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Paul Flynn (Newport West) (Lab)
It is a great pleasure to serve under your chairmanship for the first time, Mrs Osborne.
I have an extraordinary story to tell, of Government ineptitude, which will give us a key to their legacy to the nation. It is a story about punishing success and rewarding failure. The shared services in Newport were set up in 2006. It was a happy occasion. There was a lovely building, and thanks to the enterprising action of the council, shared services were welcomed. It was a marvellous idea to take little inefficient units that operated in prisons throughout the country and concentrate them in one centre, to provide a more efficient service and to save money—which it did. It saved £32 million in the first two years. The staff have by now, through their efficiency, dedication and skills, created savings of £120 million.
What do we do now? Shall we alter a winning team and wreck something that works so well? In this case the answer is yes. The Government, with fanatical devotion to the concept that all that is private is good, wonderful and efficient, and all that is public is bad and inefficient—the heresy behind so many of their failures, which we have witnessed in the past few years—decided to set up an alternative, as an improvement. They ran a scheme, which was operated by a group including the firm Steria. They sought a more efficient way of running the system, rather than leaving it alone and letting it continue to make money and savings for the country.
I shall not go too far into the detail of who is to blame, because, as we know, failure is an orphan and it is only success that has parents. However, Steria had a leading role in the operation from 2011. What has it achieved? It has achieved a loss of £56 million. What has it produced? Nothing of any practical value: that is the simple truth. When people make a loss of that kind, what should we do? Should we dismiss them, or forget about them? No. The Government are setting up a new consortium. They will let Fujitsu run the IT this time, but the project is still run by the French company Steria. It has a contract from the Government. We shall be looking for some of the facts from the Minister this morning, but that contract could lead to the loss of jobs or of 49% of the work—we cannot translate that into jobs. It could mean the offshoring of jobs, probably to India.
Jessica Morden (Newport East) (Lab)
As my hon. Friend will be aware, the Minister said during questions last week that he is against offshoring jobs in his Department. Does my hon. Friend share my concern about the fact that the Cabinet Office seems to have no such qualms, and does not Steria’s record of cutting and offshoring jobs and closing offices speak for itself?
Paul Flynn
My hon. Friend is right. There is general puzzlement about the conflicting statements that come from the Government. Perhaps they can be cleared up this morning. There is a scheme: the jobs will be privatised, and I do not know how the Government can exercise control if that happens. We are told that they are against offshoring jobs. The Prime Minister said so a short while ago; he said he wanted us to “reshore” jobs and bring them into this country. It seems an act of madness to take successful jobs from an initiative developed in Newport and send them overseas, and to spread the profits to a foreign company—a French company.
I am rather surprised when I see the Minister who is replying to the debate, whom I have greatly admired in his political career. We have been in the House a long time, and in his sensible period, when he was a Liberal Democrat, before his metamorphosis, he would have agreed with every word of my argument, as he has on many occasions. The red boxes have a strange effect, and change people’s personalities, but I am sure that it is possible to revert. I was the right hon. Gentleman’s constituent for many years. He used regularly to send me letters and would ask me what the Lib Dems should do for the country. I always made interesting answers and suggestions, not all of which he followed up.
Paul Flynn
Some he did, yes. He did not give us eternal life or a Labour Government, which were the main things I thought would be of benefit.
Bill Esterson (Sefton Central) (Lab)
I congratulate my hon. Friend on securing the debate. The issue affects my constituents as well, because some of them work at the Bootle site for the Ministry of Justice. They have been commended for their work over many years. They are loyal civil servants and are deeply worried at the prospect of privatisation, losing their civil service status, and ultimately losing their jobs to outsourcing. Does my hon. Friend agree that it is surely the role of Government, and not just constituency MPs, to look after our constituents’ interests and keep jobs in this country for them instead of letting them be outsourced?
Paul Flynn
It was touching when my hon. Friend and I talked to our constituents, who went on strike a fortnight ago. For most of them it was the first time they had done that in their lives. They would not have expected to go on strike. One had been displaced from the Passport Office, following another Government scheme to reduce it to such an emaciated state that when there is an unusual call on it, it cannot cope—the system is at the point of collapse. Those people have done nothing wrong. As my hon. Friend said, they have won accolades for their efficiency and service; but now their jobs hang in the balance. There is no certainty. They cannot look forward to a future beyond 12 months.
There is no sign that anything can be working efficiently. I wish the Government would learn the lesson. They seem to be blind on the issue, given what they did in relation to Atos. Atos broke a pledge that helped it to win the £184 million disability assessment contract. That was a story of chaos and loss, and the great suffering of hundreds of thousands of people—because of the inefficiency of Atos. Every MP has heard heartbreaking stories of people who have been misjudged and badly treated by Atos. In four out of 10 cases where the original decision was questioned, the challenge was upheld. That episode was a terrible error.
In addition, G4S had a £284 million contract to provide 10,400 staff for the Olympics; but it fell spectacularly short and we needed 5,000 members of the armed services to come and fill the gap. Where was the brilliance and perfection of the privatised services then? Serco charged taxpayers far too much for monitoring criminals, under a contract dating back to 2005. What happened was a rip-off, and Serco had to repay £68 million. Why give those people, who are little short of criminals in their behaviour, those contracts? Why favour them as we do? Capita, which in the House of Lords was referred to as “Crapita”—we would not use such language here—won a £50 million contract to run individual learning accounts programmes, which collapsed. There were mounting allegations of fraud among the programme providers and concern about the costs, which went £93 million over budget.
The Ministry of Justice had a £42 million contract for interpretation in the courts, which stalled at the outset after being given to a small company that Capita acquired to run the contract. Some 6,417 complaints were recorded by Capita, and 680 trials in magistrates courts and 34 Crown court trials were ineffective as a result of interpreters not being present.
There is a long catalogue of a Government favouring private firms over the well-established civil service ethic and systems that have served us well, and they are about to do the same again. Will the Minister tell us, and make it clear to my constituents and those of my hon. Friends the Members for Sefton Central (Bill Esterson) and for Newport East (Jessica Morden) and others, what the position is? Are their jobs in danger of being sent offshore? Will he give an absolute guarantee that that will not happen?
Bill Esterson
I am interested in what my hon. Friend says about security because the issue has also been raised with me. My constituents are very worried that in an answer I received from the Secretary of State last week he ruled out being able to protect any of the jobs. Not only will they lose their civil service status, which is much valued, they will lose their jobs. When they stop being civil servants, they will not be able to apply for vacancies elsewhere in the civil service because they will no longer be civil servants. That is a real concern for them, as is the suggestion about outsourcing and jobs going overseas that my hon. Friend mentioned.
Paul Flynn
My hon. Friend makes a powerful point that we are very much aware of. Civil service status is prized. We have forgotten to appreciate the value of civil servants, which has been neglected. In the last 24 hours, a Minister was highly critical of the civil service ethic and attacked the core of the civil service, which has benefited us so richly for the past 150 years. There is a move towards politicising civil servants. Many of my constituents work for the civil service, often not for very great salaries. The Government’s failure to appreciate their value and worth is a terrible blow and an act of ingratitude.
My constituency and many other places in Gwent have benefited from the influx of civil service jobs. We suffered greatly from the loss of manufacturing industry and the fact that the Patent Office, the Office for National Statistics and the shared services centre came to my constituency saved the economy in a way that is greatly valued. The city and the country—Wales—have a huge amount to lose if the Government behave in this cavalier way with civil service jobs. They should have the security of a continuing contract, and richly deserve loyalty from the Government. I look forward to the Minister’s assurance on that. People should not have been driven to strike, but who cannot appreciate their anger against an ingrate Government?
At the World Economic Forum in Davos on 24 January, the Prime Minister referred to reshoring jobs and said he wanted Britain to become the “reshore nation”. He announced the creation of a new Government body to encourage companies to locate in the UK jobs that would once have gone to the far east. We seem to be seeing the reverse. A Minister said in the House last week that he was against exporting jobs and siphoning them off to other countries. That is now becoming unpopular because people do not like dealing with confusing accents and it is no longer as commercially attractive as it once was. It does not seem to be the future. The Government’s duty is to remain loyal to their staff and to return the loyalty and skills of the workers by believing in them and fighting for their jobs, not to desert them and leave them with considerable anxiety and worry, and perhaps worse ahead with loss of employment and destitution.
The Minister of State, Ministry of Justice (Simon Hughes)
It is a great pleasure to serve under your chairmanship, Mrs Osborne, I think for the first time. I warmly congratulate my colleague, the hon. Member for Newport West (Paul Flynn), who is a former constituent. I did not drive him out. It was his choice, and I was happy to have him living near Elephant and Castle. I understand absolutely his continuing and proper interest in the matter. As he knows, I know Newport fairly well. It is a great city, which became a city relatively recently, which was hugely welcome. He was correct in saying that following the industrial decline of that part of south Wales, where I lived when I was growing up, the ability to have new initiatives such as the Office for National Statistics and other departments, such as the Patent Office, and the shared services centre has been healthy. That is self-evident in the beneficial effect on the economy.
I also welcome the hon. Member for Newport East (Jessica Morden) and her interest, and acknowledge the presence and interest of the hon. Member for Sefton Central (Bill Esterson) who, understandably and rightly, wants to speak up for his constituents who are employed by the Ministry of Justice. I will return to the numbers in a moment.
I want to make a couple of general propositions. First, in case the hon. Member for Newport West has any doubts, I have never changed my view about the politics and assessment of the public and private sectors. I do not have a simplistic view that all private is good and all public is bad. That has never been my view. I have always believed that there may be good public services and good private activity. I also observe that while I have been in this place and he and I were in different positions because I was on the Opposition Benches and he was loyally—sometimes loyally, but often constructively and critically—supporting his Government who were going down the same road in outsourcing and introducing contracts with the private sector for previously public sector jobs. Since I have been in this place, there has been a debate about what jobs should remain civil service and local government jobs, and what should be in the private sector. That is nothing new. It is not a creation of this coalition Government.
I will deal with the key facts and then, I hope, most of the concerns. I am here to listen and it is good that the hon. Gentleman has secured this debate so soon after the latest stage in the process of deciding what will happen to the shared services, and the consultation starting with the unions last month. As he knows, the whole ministerial team is fully apprised of the concerns of those who represent people in this work. There was evidence of that at Justice Question Time last week when a series of questions about that was rightly asked.
Bill Esterson
The Minister made a point about outsourcing jobs being nothing new, and there has always been a balance between public and private involvement in public services. The difference this time is that Steria’s track record is open to question, and the £56 million write-off on the IT project is a great example. The question put to me by my constituents was why was there no involvement by staff and the trade union in the in-house bid? Why was it carried out in what they believe were questionable circumstances and why were they not able to win, given the efficiency and high quality, and commendation of their work over many years?
Simon Hughes
I am going to try to make these points, because I hope I can address such concerns. If there are any remaining issues and some time available, I will be happy to take further questions.
I ought to add that I saw a bit of the “Newsnight” programme last night; it was actually a former Minister, rather than a current one, who was talking about the civil service. I hope that we would all join together in saying that we think our civil service is an ace organisation. It is one of the best public services in the world and we respect everybody in it. Certainly, as a new Minister in my Department, I want to thank the civil servants who work for us—not just in the Ministry of Justice, but in other public Departments—for the public service that they give.
I entirely understand that a change of the kind being proposed is hugely worrying for staff affected. That is obvious. I know that many valued, hard-working staff in Newport, Bootle and elsewhere will be concerned about the potential impact of the changes on their lives, and I will do what I can to give reassurance, as well as sharing the facts as accurately as I can.
We are talking about just over 1,000 people working for MOJ shared services. The figures I have been given, going up to today, are that the full-time equivalent number in Phoenix house in Newport is 725 and that at Redgrave court in Bootle, it is 103. Here, in Petty France, there are 67 full-time equivalents in the shared services department. There are 31 in the Prison Service college, although they may not in the end be affected, and there are 154 in nationwide teams, so we are talking about just over 1,000 in total.
As part of the shared services reforms, which are part of a wider civil service reform programme, the majority of those staff will transfer to one of the two independent shared service centres, which have been created to work across a wider range of Government Departments and services. Subject to contract, which has not been awarded yet, the independent shared service centre, to which the majority of Ministry of Justice shared services staff will transfer, is, as colleagues know, to be managed by Shared Services Connected Ltd, or SSCL. That is a joint venture between the Cabinet Office and, yes, Steria Ltd, which already manages services on behalf of the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Environment Agency. The Department for Business, Innovation and Skills is also moving its shared services across. The other company deals with much smaller parts of the civil service organisation.
The decision to move to this company was taken following a full evaluation of both the independent shared service centres and the option to remain in-house in the Ministry of Justice. The reason why SSCL was chosen as the preferred framework provider was that it provided the most competitive solution, which—this is very important for all constituents, including mine, those in Newport and those in the north-west—provided the potential to deliver significant savings to the taxpayer. The evaluation criteria included people impact, service delivery, cost and IT.
Simon Hughes
I will in a second. The SSCL proposal was the strongest, in part due to the investment that it is already making in a new IT platform and the fact that the costs could be shared across multiple Government Departments—I will carry on, because I am conscious of time, but I will try and give way later.
I want to reassure colleagues that, as I hope they know, anybody transferred, if the contract is entered into, will be protected by the TUPE arrangements, so their employment will transfer across to any new employer. There will be no overall detriment to their terms and conditions or their pensions. The current arrangement is that the Ministry of Justice has secured at least 12 months’ job protection, starting from October 2014, when the transfer to SSCL is due to take place. If the transfer does go ahead this autumn, the jobs will be secure as well as all the transferred rights for 12 months after that. As part of the agreed protections, we expect all MOJ sites to remain open for at least the first year after transfer to SSCL.
I appreciate that staff have concerns about job security beyond that. I fully understand that, but obviously I cannot make specific commitments beyond the agreement that has been negotiated.
Simon Hughes
In a second, if the hon. Gentleman will allow me to continue. It is worth bearing in mind that the addition of the MOJ and the Home Office to the independent shared service centre will almost double its number of users. That gives it a strength, a credibility and a potential that, I would have thought, strengthens its future. Staff will still be required to provide services for those users and I can tell people in south Wales, the north-west and elsewhere that absolutely no decisions have been made to close any MOJ site.
Nick Smith
I thank the Minister for giving way. I am glad that earlier he acknowledged the importance of these sorts of jobs to the south Wales economy—particularly the Patent Office and the statistical service. Newport is wary about what is happening, as are the south Wales valleys just north of it. What steps is the Minister actively taking to stop these jobs being offshored? It is really important that he addresses that point.
Simon Hughes
I was going to make that point next, so I shall make it next as planned. I understand the hon. Gentleman’s interest, as an MP not far away from Newport.
There is obvious and understandable concern about any offshoring, following a transfer. First, there has been no decision to offshore any Ministry of Justice shared services work. Secondly, I tell all hon. Members—the hon. Member for Newport West and his colleagues—that should there be any such proposal, it would need the specific agreement of the Ministry of Justice. I therefore repeat the fact that the Secretary of State has made it absolutely clear that he would not support such a proposal. Given that this is the first opportunity I have had to speak on the issue, I make it clear that I would not support such a proposal either. It seems to me that we have an obligation, particularly in those services that do key jobs for the public, to have the jobs done in this country, and the Ministry of Justice has been very clear that it will retain the right to make a decision in relation to any such proposal.
Simon Hughes
No, I am going to finish what I have to say, otherwise I might not be able to complete my remarks in the time. The Secretary of State made a commitment and we have had reference to the commitments from the Prime Minister. I repeat the commitment to British jobs here in the UK, and I hope that that is very clear to everybody.
Paul Flynn
Who will take this decision? There seems to be a different view in the Cabinet Office on this. Can he give a guarantee that the Ministry of Justice will have an absolute ban on these jobs going abroad?
Simon Hughes
I have not been in post since the beginning of this whole debate, but according to my understanding, the deal is that any such proposal to offshore would require the consent of the Ministry of Justice, and the current Secretary of State has made it clear that while he is in office, he would not give that consent. I repeat that on my own behalf and on behalf of the Ministers in the Department.
Simon Hughes
No, I cannot give way—if I can in a second, I will.
Although I have been as categorical as I can, I completely understand that there will be concerns. Change is of course destabilising and upsetting, and no one wants an uncertain future, but the reason why this is being done and why Government have made this sort of decision over the years is that, if we have to make our financial ends meet and to balance our budget, we have to ensure that we deliver public services in the most efficient way possible. Money spent on paying debt is not useful, and paying more than we need to run our public services means that money cannot be spent on other things that we all think are justified, such as the NHS and education.
It is, of course, right that we look to reform how the Government deliver savings and at more efficient ways in which to deliver back-office functions such as HR, finance, procurement and payroll. The civil service is therefore, by definition, moving towards being a leaner and more efficient machine.
May I deal with one matter raised? Steria was selected for the joint venture following competitive and rigorous testing. It is true that Steria was one of a number of suppliers involved in the previous programme. Several other parties were involved, however, and it is not right to conclude that Steria was the cause of the issues with the initial programme, which clearly went wrong. As it happens, Steria was involved with the IT on the previous programme, whereas the IT for the current programme was contracted to Fujitsu, as has been said. It is not possible to make an exact comparison.
The Department would not be pressing ahead with the reforms if it did not have confidence that SSCL was the right option for the future of MOJ shared services. We will listen to the workers in the work force and to their representatives. In the end, I hope that the result will be good for Newport and Bootle, and for the people who work there.