector partners or employees, for the centres to win additional business from other Departments and from the private sector in the UK and overseas. If business grows, and there is an opportunity to grow the business and to recruit more jobs into it, public services can be delivered at lower cost. The taxpayer will share in the upside.
In order to develop SSCL as a world-class services organisation, it formally entered a transformation phase on 31 March 2014, which involves IT harmonisation, offshoring and the adoption of a centre of excellence model, which is considered good practice across the shared services sector. We believe that that will reduce costs, increase efficiency and deliver a consistent performance and an improved customer experience.
As the hon. Gentleman said, the centre of excellence consultation process commenced during March, and following discussions with employees, clients and trade unions, four of the existing eight core sites were selected as centres of excellence. Those are York, Peterborough, Blackpool and Newcastle. Initial proposals were to close the other five sites. However, after consultation and due diligence with clients and employees that was reduced to three—Sheffield, Cardiff and Leeds. Alnwick will remain open, although not as a centre of excellence. The sites selected as centres of excellence were the ones considered most likely to be able to serve existing customers, while also ensuring the sustainable future growth necessary to provide value for money to the taxpayer.
The core of the hon. Gentleman’s concern was exit and re-employment. I listened with concern to some of the points he made, and I undertake to write to those involved to make his concerns clear and seek assurances about the way in which some tough decisions on redundancy are being implemented. I will come back to the hon. Gentleman with my view on the quality of the information I get back.
We believe that SSCL has approached the centre of excellence strategy with some sensitivity to the impact that it will have across the business, sharing plans with employees at the earliest opportunity, undertaking roadshows to explain the implications directly, and briefing employees on the proposals for site closures and the associated consultation process. At the same time, SSCL launched a voluntary exit programme for affected employees. The window for expressions of interest closed on 24 March.
As part of the negotiations associated with the ISSC2 deal, the Cabinet Office and Steria agreed a re-employment protocol with the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs, and Her Majesty’s Revenue and Customs, for those staff members who transferred to SSCL under TUPE arrangements from DWP and DEFRA. That was put in place to try to mitigate the impact of key redundancies associated with the move to the new target operating model. Although that was not mandatory, both parties felt it was important to try to support the staff with continued employment.
The Cabinet is also proactively negotiating re- employment protocols with further Departments and agencies, including the Department for Education and the Office for National Statistics, where there are suitable roles locally. We are confident that we are doing all that we can to support SSCL staff with re-employment, within the confines of TUPE law and Government policy. If I may, I should like to send the hon. Gentleman a follow-up letter with more detail about those processes, to put some assurances behind those words.
The next stage of the SSCL transformation programme is to establish the four centres of excellence. The Alnwick office, previously a DEFRA site, will not be a centre of excellence, but will remain open until June 2015. SSCL hopes to move some NHS shared business services actively to Alnwick, to retain it beyond 2015.
Paul Blomfield
I thank the Minister for his assurances about letters and initiatives. Will the Cabinet Office extend the intentions he outlined across all Departments, and move quickly? There is a limited window, before people lose their jobs, to ensure that there are proper redeployment opportunities across government.
Mr Hurd
We are certainly negotiating re-employment protocols with other Departments and agencies, including DFE and ONS, but perhaps I may clarify the detail in the letter I shall be sending. As the hon. Gentleman said, we all know that any job loss is a personal tragedy for the individual concerned and their family. We want to minimise insecurity connected with that. The process is clearly difficult, and we are as confident as we can be that it is being handled with appropriate sensitivity. However, if the Members of Parliament for the affected constituencies have substantial evidence that that is not the case, we want to know. We will follow up such evidence, because we understand the sensitivities and want to test the assurances we are given.
In this context there is no black and white world; offshoring has been a feature of many successful Government contracts signed during this and the previous Administration, including a joint venture involving NHS shared business services, which created jobs and expanded the number of its offices from two to 13 in the past 10 years. Offshoring is not in itself an absolutely bad thing. I shall certainly contact Reshore UK to make it aware of the hon. Gentleman’s concerns.